You might have seen news that the WTO will soon declare that the local content rules in Ontario’s Green Energy Act are an illegal barrier to trade and investment. It was such a shock to the minority Liberal government that Premier Dalton McGuinty quit in despair! I’m joking, not about the quitting obviously. In fact, most observers of the WTO dispute, which was brought against Canada by Japan and the European Union, felt Canada and Ontario were probably destined to lose. We shouldn’t let that get us down, which I’ll explain in a moment.
The preliminary ruling of the WTO panel leaked out in a BNA Reporter article several weeks ago. We responded to that report in a joint op-ed with the Canadian Autoworkers, written on behalf of seven organizations that filed an amicus curiae (friend of the court) submission to the WTO this year defending Ontario’s sustainable development goals.
Our legal opinion was distributed to the panel by Chair Thomas Cottier of Switzerland, according to reports, but it seems the WTO has decided to send a message to Canada and other countries that you can only do so much in the name of fighting climate change. The holy goal of fully liberalizing trade in so-called environmental goods and services is much more important. Countries should buy their way to a cleaner economy instead of incentivizing green jobs.
“The big loser,” we wrote in our op-ed, which ran Monday, “will not be the McGuinty government, but the thousands of workers who have found jobs in Ontario’s newest industry, and the very concept of sustainable development… How the Ontario and federal governments respond to this WTO loss will be a key test of their seriousness about creating good Canadian green jobs for the future.”
Since then, other members of the amicus team have put statements out supporting the local content provisions in the Green Energy Act. These require solar and wind producers to show high levels of Ontario content in parts and labour in order to qualify for the high power rates (feed-in-tariffs) the province is paying out.
The WTO panel has apparently found that the local content rules are illegal under the General Agreement on Tariffs and Trade — despite their being an exemption in the GATT for public procurement. The panel also found that the Green Energy Act violated anti-discrimination rules in the WTO’s Trade-Related Aspects of Investment (TRIMs) agreement. Both decisions could severely limit how countries around the world try to respond to the economic and climate crises through the creative use of public spending to create good, green jobs.
“Canada and Ontario should appeal this decision and defend our right to support manufacturing jobs,” said Ken Neumann, national director for Canada of the United Steelworkers, in a statement issued by Blue Green Canada this week. “It would be a travesty to let an unelected body wipe out an initiative to promote the environment and the economy at the same time.”…