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

UNCLAS SECTION 01 OF 18 PARIS 000332 
 
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 2006 INVESTMENT CLIMATE STATEMENT 
 
REF: 05 STATE 201904 
 
¶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 stated priority for the French 
government, which sees foreign investment as a way to create 
durable jobs and stimulate growth.  Despite this, comments 
by some Government officials following therumored takeovers 
of French firms by foreign competitors in 2005, and the 
ensuing debate over "economic patriotism," caused some 
observers to question the depth of this commitment. 
Nevertheless, 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 (with 
certain limitations), 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 halting economic reforms and liberalization, U.S. 
and foreign companies often point to high payroll and income 
taxes, pervasive regulation of labor and products markets, 
and occasional 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 remains among the least 
restrictive in the world.  While there is no generalized 
screening of foreign investment, legislation passed at the 
end of 2005 dictates that only acquisitions, irrespective of 
size or the nationality, involving "sensitive" sectors are 
subject to prior approval by the Finance Minister 
([http://www.legifrance.gouv.fr] - search the 31 December 
2005 French Official Journal  - decree 2005-1739 of 30 
December 2005).  For investors from non-EU countries (or not 
from European Economic Space Countries having signed an 
administrative convention with France), protected sectors 
include: gambling activities (e.g., casinos); private 
security services; research, development or production of 
chemical or biological antidotes; activities concerning 
equipment for intercepting communications or eavesdropping; 
services for evaluation of security of computer systems; 
dual-use (civil and military) technologies; cryptology; 
activities of firms that are repositories of defense 
secrets; research, production or trade in arms, munitions, 
 
SIPDIS 
explosives or other military equipment; or any other 
industry supplying the defense ministry any of the goods or 
services described above.  The EU Commission has said it 
would study the December 2005 decree to ensure consistency 
with European Community law. 
 
The decree also changes the triggers for GOF investment 
scrutiny.  The prior decree required GOF review if a 
proposed investment were to rise above the threshold of 33% 
of the outstanding shares or voting rights.  Now, the decree 
spells out that any investment that grants control of a 
firm, or surpasses the 33% threshold, or involves any part 
of any branch of any firm that has established headquarters 
in France, is subject to GOF review. 
Authorities also consider 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 firms established or incorporated in 
other EU countries, and owned or controlled by American 
residents as non-EU residents. 
 
To determine if non-EU investors control a firm, the French 
government looks at the residency of the registered office 
("siege social") 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 Generale du Trsor et de la Politique Economique: 
 
Multicom 2 - Services, Investissements et Propriete 
Intellectuelle 
139, rue de Bercy 
75012 Paris, France 
Tel:  (33)1 44-87-72-87 
 
Service du Financement de L'Economie 
FINENT 1 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 
 
AFII's website (http://www.investinfrance.org/NorthAmerica 
in English) explains 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 French summaries of 
regulations applicable to foreign direct investment: 
(http://www.inforeg.CCIP.fr). 
 
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 some 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. 
France is closing the gap with the U.S. and some other 
European countries in personal computer use and Internet 
access. 
Yet, while today's foreign investors face less interference 
than was once the case, more than a decade of reforms has 
not entirely overcome a traditional preference for state 
intervention 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 for greater labor flexibility. 
Companies also benefited from a further cut in payroll taxes 
on low wages.  On the negative side, the 35-hour workweek 
increased unit labor costs since total wages remained 
unchanged even though the number of hours worked declined. 
The government is taking measures to make the law less rigid 
and is seeking to introduce more flexibility in employment 
contracts (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 selectively implemented the 
law through its power to implement by decree.  In addition, 
the Government introduced a broad range of new investment 
promotion and competitiveness measures in 2005. 
 
In making its decision on raising the minimum wage an 
average of 5.5% (effective July 2005), the Government aimed 
to stimulate household consumption, the motor of economic 
growth.  Despite the increase in the minimum wage, wages in 
the private and public sectors are expected to accelerate 
only slightly compared with last year (2.5-2.6% compared 
with 2.5% in 2004) as the high unemployment rate restrains 
wage demands.  The government decision to apply income tax 
cuts in 2007 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]. 
 
