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The World Trade Organization (WTO) denied the Canadian government's appeal on Monday regarding an earlier ruling that a mechanism in Ontario's feed-in tariff (FIT) program violates trade law, according to a Reuters report.

Last year, the European Union (EU) and Japan issued claims that the FIT program's domestic-content rules unfairly pressure Ontario renewable energy developers to purchase a designated amount of locally sourced materials for their projects, thus discriminating against foreign companies. In December 2012, the WTO deemed the incentives illegal.

Following its denied appeal, the Canadian government will need to adjust its rules, or it could face trade sanctions, Reuters says. A spokesperson for Canada's federal trade ministry told the news agency that the federal and provincial governments will work together to respond to the ruling.

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