Appendix II: U.S. Israel Science and Technology Collaboration 2028

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1 Appendix II: U.S. Israel Science and Technology Collaboration 2028 "Israel 2028: Vision and Strategy for Economy and Society in a Global World, initiated and sponsored by the U.S.-Israel Science and Technology Commission and Foundation, paints an ambitious vision of sustained economic growth and prosperity for Israel over the next 20 years. For Israel to be among the top 15 nations in terms of GDP per capita and to excel in knowledge-intensive industries, strategic cooperation between the governments of the US and Israel must continue, including academic and research collaboration. Robust cooperation will contribute significantly to the bedrock of close strategic, economic and geo-political relations between the two nations. Following we project a vision for US-Israel collaboration for 2028, to parallel the vision outlined in the Israel 2028: Vision and Strategy for Economy and Society in a Global World strategic plan: The US will continue to be the ranked as the most competitive economy in the world and in the top five in terms of GDP per capita. Israel will be ranked 10 th -15 th in the world in GDP per capita, and will succeed in significantly reducing income disparities and eliminating poverty. The US will be Israel s largest trading partner. Academic exchanges will flourish. Extensive long-term research collaborations between US and Israeli scientists, involving dozens of research institutions and national laboratories will contribute to the development of innovative convergent technologies that will continue to lead the global transition to the new renewable energy-based economy and personalized health care. More than twenty-five US multi-national industries, in ICT, biotechnology and cleantech will maintain R&D centers of excellence in Israel. Alongside robust 1

2 bilateral programs at the federal level, such as BIRD, BARD and BSF, several US States will have parallel support R&D collaboration agreements with Israel. The number of Israeli firms traded on US capital markets will rank second only to Canada among the world's nations. Mergers and acquisitions between American and Israeli companies will exceed over $5B per annum. US-Israel economic relations will be diverse and deep, based mutual benefit and contributing significantly to economic growth, societal well-being, job creation and the global competitiveness of both nations' economies. Israel 2028: Vision and Strategy, a strategic plan to place Israel among the top nations in the world in terms of per capita GDP, calls upon Israel to enhance its competitiveness within the dynamic process of globalization. Israeli policy makers and companies will be presented with a wide range of choices as to where they should place their emphasis in seeking global strategic relationships over the course of the next 20 years. Traditionally, Israel has looked to the US for science and technology collaboration, as well as for capital and market access. For much of its recent history, the US has been Israel s largest market, only recently challenged by Europe. In response to the opportunities offered by the EU R&D Framework programs, Israel has increasingly turned to Europe for academic and industrial science and technology collaboration. Now the emergence of the China and India as economic powers offers Israel new promising outlets for trade, and alongside Europe poses challenges to increasing US-Israel ties. Continuing to foster US-Israel linkages for both nations' mutual economic and social benefit that will reinforce the strategic geo-political alliance, requires adopting policies to strengthen existing successful frameworks and develop new programs, in response to rapid, dynamic processes associated with global economic competitiveness. By promoting an environment of cooperation and collaboration, Israeli and US companies have been able to move exciting new technologies from mere concepts in a lab to products that strengthen both countries positions in an increasingly competitive global setting. 2

3 Today, a diverse group of American companies maintain flourishing R&D centers in Israel, which have made significant contributions to these companies global competitiveness. These companies include: Intel, IBM, Motorola, HP, Applied Materials, and GE Medical Systems. In addition to these models of cooperation primarily in the ICT field, strong US-Israel industrial and corporate ties are also evidenced by the extensive activities of companies like Teva in the US and Johnson & Johnson and Genzyme in Israel. Israel ranks second in the world in the number of its companies traded on NASDAQ. In addition to continuously expanding US-Israel trade and strategic industrial collaboration, there are four ongoing binational frameworks for cooperation: Binational Industrial R&D Foundation (BIRD), Binational Agricultural R&D Foundation (BARD), Binational Science Foundation (BSF) and US-Israel Science and Technology Commission (USISTC). But the existence of these relationships today is not enough. Taking the structure and recommendations of the Israel 2028: Vision and Strategy as a foundation, we provide a series of policy recommendations as to how the implementation of the recommendations in "Israel 2028", if adopted, can contribute to US-Israel economic relations. And the corollary proposition: how can US-Israel collaboration contribute to the realization of the vision set forth in the plan? We believe that the following recommendations will anchor and strengthen future US-Israel collaboration by and between governments, industry and academia for the mutual benefit of both nations. 1. Government to Government The role of governments should be focused on the creation of necessary conditions and promoting infrastructure in its broadest sense to facilitate collaboration between and among government agencies, industry and academia. A. Israel 2028: Vision and Strategy recommends the establishment of an Israeli National Council for Competitiveness adjacent to the Ministry of Industry, Trade and Labor, to be responsible for competitiveness in the economy. This National Council 3

