France Looks to Deepen Trade Ties With Russia and China
After Brexit vote and Trump’s rise, France aims to build a trade ‘backbone’ that runs from Europe to Beijing via Moscow
MOSCOW—France is losing its appetite for trans-Atlantic trade.
Economy and Finance Minister Bruno Le Maire said in an interview France was looking to China and Russia to act as a counterweight to increasingly uncertain trade relations with the U.S. and Britain.
The remarks are a sign of how European powers are reassessing ties that have underpinned their economies since the end of World War II following the U.K.’s vote to leave the European Union and the rise of U.S. President Donald Trump and his America First agenda.
“We are moving from a world dominated by very exclusive trans-Atlantic relations toward a rebalancing,” Mr. Le Maire told The Wall Street Journal during a two-day trip to Moscow in December. France is aiming to build a trade “backbone” that runs from Europe to Beijing via Moscow, Mr. Le Maire said.
French President Emmanuel Macron plans to launch this effort when he makes his first visit to China in January and attends the St. Petersburg International Financial Congress—Russia’s answer to the World Economic Forum in Davos, Switzerland—in May.
The sheer scale of France’s trade with the U.S. and the U.K., however, makes it difficult to replace with partners to the east. Trade with the U.S. and Britain totaled €119.5 billion ($142.8 billion) in 2016, compared with a total €79.1 billion with China and Russia.
The Macron government’s move to broaden its trade horizons is fueled by a growing rift between Europe and Washington. In December, Mr. Le Maire and four other European finance ministers wrote to Treasury Secretary Steven Mnuchin to voice concerns that the overhaul of corporate tax law would give U.S. firms unfair tax advantages and discourage them from investing in Europe.
“The U.S. is a close ally and Europe’s principal trading partner, but we can clearly see the difficulties,” Mr. Le Maire said. “Writing this letter is not mundane. It’s the mark of a Europe that is becoming aware of the necessity to affirm its power.”
The finance minister also criticized Washington for maintaining the threat of “extraterritorial sanctions”—laws that allow Washington to penalize foreign companies with U.S. operations for doing business in Russia. The sanctions were proposed by Congress but criticized by Mr. Trump.
Such sanctions would turn the U.S. into “the de facto gendarme of global trade,” Mr. Le Maire said.
“That is contrary to our vision of a multilateral global organization,” he said.
Since defeating far-right National Front leader Marine Le Pen in May’s election, Mr. Macron has increasingly positioned himself as a foil to Mr. Trump on the world stage.
The approach has provided moments of warmth with the U.S. president—making him a guest of honor at Bastille Day celebrations in Paris—and occasional conflict. At a summit of Group of 20 leaders in July, Mr. Macron said Mr. Trump was making a “profound error” in equating U.S. deficits with unfair trade.
The French leader has also opposed Mr. Trump’s decision to pull out of the 195-nation Paris climate accord. Mr. Macron recently hosted an international summit to address possible shortfalls in funding created by Mr. Trump’s withdrawal. At times, Mr. Macron has mocked Mr. Trump’s 2016 campaign slogan by saying France is on a mission to “Make the Planet Great Again.”
In Moscow, Mr. Le Maire was working to rekindle economic ties that have been strained by sanctions the EU imposed on Russia in the wake of its 2014 annexation of Crimea.
France is the largest foreign investor in Russia, and French companies are the largest foreign employer, with nearly 170,000 staff. But France’s imports from Russia shrank to €5.54 billion in 2016 from €10.23 billion in 2014, the year sanctions were introduced. Exports fell to €4.89 billion from €6.76 billion over the same period.
Mr. Le Maire was in Moscow to attend a meeting of the CEFIC—a Franco-Russian intergovernmental body that promotes economic relations. The CEFIC was suspended in 2015 after Europe imposed sanctions on Russia but reinstated by Mr. Macron when he was economy minister in 2016, even as sanctions continued.
During the meeting, the two countries agreed to begin technical cooperation between government experts and French companies including Electricité de France SA and Total SA on renewable energy and energy storage. Mr. Le Maire also invited Russia to cooperate on developing reusable launchers for satellites, in a bid to catch up with Elon Musk’s Space Exploration Technologies Corp.
Mr. Le Maire said France and Russia should work within the sanctions to increase economic cooperation and be ready for the day they are lifted.
“The conditions are not met for us to lift or alleviate sanctions, but I hope—I really hope—that it will evolve,” Mr. Le Maire said in a speech.