Mr. John Murphy:

I thank the Chairman and members for the opportunity to discuss the Department's six-monthly report to the Oireachtas on EU developments and also our EU Presidency outcomes and achievements. I am joined here today by my colleagues, Mr. Philip Kelly, assistant secretary, corporate services, EU affairs and trade policy; Mr. Tommy Murray, principal officer, EU affairs and internal market; Mr. Gerry Monks, principal officer, trade policy unit; Mr. Pat Kelly, assistant principal officer, Office of Science and Technology; and Mr. Paul Cullen, principal officer, labour affairs unit.

I want to acknowledge and comment on the Department's significant contribution to the recent successful EU Presidency. I thank the Chairman for his remarks on behalf of the committee and I would be happy to convey those back to the staff. There were a number of notable achievements under the remit of the Department of Jobs, Enterprise and Innovation in the jobs, enterprise, trade, competitiveness and innovation area. Chief among these, for example, was the consensus by EU Trade Ministers on the mandate to enable the Commission to begin talks on an EU-US transatlantic trade and investment partnership, the agreement on the new €70 billion research and development programme, known as Horizon 2020, the agreement on the accounting directive, the signing of the agreement on a Unified Patent Court by 25 participating member states, as well as the agreement on the Commission's new state aid modernisation proposals.

I will come back to these and the other important Presidency outcomes in more detail but suffice to say that, overall, the Irish Presidency has delivered significant long-term policy objectives and concluded agreements on numerous decisions which will be vital for Europe's future. We should be proud of the reputational benefits flowing from what has been an efficient, effective and value-added Presidency for Ireland and Europe. I have set out in an appendix, for the information of the committee, a comprehensive note on the Department's outcomes and achievements.

Turning to the six-monthly report for the period July 2012 to December 2012, which covered the period of the Cypriot Presidency, I will focus first on the key legislative and policy developments that occurred in the various EU Council formations during that six-month period. The report covers three Councils that fall within the remit of the Department, the Competitiveness Council, the Employment Social Policy, Health and the Consumer Affairs Council, usually referred to as EPSCO, and the Trade Council. In relation to matters under the EPSCO Council, while the Department of Jobs, Enterprise and Innovation is the lead co-ordinator, it should be noted that the Departments of Social Protection and Education and Skills take the lead responsibility for matters in their respective social, youth and skills policy areas covered under this Council. Furthermore, it is important to note that the Competitiveness Council has a broad cross-cutting remit, which covers the Internal Market, industry, research and space areas. While the Department takes the lead on this Council, given the wide range of sectoral issues involved, a significant number of files fall under the remit of other Departments. During the period of this report the Council met on three occasions, twice formally, under the Cypriot Presidency. A number of the dossiers discussed at the Councils during the period under review are ongoing while many were finalised during our term of the EU Presidency.

I will now turn to the specific areas. Under the Competitiveness Council, Single Market Act I and Single Market Act II,the October Council examined the state of play of the 12 measures contained in Single Market Act I and held a debate on the way forward. Ministers also welcomed the second wave of the new 12 priority proposals presented by the Commission under the Single Market Act II and Council conclusions were adopted.On the issue of consumer protection, the Cypriot Presidency successfully concluded discussions with the European Parliament on the proposals relating to alternative dispute resolution and online dispute resolution. The Cypriot Presidency provided for an exchange of views on European industrial policy and its contribution to growth and economic recovery at the October Council. Measures in support of the construction sector and the cultural and creative sectors were also considered. In addition, Council conclusions were adopted on key enabling technologies. Following significant progress under the Cypriot Presidency, broad agreement on the patents package was secured at the December Council. The December Council held a debate on the three proposals contained in the package on the modernisation of public procurement policy. Agreement on a general approach was reached on all three proposals. In relation to professional qualifications, note was taken at the December Council of a report drawn up by the Presidency on the progress made regarding a draft directive aimed at making the system of recognition of professional qualifications more efficient. Also, at the December Council delegations noted the progress made on the review and simplification of the accounting rules applicable to EU companies. An exchange of views at the December Council on the future of state aid policy from the point of view of industry resulted in delegations agreeing on the need to modernise state aid policy by setting objectives that support growth, employment and EU competitiveness. A resolution approving the launch of an EU customs action plan to combat the intellectual property rights infringements for the period 2013 to 2017 was adopted at the December Council. A public debate on the Commission proposal for a modernised Union customs code also took place with a view to facilitating a first-reading agreement with the European Parliament.

