France country brief

Introduction

The Republic of France has a population of more than 62 million people. It includes four overseas departments in Martinique, Guadeloupe, Reunion and French Guiana. Metropolitan France in Western Europe accounts for just over 80 per cent of the territory and 96 per cent of the population of the French Republic.

France is an influential member of the European Union. It attaches a high priority to European integration. France held the EU Presidency 1 July-31 December 2008. France is a Permanent Member of the UN Security Council and is a nuclear weapons power. It is a member of the Group of Eight (G8) and Group of 20 (G20) major economies, and takes a leading role in contributing to the Middle East peace process and development issues in Africa.

Political overview

System of Government

The French political system is governed by the Constitution of 1958, which established the 'Fifth Republic', a Presidential system. The President is elected by universal suffrage and serves a five-year term. The current President, Nicolas Sarkozy, was elected in May 2007. Following recent constitutional changes, French Presidents can serve a maximum of two terms. The national legislature, which may be dissolved by the President, is composed of two Houses: the Upper House or Senate (342 members who now serve six year terms - will increase to 346 by 2010) and the Lower House or National Assembly (577 members). Senate elections were held on 21 September 2008. Elections for the National Assembly are held every five years. There is a clear separation of executive and legislative powers. The Prime Minister and all other Ministers are appointed by the President, who also has the power to dismiss them.

Under the 1958 Constitution the President is the head of the armed forces, guarantor of national independence and responsible for signing international treaties. The government determines and implements national policy and the Prime Minister is responsible for national defence.

On 21 July 2008, both houses of the French Parliament (Congress) agreed to broad constitutional reforms which further define the president’s powers, including requiring consultation with Parliament on appointments and military deployments, setting the above-mentioned two term maximum mandate and limiting discretionary powers. Under the reforms the President will be able to address both houses of parliament for the first time since 1875. President Sarkozy delivered his first such address on 22 June 2009. The reforms also serve to reinforce the powers of the parliament and provide new rights for French citizens, including legal recognition of the right of equal access for men and women to high level positions.

President Sarkozy’s UMP (Union for a Popular Movement) Party won an unequivocal victory in the European Parliament elections held in France on 7 June 2009, with a number of French Government Ministers elected to the Parliament. President Sarkozy credited the success of France’s EU Presidency (July-December 2008) and the Government’s efforts in response to the international financial crisis for the win, and regarded it as a mandate to push ahead with elements of his long-standing domestic reform agenda. A subsequent French Government reshuffle of positions, and some portfolios, on 24 June 2009, saw eight new Ministers enter the French Government. While government traditionally starts to wind down in France after Bastille Day (14 July), both houses of Parliament held exceptional sittings until the end of July 2009 to push through the government’s reform agenda.

Economic overview

France is a leading industrialised country with a mature and sophisticated market economy. Per capita GDP in 2007 was US$41,940, rising to US$46,037 in 2008. GDP is dominated by the services sector (over 70 per cent). Aerospace, automobile and agriculture industries also contribute significantly to GDP and are, together with tourism, significant export earners.

Two thirds of France’s trade is with other European countries. Its major trading partner is Germany. It is the world’s second largest agri-food exporter, and the world’s foremost tourism destination. A substantial number of French multinational companies dominate market share across a broad range of global sectors. Paris is a leading financial market in the Eurozone and is ranked second in the world for international financial institutions with 46 per cent of market capital held by foreign investment institutions. France is the most energy independent of the G8 industrialised countries owing to its heavy reliance on nuclear energy. Over 75 per cent of electricity is generated by nuclear power plants.

While France has been in recession fell into recession in April 2008, it was not hit as hard as the other major European economies and has recovered more quickly. Figures released on 13 August 2009 by French statistics agency INSEE (National Institute of Statistics and Economic Studies) show that France emerged from technical recession in the second quarter of 2009, growing 0.3 per cent after four consecutive quarters of negative growth. French exports rose 1 per cent (after a 7.1 per cent fall in the first three months of 2009); consumption (assisted by lower inflation and energy costs, the national fiscal stimulus package and additional Government incentive measures) rose by 0.3 per cent; and the French economy lost 75,000 jobs (comparing favourably with 168,000 jobs lost in the first three months of 2009). Government spending in the first six months of 2009 rose substantially – according to the Budget Ministry, the half-yearly deficit was €86.6 billion (A$148 billion) compared to €32 billion (A$54 billion) 12 months ago.

