[WTO Case Review Series No.12] Canada—Certain Measures Affecting the Renewable Energy Generation Sector/Canada—Measures Relating to the Feed-In Tariff Program (WT/DS412, WT/DS426): Some implications for regulations of public-owned enterprises and governmental intervention by means of creation of a "new" market

Author Name KAWASE Tsuyoshi  (Faculty Fellow, RIETI)
Creation Date/NO. May 2015 15-P-008
Research Project Comprehensive Research on the Current International Trade/Investment System (pt.II)
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The province of Ontario, Canada introduced the feed-in tariff (FIT) system in 2009 for the purpose of mitigating global warming. This scheme aims to promote the conversion of conventional fossil fuel power generation into renewable energy generation, inter alia, solar photovolatic (PV) and wind power. This measure, however, is equipped with local content requirements for equipment and components for renewable energy generation facilities, which show an aspect of promotion of new local green industries through new investment and job creation, quite apart from the environmental motivation behind the measures. For that reasons, the European Union (EU) and Japan brought the case to the World Trade Organization (WTO), claiming Canada's violation of the relevant agreements.

While the panel and Appellate Body in this dispute found the local content requirements to be in violation of the WTO Agreement, their decision was époque-making in that the FIT scheme itself does not constitute subsidies subject to discipline of the Agreement. This case note reviews the panel and Appellate Body reports in terms of appropriateness of their treaty interpretation, precedents value, and an adequate balance between the discipline on trade-distorting subsidies and environmental policy consideration. Also, from the point of view of regulation on state-owned enterprises (SOEs), this note attempt to draw some implications for the roles of the WTO in this issue.