Turning to the Competitiveness Council, research and development Ministers, and space issues, in October, the Council agreed on the main elements of the rules of participation in projects funded under Horizon 2020, which is the next research and innovation framework programme for the years 2014 to 2020. It also agreed on the arrangements for incorporating the European Institute of Innovation and Technology within the Horizon 2020 programme. The Council held a policy debate on the next steps towards the completion and implementation of the European research area. At the December Council Vice President Tajani presented the EU-European Space Agency communication to the Council and also informed Ministers that the space industry package would be adopted in January 2013.

Turning to the EPSCO Council, the Council held an exchange of views on economic governance in the field of employment and social policy within the framework of the implementation of the Europe 2020 strategy. In October 2012, EPSCO Ministers agreed a general approach on the electromagnetic magnetic fields file. An orientation discussion on the enforcement of the posting of workers directive took place at the December Council. The proposals on the quotas for women on boards were presented to the Council. The Council was also briefed on difficulties that had arisen in negotiations with the European Parliament on negotiations for a programme for social change and innovation.

Turning to the Trade Council, there was one Trade Council held during the Cypriot Presidency on 29 November. The main trade achievement was the agreement of Ministers on an EU-Japan free trade agreement negotiating mandate. In addition, the Cypriot Presidency oversaw the conclusion of EU free trade agreement negotiations with Singapore and progress on FTA negotiations with Canada, Vietnam, India, and the southern and eastern neighbourhood countries. A decision was made to enter into negotiations to conclude a comprehensive and deep free trade area with Morocco, within the context of the Euro-Mediterranean partnership.

Turning to Ireland's Presidency from January to June of this year, my Department played a central role in driving the EU policy agenda embodied in the overarching policy theme of "promoting sustainable economic growth and jobs and building Europe's competitive advantage". In its Presidency Ireland focused on measures to promote growth and employment in accordance with the compact for growth and jobs as agreed by Heads of State and Government in June 2012. The Presidency placed a strong emphasis on advancing proposals that can boost the EU's competitive edge globally and add greatest value to jobs, growth, competitiveness and investment. Within the various Council formations chaired by Ministers and officials of the Department, we also succeeded in attaining agreements on all of the significant funding programmes under the EU's budget, the multi-annual financial framework for 2014 to 2020. To start with the Trade Council, as I indicated earlier, I supplied the committee with a note of some of the Department's achievements and therefore I will lightly touch on some of the key highlights. Under our Presidency, we attached great importance to promoting the EU's external trade agenda for the benefit of Irish companies and for the wider EU economy and its exporters. Trade is essential to job creation; 30 million jobs or 10% of the EU workforce depend on exports. In June, we reached agreement among EU trade Ministers on the mandate in order for the Commission to start talks on an EU-US Transatlantic Trade and Investment Partnership.Reaching agreement among EU trade Ministers on the terms of the EU's negotiating mandate was a top priority for the Irish Presidency and I am happy to say that the trade negotiations commenced last week in Washington.

According to assessments made by the EU Commission and other European bodies, a comprehensive trade and investment partnership between the US and the EU could over time boost EU GDP by 0.5% per annum and help create approximately 400,000 jobs in the EU. Based on those assessments, if Ireland simply benefited in proportion to the size of our economy, a comprehensive trade and investment partnership could over time provide gains to Ireland in the order of €800 million per annum in increased GDP, and 4000 new jobs.

Turning to Horizon 2020 which comes under the Research Council, on the agreement on the new €70 billion research and development programme, Horizon 2020, Ireland argued strongly, and successfully, in favour of a greater emphasis on the SME sector. In addition to new specific supports, such as access to finance and debt and equity facilities, for SMEs, it has now been agreed that the target for SME participation in relevant areas of Horizon 2020 should be increased from 15% to 20%. This is a significant change given the proposed scale of Horizon 2020. The programme will use a simplified funding model which means that a greater number of businesses and research providers - small, medium and large - can access the programme with less bureaucracy. In line with the action plan for jobs, we will pursue funding and other opportunities under EU Horizon 2020 programme for specific sectoral activities of national importance and in line with our national research priorities.

