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Seanad Éireann debate -
Thursday, 4 Mar 1993

Vol. 135 No. 5

GATT Negotiations: Statements

Statements are to conclude at 4 p.m. I congratulate the Minister, a former Senator, on his appointment and I welcome him to the House.

Tá áthas orm a bheith ar ais ag labhairt sa Seanad don chéad uair ó 1989. I thank you for your warm welcome and your congratulations and I am pleased to be back in the Seanad to speak for the first time since 1989.

I am happy to have the opportunity to outline to this House the current state of play with regard to the GATT negotiations. I also wish to take this opportunity to spell out the difficulties which we have with the current proposals for concluding the negotiations and the stance we are taking in the negotiations. As Senators are aware, the Lower House debated this matter last month when the Government's handling of the negotiations was endorsed.

The objective for agriculture, contained in the Ministerial Declaration which launched the Round, was to bring stability and balance to agriculture world trade through the correction of the market restrictions and distortions which had increasingly become a feature of the trading regime in that sector. This objective was further refined during the midterm review of the negotiations in April 1989 when it was agreed that a fair and market oriented agricultural trading system was to be achieved through negotiations of commitments on support and protection levels and the establishment of more effective GATT rules for this sector. Agriculture is, of course, just one element in the negotiations which cover 14 other sectors, including such complex issues as services and intellectual property rights.

Apart from being the most ambitious round of multilateral negotiations ever undertaken in the GATT — it is the eighth Round to date — the Uruguay Round is the first to deal with agriculture trade in a comprehensive way. The focus on agriculture trade must be seen against a background of increasing structural surpluses, budgetary costs and trade friction between the major agriculture producing countries throughout the late seventies and eighties.

The problems in the agriculture sector are clearly evident if we look at the experience within the Community. When Ireland joined the EC in 1973 agricultural policy was one of price support for unlimited production. This was of great benefit to our producers and led to rapid expansion and increased output in almost all sectors, which was aided by technological advances. However, from the late 1970s onwards, structural surpluses emerged in all major product areas which, together with increased pressure on the budget, forced the Community to implement a series of adjustments during the eighties to address the problem. These measures were not sufficient, however, to correct the problem and the Community continued to have sizeable quantities of products, particularly beef and cereals, for which there were no real outlets. At the same time, the budget continued to grow but producer incomes were not being sustained.

The situation could not continue indefinitely and last year there was a major reform of the support arrangements involving a partial switch in support away from market price support to direct income payments to producers for a range of commodities. Although not all agricultural interests in Ireland are completely happy with the outcome, there is general acceptance that changes were necessary and recognition that the days of over-production of commodities, for which there are no real markets, are drawing to a close.

Returning to the international scene, the discussions on agriculture and in a number of other areas in the GATT have proved to be very difficult and that is why the negotiations have long exceeded their expected conclusion date of December 1990. This difficulty has arisen mainly from different interpretations of the already stated objectives for the negotiations. This was particularly so in the case of agriculture.

The US and the CAIRNS Group, which includes Australia, Canada and New Zealand, set their sights from the start of the negotiations on the virtual elimination of all agricultural supports, in particular the EC's export refunds system. Although they subsequently modified this extremist position, they continued to insist on deep cuts in export supports together with large increases in market access opportunities.

The Community, on the other hand, argued that reform should be gradual and balanced and that agreed reductions in support should be dealt with in an overall way by addressing all production and trade impacting policies. This aggregate or global approach was seen as necessary because of the complementary and interrelated nature of the various support mechanisms of the Common Agricultural Policy.

Although in the early negotiations the Community managed to successfully defend this global approach, the Commission negotiators, under pressure from other trading parties, indicated in December 1991 that the EC might be prepared in certain circumstances to make some commitments on minimum market access and on the volume of subsidised exports. This was done despite strong reservations from Ireland and a number of other member states that the Commission was going well beyond the negotiating mandate given to it by the Council.

In an effort to conclude negotiations, Mr. Arthur Dunkel, the Director General of GATT put foward proposals, known as the Draft Final Act, to conclude the negotiations in all sectors in December 1991. The Community refused to accept these proposals arguing that they were unbalanced, particularly in relation to agriculture and the Commission was instructed to participate in further negotiations with a view to securing a more balanced and global package.

After several false starts, the US and the Commission, representing the EC, began intensive negotiations last autumn resulting in a meeting in Blair House, Washington, at the end of November where an outline agreement was reached on agriculture and oilseeds in the context of the Uruguay Round. The outline agreement covers a six year period and the main elements are as follows: the Common Agricultural Policy reform compensatory payments and similar payments elsewhere would not be subjected to GATT disciplines: other internal supports would be reduced by 20 per cent and credit would be allowed for reductions already undertaken since 1986; border measures, e.g. levies, would be converted into tariff equivalents which would be reduced by 36 per cent; minimum access commitments of up to 5 per cent of domestic consumption would be provided for and current access would be maintained; average 1986-90 subsidised exports would be reduced by 36 per cent in budgetary terms and by 21 per cent in volume terms; a "peace clause" which provides that once domestic support and export subsidy commitments are complied with, there would be no resort to GATT disputes procedures; and on oilseeds, the Community agreed to limit support for production to that produced from a certain hectarage and also to a minimum set-aside arrangement.

Following the draft EC/US deal, the Commission, despite objections from some member states, again undertook its negotiating responsibilities and submitted revised schedules to GATT in general based on the elements contained in the Washington deal.

The draft agreement between the Commission and the US negotiators has yet to be approved by the US Congress and by the other parties to the GATT. Within the Community, the agreement has not been formally accepted by the Council of Ministers. If the Congress and Council were to approve this or another agreement, it is likely to be accepted in due course by all GATT participants. The expectation among many commentators was that once the agriculture sector was agreed it would be easy to conclude an agreement on the other aspects. This has not proved to be the case and severe difficulties are now being experienced in a number of other sectors especially market access and services in addition to agriculture. The question of acceptance or rejection of a GATT deal will not arise until an overall package covering all sectors has been agreed.

At this stage I would like to make it clear that Ireland in the various negotiating fora has always recognised that a fair and balanced outcome to the GATT negotiations would give a valuable boost to the world economy. In fact, the Irish position in relation to the Round has been consistently positive and supportive and this stance was fully reflected in the statement by Dáil party leaders on the Round on 6 November last. We have at all times accepted that failure to conclude an overall GATT deal would not necessarily mean a return to the status quo. This clearly will not be the case and the increasing recourse to unilateral actions and to challenges in GATT by some countries which was a growing trend in international trading conditions in recent years are worrying.

The agreement on oilseeds, which was concluded at the same time as the deal on agriculture, prevented a damaging trade war which could have affected some of the major Irish exports to the US, including Waterford glass, cream liqueurs, casein and cheeses. However, while a stable trade environment is clearly in our interest, I have always stressed throughout these negotiations that any final GATT agreement would have to be balanced and global and take full account of our particular concerns.

The Community's negotiating mandate for the agricultural aspects makes it clear that there cannot be an agreement which, in effect, only covered agriculture or which would result in the Community being asked to bear an unequal share of the burden of reform of international markets. It is also worth recalling the Council's position that any agreement must be compatible with the Common Agricultural Policy reform outcome, already referred to, which was concluded only after long and arduous negotiations last May. The measures agreed in these reforms are only now being implemented within the Community and it would be extremely unreasonable to ask EC producers to make even further sacrifices in the context of GATT.

