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Business in Europe

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The first edition of EUobserver's Business in Europe magazine looks at business and industry in Europe.

Losing

Losing Schengen would hurt EU businesses Systematic border controls would cost €53 to €130 for every European citizen, according to estimates, but the transport industry is already feeling the pain of border checks within the EU. By Eszter Zalan Reintroducing border an estimated 57 million Europe’s frontiers for international road transport operations. Photo: EUobserver I still remember the gut-wrenching tension of our approach to the border between our native Hungary and Austria. While all our papers were fine, the excitement of crossing from a post-communist country into "free" Europe loomed over our car for hours. Then, when Hungary joined the EU and the passport-free Schengen area, the frontier, the officers and the nervousness disappeared. The jitters were replaced by an overwhelming feeling of freedom, that we all belonged to a Europe without borders. But those psychological barriers, and the actual border checks, are coming back. The migration crisis has put unprecedented pressure on EU politicians to control the flow of asylum seekers within the Schengen zone. But now the reinstatement of border checks in eight countries within the Schengen area is raising increasing concern that the surging costs of trading goods may threaten jobs and destroy passport-free travel. The economic price is already being felt, and every EU citizen will pay a price. The EU Commission estimates losing Schengen altogether could cost as much as an €18 billion drop in the EU's annual GDP. A RACE AGAINST TIME Countries fed up with the lack of coordinated EU response have started to introduce various degrees of border checks inside the Schengen zone to stem the flow of migrants travelling unchecked over European borders. Lorries queuing for hours for border checks to be carried out between Belgium and France was an unimaginable spectacle only a year ago. Since last September, eight Schengen countries out of the 26, including Germany and Austria, have introduced border checks. 26 — BUSINESS IN EUROPE JUNE 2016

The measures heightened fears that one of the cornerstones of European integration, the free travel of goods and citizens, might unravel. “Saving Schengen is a race against time and we are determined to win that race. Without effective control on our external borders, the Schengen rules will not survive," EU Council chief Donald Tusk warned last November. EUROPE TRADES MOSTLY VIA TRUCKS OR TRAIN The economic price would be felt all over the and trains that are now being stopped at some borders for checks. Reintroducing border controls would effect an estimated 57 million journeys a road transport operations. “We are very concerned about continued border controls,” Stuart Colley at the Brussels office of the International Road Union (IRU), an industry association for road transport, told EUobserver. tween one and two hours at border crossings into Germany, just as Austria announced new border controls at its Italian and Hungarian frontiers. companies is €55-€65 per hour, per vehicle at border crossings where checks are now installed. In total, the estimated increase in costs yearly due to border controls for the road transport sector stand at €5 billion. DIRECT COSTS FOR THE EU ECONOMY But it is not just the road sector that will feel the pain. Sustained border controls will cost to European economies, various studies have warned. The EU Commission has estimated that full re-establishment of border controls within the Schengen area would have direct costs for the EU economy annually between €5 and €18 billion (0.05-0.13 percent of GDP). “Many of the businesses in the sector are small or medium sized, family owned businesses, and there is a real potential that some of them will be put out of work because of the rising costs,” Colley said, pointing to penalties for late arrivals of goods, damage to goods and extra security costs associated with keeping migrants away from trucks. change of goods within the EU now accounts for more than €2.8 trillion in value and 1,700 million tonnes in volume. The costs for member states would be uneven. the Alpine valley down the Brenner pass between one of Europe’s most important where Austria has strengthened The European Court of Justice is based in Luxembourg. BUSINESS IN EUROPE JUNE 2016 — 27

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