FRANCE

TRADE POLICY
 OF
FRANCE

PREPARED BY
SHIRLEY SHEKHARAN
15013
SYBMS
PROJECT INCHARGE
PROF. SADNA

THE FRENCH REPUBLIC

France is a member state of the European Union located in
its western region, with several overseas territories and
islands located on other continents. France is a unitary semi-
presidential republic with its main ideals expressed in
the Declaration of the Rights of Man and of the Citizen.
The name "France" comes from Latin Francia, which
literally means "land of theFranks" or "Frankland". There
are various theories as to the origin of the name of the Franks.
One is that it is derived from
the ProtoGermanic word frankon which translates
as javelin or lance as the throwing axe of the Franks was
known as a francisca.
France is the largest state in the European Union by area and
the third largest in Europe behind Russia and Ukraine.France
is a developed country and possesses the fifth largest economy
by nominal GDP and eighth largest economy by purchasing
power parity. It is the most visited country in the world,
receiving 82 million foreign tourists annually. France is one
of the founding members of the European Union, and has the
largest land area of all members.
It is also a founding member of the United Nations, and a
member of the Francophonie,
the G8, G20, NATO, OECD, WTO and the Latin Union. It is
one of the five permanent members of the United Nations
Security Council, possesses the third largest number of
nuclear weapons in the world and the largest number
of nuclear power plants in the European Union.

WHAT IS TRADE POLICY?

Trade is the voluntary exchange of goods, services, or both.
Trade is also called commerce or transaction. A mechanism
that allows trade is called a market. The original form of trade
was barter, the direct exchange of goods and services. Later
one side of the barter were the metals, precious metals (poles,
coins), bill, paper money. Modern traders instead generally
negotiate through a medium of exchange, such as money. As
a result, buying can be separated from selling, or earning.
The invention of money (and later credit, paper money and
non-physical money) greatly simplified and promoted trade.
Trade between two traders is called bilateral trade, while trade
between more than two traders is called multilateral
trade.Trade policy is a policy affecting international trade,
including especially tariffs and nontariff barriers.
 FEATURES OF TRADE
POLICY
1.Trade policy is a key element of economic
policy-making, and is critical to successful
development.
2.Modern trade policy affects not only the
international movement of goods and services,
but also how domestic regulations are designed
and administered.
3.There is compelling evidence that countries
that have successfully integrated into the
global economy have achieved more robust
and sustained development than have countries
that have remained outside.
4.The World Trading Organization lies at the
heart of the multi-lateral trading system, and
therefore having a basic understanding of how
the institution works is fundamental to
developing effective policies and providing
good public administration.   
 TRADE POLICIES OF
FRANCE

1919-1928: France focuses on rebuilding its economy in

the wake of World War I. Trade policy is largely protectionist.
Exports are primarily of luxury goods, although poor harvests
hamper wine production. With a weakening currency, France
cannot afford many imports.

1929-1935: In the wake of the Depression, France

maintains the gold standard. As other currencies decline in
value relative to the franc, French exports become more
expensive. Exports fall to less than two-thirds of imports. A
reluctance to borrow to modernize equipment means an
inefficient agricultural sector and increased agricultural
imports.

1936-1939: France abandons the gold standard. A

devaluation of the franc helps increase exports. The structure
of exports shifts from light toward heavy industry and
agricultural products, sold primarily to Western and Central
Europe. The United States supplies imports of raw materials.
France also trades heavily with its colonies, importing raw
materials and exporting manufactured goods.
1940-1944: Trade collapses under the German
occupation and the Vichy regime. Germany requisitions most
of France's resources. Agricultural production is disrupted as
young men go to war and fighting spreads throughout the
country. The American and British markets are closed off.

1945-1948: Physical damage forces France to cast aside

its traditional protectionist attitudes. Transportation networks
and ships must be rebuilt. Poor harvests aggravate already low
production on mine-infested agricultural land. France must
import bulky coal, grain, and feed with high shipping costs,
and imports rise to five times the level of exports. Loans
finance the trade deficit.

