I move:
That Dáil Éireann take note of the reports: Developments in the European Communities—Third Report and Fourth Report.
Section 5 of the European Communities Act, 1972, provides that the Government shall make a report twice yearly to each House of the Oireachtas on Developments in the European Communities. This motion covers the two reports presented for 1974, which relate to developments in the Communities from November, 1973, to December, 1974. There are certain real advantages in taking the two reports together at this time: it allows the House to debate Ireland's second full year as a member of the Communities, to take stock of the state of the Communities on the eve of the Dublin meeting of heads of Government on 10th and 11th March and to look at the issues which will be facing the Communities in the months ahead.
In order to keep Deputies informed of general developments the major activities of the Communities since preparation of the fourth report are outlined in the supplementary report which was circulated yesterday. The period covered by the supplementary report will, of course, be treated in full in the fifth report, and will be debated in this House in due course.
Deputies will have noticed certain changes in the third and fourth reports as compared with previous reports. In response to requests from the House the range of subjects covered has been extended and more detailed information has been given on proposals and decisions. The most significant innovation however has been the inclusion in Annex II of information on grants, loans and subsidies which have been approved for Ireland or which are awaiting decision. The amounts of moneys involved—more than £90 million had been approved in grants, loans and subsidies for 1974 at the time the fourth report was prepared—indicate the large financial transfers to Ireland which membership of the Community has entailed.
The period covered by the two reports begins and ends with meetings of heads of Government—the Copenhagen Summit Conference of December, 1973, and the Paris meeting of heads of Government last December. The intervening period has been a testing time for Community institutions and Community policies. The ambitions of the Paris Summit of October, 1972, and of the Copenhagen Summit were not fulfilled and the major tasks which the Community has set itself were not all completed in the time envisaged. It proved impossible to reach agreement on the establishment of a regional development fund by 1st January, 1974, and to move to the second stage of economic and monetary union. The Community also encountered serious difficulties in agreeing on the policies to be followed in dealing with the energy crisis.
First, many member states experienced internal political difficulties involving changes of Government and of leadership. In some cases these changes brought with them a reassessment of policies and a reorientation of attitudes towards the Communities. In particular the Labour Government in the United Kingdom entered office with a commitment to seek a fundamental renegotiation of the terms of entry to the Communities. Progress in many essential areas of policy has been held up while the Community has considered the issues raised by the UK Government. The room for manoeuvre of British officials on committees and working groups and of British Ministers at Council meetings has been reduced and this has resulted in a certain lack of flexibility in the day-today negotiations and discussions within the Council's decision-making framework. In addition, I feel, there has been a reluctance to innovate, to consider new directions in policy, while the uncertainty about the UK's continued membership of the Community remains.
Secondly, there were the effects of enlargement itself. I think that we underestimate the extent of the readjustment required of the original Six, of the three new acceding states and of the Community institutions to the changed political and economic relationships. For Ireland accession to the Communities has entailed a great increase in effective participation in the formulation of economic and foreign policies at international level. It has also involved a reassessment of our relationships with the other eight member states and with the rest of the world on the many issues embraced by the European integration. It has taken time for the full implications of these changes to work themselves through our governmental and administrative structures and for us to gear up our administrative machine.
Other member states, and the Community's institutions have encountered similar difficulties. It is not hard therefore to see why the first 18 months of the enlarged Community were characterised by a certain confusion.
Thirdly, the member states did not foresee at the time of enlargement the dramatic changes which were, within little more than a year, to transform the world economy. The massive claims on the resources of the developed world which the raw material producers, particularly the oil producers, suddenly made intensified inflationary pressures within the Community and threatened a fall in employment. The continued growth in production which had formed the basis for the development of the Community and of its key social and economic policies could no longer be taken for granted.
