Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.
The U.S.-French commercial and economic alliance is one of the United States’ oldest and closest. The United States and France established diplomatic relations in 1778 and the United States’ first trade agreement, the Treaty of Amity and Commerce between the United States and France, was signed that year. Relations between the United States and France have remained active and friendly. Our countries share common values and have similar policies on most political, economic, and security issues.
With a GDP of approximately $2.8 trillion in 2018 (+ 1.7% growth), France is the world’s fifth-largest economy and Europe’s third largest economy after Germany and the UK. It has substantial agricultural resources and maintains a strong manufacturing sector, despite a recent decline. A dynamic services sector now accounts for an increasingly large share of economic activity and is responsible for most job creation in recent years. France initiated the G-20, is host to the OECD, and is a member of the G-7, the European Union, and the World Trade Organization, confirming its status as a leading economic player in the world.
France experienced 1.7% GDP growth in 2018, down from 2.4% in 2017. France’s budget deficit dropped below the 3% limit to 2.5 % of GDP in 2018. The OECD forecasts the budget deficit to reach 3.2% of GDP in 2019, due to the cost of the government’s €17 billion ($19.2 billion) emergency package to address the economic and social needs of middle-class and retired workers from the “Yellow Vest” protest movement. France’s public debt ratio of 98.4 % of GDP remains one of the highest in the Euro-Zone.
Trade and investment ties between the United States and France are strong. On average, over $1 billion in commercial transactions, including sales of U.S. and French foreign affiliates, takes place every day. U.S. exports to France include industrial chemicals, aircraft and engines, electronic components, telecommunications, computer software, computers and peripherals, analytical and scientific instrumentation, medical instruments and supplies, and broadcasting equipment. The United States is the top foreign destination for French investment and the United States is the largest foreign investor in France in terms of job creations. The United States and France have a bilateral convention on investment and a bilateral tax treaty addressing, among other things, double taxation and tax evasion.
France has an educated population, first-rate universities, and a talented workforce. It has a modern business culture, sophisticated financial markets, strong intellectual property protections, and innovative business leaders. The country is known for its world-class infrastructure, including high-speed passenger rail, maritime ports, extensive roadway networks and public transportation, and efficient intermodal connections. In 2018, France was the ninth largest global market for foreign direct investment (FDI) inflows with a year-on-year increase of 2%. In total, there are more than 28,000 foreign-owned companies doing business in France. It is the home to 29 of the world’s 500 largest companies. In 2018, the World Economic Forum ranked France 17th in terms of global competitiveness. The United States is the 7th largest foreign investor in France. Around 4,600 U.S. companies in France, of all sizes, employ over 480,000 French citizens.
Following the election of French President Emmanuel Macron in May 2017, the French government implemented significant labor market and tax reforms. By relaxing the rules on companies to hire and fire employees and by offering investment incentives, Macron has buoyed business confidence in France. According to the 2018 American Chamber of Commerce in France - Bain Barometer Survey on the attitudes of U.S. investors in France, 86% of American investors surveyed said Macron’s reforms improved France’s investment prospects and image in the United States.
The metropolitan Paris region supports the largest concentration of technology engineers outside of Silicon Valley.
Key issues to watch in the coming months include: 1) whether President Macron is able to maintain his pro-business reforms despite a wave of public protests, and 2) how the seats obtained by the Macron’s party in the May 2019 European Parliament elections will affect his economic policies and 3) continued uncertainty from Brexit, which presents both opportunities and challenges for France.