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RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFR #0141/01 0281446
ZNR UUUUU ZZH
R 281446Z JAN 08
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 1785
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUCPCIM/CIMS NTDB WASHDC
RUCNMEM/EU MEMBER STATES

UNCLAS SECTION 01 OF 17 PARIS 000141 
 
SIPDIS 
 
SIPDIS 
 
PASS FEDERAL RESERVE 
PASS OPIC 
PASS KTDB 
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 OPIC USTR FR
SUBJECT: FRANCE 2008 INVESTMENT CLIMATE STATEMENT 
 
REF: 07 STATE 158802 
 
¶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 jobs and stimulate growth. 
Debate in France over "economic patriotism" has 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, good infrastructure, technology, and 
central location in Europe.  EU membership, which mandates the free 
(with certain limitations) movement of people, services, capital and 
goods across the European Union, took on even greater significance 
with the introduction of Euro coins and bills in January 2002. 
However, despite considerable economic reform and market 
liberalization over the past decade, U.S. and foreign companies 
often point to the tax environment, high cost of labor, rigid labor 
markets and occasional negative attitudes toward foreign investors 
as disincentives to investing in France.  U.S. investors have 
welcomed tax, labor and pension reform initiatives launched by 
President Sarkozy in 2007, and expect an increase in U.S. foreign 
direct investment 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 acquisitions, irrespective of size or nationality, involving 
"sensitive" sectors are subject to prior approval by the Finance 
Minister ([http://www.legifrance.gouv.fr] - search for the 31 
December 2005 French Official Journal, decree 2005-1739 of 30 
December 2005).  Acquisitions involving sensitive sectors are 
screened.  Sensitive sectors include: gambling activities, private 
security services, research, development or production of chemical 
or biological medicines, equipment for intercepting communications 
or eavesdropping, security services for computer systems, dual-use 
(civil and military) technologies; cryptology, firms that are 
repositories of defense secrets, firms that research, produce and 
sell military equipment, and lastly any other industry supplying the 
 
PARIS 00000141  002 OF 017 
 
 
defense ministry any of the goods or services described above.  Some 
investments in sensitive sectors require the consensus of several 
ministries, including the Defense Ministry.  Only 30 cases were 
examined by the Finance Ministry in 2006 and all were approved. 
Only two transactions related to defense matters were rejected in 
the last ten years. 
 
The EU Commission initially questioned whether the December 2005 
decree respected the free circulation of capital and the freedom of 
establishment within the EU.  The 2005 decree introduced a 
distinction between E.U. investors and non-EU investors, with a less 
restrictive regime applying to the former.  However, the difference 
in treatment is often minimal. 
 
The decree also changes the triggers for Government of France (GOF) 
investment scrutiny for firms in the sensitive sectors, stating that 
any investment that grants control of a firm, or surpasses the 33 
percent 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 the place of residence rather than the 
nationality of a potential investor.  The place of residence of a 
corporate investor is determined by the location of its owners, 
without regard to place of incorporation.  While firms owned or 
controlled by American citizens who are legal residents 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  headquarters ("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) that might 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 
 
Agence des  Participations de l'Etat 
139, rue de Bercy 
75012 Paris, France 
Tel:   or (33)1 40-04-04-04 
Information may be found on the Finance Ministry's website: 
http://www.minefe.gouv.fr. 
 
AFII's website (http://www.investinfrance.org/NorthAmerica in 
English) explains the basic regulations covering foreign direct 
investment. It provides a general framework on legal issues to help 
businesses in its "Doing Business in France" section.  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 
 
France has implemented some market-oriented economic reforms that 
increase the attractiveness of the French economy to foreign 
investors, and offers a variety of investment incentives.  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 
before, after more than a decade of reforms, France 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 
 
PARIS 00000141  003 OF 017 
 
 
below) can also aggravate suspicions about the equal treatment of 
foreign investors in publicly held firms. 
 
The process of deregulation is far from complete and the state 
remains very involved in economic life.  There is extensive 
regulation of business and labor markets.  Also, the corporate tax 
rates are high in comparison to other leading industrial countries. 
Foreign investors most often cite complicated and pervasive labor 
regulation, 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 used the transition to the 35-hour workweek as 
an opportunity to negotiate work-hour annualization programs with 
employees that allow 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). 
 
