Delegates at SIPTU's conference in Ennis heard that thousands of jobs will be lost if, as the European Commission intends, duty-free sales within the Union are abolished. The process will work like this. To take airports alone, duty-free accounts for about 40 per cent of Aer Rianta's profits. Take this away and Aer Rianta will have to find alternatives. These are higher charges to its customers, for example, the people who use their car-parks.
By far the most important customers, however, are the airlines which use the airports. Aer Rianta will increase the service charges, the airlines will pass the increase on to the travelling public, the public will travel less, the airlines will make less money unless they raise fares again, and so the unvirtuous circle is complete.
Much the same will happen with the car ferries between the Republic and the UK. The ferries calculate that every 10 per cent increase in fares brings about a 10 per cent reduction in the numbers who travel.
Stena Line's chief executive, Mr Bo Lerenius, cogently painted a picture of the broader European scene at a Brussels conference last month attended by Commissioner Mario Monti and some of his officials. "If someone told you," Mr Lerenius said, "that in a Union where over 18 million people are unemployed, where economies are struggling to regain pace . . . if someone told you that the governments of that Union . . . were persistently protecting a decision that from every aspect is going to worsen the situation for that Union, would you believe it?".
Mr Lerenius dealt with the arguments against duty-free, which have taken on an almost theological force with the Commission. Why, he asked, should we be allowed to buy duty or tax-free goods going across borders by ferries or aeroplanes? Why not in a bus? Or after having spent two days in hospital? Or once a month?
Nobody disputes that duty-free is a distortion of the principle of the single market. The Council of Finance Ministers which decided in 1994 to abolish duty-free had the best of motivation: the purity of a single market. The trouble is, as Mr Lerenius pointed out, they are clashing with the real world. Duty-free was invented - in Shannon - in 1947 for the relatively few flying from Europe to the United States. It is now a major industry, supporting directly and indirectly 140,000 jobs within the EU. About 80 per cent of what is sold in EU duty-free shops is manufactured within the EU. It influences the quality of life and future of employees, from distillery workers in northern Scotland to the waiter in a Cretan restaurant. It plays a vital role in regional communications. In winter, for example, some parts of Scandinavia are accessible only by sea. The ferries which ply these routes can only afford to do so because of the income from duty-free. Its abolition would mean isolation for entire communities, something which another side of the Commission would deplore.
Mr Lerenius argues that, in academic theory, duty-free may be a distortion, but in reality it benefits the consumer, which after all is the purpose of the single market. Dutyfree facilitates the free movement of people within the EU by offering lower travelling costs by sea as well as by air. The lower transportation costs have led to expansion in the regions, increased tourism, more spending and investment than would have been achieved without duty-free.
Duty-free purchases are made by more than 130 million Europeans every year. Aer Rianta has been actively lobbying politicians to take note of this. Germany, a strong promoter of the single-market idea, finds that since unification some ferries from Baltic ports of the former East Germany are uneconomic without the revenue from duty-free.
The signal from the Commission is that it is determined to abolish duty-free according to the timetable set. The industry has been asked: "We gave you a breathing space in 1994, and what have you done to find a replacement source of income?" Mr Lerenius says the questions are silly because governments have failed to implement the other parts of the single market theology: excise duty and VAT rates within memberstates are even more divergent than they were in 1994.
Mr Lerenius wonders why he is pleading a case which should not need to be pleaded. "Duty-free is about something that has been part of society for 50 years . . . If you tear it away it will hurt. It is not a zerosum game. It concerns us all." That, too, was the message emerging at SIPTU last week.
