BUSINESS ENVIRONMENT PROJECT

ON
FRANCE

SUBMITTED BY :
SAHIL POPLI
21/153

Economy Overview

Region

OECD high
income

Income Category High income

Population

66,028,467

GNI Per Capita 42,250

(US$)
City covered

Paris

France has been a WTO member since 1 January 1995 and a member of
GATT since 1 January 1948. It is a member State of the European Union
(more info). All EU member States are WTO members, as is the EU (until
30 November 2009 known officially in the WTO as the European
Communities for legal reasons) in its own right.

THE BUSINESS ENVIRONMENT

Rankings on Doing Business topics - France (Scale: Rank 189 center, Rank 1 outer edge)

How France and comparator economies rank on the ease of doing business

Market Entry Strategy

In general, the commercial environment in France is favorable for sales of U.S. goods
and services. Marketing products and services in France is similar to the approach in
the United States, notwithstanding some significant differences in cultural factors and
certain legal and regulatory restrictions. However, because the French market is
sophisticated with the entrenched bias of a conservative market that sticks to known
suppliers and therefore requires sustained market development, entry should be well
planned. Competition can be fierce, but local partners are readily available in most
sectors and product lines.
In addition to this Country Commercial Guide, the Commercial Service office in
Paris offers many services and customized solutions designed to assist you in
developing your market entry strategy and to facilitate your export experience in
France

Market Opportunities
France is an economically developed nation with a large, diverse and sophisticated
consumer base. It has a strong manufacturing sector that seeks out quality
components from foreign suppliers. Finally, its comparatively affluent populace is a
leading consumer of services, particularly in the educational and travel sectors. It
should be noted that while the overall French market can be viewed as essentially
similar to the U.S. market, the individual French consumer of products and services is
very discriminating and care and planning are essential to success for U.S. exporters
in this market.
There are significant market opportunities for consumer food/edible fishery products
in a number of areas: fruit juices and soft drinks (including flavored spring waters),
dried fruits and nuts, fresh fruits and vegetables (particularly tropical and exotic),

frozen foods (both ready-to-eat meals and specialty products), snack foods, tree nuts,
"ethnic" products, seafood (particularly salmon & surimi), innovative dietetic and
health products, organic products, soups, breakfast cereals, and pet foods. In addition,
niche markets exist for candies, chocolate bars, wild rice, kosher, and halal foods.
Market opportunities for U.S. exporters also exist for oilseeds, protein meals and
other feeds, as well as for wood products and grains. Socio-economic and
demographic changes continued to alter food trends in France. French consumers
desire innovative and more convenient foods offering quality image, better taste, and
increased health benefits. France offers market opportunities for U.S. suppliers in a
number of areas such as fish and seafood, processed fruits and vegetables (including
fruit juices), beverages (including wine and spirits), dried fruits and nuts, but also
confectionery products, wild rice, organic products, kosher and halal foods.

Market Challenges
Foreign investors say they find Frances skilled and productive labor force, good
infrastructure, technology, and central location in Europe attractive. Frances
membership in the European Union (EU) and the Eurozone (as the 18 countries that
use the Euro currency are known) facilitates the movement of people, services,
capital, and goods. However, notwithstanding French efforts at economic reform,
market liberalization, and attracting foreign investment, perceived disincentives to
investing in France include the tax environment, high cost of labor (with the
minimum wage, called the SMIC for Salaire Minimum Interprofessionnel de
Croissance, at 1,445 per month), rigid labor markets, and occasional strong negative
reactions toward foreign investors planning to restructure, downsize or close. The
2013 AmCham-Bain Barometer (an annual study conducted by the American
Chamber of Commerce in France and Bain & Company), released in October 2013,
details U.S. businesses concerns about some of Frances economic policies under
President Franois Hollande (in office since May 2012), notably the lack of
predictability in economic and budget policy and increased complexity of the tax and
labor regimes,

POLITICAL ENVIRONMENT

The French Constitution:

France is a republic; the institutions of governance of France are defined by
theConstitution, more specifically by the current constitution, being that of the Fifth
Republic. The Constitution has been modified several times since the start of the
Fifth Republic, most recently in July 2008, when the French "Congress" (A joint
convention of the two chambers of Parliament) approved - by 1 vote over the 60%
majority required - constitutional changes proposed by President Sarkozy.
The Fifth Republic: The fifth republic was established in 1958, and was largely the
work of General de Gaulle - its first president, and Michel Debr his prime minister.
It has been amended 17 times. Though the French constitution is parliamentary, it
gave relatively extensive powers to the executive (President and Ministers) compared
to other western democracies.
The executive branch:
The head of state and head of the executive is the President, elected by universal
suffrage. Since May 2012, France's president is Franois Hollande. Originally, a
president of the Fifth Republic was elected for a 7-year term (le septennat),
renewable any number of times. Since 2002 the President has been elected for a 5year term (le quinquennat). Since the passing of the 2008 Constitutional reform, the
maximum number of terms a president can serve has been limited to two.
The President, who is also supreme commander of the military, determines policy
with the aid of his Council of Ministers (Conseil des ministres). The residence of the
President of the French Republic is the Elyse Palace (le palais de l'Elyse) in Paris.
The President appoints a prime minister (currently - 2012 - Jean-Marc Ayrault) ,
who forms a government. The residence of the French Prime Minister is at Matignon
House (l'Htel Matignon) in Paris.
In theory ministers are chosen by the PM; in practice unless the President and the PM
are from different sides of the political spectrum (a system known as la cohabitation),
PM and president work together to form a government. The President must approve
the appointment of government ministers.
The cabinet, le Conseil des ministres, meets on a weekly basis, and is presided over
by the president. Ministers determine policy and put new legislation before
Parliament in the form of bills (projets de loi); within the framework of existing law,
they apply policy through decrees (dcrets).
The legislative branch:
The French parliament is made up of two houses or chambers. The lower and
principal house of parliament is the Assemble nationale, or national assembly; the
second chamber is the Snat or Senate. Members of Parliament, called Dputs, are
elected by universal suffrage, in general elections (lections lgislatives) that take
place every five years. Senators are elected by "grand electors", who are mostly other

