Normalité, familiarité, continuité after Macron’s re-election

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And breathe. In the end it was a convincing victory by Emmanuel Macron against Marine Le Pen in yesterday’s French presidential election. Le Pen has moderated her positions a lot over the years (no more leaving the euro or indeed the EU, for example) yet still lost heavily. Today’s main piece sketches out what the result is likely to mean, given the influence of France on EU trade policy. Charted waters looks at what can be gleaned about the impact of the Ukraine conflict from last week’s unusually testy IMF meeting.

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We’ll always have Paris

The biggest laugh of the campaign for trade folks, admittedly in a contest that’s been short on globalisation-related giggles, was Le Pen’s assertion in last week’s head-to-head debate that Macron hadn’t stood up for French interests inside the EU and was too lax about allowing imports. That must have provoked hollow mirth from the Atlantic to the Black Sea and the Baltic to the Adriatic. France has always thrown its weight around in EU debates in general and trade in particular. With the UK gone, the influence of its instinctive interventionism has become increasingly clear.

There’s the European Chips Actdriven through by hyperactive French internal markets commissioner Thierry Breton, which hurls money at the EU semiconductor industry in a revival of old-school industrial policy. There’s the carbon border adjustment mechanism (CBAM), which threatens to block imports from relatively emissions-intensive producers. There’s the proposed “mirror clauses” which aim to force trading partners to adopt EU farming standards in order to be able to export to Europe. And most of all there’s the “anti-coercion instrument”, which will authorise the EU to block imports, procurement bids, inward investment and so on from countries whose governments try to bully the union or its member states. All bear the imprint of Paris, and all have raised concerns among more liberal-minded countries within the EU.

Macron was evidently aware of some vulnerabilities to Le Pen’s charges and her assertion that France should drop its focus on the EU and seek to be a global power, working especially with former colonies in Africa. (Similar claims made by Brexiters about always losing battles in the EU were also largely wrong, and yet they and the Global Britain vision carried the day in the referendum.)

The president had pretty solid answers ready to Le Pen’s accusations that the posted workers scheme for cross-border EU staff undercuts French labour standards (it’s been reformed), that trade deals cause environmental degradation (he’s stalled the Mercosur agreement because of Amazon deforestation) and that imports weaken farming standards (he specifically mentioned the mirror clauses).

France holds the six-month rotating presidency of the EU council of member states, and Macron has used the opportunity to push through a bare-bones version of the CBAM earlier this year to have something to show by election time. He has also tried to neutralise accusations of betraying French farmers by putting bilateral trade deals with New Zealand and Australia on hold for the course of the presidency. This came sufficiently late in the process that the Kiwi prime minister Jacinda Ardern had to cancel a planned trip to Brussels rather than turn up and go away again empty-handed.

So, a prepared defence and a bit of political manoeuvring to create some good optics. I’m no more a psephological expert on France than I could advise on New Zealand cattle farming: analysing the idiosyncrasies of French politics is strictly one for the pros. But I’d be surprised if trade shifted many votes from Macron to Le Pen, as opposed to more domestic concerns such as inflation and living standards. The hard right in France and elsewhere are often less rabid economic anti-globalisers than cultural nativists. ( I’ll come back to this issue in subsequent Trade Secrets.)

Accordingly I’d also be surprised if EU trade policy now changes much from before the campaign. The New Zealand and Australia trade deals will be unfrozen (the former more quickly than the latter) and the process of creating the anti-coercion tool and the CBAM — the latter much more slowly thanks to its legal and technical complexity — will continue. The EU is taking a more interventionist approach on trade, for sure. But we’re a long way from Le Pen’s wilder ideas of in effect dismantling the Single Market, breaking the union up into a loose association of independent states and thus ending the idea of ​​a unified EU trade policy for good.

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Charted waters

Finance officials are not known for their emotive language, but these are not normal timesas last week’s IMF gathering proved. US Treasury secretary Janet Yellen used the gathering in Washington to condemn Russia’s “illegal, unprovoked war against Ukraine”. She and her counterparts from the UK, the EU and Canada then walked out.

It was up to Kristalina Georgieva, IMF managing director, to explain — as the above chart illustrates — that the net effect of the conflict will be damage on the entire global economy.

Russia’s invasion had been a “massive setback” for the global economy, Georgieva said, as the fund published sharply lower forecasts for 2022 from the 4.4 per cent estimated as recently as January to 3.6 per cent. None of this was surprising, at least to FT readers. Martin Wolf explained last month how the world is now at risk of moving into two economic blocs with damaging economic and security consequences.

As with so many economic hardships, it will be the poor that suffer the most. The IMF’s fiscal and financial stability departments warned of debt distress among poorer countries as they faced a perfect storm of increasing inflation, lower growth and higher US interest rates. (Jonathan Moules)

Both the European Commission president and the UK prime minister have been in India in the past few days, talking up chances for co-operation on trade and technology.

Treasury secretary Janet Yellen revealed the limits of US economic aggression towards Russia by cautioning European countries against a full embargo on Russian oil and gas.

Research from the shipping company Flexport looks at the cost of trucking and concludes that high prices may be due for a downturn.

In the light of protests about the soaring cost of food, pushed higher by the war in Ukraine, two academics look at the history of food riots.

A piece in Foreign Affairs argues that the EU has done better at integrating its single market than the US.

One of my most treasured colleagues at the FT, David Gardner, has sadly died. Here’s his beautifully written obituary.

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