BUSINESS

A Single Market dream

Europe’s ‘1992 program’ is still unfolding

ANDREW PHILLIPS January 18 1993
BUSINESS

A Single Market dream

Europe’s ‘1992 program’ is still unfolding

ANDREW PHILLIPS January 18 1993

A Single Market dream

BUSINESS

Europe’s ‘1992 program’ is still unfolding

ANDREW PHILLIPS

French ports, which have withstood foreign assaults through the ages, recently braced for another kind of invasion. Supermarkets in Calais and Dunkirk piled their shelves high with cases of beer, crates of wine and cartons of cigarettes, ready for an influx of British shoppers on day trips across the English Channel. On New Year’s Day, the European Community’s widely heralded Single Market took effect and Britain effectively dropped its limits on goods its citizens can bring home from other EC countries for personal use. France’s excise duties on alcohol and tobacco are much lower than Britain’s: two cents on a pint of beer, compared with 60 cents. As a result, Britons can save hundreds of dollars by loading up on alcohol, tobacco and other goods—a European version of cross-border shopping.

The increase in cross-Channel shopping is just one effect of the Single Market. Popularly known as the “1992 program,” it became official at midnight on Dec. 31 as 1,000 beacons and bonfires were lit throughout the EC to mark the occasion. When EC commissioners first mapped the program in 1985, they aimed at sweeping away remaining barriers to the free movement of goods, capital and people throughout the EC’s 12 member states. In Europe, it took on immense importance as the symbol of hope for a more prosperous, dynamic market of 345 million consumers. But as the date for its implementation passed, “1992” hardly lived up to the dreams of its architects.

European business is struggling with the effects of continent-wide recession, and the EC itself is staggering from crisis to crisis. Even consumers, supposedly the main beneficiaries of the new, unified market, are disgruntled. In a statement, the European Consumers Organization, a Brussels-based pressure group, claimed that the Single Market “will not, in all sectors, be free, fair and fully open.”

In fact, it has mixed benefits. On Jan. 1, customs posts at EC borders closed down, allowing goods to pass unchecked. That will eventually put 60,000 customs agents out of work, but it also allowed trucks to pass unimpeded from one country to another without stopping to present customs documents. The EC Commission says that will eliminate 60 million forms and save business about $12.5 billion a year. The end of customs controls will also tempt Britons and others who pay high duties to raid their neighbors’ supermarkets for liquor and tobacco. Bus company executives, expressing concern that their vehicles could be damaged by the extra weight, planned to take trucks to carry passengers’ purchases behind them.

But people will not be able to move as freely as goods. The original plan called for the elimination of passport controls on travellers going from one EC state to another, an action that would have dramatically symbolized a more open Europe. But the leaders of Britain, Denmark and Greece objected, claiming that

open borders would complicate their fights against terrorism, drug trafficking, illegal immigration and, in Britain’s case, rabies. Nine other EC states intend to eliminate passport controls at land crossings by July 1. But even they say that they cannot do away with controls at airports until at least the end of 1993, in part because terminals have to be rebuilt to separate passengers arriving from other EC countries from the rest.

EC officials acknowledge that those delays are a major disappointment, but they point to compensating achievements. The EC has adopted 95 per cent of the 282 measures needed to make the Single Market a reality. Many went into effect long before Jan. 1, including the removal of restrictions 2 on capital transfers and agreements § for member nations to accept each 2 other’s standards for hundreds of g goods. That measure, which is intendI ed to eliminate protectionism under - the guise of differing health or safety standards, means that companies can sell their products anywhere in the EC as long as they meet the specifications of any member state.

Some of the toughest battles are still being fought in the sensitive area of food. The French reacted with fury to claims that their bacteriarich cheeses might be too unhygienic for other Europeans, while the British bridled at attempts to ban the additive that gives their favorite prawn-flavored potato chips their special zing. The EC retreated in each case.

Other changes on Jan. 1 include allowing banks to set up branches in any EC state without special approval, and making job training and school degrees from EC countries valid throughout the community. Experts differ on the economic impact of the Single Market. Before the current recession began two years ago, Japanese, American and Canadian firms invested billions to get a foothold in the new Europe. In 1988, the EC forecast an increase of 4.5 per cent in its output over the first six years of the program, and officials still predict a gain of roughly that amount.

Some sectors, however, remained unaffected, protected by powerful interests in each country. European airlines continue to resist deregulation and charge some of the highest fares in the world. Telecommunications and postal services remain entrenched state monopolies in almost all EC countries. Automakers have been allowed to keep restrictive arrangements with dealers until at least 1995, keeping car prices high in many EC states. And government subsidies, remaining red tape and crossborder transaction costs, as well as language and cultural differences, make the EC’s ideal of a completely free market still a distant prospect. “But the big prize is to get the market going,” said an EC official in London. “The rest is bound to follow.” But that remains a hope— not an achievement.