Editorial. 25 June 2012 ISSUE #13. Content. di.dk/europefastforward EU Business-App Download in App Stores

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1 25 June 2012 ISSUE #13 di.dk/europefastforward EU Business-App Download in App Stores Editorial With one week remaining, the Danish presidency has entered a crucial final phase. The last European Council under the Danish EU-Presidency will take place before the week is over. In this issue, DI presents a comprehensive interview with the Danish Prime Minister, Helle Thorning-Schmidt, focusing on her expectations for the crucial EU summit. European business also has clear expectations for the upcoming summit. Recently, DI, DA and BUSINESSEUROPE carried out a successful Council of Presidents, gathering Europe s largest industrial and employers organizations in Copenhagen. The meeting between the presidents of 41 organizations, representing more than 20 million European companies, culminated on the 15 June with the Copenhagen Declaration, sending a clear message to the forthcoming European Council on how to create growth and jobs in the EU. The entire declaration which gives answers to Europe s main challenges, the continuing sovereign debt crisis and the lack of European competiveness, is printed in this newsletter. And the messages are clear. Structural reforms are urgently needed to get Europe beyond the crisis as sound public finances are the basis for long-term growth. In the light of the worsening economic outlook, business community calls for increased political determination to bring Europe out of the crisis through policies which recognize the central role of enterprises in driving growth and jobs. In addition, politicians must know that no growth strategy can work if it does not reinforce trust in the Euro and European unity. The Danish presidency has been a pragmatic one in a historic time. Many different pieces of legislation have been on the table, some has been approved but of course the economic crisis has dominated the agenda. This is also reflected in this week s summit. We rely on Heads of State to address the concurrent need for sound economic finances and growth in their Compact for Growth & Jobs. The final edition of this newsletter will be distributed next week. It will focus on assessing the final summit and understanding the priorities of the incoming Cypriot presidency. Content 02 Q&A: Danish Prime Minister, Helle Thorning-Schmidt 05 The Copenhagen Declaration 07 Future Council meetings 09 Previous Council meetings 12 Commission Proposals 12 Parliamentary actions 12 Save the date DI, Brussels office Avenue de Cortenbergh, Bruxelles Director of European Affairs Ms Sinne Backs Conan Tel.: postbruxafd@di.dk EUROPE FAST FORWARD is published by The Confederation of Danish Industry every fortnight during the Danish Presidency in the EU Council. Please visit di.dk/europefastforward for further information, news, analysis, publications and much more. Get the latest Council conclusions with our free EU Business-App to be downloaded in App Stores.

2 25 June 2012 Page 2 Q & A: Helle Thorning-Schmidt, Danish Prime Minister Only few days remain of the Danish presidency. Much has been achieved and some is still to be decided at the always crucial final summit. We have talked to Danish Prime Minister, Helle Thorning-Schmidt about the results achieved during the Danish Presidency and her expectations for this week s European Council. In the beginning of your presidency, you outlined a comprehensive set of priorities for this presidential period. What are the most important results ensured by the Danish presidency? Our Presidency has been about restoring growth and jobs in the EU. Of course that is a tall order considering the severe crisis that Europe has been in and still is. The EU has taken important steps forward over the past months but we are by no means out of the woods yet. For me, it has been really important to show that the EU is still in full working-mode and capable of taking the necessary decisions. We need to show that to our citizens and to the outside world. I think we have reached a number of important results over the past months, not least with regard to the Single Market. Take for example the regulation to improve the European system of standardization, which will ease the development of EU-wide standards. And the agreement on the roaming regulation, which will lower the price of cell phone usage across European borders. Some may say these are small steps in the bigger picture. I disagree. They make a real difference to citizens and businesses. I would also highlight the agreement we landed in the Council on the socalled two-pack, which aims to strengthen surveillance of countries in financial difficulties, as well as the regulation for trading in financial derivatives and the capital requirement directive. These are all important steps, which, together, will help prevent future crises from happening. What are your expectations to the upcoming European Council that will also mark the end of your Presidency? We began the year with a strong focus in the EU on consolidation and restoring confidence in our economies. That is why we adopted the Fiscal

