HomeReportsBureau of Economic and Business Affairs2023 Investment Climate Statements…France and Monaco

# 					2023 Investment Climate Statements: France and Monaco			

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													EXECUTIVE SUMMARY											

                -  EXECUTIVE SUMMARY 
                -  1. Openness To, and Restrictions Upon, Foreign Investment                    -  Policies Towards Foreign Direct Investment 
                  -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                  -  Other Investment Policy Reviews 
                  -  Business Facilitation 
                  -  Outward Investment 
                -  2. Bilateral Investment and Taxation Treaties 
                -  3. Legal Regime                    -  Transparency of the Regulatory System 
                  -  International Regulatory Considerations 
                  -  Legal System and Judicial Independence 
                  -  Laws and Regulations on Foreign Direct Investment 
                  -  Competition and Antitrust Laws 
                  -  Expropriation and Compensation 
                  -  Dispute Settlement                      -  ICSID Convention and New York Convention 
                    -  Investor-State Dispute Settlement 
                    -  International Commercial Arbitration and Foreign Courts 
                  -  Bankruptcy Regulations 
                -  4. Industrial Policies                    -  Investment Incentives 
                  -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                  -  Performance and Data Localization Requirements 
                -  5. Protection of Property Rights                    -  Real Property 
                  -  Intellectual Property Rights 
                -  6. Financial Sector                    -  Capital Markets and Portfolio Investment 
                  -  Money and Banking System 
                  -  Foreign Exchange and Remittances                      -  Foreign Exchange 
                    -  Remittance Policies 
                  -  Sovereign Wealth Funds 
                -  7. State-Owned Enterprises                    -  Privatization Program 
                -  8. Responsible Business Conduct                    -  Additional Resources 
                  -  Climate Issues 
                -  9. Corruption                    -  Resources to Report Corruption 
                -  10. Political and Security Environment 
                -  11. Labor Policies and Practices 
                -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs 
                -  13. Foreign Direct Investment Statistics 
                -  14. Contact for More Information 
                -  Special Section on Monaco                    -  Investment Regime of Monaco 
                  -  Size of the Economy of Monaco 

## EXECUTIVE SUMMARY

France enthusiastically welcomes foreign investment and has a stable business climate that attracts investors from around the world.  The French government devotes significant resources to attracting investment through policy incentives, marketing, overseas trade promotion offices, and investor support mechanisms.  France has an educated population, first-rate universities, and a talented workforce.  It has a modern business culture, sophisticated financial markets, a strong intellectual property rights regime, and an innovative commercial sector.  The country is known for its world-class infrastructure, including high-speed passenger rail, many maritime ports, extensive roadway networks, a dense network of public transportation, and efficient intermodal connections. High-speed (3G/4G) telephony is nearly ubiquitous, and 5G is now available in large and many mid-sized metropolitan cities.

According to Business France, the French government’s business promotion agency, foreign investment in France increased by 7 percent in 2022 in comparison with the previous year. Foreign investors concluded 1,725 transactions in France, resulting in 58,810 jobs being created or maintained. Among them, the United States was the leading foreign investor in France with investment in 280 new projects creating or sustaining 17,107 jobs. The United States also accounts for 15 percent of the 155 research and development (R&D) and engineering projects led by foreign investors in France. U.S. companies based in France continue to view France favorably despite a challenging overall global economic environment. Many of France’s historical challenges for foreign investors, such as overall labor costs and labor protections, social legislation, and the complexity of administrative procedures persist, but France’s capacity for innovation and research, recent pro-business regulations, and the government’s ecological transition efforts are significant draws.

France is among the least restrictive countries for foreign investment. There are no statutory limits on foreign ownership of companies, excluding those in certain specified sectors. Any acquisition of a domiciled company or subsidiary operating in sectors deemed critical to France’s national interests relating to public order, public security, and national defense, or conducting R&D on critical or dual-use technology for application in those sectors, are subject to prior notification, review, and approval by the Minister of the Economy, Finance, and Industrial and Digital Sovereignty. In the wake of the Covid-19 health crisis, France’s investment screening body lowered the threshold for its review of foreign acquisitions in these sectors from a 25 percent ownership stake to a 10 percent stake. This review pertains to potential investors from outside the European Union or European Economic Area who are seeking investments in French companies whose shares are listed on a regulated market. This temporary provision is set to expire at the end of 2023.

Since French President Emmanuel Macron’s first election in 2017, the government has pursued a business-friendly agenda making the labor market more flexible, cutting corporate tax rates from 33.3 percent to 25 percent in 2022, and pledging to abolish the contribution on added value (CVAE) tax. But President Macron’s agenda has faced obstacles, including widespread protests in 2018 and 2019 against economic inequality, the COVID-19 pandemic and resulting economic downturn in 2020, the economic fallout from Russia’s invasion of Ukraine, persistent inflation, and vocal opposition in 2023 to pension reform that would raise the legal retirement age from 62 to 64.

Despite these challenges, the Macron administration has implemented new economic policies and financing to support business growth and innovation. The 2019 “PACTE” law on business growth and transformation, the “France Relaunch” COVID-19 recovery program, and the France 2030 investment plan have all been programs to simplify corporate formation and encourage investment in underdeveloped sectors. These programs also focus on France’s green transition and support the transformation of France’s automotive, aerospace, digital, green industry, biotechnology, culture, health, and advanced technology sectors. France’s March 2022 Resilience Plan to mitigate the economic impact of the Russian invasion of Ukraine includes grants for energy-intensive companies and an expansion of State-guaranteed lending. These programs have been equally available to firms supported by foreign investment. Aid to companies under the Relaunch program were available to companies until 2022, and investments under the France 2030 and Resilience plans are available through 2026.

The Macron administration’s draft pension reform bill was unveiled in January 2023. Following contentious debate in both houses of Parliament and facing uncertainty the bill would ultimately pass in the lower house, the government pushed through its pension reform legislation by decree on March 16 using article 49.3 of the French constitution, bypassing a vote in the lower house. In response, nationwide strikes carried out by labor unions are ongoing as of the drafting of this report (March 2023), and opposition parties in Parliament are expected to contest the pension reform bill at the Constitutional Council. While public opinion polls have shown that most French citizens oppose this pension reform, which raises the age of eligibility, the French government believes changes are necessary to place the national pension system on a firmer financial footing as life expectancy rises and as the ratio of workers to retirees decreases. Opponents dispute the need for urgency.

							1. Openness To, and Restrictions Upon, Foreign Investment					

### Policies Towards Foreign Direct Investment

France welcomes foreign investment. In the current economic climate, the French government sees foreign investment as a means to create additional jobs and stimulate growth. Investment regulations are simple, and a range of financial incentives are available to foreign investors. Surveys of U.S. investors in 2022 showed that U.S. companies based in France continue to view France favorably despite a challenging overall global economic environment. France’s historical weaknesses, such as overall labor costs, layoff procedures, social legislation, and the complexity of administrative procedures, persist, but respondents lauded France’s capacity for innovation and research and the government’s ecological transition efforts. In addition, the Macron administration has sought reforms to create a more pro-business environment. Business France, the French government’s business promotion agency, published a report in February 2023 demonstrating that 2022 was France’s most attractive year on record with 1,725 foreign investment decisions, resulting in 58,810 jobs being created or maintained. This represented a 7 percent increase of investment projects in comparison with 2021. The United States was the top investing country, in terms of both number of projects and job creation. To promote France’s economic attractiveness, President Macron has hosted the annual Choose France Summit since 2018, which brings together French government officials and leaders from large multinational corporations to discuss the economic reforms implemented by the French government and make major foreign investment announcements.

### Limits on Foreign Control and Right to Private Ownership and Establishment

France is among the least restrictive countries for foreign investment. With a few exceptions in certain specified sectors, there are no statutory limits on foreign ownership of companies. Foreign entities have the right to establish and own business enterprises and engage in all forms of remunerative activity.

France maintains a national security review mechanism to screen high-risk investments. French law stipulates that acquisitions of domiciled companies or subsidiaries operating in certain sectors deemed crucial to France’s national interests relating to public order, public security and national defense are subject to prior notification, review, and approval by the Minister of the Economy, Finance, and Industrial and Digital Sovereignty. This review considers factors relating to the level of foreign investor involvement, the nature of the transaction, the degree of resulting control over the target entity, and the sensitivity of the target entity’s activities. Transaction review is required when an investor: (i) acquires control of a French legal entity, (ii) acquires all or part of a business line from a French legal entity, or (iii) crosses the 25 percent threshold of voting rights in a French legal entity. However, this threshold was temporarily lowered to 10 percent for investors from outside the European Union or European Economic Area pursing French companies whose shares are listed on a regulated market until the end of 2023.

The specific, sensitive sectors subject to the screening mechanism and that require approval are: energy infrastructure; transportation networks; public water supplies; electronic communication networks; public health protection; and installations vital to national security. In 2018, four additional categories – semiconductors, data storage, artificial intelligence, and robotics – were added to the list requiring a national security review. France further expanded the scope of sensitive sectors in April 2020 to include biotechnology companies.

France also enhanced government-imposed conditions and penalties in cases of non-compliance and introduced a mechanism to coordinate the national security review of foreign direct investments with the European Union (EU Regulation 2019/452). The new European rules entered into force on October 11, 2020. The list of strategic sectors was expanded at that time to include the following activities listed in the EU Regulation 2019/452: agricultural products, when such products contribute to national food supply security; the editing, printing, or distribution of press publications related to politics or general matters; and R&D activities relating to quantum technologies and energy storage technologies.

