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UNCLAS SECTION 01 OF 05 PARIS 000214 
 
SENSITIVE 
 
SIPDIS 
 
WHITE HOUSE FOR USTR 
 
E.O. 12958: N/A 
TAGS: EFIN ETRD EIND EINV FR
SUBJECT: France's Sleek New Export and Investment Machine 
 
Ref: A) Paris 1553: B) Paris 1599 
 
PARIS 00000214  001.4 OF 005 
 
 
Summary 
------- 
 
¶1. (SBU) France is already world's fifth largest exporter, but 
recently restructured its export promotion and investment machine to 
stay competitive and increase assistance to small and medium 
enterprises (SMEs).  The new "French Export Team" streamlined the 
roles of the major export promotion entities, and in September 2009, 
launched "Programme France," a unified export promotion strategy and 
architecture.  Anchored by UbiFrance - France's export promotion 
agency - and the public and private-sector chambers of commerce, 
Programme France now includes partnerships with volunteer trade 
advisors, lenders, credit guarantee agencies, and even the national 
intellectual property office.  Meanwhile, the Invest in France 
Agency is boosting its leverage with similar but more limited 
partnerships.  Programme France will have some growing pains, but 
France's aggressive approach to export promotion and inward 
investment bode well for its future competitive stance and position 
as a global economic leader.  End summary. 
 
France Favors Its Big Players Over SMEs 
--------------------------------------- 
 
¶2. (SBU) France has traditionally -- and successfully -- marshalled 
significant public, private, and political resources to boost its 
largest companies (e.g., L'Oreal, Louis Vuitton-Moet Hennessy) and 
national champions (e.g., Areva, Electricite de France, Gaz de 
France, Renault, Alstom) as they compete in key sectors: aerospace, 
energy, transportation, agriculture, luxury goods, etc.  French 
presidents and ministers conduct aggressive commercial diplomacy and 
exploit cultural programs such as the "Year of France in Brazil" to 
crack open new markets (Ref A).  As a result, France has 
consistently punched above its weight in the global marketplace and 
its large companies have done well. 
 
Drop in Exporter Companies Triggered Reform 
------------------------------------------- 
 
¶3. (U) However, the number of French exporters began to drop in 
2001, with a particularly steep decline between 2002 and 2005.  SMEs 
were noticeably absent from the export scene, and a Ministry of 
Economy report showed that the majority of the top 1,000 French 
exporting companies, responsible for 70 percent of total export 
value, were large French industrial corporations or branches of 
international firms.  In general, SMEs were hampered by their size 
and inability to innovate.  The study found that 30 percent of 
first-time exporters did not export in the following year.  Many 
firms exported to just one or two European countries. 
 
¶4. (U) GOF and private sector sources readily admitted that the 
diverse public and private services available to help fledgling 
exporters were either duplicative and ferociously competitive with 
each other, or unknown to the general public and disconnected from 
each other.  SMEs also complained that French embassies only helped 
large corporations, and the Ministry of Economy concluded that the 
Ministry of Foreign Affairs sidelined commercial objectives. 
Friction between the major players in export promotion detracted 
from their overall mission and hindered new and sustained export 
activity.  At the same time, France was grinding through the General 
Revision of Public Policies (RGPP), which mandated a leaner central 
government with fewer public servants and a rationalization of 
France's often confusing public administration.  The simultaneous 
budget reform (la Loi organique relative aux lois de finances 
(LOLF)) also demanded "accountability from the first euro" and 
quantifiable objectives. 
 
The French Export Team and Programme France 
------------------------------------------- 
 
¶5. (U) In response, Minister of Economy Christine Lagarde and Junior 
Minister for Trade Anne Marie Idrac created the "French Export Team" 
in early 2008 to "simplify export assistance and increase 
efficiency."  In April 2008, the ministries of Economy and Foreign 
Affairs, UbiFrance, and the public and private sector chambers of 
commerce in France and overseas signed an agreement ("2008 
Convention") to clarify their respective roles and set out the terms 
of their future cooperation.  In September 2009, the French Export 
Team announced "Programme France," a unified export promotion 
assistance strategy and architecture that focuses on SMEs. 
 
¶6. (U) While the Ministry of Economy's General Directorate for 
Treasury and Economic Policy (DGTPE) oversees Programme France in 
general, UbiFrance has primary responsibility for the initiative. 
But along with this robust new mandate and increased budget (through 
 
PARIS 00000214  002.4 OF 005 
 
 
2011) come new quantified objectives that demand greater 
accountability.  Overseas, UbiFrance offices, French Embassy 
Economic Sections, and French bilateral chambers of commerce are 
meeting to deconflict their roles on the ground and streamline their 
services.  New agreements with volunteer trade advisors, financiers 
and specialized service providers broaden the Programme's reach, and 
the website, http://www.exporter.gouv.fr/exporter/, provides a 
one-stop shopping window, making the Programme's activities and 
services more accessible, organized, and interconnected.  Through 
the "exporter" website, users can also access the site 
www.programme-france.gouv.fr, which contains a catalogue of all the 
export and outward investment promotion activities of every French 
Export Team partner. 
 
