Opinion of the Committee of the Regions on the Communication from the Commission on Implementing the Community Lisbon Programme: a policy framework to strengthen EU manufacturing — towards a more integrated approach for industrial policy
Date: 2006-06-14
Institutions: European Committee of the Regions
Subjects: EU programme, company modernisation, industrial cooperation, industrial policy, innovation, processing industry

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Opinion of the Committee of the Regions on the Communication from the Commission on Imple-
menting the Community Lisbon Programme: a policy framework to strengthen EU manufacturing
— towards a more integrated approach for industrial policy

(2006/C 229/04)

THE COMMITTEE OF THE REGIONS,

Having regard to the Communication from the European Commission on Implementing the Community
Lisbon Programme: A policy framework to strengthen EU manufacturing — towards a more integrated approach for
industrial policy, COM(2005) 474 final;

Having regard to the decision of the European Commission of 12 October 2005 to consult it on the
subject, under the first paragraph of Article 265 of the Treaty establishing the European Community;

Having regard to the decision of its President of 10 November 2005 to instruct its Commission for
Economic and Social Policy to draw up an opinion on this subject;

Having regard to its draft opinion CdR 39/2006 rev. 2 adopted on 6 April 2006 by its Commission for
Economic and Social Policy (Rapporteur: Mr Onno Hoes, Member of the Executive of the Province of
Noord-Brabant (NL/ALDE);

WHEREAS:

1)

2)

3)

4)

A new, modern European industrial policy, geared towards enhancing the competitiveness of EU
industry, is an absolute top priority for the ‘Growth and Jobs’ agenda. The underlying issues do,
indeed, affect all of the regions of the EU and the dynamism of the respective processes is both
considerable and compelling. The CoR therefore welcomes the ambitions expressed by the Commis-
sion and also its readiness to take robust action to facilitate the necessary reforms.

In the light of the rapid changes occurring in the world economy, there is a need to take action as a
matter of considerable urgency, since the competitive position of EU industry is under substantial
pressure. This, in turn, places extra pressure on the tempo and the decisiveness of the process of
renewing European industrial policy. The CoR appreciates the commitment which the Commission
has asked for and obtained from many sectoral organisations but wonders whether this provides
adequate starting points for action. Against the background of global economic competition, Europe
is developing its future strengths above all in a number of competitive regions referred to in this
opinion as ‘valleys’; these valleys are inspired by the concept of Silicon Valley and the philosophy of
the World Economic Forum. These European ‘valleys’, which have been built on the foundations of
old industries and industrial sectors, provide the future driving force for economic and social
renewal.

Examples of such ‘valleys’ are the following regions: Stockholm, Cambridge, Bavaria, Rhône-Alpes,
south-east Netherlands, and emerging regions, such as Värmland, Riga and Saxony-Anhalt. The CoR
calls upon the Commission to make the concept of ‘valleys’ the core of its ‘new agenda’ for European
industrial policy and thereby to capitalise more effectively on the establishment of regional
economic complexes in Europe. With this aim in view, there is a need to make the current proposals
considerably more effective; these proposals go no further than proposing the establishment of
‘framework conditions’ and, in this respect, provide too little impulse for renewal. It is essential that,
above all, measures to stimulate trans-sectoral developments, geared to new technology-product-
marketing-combinations, be placed at the heart of the new European industrial policy.

In this opinion, the CoR puts forward a number of concrete proposals for bringing about a consider-
able increase in the effectiveness of EU instruments and promoting more intensive integration of
these instruments. A robust basis for action in this field needs to be established in the course of the
forthcoming German presidency of the Council; the CoR calls upon the Commission and the Euro-
pean Parliament to put forward a forceful new policy.

adopted the following opinion at its 65th plenary session, held on 14 and 15 June 2006 (meeting of
14 June):

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1. The Committee of the Regions' views

H i g h L e v e l G r ou p o n Comp e ti ti v e n e ss, E n e r g y a n d
the E nv i r onme nt

Cross-sectoral proposals

1.1
In its outline of work, the European Commission sets
out seven proposed cross-sectoral policy initiatives designed to
address the common challenges across groupings of different
industries and to reinforce the synergies between different
policy areas. The proposed measures are as follows:

— an initiative for regulating the protection of

intellectual

property rights;

— a High Level Group on Competitiveness, Energy and the

Environment;

— measures in the field of market access (access to interna-

tional markets);

— a new Legislative Simplification Programme;

— measures

to improve sectoral
achieving a more highly qualified workforce);

skills

(with a view to

— the management of structural change in manufacturing;

— an integrated European approach to research and innova-

tion.

