Opinion of the European Economic and Social Committee on the  Proposal for a Decision of the European Parliament and of the Council establishing a Competitiveness and Innovation Framework Programme (2007-2013) (COM(2005) 121 final — 2005/0050 (COD))
Date: 2005-12-14
Institutions: European Economic and Social Committee
Subjects: ESC opinion, action programme, competitiveness, entrepreneurship, innovation, small and medium-sized enterprises

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Official Journal of the European Union

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Decision of the
European Parliament and of the Council establishing a Competitiveness and Innovation Framework
Programme (2007-2013)’

(COM(2005) 121 final — 2005/0050 (COD))

(2006/C 65/03)

On 25 April 2005 the Council decided to consult the European Economic and Social Committee, under
Articles 156, 157(3) and 175(1) of the Treaty establishing the European Community, on the abovemen-
tioned proposal.

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 20 October 2005. The rapporteur was
Mr Welschke, the co-rapporteur Ms Fusco.

At its 422nd plenary session, held on 14 and 15 December 2005 (meeting of 14 December 2005), the
European Economic and Social Committee adopted the following opinion by 125 votes to two with one
abstention.

1. Preliminary remarks

1.1 Many growth, employment and innovation indicators
suggest that the European Union has been falling behind in
global competition over the past few years and is continuing to
do so. Bringing down unemployment, creating new jobs and
promoting the economic growth required for that purpose on
a sustainable basis is becoming the EU's biggest economic and
social challenge.

Businesses have a vital role to play in meeting these
1.2
in Europe are small and
challenges. 98 % of businesses
(SMEs). They provide 55 % of
medium-sized enterprises
private-sector jobs. In terms of production processes, products
and services SMEs have considerable innovative potential.

1.3 Many businesses take advantage of the benefits of the
European single market. Often, however, because of remaining
restrictions,
limited staff and financial capacity and lack of
information, they are unable to make full use of the single
market's potential. That can be remedied by the consistent
implementation of the Lisbon strategy, completion of the single
market and further market opening, better regulation, and
support programmes that generate European added value.

1.4 Modern administrations and efficient public services can
also do much to promote competitiveness and innovation in
Europe. Cross-border twinning between authorities at all levels
can improve the administrative cooperation that is becoming
increasingly necessary, facilitate exchanges of experience and
exploit examples of best practice for the benefit of all.

2. Summary of the Commission document

The Competitiveness

Framework
2.1
Programme (CIP), which is set to run from 2007 to 2013, is
intended to help implement the refocused Lisbon strategy and
the Community strategy for sustainable development.

Innovation

and

The CIP marks the continuation of a range of existing
2.2
Community support programmes in various policy areas and
presents them as a package with a coherent legal basis. The
Commission is proposing a ‘financial reference amount’ of
EUR 4. 212,6 million.

2.3
The CIP is open to all EU Member States, EU candidate
countries, countries of the European Economic Area (EEA) and
countries of the western Balkans. Other non-EU countries may
also take part if this is provided for in bilateral agreements.

2.4
The CIP is designed to foster competitiveness of enter-
prises, and particularly SMEs; to promote innovation and make
it market-viable; to accelerate the development of the informa-
tion society; and to promote energy efficiency and the use of
new and renewable energy sources.

Underpinned by Articles 156, 157(3) and 175(1) of the
2.5
Treaty establishing the European Community,
the proposal
seeks to establish a significant and coherent legal basis for
specific Community support programmes and relevant parts of
other Community programmes in fields critical to boosting
European productivity,
innovation and sustainable growth,
while at the same time addressing complementary environ-
mental concerns. The CIP is made up of three specific sub-
programmes.

The purpose of the Entrepreneurship and Innovation
2.6
programme is to create a framework for entrepreneurship,
innovation and competitiveness.
targets businesses in all
economic sectors, whether hi-tech or traditional. The aim is to
improve access to finance for SME start-ups and growth. Other
the
key elements include cooperation between businesses,
fostering of innovation and the promotion of environmental
technologies. The budgetary allocation for this programme is
EUR 2,631 million.

It

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in businesses,

administrations

2.7
The ICT policy support programme is designed to
promote the adoption of information and communication tech-
nologies
and public-sector
services. The proposed measures flesh out and support the new
EU initiative i2010, which in the years ahead is set to provide
the framework for the establishment of a single European infor-
mation area and the strengthening of the internal market in
information products and services. The budgetary allocation for
this programme is EUR 801.6 million.

environmental

and promote

the knowledge society further, complete the single market,
improve the business climate, modernise the labour market
(not least through strategies for lifelong leaning and active
sustainability. The
ageing)
Committee feels that the onus is on the Member States in par-
ticular to do everything they can to boost businesses competi-
tiveness by establishing the requisite conditions, and considers
the EU support programmes an important and effective adjunct
the framework
in this connection.
research programme,
the lifelong learning strategy and the
Structural Funds are of particular importance.

