French palm oil tax, pesticide ban likely to pass this year

PARIS, May 25 (Reuters) - A proposed French tax targeting palm oil will most likely be approved later this year after a meeting between both parliamentary assemblies on Wednesday failed to agree on a wider biodiversity bill, members of the Senate said.

The tax, which will be on top of an existing levy on vegetable oils used in food, aims at encouraging the sector to reduce the environmental damage palm oil plantations can cause.

Indonesia and Malaysia, the world’s two largest makers of palm oil have called the proposal discriminatory and contrary to international trade rules.

The National Assembly, dominated by the ruling Socialist party agreed in March on a tax starting at 30 euros ($33.5) a tonne in 2017 that would rise by 20 euros a year to 90 euros in 2020. It excluded oils made in a sustainable way.

Senators scrapped the tax in mid-May, saying it could be against international trade rules and it would be more appropriate to include it in finance legislation.

Barbara Pompili, Secretary of State for Biodiversity, confirmed in Le Monde newspaper on Wednesday that the government would back a tax with an advantage for sustainable oil, but insisted that producing countries should be supported in their fight against deforestation.

Jerome Bignon, lead member of the Senate’s commission, warned of repercussions a tax may have on France’s relationship with Indonesia and Malaysia.

French wheat exports to Indonesia have been on hold for weeks with exporters blaming the delay on a retaliation by Indonesia against the palm oil tax plan.

Another controversial proposal in the law, a ban on neonicotinoids, a pesticide accused of harming bees, would also likely be adopted.

Pompili said the government, which had been split on this issue, now had a common position favouring a ban on neonicotinoids for which there is an alternative pesticide at the latest in 2018 and a complete ban in 2020.

French farmers have widely protested against a ban, saying it would harm crop growing in the European Union’s largest producing country.

Discussions on the bill faltered long before getting into the details of neonicotinoids ban and the proposed palm oil tax.

The legislative text will now go back-and-forth between the two chambers, with the National Assembly having the final word. The adoption of the bill may not take place before the summer break, the two Senate members said. ($1 = 0.8969 euros) (Reporting by Sybille de La Hamaide, editing by David Evans)