French economic activity is significantly affected by economic activity in the rest of the world. In recent years, the export performance of France relative of its own past and relative to a major trading partner, Germany, deteriorated. That deterioration seems related to the trend growth of exports (both by geographical destination and by product composition). Faced with an increase in unit labor costs or in its terms of trade, France adjusts relatively less via price and wage changes, and more via employment changes. Given that the convergence of the SMIC operated between 2003 and 2006 resulted in a significant increase in unit labor costs, the study suggests that the foreign sector difficulties may be structural. The importance of trade flows as well as the policy constraints imposed by the euro area, highlight the relevance of structural reforms that increase good, service, and labor markets flexibility.  In addition, the analysis highlights the importance of measures that increase productivity, and the desirability of avoiding SMIC adjustments unrelated to productivity.