Opinion of the Economic and Social Committee on the 'Communication from the Commission to the Council and the Parliament: the European Union and space: fostering applications, markets and industrial competitiveness'
Date: 1998-01-29
Institutions: European Economic and Social Committee
Subjects: aerospace industry, competitiveness, research and development, satellite communications, space policy

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Official Journal of the European Communities

30.3.98

Opinion of the Economic and Social Committee on the ‘Communication from the Commission
to the Council and the Parliament: the European Union and space: fostering applications,
markets and industrial competitiveness’

(98/C 95/03)

On 30 July 1997, the Commission decided to consult the Economic and Social Committee,
under Article 198 of the Treaty establishing the European Community, on the above-mentioned
communication.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 7 January 1998. The rapporteur
was Mr Sepi.

At its 351st plenary session (meeting of 29 January 1998) the Economic and Social Committee
adopted the following opinion by 75 votes to 3, with 5 abstentions.

1.

Introduction

1.1.
Between December 1996 and September 1997,
EU institutions produced three documents of vital
importance to European space policy (1).

1.2.
The first was a Communication from the Com-
mission to the Council and the European Parliament (2),
providing an in-depth analysis of the situation and
defining the Commission’s role in this area.

The Communication ends by suggesting that work
programmes be devised, with concrete suggestions for
various market spin-offs from space activity.

The second reference document, drawn up
1.3.
in March 1997, is one of these work programmes, and
deals with the link between space policy and the
information society.

1.4.
In September 1997, the Council of Ministers
issued a number of conclusions (third document) endors-
ing the key principles underpinning the December 1996
Communication, and instructed the Commission to
launch its political and regulatory work in the various
sectors.

2. The Commission communication

point of view, but also from an economic standpoint,
given the large number of spin-offs and the significant
markets they open up.

2.2.
The Communication notes that, although space
expenditure is much higher in the USA, the EU is at the
forefront as regards market access and services in
particular, which may represent more than ten times the
total budget for satellite launchers.

2.3. On the strength of this, the Commission goes on
to define its own area of intervention, i.e. to optimize
both national and European Space Agency (ESA) efforts
within the framework of Community policies such as
R&D, human resources, training, external cooperation,
industrial development, especially for SMEs, and also
transport, telecommunications, intelligent use of ‘sus-
tainable resources’, etc.

The Commission will have to act in an environ-

2.4.
ment conditioned by:

a)

the new geopolitical scenario, which is very different
from that which — basically for military and national
prestige reasons — boosted the sector over the last
two decades;

2.1.
The Commission highlights the growing import-
ance of the space component, not just from a scientific

b) increased globalization and an international market-

place which is open to new competitors;

(1) COM(96) 617 final — Communication from the Com-
mission to the Council and the European Parliament —
The European Union and space: fostering applications,
markets and industrial competitiveness; COM(97) 91 final
— Communication from the Commission to the Council,
the European Parliament, the Economic and Social Com-
mittee and the Committee of the Regions — EU Action
Plan: satellite communications in the information society;
The European Union and space — Council conclusions of
22-23 September 1997 (10746/97 — Press 276 — G).

(2) COM(96) 617 final.

c)

technological development and the transition to a
global information society.

2.5.
In this new context, the Commission aims to use
the instruments at its disposal to create an environment
which streamlines investment in industrial structures,
by encouraging the European space industry to improve
both its competitiveness and quality.

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2.6.
A vital question is the attitude of the Member
States, who need to recognize that this sector requires
permanent joint action at European level in this new
climate.

individual businesses etc.; the Commission intends to
set up discussion forums and cooperation agreements,
notably with the ESA and as provided for under
Article 130m, and moots the establishment of European
Economic Interest Groupings in the various fields of
application.

2.7.
As for the Commission, its task would be to
improve coordination of European R&D policies, and
cooperation with the ESA and National Agencies, as
well as to help secure a common European policy in
international arenas.

3. General comments

2.8.
The Commission document goes on to look at
the areas in which space policy can be applied, focusing
particularly on telecommunications, tracking and obser-
vation of the earth from space.

3.1.
The Communication appears at a time of funda-
mental importance in the history of the space industry:
the transition from a largely prestige sector, in terms of
military technology, to the civil sector which is more
commercial and has an extensive services network.

Four types of intervention — albeit of varying

2.9.
scope — are proposed for these sectors:

— a harmonized, regulatory framework to encourage

standardization;

— support for R&D to deduct non-recurrent expenses;

— coordination in international forums;

— incentive to extend the markets to other countries.

2.10.
The document aims to maintain Europe’s pos-
ition on the world market as a provider of satellite
launch systems, with a framework of international rules
designed to secure fair competition in the sector, and a
broader range of launch vehicles.

2.11.
The EU needs to adopt a coordinated approach
to international cooperation, both in order to be able to
speak with authority in dealings with the more advanced
countries, and to develop a policy of cooperation and
provision of services to eastern European countries, the
new independent states and developing countries.

3.2.
The transition is already under way and it is very
important that the EU play a pioneer role from the
outset. The Commission and the Member States must
act together to redouble their efforts to boost Europe’s
industrial standing.

