GENEVA – The World Trade Organization’s Appellate Body has issued a ruling that broadly backs the arguments of Japan and the European Union over the Canadian province of Ontario’s preferential treatment for local firms in promoting renewable energy.
The final decision issued Monday by the Appellate Body confirms Japan’s victory, which already had been largely acknowledged in a December report drafted by a WTO dispute settlement panel. It is the first appellate ruling at the WTO relating to a renewable energy dispute.
Ontario introduced a provincial feed-in tariff program in May 2009 to promote power generation through renewable energy sources.
The provincial government allows companies to take part only if they meet certain local content levels for solar and wind power equipment, and all electricity generated through renewable energy is sold to power companies at fixed rates.
The local content requirement has blocked Japanese makers of solar panels and other equipment for green power generation from landing supply contracts.
Arguing that the program discriminated against overseas products and was effectively tantamount to subsidizing local producers — in violation of WTO trade rules — Tokyo took the case to the global trade body in September 2010, and asked the Canadian government to review Ontario’s feed-in system.
After Ottawa rejected this request, Japan called on the WTO in June 2011 to set up a dispute-settling panel. The panel was established the next month, and the European Union that August also filed a complaint with the WTO against Ontario’s feed-in tariff program.
The dispute settlement panel released a report last December supporting Japan’s claim, but Canada filed an appeal with the Appellate Body in February.
In its report Monday, the Appellate Body confirmed that Ontario’s feed-in tariff program discriminates against foreign products. But due to a lack of evidence, it turned down Japan’s argument that the system amounts to a subsidy scheme for local firms.