Economic Troubles Cloud New Market's Future
WHEN the European Community's vast Single Market officially takes effect on Jan. 1, there will be no balloons and brass bands, and holiday fliers between EC cities will still face passport checks at airports. Europeans will wake up New Year's Day with the same 10 percent unemployment and doubts about European unity.Skip to next paragraph
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"There won't be the Big Bang some might have expected," says Ricardo Perissich, EC director-general for the Single Market.
Yet in its current dour mood, Europe risks almost overlooking the revolutionary step forward it has taken in creating the world's largest and wealthiest barrier-free market - and on a continent where, for centuries, economic battles have led to some of history's bloodiest wars. Moreover, a failure to reinforce the Single Market by pushing forward with European integration could lead to an unraveling of what the internal market program has achieved, some observers say.
"The Single Market is central to the Community's progress, but it is by no means certain that it could stand alone," says one senior EC official here. "If the political will to continue moving forward fails, we can anticipate more strains in the marriage contract that ultimately would strike at what we've accomplished."
The EC's languishing Maastricht Treaty for deeper political and economic integration is the obvious example cited. Without the prospect of a single European currency, as called for in Maastricht, the Single Market risks experiencing more of the damaging monetary instability of the past few months, some analysts note. And without the promise of deeper political integration, those EC countries looking for more than a glorified free-trade zone could tire of the Single Market's free-market philosophy.
As Europe's economy has soured, free-market ideas that are new to much of Europe face new challenges. "It's worth remembering that a majority of the questions asked during the debate in France on the Maastricht referendum actually had nothing to do with Maastricht at all, but with measures already taken under the Single Market," says Perissich. "We are not safely beyond a backlash against the new world of competition."
If Europeans aren't bursting to give the Single Market a coming-out party, it may simply be that markets aren't the kinds of things people gush about, as EC Commission President Jacques Delors has often noted. The fact that free movement of people - an aspect of the market that will be most evident to the average person - is not yet a reality also plays a role. (Border delays, Page 12.)
Another explanation is that many of the market's original 282 directives have already been implemented.
"By Jan. 1 we will have passed 95 percent of what we sought in 1986 to create the Single Market, and much of that will already have been translated into national law," says Perissich. "Adjustment to the market has been going on for years and won't be expected over- night."