: With your permission, a Cheann Comhairle, I propose to make a statement on the meeting of the European Council which I attended, with the Minister for Foreign Affairs, in Brussels on 21 and 22 March. I have had the Presidency's Conclusions on the Proceedings of the meeting laid before both Houses of the Oireachtas.
The principal Irish concerns in Brussels related to the currency re-alignments within the European Monetary System; ensuring that as far as possible the agricultural price fixing is not too closely caught up with the larger questions of the enlargement of the Community and the "Mediterranean package"; the advancement of our position on the Community proposals for new revenues now that the "own resources" system as at present constituted is nearing exhaustion; the co-ordination of the Community approach to the Williamsburg meeting in May of the Heads of State or of Government of the industrialised countries; the prevention of a deterioration in EEC/US relations particularly where agricultural trade is concerned; the advancement of the work begun at the Copenhagen Council on the internal market, as an aid to internal trade and greater Community cohesion generally; a number of items on the political co-operation area to which I shall refer later.
In all this our overriding concern was the maintenance and development of measures to aid economic recovery and, therefore, employment, particularly among the young who have been so greviously affected by the current recession.
The Brussels meeting immediately followed the meeting of the Finance Ministers of the Community which ended last Monday with agreement on the realignment of exchange rates in the European Monetary System. As the Minister for Finance made a statement to the House last Tuesday on this subject, I do not propose to comment on the outcome in any detail. I wish simply to express the satisfaction of the Government, first, that in the face of considerable difficulties the Ministers were able, once again, to reach an agreement that maintains the EMS as a zone of monetary stability in a world where there is a pressing need for greater stability in exchange relationships as an aid to increasing world trade and therefore economic growth.
Secondly, I want to reiterate in the House that for Ireland and the Irish pound the outcome was precisely what was sought by the Government. Our objective had been, as the Minister has indicated, to obtain a correction of the unwarranted and unsought appreciation of the exchange rate of the pound, particularly against sterling. We sought to reestablish as far as possible the relationship with sterling in particular that had existed on average last year before the rise that took place and thus to remove a barrier to maintaining or increasing employment which would have existed if the exchange rate for the pound had been held at a level not justified by the economic facts.
It may take some time for the degree of adjustment to emerge clearly, and naturally a lot will depend on the autonomous movements in sterling. However, the initial evidence from the markets suggests that our objective has been broadly achieved. I believe that the Minister for Finance deserves great credit for the competent manner in which he discharged his responsibility on the country's behalf.
We also discussed the proposed enlargement of the Community, with conclusions which Deputies will be able to study in the texts laid before the House. The Agriculture Council had not been able, as they had been asked to do at Copenhagen, to reach agreement on the necessary adaptation of the acquis communautaire in regard to olive oil and Mediterranean fruits and vegetables.
The European Council considered the issues, gave certain guidelines and asked the Agriculture Ministers to settle the issues as quickly as possible. A speedy solution is in Irish interests in order to ensure that decisions on agricultural prices are not delayed through links with the outstanding questions on Mediterranean products.
Apart from this aspect, Irish interests in these matters are general rather than specific. We are committed to the accession of Spain and Portugal and are prepared to play our part in reaching agreement on the matters before the Agriculture Council. We adhere, however, to our view that the interests of both the present member states and the applicants require that enlargement take place on the basis of necessary decisions in such areas as Community resources and improvements in decision-making procedures.
I now come to the European Council's discussion of the future financing of the Community and of the associated problem of the balance of benefits among member states. Deputies will be aware that the Commission published, not too long ago, a Green Paper on future financing. The House will also know that for some years past the British Government has put forward the view that the share of Community own resources collected in the UK greatly exceeds the budget receipts which accrue in the UK. At Brussels, the British Prime Minister stressed the importance, from the standpoint of the British Government, of having arrangements agreed as early as possible on the way in which the budgetary imbalance on which they focus would be corrected for the future. Together with a number of other Heads of State or Government, I considered that primary importance attached to ensuring that the Community's overall development was not prejudiced by the inadequacy of its financial resources.
