The 12 nations of the European Common Market are poised for one of the boldest, most far-reaching socioeconomic experiments in modern history: the creation, by 1992, of a single European marketplace, free of nearly all restrictions on the movement of goods, people, services and money among member countries.
The promises of ”Europe without frontiers,” as the Common Market calls it, are vast and varied. As with most lofty, large-scale human goals, the ultimate aim-higher living standards for all 322 million residents of 12 nations-will be elusive.
What is certain is that even if the Common Market falls short on some of its specific objectives, the attempt to create a ”single European economy”
will change the way 12 nations and companies within them do business with each other and the rest of the world.
”The implications are indeed many and varied, but taken together they can be expressed very simply,” Henry Plumb, president of the European Parliament, said recently. ”A large market in Europe without barriers is the only way that all our industries will be able to compete successfully in world markets.”
American companies doing business in Europe aren`t sure exactly how the new single market would affect them.
”It`s going to reduce the paperwork tremendously,” said Mike Kellman, an American whose company, Audio International, manufactures top-of-the-market hi-fi equipment in West Germany, then sells it throughout Europe.
Kellman said that once all trade and tariff barriers are removed, he will have to deal with only one set of regulations for all 12 countries, instead of 12 sets.
”It`s going to save a lot on our administrative costs,” he said.
However, he added, U.S. companies that want to export U.S.-made goods to Europe may not have the advantages of companies like his that have
manufacturing bases in the Common Market.
”The feeling is that while the countries are tearing down their internal walls, they might keep one big wall around Europe to regulate imports, especially from Japan and America,” he said.
”It can be good if the (Common Market) includes favorable external tariffs,” said Sam Notkin, a London-based American who serves as a consultant for U.S. companies doing business in Europe. ”It may be fine for Europe, but 1992 won`t mean much to American companies unless the U.S. is granted `most favored nation` status.”
A single Europe is hardly a new idea; it`s what Napoleon had in mind, and Hitler. A movement for a ”United States of Europe” grew out of World War I, and a ”European Union” was proposed under the League of Nations.
Six countries-France, West Germany, Belgium, Italy, the Netherlands and Luxembourg-signed the 1951 Paris Treaty creating the European Steel and Coal Community, which went into effect in 1952 after ratification in each country. ”The Six,” as they were by then called, in 1957 signed the Treaties of Rome, establishing the European Economic Community and the European Atomic Energy Community. Those groups, together with the earlier Steel and Coal Community, form what is collectively known today as the European Community, or the Common Market.
The agreement stressed that the nations were ”determined to lay the foundations of an ever-closer union among the peoples of Europe (and) resolved to ensure the economic and social progress of their countries by common action to eliminate the barriers which divide Europe.”
Ireland, Britain, Spain, Greece, Denmark and Portugal joined later.
The primary goals of the Brussels-based European Community remain the same three decades later: a ”common market” allowing the free movement of goods, services, people and capital between member nations.
In 1987, the member countries approved the Single Europe Act and began to act on more than 300 proposals for legal and administrative changes aimed at breaking down barriers. The changes to be enacted by Jan. 1, 1992, would cover the spectrum of international dealings among member countries:
– Residents of member nations would sail through each other`s immigration posts with a common passport. There would be no customs or tariffs. With no duties, duty-free shops may disappear. European credit cards, checks, coins and perhaps even stamps would be available.
– Doctors, lawyers, teachers and other professionals qualified in one Common Market country would be able to set up practice in another without requalifying. Similarly, self-employed residents would be permitted work in any member country.
– Insurance companies, banks and other financial institutions based in member countries could operate in other member countries just as they do at home.
– Copyrights, trademarks and patents could be registered and protected under one law for all 12 countries.
– Products made in one country could be freely produced and marketed anywhere-indeed, everywhere-in the Common Market.
– Smaller companies in the same industry could merge into pan-European giants to compete not only in Europe but also in the American, Japanese and other consumer markets. Conversely, the prospect of a large single market instead of a dozen smaller ones may lure more multinationals to Europe.
These changes, along with dozens of others promised by 1992, are geared toward economic streamlining. With fewer delays at borders, people should save time and pay less to buy goods. The choice of products and services from anywhere in the Common Market should sharpen competition, promote productivity and force fair pricing. Companies should make more money, and so should their workers. Unemployment, currently more than 16 million in the 12 nations, should fall.
Aside from the daunting logistics of completing approval for more than 300 legislative proposals within the next 44 months, it remains to be seen how and whether such proud nations can abandon some of their independence and traditions.
West Germany, with its beer ”purity” laws, must permit the sale of Italian lager made with chemical additives. Italy, insisting that anything called ”pasta” be made from durum wheat, must allow German pasta made with common soft wheat.
France, which has allowed the sale of only ”live” all-natural yogurt, must accept pasteurized imports from Spain. Belgium, which prohibits vegetable fat in chocolate, must admit Danish chocolate made with vegetable fat.
How will a compromise be reached between Greece`s relatively relaxed and Britain`s stringent safety and testing standards for pharmaceuticals? Will the 12 countries trust each other to inhibit the movements of terrorists, illegal drugs and other contraband?
A series of recent takeover attempts have raised questions about when and how the corporate mergers will be regulated. These include the bid by Italian financier Carlo de Benedetti for Societe Generale de Belgique; the bid by British Airways for British Caledonian; and the bid by Pearson, the Financial Times` parent, for Les Echoes, the French business daily.
Will the single market create a merger mania in which companies spend money to acquire other companies rather than build from within? Will certain critical economic sectors be dominated by large conglomerates, with no allegiance except to shareholders and the bottom line?
The European Community is aiming for a coherent corporate takeover policy that balances the public interest of the Common Market-as opposed to individual countries-against the commercial needs of companies.
Another nettlesome concern is the value-added tax different member nations charge on the sale of goods and services. To effectively remove border duties, the Common Market says value-added taxes should be standardized at 4 to 9 percent on all purchases, instead of the current zero to more than 30 percent.
Much of the opposition to standardization comes from Britain, where Prime Minister Margaret Thatcher wants to retain the tax exemption for such items as books, newspapers and children`s clothing. Britain also is concerned that its treasury could lose almost $4 billion a year in revenue just from the sale of alcoholic beverages.
