Bonn still blocking ‘Euro-firms’

Date: 02/04/1998

By Simon Coss

EUROPE'S social affairs ministers are unlikely to break the deadlock over plans to allow firms to set up as European companies at their meeting next week.

EU officials say that the Germans are sticking resolutely to their guns on the issue and are not prepared to give any ground to other member states.

Bonn insists that workers' representatives must have the right to sit on the boards of any future pan-European firms - a principle known in EU jargon as 'co-determination' - even though a large group of other member states, led by the UK, has rejected this as unacceptable.

"I have the impression that, with elections coming up, the Germans will not be prepared to give the impression that they are sacrificing the rights of German workers on the altar of European integration," said one social affairs expert. Germany goes to the polls in September.

Although the UK is opposed to co-determination, London - wearing its EU presidency hat - has drafted a compromise text aimed at bringing member states closer on the issue. But officials say the proposal does not really get to grips with the fundamental sticking-point. "Basically, the gap has not been bridged," said one.

The current discussions centre on a plan drawn up last year by former Commissioner Etienne Davignon for a European Company Statute. At the time, it was thought that Davignon had found a formula which could break a 30-year log-jam over the issue.

The business sector has long argued that being able to set up pan-European operations, rather than having to open national subsidiaries in each EU member state, would reduce costs and increase competitiveness.

But it also warns that this will only be useful if accompanied by harmonised EU tax rules. Analysts say attempts to solve this conundrum would make the current disagreement over pan-European firms seem like child's play.

Feature on latest proposals to establish the European Company Statute