This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 17 PARIS 000349 
 
SIPDIS 
 
PASS FEDERAL RESERVE 
PASS OPIC 
PASS USTR 
STATE FOR EB/IFD/OIA, EUR/WE 
TREASURY FOR DO/IM SOBEL, RHARLOW, LHULL 
TREASURY ALSO FOR DO/IMB AND DO/E WDINKELACKER 
USDOC FOR 4212/MAC/EUR/OEURA 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ELAB PGOV KTDB FR OPIC USTR
SUBJECT: FRANCE 2005 INVESTMENT CLIMATE STATEMENT 
 
REF: 04 STATE 250356 
 
¶1.  Investment Climate Statement 
 
Contents 
 
¶A. French Investment Regime 
 
A1. Openness to Foreign Investment 
A2. Conversion and Transfer Policies 
A3. Expropriation and Compensation 
A4. Dispute Settlement 
A5. Performance Requirements and Incentives 
A6. Right to Private Ownership and Establishment 
A7. Protection of Property Rights 
A8. Transparency of the Regulatory System 
A9. Efficient Capital Markets and Portfolio Investment 
A10. Political Violence 
A11. Corruption 
 
¶B. Bilateral Investment Agreements 
 
¶C. OPIC and Other Investment Insurance Programs 
 
¶D. Labor 
 
¶E. Foreign Free Trade Zones/Ports 
 
¶F. Foreign Investment Statistics 
 
 
 
¶A. French Investment Regime 
 
Ensuring that France's investment climate is attractive to 
foreign investors is a priority for the French government, 
which sees foreign investment as a way to create durable 
jobs and stimulate growth.  Investment regulations are 
simple, and a range of financial incentives for foreign 
investors are available.  A public and commercial 
establishment, the French Agency for International 
Investment (Agence Francaise pour les Investissements 
Internationaux - AFII) integrates all offices responsible 
for promoting investment in France.  The agency combines the 
overseas offices of the Invest in France Agencies (IFA), 
with the Invest in France Network (IFN) association. 
 
Foreign investors say they are attracted to France by its 
skilled and productive labor force; its central location in 
Europe with its free movement of people, services, capital 
and goods that took on even greater significance with the 
introduction of Euro coins and bills in January 2002; good 
infrastructure; and its technology-oriented society. 
However, despite a decade or more of economic reforms and 
liberalization, U.S. and foreign companies often point to 
very high payroll and income taxes, pervasive regulation of 
labor and products markets, and sometimes negative attitudes 
toward foreign investors as disincentives to investing in 
France. 
 
A1. Openness to Foreign Investment 
 
The Formal Investment Regime 
 
The formal French investment regime is among the least 
restrictive in the world.  There is no generalized screening 
of foreign investment.  Only acquisitions, irrespective of 
size or the nationality of the investors, involving public 
order the national security of France or the national 
defense interests or research-production-sales of armament, 
ammunition, powders, and explosive substances are subject to 
prior approval by the Finance Minister 
([http://www.legifrance.gouv.fr] - search for 10 December 
2004 French Official Journal  - loi no 2004-1343 du 9 
decembre 2004 de simplification du droit).  Nevertheless, 
there are certain sector-based foreign investment 
restrictions that in practice tend to favor investors from 
other EU countries. France has notified the OECD of 
restrictions in the following sectors: 
 
Agriculture          Aircraft Production 
Air Transport        Atomic Energy 
Audiovisual          Banking/Financial Services/Accounting 
                         Services 
Defense Industry     Insurance 
Maritime Transport   Publishing 
Radio & Television   Road Transportation 
Telecommunications   Tourism 
More details can be found in OECD reports.  The OECD 
Internet address is [http://www.OECD.org]. 
 
In applying sector restrictions, French authorities look to 
the place of residence, rather than to the nationality, of a 
potential investor. The place of residence of a corporate 
investor is determined by the place of residence of its 
ultimate beneficial owners, without regard to place of 
incorporation.  While firms owned or controlled by American 
citizens legally resident in an EU country will usually be 
considered as EU residents, France will normally consider 
the following entities with American ownership or 
participation to be non-EU residents: 
 
-- Firms established or incorporated in other EU countries, 
but owned or controlled by American residents. 
 
-- For publicly traded entities, firms where non-EU 
residents own more than 20 percent of a firm's capital. 
 
-- For non-publicly traded entities, firms where non-EU 
residents ultimately own or control more than 33.3 percent 
of a firm's capital, unless physical persons who are EU 
residents also own more than 50 percent of the firm's 
capital. 
 
However, for publicly and non-publicly traded firms, the 
French government retains the authority to declare that a 
firm is controlled by non-EU investors, even if the share of 
capital held by non-EU investors falls short of the 
thresholds noted above. To determine if non-EU investors 
control a firm, the French government may look at, among 
other factors, the residency of members of the board of 
directors, and the ability of non-EU investors to veto key 
management decisions or commercial ties (such as loans, 
guarantees, options, licenses, or contracts) if these 
factors effectively make the French company dependent on 
foreign investors. Firms with questions about their 
residency status should contact the Office of Foreign 
Investments at the following addresses: 
 
Ministere de l'Economie, des Finances et de l'Industrie, 
Direction du Trsor : 
 
Service du Financement  de L'Economie 
Bureau B1 Epargne et March Financier 
139, rue de Bercy 
75012 Paris, France 
Tel:  (33)- 1- 40-04-04-04 
 
Agence des  Participations de l'Etat 
139, rue de Bercy 
75012 Paris, France 
Tel:   or (33)- 1- 40-04-04-04 
 
The AFII website ([http://www.afii.fr/NorthAmerica] in 
n 
English) provides basic regulations covering foreign direct 
investment, and a general framework on legal issues to help 
business decisions, notably in its "Doing Business in 
France" report.  The website of the Paris Chamber of 
Commerce and Industry provides English summaries of 
regulations applicable to foreign direct investment: 
[http://www.CCIP.fr/index.asp?idmetapage=17]. 
 
Informal Impediments to Foreign Investors 
 
The January 1, 1999 introduction of the Euro as the single 
currency of the European Monetary Union (EMU), including 
France, has increased the competitive pressures on France to 
improve its domestic business and investment climate in 
order to promote growth and create new jobs. In addition, 
France has responded to a more competitive international 
investment climate by implementing market-oriented economic 
reforms that increase the attractiveness of the French 
economy to foreign investors, and by offering a variety of 
investment incentives.  Foreign investors also say they are 
attracted to France by its central location in Europe, 
highly skilled labor force, and good infrastructure 
(although France continues to lag behind the U.S. and some 
other European countries in personal computer use and 
Internet access). 
Yet, while today's foreign investors face far less 
interference than was once the case, more than a decade of 
reforms has not entirely overcome a traditional preference 
for national control of business and a sometimes-reflexive 
opposition to foreign investment.  In some cases, this can 
be seen in labor organization opposition to acquisitions of 
French businesses by U.S. firms, often reflecting a 
perception that U.S. firms focus on short-term profits at 
the expense of employment.  In other cases, French firms 
have stated a preference for working with French and 
European, rather than U.S. firms.  A degree of opaqueness in 
the privatization process (see below) can also aggravate 
suspicions about the equal treatment of foreign investors in 
publicly held firms. 
 