These proposals are, without exception, measures of
1.2
outstanding importance with a view to enhancing the competi-
tiveness of industries in the EU. The CoR therefore strongly
supports the proposals from a general standpoint. In view of
the CoR's own position, it calls for attention to be paid, in par-
ticular, to measures for managing structural change in industry,
as well as parallel attention to the new simplification
programme for legislation. This is the essential aspect in this
context; the EU needs to move towards supporting and facili-
tating a new industrial policy deriving from the regions. In the
debate on how to meet the challenges and the opportunities
provided by globalisation, the competitiveness of the EU needs
to be the central issue if we are to guarantee prosperity for our
children. We reject a backward-looking protectionist approach,
geared to preserving past achievements. Initiatives, such as the
globalisation fund proposed by the Commission, must not be
used for defensive purposes but rather to promote develop-
ment, for example by providing training for new sectors which
provide a wealth of opportunities.

The CoR calls for more vigorous efforts to be made to
1.3
tie in with the European Commission's regional
innovation
policy, which also focuses on promoting the establishment of
clusters and new forms of cooperation. Within the EU, there is
already a number of good examples of cooperation between
the European Commission and the regions; attention may be
drawn in this context to the Noord-Brabant Innovation Act
Programme 2005-2010 entitled ‘Connecting, creating and
enabling winners’.

1.4
The formulation of cross-sectoral proposals, in particu-
lar, provides a possible means of establishing a modern, better
integrated European industrial policy. With this aim in view,
the CoR would like to briefly examine in the following para-
graphs a number of the measures proposed by the European
Commission, and would stress, above all, the need to exploit
every opportunity to achieve a more integrated approach.

Over the next few years, energy and the environment

1.5
will be global priority issues.

With the impetus being provided by the European Commis-
sion, a climate needs to be established in which threats can be
transformed into opportunities. The fields of energy and the
environment provide attractive new marketing opportunities
and points of departure for both European industrial policy
and research policy.

This approach will help to ensure that energy and sustainable
development (‘greener’ products and production processes) are
not addressed separately but rather as a really integral part of
industrial policy and innovation policy. To this end, greater
attention should be paid to developing alternative energy
sources. Energy costs form a substantial component of the
costs to be met by EU industry. The CoR calls upon the
Member States to increase interconnection capacity so as to
enable the liberalisation of the energy market to bring about a
situation in which EU businesses can purchase gas and electri-
city throughout Europe. One way of making an active contri-
bution towards the establishment of a level playing field in
Europe is for local and regional authorities to be active share-
holders in energy companies.

Imp r ovi ng se c tor a l ski lls

The CoR stresses that the new industrial policy must be
1.6
seen in the framework of
the Lisbon strategy and in the
context of globalisation. Restructuring processes in regions and
countries are consequences of this development. As stressed in
the CoR's opinion on restructuring and delocalisation (CdR
148/2005 fin), it is necessary to ensure that restructuring is
well-managed;
in this context attention is also drawn to the
observation made earlier in the present document to the effect
that the proposed globalisation fund must be used for develop-
ment purposes rather than defensive purposes. An essential
prerequisite for commitment on the part of Brussels is that the
action taken must promote economic and social cohesion; this
must also provide the basis for a more effective and more flex-
ible European labour market. It would be advisable to give a
more central role to the priority issue at stake here, namely
‘social
innovation’. The key issue is how we can better put
employees in the EU, across the board, in a better position to
go along with the sometimes radical restructuring measures,
without falling victim to structural unemployment.

