The objective of this Bill is to complete our ratification procedures so as to allow Spain and Portugal to become full members of the European Community. For this purpose it is necessary to amend the European Communities Act, 1972, by adding to it the Treaty of Accession of Spain and Portugal to the European Economic Community and to the European Atomic Energy Community. While Spain and Portugal may accede to the European Coal and Steel Community through a decision of the Council, the Irish Constitution requires that both the Treaty and this decision must be made part of the law of the State.
The negotiations were completed in May of this year and the Treaty of Accession was signed in Lisbon and Madrid on 12 June. Since it has been agreed that the date of accession should be 1 January 1986, both the present member states and the adherents must complete their national ratification procedures in time to meet this deadline. To date, Belgium and Luxembourg are the only members of the existing Community to have complete their ratification procedures, though the process is under way in a number of other member states. Once the Bill before the House becomes law, the way will be clear for Ireland to ratify the Treaty of Accession.
It is, I think, reflective of the interest, and indeed the concern, that Spanish and Portuguese accession evokes that this Bill was debated for a total period of about ten hours in the other House. That debate not only ranged over the various implications of enlargement but also touched upon a panoply of other Community issues. Today I would like to concentrate on a number of areas where the prospect of enlargement is, rightly or wrongly, causing concern in come quarters and also, and perhaps more importantly, to try to identify a few areas where the accession of Spain and Portugal to the Community will create opportunities which must be exploited.
Before this process of analysis, however, it may be useful to provide the context by mentioning the origins of Spain and Portugal's applications for membership and the subsequent history of the accession negotiations. In both of these countries the decision to apply for membership of the Community was the external manifestation of their return to democracy in the seventies. In Portugal this return to democracy was achieved very quickly when the old authoritarian regime collapsed practically overnight in 1974. The achievement of the fathers of the revolution in the subsequent few years was to ensure that Portugal's authoritarian system of Government was not replaced by a totalitarian one. The attainment of democracy in Spain was, on the other hand, a more gradual process. After the death of General Franco in 1975 King Juan Carlos bravely and skilfully presided over a process which culminated in the establishment of democratic institutions in Spain.
By the latter half of the 1970s it was clear that democracy in both of these countries was well established. As part of the process of its consolidation the Governments of Portugal and Spain applied for membership of the Community in the first half of 1977. The Community required a certain amount of time to consider and formally accept the applications of the candidates. It was recognised that it was desirable in political terms for Spain and Portugal to accede to the Community. On the other hand, however, it was also recognised that, as the applicants were relatively underdeveloped countries whose main agricultural products were already in surplus in the existing Community, there would be an economic price to pay.
It is a tribute to the Community spirit of the then Mediterranean member states, namely France and Italy, that they supported politically the applications of Spain and Portugal in the knowledge that competition from the Iberian peninsula after enlargement would pose a substantial challenge to their own fruit and vegetable, wine and olive oil producers. After the Council formally accepted the applications of the candidates, negotiations were opened with Portugal in October 1978 and with Spain in February 1979.
The fact that these negotiations lasted over six years is a reflection of the intrinsic complexity and difficulty of the issues that had to be tackled. As well as the question of integrating the agricultural economies of the applicant states into the system of Community agriculture, there were also the problems of the dismantlement of Spain's highly protectionist industrial tariffs, the restructuring of its large steel capacity in accordance with Community rules, and, of course, the integration of the huge Spanish fishing fleet within the Common Fisheries Policy. It must be said, however, that there were also factors extraneous to the negotiations themselves which retarded progress. In 1980 the negotiation were effectively frozen while the Community set about a major reform of its regime for Mediterranean agricultural products. A couple of years later the momentum was again lost as the Community became increasingly preoccupied with its internal, that is to say, budgetary difficulties.
The French Presidency was successful in regaining the political momentum for the advancement of the negotiations. Nevertheless when Ireland took over the Presidency in June 1984 a great deal of the substance of the negotiations remained to be dealt with. Indeed, in a number of vital areas such as agriculture, fisheries, industrial tariff dismantlement, steel restructuring, and the question of the free movement of workers, the key issues remained to be resolved.
As we set about tackling these individual issues our greatest task, as Presidency, was in securing the agreement of member states to common positions to present to the applicants. This was because member states were inclined to link agreement on one issue to a satisfactory outcome for them on another. Consequently, many of the sensitive chapters in the negotiations became the captives of a complex system of negotiating linkages.
