France Needs More Regulatory Reform to Strengthen its Economy, Says OECD

Regulatory Reform in France: Charting a Clearer Way Forward notes that France has reduced the role of the state in its economy and has largely opened its markets to competition, although further progress is still possible in some network industries and utilities. France is one of a number of OECD countries to have requested a broad review by the OECD of its regulatory practices and reforms. The report presents an overall picture, within a macroeconomic context, of regulatory achievements and challenges including the quality of regulation, competition policy and market openness. It also contains detailed reviews of sectors such as civil aviation and telecommunications.

In recent years, the report notes, successive governments have taken steps to make dealing with the public administration simpler. France has become a leader among OECD countries in making administrative forms and regulatory codes available on line. Local authorities have been given increased responsibilities through decentralisation.
However, unemployment remains high and France’s population is ageing rapidly. Public spending is high compared to other OECD countries and might not be sustainable in the long run. Decentralisation has also created overlapping responsibilities between the local authorities and the state. The role of the state in the economy needs to be more clearly defined as part of a strategy to improve competition and avoid conflicts of interest in markets. The creation of an Agency for State Holdings in 2003 marked a step in clarifying the respective roles of the state as a regulator and owner of productive resources.

Among specific actions, the OECD recommends that France should:

• Consider setting up a unit responsible for assessing the cost, quality and impact of new regulations

•Engage in more transparent and systematic consultation to increase public accountabilityImprove efficiency and transparency in public procurement

•Complete the privatisation of Air France and France Telecom

•Set up a totally independent regulatory authority to oversee allocation of landing slots and servicing contracts in the civil aviation sector

•Enhance competition in the telecommunications sector by boosting the powers of the Telecommunications Regulatory Authority

•Divest France Telecom of its cable affiliate as part of a strategy to strengthen competition in cable television

•Do more to simplify its public administration and make services user-friendly, for example by setting more “one-stop shops” where people could deal with all administrative matters, from filing tax returns to renewing driving licences, in one place.