COUNCIL OF THE EUROPEAN UNION

Brussels, 19 March 2014

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NOTE from: To: Subject:

General Secretariat of the Council Delegations European Council (20 and 21 arch 201!" # Draft conclusions

In accordance with Article 2(3)(a) of the Council's Rules of Procedure, delegations will find attached the draft conclusions prepared by the President of the uropean Council, in close cooperation with the !e!ber of the uropean Council representing the "e!ber #tate holding the si$%!onthly Presidency of the Council and with the President of the Co!!ission&

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(p&!& '(raine) urope is e!erging fro! the financial and econo!ic crisis& )he uropean econo!y is reco*ering, after se*eral years of li!ited or e*en negati*e growth& )he reco*ery is e$pected to strengthen this year& )he uropean Council had an e$change of *iews on the econo!ic and social situation and outloo(& It discussed in particular the !ost appropriate policy response for the short and !ediu! ter!& It concluded the first phase of the uropean #e!ester and had a first discussion on the i!ple!entation of the urope 2+2+ #trategy ahead of the !id%ter! re*iew at the #pring 2+,uropean Council& It also focused on a stronger uropean industrial co!petiti*eness as a dri*er for econo!ic growth and .obs& It held a first policy debate on the fra!ewor( for cli!ate and energy in the period fro! 2+2+ to 2+3+ and agreed on the way forward& It underlined the i!portant lin( between the urope 2+2+ strategy, industrial co!petiti*eness and cli!ate and energy policies& /p&!& #R"0 /p&!& sa*ings ta$ation0

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#RO$TH, COMPETITI%ENE&& AN' (OB&

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THE EUROPEAN &EME&TER

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The European Council in December 201+ endorsed the fi,e broad polic- priorities for the European .nion and its ember States set out in the 201! /nnual Gro0th Sur,e- (/GS": pursuing differentiated1 gro0th#friendl- fiscal consolidation1 restoring normal lending to the econom-1 promoting gro0th and competiti,eness1 tac2ling unemplo-ment and the social conse3uences of the crisis1 0hile modernising public administration* To steer the Council4s discussions on the 201! European Semester1 the European Council put particular emphasis on policies enhancing competiti,eness1 supporting job creation and fighting unemplo-ment1 particularl- -outh unemplo-ment1 and on the follo0#up to reforms to impro,e the functioning of labour mar2ets* The 5ational 6eform 'rogrammes and the Stabilit- and Con,ergence 'rogrammes should address the issues identified in last -ear4s Countr-#Specific 6ecommendations and in the Commission4s recent anal-sis in the conte7t of the integrated sur,eillance of macroeconomic and fiscal imbalances1 including its in#depth re,ie0s1 0hile ta2ing full account of the discussions held in the Council in the frame0or2 of the European Semester*

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The European Council assessed the implementation of the Europe 2020 Strateg- on the basis of the Commission communication* /chie,ing the Strateg-4s goal of smart1 sustainable and inclusi,e gro0th remains crucial* The crisis has slo0ed do0n progress to0ards the 2e- goals of the Strateg- and the long#term challenges affecting gro0th in Europe ha,e not gone a0a-* The European Council calls for stepping up efforts to reach the Europe 2020 targets and loo2s for0ard to the planned re,ie0 of the E. 2020 Strateg- in 201$*

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P"1 #ingle Resolution "echanis! (Results of legislati*e wor( and the I2C) +* The European Council 0elcomes the Commission8s report on the state of pla- of negotiations on sa,ings ta7ation 0ith European third countries (S0it9erland1 :iechtenstein1 /ndorra and San onaco1 arino" and calls on those countries to commit full- to implementing the

ne0 single global standard for automatic e7change of information1 de,eloped b- the ;ECD and endorsed b- the G201 and to the earl- adopters initiati,e* The European Council calls on the Commission to carr- forth the negotiations 0ith those countries s0iftl- 0ith a ,ie0 to concluding them b- the end of the -ear1 and in,ites the Commission to report on the state of pla- at its December meeting* <f sufficient progress is not made1 the Commission4s report should e7plore possible options to promote compliance 0ith the ne0 global standard*

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<n the light of this1 the Council 0ill adopt the Directi,e on ta7ation of sa,ings income at its ne7t arch 201! meeting*

The European Council in,ites the Council to ensure that1 0ith the adoption of the Directi,e on /dministrati,e Cooperation b- the end of 201!1 E. la0 is full- aligned 0ith the ne0 global standard*

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IN'U&TRIAL COMPETITI%ENE&& AN' POLIC)

