In this debate I should like, first of all, to talk about the opportunities which membership of the Communities will afford to us for the rapid economic growth which we need if we are to achieve the main goals of our economic policy, that is, full employment and an improved standard of living for all our people. We are a small country. We depend on exports to expand our employment and to improve our standard of living. A favourable export climate, that is a favourable climate externally for exports is, therefore, vital as far as we are concerned if we are to continue to have economic growth, and in considering any economic arrangement such as entry to the European Community, the criterion must be whether it best fulfils the basic conditions for balanced economic growth. By this criterion, the terms of accession which we have negotiated could not be bettered by any other arrangement which we could realistically hope to conclude.
What are those conditions and how will entry to the Community meet them? As a first condition we need favourable arrangements for agriculture which is our major industry. Ever since the end of the fifties our growth has been hindered by the unfavourable situation on foreign markets for our agricultural exports. Hitherto the cheap food policy of successive British Governments and the high guaranteed prices given to their own producers meant that we were able to sell only limited quantities and at depressed prices, and more recently we have been all but excluded from the EEC markets by reason of the levies imposed on imports under the common agricultural policy of the Community.
Entry to the Community would change all this. It offers an opportunity to expand agricultural production without having to worry about access to markets or about low and unstable prices. Farmers would be able to rely on the Community's fixed common prices for the main agricultural commodities which in this country they produce and export. They can count on selling as much as they can produce of these products at prices which are much higher than those which they have been getting. Cattle and milk count for more than 60 per cent of our agricultural output. For these two commodities prices in the EEC are at least 50 per cent above the prices received by Irish producers last year.
These figures show clearly the stimulus to production that will be given by the steady increase in prices during and after the transitional period. The best assessment that can be made of the magnitude of the response of agricultural producers was given in the White Paper. The estimate made indicates that, on the basis of prices and costs obtaining in the EEC in 1970-71, the volume of gross agricultural output will increase by about one-third and its value by 75 per cent. This assessment may well be conservative. Projections by other bodies and individuals point to the possibility of even greater expansion. The White Paper assessment, again on the basis of 1970-71 EEC prices, is that family farm income will be double its 1970 level and, with the further price rises that are certain in the Community, the actual increase in income will be considerably greater.
Growth of this order in agriculture will be a dramatic change from our experience over the past 20 years. It will make a substantial direct contribution to the faster economic growth we want to achieve and it will be a stimulus to industry and services because of the greatly increased spending power of farmers.
The second basic condition for growth is that it must be export led and, consequently, we must have favourable terms of access to foreign markets for our goods. The first thing to remember here is that Britain and Northern Ireland are going in. This is now virtually certain. I do not think I need to remind any Member of this House of the high proportion of our exports, especially our agricultural exports, which goes to these markets. We all know that it is so high that any restriction on our freedom of entry into these areas would be nothing short of disastrous.
However, while our agricultural exports will continue to be our major money spinners for some time to come, we would be very unwise to ignore the structural changes that have occurred in our economy since the 1950s and particularly during the 1960s and the extent to which future growth will depend on industrial exports. These industrial goods will have to be sold on world markets. We will not get favourable terms of access to these markets unless we open up our own market to competition. It is true that we were able to achieve a remarkable expansion of industrial exports over the past 12 years while still retaining a substantial measure of protection. This expansion was from a very small base and exports represented a relatively small proportion of our total industrial output. We must greatly increase the proportion of our industrial output which will be exported if we are to meet the needs of the changing structure of our economy. It has been changed for us and membership of the EEC, in my opinion, gives us an unrivalled opportunity of achieving this.
