New State aid rules for R&D: a tool for growth but no 'magic wand', says Kroes The new State aid rules framework for research and development (R&D) and innovation and risk capital can enable Member States to use State aid as a complementary 'weapon' in their 'arsenal' for growth and jobs, EU Commissioner for Competition Policy Neelie Kroes told ministers... The new State aid rules framework for research and development (R&D) and innovation and risk capital can enable Member States to use State aid as a complementary 'weapon' in their 'arsenal' for growth and jobs, EU Commissioner for Competition Policy Neelie Kroes told ministers attending the EU Competitiveness Council in Graz, Austria, on 21 April. Currently, the EU has structural deficiencies in research and development, innovation and risk capital, with only 1.9 per cent of its GDP being spent on R&D, compared to 2.5 per cent in the US and 3 per cent in Japan. The new framework for State aid aims to facilitate higher State aid investment in fundamental and industrial research by providing incentives for collaboration, introducing better rules for public-private partnerships and not-for-profit research institutes. But more rules do not necessarily mean more red tape, according to the Commissioner: 'This does not mean that our rules will be unpredictable, overly burdensome or needlessly bureaucratic. We want to broaden the existing Block Exemption to some State aid measures for R&D, and possibly innovation activities.' Presenting the proposed new rules for R&D and innovation, the Commissioner referred to a number of 'ground-breaking' measures to support innovation, including: aid for young innovative start-ups; aid to small and medium sized enterprises (SMEs) for advisory and support services, or for the loan of qualified personnel; aid for process and organisational innovation in services; and aid for innovation clusters. '[A] small State aid boost may go a long way to make companies large or small, public and private universities and research institutes group together, collaborate, interact and network. It'll help them to invest more in research and development, unleash their full potential and face competition in a global economy,' noted the Commissioner. However, Member States should not waste their hopes on State aid as some sort of 'magic wand' to attract investments, she warned: 'We [...] all know that State aid cannot replace the structural reforms Europe badly needs - and it should certainly not delay them. All studies show that investment location decisions - including R&D investments - are primarily based on structural factors.' The EU must tackle structural deficiencies first, said the Commissioner, focusing on, among other tasks, the completion of the internal market; the removal of remaining cross-border barriers to trade; tackling the higher education system; the quality of universities; R&D infrastructures; the protection of intellectual property rights; and the general business environment. 'Only as a part of a comprehensive structural innovation policy, State aid can be a good complement to address those market failures which prevent the Union from reaching its full potential.' First drafts of the new State aid rules for R&D and innovation and risk capital have been sent to Member State experts, and the Commission is expected to adopt the framework in the second half of 2006.
