The European Union and Taiwan have reached an understanding on a dispute at the World Trade Organization (WTO) that was initiated by the EU over Taiwan’s offshore wind auctions, more specifically, the requirements for domestic content.
In July this year, the EU requested consultations at the WTO concerning Taiwan’s use of local content criteria for offshore wind projects, which formally initiated a dispute at the WTO.
In 2021, Taiwan’s Ministry of Economic Affairs (MOEA) published a localisation policy for the first phase of its Round 3 offshore wind tenders which was completed in December 2022. According to the regulations, at least 60 per cent of the components used in offshore wind farm projects were required to be procured locally, unless the Taiwanese supply chain was unable to supply the necessary products or services.
At the WTO, the EU argued that Taiwan’s local content eligibility and award criteria in energy capacity allocation auctions for offshore wind farms were inconsistent with its WTO commitment to not discriminate against imported goods and services.
The EU also said that by discriminating against non-Taiwanese goods and services, the local content requirements meant efficiency losses and price increases, ultimately making the energy transition more difficult and costly and therefore hindering global climate ambitions.
Taiwan has now committed to introducing greater flexibility in the way the winning projects from the latest auction are taken forward, which will effectively address past implementation difficulties faced by offshore wind developers, including those from Europe, the EU Directorate-General for Trade said in a press release on 8 November.
Taiwan has also committed to no longer include localisation requirements in allocation rounds, either as eligibility conditions or as award criteria.