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Select Committee on Foreign Affairs and Trade debate -
Tuesday, 26 Jan 2016

EU Framework Agreement: Motion

We have received apologies from Deputies Pat Breen, Olivia Mitchell and Séan Crowe. I give the usual warning on the use of mobile phones.

The purpose of today's meeting is to consider the motion referred to the select committee by Dáil Éireann on approving the terms of the Framework Agreement on Comprehensive Partnership Co-operation between the European Union and its member states, on the one hand, and Central America, on the other. Under the terms of the Dáil motion of 19 January, the committee must consider the matter and, having done so, report back to the Dáil not later than 27 January 2016.

On behalf of the committee, I welcome Minister of State, Deputy Sean Sherlock, and call on him to address the meeting.

I thank the Vice Chairman and the members of the select committee for the opportunity to discuss the motion proposed by the Minister for Foreign Affairs and Trade, Deputy Charles Flanagan, which has been referred to it for consideration. I am joined today by Caoimhe Ní Chonchuir, Paul O'Hara, Elisa Cavacece and Karl Finnegan from the Department.

The motion seeks Dáil approval of the terms of the agreement establishing an association between the European Union and its member states, on the one hand, and Central America, on the other. The six countries which form Central America are Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. Diplomatic relations between the European Union and Central America were formally established with the San José dialogue in 1984 and were driven partly by the desire of Europe to help bring to an end the political violence and instability that afflicted the region at that time. Europe and Central America concluded a framework co-operation agreement in 1993 and a political dialogue and co-operation agreement in 2003. In 2007, the European Council authorised the Commission to begin negotiations on an association agreement. Talks on the agreement concluded in 2010 following the EU-CELAC summit in Madrid. The association agreement was signed by all parties in Honduras in June 2012 and received the approval of the European Parliament in December of that year.

Each member state of the European Union, together with the EU and the republics of Central America, will become a party to this mixed competence agreement. It is called a mixed competence agreement because some of the areas covered by the agreement are matters of EU competence while others remain within the competence of member states. The agreement contains three pillars: political dialogue, co-operation and trade. It was agreed that the trade pillar of the agreement, which involves European Union rather than member state competence, would be provisionally applied pending the ratification by all EU member states of the agreement. The trade elements of this agreement therefore came into effect during 2013.

To date, all six Central American republics have ratified the agreement, while on the EU side, 12 member states, including Ireland, have yet to notify the European Commission that they have completed all internal procedures necessary for the ratification of the agreement. For Ireland, receiving the approval of the Dáil is the last step of our domestic procedures necessary for its entry into force.

I will turn now to the substance of the agreement. This agreement has real value for the European Union and its people and for the people of Central America. There are significant economic advantages for both sides. The trade pillar of the agreement will eliminate high tariffs, tackle technical barriers to trade, open up services markets and public procurement markets and protect EU geographical indications. For Europe, this means new business opportunities for European exporters and investors. For Central America, it means access to the European market of 500 million consumers and a chance to move up the industrial value chain and create better quality jobs for workers.

Over time, under the agreement import duties on industrial goods and fish will be eliminated. It is estimated that the overall value of tariff elimination on European exports will be in the region of €90 million.

Agricultural trade will also open up, while protecting sensitive products in both regions. Central American exporters of fruit and vegetables stand to gain significantly from the agreement. Conversely, key European exports such as whiskey and wine will enjoy zero tariffs. This is good news for the producers of Irish whiskey which we already export in significant quantities to Panama.

The agreement also simplifies customs procedures. All Central American countries will, within three years, use a single customs document, thereby reducing the administrative burden for European exporters and traders within the region. In addition, our partners in Central America have committed to removing barriers to services, trade and investment, which will make the region more attractive for European investors. When fully enacted, the reduced costs of trade should have a beneficial impact on growth and job creation in all Central American countries and it is expected that the agreement will have a poverty-reducing effect overall in the region. EU data suggest Central America’s GDP could grow by over €2.5 billion as a result of the agreement. Economic resilience will also be improved by reducing reliance on the United States as a destination for Central American exports.

