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Preparation of the Competitiveness Council of Ministers, Brussels, 25 February 2008

European Commission - MEMO/08/107   22/02/2008

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MEMO/08/107

Brussels, 22 February 2008

Preparation of the Competitiveness Council of Ministers, Brussels, 25 February 2008

(Ton van Lierop, Oliver Drewes, Antonia Mochan, Barbara Helfrich, Helen Kearns )

The EU Competitiveness Council will meet in Brussels on Monday 25 February under the chairmanship of Mr Andrej Vizjak, Minister for Economy of Slovenia. The European Commission will be represented by, Vice President Gunter Verheugen, responsible for Enterprise and Industry, Commissioner Charlie McCreevy responsible for the Internal Market and Services, Commissioner Stravos Dimas, responsible for Environment, Commissioner Janez Potocnik for Science and Research, and Meglena Kuneva Commissioner for Consumer Protection.

Lisbon Economic reform process - Contribution to the Spring European Council ("Key Issues Paper") (TVL)

At the Lisbon summit in March 2000, European Union leaders set out a new strategy, based on a consensus among Member States, to modernize Europe. This became known as the “Lisbon Strategy''. After initially moderate results, the Lisbon Strategy was simplified and relaunched in 2005. The Strategy is based on a close partnership between the Commission and Member States, which have unanimously agreed integrated policy guidelines, implemented at EU level in the Community Lisbon Programme and at national level in National Reform Programmes, updated annually through implementation reports. The Strategy is organised around three- year cycles. Further details, can be found in MEMO/07/568. Three years after it was relaunched in 2005, the Lisbon Growth and Jobs Strategy is working. That is the main conclusion of the Commission's Strategic Report on the Lisbon strategy which was published in December 2007. (IP/07/1892) The report showed that the Lisbon Strategy is contributing to the recent much improved performance of the EU economy. Structural reforms are also starting to raise potential future growth, improving the long-term prospects for prosperity. However, some Member States have responded more robustly than others and some signs of "reform fatigue" have become apparent over the last twelve months. Europe will need to press ahead with further economic reforms at both Community and national level in the next cycle of the Lisbon Strategy to help it weather the impacts of global financial turmoil and higher commodity prices.

The renewed Strategy for Growth and Jobs has proved its worth and made an important contribution to the positive economic development of the EU during its first cycle. Building on strong economic growth in 2006 and 2007 it is essential to press ahead with further internal reforms in order to maintain and improve its competitiveness on the world stage.

Single Market Review (TVL, OD)

In 2007 the Commission came forward with a broad package of measures to facilitate the functioning of the internal market for goods, which is the biggest reform of the internal market since the Delors-package of 1992. This will make it easier for companies, particularly for small and medium-sized enterprises, to sell their products in the EU whilst increasing the protection of consumers. For industrial products existing market surveillance systems will be strengthened and for the first time aligned with import controls. Accreditation has also been introduced. This is a formal system which may now be used to ensure that conformity assessment bodies (or testing and certification laboratories) provide the high quality services that manufacturers need. The introduction of these measures serves to reinforce the role and credibility of CE marking. Improvements are also proposed for the trade with goods which do not fall under EU-legislation. From now it will also be the duty of a Member State that intends to refuse market access for products that are legally marketed in other Member States to talk to the enterprise and to give detailed objective reasons for any possible refusal, This creates new benefits for entrepreneurs as well as for consumers broadening their choice. Ministers are expected to adopt conclusions on the Commission's proposal.

RESEARCH

Communication from the Commission to the Council, the European Parliament, the European Social Committee and the Committee of the Regions "A European Strategic Energy Technology Plan (Set-Plan) – Towards a low-carbon future" (AM)

The Strategic Energy Technology Plan (SET plan), proposed by the Commission on 22 November 2007, is a comprehensive plan to establish a new energy research agenda for Europe. It will set up a series of new priority European Industrial Initiatives that focus on the development of technologies.

The SET plan will strengthen industrial research and innovation by aligning European, national and industrial activities. A European Energy Research Alliance will be created to ensure greater cooperation among energy research organisations. (IP/07/1750, MEMO/07/494)

Minsters will discuss the proposal which is being jointly considered with the Energy Council.

