Herman van RompuyPresident of the European CouncilJosé Manuel BarrosoPresident of the European Commission20 February 2012

A PLAN FOR GROWTH IN EUROPE

We meet in Brussels at a perilous moment for economies across Europe. Growth has stalled.Unemployment is rising. Citizens and businesses are facing their toughest conditions foryears. As many of our major competitor economies grow steadily out of the gloom of therecent global crisis, financial market turbulence and the burden of debt renders the path torecovery in Europe much harder to climb.Europe has many fundamental economic assets. But the crisis we are facing is also a crisis ofgrowth. The efforts that each of us are taking to put our national finances on a sustainablefooting are essential. Without them, we will not lay the foundations for strong and lastingeconomic recovery. But action is also needed to modernise our economies, build greatercompetitiveness and correct macroeconomic imbalances. We need to restore confidence,among citizens, businesses and financial markets, in Europe’s ability to grow strongly andsustainably in the future and to maintain its share of global prosperity.We discussed these issues when we last met. It is right that we discuss them again. Buildingon the conclusions we have previously reached, it is now time to show leadership and takebold decisions which will deliver the results that our people are demanding. We welcome thesteps being taken, nationally and at the European level, to address this challenge and lookforward to agreeing further concrete steps at our next meeting, with action focused on eightclear priorities to strengthen growth.

First, we must bring the single market to its next stage of development, by reinforcinggovernance and raising standards of implementation. The Commission’s report to the JuneEuropean Council should set out clear and detailed actions needed to enhance implementationand strengthen enforcement.Action should start in the services sector. Services now account for almost four fifths of oureconomy and yet there is much that needs to be done to open up services markets on the scalethat is needed. We must act with urgency, nationally and at the European level, to removethe restrictions that hinder access and competition and to raise standards of implementationand enforcement to achieve mutual recognition across the single market. We look forward tothe Commission report on the outcome of sectoral performance checks and call on theCommission to fulfil its obligation under the services directive to report comprehensively onefforts to open up services markets and to make recommendations for additional measures, ifnecessary in legislation, to fulfil the internal market in services.Second, we must step up our efforts to create a truly digital single market by 2015. Thedigital economy is expanding rapidly but cross-border trade remains low and creativity isstifled by a complex web of differing national copyright regimes. Action is needed at the EUlevel to provide businesses and consumers with the means and the confidence to trade on-line, by simplifying licensing, building an efficient framework for copyright, providing asecure and affordable system for cross-border on-line payments, establishing on-line disputeresolution mechanisms for cross-border on-line transactions and amending the EU frameworkfor digital signatures. We should build on the recent proposals of the Commission, withoutreopening the e-commerce directive, to create a system that balances the interests ofconsumers, businesses and rights holders, and spurs innovation, creative activity and growth.We must also continue our efforts to build modern infrastructure to provide better broadbandcoverage and take-up and extend and promote e-government services to simplify the start upand running of businesses and aid the mobility of workers.Third, we must deliver on our commitment to establish a genuine, efficient and effectiveinternal market in energy by 2014. All member States should implement fully the ThirdEnergy Package, swiftly and in recognition of agreed deadlines. Energy interconnectionshould be enhanced to help underpin security of supply. Urgent action is also needed,nationally and where appropriate collectively, to remove planning and regulatory barriers toinvestment in infrastructure to release the potential of the single market and support greengrowth and a low-emissions economy. We look forward to the Commission’s forthcomingcommunication on the functioning of the internal market, which should include an

assessment of the degree of liberalisation and energy market opening in member States. Wealso commit to making concrete progress towards the development of a Single EuropeanTransport Area and establishing the Connecting Europe Facility.Fourth, we must redouble our commitment to innovation by establishing the EuropeanResearch Area, creating the best possible environment for entrepreneurs and innovators tocommercialise their ideas and create jobs, and putting demand-led innovation at the heart ofEurope’s research and development strategy. We must also act decisively to improveinvestment opportunities for innovative start-ups, fast-growing companies and smallbusinesses, by creating an effective EU-wide venture capital regime which allows venturecapital funds to operate on a pan-European basis, assessing a proposal for an EU venturecapital scheme building on the EIF and other financial institutions in cooperation withnational operators, and agreeing a new EU-wide programme, modelled on the Small BusinessInnovation Research scheme, to promote more effective use of pre-commercial publicprocurement to support innovative and high tech businesses. Reforms to create an effectiveand business-friendly system of intellectual property protection remain a very high priority.Fifth, we need decisive action to deliver open global markets. This year we should concludefree trade agreements with India, Canada, countries of the Eastern neighbourhood and anumber of ASEAN partners. We should also reinforce trade relations with countries in thesouthern neighbourhood. Fresh impetus should be given to trade negotiations with strategicpartners such as Mercosur and Japan, with negotiations with Japan launched before thesummer, provided there is progress on the scope and ambition of a free trade agreement. Thedeals that are currently on the table could add €90 billion to EU GDP.But we must go further too. We need to inject political momentum into deepening economicintegration with the US, examining all options including that of a free trade agreement; seekto deepen trade and investment relations with Russia, following its accession to the WTO;and launch a strategic consideration of our trade and investment relationship with China, witha view to strengthening our economic ties and reinforcing commitment to rules-based trade.Recognising the benefits that open markets bring, we should continue our efforts tostrengthen the multilateral system, including through the Doha Development Agenda, strivefor multilateral and plurilateral agreements in priority areas and sectors, and resistprotectionism and seek greater market access for our businesses in third countries. Above all,we must reject the temptation to seek self-defeating protectionism in our trade relations.

