EU Competitiveness Council (Post-Council Statement)

Lord Willetts Excerpts

Thursday 6th June 2013 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 29 and 30 May 2013. I represented the UK for internal market and industry items on 29 May, and Shan Morgan, Deputy Permanent Representative to the EU, represented the UK for research items on 30 May. A summary of those discussions follows.

The main internal market and industry issues discussed on 29 May were: auditing; Single Market Act I and II; smart regulation; industrial policy; modernisation of EU copyright law; and; state aid modernisation. Outside the chamber, there was a lunch discussion on industrial policy.

Council began with an orientation debate on Commission proposals to regulate statutory audits. In a full round table, most member states were prepared to accept the principle of mandatory rotation, with some arguing for a longer period before mandatory rotation, or for a narrower scope. I intervened on a similar vein to this. Some member states remained opposed. On non-audit services, all member states supported the principle of a blacklist only of prohibited services, but with many stressing the need for the list to be more limited, with some pushing for alignment with international standards. I agreed with the principle of a blacklist only, though expressed reservations on any cap in non-audit services. On a final point on the role of the European Securities Markets Authority (ESMA) in pan-European audit regulation, a majority of member states supported the European Board of Auditors’ Oversight Bodies (EBAOB) solution already proposed by nine member states, citing cost and independence as key concerns. I argued this solution was more appropriate and less expensive.

The next substantive item concerned Single Market Act I and II, with the presidency and Commission outlining progress made over the last six months towards adaptation of the legislative proposals arising from Single Market Act I and II. This was an information point only and I did not intervene. Other substantive morning items included Council conclusions on smart regulation, which were adopted without comment.

The lunch discussion focused on industrial policy. Shan Morgan took the UK seat and represented the UK for the rest of the Competitiveness Council.

The discussion over lunch followed on from discussions at a dinner the previous evening on the same subject, which I attended. The main UK messages highlighted the importance of creating the right environment for industries to be competitive, while questioning the need to set a 20% target for industry’s share of the economy. The presidency summed up the discussions in the first agenda item after lunch, reporting on the consensus of the importance of re-industrialisation as a means for employment, and that technical change had opened up various new opportunities which the EU is well placed to benefit from. There were also comments on the importance of energy costs, and the revolution caused by shale gas in the US.

The next substantive agenda item was an exchange of views on the modernisation of EU copyright law, with the Council updated on progress under the Irish presidency on collective rights management, the Commission updating the Council on their ongoing “Licenses for Europe” dialogue, and finally a presentation by Antonio Vitorino on his recent report on private copying and reprography levels. There was a general consensus among member states that the copyright framework needed to be updated to better suit the digital age, and that this work should be based on sound evidence, guided by the principles of technological neutrality, promoting legal offers and providing the necessary protections for creators. Response to the Vitorino report was varied, with the UK’s view that any work in this area should commence after the pending European Court of Justice rulings in this area. This was echoed by many member states.

The final substantive agenda item was a general approach on state aid, with the presidency presenting the current text of the two proposed regulations as a finely balanced compromise. Most member states endorsed the current text, though with some opposing the procedural regulation. Other member states intervened to seek further detailed changes, though were not met with much support. In a broader debate on modernisation, a wide-ranging discussion took place. A significant number of member states asked for further flexibility regarding the Commission’s proposed ban on regional aid to large enterprises in “C” regions. The UK intervened strongly on this point, and also to welcome the regulations as a useful contribution to improving state aid procedures and that state aid was to be used only to address genuine market failure. The presidency concluded that agreement had been reached on the regulations as proposed, and noted the concern of member states concerning regional aid.

Several AOB items were discussed at the Council. The first concerned an update on the state of play of the COSME funding programme, setting out the two remaining issues of size of the budget and settling of the work programme. There was no UK intervention.

The next AOB was the LeaderSHIP item, where the Commission outlined their communication considering how to reinvigorate the European shipbuilding sector. The UK did not intervene, though some did to, for example, welcome the strategy, or to call on the Commission to implement the proposals. There were also calls from some quarters to call for flexible state aid rules in the sector.

At the request of the French delegation, the Commission introduced their proposals to modernise EU trade defence instruments. In a short discussion, there were differing views among the member states that chose to intervene. The UK intervened to welcome the revision of the rules, but also to stress the need that trade defence tools are only used to tackle unfair trade which is damaging to EU producers, and not for other reasons.

For the next AOB, the presidency updated the Council on the discussions that took place at the Informal Competitiveness Council in Dublin earlier in the month, focused on entrepreneurship. There was no discussion on this point.

An AOB was raised by a delegation on the regulations on CO₂ emissions from cars and vans. A number of member states intervened on this point, particularly on the issue of “supercredits”.

Following this item there were two further AOBs raised by delegations. The first concerning the Tobacco Products Directive, with some member states concerned on the impact of the proposals on their economies. The UK, and others, intervened to support elements of the Commission’s proposals, stressing the need for a proportionate and evidence-based final text. The second AOB concerned the high-level group on innovation policy management.

The final AOB point to conclude the industry half of the Council concerned the upcoming Lithuanian presidency. The Lithuanian Minister updated the Council on the priorities during their term.

The main research and space issues covered on 30 May were: EU space industrial policy, proposed establishment of a space surveillance and tracking support programme, Horizon 2020, joint programming, high-performance computing, international co-operation in research and innovation, and advisory work for the European research area.

On the space items, the Council adopted conclusions in response to a Commission communication on “EU Space Industrial Policy: Releasing the potential for economic growth in the Space sector”. The Council took note of a proposal for a space surveillance and tracking support programme. Under AOB, the Commission briefly presented its proposals for the funding and operation of the European Earth monitoring programme (Copernicus) 2014-20 (previously known as “GMES”). Their latest proposal reflected the agreement made at February’s European Council that Copernicus should be funded from within the multi-annual financial framework (MFF). It would provide a solid legal base from which to launch the next set of satellites in the “Sentinel” series and support the delivery of downstream applications that would foster economic growth. The Commission emphasised the importance of a swift negotiation on the regulation in order to ensure the programme could launch at the beginning of 2014. The space discussion closed with a short update from the Commission on work to re-evaluate the relationship between the EU and the European Space Agency (ESA). The Commission argued that reciprocal access to the respective decision-making bodies was essential for the relationship to function effectively. The UK intervened to insist that the issue of the Commission role in ESA governance was one that required careful analysis before decisions could be taken by Ministers.

On the research items, the Council adopted conclusions in response to the Commission communication “High Performance Computing: Europe’s place in a Global Race”. These highlighted that HPC is an important asset for the EU’s innovation capacity. The Council then adopted conclusions in response to the Commission’s communication on “Enhancing and focusing EU international co-operation in research and innovation”. The Commission undertook to closely involve member states in the implementation of multi-annual “road maps” for co-operation with selected countries. Council subsequently adopted without discussion a resolution on the advisory work for the European research area (ERA). This resolution agreed that the advisory committee ERAC should be renamed the European Research and Innovation Committee (while keeping the existing acronym ERAC) in order to enhance its advisory role in research-led innovation.

The presidency updated Council on progress in negotiations with the European Parliament on the Horizon 2020 Regulation and associated Rules for Participation Regulation. The presidency noted that seven trialogue meetings had been held with the European Parliament, and that negotiations were now entering a critical phase if a deal was going to be delivered by the end of June. They believed that a compromise package could secure an agreement which did not alter the Council’s agreed position on the reimbursement model. The Commission reiterated the importance of simplification; this was essential to make life more straightforward for participants, and widen participation by reducing barriers to entry. The Council then broke for lunch. After receiving a short presentation from the CERN Council on the European strategy for particle physics, the presidency hosted an informal discussion between heads of delegation on their strategy for the Horizon 2020 negotiations. The UK intervened to support the presidency’s aim of securing political agreement by the end of June, while recognising the need to demonstrate a willingness to compromise on several issues of importance to the European Parliament. Following this discussion the Council reconvened. The presidency concluded without further discussion that a large majority of member states had subscribed to their proposal that simplification and the “flat rate” funding model should be defended and that in exchange the Council could show flexibility on other issues, such as widening participation, a fast track to innovation instrument, some earmarking in favour of renewable energy research, and stronger support for SMEs. As a result of the discussion the presidency noted that they would intensify negotiations with the European Parliament with a view to securing an informal agreement by the middle of June.

A policy debate then took place on joint programming initiatives (JPIs). The UK intervened to underline the strong UK support for JPIs. These were complex initiatives and member states had invested significant time, money and effort in them. In the UK it was for research councils to make decisions about funding. The Commission called for swifter implementation, in particular in relation to alignment of national strategies.

Under AOB, the Commission updated Council on the state of play on the proposal for a Council regulation on the Euratom research and training programme 2014-18 and on the proposal for the European Institute for Innovation and Technology (EIT) programme (these both form part of the Horizon 2020 package). The incoming Lithuanian presidency briefly presented its work programme. The Council also received a short overview of a recently published Communication on Energy Technologies and Innovation. This would be discussed in greater detail at June’s Energy Council.