This was the situation which the member states faced in the second half of 1974. The world economic crisis, coupled with adverse political developments, had contributed to a sense of drift within the Community. Happily the drift did not continue. From the middle of the year there were signs that the Community was at last beginning to tackle the grave problems with which it was confronted. For example, in June the Commission submitted to the Council a communication on a new energy policy strategy for the Community with the aim of increasing the security of the Community's energy supplies. In October the Council agreed on a scheme to raise Community loans which would be made available to member states in balance of payments difficulties caused by the increases in prices of petroleum products; and eight of the nine member states agreed to participate in the new International Energy Agency which was established in November. The most concrete manifestation of the improved climate in the Community was the Paris meeting of heads of Government on December 9th and 10th, 1974. This meeting produced a body of constructive guidelines and decisions for the future development of the Community. At the same time it avoided imposing on the member states and the institutions an unmanageable burden of work like that which emerged from the Paris Summit in October, 1972.
The success of the meeting had of course a particular importance for Ireland coming as it did at the beginning of our Presidency. It set out a series of concrete measures which would form part of the Community's work programme during the Presidency, it gave the necessary political impetus towards the solution of some apparently intractable problems, and the improved political climate augured well for fruitful co-operation and attempts at further integration in areas not specifically dealt with at the meeting.
As Deputies are aware, the Paris meeting of heads of Government represents the last of the old-style summits. These summits were essentially extra-Community, not governed by treaty procedures, and were not designed, in either practice or intent, to replace the Council of Ministers as the Community's decision-making body. Rather, their function was to take the sort of broad decisions which would lay down an overall sense of direction and provide the necessary orientation for the Community's work, while leaving it for the Council of Ministers to translate these guidelines into practical and detailed policy measures. Seen in this light it seems to me that the Paris meeting was very successful. The decision regarding the establishment of a regional fund fully illustrates this point, with the Council of Ministers now expected to finalise the implementing decision at its next meeting on 3rd and 4th March.
It should be remembered too, that the heads of Government also took important decisions dealing with other matters including the holding of regular thrice-yearly meetings at heads of Government level, direct elections to the European Parliament, reducing the use of unanimity in the Council of Ministers and the preparation of a comprehensive report on European union, as well as agreeing guidelines for combatting the grave economic crisis which now threatens not only the Community member states but the entire world. The work of translating these broad directional decisions into detailed policy measures now rests with the Council of Ministers.
A genuine evaluation of the achievements of the Paris meeting demands, however, not only that the meeting itself be seen in context, that is as it relates to the Council of Ministers, but also that we examine the decisions taken at that meeting in their entirety. Thus the success or failure of the meeting cannot be judged on the basis of our attitude towards the decision taken on one item, or group of items, of interest to us. Rather our ultimate assessment of the meeting should rest on the whole of its decision and on this basis I am confident that the meeting was a great success.
I am thinking in particular of the regional fund on which because of Ireland's rather direct interest it is quite natural that so much of the Opposition speeches have concentrated —that is, the Opposition speeches on the motion already begun on European integration. In particular in the debate on this motion Members expressed disappointment with the size of the fund. Clearly the Opposition, like the Government, would have preferred a larger fund with a greater sum available for Ireland. Not all our partners shared this view, however, and the outcome of lengthy and often extremely hard negotiations was the decision to establish a regional fund of 1,300 million units of accounts, of which 85 million units or some £35 million would be made available to Ireland for the years 1975-77. This is a welcome and substantial net inflow of money by any standards. Given the economic difficulties at present facing the Community, however, the establishment of so sizeable a fund represents a truly remarkable example of Community solidarity by our partners in which, despite their own internal problems, the economically stronger member states have given a practical demonstration of their determination to tackle the problems of regional imbalance which affect the weaker members, including Ireland.
The significance of the regional fund is added to when taken in conjunction with the firm rejection by the heads of Government of any recourse to protectionist measures as a means of tackling their economic difficulties. This rejection of protectionism and the parallel commitment of member states having a balance of payments surplus to stimulate domestic demand, although not strictly quantifiable, is perhaps the single most important decision of the Paris meeting from Ireland's point of view. Indeed, given our exposed position as a trading nation, a regional fund which could compensate us for the adverse effects of any recourse to protectionism by our partners hardly seems conceivable.
