O'Rourke demands Commission honour pledge on duty-free

The Minister for Public Enterprise, Ms O'Rourke, yesterday demanded that the European Commission honour its pledge to produce a study on the likely effects of the proposed abolition of duty-free sales.

Speaking at a public debate in Brussels on the future of duty-free, Ms O'Rourke promised to sustain a campaign to reverse the decision taken in 1992 to suspend internal EU duty-free facilities from the end on June 1999. "A large number of people's livelihoods will be affected by our future actions," she said. "We cannot ignore the issue and hope that it will go away."

But, speaking for the Commission, its director-general for tax, Mr Jim Currie, said that "the Commission has no intention of proposing any change". He defended the failure to produce a study of the effects of abolition, claiming that such a report had become unnecessary when ministers had decided to give duty-free a seven-year reprieve.

Although the decision has indeed been taken to abolish duty-free, a formidable lobby of the industries affected and their workers is now under way. Yesterday the leader of the EU's Federation of Transport Workers Unions, Mr Hugues de Villele, warned that the battle to save an industry employing some 140,000 in the EU would have to be taken to the streets of Brussels.

His call for determined opposition among workers was endorsed by a representative of SIPTU, Mr Paul Bell.

The president of the Stena Line, Mr Bo Lerenius, said that dutyfree had been an integral part of transport economics for 50 years. "It works to nobody's disadvantage."

The campaign's focus at present is on getting the Commission to honour the undertaking, given to ministers and repeated to MEPs, to conduct an objective study in the belief that such a report will produce irrefutable evidence of job losses on a scale that would be politically unsustainable.

Ms O'Rourke refuses to accept that the decision is irrevocable and says that seven or eight member-states, largely those on the EU's periphery, are now prepared to reverse it. To do so requires a proposal from the Commission and unanimity in the Council of Ministers.

Lobbyists for the International Duty-Free Confederation also point to signs that countries such as Germany are coming under domestic pressure to reconsider their positions. The Bundesrat, the upper house, voted recently to do so and is expected to be followed by the Bundestag shortly. The British government will face a motion at next week's Labour Party conference to do likewise.

Sources in the Commission say that only very heavy pressure from the member-states is likely to force a reappraisal, and then only in the form of another temporary reprieve.

Ms O'Rourke told the conference that the Commission's view reflected "dogma ruling the day". "The Irish experience has been that profits from commercial activities, particularly from duty-free sales, have enabled the transport sector to minimise costs. We do not see this as a distortion of competition. We see it as a sound commercial practice to reduce access costs for both exports and imports and for tourism which is so important to our economy."

And she warned the Commission of the dangers of distancing itself from public opinion. "What we are about today is the will of the people."

Mr Currie described the duty-free concessions as incompatible with the principles of the single market and a "massive annual subsidy of up to two billion ecus (£1.5 billion) to the businesses involved. No one would give it up voluntarily, but there is no such thing as a free lunch." The subsidies, he said, are effectively paid for by those who do not travel by air or ferries.

"Those who travel most," he said, "are those in business, politics, and the professions." Duty-free was a subsidy by the majority of the more affluent minority.

It was a line that drew a sharp riposte from Ms O'Rourke. "I wonder from what dusty cupboard that argument was dragged," she said to applause. Talk of "elitism" was outdated by 25 years. Her constituents, from whatever background, now travelled in huge numbers on package holidays.