Seanad Éireann debate -
Thursday, 25 Nov 1993

Vol. 138 No. 8

Uruguay Round: Statements (Resumed).

Mr. O'Kennedy

I welcome the resumption of discussions on GATT and that the Minister of State is here to listen to the our views at this crucial stage in the talks. The conventional wisdom is that a successful outcome to the GATT round is vital for world trade, its development and expansion at this difficult time in the world economy and that as a small open economy, we have a vested interest in the liberalisation of trade.

I have no difficulty agreeing with that in the long term. However, I and many others, including our negotiators and the Government, are concerned to ensure that the introduction of this new GATT regime will reflect the priorities of countries, such as our own, which are dependent to a considerable extent on certain social economic structures, notably agriculture and related activities. Safeguards must be built in by way of transitional arrangements so that we can all become effective and vigorous supporters of a liberalised world trade. Those transitional arrangements are crucial to a successful outcome and that is the task the Government has been addressing for some time.

I want to focus on a few reasons they are particularly important in this country. It is evident in the years since we joined the European Community that one of the main attractions of investment in Ireland was the access external investors would have to the Common Market, later the European Community and now the European Union and the 350 million potential consumers therein. That fact remains but it is significant that, even under the current regime, multinationals who locate in any country are characteristically if not notoriously mobile.

The criterion that brings them here is profit. They cannot be blamed for that but the application of the same criterion persuades them to move from here to a country with cheaper labour. In addition, new markets are opening in developing or highly progressive parts of the world. If there was no GATT round I believe we would still face the problem of adjusting to these new developments.

Every week we hear news of multinationals who located here for one reason or another and are now slimming down their workforce or, in some instances, moving to other countries. There is an understandable reaction in the communities, most notably in Limerick, that are greatly affected by these decisions. We would be foolish to rely on major multinational investors to employ a criterion which would put our interest before theirs which will be the same as that in any commercial enterprise. The bottom line is profit and a return on investment and we have seen evidence of that.

There must be some degree of regulation and control — if that is not too strong a word — of the mobility of companies that establish themselves profitably and successfully in economies. These economies become dependent on them to an extent and such regulation could limit abrupt moves by multinationals to other places. This is particularly important in light of what is happening world-wide.

Perhaps the most dynamic economic part of the world is in the Asia-Pacific region. I recall a period when I was Minister for Foreign Affairs, from 1977 to 1979, when the European Community had a development programme — or favoured nation treatment — for what was then called the ASEAN countries and included Indonesia, Malaysia, Singapore and The Philippines. Those same countries have now — maybe not by virtue of the support from the European Community but it was helpful — reached a stage of economic development in which the dynamism we hoped to see maintained in Europe and which, regrettably, has not been maintained is more evident.

Investors will move to markets or close to markets that are more promising and profitable with better long-term perspectives than the European Community in its current condition. There is a major change underway in what is now called the European Union. The dynamics of the Community 20 years ago are very different from the priorities now emerging, whether towards eastern Europe or Germany in its pan-German form.

There is a need for balance in all arrangements for free trade. We need reasonable transitional arrangements and guarantees. Multinationals must not be allowed to roam freely and pick off profits here and there for periods that suit them. There must be some international co-ordination in this area, otherwise the plans of the Government of today or yesterday will be laid waste in a helpless and vain attempt to cope with this mobility and the profit motive.

Over the last number of years, as part of Community policy, the European Community has been dismantling its agriculture support system. Production quotas in milk and cereals have been reduced and a whole range of new disciplines and limitations imposed. It must be said that the effects of some of these significant actions have benefited countries outside, notably in the dairy sector. The increased price of dairy products, and particularly milk, in world markets is self-evident. We must get credit — and this is and must continue to be a feature of the Government negotiating position — for the actions we have taken. However, we will want to see evidence of counterbalancing measures from others, notably the United States where there is a trend of hidden subsidies that are not as transparent as the support systems of the European Community. The actions that are and have been taken must be balanced by measures from the other side because the actions already taken in Europe have benefited other regions and countries.

We are facing a trend of rural depopulation, not just in Ireland where we have 60,000 full time farmers, that is visible and rampant in Europe, America and elsewhere. Although other countries may take different views our social order, our culture and our future depend to a large extent on this. Ours is an agriculture based community; our social stability depends on it and we are entitled to safeguards in the adjustments towards more liberalised world trade.

Two matters are worthy of mention in connection with that. First, one element is in our own hands. I would continue to gear — and I did when I was Minister for Agriculture and Food — our industry, particularly our co-operative industries in the agri-food sector for whom I have nothing but admiration, to compete effectively in international markets. We could introduce schemes to enable them to compete effectively whether it is in the dairy sector, processing or pig meat; there is a range of areas where some are now ready to compete. We must continue that major effort ourselves because the quality of our product is our best guarantee. The consumer, not the profit driven investor, wants quality at the right price. We can supply it and that adjustment is in our hands. It is essential that we focus to a considerable extent on that area.