Proposal for a Council Regulation setting up the Fuel cells and Hydrogen Joint Undertaking ("JTI - FCH") (AM)

The proposal for a Fuel Cells and Hydrogen Joint Technology Initiative was adopted by the European Commission on the 10 October 2007. Hydrogen is a clean energy carrier. When used as fuel either in combustion motors or in fuel-cell systems, it does not produce any carbon emissions (carbon monoxide, carbon dioxide, unburned hydrocarbons or particulates).

The Fuel Cells and Hydrogen Joint Technology Initiative will receive €470 million from the EU's 7th Framework Programme, an amount that will be matched by the industrial partners. This initiative will offer long term solutions for sustainable energy and transport systems. (IP/07/1468, MEMO/07/404)

Joint Technology Initiatives are a major new element of the EU's 7th Research Framework Programme. They provide a way of creating new partnerships between publicly and privately-funded organisations involved in research.

Ministers are expected to reach agreement on a General Approach.

Any Other Business

(a) Emissions of CO2 from passenger cars and light-commercial vehicles (BH)

Proposal for a Directive to reduce the average CO2 emissions of new passenger cars to 120 grams per kilometre by 2012. The proposed legislation is the cornerstone of the EU's strategy to improve the fuel economy of cars, which account for about 12% of the European Union's carbon emissions. The proposal further underlines the EU's leadership and determination to deliver on its greenhouse gas commitments under the Kyoto Protocol and beyond.

The draft legislation defines a limit value curve of CO2 emissions allowed for new vehicles according to the mass of the vehicle. The curve is set in such a way that a fleet average of 130 grams of CO2 per kilometre is achieved. A manufacturer must ensure that by 2012 measured fleet average emissions are below the limit value curve, when all vehicles manufactured and registered in a given year by the manufacturer in question are taken into account.

(b) Defence Package(TVL, OD)

The fragmentation of the European defence market and divergent national policies create red tape, hamper innovation and competitiveness and, ultimately, weaken the European Security and Defence Policy (ESDP). In December 2007 the Commission presented a package of initiatives to improve this situation. This "defence package" contains three elements: 1) A communication with recommendations for fostering the competitiveness of the sector; 2) A Directive on defence procurement to enhance openness and intra-European competition in Member States' defence markets; and 3) A Directive on intra-EU transfers of defence products designed to alleviate the obstacles to intra-community trade. The proposed new legislation will contribute to creating a genuine European market in this sector without sacrificing Member State control over their essential defence and security interests. Vice President Verheugen and commissioner McCreevy will present the proposals to Ministers.

c) Consumer Markets Scoreboard - Information from the Commission (HK)

Commissioner Meglena Kuneva will present to the Council the new "Consumer Market Watch" process, which investigates how markets in various sectors of the economy perform from a consumer perspective. There are two steps to the new process. The first is a comprehensive screening of retail markets against 5 key consumer indicators - prices, complaints, switching rates, satisfaction and safety - for patterns which could indicate market malfunctioning. These irregularities – which may be indicative of practices which distort consumer choice and hinder competition at the retail level - can then trigger the second phase of the process, an in-depth, targeted consumer market investigation and corrective actions. The far reaching new Consumer Market Watch process also benchmarks the strength of the consumer environment in different Member States and the degree of integration of the retail internal market. (MEMO/08/70)

d) Internal Market Scoreboard Information from the Commission (OD)

According to the European Commission’s latest Internal Market Scoreboard, on average 1.2% of Internal Market Directives for which the implementation deadline has passed are not currently written into national law, down from 1.6% in June 2007 and equalling the best-ever result of December 2006. This means that the average deficit is again below the 1.5% interim target agreed by Heads of State in 2001. Member States are also on the right track towards achieving the new 1% target by 2009 as agreed by Heads of State in March 2007, with 15 Member States having already reached this new target. However, Member States too often fail to apply Internal Market rules correctly: only ten Member States have managed to reduce the number of infringement proceedings against them. Commissioner Charlie McCreevy will present the results to Minsters

(e) Conference on Innovation and Cluster

The Conference was jointly organised by the Swedish and Slovenian government under the Slovenian Presidency, as part and with support of the PRO INNO Europe initiative coordinated by DG ENTR. It attracted 420 participants from many European countries, including ministers from Sweden, France, Slovenia and Lithuania and high level representatives from regional governments, innovation agencies and cluster company managers from all over Europe. The Commission was represented by the Vice President Verheugen.

