JOINT COMMITTEE ON EUROPEAN AFFAIRS debate -
Tuesday, 14 Dec 2010

Single Market Act: Discussion

Chairman

I ask people to extinguish their mobile telephones as they interfere with the recording facilities. Apologies have been received from Mr. Brian Crowley, MEP.

Item No. 1 is the Single Market Act. From the Department of Enterprise, Trade and Innovation, I welcome Ms Clare Dunne, assistant secretary general, Mr. Thomas Murray, assistant principal officer, and other officials. The Commission adopted the Single Market Act on 27 October 2010. After its adoption we discussed it with Commissioner Barnier on 5 November. Commissioner Barnier was particularly anxious to ensure the invigorated single market would benefit the people of Europe and each member state to a far greater extent than had been possible in the past. The Act contains 50 proposals to make the Single Act work better. A well functioning Act is vital for recovery.

I remind members of the long-standing parliamentary practice or long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against any person outside the Houses or an official either by name or in such a way as to make him or her identifiable. By virtue of section 17(2)(l ) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or persons or entity by name or in such a way as to make him or her identifiable. That is not intended to restrict anybody’s deliberations. I invite Ms Clare Dunne to make her presentation, following which there will be a response from members, and she will have an opportunity to make the final reply.

Ms Clare Dunne

I thank the Chairman for his introduction. The Department welcomes the opportunity to address the committee on two important initiatives - the Single Market Act and the Commission Communication on an Integrated Industrial Policy for the Globalisation Era.

The Single Market Act was published by the Commission in October. It began with an initiative by President Barroso, who in 2009 requested Mr. Mario Monti, a former Commissioner, to review progress in the creation of the Single Market. Prior to that, the European Commission undertook a major review of the Single Market in 2007. Its conclusions were that the European Union must deliver more results for its citizens, consumers and small businesses; take better advantage of globalisation; open new frontiers of knowledge and innovation; and include a strong social and environmental dimension. Those objectives remain valid.

President Barroso's view was that the current economic difficulties had put the Single Market under strain and that there was a temptation to roll it back when times were hard. While there remain barriers, both real and perceived, to intra-Community trade, we do not have strong evidence to suggest that attempts are being made to roll back the Single Market. Nevertheless, we must remain vigilant in that regard.

The Monti report concluded that the Single Market faced three challenges: the erosion of political and social support, the uneven policy attention given to the development of its various components, and a sense of complacency that the Single Market had been completed. As a small, open economy, Ireland welcomes any initiative that makes it easier for us to trade externally. For that reason, we broadly welcome both the Monti report and the Single Market Act.

The Single Market Act has been issued for public consultation after which, during the course of 2011, the Council and the European Parliament will be asked to formally agree it. The Council is likely to be invited to identify priority measures and, as the Chairman pointed out, there are 50 measures. The Commission is anxious that a public debate takes place at national level as well as at EU level. During his recent visit to Ireland, Commissioner Barnier addressed this committee and explained how a better functioning internal market could help relaunch economic growth.

The Single Market project is based around four major freedoms set out in the treaties, that is, the free movement of persons, goods, services and capital. It also includes economic integration, the creation of the euro and the development of cohesion policy. I do not propose to deal with issues relating to the euro or cohesion policy.

In the briefing note for the committee we have outlined some statistics that illustrate some of the benefits of the Single Market for Ireland. The Single Market offers great benefit, in particular, for small companies. Most Irish and European companies are small or medium size enterprises. Large companies are usually better equipped to take advantage of the Single Market as it currently operates but if the Single Market is to provide more growth, employment, and deliver on its potential it must work for small companies as well as large. Likewise, the Single Market as it currently operates does not always work well for citizens and consumers. We have many examples of that in action.

The Act contains 50 proposals under three main headings: strong, sustainable and equitable growth for business; restoring confidence by putting citizens at the heart of the Single Market; and dialogue, partnership and evaluation - which are the keys to good governance of the Single Market. Almost 50% of the proposals fall under the first heading. They include the adoption of a proposal for an EU patent; proposals on copyright, counterfeiting and piracy; a proposal to continue developing the internal market in services; initiatives to develop e-commerce in the Single Market; reform of the standardisation framework; and many more. There is a clear connection between these internal market objectives and external policies such as trade policy to which I will return later in the context of my comments on industrial policy and competitiveness.

