I am pleased to brief the House on the outcome of this month’s meeting of the European Council which took place in Brussels last Wednesday, 22 May.
Last week’s Summit meeting had an agenda which was focused on two important thematic issues – energy and taxation.
I welcome the initiative taken by President Van Rompuy to ensure that we take time to have discussions on issues of such strategic importance. Both of the issues discussed last week are highly relevant to continuing efforts to improve the competitiveness of Europe’s economy, and with that the prospects for strengthened employment and sustainable growth across our continent.
All too often in the last number of years, when EU leaders have gathered, we have been responding to one aspect of the economic and financial crisis or another. This month’s meeting was not about that. Last week we took the time to calmly and seriously reflect on these critical long-term policy issues.
The European Council deals with many urgent issues. When we meet next month, for example, we will have an agenda that includes follow up on the Compact for Growth and Jobs – in which I expect we will have a particular focus on unemployment; progress on banking union; and steps to strengthen Economic and Monetary Union.
For making space in our agenda this month for discussion of the important as well as the urgent, President Van Rompuy is to be commended.
As well as energy and taxation, leaders also had a brief discussion on the evolving situation in Syria ahead of the discussion among Foreign Ministers that took place on Monday.
Importantly for Ireland, the European Council took a formal Decision which confirms that each Member State will retain the right to nominate a member of the European Commission. This Decision represents the fulfilment of a promise made to the Irish people following the outcome of the first referendum on the Treaty of Lisbon.
I also availed of the opportunity of last week’s meeting to up-date colleagues on the very considerable progress that the Irish Presidency has made across a very wide range of briefs – from agreement on a Single Supervisory Mechanism for European Banks, to new rules for the discard of fish.
Across the board, Ireland as Presidency is working hard and I am happy to say, making things happen, for the European Union and its Member States, including Ireland.
Energy
Ceann Comhairle,
Our discussion of energy at our meeting last week was a good one. As I indicated to the House last week, it was set clearly in the context of the EU's efforts to promote growth, jobs and competitiveness, consistent with Irish Presidency objectives.
Secure, affordable and sustainable energy supplies are of course crucial in that respect.
There was a clear view that this was the right time for a strategic discussion on the challenges and opportunities for Europe in adapting to the new realities of global energy markets. Our exchanges were informed by a very useful presentation from President Barroso.
The impact of the financial crisis means that we are seeing a fall in private investment and tighter financing conditions. The growing role of unconventional hydrocarbon resources in the US energy mix means that it is on its way to becoming a net gas exporter. This results in a widening gap with European industrial energy prices, and an increase in the use of CO2 emitting coal in Europe’s power plants.
Between 2005 and 2012, International Energy Agency figures indicate that real industrial electricity prices for European OECD members increased by more than one-third, while showing a small decrease in the US. There was a smaller increase for households, just over one-fifth, but still more than double the corresponding increase in the US.
At the same time, we collectively face a significant increase in global energy demand, driven in the main of course by the growing strength of the emerging economies, and pointing in the direction of rising prices.
Global energy demand is set to grow by more than one-third over the period to 2035, with China, India and the Middle East accounting for well over half of this increase. This increasing pressure on global energy resources is also against the backdrop of some countries phasing out their nuclear power production following the Fukushima disaster.
The reality is that Europe is very far today from producing the energy needed to cover its own demand. Import dependence has actually increased in the last two decades, and is set to account for more than four-fifths of oil and gas consumption by 2035.
President Barroso also highlighted that investments in the European energy sector are currently running at historically low levels, at a time when sustained investment is needed in power equipment, grids, transport technologies, infrastructure and efficient buildings.
As I indicated to the House last week, Europe will actually need investments in new energy infrastructure estimated at over €1 trillion between now and 2020.
It is the Commission’s assessment that Europe faces rising energy costs under all scenarios, but will stand to benefit most from setting a clear decarbonisation path for the period out to 2050.
Europe’s energy agenda therefore confronts us with a set of choices that are far from straightforward.
While acknowledging that there are no easy energy options, we agreed on a series of guidelines that will underpin a sustained commitment by Member States in four key areas.
