IELRC.ORG - New Collective Policies

This paper can be downloaded in PDF format from IELRC’s website athttp://www.ielrc.org/content/a0612.pdf

NEW COLLECTIVE POLICIESSusette Biber-Klemm, Philippe Cullet & Katharina Kummer Peiry

Published in: S. Biber-Klemm & T. Cottier eds, Rights to Plant Genetic Resources and TraditionalKnowledge: Basic Issues and Perspectives (Wallingford: CABI, 2006) p. 283-323.

International EnvironmentalLaw Research Centre

International Environmental Law Research [email protected]

7.1 Introduction

This and the following chapter move on toconsider a number of other aspects of thelinks between PGR and IPR. This chapter isdivided in three sections that examine dif-ferent areas which are linked to IPR buthave not necessarily been directly inte-grated in discussions on TK and IPR. It con-siders issues concerning PGR and TK thatare not assignable to a specific individual orgroup of persons. The first section examinesthe concept of farmers’ rights, its develop-ment in international law and its relevancein the context of the protection of TK. Thesecond section analyses issues related toaccess to PGR and examines both the legalframework provided by international lawinstruments – such as the Biodiversity Con-vention – and issues concerning contrac-tual arrangements for access betweenprivate parties. Finally, the third section

considers the extent to which financialmechanisms, mooted in particular in thecontext of international environmentaltreaties, could be used as models for com-pensating TK holders.

7.2 Farmers’ Rights1

The rights that farmers have under interna-tional law – or absence thereof – withregard to diverse elements such as seedsand knowledge related to PGRFA, havebeen and remain contentious. First, in thecontext of the development of a protectionregime for commercial plant breeders, whatbecame known as the farmer’s privilege is asimple recognition that plant breeders’rights are not absolute and do not stop farm-ers from using the protected variety thatthey have grown for further development.2

Secondly, the rights of farmers can be con-

© The Swiss Agency for Development and Cooperation 2006. Rights to Plant Genetic Resourcesand Traditional Knowledge (eds S. Biber-Klemm and T. Cottier, assoc. ed. D. Szymura Berglas)

283

7 New Collective Policies

Susette Biber-Klemm,a Philippe Culletb and Katharina Kummer PeirycaWorld Trade Institute, University of Berne, and Faculty of Law, University of Basel,Maiengasse 51, CH 4056 Basel, Switzerland; bSchool of Law, School of Oriental andAfrican Studies, University of London, Thornhaugh Street, London WC1H 0XG, UK;cKummer EcoConsult, Chemin de la Forêt 4, CH 1752 Villars-sur-Glane, Switzerland

1 Author: Philippe Cullet. Thanks to Dr Martin Girsberger for his detailed and specific comments on a pre-vious version of this text.2 For further developments on the UPOV Convention, see Chapter 2, Section 2.3.4, this volume. The farmer’sprivilege is not included in this review of farmers’ rights.

ceived as fully fledged rights over tradi-tional knowledge (TK). This option has notbeen recognized in any international legalframework, but some developing countrieshave attempted to develop legal frame-works that provide for the rights of farmersover their TK.3 Thirdly, farmers’ rights canbe conceived as a form of compensation forservices rendered by the community by allfarmers to the conservation and enhance-ment of PGRFA over time. This is theoption that has been developed over time inthe context of the two main internationallegal instruments recognizing farmers’rights, the International Undertaking(IUPGR) and the International Treaty onPlant Genetic Resources for Food and Agri-culture (ITPGRFA).

At present, the ITPGRFA provides theonly existing recognition of farmers’ rightsin a binding instrument. The ITPGRFAdoes not, however, provide a substantivedefinition of farmers’ rights and in particu-lar does not provide any form of propertyrights for farmers over their knowledge. Asa result, farmers’ rights at the internationallevel are currently little more than a policytool to foster the recognition of the contri-bution of farmers and farming communitiesin the overall conservation and develop-ment of plant genetic resources. Furtherelaboration of farmers’ rights can only befound in specific domestic legal regimes.This section analyses the notion of farmers’rights as it has evolved in international lawover the past couple of decades and exam-ines the extent to which the existing notionof farmers’ rights can contribute to the pro-tection of TK.

