Association arrangements for the participation of non-EU countries in Horizon 2020

Given the size of its economy, the participation of the UK as FP Associated Country would be expensive. Under FP7 and Horizon 2020, the UK was a net beneficiary of EU R&D funding thanks primarily to the rebate of the UK on its contribution to the global EU budget. In 2015, the UK share of the EU budget revenue after subtraction of the UK rebate was 12.57 %, which includes the GDP-based contribution, the VAT-based contribution, and the UK share of the EU ‘Traditional Own Resources’ (TOR) based on custom duties. The very same year the UK was the most successful participant country in Horizon 2020, receiving 15.9 % of the Horizon 2020 allocated funds. In 2015, the EU-28 GDP amounted to approximately 14,714 billion euro whilst the UK GDP reached approximately 2,580 billion euros.

The simple proportionality factor mentioned above (UK GDP/(EU-28 GDP – UK GDP)) indicates that the UK contribution as ‘Associated Country’ would have been approximately 21.26 % of the Horizon 2020 budget in 2015. In other words, from net beneficiary as EU Member State the UK would have become net contributor to Horizon 2020. The non-monetary advantages of participating in the EU FP (attractiveness of the country as a R&D hub, increased opportunities for cooperation etc.) may however compensate, at least in part, the financial burden.

These are the kind of issues on which a debate entitled ‘Brexit: the scientific impact’ are due to focus on, on 8th May at the Royal Institution, London, UK available to watch on YouTube. So what are the actual hard facts underlying the Brexit?

What the regulations say

Article 7 of the Regulation establishing Horizon 2020 opens the possibility to non-EU countries to be associated to the Framework Programme (FP) such that legal entities from Associated Countries can participate under the same conditions as legal entities from the EU Member States. Further, Associated Countries have the right to send observers to meetings of all the different configurations of the committee which is responsible for the implementation of Horizon 2020 and to the Board of Governors of the JRC, as well as the right to participate in all ERA related bodies as an observer.

Article 7 specifies the countries that are eligible to become associated to Horizon 2020:

• acceding countries, candidate countries and potential candidates;
• countries or territories covered by the European Neighbourhood Policy, the foreign relations instrument of the EU addressing those countries to the East and South of the European territory of the EU (e.g. Israel); and,
• members of the European Free Trade Association (EFTA), an intergovernmental organisation set up for the promotion of free trade and economic integration to the benefit of its four Member States: Iceland, Liechtenstein, Norway and Switzerland.

The legal bases for the association to Horizon 2020 are agreements signed between the third country and the 28 EU Members States which cover (notably) scientific cooperation and allow participation in EU programmes. The Horizon 2020 association agreement, including the financial contribution to the budget, is then negotiated between, and signed by the third country and the European Commission.

A standard rate for the financial contribution of associated countries to the framework Programmes does not exist. In principle, the Commission aims to use a simple proportionality factor, calculated every year, obtained by establishing the ratio between the gross domestic product (GDP) of the third country and the sum of GDP of all EU Member States. This is the case for Israel and Switzerland, for instance. Norway, thanks to the EEA Agreement (see below) and acceding countries benefit from a slightly more favourable rate including their own GDP to the sum of GDPs of all EU Member States, thereby reducing the proportionality factor.

Some countries benefit from an additional rebate because they are expected to perform poorly in the Framework Programme.

Switzerland and Norway

Amongst those associated to Horizon 2020, two countries could be considered as relevant examples for the United Kingdom post-Brexit because they too are highly-developed western European economies: Norway and Switzerland. However, both of them participate in the EU’s

Single Market whilst the pre-negotiation rhetoric of the UK Government seems to exclude it.

The legal base for Norway’s participation in Horizon 2020 finds its roots in the European Economic Area (EEA) Agreement, which enables three of the four EFTA Member States (Iceland, Liechtenstein and Norway) to participate in the EU’s Single Market. This agreement notably covers the so-called “four freedoms”: free movement of goods, right of establishment and freedom to provide services, free movement of capital, and freedom of movement for workers.

Switzerland decided not to ratify the EEA Agreement. The country therefore had to negotiate with the EU Member States a series of bilateral treaties allowing participation in the Internal Market. The Bilateral I agreements, which notably include the free movement of workers and science, are expressed to be mutually dependent. If any one of them is denounced or not renewed, they all cease to apply. Between 15 September 2014 and end of 2016, having failed to ratify the Protocol on the extension to Croatia of the Free Movement of Persons Agreement between the EU and Switzerland, the Horizon 2020 association agreement was downgraded to partial association allowing access to parts of Horizon 2020 only. Full association was restored as of 1 January 2017 after ratification of the protocol by the Swiss Federal Council.

Uncertainties ahead

Thus, UK participation in future Framework Programmes is subject to the negotiation of an agreement between the UK and the EU Member States covering scientific cooperation and allowing participation in EU programmes. Whether an agreement different from those in place with Norway or Switzerland, notably regarding the participation in the Single Market and the free movement of workers, can be reached remains to be seen.

Furthermore, legal issues such as the control by the Court of Justice of the European Union, the power of audit by Commission agents and the European Court of Auditors over all grant beneficiaries, contractors and subcontractors who have received Union funds, and the power of investigation of the European Anti-Fraud Office (OLAF) may constitute additional hurdles for the participation of the UK in future Framework Programmes.

Luc van Dyck, EuroScience

Featured image credit: CC BY-SA-4.0 by Jwslubbock