France - Market OverviewFrance - Market Overview
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. Differences are discussed frankly and have not generally been allowed to impair the pattern of close cooperation that characterizes relations between our two countries.
With a GDP of approximately $2.57 trillion in 2017 (+ 1.9% compared to 2016), France is the world’s seventh-largest economy and the EU’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 has already started to benefit from higher growth in Europe, with 2% GDP growth in 2017, and job creation is growing. France’s budget deficit dropped below the 3% limit to 2.6 percent of GDP in 2017 and the government has pledged to make further cuts in 2018. France’s public debt ratio of 97 percent of GDP remains one of the largest in the Euro-Zone.
Trade and investment 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. 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 welcomes foreign investment and has a stable business climate that attracts investors from around the world. The French government devotes significant resources to attracting foreign investment through policy incentives, marketing, overseas trade promotion offices, and investor support mechanisms. 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. High speed (3G/4G) telephony is nearly ubiquitous.
In 2017, France was the ninth largest global market for foreign direct investment (FDI) inflows with a year-on-year increase of 16%. 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 2017, the World Economic Forum ranked France 22nd 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 460,000 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 2017 American Chamber of Commerce in France - Bain Barometer Survey on the attitudes of U.S. investors in France, 90% of American investors surveyed said Macron’s reforms improved France’s investment prospects and image in the United States. More than one half of investors planned to hire new employees in France over the next two to three years. Investors in technology, in particular, found the climate for development of digital technologies and other innovations to be attractive in France. The metropolitan Paris region supports the largest concentration of technology engineers outside of Silicon Valley. In 2018 and beyond, Macron plans to introduce additional reforms, ranging from vocational training and unemployment insurance to rail and governments services.
Key issues to watch in coming months include: 1) whether President Macron is able to maintain the pace of reform, and 2) opportunities and challenges resulting from Brexit.
France Trade Development and Promotion