I stress this procedure because I often get the impression that some in the duty free sales lobby think it is a straightforward matter; it is not. Lest there be any doubt, the initiative for any proposals must come first from the Commission. The Commission has, until now, shown no willingness to initiate any. Naturally, the more Heads of Government and Finance Ministers call for a discussion of this subject, the greater is the pressure on the Commission to bring forward a proposal, but I sometimes wonder if the pivotal role of the Commission in the handling of EU business is fully understood. It is the Commission which must be persuaded in the first instance, not the Government, Finance Ministers or Heads of Government. The Commission must be persuaded of the need to keep duty free sales.
Against this background it must be recognised that the task of achieving a change to the legally enacted agreement to end the facility for duty free sales for intra-EU travel within the next 17 months is a challenge, but not one on which we have given up and not one on which the duty free lobby sales groups have given up either. The Government will continue to focus attention on the campaign in Europe but we need allies. We need support from other states and, in general, we are not getting it.
The Commission has consistently argued that duty free sales are not appropriate for a single market without internal frontiers. Why, it says, should such facilities be available for air travel, but not for cross frontier car travel? As a final concession, it agreed to grant a seven and a half year delay in the ending of duty free sales to allow the operators sufficient time to diversify their activities. It is its firm view that, rather than try to become less dependent on duty free sales and to phase down their operations, the industry has become even more dependent on duty free sales than it was seven years ago. New duty free shops have been built, existing ones have been expanded and turnover has increased. The profit margins on this activity are high.
Although it originally intended to conduct an EU wide study into the economic consequences of ending the duty free facility, the Commission refused to undertake such a study. It holds the view that the decision has already been taken, it has been enacted into law and no purpose would be served by undertaking such a study now. Indeed, it further argues that to conduct such a study would only raise the expectations of the industry that a further change might be considered, at a time when the industry should be devoting all its efforts to minimising the consequences of a long announced date. The Commission is determined to end duty free sales, and this must be acknowledged by all who approach it at this stage.
The absence of any wider EU analysis work is one of the key reasons Ireland has commissioned its own study. Although this will only address the issues for Ireland, it will none the less provide useful pointers for a wider European debate. It may well provide a useful vehicle in reactivating the debate at ECOFIN because ECOFIN Ministers tend to prefer hard facts and figures to rhetoric. This study will help with the facts and figures.
Deputy Noonan probably understands the issue and is aware of the legalities of the Commission. However, Deputy Owen either does not know the realities involved or chooses to ignore them. She appears to have a marked lack of knowledge of how the Commission and the EU work, otherwise she would not have uttered some of her more extreme comments in this debate.
Since I became Minister for Finance I have explained to the House on a number of occasions the legal realities of the matter and I have again outlined them here. There is no point in engaging in debate without knowing the facts and knowing who can change this decision.
Since his appointment as Oppositions spokesman on Finance, Deputy Noonan appears to think he can look into my heart when, following the example of Eamon De Valera, he looks into his heart. In doing so he tells me that I am not putting my heart into this debate. While his colleagues may not understand the situation, Deputy Noonan is probably aware of the realities involved in changing the present position. Perhaps my repeated explanation of them in this House has given some people the opportunity to say I am not fully committed to getting the decision on duty free shopping reversed. I am committed, but as with most aspects of life, I prefer to deal with the realities and, once again, I am spelling them out here.
The issue of the future of duty free shopping is extremely emotive. The demonstration held by duty free operators in Brussels last year is an example. As we move into the final furlong, we must consider our strategy carefully. We cannot continue to seek a moral victory in isolation. We need to be supported by others, however, the airport and ferry operators and their employees in other EU states do not appear to have mobilised the necessary support at political level. In Ireland there is no shortage of effort and I hope the cross-party support will continue, notwithstanding the impending by-elections.
As further evidence of the strength of feeling generated by this subject and the significant amount of interest and concern, I received a number of representations from people who may be directly affected by the abolition of duty free sales. However, at the same time, there is much confusion surrounding the topic and, in attempting to present the issue in headlines, some false impressions and misunderstandings may be creeping into the debate. For example, it is easy to overlook the fact that duty free facilities will still be available for travel to destinations outside the EU. This is a point of particular importance not only to Shannon Airport, but also to Dublin. Only intra-EU travel will be affected. This may be of little consolation to those operators who supply solely EU travellers, but even this angle may be helpful to the campaign in that it acts to discourage visits to EU states as against competing non-EU holiday destinations in the period post-1999. After 1999, Aer Lingus, which celebrates 40 years of trans-Atlantic service this year, and other operators to the United States will continue to be able to offer duty free to their passengers.
The duty free industry has moved on considerably from its effective beginnings in a small shop at Shannon Airport in 1947, over 50 years ago. Although it may appear as a facility that has always been available to EU travellers, duty free and tax free sales were not available to travellers between Britain and Ireland until 1978, less than 20 years ago. Today, according to some reports, the world-wide total of duty free sales through all channels is estimated to exceed $20 billion. Of this, the volume of activity is estimated to have reached a level of almost 6 billion ECU in Europe in 1996 alone and in Ireland it is now estimated to be approximately IR£100 million.
At these levels, it is easy to appreciate the significant contribution that the profit from duty free sales makes towards the overall profitability of the travel industry. Indeed, the income from duty free sales is now recognised as playing a central role in the commercial finances of some transport operators. More detailed information will be available from the study. I will illustrate this last point with items drawn from the 1996 annual report of the BAA, the UK airport group which operates the three main London airports and some others. In 1996, over 700,000 bottles of liquor were sold in Heathrow terminal two, together with 83 million cigarettes, enough to cover a distance of over 4,500 miles, for example, from London to Barbados. A bottle of whiskey is sold every six seconds at a BAA airport.
