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**COMMISSION** **OF** **THE EUROPEAN COMMUNITIES**

  - s i c * *

_•ir_ _-it_

**Brussels, 19.07.1996**
COM(96)344 final

**COMMUNICATION FROM THE COMMISSION**

_**Promoting RTD**_ _**cooperation**_ _**with the**_ _**world's**_ _**emerging economies**_

###### **_Promoting RTD cooperation with the world's emerging economies_**

**Foreword**

On 20 October 1995, the Commission submitted to Council a communication on
_"Perspectives_ _for International Cooperation in Research and Technological_
_Development"._ This communication provides global orientations for cooperation
policies with third countries outside the Union.

An important feature of the above-mentioned communication is that it singles out
various groups of countries (Europe and her neighbours; Highly industrialised
countries; Developing countries; Emerging economies - NICs), and urges the Union
to address them selectively, by tailoring appropriate cooperation schemes and
instruments.

The communication in object addresses the so called _"Emerging_ _Economies"_ and
recommends to implement with these countries a new cooperation frame, capable to
meet the global challenge posed by their booming industrialisation.

**Emerging Economics**

This name designates a group of developing countries currently involved in deep
economic reforms and undergoing rapid industrialisation. These countries differ from
the _"less_ _advanced developing countries"_ because they display a marked dual
character and behaviour, with large zones of poverty and archaic infrastructure
bordered by oases of leading-edge technology. Examples of emerging economies are
China, India, Brazil, as well, as other countries mainly located in South East Asia and
Latin America.

Emerging economies are, at the same time, legitimate candidates for development
cooperation and strong competitors in some sectors of trade. It follows that if the
Union wants to address the dual features of their S&T apparatus, it should also
dispose of a dual cooperation scheme. Thus, the communication in object: _"Promoting_
_RTD_ _cooperation_ _with the world's_ _emerging_ _economies'',_ recommends to complement
the current "problem-solving" approach of the INCO-DC programme, conceived to
tackle specific problems of the developing world, with a new "opportunity-oriented"
cooperation initiative aiming at high-technology sectors conducive to the promotion
of European S&T innovation on the emerging markets.

## **_i_**

Tackling the developed segment of **Emerging** **Economies**

The policy driving the new cooperation initiative is similar to that currently in force
with the _"Industrialised countries outside Europe",_ and is grounded on two basic
principles:

- the main objective of the cooperating parties shall be that of achieving mutual
benefit;

- the major task of RTD cooperation will be that of triggering industrial cooperation.

Corollaries to the above principles, are the reciprocal opening of RTD activities, the
co-financing of joint projects and the development of appropriate conventions
securing effective protection and equitable distribution of intellectual property rights.

The implementation of the above principles and corollaries requires the possibility of
opening to selected countries the Community research programmes. To do so, the
Commission should dispose of a legal base which, for programmes not unilaterally
opened for participation to all third countries (Article 8 opening), can only be
provided by the conclusion of country-specific S&T cooperation agreements.

In preparation of such a major thrust of RTD cooperation with the emerging
economies, the communication in object foresees an action plan aimed at the
exploitation of the whole range of opportunities offered by the current institutional
framework. This will comprise:

- the promotion of the participation of EEs' research institutions in specific
programmes of the 4th Framework Programme;

- the identification of a hard core of narrowly defined topics, where RTD
cooperation is expected to have clear potential industrial spin-offs;

—
the launch of a substantial scheme of exchange of scientists and the organisation of
a series of targeted scientific workshops;

— whenever it proves necessary and in the framework of the external relations policy
and its instruments (Framework Agreement and Joint Committee), the conclusion
of a complementary Science and Technology cooperation agreement with an
emerging economy.

The execution of the above plan will result in the creation of a web of scientific
partnerships in targeted areas. It will also lay down the bases necessary to foster
further collaborative ventures on a larger scale.

The communication in object also stresses the highly instrumental role that S&T
cooperation agreements may play in the setting up of new, structured relationships
with these countries of particular strategic interest for the Union.

