T. Pediaditaki, R&D Incentives and EU Maritime Policy
“The design of research and development
as an instrument of the
European Maritime Policy”
Legal counsel to the Greek
Minister of Economy and Finance
Trabzon, June 12th
International Conference on Ecological Protection of the Planet Earth-
Environment, Maritime policies and Energy Issues in the Black Sea
“How inappropriate to call this
planet EARTH when it is quite
Arthur C. Clarke
Diagram of presentation
I. Maritime policy
– Maritime policy and innovation
– Tools for integrated maritime policy-making
– EU objectives
– Features for the good design of R&D incentives
I. The maritime sector pushes and pulls
Europe is a major innovator in this sector
Maritime clusters are important facilitators
High expertise in:
- High-tech shipbuilding and advanced logistics;
- Pollution control and clean engineering;
- Renewable marine resources;
- Sustainable offshore exploitation of hydrocarbons;
- Coastal engineering.
Research on many fronts
• Across the EU, including in its outermost regions,
marine biology research institutes and submarine
engineers are innovating in:
seabed and resource mapping,
ocean and coastal monitoring,
robotic platforms and test facilities for offshore
• Marine “blue” biotechnology offers:
new sources for active substances of value in
medicine, agriculture and environmental protection.
B U T
Research in itself is not sufficient
1. It needs to interact with business
ensure the shift from invention to innovation and the
creation of an innovation policy
2. The innovation policy needs to be integrated with
other policies (research, technology,
enterpreneurship and human resource development)
comprehensive & stable maritime policy steady
flow of skilled recruits to maintain the momentum
Comprehensive & stable maritime
Promote the long-term and large-scale investments needed in marine-
based energy infrastructures and resources (particularly when
involvement of several MS and innovative technologies);
Improve the knowledge of impacts and assessment of risks for energy
investments through data and observation networks;
Enable development and successful deployment of new important
technologies such as CO2 storage;
Ensure that maritime spatial planning is used to the maximum as a tool
to reconcile conflicting uses in the same sea area;
Maximize Europe’s potential to boost growth and jobs through its
growing experience with cutting-edge marine-based energy projects:
– From specialised shipping to the creation of offshore energy grids
– From deep-water technologies to the investigation of methane hydrates
STRONGER VOICE in international discussions of rules governing
maritime transport of energy in an increasingly global energy market.
- Multidisciplinary approach coupling sciences
to socioeconomics has not been fully
addressed until now.
- A desideratum for integrating solid research
into management strategies and the granting
of incentives is echoed in all the Commission
papers and initiatives.
Tools for integrated policy-making
An integrated governance framework for maritime
affairs requires horizontal planning tools that cut
across sea-related sectoral policies and support
joined up policy making.
Major importance of:
1. Maritime surveillance (for the safe and secure use
of marine space);
2. Marine spatial planning (key planning tool for
3. Comprehensive and accessible source of data and
1. European network for maritime
Improvement and optimization of marine surveillance activities
(carried out by MS);
Interoperability of systems at EU level is important for Europe
to meet the challenges and threats relating to the:
– safety of navigation,
– marine pollution,
– law enforcement and
– overall security.
The EC Commission advocates the need for a higher degree of
coordination on maritime surveillance through deeper
cooperation within and among MS’ Costguards and agencies.
2. Maritime Spatial Planning & Integrated
Coastal Zone Management (ICZM)
Existing planning frameworks have a largely terrestrial focus and
often do not address how coastal development may affect the sea
Growing competing uses of seas offer challenges and create
Recommendation of EC Parliament and Council of 30 May 2002
concerning the implementation of ICZM in Europe (2002/413/EC).
ICZM is an instrument contributing to meeting the commitments
deriving from the new Directive on the Thematic Strategy for the
protection of the marine environment (COM(2005)505).
The EC Commission will develop a map to facilitate the
development of marine spatial planning by MS.
3. Data and information tools
The availability and easy access to natural and
human-activity data on the sea is the basis for
Establishment of an appropriate marine data and
information infrastructure is one of the building
blocks of a successful maritime policy.
