Opinion of the European Economic and Social Committee on the "Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: Innovation policy: updating the Union's approach in the context of the Lisbon strategy" (COM(2003) 112 final)
Date: 2003-09-25
Institutions: European Economic and Social Committee
Subjects: EU policy, innovation

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Outcome of the vote

For: 48, against: 41, abstentions: 8.

The following amendments, which were supported by more than a quarter of the votes cast, were rejected at the
plenary session

Point 4.4

Delete.

Outcome of the vote

For: 37, against: 53, abstentions: 10.

Point 6.3

Delete.

Outcome of the vote

For: 25, against: 51, abstentions: 3.

Opinion of the European Economic and Social Committee on the ‘Communication from the
Commission to the Council, the European Parliament, the European Economic and Social
Committee and the Committee of the Regions: “Innovation policy: updating the Union’s approach
in the context of the Lisbon strategy”’

(COM(2003) 112 final)

(2004/C 10/16)

On 12 March 2003, the Council 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 3 September 2003. The rapporteur was
Mr Soares.

At its 402nd plenary session of 24 and 25 September 2003 (meeting of 25 September), the European
Economic and Social Committee adopted the following opinion by 66 votes to none with one abstention.

1. Summary

1.1.
The Committee welcomes the Commission’s Com-
munication and endorses the goal of boosting innovation
capabilities along the lines of the strategy set out by the Lisbon
Council.

1.2.
Boosting innovation in Europe — as a major contri-
bution to economic growth and employment — is a highly

topical issue at a time when the difficulties that the European
economy is experiencing in recovering its momentum are
compounded by political uncertainties and hazards.

The Committee shares the Commission’s systemic view
1.3.
of the innovation process and its belief that innovation can
assume various guises; it is a process that is nonetheless based
on human resources skills — rooted in education and training
— for achieving innovation in firms. The EESC firmly believes

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that building up sound relations, on a voluntary or negotiated
basis, especially in the areas of human, social, financial and
ecological links, also constitutes a fundamental element for
consolidating an innovative model which is specific to the
European Union.

conditions and resources needed for beefing up investment in
innovation which is so vital for economic growth and for
improving quality of life for people in Europe.

2. Gist of the Commission document

The Committee welcomes the Commission’s efforts to
1.4.
encourage innovation based on coordinated action between
Member States and the EU institutions and in general agrees
with the strategies outlined in the Communication.

Innovation is a cornerstone of the Lisbon strategy
2.1.
launched by the European Council
in March 2000 and
emphasised by subsequent European Councils, in particular at
Barcelona in 2002.

1.5.
The Committee acknowledges that some progress has
been made in innovation over the last few years, but the EU’s
relative disadvantage vis-à-vis other regions is clear, while
there are still major differences between countries within the
EU as regards performance in innovation.

2.2.
The present Communication on innovation policy,
together with the Communication on industrial policy in an
enlarged Europe and the Green Paper on entrepreneurship,
form a coherent framework for developing an enterprise policy
that fosters company competitiveness and contributes to the
growth of Europe’s economy.

The EESC would draw Member States’ attention to the
1.6.
need to complete the single market — the largest market in
the world — effectively, and to the urgent need to create
better conditions for taking full advantage of the enormous
opportunities offered by the recently agreed enlargement for
reviving investment and economic growth throughout the
European Union.

1.7.
The Committee highlights the need to: bolster the
support mechanisms for businesses; streamline the decision-
making processes; work towards more efficient processes for
exchanging and spreading good practices in innovation; and
give greater recognition to business activity, calling upon the
Commission and the Member States to promote a business
culture more conducive to innovation, quality promotion and
business risk-taking within society as a whole.

The EESC recommends that when European policies
1.8.
are devised and applied, in particular in those areas for which
businesses provide the driving force, such as in innovation,
account should be taken of the need to bolster the mechanisms
for involving the key protagonists, namely businessmen and
workers.