**C O M M U N I C A T I O N F R O M T H E C O M M I S S I O N**

_**Promoting RTD**_ _**cooperation with the**_ _**world's**_ _**emerging**_ _**economies**_

Foreword

Global orientations for Community's S&T cooperation with third countries were presented in
the Commission's Communication: _**"Perspectives**_ _**for**_ _**International Cooperation**_ _**in Research**_
_and Technological_ _Development'*,_ issued on 18 October 1995. A section of this document,
quoted below, pinpoints the common features of a group of countries, referred to as _"emerging_
_economies",_ and urges the Union to address them with appropriate RTD cooperation actions.

_After the experience of the debt crisis in the_ _1980s_ _several_ _developing countries_ _in Latin America and_
_Asia_ _reformed their economic_ _policy_ _successfully._ _(...)_ _They have become_ _a target for foreign_ _investment_
_from_ _industrialised countries_ _and_ _a_ _meeting place for_ _global competitors_ _(e.g._ _China,_ _India,_ _Brazil_ _etc.)._

_In spite of their economic success, significant parts of their societies still share development_
_deficiencies._ _RTD_ _operation sometimes lack refinement_ _or_ _environmental_ _and_ _health_ _requirement,_ _while,_
_on the other_ _hand,_ _they have proved able to leapfrog_ _traditional_ _steps in technological development._
_Thus, emerging economies appear as partners for RTD cooperation under two different aspects._
_Objectives for EU_ _cooperation_ _with these_ _countries therefore_ _refer,_ _on the one_ _hand,_ _to those valid for_
_developing_ _countries_ _and, on the_ _other_ _hand,_ _to the_ _acquisition_ _of_ _knowledge_ _relevant for an improved_
_production of environmental and socially sustainable technologies. To increase also European_
_competitiveness,_ _cooperative RTD will focus on_ _emerging_ _markets._
_(...)_
_The development_ _of some of_ _these countries_ _may_ _evolve_ _in_ _such_ _a_ _way_ _that it might_ _become interesting_ _to_
_conclude_ _bilateral_ _RTD agreements providing for project-by-project participation on a_ _reciprocal_ _basis._

Drawing on the above arguments, the present Communication provides more detailed analysis
on why the Union should endeavour to boost RTD cooperation with emerging economies, and
how this can be achieved within the current institutional framework. It is also intended to fuel

the overall reflexions on RTD cooperation with third countries in view of the fifth Framework
Programme and can clear the ground toward possible negotiations to establish bilateral RTD
cooperation agreements with selected emerging economies of particular strategic interest for
the Union.

The dual features of emerging economies

We are using the term _"emerging economies"_ to designate those developing countries
currently involved in deep economic reforms, notably liberalisation, and undergoing rapid
industrialisation. As the term _"emerging"_ infers, these countries are still confronted, although
to different extents, with the typical problems of the developing world. They are, however,

1 Research and Technological Development, including demonstration
2 COM(95)489

#### **2ft**

well advanced in the process of industrialisation and dispose of real scientific and
technological capabilities in various leading-edge sectors.

According to the above definition, several countries in the world can reasonably claim an
"emerging economy" status. Some of them, however, are growing at such a high rate and their
potential markets are so vast that their eventual "emergence" will have a tremendous impact
on the global economy. As already mentioned in the previous Communication, China, India
and Brazil are examples of such emerging economies, of vital importance for the Union.

For emerging economies with continental-scale populations and equally large economies, the
process of transformation from a _"developing"_ to an _"industrialised"_ society may take a long
period of time. During this time the countries display a dual character and behaviour, with
zones of poverty and archaic infrastructure neighbouring oases of leading-edge technology.

_**Science in**_ _**China**_

_Remote_ _Urumky (Xinjiang)_ _tracks satellites and boasts a 25-meter radio telescope that is part of_ _the_ _global_
_Very_ _Long_ _Baseline_ _Array to_ _observe_ _the_ _most distant objects_ _in the_ _universe._

_Semitropical_ _Hainan island is the site of field_ _tests_ _of genetically modified plants on a scale unknown in the_

_West._

_Hefei,_ _provincial capital_ _ofAnhui_ _is home to elite_ _University_ _of_ _Science_ _and_ _Technology_ _of China, the national_
_synchrotron radiation_ _lab,_ _and_ _four_ _Chinese Academy_ _of Science_ _institutes._

_Industrial Shenyang_ _(Liaoning),_ _is home to the_ _highly_ _rated_ _Institute_ _of_ _Metal_ _Science,_ _specializing in advanced_
_amorphous_ _metals._

