José Manuel BARROSO
President of the European Commission
"An innovation-friendly, modern Europe"
European Technology Platforms seminar
Brussels, 6 December 2006
Ladies and gentlemen,
It's a pleasure to be here, addressing a seminar of the European Technology Platforms' industrial leaders for the first time.
Let me begin at the end. As the title of my speech suggests, the end we are all seeking is an innovation friendly, modern Europe. We know where we want to go in Europe. Innovation can take us there.
So innovation is not an end in itself. It is a means to a clear end. To reach it, we have to change innovation from a buzzword in Europe, to a byword for Europe.
And European Technology Platforms are part of this process. An important part. In trying to create the best conditions for innovation in Europe, we are all allies.
Together, we can solve the European Paradox. This is where Europe has the necessary knowledge and research, but then fails to take this knowledge to market. We have to finish what we start.
Improving Europe's performance doesn't just depend on more start ups, or better protection for end products. It also depends on everything in between. We need to look at the whole chain of the innovation process.
• This means having the people with the right education and skills.
• It means having the right facilities for these people and their projects.
• It means having the right financing for these projects.
In short, it means making it easier for Europe to get it right.
We need to innovate not just in business, but also in governments and public administrations. Joining up different policies is an obvious example. Having a forward thinking policy in one domain, while retaining unnecessary restrictions in another, provides little real progress.
The Commission has already made deep changes, thanks to its Better Regulation initiative. Taking 68 unnecessary proposals out of circulation and simplifying many procedures is just the start.
We have also published our Innovation Action Plan. This has 10 clear points where we plan to make progress, for us, for business, for Europe. This European Commission is the Commission of innovation.
Why have we placed such importance on innovation?
Because it is the key to our continued competitiveness. To maintain a high quality of life, we must maintain our economies' competitiveness. Creating a knowledge society is essential to a durable, competitive Europe. Innovation is the best way to do this. In turn, open, competitive markets act as an incentive to, and reward, innovation. So the elements are there to create a virtuous circle of benefit and reward for us all.
We already rely heavily on innovation. Hi-tech goods accounted for around 20% of the EU's exports and imports in 2004. Or the equivalent of two million jobs in R&D.
But more effort is needed, as the EU is facing growing challenges. For example, the number of technology based start-ups in R&D intensive industries in Europe continues to fall.
And economically, we are facing increasingly stiff competition. We still have our traditional competitors, such as the US and Japan, competing with high added value goods and services. But increasingly we have new, emerging competitors, who can offer low cost equivalents. And these emerging economies are moving into high-value markets too. Their increased investment means we need a new response.
The European Commission has taken on board the conclusions of the recent high level Aho report on how to create a more innovative Europe. One of these was that successful innovation needs everyone to work together. So one of our first responses has to be to tackle the obstacles to innovative collaboration.
We know that these still exist. A recent Commission consultation on knowledge transfer found that almost three quarters of universities and businesses find it hard to collaborate. This figure applies when both organisations are in the same country. It rises to almost 90% when working across national borders.
We are now looking at how everyone involved can improve knowledge transfer. This means lowering administrative burdens, improved use of funding and better intellectual property rights.
But one of our major initiatives to bring all the innovative elements together is the forthcoming European Institute of Technology.
The EIT will focus on technology and closer relationships with industry. It will create "knowledge and innovation communities" made up of closely integrated staff from universities, research organisations and industry. These three elements represent the knowledge triangle. The EIT will be a major step forward in bringing these points closer together.
They will work together and maintain links with organisations from all over Europe, gathering "the best of Europe" to work on key technologies for industry. The EIT should be operational from 2008 with the first "knowledge and innovation communities" in place around two years later.
The EIT budget is estimated at €2.4 billion for 2008-2013. The funding will come from a variety of sources, including a sizeable contribution from the Community budget. However, co-financing from the private sector will be crucial for the development of the EIT, as well as the involvement of financial institutions like the European Investment Bank.
Many enterprises and financial institutions have already shown their support and wish to be involved and to co-finance the EIT.
Before that, however, and in just a few weeks, the Commission will launch the EU's next Framework R&D Programme, FP7. It has a budget of over 54 billion euros and will last until 2013. FP7 will address major innovation challenges across the board, with projects open to research organisations and firms from around the world. Its priorities were drawn up in close consultation with industry and took into account your ETP strategic research agendas - making it even more relevant to industry needs.
As well as influencing FP7's priorities, business input has helped simplify its procedures. There will be simpler applications, more autonomy for participants and increased assistance.
We hope these measures will lead to increased business participation in FP7 – particularly of small and medium sized enterprises. Why? Because SMEs are the lifeblood of the European economy. SMEs account for 99% of all businesses in the EU and 75 million jobs.
But many SMEs fail, especially in their first few years. What we can do together is provide greater protection for SMEs, both in their early, vulnerable stages and in their later development.
We are aware of the problems small, innovative firms face. For example, financing R&D projects can be present problems for them.
As well as earmarking sections of FP7 for SMEs, the Commission's new Competitiveness and Innovation Programme will make €1.1 billion available for access-to-finance schemes. This will provide guarantees for debt finance [venture capital] and mezzanine finance [a mix of loans and equity] for small businesses.
But in addition to helping existing innovative companies, we have to encourage the creation of new ones. For that, we need more people with your mentality.
All of you here understand the risks and rewards of business. But many in Europe still do not. Some 60% of people in the EU have never considered setting up their own business.
People with an entrepreneurial mentality are needed throughout the innovation chain: from schools to universities, to research centres, to businesses.
Part of that mentality involves accepting that all well earned successes involve one element - risk. John Paul Getty said: 'No one can possibly achieve any real and lasting success...by being a conformist.'
The opposite of a conformist is, of course, an innovator. And the Commission is encouraging innovators to embrace this risk through two new initiatives.
The first is the new 2 billion euro Risk Sharing Finance Facility fund. This will help finance riskier R&D projects. The fund is managed by the European Investment Bank, so I will leave it to the next speaker, EIB President Maystadt, to give you further details.
The second initiative is the new European Research Council, which will have an annual budget of up to 1 billion euro. Its concept is simple: research teams compete for funding awarded on just one criterion – scientific excellence. This open approach means the European Research Council will be able to fund riskier, frontier research.
We are trying to help in other ways, too. For example, the Commission has just reviewed the State Aid rules for Research, Development and Innovation. We have focused on, amongst others, the importance of young enterprises and public/private partnerships. We have also produced guidance on R&D tax incentives, clarifying where they can best be used.
Coming back to the European Technology Platforms, the Commission is looking forward to working with the European Technology Platforms on future, promising innovation initiatives. For example, we have already contacted you for suggestions for potential lead markets in your areas. Together, we can refine the lead markets concept. Testing it with some pilot actions could take place next year.
We will also be working together to develop the new Joint Technology Initiatives, to be set up during FP7. This is another major leap forward, with a new type of public/private partnership.
Ladies and Gentlemen,
It's clear that we have the innovative potential in Europe. The European Technology Platforms have already shown that we can get all the main players together: public and private sectors, national and regional players, customers and suppliers and even different branches of science. That's already a lot of bridges over many divides.
The question now is how we take this forward – and how far. The British author TS Eliot gave us a clue, when he said: 'Only those who will risk going too far can possibly find out how far one can go.'
It's time to find out how far we can go, together.
It's time to take risks, together.
In short, it's time to make Europe more innovative, together.