In addition, deregulation is far from complete and the state 
remains very involved in economic life.  There is extensive 
regulation of business and labor markets, and business 
taxation rates are high compared to other leading industrial 
countries.  Foreign investors most often cite complicated 
and pervasive labor regulation and high income and payroll 
taxes as the greatest disincentives to investing in France. 
In the case of labor market regulation, the impact on 
companies of the 35-hour legal workweek is mixed.  Many 
companies took the opportunity of negotiations with 
employees on the switch to the 35-hour workweek to implement 
work-hour annualization or greater labor flexibility. 
Companies also benefited from a further cut in payroll taxes 
on low wages.  On the negative side, the 35-hour workweek 
mechanically increased labor costs since wages remained 
unchanged.  The government is taking measures to make the 
law less rigid (See D. Labor) 
 
The French and U.S. business communities initially described 
France's new "social modernization law", passed in July 
2001, as creating burdensome new obligations.  The center- 
right government elected in 2002 is selectively implementing 
the law through its power over implementing decrees.  In 
addition, the Government has a broad range of investment 
promotion and competitiveness measures in the legislative 
pipeline. 
 
In making its annual decision on raising the minimum wage by 
5.8 percent (effective July 2004), the Government aimed at 
stimulating household consumption, the motor of economic 
growth.  By giving the biggest increases to those who are 
the poorest paid this year, the Government has also reduced 
the differential between the six different minimum pay 
levels, themselves the result of the differing years when 
people switched to the 35-hour week.  Total convergence 
between the six levels will be achieved in 2005.  Despite 
the increase in the minimum wage, wages in the private and 
public sectors are expected to accelerate only slightly 
compared with last year (2.5% compared with 2.4% in 2003) as 
the high unemployment rate restrains wage demands.  The 
government decision to resume income tax cuts in 2006 should 
benefit the French economy, making France a more attractive 
place for both French and foreign investment. 
 
The French treat two social security taxes, the 
"Contribution Sociale Generalisee" (CSG) and the 
"Contribution au Remboursement de la Dette Sociale" (CRDS), 
as social security contributions.  U.S. contributors to the 
U.S. Social Security system do not pay these taxes.  (Based 
on the "May 2 2001-377 ordonnance" to apply the 1408/71 EEC 
regulation, only "individuals who are subject to income 
taxes in France and contribute to the French social security 
system including health insurance pay CSG and CRDS". The 
related "circulaire d'application" was published in the May 
20, 2001 "Bulletin Officiel du Travail, de l"Emploi et de la 
Formation Professionnelle" 
[http://www.travail.gouv.fr/publications]. 
 
On December 8, 2004, the United States amended the income 
tax convention between the United States and France to avoid 
double taxation and the prevention of fiscal evasion, and 
the estate and gift tax convention to avoid double taxation 
with respect to taxes on estates, inheritances and gifts 
[http://www.treas.gov/offices/tax-policy/trea ties.shtml]. 
 
English summaries of labor and tax regulations applicable to 
foreign companies in France are available at the AFII's 
website [http://www.afii.fr/France/Doing 
Business/db_2004_taxation_en.pdf] and at the Paris Chamber 
of Commerce and Industries' website 
[http://www.CCIP.fr/index.asp?idmetapage=17]. 
 
France's Privatization Program 
 
The former Socialist-led government that took office in July 
1997 returned to the private sector all or parts of its 
stakes in a number of large companies, banks and insurance 
groups.  U.S. firms showed interest in some of these sales. 
The current center-right government, elected in 2002, 
announced preliminary plans, but the global slump in the air 
transportation and overall equity market declines put a 
brake in privatizations through the sale of shares.  In 2003 
and 2004, the government reduced its stakes in large 
companies such as Air France-KLM (to 44.6 from 54.0 
percent), France Telecom (to 42.2 from 54.5 percent), Thales 
(formerly Thomson CSF, to 31.3 from 33.3 percent), Renault 
(to 15.6 from 26.0 percent), and Thomson (to 2.0 from 20.8 
percent through TSA).   Smaller projects were carried out: 
privatizations of SAPRR (Paris-Rhin-Rhone highway company), 
and of the electricity company SNET.  Plans to open the 
capital of three major energy-sector companies (EDF, GDF and 
Areva) in 2005 are announced.   Other projects are in the 
pipeline: merger of Snecma with Sagem, capital opening of 
Aeroports de Paris and of SANEF (North and East highway 
company), and sales of Air France-KLM shares to employees. 
The government still has stakes in Bull, EADS, Dassault 
Systemes and a myriad of other firms, and has stated its 
intention to continue privatization, based largely on the 
same criteria as the Socialists had used. 
 
Sales of government interests are conducted either through 
market-based public offerings or, more often, through an off- 
market bidding process.  In both cases, key decisions are 
made by the Ministry of Economy, Finance and Industry on the 
advice of the quasi-independent "Commission des 
Participations et des Transferts" (formerly known as the 
Privatization Commission).  Both of these consider financial 
and business plans submitted by bidders. While there is a 
strict legal and procedural process regulating these 
decisions, the confidential nature of off-market sales can 
raise suspicions about the equal treatment of foreign versus 
French bidders.  This can in itself have a chilling effect 
on foreign investment.  In the past, a policy of selling 
former holdings to "core" shareholders in an effort to avoid 
the splitting-up of companies or sales of sensitive state 
assets to foreign investors also hampered market efficiency 
and tended to favor French firms. 
 
When privatizing state-owned firms either through off-market 
placements or market-based offerings, the 1993 privatization 
law gives the French government the option to maintain a so- 
called "golden share" to "protect national interests."  This 
provision is not specifically targeted at foreign companies, 
and has not been a part of every privatization operation. A 
golden share gives the government three legal rights: 
 
-- To require prior authorization from the Ministry of the 
Economy, Finance and Industry for any investor or group of 
investors acting in concert to own more than a certain 
percentage of a firm's capital. The thresholds would apply 
to all investors; 
 
-- To name up to two non-voting members to the firm's board 
of directors; and 
 
-- To block the sale of any asset to protect "national 
interests." Assets could include shares, but buildings, 
technology, patents, trademarks, and any other tangible or 
intangible property. 
 
