Enda Kenny (Mayo, Fine Gael) | Oireachtas source

The European Council will have its first meeting of 2013 in Brussels on Thursday and Friday of this week. The main issue for discussion is agreement on the Union's future budget, which is called the multiannual financial framework, MFF. That work will start tomorrow and I expect discussions to continue late into the night. As Members will recall, negotiations on the MFF have been under way since the European Commission put forward its proposals in June 2011. They have been, and remain, both highly technically complex and highly political as by assigning resources, we are effectively prioritising our common actions, making hard choices and difficult decisions on the European Union's actions right up to 2020.

The amounts of money involved may sound very large and the Commission originally proposed expenditure of approximately €1,000 billion over seven years. In reality, however, for a European Union of 560 million citizens, this represents just 1% of European Union gross national income, GNI. If one puts it another way, it represents just 2% of total public expenditure in the European Union. At a time when we look to the Union to assume many more tasks, this seems modest. However, the negotiations this week will not merely focus on spending.

It concerns how the EU assembles the money that it needs, how we can improve the quality of the spending and how rebates may be handled for individual member states. This must all be agreed by unanimity. We are a Union of 27, soon to be 28 member states, with each member state having its own appreciation of the Union's wider interest, as well as of the national interest. This week we will need to find the right balance between national interests and the approaches we support together as common policies in instruments such as the CAP. We need to ensure that national interests do not outweigh broader EU interests.

That is the first hurdle and the treaty requires also that any agreement must have the consent of the European Parliament. In today's more complex institutional environment in the European Union, this cannot be taken for granted and nor should it be. We need to respect the interest of the European Parliament in this process, and I have made this clear both to President Van Rompuy and European Parliament President Schulz, as well as EU Commission President Barroso. Ahead of the meeting of the European Council, I met with President Van Rompuy, who will steer our discussions, as well as Presidents Barroso and Schulz, in Brussels on Monday to consider the process that lies ahead. It is clear that tough negotiations will be needed if agreement is to be found.

Some headway was made at the European Council in November but considerable differences remain. From my contacts with colleagues, I believe there is a shared appreciation that we need to close the deal this week. We need to show our citizens in the Union and the wider world that we are capable of taking decisions even on the most difficult of subjects. In general, the signals from capitals have been encouraging. It would appear that leaders will be heading to Brussels this week with a view to finding an acceptable compromise. That would be good news for the European Union and for Ireland.

Our discussions will pick up from where we left matters in November, when President Van Rompuy tabled a proposal for a budget of approximately €972 billion for the seven year period, representing a significant cut from the budget proposed by the Commission. In setting out his assessment of how matters stand, President Van Rompuy has been clear that he believes further cuts will be necessary to bring everyone on board. A main part of our discussion will, therefore, focus on how big these cuts should be and where they should be applied. In addition, the European Council will also have to reach agreement on the revenue side, an area that we did not get into in detail in November, and this involves the very difficult and sensitive question of rebates.

I have set out the Government's approach to the negotiations on a number of previous occasions. We want a properly funded and properly functioning EU. The EU's budget must have the right mix of priorities, a fair allocation of resources and, most importantly in our current circumstances, a focus on jobs and growth. The EU must, in short, have a budget that is fit for purpose.

Our overriding financial priority has been to protect the allocation for the Common Agricultural Policy and to maximise Irish access to it. The CAP accounts for approximately 85% of our total EU receipts and it is central to our interaction with the EU. The Union's budget needs a CAP allocation that will support a vigorous, consumer-focused agricultural production base in Europe. The CAP is a vital tool for economic growth through its support for agriculture, the agri-food and related industries and the rural economy. We have made this clear to our partners in Europe.

Our engagement with the MFF is of course not limited to the CAP. We have argued strongly for an MFF with adequate resources for other growth-enhancing measures, including research, education, European connectivity and support for the small and medium enterprise sector. We want the budget to support the Europe 2020 strategy for jobs and growth and be seen to support it. It must have adequate funding for investment in economic growth and the creation of employment and it must have a particular focus on youth unemployment. All member states, including those with more developed regions, must be able to access EU programmes and funds. The Union's Cohesion policy must address the challenges that face us today, with the most serious of these being unemployment. The Union must also have sufficient funds to act outside its borders, most importantly in the area of development and humanitarian aid.

The gaps between the positions taken by member states have narrowed but they remain. They broadly reflect, in large part, the relative position of member states, whether they are net contributors or net recipients. In seeking to broker a deal, President Van Rompuy - who has my full support - will be conscious that the outcome must be one of which each member state can take ownership. This will not come about if the outcome is presented as one in which there are "winners" and "losers". We each have to be able to present what is agreed as a fair deal for all concerned.

