Is the innovation principle compatible with a European Green Deal?

K J Garnett

On the day before Commission President Ursula von der Leyen’s new team was voted in by the European Parliament, an independent, Brussels-based, think-thank CEPS published their third report on the Innovation Principle : ‘Study supporting the interim evaluation of the innovation principle’. With von der Leyen promising to tackle climate change and promote a European Green Deal now would be a good time to examine whether the innovation principle fits in with this vision for greater sustainability or whether its true intention is to curb Europe’s strict environmental laws?  

As lawyers we are familiar with general principles and those practicing European law are familiar with the fact that the EU applies a number of general principles : proportionality, subsidiarity, substantive & fundamental human rights, precaution,… Authority for the EU’s legal principles stems from primary law, typically the Treaties themselves or, more rarely, when the CJEU finds principles shared by all EU Member States within their national constitutional traditions.

So why do lawyers have issues with the innovation principle?

My uppermost concern is the fact that authority for such a principle can be found in neither the EU Treaties, secondary legislation, case law nor the national constitutional traditions of a single member state.  The only authority we have for an innovation principle is from an industry-led think-tank, the European Risk Forum, with a well-known de-regulatory agenda. See also this piece by Arthur Neslen for Politico noting that

One of the ERF’s board members, Bayer, is a corporate member of CEPS. Four other fossil fuel firms — Shell, Total, ExxonMobil and Repsol — were represented at the ERF by their trade association Fuels Europe until last month .Another CEPS member, BusinessEurope, also advocates for the innovation rule, while Apple, Google, Huawei, Hitachi, Mastercard, Microsoft, Mitsubishi and Samsung have lobbied to introduce the innovation principle into Horizon Europe through their trade representative, Digital Europe.

The CEPS report published this week states that it is not the intention of the proposed innovation principle to act as a deregulatory tool. Yet, the following 54 pages focus on how the EU can use a non-existing innovation ‘principle’ to remove ‘prescriptive and inflexible’ regulations. Judging by the case studies examined in the report for ‘prescriptive and inflexible regulation’ read the EU’s strict environmental, public health and consumer standards.

A second concern is that the CEPS report confuses policy with principle. Words matter and the title of the report is misleading. There is a big difference between a ‘policy’ and a ‘principle’. The authors of the CEPS report acknowledge they looked into ‘implementing’ components of the ‘principle’ i.e. the Research and Innovation Tool and the Innovation Deals. Legal principle, however, is categorically not the same as a policy. When properly defined and applied a legal principle can act as an elegant cross-cutting, flexible tool capable of standing the test of time. Policy tools are not the same. A properly understood legal principle would never entail prescriptive ‘tool-boxes, tailor-made deals or horizon scanning’. Ad nauseam: the vast majority of assertions in the report concern innovation policy; not an innovation principle. Judging from this report and others prepared by the Commission on the innovation principle neither the ERF nor the Commission understand how policy differs from principle. In fact, one could argue that the policy recommendations put forward by report in the name of an innovation principle add yet another layer of prescriptive regulation to innovators.  The very thing they claim they want to discard.

A further matter of grave concern is that the proposed innovation principle remains undefined. Something the CEPS report itself acknowledges is a problem. Unless and until this proposed principle has been fully defined with proper consultation from all stakeholders and not just industry, scientists and research institutes it will continue to arouse suspicion and mistrust rather than act as a facilitator of sound innovation. Although some legal scholarship (including mine which I co-authored with Prof Geert Van Calster and Leonie Reins and which is quoted) has been consulted CEPS has nevertheless failed to consult any lawyers in preparation of the report as far as we are aware. Lawyers could have offered good legal insight into whether an innovation principle is feasible or not.

Finally, as far as I am aware the report does not, unlike the usual modus operandi, identify a public tender which led to its publication. For what clearly is a controversial topic, a transparent tendering procedure would have been preferable to a simple assignment of the report to CEPS. In doing so DG Research and Innovation give succor to the suggestion that they want to keep consultation to a minimum of like-minded and supportive stakeholders.

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