Japan has filed a complaint with the World Trade Organization against Canada over requirements set by the provincial government of Ontario that allegedly favor local firms under a subsidy program to promote solar power generation.
To participate in the subsidy program, electricity suppliers in Ontario are required to use solar and wind power equipment that draw on a certain level of goods and services sourced from the province.
The requirements "clearly contravene" WTO rules that ban unfair treatment of imported products, excluding tariffs, an official Ministry of Economy, Trade and Industry said, noting that the complaint was filed after METI saw no signs of improvement even though Japan had called on Canada to review the matter.
"Solar panels or other equipment exported by Japanese companies to Ontario are less favorably treated than those locally produced," the ministry said in a news release.
"The Japanese government will conduct a formal bilateral consultation under the WTO with the Canadian government to solve this problem," it added.
The government decided to file the complaint to prevent the spread of similar protectionism across the world, which could heavily affect environment-related businesses such as solar panel makers, one of Japan's leading sectors, the official said.
Ontario's subsidy scheme, known as the Feed-in Tariff Program, was established in 2009.
Starting in 2011, the provincial government plans to raise the required level of locally sourced goods and services from the current 40 to 50 percent to 60 percent for solar projects, a move that could put Japanese companies at a further disadvantage, the METI official said.