The EC Commission will take steps in 2008 towards
a European Marine Observation and Data Network,
in order to promote the multi-dimensional mapping of
MS’waters and improve access to high quality data.
II. Research and Development
Art. 163 of EC Treaty: “objective of the Community to promote the
scientific and technological basis of the Community industry and to
facilitate the development of international competitiveness, as well as to
promote the research activities that are considered necessary…”.
EU Summit of Barcelona (March 2002) objective in order to address the
gap in this field between EU vs. major business actors in international
Lisbon Strategy for the competitivess of the EC economy by 2010.
R&D contribute to the creation of jobs, growth and quality of life.
In 2003: investments on R&D as a percentage of GDP reached:
– 1,93% in the EU;
– 2,59% in the USA;
– 3,15% in Japan.
(COM(2002)449, “More research for Europe-Objective: 3% of GDP”,
EU objectives for R & D
– increase of R&D expenditure (3% of GDP)
– Increase of private sector participation to this
expenditure to 67%.
Public sector needs to increase research
expenditure by 6,5% while business actors need to
do so by 9,5% per year in Europe.
FP6 and FP7 (part of the Lisbon Strategy) are tools
to address the problem – 19 initiatives
The EC Commission approach
BLOCK OF COMMISSION COMMUNICATIONS & WORKING PAPERS:
“Investing in research: the Action Plan for Europe” [COM(2003)226] (in
association with the Report of experts on the Promotion of R&D in the EU:
improvement of efficiency of the combination of mechanisms of public support
for private sector R&D” [SEC(2003)489]
“Common approach for more R&D, focusing to the improvement of main
conditions for private investment to R&D” [COM(2005)488];
“Implementing the Community Lisbon Programme- More research and
innovation Investing for growth and employment – A common approach
[COM(2005)488 & SEC(2005)1253 – SEC(2005)1289];
“Putting knowledge into practice: A broad-based innovation strategy for the EU
“The Contribution of Taxation and Customs Policies to the Lisbon Strategy”
“Towards a more effective use of tax incentives in favour of R & D
[COM(2006)728 & SEC(2006)1515].
Influencing the business decision-
Major factors influencing business decision-making on WHERE
TO INVEST are mainly:
– Availability of researchers and research staff (human
– Existence of true basis of public research of international
– Granting of improved public economic incentives;
– Stable regulatory framework promoting and supporting
EU wants to improve all these factors with special attention to
the granting of incentives “Investing in research: the Action
Plan for Europe”, COM(2003)226 final, 4.6.2003 & Report of
experts on the Promotion of R&D in the EU: improvement of
efficiency of the combination of mechanisms of public support
for private sector R&D”, SEC(2003)489”
Types of R&D incentives
In the Lisbon strategy, Member States committed to making structural
reforms to their economies. Within this context, the European Council
called for R&D investment to approach 3% of GDP by 2010, of which
2% should come from the private sector.
R&D plays a key role in achieving productivity gains and economic
growth, but the social return of the investment is often higher than the
private return to the investing firm.
This market failure can be addressed through a combination of
different public support measures to increase private R&D investment,
– tax incentives and
– risk-sharing mechanisms,
while taking into account the specific contexts and objectives of different MS.
Recently, tax incentives have grown to become one
of the major instruments used by many Member
States to increase business R&D.
In parallel, industry is embracing the open innovation
model and cooperation across borders is becoming
commonplace, in particular in the high tech sector.
