There is much concern in the financial and political circles about the difficulties with Euro due to the deficits in Greece, Spain, Portugal and several other members of the Euro-zone. While governments are talking brave about tightening their belts, it was interesting to hear President of the Spanish Government José Luis Rodríguez Zapatero who, speaking at the U.S. Chamber recently, pointed out that one area where the Spanish government will not cut is in its support for innovation. This statement should be taken in earnest as an expression of a broader European determination to stimulate EU economies, in the mid-term, by encouraging demand for innovative products and services across this market of 500 million relatively well-heeled consumers.

Before the current economic crisis, Europe was spending around USD 170 billion on R&D, compared to USD 5 billion in China and India combined. Today, looking at the lessons from the crisis, EU is in no mood to cut where its future is at stake. EU now has a Commissioner for Research, Innovation and Science, Máire Geoghegan-Quinn of Ireland, who will chair a special top-level group of Commissioners aiming at producing a political initiative this summer. In another telling sign, one of her first speeches was addressed last week to the American Chamber to the EU. There is a clear recognition that innovation is something we have got to do together, and do it better.

The U.S. is the third largest participant in the 50 billion Europe EU-funded Research Framework Program for 2007-2013. The next 7 year program is being negotiated this year, and companies have an important stake in the outcome. In addition, according to Commissioner Geoghegan-Quinn, EU’s so-called Structural Funds for Research, amount to another 86 billion euro. 

What is also encouraging is that innovation is now understood in EU as broadly as in the US, embracing business models and social innovation. In fact, the U.S. Administration and EU have launched a promising Innovation Dialogue, which, together with BusinessEurope, our EU counterpart organization, we are eager to support. Here is what would be on my list of expectations from this dialogue:

1. Jointly fund cutting-edge research leveraging funding at local, national and international levels

2. Enable substantial private risk capital to underwrite innovation

3. Set compatible technical demands to scale up the markets in breakthrough technologies, e.g.

• Security/resilience of infrastructure systems
• Telemedicine
• Biotech
• Data collection, processing and dissemination
• Vehicle safety and e-mobility

4. Send clear joint signals of future procurement trends

5. Encourage innovation adoption by transatlantic consumers through authoritative public information about new technologies

6. Promote environment for intellectual property generation, valorization and protection in other major markets

And let’s face it – one of the imperatives for U.S. and EU to support smart innovation policy comes from the shared concern about challenges our companies are facing in China and elsewhere. China’s intent to compel local certification of innovation and technology transfer is just the most recent manifestation of these challenges. The U.S. and EU need to work very hard to develop and support the “golden standard” in innovation policies that would set an example to the rest of the world.