With the agreement of the meeting, we will take the draft treaty articles and the Charter of Fundamental Rights first. Are you going to lead off, Minister?
EU Draft Treaty Articles: Presentation.
Thank you, Chairman.
Perhaps I should begin, as the member of the praesidium who is dealing with this issue.
We really need to get a handle on this. I have an agenda and a brief which I spent the weekend reading and I have no resources to assist me to do this. It is not good enough that a parliamentary committee meets and we do not know the agenda. Everybody has had this agenda for a week.
I call Deputy Bruton on items Nos. 4 and 6, the Charter of Fundamental Rights and the draft treaty articles.
As one of those responsible for drafting the first 16 articles of the constitution I am happy to give this report. The first 16 articles set out what the European Union intends to do, what will be done exclusively by the European Union itself, what will be done by member states with the support of European Union institutions and what will be done on a shared basis between them. It also sets out the values that will inform the work of the Union and its objectives.
These first 16 articles do not, however, set out how the Union will do its work. It does not, for example, say what issues will be decided by qualified majority vote or by unanimity. It does not attribute powers as between the Commission, the Council of Ministers and the Parliament. It does not specify the issues that will be dealt with intergovernmentally or the issues that will be dealt with federally. All these are matters that will be dealt with in subsequent articles to the constitution in parts 1 and 2.
The articles provide for the incorporation of the Charter of Fundamental Rights as an integral part of the European Union constitution. They do not specify how this will be done, whether by means of a protocol or by the full inclusion of all the articles of the charter in the constitution. There is little legal difference between these two approaches but it might be advantageous to incorporate the horizontal articles of the charter which clarify that the charter only applies to the implementation of European Union law and does not expand the competences of the Union. It would be useful to incorporate these in the treaty itself rather than as a protocol.
The incorporation of the charter will give the European Union a strong human rights emphasis but it would be wrong to think that all the rights in the charter are of the same importance. For example, the right to a free job placement service is not on the same level as the right to life. I would like to stress one of the fundamental principles contained in article 8, a principle of conferral. Under this principle only competences conferred on the Union may be exercised by it and all other matters remain the exclusive competence of member states. Unless a competence is conferred on the Union under articles 11, 12, 13, 14 or 15 it remains exclusively with member states.
Another aspect of the draft that we produced has come in for comment. This is the statement that the Union shall administer certain competences on a federal basis. I stress that this refers only to certain competences. It is important to stress that under the principle of conferral, sovereign power remains with the member states but this sovereignty is shared on a federal basis to achieve certain shared objectives. From almost the beginning certain competences within the Union have been administered on a federal basis, for example, trade policy. Monetary policy within the euro has been administered on a federal basis. Since we joined the euro, the Common Agricultural Policy is administered on a federal basis.
The word "federal" has been misinterpreted in England to mean the same thing as centralisation. It does not mean centralisation, it means that powers are exercised at different levels. It is odd that the British have such problems with the word "federal", in view of the fact that so many former British dominions, such as Canada and Australia and, indeed, Nigeria, enjoy such federal systems of Government and that Great Britain itself is moving in this direction.
I wish to make a final comment in regard to article 2. Some have questioned why a longer list of values is not included here. A much longer list will be contained in the charter. The values in article 2 have been kept to the absolute essentials, because article 2 is to be capable of being used as a basis for suspending countries from membership of the Union for breach of these values. I have copies of those remarks in case they are of any value for circulation.
They may be useful.
The Deputy has illustrated well the pace at which the issues are moving. As has been stated the draft articles were circulated only on Thursday afternoon last and they will be considered carefully. We have a group examining them at present with a view to submitting any necessary comments or amendments by the end of this week. It is a rather artificial timetable but, nonetheless, it is one with which we intend to comply. I understand the secretariat will, as soon as it receives the comments from the member states, collate all the proposed amendments. We shall then have a debate on the convention in a full plenary session on 27 and 28 February. Following that I expect the presidium will make some necessary adjustments.
It is important to point out that this is not the end of the process by any manner of means. The principle that nothing is agreed until everything is agreed applies in this as it does in other areas. At the end of the convention we will have to take a view of its draft report in the round and at that stage we will have the intergovernmental conference. Nonetheless, it is critically important that we are up to speed with the work of the convention as it goes on. I hope the joint committee will understand that while I am not in a position to make detailed and final comments today, I wish to make a number of general points relating to the first 16 articles.
While it is important that the convention keeps to its timetable it is vital that its members have the time needed to give full consideration to all drafts. I would make the point, and I know Deputy Bruton is conscious of this, that, particularly in the national representatives group on the convention, there is considerable disquiet at the manner in which the convention is moving forward. There is a feeling that it is like a black box - drafts go in at one side and come out at the other. It is hoped, as we move forward, that there will be some way of overcoming that perception. I welcome the comparative clarity and the brevity of the text, even if detailed aspects of the wording require some further attention. Some of the initial press reaction, particularly in another state, which was close to hysterical does little justice to what is actually provided in the opening text. For the most part the draft articles are based on previous debates in the convention, the working group reports and on President Giscard d'Estaing's October draft or, alternatively, on existing treaty wordings. In his presentation to the plenary session on Friday last, Giscard d'Estaing made specific references to previous treaties to show that what was coming forward was not revolutionary or new. We need to bear in mind that they are intended to set out general principles. A great deal more detail on the exact responsibilities of the Union will be set out in part 2 of the draft constitutional treaty. That will define the individual policy areas with greater clarity. At this stage it is important that any comments we put forward bear that in mind.
It is clear there will need to be some correction and some clarification of the text. Some of the articles which will need more consideration include, for example, article 1. I agree absolutely with the view that the reaction to the use of the word "federal" - with the lower case - has been bordering on the hysterical. The description in the first article describes the process and does not define the nature of the Union. It is interesting to note that in the presentation on Friday President Giscard d'Estaing made the point, time and again, that he was describing a Union of nations. At no stage did he use the word "federal". There has been an over reaction to this. The other point about it is that the use of the word "federal" - again with lower case - was prefigured in the October skeleton. It might be that a stronger reference to the role and status of the member states in article 1 would dissuade the fears that have come forward in this regard.
As I will explain when we discuss the charter - and I will take the views of the Chairman on it after the initial comment - I would like to make some additional comments on the charter and, perhaps, I will ask Mr. McDonnell to speak on it also. In article 5 the Government is still reflecting on its approach to legal binding incorporation of the charter. Our approach in the matter has been vindicated in that at least one other member state which thought there would be an easy prescriptive way of dealing with the charter is now in some disarray on the matter. We are still reflecting on the approach. There will be a need for some careful technical wording on this issue in the final text. Nobody is opposed to the charter per se but the Minister for Justice, Equality and Law Reform made it clear that our anxiety will be to avoid confusion arising between this and other texts and, most importantly, to protect those rights which Irish citizens enjoy and which might be regarded as superior or more advanced than some of the rights put forward in the charter.
On article 7, the provisions on citizenship are in the current treaty but again there may be a need for clarification because I noted some over-the-top statements about this. On article 9, the principle that EU law takes precedence over the laws of member states is well established in ECJ jurisprudence. For clarity, however, it may be that it could be spelled out that by definition this applies only to those areas in which the Union has already been given competence. Deputy Bruton made the point that if one reads the word "conferral" in the sense that it is meant in one of the preceding articles, it is clear that is the sense in which the treaty is dealing with this issue.
Article 8 makes it clear that the competences which are not specifically or explicitly conferred upon the Union remain with the member states. There is a clear need for these two references to be brought into line with each other and for more clarity on the issue, but it is predominantly a drafting matter.
