Richard Bruton (Dublin North Central, Fine Gael) | Oireachtas source

We are accompanied by departmental officials, including Mr. Philip Kelly, assistant secretary, Mr. Tommy Murray, industrial division, Mr. Aidan Hodson, research division, and Mr. Pat Kelly. There are many files for this Council, which spans a large area of responsibility and involves Departments other than ours. The Council is divided into two days. One is largely devoted to the research agenda, which is handled by the Minister of State, Deputy Sherlock, while the other day, which deals with broader SME and industrial policy, will be attended by the Minister of State, Deputy Perry.

The big theme on the first day will be supporting SME competitiveness in Europe. This is five years on from the adoption of the EU’s Small Business Act, SBA. Although it sounds like a strong legal instrument, it is much more about partnership between the EU and member states in delivering a more competitive environment for SMEs. The Council will discuss a Presidency paper on supporting SME competitiveness in Europe to try to get the best business framework for SME. In 2011, four priority areas were identified, which will be no surprise: access to finance, access to markets, smart regulation and entrepreneurship. These are very much in the same vein as our own priorities. Deputy Perry is the SME envoy co-ordinating the pursuit of these objectives throughout member states. They will also examine evolving areas such as e-commerce and how that can be better used to facilitate SMEs in exploiting opportunities in the Single Market.

The discussion at the Competitiveness Council will focus on the future structures for the governance of the SBA, how the implementation of the SBA is monitored and how this information is communicated through the Competitiveness Council. The discussion will also look at how e-commerce can be better facilitated within the EU’s Internal Market and how tackling administrative burdens and restrictive regulations can support innovation and start-ups. The SME envoy network evaluates and reports on the effectiveness of the programme. Ireland has done well. We are above average on six of the ten SBA principles: entrepreneurship, second chance, responsive administration, Single Market, skills and innovation and internationalisation. This is significant during a difficult period.

The Presidency will want to discuss whether better regulation should respond in new ways to support innovative SMEs and start-ups. That spans the agenda of both Ministers of State in my Department.

A lunchtime discussion will focus on energy and climate change policies. Ministers will consider two questions. The first is whether cost competitiveness, security of energy supply and climate change should be on an equal footing. Most people recognise they are different sides of sustainability in the long term. The second is what instruments can best promote the capacity to be competitive when taking energy and climate change policies into account. That will be an important and enduring debate, particularly in the light of cheaper energy sources in countries such as the US.

There will also be an exchange on industrial policy, an area in which Commissioner Tajani has taken considerable interest. His ambition is to promote the reindustrialisation of the European Union and he has set a target of going from 16% of GDP to 20% of GDP by 2020. I suppose it reflects the same experience we have had in Ireland. We have been through a period of very substantial decline in manufacturing. For a number of reasons there are both the opportunity and the need to reverse that. The loss of jobs has been extraordinary, but there is a growing realisation that a manufacturing basis is crucial to a long-term Europe. Global trends in manufacturing create opportunities for Europe to be more competitive and see an onshoring, as it were - a return - to Europe for many of these sectors. However, it needs a big step up in investment in new technologies and also requires an attempt to create coherence across all the instruments of European policy, including state aid, Horizon 2020, for which the Minister of State, Deputy Sherlock, has responsibility, and COSME, the strategy for SMEs. They need to gel in order that there is a coherent approach to industry.

The following six priority areas have been identified on which task forces have been established: advanced manufacturing technologies, key enabling technologies, bio-based products, sustainable industrial and construction policy and raw materials, clean vehicles and smart grids. They are essentially emerging areas where an edge can be achieved for the European manufacturing sector. Obviously, industrial policy depends on a partnership between member states and the European Commission, and there are always differences of emphasis the approach. Some countries obviously have very strong traditional sectors such as steel and coal, while others, such as Ireland, have more modern sectors. There are issues over the best approach. This attempts to develop coherent policies in areas where there is a common agreed belief that there are real opportunities for Europe.

The context for this is the plan in early 2014 for a European Council meeting of Heads of State and Government to discuss industrial policy. An industry summit is planned before that and the objective towards which much of this work is focused is to bring together a coherent strategy at that point.

There are obviously areas of importance and potential, including the energy market and how state aid policy is conducted which continues to evolve. We need to get more synergies between Horizon 2020, the programmes for access to finance and so on across the various institutions and service providers in this area. It will be an attempt to get a coherent strategy for a reindustrialisation policy in Europe. This will be a theme that very much reflects the debate we are having here. Last year, the manufacturing forum published its report and we are now considering the instruments we can use to get our existing manufacturing base to step up and what combinations we can develop of innovation strategies, access to finance, lean manufacturing and so on. It is very similar to what we are discussing here ourselves.

As a second part of the debate on industrial policy, the Commission will present an item on developing a more competitive and efficient defence and security sector. This is an action plan to improve the efficiency across the sector, to promote a more competitive defence industry and to foster synergies between civil and military research. It is trying to explore areas such as energy, space and dual use capabilities. The Commission will invite Heads of State and Government to discuss this communication in December 2013. It has already been considered by the Defence Ministers and Foreign Ministers. This will focus on the areas for enhancing research and development and industrial competitiveness in this very substantial sector that employs 400,000 people directly and almost 1 million indirectly.

The Commission is aware of the sovereign nature of defence and that the Commission’s competence in the area of defence is limited, meaning that implementation of the actions identified can only be done with the co-operation of member states. Nevertheless, the Commission believes that more can be done to promote European co-operation in this industrial sector which can enhance access to markets, either within or outside of the EU, economies of scale through more standardisation and certification, and improved access to EU funding.

Trade and export control issues in this sector need to be carefully considered, including the wide-ranging legislation already in existence on dual use - items that can be used for military and civilian purposes - of military goods and services and the associated international export control regimes where member states are represented in their own right. Again the debate at Council will be led by a Presidency paper which will refer to business opportunities for SMEs in the defence and security sectors and the need to adopt a more co-ordinated approach in the interest of efficiency, industrial competitiveness and avoiding duplication and fragmentation of the Internal Market.

There were three items under any other business. The first relates to the steel action plan launched by Commissioner Tajani in June. There is considerable restructuring in the steel sector and it is important to have policies to help to adapt in that environment. The second item relates to the tobacco directive on which the Polish delegation has particular concerns. The third item relates to state aid modernisation. The Czech Republic has requested an update on the consultation process under way for the revised general block exemption regulation. These are areas of state aid that do not require notification because there is a general policy position. This would include research and development and environment. Obviously, regional aid has its own family.