The New and Improved UbiFrance 
------------------------------ 
 
¶7. (SBU) UbiFrance's main objective is to connect French businesses 
with market opportunities overseas and help the companies export 
their products successfully.  Modeled on a private corporation, this 
fee-for-service government agency often took a back seat in Paris 
and overseas to political and macroeconomic priorities.  Programme 
France seeks to reverse this trend by giving UbiFrance lead 
authority over export promotion and separating overseas UbiFrance 
staff from French Embassy Economic Sections.  UbiFrance must also 
attain specific objectives over the next three years: 20,000 
businesses assisted through trade missions, seminars, prospecting 
trips, etc; 10,000 new businesses identified and brought to export 
status through partnerships with the Chambers of Commerce and 
Industry; and 10,000 business interns placed in companies overseas. 
UbiFrance is accountable to the DGTPE and an administrative council 
comprised of businesspeople and government advisors. 
 
¶8. (U) By mid-2010, UbiFrance will have approximately 500 staff in 
its Paris headquarters and 1,000 in 64 overseas offices in 44 
countries.  All staff have more flexible, private (i.e., not civil 
service) contracts, which helps the GOF reduce its public servant 
workforce as mandated by the RGPP.  The majority of UbiFrance's 
Paris staff are engineers or technical specialists organized into 
various sectors such as agronomy, housing/health, marketing, etc. 
UbiFrance has no official regional offices in France outside of 
Paris, a situation that the domestic chambers of commerce fought 
hard to maintain.  UbiFrance has nine Economic Missions in the 
United States, headquartered in New York.  Each mission has both 
geographic and sectoral responsibilities.  For example, the Chicago 
and Detroit offices cover thirteen Midwestern states and a wide 
variety of industrial sectors including iron and steel, autos, 
mechanical industry, agriculture, etc.  Programme France also aims, 
from 2009 to 2011, to improve the synergy between UbiFrance and the 
domestic and overseas chambers of commerce, which tend to approach 
this partnership warily, since their own fee-for-service structures 
compete with UbiFrance's new primacy in the field. 
 
Public and Private-Sector Chambers of Commerce and Their Uneasy 
Relationship With UbiFrance 
---------------------------------- 
 
¶9. (SBU) Domestic chambers of commerce and industry (CCIs) operate 
in each of France's 100 departments and are represented in Paris by 
the Assembly of Chambers (ACFCI or Assemblee des Chambres Francaises 
de Commerce et Industrie).  The CCIs are public-sector entities that 
finance up to 70 percent of their budget through various business 
activities, a fact ACFCI highlights to bolster its claim of 
independence from the central government.  Due to historical 
legacies, the CCIs manage all of France's airports (except in 
Paris), many of the ports, large conference facilities and major 
professional training programs (200,000 students), including many of 
the top French business schools.  The CCIs also receive 30-40 
percent of their budget from a share of the so-called professional 
tax (which is being phased out), but this tax revenue remains 
outside the mainstream budget process, circumventing central 
government oversight.  Per the 2008 Convention, the CCIs' role in 
export promotion is to seek out local French companies with export 
potential and develop or improve their production and export 
capabilities.  With close ties to local government and some say a 
political slant, CCIs can suffer from a lack of professionalization 
and hit-or-miss personnel.  But this local network with excellent 
ties to small business is critical to the success of the French 
export machine.  According to the ACFCI's annual report, the CCIs 
assisted 8,000 companies develop their export potential in 2008. 
 
¶10. (SBU) The French CCIs overseas (Chambres de Commerce et 
d'Industrie Francaises a l'Etranger, or CCIFEs) are the 
international analog to the domestic chambers but are essentially 
private business clubs.  Each club, in return for membership in the 
CCIFE network, must commit to certain operating principles, 
 
PARIS 00000214  003.6 OF 005 
 
 
including helping any French company that seeks assistance. 
Represented in Paris by the Union of CCIFEs (UCCIFE), the CCIFEs 
support themselves through their fee-based services and corporate 
sponsorship.  There are 114 CCIFEs (21 in the U.S. alone) in 78 
countries, with a combined membership base of 25,000 companies, 
about 50 percent of which are non-French.  Most offices provide 
initial consultations, market studies, communication campaigns, 
organization of meetings, colloquia, and trade shows, as well as 
more specialized services.  The directors of UCCIFE and ACFCI serve 
on each others' boards and coordinate their respective policies. 
 