There are 19 proposals in the second category, including, significant proposals on trans-European transport networks, the energy market, the posting of workers and on industrial restructuring. The final seven proposals under the third heading, which are about the governance of the Single Market, cover technical areas, including measures that will ensure that any proposals adopted in relation to the Single Market are implemented correctly and in a timely fashion.

One of the most important lessons the EU has learned over the past 20 years or so is that a legislative basis alone is not sufficient. Given the multiplicity of authorities across the EU at national, federal and local levels, all with varying rules, and practices, making the Single Market work on the ground involves getting the active co-operation of all of those bodies. The enactment of directives, which has been the main method of creating the Single Market, is increasingly being accompanied by practical administrative co-operation measures, such as SOLVIT. These mechanisms are operated in partnership with the member states. We can speak about those later if the committee wishes.

In terms of Ireland's response to the Act, we have sought the views of Departments and the social partners. It is clear that there are many very worthwhile proposals in the Act but some may be of concern to stakeholders and need to be teased out. An example is proposal No. 19, on taxation. Any proposal relating to taxation requires detailed and careful examination by the Department of Finance. The Department is examining the Act and will be engaging extensively with all key stakeholders early in the new year. We would welcome, as appropriate, the views of the joint committee when it has had time to fully consider the proposal.

The Competitiveness Council welcomed the publication of the Act at its meeting on 10 December. While the precise timetable for the proposed discussions on the Act at EU level has yet to be finalised, it is expected that the discussions will be co-ordinated by the incoming Hungarian Presidency. It is also expected that the European Parliament will discuss the proposals.

The Department welcomes the Single Market Act and believes it provides an opportunity to build on the significant achievements of the European Union to date. We believe the Act provides an opportunity to reinvigorate the Single Market. Ireland welcomes this proposal. Ireland's recovery will be export-led and dependent on a recovery in the global markets. The Single Market is on our doorstep and a large part of that market is free from currency risk. It is a market in which Ireland has not yet realised its full potential. The Single Market is important as we seek to encourage more trade with our EU partners.

Deputy Seán Barrett

I welcome the delegation. I believe the creation of a genuine Single Market is probably the most important development for all member states. Consider our main competitors in the United States and China. What people in both countries have in common is that they speak the same language, by and large, and have the same currency. We are trying to do the impossible in Europe. We have 27 or so languages and we are failing to support the euro. Europe must make up its mind whether it really wants the Single Market through integration.

The Irish people are now suffering very badly, not because the people themselves messed things up but because of a banking crisis which was assisted and fuelled by German banks lending money to a bank such as Anglo Irish Bank to engage in reckless lending. Yet, when it came to negotiating a deal to help us out of this mess, penal rates of interest were imposed. We must make up our minds whether we want this European project to work. We must create an atmosphere of being European citizens. We could start by suggesting that it be more or less compulsory that we adopt English, French or German or both. We could make it compulsory that all our children are taught these languages from primary school. There is no compulsion to speak or to be taught French or German. It is compulsory to speak Irish, which one should not complain about because it is part of our culture. However, in terms of doing business or trade, it is vital that young people be given the tools to be able to communicate.

I do not believe this is just about technicalities. Everybody is in favour of the free movement of people, goods and trade. It is a wonderful market of 500 million people in which we can trade and move freely. We have not realised its potential. One of the most important things, as Ms Dunne mentioned in her contribution, is energy. This is an island nation with a natural resource of wind power but we have not yet put in place the necessary ingredients to enable us to maximise the potential of that resource. We have begun by getting a grant for interconnection between Rush and north Wales which, hopefully, will connect into Europe. There is a connection from the North into Scotland which, in turn, should give us a connection into north-western Europe. In time we should, and must, seek a connection into France and the south of Europe. We have a natural resource which we can export. In fact, we could export to the extent of replacing €9.5 billion of imports of fossil fuels.

