II. The balance with precaution and contrasts with “one in, one out”

For all the enthusiasm surrounding the IP, however, the fact remains that both the Competitiveness Council and the EPSC argue that the IP has to be balanced with another foundation of regulatory choice: the precautionary principle. The Precautionary Principle (PP) was adopted in 2001 and is detailed in Article 191 (TFEU). It relates to an approach of risk management that maintains that where there is the possibility that a policy might cause harm, the policy should not be pursued.Footnote ¹⁶ The ERF, as mentioned, coined the IP – arguing that it was complementary to the PP.Footnote ¹⁷ According to the ERF the IP and PP should be balanced with one another, taking into account scientific integrity and accounting for indirect and regulatory impacts. In the ERF we find the original and clearest formulation of the IP: the principle states that “whenever policy or regulatory decisions are under consideration, the impact on innovation should also be fully assessed and addressed”. There is no mention of precaution, hence for the ERF the IP was less a counter-principle (countering precaution) and more a level for the competitiveness of a sluggish European economy. The Centre for European Policy Studies (CEPS) also argues that the two principles, innovation and precaution, should complement each other.Footnote ¹⁸

The IP is not the only addition to the EU regulatory framework. The new Commission has introduced in its working methods a novel principle to be applied in every legislative proposal: the “one in, one out” (OIOO) approach. “One in, one out” is a principle that is set to reduce the legislative burden by eliminating existing rules for everyone created by new legislative proposals. It will be overseen by the Vice-President for Interinstitutional Relations and Foresight, and will be a commitment of the new College to deliver the President of the Commission’s Agenda for Europe.

OIOO is not necessarily in contrast with the IP. But it is a very different principle. It is a case of regulatory offsetting, not a perspective or a principle oriented towards final goals. Most importantly OIOO is now part of the Working Method of the Commission, while the IP is not. It remains to be seen what the connection is between OIOO and IP – if any.

In particular, concerns appear on the complementarity of the OIOO approach with the IP vision. Regulatory offsetting of the OIOO type is miles apart from the logic of regulating for innovation. OIOO is a political commitment that challenges the technical layers of the Commission. The report from the ConsultantFootnote ¹⁹ commissioned by German Ministry for Economic Affairs and Energy is supposed to facilitate the transition from the political to the technical level. The technical challenge is eminently for the Secretariat-General and the Regulatory Scrutiny Board (RSB) – the latter is now compelled to scrutinise Impact Assessments (IAs) and take OIOO into consideration. According to the RSB, OIOO is not going to be interpreted technically as a push for de-regulation. It will be applied “in an intelligent way”, moreover – the RSB argument goes on – regulations coming from the EU will be assessed against sustainability. Practically, this means to assess how many regulations already exist and whether a new regulation will be sustainable for the future. In other words, in every new proposal the collective effort is to push the sustainability principle forward and the regulation will follow.

III. The new agenda: responsive innovation and citizens engagement

The Helsinki Conference chose the angle of “responsible innovation” in approaching the theme of IP and regulation. It seems in fact that one way to resolve some of the ambiguity and tension around the IP is to take the angle of those innovations that consider European values and objectives. The priorities and values of the EU were clearly spelled out during the settlement of the Von Der Leyen Commission, and are the EU Green New Deal and Carbon Neutral Economy. Therefore, the challenge is how to make sure that EU rules can lead the way for European Member States to become sustainability champions and, most importantly, how regulations should adapt. This immediately suggests the following question: where does innovation fall in this complex picture of priorities and values?

Professor Karen Yeung (University of Birmingham) had the challenge of beginning the debate during the Helsinki Conference addressing this question. She posed the (rhetorical) question whether “innovation” is something to embrace wholesale. The consequences of an innovation, in fact, may not be wholly positive. There are social innovations and, so to speak, private innovations. On the latter, the claim that innovations are “new ways” and therefore products “function better” and in “a more efficient way” is not always true. In this sense new technologies and digital innovations promise to cut costs and times, but there is a need to reflect on the effects of such innovations, especially on whether they are equivalent in all respects to older instruments. It is wrong to assume that all innovations are desirable, and there is a need to consult with those who are affected or potentially affected by new technologies.

In the debate on responsible innovations, however, another fundamental issue must be raised, and it deals with the assessment of what is “responsible”. In particular, who is going to determine what is or is not a responsible innovation? It seems vital to identify the channels needed to assess the worth of an innovation. In fact, a major problem that could appear when declaring an innovation “irresponsible” deals with the risks related to “false positives”. For instance, if we think about electricity and how many people were electrocuted before new ways to conduct and manage electricity were invented: what if electricity had been declared an irresponsible innovation?

