WRITTEN QUESTION E-0095/98 by Bryan Cassidy (PPE) and Gunilla Carlsson (PPE) to the Commission (30 January 1998)

Subject: Duty-free sales within the EU

Does the Commission agree that the ECJ judgment of 11 November 1997 in Eurotunnel SA v Sea France (Case C 408/95) clarifies the legal position on the ending of intra-EU duty-free shopping in July 1999?

Is the Commission aware of the activities of a well-financed lobby aiming to overturn the unanimous 1991 Council decision to end the taxpayer-financed duty-free concession in 1999?

Does the Commission agree that this powerful body is unscrupulously playing on workers' fears for their job security?

Will the Commission launch an information campaign to counteract the misleading propaganda of the duty-free lobby?

Will the Commission also set up a web site to rebut the misinformation on the web site of the International Duty-Free Confederation (IDFC): www.dutyfree-europe.com.?

Answer given by Mr Monti on behalf of the Commission (5 March 1998)

The Commission agrees with the Honourable Members that, following the judgement of the Court of justice in case C-408/95 (Eurotunnel SA v. Sea France), the legal situation is now clear.

Indeed, the Court of justice did not call into question the validity of Council Directives 77/388/EEC and 92/12/EEC. The decision of the Council confirms the views of the Commission. The outcome of this case not only endorses the decision on the abolition of duty-free sales as adopted by the Council but also confirms these directives as a whole were an appropriate response to the concerns expressed by the Parliament.

As to the political aspects, the Commission is aware that a wide coalition of interests, lead by the duty-free lobby, is trying to reverse the Council decision. The Commission has made it very clear that this decision will not be changed.

The Commission is indeed concerned with any threats to employment. As regards the abolition of duty-free sales, it is however difficult to predict the real effect on employment with any accuracy because there are so many variables involved.

The dramatic figures on job losses produced by the duty-free lobby can only be considered as exaggerated. These figures are taken from studies of the lobby which predict the short term impact of abolition of duty-free sales on employment in affected transport sectors. These figures need to be balanced, taking into account the positive impact of the decision to abolish duty-free sales. Indeed, the benefit of a possible shift in demand towards the conventional retail sector should not be discounted.

The figures of the duty-free lobby confirm that there is increased demand at airports and on airlines and ferries. This is the result of the transport liberalisation in the Community which has created a substantial market for conducting business at airports and on airlines and ferries. From experience in the United States with tax-paid retail shopping, it is evident that this very captive market provides a lucrative business which will not disappear with the abolition of duty-free sales. The real challenge is for the industry to explore the opportunities such a market presents.

To prevent negative effects on employment and to alleviate workers' fears for their job security, it is important that duty-free shop operators use what is left of the transitional period constructively and prepare for the end of duty-free sales to travellers within the single market.

It is evident that the common position of the Council and the Commission on the duty-free issue is supported by solid arguments. The Commission recently explained the reasons for the Council decision, and the fact that these reasons remain sound, in a press release, accompanied by a technical memo ((Commission press-release (IP/97/808) and attached information memo (MEMO/97/82) of 24 September 1997. )), all of which can be found on the Internet ((The homepage of DG XXI is accessed by 'http://www.cc.cec/DGXXI)publicat/newsroom/index.htm'. )). This has significantly helped to balance the press coverage and the Commission will continue the efforts to ensure that the debate remains detached.