I move:
That Dáil Éireann, convinced that the welfare and prosperity of the Irish people can best be advanced through Ireland's membership of the European Community, satisfied that full and balanced integration of the Community will lead to greater economic growth, social progress and increased employment, believing that the Community should have an enhanced voice in international affairs, to which Ireland can contribute, persuaded of the need for the work of the Intergovernmental Conferences on Political and Economic and Monetary Union to be brought to a successful conclusion at the European Council in Maastricht in December, fully supports the Government in their determined and constructive efforts to ensure that the new union is firmly grounded in economic and social cohesion and solidarity between the member states and that all will share fully in the fruits of its economic and social development.
Ten days from now, at Maastricht in the Netherlands, a meeting takes place, which will be of vital importance for the European Community and for Ireland. What is decided there will determine the future of the Community and give shape and structure to the concept of European union. For Ireland it will determine how well within that structure the concerns of our people are met and their interests advanced.
The issues at stake are clearly crucial for us and for our partners. Other European countries too, await our decisions; and many are eager to join the Union to which we will now give shape. So the outcome of our meeting will have an impact well beyond the Community itself, and it may well have important consequences for the future of the European Continent as a whole.
The negotiations leading to the meeting take place against a background of extraordinary change in the world about us. The Community is continuing to integrate through the internal market programme and the ever-intensifying practice of co-operation on political issues. Convergence between the Community and its EFTA neighbours is an established fact. Germany has been unified; and the changes in the USSR and Eastern Europe have brought the Cold War to an end. The planned economies have collapsed, and there is general acceptance everywhere now of the efficiacy of the social market economy. Global financial markets have evolved, in practice outside the control of even the most powerful national governments: and there is before us the growing challenge of crisis management on a truly unprecedented scale in particular areas of the world, when international law breaks down or is called in question.
The meeting at Maastricht comes as the culmination of a process of intensive negotiation within the Community, against the background I have outlined. That process began in earnest when two intergovernmental conferences — on political union and on economic and monetary union respectively — opened in Rome one year ago. But preparatory work had already been under way even before then. The groundwork for the conference on political union was laid, and some of the preparatory work for the conference on economic and monetary union was done, during Ireland's EC Presidency in 1990.
From time to time over this past year, I myself and other members of the Government have reported to the Dáil on these negotiations: in statements after each European Council; in replies to parliamentary questions; and in a full-scale debate in this House in July. Outside this House, I addressed the important questions most recently, when I spoke to the Irish Council of the European Movement on 6 November.
In any negotiation, however, it takes time for the central issues to emerge in a way which shows clearly where fundamental choices have to be made. This is now happening in the current negotiation. We now know the shape of the draft Treaty which will be submitted for decision to the European Council at Maastricht, and I have placed copies of this draft as it stands in the Library of the House.
But there is still some work to be done on this draft text; and the Foreign Ministers of the Community must meet again in conclave in Brussels on Monday next to consider what exactly will go before the Heads of State and Government for decision one week from that date.
Now that the fundamental issues have become clearer but the assent of Governments to the texts emerging from the negotiations has not yet been given, I want to report to the House on the choices which Ireland faces, on the policy of the Government in relation to those choices, and on the thinking which underlies that policy.
After Maastricht I will, of course, return to this House to report on the outcome. I have done this after each European Council I have attended, but I will want to do so particularly on this occasion in order to ensure the widest possible understanding, by this House and by the Irish public, of what we have agreed. Over the next year it will be necessary for the Parliament of each member state to ratify the agreement we reach, if it is to come into effect, as we hope, on 1 January 1993. In Ireland, because of the probable implications for our Constitution of the changes now proposed, it will be necessary to go further and seek the approval of the electorate in a referendum some time next year.
I should like to begin my statement on the issues by recalling the fundamental principles on which our policy rests. When I spoke in this House on 9 July I pointed out that Ireland's commitment to European integration goes back now for more than 30 years, to 1961. We first applied for membership of the Community in that year, when the European Economic Community as such was only four years old. It is true that it took another 12 years before we joined, but that initial policy decision set us on the path to membership, and it pointed a direction for Irish policy, which has been followed by every Irish Government elected here for over 30 years.