7.2.1 Farmers’ rights under the InternationalUndertaking

Farmers’ rights were first enshrined in alegal instrument whose primary intent was

to promote the free exchange of plantgenetic resources. As noted in Chapter 2,the IUPGR, which promoted the manage-ment of plant genetic resources, on thebasis of the principle of common heritage ofhumankind, proved unacceptable to somecountries in its original form. The revisedversion of the IUPGR maintained a refer-ence to common heritage as a basis for reg-ulating plant genetic resources, but at thesame time recognized the validity of claimsover these resources. As a result, it acceptsboth plant breeders’ rights and farmers’rights as valid claims over plant geneticresources and drastically narrows down therelevance of the concept of common her-itage by recognizing states’ sovereign rightsover their plant genetic resources.

The IUPGR is rather unclear in its for-mulation of farmers’ rights. It first specifi-cally mentions that the basis for the conceptof farmers’ rights is the ‘enormous contribu-tion that farmers of all regions have made tothe conservation and development of plantgenetic resources, which constitute thebasis of plant production throughout theworld’.4 It further emphasizes that the con-text for the adoption of farmers’ rights is thedichotomy between the role of farmers indeveloping countries in developing andmaintaining plant genetic diversity and theneed to access these resources for the pur-poses of conservation and plant breeding inthe commercial sector.5 The specific defini-tion of farmers’ rights under the IUPGRreads as follows:

Farmers’ Rights mean rights arising fromthe past, present and future contributionsof farmers in conserving, improving, andmaking available plant genetic resources,particularly those in the centres oforigin/diversity. These rights are vested inthe International Community, as trustee forpresent and future generations of farmers,for the purpose of ensuring full benefits tofarmers, and supporting the continuation of

284 S. Biber-Klemm et al.

3 See also Chapter 2, Section 2.3.3, this volume.4 Res. 4/89, Agreed Interpretation of the International Undertaking, 29 Nov. 1989, Report of the Conferenceof FAO, 25th Session, Rome, 11–29 November 1989, Doc. C89/REP.5 Res. 5/89, Farmers’ Rights, 29 November 1989, Report of the Conference of FAO, 25th Session, Rome,11–29 November 1989, Doc. C89/REP.

their contributions, as well as the attain-ment of the overall purposes of the Interna-tional Undertaking.

This definition does not include therights of farmers over their TK. In fact, whatis provided in the IUPGR is little more thanthe recognition of the collective contribu-tion of farming communities to the devel-opment and maintenance of agriculturalbiodiversity. This recognition is material-ized through the provision of financialresources to ensure the conservation ofplant genetic resources and the need forfarmers to participate in the benefits fromthe use of their varieties in genetic engi-neering.

Insofar as the implementation of therecognition of farmers’ contribution toplant genetic resource management is con-cerned, the rationale provided is that ‘thebest way to implement the concept of Farm-ers’ Rights is to ensure the conservation,management and use of plant geneticresources, for the benefit of present andfuture generations of farmers’.6 The onlyspecific implementation mechanism pro-vided is the International Fund for PlantGenetic Resources. In keeping with therecognition that farmers’ rights are vestedin the international community and not infarmers themselves, the International Fundis conceived as a financial mechanism thatrewards countries rather than individualfarmers or farming communities. In fact, theFund is generally conceived more along thelines of a development aid programme todeveloping countries for capacity buildingin the field of agricultural biotechnologythan as a tool to reward individual farmersor farming communities for their contribu-tion to the development or improvement ofplant varieties.

