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européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
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In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 1983 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
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COMMISSION OF THE EUROPEAN COMMUNITIES
COMC85) 84 * inal
Brussels, 19 March 1985
S T R E N G T H E N IN G  T H E  T E C H N O L O G IC A L  B A S E  
A N D  C O M P E TITIV E N E S S  O F  C O M M U N IT Y  IN D U S T R Y
(Communication from the Commission to the European Council
29 and 30 March 1985)
C O M  (85) 84 final

f r  f s
19 March 1985
C O M M U N IC A T IO N  T O  T H E  E U R O P E A N  C O U N C IL
Strengthening the technological base and competitiveness of
Community industry ......
Th
e efforts m ade by the M em ber States to restore basic macro-economic 
balances have helped to improve the growth rate of the Community's econom y,, 
which has also been simulated by the vigorous recovery in the U S A -
Even so/ economic growth in the Community remains lower than in the 
United States and in Japan. O n e  of the most striking reasons for this 
poor performance is the w ay in which Community industry as a  whole has 
fallen behind those two countries in most high-technology industries. 
Although it  is not fa ir to speak of an overall loss of competitiveness 
or technological gap, there are worrying trends in several branches with 
a  high technological intensity.
In information technology, the Community’ s  trade gap and technological 
dependence is steadily worsening.
In telecommunications, up to now  one of the Community's strong points/ 
there is a  serious risk that the technological developments and the 
in stallatio n of the infrastructure needed for the high-capacity networks 
of the turn of the century w ill not be put in hand in time or in a  
su fficie n tly coordinated fashion.
In biotechnology, on which in the long run the future of our fine chemicals/ 
agriculture and food industries w ill a ll depend, the inadequacy of the 
current basic research effo rt m a y well leave us very vulnerable in the 
future, and this w ill be d iffic u lt to remedy.
In new  materials (resins, ceramics and special metals) the most important 
developments are taking place in the United States and Japan.
Our Loss of ground in these advanced technologies is likely to delay their 
use in trad itiona l industries, with the risk of losing markets and 
destroying jobs. Also, if  the European economies fa ll back on the 
widespread use of imported equipment they are likely to handicap their 
ow n new-technology industries.
(1) It is obvious that no M em ber State can face up to the challenge of 
the new  technologies on its  own: the cost of developing them is too high. 
W hat is more, through the effect of standards, technical regulations, aid 
to industry and public procurement, national policies in support of 
technology tend to perpetuate the national character of industrial 
structures and the fragmentation of the co m m on  market. Within the narrow

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confines of national markets it  is impossible for large companies to achiev 
economies of scale and smaller ones to specialize in specific market slots.
(2) It is unwise to embark without due caution on cooperation with 
U S  or Japanese multinationals. Excessive technological dependence could 
leave us in a  c ritic a l position should lim its be placed on the transfer 
of technology from the U S A . W h e n  such transfers are inevitable, they must 
allow European firms to m ake up lost ground.
In the Commission's view, two main approaches can be adopted to strengthen 
the technological base and competitiveness of Community industry:
- f ir s t ly ,  improvement of the environment in which companies operate so 
as to encourage their industrial innovation capacity and commercial 
enterprise;
- secondly, better u tiliz a tio n  of the Community dimension by states and 
above a ll by companies so as to enable firms to develop in a  
competitive, unified and open market.
O n  the basis of this diagnosis, the Commission proposes that the 
European Council select six main objectives:
1. Achieving complete unification of the internal market
The Commission has already expressed its  determination to abolish internal 
frontiers within the Community in 1992 in the interests of the citizens 
and companies of Europe. This complete unification of the market w ill 
be carried out in stages, following a  precise timetable. This programme 
calls for rapid progress - especially for the benefit of the 
high-technology industries - in the following areas:
(a) European standardization with a  world outlook is essential to put
Europeans and their rivals in the outside world on an equaL footing 
and to give users a  sufficien t degree of security to encourage them 
to invest in high technology equipment and services: Community rules
on industrial property must create a  framework guaranteeing 
investment in information technology and biotechnology and preventing 
abuse of dominant positions.
(b) Public contracts account for a  major (and often the most innovating) 
proportion of demand in these sectors. It is therefore essential
to open up access to them. S o m e  types of public contracts are particularly 
well suited to the formation of consortia on a  European scale provided

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that effective competition between them is guaranteed. There must 
be specific procedures giving small and medium firms access to them 
under equivalent conditions.
(c) Services must also benefit from the unification of the co m m on  market, 
es'peci’ aLiy when the supply of services contributes to industrial 
expansion and fa c ilita te s  industrial operations on a  European 
scale.
(d) Of the proposals designed to create an infrastructure for Community-wide 
cooperation, the one on the European Economic In terest Grouping is 
ready for a  rapida CounciL decision while the proposal on the European 
company remains the central feature of the Community Legal order.
Tax measures along similar lines are being examined by the Council 
and their adoption should not be further delayed.
(e) National forms of aid to industry are a  crushing burden on government 
finance, constrained as it  iT"b>Tgrowing budget d iffic u ltie s . A n  eye 
must be kept on both the volume of and the rules for granting such 
aid to ensure that it  serves fir s t and foremost to strengthen 
European competitiveness and does not merely help to perpetuate existing 
national structures or to distort competition within the Community.
The Community w ilt therefore step up its surveillance of such aid.
For its  part, the European Council should express its  determination 
to start gradually cutting back stcite aid to industry so as to save an 
increasing proportion of resources for the development of technological 
projects which could not otherwise be carried out in the Community.
2. Adapting the Community's external commercial policy to its  objectives 
in the w ay of new  technologies
The unification of the internal market must be accompanied by an external 
commercial policy designed to strengthen the competitiveness of European 
industry: the Community must create the conditions that w ill gradually
put its  industry in a  position to fight international competition on its  
ow n market on equal terms and to gain effective access to its  rivals' markets, 
because the Community has a  v ita l interest in keeping world markets open.
If these measures are not taken, European companies m a y well be unable 
to maintain th e ir market shares in innovating sectors where consumption 
is growing fast and our companies have excellent prospects of improving 
their financial position.
3. Strengthening and making better use of the Community's s c ie n tific  
and technological potential
Although the Community's scie n tific base is comparable to that of the
U S A  and Japan it  is less e fficie n t and is growing Less rapidly. The enormous
expansion in the Pentagon's R 8 D  programmes - around U S D  A O  000 m illion are

