00:07My guest today on 12 Minutes Whip is Antonio Campinos, the President of the European Patent Office,
00:14an international organisation with its headquarters in Munich,
00:18which examines as many as 200,000 European patent applications each year.
00:24President, welcome to the programme.
00:25Thank you, thank you for having me.
00:26So, let's start with this perennial question of Europe's competitiveness problem.
00:32We're seeing a major political push here in Europe to solve this.
00:35We're hearing that the economy is lagging behind competitors, that we really need to do something about this urgently.
00:42When does your institution, the European Patent Office, come in into all of this?
00:46Well, before I tell you or try to explain where we come in, let me tell you that the diagnostic
00:52is known, is publicly known.
00:54I mean, we need to complete the internal market.
00:57This corresponds to a non-costal barrier of around 40 to 60 percent for our goods, 100 to 110 percent
01:03for our services.
01:04This has been estimated of a non-generation of GDP of around 600 to 700 billion euros,
01:12which is basically what we need to complete, the internal market.
01:17And it is clear that we need really to remove as many bureaucratic barriers as we can,
01:25in order to free a little bit of space for micro entities, for research centres, for universities,
01:29to bring as many ideas from the lab to the market.
01:33So, it's critically what we need to do, in particular when you think about the trade volumes within Europe and
01:42between Europe and the rest of the world,
01:44we see that 60 percent of the trade volumes are between our member states and 40 percent of our member
01:50states and the rest of the world.
01:52So, in a way, we need to look at our competition rules and not say that we need to deregulate
01:58them,
01:58but it is clear that this rule will be decided for within the internal market and not for Europe competing
02:03in the global market.
02:04So, we need to have a look into it, because in the past 50 years, we didn't generate a 100
02:10billion worth company
02:11or a trillion worth company, which is basically the value of many, many, many U.S. or many U.S.
02:20companies or Chinese companies.
02:22Yes, Europe is known as a powerhouse for research, for innovation.
02:26But you've just described there the big economic costs of not completing the internal market
02:31and the fact that we don't have a European GAFAM, let's say.
02:34And why is that? What are the barriers?
02:36It's all about scale.
02:38So, we started about simplifying the rules, refocusing the rules, striking the right balance between international trade and trade within
02:46Europe.
02:47We don't have enough scale.
02:48Because we are fragmented, we are in some areas, we really act as an internal market.
02:55But in other areas, we still operate like 27 national markets.
03:00We have more than 30 stock exchanges in Europe.
03:04The value of all these stock exchanges together is 45% of our GDP.
03:09The value of Nasdaq, of Dojon, of S&P 500 is 150% of the American GDP.
03:19So, that explains why two-thirds of our investment in ARD, which are around 2.2% of our GDP,
03:26come from the public sector.
03:28And rather, when you look at the Americans, the majority of the ARD investment comes from the private sector.
03:33So, we have a problem of scale and of attracting sufficient funds in order to bring this idea from the
03:41lab to the market.
03:42And that's all the work that the Commission is doing, looking at the period of time, 2028, 2036, which is
03:493 trillion financial envelope,
03:52in order to allow our startups to get the funding they need and to be able to operate in a
03:59more seamless manner in the internal market.
04:02Do you think that the EU institutions, including the Commission here in Brussels, understands the enormity of the challenge?
04:08Are they focused on the right priorities?
04:09No, they are.
04:10I think that it's fair to say that in the past few months, I mean, both the European Council, Council
04:17of Ministers,
04:18the European Parliament and the European Commission are on the right track.
04:21They're on the right track.
04:22And the free trade agreements are good agreements for us.
04:26They might be a little bit painful in certain areas.
04:29So, we saw the demonstration, the strikes of agricultural agricultors in France.
04:35But the free trade agreements, what they do is they expand our internal markets.
04:39And as we have to compete with China and with the U.S., having access to the Canadian market,
04:46having access to the Mercosur market, having access to the Indian market,
04:50and more recently to the Australian market, is a good thing for us overall.
04:53We're hearing as well that, you know, when it comes to the big sectors of the future,
04:58clean tech, AI, quantum, that Europe is lagging behind, that China and the U.S. are really accelerating.
05:06You obviously have access to a wealth of data as the European Patent Office
05:09and to where innovation is actually happening right now.
05:12Is the outlook as gloomy as we're being told it is now?
05:15Yeah, I don't think so.
05:16But I think that we really need to learn the lessons from the past.
05:20And it's clear that when you look at the research center, the major research center in the world,
05:24many are situated in Europe.
05:26Oxford, Cambridge, and SIC, just to name the two first that come to my mind.
05:29In terms of fundamental research, if we are not the best, we are among the best.
05:35And when you look at the patent data, you will see that when we are developing a technology
05:41at the fundamental research level, we have 50% of overall European patents.
05:47But when we come close to the market, which means when you have to embody this technology in products
05:53or in services, that's where you see that the Chinese or the Asian companies
05:57and the U.S. companies, they come very strong at us.
06:00So we need to improve that.
