Q. – What’s your assessment of the half-year results for foreign trade?
THE MINISTER – The June deficit was one of the lowest for three years. As for the overall balance of the six months, it’s encouraging, and I’ll refer to three key indicators. The non-energy trade deficit was down 40% compared to the first half of 2012; the overall deficit shrank by 16% compared to the same period; and this six-month deficit is below the symbolic barrier of €30 billion – a level never achieved since 2010.
Q. – In this context, do you envisage a trade deficit below €60 billion at the end of the year?
THE MINISTER – I don’t think in terms of annual targets, because the one the Prime Minister set me is for the end of the five-year term. So I’m sticking more than ever to the target of a non-energy trade balance by 2017. And given the results of this first half-year, I’m convinced we’ll achieve it.
Q. – The trend in exports is still disappointing (-1.2% in the first six months)…
THE MINISTER – Our exports began rising again in June after tailing off in May. Performance is good in the food, aerospace and pharmaceutical industries. Unsurprisingly, given the weak economic activity in the Euro Area at the beginning of the year, the automotive, metallurgy and capital goods industries suffered. Overall, exports to the European Union dropped further in this six-month period. The fierce competition waged by the emerging countries (China, Korea, Turkey) also eroded our market share in Africa. I intend to put great effort into encouraging trade with that continent. In the past year we’ve been putting a lot of emphasis on Latin America and South-East Asia, and those efforts are paying off. Exports to Latin America in particular have jumped 14% compared to the first half of 2012.
Q. – How do you see things developing in the coming months?
THE MINISTER – Foreign trade will be an important driver of growth in 2014. The first reason for feeling optimistic is the Euro Area’s gradual emergence from recession and, in particular, the expected improvement in the situation in Italy and Spain; these will enable us to regain natural trading partners. The second factor is our efforts to improve competitiveness. France has already closed some of the gap built up with Germany since 2005. This 10-point gap in terms of cost competitiveness is closing substantially, in particular thanks to the competitiveness and employment tax credit. We must continue to carry out these reforms.
Q. – The IMF even believes France must speed up the reforms in order to strengthen its competitiveness, and abandon the tax rises planned in the budget in 2014…
THE MINISTER – The IMF has given France a good score. It says the reforms undertaken are significant and on the right track. I’m thinking in particular of the competitiveness and employment tax credit. It also believes that two-thirds of the efforts to be made to reduce the structural deficit in our public finances have been embarked on. In the 2014 budget, we’re going to put the emphasis on expenditure savings, which will account for 70% of the recovery effort compared to 30% for increased contributions. As for the structural reforms, let me reassure you that they’re not over yet. We’re going to continue implementing them. The pensions reform will be a decisive project in this respect.
Q. – Won’t it increase labour costs and therefore again penalize competitiveness in France?
THE MINISTER – We’re going to use every lever to resolve the long-term funding of pensions. The President has already said the lever of the length of the contribution period can be considered, but not that of the legal retirement age. As for the short-term funding measures, which have yet to be agreed, I believe we must avoid damaging companies’ competitiveness.
Q. – Does that mean you defend the rise in the CSG (1) rather than in pension contributions?
THE MINISTER – I repeat: companies’ competitiveness must be looked at very carefully./.
(1) Contribution sociale généralisée, supplementary social security contribution in aid of the underprivileged.