It is against that background that we must assess the EC/US agreement. We have, of course, examined the Commission's outline of the agreement and its assessment of its compatibility with Common Agricultural Policy reform. We have also seen statements made by the US side on the outcome, but we also needed to have a more detailed explanation of the agreement and to have it evaluated line by line at Community level with full particulars being provided by the Commission. For these reasons the Minister for Agriculture, Food and Forestry, Deputy Walsh, sought and obtained a Council commitment at the January meeting of Agriculture Ministers that this detailed evaluation should be undertaken immediately at expert level so that Community negotiators could be given appropriate instructions in the on-going GATT discussions in Geneva. This analysis has been on-going for some weeks and it is expected that a report will be made to the next Agriculture Council on 16-17 March. That Council is likely to ask the experts to continue their analysis of the agreement.

As a result of our preliminary analysis of the draft deal, we can accept that improvements have been secured over the Dunkel formula, in particular the exemption of Common Agricultural Policy reform and disadvantaged areas payments from GATT disciplines. We have welcomed this and will continue to insist that this element is transposed into a final GATT agreement. Likewise, we welcome the Commission's assurances that the US has accepted the Community's tariffication and access proposals.

However, despite the improvements secured vis-a-vis the Dunkel approach, we have major difficulties with the overall agreement. The analysis which we have carried out to date, and which in my view has not been reflected in the discussions at expert level, show that the Community would be required to bear a disproportionate share of the reform burden. We also believe that the undertakings could not be accommodated within the parameters of the Common Agricultural Policy reform agreement in a number of sectors. In fact, this view is also accepted in the Commission's own analysis — specifically for beef and implicitly for some other sectors.

Given the contribution which agriculture makes to our econmy, such an outcome would create major problems for Ireland and we have made this very clear in all the relevant fora. Our concerns are exacerbated by our heavy reliance on export markets which leaves us particularly exposed in an over-supplied market.

From our point of view, the main risk arises from the proposed volume restraint on subsidised exports and the methodology to be used in meeting commitments. The 21 per cent reduction together with the access arrangements would inevitably require the Community to reduce production much further than was envisaged in the Common Agricultural Policy reform in a number of sectors, especially beef, and the problem is made even more acute by the requirements to reduce exports in the first year below 1986-90 levels and by linear cuts thereafter with minimum flexibility.

In the beef sector, this would require the Community to reduce exports by more than 200,000 tonnes on current levels in the first year and by 400,000 tonnes in the final year. The Common Agricultural Policy reform measures will not reduce Community output by these amounts and, even if we wanted to do so, it is extremely difficult to put measures in place now to reduce beef output by the start of any agreement. It is also of concern to me that the restriction on subsidising exports to East Asia would remain. This makes the situation even more difficult.

While similar problems will arise in other sectors — milk is a major concern of ours also — the problem is particularly acute in the beef sector. Other questions such as the precise terms of the peace clause and the way in which sizable intervention stocks will be disposed of before the commencement of the agreement must also be answered. The Commission acknowledges that stock disposals will be a problem but a solution has not been proposed. This aspect is of particular concern given the current very high levels of Community stocks of cereals and beef.

With regard to the domestic support aspect, the EC would not have to do anything additional to meet the proposed 20 per cent reduction. The reason for this is that estimated current support, which takes account of Common Agricultural Policy reform, is significantly lower than in the base years put forward by Mr. Dunkel. The Commission estimates that there would be a surplus of some 13,000 mecu which could be used to cushion the impact of measures in other areas. But of course, additional budgetary resources would be required to fund such measures.

The domestic support aspect also covers the now infamous "green box" of policies which will not be subject to reduction under the GATT agreement. The Commission has confirmed that headage payments in the disadvantaged areas would be exempt from reduction and the provisions of the final text will have to cover this. This is one of the aspects that we will be seeking to clarify in the on-going discussions at expert level. It should be recalled that when the Council was finalising the negotiating mandate in November 1990, the Commission gave a firm undertaking that the level of these payments would not be reduced. Our aim is to ensure that not alone is this commitment respected but that nothing in the agreement would preclude the level of payments from being increased in the future. The proposed "peace clause" gives rise to some concerns in this respect and we will be clarifying the position with the Commission during the discussions already referred to.

Border protection covers the tariffication of border measures such as variable levies and commitments on current and minimum access. The proposals put forward by the EC in relation to tariffication, together with the suggested safeguard clause, should provide adequate protection for almost all sectors of interest to Ireland. A risk was identified in respect of skim milk powder and sugar but the Commission is proposing a lower rate of reduction for these products. The minimum access commitment, and in particular the level of aggregation that will be permissible, is the most critical concern in this area. The Commission has proposed an aggregation approach in its submissions to Geneva and has assured the Council that this has been accepted by the US. We are seeking to ensure that the final agreement makes this explicit. It is absolutely essential that there is no misunderstanding on this point and that all parties accept it.

There are, of course, some positive aspects to the minimum access commitment since all other parties, including the US, would have to open up their markets so as to meet the 5 per cent commitment, if it is not already being met. Thus EC producers would be able to export dairy products to the US market within these limits but they would of course be in competition with the other parties in the GATT.

The timing of the final stages of these negotiations is not clear at the moment. When one considers that every deadline in this Round of talks has been broken, I think it unlikely that there will be an early conclusion to the negotiations. A lot will depend on the attitude of the new US Administration and our latest information from Washington suggests that the new US Administration will be seeking an extension of the fast-track negotiating procedure but the timing, conditions and duration are not yet known. The accepted view is that the Administration will seek a six to nine month extension of the procedure and so negotiations will probably not be concluded until early 1994 and not implemented until 1995. Recent comments from Washington suggest that the US side itself may have some problems with certain elements of the EC/US outline accord, on agriculture, and in other areas of the talks, which the new Administration will wish to take up in the ongoing negotiations. A special review group is now examining the US concerns in relation to all aspects of the Round and the position should become clearer when this group has reported.

As has already been stated the GATT negotiations cover some 15 sectors, including agriculture. In due course a decision may have to be taken on acceptance or rejection of a GATT deal. That decision will take account of Ireland's balance of interests in all sectors. The implications for future employment levels will of course be an important element in that decision and the impact on agriculture, our largest indigenous industry, will be the principal consideration in that decision. The Minister for Tourism and Trade who has overall responsibility for GATT and these negotiations will shortly authorise a consultancy study to examine the impact on all sectors. The study will be carried out in co-operation with the Minister for Agriculture, Food and Forestry and with the Ministers for Finance and Foreign Affairs. The conclusions of this study and the resulting recommendations will be submitted to the Government as soon as possible.