However, what is our position at this stage? Getting connection for people into our grid is a mess. We have not upgraded our grid, yet we have a ready-made market for power to which we could export tomorrow morning. Above all, if the wind does not blow and given that we have not yet developed a tidal power industry, we could import through the interconnection without having to depend on gas coming all the way from Russia. When will we grasp these things? When one mentions this to the Commissioner for energy, as we did, it is welcomed with open arms as a very important part of the greater European grid. However, what are we doing about it? We are doing very little.

I was Chairman of the Oireachtas Joint Committee on Climate Change and Energy Security. In November 2008, as a result of the failure of the Government to produce legislation to deal with the planning arrangements for the development of offshore wind, the committee produced a legislative measure. It was the first time in the history of the Oireachtas that an all-party committee produced legislation. We presented it to the Department of Communications, Energy and Natural Resources, but it is still in the Department gathering dust. We were told the Government would produce its own legislation, but I have not yet seen it. There are 450,000 people unemployed and 100,000 of our graduates are emigrating, yet we have this wonderful resource sitting on our doorstep and we are doing nothing about it. We are talking about it; there are plenty of speeches and conferences and experts have been brought in to talk to us. However, we still do nothing about it. It is becoming frustrating.

I am delighted this opportunity is now presenting for a real debate on this issue. Ireland as a nation should wake up, realise the potential it has and cut out the doom and gloom that exists at present. My one criticism, and it is not really a criticism, is the habit of stating in every report presented to us: "In terms of Ireland's response to the Act, we have sought the views of Government Departments and the social partners". Nobody says they have sought the views of Seanad Éireann and Dáil Éireann. Ms Dunne mentions the committee but there are a number of committees in the Oireachtas. This Act should be debated fully in both Houses. Views on it should be sought and, through the committee system, we should invite various interested bodies to give their views so we, as an Oireachtas, can produce a proper response to this opportunity. This highlights the fact that the Executive does not have to do everything in this country. Parliament should be independent in its response and the Executive should assist the Parliament in giving a true and accurate response.

I congratulate you, Chairman, and the delegation for providing this opportunity. I hope our response will not be rushed and that the delegation will be back before the committee again. It would be a waste of their and everybody else's time if four or five committees debated this issue. We should debate it together and co-ordinate all the views into one response as a Parliament. Perhaps the Chairman would consider arranging with the chairpersons of other committees which would have an interest in this topic some means of having a joint response to this important issue.

Senator Feargal Quinn

I am grateful this topic has been brought before the committee. In my experience, the next generation does not know or appreciate the benefits we have in a single market. On arrival in Dublin Airport from abroad one is reminded that one no longer must go through customs or the other difficulties one encountered previously. The next generation does not recognise all the benefits that are apparent so we should do what we can to encourage that awareness.

However, when we first joined the European Union, one of the factors that coaxed us to do so was the concept of subsidiarity. From 2006 to 2009, I served as chairman of EuroCommerce, which is based in Brussels and which represents 6 million mainly small businesses - it also represents some larger ones - involved in the areas of retail, wholesale and international trade. EuroCommerce regularly encounters barriers which have been erected throughout Europe - either by individual countries or regions - and which are designed to protect local businesses. This happens to a considerable extent in Spain, Italy and France. I wonder about the extent to which we can overcome the difficulties that arise in this regard.

The number of online shoppers who purchase goods across borders is tiny. This is the case because of the existence of the barriers to which I refer. I am not sure whether these barriers serve as a form of protectionism or whether they have been put in place because the 27 member states have not managed to make the break. What is required is a strong commitment from the very top in order that these barriers will be dismantled. There would be benefits to society, communities and individual citizens if the latter were to occur. Such benefits would only be recognised when change has been forced through. A number of the barriers to which I refer - which were not necessarily regional or national in nature - were broken down when Mr. Peter Sutherland insisted on the introduction of legislation relating to air traffic and air travel. Everyone recognises that the benefits which accrued as a result of Mr. Sutherland's action were extremely good.