For the 1,100 Irish manufacturing firms which are already doing a significant export business, the elimination of tariffs on exports to the Community and to the EFTA countries, which will certainly have a free trade arrangement with the Community for industrial goods, will give free entry to a very substantial market of wealthy consumers. Many of these firms are already, it is true, overcoming the common external tariff and selling within the Community. This very fact has been seized on by some opponents to our membership who advance the argument that, because these firms are already doing well within the countries of the Community, or some of them, nothing will be lost. They attribute this success to the fact that the average tariff is only 7½ per cent and they say that the removal of tariffs will not really provide much of a stimulus to increased exports to the countries of the Six. I would suggest that this view is both superficial and incorrect. First, many of the tariffs on the main industrial exports from this country are substantially above 7 per cent. Some of them are above 20 per cent. Secondly, even with low tariffs, there can be a substantial degree of effective protection, depending on the value-added content of the selling price. If our exporters have been successful in overcoming the existing common external tariff, how much more successful will they be if they do not have this obstacle to overcome? They have been doing things the hard way. I do not know why people should argue that they should do things the hard way in future and that they should be deprived of the opportunity of doing things the easier way.
Another basic condition for our economic development is the need for balanced growth to exploit fully the potential of all regions of the country. We are, I think, all conscious of the importance of new industry for the achievement of this aim. I am sure most people will agree that membership of the Community will provide at least a great stimulus for the attraction of new industry here.
Our tariff-free access under the Anglo-Irish Free Trade Area Agreement has operated successfully to attract industry here. Our tariff-free access to the expanded Community market will be a very powerful inducement, indeed, especially to industrialists who are located outside the enlarged Community and who will be anxious to get inside the Community's tariff barrier. It is being suggested, of course, that firms will not be anxious to go outside the central industrial area of the Community, or the Golden Triangle, as it has been called. This was one of the main planks of Deputy Keating's opposition to full membership. He claimed that the abolition of control on the movement of capital would accentuate a process—I am, I think, quoting him correctly—which he said did us the most ferocious damage in the past and is still doing us the most ferocious damage. He began his dissertation by harking back to the experience of the last century. This is, I suggest, a fallacious comparison. In the last century all the capital that existed in Ireland was essentially in the hands of a foreign ascendancy who naturally looked to Britain for investment opportunities, all the more so as the investment opportunities in this country were few. In addition to that, at that time there was no acceptance of Government responsibility either for general economic growth or the general well-being of the economy. In particular there was no acceptance of responsibility for its regional distribution.
I suggest that the picture today is completely altered. There is a substantial amount of capital now in Irish hands. Considerable opportunities exist for investment in Ireland. One of the central responsibilities of Government today, is to pursue positive policies of economic growth and to ensure that the implementation of these policies will bring about the elimination or at least the reduction of regional disparities.
The effects of this change in our circumstances since the last century are shown very clearly by our experience over the last decade or so. While during that period we have had free movement of capital between this country and Britain and, indeed, between this country and the other members of the sterling area, the inflow of capital to this country has greatly exceeded the outflow.
I would ask why should entry to the Community turn back the clock? The aim of the Community is the harmonious development of all of its regions and it has policies and instruments which are specifically designed to ensure that resources are available for regional development.
The main purpose of the European Investment Bank is to make capital available for the development of the less favoured regions. In fact, 75 per cent of the loans issued by the bank have been for projects of regional development, mostly in southern Italy. The European Social Fund is also oriented towards regional development through the grant of assistance to the remedying of employing problems in underdeveloped regions, regions where unemployment is high or where important local industries are in decline. The Agricultural Fund provides financial assistance for projects of structural reform in agriculture, including the creation of industrial employment in backward regions.
The Community's evolving regional policy with the recent agreement to limit state aids in central regions, more or less in this golden triangle to which I have referred, to a fixed upper limit, is intended to influence industrial location decisions in favour of the less developed regions. Industrial incentives are, of course, of paramount importance to the attraction of new industries. One of the primary aims in our negotiations was to ensure our continued ability to offer an effective system of industrial incentives after we had acceded to the Community and we have achieved this aim.
