I know Deputy De Rossa would love to re-write the transcript in his own favour but it is not possible.
European Economic and Monetary Union and European Political Union: Statements (Resumed).
(Interruptions.)
Is there another Parliamentary meeting? Has it happened already?
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Truth always hurts.
It will hurt you in the long run.
The Deputy would love to re-write it and take away the implication against the President and the President elect.
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In the economic area it is now generally felt——
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I do not know if it is a Workers' Party candidate, a Labour Party candidate or an Independent. It is very hard to work out who the candidate belongs to.
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It will not matter next Thursday anyway because Brian Lenihan will show you a clean pair of heels. You will be caught out by the transcipt every time. In the economic area, it is now felt generally that new institutions are not required but that the arrangements governing existing bodies, such as the Council of Economic and Finance Ministers and the European Parliament, may need to be altered in certain respects. There is agreement that budgetary discipline is of key importance if union is to function in a successful and stable way. Broad agreement exists that key elements in such discipline are the limiting or prohibition of monetary financing of budget deficits, the limiting or prohibition of any process of automatic bailing-out of member states who get into monetary or budgetary difficulties and the avoidance of excessive budget deficits. These principles are likely to be included in a new Treaty and developed in secondary legislation.
The extent to which there should be legal prohibitions or limits on budgetary deficits that are considered excessive is being given considerable attention in the preparations for the Conference. A few countries are of the view that voluntary co-operation may be sufficient. Other countries — and I include Ireland in this list — tend to the view that more formal arrangements may be necessary. The extent to which the Council should have the right to enforce a deficit reduction for a particular country, and the manner in which it might seek to do so, are not yet agreed.
In the monetary area there is support from 11 member states for a common monetary policy which would be administered by an independent and federally-structured banking system. That system would, of course, have to be democratically accountable. Its overriding objective would be the maintenance of price stability and subject to this, the system would also be required to support the general economic policy set at Community level. The new monetary institution would have control over monetary conditions in the Community; for instance, the level of interest rates and money supply. It is envisaged that, with the final phase of EMU, the Community will have a single currency, the ECU, which will be the expression of its solidarity and unity.
There is general understanding that the Community's political authority should be responsible for key decisions in the area of external exchange rate policy but that day-to-day operations would be a matter for the new Central Bank. However, the precise demarcation lines of these two areas of competence is still to be decided. Linked to the issue of a common monetary policy is that of a single currency. Most of the member states can see this as an integral feature of the final stage of union. The nature and degree of democratic control to be exercised in an economic and monetary union, particularly in respect of any new structures, is another fundamental issue that has yet to be analysed in detail. In general, it is envisaged that democratic controls will be the prerogative of the Council of Ministers and the European Parliament. There are varying opinions about control procedures and there is every likelihood of further lengthy discussions before a consensus on this emerges. The Ministers favour a pre-eminent role for the Council.
A particularly difficult issue that arises in the context of economic and monetary union is the question of tax harmonisation. As Deputies are aware, there is a great variety of tax regimes and tax practices throughout the Community and little progress has been made to date in achieving greater uniformity. There is a general realisation that harmonisation is essential and that this matter must be addressed with greater urgency.
One area where work has been going on steadily in the last year or so, and where some progress is being made, is on the VAT regime to apply after 1992. The broad outline of a new system, which will allow imports and exports to move freely without border controls, has been agreed. Discussions are now centred on the technical arrangements to make this system work and decisions on these are due to be taken by the end of the year.
One major component of the new regime still to be decided is the level of VAT and excise rates to apply after 1992. It is abundantly clear that, when customs controls disappear, our rates will need to approximate closely to those in Northern Ireland if serious diversions of trade are not to occur. Such distortions would be contrary to the Single Market philosophy which is grounded on the principle of greater economic convergence. However, the process of bringing our rates into line with lower UK rates will be expensive — up to £600 million annually — and we must look to the Community as a whole to assist in a solution to this problem.
As I indicated earlier, the first stage of the programme for union is already in operation since the beginning of July. The main monetary requirements for achieving the objectives of this stage are that the currencies of the member states are in the narrow band of the European Monetary System and that there is full freedom of capital movements throughout the Community. We have made considerable progress in these respects and the entry of sterling into the EMS, even if only into the outer band, is a major step forward. Capital controls have been largely eliminated throughout the Community. In our case, we have already made progress in this respect and we will eliminate all remaining controls by the deadline of end-1992 which has been set for us. The Delors report envisages that, by the end of stage I, it will be necessary to have prepared and ratified the necessary changes in the Treaty to provide for full union.
The recent European Council agreed that the second phase of union should begin on 1 January 1994 provided a number of conditions are met. These include the achievement of the Single Market programme, the ratification of the new Treaty and the prohibition of the monetary financing of budget deficits. As regards the final phase, the European Council stated that, within three years of the start of the second phase, reports should be prepared on the functioning of the second phase in order to prepare a decision on the passage to the third phase. Significantly, the Council specified that the third phase should occur within a reasonable time.
Deputies will have seen references to the possibility of a two-speed approach to economic and monetary union because of the inability or unwillingness of some members to sustain the pace that is favoured by the majority. I would hope that this situation will not emerge and I know that members generally will make every effort to avoid it. If, however, it should prove unavoidable, it is our intention to move ahead with the leading group. In terms of economic indicators — inflation, balance of payments, budget deficit — we meet the economic conditions that are needed for union.
The objective of economic and monetary union is to achieve greater prosperity throughout the Community. A fully integrated economy will in the first place lead to the development of a strong economic bloc in Europe that will be a powerful force in the world economy. Internally, the removal of transaction costs and the convergence of individual economies will lead to improved benefits; there may also be costs for some member states in surrendering flexibility. A quantification of costs and benefits is not practicable because of the variety of possible scenarios. The Commission has recently completed an assessment of costs and benefits. Its general conclusion is that sizeable benefits will accrue from greater efficiencies and greater stability. It points to potential costs in terms of loss of flexibility in relation to monetary and exchange rate policy but its overall conclusion is that benefits should well outweigh costs.