The French Government will have to reconsider its use of 
golden shares in future privatization operations following 
the June 2002 European Court of Justice's decision to 
reaffirm the basic principle of free movement of capital in 
the EU.  The Court stated that the use by some EU countries, 
including France, of golden shares was a serious impediment 
to that principle.   Nonetheless, the Government is 
considering holding a golden share in the privatization of 
Areva due to loopholes in the court's judgment.    Areva's 
chairman stated that the golden share could be consistent 
with EU requirements. 
 
French Government Participation in R&D Programs 
 
With 2.2 percent of GDP devoted to R&D in 2004, France's 
effort in R&D remains stable.  The French government (GOF) 
contributes roughly 1 percent of GDP and the industrial 
sector 1.2 percent.   The GOF plans to increase R&D spending 
to 3 percent of GDP by 2010, with two percent coming from 
the private sector.  The French government relies on 
increased tax credits and incentives for the development of 
new investment structures to boost industrial research.   In 
2005, the GOF intends to create two agencies to prioritize, 
fund, and evaluate industrial innovation and scientific 
research.  It also supports the creation of high-technology 
centers ("technopoles", "genopoles") to support local 
development policies and foster cross-fertilization between 
research and innovation. 
 
The GOF sponsors R&D and technology development programs at 
three different levels: 
-- International/European programs (e.g. ESA, CERN, EUREKA, 
EU Framework program); 
-- Technology development programs in the private sector 
(approx. 46 percent of R&D expenditures are funded by the 
French government), with specific programs to encourage 
transfer of research and to aid small and medium firms; and 
-- National research programs (Civilian R&D budget 
administered by the Research Ministry), with specific 
emphasis given to health and biotech (fight against cancer, 
research on aging and handicaps, focus on new epidemics, 
genomics/genetics); resource management (including food 
resources, food safety, water management), sustainable 
development and fight against greenhouse gases (research on 
clean vehicles, new energies, energy storage and use of 
hydrogen, nuclear fusion); information and communication 
technologies; nanotechnologies; and space. 
 
The breakdown of the 2004 Civilian R&D budget is as follows: 
 
-- Life sciences: 24 percent 
-- Space: 15 percent 
-- Math, physics, and chemistry: 12 percent 
-- Environment: 10 percent 
-- Humanities and social sciences: 10 percent 
-- Information and communication technologies: 10 percent 
-- Transports, aeronautics, materials and processes: 9 
percent 
-- Energy: 7 percent 
-- Others: 3 percent. 
 
For access to R&D subsidies, the French government provides 
national treatment to all foreign companies registered in 
France, allowing them to receive the same treatment as 
French companies.  U.S. companies have experienced no 
difficulty in participating in these opportunities. 
 
Visas, Work Requirements 
 
The government of France requires that foreign citizens 
complete extensive procedures if they wish to work in 
France.  The requirements are essentially the same whether 
foreign citizens work for French or foreign-controlled 
firms.  Non-EU nationals who intend to work or conduct any 
commercial activity in France must receive a long-term visa 
and a work permit (Carte de travail) or business permit 
(Carte de commercant - foreign trader's card) before 
establishing residence in France. Information can be 
obtained from French consulates in the United States.  The 
web address is [http://www.info-france- 
usa.org/intheus/consulates.asp].  For more information on 
the foreign trader's card, please consult the Invest in 
France agency Web site at: 
[http://www.investinfrance.org/France/Living/ Expatriate/?p=f 
ormalities&1=en].  For more detailed information on other 
types of visas and applicable fees, contact your local 
Consulate General of France.  In addition, a foreigner's 
ability to practice a profession may be curtailed by 
government regulation and the regulations of French 
professional associations.  For example, lawyers seeking to 
practice in France must become members of the French bar 
before they can practice any type of law under their own 
names. This requires passing the bar examination in French. 
A number of legislative changes to these regulations are 
under consideration, and may be implemented in 2005. 
A2. Conversion and Transfer Policies 
 
All inward and outward payments must be made through 
approved banking intermediaries by bank transfers.  There is 
no restriction on repatriation of capital.  Similarly, there 
are no restrictions on transfers of profits, interest, 
royalties, or service fees.  Foreign-controlled French 
businesses are required to have a resident French bank 
account and are subject to the same regulations as other 
French legal entities.  The use of foreign bank accounts by 
residents is permitted. 
 
France has little effective foreign exchange control 
regulations.  For exchange control purposes, the French 
government considers foreigners as residents from the time 
they arrive in France. French and foreign citizens are 
subject to the same rules.  Residents are entitled to open 
an account in foreign currency with a bank established in 
France and to establish accounts abroad.  Residents must 
report the account number for all foreign accounts on their 
annual income tax returns.  French-source earnings may be 
transferred abroad. 
 
As part of the international effort to combat money 
laundering and the financing of terrorism, France's banking 
regulations have undergone several changes, which affect the 
handling of checks, as recommended by the Financial Action 
Task Force.  Additional changes are expected.  France 
sometimes uses its powers under national law to execute 
asset freeze orders against terrorists, as well as operating 
within EU structures. 
 
A3. Expropriation and Compensation 
 
Under French law, private investors are entitled to 
compensation if their properties are expropriated, and such 
compensation must be adequate and paid promptly.  In 
France's bilateral investment treaties, the French 
government promises to provide both prompt and adequate 
compensation.  There have been no recent disputes involving 
expropriation of U.S. investments. 
 
A4. Dispute Settlement 
 
There have been few major disputes involving established 
U.S. firms in recent years.  Government decisions in 
investment cases can be appealed to administrative tribunals 
and ultimately to the Council of State (Conseil d'Etat). 
The rights of U.S. investors are also protected by the U.S.- 
French bilateral convention (see Section B below). 
 
The judicial system is independent.  Property and 
contractual rights are enforced by the French civil code. 
Judgments of foreign courts are accepted and enforced by 
courts in France once they have been "declared executor" by 
a French judge through "executor" proceedings (Art. 2123 of 
the French Civil Code and Art. 509 of the Civil Procedure 
Code).  However, in some civil cases and in bankruptcy 
cases, foreign judgments are recognized and enforced by 
French courts without executor proceedings. 
 
France is a member of the World Bank's International Center 
for the Settlement of Investment Disputes (ICSID - [http:// 
www.WORLDBANK.org/ICSID]).  In addition, in most of its 
bilateral investment treaties (BIT's) it has agreed to 
accept binding arbitration to resolve investor-state 
disputes.  However, most of France's BIT partners are 
developing countries whose investors have few investments in 
France. (See below). 
 