Turning to the Competitiveness Council, furthermore, agreement was also achieved on the €2 billion dedicated programme for competitiveness and SMEs which is known as the COSME programme, which will provide targeted financial support for SMEs. In particular, the proposed equity facility for growth-phase investment will support the development of the EU-wide venture capital market, as well as the loan facility which will provide direct or other risk sharing arrangements with financial intermediaries to cover loans for SMEs.

Regarding smart regulation, which falls under the Competitiveness Council, we worked with member states and the European Commission to agree an approach for the medium term whereby all European regulation would be assessed so as to remove unnecessary costs for business and all end users. Council conclusions on smart regulation in response to two communications from the Commission were approved by the Competitiveness Council on 29 May, setting out the next steps for the simplification of EU regulation. The conclusions focused largely on the manner in which outputs would be delivered by the Commission from its various overlapping programmes.

In light of the adoption by the Employment, Social Policy, Health and Consumer Affairs, EPSCO, Council of Ministers of a recommendation on an EU-wide youth guarantee, the Department is continuing to support the Department of Social Protection in improving its services to unemployed young people with a particular focus on optimising the benefits of the guarantee for Ireland. The agreement reached by EPSCO Ministers in Brussels in February recommended that member governments should move quickly to implement youth guarantees in their respective countries, taking into account existing national, regional and local policies and objectives. At EU level, our Presidency had pushed strongly for early production of implementation plans in all member states.

Arising from this agreement, the European Council has approved a youth employment initiative amounting to €6 billion for the period 2014-20 to support measures aimed at addressing youth unemployment and, in particular, to support the youth guarantee for regions with particularly high levels of youth unemployment. The June 2013 European Council decided that member states seeking to benefit from the youth employment initiative should adopt a plan to tackle youth unemployment, including through the implementation of the youth guarantee before the end of 2013. Most funding of measures required to implement a youth guarantee will none the less need to come from the national budget.

The European semester process was greatly improved this year under the stewardship of our Presidency. The Presidency obtained Council agreement on Council conclusions on the Commission's Annual Growth Survey 2013 as well as adoption of the 2013 joint employment report and a decision approving the guidelines for the employment policies of member states for 2013. The majority of member states supported the country-specific recommendations addressed to them on employment and social policy issues.

Proposals on state aid modernisation were also agreed. These new state aid regulations will take account of post-crisis structural reforms and industrial restructuring that member states are undergoing as well as the need for better alignment of state aid with Europe 2020 objectives.

A number of important files that were vital to completing and integrating the EU Single Market were also agreed or significantly advanced, including those on recognition of professional qualifications, public procurement and the accounting directive. With the agreement on these files, some long-standing barriers to completing and integrating the Internal Market have been removed, making it easier to move and work across all member states and lowering transaction costs for SMEs. The accounting directive will provide for transparency on revenue streams that governments in resource-rich countries around the world are receiving from European companies active in these industries and in the logging of primary forests. The directive is also important, in that it updates the EU's accounting legislation, improves transparency and reduces red tape.

The signing of an international agreement on a unified patent court by 25 participating member states during the Competitiveness Council on 19 February provides the impetus for creating a genuine Internal Market for those seeking to protect and enforce their patent rights at European level. It has been estimated that users of the unified patent court could save between €148 million and €289 million per year, given the present cost of such litigations of approximately €1.5 million in some member states. The figure of €289 million refers to individual patent cases.

Given the diverse range of dossiers covered by each of the Councils, it is only possible to provide a summary overview on the main legislative and policy developments covered by the six-monthly report. The note on the Presidency, which I have also submitted to the committee, provides a more comprehensive debrief on Presidency outcomes and achievements. During our Presidency, we worked hard to progress these key dossiers with a view to advancing and contributing to a pro-growth and pro-employment agenda across Europe. I will be happy to respond to questions or observations.