Europeans to Continue Talks on Expanding Market

A HIGH-LEVEL meeting of European officials on Dec. 19 could determine whether 1993 will dawn on a vast single European market of 19 - instead of 12 - countries. The meeting of ministers from the European Community (EC) and the European Free Trade Association (EFTA) is designed to try to reinvigorate negotiations for adding EFTA's members - Sweden, Norway, Iceland, Finland, Switzerland, Austria, and for these talks, Liechtenstein - to the EC's single market, set to take full effect at the end of 1992.

Referred to as the ``European Economic Area,'' the concept was first dreamed up by EC Commission President Jacques Delors in 1989. The idea is to extend the EC single market's ``four freedoms'' - free movement of goods, services, capital, and persons - to the EFTA countries without making them full EC members. The two blocs are already highly integrated and are each other's best customer.

But negotiations for the free-trade area have fallen on hard times over concerns and priorities on each side that refuse to dovetail.

The EFTA countries, which have nothing like the economic and political coherence of the EC's 12 members, say they should have a say in EC legislation that would effect them. They also originally sought a lengthy list of derogations from EC rules for their industries and citizens, a list that has recently been replaced by a plan for phasing out most exceptions.

The EC, on the other hand, says the exceptions EFTA seeks to EC rules are still too numerous.

``We cannot possibly allow our decisionmaking process to be held up by a veto from Switzerland or Finland,'' says an EC official. ``And why should we open up to countries that want to play single market a la carte?''

EFTA representatives say the decisionmaking question will determine the negotiations' outcome.

``It's quite unimaginable that we would ever go ahead on this without some say in future legislation,'' says an EFTA spokesman.

Yet some of the very structures EFTA is seeking - such as inclusion in EC ministerial meetings where single-market matters are decided - would in practice make the EC a 19-country body. One of Mr. Delors's original reasons for proposing the European Economic Area was to dampen interest in full EC membership.

Ironically, Delors finds himself in a catch: Going slow on negotiations with EFTA has incited countries like Austria, Sweden, and Norway either to apply for EC membership or to lean in that direction. On the other hand, the new economic area is seen increasingly as creating a waiting room for EC membership.

For the EC, the problem is not with the Nordic countries, or Switzerland, which already resemble the EC and are wealthy.

But by allowing them to join, the EC would face pressure from Hungary, Poland, Czechoslovakia, and other nations for membership.

Although the EC-EFTA negotiations are largely seen as squabbles over rules for a club of the wealthy, the EC's poorer southern members are worried that EFTA's entrance would water down their influence over EC programs and hurt them financially.