In our case, a qualitative assessment leads to the conclusion that the balance of advantage is weighted substantially in favour of full integration. The greatest benefit is likely to be stability based on low inflation. There will be greater confidence in our currency and economy when we are part of a large integrated system. This should benefit investment and reduce, over a period, the premium on Irish interest rates. The disciplines imposed in order to achieve convergence of budget and general economic policies will also help to sustain a favourable economic environment. Since the foundation of the State up to 1979 we were in a monetary union — the sterling area — and we had no voice in relation to the management of monetary affairs within this union. On this occasion we will be partners with a voice in every forum and an assurance that economic progress must be made in parallel with monetary developments.
I mentioned earlier our particular concern that there be special provisions in the Treaty for possible adverse effects on the poorer and peripheral regions. We want to have the assurance of special action for these regions if there is evidence that they are falling behind and not getting an equal share of the benefits of union.
This is not to be equated with the begging bowl mentality that some Members of this House would have us adopt. We are not making demands for automatic increases in transfers as a condition for participation in union. We are making a legitimate case for balanced regional development in accordance with the fundamental principles that underlie the Treaty of Rome. We are not alone in this respect. Other countries will be making the same case and I am confident that our partners will recognise the validity of the case that is being put forward. In this context, I should mention that there will be a review of the impact of the Structural Funds by the end of 1991. It is too early to draw conclusions about the precise effect of these funds in terms of narrowing the gap in living standards within the Community. My view, however, is that additional measures will be needed to narrow the gap between the richer and poorer in accordance with the objectives of the Treaty.
I would like to turn now to the question of political union. Discussions on this matter are still at an early stage, so the European Council Conclusions are expressed in very general terms. One of the themes to be discussed in this area is the transfer of new competences to the Community or the extension of existing competences. Nothing specific is emerging at this stage, though mention has been made of areas such as health, education, culture and energy policy which might be considered.
We would wish to examine detailed proposals in these areas in the light of their impact on progress towards cohesion and on domestic costs and expenditures. Extending competence to the Community could simply mean a regulatory function which might impose new obligations on the member states through Community standards or guidelines being established without any Community financing being made available. Our aim in the discussions and negotiations will be to ensure that any new competences have specific regard to Article 130B of the Treaty, which requires the common policies to contribute towards the strengthening of economic and social cohesion.
The principle of subsidiarity is also being considered in the context of political union. There has not yet been much discussion on how precisely subsidiarity should be interpreted. If narrowly interpreted, the transfer of new competences to the Community could appear to be in conflict with subsidiarity. This need not be the case. Our view is that the Community must be given the power and resources needed to achieve its objectives, including whatever is needed to achieve the objective of cohesion. We should not take too narrow a view of subsidiarity.
While two separate intergovernmental conferences will be taking place — on EMU and political union — the two are very much inter-related. Both are aimed at furthering the integration of the Community. In EMU, we have been stressing the need for parallel progress in the monetary and economic areas. Similarly, we must now ensure parallel progress on EMU and political union. The degree of economic integration that can be achieved in dependent, to a large extent, on the degree to which political integration is also taking place. The NESC report pointed this out indicating that a significant degree of "political homogeneity" will need to be achieved to support the transfers needed for an advanced degree of economic and social cohesion. We will be ensuring that the developments in the two intergovernmental conferences are co-ordinated as far as possible.
(Limerick East): In 1969, four years before Ireland joined the EEC, the Heads of State or Government meeting in The Hague agreed that a plan should be drawn up to bring about the creation of economic and monetary union within the Community. The Werner report, presented in 1970, proposed a plan for the attainment of such a union. Although certain important policy moves followed the Werner report by mid-1970 the progress of integration was running out of steam. By 1979, the process was relaunched with the creation of the European monetary system and the European currency unit which, in turn, contributed to the adoption in 1985 of the internal market programme with the signing of the Single European Act.
European monetary union, even though it is a natural consequence of the creation of the internal market, represents a quantum leap forward and will involve change in the Community and for all member states of a nature and magnitude different and greater than anything since the Treaty of Rome. At its meeting in Hanover on 27-28 June 1988 the European Council reaffirmed its commitment in principle to European monetary union and set up a committee to be chaired by Mr. Jacques Delors, President of the European Commission, to study and propose concrete stages that would lead to European monetary union. The report was ready for the Madrid meeting in June 1989 and its findings have received increasing support from member states.
At the Dublin Summit in June the Council reconfirmed its commitment to European monetary union and reviewed the preparatory work undertaken in advance of the Intergovernmental Conference in Rome on European monetary union in December this year. The Taoiseach, and the Minister, in two very informative speeches, have outlined fairly clearly today what the national position now is. We know that the Delors report is being adopted as the basis for Government policy in this respect. Consequently, it is compulsory reading for anyone contributing to this debate.
The requirements of economic and monetary union go far beyond the internal market programme. We know from the Delors report, on which Government policy is based, what the main elements of economic and monetary union are. First, we have the single market within which persons, goods, services and capital can move freely. Secondly, there is a commitment to eliminate regional disparities within the Community. Thirdly, there is a commitment to co-ordinate monetary, fiscal and macro-economic policy and, fourthly, there is a commitment to the establishment of irreversible fixed rates leading to a single currency. I understand that the target date for this is now the turn of the century, the year 2000. It is clear, therefore, that economic and monetary union will have the most profound effect on our political, social and economic life.
As the Minister pointed out, Ireland experienced monetary union previously but, of course, we have also experienced both economic and monetary union and monetary union separately. Shortly after the Act of Union in 1800, from about 1823-24 right up to 1922, we had economic and monetary union with Great Britain and, subsequently, from the foundation of the State in 1922 to our entry into the European monetary system in 1979 we had monetary union to which the Minister referred. Our previous experience should make us pause. While economic and monetary union in Europe may bring us to a brave new world, if we enter under the wrong conditions it may institutionalise the regional disparities which exist in Europe at present. If this were to happen this would take out of our hands the instruments of economic management which could reverse the disparities in Ireland's case.
In relation to the framework laid down by Mr. Delors, I would like to remark first on the completion of the Single Market. It is not yet completed as there are still many factors which impede the free movement of goods and services and of persons and capital. Those which impede the movement of goods and services are being systematically removed. For example, the harmonisation of qualifications will free the movement of persons — this process is well under way — while agreement has been reached on the movement of capital but much remains to be done before we achieve the objective of the Single European Act, a Europe without frontiers.
