Seanad Éireann debate -
Thursday, 16 Jun 1988

Vol. 120 No. 5

Cecchini Report: Motion (Resumed).

Debate resumed on the following motion:

That Seanad Éireann notes the studies published by the Commission of the European Communities in the research project directed by Mr. Paolo Cecchini.

—(Senator S. Haughey.)

Mr. McDonald

I would like to add to the remarks that I made on the last occasion on which we had the opportunity to discuss this very important group of motions, especially the Cecchini report. There is a need to make additional information on past benefits and the future development of the Community available to every member of the public and I believe it is essential that our people should be fully informed of the many benefits which have accrued from our membership of the European Community. We are now accelerating towards further European integration and the completion of the internal market. No one can doubt that there is a great deal of will right across the Community today. The recent French presidential election and general election were fought mainly on the question of their preparedness for the 1992 deadline.

No one can doubt that there is a great deal of will today in all the countries of the Community. In Great Britain, Lord Young, the Minister with the responsibility to do so, launched their campaign some time around the middle of April. They adopted the very appropriate slogan: "Europe, open for business". On the same occasion, the President of the Commission make a very interesting contribution. He said, and this in the main would also apply to this country, that "everyone should benefit from the large market", and "it would be wrong to think that 1992 is only for business. It should also be thus for the world at large, since the new coherence of the Community adds to our already strong political role in the world where the Community is increasingly a force for peace".

I was very glad to receive yesterday an invitation from the Taoiseach to attend the launch of our country's programme on 4 July in the Concert Hall which is intended to create an awareness of and to prepare our society to participate in and benefit from the completed market after 1992. While we must be one of the last countries to get our programme under way, I am confident that the Government and the Departments concerned will have a successful launch. I wish the campaign well and I hope it will receive the support not just of business people which the UK has stressed is needed, but of all those who have influence in the areas of politics, administration and in the economy. If we are really serious about providing a better standard of living and opportunities for our population in an effort to stem the flow of emigration, we must be prepared to take the opportunities which will be presented. On the other hand, we could sit back and be swamped by the overproduction of the other 11 member states. It is one of the most serious problems that we, as a country, have had to face in a long time and I hope everyone concerned will do their bit and take this matter quite seriously. I do not know what our slogan will be but the English slogan "Europe, open for business" is one that will give us some food for thought.

I am not blaming the media for this but most of the vibes coming from Europe seem to be negative. People are inclined to look on Europe in terms of what they do not get and what they expect. Let me give a breakdown of some of the benefits we received during the 15 years of our membership of the Community. There was a very interesting series of debates earlier this year in the European Parliament on the consequences of not completing the internal market. I am sure the reports of those debates are available in the House but it is a pity that we do not have an opportunity to consider them more fully. I hope the Committee on Procedure and Privileges can devise a system which will enable us to have at least monthly debates on this subject so that we can have an input in creating public awareness of what exactly is at stake.

When Ireland joined the European Community in January 1973, an additional clause was provided in the Treaty of Accession which recognised our relative economic under-development and the need to bridge the gap with other member states. Since then we have been a major beneficiary of Community financing, receiving grants and subsidies amounting to approximately £9,000 million over that period. Last year alone — and perhaps the Minister would confirm this — we received just over £900 million in total from all sources. The economic importance for Ireland of Community membership is certainly indisputable, even though many people still cannot see this and are inclined to blame the Community for so many things.

The financial benefits Ireland receives at present from the European Community far outstrip those for the other member states. For example, the net transfers per head of population for 1986 were as follows: France, £6; the United Kingdom, £18; Greece, £75; and Ireland, £200. It is estimated that, in the absence of these transfers, VAT rates and income tax levels would have to be increased by up to 25 per cent in order to make up the necessary revenue. On average, since 1973 for every £1 we contributed to the European Community budget, we have received £5.18 by way of grants and subsidies. In addition, the European Investment Bank also lends moneys to provide loans to assist investment in infrastructure, energy and industry. We have drawn loans worth £1.9 billion from community sources.

The main instruments of funding, which we are all sick of hearing, from the European Communities are known as the structural funds. The major funds are the European Agriculture Guidance Fund, the European Social Fund and the European Regional Development Fund which was established back in 1975, I am glad to say during my own Presidency of that Commission. Lord Thompson of Dundee put in tremendous work in the establishment of that fund which was on and off for many years previously. It was a great break-through. The early years of Ireland's membership are completely understated.

Dr. Hillery, our distinguished President, who was Irish Commissioner at that time put a lot of work into the development of the Social Fund, which was tailor-made to suit conditions prevailing in this country. Many areas of social activity have benefited to a great degree from the Social Fund. Prior to the implementation of Dr. Hillery's social action programme it was not possible for funds to be expended on any area of activity from which an economic return could not be expected. As a result of the changes brought about we have in every county well organised schools and day care centres to cater for physically and mildly mentally retarded persons, and this again, relates back to the social action programme which Dr. Hillery introduced.

The Common Agricultural Policy is better known in Ireland as the Guarantee and Guidance Fund. Our agricultural industry has benefited enormously from our membership of the Community which has brought guaranteed prices, development grants and access to a huge market of 320 million people. The Community now accounts for four-fifths of our agricultural exports and up to the end of 1986 we had received more than £5,000 million in price supports from the Common Agricultural Policy as well as almost £500 million in farm modernisation and development grants for the development of food processing and better marketing and distribution. Prosperity in the farming sector has also had a spin-off in the Irish economy as a whole, by creating additional jobs not only in the food area but also in the agri-processing and the agriculture input sectors.

