INTERNATIONAL AGREEMENT

between the European Union, of the one part, and the Republic of North Macedonia, of the other part, on the participation of North Macedonia in the Union programme Horizon Europe – the Framework Programme for Research and Innovation





The European Commission (hereinafter referred to as ‘the Commission’), on behalf of the European Union,

of the one part,

and

the Government of the Republic of North Macedonia (hereinafter referred to as ‘North Macedonia’),

of the other part,

hereinafter referred to as ‘the Parties’,

WHEREAS the Protocol to the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Former Yugoslav Republic of Macedonia, of the other part, on a Framework Agreement between the European Community and the Former Yugoslav Republic of Macedonia on the general principles for the participation of the Former Yugoslav Republic of Macedonia in Community programmes (1) stipulates that the specific terms and conditions regarding the participation of North Macedonia in each particular programme, in particular the financial contribution payable, are to be determined by agreement in the form of a Memorandum of Understanding (2), between the Commission, and the competent authorities of North Macedonia;

WHEREAS the European Union programme Horizon Europe - the Framework Programme for Research and Innovation was established by Regulation (EU) 2021/695 of the European Parliament and of the Council (3) (hereinafter referred to it as ‘Horizon Europe Programme’);

CONSIDERING the European Union’s efforts to lead the response by joining forces with its international partners to address global challenges in line with the plan of action for people, planet and prosperity in the United Nations Agenda ‘Transforming our World: the 2030 Agenda for Sustainable Development’, and acknowledging that research and innovation are key drivers and essential tools for innovation-led sustainable growth, for economic competitiveness and attractiveness;

RECOGNISING the general principles as set out in Regulation (EU) 2021/695;

ACKNOWLEDGING the objectives of the renewed European Research Area to build a common scientific and technological area, create a single market for research and innovation, foster and facilitate the cooperation between universities and the exchange of best practices and attractive research careers, facilitate cross-border and inter-sectoral mobility of researchers, foster free movement of scientific knowledge and innovation, promote the respect of academic freedom and freedom of scientific research, support science education and communication activities, and encourage competitiveness and attractiveness of participating economies, and that associated countries are key partners in this endeavor;

EMPHASISING the role of the European Partnerships addressing some of Europe’s most pressing challenges through concerted research and innovation initiatives contributing significantly to those European Union’s priorities in the area of research and innovation that require critical mass and long-term vision and the importance of associated countries’ involvement in those Partnerships;

CONSIDERING that research and innovation have proven instrumental in the Western Balkan region for cooperation and funding of joint research and innovation projects enabling mutual access to excellence, knowledge, innovation, network and research resources. It has provided valuable opportunities for human development, amplifying the chances of success in finding joint solutions to regional and global challenges.

SEEKING to establish mutually advantageous conditions in order to create decent jobs, to strengthen and support innovation ecosystems of the Parties by helping enterprises to innovate and scale up in the markets of the Parties and facilitating the uptake as well as deployment and accessibility of innovation, including capacity building activities;

RECOGNISING that reciprocal participation in each other's research and innovation programmes should provide mutual benefits; while acknowledging that the Parties reserve their right to limit or condition participation in their research and innovation programmes including in particular for actions related to their strategic assets, interests, autonomy or security;

CONSIDERING that the common goals, values and strong links of the Parties in the field of research and innovation, established in the past through the Association Agreements to the subsequent Framework Programmes, and recognising the common desire of the Parties to further develop, strengthen, stimulate and extend their relations and cooperation therein,

HAVE AGREED AS FOLLOWS:

Article 1 Scope of the association 1. North Macedonia shall participate as an associated country in and contribute to all parts of the Horizon Europe Programme - the Framework Programme for Research and Innovation (the Horizon Europe Programme) referred to in Article 4 of Regulation (EU) 2021/695 and implemented through the specific programme established by Decision (EU) 2021/764 (4), in their most up to date versions, and through a financial contribution to the European Institute of Innovation and Technology. 2. Regulation (EU) 2021/819 of the European Parliament and of the Council (5), and Decision (EU) 2021/820 (6), in their most up to date versions, shall apply to the participation legal entities of North Macedonia in Knowledge and Innovation Communities.