3 25 June 2012 Page 3 Compact. Now we are looking ahead, trying to restore growth and create jobs. That is also what we will be working on at this week s Summit. We will have a heavy agenda for the meeting. First of all, we will work to reach agreement on a compact for growth and jobs with initiatives both on national and EU level which will help get Europe back on a track. For instance, I expect the compact to include a capital increase of the European Investment Bank which will allow it to increase support to growth initiatives. We will also have an important discussion on how the EU budget can best support our efforts to create growth and how we can ensure the best possible effect from each euro spent. These topics will build on a lot of the work that we have been doing throughout our Presidency. We will also have before us a report from the president of the European Council on the long term perspectives for the economic and monetary cooperation in the EU, which I expect a very open discussion about. I think the basic message that EU leaders should send over the coming days is this: To enhance growth and jobs in Europe, we need to use all the instruments at our disposal. There is no simple solution for Europe right now. As Presidency, we have been doing our utmost to underpin this wherever we can. For example, we have agreed with the European Parliament to launch a pilot phase on European project bonds to ensure access to capital for profitable projects that are hampered by the current economic situation. Another very important area is the Single Market. This is really the main engine for growth in Europe. It has already been a great success. But we need to continue to fine tune the Single Market so that we can realize its true potential. We also need action in each of our countries. That is why we have aimed for an ambitious implementation of the European Semester. We won t get Europe back on a track for growth without each Member State doing its home work to ensure a more competitive and prosperous European economy. It is no secret that your ambition of creating a green Europe has been one of the most difficult areas to accomplish success in. Nearing the end of the Presidency, how do you see the green agenda? The truth is that there is no long-term viable alternative to a green transformation of the European economies. Sooner or later, we have to introduce resource-efficient production methods and develop sustainable consumption patterns that will allow us to grow without increasing our use of resources and at the same time lower our carbon footprint. This has also been our message at the Rio+20 Conference. The sooner the EU acts, the stronger our competitive advantage will be compared to other regions of the world. We have reached some important results during the Danish Presidency. For instance, we have landed deals on an ambitious Environmental Action Programme and an agreement that will dramatically slash air pollution from ships. And I am particularly pleased that we managed to reach an agreement with the European Parliament on legislation that will significantly improve the EU s energy efficiency. The directive will create thousands of jobs as well as strengthen the EU s competitiveness in the green-tech sector. Creating a green economy goes hand in hand with moving beyond the economic crisis. Denmark has shown that growth and sustainable development are not mutually exclusive but can actually reinforce one another.

4 25 June 2012 Page 4 The Danish presidency wanted to create a bridge over troubled waters and restore confidence, security and optimism in Europe. Has this goal been achieved? There is no doubt that the EU is faced with very serious challenges. After decades of progress and closer cooperation in the EU, Europe has found itself faced with several extremely difficult and interlinked problems. And the crisis is not only of an economic nature. In many countries, citizens trust in the European project has declined considerably. The crisis has served as a heavy back-drop to the Danish EU presidency. Yet we have been working hard to show that the EU is still in full working mode. We need to continue to show that the EU is prepared to take decisions that will benefit citizens and businesses in our countries. I think that Denmark has made a significant contribution to this effort. Helle Thorning-Schmidt Danish Prime Minister

