In 2020, France’s foreign trade deficit reached 82.5 billion, according to Eurostat. A double record: historic for France since 1982; European too, never has a country experienced such a large trade deficit. The pandemic has a lot to do with it, but not for the most part. Aeronautics, which represents on average 12% of French exports, fell and imports of masks represented 5.9 billion euros in 2020.
French exports have regained 95% of their pre-crisis value
In 2021, things should go a little better: in the first half of the year, France imported only 500 million masks, aeronautics is gradually picking up colors, but remains at half of previous orders. According to customs, in June, French exports regained 95% of their pre-crisis value. It is time: in the first quarter, the deficit widened further: -34.8 billion, against -32.4 in 2020. The energy bill followed the rise in prices (+4.8 billion) while the imports of manufactured goods increased with the increase. resumption of demand.
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French competitiveness decline
France is also benefiting from the global recovery: agrifood (+ 5%), chemicals (+ 4%), pharmaceuticals (+ 6%), armaments (+ 34%) exceed 2019 figures for the first half. In China, French sales are higher by + 10% before the crisis. It is with the rest of the European Union that the deficit worsens: – 1.2 billion. This shows that the decline in French competitiveness is due to the characteristics of the French economy and not to the Euro or to globalization.
For more than fifteen years, French foreign trade has been in deficit, France’s market shares have been declining. This is not the case for most European economies, such as the Netherlands, Italy, Ireland, Poland, Sweden, or Belgium, whose trade balances are positive. Germany, above all, despite the health crisis, is accumulating a trade surplus of +180 billion euros in 2020.
Europe, a structural surplus with third countries
The European Union is experiencing a structural surplus with third countries. The European trade balance is regularly in surplus of more than 200 billion euros. China has become the first trading partner, ahead of the United States, the United Kingdom and Switzerland, then Russia, Turkey, Japan, South Korea and India.
This undermines a received idea: the opening of the European Union market would be harmful and Europeans would be naive. First world market (20% of the world economy) the European Union is the most open economy, the one which has signed the most trade agreements in the world. In all 45 agreements, not to mention the internal agreement which is the single market.
Having the most open economy in the world is not a handicap
After the EU, there are the United Kingdom (35), Iceland, Switzerland, Norway and Chile with 30 agreements. The United States has only 14 trade agreements (the EU and the United States are not bound by a trade agreement) and has a trade deficit with Europe (-150 billion) as with China. When we draw a map of “open” and “closed” countries, we see that poor countries are in the second category. Trade agreements are least numerous in Africa and the Middle East.
Those who believe that the European economy or the French economy is too open and dream of a protectionist return should observe that closed countries suffer more than others. The difference in performance vis-à-vis global competitiveness clearly shows this.
Two positive points for France: on the one hand, there are more French exporting companies than ever before, 132,000. On the other hand, the exchange of services is picking up again: +12 billion against +6 billion in 2019. France is gradually returning to its pre-crisis level (+16 billion)
Because the trade balance is only one of the components of the balance of current payments, the true balance of the “France company” includes services and in particular tourism. The balance of payments of France is unfortunately very negative, of -53 billion in 2020, services do not compensate for the trade deficit.
Looking at the performance of our neighbors, it is urgent to question the weaknesses of the French economy. And to remedy this: industry, training, cost competitiveness, robotization, positioning on foreign markets.