Little progress has been made on the harmonisation of taxes. Commissioner Schrivener has departed from the proposals of her predecessor. She believes that if minimum rates of taxes were set the removal of border posts would result in a free flow of goods and services and the forces of cross-frontier competition would force member states to approximate their tax rates. From an economic theoretic point of view this is correct. If frontier posts are removed this, of course, will happen but, as I remarked at Question Time, there is a huge difference between the commitment to economic and monetary union and political unity in Europe and the difficulties facing the Minister for Finance in removing the 48-hour rule to allow, as I said previously, Dundalk housewives to shop in Newry. While it is great to be able to come into the House and paint large visionary pictures of a Europe united from the Atlantic to the Urals, when it comes down to the little details, for example, how one can cross the Border and bring home the weekend shopping in the boot of the car, it seems to be vastly more difficult.
That leads me on to the first major obstacle which is the harmonisation of taxes. The Minister in his speech referred to the loss which would accrue to the Exchequer which is very high indeed. For example, the loss which would accrue if DIRT was abolished would be about £300 million on this year's budgetary figures. The proposal to harmonise deposit interest relief tax seems to have been put on and off the table and I am not sure what its status is at the moment but I understand——
It is an inactive proposal on the table.
(Limerick East):——the costings given by the Minister do not take DIRT into account and only refer to VAT and excise duty. He has come up with a figure of £600 million and £700 million. Unless deposit interest relief tax is harmonised with much lower rates in the Community then measures such as those announced yesterday by the Minister on the free movement of capital and the removal of exchange controls become an absolute pipe dream. If one allows the free movement of money on deposit around the Community it would not be reasonable to ask people to keep money in a bank or a building society in Dublin where 33 per cent is deducted automatically from the interest.
It is now 30 per cent.
(Limerick East): The temptation would be to deposit that money, if it was legal to do so, in a bank in a Community country where tax was not charged at the rate of 30 per cent, such as Luxembourg where the rate is 10 per cent.
The question of the harmonisation of taxes presents a major difficulty and the Minister admitted this in his contribution. As I said, this does not apply just to VAT and excise duty, it also impinges on areas such as DIRT. If we are looking for economic union taxes must be made compatible and harmonised. For example, if personal tax levels are significantly higher in one Community country, and there is free movement of labour with qualifications recognised right across the Community it would not be reasonable to believe that young, highly skilled, mobile people, such as those who come through our universities, spend every summer abroad and are experienced travellers, would stay in a high tax regime if there is absolutely no inhibition on travelling to a country with low tax rates within the Community where their qualifications are recognised.
The Government have adopted an almost passive attitude to negotiations with the European Community. I have tried on a number of occasions to establish what the Irish negotiating position is in relation to the harmonisation of taxes but the Minister claims he cannot show his hand for negotiation and strategic reasons. However, I suspect the reason the Minister does not show his hand is because he does not have a hand to show.
I do.
(Limerick East): I do not think the Government have taken up a position on the issue of the harmonisation of taxes. Our approach is to wait for the Commission, influenced by the stronger countries within the European Community, to make proposals and react to those proposals.
Constantly we see Ministers at the negotiating table reacting to proposals from other member states and to proposals from the Commission. We compromise on other people's ground and we do not seem to put forward a consistent series of Irish proposals on the major issues of the day which affect us. We should adopt an active European policy and enter all EC negotiations with a clear set of policy objectives.
I do not know if the Irish Government put forward any proposals on the harmonisation of VAT, but I suspect not. I do not know if the Minister has proposals on the harmonisation of excise duties which take the Irish position into account. If there are such proposals they are carefully hidden and have not been released in the House, even at Question Time today.
A Europe without frontiers will only work, and we will only prosper within it, if competitive forces are allowed to operate freely. In many areas of Irish life competition does not operate. Prices are very unresponsive to change in domestic and international circumstances. This is particularly so if the tendency is towards a price reduction rather than a price increase. Examples earlier in the year confirm my view. When our pound strengthened against sterling there was little or no reduction in the price of UK goods in the shops and no reduction took place until the representatives of the large supermarket chains were brought kicking and screaming into the Department of Industry and Commerce. The banks and building societies were very slow to pass on the second last round of interest rate decreases in May and June. When I made a public statement and the Minister and his Department intervened, immediately the reduction came through. That is the sequence of events. I admire the action the Minister took but if he had not taken it they would not have been responsive to the reduction throughout the summer.
A recent survey has shown that petrol stations have been particularly notorious in not passing on decreases. They pass on the increases very rapidly indeed and we have had a run of increases in the past couple of months. The Minister announced today that a decrease of about 6p is coming through as the international price of crude oil fluctuates. Even when the reduction is announced by the Department of Industry and Commerce, in many instances the old price will prevail. Our economy is particularly unresponsive to price competition. It can only be explained by the presence of widespread informal price-fixing cartels who on all occasions are willing to take a windfall profit at the expense of the consumer. Exhortations by the Ministers for Industry and Commerce and Finance and interventions by civil servants will not solve the problem. The Government must legislate. We should long since have incorporated in Irish law those Articles of the Treaty of Rome which outlaw anti-competitive practices. We must ensure that anti-competitive measures are enforceable and are enforced. There is no point talking about the operation of a Single Market if competition does not operate within that market.
I turn now to the problem of how to deal with regional disparities. There are major regional disparities within the Community and market forces alone will tend to magnify rather than reduce them. Even in very strong economies there are major disparities — in France, Provence; in Italy, the Mezzogiorno, and the northern regions of Germany. These regions lag well behind the more prosperous areas in those countries. If events are left to market forces alone EMU will lead to further impoverishment of the poorer regions. The totality of the Community will prosper but the centre will prosper at the expense of the periphery. The mobile young on the periphery will migrate to the central areas of growth and mobile capital will do likewise. In the absence of an adequate regional policy EMU will work against our interests. In an economic and monetary union there will be no national instrument of policy available to offset regional imbalances. Consequently a fully integrated EC regional policy is a prerequisite to entry.
