Pat Rabbitte
Question:11 Mr. Rabbitte asked the Minister for Tourism and Trade his Department's assessment of the likely impact on Irish trade of the GATT agreement which concluded in December 1993; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers - GATT Uruguay Round Agreement.
Michael McDowell
Question:28 Mr. M. McDowell asked the Minister for Tourism and Trade if, following the completion of the Uruguay Round of the GATT he will give a full assessment of the effect of the completed round on the Irish economy generally; if he will publish details of when the various provisions agreed in the round come into effect; and if he will publish a document for the guidance of manufacturers, traders, farmers and others to enable them to assess the effect of the round on their particular businesses.
I propose to take Questions Nos. 11 and 28 together.
The GATT Uruguay Round Agreement, on which substantive negotiations concluded on 15 December last, is the biggest trade agreement ever concluded in the history of world trade. It is a major victory for multi-lateralism over unilateral solutions to trade problems, and incorporates the biggest single reduction ever achieved in trade tariffs. The scope of GATT has been expanded to include, for the first time, major sectors such as services, agriculture and textiles. Trade related intellectual property measures have been covered and a new world trade organisation is to be created, the provisions of which will be legally binding on its members.
The outcome will create confidence and buoyancy in the world economy from which we will all benefit. The European Union stands to gain most from the agreement and significant opportunities for investment and the expansion and development of exports should result. These opportunities will, if exploited by Ireland, lead to significant growth in our exports and in foreign earnings which will benefit the economy as a whole.
The Irish manufacturing and traded services sectors will gain substantially in terms of output and employment from the increasingly liberalised international trading system arising from the agreement. The consultancy study which I published in December last concluded, using rather conservative assumptions, that the Irish economy stood to directly gain in excess of 20,000 jobs from a GATT agreement. This is in comparison with a scenario in which trade hostilities and a proliferation of protectionist measures would have followed a failure to reach an agreement.
Although the negotiations generally on the round were brought to a close in December of last year, discussions have continued since then on details, in particular on finalising the market access part of the agreement. It is a matter now for the GATT secretariat in Geneva, assisted by the delegations of the contracting parties, to complete the text of the agreement in the form of a final act to be presented for ministerial approval in Marrakesh on 12 to 15 April next.
The provisions of the agreement are scheduled to come into effect progressively from 1995 but, even in advance of that, the conclusion of the agreement has had important effects in boosting confidence in the prospects for trade growth and in recovery from the international recession of recent years.
The importance of the Uruguay Round Agreement lies in the liberalisation of trading conditions and in the achievement of the greater security for traders which comes from extension of the multi-lateral rules-based system which will be overseen by the new World Trade Organisation.
In many cases, the effects of the agreement will be invisible to individual traders, but cumulatively they are of fundamental importance in providing the basis for economic growth and prosperity.
The Minister referred to the report by the economic consultants, Fitzpatrick and Associates. Is it not the case that the GATT agreement was not concluded when that report was compiled and that the report was published the day the agreement was made? I suspect this report was rushed as a result of pressure in this House because of the lack of a sectoral measurement of the impact of GATT prior to the conclusion of the agreement. When will we have a serious discussion in this House on the impact of GATT on the various sectors of our economy? Has a study been carried out in the Minister's Department, other than this preparatory document, on the precise outcome? For example, will the multinationals be the main beneficiaries, with an insignificant impact on indigenous industry? Will the Minister agree that the impact on small farmers in disadvantaged areas could be very negative? A range of important issues arise as a result of the GATT round which were never discussed in this House and the Minister did not give any indication in his reply that serious work is being carried out in relation to measuring its impact.
Deputy Rabbitte raised many questions. The consultancy report to which I alluded was prepared by Fitzpatrick and Associates and commissioned by my Department earlier in 1993. It was updated at various stages throughout the year, but at that stage those economic consultants gave their best estimate of the likely impact of a successful conclusion of the GATT round.
The GATT round commenced in 1986 and was concluded last December. The Deputy is correct in saying that more work must be carried out betwen now and 12 April next, when the final agreement will be signed in Marrakesh. The meeting in December was fast-tracked by the US Congress and a deadline was set for receiving offers. There have been various teething problems but the agreement will be signed in Marrakesh on 12 April next.
Negotiations on GATT have been ongoing for the past seven years. Therefore, the likely outcome of the final GATT round was known and taken into account in the Fitzpatrick report. The report was not published until December because we were trying to get the best deal possible in other areas, particularly agriculture. The Fitzpatrick report concluded that the successful conclusion of the GATT round would be of immense benefit to the Irish economy, but there were a few negative aspects in relation to agriculture which we were able to overcome in worth-while negotiations between the Minister for Agriculture, Food and Forestry and the EC Commission.
And the French Government, who then sold you out.
We then published the Fitzpatrick report. I have no objection to a debate in this House on the impact of the new GATT round on this economy. That matter can be discussed by the Whips. I would remind the Deputy that in Private Members' time last November or December we discussed many aspects of the GATT round. If the party Whips agreed to another debate, I will not object.
