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Commissioner Liikanen's Speech at the Vth Plenary Session of Mercosur European Business Forum (Brasilia)

Ministers, Members of the Mercosur and the European Union, Ladies and Gentlemen,

Following what was said by the previous speakers, in my turn I would like to outline my vision of the needs for EU and Mercosur.

Both in the EU and Mercosur, we need a more innovative and competitive economy. The key building blocks for that are investments in human capital, research, development and new technologies.

In parallel, we need further to improve the regulatory framework, in the EU as in Mercosur, to govern the way business can operate in integrated markets.

These common challenges in both the EU and Mercosur shall permit us to work towards a common and positive agenda, as on the line of the Madrid declaration, adopted by your conference last year.

I will structure my presentation along the lines of the three policy areas in which we work. First, the common needs for enhancing competitiveness, innovation and growth. Second, shaping the regulation framework in an integrated approach, in a way which permit business to have the benefit of an integrated market without unnecessary burdens. And third, measures related to information and communication technologies.

Competitiveness and growth

Labour productivity is a large component of competitiveness. Increases in human capital as well as the introduction of more efficient technologies will show up in statistics as improved productivity.

More in the EU than in Mercosur, the capital-intensives are no longer the productivity leaders. In the EU in particular, the emphasis is increasingly shifting towards sectors with a high intensity of human capital and innovation.

In parallel, the widespread introduction of information and communication technology - or ICT - in virtually all the sectors of the economy has had a profound effect on working methods and productivity.

This has been the key for "services and business development", which is the theme of this session.

In both the EU and Mercosur, there is a need for growth. For that, we first need industry to be competitive, in order to create jobs, and to release the resources for a better environment. In both, the EU and Mercosur, we need to seek a real balance of the three pillars of "sustainable development".

Innovation is also a joint concern, due to its impact on growth and economic performances.

Innovations emerge where the market offers incentives to introduce new products and production methods, and where people are willing to take risks and experiment with new ideas.

EU general capacity for innovation and its performance remain relatively low compared to some main global competitors. We are still not good enough at coming up with new industrial and businesses processes, new products and sources and at exploiting them to give us the edge over the international competition.

Innovation policy remains high on the EU Commission's agenda. It is a potential field of cooperation between EU and Mercosur, on the lines of the Madrid declaration, for business development.

From the EU side, we are in a process to suggest measures at the European level to help enterprises become more competitive through innovation

First, innovation takes many forms. There is technological innovation, but also innovation through new business models and new ways of organising work, innovation in design or in marketing. Innovation can consist in finding new uses and new markets for existing products and services.

That leads to the second theme. We know that most enterprises are not always innovative. They often replicate existing businesses. We need to increase the percentage of entrepreneurs who innovate, and increase their chances of success.

Policies need to encourage innovation, the creation and growth of innovative enterprises. Policies also need to encourage the accumulation of skills for management and staff to recognise market opportunities and respond to them innovatively.

Thirdly, innovation policy is multidimensional and has to be implemented through many different traditional policy areas. This requires a coherent strategy and co-ordination across several government departments.

A regulatory framework for integrated markets

Regulation is an important tool to promote societal goals, such as social justice, health and safety, environmental protection and fair competition.

Regulation is also an instrument to integrate our markets, at regional level, in the EU and in Mercosur, in order to permit operators to have the benefit of bigger markets with harmonised rules.

However, regulation has a cost and can affect the ability of enterprises to compete, to grow and to create jobs.

The single market in the EU is expanding now to new members, which will take place next year.

Differences in comparative advantages and in industry specialisation could create a large potential for a successful extension of pan-European production networks on a larger Internal Market.

Although economic relations between the EU-15 and the accession countries have gradually become closer and closer, and if we have now a complete coherent legislative framework, the full integration of the accession countries into the EU's economic structure remains a key challenge for Europe.

Mercosur countries are also in an integration process. We welcome the potential of such integration, for wider markets, investments attraction and better integration of industrial activities based on your respective comparative advantages.

We welcome also your institutional progresses in this field. We are closely following your attempt to develop institutions in order to be able to implement common policies and a framework for business.

It is also a field where we can be jointly active. The Madrid declaration, and as a follow up the "Business Facilitation Action Plan" which was jointly adopted last year, at the initiative of MEBF, is a concrete framework for facilitating trade internally and between the two regions.