I met EU Commissioner Verheugen on a number of occasions last year. On one occasion I made him an offer - which I thought I would be in a position to deliver upon - to the effect that Britain and Ireland would change the type of electric plugs in use in their jurisdictions if those on the Continent would agree to drive on the left-hand side of the road. The Commissioner did not seem to hold out much hope of progress being made in respect of my proposal. There are some things which we will not be in a position to either touch or obtain easily.

Deputy Barrett referred to the benefits of the single currency. The United States did not have a single currency for approximately 90 years after the War of Independence. The benefits of the euro have been huge. Citizens and traders within the euro area have witnessed those benefits.

Ms Dunne referred to SOLVIT. I am not quite sure what it entails and perhaps she could expand on what she said earlier. As their representatives, our job is to sell to citizens the benefits of the Single Market. We must also sell them to those who supply goods and services - namely, businesses in the retail, wholesale and international trade sectors - to citizens. There are huge benefits from being part of the euro. Ireland was willing to forego the benefits and disadvantages of the protectionist policies that held sway in the 1960s and early 1970s - the process in this regard was not easy - in order to join the then EEC in 1973. We have reaped the benefits and it would be a shame were we not to strive hard enough to continue to enjoy them.

Senator Paschal Donohoe

I welcome our guests and thank them for their presentation. When one considers the research relating to this matter, one is presented with statistics regarding how - despite all of the discussion in which we engage in respect of it - incomplete is the Single Market. One of the briefing notes circulated to members indicates that only 1.5% of all the procurement that occurs in Europe takes place across borders. There is a major opportunity for Ireland to benefit from exploiting that fact.

I would sound one note of caution. In the context of the two referenda on the Lisbon treaty, I learned about some of the negative consequences people associate with Europe and accelerating the completion of the Single Market, particularly in the context of greater flexibility across labour markets and the perception of the impact it has had on living standards in countries such as Ireland. While this country has a major opportunity in the context of completion, we must bear in mind that what has been done up to this point has caused concern to some sectors of the population.

When outlining potential concerns regarding the Single Market Act, Ms Dunne referred to proposal No. 19 which deals with tax. Has the Department engaged in an assessment of the other concerns which might arise? When we consider matters of this nature, the issue of a common consolidated tax base tends to dominate the discussion. Have stakeholders expressed any concerns regarding the implementation of the Act?

Ms Dunne stated:

One of the most important lessons the EU has learned ... is that a legislative basis alone is not sufficient. Given the multiplicity of authorities across the EU at national, federal and local levels ... making the Single Market work ... involves getting the active co-operation of all of those bodies.

How does she proposed to proceed in this regard? There are at least 100 hundred such bodies in Ireland alone from which co-operation will be required. If the Department can crack that nut, I am of the view it will be successful in its overall endeavours. I would be interested in hearing our guests' views on how we might obtain the necessary co-operation from the bodies in question.

Deputy Seán Power

There is no point repeating what previous speakers said. However, I wish to refer to a matter upon which Ms Dunne touched early in her contribution when she stated:

While there remain barriers, both real and perceived, to intra-Community trade, we do not have strong evidence to suggest that attempts are being made to roll back the Single Market. Nevertheless, we must remain vigilant in that regard.

Will Ms Dunne outline what she sees as real and perceived barriers? In addition, will she expand on what she means by stating that we must remain vigilant?

Deputy Timmy Dooley

I welcome our guests and compliment Ms Dunne on her presentation. It is clear that the Department is taking this matter seriously. I would expect and want that to be the case.

Deputy Barrett referred to the necessity for the Parliament to play an integral role in the development of the discussion relating to Ireland's perspective on this matter. Ms Dunne referred to discussions with the stakeholders. It might perhaps be a job for the committee to engage in such discussions with the appropriate stakeholders. I do not wish to be critical of IBEC, ISME and the various groups which do a good job in the context of representing their members. However, I would like the committee to ask to come before it people who work in the export business and who encounter barriers on a daily basis. Such individuals could outline what is inhibiting their activities or preventing them from expanding their businesses or accessing certain commercial opportunities.

