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Unions and environmental groups denounce preliminary WTO ruling against Ontario renewable energy policy

You might have seen news this week that the WTO will soon declare that the local content rules in Ontario’s Green Energy Act are an illegal barrier to trade and investment. It was such a shock to the minority Liberal government that Premier Dalton McGuinty quit in despair! I’m joking, not about the quitting obviously. In fact, most observers of the WTO dispute, which was brought against Canada by Japan and the European Union, felt Canada and Ontario were probably destined to lose. We shouldn’t let that get us down, which I’ll explain in a moment.

The preliminary ruling of the WTO panel leaked out in a BNA Reporter article several weeks ago. We responded to that report in a joint op-ed with the Canadian Autoworkers, written on behalf of seven organization that filed an amicus curiae (friend of the court) submission to the WTO this year defending Ontario’s sustainable development goals.

Our legal opinion was distributed to the panel by Chair Thomas Cottier of Switzerland, according to reports, but it seems the WTO has decided to send a message to Canada and other countries that you can only do so much in the name of fighting climate change. The holy goal of fully liberalizing trade in so-called environmental goods and services is much more important. Countries should buy their way to a cleaner economy instead of incentivizing green jobs.

“The big loser,” we wrote in our op-ed, which ran Monday, “will not be the McGuinty government, but the thousands of workers who have found jobs in Ontario’s newest industry, and the very concept of sustainable development… How the Ontario and federal governments respond to this WTO loss will be a key test of their seriousness about creating good Canadian green jobs for the future.”

Since then, other members of the amicus team have put statements out supporting the local content provisions in the Green Energy Act. These require solar and wind producers to show high levels of Ontario content in parts and labour in order to qualify for the high power rates (feed-in-tariffs) the province is paying out.

The WTO panel has apparently found that the local content rules are illegal under the General Agreement on Tariffs and Trade — despite their being an exemption in the GATT for public procurement. The panel also found that the Green Energy Act violated anti-discrimination rules in the WTO’s Trade-Related Aspects of Investment (TRIMs) agreement. Both decisions could severely limit how countries around the world try to respond to the economic and climate crises through the creative use of public spending to create good, green jobs.

“Canada and Ontario should appeal this decision and defend our right to support manufacturing jobs,” said Ken Neumann, national director for Canada of the United Steelworkers, in a statement issued by Blue Green Canada this week. “It would be a travesty to let an unelected body wipe out an initiative to promote the environment and the economy at the same time.”

“Thanks to the Green Energy Act, Ontario is a national and global leader in clean-energy manufacturing,” said Merran Smith, director of Clean Energy Canada at Tides Canada, another Blue Green Canada member. “This is the not just Ontario’s future economy, but Canada’s, and we must defend our gains with every tool we have available.”

The amicus team, including the Council of Canadians, is asking that Canada appeal the decision when we finally see it in November. Ontario will almost certainly put pressure on the Harper government to appeal, but it might not be in Harper’s agenda. The Conservatives are close to closing a Comprehensive Economic and Trade Agreement with the EU in which public procurement of renewable energy, as well as transit and at the municipal level, is a controversial issue.

The EU wants Canada to commit all provincial agencies and all municipal governments to restrictive trade rules that will forbid the use of local content quotas on any major projects. The EU obviously has a big problem with the Green Energy Act specifically, since it wouldn’t have joined Japan in the WTO dispute if this was a minor irritant. The EU could push Ontario to give up any protections for renewable  power in CETA, arguing that the WTO case makes them redundant.

Harper will be inclined to give in so as imperfect as the Green Energy Act is, we need to support the province’s right to merge environmental and economic objectives in transitioning to a cleaner economy. This is the definition of sustainable development. And we should let the Canada-EU trade deal get in the way. There is very little in CETA for Ontario, especially for Ontario manufacturing. In fact the deal is likely to reinforce the province’s existing relationship with the EU — as an exporter of raw resources. (See John Jacobs’ new report, Straightjacket: CETA’s Constraining Effects on Ontario, for more about this.)

“We hope Premier McGuinty can muster the political courage to face down WTO and CETA threats to kill sound job-creation and renewable energy policy,” we concluded in our joint op-ed with CAW this week. “However, in the case of WTO disputes, the ball falls mainly in Prime Minister Stephen Harper’s court.

“If the federal Conservatives resign themselves to the logic of our global free trade system that boasts too much rhetoric, and not enough action on the green economy, then it is they who must wear the albatross for putting thousands out of work and signing the death certificate of sustainable development in this country.”


If you live in Ontario, despite the political upheaval at the moment, you would be doing a good thing by writing to your MPP and demanding that Ontario stay strong on the local content rules in the Green Energy Act. You may have issues with the Act’s emphasis on private power, or its heavy-handed and sometimes arbitrary approvals process for often controversial projects. This policy is very far from perfect. But the consequences of forever losing the ability to buy locally when it makes environmental or economic sense to do so are just too much to bear.

Procurement, or public spending by our cities and provincial governments, is one of the last places where communities can leverage investment in sustainable and job-creating ways.

“Although not perfect, the Green Energy Act of 2009 included key policy proposals to revitalize the province’s hard-hit manufacturing sector and set Canada on a path of greater local, and sustainable energy development,” said CAW President Ken Lewenza and CEP Present Dave Coles in a joint statement today. “The ‘Made-in-Ontario’ requirements for renewable energy providers supplying Ontario’s energy grid helped create thousands of much needed jobs, and incubate a new, forward-looking ‘green’ manufacturing industry that benefits all Ontarians.”

Please join them, Blue Green Canada, the Council of Canadians, the Canadian Federation of Students, the Ontario Public Service Employees Union and the Canadian Union of Public Employees in demanding that the federal government appeal the WTO ruling, and that the Ontario government stick to its guns at the WTO and in the CETA negotiations. An appeal is not guaranteed to overturn this WTO decision but it keeps the embers burning, possibly for years since it is a very slow process, with new options opening up for Canada along the way, even if an Appellate Body ultimately upholds first ruling.

To find your MP’s or Ontario MPP’s contact information, click here.

For more information on the WTO dispute against the Green Energy Act, click here.