It is also our objective to create a stable and predictable environment for our business communities.

In addition, in the EU, the Commission has recently come forward with a number of proposals to improve the regulation framework. Let me give you some examples.

• First, the Commission has introduced a new Impact Assessment procedure this year. It involves a "preliminary" impact assessment of all proposals in the Commission's annual Work Programme, and a more in-depth "extended" impact assessments of major initiatives.
  
  The impact assessment starts with an analysis of the problem which is being addressed and the objectives of the initiative. It must assess the available policy options and instruments, both regulatory and non-regulatory.
  
  The impact assessment process should help us ensure that the Commission's proposals are of high quality and that decisions are based on the best possible knowledge of all relevant impacts, in full awareness of potential trade-offs between competing objectives.
  
  
• Secondly, the Commission has established a new set of general principles and minimum standards for consultation. Our consultations are widely publicised, including the Commission's new "single access point" on the Europa web-site. A minimum of 8 weeks is given for responding.
  
  One major piece of legislation is the new regulation on chemicals. We first had a discussion paper, a White Paper on chemicals, published 2 years ago. Then, in May this year we put the text of the new proposed regulation, replacing about 60 Directives, on the Internet. Stakeholders had 8 weeks to react. We received about 6000 position papers on the text. The Commission adopted the draft Regulation yesterday.
  
  This is the first major example of a regulation which followed the line of prior impact assessment and public consultation.
  
  
• Thirdly, the Commission has presented a simplification programme for the existing bulk of EU legislation. The objectives are to reduce the volume of legal texts by more than a third in terms of pages, to eliminate obsolete rules, and to make the overall body of Community law simpler and user-friendly. In parallel, the programme aims to simplify the substance of a number of EU policies to make them more efficient, flexible and proportionate.

Some of the new procedures and initiatives will also certainly need fine-tuning in the future, as we incorporate the first lessons of practical experience, like chemicals.

The regulatory dialogue which has been starting between EU and Mercosur could use these initiatives. It will allow us to propose joint action with the objective of reducing technical barriers to trade coming from regulations. It will take into account the objective of regulating more effectively so that our "internal markets" may function better.

The way to the Information Society

I would like now to refer to the Information and Communication Technologies sector. As you may know the European Heads of State and Government have set for the EU, the goal of becoming the most competitive and dynamic knowledge based economy in the world. This is commonly known as the Lisbon strategy.

Necessity to create a viable environment for ICT companies

With a view for that ambitious objective to be fulfilled, we need to establish a favourable environment for ICT companies, in order to guarantee trust and generate the allocation of future investments in this sector. An essential condition for this is the predictability of the regulatory framework for this sector.

In this regard, I would like to draw your attention to the new telecom regulatory framework that entered into force in the European Union in July 2003. The main objectives of this new regulatory framework are to foster investment and innovation in this sector and to increase competition, with a view to benefiting citizens.

It adapts the previous regulatory framework to the new challenges of convergence, while being technology neutral and providing regulatory certainty for investors. Moreover, it is flexible enough to take into account the specific situation of each EU Member State.

European companies present in the telecom sector in Mercosur countries have already shown their long term commitment to invest in this region, having already made substantial investments to develop the telecom infrastructure and services, helping therefore to foster digital inclusion and to bridge the digital divide.

The Digital Divide

The digital divide is indeed one key issue that we will need to solve, not only in the EU and in Mercosur but also elsewhere. This is something that concerns all of us, both public authorities and private sector, given the potential of ICT to reinforce social cohesion and therefore lead to a better redistribution of wealth.

In order to achieve a fully inclusive Information Society, we need to take advantage of all existing and future platforms as alternatives and complements to PCs. Digital TV has a great potential to achieve that objective, given that TVs are present in almost every home. Mobile phones have also a great potential to promote digital inclusion.

And if all these platforms are interoperable and based on open standards, then we will be making a significant step towards fostering digital inclusion and a dynamic Information Society, given that content and applications developed for one platform can be used for the others, without the need for complex re-authoring.

The UN World Summit on Information Society (WSIS)

The digital divide is also one of the main challenges that the UN World Summit on Information Society (WSIS) that will be held in Geneva in December of this year will be facing.

In fact the WSIS offers the opportunity to address two main issues: On the one hand, development issues, notably mobilisation of ICT to achieve the UN Millennium Development Goals.

