Issue No. 721 RepoPt No. 481, NovembeP 9, 1982 IN THIS ISSUE page Community: Paris Impatient Over EEC Approach to Japan ... 1 Completion of Fisheries Policy Depends on Denmark ....... 2 Greek Accession to Judgments Convention Signed .•...•.... 3 Germany: More Taxes, Social Cutbacks in 1983 Budget ..... 3 Netherlands: Early Test for New Government Expected ..... 4 Britain: Accountants' Body Seeks 1 Charter' Name ......... 5 More Details on U.K. Government's Job-Sharing Plan ...... 5 Ireland: Five-Year Economic Plan Sets Pay Limits ...•.... 6 Belgium: Standard VAT Rate Goes Up Next Month ........... ? Belgian Government Asks for Voluntary Pay Limits ........ ? • Spain: Overwhelming Election Win for Socialists ..•..•..• ? Euro Company Scene ...•...•.............................. 8 Community: Paris Impatient Over EEC Approach to Japan The Council of Ministers has expressed disappointment over the slow progress in the trade talks with Japan. At their Oct. 25-26 meeting, the EEC's foreign and economics ministers de­ cided not to apply additional pressure on Japan at this point in order to avoid a further deterioration of the negotiation cli­ mate prior to the GATT conference starting on Nov. 24 in Geneva. Commission Vice-President Wilhelm Haferkamp convinced the major­ ity of the Council that, before taking action, it would be bet-' ter to wait for the outcome of the current bilateral phase of the negotiations under GATT Article 23. The French government is getting impatient with the Commu­ nity's cautious approach in seeking to make Japan ease up on im­ ports of products from the Common Market by cutting tariffs and removing administrative obstacles. France's foreign trade min­ ister, Michel Jobert, said that the GATT proceedings are taking too long, and he demanded Community measures against the import of Japanese cars, metalworking machines, TV sets and tubes, hi- -------- This lane Is In two pans. This la Parl I. -------- COMMON MARKET REPORTS (ISSN 0588-649X), published weekly by Commerce Clearing House, Inc., 4025 W. Peterson Ave., Chicago, Illinois 60646. Subscription rate $860 per year. Second-class postage paid at Chicago, Illinois. POSTMASTER: SEND ADDRESS CHANGES TO COMMON MARKET REPORTS, 4025 W. PETERSON AVE., CHICAGO, • ILLINOIS 60646. Printed in U. S. A. All rights reserved. © 1982, Commerce Clearing House, Inc. EUROMARKET NEWS No. 721 Page 2 fi equipment, and video recorders. Jobert provoked a lively discussion with his statement that free international trade should take a back seat when it comes to protecting national interests. He said, "It is childish to believe that economic growth would be achieved through trade. 11 In the meantime, the French government has introduced fur­ ther steps to discourage imports. In addition to demanding from importers that the documents accompanying goods submitted for clearance be translated into French, Paris has devised a method of shielding France's fledgling video recorder industry against Japanese imports. All Japanese video recorders must be cleared through the customs office at Poitiers, a town in western France about 100 miles away from any major port. Previously, customs offices at any port could clear the merchandise. The Japanese are expected to bring up the French govern­ ment's latest move at the upcoming GATT ministerial review meet­ ing. Also, the European Commission will investigate whether France should be brought before the Court of Justice under Trea­ ty Article 169. Completion of Fisheries Policy Depends on Denmark Denmark has been holding the key to completion of a common fish- • eries policy since earlier this year, when the U.K. and France - agreed on French access to British coastal waters. Since then, the Commission and the Council of Ministers have been trying to break the deadlock over Danish demands for larger quotas and in­ creased access to British fishing grounds. At the Council's Oct. 25-26 meeting in Luxembourg, the Commission submitted yet another set of compromise proposals that would entitle Denmark to larger catch quotas for four of the EEC's seven most valuable species and allow Danish trawlers to fish closer to Britain's Shetland and Orkney islands. These proposals were accepted by nine Member States, and Denmark was-given a ten-day period "to take it or leave it." Many Brussels observers still do not believe that this ap­ proach will be the Council's last word. They point out that Denmark has been in a difficult position all along, and not just in fisheries matters. No other Member State faces such a strong anti-Community feeling at home - a feeling just as strong as when Denmark joined the Communities. Every Danish government must respect the decision of the Folketing's special committee on Community affairs, and the recently established administra-. tion must do so particularly because of its minority status and its close commitments to the country's fishing