Dáil Éireann debate -
Thursday, 4 Dec 1980

Vol. 325 No. 3

EEC-Yugoslavia Co-Operation Agreement: Motion.

Minister for Foreign Affairs (Mr. Lenihan)

I move:

"That Dáil Éreann approves the co-operation agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia together with a final act related to that agreement and the agreement between the member states of the European Coal and Steel Community and the European Coal and Steel Community of the one part, and the Socialist Federal Republic of Yugoslavia of the other part together with a final act related to that agreement."

Since 1970, relations between the Community and Yugoslavia have been governed by two successive trade agreements; the first a three-year non-preferential agreement from 1970 to 1973 and the second, also non-preferential, from 1973 to 1978. This latter agreement was tacitly renewed by both sides pending the conclusion of the new co-operation agreement which is brought today for approval by the Dáil.

The terms of this co-operation agreement were negotiated over a period of approximately two years, from February 1978, when the first round of negotiations was held, to February 1980 when the agreement was initialled by both sides. The aim of the agreement, which is of unspecified duration, is to promote trade between the Community and Yugoslavia while taking account of the levels of economic development of both sides. In addition, it is designed to improve access to the Community market for products from Yugoslavia.

This is a new type of agreement, which is designed to strengthen relations between the Community and Yugoslavia while taking account of Yugoslavia's position as a non-aligned, Mediterranean, developing country. It is intended to cover as many areas of co-operation as possible. The negotiations leading up to it were lengthy, reflecting its complexity, but have led to a comprehensive agreement which can form the basis for further co-operation, which respects Yugoslavia's international position, and which underlines the Community's concern to consolidate and diversify its relationship with such an important trading partner.

The agreement contains four principal sectors of co-operation: economic, financial, trade and labour.

In the economic and financial spheres, co-operation is envisaged particularly in the areas of industry, science and technology with the intention of making a contribution towards Yugoslavia's economic and social development. The agreement contains a financial protocol under which Yugoslavia will receive a total of 200 million units of account in the form of loans from the European Investment Bank during a period of five years.

As regards trade, the Community grants levy-free access to its markets for most Yugoslav industrial products, with the exception of certain sensitive products which are subject to tariff ceilings. In the agricultural area, Yugoslavia is granted concessions for products which are of particular importance to it, namely, baby beef in respect of which Yugoslavia enjoys levy-reduced access to the Community for almost 35,000 tonnes per annum, and also tobacco and wines. In the labour sector the aim is to eliminate, as far as possible, discrimination towards Yugoslav workers in the Community and Community workers in Yugoslavia. The trade and financial provisions of the agreement were brought into effect, pending national ratification, by an interim agreement from 1 July 1980.

The agreement makes provision for the establishment of a co-operation council which will meet periodically at ministerial level and will enable the two parties to find solutions to any problem that might arise.

In addition to the co-operation agreement, a parallel agreement was reached between Yugoslavia and the European Coal and Steel Community. This follows the usual form of such agreements and applies to certain products covered by the European Coal and Steel Community.

I am sure that these agreements between the European Communities and the Socialist Federal Republic of Yugoslavia will strengthen existing links and help to promote economic co-operation while also recognising the special strategic position of Yugoslavia in Europe. I therefore recommend the motion to the House.

Mr. O'Keeffe

On behalf of my party I approve strongly of the co-operation between the EEC and Yugoslavia, but there are a few points that I should like the Minister to deal with in his reply.

Undoubtedly, Yugoslavia is a rather unique country. It is classified normally as a communist country but it has refused resolutely during the past 30 years to accept domination. Indeed, it has shown its independence in this regard by its condemnation of the Soviet intervention in Czechoslovakia and in more recent times in Afghanistan. I hope Yugoslavia will not be in the situation of having to issue a further condemnation of Soviet domination in the near future, but that is another question.

By and large the western world has helped Yugoslavia to maintain its non-aligned position. This has been by virtue of the trade agreements which have been in existence for some years between that country and the EEC. These agreements were entered into in the full knowledge of the political situation in Yugoslavia and in the knowledge that country has agreements also with the COMICON and has bilateral agreements with the Socialist bloc of the eastern European countries.