Already in the decades after the State was established, successive Irish Governments had worked with other countries in the League of Nations, to establish collective security and to create a world order built on justice and the rule of law.
In deciding to apply for membership of the new European Economic Community the then Irish Government were responding to the very different circumstances of that time. The war had ended and countries of Western Europe which had been in conflict had come together to create a new structure of co-operation which had no precedent in international life. We wanted to be part of what they were seeking to do.
The immediate means of those who founded the Community were economic; their deepest aims were profoundly political. They wanted — as the United Nations Charter puts it —"to save succeeding generations from the scourge of war". The vision — the word is not too strong — which underlay their practical efforts at economic co-operation is nowhere better expressed than in the Preamble to the very first of the Treaties — that which established the European Coal and Steel Community in 1951. There they spoke of their resolve in the following terms:
To substitute for age-old rivalries the merging of their essential interests; to create, by establishing an economic community, the basis for a broader and deeper community among peoples long divided by bloody conflicts; and to lay the foundations for institutions which will give direction to a destiny henceforward shared.
Of course, in applying in 1961 for membership of what was then the four year old European Economic Community, the Irish Government based their decision in the first instance on what they saw as Ireland's economic interest. The Treaties, which spoke of the creation of real solidarity, a common basis for economic development, and of an ever closer union among the peoples of Europe, gave promise that this was already more than an intergovernmental structure, and that it would grow and develop into a real community. We could open new markets for our produce, and our agriculture would benefit. It was also evident by then that this new, developing Community in Western Europe would affect us in many ways; it was better that we be a member, and that our voice should be heard from inside, as of right, in the making of decisions which were in any case going to affect our interests deeply.
However, it is well to recall now that there were also deeper reasons, which influenced the fundamental commitment made at that time by the Irish Government. We saw and understood what our future partners were about, and, even at that relatively early stage, we wanted to be a part of it. They were building on common values and a shared culture. They had committed themselves to link their interests in a thousand practical ways to create so strong a common interest that war between them would be quite literally unthinkable. We, too, sharing those values and that culture, and free, after centuries, to make our own choice as a people, wanted to be a part of that historic enterprise.
I have chosen to recall these earlier periods in our history as a State, because I believe it is well at this point to see that there is an underlying continuity in our approach. The Community, which we joined in 1973, has evolved further since then. We have played our full part in that evolution, and shared in its benefits. What is proposed is that at Maastricht, ten days from now, we agree together to take a further series of important steps to deepen the integration of the Community and to strengthen its institutions.
This amounts to setting in place the framework, and beginning to build the institutions, of a European Union. On the solid foundation of the Community and of the Single Market, which is now well on the way to being established, it is proposed that we take further steps to build an economic and monetary union; and complement this by a political union to be deepened and strengthened by successive stages. Ireland, I firmly believe, will want to be a part of that process — the more so, because it takes place in a changed international situation, where many other countries of Europe look with hope and expectation to what we now propose to do.
Thirty years ago, when we first applied for membership of the Community and 18 years ago when we joined, the wider European continent was deeply divided. East and West confronted each other across a line scored through its centre by the tides of war. The past two years, however, have been a time of fundamental change in the political and security landscape in Europe. The fall of the Berlin Wall did more than mark the end of a divided Germany. It also heralded an end to the dangerous division that split the continent of Europe and separated Europe's peoples.
Today all the countries of Europe are trying to come to terms with these changes — to work out new patterns of co-operation, new models, that will enhance their welfare and protect their security. No State can stand aside from this process. Our economic development, our future prosperity and our security are all fundamentally involved. European organisations too, some founded on the basis of an ideological and military divide that no longer exists, are themselves having to adjust.
NATO, the Atlantic alliance, for example, have reviewed their policies and strategy, and adopted a wider view of security, that encompasses political, economic, social and environmental aspects. New thinking is evident too in the new institutional relationship of consultation and co-operation that is being established between NATO and their former adversaries in the Soviet Union, the Eastern European countries and the Baltic States. This new relationship envisages regular meetings between NATO bodies and these countries on security and defence matters.