The principles of such a policy enunciated by the Governor of the Central Bank, Mr. Maurice Doyle, in a submission to the Delors Commission should be the blueprint of our negotiations in this respect. He recommends the following principles for regional policy: the need to eliminate the locational disadvantages of the poorer regions in the production of goods and services; the large scale movements of labour must not become a major adjustment factor; regional transfers should be sufficiently large to effect the necessary reduction in disparities between member states; the need for aid should be determined on the basis of regions, not of countries, and aid should be concentrated in the poorer regions; the composition of regional transfers should be weighted in favour of programme financing rather than project financing; moreover, it should be designed as far as possible to capitalise private sector investment in the regions so that they become self-sustaining; Community regional transfers should be financed from the own resources of the Community and be complemented by the macro-economic policies directed towards financial stability in the medium term; and there must be a sizeable Community budget to implement this.
They were the submissions made by the Governor of our Central Bank to the Delors Commission. That is the basis for the blueprint of a regional policy which would accommodate our needs. Unless we negotiate a regional policy along those lines, then once we have freely yielded the national instruments of policy which can deal with our problems to central agencies in Europe, economic and monetary union could turn us into the prairie province of the Community as quickly as leading to prosperity.
I turn now to policy co-ordination and the irreversibility of fixed exchange rates. Policy co-ordination must pre-date fixed exchange rates. Fixed exchange rates will only be possible if monetary, fiscal and macro-economic policies are fully co-ordinated to bring about the conditions to make fixed exchange rates possible. Then they must continue to be co-ordinated and irreversible. The Minister dealt with this in some detail when he talked about the state of the negotiation position in allowing member states to run deficits and the circumstances in which the Community would not intervene if deficits became too large. The negotiating point seems to be whether the restraints would be voluntarily imposed or whether there would be a central requirement to impose restraints.
Whatever way it is done the co-ordination will require a new European institution. The Minister referred to the European system of central banks which will run the system. I gather it is envisaged that this will be a confederation of national central banks rather than a new European institution. That is new information in the Minister's speech. Whatever way it is done, it will involve a transfer or pooling of sovereignty not only different in magnitude but also different in kind from anything we have experienced since accession.
There is a bigger leap forward here than signing the Single European Act. Central Banks are independent of national Governments in the exercise of their function. A European Central Bank will be independent of both national Governments and the Community institutions in the exercise of its function. The functions which will be transferred from national Governments to this new institution will not only involve those functions at present exercised by national Central Banks but also budgetary and macro-economic functions at present exercised by member Governments. This is one of the crunch issues. All transfers of sovereignty up to now have been transfers from the national Government to an institution where the sovereign Governments participated anyway.
The Minister for Finance represents us at ECOFIN, taking the decisions there which formerly his predecessor would have taken here. In the case of the Central Bank which is independent of Government, one is transferring an institution which is independent of the domestic national Parliament to a European institution which is independent as well. I believe that will not work. It is not possible for a European institution — over which there is no democratic control — to take decisions for all of Europe. That is the crunch issue. In the first instance I believe that the transfer will have to be to the Minister's own committee — most of it must go to ECOFIN — but there will also have to be powers transferred to the Parliament.
With the co-operation of the House I understand that Deputies Garland and Barnes are anxious to make short contributions. The Minister for Social Welfare has kindly agreed to wait and use his 20 minutes later. May I invite Deputy Garland to keep his contribution to about four minutes, likewise Deputy Barnes, and then I will call on the Minister to reply.
I found the Taoiseach's remarks this morning very disturbing. His vision of the long term goals of this country is very different from mine. His statement that the ratification of the Single European Act has made the Community stronger is correct. He was also correct when he said:
It has made the Community strong and given it resources to help not only the poor parts of its member states but others in the developing world.
Having the resources is one thing; distributing them is another. The continued neglect by the EC of our less advantaged areas here is notorious, and the role of the EC in the exploitation of the developing world is absolutely scandalous. The Taoiseach's reference to growth and enhanced prosperity — which he says now accrues to the EC — is simply not true. Continued growth in EC countries based on over-dependence on fossil fuels as an energy source is not sustainable.
Irish people do not want this country to become a mere province in a federal West European superstate with a common defence and foreign policy along with a common currency, which is the political objective of these proposals. Such an eventuality would be the last straw to such democracy, independence and neutrality as we possess. It would turn the Dáil and Seanad into mere provincial debating chambers in relation to most matters, placing us under the rule of people we do not elect and over whom we would have virtually no control.
The Minister for Foreign Affairs should resist pressures on him to have defence and military aspects of security made a function of the EC. There is no military threat to the EC or its member states. An EC military union has little relevance to the present needs of Europe, a Europe that has 34, not 12, states. Ireland's policy of neutrality is a more appropriate model for this larger Europe than that of an EC superpower armed with nuclear weapons and disposed to collective intervention in the Third World. The proposal that a political union treaty should extend the law-making competence of Brussels to new areas such as education, health, culture, energy and policing would further erode our democracy, national independence and capacity for development.
An economic and monetary union with fixed exchange rates, an EC central bank and a single currency — in the absence of a fiscal union whereby the EC underwrites much of our public spending and social services — would lead to massive increases in unemployment, emigration and lack of development here. This was clearly implied in the NESC report on Ireland and the European Community of last year. Our previous experience of EMU with Britain, which did involve fiscal union, bears that out. The EMU now being proposed by Brussels envisages no commitment to compensate less developed areas like Ireland for the drawbacks of having monetary policy, credit, interest rates and exchange rates decided, as inevitably they will be, in the interests of the developed central EC member states. In any case an EC with an expenditure of approximately 1 per cent of the gross national product of the Twelve would be incapable of financing adequate compensatory transfers when one considers that national public spending normally amounts to approximately 30 per cent of the national income of individual member states. In that connection it may be observed that, even with fiscal union and a federal budget equivalent to 30 per cent of GNP, the USA cannot prevent the depopulation of states like North Dakota. An EMU with an EC central bank would also put an end to the sovereignty of the Government in relation to public finances.
May I thank you, a Leas-Cheann Comhairle, the Minister for Social Welfare and Deputy Garland for being so co-operative.
I want to place on record — appropriately in the presence of the Minister for Social Welfare — the social dimension of the European Community. I do not share Deputy Garland's pessimism or bleak forecast about a united Europe. Rather I look forward, as I hope also would Deputy Garland, to the House of Europe which was envisioned — because a vision it was at the time — by Mikhail Gorbachev, and accepted by the leading statesmen of Europe as not merely a vision but a reality towards which we would all work. Indeed the events of 1989 and 1990 to date have borne out this vision. Hopefully, therefore, the relevant debate will not be about the Warsaw Pact or NATO but rather about the continued lowering of nuclear weapons, the building and furnishing of a House of Europe, thereby eliminating many of Deputy Garland's fears particularly with regard to its security and military might.
