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EU: Travelers, Producers Prepare For End Of 'Duty-Free'

The European Union's long-awaited abolition of duty-free sales in airports and ports goes into effect tomorrow. Our correspondent says it's the end of an era for cosmetics firms, tobacco companies, and alcohol producers who earn big money from such sales. The abolition is also likely to disgruntle more than a few passengers who've come to view discounts on these products as a reward for travel.

Copenhagen, 30 June 1999 (RFE/RL) -- This morning, the bus from Copenhagen to the German city of Puttgarten, some 200 kilometers away, left on schedule.

The passengers, the usual motley collection of pensioners and youngsters, shared as a common denominator only the large number of shopping bags and suitcases they placed in the bus's hold. The bags were empty, but on the return home, they will be filled with chocolates, coffee, perfume, cigarettes, and alcohol. All the goods bought by the travelers cost far less than they do at the local supermarket.

Between Denmark and Germany there is a strait. It takes only 50 minutes for the ferry to make the crossing, but within 50 minutes one can do a lot of shopping -- duty-free shopping.

The situation is identical in many other places in the European Union. Boatloads of Englishmen crossing every day into France and Belgium just to buy a few bottles of wine that are cheaper than they can find at home. Swedes daily pile onto boats to Denmark for voyages colloquially known as "booze trips." Some do not even get off at the harbor.

As of tomorrow, however, duty-free shopping within the EU will be no more. Eight years ago, Europe's finance ministers voted to end duty-free sales for travelers within the EU and the ban takes effect at midnight tonight.

Observers say people living near the borders will miss the trips, but it's hard to estimate the economic impact. Duty-free sales generated about $6 billion in turnover in 1996 alone. That will come to an end, as will employment for about 140,000 people. Some say the prices of tickets on airplanes and ferries will also rise. Duty-free sales made up as much 60 percent of turnover on some routes.

But supporters of the decision to end duty-free purchases within the EU say they are, in fact, a direct subsidy -- amounting to some $2 billion a year -- to the tobacco and alcohol industries. They ask whether tobacco and alcohol are the types of products that should be subsidized. Also, they ask, if duty free sales contribute to lower travel fares, why should taxpayers subsidize these fares?

Earlier this year, some big West European countries, such as Germany, France, and Britain, said they were prepared to postpone the abolition of duty-free. But to do that, they needed unanimous consent from EU members. The Netherlands and Denmark were opposed.

The new regulations ban duty-free sales only on routes within the EU. Trips outside of the EU are not affected. Airports in different European countries are expected to interpret the rules differently at first. In some airports, passengers are not likely to notice any big changes.

Our correspondent in Copenhagen reports that Kastrup International Airport does not plan to make substantial changes. Passengers will be asked to produce boarding cards when they shop duty-free. They will not be given any allowances if they are traveling within the EU.

Scandinavian airline SAS has stopped the sale of tobacco and alcohol during intra-EU flights, but prices for perfumes and other goods will remain unchanged. At Vienna' Schwechat airport, several airlines have decided to pay the tax on cigarettes and alcohol to keep prices at the same level.

Analysts say that, regardless of what happens, the industry has had eight years to make the necessary changes. They say retailers will still have a captive market in harbors and airports as well as on airplanes and ferries. The biggest losers are likely to be sellers of Scotch whisky. Scotch is strongly associated with duty-free and Scotch-makers sell more than $200 million a year through such outlets.

Our correspondent says, though, that the most disgruntled group is likely to be the passengers. One passenger bound for Paris today on the morning plane from Copenhagen said he was drinking his last glass of duty-free whiskey. Tomorrow, he says, it just won't taste the same.