1.9.
The Committee firmly believes that this Communi-
cation can provide a basis for strengthening innovation
capabilities throughout the European Union, and hopes that
the Member States and EU institutions provide the right

2.3. While recognising the major contribution of research
to innovation together with the importance of the recent
Communication ‘More research for Europe, towards 3 % of
GDP’, the Communication highlights that there are many other
forms of innovation.

2.4.
Innovation can be incremental or radical, it can result
from technology transfer or through the development of new
business concepts, it can be technological, organisational or
presentational.

2.5.
The object of the Communication is firstly to describe
the diverse routes to innovation and analyse the consequences
for the design of innovation policy and for the different means
by which innovation policy is put into action, so that they are
not hampered by a view of innovation which is too restrictive.

2.6.
This analysis is complemented by an examination of
the current challenges that are, to different degrees, specific to
the EU, recognising that structures, problems and oppor-
tunities relating to innovation are not necessarily the same in
all the world’s major economic areas. Factors considered
include the persistently inadequate performance of the Union,
the implications of enlargement, demographic trends, and the
large size of the public sector in EU economies.

levels,

2.7. While innovation policy takes place mostly at the
national and regional
the Member States and the
Commission need to step up their cooperation for strengthen-
ing innovation in the EU, including coordination and assess-
ment mechanisms for mutual learning, as well as for taking
stock of progress achieved. The Communication makes con-
crete proposals on how to turn European diversity into a
strength.

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The Communication also suggests several new direc-
2.8.
tions for EU innovation policy development and, in particular,
interaction with other policy areas. Innovation policy must
often be implemented via other policies, and the Commission’s
suggestions include better coordination and a pro-active
follow-up by the Commission and Member States.

national governments and the European public’ (3), and ident-
ified four crucial principles for encouraging innovation in
Europe:

— information on innovation;

— a broad awareness of its value;

3. General comments

— a functional organisational and regulatory environment;

The importance of innovation has been recognised
3.1.
since 1995, especially in the Green Paper on Innovation (1)
and the First Action Plan for Innovation in Europe (2), the main
objectives of which were to create an innovation culture,
generate an environment favourable to innovation and encour-
age better links between research and innovation.

3.2. When the Lisbon European Council of March 2000 set
the European Union the strategic objective of 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, it created
certain expectations that innovation might become a key pillar
for the future of the Union. (3)

3.3.
The 2000 Commission Communication on inno-
vation (4) identified five priorities for guiding Member States’
actions to promote innovation:

— Coherence of innovation policies

— A regulatory framework conducive to innovation

— coordination of activities at national and cross-sectoral

level.

This assessment still holds true, and particularly the

3.5.
Committee’s contributions regarding the following aspects:

— the importance of converging national innovation poli-

cies;

— the adoption of

tax measures to encourage private
investment in research and innovation and the employ-
ment of researchers by the private sector;

— the removal of barriers preventing communication
between small and medium-sized enterprises (SMEs) and
universities and research centres;

— steps to encourage the creation and growth of innovative
businesses (facilitating the access of start-ups to public
tendering procedures and Community programmes);

— the development of human resources in research insti-
tutes and centres of excellence and steps to attract
researchers and scientists from non-EU countries;

— Encouraging the creation and growth of

innovative

enterprises

— improvements to key interfaces in the innovation system;

— Steps to improve key interfaces in the innovation system

— measures to facilitate knowledge transfer activities; and

— A society open to innovation.

3.4.
The Committee expressed the view at the time that
such objectives worked towards the vital ‘recognition of the
importance of innovation policy on the part of both the

(1) COM(95) 688 final — volumes I and II: EESC opinion CES 700/

1996, OJ C 212, 22.7.1996.

