I move:
That Dáil Éireann approves the terms of the Agreement on the European Economic Area, done at Oporto on 2nd May, 1992, copies of which were laid before the Dáil on 16th June, 1992.
The Agreement on the European Economic Area, which has been laid before the Dáil and which is the subject of this debate, is a most important development in relations between the EC and the member states of the European Free Trade Area (EFTA). It is necessary in accordance with Article 29 of the Constitution that Dáil approval be obtained prior to ratification because of a possibility that a charge on public funds may arise from it. It is in any event desirable that an agreement of this size, complexity and significance be considered by this House.
The two organisations — the EC and EFTA — can be seen in a way as giving effect to different visions of European co-operation and integration. The Treaty of Rome, adhered to in 1957 by the original Six, aspires to the ever closer union among the peoples of Europe which is now being advanced further through the Maastricht Treaty and to which, as Community members since 1973, we in Ireland are committed. The European Free Trade Association was founded via the Stockholm Convention in 1960. This set the main objective of EFTA as the progressive removal of barriers to trade and the promotion of closer economic co-operation.
Although there may have been an element of competition in these competing blueprints for European construction, relations between the two organisations have always been close and intensive. Geography alone would dictate this. Switzerland and Austria have long borders respectively with three and two Community member states. Denmark's ties with Scandinavia and Finland are extremely close. Beyond that the EFTA countries and the EC member states share common political and social values, their economies are similarly structured and there is a high level of trade and mutual investment. It is worth nothing that three current members of the EC — Britain, Denmark and Portugal — were once members of EFTA. This is a pattern that is of course likely to be repeated in coming years as the applications for EC membership currently on the table are processed. I will say a little more about that aspect later.
Relations between the EC and the EFTA countries were first put on a contractual footing in the early seventies. Bilateral free trade agreements were signed in 1972 between the Community and each of Austria, Iceland, Sweden, Portugal and Switzerland. Finland signed a similar agreement in 1973 and so did Norway after full EC membership had been rejected in a referendum. As the name suggests these earlier agreements are concerned with the progressive elimination of obstacles to trade between the parties. By the early eighties trade in industrial goods between the EC and EFTA had been completely liberalised. The agreements also contain provisions on competition and state aids in so far as these may impact on trade. The free trade agreements continue to function but their provisions will be subordinated to those of the European Economic Area Agreement when this enters into force.
The pattern of essentially bilateral co-operation of the Community with each of the members of EFTA was given a multilateral dimension in 1984. EC and EFTA Ministers meeting in Luxembourg took stock of overall relations and looked at ways in which co-operation could be extended beyond the free trade agreements. The harmonisation of standards, the elimination of technical barriers to trade and the simplification of border facilities were instanced as areas for further work. In addition co-operation in science and technology, the environment, working conditions and consumer protection was seen as desirable. The Luxembourg Declaration saw this enhanced intra-European co-operation as placing Europe as a whole in a better position to create conditions for growth. It also provided for a stronger European voice on international economic issues through increased consultations and exchanges of views. Most significantly, the declaration introduced for the first time the idea of creating a dynamic European economic space of benefit to the EC and EFTA countries. It is in this that the origins of the European Economic Area Agreement — under consideration here today — are to be found.
To this historical trend of ever-increasing EC-EFTA interaction in an increasingly inter-dependent and regionalising world economy were added further factors. In 1985 the White Paper programme on the EC's Single Market was endorsed, beginning the process which will culminate next January with the completion of the Single Market. The desire of EFTA not to be placed at any disadvantage by this development added to the impulse for closer ties. There was a disposition on the Community side to respond to this, providing concrete illustration of the external openness of the Single Market. A further element in the Community approach — though not articulated at the time — was perhaps to defer any accession processes while the important and heavy internal agenda of the Single Market was addressed.
By the time of the Irish Presidency of the Council in the first half of 1990 the EC and EFTA were committed to establishing a significantly closer and more structured relationship. At its heart would be the achievement of the free movement between them of goods, services, capital and persons.
The necessary accompanying policies, for example in the area of competition, would be covered and appropriate institutional arrangements would be made. A negotiating mandate for the Commission was approved during the Irish Presidency. This laid emphasis on the achievement of comprehensive and balanced co-operation, stressed that free movement should be on the basis of Community legislation and sought the preservation of the autonomy of EC decision-making. The mandate identified the reduction of economic disparities between regions as an objective of the negotiations.