As political representatives, we are regularly informed that greater levels of protectionism exist in other countries. This is particularly true in the case of the print industry. The Office of Public Works has made efforts to examine the position with regard to State contracts in the context of, perhaps, breaking them down in a way that would allow Irish print firms to become more competitive vis-à-vis the large external players which are able to provide services at lower prices as a result of the size of the contracts involved. Sources from various sectors seem to suggest that when purchasing services at state level, other countries have succeeded in creating what are perceived to be barriers to external competition. Such barriers mitigate against Irish companies seeking to compete for business in other countries.

The barriers to which I refer may be a reality. I have no doubt that they are a reality for those Irish companies which are seeking to compete for state contracts in other countries. However, there is something of a mirage at play here because if a country is a member of the European Union, it must adhere to the standards associated with state procurement. I am anxious that the committee should seek to explore this matter. I accept that there may be an element of dúirt bean liom go ndúirt bean leí involved here but there may be a real basis for some of the concerns that have been expressed. It would be useful if the officials from the Department could outline their take on this matter.

Chairman

It is an important document for the Union and this is an important development. When Commissioner Barnier referred to this when he appeared before the committee and when he met the committee delegation in Brussels, he was quite clear about the potential. He said we had a great deal to do to achieve what was originally intended and if we set about it properly, we could remove barriers and so on. I propose, with the support of the committee, to refer this to every joint committee so that they can address the sections that apply to them and to then draft a combined response to the submission.

Several issues have come up. Proposal No. 18 refers to the adoption of a legislative initiative on services concessions and clear and proportionate rules, and so on. This is important while No. 19, which relates to the consolidation corporation tax policy, is particularly important. That will have serious implications for this country. I listened to former Commissioner Monti speak on the issue. His views are not necessarily the same as ours on this subject but it is important, as Deputy Barrett said, that every Member has a view on the subject and that he or she makes it known. There is no sense trying at a time of difficulty throughout Europe to bend the European rules in a particular direction for one reason or another. Now is the time for calm and clear thinking and for visions as opposed to changing direction in mid-stream.

If, for example, one wishes to upgrade the facilities available on one's digital television service, the cost is £1 but if one does not live in the UK, the cost is €2 for the same service, which is extraordinary. A motor car imported from Europe with all additional electronic equipment provided costs much more than the individual items cost on the market. This is not readily recognised in the context of a common consolidated tax policy. A satellite navigation system can be bought in Dublin for between €400 and €500. It can cost €3,000 to have it installed in an imported motor car. Some car manufacturers do not have a distributor in Ireland and their cars are imported through the UK. The result is a massive obstacle in terms of administration and support.

I am a motorbike enthusiast. I pity those who have to purchase motorcycle parts. The import cost of components is incredible. Many of these products can be bought on-line at a quarter of the cost with all taxes paid. There is something wrong with the Single Market. We have not had access to it in a true way.

Is it agreed to refer the report to the various committees and to seek responses before reverting to the Department again?

Deputy Seán Barrett

I do not wish to be awkward but I am afraid that each committee will examine the proposal and invite the same people to attend meetings to discuss the same subject. Could a sub-committee be established to do a report and then revert to this committee? If this is referred to four or five committees, the departmental officials will have to attend four or five meetings and there will be four or five reports. I do not know if that is wise. I would like representatives of both Houses who are interested to be appointed to a sub-committee to do the job. They can seek advice from the officials, meet the delegation to whom Deputy Dooley referred and incorporate their views in the report. Let us then discuss it again. I am afraid that sending it to multiple committees will lead to duplication all over the place.

Chairman

I had not intended to do that. We will defer the discussion on that. We will discuss it in private session to see how we can co-ordinate it.

Deputy Seán Barrett

The Chairman could use the working group of chairmen to come up with a proposal that would satisfy this need.

