The collapse of the WTO trade talks

The failure on Tuesday (29) to secure agreement on the Doha Round of world trade talks is rightly being presented as yet another missed opportunity for improving the trading opportunities for all countries, including the world’s poorest. Back in 2001 when this trade round was launched it was presented as a round that would focus on the needs of the world’s poorer nations. Failure to get an agreement will damage those countries most of all.

Economists are famously unable to agree on almost anything, yet the one proposition that does unite them is that liberalising international trade from national protective controls will generate gains for all – rich and poor countries alike. Of course the problem with that proposition is that removing controls on imports – be this for agricultural or manufacturing products or services – is not painless. Domestic suppliers inevitably will face tougher competition and some local producers may be forced out of business. This is particularly the case where trade concessions are granted for products that can be produced ‘abroad’ much more cheaply than at home. On the plus side, of course, domestic consumers will gain from access to lower priced products as new export opportunities are made available to suppliers from other countries – very often the world’s poorest nations. And as these countries benefit from new exports, and their economies grow, all countries stand to gain from the rising trading opportunities that result.

What happened last week was that a few of the world’s key trading countries (the US, China, India) were unable to agree on how to manage the transition to freer trade in agricultural and manufacturing products. No agreement could be reached on how to spread the “pains and gains” between themselves.

This is far from a new problem. This trade round, as others before it, has been beset by this very issue really since it began in 2001. Much of the dispute centred around a specific issue, i.e. the special safeguard measures (SSM) to be applied by developing countries. Countries such as India and China supported a more flexible SSM to protect subsistence farmers from large amounts of imports from highly competitive agricultural exports. However, on the other side the United States backed by some of the major developing exporter countries in South America (e.g. Brazil) wanted to see a stricter SSM that would enable them to access these markets.

It should be stressed that the EU was not involved in this dispute and in this respect cannot be blamed this time for the collapse of this round of Doha trade talks. Nevertheless, substantial progress was made in a number of other areas, where agreement was reached on duty-free quota-free market access for least developed countries, aid for trade and the “enhanced integrated framework” of assistance to least-developed countries.

What makes last week’s failure especially worrying, however, is that it occurred against a backdrop of what is increasingly looking like an imminent and possibly global economic recession within the richer countries – driven by rising fuel and commodity prices – which is not an environment conducive to trade liberalisation. And there is the not trivial matter of the forthcoming US presidential elections to consider. It was the intransigience of recession-worried US negotiators last week that was partly responsible for the failure to reach agreement. Given that, it is probably expecting too much for either of the presidential candidates to come out at this moment to champion a resumption of global trade talks to get the Doha Round back on track.

But the challenges lie not only across the Atlantic, or indeed in India or China. The EU has to look to its own position. Agricultural policy – or agricultural protectionism – continues to be the main sticking point in these discussions. Since the mid-1960s the EU’s agricultural policy and reform agenda has been largely driven by ‘domestic’ (i.e. intra-EU) political considerations. With France currently holding the EU Presidency, and given its history of staunch opposition to the liberalisation of the EU’s farm policy – itself much criticised by the developing countries – it is difficult to expect Brussels to take on a leadership role in unblocking the stalled negotiations for at least the next 6 months. After that, of course, the EU goes into election mode as the campaign for the June 2009 elections to the European Parliament gets underway and the Commission – and EU trade Commissioner Mandelson – readies itself for the change in personnel that will follow. And that isn’t even to begin to look at elections that are imminent in some of the other main countries involved in the Doha Round, including India.

Notwithstanding this latest crisis, there is a sense that most participants are keen to see this trade round brought to a successful conclusion. The question is to what extent they are prepared to make the short term sacrifices necessary in the interests of securing what will be the very real long term gains.

The timing of the current failure is dire, coinciding as it is with a global economic downturn. There is a real risk that the world’s poorer nations will suffer a double-whammy – first from the immediate effects of declining economic activity and so demand in the richer (and recession-prone) countries and second from a significant lowering of their longer term prospects for raising their levels of exports and so economic growth.

Certainly it is fair to say that the deal on the WTO trade talks table would have had some serious implications for some parts of Scotland’s farming sector, not least beef, pig and poultry meat.

On the other hand, its failure could have a considerably more serious longer term consequence for the multilateral trading order as we know it today. If the Doha Round fails, then serious questions will be raised about the continued role of the World Trade Organisation (WTO). The sole remit of the WTO is to manage global trading relations on a multilateral basis – that is by including all 153 countries who have been admitted to its ranks in the negotiations, including of course many less developed countries. If it cannot perform this function then there is a very real likelihood that the WTO will be overtaken by direct negotiations between the world’s largest trading blocs such as the US, the EU, China, India, Brazil, and Japan. In that scenario the vast majority of WTO countries will be left out of the very negotiations that will determine their trade prospects, and they will be faced with the option of simply accepting or not the terms of trade decided by the powerful trading nations. This has to be avoided, arguably at any cost, especially given the difficulties we have already seen with the negotiation of Economic Partnership Agreements.

