The UK presidency of the EC: The key British priorities in each policy area during the six months leading up to the Edinburgh summit

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The UK's top priority will be to see the completion of the single European market. Another important priority will be the successful completion of the Uruguay Round of Gatt talks, which is dependent on political agreement between the EC and US on agriculture. Michael Heseltine, President of the Board of Trade, will repeatedly underline this. Other areas where the UK will seek to make its mark are in ensuring that the state aid regime is adhered to and extending consumer safeguards on products and services throughout the EC.

Economic affairs

THE BRITISH presidency starts with one issue John Major almost certainly cannot win: a commitment from the Community to base a European central bank in London. To Britain's Community partners, it was always absurd that the British government should lobby so furiously to bring the bank to London. After all, the Maastricht treaty gives the UK the right to opt out of full monetary union, if and when it goes ahead.

But for the Government, and certainly for the Bank of England, it was not an absurd position. After all, London is still Europe's premier financial market-place. Moreover, Britain's position on monetary union now looks no more ambiguous than that of any other member state. At British insistence, the issue has been held over from Lisbon until the Edinburgh summit next December. But this is one issue on which Britain cannot turn its tenure as president to advantage. In spite of the Bonn-London axis fostered by Mr Major and Helmut Kohl, German feelings on giving up the mark for a single currency run so high that Bonn wants the bank as a minimum reassurance. At Lisbon, it became clear that the German preference for Frankfurt, Europe's second financial marketplace, was opposed by almost every other member state. But a consensus did begin to form around Bonn.

The European Monetary Institute will be set up in 1994, or the beginning of Stage Two of Emu. This forerunner of the European central bank will intensify monetary co-operation among the European central banks until 1996 when a decision is taken on whether to proceed with full monetary union.

But during Stage Two all countries intending to participate in full monetary union should have placed their currencies inside the narrow bands of the European exchange rate mechanism, which sets a fluctuation band of 2.25 per cent either side of a central rate. Many observers think that Britain will enhance its term by placing sterling - which fluctuates within the wide 6 per cent bands - inside the narrow bands this autumn. But this tactic may carry risks which Mr Lamont is not willing to take.

Enlarging the EC

BUILDING a more open Community is one of Britain's central aims during the next six months. This helps to shape its attitude towards many aspects of policy, but nowhere more than on the question of links with other states in Europe outside the Community. At the beginning of 1993, the European Economic Area comes into operation - a trade pact between the EC and the seven countries of the European Free Trade Area (Efta). But more importantly, the period will see the preparation of the mandates for negotiation with those countries that are likely to join the EC: Sweden, Finland, Austria and Switerland. Norway may decide before the end of the year that it, too wants to be in that group. All five are members of Efta.

But the topic is charged with difficulty. At the Maastricht summit, heads of government agreed that these negotiations could not open until the financial consequences of the new treaty on European union were dealt with. At the Lisbon summit, they made clear that formal negotiations could not begin until Maastricht was ratified by all 12 states - even though a Danish referendum rejected the document.

Britain pushed for negotiations to begin earlier, if neccessary. It was overruled, partly because the other 11 see this as a useful lever against Copenhagen. But the issue showed that even though there is far less resistance to enlargment in the EC than there was six months ago, there is still an undercurrent of resentment. Preparing the mandate means sorting out what the scope of the negotiations will be. This does mean that the political signal cannot be sent out until after the Danish problem has been resolved.

As well as actually bringing in new members, Britain will want to expand ties with countries which would like to join, but are being sidelined - Turkey, Cyprus and Malta in particular. Eastern Europe will also absorb a lot of attention. Britain wants to create stronger trading ties to the east, and the EC will also have to start to come to terms with the former Soviet republics. In October, Britain also takes the presidency of the Council of Europe, a broader pan-European body which is developing links with the east.

Budget

THE PROBLEMS that face Britain as it tries to lead Europe gingerly to an agreement on the EC budget are not economic or financial, but primarily political. Most specialists say that the European Commission has not put up a very strong case for its demand for a one-third increase in real terms in a budget that is already more than 46bn a year. A report from the Court of Auditors last month concluded that despite the reforms of recent years, much of the EC's money is still ill-spent. Agriculture spending is plagued by fraud. Resources devoted to improving European research and development are wasted. Even the structural and regional funds - for helping the poorer members of the EC catch up with the richer - are troubled by mismanagement and bureaucracy.

Now is a time of fiscal rigour, with little sign of recovery from recession. Member states are hardly going to be sympathetic towards a demand for lots more money for Brussels. Britain will be pushing the case for greater discipline over expenditure.

But these financial and economic arguments do not wash when compared with the main political one: the EC's rich members will have to lavish large amounts of aid on the poorer members to persuade them to achieve not just the single market and the ratification of Maastricht but also the opening of the EC to new members and a host of other things.

Hence the proposal from the European Commission, now known as the second Delors package, not just to raise real spending by a third but also to devote much of that increase to a doubling of the various arrangements - structural funds, regional funds and, from 1993 onwards, the Cohesion Fund - to help Ireland, Portugal, Spain and Greece catch up.

The important issue on which Norman Lamont will have to try to win agreement is the ceiling on Community spending. At the moment, it is 1.2 per cent of the member states' combined gross national products. The Delors plan, hotly opposed by Britain, was to increase it gradually to 1.37 per cent by 1997. Subsidiary to that is the question of which areas are given priority if not all the increase is agreed.

Internal market

COMPLETING the single internal market is Britain's main priority for the EC in the next months. This ambitious project aims to remove the physical, fiscal and technical barriers to trade between the Twelve. It is popularly known in most states as the 1992 programme, though in fact the aim is to finish it by the end of the year. The plan includes 300 measures.

