5 June 2008
Gordon Brown has welcomed Jose Manuel Barroso, President of the European Commission, to Number 10 to discuss Europe’s priorities ahead of the EU Council meeting later this month.
Read the transcript
Prime Minister:
Can I say first of all it has been a great pleasure to welcome President Barroso to Downing Street today, to thank him for his excellent leadership of the Commission, leadership that is important today in meeting the current economic difficulties as people’s living standards are hit by rising energy bills and by the rising cost of food. And governments are taking action domestically to help, but we also know that these are ultimately international challenges that require international solutions. So I am pleased that we agree that oil and food prices should be a key priority for the forthcoming European Council.
I proposed to President Barroso that the European Council should focus on a six point plan to drive down food prices: ensuring fair competition in our own domestic markets and across the European Union; raising investment in agricultural research and increasing agriculture production in poor countries; reforming food aid so that more food is bought locally, boosting local agriculture and helping local farmers; examining the impact of biofuels on food production and the implications for EU biofuels targets, and Britain has commissioned a review of this evidence which is to report shortly; improving the EU regulatory regime for genetically modified organisms; and perhaps most importantly of all, working urgently to achieve a successful outcome of the world trade deal, the elimination of trade distorting subsidies in import restrictions in particular, and then tough action on tariffs and other elements of the Common Agricultural Policy which in the past have raised the cost of food for consumers.
The oil challenge that we face globally is: there has been a huge increase in demand, particularly from China and often emerging economies, which is only being partially met by growth in supplies. And as I said to President Barroso today, Europe needs to do more to balance energy supply and energy demand, not just now but in the medium term and long term. We need to make a reality of our commitment to improve energy efficiency and to reduce our dependence on oil. This is strongly in Europe’s interest, not only helping us tackle climate change and increasing energy security, but also reducing energy and fuel bills for hard pressed households and industry.
This process must be part of a dialogue between oil producers and oil consumers. So at the European Council later this month, in addition to our discussion of the commitment to 2020 on climate change, I want to propose a more coordinated European Union strategy for responding to the increase in oil prices. We will be pressing for European leadership in developing a new dialogue at a global level between oil producers and consumers, stronger action to liberalise European energy markets, and I welcome President Barroso’s efforts to achieve a major reform of European electricity and gas markets, on transport a new European wide car emissions target of 100 grams per kilometre by 2020, and that is down from 160 grams today, so we will be encouraging manufacturers to design vehicles that are far more fuel efficient and will use alternative sources of energy. This could save around £500 a year in fuel costs for the typical British motorist, and Hilary Benn is arguing for these tougher targets at the European Environmental Council today.
And then we need a joint commitment to explore amongst other things new potential technologies, the scope to accelerate the introduction of commercially viable electrical vehicles across the European Union. We need agreement to incentivise up to 12 carbon capture and storage demonstration plants, one of which at least we want to be in Britain, and a commitment that the European Union will take all action necessary to improve energy efficiency.
Here in Britain we are committed to a new nuclear building programme to ensure that the UK’s emissions and dependence on fossil fuels do not rise as our existing nuclear stations are closed down, and we want to work with other countries who are now building new nuclear power capability.
This is an ambitious agenda for Europe. I know that President Barroso wishes to move this agenda forward, and as the economic challenges move to the top of the European Union agenda it is essential that we take further action together to reduce the pressure on high oil prices and high food prices for families here in Britain and right across the European Union.
President Barroso, thank you for being with us today.
President Barroso:
Thank you very much. Indeed it is a pleasure to meet Prime Minister Brown and also to be back in London to discuss the key European and global issues before the European Council in a couple of weeks’ time.
I will not repeat the points made by the Prime Minister, which I largely share. I believe these are indeed the priorities, that what we have to discuss in the European Council and other international moments are very important, like the G8 Summit in the beginning of July in Japan.
We have indeed discussed a whole range of issues which have a single common theme - the desire to respond to a changing world with initiatives that have a positive impact in our citizens’ lives. That is why the European Union matters. On each of the issues we have discussed today we need a European response. It is not enough for each country to take separate initiatives on issues like climate change, energy security or food and fuel [indistinct] is right. We need a European response to shape also if possible a global response, we need solutions that strengthen Europe’s and also Britain’s position on the international stage.