Procedurally, the Directorate General of the Treasury (within the Ministry of the Economy, Finance, and Industrial and Digital Sovereignty) has 30 business days following the receipt of a request for authorization to: 1) declare that the investor is not required to obtain such authorization; 2) grant its authorization without conditions; or 3) declare that an additional review is required to determine whether a conditional authorization is sufficient to protect national interests. If an additional review is required, the Minister has an additional 45 business days to either approve the transaction (possibly subject to conditions) or prohibit it. The Minister is further allowed to deny clearance based on the investor’s ties with a foreign government or public authority. The absence of a decision within the applicable timeframe is a de facto rejection of the authorization.

The government also expanded the breadth of information required in an approval request. For example, a foreign investor must now disclose any financial relationship with or significant financial support from a State or public entity; provide a list of French and foreign competitors of the investor and of the target; and sign a statement declaring that the investor has not, over the past five years, been subject to any sanctions for non-compliance with French foreign direct investment (FDI) regulations.

### Other Investment Policy Reviews

France has not recently been the subject of international organizations’ investment policy reviews. The organization for Economic Co-Operation and Development (OECD) Economic Survey for France (November 2021) can be found here: https://www.oecd.org/economy/france-economic-snapshot/.

### Business Facilitation

Business France is a French government agency that promotes new foreign investment, expansion, technology partnerships, and financial investment in France. Business France provides services to help investors understand regulatory, tax, and employment policies as well as national and local investment incentives and government support programs. Business France also helps companies locate project financing and equity capital. The agency unveiled a website in English to help prospective businesses that are considering investments in the French market (https://www.businessfrance.fr/en/invest-in-France).   U.S. Embassy Paris collaborated with Business France and the American Chamber of Commerce (AmCham France) to generate statistics and create a map of U.S. investment in each region of France in 2021 (https://investinfrance.fr/wp-content/uploads/2017/08/Entreprises-americaines.pdf).

In addition, France’s public investment bank, BPI France, assists foreign businesses in identifying local investors when setting up subsidiaries in France. La French Tech also supports foreign startups in France through the government’s French Tech Ticket program, which provides them with funding, a resident’s permit, and incubation facilities. Both business facilitation mechanisms encourage equitable treatment of women and minorities in the workplace.

President Macron prioritized innovation early in his first five-year mandate. He launched a €10 billion ($11 billion) fund in 2017 to back disruptive innovation in energy, the digital sector, and the climate transition by privatizing state-owned enterprises and introduced a four-year technology visa for entrepreneurs to come to France. This “French Tech visa” was created to fast-track residency for non-EU founders, investors, and employees. Macron also introduced in 2018 tax reforms that would tax capital gains, interest, and dividends at a flat 30 percent, instead of the prevailing top rate of 45 percent.

French authorities allow for advance payment of certain tax incentives for innovation and investment, including tax and social security exemptions for all new businesses that invested in research and development and that are classified as an “innovative startup” or a “university startup.” A research tax credit for “innovative startups” reimburses up to 100 percent of costs spent on fundamental and applied research as well as “experimental research.” A separate innovation tax credit for small and medium sized enterprises was increased from 20 percent of the company’s innovation costs in 2022 to 30 percent in 2023 (60 percent for overseas French departments), up to €400,000 ($431,482) annually. Foreign investors are eligible for these credits.

In June 2020, the French government introduced a new €1.2 billion ($1.3 billion) plan to support French startups, concentrating on the health, quantum, artificial intelligence, and cybersecurity sectors. The plan included the creation of a €500 million ($550 million) investment fund to help startups overcome the COVID-19 crisis and continue to innovate. It also comprised a “French Tech Sovereignty Fund” launched in December 2020 by France’s public investment bank BPI France, with an initial commitment of €150 million ($165 million).

President Macron unveiled the France 2030 Plan in October 2021, a €54 billion ($57.2 billion) innovation investment strategy between 2022 and 2027, which mirrors the priorities of the European Commission’s investments in digital innovation and decarbonization. France will invest by 2030 in breakthrough innovation in a wide variety of areas, including small nuclear fission reactors, green hydrogen production facilities, the production of two million electric and hybrid vehicles every year, research on developing France’s first low-carbon airplane, healthy and sustainable foods, and 20 drugs for cancer and chronic diseases, as well as the development of new medical devices. Major industrial groups are encouraged to work with startups, which will also benefit from funding under this new plan. This plan comes on top of €20 billion ($22 billion) from the 2021 Fourth Future Investment Program (PIA4). A new Secretary General for Investment was appointed in January 2022 to ensure the coordination of these two innovation programs. The Ministry of the Economy, Finance, and Industrial and Digital Sovereignty-led “Competitiveness Clusters,” a label granted to associations from particular geographical regions where companies of different sizes in common sectors gather to support members in the development of products or services, received funding from the PIA4 to support innovation and economic competitiveness.

France’s sectors that traditionally attract the most investment include aeronautics, agriculture, digital, clean energy, health, rail, infrastructure, chemicals and materials, forestry, climate and climate tech, shipbuilding, luxury, and extractive industries. However, Business France and BPI France are particularly interested in attracting foreign investment in the tech sector. The French government has developed the “French Tech” initiative to promote France as an optimal location for start-ups and high-growth digital companies. French Tech communities have been established in 32 French cities and over 67 cities globally, including New York, San Francisco, Los Angeles, Shanghai, Hong Kong, Vietnam, Moscow, and Berlin. French Tech has special programs to provide support to startups at various stages of their development. The latest effort has been the creation of the French Tech 120 Program, which provides financial and administrative support to some 122 most promising tech companies. In 2022, French startups raised €13.17 billion ($13.95 billion) in venture funding, a nearly threefold increase since 2020.

In March 2021, France launched, with the support of the European Commission and other member states, the Scale-Up Europe initiative, bringing together more than 300 start-up and scale-up founders, investors, researchers, and corporations, with the goal of creating 10 tech giants each valued at more than €100 billion ($110 billion) by 2030. French authorities supported the Scale-up Europe initiative designed to promote businesses across Europe to expand beyond their local and European markets. As part of that initiative, on February 8, 2022, France inaugurated a new European Investment Fund designed to increase European venture capital funds’ capacity to provide late-stage funding to EU-based start-ups and scale-ups. France and Germany have each committed €1 billion ($1.1 billion), along with €500 million ($565 million) from the European Investment Bank. Funding for research and innovation also comes from the EU’s Horizon Europe program, with a budget of €95.5 billion ($103.64 billion) over the 2021-2027 period in the form of grants, issued following competitive calls for projects in health, digital, industry, and space to tackle global challenges.

The website Guichet Enterprises (https://www.guichet-entreprises.fr/fr/) is designed to be a one-stop website for registering a business. The site, managed by the National Institute of Industrial Property (INPI), is available in both French and English although some fact sheets on regulated industries are only available in French on the website.

### Outward Investment

French firms invest more in the United States than in any other country and support approximately 740,100 American jobs. Total French investment in the United States reached $325.7 billion in 2021. France was the United States’ tenth largest trading partner with approximately $116.8 billion in bilateral trade in 2021. The business promotion agency Business France also assists French firms with outward investment, which it does not restrict.

							2. Bilateral Investment and Taxation Treaties					

Investments in France by other EU member states are governed by the provisions of the Treaty of Rome and by European Union law. France has Bilateral Investment Treaties (BITs) with 82 countries:  Albania, Algeria, Argentina, Armenia, Azerbaijan, Bahrain, Bangladesh, Bosnia and Herzegovina, Cambodia, Chile, China, Colombia, the Democratic Republic of the Congo, Costa Rica, Cuba, Djibouti, Dominican Republic, Egypt, El Salvador, Equatorial Guinea, Ethiopia, Georgia, Guatemala, Guinea, Haiti, Honduras, Hong Kong, Iran, Iraq, Jamaica, Jordan, Kazakhstan, Kenya, South Korea, Kuwait, Kyrgyz Republic, Laos, Lebanon, Liberia, Libya, Madagascar, Malaysia, Mexico, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Namibia, Nepal, Nicaragua, Nigeria, North Macedonia, Oman, Pakistan, Panama, Paraguay, Peru, Philippines, Qatar, Russian Federation, Saudi Arabia, Senegal, Serbia, Seychelles, Singapore, Sri Lanka, Sudan, Tajikistan, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Venezuela, Vietnam, Yemen, and Zambia.

Bilateral Investment Treaties between France and the following countries have been signed but are not in force:  Angola, Belarus, Brazil, Ghana, and Zimbabwe. France previously had BITs with Mauritius and Syria; new BITs with these two countries have been signed but have not yet entered into force.

The United Nations Agency for Trade and Development (UNCTAD) maintains the most current list of ratified and non-ratified BITs, including links to each document: https://investmentpolicy.unctad.org/international-investment-agreements/countries/72/france.

The United States and France have enjoyed a Navigation and Commerce Treaty since 1822, which guarantees national treatment of U.S. citizens.

Since 1994, a Convention between the Government of the United States of America and the Government of the French Republic continues to be in force for the avoidance of double taxation and the prevention of fiscal evasion.  France has tax agreements with 128 countries:  Albania, Algeria, Andorra, Argentina, Armenia, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium, Benin, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Burkina Faso, Cameroon, Canada, Central African Republic, Chile, China, Cyprus, Colombia, the Democratic Republic of the Congo, Côte d’Ivoire, Croatia, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Ethiopia, Finland, Gabon, Georgia, Germany, Ghana, Greece, Guinea, Hong Kong, Hungary, India, Indonesia, Iran, Ireland, Island, Israel, Italia, Jamaica, Japan, Jordan, Kazakhstan, Kenya, South Korea, Kosovo, Kuwait, Kyrgyz Republic, Latvia, Lebanon, Libya, Lithuania, Luxemburg, Macedonia (FYRM), Madagascar, Malaysia, Malawi, Mali, Malta, Mauritania, Mauritius Island, Mayotte, Mexico, Monaco, Mongolia, Montenegro, Morocco, Namibia, Netherlands, New Zealand, New Caledonia, Niger, Nigeria, Norway, Oman, Pakistan, Panama, Philippines, Poland, French Polynesia, Portugal, Qatar, Quebec, Romania, Russian Federation, Saudi Arabia, Saint-Martin, Saint Pierre and Miquelon, Senegal, Serbia, Singapore, South Africa, Spain, Slovakia, Slovenia, Sri Lanka, Sweden, Switzerland, Syria, Tajikistan, Taiwan, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Venezuela, Vietnam, Zambia, and Zimbabwe.   (Ref: https://www.impots.gouv.fr/portail/les-conventions-internationales .)