The Common Agricultural Policy is divided into two sections of expenditure. The guarantee section has financed expenditure on the reorganisation of markets and exports to non-member countries and the cost of intervention to stabilise the markets. This has been of great benefit to this country, to those involved in all sectors of the industry. My one fear is that people will become too reliant and over-dependent on these compensatory amounts which have meant so much to our economy. I was glad to read recently that Ireland received over £800 million from the guarantee section alone in 1986.

The FEOGA guidance section subsidises measures to improve agricultural structures, such as farm modernisation, vocational training, headage grants in the disadvantaged areas, herd conversion schemes, disease eradication, drainage and food marketing and processing. This section also provides aid for the restructuring, modernisation and development of fisheries and aquaculture. This aid has given a marvellous boost to our economy. The way in which the Government operate and administer these schemes leaves considerable food for thought. Let us take the western development scheme which I think is a great scheme. Under the western package farmers residing on the west bank of the River Shannon receive significant grants whereas the majority of those residing on the east side of the river, in the counties of Offaly and Tipperary, for example do not. Some of the more devastated valleys have been included under the latest redrawing of the boundaries of disadvantaged areas but until last year, or the year before, they were not considered to be deserving of any aid, even though the river floods on both sides to about four or five feet of water, for four or five months of each year. That is something that our civil servants, especially the senior officials in the Department of Agriculture and Food, have nothing to feel proud about. That problem should have been addressed back in 1974, 1975 or 1976 whenever that scheme was introduced. It is unfortunate that this problem has been allowed to drag on, given that these are important aids to the agricultural sector and the fact that Counties Laois and Offaly have the lowest density of population in the entire 32 Counties. These problems have not been addressed for whatever reason, by any Administration.

There is a growing recognition of the need to develop our food industry, that is to market farm produce in acceptable processed and packaged form, and further recognition of the potential for the creation of jobs and national wealth in the food industry. This has stimulated a lot of activity among existing food companies which are expanding and improving their facilities and has also inspired some completely new enterprises. A good deal of investment is required and this is helped; again, by grants from the Guidance and Guarantee Fund.

We have been slow in encouraging the value-added aspect of high quality produce and I hope the Government will continue to encourage it, especially over the next five years. There is no doubt, with our environment being a plus, that it would be of tremendous benefit if we were able to sell wholesome Irish food, packaged and presented in the appropriate way. For example, in December of last year, Ireland was allocated aid amounting to almost £10 million for 24 agricultural projects. This aid from the Community hardly receives any notice in this country.

Let me outline the spread of activities in the Leinster area: the provision of beef processing facilities in Athy; the modernisation of existing lifestock marketing facilities in Granard; the modernisation of potato processing facilities in Ashbourne; the provision of a centralised pig slaughtering facility at Grannagh, County Kilkenny; the provision of beef processing facilities in Kilbeggan, which are going very well; the provision of additional barley storage facilities in Tullamore; the provision of pigmeat and sheepmeat processing facilities in Hacketstown; the modernisation of poultry processing facilities in Glenealy; and the provision of facilities for three salmon rearing projects in Carlingford.

Altogether £3,500,000 was spent on those nine projects which provided a significant number of jobs in each of those small areas. It is amazing that a considerable amount of grant-aid can be made available through the Community without receiving any notice and without a word of thanks. Our public do not recognise the value of the Community and do not appreciate the contribution that it makes. I have not outlined the actual amounts that each of those firms received but in most cases they are in six figures. It would be unfair to put the names of the businesses concerned on the record. I wish each and every one of those nine businesses continuous success.

The Regional Fund, which as I mentioned earlier, was set up by Lord Thompson during his term as Commissioner, has proved to be of tremendous benefit to this country. The Fund was set up some time around 1975 with the objective, outlined in the Treaty of Rome, of correcting the imbalances between the wealthier nations and the poorer nations. I do not think that even a doubling of the Regional Fund after 1992 would compensate for the magnetic attraction of the original golden triangle, even though I am sure it will be of help. The idea behind the fund which is, again, outlined in the original Treaty of Rome is that the fund will be used as an instrument to transfer resources from the richer to the less developed regions, which tend to be on the periphery.

The entire country is classified as an area qualifying for the maximum level of aid. Since the establishment of the fund it has contributed in excess of £700 million for infrastructure development such as, the building of roads, harbours, water and sewerage works, support for initiatives in the tourist industry and industrial development, such as a series of measures in favour of small and medium-sized enterprises in the industry, craft, tourist and service sectors. The funds rules were revised a few years ago. Under the Single European Act direct access to the Fund was given for the first time, from my reading of it, to very many people and organisations, such as local authorities. Indeed, during the debate on that Act in this House the Minister confirmed that. I attended the annual meeting of the General Council of County Councils held in Athlone last weekend.

An Cathaoirleach

There is no election coming up.

Mr. McDonald

It was very interesting and very well organised and I would like to compliment Roscommon County Council and our two colleagues from that area, Senator Mullooly and Senator Seán Fallon, both of whom presided over sessions. In one of the earlier sessions the main speaker was an assistant secretary from my favourite Department, the Department of Finance, who was upset at the inconvenience that some Irish local authorities were causing the Commission by asking to go out to see what was going on. As if the Single European Act was not an Act of the Oireachtas, he said that it was the Department of Finance who would decide what projects would be included in the applications for grant-aid under the Regional Development Fund. This usurpation of power is typical of the Department of Finance. The Single European Act is quite explicit; it is there in black and white. Either the Department of Finance implement the Acts of the Oireachtas or we are nothing. Under the Single European Act local authorities have direct access to the Commission.

