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Full story...IT IS wise, in times of austerity, to do one’s Christmas shopping early. Why put up with inflated holiday-season prices? In Brussels there are cheerful flea markets aplenty and impressive warehouses of charity goods. And if the “heart of Europe” is hardly the capital for bargains when it comes to new products, it matters little. The euro makes it easy to compare prices across 16 countries, and the single market allows goods to move freely within the European Union. So with a fast internet connection, it should be easy to find the best deals from Lisbon to Lapland. Saint Nick need never leave home.
Time, then, to raise a glass of mulled wine to the EU’s four freedoms of movement: people, goods, services and capital? Up to a point. The EU likes to think of itself as a continent-sized market of 500m consumers and 20m firms. In practice, it is often an agglomeration of national markets, each with its rules and oddities. Ask the French retailer, Carrefour, Europe’s biggest. It wants to buy its own-brand cheese from the Netherlands, but is prevented from doing so by France. Why? Because Dutch emmenthal is produced in 15kg (33lb) moulds, and France insists that it be made in 40kg ones. When Carrefour ships French-made chairs to its stores in Italy, the French safety certificates must be countersigned by an Italian laboratory. Absurdly, Carrefour says it has to confirm that the chairs will not be used for the purposes of torture.
Scan the European Commission’s consumer reports, and the distortions are visible. Pre-tax car prices may be fairly uniform across the EU, but the same is not true of vacuum cleaners. How to explain that food costs 28% more in Belgium than next door in the Netherlands, when the two countries are of broadly similar size and wealth? Paracetamol costs 14 times as much in France as it does in the Netherlands. Some variation may be explained by tax rates and the cost of real estate, wages and transport. Even so, the single market is clearly not living up to its name.
In the past such differences might just about have been sustainable. Shoppers usually travel only a few kilometres from home or work to compare prices. But in the internet age such stubborn gaps are perplexing. Surely, consumers should be getting online to take advantage of cheaper prices. And yet it is not happening. Only a tiny share of e-commerce transactions in the EU—which themselves make up a small fraction of European transactions overall—are conducted across national borders.
In part this reflects a problem common to all European retailing. Some shops like to segment their markets to maximise margins where they face less competition. Big retailers, in turn, complain that suppliers impose geographical barriers: identical goods produced in the same factory must often be bought at different prices to be sold in different countries. Eurocrats suspect there is much market-fixing going on, in breach of the EU’s services directive. This forbids “discrimination” against consumers in different countries, except where differences are justified by “objective criteria”. How these should be interpreted and enforced is a matter for individual countries.
In part, the obstacles to cross-border internet trading are peculiar to the online world. Price-comparison websites remain obstinately national. A bigger problem is that most online retailers don’t want the hassle of 27 different consumer-protection laws, VAT rules, electronic waste regulations and postal systems. Varying copyright rules hinder pan-European downloads of music and video files, and even sales of music players and blank CDs.
In short, European shoppers and firms still think nationally. Oddly, it is American online traders such as Dell, Amazon, eBay and Apple that are the most active in Europe (though not without problems). Maybe they had an early advantage. Maybe only big players have the administrative strength to cope with so many national rules. Or maybe Europeans just can’t think big. Whatever the reason, European shoppers often find it easier to buy goods from America than from a neighbouring country.
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