EU rejects Irish attempt to reopen duty-free issue

EU Finance Ministers yesterday sealed the fate of the duty-free industry with a resounding rejection of an Irish attempt to reopen the issue of abolition.

However, while the Commission welcomed the "reconfirmation" of the decision to abolish intra-EU duty-free sales from July 1st next year, the Minister for Finance, Mr McCreevy, insisted that the fight would go on to the bitter end. "It's not over till it's over," he said, urging the duty-free lobby to take their campaign to the capitals of recalcitrant opponents of their industry.

The British Chancellor and President of Ecofin, Mr Gordon Brown, told journalists after the meeting that it was "absolutely clear" there was no prospect of getting such a vote.

Only France, Germany, and, less enthusiastically, Spain explicitly supported the move by Mr McCreevy to ask the Commission to produce a report on the employment consequences of abolition. Between eight and ten strongly opposed the suggestion. Ministers did agree to a declaration stating that "the Commission will clarify the instruments available to member states for addressing the consequences of abolition of intra-EU duty-free sales on July 1st, 1999" - merely a statement of the reality that some financially threatened regional airports may become eligible for structural funds or state aids and not a promise of any of either.

Mr McCreevy put a brave face on the outcome, pointing to support that had not been there only a year ago and insisting he had never raised expectations unduly. He said the decision would certainly lead to job losses and the reality would become clearer over the next year. "We will remain in this battle to the very end," he said.

Overall duty-free sales in the EU amounted to 52 per cent of global duty-free sales or £4.5 billion in 1996, 71 per cent of which was intra-EU business. Mr McCreevy said he regarded regional airports as key elements of the national infrastructure whose future would have to be safeguarded - "if money is needed, money will be forthcoming," he said.