EUROPE is publishing the draft conclusions of the European Council on Thursday 24 and Friday 25 October. The heads of state and government will focus on the means to stimulate the digital economy at European level. After the recent tragedy of Lampedusa, they will discuss European immigration policy. Also on the agenda are the social dimension of economic and monetary union (EMU), banking union and the preparations for the Eastern Partnership summit which will take place in Vilnius on Thursday 28 and Friday 29 November.
In accordance with Article 2(3)(a) of the Council's Rules of Procedure, delegations will find attached the draft conclusions prepared by the President of the European Council, in close cooperation with the member of the European Council representing the Member State holding the six-monthly Presidency of the Council and with the President of the Commission.
I. DIGITAL ECONOMY, INNOVATION AND SERVICES
A strong digital economy is vital for growth and European competitiveness in a globalised world. To this end, all efforts must be made for Europe's industry to regain momentum in digital products and services. There is an urgent need for an integrated single digital and telecoms market, benefitting companies and consumers. As part of its growth strategy Europe must boost the use of digital, data-driven innovation across all sectors of the economy.
Investing in the digital economy
To get the most out of the potential of the digital economy, to boost productivity and create new economic activity and skilled jobs, Europe needs investment and the right regulatory framework. New investments should therefore be promoted to accelerate the roll-out of infrastructure capable of achieving the broadband speed targets of the Digital Agenda for Europe, and to accelerate the deployment of new technologies, such as 4G. The proposal for a Regulation to reduce the cost of broadband roll-out should be rapidly adopted.
Cloud computing is an important enabler for productivity and better services. EU action should provide the right framework conditions for a single market for cloud computing, in particular by setting standards for secure, high-quality and reliable cloud services. The "European Cloud Partnership" and the establishment of a strong network of national digital coordinators could play a strategic role in Cloud, Big Data and Open Data development.
The on-going work to tackle tax avoidance, tax base erosion and profit shifting is important also for the digital economy. Member States should coordinate their position in order to achieve the best possible solution for the EU in the OECD/BEPS framework. In its ongoing VAT review, the Commission will also address issues which are specific to the digital economy, such as differentiated tax rates for digital and physical products. The European Council will revert to issues linked to taxation at its December 2013 meeting.
Promoting a consumer-friendly Digital Single Market
Overcoming fragmentation, promoting effective competition and attracting private investment through a better integrated EU-wide legal framework is crucial. In this context, the European Council welcomes the presentation by the Commission of the "Connected Continent" package and encourages the legislator to carry out an intensive examination with a view to its timely adoption. It underlines the importance of harmonizing the rules on spectrum allocation, while respecting spectrum as a source of national revenue.
The commitment to complete the Digital Single Market by 2015 has to be delivered: today's market fragmentation hampers the release of the digital economy's full potential. Completion of the Digital Single Market requires a comprehensive approach encompassing different instruments and initiatives which are often considered separately and therefore fail to bring full benefit to operators and end-users.
No efforts should be spared to accelerate work on the pending legislative proposals contributing to the completion of the Digital Single Market, in particular e-identification and trust services, e-invoicing and payment services to allow their adoption by the end of the legislature. Completing the Digital Single Market also implies addressing bottlenecks in accessing one's "digital life" from different platforms that persist due to lack of interoperability or lack of portability of content and data, hampering the usability and competition in digital services. Providing digital services and content across the single market requires the establishment of a modern copyright regime for the digital age. The Commission will therefore complete its review in spring 2014 and propose well targeted legislation where necessary.
It is important to foster trust of citizens and businesses in the digital economy, including through a strong data protection framework. The adoption next year of the EU general data protection regulation, the law enforcement directive and the cyber security directive is essential for the stability and growth of the Digital Single Market.
The modernization of public administrations should continue, including through the fast implementation of services such as e-government, e-health, e-invoicing and e-procurement. This will lead to more and better digital services for citizens across Europe and to cost savings in the public sector. The re-use of public sector information shall be actively promoted, to avoid citizens having to submit data more than once to the public sector.
Improving skills
Users must have the necessary IT skills. Many European citizens and enterprises currently do not use IT sufficiently. This results in a growing difficulty in filling digital jobs. In 2011, the European Union was faced with 300 000 unfilled vacancies in the ICT-sector; unless checked this could increase to up to 900 000 unfilled vacancies by 2015. This skills mismatch is detrimental to our economic and social policy.
Concrete steps should be taken in order to redress this situation:
part of the European Structural and Investment Funds (2014-2020) should be used for ICT education, support to retraining, and vocational training in ICT. In this context, the important role of actions in the field of combatting youth unemployment and the setting up of the Youth Employment Initiative must be underlined;
a higher degree of integration of digital skills in education, from the earliest stages of school to higher education, professional training and lifelong learning should be ensured;
the Grand Coalition for Digital Jobs should be strengthened to address skill mismatches by supporting targeted labour mobility schemes and the use of the newly developed classification of European Skills/Competences, Qualifications and Occupations (ESCO);
the Commission will further intensify work on the basis of the EU Skills Panorama for digital jobs in order to accelerate progress on pan-European competences frameworks for e-skills.
