The EU has filed a dispute against the UK at the World Trade Organization (WTO) over British state aid for offshore wind farms.

According to the EU, the UK’s procedures for granting subsidies unfairly favour British products and suppliers over foreign competitors.

The dispute is the first between the EU and the UK involving the WTO since the end of the Brexit transition period in December 2020, the FT reports.

National treatment principle

Since December 2021, the UK has asked bidders for green energy contracts to outline how much of the contract’s value will be produced in the UK.

The EU argues that this incentivises operators to favour UK content in their applications, which the WTO’s ‘national treatment principle’ prohibits.

According to the WTO, the rule means that “imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents.”

The UK has said it will “rigorously contest” the EU’s case.

Dispute process

According to the WTO, there are three main stages to a dispute settlement:

• consultations between the parties within 60 days of the case being lodged
• adjudication by panels and, if applicable, by the WTO’s Appellate Body
• the implementation of the ruling, which includes the possibility of countermeasures in the event of failure by the losing party to comply

Even if the EU wins its case, the UK could appeal this decision.

Lengthy process

As noted on an IOE&IT webinar in December 2021, WTO-level disputes can take years to resolve.

The longest-running case on record at the WTO was a disagreement between the US and EU over aviation subsidies. This dispute ran for 17 years with a resolution only reached last year.

UK strategy

The FT reports that the UK is looking to double its wind generating capacity and triple solar power output by 2030.

A forthcoming energy security white paper will include the ambitious new targets, underlining the UK move to sustainable sources of energy.