“The design of research and development
(R&D) incentives
as an instrument of the
European Maritime Policy”
Tonia Pediadita...
T.Pediaditaki, Trabzon,14.06.2002
“How inappropriate to call this
planet EARTH when it is quite
clearly OCEAN”
Arthur C. C...
T.Pediaditaki, Trabzon,14.06.2003
Diagram of presentation
 I. Maritime policy
– Maritime policy and innovation
– Tools fo...
T.Pediaditaki, Trabzon,14.06.2004
I. The maritime sector pushes and pulls
innovation
Europe is a major innovator in this s...
T.Pediaditaki, Trabzon,14.06.2005
Research on many fronts
• Across the EU, including in its outermost regions,
marine biol...
T.Pediaditaki, Trabzon,14.06.2006
B U T
Research in itself is not sufficient
1. It needs to interact with business
 ensur...
T.Pediaditaki, Trabzon,14.06.2007
Comprehensive & stable maritime
policy will:
 Promote the long-term and large-scale inv...
T.Pediaditaki, Trabzon,14.06.2008
- Multidisciplinary approach coupling sciences
to socioeconomics has not been fully
addr...
T.Pediaditaki, Trabzon,14.06.2009
Tools for integrated policy-making
An integrated governance framework for maritime
affai...
T.Pediaditaki, Trabzon,14.06.20010
1. European network for maritime
surveillance
 Improvement and optimization of marine ...
T.Pediaditaki, Trabzon,14.06.20011
2. Maritime Spatial Planning & Integrated
Coastal Zone Management (ICZM)
 Existing pla...
T.Pediaditaki, Trabzon,14.06.20012
3. Data and information tools
The availability and easy access to natural and
human-act...
T.Pediaditaki, Trabzon,14.06.20013
II. Research and Development
 Art. 163 of EC Treaty: “objective of the Community to pr...
T.Pediaditaki, Trabzon,14.06.20014
EU objectives for R & D
 EU objectives:
– increase of R&D expenditure (3% of GDP)
– In...
T.Pediaditaki, Trabzon,14.06.20015
The EC Commission approach
BLOCK OF COMMISSION COMMUNICATIONS & WORKING PAPERS:
 “Inve...
T.Pediaditaki, Trabzon,14.06.20016
Influencing the business decision-
making
 Major factors influencing business decision...
T.Pediaditaki, Trabzon,14.06.20017
Types of R&D incentives
 In the Lisbon strategy, Member States committed to making str...
T.Pediaditaki, Trabzon,14.06.20018
 Recently, tax incentives have grown to become one
of the major instruments used by ma...
T.Pediaditaki, Trabzon,14.06.20019
Tax incentives
 According to the Commission there is an increasing use of tax
incentiv...
T.Pediaditaki, Trabzon,14.06.20020
General regulatory framework for the
design of R&D tax incentives
 EU level:
– EC Trea...
T.Pediaditaki, Trabzon,14.06.20021
Experiences with R&D tax incentives
in Member States
 In recent years, a growing numbe...
T.Pediaditaki, Trabzon,14.06.20022
Good design features for R&D tax
treatment and incentives:
According to Commission guid...
T.Pediaditaki, Trabzon,14.06.20023
 Detailed guidance on generic design and implementation
principles;
 Overview of diff...
T.Pediaditaki, Trabzon,14.06.20024
 Systematic and consistent evaluation of their impact, both at
individual firm level a...
T.Pediaditaki, Trabzon,14.06.20025
Orientations for measures of common
interest and mutual benefit
 Specific tax issues t...
T.Pediaditaki, Trabzon,14.06.20026
Supporting large-scale trans-national
R&D projects
 The increasing globalisation of kn...
T.Pediaditaki, Trabzon,14.06.20027
Expected results of a comprehensive and
coherent use of R&D incentives as a tool of
the...
T.Pediaditaki, Trabzon,14.06.20028
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T. Pediaditaki, R&D Incentives and EU Maritime Policy

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T. Pediaditaki, R&D Incentives and EU Maritime Policy

