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

It is a pleasure to brief the committee. I am accompanied by officials of the Department, Mr. Philip Kelly, assistant secretary, Mr. Tommy Murray, principal officer, Ms Orla O’Brien, assistant principal officer and Mr. Garry Purcell, higher executive officer, all of whom work on different aspects of the Competitiveness Council agenda, which is quite broad.
The first item on the council’s agenda is a policy debate on industrial competitiveness. It is intended that the council would send a clear signal to the March European Council on industrial policy priorities and on ways to improve sustainable industrial competitiveness. The debate will be informed by four Commission communications adopted in late January.
The core Commission communication, adopted on 22 January, "For a European industrial renaissance", was presented by Commissioner Tajani. It does not promote any particularly new initiatives but sets out the Commission's key drivers and priorities for EU industrial policy and industrial competitiveness. It also proposes to increase the share of manufacturing in GDP from 15% currently to reach as much as 20% share of GDP by 2020.
Itdraws on the recommendations contained in the Commission’s annual growth survey, found at ec.europa.eu/europe2020/pdf/2014/ags2014 en.pdf, provides an overview of actions already undertaken and puts forward selected priorities to speed up the remaining actions. It reflects our own belief that we need to focus more on industrial strategy and on manufacturing potential that is probably untapped.
The European Commission is urging member states to recognise the central importance of industry for creating jobs and growth, and of mainstreaming competitiveness concerns across all policy areas. This is the key message of the communication.
The Greek Presidency will chair a policy debate at the council on industrial competitiveness on the basis of this core communication. The results of that debate will be fed into the similar debate on energy, climate change and industrial policy which is to take place at the European Council meeting of 20-21 March 2014. The Presidency has also associated three other important Commission communications recently published, namely, "A vision for the internal market for industrial products", which builds on the results of the evaluation of EU law in the area of industrial products to assess the regulatory framework’s overall coherence and fitness for purpose; "Energy prices and costs in Europe", which analyses the cost of energy across Europe and proposes actions to reduce energy costs in the context of Europe’s global competitiveness; and "A policy framework for climate and energy in the period from 2020 to 2030", which proposes a new policy framework around energy efficiency, renewables and emissions to 2030.
The common strand through each of these communications is that, in Europe, a policy supportive of a strong role for European industrial actors needs to address all policy areas in a co-ordinated way in order to promote this transformation. That means developing better co-ordination mechanisms to address more coherently different policies such as environmental, climate, energy, trade, competition, skills, state aid and regional policies, all in support of sustainable jobs and growth. For some time competitiveness Ministers have been grappling with the problem of how to achieve greater coherence across the policy spectrum between national and EU efforts. Our view is that there is an onus on the Competitiveness Council to robustly monitor and track all unintended consequences of other council formations decisions and policies in the context of competitiveness and jobs.
For example, high energy costs are now a significant threat to Europe’s competitiveness. Therefore, competitiveness and energy must go hand in hand and the new 2030 climate framework must take into account international competitors and the development of an internal energy market and energy infrastructures and interconnections. The energy price gap is so wide that gas in Europe is three times more expensive and electricity twice as expensive as in the US. As a result, the transfer of production from Europe to the US is a real threat. Therefore it is very important that the internal market in energy is completed as a contributor to lower costs for industry and business - the energy-intensive manufacturing sector in particular. This is a vital component towards sustaining Europe’s external competitiveness.
While the communication calls for the EU to continue to vigorously pursue free trade agreements, the final conclusions themselves could have mentioned the strengthening of links between trade and free trade agreements and completion of the internal market and the growth agenda in that regard. I believe that we have to exploit the added value and benefits of free trade agreements as a contributor to global regulatory convergence, jobs, growth, the export potential of goods and services, and in particular internationalisation opportunities for SMEs.
The communication fails to mention the potential for "reshoring" or "in-shoring" of firms and industry back to Europe as a consequence of advances in technology, competitiveness gains, etc.

Industrial competitiveness can play an important role in rebalancing an economy and boosting growth, and in raising the potential for "reshoring" industry back to Europe. Furthermore, the pervasive development of global value chains requires a focus on encouraging strong European networking and inter-firm linkages to build competitive advantage and enhance productivity gains.