On the other hand, other issues resulting from the global nature of the Information Society should also be addressed in the WSIS context, such as on trust and confidence in the Information Society, including network security, data protection and spam, the creation of a favourable legal, regulatory and policy environment, on benchmarks and targets, and on the encouragement of open and international standards and platforms.

I would like to say here that from the European Commission side, we have been somewhat puzzled to see that in spite the co-operation developed over the last years, our positions in the WSIS process have been rather divergent on a number of key issues.

I do not think it is because our visions of the Information society are so different. Maybe, it is due to different approaches or different wording. In any case, I would like us to find a way to explore how we can bring our positions closer. So I would suggest an in depth EU-Latin America dialogue on the Summit, during the next preparatory meeting to be held in Geneva in November.

EU-Latin America co-operation in the Information Society

Promoting digital inclusion throughout Latin America is also the main objective of the co-operation programme that was launched in April of last year by the European Commission. Under this programme, called @LIS (ALliance for the Information Society), several dialogues among both regions have already been launched or will be launched soon, and concrete actions are being put into place.

Notably, under @LIS, at the end of last year dialogues on regulatory and standardisation aspects among the telecom regulatory and standards authorities from Latin America and the EU were launched. Moreover, a policy dialogue among both regions on e-Strategies for the development of the Information Society will be launched from the beginning of next year.

Furthermore, 19 projects involving Latin American and EU partners are being financed under the @LIS Programme, aimed at demonstration the benefits of Information and Communication Technologies in four priority fields: local e-governance; e-learning and cultural diversity, e-public health; and e-inclusion.

Another promising area for establishing fruitful partnerships among both regions is in the research field. In the @LIS context, there has been major progress on preparing the ground to support the creation of a Latin American intra-regional broadband research networking infrastructure and its interconnection to the GEANT network in Europe (the broadband research network interconnecting European countries), which is the fastest in the world.

Moreover, from the beginning of this year the research programme of the European Union in the ICT field (the Information Society Technologies Programme) is able to finance organisations from a number of third countries, including Latin American countries.

eGovernment

One particular area where there is a lot of scope for co-operation between the EU and Mercosur/Latin America is on eGovernment, including both public authorities and the private sector.

eGovernment consists in the use of ICT in public administrations, combined with organisational change and new skills in order to improve public services, to increase the participation of the citizen at the democratic process and to strengthen support to public policies.

eGovernment is not a goal in itself. It is a tool for public sector reform with three objectives:

• First, a public sector that is open and transparent. Administrations should be more understandable and accountable to the citizens.
  
  
• Second, administrations that are at the service for all. A user-centred public sector will exclude no one from its services and respect everyone as an individual, by providing personalised services.
  
  
• Third, a productive public sector that is capable of delivering high value for taxpayers' money.

The European Commission has taken a strong interest in eGovernment for the modernisation of the public sector. eGovernment is one of the pillars of our eEurope information society action plan. This plan represents the contribution from an Information Society perspective to the Lisbon strategy.

Overcoming barriers between government departments and internal resistance requires strong political leadership and commitment. eGovernment cannot be led by the IT departments. It has to be the highest level, Prime Ministers, Ministers and Mayors who commit themselves and lead by example.

In this context, the European Commission has recently adopted a comprehensive policy and roadmap for eGovernment. It gives an analysis of the role of eGovernment, identifies key issues for a full-scale implementation and gives a roadmap of actions.

Conclusions

The European Commission has supported the MEBF process. In this period of time the MEBF has shown itself to be needed more than ever.

MEBF is the ballast for our Mercosur-EU relations. But you are above all the filter for the Governments, selecting the recommendations or field of actions that both business and communities consider appropriate.

It has been said many times, but it deserves to be repeated: the MEBF process is extremely important to Governments. The reason is obvious. It is important for Governments to get a practical input on trade, competitiveness or regulatory matters involving both our regions and to get that input directly from the very actors having a practical perspective.

Business can inform Governments directly at the highest level of their concern. And it permits Government to check its policies against reality.

MEBF is a good "thermometer" of current issues. And it is by providing recommendations on concrete, practical issues, as you have done in Madrid, that the MEBF can make a difference.

Thank you for your attention.

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• EU objectives for the UN World Summit on Information Society (22/5/2003)