Globalisation has been, and can continue to be, a positive force for all trading nations. It can lead to rising prosperity and greater opportunities in all countries, including the poorest. But that will only be assured if world trade talks are open to all trading nations: that is are truly multilateral. The WTO is the only guarantor of multilateralism, and in that role is absolutely central to ensuring that the poor as well as the rich countries are able to enjoy the much needed gains from freer international trade.

Victory in Glasgow East!

It’s the morning after the night before and the europhoria of what had been achieved in Glasgow East in the early hours was still very much alive. What a victory, what a result and hats off to the entire campaign team, to John our newest MP for Glasgow East and to the party for pulling off what none of the journalists, election pundits and others thought was achievable – to overturn more than a 13,000 majority and take Labour’s third safest seat by 365 votes.

I spent most of today out ‘knocking up’ with Stewart Stevenson and Alyn in Carmyle, Swinton, Mount Vernon and then latterly in and around off Shettleston road. After a slowish morning, there was a definite sea change in the afternoon and especially late afternoon when folk were arriving back from work and our sheets started to fill up with voted SNP. I knew it was going to be very close but on the doorsteps it was so positive towards us that I began to really realise that we had done it and certainly by 8.30pm I knew. These are exactly the kind of areas that we need to be winning in and to start making the inroads in the once Labour heartlands

Out on the streets I saw a couple of Tory activists who wished us good luck with the Labour cars driving past – shouting vote Labour to save the union. One battered old car drove past us which had previously been a private hire car and they had just written Labour on it – what a shambles.

I went up to the Barrachnie Inn for a while and then headed back to Edinburgh and when it finally happened after the recount, unbelievable, the earthquake had happened and I was glad to be there when it did - a stunning victory and one that will be repeated across the board come the Westminster election. Everything is to play for now. Glasgow East is the first of many victories to come and should send a clear signal to Gordon Brown and London Labour that no Labour seat in Scotland is safe now.

Back in Glasgow East

Having just got back from Brussels late on Friday night I was across in Glasgow East most of the weekend to do whatever I was asked to do. I spent most of my time getting John Mason’s latest leaflet through as many doors as I possibly could manage – this time though the sun was out and on the streets in the areas that we were in we were certainly being warmly received. I had a guy stop me in his car to ask how things were going and to tell me he was voting for John because he was a local and wanted to see the back of Labour – for too long Labour had taken them for granted and it was now time for a change, for someone else to come in and actually do something for the people of Glasgow’s East End.

Another door I leafleted a woman in her 60s was out in her garden and told me she was planning to vote for the SNP on Thursday for the first time because she was just so fed up with Gordon Brown and fed up being ignored by the Labour party who were doing nothing for them.

The atmosphere at the SNP party rooms on Baillieston Road was fantastic and as I have said elsewhere on this site it was like being at national conference. Everyone mucking in, each doing their bit to win this seat to deliver a better and more prosperous future for the people of Glasgow East and for Scotland. Roll on Thursday.....

Responding to Ireland's No vote

Last night I went along to a discussion organised by the Brussels Branch of the Irish Institute of International and European Affairs on “Responding to the No vote on the Lisbon Treaty”. Speaking at it was Ireland’s Minister for Europe, Dick Roche and Brendan Halligan, the Chair of the Irish Institute.

Dick Roche began by saying that “there were no instant solutions” to Ireland’s no vote and that the Irish government was looking at producing a very detailed analysis to understand better the result of Ireland’s recent referendum on the Lisbon Treaty. The Irish government will not be bringing forward any solutions at the European Council meeting in October but instead would be presenting a wide progress report. He acknowledged that the issues were very complex and that it was going to take some time to do a very detailed analysis.

It was underlined that the Irish government does not have a “pre-cooked solution” and that the first response is to respect the fact that the Irish people have spoken, and to understand and listen to what the Irish people are saying.

For the Minister, communicating the EU to the people is a problem for the whole of the EU and not just an Irish problem. In this respect Europe has a huge challenge and one which I believe cannot be left to the EU institutions themselves when it comes to communicating Europe’s relevancy. There is a job here to be done by all levels of government. Europe has to move away from its constant institutional navel gazing and focus on delivering on the issues that people are looking to the EU to try and resolve.