The week after Easter, a delegation from the joint committee travelled out for an entire week and held protracted discussions with the Commission, the European Investment Bank and the Court of Auditors. Not only can local authorities apply directly for grant-aid under any of those funds, but the European Investment Bank also welcome applications for funding from local authorities, the one criteria being that the application should be of a certain size, either £1 million or £3 million, I am not too sure which. In preparing an application of that magnitude they pointed out that there would be nothing to stop a group of local authorities putting a package together to suit their needs. In addition, it would be possible for the local authorities and the bank to organise Regional Development Fund assistance to subsidise the repayments of interest.

Listening to the assistant secretary of the Department of Finance, with a complete story of their own, one began to wonder if we are really wasting our time here, does legislation mean anything and whether the policies latest being espoused by the Commission mean anything as far as Irish administration is concerned. I would like the Minister when replying to this debate to let us know exactly where we stand in so far as access to central European funds is concerned. I do not want to widen the debate, but will local authorities have an opportunity to draw up their own list of priorities for the development and maintenance of the infrastructures in every county in this country? I am not making a political point but I want to know exactly what the position is and why the administration of the Single European Act is completely different from that outlined in the Act? Is this being done by way of regulation? I would like a straightforward explanation.

That being said, I am very happy that the Leinster area has received over £103 million from the Regional Fund since it was set up. My only regret is that my own county of Laois seems to have come off worst in that Carlow received £11.9 million; Kildare, £11.9 million; Kilkenny, £9.8 million; Longford, £5.5 million; Louth, £11.9 million; Meath, £6.6 million; Offaly, £4.8 million; Westmeath, £13.3 million; Wexford, £9.3 million, and Wicklow, £13.4 million while Laois received only £4.8 million, with an additional £9.2 million for various crosscountry schemes such as the scheme for the main national primary route from the port of Rosslare to the midlands. Many other grants were made available which facilitated the development of very important infrastructural works in each one of the counties mentioned. For instance these include the extension, expansion and production of high quality work-wear in Tullamore, the construction of a raw sewage scheme in Blessington, a manufacturing plant in Dunshaughlin, the manufacture of moulding tools in Bray, a water supply scheme in Kilmacoo in Wicklow, and a factory in Dundalk. The list goes on with every county in the region benefiting substantially. In addition, the Minister for the Environment told us in the House recently that £194 million of Regional Development Fund grant-aid for road development has been put to very good use. The only thing I have to say about this funding is that in the allocation of funding it was not very clear where it was being spent. I have a very strong suspicion that no additional funds were made available. I think that some of those European Regional Development Funds substituted for funds made available by the Department of the Environment. I do not think additional funds were provided and I think this is unfortunate.

Back in the seventies we advocated that each local authority should put up a sign saying that a project was being developed with European Regional Development fund assistance. That was great. After great hassle, in my own council area in respect of a sewerage scheme on the main road from Dublin to Kilkenny and Waterford we eventually got a sign erected. That was five years ago and it has not even started yet. It is an embarrassment at this stage and should be taken down. While the money was sanctioned in all good faith, it fell foul to either cutbacks, a re-arrangement of priorities, or whatever. I think that annoys the local inhabitants to an extraordinary degree.

Minister of State at the Department of Foreign Affairs (Mr. Calleary)

I hesitate in getting involved in the affairs of the——

Mr. McDonald

I am not blaming the Minister. The point I am making is that funding from Europe should not always be regarded negatively. It should be seen in a better light. When they put up the sign they should have done the work, especially when they said they got their money. If they did not get the money, they should not have put up the sign.

The finance that has come from Europe has made a tremendous contribution in upgrading living and working standards. I am confident that the Minister will launch the proposals and projects on 4 July. I hope we will be able to order the business of this House so that every month the Minister will at least have an opportunity to talk to us on some aspect of the programme to try to keep the pressure on.

As I said on the last occasion, I regret that we are discussing these eight motions together. They are of considerable significance but, because they have been grouped together this does not give the House an opportunity to deal at length with any one of them. This is a pity. Some of them are quite obscure but all of them received tremendous thought and study by the joint committee. It is a pity that they should get short shrift here.

The Cecchini report gave people throughout the Community an opportunity to consider what the Community would be like without the co-operation and effort being put into it. It is important to put on the record the fact that, while we have benefited considerably in financial terms we must not forget the input Irish personnel have put into the evolvement of the Community over the past 15 years. I can say without fear or favour that the quality, input and dedication, especially of civil servants who commute back and forth to Brussels every week, have been significant and of a very high standard. They have taken with them to Europe their impeccable status and professionalism in their approach to the day to day problems of the Community and that great honest, "ungetatable" dimension for which the Irish public service are famous. I have always been impressed by the dedication shown by the civil servants who are engaged in our European activities. If one gets a brief from them they seem to have a knowledge on a par with an encyclopaedia about even the most obscure work.

I compliment the Minister of the day, Deputy Peter Barry, and the Government on the very painstaking and careful way they got around the problem of our policy of neutrality. That leaves the door open for countries like Sweden and Austria, and perhaps Switzerland, to fill the gaps in Europe. The bigger the Community, the greater peace and freedom that will be guaranteed. I hope the Government, the Tánaiste and his Ministers of State will take a very positive view on the application for the accession of Turkey to the Community. It is a huge country which has held a 2,000 mile frontier with the Soviet Union for the past 40 years. That country's economy is very clearly on the move. It has, by some extraordinary method, combined very high technology with a high manpower input. I do not know how it has achieved that and I would dearly love to see it in operation here. It has achieved this new modern mix while at the same time employing a high percentage of people in its new and modern technology sector. I hope our Department and Ministers will support their application because the accession of that country would guarantee peace in that region. The desire of the founding fathers of the Community was to ensure that there would not be a third World War. The underlying reason for their getting together three or four years after the end of World War II was to ensure that that would not happen again and to save future generations from the holocausts, ravages, hardships, pain and suffering of war.

