Mr. Aidan O'Driscoll:

I thank the committee for its invitation to address it today.

Developments in the European Union over the past six months have essentially been dominated by the negotiations on the reform of the Common Agricultural Policy, CAP. My comments will, therefore, focus mainly on how these negotiations have evolved, where they currently stand and how we hope to progress from here. I will be happy to attempt to answer any questions that members may have and to listen to any comments or advice from members on the negotiations.

Before turning to the CAP negotiations, I would like to mention briefly a number of other key issues covered by the six-monthly report. Section 2.7 and parts of section 3 set out the current state of play on some key international trade negotiations. The conducting of these negotiations is, in the first instance, the responsibility of the Commission, but naturally Ireland, like other member states, takes a close interest in the progress and outcome of these talks. The Irish agrifood industry, as a large export-oriented sector, can benefit significantly from improved access to overseas markets, and we also have defensive interests, particularly in regard to the high-value European beef market, to which we are a major supplier. The Minister and the Department, therefore, take a keen interest in the development of both national and EU policy in this area, and we are in a process of near constant engagement with the Commission to pursue our national interests.

I would like to take the opportunity to update the report in one respect. The EU-US high-level working group referred to in sections 2.7 and 3.4 of the report has now reported, and the European Union and United States have agreed to initiate the internal procedures necessary to launch negotiations on what will be known as the transatlantic trade and investment partnership.

In addition to the CAP reform, the Irish Presidency is responsible for a crucial phase of the negotiations on the reform of the Common Fisheries Policy, CFP. The objective of the Irish Presidency is to build on the partial agreement negotiated under Cyprus and to complete, in the first instance, an overall Council position on the three composite elements of the reform package in the coming weeks, followed by a political agreement with the European Parliament and the Commission by the end of June.

As time is limited, I will not dwell on other aspects, other than to draw the committee's attention to the comments in the report on such issues as the food quality package, plant and animal health, forestry and other matters, all of which are active points for the Irish Presidency.

In very broad terms, the challenge for the current round of CAP reform is to deliver, in good time, a Common Agricultural Policy that is fit for purpose, that is coherent with the Europe 2020 strategy for recovery and growth and that supports the twin goals of competitiveness and sustainability. These broad objectives are very much in keeping with the overall theme of the Irish Presidency of the European Union, which is focused on the need for stability, jobs and growth.

The Minister made it clear to the Council, the European Parliament and the Commission at the outset of our Presidency that his primary aim is to finalise the Council position and negotiating mandate by the end of March. This will be followed by inter-institutional trilogues, or three-way negotiations, aimed at overall political agreement by the end of June.

Three conditions need to be fulfilled to meet this very ambitious schedule. First, there is a requirement for a timely agreement on the multi-annual financial framework, MFF, which has now been achieved at European Council level. Second, we need willingness in the Council of Ministers to move quickly to agreed compromises on all outstanding issues in the Council position, which will then allow us to enter negotiations with the Parliament and Commission. Third, all three institutions – the European Parliament, the Council and the Commission – have to be prepared to engage actively in the search for acceptable compromise in the final round of negotiations in the trilogue process. I would like to deal with each one of these in turn.

A significant step forward was achieved two weeks ago when the European Council reached agreement on the EU budget for the next seven years, the MFF. Subject to the consent of the European Parliament, this provides the necessary clarity on agriculture funding that will allow completion of the negotiations on CAP reform. The agreement was generally positive from a CAP perspective. The CAP will still account for almost 39% of the overall budget. It incurred a cut of 3% compared with the figure in the Commission's original proposals, whereas the total EU budget was cut by 7%. This represented a good negotiating outcome in the face of significant pressure from a number of sources for a much higher cut to CAP expenditure.

A second crucial issue is the distribution of CAP funds between member states. The formula agreed by the Heads of State and Government for the distribution of direct payment, or Pillar 1, funds between member states had originally been proposed by Ireland and resulted in a relatively favourable outcome for this country. The result is that the level of direct payments made to Irish farmers has been largely protected, with our direct payments ceiling remaining at over €1.2 billion per year, with a relatively small reduction in order to accommodate new member states and due to the overall cut in the budget.

As part of the MFF, overall EU funding for rural development, or Pillar 2 of the CAP, was reduced by comparison with that of the previous financial period. With a new distribution of funds between member states, this will mean an Irish allocation of approximately €313 million per year in current terms. This includes a special allocation of €100 million, over the full period, negotiated by the Taoiseach in the final stages of the talks. Ireland will also benefit from CAP expenditure on market support measures, but the precise figures will depend on commodity market developments. Taken together, the EU funding to Ireland from direct payments, rural development and market supports will amount to over €11 billion in the seven-year period 2014 to 2020.