The second matter, which is not in our hands, is the irony that we are introducing a new world order by agreement of nations while we have a world order that tolerates famine and scarcity of food in a number of countries. It must be possible for those nations who reach agreement in GATT to ensure that we introduce a new order which will mean that there will always be necessary supplies available for those countries who cannot provide for themselves. That means it will be necessary to have a surplus available for distribution.

Agricultural goods cannot be produced to rule because demands and production capacity vary from year to year having regard to climatic and other conditions. The needs and demands of the world vary too and it is a scandal — I said it many times as Minister and in this House — that while we are reducing food supplies throughout Europe and elsewhere — and the family of nations is allowing it to happen — other countries are experiencing starvation. That is an essential component of any new order in international trade. If we allow the profit motive to be the only determinant, we will aggravate that scandal.

The environment is another issue that must be mentioned. My fellow townsman and personal friend, Fr. Sean McDonagh, who spent a long time working in countries like Brazil and the Philippines, has constantly pointed out the consequences for the environment of an unrestricted GATT regime. The increasing demand of the consumer for products which will obviously follow an agreement will make impossible demands on the environment and on the earth that produces these products. He has pointed out, and I agree with him, that what would often be seen to be in the interest of some of these developing countries can, in fact, be to their detriment, if not to their disastrous disadvantage. That is another strand that should be included before the GATT round is completed or, if not in the conclusion of the agreement, certainly as part of the follow on to the agreement.

I wish to make two final points. GATT is about freeing trade, and I agree generally with that objective. However, there are areas where the international community must restrict trade. It is through the scandal of the armaments trade that the developed countries promote suffering, deprivation and horrible depression in many developing countries. They see it as profitable to sell armaments to various warlords and the results are evident in every oppressed part of the world, whether it is Bosnia, Somalia or Angola. In the course of the GATT negotiations this scandal must be addressed. It must be pointed out that we will not have a free trade that is based exclusively on profit because, if we do, we will see more and more armaments being supplied to people at the cost of those who, God knows, have suffered long enough.

Finally, we will have free trade in the international banking system. As a natural consequence, international financial services will be freely available. The international banking system — and it is time the community of nations addressed this — is guilty of some scandalous oversights. Secret accounts are promoted, not only in Switzerland which is the home of such accounts, where dictators and tyrants can deposit their moneys. It is free trade and free banking, but who suffers? The people who have been oppressed and brutalised in the countries where these dictators and tyrants have earned — if that is the appropriate word — the money they lodge in these secret accounts. We are all moving in that direction: no questions asked, bring your money here.

If we are to have the balance of international trade we would like to see, it must not be based on unrestricted profit making irrespective of the consequences, be it in armaments, industrial investments, agriculture or elsewhere.

Mr. Farrelly

I welcome the opportunity to speak on the proposed GATT deal and the serious effect it will have on our major industry, agriculture. I commence by quoting from a letter I received, and which I am sure many of my colleagues also received, from the Irish Farmers' Association yesterday:

As we approach the December 15 deadline, the GATT negotiations are now at their most critical phase. The livelihoods of Irish farm families, the future prospects of our food industry and the wealth generating capacity of the Irish economy are directly at stake as the Uruguay Round moves towards conclusion. The draft US/EC deal on agriculture, negotiated at Blair House last November, would cost Ireland up to £400 million per year in terms of reduced net output at farm gate level.

In particular, Ireland has a vital national interest in our beef and dairy industries. The beef sector is threatened with a nine per cent production cut and a fifteen per cent price cut (in addition to cuts in the CAP reform) as a direct knock on effect if Blair House goes through. Meanwhile Irish beef is locked out of Japan, the most important beef import market in the world to the exclusive benefit of the US and Australia.

That sums up our fears and problems in connection with GATT and the effect this will have on our economy. I could not let the occasion pass without referring to the CAP negotiations which took place when an Irishman held the position of Commissioner for Agriculture and the lack of Government concern at that time to deal effectively with the proposed cuts which were agreed and implemented at the time in the CAP reform. It seems strange to me that no sooner was an Irishman appointed as the director general of GATT than the Minister was complaining that a serious situation was developing with the GATT negotiations and how it would effect Ireland, whereas for the previous two years during negotiations on the CAP he stood idly by and allowed Commissioner MacSharry to go ahead and substantially reduce the income which we will receive here in years to come.

It disgusts me to learn that when the same organisation whose letter I quoted, which asked us all to a meeting in the Mansion House next week, wanted to deliver a letter to the Minister for Agriculture, Food and Forestry informing him of the seriousness of the situation, the door of Agriculture House was closed. With all due respect to the Minister of State, he is not responsible for the actions of a senior Minister, I wonder when the Minister will tell the public why such action was taken.