The fact, however, that not only have the heads of Government thus rejected protectionism but also, in the present difficult economic climate, have taken the necessary steps towards establishing a regional fund must surely confirm the success of the Paris meeting. The consensus reached at Paris on the Community's approach to dealing with economic policies, important as it is, should not lead us to minimise the problems which still exist. Over the coming weeks and months the question of economic revival will pose enormous problems for the Community at a time when most of the member states are suffering from very large trade deficits and when the international economic climate is not favourable.
Within the Community there are still differences as to where the emphasis on economic policy should lie and externally there is a need for the major developed countries such as the US and Japan to maintain demand and stimulate the world economy. This last point was emphasised by President Giscard d'Estaing of France when he met President Ford in Martinique last December. In addition, the Minister for Foreign Affairs when he visited the US in January informed the US Secretary of State and US Secretary of the Treasury of the general expansionary thrust of the Community's economic policy and stressed the importance of the US modifying its policies in the direction of increasing the level of demand. There have been encouraging signs in recent weeks that the US has began to re-orientate its policies in this way.
The Community has also taken an active part in international discussions on re-cycling the surplus funds of the raw materials producers, in particular the oil producers. The recycling of these funds is essential if the industrialised world is to maintain its level of demand and avoid a serious recession. The problem has been tackled imaginatively in international institutions such as the IMF and OECD and, as I mentioned earlier, the Community has agreed on its own loan scheme to help member states in balance of payments difficulties because of the oil crisis.
The Paris meeting also called on the member states to work out and implement a common energy policy in the shortest possible time. Over the past few months the Community has taken the first significant steps towards getting a Community energy policy going. At its meeting on 17th December, 1974, the Council adopted a resolution establishing energy objectives to be attained by 1975. The resolution sets specific targets to reduce Community dependence on imported energy, to reduce the Community growth rate in energy consumption and to maintain and increase the Community's indigenous supplies over all energy sectors. The Council at its meeting on 13th February adopted a further resolution which went on to define Community guidelines on the means to attain the objectives established by the resolution of 17th December, 1974, so as to develop dependable energy resources as quickly as possible under satisfactory economic conditions.
Further work is continuing within the Community and within the International Energy Agency to reach decisions on medium-term and long-term energy policies especially in the fields of energy conservation and the accelerated development of alternative energy resources. An important aspect of developing alternative energy supplies is the need to protect costly investments in new energy resources with long delays before supplies come on stream.
The US Secretary of State, Dr. Henry Kissinger, in a speech on 3rd February, 1975, proposed a floor price for oil imports which would be higher than historical prices but lower than the current price of oil so that imported oil would not be sold at prices which would make new energy sources non-competitive. This complex question of the best means to promote the development of alternative energy supplies on an equitable basis is at present under close study within the Community and the International Energy Agency in preparation for the dialogue between the oil producers, the industrialised oil-consuming countries and the developing oil-consuming countries proposed by the French President in October of last year.
As regards the role of the Community within the International Energy Agency, the Council has agreed that Community member states would seek a common position on the important problems under discussion within the agency, and especially in preparation for the proposed dialogue between oil producers and consumers. In accordance with a timetable agreed in Martinique between the Presidents of the United States and France and endorsed by the member countries of the International Energy Agency, it is envisaged that a preparatory meeting for the main conference between oil producers and consumers should be held towards the latter part of the month of March. The Community will be represented at the March preparatory meeting by a delegation consisting of representatives of the member states and of the Commission with Ireland, as current President-in-office of the Council, speaking on behalf of the Community.
I should now like to say a few words about the position of the United Kingdom. As I indicated in my opening remarks, the continued uncertainty about the position of the UK has been a factor in hindering the development of the Community and the formulation of policies designed to tackle the grave problems with which we are confronted. Important matters have had to be held in abeyance while the so-called "renegotiation" is brought to a conclusion. However, there has been progress in the past few months on most of the areas which form the UK "renegotiation" package, in particular on the question of the Community budget. In December the heads of Government took a significant initiative in inviting the institutions of the Community to set up a correcting mechanism of general application to prevent the possible development of situations unacceptable for a member state and incompatible with the smooth working of the Community. In response to this request, the Commission submitted in January its proposals which attempt to establish the criteria for deciding that a member state's economy is in an unacceptable situation and to determine the action which should be taken by the Community in the event of an unacceptable situation arising. These proposals are currently under examination within the Council, and it is hoped that the Council can take decisions on them at its meeting on 3rd and 4th March.