_Municipal and_ _regional authorities_ _of_ _Shanghai are_ _pumping funds into Fudan and_ _other_ _major_ _universities,_ _a_
_new life science research_ _centre,_ _a_ _biotech_ _park,_ _and a_ _3.5-generation_ _synchrotron facility to join the_ _16_ _CAS_
_institutes and_ _24 state key_ _labs_ _in a_ _bid_ _for_ _high-tech_ _leadership._

_With_ _less than 20 months left before Beijing takes_ _over,_ _Hong Kong is going_ _all_ _out to become an R&D base_
_for_ _China._ _The ultramodern University_ _of_ _Science_ _and_ _Technology aspires_ _to be China's_ _top scientific_ _centre by_
_decade's_ _end._

_**Indian software**_ _**in the**_ _**world**_

_Commuters on the London_ _underground_ _probably do not realise that they have a Bombay-based computer_
_company to thank when the_ _trains_ _run on time._

_Elsewhere,_ _passenger travelling on_ _many international_ _airlines,_ _should_ _thank Indian software_ _companies_ _for_
_ensuring_ _most aircraft_ _leave on lime._

_In the_ _manufacturing_ _sector,_ _several American companies use software developed in_ _India._

_An important European society uses a distribution management_ _application_ _package designed and built by_
_Indian scientists_ _to_ _integrate_ _sales forecasting._

_Even the_ _Barcelona Olympics_ _relied on Indian_ _software engineers_ _from_ _a_ _Delhi-based company_ _who designed_
_a system for TV graphics._

_While North America and Europe are_ _still_ _asleep,_ _programmers_ _in_ _Bangalore_ _are_ _maintaining software systems_
_and fixing_ _"bugs "forfinancial services companies_ _around the_ _world,_ _using_ _high_ _speed_ _satellite_ _data_ _links._

#### **2ê**

_Brazil: physicists hand-build a synchrotron_

_Campinas._ _-On_ _a_ _hilltop_ _on the_ _outskirts_ _of this_ _university_ _town in_ _southeastern_ _Brazil,_ _physicists and_ _artisans_
_have been engaged for_ _the_ _past_ _10_ _years in a_ _unique_ _and,_ _many would say,_ _wildly ambitious_ _project._ _They_ _are_
_building an electron_ _storage_ _ring:_ _a_ _29-meter-diameter_ _accelerator for_ _electrons._ _Within_ _a year, if it all_ _goes_ _as_
_planned,_ _the ring_ _will_ _spring to life as the heart of the first and only_ _synchrotron_ _light_ _source_ _in the Southern_
_Hemisphere._

Because of their dual features, emerging economies are, at the same time, legitimate candidates
for development cooperation, strong competitors in some sectors of trade and a currently
expanding market which will reach very important dimensions in the years to come.
Development concerns have thus to be seen against the backdrop of global strategic
considerations.

**Cooperation with the emerging economies: a competitive background**

The economic rationale for a greater involvement of the Union with the emerging economies
is based on the steep rise of their economic power and the need for the Union to secure a
substantial participation in their markets. Given that economic advance in the emerging
economies is increasingly driven by the expansion of their technology-based industries, the
proactive deployment of Europe's S&T strength in these countries could represent a powerful
mechanism for achieving a substantial increase of the Union's market share. It will also
contribute to the socio-economic development of the region by helping the partner countries
to adopt best practice and learn from the experiences of the Union.

The use of S&T to strengthen the presence of the European industry in the emerging markets
will have, however, to face a highly competitive background: for historical and geographical
reasons the US and Japan have already achieved a strong position in these emerging markets,
also through an enterprising S&T cooperation policy.

_Japanese_ _companies_ _going global in Asia_

_A close look at recent Japanese foreign_ _investments_ _in Asia reveals that Japanese_ _companies_ _are_ _increasingly_
_setting up research_ _laboratories_ _in neighbouring_ _countries._ _In doing_ _so,_ _they are integrating their activities_
_from R&D to_ _manufacturing_ _and_ _trade._

_The bursting of the financial bubble in the early '90s had already led to a massive wave of_ _companies_
_transferring_ _their_ _operations_ _abroad._ _The number_ _of industrial and_ _commercial units_ _in Asia rose from 3370 in_
_1988_ _to 6632 in 1994._

