Thursday, 11 March 2004

Questions (51)

Eamon Ryan

Question:

50 Mr. Eamon Ryan asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will elaborate on her statement at the National Forum on Europe that the Government is in favour of retaining the unanimity requirement on international trade in health education and cultural-AV services; and her views on whether the necessity of maintaining a unanimity requirement on national taxation matters may require a concession on certain issues in relation to the opening up of trade in health, education and cultural-AV services. [8111/04]

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Written answers (Question to Minister for Enterprise)

As stated by my colleague, the Minister for Enterprise, Trade and Employment, Deputy Harney, at the National Forum on Europe on 4 March, Ireland, along with a number of partners, has proposed in the Intergovernmental Conference that unanimity be retained in regard to the negotiation and conclusion of international agreements in the fields of trade in social services and health and education services. That remains our position.

As the Tánaiste also said at the forum, from a national perspective we will take a view on the overall balance of the final IGC texts in the light of the issues and the preferences we have raised. As regards taxation, we believe that the agreement reached at Nice should remain in place. The existing arrangement on taxation is beneficial for the diversity and dynamism of the European economy. For the information of the Deputy, a copy of the Tánaiste's remarks at the forum follow.

Address by the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, to the National Forum on Europe on 4 March 2004 Provisions in the draft Constitution relating to the Common Commercial Policy:

I am very pleased to be invited to address the National Forum on Europe. The Forum has proven its importance as a means of bringing the debate on the future of Europe to the wider community and in allowing full participation in that debate from all interested parties.

2004 is an important and historic year for Ireland in the European Union and for the Union as a whole. We are honoured to have the Presidency at a time when the greatest enlargement will take place, on May 1st. It is a momentous step in unifying the peoples of Europe in our common objective of peace, security and prosperity. It also marks a new era in developing our European neighbourhood, where European nations who are members of the Union and those who are not work together in a new way on common issues.

The European Parliament elections in June and the new Constitution will provide new opportunities to bring debate about the Union to the people and to underline the relevance of Union policies to our daily lives. It is important that we keep our eyes firmly on the fundamental objectives we have for common action. I believe this is as relevant to common commercial policy as it is to any other area of Union policy.

EU policies and the benefits of international trade:

At the outset today I would like to take the opportunity to put this in the overall context of international trade, open markets and the Union's basic policies. Trade benefits both sides in the transaction. All the evidence is that free trade helps poor countries become less poor. It raises standards of living. It provides resources for public services. It enables mutual understanding and exchange. One only has to compare North and South Korea — both starting from the same point, but one following the model of a closed, planned economy and the other, an open market, trading economy. Since 1970, the income per capita of South Korea has increased to 19 times that of North Korea.

This difference in living standards over 30 years could hardly be greater. It is not just about measures of economic production. It is about meeting and improving the basic needs of millions of people, like health care, food, clean water, sanitation and education. That is what trade has delivered in South Korea, and is now delivering in countries like China and India.

I don't think there is any developing country in the world that wants to trade less. All their efforts are to open up markets for more trade for their goods and services. Nelson Mandela has called for a new partnership through rules-based trade and investment, not a dismantling of trade and investment. And Kofi Annan put it well when he said, ‘The poor are not poor not because of too much globalisation, but because of too little'.

Trade is essential for raising global living standards, and most essential for those with the greatest need for higher living standards. I agree with the view that while trade is not the answer to all our economic and political concerns, meaningful solutions are inconceivable without it.

European Union policies

The European Union has been built since the start on economic policies of free trade and open markets. The present treaty provision in Article 4 and in the proposed Articles III-69 and 70 say that the Union shall adopt an economic policy ‘conducted in accordance with the principle of an open market economy with free competition'.

In regard to our common commercial policy, the treaties' aims are: "The harmonious development of world trade, the progressive abolition of restrictions on international trade, the lowering of customs barriers, and the achievement of uniformity in measures of liberalisation".

