Explanatory Memorandum to COM(2016)662 - Participation of the Union in the Partnership for Research and Innovation in the Mediterranean Area (PRIMA) jointly undertaken by several Member States

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dossier COM(2016)662 - Participation of the Union in the Partnership for Research and Innovation in the Mediterranean Area (PRIMA) jointly ...
source COM(2016)662 EN
date 18-10-2016


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

With 180 million people who are considered water poor, the Mediterranean area is generally characterised by high levels of hydric stress. This is why the sustainable management of water provision and food systems in the area is so important.

Climate change is increasingly causing severe water shortages in the area, with major impacts on agriculture. Most water available is used for irrigation. This means that such shortages result in decreasing and irregular crop yields, putting additional pressure on natural resources and on the capacity to provide clean water and affordable food for the region’s inhabitants.

This in turn has a negative effect on nutrition, health, livelihoods, standards of living and levels of wellbeing. This social and economic stress is a major cause of instability. It also contributes to migration, both internally, leading numerous farm families to move to cities and externally, driving part of the population to migrate, in particular to Europe.

The unsustainable management of water provision and food systems in the Mediterranean area is due to a number of factors including political instability, climate change and the rapidly growing population. One of the main reasons for this is the lack of a set of common innovative solutions that are adapted to the realities of the region and are easily transferable across it. These solutions are not forthcoming because the overall level of research and innovation (R&I) investment in the Mediterranean is not commensurate with the size of the regional challenge. Investment levels also differ greatly from one country to another. Funding is not geared towards tackling the water and food problem and the relevant stakeholders – for instance, the private sector – do not always have sufficiently strong R&I capabilities. On top of all this, R&I collaboration efforts between Union Member States and Southern and Eastern Mediterranean countries are too fragmented (mostly governed by bilateral agreements) to have any significant impact.

In this context and with regard to migration, the PRIMA Joint Programme initiative, led by Participating States from the Union and the Southern Mediterranean 1 , is particularly important and relevant. The initiative follows the approach of the new Migration Partnership for enhanced financial collaboration with Member States and other partners. It shows how research policy can bring about effective coordination by leveraging national budgets and bringing Mediterranean countries together to tackle long-term common problems.

The programme’s strategic objective is to develop the common innovative solutions for water provision and food systems that the Mediterranean region urgently needs. Achieving this strategic objective will make water provision and food systems more efficient, cost-effective and sustainable. In this way R&I could help solve bigger problems in relation to nutrition, health and social wellbeing, and ultimately help address mass migration trends. R&I policies can thus be leveraged to the maximum to tackle the migration challenge, in line with the Communication from the Commission on establishing a new Partnership Framework with third countries under the European Agenda on Migration, (COM(2016)385).

• Institutional background

The process leading to the PRIMA Joint Programme started with the Euro-Mediterranean Conference on Science, Technology and Innovation in Barcelona in 2012. The aim is to strengthen Euro-Mediterranean cooperation in R&I as part of the broader objectives of the Union’s external policy with regard to the Southern Neighbourhood.

Several Council Presidencies have highlighted the need to set up a regional partnership to tackle major common challenges, including water availability and management, innovation and institutional coordination. The idea behind a regional partnership is to work on the basis of co-ownership, mutual interest and shared benefit in a long-lasting, structured framework.

The Competitiveness Council of 5 December 2014 invited the Commission to assess whether the Union’s participation in the PRIMA Joint Programme on the basis of Article 185 of the Treaty on the Functioning of the European Union (TFEU) would be justified by the scope of the objectives and the extent of the resources required. In its Conclusions, the Council endorsed in particular the programme’s focus on developing and implementing innovative, integrated solutions for the sustainable management of water provision and food systems in the Mediterranean area. The Council regarded this as a priority, in order to improve the health, wellbeing and sociocultural conditions of the populations of the Mediterranean area and boost economic growth.

Consequently, in December 2014 Member States and third countries of the Mediterranean area submitted a proposal to the Commission to participate in the PRIMA Joint Programme.

On the basis of the Competitiveness Council’s Conclusions and after the formal submission of the proposal, Commissioner for Research, Science and Innovation Carlos Moedas asked the Commission services to prepare an impact assessment of the available policy options, including an initiative based on the legal basis of Article 185 TFEU.