In the Irish context as Dick Roche pointed out there is a need to make the EU relevant to the Irish people in a creative way. Right now there is very clearly something wrong with the way in which Europe is not being communicated and there is a need to get away from the idea of blaming Europe when things go wrong and governments taking the credit from the EU when things go right. As Dick Roche said during the referendum campaign there was no discussion about how best to promote Irish interests through the Lisbon treaty. The Minister also spoke of the ramifications if no solution is found before the next European elections but emphasised again that the best way to find a solution was through detailed analysis and the Irish government would take as much time as it was necessary to take.

The Irish Institute has set up a task force on the post Lisbon situation to help the government in its analysis. It will be producing a number of papers on the referendum campaign itself and the various issues as well as the different scenarios if Lisbon doesn’t come into force with two reports planned in time for the European Councils in October and December.

Sitting there in the audience I got the distinct impression that there was a feeling of guilt but there was also a sense that the current situation could not be resolved with timetables and agendas being imposed by external pressure and this was clearly not the role of the French presidency.

I’ve asked a number of my Irish pals how they think this will all pan out and there are many who say they cannot envisage that there won’t be a rerun of a referendum, though this won’t happen before the European elections next June. Indeed, there are murmurings about October 2009 once concessions have been worked out on issues such as abortion, each member state retaining its own EU Commissioner.

But why should the Irish be made to vote again? The people of Ireland have spoken and their democratic decision should be accepted . The Lisbon Treaty has been rejected and should now be put to bed. Its time for Europe to move on and to focus the issues that are relevant to people and which matter the most to them.

Scotland's sheep farmers come to Brussels

Yesterday we brought a delegation across to Brussels from Scotland’s NFU, the National Sheep Association and the Scottish Farmer to present a petition to the Parliament’s powerful Petitions Committee. The petition calls on the European Commission to scrap plans to individually identify sheep and their movements, that any future sheep ID and movement recording system must be on a batch basis and to review the cost effectiveness of electronic ID prior to its planned implementation at the end of 2009. The petition has already collected 7000 signatures from Scotland’s sheep farmers.

We had also organised for the delegation to meet directly with the cabinet of the European Health Commissioner Androula Vassiliou who is responsible for the Commission’s proposals for the tagging electronically of individual sheep together with officials from the Commission’s Health Department (DG Sanco), as well as with the other Scottish MEPs and some of the MEPs from the Parliament’s Agriculture Committee. I was also pleased when the delegation had the chance to meet with the French Agriculture Minister, Michel Barnier, who made it clear that the future of Europe’s sheep industry was a clear priority for the French EU Presidency.

At the Petitions Committee there was much support for the issues raised by Scotland’s sheep farmers in the petition by other MEPs, and in particular the French, the Irish and the Polish Chairman of the Committee. Certainly the petition was well received with the realisation that this wasn’t purely a Scottish issue but was a European one which will impact on sheep farmers across Europe. Later on I spoke with the clerk of the Petitions Committee who said that given the level of support shown towards the petition and how well it had been received that this would now be raised with the chair of the Parliament’s Agriculture Committee, which is set to discuss the Commission’s proposals on electronic sheep tagging at its meeting in October.

Once again, here we find another issue that had been agreed to by the London government and which our farmers in Scotland now find themselves in difficulty with. This is why we need our own independent voice in Brussels and why we need to be sitting at the big table ourselves standing up for our own distinct interests and not having to rely on London.

Is Belgium on the verge of another political crisis?

Just to add to the miserable summer here in Brussels it looks like Belgium's government is on the verge of collapse after only four months in office. Yves Leterme, the Belgian Prime Minister handed in his resignation to the King late last night following his failure to reach a deal on constitutional reforms that would see greater powers devolved to Flanders and Wallonia. Back in March when the new government finally took office, the Prime Minister set himself the deadline of 15 July for reaching agreement on such reforms.

The Flemish political parties want more power over transport, health, jobs and justice as well as greater control over tax and social security. The French-speaking parties think this will lead to Belgium splitting up and are opposed. A recent opinion poll cites 49.7% of the Flemish people who support Flanders becoming an independent state.

There is also a dispute over the redrawing of electoral boundaries around the area of Brussels-Halle-Vilvoorde. Halle-Vilvoorde is largely Flemish but it allows French-speakers in this area to vote for franco-phone candidates outwith this electoral district. The Flemish parties want to end this while the French-speaking parties do not. Usually in Belgium, Dutch speakers must vote for Flemish political parties and French-speakers for Walloon parties hence why the situation in Brussels-Halle-Vilvoorde is slightly unique.

Much of the current crisis has been ongoing since Belgium’s elections last June when it took another nine months to form a government and even then it was only on an interim government under the previous Prime Minister Guy Verhofstadt until the elected Prime Minister Yves Leterme could get a coalition together.