Again, the draft Constitution reiterates these goals. These are the long-standing, unshakeable foundation stones of the Union's economic policy. Through five referenda over 30 years they have been ratified by Irish people. And we have built a large part of our success as an open, trading economy on these foundation stones of the European Single Market. In 1973, Ireland had a trade deficit of €342 million. In 2002, our trade surplus was €38 billion. Since 1973, our total trade in goods and services has increased from 81 per cent of GDP to over 170 per cent of GDP in 2002. Our approach to questions of economic governance within the Union, such as those we are discussing today, is in the context of a continued and firm adherence to these foundation stone policies.

We affirm the value of an open market economy, of competition and of free international trade based on clear rules. In Ireland, the government has permitted private enterprise in the provision of health, transport and education services. Many people would say it matters little whether these services are purchased by the State for public use rather than provided and organised by the State. Many people would say they are less concerned about the ownership of service providers than quality of services and access to services. The European Union is neutral on these questions of ownership of social services.

The EU respects that Member States have their own history and traditions in organising public and social services. The attitude of both citizens and Member States, who together constitute the Union, suggest that they wish this to continue. Nothing in the draft Constitution would prevent that happening. It is absurd to suggest that the European Union is, deliberately or unwittingly, set upon the destruction of public social services. There is no evidence whatsoever that the European Union is hostile to public service broadcasting, that it wishes to close down public museums or that it wishes to undermine public education — the type of claims that have been made in some quarters.

For example, there was no issue arising from EU legislation for the Irish government's decision to raise the public licence fee by over 40 per cent in December 2002. There would be no issue under the new Constitution either. There is nothing in existing or proposed EU law that would require us ever to charge an entrance fee to our National Gallery. There is nothing in existing or proposed EU law that would require us to privatise any utility. These are matters of our national choice, and will remain so.

Services of General Interest

I would like to turn now to the specifics of the draft Constitution in relation to Services of General Interest and the Common Commercial Policy of the Union. This is the particular focus of today's Forum session. This debate about the regulatory regime that should apply to public utilities and services is not new. It is and will remain a constant issue for national governments and for the Union as markets and services change.

What is new in the debate is the term ‘Services of General Interest'. It refers to both public services, such as education and health, and public utilities, such as telecommunications and transport. It covers services delivered by both public and private sectors.

In addition, a new provision has been added to the draft EU Constitution relating to means of deciding common commercial policy. There is also the background of the European Commission, in a Green Paper, having prompted some debate on whether a single model for the provision of public services is appropriate for the EU. The constraints of time mean I won't address the Green Paper in these opening remarks.

The draft EU Constitution includes provisions on services of general interest in a number of Articles. While existing Treaty language is retained, Article III-6 of the Convention text gives the Union the right to adopt a European law defining the principles and conditions under which services of general interest operate.

This issue was further discussed in the IGC when the Italian Presidency proposed the inclusion of the safeguard that such European laws would be ‘without prejudice to the competence of member states in compliance with the Constitution to provide, to commission and to fund such services.'

While agreement has yet to be formally reached on this amendment, it appears to have found widespread acceptance amongst our partners. This wording reflects the actual policy and long standing approach of the Union. In my view, it should be seen more as a clarification for the avoidance of doubt than any significant change to the existing draft.

The European Convention also proposed that the Council, in line with the general use of QMV in the trade area, should no longer act unanimously in regard to the negotiation and conclusion of international agreements in the fields of trade in social services and health and educational services. Ireland, along with a number of partners has proposed in the IGC that unanimity be retained. This is because it would be more consistent with our general approach to subsidiarity and the use of QMV. The IGC is still under way, as we are all aware. Our national preference remains to keep unanimity in this area.

As Presidency we will work for a generally acceptable outcome on this as on all other matters.

From a national position, we will take a view on the overall balance of final IGC texts in the light of the issues and preferences we have raised. Over the years, Irish Governments have acted in the belief that the national interest is achieved by approaching all issues on a balance of interest basis, and not always one by one, isolated from each other.