By raising the minimum wage ("Salaire Minimum Interprofessionel de 
Croissance - SMIC") an average of 2.1 percent (effective July 2007), 
the Government provided low-wage workers a real 0.9 percent boost in 
purchasing power. Despite the increase in the minimum wage, base 
gross wages in the private sector are expected to increase at a 
slightly lower rate compared with last year (2.7 percent versus 2.8 
percent) as high unemployment restrains wage demands. 
 
The government decision to cut income and payroll taxes in 2007 
should make France a more attractive place for both French and 
foreign investment.  Finance Minister Lagarde is said to be weighing 
further tax system changes, including a possible "social" 
value-added tax increase to finance a payroll tax cuts. 
 
The French have two social security taxes, the "Contribution Sociale 
Generalisee" (CSG) and the "Contribution au Remboursement de la 
Dette Sociale" (CRDS).  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- 
videotheque/bulletins-officiels/annee-2001/bu lletin- 
officiel-no-2001-09-du-20-mai-2001-2758.html] . 
 
On December 8, 2004, the United States amended the income tax 
convention between the United States and France to avoid double 
taxation and prevent tax evasion; along with the estate and gift tax 
convention to avoid double taxation with respect to taxes on 
estates, inheritances and gifts 
[http://www.ustreas.gov/offices/tax- 
policy/library/franceegprotocol04.pdf].  In December 2005, the 
French government ratified the two amendments, and they entered into 
force on December 21, 2006. The provisions resolve problems related 
to the double taxation of partnerships and estates. The U.S. 
Treasury provided a technical explanation in February 2006 
[http://www.treas.gov/press/releases/reports/ 
tefrencheg06.pdf]. 
 
English summaries of labor and tax regulations applicable to foreign 
companies in France are available at the AFII's website 
[http://www.investinfrance.org/, search "Your project in France"] 
and at the Paris Chamber of Commerce and Industries' website 
([http://www.inforeg.CCIP.fr] search "fiches pratiques"). 
 
France's Privatization Program 
 
The Socialist-led government that took office in July 1997 returned 
to the private sector all or parts of the government's stakes in a 
number of large companies, banks and insurance groups.  U.S. firms 
showed interest in some of these sales.  A center-right government 
elected in 2002 announced preliminary plans for further 
privatization, 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, France Telecom, Thales (formerly 
Thomson CSF), Renault, and Thomson through TSA).  Smaller projects, 
 
PARIS 00000141  004 OF 017 
 
 
including the privatization of SAPRR (Paris-Rhine-Rhone Highway 
Company) and of the electricity company SNET, also were carried out. 
 In the energy sector, the government sold shares in EDF and GDF, 
but postponed the privatization of the nuclear power company, Areva. 
 A December 7, 2006 law authorizes the reduction of the government 
stake in GDF to 33.33 percent from 70 percent to permit the merger 
of Gaz de France (GDF) and Suez.  The deal is still pending.  After 
a long selection process in 2005, toll-road companies ASF, APRR and 
Sanef were privatized in 2006.  The government reduced its stake in 
Aeroports de Paris.  The government sold a 2.5 percent stake in EDF 
in 2007 and a 5.0 percent stake in France Telecom to reduce the 
public debt.  In January 2008, the government has stakes in listed 
companies including Aeroports de Paris (68.38 percent), Air France 
KLM (16.67 percent), CNP Assurances (1.09 percent), EADS (15.04 
percent), EDF (84.85 percent), France Telecom (27.35 percent), Gaz 
de France (79.78 percent), Renault (15.01 percent), Safran (30.42 
percent), and Thalhs (27.30 percent), and in unlisted companies 
including SNCF, RATP, CDC and La Banque Postale, and controls 1,143 
smaller firms in a variety of sectors. 
 
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 consider the 
financial and business plans submitted by bidders.  There is a 
strict legal and procedural process regulating these decisions, but 
the confidential nature of off-market sales can raise suspicions 
about the equal treatment of foreign versus French bidders.  This 
can 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 targeted at foreign companies and has not been a part of every 
privatization process.  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. 
 
 
In June 2002 the European Court of Justice reaffirmed the basic 
principle of free movement of capital in the EU and stated that the 
use by some EU countries, including France, of golden shares was a 
serious impediment to that principle.  Nonetheless, a December 7, 
2006 French law related to the energy sector includes the 
possibility for the government to keep a golden share in Gaz de 
France (GDF) to oppose any measure that might jeopardize the 
security of energy supplies.  The Government has also considered 
retaining a golden share in the privatization of Areva through 
loopholes in the court's decision.  Areva's chairman has stated that 
the golden share could be consistent with EU requirements. 
 