Sixth, we need to sustain and make more ambitious our programme to reduce the burden ofEU regulation. We welcome the commitments made by the institutions to reduce burdens onsmall businesses but urge further and faster progress across the EU institutions whilemaintaining the integrity of the single market and the Union’s wider objectives. We shouldassess the scope for ambitious new EU sectoral targets and agree new steps to bring tangiblebenefits to industry. We should also make a very clear and visible statement of our intentionto support micro-enterprises and ask the Commission to present detailed proposals to achievethis, including possible amendments to existing legislation. We also ask the Commission topublish an annual statement identifying and explaining the total net cost to business ofregulatory proposals issued in the preceding year.Seventh, we must act nationally and, respecting national competences, collectively topromote well functioning labour markets which deliver employment opportunities and,crucially, promote higher levels of labour market participation among young people, womenand older workers. Special attention should also be given to vulnerable groups that have beenabsent from the labour market for long periods. We should foster labour mobility to create amore integrated and open European labour market, for example by advancing the acquisitionand preservation of supplementary pension rights for migrating workers, while respecting therole of the social partners. We should also take further action to reduce the number ofregulated professions in Europe, through the introduction of a tough new proportionality testset out in legislation. In this context, we ask the Commission to convene without delay a newforum for the mutual evaluation of national practices to help identify and bring downunjustified regulatory barriers, examine alternatives to regulation which ensure highprofessional standards and assess the scope for further alignment of standards to facilitatemutual recognition of professional qualifications.Finally, we must take steps to build a robust, dynamic and competitive financial servicessector that creates jobs and provides vital support to citizens and businesses. Implicitguarantees to always rescue banks, which distort the single market, should be reduced.Banks, not taxpayers, should be responsible for bearing the costs of the risks they take.While pursuing a level playing field globally, we should commit irrevocably to internationalbinding standards for capital, liquidity and leverage with no dilution, ensuring that EUlegislation adheres to Basel 3 standards to ensure financial stability and meet the financingneeds of our economies. Banks should be required to hold appropriate levels and forms ofcapital in line with international criteria, without discrimination between private and publicequities. We also call for rigorous implementation of the G20 principles on banking sectorremuneration in line with existing EU legislation.

Each of us recognises that the plan we propose requires leadership and tough politicaldecisions. But the stakes are high and action in many of these areas is long overdue. Withbold and effective action and strong political will we can recover Europe’s dynamism and putour economies back on the path to economic recovery. We urge you and the EuropeanCouncil to answer our peoples’ call for reform and to help restore their confidence inEurope’s ability to deliver strong and sustainable growth.We are copying this letter to colleagues on the European Council.David Cameron, Prime Minister of the United KingdomMark Rutte, Prime Minister of the NetherlandsMario Monti, Prime Minister of ItalyAndrus Ansip, Prime Minister of EstoniaValdis Dombrovskis, Prime Minister of LatviaJyrki Katainen, Prime Minister of FinlandEnda Kenny, Taoiseach, Republic of IrelandPetr Nečas, Prime Minister of the Czech RepublicIveta Radičová, Prime Minister of SlovakiaMariano Rajoy, Prime Minister of SpainFredrik Reinfeldt, Prime Minister of SwedenDonald Tusk, Prime Minister of Poland

Joint letter from Prime Minister David Cameron, Prime Minister Mark Rutte, Prime

Minister Mario Monti, Prime Minister Andrus Ansip, Prime Minister Valdis

Dombrovskis, Prime Minister Jyrki Katainen, Taoiseach Enda Kenny, Prime Minister

Petr Nečas, Prime Minister Iveta Radičová, Prime Minister Mariano Rajoy, Prime

Minister Fredrik Reinfeldt, and Prime Minister Donald Tusk

A PLAN FOR GROWTH IN EUROPE