French Elections Round-Up Part Three: Trade and Globalization

Socio-economic issues will be of central concern when the French elect a new president on April 23rd and May 7th. In a mini-series, the GED project will present to you not only the most pressing issues at stake, but also the corresponding solutions each of the five main candidates proposes. In a third take, we will take a closer look at France’s role in international trade and at attitudes towards globalization. For an in-depth analysis, also take a look at our recently published Focus Paper. 

Missed one of the previous parts? You can click here  or here to go directly to part and two of this mini-series.

Globalization and free trade are traditionally controversial issues to (but not only) French debates and the country’s political landscape. Therefore, also the main candidates to this year’s presidential elections show a wide range of positions towards France’s global integration, ranging from embracing its international inclusion and its role as a global trader to advocating in favor of strong protectionism or even total reclusion. But before we look at what each of the main candidates proposes, let’s first take a look at where France actually stands in terms of global integration.

France’s place in global trade

France is strongly integrated into the global economy: The Globalization Report 2016[1] of the Bertelsmann Stiftung ranks France’s global integration stronger than for example Germany’s. But overall, its shares in global exports in goods and services have decreased both in value and volume since the 1990s. This loss also reflects a loss of competitiveness and impacts on French growth outcomes.

France nonetheless makes it into the Top 10 of global trade nations as its share of global trade in goods in 2015 amounted to 3.1 percent of exports and 3.4 percent of imports, ranking it 8th and 6th respectively. By way of comparison, Germany’s share as a traditional exporting nation amounted to 8.1 percent of exports (3rd) and to 6.3 percent of imports in goods (3rd). The Netherlands, as the EU’s second biggest exporter rank 5th in exports (3.4%) and 8th in imports in goods (3%). France’s share in global trade in services is slightly higher, ranking it as the 5th biggest exporter (5%), right behind Germany (5.2%) at fourth place and as 4th biggest importer of services (4.9%), right behind Germany at 3rd (6.3%) and ahead of the UK at 5th (4.5%).

In 2016, France continued to do most of its trade with its EU partners: 60 percent of French exports went to and 58 percent of French imports originated in the EU. With a share of 8.7 percent, French exports in goods were the 3rd largest within the EU28, after Germany (1st) and the Netherlands (2nd). Germany is France’s most important trading partner. It is by far the first destination for French exports and most important origin country for imports to France. The second most important export market for French goods is Spain, followed by the United States. After Germany, China and Hong Kong are the second most important source of imports to France, followed by Italy. The most important product groups of French foreign trade are industrial products, such as pharmaceuticals; transport materials, such as aeronautic products and cars; machinery as well as electronic equipment and further agricultural products.

French exports in goods decreased by -0.6 percent in 2016 after growing by 4.4 percent in 2015, and growth in imports stalled at 0.1 percent compared to 1.1 percent in 2015. Altogether, the foreign trade deficit of France remains high. Within the EU, France is a huge net importer and therefore its intra-EU trade deficit amounted to -€88.8 billion in 2016. For French trade outside the EU, however, the situation is somewhat different, with a surplus of €23.9 billion. With an overall trade deficit of -€64.8 billion[2], France ranks second last compared to the other EU28 states and just ahead of the UK, which comes last with a an intra-EU trade deficit of -€114.8 billion and an even higher overall trade deficit of -€204.5 billion.

Stand-out reasons for these evolutions of France’s trade balance are the declining surplus of the aeronautic and the agricultural sector as well as the increasing deficit of the automobile sector. The service balance declined strongly in 2016, with the tourism industry experiencing a serious deterioration in particular.

France and Globalisation

Even though a majority of the French (54%) thinks of globalisation as more of a threat to their country than an opportunity (46%), according to Ipsos, the number of those viewing it as an opportunity has increased since 2008.

Traditionally, especially far-left (72%) as well as far-right voters (81%) perceive globalisation as a threat, whereas a majority of socialist (60%) and conservative voters (62%) view it positively. Equally distributed are the proportions of those who favour free trade (48% on average), that is mainly socialist (62%) and conservative voters (64%), whereas an overall 51 percent of French and a majority of far-left (71%) and far-right (74%) voters favour a protectionist path. This is underlined by a recent eupinions survey of the Bertelsmann Stiftung, which examines different sources of populist support: Among Front National supporters, 76 percent are afraid of globalisation. According to Pew Research, in 2014 49 percent of French thought that trade destroys jobs, compared to a global median of 19 percent. Only 24 percent of the French thought that trade induces job creation. 47 percent thought that trade also lowers wages (global median of 21%) and 68 percent thought that foreign companies buying domestic companies is bad (46%).

On free trade agreements, French opinion is quite similar to the average of the EU28: 45 percent of French were in favour of TTIP, whereas 44 percent were against. Even so, the politicisation of the TTIP debate increased with time and spilled over into a broader, more critical stance towards greater integration with the US. French debates on free trade in general as well as debates on TTIP in particular embrace issues of culture, agriculture, as well as social and labour conditions, economic liberalisation plus strategic independence. Exemplarily during the TTIP negotiations, France emphasised the importance of “l’exception culturelle”[3] as a condition sine qua non if it was to agree to a transatlantic partnership with the US. The French government demanded in particular to exclude audiovisual services from TTIP.

CETA is another story. Just after the free trade agreement between Canada and the EU was backed by a comfortable majority in the European Parliament in early 2017, 106 left members of the French parliament, including deputies from the French Green party, former Socialists, radicals and Front de gauche-members, decided to appeal to the French Constitutional Council in a bid to block CETA. These parliamentarians justified their position by arguing that by signing CETA, countries transferred sovereignty “beyond what they agreed upon in favour of the EU”.