We need to examine carefully articles 10 to 15 to ensure they accurately reflect the actual position. Summary drafting of the text is clearly necessary. It should also be remembered that the details of the various headings will be set out in part 2 of the treaty when that comes to hand.
An issue raised last week at the convention was the co-ordination of economic policy. In the existing treaty member states are obliged to co-ordinate their economic policies within the Union. It could perhaps be spelled out that while this obligation exists, member states retain responsibility for their own policies.
There are areas where more clarity needs to be reflected in the texts and undoubtedly that will happen. I am pleased that the reaction in Ireland has been generally more measured than it has been elsewhere. The near hysteria generated in some papers that circulate in this jurisdiction about the use of the word "federal" was an extreme over-reaction. Broadly speaking, the clarity in these articles is to be welcomed and we will be able to make progress on them. I will conclude on the articles and we can come back to the charter when it is convenient for the committee.
We are dealing with the 16 draft articles and the Charter of Fundamental Rights in this session of the meeting.
I want to put a specific question to the Minister of State. In article 5, which refers to the Charter of Fundamental Rights, it is open as to whether it will be added by way of a protocol or by way of an integral part of the constitution, which would be my personal preference. The Minister of State said on a number of occasions, as did the Minister for Justice, Equality and Law Reform, that while he has no great problem with this aspect in principle, his concern would be that in incorporating a Charter of Fundamental Rights into a constitution which would, in effect, now become our constitution, in some way or other existing rights enjoyed by Irish citizens as set out in the jurisprudence of the Constitution would be either reduced, eliminated or in some way damaged. Is anybody doing any work on that aspect? If we were to adopt the Charter of Fundamental Rights into an EU treaty, will we be given a citation on whether there would be a loss of existing constitutional rights enjoyed by Irish citizens in a specific set of areas?
Perhaps I will deal with the articles as no one else is offering at this stage. I want to make two general points which need to be discussed. First, some journalists are giving the impression that the chairman of the convention is to some extent, if it is not too strong a word to use, bullying the convention or not taking a consensus. We hear statements to the effect that the right people were not present and if that opinion is allowed to go abroad it will not help when it comes to ratifying the treaty here. Second, I heard the Minister of State say on "Morning Ireland", in an interview from one of the permanent representations with whom he was conducting discussions, that there appeared to be a growing opinion that the convention would not set the agenda but that it would go more to the intergovernmental conference. In other words, the intergovernmental conference would still fashion the final outcome and the convention would not pre-empt the Intergovernmental Conference. Is that a broadly held view?
On the specific contents of the articles, I note there is reference to the progressive framing of a common defence policy. There is a detailed article in The Irish Times this morning about the conduct of foreign policy here generally. There is some validity in the article in terms of the way foreign policy is conducted but have we or has anybody else raised the issue of common defence? Are we keeping our heads down and reacting or have we put forward a view on that area? I would be interested to hear the position on that.
On the Charter of Fundamental Rights, what would be the effect of the incorporation of this charter on existing protocols? Will it have any implications for existing protocols?
Deputy Quinn made a case for incorporating the charter as a section of the treaty while others make the case for incorporating it as a protocol, but if the charter were to be amended at some stage in the future, what would happen in terms of the Treaty of European Union?
To take the points raised by you, Chairman, and I will come back to the issue of the charter, the point I have been making on the issue is that it is a legal pact. The ultimate decision on what happens will be made at the Intergovernmental Conference. There is no question but that is the case. It is clear that a number of items will have to be finally decided at the Intergovernmental Conference. It is clear also that the convention will have a major impact on the Intergovernmental Conference. The convention will be an important item. There will be much more consensus in the convention than most people believe will be the case but, ultimately, it is a matter of law that the Intergovernmental Conference will make the final decisions.
The interview to which the Chairman referred took place from Finland where I was attending a meeting of the permanent representatives. There is a large group of small and medium size states within the convention and in terms of the total of 25 states that are in or will be in on 1 May, it represents a clear majority. There are concerns among that group on institutional issues going forward. We do not have the articles on the institutional issues but we are trying to set out principles which will help to formulate those issues.
Dealing with the charter itself and to answer the questions of the Chairman and Deputy Quinn, there is no objection to the charter per se, certainly none about which we are concerned or on which we take a defensive attitude. However, we are anxious that the manner in which it is introduced into what will be a significant constitutional treaty will not produce any clash between our Constitution and the new constitutional treaty. It would be inaccurate to suggest that the constitutional treaty will displace or replace the Irish Constitution. Bunreacht na hÉireann will remain operative and will be the primary and fundamental law of this State. However, because of the way we incorporate European treaties, the European treaty will have constitutional importance and significance also. Ultimately, in regard to those issues which will become part of this treaty, the European Court of Justice will have jurisprudence and our Supreme Court and High Court will also be able to review issues that may arise. We want to make certain that anything that is introduced recognises the rights we enjoy as citizens.
There was much discussion on this area in the charter working group because there is a consciousness that we are coming into different legal settings. As Deputy Quinn said, many people would favour the full incorporation of the charter into the treaty. Another alternative is that it would be annexed in some way and a third alternative, which had the support of only one state - not Ireland I hasten to add - was that an indirect reference would be made to the charter.
The vast majority would generally support the approach of incorporation. Incorporation of the charter raises the question of the scope of its application. That is the area where concerns would exist, not just here but elsewhere. There was much work done in the previous convention which produced the charter on the so-called horizontal clauses dealing with its applicability and trying to protect the nuances and differences that exist between member states. If the committee wishes, Mr. McDonagh, who worked closely on the horizontal clauses, might elaborate on those because it does involve a bit of jargon and it would be no harm if it were explained to us. In the working group, because Ireland and the United Kingdom have a similar legal background, we were anxious about that. We wanted to make progress but we did not want to produce a clash that could cause a problem when issues related to this become the matter of legal test. Basically, we are trying to render this as clear as is possible. Going forward, I am probably anticipating a question——
Can the Minister of State give specific examples of where this will be diminished if we incorporate the charter?
It would be a mistake to enter into that type of discussion. In going forward as we are there is no way of anticipating what judgments will be made into the future. Therefore, we must be careful that we do not produce that type of situation. We are examining it carefully because incorporation of the charter would have constitutional implications and we are anxious that we fully understand that. We would be doing our job less than well if we did not because of the significance of that and of the charter.
Can the Minister of State tell us what those implications are?
If there was a clash between a right that exists in the Irish Constitution and a right that is——
Can the Minister of State give a particular example?
I am not referring to a particular example. If there was a clash, we would have a difficulty and we need to understand how that can be resolved.
Members might wish to take a break from this and deal with some points on the horizontal clauses and how they were framed.
We will take Deputy John Bruton's response and then hear Mr. McDonagh. I call Deputy Bruton.
I will comment on the concern expressed by the Minister of State about, to use his colourful phrase, "papers going into a black box and coming out again", the presidium being the black box. There is a concern that as we get down to the hard work of drafting articles the representatives of the various constituencies on the presidium will have to report back much more fully to their constituencies. In other words, Henning Christophersen, Giorgos Katiforis and Ana Palacio, the three representatives of the Ministers and of the Governments on the presidium, will need to be in much closer ongoing contact with the Minister of State and with all the other Ministers to ensure that at least we know the concerns of each of the governments represented on the presidium. Where a national of a country who is not representing a government is on the presidium, that problem will not be quite as acute because there will be some means of communication. However, this is a problem that will have to be addressed. It will also be addressed at the level of the national parliaments' representative where I, along with Gisela Stuart, represent an extremely diverse constituency of MPs from all over Europe. It will be difficult to ensure that all of their perspectives are adequately represented in the presidium discussions.
