Palm Oil Monitor – Weekly Update 22nd May 2018

RCEP Negotiations Move at Glacial Speed

The most recent round of RCEP negotiations wound up in Singapore on May 8. There has been little information – from anyone – on what happened in the negotiations. This does not bode well; in the case of trade agreements, no news can often mean bad news.

ASEAN leaders have stressed that they wish to see the negotiations completed at the end of 2018, but we have heard this sort of promise many times before since negotiations commenced in 2012.

The key potential gain for palm oil under the RCEP agreement will be greater access to the Indian market.

Is this possible?

In March of this year India raised its applied tariffs on crude palm oil to 44 percent from 30 percent and on refined palm oil to 54 percent from 40 percent.

This brought their applied tariff into line with the ASEAN-India FTA (AIFTA), which has the same applied rates. They are set to be reduced further next year.

Why the change to the applied tariffs? It was highly likely that most exporters were using the lower, WTO applied rates rather than the AIFTA rates.

India’s WTO bound tariff on both is a steep 300 percent. This means that at any point, India can raise the price of palm oil imports. In the early 2000s they were as high as 92 percent.

India’s rate on soybean oil is set at 45 per cent, so as of next year the playing field will be more level. It also means that Indian authorities have less room to tinker with import settings.

But this also highlights the overwhelming need for exporters to make greater gains in the Indian market under RCEP. India’s vegetable oil consumption will continue to increase with its rising wealth; its domestic producers will not be able to meet that demand. India already imports 70 per cent of its edible oil.

The problem now for Malaysia and Indonesia is that India appears to be giving up close to nothing in the negotiations – India is particularly concerned about Chinese access. Some are even talking of going ahead without India. This would be a loss for palm exporters, but a gain for the agreement.

European oilseeds producers go on the offensive  …

European oilseed producers have hit out with aggressive statements on the future of European biofuels policy.

The industry has launched a paid advertising campaign on the European Politico site, and has released a series of statements articulating their position.

The European Oilseed Alliance – via Politico – calls on the EU’s biofuels policy to be saved, basically by banning palm oil from the Renewable Energy Directive revision (RED II).

While the EOA can’t point to specific inferior environmental performance of palm oil, they note that palm’s share of EU biodiesel production has gone from 10 per cent in 2007 to 27 per cent in 2017. Palm has genuinely swept the EU market, while also meeting the EU’s sustainability standards.

The Association of the Producers and Use of Biofuels in Slovakia, representing oilseed growers in Poland, Czech Republic, Hungary, Slovakia, Lithuania, Latvia and Bulgaria has called for an outright ban on palm oil.

It states:

“Ban on palm oil and all its derivatives

Palm oil drives peatland drainage, and peatland drainage is a far more devastating climate event than any other land use change, including all other forms of tropical deforestation due to soil oxidation, which results in an order of magnitude greater amount of GHG emissions than simple deforestation. We applaud the EP decision to ban palm oil and note that a ban must have a reason in order to withstand any legal challenge. Therefore, we call to clearly state that palm oil is banned based on it being the only biofuel feedstock whose expansion is synonymous with soil oxidation. Accordingly, a policy that aims to limit peatland drainage, will apply also to all other forms of palm (derivatives such as POME and PFAD)”.

The problem with the position – which has clearly been influenced by various NGO positions – is that ‘guilt by association’ doesn’t work in international law: Not all palm oil is produced from drained peatland.

This particular exchange is reminiscent of the EU’s attempt to ban crude oil from Canada’s tar sands in 2012. Greener MEPs pushed the line that oil from tar sands was ‘dirtier’ than conventional crude. Much of the analysis was produced by Transport and Environment, arguably the most vocal NGO supporting the palm oil ban.

… And palm oil producers do the same

The activities of palm oil producers in the Holy See and Italy stepped up this week after meetings at the Vatican in the week prior.

Malaysia, Indonesia and the Holy See held a conference, “Eradicating Poverty Through Agriculture and Plantation Industry to empower Peace and Humanity”.

Officials included Luhut Pandjaitan (Coordinating Minister for Maritime Affairs of the Republic of Indonesia), and Tan Sri Bernard Giluk Dompok (Malaysia’s Ambassador to the Holy See), as well as Governor of Edo State in Nigeria, Mr. Godwin Obaseki.

