JOINT COMMITTEE ON EUROPEAN AFFAIRS (Sub-Committee on European Scrutiny) díospóireacht -
Wednesday, 12 Mar 2003

Vol. 1 No. 16

Scrutiny of EU Proposals.

Chairman

We will deal with Nos. 1.1 to 1.3. No. 1.1 is Commission document COM(2003)29 regarding amounts expressed in euro. This is a technical measure which adjusts upwards every five years the thresholds for small businesses to take account of inflation. Companies under these thresholds are not required to include certain details as disclosures in their accounts. In addition, they are not required to prepare consolidated accounts or an annual report, or have their accounts audited.

It should be noted that companies cannot utilise Articles 11 and 27 of the 1978 directive to set higher thresholds than is provided for in national legislation. In Ireland's case the thresholds are lower than what is provided for in the directive. For example, the directive sets a threshold of €3.6 million for a balance sheet which Irish legislation sets at €250,000. I am advised this proposal will not have any impact on Irish companies. It is recommended that this proposal does not warrant additional scrutiny. Is that agreed? Agreed.

Deputy J. O’Keeffe

It is odd that the Irish threshold is so low, but it is not within our jurisdiction to question that.

Chairman

If I recollect correctly, it is much lower than in Britain.

Deputy J. O’Keeffe

Is that causing additional problems for small companies here?

Chairman

It means small companies must have full audits and go through the full rigours of company law. The threshold is higher in Britain and there are different reporting requirements. It does cause additional problems. We probably have a higher proportion of small companies than Britain and perhaps this is the reason for it. While many sole traders register as limited companies for various reasons, it is a low threshold.

Deputy J. O’Keeffe

Why does Ireland have so many small companies in comparison to other EU states? I would like to have this question raised with the Department.

Chairman

It would be worth getting a note on it. We will ask for a note on it and raise the query. We will not refer this further in the meantime.

Deputy J. O’Keeffe

I am quite happy with it at EU level.

Chairman

We will do this and circulate the reply.

We now move on to our consideration of COM(2003)41 regarding restrictive measures against persons and entities associated with Osama bin Laden, the al-Qaeda network and the Taliban. This proposed Council regulation seeks to amend Regulation (EC) No. 881/2002 that imposes certain specific restrictive measures in accordance with UN resolutions against certain persons and entities associated with Osama bin Laden, the al-Qaeda network and the Taliban. This includes freezing of funds and economic resources. This amendment follows an opinion from the European Parliament and a subsequent resolution at the UN Security Council, 1452/2002, that makes a number of exemptions and exceptions to freezing of funds and economic resources. It also follows concern expressed by financial institutions, among others, that the existing sanctions regime did not provide for the payment of outstanding legitimate debts incurred by individuals and organisations covered by the measures.

The opinion of the European Parliament indicated the existing sanctions raised concerns about the possible infringement of fundamental rights as expressed in the International Covenant on Civic and Political Rights. The amendment makes provision for certain exemptions and exceptions to freezing of funds and economic resources. In particular, it makes provision for a competent authority, the Central Bank in Ireland's case, to determine upon request whether to allow access to frozen funds to cover basic living expenses. The findings of the competent authority are then forwarded to the UN sanctions committee for decision within 48 hours. The person seeking the exemption is then informed in writing by the competent authority of the decision of the committee. This written decision is valid throughout the EU. The list of those covered by the sanctions as outlined in Annex to COM (2002)117 was attached for the information of members. Also attached is a copy of the UN resolution that is the direct source of the proposed amendment and which is a response to concern raised by European members of the UN Security Council about the operation of the sanctions.

A relatively small level of funds - I understand it is €130,000 - is involved in Ireland. Given that the proposed measure seeks to fine tune the operation of UN sanctions across the Union, it is recommended this proposal does not warrant further scrutiny at this time. Is that agreed?

Deputy J. O’Keeffe

Is €130,000 the total fund that is frozen or the amount that may be unfrozen? What people associated with bin Laden, al-Qaeda or the Taliban have funds in Ireland?

