Let the trade jousts begin! On Monday Japan filed a complaint with the Geneva-based World Trade Organization (WTO) against Canada, arguing that Ontario’s very popular Green Energy Act, and in particular, its Domestic Content Requirement (DCR) unfairly favors local firms.
The DCR is a cornerstone provision of Ontario’s ground-braking renewable energy legislation and is ardently defended by the province’s government. It argues that the DCR acts as? a “return on investment” against the generous subsidies its handing out to foreign, renewable energy?companies. To benefit from the province’s solar feed-in tariffs, companies have to purchase 50 percent of solar equipments in Ontario. That number increases to 60 percent next year.
However, Japan argues that the DCR unfairly pressures producers of clean power to buy hardware from Ontario-based manufacturers, reports The Globe And Mail. The Ontario DCR violates the WTO’s General Agreement on Tariffs and Trade agreement, Japan says. In a statement the Ontario energy ministry stood by its Green Energy Act arguing that it? “is consistent with Canada?s international trade obligations under the WTO.?
As part of the WTO complaint process, Japan’s government has asked Ottawa for the start of formal consultations, the first step that could eventually lead to a formal trade dispute being filed in Geneva at the WTO.
The Ontario Green Energy Act hasn’t stopped foreign investors from entering the province.? The largest deal so far has been Samsung’s $7 billion wind and solar and development project.
The renewable energy sector’s transformation into a potent industrial force is fueling a growing number of trade litigation. Just last week,?in the U.S. the United SteelWorkers (USW)?asked the U.S. Trade Representative Office to begin negotiating with their Chinese counterparts over what they say are the country?s generous (and unfair) wind and solar subsidies.? If those negotiations fail, the USW has asked the Obama administration to file a complaint against China at the WTO.
Photo: Pitchyourbiz, Flickr