BRUSSELS/GENEVA (Reuters) - Canada has lost an appeal at the World Trade Organization in a landmark case over incentives offered to local companies, the European Union said on Monday, ahead of the official publication of the appeal decision.
Japan and the European Union brought the case over a scheme intended to promote renewable energy in the province of Ontario.
They said the incentives were illegal because they discriminated against foreign firms, a complaint that was upheld by a WTO adjudication panel in December 2012.
"Today's ruling is good news for everyone caring about clean energy and the environment: it has been made clear that use of quality, cost-effective technologies should not be hampered by protectionist measures," EU trade spokesman John Clancy said in a statement.
"The EU supports the promotion of renewable energy but considers this must be done in a manner consistent with international trade rules."
A spokesman for Canadian Trade Minister Ed Fast said he would react to the WTO appeal ruling later in the day.
If confirmed, Canada's defeat may spur more WTO disputes by countries which are desperate for economic growth and suspect their firms are being illegally locked out of infrastructure projects abroad.
The United States has charged India with illegally favoring local producers in its solar sector and other potential disputes are simmering, with Brazil, Indonesia, Nigeria, Russia, Ukraine and the United States all under scrutiny in sectors ranging from carmaking to telecoms.
(Reporting by Robin Emmott in Brussels and Tom Miles in Geneva; additional reporting by David Ljunggren in Ottawa; Editing by Michael Roddy)