JOINT COMMITTEE ON EUROPEAN AFFAIRS debate -
Wednesday, 25 Feb 1998

Presentation by Irish Business and Employers Confederation.

Chairman

At the end of this meeting we will discuss some of the latter items on the agenda in private. Are the minutes from the meeting on 25 March agreed? Agreed.

We have apologies from Deputy Wall, Senator Manning, Senator McGowan and Mr. Cox, MEP. We have received correspondence from Peace and Neutrality Alliance who wish to address the committee. We have two letters from Mr. Anthony Coughlan who represents the National Platform; one letter states that he will discuss the Amsterdam Treaty when he attends today. His other letter on the EMU is addressed to all Deputies and Senators.

We have a letter from the Chief Whip's office concerning the timing of meetings in relation to the overlapping of meetings, etc. We have a submission from the Voice of Irish Concern for the Environment who wish to address the committee on the directive on the legal protection of bio-technological inventions. We might facilitate them at our next meeting.

We also have a list of other documents and publications received which are available from the committee's secretariat. They have already circulated these items to Members.

At the last meeting we decided that in addition to IBEC's, spokespersons and bodies opposed to the Treaty should be sought for today's meeting. Three organisations got in touch with our secretariat: Peace and Neutrality Alliance; Mr. Anthony Coughlan of the National Platform and the Irish National Organisation of the Unemployed. Each body will address the committee. First we will have IBEC and they are represented by Mr. Peter Brennan and Ms Karen Gannon. The visiting delegation will make a short presentation which will be followed by a question and answer session.

Mr. Brennan

I am pleased to be here to talk about a very topical subject. We have already commented on the Amsterdam Treaty in the Irish Business Bureau’s newsletter dated June 1997. My comments will highlight the main features in that newsletter. I will also confine my remarks to the business dimension of the Amsterdam Treaty.

IBEC supports the Amsterdam Treaty because it represents a discernible positive step towards deeper European integration. This Treaty is not a classic in terms of the 16 other treaties which already exist but is an important gradual incremental step towards a better future for EU citizens. IBEC would agree with its description as the people's treaty because its content matches that aspiration.

We welcome some important additions in terms of the EU's competencies, the most important being employment. An entire chapter is devoted to employment and the Treaty's objective is the promotion of a high level of employment. Employment and unemployment are extremely important political issues at European level. This is also recognised by IBEC's contributions to the European Union of Industry and Employer Confederations who, in turn, have been interacting with the European trade unions as regards the whole employment agenda. The contents of the EU Treaty on employment is of considerable importance. We already know that the Government has submitted its national plan on employment to Brussels and that post-1999 the ESF will be reoriented to help deliver the policy aspirations set out in the Treaty. A chapter dedicated to employment in the Amsterdam Treaty is being anticipated and implemented in a robust fashion.

There is a modest increase in the Treaty's competencies in relation to social policy and co-decision has been extended to some areas of social policy. Normally we would be reluctant to extend that but in reality the social dialogue procedure which exists in the Maastricht Treaty will continue. Employers and social partners both at national and European level attach considerable importance to the practical workings of the social dialogue. The Amsterdam Treaty does not change the mechanics of the social dialogue and we are very pleased that it will continue. The Treaty gets rid of the anomaly whereby the UK could opt out of social policy issues. A level playing field on social policy is very important for IBEC and employees.

The Treaty's public health provisions are important but are only mentioned briefly. These provisions will also affect food safety.

Achieving a balanced sustainable development in the context of the Treaty's provisions on the environment may not seem to be very important but over time the EU will be able to take a wider and deeper view of environmental issues. IBEC attach considerable importance to these provisions. We have an extremely enlightened and pro-active policy in relation to sustainable development. It is very encouraging to see these provisions written into the Amsterdam Treaty.

We are very interested in the quality of legislation featured in the Treaty. While it did not go as far as we lobbied for, there are very important provisions including cost benefit and the implications of new legislation on competitiveness and unemployment. It is a matter of judgment how all this will work in practice. We know the European Commission is already anticipating the implementation of this provision and this will result in better legislation, not necessarily more legislation. Better legislation is good for the citizen, the consumer and the business community.