The key issue, and a solution to which allowed this impasse to be unblocked, was the question of wine and, in particular, the control of its production in an enlarged Community. Agreement on this issue at the Dublin European Council in December 1984 allowed the Community to adopt positions on a whole range of other areas. Those who voiced criticisms that the Dublin Summit concentrated too much on the wine issue were obviously unaware of the central importance of the wine dossier in the overall scheme of the enlargement negotiations. If the wine question had not been resolved and the Community was not, in turn, able to present negotiating positions to the applicants, there was a real danger that the Spanish and Portuguese delegation would have left the negotiating table for good. The agreement at Dublin allowed the Italian Presidency to pursue the final stages of the negotiations and to negotiate directly, on behalf of the Community, with the applicants on the major outstanding issues.
One of these concerns, and perhaps our primary one, was the fisheries chapter which was resolved in the final stage of the negotiations under the Italian Presidency. It has, incidentally, been claimed that we made a tactical error in not insisting on the settlement of the fisheries chapter during our own Presidency. As any experienced Community commentator knows, the role of Presidency requires a member state to behave in a disinterested and accommodating manner in the search for a compromise acceptable to all partners. The ability of a member state to vigorously protect its interests can be inhibited by the responsibility which accompanies the role of Presidency. During the Italian Presidency on the other hand, we were able to negotiate in a hard-headed and determined manner, unencumbered by the responsibility which the custodial role of Presidency involves.
I wish to restate my conviction that the arrangements we secured on the fisheries chapter represent the optimum that could be achieved without, in effect, denying Spain its right of inclusion in the Common Fisheries Policy. That policy, which had been worked out for the Ten in 1982 after very lengthy and difficult negotiations, provided the necessary scope for the further development of our fishing industry. Our primary negotiating objective during the accession negotiations was to ensure that the inclusion of Spain in the Common Fisheries Policy was achieved in such a phased manner as not to jeopardise the benefits we had secured from the policy. The centre piece of this negotiating strategy was the achievement of a long period during which Spanish fishing vessels would be excluded from the 50 mile fishing zone around our coast, the co-called Irish box.
Spain, on the other hand, was pressing for a substantial measure of integration of its fishing fleet into the Common Fisheries Policy from the date of entry, including some immediate level of access to the Irish box from accession. This was totally unacceptable to us. Near the conclusion of the negotiations the Commission and Presidency tabled a compromise package which would have given Spanish fishing vessels full access to the Irish box after seven years. While we were aware that our resolute stand in the protection of a vital national asset might seriously affect the entire negotiations, we, nonetheless, again rejected this compromise proposal.
I am glad to say, however, that our negotiating partners ultimately recognised the primary importance we attached to this issue and, at the Foreign Affairs Council at the end of March, we were successful in securing a derogation whereby Spanish and Portuguese fishing vessels will be excluded from the Irish box for a ten-year period up to the beginning of 1996. Moreover, the Spanish Minister made a unilateral declaration committing his authorities to talks with the Irish Government, before the ten-year period expires, to secure the orderly integration of Spanish boats into the Irish box after 1995.
The fisheries chapter did, of course, contain other elements such as agreement on the number of Spanish vessels that can fish in Community waters other than the Irish box during the transitional period, the re-allocation of catch quotas of particular species to include the acceding States—where, incidentally, Ireland was successful in securing improved quotas for our own fishermen—and the extension of the strict supervisory regulations of the Common Fisheries Policy to the Spanish fishing fleet, including regular inspections by Community fisheries inspectors.
Notwithstanding the merits of the deal we negotiated, concern has been expressed about the willingness of Spanish fishermen to respect the arrangements and of our capacity to fully implement them. Given the past record of Spanish vessels fishing illegally in our waters, these reservations are understandable and I fully appreciate the fishing industry's concern in this regard. Since 1980, a total of 233 Spanish, and Spanish vessels registered in Britain and Ireland, have been arrested for illegal fishing in Irish waters and practically all have been fined heavily. If such incidents continue after accession the supervisory regime of the Common Fisheries Policy to be applied to Spanish fishing vessels will assist us in ensuring that a greater number of transgressors are caught and subject to the full rigour of the law.
However, we must not presume in advance that things will continue as before. Spain will be taking its place at the Council table as a full partner on 1 January 1986 and I am confident that the Spanish Government will, in good faith, actively enforce the agreed fisheries arrangements set out in the Treaty of Accession. As regards our ability to ensure compliance with these arrangements, I might mention that the Council on 29 March, 1985, at our insistence, declared its willingness to assist member states to improve their fishing surveillance capacity. This declaration stated that the Council was prepared to consider, on a proposal from the Commission, financial aid for member states for the provision of adequate surveillance and control measures necessitated by the enlargement of the Community. On foot of this understanding the Government are currently considering the adequacy of our fishing surveillance capacity for an enlarged Community.
Any assessment of the implications for Ireland of an enlarged Community should not, of course, be restricted only to the area of fisheries. There is also the question of the general impact of enlargement on the already straitened budgetary capacity of the Community and, in particular, the effect on Ireland's transfers from the Community's structural funds, that is the Regional Fund, Social Fund and the FEOGA guidance section.
