The European Union has joined Japan in filing a complaint to the World Trade Organization against Ontario’s Green Energy Act.
The EU is objecting to provisions under the act that provide subsidies to local producers of renewable energy, saying they violate international trade rules.
“The EU believes that the Ontario Green Energy and Economy Act (OGEA) is inconsistent with Canada’s WTO obligations. Under the WTO, it is illegal to condition access to a subsidy to the use of domestic products,” the EU said in a statement last week.
Under the act, electricity generators with a certain amount of local content are offered guaranteed rates to ensure a reasonable rate of return on the investment depending on the production costs of the technology used.
Japan also filed complaint to the WTO last year over the local content requirements of the act.
The EU says it initially sought to negotiate a solution with Canada but failed to reach any agreement.
Brad Duguid, Ontario’s Minister of Energy, insists that the act is in compliance with Canada’s obligations under the WTO.
“Our priority is to Ontarians and creating jobs for Ontario workers. We’re now seen as the world leader and when you’re in that position, you’re going to have other jurisdictions looking somewhat enviously at what’s being achieved here,” he says.
Introduced in 2009 by the Ontario Liberal government, the act aims to boost investment in renewable energy and conservation and create “green” jobs. The province says 5,000 new clean energy jobs will be reared by the end of 2012.
The act has become a major source of debate in the approach to the upcoming provincial election, with Progressive Conservative Leader Tim Hudak promising to scrap key provisions of the act if elected premier.
Because it is Canada that is a member of WTO rather than individual provinces, it is the federal government’s responsibility to address the issue at the WTO.
Ontario will be working with Ottawa to defend its position at the WTO, according to Andrew Block, a spokesman with the provincial Ministry of Energy.
Caitlin Workman, a spokeswoman with the Department of Foreign Affairs And International Trade, said the government will “defend Canada’s interests during these proceedings per our standard practice.”
Canada found itself in a similar position when AbitibiBowater Inc. launched a NAFTA complaint after Newfoundland decided to expropriate the U.S.-based forestry company’s assets following its decision to shut down operations in the province. The federal government ended up settling the claim by paying Abitibi $130 million last year.
“The problem is that they filed a complaint against Canada, and Canada ends up holding the bag on it,” said Nelson Wiseman, associate professor of political science at the University of Toronto.
“Newfoundland ended up getting that property, and in effect Canadian taxpayers paid for it,” he said.
The EU is objecting to provisions under the act that provide subsidies to local producers of renewable energy, saying they violate international trade rules.
“The EU believes that the Ontario Green Energy and Economy Act (OGEA) is inconsistent with Canada’s WTO obligations. Under the WTO, it is illegal to condition access to a subsidy to the use of domestic products,” the EU said in a statement last week.
Under the act, electricity generators with a certain amount of local content are offered guaranteed rates to ensure a reasonable rate of return on the investment depending on the production costs of the technology used.
Japan also filed complaint to the WTO last year over the local content requirements of the act.
The EU says it initially sought to negotiate a solution with Canada but failed to reach any agreement.
Brad Duguid, Ontario’s Minister of Energy, insists that the act is in compliance with Canada’s obligations under the WTO.
“Our priority is to Ontarians and creating jobs for Ontario workers. We’re now seen as the world leader and when you’re in that position, you’re going to have other jurisdictions looking somewhat enviously at what’s being achieved here,” he says.
Introduced in 2009 by the Ontario Liberal government, the act aims to boost investment in renewable energy and conservation and create “green” jobs. The province says 5,000 new clean energy jobs will be reared by the end of 2012.
The act has become a major source of debate in the approach to the upcoming provincial election, with Progressive Conservative Leader Tim Hudak promising to scrap key provisions of the act if elected premier.
A Federal Responsibility
Because it is Canada that is a member of WTO rather than individual provinces, it is the federal government’s responsibility to address the issue at the WTO.
Ontario will be working with Ottawa to defend its position at the WTO, according to Andrew Block, a spokesman with the provincial Ministry of Energy.
Caitlin Workman, a spokeswoman with the Department of Foreign Affairs And International Trade, said the government will “defend Canada’s interests during these proceedings per our standard practice.”
Canada found itself in a similar position when AbitibiBowater Inc. launched a NAFTA complaint after Newfoundland decided to expropriate the U.S.-based forestry company’s assets following its decision to shut down operations in the province. The federal government ended up settling the claim by paying Abitibi $130 million last year.
“The problem is that they filed a complaint against Canada, and Canada ends up holding the bag on it,” said Nelson Wiseman, associate professor of political science at the University of Toronto.
“Newfoundland ended up getting that property, and in effect Canadian taxpayers paid for it,” he said.
