Opinion of the Economic and Social Committee on:

- the 'Proposal for a Council Decision concerning the rules for the participation of undertakings, research centres and universities and for the dissemination of research results for the implementation of the Fifth Framework Programme of the European Community (1998-2002)`, and - the 'Proposal for a Council Decision concerning the rules for the participation of undertakings, research centres and universities and for the implementation of the Fifth Framework Programme of the European Atomic Energy Community (Euratom) (1998-2002)` () (98/C 214/13)

On 6 January 1998 the Council decided to consult the Economic and Social Committee, in accordance with Article 130 of the Treaty establishing the European Community and Article 170 of the Treaty establishing the European Atomic Energy Community, on the above-mentioned proposals.

The Section for Energy, Nuclear Questions and Research, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 7 April 1998. The rapporteur was Mr Malosse.

At its 354th plenary session (meeting of 29 April 1998), the Economic and Social Committee adopted the following opinion by 122 votes to one.

1. Introduction

1.1. Rather than making a point-by-point analysis of a text which is generally satisfactory as to its form, the Committee intends to present a set of general comments in order to clarify certain imprecise points, and where appropriate to recommend additions to the content.

These comments refer to four main requirements:

1.1.1. The first of these concerns the need, in a measure setting out rules for participation and dissemination, for an approach which would impart momentum. Indeed, the aim of an administrative framework is to set limits and to open up the way, but not to be a succession of obstacles. Any administrative framework has important implications in terms of both method and content. It seems to us that several definitions must be clarified; some procedural points could also result in delays and obstruction.

1.1.2. The second requirement is for consistency between the new approach of the framework programme for RTD, particularly through key actions which require an integrated approach, and Community priorities, in the forefront of which are cohesion, employment and involvement of SMEs in development policies.

1.1.3. The third requirement concerns the competitiveness of European industry. The European research effort must primarily have the effect of restoring the position of European firms on international markets. Overall, their competitiveness has declined over the last two decades, particularly because of inadequate, fragmented research and innovation capacity.

1.1.4. The fourth requirement is for a radical reform of the procedures for allocating Community assistance to research projects. Despite praiseworthy efforts, the scientific world and enterprises, especially SMEs, are increasingly discouraged by the slowness and complexity of European procedures, with decreasing chances of success at the end.

1.2. The spirit of the Commission proposal is summed up in its preamble in the phrase 'innovation within continuity`. The initiatives listed under 'innovation` seem to us to correspond fully to Community concerns, and particularly:

- the simplifications introduced by the option of paying general costs on a flat-rate basis;

- varying the conditions for use (exclusiveness, property) according to the project's proximity to the market, where indirect actions are concerned;

- protection for pre-existing know-how;

- the inclusion of ethical considerations among the selection criteria;

- extension of the 'SME` definition to cover firms with a staff of between 250 and 499;

- the role of the technological implementation plan, which now constitutes a detailed and structured instrument for monitoring the use made of research results.

1.3. These innovations reveal a desire to take into account both the criticisms made of earlier R& D framework programmes - that they were too slow, too bureaucratic, and too remote from the market - and the main recommendations of the Davignon Report which stated that the RTD framework programme must be regarded as a way of financing measures to encourage competitiveness. The Committee congratulates the Commission on these guidelines, which correspond to the wishes it had expressed. In order to ensure that these proposals are workable and consistent with the objectives pursued, the Committee would make several specific recommendations:

2. Comments on the form

2.1. Given the innovative nature of the fifth framework programme by comparison with the fourth, it is desirable to ensure proper interpretation of the new concepts and the new implementing procedures. To this end, and to complement the efforts made to provide common definitions for the two proposals, the Committee takes the view that:

- a tool for comparison between the two framework programmes should be proposed;

- users should be able to find a summary of all the new rules and the philosophy of the fifth RTD framework programme in the form of a 'vademecum`.

2.1.1. These two elements, which should be made available to participants, would make it possible to find the implementing rules, would remove ambiguities and would constitute a practical expression of the declared intention to clarify and simplify.