Under the Treaty of Rome the Commission is required to carry out a continuing examination of the aids which are made available by the Member States, and if it finds that some particular aid is not compatible with the Common Market it can require a Member State to abolish that particular aid. After our accession our industrial incentives will be examined by the Commission. We have, however, succeeded in obtaining assurances on the conduct of this examination from the Community during negotiations. Under the Treaty State aids may be regarded as being compatible with the Common Market if they are intended to promote the development of regions where the standard of living is low, by Community standards, or where there is serious under-employment. The Protocol to the Treaty of Accession agreed during our negotiations takes formal note of the fact that we are engaged in a policy of development which is designed to align standards of living here with those in other European countries and to eliminate under-employment and it recognises that when the Commission comes to examine our State aids, our various incentives, it will be necessary for the Commission to take into account our objectives of economic expansion and higher living standards. In other words, we have obtained Community recognition, in advance of the Commission's examination, that there is a compelling case for the retention of an effective system of aids in this country. There can be no question, therefore, that the Commission's examination could lead it to require modifications of our aids which would reduce their effectiveness. No other applicant has received this assurance. It was, in my opinion, a major achievement on the part of our negotiations to obtain it.
The Commission's examination of our incentives will, of course, cover our scheme of export tax reliefs. We succeeded in the negotiations in ensuring that we will be able to continue these reliefs in operation. Firms which now benefit from the reliefs, firms which begin to export before the date of completion of the Commission's examinations and firms with which commitments have been entered into at the date of the conclusion of the Commission's examination, will benefit from the reliefs for the full period of their entitlement under existing legislation. If modifications have to be made in our scheme of reliefs following the Commission's examination, the revised incentive scheme will be equally effective in promoting industrial development and any modifications to the scheme of reliefs will be subject to appropriate delays and transitional procedures.
This is a highly satisfactory outcome. To appreciate its full worth it should be seen in the context of the measures which the Community is taking to co-ordinate the incentives offered in the member states. The main aim of these measures is to put an end to wasteful counter-bidding for new industries between member states and to increase the effectiveness of the aids available in the less developed regions of the Community. A ceiling has been placed to the cumulative value of the aids which a firm located in the more highly developed regions may receive. I think, from recollection, the figure fixed is 20 per cent. This arrangement will improve the prospect of attracting firms to the less developed regions such as this country. A system for the co-ordination of aids in the less developed regions is to be worked out in due course, and we will be involved directly in this work.
The Community's philosophy on these kinds of aid is that their level should be related to the severity of the economic and social problems which they are designed to solve. Since Ireland is relatively under-developed by Community standards, we have everything to gain from the application of a system for the co-ordination of aids based on this philosophy. If the Community were not already moving to co-ordinate aids we could well be pressing them in that direction in order that our development efforts would not be frustrated by the ability of wealthier states to outbid us in attracting industry. In our development efforts we will be assisted by the Community. As I have stated already, the Community possesses important mechanisms which can assist in regional development, such mechanisms as the European Investment Bank and the European Social Fund. As a member of the Community, we will be entitled to draw on these sources and here again, the Protocol will be of value to us. The Protocol states that the Community institutions should assist us in every way possible to attain the objectives of our development policy, particularly by making adequate use of the Community resources. Again, none of the other applicants obtained this undertaking. The only other country which was ever given a similarly favoured position is Italy, and the value of this advantage to Italy is, I think, quite clear to most people by now. Italy has received well over one-half of the total loans made to member states by the European Investment Bank. We should benefit proportionately.
In order to obtain maximum benefit from Community funds for development, we will need to present wellthought out proposals to the Community institutions soon after our accession. We will be able to do this. The reports of the regional development organisations have all been received by the Minister for Local Government. The preparation of the regional industrial plans by the IDA is very well advanced. The Government will have decided their future regional policy in good time to enable us to present proposals for regional development to Community institutions shortly after our accession. It is also possible that participation in other projects not of a specifically regional character would interest Community institutions. We intend to discuss such questions with these institutions prior to our accession. Although the Community has come a considerable distance in the field of regional policy, it is quite true that much remains to be done. The Council has recognised this and proposals for the strengthening of the Community's regional policy have been put forward by the Commission. The agreement by the Member States to the adoption of the co-ordination system for aids in the central regions of the Community is, I think, an indication of their growing acceptance of the need for a strengthened Community approach to regional problems and further developments in this can be expected in the near future.