5 25 June 2012 Page 5 The Copenhagen Declaration The following message was sent to the Danish Prime Minister, Mrs Helle Thorning-Schmidt at the BUSINESSEUROPE Council of Presidents in Copenhagen on 15 June More Growth and Jobs in the European Union Enterprises of all sizes and all sectors are the main drivers for growth and jobs in Europe. Political determination and leadership is needed to reassure the financial markets that Europe is united and committed to safeguard the euro and recreate growth. There is no opposition between growth and budget consolidation. They are in fact closely interlinked as sound public finances are required for long-term sustainable growth. Consequently, the highest level of political commitment to structural reforms in all Member States and swift implementation of the country-specific recommendations of the European Commission are paramount to bring Europe out of the crisis. Safeguarding the Euro A stable Euro is key to the success of European businesses and the future prosperity in Europe. No growth strategy is therefore complete unless it reinforces trust in the Euro and includes concrete steps towards deeper political integration. Europe needs a well functioning banking sector. The fragile state of a part of the European banking sector poses an eminent threat to the European economy as a whole. Reliable banks underpin consumer confidence and consumption and provide companies with access to finance for investment in production. BUSINESSEUROPE supports the vision of greater integration of financial markets within Europe and calls on the EU leaders to swiftly and immediately take the necessary actions to safeguard the European banking sector. Action should be taken both by using the existing available tools and by considering other means which can effectively stabilize European banks and protect the entire Eurozone. In this respect, allowing the European Stability Mechanism (ESM) to lend directly to financial institutions is an option to be considered, conditionally upon the ESM having the necessary legal competence to impose strict conditions and the necessary means to do oversight. Greater fiscal integration in the Euro Area should also be a long-term aspiration. Conditional upon transfer of significant national budgetary authority to the European level, the proposal of Eurobonds could be considered in the long-term. Collectively guaranteeing public debt in the Euro Area must, however, not undermine financial market pressure for fiscal consolidation and structural reforms.

6 25 June 2012 Page 6 Concrete actions for growth and jobs Governments and EU institutions need to adopt policies that support private sector-led growth. European companies need an effective supply side policy supporting their development and enhancing their investments in future markets. BUSINESSEUROPE would like to stress the following key elements to restore growth in Europe: Consolidate public finances Getting public budgets under control is key to restore financial stability and growth in Europe. Balanced budgets are therefore not the alternative but a requirement for financial stability and hence long-term growth. Prioritization of public spending will help restore balanced public budgets. Public spending should be moved away from passive financial support, creating room for investments in research and education, infrastructure and other areas that create sustainable growth. BUSINESSEUROPE urges Member States to further accelerate the reform agenda and irrevocably commit to the country-specific recommendations of the European Commission arising from the European Semester. Carry out structural reforms Structural reforms will increase productivity, lower production costs and improve innovation performance, hence improve the European competitiveness. Strong reform efforts consequently have to be made across the board. These include overhaul of tax systems, health sector, pension system and wage setting mechanisms. Reform of labour market rigidities must continue. In order to increase employment, in particular for the young, we need a flexible European labour market where non-wage labour costs do not inhibit job creation and where education systems are reformed in order to provide the competences needed on the labour market. Improve the single market European companies are still faced with a multitude of de facto borders and administrative burdens. The Single Market must be expanded and integrated more to avoid this. A supportive business environment includes world class transport infrastructure and communications networks. Also, investment in European energy infrastructure is needed. A fully connected European energy infrastructure will help to ensure sufficient and affordable energy supply. Increase investment and ensure access to finance Companies experience difficulties in accessing finance. More effort to correct this is needed. All the more, it is important to stabilize the banking sector. Strengthening the European Investment Bank (EIB) by means of EU s structural funds should be explored further. A stronger EIB will have a positive effect on growth as EIB would be able to increase its loans to small and medium-sized enterprises, and make it more attractive for private investors to invest in economically viable large infrastructure projects through project bonds. Boost growth through trade Open markets are a key driver of investment and job creation, but EU companies still face many barriers in accessing foreign markets. The EU should use all its negotiating power to deliver new market access opportunities for EU companies, thus contributing to the strengthening of the EU manufacturing and service industry. Europe needs to build a strong presence in global markets by engaging in closer trade and investment relationships with strategic trade partners.