(2) COM(96) 589 final.
(3) EESC opinion OJ C 260, 17.9.2001.
(4) Innovation in a Knowledge-driven Economy, COM(2000) 567

— the need to modernise basic school curricula and provide
training, especially in primary and secondary schools, in
order to raise broad social awareness on a practical level
of the meaning of innovation. (5)

However the EESC would draw attention to the need
3.6.
for some public funds to be earmarked for continuous training,
especially for intermediate-level professionals (knowledge wor-
kers), so as to allow on-the-spot research and innovation
activities in firms to expand.

final.

(5) EESC opinion OJ C 260, 17.9.2001, points 3.2 to 3.6.

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The Barcelona European Council decided that invest-
3.7.
ment in research and technological development (R&D) in the
EU should be stepped up with the aim of approaching 3 % of
GDP; it also called for an increase in the level of business
funding to two-thirds of total R&D spending. The Committee
welcomed these conclusions and highlighted the fact that the
goals of competitiveness, economic growth, employment, high
environmental and health standards and balanced sustainable
development could only be achieved by more knowledge,
R&D and innovation (1).

3.8. While R&D (research and development) has already
been dealt with in various previous European Commission
communications and corresponding Committee opinions (2),
the Communication in hand focuses on those aspects of
innovation which go beyond or fall outside the sphere of R&D,
but whose importance may be decisive for imparting new
impetus to European innovation policy.

Conference held on 23 and 24 June, on ‘Building an innovation
policy for Europe’.

in particular, and highlight

3.13.
The difficulties in relaunching economic growth
and boosting employment are compounded by the political
uncertainties and hazards affecting the world and the European
economies
the particularly
important and topical nature of the Commission’s Communi-
cation on innovation policies. This difficult situation should
be a compelling factor in encouraging Member States and
businesses to support investment policies for securing the
necessary changes designed to step up innovation activities as
a key instrument for boosting the productivity and competi-
tiveness of European economies.

3.9.
The Committee shares the Commission’s view that
although some progress has been made here, innovation is still
a real weak point for the European Union compared to the
United States and Japan, and this shortcoming could be one of
the main reasons for Europe’s relatively poor performance in
terms of growth and productivity.

4. Specific comments

3.10.
The Committee welcomes the present Commission
Communication which is designed to launch the debate on
modernising the foundations of Europe’s innovation policy,
based on a clearer understanding of
the mechanisms of
innovation and underpinned by renewed political desire on
the part of Member States for overcoming the difficulties in
creating a more innovative Europe capable of achieving the
Lisbon objectives.

4.1.
The Committee shares the Commission’s systemic view
of the mechanisms for innovation and agrees with its comment
that capacities and performance in non-technological inno-
vation may be as relevant to the slow pace of progress in
achieving the Lisbon goals as the low level of R&D spending.
This situation must not, however, be allowed to detract from
the European objective of 3 % of GDP being channelled to
R&D, to which Member States have committed themselves,
and to which they must keep in order to make up the current
innovation shortfall.

cohesion,

3.11.
The Committee attaches importance to the priorities
set down at the European Council meeting on 20 and 21 March
2003, namely as regards growth in employment and greater
social
and
environmental protection and quality of life for EU citizens,
although it does recognise that to date these priorities have
been more a subject of discussion than concrete action by
Member States.

innovation and entrepreneurship,

4.1.1.
In truth, developing new knowledge is a prerequisite
for the European Union becoming — as affirmed at the Lisbon
Council — the most advanced knowledge-based society in the
world. New elementary knowledge is a product of basic
research. On the other hand, innovation — and the practical
knowledge associated with it — flows from interaction
between basic research, applied research, development, engin-
eering, management, marketing, etc, or from any one of these
stages.
It can crop up in many forms and offer many
opportunities.

3.12.
the conclusions of

The Committee also welcomes the general thrust of
the XIVth Inter-Parliamentary Eureka

(1) EESC opinion OJ C 95, 23.4.2003.
(2) OJ C 260, 17.9.2001; OJ C 94, 18.4.2002; OJ C 241, 7.10.2002

and OJ C 95, 23.4.2003.