Chairman

The €130,000 is the total amount frozen. While we do not know the names of the persons involved, we know there are six people involved.

Deputy Carey

Are the identities of these people known to the competent authorities?

Chairman

Yes, I believe so.

Deputy J. O’Keeffe

We have a mechanical function in agreeing to this.

Chairman

If we agree to the regulation, the Central Bank will recommend to the UN Sanctions Committee that access be allowed and that committee will make a decision within 48 hours. There are various checks and balances in place. Is the regulation agreed? Agreed.

We now move on to COM(2003)20 regarding intellectual property rights. This proposed amendment to Council Regulation (EC) No. 3295 is in response to large increases in the amount of counterfeit goods being trafficked into the European Union. The explanatory memorandum accompanying the proposal indicates that seizures of pirated or counterfeit CDs have increased by 15,300% since 1999. The Revenue Commissioners have also provided additional information for members outlining the product categories and origin of intercepted goods.

The proposal would see the abolition of fees for initiating action by the relevant authorities. Currently, relatively small companies must pay the euro equivalent of £400 to initiate customs involvement and the abolition will benefit them. It extends the scope of the regulation to include the designation of origin, and it would allow for the seizure of goods within the limits of duty-free allowances and thereby tighten the rules governing small-scale traffic. This measure should help protect the consumer from poor quality imitations of branded products. It is recommended that this measure does not warrant additional scrutiny by the sectoral committee. Is this agreed?

Deputy Carey

This is one of the directives that has a significant level of importance here. While it would be possible to import three football jerseys, it would be no longer possible to import a suitcase filled with sportswear. This is very welcome and will have implications for the indigenous sportswear industry. I suspect it will give a small level of protection to manufacturers in Third World countries and may, in some small way, protect workers rights in such countries.

Chairman

The figures attached show either a huge increase in the amount of counterfeiting or a great increase in seizures. The 15,300% increase in counterfeit CDs is enormous.

Deputy Carey

According to our notes, foodstuffs are being imported illegally. What are the health implications of this? Every time one comes through an airport one is advised to declare any foodstuffs one has. The foodstuffs mentioned come from Turkey, Poland, the Czech Republic, China, Lithuania, Spain and Japan. What kind of foodstuffs are they?

Chairman

They may be copies of high value products such as champagne.

Deputy J. O’Keeffe

I hope this will not be abused. I note it will allow for the seizure of goods within the limits of duty free allowances and tightens the rules governing small-scale traffic. Young people travelling abroad will often pick up cheaply priced CDs. Will such products be seized by customs as a consequence of this regulation? I am not sure I would be completely in favour of this.

Chairman

Such goods could be seized. Members know it is rare for travellers from other EU countries to be stopped by customs. If they had reason to stop travellers, passing this regulation means such goods could be seized.

Deputy J. O’Keeffe

In eastern countries, such as Vietnam, I saw CDs being sold in shops for less than $1. I am not an expert, but they did not appear to be poor quality imitations. They seemed excellent items. I could not comment on the quality of the sound. However, I worry that we might go overboard from the point of view of young people acquiring a few CDs on holidays and that we are setting them up to have those seized by the customs authorities. I am not sure I would be in favour of that approach.

Deputy Carey

Is there a reason cigarettes are not included? Are they simply not counterfeited, faked or whatever? There is a huge problem with cigarette smuggling.

Chairman

The difference is that for cigarettes it is a question of duty. In this case the issue is intellectual property.

Senator Dardis

My daughter, who is an expert in this area, informs me that there are "genuine" fake Gucci bags and there are "fake" fake Gucci bags, and there is a difference between the two. Many young people go to New York and go to Battery Park and buy these goods from people who seem to be trading quite legitimately under license from the New York authorities. One wonders about the provenance of the goods. I accept the rights of the people who own designer labels should be protected. However, it would be going overboard if a young person who buys a bag or a tee-shirt or whatever in New York——

Chairman

I have had the experience of buying a lovely Yves St. Laurent jersey in Asia and then making the mistake of having it washed only to find out its real quality. It is reasonable.