_The_ _country which has_ _benefited_ _most from these trends is_ _China,_ _whereas India does not seem to_ _represent a_
_major target for_ _Japanese manufacturing_ _activities._

_The classic_ _enterprise partnership/networking_ _scheme of the "keiretsu" is reproduced in many_ _cases:_ _the big_
_firms bring their_ _own subcontractors with_ _them,_ _leaving little room_ _for_ _competitors._

_The setting up of R&D centres in Asia is also a way of_ _compensating_ _for the weakness of home based_
_manufacturing R&D. This is already quite clear in the case of the software industry. Several Japanese_
_companies have_ _transferred_ _R&D facilities in_ _Shanghay_ _and_ _Beijing._ _Globalisation_ _is an attempt to exploit the_
_comparative advantages_ _of_ _the parties involved_

But this situation can change. For example, not only several European firms have established
themselves as leading competitors in local markets, but official representatives of emerging
economies have formally sought increased involvement of the Union in S&T cooperation:
they value the Union both as a source of advanced S&T know-how and as an important
partner for their future.

_With a_ _few notable_ _exceptions,_ _European companies_ _have been slower than their US_ _counterparts_ _to spot the_
_opportunities,_ _in India..... A number of_ _initiatives_ _have been taken to try and correct this_ _imbalance._ _These_
_include the establishment of a_ _Bangalore-based company_ _called 3SE by the European Commission and the_
_Indian_ _Government to_ _promote_ _cooperation between the EU_ _and India in_ _computer_ _software._

The interest shown by emerging economies' policymakers in strengthening and deepening
scientific collaboration with the Union goes beyond the mere recognition that Europe was the
cradle of western scientific methodology and home for the largest number of Nobel laureates.
It rather results from a series of circumstances, such as the strong ties still existing between
some of the emerging countries and some Member States, the interest they may have for the
European market or, also, the perception that the European scientific space is a component of
a wider cultural space, where science and scientific cooperation develop in submission to
essential ethic requirements.

The success of the Framework Programmes and, in the late '80s - early '90s, that of the
"International Scientific Cooperation (ISC)" programme, has brought the Union itself to the
forefront of the attention of third countries. This not only strengthened the perception of the
Union as the focal point for advanced technology sourcing in Europe; it also designated the
Union as a special partner in cross-border scientific collaboration, carrying a unique
multicultural cooperation know-how, capable of setting off from its competitors in terms of
the value of what it has to offer.

The Union cannot afford to stay at the edge of this global challenge. It is essential to the
economic and geopolitical interests of the EU to engage in broader cooperation with the
emerging economies. Action needs to be taken promptly and the strategy adopted should be
tailored to meet the challenges of each individual country, taking into account the actions of
the Union's competitors.

Past **and** **present** **policies for** S&T **cooperation with the Emerging Economies**

The European Union has been cooperating in S&T sectors with these economies since 1983.
Cooperation took place, until 1994, under two programmes: _"Science_ _and Technology for the_
_Development (STD)_ _"_ and _"International Scientific Cooperation (ISC)_ _"._

With the adoption of the Fourth Framework Programme, these two interrelated initiatives
were merged to form the Part C of the INCO programme. _"Scientific and Technological_
_Cooperation_ _with the_ _Developing Countries (INCO DC) ",_ which started operation in 1995.

With the INCO DC programme the Union disposes of an instrument for RTD cooperation
with developing countries _sensu_ _stricto._ It has been conceived to address problems common to
all developing countries, notably basic needs and quality of life, and it plays an important role

in associating the DCs scientific communities with the relevant knowledge and the
technologies available in Europe. This programme, to which more than 209 Mioccu were
allocated for the period 1995-98, is open to three "Sectors of general importance": sustainable
management of renewable natural resources; improvement of agricultural and agroindustrial
production; and health. It also foresees cooperation in "Additional sectors of mutual interest":
information and communication technology, non nuclear energy, biotechnology and
production sectors.

_**Examples**_ _**of DCs specific problems**_ _**addressed by the INCO**_ _**DC programme**_

_Tropical forests resource_ _development_ - _Prevention_ _of losses of soil and_ _biodiversity_ _in drylands and_ _highlands_
_-_ _Improvement_ _of livestock farming -_ _Increased productivity_ _of_ _animal_ _and plant_ _species_ _in wetland - Health_
_care delivery models_ - _Prevention and_ _combating_ _of predominant diseases (e.g._ _support_ _for_ _research_ _for a_
_malaria vaccine)_ - _Malnutrition -_ _Reproductive_ _health._

It is now time that this work be complemented by a new approach to take account of the dual
nature of emerging economies within the global framework of the political, economic and
cooperation relationships which the European Union has already established with these
countries.