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]. 
In December 2005, the French government introduced two bills 
ratifying the two amendments.  The provisions will resolve 
problems related to the double taxation of partnerships and 
estates. 
 
English summaries of labor and tax regulations applicable to 
foreign companies in France are available at the AFII's 
website [http://www.investinfrance.org/] and at the Paris 
Chamber of Commerce and Industries' website 
[http://www.CCIP.fr]. 
 
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 air 
transportation and equity markets 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.  In the energy sector, 
the government sold shares in EDF and GDF, retaining a 85.9% 
stake in EDF and a 79% stake in GDF, but postponed the 
privatization of Areva.  After a long selection process in 
2005, the sale of toll-road companies ASF, APRR and Sanef 
will be effective in early 2006.  Capital openings for 
employees of Aeroports de Paris and EDF are planned for 
¶2006.  The government still has stakes in Bull and Safran 
(renamed after Sagem merged with Snecma), and in 1,280 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 also 
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 
The French government (GOF) contributes roughly 1 percent of 
the GDP to R&D while the industrial sector contributes 1.2 
percent, according to 2004 figures.  Despite budgetary 
restraints, the GOF has decided to increase spending for 
government research by an additional one billion euros 
annually from 2005 to 2007.  The GOF thus confirms its intent 
to increase R&D spending to 3 percent of the 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.  The GOF has also begun an ambitious 
effort to rethink its R&D strategy, organization, evaluation, 
and funding as reflected in the forthcoming Research and 
Innovation Bill (February 2006).  In 2005, the GOF created 
two agencies -- an NSF-style National Research Agency and an 
Agency for Industrial Innovation -- to encourage basic and 
applied research programs selected on the basis of a 
competitive, merit-based review system, to help develop 
public/private partnerships, and to facilitate technology 
transfer to the economic world.  The GOF also supports 
partnerships between public research agencies and 
universities at the regional level within the framework of 
"Research and Higher Education Poles," and encourages the 
cross-fertilization between research and innovation notably 
in the framework of newly designated "competitiveness 
clusters." 
 
The GOF sponsors R&D and technology development programs at 
three different levels: 
 
-- International/European programs (e.g. ITER, ESA, CERN, 
EUREKA, EU Framework program); 
 
-- Technology development programs in the private sector 
(approx. 45 percent of R&D expenditures are funded by the 
French government), with specific programs to encourage the 
transfer of research and to aid small and medium firms; and 
 
-- National research programs (mostly administered by the 
Research Ministry), with specific emphasis given to health 
and biotech (fight against cancer, research on aging and 
physical disabilities, focus on new epidemics, 
genomics/genetics); resource management (including food 
resources, food safety, water management); sustainable 
development and the 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 2006 Higher Education and Research 
budget is as follows (in millions of euros): 
 
Higher education and university research: 10,125; + 10% vs. 
2005 
Scientific and technical research: 3,602; -2% vs. 2005 
Space research: 1,248; +1% vs. 2005 
Energy sector research: 658; +7% vs. 2005 
Industrial research: 527; +24% vs. 2005 
Others: 4,527 
 
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 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. 
 
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. 
 
France's domestic planning and investment promotion agency, 
DATAR (Delegation a l'Amenagement du Territoire et a 
l'Action Regionale) was renamed DIACT (Delegation 
Interministerielle a l'Amenagement et la Competitivite des 
Territoires) in December 2005.  It has a broad mandate, 
including increasing the "attractiveness" of the national 
territory for foreign investors and assisting 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 DIACT.  DIACT 
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 DIACT) and 
administrative and legal requirements. DIACT's overseas 
offices were re-named "Invest in France Agencies" (IFA -- 
IFANA in North America) in 2001.  There are three 
DATAR/IFANA offices in the United States: 
 
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 310 
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 
 
AFII's internet address is [http://www.InvestinFrance.org]. 
DATAR's site, [http://www.datar.gouv.fr/] or 
[http://www.DIACT.gouv.fr]. 
 
