Friday, November 30, 2012

Eyes on Trade, Canadian FiT, domestic policy space

WTO Panel reports evoke strong reactions from domestic constituents. While some see it as a rule based system of adjudication that is rarely prevalent in international relations, others see it as a trampling of national, domestic policy space. While countries which are parties to disputes react diplomatically and carefully to rulings either gaming that they have won or that they will consider compliance in due course, rarely do we see an open challenge to the authority of the dispute settlement mechanism of the WTO. This is a good sign for the multilateral trade body and the legitimacy of a law based system that is not dependent on the power of the country involved but on law and facts. However, the issue of restriction of domestic policy space continues to dominate public debate at the domestic level.

Eyes on Trade depicted local discontent in the U.S. here about the impending WTO ruling in the Canadian FiT case (WT/DS412):
"As countries take steps to address the climate crisis, the last thing we need is the WTO interfering with innovative climate programs. Ontario’s solar and wind incentives program seeks to reduce dangerous carbon pollution and create clean energy jobs, and it should serve as a model for other countries, not a punching bag," said Ilana Solomon, Sierra Club Trade Representative."
However, it is not the WTO as some "supranational" body that is deciding this. It is a dispute settlement, adjudicatory body set up by the WTO members that is doing so.

I found the US third party brief in the Ontario FiT case referred to in the blog piece above particularly interesting as it raised several questions as to the interpretation of Article III:8(a) GATT.

Article III:8(a) GATT states: 

"The provisions of this Article shall not apply to laws, regulations or requirements governing the procurement by governmental agencies of products purchased for governmental purposes and not with a view to commercial resale or with a view to use in the production of goods for commercial sale."

Canada seeks to justify the domestic content requirement under this provision since the government was procuring electricity from the electricity utilities.

Would be interesting to note if this provision applied to Ontario's local content laws. Also, would this provision apply as a defense to a prohibited subsidy under the ASCM also?

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