A5. Performance Requirements and Incentives 
 
Investment Incentives 
 
France offers a range of financial incentives to foreign 
investors.  The following information reflects incentives as 
they existed at time of this writing.  The government has a 
broad range of investment and competitiveness measures in 
the legislative pipeline, with implementation expected in 
¶2005. 
France's domestic planning and investment promotion agency, 
DATAR (Delegation a l'Amenagement du Territoire et a 
l'Action Regionale), provides extensive assistance to 
potential investors.  In addition, financial subsidies and 
tax incentives are offered at the local, regional and 
national government level to attract investment to France's 
less affluent areas.  Incentives are available equally to 
French and foreign investors and eligibility requirements 
are the same. 
 
Within the French government, foreign investment promotion 
is the responsibility of the AFII "Invest in France Mission" 
headed by an ambassador at-large, who is based at the 
Ministry of the Economy, and backed up by DATAR.  DATAR 
maintains offices throughout France and around the world to 
seek out and advise potential investors on project 
development, site selection, investment incentives (the 
largest of which are administered by DATAR) and 
administrative and legal requirements. DATAR's overseas 
offices where re-named "Invest in France Agencies" (IFA -- 
IFANA in North America) in 2001.  There are three 
DATAR/IFANA offices in the United States 
[http://www.afii.fr/NorthAmerica/AboutUs/Cont act/?l=en]: 
 
Northern and Eastern States 
IFANA New York 
810 Seventh Avenue, Suite 3800 
New York, NY 10019 
Tel: (212) 757-9340 
Fax: (212) 245-1568 
 
 
Western and Southern States 
 
 
IFANA Palo Alto 
575 High Street, Suite 340 
Palo Alto, 
CA 94301-1663 
Tel: 650/326-8440 
Fax: 650/326-8438 
 
Midwestern States 
IFANA Chicago 
205 North Michigan Avenue, Suite 3750 
Chicago, IL 60611 
Tel: (312) 628-1054 
Fax: (312) 628-1033 
 
 
 
The AFII and DATAR internet addresses are 
[http://www.InvestinFrance.org], and 
[http://www.DATAR.gouv.fr], respectively. 
 
The primary investment incentive offered through DATAR is 
the Prime d'Amenagement du Territoire (PAT).  DATAR has 
revised downward the PAT program at the European 
Commission's request.  Nonetheless the PAT incentives remain 
generous for investment in disadvantaged zones (parts of 
north and central France, and Corsica).  The list of 
eligible zones will stay the same until December 31, 2006. 
Interestingly the current PAT system is more supportive of 
small- and medium sized companies in the industry, services, 
and research and development sectors. (New rules were issued 
in the April 13, 2001 and June 6, 2001 "Journal Officiel"). 
Other investment incentives may also be available.  New 
related criteria have been set for the 2000-2006 period. 
Potential investors should consult DATAR and AFII to 
determine the full range of possibilities, including, 
 
-- Research and development project grants 
 
-- Special tax treatment for company headquarters 
 
-- Local and regional tax holidays and special subsidies 
 
-- "Industrial conversion" zones featuring tax breaks and 
grants for job-creation 
 
-- Special access to credit for small and medium-sized 
enterprises 
-- Assistance for training, including a portion of wages 
paid to employees in training 
 
Besides DATAR/IFA at the national level, several French 
cities and regions have developed their own investment 
promotion agencies that advise potential investors, offer 
administrative assistance, and oversee investment 
incentives.  The February 2002 Local Democracy Law 
("Democratie de proximite" - www.legifrance.gouv.fr) gives 
regional councils ("Conseils Regionaux") full powers to 
establish (without decree or national convention) schemes 
for direct aids to companies (subsidies, reduced interest 
rates on loans, and advances). Each "Conseil Regional" has 
it own website.  A list of their addresses is available on 
[http://www.fr.yahoo.com] (search "conseil regional" and 
select the appropriate region). 
 
All incentives are covered by regulations set by the 
European Commission. 
 
Performance Requirements 
 
Other than those linked to incentives, there are no 
mandatory performance requirements established by law. 
However, the French government will generally require 
commitments regarding employment or research and development 
from both foreign and domestic investors seeking government 
financial incentives.  For example, to be eligible for DATAR 
grants, the French government usually requires that firms, 
whether owned by EU or non-EU residents, create a minimum of 
15 jobs within the first three years.  As noted above, PAT 
and R&D subsidies are based on the number of jobs created. 
In addition, the authorities have occasionally sought 
commitments as part of the approval process for acquisitions 
by foreign investors. 
 
Nonetheless, foreign firms need the French government's 
approval on a variety of regulatory issues, and in France, 
officials generally have much wider discretion than their 
U.S. counterparts.  This can leave firms subject to 
"unwritten" performance requirements, with regulatory 
officials making it known that a firm's request would be 
more favorably viewed if it increased employment, R&D, or 
exports. 
 
A6. Right to Private Ownership and Establishment 
 
The French government maintains legal monopolies in the 
following sectors: postal services (La Poste), national rail 
transportation (SNCF), Parisian bus and metro services 
(RATP), and tobacco manufacturing and distribution (Seita). 
The electricity and gas Companies (EDF/GDF) no longer have 
monopolies on production, distribution and sale of 
electricity and gas.  Market opening has surpassed 37 
percent (by volume) of the electricity market and 20 percent 
of the gas market -- meaning that that proportion of 
customers is free to choose another supplier, although few 
have.  In July 2004, the option to switch suppliers was 
opened to all commercial customers.  After a critical piece 
of energy sector reform legislation passed that same month, 
the first public sales of shares for EDF and GDF are 
expected to begin as early as late-2005, leading effectively 
to a partial privatization of the two companies.  However, 
the new law requires the GOF to retain at least a 70 percent 
interest.  These share sales may be complicated and/or 
delayed by questions over the companies' valuation as well 
as their large unfunded pension liabilities. 
 
A7. Protection of Property Rights 
 
France is a strong defender of intellectual property rights 
and has highly developed protections for intellectual 
property.  Under the French system, patents and trademarks 
protect industrial property, while literary/artistic 
property is protected by copyrights.  By virtue of the Paris 
Convention and the Washington Treaty regarding industrial 
property, U.S. Nationals have a "priority period" after 
filing an application for an U.S. patent or trademark, in 
which to file a corresponding application in France.  This 
period is twelve months for patents and six months for 
trademarks.  In July 2004, the French government, internet 
access providers and authors and producers of music signed a 
"Charter to fight piracy and develop legal offers of music 
online."  This charter allows access providers to address a 
warning message to Net surfers and to remove subscription 
rights of people condemned for hacking. 
 
