Environment is right for more U.S. exports - France

Environment Is Right For More U.S. Exports Prospects for the continued expansion of U.S. exports to France in 1987 are excellent. One reason is the dollar/franc ratio, whih dropped 23 percent in favor of the United States during 1986. Another is expected growth in the French economy. Last year, real GDP grew 2.2 percent; the French economy will probably match that growth in 1987.

In 1986, economic growth, combined with the decline in the dollar, resulted in an 18 percent increase in imports from the United States, to $7.2 billion; that was the highest rate of growth in U.S. imports among the major European nations.

The major objective of the current government is to shift Franch's economy toward less government control. French international trade policy will continue to be managed with an eye on the fragile balance-of-payments position, which will in turn have a bearing on domestic economic policies. A $3.7 billion payments surplus in 1986--the first since 1979--could be sharply reduced, if imports continue to greatly exceed exports.

The government completed price decontrol and tax reduction programs at the end of 1986. Exchange decontrol may be completed during 1987. Wage settlements will probably be restrained to hold household consumption in check and limit inflation to last year's rate of 2.7 percent. Neither public spending nor taxes are likely to increase in 1987, while monetary policy probably will be managed to maintain an adequate supply of credit for an anticipated modest increase in domestic investment. Unemployment may drift slightly higher to 11 percent.

The government's privatization program for $23 billion worth of nationalized companies remains very popular and will proceed during 1987. The sales of Saint-Gobain and the Paribas banking group were well received by a public that, until now, did not invest significantly in the stock market. Paribas stock was over-subscribed and rose 20 percent on the Paris Bourse within days of its offering. CGE, which recently bought ITT's European telecommunications business, and which is now France's second largest industrial group, is to be sold this spring. Foreign investment in previously nationalized firms continues to be limited to a maximum of 20 percent.

French firms import a significant volume of U.S.-manufactured components for incorporation into aerospace equipment, electronic machinery, and motor vehicles. This trend will continue throughout 1987, augmented by increased imports of capital machinery. U.S. exports should do particularly well in the following sectors: analytical instruments, automotive components, computers, electronic components, electronic industry production and test equipment, food processing equipment, medical equipment, security products, and telecommunications. Producers of seafood, textiles, and apparel will also find France a lucrative market.

The Commerce Department will organize a major exhibition of American aerospace equipment at the Paris Air Show in mid-June. Later, the Department will also participate in major French domestic or international exhibitions promoting printing and graphics arts equipment, dental equipment, control instruments, automotive products, men's wear, and textile machinery. A trade mission to promote industrial modernization and a seminar to attract investment to the United States are also scheduled.

For additional information, contact the France desk officer at (202) 377-8008.

COPYRIGHT 1987 U.S. Government Printing Office
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