The most recent changes to the taxation regime of concern to U.S. investors is that French corporate tax rate completed its gradual taper down —which began in 2019 — to 25 percent for all companies, regardless of the size of revenues in 2022. France is a member of the OECD/G20 Inclusive Framework on domestic tax base erosion and profit shifting (BEPS), joining the October 2021 Statement on a Two-Pillar Solution to address the tax challenges arising from the digitalization of the economy.

							3. Legal Regime					

### Transparency of the Regulatory System

The French government has generally achieved a high level of transparency and accessibility of its regulatory system.  The government generally engages in industry and public consultation before drafting legislation or rulemaking through a regular but variable process directed by the relevant ministry.  However, the text of draft legislation is not always publicly available before it goes to the Parliament.  U.S. firms may also find it useful to become members of industry associations, which can play an influential role in developing government policies.  Even “observer” status can offer insight into new investment opportunities and greater access to government-sponsored projects.

To increase transparency in the legislative process, all ministries are required to attach an impact assessment to their draft bills.  The Prime Minister’s Secretariat General (SGG for*Secretariat General du**Gouvernement*) is responsible for ensuring that impact studies are undertaken in the early stages of the drafting process.  The State Council (*Conseil**d’Etat*), which must be consulted on all draft laws and regulations, may reject a draft bill if the impact assessment is inadequate.  The consultation of the State Council is the last phase in the preparation of a draft bill. Once completed, the text is examined by the Council of Ministers, becomes a bill, and is then presented to the French Parliament.

After experimenting with new online consultations, the Macron Administration has used this mechanism to reach consensus on major reform bills.  These consultations are often open to professionals as well as citizens at large.  Another innovation is to impose regular impact assessments after a bill has been implemented to ensure its maximum efficiency, revising, as necessary, provisions that do not work in favor of those that do.

Over past decades, major reforms have extended the investigative and decision-making powers of France’s Competition Authority.  France implemented the European Competition Network (ECN) Directive in April 2019, which widens the powers of all European national competition authorities to impose larger fines and temporary measures on companies. The Authority publishes its methodology for calculating fines imposed on companies charged with abuse of a dominant position.  It issues specific guidance on competition law compliance, and government ministers, companies, consumer organizations, and trade associations now have the right to petition the authority to investigate anti-competitive practices.  While the Authority alone examines the impact of mergers on competition, the Minister of the Economy, Finance, and Industrial and Digital Sovereignty retains the power to request a new investigation or reverse a merger transaction decision for reasons of industrial development, competitiveness, or saving jobs.  The Competition Authority continues to simplify takeover and merger notifications with online procedures via a dedicated platform launched in 2020 and updated guidelines in English released on January 11, 2021.  Since January 2021, the Competition Authority has a new President, Benoit Cœure, who intends to focus on the impact of the cloud on all sectors of the French economy.

France’s budget documents are comprehensive and cover all expenditures of the central government.  An annex to the budget also provides estimates of cost sharing contributions, though these are not included in the budget estimates.  The French government published its first annual “Green Budget,” which measures the impact of state expenditures on the environment, in 2020 as an annex to the 2021 Finance Bill. The 2023 Green Budget contains $35.9 billion (€33.9 billion) in environmentally-favorable spending (excluding the “exceptional impact of the rise in energy prices such as tariff shields and support for renewable energies”), a $4.7 billion (€4.5 billion) increase compared with the 2022 Green Budget, due to a ramp-up of the France 2030 investment plan, clean mobility financing, support for local governments’ ecological transitions, and increased efforts on energy renovation of buildings, and support for clean vehicle acquisition. This practice attests to France’s strong commitment, notably under the OECD-led “Paris Collaborative on Green Budgeting” (which France joined in December 2017), to integrate “green” tools into the budget process.  In its spring report each year, the National Economic Commission outlines the deficits for the two previous years, the current year, and the year ahead, including consolidated figures on taxes, debt, and expenditures.  Since 1999, the budget’s accounts have also included contingent liabilities from government guarantees and pension liabilities.  The government publishes its debt data promptly on the French Treasury’s website and in other documents.  Data on nonnegotiable debt is available 15 days after the end of the month, and data on negotiable debt is available 35 days after the end of the month.  Annual data on debt guaranteed by the State is published in summary in the CGAF Report and in detail in the *Compte**de la**dette****publique*.  More information can be found at: https://www.imf.org/external/np/rosc/fra/fiscal.htm

France was the first country to include extra-financial reporting in its 2001 New Economic Regulations Law.  To encourage companies to develop a social responsibility strategy and limit the negative externalities of globalized trade, the law requires French companies with more than 500 employees and annual revenues above $106 million (€100 million) to report on the social and environmental consequences of their activities and include them in their annual management report.  A 2012 decree on corporate social and environmental transparency obligations requires portfolio management companies to incorporate environmental, social, and governance (ESG) criteria in their investment process.  In support of good governance objectives, France’s “Transparency, Anti-corruption, and Economic Modernization Law,” also known as the “Loi Sapin II,” came into effect on June 1, 2017.

France’s 2015 Law on Energy Transition for Green Growth strengthened mandatory carbon disclosure requirements for listed companies and introduced carbon reporting for institutional investors.  It requires investors (defined as asset owners and investment managers) to disclose in their annual investor’s report and on their website how they factor ESG criteria and carbon-related considerations into their investment policies.  The regulation concerns all asset classes: listed assets, venture capital, bonds, physical assets, etc.

### International Regulatory Considerations

France is a founding member of the European Union, created in 1957.  As such, France incorporates EU laws and regulatory norms into its domestic law.  France has been a World Trade Organization (WTO) member since 1995 and a member of the General Agreement on Tariffs and Trade (GATT) since 1948.  While developing new draft regulations, the French government submits a copy to the WTO for review to ensure the prospective legislation is consistent with its WTO obligations.  France ratified the Trade Facilitation Agreement (TFA) in October 2015 and has implemented all of its TFA commitments.

### Legal System and Judicial Independence

French law is codified into what is sometimes referred to as the Napoleonic Code, but is officially the *Code Civil des**Français*, or French Civil Code.  Private law governs interactions between individuals (e.g., civil, commercial, and employment law) and public law governs the relationship between the government and the people (e.g., criminal, administrative, and constitutional law).

France has an administrative court system to challenge decisions by local governments and the national government; the State Council (*Conseil**d’Etat*) is the appellate court.  France enforces foreign legal decisions such as judgments, rulings, and arbitral awards through the procedure of exequatur introduced before the *Tribunal de Grande Instance* (TGI), which is the court of original jurisdiction in the French legal system.

France’s Commercial Tribunal (*Tribunal de Commerce or TDC*) specializes in commercial litigation.  Magistrates of the commercial tribunals are lay judges, who are well known in the business community and have experience in the sectors they represent.  Decisions by the commercial courts can be appealed before the Court of Appeals. France’s judicial system is procedurally competent, fair, and reliable and is independent of the government.

Although members of the French judiciary are State employees it is independent of the executive branch.  The judicial process in France is known to be competent, fair, thorough, and time-consuming.  There is a right of appeal.  The Appellate Court (*cour****d’appel*) re-examines judgments rendered in civil, commercial, employment or criminal law cases.  It re-examines case facts and the legal basis of judgments, checking for errors in due process.  It may either confirm or set aside the judgment of the lower court, in whole or in part. Decisions of the Appellate Court may be appealed to the Court of Cassation (*cour**de cassation*), the highest court in France.

The French Financial Prosecution Office (*Parquet National Financier*, or PNF), specialized in serious economic and financial crimes, was established by a 2013 law and began its activities on February 1, 2014.

### Laws and Regulations on Foreign Direct Investment

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all sorts of remunerative activities. U.S. investment in France is subject to the provisions of the Convention of Establishment between the United States of America and France, which was signed in 1959 and remains in force. The rights it provides U.S. nationals and companies include: rights equivalent to those of French nationals in all commercial activities (excluding communications, air transportation, water transportation, banking, the exploitation of natural resources, the production of electricity, and professions of a scientific, literary, artistic, and educational nature, as well as certain regulated professions like doctors and lawyers). Treatment equivalent to that of French or third-country nationals is provided with respect to transfer of funds between France and the United States. Property is protected from expropriation except for public purposes; in that case it is accompanied by payment that is just, achievable, and prompt.

In addition to the information provided in the section “Limits on Foreign Control and Right to Private Ownership and Establishment” above, France published additional guidelines in September 2022 to improve the transparency and readability of the foreign investment control system. Those guidelines educate the stakeholders on the scope of application of the rules relating to the control of FDI, on the conduct of the control procedure, and on the follow-up of authorizations issued by the Minister of the Economy, Finance, and Industrial and Digital Sovereignty. They can be found on this webpage (in French) https://www.tresor.economie.gouv.fr/Articles/2022/09/08/publication-des-lignes-directrices-relatives-au-controle-des-investissements-etrangers-en-france.