I wish the Minister, the Tánaiste and the Government well in the launch of their programme to create an awareness of the problems we need to surmount so that they will not impinge on our progress and that we will be in a position to benefit 100 per cent from the new market after 1992.

Mr. Mullooly

The main purpose of the studies which were conducted by the Cecchini Commission was to estimate the likely impact of the completion of the internal market on the economy of the Community as a whole. The documentation produced by the studies runs to some 6,000 pages, but the digest of the report by Paolo Cecchini, entitled The European Challenge 1992 — The Benefits of a Single Market, contains the main conclusions of the studies. The commission set about their task, first, by endeavouring to identify and quantify the huge cost to the Community of existing barriers to trade and then by proceeding to assess the potential benefits which will accrue to the Community as a whole from the completion of the internal market.

The completion of the internal market has been an objective of the Community since its establishment in 1957. The opening lines of the Treaty of Rome spelled out this goal in specific terms, and I quote:

The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of Member States, to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it.

The Treaty clearly envisaged that the Community's prosperity and, in turn, its political and economic unity would depend on a single integrated market. In order to bring this about it set out specific provisions for the free movement of goods, services, people and capital. It also foresaw that these provisions would need to be backed up by other action, such as establishing freedom of competition and developing common legislation where necessary.

Despite the clear terms set out in the Treaty, many of the orginal barriers to the internal market still remain and some new ones have sprung up over the years. Among the barriers to trade are the varying national technical specifications, health and safety standards, environmental regulations, quality controls and the differences in indirect taxation which exist throughout the Community. In addition, there are still very real obstacles to the free movement of people. Consequently, the member states have largely remained 12 separate markets and as a result the Community has lost ground to its main competitors, namely, the United States and Japan. On their own the member states simply cannot compete effectively with the giant resources of Japan and the United States. Only a single European market of 320 million which allows business to flourish on a large scale, both in terms of manufacturing research and innovation, can provide the base and the environment to meet this challenge.

The added costs which arise from the currently fragmented situation make many European products uncompetitive on the world market since they all add to what the consumer has to pay for the finished article. Among the major costs which result from this fragmentation are the high administrative costs incurred in dealing with different national bureaucratic requirements, higher transport costs, the increased costs which result from having to apply different national standards and the duplication of costs involved in separate research and development. The studies carried out by the Cecchini Commission conclude that the various non-tariff barriers to which I have referred result in an additional cost burden to industry of approximately 3½ per cent of the value of the goods produced. The report states that in some industries, such as road and air transport and financial services, the additional costs involved are much higher and could be of the order of between 10 per cent and 20 per cent.

The report also estimates that the potential economic gain from the completion of the internal market for the Community as a whole is of the order of 200 billion ECUs, which would add almost 5 per cent to the Community's gross domestic product in the short term. The report predicts that the completion of the internal market will also have a price reducing effect which could be of the order of 6 per cent. This, combined with a possible 7 per cent growth in Community gross domestic product in the longer term, could lead to the creation of up to five million additional new jobs in the Community as a whole.

Obviously, therefore, the potential gains for the Community from the completion of the internal market are very considerable. However, it goes without saying that the likelihood is that these gains will not be spread evenly over all the 12 member states of the Community. This fact was acknowledged by the member states when they drew up the Single European Act which enshrines the completion of the internal market by 1992. They recognised that the larger and more developed economies of the EC stood to gain most from the process and that the more disadvantaged areas of the Community would have to be assisted if disparities between the richer and poorer regions were not to be exacerbated.

Accordingly, there is a commitment to pursue the objective of economic and social cohesion in conjunction with the completion of the internal market. The mechanisms by which this will be done were put in place at the summit meeting in February of this year. The expansion of the budget which was agreed at that meeting will be accompanied by a significant rise in the Community's structural funds. These are the principal vehicles through which the Community assists economic development and they are to be gradually increased in size up to 1992 when they will be approximately 80 per cent higher than at present. For the less developed regions, of which Ireland is one, there will be a doubling of the level of aid from the structural funds by 1992. This increased assistance to the less prosperous regions of the Community will enable them to achieve a level of economic and infrastructural development which will ensure that they will be able to compete fully in the new market and benefit from the opportunities which the barrier-free internal market will offer.

In the implementation of the structural fund reforms we have been told that there will be new rules and procedures in relation to the submission and processing of applications and that there will be a move away from assistance for projects to the funding of integrated regional programmes. In this regard the Government should endeavour to spell out as soon as possible how the new programme approach to the structural funds will operate so that the maximum benefits will accrue to the country from the increased funds which will be available. I hope — and Senator McDonald referred to this — that it will be possible for local authorities to submit schemes directly for aid from the structural funds.

One of the criticisms levelled at the Cecchini report is that it does not attempt to analyse the regional distribution of the projected gains and losses. It deals in the main with the industrial sector and does not address the regional implications of the completion of the market. The analysis contained in the report is based mainly on research which was done almost entirely in some of the more developed of the 12 member states. These are the states which stand to gain most from the single market. The likely beneficial effects on the peripheral and lesser developed states, of which Ireland is one, have not been analysed or quantified in the report and neither have the problems which are likely to arise for these regions been identified. It is important, therefore, that we should endeavour to analyse the likely impact of the completion of the internal market on our economy and the problems which it will present for us.