First, is the area of energy efficiency, including innovative financing of necessary retrofitting investments, which I highlighted in my own contribution. These are win-win measures that will reduce costs, emissions and imports, while also providing a significant boost to recovery in the real economy.
Second, is the Internal Energy Market. We reaffirmed the deadline set at the beginning of 2011 to have all rules and standards in place by 2014 and all countries part of a common grid by 2015. We can make significant efficiency gains from more integrated markets: potential annual savings in the region of €60 billion for gas and electricity.
Third, is supporting the significant potential for new investments, where predicable energy and climate policy will be key. We welcomed the Commission’s Green Paper on a 2030 framework for climate and energy policies and will return to this issue next March after the Commission makes concrete proposals.
Our conclusions also invite guidance from the Commission on efficient and cost-effective support schemes for renewable energies and on ensuring adequate generation capacity, while acknowledging the role of structural funds, project bonds and enhanced EIB support.
Fourth, is diversifying our energy sources. In terms of the geographical spread of European imports, this means making sure no country relies on a single supplier or supply route. It also means making full use of Europe's own unrealised energy potential.
This includes setting a clear path for greater deployment of our renewable resources, which can also become an important driver of investment and job creation in the real economy. It is also likely to include developing safe and sustainable ways to bring other non-renewable resources – conventional and unconventional – into the energy mix, where this is appropriate to national circumstances.
The Commission will present an analysis of the composition and drivers of energy prices and costs in Member States before the end of 2013, with a particular focus on the impact on households, SMEs and energy intensive industries, including looking more widely at the Union’s global competitiveness.
Ceann Comhairle,
As I indicated here last week, the world is undergoing a major energy transformation to which Europe must shape its own clear response: a collective response. Completing work on the Internal Energy Market will remain of overriding importance, and will continue to underpin all three pillars of EU energy policy: sustainability, competitiveness, and security of supply.
The Irish Presidency had already set the goal of agreeing Conclusions on the Commission's Internal Energy Market Communication at the June Energy Council in Luxembourg. Last week’s meeting reinforces the importance of that objective, as well as providing Energy Ministers with important political guidelines for their discussions.
We agreed that Energy Ministers will report back to us by the end of the year on the implementation of these guidelines.
Ceann Comhairle,
Last week’s European Council discussion on taxation covered three main areas: - the automatic exchange of information for tax purposes; combating VAT fraud; and international measures to tackle aggressive tax planning.
As Presidency, Ireland has been prioritising work in the tax area on measures to combat tax fraud and evasion and we are working closely with the European Commission and Member States. We have an ambitious agenda, and we are making real progress.
Building on the work of the ECOFIN Council, currently chaired by Minister Noonan, I am happy to report to the House that this meeting of the European Council sent a strong signal of intent in the area of automatic exchange of information and combating VAT fraud.
The Council had a broad discussion on the recent initiative for a pilot multilateral agreement on the automatic exchange of information. This pilot agreement builds on the US Foreign Account Tax Compliance Act (FATCA) agreement that Ireland signed with the United States in January 2013 and was the 4th country in the world to do so. Ireland has indicated its willingness to participate in the pilot initiative.
President Barroso also indicated that the Commission will shortly present new proposals for EU Legislation that expand the types of tax information that is automatically shared between tax administrations within the EU. It is hoped that this new legislation will be discussed by Finance Ministers at the June ECOFIN Council.
The revision of the EU Savings Directive was also discussed by leaders however, not every Member States was in a position to indicate that they could adopt the proposals at this time. Nevertheless, it was agreed that the proposals would be adopted by the end of the year. I welcome that clear assertion.
The Commission have been invited to negotiate revised bilateral Savings Tax agreements with Switzerland, Monaco, Andorra, San Marino, and Liechtenstein on the basis of the latest version of the proposal.
I am happy to recall that Finance Ministers agreed this negotiating mandate earlier this month, under the Irish Presidency. This is an important step forward in an area where progress had been stalled for a number of years. Ireland will continue to work towards the rapid adoption of the revised Savings Directive.
