Flury of WTO domestic regulatory autonomy cases continues: Ontario’s feed-in tariff program illegal

Just before the Christmas break, a WTO Panel ruled at the request of Japan and the EU that Ontario’s feed-in tariff program is illegal under the GATT and TRIMs agreement.  Feed-in tariff programs are a popular means to boost renewable energy. Typically, they imply that producers of renewable energy are nurtured through preferential, long-term and advantageous electricity purchase contracts (either through obliging private electricity distributors to enter into such contracts, such as in the infamous European PreussenElektra case, or such as in the case of Ontario’s law, through employment of a Government Agency which enters into these contracts). Governments are often tempted to throw ‘local content requirements’ into the mix: in the case of Ontario, domestic content requirements must be complied with in the design and construction of the relevant electricity generation facilities utilizing solar photovoltaic and wind power technology in order to qualify for guaranteed electricity prices offered under the FIT Program.

The Panel rejected the EU’s claim with respect to Subsidies, however it did accept that the regime infringed GATT Article III, as well as the Agreement on Trade-Related Investment Measures. The former to me was no great surprise. Infant industry arguments are often made with respect to renewable energy however these do not in my view carry much weight with respect to either solar, wind or hydropower. The finding on TRIMS is encouraging: it shows that the Agreement (I sometimes dub it a mini-MAI) does have some bite.

The EU has had internal issues with feed-in tariffs and the like (see e.g. my paper here on (di)similarities between EU and WTO law on the matter), and (update 5 May 2015) in the UK the Courts are considering the extent to which Article 1 of the first Protocol to the European Conention on Human rights (‘A1P1’), which protects property, shields investors in solar energy from changes in feed-in tariffs.


Size does matter. The European Chemicals Agency bans those who wrongly declare themselves small.

Under the European Union’s regime on chemicals (REACH), companies manufacturing or importing chemical substances have to notify considerable amounts of data to the European Chemicals Agency (ECHA). Under the general ‘no data, no market’ rule, those chemicals for which no appropriate risk assessment and risk management has been carried out, cannot be put on the market. What may seem a futile part of compliance – paying the correct registration fee – has now come back to haunt several companies.

ECHA’s machinery needs to be financed. Companies registering substances under REACH to that end pay a registration fee. Micro or small and medium sized enterprises (SMEs) receive a discount. Those incorrectly classifying themselves as small, have now had their comeuppance: ECHA has rejected their registrations, effectively meaning that the companies involved can no longer manufacture or import the substance above one ton per annum.

Lessons are clear. Firstly, one should always be careful with statements of size. Secondly, ECHA bites. It is one of only a few of the European Union’s Agencies which is truly ‘regulatory’ (also on issues of chemicals policy much more relevant than size).



International standards, Codex and a new SPS dispute in the making: EU US (Ractopamine)

Alberto Alemanno reports on some crucial developments in the development of international SPS standards. Prof Alemanno links to recent EU Agriculture Council conclusions which are a treasure trove of issues linked to the WTO’s room for domestic regulatory autonomy.

In brief, the FAO/WHO’s Codex Alimentarius Committee adopted limits for the use of ractopamine (a veterinary drug used to pimp pigs) which are more lenient than the EU’s (albeit stricter than those of the US). While the WTO Agreement on Sanitary and Phytosanitary Standards – SPS, encourages WTO Members to apply standards which conform with international standards, it also allows for recourse to the precautionary principle in the case of scientific uncertainty (Article 5.7).

The EU Ministers have decided to continue employing its own, stricter standard, and have instructed the European Commission to ensure that exporters to the EU that employ a weaker standard, set in place a parallel system for export to the EU (one which guarantees that the EU’s stricter standard is being abided by in export to the EU).

The EU’s resolve on this issue is firm. The likelihood of a challenge under the WTO Dispute Settlement very high. As Alberto points out, even in Beef Hormones, Article 5.7 was not employed. Before a WTO Panel would come to that, it would also have to assess the qualities of the relevant Codex decision as an international standard, given the slim majority with which it was adopted (which brings back memories of EC Sardines).

Risk management never fails to pop up on time for first term exam questions.


Things are brewing in nano land – European parliament calls for tougher action in wake of national initiatives

The European Commission has recently unveiled a second, updated review of the application of the existing regulatory framework, to nanotechnologies (see here for a link to all relevant studies; and here for an overview of my own work on nano regulation; where possible, they are on ssrn). The first, in  2008, identified the ‘incremental’ approach as the option which the EU would take in regulating nanotechnologies. The second, just out, well, basically confirms this: the Commission continues to be of the view that there is no basis in EU law to apply a moratorium, or some kind of ‘no data, no market’ principle. It is quite happy with the definitional approach in current EU legislation. Finally it uses the accompanying staff working document to give an overview of current initiatives, databases, existing commercial use etc [incidentally, for the uninitiated, staff working documents  unlike they rather innocent name, in reality tend to be much more relevant than the actual Communications; they are not subject to translation requirements, escape strict word limits therefore, and tend to be much more detailed].

Quite a bit of attention goes to REACH, the Chemical policy Regulation, and its impact on nanotechnologies, however as the staff working document indicates, there might be other areas of the law, in particular with respect to occupational health and safety, which would have to (indeed are being) looked at more carefully. Frankly, the approach to the regulation of nanotechnologies is a bit like driving a minivan in one of these underground parkings: even if one has checked the maximum height (and the manual of your car confirms one does not exceed it), one still is a little bit tense driving in.

The Greens in the European Parliament have never been convinced of the incremental approach and gave indication of such in their reaction to the new report. Dome EU Member States such as France and The Netherlands would like to see regulation at a quicker pace – starting with transparency as to what is already on the market.

Continuing the minivan reference above: manuals can be wrong, height indicators at parkings ditto: one might end up badly scratching the car or indeed getting it stuck. Late lessons from early warnings comes to mind.



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