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                     Key Economic Indicators
        (Billions of French francs unless otherwise noted)

                                  1991      1992      1993
Income, Production,
 and Employment

Real GDP (FF1980)                 3,571.8   3,621.5   3,586.1 /f
Real GDP Growth (pct.)              0.7       1.2      -1.0 /f
GDP (at current prices)           6,746.9   6,998.8   7,086.8 /f
 of which
  Consumption                     4,043.9   4,210.8     n/a
  Investment                      1,409.0   1,401.1     n/a
   (of which corporate)             764.1     739.3     n/a
  Government                      1,249.5   1,323.0     n/a
  Exports                         1,532.4   1,616.8     n/a
  Imports                         1,511.4   1,524.8     n/a
  Stocks                             23.6     -28.0     n/a
GDP (at current prices)
 by Sector
  Agriculture                       204.7     197.3     n/a
  Industry                        1,586.0   1,630.2     n/a
   (of which manufacturing)       1,131.0   1,146.5     n/a
  Construction                      349.2     367.5     n/a
  Rents                             559.6     608.7     n/a
  Financial Services                291.7     288.6     n/a
  Retail Trade and Services
   excl. Financial                2,425.5   2,504.0     n/a
  Gvt. and Non-profit Serv.       1,071.6   1,138.2     n/a
  Value-Added Tax                   258.6     264.3     n/a
Real per capita GDP (FF1980)      62,663    63,202      n/a
Labor Force (000's)               24,016    25,103    25,333 /m
Unemployment Rate (pct.)            9.9      10.8      11.6 /m

Money and Prices
(annual percentage growth)

Money Supply (M3)                   2.5       5.3       n/a
Base Bank Lending Rate             10.36     10.0       8.15 /1
Household Savings Rate             12.8      12.8       n/a
CPI (Year-end)                      3.1       1.8       2.4 /f
Intermediate Goods PI (avg.)        1.8       0.1       n/a
Exchange Rate (FF/$)                5.65      5.29      5.7/f

Balance of Payments and Trade

Total Exports (FOB) /2            1,221.4   1,248.8     584.1 /m
 Exports to US (FOB) /3              76.6      80.0      40  /m
Total Imports (FOB) /2            1,302.9   1,268.4     546.5 /m
 Imports from US (CIF) /3           124.7     106.3      49.2 /m
Gold and Foreign Exchange
  Reserves (FF millions)            326.6     294.2     n/a
Trade Balance (CIF/FOB)             -81.4      19.5      37.6 /m
 Balance with US (CIF/FOB)          -48.1     -26.3      -9.2 /m


(m) - Mid-year; (f) - Forecast 
1/  October 1993 data.
2/  Merchandise trade.
3/ International Monetary Fund, "Direction of Trade Statistics
Yearbook" (1993).  Customs based, includes trade with France's
overseas territories.

1.  General Policy Framework

    France is the fourth-largest industrial economy, with a GDP
of just under $1.3 trillion in 1992, or one-fifth the size of
the U.S. economy.  Industry accounted for 37.2 percent of
output in 1992 while services and agriculture provided 56.2
percent and 2.8 percent respectively.

    Following a period of healthy expansion from 1988 to 1990,
French economic growth has slowed since 1991.  French GDP may
decline in 1993 by one percent, during this, its worst post-war
recession.  Unemployment continues to rise and reached nearly 
12 percent in mid-1993.  The only bright spot in 1992 was in
the non-financial services sector where job creation continued,
albeit at a slow pace.  In the face of weak demand, corporate
investment has declined.  In 1992, corporations invested less
than they saved for the first time in 30 years.

    By contrast, inflation remains low, and is considerably
below both Organization of Economic Cooperation and Development
(OECD) and European Union (EU) averages.  The 
1.8 percent increase in consumer prices between December 1991
and December 1992 was the lowest 12-month increase since 1956. 
This trend will probably continue in 1993.  Low inflation rates
have helped French producers remain competitive.

    In 1992, the merchandise trade surplus (customs basis,
fob/fob) was a record FF31 billion, a large swing from the 1991
FF30 billion deficit.  Trade in industrial goods, including
military equipment, showed the largest change, registering a
FF7 billion surplus compared to a FF32 billion deficit in
1991.  For the first time since 1986, the manufacturing sector
ran a trade surplus.  France posted a FF17 billion surplus with
EU countries, a reversal from the 1991 FF8 billion deficit. 
With non-EU OECD countries, France reduced its deficit from
FF71 billion to FF60 billion, primarily due to a decrease in
the trade deficit with the United States, from FF38 billion in
1991 to FF27 billion in 1992.  France reversed a 1991 FF17
billion deficit with non-OECD countries to a FF8 billion
surplus in 1992. France should have a large merchandise trade
surplus in 1993.  However, much of this surplus is due to weak
domestic demand, and in particular, to declining corporate
investment which has decreased imports of capital goods.

