December 20, 2012

WTO confirms ruling against Ontario green energy program

RICHARD BLACKWELL | The Globe and Mail | Published Wednesday, Dec. 19 2012 |

The World Trade Organization has released its formal ruling on Ontario’s green energy program, and as expected it says the local-content rules in the initiative break international trade rules.

Japan and the European Union had complained to the WTO about Ontario’s rules that force companies that sell premium-priced electricity into the province’s grid to buy a proportion of their equipment and services in Ontario. The Green Energy Act was designed to help bolster the renewable energy industry in the province by supporting local suppliers.

The WTO’s 160-page ruling, released Wednesday, says Ontario breached its obligations under the General Agreement on Tariffs and Trade, because the local-content requirements treat imported equipment and components differently than domestic products.

However, the WTO did not uphold part of the Japanese and European complaint that suggested the local content rules amount to an illegal subsidy.

The complaint was actually against Canada, because the WTO deals with nations rather than regional governments – even though it focused on provisions that are only in place in Ontario.

“We recommend that Canada bring its measures into conformity with its obligations under the…GATT,” the ruling said.

The ruling was sent to the parties involved in the case several weeks ago, and some of the details had already leaked out.

It is widely expected that Ontario will ask the federal government to appeal the ruling, a process that could take many months.

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