This reflects the complex realities of living and working with 14, and soon 24, other Member States and more than 100 times our population. In any case, I wish to make it absolutely clear that, under the draft Constitutional Treaty, the common commercial policy cannot affect the delimitation of competences between the Union and its Member States. Nor can it lead to harmonisation where such harmonisation is excluded by the Constitutional Treaty.

I think we should also recall the very limited competence the Union has in the areas of health, education and social services, which are all clearly the primary responsibility of the Member States. In education, for instance, Union action is limited to incentive actions aimed at contributing to the developing of quality education. Harmonisation is excluded. Measures taken must ‘Fully respect the responsibility of Member States for the content of teaching and the organisation of education systems'.

Union competence in the area of health is similarly limited. It must ‘Fully respect the responsibilities of the Member States for the organisation and delivery of health services and medical care.' Agreements concluded under the common commercial policy cannot extend the competence of the Union in these fields.

WTO negotiations

Today's discussion also takes place in the context of the World Trade Organisation's trade talks under the Doha Development Agenda (DDA). The Doha work programme encompasses a very wide agenda with the promotion of market access and market opening across the full range of economic sectors, including services. These are being conducted on the basis of requests being made to non-EU WTO partners to open their markets to European exporters and a concomitant request from these partners to gain access to Europe's services markets. WTO members have committed themselves to further liberalisation of trade in services, governed by the WTO's General Agreement on Trade in Services — otherwise known as GATS negotiations.

As you are aware, following the failure of the Cancun Ministerial WTO meeting, the WTO membership is endeavouring to re-launch and restart the DDA negotiations. Having consulted with the Council and the Parliament, the European Commission last November issued a communication, which sets out the strategy designed to get the Doha talks re-started. The EU Council of Ministers endorsed this approach and urged the EU Commission to actively negotiate with the EU's trading partners with the aim of an early re-launch of the Doha Round.

Any fair examination will show that the EU's formal request, and initial offer, to our WTO trading partners, which were finalised and submitted to our WTO partners in July 2002 and April 2003 respectively, are fully in line with publicly stated objectives. That is, the EU has no intention to promote or request privatisation or the dismantling of public services in any sector in the GATS or in any country.

It is important to repeat this point in response to some of the more exaggerated claims that have been made. The EU's approach to the GATS negotiations does not threaten public services. The reality is that we in Ireland fully agree that Government must remain free to make their own choices regarding public services in the context of the current WTO Trade Round.

GATS negotiations are about opening up trade, not about deregulating services, which are regulated for very good reasons — be it to uphold quality standards or to protect consumers. Nor does it mean that we mustn't open these sectors up to competition. In the appropriate regulatory and economic framework, competition will enhance and expand the services provided to consumers without calling into question the principle of public service. The GATS negotiations are not about de-regulating public services.

Ireland's and the Union's objectives in the services negotiations, under the Doha Round, are to seek better access for European service providers in third country markets and to secure a more transparent and predictable regulatory environment for services. The formal requests submitted by the EU to our WTO partners under the current round of negotiations do not seek to dismantle public services nor to privatise state-owned companies. No requests are being made on health services or audio-visual services to any country by the EU. Only the US has received a request, limited to privately funded higher education.

On environmental services, EU requests do not touch on the issue of access to water resources and in no way undermine or reduce governments' ability to regulate pricing, availability and affordability of water supplies as they choose. Some WTO partners have requested that the EU open its services market to third country providers beyond that committed under the Uruguay Round. The European Union has made no offer to them in the areas of education, health or social services.

In all these cases, governments across the full membership of the WTO remain free to set levels of quality, safety, price or other objectives they see fit. It is inconceivable that any WTO member would agree to surrender such a right. The EU, which attaches great importance to maintaining its own right to regulate in these areas, will certainly not question the right of others to do likewise.

Mr. Chairman, I thank you and members of the Forum for the opportunity to set out the facts as I see them in regard common commercial policy of the Union and the draft Constitution and the approach the government has taken so far. I welcome the opportunity also for debate and for an exchange of views on these matters.