One area in which this has already been done in some detail is in relation to the harmonisation of indirect taxes. The harmonisation programme in question incorporates a series of proposals to apply similar excise duties on a wide range of products and to bring value-added tax bands in the member states into line. The direct impact of bringing Irish indirect taxes into line with the rest of the Community would reduce consumer prices in this country by about 3 per cent. This would result in a significant improvement in the competitiveness of our economy and in the opportunities for job creation. Loss of business due to the distortion of competition would be eliminated with consequent beneficial effects for the Border towns. The Minister for Finance has pointed out that the gross cost to the Irish Exchequer in the first year would be approximately £470 million and £350 million annually thereafter. It is in the interest of Ireland to participate fully in the process of harmonising indirect taxes. However, I recognise that in view of the revenue implications which are involved, assistance will have to be obtained from EC sources if harmonisation by 1992 is to become a reality for Ireland.

I do not believe that a derogation from the process of harmonisation of indirect taxes would be in Ireland's interests, even if it were possible to obtain such a derogation. The result would be that Irish industry would be forced to incur unnecessary Border clearance charges and distribution costs; Border customs clearance delays would remain; imported material costs would be adversely affected; distortions of competition would continue to obtain; investment in Ireland would be inhibited and Ireland's attractiveness as a location for extra Community projects would be reduced. Therefore, I believe it is essential that a solution to the revenue difficulties which the harmonisation proposals will create for Ireland should be found at a Community level.

The potential gains for this country are so great that we cannot afford to risk missing out on the opportunities which will be available to us. However, we must also recognise that improved access and the greater opportunities which will result from the completion of the internal market will also be available to our EC partners. Inevitably, the result will be a more competitive market. It is of vital importance, therefore, for industry in Ireland, first to figure out where the new competition will come from and, second, where the new markets will be so that they can make the necessary preparations to take on the first and obtain the maximum benefits from the second. It should also be recognised that only the most efficient, competitive and quality conscious industries will flourish in the new environment. Now is the time to plan in terms of production, distribution and marketing to meet the challenges that lie ahead.

Ireland, as a major food producer, stands to benefit greatly from the removal of the plethora of non-tariff barriers relating to the food industry. The introduction of a single specification and labelling system will be of immense benefit to Irish food exporters. It is imperative that we capitalise on the clean image our nation has and build up a reputation in new markets as a producer and exporter of quality food. If we do this our products will command premium prices and great opportunities will be available to Irish processors in markets which were heretofore not accessible to us. In this context, I believe the time has come to commence marketing Irish beef under a brand name which will be synonmous with quality and purity and recognisable throughout Europe.

Some speakers referred to the lack of linguistic skills among Irish people. It is regrettable that so few Irish people are able to speak a foreign language as compared with their European counterparts. It has been suggested that this will adversely affect our ability to take full advantage of the opportunities which will be available in the new integrated market. While this may be the case with regard to some job opportunities which will inevitably come on stream in the various members states, I doubt that it will prevent our exporters from maximising the benefits and the opportunities the single European market will present. However, the teaching of European languages needs to be addressed urgently in our educational system and I sincerely hope that every effort will be made to ensure that the position will improve significantly in the years ahead.

I welcome the news that the Government are about to launch a national campaign to increase awareness among the public and, in particular, among industry of the implications of 1992. The degree to which we will benefit from the huge barrier-free market which will be opened up to us will depend on how well we are prepared to meet the challenges and the opportunities with which we will be faced. No sector of the economy can afford to be complacent. We must not repeat the mistakes which were made in the run up to our joining the Community in 1973. Complacency on the part of certain sectors at that time meant that we did not exploit fully the opportunities which membership of the Community created for us. Failure to prepare adequately to meet the challenges of the new more competitive environment which was created at that time meant that certain industries went to the wall. I believe this would not have happened to the same extent if there had been a greater willingness beforehand on the part of these industries to face up to the problems and the difficulties with which they would inevitably be faced. This must be avoided at all costs on this occasion. If the Goverment's awareness programme is successful and if all sectors are adequately prepared by the time 1992 comes around, the benefits which will accrue to Ireland in the integrated European market will be very considerable.

Mr. O'Shea

The reports before us this evening are very broad-ranging. The Cecchini report deals mainly with the industrial side of the European Community and the decline in job creation in Europe. Since we joined the Community in 1973, it has produced somewhere in the region of one million new jobs whereas during the same period some 20 million jobs were created in the United States. This happened despite the fact that the Community has something like 22 per cent of world trade compared to 15 per cent for the United States and 7 per cent for Japan. The fundamental question arises as to why the Community which has such a large proportion of world trade has not done better in the creation of employment. The single market, which will allow the free movement of goods, is bound to do a good deal for the Community. The Cecchini report says that the overall effect of this will be something like a 5 per cent increase in gross domestic product. I welcome that aspect of the single market.

The other important aspect that emerges relates to standardisation. For instance, 12 different standards were set down in the Community for mobile telephones which are being used more nowadays, and it was only possible to standardise these recently. In the United States one basic model of mobile telephone can be sold throughout the country. Because problems still remain in relation to electrical appliances and the different plugs and sockets used in member states the question of standardisation is very important. This is long overdue and has been an obstacle to industrial growth and the growth of trade in the Community.