In 2014, the first full year in which the trade pillar of the association agreement was in effect, goods trade between the European Union and Central America was worth €10.5 billion, an increase of 1.2% on the figure for the previous year. The European Union is Central America’s second largest trading partner after the United States, excluding intra-regional trade. In 2014 there was a trade surplus of €1.7 billion in favour of Central America. The chief imports to the European Union from Central America are data processing machines, coffee, bananas and pineapples. The main EU exports to Central America are machinery, electrical appliances, pharmaceuticals, motor vehicles and steel products.

I reassure the committee that the agreement contains very strong safeguards for human rights, the rule of law, democratic principles, respect for the environment and workers’ rights. The very first article states human rights, the rule of law and democratic principles constitute an “essential element” of the agreement. This means that, in a situation where a government violates this essential element, any of the parties would be able to react unilaterally by taking proportional measures that could go as far as the suspension of the whole agreement. This provision is a powerful statement of our commitment to uphold our values. The co-operation pillar of the agreement commits the two sides to co-operate to achieve full compliance with all human rights and fundamental freedoms, as well as the building and strengthening of democracy. It commits the parties to work together in promoting good governance, fighting against corruption and supporting the participation of civil society in decision-making.

The agreement has sustainable development at its heart and commits both sides to respect, implement and enforce a series of universal standards for labour rights and the environment, including the eight core conventions of the International Labour Organization. The agreement contains a binding arbitration mechanism to ensure these commitments are respected, which can be triggered unilaterally by the European Union or any of the Central American countries, even against the will of the country concerned.

In regard to oversight, the agreement foresees the creation of a committee of parliamentarians, composed of MEPs and Deputies from the Central American parliaments. The committee will have the right to demand information and make recommendations to the European Commission and Central American governments. The agreement will also establish a civil society dialogue forum and a consultative committee, designed to allow civil society to hold government parties accountable.

I now turn to what the agreement means for Ireland.

Many Irish people feel an affinity with Central America. From the late 1970s up to the 1990s, a solidarity movement grew up in Ireland in reaction to the political upheaval and civil wars affecting El Salvador, Nicaragua, Guatemala and Honduras and many Irish people travelled to the region in that period as volunteers. There is also a tradition of Irish missionaries in Central America, particularly from the 1970s onwards. Our relations with Central America received a significant boost with the visit of President Higgins to El Salvador and Costa Rica in 2013, where he received a very warm reception. We do not have an embassy in Central America and most Central American republics are accredited to Ireland from their embassies in London. There is, therefore, significant potential to develop our relations, which can only be assisted by an agreement such as this.

Ireland’s trade with the region is small but growing. Ireland’s chief exports to the region include medicines, infant food, medical equipment, industrial machinery, computers and alcoholic beverages. Our chief imports from Central America include vegetables and fruit, coffee, sugar and honey.

In 2013, total trade in goods between Ireland and the region was worth €106 million. In 2014, the first full year of operation of the free trade agreement, total trade grew to €126 million, representing growth of almost 20% in our trade. Figures from January to November 2015 show continued strong growth in Irish exports, particularly in trade with Panama, Guatemala and Costa Rica. While it is not possible to prove causation, trade data seem to indicate that there is at least a correlation between the entry into force of the trade elements of the association agreement in 2013 and recent growth in Ireland’s trade with the region.

This agreement will provide a framework for strengthening the relationship between the European Union and Central America in trade, policy dialogue and co-operation. It provides a platform for bi-regional engagement on issues concerning health, the environment, climate change, energy, education, employment and science and technology and will allow us to work together to tackle global challenges, such as migration, terrorism, money laundering, organised crime and corruption. It contains important safeguards for human rights, workers’ rights and the environment. The ratification of the EU-Central America Association Agreement not only strengthens the foundation of the relationship between the EU, its member states and Central America but also charts a course for political and economic reforms. Through Ireland’s ratification of this agreement, we will show our support for the people of Central America.

I thank the committee again. I hope this motion will meet with the committee’s approval and that Dáil Éireann will approve the terms of the agreement so that Ireland can proceed to ratify in the near future. I am happy to take questions at this point.

I welcome the Minister of State's statement. He mentioned Panama being a good export market for our whiskey. I presume that if he is asked to recommend a particular brand, Midleton would not be far down the list, given where he comes from. It is good to know that the people have a discerning taste for drink.