Did the Minister take Question No. 28 with No. 11?
The Minister did not state whether he proposes to publish details of the various matters to which Deputy McDowell referred in Question No. 28, for example, details about when the various provisions agreed in the round come into effect and if he will publish a document for the guidance of manufacturers, traders, farmers and others to enable them to assess the effect of the round on their particular businesses. Will the Minister give a general assessment of the effect of the round? Deputy Rabbitte referred to the Fitzpatrick report, which the Minister agreed was compiled before the conclusion of the round. Now that the round is concluded will the Department give a general assessment of the impact of the round especially as it is no longer necessary for political or other reasons to hold a particular point of view on the matter? Can we have an objective assessment of something which will have a profound effect on our economy in the future?
The compilation of another report would not benefit tax-payers. When the Fizpatrick report was prepared in 1993 most of the details of the GATT round were known. At that stage we were mainly discussing agricultural measures. Matters relating to trade were taken into account in the consultant's report. It would not be beneficial to carry out a new consultancy study following the signing of the agreement in Marrakesh because, as indicated by the various industrial organisations such as IBEC, the details of the report were known earlier.
I replied to Deputy McDowell's question in the later part of my reply. It is not necessary to carry out the full assessment to which Deputy McDowell referred because the GATT agreement relates primarily to the regulation of trade between states rather than to business. As a result, its effect will be indirect and at times nebulous and they will unfold over time. There will be few provisions of specific interest to individual traders and it would not be suitable for a compaign of mass communications. When the final details of the agreement are settled officials of my Department will work in conjunction with members of IBEC to explain relevant effects to the various busineses. I appreciate Deputy McDowell's concern, but as Deputy O'Malley is aware from his dealings with the GATT negotiations, the final GATT round will not be relevant to specific businesses. It would be more beneficial to disseminate information on the agreement through trade organisations such as IBEC. However, if it is necessary to hold seminars or information campaigns for particular sectoral business interests, I will consider the matter but I will not do so now.
I was surprised by the Minister's reply. At this stage the Government should be aware of the sectors that will be affected and are under threat resulting from this measure. Is the Minister aware that last week 150 jobs were lost in Klopman, Tralee, one of our main textile units, and that jobs are under threat in Pretty Polly, Killarney? What measures are the Government taking to ensure that industries, which are suffering a loss in jobs, will be cushioned from the effects of cheap imports from Third World countries which will be allowed in here following the GATT agreement? What is the Government doing to improve our cost structure, to reduce the cost of employing people and so on to ensure jobs in those vulnerable industries will survive?
We could have a broad economic debate, more appropriate to the budget, on the various measures the Government is putting in place to improve business. The Fitzpatrick consultancy study — many Deputies, highlighted the effect of not having a GATT agreement — would have resulted in the proliferation of trade disputes and protectionist measures which would do untold damage for Ireland. We depend on the export market more than our European partners and many other countries. It is common sense that a more liberalised trading regime would benefit Ireland, particularly in respect of the industries referred to by the Deputy. The problems in some of those industries resulted from a liberalising of world trade conditions. However, a more liberal trading regime for Ireland, as recommended in the Fitzpatrick report, will be of immense benefit to the Irish economy.
The Minister's reply to Deputy Deenihan's question is not satisfactory. Our textile industry, which employs thousands of people, has been in decline in recent years. I asked the Minister to give a specific answer. He stated that the impact on certain industries would be indirect and nebulous. I suggest it will be neither indirect nor nebulous in regard to the textile industry and the agricultural industry as it relates to the economic position of small farmers. The House deserves more thorough and better researched replies than the Minister has given.
The final agreement on the GATT negotiations was a big improvement on what was on the table in the first instance. When the GATT negotiations concluded Professor Seamus Sheehy, not known to be a supporter of the Government, said the deal for Ireland and our European partners was far better than could have been expected; it was a tremendous achievement. Deputies Connor and Deenihan raised the question of jobs in other sectors. Ireland depends on trade and we are not immune to conditions worldwide. We will not be able to protect various sectors of the economy in the present competitive world. Unfortunately, that is the harsh reality of economic life today.
Would the Minister agree that if the economic position is country-to-country trade and we are to exploit it to the optimum, Deputy McDowell's question inquiring if the Government will publish a document for the guidance of manufacturers is very pertinent? The Department's report, and other economists' reports, advise on the need for domestic policy reforms as a result of globalisation. Is the Department contemplating any domestic reforms?
The economic position is one of country-to-country trade. Individual businesses involved in such activity usually assess changes through their organisations or through groups such as IBEC. If I consider it is necessary to have a broader information campaign regarding specific sectors, I will provide for that. I understand that there is no demand from business people for the type of campaign which Deputies McDowell and Rabbitte mentioned, but if such demand arises my Department will consider organising one.