3.3.
The Committee welcomes the conclusions of the
Council of Ministers of 23 September 1997, in which the
Member States express their willingness to cooperate,
and entrust the Community with the task of stimulating
this cooperation. It is therefore necessary to examine
further, and put into practice, points 2 and 4 of the
conclusions.

3.4.
The ESC welcomes the opportunity to highlight
these conclusions, but would point out that the Com-
mission’s analysis would require much more credible
timescales and intervention instruments. Moreover, it is
not just a matter of R&D policy action: a credible,
downstream European industrial and commercial policy
action should also be promoted in the sector. To this
end the governments should commit themselves to
forging a more prominent common identity on the
international political scene.

2.12.
Commission instruments should be deployed to
provide space project funding problems with firm
support, both strategically — with regard to the sectors
which are of particular importance to the European
Community (telecommunications, transport, mobility,
the environment) — and operationally, by promoting
use of the relevant financial guarantee mechanisms
available under the EIB (European Investment Bank)
and the European Investment Fund, given the prospect
of secure financial returns.

3.5.
It should be pointed out that demand — except
in some sectors where private investors are increasingly
showing interest — is still basically from the public
sector, with funding (and not just for R&D) coming
from the public coffers. It is, however, feasible that there
will be a speedy shift towards a more market-oriented
(i.e. private) policy. Community policies on competition,
public procurement and deregulation of services must
take this into account.

2.13.
There is still a natural interplay of responsi-
bilities and interests between the players, i.e. the individ-
ual Member States, their space agencies, the ESA,

3.6.
The key players in space policy are the Member
States and the ESA, followed by the national agencies.
An over-nationalistic space policy can lead to confusion
as to who does what, duplication of effort, poor

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synergies and dangerous competition. In the wake of
the above-mentioned Council conclusions, the Com-
mission’s action plans need to include an effective
coordination project for European space industry policy.

synergies. Clearly, the potential impact of any single
body or change to the ESA’s role would have to be
assessed thoroughly in order to improve cost efficiency.

3.7.
All Member States will therefore have to agree
to coordinate their space policies. This is the only way
to achieve an effective industrial policy in terms of the
market, and optimum use of resources. In this respect,
even closer cooperation between the Commission and
the ESA is needed.

The ESC wishes to point out that the space
3.8.
industry has a substantial
impact on the European
economy as a whole: it boosts competitiveness, encour-
ages new ventures and provides greater development
potential. Advancement of the space industry is thus of
strategic value. All instruments and procedures must
focus on this objective. If progress is not forthcoming,
there could be a case for implementing the Amsterdam
Treaty’s ‘reinforced cooperation’ procedures in this
sector.

In the international negotiations on the allocation
3.9.
of radio frequencies and ITU standards, the rules for
competition and market share, the EU needs a common
position and a sole negotiator if it is to have sufficient
political clout with its negotiating partners.

3.13.
The creation of an association of space indus-
tries should be encouraged, along the lines of that for
the defence industry, in order to align the differing
stands of national industries and move towards an
increasingly united industrial policy.

3.14.
The Commission should pay more attention to
the vital importance of continuous training for the
human resources needed to develop this sector (although
this is referred to elsewhere in the document).

3.15.
The Commission’s detailed analysis of all the
potential applications of space systems is proof not just
of the strategic validity of the sector, but also of its
diversity, and of the synergies to be had from using
satellites in the broad range of ways suggested here. The
corollary is that multi-functional satellite or satellite
network production (new generation) is likely to outstrip
that of the single-function satellites which currently
dominate the market, as will launch systems which are
more suited to the various requirements of the new
satellite systems.

3.16.
The ESC would once again stress the complexity
of the sector, and the need for an overview of all possible
applications. Consequently,
it would emphasize its
call for coordination of the space sector’s various
decision-making bodies.

3.10.
The Committee welcomes the Commission’s
feels that
move to set up discussion forums, but
more powerful, formal and regulatory coordination
machinery is needed, particularly in view of fiercer
international competition.

4. Specific comments

3.11.
In intervening in downstream space activity
applications, the Commission does not sufficiently
emphasize launch applications, which remain the main
catalyst for the industry. The ESC calls for incentive
and coordination activities to be deployed in this sector
too, in order to guarantee Europe the requisite autonomy
with regard to space launching systems.

4.1.
It is essential to promote training and technologi-
cal know-how campaigns, both for users and for SMEs,
in order to encourage investment and market demand;
the campaigns should be such as to create a self-
perpetuating dynamism in loco. SME participation is
needed to cut production costs, raise the profile of new
technologies, and boost employment and provision of
services.

The Commission has not sufficiently highlight-
3.12.
ed one of the fundamental problems for the future of
this industry, i.e. the relationship between R&D and
industrial and commercial spin-offs. This would require
either a downstream expansion of the ESA’s remit
(currently non-market-oriented), the creation of an EU
Authority, or at least a liaison body to harness potential

As thorough a review as possible of current
4.2.
European R&D is needed so that the Commission and
the relevant national agencies can, by common consent,
cut down on any superfluous elements and identify
non-profitable sectors more easily, and so that research
can translate rapidly into industrial applications, with
the emphasis on harnessing economic/employment

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returns to the full, from a European, rather than purely
national perspective. The space industry must be seen
as a catalyst of these ‘returns’.

sizes and movements, thus making sustainable fishing
possible.