2.2. Given the innovative nature of the principle of key actions as multi-disciplinary tools, it is essential to lay down uniform rules for participation in all types of action (research, applications etc.), even if the contracts themselves for indirect actions can vary according to the nature of the project. This aspect should be taken into account in the new provisions on participation instead of maintaining different rules, such as those maintained for specific actions in favour of SMEs.

2.3. As for the definitions proposed, they would benefit from being expanded and clarified. Some concepts, which appear in the body of the text to be decisive for the content and scope of the proposal, are simply mentioned without being dealt with in detail. In particular, the following terms were noted:

- flat-rate payments of general costs: this idea should be clarified with practical details (payment scales, calculation methods etc.);

- proximity to the market: mentioned in the preamble but not taken up in practical terms in the text, although it is a decisive element in the new arrangements;

- protection of know-how: insufficiently dealt with in the body of the proposal, particularly as regards arrangements for promoting intellectual and industrial property and the necessary reference to the problems of patents.

2.4. On the same general theme, it should also be stressed that Article 5 on the 'conditions for the participation of legal entities from the Member States and associated states` does not clearly demonstrate that it is possible for an SME to have access to the RTD framework programme, particularly because of the imprecision of the criterion 'about to carry out a research ... activity` which could give rise to diverging interpretations or disputes when the programme is implemented.

2.5. Similarly, in Article 8, the requirement to 'have the main resources needed for carrying it out` contradicts the principles of cooperative research (Craft programme) under which SMEs entrust research work to third parties.

3. SMEs in Europe and their specific problems

3.1. It is regrettable that the proposed rules for participation in and dissemination of RTD are based on an insufficiently precise definition which (a) does not lend itself to a practical, strategic approach, and (b) excludes large numbers of SMEs from the benefits of the RTD framework programme.

3.1.1. Given their numbers, their impact on employment (66 % of Community employment) and their share of net assets (65 % in the European Union), they are likely to play an increasingly significant economic role. However, they do not form a homogeneous group, and it is essential in tackling this problem to draw up a typology of SMEs according to their RTD needs and capacities. Indeed, a single definition of an SME has no meaning in this context and would not enable any valid practical conclusions to be drawn.

3.2. The Committee has already proposed, in a recent opinion on the impact on SMEs of the steady, widespread reduction in funds allocated to research and technological development in the EU (at Community and national levels) (), that three categories of enterprise be distinguished according to typological characteristics which are now generally accepted:

3.2.1. Those which have a well-established RTD capacity and supply or make use of technology. Such enterprises are in the minority and it is estimated that they account for less than 3 % of the total number of SMEs. A sizeable percentage of SMEs in this category are involved in research projects funded by the European Union.

3.2.1.1. Their contribution to Community research is in fact, in most cases, complementary to that of large enterprises. That is why, by associating them with the majority of key actions, alongside research institutions and large enterprises, innovation and creativeness can be ensured and greater involvement of these enterprises in RTD programmes can be guaranteed. The Committee feels that this strategy of complementarity is more appropriate than the approach too often adopted in the past of reserving certain marginal actions for SMEs.

3.2.2. Those which can be described as 'vanguard` enterprises, which lack the characteristics of the first category but are able to develop new products with a technological input. These are generally the SMEs which are the most highly developed from a technological standpoint in their sectors; it is estimated that they account for less than 10 % of the total number of SMEs.

3.2.2.1. These are able to identify, define and express RTD requirements, but they have to outsource research work as they lack adequate RTD capacity.

3.2.2.2. Even if enterprises in this category frequently manage to find solutions (the provision of suitable aid at national and regional level), they are increasingly coming up against the need for technological solutions which only specialized research partners can provide.

3.2.3. Thirdly, there are those enterprises which merely make use of the products of technological research. These represent the vast majority of SMEs in the EU and are solely interested in the final products of RTD.

3.2.3.1. By means of sufficient funds, awareness-promotion, information, preparation and back-up, these enterprises must have access to the technological opportunities yielded by RTD programmes, particularly the Community programmes.