Naturally the Government hope, and are working towards ensuring, that the UK does remain in the Community. As indicated in the fourth report, we are studying the options open to Ireland in the event of a British withdrawal; it does not appear, however, that Ireland's economic or political interest would be best served by following suit. I hope that the issues raised by the UK will be resolved quickly to the satisfaction of all and that the British people will have taken a favourable decision on continued membership of the Community by the end of the Irish presidency.
In the field of its external trade relation the Community has been particularly active over the last few months. At its meeting on 10th and 11th February, the Council approved the directives enabling the Commission to take an active part in the GATT multilateral trade negotiations which began in Geneva on 11th February. This is a decision of great importance for the Community. It confirms the importance which the Community attaches to the multilateral negotiations and it has shown the effectiveness of the Community institutions in translating an important item on the programme of the heads of Government into concrete decisions within the time laid down; this is all the more important as the subject is a complex one involving very considerable and sometimes diverging interests of the member states. In adopting the directives the Community recognised that the aims of further trade liberalisations and the expansion of world trade will be more easily attained if the tariff negotiations are placed in a global context of international measures seeking to overcome the current world crisis.
Another major development in the trade area was the agreement with the African, Caribbean and Pacific countries which will be signed tomorrow in Lome. Comprehensive arrangements covering trade, the stabilisation of export earning, industrial co-operation and financial aid, which are, I think, unprecedented in the history of relations between industrialised and developing countries, have been established between the Community and the 46 countries covering most of Africa and part of the Caribbean and Pacific islands. The negotiations on the agreement were difficult and complex both politically and economically and posed enormous strains on the Irish presidency in its first month. The fact that a successful conclusion was reached is a testimony to the political determination of the Community and the African, Caribbean and Pacific States and augurs well for the remainder of our presidency.
The negotiations on agricultural prices for 1975-76 were similarly complex and difficult. I believe that the compromise package worked out at the Council meeting on 10th to 13th February is a good one. The average 10 per cent increase in the prices of agricultural products taken together with the 5 per cent devaluation of the green pound will contribute substantially to increases in farm incomes during the coming year.
I should now like to turn to some of the institutional changes which were agreed at the Paris meeting in December and to deal with the main developments in this area since then. In order to ensure the development and overall cohesion of the activities of the Communities and the work on political co-operation the heads of Government decided to meet, accompanied by their Foreign Ministers, at least three times a year as the Council of the European Communities and in the framework of political co-operation. The general intention is that one meeting will take place in each of the two countries holding the Presidency during the year; the third meeting will be held at the normal seat of the Council, that is, either Brussels or Luxembourg. The Community has been considering the arrangements necessary for these meetings and agreement has been reached on a number of matters for the Dublin meeting in March. Briefly, these are
—that the President of the Commission will attend,
—that Commissioners will attend when Community matters for which they are responsible are under discussion,
—that when formal decisions within the Community framework are required such decisions will be made on the basis of Commission proposals,
—that the Secretary General of the Council and a representative of the Presidency will be available to provide the necessary secretarial arrangements, and
—that a communique will not normally be issued but a declaration of a general nature may be made on certain points.
As the agenda has not yet been fixed it would be inappropriate at this stage to comment on what matters are likely to be discussed at the meeting. I will mention, however, that Ireland is particularly happy to host the first of these meetings and, as the country holding the presidency of the Community, will endeavour to ensure that it is a success both at the organisational level and on matters of substance. A second institutional matter dealt with at the Paris meeting in December was the question of the voting procedures within the Council. In paragraph 6 of the communique the heads of Government considered that in order to improve the functioning of the Council the practice of making agreement on all questions conditional on the unanimous consent of the member states should be dropped. We welcome this initiative as a step towards reducing the abuse of the veto on minor matters whilst, of course, seeing the necessity, at this stage in the development of the Community, of retaining the practice of seeking consensus where the vital interests of a member state are concerned.