In conclusion I would like to summarise the position and our major concerns again. We would have major difficulties with any agreement on agriculture not compatible with Common Agricultural Policy reform; volume restraints on subsidised exports pose a serious difficulty for Ireland and no one should under-estimate the extent of the problem which this aspect creates for us. The agriculture aspect cannot be dealt with in isolation or before a complete analysis of the overall GATT outcome has been undertaken. Ireland has always been committed to a comprehensive and balanced result to the Round. Equally we have been absolutely clear that our critical interests in agriculture, and indeed other relevant areas should not be sacrificed to this end. That remains our position and only when all issues have been negotiated to the point of maximum possible consensus can the Government adopt its final position on the Round. In regard to agriculture, I would emphasise, however, that in that final position we will not accept an outcome which goes beyond the Common Agricultural Policy reform parameters, unless we secure explicit commitments that our vital agriculture and food interests will be protected.

I compliment the Minister on his appointment and wish him well in his difficult job. A Chathaoirligh, it is impossible to deal with the question of GATT and agriculture in ten minutes so I will deal with a few aspects only

We need, at this stage, to examine the background to the agriculture industry. Lately the Minister, Deputy Walsh, mentioned an 18 per cent increase in agriculture incomes in 1992 but he omitted to state that there had been a 12 per cent decrease in those incomes in 1991. The overall increase in those two years would be about 4 per cent. The only two products to receive substantial price increases in 1992 were milk and pigs. Sheep farmers, cereal growers and beef producers had bad returns in 1991 and 1992.

I would like the Minister's opinion on the study in progress at present in Brussels, on whether the MacSharry proposals will conflict with Common Agricultural Policy reforms. I understand this study will report back by the end of March. Can the Minister say, if the study report clearly states that the proposals do not conform with Common Agricultural Policy reforms, whether it will be sent back for negotiation or will there be a renegotiation of the entire deal? We need this information now. I was unaware that this study was in progress as it had received little publicity, nevertheless I consider it important.

Agriculture and food products account for approximately 40 per cent of Irish net exports. Seventeen per cent of total employment is based on agriculture and agriculture exports are worth approximately £4 billion annually. GATT proposed that between 1993 and 1999 the level of EC exports in volume terms would be cut by approximately 21 per cent and the value of export refunds by 36 per cent. It also proposed to allow an increase in imports of between 3 and 5 per cent in each product sector. These cuts would cost Irish agriculture between £200 million and £250 million. This has not been accepted by the Department. It is hard to arrive at an accurate figure, but it would be reasonable to say that the loss to Irish agriculture would be in that region. That is a large sum of money. This is in addition to already having 300,000 people out of work. This will have a devastating effect on employment in the agriculture industry.

It is impossible to go into all areas of agriculture in the time available but I will say a few words about beef. It should be remembered at the outset that the price for beef is 40p per lb. in Argentina and about 50p per lb. of carcase weight in Australia. EC beef output is about 8 million tonnes of beef per annum. As consumption stands at about 6.8 million tonnes, this leaves a surplus of approximately 1.2 million tonnes annually. The post-GATT limit for beef exports for 1994 will be less than 1 million tonnes. This means a reduction in exports of over 200,000 tonnes compared to 1992 levels and eventually the reduction will be 400,000 tonnes. I wish to inform the Minister this will have a serious impact on the beef sector. From time to time there is a surplus on the market and last year there were approximately 200,000 extra beef cows and their progeny will come on the market in 1994 and 1995. The same applies in France and Germany. They have increased numbers of suckling cows, as they are known in Ireland and we are paying a subsidy on them. Not alone will there be a reduction in our exports but there will be substantial increases in our production levels. This will have a serious impact on the amount of beef available on the European market and a devastating effect on the overall price. Beef prices in other countries, particularly in Australia and New Zealand of 40p to 60p per lb. are unrealistic in relation to our production costs. We cannot, under any circumstances, produce beef at those prices.

The proposed 21 per cent cut in the volume of EC dairy exports will mean a cut of 24 per cent to milk producers in the 1991 levels of production. The Common Agricultural Policy reforms for dairying outline two 1 per cent cuts. This will not be sufficient to meet GATT requirements. It is proposed that dairy imports will rise by 5 per cent on the domestic market. This combination will require a 5 per cent reduction in our national milk quota. The position will be especially critical for cheese exports. GATT may allow an increase in EC butter exports but, as we know, there is very little demand for this. Irish dairy production is now facing the same fate as the Danish dairy industry. Over the past 30 years in Denmark the number of milk producers has dropped from 185,000 to fewer than 15,000. The goal is to have a single dairy co-op. At present 85 per cent of Danish milk production is controlled by such a co-op. This is something we cannot visualise for this country. We have six or seven large dairy co-ops. It can be argued that allowing the dairy co-ops to work together gives them more power in marketing and cuts down production costs. However, I cannot see the two large dairy co-ops — Avonmore and Waterford — getting together over the next four to five years. I have been involved in negotiations that have been going on for approximately five years. Under the existing structures it is impossible to bring them together.

We cannot compare ourselves to Denmark. Milk is very important to our agriculture industry. We have approximately 2 million dairy cows and they form the foundation for the agriculture industry because they also supply beef.

I want to say a few words about sheep meat. Sheep meat is very important to this country. We have a large sheep herd. I have argued in the Dáil over the past two years about the importation of New Zealand lamb. I again appeal to the Minister on this matter. A GATT agreement allows New Zealand to export to the EC approximately 200,000 tonnes of lamb. I have no problem with that because there is a slight shortfall and we are unable to fill requirements on the home market. What I object to is importing lamb into the EC when the markets are loaded, as they are continuously from April to September. These imports cost Irish lamb producers approximately £10 per head and the Irish consumers get no value from this. We have seen through the years that while sheep meat is bought on the open market cheaply, it is not sold cheaply either through butcher shops or supermarkets.

The British are the greatest abusers of this system. In May, June and July in particular they continuously import low quality lamb and flood the British market. I have described this as dumping and will continue to so describe it. We have built up a good sheep flock which has been very successful for farmers. This abuse is costing them the difference between making a reasonable profit and no profit. Were it not for subsidies many sheep farmers would have to get out of producing lamb. I appeal to the Minister to look at the situation in respect of sheep meat. Little is being said about it. I also ask him that arrangements be made in respect of the New Zealand imports, so that in the six months from October to March we would accept their imports into the EC based on the GATT agreement.

The beef regime is due to be reviewed later this year. I am advised there is likely to be a reduction in the aid quota and a price drop also. This must be thoroughly resisted since it is one of the few profitable sectors of farming currently. While progress was made in such matters as exempting direct income aids from GATT cuts, it is clear market related premia, such as the ewe premium, may be affected in further negotiations.

The GATT agreement is complicated and people fail to understand its implications. Over a number of years the Americans have allowed farmers to increase the volume of all their products, particularly milk and beef. They are still arguing that the EC should cap all levels of production. I am not against that, provided everybody does the same. The same argument is going on in New Zealand and Australia, but they are allowing their farmers to increase the volume of production in the hope of getting into the European market because their costs are much lower than ours and they can make profits considerably easier.

Only when GATT is tried in practice will we see what the results are. No one knows how the set aside of cereals is going to work; neither does anybody know what the volume of production will be.

It is not expected that the GATT negotiations will be complete before 1995. I am glad of that because it will give us more time for debate and our farmers more time to get used to what is going to happen.

I welcome the Minister to this House. I congratulate him on his reappointment which is well deserved and justified.

I am pleased to speak on this most important subject.