Our economies currently face a number of challenges, in particular inflationary pressures originated by high energy prices in the context of slow growth, and is of course a real concern. The rising food prices is also very complex, the real issue. The scale of the challenges we face in these areas are becoming clear. There are, as I usually say, three important things to sustain life - food, water and energy - and the challenges posed today by these specific issues are structural and they require a structural response. There will not be an easier quick fix for these issues and the Commission on the basis of consensus among member states has put on the table some of the structural responses that will allow sustainable solutions for the short, medium and long term. Of course we will deepen our reflection and we will come to some concrete proposals on what can be done in the short term, but our proposals for the short term must be clear with our longer term strategy.
I want to thank the Prime Minister of Britain for the strong support for the Commission’s climate and energy package that we have proposed at the beginning of last year. I hope we can make a breakthrough in the coming days. Energy Ministers will be meeting tomorrow. On the genuine European internal energy market we shall bring more competition, fairer prices and a stronger response to our energy security needs. That will then open the door to reaching an agreement, hopefully by December, on the climate change and renewable energy part of that package.
We have to accept that whilst oil prices are at an exaggerated level, they will not return to the level of 12 months ago. That is why we need to implement the structural proposals that we have put forward in our Energy Action Plan initiatives on energy efficiency and diversification of energy supply. If you want a simple formula, save and diversify, save energy, diversify the sources of energy, this is the best strategy, structural response to the problem of oil prices and energy prices in general. This is the key.
These proposals, the proposals we have made for the diversification of energy sources, for more indigenous sources, for renewables, the proposals on energy efficiency of 20% by 2020, it is part of our 2020 package. This is the structural response and more than ever we will need the agreement of the member states around these goals and that Europe appears united also, [indistinct] ever for a global agreement on climate change, or against climate change, and also for energy [indistinct].
On food prices the Commission has presented a response on the structural issues in our communication. I have been asked by the Presidency of the Council to come with a communication for the European Council. Now is the moment to have a steady course, a predictable course for the short, medium and long term to do the right thing to respond to the structural [indistinct]. It is important in our view to secure a proper functioning of the food supply chain and of the retail sector. It is not less important to help those who are more severely hit by the rising food prices in Europe, but also out of Europe. We have therefore already committed 550 million euros, around £432 million of food aid. The Commission intends to prepare a set of articulated actions to help the most deprived in the European Union.
So this is part of our agenda and once again I see that Britain and the European Commission will share not only the understanding of the priorities, but a real will to come to positive concrete responses to those [indistinct] challenges of this globalised world.
And once again Prime Minister, thanks for your support and I am really looking forward to what will be a very important European Council meeting.
Prime Minister:
Thank you President Barroso and we will support your agenda on climate change.
Question:
[Party political content]
Prime Minister:
We are talking about public money. This is public money that has got to be explained for its use. We are talking about an inquiry into what is happening in the European Parliament. [Party political content] I believe the right way forward for dealing with issues where public accountability matters is the most open and transparent system. I believe that this is public money and we have got a duty to show how public money is used.
Question:
Mr President, the Prime Minister mentioned the Common Agricultural Policy and the UK has been pushing quite hard for a reform of that, a serious reform. Is that something that is on the table do you think? And for the Prime Minister, do you think it would make very much difference to food prices if there was a reform of CAP?
President Barroso:
We have been reforming the Common Agricultural Policy and in fact we have approved a financial perspective as you know from 2007 - 2013. But even in this framework we have come recently with a proposal, it is what you call the health check of the Common Agricultural Policy, making some changes, including trying to get rid of unnecessary caps on production and we are proposing in fact for instance in terms of new [indistinct], and also in terms of set aside some changes because we believe that in this context of food prices it makes no sense to keep those artificial limits on production. Having said that, the European leaders agreed that we are going to look at this issue for the next period of the financial perspective and we are preparing work on this and we have a mandate from the European Council to come by 2008 or 2009 to some general lines about the possible reform of the whole expenditure of the European Union. Certainly, certainly, these latest developments on food prices are raising new elements, but the interpretation drawn by that is not always in the same direction. Some people, to be very blunt, say good, now that food prices are so high there is no reason to keep such a high level of support. That is an argument, but as I say look with the problem of food insecurity we should really look at this as a need to keep some kind of support. So it will be an interesting debate, I promise you.
