Explanatory Memorandum to COM(2013)501 - ECSEL Joint Undertaking - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2013)501 - ECSEL Joint Undertaking. |
|---|---|
| source | COM(2013)501  |
| date | 10-07-2013 |
· General context
The European Union (EU) must take steps to ensure it can emerge from the economic and financial crisis and find a path to sustainable growth.
One of the aims of Horizon 2020, the European Union’s programme for research and innovation for the period 2014-2020, will be to strengthen European industry through actions in support of research and innovation across a range of industrial sectors.
The Leadership in Enabling and Industrial Technologies pillar of Horizon 2020 targets specifically the strengthening of industrial competitiveness in key technologies such as ICT. Micro- and nanoelectronics, and smart embedded components and systems are priority fields identified within the ICT theme in Horizon 2020.
In order to better align EU support for research and innovation with industrial goals and attract higher industrial investments in Europe, Horizon 2020 provides for the setting-up of public-private partnerships in key areas where research and innovation could contribute to Europe’s wider competitiveness goals and help tackle societal challenges.
This new proposal for a public-private partnership (PPP) relates to a Joint Undertaking (JU) in the field of electronic components and systems. The ECSEL (‘Electronic Components and Systems for European Leadership’) JU replaces the previous ENIAC i and ARTEMIS i JUs respectively in the fields of nanoelectronics and embedded systems launched under the Seventh Framework Programme i. It is put forward in the context of the Multiannual Financial Framework i, the Commission’s proposal for Horizon 2020, the Commission Communication ‘Partnering in Research and Innovation’[6], the Innovation Union Flagship Initiative i, the Commission Communication on Key Enabling Technologies[8] ‘A European strategy for Key Enabling Technologies — A bridge to growth and jobs’, and the Commission Communication ‘A European strategy for micro- and nanoelectronics components and systems’[9]. The proposal is also in line with the Commission Communication ‘Public-private partnerships, in Horizon 2020: a powerful tool to deliver on innovation and growth in Europe’[10].
· Rationale and objectives of a Joint Undertaking in the area of electronic components and systems
Apart from being a significant industry with more than EUR 1000 billion of turn over world-wide, electronic components and embedded systems are at the origin of most productivity improvements across the whole of the economy and have a key role in addressing societal challenges. Despite strong presence in important vertical markets (automotive, energy, payment systems, etc.), the electronic components and systems industry in Europe is facing major challenges that will impact the whole economy.
More specifically, Europe is facing two main challenges in electronic components and systems. One is to be in control of the key elements of the value chain, (i.e. design, manufacturing and integration in final products), that are essential to ensure the sustainability of value creation from electronics in Europe including the competitiveness of many other European industrial sectors (automotive, energy, health, web industry, etc.). The other is to bridge important gaps in the innovation chains in order to better transform research excellence into commercial successes.
In addressing the above challenges Europe must cope with fierce global competition, declining market shares of its industry, high costs of research and innovation and fast-paced technology development.
In that context, a Joint Undertaking in the area of electronic components and systems will aim at:
· ensuring the security of supply of key technologies underpinning innovation in all major sectors of the economy, and ensuring that Europe can make the best use of these technologies to spur economic growth generally;
· supporting EU policies, the environment and industrial competitiveness as embodied in the Europe 2020 strategy for smart, sustainable and inclusive growth;
· overcoming obstacles to effective research and innovation in this area, including high risks, high cost of R&D and market failures. Public support is needed to leverage private investments;
· aligning strategies with Member States to attract private investment and to contribute to sound public finances by avoiding unnecessary duplication of efforts and fragmentation, and easing participation for actors involved in research and innovation;
· pushing industry to set a long-term strategic research and innovation agenda, create the necessary critical mass, leverage private investment, facilitate knowledge sharing, reduce risks, lower costs and reduce time to market.