Article 2 Terms and conditions of participation in the Horizon Europe Programme 1. North Macedonia shall participate in the Horizon Europe Programme in accordance with the conditions laid down in the Protocol to the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Former Yugoslav Republic of Macedonia, of the other part, on a Framework Agreement between the European Community and the Former Yugoslav Republic of Macedonia on the general principles for the participation of the Former Yugoslav Republic of Macedonia in Community programmes, and under the terms and conditions set forth in this Agreement, in the legal acts referred to in Article 1 of this Agreement, as well as in any other rules pertaining to the implementation of the Horizon Europe Programme, in their most up to date versions. 2. Unless otherwise provided for in the terms and conditions referred to in paragraph 1 of this Article, including in implementation of Article 22(5) of Regulation (EU) 2021/695, legal entities established in North Macedonia may participate in indirect actions of the Horizon Europe Programme under conditions equivalent to those applicable to legal entities established in the European Union, including respect for the European Union restrictive measures (7). 3. Before deciding on whether legal entities established in North Macedonia are eligible to participate in an action related to European Union’s strategic assets, interests, autonomy or security under Article 22(5) of Regulation (EU) 2021/695, the Commission may request specific information or assurances, such as: a) information whether reciprocal access has been or will be granted to legal entities established in the European Union to existing and planned programmes, measures, projects, instruments or parts thereof of North Macedonia equivalent to the Horizon Europe action concerned; b) information whether North Macedonia has in place a national investment screening mechanism and assurances that authorities of North Macedonia will report on and consult the Commission on any possible cases where in application of such a mechanism they have become aware of planned foreign investment/takeover by an entity established or controlled from outside North Macedonia of a legal entity established in North Macedonia, which has received Horizon Europe funding in actions related to European Union’s strategic assets, interests, autonomy or security, provided that the Commission supplies North Macedonia with the list of the relevant legal entities established in North Macedonia following the signature of grant agreements with these entities; and c) assurances that none of the results, technologies, services and products developed under the concerned actions by entities established in North Macedonia shall be subject to restrictions on their export to EU Member States during the action and for four years after the end of the action. North Macedonia will share an up-to-date list of subjects of national export restrictions on annual basis, during the action and for four years after the end of the action. 4. Legal entities established in North Macedonia may participate in the activities of the Joint Research Centre (JRC) under terms and conditions equivalent to those applicable to legal entities established in the European Union unless limitations are necessary to ensure consistency with the scope of participation stemming from the implementation of paragraph 2 and 3 of this Article. 5. Where the European Union implements the Horizon Europe Programme through the application of Articles 185 and 187 of the Treaty on the Functioning of the European Union, North Macedonia and legal entities of North Macedonia may participate in the legal structures created under those provisions, in conformity with the European Union legal acts that have been or will be adopted for the establishment of those legal structures. 6. Representatives of North Macedonia shall have the right to participate as observers in the committee referred to in Article 14 of Decision (EU) 2021/764, without voting rights and for points which concern North Macedonia. These committees shall meet without the presence of representatives of North Macedonia at the time of the voting. North Macedonia will be informed of the result. Participation as referred to in this paragraph shall take the same form including procedures for receipt of information and documentation, as that applicable to representatives of Members States of the European Union. 7. North Macedonia rights of representation and participation in the European Research Area Committee and its subgroups shall be those applicable to associated countries. 8. Representatives of North Macedonia shall have the right to participate as observers in the Board of Governors of the JRC, without voting rights. Subject to that condition, such participation shall be governed by the same rules and procedures as those applicable to representatives of Member States of the European Union, including speaking rights and procedures for receipt of information and documentation in relation to a point that concerns North Macedonia. 9. North Macedonia may participate in a European Research Infrastructure Consortium (ERIC) in accordance with Council Regulation (EC) No 723/2009 (8), in its most up to date version, and with the legal act establishing the ERIC. 10. Travel costs and subsistence expenses incurred by representatives and experts of North Macedonia for the purposes of taking part as observers in the work of the committee referred to in Article 14 of Decision (EU) 2021/764, or in other meetings related to the implementation of the Horizon Europe Programme, shall be reimbursed by the European Union on the same basis as and in accordance with the procedures in force for representatives of the Member States of the European Union. 11. The Parties shall make every effort, within the framework of the existing provisions, to facilitate the free movement and residence of scientists participating in the activities covered by this Agreement and to facilitate cross-border movement of goods and services intended for use in such activities. 12. North Macedonia shall take all necessary measures, as appropriate, to ensure that goods and services, purchased in North Macedonia or imported into North Macedonia, which are partially or entirely financed pursuant to the grant agreements and/or contracts concluded for the realisation of the activities in accordance with this Agreement, are exempted from customs duties, import duties and other fiscal charges, including the VAT, that are applicable in North Macedonia.