At European level we lobbied for competitiveness to be included in the Treaty and for it to be expressly recognised. The Community will now try to have a high degree of competitiveness. This is important for Ireland as we try to ensure that the level playing field that we aspire to is open to competitiveness.

As regards other provisions, the issue of flexibility is very important. In practical terms it is hard to see how flexibility will evolve over time. It is inevitable that EU taxation policy will be looked at under the terms of flexibility after EMU because we will have up to 21 new member states. It is also important that the codification procedures of the Treaty are already being anticipated and that the Official Journal has already anticipated these provisions in the new Treaty.

When the Intergovernmental Conference was initiated the Commission saw it as an opportunity to strengthen the political unity of Europe and that ambition has been fulfilled. The maximalist agenda being put forward by the proponents of European integration was not delivered at the June Summit. We will have to await a further treaty before many other provisions, including those relating to foreign policy and defence, will get a wider hearing. The President of the European Parliament stated: "The Amsterdam Treaty has achieved limited progress". This is an important Treaty despite the fact that it is not in the same category as Maastricht in terms of its fundamental implications for the EMU. IBEC unreservedly supports the Amsterdam Treaty.

Mr. McCartin, MEP

I welcome Mr. Brennan and I wish to acknowledge the huge amount of work that he and IBEC do at European level. He is as good as another MEP; he is even more valuable because he carries out a lot of research and provides assistance to Irish MEPs.

Mr. Brennan commented on unemployment. This is a very important addition. We know it was introduced through political pressure by the French who had just fought a general election and had a lot of problems with unemployment. However, we should not over-estimate the contribution this legislation will make in helping to resolve our unemployment problem. Most of the instruments that affect job creation are in the hands of member states. High unemployment in Belgium or Spain or the drop in unemployment here has more to do with how the Single Market works, taxation levels in member states, the quality of education and training than with the money we received. We spend 150 million ECUs per year on job creation. I am sure Mr. Brennan will agree that we should go in that direction and recognise the need to resolve unemployment wherever it occurs. Direct aid will not solve the unemployment problem. The decrease in unemployment had more to do with the internal market working in our favour than with the money we received.

Mr. Fitzsimons, MEP

Peter has been a good friend to MEPs and to the Irish people involved in any type of commercial and social activity in Brussels. You have given us a wonderful service. I agree with most of your comments regarding European integration and the Treaty.

Unemployment is a huge problem in Europe. There are 18 million people unemployed. Ireland's unemployment figure is decreasing, and Joe McCartin has outlined the reasons for that. However, the major focus of the Amsterdam Treaty is unemployment in Europe. In addition, the environmental aspect — now called sustainable development — is given a great deal of attention. The drugs problem is dealt with in a positive way. Drugs are a huge problem not only in Europe but in every town of Ireland. They create severe difficulties for the national government and the problem deserves the attention it receives in the Treaty.

I have addressed a number of meetings on the Amsterdam Treaty throughout the country, as has Mr. McCartin, under the auspices of the Irish Council for the European Movement. The meetings were an education in themselves. Sometimes they only attract small crowds, but last Monday week I had the privilege of addressing the Meath federation of the IFA which consisted of approximately 100 women. I will face 100 women across a dance floor any night of the week but dealing with 100 women at a meeting is another matter.

At these meetings we discuss the Amsterdam Treaty and outline its provisions regarding employment, institutional reform, justice and home affairs and drugs and health issues. However neutrality is the issue that continues to crop up in the context of the common defence and security policy. Much has been made of this issue by certain people but I refute their comments. There have been many letters in the newspapers about neutrality but I will not deal with it in much detail today.

The extraordinary issue for public representatives who address such meetings — I am due to address many more — is that when we discuss the Treaty and ask for questions, the first questions are about Structural Funds and the reform of CAP. If anybody intends to address a meeting on the Amsterdam Treaty between now and polling day, 22 May, he or she should be well armed with a thorough knowledge about what is happening to Structural Funds, EMU and the CAP. None of these issues is relevant to the Treaty but they and the common defence and security policy are the only issues raised in the debates on it.