There was much discussion then as to whether Belgium would finally split such is the cultural and linguistic divide between the 6.5 million Dutch speakers in Flanders (north part of Belgium) and the 4 million French speakers in the south – Wallonia. Brussels exists as a sort of francophone enclave within Flanders. The problem is compounded by the fact that there are no national political parties, no national newspapers or media. For example, Belgium has French Socialists, Flemish Socialists, French Christian Democrats, Flemish Christian Democrats, French Liberals and Flemish Liberals with their own policies. It is also difficult to define what it means to be “Belgian”.

Last time round peoples’ views across Brussels were made clear by the number of flags that were hung out over their balconies and whether they chose to fly the Flemish national flag or the Belgian national flag. I stay in Ixelles, near Place Flagey and the “Des Etangs d’Ixelles” and all around this area was awash with black, gold and red Belgian flags including the house of my landlord who lives next door to me and who told me that they were flying the Belgian national flag out of frustration at the failure of the political parties to form a government as well as loyalty to the King and their national country and did not wish to see Belgium split.

Brussels is a fairly easy city to live in –its bilingual and while I speak mainly French when I’m out and about, increasingly I am having to pull on my year’s Dutch I did many years ago. Certainly if you are in towns like Ghent or Leuven it is better to speak Dutch. Administratively it is chaotic with the three different regions of Flanders, Wallonia and Brussels-Capital, plus three different language communities – the French community, the Flemish community and the German-speaking community, not to mention the different provinces and communes. Within Brussels the French speaking and Flemish communities have their own areas of competence as regards institutions which depends on the language. But the divide between the Dutch-speakers in Flanders and the French-speakers in Wallonia does seem to be getting wider.

To be honest I’d be amazed if the Belgian King accepts Leterme’s resignation this time given the coalition government is only 4 months old and does not try for the government to reach some kind of compromise deal. But I’d be even more amazed if Belgium hasn’t split within the next 20 years.

Sustainable biofuels from animal fat

The debate on the issue of bio-energy continued following the adoption this week by the European Parliament of a resolution supporting the European Strategic Energy Technology (SET) Plan proposed by the Commission at the end of last year. The EP report calls for biofuels research to be intensified under the programme so the overall environmental impact of the production of those fuels can be determined, and for energy efficiency to feature more prominently as "it is the area with the most potential for cost effective emission reductions in the medium term".

This report followed closely on the UK "Gallagher" review of the indirect effects of bio-fuels production published on 7 July which calls for a strengthening of mandatory sustainability criteria within the EU Renewable Energy Directive and a slowing down of EU targets for bio-fuel to ensure that more consideration is given to sustainable feed stock for bio-fuels. One company in Scotland that has an interest in all this is Argent Energy (which is a bio-diesel processing plant based in Motherwell) since they make bio-diesel from a very sustainable source i.e. used cooking oil and tallow (animal fat). They have been to see us in Brussels recently in relation to a Commission proposal for revised legislation for Animal By-Products which came out on 10 June. With Alyn the rapporteur for the Agriculture Committee's opinion (for the Environment Committee as the lead Committee) on the Commission's proposal, this is an issue which we will be working on over the coming weeks and months.

Time to stop misleading flight ads

Scottish consumers and especially holidaymakers are set to benefit from a decision taken by the Parliament today which obliges airlines to indicate all clearly applicable taxes and charges when advertising air fares. This also includes surcharges or fees, such as those relating to security taxes levied by national governments and fuel taxes. These measures are set to be implemented across the EU by the end of this year.

The Parliament's decision to prohibit airlines from advertising air fares without including the additional costs will enable people to see the true price they are actually paying for a flight. How many times have we all thought we were getting a bargain when you saw a flight advertised in the newspaper or on the internet for £1, only to find the actual final cost was much higher than was advertised because the price did not include taxes and other charges?

Consumers have the right to know exactly what it is that they are paying for, so the Parliament's approval today is a welcome one.

Discussions around the future shape of Europe's agriculture get underway in the Parliament

I'm back in Brussels this week not least because we're really busy as the parliament tries to get legislation through the plenary and reports through the committees before the institutions shut down for summer recess. Landing on my desk yesterday came the 4 reports that have been drafted by the Portuguese Socialist MEP (and former Portuguese Agriculture Minister), Luis Manuel Capoulas Santos for the Agriculture Committee's opinion on the Commission's proposals on the CAP health check. The deadline for amending the draft reports is not until the end of August so there is time for us to feed in the views from back home and ensure Scotland's farming and rural interests are to the fore of the Parliament's discussions. Last month the Scottish Government launched its own consultation on the CAP health check as has Scotland's NFU and certainly look forward to seeing their views.