In all three areas - investments, digital single market and using the opportunities they provide - a strong commitment is vital for reaching the objective of enhancing growth, competitiveness and jobs from the digital economy.
Innovation
In February 2011, the European Council called for a strategic and integrated approach to boost innovation and take full advantage of Europe's intellectual capital. It set out concrete steps to achieve this. Two years on, an important number of them are on track. Joint programming in innovation is developing. Annual monitoring of progress on innovation is taking place in the framework of the EUROPE 2020 strategy. The establishment of a Research and Innovation Observatory by the Commission is under way. A number of programmes providing funding to innovation are in the course of finalisation. As requested, the Commission recently proposed a single Indicator of Innovation Output which should allow for better monitoring.
The Union's intellectual and scientific potential does not always translate into new products and services that can be sold on markets. Reasons for this commercialisation gap range from difficulties in accessing finance over excessive red tape to inadequate intellectual property rights regimes. Europe needs a better coordinated use of tools such as grants, pre-commercial public procurement and venture capital, and an integrated approach from research and innovation to marketing. The 2010 Innovation Union flagship initiative provides a number of valuable instruments which, combined with financing programmes, such as Competitiveness of Enterprises and SMEs (COSME) and Horizon 2020, including the Risk-Sharing Finance Facility, can jointly support the area of innovation and its impact on the market. The proposals for Joint Technology Initiatives in pharmaceuticals, new energy technologies, aeronautics, the bio-based economy and electronics, which should secure investments of some EUR 22 billion, should be adopted as soon as possible. Efforts should also continue at national level.
The European Research Area requires accelerating structural reforms of national systems and strengthening the monitoring of progress based on robust data provided by Member States in order to boost the EU's potential in research and development. The European Research Area progress report submitted by the Commission identifies some areas lagging behind on the way to a full European Research Area by the end of 2014. In particular, efforts should be made to improve the mobility and career prospects of researchers, including through adequate pensions solutions, transnational access to research infrastructures and open access to publicly funded research results.
Investment in innovation fuels productivity and growth. Member States that have continued to invest in research and innovation have fared better in the current crisis than those that have not. The European Council therefore invites the Commission and the Member States to continue their efforts in the area of innovation and research. It will take stock of progress in the framework of its discussion on industrial competitiveness in February 2014.
Services
Services are a fundamental part of the Single Market. To reap the full economic gains, it is urgent that Member States improve implementation of the Services Directive and increase the level of ambition in the opening up of services markets. All opportunities should be seized in this respect and unjustified barriers should be removed.
The European Council welcomes the peer review of the Services Directive presented by the Commission. It agrees that all Member States should ensure systematic, thorough and robust proportionality assessments of their regulatory requirements. The European Council invites the Commission to rapidly publish additional guidance on the concept of proportionality and invites Member States to take full account of best practices.
The European Council stresses the importance of the mutual evaluation of regulated professions launched by the Commission and calls for swift progress. This exercise should identify remaining barriers in access to professions in the Member States, assess the cumulative effect of all restrictions imposed on the same profession and suggest appropriate action.
II. ECONOMIC AND SOCIAL POLICY
Combating youth unemployment
The fight against youth unemployment remains a key objective of the EU strategy to foster growth, competitiveness and jobs. The European Council took stock of preparations for the launch of the Youth Employment Initiative. It recalls the need for this Initiative to be fully operational by January 2014, which will allow the first disbursements to beneficiaries to be made. It calls on the Member States to mobilise all efforts necessary to this end.
In this regard, the European Council calls for a rapid implementation by the Member States of the Youth Guarantee and the Council declaration on the European Alliance for Apprenticeships. It recalls that Member States benefitting from the Youth Employment Initiative need to adopt a Youth Guarantee implementation plan before the end of 2013 in order to benefit rapidly from the initiative.
Financing of the economy
All efforts should continue to restore normal lending to the economy and facilitate financing of investment. Better access of SMEs to finance is crucial for recovery and job creation. The European Council takes note of the reports by the Commission and the EIB on the implementation of measures aimed at financing the economy.
[p.m. depends on the outcome of the negotiations on the cohesion legislative package]
The role of the Union's budget in providing opportunities to SMEs is crucial. In this context, the European Council welcomes the agreement on COSME and Horizon 2020 programmes and recalls that their implementation is a matter of priority. It also encourages the legislator to work swiftly on the proposed legislation on long-term investment access with a view to its adoption before the end of the legislature.
Regulatory fitness
Regulation at Union level is necessary in order to ensure attainment of the EU policy goals, including the proper functioning of the Single Market. This should be achieved with a maximum of transparency and simplicity and a minimum of costs.
The European Council welcomes the recent Commission Communication on regulatory fitness (REFIT) which acknowledges work already undertaken in recent years to alleviate the burden of legislation in particular for small and medium sized enterprises and proposes ambitious further steps to make the EU regulatory framework lighter.
