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1 63((&+ 0U'DYLG%<51( European Commissioner for Health and Consumer Protection 7KHFKDOOHQJHV,UHODQGLVIDFHGZLWK IMPACT delegate conference &RUN0D\

2 ,QWURGXFWLRQ Let me express at the outset my appreciation to IMPACT for inviting me here to speak at your delegate conference this morning. The topic of this part of your conference is very dear to my heart. I am also very pleased to be sharing the platform with Alan Leather from Public Services International. I believe that the very fact that you are devoting such considerable time to European affairs demonstrates its importance to your trade union and your members. &KDOOHQJHV$KHDG I see three major challenges on the immediate horizon facing the Irish people and their elected representatives. Both are very significant in terms of their widespread impact for the people of Ireland, business, workers and trade union members, and the trade union movement itself. And I see a third challenge for the longer term. I hope to address each of them in turn. VW &KDOOHQJH±,ULVKFRPSHWLWLYHQHVV The first is how the Irish economy is going to be managed in the short to medium term. There are many facets to this issue that I do not wish to get into great detail on, as they are essentially domestic issues. I would however say that it is necessary for Ireland to be realistic in how such issues are to be approached. The European Union has set itself the goal of becoming the most competitive regional economy in the world over the next decade. This is a challenging task. A challenging task for all of us. A challenging task for business and trade unions alike. &RPSHWLWLYHQHVVLQJOREDOFRQWH[W I am conscious that your members are concerned about the issue of competitiveness generally, but specifically in Ireland and the rest of the European Union. But we cannot just look to our own shores. Whether we like it or not we are living in a globalised market. The real challenge to us as policy makers, whether at European Union level, local level or farther afield is to harness the benefits of this new economy for our citizens. We in Ireland are very familiar with the benefits that US, and other, foreign direct investment has brought to Ireland. This has been acknowledged by your union and also by the Irish congress of Trade Unions in its recent submission to the National Forum on the Future of Europe. Major benefits have been brought by these foreign corporations that go beyond just job creation. Innovation, know how, new forms of work organisation, linkages with local industry and communities. 2

3 This has been of enormous benefit to the Irish economy. I will touch later on some of the aspects of Ireland s membership of the European Union that have assisted in this process. (8&RPSHWLWLYHQHVV*DS But let us look at the overall competitiveness gap between the EU and the US. Despite the gains made, and notwithstanding all the rhetoric, that gap is now wider than it has ever been in the past 25 years with Europe losing ground on both labour productivity and employment levels since the mid 1990s. Per capita Gross Domestic Product in the Union now stands at less than two-thirds the American level, despite accelerated economic growth and increases in employment in Europe in recent years. Yet, considerable differences in the performance of the EU s Member States lie behind these headline figures. In the second half of the 90s, five EU Member States Ireland, Luxembourg, Portugal, Finland and Greece registered higher labour productivity growth than the US. A similar number Ireland, Spain, Luxembourg, the Netherlands and Finland posted better employment growth figures. Undoubtedly, if one were to look at the performance of individual States in the US one would find a similar pattern. Nevertheless, the overall competitiveness gap is a serious cause for concern. 86VXSHULRULW\ There are two important reasons for US superiority: - the slow adoption of new technologies in the EU, and, - the relative weaknesses in the EU s innovative performance.,qqrydwlrqdqg*urzwk Many factors, ranging from the strength of the knowledge base to qualifications of the labour force, combine to encourage innovation and growth. In both the EU and US, technology-driven industries such as ICT equipment, precision instruments, chemicals and motor vehicles, which rely heavily on R&D, experienced the highest productivity growth in the 90s. But in the majority of sectors, R&D intensity is higher in the US than in the EU and most strikingly, in office machinery and computers, it is three times greater. Innovation is a fundamental component in biotechnology where success partly depends on the ability to mobilise and exploit new knowledge and to collaborate across scientific disciplines and frontiers. Judging by patent and collaborative project data, the US has a large advantage over Europe in innovative activities in this area. The EU is also hampered by fragmented research programmes, that remain largely within national boundaries. 3

