Tuesday (June 30th): French Protectionism → German approval

Emmanuel Macron

Name? Emmanuel Macron

Westphalian identity? French

Age? 42

Why is he in the news? Yesterday he flew to Germany to meet his close friend Angela Merkel for the first time in four months. The two discussed a number of issues; financial support for the hardest hit countries by Covid-19, the situation of Ukraine, Germany’s upcoming presidency of the European Council, and Macron’s personal proposal. 

Why do we care? Germany’s presidency of the European Council is deserving of its own daily so today we would like to focus on a policy proposal by Emmanuel Macron which Merkel has rejected for the past three years but is suddenly open to negotiations: Macron’s proposal for a carbon border tax. 

Why should you care? The idea behind this tax is that all goods coming from outside the EU will have to pay a tax equal to carbon emission prices in the EU. Thus, a carbon border tax for the EU will impact the world  economy; including your country of origin.  Ultimately, Macron wants to protect European goods; which will be more expensive when produced sustainably, from countries that have more relaxed regulations on the production of goods (making them cheaper than the EU alternatives). 

Who else cares? The Donald, obviously! His opinion on the EU has been clearly stated so the fact that the EU just extended the travel ban on Americans due to the number of Covid cases in the states will only further anger the Donald. But this carbon border tax? Once he hears about it you can count on him reopening the issue of tariffs on anything that comes from the EU. 

Any further comments? The main challenges for the carbon border tax will be WTO compatibility and opposing voices inside the EU. As the great Angela Merkel has stated, once both issues are resolved, the carbon tax could prove to be an effective tool to actively influence other countries’ policies. Moreover, the tax would also generate more revenue that directly flows into further innovation for carbon neutral technologies. 

Joshua Dario Hasenstab

General Coordinator