As the GATT negotiations stand at the moment, the European Community will have to take on a number of obligations: it will be obliged to lower its internal agricultural prices to approximately world price levels; it will be obliged to reduce accordingly the levels of export refunds and import levies which are required to sustain the target price levels within the European Community; it will be required substantially to dismantle its price support arrangement and would be obliged to guarantee access to Community markets for meat, dairy products and for other key products — expanded access for exporters in other GATT partner States — while itself suffering a reduction in its ability to export to those States; and it will be obliged to accept that its meat products will continue to be excluded from the rapidly growing Japanese markets for meat, a situation which has prevailed since 1985.

When we are asked to look at all these agreements, without going into too much detail, the specifics are appalling. Internal supports for agriculture would be cut by about 20 per cent over six years, with the exception of certain direct income supports which are considered as not being linked to production or to price. I was speaking to a farmer some days ago who never wanted or received a subsidy for the work he does. He employs 12 or 14 people and he said that under the new arrangements he is waiting for subsidies in the post, just like everybody else. It is a poor day for most of these people in Ireland because the one thing we can all be sure of is that anything that is available today will not be there to the same extent in ten years time. We have heard recently that the UK is complaining about these proposals in regard to subsidies. A minimum access will be required for GATT partners of 3 per cent of internal EC consumption in the first year and 5 per cent in the final year, using the period 1986 to 1988 as a base. Those are obligations that the European Community would have to undertake in connection with this new agreement.

While the European Community is accepting those reductions in its ability to support farm prices and in its ability to export, what would be happening to the other GATT partners? They, and in particular the United States, Canada, Australia and New Zealand, would benefit from the new opportunities to increase their exports. As the European Community producers disappear from markets around the world, those extra export opportunities would be opened up to exporters in the other GATT countries and particularly the United States, Canada, Australia and New Zealand. Producers in those countries will not be obliged to accept any discipline or any restrictions on their production levels. In fact, we can already see that levels of production in dairy products, for example, are already expanding in New Zealand and may begin to expand in the United States.

Producers in those countries are getting geared up to move into the markets out of which the European Community will be progressively frozen. Neither will those countries be obliged to give any reciprocal guarantees of access for European Community exports to their markets.

On any judgment, the provisions of the infamous Blair House Agreement must be regarded as seriously unbalanced. The European Community has to suffer restrictions and its partners in the GATT gain extra opportunities for expansion. No such imbalance can be seen in any other part of the agreement. In no other sector can we see such a clear contrast between what happens to one trading partner and what will happen to all the rest. No other sector in any part of the GATT will lose as European Community agriculture will lose. No other country will lose on a scale relative to its GNP than Ireland. The consequences of these arrangements in rural Ireland will be nothing short of disastrous. What we are saying is that this is simply not acceptable.

It is time for the European Community and the Irish Government to wake up and try to restore some equity into this one-way agreement. In international agreements we normally look for an element of give and take. The only element of give and take in the Blair House Agreement is that the European Community has to give and the other partners do all the taking. That has been signalled ever since that most appalling unilateral cave in by the then Commissioner for Agriculture, Mr. Ray MacSharry, at Drumoland Castle in August 1991. Even since then the European Community has allowed itself constantly to be outmanoeuvred by the United States negotiators.

The then Commissioner MacSharry went to Drumoland Castle and, perhaps seduced by the beauty of the place, he offered unilaterally a 30 per cent cut in the levels of EC internal support. I do not know what game he thought he was playing. Perhaps he thought that if he showed some willingness the United States negotiators would say that the deal was in the bag. However, what actually happened at that time was that Ray MacSharry gave the American negotiators a taste of blood and they liked it. They realised they had found a break in the EC defence and decided they would go for more. That is exactly what happened. We ended up giving more.

I do not know exactly what took place within the Commission at this stage, much less what was happening in Government here. At that time it was still a Fíanna Fáil-Progressive Democrat Government. Commissioner MacSharry who was making all these generous offers was actually being undermined by his colleagues in the Commission at the time, Commissioner Andriessen and Commission President Delors. I do not know what was happening within our Government at the time, why definite action was not taken, why we did not go out there and say that enough is enough given the effect the changes would have on the Irish economy, taking into account that the beef and dairy sectors bring in thousands of millions of pounds. We allowed this element to slip from that stage in 1991.

Since this new Government was formed it has failed utterly to bring home to the EC Commission just how serious the implications of these proposals would be. I wonder at this late stage if the least we are entitled to expect is that the European Union would play the same hard ball game that the United States negotiators have been playing since the famous MacSharry cave in.