4 But encouraging trends are emerging for the Union. Many Member States the Netherlands, Ireland, Denmark, Sweden and Finland, for example have successfully specialised in biotechnology. Significant research and production clusters also exist around Paris, Cambridge, Copenhagen and in Bavaria. $GGUHVVLQJWKHFRPSHWLWLYHQHVVJDS From a European perspective, the competitiveness gap must be addressed by an integrated and comprehensive set of measures. The broad European agenda for boosting our competitiveness was set by the European Council in Lisbon in Insufficient progress has been made since then in implementing this agenda to get Europe into pole position. This agenda was revisited, just a few weeks ago, by European leaders meeting in Barcelona. The Commission has give a clear message as to what must be achieved in our contribution to the Barcelona summit 7KH/LVERQVWUDWHJ\±0DNLQJFKDQJH KDSSHQ. 6RFLDO3DUWQHUVKLS±6RFLDO'LDORJXH From a trade union perspective, I acknowledge that many members feel daunted by the breadth and speed of change. This is perfectly understandable. Business and the political system must also acknowledge how ordinary workers feel and build business and policy responses as appropriate. One aspect of such a response to the world of change we face is, what at the European level, the Social Dialogue. Ireland itself has developed a very successful form of this social dialogue in terms of social partnership since the end of the 1980s. I am now concerned that at a time when I believe that the European level social dialogue needs to be strengthened, there are worrying signs that the successful Irish model was a straining point. It would, in my view, be a pity if the social partnership process imploded at a time when it is more crucial than ever. As I said at the outset the short and medium term economic challenges facing Ireland are real. There are many inter-related issues involved the public finances in terms of income and expenditure, social services such as health, child care, education and so many more, the expectations of workers for a fair share of the success of the economy and competitiveness of business and the effectiveness of public service delivery. And as I have said, this is at a time when I feel that the Social Dialogue across the European Union needs to be strengthened to address what I might call the Lisbon competitiveness agenda. And equally to consider the implications of more liberalised trade into the future if the Doha development round is brought to a successful conclusion. I feel that the trade union movement itself needs to give careful consideration to these two inter-related issues of social partnership at national level and, on the other hand, social dialogue at the European level. 4

5 I do feel strongly that we must face into the challenges and opportunities of the future together. This is a message that I would address to all sections of society. QG &KDOOHQJH±7UHDW\RI1LFH The other major challenge and this time of a very short time nature facing the Irish people is their attitude to the Treaty of Nice. And before I am accused of giving another pro-nice speech, let me say that I do not consider the Nice Treaty to be a work of legal art. Of course it has its flaws and drawbacks, depending on your point of view or nationality in the European Union. So had all of the other Treaties going back to the Treaty of Rome. And of course the way the Nice Treaty was finally concluded in a protracted and sometimes fractious European Council in the southern French city also left a bitter aftertaste. A public sense of is this the way things that have such important implications should be done? I have a strong sympathy with this point of view. But I hope these kinds of unseemly scenes can be avoided into the future with the kind of structure that has been adopted for consideration of where we should go in Europe from here, that is the Convention on the Future of Europe. But before I start looking too far ahead, there is still the matter of the Nice Treaty to be dealt with. -XQH WK VKRFN I believe you should already know my views on the results of the first Nice referendum on 7 th June last. They came as a major shock to me, to the Commission, but most particularly to the peoples of the candidate countries. These peoples, largely from central and eastern Europe had come to recognise Ireland as a friend and as a role model. We had suddenly disappointed them and they felt a deep sense of hurt. I think that the message was quickly conveyed to them through diplomatic and political channels that this was not the case. The European Commission s independent market research also found that the Irish people were not antienlargement. And I believe that the results of last week s general election has given the pro-nice political parties representative of 95% of the electorate a very strong message that the Irish people supports their policies on Nice and Europe generally. I have to say that I am looking forward to the campaign starting to put the Nice Treaty to the people again. I do not regard that, as some have charged, as being anti-democratic. It was clear that the yes side in the last referendum did not cover themselves in glory by the strength and intensity of their campaign. I have commented previously about some notable exceptions to this general trend. But I expect that the yes side will step up several gears in their efforts the next time around. 5

