More markets for Irish goods means more jobs in our economy, writes Charlie McCreevy. EU enlargement will help broaden our economic base.
I will be campaigning vigorously for a Yes vote in the forthcoming referendum on the Nice Treaty, which will be held on October 19th.
Fourteen countries in Europe out of 15 have ratified the provisions of the Nice Treaty. The Irish people will have to make a decision that will dictate the future direction of our country and the direction of the European Union itself.
The Nice Treaty is designed to ensure that the enlargement of the European Union can take place in a structured and streamlined manner.
Ten countries, stretching from the Baltics to the Mediterranean, are due to shortly conclude their negotiations to join the European Union. These countries will want to be in a position to accede to the European Union in as short a timeframe as possible.
Ever since the 1950s, the whole thrust of our economic policy was to broaden our economic base. Isolationist policies that were in place after the foundation of the State may have served a purpose at that time but they were not, in any sense, sufficient to further widen economic opportunities for our country.
Joining the European Economic Community was the economic opportunity that we desperately needed. We had access to the European marketplace, which was comprised of nine countries, where a system of free movement of goods and services operated.
We benefited from the Common Market in two ways. We could entice foreign companies to locate in Ireland by selling ourselves as the gateway to the markets of Europe. We could then export our goods and services into the European marketplace. A structure of securing investment into our country, and exporting our goods and services into Europe was being put in place.
This policy proved successful as the following illustrates:
In 1972, Ireland stood at 60 per cent of the EU average in terms of our gross domestic product (GDP) per capita. The equivalent figure today is 122 per cent.
In 1972, the total value of foreign direct investment in Ireland was valued at €16 million. In 2000, it amounted to some €22.5 billion. It remains at a very high level in spite of some recent fall off reflecting the global economic slowdown.
In 1972, the numbers in employment in Ireland was just over one million people. Today, the equivalent figure stands at more than 1.7 million people.
The enlargement of the EU will increase the membership of the Union from 370 million people to more than 500 million people. This will afford companies based in Ireland with excellent opportunities to open up new markets. At present, only about 1.5 per cent of our exports go to the countries seeking to join the European Union. If we take advantage of this trading potential, we will increase the level of our exports and we will create more jobs in the Irish economy.
Opponents of the Nice Treaty are arguing that, in the future, we will lose foreign direct investment to the countries of central and eastern Europe. I would like to counter this argument in a number of ways. We should recall that we have been in competition for investment with countries such as Britain, Germany, France, Italy and the Netherlands for the past 30 years.
These countries have very effective structures in place to entice foreign companies to set up in their countries. We have competed most successfully against these countries for investment. If we reject the Nice Treaty, countries competing against us for foreign direct investment will use this as a stick to beat us with. They will argue that a rejection of the Nice Treaty will be a demonstration by Ireland, rightly or wrongly, of becoming more detached and removed from the European Union. They will argue that this will show a lack of commitment by the Irish people for the EU and for the enlargement of the European Union.
The Economist Intelligence Unit recently commented on the impending referendum. It stated: "Another No vote would threaten jobs by creating economic uncertainty, greatly reduce Ireland's influence in the EU and so damage our country's image. . . one in six jobs depend directly or indirectly on foreign firms." The Economist Intelligence Unit warns that, if Ireland votes against the Nice Treaty, "it will be interpreted abroad as a move away from Europe. Investors will sniff uncertainty. More uncertainty means less investment and less investment means fewer jobs tomorrow."
I would also like to firmly nail the argument by those opposing the treaty that the enhanced co-operation provisions in the Nice Treaty will lead to tax harmonisation and terminate our low rate of corporation tax involving other member-states.
Direct tax harmonisation cannot be enforced on Ireland by enhanced co-operation involving other member-states.
I would ask the Irish people: why move away from what has been a very successful economic arrangement for our country for the past 30 years? Our economic base has grown as the European Union has grown in size.
We can similarly grow and prosper in an enlarged European Union.
It is imperative on those who support the enlargement of the EU that we win this referendum because it is in the clear economic interest of our country that we remain at the heart of the European Union. Opponents of the Nice Treaty are putting forward spurious arguments on this occasion that have proved groundless in the past.
They cannot give one economic argument that stands up to scrutiny as to why we should reject this treaty.
For jobs, growth and investment, vote Yes on October 19th.
Charlie McCreevy is Minister for Finance