French Government Participation in R&D Programs 
 
Total annual R&D expenditures in France remain slightly above 2.1 
percent of GDP.  The GOF has confirmed its commitment to increase 
total R&D spending to 3 percent of GDP by 2010 (consistent with the 
EU's "Lisbon agenda" goals), 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.  Four sectors (automobile, 
pharmaceutical, communication and aeronautics) account for more than 
53 percent of research expenditure in the private sector.  In the 
public sector, research is handled by research organizations, higher 
 
PARIS 00000141  005 OF 017 
 
 
education research centers and Defense ministry laboratories. 
 
The GOF completed in 2006 an ambitious effort to reform its R&D 
strategy, organization, evaluation, and funding.  The new system 
attempts to inculcate competition for government-funded research. 
The Research and Innovation Bill, adopted in April 2006, reinforces 
science-industry relations and promotes greater strategic direction. 
 In mid-2007, the government gave a new impulse to government-funded 
research via a new university governance law.  The new legislation 
provides for a High Council for Science and Technology, a National 
Research Agency, and reinforcement of "competitiveness clusters," 
and an Industrial Innovation Agency.  Private enterprise will 
benefit from more flexible working arrangements with government 
scientists, as well as by receiving R&D tax incentives.  The GOF 
also supports partnerships between public research agencies and 
universities within the framework of "Research and Higher Education 
Hubs," and "Advanced Research Thematic Foundations," two new types 
of cooperation. 
 
"Research and higher education" is the top priority of the 2008 
government budget, benefiting from a 1.8 billion euro increase 
compared to 2007.  "Research and higher education" accounts for 8.6 
percent of total budget spending. 
 
The GOF sponsors R&D and technology development programs at three 
different levels: 
 
 
¶1.  International/European programs (e.g. ESA, CERN, EUREKA, EU 
Framework program); 
 
¶2.   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 transfer of research and to aid 
small and medium firms; and 
 
¶3.   National research programs (mostly 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 the fight against greenhouse gases (research on new sources of 
energy, clean vehicles, energy storage and use of hydrogen, nuclear 
systems and nuclear fusion); information and communication 
technologies; nanotechnologies; and space. 
 
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.ambafrance- 
us.org/fr/ambassade/consulats.asp].  For more information on the 
foreign trader's card, please consult the Invest in France agency 
Web site at:  [http://www.invest-in-france.org/north- 
america/en/launching-your-project.html].  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. 
 
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. 
 
 
PARIS 00000141  006 OF 017 
 
 
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 freeze assets of terrorists. 
 
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) France 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, DIACT 
(Delegation Interministerielle a l'Amenagement et la Competitivite 
des Territoires) has a broad mandate, including increasing the 
"attractiveness" of France 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: 
 
 
PARIS 00000141  007 OF 017 
 
 
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 San Francisco 
88 Kearny Street, Suite 700 
San Francisco, 
CA 94108 
Tel: (415) 781 0986 
Fax: (415) 781 0987 
 
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).  The government defined a new 
list of eligible zones for the 2007-2013 period.  Two implementing 
decrees issued in May and June 2007 (2007-809 decree on May 11, 2007 
and 2007-1029 on June 15 2007) provide details on the current PAT 
system.  The system requires job creation from investors (see 
Performance Requirements), but its subsidies can be generous.  PAT 
may also be collected by firms that maintain employment when the 
investment is significant.  The system is even more flexible for 
small and medium sized companies.  Other investment incentives may 
also be available.  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" (http://www.legifrance.gouv.fr]) 
gives regional councils ("Conseils Regionaux") full powers to 
establish (without decree or national convention) schemes for direct 
aid 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 under 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.  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 
 
PARIS 00000141  008 OF 017 
 
 
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 (Altaldis - former 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 continued to increase -- meaning that 
consumers are 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. 
 