Potential investors can find relevant investment information and links to laws and investment regulations at http://www.businessfrance.fr/.  They help foreign investors make decisions and offer support throughout their project, calling not only upon Business France investment advisors but also their network of regional partners.

### Competition and Antitrust Laws

The regulatory authority that reviews transactions and conduct for competition-related concerns is the French Competition Authority (Autorité de la concurrence). EU competition law is also applicable in France, provided the alleged practice may affect trade between member states. Major reforms have extended the investigative and decision-making powers of France’s Competition Authority. France implemented the European Competition Network, or ECN Directive, on April 11, 2019, allowing the French Competition Authority to impose heftier fines (above $3.3 million / €3 million) and temporary measures to prevent an infringement that may cause harm.

The French Competition Authority’s 2023-2024 roadmap published in March 2023 enumerates its priorities, first of which is the digital sector to which it plans to devote “significant resources.” Specifically, it plans to publish findings of an investigation into competition in cloud services during the first quarter of 2023. In addition, it plans to focus on data questions to complement the EU’s Digital Markets Act (DMA), which will enter into force on May 2, 2023. The Authority notes, however, “competition law will apply to operators and practices not covered by the DMA.” It adds that entry into force of the DMA will enhance its own monitoring powers over digital platforms, by requiring the platforms to inform the European Commission of all acquisitions, whatever the size or scale.

Over the past few years, the Competition Authority’s activities in the digital sector include agreements and investigations of major American companies and platforms, including Google (on “abusing dominant position” when using content of online publishers), Apple (on restriction of intra-brand competition and user data protection), and Meta (on dominance in digital advertising).

In June 2022, the Authority dropped an antitrust legal proceeding against Meta after it accepted Meta’s commitment to re-establishing competition in online advertising. The case was brought forward by Criteo, a Paris-based advertising retargeting platform, which had been removed from some of Meta’s social network advertising measurement programs. Meta’s commitments to addressing the Authority and Criteo’s concerns included the following: 1) Over five years, to subject access to the Meta Business Partner program exclusively to “qualitative criteria;” 2) Over five years, to provide Meta’s sales teams with “compliance training” that will address the content of their communications, particularly with advertiser clients; and 3) Over three years, to develop a new application programming interface (API) for ad service partners, called “recommendation functionality” to be made available free of charge.

Another significant case in the past year is the Competition Authority’s ruling against Altice, which owns the SFR telecoms operator. The Authority imposed a $79.5 million (€75 million) fine on Altice for failing to meet its commitments to deploy fiber optics, following Numericable’s acquisition of SFR in 2014. In 2017, the Competition Authority imposed a $42.4 million (€40 million) fine against Altice. The Authority claims the new fines are due to Altice not “correctly implementing” its injunctions. In addition to injunctions relating to deployment of fiber optics, others refer to the maintenance of the network, which the Authority claims Altice has also not respected.

The Competition Authority launches regular in-depth investigations into various sectors of the economy, which may lead to formal investigations and fines. The Authority publishes its methodology for calculating fines imposed on companies charged with abuse of a dominant position. It issues specific guidance on competition law compliance. Government ministers, companies, consumer organizations and trade associations have the right to petition the authority to investigate anti-competitive practices. While the Authority alone examines the impact of mergers on competition, the Minister of the Economy, Finance, and Industrial and Digital Sovereignty retains the power to request a new investigation or reverse a merger transaction decision for reasons of industrial development, competitiveness, or saving jobs.

The decisions of the Competition Authority can be appealed to the Paris Court of Appeal, the Court of Cassation (highest court), and the Council of State. The Paris Court of Appeal has exclusive jurisdiction to hear appeals against the Authority’s decisions on anti-competitive practices.

The Economic Growth, Activity, and Equal Opportunities law (known as the “Macron Law”), adopted in August 2016, vested the Competition Authority with the power to review mergers and alliances between retailers ex-ante (beforehand). The law provides that all contracts binding a retail business to a distribution network shall expire at the same time. This enables the retailer to switch to another distribution network more easily. Furthermore, distributors are prohibited from restricting a retailer’s commercial activity via post-contract terms. The civil fine incurred for restrictive practices can now amount to up to five percent of the business’s revenue earned in France.

### Expropriation and Compensation

In accordance with international law, neither the national or local governments can legally expropriate property to build public infrastructure without fair market compensation. There have been no expropriations of note during the reporting period.

### Dispute Settlement

#### ICSID Convention and New York Convention

France is a member of the World Bank-based International Centre for Settlement of Investment Disputes (ICSID) Convention and a signatory to the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention) which obligates local courts to enforce international arbitral awards under this system. The International Chamber of Commerce’s International Court of Arbitration (ICA) has been based in Paris since 1923.

France was one of the first countries to enact a modern arbitration law in 1980-1981. In 2011, the French Ministry of Justice issued Decree 2011-48, which introduced further international best practices into French arbitration procedural law. As a result, parties are free to agree orally to settle their disputes through arbitration, subject to standards of due process and a newly enacted principle of procedural efficiency and fairness.

#### Investor-State Dispute Settlement

The President of the High Civil Court of First Instance (Tribunal de Grande Instance) of Paris has the authority to issue orders related to ad-hoc international arbitration. Paris is the seat of the International Chamber of Commerce’s International Court of Arbitration, composed of representatives from 90 countries, that handles investment as well as commercial disputes.

France does not have a bilateral investment treaty with the United States.   The European Commission directly negotiates on behalf of the EU on foreign direct investment since it is part of the EU Common Commercial Policy. In 2015, the EU agreed to pursue an investment court approach to investor-State dispute settlement. While this model is included in the Comprehensive Economic and Trade Agreement (CETA) with Canada and the EU-Vietnam FTA, no actual court has yet been established in any form or context; no disputes have been brought under these post-2015 treaties.

#### International Commercial Arbitration and Foreign Courts

French law provides conditions for the recognition and the enforcement of foreign arbitral awards in relation to the New York Convention.  The provisions of French law are contained in the Code of Civil Procedure and the Code of Civil Enforcement Procedures.  The French Civil Code envisions several mechanisms of alternative dispute resolution (ADR) including out-of-court arbitration and conciliation where a judicial conciliator puts an end to a dispute. France is a member of the UN Commission on International Trade Law (UNCITRAL).  Local courts recognize and enforce foreign arbitral awards as mentioned above.  The recognition of judgments of foreign courts by French courts is possible, but judgements must be accompanied by the issuance of an exequatur – a legal document issued by a sovereign authority that permits the exercise or enforcement of a foreign judgement.

### Bankruptcy Regulations

France has extensive and detailed bankruptcy laws and regulations. The primary legislation governing insolvency and restructuring proceedings in France is Book VI of the French Commercial Code, which is dedicated to companies facing difficulties. Any creditor, regardless of the amount owed, may file suit in bankruptcy court against a debtor. Foreign creditors, equity shareholders, and foreign contract holders have the same rights as their French counterparts. Monetary judgments by French courts on firms established in France are generally made in euros.  Not bankruptcy itself, but bankruptcy fraud – the misstatement by a debtor of his financial position in the context of a bankruptcy – is criminalized.

France’s Commercial Code incorporates European Directive 2014/59/EU establishing a framework for the recovery and resolution of claims on insolvent credit institutions and investment firms and European Directive (EU) 2019/1023 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency, and discharge of debt. In 2020, exceptional temporary measures were adopted by way of ordinance to adapt French bankruptcy law to the COVID-19 pandemic.

The Bank of France, the country’s only credit monitor, maintains files on persons having written unfunded checks, having declared bankruptcy, or having participated in fraudulent activities. Commercial credit reporting agencies do not exist in France.

							4. Industrial Policies					

### Investment Incentives

The government offers a comprehensive program of tax incentives and development subsidies to encourage investment in underdeveloped areas and certain sectors. Since President Macron came into power in 2017, the French government has embarked on a vast program of pro-business reforms on a permanent basis, aimed at generating more solid, inclusive, and sustainable growth. The Covid-19 crisis prompted the creation of new measures, some temporary, to complete these reforms.

President Macron’s investment strategy was built on four key areas: 1) measures aiming at promoting investment and employment in France such as a new tax environment to promote investment and employment such as a reduction in the corporate tax (from 33 percent to 25 percent), reduction in production tax, the *cotisation**sur la**valeur****ajout**e**e****des**entreprises* (CVAE), continuation of the Research and Innovation Tax Credit, reduction in social and employer contributions, transformation of the solidarity tax on wealth into a wealth tax on real estate, and tax exemption for overtime workers; 2) changes to the French social model to increase flexibility for companies and to promote education and training via labor market reforms, vocational training, apprenticeships, transformation of unemployment insurance and financial incentives to stimulate youth employment; 3) new economic policies and investments to support business growth and innovation, including the 2019 “PACTE” law, the “France Relaunch” recovery program, France 2030 investment plan, and the Resilience Plan to mitigate the impact of the Russian invasion of Ukraine; and 4) measures to simplify public activities and policies.

The “France Relaunch” and “France 2030” fiscal packages support France’s green transition, the “decarbonization of the French economy,” and the “French green hydrogen plan.” Measures include energy efficiency measures within public buildings, private housing, social housing, and the operating premises of VSEs (Very Small Enterprises) and SMEs (Small and Medium Enterprises); support for upgrades to the national rail network and the development of freight; development of green hydrogen; support for public transport and the use of bicycles; aid for industrial companies to invest in equipment that emits less CO2; and support for the green transition of agriculture.