6 I think that they will also have been helped, in the meantime, by the work of the National Forum on Europe, which I hope will re-commence its excellent work now that the general election has been concluded. I would also re-iterate, despite what may have been said, that the Nice Treaty is a necessary condition for enlargement to happen on the scale now envisaged. That is, ten new Member States in the EU in time for the European Parliamentary elections in the middle of LFH0\WKV$GGUHVVHG In the meantime, I also believe that a range of what I call Nice myths have been dealt with to the satisfaction of reasonably minded people. The first of these, that Nice somehow eroded Ireland s traditional policy in relation to military neutrality. There is no basis for this assertion. As I have said on many occasions in the past, there is not one line in the Nice Treaty that changes this traditional policy. And this will be copper fastened, in case of any lingering doubt, by means of a Declaration by the fifteen Heads of State and Government at the Seville European Council in June. This would again be a powerful re-affirmation of what is exactly the existing legal position, that no Member State is obliged to participate in the Rapid Reaction Force. I do not intend here this morning to go into the detail of all of the other myths that have grown up around the Nice Treaty. Let me say just this. 1LFH$ERXW(QODUJHPHQW The Nice Treaty is about enlargement. It sets in place the technical nuts and bolts for how enlargement will happen. In a not dissimilar way that the Standing Orders Committee sets the parameters for how a successful trade union conference should be run. If some people want to debate the future of Europe, let us facilitate just that. We have in fact done so, as I said earlier, by establishing the Convention in Brussels. And the National Forum here in Ireland. %HQHILWVRI0HPEHUVKLSRI(8 Looking back on the transformation of Ireland since 1973 on accession to the EEC is one of the most amazing things someone of my generation can do. The transformation will be barely comprehensible to anyone under 40, or certainly 30 years of age. The trade union movement, and the labour movement generally in Ireland, were reluctant European brides. Looking back I am reminded that Congress opposed membership in the campaign in

7 However, the changes brought about, in the decade and a half that followed, happily persuaded trade union leaders, and ordinary workers, that the benefits of membership outweighed any real or perceived advantages. I am now delighted that the trade union movement generally is such an ardent supporter of the EU and the EU project, including enlargement. This is an important message for me as a European Commissioner to hear and witness. It is also vitally important in the context of a second referendum on the Nice Treaty. I know that there are aspects of the European project that are of concern to trade unionists. Aspects of the social agenda that you feel have been neglected or insufficiently progressed. That the single market is an end in itself, solely there for the benefit of business. As Consumer Commissioner, I also challenge those who argue that the internal market is just an end in itself. Since I came to office I have ensured a shift in emphasis so that consumer policy is seen as an integral part of the internal market project. I think that the voice of trade unions should be heard much louder on this issue, through, for example, a strengthened social dialogue about which I spoke earlier. But I think that one of the greatest benefits of membership from the perspective of the Irish trade union movement has been the employment opportunities created as a result of the development of that single market, warts and all. This has been very clearly identified by Congress in its submission to the National Forum. And I believe that this message should be communicated strongly by the trade union movement to its membership. UG &KDOOHQJH In politics, trade unionism or and walk of life one cannot rest on past successes. One constantly has to innovate and move forward. There are undoubtedly challenges ahead. We have barely crosses the threshold of the new century and the dot.com bubble burst causing a lot of casualties, and wider economic difficulties. We have the opportunities of biotechnology to address. The real capacity of the internet remains totally untapped in terms of consumer driven needs and business innovation. We are only beginning to understand the intellectual property challenges of the new technologies, but there are huge issues here with enormous potential if harnessed correctly. But all of these developments must be viewed from the point of view of competitive markets and sound macroeconomic management. As I say, we are only beginning to come to terms wit some of these new issues. One thing I am clear about is that these up coming issues can only be dealt with in a regional context as part of a cohesive European Union approach to things. 7

8 This is not to say that I am in favour of every decision being made in Brussels. I am certainly not, and I can assure you that I am not. But in a globalised context the capacity of small entities, such as the small nation state, to make lasting influences on events is significantly circumscribed. That is why I am strongly committed to building a new Europe of the peoples for the peoples. A Europe that people feel they have a real stake in. I was particularly pleased when I read recently Peter Cassells contribution to the Institute of European Affairs series of debates on Ireland in the European Union The Future. He said, and I quote, I am taking as my starting point that the European Union is the economic, social and political area where the Irish economy and Irish society will function for the foreseeable future. I endorse that sentiment completely. I am sure that the vast majority of the trade union movement also does. And the real test is to get the Nice Treaty adopted and the future of Europe put on a sound footing for future generations of workers and their families. Thank you. 8