Membership of EEC: Motion.

Tuesday, 21 March 1972

Dáil Éireann Debate
Vol. 259 No. 13

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An Ceann Comhairle: Information on Cormac Breslin Zoom on Cormac Breslin Regarding No. 3 I would like to point out that I received an amendment to the EEC motion from Deputy Keating at exactly ten minutes to three. I feel that amendments should be handed in at least two days before the motion is taken. The terms of this amendment are such that it is not likely to alter the nature of the debate and for that reason, and that reason alone, I am allowing the amendment.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating Thank you.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald Perhaps you have had difficulty in making up your minds.

Mr. Corish: Information on Brendan Corish Zoom on Brendan Corish You have your mind made up. You had your mind made up in 1958. The rest of you have to make up your minds.

Mr. Bruton: Information on John Bruton Zoom on John Bruton You will be making yours up in 1978.

The Taoiseach: Information on John Lynch Zoom on John Lynch I move:

That the Dáil takes note of the [1914] White Paper—The Accession of Ireland to the European Communities—and the Supplement thereto.

The purpose of the debate is to give the Dáil the opportunity to discuss in advance of the referendum the terms negotiated for this country's accession to the Communities and the Government's assessment of accession on these terms as set out in the White Paper and the supplement. If the people approve in the referendum the amendment proposed in the Third Amendment of the Constitution Bill, 1971, and I am confident that they will, a motion will be introduced by the Government in Dáil Éireann in accordance with the requirements of Article 29 of the Constitution seeking approval of the Treaty of Accession, the text of which has already been circulated to Deputies.

The Government's intention is that the referendum should be held during the month of May. This will be after the new register of electors comes into force on 15th April, as we wish to ensure that young persons who have not previously been eligible to vote and who now have reached the voting age should have the opportunity to vote in the referendum on this issue which is so vital to their future and the future of our country. The form of the proposed constitutional amendment and the reasons therefor are explained in the White Paper and were fully debated during the passage of the Bill through the Dáil and Seanad. It is, therefore, unnecessary for me to go over this ground again. However, there is one point I feel I must stress once more, namely that the proposed amendment is specifically and deliberately confined to cover the acceptance by us of the obligations of membership of the three European Communities, the European Economic Community, the European Atomic Energy Community and the European Coal and Steel Community, which were established by the Treaties of Rome and Paris.

These obligations do not entail any military or defence commitments for there are no such commitments involved in Ireland's acceptance of the Treaties. The reason why I am emphasising [1915] this point again is that some people are persisting in their attempts to make this an issue in our membership of the Communities despite the clear evidence to the contrary and the repeated unequivocal assurances given by the Government on the subject. One can only assume that this is a diversionary tactic on their part, designed to distract attention from the real issues involved in membership to which they are opposed for other reasons.

It is of the greatest importance that the people are given clear and precise information on what membership of the Communities will mean for the country for it is they, the people, who must decide this issue. The White Paper is designed to present the facts which will form the basis of a mature and responsible decision. The terms agreed in the negotiations for our accession to the Communities are described in detail in that document and they are set out against the background of Community policies and arrangements for various sectors.

In this way a comprehensive and objective picture is given of the obligations which membership entails for this country both during the transitional period and afterwards. I am confident that anyone who, fairly and without bias, considers the terms we have negotiated will conclude with us that they are satisfactory. There will be some who while agreeing with this assessment consider that perhaps something more favourable might have been obtainable in one or other sector. Although I could not go along with this view, I accept that there is always scope for such argument after the conclusion of negotiations, however successful. What I cannot accept is the claim made by some that we could have obtained a much more favourable deal and even that we could have negotiated changes in Community rules and policies to suit us. These people choose to ignore the fact that these policies and rules were worked out by the present member states after years of arduous and prolonged bargaining. The negotiations were conducted on the basis that the applicant countries accepted [1916] the provisions of the Treaties establishing the Communities and the action taken for the implementation of these Treaties.

The Government entered into the negotiations because they were convinced after the fullest examination that, given satisfactory terms for accession, our national interests would best be served by membership. The negotiations were essentially concerned with transitional arrangements necessary to enable the applicant countries to adapt to the obligations of membership. It was obvious that the views of the applicant countries and the Community itself would differ as to the kind of transitional arrangements which would best serve their interests. Ideally, we would have liked a longer period for the removal of industrial protection and a shorter period for participation in the benefits of the common agricultural policy. Britain would have preferred to have it the other way round, while Denmark's best interest would be in a short transitional period in both sectors.

In view of this conflict of interests and to ensure a successful outcome of the negotiations it was agreed at the opening of the negotiations that in the trade sector the duration of the transitional period would be the same for all applicant countries and that an overall balance of reciprocal advantages would best be achieved by ensuring an adequate parallelism between progress in the free movement of industrial goods and participation in the common agricultural policy.

I have dealt at some length with the basis on which the negotiations were opened and co-ordinated because it is essential that we be clear on this point if we are to have a constructive and meaningful debate on the merits of the terms negotiated. I do not propose in this speech opening the debate to go into the details of the terms negotiated nor their implications and those of membership as a whole for this country. These are fully set out in the White Paper and the various Ministers will be dealing with them during the course of the debate. Let me say here that the Government are fully satisfied [1917] with the terms of accession. They will ensure that all sectors of the economy can adjust gradually to the conditions and obligations of membership. Not only this, they will enable us to derive substantial benefits immediately from the date of accession and to avail ourselves, also from this date, of many of the opportunities that membership will offer.

Many people had doubts about how accession would affect our industry and our policy of industrial development. The arrangements negotiated for this sector should remove these doubts. The timetable for the gradual removal of protection will give industry an adequate breathing space for making the necessary adjustments to conditions of free trade. A greatly extended transitional period has been obtained for the motor assembly industry and there are special arrangements for the steel industry to carry through its programme of reorganisation. Difficulties may still be encountered by some industries as a result of a lowering of protection but arrangements were agreed in the negotiations for a general safeguard provision which will enable us to take protective action for particular sectors.

We will also, where appropriate, be able to use our own anti-dumping legislation in case of urgency during that period. Protection against imports is only one aspect of the industrial picture. Our exporters, who have already proved their ability to exploit available opportunities, will now have greatly enhanced opportunities open to them with the removal of tariffs and other restrictions against their products in one of the richest and most populous markets in the world. These new export opportunities, together with the assurance obtained in the negotiations, reinforced by a special protocol, that we can continue to apply industrial aids and incentives, will provide a greater stimulus to industrial investment in this country. The protocol has been widely and rightly acclaimed as the major achievement in our negotiations. As a result, we can both continue our existing policies of industrial and regional development and look forward [1918] to extending and improving them where necessary.

There are no grounds for pessimism about the overall future of our industry in the Community. As a result of the terms obtained for this sector, we can look forward to substantial increases in both employment and output at an even more rapid pace than was achieved during the 1960s when industry played a leading role in our economic expansion. There is no need for me to recount the great advantages which accession will bring in the agricultural sector. These are appreciated on all sides, except by those whose opposition to membership blinds them to incontrovertible fact. I need hardly say that membership will give our farmers the greatest opportunity they have ever had to increase their production and income. Let me emphasise, too, that the higher prices which apply in the Community will be received by all farmers, large and small.

Finally, I should like to point out that we will begin to benefit from these higher prices immediately and that substantial savings on agricultural subsidies will also be available to us from the outset of membership. The prospects for industry and agriculture which I have outlined will mean increases in the incomes of these sectors. These, in turn, will have a beneficial effect on other sectors of the economy. It is estimated, taking these factors into account, that the total employment will show a net increase of 50,000 by 1978 and that the gross national product will rise by about 5 per cent in a year on average over this period. Such a performance, especially in the case of employment, will represent a marked improvement on the record growth achieved in the 1960s and will be the first real prospect, since independence, of achieving full employment and ending involuntary emigration.

One other aspect of the terms of accession on which I wish to comment is our participation in the institutions of the Community. Although we will have transitional arrangements in a number of sectors prior to assuming the full obligations of membership, we [1919] will, right from the start, have a full voice in the decisions of the institutions and participate fully in their work. It has been stated in some quarters that our influence in the institutions will be too small to have any real effect on Community policies and that our interests will be ignored by Community decisions. This is not true. In the case of the Council of Ministers, which is the decision-making body of the Communities, we shall, from the very beginning, have a seat and a vote in the Council just as the present member states now have.

It should be borne in mind that the invariable practice in the Council is that decisions affecting the essential interests of any one of the member states are taken only on the basis of unanimous voting. As regards the other Community institutions and bodies, we shall have, in many cases, equal representation with the other member states, and in others the size of our representation will be greater than would be warranted by reference to relative population or gross national product.

Most of the criticism of the Government decision to seek membership of the European Economic Community has been directed not so much against the terms of accession as against the idea of membership itself. The nature of this criticism spans a wide range of argument, but fundamentally the opponents of membership seek to base their arguments on either economic or political considerations. The main plank in the economic argument put forward by these people is that we would be better, or at least as well, outside the Community by negotiating some form of link short of membership. Let us be clear on what this argument is all about. It is primarily about the best means of achieving the aims of national economic policy on which we are all agreed. These aims include the rapid raising of the general standard of living of our people to a level approximating to the Community average; the elimination of disparities of a structural or regional character which bear harshly on certain sections of our people; the provision of opportunity for our agricultural population [1920] to earn an income comparable with that obtainable in other occupations; the absorption into gainful employment of our surplus labour force, including those who, of their own volition, will continue to leave agriculture; the stemming of emigration by the provision of adequate training and job opportunities and the continuing improvement of our social services.

The achievement of these aims represents a formidable task. The question we must ask ourselves is whether we are more likely to succeed in this task within the Community than outside it. The conditions of membership are clearly set out in the White Paper. The Government are convinced that these conditions, together with the transitional arrangements obtained in the negotiations, afford the best and perhaps the only opportunity we are likely to have of achieving those national economic aims. I am not seeking to play down the difficulties which will have to be overcome in some sectors. The Government have never pretended that the structure of industry would remain unaffected by the transition from a highly-protected market to free trading conditions. Over the years, they have spared no effort to facilitate this transition both by encouraging existing industry to adapt to a changing environment and by attracting new export-based industries on a large scale. Notwithstanding all that has been done there are likely to be some losses. These losses will be more than offset by the gains that can flow from membership of the Community, gains which will enable us to pursue our national economic aims with far greater prospect of success than would otherwise be possible.

Basically, the issue is one of confidence in the capacity of our people to make a success of membership. The Government have no doubts about the capacity of our people to do so and in this we are supported by the elected representatives of the great majority of the people. The opponents of membership, on the other hand, do not believe, or profess not to believe, that we as a nation are capable of achieving our national aims as a member of the Community. However, the extraordinary thing is that the most vocal [1921] opponents of membership have shown boundless confidence in our capacity to survive and prosper on the basis of an alternative relationship with the Community, the terms of which are not known.

I do not propose to go into the possible content of such alternative relationship. This question will be taken up by later speakers from the Government benches. However, I would like to concentrate the attention of Deputies on the things that any such alternative relationship would not contain. First, let us take agriculture. What we want to achieve for our farmers are guaranteed access to a large market for their products and an assurance of remunerative prices. Experience has clearly shown that these objectives are not attainable on the basis of bilateral arrangements with individual countries. They are attainable within the framework of the Community's common agricultural policy. Participation in the common agricultural policy with all the advantages that it would offer for our farmers is only open to members of the Community. This is a verifiable fact. There is not a single country outside the Community—I repeat, not a single country—which has succeeded in negotiating terms of access to the Community market for their agricultural products remotely approaching what our farmers need. It is clear that such terms of access would not be available to us in any arrangement with the Community short of membership.

