Select Committee on Foreign Affairs Minutes of Evidence

Memorandum from the Secretary of State, Foreign and Commonwealth Office



  1.  The Barcelona European Council is the third in a series of Spring European Councils devoted primarily to the economic reform process. Subjects for discussion are likely to include Energy Liberalisation; Networks; Education; Labour Markets; Financial Services; Single Market Scoreboard; Sustainable Development; Galileo; and Council Reform.


  2.  The UK supports full energy market opening. We hope that the Barcelona meeting will agree on target dates for full liberalisation for non-domestic consumers, possibly by 2003. And we will argue for a commitment to full domestic liberalisation. We would also like Barcelona to set out the key principles underpinning effective market opening, such as legal separation of production and distribution, effective regulation, equal access to the infrastructure network, sufficient interconnection, and clarity of rules.


  3.  The Presidency is expected to cover five main issues under this heading:

    (a)  Transport and energy TENs (Trans European Networks);

    (b)  Single Sky;

    (c)  The second rail package;

    (d)  Phase two of the eEurope Strategy;

    (e)  Energy interconnection.

  4.  On TENs, we want conclusions that highlight the importance of increasing private sector funding for projects, but which do not put pressure on agreed budget lines.

  5.  We would like Barcelona to call for agreement on the Single Sky (single EU air traffic management system) framework regulation by the end of the year. This would enable the creation of the Single Sky by 2005.

  6.  We broadly support the Commission proposals for a second rail package on further liberalisation and integration of the EU's railways. This has the potential to contribute to the EU's environmental objectives, as well as encouraging better interconnection across the EU rail network. It would complete liberalisation of the EU market for rail freight, providing opportunities for the UK industry.

  7.  The current eEurope strategy, agreed at Lisbon and part of the drive to deliver the ``information society'', has helped stimulate levels of access to the internet and reduce the cost of getting on line. But it comes to an end this year. We and most other Member States want Barcelona to agree a new, follow-up strategy, focussed on broadband technologies (fast internet access, which is ``always on'' and allows access to interactive services). So, with support from most Member States and the Commission, we will push for conclusions that set a target of widespread availability of broadband technologies by 2005. This is consistent with the UK's own target for delivering an extensive and competitive broadband market. We also want language that emphasises the important role of competitive markets in delivering broadband.

  8.  The Presidency is expected to push for language on better interconnectivity of energy networks. We support this in principle, as better interconnection between different countries has an important role to play in creating a genuinely liberalised internal energy market, and for security of supply. But any objectives or targets must reflect the needs of the market.


  9.  Education and training are central to the economic reform agenda, which stresses the need for a skilled, flexible and employable workforce able to respond to the rapidly changing demands of the modern labour market. Barcelona will consider three documents designed to achieve this goal:

    (a)  a work programme for the Education Council to 2010. This concentrates on the exchange of good practice between Member States in the education field and is based upon the education objectives presented to last year's spring Council in Stockholm;

    (b)  a Commission framework strategy for promoting lifelong learning, ``Making Lifelong Learning a Reality'';

    (c)  a Commission Action Plan on Skills and Mobility in response to the recommendations from the Skills and Mobility Task Force.

  10.  We want Barcelona to keep the spotlight on employability and ensure that further work on this helps meet the Lisbon jobs target. In particular, we want to stress the need for individuals to acquire basic skills, and for action to address the challenges of insufficient occupational mobility; low level of geographical mobility; and poor access to information on mobility.

  11.  The UK has been the initiator of two specific ideas on which we hope Barcelona will make progress: a schools ``internet twinning'' initiative, first discussed by the Prime Minister and Aznar during their meeting last Autumn. The main aim of the proposal is that the EU will support any secondary school in the EU that wants to set up a link with a partner school in another Member State. Barcelona is expected to ask the Commission to explore the options for taking this forward. Barcelona is also likely to endorse a UK idea—which the Spanish support—for using small groups of Member States to exchange good practice and advance work quickly and informally on priority areas, before reporting back to the full Education Council and its working groups.


  12.  We would like Barcelona to send a strong signal about the role of labour market reform in delivering the EU's employment objectives. We want Barcelona to ensure the review of the European Employment Strategy (EES) reflects this. In particular, we would like conclusions on the need to make work pay (making sure people are better off in work than out); the importance of lifelong learning and of a flexible and mobile workforce; with a focus on getting the unemployed and inactive, particularly women and older workers, back into the labour market. We welcome the Action Plan on Skills and Mobility, to be endorsed at Barcelona, as a positive contribution towards increasing labour market mobility. We want future emphasis to be on capturing the best approaches of Member States through a process of benchmarking and exchange of good practice.