During the course of our negotiations with the Community we stressed the necessity to develop Community regional policy if a lasting and meaningful economic and monetary union is to be created in the Community. I repeated this view at the meeting in Brussels, on the 7th of this month, of the Finance Ministers of the Community and the applicant countries. None of the other States is opposed to the development of Community regional policy and it will undoubtedly come about. Some countries give it a lower priority than we do, of course, and this is understandable, since there are many ways in which the Community, which is still young, could be strengthened. But there are strong influences within the Community with views similar to ours and once Ireland is a member we will not be alone in favouring the continued development of Community regional policy. I would hope that our experience of the last 50 years in tackling—and with considerable success, I may say—the deepseated regional and structural problems of our economy will enable us to contribute creatively to the evolution of the Community's regional policy. We are going into Europe to give as well as to receive.
I hope it is clear from what I have been saying that membership of the Community will create the conditions necessary for balanced economic growth of this country. In the White Paper the Government gave an assessment of the rate of growth we could achieve if we entered the enlarged Community. If this assessment turns out to be wrong it will be because there is considerable reason for optimism that we can do better. However, this largely depends on our own efforts.
To achieve the benefits of membership we must have the self-discipline which is necessary for competitiveness and this, of course, involves an incomes policy which is compatible with competitiveness and it requires a steep reduction in the rate of inflation and minimum cost production.
I think that there is a more realistic note, as has been said by some previous speakers, creeping into this debate on the EEC and I would hope to contribute a little to that by reiterating that although we see very considerable possibilities and potential for our economy and various sectors of our economy in membership of the EEC, there is nothing in the Treaty of Rome or in any part of the institutions of the Community which will of itself make life easier for us in this country. Ultimately, the results to be achieved depend on ourselves. The conditions and the economic climate, which are created within the Community, as I have been trying to outline them, are the right conditions and the right economic climate for this country to succeed both on the agricultural side and on the industrial side, to enable it to achieve considerable growth in industrial exports and the establishment of industry here from abroad, but they are the conditions; that is the economic climate. The ultimate result, of course, depends on us as a people, our own efforts and our own discipline.
Some fears have been expressed that participation in an economic and monetary union within the Community would mean that we would lose the power to shape our economic policies to meet our needs and that we would have to operate within the Community policies tailored to the requirements of the more developed and industrialised regions of the Community. These fears will be seen to be unreal if we examine the background to the Community's decision to move towards economic and monetary union, and if we look at the objectives of such a union and what it involves in practice.
The Community's decision is based on Article 2 of the Treaty of Rome which assigns to the Community the task of "promoting throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the member states belonging to it." The Community's decision of March, 1971, to proceed towards an economic and monetary union re-echoes this objective when it declares that the purpose of such a union is to ensure satisfactory growth, full employment and stability within the Community, and to remedy structural and regional disequilibria.
The operation of the Community made this decision necessary. The establishment of a customs union and the common agricultural policy, the free movement of labour and capital, and the development of a common trade policy towards the rest of the world, brought out a high degree of integration and inter-dependence of the economies of the member states. This integration and inter-dependence reduced the effectiveness of action taken by individual member states to rectify economic problems within their respective boundaries. Moreover, the freedom of action for individual member states to resort to changes in exchange parities in order to correct economic disequilibria became more circumscribed, since any such change could jeopardise the existence of the common agricultural policy which is based on a common price system expressed in a unit of account of fixed value. Therefore, not only is it vulnerable to a change of parity rates by member states but it lies exposed to the vicissitudes of the international monetary situation. The instability which is apparently endemic in international monetary affairs—at least in recent years—is well known to everyone. The Community, as an economic entity, found themselves unable to cope with this in a satisfactory manner.