The European Community — it should be acknowledged — has already contributed enormously to this country and its people. Of course we recognise that the peripheral, marginal areas of Europe remain under-resourced and are not treated in the same way as or on an equal footing with the centre. Beginning with the Treaty of Rome, advancing to the second and third programmes, particularly embracing the Social Charter and the Structural and Social Funds, it must be recognised that much has been achieved. I believe the commitment to further development is there. I shall rely consistently on our Ministers at every meeting to be held over the next few years to ensure that that overall equality is worked toward, particularly the elimination of inequality in regard to half the population of Europe.
Of course the centralisation of our economies and monetary systems and, as Deputy Noonan said, even the crunch aspect of a central bank in Europe, are crucial to our survival within Europe. Here I might quote Jacques Delors, one of the great architects and visionaries of Europe, who said that the social cohesion of Europe and its political content, which is about people, is at least, if not more, important. Hopefully the economic questions will be resolved. It is my belief that the security aspects will be teased out. We must put constantly at the top of the agenda social cohesion, the removal of the inequalities, extending equality of opportunities to those who do not yet have it and who hopefully will be given it within an integrated Europe.
I appeal to the Minister and the Government to fight at every single opportunity not only for the extension of agri business but for the employment of women within that sector — bearing in mind the realities which our farmers and others in Europe must face — to ensure that funds are made available and projects and models adopted in which women have been engaged traditionally so that they may contribute to the larger farm income at present denied but there for the taking.
I want to place on record something said by a woman researcher in Europe. She has undertaken research into the impact of an integrated market in 1992. She points out that some of the greatest legislative opportunities have come about as a result of our membership of the EC but makes the point also that the greatest fall-out for members of the Community has been borne by women, particularly by way of unemployment and lack of access to training.
The researcher I am quoting is Pauline Jackson, an Irishwoman working in Brussels. She says it has become acceptable, even fashionable, to berate the waste of resources involved in transport congestion, environmental pollution and artificial barriers to trade. She does not negate the importance of that, but she ends up by saying that women in Europe, both employed and unemployed, constitute an under-utilised resource with intellectual and physical capacities which have for far too long been ignored and undervalued. I am glad I have been able to record that in the five minutes given to me in this House. I hope the Government will continue to keep it high on the agenda.
Deputy, you recorded that in a little tilly we gave you.
I am standing in for the Minister for Foreign Affairs who is away on official duties. He had hoped to be back in time.
I am glad to note the wide measure of agreement across the House on the value of our Community membership and the need, while affording full and active protection of our national interests, for this country to play a positive role in the construction of the new Europe.
The Taoiseach this morning reported on the outcome of the Rome European Council last weekend. In doing so he took the opportunity to give a full and comprehensive account to the House of the work being done on political, economic and monetary union. He detailed the proposals that are under discussion in the preparatory work for the two Intergovernmental Conferences that will open in December, and outlined Ireland's approach. It amounts to one of the fullest authoritative descriptions to date of the work under way. Furthermore, the Taoiseach undertook to report again in December on progress achieved and on Ireland's contribution. In the light of this I cannot understand Deputy Barry's contention that insufficient information has been made available.
There can be no doubt that we are in the process of creating a more integrated and dynamic Community. The events of the last 12 months have shown the need for this and have pointed to the role the Community can play in the affairs of our continent and in international life. Two examples will illustrate what I mean. First, there was the collapse of the old regimes in central and Eastern Europe and the need to provide swift and effective support for the new democratic governments emerging in their place. The Community was among the first to respond and was chosen by its major democratic partners to co-ordinate the international effort to assist those countries.
Secondly, the unification of Germany, the union of the two Germanies under a European roof, became a priority of the Community after the fall of the Berlin Wall 12 months ago, when the member states reacted quickly and positively to the demands made of them. The detailed and often complex transitional measures which were required to make the GDR a part of the Community were agreed without difficulty. The warmth of the political welcome for the new Germany was sincerely expressed at the Dublin European Council in April.
Reporting on that meeting the Taoiseach told the European Parliament at its May session that we looked forward to the positive contribution which the population of the former GDR could make to the future prosperity of the Community, thus echoing a sentiment widely shared by our partners.
I am proud, and I think the country can be proud, that the main lines of the Community's response to one of the most significant events in post-war European history were settled during Ireland's presidency. In the meantime the work that has been done on the interim measures shortly to be completed on transitional arrangements has been undertaken with the full participation of all members states. I am satisfied that our interests are being fully protected in that regard.
The capacity which the Community has shown in dealing with the historic changes which have taken place in Europe in the last year should be seen against the background of the achievements flowing from the Single Act. The progress towards full economic and monetary union and the completion of the internal market, the reform and expansion of the Structural Funds and the putting in place of long term arrangements for the operation of the Community budget are certainly among the most important of the achievements — but there are others. The five year plan for research and development, the increased action being taken in the environment area, the Social Charter and the detailed action programme which will flow from it, are notable developments in Community integration.
The Single European Act, and its implementation, thus provides a very clear example of the Community's capacity to face up to challenges and to find the means to overcome them. Part of the reason for the success of the process set in train by the Single Act was the effective co-operation established between the Community institutions.
In the course of the forthcoming Intergovernmental Conferences it is important that the institutions of the Community work effectively together to achieve the common aim of a further real step towards integration.
We have at our disposal many ideas and proposals for the development of the Community. The Taoiseach has outlined the conclusions reached at the European Council in Rome. In addition, the Commission have just recently published their opinion on the Intergovernmental Conference on Political Union. The European Parliament has adopted a series of reports on aspects of political union ranging from subsidiarity to a draft constitution of the European union. Parliament is still actively examining the issues involved prior to giving its formal opinion on the Intergovernmental Conference on Political Union as it is required to do under the Treaty. There is much to consider in this work and I should like to examine some of the main points put forward by the Parliament and the Commission. There is no doubt that the Parliament played an important role in the process which led to the adoption of the Single Act. The work of Altiero Spinelli, and the draft Treaty which bears his name was one of the inspirations for the Single Act and it is clear that it remains an important source for Parliament today as it elaborates its own perspective on political union.
