DEBATE
DEBATE. EU countries are asked to create contexts where there are exceptions to restrictive rules. The aim is greater freedom to test new technology. But problems with overambitious regulation need to be solved in another way, writes Entreprenörskapsforum.
This is a discussion article. The opinions expressed are the writer’s own.
The earlier one ECB President Mario Draghi’s report about how European competitiveness has fallen behind the US and China has raised waves in discussions about how Europe relates to new technology and innovation.
More and more people are talking about the European penchant for regulating technologies that are still in their infancy as a major reason why our part of the world is losing ground. When also Swedish innovation giants that Ericsson is alerting if regulations make it impossible to carry out important research and development in Europe, it should be clear to everyone that the problem is acute.
In Brussels as well as at national level, the policy tool “regulatory sandboxes” is now being highlighted as an answer to the problem. All Member States are being asked to create their own sandboxes: a temporary state of emergency where companies are given greater freedom to test new ideas and new technologies in an area where there is still great uncertainty about what is allowed.
Examples from the UK and Singapore show that proactive work in the “sandbox” can release new solutions in heavily regulated areas such as financial services and ai.
The idea of a regulatory sandbox is to encourage innovation, and at the same time care about learning and innovation-promoting rule development. In a regulatory sandbox, innovations can be tested in real environments without being hindered by existing regulations. In this way, regulatory authorities and companies can learn how the technology works, what risks it entails and how regulation can be adapted to benefit both society and technological development.
In other words, the sandboxes are meant to create space for experimentation and innovation without harming consumers or the market. Examples from Great Britain and Singapore show that proactive work in the “sandbox” can release new solutions in heavily regulated areas such as financial services and AI, thereby benefiting both national competitiveness and valuable technology development.
Swedish authorities should approve this tool, and we need to call more clearly when and how it can be useful. A new report, Regulatory sandboxes as policy instrumentsfrom the Entrepreneurship Forum provides a basis for this work by summarizing European experiences in this area.
We see three important starting points for success with a regulatory sandbox:
1. Well-chosen area of activity. Regulatory sandboxes can be useful in situations with great uncertainty about applicable regulations or when multi-jurisdictional conditions exist, i.e. when there is a great need to understand how different regulations interact. Such areas exist in, for example, AI and energy.
2. Clear demarcation. For to reduce uncertainty effectively, it needs to be made as clear as possible to all parties which issues and which technology is covered by the sandbox.
3. An implementation that makes the tool as competitively neutral as possible. The advantages that a participating company can get in the form of a head start on a new market must be balanced against a “free-riding” problem where the participating companies put in work that also benefits current and future competitors. Criteria for participating must be designed in an objective way, and the entry process must be open and transparent. A regulatory sandbox should also be designed with requirements for knowledge sharing and dissemination of results that ensure that all market participants are given the opportunity to benefit from the lessons learned.
But the report also shows limitations with this model as the solution to a European and Swedish regulatory problem.
Establishing a regulatory sandbox requires significant capacity and resources. The temporary nature may work for relatively small, limited innovation projects, but does not provide sufficiently stable conditions to stimulate substantial investment in research and development.
It is simply not possible to see the regulatory sandboxes as a general solution to the broad problems arising from overambitious regulation and zealous implementation of EU legislation. Sweden and Europe need to take action to deal with the fundamental problem – this needs to be done through broad reforms rather than temporary visits to the sandbox.
Anders BroströmCEO of Entrepreneurship Forum and professor at the University of Gothenburg
Enrico Deiacoresearch leader Entrepreneurship Forum
Source: www.nyteknik.se