The key takeaway was simple:

… Oil palm cultivation has contributed significantly towards raising the income level of rural small farmers, addressing poverty, employment creation, and new business opportunities. Besides that, it was also underlined that palm oil is also an important component of the global food supply chain from developing economies in particular among the vegetable oils traded globally, and that the future development of palm oil cultivation and palm oil industry shall be based on sustainable practices that takes into account environmental as well as social considerations in order to create a balance between economic growth, better employment and income for the small holders.

The meeting was held under the auspices of the Dicastery for Promoting Integral Human Development. This is a relatively new initiative, introduced by Pope Francis in 2016.

The Dicastery takes on one of the Vatican’s core missions in relation to hunger and poverty relief. It is overseen by Cardinal Peter Turkson, originally from Ghana.

The Dicastery’s work isn’t particularly new; the Vatican has had a long history promoting agricultural investments and the work of smallholders. It’s also not surprising they are taking on this work in the region; there are 24 million Christians in Indonesia. According to some estimates, this is more Christians than in the UK.

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POM Exclusive: Documents Detail RED Negotiations in Brussels

The Palm Oil Monitor has gained exclusive access to the latest internal documents on the EU’s Renewable Energy Directive (RED) ahead of today’s Trilogue in Brussels.

The documents reflect the fierce debate that is underway in Brussels over the future of palm oil biofuels, evidenced by the intense lobbying campaign on both sides.  One thing is clear: Nothing is really clear in the RED process to date, and it can be categorized by confusion, indecision and conflict. Predicting the outcome is difficult, if not impossible.

The starting point is the following: the EU Parliament voted to ban palm oil biofuels. The EU Commission supports its original RED proposal (which did not include a ban on palm oil). The Council is divided on whether or not to support the ban.

There are three documents.

First, a Working Paper from the Council. This document outlines an attempted compromise on palm oil that was proposed in the Council of the EU. The compromise was proposed because the Council is divided between countries that oppose the ban (France, Spain, Italy, Sweden, Netherlands); and those who are tempted to support the ban, either for reasons of domestic environmentalist pressure (Germany, U.K.) or for protectionist reasons (some rapeseed-producing countries in central & eastern Europe).

The compromise was proposed by the Bulgarian Government, which currently holds the Presidency of the Council and is therefore charged with acting as Chair of the negotiations. This compromise was not uniformly popular, our sources tell us, although it is still in the running.

Second, another Working Paper which outlines an attempted path forward on all first-generation biofuel targets (including palm oil). It offers a different form of compromise – not a restriction on palm oil, but a commitment that the Commission will study and report on how sustainability criteria can be best revised to prevent deforestation in ‘producer countries’ outside the EU. Additionally, it suggests another possible compromise based on a form of ‘high carbon stock’ methodology.

Third, what is known in Brussels as a “4-column” document. This document is used to chart the progress of EU Trilogue negotiations by explaining the positions of all three EU Institutions (Commission, Parliament, Council) in a three-column table, with a fourth column reserved for suggested compromise positions between the three institutions. The compromises are generally suggested by the Presidency of the Council of the EU: in this case, the Bulgarian Government. It is constantly updated to take account of the changing positions during the negotiations.

This 4-column document shows that the Council currently does not plan to support the Parliament’s ban on palm oil biofuels: although it seems that the Council is moving towards the Parliament’s position on many other areas of disagreement under the RED. The 4-column document does integrate elements of both the proposed compromises related to palm oil that were proposed in the two Working Papers: so things are clearly beginning to move inside the Council.

All three documents illustrate very different positions on the palm oil issue, and presumably all three positions remain realistic outcomes as the Trilogues continue.

So – what do these positions mean? It helps to look at the documents one-by-one.

The compromise language in the first Working Paper is highly technical: at first glance it appears to give Member States more flexibility over which biofuel inputs they would like to restrict. However, that flexibility is clearly restricted by the stated need to apply similar restrictions to all ‘like products’ (in other words, you could not discriminate against palm oil without applying similar restrictions to rapeseed). So – at second glance, the compromise offers less flexibility than it may seem. POM suspects that there is a sting in the tail for palm oil producing countries, though. The compromise language mentions indirect land-use change (ILUC), a theory much-beloved by environmentalists but much-decried and debunked by scientists and agronomists.

 

Could the introduction of ILUC criteria be used, within this compromise, as a weapon to give Member States the power to restrict palm oil while sparing rapeseed and other EU crops? It’s possible, but such a text would surely provide work for lawyers for years – especially lawyers in Geneva.