I commend the Leader of the House for agreeing to put this important debate. On our first sitting day he was asked by several Senators to have a debate on GATT and he responded. He was commended also for responding to requests yesterday for many items of importance on the Order Paper today.

Many people, especially those in farming organisations, are concerned about the GATT deal reached in Washington last November and its implications for Irish agriculture. It is generally accepted that that agreement went beyond the Common Agricultural Policy reform package agreed last May. The Minister in his speech said:

The objective for agriculture, contained in the Ministerial Declaration, which launched the round, was to bring stability and balance to agriculture world trade through the correction of the market restrictions and distortions which had increasingly become a feature of the trading regime in that sector.

The GATT was first signed in 1947 and is both a unilateral treaty providing a code of rules for the conduct of world trade and a forum where countries can discuss and resolve their commercial problems and negotiate the reduction of barriers to trade. The dual purpose of the GATT is embodied in the main principles and the multilateral trade negotiations. The main principles of the GATT include the following: non-discrimination between trading partners, achieved particularly by the application of the most-favoured-nation clause; protection of national industries solely through use of custom tariffs; binding of custom tariffs in "tariff schedules"; negotiations with trading partners in order to compensate for increases and consultation and dispute settlement procedures.

The GATT regulations also state that derogations from the rules can be granted to regional trading groups, to developing countries and in emergency situations. That provision is important for Ireland which should be considered a developing country.

This is the eight Round of negotiations and began in September 1986 with a ministerial meeting in Uruguay. Having overcome some difficulties, the participants decided to include agricultural services and intellectual property rights in the list of subjects for negotiation. In addition traditional subjects such as tariffs and non-tariff measures and safeguards were to be discussed. With immediate effect the participating countries adopted a so-called stand-still and roll-back clause, whereby they undertook not to introduce any restrictions inconsistent with GATT privileges during negotiations and to gradually dismantle existing restrictions of this nature. With all that was undertaken it is understandable that the talks have been underway for almost six and a half years and, according to the Minister, will not be concluded until 1994. Senator D'Arcy welcomed this date and I agree it will allow more time for discussion and for the teasing out of decisions that will affect our country.

At the start of the agriculture negotiations a ministerial declaration stated that there was an urgent need to bring more discipline and predictability to world agriculture trade by correcting and preventing restrictions and distortions, including those related to structural surplus, so as to reduce uncertainty, imbalances and instability in world agriculure markets. A mid-term review of the negotiations in April 1989 agreed that a long term reform objective for agriculture should be to provide for substantial progressive reductions in agricultural supports and protection sustained over an agreed time so that for the first time agriculture could be brought under the general rules and disciplines of GATT with a serious attempt to reduce international protectionism.

The CAIRNS Group, that is Australia, New Zealand, Canada and the United States, has for a major part of the negotiations been insisting on the total elimination of all agricultural support with special reference to the EC's export refund system. Border protection measures and export refunds are an integral part of the dual pricing system of the Common Agricultural Policy and are linked inseparably to the overall support. Separate and specific commitments, market access and export refunds could have a serious adverse effect on Common Agricultural Policy and result in major changes in trade. These changes would have serious consequences for Community markets and in particular for the Irish economy which is heavily dependent on export markets both within the Community and in third countries. Singling out export refunds, for instance, for special treatment would have serious consequences for Irish farmers, processors, the Irish food industry and related industries.

Since the beginning of this round of negotiations the Community has defended its strategy on agriculture successfully. There were isolated occasions on when it was indicated that the Community, subject to certain conditions being met, would be prepared to undertake some commitments on minimum market excess on the volume of produce which would be exported with export subsidies. Ireland completely disagrees with this policy, stating that such commitments are beyond the Council of Ministers' negotiating mandate. I understand other EC member states also object to this policy and I am sure Ireland will continue to object to it with vigour in the future.

After intensive negotiations between the United States and the Commission last year an agreement was reached in Washington at the end of November that Common Agricultural Policy reform compensationary headage payments and similar payments would not be subject to GATT discipline. This was a satisfactory aspect of the agreement but the next main element of the agreement will be disastrous for Irish agriculture. This element provides for the reduction of internal supports by 20 per cent over six years. Border measures, i.e. variable levies, will be converted to tariff equivalents, based on a system suggested by the Community, to be reduced by 36 per cent over six years. Average 1989 subsidised exports would be reduced by 36 per cent in budgetary terms and 21 per cent in volume terms from 1994 over six years. The Minister outlined all of these proposals in his introductory speech.

Within the Community the November GATT agreement will have to be accepted by the Council of Ministers. However, I understand the Commission has submitted revised schedules to the GATT headquarters in Geneva based on elements contained in the Washington agreement. There should be no question of an agreement on agriculture only which required the Community to bear an unequal share of the reform of the international markets. It is worth recalling that in this connection the Council's position is that any agreement must be compatible with the outcome of Common Agricultural Policy reform which was concluded after long and arduous negotiations last May. The impact of these reforms is only now being fully appreciated within the Community and it would be totally unreasonable and irresponsible to expect European Community producers to make further sacrifices in the context of GATT.

The results of the Common Agricultural Policy reform negotiations were satisfactory for Ireland. There was a definite need for Common Agricultural Policy reform but it was important that the reform include an effective support policy which would ensure a more equitable distribution of support and that the position of developing countries on the periphery of Europe, such as Ireland and poorer countries, would be recognised.

With regard to the preservation of the traditional family farm, especially in Ireland, protection restrictions must be kept at a minimum and there must be adequate compensation for any further necessary restrictions on production. I suppose farming production can be increased easily through fertilisers and intensive farm management. Production restriction is necessary, probably, for the the purpose of control and especially tight maintenance.

With regard to Common Agricultural Policy reform, our negotiator, the Minister, Deputy Walsh, did a good job. He ensured that the herd limit for suckler cows was abolished, that the proposed milk and price quotas were dropped and direct headage and premia payments were increased from about £330 million to £620 million. I congratulate the Minister for negotiating a good deal for Ireland on Common Agricultural Policy reform. I am confident he will make sure that Ireland's position will not be affected and that our interest will be maintained in the outcome of the GATT negotiations.

As Senators said, agriculture is vital to our economy. It is a great source of employment, especially in its spin-off industries. With regard to agriculture, our position must be that any outcome of the GATT meeting which goes beyond Common Agricultural Policy reform cannot be accepted because agriculture is vital to this country.

I also welcome the Minister, Deputy Hyland. However, he is not here as Minister for the Department of Agriculture alone, but of Food and Forestry. I would like to talk about the food area.

The task facing us is one of providing jobs and success in the future. Those jobs will not be created in agriculture. The figures show there is less potential for employment growth in agriculture than in the food industry. I welcome this debate because it will highlight to the Irish people that the future of the GATT negotiations is important to us. The fact that the outcome of these negotiations is once again in some doubt is bad news for Ireland. That the world seems to be slipping back into protectionism is something we should be concerned about.

