Report endorses ending of duty-free

The abolition of intra-EU duty-free sales appears certain to go ahead in June, following a European Commission services report…

The abolition of intra-EU duty-free sales appears certain to go ahead in June, following a European Commission services report which concludes that the employment case for extending the facility is "extremely weak".

The report, which is likely to be endorsed by the Commission this week, will reiterate its earlier proposal that regional funds may be used to soften the local employment effect of abolition.

That suggestion has been denounced by Mr Frank O'Connell, of the International Duty-Free Confederation (IDFC), who claims the Commission has accepted that 56,000 jobs directly linked to duty free will be lost.

A Commission source insists the business will acknowledge.

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On the other side of the argument to the IDFC in recent weeks have been Euro-commerce, representing retailers throughout the Union, and the anti-smoking lobby, which has argued that subsidising smoking through duty free undermines health strategies.

Although the fate of duty free was supposedly sealed in a unanimous vote of EU finance ministers in 1991, a vigorous campaign led by the industry and unions through the IDFC and more recently by the Irish Government has kept the issue alive.

Support for an extension from the French, British and Germans at the Vienna summit in December forced the Commission to prepare this report, which was to include consideration of the possibility of a limited extension.

Yet even a stay of execution will require a unanimous vote of member-states on a proposition from the Commission. Few give the IDFC's prospects much hope.

Mr John Hume of the IDFC warns that a Commission hint of extra cash being made available is a "smokescreen". Billions would be needed.

Patrick Smyth

Patrick Smyth

Patrick Smyth is former Europe editor of The Irish Times