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Nihil novi sub sole: The Need for Rethinking WTO and Green Subsidies in Light of United States – Renewable Energy

Published online by Cambridge University Press:  22 June 2021

Douglas Nelson  and
Laura Puccio
Douglas Nelson*
Affiliation:
Murphy Institute and Department of Economics, Tulane University, New Orleans, USA
Laura Puccio
Affiliation:
European University Institute, Fiesole, Italy
*
*Corresponding author, Email: dnelson@tulane.edu
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Abstract

US–Renewable Energy is the last in a series of WTO disputes involving subsidies schemes with local content requirements. Local content requirements (LCRs) are highly discriminatory and trade distortive instruments and therefore all cases concerning green energy have been found to violate WTO law. However, recent jurisprudence has developed a different definition of prohibited LCRs under the GATT and the SCM agreement, the latter allowing for some leeway to define origin of products under a government subsidy scheme. Depending how the subsidy scheme is framed, it will be able to be excused from the GATT's more stringent prohibition of LCRs, this raises question of consistency in the application of the LCRs prohibition. Moreover, we review a simple and robust approach that modern welfare economics suggests for framing discussions of subsidy policy. We apply this approach to the case of renewable energy subsidies and discuss some complexities with respect to local content requirements. In conclusion, this allows us to critically assess and review proposals to increase coherence between WTO subsidy policy and green energy promotion policies and submit proposals to achieve better suited WTO subsidy rules.

Keywords

WTO lawrenewable energysubsidieslocal content requirementsgreen taxationgreen energy promotion
Type
Original Article
Information
World Trade Review , Volume 20 , Special Issue 4: WTO Case Law , October 2021 , pp. 491 - 508
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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