A8. Transparency of the Regulatory System 
 
The French government has made considerable progress in 
recent years improving the transparency and accessibility of 
its regulatory system.  Government Ministers, companies, 
consumer organizations and trade associations may petition 
the Unfair Competition Council to investigate anti- 
competitive practices. 
 
Of most concern to foreign companies has been standards 
setting.  With standards different from those in the U.S., 
rigorous testing and approval procedures must sometimes be 
undertaken before goods can be sold in France, particularly 
those that entail risk.  When EU-wide standards do not 
exist, specific French standards apply.  The United States 
and the EU have negotiated mutual recognition agreements 
covering the testing and certification of certain specified 
regulated products.  Information about these agreements and 
efforts to extend them can be found at the website of the 
Trans-Atlantic Business Dialogue, [http://www.TABD.com]. 
The National Institute of Standards and Technology, 
[http://www.NIST.gov], is represented at the International 
Bureau of Weights and Measures, [http://www.BIPM.fr], 
located in Sevres, France, and may be of assistance to 
firms. 
 
Industry associations have an influential role in developing 
both government policies and influencing self-regulatory 
organizations.  U.S. firms may find it useful to become 
members of local industry groups.  Experience has shown that 
even "observer" status can offer U.S. firms an insight into 
new investment opportunities and greater access to 
government-sponsored projects, even if U.S. firms sometimes 
feel they are not always given an adequate opportunity to 
participate in the determination of regulations. 
 
A9. Efficient Capital Markets and Portfolio Investment 
 
Access to Capital and Capital Markets 
 
France has an open financial market that gives firms easy 
access to a variety of financial products in both French and 
international markets. As markets expand, foreign and 
domestic portfolio investment has become increasingly 
important.  France continues to modernize its marketplace, 
introducing tax-advantaged retirement funds in 2004.  Facing 
the prospect of increasingly tough competition with other 
European marketplaces following the introduction of the 
Euro, French financial markets are continually updating and 
adapting their products, procedures and services.    France 
is actively involved in the effort to create a system of 
internationally accepted accounting standards (to read more, 
go to [http://www.iasb.org.uk] or search the SEC's website 
at [http://www.SEC.gov].  Most EU listed companies will be 
required to use international accounting standards from 
¶2005.  French market and banking regulators continue to 
enhance and develop cooperation with their foreign 
counterparts.  French legal, regulatory and accounting 
systems may not be as transparent as U.S. systems, but are 
consistent with international norms. 
 
Commercial banks offer all classic financing instruments, 
including short, medium, and long-term loans, short-and 
medium-term credit facilities, and secured and non-secured 
overdrafts.  Commercial banks also assist in public 
offerings of shares and corporate debt, and mergers, 
acquisitions and takeovers.  Banks offer hedging services 
against interest rate and currency fluctuations.  France 
also had 157 foreign banks with total assets of USD 124 
billion at the end of 2003, some with sizable branch 
networks.  Foreign companies have access to all banking 
services.  Although some subsidies are available for home 
mortgages and small business financing, most loans are 
provided at market rates. 
Increasingly, firms in France are bypassing banks and going 
directly to financial markets for their financing needs. 
The center of the French market is the Euronext stock 
exchange.  Euronext N.V., a holding company incorporated 
under Dutch law, was formed on 22 September 2000 when the 
exchanges of Amsterdam, Brussels and Paris merged. The 
Euronext group expanded at the beginning of 2002 with the 
acquisition of LIFFE (London International Financial Futures 
and Options Exchange) and the merger with the Portuguese 
exchange BVLP (Bolsa de Valores de Lisboa e Porto).  As of 
December 2004, Euronext listed 1,333 companies (of which 300 
are foreign excluding countries members of Euronext), with a 
total capitalization of USD 2.3 billion.  In February 2005, 
Euronext Paris plans to merge the three separate markets of 
the Paris exchange, the cash market ("Marche au Comptant"), 
the regulated market ("Second Marche") and the "Nouveau 
Marche" (growth segment) on which new companies, especially 
smaller ones with an emphasis on growth and technology, can 
raise start-up capital.  The new market list ("Eurolist") 
will be split in three segments based on the capitalization 
of companies (150 million euros, 150 million to 1 billion 
euros, and more than 1 billion euros).   The changes are 
aimed at improving liquidity and visibility of small- and 
medium-sized companies.   A financial futures market, the 
"Marche a Terme des Instruments Financiers," commonly known 
as the MATIF, trades standard contracts on interest rates, 
short- and long-term bonds, stock market indices, and 
commodities.  It has established linkages with its German 
and Swiss counterparts as well as with the Chicago 
Mercantile Exchange.  Options are traded on the "Marche des 
Options Ngociables de Paris (MONEP)" exchange.  These 
markets operate under the auspices of the Paris Bourse, 
whose website address is [http://www.euronext.com] including 
a link with [htpp://www.bourse-de-paris.fr]).  Finally, 
though not nearly as developed as in the United States or 
the United Kingdom, venture capital markets ("Marche Libre" 
and "Marche de gre a gre") have become increasingly 
important ways for start-up firms to raise funds.   In 2005, 
Euronext will create a new market "Alternext" to offer 
companies a new unregulated market (based on the legal 
definition of the European investment services directive) 
and more safety than the "Marche Libre," which will continue 
to operate. 
 
Foreigners hold approximately 35.0 percent of the capital of 
publicly traded French companies. For a foreign company 
incorporated in an OECD country to be listed on the Euronext 
stock exchange, it must be sponsored by a French bank or 
broker and prepare a French language prospectus to get a 
permit from the "Autorite des Marches Financiers" (AMF), the 
new unified body which has taken up responsibilities of the 
former Commissions des Operations de Bourse (COB)" (the 
French equivalent to the SEC). The Council of State stated 
in December 2001 that the "urgent measures for economic and 
financial reform" law ("Mesures urgentes de reforme a 
caractere economique et financiere MURCEF") was not 
unconstitutional, authorizing foreign companies to provide 
statements in English and a short summary in French. Based 
on current regulations an application to the AMF must 
include a French summary that describes "essential 
information related to the content and modalities of 
operations" as well as to the "organization, financial 
situation and development of the activity of the company". 
Details may be found on the AMF web site [http://www.amf- 
france.org], which is merging with the COB web site 
[http://www.cob.fr]. 
 