A7. Protection of Property Rights 
 
The French government continues its efforts to enforce intellectual 
property rights.  On October 16, 2007, the French Parliament 
approved a GOF bill on counterfeiting which transposes into French 
law the April 29, 2004 EU Directive on the enforcement of 
intellectual property rights.  On April 6, the GOF issued an 
implementing decree regarding the interoperability articles of the 
French Digital Copyright Law of August 2006.  The decree established 
a Technical Measures Regulation Authority (TMRA), which will decide 
on issues of interoperability of digital rights management (DRM) 
systems, as well as rights to copy original works for private use. 
The law and decree create an uncertain environment for proprietary 
DRM systems in France.  Article 15 of the digital copyright law 
could result in source code disclosure obligations on technical 
protection measures and security software providers who make their 
products available in France, though implementing regulations have 
yet to be finalized.  In order to strengthen French policy on 
illegal downloading of music and movies, a commission appointed by 
President Sarkozy presented a series of proposals in November 2007 
to prevent piracy and to stimulate the growth of a legal digital 
music and movie market.  A number of these proposals should become 
law in 2008. 
 
France is a traditionally strong defender of intellectual property 
rights and has highly developed protection 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 a 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. 
 
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. Where 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 importance of cooperation on regulatory 
issues to the Transatlantic business environment was further 
underscored during the French American Business Council (FABC), 
 
PARIS 00000141  009 OF 017 
 
 
which met in November 6-7, 2007 in Washington.  The Transatlantic 
Economic Council, established last Spring at U.S.-EU annual Summit, 
and which met on November 9, 2007, will also focus on improving 
regulatory cooperation. 
 
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 allows 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 and in 2007 its main market, Euronext, 
merged with the New York Stock Exchange. 
 
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 were required to 
use international accounting standards from 2005.  French market and 
banking regulators enhanced and developed cooperation with their 
foreign counterparts.  Some aspects of French legal, regulatory and 
accounting systems may not be as transparent as U.S. systems, but 
they 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, 
mergers, acquisitions and takeovers.  Banks offer hedging services 
against interest rate and currency fluctuations.  France has 161 
foreign banks, one third of which are non-EU banks (some with 
sizable branch networks) with total assets accounting for around 10 
percent of total bank assets at the end of 2006.  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, 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).  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 has become an increasingly important way for start-up firms 
to raise capital.  In 2005, Euronext created a market, "Alternext," 
to offer companies a new unregulated market (based on the legal 
 
PARIS 00000141  010 OF 017 
 
 
definition of the European investment services directive) with more 
consumer protection than the "Marche Libre."  The NYSE merged with 
Euronext in March 2007.  As of December 2007, NYSE Euronext listed 
4,566 companies, with a total capitalization of USD 2,944 billion. 
The merger has increased international exposure to the European 
exchange and reduced trading fees, which should attract more 
investors. 
 
Foreigners hold more than 40 percent of the capital of large 
publicly traded French companies (CAC 40). For a foreign company 
incorporated in an OECD country to be listed on the NYSE 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 
"Autorite des Marches Financiers - AMF," the French equivalent of 
the SEC. Foreign companies are authorized to provide statements in 
English and a short summary in French.  Since July 1, 2005, France 
has applied European regulation 809-2004 that details the content of 
prospectuses.   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/index-2166-FR.html]. 
 
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, according to a 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 by 
imposing some additional obligations on investors taking control of 
a company listed on a French market depending on the level of voting 
rights in the targeted company and the nature of the proposed 
acquisition. 
 
In transposing the European takeover directive, France has tried to 
reconcile its objectives of reestablishing its credentials as an 
investor-friendly country, while allowing companies to defend 
themselves against "predators."  French companies may suspend 
implementation of a takeover if they are targeted by a foreign 
company that does not apply reciprocal rules.  The government also 
introduced an amendment allowing a U.S.-style "poison pill" takeover 
defense, including granting existing shareholders and employees the 
right to increase their leverage by buying more shares through stock 
purchase warrants ("bons de souscription d'actions - BSA") at a 
discount in case of an unwanted takeover.  New provisions include a 
reform of AMF supervisory procedures.  Procedures cover declaration 
of conformity, offer price, declaration of a bid in relation to 
takeover rumors and nomination of an independent appraiser when 
conflicts of interests exist 
[http://www.amf-France.org/affiche_page.asp? 
urldoc=mediateur.htm&lang=fr&Id_Tab=0]. 
 