Chairman

It is not rocket science. The document is clear and straightforward. For instance, it states: "Proposal No. 19: The Commission will take steps to improve the coordination of national tax policies, notably by proposing a Directive introducing a common consolidated corporate tax base (CCCTB) in 2011". We do not have long to wait. I am anxious to ensure there is a short and sharp political response, which is necessary. It is important in the context of the work being done. For example, the agriculture committee will want to refer to agriculture, fisheries and the food industry. I want to ensure there is a political response so than nobody can say afterwards that he or she was not consulted about this issue. Commissioner Barnier has given us the opportunity.

The Deputy is correct that the social partners are important but it is also important to have a political imprimatur, otherwise the political system cannot take responsibility for something to which it did not agree in the first place. Perhaps that might be sufficient in respect of that issue. The officials might continue with the Commission communication on integrated industrial policy for the globalisation era. The same will apply to this. It is an important subject and Commissioner Barnier referred to the issue of competitiveness and the emphasis of large industrial corporations on relocating to low wage economies in south east Asia and the pretension that this is the way we proceed in the future. It is not the way we should proceed. If we become so uncompetitive in Europe that we have to rely on industry based in south east Asia, Europe will become vulnerable in certain areas and if this happens, we will decry what has happened and why it happened. The Commissioner was clear when he addressed the committee delegation in Brussels recently that in Europe we should consider doing the things that we do well and we should use modern technology to upgrade and advance our systems in manufacturing and the services sectors in a way that will make the Union competitive not only in high technology sectors but in the manufacturing and services sectors.

Ms Clare Dunne

I thank the joint committee for the level of interest it has shown in this proposal. It is heartening from my perspective and that of my colleagues that we are getting real engagement here. A number of very interesting questions and points were raised by Deputies and Senators. I appreciate that the committee may not have time for me to go through some of the answers but if it is acceptable we will be happy to supply short replies in writing to the secretariat after the meeting.

Chairman

Yes.

Ms Clare Dunne

I will now address the Commission's Communication on an Integrated Industrial Policy for the Globalisation Era: Putting Competitiveness at Centre Stage. This is very much linked to the subject we discussed earlier. This communication was adopted by the European Commission in October. It was subsequently discussed by the Competitiveness Council on 25 November and conclusions agreed by the Council on 10 December last.

The committee will be aware that this is one of the seven flagships being launched under the European Union's new strategy for Jobs and Growth: Europe 2020. The Department fully supports the core elements of the Europe 2020 strategy. We have been key architects of the strategy working with our colleagues across member states and with the Commission.

The Department fully supports the objectives of the strategy to stimulate growth based on knowledge and innovation and a more sustainable and greener economy with high employment and social inclusion. These objectives are also broadly consistent with the Government's national strategies, including the smart economy, green enterprise, the trade strategy and the recently launched four-year framework for economic recovery.

This flagship initiative sets out a strategy that aims to boost jobs growth by maintaining and supporting a strong, diversified and competitive base in Europe. As the committee will be aware, the continued growth of the BRIC countries, as well as other high growth economies, has meant that EU industry is increasingly orienting its growth strategies towards the global market.

In addition, industry needs to be able to invest and to transform itself to respond to the opportunities and challenges of globalisation and climate change. Therefore, co-ordinated European policy responses are needed. The new approach also means looking at the whole value chain, from infrastructure and raw materials to after-sales service. Promoting the creation and growth of small and medium-sized enterprises is at the core of the EU industrial policy - it is also at the core of Ireland's industrial policy. Moreover, the transition to a sustainable economy is recognised as an opportunity to be seized as a means of strengthening competitiveness.

In recognition that it is enterprises that create jobs and drive economic growth, the role of governments is to ensure that the optimal environment framework conditions are in place to allow this to happen. It is crucial, therefore, that a horizontal approach to industrial policy, coupled with the identification of key sectors for supports, is developed. In an Irish context, that means building on existing strengths and supporting export-oriented firms and sectors and emerging potential in new and mature sectors. As a committee member said in the previous session we need to focus on and play to our strengths because we are a small economy.

