Lead markets: it's about facilitation, not funding

Jiri Plecity: accent on better coordination of public policy tools.

Top Commission officials addressed around 30 company and university executives in March at a Science Business Bridge seminar event devoted to the recently launched lead markets initiative.

Jiri Plecity, a member of Commission vice-president Gunter Verheugen’s inner circle of advisors, and Pierre Vigier, head of innovation policy in the Commission’s industry department, explained that the objective of the lead market initiative is primarily to remove obstacles that slow down the uptake of new products and services and thus impede the emergence of new markets.

One aim is to make public policy tools better coordinated around the EU to facilitate the emergence of the six lead markets, identified at the beginning of this year as being areas where Europe could become a dominant commercial force and where a variety of obstacles have been identified, Plecity said.

The six markets are eHealth, protective textiles, sustainable construction, recycling, bio-based products and renewable energies.

Policy deficiencies, not market ones

“We are addressing policy deficiencies rather than market deficiencies,” said Vigier, referring to areas such as legislation, the setting of industry standards and public procurement policy. “It is not about creating artificially new markets with state aid or EU money”

Some delegates at the meeting said they did not fully understand the methodology of the project. Vigier said that indeed the lead market initiative could be “misinterpreted” by some who expect it to become yet another way of investing public money in research, repeating that it is not a supply-centered but a demand-centered initiative.

Michael Browne, director of European R&D at University College London asked: “What is the financial incentive for us to get involved in the lead markets initiative?”

Vigier replied that there is “none directly”, but that the objective is to create a virtuous circle for investing in research, and “this is what Europe needs at the moment”. Plecity said, “The success of this initiative should not depend on public money,” he said.

Vigier did, however, note that this doesn’t preclude making better use of existing resources. For instance, DG Research would be launching a call for proposals for networks in support of lead markets, at the level of the regions, with the aim of designing better relations between research agendas and industrial needs in support of lead markets in groups of regions, thus facilitating the access of these regions and their associated research institutes to Framework Programme 7.

Call to cut red tape

While the representatives of academia appeared disappointed about the lack of financial incentives, company executives were keen to revise unnecessary regulations and to make smarter use of public procurement.  “This initiative mustn’t lead to additional burden,” warned, for instance, Veronique De Waele, Manager for Corporate & Governmental Relations at the German chemicals group BASF. Instead of conducting new regulatory projects the EU should concentrate on getting rid of red tape, she said, referring specifically to two EU laws on the handling and recycling of industrial waste that are being reviewed at the moment. “The Commission should make sure that legislative changes don’t add an additional burden to European companies,” she added.

Joachim von Heimburg, director of corporate R&D at the consumer products company Procter & Gamble, echoed these sentiments. He also said the lead markets project was “a wonderful opportunity for some regulations to disappear”. Both Vigier and Plecity confirmed that the six action plans do indeed aim to improve the regulatory environment and make it conducive to innovation in a targeted way.

Although in their infancy, the six chosen areas already generate over €120 billion in sales and employ over 1.9 million people in the EU, the Commission said when it launched the lead markets proposal in January.

The Commission believes that with coordinated action by the 27 member states of the Union they could grow to over €300 billion in sales and over three million jobs by 2020.

“The lead markets initiative will foster the emergence of these markets by improving legislation, encouraging public procurement and developing interoperable standards,” the Commission said in a statement announcing the move.

The Commission insists it isn’t trying to pick winners. It won’t favor one company or research institute over another, it said, as this would be anti-competitive. “The initiative is decisively focused on a competitive, demand-driven approach,” the Commission said.

National government ministers will debate the lead markets initiative in May. Plecity said he expects the member states of the EU sign up to the plan. “We really believe in this. It’s not just another coordination exercise; it should also get strong results,” he said.