Copenhagen May, 2005

Ladies and gentlemen,

I welcome the opportunity to speak to you today on the subject of ¡°knowledge for growth¡± and on the role played by EU research. I wish to thank EIRMA very much for the invitation.

In front of an audience of senior-level research managers from industry, the first thing I would like to say is that I attach great importance to your views on how to make Europe more attractive for R&D investment. I meet regularly with European industrialists and associations like yours to hear your concerns and discuss how they might be taken on board. Today is one of those occasions.

I would like to up-date you on recent efforts at EU level, concentrating my comments on two of the areas under my responsibility:

• the Research Framework Programme, and
• the 3% research investment action plan.

The Lisbon Strategy

First of all, let me sketch for you the Lisbon Strategy which defines the overall policy context.

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This major reform programme was originally designed five years ago with the aim of making Europe ¡°the most competitive and dynamic knowledge economy in the world¡±.

The Commission under President Barroso has made ¡°Lisbon¡± a top priority. Furthermore, last March the European Council fully endorsed the Commission¡¯s proposals to revise and refocus the Lisbon strategy, and strengthen Member State commitment to it.

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Its central focus now is on establishing a strong partnership for jobs and growth between the EU, Member States, and all actors, including the business sector. Three areas for joint action have been singled out:

• Making Europe a more attractive place to invest and work in;
• Leveraging knowledge and innovation for growth; and
• Job creation.

What is most noteworthy and encouraging in this new partnership is that knowledge and innovation are at its core. For the first time, we have a coherent approach to build a Europe of knowledge. This is not just the right way to proceed, it is the only way if we are serious about Europe. But of course the real test is whether the political will, and the endorsement by stakeholders, will translate into concrete action.

At present, efforts at EU level to roll-out the revised Lisbon agenda are moving fast. Knowledge-related topics being discussed include the doubling of the Research Framework Programme budget, the new Competitiveness and Innovation programme and the need to accelerate national-level implementation of the 3 % research investment action plan.

But hanging over all of this is the crucial debate on the EU budget for 2007 to 2013 ¨C the so-called ¡°financial perspectives¡±. The decision by Member States on the financial perspectives, and in particular on the Research Framework Programme (FP7) budget, will be a moment of truth. European leaders will decide whether they want a Europe that focusses on redistributing existing wealth or one that thrives on knowledge-based growth and creates sustainable prosperity for its people.

What we see for the moment, is, I am afraid, far from promising. Many Member States governments, who are clearly worried about keeping the support of their voters, continue to defend traditional posts in the budget, such as agriculture and cohesion. I am not saying that we do not need to support agriculture and cohesion, but if we are serious about the future of Europe, we need to invest seriously in growth-driving actions ¨C that is, in research, knowledge and innovation.

As I see it, we have an opportunity for Member States to make a courageous and collective political decision demonstrating serious commitment to the Lisbon vision.

Why should we build a Knowledge Europe?

Linking with the theme of your conference ¡°bringing ideas successfully to market¡±, my basic premise is that knowledge-based growth must become the motor of sustainable competitiveness and welfare in Europe.

At present, some of our trading partners compete with primary resources, which we do not have. Some compete with cheap labour, which we do not want. Some compete on the back of their environment, which we cannot accept.

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So what must we, in Europe, do?

Europe and European enterprises must build sustainable leadership in the way knowledge is produced through research, in the way knowledge is diffused through education and in the way knowledge is used and applied through innovation. I call this the knowledge triangle.

The emerging markets in which our companies compete are increasingly global and technology-intensive. By raising the knowledge capacity of our firms, our competitive advantage can be based on providing the best new products, services and processes in the world.

Knowledge does not only build business competitiveness. It also brings continuous progress to society. Progress in fields such as health, preserving the environment and sustainable energy supply, rests largely on the advancement of knowledge.

Building the knowledge society is probably the best, and maybe only, way to sustain the European model of society, without having to make a trade-off between economic growth, social cohesion and environmental protection.