In anticipation of Bobby McDonagh, the expert who sat on the committee, doing so, I will try to answer the question raised by Deputy Quinn on the charter. The charter will apply. It will be the equivalent of a constitution for the implementation of EU law whereas the domestic Constitution will be the constitution for the implementation of national law, which is not EU law. Problems will arise in regard to the boundaries between EU and national law. If there is legislation which, in part, implements an EU directive, but other parts are added in by the home government for whatever purpose, one set of constitutional law will apply to one part of that Act and a different set of constitutional law will apply to other parts of it. I believe this is the problem. I will not give members a categorical statement on that, but I believe it is in that area problems will arise. It is impossible to answer this question in anticipation of the lawyers getting to work on it because there is no limit to their ingenuity when it comes to trying to make a case. In making that comment, I am not referring to any members of the committee.
On the question raised by the Chairman in regard to bullying, I do not believe there is any bullying or any possibility of it by anybody at the convention. The chairman, President Giscard d'Estaing, is doing a good job. He is an individual with all the individuality and eccentricities that we all have only he displays them under a rather brighter spotlight than the rest of us do. He is a good chairman. I had a row with him last Friday, but that does not make any difference. I still believe he is a good chairman.
The Minister of State was fair in what he said about the Intergovernmental Conference relative to the convention. We hope, in the convention, that we will produce the full deal - that we will do everything. We would not want to waste the time of people such as the Minister of State at a convention that was not going to do the full deal. I hope the Minister of State's senior Minister will allow him to do the full deal in the convention.
The Chairman asked about the other protocols. It is not clear yet what will happen to those. It is likely that as a group they will be carried forward into the new treaties. I cannot envisage that any country with a protocol would be willing to give it up. Given that every country has to agree to the final treaty, I believe members can take it that all the protocols, including the protocol on the Aland Islands, the protocol on Madeira and the Irish protocols, will be carried forward as a group into the new treaty. As of now there is no formal decision on that. Once the charter articles are incorporated in the treaty, either as a protocol or as articles of the treaty, they cannot be altered without another Intergovernmental Conference.
The Charter of Fundamental Rights shall be an integral part of the constitution and the Union may accede to the European Convention for the Protection of Human Rights and Fundamental Freedoms. There are two fundamental rights issues addressed. If the contents of those fundamental rights conflict with the protocol, who will adjudicate on which takes precedence?
As far as the charter is concerned, the protocol will cover this country because it covers all EU actions. That is my interpretation, although Bobby McDonagh may have another one. In so far as the European Convention on Human Rights is concerned, that is a different issue. The European convention is something to which we have independently acceded. As far as the Union acceding to it is concerned, the Union is only acceding to the Convention on Human Rights and that is relevant only in so far as EU law is concerned. In the area of national law, and the subject matter of our charter is a matter of national law, EU law does not and will not apply. As a signatory of the European convention, we could conceivably be subject to that, but it is not an EU matter, it is a Council of Europe matter.
To return to a point Deputy Quinn made, which was fundamental, it is impossible to say where there could be clashes because as soon as one gives a list, it will be the point not on that list in respect of which an issue arises. The charter is to be addressed to the institutions of the Union and to the member states only in so far as they are implementing Union law. It is making that clear in a constitutional sense that is causing us to take some time on the matter. We have a strong tradition of judicial review here which is far in advance of the position that exists in other EU states. The definitive statement on this issue has been made by the Minister for Justice, Equality and Law Reform. The bottom line is we are trying to be pragmatic and reasonable and are anxious to achieve consensus, but we want to be certain that in so doing we do not violate anything that has occurred in our strong, relatively rigid constitutional process, which has arisen out of our strong tradition of judicial review. It is not that we are fearful, it is that we are anxious to make sure going forward that anything that is done stands the test and does not land us in some sort of legal quagmire in the future. That is a reasonable approach.
I do not wish to reflect adversely on any other member state, but it is not possible, as some people might suggest, to import a clause, to the effect that this requirement does not apply in the domestic courts, to our situation because of our relatively unique constitutional status. I defend absolutely the approach taken by the Minister for Justice, Equality and Law Reform. He is being responsible, not a eurosceptic and it is unfair to give him that label. The people who have chosen to attach that label in the recent past would be quick to blame in the future if we had not gone through the exhaustive process we are going through now. It is a little frustrating that we cannot answer directly and say it is A, B or C but, as Deputy Bruton has illustrated, it is not that we are anticipating a difficulty in A, B or C but we want to construct a framework in which it does not occur in so far as that is possible.
The Chairman mentioned accession to the ECHR. The ultimate decision in that regard will be a political one. I attended a Council of Europe ministerial session which discussed this. It is not yet clear how the process of the EU signing up to the ECHR, only in so far as the EU has these competences, would occur. Again, there will be careful drafting there.
Deputies Bruton, Gormley, Carey and I have referred to horizontal clauses and there has been some ribald commentary as to what the phrase means. It might be a good idea if Mr. McDonagh, who worked on that section, explained it.
The convention briefing note says that if the charter becomes a binding text, jurisdiction in actions relating thereto will lie principally with the courts of member states, although in certain cases the European Court of Justice will also be competent. Perhaps Mr. McDonagh will indicate where the European Court of Justice will be competent.
Mr. McDonagh
Your intention seems to be to deal in a little more detail with this question in the context of the first 16 articles. I had the honour of being the Government's representative on the working group and I am delighted to say a few words about it. The charter was promulgated at the Nice European Council by all member states, including Ireland. The Laeken European Council decided, in setting up the convention, that consideration should be given to whether the charter should be included in the new treaty. That is what the convention has been doing.
From the outset of discussion at the convention, including at the working group and the plenary, it has been clear that there is strong support for incorporation. A number of ways of incorporating it have been considered and two of these are set out in the articles which were distributed on Friday. Both options under consideration on the basis of those draft articles would be legally binding. It is, therefore, crucial that the exact meaning and scope of the charter is clear. That is where the horizontal clauses come into play.
There are 54 articles in the charter. The first 50 relate to rights and principles across a range of areas, but Articles 51 to 54 effectively delimit the scope and application of the charter. In the working group, Ireland and the UK worked hard together to bring greater clarity to these clauses and to make them as legally watertight as possible, while not changing the purpose and original aim of the charter. In other words, we wanted to make clear, legally and to the public, what the charter means. As a result, the working group recommended some important drafting adjustments. In endorsing those amendments the group stated that incorporation would not modify the allocation of competences between the Union and the member states and that the horizontal clauses, as amended, are designed to "render this clear beyond any doubt".
I will give an example of the type of provisions that are in the horizontal clauses, as amended by the convention. They state that incorporation of the charter will not modify the allocation of competences between the Union and the member states and that the limits of the powers of the Union under the treaty must be respected. That was accepted as the essential aim of the charter when it was drafted. It is accepted as a principle by everybody at the convention but it has now been set out in watertight and clear language.
The horizontal provisions also state that full account shall be taken of national laws and practices, as and where provided for in the charter. They also make clear that in cases where rights which correspond to rights that are already in the European Convention on Human Rights, the meaning and scope of the rights will be the same as that laid down in that convention. That partly answers the Chairman's earlier question about how to avoid conflicts of jurisdiction between the two courts.
There are other horizontal provisions. The committee has the report of the working group where they are set out in more detail. Essentially, the horizontal provisions specify the purpose, aim and limits of the charter. The Government is examining carefully the implications of incorporation in light of the significant progress made at the working group. The group also looked at the important explanations which were drawn up by the previous convention which agreed the charter - these are normally referred to as the "commentary of the praesidium" - so there would be further clarity. If the explanations that were agreed at the previous convention on the charter are given some status and brought up to date, it will provide further legal clarity.