The summit also reached conclusions on a number of other issues that are central to the CAP negotiations, including: the use of 30% of national direct payment ceilings to pay farmers for greening practices; the implementation of new ecological focus areas, which will be done in a way that does not take land out of production and avoids unjustified income losses to farmers; the co-funding rates for rural development, where the general rate will be 53%; the capping of direct payments, which will be introduced on a voluntary basis by member states; the option to transfer up to 15% of funding between direct payments and rural development; and provision for an agriculture crisis reserve, which will be funded as required from direct payments.

The MFF now requires the consent of the European Parliament, and this will be an important task for the Irish Presidency. A further good foundation for the CAP reform has been laid in recent months on the second condition to which I referred, that of achieving rapid progress on outstanding issues in the Council of Ministers.

The Cyprus Presidency built on the work of our Danish colleagues, resolving or progressing a range of issues to the point where, in its progress report in December, it was able to identify the 30 or so outstanding technical and political issues which still need to be agreed by member states. That progress report now provides the basis for the Irish Presidency's efforts to reach agreement. Naturally, and this deserves some emphasis, the outstanding issues are those that have been found most difficult to resolve so far.

Our ambitious target is to finalise all outstanding issues in February and March. Under this timetable, a comprehensive Council position would be concluded at the March Council, with the negotiating mandate finalised by the end of March. This would broadly parallel the process in the European Parliament where a plenary vote on the CAP reform package is scheduled to take place in mid-March. The commitment of Agriculture Ministers to meeting this timeline was evident in the course of a very positive Council debate at the end of January, chaired by the Minister, Deputy Coveney. This has been largely reproduced at official level, where a number of outstanding issues have already been agreed by the special committee on agriculture in recent weeks. However, the scale of the challenge remains an enormous one and we are dependent on the ongoing readiness of member states to engage constructively with the compromise proposals we are tabling.

This brings me to the third condition that must be fulfilled if we are to conclude the reform process by the end of June, namely, the active engagement of the three institutions. Again, there are very encouraging signs on this one. The Minister, Deputy Coveney, and Department officials have been in ongoing contact with the Commission at political and technical levels for some time now and we expect this constructive engagement to further intensify over the coming weeks and months as proposals are developed and agreement sought.

There have also been very positive developments within the European Parliament in recent months. Following the reports produced last summer by the MEP rapporteurs on the four main legislative proposals on the CAP, almost 8,000 amendments were submitted by individual MEPs. These were then reduced to a more manageable number of compromise texts in December and the Parliament's Committee on Agriculture and Rural Development voted on them at the end of January. This has cleared the way for informal contacts to take place between the Presidency and Parliament ahead of the latter's plenary vote planned for mid-March which should then provide the necessary mandate for the formal trilogue process between the Parliament, the Council and the Commission to begin in April.

In overall terms, therefore, we are making good progress and we hope that each of these elements will continue to function effectively. However, we are entering a crucial phase between now and the end of March on which much depends. Although our focus as Presidency is to broker agreement among the member states at Council, we have also been endeavouring to resolve satisfactorily the key issues from an Irish perspective. One of these is the important question of how direct payments should be distributed within member states, otherwise known as internal convergence. As members of this committee will know, a large number of member states have difficulties with the Commission's flat-rate proposal. In the case of Ireland and some others, this is primarily because of the significant payment transfers that would result. In other cases, it is because differentiation of payments between sectors or areas is not facilitated. In others again - primarily the new member states - it is because their existing payment structures cannot be accommodated as simply as perhaps was thought earlier. We have, therefore, proposed a set of solutions which endeavour to address all of these difficulties by essentially giving the necessary flexibility for member states to respond to their own conditions while, at the same time, respecting the overall thrust of the Commission proposal.

Similarly, member states have a range of views in relation to how the Commission's greening proposal should be implemented. We, in Ireland, have our own particular issues that need to be resolved. These include our desire to make the greening payment a percentage of a farmer's overall payment rather than a flat rate and the need to adjust the three criteria to suit Irish farming conditions. We have already tabled a proposal that aims to deal with the percentage payment issue and we hope to present a compromise proposal on the greening criteria shortly which will address the main concerns expressed by member states, including Ireland. The same approach will apply in the case of the outstanding issues under the other two main pieces of CAP legislation on market measures and rural development.

We are at a crucial time in the CAP reform negotiations. Good progress has been made at Council level in recent months and the process has been given added impetus by the agreement on the EU budget and the significant steps taken by the European Parliament. However, we need to build on this momentum, because there is still a lot of work to be done and in this regard, the next few weeks will be especially important. The negotiation process will continue to be complex and difficult but we are firmly focused on achieving an agreement that will be to the long-term benefit of Irish and European agriculture.