I attended the meeting of the European Council in Brussels on 10 and 11 December last accompanied by the Tánaiste and Minister for Foreign Affairs, Deputy Dick Spring, the Minister for Finance, Deputy Bertie Ahern, and the Minister of State with responsibility for European Affairs, Deputy Tom Kitt. Apart from attending the Council, I had the second of three meetings with Prime Minister Major in the margins. I reported on the overall outcome of these yesterday.
I would like to take this opportunity to pay tribute to the work of the Belgian Presidency, whose term of office ends on 31 December next, and which can point to a very solid record of achievement.
The discussion at last weekend's European Council concentrated on the economic situation in the Union with particular reference to combating unemployment. As Taoiseach, I have placed the need for co-ordinated action to retain and create jobs at centre stage in my approach to EU affairs.
The Commission's very substantial White Paper on Growth, Competitiveness and Employment received a unanimous welcome from the Heads of State and Government as "a lucid analysis of the present economic and social situation of the Union and a reference point for future work". The White Paper stated that there was no miracle cure for unemployment, but it pointed the way forward, and its policy prognosis was broadly accepted by the Council.
Taking the view that a joint approach will be the most effective way of implementing the White Paper, the Heads of State and Government decided on an action plan aimed at significantly reducing by the end of this century the currently unacceptable level of 17 million unemployed. This action plan has three main planks which are a general framework for the policies to be pursued at member state level, to promote employment; specific accompanying measures to be conducted at community level and a follow-up procedure.
The key aspect of the first plank is, the guidelines for economic policy broadly approved by the European Council and agreed by the Council of Finance Ministers on Monday last. These guidelines encompass a stability-oriented monetary policy, low inflation, curbing excessive budget deficits, and moderate incomes growth. This is the prescription to deliver low interest rates, thereby generating economic growth, without which we cannot achieve the required employment increases.
The European Council accepted the White Paper's view that getting the economic fundamentals correct is not sufficient, and that member states must be prepared actively to pursue structural measures to help create jobs. The Presidency conclusions sets out such measures, including improved education and training systems, greater labour market flexibility, economically sound reorganisation of work at enterprise level, targeted reductions in the indirect cost of labour, especially low-skilled work, with particular reference to statutory social contributions and better use of public funds set aside for combating unemployment through more active policies to help job-seekers.
The Government has taken decisive action in a number of the areas identified in the White Paper, for example, in regard to education and training. In other instances, the Commission's views accord closely with priorities identified in our Programme for a Partnership Government. The Government will carefully consider whether there are further policy changes that would help to improve Ireland's performance. We are fully aware of the obstruction which structural barriers to employment creation can pose. It is essential that the right balance be achieved between the need to foster social protection and the rights of employees and the need to create an environment conducive to employment creation.
One further theme in the domestic framework for job creation mentioned in the White Paper and the Presidency conclusions, which warrants attention, is the notion of solidarity between those with jobs, especially those fortunate enough to have a very high degree of job security, and those without jobs. Our conclusions rightly point out that one expression of such solidarity is to allocate part of productivity gains, on a priority basis, to investment and job creation, in particular through wage moderation. I also welcome the recognition by the European Council that there must also be solidarity across the regions in the context of economic and social cohesion.
The second plank of the strategy approved by the European Council is a series of Community measures. The Council decided on action to fully tap the potential of the Single Market, including the creation of a better environment for small and medium sized enterprises. In this context, the Council asked the Finance Ministers to adopt before the end of the year the system of interest rate subsidies amounting to 3 per cent for small sized enterprises decided upon at the Copenhagen and Brussels European Councils. The Council resolved in the infrastructural sphere to speedily complete the programme of trans-European networks in the transport and energy fields and to advance infrastructures in the key sphere of information. On funding, we agreed that the Union's main task is, by reducing financial risks, to support the decisive role of private investors. We noted that some 12 billion ECU per year both from the Community's budget and from the European Investment Bank and the European Investment Fund are available for this purpose. We agreed that additional funding will be provided as far as is necessary to lever the target investment and called upon the ECOFIN Council to study procedures which would enable the mobilisation of up to an additional 8 billion ECU per annum in loans for operators involved in setting up networks. The European Council stressed the importance of the research framework programme for 1994-98, in areas such as information technology, with a budget not less than 12 billion ECU.
These initiatives add up to a significant investment package with the potential for direct and indirect employment benefits for Ireland.
The third plank of the action plan provides for direct involvement of the European Council in follow-up on the action plan adopted, with an annual stock-taking of results, starting in December 1994.
This European Council placed jobs at the top of the European Union agenda, and has set out a realistic and credible plan of action. The Government will ensure that this country will play its full part in helping to achieve the employment goal set out in the action plan. Through the boost that it together with the successful completion of the GATT negotiations will give to the European economy, it should help significantly to reduce our own unacceptable level of unemployment.
Our meeting took place as the negotiations on the GATT Uruguay Round were reaching a conclusion. I greatly welcome the successful conclusion of these negotiations which will certainly, over time, give a tremendous fillip to trade and economic growth internationally. Estimates of the global welfare benefits vary but they are generally in the range of $200-500 billion annually.
