Identifier
Created
Classification
Origin
05PARIS8374
2005-12-09 16:25:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Paris
Cable title:  

FRANCE - BUSINESS UPDATE

Tags:  ECON EINV ETRD PREL FR EUN 
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UNCLAS SECTION 01 OF 02 PARIS 008374 

SIPDIS

SENSITIVE

STATE FOR EB/TPP, EUR/ERA, EUR/WE, EUR/PPD, EB
STATE PASS USTR
COMMERCE FOR ITA

E.O. 12958: N/A
TAGS: ECON EINV ETRD PREL FR EUN
SUBJECT: FRANCE - BUSINESS UPDATE

NOT FOR INTERNET DISTRIBUTION

UNCLAS SECTION 01 OF 02 PARIS 008374

SIPDIS

SENSITIVE

STATE FOR EB/TPP, EUR/ERA, EUR/WE, EUR/PPD, EB
STATE PASS USTR
COMMERCE FOR ITA

E.O. 12958: N/A
TAGS: ECON EINV ETRD PREL FR EUN
SUBJECT: FRANCE - BUSINESS UPDATE

NOT FOR INTERNET DISTRIBUTION


1. (U) This message contains a series of updates on French
trade and business news.

U.S. Investment in France is Up
--------------

1. (SBU) France's President of the French Agency for
International Investment, Clara Gaymard, recently told a
French business daily that U.S. investment was up 24 percent
last year, ahead of all other foreign investment in France.
She added that the Franco-American economic and trade
bilateral relationship had not suffered from France's
position on Iraq. She concluded that although the "tone of
the relationship is not improving," the economic
relationship is `very good.'" Gaymard further agreed with
her Government's stance on "economic patriotism," claiming
that it was not particular to France, and that it was an
element of national pride in all countries except France.

Redefining France's "Attractiveness"
--------------

2. (U) Gaymard also presented a new scoreboard of the
attractiveness on France, which she considers more relevant
than existing studies, which are based on criteria of
concern to economists rather than foreign investors. As a
result, the Invest in France Scoreboard has included
categories in which France excells, such as the number of
foreign students having received university education in
France and penetration of broadband Internet. France leads
the EU in both areas but remains behind the U.S., Japan and
Finland. (Note: For more details on the scoreboard, and in
English, go to http://www.investinfrance.org/France/?l=en.
End Note).

French Efforts to Select Foreign Students
--------------

3. (SBU) France is proposing more overseas staff and a more
rigorous selection process for foreign students wishing to
study in France. As part of a package of tighter
immigration laws to be presented to Parliament for approval
early next year, beefed up staff in French Embassies will
screen students before their arrival in France and select
the best of them according to four additional criteria:
their targeted research/study plan, their resume, their
linguistic skills, and the state of bilateral relations with

the country of origin of the student. With 50,000 new
foreign students every year, France is currently the third
global destination of foreign students, behind the U.S. and
the United Kingdom.

China's hard bargaining with Airbus
--------------

4. (SBU) The Chinese apparently leaned hard on the French
to obtain local assembly as part of their recent "historic"
USD 9.7 billion Airbus deal -- the biggest single order from
China. In the run-up to Chinese Prime Minister Wen Jiabao's
four-day visit to France December 4-7, Chinese negotiators
pushed hard to associate a "precondition" to the order, i.e.
that the European aircraft maker investigate the feasibility
of opening an assembly plant in China. Reflecting the
ambivalent mood in France with regards to this deal, the
official French news service AFP opined that any big deals
with China "come with strings attached, namely the transfer
of know how and technology to their country so it can be a
heavy manufacturing powerhouse in the future." This
analysis was further substantiated when the Chinese Prime
Minister told the French elite Polytechnic School that
France should "offer more attractive conditions on
technology transfer as well as price" if French nuclear
group Areva is to win a massive contract to built third-
generation nuclear reactors in China. The big contracts
have allowed France to become China's second largest
technological cooperation partner in the EU and its third
largest source of direct investment, although France remains
far behind the UK and Germany. In terms of bilateral trade,
France's share of the Chinese market has dropped from 2.7
percent five years ago to 1.4 percent. France is China's
fourth EU trading partner and 15th worldwide.

Foreign Investment Offsets Outsourcing
--------------

5. (U) A recent study by the Assembly of French Chambers of
Commerce and Industry (ACFCI) shows that a majority of the
100 middle-sized French companies polled moved some
operations to East European countries, China, and Maghreb
countries, and that most companies noticed an immediate
improvement in their financial situation. The study,
entitled "Fear of outsourcing is not a solution" shows that
outsourcing has cost 10,000 jobs in France in 2004; however,
foreign investment has led to the creation of 30,000 jobs.

Pharmaceutical Industry angry at rise in tax
--------------

6. (U) The recently adopted French Social Security
Financing bill for 2006 means bad news for the
pharmaceutical industry in France. To bring the Social
Security deficit down from an estimated 11.9 billion euros
in 2005, to 8.9 billion euros in 2006, the new Social
Security Finance bill calls for a rise on an "exceptional
basis" from 0.6 to 1.96 percent in the tax on the
pharmceutical companies' turnover, despite protests from the
industry and the Embassy. (Note: this "exceptional" tax has
been in existence for three years, and has risen every
year.)
STAPLETON