Capoulas Santos has also published a working document to accompany his four draft report, which provides his explanatory statement to proposals. These include for example proposing much smaller rates of compulsory modulation and to compensate for the reduction in the transfer of financial resources to the second pillar of the CAP (measures for supporting rural development and agri environment schemes) Capoulas Santos foresees capping the allocation of direct CAP payments to farmers at 500 000 euro as well as using Article 68 under which Member States would have the option to transfer unused amounts relating to Article 68 measures to the second pillar. These could then be used to support rural development programmes without any national co-financing.

On compulsory modulation Capoulos Santos proposes not to change the modulation rate for payments between €5,000 and €10,000. For payments above €10,000-99,999 the proposed rate would be increased by 1%, payments between €100,000 and €200,000, the rate would be increased by 2%, payments from €200,000 - €300,000, an increase of 3% and above €300,000, the proposed rate would be 4%.

Other proposals include in the area of minimum payments where Capoulas Santos recommends rejecting the Commission's proposal for establishing a minimum limit of 250 euro per year of one hectare and replacing it with the setting up of a 'simplified voluntary support scheme for farmers' that would allow farmers receiving less than 500 euro to be paid in a single lump sum every two years. This alternative is seen as greatly reducing and simplifying administrative burdens.

Interestingly, though Capoulas Santos also took the opportunity in his working document to criticise the Commission's health check proposals with his comments that:

"the Health Check could (and, in the rapporteur's view should) have dwelt more on the debate concerning the drawing up of an agricultural-policy model for the post-2013 period. The waste of such an opportunity is to be regretted.

The boundary which the commission wished to place around the debate on the 'health check' (leaving out in particular topics such as the legitimacy of aid and the setting of parameters for as common a model as possible of decoupled payments, the degree of management flexibility which should be granted to the Member States, modulation vs co-financing, the possibility of a ‘single pillar’ and the role of market regulation within the new CAP) will complicate the debate and the decisions concerning the 2013 reform, discussions on which will have to begin in 2010/2011.”

I'm guessing this is aimed at the forthcoming discussions on reforming the EU's budget that will be gathering speed come 2009 and not to mention the latest WTO Doha development round of negotiations where crucial ministerial talks are scheduled to take place in Geneva on 21 July to discuss the latest negotiating documents on agricultural trade issues.

The Parliament's Agriculture Committee will have its first chance to not only discuss the draft report next Monday (14 July) when it meets in Brussels but it will also have the chance to hear from the French Farming Minister, Michel Barmier when he comes to present the agricultural priorities of the French EU Presidency.

Environment Committee rejects 10% EU biofuels target

The Parliament's Environment Committee met last night to vote on its opinion for the report that is currently being drafted in the Energy Committee by the Luxembourg Green MEP Claude Turmes on the Commission's proposals for increasing the use of renewables by 20% by 2020. The Turmes report was supposed to be voted on in the Energy Committee next week but with over 1100 amendments tabled, the vote has been postponed until early September.

With all the growing disquiet about the potential impact of biofuels on rising food prices (with the growing competition between crops for fuel or food), accelerating mass deforestation and water shortages and the extent to which it can actually deliver the required reductions in CO2 emissions, the Environment Committee voted to reject the Commission's proposed mandatory target of getting at least 10% of road transport fuels from biofuels by 2020.

In the end, the Committee voted through a number of compromise amendments which supported a target of at least 4% of road transport fuels from renewable sources by 2015. Out of this, at least 20% should be met by the use of electricity or hydrogen from renewable sources, biogas or transport fuels from ligno-cellulosic biomass and algae. A new 8-10% could be set for 2020 out of which 40-50% is met by the use of electricity or hydrogen from renewable sources, biogas or transport fuels from ligno-cellulosic biomass and algae. The exact target for 2020 is to be decided in 2015 subject to "a major review of the overall experience of the policy for renewable energy for transport – with a special focus on the eventual negative consequences for food security and biodiversity as well as the commercial availability of transport fuels from lingo-cellulosic biomass and/or algae, biogas and the use of electricity or hydrogen from renewable sources".

These compromise amendments had cross-party support and were also backed by Claude Turmes but we will still have to wait and see whether they are taken on board by the Parliament's Energy Committee in September. A number of the Parliament's other committees have already backed the 10% mandatory biofuels target including Agriculture, Regional Development and Transport.

The Environment Committee report also outlines a number of environmental and social sustainability criteria for the usage of biofuels, which are certainly more stringent than those outlined by the Commission. For example, new criteria were added such as changes in water quality, water consumption, air pollution and soil quality, as well as for land owners, respect for local communities and native peoples. MEPs also voted to opt for a two-stage approach, under which biofuels that fail to deliver life-cycle CO2 savings of at least 45% compared to fossil fuels would be banned from the start, while those delivering less than 60% savings would be excluded as of 2015.

