General Affairs Council

Thursday 12th July 2012 Written Statements

[The Minister for Europe (Mr David Lidington)]

I attended the General Affairs Council (GAC) in Luxembourg on 26 June.

The GAC was chaired by the Danish EU presidency, Mr Nicolai Wammen, Minister for European Affairs. A provisional report of the meeting can be found at:

http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/EN/genaff/131236.pdf

Montenegro

The first item discussed at the GAC was whether to open accession negotiations with Montenegro. Some member states had argued that this decision should be postponed pending further progress on improving rule of law issues, including the fight against corruption and organised crime. I agreed that these were valid concerns but argued that Montenegro had met the criteria set at the December 2011 European Council and that opening negotiations now was the best way to increase the EU’s leverage on the issues where further progress was needed. The GAC was able to agree to the opening of Montenegro’s accession negotiations and the European Council endorsed this decision on 29 June 2012, and negotiations were opened at an intergovernmental conference later that day.

Multiannual Financial Framework

The General Affairs Council had its final discussion, under the Danish presidency, on the multi-annual financial framework (MFF) for the period between 2014 and 2020. The discussion focused on the latest version of the “negotiating box”, of which I have placed a copy in the Library of the House. This discussion gave member states the last opportunity to address specific issues in the text before it went to the June European Council. There, leaders took stock of progress before the negotiations were taken over by the Cypriot presidency, which officially commenced on 1 July 2012.

The negotiating box text contains positive language on the need to focus EU spending on areas that promote growth and explicitly states that

“it is essential that the future MFF reflects the consolidation efforts being made by Member States to bring deficit and debt onto a more sustainable path.”

Less helpful parts of the text are the possible reform to own resources, including the rebate, and the possibility of a financial transaction tax.

The UK Permanent Representative to the EU Sir Jon Cunliffe represented the UK on my behalf for this part of the discussion. He argued that the negotiating box still did not go far enough in reflecting the need for budgetary restraint. This sentiment was echoed by Ministers from the “likeminded group” on the budget. Sir Jon also argued that the UK would not agree to any changes to the UK rebate or any new own resources such as a financial transaction tax.

Other Ministers, led by Polish Secretary of State for the EU, Piotr Serafin, argued that the negotiating box was unacceptable in its current form, in particular because of their objection to the inclusion of the proposed reverse safety net which could serve to cap structural and cohesion fund (SCF) receipts received by the newer member states to a percentage of their previous allocations.

Although there are still elements to the negotiating box text that we are not satisfied with, overall we are content that it leans in the right direction. It has therefore been important to continue to be robust in what action needs to be taken going forwards, but also to consolidate the progress made so far. We have done this at both the GAC and the European Council, where my right hon. Friend the Prime Minister argued that despite the opposition from some member states, the European Council should welcome the progress achieved under the Danish presidency.

Cohesion Policy

The presidency sought a partial general approach on elements of the package of cohesion regulations. These were: on the rules for financial instruments; on the performance framework; and on proposals on revenue generating projects. There was some discussion on the technical elements of this package but the presidency was successful in getting broad agreement on all of the four blocks presented at the meeting: thematic concentration, financial instruments, revenue generating projects and performance framework.

The agreement included an amendment tabled by the presidency to add a footnote to the European rural development fund (ERDF) article 4, in the thematic concentration block. This would make it clear that the issue of the percentages for concentration in the transition regions would be reviewed once further decisions were made in the context of the MFF.

We also proposed a declaration on the need for better harmonisation between the rules of the funds of the common strategic framework for 2014 to 2020. In addition to France, Italy, Poland, Spain, the Netherlands and the Czech Republic who formally signed up to the declaration, Austria and the Commission also expressed their support during their interventions.

European Semester

The General Affairs Council agreed the set of country-specific recommendations that had been endorsed by Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) and Economic and Financial Affairs Council (ECOFIN) the previous week. Malta, Bulgaria, Hungary and the Czech Republic all took to the floor to reiterate their particular concerns. The presidency was clear however that a qualified majority existed and so the recommendations were sent to the European Council without an in-depth discussion. The UK, however, maintains its parliamentary scrutiny reserve on this issue.

June European Council

There was also preparation for the June European Council, which had an extensive agenda covering growth, trade, the MFF, energy, enlargement, justice and home affairs issues and foreign policy. This took place on 28 and 29 June.

Economic and Monetary Union

Finally, there was a discussion with European Council President Herman van Rompuy which provided the first opportunity to comment on the Economic and Monetary Union report of the “4 Presidents”, released in the early hours of the morning prior to the meeting and available at:

http://ue.eu.int/uedocs/cms_data/docs/pressdata/en/ec/131201.pdf

I underlined that while we were still studying the detail, the focus of our work should be on the more immediate next steps to help resolve the problems in the eurozone. I stressed the delicate challenge of reconciling the eurozone’s need for fiscal integration with protecting the integrity of the single market. In this vein, I made clear that while we support a banking union for the eurozone with a single eurozone banking supervisor, the UK will not be part of such supervision.