Increasing labour productivity, the employment rate and
1.7
labour mobility are essential prerequisites if the EU is to be
competitive. More attention needs to be paid to this point both
in the policies pursued by the Member States and in the EU
programmes and Structural Funds. Furthermore, there is a need
for increased scope for giving (temporary) access to the EU
labour market to highly trained workers from non-EU states;
this type of liberalisation, too, helps to promote the competi-
tiveness of the EU.

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I n t e l le c tu a l Pr o p e r t y R i g h ts

1.8
The CoR notes that some important European manufac-
turing sectors still have considerable advantages over their
competitors, but globalisation may have negative effects on
them as well. The provision of adequate protection for intellec-
tual and industrial property is of vital importance for the main-
tenance of the competitive position of the EU. The existence of
protection for intellectual property provides an incentive for
innovative actions and the development of new business
models. The regulatory framework needs to be adjusted to take
account of rapidly changing technological and social develop-
ments. Legislation in this field needs to be more transparent
and to provide more legal certainty. Rules need to be intro-
duced and enforced at both European level (Community legisla-
tion) and global
level (WTO, TRIPS). Many entrepreneurs in
SMEs — which are the drivers of innovation — still do not know
how precisely to deal with infringements of their intellectual
property. A major problem with which many SMEs have to
contend is that of the extremely high level of enforcement
costs in Europe which are far higher than those applying in,
for example, the USA. Furthermore, turning to the subject of
the cost of submitting applications, it is of the utmost impor-
tance that, after 30 years discussing the issue, the Community
patent
the European
Commission put forward a concrete proposal, this dossier still
remains deadlocked at the Council as a result of a dispute over
the question of language arrangements. The CoR calls upon the
European Commission to put forward a harmonisation Direc-
tive, based on Article 95 of the TEC. Under this provision,
national patent regimes may be maintained but would be
subject to the principle of mutual recognition. By limiting the
number of languages involved to the language of the Member
State concerned, plus English, the cost of introducing the Com-
munity patent could be considerably reduced, which would
benefit, above all, SMEs. In this way it would be possible to
create an internationally competitive patent. Furthermore, it is
essential to reduce to a minimum the charge for maintaining a
patent, which is levied in many EU countries and acts as a
disincentive to innovation.

is now introduced. Five years after

I n t e g r a te d a p p r oa c h t o r e se a r c h a n d i n n ov a ti o n

1.9
In combination with the Structural Funds, the European
framework programme KP7 and the Competitiveness Innova-
tion Programme (CIP) play a very important role in respect of
facilitating and guidance. Funding provided under the KP7
programme is essential if we are to enhance the competitive-
ness of the EU and to strengthen those regions which exploit
leading-edge technology. When the Financial Perspectives are
set out, the budget in question must not be reduced.

In this opinion, the CoR stresses the need for attention
1.10
to be paid to stimulating the establishment of
regional
economic complexes in Europe (‘European valleys’). With this
aim in view, it is essential that the use of the Structural Funds
and the framework programmes, such as KP7 and CIP, in the
regions can be pooled to a greater extent. The CoR calls upon
the European Commission to put forward concrete proposals
in this regard.

the concentration of

One aspect, amongst others, which is of particular importance
is
resources on the most advanced
research under the heading: measures to stimulate ‘open inno-
vation’ culture and ‘clustering’ in the regions.

a question of investing heavily in research. The experiences
gained in, for example, the Eindhoven region's Brainport bring
home this message. Promoting a great variety of applications of
innovation chains creates new
specific knowledge in several
jobs at all levels and serves to firmly anchor knowledge in a
given region. In this context, small and medium-sized enter-
prises are entitled to be provided with the same sort of incen-
tive as those given to the parties who develop knowledge. The
CoR calls upon the European Commission to target the Euro-
pean programmes and the Structural Funds more at stimulating
the establishment of several innovation chains per region and
urges it to exploit the multiplier effect to this end. This will
make it possible to create a very large number of new jobs for
persons in possession of higher education, higher vocational
education and intermediate vocational education qualifications.

