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Eurocrats In Retreat (Int'l Edition)


International -- European Business: BRUSSELS

EUROCRATS IN RETREAT (int'l edition)

The EC's agenda is shrinking, but does that help business?

Jacques Santer finally has found a rallying cry. Ever since taking over as president of the European Commission four years ago, he has struggled with little success to improve his Brussels-based bureaucracy's poor public image. Now, he seems to be giving up. On Oct. 24, Santer will host an informal summit of European leaders in Portschach, Austria, where he will trumpet the slogan: "Do LesS But Better."

Santer's strategy represents a major retReat by the EC and leaves business with mixed feelings. Companies certainly won't miss Brussels' stringent, intrusive labor and product regulations. And the minimalist philosophy may be appropriate, since the single currency is likely to lead to tax harmonization, deregulation, and saner, more uniform market rules eventually. But in the short term, Santer's retreat means business can expect little progress in crucial areas such as Europewide legislation on financial services and environmental issues. "We like the `Do Less But Better' philosophy--depending on where less is done," says Caroline Croft of the Union of Industrial & Employers' Confederation of Europe.

Brussels doesn't have much choice. Britain long has railed against centralizing authority. French President Jacques Chirac wants to protect France's political autonomy, while Bonn opposes paying more for European projects. And despite his insistence on foreign policy continuity, new German Chancellor Gerhard Schroder looks less attached to continental unity than his ardently pro-European predecessor, Helmut Kohl.

Brussels already is producing fewer Europewide laws and regulations than in the past. In the 12 months before Europe became a single market in 1992, the commission put forward 60 new legislative proposals. Last year, the figure was 10. In recent weeks, Santer has vetoed staff ideas to introduce uniform drunk-driving limits and safety rules for zoos.

More important, some analysts fear there will be a regulatory power vacuum when the euro is adopted. The new Frankfurt-based European Central Bank has no authority to supervise commercial banks or regulate national stock markets. "Although many of us believe there should be a single European Securities & Exchange Commission, it's not in the cards," says Karel Lanoo, a finance specialist at the Center for European Policy Studies in Brussels. So rules on insider trading, corporate taxation, accounting, and shareholder rights will continue to vary across the Continent, making it hard for business to reap the full benefits of a single financial market.GRIDLOCK. Where the EC still does make efforts at reform, institutional gridlock stalls the process. Most recently, the European Parliament and the Council of Ministers--which represents member states--have held up commission proposals on labeling for genetically engineered foods--to the dismay of biotech giants such as Novartis and Monsanto Co. "The whole process is incredibly slow," complains Monsanto President Hendrik Verfaillie.

Not every arm of the EC has atrophied. Trade Commissioner Leon Brittan, who has led a crusade opposing U.S. sanctions again Cuba and Iran, and Competition Commissioner Karel van Miert, who slowed Boeing's merger with McDonnell Douglas and fined Volkswagen heavily for price-fixing, have managed to carve out significant power. But Santer is clearly out to diminish the commission's role in Europe, not enhance it.By William Echikson in Brussels


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