Solutions Proposed by the Candidates

Jean-Luc Mélenchon

Mélenchon, the most left-leaning candidate to this year’s presidential elections, blames current trade policies for undermining social rights and labour standards. His election manifesto therefore proposes a radically different kind of trade policy. Consequently, he intends to raise tariffs for imports from countries with low labour standards and to launch countervailing measures against tax havens. He is also calling for anti-dumping measures in strategically important sectors such as steel and solar panels.

Benoît Hamon

Hamon, the candidate of the Parti socialiste, is generally against free trade agreements, opposing both CETA and TTIP. He states his immediate intention to suspend the application of CETA due to environmental, health and social protection issues. For him, “the obsession with GDP growth and free trade agreements is characteristic of Europe’s failure”. However, his supporters are divided on the issue: Whereas the “Frondeurs” (the rebels, strong critics of Hollande and Valls) in the Parti socialiste share his opposition to free trade agreements, the pro-government party members have voted in favour of CETA.

Emmanuel Macron

Emmanuel Macron, head and founder of the En Marche! movement and currently predicted by the polls to enter into the elections’ second and final round, is the only candidate clearly in favour of free trade agreements. He assumes that CETA would objectively improve trade relations with Canada. As the Belgian region of Wallonia was blocking ratification in autumn 2016 owing to concerns about protecting public services and social and environmental norms, Macron acknowledged these concerns as pertinent, but underlined the fact that trade policy lies within the realm of EU competencies and that in matters of both trade and competition policy, the EU is strongest when it acts commonly.

François Fillon

Compared to labour and tax reforms, trade policy is less prominent in Fillon’s manifesto. The candidate of les Républicains rejects TTIP as it presently stands, as he does not believe it to be in the interests of the EU. As for CETA, he is less clear: While supporting it in principle, he believes there are agricultural and environmental aspects that require further discussion. Fillon is also opposed to official EU recognition of China as a market economy.

Marine Le Pen

Marine Le Pen, the far-right candidate of the Front National, has adopted a critical and protectionist stance towards free trade and is strictly against any free trade agreement, including CETA and TTIP. She wants to put in place an “intelligent protectionism” that would protect French companies against dumping. Imports of all goods not conforming to French standards would be prohibited. She also wants to adopt a control mechanism for foreign direct investment into France so as to protect the national interest.

Missed one of the previous parts? You can click here  or here to go directly to part and two of this mini-series.

[2] Different to Eurostat, the French government reports a trade deficit of –€48.1 billion for 2016.

[3] „L‘exception culturelle“ (eng. cultural exception) was initially introduced by France in the context of the GATT negotiations in 1993. It aims at treating cultural issues as exceptions in international treaties and agreements. Thereby, a country could sovereignly protect and promote its domestic culture

Selection of Sources:

Bertelsmann Stiftung (ed.). Globalisierungsreport 2016. Gütersloh 2016

Bricq, N., A. Filippetti. Accord de Libre Echange avec les Etats-Unis. Exception culturelle : une déclaration de principe qui doit se concrétiser sans ambigüité dans le mandat. Communiqué de presse N° 232, Ministère du commerce extérieur. Paris 23.04.2013.

Caravagna, L. Ceta : les principaux candidats à la présidentielle sont tous contre … sauf Macron. Le Figaro 15.02.2017.

de Vries, C., and I. Hoffmann. Fear not Values. Public opinion and the populist vote in Europe. Bertelsmann Stiftung (ed.). Gütersloh 2016.

European Commission. Eurobarometer 86. Brussels 2016.

European Commission. Commission Staff Working Document. Country Report France 2017. Including an In-Depth Review on the prevention and correction of macroeconomic imbalances. Brussels 2017.

European Parliamentary Research Service Blog. TTIP And The Cultural Exception. Brussels 29.08.2014.

Eurostat. Euro area international trade in goods surplus €28.1 billion. News Release, Euro Indicators, 28/2017. Luxemburg 15.02.2017.

Eurostat. Eurostat Dissemination Database. Luxemburg 20.03.2017.

Fekl, M. Commerce éxterieur. Résultats 2016. Ministère des Affaires étrangères et du Développement international, ministère de l’Economie et des Finances. Paris 07.02.2017.

Gotev, G. Leftist French Lawmakers take CETA to Constitutional Council. Euractiv 22.02.2017.

Le Soir (n.n.). Les questions wallonnes sur le Ceta sont pertinentes, mais … Le Soir 20.10.2016.

Ministère de l’économie et des finances. Aperçu du commerce extérieur de la France en 2016. Paris 2017.

Ministère de l’économie et des finances. Le chiffre du commerce extérieur. Année 2016. Paris 2017.

Pew Research Center. Faith and Skepticism about Trade, Foreign Investment. Washington D.C. 2014.

Robert, A. Hamon veut sortir l’Europe du „blabla“ avec un „arc politique européen“. Euractiv 15.03.2017.

Teinturier, B., and Dusseaux, V. Les Français, l’économie et la réforme de l’Etat. Ipsos Public Affairs. Paris 2016.

World Trade Organization. World Trade Statistical Review. Geneva 2016.

Xavier-Bender, G. France’s unexpected role on the way to a reasonable and balanced TTIP. Europe Policy Paper 2/2015, The German Marshall Fund of the United States. Washington D.C. 2015.