The World Trade Organization appears to have upheld a complaint against the Province of Ontario’s green energy program.

The complaint was made by the EU and Japan, which claim the province's "feed-in tariff" program for its energy grid discriminates against foreign component manufacturers by declaring a minimum percentage of renewable energy goods and services be provided by Ontario-based companies.

According to the Green Energy Act, wind and solar projects in Ontario made between 2009 and 2011 must contain at least 25 per cent Ontario-made content, and projects coming on-stream in 2012 must be at least 50 per cent made in Ontario.

Free trade dispute

Japan and the EU alleged such tariffs are unfair, and a hindrance to free trade.

Although the WTO has yet to acknowledge any decision publicly, reports Monday suggest the affected parties have been notified of the organization's decision to side with the complainants.

Canada's two largest trade unions, the CAW and CEP, issued a joint statement Monday denouncing the ruling, for example. "Governments in Canada at every level must have the capacity to encourage local production through procurement policies," CAW president Ken Lewenza said.

"This decision aims to destroy the kind of inventive, creative job creation policies that are absolutely necessary to put our economy on the right foot and to prepare for the future."

The WTO ruling is non-binding, meaning Ontario could simply ignore it and not face any monetary punishment. But such a move would likely be met with the implementation of tariffs against any Ontario-made goods in Japan and the EU. That would also be especially unlikely against the backdrop of a federal government trying to iron out a comprehensive free trade agreement with the European Union.

For its part, the Province of Ontario was more diplomatic. "We will continue to explore all options to sustain these jobs and investments for Ontario's future, including working with the federal government towards an appeal," said Nauman Khan, a spokesperson for Ontario Energy Minister Chris Bentley.

"Our position on this issue remains that the [feed-in tariff] is consistent with Canada's WTO obligations."

The case is being viewed as a trial for many other attempts by governments to favour local producers in an effort to promote renewable energy projects.