The CSCE also has a vital role to play in promoting stability and democracy. All European states, east and west, are members, as are the USA and Canada. The end of the era of confrontational division in Europe will permit its member countries to work together on a new basis of respect and co-operation. Deputies will recall the contribution to this objective made by the Paris Conference of the CSCE, which I attended with the Minister for Foreign Affairs last November.
In this period of change and transition the European Community is at the centre of the debate about the future organisation of relations on our Continent. All European countries look to it as an anchor of stability in the new Europe. It has encouraged and assisted the countries of Eastern Europe in their pursuit of political and economic reform. It will help consolidate this through the new association agreements. It has concluded an agreement with the countries of EFTA to establish a European economic area which will now comprise 19 countries.
Many of these countries look to eventual membership as a way of securing their future, and several have applied, including two neutral EFTA countries, Austria and Sweden. Debate on membership is under way in others, which see clearly the importance of the new steps in integration which the Community is now preparing to take, and the impact which a more coherent Community, evolving by successive stages into a full European union, will have on their interests.
The outcome of our present negotiation within the Community is to be a further significant step towards European union. When I reported to the House in July, the negotiations had not settled on the structure of a new union treaty. It is now generally agreed that the Treaty will be based on what has been called a "three-pillar" approach. This will involve, first, amendment of the existing Treaties to improve the efficacy of the institutions; to create new areas of Community Union; secondly, steps and procedures for the establishment of a Common Foreign and Security Policy; thirdly, provisions to strengthen co-operation between member states on issues such as immigration, which are dealt with by Ministers of Justice and of Home Affairs. The first of these "pillars" will operate according to accepted Community procedures; the other two, though part of the new Treaty, will be intergovernmental in character at this stage.
We accept this "three-pillar" approach. It fits with the concept of an evolving union and, I believe, takes account of the present stage of development of the Community. We would want, however, to see the way left open for the member states to go further in due course. When the time is ripe it should be possible to bring all three "pillars" together in one integral Community operating according to accepted Community procedures, which have served the Community and Ireland so well.
The draft Treaty, creating structures for a European union based on these three "pillars", is available to Deputies in the Library. I have explained that, while its structure and scope are clear, it is still a draft in two respects: it may be further amended at the conclave on Monday next, when the Foreign Ministers try to reduce points of disagreement to a minimum; and, even then, the text remains a set of propoals from the two intergovernmental conferences to be submitted for decision to the European Council of Heads of State and Government in Maastricht ten days from now.
I have explained the broad policy approach which we bring to his new phase in Community integration; and I have described the framework for decision at Maastricht. I should now like to focus on some of the main issues for decision in the draft Treaty which encompasses all three "pillars" in one single document. I will deal first, with the proposals for a Common Foreign and Security Policy; secondly, with the role of the institutions; in particular, proposals to give increased powers to the European Parliament; thirdly, with proposals to confer on the Community new or extended competence and responsibilities in areas such as education, health, social policy, environment and research; fourthly, with Economic and Monetary Union; and fifthly, with provisions to promote greater economic and social cohesion, so that the benefits and the increased prosperity which the union will bring will be shared equitably between all member states.
I would like to deal first with the question of a common foreign and security policy. I spoke earlier about the remarkable transformation which has taken place in Europe over the last two years. It is clear that the Community needs to consider whether it has the means to conduct a coherent and effective external policy commensurate with these great changes. Will it be able to meet the expectations placed in it and the challenges which lie ahead?
What is now envisaged is that a series of provisions to allow it to do this will be set out in a separate chapter of the union treaty, which will replace Title III of the Single European Act dealing with political co-operation. Under these new provisions, the union and its members states will commit themselves to define and implement a common foreign and security policy with five stated objectives: to safeguard the common values, fundamental interests and independence of the union; to strengthen the security of the union and its member states; to preserve peace and strengthen international security in accordance with the principles of the UN Charter and the CSCE; to promote international co-operation; and to develop and consolidate democracy and the rule of law, and respect for human rights and fundamental freedoms.