On the whole, the system of farmers’rights provided in the IUPGR seeks to coun-terbalance the existence of plant breeders’rights and other IPR in the field of geneticengineering with some form of incentiveand compensation for farmers. However, itstops short of defining any type of individ-ual or collective property rights of farmers

over their TK. It only provides recognitionof the contribution of farmers to the conser-vation and sustainable use of plant geneticresources. A general form of compensationis offered under the aegis of the Interna-tional Fund, but even the material benefitsfrom the International Fund are targeted ina very general manner and are not meant todirectly reach specific farmers or farmingcommunities that have made a specific con-tribution to the development and conserva-tion of plant genetic resources. In practice,the concept of farmers’ rights provided inthe IUPGR has never had much impact,since the International Fund never becamea reality because funds were not madeavailable by donor countries. However,developments in the context of the under-taking have had an important influence onsubsequent developments leading to theadoption of the ITPGRFA.

7.2.2 Farmers’ rights under the InternationalTreaty on PGRFA

The ITPGRFA addresses a number ofimportant issues concerning the conserva-tion and use of PGRFA. Farmers’ rights areonly one of many issues considered, but itis noteworthy that negotiations concerningthe definition of farmers’ rights constitutedone of the important issues on which thesuccessful completion of the treatydepended. In fact, one of the main goals ofthe revision of the IUPGR was the furtherdevelopment and concretization of farmers’rights. In the end, farmers’ rights wereretained as one of the important elements ofthe treaty, but negotiators stopped short ofrecognizing and comprehensively definingfarmers’ rights at the international level.

The concept of farmers’ rights underthe ITPGRFA has evolved, as compared tothe first formulation in the context of theIUPGR, but a clear affiliation can still beseen. Most importantly, the ITPGRFA doesnot go beyond the concept of farmers’ rightsas a form of compensation for farmers’ con-tribution to the development and mainte-

New Collective Policies 285

6 Res. 4/89, note 4 above, p. 284.

nance of agricultural biodiversity. It doesnot include property rights but provides,however, that member states are free todevelop their own forms of protection.

The basis for the recognition of farm-ers’ rights is again the

enormous contribution that the local andindigenous communities and farmers of allregions of the world, particularly those inthe centres of origin and crop diversity,have made and will continue to make forthe conservation and development of plantgenetic resources which constitute thebasis of food and agriculture productionthroughout the world.7

The Treaty does not provide any otherdefinition of farmers’ rights insofar as theirprotection at the international level is con-cerned. It only makes explicit the minimumlevel of protection of farmers’ interests thatshould be protected. In effect, only existingrights of farmers to save, use, exchange andsell farm-saved seed/propagating materialare protected under the Treaty.8 Further,even these residual rights are protectedonly to the extent that national law does notdiffer from the provisions of the Treaty.

Insofar as domestic law is concerned,the ITPGRFA provides that member statesshould in principle undertake to protect andpromote farmers’ rights. The Treaty high-lights some of the areas that should beaddressed in priority. This includes the pro-tection of TK in the context of agriculturalbiodiversity, benefit sharing and participa-tion in decision-making with regard to themanagement of agrobiological resources.9

7.2.3 Farmers’ rights as a means to protecttraditional knowledge

The preceding sections indicate that theconcept of farmers’ rights in international

law has a specific meaning in the context ofthe IUPGR and the ITPGRFA. In the contextof these two instruments, farmers’ rightsconstitute in effect a policy decision at theinternational level to formally acknowledgethe contribution of farmers and farmingcommunities to the development and con-servation of agricultural diversity. Apartfrom the call to member states to realizefarmers’ rights at the national level, theonly practical consequence of this acknowl-edgment at the international level has beenthe progressive development of the notionof benefit-sharing, which focuses on waysto provide financial and other compensa-tion for the farming community’s contribu-tion to fulfilling humankind’s food needs.As such, the concept of benefit sharing isnot specific to the case of farmers and hasbeen developed more generally to compen-sate holders of TK for the use of this knowl-edge in different contexts.10

