EUROPEAN COMMISSION Brussels, 22.6.2017 COM(2017) 336 final 2017/0139(NLE) Proposal for a COUNCIL DECISION concerning the renewal of the Agreement for scientific and technological cooperation between the European Community and the Federative Republic of Brazil





EXPLANATORY MEMORANDUM 1.CONTEXT OF THE PROPOSAL •Reasons for and objectives of the proposal The Agreement for scientific and technological cooperation between the European Community and the Federative Republic of Brazil (‘the Agreement’) entered into force on 7 August 2007. Article XII(2) of the Agreement provides that it ‘shall initially be valid for a period of five years and may be renewed by agreement between the Parties after evaluation during the penultimate year of each subsequent renewal period’. The Agreement was last renewed in 2012 and remains in force until 7 August 2017, unless the Parties renew it for the next five-year period. Since the Agreement was last renewed (Decision 2012/646/EU), Brazil has made significant advances in its science, technology and innovation (STI) policy, which has contributed to the institutional strengthening of the STI system. This included an improvement in the number and qualifications of human resources and in R&D infrastructure. Brazil remains at the forefront of research in the field of agriculture, as well as in tropical and infectious diseases. It is also a world-class player in the fields of information and communication technologies, nanotechnologies and energy and it hosts some of Latin America’s top universities. These research areas are of interest to the European Union. The links between Brazil and the EU in science, technology and innovation have been growing through intense cooperation at EU and Member State level. The evaluation carried out by the Commission clearly demonstrates that the Agreement provides an important framework for facilitating cooperation between the EU and Brazil in common S&T priority areas leading to mutual benefits. As Brazil’s potential as a research and innovation partner continues to grow, it should be seen as a strategic partner for the EU in Latin America. The main instruments for cooperation are the EU framework programmes for research and innovation. Among non-Associated third countries, Brazil was the 6th most active country in FP 7 (2007-2013) and the 5th in Horizon 2020 so far. Cooperation between the EU and the Brazilian research community led, among other results, to the development of a new drug for Chagas disease (already registered with Food and Drug Administration to start clinical testing) and to the development of a new biomass pre-treatment process for advanced bioethanol (allowing the set-up of the first commercial advanced bioethanol plant in Europe). It is, therefore, in the EU’s interest to renew the Agreement for scientific and technological cooperation between the European Community and the Federative Republic of Brazil for a new period of five years. Both Parties confirmed their wish to renew the Agreement by exchange of letters, dated 14 November 2016 and 5 January 2017. The substance of the renewed Agreement will be identical to that of the current Agreement, as discussed and agreed with the Brazilian counterpart. •Consistency with existing policy provisions in the policy area This initiative is fully in line with the EU’s international cooperation strategy for research & innovation. The EU’s strategy clearly states the importance of science & technology agreements as vehicles for defining and implementing multiannual roadmaps for cooperation with non-EU countries. The Agreement is also means of implementing the EU’s international cooperation strategy for research and innovation, which calls for more internationalisation and openness in the EU’s research & innovation landscape. •Consistency with other Union policies The EU’s global strategy for the EU’s foreign and security policy confirms that research cooperation is an important aspect of EU foreign policy and sees research cooperation as an essential element of stronger socioeconomic ties, notably with Latin American countries. 2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY •Legal basis The EU’s power to act internationally in research and technological development is based on Article 186 TFEU. The procedural legal basis for the proposal is point (v) of Article 218(6)(a) TFEU. 3.RESULTS OF EX POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS •Regulatory fitness and simplification This initiative is not part of the REFIT agenda.

4.BUDGETARY IMPLICATIONS Only human and administrative resources are required; these are set out in the legislative financial statement. In the light of the above considerations, the Commission requests that the Council: - approves, on behalf of the Union, and with the consent of the European Parliament, the renewal of the Agreement for scientific and technological cooperation between the European Community and the Federative Republic of Brazil which will apply, following the expiry of the five years, for an additional period of five years (i.e., from 08.08.2017 until 07.08.2022) - authorise the President of the Council to designate the person(s) empowered to notify the Government of the Federative Republic of Brazil that the Union has completed the internal procedures necessary for the entry into force of this renewed Agreement 2017/0139 (NLE) Proposal for a COUNCIL DECISION concerning the renewal of the Agreement for scientific and technological cooperation between the European Community and the Federative Republic of Brazil

THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 186, in conjunction with point (v) of Article 218(6)(a) thereof, Having regard to the proposal from the European Commission, Having regard to the consent of the European Parliament, Whereas: (1)By Decision 2005/781/EC, the Council approved the conclusion of the Agreement for scientific and technological cooperation between the European Community and the Federative Republic of Brazil (the ‘Agreement’). (2)The Agreement, in accordance with Article XII, enters into force on the date on which both Parties have notified each other in writing that their respective internal procedures necessary for the Agreement to enter into force have been completed. The Agreement is initially valid for a period of five years and may be renewed by agreement between the Parties after evaluation during the penultimate year of each subsequent renewal period.

