Academic journal article Chicago Journal of International Law

Renewable Energy Subsidies and the GATT

Academic journal article Chicago Journal of International Law

Renewable Energy Subsidies and the GATT

Article excerpt

Table of Contents

I. Introduction ..........704

H. The Emergence of Renewable Energy Industries .......... 704

A. Chinese Support of Renewable Energy .......... 705

B. The United States and Renewable Energy .......... 706

ni. The Legal Landscape .......... 709

A. Agreement on Subsidies and Countervailing Measures .......... 710

B. Article XX .......... 712

IV. Analysis of Renewable Energy Subsidies in the Current WTO Framework ..........715

A. Feed-In Tariffs .......... 716

B. Solar Panels .......... 718

C. General Article XX Analysis .......... 720

V. Creating a Model for Renewable Energy Based on the Agreement on Agriculture .......... 722

A. The Agreement on Agriculture .......... 722

1. The box classifications .......... 723

2. The Agreement on Agriculture does not apply to renewable energy...725

B. A Renewable Energy Model .......... 726

1. A comparison of the agricultural and renewable energy industries .......... 726

2. A renewable energy box method .......... 727

C. Barriers to an Agreement .......... 727

VI. Conclusion .......... 728

I. Introduction

In a world of limited resources, renewable energy is increasingly important on the global stage. Developing countries, such as China, have increased their investment in renewable energy technology in order to reduce their dependence on fossil fuels and advance their economies.1 More developed countries, such as the United States, are also interested in this sector for reasons that include environmental issues, job creation, and energy independence.2 While there is private involvement in these industries, government support can be necessary for realizing such large-scale investments.3 Moreover, as countries become financially involved with the private sector actors in these industries, their governments' support thereof can implicate international agreements on free trade. The fact that current international trade law does not have a tailored treatment for renewable energy creates difficulties when countries look to invest in these technologies. Importantly, developing countries suffer the greatest difficulties under the current scheme because of international law's focus on encouraging principles of free trade and therefore only permitting subsidization of programs whose sole focus is environmental preservation. China's creation of various renewable energy programs shows the inherent conflict between the existing World Trade Organization (WTO) regime and the twenty-first century's unquenchable demand for energy.

This Comment will first discuss the emergence of renewable energy in the global economy, focusing on examples in China and the United States. It will then explain how WTO agreements currently address the issue, and discuss the problems facing countries that attempt to support their domestic renewable energy industries under this framework. Finally, this Comment will propose the creation of a new WTO agreement on renewable energy modeled after the Agreement on Agriculture's box system.

II. The Emergence of Renewable Energy Industries

Renewable energy industries are not isolated to either the developed or developing world. But a country's development status does impact how important renewable energy is to the country because developed and developing countries have different energy infrastructures, needs, and priorities.4 Developing countries such as China are potentially focused on renewable energy as a vital cost-saving mechanism to help them continue developing, whereas developed countries such as the United States may see it as more of an environmental issue. The WTO's prioritization of one worldview over the other in-its policies is therefore extremely important when considering how different countries think about these issues.

A. Chinese Support of Renewable Energy

China is extremely dedicated to expanding its renewable energy capabilities. …

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