  13.  We want Barcelona's conclusions to reaffirm the focus of the Financial Services Action Plan as: cutting the cost of capital for firms; and more choice and lower prices for consumers and investors. We also want Barcelona to prioritise the Commission's work on indicators of the success of financial market liberalisation; and to highlight progress on the Lamfalussy procedure (which aims to provide faster and more flexible financial services legislation), and push for its proper implementation.


  14.  We want Barcelona to underline the important of the better regulation agenda. The Commission's Action Plan, which it should deliver in time for the Seville European Council, should include measures on: assessing the impact of legislation; removing redundant red tape; and minimising the amount of legislation flowing from Brussels.

  15.  Better regulation is also important for improving the environment for SMEs. We want Barcelona to emphasise SME's central role in job creation, innovation and economic growth. Conclusions should underline the importance of the Small Firms Charter and other mechanisms for ensuring proper SME representation in the EU policy process.

  16.  The UK has been closely involved in recent work by the Economic Policy Committee, looking at how to improve the EU's record on R&D and innovation. We would like Barcelona to endorse the report's key conclusions, including in particular the need to create a European Research and Innovation area based on strong networks between Member States. We would also welcome conclusions on the need to increase private sector investment in R&D, as part of the drive to improve EU productivity.

  17.  Biotechnology is another important driver for innovation, and we would like Barcelona to endorse the Commission's recent Action Plan: ``Life sciences and biotechnology—A Strategy for Europe''.

  18.  We also want Barcelona to help advance UK ideas on state aids, as agreed by the Industry Council—in particular the need for less and better state aid. We would like conclusions reaffirming the need to reduce market-distorting subsidies, but recognising the legitimate role for targeted aid which helps to deliver restructuring regeneration or sustainable development.


  19.  The Stockholm European Council set Member States a target for implementation of single market Directives—98.5 per cent in time for Barcelona. The UK has met this target.


  20.  Barcelona is the first Spring Council mandated to consider the Sustainable Development Strategy agreed at Gothenburg, including the international aspects. The central message from Barcelona should be one of further progress on economic reform: but we also want Barcelona to demonstrate the EU's high level commitment to a successful outcome at the World Summit on Sustainable Development (WSSD). We want conclusions which reflect our objective for the Summit (to make globalisation work for sustainable development, especially for the poorest) and recognise the need to address inconsistencies between EU's internal and external policies (eg trade and agriculture) as part of the development of the EU's position for WSSD.


  21.  A decision on launching the development phase of the Galileo satellite navigation system is due at Transport Council on 26 March, but there could be a preliminary discussion at Barcelona. Since a decision was deferred by the Laeken European Council in December, further negotiations have started to address key concerns of the UK and other Member States about Galileo's costs, funding and aspects of security and project management. The Barcelona meeting may assess progress in those areas.


  22.  The successor to the current Vice-President, Christian Noyer of France, must be appointed by the end of May. Under the Treaty, Heads of State and Government must decide "by common accord", following a recommendation from ECOFIN. It is not clear how the Presidency intend to handle this issue. The UK, as an "out", does not formally participate in the selection process.


  23.  Javier Solana, on behalf of the Council Secretariat, will present proposals for practical steps to reform the Council, which do not require Treaty change (which would be a matter for the IGC). We shall highlight our own ideas, as set out in the Prime Minister's joint letter with Schröder, advocating that the European Council should:

    (a)  avoid overloaded agendas;

    (b)  focus its discussions on strategic and overarching issues;

    (c)  as far as possible limit consideration of individual dossiers;

    (d)  limit the length and number of the reports submitted for its consideration;

    (e)  work by unanimity only in areas where this is provided by the Treaty: decisions under QMV Treaty bases should be by QMV;

    (f)  respect confidentiality;

    (g)  minimise the time devoted to considering draft conclusions:

  and that the formations of the Council should:

    (a)  improve their co-ordination, perhaps through a reduction in the number of formations, and of high level committees;

    (b)  hold meeting in public when acting in its legislative role;

    (c)  consider ending the practice of table rounds.

  24.  We expect that the Presidency will propose to use the Solana presentation as the basis for a more extensive discussion, and if possible decisions, on Council reform at Seville.


  25.  Heads of State and Government will discuss key international issues.

Foreign and Commonwealth Office

March 2002

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