Swift action required
All stakeholders must counter the proposed measure before it is adopted. The French government, in particular represented by the State Secretary on biodiversity, appears resolved to introduce such a tax. In particular, bilateral discussions with the EU and France must be requested as soon as possible within the WTO framework.

For example, at the meeting of the WTO Committee on Technical Barriers to Trade in Geneva from March 9-10, 2016, Indonesia had raised a Specific Trade Concern on the proposed French measure vis-à-vis the EU.

There is a need for palm oil producing countries to engage with the French government, Senate and National Assembly, within all available avenues. They must impress upon legislators that this measure would be discriminatory, not scientifically based, not the least trade restrictive measure available, and a disguised restriction to international trade.

The first objective of any formal (i.e. diplomatic, political, commercial and technical) engagement with France should be to clearly understand the objectives of the measure; the details of the ‘special tax’; and the impact on palm oil vis-à-vis competing ‘like products’.

France must scientifically explain the environmental criteria for exemption from the special tax, together with the related certification mechanisms. It should also provide enough time for the affected WTO members to review the measure and convey their comments and alternative solutions. As it stands, France appears to be falling short of these requirements under WTO law.

Draft Law – Chronology of Events to Date
March 26, 2014: The Draft Law from the Ministry of Ecology, Sustainable Development and Energy is tabled before the National Assembly.

June 26, 2014: The National Assembly’s Commission for Sustainable Development and Spatial Planning (Commission) files a report on the Draft Law.

March 24, 2015: The National Assembly holds its first reading of the Draft Law and adopts it by a vote of 325 to 189. This version does not include the provisions now affecting palm oil.

March 25, 2015 – Jan 26, 2016: The Senate considers the Draft Law. In all, 674 amendments are tabled – No. 367 provides for an addition to a special tax on on palm oil, palm kernel oil and coconut oil in their natural state and in food products.

This proposes to raise the tax to EUR 300 per tonne in 2017; EUR 500 per tonne in 2018; EUR 700 per tonne in 2019; and EUR 900 in 2020. It is to be then raised each year on Jan 1, from 2021 onwards.

Jan 26, 2016: The Senate adopts the Draft Law, including Amendment No. 367, by a vote of 263 to 32.

March 1-9, 2016: Debate and amendments follow within the Commission, as well as by the National Assembly as a whole.

March 15-17, 2016: The National Assembly adopts a revised version of the Draft Law during the second reading. Instead of the fixed tax rate, the Draft Law returns to the ‘tiered’ structure. It sets the tax rate at EUR 30 per tonne in 2017; EUR 50 per tonne in 2018; EUR 70 per tonne in 2019; and EUR 90 per tonne in 2020.

Twelve amendments relating to the tax are tabled during the Commission’s review. Amendment No. CD436 introduces a sustainability exemption to the palm oil, palm kernel oil and coconut oil tax that is approved by the National Assembly. However, the environmental sustainability criteria are not stated.

March 18, 2016: The Draft Law is sent back to the French Senate – in particular, to the Commission – for discussion.

May 4, 2016: The Commission files its report and proposes the elimination of the provision establishing the special tax on palm oil, palm kernel oil and coconut oil.

May 9 & 10, 2016: Several Senators and the government table amendments calling for the retention of the provision establishing the special tax on the three oils.

May 11, 2016: The Senate rejects the amendments calling for the retention of
the provision by a vote of 159 to 138. The provision remains eliminated from the Draft Law.

May 25, 2016: The Parliament’s Joint Commission debates the Draft Law but is unable to reach compromise. It is sent back to the National Assembly for a new reading.

FratiniVergano
European Lawyers

 

© 2018 Global Oil & Fats Business Online – gofbonline.com

Top