On the general question of the adequacy of the Community's budget to absorb the costs of enlargement, Senators will be aware that, in parallel to the accession of Spain and Portugal, the VAT element in the Community's own resources will be increased from the existing ceiling of 1 per cent to 1.4 per cent of member states VAT bases on 1 January 1986. Provision has also been made for a possible further increase of 1.6 per cent on 1 January 1988. This increase in own resources and the enlargement of the Community are inextricably linked. Indeed, the agreement of a number of the larger member states to an increase in own resources was conditional on the accession of Spain and Portugal to the Community.
Doubts have been expressed about the adequacy of a 1.4 or, indeed, 1.6 per cent VAT base for the functioning of an enlarged Community. I fully share those doubts. In fact the Government have for a long time been using every opportunity to make the point that the Community needs to be provided with a long-term stable revenue base.
This revenue base should be sufficient to enable the Community, first, to strengthen and develop its existing policies; secondly, to allow it to meet the new demands which the impending enlargement will place on its resources; and thirdly, enable it to develop the new policies which are necessary if the Community is to be revitalised. The increase to 1.4 per cent is a start, but we believe that a further early increase in own resources is necessary if the Community is to be able to meet the three challenges I have mentioned. The Government will continue to press in Brussels for such a further increase.
The adequacy of a stable revenue base in the Community determines, to a great extent, the Community's ability to transfer resources from its prosperous centre to the less developed periphery. The Preamble to the Treaty of Rome speaks of the desire to reduce the differences existing between the various regions and the backwardness of the less favoured regions. The operation of the three structural funds has gone some way to achieving this goal. Since our own accession to the Community we have received in aggregate over 1.1 billion pounds from these three funds. Spain and Portugal, as relatively underdeveloped countries, will have access to all of the structural funds from accession. At the moment the precise manner in which the acceding states will be integrated into the Regional and Social Funds is being discussed in Brussels. In the case of the Regional Fund, the provision of shares for Spain and Portugal means that the share of the present member states must be proportionately reduced in percentage terms. However, we firmly believe that the less prosperous member states should not have to accept a real fall in their receipts because of enlargement. We shall continue to insist that there should be no erosion in our current level of transfers from the Regional Fund. As regards the Social Fund, the present 40 per cent allocation reserved for the existing regions of absolute priority, including the whole of Ireland, is being revised upwards to take account of the inclusion of Portugal and certain regions of Spain. We are pressing for an increase in the allocation that is sufficient to meet the needs of all the regions of absolute priority in an enlarged Community.
When this Bill was being discussed in the other House, it was said by many participants in the debate that the Community had failed to develop an effective regional policy and that this situation would be exacerbated in an enlarged Community. It was stated that economic indicators showed that, since the establishment of the Regional Fund in 1975, the disparities in living standards between the centre and the periphery have widened not narrowed. While the Regional Fund has made a useful contribution towards the development of our national infrastructure, it has to be admitted that it has not met the expectations of those who saw its establishment as the beginning of a process aimed at the elimination of economic disparities between regions.
The Government certainly feel that the fund could be made a much more effective instrument of economic convergence. This can only be achieved, however, by a more realistic endowment of its resources. At the moment the Regional Fund's resources only represent between 4 and 6 per cent of the national expenditure by all member states on regional development. The question of endowing the Regional Fund with sufficient resources to begin to achieve a degree of economic convergence between regions is, of course, related to the more general question of equipping the Community with a realistic revenue base. As Senators will know, there is at the moment an Intergovernmental Conference of the member and acceding states whose purpose is to decide on further steps towards European integration. In the Government's approach to the conference we are seeking, together with others who share our concerns, to focus attention on the need to increase the economic cohesion of the Community and to provide for the necessary financial capacity to achieve this.
These then are the main concerns and challenges which I believe are created by enlargement. I have dealt with them at some length to give Senators an idea of the complexity of the issues we confronted and to show that, while the accession negotiations are over, the challenge of enlargement in many respects remains to be dealt with. The enlarged Community, of course, also brings opportunities. In the other House last Thursday one speaker spoke of enlargement in terms of its positive challenge for the Community in general and for Ireland in particular. He stated that the Community was not only about guarantees and financial transfers but also about the creation of an open market that could be exploited. For too long we had passively enjoyed the guaranteed benefits of membership without actively seeking to utilise the potential which free access to a huge market offered us.
The accession of Spain and Portugal represents such an opportunity which our exporters and industrialists must not miss. These two countries will add a further 48 million consumers to the Community's common market. Industrial tariffs on trade between the acceding states and the Community will be gradually abolished over seven years. The greater part of this dismantlement will occur over the first three years. In addition, apart from a very few exceptions, Spain and Portugal must abolish their non-tariff barriers — such as quotas or import licences—from the date of accession. In the agricultural area, it has been agreed that the Community will have immediate access to the Iberian market for specified levels of its "northern products" such as dairy products, beef and pigmeat. These levels will be gradually increased over the transitional period.