The Conference brought together a great number of leading experts in the field of innovation and clusters, including Prof. Michael E. Porter, Harvard Business School, Mr Esko Aho, President of SITRA and former prime minister of Finland and Senator Laffitte, the founder of Sophia-Antipolis (France). All speakers highlighted the increasing importance of clusters as drivers of innovation and competitiveness of firms and local territories and underlined the need for a concerted action to further develop more efficient cluster policies and competitive clusters in Europe. The Presidency will give ministers a report on the conference.

f) Proposal for a Decision of the European Parliament and of the Council on the participation by the Community in a research and development programme aimed at enhancing the quality of life of older people through the use of new Information and Communication Technologies (ICT), undertaken by several Member States (AAL) Information from the Presidency on the state of play

(g) Proposal for a Decision of the European Parliament and of the Council on the participation by the Community in a research and development programme aimed at supporting research and development performing SMEs undertaken by several Member States (Eurostars) Information from the Presidency on the state of play (AM)

The Eurostars Programme is the first European funding and support programme to be specifically dedicated to SMEs. Eurostars will stimulate them to lead international collaborative research and innovation projects by easing access to support and funding.

Eurostars projects are market driven European research and development projects. They can address any technological area, but must have a civilian purpose and be aimed at the development of a new product, process or service. (IP/07/1313)

The Presidency will update the Council on progress regarding the Commission's proposal. The initiative Eurostars is expected to be adopted by mid-2008

(h) Better Regulation Information from the Commission on the state of play (TVL)

Cutting red tape has reached cruising speed in the EU and is now delivering the first tangible benefits to citizens and enterprises. The second progress report on the strategy for simplifying the regulatory environment tabled by the European Commission in January lists a series of impressive results already delivered and a set of ambitious further measures that will be presented by the Commission in the course of 2008. Examples of simplification proposals already adopted include the "Single Payments Area" in the EU which could save the EU economy up to €28 billion per year and the new electronic Customs Code which will boost international trade and save businesses up to €2,5 billion/year. The Commission also reported today on the first year of operation of the Action Programme for reducing administrative burdens. €500 million is the estimated savings for companies by cutting red tape imposed on business resulting from the adoption of five fast track actions in 2007 with a further 800 million Euro savings expected to follow shortly. The Commission also announced its intention to come forward later this year with a further wave of fast track proposals in areas such as easing information requirements in the transport, agriculture and maritime sectors. The Commission also reported on how it is using impact assessments in the policy-making process. All new Commission proposals benefit from an impact assessment that provides a thorough analysis of all significant economic, social and environmental impacts. The independent "Impact Assessment Board", which the Commission put in place at the end of 2006, is monitoring and providing advice on impact assessments and this has led to significant improvements in the quality of Commission proposals. Vice President Verheugen will present the results so far to Ministers.

(i) Climate-Energy Legislative Package Information from the Presidency (BH)

A far-reaching package of proposals that will deliver the European Council's commitments to fight climate change and promote renewable energy. The proposals demonstrate that the targets agreed last year are technologically and economically possible and provide a unique business opportunity for thousands of European companies. These measures will dramatically increase the use of renewable energy in each country and set legally enforceable targets for governments to achieve them. All major CO2 emitters will be given an incentive to develop clean production technologies through a thorough reform of the Emissions Trading System (ETS) that will impose an EU-wide cap on emissions. The package seeks to deliver the European Union to reduce greenhouse gases by at least 20% and increases to 20% the share of renewable energies in the energy consumption by 2020, as agreed by EU leaders in March 2007. The emissions reduction will be increased to 30% by 2020 when a new global climate change agreement is reached.


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