What we need at this stage are reciprocal guarantees of access to markets in other GATT countries however they are expressed. We cannot go along with a unilateral surrendering of markets for the European Union without obtaining something in return. Secondly, we need from the other GATT members, particularly the United States, Australia and New Zealand, reciprocal undertakings to control their levels of production of key agricultural products. Without those kinds of reciprocal undertakings and agreements the GATT agreement as it is now emerging will constitute a one-way ticket for the people living in rural Ireland, in other words, we will be flooded out of the market with the power of the major international food companies from other countries, such as America, New Zealand and Canada. They will flood our European markets and our major food companies, such as the Kerry Group and Waterford Foods, will not be in a position to compete. As a result the prices our farmers will get for their products will be reduced, with a 9 per cent reduction for beef and a 15 per cent reduction for milk.

In statements made over the last three weeks the Taoiseach and the Minister for Agriculture, Food and Forestry have accepted the balance in these global proposals. Unless the Taoiseach, the Tánaiste and the Minister for Agriculture, Food and Forestry realise the seriousness of the effect of these proposals and that there is no guarantee of the continuation of the proposed subsidies I talked about — in which, in real terms, farmers were not interested but which have become part of their lives — and unless we get guarantees to ensure the long-term viability of small farmers and their incomes, then we will see a continuation of the large numbers of farmers retiring and getting out of farming. I am sorry this is the case. I thank the Minister of State for listening to the debate and I have no doubt there are many other Members who will raise worrying aspects of how this situation is developing and with D-day approaching.

Mr. Calnan

I welcome the Minister of State to the House for the debate on the important issue of GATT. The General Agreement on Tariffs and Trade and the ongoing negotiations are of signal importance for this country. Ireland is a small country, a small economic unit with a population of about 3 million. When we think of the millions of people who live in American and European cities we realise that we are small in number. Consequently, a small change, a percentage point, could make a vast difference to many people living in this country. When we talk about GATT we talk about tariffs, quotas and restrictions and, due to the complex nature of western economies, some people will be hit by them. On the other hand others will benefit. We must obtain the best deal possible for those who might be disadvantaged by the negotiations.

At present the United States is flexing its muscles with NAFTA, the agreement with Canada and Mexico, and the work it is doing to further a Pacific Rim agreement. We must be conscious of the trading throughout the world in everything covered by GATT. We cannot dwell on agriculture alone; we must take other elements into account. We have to go from the general to the specific.

In my home town not too long ago a foreign company employed a large number of workers. It cut its workforce in half — a disaster for the area — not because the goods they were supplying were not wanted but they could be made more cheaply in Thailand, imported into the EC and, having paid the necessary taxes, the goods could still be sold at the same price in the EC. Thus there was a loss of jobs in a community which could ill afford it.

This type of trading will have to be looked at and battled against by our Government negotiators. If not, we will see the closure of more firms in Ireland and in Europe. Often the work done by the IDA, local development groups and local authorities who fight hard to get industry into their areas, and the grants that are paid to foreign companies setting up here, go down the drain in one fell swoop when someone cancels the Irish operation and transfers it to Thailand. That is not good enough. When we talk about GATT we are talking about this type of activity which should not be allowed.

I was told about an industrialist across the Atlantic who was complaining about the fall in car sales. He was reminded that if the Mexican employees in the factory were paid United States wages they could then afford to buy cars. There is a salutary lesson to be learned there. We are influenced by the CAP and it will be greatly influenced by GATT. The effects of the CAP can be felt by the agricultural community, but especially in areas where there is no alternative to agriculture and related activities. If we will have set aside and restrictions not only will the agricultural community be hit but also the co-operative worker, the agricultural contractor and his workers and the agricultural supplier and his workers. Every restriction has a knock-on effect. It is in this area of the negotiations that we need to be most forceful.

On the other hand, while we have restrictions from the EC which are often brought on by GATT, we also have the effect of the Community Support Framework or the EC funds which we receive. Since 1988 or 1989 we have received money from Europe. As the amount we get is greater than the amount we contribute, we are benefiting greatly from the EC, and let us hope that continues.

Regarding restrictions and quotas, are we too mild or obedient in following EC regulations to the letter of the law? When quotas were introduced on agricultural production, there was one country which almost openly flouted them and when, at further negotiations, that country was seeking an increase in its allowances, not only did it take what it was allowed in the past but it wanted to negotiate a percentage increase on that figure. Perhaps we are too ready to adhere to EC regulations instead of seeing if there are other ways of complying.

In any general agreement on trade and tariffs we have to deal with foreign vessels are coming into our waters, over-fishing and ravaging the waters off our coast. If that is allowed to continue, our waters will be like the North Sea, which is bereft of fish. Many species have disappeared and this will happen to the Celtic Sea and around the south coast if we continue to allow foreign vessels to enter these waters without restriction.

These matters should be discussed with the offenders in the GATT talks. In an economy such as ours, where fishing is of vital importance to the peripheral areas, such as the south west coast where I live and also the Kerry coast, the west of Ireland and the County Donegal coast, there is open flouting of the fishing regulations. Not only are boats entering and more or less forcing Irish boats off the water but they are also taking illegal catches. As somebody remarked recently, we could well do with the fish caught in this way and have it processed and sold to those countries if they are so badly in the need of such fish that they have to enter and break the regulations.