• Consistency with existing policy provisions in the policy area

The PRIMA Joint Programme fits into an institutional context which, at the highest political level, highlighted the need to strengthen Union cooperation with Southern Mediterranean countries in the key areas of water resources and food systems and related areas.

PRIMA anchors key regional R&I challenges in broader socioeconomic and geopolitical objectives. It is intended to complement recent relevant institutional actions in Union policies other than R&I. These are listed below.

Contents

1.

a) Water diplomacy (Foreign Affairs Council Conclusions dated 22 July 2013)


The effects of climate change and demographic and economic development, coupled with stress on water quality, availability and management are major security challenges likely to give rise to tension and conflicts over access to water. In this context, the Union plays an important role in supporting water diplomacy across the world and in transboundary waters in Europe – including by promoting water initiatives with countries in the EU neighbourhood and other countries identified in the EU water security mapping exercise.

2.

b) Review of the European Neighbourhood Policy (ENP) (Foreign Affairs Council Conclusions dated 14 December 2015)


The Council welcomed the Review of the ENP as a key political priority for the Union in the coming years. This includes the crucial role of R&I for socioeconomic development in the neighbourhood and helps neighbourhood countries modernise and diversify their economies by facilitating their participation in EU initiatives.

3.

c) Sustainable Development Goals (Foreign Affairs Council Conclusions dated 26 May 2015)


Reference is made to Horizon 2020’s commitment to supporting sustainable development, both within the Union and with international partners, as well as to the need to foster science, technology and innovation as part of the overall post-2015 approach to eradicating poverty and promoting sustainable development.

4.

d) Migration (Foreign Affairs Council Conclusions dated 12 October 2015 and 17-18 March 2016)


These Council Conclusions acknowledge that the migration crisis within and beyond the EU neighbourhood is exacerbated by poverty, poor socioeconomic development and violations of human rights, and call for a strong EU external migration and asylum policy. The Council also renewed its commitment to mobilising all instruments and policies to address the root causes of migratory flows, mainly poor socioeconomic conditions and climate change.

5.

e) European climate diplomacy after COP21 (Foreign Affairs Council Conclusions dated 15 February 2016)


In the overall context of climate diplomacy, the Council refers to the development of a climate diplomacy action plan, including efforts measures focusing on the nexus of climate change, natural resources (including water), prosperity, stability and migration.

• Consistency with other Union policies

The objectives are in line with the problem definition and cover the related R&I challenges, ensuring interaction with European, Mediterranean and global policies. In particular, PRIMA is consistent with the recent Communication from the Commission on establishing a new Partnership Framework with third countries under the European Agenda on Migration, (COM(2016)385). It focuses on tackling the root causes of migration and forced displacement through ‘all EU policies including education, research, climate change, energy, environment, agriculture’. It also advocates new development cooperation models involving the private sector, innovative financing mechanisms and investments in SMEs and sustainable infrastructures.

Horizon 2020 has already identified ‘Climate action, environment, resource efficiency and raw materials’ and ‘Food security, sustainable agriculture and forestry, marine, maritime and inland water research, and the bio-economy’ as two of the priority societal challenges to be addressed by supporting R&I investments. It also recognises that R&I activities aimed at addressing these challenges should be carried out at EU level and beyond, given the transnational and global nature of climate and the environment, their scale and complexity and the international aspect of the food and agricultural supply chain.

The R&I objectives related to water provision and food systems in the Mediterranean area appear to be consistent with and relevant to the following initiatives.

• The Post-2015 Development Agenda and the Sustainable Development Goals.

• The Barcelona Process launched in November 1995 at the initiative of the Euro-Mediterranean Foreign Ministers and the related Communication Barcelona Process: Union for the Mediterranean (COM(2008)319), which set up a multilateral partnership, focusing on regional and transnational projects.

• The Communication Enhancing and focusing EU international cooperation in research and innovation: A strategic approach (COM(2012)497), which establishes a focus on fostering integration into – or alignment with – the European Research Area (ERA) for the neighbourhood.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The proposal for the PRIMA Programme is based on Article 185 TFEU. This instrument allows the EU, in implementing the multiannual framework programme, to make provision for participation in research and development programmes run by several Member States, in agreement with the Member States concerned, including participation in the structures created for the execution of those programmes.