3.3. It should also be pointed out that, in the proposal as a whole, the term SME is used only in paragraphs c) and d) of Article 5, relating respectively to 'exploratory phase awards` and 'cooperative research projects`, and therefore to relatively marginal aspects of the RTD framework programme. There is no reference to SMEs in the proposal relating to the Euratom Treaty, despite the fact that there are many small enterprises working in this field.

3.4. In this context, the Committee would stress that specific questions concerning SMEs do exist:

3.4.1. The difficulties which SMEs have in defining their real technology needs. Not only do the majority of SMEs lack the management capacity required of them by the framework programme, e.g. when compared with the management requirements for European RTD consortia, but there is also the 'upstream` problem of evaluation and strategic choices.

3.4.2. In order to participate in the RTD framework programme, these enterprises need complementary measures which should be contained in the proposals. These measures should:

- set out rules giving access to the framework programme on RTD to intermediaries as 'technological mediators` alongside enterprises, in order to assist the identification and formulation of SMEs' own needs as regards products, markets and technology;

- allow bodies (associations, chambers, technical centres and others) whose activities are orientated towards SMEs and craft industries to propose and manage RTD projects designed specifically for such enterprises;

- strengthen the advisory and flanking role of information networks in the field, particularly with a view to helping SMEs to identify their real interest in participation in Community RTD actions.

3.5. Thus it would be advisable to insert a specific paragraph on this category of enterprises:

- differentiating on the basis of technological level;

- guaranteeing a priori access to research for non-high-tech SMEs. Indeed, no-one would nowadays dispute that technology is a decisive factor for acquiring a competitive advantage, but in the first place these technologies need to be developed, and it can prove difficult for SMEs to carry out RTD work alone to a meaningful level. Cooperation with research centres and large enterprises and the involvement of legitimate intermediaries - 'technological mediators` - constitute one solution to this problem, since they make it possible to pool resources and since partners can often bring complementary skills to a project.

4. Integration of the main lines of Community policy

4.1. At this level it is advisable to ensure that management arrangements and the proposed rules for participation and dissemination:

- do not run counter to the basic policies of the European Union, particularly employment and cohesion policies aimed at reducing inter-regional disparities and discrepancies;

- contribute to regulating and solving these problems.

4.2. RTD programme and employment

4.2.1. The term 'employment` appears only once, in Article 2 as part of the presentation of the Community's interests, whereas the Commission's statement of intent in preparing the Fifth RTD Framework Programme refers explicitly to the need to put research in the service of the citizen by orienting it towards the economic and social needs of Europe.

4.2.2. Employment is an important factor in the debate on the Community's future research prospects. The importance of this problem also justifies its being taken into account in any consideration of economic and technological development in Europe. In this respect an essential element is that of transforming research into innovation, new products and services.

4.2.3. It is regrettable that this aspect is not explicitly included in the proposal on criteria for selecting projects to be assisted by the European Union.

4.2.4. Similarly, there should be an explicit mention of the direct or indirect impact on employment in the plans for technological implementation.

4.3. RTD programme and cohesion

4.3.1. Closing economic and technological gaps is one of the main priorities of all Community policies since the Maastricht Treaty. RTD policy can play a dominant role in this process, given that a scientific basis is essential for sustainable growth.

4.3.2. It is a fact, however, that the most disadvantaged countries and regions are often tempted to concentrate their efforts on low-technology sectors requiring a large labour force. It is therefore necessary to assist these regions in participating in RTD activities so that they can increase their scientific and technological capacity.

4.3.3. SMEs play a fundamental role in this process; in these priority countries and regions they need specific assistance to give them access to research and technological innovation activities, and will be all the more receptive to any form of support which seeks to improve their technological component.

4.3.4. Again there is only a fleeting reference to this question in Article 2 of the proposal, presenting the Community's interests. This point ought to be dealt with in greater depth under the heading of selection criteria. It should be noted that this initiative would accord with the Commission's declared intention of giving more importance to innovation in the redefinition of the Structural Funds.

