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EU: Competitiveness Council

Volume 709: debated on Tuesday 17 March 2009


My honourable friend the Economic and Business Minister (Ian Pearson) has made the following Statement.

The following Statement provides information on the Competitiveness Council which took place in Brussels on 5 March 2009, at which I represented the UK. The meeting was chaired by Alexandra Vondra, Czech Deputy Prime Minister for European Affairs.

The meeting started with discussion of the Commission's single market review progress report. Member states agreed conclusions on the single market as a source of competitiveness and engine of economic recovery and that protectionism should be avoided in all circumstances. Single market priorities included rapid implementation of the services directive and small business Act. I emphasised three key points: to protect the integrity of the single market; to continue to improve the functioning of the single market; and to identify priority areas for action through targeted reforms.

The Commission presented a key issues paper on the Lisbon strategy for EU competitiveness. In discussion, member states wanted short-term responses to the economic crisis to be consistent with long-term structural reforms. Industrial and economic support measures should be co-ordinated and respect single market rules. Member states agreed that priorities for competitiveness were SME access to finance, innovation and research, reducing administrative burdens and the energy internal market. I stressed the need for globally open markets, completing the Doha world trade round, reviewing the EU budget, active labour market policies and low-carbon investment. The key issues paper was formally adopted after some discussion on the text.

Over lunch, Ministers discussed the economic crisis and the automotive sector. This continued in the afternoon session where member states agreed conclusions on the single market, avoiding discrimination and protectionism, as well as access to finance. The importance of research and innovation and underpinning infrastructure to foster green products and technologies were highlighted.

I emphasised the need for co-ordination at EU level to respond to the crisis in the European automotive industry, to avoid national protectionist measures and for European Investment Bank funding to the EU automotive industry to be sectorally and geographically balanced. I also said that the UK had reservations about the viability and value for money of vehicle scrappage schemes, but welcomed flexibility for member states to implement schemes as appropriate. In discussion the Commission raised concerns about the impact of the EU-Korea free trade agreement and in response I highlighted the wider benefits for the EU. The draft council conclusions on the automotive industry were adopted, with the presidency concluding that there will be a further debate on the sector at the next council in May.

The presidency briefly introduced its progress report on better regulation, highlighting the fact that over half of burdens come from Europe. The Commission was supportive of the report and said that better regulation was a top priority to help overcome the economic crisis.

Under any other business, a brief update was provided on EU enlargement, which the presidency said has been beneficial for all and the internal market and consumer market scoreboards. The Commission said that member states would be involved in a mid- to long-term strategy for the Transatlantic Economic Council before the EU-US summit in June. Regarding the external dimension of EU competitiveness, the Commission emphasised the need for regulatory convergence and the benefits of multilateral agreements. On the small business Act package of EU measures to support small businesses, the Commission stressed the importance of implementation in view of the current economic crisis.

The following Statement provides information on the Competitiveness Council which took place in Brussels on 5 and 6 March. The research session of the council was held on 6 March and was chaired by Ondrej Liska, Czech Minister of Education, Youth and Sports. The UK was represented by the deputy permanent representative to the European Union.

Research Ministers agreed the importance of maintaining the drive to increase investment in R&D during the current economic crisis. The UK argued that R&D investment needed to contribute to creating the low-carbon, highly skilled, and digital economy Europe needed. The council agreed that there was a need to strengthen the knowledge triangle—the links between education, research and innovation—to ensure investments in R&D made the maximum contribution possible to economic recovery.

The council discussed large-scale research facilities and their role in facilitating economic development. Council conclusions are expected on this at the May Competitiveness Council. During the debate on the location of research facilities, the UK argued that decisions should be made on the basis of science—where the facility would best contribute to excellent research, and that these infrastructures were important in promoting the mobility of researchers across Europe. The council also took note of a presentation from the chair of the European Strategic Forum for Research Infrastructures (ESFRI) on ESFRI’s 2009 priority list of large-scale research facilities in Europe.

Over lunch, Ministers discussed the Commission’s proposal for a new legal status for European research infrastructures providing VAT and excise duty exemptions. On the basis of my letter to the Czech presidency, the Commission has been tasked with bringing the issue to the VAT committee quickly for a decision on the proposed VAT exemptions. The committee’s decision would need to be agreed by ECOFIN Ministers. The UK noted that while its initial view was that these research infrastructures did meet the criteria in the VAT directive to be exempt from VAT, an acceptable solution on this could only be found in the VAT legislation or its implementing guidelines. The UK also stressed that it could not agree to substantive VAT wording in the research infrastructure regulation itself. Ministers also discussed how to facilitate a decision on the location of the European spallation source (ESS). Member states with an interest in ESS would discuss this further with the view for a decision to be taken before summer 2009.

Under any other business, the council took note of an update from the Commission on the request from Russia to sign an association agreement by paying to allow its researchers to compete for funds under the EC seventh framework programme. Member states had flagged up a number of questions on this issue which the Commission was currently considering. The council also took note of the progress made on negotiating a draft decision of the European Parliament and of the council on a European metrology research programme (EMRP) Article 169 initiative; First Reading agreement with the European Parliament is expected to be reached within the current legislative term. The Commission also introduced a new communication setting out the value of ICT facilities for science. The presidency informed the council that conclusions on the evaluation of R&D activities including a recent evaluation of the sixth framework programme were being developed. A progress report on the seventh framework programme is also expected.