Despite the relative underdevelopmentof farmers’ rights in the two FAO instru-ments, it is noteworthy that a treaty thatdoes not specifically focus on agriculture,like the Desertification Convention, indi-rectly considers farmers’ rights through thelens of TK. The Desertification Conventionis a typical treaty of the law of sustainabledevelopment. This implies that it takes abroad view of the environmental challengeslinked to land degradation and includesagriculture among the important fields thatmust be taken into account to successfullyaddress desertification. In this context, therecognition that state parties must not onlypromote and use TK, but also protect it, issignificant.11 In this sense, the Desertifica-tion Convention constitutes another instru-ment indirectly promoting the developmentof farmers’ rights at the national level aspart of the more general protection of TK.The importance of the Desertification Con-


7 Article 9.1 of the International Treaty on Plant Genetic Resources for Food and Agriculture, Rome, 3November 2001 [hereafter ITPGRFA].8 Article 9.3 of the ITPGRFA.9 Article 9.2 of the ITPGRFA.10 Further examination of benefit-sharing is undertaken in Section 7.3 of this chapter.11 See Article 18 of the Convention to Combat Desertification in those Countries Experiencing SeriousDrought and/or Desertification, Particularly in Africa, Paris, 17 June 1994, 33 ILM 1328 (1994).

vention in this area stems from its recogni-tion of a need to protect TK rather than themore limited aim of compensation for serv-ices rendered, as is the case under the ITP-GRFA.

The limits of the concept of farmers’rights at the international level are no bar totheir further development at the nationallevel. In fact, this is what the ITPGRFA callsfor. At the national level, farmers’ rightshave been conceived as a tool for imple-menting benefit sharing in accordance withdevelopments at the international level.Some countries have, however, attemptedto go beyond this limited notion of farmers’rights, while a number of others are stilldeveloping legal frameworks in this area. Itis therefore useful to review some of theoptions that countries have chosen, or maychoose, to implement the notion of farmers’rights in their legislation.

In some countries, like India, the devel-opment of farmers’ rights has taken a routethat focuses at least in part on the individ-ual rights of farmers to their varieties. Sincethis individual right aspect was covered inChapter 5, this section does not consider itagain. In fact, one of the important contri-butions of the concept of farmers’ rights isthe recognition that innovation and incre-mental improvements in the field of agri-cultural biodiversity cannot always beassigned to a particular individual or group.In such cases, traditional notions of IPR arenot particularly well suited to offer protec-tion for this TK. Farmers’ rights thus con-stitute an interesting departure point todeveloping rights that could be collective inscope. There have been a number of pro-posals seeking to grant property rights tolocal communities or other groups.12 Thechallenge has already been taken up bysome countries like Venezuela, which hasinstituted a system that distinguishes therights of TK holders and individual IPR incases where knowledge is developed incre-

mentally.13 In other words, the Venezuelanlaw goes further than merely acknowledg-ing the importance of biodiversity-relatedTK with the usual compensation for conser-vation of biological resources, and specifi-cally recognizes the associated rights ofindigenous and local communities.14 Thistends to indicate that where knowledgeacquisition is either collective or incremen-tal, the concept of farmers’ rights may offeropportunities to devise an alternative formof protection to the dominant intellectualproperty model.