The EC-EFTA negotiations to create a European economic area formally opened at the end of June 1990. The negotiations were complex, covered a very wide field and had no real precedent in any other area of the Community's external relations. They also involved sectors of considerable importance and political sensitivity for a number of the participants, such as fisheries and road transit. A number of ministerial level sessions were necessary before substantive political agreement was reached on all issues in October 1991. Provisions of the agreement dealing with the setting-up of a judicial mechanism, or court, for the EEA had to be re-examined after they were found by the European Court of Justice to be incompatible with the Treaty of Rome. This area of the agreement was appropriately modified and the European Economic Area Agreement was signed by EC and EFTA Ministers in Porto near Lisbon on 2 May this year. As part of the overall package, agreements were also signed on this occasion covering EC relations with various EFTA countries in the areas of agricultural products, fisheries and road transit.
The agreement in its preamble takes up the theme of the privileged relationship between the Community, its member states and the EFTA states based on proximity, long-standing common values and European identity. Its first article states the aim of the agreement as being the promotion of a continuous and balanced strengthening of trade and economic relations with equal conditions of competition and based on the same rules. In pursuit of this objective the agreement sets out measures to achieve between the EC and EFTA free movement of goods, services, persons and capital. It includes rules on competition and provides for strengthened co-operation in areas such as science and technology and the environment. There are provisions on the necessary institutional arrangements. In effect, the agreement extends the Single Market of the EC to the territory of the seven EFTA members while making provision for all necessary accompanying measures.
The EEA Agreement is a substantial document of some 1,200 pages. At its core is a statement in 129 articles of basic objectives and principles as well as general provisions on the four freedoms — freedom of movement of goods, services, persons and capital. The 49 Protocols set out more detailed arrangements that apply in various sectors, for example, in relation to rules of origin and mutual assistance in customs matters. The EEA involves in practice the taking on by EFTA of much of the Community's body of legislation. It is, therefore, necessary to list in the agreement the EC legislation, appropriately modified, that will apply in the EEA. This is done in 22 annexes to the agreement.
Free trade in industrial products is, as has been noted, already a feature of EC-EFTA relations since the early eighties. The EEA Agreement removes virtually all remaining obstacles to trade in goods. Technical barriers to trade will be removed since the Community's legislation concerning norms and standards will apply throughout the EEA. Quantitative restrictions are prohibited as is any kind of discriminatory practice by commercial state monopolies as regards the conditions under which goods are procured and marketed. The area of public procurements is to be opened up on the basis of EC rules. In dealing with the complex area of rules of origin of products, the agreements treats the EEA as a single area and full cumulation of products is possible. The greater clarity, simplicity and precision which the Origin Protocol provides for is, in our view, particularly welcome step. It should be noted, however, that the EEA will not be a customs union, unlike the EC. Free movement will apply only to goods originating within the EEA and not to goods imported from outside. A common external tariff, such as that imposed by the EC, will not be introduced in an EEA context. Border controls between the EC and EFTA countries cannot therefore, be removed. An entire Protocol of the agreement, however, is devoted to the simplification of border formalities and to mutual assistance in customs matters.
Special and less ambitious arrangements were negotiated for agricultural products. The procedures for trade in processed agricultural products will be simplified under the terms of the agreement. In respect of primary products, there is a commitment to continue efforts to achieve progressive liberalisation of trade, taking account of the results of the Uruguay Round. The reduction of technical barriers to agricultural trade is to be tackled by moves towards harmonisation of technical regulations on animal and plant health. Parallel with the main agreement, argiculture agreements have been concluded between the EC and Austria, Finland, Iceland, Norway, Sweden and Switzerland. These are designed to develop trade in particular sectors. They also provide opportunities for greater exports by the cohesion countries — Ireland, Spain, Portugal and Greece — to EFTA of certain products. In Ireland's case tariff reductions will be made on whiskey and cream liqueurs entering EFTA.
Irish merchandise trade with the EFTA countries is buoyant and has been in surplus in recent years. In 1991 our exports were worth IR£809 million while imports totalled £650 million. An Bord Tráchtála see considerable prospects in the medium-term for further growth in the range and depth of Irish trade links with EFTA countries. In the medium-term the programme to establish marketing partnerships for Irish manufacturers will be extended to selected EFTA countries.
The agreement provides that there shall be no restrictions on freedom to provide services throughout the EEA. Financial services, insurance, telecommunications, audio-visual and information services are covered. Services in the area of transport are dealt with separately. The aim is reciprocal and mutual access to the market, more liberalisation on a multilateral basis and harmonised technical provisions and working conditions. In the area of air transport, further consideration will have to be given to the application in the EEA context of the regulations governing the third and final phase of the liberalisation of the EC internal market in air transport. If it is decided that these regulations should be applied in the EEA the bilateral agreements between EC and EFTA member states will be superseded.
The advent of the EC Single Market has spurred efforts to create conditions for growth of the financial services sector in Ireland. Legislation has been overhauled with a view to enabling the Irish financial sector to meet the challenges of the internal market. These improvements should also assist in dealing with the challenge of increased competition from EFTA. We also have an interest in the opening of the EFTA markets and some Irish companies already have interests in EFTA countries.
