World Trade Organization Rules Against Ontario’s “Buy Local” Program

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The Province of Ontario has imposed a requirement that in order to participate in its feed in tariff program (FIT) for solar energy a project much source at least 60% of the solar project content from within the Province. That requirement has been challenged by Japan and the European Union. The World Trade Organization now has ruled that this domestic-content requirement violates sections of the General Agreement on Tariffs and Trade 1994. Canada will be appealing the decision.

Many in Michigan have suggested that the Ontario requirement would be good for Michigan manufacturing, if coupled with a Michigan FIT. However, under the federal Constitution such a requirement would give rise to challenges from the other 49 states under the Commerce Clause, which generally prohibits one state from erecting impediments to interstate commerce. Now we see that such a state law would also violate international trade agreements. All this begs the question of whether the bow to Michigan content in granting bonus renewable energy credits may itself be subject to challenge.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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