The primary investment incentive offered through DIACT is 
the Prime d'Amenagement du Territoire (PAT).  DATAR had 
revised downward the PAT program at the European 
Commission's request.  Nonetheless, 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 DIACT and AFII to 
determine the full range of possibilities, including: 
 
-- Research and development project grants, notably for 
businesses located in competitiveness clusters 
-- 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 DIACT/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, which can be found with any internet search 
engine using "conseil regional" and the name of 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 DIACT 
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 in Europe has surpassed 
37 percent (by volume) of the electricity market and 70 
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 began in 
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. 
 
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.  In December 2005, 
the lower house of Parliament, the National Assembly, 
narrowly passed an amendment that, if enacted into law, 
could authorize online peer-to-peer copying of works for 
private use, but the Government promised a closer review in 
2006 to ensure copyrights continue to be protected. 
 
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 learn 
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 186 foreign banks with total assets accounting for 
10% of total bank assets at the end of 2004, 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 2005, Euronext listed 1,259 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 merged 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") was 
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, operated by 
Euronext.  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 created a market, "Alternext," to 
offer companies a new unregulated market (based on the legal 
definition of the European investment services directive) 
with more consumer protection than the "Marche Libre," which 
will continue to operate. 
 
Foreigners hold more than 40% 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. 
It must also prepare a French language prospectus to get a 
permit from the "Autorite des Marches Financiers" (AMF), the 
new unified body that 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.  Since 
July 1, 2005, France has applied the European 809-2004 
regulation that details the content of prospectuses.  AMF 
has modified its general regulation on September 8, 2005, 
taking into account the transposition of the November 4, 
2003 EU directive on prospectus on securities offered to the 
public or admitted to trading.  Based on the December 13, 
2005 2005-11 disposition, an application to the AMF must 
include a summary in French or any other language commonly 
used in financial issues 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 merged with the COB web site 
[http://www.cob.fr]. 
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.  More information is available 
on the Paris Stock Exchange website, 
[http://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, with the new regulation, passed by 
the Parliament on December 15, 2005, stockholders are 
required to notify company management and AMF when they have 
decided to prepare a takeover.  France extended its public 
offering rules, requiring investors taking control of a 
company listed on a French market ("the target") to make a 
public offering on French and foreign subsidiaries having 
shares listed on a regulated market of the European economic 
space or an equivalent regulated by foreign laws if "the 
target" holds more than one third of voting rights in these 
companies and if companies constitute essential assets of 
the target. 
 
A10. Political Violence 
 
Occasionally, anti-American sentiments, particularly by 
those who see themselves as threatened 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.  That said, incidents targeting 
U.S. investments are rare.  France is one of the world's 
leading democracies and a founding member of the EU; there 
is little danger of 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. No case has yet been 
brought before the French Justice system under the OECD Anti- 
Bribery convention as of the end of 2005. 
 
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, http://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 2006. 
 
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.org, 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 81 countries: Albania, Algeria, 
Argentina, Armenia, Azerbaijan, Bangladesh, Bolivia, 
Bulgaria, Chile, China, the Democratic Republic of the 
Congo, Costa Rica, Croatia, Cuba, Czech Republic, Ecuador, 
Egypt, El Salvador, Equatorial Guinea, Estonia, Ethiopia, 
Georgia, Guatemala, Haiti, Hong Kong, Honduras, Hungary, 
India, Indonesia, Iran, Israel, Jamaica, Jordan, Kazakhstan, 
Korea (South), Kuwait, Kyrgyz Republic, Laos, Latvia, 
Lebanon, Liberia, Lithuania, Macedonia, Malaysia, Malta, 
Mauritius, Moldavia, Mexico, Mongolia, Morocco, Nepal, 
Nicaragua, Nigeria, Oman, Pakistan, Panama, Paraguay, Peru, 
Philippines, Poland, the Dominican Republic, Qatar, Romania, 
Russia, Singapore, Slovakia, Slovenia, South Africa, Sri 
Lanka, Sudan, Syria, Trinidad and Tobago, Tajikistan, 
Tunisia, Turkmenistan, Ukraine, United Arab Emirates, 
Uruguay, Uzbekistan, Vietnam, Yemen, and Yugoslavia (the 
former Federal Republic). 
 