Because of the sensible approach of the EEC, they have contributed towards the maintenance of Yugoslavia in the unique position in which it is today and which we hope it will be able to continue to maintain in the post-Tito era.

I should like to hear from the Minister as to whether he is totally satisfied with the agreement in so far as it effects this country. I do not have up-to-date figures but it appears to me, on the basis of the figures I have before me, that the huge gains in regard to trade with Yugoslavia have accrued to the EEC heavies rather than to the smaller countries like our own. For instance, I know from the information I have here in respect of the import and export figures as between Yugoslavia and some of the EEC counttries that the trade balance in favour of Germany, for instance, is running at the rate of about three to one. These figures go back some years to 1976 and are related to Yugoslav dinars. They are mentioned in terms of one million dinars. In 1976 the exports from Yugoslavia to the Federal German Republic were 7,257 in terms of one million dinars while the imports, at 20,858, were almost three times that. I have some figures also in respect of the trade as between Yugoslavia and the UK. Again, these show a huge imbalance in favour of the UK. The figures in this instance are expressed in sterling and relate to 1978. They show that Yugoslav exports to the UK in that year were of the order of £37 million while the imports amounted to £160 million. The point I raise in this context is whether, in so far as there are gains to the EEC countries from such agreements, these gains are being taken advantage of solely by the big countries. This raises the question of our trade figures with Yugoslavia, and consequently I should like the Minister, if he has the relevant figures, to let us have them when he is replying.

I raise this point in the overall context of the moaning and groaning that comes from Germany and Britain in respect of their situation in the EEC. In increasing volume in recent times we have been hearing from the Germans that they will not continue to be the paymasters of Europe, while the British are saying that they are not getting anything from the EEC, that they are contributing too much to the Community while they are paying far too much for their food. It is a question of the raising of the imperial flag again.

I make this point to illustrate one further gain that I see accruing to those two countries from their membership of the EEC by reason of the trade agreements which the Community have with Yugoslavia. It is one of the many factors not taken into account in the context of weighing up the advantages to those countries of EEC participation. In the future we will have to make continual assessments of those advantages and highlight them. It seems to me there is more and more evidence of what these two countries in particular construe as being the disadvantages of their membership of the EEC. It is important for small countries such as Ireland to press the case that on this issue, as on so many others, there are many advantages accruing to those countries because of their membership of the EEC.

It is important that people here know what may be the adverse effects of such an agreement. The main area of interest will be in the context of agriculture and the agreement relating to the import of baby beef. I appreciate that any international agreement we enter into will normally have advantages and disadvantages, and I think it important that they be spelled out not only to this House but to the country. I have raised in particular the question of agriculture. There is no need in the context of this debate to highlight the problems of Irish agriculture. The Minister has a duty to indicate clearly to the House and the country if this agreement will result in further problems for agriculture or if it will have an effect on markets to which we might normally be exporting.

I accept that Yugoslavia is a unique country. It is non-aligned and despite the most frightful pressures during the years it has succeeded in maintaining its independence and non-aligned status. Certainly such a history imposes an obligation on the free world, and in particular on the EEC, to ensure that it is not forced back under Soviet domination. We should be as free and fair as possible in our trade relations with that country. This co-operation agreement goes a long way towards achieving that. From that point of view and subject to the reservations I mentioned I support the motion seeking approval for this co-operation agreement.

Mr. Quinn

The Labour Party support fully the proposed co-operation agreement between the EEC and Yugoslavia. To do so is consistent with the general policy of encouraging the creation of a new economic international order and particularly, as the Minister said in his speech, since this ensures that Yugoslavs who unfortunately cannot get employment in their own country will receive the same kind of treatment as that given to other guest-workers in the Community. It will also ensure that Yugoslavia can get its new industrial products into Community markets without heavy tariffs although I note that the industrial sector of the Community have put in a proviso excepting certain sensitive industrial products.