¶11. (SBU) In the past, the domestic and overseas chambers passed 
businesses off to each other depending on the service required, and 
functioned independently of UbiFrance, although with some contact 
with the embassies.  Now, the 2008 Convention commits the chambers 
to coordinating more with UbiFrance, with which they are required to 
share their carefully cultivated business contacts and projects. 
Many chambers are reluctant to do this; a fear echoed by private 
consultants who claim UbiFrance is "dumping" services at 
below-market prices and forcing consultants out of business.  On the 
other hand, UbiFrance complains that the chambers often abuse the 
Programme France label (a small Eiffel Tower with a tricolor scarf 
and the word "france" beneath it) and provide uneven services at 
high prices.  Now another potential competitor has entered the 
field: the EU is creating its own chambers, as smaller member states 
realize they need export assistance but cannot afford their own 
bilateral networks.  The UCCIFE is pushing the EU to create a 
Chamber of Member-State Chambers, open only to other bilateral 
chambers, rather than to individual businesses.  The UCCIFE claims 
it will take at least two more years to sort out the respective 
authorities between UbiFrance and the chambers and avoid continuing 
clashes over territory and client bases. 
 
Programme France's Financial Partners 
------------------------------------- 
 
¶12. (SBU) Programme France has drawn in two financial entities -- 
OSEO and COFACE -- to round out the export promotion portfolio. 
Billing itself as "the Company for Entrepreneurs," OSEO provides 
direct financing, guarantees bank loans, and co-finances loans to 
small innovative business seeking to export.  OSEO's 2008 and 2009 
budgets were 733 million euros and 544 million euros, respectively, 
and the organization received 1.5 billion in the "grand emprunt," 
President Sarkozy's special debt offering for future-oriented 
investments. (Ref B) OSEO claims that one secret of its success is 
speed; it can react to financing requests in five to ten days.  OSEO 
employs 1,000 people in its 37 regional offices in France, 600 in 
its high-end Paris headquarters, and operates only domestically. 
UbiFrance represents OSEO overseas.  According to OSEO's 
international office, OSEO economic stimulus financing helped 70,000 
businesses pull themselves out of the financial crisis. 
 
¶13. (U) Coface is a French corporation founded in 1946 as a 
specialized export credit insurance company, managing its own 
products and state guarantees for French exports.  Privatized in 
1994, Coface has expanded internationally to include 6,816 staff in 
67 countries, including the United States.  Coface is France's 
leading credit information provider, and in 2008, launched a 
worldwide rating on the business environment (Coface Rating).  In 
2009, Coface announced its intention to become a financial rating 
agency like the three major Anglo-American agencies, though limiting 
itself to corporate ratings.  In France, Coface also manages public 
export credit guarantees provided by the French state.  Examples of 
large and small COFACE projects:  credit insurance for Brazil's 
possible purchase of Dassault's Rafale jets; and insurance for the 
costs related to an entrepreneur's business exploration trip. 
 
Helping Hands: INPI, MEDEF, and Trade Counselors 
--------------------------------------------- --- 
 
¶14. (U) Programme France also taps other specialists to assist 
budding exporters.  The National Intellectual Property Institute 
(INPI) is the national government's self-financing IP agency and has 
20 domestic offices and branches in the French embassies located in 
Beijing, Rabat, and Abu Dhabi, and the French Economic Mission in 
Rio de Janeiro.  As a Programme France partner, INPI advises 
exporters on international patent issues, particularly SMEs.  MEDEF 
International is the 20-year old spin-off organization of MEDEF, the 
French employers union, and helps connect French companies with 
visiting international officials, or organizing business delegations 
to foreign countries.  Finally, the French Foreign Trade Counselors 
(Conseillers de Commerce Exterieur de la France (CCEF)) is a 
prestigious hundred-year old network of private businesspeople 
serving voluntarily as honorary foreign trade advisors.  Experts in 
their areas, the trade advisors help shape trade policy, advise 
SMEs, and sponsor business interns abroad.  There are currently 
 
PARIS 00000214  004.4 OF 005 
 
 
3,800 CCEF: 2300 French senior executives in 140 countries; and 1700 
in France working as managers and executives in exporting or 
multinational companies.  (CCEF's are nominated by the Prime 
Minister, subject to a rigorous background check and pay annual dues 
of 800 euros for the privilege to serve.) However, the new 
UbiFrance-CCEF partnership is bumpy.  A French consultant said he 
and his fellow San Francisco consultants who also volunteer as CCEFs 
"reacted badly" to being told they should now coordinate everything 
with (professional competitor) UbiFrance: "Why should I work for 
them for free?" 
 
