By Cheryl Johnson
GLOBE-Net, March 30, 2012 - After
significant delays, a date has been set for the World Trade
Organization (WTO) to hear two disputes against Ontario's Green
Energy Act feed-in tariff (FIT) program for its domestic content
The FIT program provides guaranteed prices with long-term
contracts for renewable electricity production, and includes
minimums on the amount of goods and services that must originate in
Japan and the EU have identical complaints that the DCRs violate
WTO provisions prohibiting supplying subsidies for domestic
products and discriminatory treatment between domestic and imported
The WTO challenges offer an interesting example of
sustainability-focused policies coming into conflict with
international trade commitments. DCRs are tools that entrenched
trade policies aim to prevent and eliminate; however, the capacity
of national or sub-national governments to pursue locally
sustainable energy systems benefit from such initiatives.
The relationship between trade commitments and governments'
sovereignty regarding innovative policy choices may be an emerging
issue in international trade relations as sustainable energy and
environmental policies become increasing common.
In addition to Japan's references, the challenges to Ontario's
DCRs will also depend on how the dispute panel considers exemptions
under GATT (the General Agreements on Tariffs and Trade) for some
government procurement activities, as well as Canada's
constitutional distribution of mandates between the federal and
The two complaints have been joined and will be heard by the
same WTO officials at one dispute panel. The hearing will take
place in July, with a final ruling by September.
If Canada loses the dispute it will have to harmonize its policy
with WTO recommendations. In addition, a serious question
related to the future of existing contracts under the FIT program
is raised if the WTO deems Canada responsible for changing the
program design to satisfy trade-related obligations.
This article appears in the March 2012 Climate Change Policy
& Sustainability Update published by the Delphi Group and is
reprinted here with the kind permission of the author.