“France 2030” supports the transformation of France’s automotive, aerospace, digital, green industry, biotechnology, culture, health, and advanced tech sectors. Its objectives include the development of small modular nuclear reactors, France’s leadership in green hydrogen (hydrogen made using renewable and nuclear energy sources), the production of two million electric and hybrid vehicles by 2030, and the decarbonization of France’s industry by reducing greenhouse gas emissions by 35 percent relative to 2015. Of the plan’s $33.8 billion (€30 billion) to be invested over the five years, $ 8.9 billion (€8.4 billion) was invested as of October 12, 2022, across more than 1,700 innovative projects throughout the country. Additionally, one-third of France’s $106 billion (€100 billion) “France Relance” pandemic recovery package is allocated to the ecological transition, including energy sector related investments. The plan also targets green technology, including the development of a decarbonized hydrogen economy. With approximately two-thirds of its electricity coming from nuclear power, France supports the use of nuclear energy to meet emissions reductions targets. Legislation in 2023 to accelerate the construction of new civil nuclear plants aims to ensure at least 50 percent of France’s electricity production comes from nuclear energy by 2050, accelerate the construction of small modular reactors and new generation European Pressurized Reactors (EPR2), extend the lifespan of existing nuclear facilities, and streamline the permitting process for new builds. Of the developed economies, France has one of the lowest rates of greenhouse gas emissions per capita and per unit of GDP due to its reliance on nuclear power. France aims to phase out fossil fuels over the next decade, shut down its two remaining coal plants by 2026, and end public financial support for fossil fuels and natural gas by 2025 and 2035, respectively. In October 2020, France announced it would phase out export guarantees for foreign projects involving fossil fuels by 2035.

### Foreign Trade Zones/Free Ports/Trade Facilitation

France is subject to all EU free trade zone regulations. These allow member countries to designate portions of their customs’ territory as duty-free, where value-added activity is limited. France has several duty-free zones, which benefit from exemptions on customs for storage of goods coming from outside of the European Union. The French Customs Service administers them and provides details on its website (http://www.douane.gouv.fr). French legal texts are published online at http://legifrance.gouv.fr.

President Macron announced the extension of 44 Urban Free Zones (ZFU) in low-income neighborhoods and municipalities with at least 10,000 residents in September 2018.  The program provides incentives for employers, who have created 600 new jobs since 2016. Incentives include exemption from payment of payroll taxes and certain social contributions for five years, financed by $17.7 million (€15 million) a year in state funds. The program ends December 31, 2023.

### Performance and Data Localization Requirements

While there are no mandatory performance requirements established by law, the French government will generally require commitments regarding employment or R&D from both foreign and domestic investors seeking government financial incentives. Incentives like PAT regional planning grants (Prime d’Amenagement du Territoire pour l’Industrie et les Services) and related R&D subsidies are based on the number of jobs created, and authorities have occasionally sought commitments as part of the approval process for acquisitions by foreign investors.

The French government imposes the same conditions on domestic and foreign investors in cultural industries:  all purveyors of movies and television programs (i.e., television broadcasters, telecoms operators, internet service providers and video services) must contribute a percentage of their revenues toward French film and television productions. They must also abide by broadcasting cultural content quotas (minimum 40 percent French, 20 percent EU).

The 2018 EU Directive on audiovisual media services, implemented in France by a December 2020 government decree and an additional six decrees in December 2021, requires video-on-demand subscription services to contribute 20 or 25 percent of revenues in France to the production of European and French movies and television fiction. Netflix, Amazon, Disney Plus, and Apple TV Plus signed in December 2021 an agreement with France’s broadcasting authority CSA to start investing 20 percent of their annual revenues in French content.

France maintains a four-month waiting period between the date a movie ceases cinema showings and the date when it can be shown on video-on-demand and DVD/Blu-ray. This can be reduced to three months if the film has registered less than 100,000 admissions in four weeks. After six months, OCS and Canal+, major financial partners of cinema in France, can broadcast the film. Video streaming platforms (including U.S. firms) can add feature films to their catalogs between 15 and 17 months after their release in cinemas. For example, Netflix has signed the agreement under the new windowing rules and will have access to movies 15 months after their theatrical release. Other streaming services such as Disney Plus will have a 17-month window for new films. Finally, a film can be broadcast on classic free channels 22 months after its theatrical release, at which point, video streaming platforms must remove the film from their platforms.

France, as an EU member state, adheres to the General Data Protection Regulation (GDPR), as its data privacy protection and transfer framework. The French National Commission for Information Technology and Civil Liberties (CNIL) is the regulatory authority that monitors that data transfer requirements are met for the transfer of customer/personal data out of France.

The National Authority for Cyberdefence and Network and Information Security (ANSSI), France’s national cybersecurity agency, revised its cybersecurity certification and labeling scheme SecNumCloud in 2021 to effectively preclude foreign (non-EU) cloud firms from providing services to government agencies with “highly sensitive date” as well as firms and local governments that operate “critical services,” though the French government has not yet formally defined those terms. The regulation could effectively force foreign firms to store data locally with European service providers.

							5. Protection of Property Rights					

### Real Property

Real property rights are regulated by the French civil code and are uniformly enforced. French civil-law notaries (notaires) – highly specialized lawyers in private practice appointed as public officers by the Justice Ministry – handle residential and commercial conveyance and registration, contract drafting, company formation, successions, and estate planning. The official system of land registration (cadastre) is maintained by the French public land registry under the auspices of the French tax authority (Direction Generale des Finances Publiques or DGFiP), available online at http://www.cadastre.gouv.fr . Mortgages are widely available, usually for a 15-year period.

### Intellectual Property Rights

France is a strong defender of intellectual property rights (IPR). France does not appear on USTR’s 2022 Special 301 Report list.  USTR’s 2022 Notorious Market report continues to list France as host to illicit streaming and copyright infringement websites.Under the French system, patents and trademarks protect industrial property, while copyrights protect literary/artistic property. By virtue of the Paris Convention, U.S. nationals have a priority period following filing of an application for a U.S. patent or trademark in which to file a corresponding application in France:  twelve months for patents and six months for trademarks.

Counterfeiting is a costly problem for French companies, and the government of France maintains strong legal protections and a robust enforcement mechanism to combat trafficking in counterfeit goods — from copies of luxury goods to fake medications — as well as the theft and illegal use of IPR. The French Intellectual Property Code has been updated repeatedly over the years to address this challenge, most recently in 2019 with the implementation of the Action Plan for Business Growth and Transformation or PACTE Law (Plan d’Action pour la Croissance et la Transformation des Entreprises).  This law reinforced France’s anti-counterfeiting legislation and implemented EU Directive 2015/2436 of the Trademark Reform Package. It increased the Euro amount for damages to companies that are victims of counterfeiting and extends trademark protection to smartcard technology, certain geographic indications, plants, and agricultural seeds. The law also increased the statute of limitations for civil suits from three to ten years and strengthened the powers of customs officials to seize fake goods sent by mail or express freight.  France also adopted legislation in 2019 to implement EU Directive 2019/790 on Copyright and Related Rights in the Digital Single Market.

The government also reports on seizures of counterfeit goods. The government launched a new French customs action plan in February 2021 to combat counterfeiting for the 2021-2022 calendar year and released its 2022-2025 strategy in December 2021. Customs seizures in France have increased from 200,000 items in 1994 to 5.64 million items in 2020, and a record 11.53 million items in 2022 (a 27 percent increase over 2020). The action plan focused on improved intelligence gathering, investigation, litigation, and cooperation between all the stakeholders involved, including the Customs Office, which investigates fraud cases; the National Institute of Industrial Property, which oversees patents, trademarks, and industrial design rights; and France’s top private sector anti-counterfeiting organization, UNIFAB. The 2022-2025 strategy’s three stated objectives are to increase the fight against trafficking and organized crime and to guarantee the conformity of goods throughout the logistics chain; to optimize and modernize the processing of the flow of goods at the border and to consolidate support for businesses; and to make French Customs service a modern and innovative administration.

France has robust laws against online piracy. A law on the regulation and protection of public access to cultural works in the digital era approved by Parliament on September 29, 2021 established the Regulatory Authority for Audiovisual and Digital Communication (ARCOM) from the merger of the French Audiovisual Authority (CSA) and the French digital piracy agency HADOPI (High Authority for the Dissemination of Artistic Works and the Protection of Rights on Internet). The HADOPI element of ARCOM administers a “graduated response” system of warnings and fines and has taken enforcement action against several online pirate sites. The new law grants ARCOM wider investigative powers to close down mirror sites, as well as blacklist and block access to websites that repeatedly infringe on copyrights. The law also introduced a fast-track remedy to prevent the illegal broadcast of sporting events. The establishment of this new authority was delayed by the COVID-19 pandemic, and the new authority was finally established in January 2022. The government issued an order on May 12, 2021, enforcing in France the EU Directive on Copyright and Related Rights in the Digital Single Market (CDSM), which holds content-sharing platforms liable for the unauthorized communication of copyrighted content. The United States will continue to monitor ways this legislation may impact U.S. stakeholders.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

							6. Financial Sector					

### Capital Markets and Portfolio Investment

There are no administrative restrictions on portfolio investment in France, and there is an effective regulatory system in place to facilitate portfolio investment. France’s open financial market allows foreign firms easy access to a variety of financial products, both in France and internationally. France continues to modernize its marketplace with a wave of new participants and service providers, new digital assets and crypto assets, as well as new exchange and settlement infrastructure. Among the digitalization trends, the concept of “decentralized finance” (DeFi) is increasingly discussed. As in most EU countries, France’s listed companies are required to meet international accounting standards. Some aspects of French legal, regulatory, and accounting regimes are less transparent than U.S. systems, but they are consistent with international norms. Foreign banks are allowed to establish branches and non-retail operations in France and are subject to international prudential measures. Under IMF Article VIII, France may not impose restrictions on the making of payments and transfers for current international transactions without the (prior) approval of the Fund.