There are three reasons the GATT agreement is of importance to us. First it is important in regard to the EC and the wider European area and that area's trade with the outside world. Our membership of the EC has removed the trade barriers between us and other EC countries, but trade with the rest of the world, with perhaps one exception which I will mention later, is of vital importance to us. Our ability to sell within the EC depends on the ability of the EC economies to survive and thrive. They are the ones to which we sell and they depend on their ability to trade outside EC borders. We tend to forget that one of the major aims of the Single Market is not just to increase the trade flows inside the EC but also to increase EC strength in world markets. If Europe is to prosper and not be left behind, the next move forward to world economic growth will need favourable trading negotiations at the Uruguay Round of the GATT talks.

The second reason GATT is important to Ireland — and I acknowledge its importance for agricultural exports — is that if we get this agreement it will extend the concept and practice of free trade into services. That is a wider area in addition to manufactured goods and agriculture. The broadening of the GATT approach is of vital concern to this country because, potentially, nobody stands to gain more than we do in a liberalisation of world free trade in services. I am convinced that our biggest task over the next ten years or so must be to bring to the development of tradeable services the same energy, resources and effort that we put into the development of manufacturing industry and agriculture in the past.

Services is the area in which we can overcome the disadvantages we have, being on the periphery of Europe, by using the telecommunications that have become available in recent years. Services is also the area where we can employ larger numbers of people because services, by their nature is a job intensive industry. It is the area where we can get that competitive advantage out of our key resources, our well educated young people and a tradition — which stretches back over centuries — of imagination and creativity that has very often only shown itself when our people have gone abroad. We have dipped our toe into this pool already with activities such as financial services and remote data processing of which there are many successful stories, particularly in the west of Ireland.

In the years ahead this is the area we need to develop more aggressively alongside our continuing efforts to broaden our manufacturing and agricultural capabilities. If a large part of our future is in services, as I believe it will be, it becomes of vital national interest that we have a world in which there is free trade in services as well. That is the new ground the new GATT agreement can open up. That is why a failure to achieve agreement would be a serious setback to our development, even in areas outside agriculture. While we must take agriculture into account in the GATT negotiations, it is only one of a number of cards that we have to play.

The third reason GATT is important to us in Ireland is that the United States is our fourth most important export market after Britain, Germany and France. In fact, to say it is our fourth most important market is to understate its importance by a long shot. To indigenous Irish companies that are usually small and medium in size, the US is a key market, probably export market number two and, in some cases, even export market number one. What this means is that our trade relations with the United States are of vital importance to the economy and they are of vital importance particularly in the area of trying to create jobs.

It must be a matter of considerable concern to us that the new American Administration seems to be considerably more hawkish to trade than the previous Administration. They seem to be considerably less ready to move forward on GATT and they seem to be about to turn the clock back towards protectionism instead of towards a freer world trade.

I make this point because of the apparently conciliatory remarks of President Clinton at the end of last week. On that occasion he took an upbeat, almost a free trade, approach but unfortunately we are getting conflicting signals from the Clinton Administration, and even from the President. In the first five weeks of this new Administration we have seen threats of punitive duties against European goods, including Irish goods. We have also seen the rowing back on the agricultural agreements between the US and Europe which were concluded with such difficulty at the end of last year and which are an essential prelude to making further progress on GATT.

We have seen an escalation of the dispute between the US and Europe over aircraft manufacturing, a dispute in which the President, speaking to the Boeing workers in Seattle, made some rather aggressive remarks about protectionism which is bad news for Ireland, and for the world. This hardline attitude of the new American Administration to international world trade threatens recovery around the world. A point which I made at the University of Southern California in Los Angeles last week was that this approach could rebound on the Americans and lead to a trade war. The United States has the most to gain from a global economic recovery and most to lose in the long run, if it focuses on short term gains only and tries to keep for itself the benefits of the current recovery.

I would like to make a practical suggestion on this matter. In a fortnight's time, around St. Patrick's Day, Government Ministers will travel overseas particularly to the United States. They might put Ireland and the GATT at the top of their agenda ahead of the usual local issues. The future of GATT and the current flexing of muscles by the Americans on the trade scene is an issue of direct and vital concern to us and our Ministers should say so. The present stance of the United States endangers their own position as well as the rest of world trade.

Increased world trade can be an important stepping stone to world peace and may help to establish justice, firmness and fairness between developing nations. This vision should be part of Ireland's approach in day to day trade negotiations. Let us wear an agricultural hat but let us not forget the food hat, the services hat and the other benefits we will receive from the conclusion of a successful GATT negotiation.

I welcome the Minister to the House. Many Senators declared their interest before they spoke and I would like to declare mine. Before the Tánaiste and Minister for Foreign Affairs, Deputy Spring, and the Taoiseach, Deputy Reynolds, took pity on me and offered me this job I was a full-time farmer. I lived and reared my family on what I produced from 50 acres and therefore, I see Common Agricultural Policy and GATT in a different light from others. I would prefer if people did not take what I have to say as criticism but as a difference of opinion.

Last week when the redundancies at Digital were announced all hell broke loose. I work at the coalface of an indigenous industry in which, at a conservative estimate, 800 workers are forced into redundancy every month. There is reliable indication that when Common Agricultural Policy and GATT are in place, monthly farm redundancies will be equivalent to the closure of two Digital factories. I am amazed that we kick up such a fuss about Digital, a multinational company over which we have no control, while we remain silent over the number of small farmers, equivalent to the workforce of 12 Digital factories who leave the land each year. That number could be reduced with a bit of common sense and at no cost to the Exchequer or to the PAYE sector.

When the former EC Commissioner for Agriculture, Mr. MacSharry, set about reforming the Common Agricultural Policy he wrote in a foreword to his proposals:

Our policy has not prevented large numbers of farmers leaving the land. Furthermore 80 per cent of Common Agricultural Policy resources go to 20 per cent of the farmers because of the systems linkage of price support to food volume.

As a small farmer I was delighted when I heard Mr. MacSharry say that because I believed he was a man who knew what was wrong and was in a position to do something about it. Unfortunately I was wrong. It is a case of the best laid schemes o' mice an' men Gang aft a-gley, an' lea'e us nought but grief and pain, for promised joy.

The revised Common Agricultural Policy, which relies heavily on indirect income aid — some might call it dole — continues the system which puts small farmers at a disadvantage. For example, a large farmer who in 1992 was able to buy 100 cows secured for himself £400 of indirect income aid per week. The small farmer who purchased ten cows only received £40 per week. It is no coincidence that when agreement on Common Agricultural Policy was reached the British Agriculture secretary, John Gummer, was loud in his praise of Mr. MacSharry. Mr. Gummer was not thinking of small Irish farmers.

In addition to Common Agricultural Policy being loaded against small farmers, there is evidence of a well organised campaign to encourage small farmers to leave their holdings. Farmers are told in order to survive that they must have large acreage and do things on a large scale. According to figures I received from Teagase this is not the situation throughout Europe. We are being told one side of the story only. For example, there are 1.5 million dairy farmers in the EC with an average of 16 cows per holding. Seventy five per cent of them produce less than 22,000 gallons of milk while 15 per cent produce over 44,000 gallons. Cattle rearing takes place on 2.6 million holdings in the EC. The average number of animals is 32 animals per holding and 80 per cent of holdings have less than 20 animals. One million farmers keep sheep in the EC; 50 per cent of these have fewer than 50 ewes. There are 4.3 million farmers growing cereals and the average area under cereals per holding is 17.6 acres. However, 88 per cent of cereal producers sow less than 44 acres. We are reminded constantly about the large farmers in England and France but we are not told about the small farmers throughout Europe. I wonder why?