Deputy Carey

In regard to intellectual property rights, I notice in our notes that, among others, Philip Morris, the tobacco company, was invited to comment. I suspect it did not. I presume it would not have been invited to comment if it were not within the categories that ought to be included.

Chairman

On the list we have, the only area where I can see cigarettes fitting in is under foodstuffs, alcoholic and other drinks. Even there it is difficult to see where they would fit in. They do not seem to fall into any of the areas that come under the headings we are examining.

The next item on the agenda relates to documents which it is proposed to refer to sectoral committees for further scrutiny, items 2.1 and 2.2. The first of these proposals is item 2.1, COM(2002)746, which is a Green Paper on a European Order for Payment Procedure. The Commission Green Paper launches a wide-ranging consultation on possible measures to be taken at Community level to create a procedure which would operate throughout the EU in relation to the obtaining by a creditor of a payment order in respect of an uncontested claim - European Order for Payment Procedure; and to simplify and speed up small claims litigation. There are two issues, uncontested claims and the speeding up of small claims litigation. Although these are two distinct areas, views are being sought on them together because there are substantial overlaps in the issues raised by both in relation to the harmonisation or the creation of uniform procedures across the European Union. The Green Paper is based on a comparative study of how member states currently deal with these two issues and the intention is to identify best practices across the European Union that could be built into European regulations. The consultation period ends on 31 May 2003 and it is likely the outcome will be two separate proposals for regulations, one later in 2003 and another in 2004.

The Department of Justice, Equality and Law Reform is consulting widely on the proposals with interested parties, including the Courts Service and other courts-related bodies that may have an interest, the Office of the Attorney General, the Law Society, the Department of Enterprise, Trade and Employment, relevant consumers' associations, associations representing Irish business and small firms and the Irish Insurance Federation.

The relevant Oireachtas committees should have an opportunity to consider any legislative proposals which arise following the current Green Paper consultation. It is recommended, therefore, that the Green Paper be circulated to the Joint committee on Enterprise and Small Business and the Joint Committee for Justice, Equality, Defence and Women's Rights for their consideration.

Deputy Mulcahy

I agree with the recommendation. This is one I would like to flag for intra vires, ultra vires and subsidiarity. We have our own claims procedures and our own system of civil justice. There is enforcement of court orders across all of Europe. However, this borders on the cultural area in terms of how we run our courts. This is the type of regulation on which I would like to get an opinion as to whether it breaches subsidiarity and whether it is the business of the EU to be involved.

Deputy J. O’Keeffe

It is in everybody's interest that procedures of this kind be put in place and it must be on a Community-wide basis if progress is to be made. With due respect to Deputy Mulcahy, his approach would not stand up to investigation. Let us see what the relevant committees have to say. That is all we need to decide at this stage.

Deputy Carey

My concern is procedural. I note the consultation period ends on 31 May. I am becoming increasingly concerned that, although it is not our fault, many of the referrals we make almost disappear into a black hole. I remain to be convinced that we yet have a proper reporting mechanism which gives us an indication of how the sectoral committees examine these referred items. I certainly would like in this case, if the consultation period is due to end on 30 or 31 May, to have reports from the various committees to which this is being referred well before then.

Chairman

That is a relevant point. There are two aspects to this. As members will recall, we agreed some time ago on the secondment of an official from the Commission. That is taking longer than we envisaged. If we get that person, the idea is he or she would assist us to look at these issues further up the line before they get to the stage where we are nearing the end of the period for consultation. We have three reports from sectoral committees to circulate telling us how they are getting on, and we will look for reports from all the other committees. We will be compiling an annual report. Our first year of scrutiny ends in October. We might consider doing an interim report to put down a marker to say to sectoral committees that we expect them to report back. We have three reports to circulate today from three sectoral committees. Is that agreed? Agreed.