The eventual economic and monetary union, as envisaged in the Community's decision, will involve the taking of decision at Community level on the member states' short and medium-term economic policies, a unified monetary area operating fixed currency parities and a common monetary policy, in addition to a common policy to deal with regional and structural problems, free capital movements and fiscal harmonisation. The measures to be taken towards the achievement of economic and monetary union were laid down only for the first stage which runs from 1971 to 1973. Progress in the implementation of these first stage measures was interrupted by the international monetary crises of 1971, but the Community reached an agreement this month on the following measures. First, the establishment of a group of Ministers' representatives to reinforce the co-ordination of short-term economic policy; secondly, the establishment of a regional development fund, or other appropriate system, to promote regional development and the use of the Agricultural Fund for the development of priority agricultural areas; thirdly, the narrowing of the fluctuation margins of member states' currencies.
We must accept that there is a need for closer economic and monetary integration if the development of the Community as a whole and its component parts is to proceed and if the achievements to date, and in particular the common agricultural policy, are not to be endangered. Far from looking on this development as something to be viewed with apprehension we should see it as ensuring a favourable environment for our economic development.
Our economy is an open one and we are mainly dependent on foreign trade for economic growth and for raising our living standards. Too often in the past action taken by our main trading partners has proved to be a brake on the expansion of our exports and, consequently, on the expansion of output and employment. Successive Irish Governments have been made acutely aware of the effects on our economy of the external economic and trading environment and they have been made aware of the fact that they have had no control whatever over that external environment.
It is on this point that the importance of our participation in the economic and monetary union of the Community lies. Within such a union the management of the economies of the member states will be co-ordinated at Community level so that all can move forward together on the basis of mutually consistent policies. Thus, not only can we look forward to trading in a more stable and growing market, we will also have a voice in the directing of that market and in the reconciling of our external economic environment with our own needs.
Some people will argue that the taking of important economic decisions of Community level will involve a diminution in our economic sovereignty. I suggest this is a superficial view. To forego the power to take decisions, which are at all times subject to the constraints imposed by our external environment, in return for an effective voice in the shaping of that environment, cannot be regarded as a loss of sovereignty.
In accepting economic and monetary union as a Community goal, the Government are fully conscious of the special development needs of the Irish economy as a whole and of regional development problems in particular. These must be taken into account in progress towards union. During the negotiations our special economic circumstances have been brought to the notice of the Community and the Community recognition of our special circumstances has been enshrined in the Protocol to the Treaty of Accession. We have also availed of the consultations we have had with the Community on their recent decision in regard to action to achieve the first stage towards economic and monetary union, to stress the very great importance we attach to the development of a comprehensive and coherent regional policy for the Community.
When we are a member of the Community this will be a priority concern of the Government, and the Community is under no illusions about this. It has been made quite clear to them in our negotiations and since. As recently as at a meeting earlier this month, which I attended, I personally made it clear again that we regarded this as a top priority and, in fact, that we could not and would not accept the achievement of full economic and monetary union, unless prior to that we had achieved or had set up in such a way that we were satisfied we would shortly achieve, sufficiently comprehensive regional development policies to ensure that the standard of living of our people would approximate to the standard of living of those in the centre of the Community. For us this is a sine qua non. Of course the achievement of the final stages of economic and monetary union are dependent on the unanimous vote of the members of the Community.
The Community plan for economic and monetary union includes measures for the harmonisation of indirect taxation and certain aspects of company taxes. It is intended that in the first stage of the plan, that is before the end of 1973, measures will be adopted for the harmonisation of the structures of the value-added tax and excise duties. The harmonisation of the rates of those taxes will be taken up at the later stages.