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entered in the 1985-86 budget - w ill help to increase the American 
superiority. Community research is handicapped by its  national isolation, 
duplication of effort and inadequate thresholds of efficiency.
T he Commission requests the European Council to develop and m ake better 
use of the Community's scie ntific and technological potential.
At past meetings the European Council supported the launching of a  Community 
framework programme for research. This programme no w  needs to be reviewed, 
adapted and strengthened for the period 1986-89. The efforts being m a d e  
and s t ill needed to rationalize the budget and keep Community spending 
under control should allow an increase of from 3% today to 6 5 «  in 1989 in 
the share of o w n  resources earmarked for research. T he European Council 
should support this approach.
For its  part the Commission w ill m ake proposals in the months ahead to 
introduce a  m axim um  of fle x ib ility  into the Community's plans to encourage 
research. Increased research spending at Community level does not rule 
out closer cooperation between M em ber States interested in certain projects 
in which others do not wish to participate^ the Community must be able 
to support such ventures, especially as the current prospects for 
technology indicate that its  decentralized use can be envisaged.
4. Making better use of hum an resources
With its shortage of energy and raw material resources, the Community is 
obliged to m ake the best possible use of its hum an potential, which is 
its best comparative advantage. Consequently young people and adults at 
a ll levels of s k ills  must be better educated and trained, and their training 
must be continuously adapted to the changing qualifications required to 
keep up with developments in jobs and techniques.
(a) The M em ber States must take steps to raise the level of training of 
its  research scientists and improve the efficiency of their work through
a  community action designed to develop European cooperation, mobility between 
countries and the links between industry and universities. The plan to 
stimulate scie ntific and technical cooperation and exchanges 1985-88 meets 
these objectives. T o  strengthen the Community's technological base it 
is necessary to adapt school systems and further training for adults along 
similar lines.
(b) A  programme designed to promote cooperation between universities 
and industry so as to improve in both numerical and qualitative terms the 
training of personnel qualified in the use of new  technologies is no w  being 
prepared in the Community. The emphasis w ill be on the need to increase the

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m obility of students by fa c ilita tin g  study periods or training in 
firms in a  different Community country.
Recognition as a  "Community centre of excellence" for establishments 
giving additional training or conducting very advanced research in 
specialized areas would help towards the increased m obility of students 
and research scientists within the Community. The European Council 
should express its  support for these types of a c tiv ity  which w ill 
promote the European identity in the eyes of the economic and social 
decision-makers of the future in the Community.
5*  Promoting innovation, including database networks, and establishing 
the' information m ar"k e "t'
Putting innovations into application is one of the W eak points of
European industry. The transition from the Laboratory to the factory
and from the factory to the market must be encouraged by greater fle x ib ility
and transparency of production structures and mòre effective rewards
for good management performances. The Community can contribute to
this.
(a) Innovating firms need a  tax policy encouraging risk taking.
The Commission intends to propose objectives to be adopted jo in tly  
in various areas (company formation,, tax arrangements applicable 
to venture capital/ innovation financing (NCI)).
(b) The dissemination of knowledge is v ita l to the use of government- 
financed research results and the stimulation of innovation.
The Community must play its  part. The dissemination of these 
results should be improved so that companies throughout the Community 
can benefit from them. The practices adopted for development 
of the Esprit programme should be extended to other sectors.
(c) In the Community information should be a  sector producing value 
added and creating jobs but its  great innovationpotential w ill 
not be exploited to the sam e extent as in the United States and 
Japan unless the Community market is unified: there should be 
complete freedom for the establishment of data bases and the 
transmission of data across frontiers.
6. Achieving a  breakthrough in telecommunications
High-capacity networks w ill be to the industry and services of tomorrow 
what the waterways, railways and motorways have been or are to the 
industry of today. In particular they w ill be a  source of new  services 
(creating jobs), wiLL improve the overall productivity of our economies 
and w ill allow better decentralization of production a c tiv itie s  over 
the whole of the Community te rrito ry .

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Telecommunications can be to the Community what defence and space 
are to the United States and consumer electronics is to Japan. The 
Community has here a  significant strategic base. It must act rapidly 
to bring this base up to a  level of technological and industrial capacity 
that w ill secure its  place on the world market.
Success here presupposes a  number of coherent and complementary measures 
concerning the market (policy of com m on standards), the stimulation 
of demand (p ilo t projects such as vidéocommunications) and the industrial 
technology needed to establish the future advanced communications 
networks and services.
Suitable financing is also required for the infrastructure investment 
that wiLl not show a  return for som e time and is the nature of a  public 
asset.
The R A C E  programme w ill be the fir s t stage in the implementation in 
the Community of future-generation telecommunications services.