Ireland can accept these objectives. I list them here because they will guide and underpin the discussions in the union on foreign and security issues and the decisions taken. They will be our essential points of reference.
The draft treaty envisages that the objectives will be pursued in two ways: one of these will be by establishing more systematic co-operation between member states; the other by the gradual introduction of what is now to be described as "joint action" in the conduct of areas of foreign policy, where member states have essential interests in common.
Under the first of these procedures — described as "systematic co-operation"— member states will inform and consult one another on foreign and security policy issues, and will define common positions in the Council; they will ensure that national policies conform to the common positions; and they will co-ordinate their action in international organisations and at international conferences. All decisions will be by consensus. The method is broadly similar to the present system under European political co-operation, and we have accepted it in the negotiations.
The second method of co-operation — joint action — would be new. Its essential quality is that joint action would be binding on the member states in the positions they adopt and in the conduct of their activity. It would be introduced initially in selected areas to be decided. We have indicated our willingness to work on this concept, but several important questions remain to be settled, in particular, the scope of joint action and the decision-making mechanism.
In so far as the scope is concerned, the negotiations are addressing the areas to which joint action should apply and how it might be gradually introduced. One way of doing this would be to agree a list of areas and topics that could be considered for joint action, as soon as the treaty enters into force — for example, relations with the Soviet Union, policies in the CSCE, nuclear non-proliferation, arms control and confidence-building measures. New areas could be added by unanimity after full consideration in the European Council and by Ministers for Foreign Affairs. This is an approach that we favour and we hope it can be agreed.
On decision-making we have taken the view that for joint action, which is being introduced into the treaty for the first time, all decisions on matters of policy should be by consensus. Several of our partners would like to go further and provide for majority voting. We have not ruled out the possibility of majority voting for limited implementing matters provided adequate safeguards can be built into the treaty. The Presidency's draft envisages the use of qualified majority as a general rule for detailed implementing arrangements. We have advocated a procedure whereby the Council would by unanimity define those implementing matters on which decisions are to be taken by majority. A procedure such as this would admit the principle of majority voting in the area of foreign and security policy. It would allow the practice to be introduced gradually for implementing measures, as we gain experience of the working of joint action. But it would provide an essential safeguard for member states in this new and important area.
The Intergovernmental Conference is also considering the question of security and defence. These are among the most complex and difficult issues in the negotiations on political union. Foreign Ministers will take them up again on Monday next, but it is possible that they will be among the matters that will come to Heads of State and Government in Maastricht for resolution. Several proposals have been advanced, including proposals in recent weeks from France and Germany and from the UK and Italy. I have pointed out that some of these proposals and ideas are appropriate to the negotiations on political union and the union treaty. Some are more appropriate to the Western European Union and NATO, and indeed are under consideration in those organisations. Some appear to be for bilateral action between the states concerned.
We are following the wider debate on European security closely, both because of its relevance to the changed European security situation, and because of its implications for the IGC negotiations. In the Intergovernmental Conference a distinction has been drawn between the possible longer term role of the union in European security and the arrangements that should apply in the meantime.
In so far as future security is concerned, the proposal is that member states would agree in the union treaty to the formulation of a common defence policy at a later date. The issue would be taken up in new Intergovernmental Conference negotiations in five or six years time with a view to a new treaty or amendments to the existing treaty. This is an arrangement that we might accept, provided of course the other aspects of the chapter are settled to our satisfaction. It would leave the nature and content of a common defence policy to a future negotiation and would be in accordance with our long-standing commitment to partners that, if the Community were to develop its own defence arrangement for its security, we would consider participating in these arrangements. The outcome of any future Intergovernmental Conference on this issue would, like the present Intergovernmental Conference, require unanimous agreement among the member states.