What to think of the second Working Paper, and the potential report and action by the EU Commission on deforestation? Again, this is a mixed picture for the palm oil sector. The wording is clearly aimed at palm oil: the expectation should be that any such EU report would be focused on palm oil and probably negative. It could lead to restrictions on palm oil biofuels after the report is published in 2023 – as foreseen in this Working Paper.

On the brighter side for palm oil interests, a report in 2023 is a huge improvement on a ban in 2021 – which is what the EU Parliament is currently pushing. This outcome may be desirable from a palm oil perspective: it solves the current debate (without a ban) and gives time for the sector to prepare for the next round of debate in 2023.

Add to this that a common complaint from producing countries about the Parliament’s ban on palm oil is that it is based on little evidence. This gives the EU, and palm oil producing countries, an opportunity for fact-based evidence gathering. Perhaps this possible solution has more mileage – although it is not clear at this stage whether the EU Commission or Parliament would accept this idea in the Trilogues.

The other proposal contained in the second Working Paper is for ‘high carbon stock’ criteria to be applied to all biofuels after 2021. Again, this is quite transparently aimed at palm oil and looks suspiciously like a manufactured attempt to push palm oil out using technical criteria – rather than the blunt instrument of an outright ban. Whether palm oil producing countries will walk into this trap – and how they will react if it is formally proposed in the RED – will be interesting to see.

We now arrive at the ‘4-column’ document. Currently the Council’s formal position remains a hash of half-agreed compromises and patched-up technical language. That means the Member States have not settled on a real compromise position on which they can agree: this is most likely due to the prevarication of wavering nations, most notably Germany and the U.K., who cannot decide whether to support the ban pushed by Green groups, or to support their valued trading partners from palm oil producing countries.

In the 4-column document’s language, ‘tropical deforestation’ is particularly highlighted: an even more obvious signpost that any future reports and investigations will be focused on palm oil.

Where does all of this leave the EU process on RED? The next Trilogue negotiation will take place today in Brussels.

The real question though is this: what is acceptable for all of the different actors in the process? Will the EU Parliament accept anything less than a total ban on palm oil biofuels? Will the Commission be willing to compromise, even if it means violating WTO rules? Will the palm oil producing countries – who have been so vocal about retaliation against an outright ban – take the same strong approach if a ‘compromise’ restriction on palm, perhaps one of those outlined above, is agreed by the EU as part of RED?

We’ll have to wait and see.

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Palm Oil Monitor – Weekly Update 14th May

Certification: Still the best solution

An NGO based in the Netherlands – ‘Changing Markets Foundation’ – has released a report claiming that certification schemes have ‘lost all credibility’.

This isn’t a new angle; environmentalists have been making this kind of claim about RSPO for years. The timing is conspicuous, however, with the EU trilogue on renewables currently underway in Brussels.

Why conspicuous? Because the only vegetable oil that the report singles out is palm oil.

There are other certifications for vegetable oils – e.g. the Roundtable for Sustainable Soy, and ISCC certification, which covers all vegetable oils – but Changing Markets only wants to focus on palm oil.

The key recommendation of the report is for new strategies to be developed to curb demand for palm oil – particularly in the biofuels sector.

This is instead of recommending strategies to increase the rigour of sustainability standards themselves, or possibly use alternative strategies such as using business-to-business initiatives.

This seems to fly in the face of the original impetus for sustainability schemes: generating a broad economic, social and environmental consensus on what the content of a sustainability certification should actually be.

This was a strategy that was wholly endorsed by WWF as part of its ‘market transformation’ strategy. The idea behind this was to get the world’s largest purchasers of commodities to adopt sustainable procurement standards and have producers implement them.

This has, to some extent, been immensely successful. It has also prompted the development of other, state-backed standards, providing choice and competition. The idea of throwing this progress away seems counterproductive, and would remove the current incentives for improving the environmental impact of palm oil production. Certification may not be perfect, but it’s the best thing we have right now.

 

RCEP and ASEAN: Any progress?

The latest round of negotiations for the Regional Comprehensive Economic Partnership (RCEP) wound up in Singapore last week. The round was tacked on to the back of the ASEAN Summit, held in Singapore. The RCEP is an agreement between ASEAN countries, India, China, Japan, Korea, Australia and New Zealand.