However, the diversity of schemes introduced has
resulted in an increasingly complex landscape for
R&D treatment in Europe hindering trans-European
According to the Commission there is an increasing use of tax
incentives for the promotion of business research, as they are
likely to support an important number of enterprises, while giving
to the entreprises the largest margin of autonomy
COM(2003)226, Investing in research…, p.19
The design of tax incentives lies within the competence of MS
and is largely dependent on the specific character of MS fiscal
but in parallel
Some general principles are the same for all MS Study of
independent experts on the promotion of R&D in Europe (April
– higher expenditure for research
– win/win or even win/win/win outcomes of research results
General regulatory framework for the
design of R&D tax incentives
– EC Treaty fundamental freedoms
– Specific tax legislation per subject (i.e. Interest and royalties, depreciation rules, …);
– Code of conduct for business taxation:
blacklist of specific regimes
application of stand-still and roll-back clauses
– Competition and State aid rules (art. 87-88 EC Treaty):
Primary legislation (art. 87-88 EC Treaty)
Guidelines per sector of state aids (i.e. RDI state aid framework, environmental state aids
– International agreements and conventions (such as DTCs)
– Constitutional rules
– Specific national tax legislation
Experiences with R&D tax incentives
in Member States
In recent years, a growing number of Member States have adapted or
introduced R&D tax incentives to foster investment in R&D.
Currently, 15 Member States use them as part of their mix of public
Under the Open Method of Coordination, expert reports (CREST)
provide an overview and analysis of the various R&D tax incentives in
Member States and other relevant countries.
Great variety of types and design characteristics of tax incentives,
reflecting the diversity of situations in the countries concerned:
– general tax policy,
– industrial structure,
– private sector R&D performance.
There is no single answer as to how R&D tax incentives should be
designed, implemented or evaluated.
IBFD report, 2004
Good design features for R&D tax
treatment and incentives:
According to Commission guidelines (COM(2006)728), the
guiding principles include the need for tax incentives to:
• reach more firms, maximising the potential increase in
BERD and minimising market, distortions, general
measures are best used;
• include all current expenses and consider certain types of
R&D-related capital expenditure;
• focus on ascertaining the direct additionality of tax
incentives and their behavioural additionality;
• consider evaluation criteria and data from the design stage;
• test whether tax incentives have met their specific
objectives, whether their delivery/administration mechanism
was efficient and their wider societal effects.
Detailed guidance on generic design and implementation
Overview of different types of regimes and relief, and eligible
Options for improving the tax treatment of R&D in different
policy contexts, addressing in particular the influence of:
– the wider policy mix,
– the relative merits of a generally R&D-friendly tax environment
versus the use of general corporate tax incentives or selective
support for young innovative SMEs.
Member States are invited to take these guidelines into account when
introducing new or adapting existing R&D tax incentives.
Systematic and consistent evaluation of their impact, both at
individual firm level and on the economy at large, is crucial for a
more effective use of R&D tax incentives.
However, the relatively few evaluation studies that currently
exist often use different methodologies, making their results
difficult to compare:
– IBFD report (2004)
– CREST reports
Member States are invited to adopt a systematic and consistent
approach for their evaluation along the lines defined in
Orientations for measures of common
interest and mutual benefit
Specific tax issues to be addressed in a consistent way, on top
of the basic design principles outlined by the Commission
Some of these issues are research-related aspects of the
general taxation system while others concern R&D issues of
– Common R&D definitions across MS;
– Compliance with EC law in general;
– Importance of ECJ caselaw;
– Learning from MS best practices;
– Use of Open Method of Coordination.
Supporting large-scale trans-national
The increasing globalisation of knowledge and the internationalisation of
research and innovation is an important current trend.
This development is supported by advances in ICT as well as the
realisation of the significant value added to the knowledge production and
dissemination that globalisation and international partnerships have to
The experience of multinational research initiatives has shown that large-
scale transnational projects face major difficulties in ensuring timely and
synchronised multi-annual public funding from several Member States,
often linked to the distinct approval procedures used.
Consequently, whilst transnational projects should ideally be encouraged
due their high productivity, beneficial learning and knowledge transfer
impacts, they may in fact be discouraged.
To resolve these issues, it may be appropriate to also use specific R&D tax
incentives for their timeliness and predictability over the duration of a
research project instead of solely funding such projects through grants.
Expected results of a comprehensive and
coherent use of R&D incentives as a tool of
the EU maritime policy
Creation and promotion of (single site or multi-
centered maritime clusters;
Preservation of maritime knowledge and know-how;
Enhancement of cross-border mobility of
Facilitation of cross-border outsourcing of R&D in ad
hoc issues of transational interest and benefit.
Many more win/win/win/win outcomes!