4 would conduct annual international benchmarking, i.e., a rigorous process of comparative economic, social, technological and scientific measures in relation to other globally competitive nations on an annual basis. It is recommended that the US-Israel Science and Technology Commission, through the US-Israel Science and Technology Foundation, perform a similar benchmarking with respect to the status of US-Israel collaboration, as well as to recommend policies and administer programs to expand and enhance such collaboration for mutual benefit. B. The MAGNET program of the Office of the Chief Scientist (OCS) in the Ministry of Industry, Trade and Labor supports a consortium between industry and R&D institutions that deal with generic, pre-competitive technologies. MAGNET should be opened to participation of academic researchers and industrial partners from the US and consideration should be given to developing joint funding mechanisms for inclusion of US industrial companies as full partners in MAGNET consortia. C. The plan also recommends that Israeli government support policies aimed at encouraging research and development via the OCS be based on a new balance between targeting preferred sectors and continuing the policy of neutrality among the various sectors, which is the current practice to date. Target sectors would be selected on the basis of their degree of innovation and their chances for producing breakthroughs leading to activity with high business potential. We recommend that in selecting technology targets, the OCS take into consideration the synergy between US and Israeli potential to jointly develop innovative intellectual property, as well as to acquire and implement the developments, particularly with respect to the emerging convergent technology landscape. D. The US has recently passed legislation to create new frameworks for binational government support for R&D in targeted fields. One such example is the US-Israel Energy Cooperation Act. A similar program for international cooperation in Homeland Security, mandated by the U.S. Congress, specifically identifies Israel as a partner, among other U.S. allies. It is highly desirable that both governments provide 4

5 adequate matching funds to underwrite these cooperation frameworks. In addition, the two governments should mandate and fund the US-Israel Science and Technology Commission and Foundation to annually monitor and measure the success of such targeted technology cooperation frameworks and make futureoriented policy recommendations for targeting additional areas for strategic cooperation. E. A number of US Government agencies can be described as centers for competitiveness offering a variety of opportunities for funding, as well as facilitating international intellectual property linkages. These include the Department of Transportation, Department of Commerce (International Trade Administration, National Telecommunications and Information Administration, Economic Development Administration), Export-Import Import Bank, Overseas Private Investment Corporation, Office of the US Trade Representative, Department of Energy, Department of Homeland Security (S&T Directorate), SBIR (Small Business Innovation Research), etc. It is recommended that an in-depth detailed survey of existing US government programs be performed by the US-Israel Science and Technology Foundation to determine the potential for US-Israel linkages that may be found in existing government programs. F. The US-Israel Science and Technology Commission and Foundation seek to identify impediments and barriers to cooperation. It is recommended that binational funding be provided to perform an in-depth study of impediments and recommend ways and means for their removal in specifically targeted fields to be annually recommended by binational advisory panels selected by the US-Israel Science Technology Commission, such as encryption technologies, human genome research and development of stem cell technologies. G. The mandate of the US-Israel Science and Technology Commission and Foundation is to foster and enhance opportunities for collaboration for the mutual benefit of the peoples and economies of both nations. Bilateral US- Israel programs should target 5

6 preferred areas for collaboration. Programs would be funded by the Foundation; and/or other binational support mechanisms; or by way of parallel support from each government for to its respective participants. Such programs should focus on two key areas: building the infrastructure for expanded collaboration between and among government, industry and academia; and grants for basic and applied research, particularly in fields likely to impacted by the synergies in a broad range of novel, convergent technologies, such as healthcare, cleantech and biotechnology, as well as in energy, water, desert agriculture and security (physical and cyber). H. There are four binational U.S.-Israel programs at the federal level which are actively involved in the various fields of science and technology development. These organizations include three binational Research and Development Funds - BARD, BSF and BIRD - established in the mid-1970s to foster science and technology cooperation, and the US-Israel Science Technology Commission, established in the mid-1990s. In addition to our recommendation to increase endowments for binational R&D funds, we propose that each of the two governments allocate budgets for the purpose of creating an endowment for the US-Israel Science and Technology Commission and its Washington D.C.-based implementation arm, the US-Israel Science and Technology Foundation. 2. Industry to Industry Collaboration Israeli and American business and industry have developed extensive mutually beneficial ties. Israeli high tech industry in particular has looked to the US for strategic marketing alliances, and US companies continue to benefit from technology development and entrepreneurial talent in Israel. We seek to encourage and broaden the opportunities for mutual benefit in industry to industry linkages. "Israel 2028: Vision and Strategy proposes significant infrastructure investment for upgrading and advancing Israeli infrastructures over the next twenty years: about NIS 350 billion for land transportation, about NIS 20 billion for sea and air transportation, about NIS 80 billion for energy, and some NIS 40 billion for water and sewage. Israel 6

