Canada: WTO Appellate Body Releases Appeal Decision On Domestic Content Requirement Of Ontario’s FIT Program

Last Updated: May 20 2013
Article by Sven Walker

On May 6, 2013 the World Trade Organization's (WTO) Appellate Body, the highest court at the WTO, released its report with respect to Canada, Japan and the European Union's (EU) appeals against the decision made by the WTO Panel on the domestic content requirements of Ontario's Feed-in-Tariff (FIT) Program.

History of Proceedings

Ontario's domestic content requirements for the FIT Program were  challenged at the WTO by Japan and the EU on the basis that they are contrary to Canada's free trade obligations under the General Agreement on Tariffs and Trade, 1994 (GATT). The WTO Panel Report of December 19, 2012, which partially ruled that the FIT Program breaches Canada's international trade obligations, was appealed by Canada, Japan and EU.

For more information about the Panel's Report, please see my blog posting WTO Panel Releases Final Report Domestic Content Requirements and for more information about the WTO's appeal process, please see WTO Likely to Deem Domestic Content Requirements Illegal.

Summary of the Appeals

Canada appealed the findings of the Panel Report for two key reasons:

  • Canada argued that the resale of electricity purchased under the FIT Program is not commercial in nature and therefore the FIT Program is not covered by the terms of Article III:8(a) of GATT; and
  • Canada argued that Panel failed to find that the Government of Ontario does not purchase renewable electricity "with a view to use in the production of goods for commercial sale."

Japan and the EU counter appealed to seek a reversal of the Panel's findings that:

  • The FIT Program and FIT Contracts amount to a government purchasing goods within the meaning of Article 1.1(a) of the Subsidies and Countervailing Measures (SCM) Agreement; and
  • Japan and the EU failed to establish that domestic content requirements confer a 'benefit' within the meaning of Article 1.1(b) of the SCM Agreement to electricity generators who participate in the FIT Program.

Summary of Appellate Body Key Findings

The Appellate Body confirmed the main findings of the Panel's Report:

  • it supported the findings that the local content requirements of Ontario's FIT-Program are in violation of the TRIMs Agreement and therefore Canada breaches its national treatment obligations under Article III:4 of the GATT and Article II:1 of the TRIMs Agreement; and
  • that the Minimum Required Domestic Content Levels mandated in the FIT Program do not meet the conditions of Article III:8(a) of the GATT.

The Appellate Body reversed the Panel's findings that Japan and the EU failed to establish that domestic content requirements confer a 'benefit' within the meaning of Article 1.1(b) of the SCM Agreement to electricity generators who participated in the FIT Program but the Appellate Body did not complete the analysis and rule how this factor should have been decided.


Once the Appellate Body Report is adopted by the WTO's Dispute Settlement Body (DSB), it must be unconditionally accepted by the parties. Canada must present a plan for implementing the ruling within a month of the decision. Since only countries can be represented at the WTO, Canadian federal officials have confirmed that Canada will comply with the ruling. However, the Government of Ontario has yet to give a statement as to how this ruling will impact the FIT Program and the program participants.

Despite the WTO ruling, it is important to recognize that the Ontario Power Authority's FIT Program and the domestic content requirements have been in place since the fall of 2009 and a local industry has been established. While I do not have a crystal ball, it is likely that the province of Ontario will take less than the average 15 months to become compliant with the WTO Appellate Body decision. The primary reason is that 200 MW of small FIT projects (500 kW or less) are scheduled to be awarded this year and the large FIT window is also scheduled to open at some point in the near future. In light of the WTO decision, it is probable that all future FIT contracts awarded will no longer need to be domestic content compliant.

I also anticipate that it is unlikely that the WTO ruling will apply retroactively to existing OPA FIT Contracts as feed-in tariff rates were specifically established with a view to covering the higher than usual capital costs for domestic content compliant renewable energy generation equipment. In our experience, the cost of domestic content compliant renewable energy generation equipment is generally 25% to 50% more than the market price for such equipment in non-protectionist markets.

Finally, I anticipate that the elimination of domestic content will signal the slow decline of the renewable energy manufacturing sector in Ontario. There are two key reasons:

  1. All FIT contracts with a domestic content compliance requirement were awarded in 2010 and 2011. Most renewable energy projects are now scheduled for construction and commissioning in 2013, 2014 and perhaps early 2015 at the latest.  Given that there has been no awarding of FIT Contracts since July of 2011, there will be no need for a domestic content compliant supply chain beyond 2015; and
  2. equipment manufacturers are generally able to source their renewable energy equipment from outside of Ontario at a lower cost.

Lower equipment costs are necessary in order to make the renewable energy industry sustainable in Ontario. The domestic content requirements have actually proven to be an obstacle to reducing equipment costs and feed-in tariff rates to a level that is viewed as acceptable by the general public. As the cost to develop solar and wind power generation projects continues to fall, and the cost of retail electricity continues to increase, there is a real possibility that solar and wind grid parity will be achievable in the near future. With lower capital costs, solar pV has the potential of becoming a major viable alternative source of energy for owners of residential, commercial and industrial properties alike.

By the end of 2013, the province of Ontario will be almost entirely coal-free. 10 years ago, 25% of Ontario's power production originated from coal fired power plants. By shutting these down, Ontario is reducing greenhouse gas emissions and fighting climate change, protecting human health and filling the energy production void with renewable energy sources.  The renewable energy industry is here to stay with or without the domestic content requirements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Sven Walker
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.