One thing I want to tell you, we, the Commission, we are very much committed to a reform of the Common Agricultural Policy. We have been, and the European Union have been doing it over the years. We believe that some kind of support to our rural areas in Europe is necessary, we want to promote rural development, we want to promote more sustainable ways for the communities that live in the rural areas, but we believe that some kind of decoupling of the aid is necessary and we are going out in that direction.
Prime Minister:
Every family in Britain is facing rising costs of bread, of milk, of eggs, of some of the most basic food stuffs when they go to their supermarket or do their shopping and people want to know what is actually happening both in Britain and round the world. Now we have seen the doubling of the price of wheat and maize, and these are world prices that are influencing costs in Britain as elsewhere. And there is a shortage of food as a result of increased demand in China, India and Asia and that is a long term factor that we have got to keep into account. I have just said we need to increase agricultural production round the world, but one factor is obviously the tariffs and the cost of food in the European Union. We do want tough action on tariffs and other elements of the Common Agricultural Policy and one way we can start is by signing a new world trade deal which will mean a cut in the tariffs that are imposed by the European Union as other countries also reduce their subsidies and make further changes in their agricultural policy as well. So there are a number of measures that have got to be taken, one of them is the change in the tariff structure in Europe.
Question:
Given what you have said about the need to persuade people to use less polluting cars, does that mean there is no possibility at all of a rethink on the vehicle excise duty changes? And if I could just pick up on the point that you made about biofuels, do you think the EU was wrong to introduce that 5% requirement, are you now pressing for a rethink on that, and perhaps the President could tell us if he thinks there is a prospect of [indistinct] biofuels?
Prime Minister:
Well I am not going to add to anything I said in the House of Commons yesterday about vehicle excise duty. There has been a long term trend where people wish to move to encourage the low polluting vehicles and wish to discourage people with new incentives for high polluting vehicles, and that is a trend that is happening in every country as a result of what is happening both to the cost of fuel and to people’s desire for greater energy efficiency. And I think you should note today that we are proposing that the European Union take further action to encourage the electric car, to encourage greater energy efficiency in the use of cars.
As far as biofuels are concerned, this is a controversial subject because of its effect, or alleged effect, on the price of food. Britain has actually commissioned a review of all the new evidence about the impact of biofuels, both in Britain, in Europe and America and elsewhere. That report will be published shortly. We will then give our views about the impact of biofuels on food production and the implications as we see it for the European Union biofuels target. So we are commissioning research, it will be published soon and I believe that the evidence has got to be the basis of a solution for the future.
President Barroso:
Regarding our policy on biofuels, you know it was agreed unanimously by the European Union member states, not only by the Commission, to have 10% of biofuels in transport, but this target is not biofuels at any price, it is 10% under very strict conditions. Those conditions include a workable and robust sustainability scheme and commercial viability for what we call second generation biofuels. So we are not speaking about some of the biofuels that are now in the market. By the way, the European Union biofuels production is too small to have had an impact on food prices. What happens now is that we are trying to have a European Union sustainability scheme for biofuels, the first of its kind in the world, and for that we need to ensure that production will not have damaging side effects and we have to realise all the potential of second generation biofuels. I can tell you that there is going on very interesting research on this matter and some very important innovations will come very soon to the market. One thing is clear, with or without our target in the European Union there will be a further increase in the worldwide production of biofuels. The main producers will increase biofuels. So the question is are we going on like that without any kind of standards of criteria [indistinct] or should we as Europe try to promote a worldwide regime of sustainability for biofuels. We believe we should keep it, that is why I think we have to do everything possible to show that a sustainability scheme can work and promote it globally.