    Due primarily to the merchandise trade surplus and a record
FF59 billion surplus in net tourism receipts, in 1992 France
ran a current account surplus of FF19 billion, compared to a
1991 FF35 billion deficit.  Despite the overall increase, the
deficit on net investment income rose to FF41 billion in 1992
from FF29 billion in 1991 due to larger net interest payments
to foreigners as a result of the continued inflow of foreign
portfolio investment and to higher interest rates relative to
those in other industrialized countries.
    As an EU member, imports into France are subject to the
EU's common external tariff and to the restrictions of the
Union's Agricultural Policy.  In addition, as the EU implements
its "Single Market" program to remove all barriers to the free
internal circulation of goods, services, capital and labor
beginning in 1993, jurisdiction for a growing number of
economic areas, including certain aspects of tax and investment
policy, will transfer to the EU.

    The French government had succeeded in progressively
cutting the budget deficit from 1985 to 1991.  Since then, the
sharp drop in economic activity has led to a dramatic decline
in revenues.  This, coupled with increased spending on
unemployment, retirement, health care and interest payments,
has pushed the deficit upwards.  The central government budget
deficit as a percentage of GDP rose from 1.8 percent in 1991 to
3.3 percent in 1992 and is expected to be close to five percent
in 1993.  The general government budget deficit, which includes
federal, local, and social security budgets, rose from 2.1
percent of GDP in 1991 to 3.8 percent in 1992, and is expected
to be over 5.5 percent in 1993.
    During most of 1992, French money supply (M3) grew slightly
more than the Bank of France's targeted annual rate of four to
six percent.  Much of this growth was due to the popularity of
money market funds offering high interest rates.

    After double-digit growth in 1989-1990, credit growth
slowed considerably from 1991 to the present.  Businesses have
cut back on their borrowing due to decreased investment in the
face of weak demand and high real interest rates.  Banks have
become more cautious in their lending as unemployment and
corporate bankruptcies increased in 1992 and 1993.  Some banks
are also burdened with the legacy of poor real estate loans. 
The government, compelled by growing deficits, was the only
sector to increase its borrowing.

    Throughout much of 1992 and the first half of 1993, the
Bank of France was forced by high German interest rates and a
series of exchange rate crises to maintain high short term
interest rates to keep the franc within its Exchange Rate
Mechanism (ERM) bands.  Even after the bands were widened in
August 1993, the Bank maintained high rates while it
replenished the FF350 billion in foreign exchange reserves it
spent in July to defend the franc.  It is expected to lower
interest rates only very gradually during late 1993 and early
1994 , keeping them broadly in line with German rates to
prevent further serious pressures on the franc.

    Despite high short-term rates, the average interest rate on
long-term government bonds has declined from over 10.5 percent
in September 1990 to less than six percent in October 1993 due
in part to declining inflation.  From late March, when the
Balladur government came to power, until October, the average
yield on long-term government bonds has fallen over 150 basis

2.  Exchange Rate Policies

    Within the established limits of the ERM, whose bands were
significantly widened in August 1993, the value of the French
franc is set by market forces.  It is also influenced by
macroeconomic policy actions or central bank interventions. 
These actions are usually coordinated with those of other
governments, both within the EMS and as part of broader
international economic policy coordination efforts among
industrialized countries, including the United States.

    The Balladur government has continued the "franc fort"
(strong franc) policy of its predecessors.  This policy lowers
the costs of imports and keeps inflation and wage increases
low, thereby improving French competitiveness.  It is also seen
as a way to build France's reputation for sound economic
policies, and as the necessary step to ensure further progress
in European Economic and Monetary Union (EMU).  The franc
appreciated 4.4 percent in nominal terms against other EU
currencies between September 1992 and September 1993. 
Factoring in France's relatively low inflation rate, however,
lowers appreciation to 3.1 percent in real terms.  Furthermore,
the franc depreciated 2.2 percent in real terms against all
OECD currencies during this time.  Compared to the dollar, the
franc depreciated by 15 percent in real terms from September
1992 to September 1993, mainly due to the narrowing of the
differences between interest rates in France and the United

