Some Thoughts on the Commission s Proposals for Future EU R&D Policy and the Seventh Framework Programme

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1 Some Thoughts on the Commission s Proposals for Future EU R&D Policy and the Seventh Framework Programme 1. Future EU R&D Policy The future of EU R&D Policy, especially in the context of the Commission's proposed Guidelines and Framework Programme 7: Should industry submit views and if so, who should do this and how could inputs be coordinated? What is proposed? In its June 2004 Communication, the Commission proposed doubling the Union s research budget to around 30billion+ (in fact a substantially larger figure will be sought, see footnote 1 and question 2). This relates (in Mr Mitsos words during a meeting on the day the Communication was launched) to an upgrading of research and the European Research Area as part of the European constitution. The Communication describes six axes for the next period, continuing some approaches from the 6 th Framework Programme (FP6) and introducing new elements. For the bulk of today s EU research activities, the keyword is continuity (which is also encouraged by the mid-term ( Marimon ) report on the FP6 instruments). The proposal places greater emphasis on human resources, especially to improve mobility along the academic-industry and inter-sector axes and to give greater opportunities for whole career development by women. There are also ambitious objectives relating to the coordination of national programmes (under treaty article 169). The Commission hopes to establish an ambitious programme of co-funding with nations (and the private sector where appropriate) to achieve what it sees as the required critical mass of key research infrastructures. Another ambition is to introduce greater competition within basic (now referred to as frontier) research (see question 3). The view is that the scientific community itself must have the final word on (and responsibility for) decisions about domains and excellence. Breaking with the past, collaboration will not be a pre-requisite. Third, Technology Platforms (see question 4) are mechanisms for enabling stakeholders to determine jointly their medium- and longer-term research needs and mechanism for implementation: to obtain broad industry-led agendas. The directions set out by the Commission reflect important and valid priorities. It is important to strengthen and make better use of infrastructures and competencies. At the same time, substantial and urgent improvements are needed in philosophy and process. The important questions are about how such improvements will be achieved and the extent to which the EU R&D instruments 1 COM (2004) 353. Care needs to be taken over timeframe and scope: for comparison, the FP6 budget ( ) is 17.5 billion, i.e. around 4.5 billion/year. FP7 covers the period and the EU-25 rather than EU- 15. The Commission is looking for a doubling in real terms to address significantly greater objectives. 1

2 can have a truly catalytic impact on economic competitiveness and the research base upon which this competitiveness rests. The general tendency of successive Framework Programmes, including FP6 and the proposals for FP7, can be summed up as greater ambition. Unfortunately and for a number of reasons, the quality with which these programmes have been implemented has lagged behind the ambition, and insufficient attention has been given to the mechanisms by which to bring knowledge successfully through to market. FP6 has achieved lower industrial participation than was hoped, primarily because many firms have found that the submission costs are too high, the application success rates too low, and the direct benefits too few. Enhancing competitiveness in a knowledge-based economy is critical for Europe, and transnational R&D has a growing part in making this possible. If there is continued dissatisfaction with the Framework Programme, this risks damaging credibility (both of the programme and the Commission) and further discouraging industrial involvement in what are potentially useful and important initiatives. Suggested Approach 1) Many groups have commented on the June 2004 Communication and the Commission published its analysis of the consultation in December There is no point in reopening that discussion. However, it is important that we try to sing from the same hymn sheet in our different choirs. Otherwise, differences of interpretation on what tend to be rather complex and technical points may obscure the substantial agreements that exist throughout industry (and often with other parts of civil society, especially universities) on the main messages. 2) These main messages are to encourage (particularly) Council and Parliament to adopt instruments that work effectively in today s world of (more Open) innovation so that R&D can better support improved competitiveness as a primary goal. 3) We think that the best way to foster this goal at EU level is to make it easier for the main actors (companies, universities, and public laboratories) to work together and reap benefits. Within EIRMA, we have been using the phrase Strong Industry, Strong Science, and Well Connected. The goal is to achieve improved growth and competitiveness through better use of knowledge. 4) It is important to enhance (not just maintain) the quality of public research and education; to give more attention to Europe s capacity to transform knowledge effectively; always to seek simple procedures that have low transaction costs and obvious relevance and benefit to the intended participants; to reduce regulation; and to be clear when there are overarching strategic agendas. 5) Except where there are compelling reasons to do otherwise, the Commission s role (even with the larger resources it seeks) should move further in the direction of being catalytic, and be less of a programme manager. We think that it is the responsibility of corporate and national programmes and bi/multilateral cooperation between governments to provide the heavy lifting. 6) This line of thinking seems consistent with the new Commissioner Potoçnik s theme of Knowledge for Growth. We need to reinforce this connection, so that thinking at lower levels in the Commission shifts from its previous input orientation. 7) The introduction of Technology Platforms and the intention to give more bottom up responsibility for fundamental research to the scientific community are clearly steps in the right direction (see questions 3 and 4). In the best cases, these can create and in fact already are creating - 2

