EC Unification Plan Worries Administration

The Reagan Administration, in its first major policy statement on Western Europe’s plan to create a unified economy by 1992, expressed fear Thursday that Europeans may adopt protectionist measures excluding American business and other foreign companies.

“The creation of a single market that reserves ‘Europe for Europeans’ would be bad for Europe, for the United States and for the (global) economic system,” M. Peter McPherson, deputy Treasury secretary, said in a speech.

McPherson emphasized the U.S. position in support of European integration but outlined a number of specific concerns held by U.S. officials that added up to a fear that Europe “may try to exclude others as it liberalizes internal barriers.”

Concern Over “Reciprocity”

Under the European plan, the 12 nations of the European Community (also known as the Common Market) are scheduled to eliminate a host of existing regulatory, trade, technical and tax differences that force companies to operate in a variety of different, inefficient ways in the various European countries.

The goal of creating a single market for the European Community’s 320 million people is to enable Europe to improve its faltering economic performance of the past decade. European officials estimate that the drive could boost Europe’s overall economic activity by 5% above what it would otherwise be and cut prices by 6%. Moreover, the plan is supposed to create as many as 2 million additional jobs--a vast improvement over the actual loss of jobs that Europe has suffered since the late 1970s.

But U.S. officials, while welcoming progress toward the 1992 goal of a unified market, have grown increasingly concerned in recent months about statements from prominent Europeans who are worried that European companies may not be able to withstand tougher outside competition.

“We’re afraid there may be a tendency to settle upon the lowest common denominator by adopting the standards of the most protectionist nation,” McPherson said in an interview. “That is a slippery slope.”

The biggest concern among U.S. officials, McPherson said, is that the Europeans are interested in pursuing a policy of “reciprocity” in certain sectors of the economy, which might require other countries to emulate European rules before being granted equal access to the newly opened market. Instead, McPherson said, the United States favors a standard of “national treatment” that requires countries to treat foreign firms the same way they treat their own companies.

“This standard of reciprocity could be applied in a manner that would discriminate against firms in the United States seeking entry to the EC and against U.S.-owned firms already operating in Europe,” he said.

“The danger of this approach,” he added, “is that legitimate differences in national regulatory regimes could be used to justify discrimination against foreign firms.”

Officials of the EC, however, said many of the Administration’s objections reflected a mistaken view of the European plan.