( brussels+ )

‘Made in France’ - a key presidential campaign topic or just political marketing?

In the midst of an economic crisis heightened by a chilly outlook for the euro and further EU integration, the ‘Made in France’ label made a comeback at the start of our cold winter, as if to warm up the French ahead of the presidential campaign.

Highly publicised relocations and restructurings of flagship French industries such as Renault and the textile industry have given this old slogan a new lease on life. But unlike in 1981, when the French Communist Party and the Front National disputed the monopoly over the ‘Let’s produce in France’ campaign, the theme now transcends party lines.

François Bayrou from the centrist Modem party claims to have struck first by advocating a ‘Made in France’ label with the aim of making consumers “the active source of support for French producers”. The French media have certainly relished taking Bayrou’s comments out of context and have ridiculed them as seeking to solve France’s economic woes by policing households’ shopping baskets! Indeed, it would be naïve to hope the average French consumer will spend twice as long at the supermarket perusing product packaging and opt for the 100% French option (if he finds one) that costs twice the price of the imported alternative.

What is more, the limits of such labelling policies at national level are already known.  For example, one of the results of the government review into French industry’s decline started in 2007 was the development of a label ‘Origine France Garantie’ (Guaranteed French Origin) for products with at least 50% of their added value produced in France. During a visit to ski manufacturers Rossignol and Dignastar in Haute-Savoie in mid-December, the French President Nicolas Sarkozy was quick to remind the public that he was at the origin of this initiative, and unveiled the list of forty products or so that have been awarded the label since its creation in 2010. Never heard of it? Not surprising, since this label is awarded by a private certification office and has no legal meaning since the only valid labels are strictly regulated and granted by the European customs code.  The margin of manoeuvre of the French governmentis therefore very limited.

So, what else can be deduced from a campaign slogan endorsed in one form or another by all the presidential candidates?

As candidates head to the soap box in the run up to the first round of presidential elections on 22 April, ‘Made in France’ is the stage name for another debate, for which there is no sexy name in French or English: ‘compétitivité’ (competitiveness).  Debating France’s competitiveness is about three things:

France’s capacity to produce "better quality for value" - i.e. boosting public and private investment in R&D;
Making it more appealing to do business in France while empowering SMEs - think labour costs and taxation;
And, partly as a result of the above, raising our export capacity - in short, being able to compete with the Germans and regain economic status in Europe.

This discussion implies questioning France’s very own industrial and to an extent, socio-economic model – a slippery ground for heads of state and government, while the sugar-coated ‘Made in France’ resonates well with the French. As Frédéric Dabi, Head of the Opinion Department at polling institute IFOP told Europe 1 on 13 December:  “The French feel their country ‘has lost’ in the globalisation process. And faced with this, they feel that it is better to ‘protect’ themselves (60%) than to ‘open up’ (31%). These results indicate levels of protectionism not seen five years ago.” Due to a fear of globalisation, for 44% of the French “to buy French” equals “quality” and an "act of citizenship” to sustain the French economy in crisis.

But what if the French no longer need sugar-coating? What if an excessive – or erroneous - use of political marketing and communications triggered a fatigue for words and a craving for political courage and action? The first weeks of 2012 saw Sarkozy and his contenders adding flesh to the bones of ‘Made in France’ speeches, and the focus has naturally shifted toward France’s competitiveness.

On 8 February, Sarkozy (now a declared candidate) proposed an amendment to an obscure public finance act. The bill aims to cut the cost of labour by lowering employers’ social contributions and offset the loss of public revenue with a VAT increase from 19.6% to 21.2% - a so-called ‘social VAT’  - and a two point hike in another levy on financial returns.  These proposals echo three flagship proposals from his 2007 campaign which he failed to deliver: (i) decrease compulsory levies by € 68 billion over ten years, (ii) create a social VAT and (iii) tackle one of the biggest rigidities in the French economy, the 35-hour working week. Or, if you feel like being generous to Sarkozy, these proposals are the logical follow-up to measures he did take during his five-year mandate, but which are yet to bring results. These include an increase of the tax rebate for research, university reform, professional tax write-offs, large public loans in favour of future investments, the reinforcement of an SME bank (Oseo) and more recently, on 29 January, the announcement of the creation of an industry bank.

As part of the 60 commitments he will endeavour to fulfil if elected, Socialist candidate and runaway poll leader Francois Hollande has fleshed out his vision of “industrial patriotism”. The diagnosis? “Industry represents only 13% of France’s total GDP, against 28% in Germany.” The objective? “To restore France’s production capacity.” The solution? No social VAT because it is deemed to unfairly target all consumers, including those on low incomes. But fiscal means to encourage investment, and a public bank that will be fully devoted to facilitating funding access for sectors deemed innovative and to redirecting the existing research tax credit to SMEs. Hollande is also rumoured not to be against cuts in employers’ contributions, and he actually proposes cutting taxes on very small companies. And it’s worth noting that, for the first time in the Fifth Republic’s history, a French Socialist candidate at the presidential election is not suggesting an increase in the minimum wage.

As for Bayrou, the announcement of his economic programme on 1 February was a good reminder of the broader framework for his ‘Made in France’ concept. His programme includes measures to support SMEs and investment in innovative sectors that are not too dissimilar to the programmes of Sarkozy and Hollande. In particular, Bayrou calls for a national consultation on the social climate within companies, and wants to bestow ‘business angels’ with a legal status modelled on private equity ‘angel funds’.

The ‘competitiveness’ issue clearly implies further-reaching reforms than the ‘Made in France’ label.

But it’s hard not to notice that despite more than fifty years of EU integration and twenty-odd years of a single market, the European dimension has not yet surfaced in the debate. At best, the three main candidates pay lip service to it. For example, Hollande speaks of “a Europe entirely turned towards innovation,” involving eurobonds to finance infrastructure projects, a revision of monetary policy for the euro to live up to the dollar, and a better alignment between trade policy and social, environmental and democratic values. As for Bayrou, he suggests cementing his ‘Made in France’ policy by earmarking 10% of the European budget for priority sectors, gearing Europeans’ savings towards long-term investment, and organising an EU-BRICs summit to stop blaming emerging countries for Europe’s economic evils.

When candidates speak of empowering local SMEs, there is little discussion of their inclusion in pan-European networks to acquire sufficient scale economies. Instead, candidates wax lyrical about boosting research and innovation and use sound bites like ‘Made in France’ without exploring the cross-border opportunities.

At a time when France’s industrial jewel in the crown is called Airbus, you might think the candidates would be in favour of developing European instead of ‘national’ champions. But this would mean that a presidential campaign could be fought (and won) on European topics – and that is another story.