Ar an gcéad dul síos ba mhaith liom mo bhuíochas a chur in iúl don tSeanadóir Mac Gearailt as ucht an chabhair a thug sé dom anocht.
I speak this evening in support of the amendment to the motion tabled by Senator D'Arcy and Senator Farrelly. This current round of GATT negotiations — the Uruguay Round — which is now to all intents and purposes finalised, has been the most complex, far reaching and intricate ever embarked upon. I believe that it will be viewed in years to come as a milestone in the move towards the liberalisation of world trade. As well as being the first time that attempts have been made to include areas as divers as services and intellectual property rights under GATT rules and disciplines, it is also the first time that agriculture is being dealt with in the GATT in a comprehensive way.
I do not intend to go into the history of the negotiations which have been ongoing since September 1986. Members of this House will be familiar with this as the Uruguay Round was discussed on several occasions here, most recently last month. As the House knows, agriculture is only one of 15 different subjects which have been under consideration in these negotiations. While the thrust of this discussion is towards the agriculture element, before I speak on this aspect I would like to say a few words about the overall agreement and what it will mean in general for this country.
The role of GATT in the proper functioning of world trade is a vital one which must be maintained and improved so that the multilateral trading system is not undermined. This is particularly important for Ireland given our dependence on exports for our future economic growth. I do not have to remind Senators that exports are the lifeblood of the Irish economy and that it is in our interest to have a stable economic trading environment. This is simply illustrated by the fact that today some 60 per cent of the output of Irish industry is exported and two thirds of our manufacturing jobs are dependent on exports.
Ireland's exports have grown very significantly in the past ten years — from £5.7 billion in 1982 to £16.6 billion in 1992. In 1992, Ireland's trade surplus exceeded £3.4 billion which represents an amazing turn around in Ireland's economic fortunes because we had a trade deficit of over £1 billion only ten years earlier.
In 1992 our total exports amounted to £16.6 billion with £4 billion representing agri-food exports and £12 billion representing industrial exports. Our main manufacturing exports included chemicals, £3 billion; data processing equipment, £2.6 billion; and machinery, £1 billion. Our overall trade surplus in 1992 represents 13 per cent of GDP, one of the highest in the world.
We have, therefore, a strong interest in the creation and maintenance of a stable, well regulated, liberal world trading environment. A failure in the Uruguay Round would likely produce the exact opposite and carries the threat of potentially serious damage to the Irish economy. Failure could also lead to a rapid escalation of trade conflicts and could create a hiatus during which the main trading blocs could drift into an increasingly antagonistic trade war. We got a small hint of what that might entail during last year immediately prior to the negotiation of the Blair House agreement when the US threatened to introduced punitive tariffs on EU exports and the EU responded with the threat of retaliatory measures against US products. Some very important Irish products featured on the US "hit list" at that stage and the effect would have been to stop the trade in these products with the consequences of significant job and export earnings losses.
Even bearing in mind that 31 per cent of our exports go to the UK and 43 per cent to other European Union countries, it is certain that these markets would be seriously affected by a trade conflict and that our ability to export would be severely curtailed. Couple that with the fact that a failure to reach agreement would deny us the trade opportunities that are forecast to flow from the expected growth in world trade and Senators can see how important the achievement of a fair and balanced agreement would be to Ireland.
It is in this context that the Government defined our policy in relation to the various elements of the Uruguay Round negotiations. This policy can in broad terms be defined as a commitment to a global and balanced agreement which has regard to our concerns in relation to specific topics in the negotiations. This approach is based on the premise that freer world trade would bring about significant annual gains to the world economy and that we are well placed to take advantage of any such increases. In this regard, the Minister for Tourism and Trade earlier this year commissioned a consultancy firm to assess the impact for Ireland of the likely Uruguay Round agreement.