The negotiation process has been painfully slow. ASEAN continues to consolidate its position, negotiating as a single bloc. One of the key obstacles has to this point been the Indian government, which is calling for liberalised rules on human movement, but refuses to lower its tariffs. Better access to India’s vegetable oil market – and any other markets — is a key priority for both Malaysia and Indonesia. Without better access there, the agreement may well fall over.

However, the Chair’s statement at the ASEAN meeting also included a specific reference to Indonesia and Malaysia addressing palm oil sustainability. On the outside this may not look like a big deal, but Malaysia and Indonesia have clearly managed to get other ASEAN members onside in the palm oil debate – including Singapore, which profits significantly from the palm oil trade. This elevates this from a national issue to a region-wide issue – and is of particular relevance in EU-ASEAN relations.

 

LMC’s choice: new plantings or higher prices

Consultancy LMC has made some bullish medium-term projections on palm oil prices heading out past 2020. At a conference last week in Ghana, they projected that prices will be over the current norm by around USD100 to 150.

(You can find a similar presentation from February this year here.)

Their reasoning is simple: there has been a slowdown in new oil palm plantings, which won’t be felt for several years.

This slowdown will, in turn, have an impact on palm oil stocks. Future increases in demand will be met by the remaining new plantings, but after that there is little room to move.

So, as palm oil stocks diminish, the premium for palm over the Brent crude price goes up.

The final result is simple: “This will persist for several years until new supplies are created.”

But are substantial new plantings possible? Aid agencies talk about productivity gains and higher yields from smallholders, but this requires significant work. Improving yields among smallholders in a country like Indonesia is a momentous task.

New plantings in Africa and Latin America may be possible also, and this appears to show some promise. However, the success of large-scale agriculture in sub-Saharan Africa is patchy at best.

The problem will be willingness to invest. There’s a level of risk in African projects that few are willing to take on. It’s not just a matter of the palms themselves; it’s the processing, infrastructure and training that goes with it, as well as strict conditions around RSPO certification.

IN BRIEF

Agricultural giant Wilmar says it’s particularly concerned about the impact of ongoing US-China trade tensions on its oilseed business, more specifically volatility in global soybean markets. China has threatened tariffs on US soybeans in response to Washington’s threatened steel tariffs. The Financial Times reports that “Chinese buyers have already halted purchases of the coming US soyabean crop due to concern they could be hit with a $100 per tonne tax shipments.” As reported previously, this may provide an upside for palm oil shipments to China.

UK officials are jumpy at the prospect of the European Parliament’s proposed palm oil biofuel ban.  The UK press has been rife with stories claiming that officials are seeking to distance themselves from any ban, in case manufacturing contracts for aircraft purchases are scotched. According to The Times, “Malaysia plans to buy up to 18 Typhoon fighter jets to replace grounded Russian MiG-29s. BAE Systems hopes to secure the contract, worth more than £1.5 billion. BAE employs 5,000 people directly in the UK on the Typhoon programme and there are 9,600 other jobs in the UK supply chain.”

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Palm Oil Monitor – Weekly Update 8th May 2018

Quantifying the EU’s palm oil ban

An analyst from Singapore has attempted to quantify the cost of the EU’s proposed biofuel ban in a post for the East Asia Forum. Yu Leng Khor of Segi Enam writes:

“The EU energy demand for palm oil from Malaysia and Indonesia is worth about US$1.5 billion per year. Malaysia’s market share is 30 per cent and a notional loss would total about US$256 for each of Malaysia’s 650,000 smallholders. Under current income estimates, this would represent 5 per cent of a FELDA settler’s annual income from oil palm”.

This is a good back-of-the-envelope calculation.  It squares with a very rough calculation that we put together on the back of EU modelling commissioned in 2010, but could be an underestimate.

Back in 2010 (along with the launch of the iPad) the EU reckoned that EU renewable energy directive policies would increase palm oil production – not just exports — by around 10 per cent by 2020 for both Malaysia and Indonesia – as a whole.  So, if we take that out, i.e. reverse the counterfactual, we’re looking at a 10 per cent drop in output across the board for both countries.

Note that this estimate doesn’t include increased output and any revenue from palm kernel oil, palm kernel meal and expeller.

So, it would be reasonably safe to say from these assumptions (provided they were broadly correct in the first place) that there would be a minimum drop in revenue for producers of around 10 per cent, plus drops from PKO, etc. Whether this corresponds directly with a drop in income is up to the farmer.  Either way, it’s a significant drop in revenue that will impact the private sector and government accounts.