I hope the implementation of agreements happens in the spirit in which we agree them on a macro level and that they can lead to additional trade and increased job opportunities in Europe and in Central America. The Minister concluded by referring to human rights. The EU is formally committed to respecting human dignity, freedom, democracy, equality, the rule of law and respect for human rights. Its aim includes promoting a society in which justice, solidarity and equality prevail but we often do not recall that its founding treaty stated explicitly that it would apply these principles to all its activities, agreements and interaction with other countries and trading blocs.

When we sign up to trade agreements, it is particularly important we ensure workers' rights and human rights are protected. A trade agreement should not be just about increasing the quantum of the trade but should also be about trying to improve the living standards of those on either side of the agreement who will be the beneficiaries of it.

Climate change has been in the news recently, particularly in terms of the Paris conference. My understanding is that, in global terms, there are hot spots for adverse climate change impacts in Central America. If droughts are likely to intensify and become more prolonged, there will be an adverse effect on those countries' ability to have a sustainable food production system and, sadly, it will be the poorest of people who will suffer most if there is a decline in production of food. All the research shows that food security, particularly for the rural poor, is an issue that must be kept at the top of the agenda. Whatever the European Union can do to help the farming systems in those countries to adapt and try to mitigate the effects of climate change, it is very important that is done and that Europe makes a meaningful contribution to the greatest extent possible to try to ensure there is not a lessening of food production due to climate change. We know we cannot deal with everything nature throws up but there are methods, including technology and knowledge transfer, that are essential in terms of those agricultural and food production systems being given the benefit of what Europe has achieved in that respect. I sincerely hope that will not be left to one side in the implementation of this agreement.

On imports, we have demanding and exacting standards within the European Union in regard to animal health, welfare, traceability and environmental standards for exporting food, which should be the case. Likewise, the same standards must be applied to food products coming into the European Union. There must be equivalents in the standards we set to export our products and those we demand for products that come into the European Union.

The Minister of State mentioned sustainability. Sustainability is hugely important in the Central America context and from the point of view of subsistence farmers and fishermen. We want to increase trade from Europe but at the same time, we must respect producers in Central America and not make them uncompetitive. We must respect local markets that are developed for local produce and ensure that we do not end up displacing local small producers.

We must ensure also that there are ongoing mechanisms to review the implementation of the agreement and that the human rights, workers' rights, sustainability and environmental awareness issues are continually addressed, monitored and implemented in the best way possible. That will ensure that Europe and the Central America countries are both beneficiaries of the agreement as it is implemented and that it benefits in particular the poorer people living in difficult conditions in remote rural areas and that their needs are respected in the implementation of those deals.

I welcome the advancement of this agreement but I emphasise that we can look at the agreement only on the macro level. We do not have the knowledge or competence to invigilate every aspect of the agreement but we trust that it will be implemented according to the founding principles of the European Union.

We had a meeting some time ago with the ambassadors of Central America countries. As far as I can remember, the ambassador of Belize was also in attendance, but that country is not included in the agreement. Some years ago, when it was being discussed, there was considerable concern among civil society organisations about the need to have binding mechanisms and monitoring systems in terms of the protection of human rights. Based on what the Minister of State has said, it appears that these concerns have been taken on board. However, there can be a huge difference between what is written on paper and the reality. Is the Minister of State assured that what he says about what is included in the agreement will prove beneficial in terms of the protection of human rights and the pressures on natural resources such as land and water because there is significant displacement in South American and Central American countries? He has said that when the agreement is fully enacted, the reduced costs of trade "should" have a beneficial impact on growth and job creation. How confident is he that they "will" have a beneficial impact? Significant work has been done and a paper prepared for consultation on business and human rights in Central America. It is vital that we be clear on what we mean in this regard. I am always struck by the fact that Ireland is an exporter of infant food when we know that support for and the encouragement of the breast-feeding of babies are more beneficial. There seems to be a contradiction in that regard. We also export whiskey, but I hope we are not exporting our alcohol problems with it and that it will not end up costing Central American countries what it is costing this country.

Are there plans to have a trade mission to Cuba or to develop more contacts with it?

