Potholes Appear in Road to 1992

AS long as it takes twice the time to transport goods between Antwerp, Belgium, and Rome that it does to cover a similar distance in the United States, European business is not going to be on the inside track of increasingly tight international competition.That is one of the simple but practical conclusions of a group of prominent European business leaders speaking out recently on the challenges facing a Europe determined to rival its Japanese and American competitors. With the European Community's single, borderless market less than 500 days away, Europe's business community is turning increasingly blunt about the hurdles the Continent faces if the dream of a Europe of freely circulating goods, people, and capital is to come true. The more traditional worries - such as the infrastructure bottlenecks, customs slowdowns, and varying drivers' unions' rules that make transportation a continuing preoccupation - have recently been joined by a whole new dimension of warnings concerning the political construction of a united Europe and the revolutionary changes in Europe's east. "My profound conviction is that the Europe we have begun to build so courageously is now in front of a wall that it is not capable of crossing," Jacques Calvet, chairman of France's Peugeot, recently told the Paris daily Le Figaro. "The Europe we are busily trying to build has no chance of succeeding." Mr. Calvet says the fundamental decisions the EC faces before it can assume the economic and political roles the world now expects of it can't now be taken. Recent events in Europe are pulling the EC's 12 members in different directions, he says. The French carmaker, who has already created rifts with other European car producers over his fiercely protective and anti-Japanese position on the European car market, is known for his blunt words. But now he is finding an echo - though a less strident one - in other prominent European business leaders as well. "The pretense that the Community can satisfactorily deal with economic subjects while leaving the management of all other foreign affairs in other hands has become an anachronism," says a report issued last month by the European Roundtable, a group of 45 prominent company chairmen. The ERT companies represent more than $600 billion in sales and 3 million employees in virtually all major industrial sectors. The elite group, which was influential in helping formulate the hundreds of directives required for the EC's single market, now says Europe must change at a "new, faster pace," so that it can address the challenges of a new Europe even while it confronts international economic competition. "The Community faces chaos on one side, and absolutely pitiless competition [from the Japanese] on the other," says Jme Monod, president of Lyonnaise des Eaux-Dumez. "We must move forward together, and we must move quickly," he says. In order to build a more competitive Europe that is also a world political player, the ERT says Europe must advance along four prinipal "axes:" * Completion of Europe's single market. The ERT report notes that the EC's 12 member countries still have to adopt a quarter of the single market's provisions targeted for the end of 1992. * Extending Europe's "human" dimension. Business leaders say Europe must begin now to develop more "European" and less nationalistic education systems, push for better cross-national training of workers, and prepare for an aging European work force. * Ensuring the basic elements for sustaining Europe's economic development. The ERT says plans for Europe's energy supplies and improvement of infrastructure must be reinforced, while integrating environmental protection. Along these lines, the ERT recommends creation of an independent institute to monitor the state of infrastructure and progress in streamlining transportation. * Simultaneous "deepening and widening" of the EC. Business leaders say Europe must move towards a single currency and a coordinated foreign policy with a defense capability even as the EC expands to include 20 members or more by the year 2000. The ERT calls for creation of one Community currency by 1998, although roundtable member Umberto Agnelli, chairman of Fiat, says the currency should be circulating by 1996. "The important thing is not so much the exact date but a strict timetable, so business can plan and know what to expect," says Patrick Sheehy, chairman of B.A.T. Industries. The EC estimates that working with a dozen European currencies instead of one costs European business more than $15 billion a year. The ERT's creation in 1983 is one example of how European business, traditionally less involved with government than those in either the US or Japan, has moved to boost its role. "It's not the only group of its kind, but it's notable for who it has assembled," says Philippe Haspeslagh, an international specialist in mergers and acquisitions at INSEAD, the European Institute of Business Administration in Fontainebleau, France. The roundtable is probably more influential than other industrial groups because it includes companies from across Europe and not just in the EC, and because it assembles a wide range of industries "and is not sectoral," says Dr. Haspeslagh.