DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT A: ECONOMIC AND SCIENTIFIC POLICY Review of EU-Third Country Cooperation on Policies Falling within the ITRE Domain in Relation to Brexit STUDY Abstract This study was prepared at the request of the European Parliament’s Committee on Industry, Research and Energy (ITRE). It provides a critical assessment of the implications of existing models of cooperation of third countries with the European Union in each of four thematic areas for which the ITRE is responsible (energy, electronic communications, research policy, and small business policy. The relative desirability to the EU of EEA membership, bilateral relationships (as with Switzerland), a new generation Free Trade Agreement (FTA), membership in the Energy Community, or participation in the Horizon 2020 or COSME programmes are considered. IP/A/ITRE/2017-001 June 2017 PE 602.057 EN This document was requested by the European Parliament's Committee on Industry, Research and Energy (ITRE). AUTHOR(S) Bruegel, Belgium: Bruegel, Belgium: J. Scott MARCUS, Georgios PETROPOULOS, André SAPIR, Simone TAGLIAPIETRA, Alessio TERZI, Reinhilde VEUGELERS, Georg ZACHMANN1 RESPONSIBLE ADMINISTRATOR Frédéric GOUARDÈRES Dagmara STOERRING EDITORIAL ASSISTANT Irene VERNACOTOLA LINGUISTIC VERSIONS Original: EN ABOUT THE EDITOR Policy departments provide in-house and external expertise to support EP committees and other parliamentary bodies in shaping legislation and exercising democratic scrutiny over EU internal policies. To contact Policy Department A or to subscribe to its newsletter please write to: Policy Department A: Economic and Scientific Policy European Parliament B-1047 Brussels E-mail: [email protected] Manuscript completed in Month Year © European Union, Year This document is available on the Internet at: http://www.europarl.europa.eu/studies DISCLAIMER The opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the publisher is given prior notice and sent a copy. 1 The authors would like to thank and acknowledge valuable research assistance from Filippo BIONDI, Enrico NANO and Alexander ROTH. Review of EU-Third Country Cooperation on Policies Falling within the ITRE Domain in Relation to Brexit CONTENTS LIST OF ABBREVIATIONS 6 EXECUTIVE SUMMARY 11 1. INTRODUCTION 14 1.1 THE PROCESS TRIGGERED BY THE UK’S REFERENDUM 14 1.2 OUR APPROACH TO THE STUDY 15 1.3 OUR METHODOLOGY 15 1.4 Structure of this report 16 2. GENERAL MODELS OF PARTICIPATION IN THE EU 17 2.1. Membership in the European Economic Area (EEA) 18 2.1.1. Objectives 18 2.1.2. Treaty and legal considerations 19 2.1.3 Institutional design 19 2.1.4 Overall assessment 21 2.2. Membership in the EFTA 24 2.2.1. Objectives 25 2.2.2. Treaty and legislative considerations 26 2.2.3. Institutional design 26 2.2.4. Overall assessment 26 2.3. Other forms of cooperation with third countries 26 2.4. Comparative assessment 27 3. ENERGY 29 3.1. Market and industry structure for the countries under consideration 30 3.2. Treaty and legal considerations 34 3.2.1. Internal Energy Market 34 3.2.2. Renewable Energy and Energy Efficiency 35 3.2.3. Climate and Environment 36 3.2.4. Security of Supply 36 3.3. Implementation at national level 37 3.3.1. Institutional setting 37 3.3.2. Internal Energy Market 40 3.3.3. Renewable Energies and Energy Efficiency 45 3.3.4. Environment and Climate 48 3.3.5. Security of Supply 49 3.4. Comparative assessment of different arrangements 50 PE 602.057 3 Policy Department A: Economic and Scientific Policies _______________________________________________________________________ 4. ELECTRONIC COMMUNICATIONS 53 4.1. Market factors for the countries under consideration 53 4.2. Treaty and legal considerations 59 4.3. Implementation at national level 64 4.4. Considerations for specific policy elements 68 4.5 Comparative assessment of different arrangements 72 5. RESEARCH POLICY 76 5.1. The Framework Programmes, Horizon 2020, and other forms of research cooperation 77 5.2. Research and innovation in the countries under consideration 78 5.2.1. Research and innovation in the UK 79 5.2.2. Research and innovation in Norway 79 5.2.3. Research and innovation in Switzerland 80 5.2.4. Research and innovation in the United States 80 5.3. Treaty and legal considerations of participation in the EU’s H2020 Framework Programme 82 5.3.1. Participation as an associated third country in EU’s H2020 Framework Programme 82 5.3.2. Participation of other third countries in the EU’s H2020 Framework Programme 83 5.4 Forms of participation in cooperative research with the European Union 84 5.4.2 Norway 84 5.4.3. Switzerland 84 5.4.4. The United