In reaching a view on what the ultimate status of the charter should be, it is important to be clear about what the charter is intended to be. It is addressed to the institutions of the Union and to the member states only where they are implementing European Union law. That is clear from the text of the charter. It is not intended as a vehicle to extend Union competence into areas where it currently does not have the authority to act.
The purpose of the charter is, effectively, to increase people's rights by ensuring the institutions of the European Union, to whom it is primarily addressed, will be obliged to respect those rights. It is not intended to diminish anyone's rights and nobody has suggested in the lengthy discussions in the working group that there is any question of diminishing rights. There is a provision in the horizontal clauses which specifically provides that if there are higher rights protected by national constitutions, they are not affected by the charter.
The Government is now giving full and careful consideration to all the possible legal consequences. However, its approach is clear. The Government supported the promulgation of the charter in Nice in 2000. The Union is founded on the principles of liberty, democracy and respect for human rights and fundamental freedoms and it is entirely appropriate that these values and their implications be set out in a clear, comprehensive and comprehensible way. However, we have made clear that, like the UK, we would not support incorporation in a manner which would increase EU competence over national legislation or over socioeconomic decisions which our Governments make. Where Irish citizens currently enjoy a higher standard of protection under the Constitution it will continue toapply.
In reaching a final decision the Government has made clear that it will be pragmatic, reasonable and anxious to achieve consensus and will carefully bear in mind the expectations citizens now rightly have that institutions, whether they be their Government or the European Union, should be held to account for how they protect and vindicate fundamental rights.
I pay tribute to the work the convention members are doing on our behalf. I pay tribute in particular to the Minister of State, Deputy Roche, for the work he is doing in forging alliances with the smaller states and the applicant countries. Obviously that will be to our advantage.
I am always conscious that there will be a referendum at the end of all this. We have been dealing with a great deal of detail this morning. Now that the 16 draft articles are published we should reflect on what this process is about. The work of the convention has been presented in this country in terms of whether we want a European federal superstate or a partnership of equal member nation states. Like it or not, they are the terms in which the convention process and the articles which were published are being presented. Is it fair to see the process in terms of a great conflict between the two views? If that is the case, who is winning the battle now that the process is well advanced? Do other countries see it in those terms? Is that description too simplistic and have we moved beyond those terms?
Mr. McDonagh, Deputy Bruton and the Minister of State have clarified a number of issues in relation to the protocols and particularly the horizontal clauses. It is sometimes forgotten that the Charter of Fundamental Rights went through the same detailed process. In fact, many of those who were on the conventionon the charter are now members of this convention.
I was privileged to represent this Parliament for many of the discussions that took place. Perhaps the clarification needs to be reinforced again. I and many of the other Irish delegates left the convention on the basis that it was not creating any new laws, it was not in any way interfering with the concept of subsidiarity and that it was exclusively about the institutions of the EU. Is it correct, Mr. McDonagh, that the Government position is that there was a concern that elements of the charter, if it was to go outside the normal competences, would require a separate referendum here? Now that the proposal is to incorporate the charter into the EU treaty will there be just one overall referendum? There was a question that if the charter as a standalone document was to be incorporated it would have required constitutional change which would have led to a referendum. Essentially that is what I was concerned about because there are areas of the charter which relate to the social chapter and Ireland, Britain and other countries are concerned that it might mean a further charge on the Exchequer. I want to focus on these specific issues that it will not require a separate referendum, that it will be part of the new constitution of Europe and that it does not create any new competences which has never been the case and that this has been clarified and reinforced.
I have somewhat similar concerns. One thing that worries me is that unless the incorporation into the treaty of the charter is somehow synchronised with national constitutions it will lead to friction. We talked about this in the previous convention also. The big issue was whether the findings would be enforceable or recognisable by the law of the member states. Then the question of a protocol or derogation arose. If we have a treaty that is littered with that kind of qualification it will not be workable. At the present time in the evolution of the European concept the introduction of something as porous as that will lead to problems.
The right of the citizen to appeal to the courts and the European courts is another issue. How will the European courts decide on matters? Will they decide in favour and say that something is applicable because this is the law in the member country? Will they say that, notwithstanding the law in the member country and having regard to the treaties entered into, they will now superimpose Community law? The closer together we can bring the charter, the convention and the incorporation of what is palatable within each member state the easier it will be. My fear is that individual member states will begin to express their opinions to an even greater extent than in the past.
Deputy Haughey said that after the convention and the Intergovernmental Conference this would come before the people for a decision. We are protective of our Constitution. It was stated that if higher rights are protected by the national constitution the charter will not interfere with those rights. May I have an example of that? Is there any situation where the opposite applies?
Before coming to that, I did not hear the response to the question I asked about which issues would be adjudicated on by the European Court. Was that addressed?
These questions come to the heart of the issue. In regard to Deputy Haughey's point I do not think that press coverage in this country was anything other than responsible. From what I read and heard in other newspapers and on other radio stations I do not understand how people could so dramatically misrepresent what was happening in the charter. Our coverage was appropriate and modified. The media here is playing a more responsible role than that of one of our near neighbours where hysteria is not too harsh a word to reflect the way with which the issue is dealt. There are concerns and people have the right to be concerned. That is what the convention process is about.
Deputy Durkan put his finger on the issue when he mentioned synchronisation. That is one of our anxieties. I wish to reflect that in my responses to the Chairman and to Deputy Quinn. There is nothing in the charter that causes grave difficulty for anybody but we want to make certain that there is no question but that the rights that are well defended in our Constitution remain well defended. The challenge is to synchronise and get it right. We must also bear in mind that there are significant constitutional divergences between the member states. Some member states have a more relaxed view than we have of some serious issues. Our Constitution, in terms of international comparison, is relatively inflexible. It recognises only one sovereign authority in matters relating to the Constitution - the people - and that is one of its great strengths. Nothing that is being done will question that.
Deputy Harkin asked if we could identify a particular area where a challenge or clash might occur. We do not anticipate that happening. We are not conscious of an area that would give concern. We are anxious to make certain that the process makes it absolutely clear that in the area relating to the charter, "the charter is addressed to the institutions of the Union or to the member states only where they are implementing Union law." This will not cause the kind of dissonance touched on by Deputy Durkan where we have to decide which is which. Deputy Bruton made the point clearly that there are borderline areas. We need to be careful that those areas do not cause difficulties for us. We have been cautious in this regard. One of the horizontal positions mentioned by Mr. McDonagh makes specific reference to this jurisdictional issue.
There was a further point in regard to horizontal issues. Deputy Bruton may wish to come in on that and perhaps Mr. McDonagh would like to give some additional elaboration.
If one looks at the last page of the brief it answers the question to do with this. Article 51(2) makes it quite clear that the charter does not extend the application of EU law beyond the powers of the Union nor establish any new power or task for the Union nor modify any of the existing tasks. That answers Senator Mooney's query. Thanks to Mr. McDonagh's work that has been strengthened from what it was.
In reply to Deputy Durkan, wording has been added to article 52 which states that in so far as this charter recognises fundamental rights as the result from constitutional traditions common to member states these rights shall be interpreted in harmony with those traditions. It is not possible to say that we can adopt all the rights of all 25 member states and interpret them all in exactly the same way as they will be interpreted in each state. They will be interpreted slightly differently in each member state. An attempt will be made to do it consistently in as far as it is possible. The important distinction to be made is that the charter only applies to EU law, either laws directly made by the EU itself or laws as implemented on the EU's behalf by a member government. It goes no further than that. Then there is a leap to another area which is national law where national constitutions apply. That is a decision to keep in mind at all times. There may be slight differences and people may have slightly different rights under EU law to those they enjoy under national law but these apply in separate legal domains, in principle at least. I do not know whether the practice will work out quite as neatly as that, but that is the concept.