Dr. Garret FitzGerald and I are due to address some other meetings on the Treaty but we will discover that, no matter what we say about the Treaty, these issues will be raised. There have been many treaties on Europe since the Treaty of Rome and the Amsterdam Treaty is simply another measure to bring Europe through the millennium, to prepare it for the future and to deal with existing problems. Unfortunately, however, the debate is being mixed up with EMU, enlargement and the diminution of our Structural Funds, although it has nothing to do with these matters. However, that is the problem that will confront people who intend to speak on the Treaty before the referendum date and they should be well armed with information.

I wish Peter well. If I can survive 100 women asking me many and varied questions on this issue and emerge with a little applause, we all can survive.

Ms Malone, MEP

We know Peter well from our dealings in Europe. I regret that the unions are not as well organised as the IFA and business people in the European context. IBEC is almost as strong a lobby in Europe as the IFA.

What is Peter's opinion of the friction that has developed over the years between the implementation of European social policy in member states on the one hand and the complaint we regularly hear from certain business people that these policies are making us uncompetitive by imposing strictures on employment? The latter was exemplified in recent days in the reaction to the proposal for a minimum wage.

I am a member of the European Parliament's Social Affairs Committee which is dealing with information technology. Ireland has a huge deficit in this area. What is IBEC doing to tackle this deficit? I accept it is mainly the concern of the education establishments and Government, but business must also have an input. We do not wish to be sitting ducks for any passing multinational but if people are properly trained they will be able to take up those jobs. One of the reasons the economy is so successful at present is that we have a young, trained and English speaking workforce. However, there are gaps and I am anxious to hear Peter's comments.

IBEC recently produced documentation on Agenda 2000 and partnership between business and government to take up the slack that will be left by any diminution in Structural and Cohesion Funds which might occur in the next few years. Will you comment on that?

Deputy U. Burke

I welcome Mr. Brennan. Is there a threat to local incentives for industry, particularly in peripheral areas, vis-a-vis IDA policy and European policy? There are push and pull effects in the greater European scene as against the local scene. IDA Ireland often claims it as a great victory when a multinational is enticed to some part of the west because of the incentives available. How is that compatible with overall industrial policy in Europe? There is also the issue of the restriction endorsed by the EU on farming in marginal areas in the west while at the same time grant aid, assistance and supports are available for the maintenance of production on small farms in the west. Is the national policy in the areas of industry, employment and agriculture compatible with European policies?

Mr. Brennan

I thank the three MEPs for their kind words about the work of the Irish Business Bureau. We enjoy working with them and it shows the reward one can get when one is briefing and helping Ireland Inc. generally.

On the issue of employment, I agree with Joe McCartin that national instruments will solve the problem. For example, the German economy is not using the national instruments as vigorously as we can and have. Market dynamic creates jobs, not schemes and inventions. In the past three to four years, Ireland has generated 240,000 new jobs, the long-term unemployment register has fallen sharply and the number of unemployed has dropped by about 65,000. In Belgium, if 15,000 jobs were created in one year, it would be a record. Here 40,000 to 50,000 jobs are created for an economy three times smaller than that of Belgium's. What Ireland has done on employment in the past three to four years is remarkable. At the beginning of the last national development plan the employment problem in Ireland was cited as being the country's major problem, which it was. Unemployment was 16.7 per cent; it is now down to 9.7 per cent which is below the European average. A considerable amount has been done but more needs to be done.

The Amsterdam Treaty is very important in that respect. Treaty language will not create jobs. However, the Treaty will give the power to the Council, the Commission and to member states at national level to push forward a number of long-term measures to get Europe's 18 million unemployed down to more manageable numbers. I agree with Mr. McCartin that the issues are primarily national ones and the European Commission, the Essen Conclusions and the Conclusions of the Amsterdam Summit recognised that as the way forward. What can be called self-help must be imposed at member state level to reduce unemployment.

