EU Competitiveness Council

Lord Willetts Excerpts

Tuesday 18th December 2012 Written Statements

[The Minister for Universities and Science (Mr David Willetts)]

My noble Friend, the Minister of State for Trade and Investment (joint with Foreign and Commonwealth Office), Lord Green, has today made the following statement:

The EU Competitiveness Council took place in Brussels on 10 and 11 December 2012. I represented the UK on internal market and industry issues on 10 December, and my right hon. Friend the Minister for Universities and Science (David Willetts) represented the UK for research items on 11 December. A summary of those discussions follows.

The main internal market and industry issues discussed on 10 December were: state aid modernisation; industrial policy; Customs 2020; the union customs code; unified patent and the unified patent court; Single Market Act II; public procurement; and mutual recognition of professional qualifications.

Council began with a policy debate on the Commission’s plans to modernise the state aid rules. Commissioner Almunia set out the principles of the initiative, namely a more focused and simplified regime better aligned with EU2020 objectives that better tackled market failure and enhanced EU competitiveness while protecting the internal market. All member states intervened to support the Commission’s objectives, and most then raised specific issues with the proposals. For example, there were calls for more flexible rules on the use of regional aid, changes to thresholds and matching funding. I intervened to support the Commission’s approach, welcoming the intention for scrutiny of state aid to focus on the most difficult cases, and stating the need to avoid the use of state aid to prop up uncompetitive firms or in supporting national champions. Commissioner Almunia then summarised the discussion and said he would take note of the points made.

The next item concerned industrial policy. Firstly adoption of Council conclusions on an industrial policy communication, followed by an exchange of views on CARS2020—an action plan for a competitive and sustainable automotive industry in Europe. The Council adopted conclusions on the industrial policy communication with all member states in agreement on the compromise text. The Council then debated CARS2020. The debate in Council followed on from a dinner hosted by Commissioner Tajani the evening before the Council, which was attended by Michael Fallon, Minister for Business and Enterprise. Most member states intervened on this agenda item, acknowledging the importance of the automotive sector to the EU economy, with many stressing the importance of directing investments towards research and innovation in the sector. The impact on the automotive sector with respect to free trade agreements was also raised, with some member states advocating reciprocity in negotiations. There was also support for better regulation principles in the automotive sector, and ensuring coherence in all policies impacting the sector. I intervened to welcome the Commission’s action plan, whilst stressing that it is for individual companies to make commercial decisions based on capacity and business plans, who should be able to do this without hindrance or interference.

The next substantive agenda item was a discussion on Customs 2020. The Council agreed a partial general approach on the proposed regulation, which provides a legal basis for funding the customs action programme from 2014. At our request, the Commission supported the joint Council/Commission statement confirming that provisions in the regulation fall outside of Tile V. Discussion then turned to the union customs code dossier. The Commission were particularly concerned to meet the June deadline for the implementation of the recast customs code. Several member states, including the UK, recognised the deadline as a challenge, expressed commitment to achieve it in terms of content and timing, but also that we should not rush to agreement. However, other member states intervened to call for a speedy resolution. The dossier will be further discussed in working groups in January.

Following lunch (there was no Council-based discussion over lunch) the Council gave political endorsement to the patent package, which consists of the regulation creating a unitary patent, the regulation on the language regime and the inter- governmental agreement that would create the unified patent court. Some member states intervened to welcome the package, and some raised a few issues with the text but did not change their position regarding endorsement of the package.

Council conclusions were adopted on Single Market Act II without comment from other member states.

The next substantive agenda item was the public procurement package, consisting of three measures to update EU public procurement rules. The main outstanding point was whether the measure governing procurements by utilities should allow the Commission to initiate reciprocal action against third counties that did not open their procurement markets. At COREPER the presidency had added articles that replicated the existing arrangements whereby the Council could agree, by qualified majority, to restrict access by third countries in certain circumstances. The UK argued that these provisions were not necessary given that a separate legislative proposal on reciprocity was being discussed by trade Ministers, but that we could reluctantly accept the proposal on the clear condition that: they went no further than what was already in EU law; they applied to utilities only (and not general public sector procurements covered by the main “classical” directive); and in forthcoming trilogues with the EP this position should not be changed. Several member states intervened in a similar way. The other elements of package were also discussed. The presidency concluded that general approaches had been agreed on all three texts.

Earlier UK gains relating to mutuals, defence and security (including the revisions to the utilities and concessions texts negotiated after COREPER) and “flexibilisation” of processes, were not challenged so remain in the general approach texts agreed by Council.

The final substantive agenda item was mutual recognition of professional qualifications, where the presidency outlined the progress made on this directive over the past six months. Main interventions by member states concerned recognition of qualifications in the healthcare sector, while other member states called for the need for flexibility to reach agreement as soon as possible.

Several AOB items were discussed at the Council. On the consumer agenda, the presidency informed the Council that they had reached a provisional first reading agreement with the European Parliament on both instruments concerning the alternative dispute mechanism directive and the online dispute mechanism regulation. The presidency also announced that agreement had been reached on all the key provisions in the consumer programme initiative (except use of delegated acts and on the financial envelope) and the Commission also summarised the findings of the recently published consumer markets scoreboard. Three AOB items related to customs were also on the agenda. The Commission presented their report on the EU action plan on intellectual property rights 2009-12, the Council adopted a resolution on an EU customs action plan to combat intellectual property rights infringements 2013-17, and the Council also adopted conclusions on evolution of the customs union. All three dossiers passed without comment. A further AOB point concerned the European semester/annual growth survey, where the Commission discussed growth priorities over the coming year. Again, this passed without comment. The final AOB point concerned the accounting directive, where the presidency reported on the progress on negotiations with the European Parliament. There were still some issues to settle, though it was hoped agreement could be reached at the next trilogue on 18 December 2012.

On 11 December the Council opened with space agenda items, with an exchange of views on a Commission communication on the future relations between the EU and the European Space Agency (ESA). Vice-President Tajani opened the debate by noting the growing role that the EU was playing in space, highlighting Galileo/Egnos and the GMES earth observation system (now named ‘Copernicus’) as particular examples of EU action in this area, and emphasised that article 189 of the treaty on the functioning of the EU, which had introduced a union competence in space, meant that the EU was now an actor in its own right, alongside member states and ESA. Given the importance of the space sector for the EU’s future competitiveness, and as the EU relied heavily on ESA to deliver research and development on its behalf, Mr Tajani argued that the time was right to review the relationship and explore a wide range of options for improved co-operation.

During the discussion that followed the majority of member states agreed that it was appropriate to review relations, although the tone of the Commission’s communication, which focused almost exclusively on the difficulties in the existing relationship, came in for criticism from a number of quarters. A large number (led by the UK amongst others) emphasised that they valued the role of ESA and wished to maintain it as an independent intergovernmental organisation. The UK also noted that it was unfortunate that ESA had not been invited to participate in the discussion. At the end of the debate the Irish delegation confirmed that they intend to adopt Council conclusions on this issue during their presidency.

The main items discussed in the research part of the Council on 11 December were: the specific programme for Horizon 2020 (the EU’s research and innovation funding programme for 2014-20), the strategic innovation agenda (SIA) of the European Institute of Innovation and Technology (EIT), the EURATOM programme in Horizon 2020, and the European research area and international collaboration in research.

The presidency sought political agreement on draft texts of the specific programme (the document which sets out the scientific content of the programme) and the EIT’s SIA. On the former, member states agreed to wording in the presidency draft designed to strengthen member state oversight of the implementation of the programme through the member state committees which oversee the various elements of the programme. Several of the newer member states sought to press for amendments which would have strengthened actions aimed at widening participation in the programme; the UK, along with other member states with strong research sectors and the Commission, successfully resisted this move, arguing that the text already included compromises in this direction and that further changes would dilute the programme’s focus on excellence. There were also discussions of the civilian nature of the programme and on the provisions concerning the funding of human embryonic stem cells. Political agreement was reached on the basis of the presidency text with two minor amendments; Malta abstained.

Political agreement was also reached on the EIT SIA.

In other business, the presidency gave a short overview of progress on the EURATOM part of the Horizon 2020 programme. The Council adopted conclusions on the European research area which underlined the importance of completing this by 2014 and Ministers held an exchange of views on international co-operation in research and innovation, based on a Commission communication on this subject.

The lunchtime discussion involved Professor Anne Glover, the EU chief scientific advisor, who outlined her role and spoke on the importance of risk assessment in policy making.

During the discussion that followed my right hon. Friend the Minister for Universities and Science (David Willetts) underlined the important role that Professor Glover, other chief scientific advisors, and Ministers had to play in improving the use of scientific evidence in the policy-making process. In too many instances policies were driven by a restrictive interpretation of the precautionary principle which obstructed innovation by confusing risk and hazard, which risk undermining the EU’s ability to innovate and compete internationally in a range of fields. His intervention was picked up by others and the Irish expressed an interest in following up on it during their presidency.