Brussels, October 2006

Europe and the US have nothing to fear from globalisation, and can in fact use it to their advantage, EU Science and Research Commissioner Janez Potocnik told an audience at Harvard University in the US on 26 October.

The Commissioner claimed that not only does Europe have the structures in place to deal with the new competition, but that the threat - although it must be taken seriously - should not be overestimated.

'Should we fear this?' asked Mr Potocnik, referring to China and other emerging Asian economies. 'In a word, no. It's true that the challenge needs to be taken seriously and addressed correctly - now. But as long as we do that, I believe that - to quote your President Franklin Delano Roosevelt - 'the only thing we have to fear is fear itself',' said the Commissioner.

There are 'knock-on' effects of China's expansion to look out for, said Mr Potocnik. These include a limited loss of science and technology staff for large multinationals in Europe and the US.

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On the other hand, European companies are planning to increase their research spending by 5% every year for the next three years, and these companies still prefer to locate most of their research in their home country. Most of the new centres being opened in Asia are expansions, rather than relocations from the West. They are also playing host to companies' non-strategic research, said the Commissioner. 'the reason is that effective intellectual property rights (IPR) protection is vital for strategic research. This is why, for example, most pharmaceuticals companies are not presently doing R&D [research and development] in China,' he explained.

Europe will not lose out to China because Europe has a number of inherent assets, including personnel and innovation. European and US companies may be relocating some of their R&D activities eastwards, but they are not deserting Europe. Why? 'The reason is largely because labour costs are not the sole determining factor. The single most important factor mentioned by companies for locating R&D in EU countries is people. Companies want quality R&D personnel,' said Mr Potocnik.

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The focus in Europe and the US should therefore be on promoting high standards in education and research, and then linking this with companies. 'Innovation is what can help the US and EU tackle problems which are too big for either of us in isolation,' said the Commissioner.

Mr Potocnik finished his speech on an upbeat note, reminding his US audience that globalisation is not to be feared, and extolling the virtues of EU-US cooperation: 'We are divided by an ocean but united by globalisation's challenges - and opportunities. If there are two blocs of determined people, capable of responding, it is the US and the EU. And together, we can do even more.'