Regulations will change with the implementation of measures 
of the European Directive on Prospectus to be published when 
securities are offered to the public or admitted to trading. 
The Committee of European Securities Regulators (CESR 
-http://www.cesr-eu.org] has launched a number of 
consultations that address the technical advice required by 
September 2003 by the European Commission.  Measures cover 
the format of prospectus, disclosure requirements and 
information included in annual reports.  The legislative 
package for prospectus must come into force in all EU 
countries on July 1, 2005.  The sponsoring bank or broker is 
responsible for placing the securities with investors when 
the securities are listed and for acting as a market maker. 
Special procedures apply to listing on the "Nouveau Marche." 
Companies must offer at least 100,000 shares with a value of 
at least Euro 5 million, or be able to demonstrate 
comparable liquidity in their home market if already listed 
on another exchange.  Information is available on the Paris 
bourse website, [http://www.bourse-de-paris.fr] or 
www.euronext.com. 
 
Cross-Shareholding 
 
An intricate network of cross-shareholdings among French 
corporations has often been seen as a barrier to foreign 
acquisition of French firms. Often, two French companies 
will each own a significant share of the other. This system, 
which was traditionally a means to help ensure state-control 
of the economy, has weakened in recent years under the 
pressure of the marketplace. 
 
Mergers and Acquisitions 
 
Although French laws regarding takeovers do not discriminate 
against foreign investors, a hostile takeover in France by a 
foreign investor could face public and even official 
scrutiny. Provisions of the company takeover law are 
designed to limit hostile takeovers of publicly traded 
companies. For example, stockholders are required to reveal 
themselves to company management and the authorities when 
their holdings total 5, 10, 20, 33 or 50 percent of the 
capital of the company. On crossing the 10 percent 
threshold, purchasers must declare their "intentions" for 
the period covering the coming twelve months. When a 
potential investor makes a "public offer to purchase" (OPA) 
shares in a publicly traded company, that offer must remain 
open for at least 20 working days for "friendly" bids and 35 
working days for "unfriendly" bids. Decrees issued in 2002 
to implement the May 2001 new economic regulations law 
("Nouvelles Reglementations Economiques - NRE") increased 
requirements of potential investors for financial 
transparency and communication with the public, associated 
companies and their employees.  Newcomers to the French 
stock market should also be aware of the possibility that by- 
laws of individual companies may impose requirements that 
purchasers of significant amounts of stock in a company 
report that purchase to the management of the company. 
 
A10. Political Violence 
 
Occasionally, anti-American sentiments, particularly among 
groups likely to be economically harmed by U.S. policies, 
result in demonstrations against U.S. investments.  The 
recent massive demonstrations by anti-globalization 
protesters at major international conferences and summits 
around the world, which have resulted in the targeting of 
U.S. firms and significant property damage, could be 
replicated in France should there be an attractive 
opportunity for such groups.  However, incidents of this 
type are mostly isolated, and there is little danger of 
nascent insurrection, belligerent neighbors, or widespread 
civil disturbances.  Moreover, since the terrorist attacks 
of September 11, 2001, there have been relatively fewer anti- 
American demonstrations in France as compared to prior 
years. 
 
A11. Corruption 
 
France has laws, regulations and penalties that effectively 
combat acts of corruption committed in France.  A 1993 law 
established a Central Service for the Prevention of 
Corruption under the aegis of the Ministry of Justice.  The 
French judiciary is responsible for prosecution, and is 
active in doing so.  There have been numerous investigations 
and convictions of public officials and businessmen under 
the anti-corruption statutes.  Penalties for acts of 
corruption vary according to the circumstances; they often 
include fines and prison terms.  At the 2003 trial of former 
executives of the oil company Elf, the prosecution has 
sought five to eight-year prison sentences as well as fines 
for three of the main figures among the 37 defendants.  The 
criminal investigation into the activities of the then state- 
owned oil company was launched in 1994 and is considered 
France's biggest corruption investigation in recent history. 
 
France ratified the OECD Anti-Bribery Convention and enacted 
implementing legislation to enforce its provisions in 2000. 
The OECD Anti-Bribery Conventions is enforced via amendments 
to the Criminal code, which have been integrated into 
Articles 435-3 and 435-4 of a new chapter on international 
corruption (Chapter V, Title III, Book IV).  Article 435-3 
incriminates the offer or promise of a bribe, but not the 
actual payment of a bribe, which is explicitly mentioned in 
the convention.   Furthermore, there is a difference in the 
treatment of victims of bribery, depending on whether the 
bribery is domestic, EU or foreign.  In cases of bribery of 
GOF/EU officials, any victim may initiate prosecution.  In 
cases involving the bribery of other foreign government 
officials, on the other hand, criminal proceedings may be 
initiated only by the public prosecutor on the basis of a 
complaint from a Government official in the country where 
the bribery took place.  In other words, if the victim were 
a U.S. company, it would not be able to initiate criminal 
proceedings under French legislation. 
 
The OECD Anti-Bribery convention is further enforced via 
amendments to the Tax Code and to the Code of Criminal 
Procedure.  Article 39-2 of the French Tax Code puts an end 
to the tax deductibility of bribes as of the entry into 
force in France of the Convention (September 29, 2000). 
Finally, Article 706-1 of the amended Code of Criminal 
Procedure provides that acts criminalized by the OECD 
Convention will be prosecuted in the Economic and Financial 
Unit of the Paris Court of Justice.  More information about 
France's implementation of the agreement can be found at the 
OECD's Internet address, www.OECD.org. 
 
France has also begun ratification of the Council of 
Europe's civil and criminal conventions on corruption.  The 
procedure should be completed during the first half of 2005. 
 
There have been no specific complaints from U.S. firms of 
unfair competition or investment obstacles due to corrupt 
practices in France in recent years.  More information on 
the international fight against corruption can be found at 
the Internet site of Transparency International, 
www.Transparency.de, a private organization.  According to 
Transparency International's French Chapter, the sectors 
most affected by corrupt practices tend to be public works 
and the defense industry. 
 
¶B. Bilateral Investment Agreements 
 
1959 U.S.-France Convention on Establishment 
 
U.S. investment in France is subject to the provisions of 
the Convention on Establishment between the United States of 
America and France, which was signed in 1959 and is still in 
force. Some of the rights it provides to U.S. nationals and 
companies include: 
 
-- The right to be treated like domestic nationals in all 
types of commercial activities including the right to 
establish offices and acquire majority control of French 
firms. (This right does not apply to firms involved in 
communications, air transportation, water transportation, 
banking, the exploitation of natural resources, certain 
"professions," and the production of electricity) and in 
obtaining and maintaining patent and trademarks; 
 
-- The right to receive the best treatment accorded to 
either domestic nationals and companies or third country 
nationals and companies with respect to transferring funds 
between France and the U.S.; and 
 
-- The requirement that property may only be expropriated 
for a public purpose and that payment must be just, 
realizable, and prompt. 
 
