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Cold Feet on Euro-1992

WITH 1992 bearing down on European business like a high-speed French train - or, perhaps, a Japanese one - a lot of executives from Birmingham to Berlin, Brussels to Barcelona, are getting worried. That's the conclusion of a report in The Economist on Project 1992, the European Community's plan to create a single regional market by the end of next year. Europe has a lot to gain from uniting its fragmented market of 300 million consumers. The elimination of customs red tape and the conforming of product standards will widen markets for European producers and improve business efficiency.

But many business leaders, the report finds, are recognizing with a gulp that competition produces losers as well as winners, that it punishes inefficiency while it rewards efficiency and innovation. The result is pressure from some powerful business quarters to fudge on the single-market project.

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Three concerns are highlighted. First are attempts to lessen competition in some industries through cross-border mergers and even illegal collusion. Some business combinations may be needed to confront giant Japanese and American firms, but the EC's trust-busters will have to be vigilant.

Another worry is that EC governments will yield to demands to preserve subsidies that are a more integral part of the business environment in Europe than in the US or even Japan. Governments will be tempted to maintain subsidies both to avert unemployment in sluggish industries and because of national pride in certain flag-carrying champions.

Finally, free-trade advocates are concerned that, even as barriers fall within Europe, protectionist pressures to build a "fortress Europe" will grow. Fear of Japanese competitors, more than American, is behind such pressure, which already can be seen in the semiconductor and automobile industries.

The premises underlying Project 1992 continue to make sense for both Europe itself and the world trading order. The visionaries who conceived the project need to stand firm in defense of their ideal.

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