One aspect of the new development which worries me in the local Irish context is the whole business of the changes that are coming about in the structural funds. It is proposed that the structural funds are to be doubled by 1992 but it is in the area of the Regional Fund where Ireland is one single region that I have most concern. If there is a further breaking down of the country into other regions I would suggest, as has been suggested by John Hume as a member of the European Parliament, that nine regions would be appropriate. Work is being done at present by a steering committee in Dublin. Some work is being done in the Cork area and for the west in order to gear up for the changes that are coming about in the structural funds. A very retrograde step taken by the Government was the abolition of the regional development organisations. The South Eastern Regional Development Organisation which operated in the area from which I come was finally disbanded on Tuesday of this week.

The Buchanan report which is the only real study that has been done of the regions in this country was commissioned in 1962 and the basis of it was that each region would be built around a capital and this strategy — I will relate it to my own area here, the south eastern region — was constructed around Waterford city as its capital. I believe that the regional development organisation played a very meaningful role and could have continued to play a very meaningful role and a much more meaningful role as we moved towards 1992 and the changes in the structural funds. It provided a forum for public representatives to meet and to discuss areas of common interest. For instance, the South Eastern Regional Development Organisation had developed a water management plan for the south eastern region and, in general, these regional development organisations broadened the horizons of public representatives and in that way geared us up for this new structure. There will be a Government plan for the whole country made up of programmes from regions and that programme will, at the end of the day, contain projects which will be carried out in the various counties.

I have a particular interest in regional airports. I am chairman of the south eastern regional airport committee in Waterford and one of the criticisms I would have of the Community is that there are very grandiose documents regarding the development of local and regional airports but there have been no funds to back them up. I was pleased to hear the Minister for the Environment say in Athlone last weekend at the annual general meeting of the General Council of County Councils that the new approach in the structural fund would relate in terms of roads to national primary roads, to regional roads and to access roads to ports and to airports. At present, at Waterford Regional Airport where we have a very successful scheduled flight operating between Waterford City and Luton, there is a major problem with the access road. Waterford County Council and Waterford Corporation are undertaking a survey in order to agree on the optimum route. At the moment there is no regional forum to which that project can be referred. What will happen is that Waterford County Council and Waterford Corporation jointly will make the approach to Government.

Taking the Shannon region, the facilities are there for regional development. They have been highly successful down through the years and they are to be absolutely commended on the enterprise that has created jobs and created a lot of important economic activity. I still worry, not alone about the south eastern region from which I come but also about all the other regions throughout the country outside of the western region, Cork, Dublin and the mid-western part which includes Shannon. The whole preparation for 1992 is happening a little bit too quickly for us and we are not coming to grips with it. Mr. Michael Tutty from the Department of Finance, speaking in Athlone last weekend, spoke of steering committees being set up in the various regions, that would be the sub-divisions of the country. One worrying aspect of that for me was that he seemed to be discounting any meaningful presence of local public representatives on these steering committees. He spoke possibly of one to represent a region. It would be a very retrograde step if these steering committees did not have strong representation from local public representatives because the public representatives have a feel for their areas. They hear a lot more and know a lot more about their areas — quite often more than officials know — and any steering committees that are set up without strong public representation as against the official side in my view will not be effective in terms of preparing worthwhile plans and worthwhile directions. I would hope the Government would get their act together in setting up meaningful bodies in the various regions so that they can prepare their priorities and extract maximum benefit from the changes in the structural fund.

The Labour Party had reservations about the Single European Act and possibly the largest reservation we had was on the matter of neutrality, Indeed, we also had reservations about bringing taxation into harmony because this country depends to a very large extent on indirect taxation to fund the Exchequer and our rates of VAT, for instance, tend to be high in comparison with our European neighbours. Our direct taxation is also very high and all of us would like in theory, or on the face of it anyway, to have our taxation in line there, but obviously the money has to come from somewhere to run the country. We would see this aspiration towards tax harmonisation at this point in time as being a pious aspiration. Obviously, every Member of the Oireachtas is committed to and wants to see direct taxation lowered as quickly as possible. We are not terribly happy about indirect taxation either.

We get down then to the basic problem beyond that, neutrality. This is of major concern to us. Throughout the Second World War we maintained our neutrality. We stayed out of the terrible war in Europe, even though many Irish people became involved voluntarily in the war and many of them died. That is a very large reservation we have in the Labour Party. Certainly we see that, at the end of the day, it would be to the benefit of the country if the barriers between member states were removed.

We have much gearing-up to do. This is very true in the region I come from. For instance, take one industry which is based on an indigenous product, the leather industry. The leather industry, prior to our joining the Common Market in 1973, employed 1,200 people in four plants, one in Gorey, County Wexford, two in County Waterford — Portlaw and Dungarvan — and one in Carrick-on-Suir in County Tipperary. One of the aspects of the Common Agricultural Policy is that the only part of the beast which is not subsidised is the hide. The hides come from the slaughterhouses and are passed on at virtually no cost. These in turn are sent on to the Manchester market where Irish Leathers had to buy these hides at the world price. You could have a swing from £15 to £42 in the price of the hides. The hides had to be purchased some three months in advance at the price that obtained at the time. That industry is virtually gone in the south-eastern region.

