Ireland's future in Europe will be the subject of a referendum in the next three weeks. The Nice Treaty may be about enlargement and the institutional changes needed for it to proceed, but the debate will also be about the future of taxation policy, the euro and economic policy guidelines as well as the trade and labour market benefits and risks of an enlarged Europe.
There are currently 12 applicant countries in negotiation with the EU. These are Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia. If successful, they would bring the total number of possible EU member states to 27, adding a further 107 million citizens to a new grand total of 480 million.
Not all will join at once, with three waves looking likely. But the benefits for Irish companies in terms of increased market size are obvious and substantial. It is perhaps this more than anything else which has persuaded the employers' body, IBEC, to support enthusiastically a Yes vote in the referendum.
According to research last year, both candidate countries and EU member countries believed that enlargement would create net new market opportunities for all.
At the moment trade between the Republic and candidate countries only amounts to #2 billion (£1.57 billion), a fourfold increase since 1993. But that only represents 1.5 per cent of the Republic's total export trade with the EU and so the potential is huge. According to Mr Turlough O'Sullivan, IBEC director general, "it is a question of approach to life, really. The outward-looking person sees the possibility of a competition and will do everything to just get out there and compete - and do so on the biggest possible pitch. The more inward-looking person worries about what might happen if the other players are better".
However, enlargement will also bring with it a serious challenge to Irish competitiveness. In this context, Ms Maria Cronin, IBEC director of operations, points to the increasing importance of Ireland producing value-added products.
"We are going to be in a very competitive situation and many of these countries have lower cost structures which Ireland cannot compete with. But there is no reason Ireland cannot compete on key skills such as education and productivity and technology. The challenge for us going forward is to move up that value-added chain."
But even if that happens there can be no doubt that jobs will be lost in manufacturing. Enlargement may accelerate the process, but one way or another, it is likely to happen.
The other element of the debate relates to investment. The new EU states are likely to receive substantial foreign direct investment, much as Ireland did in the 1970s, according to UCD's Ms Brigid Laffan. The question is, will this be new investment or at the expense of existing investment elsewhere in the EU? It also depends whether the bulk of the investment is from the likes of Germany - which Ireland would be unlikely to get in any case - or from the US on which the Irish economy relies so heavily. How quickly this happens also depends on the speed of legal and regulatory change in the applicant countries.
In any event, it is likely that the Republic will lose jobs, particularly those in the lower end assembly-type operations. However, this could happen whether enlargement goes ahead or not.
On the plus side, proponents point to the large numbers of highly-skilled and well-educated people in countries such as Poland and the Czech Republic. Free movement could see them finding their way to the Republic and plugging the growing skills gap in IT. However, there has been no research done on the likelihood of this actually happening. Past experience would suggest that most people prefer to stay in their home country, if employment is available. The experience here in the 1980s and the 1990s only underlines that.
Research last year also suggested that there are reservations in EU member-states, where some fear the prospect of cheaper produce and labour from eastern Europe will undercut EU wages. In contrast, many of those in the applicant countries fear the impact of a "brain drain". Irish fears also centre around the vexed issue of tax harmonisation, particularly corporation taxes. There can be no doubt that this is on the agenda of some European politicians - unhappy with the Republic's competitive advantage - but this is not part of the Nice Treaty. The Treaty will extend qualified majority voting by EU Councils to 90 per cent of policy areas, though it will exclude taxation. After a prolonged discussion at Nice, the Treaty retains the requirement for unanimous support for key tax measures. This issue is not likely to be on the agenda again until at least the next Inter-Governmental Conference in 2004.
However, there are also fears that enhanced co-operation and flexibility, which is provided for in the Treaty, could lead to tax harmonisation in one form or another. This is a process in which at least eight member states co-operate to form a subgroup in a new area of activity, if unanimously agreed by all members. It does, however, allow other members to opt out. This technically means that if a small group decided to go ahead and harmonise, say, corporate tax rates, the Republic could decide to opt out and retain its own regime.
Other issues such as benchmarking the performance of one member-state against another and peer review, both of which are the subject of an ongoing dispute between the Minister for Finance, Mr McCreevy, and the European Commission, are not part of the Treaty.