In addition to the CIP,

The Intelligent Energy — Europe programme seeks
2.8
to support sustainable development as it relates to energy; to
improve security of supply and energy efficiency; to reduce
dependence on energy imports; and to increase renewable ener-
gy's share of gross inland consumption to 12 %. Priorities
include projects to promote and disseminate sustainable energy
technologies;
improved administrative structures and closer
networking; and action to raise overall awareness of the need
for sustainable energy use. The Intelligent Energy Executive
Agency set up by the Commission is to remain in place. The
budgetary allocation for this programme is EUR 780 million.

The CIP will operate on the basis of annual work
2.9
programmes. The Commission intends to ensure implementa-
tion of
these programmes. Management committees are to
provide back-up for the measures at Member State level and
ensure the coherence of national activities.

3. General comments

3.1
The CIP proposal is wide-ranging and covers a broad
spectrum of policies and programmes. The comments here
relate only to those aspects which the Committee considers to
be of particular importance or where it would like to see addi-
tional considerations borne in mind.

3.2
The Committee welcomes the CIP as an important step
towards establishing synergies to promote business competi-
tiveness and innovation and to foster sustainable development.
in
The proposed measures and tools can play a key part
strengthening social cohesion, promoting sustainable economic
development and achieving the Lisbon strategy's growth and
employment objectives. This is why the Commission also high-
lights the CIP as an important element of Community policy in
its proposed action plan to revitalise the Lisbon strategy at
Community level (COM(2005) 330).

3.3
The 2004 Kok report refers to the key factors deter-
mining the competitiveness of the European economy. The
report rightly recommended that measures be taken to develop

3.4
Businesses boost their innovative capacity not only by
exploiting technological progress. Innovation is also furthered
by making the entrepreneurial spirit a more established fixture
in each country's society and culture and expanding managerial
knowledge, as well as by responsible business management and
the pursuit of cross-border activities. When setting goals for
the CIP,
it would be a mistake to interpret innovation too
narrowly, thereby squandering opportunities for more growth,
employment and social cohesion. Businesses are key players in
the process of innovation, and the social partners should be
involved appropriately in implementing that process.

3.5
Innovation is born in people's minds. A high level of
education and training is essential if there is to be a sustained
increase in innovative capacity in the European Union. It is a
duty equally incumbent on employers, workers, governments,
universities, schools and all other stakeholders to raise the
innovative potential of our societies still further. Cross-border
projects are a good way to build on national efforts to promote
the knowledge society. The Committee is pleased that the EU is
targeting education and training, not least through Community
schemes such as Socrates (education in general), Tempus
(university studies) and Leonardo da Vinci (vocational training).
The integrated action programme for education, training and
lifelong learning, which is set to run from 2007 to 2013, can
also play a key part in boosting businesses' innovative capacity
and making the CIP a success.

The Committee welcomes the Commission's intention to
3.6
boost businesses'
innovative capacity and competitiveness
through better regulation and a systematic review of existing
legislation to check for disproportionate burdens. It is particu-
larly important that any new rules be subject to an effective
impact assessment. When conducting this impact assessment,
the Commission should work closely with the Competitiveness
Council and the European Parliament.

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3.7
The Committee shares the Commission's view that hori-
zontal and coordinating EU measures can generate major added
value. It will be particularly important to provide businesses
with information that is as practical as possible and to give
them easy access to CIP actions and tools.

incorporated into the annual planning of work at an early
stage. The Commission and the players involved in imple-
menting the programmes should take a critical look at the mid-
term review to see if any changes need to be made, with due
regard to the experiences of businesses and the other target
groups. However, the certainty with which all project stake-
holders must be able to plan ahead should not be undermined
at any time.

3.8
The Committee backs the Commission's aim of using
the CIP to promote traditional and not only hi-tech sectors.
Such traditional sectors in particular have the potential to play
an even greater role in boosting employment and strengthening
social cohesion if they are given the opportunity to become
more competitive and innovative. There is also considerable
innovative potential in the services and logistics sectors.