(3)By Decision 2012/646/EU, the Council approved the renewal of the Agreement for an additional period of five years. (4)The exchange of letters between the Parties, dated 14 November 2016 and 5 January 2017, confirmed their interest in renewing the Agreement for another five years. (5)As a consequence of the entry into force of the Treaty of Lisbon on 1 December 2009, the European Union has replaced and succeeded the European Community. (6)The renewal of the Agreement should be approved on behalf of the Union, HAS ADOPTED THIS DECISION: Article 1 The renewal of the Agreement for scientific and technological cooperation between the European Community and the Federative Republic of Brazil, for an additional period of five years, is hereby approved on behalf of the European Union. Article 2 The President of the Council shall designate the person(s) empowered to notify the Government of the Federative Republic of Brazil, on behalf of the Union and in accordance with Article XII(2) of the Agreement, that the Union has completed the internal procedures necessary for the entry into force of this renewed Agreement and make the following notification to Brazil: 'As a consequence of the entry into force of the Treaty of Lisbon on 1 December 2009, the European Union has replaced and succeeded the European Community and from that date exercises all rights and assumes all obligations of the European Community. Therefore, references to "the European Community" in the text of the Agreement are, where appropriate to be read as "the European Union".'. Article 3 This Decision shall enter into force on the day of its adoption. Done at Brussels, For the Council The President LEGISLATIVE FINANCIAL STATEMENT 1.FRAMEWORK OF THE PROPOSAL/INITIATIVE 1.1.Title of the proposal/initiative 1.2.Policy area(s) concerned in the ABM/ABB structure

1.3.Nature of the proposal/initiative 1.4.Objective(s) 1.5.Grounds for the proposal/initiative 1.6.Duration and financial impact 1.7.Management mode(s) planned 2.MANAGEMENT MEASURES 2.1.Monitoring and reporting rules 2.2.Management and control system 2.3.Measures to prevent fraud and irregularities 3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE 3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected 3.2.Estimated impact on expenditure 3.2.1.Summary of estimated impact on expenditure 3.2.2.Estimated impact on operational appropriations 3.2.3.Estimated impact on appropriations of an administrative nature 3.2.4.Compatibility with the current multiannual financial framework 3.2.5.Third-party contributions 3.3.Estimated impact on revenue LEGISLATIVE FINANCIAL STATEMENT 1.FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1.Title of the proposal/initiative Proposal for a Council Decision concerning the renewal of the Agreement for scientific and technological cooperation between the European Community and the Federative Republic of Brazil 1.2.Policy area(s) concerned in the ABM/ABB structure Policy strategy and coordination of, in particular, the Directorates-General RTD, AGRI, CLIMA, JRC, EAC, ENER, GROW, CNECT and MOVE. 1.3.Nature of the proposal/initiative ◻ The proposal/initiative relates to a new action ◻ The proposal/initiative relates to a new action following a pilot project/preparatory action ☑ The proposal/initiative relates to the extension of an existing action ◻ The proposal/initiative relates to an action redirected towards a new action 1.4.Objective(s) 1.4.1.The Commission’s multiannual strategic objective(s) targeted by the proposal/initiative The present initiative will allow both Parties to improve and intensify their cooperation in scientific and technological areas of common interest. 1.4.2.Specific objective(s) and ABM/ABB activity(ies) concerned Specific objective No This decision should allow both Parties to enhance the cooperation and develop a more strategic partnership by increasing the scale and scope of existing cooperation, addressing key societal challenges in common and promoting reciprocal access to programmes and funding. It will also allow regional cooperation to increase where appropriate. ABM/ABB activity(ies) concerned 1.4.3.Expected result(s) and impact