It has been Government policy for many years of successive Administrations to encourage small farmers to leave the land in order to take up jobs. Those jobs are non-existent. That policy should be reversed so as to discriminate in favour of small farmers. If a proper direct income payment — I use the word "direct income" intentionally — was made relating to the adjusted acreage of the holding and family numbers and not to production or animal numbers, many of the estimated 8,000 to 10,000 farmers who leave the land each year would not do so. A family income supplement of the type which the ICMSA leader has called for, could be provided out of a small pecentage of the £1,500 million Ireland receives in Common Agricultural Policy transfers. If three per cent of the Common Agricultural Policy transfers was reserved — this could easily be done, given the amount of money fraudulently claimed for beef intervention — £90 per week could be given to 10,000 farmers to keep them on their holdings. This measure would be of great help and should be seriously considered. Farmers are leaving the land because they do not have enough money to remain.

There has not been a national agricultural scheme which treated farmers equally since Deputy Blaney was Minister for Agriculture. At present there are some pilot schemes in operation, one of which is known as the "bottoms up" scheme. We thought that had something to do with sex and we did not apply for it.

We have the Leader programme in parts of the country, and I hope what is happening in Tipperary is not an indication of how much is going to the small farmers. Before we conclude the GATT negotiations something will have to be done about the Common Agricultural Policy and some income given to smaller farmers.

I endorse the remarks made about the Minister and I welcome him here this afternoon. Senator Kiely said that the Minister's re-appointment was deserved and I share that view because I know the work he did in the previous Administration.

There is an implication in much of what has been written and spoken about in relation to GATT that an agreement has almost been reached. That, of course, is not the case. What we have is a bilateral deal between the EC's Commissioner for Agriculture and the United States, and it is only a bi-lateral deal if it stands up. We are in the position of almost excluding the 94 other countries which are party to any proposed GATT deal. That is important and needs to be borne in mind. Several Senators have talked about the importance of agriculture to the Irish economy. There is no need to go into the figures in detail other than to say that about 42 per cent of our net foreign earnings are derived from food exports and about 26 per cent of our exports are agricultural compared to about 9 per cent for the Community as a whole. That puts the position in relation to Ireland into perspective, and the outcome of the GATT agreement is crucially important for us.

I support the view expressed by Senator Quinn that it is important for us, as a small open economy, to have an agreement on GATT but I do not subscribe to the view that that agreement can be achieved at the expense of agriculture and the farmers whom Senator Townsend has so eloquently defended. Farming is an indigenous industry and, while I take the point made by Senator Quinn in relation to food, the two matters are intimately connected. We cannot look at one to the exclusion of the other; we must look at both together. Culliton has pointed the way in relation to how we can create jobs and how we can develop our indigenous food industry. I support the findings made by Culliton in that regard.

The concern my party had about GATT was such that in June 1990 in this House we put down a motion — which I am glad to say was supported at the time — rejecting the negotiating position of the United States of America on the GATT Round. Subsequently Deputy O'Malley, in his capacity as Minister for Industry and Commerce, told the GATT partners that the negotiations must allow the EC to continue to support agriculture and that strong rural society must be maintained not just in Ireland but throughout the Community. That is the position which needs to be maintained by all our negotiators in the weeks and months ahead. To do otherwise would condemn us to even more of the rural blight about which Senator Townsend has spoken.

The food sector has been identified as a source of growth in jobs but it is bound up with agriculture. If, as almost inevitably will be the case, as a result of Common Agricultural Policy reform we are faced with decreasing production of our land to supply the food industry, the dairies and beef factories, then the consequences are apparent from the point of view of unit costs and competitiveness within the industry. The greatest problem is that our competitiveness is based on our undoubted ability to produce grass to the extent that no other country, with the possible exception of New Zealand, can produce.

In Common Agricultural Policy reform we are faced with giving cereals a competitive advantage and allowing them to replace grass in the diet of cattle and sheep. That is very serious from an Irish point of view. If the indigenous food industry is to expand, it is important that we defend the competitive advantage underlying that industry in terms of our basic production. We do need a GATT agreement but it cannot be at any price.

The Minister, Deputy O'Shea, said that what was required was a fair and balanced outcome. That is correct but he did say something in his concluding remarks about which I have a degree of disquiet. He said he would re-emphasise that the final position will not accept an outcome which goes beyond the Common Agricultural Policy reform parameters unless we secure explicit commitments that our vital agriculture and food interests will be protected. In my view, he should have said we will not accept an outcome which goes beyond the Common Agricultural Policy reform parameters full stop, not "unless". That is to defend the people who are trying to live and survive in the rural environment.

There has been a lot of concern about what happened at Digital in Galway. It is right that that question would be debated in both Houses of the Oireachtas and examined in great detail. There is, however, a rural blight in Ireland which is as devastating, and in many instances more devastating, than what is happening in Galway. If these proposals are implemented it has been estimated that we will lose 450 jobs in the dairying sector and another 440 in the beef sector. That is as many as were lost at Digital.

Historically about 11 people a day have been leaving the land. That is a catastrophe of far greater scale than the undoubted catastrophe which has faced the people of Galway. It is a dignified, hidden catastrophe, with rural poverty and desperation, which is just as severe as any urban poverty and is going unnoticed. We must bear this in mind when we debate these matters and reach agreements in international fora. We have a duty to defend those people and it would be remiss of us if we were not to do so.

There is a proposal that the reduction in internal Community support would be of the order of 21 per cent. That is a very easy figure to mention but a lot of the time we do not establish the baseline, or the year of the baseline and there have been disagreements about how we calculate the measures of support. We need to be very careful that we know exactly what these figures mean and what the consequences are. Are we going back to 1986 when we started the Uruguay Round at Punta del Este? Are we taking those figures? My understanding is that we are; we are looking for credit for the reductions in support that have taken place since then. These matters however, have to be looked at again if, as seems to be the case, we are going to find it difficult to reach an agreement immediately, that it will not be reached, as the Minister indicated, until 1994 and will not be implemented until 1995.

We all know what the United States is thinking about and doing at the moment. Will there be retrenchment? One of the most unfortunate aspects of what has taken place in the GATT negotiations has been the intimidatory tactics used by the United States to browbeat people with a different view into thinking that they should accept the United States view of life as the only one that prevails. Threats of trade war and threats against individual products, such as Baileys Cream, are unacceptable in the civilised negotiating of a deal which is to world advantage. I sometimes think that the plausible ideas put forward by the United States in respect of trade liberalisation and levelling the playing field are simply for US domestic advantage and not for philanthropic reasons.

We must defend the national interest. These proposals could have disastrous consequences for rural Ireland. Liberalisation is acceptable but destitution is not. What is good for farming is good for the economy, and the fundamental role of the family farm in our society and in European society must be defended. That can be done by consensus; we are all on the same side of the fence on this. I hope the Minister will bring those thoughts to bear in future negotiations.

I welcome the Minister and the Minister of State at the Department of Agriculture, Food and Forestry, Deputy O'Shea, who was here earlier. I also welcome the speech made by the Minister last night on the reformed Common Agricultural Policy because all these matters are intertwined with the GATT debate.

