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

I thank the Deputy and he is welcome back to the committee. As I said to Deputy Calleary, it is not unlike our own challenge. Our approach to the Action Plan for Jobs is not altogether dissimilar to the European approach. It considers a wide range of areas. It is possible to see this from the headings, which refer to the integrated market and how we bring down barriers within the market. Clearly, the biggest of these barriers which remain are in the services sector rather than manufacturing. Generally speaking, manufacturing does not have many barriers left. However, there is an opportunity through free trade agreements to bring down barriers. With the United States the tariff barriers would be of the order of 2% to 3% whereas the non-tariff barriers in the areas where they apply run to 20%. The non-tariff barriers within many of the free-trade areas are the real opportunity. The idea is to open up markets by having more standard approaches and mutual recognition of standards. In a country like ours with our pharmaceuticals it represents a big opportunity. Clearly, if we do not have to replicate the same approval network in the United States and in the European Union and if there is mutual recognition, then it takes out costs and allows us to compete. To a considerable degree the integration of markets offers opportunity.

Another area is investing in innovation, new technologies, production inputs and skills. It is similar to our agenda and involves looking at how we use our research budgets in a way that opens up opportunities in sectors where we have a competitive edge in Europe. The document has identified areas such as smart grids, digital infrastructures, clean vehicles and advanced manufacturing. These are areas we would not dispute.

Access to finance, which is a major subject of debate here, is still a subject of debate in Europe.

The perceived lack is that we do not have the seed and venture markets typically available in other countries. In the immediate crisis the banks have retreated from much of their appetite for risk. This, in, turn creates additional pressures in Europe and the response from European policy systems is not as successful as one would wish.

On the question of energy, the loss of competitiveness, rather than raw materials, is the reason. We are out of line in taxes and levies and network costs. Raw energy costs are at the centre of most of the tension with regard to shale gas, for example. The report also indicates that there are savings to be achieved in the transmission and distribution networks. The reference to the public service obligation, in turn, raises the issue of renewables. A strong renewables strategy raises the cost of energy in the short term, but in the longer term the view is that a diversified portfolio, with a high level of energy from renewables in the system, will mean that we will have a more robust and sustainable energy environment. It is a case of short-term versus long-term conflict.

Another matter of interest is the funding and integration of energy infrastructure in Europe. Ireland is in a vulnerable position in that we do not have the same level of integration as in the rest of Europe. For example, the advantages of a single European energy market are well known to the Austrians because the market is well interconnected. Ireland's market is only 8% interconnected; therefore, there are particular challenges facing Ireland in dealing with some of these issues.

Skills is a significant theme. The vogue in Europe is the German model of apprenticeship which has been proved to be very resilient in the crash. The Germans have a policy structure that has allowed them to soak up the effects of the recession or depression without an impact on their base which seems to be much more robust. The Minister for Education and Skills, Deputy Ruarí Quinn, has received a report on the future of the apprenticeship system and the debate elsewhere in Europe mirrors ours.

We are undertaking some work on the issue of the cost and benefits. It is a fair comment that in estimating the potential gains some of the models are very conservative, while others are very rosy. It is tricky to be accurate and we need to do more work which will involve examining the sectors in which we have the potential to gain.

Members worry that free trade agreements will only be for the big guys. In many ways, the small guys are screwed by trade barriers because they do not have the sophistication to relocate. It is a common view that free trade agreements are good for smaller trading and enterprises if one can be confident that regulatory approval in one's home market will travel into overseas markets because that would be much easier for SMEs. A larger company will be able to manage the regulatory pitfalls, but I would not be of that view. In any free trade agreement and, in particular, the case of the United States there is no question of a dilution of our policy standards for workers' rights and the environment. We enter into an agreement with these standards intact. The issues of regulatory standards are to do with drug approval systems and harmonisation, for example. An agreement is not designed to undermine public policy. Both sides enter into the agreement with their own public policies which are off limits.

The Competitiveness Council is not an arena for discussion of tax matters which are the business of ECOFIN and other international organisations such as the OECD because taxation matters are relevant in countries outside Europe.