Duty-free lobby gains some ground

The campaign to save duty-free sales won its biggest victory to date in Vienna this weekend when European leaders agreed to reconsider a decision to end duty-free shopping within the EU next year. They asked the European Commission and EU Finance Ministers to examine the implications of a 1991 decision to put an end to the cheap cigarettes, alcohol and perfume that have been a perk of cross-border travel for half a century.

The President of the Commission, Mr Jacques Santer, said that he would consider ways of limiting the loss of jobs in the duty-free industry, possibly by compensating the regions that are worst affected.

"Funds are available so we are going to look at that," he said.

But the Taoiseach, Mr Ahern, dismissed the Commission's proposals so far as unworkable and predicted that Mr Santer and his colleagues were unlikely to advance many new ideas.

"They will continue to argue for some of the methods they put forward, perhaps by using some of the structural funds to help people with difficulties," he said after the final session of the summit on Saturday.

"I made it quite clear that the reason why nobody was taking up the Commission's proposals over the last seven years was because they were no good. I put that bluntly to the Commission."

Mr Ahern welcomed the EU leaders' decision to reopen the duty-free issue, which had been considered a dead one as recently as a year ago. But the obstacles in the way of a reversal of the 1991 decision are immense, not least because any decision to revoke or postpone the ban on duty-free sales must be taken unanimously by all 15 EU states.

Although the finance ministers have been asked to examine the issue, only the Commission has the authority to make a proposal to amend the duty-free ban. Mr Santer indicated that the Commission would be reluctant to make any proposal without a guarantee that it would be accepted by all EU states without any changes.

"We were asked to look at the possibility of a limited extension, maybe for a few months. The Commission will look at it seriously but we're not committing ourselves now to any particular decision," he said.

The Dutch government remains sceptical about the desirability of maintaining duty-free sales and the Danish government could even collapse over the issue.

Denmark's Finance Minister, Ms Marianne Jelved, is angry that her Prime Minister, Mr Poul Nyrup Rasmussen, has opened the door to keeping duty-free and may now withdraw her vital support in his coalition regime.

When Mr Rasmussen finally caved in to the demand by other EU leaders to allow a rethink of the ban, Ms Jelved demanded a private meeting with him that was so heated that officials were asked to leave.

Mr Rasmussen insisted on Saturday that his agreement to allow the EU Finance Ministers and the Commission to examine the impact of the 1991 decision did not imply that his government would agree to reprieve duty free.

"The Commission has said it would not feel obliged to make any proposal and the Danish government does not feel obliged to vote for an extension," he said.

Ms Jelved, who opposes a reprieve of duty-free as undermining the single market and the authority of the EU, was more forthright.

"The Danish government has not changed its policy. There is nothing new under the sun," she said.

When asked if this meant that Denmark would vote against any move to save duty-free, she replied: "Yes, that's clear."

Trade unions, airport authorities and the tourist industry have campaigned fiercely against the decision to end duty-free sales, despite an unusually long transition period of seven years.

The duty-free lobby claims that 140,000 European jobs depend, directly or indirectly, on the industry, 4,000 of which are in Ireland.

But critics insist that most airport shops would remain open and point out that massive mark-ups mean that many items in duty-free shops are more expensive than in conventional stores.