On the issue raised by Deputy Mulcahy, I do not know whether this will be decided at the committee on the basis of qualified majority or of unanimity. I suspect it will be the latter because it concerns the Department of Justice, Equality and Law Reform. I asked for advice on that, and it is not clear. They are talking about a regulation and not a directive. If it is a regulation, it will apply across the European Union; the same regulation would apply everywhere. The purpose of the Green Paper is to give everybody an opportunity to put their concerns. That is why we should send it to the committees.

Deputy Mulcahy

I agree with the recommendation. However, could we include a rider that it might be examined? No one is saying that per se it is not a good idea. The point is whether the European Union is now going to start telling countries how to run their civil procedures in courts. Does it come within the treaty and does it breach the principle of subsidiarity? They are reasonable questions. An early warning system on subsidiarity is envisaged, which smacks of interference in our civil procedures. I want that issue flagged on any documentation going forward because it may not be apparent to the committees to which it is referred.

Chairman

I suggest we bring Deputy Mulcahy's comments to the attention of the Department of Justice, Equality and Law Reform. That is the relevant Department and it is consulting widely on this matter. Is that agreed?

Deputy Mulcahy

Yes. Perhaps it could come back to me with a response at the end of the circuit.

Chairman

We will say this concern was raised at the meeting today and ask it for a response.

Deputy Mulcahy

That is acceptable.

Chairman

We will then refer it to the other committee for a detailed——

Deputy J. O’Keeffe

Will the regulation come before the Commission?

Chairman

Ultimately.

Deputy J. O’Keeffe

So it is currently only at consultation stage.

Chairman

That is agreed.

Item 2.2 - Commission document 50 on the economic accounts for agriculture in the Community. This proposed regulation concerns the gathering of agriculture statistics across the European Union. Since 1964, EUROSTAT has been publishing economic accounts for agriculture compiled by the member states on a voluntary basis. These statistics are used, inter alia, for estimating income level. This proposal seeks to establish a legal basis to this voluntary action by the member states.

Apart from minor changes to the request for information, the regulation would continue current practice. One of these minor changes, however, would directly impact on Ireland in that the proposed deadline for receipt of the information, the end of November, would be a week or so earlier than Ireland has traditionally furnished this information. I understand, however, that the Commission has undertaken that it will be fairly flexible on this point.

While the proposal has been generally welcomed at working group level, a minority of the group indicated they have some reservations about it. I understand Germany, supported by Spain, has been most vocal in this regard. In particular, these reservations have centred on the need for a legal basis for the compilation of these statistics. It has been argued at working group level that, for example, the existing flexibility in the system is an advantage that would be lost if the existing gentleman's agreement was given a legal basis through a regulation.

There also has been some questioning of the value for money of collecting the amount of statistics requested by the Commission. One advantage of a legal basis, however, would be that all members, including the new members after 2004, would be required to provide the information and one or more would not be able to opt out of the process due to budgetary consideration. Given that the proposal raises a number of questions that may need to be addressed, it is recommended that the proposal be referred to the Joint Committee on Agriculture and Food for further scrutiny. Is that agreed?

Senator Dardis

An important aspect, in the context of what is taking place this week, is the statement in the proposal that racehorse stables and riding schools are not characteristic agriculture activities and the income accruing to farmers from such activities must——

Deputy J. O’Keeffe

Perhaps it means governmental activities?

Senator Dardis

No, agricultural activities. It refers to income accruing to farmers from such activities must be excluded from the economic accounts. It also states that similar treatment is applied to bulls bred for bull-fighting. I am sure we are relieved to hear of that provision.

Chairman

Particularly in County Kildare. Is that agreed? Agreed.

The next item on the agenda is the proposal adopted prior to scrutiny - item 3.1 ^ COM(2003)39 regarding the use of a growth promoter in seed for turkeys. This proposal seeks to make permanent the authorisation to permit the use of avilamycin as a growth promoter in turkey seed for ten years up to 2013. Avilamycin is an antibiotic which has been cleared by the standing committee on the food chain and animal health. It should be noted, however, that a separate directive, Commission document 771 of 2002, which will supersede this regulation, was notified to the committee at its last meeting. This directive will ban the use of antibiotics as growth promoters by 1 January 2006. Once this directive comes into force, the extended authorisation for avilamycin and the other antibiotic growth promoters will be discontinued from that date. The industry in Ireland is aware of this proposal, has no difficulty with it and has begun to take steps to implement a phased withdrawal of antibiotics. In effect, this regulation will become obsolete on 1 January 2006.