• Subsidiarity (for non-exclusive competence)

PRIMA is a joint programme based on and composed of national programmes run and activities carried out by the participating Member States and Associated Countries, with the support and participation of the EU.

The Commission’s proposal for Horizon 2020 makes provision for the EU’s participation in PRIMA under Article 185 TFEU. It is the appropriate instrument for the EU to support the initiative since it makes both the coordination of national research programmes and the EU’s participation in the joint programme possible.

The national, bilateral and transnational programmes that have been used so far to improve R&I in water provision and food systems have not proved sufficient to tackle cross-border issues and attract further public and private investments.

On top of that, the challenges of water provision and food systems in the Mediterranean area are complex, interrelated, transnational and multi-sectorial. They require transdisciplinary research and integrated solutions that include innovation. Other factors, such as the social behaviour of rural communities, economic constraints, or the stability of the legal and institutional frameworks, may also be conducive to the adoption of the most appropriate measures. One country alone would hardly be able to cope with such complexity.

The experience of similar Article 185 initiatives shows that action at Union level can produce a well-coordinated and integrated programme by:

6.

a) Attaining the scale and scope needed and getting a critical mass of resources


b) Stimulating leverage effects and having impacts on and implications for the EU’s external policies and migration

7.

c) Contributing to global cooperation and the Southern European Neighbourhood


• Proportionality

The proposal does not go beyond what is necessary to achieve its objectives. Union participation in PRIMA will take place within the limits of the competence provided under the TFEU and will only facilitate and support, including financially, the fulfilment of PRIMA's objectives by the participating states. The participating states will have to work together to better coordinate, align and integrate the relevant national programmes or activities, and ultimately develop a common long-term strategic research agenda.

Please refer also to the impact assessment report, section 6.5.

• Choice of instrument

The conclusions of the stakeholder consultation activities and the analysis and comparison of the options in the impact assessment have shown that Article 185 TFEU is the most appropriate way to achieve the objectives of PRIMA. Article 185 TFEU is also the choice of the participating states.

An Article 185 TFEU initiative is the most efficient and effective mode of intervention to achieve PRIMA’s strategic and specific objectives. An Article 185 TFEU initiative is likely to have the highest overall leverage effect in comparison to other instruments in a stable, long-term and integrated manner.

An Article 185 TFEU would further enable the development of a more equal relationship with neighbourhood countries. The Union and the countries concerned will determine together their mutual priorities, entering a new phase of cooperation, in line with the priorities of the European Neighbourhood Policy.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Stakeholder consultations

Two main consultation activities were organised as part of the PRIMA impact assessment:

• a 12-week online public consultation, from 1 February to 24 April 2016;

• a stakeholder event in Malta on 17 March 2016.

Different European and southern Mediterranean stakeholders from research, academia, industry and civil society gave their views. The preparation of the proposal has taken full account of the many contributions and inputs received.

The consulted stakeholders were largely in favour of an Article 185 option.

• Collection and use of expertise

A group of external experts (the PRIMA Expert Group) from Mediterranean and non-Mediterranean Member States and third countries, was set up to support the impact assessment exercise. The Group’s findings were compared with findings from other sources (for example a literature review carried out by Commission services, results of the online public consultation) and taken into account in the impact assessment.

• Impact assessment

Different possible policy options were identified during the impact assessment, differing in terms of scope, geographical coverage and the type of instrument used. All these options were screened using Tool #14 of the Better Regulation Toolbox. On that basis, the following policy options have been retained.

• Option 0: No policy change - Baseline scenario - Horizon 2020 will continue providing support for water and food issues in general on an ad hoc basis. It is unlikely that dedicated initiatives aimed at integrating Mediterranean R&I systems will be launched. Individual actions would typically last three to four years, with limited impact.

• Option 1: ERA-NET Cofund action – The main activity under Horizon 2020 is the implementation of a single co-funded joint call for proposals for each action, resulting in the funding of transnational research and/or innovation projects. Individual actions would typically last five years. This option would consist of a series of ERA-NET Cofund actions, limited to the remainder of Horizon 2020. It would not allow to address substantially the innovation dimension, since the national programmes that would collaborate and coordinate their activities mainly focus on the research activities of public research organisations. Option 1 is not expected to integrate national funding programmes into a common strategic research agenda.

