National Energy Policies on Trial at the WTO Nilmini Silva-Send EPIC (Energy Policy Initiatives Center) University of San Diego School of Law Western Energy Policy Conference September 4, 2013
World Trade Organization Law GATT 1949: liberalization of global trade by..developing the full use of resources of the world WTO GATT 1994: raise standards of living while allowing for the optimal use of the world s resources in accordance with the objective of sustainable development
Relevant WTO Agreements GATT trade in goods TBT technical barriers SCM subsidies TRIMS trade related investment by governments
WTO Principles Non-discrimination Most favored nation treatment (GATT Art 1) National treatment (GATT Art III)
Subsidies A financial contribution by a government or public body That provides a benefit AND Involves a direct transfer Is revenue foregone for the government A government provides goods or services other than infrastructure Considered income or price support Or is any form of income or price support
Subsidies Must be specific. Then, subsidies can be Prohibited if contingent upon export performance or use of domestic v imported goods Actionable if cause adverse effects on the interests of other member states, injury or serious prejudice to the domestic industry (increase of global market share compared to average share of past 3 yrs), impair benefits conferred by tariff concessions
Exceptions GATT Environmental or human protection or conservation of natural resources (Art XX (b) (g)) TBT If legitimate objective protection of human health, animal/plant life, environment (Art 2.2) SCM No exceptions for actionable subsidies TRIMS Government procurement of products for governmental purposes and not with a view to commercial resale are not subject to national treatment
National environmental exceptions cases Herring Salmon (1988) - the Canadian Fisheries Act was not primarily concerned with conservation cannot be justified as a GATT env. exception Tuna dolphin cases (1991, 1994): US national conservation policies could not be applied extra-territorially; method of production of product could not be used to distinguish the product Taxes on automobiles (1994): US fuel efficiency standards to clean the air nonetheless in effect discriminated EC cars Reformulated gasoline (1996): a US policy primarily to conserve the air potentially justifiable under GATT env. exception but fails otherwise. Shrimp Turtle (1998): US policy concerned with an exhaustible natural resource was potentially justifiable as an environmental exception if it did not discriminate amongst members
Do UNFCCC obligations play any role?? All UNFCCC member states must - Implement climate mitigation policies - Measures should not be a means of arbitrary or unjustifiable discrimination or disguised restriction on trade Kyoto Protocol member states have specific quantitative obligations during 2008-2012 (EU, Japan)
Are climate change related WTO disputes related to climate change??? Date Title Complainan t 1999 Greenhouse Gas Controversy 2010+ 2011 Measures Affecting RE, Feed-in tariff Responden t Alleged Breaches EU/US Japan Japan s Top Runner Program (energy efficiency measure under Kyoto protocol) unnecessarily trade restrictive under TBT Japan, EU Canada Feed-in tariff domestic content rule violates GATT, SCM, TRIMS Status Unres. Panel, AB reports 2010 Wind power equipment US China Subsidies violate GATT, SCM Consult./w ithdrawn 2012+ 2013 Re biodiesels Argentina EU/member State Import restrictions based on sustainability criteria to reduce GHG by 35% is arbitrary and so violate GATT, TRIMS Consult. 2012 Re RE sector China EU FIT subsidies impair benefits, discriminate thus violate GATT; biofuels criteria arbitrary Consult. 2013 Re solar cells/modules US India Subsidies violate GATT, SCM, TRIMS Consult.
Canada s (Ontario s) FIT: Japan/EU v Canada (Decided) Canada s only defense: government procurement so falls under GATT exception Held: No, FIT is not government procurement so domestic content rule violates GATT/TRIMs but NOT SCM (no benefit had been shown to takers of subsidy) Issue: WTO decisions binding on states, not provinces what next? 9/23/2013www.sandiego.e du/epic
Argentina/EU re EU biofuels measures: (Consultations)..35% GHG reduction criterion is arbitrary..neither scientifically based nor a recognized international norm Issue: Can EU show that the criterion is scientifically based?
China/EU, Greece, Italy re promotion of RE measures, including biofuels measures (Consultations)..subsidy measures discriminate against Chinese like products impair benefits to China under GATT Issue: Can China show that FITs confer a benefit to electricity producers? If yes, such subsidies would be actionable under SCM. Biofuels sustainability criteria re GHG reduction is arbitrary and not based on scientific evidence
US/India re subsidies for solar cells and modules (Consultations) India s requirement for solar power developers to purchase and use solar cells and solar modules of domestic origin causes serious prejudice to the interests of the U.S. through displacement or impedance of imports of U.S. solar cells and solar modules into India and through lost sales of U.S. solar cells and solar modules in India... Issue: some Indian solar power projects are financed by US loans, themselves conditional on purchasing US products!
Conclusions Developing and developed countries have adopted similar national energy and climate mitigation policies Does not matter if member of Kyoto Protocol or not Climate change convention initiated race for RE/EE investment capital Climate change and environment play no legal role in WTO for defense of national energy policies WTO decisions will have effects on national climate and energy policies, and climate mitigation
Thank You! silvasend@sandiego.edu 619-260-2957 www.sandiego.edu/epic