The Framework Programme

As far as direct support to research at European level is concerned, this is where the EU Framework Programme for research and development comes in.

Central to the success of the Framework Programme is its relevance to European industry. Therefore, the apparent decline so far of industrial participation in FP6 compared to FP5, is a cause for concern.

My ambition for FP7, therefore, is of a powerful instrument leveraging knowledge for growth, with flexible and simpler instruments and procedures, focusing on consolidating our strengths, addressing our weaknesses, and serving the needs of our industry.

The Commission¡¯s proposal for the 7th Framework Programme is structured into four main ¡®specific programmes¡¯ each with a clear objective and title:

• Co-operation,
• Ideas,
• People, and
• Capacities.

I expect these specific programmes to deliver significant benefits to industrial competitiveness.

The co-operation programme represents the core of the 7th Framework Programme and will support transnational collaborative projects better focused on the needs of industry.

This focus has been achieved through wide-ranging consultations to identify priority themes, and in particular the work of industry-led European Technology Platforms. There are more than 20 such platforms in areas ranging from innovative medicines and aeronautics to textiles and construction.

A challenge for FP7 is to support the implementation of the strategic research agendas of the Technology Platforms. In most cases, support will be provided through calls for proposals.

However, in a few selected areas, such as hydrogen or nano-electronics, we believe that a more ambitious and concerted approach is needed. That is why we are proposing the establishment of Joint European Technology Initiatives. These will bring together European, national and business resources into major research and technological development ventures corresponding to the technology-intensive markets of the future.

I should also stress that the benefits of European Technology Platforms go well beyond the 7th Framework Programme proposals. In fact, they are beginning to play a central role in shaping both industrial research and public support programmes throughout the EU.

Based on feedback from industry, there are other areas of importance to industry which the Framework Programme needs to address or where the relevance of its actions should be better aligned to industry needs.

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FP7 will respond to these in the following way:

• The ¡°ideas¡± programme will stimulate excellence and creativity in basic research through the creation of a new European Research Council. This will provide the basis for tomorrow¡¯s breakthrough innovations. It will fund individual teams of researchers competing for the first time at European level and evaluated solely on the basis of excellence.
• The ¡°capacities¡± programme will deliver a strengthened infrastructures programme. One of its targets is equipment of industrial relevance, in the frame of a strategy developed by the European Strategy Forum for Research Infrastructures. It will also more than double the budget allocated to the specific research actions for SMEs.
• The ¡°people¡± programme in FP7 will support researcher training and career development through a further enhanced ¡°Marie Curie¡± scheme, promoting public-private career paths and mobility.

FP7 also proposes to introduce a novel risk-sharing finance facility aimed at improving access to EIB loans for large European research actions, in particular joint technology initiatives, large collaborative projects or new research infrastructures.

If we really want to make Europe into THE technological leader worldwide, all of this will require significant resources. This is why we are proposing to double the research funding, focusing on actions where there is real added value at European level and which create a multiplier effect on national and private sector funding.

CIP

Let me mention briefly the new competitiveness and innovation programme - ¡°CIP¡± as it is becoming known.

CIP will bring together a number of existing Community programmes relevant to innovation and competitiveness under one roof. It will create a coherent package, including actions to promote SME participation in the RTD Framework Programme.

The Research Framework Programme and CIP have been designed to work side by side, in support of Lisbon. Indeed, they even share some objectives and have a number of complementary and mutually reinforcing activities, in particular:

• CIP will focus on downstream activities such as market take-up of proven technologies, while FP7 will focus on the technological needs of industry;
• CIP will support the development of technology transfer networks, while FP7 will support technology transfer events in specific areas as well as innovation-related activities undertaken within EU research projects.