3.  Structural Policies

    France has a centuries-old tradition of highly centralized
administrative and governmental control of its essentially
market economy.  However, over the last decade, the government,
both Socialist and Center-Right, has accepted that reducing
government involvement is the best way to spur economic growth
and reduce the high unemployment rate.  This process continues
under the Center-Right coalition which came to power in March
1993 under Prime Minister Balladur, a former Economics
Minister.  His government has begun a program to privatize 21
state-owned enterprises, including some of France's largest,
such as Rhone-Poulenc and Elf-Aquitaine.  Shares in the first
of these, Banque Nationale de Paris, went on sale in October

    The Balladur government's first budget measures for 1993,
designed to reduce the deficit, had a restrictive effect on the
economy.  Subsequent 1993 supplements have by and large
reversed this trend and may have a mild stimulative effect
overall.  These supplements include additional funding for
training, unemployment, public infrastructure and capital
infusion in state-owned enterprises.  To tackle unemployment,
the government is keeping the minimum wage increase as low as
possible, and has reduced payroll taxes for businesses
employing low-paid workers.  It has given management and
workers more flexibility in setting work hours and has
increased subsidies for firms which temporarily reduce work
hours instead of laying off employees.  The Balladur government
has followed up on campaign promises to reduce the burden of
the welfare state on business.  The fiscal measures taken so 
far represent a significant transfer from households to

    In its proposal for the 1994 central government budget, the
government seeks to limit increases in nominal government
spending in 1994 to 1.1 percent and appears to be relying on
privatization revenues, admittedly a one time revenue source,
to keep the deficit from rising.  The budget proposal also
seeks to increase household consumption, as it would reduce
personal income taxes by FF14 billion.  However, the decrease
in income taxes only partially offsets the 1993 increase in
excise taxes and the general social contribution, a
supplemental tax on all earned and unearned income.  As a
result the French government expects taxes as a percentage of
GDP to rise from 43.6 percent in 1993 to 44.4 percent in 1994,
one of the highest among OECD countries.

    Taken together, the fiscal changes implemented in 1993 and
proposed for 1994 are expected to reduce economic growth. 
However, the French government has little room to maneuver as
it attempts to meet the Maastricht Treaty criteria of budget
deficits of no greater than three percent of GDP and a debt to
GDP ratio of no more than 60 percent.  To meet these goals, the
French government has adopted a five-year deficit reduction
plan which would cut real non-interest spending by about one
percent a year during 1995-1997.

4.  Debt Management Policies

    The budget deficit is financed by issuing government bonds
at weekly and monthly auctions.

    As a member of the G-10 group of leading financial nations,
France participates actively in the International Monetary
Fund, the World Bank and the Paris Club.  France is a leading
donor nation and is actively involved in development issues,
particularly with its former colonies in North and West Africa.

5.  Significant Barriers to U.S. Exports 

    U.S. companies sometimes complain of France's complex
technical standards and of unduly long testing procedures. 
Testing requirements (which must usually be done in France) and
standards sometimes appear to exceed reasonable requirement
levels needed to assure proper performance and safety.  Most of
the complaints have involved electronics, telecommunications
equipment, medical/veterinary equipment/products and
agriculture phytosanitary standards.

    The 1989 EU Broadcast Directive requiring a "majority
proportion" of programming to be of European origin was
incorporated into French legislation on January 21, 1992. 
France, however, specifies a percentage of European programming
(60 percent) and French programming (40 percent).  These
broadcast quotas were approved by the EU Commission and became
effective on July 1, 1992.  They are less stringent than
France's previous quota provisions which required that 60
percent of all broadcasts be of EU origin and that 50 percent
be originally produced in French.  The new 60 percent 
European/40 percent French quotas are applicable throughout the
day, as well as during prime time slots.  The prime time rules
go beyond the requirements of the EU Broadcast Directive and
will limit the access of U.S. programs to the French market. 
Nevertheless, the market share of U.S. films and television
shows remains high.
    The French government has recently revised its legal
services system.  Non-EU lawyers may no longer practice as
legal consultants and are required to qualify as "avocats", on
the basis of full-fledged membership in the French bar.  Under
the new implementing legislation which went into effect on
January 29, 1993, this means that non-EU lawyers will have to
pass either a "short-form" exam or the full French bar exam. 
Non-EU lawyers will qualify for a "short-form" exam provided
they are able to prove that the foreign state or territorial
unit in which they practice allows French lawyers to practice
law "under the same conditions".  Failing that, they will have
to take the full French bar exam.  Due to EU regulations,
France is required to recognize law degrees for EU nationals
but not third country nationals.  Nevertheless, non-French EU
lawyers, who are also required to qualify as "avocats", may do
so via exams less stringent than those for non-EU lawyers. 
Meaningful access will now hinge on how implementing
regulations are administered, including the interpretation of
what is meant by granting access on a "reciprocal basis"  and
the nature of the exam to be imposed on non-EU lawyers.

