Opinion of the European Economic and Social Committee on the "Commission Communication — More Research for Europe — Towards 3 % of GDP" (COM(2002) 499 final)
Date: 2003-02-26
Institutions: European Economic and Social Committee
Subjects: economic and social cohesion, gross domestic product, research and development, single market, sustainable development

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2.2.3.
The aim of cooperation in this respect is to ensure
that operators contact their correspondent in the competent
authority immediately to inform of any circumstances which
suggest that chemicals may be diverted for the illicit manufac-
ture of narcotic drugs and psychotropic substances.

2.2.4. Within EU, the voluntary monitoring of non con-
trolled chemicals has concentrated mainly on those chemicals
used in the illicit manufacture of synthetic drugs. At the wider
international level, the UNINCB (United Nations International
Narcotics Control Board) has also sought to address the
problem of proliferation of use of non-controlled chemicals in

illicit drug manufacture and an Advisory Expert Group has
drawn up a Special Surveillance List of chemicals which are
used in the illicit manufacture of heroin and cocaine as well as
the synthetic drugs.

3. Conclusion

The Committee endorses these measures and advocates uni-
form application of Community legislation in this field so as
to prevent any diversion of drug precursors for the manufac-
ture of illegal narcotic drugs.

Brussels, 26 February 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on the ‘Commission Communication
— More Research for Europe — Towards 3 % of GDP’

(COM(2002) 499 final)

(2003/C 95/03)

On 12 September 2002 the Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the above-
mentioned Communication.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 29 January 2003. The rapporteur was
Mrs Sirkeinen.

At its 397th plenary session on 26 and 27 February 2003 (meeting of 26 February), the European
Economic and Social Committee adopted the following opinion by 108 votes to none with one
abstention.

1. Summary

The EESC

— stresses that the goals of competitiveness, economic
growth, employment, high environmental and health
standards and a balanced sustainable development can
only be achieved by more knowledge, R&D and inno-
vation;

— welcomes the targets set at Barcelona and the Com-

mission Communication for opening a debate;

— encourages the Commission to a stronger presentation of
the case and a stronger challenge to the Member States in
face of the dramatic change needed;

— underlines that particularly in times of economic slow-
down R&D should be seen as an investment, not an
expenditure;

— proposes that regional funds and funding to candidate

countries be directed to R&D;

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— recommends that the Commission prepares a strategy for

SMEs and research;

— puts more emphasis on removing borders and barriers
to cooperation and networking than overall top-down
coordination;

— sees that, in order to maintain growth of R&D investment
in the EU by big frontrunner companies as well as
strongly increasing the number of companies doing R&D,
the Commission’s proposals need to be implemented, in
particular on:

— finalising the internal market;

— the Community patent and other IPRs issues;

— human resource development and mobility;

— advice and liaison services to SMEs; and

— renewing state aid rules on R&D financing.

2.

Introduction

2.1.
The European Council at Barcelona agreed that
research and technological development (R&D) investment in
the EU must be increased with the aim of approaching 3 % of
GDP by 2010, up from 1,9 % in 2000. The Council also called
for an increase of the level of business funding, which should
raise from its current level of 56 % to two-thirds of the total
R&D investment.

2.2.
The investment objectives arise from the recognition
that strengthening our R&D and innovation systems is essential
in realising the Lisbon strategic goal of the Union becoming
‘the most competitive and dynamic knowledge-based economy
in the world, capable of sustainable economic growth with
more and better jobs and greater social cohesion’ by 2010. In
comparison with the US, the gap in R&D investment reached
more than EUR 120 billion in 2000. In particular, investment
by business is lower in the EU.

In its previous opinions, the EESC has recommended
2.3.
to set a goal for R&D investment, which the Commission has
recognized. The EESC has further recommended (1) setting a
target of an increase of about 50 % in the overall Community
RTD&D budget as a medium-term political goal for the period
beyond FP6 and appealing to the Member States and to act
likewise on their part.