Foreign investors have access to all classic financing instruments, including short-, medium-, and long-term loans, short- and medium-term credit facilities, and secured and non-secured overdrafts offered by commercial banks. These assist in public offerings of shares and corporate debt, as well as mergers, acquisitions and takeovers, and offer hedging services against interest rate and currency fluctuations. Foreign companies have access to all banking services. Most loans are provided at market rates, although subsidies are available for home mortgages and small business financing.

Euronext Paris (also known as the Paris Bourse) is part of a regulated cross-border stock exchange located in six European countries. Euronext Growth is an alternative exchange for medium-sized companies to list on a less regulated market (based on the legal definition of the European investment services directive), with more consumer protection than the Marché Libre still used by a couple hundred small businesses for their first stock listing. Companies seeking their listing on Euronext Growth must have a sponsor with status granted by Euronext and should prepare a French language prospectus for a permit from the Financial Markets Authority (Autorité des Marchés Financiers or AMF), the French equivalent of the U.S. Securities and Exchange Commission. Small and medium-size enterprises (SMEs) may also list on Enternext, a subsidiary of the Euronext Group created in 2013. The Paris Bourse also offers Euronext Access, an unregulated exchange for start-ups.

### Money and Banking System

The large banking groups (BNP Paribas, BPCE Group, Crédit Agricole Group, Credit Mutuel Group, and Societe Generale) had total consolidated assets of $8,271 billion (€7,850 billion) at the end of 2021, accounting for 83 percent of France’s total banking sector. Their footprint extends well beyond national borders: in Europe they are classified as “significant institutions” and have been directly supervised by the European Central Bank since 2014. Four of them (BNP Paribas, BPCE, Crédit Agricole, and Société Générale) also qualify as “global systemically important banks.” The successive crises that have unfolded since 2008 – the financial crisis, the sovereign debt crisis, the public health crisis, and then the war in Ukraine – have had knock-on effects on French banks’ foreign activities.

Russia’s invasion of Ukraine and the subsequent imposition of economic sanctions on Russia have forced French banks to reevaluate their exposures in both countries. At the end of 2021, the six large French banking groups had total claims of $33 billion (€31.3 billion) vis-à-vis Russia (0.8 percent of their total foreign claims) and $3.9 billion (€3.7 billion) vis-à-vis Ukraine (0.1 percent of total foreign claims). Following the onset Russia’s full-scale invasion, Société Générale sold its Russian subsidiary Rosbank, severing one of the largest remaining links between French banks and the Russian financial sector.

Banque de France is a member of the Eurosystem, the monetary authority of the eurozone which groups together the European Central Bank (ECB) and the national central banks of all countries that have adopted the euro. Banque de France is a public entity governed by the French Monetary and Financial Code. The conditions whereby it conducts its missions on national territory are set out in its Public Service Contract. The three main missions are monetary strategy; financial stability, together with the High Council of Financial Stability (HCSF) which implements macroprudential policy; and the provision of economic services to the community. In addition, it participates in the preparation and implementation of decisions taken centrally by the ECB Governing Council.

Foreign banks can operate in France either as subsidiaries or branches but need to obtain a license. Credit institutions’ licenses are generally issued by France’s Prudential Authority (Autorité de Contrôle Prudentiel et de Résolution or ACPR) which reviews whether certain conditions are met (e.g., minimum capital requirement, sound and prudent management of the bank, compliance with balance sheet requirements, etc.). Both EU law and French legislation apply to foreign banks. Foreign banks or branches are additionally subject to prudential measures and must provide periodic reports to the ACPR regarding operations in France, including detailed reports on their financial situation. At the EU level, the ‘passporting right’ allows a foreign bank settled in any EU country to provide their services across the EU, including in France. There are about 874 credit institutions authorized to carry on banking activities in France; the list of foreign banks is available on this website: https://www.regafi.fr/spip.php?page=results&type=advanced&id_secteur=3&lang=en&denomination=&siren=&cib=&bic=&nom=&siren_agent=&num=&cat=01-TBR07&retrait=0 

### Foreign Exchange and Remittances

#### Foreign Exchange

For purposes of controlling foreign exchange, the French government considers foreigners as residents from the time they arrive in France. French and foreign residents are subject to the same rules; they are entitled to open an account in a foreign currency with a bank established in France and to establish accounts abroad. They must report all foreign accounts on their annual income tax returns, and money earned in France may be freely converted into dollars or any other currency and transferred abroad.

France is one of twenty countries (known collectively as the Eurozone) that use the euro currency. Exchange rate policy for the euro is handled by the European Central Bank, located in Frankfurt, Germany. The average euro to USD exchange rate from March 7, 2022, to March 7, 2023 was 1 USD to 0.95 euro.

France is a founding member of the OECD-based Financial Action Task Force (FATF, a 39-member intergovernmental body). As reported in the Department of State’s France Report on Terrorism, the French government has a comprehensive anti-money laundering/ counterterrorist financing (AML/CTF) regime and is an active partner in international efforts to control money laundering and terrorist financing.  Tracfin, the French government’s financial intelligence unit, is active within international organizations and has signed new bilateral agreements with foreign countries. In May 2022, the FATF released its two and a half year-long investigation on France’s capacity to combat financial crime and concluded that France has a “robust and sophisticated framework to fight money laundering and terrorist financing that is effective in many respects.”

#### Remittance Policies

France’s investment remittance policies are stable and transparent.  All inward and outward payments must be made through approved banking intermediaries by bank transfers.  There is no restriction on the repatriation of capital.  Similarly, there are no restrictions on transfers of profits, interest, royalties, or service fees.  Foreign-controlled French businesses are required to have a resident French bank account and are subject to the same regulations as other French legal entities.  The use of foreign bank accounts by residents is permitted.

### Sovereign Wealth Funds

France has no sovereign wealth fund per se (none that use that nomenclature) but does operate funds with similar intents. The Public Investment Bank (BPI France) supports small and medium enterprises (SMEs), larger enterprises (Entreprises de Taille Intermedaire), and innovating businesses with over $39.6 billion (€36 billion) in assets under management. The government strategy is defined at the national level and aims to fit with local strategies.  BPI France may hold direct stakes in companies, hold indirect stakes via generalist or sectorial funds, venture capital, or development or transfer capital.  In November 2020, BPI France became a member of the One Planet Sovereign Wealth Funds (OPSWF) international initiative, which federates international sovereign wealth funds mobilized to contribute to the transition towards a more sustainable economy. BPI France stepped up its support for the ecological and energy transition, aiming to reach nearly $6.6 billion (€6 billion) in green financing per year by 2023.

							7. State-Owned Enterprises					

The 11 publicly-listed entities in which the French State maintains stakes at the federal level are Aeroports de Paris (50.6 percent); Airbus Group (10.9 percent); Air France-KLM (28.6 percent); EDF (93.11 percent), ENGIE (23.6 percent), Eramet (27.1 percent), La Française des Jeux (FDJ) (20.5 percent), Orange (a direct 13.4 percent stake and a 9.60 percent stake through BPI France), Renault (15.0 percent), Safran (11.2 percent), and Thales (25.7 percent). Unlisted companies owned by the State include SNCF (Société Nationale des Chemins de Fer Français, rail), RATP (Régie autonome des transports parisiens, Paris public transport), CDC (Caisse des depots et consignations-bank) and La Banque Postale (bank). In all, the government maintains majority and minority stakes in 83 firms operating in a variety of sectors.

Private enterprises have the same access to financing as SOEs, including from state-owned banks or other state-owned investment vehicles. SOEs are subject to the same tax burden and tax rebate policies as their private sector competitors. SOEs may receive subsidies and other financial resources from the government.

France, as a member of the European Union, is party to the Agreement on Government Procurement (GPA) within the framework of the World Trade Organization. Companies owned or controlled by the State behave largely like other companies in France and are subject to the same laws and tax code. The Boards of SOEs operate according to accepted French corporate governance principles as set out in the (private sector) AFEP-MEDEF Code of Corporate Governance. SOEs are required by law to publish an annual report, and the French Court of Audit conducts financial audits on all entities in which the State holds a majority interest. The French government appoints representatives to the Boards of Directors of all companies in which it holds significant numbers of shares and manages its portfolio through a special unit attached to the Ministry of the Economy, Finance, and Industrial and Digital Sovereignty, the shareholding agency APE (Agence de Participations de l’Etat). The State as a shareholder must set an example in terms of respect for ESG norms, including gender equality. The annual report also highlights that the State must protect its strategic assets and remain a shareholder in areas where the general interest is at stake.

### Privatization Program

The French government increased to 29.9 percent its existing 14.3 percent stake in the Air France-KLM group in 2021 in a deal that injected $4.5 billion (€4 billion) into Air France and its Holding Company under the European State Aid Temporary Framework. This recapitalization, through a mix of new shares and hybrid debt, constrains the group from taking more than a 10 percent stake in any competitor until three-quarters of that aid is repaid. It follows a $7.7 billion (€7 billion) bailout the government provided earlier in 2020. The French government has pledged to reduce its stake to the pre-crisis level of 14.3 percent by the end of 2026.

The government was due to privatize many large companies in 2019, including the airport operator ADP and the energy company ENGIE in order to create a $11 billion (€10 billion) fund for innovation and research. However, the program was delayed because of political opposition to the privatization of airport manager ADP, regarded as a strategic asset to be protected from foreign shareholders. In 2019, over a million French citizens, mostly opposed to privatization, signed a petition to hold a referendum on the government’s plan to sell all or part of its 50.6 percent stake in ADP. The referendum was held online for nine months ending in March 2020. An insufficient number voted for the results to be binding. In any case, the government announced on March 11, 2020, that it had suspended its plans to privatize ADP, because the outbreak of the COVID-19 pandemic created unfavorable market conditions. As of March 2023, the government had not resumed plans to privatize ADP. The government succeeded in selling in November 2019 a 52 percent stake in gambling firm FDJ. The government continues to maintain a strong presence in some sectors, particularly power, public transport, and defense industries.