This document deals mainly with the Uruguay Round which covers agricultural aspects. Many years ago, the implementation of a cheap grains policy led to widespread evictions throughout western Europe, especially in England and Ireland. I hate to see trade wars developing between groups as strong as the EC and the CAIRNS Group which includes Canada, the United States, Australia and New Zealand, whose economies have a strong agricultural base. Let us learn from history; it is better to negotiate early and reach proper agreements than to indulge in brinkmanship with the result that many smaller producers and those who are less well off will suffer.

In the United States there are big ranches. If a person with 1,000 acres makes only £1 per acre he is making £1,000 but a man with only 20 acres will make £20. From those figures it can be seen why America can produce goods much more cheaply than we can. We cannot just bring it down to economics. We have talk about the social fabric of Irish society. In some areas in this country such as south-west Cork, many families have been raised on small farms. I am glad to see that the Common Agricultural Policy as reformed will be exempted from GATT disciplines.

I also welcome the fact that disadvantaged areas will be excluded from GATT disciplines. I live in a borderline area — a few miles up the road is a severely handicapped area and a few miles on the other side there is good land that is not included in disadvantaged areas. I know the problems faced by people in the disadvantaged area and I am glad they will be excluded from the GATT disciplines. In my area the town-lands on a hill overlooking valleys are not included in the disadvantaged areas but the valleys are. This is an anomaly which I hope will be rectified shortly; there are three or four of these areas close to my home.

Many other countries, including the United States, Australia and Canada, have looked for the elimination of all supports for agriculture. That is not good enough because if an agricultural economy has been working, year after year, getting these supports and that lifeline is taken away people will be left bankrupt. There is no way that can be done. Since the early 1970s we have accumulated surpluses in beef, cereals and sheep. Opening the American market to Irish goods and promoting it properly would be a big advantage if a GATT agreement was reached with proper limits. American cities, especially on the east coast, have huge markets.

I come from an area where the quality of the land many not be the best. There are many mountains and hills but we have fresh vegetables, clean air, a pollution free countryside. If the early ripening season in the extreme south-west could be exploited, and if there was proper marketing, many small farmers could make a good living from new enterprises. The Leader programme is working well in the area and many of the projects aided are doing extremely well.

I hope the new administration will look on Europe with a view to co-operation rather than competition. Europe has much to offer the United States and other GATT countries. While the Uruguay Round deals only with agriculture, there are 14 other sectors that have to be dealt with, and there will have to be some bargaining. I hope factories will not have to close, as happened in my own town in a factory employing 240 people, some lost their jobs because it was cheaper to produce the goods in a similar factory in Thailand and import them into the EC. I do not know how we can prevent that but something should be done to ensure that this does not happen to other factories. The IDA and FÁS spend a great deal of money promoting industry here and we do not want to see this money being wasted.

We do not want a deterioration in the Common Agricultural Policy as reformed and we do not want to give anything on the Common Agricultural Policy in return for benefits for other sectors in future GATT agreements.

Thee was a discussion on today's "Morning Ireland" about farmers in north Longford, Leitrim and parts of Roscommon who are looking to have severely disadvantaged areas — I am not sure what the term is——

Severely disadvantaged.

Is it disadvantaged at present? As somebody who lives there, I can say it is severely disadvantaged from an agricultural point of view which will have serious consequences for the future development of the area. I would be grateful if pressure could be put on the European Commission to have the area brought into the severely disadvantaged category. According to the Irish news this morning the grants per livestock unit range from £40 to £60 and for cow and cow suckler grants range from £80 to £100. That money is needed because over the last couple of years it has become very difficult for farmers in Sligo and Leitrim to earn a livelihood from their farms.

My county has suffered greatly from emigration; the number of young people remaining on family farms is small. Financial incentives are necessary because the farming land is insufficient to provide a living. Farms are not big enough, land is marginal and the available incentives are not adequate. We must try to keep people in rural Ireland; de-population is a national problem. Rural development is a main focus of the Minister's Department. I know the Minister is committed to it and that he visited Arigna last week. Increased financial incentives could help retain population in rural areas. I would be grateful if the Minister would endeavour to have this area termed "severely disadvantaged".

Recommendations have been made for early retirement schemes for farmers and I noticed that £1,000,000 has been set aside for this purpose in this year's budget. If the number of requests and inquiries about farmer retirement I have received since my election to this House is a guide £1,000,000 will not provide the necessary finance. It is a worth-while scheme and I would be grateful if it could be looked into also.

It would be presumptuous of anybody to try to understand fully the complex and detailed GATT negotiations that have taken place over several years. Suffice to say that a global settlement framework is necessary to avoid the disastrous consequences of a trade war. The Government, the Minister and his Department are to be complimented on the detailed work carried out for these negotiations over many years by technical people in various Departments. We support the Government's stand in the GATT negotiations.

Last night we discussed an international situation in which, despite talk of surpluses and over production, 40 million people are dying of starvation. Surely it is within the capacity of international politicians today to achieve a balance between food requirements and food production. It is reasonable to expect imbalances here and there no matter what system is used, but it is an indictment of past and present economic policies that millions of people are currently suffering from lack of food. Additional millions are threatened with starvation because we cannot deal effectively with the food crisis. The food supply situation in southern Africa is deteriorating rapidly because of drought and mismanagement while we discuss control of production levels.

It would be easy to condemn outright the international effort being made in this regard. Nevertheless, there is serious cause for concern in international trading when global arrangements have to be made for massive curtailment of beef production at a time when millions of people worldwide, suffer from starvation.

It is difficult to understand the implications of the GATT negotiations at local level. I am glad that the Minister has indicated this afternoon that an evaluation will be carried out between Ministers with reponsibility for foreign affairs, agriculture, tourism and trade to assess fully the implications of the GATT when it is finally agreed. We have a general idea now of the shape it is taking. There may be some delays but we cannot afford a delay which would threaten the stability of international trade generally. Nevertheless we need to know precisely how the negotiations will impact on the farmers and others. Agriculture is not the only sector involved in GATT; there are 15 or 16 other sectors involved also.

I welcome the Minister's commitments this afternoon, that at the European Commission, the Council of Ministers including the Minister for Agriculture, Food and Forestry will continue to ensure that the impact of the negotiations on the Irish agricultural industry will be minimised. I am concerned that compliance with the Common Agricultural Policy reforms will be observed so as to ensure the maximum benefit to Irish farmers, bearing in mind that direct payments to farmers over the next three to four years will be in the region of £700 million. Those who cannot organise their business to get the maximum benefit from the scheme will lose out heavily. I welcome the commitments given here last night by the Minister for Agriculture, Food and Forestry that every assistance would be given by the Department to help farmers claim their entitlements under the new arrangements resulting from the Common Agricultural Policy changes so that the maximum benefit will be paid directly into the farmer's pocket.

I welcome a continuation of the strong line adopted by successive Ministers in these negotiations insisting that Ireland should not have to bear a disproportionate reduction in production levels. The GATT negotiations bring home to all of us the necessity to streamline our economy to avoid a recurrence of our fast dependence on export markets. At present, we are losing jobs in a range of Irish industries because we are not able to avail of available opportunities especially in the food sector. Yesterday, An Bord Tráchtála announced opportunities for massive job creation in 40 or 50 different areas of the food processing industry, through the use of agricultural produce.

