Foreign Minister on how France is boosting its investment attractiveness
United States – Brexit/free-trade agreements – Speech by M. Jean-Marc Ayrault, Minister of Foreign Affairs and International Development, to the American Chamber of Commerce in France – AmCham (excerpts)
Paris, 29 September 2016
I can affirm here, because it’s an obvious fact you’re perfectly aware of, that our economies – those of the United States and France – are closely linked. In 2015, the United States became France’s second-biggest customer, and for many years it has been the leading foreign investor in France. American companies have a huge presence in our country and this creates jobs: more than 4,800 companies and 460,000 employees. More than 1,200 American subsidiaries in France export part of their production, amounting to €30 billion. This means I can affirm and reaffirm that France is an open, innovative country which is attractive to investment.
In 2015, France was the country that ranked third in Europe for hosting foreign investment. It comes top for industrial investment projects. It is also increasingly attracting financial players: Paris is continental Europe’s leading financial centre for asset management. I’m restating these facts because we hear a lot of gross distortions and prejudice about France, and I’m duty-bound to defend not only France but also the choice you have made to work in our country.
As regards France’s contribution to the United States’ economic development, it’s a very substantial one because the leading destination for French FDI, with €153 billion in stock at the end of 2013, is the United States. There are 3,500 French subsidiaries established in the United States, employing more than 600,000 people.
There’s reciprocity, and these figures testify to the calibre of our bilateral trade relationship. But we mustn’t content ourselves with this; we want to and can do more and better. Attractiveness, I know, is our common priority. And your chamber of commerce, in this respect, is a very useful source of advice, particularly through the regularly published French attractiveness barometers, which we study closely.
How can conditions for investment be further improved in France? I obviously want to hear what you’ve got to say on this subject and am counting on you to try and help me. I regularly participate in the French Strategic Attractiveness Council, which was set up a few years ago when I was Prime Minister. This is an important moment to look at what conditions would make this attractiveness stronger, more transparent and simpler.
The first major project we’ve embarked on involves speeding up administrative simplification. We’ve taken concrete steps, among other things to make trading easier through simplified procedures – I’m thinking of the paperless export customs procedures. We’ve also striven to make it easier for foreign company employees to enter and move around France – this has been done with the faster processing of visa applications. More broadly, we’ve tried to simplify economic activity itself, for example as regards the process for authorizing major energy projects. Companies are already seeing the results of these efforts. We’ll be stepping these up even further; the simpler things are, the more effective they’ll be.
Since 2013, we’ve also embarked on major projects to modernize and simplify labour law which are making it possible to be more flexible, to adapt and to do so more through negotiation and social dialogue. I think it allows us to take into account the specific nature of certain situations companies are in. Yesterday evening I met companies from the digital sector, and they feel strongly that this flexibility mustn’t be interpreted as a rollback of employees’ rights. It’s another approach, a different method and I think it’s necessary.
The third major project aims to stimulate innovation and the digital sector. France is recognized abroad for its ability to innovate. The government has committed itself to guaranteeing something unique to France which is a strength for our attractiveness, namely the R&D Tax Credit. It’s clear, simple and unconditional, and it’s a very significant asset for our competitiveness.
I was talking recently to the boss of the Saint-Nazaire shipyard, which builds magnificent cruise liners. He pointed out the strengths that enabled him to succeed. First of all, the strengths of the business itself, which has managed to reorganize and improve its competitiveness and ability to innovate, by providing the best technology and expertise. At the same time, he welcomed the reduction in labour costs, the establishment of the Competitiveness and Employment Tax Credit and the R&D Tax Credit, and also the laws that have enabled him, since 2013, to negotiate competitiveness agreements between the company and unions. It’s interesting that this international business based in Saint-Nazaire has managed to take up the challenge of industrial modernization by dint of its own energy, and that it’s managed to develop in a favourable environment. And American shipowners have been sure to place orders with this French company.
A report compiled by Capgemini and Altimeter at the beginning of the summer shows that Paris holds third place, after Silicon Valley and London, in the global innovation clusters ranking. For John Chambers, boss of Cisco, “France is Europe’s Silicon Valley”. Specific things illustrate these strengths, particularly Facebook’s decision to choose Paris in June 2015 as the location for its artificial intelligence research centre. It was also the choice for Alexion, which specializes in biotechnologies and the treatment of rare diseases and, in June 2015, opened its first R&D centre outside the United States, at the Necker Hospital Imagine Institute in Paris.
In order to innovate, we must also attract ever more talent to France. I’d like to quote the following figure, because France wants to be increasingly welcoming to foreign students. In 2015 – this is a first – France saw its number of foreign students pass the 300,000 mark, making it the world’s third-ranking country in this regard. The goal set by France and the United States in 2014 was to double student mobility between our two countries by 2025. This year, 17,000 American students are being hosted in France and 8,300 French students in the US.
We’ve also decided to make it easier for foreign students to integrate into the world of work in France. That’s the purpose of the “skills passport”, which, since March 2016, has facilitated the entry into France of foreigners with high potential. It was also with this in mind that the French Tech Ticket – a programme to attract foreign start-up entrepreneurs – was developed. Its first year group of 50 prizewinners – seven of them American – is currently being hosted by incubators in Paris. There will be 200 of them for the 2017 programme.
French Tech also means support for the internationalization of our Internet start-ups. On that subject, I had the opportunity last week to get an idea of the full potential and dynamism of the French Tech community in New York by visiting a French start-up, Datadog, based in the New York Times tower. It’s two young creatives who have kept an R&D office in France while being in New York, where they have potential for development, in particular with very easy access to finance. They’re currently in charge of 250 people, and it’s a very recent business. It’s another illustration of what talent can do. These young start-up bosses told me that when it comes to training engineers, they found the French training system to be more successful than the American system.
We’re also committed to attracting strategic operations to France. The prospect of Brexit puts this issue in a new light. As of now, businesses need a clear idea of the way ahead. And we have a duty to provide concrete solutions to businesses wondering about possibly settling in Europe. Our message is clear. We’re prepared to welcome new businesses and we offer especially attractive conditions to this end.
I remind you that we’ve devoted €40 billion to reducing labour costs, and we’ve also got the prospect of harmonizing corporation tax rates in Europe. The French rate is currently 33.3%, and we want to reduce it to 28% for Small and Medium-sized Enterprises in 2017, then for all businesses by 2020. Excluding Ireland, that’s the average rate in Europe, and in the Euro Area in particular. And together with the European Commission, work has been done on the corporation tax base, because there isn’t only the rate, there are also the bases on which these taxes are applied.
We’re soon going to establish a one-stop shop, to support businesses in a very practical way in their choices of location and give them the necessary information and support. This one-stop shop will be driven by our operator Business France, the Ile-de-France region, the City of Paris, the Greater Paris Metropolis and the Paris Chamber of Commerce and Industry. Moreover, the government has pledged to support the regions in building new international lycées [schools catering for pupils aged between approximately 15 and 18 years]. (…)./.