1993 rings in a Europe without trade barriers

December 30, 1992|By Chicago Tribune

LONDON -- At the stroke of midnight on New Year's Eve, thousands of Britons may be poised to return from a day's shopping in France or Belgium.

At that hour they will be able to fill their cars with almost unlimited supplies of the cheaper alcohol and tobacco available in those countries, then return home without paying customs duties.

Britain's Sunday Times recently said that a Briton would be able to save $385, even allowing for the cost of crossing the English Channel by ferry, by buying 28 cases of wine in France or `D Belgium, where excise taxes are lower.

The same will be true for any other European who can find a better bargain across a border.

At the same time, truck drivers who sometimes have to wait eight hours or more at frontiers for customs checks will be able to whiz across Europe with the same freedom an American trucker has crossing from Illinois to Indiana.

Welcome to the new Europe of the single market -- a Europe in which people, goods, services and capital will flow freely across national frontiers for the first time.

Well, not quite. In many respects, unprecedented freedom of movement will begin. But Europe is still a long way from the nearly unrestricted movement that takes place between states in the United States.

As the historic hour of the single market approaches, governments in the 12 European Community nations are preoccupied with the receding goal of European unity, rising unemployment, deepening recession and the uncertainty that hangs over negotiations on reducing world trade barriers. The mood on the eve of the single market is definitely subdued.

The community nations have a combined population of 360 million and national incomes totaling $6.5 trillion. The ultimate effect of removing barriers should be to make businesses more competitive, give consumers wider choices and increase professional mobility.

Cross-border acquisitions and mergers of European business have boomed in anticipation of the single market. Some industries have raised their rate of investment so that they can better serve a larger market.

The European Commission, the community's executive arm, has estimated that the single market will boost the European economy by $7.7 billion a year. But problems remain.

Since 1985, the commission has defined 282 measures needed to make a single market work, and member countries have reached agreement on more than 95 percent of them. But all such agreements must be translated into law in each country, and some have been slow to do so.

Italy, at the bottom of the table, has adopted only about 73 percent of them. The average throughout the community is nearly 80 percent.

Britain also has balked at carrying out a major objective of the single market -- the elimination of passport checks at frontiers for community citizens. It fears that illegal immigrants, terrorists and other criminals could slip through.

Ireland, Denmark and, to some extent, the Netherlands share Britain's reservations.

After the European Commission threatened to take Britain to the European Court of Justice, Home Secretary Kenneth Clarke recently signaled that London might be prepared to adopt "light touch" checks of passports rather than the current lengthy scrutiny.

The single market in theory makes it possible for any European to work anywhere within community states. In practice, applying for work in another country is still likely to be a drawn-out process. And language barriers will prevent many people from achieving full mobility.

But there will be changes. European banks will be allowed to operate in any member country, and their foreign branches will ++ be regulated by the parent country, not the host country as is the case now.

Insurance companies will be able to sell policies throughout Europe.

About 60,000 customs forms will be scrapped, saving millions of dollars for companies doing business across frontiers.

At airports, green-edged labels will identify the baggage of intra-European travelers so that they will not be subject to the same checks imposed on those coming into the community from outside. Further modifications are planned at most airports to make a distinction between intra-community flights and those originating outside.

For European travelers, the old national limits on the amount of duty-paid gifts and other goods for personal consumption that could be imported will be abolished, and allowances for duty-free goods will be doubled.

Travelers will be able to bring home unrestricted amounts of perfume. They should also be able to bring virtually unlimited amounts of tobacco and alcohol, if they can convince customs officers that they do not intend to resell it.

The British Treasury expects to lose about $385 million a year in liquor and tobacco tax revenues.

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