European and External Relations Committee, 18 Nov 2008

Meeting date: Tuesday, November 18, 2008

Official Report 98KB pdf

---

“Brussels Bulletin”

The next item on our agenda is our first special edition of the "Brussels Bulletin", which is on the theme of energy and climate change. I am pleased that we have with us Ian Duncan, who writes the "Brussels Bulletin" for us. I take the opportunity to thank him for all the work that he does on our behalf in preparing it.

It is envisaged that special editions of the bulletin that will allow a more in-depth look at some issues will be published quarterly. The committee considered that that would be a good way forward.

Do members have any comments on the special edition of the "Brussels Bulletin"?

I draw members' attention to the section on backing research on page 4, which states:

"The European Commission will work to stimulate the construction and operation by 2015 of up to 12 large-scale fossil fuel plants to demonstrate CO2 capture and storage technology, and will provide a clear indication of when coal- and gas-fired plants will need to install the technology."

That technology could be extremely important for Scotland, so we should write to the Government and ask where it is on the matter. Longannet is a possible candidate for one of the demonstration projects. We need clarification of what will be funded by or through Europe and whether separate funding for demonstration projects is still on the table from the Westminster Government.

We should keep an eye on the area because it is potentially extremely important for Scotland, in relation not just to coal but to oil and gas.

That is correct. Another committee is visiting Longannet today, is it not? Longannet is important.

I am happy for the clerks to prepare a letter such as Alex Neil suggests. We have a challenge ahead of us but, as the bulletin states, challenges are also opportunities. Some of the challenges that we face give rise to opportunities to invest in jobs in renewables and so on. Scotland is well placed to do that.

Do members have any other points?

I read with interest point 1 on page 3, but I am not sure what it means in effect. It states:

"Creating an efficient and competitive EU energy market: a more efficient and competitive energy market will result in more reliable supply at a lower cost to consumers."

Apparently, we have a competitive energy market in the United Kingdom, but I am not sure that consumers would agree that it has resulted in lower costs to them. Can we find out more about that?

That comes from the energy commissioner's paper, but we can ask Ian Duncan to look into it further.

Halfway down on the right, the page—page 3—that Jamie Hepburn talked about mentions the target of reducing emissions by 30 per cent by 2030 and by 60 to 80 per cent by 2050. It would be interesting to know whether Europe has set annual targets to ensure that it is on track to reach those targets as such targets have been the subject of controversy in this Parliament.

We can certainly seek further information on that. The clerk's paper recommends forwarding the special "Brussels Bulletin" to the relevant subject committees. If those committees wish to raise points with us, I will be happy for us to take them up. As well as agreeing to that recommendation, it is important to note the timetable at the end of the document, which helpfully outlines key developments in the EU's energy position.

As members have no other comments, do we agree to that recommendation and to take up the points that members have raised, which will come back to the committee?

Members indicated agreement.

I thank Ian Duncan for the effort that he put into preparing the document.

Agenda item 4 is the regular "Brussels Bulletin", which contains quite a bit about fishing, so I am sure that Ted Brocklebank has a lot to say. I open the meeting to members' comments.

I noted the various proposals for reducing catching capacity and that

"These issues will be resolved at the Fisheries Council, 17-19 December".

At our previous meeting, we considered appointing reporters from the committee to examine European policies, one of which was the fisheries policy. I do not know whether we will return to that in the near future, but I am interested in taking such an opportunity, should it arise.

Absolutely. We will note that carefully and I will meet the clerks to discuss it. If the committee agrees, we will draw on Ted Brocklebank's expertise.

We might have to work in conjunction with the Rural Affairs and Environment Committee, but I do not see why we should not be part of such an undertaking—

Especially as Ted Brocklebank takes a completely different view from David Cameron on the issue. [Laughter.]

He does not have a view. Was that on the record?

Would you like it to be?

Sweden will take over the European Union presidency in July, after the Czech Republic. We have had one meeting with the Czechs and we plan to have another meeting with them in Prague. We have found such meetings to be helpful in deciding on the key issues for Scotland to address. I therefore suggest that we start to think about when we will approach the Swedes and look at their agenda for the presidency. I note in passing that the Czech Republic and Sweden are roughly the same size as Scotland and that they are successive presidents of the European Union, which shows that Scotland would be capable of doing the same thing one day.

I think we will ignore that last point, but it is on the record. I point out that, at the end of the meeting, the clerks want to share with us an update on the visit to the Czech Republic.

I have a small point to make. At the last meeting I attended, which I admit was before the summer recess, we agreed to consider earlier engagement with the incoming presidency. We did not necessarily expect that to influence its work programme, but that would give us an early start on monitoring and thoroughly examining the work.

Absolutely.

It would be good to do such work sooner rather than later.

We all agree on that. That was the initial approach that we took to the visit to Prague—unfortunately, however, other things have got in the way a bit. Patricia Ferguson is right that early planning for the Swedish presidency would be no bad thing.

Members will recall that I referred at our previous meeting to the financial crisis and the reference in the previous "Brussels Bulletin" to the meeting of European Union leaders on 7 November. I asked for an update on that. I note that we have that update in the current "Brussels Bulletin", which is helpful.

The bulletin reports that President Sarkozy has said:

"We want to change the rules of the game in the financial world."

However, the bulletin also reports that one of the principles that European leaders agreed at the 7 November meeting is that the International Monetary Fund should have

"a more central role in financial architecture."

I hesitate to comment on the contradiction between those two statements.

It would be useful to have more information on a few matters in the current bulletin. For example, it states:

"President Sarkozy also suggested closing tax havens … and creating European sovereign wealth funds"

and so on. Could we find out what the other member states' positions are in relation to that proposal? The bulletin also states:

"The EU will be represented in its own right at the Washington summit"

alongside some of the member states, which it was. What were the criteria for being in attendance?