The question of what the security role of the union should be in the meantime has not yet been settled. I can see merit in proceeding gradually in this area, perhaps by agreeing that security considerations in the widest sense could be taken into account in the discussions under the co-operation provisions of the Treaty. This would permit the Twelve to assess the potential implications for their security arising, for example, from the Yugoslav crisis. But it would not entail joint action by the union in the defence area, or the union's acquiring its own military capability. That is not an issue in these negotiations.
The Intergovernmental Conference is considering whether a link with the Western European Union might provide a way of establishing a framework within which a defence role for the Community might be developed. Some partners see the Western European Union as an integral part of European Union with organic links to the union. Others would prefer it to stand in an autonomous relationship but taking guidance from the union. Some have concerns about the implications of all this for NATO. The different approaches have not been reconciled to the point where we have a clear view of what might go into the union treaty. But we should not rule out a relationship between the political union and the Western European Union. I am thinking, for example, of cases where the Western European Union could have a peacekeeping or humanitarian role, where, as was agreed in regard to humanitarian aid to the Kurds, Ireland and other non-Western European Union members could act separately, in parallel and in co-operation with those partners who are in Western European Union.
The provisions I have just outlined would represent a substantial advance in the way in which the Community deals with foreign policy and security issues. However, I would point out to the House that the draft treaty under negotiation would not involve Ireland in a mutual defence commitment. Nor would it oblige us to become a member of a military alliance. Moreover, the draft on the table recognises our traditional position in regard to the military alliances, as agreed at the second Rome Summit last year.
The new treaty will enable the Twelve to develop their co-operation on foreign and security issues, and permit the union to act in a more coherent and effective manner in international affairs. From Ireland's point of view, we intend to bring to the discussions in the union those values based on our tradition and experience that we hold dear: our emphasis that security is broader than defence; our belief that real security requires many different kinds of approaches — preventive diplomacy, negotiations, procedures for the peaceful settlement of disputes, peacekeeping, and our view that the causes of instability, such as the arms race and underdevelopment, must also be tackled.
The approach of the Government at the conclave on Monday next and at the European Council at Maastricht will be to seek agreement to a common foreign and security policy along the lines I have outlined.
I turn now as a second issue to the question of the role of the institutions and in particular the issue of increased powers for the European Parliament. The Government are conscious of the balance between the different institutions which was built into the structure of the Community; and we share the view of the Commission that that balance should be preserved. The draft treaty proposes certain changes which affect the Parliament; the Commission; the Court of Justice and the Economic and Social Committee. I will touch briefly on each of these in turn.
We favour new powers for the Parliament. It is elected democratically by the citizens of the Community, and it is right that it should have a greater role in Community decisions. At the same time, we do not wish to see the decision-making procedures of the Community become slower and more difficult, where the need is increasingly to make them more responsive and more effective. The proposals now on the table for decision will meet these two requirements.
These proposals envisage that the European Parliament will receive some significant new powers; it will acquire the formal right to set up committees of inquiry and to receive petitions from citizens of the Community; there will be wider use of the co-operation procedure for legislation established by the Single Act; and, for the first time, Parliament will be given a right to reject legislation in a number of areas. The new procedure will mean greater involvement of the Parliament in Community decisions. But there will also be a series of binding deadlines which will limit the scope for delay and ensure the processing of Community legislation as expeditiously as possible.
There is also a need to reinforce the links and improve the dialogue between the European Parliament and the national parliaments of member states, and some orientation may emerge on this.
The members of the Commission will continue to be nominated as at present by member states, but the draft treaty contains a provision, under which the Commissioners-designate as a body will require a vote of confirmation by the Parliament, before they are formally appointed. To this extent, the Commission will be more explicitly seen as accountable to Parliament than at present.
There is also wide support among member states for the view that the Commission, which already has 17 members, would become unwieldy and less effective, if its numbers grow further, as new member states join the Community. There is likely to be agreement to streamline somewhat the existing structure of the Commission by limiting the number of Commissioners to one per member state. Provision may also be made for a new category of Assistant Commissioners. These points will receive further consideration.
The draft treaty also contains proposals to strengthen somewhat the position of the Court of Justice. It will in future have power to penalise member states, which fail to comply with its ruling.