1949-1957: With the passage of the General Agreement

on Tariffs and Trade in 1948, France removes quantitative
restrictions on half of its private trade with other European
countries, despite strong resistance from groups that benefit
from protectionism. Loans and a reduction in coal shortages
and other industrial bottlenecks enable an increase in exports,
which benefit from specific credits and subsidies.

1958-1961: The Treaty of Rome establishes the

European Economic Community. Member states establish a
common integrated tariff system. Duties are applied to non-
EEC countries' imports. The franc's devaluation helps exports
increase greatly. France must turn to expensive oil supplies, in
part from Venezuela, when the Middle East refuses to supply
oil after the Franco-British attempt to retake the Suez Canal.
1962-1969: Membership in the EEC and rapid
decolonization change the pattern of trade. The EEC's
industrialized nations provide a large market for France's
agricultural products. By 1969, France provides 42 percent of
the EEC's agricultural exports. The government, however,
remains the principal buyer of high-tech products such as
military aircraft, nuclear weapons, and nuclear power.

1970-1978: Industrial exports, particularly of cars,

chemicals, pharmaceuticals, and aircraft, rise. France also
sees an agricultural boom and becomes the world's second
agricultural exporter after the United States. The 1975 Lomé
Convention formalizes bilateral agreements in which
European Community countries extend export concessions to
their former colonies.

1979-1982: France's economic crisis does not spare its

trade sector. OPEC's price increases and the overthrow of the
Shah of Iran drastically reduce France's oil imports from the
region. France builds up its nuclear power capacity, but still
must import expensive oil from other regions.

1983-1992: Persistent inflation lowers the value of the

franc against other major currencies and drives up the price of
imports. The trade deficit grows dangerously until 1991. The
global economic slowdown leads France to reduce its imports
and thus regain a positive trade balance. Trade surpluses
continue past the global recession.
1993-1997: The establishment of the European Single
Market brings free movement of people, goods, services, and
capital across Europe and opens up an area of 376 million
consumers to French companies. A new ratification of the
GATT includes agriculture, services, and intellectual property,
but not cultural materials (such as films), long a controversial
issue in France.

1998-2003: France represents 6 percent of world trade.

In general, trade policies are determined by European Union
agreements and practices. The government investigates ways
to promote exports more aggressively, especially to markets in
East Asia and Latin America. France continues to extend
varying preferential tariff treatment to imports from the
African, Caribbean, and Pacific developing countries.
 France is one of the EU’s
major importers and exporters
with everything from raw
commodities to automobiles.
The economy of France has been carefully planned to provide
support to international trade with a number of important
products and commodities. Globally, the country holds an
important position as the third largest trader in the European
Union after Germany and the United Kingdom. 

France also exports a number of valuable commodities

including machinery and transportation equipment, aircraft,
plastics, chemicals, pharmaceuticals, iron, steel, consumer
products, petroleum and cars & vehicles. A major part of this
foreign trade is carried out with European partners including
Germany, UK, Spain and Italy. 

France is the second largest exporter in the world of both

services and farm products. It is justly famous for its cheese,
wine, and wheat, being the world’s leading supplier of quality
produce in these areas. 
The country is one of the major agricultural powers with
almost 25% of the total agricultural products of the European
Union being produced there. The contribution of the
agricultural sector to the country’s GDP is almost 2.5%. The
French government provides considerable subsidies to its
agricultural sector so that it may continue to grow and
contribute to the country’s GDP, a development that will
further ensure increased export activities. 

The manufacturing industry is also a key exporter,

contributing nearly 27% to GDP. France’s phenomenal export
growth has been aided by structural reforms initiated by the
government that promote every aspect of foreign trade. It is
one of the five largest global exporters of durables. 
 EXPORTS AND IMPORTS
Export Goods
aircraft, plastics,
chemicals, pharmaceutical
products, iron, steel,
beverages, machinery and
transportation
equipment.
Import Goods
vehicles, crude oil,
aircraft, plastics,
chemicals, machinery and
equipment.

