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France Can’t Compete With Rest of Europe: WTO Chief

France is uncompetitive, not only versus China, but against the rest of Europe, according to Pascal Lamy, director general of the World Trade Organization.

Adam Berry

"The competitiveness of France on foreign markets has been damaged for the last 10 years. This is nowhere more obvious than in Europe, where France has lost market share for the last 10 years," said Lamy in an exclusive interview with CNBC in Paris. "The place where the trade balance of France has deteriorated the most is within Europe, where conditions of competition are roughly level. So contrary to what I hear from time-to-time, they are probably not [struggling because of] China."

Lamy said that in the short term France must become more cost competitive by cutting taxes on businesses "so they regain a bit of margin for maneuver."

France's socialist government under President Francois Hollande is due to outline measures to boost competitiveness on Nov. 6.

However, the government has already detailed plans to increase, rather than decrease, taxes on big companies as part of its 2013 austerity budget, which aims to tackle France's crippling deficit.

On Sunday, around 100 French business executives made a joint appeal in a French newspaper to cut payroll taxes by 30 billion euros ($38.8 billion).

Having met with Hollande earlier on Monday, Lamy told CNBC that the president was aware of the need for labor and product market reforms in France.

"I think the French president and the government of the Republic are aware deep reforms have to take place in order to modernize this country, which has a resistance to change stemming from the fact that most of the French see the place as a very happy one, surrounded by a terrible world," he said.