1.12
In connection with the last-mentioned point, the CoR
calls for specific attention to be paid to the issue of the accessi-
bility of EU framework programmes and funds to small- and
medium sized enterprises. This is, in the CoR's view, a major
problem; unless simplification measures are introduced,
the
ambition of promoting, above all, SMEs will have little chance
of success. It is important to establish a greater degree of ‘open
innovation culture’ under which resources and projects would
be made more accessible to SMEs and made available to them
under provisions allowing for a higher level of pooling.

Experience gained with regional

1.13
innovation policy
points to the fact that SMEs derive benefit, above all, from
interaction with larger enterprises. The CoR therefore draws
attention to the fact that European industrial policy should pay
more explicit attention to interaction between large (1) and
medium-sized or small enterprises. Interaction between SMEs
and research centres is another aspect which is of major impor-
tance.

1.14
In conclusion, the CoR wishes to make just one further
observation in respect of the possibilities of achieving a more
integrated European industrial policy. Attention should be paid,
in particular, to bringing about the integration of industrial
policy with the policy in respect of sustainable development
and social cohesion; this represents a key challenge for the EU.
By pursuing this programme, the European Commission can
help to ensure that, within the framework of the development
of a sustainable knowledge-based society in Europe, a higher
level of attention is paid to new forms of cooperation and
product-market combinations in areas such as the health
industry (medico-technical
innovation), the environment and
energy. This will provide European industries with interesting
new markets.

1.15
Attention has already been drawn to the trend towards
bundling and specialisation in respect of top-level economic
activities in Europe. This trend may be strengthened in other
policy areas, such as land-use policy and policy in respect of
modern infrastructure. EU policy should be geared more
towards creating effective conditions for (cross-frontier) top
locations, coupled with and opened up by
international
modern European infrastructure. Furthermore,
the idea put
forward by the President of the European Commission, Mr
Barroso, to set up an EU university (EIT) deserves support. The
establishment of a top-level institute of technology in the EU
may prevent a further braindrain of talent to other parts of the
world. It is high time that the EU had an institute which was
on a par with, for example, MIT in Boston.

1.11
In order to develop a sustainable economic model for a
region which exploits leading-edge technology, it is not simply

(1) The concept of large enterprises in this respect should also be given

attention.

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Sector-specific proposals

1.16
following new initiatives:

The European Commission will put

forward the

— a Pharmaceuticals Forum,

— a mid-term review of

life sciences and biotechnology

strategy,

— new high level groups on the chemicals industry and the

defence industry,

— a European Space Programme,

— a Taskforce on ICT Competitiveness,

1.23
The ‘cluster model’ — which involves intensive struc-
tural cooperation between governmental bodies, enterprises
and universities and research bodies — represents,
in this
context, a crucial factor in ensuring the success of all the inno-
vative regions in the EU. Examples of such areas are: the Stock-
holm region, Bavaria, Ile-de-France, Rhône-Alpes and South-
East Netherlands. Such an approach based on the promotion of
clusters should be robustly supported with a view to securing a
renewed, better-integrated European industrial policy.

2. Further recommendations made by the Committee of

the Regions

— a mechanical Engineering Policy Dialogue,

Europe in 2027 (policy for the future)

— competitiveness studies (ICT,

food,

fashion and design

industries).

The

sectoral

1.17
studies underpinning the European
Commission's outline of work demonstrate that many Euro-
pean industries have the potential to remain competitive on the
global
level. The decisive factor in determining ‘world class
performance’ is the extent to which industry is able to respond
to demands in respect of both knowledge and innovation in
connection with new products and production processes.

1.18
It is important that this process of change and reform
continues to be strongly supported by both the EU and the
individual Member States. As regards facilitation by the EU, the
present EU framework programmes do, in our view, provide an
effective set of instruments when taken together with the (new)
EU Structural Funds.

1.19
In the case of sectors such as the machine and systems
industries, the issues of focus and mass are of decisive impor-
tance in connection with the establishment of the European
strategic agendas. The European Nanoelectronics
Initiative
Advisory Council (ENIAC) and Artemis strategic agendas are, in
this connection, of key importance to European and national
investment in this field.

