A Big Step for European Free Trade

CALL it the Jericho phenomenon: In Europe walls keep tumbling down. The wall that crumbled in Berlin was concrete. The crash you heard last Wednesday was the sound of trade barriers collapsing.After two years of negotiation, the 12 members of the European Community (EC) and the seven members of the European Free Trade Association (EFTA) announced that they will create a vast common market of 380 million producers and consumers. Starting in 1993, the 19 countries will remove virtually all tariffs and other barriers to the movement of goods, services, people, and capital within the European Economic Area. The EFTA countries - Austria, Finland, Iceland, Liechtenstein, Norway, Sweden, and Switzerl and - also will adopt EC laws on competition, labor practices, consumer and environmental protection, and social policy. The pact can be expected to cause some short-run hardship as producers, sellers, and workers adjust to a more competitive marketplace. Overall, though, the agreement can only be seen as a major step forward to greater prosperity and cooperation in Europe. By itself, the formation of the European Economic Area will not affect negotiations within the EC on strengthening political unity among the members. Yet the agreement may intensify the debate over whether the community should be "deepened" or "widened." Some EC nations, led by France, have favored steps to increase political union before adding new members. But EC members Britain and the Netherlands, and neighboring nonmembers like Austria, Turkey, and some Eastern European countries, have pressed for a more inclusive trade group, with less emphasis on political cohesiveness. The formation of the larger trade bloc could impart some momentum to widening, at the expense of political deepening. That's a development to watch. In the meantime, a bigger and freer European market is emerging as a more formidable international competitor.

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