Technological progress is often hindered or almost impossible in Europe. We need to embed an Innovation Principle in European policy making, writes Markus J. Beyrer.
Markus J. Beyrer has been Director General of BUSINESSEUROPE since late 2012.
Are you in favour of innovation? If you ask anyone in Europe, I believe 99% would say, yes, it’s a good thing. But if you ask the same people if our European researchers, engineers and companies should be allowed to take more risks to explore new and innovative products and companies to put these new products easier on the market the answer would be: “I’m not sure.” “Better not.” Just a few may say “Yes, because otherwise innovation will just happen outside Europe.”
Unfortunately, too often, the reflex is to first look at a new product’s risks as opposed to its benefits. Europeans have their feet on the brakes whenever they fear risks. We regulate everything.
Technological progress is often hindered or almost impossible in Europe. Meanwhile economies such as China, South Korea and North America are competing for global innovation leadership. The pace of change is increasing. In these countries, the R&D intensity is up to two times greater than in Europe, which will ultimately reduce our competitiveness. Europe was once the innovation leader and is now the regulation leader. We can’t successfully compete with other faster moving markets where capacity to innovate, adapt, and exploit new technologies is critical for success.
In Europe, we spend nearly €80 billion over 7 years from the EU budget for the so-called Horizon 2020 to support research and innovation which we strongly support. But public financial support is not enough. They also need a supportive regulatory environment. Regulation must keep pace with scientific progress and technological innovation in all industries.
For some time now, the European Commission has been more active on this front. Last year, in its Better Regulation package, it put forward first guidance on how policy-makers should assess the impact of regulation on research and innovation. It’s the right direction, but politicians must now scale up to frame this supportive environment.
Let me give you one example. Nanotechnology has been identified by the EU as a ‘key enabling technology’, representing the basis for further innovative solutions in a range of sectors such as health, energy, water or construction. However, companies face multiple and inconsistent definitions of nanotechnology across different EU regulations and lack of standard methods and clear references whether certain material can be classified as nanotechnology. It’s hindering researchers and business in Europe.
We need to embed an Innovation Principle in European policy making. This principle sets out to provide a new and positive framework for ensuring policy makers not only recognize societal and environmental needs for precaution, but also the need for innovation. It simply states that whenever legislation is under consideration, its impact on innovation should be assessed and addressed.
This Principle would also require better evaluation of innovation through impact assessments and better quality control of evidence. This doesn’t mean removing the Precautionary Principle – it is an essential part of the European Treaties. But, but we want to ensure that the innovation principle complements well the precautionary principle and existing risk management regulations. Together, it would encourage a balanced view of risks and benefits. The result will be better regulation and more innovation.
I believe many EU member states see the need to act but their stronger support for this Innovation Principle would be an important signal as it’s important for Europe and its businesses competing on global level. That’s also why twelve CEOs of innovative multinational companies have signed an initial letter to the Presidents of the three EU institutions, proposing the adoption of the Innovation Principle. They’re representing a wide range of industrial sectors, including electronics, oil and gas, chemicals, biotechnology, crop protection, pharmaceuticals, aerospace, farm machinery, consumer products, innovation consultancy, IT and fertilizers and they’re investing €30 billion a year in R&D. This initiative was pursued further when a larger group of 22 CEOs sent a letter to Commission President Juncker.
They stressed that we must not stifle innovation and competitiveness with too prescriptive and too detailed regulations. Jobs, growth and investment will only return to Europe if we create the right regulatory environment and promote a climate of entrepreneurship and job creation. Today increasingly risk-averse legislation blocks Europe’s ability to innovate and invest in new technologies. We should accept the fact that there is no innovation at zero risk. Of course these risks should be recognized, assessed and managed. But they cannot simply be avoided to a 100 per cent if Europe wishes to remain competitive.
At the same time the Innovation Principle is complementary and should go hand in hand with the need to protect human health and the environment. Today we can claim in many ways to be leading the world in regulations to protect health and the environment, but there is no coherent industrial policy to protect innovation. To re-balance this situation we should promote a cultural change, with a more positive attitude towards innovation across society and EU citizens. We should also improve the innovation governance.
To succeed we also need credible and independent scientific advice to the European Commission, the European Parliament and the European Council, to ensure high scientific standards and transparency, better impact assessment, routine consultation with innovative organisations, from both public and private sectors. We need better law for administrative procedures to ensure appropriate quality, governance and predictability when drafting and implementing legislation in Europe.
Europe is a rich and ageing continent. Therefore, we need to be more and not less innovative than other regions. In order to achieve this, we need an Innovation Principle in Europe.