A public opinion poll released this week by Friends of the Earth has found that 83% of Ontarians believe it is important "to have more renewable, green energy in Ontario to deal with climate change and help reduce the record levels of greenhouse gases in the atmosphere." Notably, 73% of Ontarians "feel that the World Trade Organization should not be able to override Ontario's plans to encourage investment in green renewable energy while only 27% are of the opinion that it should."
Of course that is just what the WTO has done in a ruling we expect to finally go public any day now. The WTO dispute settlement panel decision, which was leaked a few weeks ago, argues that local content requirements of up to 50% on wind and solar projects violate non-discrimination rules in the General Agreement on Tariffs and Trade (GATT) and the Agreement on Trade-related Investment Measures (TRIMs).
Former Ontario Premier Dalton McGuinty dismissed the result of the WTO complaint, which was brought against Canada by Japan and the European Union, saying "Ontario has secured $27 billion worth of investment from Korea, China, the U.S., France and Germany in renewable energy projects," according to a CTV report. The Ontario Conservatives and Globe and Mail however urged the Premier to dismantle the program, or at least remove its local content rules, in deference to the gods of free trade.
Beatrice Olivastri, CEO of Friends of the Earth Canada, pointed to the new poll results as another reason why Ontario should challenge the WTO's ruling. "Canadians should be allowed to support our own green energy manufacturers, and not be forced to rely on solar panels imported from other countries," she said in a December 3 press release.
As I said when the leaked WTO result showed up in the news, without local content requirements for solar and wind power, the Green Energy Act is almost worthless to Ontario. Our provinces and local governments should have the right to ask for some local content in big projects like energy, transit and construction. These kinds of policies, which are threatened indirectly by the WTO decision and directly by the almost finished Canada-EU free trade negotiations, are used the world over to create vibrant innovative industries.
The alternative way of attracting investment is to cut wages and taxes, which creates a race to the bottom for Ontario, other provinces, U.S. states, and other countries. We collectively need more options if we are going to make our economies more sustainable. The Green Energy Act was one of those options, which is why we expect the federal government to appeal the unfortunate WTO decision.
Friends of the Earth U.S. was also disappointed in the WTO for declaring Ontario's program illegal, saying it "illustrates how the WTO has put itself in a position to make future choices about climate policy based not on sound climate science, but rather based on trade rules."
Erich Pica, president of FOE, said:
"The most unsettling thing about the WTO decision is that it is not an isolated incident -- rather it is part of an alarming trend of international trade disputes posing significant risks to global efforts to curb climate change. Trade tribunals that focus on theoretical free market efficiency are becoming the de facto forum for resolving international disputes over climate policy. The World Trade Organization in the Ontario feed-in tariff case favored profits over the planet -- unfortunately this is typical of the WTO and other international trade policy makers.
"Climate policy should not be decided by the WTO and similar entities, based on trade law; instead we need to support building a green economy based on climate science."
The Council of Canadians is one of seven environmental, labour and student groups that filed a joint amicus curiae (friend of the court) submission to the WTO dispute settlement panel hearing the European and Japanese joint case against the Green Energy Act. In part, we argued that the obligation to reduce greenhouse gas emissions cannot, under international law, be relegated to secondary status to the goals of trade liberalization. To the contrary, by signing and ratifying the Framework Convention on Climate Change and the Kyoto Protocol, Canada, the EU and Japan have each declared that the pursuit of ecological security in the face of potentially catastrophic climate change is the paramount obligation.
We suggested in our submission that the WTO should recognize its limitations to decide in this case and accede to the jurisdiction and competence of multilateral institutions and instruments that have been created to address the imperative of climate change. In the event of a conflict between trade liberalization rules and obligations under the Framework Convention and Kyoto Accord, under international treaty law, priority must be given to the latter.
If Canada does decide to appeal the decision, it will be up to the WTO's Appellate Body to change or clarify the earlier panel's findings. Even if this second body upholds the illegality of Ontario's local content rules in the Green Energy Act, the province is not required to change the policy. If that were the case, as a consequence the EU and Japan could apply restrictions to Canadian trade or investment in any area or on any product, as long as the restrictions were deemed comparable in economic value to the limitations the Green Energy Act puts on European or Japanese investment in Ontario.
The EU, for example, maintains a ban in the import of hormone-treated beef despite a WTO ruling, in a case brought by Canada and the United States, that the precautionary and highly popular European measure was illegal under international trade rules. (Canada continues to press the EU on this in the CETA negotiations, where greater access for Canadian beef is one of the Harper government's only interests.)
To read the joint amicus curiae submission, and for more information on the WTO dispute: http://www.canadians.org/trade/issues/WTO/WTO-Challenge-GEA.html.