Unemployment has been among the French Government’s most pressing economic and political concerns. The rising jobless rate was the main driver behind a rise in social unease and protest action in France in the first half of 2009. Days of “social action” took place in January, March, May and June (although the successive demonstrations attracted less and less public support), leading President Sarkozy to add a “social justice” package to his economic stimulus plan to assist low income earners, and social security recipients. According to the INSEE, France’s unemployment rate had reached 9.1 per cent by the end of the second quarter of 2009 (9.5 per cent including France's overseas departments), up from 8.7 per cent in March. The 15-24 age group continues to be the worst affected.

President Sarkozy has used the global financial crisis to underline the urgency of progressing the government’s domestic economic reform agenda. His main priority in 2009 is to reduce public expenditure at the regional and local administrative levels. The French Government’s €26 billion (A$49.9 billion) stimulus package is designed to promote employment and growth. The package provides funding in a number of key sectors such as research, cultural heritage, justice and defence, as well as major infrastructure work.

France is counting on public investment under its investment-led economic stimulus plan to play a significant compensatory role and underpin the expected gradual economic recovery during 2010. The Government’s 2010 draft budget, presented on 30 September 2009, maintains a number of key elements of President Sarkozy’s 2009 stimulus plan, with an easing of expenditure on some stimulus programs, while introducing a range of new welfare entitlements for the young unemployed. The most significant benefit for business is the abolition of the “professional tax” on business investment from 1 January 2010. The budget figures also include the Government’s new carbon tax, also to be introduced on 1 January 2010. According to the Government’s economic forecasts, GDP growth of 0.75 per cent is expected in 2010. Inflation is expected to remain low, at an annual average of 0.4 per cent in 2009, before rising to 1.2 per cent in 2010.

Bilateral relationship

Australia’s relations with France are positive and friendly. Dialogue and practical cooperation between the two countries have been strengthening on many fronts in recent years, including on key global security issues such as arms control and disarmament, non-proliferation and counter-terrorism. Australian and French officials meet regularly for political-military talks. The last talks were held in Paris in November 2009. The Pacific region, where both countries have direct interests, continues to be an important focus of bilateral engagement. Commercial links are substantial and France is an increasingly important source of direct investment and technology, including in the defence sector. Cooperation in the surveillance of valuable fisheries resources is also an area of ongoing bilateral activity, including under the Treaty on Cooperation in the Maritime Areas adjacent to the French Southern and Antarctic Territories, which entered into force in 2005. Although Australia and France share many common interests important policy differences exist, notably in the area of agricultural trade liberalisation. People-to-people links between Australia and France are growing, as are science, research and cultural exchanges.

High Level Contact

High level contact and visits are important in promoting cooperation and understanding between Australia and France.