In view of these GATT negotiations, it is timely that we start to examine carefully how we can transform our excellent opportunities for agricultural production into real jobs, based on the strength of our agricultural resources. This is an opportunity to develop many more jobs in the food area. I am pleased that the Minister of State for Agriculture, Food and Forestry is here because it is in this area that we can minimise the impact of any GATT negotiations on our economy.

We can minimise the impact of any GATT negotiations to a large extent by giving the proper support to Irish industry to avail of the opportunities provided by substituting Irish produced goods for imports. I am sorry Senator Quinn is not present because recently, in one of the large supermarket chains in Ennis, it was almost impossible to buy an Irish produced commodity. On the shelves there were Scottish biscuits and beef steaks from Denmark, at a time when we have serious problems with agricultural production. This issue needs to be debated on another day.

I want to encourage the Minister to proceed as soon as possible with the review he promised of the impact of these negotiations on our econmy, and on various sectors, including the agriculture industry. Now, after years of debate about the GATT negotiations and how they will affect the livelihood and the lives of people in agriculture and elsewhere that the European Community is thinking of setting up a committee of experts to see what the real impact will be. That is putting the cart before the horse. This should have been done many years ago.

I welcome the commitments given by the Minister today and I hope he will continue the good work done in the Department.

We were fortunate in having a Commissioner of the calibre of Ray MacSharry to steer not alone the Common Agricultural Policy negotiations but also the GATT negotiations. The former Minister for Agriculture and Food, Senator O'Kennedy, also lent his hand to that enormous task on behalf of the Irish people. The present Minister, Deputy Walsh, and the Minister of State, Deputy Hyland, have a grave responsibility to carry in the weeks and months ahead.

As Senator Daly said, much needs to be done, especially when we see multinationals, such as Digital, leaving the country. Many of our State bodies which were supposed to be promoting our dairy, beef, sheep and pork products, have only been shadow-boxing and playing around. They went on the grand tour of Europe in the last number of years but we did not get value for money.

Some years ago I spoke to a man involved in the importation of intervention beef into Italy. He told me that the feeble efforts made by CBF representatives over the years to promote the sale in Italy of our high quality, grass produced beef was a national scandal. CBF had an office there but, the gentleman in change was an invisible figure, he was never available. Later, that gentleman started up in the meat business — he was too busy with other issues to deal with what he was sent out to do. Our meat factories were dumping the finest quality beef into intervention, causing other problems down the line. Certain bodies were supposed to promote our top class products over the last 15 years or more but all they did was pay lip service to it. That is sad and reflects on the present situation where there is a constant drift from the land.

I wish the Minister and the Minister of State success in the months ahead in these critical Common Agricultural Policy and GATT negotiations. It is important to keep people in rural areas and to create jobs in the towns and cities. I would hate to think what would have happened if the Commissioner for Agriculture at that time had been British. We would probably be in an even worse situation.

The support reductions are supposed to apply over a six year period commencing in 1994. All those regulations and the cuts in the protection of supports are irreversible. The levels of protection of support applying in 1999, the last of the six year reductions, cannot be subsequently increased by the EC, in other words, they would be permanent. That is very serious.

The US-EC agreement would involve a 36 per cent cut in the value of export refunds and a 21 per cent cut in the volume of products covered by export refunds. These cuts are calculated from a base which is the average for the years 1986-90; that is unfair and should be changed.

In cereals alone the cut will be 11.1 million tonnes, or a 32 per cent cut. The farmer will be affected but thousands of jobs will be lost downstream and we will be flooded with cheap imported junk from all over the world. We will no longer be allowed produce high quality feed grain. In the sugar beet area, a 3 million tonne or 19 per cent cut in volume, will cost jobs. In the beef area the cut will be 480,000 tonnes or 38 per cent in volume. That will have major implications for us. We have failed miserably down the years to market our products. We went for the easy option. It was a failure of the Common Agricultural Policy that it was more profitable for beef processors to dump their beef into intervention. We are now at the end of that road.

I question the accountability of the various bodies which were supposed to be supporting and promoting our beef, pig meat, lamb, butter or cheese products, abroad and if they got value for taxpayers' money over the years. I appeal to the Minister to look at that. The day for shadow-boxing or people globetrotting and producing very little is long gone. We want to see markets. We have a high quality grass-produced commodity.

We want to keep people on the land. It will be a long haul to create more jobs in the industrial area. The pig meat industry is in serious trouble — a cut of 270,000 tonnes or 41 per cent. That too will backfire on the farmer because fewer pigs will be produced to consume the home-grown grain. Our butter quota will be cut by 20,000 tonnes or 6 per cent; our cheese quota will be cut by 170,000 tonnes or 35 per cent.

On the other hand support was obtained under Common Agricultural Policy negotiations. Both Ministers Walsh and Hyland fought hard for this support but it might not be sufficient to diminish the impact of these severe cuts although I know that the cuts will not apply to disadvantaged areas. The proposed cuts in beef production mean that Ireland would have to progressively cut its volume of beef exports to non-EC countries by 200,000 cattle per annum, a frightening figure, given that non-EC markets have only recently been opened up. We are going to be hemmed in. In the dairy industry, a combination of increases of import access to the EC and a cut in export volumes by 570,000 tonnes will result in a cut of EC milk quota by at least 5 per cent. This agreement therefore is riddled with dangers.

In addition to the loss of 11 million tonnes of cereal exports, the cereal sector will have to cope with additional substitute imports. We will be flooded with low cost junk from all over the world.

The proposed cuts envisaged for Ireland are serious, but should be looked at in conjunction with Common Agricultural Policy reform. We appreciate the hard work put into Common Agricultural Policy reform which was necessitated by overproduction. Over-production was neglected for many years, particularly in the meat industry, where with high class beef being dumped into intervention. Nobody tried to market our excess products, nor did the system encourage that. The quantity of produce dumped into intervention was a national scandal. Surpluses built up and we were left eventually without a market. Farmers should be paid higher premiums in compensation for cuts in intervention and in premium payments, considering the cuts in production likely to take place under GATT. Cuts in cereals will be compensated for by paying farmers to set aside 15 per cent of their cereal growing land. There is also a premium of £29 a head payable to farmers who reduce their bull numbers. We are returning to dog-and-stick farming. The average to small farmer will not survive; the bigger farmer will cope. If the small farm is removed, it will be a sad day for rural Ireland. Worries have been expressed that the Common Agricultural Policy reforms will not be enough to subsidise farmers for losses under GATT. The GATT reductions should then be modified and implemented with a view to keeping the maximum number of people on Irish farms and the base period used should be 1990, and not the average of 1986-90.

I am sorry to interrupt you but it was ordered that speeches should last for ten minutes only.

Have I exceeded it?

Acting Chairman

You have exceeded it.

Give him more time.

I wish Minister Hyland and Minister Walsh every success in the months ahead because they have much to do to rescue the country.

Acting Chairman

When is it proposed to sit again?

At 2.30 p.m. on Wednesday, 10 March 1993.

Sitting suspended at 3.55 p.m. and resumed at 4 p.m.
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