3 greater awareness and understanding among all stakeholders policy maker, academic, industrialist of what is required to obtain competitive advantage, what it is realistic to achieve, and how this can happen. Strategic research agendas are already emerging. 8) The danger is always that these possibilities because administration costs become too high, direct benefits too small, and too many players feel they are being encouraged to fish from too small a pond. A good test of effectiveness is that the purposes of European programmes are clearly articulated and understood by the target participant groups, and that these groups then see value in participating in the programmes for these purposes. 9) It is essential for different Directorates in the Commission to achieve greater unanimity of purpose in these respects, for example in the relationship between R&D and regulatory policies. It is also important that we try to move Parliament and Council beyond the restrictive rules that contribute to negative perceptions of the Commission and the Framework Programme. 2. EU R&D Budget The Commission's proposal for an increased EU R&D Budget: Does industry support this increase, given constraints on the overall budget and competing priorities? See point 1. 1) It is appropriate to increase the EU R&D budget, both in absolute terms and relative to other activities funded at EU level. Sufficient funds must be provided to ensure that the programme can achieve the intended effect, even though this effect should be primarily catalytic. If necessary, the Commission should be prepared to drop some proposals rather than pursue too many within a constrained budget. 2) We do not think that the desired increase will be approved (or that the programme would generate the intended results) unless serious efforts are made to put the house in order. 3) The worst-case scenario for the 7 th Framework Programme is for a steady (or only slightly increased) budget ( smoke and mirrors ), insufficient to address new and existing commitments, out of line with the competitiveness agenda, and a distraction from the fundamental challenges of marshalling resources to better effect. 4) The general point is that R and D are both important: don t push R at the expense of the possibility to implement the findings of this R. 3. European Research Council The proposal to establish a European Research Council for basic research: what is industry s perspective? Is it enough that centres of excellence are created in Europe, or should there be links between such centres and (European) industry, to ensure that the possible commercial benefits of innovations (for the innovator, for industry, for the consumer, etc) are realised? What is the European Research Council? The ERC is a proposed autonomous body to be responsible for competitive funding of investigator-driven research at European scale. The Commission has indicated its general support, and there are suggestions of funding of around 1-2 billion/year as part of, but also independent 3

4 from, the larger Framework Programme. The Commission s support seems to be conditional on establishing challenging ambitions and mode of operations and a budget that does not constrain its other priorities. Details are as yet unclear. Lord Patten, Chancellor of Oxford University, is chairing the ERC Identification Committee, responsible for establishing the nucleus of the future ERC 2. The intention is to go to Council in June Following a decision on the Framework Programme, the ERC would use 2006 to work out its detailed procedures. Funding would commence in ) We think that the general ambitions are correct. It is important to establish initiatives supported bottom up that reinforce Europe s future capacity for pioneering research; that in some areas concentrate efforts; that create stronger links where these links matter; and that more visibly attract the best brains to come to Europe and increase the mobility of such people within Europe. 2) There are risks in the proposal for an ERC; not all the claims are true; and past experiences encourage scepticism. There is always too much tendency towards bureaucracy. Academics and funding agencies do not always give enough attention to the transfer of knowledge to market. Some countries are systematically under-funding their universities. The danger in voicing concerns is that industry will be seen to be opposed to high-quality scientific research, which is not true at all. It would also be offensive for us to imply that the international scientific community cannot work well together and should not be given greater responsibility. Suggested Approach 1) We should acknowledge the conditions that have stimulated the arguments for a European Research Council. 2) We should encourage reform of European public research institutions and funding mechanisms, including in basic science, to meet current and future needs, based on Strong Industry, Strong Science, Well Connected. 3) We should encourage initiatives (like the ERC) that will give greater responsibility to the research community for raising quality and improving critical mass in key disciplines, achieving better connectivity between disciplines, and developing better understanding of and commitment to, the types of research needed to support medium- and longer-term industrial competitiveness. 4) We should avoid forcing organised industry links. Industry will connect by itself when there is clearly-identified value. Instead, we should encourage the establishment of governance mechanisms within the ERC that are capable of recognising and accommodating a broader view of societal and economic needs. We welcome an ERC that sees itself as part of such a reform package; that intends to focus on areas where quality and ambition are the criteria; where political control is clearly limited to matters such as audit and overall success criteria; that is sufficiently resourced to make a difference; and that accepts challenging targets for assessing its own performance. The ERC should not be concerned with short-term industrial expediencies. Sufficient funds must also be allocated to measures designed to improve knowledge transfer within the (increasingly Open) innovation process. 2 Lord Patten has invited EIRMA to make suggestions regarding the identification and selection processes. 4