industry. A ma­ jority of the 17-member committee representing all political parties is enough to block government proposals or decisions on Community matters. The existence of this committee, the only one of its kind,· has often prompted the Council to show patience with Denmark. • EUROMARKET NEWS No. 721 Page 3 Greek Accession to Judgments Convention Signed On Oct. 25, representatives of the ten Member State governments signed the convention on Greece's accession to the 1968 Conven­ ·tion on jurisdiction and enforcement of civil and commercial judgments and the 1971 Protocol on the Court of Justice's inter­ pretation of the convention. A major purpose of the 1968 con­ vention is to cut red tape in recognizing and enforcing civil and commercial judgments. The convention contains rules indi­ cating where one party may sue another party in another Member State. Both the convention and the protocol have become increasingly important for businesses as national courts have handed down hundreds of decisions based on the convention, and the Court of Justice has settled fundamental questions of inter­ pretation in a series of judgments (Common Market Reports, Pars. 6001, 6003). Germany: More Taxes, Social Cutbacks in 1983 Draft Budget The new German government has submitted to Parliament a DM 253.8-billion 1983 draft budget as well as several bills provid­ ing for further cutbacks in social security expenditures. These cutbacks, amounting to DM 5.6 billion, would be achieved by re­ ducing children's allowances and grants to students, allowing only minor pay raises for civil servants, postponing pension in­ • creases for around 10 million recipients for six months, and compelling retired persons to make a contribution to the health insurance funds that pay their medical bills. Among the bills sent to Parliament is a proposal to in­ crease the VAT rate from 13% to 14% as of July 1, 1983. Single taxpayers earning more than DM 55,000 annually {married taxpay­ ers, DM 110,000) would be subject to a 5% repayable levy imposed on their income tax due in 1983 and 1984 {the levy would be paid back without interest in 1987-89). Social security (old-age pension) contributions would go up from 18% to 18.5% as of Sept. 1, 1983, rather than on Jan. 1, 1984, as provided in legislation already enacted. This increase would produce an estimated DM 850 million in additional revenue for the old-age pension funds, whose reserves have plummeted in recent years. Unemployment in­ surance contributions would rise by 0.6% to 4.6% as of Jan. 1, 1983, instead of the 0.5% increase proposed by the previous gov­ ernment. The estimated DM 650 million in additional revenue from this source would go to the government's Labor Office to help reduce the high deficit resulting from unemployment benefit payouts (Doing Business in Europe, Pars. 23,453, 23,456). The legislation accompanying the draft budget contains sev­ eral elements designed to help revive the economy and cut unem­ ployment. Businesses, especially smaller ones, would be en­ titled to some business tax relief in that only 60% of long-term debts would be included in the tax base for the 1983 tax year • © 1982, Commerce Clearing H014se, Inc. EUROMARKET NEWS No. 721 Page 4 and 50% for 1984 (Doing Business in EUl'ope, Par. 23,385). Indi­ vidual and corporate taxpayers would be allowed to set aside a nontaxable reserve of 30% of the cost of buying a bankrupt or almost bankrupt business. However, this reserve would be per­ missible only when the acquired business 1 s annual sales are be­ low OM 200,000. After five years, the reserve would have to be restored to income over a five-year period. In order to stimu­ late construction activity, individuals buying a home for pri­ vate use could, over a period of three years, deduct mortgage interest payments of up to OM 10,000 annually from their taxable income. Netherlands: Early Test for New Government Expected Following the appointment of Christian Democratic (CDA) leader Ruud Lubbers as formateur and his designation as the next prime minister, a new center-right government was, as expected, formed in Holland at the end of the first week of November. The government coalition will control 81 of the 150 seats in Par­ liament and consist of eight Christian Democratic cabinet minis­ ters and six ministers representing the right-liberal VVD. The new cabinet, succeeding the caretaker administration of • Andries Van Agt, also of the CDA, can expect to be faced immedi- ately with severe problems on labor issues and conflicts with the unions. The civil servants' federation and the public- sector trade unions have joined in the organization of indefi- nite strikes this month, following intermittent stoppages in October. The workers are protesting government spending cuts, which they fear will lead to the loss of 80,000 jobs. Utility supplies and port operations are expected to be affected by the walkouts.