Bilateral Investment Treaties signed with the following 11 
countries have not yet been ratified:  Bahrain, Bosnia, 
Brazil, Byelorussia, Ghana, Libya, Madagascar, Mozambique, 
Namibia, Uganda, Zambia and Zimbabwe. 
 
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). Further information can be found 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 countries. 
 
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 trade 
union federations 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 former Prime Minister Jean-Pierre Raffarin (in 
office from May 2002 to June 2005), made the law less rigid, 
principally by loosening restrictions on overtime hours.  By 
allowing French employees to work longer overtime hours, the 
Raffarin government engineered a potential return to a 39- 
hour workweek. 
 
 
¶E. Foreign Free Trade Zones/Ports and Competitiveness 
Clusters 
 
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 use 
search to find information about "zones franches")]. 
 
In addition, the French government has renewed the tax 
exemption program for five years, until December 31, 2007, 
in the existing urban "enterprise zones" (Zones Franches 
Urbaines), for 44 depressed or impoverished municipalities 
in France or its overseas territories, added 41 new zones to 
the list in 2004, and 15 new zones in 2005.  Since January 
2004, any zone benefited from tax exemptions on corporate 
tax, payroll taxes, professional tax and real estate tax. 
Related information is notably available at the City 
Government web site [http://www.ville.gouv.fr]. 
 
More information on enterprise and investment zones is 
available from various sources: [http://www.zones- 
franches.org], [http://www.InvestinFrance.org] 
[http://www.diact.gouv.fr], and [http://www.oseo.fr] for 
assistance to small and medium sized companies. 
 
The 67 competitiveness clusters created by the government in 
July 2005 to reinforce innovation in France and fight 
against relocation of enterprises abroad will benefit from 
income and social tax exemptions.  Clusters involved in 
research and innovation will also benefit from financial 
support from the state-owned investment bank Caisse des 
Depots. 
 
¶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 2004 by 48 
percent to 1.2 percent of GDP (versus 2.7 percent in 2003) 
due in part to the absence of large merger-acquisitions 
initiated by foreign investors.  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 13 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 58.9 billion book value for 2004 reported 
in U.S. Department of Commerce data 
[http://www.bea.doc.gov/bea/di/home/directinv htm]. About 
2,000 affiliates of U.S. firms are established in France. 
Around 590,000 jobs result from U.S.-origin investments. 
 
Today, foreign-controlled firms play a significant role in 
France's economy: they account for 15 percent of capital 
expenditures, 30 percent of exports, and 15 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) 
 
                        2002  2003  2004 
 
 
EU (12),                188    256 
of which 
Germany                  45     58 
Belgium                  39     55 
Italy                    14     15 
Netherlands              57     78 
 
Other EU (15)            74     50 
of which 
UK                       57     74 
Sweden                    4      6 
 
North America,           47     76 
    of which 
USA                      48     62 
Canada                    1      5 
 
Other Industrialized 
countries                21     72 
Japan                     8     10 
Switzerland              21     27 
 
Other countries          16     20 
 
Total                    347   466   430 
 
Total as percent of GDP  24.0  26.0  21.0 
(Exchange rate:) 
USD 1.00 equals Euro     1.06  0.88  0.80 
 
Source: Bank of France 
 
Stock by country of origin (Market value) (USD billions) 
 
Total                    509  705    852 
 
Total as percent of GDP  35.2 39.2   41.6 
(Exchange rate:) 
USD 1.00 equals Euro    1.06  0.88  0.80 
 
Stock by Industrial Sector of Destination (USD billions) 
 
