Reuters reports that, “Japan asked the World Trade Organization on Wednesday to form a legal panel to decide whether Canadian provincial backing for solar and wind energy gives an unfair advantage to Canadian equipment makers. (Japan is complaining against) an Ontario scheme that guarantees prices for renewable energy as long as it is generated with Canadian-made equipment…”
“Japan says that an environmental scheme operated by the Ontario provincial government violates Canada’s obligations as a WTO member. In May 2009 Ontario set a minimum feed-in tariff for electricity generated from renewable sources….but reserved this for generators partially or completely built in Canada. Japan says the local-content clause is illegal and cites Ontario’s decision in January 2011 to further raise the local content requirement.”
According to a Business News Americas report, Japan said Ontario’s actions violate:
– Articles 3.1(b) and 3.2 of the WTO’s Agreement on Subsidies and Countervailing Measures (SCM), because the measures are subsidies that are provided contingent upon the use of domestic over imported goods, namely contingent upon the use of equipment for renewable energy generation facilities produced in Ontario over such equipment imported from other WTO members such as Japan;
– Article III:4 of the General Agreement on Tariffs and Trade (GATT), because the measures accord less favorable treatment to imported equipment for renewable energy generation facilities than accorded to like products originating in Ontario; and
– Article 2.1 of the Trade Related Investment Measures Agreement (TRIMs), because the measures are trade-related investment measures inconsistent with Article III:4 of the GATT which require the purchase or use by enterprises of equipment for renewable energy generation facilities of Ontario origin.
Reuters notes, “The dispute stokes a larger debate over plans by countries including Canada, the United States and China among others to reserve public works as well as energy and environmental projects worth billions of dollars for local firms.”
“WTO members will discuss the opening of legal proceedings on June 17, with Canada likely to ask for a delay while it studies Japan’s complaint.” Business News Americas further specifies, “Japan’s request will be taken up at the next meeting of the WTO’s Dispute Settlement Body (DSB) scheduled for June 17. Canada at that time can block the panel, but any subsequent request from Japan would automatically be accepted by the DSB.”
“Canadian officials in Ottawa were not immediately available for comment.”
BACKGROUND
In March 2010, the Globe and Mail reported, “As a proposed large-scale free-trade and economic-integration pact (the Canada-EU Comprehensive Economic and Trade Agreement) between Canada and the 27 European Union countries enters a crucial stage of negotiations, Canadian and European officials say the deal’s biggest obstacle is the province of Ontario. …Europeans say that a particularly contentious point is Ontario’s new Green Energy Act. …The EU negotiators said in a position paper they tabled in the negotiations this year that the Ontario legislation is a perfect example of the sort of protectionist legislation that would prevent European access to markets and make CETA unworkable.”
In September 2010, the Toronto Star reported, “Calling it a ‘test case globally,’ Council of Canadians chair Maude Barlow (said Japan’s WTO challenge) threatens policies designed to decrease greenhouse gas emissions. ‘Why should the Ontario taxpayer be paying high rates for clean energy if it is going to the profit margins of big corporations from Japan or Europe?’ she asked. …Barlow said: ‘(Given a WTO challenge can take years) it is the chill effect that matters. While a dispute is being settled, other jurisdictions are loathe to start any similar program or pass any similar rule.’ …Barlow said she sees a ‘perfect storm’ of events to strip the sovereignty of Canadian legislators, with Japan’s challenge the latest element. ‘We should be very worried,’ she said. ‘This challenge could constrain governments from introducing laws, practices and standards that reflect community values of Canadians on environmental sustainability, fair trade, local jobs and justice, and local economic development.’ …(Barlow also) noted municipalities have been targeted in the ongoing negotiations for the Canada-European Union Comprehensive Economic and Trade Agreement. …Barlow says the Green Energy Act is already under threat by the EU negotiations, pointing out the European Commission targeted the Ontario program in a leaked memo earlier this year, citing it as a bad example for the other provinces. ‘This is a dangerous and anti-democratic move on the part of Japan,’ she said. ‘The Ontario and Canadian governments should vigorously oppose this challenge at the WTO and halt (EU negotiations) until it is clear such programs are protected.’”
In October 2010, the Globe and Mail reported, “The United States and the European Union emerged on Thursday as latest countries to say they have key commercial interests at stake and want to join the consultations on a complaint by Japan to the World Trade Organization. …Japan, the United States and European countries also have clean power strategies, and see Ontario’s local-content rules as a threat to their export potential. ‘The renewable energy generation sector is of key interest for the EU importers, exporters and investors,’ said the European Union submissions to the WTO. ‘Therefore the EU has a substantial trade interest in the present dispute as well as a systemic interest in the correct implementation’ of international trade agreements.”
Our September 2010 media release on Japan’s complaint can be read at http://canadians.org/media/trade/2010/13-Sep-10.html. Trade campaigner Stuart Trew’s May 2010 blog on CETA and the Green Energy Act can be read at http://canadians.org/tradeblog/?p=850. Energy campaigner Andrea Harden-Donahue’s March 2009 analysis on the Green Energy and Green Economy Act can be read at http://canadians.org/energy/documents/Written%20submission%20Green%20Energy%20Act.pdf.