I said that it was increasingly clear that we are near the limit of existing own resources. The 1 per cent VAT ceiling could be reached in 1984: the Commission has very little confidence that it will not be breached at the latest in 1985. This is quite apart from the anticipated increased demands arising from enlargement or any further adjustments in favour of the UK. I urged that the Commission submit firm proposals on future financing as soon as possible.
The Commission's recent Green Paper on future financing placed emphasis on the continuing role of VAT as the centre of the Community's financing system. I welcomed this and said that I trusted this emphasis would be reflected in a clear proposal by the Commisison for a raising of the 1 per cent VAT ceiling which is now very urgent. I also asked that further and detailed consideration be given to the introduction of greater progressivity into the system, as well as a form of financial equalisation — both of them options aired in the Green Paper. Deputies are probably aware that a further option canvassed in that paper was a tax to be paid by national Exchequers but based on agricultural indicators. I made it clear when I met President Thorn in Dublin, and again at the meeting in Brussels, that this proposal is unacceptable to this Government.
I should make it clear to the House that Ireland, together with Denmark and Greece, entered a reserve regarding the reference to budgetary imbalances in the Statement by the Presidency after the meeting. This term reflects, in our view, an incorrect and narrow view of the balance of advantages and disadvantages among member states, many of which are not reflected at all in the Community budget. In addition, this wording could suggest that the problem was simply one of adjustments within the existing budgetary framework rather than, as we contend, one of an imminent inadequacy of own resources.
As I indicated earlier, the economic situation and action to improve it were high among my priorities going to the meeting. This, of course, reflected the magnitude of the economic difficulties and challenges facing us in Ireland and the reality that while we can do a great deal to help ourselves we are, as an extremely open economy, greatly affected by developments in the economies of the Community and indeed of the world at large.
In the Community, growth in 1982 was only 0.2 per cent in volume terms, with the Federal Republic of Germany recording a decline of 1 per cent. This experience was common to all the industrialised countries, their combined output falling last year for the first time since 1975. Much of the deterioration was due to the combined impact of: a worsening in the recession in the US, where real GDP declined in 1982; and an actual contraction, in world trade, which in the three years up to 1979 had expanded at an average annual rate of 6.9 per cent.
The number out of work in the Community continued to climb last year, to reach 9.6 per cent of the labour force on average, a level 75 per cent higher than in 1979.
There are some positive aspects. Inflation has eased in all member states, and most notably in the US and Japan, and for the Community as a whole progress in bringing the current account of the balance of payments back into equilibrium has been faster than expected.
As assessed by the Commission, before the meeting the outlook for 1983, while subject to some major uncertainties, was somewhat better than the 1982 outturn in a number of respects, but unemployment seemed set for a further rise to a total of more than 12 million or over 10 per cent of the labour force.
Recent indicators point to some incipient recovery in a number of member states and in the US where the economy has shown a more favourable trend since the beginning of this year. There has been a downward movement in interest rates internationally and we have had the recent OPEC decision to reduce oil prices, confirming a trend that has been evident for some time.
This does not, however, mean that an end to the recession is assured. We have had a number of false dawns in recent years. The favourable developments still need to be confirmed as to their scale and duration. There are problems and uncertainties in the international financial situation.
Nevertheless, there is a chance of a positive turnaround. My concern, leading up to the Brussels meeting, was that the Community should focus on the action required to realise this possibility of recovery and to make it durable and cumulative. What I wanted — and what I urged upon my fellow Heads of State or Government — was that arrangements be made for careful preparation of a Community position for the Williamsburg meeting of seven major industrialised countries and other forthcoming meetings at international level.
Different countries have now become so interdependent economically that no one country can promote or sustain economic growth on its own. Even the European Community, with its large population and enormous resources is, in today's conditions, insufficiently powerful to achieve autonomous growth — assuming that all its member states could be got to act in concert. That is why the Williamsburg Summit, involving also the United States, Canada and Japan as well as the four leading states of the Community is of such importance. There could be co-ordination there on a world scale which would aid and secure the persistence of the incipient recovery. This, if it happened, could start to roll back the tide of unemployment which is becoming such a serious threat to western democracies as a whole.