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Europe needs a strong and competiti,e industrial base1 in terms of both production and in,estment1 as a 2e- dri,er for economic gro0th and jobs* Competiti,eness re3uires a stable1 simple and predictable en,ironment1 including better regulation* The o,erall frame0or2 at European and national le,els must be made more conduci,e to in,estment and inno,ation and the reshoring of manufacturing jobs* The Commission communication =>or a European <ndustrial 6enaissance= pro,ides important input in this respect? the Commission is in,ited to present a roadmap for ta2ing 0or2 for0ard on this basis*

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<ndustrial competiti,eness concerns should be s-stematicall- mainstreamed across all E. polic- areas and be part of impact assessments* This should go together 0ith targeted competiti,eness proofing* ember States are in,ited to match European measures to strengthen competiti,eness of industr- at national le,el*

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Efforts must continue to full- e7ploit the potential of the internal mar2et in goods and ser,ices and to foster entrepreneurship* <nfrastructure net0or2s1 including digital net0or2s1 need to be de,eloped and updated 0ith intelligent and inno,ati,e technologies* 'articular attention should be paid to encouraging the creation and gro0th of S Es1 including facilitating access to finance across the E.*

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Through its budget1 the European .nion contributes to industrial competiti,eness* The best possible use should be made of E. instruments such as Bori9on 20201 the Connecting Europe >acilit-1 the European Structural and <n,estment >unds and C;S E as 0ell as mar2et#based and other inno,ati,e financial instruments to support competiti,eness and access of S Es to finance* <n this conte7t1 smart specialisation should be promoted at all le,els1 including through the efficient use of public in,estment in research* This 0ill facilitate contacts bet0een firms and clusters and impro,e access to inno,ati,e technologies*

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The competiti,eness of European industr- on international mar2ets cannot be ta2en for granted* Efforts should continue to impro,e mar2et access around the 0orld b- facilitating the integration of European companies in global ,alue chains and promoting free1 fair and open trade 0hile asserting its interests1 in a spirit of reciprocit- and mutual benefit* The European Council calls on the European <n,estment Dan2 to further contribute to enhancing European companies4 internationalisation and competiti,eness* Ta2ing for0ard an ambitious trade and in,estment agenda and promoting European and international standards and regulations1 including the fight against counterfeiting1 are important elements contributing to enhancing the E.4s industrial competiti,eness globall-* This should help open mar2ets1 defend E. interests and acti,el- promote a le,el pla-ing field in third mar2ets* >urther action must also be pursued on ensuring access to core ra0 materials*

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>ostering the .nion4s industrial gro0th re3uires the right s2ills* The European Council urges the Commission and the ember States to address shortages in the area of science1 s2ills" as a matter of priorit-1 0ith technolog-1 engineering and mathematics (STE

increased in,ol,ement of industr-* >urther efforts b- the public and pri,ate sectors should be directed to promoting mobilit-1 education and ,ocational training* /ll a,ailable instruments should be used to this end1 such as the European Structural and <n,estment >unds (ES<>"1 the ne0 generation of Erasmus E1 the Grand Coalition for Digital Fobs1 the European /lliance for /pprenticeships or the Gouth Emplo-ment <nitiati,e and the Gouth Guarantee* <ndustrshould be more in,ol,ed in forecasting future s2ills needs* 10* <ntellectual propert- and patenting are 2e- dri,ers for gro0th and inno,ation* Despite its leading role in a number of technolog- industries1 the European .nion is lagging behind in patenting* The European Council therefore calls for enhancing support to these high#gro0th sectors1 in order to preser,e the European .nion4s technolog- lead* The concerned 'arties should ratif-1 in accordance 0ith their constitutional pro,isions1 the agreement on the .nified 'atent Court and ma2e the necessar- legal and administrati,e arrangements so that the E. patent regime can enter into force b- the end of 201!* 11* The European Council recalls that 2e- enabling technologies (HETs" are of crucial importance for industrial competiti,eness* HETs of high industrial interest1 such as batteries for electro#mobilit-1 intelligent materials1 high performance production and industrial bio# processes1 should be strengthened b- s0iftl- identif-ing projects of European interest* Special attention should be paid to the role of cleantech as a cross#cutting element for enhancing the competiti,eness of the European industr-*

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;n the basis of the orientations set out abo,e1 the European Council in,ites the Council1 the Commission and the ember States to continue 0or2* The European Council 0ill come bac2 arch 201$* to these issues in the conte7t of the Europe 2020 Strateg- re,ie0 in

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/ strong1 resource#efficient and competiti,e European industrial base must be seen in relation to a coherent European climate and energ- polic-1 including through addressing the issue of high energ- costs1 in particular for energ-#intensi,e industries*

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CLIMATE AN' ENER#)

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/ coherent European energ- and climate polic- must ensure affordable energ- prices1 industrial competiti,eness1 securit- of suppl- and achie,ement of our climate and en,ironmental objecti,es* Substantial progress has been made to0ards the attainment of the E. targets for greenhouse gas emission reduction1 rene0able energ- and energ- efficienc-1 0hich need to be full- met b- 2020* 'rogress in interconnections should be commensurate to 0hat is needed in order to facilitate the achie,ement of the E. energ- and climate objecti,es.