As regards our adoption of the value-added tax system, as Deputies will recall, a Bill providing for that tax has passed the Second Stage in this House and the Committee Stage will be taken at the earliest convenient opportunity. The value-added tax which we propose to introduce will replace the existing turnover and wholesale taxes. It is on the EEC model. Since it was fully described in my speech opening the Second Stage debate on that Bill, I do not propose to go into it in further detail at this point. However, I might mention that there will be a transitional period of one year during which we may make modifications in our value-added tax should they be found necessary to bring it fully into line with the EEC form of value-added tax.
As I have said, the question of the harmonisation of the rates as distinct from the structure of the value-added tax and excise duties will not come up until some time after our accession when, of course, we will have a voice in determining the level of the harmonised rates. As Deputies are aware, the rates of the main excise duties in general are much higher here than in the present member states of the Community. If the harmonised rates were to reflect the existing level within the Community there would be a substantial loss of revenue from our excise duties. However, the enlargement of the Community will create an entirely new situation in this regard because the other three new members have higher rates of excise duties. I might also add in this connection that any decision on the harmonisation would require an unanimous vote under the Treaty provisions.
There is another matter which is of direct concern to me as Minister for Finance, that is the arrangements agreed in the negotiations for our contributions towards the financing of the Community. These arrangements are described in detail in the White Paper and I do not propose to go over that ground again. The transitional arrangements for our contributions to the Community budget are particularly favourable to us. They allow us a period for the gradual phasing in of the Community's own resources system while we will be able to benefit fully from the start of accession from the Community expenditure, particularly in relation to the common agricultural policy.
The substantial Exchequer savings which will result from our participation in the common agricultural policy will give us greater scope for financing further economic and social development. A priority claim on these Exchequer savings will be the improvement of social welfare benefits to compensate the less well-off sections for any increase in food prices arising from membership.
A number of the critics of Government policy in relation to the EEC base their case on the claim that the essential interests of this country could be adequately safeguarded without full membership of the European Communities. Sometimes this claim seems to be based on a blind and irrational hostility to the EEC and, on other occasions, it reflects a remarkable and dangerous illusion about the trading terms which the Community would be prepared to give to us as a non-member.
In the first place I should like to try to dispel any ideas that may be prevalent that we can simply ignore the EEC and continue as we are. This is something which is basic but which, in my opinion, is not well enough known. We have not got the choice of going in or staying as we are. That option is simply not open to us. We either go in or we take another course. The option of staying as we are is not open because Britain and the Six Counties are going in.
Most opponents of membership now recognise that we must come to some arrangement with the enlarged Community unless, of course, we are to suffer a disastrous decline in living standards. Some of the more extreme anti-EEC propaganda seems to portray the Community as a "capitalist plot" designed to destroy the Irish nation and argues, therefore, that we should have nothing whatever to do with it. Not only is this assertion completely untrue but it ignores the plain and irrefutable facts of our trading position vis-á-vis the Community.
About 80 per cent of all our exports go to the countries of the enlarged Community. Therefore, we must take a very keen interest in what happens in this large market. We must take steps to ensure that our vital interests are not only safeguarded but developed further. To do nothing in the context of the Community's enlargement would mean that we would lose our present free access to the British market and fail to secure better markets in the rest of the Community. I do not know how anyone can really claim that this would be good for Ireland. We must export if we are to live and any action or inaction which damages our ability to export would be disastrous for this nation and would represent the height of irresponsibility.
We must, therefore, reach some agreement with the enlarged Community. The real question at issue is whether membership represents the best way of doing this or whether some other trading arrangement would enable us better to develop our potential to provide an acceptable standard of living for all of our people.
In considering such a relationship it is not sufficient, as some people seem to have done, to draw up a list of all the things which we would like to have and then to say this represents an alternative to membership. A more realistic approach than that is necessary. We must consider what the Community would be likely to give to us and what we, on our part, would have to give in return; what the effects on the economy would be and how this would compare with our likely position as members of the EEC. These are also factors that must be taken into account.