When I met Mr. Gaston Thorn, President of the Commission, here in Dublin towards the end of last month, I pressed that the Commission should give a bold lead along the lines I have mentioned. I am, therefore, happy to acknowledge that the paper which the Commission submitted to the European Council was one of the most forthright and positive documents on economic policy to emerge from the Commission for a long time. It proposed priorities and guidelines relating to the security of the international financial system, the restoration of international monetary stability, the handling of monetary policies, including interest rates, the management of public finances and lastly, the handling of developments in regard to the price of oil.
My views on the need to prepare a Community position for Williamsburg — for which the Commission paper will now provide a first-class point of reference — were, if not universally, very widely shared. This emerged in a full and lively discussion of this matter on Monday afternoon and is, I am glad to say, fully reflected in the very satisfactory section of this subject in the Presidency's conclusions.
The section of the Presidency's conclusions is followed by a section on Community-US relations. This relates to another concern of mine before and at the Brussels meeting — the threat posed to important Irish and Community interests by strains in Community-US relations in regard to trade in agricultural products. In the Tokyo round of agreements within the GATT, the US accepted that the system of export refunds operated as part of the Common Agricultural Policy was compatible with GATT rules so long as the Community did not take an undue share of world markets. There is, of course, in the US a strong and vocal farm lobby which has been pressing for a more aggressive US policy on trade in agricultural products.
Deputies will be aware of the feelings aroused recently when the US concluded a contract for a subsidised sale of one million tonnes of wheat flour to Egypt, undercutting the Community in a market traditionally supplied from Europe, primarily from France. This happened during a pause in discussions between the two sides which had been designed to resolve the problems and was in breach of an understanding for a "truce" reached in those talks. The US also appeared to be preparing to enter into further subsidised deals and it was reported that negotiations were in train for the sale of some 20,000 tonnes of butter, again at very low prices, to Egypt, which could have major repercussions on international market prices and outlets to the detriment of Irish and Community exports of dairy products. This was naturally a matter of considerable concern to the Government, especially as it would follow the losses, running into tens of millions of pounds, that we already stand to suffer as a result of an agreement that provides, inter alia, for the subsidised sale by the US of skimmed milk powder to Mexico, where Ireland had built up a large market for this product, although in this case the US was also a traditional supplier.
There have in recent weeks been intensive contacts at high level, including an exchange of correspondence between the Presidents of the Council and of the Commission and Secretary of State Schultz and a visit to Washington last week by Vice-President Haferkamp and Commissioner Dalsager, designed to prevent the outbreak of a trade war in the agricultural products area. Irish concerns in the matter were expressed to Mr. Schultz by the Minister for Foreign Affairs at their meeting last week. The situation remains delicately balanced, however, especially in the light of the intended visits by the United States Secretary for Agriculture, Mr. Block, over the next few days to Tunisia, Egypt, Saudi Arabia and Turkey. US export packages are reported to be ready for signature in all four countries and some might involve dairy sales.
Thus we are faced with dangers of price undercutting in important markets which could have dramatic effects on Community finances. I am, however, satisfied, as a result of the discussions in Brussels, that there is an appreciation of the seriousness of the situation and an intention on the Community's part to engage in constructive discussion which could lead to a modus vivendi if there is a reasonable response from the Americans.
We must hope that there will be an appreciation at the highest level in Washington of the possibly far-reaching consequences of repeating in 1983 the disputes that strained US-European relations last year and that no action will be taken in coming days that would prejudice the further discussions envisaged.
The European Council held in Copenhagen on 3-4 December 1982 drew up a programme of work to be undertaken in the economic and social field and in regard to enlargement. In Brussels we reviewed progress in these areas and further work to be undertaken on the basis of a report by the Commission. The work under way in the economic and social field is broadly in what I might perhaps call the micro-economic category as distinct from macro-economic policy measures to stimulate economic recovery. The programme includes action on opening up the Community's internal market, on the external trade policy of the Community, on research, energy policy, innovation and industrial policy, expansion of the Ortoli borrowing facility and supplementary measures to relieve unemployment, especially among young people.