The single market is Europe's main saving grace as far as the Conservative Party is concerned, even its more sceptical members. But of the measures to be dealt with, many are highly complex, and some are politicised. Many of the remaining measures concern tax. They will be dealt with by the Economic and Finance Council (Ecofin), and some are controversial: the harmonisation of minimum rates of VAT, for example. Others measures include company law, the European company statute, and trademarks, to be dealt with by the Internal Market Committee, to be chaired by Richard Needham, the Minister for Trade. The company statute includes provisions on worker participation which are regarded as deeply suspect by the British government.

There are also measures on copyright, food law and perhaps most controversially, the abolition of border controls. Britain's view of the single market is tempered by free-market principles; it fears other states want to use the programme for political ends, or to to block off Europe from the rest of the world. Border controls raise an even bigger problem.

It seems highly unlikely that all of the elements of the single market will be in place by 1 January, 1993. Many have already fallen by the wayside. Some have been added, however, in fields such as energy. In most cases - taxation is an exception - voting is by qualified majority, and the task of British ministers will be to broker delicate compromises.

But it is not just a question of getting measures passed. Britain wants to ensure that those measures are implemented by member states. Britain has one of the better records on implementation, with 111 measures passed by the end of last year out of 209 agreed by the Council of Ministers.

Health

The priorities will be the promotion of Europe-wide targets to improve public health. They will be based on the British white paper, Health of the Nation, to be published on 8 July, setting out targets for increasing immunisation rates and reducing the incidence of diseases such as cancer. Virginia Bottomley, Secretary of State for Health, will chair a health council on 13 November, and may face embarrassment over Britain's resistance to European calls for a ban on tobacco advertising. Public health will be covered by European competency under the Maastricht treaty.

Education

A four-point plan for education during the UK presidency of the European Community will target higher education. Speaking at the EC Council of Education ministers in Luxembourg last month, the Secretary of State for Education, John Patten, said the plan included an expansion of Open University-type courses. By opening up the market in such courses, more students would learn in their own time and way, he said. Other aims included support for European higher education systems and encouraging student and teacher mobility in higher education through the EC.

Development

Curiously, the plan of action on development contains no mention of Britain's stated policy to make foreign aid conditional on good government. Instead, Baroness Chalker's department singles out population growth with a hint at sexual equality: the aim is to allow 'women and men' to 'make real choices about the number and spacing of their children'. Britain also wants to 'highlight the role of the voluntary sector', and 'encourage member states not to 'tie' their aid'; France and Italy are the main culprits, but Britain is also guilty.

Consumers

The Consumer Affairs Council has a low profile in the Community. The ministers who look after the area, such as Britain's Baroness Denton, are usually relatively junior, and producer interests tend to prevail. The Timeshare directive, which came before the Consumer Affairs Council the day before yesterday, is one important piece of legislation that Britain will press for. But consumer lobbies want the interests of consumers taken into account across the board. They also want to see stricter enforcement of existing legislation.

Employment

The row over the 48-hour week appeared to have been settled just before the beginning of the presidency. But a huge expanse of continental-style employment law is only now being incorporated in Britain. Details of the package, and of attempts to protect European workers, are certain to be debated in the next few months. Gillian Shephard is proving more skilful at forging consensus as employment secretary than her predecessor, Michael Howard. Hanging over the presidency will be Britain's opt-out from the Maastricht social charter.

Agriculture

One area in which the presidency might have been expected to have less to do than when Portugal held it is agriculture. The deal on reforming the CAP that was struck in the final weeks of the Portuguese presidency establishes irrevocably the principle of moving away from supporting farmers by means of high produce prices and towards giving them direct income support. Plenty remains to be done on the question, however, under the chairmanship of John Gummer. One particularly knotty negotiation is likely to be over the question of Italy's milk quota

Transport

Reducing state aid for state-owned airlines will be high on the agenda for John MacGregor, the Secretary of State for Transport during the European presidency. Mr MacGregor is keen to build on last week's long-term EC agreement for greater competition between airlines. Airline slot allocation for services and freight cabotage linked to road freight will be in the programme. He will outline the programme at a meeting of transport ministers next week discussing the completion of the single market, transport safety and environment.

Energy

The UK's fight for a free market in energy across the EC is expected to run into fierce opposition from energy ministers and the industry alike. Some European nations oppose Commission moves to open up energy to more competition. The Commission has proposed that large users should be able to buy from anywhere in the EC from next year, extending this to smaller users in three years. Tim Eggar, Energy Minister at the Department of Trade and , has said he wants a 'determined move' towards speedy liberalisation.

The EC spends 2bn ecus a year on collaborative research and development, under a series of initiatives on science and technology known as the Framework Programmes. William Waldegrave, the Minister for Public Service and Science, will be well placed to set the priorities of the Fourth Framework Programme which begins in 1994. The EC commissioner, Filippo Pandolfi, received a cool response in London last week when he suggested more money should be spent on the current programme. Britain also believes EC industrial research should not aim to 'pick winners'.

Environment

The main environmental theme of Britain's presidency of the EC is likely to be effectiveness: translating the Community's many directives into real improvements in air, soil and water quality across all of Europe, not just the greener member states. Michael Howard, the Environment Secretary, wants the EC to be seen to take a lead in implementing Agenda 21, the general action plan which nations signed up to at the Earth Summit in Rio de Janeiro last month. Britain believes there should be closer monitoring of whether EC governments are delivering on their green commitments.

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