Given the history of Yugoslavia and the nature of this agreement, it is not very different to an association agreement enjoyed by Turkey. However, because of the political realities of the situation an association agreement would not be in accordance with the continuing balancing position Yugoslavia must maintain vis-à-vis the East and the West. I recognise the need for that and I approve of the formula that has been arrived at. In the context of Eastern Europe generally I hope this may serve as a kind of model for the Community's relationships not just with Poland — a country that unfortunately is in the news very much recently — but also with countries such as Czechoslovakia, Hungary and Romania which form a natural part of the European hinterland and to which we should be more closely aligned and intergrated in the context of the economic crisis facing the world.

I accept the difficulty that must have been encountered in negotiating this agreement. It is a sensitive area and there are interests in the Community that have to be balanced against the economic interests of Yugoslavia. Perhaps the Minister in his reply would indicate the nature and detail of the co-operation council. I gather from his speech that it will be at ministerial level. Will he indicate what kind of participation and involvement Ireland will have? I cannot find a reference to the time-table for this agreement. Will it be reviewed within five or ten years or is it an open-ended agreement without any review period? Perhaps the Minister will give us this information in his reply.

Following the remarks made by Deputy O'Keeffe, I agree there are implications from the Irish point of view. We have not a large trade with Yugoslavia for obvious geographical and historical reasons. I think our potential trade with other EEC countries could be damaged in part by this agreement, particularly in the agricultural sector. There is a market in Greece and Italy for beef and there will also be markets in Spain and Portugal when those countries are full members of the EEC. Our geographical position does not help us in relation to these markets. Will the Minister indicate how the agreement in relation to baby beef and beef products generally is likely to affect the Irish sector and will he state if any assessments have been made? Have the Minister and his Department, in conjunction with CTT, made any arrangements for a full trade mission to travel to Yugoslavia in an attempt to reap some benefit from this opening up of what is, undoubtedly, a two-way agreement? The Minister's speech is very shy on the cost of this agreement to the Community generally, and particularly to this country. That is not to say that we are against the agreement, not at all, but the whole thrust of the debate in support of the demand for the creation of a new international economic order is based on the clear, explicit statement of mutuality of interests and of benefit. No quantified Irish benefit is mentioned in the Minister's speech, but perhaps the scale of trade between the two countries is too insignificant to be measurable.

The Yugoslav economy and certain aspects of its agriculture particularly in Northern Yugoslavia is an efficient, highly productive area. They will, undoubtedly, be competitors with us in milk and beef products in the Mediterranean, which is a growing market for such products as the economies of these countries improve. If one can take the previous figures, the levels of consumption of meat in general, and beef in particular, and of milk products is likely to rise, and since we have all along the line since joining the EEC seen the retardation of industrial growth in part in this country, our major asset is agriculture. I want to see in what way, in assenting to this agreement, the Minister and his Department — and, indeed, the other specialist Department officials — have quantified the net cost to Ireland and various sectors of its economy of this agreement and if they can demonstrate why, in fact, Ireland should agree to this specifically. Perhaps we could be a little more French or a little more British in seeing what exactly is the cost of this agreement as against the benefits. In general — and I do not wish my remarks to be misinterpreted, because we support the agreement and are in no way suggesting that it should be modified — I should like to hear from the Minister in what way this was quantified.

Minister for Foreign Affairs (Mr. Lenihan)

First of all, the agreement between the Community and Yugoslavia is an important one from the point of view of stability in Europe. I do not have to elaborate on the important role which Yugoslavia has played. The manner in which that very large, underdeveloped country has improved since the war pays a great tribute to the genius and tenacity of its people. It is important that the Community itself make stronger links between the Community and Yugoslavia, for very important strategic and political reasons. This was the uppermost thought in the Community's mind in making this agreement.

Even though we had objections and did a lot of hard bargaining in regard to the baby beef aspect, which was eventually fixed at 35,000 tonnes per annum on a levy-reduced basis, at the end of the day we were the only people fighting in this respect. All the other eight countries agreed and in the context of the overall situation we reluctantly agreed, primarily because, within the Community, one cannot act in isolation at all times. If there are strong compelling reasons being pushed by eight of the nine, one cannot hold one's position indefinitely.