As a country very dependent on trade, Ireland will be set to make a significant net gain. A study commissioned from consultants estimated that the net annual gain in output to the Irish economy would be of the order of IR£1.7 billion and that the direct employment gain would be in excess of 20,000 people. Those estimates depended on a wide range of assumptions and have to be regarded as orders of magnitude. They were net of foreseen loses for Ireland. The result will also be good for consumers in the long run.
The consultants' assessment was based on the Dunkel draft Final Act of 1991 and the original, unmodified form of the Blair House Agreement on agricultural trade. Since the estimates were made some months ago, there have been very significant amplifications of the Blair House Agreement which make the modified agreement less problematic for Ireland. There have also been significant improvements, in other areas, on the draft Final Act. Thus, the effects on Ireland will be considerably more favourable than the consultants' assessment.
Quite significant improvements to the Blair House Agreement were secured in the course of the recent negotiations between the European Union and the US, gains which have now been multilateralised in the final GATT outcome in Geneva. The concern about front-loading of commitments in regard to reductions in subsidised exports has been met by agreement to change the base from which the reductions are to start. The revised arrangements mean that over the full implementation period, the Union will be able to export substantial additional amounts, as compared to the unmodified Blair House Agreement. These additional amounts include 362,000 tonnes of beef, 102,000 tonnes of cheese and 44,000 tonnes of other dairy products. Irish exporters will be able to avail of these quantities on the same basis as all other EU exporters, and it is for the Irish interests involved to secure the maximum amount of this additional business with the support of export refunds. These arrangements, coupled with a start date of 1995 for the new GATT arrangements, should also enable the Community to make significant progress in disposing of accumulated stocks.
In addition, the duration of the peace clause was extended by three years, to a total of nine years; continuation of this clause will be included in the overall review of the agreement which is to commence in its fifth year. On another important European concern, that we should be able to participate in the normal growth in world trade in agricultural products, the agreement is that the US and the Commission would consult annually. The US also accepted the EU position on market access, something that is very important for Ireland, as well as other aspects of the European position. The position on South East Asia markets for beef was that the European Union can discontinue at any stage on a unilateral basis the Andriessen understanding, which excluded the European Union from those markets. It is not and was not part of GATT. In return for these concessions, the European Union agreed to grant only limited further US access to some agricultural products.
At the European Council, we secured further important commitments on the implementation of GATT within the Union. It had always been the Government's position that commitments in a GATT agreement should be compatible with the reformed CAP; and that implementation arrangements within the Union would have to take into account both the relative importance of agriculture in the economics of the different member states and also the Treaty provisions on economic and social cohesion.
At the meeting of the European Council, I put our position on these matters strongly on four separate occasions. In the guidelines adopted by the European Council for the conclusion of the round, we took note of the Commission's prognosis that the emerging GATT agreement was compatible with the reformed CAP. It will be several years before the actual outcome on this is clear.
Our conclusions state that if additional measures were to prove necessary they should not increase the constraints of the reformed CAP, nor affect its proper operation. It was further agreed that the Union would take the requisite steps for the application of the reform, while respecting the financial decision of the Edinburgh European Council. Thus, there is a basis for obtaining compensation for producers, if any steps were to be taken beyond those under CAP reform.
Overall, the European Union has been remarkably successful in retaining the essential elements of the Common Agricultural Policy, especially when at one stage the US was seeking a 90 per cent reduction in European exports benefiting from export refunds.
In the area of the Common Foreign and Security Policy — CFSP — the European Council had successful discussion in three areas. The common factor in each case was the willingness to bring the influence of the European Union to bear in a sustained and coherent manner on the shaping of external events.
First, the European Council decided to launch the diplomatic process which should lead to the adoption of a "pact for stability" in central and eastern Europe. This is an exercise in preventative diplomacy aimed at avoiding unstable situations which could lead to conflict in the future.
Secondly, the European Council had a detailed discussion of the Bosnia negotiations which began in Geneva on 29 November. Last Saturday's declaration from the European Council is both firm and detailed. It considerably narrows the room for manoeuvre of the parties, and especially of the Serbs, if they hope to have their good faith accepted by the European Union. As a further encouragement, the parties have been invited to meet the Council in Brussels on 22 December.
Thirdly, in relation to the Middle East, the framework for joint action agreed at the European Council is an overview of the political steps and concomitant economic measures to be taken in support of the Middle East peace process. I indicated to the chairman of the PLO, Yasser Arafat, this morning that we would strongly support, through the European Union and bilaterally, aid and other measures necessary to underpin the stability of the new arrangements for the Palestinian people arising from the accords with Israel.
There was also discussion at the Council on the place of the applicant states in the institutions and my colleague, the Minister of State with responsibility for European Affairs, Deputy Kitt, will deal with this aspect in his reply.
My assessment of the meeting is in line with a very widespread reaction in the media across Europe, that it was a workmanlike Summit that set out a worth-while programme of action that with the major bonus of a GATT agreement, should provide a major injection of confidence into the world and European economies, with consequent benefit for all, starting in 1994. For Ireland and its people, it has, therefore, been a good week's work, in the economic, as in the political, sphere.