• The Minister for Foreign Affairs, the Hon Stephen Smith MP, met French Foreign Affairs Minister Bernard Kouchner at the UN General Assembly in September 2009.
• The Minister for Trade, the Hon Simon Crean MP, visited France 24-25 June 2009 to attend the OECD Ministerial Council meeting and to host an informal meeting of trade ministers to discuss advancing the WTO Doha round.
• The Minister for the Environment, Heritage and the Arts, the Hon Peter Garrett AM MP, visited France 25-27 June 2009 where he accepted an Order of Arts and Letters from the French Government and held discussions at the International Energy Agency (IEA).
• Senator the Hon Penny Wong, Minister for Climate Change and Water, led Australia’s delegation to the second meeting of the Major Economies Forum (MEF) on Energy and Climate held in Paris 25-26 May 2009.
• The Minister for Infrastructure, Transport, Regional Development and Local Government, the Hon Anthony Albanese MP, visited France 29-31 March 2009 to participate in OECD meetings and to meet the French Minister for Economic Stimulus, Patrick Devedjian, as well as senior executives of leading French infrastructure companies.
• The Minister for Veterans’ Affairs, the Hon Alan Griffin MP, visited France 20-25 April 2009, where he delivered the commemorative address at the second annual ANZAC Day Dawn Service at Villers-Bretonneux, and held discussions with his French counterpart and regional authorities responsible for WWI commemorative sites.
• The Governor-General, HE Ms Quentin Bryce AC, visited France 6 - 13 November 2008, to represent Australia at official French ceremonies commemorating the 90th anniversary of Armistice Day. She also met President Sarkozy.
• During his visit to France in October 2008, the Minister for Foreign Affairs, the Hon Stephen Smith MP, launched the Australia-EU Partnership Framework and met French Foreign Minister Mr Bernard Kouchner, French Minister for Defence, Mr Hervé Morin, and French Secretary of State for Foreign Affairs and Human Rights, Ms Rama Yade.
• Mr Smith had previously met Mr Morin during Mr Morin’s visit to Australia in September 2008. While in Canberra, Mr Morin also met Prime Minister Rudd, the Minister for Trade, the Hon Simon Crean MP, and the former Minister for Defence, the Hon Joel Fitzgibbon MP.
• On 3 April 2008, Prime Minister Rudd met French President Sarkozy at the NATO Summit in Bucharest. Also at the NATO Summit, the former Minister for Defence Hon Joel Fitzgibbon MP met France’s Minister for Defence, Mr Hervé Morin.

Pacific engagement

France has direct strategic and economic interests in the region through its Pacific entities of New Caledonia, French Polynesia and Wallis and Futuna. France is a member of the Pacific Commission and the South Pacific Regional Environment Programme , and has been a dialogue partner of the Pacific Islands Forum since 1989. France convened its third France-Oceania Summit in Noumea on 31 July 2009. Previous Summits were held in Paris (2006) and Papeete (2003).

Australia and France cooperate on Pacific issues in areas of development assistance to Pacific island countries, including through such initiatives as the joint Australia-France HIV and STI programs for Pacific Islands, announced in July 2003. Cooperation is well established in some defence areas, including disaster relief coordination under the trilateral FRANZ arrangement with New Zealand, and maritime fisheries surveillance, also under trilateral arrangements with New Zealand. The latter cooperation was formalised under a joint declaration signed in Canberra in March 2006.

Defence Cooperation

Australia’s defence relationship with France is solid and continues to grow in terms of personal contact at high levels, frequent exchanges, single Service and Joint meetings, and major equipment procurement programs. In 2006, a new Defence Cooperation Agreement between the two countries was signed, providing a framework for further cooperation. The Agreement entered into force on 7 July 2009. Progress of negotiations on a Mutual Logistics Support Arrangement (MLSA) was discussed during the September 2008 visit to Australia by French Defence Minister Morin.

Australia and France regularly participate in combined force training exercises. Australian and French forces have co-operated in the Pacific and Southern Oceans, including for emergency and disaster relief and operations against illegal fishing.
In recent years Australia and France have developed a good working relationship in the counter-terrorism field, including as founding members of the Proliferation Security Initiative to combat the trafficking in weapons of mass destruction. France is a valuable partner in this area, with significant expertise and experience in combating and prosecuting terrorism, a system of specialist counter-terrorism judges, and global reach, including in regions where Australian knowledge is limited, e.g. North Africa.

Australia works closely with France in arms control regimes such as the Australia Group, the Comprehensive Nuclear Test Ban Treaty, Missile Technology Control Regime and the Proliferation Security Initiative, to strengthen export controls and non-proliferation norms.
As the fourth largest contributor to the United Nations and a P5 Member, France's positive approach to reform of the Security Council is important. The UN Peace Building Commission and Democracy Fund are reform initiatives where Australia and France share common views and together play a leading role.

The French company Thales has a major investment stake in Australian defence industries. France is currently the world’s fourth largest exporter of defence materiel with a 6 per cent share of the international market.

