Regulating for Innovation

Protego >  Articles >  Regulating for Innovation

Insights from the Finnish Presidency of the Council of the European Union

The European Union (EU) is seriously considering the impact that developing or updating policy has on research and innovation. In May 2016, the Council supported the innovation perspective in the regulatory process following a policy debate on how to tweak the better regulation strategy of the European Union in order to strengthen competitiveness. The same idea of using regulatory policy to support innovation, competitiveness and growth appeared in a 2016 staff working paper of the European Commission. The Commission Industrial Policy Strategy refers more precisely to the Innovation Principle (IP), thus upgrading the ‘perspective’ on innovation to a principle, that is, a foundation of regulatory and policy choice. The same Innovation Principle can also be found in the law establishing European Horizon.

Granted that there are no objections to innovation as important means to the ends of competitiveness and growth, the political question is whether the EU is now poised for embracing the Innovation Principle as foundation of regulatory and policy choice. In a few words: innovation can be a policy perspective of ‘frame of reference’ for policies, a binding or non-binding principle. Where does the new Commission stand? And is this the same position adopted by the Council? What is the new agenda about it and does it re-define the relation between innovation and the Treaty-based precautionary principle?

The idea of using regulatory policy to support innovation, competitiveness and growth appeared in a 2016 staff working paper of the European Commission

Some of these issues were addressed during the Innovation Principle Conference held in Helsinki on 3 December 2019 where a wide group of policy makers, experts, academics, innovators as well as NGOs and students gathered to discuss about innovation and regulation. The aim of the conference was to uncover the potential, and to some extent the problems, of the Innovation Principle and to assess how a regulatory framework could better address challenges such as new technologies and environmental goals.

One way the Commission seems to square the circle among Council’s pressures on these issues is, at the moment at least, to consider Innovation as a fundamental perspective endorsed by the Commission, it is not a legal principle (yet). It will not be used to counter precaution and to limit environmental and social protection, but quite the contrary: to the extent that the Commission supports Innovation, it does that exactly to achieve the goals of the Green Deal and sustainability in general. Where this is a temerarious proposition or fine political strategy only time will tell.

Innovation is a cornerstone in the regulatory vision of both the Council and the Commission and there seems to be no fracture between the different institutions of the EU. Beyond this shared vision, there are different interpretation and challenges. There are different types of innovation: social innovation can be social in the means and in the ends, or only in the means but not in the ends. Innovations have to be appraised one by one rather than being considered wholesale positive, yet we know that suppressing innovation via bad regulatory choice hinders prosperity and well-being.

The very meaning of regulating for innovation is a territory that the Commission has just started to explore, also because innovation and regulation have been assigned to different DGs and Commissioners in the past – and so are now. The Commission embraces innovation as a perspective for regulatory design, but there is no formal endorsement of the IP as foundation of regulatory choice, at least not yet. The RSB will endorse innovation as broad vision about the ultimate goals of regulation.

It is also possible to stress that regulatory offsetting’s like ‘one in, one out’ (OIOO) are a political commitment for the new Commission. The challenge is to turn it into methods and techniques, including oversight approaches, that are balanced with IP. Much will depend on the operationalization of OIOO by the Sec Gen and the RSB.

Lastly, it seems that the way forward to innovation and regulation is through simplification. Indeed, as mentioned simplification is crucial for regulatory design and innovation. The Commission and beyond Brussels all regulators are challenged by the fact that innovation needs simplification as well as critical thinking about when new rules and standards are really needed and to strike a balance of positive and negative effects of innovation.