The treaty does not apply to the use or production of 
fissionable materials, arms, or any materials used directly 
or indirectly to supply military establishments. The treaty 
does not prevent application of measures necessary to 
protect essential security interests. 
 
Bilateral Investment Treaties 
 
Investments in France by other EU member states are governed 
by the provisions of the Treaty of Rome and by Union Law. 
France has also signed Bilateral Investment Treaties (BITs) 
with the following 61 countries: Albania, Argentina, 
Armenia, Bangladesh, Bolivia, Bulgaria, Chile, China, the 
Democratic Republic of the Congo, Croatia, Czech Republic, 
Ecuador, Egypt, El Salvador, Equatorial Guinea, Estonia, 
Haiti, Hong Kong, Hungary, Indonesia, Israel, Jamaica, 
Jordan, Korea (South), Kuwait, Kyrgzistan, Laos, Latvia, 
Liberia, Lithuania, Malaysia, Malta, Mauritius, Mongolia, 
Morocco, Nepal, Nigeria, Oman, Pakistan, Panama, Paraguay, 
Peru, Philippines, Poland, Romania, Russia, Singapore, 
Slovakia, South Africa, Sri Lanka, Sudan, Syria, Trinidad 
and Tobago, Turkmenistan, Ukraine, United Arab Emirates, 
Uruguay, Uzbekistan, Vietnam, Yemen, Yugoslavia (Federal 
Republic). 
 
Bilateral Investment Treaties signed with the following 22 
countries have not yet been ratified: Algeria, Azerbaijan, 
Brazil, Byelorussia, Costa Rica, Cuba, the Dominican 
Republic, Georgia, Guatemala, Honduras, India, Kazakhstan, 
Lebanon, Macedonia, Mexico, Moldavia, Morocco, Namibia, 
Nicaragua, Qatar, Slovenia, and Tunisia. 
 
French BITs generally cover the following: 
 
-- Just and equitable treatment that is no less favorable 
than that accorded to domestic investors or the most favored 
investor from a third country; 
 
-- Restrictions on expropriation of investments, and 
requirements that, in the case of expropriation, 
compensation be prompt and adequate; 
 
-- Free transfers; and, 
 
-- The ability to resolve investor-state disputes through 
binding international arbitration. 
 
¶C. OPIC and Other Investment Insurance Programs 
 
Given France's high per capita income, investments in France 
do not qualify for investment insurance or guarantees 
offered by the Overseas Private Investment Corporation 
(OPIC). You can connect with OPIC at www.OPIC.gov. 
 
¶D. Labor 
 
France's private sector labor force is one of the country's 
strongest points in attracting foreign investment, combining 
high quality with relatively competitive unit-wage costs 
compared with those of other industrialized companies. 
 
The labor code sets minimum standards for working conditions 
including the workweek, layoffs, overtime, vacation and 
personal leave. Other labor standards are contained in 
collective agreements, which are usually negotiated by 
sector on a national or regional basis by the various unions 
and employers' associations. French absenteeism is modest by 
European standards and, in the private sector, peaceful 
labor relations generally prevail. 
 
While the rate of unionization in France has steadily 
declined to a little more than half that of the United 
States, French labor law provides an extensive institutional 
role for employee representatives and for organized labor. 
 
-- In companies with more than 10 employees, employee 
delegates are elected for a one-year term. They are 
authorized to present individual or collective claims and 
grievances relating to working conditions, to inform 
government labor inspectors of any complaints under the 
labor law, and to concur with management in any 
reorganization of the workweek. Management is required to 
meet with employee delegates at least monthly. 
 
-- A company with more than 50 employees must have a joint 
management/employee enterprise committee, to which employee 
representatives are elected. The committee must be consulted 
for all major corporate decisions, but has no veto. The 
enterprise committee must be provided with the same 
information that is made available to shareholders. It is 
funded by the company at a rate equal to at least 0.2 
percent of the firm's payroll, and uses this money to 
finance social and cultural activities for the benefit of 
employees. 
 
-- Workers also hold most slots on occupational health and 
safety committees, which are mandatory in medium and large 
size companies. Labor tribunals (playing a role largely 
equivalent to the NLRB in resolving labor disputes) are 
comprised of equal numbers of union and employer 
representatives. Appeals are possible to the level of the 
"Cour de Cassation," one of France's high courts. 
 
Due to a variety of macro and microeconomic factors, 
including high payroll taxes, a high minimum wage, and rigid 
labor laws, French businesses tend to use less labor- 
intensive procedures and rely more on laborsaving technology 
than businesses in other countries. This is one reason for 
France's high unemployment rate. 
 
While not rejecting outright the 35-hour workweek, the 
government of Prime Minister Jean-Pierre Raffarin, who took 
office in May 2002, has made the law less rigid, principally 
by loosening restrictions on overtime hours.  By allowing 
French employees to work longer overtime hours, the Raffarin 
government has engineered an effective return to a 39-hour 
workweek. 
 
¶E. Foreign Free Trade Zones/Ports 
 
France is subject to all European Union free trade zone 
regulations and arrangements. These allow member countries 
to designate portions of their customs territory as free 
trade zones and free warehouses. France has taken advantage 
of these regulations in several specific instances.  The 
French Customs Service administers these zones and can 
provide more details.  Customs can be contacted at the 
finance ministry web address: [http://www.douane.gouv.fr]. 
 
In addition, the French government has renewed the tax 
exemption program for five years in the existing urban 
"enterprise zones" (Zones Franches Urbaines), for 44 
depressed or impoverished municipalities in France or its 
overseas territories, and added 41 new zones to the list. 
Since January 2004, any zone benefited from tax exemptions 
on corporate tax, payroll taxes, professional tax and real 
estate tax.   Related information is available at the City 
Government web site [http://ville.gouv.fr]. 
 
More information on enterprise and investment zones is 
available from AFII and DATAR : [http://www.zones- 
franches.org/zones_franches.asp], 
[http://www.InvestinFrance.org] and 
[http://www.DATAR.gouv.fr]. 
 
¶F. Foreign Investment Statistics 
Foreign investment represents a significant percentage of 
production in many sectors.  Rapid growth in the new 
technologies sector has given way to renewed growth in 
traditional sectors: automobiles, metalworking, aerospace, 
capital goods, and consultancy and services.  France has 
remained one of the main destinations of foreign direct 
investment (FDI), although foreign investment in 
industrialized countries has declined.   .  Foreign 
investment inflows remained significant, but decreased in 
2003 by 20.0 percent to 2.7 percent of GDP (versus 
3.4percent in 2002) due in part to the worldwide economic 
slump.  Based on preliminary information the U.S. remained 
one the largest sources of FDI in France.  Using Bank of 
France balance of payments data based on the historical book 
value of investment, U.S. firms accounted for 15 percent 
(versus 25% in previous years) of the stock of foreign 
investment.   Using the book value instead of the market 
value of investments tends to underestimate the value of 
U.S. investments in France. This is because investments by 
U.S. companies tend to be considerably older than other 
countries' investments and because U.S. firms often finance 
expansions and acquisitions on domestic French capital 
markets or through subsidiaries in third countries. Thus, 
much U.S. investment in France is not recorded in balance of 
payments statistics, even though U.S. citizens ultimately 
control it. 
 