5. Coherence of RTD actions in Europe

5.1. Given that Community RTD constitutes only about 4 % of research and development in the European Union, the question of complementarity between the Community actions themselves and national/regional or private actions is fundamental. To this end the Committee advocates practical arrangements such as:

- coordination with other Community programmes, first and foremost those in the education and training field, actions linked with the Union's 'innovation plan` and actions to encourage mobility of researchers;

- integration of information and advice networks for research programme applicants, so that European programmes on offer - whether of Community, intergovernmental (Eureka), national or private origin - are presented in an overall way for the sake of transparency and efficiency;

- more active promotion of technology dissemination and its commercial use through cooperation and coordination links with other mechanisms, such as Eureka.

6. RTD programme, competitiveness and definition of technological implementation

6.1. The question of international competitiveness is referred to only in Article 2 ('Interests of the Community`). It is absent from the entire exposition of the two proposals.

Any reflections and proposals on technological and economic development must take full account of this essential factor.

6.2. The practical details should therefore be stated more explicitly by:

- setting out the principles whereby available resources are concentrated on the priorities of the European Union, selected for their economic, technological and social relevance and their European added value;

- tailoring all developments in the participation and dissemination rules to changes in the legal framework currently governing the framework programmes, with a view to increasing flexibility and concentration;

- seeking systematically to give priority to this objective of competitiveness in all recommendations for new approaches to implementing the RTD framework programme.

6.3. The Committee asks the European Commission to lay down explicitly, e.g. in the form of a uniform presentation model, that technological implementation plans must specify the objectives of projects in terms of 'Community interests`, particularly in terms of likely impact on employment in the short and long term, on European competitiveness, on the environment, etc.

6.4. Emphasizing, as it does, through the technological implementation plans, the obligation for a research project to have industrial aims, the Fifth Framework Programme is indeed a step in the right direction. However, it is important for these technological implementation plans to be not just a monitoring instrument but also a management tool for operators, in order to guarantee full exploitation and application of research work. Thus these plans, with a validation procedure which could be conducted by the JRC, would make a contribution to the industrial development of the research projects, not least as support, of the risk capital or development capital type, vis-à-vis the financial institutions and mechanisms. The Committee suggests that a proportion of the Community aid be earmarked for this follow-up tool, particularly when it is entrusted to specialized bodies such as technical centres, development agencies or consultants on innovations for SMEs. The Committee takes the view that these plans must not be restrictive: they must be adaptable to changes during the development stage. Indeed, the Committee recommends that these plans be used as follow-up mechanisms to measure the impact of the work carried out and to facilitate the technological conditions for use and the search for financial resources for development.

7. RTD programme and simplification of procedures

7.1. Apart from expressing good and praiseworthy intentions, the proposals on the procedures do not involve any innovation as regards selecting and allocating funds. The Committee deeply regrets this.

7.2. The ESC would advocate trying out simplified procedures, particularly for SME projects. In particular, it recommends exploring the following approaches:

- decentralization of the 'preselection` arrangements, without restoring the programme to national control, on the lines of the arrangements set up by the Leonardo programme (national information agencies, pre-examination of proposals, etc.);

- a permanent, generally available mechanism for calls for expression of interest, in order to identify precise research priorities, giving rise to well-targeted calls for tenders to optimize the chances of success for promoters applying at this second stage;

- a system of expert assessment to be formalized in the participation rules, taking account of the main guidelines: competitiveness, employment and cohesion.

7.3. The ESC stresses that the procedures set up should be coordinated with national arrangements or the Eureka programme, so that each project can be guided towards the most appropriate programmes.

7.4. To ensure that the procedures are totally clear, operators must have access - particularly through new technology - to a broad information and exploitation network, which is consistent with all national and Community arrangements. The Committee is preparing a specific own-initiative opinion on this project.

Brussels, 29 April 1998.

The President of the Economic and Social Committee

Tom JENKINS

() OJ C 3, 7.1.1998, p. 5-13; OJ C 40, 7.2.1998, p. 14.

() OJ C 355, 21.11.1997.