The government of Ontario should not struggle on, to uphold the preference for provincial suppliers in its ambitious Green Energy program, now that the World Trade Organization has decided that the program's "local content" element violates international trade law.
Chris Bentley, the provincial Minister of Energy, had already said that Ontario would work with the federal government on an appeal, if the WTO made such a decision – which was likely enough to happen.
The customer for the renewable energy in question is an electricity utility owned by the Crown in right of Ontario. So, as a matter of government procurement, the Green Energy program is subject to the rules and principles of the WTO – indeed to rules going back to the postwar GATT, the WTO's predecessor.
As Lawrence Herman, an international trade lawyer at Cassels Brock Blackwell LLP, says, "If it looks and walks like a local trade preference, however noble and just the cause, it can't pass muster."
For Canada (on behalf of Ontario) to persist in opposing the lawsuit brought by the European Union and Japan, with a supporting brief from the United States – or to provoke retaliatory measures from Europe by simply disregarding the ruling – would be especially odd at present, considering that Canada and the EU plan to put the finishing touches soon on their free trade agreement.
It is to be hoped and expected that the Canada-EU Comprehensive and Economic Trade Agreement will include provisions that eliminate discriminatory procurement policies at all levels of government.
Canada should not waste time on an appeal. Instead, the Legislative Assembly of Ontario (now unfortunately prorogued) should repeal the local-content aspects of the Green Energy and Green Economy Act. There is quite enough in the rest of that statute to satisfy the departing Premier, Dalton McGuinty, that he will leave a legacy that accelerates the growth of renewable energy.