France - United States Trade Relations

1. France - United States Trade Relations Embassy of France - Trade

2. Contents I – A strong trade relationship a) Bilateral trade : « top ten » partners b) Investments : the heart of our economic ties II – France : a major EU partner III – Trade policy : the importance of the Transatlantic Partnership Embassy of France - Trade

3. Part I A strong trade relationship Embassy of France - Trade

4. Big figures : $270 billion and more • Two-way trade in goods : over $50 billion per year ( • France, 2004 : 9th export market for US goods, and 9th provider • Trade in services : $20 billion per year • Investments (2003 stocks) : $143 billion of French direct investment. France is the #5 investor in the US… compared to only $48 billion of US direct investment Sources : US DOC, BEA Embassy of France - Trade

5. I- a. Bilateral Trade 2004 : US imports of goods from France $ 32 billion; US exports $21 billion Source : US Census Bureau Embassy of France - Trade

6. N.B. : the statistical discrepancy Statistical tendencies remain a reliable tool and records of total trade volumes are similar. But 2004 US-France trade balance according to : • French Customs = US deficit Euros -644 million • US Census Bureau = US deficit $ -11 billion (US imports overestimated with temporary imports accounted as permanent ; US exports understimated because of loose record). Embassy of France - Trade

7. Also rising US deficit with the European Union-15 2004 : US imports $ 270 billion; US exports $169 billion Source : US Census Bureau Embassy of France - Trade

8. US imports from France Contrary to common perception : • Agribusiness products ($1,6 billion) = 5,6 % • «Traditional» goods : wine/spirits ($1 billion, less than 4%), water, fragrances & cosmetics, arts & antiques = 15% • Aircraft/spacecraft ($4,2 billion) = 14,5% • Reactors, machinery, appliances = 14,6% • Chemicals = 23% Source : US Census Bureau Embassy of France - Trade

9. US imports from France Machinery/transport. = 40% of US imports from France Source : US Census Bureau Embassy of France - Trade

10. US exports to France Machinery/transport. = 55% of US exports to France Source : US Census Bureau Embassy of France - Trade

11. Trade rising in 2004 • 2004 (US Census Bureau) US exports to France : $21 billion => +24% US imports from France : $32 billion => +8% Trends : • slowdown of French Aircraft/spacecraft sales (-3%) contrary to sectorial US sales (+35%); • French wine sales dropped -3% in value (Source : fédération des exportateurs de vins et spiritueux) Source : US Census Bureau Embassy of France - Trade

12. Source : US Bureau of Economic Analysis Services: US-French trade • 2003 : US exports $11 billion; US imports $10,2 billion ; US surplus $800 million Embassy of France - Trade

13. I- b. Investments : the heart of our economic ties Source : US Bureau of Economic Analysis Embassy of France - Trade

14. France : a major investor in the US • 2003 stocks : $143billion French Foreign Direct Investment in the US… • …that is 3 times the amount ($48 billion) of US investment in France • France is #5 investor in the US : more than 10% of all FDI in the US Source : US Bureau of Economic Analysis Embassy of France - Trade

15. A strong and diversified presence • More than 2 500 subsidiaries of French firms operate in the United States • Their activities provide 515 000 jobs (2002, BEA) • Generated turnover figures, over $160 billion in 2003, are tantamount to five times our exports to the U.S. Source : US Bureau of Economic Analysis Embassy of France - Trade

16. French Investments In The US (2003 stocks) Finance + Information + Chemicals + Machinery = 62% Source : US Bureau of Economic Analysis Embassy of France - Trade

17. 2003 Investment Inflows & Outflows • Sharp decrease in US FDIs to France ($1,5 bln against 3,3 in 2002) but increase foreseen in 2004 • Slight decrease of French FDIs in the US : $5,1 bln • Inflows : France remains #3 country for worlwide investment inflows ($46 bln). Inflows in the US at their lowest ($29 bln) since 1992. • Outflows : US first investor worldwide ($152 bln), France #3 ($57 bln) Source : BEA, UNCTAD Embassy of France - Trade

18. Part II France : a major EU partner Embassy of France - Trade

19. US/EU Trade in 2004 • $ 440 billion trade relationship ; France accounts for about 1/6th of this amount. • US imports = $ 270 billion, US exports = $ 169 billion • First supplier of the US with a market share of 18%, before Canada (17%), China (13%), Mexico (10%) and Japan (9%) • A rising US bilateral deficit of $ 101 billion (23 times the 1993 amount) Source : US Census Bureau Embassy of France - Trade