To answer Deputy Haughey's question, it is similar to a point that was being made by Deputy Andrews at the last meeting of the committee. The truth of the matter is that the European Union has always been, in some respects, a federal state and in some respects also, at the same time, it has been a partnership of equal member states. It has never been just one, nor will it ever be just the other. There will always be a bit of both in it and that is reflected in the fact that in some areas of the Union's institutions each state is treated equally, while in other areas some states have more votes than others. In some legal areas, EU law is superior to national constitutions, while in other legal areas national law is superior to EU law. I think it will continue forever to be something like that. There will be movements at the margins with some areas moving more into Community competence, while others may move towards the national competence, but there will never be a definitive answer to this question.
Mr. McDonagh
Most of the points have been covered. The answer to your own question, Chairman, about what is done by national courts and the European Court, is a complex one upon which lawyers could expound at great length. Essentially, however, the Court of Justice ultimately interprets the EU treaties and legislation, while the Irish courts interpret our legislation and the Supreme Court interprets the Constitution.
In reply to Senator Mooney's point, the charter is addressed only to the institutions of the Union, and to the member states when they are implementing EU law. That is crystal clear and is accepted by everybody. Senator Mooney also mentioned the question of social rights. In the charter as drafted there are clearly things that are rights in a traditional sense but there are also things that are broader principles of social or economic policy. The strengthened horizontal provisions - I am sorry to use jargon - make clear that the provisions of the charter that contain principles, as distinct from rights, may be implemented by legislative and executive acts taken by institutions and bodies of the Union, and by acts of member states when they are implementing Union law. In other words, they are not principles or rights in that somebody can suddenly go to the Court of Justice in Luxembourg and say, "I want that right." They are principles to be reflected by the Union when it adopts the legislation it is entitled to adopt under the treaties.
It is an important point, particularly in the social area. Just to reiterate, a citizen cannot refer to the charter or the new constitution and place a legal obligation on the government of a member state to implement those proposals.
Mr. McDonagh
It is a complex area, obviously. These horizontal provisions are intended to provide maximum guidance to the Court of Justice as to how the charter is to be interpreted, but they have not been finally agreed at the convention. Essentially, they are addressed to the institutions of the EU and to the member states implementing European law. The member states have to implement Union law correctly, of course, which is currently the case. If they do not do so, they can be challenged.
As regards the issue of the Court of Justice, a new informal working group is being set up at the convention to look at these questions. The nature of the charter, however, is that it is addressed to the institutions of the Union.
If, in implementing an EU directive, a member state failed to give people rights to which they are entitled under the charter in that area, then a person would have recourse to the courts and would be entitled to cite the charter in regard to the implementation of EU law. The charter does not give people any independent rights. For instance, there is a provision in the charter which says that one has a right to a free placement service for jobs. If the EU actually moved into this area, which it has not done, and started laying down directives in regard to placement services, only then would that article of the charter be activated. That is my understanding of it.
I am a little concerned that in the process of clarification we might be making the waters muddier. A fundamental point has been made, which is worth repeating, that the charter is addressed to the institutions. It is only addressed to the member states when they are implementing Union law. That is the fundamental point and if we keep that in mind we will not go far wrong.
There are exceptions.
No, Chairman. That is it. There are no exceptions. I find that sometimes, when we start to elaborate, we can make it more complicated. The Government fully supported the promulgation of the charter after the declaration at Nice in 2000. We also have to bear in mind that this is not new territory. From day one, the Union has been based on the principles of liberty, democracy and respect for human rights and fundamental freedoms. In the absence of a clear-cut statement on that, the European Court of Justice has used what are called directive principles of law that they have applied. It is entirely appropriate at this stage that the values should be stated clearly and comprehensively. We would not wish to see the incorporation of the charter undertaken in a manner which would increase EU competence over national legislation, particularly over socio-economic decisions which have to be made. Where Irish citizens currently enjoy higher standards of protection under our Constitution, that should continue to be the case. There is a great deal of clarity about what we want to achieve. In taking a cautious approach to this issue, we want to make absolutely certain that when it comes to signing on the line, we are clear about what the implications will be.
I do not wish to muddy the waters and perhaps I should have prefaced my remarks by saying how appreciative all of us are, both inside the Oireachtas and outside, of the outstanding work that has been done by all representatives at the convention. Perhaps that should be said more often. It is an extremely complex area which none of us fully understands. I compliment Mr. McDonagh for picking his way through it so well.
Perhaps I am getting the wrong end of the stick but I am seeking a point of clarification. Currently, where EU directives are agreed by this country, if they are not implemented I presume there is no redress for citizens. Will that change when social rights are incorporated into the charter? If there is consensus on a directive which affects EU law, in which we have participated but which we have not implemented, and if it has an adverse bearing on citizens' rights, can they then seek legal redress? That is my specific point. Does anything change, notwithstanding the clarification in relation to it not affecting national law, but only as it affects the institutions?
Does Senator Dardis have a question on this? We need to get on to the economic governance section.
I would like to go on from there, but could we just have the answer to that question first and then I will ask a question, if I may, Chairman?
Under EU law at present, directives and regulations have an effect. Regulations have a direct effect, while directives have to be introduced. There are rights, of course, where a directive gives a citizen a right. If a member state were to be recalcitrant or failed to comply with its legal responsibilities in that regard, there is already a right in European law to challenge that and it has been used successfully. The matter is a complex one, however.
I am sorry for throwing this up.
Would it be helpful to you, Chairman, and to the committee if, in addition to the note I have circulated - and which I hope will be helpful - we also prepared a brief explanation of what we mean by "horizontal clauses"?
I think it would be helpful.
I will arrange for that to be done.
I am anxious to let Mr. McDonagh finish and Senator Dardis has a question. Deputy Bruton wants to comment also.
If I may say so, the Senator's question is answered comprehensively in the last page of the brief which the committee has circulated. The second last paragraph on the last page is what Mr. McDonagh has succeeded in having added to article 52.2 of the charter. It states that the provisions of this charter, which contains principles, may be implemented by legislative and executive actions taken by institutions and bodies of the Union, and by acts of member states when they are implementing.
The provisions of this charter which contain principles may be implemented by legislative and executive actions taken by institutions and bodies of the Union and by Acts of member states when they are implementing Union law in the exercise of their respective powers. They shall be judicially cognisable only in the interpretation of such Acts and in the rulings on their legality. It is only if the State implements the directive implementing a new law that at that stage, once it does it, the charter comes into play as a means of interpreting whether it has done it properly or not. As the Minister of State has explained, if a country fails to implement a directive that it should have implemented, there are separate and alternative means of bringing it to book for that.
I call Senator Dardis and I am going to finish on this section.
That logically leads to my question which will extend the debate beyond this. With regard to the addition to article 52, do national constitutions have a primacy with regard to the charter?
No.
Referring to the point made by Deputy Roche, the difficulty I can see is that there is a multiplicity of constitutions and different attitudes to those constitutions and different ways of amending them, so how will it be possible to frame a common position that can be accommodated by all the various constitutions?
If Mr. McDonagh is allowed to respond and finish his contribution it might become clearer.
Mr. McDonagh
As the Minister of State and Deputy Bruton said, it is really a question of what the charter is and is not. We have tried in our various ways to explain what it is and what it is not. We can try to set it out in a further note if that would be helpful. The horizontal provisions delimit very clearly what it is and what it is not. Not only is there this new horizontal provision that Deputy Bruton referred to which relates to principles set out in the convention, but the phrase: "They shall be judicially cognisable only in the interpretation of such Acts," is actually taken from the Irish Constitution. They shall be judicially cognisable only in certain circumstances.