In particular, the specific objectives of this new Joint Undertaking are:
· to maintain and grow semiconductor and smart systems manufacturing capability in Europe including leadership in manufacturing equipment and materials processing;
· to secure a leading position in design and systems engineering including embedded technologies;
· to provide access for all stakeholders to a world-class infrastructure for the design and manufacture of electronic components and embedded and smart systems;
· to foster the development of ecosystems involving innovative SMEs, strengthening existing clusters and nurturing the creation of new clusters in promising new areas.
· Building on past experience
The proposed Joint Undertaking builds upon the achievements of previous JUs (ENIAC and ARTEMIS) under the Seventh Framework Programme. Both JUs aimed at creating a Europe-wide research and development programme in the fields of nanoelectronics and embedded systems with an incentive for industry, Member States and the European Union to align strategies and increase investments. They provided a major opportunity to cooperate across Europe, create critical mass and leverage investments. The JUs demonstrated that they can successfully play the role of an honest broker, and be a catalyst for ambitious projects increasing the engagement of the private sector champions in a framework in which national and European public authorities can support topics of high strategic value. This capability has been convincingly demonstrated by the ENIAC JU’s success in jump-starting the implementation of the KET recommendations in nanoelectronics and by the ARTEMIS JU’s first launch of large-scale innovation Pilot Projects. In the period 2008-2012 a total research, development and innovation investment of EUR 2.8 billion was realised by some 2000 participants of which over 500 are SMEs.
These JUs involve the private sector, national authorities and European authorities. One important challenge of this tri-partite construction consisted in aligning procedures and content with the expectations and processes of the participating Member States.
The first and second interim evaluations of the ARTEMIS and ENIAC JUs strongly recommended continuing a similar initiative under Horizon 2020, considering that no single organisation or Member State could possibly address all the challenges of this sector. Therefore, a coordinated action at European level is deemed the most appropriate way forward.
The experience with the current model shows that it has been able to meet the objectives, albeit with a steeper learning curve than anticipated, during which confidence and a practical modus operandi had to be built up.
Besides the successes mentioned above, there are some observations to be made on the present set-up:
· There is a lack of synchronisation between the various national procedures (for both contracting and payments), creating delays in the implementation of projects.
· The obligation for the participants to conclude two grant agreements based on different rules (JU and national) constitutes an administrative burden.
· The differing national rules have an impact on the way consortia are built.
· The rigid dependency between EU and national commitments (ratio contributions as imposed by the Council Regulation MS/EU 1.8) has hampered budget execution.
· The requirements of the Framework Financial Regulation for decentralised agencies put significant constraints on the limited resources of the JU.
Those difficulties did not hold things up but required continuous efforts by all parties to make the system work. The future initiative will greatly benefit from a simplified operating model in line with the overall goal of simplification under Horizon 2020. The proposal for the new Joint Undertaking includes provisions aiming at simplification and flexibility of operations.
Contents
· Results of consultation
Stakeholders consider the two existing Joint Undertakings in ICT as being of high value. The public consultation showed that the JUs helped addressing key bottlenecks in their respective domains and contributed to an increase of European competitiveness.
The current ENIAC and ARTEMIS JUs involve industrial stakeholders (both large companies and SMEs) and the research community (research and knowledge-dissemination organisations) from across Europe. Member States are directly involved in the governance structures and contribute financially. The industrial and research communities are represented through the industrial associations AENEAS and ARTEMIS-IA.
The consultations show that all actors are motivated and committed to the JTIs. According to industry, the JTIs have helped in bringing together relevant stakeholders and facilitated cooperation in the implementation of strategic research agendas. The JTIs pool private resources and public funds from Member States and the European Union.
For the new JTI, all stakeholders strongly support the following two main objectives:
· Achieve critical mass by pooling public and private resources; and
· Provide public support for large-scale demonstrators and pilots.
Cooperation on innovation across value chains throughout Europe and closer to the market should be supported. The design of complex electronic components and systems should be covered as well as manufacturing and technology development.
