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Market Scene : EC Practicalness or Protectionism? : The European Community is trying to establish product standards. Some U.S. firms fear the move could shut them out of certain markets.

October 23, 1990|JOEL HAVEMANN | TIMES STAFF WRITER

OLEN, Belgium — Here in the Flemish-speaking countryside of Belgium, an American-based manufacturer of home water-softening systems has figured out how to play the export game by European rules--and to win.

Ecodyne, a sister company of EcoWater Systems of St. Paul, Minn., is complying with a strict German standard designed to eliminate the breeding of bacteria in home water softeners. The two companies, which are part of Chicago's Marmon Group Inc., should be well situated if the German standard, as part of the drive toward a single European market, becomes the norm for the 12 nations of the European Community.

"We are aware, and we are acting accordingly," Ecodyne's general manager, Sylvain Claes, said at his small plant, where mostly American-made parts are assembled into water softeners.

It wasn't easy for Ecodyne, and it won't be easy for other American companies and their European subsidiaries that want to maintain sales in the quickly changing European market. The European Community has undertaken an extraordinarily tedious and complicated process of setting EC-wide standards for everything from infant formula to earth-moving machines.

The ultimate purpose of establishing a single European market by the end of 1992--a deadline that will surely not be met--is to simplify life for manufacturers. No longer will they have to make up to 12 different products if they want to sell in all 12 EC nations.

But some Americans wonder if there is not a more sinister purpose as well: to write standards in ways that confer a competitive edge on European manufacturers. This is at the bottom of the fear that the EC-92 movement, as it has come to be known, will lead to a "Fortress Europe," open to European products but closed to imports.

With a collective gross national product of $4.8 trillion--just a shade lower than the U.S. figure of $5.2 trillion--the 12 EC countries constitute an enormous market. So the concern of American marketers is understandable.

European officials hotly deny the "Fortress Europe" scenario. "Nothing of the kind is happening," Martin Bangemann, a German who is EC commissioner for the interior market, insisted in a recent interview. "EC-92 is an opening, not a closing."

Commerce Secretary Robert A. Mosbacher, interviewed during a recent trip to Brussels, said the development of EC-wide product standards should generally help U.S. exporters. But whether intentionally or not, he said, the Europeans seem to be developing some standards that would effectively close their markets to Americans.

"Sometimes it's easier, sometimes it's harder to do business here," Mosbacher said. "There's some movement toward an open market, and I'm heartened by that. There are also some serious obstacles left."

American business echoes that view. "There is some suggestion that some groups within the EC, particularly in Germany, are determined to keep out non-EC products," said Stephen Cooney, an economist with the National Assn. of Manufacturers in Washington.

Indeed, U.S. exports to the EC nations have been booming since 1985, when the dollar began losing value on international currency markets and American goods became less expensive overseas. Exports roughly doubled from 1985 to 1990.

"By and large," Cooney said, "we view EC-92 as an opportunity to do even better in Europe. Whatever barriers there may be on the micro level, we're doing fine on the macro."

But at the micro level, some U.S. industrial sectors are running scared. Particularly vocal have been timber producers.

John Mentis, director of cross-industry programs for the National Forest Products Assn. in Washington, has his eye on a proposed EC standard requiring that all softwood products shipped from the United States be kiln-dried. The stated purpose is to prevent the introduction in Europe of a timber pest called the pinewood nematode.

"The United States and Canada have been shipping green (not kiln-dried) softwood to Europe for over 100 years without mishap to European forests," according to the forest products group. It argues that the proposed standard would freeze out the 85% of Pacific Northwest softwood that is not kiln-dried.

Mentis complained that U.S. interests have been frozen out of the meetings of the Brussels-based European Committee on Standardization (CEN, its acronym in French) at which the standard was prepared.

Gaston Michaud, the manager of CEN's secretary general's office, conceded that until two or three years ago, its deliberations were largely private. Foreign representatives are still not allowed to participate, he said, because the meetings would be unwieldy.

But he said the agency now provides the American National Standards Institute with draft proposals of new standards during the development stage. He said American businesses, working through the institute, have ample opportunity to comment before standards become final.

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