20. The EU is the #1 investor in the USA • $ 855 billion in stocks 2003 = 62% of all foreign investments in the U.S. • In 2003, France #4 European investor (#3 in 2002) behind the UK, Germany and the Netherlands • $ 963 billion US stocks = 54% of all US foreign investments • Each partner employs about 4 million people in the other Source : US Bureau of Economic Analysis Embassy of France - Trade

21. Top investors in the US, 2003 stocks Five of the 8 top investors in the US are EU members Source : US Bureau of Economic Analysis Embassy of France - Trade

22. Part III Trade Policy : The importance of the Transatlantic Relationship Embassy of France - Trade

23. The EU and the US are each other’s main trading and investment partner • A bilateral framework to reduce barriers to trade and investment : The New Transatlantic Agenda (1995) and the Transatlantic Economic Partnership (1998) & PEA (2002) • Annual EU-US summit and regular high level meetings • TABD, TACD, TALD • Mutual recognition agreements, Customs cooperation (CSI) • Ongoing negotiations : “Open Sky Area”, APIS-PNR, Financial Markets dialogue, wine • 2005 : stakeholders came forward with proposals to strengthen the transatlantic economic partnership Embassy of France - Trade

24. The Transatlantic trade disputes : minor irritants • WTO disputes affect less than 2% of transatlantic trade • Resolution of certain disputes : Antidumping Act of 1916, geographical indications, “rice” conflict • FSC/ETI: US passed American Jobs Creation Act but grandfathering and transition clauses still unacceptable for EU • US Congress reluctant to comply with WTO rulings (Byrd Amendment, “section 211”) • Ongoing discussions : Airbus/Boeing; GMO; EU enlargement • The US requested a new panel against the EU (customs procedure) • Increasing difficulties of the regulatory cooperation between Parliaments and independent regulatory agencies (EU-US Veterinary Equivalence Agreement, Sarbanes-Oxley Act) • What balance between security and trade (Container Security Initiative, Bioterrorism Act) ? Embassy of France - Trade

25. Iraqi crisis : US boycott of French products ? • US-France bilateral trade slowdown in 2003 was not related to the boycott, but to macro-economic factors : weak growth in France, appreciation of the Euro, worldwide crisis in the aeronautic sector • However the boycott stressed structural difficulties in two sectors : wine and tourism • 2003 Wine exports to the US decreased by 12% in volume (French statistics). Structural competition of Australian, Italian, Californian and Chilean wines (French market share of 14% in 2003, fell from 25% in 1998) • Estimated drop of US visitors in France of -14% in 2003. But estimate of +13% in 2004 (3 millions American visitors). France is #2 travel destination in Europe (after the UK, before Italy) • France’s image in the US has been deeply damaged, although recovering somewhat : 80% favorable in Feb 2002, 34% in March 2003, 47% in Feb 2004, 51% in Feb 2005 (Gallup). Embassy of France - Trade

26. Free Trade Agreements • The EU has concluded more free trade agreements : • 28 FTAs concluded • On going negotiations with 15 countries (including countries of MERCOSUR and of the Gulf Cooperation Council) • A new momentum for bilateral and regional FTAs in the US (« competitive liberalisation ») : • 10 FTAs concluded : Israel (1985), NAFTA (1994), Jordan (2001), Chili and Singapore (2003), Australia, CAFTA/Dominican Republic, Morocco and Bahrain (2004) • On going negotiations with the 34-nations FTAA, bilateral negotiations with Southern African Custom Union, Panama, Andean Region, Thailand • Committed to begin negotiations with United Arab Emirates (Egypt still uncertain) Embassy of France - Trade

27. US new FTAs account for a small share of US trade • Trade with existing FTA partners account for one third of total trade flows both for the EU and the US • But in 2004 US trade with the new (FTAs not yet implemented) and potential FTA partners (FTAA, SACU, Thailand, etc…) accounted for only 8% of total US trade Source : US Census Bureau Embassy of France - Trade

28. Copyright Tous droits de reproduction réservés, sauf autorisation expresse de la Mission Economique de WASHINGTON (adresser les demandes àwashington@dree.org). Clause de non-responsabilité La ME s’efforce de diffuser des informations exactes et à jour, et corrigera, dans la mesure du possible, les erreurs qui lui seront signalées. Toutefois, elle ne peut en aucun cas être tenue responsable de l’utilisation et de l’interprétation de l’information contenue dans cette publication qui ne vise pas à délivrer des conseils personnalisés qui supposent l’étude et l’analyse de cas particuliers. Auteur : Mission Économique Adresse : 4101 Reservoir Road, NW WASHINGTON, DC 20007-2173 ÉTATS-UNIS Rédigée par : Michel ESTEVES Revu par : Jean-François BOITTIN Date de parution : 4 avril 2005 Version originelle 28 septembre 2004 Version n°3 du 1er avril 2005 Embassy of France - Trade