Info Service on WTO and Trade Issues (Feb13/06)
26 February 2013
Third World Network
to appeal renewable energy ruling
Published in SUNS #7521 dated 8 February 2013
7 Feb (Kanaga Raja) -- Canada has notified the WTO Dispute Settlement
Body (DSB) of its intention to appeal a panel ruling that had found
that certain Canadian measures relating to the feed-in-tariff (FIT)
programme established by the province of Ontario that affects the
country's renewable energy generation sector were inconsistent with
its WTO obligations.
In a ruling issued on 19 December 2012, the Panel - in its overall
conclusions and recommendations, issued separately for Japan and the
European Union (the complainants) - had concluded that both Japan
and the EU have established that the "Minimum Required Domestic
Content Level" prescribed under the FIT Programme, and implemented
through the individual FIT and microFIT Contracts executed since the
FIT Programme's inception, places Canada in breach of its obligations
under Article 2.1 of the TRIMs (Trade-Related Investment Measures)
Agreement and Article III: 4 of the GATT 1994.
On the other hand, the Panel had concluded that both Japan and the
EU had failed to establish that the FIT Programme, and the individual
solar PV (photovoltaic) and wind-power FIT and microFIT Contracts
executed since the FIT Programme's inception, constitute subsidies,
or envisage the granting of subsidies, within the meaning of Article
1.1 of the SCM (Subsidies and Countervailing Measures) Agreement,
and thereby that Canada has acted inconsistently with Articles 3.1(b)
and 3.2 of the SCM Agreement.
The three-member Panel ruling on the "benefit" question
in relation to the "subsidy" complaint under the SCM agreement
was by a majority. The majority had held that the complaint had not
been established on the issue of subsidy, while the dissenting member
had held that the programme provided a benefit, and thus constituted
a subsidy in terms of the SCM agreement.
The Panel had concluded that to the extent Canada had acted inconsistently
with Article 2.1 of the TRIMs Agreement and Article III: 4 of the
GATT 1994, Canada had nullified or impaired benefits accruing to Japan
and the EU. It had recommended that Canada bring its measures into
conformity with its obligations under the TRIMs Agreement and the
GATT 1994 (see SUNS #7507 dated 24 December 2012).
In its notification to the DSB and Appellate Body, dated 5 February,
Canada is appealing certain issues of law and legal interpretations
developed in the panel reports.
According to Canada, it is seeking review by the Appellate Body of
the Panel's findings and conclusions that the Government of Ontario's
FIT Program, as implemented through the FIT and MicroFIT Contracts,
is not covered by the terms of Article III: 8(a) of GATT 1994.
"This conclusion is in error and is based on erroneous findings
on issues of law and legal interpretation including the Panel's finding
that the Government of Ontario purchases renewable electricity ‘with
a view to commercial resale'."
Canada is also requesting the Appellate Body to find that "the
Panel acted inconsistently with Article 11 of the DSU [Dispute Settlement
Understanding] by failing to make an objective assessment of the facts
related to this issue, specifically with respect to the Panel's finding
that the resale of electricity purchased under the FIT Program is
‘commercial' in nature, and by using this faulty factual finding to
support its conclusion about the applicability of Article III: 8(a)
of GATT 1994 to the FIT Program."
Canada further requests the Appellate Body to find that the Panel
failed to find that the Government of Ontario does not purchase renewable
electricity "with a view to use in the production of goods for
Meanwhile, according to trade officials, the United States on 6 February
separately notified the WTO Secretariat of its request for consultations
with India on certain measures imposed by India relating to domestic
content requirements under the Jawaharlal Nehru National Solar Mission
(NSM) for solar cells and solar modules.
Trade officials said that in its request for consultations, the first
step in the dispute settlement process, the US alleges that India
requires solar power developers, or their successors in contract,
to purchase and use solar cells and solar modules of domestic origin
in order to participate in the NSM and to enter into and maintain
power purchase agreements under the NSM or with National Thermal Power
Company Vidyut Vyapar Nigam Limited.
The US claims that as a result, solar power developers, or their successors
in contract, receive certain benefits and advantages, including subsidies
through guaranteed, long-term tariffs for electricity, contingent
on their purchase and use of solar cells and solar modules of domestic
According to trade officials, the US complaint said that India's measures
appear to be inconsistent with several WTO Agreements.
A press release by the Office of the US Trade Representative dated
6 February announcing the US request for consultations with India
relating to domestic content requirements in India's national solar
programme, said that "India's program appears to discriminate
against US solar equipment by requiring solar energy producers to
use Indian-manufactured solar cells and modules and by offering subsidies
to those developers for using domestic equipment instead of imports."
"These forced localization requirements of India's national solar
program restrict India's market to US imports," the USTR press
It quoted outgoing USTR Ron Kirk as saying: "The Obama Administration
is committed to strengthening the American clean energy sector and
preserving the millions of jobs it supports."
"Trade enforcement is critical for ensuring that our clean energy
goods and services can compete on an equal footing around the world.
As today's action demonstrates, we will not hesitate to enforce our
rights under our trade agreements on behalf of American workers and
USTR Kirk added: "Let me be clear: the United States strongly
supports the rapid deployment of solar energy around the world, including
with India. Unfortunately, India's discriminatory policies in its
national solar program detract from that successful cooperation, raise
the cost of clean energy, and undermine progress toward our shared
A news report in the Wall Street Journal has quoted the joint secretary
at India's Ministry of New & Renewable Energy as saying that India's
program has not stopped imports of equipment, and that it continues
to comply with WTO rules. +