4.3.
It is essential that R&D streamlining should be
backed by timely, efficient mechanisms for funding by
European central bodies in the application stages too,
(e.g. project funding), in order to stimulate private
investment in particular.

In view of Europe’s considerable commitment to
4.4.
the International Space Station, and the lack of any
specific European regulatory practice governing com-
mercial rights for ‘proprietary’ technologies which are
applied and/or developed in space, it is essential to make
such provision within the framework of Patents and
Licences. Such provision already exists in the USA
and is currently being amended in Japan and Russia.
Eventually, common international standards will have
to be determined, to regulate specific aspects of the
WTO TRIPS negotiations.

5.4. Science

Science is one of the cornerstones of the space industry.
The Commission has emphasized the importance of
exclusively commercial objectives, without paying suf-
ficient attention to the spin-offs from exclusively scien-
tific objectives, which have — thus far — been left to
the ESA to deal with. It thus wastes the opportunity to
make the most of the limited human and financial
resources to enhance the long-term outlook of this
sector, and give it a more flexible, industrial slant. In
this respect, European industry should be encouraged
to participate in the International Space Station, in order
to reap the benefits of both its industrial spin-offs
(metallurgy,
pharmacology, micro-
electronics, telecommunications) and scientific inno-
vation.

biochemistry,

5. Suggestions for the action plans and potential appli-

cations

The examples aim to illustrate the importance of space
applications in terms of the EU economy and European
society. Not all of these applications necessarily require
specific intervention from the Commission.

5.5. Disaster prevention and operations management

The potential, in some cases, for prevention and sub-
sequent monitoring of
the impact of disasters on
infrastructure illustrates the key role space systems
can play in providing observation and communication
services for efficient operations management on the
ground.

5.1. Agriculture

5.6. Combating fraud

Space applications are particularly useful for the global
monitoring of this sector, and for identifying which
crops are best suited to the chemical and physical
make-up of specific geographical areas. Moreover,
satellites can be used to assess pollution caused by
human activity, and prevent damage caused by swarms
of insects and other parasites.

Despite their effectiveness, satellites have not yet been
sufficiently exploited in the fight against fraud and
organized crime (e.g. flouting of regulations, illegal toxic
waste dumps, illegal immigration, drug production and
trafficking, deforestation, illegal or dangerous industrial
plant, etc.).

5.2. Meteorology

5.7. Environment

Space has played, and can play, a vital role in weather
observation, analysis and forecasting, particularly over
extensive areas; to this end satellite technology should
be updated, to provide satellites with more efficient
sensors and better data processing and distribution
capability.

Over the coming years, satellite observation of the earth
will play a vital part in improving the environment:

a) more accurate mapping;

b) policing of sources of pollution in densely populated

areas;

5.3. Fisheries

c) wide-range monitoring of water conditions;

Satellite observation of the seas could be a boon to the
fishing industry, providing useful information on catch

d) monitoring climate change (greenhouse effect,

desertification, deforestation, etc.).

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5.8. Mobility

As is widely known, dedicated, multimodal and multi-
functional satellite systems are extremely useful
in
traffic (air, sea and land) monitoring and management,
providing consistent services across continents or even
globally. Such a project, given the current lack of
adequate positioning, communications and security
services, could provide a valid, pan-European industrial
and technological alternative to US supremacy. Clear
regulation (radio frequencies, standards, user terminal
compatibility and inter-operability), will — at least at
Community level — help to boost industrial develop-
ment and services, not just for sea and air navigation, but
also for surface transport. Its relative output potential is
decidedly high, particularly as regards user terminals
and value added services. This is also an important
feature of the ESC opinion on the aviation sector.

particular, mobile radio communication services can be
provided much more efficiently via satellite than via
terrestrial cellular networks.

¨

5.9.1. Moreover, satellites are a quintessentially
‘supranational’ medium which facilitate connection
between users in different countries, irrespective of how
the individual terrestrial networks are managed.

5.10. Launch services

With reference to more efficient coordination at EU
level, it is important to emphasize the need to press
ahead with the drive to maintain European industry’s
current share of the market. It is also advisable to
broaden the range of launches in the light of market
prospects for re-useable and medium-small launchers,
to meet the growing need for single launches of small
and medium-sized, specific-purpose satellites.

5.9. Telecommunications

5.11. Dual use products

Thanks to their specific ability to provide broadband
telecommunications services (multimedia platforms)
transmitting high-density information throughout the
footprint area (at continent level), they are able to reach
the individual user where terrestrial networks fail. In

It is important to put the large volume of findings of
military (e.g. WEU and NATO) studies to non-military
use, wherever they provided for efficient observation,
monitoring and multimodal communications pro-
grammes and systems.

Brussels, 29 January 1998.

The President

of the Economic and Social Committee

Tom JENKINS