The Minister for Foreign Affairs was able to hear the views of Parliament in Strasbourg last week at an inter-institutional meeting between the Council, the Parliament and the Commission. At the meeting the members of the Parliament's delegation outlined their main proposals which are contained in its various reports and resolutions.
These call for the achievement of EMU according to a specific, automatic and mandatory timetable; the full integration of European political co-operation into the Community framework; the strengthening of Community competence in the area of social and environmental policy; the inscription of a declaration on fundamental rights and freedoms in the treaty; increased use of majority voting in the Council; the reinforcement of the powers in the Council; the reinforcement of the powers of the Commission; reform of the system of Community "own resources"; increased powers for the Parliament including, co-decision with the Council on Community legislation, the right to initiate legislative proposals, the right to elect the President of the Commission and to give assent to the appointment of the Commission, the Court of Justice and the Court of Auditors; ratification of all constitutional decisions which also require ratification by the member states and co-decision in external agreements and international conventions, including trade agreements.
Many of these proposals are under consideration in the preparatory work leading up to the Intergovernmental Conference on Political Union which the Taoiseach addressed in his speech this morning. Some of them have the support of member states, in particular, the full integration of European political co-operation into the Community framework, strengthening of social and environmental policy, inscription of rights and freedoms in the Treaty and the extension of majority voting.
More problematic, perhaps, will be the increase in its decision-making powers to the degree sought by the Parliament. For many member states, including Ireland, the Council of Ministers must continue to be the principal decision-making body. That is not to say that we cannot look carefully at the demands of Parliament, see what improvements can be made to existing procedures and reflect together on what additional powers might be granted to Parliament and in which areas. For example, we might envisage the extension of the co-operation procedure between Parliament and the Council.
One important further consideration is that any additional powers that are given to the European Parliament must be directly related to the overall shape of the Treaty reforms to emerge from the Intergovernmental Conference. They should be commensurate with the scale of any such changes and should take account of the need to preserve balance and efficiency in the operation of the Community institutions.
National parliaments have expressed concern at what they see as the gradual erosion of their powers, especially following the adoption of the Single European Act. The European Parliament has taken the initiative in establishing contacts with the national parliaments and in associating them with its work on maintaining the momentum of European integration. It has already held a number of joint meetings with the national parliaments. As Deputies know, this process is to culminate in a Congress of the European Parliament and the national parliaments which will meet in Rome at the end of this month.
At the Rome meeting the European Parliament will, I expect, seek to persuade the national parliaments that their powers have not been transferred to it but rather to the Council of Ministers, an intergovernmental body which, it will be argued, cannot be called into account. To correct this, the proposition may be put that the prerogatives which the Treaty of Rome and subsequent legalisation have transferred to the Community from the parliaments of the member states should be given to the European Parliament.
I have two points to make on this argument. First, the members of the Council of Ministers are responsible to their national parliaments for their actions and have a clear and direct democratic mandate. Second, it is relevant to recall that the attitude of member states to the role of the European Parliament in the decision-making process varies greatly. Some, including Ireland, are very conscious of the fact that they cannot exercise through the participation of their representatives in the work of the European Parliament, the influence which it is open to them to exercise through their participation in the work of the Council of Ministers. In addition, the decisions taken by the Council of Ministers generally result from a genuine negotiation involving an effort to accommodate the interests of each of the member states.
I am not arguing here against the development of the European Parliament's role in the legislative sphere. This is something to which a majority of Heads of State and Government subscribed last weekend and which will be taken up in the Intergovernmental Conference.
What I am saying is that in seeking to ensure the democratic legitimacy of the Community and its democratic accountability, all the institutions are involved and we must take care that the balance between them is preserved.
The Commission published its opinion on 21 October on the proposal for amendment of the Treaty with a view to political union.
It is a well reasoned document and one which will make a valuable contribution to the work of the Intergovernmental Conference. It argues that the historic legacy of the founding fathers and the cumulative commitment to European integration, favours concentrating the revision of the Treaty on the integration of new objectives into a single Community with a single institutionial structure.
This, it believes, is the only way to bridge a gap which has opened up between progress on common policies and advances on political co-operation.
The Commission advocates a flexible institutional structure which would be capable of taking account of: (a) the state of public opinion on the future of European integration, which varies considerably from country to country, and the way member states perceive the joint exercise of pooled sovereignty; (b) the need for caution, which militates against defining the final shape of European Union at this early stage and in favour of keeping to the course charted by the Treaty of Rome, leading eventually to a federal-type organization; and (c) the likelihood of further institutional change to accommodate enlargement of the Community. Common sense dictates that in a much larger Community the institutions will have to be radically reformed to prevent it degenerating into a mere free trade area with loose arrangements for foreign policy consultation.
These general considerations are ones we could support as they confirm our approach to the Intergovernmental Conference on Political Union.
The Commission adopts a more restrictive attitude than some member states and the European Parliament to the extension of the scope of the Community.
It proposes that any increase in the Community's powers should concentrate on social affairs, major infrastructural networks and aspects of the policy of free movements of persons. As far as the environment and research areas are concerned, the Commission feels that qualified majority voting should be used more frequently and it could also be used in the taxation area. It would also wish to see an extension of Community competence into the cultural area, by providing for a cultural dimension to the Community's activities, and a consolidation of the provisions of the Treaty in the energy area.
We are still examining the implications for Ireland of extending Community competence and additional use of majority voting. I am conscious of the very great contribution which majority voting has made to decision making in the area of the Single Market since the adoption of the Single Act.
However there is a number of areas where I believe we must proceed cautiously. Taxation is one example.
The Commission is anxious to ensure that Parliament's powers are increased and that it will have a more substantial say in decision-making.
We will examine the Commission's views but I should say that one proposal made in the Commission paper — that Parliament be given a limited right to raise taxes — seems at the very least premature and out of line with the existing budgetary system.
Finally, it is worth noting that the Commission proposes that the implementation of economic and social cohesion should be one of the tasks of the union. We fully share this view and support it. The reason is quite straightforward. The Treaty of Rome talks, in its very first sentence, of laying "the foundations of an ever closer union among the peoples of Europe".