There is a prospering export of hides business going on but it is sad to go to the town of Portlaw, County Waterford — a town which employed well over 400 people in the tannery when we joined the EC — and to visit the boardroom in Mayfield House. There are glass cases around the walls there which have examples of the products that Irish Leathers could produce. For instance, it was conceded that Irish Leathers in Portlaw produced the best wet-look patent leather in the world. They had many other products which won European awards. Here we are with an industry for which the raw material is freely available, the skills are still there but, because of problems within the Community, we have not been able to allow this industry to prosper. Representations were made through the Labour Party in the early eighties to the European Parliament regarding dumping which was going on from countries outside the Community. For instance, Brazil and Argentina were able to send in finished leather at a price which was, at times, identical with the price Irish Leathers had to pay for the hides. The protocol which applied to dumping stated that a significant part of the industry — not necessarily 50 per cent — would have to object to dumping. The Irish leather industry would be a small part of the European industry.

We have not really got our act together in the whole area of indigenous industries, of the added-value products of our agricultural produce, our fish and timber. There are vast markets in Europe for upmarket products. I know the Minister of State at the Department of Agriculture and Food is actively involved in this. We in the Labour Party wish him every success and are very supportive of the work he is doing. We have the raw material; it is renewable raw material and the markets are there. The fact that we will be able to move our products into the European Continent more quickly and freely after 1992 can only be for the best.

This is a very wide subject. There are other areas where I would have negative comments to make. We are here now; 1992 is coming. We must get our act together and to exploit this opportunity to the best of our ability. We have to use it to create more employment, to stop the outflow of our young people, to stop emigration. The opportunity is there. It is a great challenge. Whatever Government are there in 1992, it is incumbent on all Members of the Oireachtas to push in the same direction to extract the maximum benefit from the changes that are coming.

Minister of State at the Department of Foreign Affairs (Mr. Calleary)

First, may I thank all the Senators who have spoken in the debate for their very thoughful and constructive contributions on the issues which were raised in the Cecchini report? There is clearly a consensus that these are very important issues for Ireland. The fact that we are completing the second of two debates in both Houses of the Oireachtas on the report is a clear signal to the key economic operators of the importance we attach to the 1992 process. It is also a clear signal to the Commission of the attention we are paying to its work in this area. I am sure our Community partners will note carefully what has been said in our debates here.

I would like to reply to the comments made by Senators under two main headings: preparations for the risks and opportunities of completion of the internal market and the development of cohesion. Before I do that I must refer to the fact that a number of Senators, Senators O'Toole, Haughey, Mullooly and McDonald, mentioned the importance of languages and spoke about education. Unfortunately, there is no mention per se in the Cecchini report. However, a report by the Commission last year pointed to the dangers of the brain drain from outlying areas to the centre. I assure the Seanad that the Government will encourage any effort made by the Community and within the Community to ensure that those going elsewhere in Europe are well equipped to cope. The Education Council of Ministers are examining a programme to promote a sense of Europe in all the member states.

Senator O'Toole and Senator Mullooly spoke about the whole question of languages. I accept that there is a great need to expand our teaching of European languages, but I recall that a number of years ago that same cry went out in relation to our need to expand our teaching of science subjects. This was done. While having no expertise in the area, I feel that, if we looked at our language teaching on the basis of a non-examination subject, we would make much more progress.

Senator McDonald and Senator Mullooly made special mention of the tremendous potential that is in our food market. The importance of our food market was recognised by the Government and by the Taoiseach when he appointed a Minister of State with specific responsibility and renamed the Department of Agriculture the Department of Agriculture and Food. The sentiments expressed by all the Senators have been well taken into account by the Government who recognise the importance — as the Senators obviously do — of our food and the high quality of our food and the importance that it will have in future markets.

Senator McDonald laid special emphasis on the tremendous advantage to Ireland of our membership of the Community. He quite rightly said — and this point was mentioned by a number of Senators — that these benefits have been somewhat understated. It is sometimes suggested, as mentioned by Senator Manning, that Ireland has the begging bowl in its hand, that we have no belief in ourselves. This is untrue. I am firmly convinced that we have a very clear idea of where we are going and what our objectives are.

May I also thank the Seanad for their good wishes to the Tánaiste? As probably most Members know, he has been around the House in the past day or so and is making a very full and, hopefully, complete and early recovery. I shall certainly pass on to him the good wishes of the Senators who spoke about his good health.

A point was made by Senator McDonald and Senator Mullooly in relation to a seminar in Athlone recently. The position at present is that the Community regulations on the Regional Fund require that all applications go through national authorities. The Government try to set priorities in the national interest as to what projects get funding. Otherwise, I think Senators would agree, there could be competition between local auhtorities and also between national schemes. However, Senators, particularly those who are members of local authorities, will know that the local authorities are involved and will be involved in the preparation of and applications for schemes. For example, there is the involvement of the local authorities in the Dublin scheme steering group.

As one who comes from the west of Ireland I was very interested to hear Senator McDonald talk about the £103 million that has gone to the east. Those of us from the west will be glad to hear that because the myth that everything that came from Europe went to the west has been finally laid to rest.

Senators spoke about the Government's awareness campaign and the implications of the single market for the Irish economy. The Government have not been slow in getting preparations under way. There is, of course, a widespread awareness in this country of what is involved in the completion of the internal market and the process of removing the remaining barriers to trade because of the referendum campaign last year. Senator Mullooly gave some examples of problems that arise from the existing barriers which still remain before the completion of the internal market. Preparations for a campaign to inform economic operators of the implications of 1992 are at an advanced stage. The campaign will be launched by the Taoiseach at the National Concert Hall on the morning of 4 July, as referred to by Senator McDonald. It will be addressed by eminent speakers from Europe and from home. The speakers will represent business and trade unions interests. A large number of guests have been invited to the launch representing business, trade union, agriculture, education and other interests.