Member States insist on the most effective spending of public money in the interests of their national industry and research community. All participating Member States acknowledge the importance of a strong industry in electronic components and systems for their national economy. Member States are willing to consider participation in a tripartite model, when the level of funding requires pooling of resources and stronger alignment of strategies at regional, national and EU levels.
Some Member States recognise the difficulties currently faced by participants, notably through the application of national eligibility criteria and the lack of synchronisation and alignment of national contracting and funding terms. Differences in national agreements create different conditions of participation and lead to some inefficiencies. These difficulties were reported by stakeholders in connection with the tripartite model for the JTI.
For SMEs ease of participation is of paramount importance. They strongly favour more targeted support, an opinion that is shared by the participating Member States.
The need for multi-annual financial perspectives from the Member States for the operations of the JU is equally highlighted by many stakeholders.
The various opinions were taken into account when designing the new JTI in electronic components and systems although the modus operandi of the JU as a one-stop shop was not equally supported by all Member States.
· Impact assessment
The proposed Regulation has been subject to a Commission impact assessment which is attached to the proposal.
· Summary of the proposed action
The proposal consists of a Council Regulation setting up the ECSEL Joint Undertaking and defining its objectives, legal status, operational rules and statutes for the period 2014-2024 (up to 2020 for financial programming). The ENIAC and ARTEMIS Joint Undertakings were established respectively in the fields of nanoelectronics and embedded computing systems by Council Regulations (EC) No 72/2008 and No 74/2008 of 20 December 2007. These are to be repealed with effect from the entry into force of the new JU.
· Legal basis
The legal basis of the proposal is Article 187 of the Treaty on the Functioning of the European Union.
The Rules for Participation and Dissemination of Horizon 2020 will apply. However, given a specific operational need of this initiative, a derogation from these Rules is necessary. Nevertheless, this specific derogation is not included in the present proposal at this stage, in order not to prejudice the inter-institutional discussions concerning the appropriate legal basis/procedural modalities for their adoption, which are still pending in the context of the legislative works concerning the Commission proposal for a Regulation of the European Parliament and of the Council laying down the Rules for Participation and dissemination in Horizon 2020 (COM(2011) 0810 - 2011/0399 (COD). The specific derogation will be introduced at a later stage in view of the outcome of the abovementioned discussions.
The applicability of State aid rules requires derogating from Regulation (EU) No … [Rules for the participation and dissemination in Horizon 2020] with regard to the single funding rate per action. Due to the co-funding by Member States, the State aid rules with their specific provisions on aid intensities depending on the type of participants and the type of activities apply to the public aid granted by the Joint Undertaking.
· Subsidiarity principle
The subsidiarity principle applies insofar as the proposal does not fall under the exclusive competence of the Union.
The objectives of the proposal cannot be sufficiently achieved by the Member States individually for the following reasons.
· The sizeable challenges facing Europe’s industry and economy require a substantial investment that represents a major effort for any one Member State to take on by its own. As a result, individual Member States, whatever the size of their economy, hesitate to engage in research and innovation, or delay investments that are essential for attracting further private investment and building Europe’s capacity to innovate and compete. By combining resources from regional, national and EU levels, Europe can quickly react to, and anticipate the demand for, high investments as evidenced by the 2012 calls for proposals in respect of the ENIAC JTI. This call supported a set of manufacturing pilot lines in key domains for Europe’s industries.
· Europe has high-quality specialised technology and industrial clusters in micro and nanoelectronics components and smart and embedded systems. Innovation and competitive products and services are increasingly stemming from multi-disciplinary research and innovation activities and from alliances and partnerships along the value chain from semiconductor development up to embedded software and networked applications. If no new initiative is launched at EU level fragmentation of the research and innovation landscape will increase in Europe. Without a focused and coherent programme Europe’s contribution to electronic components and systems would consist of a set of scattered and unstructured local efforts. Progress will be held back by lack of coordination of industrial R&D objectives, duplication of effort, unnecessary bureaucracy, and suboptimal use of limited research funding. Therefore, action by individual Member States is not sufficient to meet the challenges faced by the electronic components and systems industry. No single national mechanism will be able to gather all the necessary expertise and financial means to take a strong position in the worldwide competitive market.