Unless in the process of further integration it is recognised that the common policies must bring benefits to all of the people of the Community, I think we cannot hope to succeed in the construction of a prosperous Community in which solidarity among all its members and peoples is an accepted principle.
The Council of Ministers is at present involved in the task of preparing the Intergovernmental Conference. This work is still at a preparatory stage and positions have not crystallised on specific issues.
The conclusions adopted at the European Council in Rome at the weekend give a reasonable indication of the state of play at this stage.
Essentially delegations are in the process of considering the various options in the following areas: extension of the scope of the Community, democratic legitimacy, inceasing the efficiency and effectiveness of the Community, and the unity and coherence of the Community's international action.
I have covered the first three of these issues in some detail already and I would now like to deal with the issue of foreign policy.
The main thrust of the high-level meetings during the Irish Presidency, including the informal session of Foreign Ministers at Parknasilla in May, was that the further development of the European Community is not only in the interests of the Twelve member states themselves but has become a crucial element in establishing a reliable framework for peace and security in Europe as a whole.
The European Council meeting in Rome on 27-28 October has now agreed, with some reservations on the part of the United Kingdom Government on the question of seeming to pre-empt the Intergovernmental Conference, on the objective of a common foreign and security policy and on the objective of going a step further on a common security policy.
The prospect of the Twelve elaborating a common foreign and security policy has aroused public interest, as this debate demonstrates. Security is a broad concept. There is more to it than military defence. Increased force alone does not lead to security. The security we now enjoy in Europe has been brought about by a reduction in tension and an increase in co-operation. We have never felt that our security was guaranteed by an arms race between two military blocs in Europe, which now thankfully, has ended. Nor, in our view, has the world been made more secure by the doctrine of nuclear deterrence. We are very happy to see the military stand-off in Europe coming to an end at last.
In this context the CSCE is of special importance. As its name says, it deals with security as well as co-operation in Europe. All of the Twelve participate in it and act together there as Twelve. The CSCE is an important framework for relations in Europe and has made a very significant contribution to the reduction of tensions in Europe. I believe, as do our partners in the Twelve, that the CSCE Summit in Paris in November will make a decisive contribution to strengthening stability and co-operation in Europe and to disarmament. The CSCE has never, of course, been exclusive of reciprocal arrangements for security in Europe.
I have given some idea of the extent to which security for us is a concept which cannot simply be equated with military defence. That is a view reflected in the position of many of our partners among The Twelve.
On a point of order, I would be happy to agree that the Minister be allowed to continue his contribution to enable it to be put on the record of the House.
Even though it is contrary to Standing Orders, and in so far as there is no vote this evening, the Chair is happy to accept that.
(Limerick East): We will do anything by agreement.
Deputy Barry also raised the issue of security and what that might comprise. The Taoiseach did say that the defence or military aspects would not be the subject of a common security policy for some time to come. The process of integration under the heading of a common foreign and security policy must be seen as a gradual one. Indeed the conclusions of the European Council themselves specify that the content and detailed rule for the role of the union in securities here will have to be defined gradually in the light of the various aspects covered by this concept and without prejudice to the obligations arising out of the security arrangement to which member states are party. A number of our partners consider that a distinction should be drawn between security policy in the broad sense and defence policy which should, for the time being, be dealt with in NATO and WEU.
The Government agree that such a distinction should be drawn and we shall approach the Intergovernmental Conference from this perspective. This point should also be made in response to Deputy Ferris' comment about joining NATO or any other military pact. There is no suggestion being made that Ireland should join NATO or any other military pact. The Italian proposal that the WEU and the Community should be merged is not one that Ireland, or indeed a number of other member states, consider acceptable or appropriate. In general, however, I would like to emphasise that what is happening at present is the preparation of the Intergovernmental Conference, that is, a clarification of what the issues are that will be negotiated during the IGC. The negotiations will begin then and continue in the course of next year, the Intergovernmental Conference, having set its own agenda as is agreed. In the meantime the views of Deputies as conveyed to the House today will be taken into account in our preparations for the Conference.
Deputy De Rossa expressed his agreement with some of the Taoiseach's views in the context of a common security policy. Of course, disarmament should be included. I assure him also that the Government agree that Ireland should not be neutered instead of being neutral. It is generally accepted that the outcome of the IGC should be one Community. Ireland will not accept a Community in which we would habitually opt out on certain questions while being bound by the decisions of others.
Deputy De Rossa's comments on the CSCE and the UN were very interesting. However, these are issues which go wider than the Twelve and will not be negotiated in the IGC. I said that many of our partners consider that security is a wider concept than that of defence.
These partners too consider that military defence should remain the prerogative of the Western European Union and/or the North Atlantic Treaty Organisation. That is their right, as was recognised in the Single European Act. There are certainly those among the Twelve who wish to see a coming together of the European Community and the Western European Union. However, Ireland is not alone in dissenting from that idea and, even among those who would like to see it come about, it is being viewed as an unrealistic goal for now.
I am not surprised that that assessment is being made now that the subject is being closely examined. There is a consensus on a common foreign and security policy as an objective. Defining what might be such a policy in the security area for the Twelve as such is clearly going to require more effort on the part of all involved. Therefore, more preparation is foreseen and the details will, of course, have to be worked out in the Intergovernmental Conference itself.
There is recognition of the fact that individual member states have existing obligations, including military commitments, that go outside the Twelve. Furthermore, among the Twelve there are two nuclear powers, eleven of the Twelve are parties to the Nuclear Non-Proliferation Treaty, two of the Twelve hold seats as permanent members of the United Nations Security Council. This gives some idea of the diversity of positions which will need to be accommodated if we are serious about defining and implementing a common foreign and security policy. The content and detailed rules for the role of the Union in the security sphere will have to be defined gradually in the light of the various aspects covered by this concept and without prejudice to the obligations arising out of the security arrangements to which member states are party. Ireland is therefore only being practical and realistic when we say it is necessary to define clearly what is meant by a security policy for the Twelve as such.
