ECONOMIC UNIFICATION OF THE EC

Only occasionally is the European Community referred to as the Common Market any more. Almost 30 years after the Treaty of Rome was signed by six European countries who hoped to create integrated economies, it is clear that the term Common Market remains a misnomer.

Even at the most superficial level there are few signs of unification, with border controls still very much in evidence. The 320 million people living in the twelve member states of the European Community invariably need to show passports when traveling from one country to another and freight forwarders have to obtain customs clearance.Less apparent but more economically damaging are the restrictions on trade in services between the twelve; the lack of common standards; the absence of mutual recognition of professional qualifications and dozens of other issues on which there is no harmonization. Altogether, the European Commission has to reach agreement on around 300 changes of legislation before a genuine common market can be achieved.

Britain's Prime Minister, Margaret Thatcher, is acutely aware of the urgency of creating a single unified marketplace free of any internal

barriers, and has made this a key issue of the United Kingdom's six months presidency of the EC.

As host of the summit meeting of EC leaders in London last Friday and Saturday, she was able to put the subject of economic unification high on the agenda.

In a summit, which studiously avoided any seriously contentious issues such as the Community's looming budget crisis and reform of the Common Agricultural Policy, which has resulted in massive food mountains, Mrs. Thatcher had little trouble in winning agreement on the need for deregulation of restrictive practices and the dismantling of economic red tape.

Only relatively recently have European politicians and industrialists started to grasp quite how badly the lack of a homogenous home market may be hindering EC-based companies in the world marketplace. The additional costs incurred because, for example, of different technical specifications in each of the twelve Community countries or the numerous documentary requirements make it far more difficult to compete effectively against Japanese or United States corporations, which each enjoy a large domestic market.

Recognizing the damage being done to Europe's industrial strength, Mrs. Thatcher has become the standard bearer of the liberalization lobby.

Last year Community governments set themselves a target date of 1992 by which time to achieve a fully integrated common market, but in the early weeks of Britain's presidency of the EC it was becoming clear that the program for reform was falling seriously behind. Lord Cockfield, the former U.K. trade secretary who is now the European Commissioner responsible for steering the necessary reforms through the Council of Ministers, warned recently that progress was too slow and that greater discipline at all levels of the legislative process was vital if the target date is to be met.

Mrs. Thatcher intervened directly last month when she appealed to fellow heads of government to press for speedier action, and early last week her efforts were rewarded by a sudden burst of activity from EC trade ministers who agreed upon 12 measures, which will contribute towards freer trade within the Community. Late last week, further progress was made towards liberalization of insurance markets in the EC when the European Court of Justice in Luxembourg ruled that a series of barriers against the marketing of non-life insurance in the EC were illegal.

The British Prime Minister hopes that endorsement of her commitment to a deregulated and unified economic trading bloc by other EC leaders will add fresh impetus to the reform program and that further progress will be seen in the final three weeks of Britain's presidency, which ends on the last day of this month.

At the summit, the twelve countries said they wanted to see further progress during 1987 on the next phase of capital movement freedom throughout the Community; the opening up of markets in financial services including insurance; mutual recognition of testing and certification; full arrangements for a single market in road haulage by 1992; the opening of public purchasing to cross-border competition; and mutual recognition of professional qualifications.

They also called on their transport ministers, who will be meeting next week, to make further progress on the deregulation of air and sea transport, an issue particularly close to the heart of the British government, which has negotiated a number of bilateral air service pacts in the absence of agreement on a multilateral liberalization of air fares, routes and capacity. At the same time, the heads of government instructed officials to reach agreement before the end of the year on proposals concerning public purchasing and telecommunications standards.

Broad consensus on the need to eliminate trade barriers is easy enough to obtain, though. The real problems will arise when member states start

discussing the small print and begin to consider how votes at home might be affected.

Mrs. Thatcher is convinced that, for her, liberalization is a vote winner, and she is determined to get over the message of how freer markets will create more jobs and have a direct beneficial bearing on individuals' living standards and welfare in all sorts of ways.

As a major trading nation with a hugely important service sector, the United Kingdom can only gain from a reduction of barriers against trade in goods and services. But when they get to the negotiating table, some other countries are bound to have cold feet about how their industries might fare in an unprotected world.

And EC leaders carefully side-stepped the most difficult and controversial issue of all, reform of the Common Agricultural Policy which, because of the huge subsidies paid to farmers, is threatening to bankrupt the Community. That is being left to agriculture ministers who started to consider this momentous problem at a two-day meeting, which began in Brussels Monday.

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