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. This decision will allow both Brazil and the European Union to derive mutual benefit from the scientific and technical progress achieved through research in their respective research programmes and ongoing cooperation activities. It will allow for exchange of specific knowledge and transfer of know-how to the benefit of the scientific community, industry and citizens of both Parties. 1.4.4.Indicators of results and impact Specify the indicators for monitoring implementation of the proposal/initiative. The Commission will regularly monitor all actions carried out under the Agreement, including of cooperation activities. This evaluation will cover the following points, among others: (a) cooperation indicators — analysis of the number and type of participation of Brazilian entities in EU funded programmes (e.g. number of proposals, number of signed grant agreements, main collaboration links, main thematic; generated output) and vice-versa (whenever the data is available); (b) performance indicators — success rate of Brazilian entities participating in the EU framework programmes compared to other non-EU countries and to Member States/Associated countries to a Research Framework Programme; analysis of the quality of the participation (e.g. number of best ranked universities taking part on the programme, number of patents and publications coming from collaborative projects); (c) data collection regarding cooperation activities and links beyond the respective research funding programmes and assessment of the impact of these activities, like participation in multilateral initiatives and working groups. 1.5.Grounds for the proposal/initiative 1.5.1.Requirement(s) to be met in the short or long term This decision will allow the two Parties to continue to improve and intensify their cooperation in scientific and technological areas for mutual benefit. 1.5.2.Added value of EU involvement Cooperation in research & innovation between Brazil and the EU and its Member States has been growing steadily in the past years. The involvement of the EU allows activities with larger scale and scope for the benefit of all Member States. The renewal of this Agreement will allow the EU to have easier access to scientific knowledge produced in Brazil and to engage in more cooperation activities leading to additional exchange of knowledge and technologies. It will also provide easier access to the Brazilian market for European companies. 1.5.3.Lessons learned from similar experiences in the past Based on the experience so far in scientific and technological cooperation, it is considered mutually beneficial to continue research cooperation with Brazil, as a strategic partner of the Union in research and innovation. 1.5.4.Compatibility and possible synergy with other appropriate instruments

The renewal of the Agreement with Brazil is considered to be fully consistent with the overall policy framework on international cooperation in research and innovation (COM(2012)497). 1.6.Duration and financial impact ☑ Proposal/initiative of limited duration –☑ Proposal/initiative in effect from 08/08/2017 to 07/08/2022 –☑ Financial impact from YYYY to YYYY ◻ Proposal/initiative of unlimited duration –implementation with a start-up period from YYYY to YYYY, –followed by full-scale operation. 1.7.Management mode(s) planned ☑ Direct management by the Commission –◻ by its departments, including by its staff in the Union delegations; –◻ by the executive agencies ◻ Shared management with the Member States ◻ Indirect management by entrusting budget implementation tasks to: –◻ third countries or the bodies they have designated; –◻ international organisations and their agencies (to be specified); –◻the EIB and the European Investment Fund; –◻ bodies referred to in Articles 208 and 209 of the Financial Regulation; –◻ public law bodies;

–◻ bodies governed by private law with a public service mission to the extent that they provide adequate financial guarantees; –◻ bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that provide adequate financial guarantees; –◻ persons entrusted with the implementation of specific actions in the CFSP pursuant to Title V of the TEU, and identified in the relevant basic act. –If more than one management mode is indicated, please provide details in the ‘Comments’ section. Comments […] 2.MANAGEMENT MEASURES 2.1.Monitoring and reporting rules Specify frequency and conditions. Brazil’s participation in the framework programme is monitored on a regular basis through meetings of the Joint Steering Committee established under Article VI of the Agreement. 2.2.Management and control system 2.2.1.Risk(s) identified Meetings and bilateral contacts take place on a regular basis allowing for the systematic sharing of information and control. No risks have been identified in the control system. 2.2.2.Information concerning the internal control system set up 2.2.3.Estimate of the costs and benefits of the controls and assessment of the expected level of risk of error