As the member state currently holding the Presidency of the Council, Ireland will have a particular role to play if agreement is achieved this week. Members are aware that it is only on conclusion of the European Council figure that the mandate is given to the Presidency to negotiate with the Parliament. That will fall to Ireland on this occasion. Tomorrow morning, ahead of the meeting, I will meet again with President Van Rompuy and President Barroso to discuss the work that lies ahead for these discussions and beyond. Following an agreement it will be our responsibility to gain the formal consent of the Parliament.

As the House will recall from the visit of President Schulz to the Dáil, the European Parliament is fully engaged with the process and is very clear on the outcomes it expects. Ireland has repeatedly stressed the importance of any European Council deal on the MFF being one acceptable to the Parliament, which is a requirement of the Lisbon treaty from a number of years ago. The Irish Presidency will also have responsibility for chairing discussions on many sectoral regulations underpinning the MFF, including reform of the CAP, and for negotiations and passage in discussions with the Council and the Parliament. I expect the negotiations on Thursday to be long and difficult but I am confident a deal can be reached if there is goodwill on all sides to achieve a result.

On Friday, the European Council will discuss the other items on its agenda, which are trade and external relations. The latter will include consideration of the Arab Spring and the evolving very difficult issue with Mali. I very much welcome the discussion on trade and as Presidency we have indicated that an ambitious agenda on this front is an essential element of any drive for growth and job creation. President Barroso will brief the meeting on trade-related issues, on which the Commission plays a strong leadership role. This discussion will come at a time of unprecedented expansion of the EU's trade policy agenda.

Trade has never been more important for the EU economy and our discussions this week are most timely. Approximately 30 million jobs in the EU depend on sales to the rest of the world, an increase of 10 million jobs since 1995; this is equivalent to the total workforce working for the manufacturing industry in the EU. Over the next two years, 90% of world growth will be generated outside the EU. It is estimated that an ambitious trade agenda could lead to an overall increase of 2% in growth and the creation of over 2 million new jobs across the EU in the medium term. This would be most welcome, especially at a time when there are 26 million unemployed across the EU. An active trade policy is therefore a key condition of success both to economic recovery and to job creation. This fact is recognised by all leaders.

To benefit fully from the potential trade has to offer, the EU must also invest in increasing its internal competitiveness, making better use of untapped potential of the Single Market, opening up trade in services, strengthening the industrial basis in Europe and enhancing Europe's place in global supply chains. These drivers of growth are mutually reinforcing. I expect the European Council will prioritise those trade measures that will provide most benefit in terms of growth and jobs to the EU, and we must seize the opportunity of higher levels of growth abroad, both in emerging economies and in peer economies. Immediate priority will be given to developing our bilateral trade agenda in the absence of momentum towards a more comprehensive multilateral approach.

With regard to emerging economies, we should continue to strive to bring these economies to our level of openness. This will bring benefits to developed and developing countries alike. In this respect, the EU is actively pursuing its trade relationship with Russia, China, India, MERCUSOR and ASEAN countries, as well as with emerging markets closer to home. In the short term however, the biggest potential for growth lies in forwarding our new generation free trade agreements with peer economies. Advancing the agreements will bring challenges for the EU and for our negotiating partners alike, such as Japan, Canada and the US, but it will ultimately bring longer term benefits for growth and jobs.

In this regard, the EU-US high level working group on jobs and growth has been actively engaged in finding ways to tap into the significant potential of this bilateral trade and investment relationship. The working group will present its final report in the near future. We have stated that if it makes a positive recommendation, as is widely anticipated, we will do all that we can to advance matters during our term in the Presidency. If possible, we would like to see agreement by the Council on an EU negotiating mandate during the Irish Presidency. I have raised this matter with President Barroso, President Van Rompuy, Mr. Martin Schulz, MEP, and President Obama when I spoke to him by telephone after his re-election.

Foreign policy issues will be addressed by leaders during the working session on Friday morning. We will review Europe's relations with its southern neighbours two years after the first democratic uprisings in Tunisia and Egypt in early 2011. Such a review is appropriate given the momentous changes that have swept across the Arab world in the past 24 months.

The other foreign policy item on the agenda this week will be the crisis in Mali, a key foreign policy priority for the European Union which continues to be of serious concern. It is welcome that leaders will address this pressing and critical issue. President Hollande, who visited Mali last week, may brief partners on the latest developments on the ground in Mali where French forces are active. The Tánaiste and Minister for Foreign Affairs and Trade, Deputy Eamon Gilmore, will elaborate further on both of these foreign policy issues in his contribution.

I look forward to playing a full, active and constructive part in the discussions in a national capacity as leader of the Government and as Presidency in this week's deliberations on each of the items on the agenda. As I stated, this meeting is important for Ireland and the European Union. Concluding negotiations on the multi-annual financial framework will mark a significant achievement for the European Union and one which will contribute positively to our Presidency objectives of stability, growth and jobs. I will report back to the House on my return from the Council.

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