I propose, a Cheann Comhairle, to make a statement on the European Council which I attended, in Copenhagen, on 4 and 5 December, with the Minister for Foreign Affairs, Deputy Brian Lenihan. The Minister of State at my Department with special responsibility for European Affairs, Deputy Geoghegan-Quinn, was also in attendance in Copenhagen.
The Council did not reach any formal conclusions and was adjourned late on the second day. It will come together again, under the German Presidency, in February 1988. I do not wish to conceal from the House my sense of disappointment at this delay. The Copenhagen Council is the second in succession at which the members of the Community have been unable to reach agreement on vital issues. This is particularly disappointing against the background of the world economic situation, and the dangers of recession threatened by the fall in prices on the major stock exchanges.
The Community is the largest trading bloc in the world and must itself affect and be affected by the despatch and sense of confidence with which it can do its business. The inability of the assembled Heads of State and Government of the Community member states to reach conclusions on matters of vital concern to the Community should be seen in this light.
Because of the postponement of decisions at the Copenhagen Council, my statement to the Dáil is, in effect, a description of work in progress. It should not be regarded as a record of definitive conclusions.
At the beginning of the Council the President of the European Parliament, Lord Plumb, spoke briefly to Heads of State or of Government outlining the views of Parliament on the issues before the Council.
Essentially, the Council was concerned with measures for the implementation of the Delors Plan for the completion of the internal market. Deputies will be aware of the proposals, most specifically stated in the Single European Act, for the abolition of all barriers to trade and the completion of a common economic area or European market, without frontiers, of about 320 million people by the year 1992. The plan has many facets which I do not intend to go into now but, in summary, it is concerned with ensuring that the Community has sufficient resources to achieve its economic and social purposes and that these resources are spent so as to achieve maximum effect. It is also stipulated that a strict code of budget discipline should apply in the disbursement of Community funds.
The Summit concentrated on exploring five crucial issues all of which are related. What we were seeking was a global settlement which would encompass all five and decide their relationship to each other and their separate contributions to an overall agreement. The five issues were: (1) a new regime of own resources; (2) budgetary discipline; (3) the settlement of new agricultural guidelines with overall limits of expenditure and the use of stabilisers; (4) the future size and operation of the Structural Funds and (5) the British rebate. All decisions on these points were to form, in the words of the tentative conclusions of the Brussels Council, an indivisible whole.
There was tentative agreement in Copenhagen that a ceiling should be placed on the resources of the Community equivalent to approximately 1.3 per cent of the Community GNP. While I pressed the point that a limit of 1.4 per cent of GNP would be more satisfactory, I believe that the limit now in contemplation, which would give the Community access to about 55 billion ECUs compared with expenditure in 1987 of approximately 41 billion ECUs, is tolerable. I am assured that on all reasonable assumptions the 1992 total would enable the Community to discharge its functions satisfactorily.
These resources would be raised by way of levies and duties as at present, in addition to a rate of VAT of 1.4 per cent in 1988 declining to 1 per cent in 1992. There would also be a fourth resource to be determined on a basis related to Gross National Product less the base on which VAT is levied. This would be the marginal resource and as its weight increased while that of VAT declined, it would help to make the overall financing system more proportional by reference to relative prosperity, as decided in Brussels. The entire question of how the resources of the Community were to be provided, and, in particular, the nature of the fourth resource, was one of the points on which agreement had not been reached when the Copenhagen Council was suspended.
Under existing arrangements, the Community will continue to operate and be financed on the basis of 1/12th of the 1987 expenditure, for each month during which there is not a 1988 budget. Though the failure to reach agreement on the nature of the Community's resources is regrettable it is not fatal to the functioning of the Community, at least in the early months of the coming year. There is to be a meeting of the Budget Council tomorrow with a view to ensuring that there is the least possible disruption to the functioning of the Community arising from the circumstances where no budget for 1988 has been agreed.
On budget discipline, a number of proposals are under discussion. Since expenditure on agriculture absorbs approximately two-thirds of all Community spending, this is an area which would naturally be affected by the discipline proposals. The first of these is that expenditure under the guarantee section of the Common Agricultural Policy should not grow by more than 60 per cent of the growth of Community GNP, in any year. It was proposed that the base from which this expenditure is to be measured would be a figure of 27.5 billion ECUs, in 1988, with provision for costs connected with the depreciation of excess agricultural stocks to be kept outside these guidelines. That is an important point for Deputies to keep in mind when considering the level of resources. What is proposed as the base for agricultural spending will not include sums to be used for the disposal of surplus stocks. They will be put into the budget separately. To help restore some order to Community finances, payments to member states for FEOGA guarantee expenditure would be delayed for two and a half months instead of two months as under the arrangements agreed for 1987. There would be new stabilisers to prevent the too rapid increase of agricultural expenditure, particularly for cereals and oil seeds, with provisions imposing penalties for production over certain thresholds and other provisions encouraging farmers to set aside land which would otherwise have been used for the production of commodities in surplus in the Community. If exceptional circumstances occur, relating, for example, to an unanticipated increase in subsidies for the export of agricultural produce from the Community resulting from, say, a depreciation in the rate of exchange of the dollar, or a breach by other countries of treaty undertakings in relation to the sale of agricultural produce, there would be special provision for exceeding the stipulated limit for agricultural expenditures. There are many details of these and other proposals, with which I do not propose to detain the House here, since the whole subject is still under discussion.
