Shot in arm for duty-free campaigners

They may not be celebrating victory just yet, but the tide has suddenly turned for those campaigning to retain dutyfree sales…

They may not be celebrating victory just yet, but the tide has suddenly turned for those campaigning to retain dutyfree sales within the European Union. Political events in recent days have hardened the conviction of the duty-free lobby that plans to abolish such sales from next June will be shelved for up to five years.

The issue, however, is still in the balance and could effectively be decided this weekend when it comes before EU leaders at the Vienna summit, where it will be raised by either the British Prime Minister, Mr Tony Blair, or his French counterpart, Mr Lionel Jospin. Britain's unexpected support last week for a postponement of abolition, along with Germany's pledge to put it on the agenda of its EU presidency in January, was the shot in the arm the duty-free lobby needed.

And the good news, for those who want duty-free retained, has kept on coming. On Tuesday, Denmark, until then considered to be implacably opposed to retention, indicated it would listen to the arguments for an extension of the current regime.

The following day another hardline opponent of retention, Sweden, went even further. That country's Prime Minister, Mr Goeran Persson, said he would not block such an extension "if the large countries want it".

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The developments were described as "encouraging" by the Irish Duty Free Association, while the Federation of Transport Workers' Unions in the EU said they provided the first "glimmer of hope" for those working in the industry.

But the fight to save duty-free is far from over. Several EU states are yet to be convinced and the Vienna summit may be the best opportunity remaining for something to be done.

A postponement of duty-free abolition will require, in the first instance, a unanimous decision to that effect by EU finance ministers, who next meet in January. But they will certainly take their lead from the outcome of the debate in Vienna.

When finance ministers met last week, only five other states backed a French proposal to extend duty-free within the EU by five years - Ireland, Britain, Germany, Greece and Spain. However, two of the six who opposed the proposal, Denmark and Sweden, have since softened their stance.

Austria - which holds the presidency - Belgium and Luxembourg took no position at the meeting, leaving Finland, Italy, Holland and Portugal in the confirmed "no" camp.

Of these, duty-free lobbyists believe Italy, which has hardened its stance since the recent change of government there, and The Netherlands may be the toughest nuts to crack.

Then there's the European Commission itself, which continues to argue that duty-free shopping is an anachronism in a single market. The Commission also disputes the duty-free industry's claims that abolition will cost thousands of job and lead to higher air and sea fares.

Mr Philip Ryan, acting director of the Commission's office in Dublin, said duty-free shops had expanded to encompass a broad range of taxable goods, to the extent that only a small percentage of their profits were now derived from actual duty-free sales.

He added that air and sea passenger traffic was expected to double by 2005, "so there is no prospect whatever of services closing down and jobs being lost".

However, the assistant general secretary of the Brussels-based Federation of Transport Workers' Unions, Ms Brenda O'Brien, insisted that the planned abolition was already causing job losses. An estimated 4,000 workers are directly or indirectly employed in the industry in Ireland. Only dutyfree sales for people travelling within the EU, which amount to 70 per cent of the total business, are to be abolished. Duty-free shops will still be open for those travelling elsewhere, outside the Union, even if the June abolition goes ahead.

Even a five-year extension would probably just bring the industry back to where it is today, campaigning for another reprieve. "Well, no industry will accept its own abolition," said a spokesman for the International DutyFree Confederation in Brussels.

The day of reckoning has been put off once before, when finance ministers voted unanimously seven years ago to postpone abolition from 1993, as originally planned, to next June.

Overturning the previous decision is not just a simple matter of finance ministers voting again. A new proposal would have to come from the European Commission and the opinion of the European Parliament must also be sought.

But there is still time for these procedures to be implemented. And a unanimous vote in this context does not require the active support of every finance minister, just a "yes" vote or an abstention.

But this may prove academic if the campaign to preserve the status quo fails to maintain its pace in Vienna.

Chris Dooley

Chris Dooley

Chris Dooley is Foreign Editor of The Irish Times