The government has no major privatization projects for 2023. On the contrary, the government has taken steps to nationalize the energy company EDF, purchasing outstanding shares to expand its previous 84 percent stake to near full ownership.

							8. Responsible Business Conduct					

The business community has general awareness of standards for responsible business conduct (RBC) in France. The country has established a National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises, coordinated and chaired by the Directorate General of the Treasury in the Ministry of the Economy, Finance, and Industrial and Digital Sovereignty. The NCP coordinates representation from the ministries in charge of Economy, Finance, and Industrial and Digital Sovereignty; Labor, Employment, and Economic Inclusion; European and Foreign Affairs; Ecological Transition and the Cohesion of the Territories; and the Energy Transition), six French trade unions (CFDT, CGT, FO, CFE-CGC, CFTC, UNSA), and one employers’ organization, MEDEF.

The NCP promotes the OECD Guidelines in a manner that is relevant to specific sectors. When specific instances are raised, the NCP offers its good offices to the parties (discussion, exchange of information) and may act as a mediator in disputes, if appropriate.  This can involve conducting fact-finding to assist parties in resolving disputes and posting final statements on any recommendations for future action with regard to the Guidelines. The NCP may also monitor how its recommendations are implemented by the business in question. In 2021, the French NCP participated or organized 47 projects to promote responsible business conduct and the OECD Guidelines for Multinational Enterprises, but activities remained impacted by health constraints related to the COVID-19 pandemic. The General Directorate of the Treasury in the Ministry of Economy, Finance and Industrial and Digital Sovereignty has a dedicated NCP webpage available at: https://www.tresor.economie.gouv.fr/tresor-international/pcn-france

In France, corporate governance standards for publicly traded companies are the product of a combination of legislative provisions and the recommendations of the AFEP-MEDEF code (two employers’ organizations). The code, which defines principles of corporate governance by outlining rules for corporate officers, controls, and transparency, meets the expectations of shareholders and various stakeholders, as well as of the European Commission. First introduced in September 2002, it is regularly updated, adding new principles for the determination of remuneration and independence of directors, and now includes corporate social and environmental responsibility standards. The new AFEP-MEDEF code, which is followed by most publicly listed companies in France, was published in December 2022, almost three years after its last update. The major changes to the code focus on how environmental and social responsibility, including climate, should be integrated into corporate strategy, board discussions, and the executive remuneration policies of French public companies.

Also relating to transparency, the EU passed a regulation in May 2017 to stem the trade in conflict minerals and, in particular, to stop conflict minerals and metals from being exported to the EU; to prevent global and EU smelters and refiners from using conflict minerals; and to protect mine workers from being abused. The regulation went into effect January 1, 2021, and applies directly to French law.

France has played an active role in negotiating the ISO 26000 standards, the International Finance Corporation Performance Standards, the OECD Guidelines for Multinational Enterprises, and the UN Guiding Principles on Business and Human Rights. France has signed on to the Extractive Industries Transparency Initiative (EITI), hosting its eighth global conference in Paris in 2019 and regularly serving on the EITI board. Since 2017, large companies based in France with at least 5,000 employees are now required to establish and implement a corporate plan to identify and assess any risks to human rights, fundamental freedoms, workers’ health, safety, and risk to the environment from activities of their company and its affiliates.

The February 2017 “Corporate Duty of Vigilance Law” requires large companies to set up, implement, and publish a “vigilance plan” to identify risks and prevent “serious violations” of human rights, fundamental freedoms, and serious environmental damage.

Significant human rights issues in France occur and have included credible reports of crimes involving violence or threats of violence based on ethnicity, nationality, and religion, including against Muslims; crimes, violence, or threats of violence motivated by antisemitism; and crimes involving violence or threats of violence targeting lesbian, gay, bisexual, transgender, queer, and intersex persons. There were no reports of violence against environmental defenders in mainland France, though environmental protesters and police have been injured in some recent clashes. Indigenous people in French Guiana continue to report inequalities and lack of access to justice for land disputes and wildlife trafficking. Similarly, some indigenous groups continue to oppose the construction of large-scale electricity-generating projects, including the Larivot power station in French Guiana. The government took steps to investigate, prosecute, and punish officials who committed human rights abuses or engaged in corruption. Impunity was not widespread.

### Additional Resources

Department of State

- Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/ )
- Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/ )
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/ )
- U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ( https://www.state.gov/u-s-national-contact-point-for-the-oecd-guidelines-for-multinational-enterprises/ )
- Xinjiang Supply Chain Business Advisory ( https://www.state.gov/xinjiang-supply-chain-business-advisory/ )

Department of the Treasury

- OFAC Recent Actions ( https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions )

Department of Labor

- Findings on the Worst Forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings  )
- List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods )
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab )
- Comply Chain ( https://www.dol.gov/ilab/complychain/ )

### Climate Issues

France enacted a Climate and Resilience Law in 2021 covering consumption and food, economy and industry, transportation, housing, and strengthening sanctions against environmental violations. The production and work chapter of the Law aligns France’s national research strategy with its national low carbon and national biodiversity strategies. All public procurement must consider environmental criteria. To protect ecosystems, the law amends several mining code provisions, including the requirement to develop a responsible extractive model. The law translates France’s multi-year energy program into regional renewable energy development objectives, creates the development of citizen renewable energy communities, and requires installation of solar panels or green roofs on commercial surfaces, offices, and parking lots. The consumption chapter requires an environmental sticker and inscription to better inform consumers of a product or service’s impact on climate. The law banned the advertising of fossil fuels by 2022 and the advertising of the most carbon-emitting cars (i.e., those that emit more than 123 grams of carbon dioxide per kilometer) by 2028. The law also empowered local authorities to reduce paper advertisements and regulate electronic advertising screens in shop windows. Large- and medium-sized stores (i.e., those with over 400 square meters of sales area) must devote 20 percent of their sales area to bulk sales by 2030. In the agriculture sector, the law sets annual emissions reduction levels concerning nitrogen fertilizers; failure to meet these objectives will trigger a tax beginning in 2024. The law’s transportation chapter extends France’s 2019 Mobility law by creating 33 low-emission zones in urban areas that have more than 150,000 inhabitants by the end of 2024, and bans cars manufactured before 1996 in these large cities. In the top 10 cities that regularly exceed air quality limits on particulates, the law will ban vehicles that have air quality certification stickers of above a certain level. The law requires regions to offer attractive fares on regional trains, bans domestic flights when there is train transportation of less than 2.5 hours, requires airlines to conduct carbon offsetting for domestic flights beginning in 2022, and creates carpool lanes. The law creates a road ecotax starting in 2024, prohibits the sale of new cars that emit more than 95 gram of carbon dioxide per kilometer by 2030 and of new trucks, and buses with 95 gCO2/km emissions by 2040, and provides incentives to develop bicycle paths, parking areas, and rail and waterway transport.

The Climate and Resilience Law’s housing chapter seeks to accelerate the environmental renovation of buildings. Starting from August 2022, owners of poorly insulated housing must undertake energy efficiency upgrades if they want to increase rent rates. The law forbids leasing non-insulated housing beginning in 2025 and bans leasing any type of poorly insulated housing beginning in 2028. It also provides information, incentives, and control mechanisms empowering tenants to demand landlords conduct energy efficiency upgrades. As of September 2022, the law required, when selling poorly insulated housing or buildings, an energy audit including proposals for improvement construction, cost estimate, and an estimate of the energy gain. All households will have access to a financing mechanism to pay the remaining costs of their upgrades via government-guaranteed loans. The law regulates the laying of concrete, mandates a 50 percent reduction in the rate of land use by 2030, requires net zero land reclamation by 2050, and prohibits the construction of new shopping centers that lead to modifying the natural environment. The law also aims to protect 30 percent of France’s sensitive natural areas and supports local authorities in adapting their coastal territories against receding coastlines.

The law’s final chapter focuses on environmental violations and reinforces sanctions for environmental damage, such as long-term degradation to fauna and flora (up to three years in prison and a $273,000 (€250,000) fine, as well as for the general offense of environmental pollution and “ecocide” (up to 10 years in prison and a $4.9 million (€4.5 million ) fine or up to 10 times the profit obtained by the individual committing the environmental damage). The chapter uses the term “ecocide” to refer to the most serious cases of environmental damage, although the term is not defined in the law. Even if pollution has not occurred, these penalties apply as long as the individual’s behavior is considered to have put the environment in “danger.” The law aims to protect 30 percent of France’s sensitive natural areas and supports local authorities in adapting their coastal territories against receding coastlines.

France developed a roadmap for the deployment of sustainable aviation biofuels by 2025 to reduce CO2 emissions. The roadmap was informed by a few French initiatives, including a study on the conditions for the emergence of an aeronautical biofuel industry in France. The roadmap prioritizes sustainable aviation fuels produced in France, noting the importance of a biofuel’s origin and environmental and socio-economic sustainability. France established the following objectives for the share of sustainable aviation fuels; 2 percent by 2025, 5 percent by 2030, and 50 percent by 2050, consistent with achieving carbon neutrality.France is home to 10 percent of the world’s known species. It is one of 15 “megadiverse” countries according to the International Union for Conservation of Nature and the only one to be present in five of the 36 global biodiversity “hotspots” (Mediterranean, Caribbean, Indian Ocean, New Caledonia, and Micronesia-Polynesia). Since 2007, 546 marine protected areas have been created across metropolitan France and its overseas departments and territories, including nine marine natural parks. France has 54 regional nature parks and 11 national parks, including three in its overseas territories. France will host the next UN Conference on the Oceans in 2025 in Nice, France.