I want to emphasise in regard to our trade position that we do not do much trade with Yugoslavia but what we do is, in balance, in our favour. The figures for 1979 were, imports £1.6 million, exports £5.6 million. For the first part of this year imports are £1.5 million and exports £4.7 million. As a matter of interest, our exports are, food products £1.9 million, cosmetics £1.1 million, data processing office machinery £1 million. Our exports exceed our imports by more than 3 to 1 although I grant that the volume is not high. We are not in any deficit position, vis-á-vis our trading position with Yugoslavia.

As regards the co-operation council, this is at ministerial level. What happens is — and Deputy Quinn rightly said that this is in the nature of an association agreement similar to what we have with Cyprus and Turkey — that vis-á-vis all of these countries there are regular co-operation council meetings at ministerial level. For instance, we had one meeting the week before last with Cyprus and one with Turkey. There will be one held in the new year, the first in 1981, with Yugoslavia, in which their Minister will sit down with the Commission and the Community Foreign Ministers at a special meeting to find out how their particular agreement is working out, exchange views, make proposals and so on.

As a result of the agreement we have taken a very positive interest in Yugoslavia. The Irish Ambassador to Yugoslavia has already in the past few months led a delegation from the Department of Agriculture and the CBF to look at the possibilities of trade there. On their return, they were optimistic about commercial development of Irish agricultural exports to Yugoslavia. This was a direct follow-up to the question of baby beef. As I said, we has agreed reluctantly to that, entering a caveat at the time that we expected a quid pro quo. The Department of Agriculture and the CBF experts had gone to Yugoslavia with a view to facilitating other agricultural exports as a quid pro quo for the baby beef concession which Yugoslavia had received. That is a positive way forward. There has been a direct follow-up to our reluctant agreement in allowing baby beef into the Community from Yugoslavia.

Another matter raised, I think, by Deputy O'Keeffe — and he and I on another occasion had an exchange of views concerning it — and mentioned, as well, by Deputy Quinn, is the question often raised by Britain and Germany of their contribution towards the financing of the Community, Germany, in particular, making the case that she, in accountancy terms, pays the heaviest contribution towards Community funding. The disagreement which Britain had some months ago on the extent of her contribution to the Community was debated. As I have said publicly before, the larger countries in the Community are substantial gainers, by reason of membership of the Community, in the unquantifiable area of free market within the Community and the market access gained by the Community to third countries, such as Yugoslavia, throughout the world with whom the Community have agreements. Community have agreements.

Naturally, the larger, industralised countries are big gainers by reason of the internal European market on one hand, and the agreements reached by the Community, on the other hand. It is a completely wrong argument merely to point to an accountancy figure, saying "That is our contribution to the Community. We are paying far more than other countries in real terms and, therefore, we must restrict Community spending in the desirable social regional areas concerning transfer of resources leading to a convergence of economies". That argument does not hold water. The really big gain to the larger countries and, in particular, Germany — and Britain also, but not to the same extent — is the existence of the market and the amount of trade generated by reason of the market and the capacity of the larger, developed industralised countries to make use of that market. The value both the internal markets and the external markets gained by agreement runs far ahead in real value terms of any small accountancy contribution made to the annual budget.

Mr. Quinn

It is a pity the Minister was not able to persuade Prime Minister Thatcher about that. Next week he may get an opportunity to do so. She won the argument and we are paying.

Mr. Lenihan

We are not paying in that respect so far as our contribution is concerned. Our gain is also substantial by reason of the existence of the common agricultural policy which the Socialist parties in Europe are seeking to erode. That is our prime area of gain. Every country has its own different legitimate interests.

Mr. O'Keeffe

We have to highlight the gains they are getting.

Mr. Lenihan

We are getting excited about a matter which is not really of concern. We are talking about a co-operation agreement with Yugoslavia which has been welcomed by the two Deputies opposite. I thank them for that.

Question put and agreed to.