5 4. Technology Platforms The Commission s proposed Technology Platforms: Does industry consider these to represent the right approach towards boosting EU competitiveness in the longer-term? Is industry prepared actively to support the development of these platforms to achieve the intended benefits? What are Technology Platforms? Technology Platform is a general term now being used for mechanisms that encourage and enable stakeholders to determine jointly their medium- and longer-term research needs at EU level, starting from a shared vision. The key point is encouraging industry-led agendas that unite relevant stakeholders and mobilise the necessary scale of effort. Industry s lead role is seen as crucial and intended to ensure focus on potential future markets. The fact that an area is described as a Technology Platform does not necessarily imply separate or additional budget. In many cases, it is felt that the existing collaborative research instruments will provide appropriate support, and even here, this will depend upon EU funding being optimal and essential for realising a truly strategic agenda, complementary to investments and efforts made by Member States in national and intergovernmental programmes. It is foreseen that a few platforms will develop research agendas that can only be implemented through long-term public-private partnerships. In such cases, the Commission has said that it will propose to Council and Parliament to launch and support large-scale technology initiatives, but it is still unclear how and when this will happen. The number of Technology Platforms is growing: Hydrogen and Fuel Cells; Nanoelectronics; Water Supply and Sanitation; Plant Genomics and Biotechnology; Mobile and Wireless Communications; Innovative Medicines for Europe; Aeronautics; Embedded Systems; Steel; etc. This question has immediate relevance to EIRMA member companies, and a number are already involved in the evolving Technology Platforms. Informal discussion with these indicates the following: 1) A wide range of activities are developing with quite different purposes: existing work being given new names; important mainstream tasks which are perhaps not cutting-edge; and some truly new initiatives that may help develop completely new industries. 2) In some cases, experience has been very positive. For example, the Hydrogen and Fuel Cells Platform seems to be generating a realistic understanding among companies, NGOs and (through a mirror group) policy makers of what can be achieved, when and how, in an area where questions of physical infrastructure, environmental policy and deployment strategy are more significant than the basic science. 3) In some other cases, there is worry that the proliferation, combined with lack of additional public funding, limited strategic ambition or thinking that is out-of-line with current innovation processes within industry, insufficient direct benefit or inappropriate expectations of (pooled) commitment by companies will render the scheme ineffective. 5

6 4) In several cases, the process of jointly developing a pan-european strategic research agenda is seen as a very worthwhile exercise, even if only to direct the work programmes for collaborative R&D in FP7. The Strategic Research Agendas are proving to be useful reference documents. 5) It is worth recalling that (even in the case that is being described positively) similarlyintentioned schemes in the United States tend to be much better resourced and more industryfriendly, while many of the key companies are global in scope and will base their work where this will be most effective. 6) The European tendency is to prefer larger groups whereas the American approach favours parallel competition, with some way of identifying the successful results. The European approach makes it harder to achieve significant innovation in key mission-oriented areas. Unlimited openness is not such a good idea: a balance between openness and effectiveness is needed. 7) It is interesting to note that the approach being proposed for the European Research Council (question 3) seems more truly bottom up. Suggested Approach 1) Technology Platforms in principle offer things that Europe badly needs: greater mission orientation and better alignment of strengths in key areas. We should say so. 2) Platforms should develop in ways that enable stakeholders to work together bottom up to establish the critical mass of understanding, cohesion and practical effort necessary to achieve key step changes and obtain lasting benefit. 3) We must avoid too much proliferation and conditions that are participant unfriendly. Companies will only take part in schemes when these can add value and reflect the strategic nature of their industries and technologies. There needs to be more clarity concerning the identification and selection processes. 4) Good in principle, good in some cases does not mean always effective. The test will come when some platforms move to the third stage: implementation. We should watch closely the terms proposed under which companies can capitalise on the results; and also for any barriers created by inconsistencies with other aspects of public policy. The lack of clarity of the current state aid rules is a major concern. 5) Although ERT and EIRMA are by nature more aware of the thinking of larger companies, the participation of the (often global) high-tech, innovative SME community must not be overlooked and the scheme must be suitable to their needs. The SBIR programme provides a good model of how this has been achieved in the US. We should point to this. 6