This is not all. If we are to remain outside the enlarged Community which will include Britain, the Community barriers which would be erected against our exports to the British market, which at present accounts for 80 per cent of our total agricultural exports, would have disastrous effects on Irish agriculture and the repercussions would damage the entire economy. Then, there is the matter of access to the Community's funds. The Agricultural Guidance and Guarantee Fund in addition to providing market support for agricultural production has the function of assisting the structural improvement of [1922] agriculture in the Community. The European Social Fund provides funds for the training of workers and is assuming an increasingly important role in this area. The European Investment Bank is a major source of funds for development projects. Additional means of Community assistance are also being devised with the special object of dealing with the problem of regional and structural disparities within the Community. We could not expect that access to these various sources of Community assistance which would be of great benefit to our economic and regional development would be open to us if we were not a full member of the Community.

Finally, in the protocol agreed in the negotiations, the Community has acknowledged that it has a responsibility to assist economic development in Ireland and has therefore agreed to recommend that all the means at the disposal of Community institutions be used for this purpose. Can anyone honestly claim that this kind of general commitment on the part of the Community would be given to us outside the context of membership? Certainly, it is not to be found in any agreement negotiated with the Community with a non-member country. These are some of the advantages that would be lacking in any of the arrangements we might negotiate in place of membership. It is amazing that anyone should claim that without these advantages our goal of a growing and prosperous economy would be more easily achieved. It might be that with such an arrangement we could escape some of the losses which would occur if we remained totally aloof from the Community but it is certain that most of the gains which only membership can bring would be denied to us. The result would be a long period of economic stagnation which could be overcome if at all only by a national effort far greater than that required to meet the challenge of membership.

This highlights the kind of contradiction that lies at the heart of the economic arguments against membership. It seems clear that many of those opposed to membership, who advance the unfounded and illogical economic [1923] arguments I have discussed, really have objections of a political nature to membership. These objections are concerned chiefly with sovereignty and the political future of the Community. The wilder flights of anti-Common Market oratory introduce emotive expressions such as “rich man's club”, “neo-colonialism”, “capitalist plot” and so on. I hope—in fact I am confident—that this debate will not be conducted in these terms. The issues raised are important ones and deserve to be discussed in a serious way.

At this juncture I do not propose to deal with these political aspects in any detail since I have on many occasions inside and outside the House commented on these matters and later speakers on the Government side will also cover such points. I must, however, say that the political objections advanced by opponents of membership exhibit the same illogicalities, the same contradictions as their economic arguments. I have already pointed to their mental somersault concerning the behaviour of the Irish people themselves. Inside the EEC, they allege that we will be unable to compete on level terms with the other member countries because of our many weaknesses and short-comings. Outside EEC, however, we apparently would be able to call on boundless reserves of energy and enterprise in order successfully to overcome tariff barriers and other obstacles to economic expansion.

The same sort of mental gymnastics characterise the political objections to EEC. Inside EEC it is alleged we would be stripped of our sovereignty, our resources exploited by half-baked Europeans hungry for profits while we remain helpless in the face of decisions taken in the interests of the larger and more powerful member states. Outside EEC, on the other hand, these same countries, it is alleged, would suddenly become filled with sweet reason and light willing to negotiate some form of agreement with Ireland which would take account of all our special circumstances. The fact that any such arrangement would mean almost total dependence on the Community without any say at all in its political or economic [1924] decisions would, apparently, be no cause for alarm because of the continued benevolence of the EEC towards us.

The same sort of confused thinking is evident also in the argument put out by the anti-Common Market lobby that joining the Community would perpetuate the division of our country and this, despite the disappearance of economic frontiers within the EEC and the commitment of the Community to an ever-closer union of its peoples. It passes comprehension how anybody could support that view. Surely it is self-evident that if we were to remain outside the Community we would be conferring on the Border the status of a frontier, both economic and political, between ourselves and the rest of Europe. Moreover, since Britain would continue to be the major market for agricultural products any agreement which we would make with the EEC as a non-member country would depend largely on the goodwill and favour of the British. Not alone, therefore, would we be copper-fastening Partition but by remaining outside the EEC we would be also increasing our dependence on Britain. Can any Irishman seriously want this?

The logical conclusion is that the political, economic and other interests of our country and our people are best served by membership of the Community. In saying this, it is not my intention to hold out membership of the Community as a universal panacea to cure all our ills. The Community has its defects as have all man-made institutions. Its most noteworthy feature however is the extraordinary progress it has achieved over the short period of its existence, a mere 13 years. In so far as the Community has defects, it would be for us as a member to work with our fellow members in order to remedy these defects.

It is a salutary exercise to reflect on the kind of Europe—even the kind of world—we would have today if the European statesmen in the seats of power at the beginning of this century had been endowed with the same vision, the same dedication to peace and the same sense of Community as were Schuman, Spaak, Adenauer and [1925] de Gaspari. It is conceivable that Europe and the world would have been spared two devastating wars, that we would not have had the division of Europe into two blocs and that we would be nearer to a solution of the problems of the developing world.

It is easy for us, with the benefit of hindsight, to pass judgment on the shortcomings of previous generations of political leaders. Let us not, however, forget that we in turn will be judged by posterity. Today we stand at a most important crossroads in our history. The road we take will determine not only the future of our country for generations to come, but also the contribution we make to the creation of a Europe that will measure up to the high ideals of the founders of the Community. I am confident that the decision we take will reflect our people's faith in their capacity to help fashion for themselves and for future generations of Irish men and women a better Ireland in a better Europe.

I have kept my speech short in the hope of setting an example. It is desirable that as many speakers as possible participate in the debate and perhaps before the debate develops much further there might be some agreement reached as to the length of speeches. That is a matter for the Whips. As I have indicated, those Ministers having special responsibility for any aspect of European Community will be dealing specifically with such aspects and I hope that it will be possible for the Ministers concerned to satisfy any Deputies regarding any questions that may be asked. I recommend the motion for the approval of the House.

Dr. O'Donovan: Information on John O'Donovan Zoom on John O'Donovan Will the Taoiseach's speech which was written and read be circulated to the House?

The Taoiseach: Information on John Lynch Zoom on John Lynch I will have it circulated almost at once.

Dr. O'Donovan: Information on John O'Donovan Zoom on John O'Donovan I am grateful to the Taoiseach. I hope the speech will be circulated as soon as possible so that we will have an opportunity of analysing it before speaking on it.

[1926]The Taoiseach: Information on John Lynch Zoom on John Lynch There are some alterations that I shall have to correct.

Dr. Cruise-O'Brien: Information on Conor Cruise-O'Brien Zoom on Conor Cruise-O'Brien We would like to see them.

The Taoiseach: Information on John Lynch Zoom on John Lynch They are technical alterations.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating I move amendment No. 1:

To add to the motion the following:

and deplores the inadequacy of the negotiations described therein and rejects the terms set out.

While I appreciate what the Taoiseach has said about the length of speeches and while he has spoken for only half an hour, I propose to take somewhat longer. However, I agree that it is desirable that as many Deputies as possible should express their views on this important issue.

Much as I disagree with many of the Taoiseach's conclusions, I must say at the outset that I welcome what seems to me to be a reasonable and moderate tone in his speech. We can form this much common ground: the Taoiseach said that what we are arguing about primarily are the best means of achieving the national economic aims on which we are all agreed. That is a reasonable representation of what this argument is about. On both sides there has been the sort of exaggeration, almost of hysteria, that he castigated as coming only from the anti side. I have heard what I regarded as ridiculous and outrageous statements from both sides, but it seems now that we are moving along towards discussing this matter seriously. I hope we can continue to do so. The central thought relates precisely to how best we develop this nation, whether full membership is the best way or whether an association agreement is best. I am glad we have reached the stage of omitting to try to terrify the voters by telling them that if we do not go for full membership we will have to stay out completely. That is a step forward. On the last occasion on which this matter was discussed I heard Deputy Cosgrave suggest that if we should not become full members enormous barriers [1927] would arise immediately in respect of our industrial products. I am glad that that has been recognised as a non danger and that it is not being repeated.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald So long as we accept free trade.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating I will talk about that. Despite the arguments that have been put forward if one wishes to formulate his arguments in that way he is of course at liberty to do so. Association agreement is available to countries that do not opt to become full members. While I shall have some sharp comments to make on various chapters of the White Paper, I propose to give it the benefit of the doubt and try to treat it as a serious document, although I am not sure that it merits that.

The White Paper says that association agreement is available to those countries which are not developed sufficiently to become full members and it contains comment on the alternatives to membership. I quote from pages 62 and 63:

As regards the possibility of negotiating an association agreement, the view of the Commission is that membership is the proper form of participation for a European State and such a State should not be granted associate status unless either its state of economic development or its international relations preclude membership of the Community.

I will be arguing that the first of those applies to us — that our state of economic development renders full membership exceedingly dangerous. My belief is that it would be nationally fatal for us. I will be arguing also that associate membership is appropriate to our level of economic development, that it can give us many of the gains and avoid much of the drawbacks and that it is simply a mistake of the understanding of our economy to argue that we are comparable to the other applicants or to the six present members. I will be making this case both on the basis of the development of our economy and on the control of our financial institutions.

[1928] It seems to me that the central error in the position of the Government is the belief that we are comparable in regard to our level of development to the other European states. From that mistake flows the belief that our economy would be able to withstand full membership in regard to the prevention of the outflow of capital and in regard to the prevention of the destruction of our industry by the inflow of goods. The White Paper is more interesting in what is left out of it than in what it contains. It contains elegant economic calculations that are utterly meaningless but there is no effort made to sustain them. I am glad that the Taoiseach has not referred to them because they do not merit discussion at all. One can make any set of economic predictions that one wishes to make. It is interesting that in the interval since these predictions were made, though we called repeatedly for detailed economic validation that would have enabled us to examine the parameters built on those detailed economic predictions, such validation has not been produced. I do not think there is any reason to think they exist. This is an exercise in persuasion rather than in serious economics. Chapter 6 of the White Paper is entitled “Political Implications” and runs into five pages. Chapter 7 which is entitled “Is There an Alternative to Membership?” covers six pages and dismisses cavalierly the alternatives without any serious discussion of them, including the quotation I have given about association agreement, which is the serious one for us.

Let me develop this thought that we are not comparable economically either to the Six or to the other three applicants. There is available a vast number of facts on this issue but I do not propose to spend a great deal of time on it. I take the Taoiseach's point about brevity and shall abbreviate documentation that I intended using. I am referring now to the Commission's own sources. This is The Enlarged Community in Figures, produced in Brussels in January, 1972, reference X 43/72E. On pages 3, 5, 6, 7, 8, 27, 31, 44 and 45 of this document there are a whole series of economic indicators which set out the [1929] relative level of development of this country. We see first that our index is by far the smallest of the ten countries. For example, one may think of Norway and Denmark of being comparable in size with this country, but if we compare the GNP of the countries for 1970 we find that while ours was 3.8 billion, in the American sense, the next smallest was Norway at 11.4 billion which is nearly three times as big. There are many other measurements that can be used but the result of the comparisons is that in terms of wealth not only are we the smallest, the most peripheral and the slowest growing but we are also about half as rich, taking it on average as either the Six or the other three applicants.