The Committee feels it of the utmost importance that
3.12
Member States take on board the concept of ‘additionality’.
Member States are urged to maintain their national support at
the planned levels irrespective of financial contributions from
the EU. As the Committee see it, Member States are committed
the agreed objective of devoting 3 % of GDP to research and
development. CIP implementation must not result in any slack-
ening of Member States' efforts to achieve this objective.

regions

3.9
The Committee would ask the Commission not to be
too restrictive in identifying the framework programme's target
groups, so as to secure maximum added value across as many
as possible. Cooperatives,
different
and sectors
consortia, mutuals,
innovative start-ups and microenterprises
can also help boost competitiveness and innovative capacity
within the EU. Cooperatives, for instance, make it possible to
utilise size-related advantages which have a favourable impact
on market access (including participation in larger invitations
to tender), market position, the development of management
potential, further training and research capacity. A key condi-
tion for access to CIP projects should be the extent to which
the target groups develop feasible ideas that help boost compe-
titiveness and innovation and warrant support. Foundations,
associations and chambers of industry and commerce play a
key role as intermediaries with regard to the framework
programme.

3.13
The Commission is right to point to the need for close
links between the CIP's tools and measures and other EU
programmes and initiatives. Links with the 7th Framework
Research Programme, the lifelong learning strategy and struc-
tural policy programmes are of particular importance. The
Commission should take steps to ensure that all the directo-
rates-general involved pursue coherent objectives. Transparency
must be guaranteed for the activities and decisions of all the
stakeholder bodies. Horizontal synergies and vertical synergies
between the EU and the Member States and between business,
science and the public authorities will only be fully attainable if
the
these
organisational
programmes are well coordinated.

substantive

priorities

and

of

Given the budgetary constraints in the Member States
3.10
and at European level, CIP funding is limited. The Committee
expects the programme to be given adequate funding under the
next financial perspective, on which a decision is still pending.
At the same time, it is essential to focus available funding as
efficiently as possible on the target groups and in a way that is
best suited to achieving the desired outcome. The Commission
should examine
to which funding currently
earmarked for managing the programme can be used for
projects.

extent

the

4. Specific comments

4.1 When implementing the CIP, the target groups must
have ready access to the proposed programmes. This was not
always fully guaranteed in the past. Funding must be allocated
efficiently and on the basis of practical need, with as few
bureaucratic hurdles as possible (inter alia as regards reporting
and documentation).

3.11
The Committee welcomes the Commission's intention
to evaluate the experience it has gained with the existing
programmes, to correct any shortcomings and, when imple-
menting the CIP, to draw on examples of best practice. Bench-
marking and monitoring that is readily understandable to all
stakeholders will help make the CIP a success. Any findings
that could help make the CIP as effective as possible should be

4.2
The Commission should administer the CIP in an effi-
cient and user-friendly way by adopting a coherent approach.
All players involved in implementing the CIP rely both on
It
long-term certainty to plan ahead and on transparency.
would be helpful to use an external agency to handle the
administrative side of the programmes if administrative proce-
dures could be considerably simplified and costs cut as a result.

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4.3
The Commission's SME observatory should play an even
more active back-up role with regard to the CIP's implementa-
tion. This could further improve the exchange of knowledge
and experience between the Member States, between busi-
nesses, and between industry, science and the public authori-
ties. The SME observatory reports should be examined with a
view to their practicability and relevance to the target groups.
It would be helpful to define the observatory's remit in such a
target groups (as defined in
way that
point 3.9) is clearly brought to bear.

the input

from all

4.4 The Entrepreneurship and Innovation programme

For SMEs and innovative micro-enterprises, access to
4.4.1
capital remains very limited — despite the fact
this
problem has been well known for many years. Action is
needed on this front without delay. The financial instruments
proposed under this programme are of crucial importance for
the success of European enterprise policy. The Committee
trusts that
they will be able to do much to move things
forward and generate leverage.

that

The Committee advocates allocating resources

4.4.2
to
appropriate financial intermediaries in order to reduce finan-
cing costs (including staffing and administrative costs) and to
lower financing risks. The High Growth and Innovative SME
Facility (GIF), the SME Guarantee Facility (SMEG) and the Capa-
city Building Scheme (CBS) are designed to help make it easier
for businesses to finance loans and access risk capital. Providing
loans to innovation-driven SMEs and micro-enterprises, espe-
their
cially in their start-up and growth phase, will boost
growth and employment potential. Small and micro loans
should also be made available for appropriate projects.

4.4.3
The Committee thinks that building up and expanding
cross-border activities should also be considered as an integral
part of European policy and a key SME strategy to boost
competitiveness and innovation. All
the actions and tools
provided for in the programme should serve this objective. On
this front,
the Commission should provide businesses with
active support through ‘cooperation exchanges’, practical infor-
mation and other appropriate measures.