Senator Dardis

There appears to be a contradiction between the proposed regulation and the directive. The regulation states that it should be possible to use the material up to 2013 but the directive states that the ban will come into operation on 1 January 2006 and that once it comes into operation the authorisation for the antibiotic will discontinue. I do not understand the reason 2013 is mentioned in one and 2006 in the other. It would appear it will be discontinued in 2006. I do not understand that.

Chairman

I do not understand the reason for it but Commission directive 771 will supersede the regulation, and that was notified to us at the last meeting. I presume, based on the advice of the food chain and animal health committee, they decided to supersede the existing directive, the effect of which would be to bring in the new directive five years earlier.

Deputy J. O’Keeffe

This document appears to have been adopted prior to our examination of it. What was the urgency? Why was it adopted on that basis?

Deputy Carey

Perhaps they had no choice.

Senator Dardis

The Council decided.

Chairman

I understand the use of this antibiotic is monitored on a ten year basis and that the ten years run out this year, 2003, and they quickly extended it by ten years to 2013. They had been considering changing the regulation in any event so that the new directive will supersede the regulation, but the regulation had to be renewed in the interim.

Deputy Mulcahy

Even though it is too late, can we not refer it to the agriculture committee for its attention?

Chairman

We have already referred the 771 document and that will give the opportunity to examine it.

Deputy J. O’Keeffe

If it was a procedure that had a ten year life span there was an enormous amount of time to discuss whether that life span would be extended. It was not a case of a sudden influx of turkeys from Thailand or somewhere which had to be dealt with. I have no problem with the scrutiny procedure being over-ridden where there is just cause but I do not see just cause here. I am concerned that we would allow a precedent to be created whereby documents would be adopted without any scrutiny in cases which we should examine. From what I have read of this directive, it appears to be appropriate but I am concerned about creating a precedent.

Chairman

It failed to get the qualified majority required to agree this measure.

Senator Dardis

I can understand the committee failed to adopt it and that it went to Council. This is a contentious issue. A body of opinion would say the presence of antibiotics in the feed of any livestock could be detrimental to human health. There is also the issue of the welfare of the animals. In the event of an outbreak of disease in an intensive production unit, all the animals would be wiped out. This is a contentious issue which requires careful consideration, although that is not to say the committee and the Council have not given it such consideration. However, it is notable that there were also dissenting voices at Council on this matter. Therefore, this is an issue to monitor into the future.

Chairman

Members will have read point 14 of the document which outlines the implications in this regard for Ireland. It states that avilamycin is used in turkey seed in Ireland and, as indicated in point 9, Ireland voted in favour of the continuation of the authorisation for a further period. It also states that in the event of withdrawal of the authorisation it would be desirable to have a phased withdrawal period to provide the necessary time for producers to alter rearing and husbandry practices and thus avoid potential disease and welfare problems that may result from a sudden and immediate withdrawal of this substance.

The situation will change dramatically on 1 January 2006. The Irish position appears to be that a phased withdrawal period is more desirable than a sudden change in terms of animal health. We have not referred Commission document 771 to the Joint committee on Agriculture and Food. Perhaps we should do so and bring to its attention Commission document COM(2003)39 and advise it that in view of the later document it might wish to examine the Commission document 771 of 2002.

Senator Dardis

We should be clear about this. I take it that although the use of this product has been sanctioned for a ten year period, when the directive comes into force in 2006, the use of this product will be phased out. I am more reassured about this than I would have been if the provision was in regard to a ten year horizon.

Chairman

Is it agreed we should refer Commission document 771 to the Joint Committee on Agriculture and Food and draw its attention to our concerns regarding it and the Commission document of 2003 so that it might examine it.

