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Backgrounds: France Economy
With a GDP of $1.6 trillion, France is the fourth-largest Western industrialized economy. It has substantial agricultural resources, a large industrial base, and a highly skilled work force. A dynamic services sector accounts for an increasingly large share of economic activity (71% in 2002) and is responsible for nearly all job creation in recent years. GDP growth was 0.2% in 2003, after two years of steady decline from 4.2% in 2000.
Government economic policy aims to promote investment and domestic growth in a stable fiscal and monetary environment. Creating jobs and reducing the high unemployment rate through recovery-supportive policy has been a top priority. The Government of France successfully reduced an unemployment rate of 12% to 8.7%, in the late 1990s, but has seen unemployment increase to 9.5% in 2003 . France joined 10 other European Union countries in adopting the euro as its currency in January 1999. Since then, monetary policy has beeen set by the European Central Bank in Frankfurt. On January 1, 2002, France, along with the other countries of the Euro zone, dropped its national currency in favor of Euro bills and coins.
Despite significant reform and privatization over the past 15 years, the government continues to control a large share of economic activity: Government spending, at 53.5% of GDP in 2002, is among the highest in the G-7. Regulation of labor and product markets is pervasive. The government continues to own shares in corporations in a range of sectors, including banking, energy production and distribution, automobiles, transportation, and telecommunications.
Legislation passed in 1998 shortened the legal work week from 39 to 35 hours for most employees effective January 1, 2000. Recent assessments of the impact of work week reduction on growth and jobs have generally concluded that the goal of job creation was not met. The current administration is introducing increasing flexibility into the law, returning the country to a de facto (if not de jure) 39-hour work week in the private sector.
France has been very successful in developing dynamic telecommunications, aerospace, and weapons sectors. With virtually no domestic oil production, France has relied heavily on the development of nuclear power, which now accounts for about 80% of the country's electricity production. Nuclear waste is stored on site at reprocessing facilities.
Membership in France's labor unions accounts for less than 10% of the private sector work force and is concentrated in the manufacturing, transportation, and heavy industry sectors. Most unions are affiliated with one of the competing national federations, the largest and most powerful of which are the communist-dominated General Labor Confederation (CGT), the Workers' Force (FO), and the French Democratic Confederation of Labor (CFDT).
In 2002, U.S.-France trade in goods and services totaled some $60 billion. According to French trade data, U.S. exports accounted for 7.9% of France's total imports. U.S. industrial chemicals, aircraft and engines, electronic components, telecommunications, computer software, computers and peripherals, analytical and scientific instrumentation, medical instruments and supplies, broadcasting equipment, and programming and franchising are particularly attractive to French importers.
Principal French exports to the United States are aircraft and engines, beverages, electrical equipment, chemicals, cosmetics, and luxury products. France is the ninth-largest trading partner of the United States.
France is the world's second-largest agricultural producer, after the United States. However, the destination of 70% of its exports is other EU member states. Wheat, beef, pork, poultry, and dairy products are the principal exports. The United States, although the second-largest exporter to France, faces stiff competition from domestic production, other EU member states, and third countries. U.S. agricultural exports to France, totaling some $600 million annually, consist primarily of soybeans and products, feeds and fodders, seafood, and consumer oriented products, especially snack foods and nuts. French agricultural exports to the United States are mainly cheese, processed products, and wine. They amount to more than $900 million annually.
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