What happens at the GATT level will have a profound effect on rural Ireland. Already in parts of this country people are being told not to work in the agricultural sector and this has the knock on effect to which I have already referred. Not only does it affect jobs, which are of vital importance, but it affects the entire social fabric of society in these areas. Young people having to move out causes social life in that area to break down and there is no incentive for other people to stay. They cannot live on meagre incomes at home without a proper social life. These people are anxious to get into the cities or even to go abroad. In the past people have left Ireland and gone to Britain, America and Australia. However, there are now more and more Irish people working on the Continent. They find it easier to get work in Germany, the Netherlands or elsewhere.

In the past countries outside the EC have brought goods into EC countries which were sold side by side with Irish goods. In such circumstances the Irish goods should have been cheaper but that was not the case. The whole issue of the GATT requires strict scrutiny by our negotiators. Where people will suffer to ensure a greater advantage for others, we must minimise such suffering as much as possible.

I thank the Minister again for being in attendance this evening. He is always welcome in this House.

Mr. Enright

The debate this afternoon takes place during the final stages of the GATT negotiations. There is a deadline of 15 December 1993 and therefore it is of fundamental importance to recognise the significance of what we do and say in this area and to ascertain whether or not we as a small country can have any influence on the decisions to be taken.

It is important to examine the effect of the Blair House agreement on Ireland. I agree with Senator Calnan that we should look at this issue from both a national and European viewpoint, but with particular emphasis on the Irish viewpoint. We in this House represent the people of Ireland and it is up to us to put forward views on behalf of the people we represent.

When the effects of the Blair House agreement on agriculture are examined, I believe that we must be deeply concerned. The cost to Ireland will be up to £400 million per year in terms of reduced net output of our agricultural produce at farm gate level. This is a sizeable annual figure. The beef and dairy industries are of major importance. These two industires are a vital part of our national interest and must be treated as such.

Under the Blair House agreement the beef sector will be affected by a 9 per cent production cut plus a 15 per cent price cut. At present Irish beef is unable to gain an admission to the expanding Japanese market which is currently one of the most important beef markets in the world. This market is, at present, exclusive to the USA and Australia.

Irish dairy farmers face a new set of quota cuts of up to 4.5 per cent and a drop in milk prices of approximately 15 per cent unless we are able to achieve some fundamental changes in the Blair House agreement. There will also be a cost to other producers in grain, in pig meat and so on. Sugar is also affected, as are the poultry sectors. That is why there is so much concern about what is happening. We should put up a strong defence of the farmers and people of Ireland. We are not comparing like with like. A television programme some time ago showed one farmer in the USA using one feed lot for 43,000 head of cattle. This is what the small family farms here have to compete with.

I believe that we have been correct in Ireland in our approach to hormones and stimulants and to the issue of force feeding of cattle. We in Ireland have been right to have proper controls. The Minister and his predecessors have been careful to ensure Ireland produces clean food, free from hormones. That is the legal position in Ireland. The Minister may be able to confirm that one can legally use such hormones in the United States. It is wrong that they have that opportunity and will use it to try to gain access to markets currently available to Ireland. The US, Canada and Australia are anxious to capture markets Ireland has built up over the years and to force us out of those markets. We have to stand up for ourselves. The French farmers have done so with a view to changing the GATT deadline.

When Ireland entered the EC originally, we were told our industries would suffer but we would be provided with opportunities for expansion in agriculture. The effect on our industry has been alarming. In the midlands all our large textile industries have disappeared. Clothing, light engineering and shoe factories have all closed. We were led to believe agriculture would be the mainstay of our economy, yet agriculture has been badly affected. We can produce good quality food at a reasonable price but our industries have gone. Unless there are fundamental changes to the Blair House agreement many small family farms will wither and die and those living on them will be forced out.

One of the first to write about what was happening in the west of Ireland was John Healy in his books Death of an Irish Town and No-one Shouted Stop. John Waters is a successor of his who writes in The Irish Times. In the Dáil recently, Deputy Jim Higgins asked how many townlands in the west were bereft of people. The figures are now on the Dáil record. The recent census figures for my county, Offaly, showed only the town of Tullamore and two townlands had an increase in population. The county as a whole suffered a population decline. That fate is befalling the west, the midlands and most counties. John Waters wrote this week about people leaving the townlands and small villages. He wrote of towns dying before his eyes and said some of our cities will eventually go the same way. It was a depressing article. I do not believe the position is nearly that bad.

GATT agreements affect everyone in the country. We are having major problems with Europe but that is another day's work. We are part of the agreement as Europeans. Unless there are fundamental changes to GATT, there will be a haemorrhage from agriculture and from our small towns and villages. Efforts have been made to prevent this. The IFA, the ICMSA and other farming organisations are telling many truths but time is now limited. Unless we can make changes to this fundamental sector of our economy we are in serious trouble.