( 1) OJ C 260, 17.9.2001.

2.4.
The targets were set for the Union as a whole and as
the decision was taken by the European Council it means that
all Member State Governments committed themselves to act
on them and contribute to the whole. A few (two) Member
States are for their part over a 3 % level, while others show
much lower figures. The diversity of situations in Member
States and Candidate Countries must allow for a differentiated
policy response.

The present Communication from the Commission
2.5.
aims at launching a debate on the ways and means of reaching
the objectives for R&D investment. The Commission analysis
of the situation,
its background and effects, and presents
objectives to be pursued in order to create more attractive
framework conditions and more effective use of public finan-
cing for business R&D as well as R&D and innovation in
corporate strategies and management.

3. General comments

3.1.
The EESC recognises with satisfaction that its rec-
ommendation has been taken on board and welcomes the
important targets set at Barcelona. After the political decision
action is needed, in particular by Member State Governments.
The Communication from the Commission is welcomed for
keeping the issue in the forefront and presenting proposals
and advice. The debate will hopefully help to push things
forward.

3.2.
Economic growth is presently slow, the market in
many sectors is sluggish and Member States struggle with
budgetary problems. The argument is heard that under such
conditions R&D expenditure cannot be increased neither by
State nor by business. It should be strongly underlined that
money spent on R&D is an investment, for the society as a
whole as well as individual company, not an expense. The
Commission should be commended for consequently using
the proper expression, ‘R&D investment’.

3.3. More innovations are needed in order to strengthen
the role of European companies on the world markets and
thereby get economic growth and employment in the EU back
on a stronger track. The key to better competitiveness and
economic development is also stronger productivity growth,
in particular with the demographic development we are facing.
A high level of environmental and health protection, which
Europeans value highly, needs to be developed without
compromising on economic growth and social welfare,
respecting the goal of sustainable development. All these goals,
for individual enterprises as well as the EU economy, can
only be achieved by more knowledge, R&D, innovation and
investment in new and better technologies.

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In order to turn the trend in line with this, it

3.4.
is
important that an ambitious target has been set. It must be
clearly understood that dramatic change is needed. However,
especially in view of the upcoming enlargement of the EU, the
target is probably over-optimistic.

R&D investments in the EU will not grow or grow only
slightly. ERT companies plan to invest more in R&D outside
the EU, mainly because of relatively unattractive framework
conditions for investing in the EU in terms of human resources
and infrastructure, financial incentives and overall legislation
and regulation. ERT results support
the messages of the
Commission’s communication, but underline the seriousness
of the need for dramatic change.

3.5.
The Commission links the need for more R&D and
innovation with the Lisbon goal, which is right and vital. But
key actors here are Member State governments and companies,
and they may need stronger motivation to make the dramatic
changes needed than just stating the overall goal of Lisbon. A
stronger presentation of the case could have been expected
from the Commission.

3.6. Member States should be strongly challenged. There
are big differences between individual Member States concern-
ing the level of R&D investment and relative role of private and
public sources. Publishing comparisons can be instrumental to
challenge governments. It is surprising that the Commission
has only briefly referred to a few figures at the opposite ends
of the statistical evidence.

3.7.
The level of R&D investment in the candidate countries
is generally lower than in the Member States. The candidate
countries’ governments would be well advised to head for a
national goal of 3 % as soon as possible given that their
foreseen faster economic growth over time will make the
challenge even harder.
in R&D infrastructure
Investment
should be a priority in order to create a growing ground. EU
funds to the candidate countries should be directed in particu-
lar to this.

3.8.
Statistical aggregate information should always be
interpreted with care. Comparisons between the EU and the
US always provoke debate, so also in the case of R&D and, in
particular, the share and role of military R&D. This share is
clearly higher in the US. Military R&D does not contribute
directly and fully to competitiveness in the civil markets. But,
even if no statistics are available, it can be assumed that a big
part is directed to so-called dual use — military and civil —
purposes. Given the lack of transparency of military R&D
support to companies this probably creates a considerable
competitive advantage to American industry.