The study sought to analyse the potential impact on Irish production and employment when the full effect of a GATT agreement had worked through to the international and Irish economies, that is, in the first full year after the six year period over which the GATT agreement is phased. The consultants assumed that a GATT agreement would add a cumulative 1 per cent to the value of world trade each year over the six years of the transition compared to what is assumed would be the case in the absence of a GATT agreement. Conversely, it was assumed that a breakdown in the GATT negotiations would lead to a cumulative 1 per cent annual reduction in the value of world trade over the six years of transition. These assumptions yield an estimate of the long-term impact of a GATT agreement or a GATT breakdown of plus or minus 6 per cent of the value of world trade. It is this world trade growth effect of a GATT agreement which is by far the most important effect in stimulating the production and employment growth which the study postulates will occur.
The study's estimates of a GATT agreement's impact on manufacturing were that Irish manufacturing output would be expected to increase by £524 million if world trade and investment continued unaffected, if there was not a GATT agreement and almost £1,500 million by comparison with a situation where a breakdown was followed by increased global trade protectionism and a slowdown in global investment. Manufacturing employment could be expected to increase by 4,550 and 13,112, respectively, under the same scenarios. The gains in services were estimated at £121 million and £242 million in terms of output and some 6,000 and 12,000 jobs under the "no change" and "trade hostilities" scenarios, respectively. I will deal later with the study's outcome in relation to agriculture.
Turning to agriculture, it will be recalled that the initial draft outline agreement was contained in the Draft Final Act of December 1991. Ireland was to the forefront in securing the Union's rejection of the approach of the Draft Final Act of December 1991 for finalising the round which we considered was not in the best interests of Irish agriculture. Subsequently, the Commission embarked on negotiations, with the US in particular, to find a more equitable outcome. Arising from this, US and Commission negotiators reached agreement at Blair House on a number of amendments to the agriculture sector of the Draft Final Act. The most significant amendments related to the exemption of CAP reform payments from the support reduction obligations, a reduction in the volume restraint commitment from 24 per cent to 21 per cent and the introduction of a peace clause of six years duration.
Notwithstanding the Blair House adjustments, the Minister for Agriculture, Food and Forestry, Deputy Walsh, still continued to have concerns on certain aspects of the agreement, particularly in relation to the volume restraint commitment and the matter of application. On the day the agreement was reached, the Minister expressed these concerns and on 20 November 1992 he said that he remained very concerned at the outcome in regard to volume limitations on subsidised exports, particularly in so far as they will affect the beef and dairy sectors. He said he will need to be clear that these can be accommodated within the CAP reform arrangements before there can be any question of his acceptance of the agreement in the Agriculture Council.
The Minister for Agriculture, Food and Forestry, and other Irish Ministers continued to outline the potential impact of the volume restraint aspects of the draft agreement on Irish agriculture at all the relevant Union fora. In addition, they had insisted that the Union's approach to market access, including aggregation and tariffication, which were being strongly challenged in some quarters, be secured and that a range of adjustments would be required to make an agreement acceptable to the Government. Every opportunity was consistently availed of to outline the Government's concerns in bilateral discussions with the Commission, Union Ministers and representatives from countries outside the Union.
Arising from this, on 20 September 1993 a Joint General Affairs/Agriculture Council reaffirmed that the Union must ensure that its international commitments would be compatible with the CAP and the Union's export vocation would be protected. The Council, at the insistence of a number of member states including Ireland, laid down a number of general guidelines for the Commission for further negotiations.
In the further negotiations, significant adjustments were secured. These adjustments represented major gains, particularly when viewed against the strongly held views of some participants that there could be no renegotiation of the export commitments or, alternatively, that if changes were made, the European Union would be required to make major concessions on market access for products of importance to Ireland.
Of major importance are the concessions secured on the export support commitments, on market access and the peace clause. The arrangements secured on the support commitments fully address our concerns in relation to front loading and intervention stocks. Under the revised arrangements the European Union will, by comparison with the volumes which would have resulted from the original Blair House agreement, be able to export the following additional volumes over the next six years: 362,000 tonnes of beef; 146,000 tonnes of dairy products; 8,116,000 tonnes of wheat and wheat flour; and 269,000 tonnes of poultry and eggs.