The 3% objective and Action Plan

Having said all that, much more is needed to make Europe attractive enough to reverse the current trends of business delocalisation and the stagnation of private investment in knowledge in Europe. It is worrying that the ¡°EU Industrial R&D Investment Scoreboard¡± published last December shows for 2004 a decline in R&D investment of the top 500 EU firms by 2% compared to a rise by 3.9% for the top 500 non EU firms.

The key factors driving these trends ¨C such as framework conditions, access to poles of excellence & human resources, direct & indirect public incentives, etc. ¨C need to be carefully analysed and understood in order to address them in a forceful way by policy actions at the appropriate levels in Europe. For this, it is very important for us to get feedback directly from firms. I ask you to help us in this regard by contributing to the R&D investment survey which the Commission has launched with the support of EIRMA and which will close by 17 June next.

The 3% goal for EU research investment and the Commission¡¯s the 3 % action plan have had a positive mobilising effect. R&D is now high on most national agendas.

Nearly all Member States have set national targets regarding research investment. If these are met, research investment will come close to 2.6% by 2010 - a real improvement on the current level of about 2 %.

But the measures being implemented by Member States still fall far short of the challenge of making Europe ¡°the most competitive and dynamic knowledge-based economy in the world¡±.

The fragmentation of effort is still holding back the creation of a truly effective European Research Area. This is why the co-ordination of national R&D policies remains a priority to catalyse stronger and more coherent efforts.

To make progress, Member States have started applying the ¡°open method of co-ordination¡± to the implementation of the 3% Action Plan and in the area of human resources for research, with support from the European Commission.

Firstly, regarding ¡®human resources¡¯, the aim is to put in place an EU Framework to improve the career prospects for European researchers, including those in the private sector.

This is based on the recent Recommendation for a European Charter and Code of Conduct to help provide researchers with a fair and more stimulating professional environment. The backdrop to this is that without an increase in the number and quality of researchers, Europe will not be able to secure and expand its role in research and innovation.

Secondly, in the area of research-related tax incentives, the Commission intends to issue voluntary recommendations to Member States next year with a number of objectives in mind. These include improving the design and implementation of such tax incentives, encouraging national tax incentives to support the growth of SMEs, and possibly proposing a concerted tax scheme to support participation in major European research projects.

Thirdly, in the area of public procurement, our aim is to issue guidelines on research and innovation-friendly procurement which will explain good practices and how the use of ¡®lead markets¡¯ can stimulate the development of innovative technologies through public procurement.

Fourthly, in the area of public research and its links with industry, the Commission also aims to issue voluntary recommendations to Member States next year.

The emphasis here will be on the need to create a level playing field in Europe for trans-national collaboration and technology transfer between universities and industry.

One final issue I would like to mention is the revision of the R&D state aid framework.

The Commission is about to launch an overhaul of its state aid control policy. This is in reaction to the calls from the European Council to reduce state aid and redirect it to horizontal objectives such as research and innovation. One of the centrepieces of this reform is the revision of the rules on state aid for R&D, for which a new framework should be adopted by the Commission before the end of this year.

Conclusion

Ladies and Gentlemen,

One side of the coin is what public policy can do to make the environment more favourable for private investment and growth.

But the other side is the decisions of private actors to invest, expand their business, and to take advantage of the measures which public policy actions and programmes offer them. Here, the ball is in your court.

Furthermore, I hope that, as key European stakeholders, and from your various positions of influence, you can also help us take forward our EU agenda.

In this respect, we need your support to help us convince national authorities to take the decisions which are necessary in order to deliver the Lisbon Strategy. This concerns the Community budget for the next seven years, and in particular the doubling of the RTD Framework Programme budget. I invite you, therefore, to take an active part in the establishment of the national Lisbon reform programmes. Your views are important and must be heard.

You can rest assured that I will deliver on my part of the job to make a Knowledge Europe a reality. And, seeing you, I feel confident that you and your respective companies will help us to deliver as well.

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Together we can do it.

Thank you for your attention.

Item source: Date: /05/2005