The new cooperation initiative will address the developed segment of these countries and
target technology sectors close to industry, such as those addressed under the 4th Framework
Programme by the specific programmes and the Task Forces, or by any other similar form of
Community research that will be implemented under future Framework Programmes.

_**Examples of high**_ _**technology**_ _**RTD**_ _**themes where cooperation with**_ _**the**_ _**emerging economies**_ _**should**_ _**be**_

_**strengthened and oriented toward industry**_

_Computer and multimedia technologies - Personal communication networks • Clean_ _manufacturing_
_technologies -_ _Space technology and applications -_ _Coastal zone and shelf seas management -_
_Technologies_ _to increase the safety and_ _efficiency_ _and_ _decrease_ _the_ _environmental_ _impact of transport systems_

_- Nuclear_ _safety_ _- Biomedical technology and_ _engineering_ _-_ _Vaccinology -_ _Pharmaceutical_ _research -_
_Clean energy sources_ _-Energy-saving_ _RTD_ _-_ _Earthquake engineering_ _-,_ _etc._

The above examples of core technologies are growing rapidly in the emerging economies, and
official representatives of these countries have repeatedly asked the Union to move the centre
of gravity of RTD cooperation toward them.

Considering that it is in this bracket of science that joint efforts are most likely to produce
industrial cooperation spillovers, the Union should wait no more and tailor its cooperation
instruments accordingly.

**Guidelines for a new** **policy** **of** **RTD** **cooperation with the Emerging Economies**

Following on from previous arguments, it is in the Union's interest to set a new and ambitious
agenda of RTD cooperation with the emerging economies. The scale of this cooperation
should be commensurate with the challenge posed by the booming industrialisation of these
countries and the benefits that the Union can expect from a far-sighted deployment of its
cooperative strength.

The policy driving the new cooperation initiative should complement the problem-solving
approach of the INCO-DC programme. It should adopt instead a proactive opportunityoriented perspective aiming at core science sectors conducive to the promotion of European
S&T innovation on the emerging markets, while remaining watchful that cooperative research
is not be used for military purposes.

The policy of RTD cooperation with the highly developed segment of the emerging
economies will therefore be grounded on the following principles:

 - **the main objective of the cooperating parties shall be that of achieving mutual benefit**

(from the Union's viewpoint this will mean, chiefly, promotion of the European industry
presence in the emerging markets; e.g. by implementing well targeted technology
demonstration projects in jointly selected sectors);

 - **where** **appropriate,** **RTD cooperation should be used to trigger industrial cooperation**

(this should be achieved through the creation of a network of alliances, linking European
and EEs' centres of excellence in RTD topics of industrial relevance).

From the above principles stem the following corollaries:

- cooperation sectors should be agreed on jointly by the parties. This will provide both sides
with the opportunity to target narrowly defined RTD themes with good prospects of
industrial cooperation in the short term. In this context, the Union may foster RTD
cooperation by financing partially the initial steps of the collaborative work provided by its
partners in the emerging economies;

- cooperation between the Union and the emerging economies should be set up on equal and
reciprocal grounds. An accomplished expression of such partnership will thus consist in the
eventual participation of research and technical institutions of one parly into the publicly
funded RTD programmes of the other. In practice, this would imply both the opening to the
emerging economies of some Community RTD activities and, reciprocally, the opening to
European companies of selected outside programmes;

- transnational research projects carried out within the framework of a mature partnership
will not require transfer of funds from one party to the other;

joint activities should be implemented under appropriate conventions securing effective
protection and equitable distribution of intellectual property rights. This is particularly
necessary when the partner country has not endorsed the relevant international
conventions, including the TRIPS Agreement of the GATT-WTO, the Berne Convention
(Paris Act 1971), and the Paris Convention (Stckholm Act 1967).

The implementation of the above principles and corollaries suggests the adoption of a flexible
cooperation scheme similar to that currently in force with _"Industrialised_ _countries outside_
_Europe "._ However, due to the particular features of emerging economies, it is important to
tailor the new scheme appropriately.