This by itself puts us into the category of countries like Spain, Greece and Israel which are not very different in GNP terms from ourselves, countries which have not taken the role of full membership but which have negotiated different sorts of agreement. However, that argument merely on the level of wealth, GNP, rate of investment and so on, is not conclusive. The one that in my view is conclusive is that we are in fact economically a colony of the United Kingdom. We do not have control of our own financial institutions; we never have had. We do not have control of our own currency. In this sense not alone are we economically weak in the way I have indicated but also we are not in control of our own affairs. A country like Turkey, for example, which is much bigger and much more populous but poorer in GNP terms per capita compared with us is sovereign in a way that we are not. Therefore, both by the quantity of our income and the size of our economy, on the one hand, and the lack of sovereignty, on the other hand, we are simply not comparable with any of the other nine. Therefore, arguments about what is good for them and what is not good for them do not apply to us.

We had a discussion in recent times as to whether or not Ireland is one nation or two nations. It was not a very serious discussion because I do not think anyone put forward seriously [1930] the two-nation idea. However, the whole point when one says it is one nation is that, in fact, in terms of territorial unity it is not yet; in terms of economic sovereignty it is not yet, if it ever will be. Ireland as a nation has never been mature and established in the sense of any of the applicants or any of the members. It is much more fragile in regard to its institutions and its continuity, in regard to its very survival than any of the other nine of the ten nations. Therefore the outflow of capital and the inflow of goods against which our industry would not be competitive would be a threat to our national survival in a way that it would not be a threat to the national survival of, say, France or Germany.

Ireland's completeness as a nation does not yet exist; all that exists at the moment is an aspiration, a movement in that direction, a striving, a determination. Therefore, the appropriate posture for the Government is a posture that is defensive, cautious, that keeps options open, that recognises our special weakness, and that puts the greatest possible number of barriers in the face of the free play of market forces. If one were to indicate the objections to the EEC in one sentence it is that it is dedicated to the abolition of all those hindrances to the operation of free market forces. If you abolish all those hindrances it is our contention that you abolish Ireland because we are simply not strong enough to withstand those pressures.

Let us try to validate briefly this argument about the nature of our economy and therefore what free movement of capital and goods will do to us. Again I propose to abbreviate here what I had intended to say. I think we can categorise our industry into three groups. First, there is the indigenous industry that has existed here for a long period — the industries that come immediately to mind are Guinness, whiskey and other sorts of beer, food processing and so on. Then there are the industries that grew up after Fianna Fáil came to power in 1932, industries that grew up in circumstances of very considerable protection, which were geared for the home market, which was a small and a poor [1931] market but which gave us such industry as we had, and this was a very welcome and correct thing to do up to the late fifties. In the late fifties there was then a fairly radical change of direction of economic policy and we had the abolition of limitation on overseas ownership and the inviting in of foreign companies which, by and large, have set up branches of multi-nationals. All the industrial growth we have seen in the last decade has been from these branches of multi-nationals.

I said earlier that where the White Paper was inadequate was in its omissions. If we become full members of the EEC we must, over a transition period but quite a short one, dismantle all of the protections we have got against the input of goods by European competitors. Again what I consider a great inadequacy of the White Paper is the section on dumping. I refer to pages 99 and 100. Before going on to consider the protection in the matter of dumping, let us look at the economic scene. Every commentator from the extreme right to the extreme left and all the reasonable people in the middle are agreed, I think, that in the last 18 months or so a new economic period has opened in the EEC. Rapid growth has ended. Investment in capital goods has diminished very much. The simultaneous phenomena of inflation and stagnation are to be seen, and there is a new word “stagflation” coined to describe it. There is very sharply intensifying competition in EEC circumstances and rising unemployment now well over the two million mark inside the Community. By our standards that is very little but by their standards of five years ago it is very large and it is rising, and of course our standards in world terms are very special.

Therefore, we have sharply intensifying competition in the Community and sharply diminishing economic growth at a time when we are required, over a very short period, to open our frontiers to the products of industries which have been geared over the last decade to a market of over a quarter of a billion people. Let us briefly consider [1932] what this will do to the three categories of industry with which we are concerned and which I have already listed. In regard to the old industries, some branches of our food industry, as we have been seeing to our regret in the last few months, are inefficient and not capable of competing; some parts are efficient but others are not so efficient. In regard to commodities like whiskey, presumably there will always be a future if it can be marketed effectively and if it catches on to the public taste. Even in regard to a commodity like beer, where you have old-established, centrecity breweries and where these are on very valuable sites, and where the tendency is towards a very small number of very productive and automated breweries, the future is not particularly good, because you can supply a whole market from a small number of breweries and people say: “We will sell the sites and set up a new brewery somewhere else.” I hope Guinness will never leave Dublin, and the Taoiseach knows I am not talking about a problem that does not exist. The question of where Guinness can best be brewed, with an existing Park Royal site, is a real problem, and it will be decided by the Guinness management in the light of certain pressures that I hope our Government will be able to bring, but also in the light of where the most effective rate of profit and the easiest distribution occurs.

That is the first category. One cannot see a particularly hopeful development there because they are not on a par, most of them, and the arguments to move them closer to their consumer are powerful ones. If, then, you take what I might call the Fianna Fáil protected industries, all their efforts at adaptation and all the examinations of these industries indicate that they are not competitive, but they are rapidly becoming competitive, and already with the half bite, because it is not fully in force yet, of the Anglo-Irish Free Trade Area Agreement we are seeing the appalling damage that is being done to them in terms of quality, of design and of marketing. I do not say the material is not good; I mean the product is not just tailored to the sort of thing the housewife wants. It is [1933] not easy to do that. It is not the fault of the people. It was not possible when you had production runs catering for a couple of million relatively poor people. But their competitiveness, as indicated by innumerable adaptation and other documents, is low.

The third category then, the post-1959 category, is the multi-nationals and these multi-nationals will tend to put their investment wherever the return is highest. Why the return should be higher in an island beyond an island in the process of trying to equalise its social services and wages and, therefore, to diminish any competitive advantage that might have come from low wages and poor social services, why it is more profitable at the edge of the Community in that context than it is to invest in the centre of the Community nobody at any stage in this controversy has explained. They have made feeble noises about the golden triangle being crowded; they seem to think the factories are end to end but, in fact, there are oceans of space inside that already developed area. Now, for that, the greater industry exists inside the whole Community at the moment. All the infrastructure is there so that the free movement of goods for our three categories of industry pose a very great threat to jobs, that free movement of goods in, and there is very little about it. What is there about it? Again, I do not mean this to be abusive; I think it is almost funny; I am referring to the listing of the protections against dumping on pages 99 and 100 of the White Paper.

There is a definition of dumping, by the way, with which economic textbooks would not agree. It is internationally accepted that dumping takes place when goods are exported at prices lower than those at which they are sold on the home market. It is a very widespread practice to do this and it does not constitute dumping. My understanding of dumping is the selling of goods below the cost of production; it is not related to the home market price, but to the cost of production price. In fact, sellers calculate their profits in different markets on the basis of what the market will stand and often, for the sake of getting into [1934] overseas markets, they will sell below the home market price. Sure, British industry in the last decade preferred to sell at home than to sell overseas because the return was always less overseas, but that did not constitute dumping when they did that, provided they were making a profit, even though it was a lesser profit than the profit at home. However, having had that small crib, we will not argue about that.

The protection then against dumping: Article 7 prohibits discrimination on the grounds of nationality. Now that is the one that is put first in the protections against dumping. God help us! If you prohibit discrimination on the grounds of nationality that takes away your power to stop dumping. It does not give you the power to stop dumping. It takes it away. If you cannot discriminate against something that is Italian on the basis of nationality — let us say consumer durables where they have the enormous factories and have mopped up the rest of Europe what are you to do? That this should be put down as a protection against dumping I find so ridiculous as to be a reversal of all meaning of language, as I understand it.

There is also the suggestion that inside a single, if we had a single, economic area, by definition dumping could not take place. Now it would not matter a bit to the little Irish industries that were knocked on the head by much bigger European communities whether semantically the process of dumping was abolished since, by definition, it cannot take place inside a single market. It would not matter; it would be, of course, dumping in any sense in which it means a threat to our industry by big or more efficient producers who can divert maybe one day's or two days' production to abolish our national industries.

Article 85 says that protection prohibits agreement between enterprises which would adversely affect member states. We are not worried, in this particular context, so much about cartel agreements, which often exist to raise prices and prevent trade wars, but we are worried about big companies with huge volumes of production being able to get their cost of production down [1935] below anything we can do and knocking out our industry.

Article 86 prohibits improper exploitation by enterprises with a dominant position within the Common Market. But enterprises with a dominant economic position use that dominant position to keep their prices up as a general rule. That is no guarantee against dumping.

Article 92 prohibits state aids which distorts competition. State aids that distort competition might conceivably give some protection to our industry against dumping and it is precisely what we need, but Article 92 takes away the protection against dumping. Four Articles of the Treaty protecting us against dumping and everyone of them does the opposite! That is a ridiculous section. That is pitiful. It is on the dangerous area that the White Paper is silent — the dangerous area of the input of goods by big companies geared up to a quarter of a billion market. That is the danger. As protection against that danger we are offered the four fatuous protections I have read out. Interesting silence in the White Paper, interesting weakness, because that is where the weakness of the economy lies and the threat to jobs is. Nothing is said about that. The Taoiseach did not mention it in his opening speech. But we will wait in the hope that Ministers with particular areas of responsibility will give us some answers. How do you protect jobs in small industries which are less competitive and lest cost efficient than their enormous European rivals? That is the question. It is a simple question, but it is an important question for Irish industry and Irish jobs. It will be interesting to have an answer. We say we are economically evolved enough by the whole Government position to become full members and therefore to have the free movement of goods without any let or hindrance into this country after the transition period. Our contention is that we are not and that it will be destructive for jobs and for industry.

Let us take the other great freedom which we say we are strong enough to have inside full membership — the free movement of capital. It is our contention [1936] that the free movement of capital out of Ireland has been the single greatest source of our present economic impotence. In round figures there are £300 million of publicly held Government external assets and it is impossible to tell how much are privately held. It has been estimated about £700 million. You are talking therefore about a billion pounds worth of external assets for 3,000,000 people which comes out at quite a lot per family. It is a large amount of money and it is the source of the impotence of Irish industry. No small peripheral economy that has done well in Europe or elsewhere in this century has done well on the basis of allowing the free outflow of capital. Not the Danes. Not the Norwegians. Not the Austrians. Not the Swiss — the Swiss are a special case because Switzerland is one of the three or four world banking centres. Not the Finns. You always had to dam up the accumulation of capital at home so that it sought out investment opportunities in your own country if you wanted to develop a small economy. The great economic mistake of the half century life of this State has been the refusal to set up separate financial institutions and have our own currency. We had a pound on it in Irish, but it meant nothing. It was a pound sterling. The refusal to prevent the outflow of capital has meant that we have accumulated £1,000 million assets. But the suck of the sterling area, and it has sucked capital and people out of Ireland, will be weaker, is weaker; Britain is already sluggish and in pretty bad trouble economically on a whole series of fronts. Where growth rates are higher, as they are in Europe, then the effect of abolishing any controls to the movement of capital will be to accentuate a process which did us the most ferocious damage in the past and is still doing us the most ferocious damage.

Again, I am going to omit a section that I had intended to document — the effect of this outflow of capital. I had intended to start off by comparing the size of the economies of England and Ireland at the time of the Act of Union in population, gross national product et cetera and to see the way the concentration [1937] of capital towards a dynamic growth centre in the last century denuded Ireland, destroyed our community, destroyed the fabric of our society. This happened at a time when Britain was extremely rich, dynamic and rapid-growing. It was the technological, industrial and financial leader of the world. Far from that producing a spin-off of capital from London and the dynamic parts of the United Kingdom it produced the emptying of Scotland, parts of Wales and Ireland of people, money, industry, everything. This tendency of a dynamic growth area to concentrate the capital into it is the second great danger which is not mentioned at all in the White Paper. The White Paper has a tiny section on page 22. It is paragraph 3 (48). It contains about 12 lines. It says that we, simultaneously with Britain, will have to dismantle the protection against the outflow that Britain had erected for her own protection. We did not do it for protection against Britain but Britain did it. From inside the sterling area if you want to invest outside it it is not just a dollar for investment in the United States—the same applies to Europe— there is this auction of investment dollars which sell at a dollar premium. That will have to go. That is a tiny bit of protection.