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Ta2ing into account the timeline agreed in Iarsa0 for the conclusion of a global climate agreement at the 21st session of the Conference of the 'arties in 'aris in 201$1 the European Council confirms that the European .nion 0ill submit its contribution at the latest b- the first 3uarter of 201$1 as should all major economies* <n the light of the .5 Climate Summit in September 201! the ne0 E. target for greenhouse gas emission reductions 0ill be in line 0ith the agreed E. objecti,e for 20$01 and should be more ambitious than the impact in 20+0 of the full implementation of measures en,isaged in current obligations* Such an agreed E. polic- frame0or2 on greenhouse gas emissions1 rene0ables and energ- efficienc-1 to be elaborated on the basis of the Commission communication1 0ill pro,ide the necessarstabilit- and predictabilit- for its economic operators and confirm the E.4s role globall-*

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The ne0 frame0or2 should be based on the follo0ing principles: further impro,e coherence bet0een greenhouse gas emissions reduction1 energ- efficiencand the use of rene0ables and deli,er the objecti,es for 20+0 in a cost#effecti,e manner1 0ith a reformed Emissions Trading S-stem pla-ing a central role in this regard? ensure securit- of energ- suppl- for households and businesses at affordable and competiti,e prices? pro,ide fle7ibilit- for the mi7* ember States as to ho0 the- deli,er their commitments in

order to reflect national circumstances and respect their freedom to determine their energ-

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Iith a ,ie0 to an earl- agreement on a ne0 polic- frame0or2 for energ- and climate in the period 2020 to 20+01 the European Council in,ites the Council and the Commission to continue 0or2 and rapidl- de,elop the follo0ing elements: anal-se the implications for indi,idual ember States of the Commission4s proposals for

emission reductions and rene0able energ- in the E.? elaborate mechanisms 0hich 0ill result in fair effort sharing and foster the modernisation of the energ- sector? de,elop measures to pre,ent potential carbon lea2age and call for long#term planning securit- for industrial in,estment in order to ensure the competiti,eness of Europe4s energ-#intensi,e industries? re,ie0 the Energ- Efficienc- Directi,e in a timel- manner and de,elop an energefficienc- frame0or2* The European Council 0ill ta2e stoc2 of progress made on these issues at its meeting in Fune1 based inter alia on consultations 0ith ember States1 0ith a ,ie0 to ta2ing a final decision on the ne0 polic- frame0or2 as 3uic2l- as possible and no later than ;ctober 201!*

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The objecti,es of completing the internal energ- mar2et b- 201! and de,eloping interconnections so as to put an end to an- isolation of efforts in particular as regards: speed- implementation of all the measures to meet the target of achie,ing interconnection of at least 10 J of their installed electricit- production capacit- for all and&or less 0ell connected parts of the single mar2et1 and integrating de,eloped 0ith third countries? effecti,e and consistent implementation of the Third Energ- 'ac2age b- all pla-ers in the European energ- mar2et? effecti,e application and enforcement of E. rules regarding mar2et integration and energefficienc-1 and stri,ing for a le,el pla-ing field for companies operating 0ithin the E.* ember States* Special attention should be paid to impro,ing interconnections 0ith the more remote ember States into the European continental net0or2s* Ihere rele,ant1 interconnections should also be ember States from European gas and electricit- net0or2s b- 201$ remain a priorit-* The European Council calls for speeding up

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Efforts to reduce Europe4s high gas energ- dependenc- rates should be intensified1 especiallfor the most dependent ember States* oderating energ- demand through enhanced energefficienc- should be the first step 0hich 0ill also contribute to other energ- and climate objecti,es* The European Council calls on the Commission to conduct an in#depth stud- of E. energ- securit- and to present b- Fune 201! a comprehensi,e plan for the reduction of E. energ- dependence* The plan should reflect the fact that the E. needs to accelerate further di,ersification of its energ- suppl-1 increase its bargaining po0er and energ- efficienc-1 continue to de,elop rene0able and other indigenous energ- sources and coordinate the de,elopment of the infrastructure to support this di,ersification in a sustainable manner* ember States 0ill sho0 solidarit- in case of sudden disruptions of energ- suppl- in one or se,eral ember States*

