Triple strategy for the revised technological policy of the European Union in the next mandate (2024-2029): regulation, investments, and international agenda

The elections of the European Parliament (June 9, 2024) brought a close to a political and legislative cycle within the European Union that began in 2019. This period has been marked by ever-increasing geopolitical rivalry between China and the United States, across technological, economic, and commercial spheres; by a world health crisis of the first order (COVID-19), which prompted the acceleration of digitization; and by the situation of technology as a line of international action that can lead to both fractures and new windows for cooperation.

The top priority of the next mandate will be to establish a common European approach to innovative digital technologies based on principles of efficiency, coherence, effectiveness, agility, impact, and coordination, to keep the European market innovative, meanwhile enabling solidarity and the prioritization of instruments that foster open economic security. To achieve those ends, the next mandate must rethink its current paradigm in three technological areas: regulationinvestments, and foreign policy.

Regulatory simplification will be an axis of action in the coming years. The first step will be implementation of the more than 50 legislative files currently existing in the digital sector. The second step will be to guarantee that implementation of said regulation be carried out in an effective, efficient, and coherent manner throughout the national Public Administrations, which will require training at the human resources level for both technical and regulatory authorities. As an example, application of the European Regulation on Artificial Intelligence and of eIDAS2 (the second version of the regulation for Electronic Identification, Authentication, and Trust Services, the objective of which is to promote secure digital interactions within and among the EU Member States) will together assume over 60 implementing acts at the national level.

In its latest Conclusions (May 21, 2024), the Council of the European Union itself speaks of “the future of EU digital policy” and indicates the need to comprehensively evaluate the repercussions of any new legislative initiative, to guarantee a “balance between innovation and the regulatory burden” and to avoid the risk of hindering an agile, innovation-friendly European digital single market, all without losing sight of the risks posed by technological advances.

Through the five years of the next mandate, the regulatory focus must be on the implementation of rules in a simplified way, coordinated between the European Commission and the Member States and with the guarantee that rights be respected while ensuring innovation throughout the productive fabric. It is estimated that 25 industrial segments (from the chemical sector to railways and hospitality) will need to increase their legal operations to comply with these regulations.

The second challenge of the next mandate will be the economic competitiveness of the European Union. In the final years of the current mandate, both the Commission and certain Member States have promoted industrial policy strategies aimed at channeling increased public financing toward strategic and critical sectors within the digital, climate, and energy fields, as well as for defense. In the first area, the launch of STEP (the Strategic Technologies Platform for Europe) has sparked great interest and support, driving investment in digital and deep technology, clean and green technology, and biotechnology. The initial proposal of June 2023, presented within the package of measures for mid-term review of the Multiannual Financial Framework for the 2021-2027 period, called for a total of 10 billion euros. However, as the months passed, this ambition diminished to 1.5 billion euros, a reduction of more than 85% below original expectations.

In a scenario where other regions are likewise channeling increased public investments into key private sectors, the next mandate of the European Union should focus on three aspects. First, it should ensure that investments be combined and coordinated at the European Union level. Currently in existence are Industrial Alliances, Joint Undertakings, and instruments such as IPCEIs (Important Projects of Common European Interest). As relates to the 10 IPCEIs approved since 2018, only 20% of participating companies are SMEs. In the current context of increasing concentration of technological companies, it is important that the EU enhance its support to SMEs, to guarantee their competitiveness and economic activities with larger companies. On the other hand, of these same 10 projects, only one is dedicated to infrastructure; the rest are dedicated to R&D or to projects for early industrial deployment. The next step should be to channel R&D into tangible economic effects along European value chains.

The second aspect in terms of investments will be to evaluate the impact of both public and private investments along the same technological vertical. In 2022, levels of public investment increased – for example, in the area of quantum technologies, China announced 15.3 billion dollars of investment, the EU 7.2 billion, the U.S. 1.9 billion, and Japan 1.8 billion. Meanwhile, the private sector in the EU continues to exhibit quantitatively low market capitalization. Currently, 10 of the 15 largest quantum computing companies in the world are from the U.S., while only one is of European origin (France). Hence the need to explore why, within certain emerging verticals, the increase in public aid has not led to greater private investment.

The third aspect is to establish prioritization of funding, instruments, and incentives according to existing or potential technological capabilities. The report entitled Resilient EU2030, launched during the Spanish Presidency of the Council of the EU, articulates three scenarios from which to decide the extent to which the EU’s internal capacities need to be strengthened: technologies where a competitive advantage is present; those showing certain potential for forefront positioning; and those where leadership is not possible, but where a minimum critical capacity is required in case of supply chain disruptions or external shocks. The next step – above all for the Member States, including for the Spanish Administration – is to guarantee that Spain submits a mapping of critical technologies that will be truly coordinated, consulted, and compared between Ministries and actors from the private sector and civil society, with a view to the Strategy for Economic Security. The establishment of the first Office of Artificial Intelligence in the EC coincides with a review of the National Strategy for Artificial Intelligence 2024 from the Government of Spain. Nevertheless, it is necessary to move other technological areas in this same direction, as with the expected National Strategy for Quantum Technologies, or for Spain to obtain a joint position on the Commission’s Recommendation on the Security and Resilience of Submarine Cables.

This latter point leads to the third aspect of the revised technological policy of the European Union. One cannot speak of a digital agenda by referring to regulation or economic competitiveness alone – partnership with like-minded countries and allies is also fundamental. Since 2019, the EU has advanced rapidly in the configuration of three models: Trade and Technology Councils (with the United States and with India), Digital Cooperation Agreements (or DPAs, with South Korea, Japan, and Singapore), Digital Alliances (with Latin America and the Caribbean), and Digital Economy Packages with individual countries such as Nigeria. The next step is to strengthen the EU’s technological diplomacy structures within the institutions themselves, as well as in the Member States, including Spain, which still lacks a structured and coordinated strategy for technological diplomacy.

The coming 2024-2029 mandate of the European Union is not expected to create more instruments, regulations, or initiatives. Rather, the road map will consist of: implementation of what already exists; effectiveness and coordination in the use of the instruments and processes created; evaluation of the real impact of said initiatives; and greater structuring and dialogue between Member States and the European Union. All of this will guarantee the application of existing regulations, the promotion of innovation and economic competitiveness, and ongoing association with trusted third countries.

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