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The UK will leave the European Union on 31 January 2020. Negotiators and commentators have spent more than three years discussing the terms on which the UK will withdraw, but comparatively little attention has been paid to the future relationship between the UK and the EU after Brexit at a sectoral level. Withdrawing is merely the first stage of the process, and the UK and the EU will soon begin to think about negotiating a new relationship and decide which issues to prioritise.

Research and innovation is one of the key areas in which the UK and the EU will need to establish a post-Brexit relationship. Over the past two decades, the UK and the EU have been at the forefront of that enterprise through the development of the European Research Area (ERA).

Together, European nations have created a world-leading research base. Six of the world’s top twenty universities are in the ERA, and Europe produces a third of the world’s scientific publications with just 7% of the global population.

A new post-Brexit relationship on research and innovation will need to be negotiated to ensure we sustain and grow this valuable and mutually beneficial partnership. Research and innovation are critical to achieving lasting competitiveness and economic development, especially with the dominance of the USA and the rising challenge of China in this field. An early agreement providing for cooperation on research and innovation would reflect the economic and social importance of research and innovation to the people of the UK and the EU.

This report sets out what the Wellcome Trust and Bruegel have learned from a project to simulate a negotiation process between the UK and EU to create a post-Brexit research and innovation agreement. Our  negotiating scenario assumed that the UK had left the EU with a withdrawal agreement, and that the negotiation was taking place during a ‘standstill’ transition period.

Our exercise demonstrated that it is possible to reach agreement among experts on the terms of an EU-UK research and innovation deal. However, the project also revealed that some elements of an agreement may be harder to negotiate than expected. A shared purpose and belief in the importance of research and innovation is not enough to see a deal come to fruition. It is also necessary to overcome a number of political and technical challenges that are spelled out in this report. The process must start now to ensure an agreement is reached as soon as possible. We hope that this report will provide inspiration and guidance for that process.

Our simulated negotiation highlighted specific areas for attention that we hope will create a roadmap for UK and EU post-Brexit discussions:

• UK association to Horizon Europe needs to be a core part of a research and innovation agreement, and this would be a win-win for the UK and the EU. Both parties in our exercise wanted UK inclusion in all parts of Horizon Europe to be the default option. The teams hoped this would keep cooperation between the UK and EU as close as possible to its current levels

• The EU moving away from its historical GDP-based financial formula could make it easier for the UK to agree terms, as would the inclusion of a “correction mechanism” designed to address any “significant imbalance” between what an Associated Country pays in and the money it receives. This should reassure the UK that it will get value for Our teams reached an agreement based on the UK ‘paying its way’, including a contribution towards the running costs of the programme
• Suitable precedent was found to provide the UK with an appropriate degree of influence over the Horizon Europe programme, without needing to grant the UK formal voting rights. It was agreed that UK participation in the programme would mean accepting Court of Justice of the European Union and European Court of Auditors’ jurisdiction in this area
• Arrangements to facilitate the exchange of research workers and their direct families are essential to a research and innovation agreement. Our negotiating teams were able to agree suitable wording on this issue, albeit through a commitment to establishing “reciprocal” and “favourable” arrangements rather than attempting to detail a specific system for achieving this
• Finding suitable wording that reflected both teams’ views on common standards was difficult. The UK team sought to preserve UK sovereignty while recognising the practical benefits of common standards for research purposes. The EU team aimed to ensure high standards in the UK after leaving the EU. Wording on adopting regulatory approaches that were “compatible to the extent possible” was agreed, based on similar text in the October 2019 Political Declaration
• Due to its importance to research, the teams also agreed a backstop mechanism for the sharing of personal data. Facilitating the free flow of data for research was felt to be an essential part of an agreement, but the teams hoped that this could be superseded by a broader post-Brexit decision by the EU on the adequacy of the UK’s data protection arrangements.

Our negotiation process explored a research and innovation agreement separately from broader political issues. This focused our work, but we sought to keep wider political issues and pressures in mind. Researchers are mainly influenced by the need for continuity in cooperation to maintain world-class performance on both sides of the Channel. Politicians and officials, however, will also be influenced by concerns over sovereignty, the unity of the EU’s single market, and the autonomy of decision-making, as well as the parameters of the broader post-Brexit relationship between the two parties. Given our starting point, it is therefore likely that our process reached a post-Brexit agreement more readily than officials or politicians might.

Several of the most important issues for research and innovation overlap with these broader political discussions – for example, researcher mobility and common standards. Discussion of such issues as part of a research and innovation agreement would intersect with negotiations on the overall future relationship between the EU and UK, adding a significant layer of complexity to the process.

The UK and EU have two main options: either wait for the future overall shape of their relationship to be agreed first or pursue without delay a standalone research and innovation agreement.

With Horizon Europe due to begin on 1 January 2021, there is a significant risk that a research and innovation agreement will not be in place in time for the start of the programme.

Delaying negotiations until after an overall EU-UK future framework has been agreed would increase this risk.

The legislation establishing Horizon Europe is still being negotiated within the EU institutions, and countries wishing to associate cannot formally start the process until the legislation is in place. This will create further time pressures.

Any discontinuity in the UK’s participation in Horizon 2020, the existing Framework Programme, or Horizon Europe,  its successor, would be highly damaging to research and innovation in the UK and the EU. Our exercise suggests that the UK government and the European Commission must start work on a research and innovation agreement as soon as possible, and that this should be a priority.

A standalone research and innovation agreement represents the best chance of the UK fully participating in Horizon Europe from the start of the programme.

The intersection with wider political discussions will be difficult to manage, but our exercise suggests that compromises could be found.

The scenario for our simulation optimistically assumed that the UK had left the EU with a withdrawal agreement in place. However, a no-deal Brexit would make the task of negotiating a research and innovation agreement even more difficult. If the UK were to leave the EU without a withdrawal agreement, the current win-win approach of experts on the two sides would be lost and negotiations would start against a background of tensions rather than goodwill. Research and innovation would then be caught up in the political impasse created by a no-deal exit, making it less likely that the UK will be a full participant in Horizon Europe from day one of the programme. The UK and EU should strive to avoid such an outcome.