World War Commemorations

The legacy of Australian involvement on French soil in the First and Second World Wars plays an important role in the bilateral relationship. Over 45,000 Australians lost their lives on French soil in the two conflicts – more than in any other country in the world. Each year many Australians travel to the Western Front to commemorate the thousands of Australians who were killed and injured there in World War I. An Anzac Trail will develop seven key sites in France and Belgium in the lead-up to the centenary of World War I (2014-18), to honour their courage and sacrifice. The sites currently under consideration are Villers-Bretonneux, Pozieres, Bullecourt, Fromelles, Mont St Quentin, Ypres and Tyne Cot.

The Battle of Fromelles was the first battle fought by the Australians on the Western Front. The battle occurred in northern France just south of Armentières. The Commonwealth War Graves Commission is currently constructing the Fromelles (Pheasant Wood) Military Cemetery which will be the final resting place for the soldiers discovered at Pheasant Wood in excavations conducted in 2008 and 2009. This is the first full cemetery that the Commission has constructed in more than 50 years.

The Governor-General, HE Ms Quentin Bryce AC, represented Australia at official French ceremonies on 11 November 2008 commemorating the 90th anniversary of Armistice Day. Over 4,000 people commemorated the 90th anniversary of the battle of Villers-Bretonneux on 25 April 2008 with a special Anzac Day Dawn Service at the Australian National Memorial at Villers-Bretonneux. The Government announced that the Dawn Service would continue in future years. Minister for Veteran’s Affairs, Mr Griffin, represented Australia at the 2009 Dawn Service.

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 (excluding imports of civil aircraft since September 2008) in the same period totalled A$4.7 billion, with major products including medicaments (A$750 million), aircraft and parts (A$496 million), perfumes and cosmetics (A$208 million) and alcoholic beverages (A$193 million).

Services

In 2008-09 Australia exported A$745 million in services to France. Services imports were valued at A$870 million, with the bulk of exports and imports comprising recreational travel services. Tourist links between the two countries are significant, with Australia receiving approximately 89,400 French visitors in 2008-09, making France our 15th 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.

Investment

Total Australian investment in France in 2008 was valued at A$35.4 billion (A$333 million of which was FDI). The major new commercial activity in the past financial year has been Macquarie’s acquisition in October 2008 of French company Pisto which owned significant oil storage and pipeline facilities across France, including the oil terminals at Le Havre Port. In June 2007, Australian investment company, Challenger, acquired 66 per cent of French company LBC Tank Terminal Group (LBC). LBC is the second largest operator of tank storage facilities for liquid bulk chemical products in the world.

Billabong has invested in the south-west of France in surf and sportwear. Following the opening of its second Paris office in 2007, Servcorp is now well established in the competitive field of serviced office rentals and has opened a third office in the capital. In 2007 QBE insurance celebrated the 10th anniversary of QBE France. The Queensland-based company Ingeus, which provides job placement services for long-term unemployed, has opened several new offices and won important employment placement contracts in four separate regions of France. Bovis Lend Lease manages property and projects in France, including Disneyland Paris. Australian investment in France received a significant boost in December 2005, with the French Government's announcement of Macquarie Bank's successful tender, with its French partner Eiffage for the privatisation of the Autoroutes Paris Rhin Rhône (APRR) toll road (the fourth largest tolled motorway network in Europe). Macquarie’s consortium currently holds 81 per cent of APRR.  Rio Tinto Alcan operates two large aluminium production plants in northern France.

Australian music, indigenous art and fashion exports to France continue to grow. In 2007, Australian cosmetics firm, Aesop, provider of high-quality skin-care products, opened a boutique on the Champs Elysees in Paris and the Sydney-based company ModelCo also secured new business. Australian fashion designers Martin Grant, Colette Dinnigan, Akira Isogawa, Easton Pearson and Nicola Finetti are well regarded in France. The 2008 Paris fashion week featured Willow, Material Boy, Life with Bird, shoe designer Mary Kyri, and bag designer Stephen Harkin. Austrade has created a website to promote Australian fashion, design and beauty in France.

France is the ninth largest foreign investor in Australia with a total investment of A$28.9 billion in 2008 (A$13.4 billion of which was FDI). There are now around 300 companies in Australia with a French association employing some 70,000 people. A number of companies, such as AXA, have chosen to headquarter their regional operations in Australia or to build very substantial offices with considerable regional responsibilities, such as the hotel group Accor.