IV. Innovation and regulation: how to guarantee superior regulatory outcomes?

There is a policy implication in this way of reasoning about innovation. Arguably, it is about not limiting the IP to the assessment of the impact on innovators, but to consult with those potentially affected by innovations. Hence, another implication is whether innovation also calls for new ways to regulate. In fact innovations, by enlarging the range of impact of new laws and because of their speedy nature, inevitably call for new ways of thinking about regulation. In fact, the panel on IP in Regulatory Practices in Helsinki touched on the issue of regulating innovation. One point raised during the conference was about the concept that rules should anticipate the market’s needs. Output-oriented regulations should respond to complaints coming from companies and new tech firms that find standards are not keeping pace with new technologies. Thus, the IP as a policy-framing principle aims at outcome-oriented legislation: regulations can and should encourage innovations, eg in the recycling material industry.

Innovation and regulation, however, are not technical choices. They take place in the real world, where stakeholders have the right to participate. It follows that innovation in regulation also calls for a greater need for engagement. If laws are blamed for not being able to keep up with innovations and changes that happen very quickly a continuous consultation with stakeholders should be incentivised in order to correct this distortion. Engagement should then be accompanied by experimental and holistic approaches, review periods of EU regulation, and a more careful focus on communication. For regulation to be a tool of support and not of restriction to innovations, these mechanisms of accountability must be enhanced. In fact, the most important implication is certainly the impact on innovation, and this is something to keep in mind throughout the process of design of new rules, but also and most pertinently perhaps regulators should engage and mobilise those potentially affected throughout the process of design.

Citizen engagement is a necessary counterpart to the innovation impact in the design of new regulations. This was one of the main points to take away from the Helsinki conference, where it was suggested that the innovation side of any new proposal should be considered, but this should go with the strengthening of mechanisms such as consultation in order to correct the potential distortions that innovations might have on citizens.

If accountability mechanisms need to be enhanced in order to cope with possible shortcoming of innovations, then how should regulatory design processes adapt to IP? Firstly, innovation is not to be considered the aim of regulation. Helsinki’s panellist Veronica Gaffey, Chair of the scrutiny board of the European Commission, stressed that innovation is a means to an end and the end is sustainable growth. It is possible to state that the Commission is buying into the IP approach of the Council only within the limits of innovation being a means and not an end. In order to achieve this goal, it is necessary to have evidence-based EU proposed legislation, stakeholder views and hard data. The new EU Commission, therefore, is pushing for ideas such as: foresight, reduction of administrative burdens and further development of the area of digitalisation. Innovation calls for new ways to regulate, in particular mechanisms for agile regulatory policies such as less prescriptive regulation should be appraised, together with new ways of designing regulation that give more room for regulatory sandboxes. Strong emphasis is also put on the need for “less regulation” or to regulate only when necessary. Questions should be raised in the design of new rules such as: do we need this new legislation? What is the objective this law is trying to achieve? What are the options that need to be assessed?

In the words of the Chair of the Regulatory Scrutiny Board, the interest of the Commission is to break down an old way of thinking related to Impact Assessment that has previously emphasised the impact of diverse options on the table, in this sense the options were either to do nothing or to do something bureaucratic. The new mindset should instead be on simplification and the questions driving regulation should consider what can be simplified, and what can be digitalised.

How is it possible to assess whether the new tools employed are really innovation friendly? How do we measure innovation and improvement? Measurement and innovation are central issues that also call for a reflection on data availability and standardisation of measures.

The issue about measurement becomes even more urgent when considering new impact assessments on innovation and the use of parameters of what is “positive” innovation and what is not. Metrics on innovation are difficult, as there are different ways to measure nowadays, but nevertheless the metrics of what is innovation-friendly is vital. The issue at stake is how to deal with data and especially with data-availability that is much needed for policy makers to work out the success for a regulation. Gathering data is a collective effort, and there is a need for better data collection and standardisation. What data regulators are capturing is still not enough – as noted by some of the panellists during the Helsinki Conference – and standardised data should be made transparent, accessible and shared among regulators.

On the need to have more standardised data in order to assess the impact of innovations, an interesting example of possible shortcomings was pointed out by the head of “technologies futures” (NESTA) during the Helsinki Conference. A compelling new technology that is entering a wide number of sectors is Artificial Intelligence (AI). The use of AI, for instance in the judicial sector, is conceived as a means to enhance access and reduce the costs of access to legal aid. However, there are no clear and standardised data on what are – and might be – its negative impacts. Therefore, data availability is critically connected to innovation and is an unavoidable issue that should enter the picture of regulatory policy formulation.