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<n order to pursue the objecti,es set out abo,e1 implementation of rele,ant projects of common interest should be speeded up and a,ailable E. resources1 including the CE>1 and the E<D financing capacit-1 should be s0iftl- mobilised*

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<n the light of the main cost dri,ers identified in the Commission communication1 the European Council calls for sustained efforts to moderate the energ- costs borne b- energend#users1 in particular through: a progressi,e e,olution of support mechanisms for rene0ables to a more cost#effecti,e and mar2et#based s-stem and more con,ergence of national support schemes be-ond 2020? sustained in,estment in energ- efficienc- and demand#side management all along the ,alue chain and at the 6KD stage? fuller use of the electricit- generation capacit- a,ailable on the internal mar2et rather than rel-ing on national capacities alone1 0hile recogni9ing the role of ensuring securit- of suppl-? promotion of domestic resources and of competition on gas suppl- mar2ets and addressing the issue of the contractual lin2age of gas and oil prices* ;n the basis of the abo,e measures1 bet0een ember States 0ill ta2e the appropriate actions leading ember States in

to cost reduction in the manner most suited to their specific circumstances* Coordination ember States as 0ell as across sectoral policies must be ensured in order to facilitate the achie,ement of E. le,el objecti,es* 22* <n addition1 the European Council calls on the ember States to further e7amine their

different national practices on energ- polic- le,ies1 ta7 components of prices and net0or2 costs1 0ith the objecti,e of minimising negati,e conse3uences for energ- prices* Duilding on recent e7perience1 ember States 0ill continue to regularl- e7change information on major ember States1 0hile fullnational energ- decisions 0hich ha,e a possible impact on other respecting national choices of energ- mi7*

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C)PRU& 2+* The European Council 0elcomes the resumption of full- fledged settlement negotiations based on the 11 >ebruar- Foint Declaration 0ith the aim to reunite C-prus* The European Council supports a comprehensi,e and ,iable settlement of the C-prus problem 0ithin the .5 frame0or21 in accordance 0ith rele,ant .5 Securit- Council resolutions and in line 0ith the principles on 0hich the European .nion is founded* The European Council underlines that the di,ision of C-prus has endured for too long and emphasises the importance of maintaining the momentum* The European Council stands read- to pla- its part in supporting the negotiations* 6eunification of C-prus 0ould be to the benefit of all the C-priot people and in this respect the European Council supports an- confidence building measures agreed b- the t0o parties 0hich could contribute decisi,el- to creating a climate of mutual trust and gi,e impetus to the negotiation process*

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E*TERNAL RELATION&

(p*m* .2raine) EU!A+r,ca rela-,./s 2!* /head of the !th E.#/frica Summit on 2 and + /pril 201!1 the European .nion remains committed to building a partnership of e3uals 0ith /frica and strengthening relations in all rele,ant areas in response to the gro0ing interdependence bet0een the European .nion and /frica* The European Council e7presses the E.4s 0illingness to further cooperate 0ith its /frican partners in promoting trade and de,elopment1 good go,ernance1 the rule of la0 and human rights* <t also underlines the importance to address migration and mobilit-1 including irregular migration and the fight against traffic2ing of human beings1 in a spirit of shared responsibilit- bet0een countries of transit1 origin and destination* 2$* The European Council emphasises in particular that continued international support for /frican partners in the area of securit- remains crucial and encourages other donors to participate in burden#sharing* Therefore1 the European .nion 0ill continue to pro,ide operational support through its ci,ilian crisis management missions and militar- operations1 at the re3uest of indi,idual countries and in close cooperation 0ith other regional and international actors* <n this conte7t1 it underlines the urgenc- of mobilising financial and operational support for the /frican#led <nternational Support 6C/ in the coming 0ee2s* ission to the Central /frican 6epublic ( <SC/" and reaffirms the .nion4s commitment to deplo- its operation E.>;6

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The European .nion 0ill also consider 0a-s and means to support /frican initiati,es for capacit-#building1 0hich 0ill strengthen the /frican 'eace and Securit- /rchitecture and enable /frican partners to pre,ent conflicts and address crises effecti,el- and rapidl-* The European Council encourages further 0or2 at E. le,el to enhance support for /frican capacit- de,elopment in a comprehensi,e and s-stematic 0a- encompassing ad,ice1 mentoring1 training and e3uipment* The European Council in,ites the Bigh 6epresentati,e to ma2e further proposals in this regard1 including on a possible clearing house on the pro,ision of e3uipment to support training pro,ided b- the E.*

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