Our colleagues in the Green Group had also put down amendments for the land used for food and feed production not to be converted for the production of transport fuels and that transport fuels from biomass should be limited to production from idle, marginal or degraded land without high biodiversity value where the direct land use conversion results in a net carbon benefit and that there are no significant negative environmental or other impacts.

The Environment Committee also wants to encourage the development of alternatives such as electric cars and hydrogen, based on renewables and biogas, which would play a role alongside biofuels (provided the latter is accompanied by strict criteria) in curbing greenhouse gas emissions from the transport sector.

Yesterday’s vote comes at a time when the EU's Energy and Environment Ministers are also backing away from the EU's proposed 10% binding biofuels target - a position that was reinforced with the publication of a report for the UK government by the independent UK Renewable Fuels Agency ("Gallagher" report) which has called for the slowing down of the introduction of biofuels until there is more evidence of its impact on land use and climate change.

Proposals by Claude Turmes in his draft report to scrap the 10% binding target are to be welcomed not leastbecause a fixed binding target would not allow any flexibility to use renewable energy sources where they would be most efficient. Also to be welcomed are proposals for creating a clear hierarchy for uses of biomass for energy, with "go" areas (like biomass from waste streams and residue from agriculture), and "no go" areas like agrofuels and biodiverse landscapes.

Farming land has to be used first and foremost for the production of food. While there is a clear need to ensure that strict and binding sustainability criteria are developed to enable the sustainable production of biofuels, there is also a need for greater support for the research and development of more efficient energy use in the transport sector and at the same time investing in research into second generation biofuels. We have to look at ways in which our own energy use can be reduced.

Scotland has for example a number of innovative projects for developing biofuels (biogas, large scale digesters for municipal solid waste, marine biomass, algae and seaweed, abbatoir by-products and animal manure) from various non-food crops and waste, not least the Scottish Association for Marine Science in Oban which is looking at the potential of seaweed for biomass and biofuel production. Napier University has also recently opened a biofuels research centre for developing second generation biofuels. Such research is crucial to see how the development of these technologies can best be utilised to enable the sustainable development of biofuels, which in the long run can help tackle climate change.

Reforming Europe's budget

One of the issues set to dominate the EU policy agenda during the 2009-2014 EP is how to reform Europe's budget. I was closely involved last time round with the 2007-2013 EU budget through our work both on the Parliament's Temporary Committee that was set up to enable MEPs to agree its opinion on what the future EU budget should consist of and the Regional Development Committee which was discussing the detail of the Commission's proposals on European Structural Funding. So, I could pretty much see at first hand at least from the Parliament's side what was going on and what we needed to do to ensure Scotland's funding interests were protected – insofar as that can be achieved when not being an independent member state.

The process for every budget negotiation is more or less the same. Last time round the Commission brought forward its original proposals in 2004 for a new financial framework for funding the EU's policy activities over the seven year period 2007-2013. The key issues largely revolved around (a) the size of the budget, (b) spending priorities and (c) the system of revenue, i.e. how much each Member State wants to contribute to the budget. So, our starting position is always the Commission's proposal which, back in 2004, was for a budget set at 1.26% of the EU's Gross National Income (GNI) – equivalent to an overall total of 1025bn euro. Sounds a lot I know, but bear in mind that the UK budget is about 40% of UK Gross National Income!

The UK government's position was clear. Not only was the British rebate non negotiable, the UK wanted the EU budget cut to a maximum of 1% of the EU's GNI (as did France, the Netherlands, Germany, Austria and Germany), with spending on cohesion policy in the UK – and the other ‘old’ member states – more or less cut to zero. This implied no more EU funding for Scotland, and in particular for the Highlands and Islands. That in turn would involve major cuts over a wide range of key programmes that had supported vital economic development programmes in the Highlands and Islands including research and development, social inclusion, rural development, and cross-border programmes. To put this in perspective, from 2000 - 2006 Scotland had received £1.1bn in European funding – money that had been absolutely crucial in improving the economy of the north of Scotland. As far as London was concerned this should not continue. Needless to say London's position was supported by the previous Scottish Labour/Lib Dem Executive in Edinburgh who sat back, said nothing and did nothing to fight Scotland's corner and protect Scottish interests at stake.