It is envisaged also that the involvement of the interest groups of the Community in the processing of legislation would be reinforced by the steamlining of the operation of the Economic and Social Committee. In addition the setting up of a regional committee will, if it is agreed, provide scope for regional interests to make an input into the decision-making process.
Taken together, this is an important series of improvements in the institutional structure, which would in several respects make the institutions more effective and help them to respond more fully to the concerns of the citizens of the Community. At the same time, these changes do not disturb the balance between institutions which is appropriate at this stage. They also of course represent the limit of what can be agreed by member states at this stage of the development of the Community.
A third set of issues on which I wish to focus is a series of proposals that there should be a development of the existing role of the Community in certain areas of activity, and that certain new areas should be brought within the scope of the treaties for the first time. These proposals are referred to collectively as proposals for the extension of Community competence.
It is obviously right that where the member states can act more effectively together, and through Community structures, they should do so. But equally, it is right that action and decision-making should not unnecessarily be forced upward to Community level in areas where it can be handled more effectively at national level.
This, briefly stated, is the important concept of subsidiarity, which has now been generally accepted as a guiding principle in the negotiation of new areas of competence for the Community. It is likely that the new Treaty will contain an explicit statement of this principle in some form.
I believe we can accept this. Indeed, we ourselves see the principle as one which has relevance in certain areas of social policy and on some environmental issues. But we would also want to ensure that the wording of the provision on "subsidiarity" in the new Treaty is carefully drafted, so that it does not provide a kind of general "escape clause", or block in unacceptable ways the further development and growth of the Community in areas where common action is clearly desirable and in the common interest.
One area of importance where it is proposed that Community competence be extended and where we have specific concerns is that of social policy. It is proposed to reinforce the existing social chapter of the Treaty. We accept and support this, as we accepted the principle of a Social Charter in 1989. At national level here, relations between employers and trade unions are based on dialogue; and at Community level we welcome the contribution made in discussion by the social partners.
Our specific concerns in this area are twofold. First, we believe that the formulation of social policy must also take account of the pressing need to promote employment. For this reason we have wanted to see the promotion of employment accepted at Community level, as one of the objectives of social policy. This has now been done; and our proposal that it be included in the draft Treaty has been accepted.
Our second concern is that we feel that the principle of "subsidiarity" can appropriately be applied to certain aspects of social policy, which can more appropriately be dealt with at national or local level or through the collective bargaining process. It is our view that on such issues, each member state should be allowed to tailor its approach to its own particular circumstances, so that the overall effect of the policy will be genuinely to the benefit of those groups to whom it is directed. For this reason, we would wish to see Community voting on some specific areas of social policy continue to be subject to a requirement of unanimity.
A part of my preparations for Maastricht, I recently had a useful meeting, primarily on employment and social issues, with a delegation from the ETUC, which was led by its President, Mr. Norman Willis. I indicated our support to the joint ETUC/UNICE proposals, which had been submitted to the Intergovernmental Conference on the role of the social partners on EC social policy measures. These are important proposals, which are likely to be incorporated in the new Treaty, and as such will represent an important step in advancing and putting into effect EC social policy measures.
An important issue in these discussions on the extension of Community competence has been the proposal that decisions in the Council on areas such as environment, research and development and what have come to be called "trans-European networks" should be taken by majority vote. We for our part support the wider use of majority voting. We think it will make Community decision-making more effective. Our final position on specific areas to which it is now proposed to extend majority voting will depend on how far exactly the Community is given competence in each area; and, in relation to the environment and trans-European networks, on the Community's commitment to provide funding for activities in these areas.
There are, in addition, to those I have mentioned, a number of other areas, where the extension and/or the reinforcement of the competence of the Community is under discussion. Negotiations on some of these issues are still in progress, and it is not yet clear how far the new steps proposed will be agreed.