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.  That said, such incidents 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.  Perceived 
 
PARIS 00000141  011 OF 017 
 
 
discrimination and a lack of economic opportunity contributed to 
disturbances that affected poorer largely Muslim suburbs of France's 
largest cities in recent years.  Most observers believe the unrest 
was fanned by small groups of youths looking for trouble, and 
incidents of violence have largely dissipated.  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. 
 
French magistrates launched a probe in December 2006 against 
officials from French oil company Total for the bribery of foreign 
civil servants, a criminal offence in France since 2000, when the 
GOF ratified the OECD Anti-Bribery Convention and enacted 
implementing legislation to enforce its provisions.  The OECD 
Anti-Bribery Conventions are 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, 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. 
 
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. 
 
In July 2007, French Parliament approved the additional protocol to 
the Council of Europe's criminal convention on corruption. 
 
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 [http://www.Transparency.org].  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, and in obtaining and 
maintaining patent and trademarks. (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) ; 
 
-- 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.; 
 
-- The requirement that property may only be expropriated for a 
public purpose and that payment must be just, realizable and prompt. 
 
PARIS 00000141  012 OF 017 
 
 
 
 
The treaty does not apply to the use or production of fissionable 
materials, arms or any materials that are 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 - "Accords de protection 
et d'encouragement reciproques des investissements") with the 
following 85 countries: Albania, Algeria, Argentina, Armenia, 
Azerbaijan, Bangladesh, Bolivia, Bulgaria, Cambodia, 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, 
Mexico, Moldavia, Mongolia, Morocco, Nepal, Nicaragua, Nigeria, 
Oman, Pakistan, Panama, Paraguay, Peru, Philippines, Poland, the 
Dominican Republic, Qatar, Romania, Saudi Arabia, Russia, Singapore, 
Slovakia, Slovenia, South Africa, Sri Lanka, Sudan, Syria, Trinidad 
and Tobago, Tajikistan, Tunisia, Turkmenistan, Ukraine, United Arab 
Emirates, Uruguay, Uzbekistan, Venezuela, Vietnam, Yemen, and the 
former Federal Republic of Yugoslavia. 
 
Bilateral Investment Treaties signed with the following 12 countries 
have not yet been ratified:  Bahrain, Belarus, Bosnia, Brazil, 
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 is prompt and 
adequate; 
 
-- Free transfers; 
 
-- 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 [http://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.  Part of President Nicolas Sarkozy's economic reforms ("Work 
more to earn more") has aimed at greater flexibility regarding the 
35-hour workweek.  Tax exemptions on overtime work were included in 
the GOF's fiscal packaged approved by Parliament and took effect 
October 1, 2007.  Employees working overtime are exempt from 
personal income tax on those hours, and employees and employers 
benefit from reduced payroll taxes on overtime work.  Business 
welcomed the GOF's efforts, but has complained that the implementing 
regulations are confusing and costly for French companies. 
 
Talks between employers and unions on revising labor contracts to 
make hiring and firing easier resulted in agreement on a number of 
points in early 2008.  The government had threatened to introduce a 
tougher draft bill in Parliament if the talks had broken down.  The 
agreed-upon measures will have to be approved by Parliament. 
 
PARIS 00000141  013 OF 017 
 
 
 
The President' proposal to streamline assistance to job-seekers by 
merging France's national job placement and unemployment agencies is 
currently before Parliament, with the government hoping that the 
bill will be enacted before the March 2008 municipal elections. 
 
At the end of 2006, France adopted an employees' shareholding law 
("Loi sur la Participation"), which involves some changes in the 
labor code.  The law encourages the purchase of shares by employees, 
the development employees' investment/retirement savings accounts, 
and better representation of employees as shareholders. Employees in 
large companies who are laid off for economic reasons may benefit 
from "mobility leave" which involves training, short-term contracts, 
or transfer to another company within a pole of competitiveness.  A 
new "transport allowance" will benefit employees who commute using 
public or private transportation.  ([http://www.legifrance.gouv.fr] 
- search the 31 December 2006 French Official Journal - law 
2006-1770 of 30 December 2006). 
 
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 tended to use less labor-intensive procedures and rely 
more on labor saving technology than businesses in other countries. 
This is one reason for France's high unemployment rate. 
 
¶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 
in return for commitments in favor of employment. 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")].  France has redesignated trade zones in 
May 2007 [http://www.zones- 
franches.org/PDF/textes_lois/decret2007894.pd f]. 
 