I appreciate that this is not the first time we have dealt with a trade agreement such as this and the more I study such agreements, the more I favour them. It makes me feel proud that, as Europeans, we support emerging democracies and provide substantial development aid to assist them in key areas such as the protection of human rights, the rule of law and democracy. I note that we are funding them to the tune of €120 million in the context of regional economic integration; security and the rule of law; and climate change. We are pumping €35 million into assisting them in addressing the issues of climate control, land development, food production and water resources.

In the past five years I have noted the concerns expressed by NGOs. I respect their views and the fact that they are on the ground in countries such as Colombia and Peru and that they have first-hand experience of the abuse of human rights such as land grabbing by multinationals or criminals. On the other hand, we have seen a very brave President Santos in Colombia negotiate with the FARC rebels in order to bring stability to his fine country in order that it can take its place among the nations of the world. At the time of the debate on the issue we expressed our concerns about human rights there and were assured that the European Union had core workers on the ground monitoring implementation of the agreements in place, which was excellent.

As we are in the last few weeks of the Government's cycle, it is important to recall that this committee also dealt with the Chilean Minister for Foreign Affairs. Chile is in Latin America rather than Central America. It was fascinating to see his enthusiasm for trade agreements and hear how beneficial such agreements with the European Union were for the Chilean people.

He was going further and further into the negotiations. Therefore, I think that sometimes, we, as Europeans, forget that we are acting in the best interests not just of pure capitalism, grabbing land and produce, but are actually contributing to the key areas of developing law, human rights and workers' rights. We are now trying to influence, in these Central American countries, all of those liberal democratic processes that we take for granted in the West.

We have already completed one agreement with Colombia and Peru. The Chilean foreign minister, who is a socialist, has spoken about the redistribution of wealth there and how he was opening up the educational system to all and sundry, whereas it had been privatised under the previous government. It is important that we, in the West, including Europe, recognise that there are democrats going through struggles in their own countries. They are deserving of support, financially, politically and through development aid.

I am enthusiastic about what I have read here. I see that the Minister of State's remit covers some of these countries. As often as I can, I buy fair trade produce. I know that the Department of Foreign Affairs and Trade is keen on advocating fair trade production. We import produce from many of these countries. The more we develop trade and diplomatic contacts, including by establishing embassies, the greater will be the understanding between NGOs, parliamentarians, governments and the whole European process. I am enthusiastic about these agreements and I hope they will go through the House without any great difficulty.

I thank the Minister of State, Deputy Sherlock, for appearing before us today. These agreements are a progressive step in establishing trade relations with emerging, developing countries. Unlike some other countries, Ireland has a good record of having treated trade and development aid as two separate issues. Some countries tend to tie the two together, so that one becomes conditional on the other. We have never pursued that approach.

Obviously, opportunities will arise for Latin American countries from the agreement. The only rider I would put in, as always, is to say that I hope multinational corporations will not get the bulk of the benefit. That has happened in the past, certainly in the African countries. We need to closely observe the progress of the agreements as time goes by. Does the Minister of State wish to make some closing remarks?

I wish to thank Deputies in general terms for their comments. I will endeavour to reply to some of the issues that have been raised. As regards labour rights and the universal standards that apply to them, the eight core principles of the ILO are part of that agreement. As regards the main provisions of the agreement concerning human rights, if one examines the various articles inherent in the agreement, for instance, article 1 deals specifically with protections around human rights, the rule of law and democratic principles. Climate change is inherent in articles 50 and 51, so there are specific references to responsibilities in respect of those issues.

It is evident through Irish Aid support that we have committed more than €17 million since 2012 to this region. We do much work through our partners, including Trócaire, which is a key example in terms of capacity-building to assist the people who are most directly affected, namely, the primary producers. We do much work at ground level in that respect.

Articles 41 to 46 specifically refer to addressing poverty, inequality and exclusion. Provisions are made through specific programmes in that regard.

There is a programmatic element which ensures decent work for all, respect for workers' rights, equal access to education and public health and special initiatives aimed at vulnerable groups such as indigenous communities, something on which we are very strong from an Irish perspective.

Let us look at the trade terms. As I said, they favour Central America in trading with the European Union. In that sense, we are on a good footing. It means that primary producers trade in coffee and fruits, in particular. As Deputy Eric Byrne said, in Ireland we are good consumers of coffee. In the case of Fairtrade Ireland, Java Republic, Bewleys and other brands, not to be too brand specific at this committee meeting, there is a very strong impetus towards purchasing unroasted beans directly from producers through intermediaries but giving a fair price to the primary producer. This is now inherent within the Irish consciousness when we consume coffee. We have moved a long way from buying jars of instant coffee.