**Blueprint for a new RTD cooperation scheme with the emerging economies**

Experience gathered at Community level shows that a mere, passive opening of Community
RTD programmes to third countries is not sufficient to trigger a significant response of their

scientific operators. Conversely, if the opening of **the** same programmes is endorsed by a
political commitment to promote RTD cooperation, the resulting collaboration may become
substantial.

It follows that, since the Union is determined to launch a high profile RTD cooperation with
the emerging economies, it shall be ready to account for a substantial political and managerial
investment. This can be outlined as follows.

- The Union should first undertake to seize all cooperation opportunities already offered by
the opening-up of various specific programmes to **the** participation of third countries.

**•** [To carry out cooperation with the emerging economies in sectors of advanced technology, ]
the Commission should also be able to open their participation in additional specific
programmes. According to Council decision of 21 November 1994 (94/763/CE), the Union
must then envisage to conclude with selected emerging economies **S&T cooperation**
**agreements** The implementation of this procedure is not only the ultimate expression of a
political will to foster RTD collaboration. It also allows the parties to tailor countryspecific RTD cooperation frames and orientate the scientific communities towards selected
RTD themes and technological challenges of common interest.

In most cases, relations with the emerging economies are covered by Framework
Agreements for cooperation. Such Framework Agreements contain a "Future
developments" clause which allows the level of cooperation to be enhanced by the addition
of agreements on specific sectors or activities. Thus, whenever political and other
considerations (participation in otherwise closed programmes, reciprocity, intellectual
property rights, etc.) demand, an S&T Cooperation Agreement, referring explicitly to the
Framework Agreement and the Joint Committee, will be concluded.

If it proves opportune to conclude an S&T Cooperation Agreement with an emerging
economy which has not concluded with the Union a Framework Agreement for
cooperation, the specific S&T Agreement will be consistent with the general policy of the
Union towards the country concerned.

The follow-up of each S&T Cooperation Agreement shall be insured by a **Joint Group**
**for Cooperation in Science and Technology (JGSTC);** forum of dialogue, orientation
and monitoring of cooperation activities. These Joint Groups should comprise senior civil
servants, prominent scientists, industrialists and policy makers from both sides. When an
emerging economy has concluded with the Union a Framework Agreement for
cooperation, to insure the coherence of the external action the Joint Group will be a sub
committee of the Joint Committee.

The key to the success of the entire operation will depend on the capacity of the JGSTCs to
trigger the growth of "bottom-up" cooperation proposals and to orientate them towards
selected target sectors. The Joint Groups should be particularly vigilant in relation to the
implementation of the **reciprocity principle.** Participation in each other's programmes
should be real and produce a two-way flow of information, scientific workforce and
innovative projects.

It is important to stress that, in case of participation of outside partners in Community
research programmes, the JGSTCs will have no power of intervention in the Community
internal procedures of submission, evaluation and selection of projects.

The impact of the cooperation scheme on the development of cooperation activities should
be monitored periodically. Evaluation reports should be thoroughly discussed by the
JGSTCs in order to take the necessary steps to comply with the recommendations.

**Concertation with Member States: dialogue with the industry**

The success of the above-mentioned S&T cooperation policy rests on the will of the Union
and its Member States to produce a coherent thrust aiming at the strengthening of the
competitive position of European high-tech companies in the markets of the emerging
economies. This is not simply to underline the principle of subsidiarity, but rather it is the
expression of a crucial step which needs to be taken and the very justification for this new
European initiative.

Member States have already been cooperating, on a bilateral basis, with the emerging
economies in scientific and technological sectors. Some of these States have achieved
particularly good results and established durable relationships. They pride the success
obtained through their national collaboration schemes and prepare themselves to face the
challenge of market globalisation.

On the other hand, European firms are generally favourable to the idea of a more active role
of the Union in international S&T collaboration. They consider that a Community-driven
framework for RTD cooperation activities, can provide their ventures with a high profile and a
strong negotiating leverage. They also point out that poor Community coordination might
allow twin cooperation projects to mature into the cooperation schemes of different Member
States, and consider such potential duplications as a threat to European credibility.

Thus, the fundamental pattern of the cooperation initiative foreseen in this Communication,
and the ground on which it will have to grow, shall and will be an intensive concertation with
the Member States. The Delegations in the respective countries, will be called to play a central
role in the accomplishment of this task.