According to the CIA World Factbook, France exported US

$490 billion worth of goods and services in 2006. Its main
export partners as of 2005 were:

 Germany (14.7%)
 Spain (9.6%)
 UK (8.3%)
 US (7.2%)
 Belgium (7.1%)
During 2006 French imports stood at US $529.1 billion.  
Primary imports included cars and vehicles, machinery and
equipment, crude oil, plastics, chemicals and aircraft. As of
2005, it imported from:

 Germany (18.9%)
 Belgium (10.7%)
 Italy (8.2%)
 Spain (7%)
 Netherlands (6.5%)
 UK (5.9%)
 US (5.1%)

France imports different commodities from other countries.

Some of the major import partners are represented in the chart
(2005): 

In 2005, France imported goods worth US$471.36 billion and

the exported goods worth US$439.22 billion. Within this same
period, the services sector contributed a huge portion of its
import and export activities. 
France imports different commodities from other countries.
Some of the major import partners are represented in the chart
(2005): 
Foreign Trade In France

A recovery is being marked in the economy as the exports

sector grew by 3.2% in the year 2005 compared to 2.2% in the
year 2004. The level of imports also grew by 6.5% compared to
6.1% in the last year. The following table gives a clear picture
upon the growth rate of the exports and imports in the
country. 

Exports and Imports In France (% Change)

  2003 2004 2005 2006**
Exports Of Goods and Services -1.8 2.2 3.2 6.7
Imports Of Goods and Services 1.3 6.1 6.5 7.9
Net Exports* -0.9 -1.1 -1 -0.5
 FRANCE RELATIONS
UK
France and the UK are major economic and trade partners. France is
the UK’s third largest export market (the second in Europe) and the
UK's third largest supplier. Exports to France amount to some £20
billion per year and account for nearly 10% of UK visible exports
worldwide. Manufactured goods represent 80% of exports, energy
12% and agri-food products 7%. The trade balance is in France's
favour but the UK has substantial surpluses in the machinery,
pharmaceutical and energy sectors.

France in India
France is India's 5th largest trading partner in the EU (after
the UK, Belgium, Germany and Italy). The European Union is
the second most important destination of India's exports and
France accounts for 2.05 % in it. France's share in India's
imports was 1.3% in 2004-05. 

India's exports to France increased from USD 1119.03 mln in

2003-04 (April-Feb) to USD 1443.06 mln in 2004-05(April-
Feb), making a growth of 28.96 in one year. India's imports
from France were USD 988.11 mln in 2003-04 million (April-
Feb) and USD 1237.03 mln in the same period in the last
fiscal representing an increase of 25.19%. 

French exports to India include electrical equipment, organic

chemical products, aeronautical & space construction
products, mechanical equipment, general & special usage
machines, and pharmaceutical products. Indian exports to
France consist of both a)traditional items such as garments,
leather, textiles, raw cotton and yarn, and marine products,
and b) non-traditional items such as automotive components,
electronic and rubber components, chemicals and dye-stuffs,
pharmaceuticals, granite, and consumer durables are showing
promising growth. 

India in France
On the other hand, India's presence in France is far from
being significant. India doesn't emerge in the list of top 10
investing countries in France. Indian exports of software
services to France are still at a low level. Therefore, a huge
potential market remains open for the Indian software
industry. Tata Consultancy Services (TCS) has a partnership
with a French company in France, WIPRO is opening its own
representative office in Paris, Sankhya Infotech has a
commercial office in Toulouse, Satyam Infoway is also
looking for business opportunities in France and new Indian
companies like Netkraft Private Ltd. or Technova Information
Systems are gaining a preliminary foothold in the French
market. 