4.4.4
The complexity of European aid arrangements and the
legal framework involved makes it essential to provide busi-
nesses and other target groups with tailor-made information
and advice. The best means of achieving that is through a Euro-
pean-wide network of information channels working success-
fully together. In this way, it is possible to heighten awareness
still further among the public and among businesses of the
added value of European programmes and projects. This also

ties in, among other things, with the new EU communication
strategy.

4.4.5
The Committee is keen that the planned invitation to
tender for network partners to provide support services for
businesses and innovation should be subject to transparent
rules and be open to all regional and sectoral organisations,
which, by virtue of their structure and the services they offer,
can respond directly to business concerns. The Commission is
advised to give individual consideration to the credentials of
existing Euro Info Centres (EIC), the Innovation Relay Centres
(IRC) and the Business Innovation Centres (BIC).

4.5 The ICT policy support programme

4.5.1
The Committee welcomes the line taken by this
programme. This sector is a driving force behind the increased
productivity that
is necessary in all economic fields. The
proposed measures may be expected to generate considerable
European added value.

Promoting the European information society will help
4.5.2
sustainable economic development, boost European
foster
social integration and improve people's quality of life. When
implementing this programme, it is particularly important to
ensure that all companies have access, including those in tradi-
tional sectors.

4.5.3
Targeted projects, consolidated measures and the
establishment and expansion of cross-border networks and
clusters can boost technology transfer and the application of
innovative, market-based ICT solutions. The Committee is
pleased that joint technical specifications and action plans are
to be drawn up to facilitate public procurement in this sector.

4.5.4
In terms of structure and planning, the ICT policy
support programme should be coordinated very closely with
the initiative i2010 — A European Information Society for growth
and employment (COM (2005) 229). The Committee is working
on a separate opinion on the i2010 initiative.

4.6 The Intelligent Energy — Europe programme

4.6.1
The Committee welcomes the scope of the proposed
programme. Energy efficiency, the promotion of renewables
and the diversification of energy supply are vital for sustainable
and environmental protection in
economic development
the energy
Europe. The programme should help harness
sector's full
in the fields of
systems engineering and energy conversion.

innovative potential, not

least

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and

technologies

4.6.2 Market-oriented
competitive
products will be crucial in determining whether the programme
is able to achieve its objectives. The Committee is therefore
pleased at the support to be given to projects that make it
easier
innovation into marketable products.
However, such activities can only be useful early on in the
innovation process. Basically, the only way to develop the best
technologies and competitive products or services is through l
competition.

to convert

4.6.3
The Committee welcomes the Commission's plan to
promote the sustainable use of energy resources and to dissemi-
nate information to that end. These activities should be aimed
not only at specialist groups but also at the wider public. The
ongoing Sustainable energy for Europe campaign has an impor-
tant contribution to make in this regard.
It is designed to
spread examples of best practice and further raise public aware-
ness of the need to use energy efficiently and protect the envir-
onment. The Committee trusts that this campaign and the Intel-
ligent Energy-Europe programme usefully complement each
other.

5. Final recommendations

5.1
The Committee would encourage the Commission to set
out the aims and structure of the CIP even more clearly. A
good example is the list of planned implementing measures in
CIP Article 6. The individual programmes and tools could be
presented in a similarly systematic fashion, thereby making the
CIP more readily understandable for the target groups. Civil
society organisations should also be involved in this process.

Brussels, 14 December 2005.

5.2
The Committee expects that consolidating a range of
programmes and individual measures will produce added value.
That will only succeed through optimum coordination, consis-
tency between the individual measures taken, and coordination
with other relevant EU schemes. The onus here is on the
Commission and the managing authorities in particular.

The Committee is pleased that the CIP is based on the
5.3
EU's key economic, social, environmental and energy policy
objectives. In implementing the CIP,
it will be important to
structure the annual work programmes in a practical way that
is of clear relevance to the target groups, not least innovative
businesses. That can only be achieved through the appropriate
involvement of the target groups even at the planning stage.

For

the purposes of

5.4
improved implementation and
policy continuity, the Committee calls on the Commission to
clarify the links between the CIP and other related existing and
future initiatives, notably the 2000 European Charter for Small
Enterprises, the 2003 Entrepreneurship in Europe Action Plan
and the Communication that has been announced on SME
policy for the years ahead. This would be of great value to busi-
ness representatives and policy makers at national, regional and
local level.

The Committee will be closely monitoring CIP imple-
5.5
mentation. It reserves the right to submit fresh recommenda-
tions in the light of experience gained or as part of the mid-
term review.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND