There are many things an economic policymaker can admire about France. The European Union’s (EU) second-largest economy is quasi-autonomous for electricity production, in large part thanks to a long-standing civil nuclear program. France hosts globally competitive multinationals in diverse sectors including aeronautics and finance. The commitment to having an independent military-industrial complex has fostered a tradition of strategic thinking on economic security. Its long coastline is served by many international shipping routes and its firms enjoy near-full mutual market access with all of France’s neighbors.

Yet working with France has sometimes been challenging for US officials. Where Washington sees an obvious case for alignment, France will sometimes assert independence. There is a consistent thread from General Charles de Gaulle’s assertive policies to President Emmanuel Macron’s semi-successful push for the EU to embrace strategic autonomy from everyone, including the United States. Macron’s cause célèbre is already getting a second hearing now that President Donald Trump will be returning to the White House.

Understanding how France “does” economic statecraft will be crucial for US and other Western policymakers in the months and years ahead. Therefore, over three months, we have conducted interviews with the relevant teams in Paris, Brussels, and Washington DC, which agreed to meet despite very busy schedules. The goal of this piece is to represent how these teams are organized and how they think about their issues.

Before delving in, it’s worth knowing the basics about France’s place in the global economy.

France produces competitive exports in the sectors in which it is specialized: aeronautics, beverages, and cosmetics. In these sectors, France is among the top five countries in terms of quality ranking, indicating high non-cost competitiveness. However, these export sectors make up less than 20 percent of France’s export revenues. The rest of France’s exports (mainly in electrical equipment, machinery, vehicles, plastics, and pharmaceuticals) have more average quality rankings and these have deteriorated over time. This makes French exports sensitive to cost competitiveness—which has been a problem in recent decades because of high unit labor costs. President François Hollande’s Tax Credits for Competitiveness and Jobs (CICE), as well as other steps taken toward flexibility in the labor market by Macron, have gone some way in addressing this. Even without the scale advantages of the US market, the French start-up ecosystem has produced unicorns like BlaBlaCar in the sharing economy and Mistral.AI—the highest-valued artificial intelligence (AI) firm based outside the San Francisco Bay area.

Still, France’s trade deficit, which has grown since the mid-2000s, remains a persistent concern for French voters.

France’s manufacturing sector relies heavily on foreign inputs. The French Treasury estimated that 40 percent of manufacturing inputs were imported in 2020, albeit predominantly from other European countries. The energy sector is the most dependent on non-EU inputs, relying on crude oil imports. The textile industry has seen the largest growth in import dependency over the past two decades, with more than 60 percent of inputs imported. The textile sector is the most dependent on Chinese inputs, followed by the electronics and transport sectors.

Meanwhile, high social spending—the legacy of COVID-19—has left France with a heavy debt pile. Paris has struggled to bring down deficits even as COVID-related and other price shields brought in at the beginning of Russia’s full-scale invasion of Ukraine have been phased out. The short-lived Michael Barnier government has already fallen before passing a budget for 2025. The successor François Bayrou government will probably succeed in passing a late budget, but with little margin for savings. Along with being costly, France’s debt can affect its credibility in EU debates. Yet it would be a big mistake to underestimate French influence in Brussels. Our journey through French economic statecraft will take us there first.

France and EU economic statecraft

Through its membership in the EU, France participates fully in the Customs Union and the border-free Schengen Area. Any targeted sanction—such as an asset freeze or a travel ban—must therefore be applied in the whole EU, though implementation is carried out by national immigration and customs authorities. Even for a well-established EU tool like sanctions, the fact that they belong to foreign policy means that member state unanimity is required for renewal every six months. Teams at the European External Action Service (EEAS) decide whom to sanction—and national diplomats on loan are heavily present there. France’s permanentrepresentation tries to get involved early to avoid the leak of draft proposals that are difficult for France. Trade and regulation policy, on the other hand, tends to rely on qualified majority voting (QMV) in the Council of the EU. A timely example of this is France’s current effort to slow or block the ratification of the EU-Mercosur trade agreement by working with other member states with strong agricultural sectors.

Russia’s full-scale invasion of Ukraine forced France and the EU to beef up their activities in most of these clusters, while causing few if any recriminations regarding who’s in charge. The French interministerial process run by the General Secretariat for European Affairs(SGAE) in Paris and the permanent representation in Brussels have allowed France to bring a quick end to the rare initiatives that might have disproportionately affected the French economy, such as sanctioning Rosatom.

Perhaps counterintuitively, tensions have arisen more frequently in abstract discussions about which tools the EU should equip itself with next. The division of labor between the EU and national powers becomes muddier as newer tools are explored. National security remains the preserve of member states and is not as well defined in the treaties of the European Union as it is in the General Agreement on Tariffs and Trade. On the other hand, economic statecraft touches on trade, regulation, and competition rules, which are the EU’s prerogative and areas in which the European Commission has the sole power to initiate legislation. The following chart shows there is a sliding scale of policy clusters. These are not exhaustive, nor is their position set in stone. However, the chart provides a fairly accurate map of where Paris’s preferred mix of pooled sovereignty and national competence currently lies for each cluster.

There has been a trend of President Ursula von der Leyen’s European Commission publishing turnkey compromises on newer areas of economic statecraft, such as outbound investment screening. The January 2024 white paper on outbound investment conspicuously avoids mentioning “national security” and instead refer to risks to “common EU security.” Paris argues that trying to replicate instruments born in the US approach to national security is counterproductive and that respecting the committee-based process for using existing tools and elaborating new ones will lead to better outcomes.

The Council of the EU hosts myriad committees focusing on thematic areas pertaining to economic statecraft (customs, trade, financial regulation, and merger control), each with its own communities of experts and preferences. France is represented in each one and is confident in its abilities to shepherd discussions. The SGAE plays a key role in coordinating between ministries so that the French positions on different committees are compatible. The French Treasury (DG Trésor) and its trade and investment policy office (MULTICOM) are competent authorities for investment screening in France, making them an important knowledge hub for where France’s interest lies in these discussions.

In Paris’s view, allowing time for comitology has two other advantages. It enables member states to find the right balance between the ability to intervene and block an investment when necessary and creating rules to prevent the profligate use of new tools by some capitals. It also allows the EU to devise economic statecraft tools in a way that is coherent with its internal rules. For example, the Carbon Border Adjustment Mechanism will use the Emissions Trading System’s method to calculate adjustments due on third-country goods. A new challenge will be making inbound investment screening more explicitly compatible with competition rules on mergers.

Paris is focusing carefully on how the European Commission is preparing to divvy up the economic statecraft brief over the 2024–2029 term. The clearest owner of the issue, alongside von der Leyen herself, will be four-time Commissioner Maros Sefcovic, whose portfolio now includes trade and economic security. In his mission letter, he is also instructed to lead work on a New Economic Security Doctrine for the EU.

The inner workings of French institutions in shaping economic statecraft

The French Treasury and its MULTICOM office fit within a wider ecosystem feeding into French economic statecraft policy. The SECFIN office of the French Treasury is the most competent authority on sanctions and controls. It runs regular dialogues with the Office of Foreign Assets Control and the Bank for International Settlements and oversees the work of the customs service (la douane). The Directorate General for Firms (DG Entreprises) is a separate directorate within the Economics Ministry that helps the private sector with compliance. A subdivision created in the 2019 reform of French economic security policy, the Strategic Information and Economic Security Service (SISSE) also fulfils an economic intelligence role and can contact and support firms of strategic importance which it believes are being targeted by foreign economic statecraft or simply by investors the French government deems inappropriate. Ever since a blocking law was passed in 1968, French firms have needed to seek permission from the French government before transmitting sensitive information to foreign governments or justice systems. The 2019 reform makes SISSE the point of contact for seeking this authorization.

Paris argues that its rules on inbound investment are clear, as are its demands when it intervenes in a transaction. These demands usually include key elements like research and development and production staying in France. US investors certainly don’t seem to fear politically motivated or arbitrary interventions. France usually tops the list for US foreign direct investment into Europe and US firms’ direct investment position in France was in excess of $100 billion in 2023. This doesn’t make the investment screening mechanisms totally immune to political pressure, but this tends to be exercised for firms with high symbolic but low strategic value, as in the recent case of Sanofi’s attempt to spin off its Doliprane painkiller brand.

While it sits in the imposing Economics and Finance Ministry, which is sometimes described as a fortress, the French Treasury is comfortable with Brussels’s process and pooling sovereignty because its areas of competency are already quite Europeanized. But it’s important to understand which other ministries have an economic statecraft role.

Though it is not the hub of economic statecraft thinking, the Ministry for European and Foreign Affairs plays an important role. The main reason is that its diplomats are likely to be present when policy deals are struck at a political level, be it Joint Comprehensive Plan of Action (JCPOA) negotiations in Vienna or more recent Group of Seven (G7) meetings focused on responding to Russia’s aggression against Ukraine. The need for in-house coverage is mainly fulfilled by the globalization directorate, which has several teams working on economic diplomacy, including a deputy director for sanctions, economic norms, and the fight against corruption. But because of the EU components, the deputy director for external relations of the European Union and the deputy director for EU and international economic law will also be heavily involved in interministerial discussions before every new EU sanctions package or white paper on economic statecraft.

Collaboration between the foreign and economics ministries works well, and it is useful to meet and discuss matters with both. The Foreign Ministry is more comfortable than the Economics Ministry in owning France’s independent streak and justifying the need to stand up to the United States on occasion. The historical purpose of the office of the deputy director for sanctions was to deal with the spillover effects from US economic statecraft, as demonstrated by the 1990s blocking regulation meant to protect EU firms investing in Cuba or setting up the Instrument in Support of Trade Exchanges to maintain some economic relations with Iran when the United States left the JCPOA in 2018, leaving French banks and energy firms particularly exposed. Today, the Foreign Ministry’s sanctions team thinks of itself as the knowledge hub on sanctions complications—which can also mean anticipating unintended consequences from European sanctions. Foreign Ministry teams are also keen to remind interlocutors that none of the tools built for economic statecraft are targeted only at China and will be careful to make sure this remains the case in European policy.

