International Trade Disputes on Renewable Energy: Testing Ground for the Mutual Supportiveness of WTO Law and Climate Change Law

• DOI: http://doi.org/10.1111/reel.12092
• Author: Kati Kulovesi
• Date: 01 November 2014
• Published date: 01 November 2014

International Trade Disputes on Renewable Energy:

Testing Ground for the Mutual Supportiveness of

WTO Law and Climate Change Law

Kati Kulovesi*

This article explores the relationship between renew-

able energy support policies and World Trade Organi-

zation (WTO) law on unfair trade practices. It analyzes

the Canada-Renewable Energy case at the WTO, where

an open conflict between trade rules and climate policy

was arguably avoided only through a heavily criticized

interpretation of the definition of subsidies by the WTO

dispute settlement bodies. It draws attention to broader

challenges in the relationship between renewable

energy support policies and the current WTO subsidies

law. The article also discusses the AD590-Solar Panels

trade dispute between the European Union and China,

examining the complex relationship between cheap

solar panel exports, anti-dumping duties and EU

climate policy objectives.

THE WTO AND CLIMATE CHANGE:

FROM ABSTRACT DEBATE TO

CONCRETE CONFLICTS?

Renewable energy is emerging as a prominent trade

issue. Viewed in the context of the 20-year history of the

World Trade Organization (WTO), it is arguably guiding

the trade and environment debate towards those areas

of WTO law dealing with unfair trade practices. Building

on the tuna-dolphin1and shrimp-turtle2cases, the trade

and environment debate has traditionally tended to

focus on trade bans and other environmentally moti-

vated trade measures targeting processes and produc-

tion methods (PPMs). Analogous legal questions have

thus far dominated the discussion on the WTO and

climate change, where trade bans and border carbon

adjustments (BCAs) feature among the key topics.3

However, the continuing scholarly emphasis on such

politically controversial but practically non-existent

climate policies seems disproportionate in the current

climate policy context.4The idea of trade bans and BCAs

gained prominence in a particular historical situation

where the free-rider problem in global climate policy

was particularly eminent.5Notably, there are no current

examples of such climate policies; partly because trade

bans and BCAs are not considered to be the most effec-

tive means to mitigate climate change; and partly

because all major emitters have subsequently started

implementing domestic policies to reduce greenhouse

gas emissions, making finger-pointing more difficult.6

By contrast, government policies to boost renewable

energy and clean technology are emerging as the most

concrete testing ground for assessing the mutual

supportiveness of WTO rules and climate change law.7

Renewable energy plays an important role in the

climate policy portfolios of key greenhouse gas emit-

ters, including Brazil, China, the European Union (EU)

* Corresponding author: Kati Kulovesi, Centre for Climate,

Energy and Environmental Law, School of Law, University of

Eastern Finland, PO Box 111, FI-80101 Joensuu, Finland. Email:

kati.kulovesi@uef.f‌i

1GATT Panel 3 September 1991, United States – Restrictions on

Imports of Tuna, DS21/R-39S/155.

2WTO AB 12 October 1998, United States – Import Prohibition of

Certain Shrimp and Shrimp Products, WT/DS58/AB/R.

3See, e.g., T. Epps and A. Green, Reconciling Trade and Climate:

How the WTO Can Help Address Climate Change (Edward Elgar,

2010), at 56 and 122; L. Tamiotti, ‘The Legal Interface between

Carbon Border Measures and Trade Rules’, 11:5 Climate Policy

(2011), 1202; S. Monjon and P. Quirion, ‘A Border Adjustment for the

EU ETS: Reconciling WTO Rules and Capacity to Tackle Carbon

Leakage’, 11:5 Climate Policy (2011), 1212; and R. Leal-Arcas, ‘Uni-

lateral Trade-related Climate Change Measures’, 13:6 Journal of

World Investment and Trade (2012), 888.

4K. Kulovesi, ‘Real or Imagined Controversies? A Climate Law Per-

spective on the Growing Links between the International Trade and

Climate Change Regimes’, 6:1 Trade Law and Development (2014,

forthcoming).

5Ibid.

6Ibid.

7This is also ref‌lected in recent publications. See, e.g., A. Cosbey

and P.C. Mavroidis, ‘A Turquoise Mess: Green Subsidies, Blue Indus-

trial Policy and Renewable Energy: The Case for Redrafting the

Subsidies Agreement of the WTO’, 17:1 Journal of International Eco-

nomic Law (2014), 11; R. Pal, ‘Has the Appellate Body’s Decision in

Canada-Renewable Energy/Canada-Feed-in Tariff Program Opened

the Door for Production Subsidies?’, 17:1 Journal of International

Economic Law (2014), 125; L. Rubini, ‘Ain’t Wastin’ Time No More:

Subsidies for Renewable Energy, the SCM Agreement, Policy Space

and Law Reform’, 15:2 Journal of International Economic Law (2012),

525; R. Leal-Arcas and A. Filis, ‘Certain Legal Aspects of Multilateral

Trade System and the Promotion of Renewable Energy’, in: C.L. Lim

and B. Mercurio (eds.), International Economic Law after the Crisis: A

Schizophrenic Science (Cambridge University Press, 2014, forthcom-

ing), found at: <http://papers.ssrn.com/sol3/papers.cfm?abstract

_id=2380517>; L. Rubini, ‘What Does the Recent WTO Litigation on

Renewable Energy Subsidies Tell Us about Methodology in Legal

Analysis’, 48:5 Journal of World Trade (2014), 895; A. Kent, ‘The

WTO Law on Subsidies and Climate Change: Overcoming the Dis-

sonance?’, 5:2 Trade Law and Development (2013), 344.

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Review of European Community & International Environmental Law

RECIEL 23 (3) 2014. ISSN 2050-0386 DOI: 10.1111/reel.12092

© 2014 John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

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