2.3.Measures to prevent fraud and irregularities Specify existing or envisaged prevention and protection measures. When the implementation of the framework programme calls for the use of external contractors or entails granting financial contributions to third parties, the Commission will carry out, where appropriate, financial audits, in particular if it has reason to doubt the realistic nature of work performed or described in the activity reports. The Union’s financial audits will be carried out either by its own staff or by accounting experts approved according to the law of the audited party. The Union will choose the latter freely, while avoiding any risks of conflicts of interest which might be indicated to it by the party subject to the audit. In addition, the Commission will make sure, in carrying out the research activities, that the financial interests of the Union are protected by effective checks and, where irregularities are detected, by deterrent and proportionate measures and penalties. In order to achieve this aim, rules on checks, measures and penalties, with reference to Regulations No 2988/95, No 2185/96 and No 1073/99 will be incorporated in all contracts used in the implementation of the framework programme. In particular, the following points will have to be provided for in the contracts: - the insertion of specific clauses in the contracts to protect the financial interests of the EU in carrying out checks and controls in relation to the work performed; - the carrying out of administrative checks as part of anti-fraud measures, in accordance with Regulations No 2185/96, No 1073/1999 and No 1074/1999; - the application of administrative penalties for all intentional or negligent irregularities in the implementation of the contracts, in accordance with the Framework Regulation No 2988/95, including a blacklisting mechanism; - the fact that any recovery orders in the event of irregularities and fraud must be enforceable according to Article 299 of the Treaty on the Functioning of the European Union. In addition and as a routine measure, a programme of checks on scientific and budgetary aspects of cooperation will be carried out by the staff responsible in the Directorate-General (DG) for Research and Innovation. An internal audit will be carried out by the Internal Audit unit of DG Research and Innovation, and local inspections will be carried out by the European Court of Auditors. 3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE 3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected ·Existing budget lines In order of multiannual financial framework headings and budget lines. Heading of multiannual financial framework Budget line Type of

expenditure Contribution Number

[Heading………………………...…………] Diff./Non-diff. from EFTA countries from candidate countries from third countries within the meaning of Article 21(2)(b) of the Financial Regulation 1a 08.01.05 Non-diff. YES YES NO NO ·New budget lines requested In order of multiannual financial framework headings and budget lines.

Heading of multiannual financial framework Budget line Type of

expenditure Contribution Number [Heading………………………………………] Diff./Non-diff. from EFTA countries from candidate countries from third countries within the meaning of Article 21(2)(b) of the Financial Regulation [XX.YY.YY.YY] YES/NO YES/NO YES/NO YES/NO 3.2.Estimated impact on expenditure [This section should be filled in using the spreadsheet on budget data of an administrative nature (second document in annex to this financial statement) and uploaded to CISNET for interservice consultation purposes.] 3.2.1.Summary of estimated impact on expenditure EUR million (to three decimal places) Heading of multiannual financial

framework Number [Heading……………...……………………………………………………………….] DG: <RTD> Year

2017 Year

2018 Year

2019 Year

2020 Year

2021 Year

2022 TOTAL • Operational appropriations Number of budget line Commitments (1) Payments (2) Number of budget line Commitments (1a) Payments (2a) Appropriations of an administrative nature financed from the envelope of specific programmes Number of budget line 08.01.05 (3) TOTAL appropriations

for DG Commitments =1+1a +3 0.024 0.061 0.061 0.061 0.061 0.037 0.305 Payments =2+2a +3 0.024 0.061 0.061 0.061 0.061 0.037 0.305









• TOTAL operational appropriations Commitments (4) Payments (5) • TOTAL appropriations of an administrative nature financed from the envelope for specific programmes (6) 0.024 0.061 0.061 0.061 0.061 0.061 0.037 0.305 TOTAL appropriations

under HEADING <….>

of the multiannual financial framework Commitments =4+ 6 0.024 0.061 0.061 0.061 0.061 0.061 0.037 0.305 Payments =5+ 6 0.024 0.061 0.061 0.061 0.061 0.061 0.037 0.305 If more than one heading is affected by the proposal / initiative: • TOTAL operational appropriations Commitments (4) Payments (5) • TOTAL appropriations of an administrative nature financed from the envelope for specific programmes (6) TOTAL appropriations

under HEADINGS 1 to 4

of the multiannual financial framework

(Reference amount) Commitments =4+ 6 Payments =5+ 6







Heading of multiannual financial

framework 5 ‘Administrative expenditure’ EUR million (to three decimal places) Year

2017 Year

20181 Year

2019 Year

2020 Year

2021 Year 2022 TOTAL DG: <…….> • Human resources • Other administrative expenditure 0.003 0.008 0.008 0.008 0.008 0.005 0.04 TOTAL DG <…….> Appropriations 0.003 0.008 0.008 0.008 0.008 0.005 0.04 TOTAL appropriations

under HEADING 5

of the multiannual financial framework (Total commitments = Total payments) 0.003 0.008 0.008 0.008 0.008 0.005 0.04 EUR million (to three decimal places)