4.1.2.
On the other hand, more effective incentives are
needed to encourage mobility amongst scientists and engineers
— as purveyors of information and innovative techniques —
between industry (including SMEs), universities and other
research centres. Intellectual property rights must be distrib-
uted fairly.

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Of particular importance is the role which small and
4.1.3.
medium-sized enterprises can play in adopting and developing
ideas for new products. However, their market opportunities
and chances of survival do not depend exclusively on mobility,
knowledge transfer and the sharing of new ideas, but much
more on the general economic climate, their self-sufficiency
in basic equipment,
financing arrangements and business
experience. Thus, improved competitiveness for new compani-
es,
together with a better market position and financial
capacity, are also vital for innovation, at least in the first five
years.

4.2.
The Communication argues that businesses constitute
the driving force for innovation, based on their ability to
recognise market opportunities and to respond in innovative
ways using their know-how and skills. The EESC would,
however, emphasise that although all
the interactions a
businesses has with its immediate environment are vital to its
innovative capacity, and conditions in the broader environ-
ment affect its innovative orientation, the knowledge base
depends on life-long human resource education and training.
Individuals’ learning opportunities and abilities are decisive
elements in the innovation process.

4.3.
The EESC stresses the importance of greater recog-
nition for business activity and the need for the Commission,
Member States and society in general to strive to create
a business culture more conducive to innovation, quality
promotion and business risk-taking.

As part of the mutual learning process, it would be
4.3.1.
particularly valuable for the Commission to organise round
tables at sectoral level, at least as pilot projects, in order to
make it easier to pass on information about best practices in
business innovation.

The EESC would point out that Europe’s main weak-
4.4.
nesses emerge most of all in the proportion of GDP represented
by companies’ R&D spending,
the number of high-tech
patents (1) and industrial added value in high-tech sectors. It
reiterates its view that this state of affairs must be put right.

4.5.
The EESC would also stress that differences between
the Member States are particularly significant in terms of
participation levels in life-long learning and numbers of high-
tech patents. The continuing disparities between Member
States’ R&D expenditure as a share of GDP and high-tech
patents is worrying. These are some of the aspects which
require particular attention.

4.6.
The acknowledged difficulties affecting innovation
should be adequately addressed by the EU countries. These
involve, firstly, shared problems such as risk-aversion, insuf-
ficient R&D investment and the lack of cooperation between
the research and industrial sectors and, secondly, the specific
problems the accession countries face in making the necessary
changes to their economic, institutional, education and social
frameworks.

4.7.
The Communication underlines the need for suitable
human resources policies in terms of providing appropriate
opportunities for the last phase of working life, encompassing
flexible working time arrangements and opportunities to
participate in training. The EESC agrees that developing all
workers’ skills and extending the economic contribution made
by older workers are important factors which must be reflected
in companies’ age structures and in steps to resolve the
difficulties faced by social security systems. Nevertheless,
workers in physically hard jobs or working in certain high-risk
conditions should be dealt with differently in this connection.

The particular nature of innovation activities, bearing
4.3.2.
in mind the high failure rates in turning ideas into financially
viable projects, should warrant steps by Member States to
make specialized services available to provide support for
business innovation.

4.7.1.
In particular, consideration should be given to the
contribution that older knowledge workers can still make to
creating wealth and well-being for the community, with skill
and intelligence, providing valuable opportunities for the
community’s productive and economic system while reducing
economic and social costs.

financial

In addition,

institutions should expand
4.3.3.
their capabilities for assessing new ideas, giving businesses
opportunities for obtaining financial resources so that they
can benefit as much as possible from existing and emerging
knowledge.

(1) 2002 European Innovation Scoreboard [SEC(2002) 1349].

