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France In brief… The political foundations of contemporary France go back to the 1789 revolution. France was a founder member of the EU and has been in the vanguard of European integration. The French economy, alongside the UK, is the second-largest in Western Europe and is around three-quarters of the size of the German economy. Political structure…The constitution of the Fifth Republic came into force in early 1959. The president (currently Mr. Jacques Chirac) is elected by universal suffrage for a five-year term. Parliament comprises two chambers: the Senate (the upper chamber), members of which are elected by an electoral college and serve for nine years (with one-third retiring every three years); and the more important National Assembly (the lower chamber), to which deputies are elected by universal suffrage and which serves for a five-year term (although it may be dissolved by the president). The current government is a centre-right administration. Full name: French Republic Population: 62.9 million (Including overseas territories) Capital: Paris Area: 551,670 sq. km. (220,668 sq. mi.) Major language: French Major religion: Christianity Monetary unit: 1 euro = 100 cents Main exports: automobiles and automobile spare parts, aircraft, pharmaceuticals, electronic components, wine, electric components Per capita GDP at PPP (2005 est.):US $29,087. Internet domain: .fr International dialing code: +33 Policy issues…Medium-term challenges are to reduce the budget deficit and to make further inroads into the rate of unemployment, which remains high even by EU standards. This will require wide-ranging reforms to the country’s tax and benefits system, to public administration and to the legal framework for the labour market, to which social resistance will be high. On Sunday 29 May 2005, the French voted against the draft Treaty establishing a Constitution for Europe. According to the final results published by the Ministry of the Interior, 54.68% of the French voted “no” at the referendum whilst 45.32% voted in favour. The 2007 French presidential election will be the ninth such election of the Fifth French Republic. The first round will take place on Sunday, April 22, 2007, with a second round on Sunday, May 6, 2007. The two favourite candidates seem to be Mr. Nicolas Sarkozy, current Minister of Interior and leader of President Chirac's own party, the right-wing UMP – Union for a Popular Movement, and Mrs. Ségolène Royal, who was elected on November 16, 2006 by the members of the left-wing Socialist Party to contest the election. The ‘outsider’ (center right) is François Bayrou, leader of UDF – Union pour la démocratie française. Economy… France is in the midst of transition, from a well-to-do modern economy that has featured extensive government ownership and intervention to one that relies more on market mechanisms. The government has partially or fully privatized many large companies, banks, and insurers. It retains controlling stakes in several leading firms, including Air France, France Telecom, Renault, and Thales, and is dominant in some sectors, particularly power, public transport, and defense industries. The telecommunications sector is gradually being opened to competition. France's leaders remain committed to a capitalism in which they maintain social equity by means of laws, tax policies, and social spending that reduce income disparity and the impact of free markets on public health and welfare. The government has lowered income taxes and introduced measures to boost employment and reform the pension system. In addition, it is focusing on the problems of the high cost of labor and labor market inflexibility resulting from the 35-hour workweek and restrictions on lay-offs. The tax burden remains one of the highest in Europe (43.8% of GDP in 2003). In 2005, the lingering economic slowdown and inflexible budget items have pushed the budget deficit above the Eurozone's 3%-of-GDP limit. The tax burden rose through much of the 1990s and is now well above the EU average. Two surcharges on corporation tax were introduced in 1995 and 1997 to help France qualify for economic and monetary union, but these have now been eliminated. The standard rate of corporation tax is 33.3%. The standard rate of value-added tax (VAT) was cut from 20.6% to 19.6% in April 2000. Rates of income tax have been falling for several years (particularly at the top end), but fiscal constraints will prevent the government from honouring its pledge "to cut income taxes by a third" during the current parliamentary term. Foreign trade…France is the fourth-largest exporter of goods and the third-largest exporter of services in the world. The value of goods exports in 2004 totalled US$421.1bn, while the import bill reached US$429.1bn, resulting in a trade deficit of US$7.9bn. As has been the case for several years, France posted surpluses on the services and investment income balances. Nevertheless, the current account recorded a deficit of US$4.8bn, or 0.2% of GDP. US-French relations…Relations between the United States and France are active and cordial. Mutual visits by high-level officials are conducted frequently. Bilateral contact at the cabinet level has traditionally been active. France and the United States share common values and have parallel policies on most political, economic, and security issues. France opposed the use of force in Iraq in March 2003 and did not join the U.S.-led coalition. As in several European countries, US role in Iraq led to an increased anti-Americanism in France or more precisely a rejection of President Bush’s administration1. Despite differences over Iraq, the U.S. and France continue to cooperate closely on many issues, most notably on counterterrorism, efforts to stem the proliferation of weapons of mass destruction (WMD), and on regional problems, including in Africa, Lebanon, and Kosovo. France is also one of NATO’s top three troop contributors. 1 See www.transatlantictrends.org Trade and investment between the U.S. and France are also strong. On average over $1 billion in commercial transactions take place between France the U.S. every day. In 2004 U.S. exports to France totaled over 22.4 billion euros and U.S. imports from France were valued at 23 billion euros. France is the ninth-ranked supplier worldwide to the U.S. and its 10th largest customer. The U.S. is France’s third-ranked supplier and its fifth largest customer. There are approximately 2,300 French subsidiaries in the U.S., providing more than 500,000 jobs and generating an estimated $160 billion turnover. U.S. companies in France employ about 580,000 French citizens. The U.S. is the top destination for French investments worldwide.