Major French investments have been made in the financial services, telecommunications, pharmaceuticals, energy, resources and agribusiness sectors. Some important examples include the acquisition of a 51 per cent stake in National Mutual by insurer AXA; Pernod-Ricard's purchase of the Orlando-Wyndham group; the participation of Vivendi in the successful bid for the A$1.5 billion project to manage South Australian Water; Transroute's participation in the construction consortium concerning the A$1.5 billion Melbourne City link toll-road; and Thales purchase of Transfield Holdings’ remaining 50 per cent interest in ADI (Australian Defence Industries).

An important initiative in 2007 to boost our trade and investment relationship with France was the establishment of the Australian Business in Europe (ABIE) Paris Chapter's Corporate Club. The Corporate Club has a high-level membership (pitched at CEO or MD engagement) of the main Australian and French multinationals involved in the bilateral trade and investment relationship. Its launch has already paid dividends, stimulating contact and collaboration between some of the participants. The initiative has also helped strengthen the Paris chapter of ABIE by bringing a number of the major multinationals into the organisation for the first time. Recent events have included presentations by senior academics and business people on the global economic crisis, and cross cultural communication in business.
The European Australian Business Council (EABC), a national not-for-profit body based in Sydney, sends a business mission to Europe annually to meet policy makers and business people with a view to developing linkages and discussing the current business environment in Europe as well as opportunities for Australian trade and investment. A delegation from the 2008 EABC business mission visited Paris 31 May – 3 June.

The Arts

Australia and France have a dynamic relationship in all fields of the arts, with Australian artists enthusiastic to work within the French cultural tradition, and many French counterparts keen to explore Australia's vibrant culture. Institutional links are encouraged within the framework of the 1977 Australia-France Agreement on Cultural and Scientific Cooperation. The Australian Embassy in Paris administers the Australia-France Foundation, which promotes cultural and people-to-people exchanges. The Department of Foreign Affairs and Trade's Cultural Awards Scheme has also helped promote cultural relations between Australia and France.

The National Gallery of Australia will present masterpieces from the collection of the Musee d’Orsay (December 2009-April 2010). Australia will be the first country to exhibit the chosen works together outside France. Australia has made a significant contribution to the Musée du Quai Branly, a major international museum dedicated to the world's indigenous arts and cultures that opened in Paris in June 2006. A permanent installation of works by eight Australian Indigenous artists commissioned by the Australian Government has been incorporated into the structure of one of the main buildings of the museum.

The energy, physicality and technique of Australian dance are appreciated by French audiences. The Australian Ballet performed in Paris for the first time in 43 years (29 September – 4 October 2008), accompanied by Bangarra Dance Theatre – making its Paris debut. Their double bill program was a sell-out success. The Australian Dance Theatre returned in late 2009 for a five-city tour of the production “G”.

Export opportunities

Information and Communication Technology
The French market for information and telecommunications (ICT) services is growing as France adopts technological innovations as part of the EU's Lisbon Agenda to lift EU productivity. Current growth trends indicate that France will continue to be one of the world's most attractive destinations for mobile infrastructure, satellite equipment, optical fibre, telephones, pagers and internet services. Australia and France signed an agreement on cooperation in Information and Communications Technology in 2002 to encourage greater two-way trade and investment in the ICT field.

Biotechnology

France is the third-largest market in Europe in biotechnology, behind the UK and Germany. Australia's reputation in research and development has gained prominence within the EU, including France. Over 80 per cent of French biotechnology companies are involved in the health sector, with a majority of the remaining companies in the agricultural and environmental fields. Opportunities for Australian biotechnology companies include pharmaceutical discovery, development and manufacturing, with potential to initiate collaborative research partnerships, technology transfer agreements or licensing ventures.

Food & Beverage

The main opportunities for Australian exporters in the French food and beverages area are in wine, seafood, meat, game meats, fruit and vegetables, and processed food.

Indigenous Art & Crafts

French interest in Australian Indigenous arts and crafts (including fine art, handcrafts, homeware and textiles) has been growing markedly in recent years. This has been further heightened by the opening in June 2006 of the Quai Branly Museum for international Indigenous art.

Updated 03 December 2009