There are a number of initiatives specifically targeted at the Border region which should substantially boost economic development in the region.
Commission approval for the Ireland-Northern Ireland INTERREG Programme was announced yesterday. This is the successor to the INTERREG programme for the Border region which ran from 1991 to mid 1994. It is a multisectoral programme comprising a wide range of measures which will give a substantial boost to economic development in the region.
The EU funding for the joint programme amounts to 157 million ECU (approximately £125 million in Irish pound terms). Of this, 89.5 million ECU (approximately £72 million) will go to the Southern Border counties.
As a coherent economic development strategy for the Border region is dependent on adequate infrastructural foundations, the bulk of the funding will be allocated to the infrastructural and environmental protection sub-programmes.Roads, sanitary services, electricity networks and telecommunications are vital underpinnings to the tourism, agricultural, food processing, industrial and service sectors.
As the Deputy will be aware, additional EU funding is being provided to support the Northern Ireland peace process. Draft guidelines have now been approved by the Commission and are in course of examination by the European Parliament, committee of the regions, the economic and social committee and the management committee on community initiatives. Formal adoption of the initiative is expected around the end of April and the operational programme is expected to be approved before the end of the year.
The total EU funding available to the initiative will be in the region of 300 million ECU over three years. The Border counties on the southern side will get at least 20 per cent of the aid amounting to approximately 20 million ECU (£16 million) per annum over the period. Funding over a further two year period will be subject to a review of the situation by the Commission. As with the INTERREG programme the funding available under the peace programme will represent a significant contribution to economic development in the Border region.
There will be an extensive consultative process as part of the preparation of the peace programme. Arrangements in regard to this will be announced at a later date.
President Clinton has appointed Senator George Mitchell as his special adviser for economic initiatives to support the peace process in Ireland. He has been mandated to organise the US investment conference on Ireland to be held in Washington on 24-26 May 1995.
The conference is part of a package of economic measures announced on 1 November by President Clinton to assist in the consolidation of the peace process in Northern Ireland. The most significant of these has been the announced intention to increase the US funding to the International Fund for Ireland by an additional $10 million in 1996 and 1997 on top of the $20 million funding announced for 1995.
The conference will offer a major opportunity to attract new US investment to Northern Ireland and the Border counties. Both Governments will be availing of the conference to reinforce the message that there is now a lasting peace in Northern Ireland and that this dramatically improves the environment for US trade and investment in Ireland.
The Government is targeting considerable additional resources at tackling infrastructural weaknesses in the southern Border counties to further enhance their attractiveness as an investment location. The EU INTERREG programme is an important element of our approach. INTERREG, the peace initiative and the Washington investment conference will greatly complement existing programmes.
As regards the Deputy's suggestion relating to the introduction of special tax concessions in the Border regions to encourage exports, such a course of action would fall foul of EU law. Under the State Aids provisions of the Treaty of Rome, any aid which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall be held to be incompatible with the common market where trade between member states is affected. A special tax concession designed specifically to encourage exports would clearly act to distort competition in this way.
I would point out to the Deputy that a special concessionary rate of corporation tax of 10 per cent already exists for manufacturing and this is available country-wide including the Border regions. In addition, in this year's budget I made the first step in a move to reduce the standard rate of corporation tax paid by services companies and other non-manufacturing concerns towards a level comparable with overseas competitors. Even if EU law were not a barrier, I would not be prepared to start recomplicating the corporate tax system by the introduction of special rates of corporation tax for particular regions. The Deputy is well aware of the tax planning opportunities which such a course of action would open up and the demands I would receive for similar special treatment from many other areas which would view themselves as being just as deserving as the Border regions.