1.20
In addition to the need to pay ongoing attention to the
competitiveness of particular sectors, it is, however, important
to note that Europe's future prosperity will be increasingly
dependent upon inter-sectoral activities. Particular attention
needs to be paid to this aspect in the European Commission's
outline of work. Industrial policy can help to step up develop-
interaction’.
ments in this field by promoting ‘cross-sectoral
This can lead, by definition, to intermittent spectacular innova-
tions in products and marketing. This is already beginning to
happen in a number of sectors; examples which may be quoted
are the food and pharmaceutical sectors (life sciences), biome-
dical technology, automotive and high-tech systems.

1.21 With the above aim in view, the four broad categories
set out in the European Commission's outline of work do not
constitute a sufficiently comprehensive list. In the case of life
science industries, there is a need to refer also, for example, to
the key area of
‘molecular medicine’. Furthermore, explicit
reference should also be made, in particular, to nanoelectronics
and embedded systems. In the light of current developments in
the field in question, the category of ‘fashion and design indus-
tries’ also needs to be expanded by referring to ‘creative
industry’.

1.22
It would therefore appear to be increasingly important
to facilitate the development of coherent clusters of industrial
activity and to promote new emerging industrial activities. The
CoR urges the European Commission to make reference to this
point in a more emphatic and explicit way in its outline of
work.

2.1
The European Commission's outline of work further
fleshes out the Lisbon strategy and the Gothenborg objectives
and is, in this respect, a consistently drafted document. As has
already been pointed out at several points above, this document
does, in our view, comprise many good and useful plans. Few
people will disagree with this verdict. What
the document
lacks, however, is a clear vision of the future as regards how
European industry can rise above its competitors, in the rest of
the world.

2.2
The CoR recommends that a vision be set out which is
both stimulating and promotes enthusiasm. What will the situa-
tion in Europe look like in 2027? How have industries in
Europe responded to the tasks set out in 2006? How has the
strategy of setting up ‘intelligent regions’ succeeded in bringing
about economic and social renewal in all the EU Member States?
In the drive to establish a sustainable knowledge-based society,
how successful have we been in deriving new opportunities
and markets in the fields of energy, the environment and the
health industry? etc., etc.

Inviting enterprises to ‘Achieve your full potential
pursuing a strategy of interaction with regions

in Europe’ and

2.3
The CoR recommends that greater emphasis be placed
on the strategy of pursuing promising developments in the
various regions,
thereby bolstering the trend towards the
concentration of economic activity and economic specialisation
which will gather pace in Europe over the next few years. The
starting point for such a strategy is that by facilitating the
development of leading-edge regions, we will make a strong
contribution towards wide-ranging
and social
renewal in all the Member States of the EU.

economic

As part of

the drive to bring about a renewal of
2.4
EU industrial policy, the CoR recommends that criteria for
identification of prospective leading competitive regions in
Europe and within each Member State be approved, allowing
channelling of European investment programme funds towards
these competitive regions in order to supplement national and
regional investments, but also support their physical and intel-
lectual production.

In keeping with the ‘new solidarity’, the new European indus-
trial policy, geared to promoting developments which provide
a wealth of opportunity and the establishment of new regional-
economic complexes, also needs to pay explicit attention to
stimulating lagging regions. The CoR proposes that the Euro-
pean Commission make provision for a ‘leverage effect’; one
example would be to set, as a condition for receiving contribu-
tions from the EU framework programmes and the Structural
Funds,
into inter-regional
economic partnerships.

that beneficiaries must

enter

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Moving from a sectoral approach to a cluster-based approach (new
areas)

The task of stimulating those sectors of European
2.5
industry which serve as a driving force for the economy so that
they can achieve world-class level is, and will remain, one of
the key objectives of EU industrial policy. The future prosperity
of Europe will, however, become increasingly dependent upon
inter-sectoral activities. It is recommended that the autonomous
developments which are already taking place be given greater
prominence in the ‘broad categories’ set out in the European
Commission's outline of work.