Over time the issue of drugs and cross-border crime will become very important. Cross-border crime is an important issue for business. Being able to have judgments of a court in one country enforceable in a court in another is one of the practical ways in which the Treaty can help the proper functioning of business across the European market. The Amsterdam Treaty does not specifically say anything about the mutual reinforcement of judgments but it is all part of the drift towards facilitating the examination in an expansive manner of the issues of Justice and Home Affairs. We are in a single market and common area so Justice and Home Affairs must be considered in the same way as the economic dimension of the European Union.

I agree with Mr. Fitzsimons about European Movement meetings. I spoke at two such meetings last week in Galway and Clonmel. It is inevitable that, because of the coincidence of timing and the Agenda 2000 proposals, there will be considerable interest in what will happen to Structural Funds after 1999 and to CAP after enlargement. These issues are connected with the current debate. When we articulated similar views on the Single European Act, these were contained in it what looked like an innocuous provision called economic and social cohesion. The Structural Funds are a creature of that concept. The Treaty may set down theoretical or conceptual ideas, but a great deal occurs over time as the European Commission and Council put flesh on these conceptual ideas. The development of Structural Funds and the policy of economic and social cohesion are products of a treaty. There are similar provisions in the Amsterdam Treaty relating to sustainable development which, when implemented over time, will have a very positive benefit for an economy such as Ireland's where sustainable development is the only way forward.

I agree with Jim Fitzsimons about what constitutes people's general interests and it is important they are briefed on the wider agenda beyond Amsterdam. I congratulate him on his production of a brochure for his constituents explaining in very simple terms the language of the Treaty. I have read it and it is perfect for the purpose for which it is intended.

I do not intend to enter into a debate on the issues of neutrality and defence. They are not business issues and I do not intend to cross the line in that regard, at least not in a public meeting.

As regards the points raised by Bernie Malone, the social provisions in the Amsterdam Treaty make very few changes compared to the situation which pertains at present. The issues she raises go beyond those relating to the Amsterdam Treaty in the sense that there will be, and has always been, some conflict between the social partners, especially at European level, as regards some of these provisions. This happened recently concerning provisions relating to information and consultation where European employers refused to negotiate on the basis of a document brought forward by Commissioner Flynn because we believed it to be unnecessary and there was no need to harmonise legislation in an area where good management practice could do the business.

We believe the Treaty provision on competitiveness should be, and will be, used to benchmark all proposals of the European Commission and not just those concerning social policy. If the Treaty required the task of competitiveness to be taken into account in the formulation of all EU policies, many of the proposals in the area of social policy would not pass that test. The second test which must be examined in the area of social policy is that relating to employment. The Treaty now requires that all legislation brought forward must be positive in terms of employment creation. These two tests will have to be used in relation to social policy in future. If measures pass both tests, support will certainly be found for them. Too many legislative proposals are coming from Brussels in the area of social policy but I understand that few will come forward in future because 90 per cent of the legislation required in the area of social policy has already been adopted and is in the Statute Book. I will not deal with issues such as the minimum wage because it has nothing to do with the Amsterdam Treaty and its provisions do not cover wages and pensions.

The information society is not an Amsterdam Treaty issue. However, a great deal has happened at national and European level as regards information technology and innovation. The business investment in science and technology is probably around the European average but that is a dramatic improvement on what happened before. That is largely due to Measure One in the Structural Funds. There was a significant over-subscription by the private sector in respect of scarce European Union co-financing relating to information technology, and that is likely to continue. I know from a recent Government report on science and technology that the issue is significantly higher on the priority list at national level, and that is understandable given the state of our economy. Investment in science and technology in the public and private sectors is fundamental to the success of the economy.

UNICE, for example, has benchmarked Ireland's investment in science and technology in one respect: we have the highest number of science graduates per thousand of population than any other country in the European Union. While we may not be doing as well in areas of private investment in business research, we are top of the European league in respect of the science graduates we produce and are well ahead of many OECD countries. Only Japan had a higher number of science graduates per thousand of the number of qualifying from universities. This answers the questions about the skills and needs shortages.