    Although French foreign investment procedures have been
streamlined in recent years, French regulations distinguish
among EU and non-EU firms with sales over $100 million or
seeking to make acquisitions valued at over $10 million. 
Non-EU entities (publicly traded firms in which non-EU
nationals own more than 20 percent of the equity or
non-publicly traded firms in which non-EU nationals own more
than 33.3 percent of the equity) are subject to an extendable
one month prior review period.  The acquisition can be denied
or delayed for reasons of "national interest".  Most large EU
firms are only required to make an after-the-fact notification
and for all EU firms, investments may only be blocked if they
affect public health, public order or national security.  No
proposed U.S. investment has been denied authorization since

    The recently passed privatization law prevents the
government from selling more than 20 percent of a firm's
state-owned capital to non-EU investors at the time of the
government's sale.  This limit does not apply to shares already
held by non-EU investors, or to transfers after a firm's
initial privatization.  Exceptions are granted only in the case
of a government-approved partnership with a French company. 
The law also gives the government the right to hold so called
"Golden Shares".  These "shares", or retained legal rights,
allow the government to 1) require that investors obtain prior
authorization from the Ministry of Economics; 2) name up to two
non-voting members of the firm's board of directors; and, 3)
block the sale of any asset to protect national interests.

6.  Export Subsidy Policies 

    France is a party to the OECD guidelines on the arrangement
for export credits, which includes provisions regarding
concessionality of foreign aid.  The government has begun
examining ways to concentrate the benefits of its export
promotion efforts more on small and medium-sized businesses.

7.  Protection of U.S. Intellectual Property 

    France is a strong defender of intellectual property rights
and an advocate of improving protection.  It is a party to the
Bern Convention on Copyright, the Paris Convention on Patents,
the Universal Copyright Convention, the Patent Cooperation
Treaty, and the Madrid Convention on Trademarks.

    Since 1984, French law has permitted judges to grant
injunctive relief in patent infringement disputes in cases
where the patent holder manufactures the product in France. 
The French patent law permits a judge to grant a compulsory
license in cases where a patent is not worked in France and
where the patent holder has refused to license it in France. 
In practice, French courts have been strict in their
interpretation of this statute, and compulsory licenses have
been granted in very few cases.  A 1985 amendment to the French
copyright law extended protection to computer software,
although it limited protection to 25 years.  It also improved
the protection of video recordings.

8.  Worker Rights 

    The French Constitution guarantees the right of workers to
form unions.  Although union membership has declined to ten
percent of the work force, the institutional role of organized
labor is far greater than its numerical strength might
indicate.  The French government regularly consults labor
leaders on economic and social issues, and joint works councils
play a role even in industries only marginally unionized.  The
principle of free collective bargaining was re-established
after World War II and subsequent amendments in labor laws
encourage collective bargaining at the national, regional,
local and plant levels.  French law prohibits antiunion
discrimination and forced or compulsory labor.

    With a few minor exceptions for those enrolled in
recognized apprenticeship programs, children under the age of
16 may not be employed.  France has a minimum wage slightly
over $6.00 an hour.  The standard work week is 39 hours, and
overtime is controlled.  In general terms, French labor
legislation and practice, including that pertaining to
occupational safety and health, are fully comparable to those
in other industrialized market economies.  France has 3 small
export processing zones, where regular French labor legislation
and wage scales apply.  Labor law and practice are uniform
throughout all industries of the private sector.

         Extent of U.S. Investment in Selected Industries

              U.S. Direct Investment Position Abroad
                on an Historical Cost Basis - 1992
                    (millions of U.S. dollars)

Category                                    Amount

Petroleum                                                  D
Total Manufacturing                                   13,975
    Food & Kindred Products                  1,246
    Chemicals and Allied Products            4,347
    Metals, Primary & Fabricated               510
    Machinery, except Electrical             3,197
    Electric & Electronic Equipment            499
    Transportation Equipment                   720
    Other Manufacturing                      3,456
Wholesale Trade                                        3,750
Banking                                                  337
Finance and Insurance                                  2,363
Services                                               1,075
Other Industries                                           D

TOTAL ALL INDUSTRIES                                  23,257

(D)-Suppressed to avoid disclosing data of individual companies

Source:  U.S. Department of Commerce, Bureau of Economic

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