CANADA – CERTAIN MEASURES AFFECTING THE RENEWABLE ENERGY GENERATION SECTOR NOTIFICATION OF AN OTHER APPEAL BY JAPAN UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
Document: AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
Date: 15 February 2013
Document codes: WT/DS412/11
Complainant: Japan
Respondent: Canada
Third parties: Australia, Brazil, China, El Salvador, EU, Honduras, India, Saudi Arabia, South Korea, Mexico, Norway, Taiwan, U.S.
Dispute stage: Appellate Body
Agreements cited: Art. XXIII:1  GATT 1994Art. 1.1, 3.1(b), 3.2  Subsidies and Countervailing Measures (SCM)Art. III:4  GATT 1994Art. 2.1  Trade-Related Investment Measures (TRIMs)

CANADA – CERTAIN MEASURES AFFECTING THE RENEWABLE
ENERGY GENERATION SECTOR
NOTIFICATION OF AN OTHER APPEAL BY JAPAN
UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES
AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),
AND UNDER RULE 23(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
 The following notification, dated 11 February 201 3, from the Delegation of Japan, is being
circulated to Members.

Pursuant to Article 16.4 and Article 17 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes ("DSU") an d Rule 23(1) of the Working Procedures for
Appellate Review ("Working Procedures"), Japan hereby notifies its decision to appeal to the
Appellate Body certain issues of law covered in the Panel Report in Canada – Certain Measures
Affecting the Renewable Energy Generation Sector () ("Panel Report"), and certain
legal interpretations developed by the Panel in this dispute.

 For the reasons to be elaborated in its submissions to the Appellate Body, Japan appeals the
following errors of law and legal interpretation contained in the Panel Report, and requests the
Appellate Body to reverse, modify, or declare m oot and of no legal effect the related findings,
conclusions and recommendations of the Panel, and where indicated to complete the analysis.
1

1. With respect to Japan's claims under the Agreement on Subsidies and Countervailing
Measures ("SCM Agreement"):

a. The Panel erred in its interpretation and application of Article 1.1(a) of the
SCM Agreement in concluding that the appropriate legal characterization of the
FIT Program and Contracts
2 is "government … purchases [of] goods". 3 Japan requests
the Appellate Body to reverse the Panel's finding in this regard, and complete the
analysis to find instead that the FIT Program and Contracts are appropriately
characterized as "a government practice [that] involves a direct transfer of funds … [or]
potential direct transfers of funds" or "any form of income or price support" or
alternatively modify the Panel's finding in this regard to find that these measures may
also be characterized as "direct transfer[s] of funds", "potential direct transfer of funds",
or "income or price support" under Article 1.1(a) of the SCM Agreement.

1 Pursuant to Rule 23(2)(c)(ii)(C) of the Working Procedures, this Notice of Other Appeal includes an
indicative list of the paragraphs of the Panel Report containing the alleged errors, without prejudice to the
ability of Japan to refer to other paragraphs of the Panel Report in the context of its appeal.
2 Throughout this Notice of Other Appeal, Japan uses the term "FIT Program and Contracts" to refer to
the Government of Ontario's feed-in tariff program (including microFIT), and the FIT and microFIT contracts
entered into by the Government of Ontario under that program, that are at issue in this dispute – i.e., the
"challenged measures".
3 Panel Report, paras. 7.220-7.249.