The great threat, along with free trade in goods, is free outflow of capital. These are the two things we cannot stand economically. That merits 12 lines out of over 200 pages. That is ridiculous. That is concentration on the inessentials. Let us take Ireland's experience with the UK in the last century when we were in the UK. It happened in the United States at a time when the United States was the richest country in the world which it still is. The dynamic growth of certain industrial areas has produced Appalachia. There has not been a spin-off of wealth in peripheral areas. There has been a dragging of wealth and of people out of them so that they become dying regions, as Appalachia is.

Two weeks ago the Community itself produced figures on what had happened inside the Community since it started 14 years and a few months [1938] ago. Indeed, there has been an increase in wealth everywhere. Perhaps, I will not have time to talk about the fairness of Government comparisons of growth rates but they are tendentious because they compare slow-growing Britain with fast-growing Europe and suggest that there is an economic miracle in Europe. This will not stand up to examination if you look at some of the other areas of Europe which grew just as fast as the Community or faster. However, let us revert to what has happened inside the Community. All areas show a growth but on their own measurement of it the differences in income between the poorest regions and the richest regions did not stay the same and they did not narrow; they got wider. The terrifying process of the concentration of capital is to be seen inside the Community at this moment from their own figures.

Deputy FitzGerald has said on occasions that Italy is the country that benefited most in his view. He must be aware that at this moment, were it not for a very strong public sector in Italy, the flight of capital is such that the Italian economy would be in a vastly more profound crisis than it is even now. It is in a profound crisis and the Community's measurement of unemployment is that there are 1.2 million out of work in Italy. There are different measurements so you can take any figure from about 900,000 to 1.2 million. That does not measure the underemployed, people who do not register. The Italian economy at this moment is seeing precisely the flight of capital, the sucking out of wealth under free movement of capital conditions that poses such a vast threat to us.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald A flight to other EEC countries?

Mr. Keating: Information on Justin Keating Zoom on Justin Keating I am not applying it to other EEC countries at the moment.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald Internal flight of capital or flight of capital from Italy to other countries?

Mr. Keating: Information on Justin Keating Zoom on Justin Keating From Italy to other EEC countries.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald I wanted to know what the Deputy's assertion was so that I could deal with it later.

[1939]Mr. Keating: Information on Justin Keating Zoom on Justin Keating Much as I am tempted, I suppose I would be wasting the time I have if I started pursuing Deputy FitzGerald. Serious economists know that if you have very sophisticated calculating machinery, computers, and if you put into those computers every relevant statistic and modifying factor that you can think of, you get predictions. No two models come out with identical predictions. They are quite often wrong. That is not to say the exercise is not worth doing. The predictions get less useful the further you get from the moment at which you are speaking. One year away it is possible. Five years away nobody takes seriously because there are so many imponderables. Yet we have lighthearted predictions that result from multiplying two figures on the back of an envelope and thinking that the third figure has some economic meaning. Deputy FitzGerald and others, as working economists, know just how little weight to give to those things because that is their trade and because they see First and Second Programmes for Economic Expansion and what became of them and they see the British, the French, the Americans and everybody making predictions which turn out, with the best will and the greatest expertise, to be meaningless. They know that but unfortunate people in the street seize on figures like 50,000 jobs or the trebling of incomes by 1980 and think that they are meaningful. They have no real meaning whatever except, perhaps, to indicate that the people who take them seriously are not familiar either with the nature of statistics or the nature of the economic process.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald The same can be said of unquantified prophecies of doom.

An Leas-Cheann Comhairle: Information on Denis Francis Jones Zoom on Denis Francis Jones Deputy Keating should be allowed to make his contribution.

Dr. O'Donovan: Information on John O'Donovan Zoom on John O'Donovan My colleague is more than fair to Deputy FitzGerald.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald May I just ask the source of this data on the outflow of capital from Italy?

[1940]Dr. O'Donovan: Information on John O'Donovan Zoom on John O'Donovan This is not Question Time.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating I cannot give Deputy FitzGerald the date but the source is The Economist within the last six weeks where there was a lengthy discussion of this topic.

I have talked about the danger of the free inflow of goods and the free outflow of capital if we cannot limit it. I have said that we have suffered profoundly because we had no restraint on the outflow of capital. We have seen the effect of that in regard to our relations with Britain. The suck of Europe will be even greater because Europe is very dynamic. Our contention is that not alone will the input of goods be disastrous for industry but that the outflow of capital will be disastrous for industry and employment also. I asked a question which I made as simple as possible. I will try to make the question about capital investment as simple as possible. We are agreed that inside the European Community, whether it is six or ten, all barriers to the movement of capital are to be removed. If that is the case, then why would a multi-national company striving simply, regardless of nation, to maximise its profits, able to raise capital freely pretty well everywhere because of its special position, come to Ireland if we have to make uniform our special incentives with other peripheral countries? I know that we can retain a differential in regard to our industrial incentives—the centre of the Community will have less industrial incentives than the periphery — but I also believe that we will not be able to maintain any differential with the Norwegians and the western French, the southern Italians and the Scotch and the Welsh must harmonise their incentives, even if those incentives in the peripheral areas are less than the incentives in the central area.

What are the arguments that make a significant amount of capital settle here rather than going into the golden triangle, the dynamic centre? If you say that the arguments are lower wage rates, the long-term effect of the Community will be to harmonise wage rates. If you say that they are less [1941] expenditure on social services the long-term effect of the Community will be to harmonise social services. Then you are left with a Community from the west of Ireland to Berlin and from Sicily to the north of Norway where you harmonise all of the factors of competition and you do nothing that will interfere with free market forces, and this, of course, is in contradiction with the serious regional policy, but I will refer to that later. Then, where does the industry go? It goes to the already sophisticated and developed areas; the industry goes into the golden triangle. If you believe that the regional policy can reverse this trend, then you are looking for a reversal of the dominance of the market place on which the whole Community is built.

You are not looking for investments like £40 million for all the peripheral areas, which is tiny and insignificant; you are looking for thousands of millions of pounds, even for a country of this size; you are looking for enormous quantities of money and there is not the faintest prospect that the Community will develop a regional policy that will pump out from the centre capital on that scale.

Of course, we are pleased to see the declarations of good intentions of policy. They are a bit late but they are welcome, but we must not take anything that they say as indicating that a serious counter effort to the tendency of capital to concentrate into the centre is being mounted.

In the document, A Regional Policy for the Community, which the committee put out in 1969, they say that they have noted that the immediate consequences of opening frontiers is an accentuation of tendencies towards geographical concentration. That is a Community quote. In those circumstances, there is the second great threat. For the reason that we are not developed, that our capital does not attract the investment funds of other countries without the level of development that would raise profits to be comparable to European profit rates, then the money will get sucked out. And what stops it? That again is a simple question. The Taoiseach said he wanted the real issues debated. I [1942] am trying to do that. I am saying what is the protection against the free movement of goods in and I am saying now, what is the protection against the free movement of capital out? I see nothing serious in the White Paper that even recognises that those things are problems, much less does anything about them.

In those circumstances we are faced with very severe damage to the three categories of industrial jobs that I tried to talk about; we are faced with an outflow of capital that will be very serious and we are faced with this differential growth in the dynamic central areas and the peripheral areas, much slower, much weaker. We are faced with the fact that regional policy is nothing like adequate at present and nothing visualised at this time will be significant in relation to the huge amounts of money being attracted towards the centre. This again is serious. This again raises the issue of what do we do to protect ourselves.

I do not want to spend time in analysing these capital movements in any more detail but there is one argument that I would like to deal with which relates to differential growth rates inside and outside the EEC. The little bits of propaganda that have been put into every post office around the country show growth rates for the six countries and also the growth rate for Britain and for Ireland. If you present it like that, of course, it looks great because the growth rates for EEC countries are much higher than the growth rates for Britain and Ireland but it just is not fair to pick the countries where growth has been exceedingly slow. Again I go to a Community source. I want to talk about this matter of whether some of the peripheral countries grew quickly or grew slowly and I want to make comparisons. I refer again to a document for which I gave the reference at the beginning —Enlarged Community in Figures, put out by the Communities in February. Page 7 of that document shows the average annual growth rates for the decade 1960 to 1970, which is taking it over a fair span, at constant prices, per capita. The figures are: United [1943] Kingdom, 2.2; Ireland, 2.5. The Six as a whole grew at the rate of 4.3. The range inside the Six was from 4.8 down to 2.6 in Luxembourg.

That looks very much in favour of the Community, that putting the Six countries together you got a tremendous stimulus to growth and they grew much faster. This argument is being widely put about and it is widely believed. In fact, I think it was believed by Mr. Donal Barrington, an eminent barrister but perhaps not quite so familiar with the figures, on our side in a recent television broadcast. He said he conceded the great economic developments and the great economic victories of the Community. I do not concede them for a moment.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald You must not have briefed him.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating I do not mean it as a hostile criticism. He cannot know about everything. He did his part of the work very well.

Mr. Tully: Information on James Tully Zoom on James Tully He was not the only one who was incorrect on that occasion.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating Let us look at the per capita figure over a decade — annual growth rate for Denmark, 4.1; for Norway, 4.2. If we did it for Austria, Finland and Switzerland then you would see that this little thing that is put into every school and every post office in the country is bogus and tendentious and is a use of public money to make party political propaganda, because, if you look at the growth rates of the small, independent, peripheral countries around the Community, leaving Britain, the sick man of Europe — it is a cliché to call it that — and Ireland out of it, then you can demonstrate neither a benefit from being in the Community nor a benefit from staying out of the Community and you can see very comparable growth rates on both sides. In fact, economists more profound than anyone in this House would claim to be are not able to find a clear trend either way when they look at it carefully; [1944] they just do not know. There are people who say, yes, there was some economic benefit from putting the Six together. There are others who say no, there was not. They are both serious and they are both also, which makes a nice change, willing to show the arithmetic on which they base their arguments, which is clearly lacking in our present estimates.

This business that you automatically get a boost by joining the Six, that the Six got a boost by going together is bogus. Perhaps to many it is not. We have no way of knowing. But that consequently we would get a boost by going in with them, for the reasons I have indicated, is profoundly misleading because of the arguments about the outflow of capital and because of the arguments about the inflow of goods.

Therefore, it is our contention that what we want in regard to industrial produce — and I am coming to the agricultural situation later — is the kind of agreement the Community have negotiated with many countries that were honest enough to describe themselves as less developed economies, or not fully developed economies. I am not going to read the details of these agreements into the record because I respect the need and wish of others to make contributions. I want to come to what free trade means and what has been obtained from the Community in the course of trading agreements.

Free trade means that at the frontiers all hindrances, either by tariff or by quota, to industrial and agricultural goods are abolished. There can be all kinds of pure free trade; the kind of Adam Smith textbook free trade has never existed in the world and never will exist. You can have special financial incentives and special taxation incentives for your own producers; you can have special policy-making in regard to expenditure of public funds which benefit your own producers. This has been the case in this country in regard to expenditure of public moneys on goods that originated inside the State. You can have all these things which give industry protection at the time when you [1945] have free trade in the formal sense, namely, the abolition of tariffs and quotas.

