World Trade Organization hammers Dalton McGuinty’s FIT program for green energy

THUNDER BAY – Solar power and wind energy is supposed to be Ontario’s path back to manufacturing prosperity. Under the leadership of the Ontario Liberals and Premier Dalton McGuinty, Ontario would re-vitalize the sagging manufacturing base by creation of a Green Energy industry. Under the Liberals, the goal was simple. Incentives, paid for by higher energy prices under the Feed in Tariff or FIT program would create new manufacturing jobs in the province for solar panels and wind turbines.

The evidence was there already that such schemes don’t work. Northern Ontario’s struggling forestry sector offered up evidence of how high electricity prices, before the FIT program pricing was hammering the industry. However the Liberals under Premier Dalton McGuinty forged ahead.

Much of the plan appears now to have been drafted in a far more ham-fisted manner. The World Trade Organization has likely put the boots to the plans with a decision this past summer that the Liberals were not all that keen to make sure Ontarians knew about it.

“On 13 September 2010, Japan requested consultations with Canada regarding Canada’s measures relating to domestic content requirements in the feed-in tariff program (the “FIT Program”). Japan claimed that the measures are inconsistent with Canada’s obligations under Article III:4 and III:5 of the GATT 1994 because they appear to be laws, regulations or requirements affecting the internal sale, offering for sale, purchase, transportation, distribution, or use of equipment for renewable energy generation facilities that accord less favorable treatment to imported equipment than that accorded to like products originating in Ontario; that the measures could be internal quantitative regulations relating to the mixture, processing or use of a specified amount or proportion of equipment for renewable energy generation facilities which require that equipment for renewable energy generation facilities be supplied from Ontario sources; and that the measures appear to require the mixture, processing or use of equipment for renewable energy generation facilities supplied from Ontario in specified amounts or proportions, being applied so as to afford protection to Ontario production of such equipment, contrary to the principles of Article III:1 of the GATT 1994.

“Japan also claimed that the measures appear to be inconsistent with Article 2.1 of the TRIMs Agreement because they appear to be trade-related investment measures that are inconsistent with the provisions of Article III of the GATT 1994.

“Finally, Japan alleged that it appears that a subsidy is granted under the measures because there would be a financial contribution or a form of income or price support, and a benefit is thereby conferred.  It is also claimed that the subsidy would be a prohibited subsidy under Articles 3.1(b) and 3.2 of the SCM Agreement because it appears to be provided “contingent … upon the use of domestic over imported goods”, namely contingent upon the use of equipment for renewable energy generation facilities produced in Ontario over such equipment imported from countries such as Japan.

“On 24 September 2010, the United States requested to join the consultations.  On 27 September 2010, the European Union requested to join the consultations.  Subsequently, Canada informed the DSB that it had accepted the requests of the European Union and the United States to join the consultations”.

The ruling has now come down. Ontario’s FIT program and its requirement for local content have been deemed in violation of the World Trade Organization’s rules.

It would now be up to Ottawa to appeal the decision. Ottawa is being urged by the CAW and the CEP unions.  Both labour unions have voiced their opposition to the WTO ruling siding with the European Union and Japan’s complaint against Ontario’s Green Energy Act and is urging the federal government to appeal the decision.

The silence from the Premier’s office is not all that surprising, the cornerstone of Dalton McGuinty’s energy program has been hit harder than Queen’s Park opposition could have ever hit it.  The FIT program has likely seen a hammer blow that might mean the next leader of the Liberal party and the next premier has some real work ahead of them in recovering from this major setback.

Silence isn’t leadership.

James Murray

Content and News Director