Also, the Indo French trade has remained modest in size from
France's point of view and the agriculture sector is no
exception. In 2002 France has exported only 70 million Euros
worth of Agricultural Commodities & Processed Food to
India. On the other hand, Indian exports to France during the
same period touched 210 million Euros. 
AUSTRALIA (BILATERAL TRADE)
Commercial links, both trade and investment, between
Australia and France are substantial but with the balance
firmly in France’s favour. France is currently Australia’s
15th largest merchandise trading partner (excludes
imports of aircraft since September 2008).
Australia’s merchandise exports to France totalled A$1.7
billion in 2008-09, dominated by coal (A$696 million) and
iron ore and concentrates (A$122 million). Other major
exports included aircraft and parts (A$119 million), and
medical instruments (A$101 million) and oil-
seeds/oleaginous fruits (A$83 million). Imports from
France in the same period totalled A$4.6 billion, with
major products including aircraft and parts (A$496
million), medicaments (A$750 million), perfumes and
cosmetics (A$208 million) and alcoholic beverages (A$193
million).

In terms of Services
In 2008 Australia exported A$654 million in services to
France. Services imports were valued at A$790 million,
with the bulk of exports and imports comprising personal
travel services. Tourist links between the two countries are
significant, with Australia receiving approximately 85,600
French visitors in 2008, making France our 14th largest
source of tourists. Over 400,000 Australians visited France
over the same period (French Tourist Bureau). Australia
and France signed a Working Holiday Maker Agreement
in 2003. In 2008 3,705 French students were enrolled in
accredited courses in Australia.

ESTONIA
In 2007, the turnover of trade with France amounted to 343.4
million EUR. The balance of trade was negative for Estonia by
126 million EUR. In terms of the turnover, France as
Estonia's trade partner placed 13th (1.8%).
In terms of exports, France was Estonia's 15th largest trade
partner (108.7 mln EUR), in terms of imports 13the largest
partner (234.7 million EUR), with the shares respectively 1.4%
and 2.1%. Compared to 2006, exports increased by 10%,
imports by 19%.
 WORLD TRADE
ORGANISATION (WTO)
The World Trade Organization (WTO) is an international
organization designed by its founders to supervise
and liberalize international capital trade. The organization
officially commenced on January 1, 1995 under
the Marrakesh Agreement, replacing the General Agreement
on Tariffs and Trade (GATT), which commenced in 1947. The
World Trade Organization deals with regulation of trade
between participating countries; it provides a framework for
negotiating and formalising trade agreements, and a dispute
resolution process aimed at enforcing participants' adherence
to WTO agreements which are signed by representatives of
member governments and ratified by their parliaments. Most
of the issues that the WTO focuses on derive from previous
trade negotiations, especially from theUruguay Round (1986-
1994). The organization is currently endeavouring to persist
with a trade negotiation called the Doha Development
Agenda (or Doha Round), which was launched in 2001 to
enhance equitable participation of poorer countries which
represent a majority of the world's population. However, the
negotiation has been dogged by "disagreement between
exporters of agricultural bulk commodities and countries with
large numbers of subsistence farmers on the precise terms of a
'special safeguard measure' to protect farmers from surges in
imports. At this time, the future of the Doha Round is
uncertain."
The WTO has 153 members, representing more than 95% of
total world trade and 30 observers, most seeking membership.
The WTO is governed by a ministerial conference, meeting
every two years; a general council, which implements the
conference's policy decisions and is responsible for day-to-day
administration; and a director-general, who is appointed by
the ministerial conference. The WTO's headquarters is at
the Centre William Rappard, Geneva, Switzerland.
 DONATIONS DONE BY
FRANCE TO WORLD
TRADE ORGANISATION
France donates EUR 3 million to WTO
development programmes for the period 2009-2011 and
EUR 3 million to the Enhanced Integrated Framework for the
same period.
Anne Marie Idrac, France’s Minister of Foreign Trade, stated
at the Ministerial Conference that France welcomed the
opportunity to support developing and least developed
countries through its contributions to WTO trade related
technical assistance and the Enhanced Integrated Framework.

France donates EUR 2 million to WTO

development programmes
France has donated a total of EUR 2 million (about CHF 3
million) to the Doha Development Agenda Global Trust Fund
(DDAGTF) and to the Enhanced Integrated Framework (EIF).