7 25 June 2012 Page 7 Future Council meetings European Council Brussels, 28 th 29 th of June 2012 DI Opinion: Political determination and leadership is needed to reassure the financial markets that Europe is united and committed to safeguard the euro and recreate growth. Agenda (highlights) Issues for business: The European Council on June is likely to mark the beginning of a new chapter in European integration. Herman Van Rompuy will present a roadmap for closer European cooperation, especially in the field of fiscal policy, with a view to complete the political dimension of the Euro. As stated in the Copenhagen Declaration, no growth strategy is complete unless it reinforces trust in the Euro and includes concrete steps towards deeper political integration. Greater fiscal integration in the Euro Area should however be a long-term aspiration. Conditional upon transfer of significant national budgetary authority to the European level, the proposal of Eurobonds could be considered in the long-term. Collectively guaranteeing public debt in the Euro Area must, however, not undermine financial market pressure for fiscal consolidation and structural reforms. The fragile state of the European bank sector poses an imminent threat to the European economy as a whole. Reliable banks underpin consumer confidence and consumption and provide companies with access to finance for investment in production. The European business community therefore calls for actions to be taken both by using the existing available tools and by considering other means which can effectively stabilize European banks and protect the entire Eurozone. In this respect allowing the European Stability Mechanism (ESM) to lend directly to financial institutions is an option to be considered, conditionally upon the ESM having the necessary legal competence to impose strict conditions and the necessary means to do oversight.

8 25 June 2012 Page 8 General Affairs Council Brussels, 26 th of June 2012 DI Opinion: EU s budget should be reformed with a view to modernise it and underpin the EU growth strategy, EU2020. Agenda (highlights) Issues for business: Multiannual Financial Framework (MFF) At the General Affairs Council, the Danish EU-Presidency is expected to present a complete toolbox on the MFF post 2013 with a view to prepare the discussion by the European Council on June. The toolbox is an overall framework which outlines the structure of the MFF. The toolbox which at present does not include a position on the overall size of the MFF, or the size of the individual budget headings, will constitute the basis for the final stage of the MFF negotiation. According to the timetable, the negotiations will be concluded before the end of DI calls for a radical overhaul of the spending priorities. EU s budget must reflect the challenges of the future, not those of the past. Europe needs a budget that supports growth. To this end, the budget must be aligned with the EU2020 strategy. Priority should be given to ensure adequate funds for research, development and innovation as well as infrastructure in the field of transport, energy, and ICT. Read the agenda here.

9 25 June 2012 Page 9 Previous Council meetings Economic and Financial Affairs Council Luxembourg, 22 nd of June 2012 DI Opinion: Accelerate the reform agenda and irrevocably commit to the country-specific recommendations of the European Commission. Agenda (highlights) Issues for business: Country-specific recommendations As part of the European Semester, the Council (ECOFIN) adopted country specific recommendations of the Commission which were presented on 30 May. The recommendations will also be discussed and endorsed by the European Council on June. Getting public budgets under control is key to restore financial stability and growth in Europe. Balanced budgets are therefore not the alternative, but a requirement for financial stability and hence long-term growth. Prioritization of public spending will help restore balanced public budgets. Public spending should be moved away from passive financial support, creating room for investments in research and education, infrastructure and other areas that create sustainable growth. Backed by the rest of the European business community, DI calls on Member States to further accelerate the reform agenda and irrevocably commit to the country-specific recommendations of the European Commission. Financial Transaction Tax (FTT) The EU finance ministers have also debated the proposal of a European financial transaction tax. In the light of views expressed, the Council concluded that support for an FTT was not unanimous. A significant amount of Member States, leaded by France and Germany, is now considering enhanced cooperation. DI finds, that increasing the tax burden of European companies, regardless of it being in the financial or industrial sector, will make it more expensive to do business in Europe. In a time where we all call for growth, this is not the right way to go. Read the Council conclusions here.

