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Component 5 discussion at Swedish permanent representation attracts great level of interest

Component 5 discussion at Swedish permanent representation attracts great level of interest

Monday, January 28, 2019

On 16 January 2019, the Permanent Representation of Sweden to the EU and the Vanguard Initiative organised an informal information and discussion session about the topic How to stimulate interregional innovation investments – what would the proposed Interreg “component 5” bring us? The session gathered 60 regional representatives and 20 representatives from Member States’ Permanent Representations to the EU. The event was a follow-up of the meeting hosted by the Dutch Permanent Representation on the 25th of May 2018.

After introduction remarks from Jeanette Lund, Councellor for Industry Policy, Permanent Representation of Sweden to the EU, the session started with a panel discussion where the EU institutions gave an update on the state of negotiations regarding the newly proposed “Interregional Innovation Investments” tool (hereafter “Component 5”). Peter Berkowitz, Head of Unit for Smart and Sustainable Growth at DG REGIO, presented on behalf of the European Commission, outlining the reasons why the Commission has proposed this new initiative and its foreseen content. Berkowitz stated that the proposal has gained political support, but still needs further discussions. The Component 5 is a response from the European Commission to demands raised by the “smart specialisation community” (Regions, Academic, and other stakeholders) for strengthened support to interregional collaboration in the field of smart specialisation. The Component 5 is also an answer to a world-wide trend and shift to global value chains, as it aims to encourage close-to market investments involving innovative products and services through the deployment of new technologies or processes, within European value chains. Bekowtiz furthermore highlighted that this topic is also crucial for less developed regions, which is the scope of the proposed strand 2. The Commission intends to pursue a close dialogue in the coming months with concerned regions on strand 2.

Calin Chira, Chair of the Council Working Party on Structural Measures, representing the Romanian Presidency gave the viewpoint of the Council. The Council has proposed to move component 5 from the ETC-regulation to the ERDF regulation as a majority of Member States supports this move. The position of the Council has not changed since the last discussions took place in November 2018, and Chira does not believe it will change moving forward. The budget discussion will take place in the more general negotiation about the multiannual financial framework (negotiation box). Chira explained that there is a need for increased understanding of what kind of activities will be financed by the new initiative, who are the potential beneficiaries and how component 5 can contribute to the main goals of Cohesion Policy and its EU added value. Chira furthermore stated that he sees it as complementary to mainstream programmes, while articulations could be further explained.

Since the session was organised during a plenary week in Strasbourg, the European Parliament’s viewpoint was presented by Lieke van Alphen Buscardini, Senior advisor EU Public Affairs, South Netherlands. The European Parliament debated the Arimont’s report in plenary on the day before the event – 15 January, with several MEPs voicing their support for component 5. The report was adopted with great majority on the same day as the event, 16 January. van Alphen Buscardini presented the main content of the report and how it differs from the Council’s and the European Commission’s proposals. Unlike the Council, the Parliament proposes to keep component 5 within the ETC-regulation but moving it to its own new section of the regulation. Wim De Kinderen, International Project Manager, Brainport Eindhoven EU Office, South Netherlands presented examples from the Vanguard Initiative and the thematic S3 platforms (S3P) on why Component 5 is a welcomed instrument, answering to identified needs. Based on experiences from the Vanguard Initiative’s Pilot Projects, De Kinderen showed how Component 5 can help in solving the problems that interregional collaboration projects are facing in taking considerable steps forward in creating European industrial value chains. De Kinderen also highlighted that the tool is not only relevant for the Vanguard Initiative, but also for the largest S3 partnerships community that involved a large number of regions across Europe and cover a wide panel of sectors.

A topic that was much discussed during the session was the issue regarding direct management. According to Berkowitz this is the key issue surrounding the Component 5 at the moment. to the Romanian Presidency acknowledged that direct management is needed for the tool to have an impact; the Council seems to be in favour of direct management even if Component 5 is moved to the ERDFregulation. There are several reasons why direct management is crucial for Component 5, highlighted by both the speakers and the audience. Direct management will reduce coordination costs which is a crucial aspect for cross-regional cooperation, avoid state-aid issues notably for projects being close to market, allow for swift operations to keep pace with technological developments, facilitate the development of synergies with other EU programmes, notably Horizon Europe. Wim De Kinderen also highlighted that besides direct management, the Vanguard Initiative would like to see an earmarked budget for Component 5, complementary to the Operational Programmes, in order to allow beneficiaries to build a regional top-up from mainstream ERDF-funding. Furthermore, the Vanguard Initiative would like Component 5 to include co-creation aspects regarding the design of the work programmes, something which was in line with remarks made by Berkowitz when discussing how the European Commission foresees the implementation of Component 5. The work programme should also reflect the specific needs of the Cohesion policy, e.g. the territorial dimension and the bottomup approach. There is also a need to answer to EU fragmentation in value chains, with a view to compete globally.

As part of the discussions, the Council was asked to explain the logic behind the proposal to move Component 5 from the ETC-regulation to the ERDF-regulation. Chira explained that the decision was based on the fact that the majority of Member States preferred this solution. An additional clarification  came from the Austrian Permanent Representation, explaining that the move was proposed to “secure and save the instrument”, and that it was a response to the overall reduced budget for ETC proposed by the European Commission. Adding a new instrument, with significant budget, while decreasing the overall budget for ETC was not seen as a positive proposal by the ETC-community. The proposal to move the Component 5 to the ERDF-regulation is a way to save it, since it might disappear in negotiations if it remains within ETC, when the budget for Components 1-4 will be negotiated. The European Commission, the Council and European Parliament positions on this are quite similar. As a last take away message, Chira concluded that there is a need for investments through Component 5 and encouraged the audience and potential beneficiaries to voice the benefits they see with the proposal and to spread concrete examples which motivate the need for the Component 5 across Europe.

The Vanguard Initiative would like to thank the Permanent Representation of Sweden to the EU for hosting the event and the audience for attending. We ask everyone to continue the efforts of supporting component 5, until the moment of the final vote by our national governments in the European Council. We encourage an active communication effort to share examples on why we need the Component 5 using the Twitter hashtag #weloveC5.

For more information:
Vanguard Initiative’s position paper on the MFF.
Vanguard Initiative’s working document on Component 5