Okay. We can look into those points. Just to update Jamie Hepburn, we wrote to the Scottish Government, on the basis of our discussion at the previous committee meeting, requesting further information on what discussions the Government is having with the United Kingdom Government on the financial crisis. We sent the letter only this week, so we do not yet have a reply. It will come to the committee when we have it.

I read an interesting article in the Social Europe Journal that refers to a number of good recommendations that are coming through the European Union on actions to address the financial crisis. For example, it was proposed to set up a

"European Credit Rating Agency which would offer genuinely impartial advice on credit worthiness, a system of registration and authorisation for managers of hedge and private equity funds and a common European Financial Supervisory Body."

A lot of work and discussion is taking place at European level in that regard, and I agree that the committee would want to be kept up to date with developments. Dr Ian Duncan, who produces the "Brussels Bulletin", is present this morning. I am sure that he will take on board the requests that have been made. When we get from the Government a response to the letter that we sent, we can perhaps bring to the committee a paper that will update us on what is happening so that we can discuss it.

I know that it is early in the game, convener—given what you have just said—but you know that, given how things tend to work in Europe, it is important to get in first. If a new agency is to be established, and given the pre-eminence of the Edinburgh financial centre in the EU, should not we be thinking, even at this early stage, about positioning ourselves to try and make a bid for it?

I think that the deputy convener and I would probably be able to agree on a place in Scotland to put forward for that, which might be in Ayrshire. I acknowledge what Keith Brown said, but discussions on the issue are at an early stage. I know, for example, that my political party has made a sub-proposal on the financial crisis to Europe, with which one or two parties do not agree. Discussions on proposals to address the financial crisis are at an early stage, but we will certainly keep a watching brief on that issue.

Page 6 of the current "Brussels Bulletin" refers to a Danish referendum on joining the euro zone. I was surprised to see that because the Danes voted in 2000 against joining. It would be interesting to see how we would deal with a referendum. Is it the case that, if Parliaments fail to get the referendum result they want, they just continue until people say yes? I wonder whether Alex Neil wants to comment on that.

I would not dare to comment on the internal affairs of how the Danish run their referenda. However, I, too, noted that point and I thought it would be interesting to see what happens, although it is a little bit away from us.

The arc of democracy.

We have a new arc.

Europe is rightly taking a keen interest in the current financial crisis and is giving a lead to the countries that comprise the European Union. Important talks have also been going on about trade between the developing world and Europe. Those talks are at a critical stage and it is hoped that things will be sorted out by February. We do not hear much about that or about the other discussions on trade that are going on, which to an extent I understand. On the other hand, during the crisis the developing countries are likely to take an even bigger hit than the developed countries. Is there some way in which we can highlight that issue and get some more information about those discussions? Very little has been said about them.

One proposal is that we should try to close the tax-avoidance loophole whereby EU investors can register offshore and avoid paying any taxes. The article to which I referred earlier, by the president of the European socialist group, Poul Nyrup Rasmussen, says:

"It has been calculated that the tax revenues lost through offshore tax avoidance could pay for the Millennium Development Goals to be implemented."

I hope that that comes out in the discussions. When everybody is taking a hit, it is ridiculous that we should still have offshoring loopholes in the tax system. Those investors could be contributing, and the link has been made between that and the millennium development goals. We will ask Ian Duncan to keep us abreast of developments.

I wonder whether it would be appropriate, seeing as Ian Duncan is here, to ask him to stargaze a little and tell us where he thinks the Lisbon treaty is going. I have read little about it in the newspapers recently. It is interesting to see that the Czech Republic is unlikely to ratify the treaty before it assumes the presidency. I also see that the Czech President is having talks with the Irish "no to Lisbon" campaign. I wonder whether anybody can give us an update on where they think the Lisbon treaty is going.

We could do one of two things: we could produce a paper for a later meeting of the committee, if members were interested in that; or, as Ian Duncan will be here when we go into private session, I am sure he will tell us what he knows, if members want a verbal update.

If the Irish re-run the referendum, we should all go and campaign for a no vote.

I will resist the temptation to engage with that, although it is difficult. If I were on the sidelines, I would not be able to resist.

I have a question about upcoming events and meetings. When Alex Neil and I were in Brussels, we met many people. European defence procurement was obviously of great interest to us. Tomorrow, there will be a plenary vote on public procurement in defence then, later this week, there will be a seminar on it in Maastricht. It may be interesting if, at the next meeting, we can get a bit of feedback about what has gone on this week.

I am sure we will be able to have that.

After we got back, Jim Hume and I recommended that the committee write to the Government, asking what it is doing. Did that happen, and did we get a reply?

I do not think that we have had a reply.

Why do we not write? If the defence procurement directive is introduced next year—the Czechs intend as part of their presidency to ensure that that happens—it will fundamentally change the prospects for key industries such as shipbuilding, aerospace and related industries in Scotland. It will provide both opportunities and disadvantages. The opportunity will be that the whole defence procurement market will be open to Scottish companies; the downside will be that anything we do in the UK will be open to wider competition. If we play our cards right, Scotland might be a net beneficiary of the opening up of the defence procurement market. I would have thought that the Government, along with the industries that are involved, should be doing preparatory work on the implications of the defence procurement directive. We should be preparing for it in order to take advantage of it.

Alex Neil is right that it is an opportunity. At one point, the Czech Republic was the eighth-largest manufacturer in the world—I do not know whether that is still the case—so there are large parts of eastern Europe that may have cheaper production costs than us. It is a threat and, I hope, an opportunity.

I recall that matter being raised previously, but I am not sure that we acted on it, so we shall do that.

We have had a good, wide-ranging discussion on the "Brussels Bulletin", so we will note its contents.