Monday, November 19, 2012

Ontario feed-in tariff case countdown begins

WTO watchers are keenly awaiting the end of November decision of the Panel hearing the Ontario Feed-in tariff case against Canada (DS 412). The decision will be the first case at the WTO that lays down the jurisprudence relating to local content and applicability of WTO law (especially the nondiscrimination rule as well as subsidies) in the context of renewable energy programs. I have blogged about it recently here. With many countries implementing renewable energy  programs the decision will be awaited eagerly. The Panel decision is likely to be appealed against. It will also be judicially dissected and critically analyzed by the legal fraternity, especially at the IELP blog. The stakes are high for the renewable energy sector, which is one of the most subsidized sectors in both the developing and developed world.

Anticipating the decision in November reports are predicting the fall out of the case.The Globe and Mail had this piece outlining the possible impact of the Panel decision.
"A crucial ruling from the World Trade Organization, expected as early as this week, could force a dramatic rethink of Ontario’s green energy policies. 
The WTO will decide whether to side with complaints from Japan and the European Union that insist Ontario’s “local content” rules breach international trade law. Those rules force firms that sell premium-priced renewable energy to the province to buy a proportion of their equipment and services in Ontario. The policy, part of the province’s Green Energy Act passed in 2009, was designed to try to create a 21st-century manufacturing sector with an emphasis on renewable technology."
WIll the WTO decision force a rethink across the world about support for local content in renewable energy projects? Will mandating local content become taboo or will countries continue to implement local content programs? Will the issue of whether mandating or incentivizing local content being a prohibited subsidy (subsidy contingent on the use of local over imported goods) under Article 3 of the ASCM also be settled in the decision? Is this going to be a long drawn battle which will go upto the Appellate and compliance stage like the Airbus-Boeing Subsidies case that has engaged the dispute settlement mechanism for more than seven years now? 

Over to the Panel now for a decision.