local elected representatives. The electoral system for parliamentary elections

involves two rounds; a candidate can be elected on the first round by obtaining an
absolute majority of votes cast. The second round is a runoff between two or more
candidates, usually two.
In 2014, the left-wing Socialist party have a majority in both houses. However,
following the municipal elections, the Socialists may well lose their majority in the
Senate in September 2014. Senators are chosen by "grands lecteurs", notably by
mayors and other locally elected representatives.
The judicial branch:
While the Minister of Justice, le Garde des Sceaux, has powers over the running of
the justice system and public prosecutors, the judiciary is strongly independent of the
executive and legislative branches. The official handbook of French civil law is
theCode Civil.
Promulgation of laws:
New bills (projets de loi), proposed by government, and new pivate members bills
(propositions de loi) must be approved by both chambers, before becoming law.
However, by virtue of Article 49.3 of the French constitution, a government can
override parliamentary opposition and pass a law without a parilimentary vote. This
does not happen frequently, and in the framework of constitutional amendments,
president Sarkozy curtailed the possibility of using 49.3.
Laws and decrees are promulgated when the official text is published in the Official
Journal of the French Republic, le Journal Officiel.
The Constitutional Council
The Constitutional Council , le Conseil constitutionnel, exists to determine the
constitutionality of new legislation or decrees. It has powers to strike down a bill
before it passes into law, if it is deemed unconstitutional, or to demand the
withdrawal of decrees even after promulgation. The Council is made up of nine
members, appointed (three each) by the President of the Republic, the leader of the
National Assembly, and the leader of the Senate, plus all surviving former heads of
state.
Political parties;
In 2014, France is governed by the Socialist Party and allies..
The main political parties are:
On the right: The Popular Union Movement (UMP - Union pour un Mouvement
Populaire),
Centre right: the New Centre (Nouveau Centre), and the Union of Democrats and
Independents (launched in 2012) l'Union des dmocrates et indpendants,
Centre : The Democratic Movement (Mouvement Dmocratique, MoDem)
On the left: the Socialist party (Parti Socialiste, PS) - since June 2012 the party in

power.
The French Communist Party (parti Communiste Franais - PCF).
The Green Front (Front National). Party (EELV - Europe Ecologie Les Verts)
France also has some surprisingly resiliant extremist parties on the left and on the
right, including the NPA (Nouveau parti anticapitaliste) and the trotskyist Workers'
Party (Lutte ouvrire), and the National

LEGAL ENVIRONMENT
1. The nature of legal systems
Unlike English-speaking countries, which use a system of "Common Law", France has a
system of "Civil law".
Common law systems are ones that have evolved over the ages, and are largely based on
consensus and precedent. Civil law systems are largely based on a Code of Law.
Worldwide, Common Law forms the basis of the law in most English-speaking countries,
whereas Civil law systems prevail in most of the rest of the world, with the notable
exception of many Islamic nations and China.
In line with the democratic principle of the separation of powers, the French judiciary although its members are state employees - is independent of the legislative authority
(government).

2. The origins of the French legal system

The basis of the French legal system is laid out in a key document originally drawn up in
1804, and known as the Code Civil, or Code Napolon, (Civil code or Napoleonic code)
which laid down the rights and obligations of citizens, and the laws of property, contract,
inheritance, etc.. Essentially, it was an adaptation to the needs of nineteenth-century France
of the principles of Roman law and customary law. The Code Civil remains the cornerstone
of French law to this day, though it has been updated and extended many times to take
account of changing society. There are other codes, including notably the Code Pnal, or
Penal code, which defines criminal law.

3. The making of law

Laws in France, as in other democratic countries, are generally proposed by the Government
of the day, and must be passed by the two houses of the French Parliment, the National
Assembly and the Senate. They become law as from the date on which they have been
passed by Parliament, signed into law by the President, and published in the Journal
Officiel, or Official Journal. Statutory instruments (dcrets, ordonnances) become law on
signing by the minister(s), and being published in the Journal Officiel. Publication in the
electronic version of the J.O. is sufficient.