I turn now to the important and ambitious project of economic and monetary union which the Community has set itself to achieve by defined stages. This project has been under negotiation in a second Intergovernmental Conference in parallel with that on political union over the past year and a series of steps towards an economic and monetary union will be proposed for decision at Maastricht. These in a sense complement the steps we will now take towards political union, and some member states lay particular emphasis on this link. Taken together, the proposals in both areas which will be in the draft Treaty justify us in saying that it will set in place for the future a general framework for European union.
I believe that it is desirable now to move from the present situation to negotiate a carefully structured and balanced economic and monetary union, achieved by stages, and with adequate built-in safeguards. Success in this project will be of great importance for the Community and for Ireland as a member state which has been a full participant in the European monetary system now for over a decade.
A full economic and monetary union is to be put in place in three stages. The Community has already embarked on stage 1 of this process — since 1 July 1990. The draft Treaty which will be before us at Maastricht is likely to provide for a series of further steps.
It is widely known that one member state, the UK, so far maintains a general reserve on the project. Subject to this, a broad agreement seems to be emerging about the further steps which are now to be proposed for decision. These would envisage a transition to Stage II on 1 January 1994 with the establishment of a new monetary institution — the European Monetary Institute, and a strong co-ordination of economic policies with special provisions against monetary financing and excessive budget deficits.
No date would be specified at this stage for the further transition to Stage III which would put a full Economic and Monetary Union in place. However, before 31 December 1996 there will be a review of progress, and a decision will be taken by the European Council on the timing of transition to Stage III. The transition to this final stage would be subject to strict economic criteria and would take place only when a substantial majority of states are in a position to meet those criteria. There would be derogations for those countries which were not yet in a position to meet the criteria; and there may perhaps be a more general deferral arrangement to meet the particular case of the UK.
The main features of the proposed economic and monetary union, when it is finally in place, will be the close co-ordination of economic policies, and the establishment of a single currency and monetary policy, which will be administered by the European system of central banks. Some of the more detailed issues are still under discussion; and many aspects of the arrangements for a full-scale economic and monetary union will be decided only at a later stage.
Economic policy co-ordination in European Monetary Union will be subject to what is called a "multilateral surveillance procedure". This means that there will be regular monitoring of economic developments in each member state, and there will be an effort to combine economic policies in such a way as to ensure maximum growth and cohesion throughout the Community. There will be a special focus on budget deficits to ensure that monetary stability in the Community is not jeopardised by excessive budget deficits in some countries. Though tight criteria are being set for the excessive budget deficit procedure, they are no tighter than the present policies being pursued here by the Government. In order to take account of special features such as cyclical developments which can affect the deficit from year to year, the procedure proposed will build in a wide margin of flexibility by providing for an overall assessment of the position of a member state, if the criteria laid down are exceeded.
In the monetary area, Ireland has always voiced strong support for an independent Central Bank, committed to the goal of price stability and, subject to that, committed to supporting the economic policies of the Community.
Because we attach such value to the credibility of the European Central Bank, we accept that it cannot reasonably be established until such time as it can take on full and unquestioned responsibility for monetary policy within the Community. The Presidency proposal for a European Monetary Institute in Stage II has won widespread support, and we would endorse it as a sensible compromise in creating a forerunner to the European Central Bank which is to be established in due course.
A major interest for many member states centres on the arrangements which will govern the transition to Stage III. Since economic and monetary convergence is a key to successful participation in the final stage of European Monetary Union, it is important that there be objective indicators to guide the assessment as to which member states can move ahead to that stage. There is general agreement that the assessment must involve consideration of inflation rates, of budgetary performance and of exchange rate stability. Interest rates may also feature. It is important however in our view that this assessment should take place in a non-mechanistic way and should allow for a necessary element of judgment. While the procedures for the transition to Stage II have still to be decided, we believe that they should provide that the decision to make the transition will be made by consensus, and that it should come only when a substantial majority of member states are prepared and able to move to Stage III.
There is a general belief that European Monetary Union will bring benefits to the Community as a whole in growth and in employment; and this will add to the beneficial effects expected to flow from the completion of the single market. The additional benefits in European Monetary Union will come from the removal of the remaining barriers to the free flow of goods and services within the Community and the elimination of the cost of business——