I used to drink Irel coffee. Does the Minister of State remember it?

As a nation, we are now very discerning when it comes to ensuring a proper dividend is paid to the worker who operates in the field. We are satisfied that the agreement contains protections in that regard.

I will restate the following for the benefit of the committee. In 2014 there was a trade surplus of €1.7 billion in favour of Central America. That shows that the trade terms favour Central America. Ireland is growing its level of trade on a bilateral basis.

On climate change, Ms Cavacece might want to reiterate what the nature of the relationship is with NGOs from an Irish Aid perspective. We are confident that everything we are doing in respect of the agreement corresponds with our foreign affairs policy on inclusive economic growth.

I will come back to Deputy Maureen O'Sullivan on her question on Belize. I am pretty sure Ms Ní Chonchúir has the answer.

On Cuba, I met Dr. Herrera in the past few weeks and we had a very positive discussion on how we could enhance and improve the relationship between Ireland and Cuba across a range of sectors, including medicines, pharmaceuticals and education. Work is ongoing between him and the Department of Foreign Affairs and Trade in that regard. If there are specific areas about which the committee has ideas, I can assure members that the Department operates an open door policy when it comes to areas in which we can enhance co-operation.

When we talk about equivalence, there are very specific measures in the areas of food safety, sanitary and phytosanitary requirements, energy, mining, tourism, science and technology, as well as governance in terms of taxation and small to medium-sized enterprises. We are trying to reduce technical barriers to trade. Sometimes there is a certain connotation surrounding the liberalisation of markets, but we are satisfied that the manner in which the agreement has been negotiated is such that there will be very stringent checks and balances explicit within it. Also, there will be a parliamentary oversight function through the European Parliament. If one also has directly elected Members of the European Parliament overseeing these agreements, it means that when issues arise, they will come to the fore through the European Parliament.

Ms Elisa Cavacece

As the committee will probably be aware, Ireland has a long well-established development partnership with Central America. Irish missionaries have been present in Central America since the 1970s, with Irish NGOs joining in the 1980s. As the Minister of State mentioned, the core focus of our support to civil society partners in Central America is around two areas, climate change and its impact on the poorest and most marginalised people. Our civil society partners are working very closely with communities to make sure that more resilient and more sustainable livelihoods are developed. For example, in the agriculture sector much work is being done around developing more effective irrigation systems, introducing more modern agricultural practices and also increasing the focus on agri-processing and ensuring the poorest small holder farmers have a link to market to sell their produce at a reasonable price.

The other important area in our development assistance programme in Central America is around making sure the poorest and most marginalised people are able to hold their government accountable in terms of how it makes decisions on the allocation of resources and the allocation of power. These include issues such as access to land and access to water. There is much work done at community level by civil society partners to ensure citizens, with a particular focus on women, are able to influence decision making. We are quite comfortable that through the very solid partnership we have with organisations such as Trócaire, Christian Aid, Misean Cara and front-line defenders to look at the human rights issues we will be able to receive information on what is happening on the ground and have a good understanding of what is happening in the countries.

I call Ms Caoimhe Ní Chonchúir.

Ms Caoimhe Ní Chonchúir

I believe there is a straightforward answer to that. While Belize geographically would be considered part of Central America, culturally it tends to see itself more as part of the Caribbean group. Belize formed part of the CARIFORUM group, a delegation from which appeared before the committee prior to Christmas with the Minister of State, Deputy Sean Sherlock, in regard to the EU free trade agreement that replaced the Cotonou deal. In terms of the mechanisms for oversight, there are various levels of oversight, ministerial oversight, official level oversight and the creation of this parliamentary committee, which is an interesting innovation. This will improve the capacity of Central American parliaments. There is also a civil society dialogue forum, which is an excellent innovation and will encourage Central American society to build its oversight capacity. The agreement foresees that where any party feels there may be a problem with workers or environmental rights, they can call for the creation of a panel of independent experts who will adjudicate on those standards and in a transparent manner deliberate and deliver a public report. It is also foreseen that if the balance of trade becomes drastically disproportionate in a given country, that country can implement measures to redress that and can temporarily suspend the agreement. I hope that addresses some of the concerns.

