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Macron’s misfortune spells trouble ahead for EU trade

Politico | 22 June 2022

Macron’s misfortune spells trouble ahead for EU trade

By Giorgio Leali and Barbara Moens

PARIS — The resurgent political forces on the left and right of French politics disagree on most things, but on one core issue they are united: Brussels should cancel its plan to strike more free-trade deals.

After robbing French President Emmanuel Macron of his parliamentary majority, these opposition parties will now try to impose their protectionist will on France — and on trade policy across Europe.

France’s National Assembly election complicates an already fraught situation for officials working on the European Union’s trade agenda. The bloc is seeking to recalibrate its trade policy in the context of a pandemic and a war that have upended global supply chains and caused havoc on international commodities markets.

Pro-commerce governments in the EU had been hoping that with Macron safely reelected as president, free-trade negotiations with the likes of Australia, New Zealand, Mexico and Chile would resume at pace.

But Sunday’s election in France saw trade-skeptic parties win huge support. The left-wing NUPES coalition backed by anti-establishment leader Jean-Luc Mélenchon and Marine Le Pen’s National Rally will be the second and third biggest political forces in the parliament, after Macron’s camp lost more than 100 lawmakers.

The NUPES coalition — which brings together the far-left France Unbowed, the Greens, the Communists and the Socialist Party — is set to align with Mélenchon’s radical approach on EU affairs and trade. “Free-trade deals are an obstacle to reaching our ecological objectives, they fuel social dumping and encourage delocalizations,” NUPES’ programme reads.

At the other end of the political spectrum, there’s Le Pen.

In her program, the far-right leader pledged to exclude agricultural products from trade deals and, as a result, to stop the ratification of the EU-Canada agreement and to suspend its provisional application. Le Pen also proposed to stop trade talks with Australia and New Zealand and to block the ratification of the deal with the Latin American bloc of Mercosur countries.

The EU’s trade deal with Canada, known as CETA, has not yet been formally endorsed by French lawmakers, but is already in force on a provisional basis.

Last time it was on the French parliament’s agenda was more than a year ago, when communist senators urged Macron’s government to open a parliamentary debate on the Canada deal just to get an opportunity to strike it down.

France’s trade minister Franck Riester on Wednesday said he will defend the benefits of CETA when the trade deals are next discussed in parliament. He also hoped that future agreements, with stricter environmental obligations could face less opposition from trade-skeptic parties.

If the government draws MPs’ attention to "all those trade policy points which are delicate and are evolving at the European level, maybe lines will change, we will see," Riester told reporters on Wednesday. The French minister pledged to show lawmakers that there has been "a very clear evolution on trade deals."

His comments came as the European Commission proposed toughening up rules in future trade agreements to ensure partner countries stick to their promises on meeting environmental standards.

Rien de rien

Macron himself gave off a protectionist vibe as he sought reelection, while holding the rotating presidency of the Council of the EU. During the six-month period of France’s presidency, Paris made no efforts to push forward negotiations of new deals and instead successfully focused on trade defense measures.

As Macron will now need support from MPs outside his party to get his plans through parliament, many observers now believe there is little chance that he will change his approach to trade and back EU efforts to strike new deals.

"The prospects are not good at all," said Elvire Fabry from the Jacques Delors Institute think tank. "I don’t see the French government using its political capital on trade agreements, especially in the short term."

Fabry expects the French parliament to be extremely vigilant on trade deals, even when it comes to steps that are technically in the hands of the European Commission, such as making progress on the EU’s deal with Chile.

This is bad news for the bloc’s free-traders, who had hoped to turn the page on French objections after the presidential election.

Beyond France, momentum has been growing for a revival of the bloc’s free-trade agenda. The next presidencies will be held by the Czech Republic and Sweden, two firm believers in the benefits of global commerce.

Russia’s war in Ukraine has also given the EU’s free-traders a new sense of purpose. For them, the disruption flowing from the invasion shows the EU needs to open up to other parts of the world to diversify its suppliers in new markets.

On Monday, 15 EU countries sent a letter to the EU’s trade chief Valdis Dombrovskis urging him to step up work on the conclusion and ratification of EU trade deals. A first milestone could happen as soon as the end of this month, when the prime minister of New Zealand travels to Brussels and is expected to conclude the ongoing negotiations with the EU.

But — crucially — trade deals have to get enough support in the Council, where France still has a lot of political weight. And countries such as New Zealand and Australia are primarily seen as agricultural importers in Paris, Fabry warned. "At this point, it’s not easy for the French government to invest political energy on the geopolitical dimensions of these deals."

One EU diplomat from a more free-trading country sighed when asked about the impact of the French deadlock on the EU’s trade policy. "We finally thought we could make some progress," the diplomat said. "This is just terrible."

This article is part of POLITICO Pro

 source: Politico