At the moment Ireland's exports to Spain and Portugal represent about 1.25 per cent of our total exports. While our trade with Portugal is relatively modest, Spain is our fifteenth largest export market. We exported over £94 million worth of goods to Spain in 1984 and the figures for the first nine months of this year indicate that the export figure for 1985 will be significantly higher. Our principal categories of exports to Spain are chemicals, office machinery, metals, beverages, pharmaceuticals and fish.
Until now Spain has operated a very protectionist trade regime and has shielded its industry behind high tariff walls and a complex system of non-tariff barriers. Notwithstanding this, Irish exporters and manufacturers have in recent years been successful in making even deeper inroads into the Spanish market. After Spain begins the gradual dismantlement of its tariffs and the immediate abolition of its non-tariff barriers in 1986, Irish exporters will be in a much better position to penetrate the Spanish market. An area where there clearly is potential is fish. Spain has one of the highest per capita consumption rates of fish products in the world. Our fishermen catch species, such as hake, which are very popular on the Spanish market. In 1984 we exported over £4 million worth of fish to Spain. If our fishermen and fish processors orientate themselves towards the Spanish market, I am sure that we can considerably increase this export figure after enlargement.
It has been said that the economic benefits of enlargement will exclusively favour the large member states whose developed trade economies will allow them to exploit the opening of the market in Spain and Portugal. However, there are a number of small and medium sized member states, such as Denmark and the Netherlands, who are preparing to avail of the trade opportunity which the opening of the Iberian market represents. These countries in the past have shown themselves adept, especially in the agricultural foodstuff sector, in gaining access to various world markets. We are now beginning at last to develop a substantial food processing industry. If this industry studies the needs of the market in Spain and Portugal, develops or refines its products to suit that market and used the right marketing techniques to sell them, I am convinced that we too can benefit significantly from the extension of the Community market.
So far I have been addressing the question of the economic challenges and opportunities posed by the accession of Spain and Portugal to the Community. There are, however, other political and cultural implications which are, nonetheless, considerable. One of the achievements of the Community has been that it has managed to give concrete expression to the notion of a European identity while, at the same time, safeguarding the cultural diversity of its constituent member states. This cultural diversity will now be enriched by the addition of two new states who, while being European in every sense of the word, have their own distinct heritage.
On account of their histories, the political and economic orientation of the two acceding states has in the past often been outside rather than inside the European mainland. A large part of southern Spain was occupied and settled by the Moors of North Africa in the medieval period. While the native Spaniards were by the fifteenth century successful in reasserting their political dominance, the Moorish legacy can be seen to this day in the architecture of many Spanish cities, such as Granada and Seville. The rise of Spain as a military and political power in the sixteenth century was, in large part, based on the wealth of its possessions in Latin America. Today Spain still enjoys extensive political and cultural links with North African and South American states. On the other hand, Portugal's focus of interest during its history was Africa and the Far East. Portuguese navigators pioneered the voyages of discovery that began in the fifteenth century and Portugal succeeded in establishing an extensive trade network with its southern African and Asian territories. The cultures of the acceding states have been enriched by their historical relationship with countries in Africa and Latin America. The cultural diversity of the existing Community will now, in turn, be enhanced by the accession of two European countries who enjoy such a rich heritage.
The process of European political co-operation has meant that the Ten have been able to speak with one voice on important global issues. The inclusion of Spain and Portugal in the system of European Political Co-operation will mean that the voice of the Ten now becomes of voice of Twelve and, consequently, all the more authoritative. In addition, the Community has in recent years concluded co-operation agreements with individual third countries and with other regional multilateral groupings such as the Association of South-East Asian Nations. The accession of Spain and Portugal to the Community will facilitate it in the development of its external policy in those regions where the acceding states have long standing cultural and political interests. For instance, in regard to the co-operation agreement signed this week between the Community and the Central American states, Spain's corpus of knowledge and influence in this troubled region will greatly assist the Community in developing this new relationship with Central America.
Finally, I would like to say again that the Government welcomes the accession of Spain and Portugal to the Community. After a period in their recent histories during which dictatorial regimes imposed an inward looking isolationism upon both countries, Spain and Portugal are now resuming their rightful place in Europe. While the integration of Spain and Portugal within the Community will present challenges, it should be remembered that the acceding states have also a great deal to contribute. I look forward to a new and fruitful relationship with Spain and Portugal in the Community and am confident that the challenges which lie ahead can be effectively tackled in a spirit of co-operation between all member states, both old and new.