The next agenda item is a policy debate on integration of the EU’s internal market and aspects of the European semester. In terms of how member states have implemented the 2013 country specific recommendations in key areas, the report from the Commission indicates that more needs to be done in product and services markets to boost the EU's growth potential and in improving the business environment.
The commission’s second annual report on single market integration presents an analysis of the state of such integration in five single market priority sectors, with the highest growth potential; namely, services, financial services, energy, transport and digital markets. Based on its assessment of where progress was made and where challenges remain, the Commission identifies further priorities for national reforms, including a more ambitious implementation of the services directive as well as liberalisation of the regulated professions. Incidentally, this is the first year where Ireland comes into these country specific recommendations, because this process of the European semester did not apply in Ireland as the troika recommendations were applied to Ireland.
Services markets are important sources of job creation in Europe. In Ireland, the services sector accounts for 69% of GDP and 78% of employment overall. The services covered by the services directive amount to 45% of EU GDP. Ireland has also been ranked as the world’s third most globalised nations in terms of GDP. Both the Commission and the European Parliament consider that a more integrated and better functioning single market for services is vital to contribute to the economic recovery of the EU and to the ability of Europe to trade globally. In linking this with the other previous agenda items, I believe that enhancing industrial competitiveness necessitates a robust openness to international trade, because trade and competitiveness are interlinked and trade provides the opportunity for SMEs to internationalise and obtain access to global supply chains. As we know, the productivity gap between the EU and the US is growing partly due to under-investment in ICTs and relevant skills, failure to complete the digital single market and regulatory barriers across services markets, to name but a few. That is why it is so important that in tandem with completing our own internal market, an ambitious free trade agreement with the United States is delivered - one that addresses non-tariff barriers, takes concrete steps to secure significant regulatory coherence and opens procurement opportunities for European companies.
The Commission estimates that the measures which member states have adopted to implement the services directive will, over time, generate an additional 0.8% of EU GDP, with the majority of the effect materialising during the five to ten years following implementation. Economic analysis has shown that if all member states were to abolish almost all of the remaining restrictions, the total economic gain would be more than three times than what has already been achieved. This amounts to 2.6% of GDP. Therefore, the Commission is striving to ensure that the unequivocal obligations contained in the services directive, such as prohibition on nationality or country of residence grounds, are tackled vigorously. The purpose is to put an end to practices by some member states, professions or businesses that unjustifiably hamper access to their services by residents in other member states.
I will mention the National Competitiveness Council’s AOB items only very briefly. The first item is information from the Commission on the ninth meeting of the Union for the Mediterranean on Euro-Mediterranean industrial co-operation. The next two items are in respect of an update on the proposal for a Council recommendation on the European tourism quality principle. The overall objective of the initiative is to bring a certain level or consistency into the quality of tourism services among the participating service providers across the EU. The next AOB item is about a European strategy for coastal and maritime tourism, which clearly is of interest to Ireland.
The Italian delegation has requested an AOB item on the impact on the EU acquis and internal market of a “hybrid” nutrition labelling system recommended in some member states. This is an issue that comes under the remit of the Minister for Health. Italy and a number of other members states are objecting to the voluntary food labelling scheme introduced in the UK under the EU food information regulations. Some member states are concerned that multiple nutritional labelling schemes might be endorsed, confusing the consumer. Ireland intends to carry out a public consultation to ascertain public support for such a scheme. The next AOB item involves an update from the Commission on state aid modernisation. The discussion at the council will focus on a short update from Commissioner Almunia on the progress of the state aid modernisation initiative.
The next AOB relates to the proposed directive on disclosure of non-financial and diversity reporting for certain large companies and groups. The Council will be updated by the Presidency on the state of play in the negotiations with the Parliament on this proposed directive. Our position on the draft directive has been positive overall. However, we have looked for some amendments which we believe would improve the text, with the intention of introducing more flexibility and making it less burdensome for companies to implement. I hope that the current negotiations will result in a workable instrument. The next item is an issue being dealt with by the Minister for Public Expenditure and Reform and is related to information from the Commission on a proposal for a directive on electronic invoicing in public procurement. The final AOB item is a state of play report from the Commission on a proposal for a Council regulation on the Statute for a European foundation. This dossier comes under the remit of the Minister for Justice and Equality.
As we can see, it is a pretty diverse agenda. I am happy to take any comments or questions.