We have probably answered the questions in our various ways but in addition I emphasise that no new competences are being created for the Union by means of the charter. There is nothing which the Union would be able to do legislatively on the basis of the charter that it is not able to do on the basis of the present treaties or the treaties, as amended elsewhere, of the convention. That is also stipulated in the charter. The Union can legislate if the member states agree to the proposals brought forward by the Commission. The new element will be that in bringing forward its legislative proposals it must respect certain rights. It does not have a new basis for tabling proposals in areas that are not areas of Community competence.
That goes to the heart of Deputy Harkin's point. I do not wish to muddy it by clarifying further but the note I have circulated clarifies exactly where we stand but we will also send the committee a note on the horizontal provisions. It is very important that members understand exactly the impact that we have had on the discussion. The charter working group literally went back to the Irish Constitution to find words and text to give effect to the concerns we are reflecting.
To answer Senator Dardis, it is of course the case that in its field of competence, Union law is superior to Irish law, including to the Irish Constitution. That was the basis upon which we decided to join the European Union and that was why we had a referendum in 1972. In its own area, if one likes, it is superior and what will be different by incorporating the charter is that there will now be a similar constitutional umbrella hanging over EU law to the fundamental constitutional rights umbrella that hangs over domestic law under our own Constitution. So in a sense we are importing into EU law some of the types of protections, though not in exactly the same words, that we have enjoyed up to now in regard to national law.
This is obviously an area of great interest and will be examined closely. Often when words are put into the Constitution they do not turn out to mean what we thought they would mean. This has been a very useful and helpful exchange and we look forward to receiving the Minister of State's note.
I wish to deal now with the topic of economic governance and social Europe. I invite the Minister of State to speak.
I have circulated notes on both the working group on economic governance and on the working group on social Europe because as Deputy Bruton said, the two are quite close but at the same time the concerns are somewhat different. Of all the working groups in the convention I suppose the working group dealing with economic governance found itself in the greatest difficulties in achieving any sort of consensus. Very little consensus emerged in this working group, which agreed broadly speaking that the Union's social and economic objectives should be included in the new treaty but there was no agreement on which objectives should be highlighted. On the monetary side, while a large number of states agreed that the mandate of the European Central Bank will remain unchanged, some felt that it should include objectives of growth and employment, referring to, for example, the situation in the Federal Reserve in the United States.
On economic policy, a small majority of the working group members favoured making changes in the decision-making procedures on taxation and extending the use of QMV in this area. This is an area of particular importance to Ireland and of specific importance to Dáil Éireann. Deputy Carey participated in that group and can elaborate further. A lot of the majority in the group was made up of MEPs who would not necessarily take the same view that national parliamentary representatives or governmental representatives would have been making in the convention.
On the matter of QMV and taxation, our position is clear. We take a strong view that this is one of the few areas where sovereign authority should be retained and we are of the view also that this matter was discussed as recently as in the Nice treaty and members may be forgiven for overlooking the fact that the Nice treaty only took effect from the first day of this month. It seems a little premature therefore to be abandoning a principle which was agreed at Nice. We are not alone, by the way. It has been portrayed in some extraordinarily ill-considered and badly researched articles in the media - not in the Irish media but in the international financial media - that we are alone in this regard. That is fundamentally not the case. When this issue was discussed at the convention and there were some false views as to the degree of consensus, seven states including Ireland signed a letter to Mr. d'Estaing on the issue. Our views are similar to those held by Sweden and the United Kingdom and from my own bilateral contacts I know our concerns are shared by a number of the incoming states.
On the broad economic policy guidelines there was no agreement on giving the Commission the right to make a fundamental proposal rather than a recommendation which is the current state. On the stability and growth pact, a majority wished to amend excessive deficit procedures to allow the Commission issue first warnings directly to the member states. Some, including Ireland, supported no change in the existing arrangements. We have already felt the anger and suffered under the existing arrangements so we are not particularly anxious to see them modified now when it suits others.
On the institutional issue, there was agreement that there be no measures taken after enlargement to prevent formal discussions among finance ministers of the euro group. There is a concern that the euro group is not universal.
Moving to the group on social Europe, this group was asked to consider seven questions: the values of the Union; its objectives; what competences the Union should have in the social field; whether the open method of co-ordination should be incorporated in the new treaty; the co-ordination of economic and social policies; the extension of QMV and co-decision; and the role of the social partnership. The convention plenary debate discussed the working group papers last Friday. There is a great deal in this report to commend it. This was one of the successful working groups. The chairman worked hard at producing a consensus document. The members of the group are strongly committed to making progress in the social field. The basic objective for Ireland in line with what the Taoiseach said recently was the importance of social issues in the Union to ensure that there is an outcome in the convention and it achieves a balance between the economic and social aspects. Heretofore the focus in Europe has largely been on the economic. Contrary to myth we are strongly committed to the maintenance of the European social model but in a way which takes account of the demands of global competition.
The group agreed that a new article 2 on values of the Union should be clear and concise. Perhaps Deputy Bruton, who was a participant in the group, might wish to speak on how this can be brought forward by the praesidium. With regard to article 2, the group succeeded in achieving its aims, especially on issues such as the equality between men and women. I do not believe citizens would expect to see anything less in the equality provision outlined in the treaty.
I have no difficulty with the objectives, which are broadly outlined in article 3. We were a little concerned that if too many articles were inserted difficulties might arise. The group's recognition that the existing competences in the social field are adequate is clear and precise. We welcome that.
We also broadly welcome the recommendations on the open method of co-ordination. Again, there is an agreement in the social working group to try to streamline economic and social policy co-ordination. We would strongly agree with that. There will, of course, be areas where agreement is not possible and these are honestly reflected in the report.
We returned to the issue of qualified majority voting in the discussion on this group, especially with regard to taxation and tax harmonisation. I reiterated the points made earlier and was strongly supported by a number of member states. One or two felt they were operating like the seventh cavalry. The Nice treaty entered into force at the start of this month and it is premature to consider further change at this stage. The Dáil and this committee might need to pay attention to what is happening in this area because it is of particular importance to the Dáil.
I also welcome the conclusions on social partnership, although I draw the attention of the committee to one issue. On the last day of the working group's consideration I was attacked - it is not too strong a word - in the most extraordinary and intemperate language by a representative of the trade union group in Europe. We were mystified by it. He was anxious that the Irish interpretation of social partnership, which is the broadest in Europe, should not be accepted. He was concerned to ensure that social partnership should simply be concerned with management and labour. I pointed out that in our view that was a primitive, backward and outdated view, that social partnership now means the community, voluntary and farming interests. Notwithstanding all the charm I could bring to bear on this gentleman, his rage intensified. I do not understand what it was about. The French texts make it clear that they were concerned with social partnership in the sense we mean it. It has lost something in the translation into the English text and is less than I would have hoped it to be.
We had an interesting debate on what we would regard as the primitive, backward looking ways of some European states. This man was from the European trade union movement and perhaps the trade unions in this country would have a quiet word with him if they can. He did not agree that farmers had a right to have an input into social partnership. We did our best to disabuse him of that notion.
Unfortunately, I will have to leave the meeting early. The Minister of State elaborated on the findings of the working group. I joined it when the report was at a drafting stage. We succeeded in holding the positions that are important to Ireland, particularly the extension of QMV to the issue of taxation. This was one of the reports to find least consensus, both at working group level and at the plenary. Ireland had to join with others in drawing attention to our difference with the chairman on the interpretation of the debate. We did not consider that there was a consensus.