The Union and the Member States have here a new opportunity to seize: that of promoting a
European dimension in the RTD cooperation with the world emerging economies, that of
orienting scientific research towards innovation and that of using European innovation to help
the European enterprise position itself in the emerging markets.

Particular attention should be paid to the actual involvement of European industry in this
endeavour. IRDAC, in its role of advisory body to the Commission in the field of industrial
research and development, should be associated with the implementation of the new policy at
all stages. In the preparatory phase it could assist the Commission in the identification of the
most promising cooperation themes and actions, as well as of the industrial operators most
suitable to play an active role internationally. Later on, it should be associated with the
different activities of the Joint S&T Cooperation Committees.

IRDAC's part in the consultation process will not only help maintaining a permanent dialogue
between European RTD and European industry; it may also encourage the cooperating Parties
in the emerging economies to request the involvement of similar bodies, capable of
interfacing between their RTD establishments and their respective national industries. This
will create a true forum of dialogue and negotiation between all the operators involved in the
planning and management of cooperation activities, and, hopefully, will contribute to
breaking down the barriers still existing between scientific and industrial operators.

**Action plan**

The action plan will address two different objectives:

—
**to seize the whole range of opportunities offered by the fourth framework**
**programme to develop and redirect the present orientations;**
**—** **to prepare a major thrust of** **RTD** **cooperation with the emerging economies.**

This will be executed by means of the following actions:

- The Commission should optimize the opportunity offered by the current INCO
programme and encourage cooperation initiatives in industry-oriented sub-sectors
opened for participation of the emerging economies;

- An information campaign should be launched in Europe and in the emerging economies,
to promote the participation of EEs' research institutions in relevant Community
specific programs;

- In parallel with this action and in collaboration with the partner governments, the
Commission will launch a first pilot scheme for exchange of scientists This action will
offer several distinct advantages:

    - in conformity with the subsidiarity principle it will complement the complex array
of scientific mobility schemes already implemented by several Member States with
individual emerging economies;

—
focussed on scientific sectors relevant to the specific programmes of the 4th
Framework Programme, it may help reinforce the research capacity of European
consortia already operating in these programmes;

—
it will create a first web of partnerships between the Union and the emerging
economies in areas of Community's competence, thus paving the way for formal
participation of research institutions located in these countries in Community
research programmes;

    - it will also allow the Commission to identify a hard core of narrowly defined topics,
where RTD cooperation with the different emerging economies is expected to be

3 The Commission implemented previously, under the ISC programme, a large scheme of fellowship
allocation to leading scientists of third countries to spend 6-12 months in European laboratories. A scheme of
exchange of scientists should revive the success of that promising action, adding to it the new dimension of
reciprocity, more suited to a policy of equal partnership with emerging economies

**•**

manageable, with clear potentials for industrial cooperation spin-offs, and
particularly beneficial for both parties.

—
it will finally allow the obtention of precious information in view of the
implementation of a further and much wider scheme for the exchenge of leading
scientists between the Union and the emerging economies. This scheme, which the
Commission plans to implement in future Framework Programmes, will allow the
establishment of a vast network of durable relationships.

Finally, whenever it proves necessary and in the framework of the external relations policy
and its instruments (Framework Agreement and Joint Committee), the Commission will
enter negotiations aiming at the conclusion of a complementary Science and Technology
cooperation agreement with an emerging economy in accordance with the rules and
mechanisms proposed at the paragraph _"Blueprint for a new RTD_ _cooperation scheme_ _with_
_the_ _emerging economies_ _"._

10

**FINANCIAL STATEMENT**

**l.** **Title** **of the** **operation**

International scientific cooperation : Proposal for the implementation of a new cooperation
scheme aimed at the promotion of S&T collaboration between the Union and the "Emerging
Economies" of the world, in sectors with industrial spin-offs.

**2.** **Relevant** **budget headings**

Costs for accompanying measures and pilot activities will be charged to specific budget
headings of the programme: Cooperation with Third Countries and International
Organisations (INCO).

B6-7211

**3.** **Legal Basis**

Council Decision 94/807/EC of 23 November 1994.