I must emphasise, however, that, as Deputies will be aware, the negotiations have major implications for Irish agriculture. The proposals I have mentioned were designed to put a tight limit on agricultural expenditure and contain production around current levels. At this stage, they are no more than proposals on which we will continue to put forward our views. In the middle of a continuing negotiation I cannot go further in commenting on details: I shall simply say that while we are prepared to accept reasonable limits in the agricultural area we are determined to ensure that the CAP would be maintained as an effective and fully operational policy: and that it must support to a greater extent the concept of the family farm — a point on which I laid considerable stress in Copenhagen.
The arrangements for dealing with production increases were, in the case of most sectors, largely worked out in the Agriculture Council, which had, however, been unable to find a basis for agreement on cereals. The Commission proposed a limit of 155 million tonnes, for full Community guarantee as to price. Other countries wanted a higher limit. Discussion on this topic took up a great part of the time of the Council and, in the end, this was another of the points on which there was failure to reach agreement in the discussions.
The measures to contain production in the other sectors are more or less in line with the majority view of the Agriculture Council. These arrangements do not, of course, involve additional measures in the beef or milk sectors, which account for some 75 per cent of Irish production — although they do involve some reduction in the compensation for suspended milk quotas after 1988-89. They involve a settlement of the deficit problem in the sugar sector in a way which would be very satisfactory from the Irish sugar industry point of view. Again we have our views which we will continue to put forward, not least in regard to compensation in the milk sector.
Against the proposals for the reform of CAP expenditures, but more especially against the background of the proposals for the completion of the internal market by 1992, the proposals for the reform of the Structural Funds, on which about 7 billion ECUs a year is now spent in aiding the peripheral and other regions of the Community and other purposes, assume particular importance.
The Commission, as Deputies will be aware, proposes a doubling of the funds and their use in an integrated way for the attainment of five priority objectives: (1) promoting the development and structural adjustment of the less developed regions; (2) converting the regions, border regions or parts of regions (including employment areas and urban communities) seriously affected by industrial decline; (3) combating long term unemployment; (4) facilitating the integration of young people into the labour force; and (5) with a view to reform of the Common Agricultural Policy, speeding up the adjustment of agricultural structures and promoting the development of rural areas.
Under the proposals discussed in Copenhagen, the amount of the funds for less developed regions would have been substantially increased. In addition, there were proposals for a rate of recoupment for the less developed regions of up to 75 per cent of total cost, compared with a figure of approximately 50 per cent at present. I would regard these as favourable developments and a very necessary prelude to the completion of the Common Market; but, again, in this area what we are left with are not definite decisions but proposals under discussion.
Under the Copenhagen proposals, the amount of the British rebate would have been adjusted to take account of the favourable impact on the British contribution to Community own resources resulting from the revision in the method of assessment of these contributions. I do not think it necessary to go into detail here into a subject which again is still under discussion — and far from resolved.
The European Council also issued three Declarations on foreign policy issues: the Middle East, Afghanistan and East-West relations, welcoming the INF agreement between the United States and the Soviet Union. Copies of these statements are in the Dáil Library.
During my time in Copenhagen, I had a separate meeting with the British Prime Minister, Mrs. Margaret Thatcher, to discuss current issues in Anglo-Irish relations. As the statement issued following this meeting indicates the Prime Minister welcomed Irish ratification of the European Convention on the Suppression of Terrorism but expressed concern about recent changes in existing extradition procedures between our two countries. I outlined the assurances I have given in this House that it is the intention of the Government to make the new arrangements work satisfactorily and that if any difficulty should arise, the procedures will be further reviewed.
We agreed to maintain and strengthen further the co-operation between our two Governments against terrorism; and we had an exchange of views on the operation of the Anglo-Irish Agreement. The meeting was a useful opportunity for an exchange of views between us: it was frank and friendly and provided an opportunity to improve our mutual understanding of the situation. I also had a separate meeting with Prime Minister Chirac, during which we had a friendly and constructive discussion on bilateral matters of mutual interest.
The Copenhagen Council is the second, in succession, at which the Community Heads of State and Government have failed to come to conclusions on the matters before them. It is easy to be saddened at this inability to reach consensus on issues of such importance to the Community and its member states, but I continue to take some comfort from the fact that the Copenhagen meeting was not ended but adjourned to dates in February, when the same issues and possibly others will be further discussed and, I would hope, decided, under the German Presidency.
In conclusion, I would like to pay tribute here to Mr. Delors, President of the Commission and his staff who worked so assiduously to try to bring together the framework of a solution. I would also like to pay tribute to the Danish Presidency, and in particular, to the ingenious and determined efforts of Prime Minister Schluter to bring the Copenhagen Council to a successful and decisive conclusion. The failure of the Council to reach conclusions was not due to any shortcoming of the Presidency but to the intractability of the subject matter and the existence of so many strongly held and contradictory views on the central issues. Prime Minister Schluter and his aides did everything possible to bring success; and I would like, personally, to take this opportunity to place on record my appreciation of all he did in Copenhagen for those participating in the Council. I should like to assure the Leaders of the parties who will be making statements that I will very carefully listen to their contributions and take them on board because these matters are still under discussion.