France Planning to Introduce WTO-Violating FIT Premiums

This article at rechargenews writes this about recent French plans for reforming the FIT system:

Delphine Batho, head of the ministry of ecology, sustainable development and energy, also confirmed a 10% bonus for sub-100kW systems that use modules manufactured in the EU – a decision certain to raise the temperature in Europe’s simmering solar trade dispute with China.

I am not sure how that is supposed to be compatible with the prohibition of discrimination against foreign produced goods in GATT.

Maybe the French know that and have decided to just do it anyway.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

6 thoughts on “France Planning to Introduce WTO-Violating FIT Premiums

  1. You’re right this is clearly illegal. But at the moment it’s not a law, or anything like that, just a declaration of intent. Several things could happen.

    – One of them, actually the most likely one, is that they later come back very quietly saying that after all they checked, and that hum, European laws actually forbids to do that, so they’re very sorry but they won’t be able to implement it.

    – Another, less likely, is based on the fact the declaration actually says 10% “according to the origin of the panels.”
    This could end up as “according to some performance criteria that the place where the panel is manufactured respects”, which in effect discriminates against China without explicitly referencing to any specific place.
    For example, it could says that only panels that can prove they have been manufactured using low carbon electricity can claim this 10% bonus. The low carbon threshold could easily be set so that only a few countries like France and Sweden comply, and certainly not China with a very large percentage of coal in it’s electricity.

    Like

  2. It would be not illegal under EU law, but under WTO law (or GATT, to be specific).

    For GATT discrimination, it doesn’t matter if you try to do only factual discrimination (as in your scenario 2). Illegal in both cases.

    But they could do it anyway, then wait for China and Japan to start the dispute settlement procedure under WTO rules, and keep the illegal discrimination for a couple of years while the procedure works itself through the system.

    There is a case where Japan complains about a 60% local content rule in the FIT in Canada where a panel report is due in November.

    Like

  3. I’ve just read that Italy has a similar 10% bonus. Maybe the idea is to fly under the radar, that 10% doesn’t really change things enough to justify the complexity of a WTO complaint.

    But I’ve heard installers saying there’s actually a 50% price difference between a Chinese and an European panels, so the 10% would change nothing except being just a tax, giving money with the FIT on one hand, but taking some of it back with the other hand.

    Like

  4. Even if China or Japan complains, that takes a couple of years, and in the meantime the illegal bonus is paid. And there are no damages claims under WTO rules. So the French government might just go ahead anyway.

    Like

    1. This is not good news for the dispute settlement mechanism if it cannot act as a deterrent enough for WTO inconsistent national legislations or regulations. There is a strong case for retrospectively of relief in case of WTO cases.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: