The meeting of the European Council in Brussels on Thursday and Friday of this week will represent a welcome opportunity to take stock of developments in relation to a range of economic policy matters.
The meeting will also provide leaders with an opportunity for an exchange of views on the European Union’s relations with its strategic partners, without the constraint of seeking to agree a set of conclusions on this issue. The EU’s relationship with China will feature prominently in those discussions.
It is expected that we will also discuss foreign policy matters, including possibly the evolving situation in Syria.
I think that it is fair to say that this week’s Summit meeting will, for the most part, be of a preparatory nature, with our deliberations following-up on previous developments and feeding into decisions to be taken at forthcoming meetings.
It is worth noting at the start that this week’s meeting of the European Council will not address the issue of the Union’s budget over the period 2014 – 2020: the so-called Multiannual Financial Framework.
President Van Rompuy has convened a special separate meeting of the European Council for 22-23 November, at which it is intended an agreement will be reached on this critical piece of business. Ireland will support the work of the Cypriot Presidency and of President Van Rompuy and his office to ensure the success of that meeting.
I will, of course, brief the House in advance of next month’s meeting.
Economic Policy
Under the Economic Policy heading, EU Heads of State or Government will focus on reviewing progress in the implementation of the ‘Compact for Growth and Jobs’, and on engaging with President Van Rompuy on his interim report on strengthening the Economic and Monetary Union. Banking union and particularly the proposals for a single supervisory mechanism for euro area banks will form an important part of the latter discussion.
Compact for Growth and Jobs
The Compact for Growth and Jobs, which we agreed in June, is an important reinforcement of political commitment in this area, and provides a clear framework for actions at national and EU levels.
The key task we face in the period ahead is driving it forward with real commitment and momentum. That will be the focus of this week’s discussion.
Of course, the Compact also supports a vital national interest. The reality is that Irish recovery depends on European recovery. Europe will have recovered from the current crisis only when our economies are growing again and creating jobs.
That is why we see the Compact becoming a key driver of the Irish Presidency programme. It will underpin crucial work on our primary growth and jobs priorities, including:
further unlocking the potential of the Single Market, including the Digital Single Market;
deepening of the Union’s external trade relations, including with key strategic partners, such as the US, Japan and China;
progressing the Youth Transitions package being produced by the Commission in December; and
managing effectively the third European Semester cycle of economic and fiscal policy coordination.
It’s clear that one of the biggest challenges facing Europe at the moment is the high rate of unemployment, especially youth unemployment.
The Commission will put forward a Youth Transitions package, including a Youth guarantee, later this year and we will seek to prioritise work on this during our Presidency.
The promotion of the Single Market will be central to Ireland's Presidency agenda. A recent assessment by President Van Rompuy of progress on the twelve so-called levers of the first round of Commission Proposals under the Single Market Act shows that as the deadline of the end of the year for their agreement on them approaches, the picture is a very mixed one.
In particular, unless real momentum is injected, despite the considerable efforts of the Danish and Cypriot Presidencies, there is a danger that only half of the levers will be agreed. We are falling short in areas as various as public procurement, professional qualifications and energy. I will be making my strong support for early progress clear at this week's meeting and stressing that advancing the Single Market will be at the heart of our efforts as Presidency in the new year.
The Commission has now brought forward its second round of proposals under the Single Market Act.
These have the real potential to contribute in a meaningful way to our efforts to secure jobs, growth and investment, and I look forward to early progress on them.
It goes without saying that the Government supports these further efforts to improve the operation and governance of the Single Market, as the cornerstone of the Union and as a lever for increasing competitiveness, growth, productivity and mobility in Europe.
The effects of Single Market fragmentation are felt most
strongly within the SME sector. We are particularly supportive,
therefore, of measures which assist SMEs, including through
improving their access to long term investment funds and
tackling disproportionate “red tape”.
The outcome of the Mid Term Review of the Digital Agenda for Europe is expected by end 2012 and therefore follow-up will fall into Ireland’s Presidency. It presents an important opportunity to assess the delivery of the Digital Single Market to date, allowing Member States to address any shortcomings and to redouble efforts towards implementation.
A further critical issue for the Union is how to respond to the challenge of getting the European economy back on track by improving the EU’s global competitiveness, promoting economic growth and creating jobs.
Research and innovation are, therefore, of major importance given their potential role in contributing to economic recovery, competitiveness and growth across the EU.
We also see the potential for trade to be a real driver of growth and will work to try and make progress on a number of fronts. We will be prioritising the development of EU-US trade during our semester as Presidency, including with an informal Ministerial meeting on this theme in Dublin in the spring.
Completing EMU
Ceann Comhairle,
As we have navigated our way through the economic and financial crisis, it has become increasingly clear the euro needs to be grounded on the foundations of a strengthened Economic and Monetary Union (EMU). Under President Van Rompuy, we are in the process of carefully assessing what needs to be done.
Only then will we move to determining how best to take those steps forward. It is critically important that we get this right.
We need to ensure that over the years ahead, the Union develops the ways and means of strengthening the underpinnings of our shared currency, through an enhanced Economic and Monetary Union.
As recent years have all too clearly illustrated, this process of developing – what President Van Rompuy has termed a ‘genuine’ EMU – is not an optional extra. This is an exercise which is critical to the stability and wellbeing of the euro area and indeed the entire European Union. It is, of course, critical to Ireland’s economic and financial wellbeing into the future. A stable euro is fundamental to our national interests.
The House will recall that European Council President Van Rompuy presented his initial “vision for the future of Economic and Monetary Union” to the June European Council meeting. In response, he was asked by leaders to develop his thinking – in close cooperation with the Presidents of the Commission, ECB and Eurogroup – and to return with a “time-bound roadmap for the achievement of a genuine Economic and Monetary Union”.
President Van Rompuy will present his interim report to this week’s meeting of the European Council, and his final report to the December European Council meeting.
I welcome the close consultations which have taken place over the last months between President Van Rompuy and Presidents Barroso, Juncker and Draghi, but also with Member States and indeed with the European Parliament. President Van Rompuy’s interim report, which was published on Friday last (12 October) is all the stronger for having had the benefit of a wide range of inputs.
I very much welcome and endorse the recognition in the interim report that moving forward on the integrated financial framework – the so-called ‘banking union’ – especially the Single Supervisory Mechanism for euro area banks, is a political priority. I would add to that and say that it is of pressing urgency, not just for Ireland but for the euro area as a whole.
In June, we agreed that breaking the sovereign-banking link was imperative. I worked hard with my colleagues to achieve that acknowledgement. We must now ensure that we deliver on that undertaking. Having set out our stall in this way, expectations are now high that we will deliver –this is a real credibility test for the Union. Be in no doubt, we will be punished for any back-sliding or stepping away from what has been agreed.
I am
encouraged by the steps already taken – the Commission brought forward already last month their formal legislative proposals for a Single Supervisory Mechanism and the draft European Council conclusions recognise that we are still aiming for agreement on the Single Supervisory Mechanism by the end of the year.
If the Union is to be credible, commitments entered into at the level of Heads of State or Government have to be honoured. I am confident that that will be the case.
I welcome the fact that the draft conclusions being worked on in preparation for our meeting later this week – including at the General Affairs Council in Luxembourg today, at which Minister of State Creighton is representing Ireland – call on the Eurogroup of Finance Ministers to draw up the exact operational criteria that will guide direct bank recapitalisation by the European Stability Mechanism (ESM), “in full respect of the 29 June 2012 euro area Summit statement”.
This is a vital anchor for the work ahead.
The recognition in President Van Rompuy’s interim report that once a Single Supervisor is in place, a common resolution mechanism is required, is also welcome. I strongly support the need for swift progress to make these steps a reality.
The interim report rightly recognises the important steps we have taken towards stronger economic governance, both in terms of developing an integrated budgetary framework and an integrated economic policy framework, since the outbreak of the crisis.
We now have a broad range of instruments at our disposal – from the ‘Six-pack’; and ‘two-pack’; to the Stability Treaty; and the enhanced Stability and Growth Pact; and the European Semester to the Euro Plus Pact – we must ensure that we implement, in full, what we have already agreed, or are in the process of finalising, before we seek to open new windows.
Implementation must remain our priority. It is regrettable that sometimes it can seem easier to agree on new mechanisms, even before we have seen how our existing tools work in practice. I will continue to press for implementation of what we already have, at every level.
President Van Rompuy has sought a mandate over the coming months to explore further a number of new possibilities suggested in his interim report – a possible ‘fiscal capacity’ for the euro area and possible ‘contracts’ between Member States and the EU Institutions, perhaps covering the Country Specific Recommendations generated as part of the European Semester process. These ideas, while potentially interesting, need to be fleshed out so we can be clear on what might be involved.
They raise many questions and complex issues, but yet they may ultimately have a contribution to make. I look forward to hearing more from President Van Rompuy later in the week.
I would however caution that we need to be very careful that any ‘fiscal capacity’ must not cut across the on-going negotiations on the Multiannual Financial Framework (MFF). Concluding those negotiations is an immediate priority. Agreement would send a positive signal of the Union’s willingness and ability to reach a compromise on something as fundamental as the funding of the EU over the seven year period from 2014. We must not deflect ourselves from that goal.
Democratic legitimacy and accountability is the fourth building block identified by President Van Rompuy. This must not be an afterthought, quite the contrary, it must be central to our work in strengthening the EMU.
We in Ireland know better than anyone across Europe that democratic legitimacy and accountability is not an optional extra, but must be standard equipment.
We need to pursue a balanced approach in this regard, in addition to any enhanced role for the European Parliament, national parliaments – including, of course, the Oireachtas – must be central to whatever mechanisms we seek to develop.
In his final report to the December European Council, President Van Rompuy will examine “what can be done within the existing Treaties, and which measures would require Treaty change” as he sets out a roadmap to strengthening EMU.
In this regard Ireland’s position is similar to that of the great majority of Member States that wish to see the Union make the maximum possible use of the wide range of instruments available to it.
Discussion of the possibility of Treaty change at some stage in the future must not be allowed distract us from getting on with what needs to be done now.
I should note that the Government strongly holds that any new arrangements, including those adopted under the existing Treaties, must avoid fragmentation of the Union and must maintain the integrity of the Single Market.
While in a larger Union there will sometimes be areas in which some Member States, including those who share a common currency, will wish to go further together, this must respect these key principles.
Strategic Partners
The European Council will this week further consider the EU’s relations with its strategic partners, focussing in particular on the relationship with China.
Since the entry into force of the Lisbon Treaty, High Representative Catherine Ashton has sought to enhance the effectiveness of the Union’s engagement with key partners, such as China, the US, Russia, India and Brazil.
An enhanced framework for summit preparation has provided momentum to this process and there has been progress towards assuring what HR Ashton has described as ‘fewer priorities, greater coherence, more results’.
The discussion on China is timely as it comes shortly after the most recent EU-China Summit in Brussels on 20 September.
The Summit, which was Chinese Premier Wen Jiabao’s last before he steps down, reflected on the great progress that has been achieved in the past ten years. The relationship has become increasingly rich and multi-dimensional, and covers areas such as trade, global challenges, human rights, and agriculture.
In relation to trade, the EU believes that the principles of openness, fairness and predictability should be a cornerstone of our relations with China. We should be firm yet fair in applying the rules that govern international trade.
The recent EU-China Summit confirmed both sides’ commitment to launching negotiations for an EU-China Investment Agreement. Such an agreement would facilitate investment in both directions, and should, we hope, result in an additional source of growth and employment in this country.
Ireland has entered a new phase of engagement with China following my visit there earlier this year and subsequent visits by a number of Government Ministers. The announcement during my visit that Ireland and China were establishing a Strategic Partnership has moved our relationship to a new level.
With two-way trade between Ireland and China already at nearly €8 billion, the potential for this partnership is evident. Together with my colleagues in Government, I will continue to work to realise that potential.
Other Items
The European Council may also consider a number of other items, particularly in the sphere of foreign policy. The evolving situation in Syria, may be included on our agenda, in light of discussions at yesterday’s meeting of the Foreign Affairs Council in Luxembourg, at which the Tánaiste represented Ireland.
Conclusion
Ceann Comhairle,
This week’s meeting of the European Council presents us with an opportunity to consolidate and build upon the important progress that the Union has made over recent months in both bringing a degree of stability to our common currency and in looking ahead to sketch out what kind of Economic and Monetary Union we will need for a stable and prosperous future.
I trust the meeting will offer important impetus to our efforts in building upon the Compact for Growth and Jobs; progressing banking union, with its clear link to the direct recapitalisation of euro area banks by the ESM; and it will provide us with an opportunity to reflect calmly on the EU’s relations with our strategic partners, especially with China.
Ceann Comhairle, as ever, I will play a full and active part in the deliberations at this week’s European Council meeting, and I look forward to reporting back to the House next week upon my return.