4. The two branches of French law

Unlike the English-speaking countries, France has a dual legal system; one branch, known
as Droit public, or Public law, defines the principles of operation of the state and public
bodies. This law is applied generally through public law courts, known as les Tribunaux
administratifs. The other system, known as Droit priv, or private law, applies to private
individuals and private bodies.
4.1. Private law - le droit priv
This is the basic law of the land. It is administered through the judicial courts.
There are two judicial channels, a) those dealing with civil litigation, and b) those dealing
with criminal offences
a) Basic civil litigation concerning private individuals is dealt with by a local court, known
as a Tribunal d'Instance, or by a regional or departmental court known as aTribunal de
Grande Instance (TGI), depending on the importance of the case. Commercial and business
law is administered through institutions known asTribunaux de commerce. These are known
as "first degree courts".
Appeals are heard in a Cour d'Appel or Court of Appeal, a "second degree court". In France,
there is a fundamental right of appeal in all cases. In exceptional circumstances, judgements
of the Appeal Court can be contested at the highest level, the Cour de Cassation, the French
Supreme Court in matters of private law.
b) Everyday offences and petty criminal matters are generally dealt with either by aJuge de
proximit (a local magistrate) or a Tribunal de Police (police court); more serious matters
will be referred to the Tribunal Correctionnel, the criminal law equivalent of the TGI. The
most serious criminal offences, notably murder and rape, will be referred to a Cour
d'Assises, or Assize court, where they will tried by jury.
4.2. Public law - le droit public
Complaints or litigation concerning public officials in the exercise of their office are heard
in Tribunaux Administratifs, or Administrative Courts. For example, universities or public
academic institutions are regularly taken to court over claimed irregularities in the
organisation of exams. As in the private law system, appeals can be lodged, in this case with
the Cour administratif d'appel, or Administrative appeals court. The highest echelon, the
Supreme Court for public law, is the Conseil d'Etat, or Council of State, the body ultimately
responsible for determining the legality of administrative measures.

5. How the courts operate in France

French courts are presided over by Juges (Judges) also known
as Magistrats(magistrates). Magistrats, are highly qualified professionals, almost all of
whom have graduated from the postgraduate School of Magistrature; they are high-ranking
juges . In other words, a French Magistrat is not at all the same as a Magistrate in the
English legal system.
Criminal court proceedings can be overseen by a juge d'instruction. The judge who is
appointed to the case is in charge of preparing the case and assessing whether it should
come to court. In legal jargon, this system is known as inquisitorial, as opposed to
the adversarial system used in Common Law legal systems.
In court, the judge or judges arbirate between the the prosecution and the defence, both of
which are generally represented by their lawyers, or avocats. The French judicial system

does not have recourse to juries except in assize courts.

If the case goes to appeal, the arguments of the prosecution and the defence are taken over
by appeals specialists known as Avous.

6. Ongoing reforms
In 2008, President Sarkozy announced plans to further reform and streamline the French
judiciary. Among the reforms are plans to reduce the number of courts, move court
procedures towards a more adversarial system, and to get rid of the system of avous in the
courts of appeal. This change has not yet been implemented.
One reform recently tried out in a couple of Tribunaux correctionnels (criminal courts)
was the introduction of trial by jury, previously limited to the assize courts. Juries in this
case were made up of six members of the public, and three magistrates. But in 2013, the
socialist administration of Franois Hollande decided to scrap this reform, claiming the
process was expensive, slowed down the judicial procedure, and did not produce any
significant change in results.

7. Getting a lawyer in France

If you wish to take legal action against someone or against an institution, if someone is
taking legal action against you (civil litigation), or if criminal charges have been brought
against you (for example for reckless driving), you may need to find a lawyer (trouver un
avocat)..
The consular services of the British, United States and other embassies in Paris, and
consulates in other cities, can often point you in the direction of an English-speaking lawyer.
There are a number of English-speaking lawyers practicing in France, including British and
American lawyers, qualified to practise as lawyers in France; though they are not to be
found in every town or city, far from it. To find one, check the local yellow pages, or contact
the local Tribunal d'Instance.
Alternatively, contact a local French lawyer specialising in the appropriate field of law :
family law, inheritance law, property law, etc. In the end, proximity and competence are
usually more important than having an English-speaking lawyer; after all, your lawyer will
be pleading in a French court. And many French lawyers do have a basic ability to speak
English.
For companies, the situation is easier, and there are growing numbers of international
corporate law firms, including some very big ones, established in Paris, Lyon, Toulouse and
other big cities. For details contact the local consulate, the Tribunal de commerce, or the
Chamber of Commerce. The Franco-British chamber of commerce has a list of a number of
international business law firms in France.
Legal Aid
Legal aid is easier to obtain, and cheaper, in France than in many other countries. A useful
first port of call for anyone wanting legal aid is the Maison de Justice, usually attached to
the local Tribunal d'Instance.

Social protection schemes and

benefits & Labor disputes indicator
Availability of unemployment protection
scheme?
Health insurance existing for permanent
employees?
Availability of courts or court sections
specializing in labor disputes?

Data
Yes
Yes
Yes