We strongly endorse the principle "think small first" as established in the EU Small Business Act, of which reducing regulatory burden and barriers to internationalisation are recognised objectives. European SMEs derive a much smaller percentage of their turnover from exports than competing economies such as the US and China. I understand that only 7% of European SMEs export beyond Europe. Therefore, there needs to be a much a stronger international orientation of European SMEs to compete globally. EU policy instruments and other EU-wide supports can be critical in this regard, including early-stage financing by the European Investment Bank.

Strengthening the Single Market presents significant opportunities for European industry, including Irish businesses. We recognise the importance of coherent frameworks for intellectual property, in particular the need to urgently progress agreement on the EU patent. Given that this issue has been debated for the past 30 years, progress is long overdue. The importance of infrastructure - energy, transport and communications - is clear as part of the wider environment in which industry can prosper, innovate and grow. The focus on innovation and the improvement of standardisation processes is also to be welcomed.

New technologies bring with them new product standards. If the EU is first to market with winning technologies our standards will set global ones. If we can negotiate acceptance of EU standards by others, it makes it easier and cheaper for our exporters to trade internationally. This is especially important in terms of negotiating with the EU's strategic partners such as the US and China, both enormous and attractive markets, particularly for small companies. The EU is a growing force in global trade. Therefore the role that open trade plays, is essential to the EU's industrial policy approaches. In that regard, the new EU industrial policy must also take account of the Commission's new trade strategy, which was published recently.

This is where the impact of Europe's external policies is very important. We are investing in new technologies, promoting innovation, supporting SMEs and upskilling our workers to make the EU more competitive. The dividends from this investment can be multiplied if we make the best use of open markets to drive more trade and investment. At the same time when we reduce trade barriers through trade agreements we give a further boost to exporters and consumers in Europe and in Ireland. That adds to economic growth.

Cross-sectoral as well as sectoral approaches will be important as industries and technologies converge. This will involve mapping out existing key strength and identifying niche and growth potential areas to exploit export opportunities. Health care, security industries and green technologies are particular strengths in Ireland where convergence between sectors is opportune, including in the software, life sciences, electronics and services areas. The promotion of clusters and networks to improve competitiveness and productivity is welcome, as is the proposed "competitiveness proofing" of new EU legislation.

Although manufacturing remains a most significant part of indigenous industry, accounting for 80% of employment in that sector, in general there should be a more balanced emphasis in any new EU industrial policy initiatives on services innovation and the services sector that, in Ireland, represents an area where exports are growing at a significantly faster pace than goods, representing about 45% of our exports in 2009 and two out of three jobs. The services sector is also of increasing importance because of the trend for manufacturers to provide value added services as part of their business model to improve competitiveness.

Ireland welcomes both of these important EU initiatives, each of which is broadly consistent with our national policies and strategies. The industrial policy flagship recognises the need for the EU as a whole to develop a strong, competitive industrial base that can continue to compete globally. We look forward to engaging fully on each of these proposals at national and EU levels, in consultation with key stakeholders, including members of the committee, and, as Deputy Barrett said, other committees and members of the Oireachtas.

Chairman

The same applies as in the first part of the presentation - this is an issue we have to take up with our colleagues throughout the House. We will agree on this in private session later. I compliment Ms Clare Dunne on her presentation and our secretariat for the presentation and the document it laid before us. It is hugely important that we do our duty as elected public representatives in this area. There is no sense in debating afterwards, wringing our hands, and tearing our hair out if something does not work out right. It is up to us to put our proposals and our responses to each proposal in a meaningful way, not necessarily in the way that it relates to one country's options only - our own perspective - it must be our own and the EU perspective. The EU likewise, in its proposals, must take into account the needs of individual member states. It is a difficult situation. The timescale for deliberations is quite short. We shall discuss that issue in private afterwards and set up a system that will investigate and provide a response to each of those items, either directly from this committee, or from other committees of the House. As we approach political turbulence in the run-up to the election it is hugely important that it be done, in the same way as a government, after an election, in the interregnum, may have to carry on negotiations at European level even though the election is already over. The same continuity is required in this case. With the committee's approval I propose to do that. Is that agreed? Agreed. I thank Ms. Dunne.