The Barriers Within

While tariff walls fall within Europe's Common Market, new barriers often rise to replace them. Suddenly exposed to an influx of their neighbors' goods that offers strong competition to local products, the members of the Six have found ingenious and devious ways to hamper their economic rivals and counter the spirit of free trade that prompted the establishment of the Common Market six years ago. Everyone, of course, blames the other fellow, and accusations of weaseling or violations of law can be heard in every member nation.

Last week Common Market officials, eager to eliminate arbitrary and sub rosa barriers to trade, welcomed a break through in "the Gingerbread Case." The Belgian government announced that it will halve the levy on imported gingerbread to 70-c- per 100 kilos, the charge before the Common Market was set up. Belgium's gingerbread imports amount to a bare $66,000 a year, but the decision set a significant precedent, for it was the result of a European Justice Court ruling that Belgium's gingerbread levy was punitive--the first such ruling. This week the European Economic Community is holding a meeting of the Six in Brussels to discuss 150 obstacles to competition that have cropped up so far--and the means to eliminate them.

Great Caramel War. Common Market nations, forced to work for the elimination of tariffs among themselves, seek to get around it through fees and customs levies. The Rome Treaty ruled out limitations on trade, but in Article 226 gave member nations the right to ask for temporary protection where specific industries are imperiled. The Six have all been notably quick to take advantage of the escape clause. In "the Refrigerator War," France last month imposed a 12% duty on an increasing influx of the cheaper Italian product. And in what has come to be known as "the Great Caramel War," German candy manufacturers won tariff protection against French candy makers after caramel imports by Germany had jumped 516% in three years. Similarly, France managed to get tariff extensions to slow down imports of German transistors. Italy was allowed to protect its lead, zinc, sulphur and silk industries. And the three Benelux nations got a six-month respite on penicillin imports from elsewhere in the Common Market.

Protection for home industries does not always take the form of relief under Article 226. Though tariffs are on the way out, the Europeans can still collect import taxes on one another's goods--and do. They also help their own industries to compete by imposing "turnover taxes" on imported goods or by giving exporters generous tax rebates on domestic turnover taxes. Opportunities for legal chicanery are many. The Italians often estimate the value of imported products above actual value to make taxes on them much higher than on locally produced goods. They also demand no fewer than 27 government forms, 105 signatures and 75 stamps for each imported automobile.

Subtle Warfare. France and Italy have a "special tariff-stamp duty" that amounts to a 3% surtax, and other nations require various fees to be paid to all sorts of inspectors and checkers. Stiff inspections of imports are common and, not surprisingly, often involve an importer in differences of sanitary or safety codes. Whenever Italian espresso machines arrive, French inspectors have a heyday with France's strict code for compression machines, have managed to stem the flow of the Italian imports.

Since there are not yet any Common Market regulations for wine, that European necessity is also the subject of some subtle warfare. The French recently took new steps to restrict the brandy raw material that the German wine industry needs to make its own brandy, and German champagne makers are worried about a French drive to classify as "quality" champagne only that grown, processed and bottled on the same site--a move that would disqualify the grape-importing Germans and rob them of a 37.5-c--a-bottle tariff protection. To protect its grape growers, Belgium last summer let wagonloads of French and Italian grapes rot on its border while Belgian inspectors all too carefully checked the licenses of the importers. But the French got back at Belgium: by slowing up licenses with as much red tape as possible, they effectively kept Belgian chocolate out of France during the pre-Christmas season, when the sweets industry does most of its trade.

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