Article 3 Financial contribution 1. Participation of North Macedonia or legal entities of North Macedonia in the Horizon Europe Programme shall be subject to North Macedonia contributing financially to the Programme and the related management, execution and operation costs under the general budget of the European Union (hereinafter referred to as the ‘Union budget’). 2. The financial contribution shall take the form of the sum of: a) an operational contribution; and b) a participation fee. 3. The financial contribution shall take the form of an annual payment made in one instalment, and shall be due at the latest in May. 4. The operational contribution shall cover operational and support expenditure of the Programme and be additional both in commitment and payment appropriations to the amounts entered in the Union budget definitively adopted for the Horizon Europe Programme, including any appropriations corresponding to decommitments made available again as referred to in Article 15(3) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (9), in its most up to date version (hereinafter referred to as ‘the Financial Regulation’), and increased by external assigned revenue that does not result from financial contributions to the Horizon Europe Programme from other donors (10). For external assigned revenue allocated to Horizon Europe Programme under Article 3.1 of Council Regulation (EU) 2020/2094 establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis (11), this increase shall correspond to annual appropriations indicated in the documents accompanying the Draft Budget with regard to the Horizon Europe Programme. 5. The initial operational contribution shall be based on a contribution key defined as the ratio of the Gross Domestic Product (GDP) of North Macedonia at market prices to the GDP of the European Union at market prices. The GDPs at market prices to be applied shall be determined by the dedicated Commission services based on the most recent statistical data available for budget calculations in the year prior to the year in which the annual payment is due. By derogation, for 2021, the initial operational contribution shall be based on the GDP of the year 2019 at market prices. Adjustments to this contribution key are laid down in Annex I. 6. The initial operational contribution shall be calculated applying the contribution key, as adjusted, to the initial commitment appropriations entered in the European Union budget definitively adopted for the applicable year for financing the Horizon Europe Programme, increased in accordance with paragraph 4 of this Article. 7. The participation fee shall be 4 % of the annual initial operational contribution as calculated in accordance with paragraph 5 and 6 of this Article and shall be phased in as set out in Annex I. The participation fee shall not be subject to retrospective adjustments or corrections. 8. The initial operational contribution for a year N may be adjusted upwards or downwards retrospectively in one or more subsequent years on the basis of the budgetary commitments made on the commitment appropriations of that year N, increased in accordance with paragraph 4 of this Article, their implementation through legal commitments and their de-commitments. The detailed provisions for the implementation of this Article are set out in Annex I. 9. The European Union shall provide North Macedonia with information in relation to its financial participation as included in the budgetary, accounting, performance and evaluation related information provided to the European Union budgetary and discharge authorities concerning the Horizon Europe Programme. That information shall be provided having due regard to the European Union’s and North Macedonia confidentiality and data protection rules and shall be without prejudice to the information which North Macedonia is entitled to receive under Annex III. 10. All contributions of North Macedonia or payments from the European Union, and the calculation of amounts due or to be received shall be made in euro.

Article 4 Automatic correction mechanism 1. An automatic correction mechanism of the initial operational contribution of North Macedonia for year N, as adjusted in accordance with Article 3(8), shall apply and shall be calculated in year N+2. It shall be based on the performance of North Macedonia and legal entities of North Macedonia in the parts of the Horizon Europe Programme which are implemented through competitive grants financed from commitment appropriations from the year N, increased in accordance with Article 3(4). The amount of the automatic correction shall be calculated based on the difference between: a) the initial amounts of the legal commitments for competitive grants actually entered into with North Macedonia or legal entities of North Macedonia financed from commitment appropriations of the year N, increased in accordance with Article 3(4); and b) the corresponding operational contribution of the year N paid by North Macedonia as adjusted pursuant Article 3(8), excluding non-intervention costs financed from commitment appropriations from the year N, increased in accordance with Article 3(4). 2. Where the amount referred to in paragraph 1, whether that amount is positive or negative, exceeds 8 % of the corresponding initial operational contribution as adjusted pursuant to Article 3(8), the initial operational contribution of North Macedonia for year N shall be corrected. The amount due by or to be received by North Macedonia as an additional contribution or reduction of the contribution of North Macedonia under the automatic correction mechanism shall be the amount exceeding this 8 % threshold. The amount below this threshold of 8 % will not be taken into account in calculating the additional contribution due or compensated. 3. Detailed rules on the automatic correction mechanism are laid down in Annex I.

Article 5 Reciprocity 1. Legal entities established in the European Union may participate in programmes, measures, projects, instruments or parts thereof of North Macedonia equivalent to the Horizon Europe Programme, in accordance with the internal legislative regulations of North Macedonia. 2. The non-exhaustive list of the equivalent programmes, measures, projects, instruments or parts thereof of North Macedonia is provided in Annex II. 3. Funding of legal entities established in the Union by North Macedonia shall be subject to the legislation of North Macedonia governing the operation of research and innovation programmes, measures, projects, instruments or parts thereof. Where funding is not provided, legal entities established in the Union may participate with their own means.