States 85 5.5. Level of participation in EU’s Framework Programmes 87 5.5.1. The United Kingdom 87 5.5.2. Norway 89 5.5.3. Switzerland 89 5.5.4. The United States 91 5.6. Comparative assessment of different arrangements 92 6. SMALL BUSINESS AND COSME PROGRAMME-RELATED INDUSTRY ISSUES 96 6.1. The Programme for Competitiveness of Enterprises and SMEs (COSME) 97 6.2. Programmatic factors for the countries under consideration 99 6.3. Treaty and legal considerations 100 6.4 Implementation at national level 101 6.5. Comparative assessment of different arrangements 101 4 PE 602.057 Review of EU-Third Country Cooperation on Policies Falling within the ITRE Domain in Relation to Brexit 7. FINDINGS 105 7.1 Strengths and weaknesses of existing models of cooperation with third countries 105 7.2. Which are the preferable models for the EU? 108 REFERENCES 111 ANNEX: INTERVIEWS CONDUCTED 116 PE 602.057 5 Policy Department A: Economic and Scientific Policies _______________________________________________________________________ LIST OF ABBREVIATIONS AAL Ambient Assisted Living ACER Agency for the Cooperation of Energy Regulators ARTEMIS Advanced Research and Technology for Embedded Intelligence and Systems BAU Business as usual BEREC Body of the European Regulators of Electronic Communications BBL Balgzand Bacton Line (gas pipeline UK-Netherlands) CEER Council of European Energy Regulators CEF Connecting Europe Facility CH Switzerland CIP Competitiveness and Innovation Framework Programme CO2 Carbon Dioxide COSME EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (SMEs) (A,V)DSL (Asymmetric, Very-high-bit-rate) Digital Subscriber Line DSOs Distribution System Operators EDCTP European & Developing Countries Clinical Trials Partnership EE Energy Efficiency EEA European Economic Area EEC European Economic Community EEN European Enterprise Network EFG Equity Facility for Growth EFTA European Free Trade Association 6 PE 602.057 Review of EU-Third Country Cooperation on Policies Falling within the ITRE Domain in Relation to Brexit EFSI European Fund for Strategic Investments (“Juncker Investment Plan”) EIA Environmental Impact Assesment EIF European Investment Fund EIS European Innovation Scoreboard (previously IUS, Innovation Union Scoreboard) (Chapter 5) Entreprise Investment Scheme (Chapter 6) EIT European Institute of Innovation and Technology EIP Entrepreneurship and Innovation Programme ElCom Eidgenössischen Elektrizitätskommission (Swiss energy regulator) EMRP European Metrology Research Programme EMU Economic and Monetary Union ENIAC Joint Technology Initiative (JTI) in the field of nanoelectronics ENTSO-E European Network for Transmission System Operators for Electricity ENTSOG European Network for Transmission System Operators for Gas ENP European Neighbourhood Policy EPFL École polytechnique fédérale de Lausanne ERA European Research Area ERAC European Research Area and Innovation Committee ERC European Research Council ESIF European Structural and Investment Funds ESD Effort Sharing Decision ETH Zürich Eidgenössische Technische Hochschule Zürich PE 602.057 7 Policy Department A: Economic and Scientific Policies _______________________________________________________________________ EU European Union EU ETS European emission trading system EURATOM European Atomic Energy Community FCH Fuel Cells and Hydrogen FP Framework Programme for research of the European Commission FTA Free Trade Agreement FTTP Fibre to the premises FTTH Fibre to the home GDP Gross Domestic Product GHG Greenhouse gas(es) H2020 Horizon 2020 (8th Framework Programme for research) IEA International Energy Agency IED Integrated Energy Design IMI Innovative Medicines Initiative (I)NDC (Intended) Nationally Determined Contributions IPA Instrument of Pre-Accession Assistance ITER International Thermonuclear Experimental Reactor ITRE Committee on Industry, Research and Energy IUK Interconnector UK (gas pipeline UK-Belgium) JCG Joint Consultative Group JPI Joint Programming Initiative(s) JTI Joint Technology Initiative(s) KICs Knowledge and Innovation Communities LGF Loan Guarantee Facility 8 PE 602.057 Review of EU-Third Country Cooperation on Policies Falling within the ITRE Domain in Relation to Brexit LLU Local Loop Unbundling LNG Liquid natural gas M(S)CA Marie (Skłodowska-)Curie Action(s) MEPs Members of the European Parliament MNO Mobile network operator MTRs Mobile call termination rates MSIP South Korean Minister of Science, ICT and Future Planning NCPs National Contact Points NEEAP National Energy Efficiency Action Plan NERC National Electricity Regulatory Commission of Ukraine NIH National Institutes of Health