GENEVA (Reuters) - The European Union has escalated a trade dispute over Canadian provincial rules for solar and wind energy subsidies by asking the World Trade Organization to set up a panel to rule on the case, the WTO said on Wednesday.
The EU's decision to resort to legal measures against Canada, after the failure of direct talks to settle the dispute, will come as little surprise because Japan has already trodden the same path in an identical case.
The EU and Japan say the Canadian province of Ontario is illegally restricting trade by giving an subsidy to local producers of renewable energy equipment and services.
The scheme guarantees above-market energy prices for renewable power that uses a certain amount of Canadian-made equipment or services, a provision that the complainants say is against the WTO's rules.
The EU says Ontario's scheme demands solar projects must have 40 percent of their initial development made up of local products and services, while wind energy needs 25 percent.
The EU has put the request for a dispute panel on the agenda of the WTO's Dispute Settlement Body when it meets on Friday January 20, six months after a panel was set up to adjudicate on Japan's complaint against Canada.
Last August, Ontario Energy Minister Brad Duguid defended the policy, saying it would create jobs and complied with WTO rules.
"We're now seen as the world leader and, when you're in that position, you're going to have other jurisdictions looking somewhat enviously at what's being achieved here," he told Reuters at the time.
Since Ontario launched its scheme, a number of domestic and foreign companies including South Korea's Samsung C&T have announced plans to set up multibillion-dollar operations in the province, most likely to benefit from the guaranteed prices.
Reporting by Tom Miles