Article 6 Open Science The Parties shall mutually promote and encourage open science practices in their programmes, measures, projects and instruments in accordance with the rules of the Horizon Europe Programme and the internal legislative regulations of North Macedonia.

Article 7 Monitoring, Evaluation and Reporting 1. Without prejudice to the responsibilities of the Commission, the European Anti-Fraud Office (OLAF) and the Court of Auditors of the European Union in relation to monitoring and evaluation of the Horizon Europe Programme, the participation of North Macedonia in that Programme shall be continuously monitored on a partnership basis involving the Commission and North Macedonia. 2. The rules concerning sound financial management, including the financial control, recovery and other antifraud measures in relation to European Union funding under this Agreement are laid down in Annex III.

Article 8 EU- North Macedonia Joint Research and Innovation Committee 1. The EU-North Macedonia Joint Research and Innovation Committee is hereby established (hereinafter referred to as ‘EU-North Macedonia Joint Committee’). The tasks of the EU-North Macedonia Joint Committee shall include: a) assessing, evaluating and reviewing the implementation of this Agreement, in particular: (i) the participation and performance of the legal entities of North Macedonia in the Horizon Europe Programme; (ii) the level of (mutual) openness to the legal entities established in each Party to participate in programmes, measures, projects, instruments or parts thereof of the other Party; (iii) the implementation of the financial contribution mechanism and the automatic correction mechanism in accordance with Article 3 and 4; (iv) information exchange and examining any possible questions on the exploitation of results, including intellectual property rights; b) discussing upon request of either Party restrictions applied or planned by the Parties on access to their respective research and innovation programmes, including in particular for actions related to their strategic assets, interests, autonomy or security; c) examining how to improve and develop cooperation; d) discussing jointly the future orientations and priorities of policies related to research and innovation and research planning of common interest; and e) exchanging information, inter alia, on new legislation, decisions or national research and innovation programmes that are relevant for the implementation of this Agreement. 2. The EU-North Macedonia Joint Committee, which shall be composed of representatives of the European Union and of North Macedonia, shall adopt its Rules of Procedure. 3. The EU-North Macedonia Joint Committee may decide to set up any working party/advisory body on an ad hoc basis at expert level that can assist in carrying out the implementation of this Agreement. 4. The EU-North Macedonia Joint Committee shall meet at least once a year, and, whenever special circumstances so require, at the request of any of the Parties. The meetings shall be organised and hosted alternately by the European Union and by the responsible National Authority of North Macedonia. 5. The EU-North Macedonia Joint Committee shall work on an on-going basis through an exchange of relevant information by any means of communication, in particular in relation to the participation/performance of the legal entities of North Macedonia. The EU-North Macedonia Joint Committee may in particular conduct its tasks in writing whenever the need arises.