Where collective rights are allocated, itis necessary to make sure that the benefitsreach all the rights holders. Some countrieshave focused on exploring the possibility ofassigning collective rights to local demo-cratically elected bodies rather than tolegally amorphous local communities. Incountries with strong traditions of localdemocratic governance, as in India, whichhas a highly developed panchayat system,using them has obvious advantages since itguarantees to a certain extent that benefitsarising from the assignment of propertyrights will at least in principle be sharedwith a measure of public accountability.This is in fact what the Indian BiodiversityAct attempts by requiring the setting up ofbiodiversity management committees ineach panchayat whose functions includethe promotion of conservation, sustainableuse and documentation of TK.15

Beyond the collective rights dimen-sion, farmers’ rights may provide an inter-esting departure point for examiningalternative forms of knowledge protection.Registration may, for instance, constitute aground for differentiating farmer varietiesfrom commercial breeders’ varieties. Thiscan be achieved by providing that protec-tion for a farmer variety can only beobtained for varieties which are particularto a given locality. The rights that canbe conferred include the right to develop,


12 For instance, Biodiversity (Rights and Protection) Bill, 1998 (New Delhi: Research Foundation for Science,Technology and Ecology & Lawyers Collective, 1998).13 Article 85, Venezuela, Ley de diversidad biológica, 27 October 1999. 14 Articles 13 and 84, Venezuela: Ley de diversidad biológica, 27 October 1999. 15 India: Biological Diversity Act, 2002.

produce, sell and export the protected vari-ety.16 The distinguishing element is thenon-exclusivity of the protection which isoffered. This is due to the fact that exclu-sivity may not be practical in the fields offarmers’ varieties since they may exist inmore than one location and possibly morethan one country. Another argumentagainst exclusivity is the strong linkbetween farmer varieties, agro-biodiversitymanagement and food security. These linksseem to preclude a focus on the commercialdimension of property rights at the expenseof the broader goals of environmental con-servation and food security. As a result,non-exclusive farmer rights could providean alternative scheme whereby all rightsholders are entitled to separately produceand commercialize their own productswithout infringing on the rights of othersimilarly placed rights holders.

Another interesting dimension of col-lective farmers’ rights is that they can beused as a tool to take into account not onlythe commercialization of knowledge, butother goals as well. These include, forinstance, agro-biodiversity management,biosafety and food security. The manage-ment of agro-biodiversity is particularlyinteresting insofar as diversity has histori-cally been conserved and enhanced byfarmers. This contribution of farmers islikely to remain important in the future.17

One of the central points with regard toagro-biodiversity and farmers’ rights is thatwhile farmers directly benefit from agro-biodiversity conservation, national govern-ments and the international communityalso benefit in direct and indirect ways.This may require the sharing of conserva-tion obligations on an equitable basisbetween all actors benefiting from theexploitation of agro-biodiversity, fromfarmers and local firms marketing seeds to

research institutions, private seed compa-nies and states. In terms of property rights,this tends to indicate the need for farmers’rights that are appropriate to giving incen-tives to farmers not only to conserve exist-ing agro-biodiversity and associated TK,but also incentives to further develop thisknowledge.

Overall, the notion of farmers’ rights isinteresting because it fosters a broaderunderstanding of the links between innova-tion, rights over knowledge, biodiversityconservation and the sustainable use ofagro-biodiversity. While patents and plantbreeders’ rights are on the whole com-pletely unlinked from concerns over con-servation and sustainable use, farmers’rights are quite different and much moreamenable to a broader perspective. This isnow enshrined in the ITPGRFA, whichclearly recognizes the links between con-servation of plant genetic resources and theuse that can be made, including the com-mercialization of products derived fromplant genetic resources-related knowledge.

7.3 Reviewing Access Legislation18

7.3.1 Introduction

Both the CBD and the ITPGRFA enunciatethe sovereignty of states over their geneticresources. Yet the exercise of sovereignrights is balanced by the obligation of donorstates to facilitate access to their geneticresources. Both conventions provide frame-works to this end: the CBD establishes abasic regime on Access and Benefit Sharing(ABS) (Articles 1, 15, 16, 19; see Chapter 2,this volume); the ITPGRFA concretizes thisABS regime for a defined part of theresources by the Multilateral System (MLS)(see below). The concept of the sharing of