The European Council urges the Commission and the legislator to rapidly implement the REFIT programme, including through simplification and consolidation of existing EU law, by withdrawing proposals that are no longer needed and by repealing legislation that is out of date.
To this end, the European Council underlines the need to annually monitor progress through a comprehensive scoreboard to track progress at the European and national level and facilitate dialogue on regulatory fitness. It welcomes steps taken by the Member States and the EU aimed at a better identification of excessively burdensome regulation. Substantial efforts are required in this respect, both at EU and national levels.
III. ECONOMIC AND MONETARY UNION
In December 2012 the European Council agreed on a roadmap for the completion of the Economic and Monetary Union (EMU), identifying four key building blocks. The European Council has focused its discussion on banking and economic union but will revert to all four building blocks in December 2013.
Strengthened economic policy coordination
In recent years, significant improvements to the economic governance have been achieved. The European Semester brings the elements together in an integrated process leading to the formulation of policy recommendations.
In order to strengthen economic policy coordination, the effectiveness of the European Semester could be reinforced by further improving the ownership and the implementation of the country specific recommendations. To this effect, the European Council will establish a shared diagnosis of the economic situation in the Member States and in the Euro area as such. In December it will hold an in-depth discussion on the basis of the Commission's Annual Growth Survey and the Alert Mechanism report with the aim to agree on the main policy areas for reform and the relevant indicators that should drive the coordination exercise throughout the Semester.
Social dimension of the EMU
The European Council welcomes the European Commission's Communication on the social dimension of the EMU and restates the importance of better monitoring social developments within the European Semester. The introduction of a new social scoreboard in the Joint Employment Report and the development of social indicators under the MIP along the lines proposed by the Commission should be pursued, following appropriate work in the relevant Committees, with the objective of using these new instruments as early as the 2014 European Semester.
The European Council also marks its determination to enhance coordination of economic, employment and social policies in the EMU and calls for further work to strengthen cooperation between various Council formations in order to ensure consistency of economic, employment and social policies in line with our common objectives.
Finally, the European Council underscores the importance of enhancing social dialogue both at Member States' and European level, in particular in the context of the European Semester with the objective of improving its quality and enhancing the ownership of its conclusions and recommendations across the Union.
Banking Union
The European Council has been actively steering the process of establishing the Banking Union. It welcomes the final adoption of the Single Supervisory Mechanism and the European Banking Authority (EBA) Amending Regulations by the Council. This represents a decisive step towards the Banking Union. The European Council reiterates the principle of non-discrimination of Member States regarding banking supervision and resolution as stated by the European Council in October 2012 and reconfirms the agreed new voting arrangements in the EBA regulation for these matters, which is reflecting an appropriate balance between the participating and non-participating Member States. The European Council also reconfirms the agreement that the review on the operation of the voting arrangements will take place from the date on which the number of non-participating Member States reaches four.
The European Central Bank plans to launch a balance sheet assessment comprising an asset quality review to be followed by a stress test conducted by the European Banking Authority. This exercise is critical both in the short term to improve transparency, restore confidence and where necessary repair banks balance sheets and in the medium term to ensure a smooth transition towards the Banking Union.
In this context, the European Council recalls the urgency, for the Member States taking part in the Single Supervisory Mechanism, of establishing a comprehensive European approach notably comprising national backstops in preparation of the balance sheet assessment. The European Council tasks the Council to develop as a matter of urgency such a comprehensive and coordinated approach to be communicated before the end of the year in order to ensure that the balance sheet assessment and the bank stress tests can be conducted in a timely manner.
Completing the Banking Union is urgent and requires not only a Single Supervisory Mechanism but also a Single Resolution Mechanism and harmonisation of deposit guarantee schemes. The European Council therefore calls on the legislators to adopt the Bank Recovery and Resolution and the Deposit Guarantee Directives, and calls on the Eurogroup to agree on the guidelines for ESM direct recapitalisation by the end of the year. It recalls also the commitment to reach a general approach by the Council on the Commission's proposal for a Single Resolution Mechanism by the end of the year, in order to allow for its adoption before the end of the current legislature.
IV. OTHER ITEMS
The European Council has taken note of the state of play on preparations for the Eastern Partnership Summit (Vilnius, 28-29 November 2013).
The European Council expresses its deep sadness about the recent tragic accidents in the Mediterranean in which hundreds of people lost their lives at sea. It agrees that more should be done to avoid this from happening again. It welcomes the agreement of the Council on a Task Force with the European Commission to identify, in the short term, concrete actions to ensure more efficient use of existing policies and tools, in particular as regards cooperation with countries of origin and transit, FRONTEX activities and the fight against trafficking and smuggling. The European Council invites the Council to follow up on the outcome of the work in December. The European Council will revert to asylum and migration in June 2014, when strategic guidelines for further legislative and operational planning in the area of freedom, security and justice will be defined.
(poss.) In the light of events the European Council may be invited to adopt conclusions on certain foreign policy issues.