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

171449Z Mar 06

UNCLAS SECTION 01 OF 02 PARIS 001715 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/TPP, EUR/ERA, EUR/WE, EUR/PPD, EB 
STATE PASS USTR 
COMMERCE FOR ITA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV ETRD ELAB PREL FR EUN
SUBJECT: FRANCE - BUSINESS UPDATE 
 
 
NOT FOR INTERNET DISTRIBUTION 
 
¶1.  (U) This message contains a series of updates on French 
trade and business news. 
 
France to ease restrictions on new EU workers 
--------------------------------------------- 
 
¶2. (U) Prime Minister Dominique de Villepin announced on 
March 13 that France would "gradually" open up its labor 
market to workers from eight countries that joined the EU in 
2004 even though it could have theoretically maintained its 
restrictions on workers from new EU member states until 
¶2011.  Priority will be given to sectors where labor is in 
short supply.  These include healthcare, hotels, 
restaurants, construction and transport.  According to the 
latest figures, there are some 300,000 vacancies in those 
areas.  However, the lifting of restrictions is likely to be 
very "progressive and controlled", as France has a 9.6 
percent unemployment rate.  Prior to this decision, some 74 
percent of the authorizations issued in France were for 
seasonal workers, 11 percent for temporary workers, and only 
5 percent for permanent workers. 
GE unit fined over use of English 
--------------------------------- 
 
¶3.  (SBU) Earlier this month, a French appeals court ruled 
that a French subsidiary of U.S. firm must translate 
internal documents into French.  More specifically, General 
Electric's Healthcare's French arm, GE Medical systems SCS, 
was ordered to provide workers with French versions of 
software, instruction and training manuals, and documents 
relating to health and safety.  The court also fined the GE 
subsidiary 714,000 USD.  This is the first time that a court 
applies the so-called Toubon law to materials used by an 
international company based in France.  This law makes 
French mandatory in advertising and workplace documents. 
 
Price-fixing fine tarnishes French cosmetics industry 
--------------------------------------------- --------- 
 
¶4.  (U) France's most famous names in cosmetics were 
recently condemned by France's competition Council for price- 
fixing arrangements between 1997 and 2000.  The Council 
imposed 55.1 million USD in fines to 13 perfume cosmetic 
brands (including Chanel, Christian Dior, Yves Saint 
Laurent, Guerlain, Clinique and Estee Lauder) and three 
vendors (Marionnaud, Sephora and Nocibe) for artificially 
inflating prices.  This is the second time that France's 
anti-trust watchdog has slapped fines on French 
conglomerates for price collusion.  Last year, the 
Competition Council ordered France's three mobile operators 
to pay a record combined fine of 628 million USD for 
distorting competition. 
 
France is losing the education battle 
------------------------------------- 
 
¶5.  (U) A recent OECD study on education (The Economics of 
Knowledge: Why education is key for Europe's success) 
reveals that Europe is lagging Asia in the education race, 
held back by France and Germany.  The study indicates that 
while most of Korea's young people pursue college and 
graduate studies, only half of today's school-leavers enter 
higher education in Germany and France.  As a result, 
"France and Germany, which make up 35 percent of the EU's 
11.6 trillion euro economy, are no longer the world's 
leaders in developing knowledge and skills," the OECD report 
concludes.   It points to that social background, notably in 
France, Germany and Italy, as preventing young people from 
getting ahead.  The OECD study further mentions that France 
refuses to publish the evidence it provides on social 
inequality between schools. 
 
The CAC 40 - Less and Less French 
-------------------------------------------- 
 
¶6.  (U)  The French stock Index CAC 40, generally 
recognizable across world market listings by the red white 
and blue tricolor is less and less French.  The CAC 40 
companies recently posted stunning profits of 84 billion 
Euros for 2005.   While a member company of the index must 
nominally have its decision-making center "largely or 
historically" in France, a recent study shows that foreign 
investors increasingly dominate the index.  A study by the 
government's National Institute of Statistics and Economic 
Studies (INSEE) shows that foreign shareholders hold 55 
percent of the shares of non-bank CAC40 member companies. 
In addition, only 35 percent of the CAC 40 companies' work 
force is French.  Finally, less then 30 percent of the non- 
bank companies' sales are made in France.  Naturally, this 
state of affairs enabled President Chirac to claim that 
France was more open to foreign investment than Germany.  A 
victory for much-maligned globalization? 
 
Stapleton