Summary: While goods exchanges between France and Estonia decreased by 5% in 2023, Estonian service exports to France saw a significant increase (+22%). Although Estonia manages to achieve a trade surplus in services, the final trade balance is close to equilibrium: France incurs a deficit of 17 million euros. In a challenging context of falling commodity prices and a decline in exchanges with Russia, France gains a position and becomes Estonia's 12th economic partner. However, compared to Estonia's neighbors such as Germany or the Anglo-Saxon world, France remains a second-tier partner. Reciprocally, Estonia is the Baltic country with which France exchanges the least: the partnership remains limited.
Goods exchanges between France and Estonia progress but remain limited
In 2023, commercial goods exchanges between France and Estonia slightly declined (-5%), but the - low - French trade surplus increased. Estonian exports decreased by 7% and French exports by 4%, reaching 351 and 401 million euros respectively. As in 2022, France thus maintains a trade surplus, estimated this year at 49 million euros (+29%).
However, France sees its relative share increase and becomes Estonia's 12th economic partner (+1 place). Indeed, although these figures are declining, since Estonian foreign trade in goods had a difficult year (-16% for exports and -17% for imports), France's share increases in Estonian goods trade. Ranked 13th as a client and supplier in 2022, France is now the 13th client and the 12th supplier. Including services, France gains a position and becomes Estonia's 12th economic partner. Exchanges with France represent 1.9% of Estonian foreign trade (+0.2 points), about as much as the Near and Middle East (including Turkey) or Russia in goods trade.
Towards France, although wood retains a predominant place, high-value-added products saw their share in the composition of goods exchanges increase in 2023. Estonia exports electrical and electronic equipment (27% in 2023), wood (25%), chemicals (8%), and transport equipment (7%) to France. The five most sold products in value by Estonia are telecommunications devices, plywood, sawn wood, firewood, and prefabricated constructions. Due notably to the fall in commodity prices, exchanges concentrated on high-value-added products: exchanges of electrical and electronic equipment increased by 15%, those of transport equipment by 19% while exchanges of wood products decreased by 21% and those of chemicals by 48%.
In the direction of Estonia, the composition of our exports is stable and trade also focuses on high-value-added products, but also on metal components, as well as wines and spirits. Exports consist of electrical and electronic equipment (25%), transport equipment (16%), metals (14%), and prepared food products (13%, including 61% wines and spirits). Content variations are less pronounced than Estonian exports: metal exchanges have decreased (-32%), transport equipment has increased by 13%, and the rest of the variations are not notable. The five most sold products in value by France are cars, rolled steel plates, wine, tractors, and medicines. Also note the presence of spirits, beauty products, and perfumes among the ten best-selling products. Out of the 88 million euros of wine imports into Estonia, France holds the largest market share with 24%, followed by Italy with 22%. France also holds the third market share (13%) of Estonian spirit imports (96 million euros, a growing market of 9% in 2023). France is also the first in perfume sales in Estonia (6 million euros, 16% of the market).
Franco-Estonian service exchanges have doubled since 2019.
In 2023, while French exports slightly decreased, Estonian service exports were very dynamic (+22%). In 2023, bilateral service exchanges increased on average by 8%: they increased by 22% to France and decreased by 6% to Estonia. 2023 thus marks the transition from a balanced trade balance (+2 million euros for Estonia) to a French deficit (67 million euros). The latter exceeds the Estonian deficit in goods exchanges and makes the bilateral relationship weakly deficit for France: -17 million euros. In the medium term, service exchanges between Estonia and France are making great progress: they have doubled since 2019. France is the 11th partner for Estonia's service exchanges and 40% of the value exchanged comes from services: slightly more than the Estonian average of 34%.
These exchanges are mainly composed of "other business services" (including R&D, consulting): Estonia exports 53% of these services, 24% of IT and information services, 9% of transport, and 7% of tourism, while France exports 56% of "other business services", 18% of tourism, 13% of transport, and 7% of IT and information services. In addition, Estonia exports more IT services (due to its digital model) while France focuses more on tourism and transport.
Reciprocally, these partnerships remain timid.
Although the trend is encouraging, France remains a second-tier partner for Estonia. While France sees its market share increase and ranks 12th in Estonia's trading partners, this is more due to the decline in exchanges with Russia (-92% in Russian goods imports) than to a real increase in bilateral trade. The slight decline in the exchanged value, relative to the trend, is also explained by the structure of exchanges around high-value-added goods, which are less subject to commodity prices. Even if Estonia's main partners are its neighboring countries (Finland, Latvia, Lithuania, Sweden), some countries comparable to France achieve better performances in Estonia. Germany is an indispensable partner for Estonia (3rd partner, 4 times more exchanges than France) and the United Kingdom is one of its main partners for services (6th place, 9th partner overall). Italy achieves similar performances to ours, but with a stronger focus on goods exchanges (13th partner, 10th in services, and 21st in goods).
In most of its best-selling products (cars, tractors, medicines), France remains a second-tier supplier. Regarding automotive equipment, France represents only 2.5% of car imports into Estonia (40 million euros), about 9 times less than Germany or 12 times less than Sweden. In the tractor segment, France represents 8% of imports, the 5th market share. Finally, in the medicine segment, France also represents only 3% of the 600 million euros of imports made by Estonia.
Conversely, Estonia represents only 0.06% of French goods exchanges. With exchanges amounting to 755 million euros, Estonia is the Baltic country with which we exchange the least, just behind Latvia (839 million euros) and far behind Lithuania (2 billion euros).
Data sources: Statistics Estonia/Eesti Pank, Banque de France
Article source: Direction Générale du Trésor, Ministry of the Economy, Finance and Industrial and Digital Sovereignty
Link to the original article (in French): https://www.tresor.economie.gouv.fr/Pays/EE/relations-bilaterales
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