Under Community rules and ideology member states are obliged to abolish all protection by way of grants, by taxation and by special financial incentives, by Government policy in regard to expenditure and by the policy of semi-State companies. The two kinds of free trade are not comparable. We will have to face a liberalisation of trade. However, given our own financial resources, given control of the outflow of capital, given the right to have special kinds of grants and incentives and the right to have our own taxation system—which we will have to give away in full membership—we could protect our industries much more than we could protect them under the kind of free trade that exists in the Community.

The relevant point is the agreement that was negotiated with Turkey and some other countries—the agreement with Turkey is the only one I wish to put on record. There is an agreement between the Community and Turkey whereby the Turks will put in their industrial products immediately; in return they have to dismantle their protection, some in 12 years and some in 22 years. In other words, they are able to get themselves a long inter-regnum in which they can grow and develop.

That is called a trading agreement but it is the kind of protection we want. We can foresee a liberalisation of trade. There are the continuous efforts of the GATT and UNCTAD to dismantle barriers that will give some hope for the Third World, for the weaker economies to have their place in the sun and not to get crushed. In the long run, and having regard to the responsibilities of more developed countries towards the poor countries of the Third World, this is to be welcomed. If I thought our economy was on the level of development of the other nine countries I would say that we should take our place with them and take the risks. But the same situation does not exist here as can be seen from the figures I have given and the [1946] many other figures I could give. We cannot face this free trade now.

On the other hand, if we can get a decade or two decades of protection, when we have the free input into the Community without having to face total free competition against us because we can protect our industry by the retention of tariffs and quotas and by our own special internal arrangements of taxation, of Government policy and of financial incentives, we can have industrial growth so that we can face free trade in one or two decades.

I do not find membership of the EEC unthinkable. The EEC may develop into something reasonable or it may develop into something loathsome. I do not pretend to be able to say whether it is going to grow into a super power having nuclear weapons, building up armies and getting into a super-power race vis-à-vis Japan, China or America, and thereby bankrupting everybody by expenditure on arms. I do not know if it is going to develop in that way or if it will develop into something like an enlarged Nordek. If it develops into the latter it will be a reasonable place to be, but if it develops the other way it will be a loathsome place. Therefore, the prudent thing is to take up a defensive posture, to keep options open, to be able to say in a decade; “We like the way it is evolving and we will go into full membership”. On the other hand, if we do not like how the Community has developed we should have the option of not entering into full membership. The point about an association agreement is that it keeps such options open.

What I am saying in essence is that our industry cannot stand the full competition of European firms, it cannot run the risk of an outflow of capital. We can get our industrial growth and our right to put industrial goods into the Community without having to give up our sovereignty, without having to become full members. This is possible, and it is an important possibility for us because we need that industrial export possibility.

Let me turn to a much more difficult [1947] situation and the situation the pro-Common Market side have chosen to fight on—the position of agriculture. They have not chosen to fight on the danger of free trade for our goods or on the danger of the outflow of capital. They have said nothing significant about either matter and, in fact, there have been ridiculous statements made in this connection in the White Paper. Agriculture is a more difficult prospect from our point of view. It is essential that we have a satisfactory outcome from the point of view of agriculture.

I should like to refer to the common agricultural policy. Many of our attitudes regarding European agriculture were formed when we first applied for membership ten years ago and we have not noticed the vast changes that have taken place in the Community's agricultural policy——

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald There is now a common agricultural policy.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating If the Deputy wishes to call it a common agricultural policy he is at liberty to do so. At the moment there are three separate trading areas inside the Community, the common policy is in considerable ruin, this year's negotiations in regard to price increases are deadlocked, and various other matters have developed. Certainly there is an effort at a common policy but that is all. In the period 1963-70, real farm prices went down by 2 per cent per annum.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald Can the Deputy say to which country he is referring?

Mr. Keating: Information on Justin Keating Zoom on Justin Keating It is for the Community as a whole. What I am saying is on the record and it will be easy to contradict me if I am not recalling it correctly. Real farm prices have dropped by 2 per cent per annum over the period 1963 to 1970.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald These are weighted average figures for the Community as a whole.

An Leas-Cheann Comhairle: Information on Denis Francis Jones Zoom on Denis Francis Jones It would be better if Deputy Keating made his statement.

[1948]Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald I am just seeking to clarify what we are talking about.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating In that period comparable indices of the things farmers buy have risen in real terms. Farmers' costs have risen in real terms and their prices have dropped. At this moment there is a very significant effort to give a good hike to farm prices. It is deadlocked just now but I think the deadlock will be overcome during the next few weeks and there will be a significant rise, largely as a result of intense agitation by farmers in Brussels last spring in the light of their deteriorating economic situation which resulted in the sort of demonstration at which one person was killed.

In those circumstances farmers in Europe see their position in regard to profitability deteriorating. There are many indications that this deterioration is likely to continue and is intended to continue. For example, when Mansholt presented his first plan to the Commission in December, 1968, he talked about his price proposals for 1969-70 and said:

The price proposals are closely linked with the overall set of measures proposed. They are part and parcel of the new strategy which the Commission hopes will be adopted for agricultural prices and which should gradually make these prices economically meaningful again. There can be no doubt that if the errors of the past were to continue, the very principles of the common agricultural policy might be undermined.

The new strategy which should gradually make agricultural prices meaningful again, means a reduction of agricultural prices in real terms. We saw that during the period 1963 to 1970. Mansholt made it quite clear then that it was his wish that this reduction in prices in real terms should continue. I am quoting from page 20 of the same document:

Our prices are too high to enable us to export on satisfactory terms... The Community is forced, therefore, to adopt a cautious policy on prices.

Far from fading away Mansholt is [1949] about to become the President of the Commission for his swan song.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald His planned fading away.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating That is not true.

Mr. Tully: Information on James Tully Zoom on James Tully And darn well he knows it.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating We will come to that later. The point is that we can anticipate the movement of agricultural prices from what happened in other highly industrialised groupings at times when competition sharpened. We know about the battle in Britain in the last century which culminated in the repeal of the Corn Laws and in a movement towards a cheap food policy. Agriculture in the United States is the most capital intensive and most productive in the world. It is the envy of the world. Yet the farmers there are making very little or no profit. This is not a mystery. Books have been written about the tendencies of agricultural prices and the forces that move them. Agricultural prices in part, not entirely, are the result of a tug-of-war. On one end of the rope you have farmers who want to sell their food for more money. On the other end of the rope you have industrialists, who want cheap food so that they can get a cheap end product because food is a significant part of the cost of an industrial product, and workers who want cheap food so that their wages will go further.

This is happening at a time when the industrial and working sectors are getting stronger and the agricultural sector is getting weaker because the farmers are becoming fewer. When you find circumstances like that, as you currently find them in the Community, you find that farm prices tend downwards. In the long run the Community is going in the direction of adopting a cheap food policy. I developed this argument very briefly on television about ten days ago. A German from the Commission, called Froschmeier, if my memory serves me, said to me afterwards—and it was not a private conversation—that he entirely agreed with my argument about farm prices. [1950] I have quoted what Mansholt said. I have talked to many people in the Community and they are agreed that the long term tendency of farm prices is downwards in the Community.

This is something one could see happening over the past nine years or so. One can predict from various external forms of reasoning that this is likely to go on happening so that the real profits of farmers in the next decade, in my view—and I am putting it as weakly as that—will be very much less than they were in the Community in the past decade. The erosion of farming profitability which has been taking place, and which is continuing, and which it might be argued will accelerate, has already had its effects inside the Community. In this context I should like to put on the record of the House something which I have already quoted elsewhere. I will have time now to quote it at greater length. I refer to the supplement, “Europe in 1975” to The Times, Wednesday, 23rd February, 1972. An Italian, Manlio Rossi Doria, described by the newspaper as a Senator specialising in agricultural problems, wrote an article about European agriculture and a number of the things he said are quite interesting.

He talked about what he called the sick man of Europe requiring a radical cure and said that the reason is not difficult to find. He said:

In spite of artificial props and the unquestioned progress of the past decades, on average the gap between the incomes and the standard of life of farmers and those of other social classes has widened.

He mentioned the reasons and said there were specific reasons for this. He said one of them was “the farmers' reduced bargaining power on the market in relation to the increasing strength of the other economic sectors.” That is another way of saying something I have already said. He said:

The consequences are there for all to see: the repeated postponement of structural reform; the useless enrichment of a few powerful farmers working the most fertile [1951] holdings; the protracted death throes of the weakest undertakings and the poorest regions... the increasing predominance of a few financial groups in the food sector; the piling up of unsaleable surpluses and the onerous Community commitment to dispose of them below cost.

He talked about the erosion of prices and the way in which he sees agriculture in the Community evolving. Many people who have looked at this—I am using this as an example—see the landscape of Europe evolving into an area of large farms like the American farms, very capital intensive, very productive but not very profitable. When this has happened we will have lost a very valuable section of the community. I come back to the quotation from The Times of London of 23rd February which to my mind rings a bell. It is this:

On average or poor holdings, noted in the past for noble national traditions, the flight from the countryside would in its turn bring the danger of creating a void so vast as to make inevitable first depopulation and subsequently the return to more extensive use of land.

These are not the sentiments of the anti-EEC campaign in Ireland. They are projections given by an Italian specialist in agriculture. There is very good reason to believe that farmer's real prices and real profits will drop. The gravy was in the early 1960s. It was already disappearing in the late 60s and it has disappeared much more of late. We are doing an extraordinary thing. We are holding out extraordinary expectations to our farmers and the result is that they are bidding up the price of cattle so that there will be very little difference between EEC cattle prices and ours. They are bidding up the price of land so that there will be very little difference between our prices and EEC prices in the expectation of some future bonanza which will simply not be there. In the process of doing this we will lose our small farmers.

Deputy FitzGerald, in an interjection, [1952] said something which I am not sure he meant me to take seriously. Perhaps, he intended me to take it seriously. I was referring to the first Mansholt Plan and I think he suggested that it had been dropped. I am quoting from a source dated June, 1970——

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald Nine months before the decision.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating Yes. The first Mansholt Plan was put out in December, 1968 and this was 18 months afterwards. It is an article with a picture of Mansholt and it is called “The European Community”. The paper is the Journal of the Community. It is No. 6 and it is dated June, 1970. It states:

The broad aims of the plan, published in December, 1968, known officially as “Agriculture 1980”, remain unchanged.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald Until they were rejected nine months after the article.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating The Deputy can make interjections like that but it is absolute nonsense. We were not talking about the precise suggestions, if the Deputy will listen, for the first stage of the implementation. We said “The broad aims of the plan remain unchanged”. That is the quotation. They did remain unchanged until June, 1970, and they remain unchanged to date. The broad aims of the plan are to get small farmers out of agriculture in what is in Belgium or in Holland or in France or in Germany a humane and reasonable way. I do not think Mansholt is a wicked man at all. I think he is not a bad fellow, but the point is that if you provide the cash incentive and the retraining grants you must have the industries if you are to keep people in their own country.

The exercise in the White Paper about industrial growth is useless. One could produce a contrary set of figures which would be equally meaningless. It is an exercise without meaning in regard to the number of industrial jobs because there is no effort to quantify the possible flow in either direction. If you displace people from Irish land in [1953] a way perfectly humane in contemporary Europe, unfortunately, you also displace them from Ireland because the growth of industrial jobs will not be there. What is humane and reasonable for the highly industrialised parts of France, adjacent parts of Germany, Northern Italy or Belgium, is not humane and reasonable for Ireland. I make this general analogy about the way in which the Community functions: it functions at the centre in a sort of average way. There is profound deadlock and then there is a package which does not satisfy anybody but throws a little bit to everybody. That precludes the sort of fine tuning that the more specialised areas of the Community want and require. Since we are talking about farming, if the applicants for membership are a litter, we are certainly the runt of that litter in economic terms, and if the European sow will lie on us with as little hostility as any sow has towards her litter, we are too small and insignificant and they are too large and indifferent. Our circumstances are special.