06:02And that's exactly when you move this idea from the lab to the market.
06:06What are the consequences for the European economy of not doing that, of not achieving that?
06:11We lose a race which is called the standards, which is these patents who are very close to the market,
06:19they will be those who will set the standards.
06:22And they will be called the essential patents, so the most valuable patents.
06:27So we will lose that race.
06:29We will not be setting the standard as we've been setting standards in the past.
06:34We're also hearing a lot of concern about this kind of flight of manufacturing power to other parts of the
06:39world.
06:40I'm thinking especially of China, especially when it comes to those key sectors of the future.
06:45How much of a concern is that?
06:46Well, it's kind of a concern, you know, because, I mean, when you look, for instance,
06:52when you look at what powers all this technology,
06:56it immediately comes to your mind these rare materials or this rare earth.
07:03Because all the, basically all those who finish inium, gallium, germanium, lithium, you name them.
07:10And they are absolutely fundamental to produce what is called a permanent magnet.
07:14The permanent magnet functions without electricity, basically.
07:18And these permanent magnets, they are using all kinds of high tech technologies.
07:22So, if we were to create a supply chain from zero to the level the Chinese are,
07:30where they produce, they manufacture 90% of the rare minerals,
07:36and they have, their minds represent 60% of the overall volumes.
07:42It will take us easily 10, 15 years.
07:45And that's why I think, for instance, that another technology,
07:49which we have been talking in Europe,
07:52but not as much as we've been talking about AI or the quantum technologies,
07:56but it's the recycling, the materials recycling technologies,
08:00so that we build circular economies around specific technical fields.
08:05It's fundamental for our autonomy, for our sovereignty.
08:08Yes. We are seeing, though, a push to deregulate,
08:13kind of a stripping back on some of the, maybe, the ambitions here in the European Union.
08:18Do you think that it's creating uncertainty,
08:21this kind of push to deregulate and pull back on regulation?
08:24No, I don't think so.
08:25Because, you know, the AI Act, the Quantum Act,
08:29I mean, the act that relates to a technology that you can define vertically,
08:33vertically, there are good regulations,
08:37and we need to keep them, and we need to develop them.
08:40What I'm talking is about, you know, whatever implies a taxable fee,
08:45whatever implies bureaucracy, whatever implies registration,
08:48whatever implies licenses, whatever implies intermediaries
08:51that take a part of your time, that take a part of your money.
08:55And today, in the digital world, where we are, powered by AI and tomorrow by Quantum,
09:01all these intermediaries, they're not needed.
09:04All these filling taxes and registries, they're not needed anymore.
09:08To close, I want to maybe take a step back and look globally,
09:12because there is a sense that we're seeing a big shift in power, maybe,
09:18where who's driving the global economy.
09:20We're seeing a lot of instability as well, a lot of volatility,
09:25particularly due to the geopolitical context.
09:28Where does this leave Europe, do you think?
09:30I mean, when you look at the 10 big sector, technological sectors,
09:35or you look at the 10 first big companies that file the more patents
09:41in these different areas, you will find four European amongst the 10.
09:44We're not bad.
09:45But we need to grow more of these companies.
09:48We need to grow more startups companies and become these first billion market value,
09:54the 10 billion market value, 100 billion, the hectocorn,
09:57and then the 1 trillion.
09:58That's where we need to focus.
09:59Because there are major US companies that seem to be accelerating,
10:03accelerating and making it very difficult to catch up as well.
10:07Some US multinationals that are investing more in innovations
10:12than certain economies.
10:14Yeah, I think that there's technological battles
10:16where we can bring some more incremental improvements
10:20because we lost more or less the race, the race to the cloud,
10:24the race to AI.
10:25But we can still, we still have very excellent startups operating in these fields.
10:31But the next big revolution I see is the quantum technology.
10:35And we're still in the phase between fundamental research and development research.
10:41But we're coming very close to the market.
10:43And typically that's where Europe loses the battle of competitiveness, of innovation.
10:49So that's where we need to focus.
10:50And to focus there, we really need to defragment the internal market.
10:55We might need to discuss, I mean, the creation of the stock market for the EU,
11:00and not these more than 30 international stock markets,
11:04and to scale up these startups to become global players.
11:08Okay, finally, just to close, we've had two major reports in about two years ago
11:14from Letta and Draghi, both previously Italian prime ministers.
11:18Yes.
11:19Mario Draghi didn't warn that if Europe doesn't do anything urgently,
11:22it could face a slow agony.
11:25Is that still a fear, a possibility?
11:27I mean, at a macro level, macroeconomic level,
11:30we are among the most costly social models, and the most beautiful ones.
11:36I see myself in the European social model.
11:38But this social model, this pension system that we have,
11:42social security systems that we have, unemployment, needs to be financed.
11:46And in order to be financed, we have no other alternative
11:49to increase our productivity and to be more competitive.
11:52Great. Antonio Campinas, thank you so much for joining us.
11:54Thank you so much for having me invited.
11:57Thank you so much for joining us.
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