Under the terms of the agreement citizens of EEA countries will be able to move freely throughout the economic area in order to accept offers of employment. Any discrimination on grounds of nationality as regards remuneration and conditions of work will be abolished. Freedom of establishment is provided for. Nationals of any EEA country will have the right to set up businesses, branches, subsidiaries and so on and to pursue activities as self-employed persons. In connection with this, the existing system of EC mutual recognition of qualifications is to be extended through the EEA Agreement to the EFTA countries. Persons in a wide range of professions from EC countries will be able to seek to practise in EFTA countries and vice versa. These are positive and welcome developments in the field of mutual recognition of qualifications. They will open up new labour markets and promote the products of Irish education and training systems.
In parallel with this greater mobility in the labour market the EEA Agreement provides for aggregation of social welfare contributions throughout the EEA and for uninterrupted social protection. Nationals of EFTA countries will be treated in the same way for social security purposes as EC nationals. Migrant workers from Ireland to any of the EFTA countries will have their social security rights preserved and will not lose benefits or pensions by having their working careers spread over a number of countries. A more limited arrangement of this sort in the area of social security is already in existence between Ireland and Austria. The provisions under the EEA Agreement are broader including not only pensions but a range of short term benefits. It is possible that a charge on public funds could arise from our obligations towards EFTA nationals under this part of the Agreement. This is unlikely to be significant as the migratory flows between the EFTA countries and Ireland are not considerable.
The degree of freedom of capital movement which currently applies to EC member states will, under the EEA Agreement, be extended to EFTA. Thus any discriminatory restricitons will have to be abolished, so that the conditions for investments and capital transfers are the same for all nationals and companies established throughout the EEA.
Fisheries proved to be one of the most contentious aspects of the negotiations on a European Economic Area and was one of the last to be resolved. The debate focused on two linked issues — access to the EEA market for fisheries products and access to EFTA resources, that is the right to exploit fish stocks in EFTA waters. The question of market access is covered in the EEA Agreement. Access to resources is covered in agreements signed by the EC at the same time with Norway, Iceland and Sweden.
Trade in fisheries products in the EEA will be progressively liberalised. From the entry into force of the Agreement the EFTA countries will abolish practically all their customs duties on Community exports and the Community will either immediately abolish or progressively reduce its custom duties. Certain species, such as salmon, mackrel and herring, have been excluded from the free trade provisions, an exclusion that was particularly sought by Ireland in view of their sensitivity for our fish processing industry.
The liberalisation of the market in fisheries products is of particular interest to the EFTA countries. The Community insisted in return on improved access to fish stocks in EFTA waters. This is provided for in the parallel agreements with Sweden, Norway and Iceland.
There is in addition a unilateral concession by EFTA — by Norway in fact — of increased fishing rights for cod as a contribution to the EEA goal of reducing economic disparties between areas. The allocation opens at 6,000 tonnes in 1993. The share out between the interested cohesion countries — Ireland, Spain and Portugal — has not yet been agreed but Ireland has made the case for a substantial share.
In addition to the direct provisions for the achievement of the four freedoms, the Agreement covers also a number of necessary accompanying policies.
The most important of these is in the area of competition. The Agreement from the outset lays emphasis on the need for equal conditions of competition within the EEA. This will be achieved through the EFTA countries taking on the Community's competition rules and through their establishment of a surveillance structure equivalent to that in the Community. EFTA states will be subject to control in their granting of state aid on the basis of the same substantive rules and pursuant to the same procedures as EC member states in the Community. The Agreement also includes measures in areas that may have an impact on the competitive position of undertakings such as consumer protection, statistics and company law.
The EEA should also continue the process begun with the Luxembourg Declaration in 1984 of intensifying EC-EFTA co-operation in areas beyond the four freedoms. A particularly important aspect relates to extended co-operation in research and technological development. EFTA countries will under the EEA Agreement be able to participate fully in the implementation of the Community's Framework Programme in the area. They will contribute in proportion to their gross domestic product and this will increase the scale of the programmes. Ireland welcomes the possibility the Agreement thus represents of developing for Irish researchers a wide range of collaborators.
The EEA, just as the Single Market, is likely to give rise to new competitive challenges as well as providing an overall boost to economic activity throughout the area. The EFTA countries have technologically advanced economies and enjoy on average a GDP per capita some 19 per cent above the Community average. It was natural then that in the course of the negotiations attention should focus to an extent on the cohesion question. The desire to reduce economic and social disparities between regions of the EEA is enshrined in the Preamble to the Agreement and given effect by a number of specific provisions. I have already mentioned tariff concessions for the entry on to EFTA markets of certain agricultural products from cohesion countries of the EC. There is also the allocation by Norway to interested cohesion countries of an amount of cod to be fished in its waters. Perhaps most significantly the Agreement makes provision for a financial mechanism, or fund, to promote economic and social cohesion. This fund will be financed by the EFTA states. It is to provide assistance to the development and structural adjustment of Greece, Portugal, Ireland, both North and South, and the objective 1 regions of Spain. Priority will be given to projects which place particular emphasis on the environment, on transport including infrastructure, education and training.