 

Indonesia lobbies away

Indonesian palm oil envoys have been particularly busy in the European Union. Last week they’ve drafted the support of the Vatican, which has taken on the ASEAN position and is now advocating for small farmers, as part of its poverty alleviation mission. Palm oil is, famously, one of the best-known tools in the world for poverty alleviation amongst rural communities, having helped to reduce Malaysia’s poverty rate spectacularly, down to its current rate of below 5%.

According to Indonesian officials, Cardinal Peter Turkson, Director of the Pontifical Council for Justice and Peace had voiced “concern over the fate of oil palm farmers and millions of people whose lives depend on the palm oil industry.

“He specifically stated what would happen if these workers … had no income anymore,” he said, pointing out that there were 16.5 million people who depend on the industry.

“Cardinal Turkson is proposing to hold a seminar that addresses this issue at the Vatican’s Pontifical University next month.”

In addition, Indonesia’s palm oil envoy, Luhut Binsar Panjaitan, met with EU trade commissioner Cecilia Malmstrom in Brussels. In an interview with Politico, the envoy pointed to the unforeseen impacts of a palm oil ban: “If you ban it, this immediately impacts smallholders. We’re talking about poverty. Poverty creates radicalism. Radicalism creates terrorism.”

According to our sources, a high-level forum between Vatican, Indonesian, Malaysian and EU officials will take place on Tuesday, 15 May.  Watch for more details on this front; it’s never a good thing for Western politicians to offend the Vatican.
IN BRIEF 

Indonesia’s coordinating minister for economic affairs Darmin Nasution says palm science will make palm oil sustainable. Nasution told the International Conference on Palm Oil and Environment that “the need for edible oil and energy will continue as populations grow. Meanwhile, land that can be utilised will decrease, so the question is how to meet those needs in the limited land area.  Increasing productivity will be the key.”

Greenpeace has gone after a palm oil supplier, the Yemeni-owned HSA Group, which is a supplier to Mars, Nestle and Unilever. Greenpeace claims HSA subsidiaries cleared peatland in Papua, in contravention of those companies’ sourcing policies. Unilever has suspended purchases from the group. The timing, again, is conspicuous given the current debate on palm in the EU.

WWF is sending mixed messages on the palm ban. At a conference run by the International Institute for Sustainability Analysis and Strategy, WWF happily endorsed a much tighter regime for palm oil in the RED, going further than the current acceptance of RSPO-RED, and calling for reduced levels of palm oil in the RED – but didn’t call for increasing levels of certified production. But there was one gross overstatement: they claim that banning imports can be justified on loose environmental grounds under WTO law. This is simply not true, as Borderlex reported last week.

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Palm Oil Monitor – Weekly Update 4th May 2018

Certification Leaders Come Out Against RED II

The latest organisation to argue against the EU’s proposed ban on palm oil biofuels is the ISCC (International Sustainability and Carbon Certification).

This is a significant intervention because ISCC is the leading figure in the European sustainability certification market. They are a member-based organisation headquartered in Germany, and they have credibility on carbon certification that is unmatched by anyone else in the market. The ISCC standard addresses the environmental objectives of the assessed EU and UN policy instruments more closely than the other standards. They are trusted by suppliers to help certify their products in compliance with European carbon requirements: they don’t have political or geographical allegiances.

Last week ISCC released a paper pointing out the significant flaws in the EU Parliament’s reasoning on the palm oil ban. The key takeaways are as follows:

  • The EU ban will mean lower demand for certified palm oil (i.e. palm oil that complies with existing RED standards using ISCC RED or RSPO RED);
  • This means that existing suppliers will have no incentive to remain certified or gain certification for new operations;
  • Plantations will not adhere to the higher standards associated with certification, and there will be a reduced incentive for new players not to deforest;
  • Other social gains from certification will also be lost.

But the core point made by ISCC is that the proposed ban will not do anything to reduce deforestation and provides no incentives for plantations to move towards more sustainable production – quite the opposite.

This intervention is particularly interesting because not many in the palm oil sustainability world have so far engaged in the RED debate – in fact, not many palm oil organisations in Europe have engaged at all. Perhaps others will follow where ISCC has led?

 

The Guardian  … in favour of palm oil?

The Guardian managed to surprise Palm Oil Monitor this week with what seemed like a defence of palm oil and palm oil producers.