Reasonably satisfactory progress had been made since Copenhagen in a number of these areas as a result of efforts made by the Presidency, but work is still under way in most of the individual areas and as it is therefore somewhat premature to assess the outcome I do not propose to review this programme further today. I must say, however, that it was disappointing that we were not in a position to tackle the unemployment problem, particularly among the young or to take special measures to deal with it in a more meaningful way.
The Heads of State and Government issued an important statement in the situation in the Middle East. In relation to the Arab-Israeli conflict, we identified the withdrawal of all foreign forces from Lebanon and a resumption of negotiations for a comprehensive settlement in the Middle East as the two most urgent objectives. We expressed support for the efforts of the United States to achieve these aims and for the peacekeeping role of UNIFIL and the multinational force in Lebanon. We reiterated the principles of our approach to peace negotiations, as established in the Venice declaration and other statements: a lasting peace can be built only on the right to a secure existence for all states in the region, including Israel, and justice for all the peoples, including the right of the Palestinian people to self-determination with all that this implies. These rights must be mutually recognised by the parties themselves. Negotiations will have to embrace all the parties concerned including the Palestinian people; and the PLO will have to be associated with them.
We recognised that President Reagan's initiative of 1 September last indicated a way to peace, that the Arab summit meeting at Fez demonstrated a readiness for it and that the recent meeting of the Palestine National Council can and should contribute to the peace process. We welcomed the discussions between Jordan and the PLO and urged the Palestinian people and the PLO to seize the present opportunity by declaring themselves in favour of peace negotiations. Above all, we affirmed that the time has come for Israel to show its readiness for genuine negotiations on the basis of Security Council Resolutions 242 and 338, in the first place by halting the settlement process in the occupied territories.
This statement was very much directed at the present position. It reflected the assessment of the Ten that an opportunity for a peaceful settlement now exists but may not be there for much longer. We aimed to encourage all the parties to avail of this chance while it is there.
We also expressed our growing concern at the continued conflict between Iran and Iraq and called for a ceasefire and the withdrawal of forces to internationally recognised frontiers.
Finally, we received a report from Mr. Genscher on progress in finalising the proposed Solemn Declaration on European Union on which work has been proceeding for the last 18 months or so, following the initiative taken by Mr. Genscher and the Italian Foreign Minister, Mr. Colombo. The text has evolved very considerably in the interval. Most points of disagreement have now been resolved but a few remain and there is to be contact with the European Parliament on some of these and on the draft Declaration generally. It is possible that final decisions on the matter will be taken before the end of the German Presidency.
On the proposal of the British Prime Minister, there was a general informal agreement that the Community should make a special effort to relieve the famine that is affecting or threatening great numbers of people in Ethiopia and Somalia.
On the morning of 22 March, before the resumption of the European Council meeting, I had informal talks with Mrs. Thatcher. These covered a number of matters of mutual concern and common interest. In a brief press statement issued after the meeting, it was indicated that we expect to meet again at the next meeting of the European Council. This is to take place in Stuttgart on 6/7 June next.
This was a cordial and constructive meeting and I am satisfied that it represented a worth while start in the process of restoring relations between the two countries to the condition they were in when I was previously in office. We are now moving in the right direction.
I would sum up the Brussels Council as somewhat uneven in quality, much of its work being effectively in preparation for the June Stuttgart Council. I want nevertheless to pay a tribute to the way in which our deliberations in Brussels were led and steered by Chancellor Kohl. This gives me confidence as regards the follow-up areas, such as preparation of a Community position for Williamsburg and US/ Community trade relations, where the European Council discussions were useful and led to satisfactory conclusions.
The House may be assured that for their part, the Government will ensure that Ireland makes its own constructive and distinctive contribution to this follow-up and that we will continue to promote and to safeguard Irish interests within the framework of a broad and forward-looking concept of Community development.