In addition, the French government has extended the tax exemption 
program for five years, until December 31, 2011, in the existing 
urban "enterprise zones" ("Zones Franches Urbaines").  Since January 
2004, all such zones benefited from tax exemptions on corporate tax, 
payroll taxes, professional tax and real estate tax.  The December 
19, 2006 decree designated new urban zones.  Related information is 
 
PARIS 00000141  014 OF 017 
 
 
available at the City Government web site 
[http://www.legifrance.gouv.fr/affichTexte.do ?cidText 
e=JORFTEXT000000641190&dateTexte=]. 
 
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] 
[http://www.oseo.fr] for assistance to small and medium sized 
companies. 
 
France has 71 competitiveness clusters including projects with 
international ties and with related missions.  The clusters are 
designed to reinforce innovation and encourage innovative businesses 
to remain in France. They will benefit from income and social tax 
exemptions [http://www.competitivite.gouv.fr].  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, consultancy and services. 
France has remained one of the main destinations of foreign direct 
investment (FDI).  According to recent UNCTAD's classification, 
France is the third recipient of foreign direct investment inflows 
due to a 57 percent rebound in 2007.  Foreign direct investment 
inflows accounted for 3.6 percent of GDP.  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 11.8 percent of the stock of foreign investment 
in 2005 (most recent data available), slightly down from 12.2 
percent in previous years. 
 
Using the book value instead of the market value of investments 
tends to underestimate the value of U.S. investment 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 it may ultimately be controlled by U.S. 
citizens.  The December 30, 2005 decree 2005-1739 on financial 
relations with foreign countries defines foreign investment 
operations that have to be notified to the Bank of France for the 
establishment of the balance of payments and France's external 
position.  Firms with questions should contact the Bank of France at 
the following address: 
 
Banque de France 
Service de la Balance des Paiements 
31, rue Croix-des-Petits Champs 
Tel:  01.42.92.42.92 
 
Correcting for 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 60.9 
billion (or USD 65.9 billion for 2006) book value for 2005 reported 
in U.S. Department of Commerce data ([http://bea.gov] search in 
International). About 1,326 affiliates of U.S. firms are established 
in France.  Around 619,900 jobs result from U.S.-originated 
investments. 
 
Today, foreign-controlled firms play a significant role in France's 
economy, accounting for 15 percent of capital expenditures, 30 
percent of exports, and 17 percent of value added. 
 
An updated list of recent U.S. investment projects ors may be found 
on [http://www.invest-in- 
france.org/north-america/successful-business- 
developments-in-France.html]. 
 
Lists of foreign investors by industry can be found at the American 
Chamber of Commerce in France. 
156, boulevard Haussmann 
75008 Paris 
Tel: 01 56 43 45 67 Fax: 01 56 43 45 60 
http://www.amchamfrance.org.   Useful information on the first 1000 
companies and financial institutions established in France can be 
found in local periodicals such as Expansion ("Les 1000 de 
 
PARIS 00000141  015 OF 017 
 
 
l'Expansion": 
[http://www.lexpansion.com/economie/classemen t/atlas. 
asp?idc=124715&typerec=3&code secteur1000=1]). 
 
Stock by country of origin (Book value) (USD billions) 
 
                        2003  2004  2005 
 
EU (25)                  347   434   497 
 
EU (12)                  263   327   375 
of which 
 
Netherlands               82    89   96 
Belgium                   58    68   79 
Germany                   58    73   77 
Luxemburg                 32    44   54 
Italy                     15    20   25 
 
Other EU (15)             83   106  120 
Of which 
UK                        74    93  106 
Sweden                     6     6    7 
 
New EU                     1     1    2 
 
Other Industrialized 
countries                109   136  145 
Of which 
USA                       63    72   78 
Switzerland               27    37   38 
Canada                     5     8    8 
Japan                     10    14   13 
 
Other countries           17    16   20 
 
Total                    473   586  662 
 
Total as percent of GDP  26.2  28.4 31.0 
(Exchange rate:) 
USD 1.00 equals Euro     0.88  0.80 0.80 
 
Source: Bank of France 
 
Stock of Foreign Investment in France (Market value) (USD billions) 
 
                         2003  2004   2005 
 
Total                     695   960   1062 
 
Total as percent of GDP  38.5  41.2   31.0 
(Exchange rate:) 
 