16 Note that Thailand has, for instance, adopted a farmers’ rights regime which entitles the local legal entityto ‘have the exclusive right to develop, study, conduct an experiment or research in, produce, sell, export ordistribute by any means the propagating material [of the registered local domestic plant variety]’. See Sec-tion 47 of the Plant Varieties Protection Act, B.E. 2542 (1999).17 See, for example, Article 9 of the ITPGRFA.18 Author: Susette Biber-Klemm. I thank Alwin Kopse, Philippe Cullet and Michael Halewood for theirthoughtful and inspiring comments and Danuta Szymura Berglas for her careful language editing.

benefits resulting from the use of PGR andTK is a response to the experiences in theexchange of this information and its appro-priation due to different levels of protectionof informational values in different coun-tries (see Chapter 3, this volume).

The focus in the following discussionwill be access to TK in the framework of thetwo instruments. TK can be associatedeither with wild or domesticated geneticresources, or – in the case of traditionalPGRFA – be expressed in a product result-ing from the use of TK.19 This means thatthe regulation of both the CBD and the ITP-GRFA will be examined regarding the pro-visions for: (i) access to TK associated withPGR in general (CBD); (ii) TK associatedwith PGRFA (ITPGRFA); and (iii) access tothe PGRFA themselves (ITPGRFA). Thegoal is to describe and evaluate ABSregimes as instruments for promoting tradein the informational values of TK and tradi-tional PGRFA. The criteria for the evalua-tion of the ABS system are the goalsdiscussed in Chapter 1, namely the goal ofcreation of incentives and economic meansto support and maintain TK and traditionalPGRFA. In this context it is important totake account of the findings of Young andGunningham (1997) and of Swanson andGöschl (2000), who argue that incentives tomaintain TK and PGRFA are best created atthe level where the costs occur (see Chapter4, this volume). In the case of the conserva-tion and maintenance of TK and traditionalPGRFA, these costs occur not only in the exsitu facilities but, as has been shown (Chap-ters 1 and 4), to a great degree also at thelevel of in situ conservation by traditionalon-farm breeding. Therefore one of the keyquestions is to what degree the stakeholdersat the level of local farming communitiesand indigenous peoples can be involved inthe respective ABS regimes in order to ben-efit from the values they have created. Inrespect of PGRFA, the focus will thereforebe put on access to in situ-maintained tra-ditional PGRFA.

The second point will then be to evalu-ate the ABS system in view of its capacityto create benefits in a trade context. Thethesis is that at present rather cumbersomeprocedures20 ought to be rethought in orderto be more market and trade supportive.Accordingly, the emphasis will not prima-rily be put onto the technicalities of theABS system but rather the questions arisingfrom its implementation at the interfacebetween national and international tradeand local stakeholders.

In the present discussion the tradeaspects of genetic resources and TK are pre-dominantly perceived as a North–Southrelationship, in that the biodiversity-richcountries of the South are the providers,and the industrialized countries of theNorth the recipients and users of the infor-mation. However, in evaluating the ABSsystem, it is to be kept in mind that the rela-tionships of access to genetic resources andTK show a much more varied pattern. First,not only international, but also domestictrade relations, might be of importance, andsecondly, exchange of genetic informationand TK may also take place in aSouth–South or North–North relationship.The global interdependence of all players isin particular true for PGRFA, where allcountries may have the role of both pur-chaser and provider.21 Finally, one shouldavoid the over-simplification that ‘less-developed’ necessarily equates with ‘biodi-versity-rich’, and ‘industrialized’ with‘biodiversity-poor’: an obvious examplebeing Australia, which is both a developedcountry and one containing ‘mega biodiver-sity’ (see Chapter 2, this volume).