Correcting for these statistical biases, and including the 
value of U.S. holdings of French stocks, the market value of 
the stock of U.S. investment in France may be as much as 
five times the USD 47.9 billion book value for 2003 reported 
in U.S. Department of Commerce data 
[http://www.bea.doc.gov/bea/di1.htm].   About 2,000 
affiliates of U.S. firms are established in France.  Around 
540,000 jobs result from U.S.-origin investments. 
 
Today, foreign-controlled firms play a significant role in 
France's economy: they account for 22 percent of the 
workforce, 27 percent of capital expenditures, 30 percent of 
exports, and 30 percent of production. 
 
An updated list of U.S. investors may be found on 
[http://www.investinfrance.org/NorthAmerica/Y ourProject/Data 
base/?l=en] 
 
 Lists of foreign investors by industry can be found in 
local periodicals such as Expansion ("Les 1000 de 
l'Expansion":  [http://www.lexpansion.com/PID/7800.html]). 
The Expansion link provides useful information on the first 
1000 companies and financial institutions established in 
France. 
 
 
Stock by country of origin (Book value) (USD billions) 
 
                        2000 2001 2002 
OECD                     251  288  n.a. 
 
EU,                      185  221  255 
   of which 
United Kingdom            35   45   59 
Netherlands               51   58   57 
Germany                   29   35   45 
Belgium                   29   39   40 
Italy                     10   13   14 
Other                     30   31   33 
 
North America,            40   43   51 
    of which 
USA                       39   42   50 
Canada                     1    1    1 
 
Other OECD countries      26   24  n.a. 
Switzerland               20   19   21 
Japan                      5    5    8 
Other                      2    0  n.a. 
 
Non OECD countries             n.a. 
 
Total                    258  300   349 
Total as percent of GDP  19.7  22.7  24.1 
(Exchange rate:) 
    USD 1.00 equals Euro 1.08  1.12  1.06 
 
Source: Bank of France 
 
Stock by Industrial Sector of Destination (USD billions) 
 
                             2001 2002 
Holdings                      104  116 
Finance intermediation         45   53 
Real estate                    30   39 
Retail trade                   21   19 
Chemical industry              13   17 
Transportation equipment        6    7 
Transport and Communications    9    7 
Food and processed food         5    6 
Metal Industry                  3    5 
Wood industry 
  - publication - printing      4    4 
Mechanical industry             3    3 
Oil refining                    3    3 
Other                          55   70 
Total                         300  349 
(Exchange rate:) 
     USD 1.00           Euro 1.12 1.06 
 
Source:  Bank of France 
 
Flows by country of origin (Market value) (USD billions) 
 
                             2001 2002 2003 
OECD                           48   51  n.a. 
 
EU,                            35   37   37 
   of which 
United Kingdom                 15   15   15 
Netherlands                    -1   -1    6 
Germany                        10   10    8 
Belgium                         1    1   11 
Italy                           0    0   -2 
Other                          10   10    4 
New EU members (1)              0.1  0.1  0.2 
 
North America,                  6    6   10 
   of which 
USA                             6    6    4 
Canada                          0    0    6 
 
Other OECD countries            7    7   n.a. 
Switzerland                     0    0    2 
Japan                           3    3   -1 
Other                           3    3   n.a. 
 
Non OECD countries             -1   -2   n.a. 
 
Total                          47   49   52 
Total as percent of GDP         3.8  3.4  2.7 
(Exchange rate:) 
        USD 1.00          Euro 1.12 1.06  0.81 
 
Source:  Bank of France 
(1) Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, 
Poland, Czechoslovakia, Slovakia, and Slovenia. 
 
 
Stock by country of destination (Book value) (USD billions) 
 
                        2000 2001 2002 
OECD                     404  457  n.a. 
 
EU,                      217  261  290 
  of which 
Belgium                   54   74   83 
United Kingdom            56   66   72 
Netherlands               40   39   41 
Germany                   28   27   33 
Spain                     12   15   18 
Italy                     13   17   17 
Other                     14   23   27 
 
North America,           149  173  152 
    of which 
USA                      113  142  130 
Canada                    35   32   21 
 
Other OECD countries      26   24  n.a. 
Switzerland               17   18   20 
Japan                      8    8   10 
Other                     14   -2  n.a. 
 
Non OECD countries        26   61  n.a. 
 
Total                    430  517  529 
Total as percent of GDP  32.7 37.8  36.6 
(Exchange rate:) 
USD 1.00  Euro           1.08 1.12  1.06 
 
Source:  Bank of France 
 
Stock by Industrial Sector Destination (USD billions) 
 
                             2001 2002 
Holdings                      174  166 
Finance intermediation        114  116 
Retail trade                   28   32 
Computer                       26   26 
Electricity, natural gas, 
              and water        28   25 
Transportation equipment       23   24 
Chemical industry              16   16 
Transportation 
         and communication     11   12 
Other                          98  111 
Total                         517  529 
(Exchange rate:) 
       USD 1.00          Euro 1.12 1.06 
 
Source:  Bank of France 
 
Flows by country of destination (Market value, USD billions) 
 
                             2001 2002 2003 
OECD                           85   60  n.a. 
EU,                            56   23   46 
   of which 
United Kingdom                 13    4   16 
Germany                         8    6    8 
Italy                           4    0    1 
Spain                           3    2    1 
Belgium                        22    6    0 
Other                           5    3   10 
New EU members (1)              4    2    1 
 
North America,                 17   16    9 
of which 
USA                            17   16    8 
Canada                          0    0    1 
 
Other OECD countries           12   21  n.a. 
Switzerland                     0    2    5 
Japan                           0    2    0 
Other                          12   17  n.a. 
 
Non OECD countries              2  -10  n.a. 
 
Total                          87   50   63 
Total as a percent of GDP       6.6  3.4  3.3 
(Exchange rate:) 
      USD 1.00            Euro  1.12 1.06  0.81 
 
Source:  Bank of France 
(1)  Cyprus, Estonia, Hungary,  Latvia, Lithuania, Malta, 
Poland, Czechoslovakia, Slovakia, and Slovenia. 
WOLFF