The full employment and social issues would have given rise to members of the working group, especially the MEPs, pushing hard and successfully for the establishment of a separate working party on the social Europe. Most of what is contained in the final report on the social Europe possibly reflects some of the debate in the economic governance working group.
I served on both committees. The social Europe group wanted a much longer list of things to be included in the fundamental values of the Union, including a high level of public health, a high quality of social services and equality between men and women to be added to the articles we discussed earlier. Given that these articles are a basis on which countries might be expelled from the Union if they fail to comply, the view of the presidium was that the social affairs group was going too far in including, for example, a high level of public health as a fundamental value. It was considered to be too ambitious. The question of extending qualified majority voting was also important to the social affairs group. Most of the Irish representatives, Government and otherwise, took the view there was no need to go further than the existing provisions.
On the economic governance committee, I agree with the Minister of State that we should not give ground on the issue of the introduction of QMV on taxation. However, we should acknowledge that there is considerable pressure for this. We are in company with the British, the Swedes and some of the applicant countries. However, it will probably be raised again and we must be prepared for it.
I do not agree with the Minister of State's comments on broad economic policy guidelines, I would be among those members of the group who believe that the Commission should have the right to make formal proposals with regard to the broad economic policy guidelines rather than recommendations. I would also be among the members who consider that the first warning on implementation, or failure to implement these guidelines, should be issued directly by the Commission to the member state concerned rather than having to be agreed by the Council.
The Commission was right and the Government was wrong in the recommendations that were issued about the 2002 budget. If the Government had followed the advice it was given and introduced a more modest budget, we would not have the current problems with schools, the failure to raise medical card limits sufficiently and project delays. If the Government had taken the sensible advice of the Commission not to continue to spend money when times were good, we would be better off today. Unfortunately, with a general election pending the Government disregarded the Commission's advice and in so doing attempted to almost belittle its right to make this recommendation when it had the absolute right to issue it under the Maastricht treaty. While I do not expect the Minister of State to agree with me, there is an alternative view on this.
Nobody could accuse Deputy Bruton or the Minister of State of beating about the bush. On the question of taxation, the covering note indicates that some working group members proposed that to improve the functioning of the Internal Market, decision making procedures should allow the approximation of rates and the establishment of minimum standards of indirect and company taxation. The more detailed note indicates that a majority of members of the group agree that some changes should be made to the existing decision making procedures to facilitate progress in the area of fiscal policy. The objective of these changes should not be the establishment of unified taxes, nor should it concern the areas of personal and property taxation. The objective should rather be to provide for a sufficient approximation of rates, minimum standards and tax bases in the areas of indirect and company taxation to ensure that the proper functioning of the Single Market is not affected by harmful tax competition or serious internal trade distortion. Could we get some guidance on the nature of the majority that holds this view? This obviously is an area of central concern, not only to the Dáil which under the Constitution is the authority here - the Oireachtas is not the authority - but also to national parliaments generally.
I want to make a broader point. The average per capita income in Ireland is €26,000 or so. In fact, the average industrial earnings, according to figures for the last quarter of 2002, were €26,550. From an exchange I had in Brussels last week, I was certainly surprised to learn that the average could be €31,000 or more if US growth rates were attained. A representative from a small business from Germany pointed out recently that the lower growth rate in euroland, which is higher than the growth rate for the whole of the EU, compared to that of the United States is on average 1.5% to 2% per year lower. This means that average EU per capita income could be between €5,000 and €6,000 higher if we had attained US growth rates over the past decade.
The forecast is that for the next three years euroland will underperform the US and Germany will underperform euroland. This is very important since Germany accounts for about one third of GNP in euroland and therefore a German problem is a euroland problem.
The point this man made is that the United States has a fire and hire approach rather than a hire and fire approach. The general point being made was that in the business cycle US employers take on employees much sooner than those within the European model. If I am reflecting fairly what the gentleman had to say, the last thing an employer in Germany wants to do is take on another employee because of the contractual obligations involved.
I am leading to a particular point. Some see increased GNP as the way to increase employment. In reality perhaps it is that employment growth leads to a growth in GNP - that the reverse is not the case. Comparing the adult populations in the US and euroland, the US rate of employment is 8% ahead of that in euroland. The three main reasons offered for this are that in the US there is greater productivity, they work longer and there are more working days.
When asked if we would prefer the model of Boston or Berlin, I suspect many of us would say the Berlin model - certainly that is my bias - but clearly there is room for improvement. Will incorporating the Union's economic and social objectives in a new constitutional treaty aid or hinder the best interests of the people? The proposal to incorporate such provisions in a treaty require very careful consideration and I suggest the Irish members in the convention take independent professional advice on this. I know we all want good social services. I certainly want them. However, if you were to say to people that we could improve on per capita income and have good social services, people might be inclined to say, "Let us have a look at that." Can our convention members take independent advice on this? Perhaps we could learn from the Boston model while keeping the best of the Berlin model.
Deputy E. Ryan
In the past six months there was an interesting article in The Economist which pointed out that the three European countries, including Ireland, which had similar tax policies were far more efficient and had far higher numbers of people employed than the ones that were closer to the Berlin model - without wanting to sound like a eurosceptic, which I am not. It was a very interesting article which showed that we may not want to be sceptical of Berlin, but the facts of the matter are that the points you are making about the American economy and employment are true. The article pointed out that those three countries in Europe, including Ireland, were closer in tax law to America. It showed that this was something you should look at if you want to create employment. Certainly the problem in Germany is that they cannot create jobs and they themselves will have to look at why that is the case.
Those who know me know I am not a eurosceptic but the time for questioning this is now, if we are going to put this in the treaty, and therefore I want to take the opportunity to raise it.
I want to establish where we are on the issue of tax harmonisation. In particular, could somebody summarise fairly quickly what is involved in the tax harmonisation arrangements adopted at Nice? I want to see where we are moving from, if, indeed, we are moving forward on that issue.
The last point is very important. The Government is not, as has been portrayed, sitting out there alone with its face set against tax harmonisation where it is beneficial. For example, under Nice, to answer Deputy Haughey's question, there can be a significant amount of progress on tax harmonisation. The decision, however, will be taken by unanimity within the Council of Ministers. That is a process which has served us well and there is no reason whatsoever to simply abandon that.
I gratefully record the very strong support that Deputy Bruton has given, not only within the working group where he has been supporting a point that was made by Deputy Carey but also within the presidium where he has tried to point out that this is an issue which has become almost an obsession with some members of the convention.
The Chairman asked a very good question, namely what constitutes a majority. Certainly within Working Group VI on Economic Governance there was a majority in favour of abandoning the arrangements which have recently been reached at Nice, but they were driven largely by Members of the European Parliament who would not have been reflective of the views of national parliaments. Since that group's report was published, I have had the experience of travelling to a number of other states. When you sit down and talk with them about tax harmonisation, they become far less willing to sign up for QMV in the area because they recognise that taxes are a sovereign right for individual member states. It is a fundamental change, if you go in the direction that some people, who are not be representative of either national parliaments or national governments, would impel it.
The point we are making within the European Union and within the convention is not a bad one. It is, being as modest as I can be in this regard, a damn sight more logically structured than some of the arguments which have been put forward for abandoning it. It has to be said that there is simply no logic to some of the arguments which have come forward for abandoning the current situation, which literally is current only from 1 February 2003. There is no basis, no intellectual argument being put forward. There is no substantial support for the viewpoints which are coming forward. It is just bizarre.
