Adjournment Debate. - Aer Rianta Duty Free Facilities.

I raise this matter because I am extremely concerned at the proposal to abolish duty free facilities from 1 January 1999. This measure, if adopted, will have serious repercussions for regional airports in particular. Some 4,000 people are employed nationally in duty free facilities and many more in airlines throughout the world. We have many products which are internationally known, particularly small craft type products, which would not survive if it were not for duty free. I call on the Government, during its EU Presidency particularly, to insist that duty free be retained.

Aer Rianta has pioneered this mode of marketing and merchandising goods. There is no good reason it should not be allowed to continue. Some 40 per cent of Aer Rianta's earnings come from duty free activities. I would like to be parochial by saying that 35 people are employed in the duty free facility — to which I often had access — in Cork Airport. There are an additional 100 jobs in ancillary activities around the airport. There are many industries in Cork, as far as the Bere peninsula, whose products are for sale in the duty free shop in Cork Airport. Were it not for the duty free facility——

What about Gubeen cheese?

—— they would be put out of business. Not only does it sell Gubeen cheese, which I have eaten, but it has Milleen's which is at Ardgroom and Ahakista and Round Tower cheese. Having done a tour of the constituency I will return to the airport.

The airport made £2.2 million last year which was made exclusively from the duty free shop. All the other activities at the airport just about broke even; the shop kept it going. Excellent improvements have been carried out at Cork Airport under Fianna Fáil Governments over the past seven years, to which the Minister of State referred a short time ago. There is a new runway, landing facility and lounge. The entire airport has been upgraded and it would be a pity if this development was not allowed to continue.

If this facility is allowed to be closed down, it will have serious repercussions for all regional airports. As the Minister knows, there are good facilities in Galway, Letterkenny and in many parts of the west. Kerry Airport is the only one which is getting any substantial aid. It is a disgrace that the Government allowed one regional airport to be developed and subsidised——

Does the Deputy think Kerry should not have an airport?

——to the exclusion of all others. Another factor which I ask the Government to take into account is that probably our premier product worldwide, Bailey's Irish Cream, was developed through the duty free system. No matter what airport one visits one may not get Paddy Whiskey, but one will certainly get Bailey's Irish Cream.

One will not get Cork gin.

It is a brand leader worldwide. It would be a national loss if we were to lose this facility. I call on the Government to not only use the EU Presidency to savour the nice things in life, like Chablis and Chateau Lynch-vages, but to think of the economy, the country and small industries, like the craft industry, and our regional airports and to insist, as President of the Council of Ministers in Europe, that this facility will be retained.

I thank the Deputy for raising this issue as it allows me to correct some misleading impressions which are circulating about the future of duty free and tax free sales for EU travellers. My colleague, Deputy Sheehan, has regularly voiced his concerns in this area to me and to the Minister.

That was not in the script.

There is no proposal to terminate duty free or tax free sales for travellers to non-EU destinations. This portion or variant of business will remain.

I am a good customer of duty free.

For certain ports and airports, particularly Shannon Airport, the non-EU traveller is an important source of revenue. The other State airports also handle traffic to and from non-EU locations, including the important and welcome visitors who come here from Iceland.

As regards EU travellers, the EU has decided as part of the package of Single Market measures adopted in 1992 to allow the continuation of duty free and tax free sales for intracommunity travellers only until 30 June 1999. This was agreed as part of a comprehensive series of Single Market tax measures, including substantial changes to the entitlements of travellers to bring in tax paid goods more freely. From 1 January 1993, travellers from EU countries benefited from enhanced entitlements to import items tax paid from other EU states and easier border controls. This continuation to end June 1999, set out in Directives 91/680/EEC and 92/12/EEC, was agreed to allow the duty free operators, including Aer Rianta, time to diversify their activities. It had been originally planned that duty and tax free sales would end in January 1993 for EU travellers and the duty free operators were well aware of this intention for many years before that. The extension to 1999 was in response to requests for more time to adapt and that extension was reluctantly agreed to by the Commission on the basis of an entirely new system of vendor control of duty free sales and with the legal position being that EU duty free would end in 1999.

This new system of vendor control was to be subject to review by the Commission as it was a very substantial change from the previous arrangements based on customs controls, which became unworkable in a Single Market context, with much reduced frontier formalities, including the creation of special Blue Channels for EU passengers. From indications from the Commission, it seems that it has not been entirely happy with how the vendor controls have operated.

I stress that the decisions to end duty free in 1999 are firm ones that have been taken by the Council and enacted in Community law some considerable time ago, not proposals from the Commission which have still to be adopted by Council. Public comment sometimes suggests that these are new proposals which can be obstructed by Ireland or by other member states, but that is not so.

The Commissioner with responsibility for the Internal Market, Mario Monti, very recently confirmed to the duty free industry in the EU that the Commission had no intention of bringing forward any proposal for a further retention of duty free and tax free sales beyond the expiry date of 30 June 1999. If there is no Commission proposal on the table, the Council cannot adopt any measures to extend the concession. I draw the Deputy's attention to that important point.

I know Aer Rianta has taken many steps to diversify its activities, including the operation of duty free shops outside the EU. It operates in Russia and in the Middle and Far East and it has adopted a prudential attitude to the question of duty free sales and to the issue of extension post-1999. Obviously it would like the concession to continue but it has not placed all its eggs in one basket and will be able to cope with the changing circumstances. Increased passenger throughput at the Irish airports will also help.

I am aware of concerns over the ending of duty free facilities for EU travellers. It is a major issue in my constituency of Wexford which includes the port of Rosslare Harbour. The Irish and EU duty free sectors have been making clear their difficulties. The Minister for Finance will monitor the position with interest and he has received representations from the industry which he is considering. As I explained, however, the right of initiative in this case does not rest entirely with us or with the Council. It is a matter initially for the Commission. The Deputy may know one or two friendly Commissioners with whom he could have a word.

He could lobby Brian Crowley.