Philippe Varin, chair of the International Chamber of Commerce, is stewarding the kind of globalist institution which Trump instinctively distrusts. He speaks to Eliot Wilson about championing free trade in an era of protectionism
The International Chamber of Commerce is the world’s biggest representative organisation for business and trade. To establish some sense of scale, the ICC acts as a voice for 45m businesses in more than 170 countries, holds observer status at the United Nations General Assembly and maintains a permanent office at UN headquarters on Manhattan’s East River.
Philippe Varin was elected Chair of the ICC in June last year. A courteous, deliberately spoken Frenchman, he is a product of the École polytechnique and Mines Paris, France’s Ivy League, and began his career at aluminium conglomerate Pechiney in 1978. From 2003 to 2009, Varin was CEO of Corus, Europe’s biggest steel manufacturer, before heading automotive giant PSA Peugeot Citroën from 2009 to 2014.
The last decade has seen him take on broader roles. He has chaired the World Materials Forum since 2014, and was chairman of French nuclear power group Areva and its successor Orano (2015-20) and water and waste management firm Suez SA (2020-22). When he was elected to his ICC role, he set out five pillars for his two-year term of office: international trade, the rule of law, action on climate change, trade digitalisation and multilateral cooperation. I spoke to him recently about how he would pursue these in the economic situation following Donald Trump’s inauguration as president.
Tariffs are on everyone’s lips now, a form of economic strength and coercion central to Trump’s conception of the world. He sees them as part of “a great, beautiful golden age of business”, and wants to impose a 10 per cent duty on all imports to the United States but much higher retaliatory tariffs of 60 per cent or more on rivals like China.
By contrast, Varin explained, the ICC is an organisation predicated on the promotion of free trade.
“With our Incoterms rules, the soft law of global trade, we facilitate the smooth flow of more than $17 trillion worth of goods. We are also focused on tackling major frictions in the global trading system, including the resurgence of protectionist pressures in recent years… we continue our well-known traditional work, through the International Court of Arbitration. We have a longstanding partnership with the World Trade Organization and are very keen to maintain the centrality of the WTO.”
The protectionist pivot
The anticipated protectionism of Trump’s second presidency had not appeared suddenly from the ether but is in tune with developments in other parts of the world.
“The new US administration will certainly introduce a lot of uncertainty in the global trading system. But we view this as part of a broader trend: in 2023, over 3,000 new barriers to trade were introduced by governments, five times more than just five years ago. This is driving a steady fragmentation of trade, and we are particularly alert to the risk of major disputes arising as a result of climate and industrial policy interventions. The trade tensions stoked by the EU’s carbon border adjustment are a good example of that.”
The ICC has a delicate task: it is the kind of multilateral, “globalist” institution which Trump and his supporters instinctively distrust, and will gain nothing for its members by a head-on collision with a bullish president and a triumphalist MAGA movement.
“Our aim is to be pragmatic,” Varin said, “finding ways to smooth these frictions that don’t result in markets being shut off as a result of unilateral or retaliatory policies. We have to make a positive case for open markets.”
Varin certainly does not waver in his conviction. The ICC has analysed the potential impact of the WTO effectively disappearing overnight, and the negative economic consequences would be stark: emerging economies would see their GDP fall by around five per cent and their trade flows reduced by 30 to 50 per cent. This emphasises the capacity of free trade to increase the prosperity of nations which need it most. “In the last decades, global trade has lifted more than 2bn people out of poverty. I mean, it’s huge, right?”
The ICC has analysed the potential impact of the WTO effectively disappearing overnight, and the negative economic consequences would be stark: emerging economies would see their GDP fall by around five per cent and their trade flows reduced by 30 to 50 per cent. This emphasises the capacity of free trade to increase the prosperity of nations which need it most
One issue which has become starkly polarising is the development of electric vehicles. In the UK, the sale of petrol and diesel cars is due to end in 2030 but the automotive sector has argued that the demand for EVs is not economically sustainable. I wanted to know how Varin, a former CEO of Peugeot Citroën, thought governmental policy targets and commercial reality could be balanced.
“We have a drop in demand growth in the EU and in China. Why? Because after five or six years of steady market growth, the industry has gone down now because of the global economy, and because of consumers who are careful about switching to EVs when they are not comfortable about the availability of charging stations or mileage range.”
The circumstances of the market will require governments to be flexible and work with the automotive industry, rather than clinging doggedly to arbitrary targets.
“The EU will need a real plan. There will probably need to be some flexibility for the 2035 deadline on the production of zero-emission cars, to allow enough time to make things happen in a proper way. There will also be a need for financial support for the car makers and a specific strategy for battery technology transfer between China and the EU.”
Net zero will not be painless
Varin was open about the fact that addressing emissions and phasing out fossil fuels would not be simple or painless.
“The transition to net zero comes at a huge cost, in energy infrastructure, industrial upgrades, and so on,” he observed. “Given the economic situation in many countries, with the impact of inflation on purchasing power, there is a very difficult decision to take on who will pay. We need to mitigate the climate risk, but the percentage of public spending is going to be a top question. How much now, and how much in the future?”
Achieving such a fundamental global transition in terms of the economy, technology and consumer behaviour needs the cooperation of governments and the private sector. Different countries will approach the challenge in their own ways.
“If you want to substitute private to public spending, you can use a carbon tax or an emission trading scheme. There is no one-size-fits-all solution. It depends on the economy of each country, on the social situation, and on the level of public debt… there is a need for governments to support emerging technologies, not just in one area but in many. Everyone is going to make their own choice. If you look at batteries, wind farms, solar panels and so on, industrial policy is clearly the name of the game here.”
The ICC Chair remains a cautious optimist. He believes many of the mechanisms and technologies required to meet the challenges of the coming decades are already available, if political will can be found to marshal them effectively.
“A big part of the technology needed to address this challenge already exists or will be available in the next five to ten years. The key question for us in the ICC remains around the financial framework and funding of all these big infrastructures in the developing countries, because we probably have to multiply by at least two to three times the current level of investment. It’s an unacceptable situation when you look at the restrictions on financing.”
When you have a project, and the World Bank or other multilateral banks put in one dollar to fund it, the private sector only puts in one-point-three, right? This is because public spending is not taking enough risk to the private sector
“I’ll give you an example: when you have a project, and the World Bank or other multilateral banks put in one dollar to fund it, the private sector only puts in one-point-three, right? This is because public spending is not taking enough risk to the private sector.”
The ICC has a role to play in fostering engagement between public and private sectors to achieve genuine transformation. “There’s a big opportunity to change here,” Varin concluded. “The ICC is engaged with businesses around the world to understand how we can react and adapt but with a clear line of sight, to do what we have always done: to promote peace and prosperity through trade. And perhaps going forward, there will be other ways to fulfil our mission than strictly following the orthodoxy of the past 50-plus years.”
Steering an international organisation committed to free trade and global prosperity is a formidable task against the protectionist, populist and often insular headwinds which currently prevail. Philippe Varin has articulated a clear, careful, reasoned framework which makes sense on paper. Will the ICC’s mission be successful?
A shrug which can only be described as Gallic. “It’s difficult to predict.”
Eliot Wilson is a writer and strategic adviser