Guardian Southeast Asia correspondent Hannah Ellis-Peters wrote an extraordinary rebuke to those campaigning against palm oil, stating:

“Yet for Malaysia’s smallholder farmers, many of whom were rescued from poverty when the government’s land authority, Felda, gave them 10 acres of land to harvest palm oil in the 80s, the allegations of environmental destruction are baffling. They account for 40% of Malaysia’s palm oil output and yet none engage in any land-grabbing, the slash and burn or deforestation practices that were pivotal proponent for MEPs voting to ban palm oil in biofuels.”

The Guardian, to its credit, has always attempted to balance its reporting on palm oil – and a sponsorship from RSPO certainly helped. The position was always: palm oil with certification, as long as it’s the right kind of certification. This appears to be the first time that they’ve covered smallholders with any depth. At POM we’re hoping this is a sign that this post-colonial guilt will now be applied to the shortsighted trade policies dreamed up in Brussels …

 

Palm Oil Free Certification Makes Tracks?

Two brands – the UK’s Bloomtown and the US-based Enjoy Life foods – both joined the relatively small number of certified ‘palm oil free’ products on both sides of the Atlantic. The former is certified to Orangutan Alliance’s Palm Oil Free certification, and the latter to the Palm Oil Free Certification Accreditation Program.

Both programs are relative newcomers to the certification landscape. The key difference between these certifications and broader, non-certified ‘palm oil free’ claims is as follows: A broad claim implies there are clear benefits from not having an ingredient (in this case, palm oil); A certified claim needs to have an established testing procedure to prove the claim, and a trademark or certification mark associated with it.

In the International Palm Oil Free Certification Accreditation Program, it is outrageous to read a list of so-called alternate names for palm oil. This list contains many products derived from saturated fatty acids, fatty alcohol etc. that can come from many sources, not just palm oil or palm kernel oil.

The scientific incompetence and dogmatism of this organization can only lead to stupid and unjustified psychosis.

However, there is clearly a demand for this in the same way a slice of the population demands vegan or organic standards. Palm oil free most likely falls into that same segment. By way of parallel, the demand for sustainable palm oil, for example, has not exceeded the supply.

Would major food companies and brands consider following this route? Possibly, but it has already been tried to some extent in European markets, specifically with brands attempting to compete with Ferrero’s Nutella. Nutella stood up to several challenges from ‘palm oil free’ alternatives. What Nutella proved is that the strength of the brand and the quality of the product matter more than tinkering at the edges.

Despite this, dismissing ‘palm oil free’ certification as a fad would be a mistake. There are plenty of products that don’t contain palm oil that will certify just to differentiate themselves, even if it seems ridiculous. Expect to see ‘palm oil free’ beer sometime soon.

There are two other points to consider. Enjoy Life in particular is owned by Mondelez, a member of RSPO. RSPO requires that members are not permitted to make denigratory claims about palm oil. The palm-free certifications have a certification process, but their claims are implied. Both use pictures of orang-utans in their logos. How will both RSPO and Mondelez respond to this?

The second point is that Enjoy Life is a health-oriented brand. It provides gluten-free and other “free from” brand lines to offer health choices to specific consumers, concentrating specifically on allergens. Certifying something on environmental grounds is something different altogether and deviates from this branding that has given them a great deal of success. Is Enjoy Life about to become Mondelez’s new ‘eco brand’?

 

Macron makes an impassioned defence of free trade, WTO

French President Emmanuel Macron has made an impassioned defence of the world’s multilateral trading forum, the World Trade Organization (WTO) and of free trade more broadly in a speech to US Congress.

In his speech, Macron stated that “commercial war is not the proper answer” to solve economic problems – such as trade imbalances or uncompetitive sectors.

The speech was targeted at Trump Administration policies, particularly on steel, where the EU and France are seeking exemptions from new tariffs. Macron’s views also express a broader concern that Trump’s policies may simply end up jamming the WTO entirely. Indeed, the US’ delaying of appointments to the Appellate Body means that disputes simply aren’t being resolved quickly.

However, the speech could quite easily be directed at the EU itself. If the EU is so concerned about the integrity of the international trading system and making sure trade is free and fair, it should consider not using the system so cynically. Imposing a tariff or trade regulation in full knowledge that it isn’t WTO compliant – such as biodiesel tariffs or palm oil bans – and then enjoying a four-year period of zero-consequence trade restrictions is the kind of cynicism that has been on display in the EU for years. And sure, a lot of countries engage in this kind of thing; but true leadership means staying above the fray.

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