VAT Fraud costs Member States tens of billions per annum. To effectively fight this fraud the European Council agreed that the Irish Presidency anti-fraud VAT package should be adopted by June 2013. This is a priority for the Irish Presidency and we are confident that we can get the necessary support to adopt this package before the end of next month.
Finally, in the area of aggressive tax planning, the European Council gave a strong mandate for Member States to coordinate their positions in advance of the G8, G20 and OECD meetings.
Like all other EU Member States, Ireland believes in fair tax competition and, building on the work of the OECD, the Global Forum on Tax Transparency and the Code of Conduct on Business Taxation, unfair tax competition is an issue that needs to be addressed.
In addition to last week’s European Council discussion on taxation matters, during its term the Irish Presidency has put a strong emphasis on combating fraud.
Following the informal meeting of ECOFIN in April, Minister Noonan, as President of ECOFIN, jointly wrote to all Finance Ministers with Commissioner for Taxation Šemeta, identifying seven key actions that Member States could adopt by the end of the Irish Presidency that would make a real difference in the fight against fraud and evasion.
Agreement on the seven measures outlined in the joint letter is essential in tackling trans-national tax fraud and tax evasion.
As I noted when I came before the House ahead of last week’s European Council, thus far, four of these measures have been adopted and the Irish Presidency is working towards adoption of further measures at the June ECOFIN Council.
Ceann Comhairle,
Although not initially on the agenda of the meeting, the issue of EU policy in relation to Syria and, in particular, the question of the arms embargo were briefly raised by Prime Minister Cameron and President Hollande at last week’s European Council meeting.
Deputies will be aware that both the UK and France have made clear for some months now that they favour amending or lifting the EU arms embargo in order to allow the provision of arms to the main opposition grouping, the Syrian National Coalition.
After a short exchange of views, the European Council decided to ask Foreign Ministers to address this topic as a matter of urgency and the Tánaiste and his European colleagues had a thorough discussion at the Foreign Affairs Council meeting that took place in Brussels last Monday.
Regrettably, it did not prove possible to reach agreement on extending the arms embargo which will now expire on 31 May.
It is important to emphasise, however, that the EU remains fully united and committed to seeking a political resolution to the current crisis.
The Foreign Affairs Council also agreed on Monday that the EU will spare no effort to create the appropriate conditions for the success of the planned Geneva II peace conference initially proposed by the US and Russia earlier this month. Furthermore, Member States have committed not to take certain steps at present in advance of the conference, while the Council itself will further review its position on Syria before 1 August.
Ceann Comhairle,
Decision on the Number of Commissioners
While the main focus last week was on the issues of energy and taxation, I am delighted to report to the House that this month’s European Council meeting also took an important formal Decision to the effect that the European Commission will continue to include one national of each Member State.
This House will certainly recall that the Lisbon Treaty stipulated that the number of Commissioners would fall from 2014 onwards, except in the case that the European Council decided unanimously that that not be the case.
In December 2008 and June 2009, the European Council noted the concerns of the Irish people with respect to the Lisbon Treaty and agreed that, provided the Lisbon Treaty entered into force, that a Decision would be taken, in accordance with the necessary legal procedures, to provide for the Commission to continue to include one national of each Member State.
Last Wednesday, the European Council formally delivered on that promise to the Irish people.
I naturally, wholeheartedly welcome the taking of the Decision, which will be reflected in the new Commission to be appointed next year.
It is an eloquent, if understated, reaffirmation that the European Union delivers on its promises.
Conclusion
The outcome of this month’s European Council was a welcome one, as its focus energises two important policy areas – energy and taxation – which are critical to Europe’s competitiveness, employment and growth.
In both policy areas our Conclusions provide a most welcome set of guidelines for further work to be undertaken, including by the Council. As Presidency, this is extremely helpful to our on-going efforts to progress a whole range of files across both these briefs.
Beyond these topics, we will continue to deliver progress, to the maximum extent possible, during the remaining four and a half weeks in the chair. Our actions are at all times driven by our primary objective of restoring stability, while at the same time supporting sustainable growth and job creation.
I will continue to keep the House updated on all relevant developments.