The London government had assured Scotland (and the regions in England and Wales) by vague promises that any loss of EU structural funds would be made good by money from the UK government. Trouble was we were never given any delivery mechanism whereby this would be done! So it was another case of “trust us – we’re the British government”. Aye, right! But there was a second problem, and one that had to do with the then Executive in Edinburgh. Even if they had received additional money from the UK government to compensate for the loss of EU funds, could we be sure they’d spend it in the Highlands and Islands? After all, the block grant is at the disposal of the Scottish Government, and there was widespread concern that the Labour/Liberal coalition would have been much keener to spend any extra money it got in areas where its political support was highest – i.e. not in the Highlands and Islands! The point is that when a country receives monies under the EU structural funds it is obliged to spend that money in the designated region. In other words, EU economic development support monies are ring-fenced.

With Blair as Prime Minister, and with pressure on the UK to give up the generous budget rebate that dated back to 1984, the 2006-2013 budget round became embroiled in controversy. The UK position was that the rebate would only be put on the table if the French were prepared to put a root-and-branch reform of the CAP on the same negotiating table. For the former French President Chirac, this was a non-starter. And for the rest – well, they had just concluded a tortuous round of CAP-reform discussions (whereby CAP spending would be frozen in real terms 2007-2013) and there was no appetite to re-open that hornet’s nest. So the UK rebate stayed. The weakness of London's budgetary strategy – slash structural fund spending all over the place but let’s keep the British rebate – won the UK no friends, especially in Scotland. And that turned out to be crucial. A member state that advances a negotiating position that has no support at home stands a much lesser chance of carrying the day in Brussels. An important lesson as long as Scotland is dependent on the UK to represent its interests at EU level.With the support of many of the funding bodies and organisations back home we fought hard to ensure the continuation of EU funding for Scotland and I was glad when we were backed in this by the European Parliament.

After months of wrangling, EU leaders finally reached a deal at the European Council meeting in Brussels in December 2005 under the UK Presidency. I spent much of that evening sitting in my office in the Parliament waiting for something to happen so that I could then work out what the outcome meant for Scotland. It finally did in the early hours of the next morning. Once again the final stage of the budget negotiation was a shambles, with late night wranglings behind closed doors as financial sweeteners were dished out to all and sundry to ensure that every member state could return home claiming victory! This is no way to run a budget round, and that it succeeded at all was due in large measure to the negotiating tactics of the new German Chancellor, Angela Merkel, who showed real leadership of the EU while the UK was left isolated in both the EP and the Council.

The deal set an EU budget of 862.36bn euro (1.045% of EU GNI) for the period 2007-2013. Built into the agreement was a mandate for the Commission to undertake a "full and wide ranging" review covering all aspects of the EU budget – including all spending policies, the UK rebate and the way in which the budget was funded (currently three-quarters of which comes via direct national contributions) and which would report in 2008/09. In effect that report – which is eagerly awaited – will sound the starting gun for the post-2013 budget negotiations.

Although Scotland's funding was saved under the current budget round, this was not thanks to pressure from London. Instead it was due to pressure from some of the smaller Member States, such as Estonia, Latvia and Lithuania, who sought to retain EU regional economic support albeit at a reduced level. Each time the UK came forward with a new proposal to cut regional economic development support it was politely told to think again.

But even this victory could not mask the fact that the overall budget deal was a disappointment. The UK line – which essentially stated that the EU’s richer member states were seeking a significant reduction in their net contributions to the EU budget – was endorsed by the other net contributing countries. The result was a budget that sought major cuts in the EU's funding programmes – including structural funds, research and development, education, health, culture. This was not the result of any analysis regarding where efficiency savings could be made, or where monies could be used more effectively. Instead the spending cuts were largely indiscriminate and MEPs were quick to make the rather obvious point that this would leave the EU unable to implement many of the policies to which it was committed. This is not a trivial issue. The result can easily be an EU that loses credibility in those member states badly affected by spending cuts, and that can lead to a sense of dis-connection between EU citizens and the EU itself. In more extreme cases it can result in member state governments losing confidence in the EU and being less willing to adhere to EU rules over other matters. Sure we do not want an EU that ‘spends, spends, spends’. But nor do we want an EU that solely benefits the rich member states – and the rich areas within the rich member states – and ignores the rest.

It was in the light of these considerations that, on 18 January 2006, MEPs voted overwhelmingly to reject the budget deal. After deliberation, the Parliament managed to secure an extra 4 billion euro for the total budget, with 2 billion allocated for spending on research and development and competitiveness as well as life long learning – areas that are of benefit to Scotland. That closed what was an extraordinary and troubled budgetary negotiation.

In this blog I’ve tried to set out how the EU budget procedure works – or at least the politics of the process. It is clear that it is member states that are in the driving seat – particularly the richer, net contributing member states – and not the EU institutions as such. Sure the Parliament has some powers over the final shape of the budget, but to be honest it can really only affect the budget at the outer margins. One thing is clear – it is the member states that run the show. They are in complete charge of their destiny in this aspect of EU business, as in so many others. Only as an independent member state can Scotland begin to advance its interests and to ensure not only that the EU budget is ‘good for Scotland’, but more importantly that the EU budget reflects those priorities that Scotland wants to see championed at the EU level such as climate change, food security and energy policy.