  1. 1. “The design of research and development (R&D) incentives as an instrument of the European Maritime Policy” Tonia Pediaditaki Legal counsel to the Greek Minister of Economy and Finance Trabzon, June 12th -15th , 2008 4th International Conference on Ecological Protection of the Planet Earth- Environment, Maritime policies and Energy Issues in the Black Sea
  2. 2. T.Pediaditaki, Trabzon,14.06.2002 “How inappropriate to call this planet EARTH when it is quite clearly OCEAN” Arthur C. Clarke
  3. 3. T.Pediaditaki, Trabzon,14.06.2003 Diagram of presentation  I. Maritime policy – Maritime policy and innovation – Tools for integrated maritime policy-making  II. R&D – EU objectives – Features for the good design of R&D incentives
  4. 4. T.Pediaditaki, Trabzon,14.06.2004 I. The maritime sector pushes and pulls innovation 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.
  5. 5. T.Pediaditaki, Trabzon,14.06.2005 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 energy. • Marine “blue” biotechnology offers:  new sources for active substances of value in medicine, agriculture and environmental protection.
  6. 6. T.Pediaditaki, Trabzon,14.06.2006 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
  7. 7. T.Pediaditaki, Trabzon,14.06.2007 Comprehensive & stable maritime policy will:  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.
  8. 8. T.Pediaditaki, Trabzon,14.06.2008 - 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.
  9. 9. T.Pediaditaki, Trabzon,14.06.2009 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 sustainable decision-making); 3. Comprehensive and accessible source of data and information.
  10. 10. T.Pediaditaki, Trabzon,14.06.20010 1. European network for maritime surveillance  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.  Transnational nature…  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.
  11. 11. T.Pediaditaki, Trabzon,14.06.20011 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 and vice-versa.  Growing competing uses of seas offer challenges and create problems.  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.
  12. 12. T.Pediaditaki, Trabzon,14.06.20012 3. Data and information tools The availability and easy access to natural and human-activity data on the sea is the basis for strategic decision-making.  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.
  13. 13. T.Pediaditaki, Trabzon,14.06.20013 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 level.  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”, 11.9.2002, p.6)
  14. 14. T.Pediaditaki, Trabzon,14.06.20014 EU objectives for R & D  EU objectives: – 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
  15. 15. T.Pediaditaki, Trabzon,14.06.20015 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 [COM(2006)502];  “The Contribution of Taxation and Customs Policies to the Lisbon Strategy” [ COM(2005)532];  “Towards a more effective use of tax incentives in favour of R & D [COM(2006)728 & SEC(2006)1515].
  16. 16. T.Pediaditaki, Trabzon,14.06.20016 Influencing the business decision- making  Major factors influencing business decision-making on WHERE TO INVEST are mainly: – Availability of researchers and research staff (human resource issue); – Existence of true basis of public research of international level; – Granting of improved public economic incentives; – Stable regulatory framework promoting and supporting business activities.  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”
  17. 17. T.Pediaditaki, Trabzon,14.06.20017 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, such as: – grants, – tax incentives and – risk-sharing mechanisms, while taking into account the specific contexts and objectives of different MS.
  18. 18. T.Pediaditaki, Trabzon,14.06.20018  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 collaboration.
  19. 19. T.Pediaditaki, Trabzon,14.06.20019 Tax incentives  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 system 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 2003): – higher expenditure for research – win/win or even win/win/win outcomes of research results
  20. 20. T.Pediaditaki, Trabzon,14.06.20020 General regulatory framework for the design of R&D tax incentives  EU level: – 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)  Secondary legislation  Guidelines per sector of state aids (i.e. RDI state aid framework, environmental state aids etc…)  International level – International agreements and conventions (such as DTCs)  National level – Constitutional rules – Specific national tax legislation
  21. 21. T.Pediaditaki, Trabzon,14.06.20021 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 support instruments.  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
  22. 22. T.Pediaditaki, Trabzon,14.06.20022 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.
  23. 23. T.Pediaditaki, Trabzon,14.06.20023  Detailed guidance on generic design and implementation principles;  Overview of different types of regimes and relief, and eligible R&D costs;  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.
  24. 24. T.Pediaditaki, Trabzon,14.06.20024  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 Commission guidelines.
  25. 25. T.Pediaditaki, Trabzon,14.06.20025 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 interest.  General concerns: – 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.
  26. 26. T.Pediaditaki, Trabzon,14.06.20026 Supporting large-scale trans-national R&D projects  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 offer.  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.
  27. 27. T.Pediaditaki, Trabzon,14.06.20027 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 researchers;  Facilitation of cross-border outsourcing of R&D in ad hoc issues of transational interest and benefit.  Many more win/win/win/win outcomes!
  28. 28. T.Pediaditaki, Trabzon,14.06.20028

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