`No going back' for EC, biggest market in the world
Washington — Economic merger of the 12 nations of the Europe Community is now ``irreversible,'' says the man who is the driving force behind creation of a single European market by 1992. ``There's no going back on it now,'' Lord Cockfield (pronounced ``co-field''), the British peer who is vice-president of the EC Commission, told a group of reporters this week.
In four years, the biggest, richest market in the world will be created: 320 million people from Britain, France, West Germany, Italy, Spain, Portugal, Greece, Ireland, Belgium, Denmark, Luxembourg, and the Netherlands.
Physical barriers for shipping goods will be abolished. Technical barriers will end on everything from the contents of food to government procurement. Value-added taxes will be coordinated. Banking, insurance, and capital movements will flow freely. Doctors and other professionals will be able to practice where they please.
It will be a giant step toward an economically united Europe. And it is a necessary step if a politically united Europe is ever to follow - though virtually everyone, including Lord Cockfield, sees the postwar dream of a ``United States of Europe'' as still a far-off possibility.
But ``you only get political answers if you go through the economic answers first,'' he says.
Since the landmark Single Europe Act was passed by European Community members last July, Europe 1992 has sparked lively debate in Europe and other parts of the world. ``You even get TV commentators referring to 1992 in the most unlikely contexts,'' Lord Cockfield says. ``I don't think they even know what it's about.''
But business knows. Across Europe, businesses are restructuring, buying subsidiaries, and targeting markets throughout the 12-nation bloc. Until now, the hassles of crossing frontiers - from, say, France to Italy - made intra-European business much less attractive than doing business overseas.
In the runup to 1992, a wave of takeovers across borders has taken place - the most famous being the attempt by Italian financier Carlo de Benedetti to grab Soci'et'e G'en'eral de Belgique, which dominates the Belgian economy.
Industry is making plans now for an integrated European market by 1992, Lord Cockfield says. This economic imperative will make the pressure for completion very powerful.
And the economic incentive for Europe's governments looks highly attractive, too. Just the act of unifying the market will boost the European Community's gross domestic product by 4 to 6 percent, according to a recent EC study. It will also create up to 2 million new jobs, the report says, and keep consumer prices 6 percent lower than what they would be in a divided market.
If such a windfall does occur, other economic steps are likely to follow. There is continued talk about a European central bank and a Europe-wide currency based on the European Currency Unit (or ECU). Lord Cockfield is cagey about this, however, noting that there is ``only debate at present, but the debate will end up with decision.''
One big impediment is Britain's reluctance to join the European Monetary System's exchange-rate mechanism. Britain is concerned because of the loss of sovereignty that this would entail, given the dominance of the EMS by the West German Bundesbank. Recent appreciation of the British pound could also create unfavorable trading conditions for British industry. These might get locked in if the pound were pegged to other European currencies.
``The fact that the UK is not in the European Monetary System creates problems at present,'' Lord Cockfield says, adding that ``it is essential that the UK come into the EMS before 1992.''
Another concern - and one of the reasons Lord Cockfield was in Washington this week - is that a single market could lead to a ``fortress Europe'' when it comes to trade protection. Lord Cockfield denies this will happen, noting that important individual countries (Britain, the Netherlands, West Germany) are anti-protectionist already.
He argues that ``if Europe is strengthened, there will be less fear, less need for protectionism, not more.''
By the end of the year, laws will be adopted by members of the EC which will show exactly what Europe in 1992 will look like. Even before those laws, Lord Cockfield is bullish on 1992.
``This is the greatest development that has happened since the end of World War II,'' he says. ``It stands on the same basis as Bretton Woods,'' the agreement that formed the basis of the postwar monetary system. And referring to European unity, he adds, ``It is not an end, it is a beginning.''