We are a small country and because of our dependence of agriculture we will be more badly affected than many others. We must rally together. No-one in this House has made a political point-scoring speech on this subject. Everything said in this debate has been in the interest of this country we are proud to be part of, where we were born and where we live.

In these negotiations the Americans have threatened us with a big stick. They said they would block our exports to the US. That is not the way to negotiate. American militancy in this context should not be condoned. The US is speaking from a strong position but we should stand up to them. We have had good relations with the US but there comes a point in negotiations when a line must be drawn. That point has now been reached.

The approach to farming is entirely different in the countries with which we are negotiating. Ireland has small family-based farms. America, Canada and Australia have huge combines and ranches. The population has already been reduced in many of those places. Here we still have faith in the family farm. Its effects on the towns and villages are of fundamental importance to all of us. The Grapes of Wrath by John Steinbeck showed the effects when big combine farms were introduced. I would not like the combines to take over here and force small farmers off their holdings. It is up to us to protect them and change the agricultural provisions of the Blair House agreement. If we do not it will be a poor day for us as a nation.

Mr. O'Brien

The past number of years have been a worrying time for Irish farmers and for the farming industry in general. The CAP reform and the GATT negotiations placed a cloud of doubt over what the future might hold for our farmers, with predictions of disastrous consequences coming out of these negotiations. Confidence in the industry was low. However, the CAP reform of 1992, the most radical in EC history, brought a new confidence to farmers, certain of the future with a market-led approach and the assurance of comprehensive compensation being available. The threats posed by GATT are now a major cause for concern and it is timely for us to address them. Agriculture is the keystone of our economy and it is of vital national interest to protect the industry. The duty rests on us all to defend the great work done over the last 20 years to develop agriculture.

I urge all Members of this House to unite in supporting the efforts of the Government and the Minister to bring about the necessary changes in the Blair House agreement of last year. Irish negotiators fought long and hard to ensure a favourable CAP reform package for Irish farmers and we must ensure that GATT is not allowed to interfere with the commitments given. The Blair House agreement cannot be introduced without serious consequences for Irish farming since additional measures will have to be taken to cut production to limits agreed under the CAP. This is not acceptable and we must send out the message from this debate that Ireland cannot accept these proposals because of our reliance on export markets.

It is in Ireland's interest, as a small open economy, to have a successful conclusion to the Uruguay Round to promote international growth and the strengthening of the trading system. However, we must ensure that the final package is balanced and does not impose an unfair burden on any sector or region. I see the Irish beef sector suffering unfairly following this agreement. With the Community required to cut beef production by approximately 5 per cent on the amount agreed in the CAP reform and with its reliance on exports, the beef sector will suffer enormously and will leave Irish farmers facing a bleak future. The proposed volume restraints on subsidised exports is potentially damaging to all sectors of agriculture, including the dairying and cereals sectors. I totally agree with the position taken by the Government on the consequences if this GATT agreement were to go through. It is totally unacceptable that while American farmers continually receive hidden supports on their large holdings.

We must all support the Irish negotiating team and the Minister for Agriculture, Food and Forestry, Deputy Walsh, who have done great work in their efforts to ensure a satisfactory outcome. We must ensure that the Uruguay Round will not affect the CAP reforms or its basic principles in any way and that the future for Irish farmers and the rural way of life is safeguarded well into the next century. The commission will now find it easier to negotiate with the US, following the favourable vote in the House of Representatives last week on the North American Free Trade Agreement, with which they have been preoccupied for some time. This will allow their administrators to focus on the GATT negotiations and the adjustment of the draft outline agreement on agriculture.

We are an economy highly dependent on exports, with almost two thirds of Irish output exported annually. I am satisfied the Minister will do his best to achieve a satisfactory conclusion to the GATT negotiations. I thank him for coming to the House.

Mr. Byrne

We can be satisfied that there is a good team negotiating for us. Former Commissioner MacSharry worked hard over a number of years to lay down the framework for this GATT deal. While we are all worried about certain aspects of it, we have a balanced and experienced team in the Minister and the Ministers of State and they will not be found wanting when the final touches have to be made before an agreement is reached. We all know that they will do their best to get the most favourable deal for the Irish community because we, as a country, depend more on agriculture than any other member state of the EC.

I am surprised at the negative attitude coming from some of our farm organisation leaders. Maybe it has more to do with their presidential election than the GATT negotiations. As Senator O'Brien said, there is a great responsibility on Members of both Houses to support the Government, and that also applies to the farmers' organisations. I am a member of the IFA, but I am not too happy at their conduct on many issues over recent weeks. They should act in a more responsible manner.