The Inward Investment Machine: 
Well-Built But Underpowered 
--------------------------- 
 
¶15. (SBU) In 1969, France opened the first French Delegation for 
Development and Regional Action (DIACT) in New York to encourage 
international investment in France.  Throughout the 1970s, further 
offices were opened in Chicago, Los Angeles, Japan, Germany, the UK, 
Sweden, Switzerland, and Spain.  The offices adopted the "Invest in 
France" title and became, within French Embassies, the departments 
responsible for inward investment in France.  In 2001, the New 
Economic Measures Law established the Invest in France Agency (IFA), 
a public "industrial and commercial body" placed under the authority 
of both the Ministry of Economy and the Ministry of Regional 
Development.  The 2007 IFA budget was 22.2 million euros, coming 
entirely from government funding. 
 
¶16. (U) The Invest in France Agency is now the main government 
agency charged with attracting inward investment to France.  It 
covers every stage of the investment decision-making process, from 
researching the market to actually setting up a business in France. 
Activities include promoting the French territory to international 
investors and opinion leaders; prospecting for investors and 
internationally mobile investment projects; acting as a link between 
investors and local authorities to facilitate investment and site 
selection bids; and monitoring and studying international investment 
flows, and providing individualized after-care services.  IFA works 
in close coordination with French regional economic development 
entities as well as with private partners (logistics, real estate, 
energy, banks, lawyers, accountants and other business-to-business 
(B2B) service providers) to come up with the appropriate and most 
effective/competitive offer to the potential investor.  IFA will 
also do a pre-selection of appropriate locations in France, based on 
the specificity of the project, thus helping potential investors 
avoid being approached by too many regional economic development 
agencies and local entities. 
 
¶17. (U) In contrast to UbiFrance and the chambers of commerce, IFA's 
services are free, but the agency works closely with a network of 
corporate partners -- the IFA Club -- which provide a range of 
fee-based services to potential investors.  IFA's staff are 
typically sectoral experts on three to five-year contracts, with 
steep quotas they must fill each year, e.g., visiting 200 new 
companies a year to sell France as an investment destination.  IFA 
maintains 21 overseas offices -- 11 in Europe, four in North America 
(New York, Chicago, San Francisco, Toronto), and seven in Asia -- 
which employ 79 people (22 in North America) in addition to the 
60-person IFA headquarters in Paris.   These offices are considered 
part of the French public service.  Through the French embassies, 
the DGTPE represents IFA in another 30 countries. 
 
¶18. (U) The IFA covers every stage of the investment decision-making 
process, from researching the market to actually setting up a 
business in France.  IFA has limited partnerships with DGTPE, 
UbiFrance, FirmaFrance (the official French exporter directory), and 
Maison de la France (the French Government Tourist Office website), 
as well as with French regional entities.  Through these 
partnerships, IFA is represented at international and domestic trade 
shows, has access to French business listings, and obtains 
testimonials from the heads of international businesses already 
operating in France.  In the near term, Invest in France will focus 
on 15 emerging high-tech, high-value-added sectors:  renewable, 
efficient, and nuclear energy; electronics/telecom; medical and 
pharmaceutical; bio-, nano,- and animation technology; non-food 
agricultural products; and waste management. 
 
¶19. (SBU) While the IFA structure seems impressive, business 
contacts say their impact is often limited.  Our French investment 
consultant contact told EconMinCounselor that the San Francisco 
office is too small to be effective and only helps large companies. 
However, IFA is the biggest sponsor of the annual World Investment 
Conference, organized to attract investment to Europe, and it 
recently received a 13 million euro injection. 
 
Revving the Engine and Hitting the Gas 
 
PARIS 00000214  005.4 OF 005 
 
 
-------------------------------------- 
 
¶20. (SBU) Comment:  France is already a top exporter, and if 
Programme France can quell the current rivalries and increase 
efficiency, exports could boom, especially for SMEs.  The 1.5 
billion euros available through the "grand emprunt" to finance 
innovative SMEs will provide another significant boost.  While some 
lack of innovation or quality in French products is partially to 
blame for declining exports over the past decade, a well-designed 
French widget now stands a better chance of reaching a fertile 
export market.  The French inward investment machine needs a similar 
revamp:  while the basic structure exists, performance lags behind 
potential.  While much depends on the economic policies that 
President Sarkozy's government adopts, or fails to, France's 
aggressive approach to export promotion and inward investment bode 
well for its future competitive stance and position as a global 
economic leader.  End comment. 
 
PEKALA