France focuses on rebuilding its economy in the wake of World War I. Trade policy is largely protectionist. Exports are primarily of luxury goods, although poor harvests hamper wine production. With a weakening currency, France cannot afford many imports.
In the wake of the Depression, France maintains the gold standard. As other currencies decline in value relative to the franc, French exports become more expensive. Exports fall to less than two-thirds of imports. A reluctance to borrow to modernize equipment means an inefficient agricultural sector and increased agricultural imports.
France abandons the gold standard. A devaluation of the franc helps increase exports. The structure of exports shifts from light toward heavy industry and agricultural products, sold primarily to Western and Central Europe. The United States supplies imports of raw materials. France also trades heavily with its colonies, importing raw materials and exporting manufactured goods.
Trade collapses under the German occupation and the Vichy regime. Germany requisitions most of France's resources. Agricultural production is disrupted as young men go to war and fighting spreads throughout the country. The American and British markets are closed off.
Physical damage forces France to cast aside its traditional protectionist attitudes. Transportation networks and ships must be rebuilt. Poor harvests aggravate already low production on mine-infested agricultural land. France must import bulky coal, grain, and feed with high shipping costs, and imports rise to five times the level of exports. Loans finance the trade deficit.
With the passage of the General Agreement on Tariffs and Trade in 1948, France removes quantitative restrictions on half of its private trade with other European countries, despite strong resistance from groups that benefit from protectionism. Loans and a reduction in coal shortages and other industrial bottlenecks enable an increase in exports, which benefit from specific credits and subsidies.
The Treaty of Rome establishes the European Economic Community. Member states establish a common integrated tariff system. Duties are applied to non-EEC countries' imports. The franc's devaluation helps exports increase greatly. France must turn to expensive oil supplies, in part from Venezuela, when the Middle East refuses to supply oil after the Franco-British attempt to retake the Suez Canal.
Membership in the EEC and rapid decolonization change the pattern of trade. The EEC's industrialized nations provide a large market for France's agricultural products. By 1969, France provides 42 percent of the EEC's agricultural exports. The government, however, remains the principal buyer of high-tech products such as military aircraft, nuclear weapons, and nuclear power.
Industrial exports, particularly of cars, chemicals, pharmaceuticals, and aircraft, rise. France also sees an agricultural boom and becomes the world's second agricultural exporter after the United States. The 1975 Lomé Convention formalizes bilateral agreements in which European Community countries extend export concessions to their former colonies.
France's economic crisis does not spare its trade sector. OPEC's price increases and the overthrow of the Shah of Iran drastically reduce France's oil imports from the region. France builds up its nuclear power capacity, but still must import expensive oil from other regions.
Persistent inflation lowers the value of the franc against other major currencies and drives up the price of imports. The trade deficit grows dangerously until 1991. The global economic slowdown leads France to reduce its imports and thus regain a positive trade balance. Trade surpluses continue past the global recession.
The establishment of the European Single Market brings free movement of people, goods, services, and capital across Europe and opens up an area of 376 million consumers to French companies. A new ratification of the GATT includes agriculture, services, and intellectual property, but not cultural materials (such as films), long a controversial issue in France.
France represents 6 percent of world trade. In general, trade policies are determined by European Union agreements and practices. The government investigates ways to promote exports more aggressively, especially to markets in East Asia and Latin America. France continues to extend varying preferential tariff treatment to imports from the African, Caribbean, and Pacific developing countries.
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