Agenda 2000 is a very complex policy document and another meeting at a later date should probably be held to discuss it. Such a hearing on Agenda 2000 would be interesting. We have summarised the main provisions of Agenda 2000 in our July newsletter.

On the question raised about partnership, the proposals envisage that it will be extended to such a degree that at member state level, the social partners and local and regional authorities will be required to give their imprimatur to governments' national development plans. If this proposal is agreed at national level and by the Council of Ministers, it will mean that the Irish national development plan, which will go to Brussels probably round this time next year, must have the imprimatur of the partners. It will be important that the social partners and the local and regional authorities have a major and direct say in implementing the provisions of the national development plan when it is turned into the Community Support Framework.

Indirectly, this stems from the Amsterdam Treaty which deals with transparency. It also mentions a Citizens' Europe and better legislation. All these concepts in the Treaty are now finding their way into other expressions. I outlined the proposal in relation to partnership. The idea of consulting a wide variety of social and voluntary groups flows from the recognition of citizenship in the Amsterdam Treaty.

In relation to local incentives, there is a shift in policy at European level. It is related to the policy articulated in the Single European Act about economic and social cohesion. This is a European wide policy which states that the rich should help the poor in a number of ways, for example, policy bias, Structural Funds and economic development broadly. At present Ireland is the eighth richest country in the European Union. By the year 2004, when enlargement takes place, Ireland will probably be the fifth richest country in the EU from a total of 21 members. Therefore, our view on economic and social cohesion will have changed from a country which was probably the third or fourth poorest to a country which will be about the fifth richest. As a consequence of our wealth over five or ten years the European Commission will argue that State grants must be tapered down to reflect the fact that Ireland as a region is not poor as it was four to five years ago.

Last December the European Commission adopted regional aid guidelines; these were published in the Official Journal of the European Communities and have been summarised in our December newsletter. They will, over time, have implications for local, community and industrial incentives. Like everything from Brussels, the emphasis is nothing too dramatic and long transition periods are on offer. Everything that has happened has been fully negotiated with the government and civil servants concerned. There is nothing too dramatic that has not been well signposted.

The Deputy will forgive me if I skip over the issue of small farms. I rarely stray into the area dealt with by the IFA. I am delighted to learn that IBEC is almost as strong as the IFA. I will redouble my efforts and work a little harder in future.

I hope I have answered the questions comprehensively. I am also happy to take any supplementary questions Members may wish to put.

Ms Gannon

We have copies of the newsletter produced last summer. It highlights IBEC's perspective on the Amsterdam Treaty and deals with many of the issues raised today. We will leave copies which can be distributed to the committee later.

Deputy Kirk

Due to other considerations, unfortunately, I did not hear Mr. Brennan's comprehensive dissertation on the implications of the Amsterdam Treaty. The current prosperity and the projections for the future will have implications for Ireland in terms of EU support. We must be realistic and accept that is the position. Ireland have benefited considerably from its membership of the EU and will continue to play its part as a member of the Community.

The debate on the Amsterdam Treaty is taking off. It is important that every available opportunity is taken to enlighten the public and raise the level of awareness of what is involved. The deliberations of the committee have been geared in that direction and that will continue to be the case.

Chairman

I thank Mr. Brennan and Ms Gannon for attending. I am aware they have busy schedules and the committee is due to meet a number of other delegations today. I congratulate IBEC on its work. In the context of Agenda 2000, which will arise at a later stage, it behoves us to recognise the huge effort on everybody's part to create the type of economy which exists at present. A major contribution has been made by the social partners.

There will be a tendency in Europe in the future to cut back on the incentives and assistance that are available. However, it is no harm to remind our colleagues in Europe that Ireland has come a long way in a short time. Dramatic growth rates reflect the huge effort involved in recent performances. However, Ireland did not have the luxury enjoyed by more sophisticated European economies over the past 50 years of constant and positive growth rates. This point needs to be made to our European colleagues. The committee has highlighted it on visits and will continue to do so. This aspect needs to be borne in mind. I thank the delegation for their attendance.

The witnesses withdrew.