Article 9 Final provisions 1. This Agreement shall enter into force on the date on which the Parties have notified each other of the completion of their internal procedures necessary for that purpose. 2. This Agreement shall apply from 1 January 2021. It shall remain in force for as long as is necessary for all the projects, actions, activities or parts thereof financed from the Horizon Europe Programme, all the actions necessary to protect the financial interests of the European Union and all the financial obligations stemming from the implementation of this Agreement between the Parties to be completed. 3. The European Union and North Macedonia may apply this Agreement provisionally in accordance with their respective internal procedures and legislation. The provisional application shall begin on the date on which the Parties have notified each other of the completion of their internal procedures necessary for that purpose. 4. Should North Macedonia notify the Commission acting on behalf of the European Union that it will not complete its internal procedures necessary for the entry into force of this Agreement, this Agreement shall cease to apply provisionally on the date of receipt of this notification by the Commission, which shall constitute the cessation date for the purposes of this Agreement. 5. The application of this Agreement may be suspended by the European Union in case of partial or full non-payment of the financial contribution due by North Macedonia under this Agreement. In case of non-payment which may significantly jeopardise the implementation and management of the Horizon Europe Programme, the Commission shall send a formal letter of reminder. Where no payment is made within 20 working days after the formal letter of reminder, suspension of the application of this Agreement shall be notified by the Commission to North Macedonia by a formal letter of notification which shall take effect 15 days following the receipt of this notification by North Macedonia. In case the application of this Agreement is suspended, legal entities established in North Macedonia shall not be eligible to participate in award procedures not yet completed when the suspension takes effect. An award procedure shall be considered completed when legal commitments have been entered into as a result of that procedure. The suspension does not affect the legal commitments entered into with the legal entities established in North Macedonia before the suspension took effect. This Agreement shall continue to apply to such legal commitments. The European Union shall immediately notify North Macedonia once the entire amount of the financial contribution due has been received by the European Union. The suspension shall be lifted with an immediate effect upon this notification. As of the date when the suspension is lifted, legal entities of North Macedonia shall be again eligible in award procedures launched after this date and in award procedures launched before this date, for which the deadlines for submission of applications has not expired. 6. Either Party may terminate this Agreement at any time by a written notification informing of the intent to terminate it. The termination shall take effect three calendar months after the date on which the written notification reaches its addressee. The date on which the termination takes effect shall constitute the termination date for the purposes of this Agreement. 7. Where this Agreement ceases to apply provisionally in accordance with paragraph 4 of this Article or is terminated in accordance with paragraph 6 of this Article, the Parties agree that: (a) projects, actions, activities or parts thereof in respect of which legal commitments have been entered into during the provisional application and/or after the entry into force of this Agreement, and before this Agreement ceases to apply or is terminated shall continue until their completions under the conditions laid down in this Agreement; (b) the annual financial contribution of the year N during which this Agreement ceases to apply provisionally or is terminated shall be paid entirely in accordance with Article 3. The operational contribution of the year N shall be adjusted in accordance with Article 3(8) and corrected in accordance with Article 4 of this Agreement. The participation fee paid for the year N shall not be adjusted or corrected; (c) following the year during which this Agreement ceases to apply provisionally or is terminated, the initial operational contributions paid for the years during which this Agreement applied shall be adjusted in accordance with Article 3(8) and shall be automatically corrected in accordance with Article 4 of this Agreement. The Parties shall settle by common consent any other consequences of termination or cessation of provisional application of this Agreement. 8. This Agreement may only be amended in writing by common consent of the Parties. The entry into force of the amendments will follow the same procedure as that applicable for the entry into force of this Agreement. 9. The Annexes to this Agreement shall form an integral part of this Agreement. This Agreement shall be drawn up in duplicate in English and Macedonian, each text being equally authentic. In case of divergence of the interpretation, the English text shall prevail.

Done at Brussels, this 6th day of December and at Skopje, this 30th day of November in the year 2021. For the Commission, on behalf of the European Union, Mariya GABRIEL Commissioner for Innovation, Research, Culture, Education and Youth For the Government of North Macedonia, Mila CAROVSKA Minister of Education and Science

(1) OJ L 192, 22.7.2005, p. 23.

(2) This Agreement constitutes and has the same legal effects as the Memorandum of Understanding stated under the Protocol to the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Former Yugoslav Republic of Macedonia, of the other part, on a Framework Agreement between the European Community and the Former Yugoslav Republic of Macedonia on the general principles for the participation of the Former Yugoslav Republic of Macedonia in Community programmes.

(3) Regulation (EU) 2021/695 of the European Parliament and of the Council of 28 April 2021 establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination, and repealing Regulations (EU) No 1290/2013 and (EU) No 1291/2013 (OJ L 170, 12.5.2021, p. 1).

(4) Council Decision (EU) 2021/764 of 10 May 2021 establishing the Specific Programme implementing Horizon Europe – the Framework Programme for Research and Innovation, and repealing Decision 2013/743/EU (OJ L 167 I, 12.5.2021, p. 1).

(5) Regulation (EU) 2021/819 of the European Parliament and of the Council of 20 May 2021 on the European Institute of Innovation and Technology (recast) (OJ L 189, 28.5.2021, p. 61.).

(6) Decision (EU) 2021/820 of the European Parliament and of the Council of 20 May 2021 on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT) 2021-2027: Boosting the Innovation Talent and Capacity of Europe and repealing Decision No 1312/2013/EU (OJ L 189, 28.5.2021, p. 91.).

(7) The EU restrictive measures are adopted pursuant to Article 29 of the Treaty on the European Union or Article 215 of the Treaty on the Functioning of the European Union.

(8) Council Regulation (EC) No 723/2009 of 25 June 2009 on the Community legal framework for a European Research Infrastructure Consortium (ERIC) (OJ L 206, 8.8.2009, p. 1.).

(9) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

(10) This includes notably the resources from the European Union Recovery Instrument established by Council Regulation (EU) 2020/2094 of 14 December 2020 establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis (OJ L 433 I, 22.12.2020, p. 23).

(11) OJ L 433 I, 22.12.2020, p. 23.