**4.** **Description of the operation**

4.1. Specific objectives of the operation

The essential objective is to open a new cooperation channel with the EEs of particular
strategic interest for the Union. This channel will complement the current "problem-solving"
approach of the INCO-DC programme, conceived to tackle specific problems of the
developing world, with a new "opportuinity oriented" initiative aiming at high technology
sectors conducive to the promotion of European S&T innovation on the emerging markets.

4.2. Duration

Ongoing annual budget entry, subject to annual budget disponibilities under the present
INCO programme 1996-98.

5. **Classification of the expenditure**

5.1. Non-compulsory expenditure
5.2. Differentiated appropriations

###### **_AA_**

**6.** **Type** **of expenditure**

Financing of missions to various EEs by Commission officials and EU experts; organisation
of joint workshops; joint studies; implementation of a pilot phase for the exchange of
scientists.

7. **Financial Impact**

7.1. Method of calculating the total annual cost of the action (estimate)

    - 5 Workshops [China, India(x2), Brazil and Mexico] on space technologies,
engineering seismology and advanced materials:

0.450 MI-X'U

    - 5 Studies (China, India, Brazil, Mexico, Argentina) to define a new strategy for
RTD cooperation with the emerging economies:

0.280 MECU

    - Travel and subsistance expenses for visits to the Emerging Economies by EU
officials and experts:

0.050 MECU

Total Optimale) : 0.780 MECU

7.2. Breakdown of the elements of the action (MECU)

Commitment appropriations in MECU
(current prices, estimate)

1998

0.450

0.280

0.050

**0.780**

Breakdown

Workshops
Studies

Missions

Total

1996

0.450

0.280

0.050

**0.780**

**12**

1997

0.450

0.280

0.050

**0.780**

Total

1.350

0.840

0.150

2.340

7.3. Schedule Commitments appropriations / Payments appropriations

1998

0.780

0.780

**0.780**

Total

2.340

0.780

0.780

0.780

2.340

Commitments appropriations

Payments appropriations

1996

1997

1998

Total

**8. Anti-fraud measures**

1996

0.780

0.780

0.780

1997

0.780

0.780

**0.780**

There are many administrative and financial controls at each stage of the signature and
implementation of research contracts. Among these controls are the following:

At the stage prior to the conclusion

- Initial selection of proposals based on the scientific merit of the project and on the realism
of research costs relative to the content, duration of the project and its potential
implications.

- Analysis of financial details submitted by the proposers in the contract negotiation form.

After signature of the contract

- Examination of expenditure at a number of levels (financial officer, scientific officer)
before payment.

- Internal audit performed by the Financial Controller.

- On-site audit, which should allow the detection of errors and other irregularities by
examination of supporting documents. In order to improve the efficiency of these controls,
the Commission services have established an audit Unit which coordinates all controls

taking place. These controls are carried out either by members of this audit Unit, or by
audit firms with which the Commission has concluded a contract, under the supervision of
personnel from this Unit.

- On the spot inspections made by the Financial Controller of the Commission and by the
Court of Auditors of the European Union.

**9. Cost-effectiveness analysis**

9.1. Specific objectives, target population
###### **43**

o The new scheme for cooperation with the Emerging Economies is designed to enable the
European Union and the EEs to profit, on the basis of the principle of mutual benefit, from
the scientific and technical progress achieved under their reciprocal research programmes;

»
beneficiaries in the European Union and the Emerging Economies will be the scientific
communities, the industrial sector and the general public, thanks to the direct and indirect
effects of cooperation.

9.2. Justification of the operation

Community budget intervention is indispensible because the planned cooperation comes
under the implementation of the Framework Programme, including the budgetary section.

9.3. Monitoring and evaluation of the operation

An evaluation of all the cooperation activities in the context of this action will be made by the
Commission's departments at the end of 1998.

**10.** **Implications for administrative expenditure**

- The Commission is not requesting any additional posts for the management of this
cooperative action.

- No officials are being specifically assigned to manage this action. [ T] t vvill be managed by
the staff authorised for the 4th Framework Programme.

_**At,**_

###### **ISSN 0254-1475**

### **COM(96) 344 final**

# **DOCUMENTS**

##### **EN U 15 16** **Catalogue number : CB-C0-96-343-EN-C** **ISBN 92-78-06610-9**

**Office for Official Publications of the European** **Communities**

**L-2985** **Luxembourg**

##### **_AS_**