France adopted its third National Biodiversity Strategy, covering 2022-2030, and has prioritized biodiversity as an environmental priority in its diplomatic efforts. The third National Biodiversity Strategy relies on three principles: “sobriety” in the use of natural resources; coordination and alignment of public policies, private sector partnerships, and global interventions; and enhanced focus on implementation of policies.

							9. Corruption					

In line with President Macron’s campaign promise to clean up French politics, the French parliament adopted in September 2017 the law on “Restoring Confidence in Public Life.” The law bans elected officials from employing family members or working as a lobbyist or consultant while in office. It also bans lobbyists from paying parliamentary, ministerial, or presidential staff and requires parliamentarians to submit receipts for expenses.

France’s “Transparency, Anti-corruption, and Economic Modernization Law,” also known as the “Loi Sapin II,” came into effect on June 1, 2017. It brought France’s legislation in line with European and international standards. Key aspects of the law include:  creating a new anti-corruption agency; establishing “deferred prosecution” for defendants in corruption cases and prosecuting companies (French or foreign) suspected of bribing foreign public officials within France and abroad; requiring lobbyists to register with national institutions; and expanding legal protections for whistleblowers. The Sapin II law also established a High Authority for Transparency in Public Life (HATVP). The HATVP promotes transparency in public life by publishing the declarations of assets and interests it is legally authorized to share publicly. After review, declarations of assets and statements of interests of members of the government are published on the High Authority’s website under open license. The declarations of interests of members of Parliament and mayors of big cities and towns, but also of regions are also available on the website. In addition, the declarations of assets of parliamentarians can be accessed in certain government buildings, though not published on the internet.

France is a signatory to the OECD Anti-Bribery Convention. The U.S. Embassy in Paris has received no specific complaints from U.S. firms of unfair competition in France in recent years. France ranked 21 of 180 countries on Transparency International’s (TI) 2022 corruption perceptions index. See https://www.transparency.org/country/FRA.

### Resources to Report Corruption

The Agence Francaise Anticorruption (AFA) is charged with preventing corruption by establishing anti-corruption programs, making recommendations, and centralizing and disseminating information to prevent and detect corrupt officials and company executives. Its website can be found here: https://www.agence-francaise-anticorruption.gouv.fr/fr/guides-et-chartes. The AFA also has administrative authority to review the anticorruption compliance mechanisms in the private sector, in local authorities, and in other government agencies.

Contact information for Agence Française Anticorruption (AFA):

Director: Charles Duchaine23 avenue d’Italie75013 ParisTel : (+33) 1 44 87 21 14Email: charles.duchaine@afa.gouv.fr

Contact information for Transparency International’s French affiliate:

Transparency International France14, passage Dubail75010 ParisTel: (+33) 1 84 16 95 65;Email: contact@transparency-france.org

							10. Political and Security Environment					

France is a politically stable country. Large demonstrations and protests occur regularly and are sometimes organized to occur simultaneously in multiple French cities; these sometimes can result in violence. When faced with imminent business closures, on rare occasions French trade unions have resorted to confrontational techniques such as setting plants on fire, planting bombs, or kidnapping executives or managers.

Demonstration activity has continued across France since 2021, primarily driven by opposition to the government’s implementation of coronavirus restrictions, economic concerns, and the government’s pension reform efforts. Demonstrations increased by 61 percent in mainland France in 2021 and 257 percent in French overseas territories and Corsica. While some of these demonstrations turned violent or destructive, the vast majority — 98 percent — remained peaceful. Demonstrations against coronavirus-related restrictions first surged in November 2020, after President Macron announced a second nationwide lockdown, before surging again in March and July 2021, with the introduction of further restrictions, and peaking in August 2021. Since the beating — and subsequent death — of a high-profile imprisoned Corsican separatist in March 2022, 31 percent of demonstrations in Corsica turned violent or destructive. Police response included tear gas and water cannons. In October 2022, thousands took to French streets to decry government inaction over the high cost of living. The demonstrations erupted following weeks of “walkouts” that have crippled oil refineries and caused gasoline shortages. A series of general strikes and demonstrations began in France on January 19, 2023, organized by those opposed to the 2023 French pension reform bill proposed by the government. The strikes, which have continued to date through the first quarter of 2023, have led to widespread disruption, including garbage piling up in the streets and public transport cancelations.

Between 2012 and 2021, 271 people have been killed in terrorist attacks in France, including the January 2015 assault on the satirical magazine Charlie Hebdo; the November 2015 coordinated attacks at the Bataclan concert hall, national stadium, and streets of Paris; and the 2016 Bastille Day truck attack in Nice. Per the Secretary General of National Defense and Security (SGDSN), the terrorist threat in France remains “very high.”  Security services are concerned about “Sunni terrorism” and “ultra-right” groups and consider endogenous attacks (lone wolf attacks) to pose the most significant current threat.  Terrorist attacks have since been smaller in scale. French security agencies continue to disrupt plots and cells effectively. Despite the spate of recent small-scale attacks, France remains a strong, stable, democratic country with a vibrant economy and culture. Americans and investors from all over the world continue to invest heavily in France.

							11. Labor Policies and Practices					

France’s labor market is performing well despite the deteriorating economic outlook. In the last quarter of 2022, the unemployment rate in France stood at 7.2 percent of the active population. The rate is 1 point below its pre-pandemic level and at its lowest level since 2008.The unemployment rate for people aged 15 to 24 is still high but decreased to 16.9 percent, while the overall women’s unemployment rate reached 6.9 percent (men’s unemployment rate is 7.4 percent). According to the French Central Bank Monthly Business Survey, recruitment difficulties remain significant in January 2023, affecting 51 percent of businesses across all sectors, but these challengesare nonetheless receding gradually from their peak in September 2022.

Some sectors face growing recruitment difficulties even though the number of job seekers remains high. According to Dares, the research and statistical section of the French Ministry of Labor, in 2021, the intensity of hiring is the main cause of tension on the French labor market, followed by a shortage of trained labor in jobs considered attractive (executives, technicians, computer engineers), and the role of working conditions and wages in certain sectors and professions (construction, catering, nursing,etc.).

A February 2023 paper by Dares estimated that in 2019, 10.3 percent of French employees were union members, a 0.9 percentage point decrease compared to 2013. This is one of the lowest unionized work forces in the developed world. However, unions have strong statutory protections under French law that give them the power to engage in sector- and industry-wide negotiations on behalf of all workers. Any organizational change in the workplace must usually be presented to the unions for a formal consultation as part of the collective bargaining process.

In France, the Labor Court (**Conseil des **Prud’hommes in French) is responsible for settling individual conflicts between employers and employees related to the private law employment contract (including apprentices).The Labor Court is a joint jurisdiction since its judges are not professional judges, with mixed membership elected from two colleges: one by the employees and the other by the employers, each group electing the same number of councilors.

The “Professional Future” law of September 5, 2018, thoroughly reformed the apprenticeship system, raising the age ceiling (from 25 to 29),modifying the aid intended for employers, financing anapprentice training center, and creating the France Compétencesagency. The number of apprenticeships in France in 2022 reached837,000 (+14percent compared with 2021), including 811,500 in the private sector, according to March 2023 Labor Ministry figures. Apprenticeships, like vocational training, have been placed under the direct management of the government via the France Compétences agency.

The reform of unemployment insurance was adopted in 2019and postponed because of the COVID-19 pandemic. These measures include a new method for calculating the daily reference salary, the extension of the period of affiliation required for entitlement(from 4 to 6 months of work in the last 24 months), a 30 percent cut in benefits of higher wage earners in the seventh month, and a bonus-malus system on the employer’s contribution of unemployment insurance. In February 2023, new unemployment insurance reforms introduced a 25 percent reduction in the duration of entitlements for new entrants in the event of good economic conditions (an unemployment rate below 9 percent and a quarter-on-quarter change below 0.8 point). Therefore, the maximum duration of compensation is 18 months instead of 24 months. It also introduced a presumption of resignation in the event of job abandonment by the employee whereas it previously presumed a dismissal. According to a March 2023 report by Unedic – the non-profit organization that manages the unemployment insurance scheme, thescheme’s deficit disappeared by the end of 2022, leading to a surplus of$4.6 billion (€+4.3 billion)due to the end of the government’s COVID-19 partial unemployment scheme and as a consequence of the unemployment insurance reform. In 2023, with expenditures growing faster than revenues, the Unédic balance is forecasted to contract by$4 billion (€3.8billion), though remaining positive.

A pension reform bill was unveiled in January 2023,and wasadopted by government decreeon March 16 when Prime Minister Borne used article 49.3 of the French constitution, avoiding a vote within the lower house. However, it is currently facing widespread protests and is before the Constitutional Council for reviews at the time of report drafting (March 2023). France’s pension system relies on a pay-as-you-go structure in which workers and employers are assessed mandatory payroll taxes that are used to fund retiree pensions. The 2023 reform will maintain this structure and raise the legal age of retirement from 62 to 64 year. It also increases the number of years people must pay into the system before they can draw a pension. Debates in both chambers of the French Parliamentwere tense, and labor unions carried out nationwide strikes for more than two months.Public opinion polls have shown that most French citizens oppose this reform. Through the reform, the French government intends to place the pension system on a firmer financial footing as life expectancy rises and as the ratio of workers to retirees decreases. However, opponents dispute the need for urgency.

							12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs					

Given France’s high per capita income, investments in France do not qualify for investment insurance or guarantees offered by the U.S. International Development Finance Corporation (DFC).

							13. Foreign Direct Investment Statistics