• Option 2: PRIMA Joint Programme based on Article 185 TFEU – This enables the EU to make provisions for its participation in research and development programmes run by several Member States, including its participation in the structures created for the implementation of those programmes. Article 26 of the Horizon 2020 Framework Programme Regulation specifies the conditions and criteria for identifying and proposing an initiative pursuant to Article 185 TFEU.

Among other criteria, the Commission may only propose Article 185 initiatives if there is a need for a dedicated implementation structure and participating states have expressed a high level of commitment to a closer integration at scientific, management and financial level. This option involves coming up with a comprehensive strategic research agenda and its complete implementation through multiple transnational calls for proposals, undertaken by several Participating States and implemented through a dedicated implementation structure (hereinafter referred to as DIS funding body). This is typically a long-term commitment (ten years). The Union would provide financial support by matching national investments. This option is the best one for achieving the specific and general objectives and implementing a number of pilots and demonstrators in strategically important areas related to water provision and food systems. It takes full account of all the lessons learned – with respect to the management of the Union financial contribution, the achievement of impacts, etc. – from implementing past and ongoing Article 185 initiatives. It is also designed to ensure sound financial management and protect the financial interests of the Union through adequate ex-ante checks, financial reporting and ex-post verification.

Taking into account their likely impacts, these options were compared with each other using the baseline scenario as the reference point and applying the following criteria.

• effectiveness: the proposed options should improve the R&I framework in the Mediterranean area in the fields of water provision and food systems.

• efficiency: the proposed options should achieve the impacts with the greatest cost/benefit ratio.

• consistency with other policies: the proposed options should be consistent with other EU and national R&I policies and programmes and with international coordination and cooperation policies.

Previous and ongoing Article 185 TFEU initiatives show that such an initiative is likely to have a high leverage effect on national public funds in a stable, long-term and integrated manner, helping to:

• deliver the desired structuring effect on national R&I policies and programmes and to integrate them;

• enable the formulation of stable, long-term, common strategic research agendas with the adequate scale and scope of actions;

• support the alignment of national R&I programmes;

• enable the involvement of partner countries on an equal footing;

• enable the structural involvement of different types of stakeholders, both public and private, bringing together and leveraging their respective knowledge and financial resources;

• strengthen R&I capabilities in a lasting manner.


• Fundamental rights

The initiative is consistent with Article 37 on Environmental protection of the Charter of Fundamental Rights of the EU: ‘A high level of environmental protection and the improvement of the quality of the environment must be integrated into the policies of the Union and ensured in accordance with the principle of sustainable development’.

4. BUDGETARY IMPLICATIONS

The Legislative Financial Statement accompanying this decision sets out the indicative budgetary implications. The EU contribution shall be up to EUR 200 million including the EFTA contribution. The envelope is in current prices. The EU contribution shall be made as part of the implementation of Horizon 2020 – the Framework Programme for Research and Innovation.

• From DG Agriculture and Rural Development:

– Societal Challenge 2 ‘Research and innovation related to agriculture – Securing sufficient supplies of safe and high quality food’.

• From DG R&I:

– Societal Challenge 2 ‘Food Security, Sustainable Agriculture and Forestry, Marine, Maritime and Inland Water Research and the Bio-economy’;

– Societal Challenge 5 ‘Climate Action, Environment, Resource Efficiency and Raw Materials’;

– Industrial Leadership.

The maximum amount of the EU contribution to administrative costs is up to 5%. This corresponds to EUR 10 million.

The EU contribution will be managed by the Prima Implementation Structure PRIMA-IS (indirect management of EU funds). Before the delegation of management and transfer of funds the PRIMA-IS will be subject to an ex-ante assessment in accordance with the requirements set out in Article 61 of the Financial Regulation, in order to assess its capacity to implement the programme, including receiving, allocating and monitoring the EU's financial contribution in the framework of indirect management of the EU budget.

The provision of the Decision and of the delegation agreement to be concluded between the Commission and the dedicated implementation structure ensure that the EU financial interests are protected. The risk of non-recovery is covered by the financial guarantees that the Participating States will have to provide in due time and at the latest before the signature of the delegation agreement.


