EU Protests Taiwan’s Local Content Rules for Offshore Wind Farms

The European Union has filed a formal challenge to a longstanding Taiwanese directive that requires offshore wind developers to source most of their components locally. Last week, the EU requested for dispute settlement consultations at the World Trade Organization (WTO).

In 2021, Taiwan’s Ministry of Economic Affairs published a localization policy to spur development of the domestic offshore wind supply chain. The policy applied during Taiwan’s Round 3 offshore wind tenders, with the first phase completed in December 2022. As per the local requirement rules, at least 60 percent of parts used in offshore wind farm development must be sourced locally, except products and services that the Taiwanese supply chain cannot readily provide.

However, the EU argues that the localization criteria is inconsistent with WTO regulations, which require that member countries such as Taiwan should not discriminate against imported goods and services.

The dispute settlement consultations that the EU is requesting are the first step in WTO dispute settlement proceedings. If they do not lead to a satisfactory solution within 60 days, the EU can request the WTO to set up a panel to rule on the matter.

Taiwan has responded that it will participate in the talks with the EU in resolving the trade dispute. “Our foreign mission has been tasked with discussing the concerns over the policy with the EU. Again, the Minister of Economic Affairs J.W Kuo had already said that Taiwan would relax its local content criteria for windfarm projects,” said the Ministry of Economic Affairs.

Taiwan has defended the policy, arguing that it is critical to its national and energy security. In addition, it is meant to encourage foreign developers to cooperate with domestic players, especially in the field of research and development.