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4.7.2.
necessary to:

Against this background, the EESC feels that it is

— set up specific instruments to safeguard rights by involv-
ing these workers more in the process of reorganising
and restructuring businesses, in such a way as to facilitate
new opportunities by adopting suitable instruments for
back-up and technical support;

— introduce incentives for firms to employ knowledge

workers who are seeking new jobs;

— encourage — through specific projects for investment
policies — commercial development and partnerships
with the Member States, and mobility and improved
status for these workers, in order to make it easier for
them to fit into the system and to ensure maximum use
is made of their valuable skills and knowledge;

— make use of these workers’ knowledge in order — as part
of the policy of managing migratory flows — to develop
selection and training activities on the spot in firms
interested in hiring immigrants;

— use experts to provide professional support in the field to
SMEs wishing to gain a foothold on new markets opened
up via the accession countries;

— encourage exchanges between these professionals so as
to give on-the-spot back-up to the process of modernising
the productive, organisational and administrative appar-
atus of the new members of the Union; and

— introduce a specific policy for knowledge workers who,
in addition to losing jobs, encounter major difficulties in
reconciling mobility with the need to support a family.

The EESC is convinced that worker satisfaction, par-
4.8.
ticularly regarding the quality of working conditions and
relations, is a key factor in strengthening business innovation.
Greater environmental and social responsibility on the part of
businesses, with all its implications, would also appear to be
fundamental to reinforcing a specific model for innovation in
the European Union.

The Committee recognises the importance of

4.9.
the
specific features of the EU set out in the Communication and
having a bearing on innovation policy, such as the importance
of the public sector and its interfaces with the most innovative
enterprises, the regeneration of urban areas as centres of
innovation, attractive to highly-qualified individuals, and the
need to draw on European diversity in developing an inno-
vation policy specifically geared to boosting economic growth,
employment, and the quality of life for Europe’s citizens.

The Committee joins with the Commission in reco-
4.10.
gnising the need to step up efforts to encourage innovation,
and to coordinate action between the Member States and the
EU institutions; such efforts must however lead to practical
effects on both enterprise support policies and models for
encouraging worker participation and commitment, as well as
budget policy guidelines for allocating the necessary resources.

The EESC urges Member States to devise actions for
4.11.
developing better basic and technical training for the working
population and, as part of moves to coordinate policies
Europe-wide, to create the conditions for boosting the mobility
of human resources between universities/research centres and
industry, between countries and between businesses. Such
actions can play a decisive part in speeding up the process of
spreading knowledge and best practice in innovation activities
so that sectors and businesses can benefit fully from the
knowledge available, applying it to the design, production and
marketing of goods and services. In information technology, it
will be vital to ensure that better use is made in future of
existing networks, especially by businesses and universities/
research centres so that, by learning from each other, they can
achieve the desired levels of innovation.

4.12.
The Communication calls for new directions to be
studied in order to improve innovation performance in Europe.
The Committee supports many of the suggestions made,
regarding either the implications for policy interfaces, or
the systematic assessment of their impact on innovation
(competition,
the
internal market, employment,
environment and regional development), steps to stimulate
greater market dynamism (exploiting the concept of lead
markets), the promotion of innovation in the public sector
(efficient, open and competitive public procurement, new
types of services), and moves to strengthen the regional
dimension of innovation policy (skills creation reflecting the
distinctive social and economic characteristics of a region and
learning from previous successes).

taxation,

4.13.
strengthened through the following specific interfaces:

In the EESC’s view, European innovation should be

— taxation: a policy of selective tax incentives for innovative
activities, especially for SMEs operating in growth and/or
medium- and high-tech markets;

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— public sector: an investment policy for boosting the
development of new products and services, focusing
particularly on those with the greatest impact on public
well-being (health, education and training, the environ-
ment, transport and communications);

— employment: coherent employment market policies
aimed at upholding and creating high-quality employ-
ment, strengthening social cohesion and steady EU pro-
gress to a level of near full employment;

— social responsibility and company human resources: one
of the main concerns of an innovative organisation
should be its ability to relate to its various stakeholders
in a fair, balanced way, defending and advocating environ-
mental protection in such a way as to satisfy the various
interests involved, particularly those of its workers and
the community in general. At present, one of the greatest
challenges facing businesses is to establish good relations,
especially human relations and those relating to social,
financial and environmental issues, and particularly on a
voluntary or negotiated basis.

