Micheál Martin (Cork South Central, Fianna Fail) | Oireachtas source

I will attend a meeting of the European Council this Friday and Saturday, 17 and 18 July 2020. While EU leaders have met five times in recent months by videoconference, and twice by videoconference with leaders from neighbouring regions, this will be the first time that leaders will meet in person since the special European Council held on 20 February and since the start of the current Covid-19 crisis. It will also be my first time to attend a meeting of the European Council as Taoiseach.

The essential focus of this week's meeting will be the proposed budgetary package for the EU for the next seven years, that is the multiannual financial framework, MFF, and a new recovery proposal, Next Generation EU, to support and accelerate economic recovery across the EU in the wake of the Covid-19 crisis.

In advance of this week's meeting and in preparation for our discussions, I have engaged with a number of my counterparts, including Charles Michel, President of the European Council, Ursula von der Leyen, President of the European Commission, and fellow leaders, Angela Merkel, Mark Rutte, Gitanas Nausėda and António Costa. In these engagements I have expressed my strong support for an ambitious MFF focused on economic recovery and the green transition, and a recovery fund to match the scale of the greatest challenge we have faced for decades. An unprecedented challenge demands an unprecedented and collective response.

I will approach this week's meeting in a constructive manner and with the aim of reaching agreement. As I told President Michel, I very much hope that it will be possible to reach agreement. In recent times, the EU has experienced considerable division and discord. It would send a strong signal to our citizens if these divisions could be set aside in the interests of reaching a compromise outcome that sets the EU on the path to recovery and to a better future. However, I will only sign off on a package that is fair, balanced and meets Ireland's needs. Of course, political agreement in the Council is a first step. Once it has been achieved, the consent of the European Parliament is also required for the MFF to come into operation from the beginning of next year.

President Michel presented his new proposal, or negotiating box, last Friday in the form of draft conclusions for this week's meeting. The revised negotiating box is receiving careful consideration by all relevant Ministers and Departments. We had an initial discussion of it at Government on Monday and the Cabinet committee on Europe will consider it further tomorrow. What is clear is that President Michel has set out an ambitious proposal for strategic recovery for Europe. It focuses on repairing the damage caused by Covid-19 while also setting clear direction for a fairer, greener digital future grounded in shared EU values.

President Michel recognises the need for the right overall balance in any final package that can be agreed by 27 member states. From his discussions with European leaders, including my own constructive exchanges with him on 1 July, he has identified six building blocks as a basis for possible political agreement. The first is the overall size of the package, whereby he proposes a new multi-financial framework of more than €1 trillion in 2018 prices, based largely on the package considered by leaders in February. The second is broad continuity with the current position on the issue of rebates, an issue of significant concern for a number of member states. The third is the size of the new recovery fund, whereby he proposes retaining the ambition of a new €750 billion instrument funded by exceptional one-off borrowing on capital markets, as proposed by the European Commission in May. The fourth is the balance between loans and grants in the new instrument, whereby he proposes retaining the balance proposed by the European Commission of €500 billion in direct funding through EU programmes and €250 billion in new loan-based financial instruments. With regard to the fifth, on allocations from the recovery and resilience facility, which forms the bulk of the new fund, he proposes that 70% be committed in 2021 and 2022 using the methodology proposed by the Commission in May, with the remaining 30% of funds committed in 2023 when further data will be available, allowing greater responsiveness to the evolving economic impact of the crisis. The sixth is governance and conditionality, on which he proposes that these new arrangements be embedded in the existing European semester process and aligned with the country specific recommendations adopted by the Council each June.

President Michel also proposes ensuring appropriate linkages between funding and the rule of law, an issue I have raised with him, and setting a 30% target for the share of the overall package meeting climate-related objectives consistent with climate neutrality by 2050, the Paris Agreement, and the do-no-harm principle of the European Green New Deal. This will undoubtedly be an important aspect of our debate when we meet. The EU is not simply an economic partnership or a trading bloc. It is a community of values and laws to which all member states must be committed, and by which they must operate.

These six building blocks are accompanied by important proposals in two further areas. Alongside its proposals for spending, the Union must also provide itself with the revenue it needs. To date, this has largely been provided by member state contributions and it is my view that this should continue to be case. However, in addition to current sources, President Michel is proposing a new own resource starting in 2021, based on the weight of non-recycled plastic packaging waste. I have signalled that this is something I can support. However, I remain to be convinced about other proposals in the new negotiating box, including one based on the emissions trading system possibly reformed to include the maritime and aviation sectors.

I do not believe that now is the time to consider further sources, such as the carbon border adjustment tax or a digital levy, on which President Michel 's text asks the Commission to bring forward early proposals. Ireland's position on digital tax is well known. We support the work under way at the OECD. Furthermore, with the EU in the middle of a severe economic crisis, we should be very careful about introducing innovative new taxes, the consequences of which are unknown and which could seriously impede Europe's economic recovery.

In my discussion with President Michel and others, I also highlighted the economic impact of Brexit on Ireland. In all scenarios, Brexit will have a negative impact on important sectors in our economy, which are already dealing with the unprecedented challenges of Covid-19. If we do not succeed in reaching agreement with the UK on a free trade agreement, the impact will be all the more severe. No set of arrangements will replicate the access and benefits of the UK being a member of the EU and being within the Single Market and customs union. I expressed my strong view to President Michel that just as we as a Union are all standing in solidarity with those most impacted by Covid, so we should be able to support those most impacted by Brexit. The inclusion in this latest negotiation text of a proposal for a new Brexit adjustment reserve to counter the adverse consequences in worst affected member states and sectors is, therefore, most welcome.

While the details of this new proposal remain to be worked out, we are ready to work constructively with partners to ensure that it is targeted where the need is greatest and that the consequences of Brexit for Ireland are fully understood and reflected. In summary, I welcome President Michel's proposals as the basis for negotiations at this week's meeting. They are an advance on previous proposals in meeting Irish concerns, although there are other elements on which we will need to see further progress before a final agreement is reached.

In line with the priorities in our programme for Government we will work constructively to agree a package focused on Covid-19 recovery and which sets out an ambitious strategic agenda for Europe. We will seek to maintain the Common Agricultural Policy budget at current levels and meet other priorities such as climate action, Horizon Europe, Erasmus and programmes such as PEACE PLUS. The negotiation of the new CAP will be critical for the next decade of farming, especially with so many pressures on the Irish farming sector and on family farms at present. As they have shown, our farmers and rural communities are ready to meet the challenge of the climate transition. A properly funded Common Agricultural Policy is a vital tool in this regard. The CAP is an important, long-standing and well-functioning policy. A strong, progressive, sustainable and resilient agrifood sector will continue to provide European consumers with high-quality and secure food into the future. I will be making this case strongly at the meeting.

Ireland is now a net contributor to the budget, reflecting the strong economic growth we have witnessed in recent years. As a country that has benefited from the solidarity of our partners in almost 50 years of membership, including in providing us with vital funding at times when it was needed most to drive our economic and social development, Ireland remains prepared to offer the same solidarity to those countries that continue to lag behind in economic terms. As our history shows, contributing to growth in one member state helps to build prosperity and markets for all.

In recent months Covid-19 has caused a crisis without precedent at global and European levels. As well as managing and controlling the pandemic, mitigating and recovering from its impacts, including the extensive economic damage it has inflicted, remain at the top of our agenda. Reaching early agreement on the next MFF and recovery fund will be a strong signal that the EU is determined to chart the pathway to recovery together at this difficult time. I hope it will be possible to make strong and positive progress at this week's European Council meeting.

The Minister of State, Deputy McConalogue, will respond when today's statements conclude.

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