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France’s protectionist reputation is not entirely justified, given the open border policies that this key EU member state implements. In addition, many of the companies operating in France are foreign-owned—not to mention that power of foreign investors to influence prices on the Paris stock exchange.

Yet the reputation does exist and not entirely without reason. For centuries, French national leaders have pursued what is commonly referred to as a colbertiste policy of strong state intervention in both domestic and international business. In recent decades, this has been expressed through opposition by both conservative and progressive parties to what the French commonly refer to as ‘Anglo-Saxon’ capitalism, or the free-trade, neo-liberal approach that advocates letting market forces alone to dictate economic processes. One example is the global market for culture products (film, music, etc.). French authorities started to become concerned a few decades ago that the growing global domination of Englishlanguage products might undermine France’s long and proud heritage as a cultural force. The consensus in favour of protecting domestic artists ultimately led in the early 1990s to Culture Minister Jack Lang successfully negotiating a ‘cultural exception’ (exception culturelle) waiver exempting French cinema, music, and TV production from the kinds of restrictions that the WTO normally places on state aid. Instead, France follows a different set of rules (see Figure 3.8) ensuring that some of the receipts from any cultural activity taking place on national territory, i.e. when people go to watch Hollywood blockbusters, are recycled in the form of subsidies for French artists, whose outlets are further protected by a quota system forcing broadcasters to offer minimum thresholds of national output. The end result is that unlike many other similarly sized

Figure 3.8

(or even larger) countries, France’s cultural production continues, in quantitative terms at least, to punch above its weight.

Recent French business history also abounds with examples of protectionism. There is the country’s decades-long unwillingness to permit any significant reform of the EU's Common Agricultural Policy, which subsidizes French farmers but places a huge burden on the EU budget. Then in 2000, at a time when the banking sector was experiencing a wave of cross-border takeovers as companies tried to maximize their global presence, the French state preferred to broker a merger between two domestic banks (BNP and Paribas) to ensure continued national control. This was followed in 2003 by the French government’s formal categorization of 14 sectors as ‘strategic’, meaning that foreign shareholders would no longer be allowed to take a controlling share of companies operating in certain areas. This measure was not unprecedented, with other countries having adopted similar policies in relation to clearly strategic industries like energy—although even in this sector, it was remarkable that France used its new powers to prevent Italian energy company ENEL from taking over French consortium Suez only a few years after Electricité de France had acquired the Italian utility Montedison. What was striking about the new ‘strategic list’ was that it also included Danone, a food processing company that the French government protected from being taken over by PepsiCo, the American soft drinks maker. Decisions of this kind reflect the general support in France for intelligence économique, best translated as industrial espionage. Figures such as conservative Member of Parliament Bernard Carayon have built an entire media career around the idea that economics is a war that companies wage on governments’ behalf. In this view, it becomes legitimate to adopt any means necessary to advance national economic interests, even if this involves bending international trade rules.

The crises of 2008 and 2011–2012 did nothing to change the French approach, quite the contrary. Having learnt that it is dangerous to restrict trade during times of reduced economic activity (a policy that had worsened the Great Depression of the 1930s), most heads of state pledged this time around to avoid the temptation of protectionism. Yet once again, French leaders on both sides of the political spectrum showed an entirely different sensitivity. In 2009, for instance, conservative president Nicolas Sarkozy announced that he would only provide additional loans to French automaker Renault if the company promised to close a plant it was operating in Slovenia to move production back home. Two years later, the French Socialist Party declared that if its candidate, François Hollande, were to win the 2012 presidential election (which he ultimately did), it would require that labour, environmental, and other standards be built into world trade rules, failing which it would try to increase import tariffs on non-European partners lacking such standards (Taylor 2011). Whether this is analysed as a new form of mercantilism or simply as common sense in re-establishing a level playing field, there can be no doubt that in terms of the relationship between globalization and state power, France continues to march to the beat of its own drum.


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