Let us not forget that in the transport sector today - today - the alternative to biofuels is non-sustainable for [indistinct] so when we speak about the sustainability of biofuels it is important also to speak about the sustainability of oil and to think is oil as it is today it is sustainable from an economic, from an ecological and also from an energy security point of view. This is the current [indistinct]. Having said this, for the future there are great possibilities, electric, what Prime Minister Gordon Brown said about the possibility of developing more and supporting more electric cars is really interesting and it has my support, but the current alternative is this one. And so we have to look at this issue very, very seriously and not just giving up to some simplistic methods that sometimes are [indistinct]. There are biofuels, and biofuels, and there can be new biofuels in the future, namely from bio [indistinct], that we believe can be sustainable and that can be part, part of the answer, it will not be the big part but part of the answer.
Question:
The European Commission’s initial report into the Northern Rock rescue raises doubts about whether it might constitute unfair state aid. Is this something you two discussed today? Prime Minister can you tell us whether you are confident that the rescue will go through? And Mr President is it something that concerns you?
Prime Minister:
We have not discussed this today. I am confident that the package will go through, I am confident that we meet all the requirements under the state aid regime and we will listen to what is said by the European authorities. Let me say there are a number of banks or building societies that had difficulties last autumn, some in other countries of Europe as well. We have applied in the normal way, we have put forward all our proposals and we believe that we fully meet all the criteria under the state aid regime.
President Barroso:
[Indistinct] that as Prime Minister Brown said, we did not discuss this. Maybe I can use this opportunity to explain what is going on. First of all let me say that we have had excellent cooperation with the UK authorities on this issue from the beginning and there are no new developments here, perhaps I can explain. The Commission opened a formal investigation procedure on this issue on 2 April and indeed made clear in our press release on 2 April some of the issues we will be looking into, such as restructuring plans, proposals for avoiding undue distortions of competition. We published this decision on 3 June, as required by the rules, setting out in full the initial views we had already given to the UK government on this case. Interested parties have one month now to comment and the investigation continues in the normal court, and once again thank you for the very open and excellent cooperation that we are having on this issue.
Question:
Can I just ask you about Barack Obama, what you think of him and why you think that while European countries have led the way on gender leadership they haven’t done so much on minorities, except perhaps for Scots.
Prime Minister:
I had the good fortune to meet all the Presidential candidates when I was in America a few weeks ago and I met John McCain, I met Hillary Clinton and I met Barack Obama. I was most impressed by all of their interests in the environmental issues that we have just been talking about where I think we can make very big progress in the next period of time, their interest in what is happening to the economy round the world, and of course the proposals that they themselves have had for reform. And obviously America has in the Democratic Party the historic choice that it has been making between the first potential woman President and the first potential Afro-American President and that has been an historic moment for the Democratic Party.
President Barroso:
Certainly it is an historic moment to have for the first time an Afro-American leader nominated by one of the two biggest parties in the United States so I think it has a great meaning and from that point of view we all welcome that because it represents something that is very important for all of us that are committed to this non-discrimination principle. Having said that I am not going to interfere in the United States campaign except to say two things. I am very happy to see what Senator McCain and Senator Obama are saying about climate change because in fact they are going in the direction that the European Union has been advocating for some time; I am not so happy with some of the statements made so far by the Democratic candidate on trade and I think we have to discuss this very openly with our American friends because we need the United States of America to be in the front line for the economies in the world and that would be great. What Prime Minister Brown said before about the opportunity that still is there for Doha, I fully subscribe, but we need a United States of America in that position too so that we can bring others. But on climate change there is a real opportunity for a global agreement with our American partners and we very much welcome that because sometimes others in other parts of the world are hiding behind the Americans. So let’s see if the debate in the United States, of course it is very important for all of us, goes in the right direction in those two points. But this is not a party comment, this is just from a European perspective but I think it is important for our common agenda. You know how committed we are in the European Commission, we have a common agenda for those global issues with the United States of America.
Prime Minister:
Can I just add that every candidate said that they would work towards a climate change agreement, and of course the crucial year for that is 2009 and I believe that we have a chance now of getting an historic climate change agreement during the year 2009.
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