7 government tenders should be open, transparent and competitive, in particular so as to enable US companies to collaborate with Israeli companies, as well as to compete directly for contracts in this field. A. The Binational Industrial Research and Development Foundation (BIRD) is a good example of a long-standing program deserving of expansion that should be pushed to focus on new areas of future technology collaboration. BIRD has played a major role with US industry in championing the importance of public-private partnerships to enable innovation and competitiveness in both countries; however, the existing level of endowment does not allow it to meet current demand, let alone expand to support for larger-scale projects in alternative energy or promising new convergent technologies. A specific policy step would be to increase the current $110M endowment to no less than $330M to allow it to support more that $50 worth of joint venture industrial R&D projects per annum. Similarly, an increase in the endowment of BARD would enhance the collaboration opportunities in pre-competitive R&D in agriculture. B. Encouraging the creation of large global companies in the Israeli economy is one of the most prominent tasks in the realm of globalization for the next twenty years. In pursuing new policies to harmonize Israeli legal, tax and other corporate policies with best international practices, particular prominence should be given to the impact of Israeli companies doing business in the US. Both governments should strive to reduce bureaucratic impediments, increase transparency, and encourage harmonization in company taxation, registration, finance, technical standards, etc. C. Over the coming decades, the technology landscape will be dominated by a broad range of novel, convergent technologies. ICT (where US-Israel industrial collaboration has been particularly successful) and new emerging science-intensive bio/nano/chemistry/material oriented technologies are closely intertwined and, in fact, the former enables development of the latter. A recent, important study at the Rand Corporation analyzes the unfolding technological landscape for 2020 and identifies both the US and Israel prominently as possessing the potential of countries to acquire and 7

8 implement these converging new, exciting technologies. The US and Israel should examine ways and means to promote and foster necessary interdisciplinary collaboration, with the active involvement of both academia and industry, that leverages Israel s strength in innovation and systems integration with US discipline and management of the technology transfer and commercialization processes. D. The US and Israel should partner in regional economic cooperation programs in targeted areas such as water and energy. Significant economic and geo-political advantages can be generated from the establishment of solar energy power stations, involving US-Israel joint ventures in both Jordan and Egypt, and subsequent linkages in the regional electricity transmission grids. E. The US and Israel should examine ways and means of jointly exploiting opportunities in the emerging Chinese market based on a strategic alliance US-Israel interests. Through Israel, US may gain strategic entrée into China in fields that China has defined as national imperatives, e.g., water technology, renewable energy, personalized health care and long-distance communications infrastructure. 3. Academic Collaboration Broadening the opportunities for educational exchanges, from high school through university to graduate school and post-doctorate can provide the infrastructure to build bridges of familiarity and trust, leading to collaboration for scientific innovation. With an emphasis on excellence and quality, Israel 2028: Vision and Strategy envisions two Israeli research institutions in the top twenty in the world, with a second tier system of universities granting all levels of degrees. A. In order to raise the international standing of Israeli universities, the number of positions for foreign post-doctorates and academic visitors must be increased, with US academics being a preferred target. Funding should be provided for programs that provide for long-term academic exchanges, establishment of centers of excellence 8

9 for targeted research (perhaps co-endowed by industry) coupled with technology transfer mechanisms for taking the applied research into industry. B. The Binational Science Foundation (BSF) is a long-standing successful program with a current endowment of $110M. In recent years, however, the level of grants has become less attractive and not competitive with grants available within the EU Framework programs. It is recommended that the endowment be significantly increased by a factor of three, so that alongside the expanded BIRD Foundation, there will be a comprehensive answer to the challenge posed by the EU R&D Framework program. C. The US-Israel Educational Foundation which administers the Fulbright program in Israel should be expanded so as to accommodate a significantly greater number of US post-doctorate positions at Israel universities. D. To gain equal footing to EU Framework programs that offer funding for networking and for bringing lecturers to academic and academic/industry conferences, a program should be developed and funded to provide grants to bring US researchers to lecture at Israeli academic, professional and industry conferences. E. Academic collaboration should also be encouraged prior to the higher education research stage, i.e., it should pursued in the broadest sense through educational exchanges between high school students and teachers, and include collaboration between educational systems. F. Establish a program to bring US engineering graduate students to Israeli universities in targeted areas, e.g., environment, cleantech, signal processing, mechanical and electrical engineering. Student s grants would be covered and not be subject to taxation. The program could include a mentoring component with local industry. G. Israeli universities should seriously consider offering a broad range of degree granting programs in English, perhaps in partnership with US academic institutions to attract 9

10 American, particularly Jewish students. In parallel, one-year education abroad programs at Israeli universities for American students should be expanded, and similar opportunities should be developed for Israeli students who desire to spend a year studying at US universities. Funding for scholarships to enable such year-long opportunities should be raised through a public-private partnership, that might involve the Jewish Federations in the US. Implementation of these recommendations through a variety of sustained programmatic efforts, perhaps under a coordinated umbrella organization like the US-Israel Science and Technology Foundation, will enable the realization of the vision for mutually beneficial flourishing US-Israel economic relations. 10