— redefinition of Community support schemes for inno-
vation: bearing in mind that part of the Community funds

Brussels, 25 September 2003.

allocated to Member States for innovation are not used
because the public contribution to the national financing
component is lacking, it must be possible to guarantee
this contribution fully from private sources only, so that
all the funds which the EU makes available to the Member
States for innovation can be used.

4.14.
The Committee is convinced that the steps proposed
by the Commission go some way to reducing the effects of the
productivity gap between the EU and other economic areas,
and can help to devise specific paths and solutions capable of
strengthening the European social model.

4.15.
Lastly, the EESC feels it must express its concern
about how slow decision-making procedures are in the
European Union, typical instances of which are the actual
operation of the single market and the European patent. This
difficulty means that the processes for devising and formulating
policies and for subsequently implementing them on the
ground — particularly those, such as innovation policy, for
which businesses are a driving force — should take into
account the need to strengthen the mechanisms for involving
the main protagonists — businessmen and workers. The
Committee is convinced that it is becoming vital for the
Commission and the Member States to adopt such a new
stance so that Europe can meet the challenges of innovation.

The President

of the European Economic and Social Committee

Roger BRIESCH

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APPENDIX

to the opinion of the European Economic and Social Committee

The following amendment, which received more than one quarter of the votes cast, was rejected in the course of the
discussion:

Insert a new point 4.1.4

‘Accordingly, the Committee advocates that, until the R&D target of 3 % of GDP is achieved, all public investment in
this sphere should be excluded from the calculations of public expenditure for the purposes of the Stability Pact.’

Result of the vote

For: 35, against: 39, abstentions: 3.

Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of
the European Parliament and of the Council amending Regulation (EC) No 1655/2000 concerning
the Financial Instrument for the Environment (LIFE)’

(COM(2003) 402 final — 2003/0148 (COD))

(2004/C 10/17)

On 16 July 2003 the Council decided to consult the European Economic and Social Committee, under
Article 175(1) of the Treaty establishing the European Community, on the above-mentioned proposal.

The Bureau of the European Economic and Social Committee instructed the Section for Agriculture, Rural
Development and the Environment to prepare the Committee’s work on the subject.

At its 402nd plenary session (meeting of 25 September 2003), the European Economic and Social
Committee decided, in view of the urgency of the matter, to appoint Mr Chiriaco rapporteur-general and
adopted the following opinion by 56 votes to one with one abstention.

1. Gist of the Commission proposal

At the time of the adoption of Regulation (EC) No 1655/2000
Instrument for the Environment
concerning the Financial
(LIFE) (1), the Commission had proposed a management com-
mittee to oversee its implementation since the choice of
projects was a measure with substantial budgetary impli-
cations.

1.1.
The Council unanimously rejected the Commission
proposal regarding the committee procedure to be applied,
and specified in Article 11(2) that the regulatory procedure

provided for in Article 5 of Decision 1999/468/EC be used for
the adoption of measures implementing Regulation (EC)
No 1655/2000.

The Commission therefore brought an action before

1.2.
the Court for the annulment of the provision in question.

In its judgment of 21 January 2003 (2), the Court of
1.3.
Justice annulled Article 11(2) of Regulation (EC) No 1655/
2000, arguing that management measures relating to the

(1) OJ L 192, 28.7.2000, p. 1.

(2) Judgment of the Court of 21.1.2003, Commission v. European
Parliament and Council, Case C-378/00, not yet published in the
Court Reports.