O'Rourke more optimistic over duty free issue

There is new hope for the duty-free industry, the Minister for Public Enterprise, Ms O'Rourke, has argued, following a meeting of EU Transport Ministers.

There was a clear "wind of change" in member states' positions in favour of retention and she believed now there was a real prospect of getting an extension on the deadline, she said. The "wind of change" will be tested today when the issue is to be raised again by the French at the meeting of Finance Ministers in the form of a report on the effects of abolition on the city of Calais. Most significant will be the attitude of the new German Government which made an election promise to campaign against abolition. Duty-free is due to be abolished next summer on the foot of a unanimous decision of Ministers in 1992. A major lobby of the industry and its unions has been fighting, however, for a reversal of the decision. Diplomats say that much depends on how much of a fight the Germans, who take over the presidency next month, are prepared to put up. They identify supporters of duty free as Ireland, France, Germany, the UK, Italy, Spain, Finland, and Belgium, while Holland, Sweden and Denmark are against. The meeting today is also likely to see renewed calls from last week's Socialist Finance Ministers' discussion for harmonisation of corporate tax rates.

The Government can take some comfort, however, from the publication of two reports which back its position.

A working group of the Catholic bishops' conferences of the EU, COMECE, has produced a report backing the Commission's position on eliminating "harmful competition". The paper backs the idea of uniform corporate taxation within countries and argues that setting such rates should be a matter for the member states.

Between states, "the Working Group considered the maintenance of tax-rate competition per se to be an effective way of keeping government spending down to the necessary minimum". And a report from the European Policy Forum in London argues that "well-designed tax policies have transformed Ireland from a relatively backward agrarian economy into a diversified, dynamic Celtic Tiger." It would be a great shame, economist Mr Marsden argues, if its growth were "constrained by foreign politicians and EU bureaucrats with an aversion to competition and economic freedom."