The Participating States and the EU make up-front commitments to contribute to PRIMA. The EU's commitment of €200 million from the current Multiannual Financial Framework will be mainly used to finance indirect actions resulting from calls launched by the PRIMA-IS. This will cover a series of seven Annual Work Plans (2018 – 2024), with the last commitment from the Commission being made in 2020 that will be used for the funding of projects resulting from the calls in the years 2020 – 2024. The Participating States will describe in the Annual Work Plan their activities funded from national programmes and the respective budgets allocated to these activities. Participating States have been made aware of the need to provide substantial commitments already in the first years of programme implementation and front-load the initiative to balance the strong up-front commitment from the Union budget.


The EU contribution to each Annual Work Plan will not exceed the commitment of the participating states to it. This ensures that there is a balance with at least matching contributions of EU funding and Participating States. This allows a mechanism to reduce the EU commitment if participating states fail to commit as expected.


Furthermore, an assessment by the Commission of Participating States commitments undertaken through the first two annual work plans has been foreseen in the legislative proposal as a condition for the EU financial contribution. Following this evaluation, the maximum EU contribution may be reviewed in accordance with the applicable safeguards regarding termination, reduction or suspension of the EU financial contribution, which set out that "If the Participating States do not contribute, contribute partially or late to the financing of PRIMA the Commission may terminate, proportionally reduce or suspend the Union’s financial contribution, taking into account the amount of funding allocated by the Participating States to implement PRIMA."

5. OTHER ELEMENTS

• Annual Work Plans, monitoring, evaluation and reporting arrangements

The PRIMA Annual Work Plans (AWP) will ensure consistency and coordination between all activities and their orientation towards the achievement of the operational, specific and general objectives of PRIMA. The AWP, which is subject to approval by the Commission, will include:

- Transnational calls for proposals to be funded by the PRIMA-IS with EU contribution, in accordance with the Horizon 2020 Rules for Participation;

- Activities only funded by the Participating States, and counting for the matching with the Union contribution under certain conditions. In particular, these activities will be included in the AWP after positive external evaluation by international peer review with regard to the objectives of the PRIMA Joint Programme. They will be implemented in compliance with common principles, to be agreed by the Participating States and the Commission. These activities will include calls between Participating States' programmes for transnational projects, organised by the PRIMA-IS (including proposal evaluations). Activities should increasingly address also the higher Technology Readiness Levels, as defined in the General Annexes to the Horizon 2020 Work Programmes 2 .

The annual reporting of the PRIMA-IS will cover both strands. This allows close monitoring by the Commission services and facilitates taking corrective measures, if necessary, in particular reducing EU commitments to individual Annual Work Plans if the implementation of the activities by Participating States does not maintain the necessary level of commitment to match the one of the EU.

The Directorate-General for Research and Innovation has adopted standard supervision arrangements for Article 185 TFEU initiatives. These arrangements will also apply to the PRIMA Joint Programme. Their effectiveness should be evaluated at both programme level (focusing on whether the overall objectives have been achieved) and national level (focusing on the goals of individual countries).

The responsibilities of the Commission services and those of the PRIMA-IS and the Participating States with regard to monitoring and audit mechanisms are clearly differentiated in the basic act. They will be further developed in the delegation agreement between the Commission and the PRIMA-IS.

An interim and a final independent evaluation are envisaged.

The Commission will also ensure that all actions taken and supported as part of the initiative respect the Charter of Fundamental Rights of the EU.

• Derogations from the Horizon 2020 Rules on Participation

The approach chosen for the Article 185 PRIMA option requires only limited derogations from the Horizon 2020 Rules for Participation. To ensure balanced core participation in indirect actions in a north-south configuration, as a derogation from point (b) of Article 9(1) of Regulation (EU) No 1290/2013, the minimum number of participants should be three legal entities established in three different Participating States, one of which is established in a Member State or in a country associated to Horizon 2020 and one in a third country, associated or not to Horizon 2020. Derogation from Article 9(3) of Regulation (EU) No 1290/2013 is necessary to ensure that the minimum eligibility conditions for participation in indirect actions with a minimum condition of the participation of one legal entity are not discriminatory for entities established in third countries participating in PRIMA as Participating States. This would only apply in the exceptional case that calls for proposals in the annual work plan include mono-beneficiary actions, and subject to the approval of the Commission. Derogations from Article 12 of Regulation (EU) No 1290/2013 are necessary to broaden cooperation through joint calls launched by the PRIMA Implementation Structure with legal entities other than third countries and international organisations.