EU-level action will better achieve the desired objectives for several reasons. A European public-private partnership will leverage the financial and technical means that are essential to master the complexity of the ever escalating pace of innovation in this area. It will have a focusing effect on the European, national and industrial priorities. It will combine the strengths of transnational and European programmes. The adoption of a simplified modus operandi should allow for a shorter time-to-grant and avoid additional red tape for participants.
The proposal therefore complies with the subsidiarity principle.
· Proportionality principle
In accordance with the principle of proportionality, the provisions of this Regulation do not go beyond what is necessary to achieve its objectives.
The proposal complies with the proportionality principle for the following reasons. The proposed Joint Undertaking is the only simple option that overcomes the constraints and satisfies the requirements for achieving the objectives of the action. It is a structure that is durable over time, has legal personality and provides a clear legal framework for the collaboration and participation of actors involved in research and innovation, national authorities and the EU in a public-private partnership. The participation of all stakeholders is of paramount importance. As the initiative focuses on industrial objectives of great significance for economic competitiveness, industrial participation is essential to help shape the research priorities and innovation policies. The involvement of Member States is needed to mobilise national funding that constitutes the bulk of the public research and innovation spending in the area. Finally, the EU has a key role to play in driving the integration process, balancing the different interests of the partners, and adequately monitoring the use of its financial contribution.
The proposed action will achieve the necessary integration at EU level while providing flexibility for participation by individual Member States. Decision-making power on the use of national financial contributions is kept at the national level. The Joint Undertaking will establish a lean structure for decision-making and financial and administrative operations. It will be particularly cost-effective as its administrative costs are expected to be around 3% of the overall EU contribution to the research and innovation activities to be launched by the Joint Undertaking.
· Choice of instrument
Other means would not be adequate for the following reason: the creation of a Joint Undertaking in which the European Union participates requires a Council Regulation.
The budgetary assessment to be contributed by DG CONNECT from its budget for Leadership in Enabling and Industrial Technologies indicates maximum EU expenditure of EUR 1 215 255 000[11] [12] (EFTA included) over the total lifetime of the ECSEL Joint Undertaking (up to 2024), which would need to be committed before 31 December 2020, when the budget for Horizon 2020 comes to an end, and paid by 31 December 2024.
· Simplification
A simplified operating model is proposed to address the practical difficulties experienced by participants with the current JUs such as the variety of national rules and practices leading to significant differences in treating individual participants. It is proposed that the new JU may act for the Member States in making grant agreements/payments instead of national administrations just like it does for the EU contribution. This will allow the JU to act as a one-stop shop and ensure synchronisation of funding to all participants. It is also proposed to harmonise the public funding rates (from EU and national sources) for all participants.
· European interest
Having a leading-edge electronics components and systems industry in Europe is of strong European interest as it will supply the enabling electronics technologies that foster innovation in a very wide range of businesses across the economy from automotive and aerospace to energy, health equipment, home appliances and all types of industrial manufacturing processes. In this respect, the objectives and scope of the ECSEL Joint Undertaking will be precise on the technology tracks to follow and economic goals to reach, the open and fair selection criteria for participants, the industry engagement in investments and creating jobs and the relevant governance and implementation modalities. The public aids provided to the activities of the ECSEL Joint Undertaking will improve the European Union’s situation regarding research and innovation in the international context. They will benefit the full value chain of the electronics components and systems industry in Europe including many SMEs, but also the wider economic actors through the spill-overs generated. The Commission might consider, upon notification of the Member State or group of Member States concerned, that the ECSEL Joint Undertaking's initiatives qualify as important projects of common European interest, provided all relevant conditions are met.