Why should you care about France’s elections?

France held the first round of its presidential elections last weekend. EDC’s Economic and Political Intelligence Centre (EPIC) is closely monitoring the results — and you probably should, too.

Why should Canadian businesses care? Because there is a chance, albeit a small one, that a radical party could be elected. This could have repercussions for trade policy not only in France, but also across Europe. Given what this might mean for the future of globalization, the ripple effects could be felt around the world. It could, for example, impact the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).

The biggest risk would be an attempt on France’s part to leave the EU and Eurozone, which could trigger a sovereign debt crisis and reverberate across the EU. It is reassuring, then, that EDC assesses this scenario as unlikely to happen.

France’s electoral system is semi-presidential, meaning they have both a president and a prime minister. There are two rounds of voting for both the presidential and legislative elections, making it much harder for radical parties to win.

Two radical parties were in the running for president. The far-right Front National, led by Marine Le Pen, supports trade protectionism and a return to greater sovereignty. This includes threatening to leave the Eurozone. The far-left Unsubmissive France, led by Jean-Luc Mélenchon, supports nationalism, trade protectionism, and EU renegotiation.

There was some concern that both of these Eurosceptic parties would make it to the second round.

In the end, only one made it through. Marine Le Pen advanced to the second round, along with Emmanuel Macron, running under the centrist En Marche! banner. Macron finished first with 24% of the vote, with Le Pen earning 21.3%. Melenchon came fourth with 19.6%.

With the Front National’s voter base unlikely to grow materially, and a tendency toward more strategic voting in the second round, this result heavily favours Macron. Even if Le Pen were to win the presidency, she would still need to win a majority in parliament to elect a PM from her party and to pull France out of the EU and Eurozone. The FN currently holds only two National Assembly seats out of 577, making an outright majority an extreme long-shot.

Macron supports the EU, free market globalization, and international trade deals. His victory contrasts recent moves toward protectionism around the globe. Markets staged a rally following the first round results.

France goes back to the polls for the second round on May 7th. The world will be watching.

Warm regards,
Daniel Benatuil