I listened to one particular MEP who was vociferous on absolutely everything, making the point that just on a point of principle the national governments and national parliaments, and in particular the national lower houses which would be the case here, should abandon their rights in this regard. It is a red-line issue for us, not because we wish to be in any way dogmatic or difficult but because it is a matter of some significance.
The Chairman also made a point which has not been sufficiently factored into the debate. There are different models and the European social model comes with a cost. That is a fact. You have identified some elements of that cost. There is a lot of work out there. Personally my temperamental inclination would be more towards a humane European model than to the fire and hire model which seems to operate in the United States and I think that would be the view that most Irish people would take. We want to take an approach which is central to our whole ethos of a mixed economy.
The other issue which comes across and disturbs me is that the argument continuously made in the tax harmonisation debate focuses only on corporation taxes - Deputy Bruton will bear me out on this. It is just bizarre that the attitude reflected seems to be informed in some cases by the belief that countries like Ireland which have a very low rate are somehow or other taking jobs from countries like Germany which have a different tax structure, whereas, in fact, if you sit down and do any form of proper analysis, you actually find that our thesis is much more supportable than the alternatives.
In answer to your question of whether we have sought independent advice, I have asked that this issue be studied in detail. As you will be aware, Chairman, I chair the convention oversight group. I indicated that my approach to this is that I want the Irish thesis tested to destruction. In other words, I want it put to the acid test to make sure when we have a bottom line, it can be defended and is informed by logic and proper analysis.
An alternative approach is advocated by some people who do not necessarily have the same connection with the electorate as us. Our approach stands up to the test much more logically than theirs. There is more rationality informing our approach. I am particularly grateful because our arguments have been well carried not only into the working group by Deputy Carey but also onto the convention floor by myself and Deputy Bruton and into the presidium by Deputy Bruton. It might be helpful if the committee had a strong view on the issue.
It is important that we should present this country's position in opposition to the idea of tax harmonisation as a positive contribution to the European social model and as a means whereby competition is encouraged in the provision of services and dynamism is released in the economies of member states. We should present this in European rather than Irish terms. If we simply go to Brussels saying we want to protect our 12.5% corporation tax rate, we will not get the audience we deserve for the much more profound case we are making in favour of greater freedom within the Common Market.
We should remind those in the Union who advocate change in this regard that they have been able to force us, without unanimity on tax, to abandon export sales relief and they subsequently succeeded in forcing us, again on grounds of competition policy, to shift from a 10% manufacturing tax, on the grounds that it was discriminatory, to a 12.5% tax rate across the board on all companies. If there is genuine evidence of harmful competition, they have the powers to deal with this. We do not want the introduction of qualified majority voting in this area where demagogy and not analysis will be the driver of policy. There are demagogues in countries that have high tax rates who would love to mislead their electorates into believing that the problem is Ireland has been able to steal jobs from them because it has lower taxes. They cannot produce evidence of this because it is not true but they are able to use this belief as a means of fending off perfectly proper criticism of their management of their own countries. I would like them to come up with the evidence that the existing powers are not capable of delivering fairness in competition in the area of taxation. They are capable because they have been able to require certain changes, not only of Ireland but also of other countries. There is no need for a change in this regard and we should be quite unabashed in making that case to the public in Europe at large.
I refer to your comment, Chairman. I do not worry much about the objectives to be inserted in the treaty because they are only guidelines. I only qualify myself as a conditional fan of the US economy. It should be borne in mind that economy has achieved a higher growth rate but at the cost of consuming more non-renewable resources than Europe. The US can fuel its economy on the basis of low gas and energy prices that are artificial relative to the long-term energy vulnerability of the planet. The gas-guzzling economic model of the US is not necessarily the best model to follow on sustainability grounds. It is unsustainable in the long-term unless a new energy source is discovered, which may happen. Perhaps hydrogen will be the new source but until one has been discovered it cannot be said that Boston is proven to be better than anywhere else.
Employment has fallen by approximately 1% in the US over the past 12 months whereas it has increased by 1.5% in Ireland and 2.5% in Luxembourg, the highest in Europe, even though it has the highest GDP per head in Europe. Luxembourg is beside Germany, not far from the Ruhr. There is not necessarily an endemic problem in central Europe but there is a political problem in Germany. It has been unable and unwilling to reform its labour and pensions laws. It is amazing that in Italy most people have retired by the age of 58. A minority still work beyond that age. That is a significant burden on the Italian economy and the pensions involved are entirely paid for by the Italian taxpayer. It is no wonder, therefore, that the Italian debt to GDP ratio is approximately 110%, which is four times ours. Italy has a major pension burden, which must be reformed, just as the Germans must reform their pension burden. These things have to be done.
The employment rate in the US is high. Productivity per worker is higher but productivity per hour in Europe is as high as in the US. We work less but Europeans are as productive as Americans per hour. They are more productive per year because they work longer hours. It is also important not to become too much of a worshipper of GDP as a measure of welfare. Work done in the home looking after an elderly relative or children or in a voluntary organisation does not count in terms of GDP but it contributes immensely to welfare and, therefore, we should not allow GDP, which in a crude sense only includes paid work, to be the measure of welfare. On that basis, in many cases, European economies would probably fare better than the US. I do not criticise the US model because it is good and it works but it is no more perfect than ours.
I asked whether we could learn from it and the answer is yes.
They can also learn from us.
I refer to QMV on taxation. There is a willingness in commentaries in Ireland to outline that somehow or other our position is wrong and it should be surrendered. Our position is entirely defensible as the intellectual arguments support it. Deputy Bruton's point about competition is good and positive. One of the issues I am working on is the presentation of the tax argument from an entirely European viewpoint as opposed to an Irish viewpoint. I am confident that logic is on our side. I am working hard at making sure that we also have member states' governments on our side.
I recall chairing a review of the ISSC for the then Government. One issue that emerged was that some EU member states had high marginal rates of company taxation but, in terms of write offs against profits, Revenue could be approached in some cases and, on a bilateral basis, write offs agreed. The rate of tax, therefore, was not relevant. However, it is an area that must be examined more closely. We must be questioning about incorporating treaty provisions that could have implications for competition or whatever later. We have arranged provisionally for the Department of Finance to appear before the committee on 5 March to discuss an issue relating to tax harmonisation and we might visit this issue more generally then.
Are all the Irish convention members unified on the question of tax harmonisation? Is it an issue of national interest that is being pursued in the convention process?
I think all the members present are unified but they should be asked. Perhaps they could attend the next committee meeting.
On the open method of co-ordination, I understand this refers to the fast tracking of decisions where there is no disagreement. I understand there was some concern about including this in the constitutional treaty.
There was. The opening method of co-ordination is very flexible. The problem is that when a very flexible instrument is included in the constitution perhaps it is made less flexible. When we were considering this question, our primary concern was to ensure adaptability and flexibility were kept in place and should not be lost. I believe the recommendation of the working group on social Europe was sufficiently flexible to meet our concerns. However, our anxiety was not about the process, which we support, but to ensure we do not lose any of the flexibility that existed in the process.
That brings the meeting almost to an end. I ask the Minister of State and Deputy Bruton to stay with us for one moment. There clearly is a need to continue to meet to discuss these issues. It is very useful from the point of view of the Oireachtas and I am sure it is helpful to the members. I am aware of the pressures on members. I join with others in thanking the Minister of State, Deputies Bruton, Gormley and Carey, Mr. De Rossa and Mr. McDonagh for the work they are doing, which is very demanding. I hope they will acknowledge that the Committee on European Affairs is putting a huge amount of work into trying to bring the message to the people and in being proactive on the issue.
The joint committee went into private session and adjourned at 2 p.m. until 2.30 p.m. on Wednesday, 12 February 2003.