2.6
The CoR therefore recommends that, in the new indus-
trial policy for the EU, the European Commission pays greater
attention to the strategic importance of adopting an inter-
sectoral approach, recognising the powerful impact of ‘cross-
sectoral
interaction’. Structural cooperation between govern-
ment bodies, industry and universities and research bodies, also
known as the ‘Triple Helix’, is therefore an essential prerequi-
site. This cluster model is one of the key features of the new
European industrial policy.

interaction’

The promotion of ‘cross-sectoral

2.7
is geared
innovation and completely new product-market
towards
combinations in industry. This interaction is however not
confined solely to areas of industry;
interaction with other,
social fields produces a new dynamism. In this context, the
CoR draws attention to interaction with art and culture
interaction between cultures (new inter-
(creative industry),
cultural
interaction with vocational
training (new expertise). In these areas, too, the EU can, and
must, play an important role in providing a stimulus. The CoR
calls upon the Commission to take account of these aspects in
its programmes and in the new Structural Funds.

entrepreneurship) or

Boosting integration more effectively

the

cross-sectoral proposals,

2.8
in particular, provide
starting points for giving a strong boost to integration in EU
policy. The CoR calls for additional emphasis to be given to the
following areas:
— in the fields of energy, the environment and the health
industry, the EU should move away from classifying these
issues’ and regard them rather as
matters as
providing new marketing opportunities for the future as
part of the drive to achieve a sustainable knowledge-based
society (see point 2.1 above);

‘social

— the EU should set up a European Task Force on Social Inno-
vation which would not be separate from EU industrial
policy but would rather lie at the heart of such policy,
whilst taking account of the top levels of the labour market
and also offering prospects for the lower levels of this
market;

— there is a need to adopt an integrated approach in respect
of research and innovation: it is essential to achieve greater
coordination between the framework programmes and the
Structural Funds in respect of planning and guidelines, with
particular attention being paid to the bundling of resources
for top-level research;

Brussels, 14 June 2006.

— tendering policy: this field has not been taken into account;
it should, however, be one of
the cross-sectoral policy
initiatives with a view to promoting the interests of SMEs
since these enterprises are finding it increasingly difficult to
benefit from the EU policy on tendering;

— steps should be taken in other areas of EU policy to help
create (cross-border) international top locations in Europe.

Removing red tape and promoting access on the part of SMES to EU
programmes

2.9
In its outline of work the European Commission rightly
acknowledges the considerable value of the innovative power
of SMEs. The extent to which EU measures actually embrace
these enterprises does, however, depend to a considerable
degree — and above all — on whether EU provisions can be
simplified. As the proposals in respect of SMEs stand at
present, the possibilities for, for example, subsidising R and D
carried out by SMEs will decrease considerably, which is at
variance with the need to boost the global competitiveness of
these enterprises. An average SME in the USA already spends
more than seven times more on R and D than does its counter-
part in the EU.

2.10
There is not a single enterprise which will in the near
future be either willing or able to take on board all the admin-
istrative requirements of the EU in order to qualify for a grant
of 15 %. The CoR therefore calls for a very intensive campaign
to remove red tape with a view to making the EU framework
programmes and the Structural Funds more accessible to SMEs.
The CoR will give its full support to all proposals from the
European Commission to achieve this goal.

In this context, the involvement of regional and local authori-
ties, as the level of government closest to SMEs, will facilitate
their access to Community aid.

2.11
Deregulation and a reduction in the administrative
burden resulting from Community regulations, together with
an intensive cost-benefit analysis of these regulations, are essen-
tial prerequisites for achieving the goals set out in Lisbon. In
this context,
it is important to carry out a ‘business impact
assessment’ with regard to EU legislation. A prerequisite for
ensuring the quality of such business impact assessments is that
the assessments must be carried out objectively by an indepen-
dent third party. The CoR calls upon the Commission to put
forward proposals as soon as possible in this respect. The
mechanism introduced in the Netherlands, involving the estab-
lishment of an independent audit body (the Advisory Board for
Assessing Administrative Burdens [ACTAL]) could provide a
starting point in this context.

Conclusion

In the light of the forthcoming interim appraisal to be carried
out by the Commission, the CoR points out that it would very
much welcome a response to the proposals and recommenda-
tions set out in this opinion. The CoR also urges the Commis-
sion to consider introducing a system of annual monitoring.
The CoR would be pleased to make known its views in the
context of such an annual monitoring exercise.

The President
of the Committee of the Regions
Michel DELEBARRE