Mansholt, in the face of public opposition of course, had to water down what seemed in current political terms the outrageous immediate suggestions, but neither Mansholt nor the people around him in the Commission have given up their long-term objectives one little bit. Indeed, it is stronger in their minds than it ever was. Market forces are moving them in that direction. We have had these wonderful predictions about vast growths in agricultural output. We are told we are the only area inside the enlarged Six that possesses the precise geographical advantages. That is just not true. There are vast areas of France and a good deal of Britain that have many of our advantages, and you can follow that into Belgium and Holland.

These projections of these vast growths are depressing because they are not based on any serious figuring that I know of.

There is something I have come across recently and, perhaps, I might read it into the record because I ordered a copy but I have not got it. [1954] The people at Michigan University have produced a larger report of 367 pages concerned with their agricultural situation and it deals with the impact on the US agricultural trade of the accession of the UK, Ireland, Denmark and Norway to the EEC. Using a computer and a bit of sophisticated analysis, they have come to some conclusions, one of which is interesting for us. I quote from the March issue of the British periodical The Dairy Farmer. They, in turn, are quoting the document which I have not seen yet but of which I have a copy on order, as I have said. Butter consumption, for example, is projected for 1980 to be reduced from 630,000 metric tons to 430,000 metric tons. The magazine states that the ten-member EEC will have an overall surplus of milk. With the current relatively high butter price, with the sharp rise in Britain, one can see a swing away from butter and into margarine. It is happening here, it is happening in Britain and in a number of other places. This is just the sort of real event which makes nonsense of the predictions I have been talking about. Does anybody believe that if a butter mountain emerged again the EEC would let us go on producing any amount we liked, that the Irish, the British, the Dutch or the Danes would not in any way be restricted—that they could go on and on and up and up in butter production?

This is a ridiculous assumption and it is, therefore, misleading the people to suggest, even if the increases in price called out the sort of production increase which would be technically possible, that this is likely to happen. There are too many contrary forces which indicate that at a certain level you would get a cut-off of your butter production, that you would get milk production rationed between the Community members in the light of their existing levels. You simply cannot go on and on and up and up in butter production. If there is one thing in general that is certain about the EEC in regard to agricultural policy it is that it is in crisis and in change, that it will not remain the same—that it is moving towards big American-style [1955] farming with low profits and moving away from small farming; moving away from unlimited production of the things we may want to produce and moving towards much more modern, intensive farming in which only the richest will survive. All the signs are pointing in that direction. Therefore, our farmers have been misled.

There was a brief television programme the other night and one odd thing was that one person said he did not think there is any argument in regard to agriculture against our full membership. He did not believe there was a case. If we had got in in 1961 we would have had a good decade but it is not 1961.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald With prices falling 9 per cent per annum in real terms. You cannot have it both ways.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating People will read the record afterwards and they will perhaps see the profundity and the perception of that interjection. It is not worth pursuing.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald There is not much profundity in the reply.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating There is no effort at replying.

An Leas-Cheann Comhairle: Information on Denis Francis Jones Zoom on Denis Francis Jones Deputy Keating should be allowed to make his statement and then it can be dealt with.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating If it was a serious interjection I would have dealt with it.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald I thought the Deputy might like to reconcile the two things.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating It is a useful thing for people to be able to interject across the House if the interjections are serious. I do not consider that one to be serious and I do not propose to deal with it.

What happens to agriculture in an associate agreement? The answer is that we do not know. Of course it is a weakness on our side of the debate and it is strength on the Government side [1956] that all the time the Government are proposing something which is absolutely clear-cut and that we are proposing something which is not clear-cut and cannot be so because we cannot say what the outcome of negotiations would be. We could not say what the terms of an associate agreement would be until they were negotiated. I believe the correct negotiating position would have been for our Government to do, as the British Government did, to negotiate a package and decide at the end and not at the beginning. It would have been desirable for us to negotiate a number of packages. If I could be shown that a serious effort was made to negotiate an associate agreement and that it had totally failed then I would be satisfied that it is better to have full membership than total exclusion. If I was convinced of that I would have to go for full membership with all the risks involved.

The Government have not looked at alternatives. They dismissed them in a few pages in the White Paper. Now we have the extraordinary spectacle of people in the Government and people in the major Opposition party going around saying at the tops of their voices that we have no negotiating position, that we could not get this, that or the other. Negotiations in terms of the Common Market it very much like negotiating in a commercial undertaking which farmers and other people know about. If you are trying to drive a bargain of great advantage to yourself it is foolish to decry what you have to offer. If the people doing that are a nation it is anti-national to decry what you have to offer. When the Minister for Foreign Affairs, Deputy Hillery, came back from Brussels he was heckled at the airport in a way he did not like. He said the people who did that were anti-national. It seems to me to be weakening a national bargaining position persistently to say that we are so weak that we could not do this, that or the other.

I believe we could have done very much better than the New Zealanders did in regard to their getting agricultural products into Britain in circumstances [1957] in which Britain is a member of an enlarged EEC. The New Zealand agreement guaranteed them at the end of a five-year transitional period 71 per cent of the income they enjoyed at the opening of that period. We have to be careful about purchasing an illusory future for our agriculture at the cost of our industry and at the cost of our level of employment. The agricultural future we are purchasing will only be good for large intensive grass farmers producing livestock products. Even if it were permanent we are doing it at a great risk.

One sees, if one takes the actual levels of production and consumption of milk and milk products inside the Community and in the African countries that the Irish problem is, in European terms, a very small one. I am referring to figures in a Community document of January of this year. This gives production of milk for the applicants, for the Six and also for the USA, USSR and Japan. The production of milk in the Six is 75 million tons. The production for the Ten is almost 100 million tons. Our production is 3½ million tons. It would take a decade of remarkable agricultural growth to double our milk production and we would still be talking of 7 per cent of the total production of the Ten. We are not talking on the scale of New Zealand production.

Our milk problem is very small. The Australians, who have been sending milk products to Britain on a considerable scale, did not try to get into the enlarged Community because they have Japan on their doorsteps. The Community knew, in negotiating with New Zealand, that the Japanese and other markets were there. They know that our great dependence is on the British market. There are many people in British agriculture who benefit much more than Irish farmers particularly in regard to cattle.

We have some leverage in regard to the scale of our industrial connection with Britain, in regard to imports and exports, but particularly as an industrial market for Britain, and we have a very valuable strategic position astride the most important shipping lane in the world. It seems to me with [1958] this on our side of the scales that the total amount of milk and milk products we are arguing about is so very small that to say we have no possibility of getting an agreement which would be much better than what exists at present, even though it might be less than we would have in full membership, is a disgraceful thing. I see it happening on both sides, but until one goes to the bargaining table and tries, how can one know? We have not a serious long-term difficulty in regard to the projections concerning beef. We have certainly such difficulty in regard to milk. The well-being of industry and tourism must be set against this difficulty. If we preserve our country as a lower price food area and a lower wage area this could have advantage for tourism. I know I have suggested that we might have to put up with slightly lower wages. Will the possibility of wages identical with those in Europe be accepted or will it be accepted that our industry is slightly less involved and that we must retain wages which are slightly less but which leave us with our industry and with the possibility of growth? We may have to make such a choice. In regard to milk, if we take the scale of European consumption and production, as compared with ours, the difficulties have been magnified. We are talking now about our own national position. We must explore it fully. By Mansholt's standard I am an efficient milk producer. I say that for myself and for this country it is better to risk losing this five, seven or ten years of special advantage which we will get with regard to milk products and to get a little less while preserving our industry and our special competitive position in regard to tourism.

Tourism is important in terms of gross earnings. It is not right to judge farming in terms of the well-being of certain sorts of farmers. Practically all milk farmers are convinced that the long-term evolution is such that in ten years' time the Community will choose to import their temperate products from lower cost producers anyway and will completely dismantle the special position in regard to butter and meat. The whole agricultural argument is [1959] being based on false ground. We must keep our people in the countryside. They need more protection than the people in Germany or elsewhere. The economic forces which are emptying the countryside must be allowed to work slowly. People could be moved out of the country as well as from the countryside. The actual economic and social embodiment of our Gaelic culture is in an area which is weak agriculturally. The operation of the Mansholt policy in Gaeltacht areas would result in their extinction. The vast majority of Gaeltacht farms are not even potentially viable by Mansholt standards. We must talk about the survival of the Gaeltacht and the survival of the countryside. This is under profound threat.

I concede some points about milk and meat prices, although with the recent rise in beef cattle prices the differential between Irish prices and Community prices is very much less than is generally presented. We have discounted a lot of that rise already, as we discounted land rises.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald It will widen pretty quickly if the referendum is defeated.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating The Deputy once accused me of speculation, but surely that the sort of speculation which can be easily made.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald The Deputy used the word “discount”.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating I am saying that the existing price rises have resulted in discounting already.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald They will discount rapidly if the referendum is defeated.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating This is based on a lot of assumptions.

Dr. FitzGerald: Information on Garrett Fitzgerald Zoom on Garrett Fitzgerald The Deputy attributed the increase to the expectation of going in. He must accept that not going in will lead to a reduction again.

Mr. Keating: Information on Justin Keating Zoom on Justin Keating I find Deputy FitzGerald's logic is really almost of the kindergarten variety. Processes in real life are vastly more complicated than that. One cannot draw those conclusions [1960] so lightheartedly. I am not going to continue talking about agriculture at any great length. There is certainly a milk problem. It is not right to say that it cannot be solved inside the context of an association agreement until we try. This leaves us with the matter of our negotiating posture. We said in advance that we wanted full membership, but we were negotiating about the duration of the adaptation mechanism and the size of our representation. We started off substantially negotiating about nothing else. Other things come into the negotiations later on. The original declared negotiating policy of both the Taoiseach and the Minister for External Affairs, as he then was, was that these were the areas in which we were concerned to negotiate. Of course, the negotiations deepened but not nearly enough.

Let me indicate some of the areas of inadequacy. One relates to fisheries. I do not propose to pursue all the ridiculous chickens that have been hatched in the Department of Foreign Affairs at public expense or to indicate the fallaciousness of their arguments or the downright misrepresentation as I did earlier in regard to growth rates. I must refer to fisheries. When one says something that is as untrue as this in a public document which is as serious as a White Paper it cannot be defended and there should either be an apology or an explanation or a resignation. On page 47 of The Accession of Ireland to the European Communities it says:

As a member of the Council we will be in a position to ensure that our national interests in the fishery sector will be provided for by appropriate arrangements including the maintenance of special limits.

Take special notes of those words. They are not true. It is known that they are not true. “To ensure” means what it says—to make sure of something. The position is that there is a derogation from the fisheries policy for ten years. After the ten years, unless there is unanimity among the ten—and we have not the veto although the other nine have the veto on us— no special arrangements can be continued. The derogation then lapses and [1961] the full fishery policies come into operation. That is what was negotiated. The Norwegians fought a bit more and finally surrendered. Their Minister went home and resigned, saying that he could not protect their limits in the future. Our Minister came home and said we could, which is not true.

I would like in this context to refer to a speech made in Oslo by the Norwegian Foreign Minister on the 14th January, 1972. I am quoting from an unofficial translation, circulated by the Norwegian Embassy in London. I refer to pages 17, 18, 19, 20, 21 and 23. This raises the question of the nature of our negotiations. The references I have to make are partly about fisheries and partly about a protocol on agriculture which has not been widely referred to and which the Norwegians secured and we neither sought nor secured. In regard to the fisheries proposal, there is a very interesting comment which occurs on page 22 of this document of the Norwegian Foreign Minister. I shall read the two concluding sentences of the previous paragraph, also on page 22, so that Deputies can get the flavour of the bit that interests me particularly:

At an early stage in the negotiations the Norwegian delegation proposed that fishing within the fishery limits should be based on the same principles as those valid in the Treaty of Rome in the sector relating to the right of establishment. This would mean that foreign fishermen would have to be domiciled in Norway in order to carry out fishing within the Norwegian fishery limit.

This is a very useful protection but the interesting paragraph is the next one:

During the enlargement negotiations we were not supported in our proposal by the Community or the other applicant states.

One can see why the British might not want to support the Norwegian initiative and possibly why the Danes might not wish to do so, but why did we not support it if we were negotiating seriously about protecting our fishermen?

I shall quote now from page 23:

As early as September 22nd, 1970, [1962] the Community stated that it was prepared to recognise, in due course, the attention which it will be appropriate to ascribe to the problems faced by Norway in the fisheries sector.

The interesting sentence here is:

No other applicant state received a statement of this kind from the Community.

The Norwegians got that statement: we did not. Why not? The problems of our inshore fishermen are at least as acute as theirs. But let us look at the agricultural protocol. I said earlier that we had special problems in regard to our small farmers and that the rules that might be very good for Holland or Belgium might be very bad for Ireland and that we could not allow the policies to be applied equally over the whole Ten except at terrible social cost to our countryside. The Norwegians talking about their negotiations said—I am quoting page 18:

The greatest difficulty during the agriculture and fisheries negotiations has therefore involved reconciling EEC's regard for fundamental provisions with Norwegian demands for special arrangements for agriculture and fisheries beyond certain transitional periods....

On page 19, we find:

The Norwegian agriculture protocol on which agreement has been reached constitutes a supplementary arrangement for Norway in addition to the common agricultural policy. The preamble to the protocol specifically recognises that problems cannot be solved by means of a transition period, and that it will therefore be necessary to have special arrangements which, without constituting precedents, will aim at maintaining the standard of living of Norwegian farmers, while observing the rules of the common agricultural policy.

The measures which may be taken, according to the protocol, to achieve this objective, is a system of support. The support that may be granted in accordance with these provisions is to be a support system which “will vary according to [1963] regions and the categories of farmers concerned. The measures to be taken are to be adapted in accordance with the various types of production”. It is furthermore made clear that a number of the support measures at present in use in our agriculture may still be used. This applies for instance to such cost-reducing measures as subsidies for chemical fertiliser and feed concentrates. Our operating subsidies will also be compatible with the provisions of the protocol. I might mention that the support system may comprise every branch of agriculture and horticulture, and that Norway will be in a position to continue using freight subsidies both for agricultural produce and for farm equipment.

With regard to the most important single sector in agriculture, viz. milk, the following provisions are contained in the protocol...

On page 21 it says:

The system laid down in the Norwegian protocol has no time limit. The protocol is an annex to, and consequently a part of, the Accession Treaty. It is therefore just as lasting as the treaty of which it constitutes a part.

If my predictions for the next five or ten years are correct about the evolution of farm price policy and if by European standards diminishing profits are to continue in farming and if market forces are to root people out of the countryside it will be interesting to remind the Irish farmers that the Norwegians negotiated a protocol for their farmers open-endedly but we did not and that our Taoiseach professes to be very satisfied with the terms we got. Had he said that they were the best we could get, that we do not like them, that might be a defensible position, but the eulogies we heard today of what we got do not stand up to examination.

We have seen how an association agreement would be vastly more advantageous to our industry because we could place goods on the European market and we could now phase out [1964] our protection over a decade at least and possibly two decades and even when we phased out tariffs and quotas we could retain special protections by differential taxation and by direct aid by Government policy. In a number of ways we could distort free competition which our industry cannot survive; we could give the special benevolence of a government which is essential for our industry. The case is overwhelming in regard to industry that an association agreement would be much more advantageous for us than full membership.

The case is then made that for the sake of agriculture we must go in, that we have no option even if it is very destructive for industry. I have talked about the evolution of agricultural prices and the evolution of the agricultural situation of the Community and about the probable development of the countryside. I think our farmers are buying a pig in a poke and are being misled. But if we go in, time and events will become the judges. I argue that, even if we go in, we could have got a protocol like that of the Norwegians which might not seem particularly advantageous to us now, but if my predictions are right over the next five or ten years it would be profoundly advantageous to us in a decade and we shall bitterly regret its absence in less than a decade, because the Norwegians carried this fight about their fisheries alone and without success in their case, but carried a fight alone about an agricultural protocol with a success that is very valuable to them and the lack of which is a serious defect for us.

Finally, I want to talk of what one might call the politics of the situation. There are people in Fine Gael who for a long time have believed that we should opt for full membership. Of course, they are entitled to that belief but for the reasons I have given I think they are wrong. They believe that to be European it is necessary to favour full membership. I would remark in passing that in so far as this party are concerned we yield face to no one in being European, in our concern with Europe, in our appreciation, in our understanding of it and in our wish to [1965] participate in it, but we deny that to be European one must be in favour of full membership. The political point I wish to make is this: surely in the light of the threat to industry and to our small farmers and of the failure to protect our fisheries and of the lack of a protocol regarding protection for certain sectors of our economy and of the real threat to sovereignty, it would have been prudent for Fine Gael to say that they were in favour of full membership but that they could not accept the terms that have been negotiated? The reality is that Fine Gael are now the prisoners of the Taoiseach on this issue. It will be the articulateness of certain Members of Fine Gael that may be the determining factor in deciding which way the referendum will go. At this moment I do not know how it will go. I am aware that certain soundings of public opinion have been taken but have not been published. The fact that they have not been published interests me because I conclude that, should they be published, they would conclude that my side would be favoured rather than the other side. I understand they give a rather equivocable answer.

The position now is that there is an alliance on a crucial issue between Fine Gael and Fianna Fáil. The way in which Fianna Fáil negotiated this issue and the package they brought back have been in line with their inadequacy on almost every issue during the past two years. They are now a Government of extraordinary weakness, incompetence, negligence and indifference and give the impression of being preoccupied all the time with something else. The package they brought back is in line with the quality of their performance across the whole spectrum. They jumped blindly and abandoned the sort of protective and defensive position that a weak economy and a weak nation like ours requires. What they did in opting for full membership was extraordinarily dangerous and irresponsible. They did not consider the alternatives but acted in panic and in a desire to shift responsibility elsewhere and to get out of the job of governing.

What depresses me is that Fine Gael have gone along with them. It would [1966] have been no diminution of Fine Gael's admiration for Europe and no change in their traditional policy of being in favour of Europe to have said that, while they approved of the idea, they could not accept the terms that have been negotiated because of the danger involved for jobs and for industry as well as for small farmers, fishermen and all the other special interest groups that will be at a disadvantage. It would have been a magnificent opportunity for them to have pulled down a weak and incompetent Government and to have gone back to Brussels and negotiated a satisfactory package. I am interested in the fact that Fine Gael did not choose to do this, but I am disappointed also because they have allowed themselves to be brainwashed by a small number of people and to be carried away by arguments that do not stand up to examination. I have not heard any arguments from anybody which convince me that our industry can stand up to the full blast of competition. There is no argument that can convince me that we will not suffer a flight of capital more grievous than in the past or that over a decade our small farmers will not have suffered very severely.

For a country as weak and as fragile as ours and one that is still striving towards nationhood, should we not need a posture that is protective and cautious? Should we not need a good defensive position? Should we not need to keep our options open, perhaps to go into the Community if we evolve well and if they evolve well? What we are doing is irrevocable in reality if not in law. Surely the greatest defence of national interest would be a position strong in defence, cautious and circumspect, a position of compiling a balance sheet of the pros and contras for all the possible alternative relationships, of measuring the advantages and disadvantages—there are both—of an association agreement by comparison with full membership?

It may be that I am wrong as to the dangers to our industry and to our free trade from the big European factories. As a probability, perhaps there is a 50-50 chance that I am wrong, but even that would mean that our industry [1967] would be wiped out substantially. The experience of the north of Scotland and of those parts of the United States that used to be industrialised has been that when an area is emptied, it is very difficult to refill it. My argument about the flight of capital does not have to be right but, again, if the probability is only 50-50 will it not damage profoundly our country and take people out with it? Is it not a dangerous and foolhardy policy to put everything at risk? By association agreement, we would be keeping the options open as to joining and we would retain the power to protect our industry while retaining the power to export. We run some risks in agriculture and we cannot quantify them until we negotiate but we have a lot to bring to a negotiating table provided we do not talk away our own position. Therefore, I am disappointed and even a little shocked that Fine Gael should have delivered a sterile victory, that is, provided the people listen to the two larger parties. If the people vote for entry, this sterile victory will turn back on those who won it because I believe that during the next decade my arguments will be seen to be correct and then the people will judge who told them the truth. Deputy Cosgrave said here that the Government had no chance of being successful in the referendum without the support of Fine Gael. My view is that Fine Gael are participating in something that is foolhardy and reckless. They will be abandoning a path of prudence and safety. It is possible yet for them to say that they cannot accept the terms that have been negotiated. It is possible for us to say we approve of the Community as well as approving of Europe but that we are not satisfied with the terms because the case of our country is a special one. We are only half as developed as the other countries and we do not control our financial institutions so that the rules that will be good for these other countries will be destructive for us.

As I have said, there is no way at the moment of predicting what will be the outcome of the referendum because there are so many imponderables of Irish life that is so turbulent [1968] now. Therefore, I am not speaking of a likelihood but of a possibility when I say that if this referendum is passed we will not alone be abolishing the chance of ever growing to nationhood, which we have not yet done, but, in regard to community, population and tradition, we will be abolishing a good deal of Ireland. As somebody said recently, it will be the last action we will ever take as something almost a nation if we vote ourselves in. Fine Gael will have to bear a very heavy responsibility for that.

I want to develop one thought, I hope seriously and responsibly, because it is an area in which irresponsibility would be very easy and in which irresponsibility has occurred, in regard to the EEC and national unity. The North of Ireland has suffered from the flight of capital just as profoundly as the South of Ireland. We have to try to think and to argue for Ireland as a whole in this Assembly here. We claim to do so and we do not often do so. Even with a subsidy running at £150 million a year, unemployment in Northern Ireland is desperately high. Many industries are in crisis. The concentration of capital into the south east of England is damaging the North just as much as the South, and £150 million a year is not strong enough to counter that general tendency.

There is only one way that I see that a significant majority of Northern Protestants could ever opt to join the Republic. That one way is for us to be better off than they are. If we take it that we can have the votes of the 40 per cent of the Catholics for joining and 60 per cent of the Protestants want it the other way—we have got used to talking over the last couple of years in the crude religious terms that would have shocked us two years ago but which now, unfortunately, represent a real polarisation.

How do you ever persuade enough, after the events of the last two years, to come over to the point of wanting a unified Republic if you are going to forswear the use of violence as a persuader? It is only by having a higher standard of living. If my argument is correct about the flight of capital from both parts, the only way we can ever establish a differential in our favour [1969] between the Six Counties and the Twenty-six Counties is for us to have an association agreement, not to be full members. If Britain goes in and we stay out, they will suffer the flight of capital; they will suffer the loss of jobs and of people, and we will be able to retain the capital, because then there will be a real barrier between the City of London and us in regard to the flow of £s. That is not a bad thing. It is an essential thing for national development. Then we can dam up the capital here. Then we can have a regional policy ourselves, not from Brussels, and we can direct industry. Then we can have the sort of industrial growth that will produce the differential that will make the Republic of Ireland attractive. Nothing else will.