b. The Panel erred in its interpretation and application of Article 1.1(a)(1) of the
SCM Agreement by concluding that government "purchases [of] goods" under
Article 1.1(a)(1)(iii) could not also be legally characterized as "direct transfer[s] of
funds" or "potential direct transfer s of funds" under Article 1.1(a)(1)(i).
4 Japan requests
that the Appellate Body declare this finding to be moot and of no legal effect, and to find
that the Government of Ontario provides financial contributions in the form of "direct
transfer[s] of funds" or "potential direct transfers of funds" through the FIT Program and
Contracts, regardless of whether they may be characterized as government "purchases
[of] goods".
c. The Panel failed to make an objective assessment of the matter as required by Article 11
of the DSU by improperly exercising judicial economy, and failing to make findings with
respect to Japan's claim that the FIT Program and Contracts may be legally
characterized as "income or price support" under Article 1.1(a)(2) of the
SCM Agreement.
5 Japan requests the Appellate Body to find that the Government of
Ontario provides "income or price support" through the FIT Program and Contracts,
regardless of whether they may be characterized as government "purchases [of] goods".
d. The Panel erred in its interpretation and application of Article 1.1(b) of the
SCM Agreement, and failed to make an objective assessment of the matter as required
by Article 11 of the DSU, when it found that it cannot resolve whether the challenged
measures confer a benefit by applying a benchmark derived from the conditions for
purchasing electricity in a competitive wholesale electricity market, particularly in
disregarding Japan's argument that the challenged measures confer a benefit because
the objective design, structure and operation of the FIT Program demonstrates that solar
PV and wind generators would not be present in Ontario's wholesale electricity market
absent the FIT Program.
6 Japan requests the Appellate Body to reverse these findings by
the Panel and instead to find that the challenged measures confer a "benefit".
e. The Panel failed to make an objective assessment of the matter, including an objective
assessment of the facts of the case, as requir ed by Article 11 of the DSU, in failing to
resolve the question of benefit under Article 1.1(b) of the SCM Agreement based on its
preferred comparison between the relevant ra tes of return of the challenged FIT and
microFIT Contracts with the relevant average cost of capital in Canada.
7 Japan requests
the Appellate Body to complete the analysis, and find that the FIT Program and
Contracts confer a benefit under the Panel's preferred approach. However, this appeal is
conditional on the Appellate Body rejecting Japan's argument that the challenged
measures confer a benefit pursuant to item 1.d above.
f. Should the Appellate Body find the FIT Program and Contracts to be a subsidy within the
meaning of Article 1.1 of the SCM Agreemen t, Japan requests the Appellate Body to
complete the analysis, and find the FIT Program and Contracts to be inconsistent with
Articles 3.1(b) and 3.2 of the SCM Agreement.
g. In addition to its error in failing to find the FIT Program and Contracts to be prohibited
subsidies, the Panel erred in failing to recommend, pursuant to Article 4.7 of the
SCM Agreement, that Canada withdraw the subsidies without delay, by eliminating the
domestic content requirement of the FIT Program and Contracts, and erred in failing to
specify the time period within which the measures must be withdrawn.
Accordingly, if the Appellate Body completes the analysis and makes the findings
requested by Japan in item 1.f above, Japan further requests that the Appellate Body
make the recommendation, and specify the time period within which the measure must
be withdrawn, pursuant to Article 4.7 of the SCM Agreement.

4 Panel Report, paras. 6.83-6.85, 7.243-7.248, particularly paras. 7.246-7.247.
5 Panel Report, paras. 6.88, 7.249.
6 Panel Report, paras. 6.94-6.95, 7.271-7.313, 7.315, 7.317, and 7.319-7.320, particularly
paras. 7.308-7.313.
7 Panel Report, paras. 7.322-7.327.

2. With respect to Japan's claims under the General Agreement on Tariffs and Trade 1994
("GATT 1994"):

a. The Panel failed to make an objective assessment of the matter as required by Article 11
of the DSU by exercising false judicial economy and failing to separately examine Japan's
claims under Article III:4 of the GATT 1994. 8 Japan requests the Appellate Body to
complete the analysis, and find that the FIT Program and Contracts are inconsistent with
the terms of Article III:4 independent of the Panel's findings under the Agreement on
Trade-Related Investment Measures ("TRIMs Agreement").
b. The Panel erred in its interpretation and application of Article III:8(a) of the GATT 1994
in the following respects:
i. The Panel erred when it found the FIT Program and Contracts to involve
"procurement by governmental agencies of products purchased" under
Article III:8(a) of the GATT 1994, based on its conclusion that these measures are
"government … purchases [of] goods" under Article 1.1(a) of the SCM Agreement.
9
ii. The Panel erred when it interpreted the term "governmental purposes" in isolation,
rather than the entire term "purchased for governmental purposes", and failed to
separately assess whether purchases under the FIT Program and Contracts were
"for" governmental purposes. 10 Japan requests the Appellate Body to complete the
analysis, and find that the FIT Program and Contracts are not "purchase[s] [by
governmental agencies] for governmental purposes". However, this appeal is
conditional on the Appellate Body rejecting Japan's argument pursuant to item 2.b.i
above.
iii. The Panel erred when it found evidence of profit earned by the Government of
Ontario and Ontario's municipal governments may be a relevant consideration in
determining that the FIT Program is undertaken "with a view to commercial resale".
11
In this regard, Japan seeks only modification of the Panel's findings to conclude that
the Government of Ontario's procurement of electricity under the FIT Program and
Contracts is undertaken "with a view to commercial resale" by virtue of the fact that
the electricity "is resold to retail consumers through Hydro One and the LDCs"
12,
without regard to whether those entities make profits. However, this appeal is
conditional on the Appellate Body rejecting Japan's arguments pursuant to items
2.b.i and 2.b.ii above.
TRIMs Agreement and Article III:4 of the GATT 1994").
9 Panel Report, paras. 7.129-7.136, particularly paras. 7.135-7.136.
10 Panel Report, paras. 7.138-7.145, particularly paras. 7.140, 7.144-7.145.
11 Panel Report, paras. 7.146-7.151, particularly paras. 7.149-7.151.
12 Panel Report, para. 7.147.