I thank Ms Caoimhe Ní Chonchúir.

Perhaps the Minister or State or his officials would clarify the following matter. The Department of Foreign Affairs and Trade is the lead Department in these negotiations whereas with the proposed transatlantic trade and investment partnership, TTIP, the Department of Jobs, Enterprise and Innovation is the lead Department. Is there a reason for that? Some time ago, some groups appeared before the committee and made a presentation to us in regard to the TTIP and the concerns that have arisen.

I know it is not the responsibility of the Minister of State's Department as such but it is worth our while putting on the record our concerns regarding some of the proposed provisions within that agreement. We know that if the TTIP comes to fruition, it will create the world's largest free-trade area. There are obvious concerns in this country about retaining our food standards and the current EU law on GMOs and hormone-treated beef. These are issues that are particularly important for Europe. We could not have the American way imposed on us in respect of those food standards.

One other area in respect of which there has also been considerable concern is the controversial investor-state dispute settlement mechanism. Those of us who are parliamentarians or who are in government could not countenance, in any agreement, giving powerful multinational corporations the ability to sue sovereign governments. This would not be acceptable in any agreement.

As an exporting country, in practical terms we should benefit disproportionately from trade agreements. The proposed EU-US trade agreement, if implemented while upholding workers' rights as well as maintaining food standards, would benefit this country. It is estimated that perhaps 10,000 jobs would be created here. However, if that particular proposed agreement is advanced, these important issues must be kept to the fore at all times. Ireland must continue to defend its interest in agriculture and the agrifood sector when it comes to international agreements. We know the importance of that particular sector throughout all of our island and the exacting standards which are quite rightly imposed by the regulator agencies and implemented and put into practice by our farmers.

That is particularly so in respect of climate change because it has the potential for wide and serious impacts.

I would not disagree with anything Deputy Smith has said. I share some of his concerns, as do certain European member states, on the dispute mechanism. However, we must remember that this agreement is far from being concluded. We are currently engaged in the 12th round of talks and a mechanism has been proposed by the European Union on the investment courts but we are a long way off an agreement.

I absolutely concur with Deputy Smith on the protection of agriculture standards in particular. We have exacting food health, food provision and food production standards. There is no way we would want those in any way diminished. Agriculture is a key component of our export strategy. I totally agree with the points made by Deputy Smith, which have now been put on the record. However, an agreement is still a long way off.

On the procedure around the negotiation of TTIP, for an association agreement, it is not just about trade as we are talking about it today. There is also political dialogue and co-operation given TTIP is a trade agreement. Mr. Karl Finnegan, who represents the Department of Jobs, Enterprise and Innovation, is with us here today and if the committee would like a little insight - after the meeting - on where negotiations are from a technical point of view, we would be happy to facilitate that. In political terms, we are a long way from an agreement and we all, as parliamentarians, have concerns about the dispute mechanism and the power of corporations relative to member states.

Mr. Karl Finnegan

I will make a quick comment on food standards.

It has been clear, and is on the record from Commissioner Malmström and her US counterpart, the trade representative, Mr. Mike Froman, that nothing will change with regard to European Union standards on food safety or genetically modified organisms, GMOs, at the conclusion of a potential agreement between the European Union and the United States. Certainly, there will be no drop in standards. This has been clear and has been accepted by both parties.

As for the investor-to-state dispute settlement, ISDS, mechanism for investor protection, the updated piece on that, as alluded to by the Minister of State, is that the European Commission has proposed its views on a reformed ISDS piece, which it has called an investor court system. The Commission has sought to tackle some of the existing outlined issues and concerns expressed by member states, Members of the European Parliament and generally. The Commission is waiting to hear back from the United States regarding its formal response to the proposal and that will be negotiated, possibly, or discussed at the next round of the negotiations, which will be later in February.

I thank Mr. Finnegan, as well as the Minister of State and his colleagues, for appearing before the committee and for giving members so much of their time. The select committee has now completed its consideration of the motion in accordance with the order of 19 January 2016 and a message to that effect will be sent to Dáil Éireann. I wish everyone present happy hunting.

I thank the Vice Chairman.