The solution of the problem of unity that abolishes the Border is also a solution, in my view, that abolishes this nation. Certainly, it abolishes this State in any real sovereign sense and, therefore, is no solution. An association agreement which gives us the possibility of the industrial growth that will make us more attractive is the only solution that, not just in my lifetime but the lifetime of anyone now living would make it attractive to enter a Republic for people who are Northern and Protestant and value their link with the United Kingdom. For us to accept an economic dispensation which would come to us with full membership and which would empty our country and diminish the possibility of real industrial growth in the way I have argued earlier on is to give up any possibility of ever establishing an economic differential in our favour such as would make it attractive for any minority of the Northern Protestant population ever to opt for joining this Republic.

I have tried not to use emotive terms at any stage and to make this an economic argument. The dearth of serious economic projections about job opportunities, the movement of capital and the movement of people in full membership circumstances is very striking. How is it that we can have sophisticated economic work about all sorts of national matters, that we have the Economic and Social Research Institute, [1970] that we have a number of university departments, that we have a fairly large volume of very elegant economic work going on in the country, and no economist has faced the question: how do you create the jobs set out in the White Paper? What will the balance of capital inflow and outflow look like? What will the balance of the inflow and outflow of people look like? What will the competitiveness of Irish industry be? Nobody has tried to quantify those, and the reason is not indifference or accident. The reason is that were these studies to be carried out by the standards and techniques accepted by serious economists everywhere, they would reveal just the sort of dangers I have been pointing out. Therefore, our opposition to this motion, the amendment to which I must thank the Ceann Comhairle for giving me permission to move at this late time is, I think, justified. In it we deplore the inadequacy of the negotiations. The negotiations should have protected job opportunities; they should have protected us against the full blast of industrial free trade; they should have had an agricultural protocol; they should have protected our fisheries more extensively by making common cause with the Norwegians. They should have done many things they did not do.

The White Paper sets out the terms adopted. The belief in Irish independence and Irish sovereignty, though it is often expressed in mystical terms, was not a mystical thing. It expressed the intuitive knowledge of the people that no peripheral and weak economy ever developed in free trade conditions. The great upsurge of Irish republicanism and the wish for sovereignty came after a century of participating in an economic community when we were part of the United Kingdom. It was the knowledge of every farmer and every worker, although the workers were fewer, of what that meant in terms of loss of capital and loss of opportunites that turned the Irish people into a nation of separatists who wanted economic independence.

We believe, therefore, that we are [1971] upholding the best interests of the Irish people. We recognise the danger of being cut out of the Community. We believe that by negotiating an association agreement we could have overcome that. We believe the time still exists to negotiate it, because we believe that the Norwegians and very possibly the Danes will not become members. There seems a less than even money chance of the Norwegians voting themselves in and, if they stay out, it seems that the Danes, who, on balance, want to go in but who have a great sense of Nordic solidarity, will stay out also. Therefore, we may have a completely new ball game with Norwegians, Danes, Swedes, Finns, Austrians, all trying to finalise the sort of agreement in the near future which we need, close association but not full membership.

We urge the House to adopt this amendment and we urge the people, when the date is finally announced on which they may express their opinion in the month of May, to reject the terms on which the Government have negotiated.

Mr. Tully: Information on James Tully Zoom on James Tully I formally second the motion and reserve the right to speak later.

Mr. Cosgrave: Information on Liam Cosgrave Zoom on Liam Cosgrave I listened with considerable attention to Deputy Keating and I followed his arguments with interest during the course of his comments. I agree with him that the decisive factor, subject to the people's view on this referendum, is the attitude of this party. I agree with him that some of the terms might be better than they are. But I am a pragmatical politician and I have to decide this issue on the terms that are put before us. Where I disagree with him is where he seeks to suggest that Fine Gael could, by some action, have defeated the Government. I recollect two occasions in recent years when there was an election opportunity offered to the Labour Party and that party sat on the fence and allowed Fianna Fáil to be re-elected. Because of that decision I reject the suggestion from any quarter that we have been in some way deficient. I look at the record of this party, [1972] a party I have seen grow from 25 to over 50 Deputies in my time here. There are two lessons to be learned from that. One is that, if you have the will to fight and you survive, you can increase your strength; the other is that it demonstrates our faith in the democratic process as entitling the people to assert, through the ballot box, their views and to get effect given to those views through the force of public opinion.

This referendum is, I believe, coming at a time when it is being foreshadowed, as it were, by a debate which is taking place in utterly unreal circumstances. There is an air of unreality about this debate for some of the reasons that Deputy Keating put clearly and well before the House. There is at the present time a lack of confidence in the Government and that lack of confidence stems from the belief that it is both weak and indecisive. There is a threat to the very fabric of this State which transcends party politics and personalities. I subscribe to the view expressed by Deputy Keating that one of the ways in which the people in Northern Ireland could be attracted into this State is by making it more prosperous and, therefore, more attractive for them to come in here because they would be better off in here than they would be elsewhere. That opportunity certainly offered on one occasion. But the opportunity was missed because party and personality took precedence over the people's or the national interest. Whether it will ever return again is a matter of conjecture.

This discussion and the referendum are being held in circumstances and conditions that are unparalleled since the establishment of this State. They certainly have been unparalleled for 50 years. One of the important elements to get clearly and unmistakably before the electorate at this juncture is that the institutions of this State are going to last and the people and those elected by them are determined that they are going to last. Secondly, the decision taken on this matter will be the decision of the people. Whether it is for or against, it will be the people's decision and the politicians will naturally [1973] and properly have to accept that decision.

It is important to recognise the challenge that there is to the democratic institutions established here. There is a challenge. Because it is more obvious in the North of Ireland than it is here, it is, nonetheless, a real challenge and there is an inescapable obligation on public representatives and political parties to ensure that our democratic institutions, with all their defects, must be preserved and will be defended as representing the best interests of the Irish people. Having accepted this, I believe the issue is relatively clear.

The Common Market is now a fact of life. It is an institution of six countries which came together with the objective of unifying Europe and developing aims and objectives to which most Deputies here would subscribe. We, in common with other countries, sought membership just a decade ago. It is not necessary now to recount why we did not adhere to the Community before this. It is not necessary to recount what happened to prevent the enlargement of the community. If the Community is enlarged, and it now looks as though it is almost certain that it will become a Community of six plus Britain—whether the other two applicant countries and ourselves join depends on the results of the referenda in these countries—we must look at the facts of the situation on the assumption that Britain is as good as in. If we take our present trade with Britain and the trade we have with the EEC countries the total amounts to about 80 per cent of our total trade.

The European Economic Community operates, and this is an accepted fact, a common external tariff against non-members under a customs union in full operation for the benefit of member States. If, therefore, Britain, with which we have almost 70 per cent of our total trade, becomes a member and we then have the EEC and Britain together, then just 80 per cent of our total trade would be with this enlarged Community. A common external tariff would apply against non-members. It would apply against us.

Whatever argument there is, and I do not deny that there are aspects of [1974] the agreement that could be improved —I will refer to detailed provisions later—the fact is that, whatever alternative there is to full membership, there is no alternative to free trade in industrial goods. Whether we have a trade agreement, some form of association or full membership, it is recognised and accepted that the aim of the Community is to work towards and operate free trade arrangements in any event. That would put at risk here a total of 35,000 people in industrial employment. At the same time, we would have no direct say in Community decisions. To a great many people these are in many respects academic questions. The average individual looks at the proposal and tries to analyse the alternative. Having done that, he or she will decide for or against. This is the issue the electorate will have to decide when the referendum is held. There is no point now in failing to disclose the actual date of the referendum. There are 31 days in May. On the assumption that it will not be held on a Sunday or on a Saturday, and it is unusual to have elections on either a Monday or a Friday, it leaves Tuesday, Wednesday and Thursday of four weeks. It should be possible to come to a decision on which day in which of these weeks it is proposed to have the referendum. It would simplify matters. I think it is symptomatic of the indecision that characterises this Government that they cannot announce on this date, 21st March, on what date in May the referendum will take place.

That is beside the point. What we have to decide and what we believe the people have to decide is, on the basis of the proposals that are put before the country and on the alternatives that are available, where does the balance of advantage lie. I approach this entirely in a pragmatic fashion. I think people generally subscribe to the idea of European unity, to the aims and objectives of bringing the countries of Europe closer together and of trying to eliminate the dissensions and causes of conflict that have bedevilled and affected Europe, particularly affected it twice in the last 50 years.

Leaving these altruistic aims aside, this is mainly, for the average individual, an economic or a social question. [1975] Whether he is a farmer, an industrial worker, a manufacturer or an urban dweller, no matter what his calling in life or his occupation, it is a question of economics or social interest that will decide the question. These are the issues that have to be decided and these are the questions that the average voter will have to ask himself when he comes to vote. Without again outlining the aims of the EEC in dealing with the ending of conflicts which divide Europe, the economic aims were to improve by joint action the working conditions and living standards of the people of Europe, to abolish the outdated barriers which split up western Europe in small protected markets, to speed up technological progress and to make possible large scale operations in the increasing number of industries in which it was essential and to make a special joint effort to help the less favoured areas of the Community and its other associates. With that end in view a number of decisions were taken by the EEC and certain actions were taken as a result of which this is the kernel of the question that the people will have to decide in the referendum.

The facts disclose that the EEC, and here I recognise and admit that its growth in recent years has not been as spectacular as it was initially, over the last 14 years was one of the fastest growing economic areas of the world. Between 1958 and 1970, a period of 12 years, the GNP of the Community increased by 90 per cent in real terms. This compares with 61 per cent here and in the United States and 42 per cent in the UK. The Community at the same time achieved improvements in living standards while having a low unemployment rate, 2½ per cent average as against about 8 per cent here. Trade in the Community increased, it is estimated, five-fold between 1958 and 1970 and EEC trade with nonmember states accounts for 20 per cent of the world's imports and exports. This compares with over 18 per cent in the United States, 8.5 per cent in the UK and 8 per cent in Japan.

If, therefore, this country and the other applicant countries become members of the Community under the [1976] terms of the Treaty of Rome we will have free access to a market of 250 million people. On this basis we would have a much larger market than we have at present. I have repeatedly expressed the view that no one owes us a living, that no other country or no other combination of countries will provide this country or its people with a living. We will have to earn it ourselves. It does not matter whether we trade with one country or a number of countries this is a task that must be undertaken by ourselves and nobody else will do it for us. However, the advantages of this Community and the benefits which will flow from it are there to be earned if we are fit to earn them. The problems involved in remaining outside it would be considerable if Britain became a member and if there was a common external tariff operated against us.

This is a very large assumption, but provided conditions are stable here, provided we make it clear as a united people, irrespective of party politics, that the rule of law is going to run and that unauthorised action by any section or group will not be tolerated; provided that is implemented in practice no matter what the cost, then I believe that the confidence which was there and which may be temporarily eroded—and in this the Government have a responsibility that they cannot evade—the confidence there was in the stability of our institutions, in the rectitude of our public finance and the manner in which we administer our affairs, will again attract outside investment. Despite recent events that have coloured outside views of this country there probably is still an inflow of foreign capital on the assumption that the present problems, grave and serious as they are, and damaging as they are to the external view of this country, are a passing condition of affairs. A recent survey which was published in the Irish Independent on 11th March carried out by Daiwa Securities, one of the top three merchant banking houses in Tokyo, showed Ireland as rating high as an attractive base for Japanese industrialists.

Debate adjourned.

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