FRANCE - BUSINESS UPDATE

UNCLAS SECTION 01 OF 02 PARIS 001715 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 ELAB 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. France to ease restrictions on new EU workers -------------- ¶2. (U) Prime Minister Dominique de Villepin announced on March 13 that France would "gradually" open up its labor market to workers from eight countries that joined the EU in 2004 even though it could have theoretically maintained its restrictions on workers from new EU member states until ¶2011. Priority will be given to sectors where labor is in short supply. These include healthcare, hotels, restaurants, construction and transport. According to the latest figures, there are some 300,000 vacancies in those areas. However, the lifting of restrictions is likely to be very "progressive and controlled", as France has a 9.6 percent unemployment rate. Prior to this decision, some 74 percent of the authorizations issued in France were for seasonal workers, 11 percent for temporary workers, and only 5 percent for permanent workers. GE unit fined over use of English -------------- ¶3. (SBU) Earlier this month, a French appeals court ruled that a French subsidiary of U.S. firm must translate internal documents into French. More specifically, General Electric's Healthcare's French arm, GE Medical systems SCS, was ordered to provide workers with French versions of software, instruction and training manuals, and documents relating to health and safety. The court also fined the GE subsidiary 714,000 USD. This is the first time that a court applies the so-called Toubon law to materials used by an international company based in France. This law makes French mandatory in advertising and workplace documents. Price-fixing fine tarnishes French cosmetics industry -------------- -------------- ¶4. (U) France's most famous names in cosmetics were recently condemned by France's competition Council for price- fixing arrangements between 1997 and 2000. The Council imposed 55.1 million USD in fines to 13 perfume cosmetic brands (including Chanel, Christian Dior, Yves Saint Laurent, Guerlain, Clinique and Estee Lauder) and three vendors (Marionnaud, Sephora and Nocibe) for artificially inflating prices. This is the second time that France's anti-trust watchdog has slapped fines on French conglomerates for price collusion. Last year, the Competition Council ordered France's three mobile operators to pay a record combined fine of 628 million USD for distorting competition. France is losing the education battle -------------- ¶5. (U) A recent OECD study on education (The Economics of Knowledge: Why education is key for Europe's success) reveals that Europe is lagging Asia in the education race, held back by France and Germany. The study indicates that while most of Korea's young people pursue college and graduate studies, only half of today's school-leavers enter higher education in Germany and France. As a result, "France and Germany, which make up 35 percent of the EU's 11.6 trillion euro economy, are no longer the world's leaders in developing knowledge and skills," the OECD report concludes. It points to that social background, notably in France, Germany and Italy, as preventing young people from getting ahead. The OECD study further mentions that France refuses to publish the evidence it provides on social inequality between schools. The CAC 40 - Less and Less French -------------- ¶6. (U) The French stock Index CAC 40, generally recognizable across world market listings by the red white and blue tricolor is less and less French. The CAC 40 companies recently posted stunning profits of 84 billion Euros for 2005. While a member company of the index must nominally have its decision-making center "largely or historically" in France, a recent study shows that foreign investors increasingly dominate the index. A study by the government's National Institute of Statistics and Economic Studies (INSEE) shows that foreign shareholders hold 55 percent of the shares of non-bank CAC40 member companies. In addition, only 35 percent of the CAC 40 companies' work force is French. Finally, less then 30 percent of the non- bank companies' sales are made in France. Naturally, this state of affairs enabled President Chirac to claim that France was more open to foreign investment than Germany. A victory for much-maligned globalization? Stapleton