Since the beginning of this year the Minister for Foreign Affairs, in his capacity as President of the Council, has initiated certain procedural changes in the preliminary sessions which are held before the Council meetings proper in order to identify those items on the agenda, susceptible to majority vote, which are not of such importance to individual member states that these member states cannot agree that paragraph 6 of the communique should apply. Majority or qualified majority voting can then be applied in the Council as appropriate.
On the question of direct elections to the European Parliament the heads of Government noted that the objectives laid down by the treaty should be achieved as soon as possible. They wished the Council to act on the Parliaments proposals by 1976 so that the first elections could take place starting in 1978. I am glad to note that the Parliament on 14th January adopted a resolution presented by Mr. Patijn on a draft convention providing for elections by direct universal suffrage. The way is now open for the Council to take the necessary action once the political reservations expressed by the UK and Danish delegations at the Paris meeting are lifted. I should say, however, that though the Government has indicated its desire for early direct elections, indeed pushed for them at the Paris meeting, and though we have welcomed the Patijn proposals as a further step in the right direction we will be concerned to see that there is an adequate distribution of seats in a directly elected Parliament to the smaller countries such as Ireland. The question of direct elections is a complex one and we will be giving the Parliament's proposals close examination when they come up for discussion in the Council.
In the field of political co-operation between the Nine, a number of meetings have already taken place, under our presidency, in Dublin. These have included a meeting of the Foreign Ministers of the Nine on 13th February, a meeting of the political committee, composed of senior officials, in late January, and meetings of some eight different groups of experts on particular subjects.
At their meeting on 13th February the main subjects considered by the Ministers were the situation in Cyprus, the Conference on Security and Co-operation in Europe, the Euro-Arab dialogue, the situation in the UN, Portugal, and the agreement on a procedure for replying to the questions of the European Parliament on political co-operation activities. With regard to Cyprus, the Ministers stated "that they continue to consider it highly desirable to seek a fair and lasting solution negotiated through consultation between the two Cypriot communities", and "that, in order to help achieve this objective, the Nine are prepared to conduct talks with the representatives of all the parties concerned". On the Euro-Arab dialogue, the Ministers considered the concrete preparations that have now been put in hand and expressed their desire that these continue to make progress. The Minister for Foreign Affairs had the opportunity on 19th February last in Strasbourg of informing the political affairs committee of the European Parliament of the results of the Ministers' meeting on 13th February.
The developments I have just outlined represent some of the more important activities undertaken by the Community over the past year or so. This has been an immensely difficult period during which the Community, and, indeed, the world as a whole, has been threatened with a grave economic crisis. It is, therefore, a mark of the Community's achievement that not only has it withstood the disintegrating effects of that crisis but that it has also in large measure striven successfully to cement further the bonds which tie the member states together in their joint endeavour of creating a new Europe. The member states' rejection of any recourse to protectionist measures provides an excellent illustration of this point but, perhaps, even more encouraging is the fact that at this time of grave difficulty the Community has given every indication of its commitment to helping economically weaker states, whether internally, through the establishment of the regional fund, or externally, through the recent and successfully concluded negotiations with the ACP countries.
It is well to record, however, that the member states' understandable concern with the economic well-being of the Community and associate countries, has not blinded them to the important and politically desirable task of increasing and extending the democratic nature of the Community's institutions. Thus the established aim of holding direct elections to the European Parliament in 1978 and of extending the competence of the Parliament, in particular by granting it certain powers in the Communities' legislative process, represent important steps towards achieving greater democratic control over the Community's activities. It is premature to make predictions but presumably this aspect of the Community will be a major concern of the report on European union which the heads of Government have asked Mr. Leo Tindemans, Prime Minister of Belgium, to prepare.
Looking back, therefore, I think that the last six months have been a period of steady progress in which the foundations for an integrated Europe have been solidly and methodically laid. It is on these foundations that Ireland started its period in the presidency on 1st January last and on which we have already begun to make our contribution towards the future evolution of a Community that will be socially just, economically well-balanced and democratically controlled.