A major feature of security in our view is a reduction of tension in Europe and elsewhere. Of course we have to look at other realistic components of a common foreign and security policy. Some of the suggestions that have been made — and they are in an early stage of gestation — are the industrial and technological development of defence equipment, disarmament and arms control, non-proliferation of nuclear weapons, control of arms exports, control of exports of sophisticated defence technology, UN-sponsored initiatives of a peace-keeping and peace-enforcing nature.
These are suggestions which raise some important questions. In particular, any policy concept that regulates Twelve action in those fields could not be imported from outside the Twelve: it would have to be developed by the Twelve themselves, for themselves.
We have every interest in the idea of the Twelve formulating a common policy on non-proliferation. One of the achievements of our Presidency was to secure a declaration on nuclear non-proliferation by the European Council in June. The Twelve's commitment on that occasion to the maintenance of an effective international nuclear non-proliferation regime was an important step forward. The principle of general and complete disarmament has already been subscribed to by all of the Twelve at the United Nations. It should be realistic to expect that the further elaboration of it could constitute a real component part of any security policy evolved by the Twelve. As I have said, however, a commitment to act in such areas as Twelve carries the implication that it will be in accordance with a Twelve concept.
The suggestion that UN-sponsored initiatives of a peace-keeping or peace-enforcing nature might be dealt with in the framework of a common foreign and security policy is one worth considering. At first glance one might expect that it would appeal to this country since we have a tradition of strong support for UN-sponsored initiatives. However, if it is envisaged that the Twelve, as Twelve, would be formulating proposals for action in the UN framework, we would need to be very clear about what those proposals might involve. For example, account would have to be taken when it comes to peace enforcement that two of the Twelve hold permanent seats on the Security Council. In addition there would need to be agreement on the interpretation of the Charter of the United Nations, agreement on the types of action permitted by the charter and the circumstances in which they could be undertaken.
I have until now talked of the concept of security in the international domain, which is certainly the popular perception of the subject. However, I do not think that the debate will necessarily be confined to international security but may also consider security within the Community, including for example, how the Twelve might more effectively combat major transnational crime like drugs and terrorism. There is, of course, established co-operation between the Twelve in these areas and it can undoubtedly be developed further.
The negotiation on the Intergovernmental Conference will not begin until December. I do not wish to pre-empt those negotiations but have attempted to give Deputies an idea of what might be addressed under the heading of a common foreign and security policy.
One issue which it will be necessary for the IGC to address will be the manner in which decisions are to be taken both as regards what constitutes a common foreign and security policy and how that policy is to be implemented.
Proposals have been put forward for either the continued use of the consensus principle or for the qualifying of the consensus rule in some manner in order to permit decisions to be taken in spite of the disagreement of one or more member states. It is our view that realistically the consensus rule will continue to apply in the domain of European political co-operation. It would be hard to imagine decisions being taken by any other method in respect of any area being brought within the competence of Community machinery for the first time.
Attention has focussed on the ideal of a common security policy but there are other important matters which will be addressed, and I expect successfully, at the IGC. In the Irish Presidency we took practical steps to bring the Community and European political co-operation into a more effective working relationship. We want to see this carried significantly further in the IGC. There are many organisational measures which could be envisaged as a means of improving the effectiveness of the foreign policy process, for example, the creation of a suitable structure to deal with crises when they arise.
Many of you will be familiar with the European Parliament's Martin Report to which I have already referred and which calls, among other things, for appropriate use of the missions of the Community and its member states in third countries and for the functions of the EPC Secretariat to be absorbed by the Commission and the Council.
Collaboration between the Twelve's diplomatic services in other countries and reinforced secretariats are practical proposals but nonetheless important and I am sure there will be more proposals of this nature for the IGC to address. All of these proposed measures are practical and give rise to few problems of principle. We shall accordingly be approaching such proposals in a pragmatic spirit, prepared to agree on the arrangements which are most effective and efficient, once the issues of principle in regard to scope and decision-making are decided.
I have given some idea of the extent to which security for us is a concept which cannot simply be equated with military defence. That is a view reflected in the position of many of our partners among the Twelve. At the Rome European Council at the weekend there was real optimism about the Community's ability to meet the historic challenge of political union. We should share that optimism as we look at the period ahead. It is not just a challenge to be faced but an opportunity to be seized.
The idea of a committee to examine the implications of political union and economic monetary union has been mentioned by several speakers. This morning the Taoiseach suggested that the Committee on Secondary Legislation of the EC might be an appropriate forum for this work. In this connection I would recall that the committee has on previous occasions determined that it has the power to examine such questions as the European Parliament's draft Treaty establishing European Union, the Spinelli Treaty and the Single European Act. When Deputy Collins, Minister for Foreign Affairs, was the chairman they produced detailed reports on both of these. It is something on which the current chairman might like to reflect.
How then should Ireland face into the period ahead and, in particular, into the two Intergovernmental Conferences? In his statement, the Taoiseach has drawn attention to some of the key issues which we must address and has given a clear indication of the broad approach which the Government intend to adopt in the preparatory stages and in the negotiations proper. He has outlined the basic principles behind our approach.
I believe that Ireland should look to the future, first, with optimism that the Community is about to take a further significant step on the path towards European union. The importance of our membership of the Community to our economy and the benefits which we derive from the operation of common policies means that our position of net beneficiary should be consolidated and enhanced as a result of present moves towards fuller integration.
Secondly, we should regard the future with confidence that Ireland, more particularly our businessmen, our workers, and our farmers, will continue to seize the opportunities afforded by the Community. These opportunities may present themselves differently in the future but will ultimately be enhanced by the two Intergovernmental Conferences, by the enlarged Community following German unification and by the advent of 1992.
Thirdly, we should move forward with realism, since the success of the Community has always been based on an imagination firmly rooted in the real world in which we live, on limited but significant steps in the right direction rather than giant steps into the void. Ireland, as always, will approach the challenges ahead and in particular the questions which will be posed by the two Intergovernmental Conferences with a pragmatic, serious application of our imagination. We will look at each matter which arises and ask objectively whether it is in our interests and whether it is in the interests of the Community. I thank the Deputies and I hope they found this elaboration to be of value.
The Minister should be congratulated on his speed reading.
I do not envisage the expansion of the powers of the Joint Committee on Secondary Legislation of the EC as being merely to produce reports on past events. What I have in mind is much more fundamental and I understood the Taoiseach to assent to that this morning.
The point is noted.