The fund will make available grants to a value of 500 million ECU over the period 1993 to 1997. It will provide interest rebates of 3 per cent on loans to a value of 1,500 million ECU. This financial mechanism for the EEA is to be administered by the European Investment Bank. The shareout of financial assistance between the eligible countries has not yet been decided. Ireland favours an approach to this question reflecting the shareout under the EC Structural Funds and is pursuing this goal.
The EEA Agreement is dynamic in that additions and modifications will be made to its terms as developments in the Single Market or related areas warrant. It is EC legislation that forms the basis for the EEA. A way of translating relevant new EC legislation to the EEA context is therefore necessary. The Agreement makes provision for a continuous process of information and consultation with EFTA during all stages of the preparation of Community legislation. It was a basic point in the Community's negotiating brief that the autonomy of its internal decision-making process be preserved in any EEA Agreement. The provisions now included are satisfactory on this point. It is vital that uniform interpretation of the Agreement be ensured and procedures for this purpose are included. The setting up of a separate Court for the EEA, which had been discussed in negotiations, is not envisaged in the Agreement as finalised. Such an institution would have been incompatible in the view of the European Court of Justice with the Treaty of Rome.
An Agreement of the size and complexity of the EEA Agreement necessitates a number of institutional arrangements. EC and EFTA representatives will meet at Ministerial level in an EEA Council which will assess the overall functioning and development of the Agreement. An EEA Joint Committee at senior official level is to ensure the effective implementation and operation of the Agreement and will meet once a month or more often if necessary. Parliamentary co-operation is to be ensured through establishment of a joint parliamentary committee made up of members of the European Parliament and an equal number drawn from the parliaments of the EFTA states.
The Agreement contains a stipulation regarding entry into force on 1 January 1993. Ratification procedures are now well under way in the member states of the EC and EFTA with a view to meeting this deadline. In the case of the community itself a proposal for a decision to formally conclude the Agreement in accordance with the procedures of Article 228 is before the Council. With the adoption of this decision the relevant provisions of the EEA Agreement and measures adopted by the institutions set up by it will, as the European Court of Justice has held, become an integral part of the Community legal order when the Agreement enters into force. The question of any necessary further measures in Ireland to enable ratification by the State of the EEA Agreement is under examination. Any such measures will be undertaken as a matter of urgency.
The European Economic Area Agreement is an ambitious undertaking, in a sense the culmination of over three decades of co-operation between the EC and EFTA. The EFTA and the Community are each other's most important trading partner. With the effective extension of the EC Single Market to EFTA from next year the largest integrated market in the world will be created, including nearly 380 million consumers. Together, the EC and EFTA account for almost half of world trade. The close co-operation and consultation between the EC and EFTA which will be a feature of the agreement should lead to a strengthening of the European voice on wider international developments. This applies in the economic sphere as well as in the political where a declaration on closer political dialogue has been adopted.
The Community's major interests are adequately catered for in the text of the EEA Agreement as finalised. It is Community legislation which will form the basis of the EEA. The exceptions granted to certain EFTA states in respect of some of this legislation have been kept to a strict minimum. The autonomy of the Community's own decision-making procedure has been preserved.
Particular Irish interests are also dealt with in a satisfactory way. Our trade with the EFTA countries is buoyant and in surplus. Its further growth should be facilitated by the removal of obstacles which the EEA represents. Specific Irish concerns about market access for some fisheries products have been resolved. The explicit endorsement in the agreement of the goal of cohesion is an important element of continuity with the Community's approach to creation of its own Single Market. We stand to gain from the operation of the EEA financial mechanism.
Above all the EEA Agreement provides a more intensive and structured framework for relations with the EFTA countries with which Ireland has always enjoyed excellent ties.
Finally, I believe the EEA Agreement should be viewed against the background of historic changes in Europe's political and economic landscape since 1989. The pattern of close, co-operative relations and of an integrated market which it establishes may well have relevance in the further and wider development of European co-operation. It is also the case that in the course of the negotiations on the EEA Sweden and Finland and later Switzerland submitted applications for accession to the EC. These join the application already received from Austria and there may yet be further applications from EFTA states. The EEA Agreement is without prejudice to the question of accession applications. It is worth noting however, that the substantial work done through the EEA process on a wide range of the Community's legislation will facilitate to a considerable degree the accession negotiations when they take place.