The challenge ahead will be great because we have lost a lot of time. Our promotional agencies did not find enough markets for our high quality beef and lamb. We depended on our meat factories to do this instead. While An Bord Bainne and various creameries have done a reasonably good job for the dairy sector in recent years, it was sad to see top class beef being dumped into intervention. This had much to do with the outdated systems within the EC, but that day is now nearly gone and we must seriously examine developing new markets. There has been a great effort made in this regard in recent years in hope of a future spinoff effect.

The United States is playing an important role in these negotiations, although it can be greedy. the Americans believe they rule the world and they tend to be selfish. I hope when the negotiations are finished they will be made to take a step backwards in the interests of farmers throughout the EC. The United States has built-in subsidies for its farmers which are concealed in many ways.

The trend throughout the world is towards bigger farms. It is frightening that the family farm will no longer be economical and that families solely dependent on income from the farm will be unable to educate their children. They will either have to sell their farms or get jobs. We must ensure that ready markets are available for high quality products, such as cheese, beef and lamb and that we get a corner of these markets. We cannot tolerate further flights from the land. Everyone must play their part. I have confidence that the Minister for Agriculture, Food and Forestry, Deputy J. Walsh, his two Junior Ministers, Deputy O'Shea and Deputy Hyland, and the Government will strike a deal that is to our satisfaction.

We have missed many opportunities in the past 20 years by not developing and finding markets for our high quality products. I was in Italy some years ago and met business people who said that the efforts made to promote Irish beef in Italy at that time left a lot to be desired. There is great potential for our products on the Italian market and this challenge should be taken up in the future. Our farmers produce high quality products and the skills and professionalism of the owners and staff of our creameries, milk processing plants and meat factories are excellent. We have a good team not only to sell Irish dairy and beef products but other products as well. We should increase our efforts in this area.

If a GATT deal is not concluded and this situation continues, Ireland will lose out. We are not a large country which can cope with this situation alone. I am afraid there could be a free-for-all which would place Ireland at a disadvantage. We do not want farmers and those employed in agriculture related areas to lose their jobs. I hope a deal will be agreed in the national interest.

Correspondents may say what they wish but we are fishing in a big pool. The GATT deal is more important to us than to any other member state in the EC because agriculture means a lot to us. Other states have an industrial base and their unemployment problem is not as great as ours. We need a good deal and good marketing of our products in the years ahead to keep people on the land and to maintain permanent jobs for those working in meat factories, creameries and processing units around the country.

It is sad that we have failed to build those markets. We were led to believe that the intervention system would last forever, we continued to put our quality beef into intervention and, over the years, we lost an opportunity during the years to do something about it. We must now face reality and increase our efforts in this regard.

I wish the Minister, his Department and the Government every success and I have confidence they will not be found wanting. They need the support of every Member of both Houses of the Oireachtas.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. O'Shea)

I am happy to have the opportunity to close this debate on the agricultural aspects of the GATT negotiations. As has already been stated, these are important negotiations which could have a far-reaching impact not only on the agricultural trading system but on the multilateral trading system as a whole. It is appropriate that the matter should be debated now in view of the proximity of the deadline for concluding negotiations.

Ireland has a major interest in the negotiations and has actively participated in the discussions from the outset and this interest is not only confined to the agricultural aspects which are under consideration here today.

Agriculture continues to be our largest single industry. It accounts for up to 10 per cent of GDP, 40 per cent of net foreign earnings and 20 per cent of all manufacturing jobs, while agri-food exports account for over 25 per cent of total Irish exports. Agri-food exports make an important contribution to our balance of payments, contributing £2.1 billion in recent years.

As a country with a small population base, exports have always played an important role in the agriculture sector. Some 85 per cent of our beef production and 70 per cent of our dairy production is exported, of which between 40 to 45 per cent and 26 per cent, respectively, goes to markets outside the Community.

Ireland has a major interest in an open and liberal world trading system and in supporting adherence to the rules and disciplines governing multilateral trade. However, as we have consistently said, we are not willing to accept an agreement at any cost. Our position has always been that we want a global and balanced agreement, one which does not place a disproportionate burden on any region or sector, and our negotiating approach has been directed to this end. In his opening statement my colleague, the Minister of State at the Department of Agriculture, Food and Forestry, Deputy Hyland, outlined in some detail our position in the negotiations and the negotiating strategy being adopted by the Government on this issue.

I wish to respond to some of the points raised by Members during the debate. I compliment Senators on the quality of their contributions which is evidence of their high level of interest in this subject.

As Minister of State at the Department of Agriculture, Food and Forestry, I was gratified to hear the contributions made about the food industry. We must move rapidly from commodity producing to a wider value added portfolio. Senator Byrne referred to intervention. We must recognise the fact that intervention as a market outlet will decline substantially. We must adopt a value added role in order to sell our produce.