3.10. Maintaining a growth of R&D investment in the EU
by frontrunner big companies, like those of the ERT, is crucial.
In addition the number of companies investing in R&D must
be increased. A big potential lies in the vast number of mainly
small and medium-sized enterprises in different sectors. Raising
awareness and motivation in these companies needs wide-
ranging efforts as well as introducing most suitable support
measures.

3.10.1.
Referring to the European Charter for Small Enter-
prises the EESC recommends that the Commission prepares
an open coordination strategy for SMEs and research. Cultural
barriers and administrative burdens between SMEs, in particu-
lar micro enterprises, and the research spheres have to be
overcome in order to develop and benefit from the enormous
innovative potential of these companies.

3.11.
Public R&D investments need to be sufficiently
directed towards technological development and application
in order to stimulate industrial R&D investment. The goal
should be to serve development of new products and services
as well as more efficient processes. Education and career
incentives of researchers need to develop in the same direction.
The resources of corresponding basic research must naturally
be ensured.

Networking needs to become the key issue of future
3.12.
R&D developments in the EU. Easy and efficient cooperation
between universities, research institutes and companies gives
optimal results for investments made. Still remaining numer-
ous obstacles must be removed. Cooperation involving several
in more traditional
companies can work particularly well
sectors and when production processes are developed. Also in
newer areas, like ICT, R&D cooperation has been strong and
successful, even in situations of hard competition and respect
for business confidentiality.

3.9.
According to the Barcelona goals, in particular enter-
prises are expected to increase their R&D investments. A
survey of companies represented on the European Round Table
of Industrialists (ERT), representing 13 % (EUR 22,3 billion in
2001) of all R&D investment in the EU, foresees that their

Regional funding both by the EU and Member States
3.13.
should be increasingly directed towards R&D and innovation
as well as relevant education and training.

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3.14.
A better coordination of R&D programmes and
efforts of Member States is strongly called for by the Com-
mission as well as many stakeholders. The need to create
programmes with sufficient resources to reach world level
achievements and vital centres of excellence is evident. Coordi-
nation must, however, not be centralised, directed top down.
It should under no circumstances hinder healthy competition,
which is a necessity on the road towards excellence.

Coordination should rather be based on wide and
3.15.
open exchange of information on plans and programmes and
supportive to all kinds of partnerships and coalitions with a
bottom-up approach. More important than overall EU-wide
coordination is to mentally and legally remove national and
institutional borders and barriers!

software as well as a cost-efficient Community patent system.
Companies need regulatory certainty and clarity in order to
venture investments within the EU.

Unnecessary or unclear regulation and burdensome
4.1.4.
administrative procedures are a disincentive to, among other
things, corporate R&D investments. Simplification of legis-
lation is needed in order to cut ‘red tape’, as the EESC has been
stressing regularly. The Better Regulation Initiative should be
to achieve a genuine balance between
applied in order
economic, social and environmental aspects of sustainable
development.

4. Specific comments

The EESC in general agrees with the points taken up by the
Commission in Chapter 3 Reversing the Trend: Areas for
In the following only issues that the
Concerted Action.
Committee wants to particularly stress or add are taken up.

4.1. More attractive framework conditions

4.1.1.
The importance of a well functioning, open and
competitive market cannot be stressed enough. The finalising
of
the internal market — which gives demand potential
enough for even fairly big R&D investments — is crucial.
Many innovation projects are, however, today so expensive
that their profitability requires access to even wider markets.

4.1.2.
Concerns about adequacy in number, speciality and
motivation of European researchers are repeatedly aired. New
ideas need to be employed in order to make research, and also
engineering, careers more attractive. Barriers to movement
between states and public and private occupations need finally
to be removed — development has been painfully slow. As to
education of researchers, one practical example is a target-
oriented programme, giving incentives to both universities and
graduate students,
that has been implemented with good
results in Finland.

