Technologically advancing Europe
Key Enabling Technologies can help the EU achieve many of its ambitions, but only if protected from global competitors, argues Ivars Ijabs.
When Ursula von der Leyen stated, in her new work programme, that for Europeans “it is not too late to achieve technological sovereignty in some critical technology areas”, she drew attention to an important fact.
Namely, that today’s geopolitical competition largely takes place in the field of research and innovation. Europe still has a chance to be a global player in this field, provided that it acts resolutely and strategically.
But to do this, we need a value-based approach; for us to remain a place of freedom and innovation, we have to balance our openness with a long-term strategic perspective.
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Future technological advancement has its own preconditions that must be developed and protected by us, but these should not be sold on the global market without considering long term European interests.
Key enabling technologies (KETs) are a case in point. These are technologies that will serve as the basis for future scientific developments, such as biomaterials, nanotechnology, photonics and microelectronics.
These can provide the EU with the crucial advancements needed to achieve many of its ambitions - from the Green Deal and digital transformation to a cure for cancer.
“Biomaterials, nanotechnology, photonics and microelectronics. These can provide the EU with the crucial advancements needed to achieve many of its ambitions - from the Green Deal and digital transformation to a cure for cancer”
Therefore, if the EU wants to deliver on the aims set out in the Commission work programme and supported by Parliament, it has to ensure that KETs remain available for European businesses and innovators.
The EU has been investing in KETs since 2012 through the “Horizon 2020” programme; its successor, “Horizon Europe”, must pay special attention to these technologies in all three of its pillars.
KETs have been included in each pillar, particularly in the second - where there are several European partnerships devoted to KETs - while in the third pillar their role as a basis for innovation should also be underlined.
However, recent developments have shown that these measures might not be sufficient to fully develop the potential of Europe’s researchers and innovators nor, crucially, to keep them here. In recent years, China and the US have been investing heavily in KETs by buying up European enterprises and start-ups.
This trend is not negative per se; however, Chinese and American companies acquiring parts of European knowledge and industry to boost their own technological capacity poses a serious threat to the EU’s competitiveness.
Many EU Member States have introduced measures to prevent their strategic and innovative companies being bought up by non-European players.
“Chinese and American companies acquiring parts of European knowledge and industry to boost their own technological capacity poses a serious threat to the EU’s competitiveness”
In Germany, the takeover in 2018 of the cutting-edge robot-company Kuka by Chinese fi rm Midea provided a wake-up call. The EU itself has recently introduced a set of rules to prevent foreign investment that threatens national security.
However, the effectiveness of these rules is rather limited, because the final word on admissibility of a certain investment still lies with the Member States.
Special attention must also be paid to small tech companies and innovative SMEs whose selling abroad often draws much less public attention than that of large multi-billion entities.
For example, in the fields of photonics and microelectronics, Europe has produced much ground-breaking research. Yet there is often a lack of European investment, which makes these companies easy prey to non- European actors.
Therefore, as it is in Europe’s common interest, we have to provide investment solutions for these companies. So, what can the EU institutions do?
The European Investment Bank should design specialised targeted instruments for public investment in venture capital funds focused on KET ventures and adapt existing financial instruments and programmes to better fi t the risk-return profile of KET companies.
European research and innovation programs should focus on KETs, drawing upon the experience and lessons learned from previous initiatives.
Additionally, the Commission should promote further coordination with national programmes to encourage a more specific roll-out of funds to KET companies.
More broadly, the EU should define its strategic aims for its technological sovereignty and apply the concept not only to fields such as energy, aviation, aerospace or geo-positioning but also to digital networks, cloud computing, genomics, artificial intelligence and other KETs.
This will require numerous initiatives in education and research, investment in infrastructure, scaling of the internal market and reforming tax systems. Most urgently, in order to compete with China we need action on controls for State aid, mergers, investment and exports.
The EU needs to review its competition policy instruments and to apply them more efficiently to State aid emanating from foreign governments.
We should also design security control mechanisms for merger controls, such as not only blocking a merger from a third country on national security grounds but also allowing intra-EU mergers to prevent a foreign company from dominating a critical infrastructure or field.
These measures should be taken sooner rather than later and supported by the establishment of an independent EU authority for investment screening.
Last, we also need to give the Council (upon a proposal of the Commission) the power to veto certain investments. To off-set this, the EU could develop a dedicated investment fund that would offer Member States alternatives when foreign investments are deemed undesirable.
An example of such an alternative is the €80m in financial support to the German biotech CureVac AG, offered by Commission after it was reported that US President Donald Trump was attempting to secure exclusive access to a COVID-19 vaccine that it is developing.
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