                              2002  2003 
 
Holdings                      117    164 
Finance intermediation         52     71 
Real estate                    38     55 
Retail trade                   25     31 
Chemical industry              19     25 
Transportation equipment        9     11 
Transport and Communications    9     11 
Food and processed food         6      7 
Metal Industry                  5      5 
Wood industry 
  - publication - printing      3      4 
Mechanical industry             4      5 
Oil refining                    3      4 
Other                          57     73 
Total                         347    466 
(Exchange rate:) 
 USD 1.00 equals Euro        1.06   0.88 
 
Source:  Bank of France 
 
Flows by country of origin (Market value) (USD billions) 
 
                        2002  2003  2004 
 
EU (25)                   38   31     23 
 
EU (12)                   21   26     17 
of which 
Germany                   10    1      5 
Belgium                    1   10      5 
Italy                      0    0      1 
Netherlands                0    4     -1 
 
Other EU (15)             16    5      6 
of which 
UK                        16    4      4 
Denmark                    0    0      2 
Sweden                     1    0      1 
 
New EU members (1)         0    0      0 
 
North America,             6    9      8 
of which 
USA                        0    5      1 
Canada                     6    3      6 
 
Other Industrialized 
Countries                  3    1      2 
of which 
Japan                      3    1      0 
Switzerland                0    1      2 
 
Other countries            2    2    -11 
 
Total                     49   43     24 
 
Total as percent of GDP  3.4  2.4     1.2 
(Exchange rate:) 
USD 1.00 equals Euro     1.06 0.88   0.80 
 
 
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) 
 
                        2002  2003   2004 
 
EU (12)                  213  267 
of which 
Germany                   33   47 
Belgium                   80   80 
Italy                     18   24 
Netherlands               43   64 
 
Other EU (15)             50   37 
Of which 
UK                         2   96 
Sweden                     5    6 
North America            139  187 
of which 
USA                      127  139 
Canada                    21   27 
 
Other industrialized 
countries                 67   95 
Japan                     10   13 
Switzerland               18   25 
 
 
Other countries           55   70 
 
Total                    529  645   746 
 
Total as percent of GDP  36.6 35.9 36.4 
(Exchange rate:) 
USD 1.00 equals Euro     1.06 0.88 0.80 
 
Source:  Bank of France 
 
Stock by country of destination (Market value) (USD 
billions) 
 
Total                    808 1,075 1,270 
 
Total as a % of GDP      55.9 59.9  70.8 
 
Stock by Industrial Sector Destination (USD billions) 
 
                             2002 2003 
 
Holdings                      193   240 
Finance intermediation        112   138 
Retail trade                   31    42 
Transportation equipment       24    32 
Transportation and 
Communications                 34    31 
Electricity, natural gas, 
and water                      19    15 
 
Other                         104   129 
 
Total                        529    645 
(Exchange rate:) 
USD 1.00 equals Euro        1.06   0.88 
 
Source:  Bank of France 
 
Flows by country of destination (Market value, USD billions) 
 
                             2002 2003 2004 
 
EU (25)                        25   37   45 
 
EU (12)                        19   23   31 
   of which 
Germany                         5    6    8 
Belgium                         7    6    8 
Italy                           0    3    2 
Netherlands                     2   11    7 
 
Other EU (15)                   4   13   11 
Of which 
UK                              4   12   10 
Denmark                         1    0    0 
Sweden                          1    1    1 
 
New EU members (1)              1    1    3 
 
North America                  15    8   -1 
of which 
USA                            16    6   -1 
Canada                          0    1    0 
 
Other Industrialized 
Countries                       4    9    1 
Japan                           2    3    0 
Switzerland                     2    5    1 
 
Other countries                 6    0    4 
 
Total                          51   53   48 
 
Total as a percent of GDP     3.5   3.0  2.3 
(Exchange rate:) 
USD 1.00 equals      Euro    1.06  0.88  0.80 
 
Source:  Bank of France 
(1)  Cyprus, Estonia, Hungary,  Latvia, Lithuania, Malta, 
Poland, Czechoslovakia, Slovakia, and Slovenia. 
 
Stapleton