An expert group on the food industry has outlined targets which must be achieved. For example, the targets set by the expert group in relation to job creation would be to create 9,500 net jobs over a five year period. This has been extended in the context of the National Development Plan which will go over a longer period. The operational programme for the food industry is an important ingredient, not alone for the creation of jobs in the industry but, as Senators pointed out, in terms of giving direction to our producers and ensuring that the maximum number of producing units are retained in rural Ireland.

A number of Senators referred to imbalances in the proposed agreement and sought information on its potential impact on a sectoral level. On the first aspect, the position is that the proposed obligations would apply equally to all participants, other than the least developed countries. Thus all the developed countries will be required to provide import opportunities for 5 per cent of domestic consumption at the end of the six year period, to reduce domestic support by 20 per cent and to reduce export subsidisation by 36 per cent in monetary terms and by 21 per cent in volume terms.

As regards the potential impact, the position is that the undertakings would apply at Community level and any additional measures that might be required would be a matter for the Council at a later stage. The Commission has sought to demonstrate that the proposed agreement is broadly compatible with the reformed CAP, although it accepted that it could create difficulties in the beef sector. A number of member states, mainly Ireland and France, have disputed the Commission's conclusions and have contended that the assumptions on which they are based are over-optimistic. That has remained our view and this was broadly accepted by the Jumbo Council on 20 September which directed the Commission to continue discussions with the US and others on the basis of agreed guidelines. These discussions are ongoing. Senators will be aware that as recently as this week Commissioner Brittan met US Trade Secretary Kantor and that further discussions are scheduled over the next week.

A number of Senators questioned the bona fides of Commissioner Brittan in the negotiations. While not seeking to defend the Commissioner, the position is that he is carrying out the unanimous will of the Council and it is the Council which will have to accept or reject the eventual agreement.

It is not possible, for the reasons already mentioned, to quantify the impact of a possible agreement at a product or member state level. Nevertheless I assure the House that the current agreement will not require the Community to lower price supports to world levels or to dismantle its support arrangements.

For example in the milk sector, we estimate that for the Community the combined effects of the import and export commitments would represent some 4.75 per cent of Community output. However under arrangements agreed recently, Italy and Spain have to reduce output by the equivalent of 2.4 per cent of Community production while under CAP reform the Council decided to cut quotas by 2 per cent subject to market needs. Thus, and taking account of the expected growth in consumption of some dairy products, the GATT agreement should not require the Community to go beyond the 2 per cent cut agreed provisionally under CAP reform. The position in regard to cereals is less clear cut mainly because it is extremely difficult to predict precisely how production and consumption will develop. The assumptions made will determine the conclusions reached.

We believe that the major difficulties from the proposed agreement will arise in the meat sector. Our analysis leads us to believe that in the longer term, Community beef production would have to be reduced to a greater extent than would result from the 1992 CAP reform decisions and there could be major difficulties in the short term. The Community has sought to dilute the impact of the minimum access arrangements by aggregating meats under a single heading. This approach would require the Community to provide access opportunities for 78,000 tonnes of meat whereas under separate headings, access would have to be provided for more than 700,000 tonnes of meat.

Although some parties are challenging the Community's approach, the Jumbo Council confirmed that the Community's offer is an integral part of the Community's position. Depending on the level of intervention stocks and production in the next year, the methodology proposed in relation to export commitments, that is front loading and linear cuts, could create major difficulties in the short term. We have also continued to insist that the Community should not continue to be prevented from supporting beef exports to south-east Asia, including Japan.

It was for the foregoing and other reasons that we have pressed the Commission to secure the necessary adjustments to the current proposed agreement. We, therefore, welcomed the conclusions of the Council on 20 September that the Community will ensure that its international commitments will be compatible with the CAP and that the results of the current round will not, either directly or indirectly, jeopardise the durability of the CAP or its basic principles. We also welcome the statement that the Community will ensure the continued presence of its agricultural products on international markets. As Senators will be aware, the Council laid down guidelines for the Commission for the ongoing negotiations.

Of course, the implementation arrangements for any agreement will be extremely important in determining the impact on different sectors and regions. In this regard the Council declaration of November 1990 provided that the GATT commitments within the Community will be shared out in an equitable fashion taking into account the particularly difficult situation of certain categories of producers and certain regions. The economic and social cohesion provisions of the treaty would also demand this.

The Government will continue to press the Commission to ensure that outstanding issues are resolved satisfactorily and to insist that the particular dependence of individual member states on agriculture and food is taken fully into account in arrangements to implement any proposed agreement. As has always been stated, Ireland's approach to the final outcome will be decided when agreement has been reached in all areas and in the light of whether, and to what extent, the concerns outlined have been addressed. In the meantime, much work remains to be done over the next few weeks in many areas before a conclusion could be reached.

Sitting suspended at 3.30 p.m. and resumed at 4 p.m.

An Cathaoirleach

When is it proposed to sit again?

Mr. Mullooly

It is proposed to sit again at 2.30 p.m. on Wednesday, 1 December 1993.