European Free Trade Area
Committee of Secretaries of Departments
Fourth Meeting, 2 January 1957

Present:

Mr. T.K. Whitaker, Secretary, Department of Finance (in the Chair),

Mr. J.C.B. MacCarthy, Secretary, Department of Industry and Commerce,

Mr. J. Dempsey, Secretary, Department of Agriculture,

Mr. S. Murphy, Secretary, Department of External Affairs,

Mr. W.P. Fay, Ambassador in Paris, Mr. C.H. Murray, Department of the Taoiseach, and Mr. T.J. Cahill,¹ Department of Industry and Commerce, also attended. Mr. D. McCutcheon,² Department of Finance, acted as Secretary.

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Mr. Whitaker explained that Mr. M. Ó Muimhneacháin, Secretary, Department of the Taoiseach, was unable to preside owing to a meeting of the Government.

Report by Mr. Fay:

Mr. Whitaker said the meeting had been called to learn from Mr. Fay, at first hand, how far the Free Trade Area project had developed and the likelihood of its attaining fruition. The members of the Committee had read the draft Report of the Working Party as well, of course, as Mr. Fay’s reports from Paris but there were a number of points on which they would like to obtain further information.

In reply, Mr. Fay thanked the Committee for the opportunity of addressing them. He said that there were two points of primary importance to be considered; firstly, the likelihood that as a result of the present studies, a decision would be taken to set up a free trade zone. Secondly, what Ireland’s attitude should be towards such a zone, if established.

On the first point, little doubt remained amongst observers in Paris as to the outcome of the forthcoming Ministerial meeting. The report of Working Party 17 admittedly showed many lacunae, but their studies had nonetheless proved that technically it was feasible to set up a Free Trade Zone in association with the Customs & Economic Union of the Six.

[matter omitted]

The Irish delegation had, in accordance with their instructions, kept in close contact with the Portuguese delegation. The Portuguese attitude appeared to be to press for special concessions for under-developed countries as compensation for the exclusion of agriculture from the project, although they do not appear to feel that the exclusion of agriculture would be greatly to their detriment. They have the same protection problems as Ireland but appear to be satisfied that their protected industries are becoming or can be made efficient. It seems that they are satisfied to become members of the area on condition that they will not have to assume immediately the full obligation of relaxing their protective duties and quotas. In return for this concession they will be prepared to make certain token relaxations at once and to submit their whole system of protection for examination by the other Free Trade Area members after five or seven years.

Finally, Mr. Fay said that, if he might be permitted a personal opinion as to our eventual attitude, he wished to express the view that the present was, from many concurring viewpoints, a particularly appropriate time to take a radical look at the whole Irish economy, particularly in relation to our foreign trade, and to see whether protection should be regarded as a temporary expedient or a permanent measure. If, as a result of such a review, we decided to adopt a long term plan, with, say, five or ten year targets, there was no doubt that it would be sympathetically received in the OEEC, and we should be able to call upon the Organization for all the technical and expert assistance that we needed in elaborating it. Such a plan would also give us an added reason, and a weighty one, for special treatment if we were to join the Free Trade Zone. There was no question, of course, of socialistic planning, but rather of an attempt to co-ordinate our economic aims so that they might be rationally consistent and economically sound. The idea of such a plan had already been touched on by Mr. Cahan,³ Deputy Secretary General of OEEC.

Mr. MacCarthy said facts had to be faced. We could not abolish protection without destroying our industrial economy. The reasons for this had been explained in a memorandum circulated by his Department.⁴ It was not a question of needing a five year or a ten year postponement of the removal of protection but an understanding that, while we would always be prepared to look at the situation, we could not be committed to any set formula which involved a reduction or removal of protection. It would be industrial suicide to tinker with five or ten year plans if there were anything binding about them. He suggested that it was unrealistic to talk about revamping our economy if by that was implied the abandonment of industrial production or the limitation of production to lines which could subsist without protection.