If we examine the kind of relationships which the EEC has with non-member countries we find they have not negotiated any agreement that would be likely to offer any worthwhile benefits to us. Critics of membership have quoted as examples to us various trade agreements between the EEC and other countries but they have very conveniently failed to mention that none of these agreements contains any significant concessions for agricultural products which are of major interest to this country. Even where products such as beef are covered, as in the case of the Argentine or Yugoslavia, the terms provide for a limited reduction of import levies but not of the heavy customs duties of about 20 per cent. There is no reason to suppose that there would be any significantly better terms available to us. It is most unlikely that there would be any concessions at all for our dairy products and thus not only would we fail to improve our present terms of access to continental countries but we would lose the advantages we now enjoy in the British market.
In this context a favourite argument of the opponents of membership is that because of our trading relations with Britain, special arrangements would be made for our agricultural trade with that country, by analogy, in some way, with those agreed for certain New Zealand products. I should like to make it quite clear that we would not regard the New Zealand terms as being at all satisfactory for our circumstances. They are of limited duration, uncertain future and provide a return to producers far below that which is obtainable under the common agricultural policy. But, apart from this, we would in effect have to rely on Britain to secure special terms for us. I am amazed at some of the people who put forward this argument because at the same time they talk about staying out of the EEC to retain our independence. But this kind of operation, in which effectively we are relying on the British to secure terms for us which are not as good as we can get ourselves by full membership, is simply increasing our dependence on Britain and for me, personally, one of the strongest reasons for wishing to enter the EEC is to bring about a situation in which we can have genuine economic independence from Britain, the kind of independence that is available to other countries but not to us because of the enormous amount of our trade with Britain.
As I said, to follow that line would simply increase our dependence on Britain whereas full membership, as proposed, will have the reverse effect. It will diversify our markets and give us a say in determining the conditions which will be applicable to a large part of our external trade. While we are Britain's third largest customer, trade with us represents only a very small portion of her total trade and it would be very unwise for anybody to place much reliance on this factor in encouraging Britain to look after our interests in Europe. I am being as objective and restrained as I can be when I refer to that proposal.
It is likely that the EEC would be quite prepared to negotiate with us an agreement for free trade in industrial goods on the lines of the current negotiations with the EFTA countries which are not seeking membership. Indeed, many of the critics of the Government in this matter have suggested that if countries such as Sweden and Switzerland can negotiate a free trade agreement like that, why should not we be able to do so. The simple answer is that such an arrangement would not be suitable in our conditions. These countries are mainly concerned with industrial exports. Therefore, they can afford to enter into an agreement which has a very small agricultural content or none at all, but in our case agriculture provides almost half of our exports as compared with about 5 per cent for the countries I have mentioned. An agreement which did not cater adequately for agricultural exports would be useless for us. Such an agreement would leave us open to the loss of protection which is inherent in industrial free trade but without the counter-balancing advantages of Community aid for development and remunerative outlets for agriculture. Those who advocate an EFTA-style trade agreement seem to ignore this major snag. It is futile to argue that the EEC might grant us considerable and substantial concessions on agriculture. The fact is they have not done so in any other case and they show no disposition to do so in the future. They do not owe us a living.
Some critics see in a limited preferential agreement a solution to our problems vis-á-vis the EEC. This, they claim, would enable us to retain some protection for the home market and an improvement in terms of access to the EEC for some exports. To say the least, it is doubtful if we could get such an agreement because the Community has hitherto confined this type of agreement to Mediterranean countries as part of its policy for that region. Even if an agreement of this sort were forthcoming, the benefits would be small but the disadvantages would be large.