Not all policy issues are coordinated through the SGAE. The same ministries can also be summoned to coordinate through the Defense and National Security Council Secretariat (SGDSN), which prepares Defense Councils. In addition to the sliding scale of instruments—some more national than others—France also guards some sectors from European policy. Everything related to civil nuclear contracts is kept quite separate from the EU, as are military export contracts. This may be part of the reason why France is cautious about outbound investment screening, as some of these contracts come with local production partnerships (offsets or mesures de compensation).

The 2019 reform also instituted the Economic Security Liaison Committee (COLISE) meetings, which include ministries that weren’t historically alert to these risks, such as the Education and Research Ministries. The public financial institutions that form France’s robust infrastructure for positive economic statecraft are not officially part of COLISE meetings but can be invited. The French Development Agency (AFD) and its development finance subsidiary PROPARCO are powerful instruments, but their status as a bank makes them quite independent from political priorities in Paris. The Public Investment Bank (Bpifrance), a joint venture between the state investment bank and previous iterations of strategic investment funds, can be asked to make domestic investments—including when the French government has blocked an inbound investment.

All of these ministries and coordination bodies are meant to answer to the top. But even in France’s presidential system, the prime minister can sometimes assert themself. There have been no obvious divergences while Macron has had prime ministers from his own or allied parties. Still, the SGAE explicitly sits under the prime minister, so a more assertive prime minister from a political party different from the president’s can heavily influence what position France takes on EU policy. Still, the presidency will always remain heavily involved through the president’s own presence at European Councils and at G7 summits. Macron’s diplomatic adviser Emmanuel Bonne was on the now notorious WhatsApp group used to finalize the first salvo of G7+ sanctions in February 2022, as was von der Leyen’s Chief of Staff Björn Seibert.

Putting collaboration on a more sustainable footing

If our interlocutors in Paris would like US readers to take one message on board, it would be that they should have more faith in the EU’s way of doing things. Provided there is enough time for comitology, they say, EU economic statecraft can have formidable effects. The often-cited Anti-Coercion Instrument—which is meant to allow the EU to respond as one bloc when coercion is being exercised on one member state—was first introduced in 2018 and work was stepped up in 2021 when China started piling economic pressure on Lithuania. The instrument entered into force in December 2023. This might seem slow to Washington, but this is the price to pay for a policy with which all member states are comfortable. This, in turn, relies on two crucial elements. First, new tools must be country agnostic. Setting up China-specific instruments will alienate key member states and—even if the instruments are set up—will require starting all the comitology from scratch if a new threat emerges from a country other than China. Second, there needs to be trust that there are sufficient guidelines to prevent a minority of member states from free riding on others’ efforts.

The EU’s fourteenth sanctions package against Russia from June 2024 provides a more recent example of just how effective EU measures can be when a consensus is finally reached. In this case, the EU gave itself the legal basis for sanctioning Chinese firms with extensive activities in Russia. While the EU didn’t even designate any bank, the news drove many Chinese banks out and commercial interest rates in Russia up. Paris would argue that this was worth the wait.

Attempts by Washington to hasten progress haven’t necessarily been productive. The clearest example concerns outbound investment screening. Von der Leyen’s endorsement of this approach during her March 2023 US visit, and the last-minute addition of a white paper on the topic to the January 2024 package of papers on economic statecraft, has generated rumors about pressure from the White House and poisoned the committee-based discussions on the topic. Going forward, the fact that Macron’s former Europe adviser Alexandre Adam now serves as von der Leyen’s deputy chief of staff should avoid a repeat of this kind of hiccup.

There is a conundrum for the three EU member states that are also part of the G7, including France. Washington sometimes takes the shortcut of assuming G7 statements commit the EU to a particular course of action, when the reality is that comitology will need to take place anyway. There is also a lesson here for the EU institutions, which tend to be quiet in G7 working groups when they should instead provide feedback on what is feasible for the EU and how long it will take.

In a way, the US-EU Trade and Technology Council (TTC) was designed to build trust between technical teams so that this type of hurdle would be less of a problem. It isn’t clear whether the format will survive under Trump. In any case, imposing solutions on Europe is bound to backfire and to return knee-jerk criticism of extraterritorial justice. Instead, experts are capable of having a nuanced debate and can see how EU law also carries global implications, though without the same means of enforcement.

As one experienced practitioner told us, “If Europe is both taken for granted and collateral damage of US economic statecraft, this makes it harder for us to push back on extremist parties’ arguments against any sort of restrictive measures.”

Strategic empathy is therefore crucial. This is especially true as our interlocutors tended to land on the same parting thoughts that any US policymaker might share at the end of a similar discussion, such as the need for a doctrine of economic statecraft.

Charles Lichfield is the deputy director and C. Boyden Gray senior fellow of the Atlantic Council’s GeoEconomics Center.

The report is part of a year-long series on economic statecraft across the G7 and China supported in part by a grant from MITRE.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

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Image: View of the Colbert building, seat of the Ministry of Economy and Finance in Paris. iStock