10 25 June 2012 Page 10 Transport, Telecommunication and Energy Council Luxembourg, 15 th of June 2012 DI Opinion: Predictability for long-term investments in energy efficiency measures has now been ensured. This can stimulate innovation, growth and job creation. Agenda (highlights) Issues for business: Energy Efficiency Directive The EU energy and climate ministers have reached an agreement on the Energy Efficiency Directive, which aims to make the EU member states use of energy more efficient. Once the directive has been adopted into national legislation, the overall impact will be a reduction in the EU s energy consumption of approximately 17 percent. The agreement is important to the Danish presidency as the directive has been a top priority throughout the presidential period. The directive will bring energy efficiency into focus again and strengthen the efforts of reducing energy consumption in the EU. This will benefit the individual consumer, the clean tech industry and the climate. But it also benefits companies selling energy efficiency technology and consultancy services. There are numerous European companies who can deliver the necessary solutions to solve the energy problems that many EU countries face. The Directive contains different elements. One is that all Member States need to make energy renovations of governmental buildings and develop national strategies for the existing building stock. Another is that national energy companies will be obligated to implement energy efficiency measures among their customers. Also, the use of combined heat and power and district energy is set to be further promoted with the directive. In its entirety, the directive will be a lever for the whole business community both the energy consuming companies as well as those who produce and deliver clean tech solutions. This has been a priority for DI throughout the course of negotiations. Now businesses have an agreement on a legal framework which can provide the predictability necessary for investments in energy efficiency measures. The implementation should strike a delicate balance, thus giving priority to measures that encourage investments in energy efficiency but at the same time does not impose unnecessary bureaucratic burdens on companies. Read the Council conclusions here.

11 25 June 2012 Page 11 Environment Council Luxembourg, 11 th of June 2012 DI Opinion: EU s economic and environmental goals should not work against each other. Strengthening investment and innovation capacity of industry can ensure that this will not happen. Agenda (highlights) Issues for business: Environment The final Environment Council defined the framework for the 7 th Environmental Action Program (EAP). The adopted conclusions give guidance to the Commission on the content of the new program. The ministers want a 7 th EAP to set out the key elements of the future environment policy. The framework should be linked to the 2020 Strategy, the Vision 2050 and the EU sustainable Development Strategy. The overall objective is to strengthen and ensure better implementation of the existing environment policy and legislation and a transition to a green economy. For some months, both the Council and the European Parliament have been calling for the Commission to produce a proposal for a 7 th EAP. The 6 th EAP will expire on 22 July The Commission has now confirmed its intention to present a new proposal but the new program is not expected before the end of DI believes that EU s economic and environmental goals should not work against each other. The objective must be to set up an efficient policy framework that aims at achieving both goals at the same time. This should first and foremost be carried out by strengthening investment and the innovation capacity of industry. Climate The climate ministers discussed the state of play on the Low Carbon Roadmap The Low Carbon Roadmap has twice been turned down in the Council by Poland due to disagreements on milestones for carbon emission reduction and no notable further developments were achieved at this meeting. DI would welcome conclusions on a regulatory framework beyond Predictability is important for business in order to make long-term strategic investments in low carbon technologies. An extensive and long transition phase must, however, go hand in hand with European competiveness. Finally, the climate ministers discussed climate financing between 2013 and 2020 ahead of the COP 18 in Doha and beyond. There was a clear agreement that climate financing is crucial to reach EU s overall CO2 reduction objectives. Read the Council conclusions here.

12 25 June 2012 Page 12 Forthcoming Commission Proposals DI has made a selection of European Commission Proposals to be presented during the coming weeks. Please note that the list is subject to changes. 27 June 2012 Amendments to regulation on CO targets for cars and vans (Hedegaard) 11 July 2012 Revision of directive on clinical trials in the pharmaceutical sector (Dalli) Parliamentary Actions Plenary Session Strasbourg, 2 nd 5 th of July 2012 Agenda (highlights): Review of Danish Presidency Conclusions of the European Council meeting Anti-Counterfeiting Trade Agreement (ACTA) Creation of unitary European patent Capital Requirements Directive (CRD IV) Programme of activities of the Cyprus Presidency EU-Russia agreements / commitments on trade Financial aid to the trans-european transport and energy networks Financing of the common agricultural policy Outcome of the Rio+20 summit Save the date CONFERENCE: STRIVING FOR GROWTH IN THE EU (27 th of June 2012, Copenhagen) The Confederation of Danish Industry, the Cypriot Embassy in Denmark and the European Commission organize this exclusive conference in Copenhagen on how to strive for growth in the EU. The conference marks the end of the Danish EU-Presidency and presents the priorities of the Cypriot EU- Presidency while a high-level panel debates how to bridge the gap between deeper integration in the Euro area while maintaining the integrity of the EU27 and its essential governing structures. Read more here.