Say goodbye to Dalton McGuinty’s green industry strategy for jobs and manufacturing.
The World Trade Organization may have put the boots to it. But the Ontario premier and his government were unwitting accomplices.
Critics are already denouncing the trade body for vetoing a Buy Ontario plan designed to revitalize the province’s manufacturing base.
Communications Energy and Paperworkers union president Dave Coles called the recent decision by a WTO dispute panel “blatantly undemocratic” – which, of course, it was.
But, strangely, the other villain in the piece is Ontario’s Liberal government. By its decision to quietly privatize big chunks of the province’s electrical generating industry, it left itself wide open to a trade challenge.
The story began in 2009 when Ontario passed the Green Energy and Green Economy Act.
For the McGuinty government, it was an unusually bold effort aimed at meeting two urgent needs.
The first was to reduce carbon emissions by moving away from coal-fired electrical generation.
The second was to encourage new kinds of manufacturing that could revitalize Ontario’s hard-hit industrial base.
The mechanism was simple. Consumers would subsidize producers of solar and wind power through higher electricity rates. But to qualify for these subsidies, power producers would have to ensure that up to 60 per cent of their equipment was manufactured in Ontario.
The idea was to give a boost to Ontario windmill and solar panel factories. And it was starting to work.
But in a move that would prove fatal to their industrial plans, the Liberal government was also moving away from public power generation.
New contracts for wind and solar development were let to private companies such as Enbridge and Brookfield rather than to Crown corporation Ontario Power Generation.
Indeed, except for one windmill at its Pickering nuclear plant, Ontario Power Generation is specifically barred from investing in non-hydroelectric renewable energy.
For power consumers, that mattered little. Electricity is electricity.
But for the WTO, it seems to have made a world of difference.
Under the WTO pact, Canadian provinces have wide leeway to demand local content in government procurement contracts. Ontario, for instance, requires that 25 per cent of public transit vehicles purchased by municipalities be manufactured in Canada.
But the key here is that a public body does the purchasing. In the green energy case, according to the newsletter Bloomberg WTO Reporter, Japan and the European Union successfully argued that the purchasers to whom Buy Ontario rules apply (the private generators) are not public bodies.
“It seems they (the government) left themselves open to a challenge,” Scott Sinclair, a trade researcher for the Canadian Centre for Policy Alternatives, said Wednesday.
Sinclair points out that Quebec has demanded local content rules for green energy projects since 2004, without facing any trade challenges.
But in that province, such projects – even if privately financed – come under the umbrella of Crown corporation Hydro Quebec, a public body with an effective monopoly on power generation.
Even before the WTO ruled, McGuinty’s green energy strategy was floundering. Government attempts to locate large-scale wind turbine developments in rural Ontario have run into fierce opposition. Tim Hudak’s Tories say they’ll scrap the entire plan if they win power.
The WTO appears to have delivered the coup de grace.
True, the decision can be appealed – although, under WTO rules, Ottawa rather than Queen’s Park would have to institute such an action.
But even if Prime Minister Stephen Harper’s Conservative government were to appeal on behalf of the McGuinty Liberals, it is doubtful that the world trade body would change its mind.
And it is even more unlikely that any Ontario government – Liberal or otherwise – would risk the retaliatory trade measures sure to be imposed if Queen’s Park ignores this ruling.
Thomas Walkom is a news services columnist.
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