In subsequent blogs I will return to this budget issue and ask what lessons can we learn from the experience of the discussions leading up to the 2007-2013 budget agreement as we approach the beginning of the discussions that will determine the shape of the post-2013 budget. Just what should we be wanting from the next EU budget? To be continued…

Labour meltdown in Glasgow East

I couldn't believe it when I woke this morning to the news that Labour had failed to select their candidate, George Ryan, for Glasgow East after he had failed to show up at a hustings meeting last night - you just can't make this sort of stuff up with Labour clearly in their own meltdown. What a non-way to start their by election campaign.

In complete contrast, I was back in Glasgow East today and what a fantastic day its been despite the pouring rain. I heard there were over 300 activists out today along with our candidate, Cllr John Mason and First Minister Alex Salmond, our MPs and MSPs and to be honest it was great to be there doing what I could to help. In all the campaigns I've been involved in I've never quite seen anything like this. I heard someone say it was like being at our Annual National Conference except everyone was outside campaigning, meeting the voters, and talking to the locals about the issues that matter the most to them. Every street I was in was blanketed by us. With SNP brollies, cars, posters, leafleters and canvassers out across the whole constituency it was certainly a sight to see.

If you can help, there are various ways in which you can do so by clicking on this link to the by election campaign page on the SNP website. This also gives details of the Glasgow East campaign headquarters, opening hours, map and directions, etc.

With a heavy legislative agenda next week in Brussels, I have to head back to hold the fort there but I'll be back in Glasgow East for the last push before polling day.
 With our candidate for Glasgow East Cllr John Mason outside the party rooms on Baillieston Road.

Glasgow East By Election

With me being back in Scotland for a couple of days I went across to Glasgow East this afternoon to help out in the by-election.

There was a squad of activists already out and about across the constituency, leafleting and canvassing. I had the opportunity to meet with John Mason, who is going forward as one of our three candidates at a constituency meeting this evening. John's been a local Councillor for the past ten years and worked extremely hard on behalf of his constituents. He was in fine form when I met him and with his experience he is certainly on the side of the people of Glasgow East.

France at the helm of the EU

The glamour and the glitter of France's six month Presidency of the EU officially begins today. When the French President, Nicholas Sarkozy, outlined his vision for the French EU Presidency on the same day as the start of Slovenia's EU Council Presidency it was all too clear that this was going to be an ambitious policy agenda - much of which is more about France regaining the initiative and its leadership role in Europe: to ensure France's place is at the heart of Europe.

With its slogan, "a more protective Europe", what can Scotland look forward to being achieved between now and the end of December? In an ambitious programme, Sarkozy has listed energy and climate change, security and defence, immigration, and the CAP health check as its top priorities. Beyond this Sarkozy has plans to reinvigorate the EU's relations with its Mediterranean neighbours through his Union of the Mediterranean. Key issues for Scotland are reaching a political agreement on the Commission's legislative plans for cutting carbon emissions and increasing the use of renewables, and reforming the CAP. Trouble is this needs to happen for sure by the end of the French Presidency – the European Parliamentary elections next June mean that the Parliament will pack up earlier that normal thus cutting short (by a couple of months) the time it has to enact legislation. It is also all the more imperative given the EU needs to have its negotiating position agreed before the world climate change conference in Copenhagen in December 2009.

Of course the French had hoped that in addition to its ambitious EU policy programme, its Presidency would be crowned by its success in preparing for the implementation of the Lisbon Treaty – and overseeing the appointment of the ‘new’ top jobs, President of the European Council and the High Representative for Foreign Affairs and Security Policy. This has all been torn to shreds with Ireland's rejection of the Lisbon Treaty. Instead the French Presidency will be dogged by trying to resolve the so-called ‘crisis’ created by the Irish doing no more than exercising their democratic rights!! If there is a crisis then it is one that will be triggered by the ill-advised line coming out of Paris insisting that if there is no Lisbon Treaty there will be no further enlargement. Let’s be honest – had Gordon Brown not welched on his commitment to hold a referendum in the UK over the Lisbon Treaty then Ireland would not be alone in the veto corner!

At the recent European Council EU leaders agreed to give the Irish government more time to come up with some proposals on how next to proceed, reporting back at the next meeting of EU leaders in October. Before that though Sarkozy will be in Dublin to hear Ireland's concerns and one can only hope that he will listen. Threatening to block further EU enlargement and using it to push for Lisbon's ratification is not the answer Europe is looking for, nor what it wants.