Year

2017 Year

2018 Year

2019 Year

2020 Year 2021 Year 2022 TOTAL TOTAL appropriations

under HEADINGS 1 to 5

of the multiannual financial framework Commitments 0.027 0.069 0.069 0.069 0.069 0.042 0.345 Payments 0.027 0.069 0.069 0.069 0.069 0.042 0.345 3.2.2.Estimated impact on operational appropriations –☑ The proposal/initiative does not require the use of operational appropriations –◻ The proposal/initiative requires the use of operational appropriations, as explained below: Commitment appropriations in EUR million (to three decimal places) Indicate objectives and outputs ⇩ Year

N Year

N+1 Year

N+2 Year

N+3 Enter as many years as necessary to show the duration of the impact (see point 1.6) TOTAL OUTPUTS Type Average cost No Cost No Cost No Cost No Cost No Cost No Cost No Cost Total No Total cost SPECIFIC OBJECTIVE No 1… - Output - Output - Output Subtotal for specific objective No 1 SPECIFIC OBJECTIVE No 2 ... - Output Subtotal for specific objective No 2 TOTAL COST 3.2.3.Estimated impact on appropriations of an administrative nature 3.2.3.1.Summary –◻ The proposal/initiative does not require the use of appropriations of an administrative nature –☑ The proposal/initiative requires the use of appropriations of an administrative nature, as explained below: EUR million (to three decimal places) Year

2017 Year

2018 Year

2019 Year

2020 Year

2021 Year

2022 TOTAL HEADING 5

of the multiannual financial framework Human resources Other administrative expenditure 0.003 0.008 0.008 0.008 0.008 0.005 0.04 Subtotal HEADING 5

of the multiannual financial framework 0.003 0.008 0.008 0.008 0.008 0.005 0.04 Outside HEADING 5

of the multiannual financial framework Human resources 0.024 0.061 0.061 0.061 0.061 0.037 0.305 Other expenditure

of an administrative nature Subtotal

outside HEADING 5

of the multiannual financial framework TOTAL 0.027 0.069 0.069 0.069 0.069 0.042 0.345 The appropriations required for human resources and other expenditure of an administrative nature will be met by appropriations from the DG that are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints. 3.2.3.2.Estimated requirements of human resources

–◻ The proposal/initiative does not require the use of human resources. –☑ The proposal/initiative requires the use of human resources, as explained below: Estimate to be expressed in full time equivalent units Year

2017 Year

2018 Year 2019 Year 2020 Year 2021 Year 2022 • Establishment plan posts (officials and temporary staff) XX 01 01 01 (Headquarters and Commission’s Representation Offices) XX 01 01 02 (Delegations) 08 01 05 01 (Indirect research) 0.2 0.5 0.5 0.5 0.5 0.3 10 01 05 01 (Direct research) • External staff (in Full Time Equivalent unit: FTE) XX 01 02 01 (AC, END, INT from the ‘global envelope’) XX 01 02 02 (AC, AL, END, INT and JED in the delegations) XX 01 04 yy - at Headquarters - in Delegations XX 01 05 02 (AC, END, INT — Indirect research) 10 01 05 02 (AC, END, INT — Direct research) Other budget lines (specify) TOTAL 0.2 0.5 0.5 0.5 0.5 0.3 XX is the policy area or budget title concerned. The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints. Description of tasks to be carried out: Officials and temporary staff Preparation and management of Joint Committee Meetings as provided for in Article VI of the Agreement, as well as follow-up of functioning and implementation of the Agreement. Calculations are done proportionally considering the duration of the Agreement. External staff 3.2.4.Compatibility with the current multiannual financial framework –☑ The proposal/initiative is compatible the current multiannual financial framework. –◻ The proposal/initiative will entail reprogramming of the relevant heading in the multiannual financial framework. Explain what reprogramming is required, specifying the budget lines concerned and the corresponding amounts. –◻ The proposal/initiative requires application of the flexibility instrument or revision of the multiannual financial framework. Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts. 3.2.5.Third-party contributions –☑ The proposal/initiative does not provide for co-financing by third parties. –The proposal/initiative provides for the co-financing estimated below: Appropriations in EUR million (to three decimal places)