The foregoing will be particularly beneficial to Ireland. For example, the additional quantities represent 60 per cent of current beef stocks and 33 per cent of current cereal stocks. When compared to stock levels and normal export volumes the change in the front loading commitment in regard to beef is of relatively greater value than it is in the other sectors.
In return for the concessions the European Union will be required to provide some additional access to its markets, mainly in the pigmeat and fruit and vegetables sector, and to reduce the import duty on the quota quantities of some other products, mainly cheese, turkeymeat and liver. In the pigmeat sector, the Union has agreed to provide additional access for 39,000 tonnes of produce while, for cheddar cheese, the import duty for the quota quantity, which will be 15,000 tonnes at the end of the six year period, will be reduced from 845 ECUs to 210 ECUs per tonne.
It is important that the Union accepted the Government's position on resisting further access for beef and dairy products. The fact that the Commission's undertaking not to grant subsidies on beef exports to South-East Asia will not be bound in GATT is also of importance as this leaves open the possibility of pursuing the reopening of this market for beef exports. The Government will continue to pursue this vigorously.
Acceptance of the Union's approach on market access was also particularly beneficial. The tarriffication arrangements and the safeguard mechanism will continue to ensure the protection of Union preference. The acceptance of the Union's aggregation approach on access means that meat imports will be 600,000 tones less than would otherwise arise.
I have already referred to the report of the consultancy firm on the impact for Ireland of the Uruguay Round agreement. The report assessed the impact of the round for the agriculture sector under a number of scenarios. The worst case scenario which projected losses of £310 million is no longer relevant in the light of the arrangements that have been secured. The Government is satisfied that the efficiency of the Irish agriculture and food sector will keep any losses at the lower end of the estimated scale.
The Government has always insisted that the implementation of GATT commitments in the Union must take account of the relative importance of agriculture and specific products to member states and regions. It has also always insisted that any GATT commitments which go beyond those in the CAP reform must be subject to adequate compensation to ensure that the income of producers is consistent with that under CAP reform. That continues to be the Government's position. The assurances obtained at the European Council and in the Council of Ministers can be relied on to secure any necessary compensatory measures at European Union level.
It must be kept in mind that the alternative to a GATT agreement was not a continuation of the status quo. If an agreement was not reached, it was inevitable that either many of the Union's support arrangements would be challenged under the GATT or there would be trade hostilities. The Union's support arrangements were vulnerable under the GATT, whereas the peace clause arrangement which will now continue for nine years would safeguard the current support and protection arrangements. The consultancy report has estimated the costs to the agriculture sector in a trade hostilities scenario at £125 million per annum, which must be regarded as a conservative figure.
The Irish agriculture and food sector will face challenges under the new GATT arrangements and the Government does not under-estimate these challenges. At the same time, the fact that Irish industry was increasingly successful in exploiting market opportunities on the Union market and had reduced its dependence on the intervention system is reassuring and is a measure of the ability of the agri-food sector to face all challenges and to successfully adapt to new situations. This favourable trend will undoubtedly continue and will be supported by the Government in regard to investment aid, market promotion and assistance for research and development.
As I have said, the agri-food industry is well prepared to face the new challenges. In this regard, investment in the industry from 1987-93 amounted to £323 million, assisted with EC grant awards totalling £121 million under the FEOGA processing and marketing grants schemes and over £47 million in grant awards provided by the national development agencies.
The food sub-programme for the period 1994-99 envisages total investment of £665 million. It is envisaged that the EU will contribute £231 million towards the implementation of the programme and almost £73 million is to be provided by the State. The programme includes the provision of capital grants to the food industry and financial assistance for research and development, marketing and promotion and training.
I consider that, viewed objectively, particularly against the background of negotiations which have been ongoing since 1986 and the number of sectors and countries involved, all of whom had their own interests to protect, the proposed agreement underlines the fact that the Government's strategy in the negotiations in relation to agriculture has resulted in Ireland's major concerns being satisfactorily addressed.
I commend the amended Motion to the Seanad.