Source:  Bank of France 
 
Stock by Industrial Sector of Origin (Book value)(USD billions) 
 
                          2003  2004  2005 
 
Manufacturing             149    189   218 
Of which 
-Chemical Industry         50     51    63 
-Processed Food            17     22    26 
Real estate 
and Services to companies 141    174   208 
Financial Intermediation   71     91   102 
Other                      83    116   128 
Total                     473    586   662 
(Exchange rate:) 
 USD 1.00 equals Euro    0.88   0.80  0.80 
 
Source:  Bank of France 
 
Flows by country of origin (Market value) (USD billions) 
 
                         2004   2005   2006 
 
EU (25)                    28     65     62 
 
EU (12)                    18     48     46 
of which 
 
PARIS 00000141  016 OF 017 
 
 
Netherlands                 0      9     16 
Spain                       3      8      8 
Belgium                     3      7      6 
Italy                       2      2   3 
 
Other EU (15)              10     16     16 
of which 
UK                         8     16      14 
Denmark                    1      0       1 
Sweden                     0      0       1 
 
New EU members (1)         0      0       1 
 
Other Industrialized 
Countries                  7     13      13 
Of which 
USA                        5      8       8 
Switzerland                1      2       2 
Canada                     0      0       1 
Japan                      0      1       1 
 
Other countries           -5      4       5 
 
Total                      30     81     80 
 
Total as percent of GDP   1.6    3.9    3.8 
(Exchange rate:) 
USD 1.00 equals Euro     0.88    0.80   0.80 
 
Source:  Bank of France 
 
Stock by country of destination (Book value) (USD billions) 
 
                        2003    2004   2005 
 
EU (25)                  381     485    584 
 
EU (12)                  268     343    409 
of which 
 
Netherlands               70      93    104 
Belgium                   72      78     91 
Germany                   48      73     79 
Italy                     24      28     44 
 
Other EU (15)            102     127    156 
Of which 
UK                        95     117    143 
Sweden                     6       6      7 
 
New EU (1)                11      16     19 
 
Other industrialized 
countries                216     228    275 
of which 
USA                      140     148    180 
Switzerland               25      28     32 
Canada                    27      22     28 
Japan                     13      17     19 
 
Other countries           52      59     71 
 
Total                    649     772    930 
 
Total as percent of GDP  36.0    37.4  43.6 
(Exchange rate:) 
USD 1.00 equals Euro     0.88    0.80  0.80 
 
Source:  Bank of France 
 
Stock of French FDI Abroad (Market value) (USD billions) 
 
                          2003     2004     2005 
 
Total                    1,086    1,333    1,658 
 
Total as a percent of GDP 60.2     64.5     80.3 
 
Stock by Industrial Sector Destination (Book value)(USD billions) 
 
                        2003   2004   2005 
 
PARIS 00000141  017 OF 017 
 
 
 
Manufacturing            214    257    306 
Of which 
-Chemical Industry        46     54     64 
-Processed Food           18     24     36 
Finance Intermediation   126    164    184 
Real estate and 
Services to companies     94    108    127 
Other                    215    243    313 
Total                    649    772    930 
(Exchange rate:) 
 USD 1.00 equals Euro   0.88   0.80   0.80 
 
Source:  Bank of France 
 
Flows by country of destination (Market value) (USD billions) 
 
                          2003  2004  2005 
 
EU (25)                     38    81    62 
 
EU (12)                     27    62    44 
of which 
Belgium                      5    14    12 
Germany                      8     4    10 
Italy                        1    14     5 
Netherlands                  6    13    10 
 
Other EU (15)                8    17    15 
Of which 
UK                           7    12    15 
Denmark                      0     4     0 
Sweden                       1     1     0 
 
New EU members (1)           3     2     2 
 
Other Industrialized 
Countries                    3    21    38 
Of which 
USA                          2     9    18 
Switzerland                  2     6    13 
Canada                       4     1     1 
Japan                        2     2     2 
 
Other countries              2    27    50 
 
Total                       43   110   114 
 
Total as a percent of GDP  2.8   5.9   5.3 
(Exchange rate:) 
USD 1.00 equals      Euro  0.88  0.80  0.80 
 
Source:  Bank of France 
(1)  Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, 
Czech Republic, Slovakia, and Slovenia. 
 
STAPLETON#