7.3.2 Legal background

In general

From the factual, legal and political point ofview, access to (wild) genetic resources is


19 In the following, the term ‘information’ is meant to encompass both elements. 20 See the case study on Peru in Chapter 2. 21 See Fowler et al. (2000).

different from access to TK and domesti-cated varieties of PGRFA, respectively.Whereas the primary right to regulate own-ership of wild genetic resources is attrib-uted to the sovereign state, in the case of TKassociated with PGR there seems to be acommon legal conviction that the right andcompetence to deal with the product of cre-ativeness lies with its creators or holders.22

Thus it is considered inequitable and polit-ically unfeasible for states to attempt toexpropriate individual and collective rightsof communities to their knowledge (Ruiz1997, cited in Glowka, 1998, p. 37).

The question is whether the same canbe said for varieties of PGRFA based on theunderstanding – confirmed by the last gen-eration of scholarship – that maintenanceand breeding of farmers’ varieties involvestechnical know-how and creative skills (seeChapter 4, this volume). In the case ofPGRFA, we find ourselves with the problemof creative information being embodied in aphysical, self-propagating entity, which,moreover, can also be traded as a commod-ity. Plant Breeders’ Rights are the solutionto protect the informational value con-tained in varieties bred in formal, industrialprocesses. However, no such protectionexists for the protection of informationalvalue incorporated in farmers’ varieties.The question, therefore, is whether com-pensation for the utilization of the informa-tional value is possible on the basis of theABS system.

The regulation of the CBD23

The subject matter of the CBD is in princi-ple all biological resources: wild and

domesticated, and related TK. However, theConference concluding the convention del-egated the issues regarding PGRFA to thenegotiations in the framework of the revi-sion process of the FAO IU on PGRFA, nowthe IT on PGRFA.24 So the latter is prima-rily relevant for PGRFA, including wild rel-atives, and related TK, while the CBDcovers the remaining wild biologicalresources and TK.

The regime of access to geneticresources as laid down by the CBD is basedon a contractual approach. It encompassesthe three elements of ‘prior informed con-sent’, ‘mutually agreed terms’ and the ‘fairand equitable sharing of benefits’ (Article 15).It is important to note that the authority fordetermining access to genetic resources isvested in the state and subject to national leg-islation. Thus the convention only entitlesthe providing state, and does not confer anyrights to the individual holders of the PGR.

The same is true for the regulation ofissues regarding access to TK associatedwith PGR. The implementation of the gen-eral principles that are stated in Article 8(j)of the CBD is referred to the national level.Yet the CBD does give some interpretativeguidelines. States are – as far as possibleand appropriate – to involve the holders ofthe TK in its wider application, and toencourage the equitable sharing of the ben-efits arising from its use.

In the follow-up process of the CBD, itsABS regime has been further developed.The ‘Guidelines on Access to GeneticResources and Fair and Equitable Sharingof the Benefits Arising out of their Utilisa-tion’ (Bonn Guidelines)25 provide a moredetailed framework for the development of


22 See, for example, Article 27(2) of the Universal Declaration of Human Rights which states that ‘Everyonehas the right to the protection of the moral and material interests resulting from any scientific, literary or artis-tic production of which he is the author…’, and Article 15 of the International Covenant on Economic, Socialand Cultural Rights, which states that ‘The States Parties to the present Covenant recognize the right of every-one … to benefit from the protection of the moral and material interests resulting from any scientific, literaryor artistic production of which he is the author.’23 For details see Chapter 2.24 International Treaty on Plant Genetic Resources for Food and Agriculture, Rome, 3 November 2001 [here-after ITPGRFA].25 Accepted as Decision VI/24 by the VI meeting of the Conference of the Parties, The Hague, The Nether-lands (7–19 April 2002).

ABS regimes, including with particular ref-erence to Article 8(j) on TK (Nos 1 and 9).One of the explicit goals is to ‘contribute tothe development … of mechanisms andaccess and benefit-sharing regimes thatrecognise the protection of traditionalknowledge … in accordance with domesticlaws and relevant international instru-ments’. The Guidelines assert the impor-tance of the involvement of all relevantstakeholders in the ABS process, explicitlyincluding indigenous and local communi-ties. In particular, stakeholders should beintegrated in the negotiation and imple-mentation of ABS arrangements on the onehand, and in the development of nationalstrategies, policies or regimes on ABS onthe other. The provision of pertinent infor-mation and capacity-building is identifiedas an important measure in supportingnegotiations (Nos 17–21).26

Thus, the framework of the CBDpresently evolves in the direction ofstrengthening the position of the (individualor community) holders, which in turn leadsto the marketing problems discussed below.