Theses donations are intended to build the capacity of

developing and least developed countries to negotiate
effectively within the WTO and help implement WTO
agreements. These are areas that are key to protecting the
trade interests and development needs of the world’s poorest
countries.
A first donation of EUR1 million (about CHF1.5 million) will
be offered to the Doha Development Agenda Global Trust
Fund. This contribution will be used to finance WTO technical
assistance activities targeted especially at the needs of
developing and least-developed countries as well as economies
in transition. The aim is to better adapt their practices and
laws to WTO rules and disciplines, improve the
implementation of their obligations and enhance the exercise
of their membership rights.

A second donation of EUR1 million (about CHF1.5 million)

will be offered to the Enhanced Integrated Framework Trust
Fund to provide trade-related technical assistance to least
developed countries. The aim is to assist LDC’s in identifying
their trade development needs and to integrate these needs into
the countries’ national development strategies and plans to
ensure that they are appropriately addressed by the country
and its development partners. This in turn will allow them to
take more fully advantage of the multilateral trading system.

“I welcome France’s donations to the WTO trust funds. These

contributions will allow developing countries to expand their
markets, integrate in the global economy and take better
advantage of the multilateral trading system. “declared the
WTO Director General Pascal Lamy 

Permanent Representative of France to the WTO Philippe

Gros stated “These contributions are an expression of
France’s commitment to support the development of poorer
countries, to improve the standard of living in these countries
and to foster developing economies through trade. France
intends to work hand in hand with Ms Tembo and her new
team of the Enhanced Integrated Framework to launch
ambitious programmes in favour of least developed countries
without any further delay.”
 France Trade Deficit
December 2007
France's trade deficit widened in 2007 to the biggest ever after oil
prices and the euro climbed to records in the past year.
The gap widened to a record 39.2 billion euros ($57.3 billion) from
2006's revised deficit of 28.2 billion euros, according to a ministry
statement. The last annual trade surplus was 1.1 billion euros in
2003. 
The December shortfall was 4.3 billion euros compared to a revised
4.6 billion euros in November. Exports fell to 33.1 billion euros from
33.2 billion the previous month as shipments to the Americas dropped
to 2.8 billion euros from 3.1 billion euros. Imports were 37.4 billion
euros, compared with 37.8 billion. 
 Shares of global total exports
and imports of top largest
countries
Comparing between the shares of global total exports and
imports of United States, Germany, China, Japan, France and
United Kingdom between the periods of 1985-2007, USA has
the highest amount of shares relative to others. USA’s shares
peaked in the year 2000 with 34.5% of shares in global imports
and exports. During that year, China has only 7.6%. However,
that year also marks a reversal of trend where the shares of
USA are on decline to 22.6% in the year 2007. On the other
hand, China’s shares in the global total exports and imports
have been surging rapidly from 3.5% in 1985 to 15.5% in
2007. China’s large pool of manpower and low cost of labor
have provided the comparative advantage for this upcoming
trend. China has already overtaken Japan, France and UK. It
would not be surprising when China would be able to overtake
USA and Germany in times to come.
 
Below is the chart of export and import's shares of United
States, Germany, China, Japan, France and United Kingdom
amongst global total exports and imports from year 1985 -
2007:
 CONCLUSION
The main goal of this project is to make the complex
relationship of international trade more understandable and
accessible to policy-makers, non-governmental organizations
and the public. The project also aims to dispel the idea that the
relationship between, trade and development can easily be
described as either negative or positive. It is an immensely
complex interaction that varies from country to country, sector
to sector, and firm to firm. There are both threats and
opportunities in this relationship for countries, local
communities and firms pursuing economic development and
environmental protection.
The challenge is to exploit the opportunities and reduce the
threats, and in so doing to maximize the net positive
contribution that trade can make to sustainable development.
A broader and clearer understanding of trade is a prerequisite
for seizing those opportunities and reducing those threats.
The conclusions that can be drawn from this project are
essentially about research and consensus-building,
enhancement of international co-operation, and defining new
and more balanced and participatory procedures for trade
policy-making on these issues. In particular, formal
assessments of trade liberalization will have to be undertaken.
These assessments will have to take account of the interrelated
economic and social effects of trade policies, through
integrated assessment techniques.