4.1.3.
EU-legislation on Intellectual Property Rights needs
to be put in place urgently. This concerns both GMOs and

4.2. More effective use of public financing for business R&D

4.2.1.
A mix of measures is needed to create optimal
incentives for different kinds of enterprises to increase their
R&D investments. Public support is justified by the fact that
market incentives lead companies to invest less in R&D than
what is optimal for the economy as a whole. The return on
R&D investments are also usually slower than return on other
investment.

An important part of the effort to increase R&D
4.2.2.
should be to motivate more companies to develop their
own R&D strategies and activities, often starting from nil.
Appropriate measures for this are, for instance, advice and
liaison services to create contacts with research units. One
example could be SINTEF in Norway, with the task of building
a bridge between SMEs and the expertise of the University of
Technology in Trondheim. As to financial support, a tax relief
could serve well to start R&D in SMEs.

4.2.3.
Supporting start-ups in high-tech sectors, with high
risk but a potential of fast growth, requires its own instruments.
Here seed money and sufficient risk capital are particularly
important. One efficient measure in this area has been
issued by the Technology
the granting of ‘equity loans’,
Development Centre in Finland. The borrowed capital
is
treated as equity and thereby not burdening the usually utterly
weak balance sheet of the company.

4.2.4.
Studies show that state aid to corporate R&D projects
do not usually decrease the company’s own investment, on the
contrary. Public aid gives the company a possibility to start
more R&D projects than it otherwise could. In other cases the
aid makes it possible to operate a project with more resources
and faster than without aid, which can be very important in
fast-changing markets.

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4.2.5.
The treatment of R&D support in the EU rules on
state aids needs, indeed, a review. It may not necessarily be a
question of more generous rules, but definitely to make them
more flexible. To mention just one important problem,
cooperative projects between the public and private sector are
burdened by requirements of notification to the Commission,
which adds bureaucracy and also leads to much uncertainty.
These kinds of barriers to partnerships need to be removed. A
well judged ‘de minimis’ rule should be introduced.

4.3. R&D and innovation in corporate strategies and management

4.3.1.
In order to be able to strengthen their R&D efforts,
enterprises need a stable political framework. Governments

Brussels, 26 February 2003.

need to give a clear and coherent message, not only on
measures for more R&D as such, but on their emphasis and
orientation towards a knowledge-based, innovation-oriented
economy whenever any policies are addressed and executed.

4.3.2.
Companies need, and they do take, different, individ-
ual approaches to their R&D. Amongst advice to be given, the
EESC stresses one in particular: networking with the public
research institutions as well as other companies. Some of the
barriers to networking seen by companies are real and relevant,
but many are more a matter of tradition and mistrust.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the
European Parliament and of the Council on the promotion of cogeneration based on a useful heat
demand in the internal energy market’

(COM(2002) 415 final — 2002/0185 (COD))

(2003/C 95/04)

On 5 September 2002 the Council decided to consult the European Economic and Social Committee,
under Article 175 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 6 February 2003. The rapporteur
was Mr Buffetaut.

At its 397th plenary session on 26 and 27 February 2003 (meeting of 26 February), the Economic and
Social Committee adopted the following opinion by 107 votes to one with two abstentions.

1.

Introduction

— the EU has limited scope to influence energy supply

conditions.

The proposed Directive is set against the following

1.1.
backdrop:

— the European Union is extremely dependent on external

energy supplies;

It is therefore paradoxical that the potential for using cogener-
ation as a measure to save energy is underused.

— greenhouse gas emissions are on the rise, contrary to the

commitments under the Kyoto Protocol; and

This is why the promotion of high-efficiency cogeneration
based on a useful heat demand is now a Community priority,
intended to supplement renewable energy policy.