On the industrial side, in return for partial protection we would have only partial access to the Continent and we would lose our present free access to the British market. Our share of the British market would be eroded because other EEC members would have free access to that market and would be in a more advantageous position. The consequences for the thousands of jobs that depend on exports to Britain would be very serious. This is an aspect that the anti-EEC membership lobby never seem to mention. They clamour about the loss of jobs arising from the removal of protection but they ignore the losses of jobs that would arise from protection against our exports to other markets. That is, they ignore the raising of new barriers to our exports to Britain which is inherent in any other arrangement. On the agricultural side a limited preferential agreement, like all other arrangements which fall short of membership, would exclude us from the common agricultural policy and condemn us to seeking minor concessions here and there. Under such conditions, agriculture would stagnate and the whole economy of this country would suffer as a result.
Association is designed for countries with a far lower level of economic development than we have and I have found no evidence to suggest that the EEC would contemplate such a status in our case. Association is intended to prepare a country for eventual membership and, therefore, it is not really an alternative to but rather a deferment of membership. During the period of "preparation" we would be denied the full benefits of membership and the level of our economic growth would be slowed down. This is not what we want. I do not think that many people would settle willingly for a lower rate of prosperity when, for the very first time in our history, there is the chance of achieving a dramatic breakthrough in relation to living standards.
These, then, are the alternatives to membership. Because of the enormous disadvantages attaching to each of them, I am certain that they could lead only to economic isolation and to stagnation. The prospects for agriculture would be grim. Even the opponents of membership admit that. There would be what they euphemistically call "difficulties". This must be compared with the benefits of the common agricultural policy available to us as members. These include guaranteed high prices for our major products, irrespective of where they are sold; protection against imports from outside the Community; subsidies for our exports to non-member countries and financial aid towards improving the structure of agriculture. Industry will suffer because of the elimination of protection either in whole or in part—and it is accepted by all that some degree of free trade is inevitable—but it would not be counter-balanced by the increased activity generated by a prosperous agriculture and, perhaps, more important in the long run, the attraction of Ireland for new investment would practically disappear. Also, we would deny ourselves the benefits of the Community commitment to the future development of Ireland. Already we hear of several industries that are held up until our membership of the EEC is certain. I wonder whether the anti-EEC lobby can really deny that industrialists would be reluctant to invest in this country if we passed off deliberately the chance of joining one of the greatest trading groups in the world?
As I have mentioned, some of our critics admit that there would be difficulties for us outside the EEC. However, their solutions to these difficulties seem to me to display the same lack of realism which characterises their assessment of the alternatives to membership. It is claimed that outside the EEC we would have freedom to subsidise exports, grant tax reliefs, vary exchange rates and boost our trade with other countries. It is claimed that these measures would enable us to maintain and stimulate economic growth.
However, this ignores a number of facts. First, as members of the EEC we are being allowed to retain our export tax reliefs and if at some future date we have to withdraw them they will be replaced by incentives of equal value. Therefore, being out of the EEC offers no advantage to us on this score. Subsidisation of exports costs money and outside the Community our resources for this would be very limited because of the generally slower rate of economic activity. In fact, one of the advantages of membership is that the burden of subsidising our agricultural exports will be shifted from the Irish taxpayer either to the consumer abroad or to the funds of the Community.
It is claimed also that only outside the EEC would we be able to develop new markets for our exports. Membership of the Community will not in any way inhibit our efforts to expand our exports to markets such as the US, Japan, eastern Europe or the developing countries. As members, our prospects in such markets will be, perhaps, improved somewhat because we will benefit from any concessions secured by the greater bargaining power of the EEC and from the various association agreements which the Community have with developing countries.
For all of the reasons that I have outlined and which I have tried to confine to matters concerned more or less directly with me as Minister for Finance, I am convinced absolutely that the best interests of this country lie in full membership of the EEC, that the so-called alternatives are not real alternatives in any sense of being acceptable to our people in terms of the standard of living they are prepared to accept. Therefore, I urge the House to support the motion in this regard and I intend to do my best personally to ensure that the people have the issues explained to them. I am confident that once they know what the issues are and know the facts even in outline, they will not hesitate to vote for full membership of the EEC.