The sectoral interests are directly involved in this campaign through the Programme for National Recovery machinery. As the Taoiseach indicated in the Dáil last month, we see the campaign as a task which has to be undertaken with the complete involvement and commitment of the sectors themselves. I am glad to be able to inform the Seanad that they are gearing up to the task in close co-operation with Government Departments and agencies.

By targeting our efforts sector by sector, the Government expect to make the maximum impact. A diffuse, nonspecific approach may give the apprearances of creating awareness. It will not necessarily inspire the key economic opeators to take the measures that need to be taken to prepare their firms for the completion of the internal market. It will not necessarily achieve the intended results, which are to ensure that the Irish economy is able to face the demands of a free internal market.

Senators Manning, Haughey and O'Toole referred rightly to cohesion in the course of the debate. Article 130 of the Single Act gives a formal position of cohesion in the Community's basic Treaties. As I already mentioned, we are disappointed that, despite the substantial resources devoted to the Cecchini report, the Commission did not attempt an analysis of the potential regional gains and losses on the completion of the internal market. While we are in no doubt as to the benefits which the internal market will bring, we are also aware from our own historical experiences of the potential adverse effects of economic integration.

The need to counter these adverse effects was recognised when we joined the Community, in Protocol No. 30 on Ireland, annexed to our Treaty of Accession. During the debates on the Single European Act in the Dáil and Seanad in 1985, Fianna Fáil speakers recalled the need to ensure that the internal market was completed in the spirit of Protocol 30. When we came, last year, to ratify the Single European Act, the Government made a declaration to this effect at the time of ratification. We intend, as the Taoiseach said in the Dáil last month, to ensure that it is acted upon at Community level. The outcome of the Brussels European Council has given the green light for the application of a programmed approach to the structural fund. Here again the Government have taken the necessary steps to give practical effect to that approach which has for so long been the aim of the EC Commisison.

As I mentioned when I opened the debate, the first steps towards the implementation of the programmed approach have been taken and it will gradually extend to the rest of the country. We have demonstrated our alertness to the need to ensure that this country continues to draw the maximum benefit from the funds which are such an important instrument in national development. The Cecchini report makes ambitious claims for the success of the completion of the internal market. We hope those claims will be met. The boost which the further freeing of trade will give to the Community's economy is bound to be to Ireland's benefit. We send nearly three-quarters of our exports to the Community market. The Government's targets for economic recovery are based on, among other objectives, the further substantial development of exports and the completion of the internal market is bound to be of major benefit to developing exports.

I should like to comment on a matter raised by Senator Fitzsimons in relation to the Report of the Joint Committee on the Secondary Legislation of the European Communities. He argued for the use of primary legislation rather than secondary legislation in relation to the implementation of European Community directives. This issue has been raised in the past in both Houses. I would remind Senators that the decision to use secondary legislation for the most part in implementing directives was taken only after careful consideration. Directives must be fully applied to member states. The text of the directives is very important in this regard. If it was not adhered to, departures from the obligations imposed by directives and, therefore, infringements of the directives and of the Treaty of Rome, would be likely to arise. Moreover, the legislative supremacy of the Oireachtas is reflected in the fact that the statutory regulations in question are invariably made pursuant to powers conferred on Ministers by Acts of the Oireachtas, in particular the European Communities Act, 1972.

Senator McDonald made a similar point in relation to the implementation of the EC Directive on Product Liability, which is covered by the first report of the Joint Committee, and which was also referred to by Senator Fitzsimons. I understand that the Minister for Industry and Commerce proposes to implement the directive by primary legislation chiefly for the reason that the directive represents a significant new measure in Irish civil law and merits being dealt with by way of primary legislation. The joint committee in their report strongly recommend this approach so that the substantive issues raised by this directive can be fully considered, a view which is shared by most member states who are also proceeding by way of primary legislation.

Senator Fitzsimons also referred to the first report on the Directive on Product Liability and appeared to have some difficulty in understanding the following statement in the joint committee's report.

Indeed, depending on the nature of the damage, there would be nothing to stop claims in respect of the same offence being made under each of the laws.

However, as I understand it, this statement means that, in relation to a a particular offence, a plaintiff could claim under (1), product liability (2), tort law and (3), contract law. This could arise, for example, in a situation where a plaintiff was claiming damage caused by (a), personal injury or death (b), pain and suffering and (c), damage to the defective product.

While a claim can be made under product liability for personal injury or death, it cannot be made for pain and suffering or for damage to the defective product itself. However, under tort law a plaintiff can make a claim for damage caused by pain and suffering and under contract law if a defective product was purchased by the injured person, he or she can claim for damage to the defective product itself. Therefore, three different types of damage can be claimed in respect of the same offence under each of the laws.

Senator MacDonald also raised a point in relation to report No. 4 of the fifth committee which dealt with the Community Trade Mark. He said the committee were concerned that the draft regulations on the Community trade mark make no provision for an official search of its registry by the Community trade marks office for prior conflicting registration. The committee recommended that every effort should be made to secure that at least a search is made and that the new application is notified to owners of appropriate prior registration. I can confirm to the Senator that the current draft of the regulation in question contains such a provision.

We see the Cecchini report as contributing to the mix of Community policies over the next few years. It will underline the importance of taking decisions on the proposals on the internal market put forward by the Commission. By itself, the Cecchini report in its findings represents part of the full picture of Community policies albeit a very important part. The reinforcement of cohesion brought about by the Single Act and the decisions of the February European Council are equally important. It is the intention of the Government to continue to monitor the implementation of cohesion policies while, of course, fully encouraging the implementation of the integral market. Again I thank all Senators for their contributions and hope that the debate has been of value.

Question put and agreed to.