Deputy J. O’Keeffe

I would like the Department to explain to this committee why this document was not referred to the committee at a time when we could have offered a view on it. There was a time lag between the committee's report prior to Christmas and the vote at the end of February when the document was up for consideration. During that period the proposal should have been referred to this committee for review.

Deputy Carey

The Deputy has raised a point I have already raised. Some Departments, for one reason or another, do not seem to understand the importance of the legislation introduced in relation to the functioning of this committee and the scrutiny of European legislation.

Chairman

I suggest that instead of referring this document to the Joint Committee on Agriculture and Food, we call before this committee representatives of the Department of Agriculture and Food to explain what is involved in this regard. Is that agreed? Agreed.

Deputy J. O’Keeffe

We must make sure this will not happen again.

Chairman

We may have to take this approach in regard to Departments from time to time. The co-ordinator from the Department of Foreign Affairs is present and will have noted the concerns members have raised. Much of this discussion relates to teething problems, but we want people to get the message that scrutiny means scrutiny.

Members will recall that one document was referred from the previous meeting in order to seek further clarification prior to taking a decision. Item 4.1 is Commission document 24 regarding transitional product specific safeguard mechanisms for imports originating in China. This trade measure was held over from the last meeting to allow for further clarification from the Department. The amended measure is to take account of China's accession to the WTO that necessitates transitional measures up to 2013 that will see progressive reductions to trade barriers to the entry of products from China. During this transitional period it will be still possible to impose emergency measures to protect the market in these products in the EU. It is proposed that we note this proposal which, in any event, was adopted on 3 March 2003 subsequent to the last meeting of the sub-committee. Is that agreed? Agreed. That concludes the scrutiny of legislation.

The next agenda item is the minutes of the meeting of 25 February which have been circulated. Are they agreed? Agreed.

Deputy J. O’Keeffe

I have a major problem with them - the name "O'Keeffe" is incorrectly spelt.

Chairman

I will ensure that is corrected. We do not have the minutes of 13 February due to a slight hitch, but they will be circulated shortly.

The draft ninth report of the sub-committee will be circulated directly after today's meeting and will reflect all decisions taken today. This report can be agreed at the next meeting and will be laid in the Library. Is that agreed? Agreed.

Under the heading, any other business, we will circulate a note to members on anti-dumping. This is an information note on anti-dumping measures in relation to competition and issues of that kind. If members notify us of any issues they wish to raise regarding it, we will put it on the agenda for further discussion. Members may find the note of interest. I read it yesterday and I thought members might like to read it.

Item 8 is date and time of the next meeting. It is proposed that the sub-committee will meet on Thursday, 27 March, at 9.30 a.m. Is that agreed? Agreed.

For the information of the staff of Departments present, there is a concern among members of the committee to ensure that the sub-committee scrutiny procedure works, that every Department is aware that it is intended it will work and that we will report on this area to the Oireachtas in due course. We may seek to introduce an interim report. Any person who has responsibility in this regard should make sure every Department understands that. We do not want to bring this matter to a head by bringing officials of Departments individually before this committee. The committee is determined that the scrutiny procedure will work in a pro-active way.

Deputy Carey

Is there a designated person in each Department with responsibility for this area?

Chairman

Yes.

Deputy Carey

Would there be any value in bringing those individuals before this committee to discuss the procedures they apply in their Departments?

Chairman

We would need to have something to say to them. An official from the Department of Foreign Affairs is present who co-ordinates with co-ordinators in other Departments. At some point it might be useful to invite those people to appear before the committee for a 15 minute discussion during which we could tell them what is expected of them and invite them to raise questions. That would be useful. We will try to organise that between now and the summer.

I advise members of a personal matter which was brought to my attention this morning. I am sure the committee would like to join me in congratulating Siobhán, our clerk, on her engagement.

The sub-committee adjourned at 10.20 a.m. until 9.30 a.m. on Thursday, 27 March 2003.