The regulation of ABS by the ITPGRFA27

The development of a regime regulatingaccess to PGRFA is directly linked to theprinciple of state sovereignty over geneticresources. The reiteration of this principlein the CBD has prompted the revision of theIU (see Chapter 2, this volume). Accord-ingly the two Conventions are closely inter-related. The definition of the objectives ofthe treaty – conservation and sustainableuse of PGRFA and the fair and equitablesharing of the benefits arising out of theiruse – corresponds to the CBD goals. The

goals of the IT are to be attained ‘in har-mony’ with the CBD, and by closely linkingthe IT to the CBD (Article 1.2).

The ITPGRFA adopts the concept ofthe CBD that the authority for determiningaccess to PGR rests with national govern-ments and is subject to national legislation(Article 10.2), and also limits national sov-ereignty by the obligation to facilitateaccess for contracting parties.

Given this, and the recognition thatPGRFA are a common concern ofhumankind, the treaty establishes a specificsystem of facilitated access to a selection ofvarieties specified in an Annex (Annex 1) tothe Treaty, the so-called MultilateralSystem of Access and Benefit-Sharing(MLS) (Article 10).

Thus, within the ITPGRFA, two basicregimes exist for access to PGRFA and thesharing of the benefits resulting from theiruse: (i) the MLS for the Annex 1 materialand, as the Treaty is silent on non-Annex 1material, (ii) by default the more generalprinciples of the basic ABS regime coveringthe remaining varieties.

THE MULTILATERAL SYSTEM

In the background of the MLS lies theinsight into the global interdependenceregarding PGRFA, or worded differently, intheir common resource nature (Preamblepara. 2 ITPGRFA). Accordingly, the MLS insome ways takes up the concept of PGR asbeing the common heritage of mankind,which at its outset ruled the IU (see Chapter2, this volume), and adapts it to the systemof state sovereignty. Consequently the goalof the MLS is to support the free flow ofgermplasm, and to bypass the complica-


26 Some of the Contracting Parties are concerned about the voluntary character of the Guidelines. It is fearedthat due to their voluntary nature, they remain ineffective (see, for example, Brazil in IP/C/W/228, No. 34).Accordingly, the COP explicitly decided to keep the Guidelines under review, considering that they are buta first step of an evolutionary process (Dec. VI/24). The Plan of Implementation adopted by the WorldSummit on Sustainable Development in 2002 calls for action to negotiate an international regime to promoteand safeguard the fair and equitable sharing of benefits (Report of the World Summit on Sustainable Devel-opment, Johannesburg, South Africa, 26 August–4 September 2002; A/CONF.199/20, chapter I, resolution 2,annex; see also Doc. UNEP/CBD/MYPOW/6, Nos. 1, 15–20). A regime is a ‘set of principles, norms, rulesand decision-making procedures’ and not per definition a legally binding instrument, but might include bind-ing norms (UNEP/CBD/MYPOW/6 No. 19). 27 For an overview of the entire Treaty see Chapter 2, this volume.

tions, which might occur by the CBD ABSregime, between those that are parties to thetreaty.

The system is based on the idea of sol-idarity and mutual benefit. The listed vari-eties are selected according to the criteria offood security and interdependence (Article11.1); access is to be provided for research,breeding and training for food and agricul-ture; no IPR of any kind limiting facilitatedaccess might be claimed on the PGRFA inthe form received; and any fees imposedmay cover only the minimal cost incurredin providing access. Access is to be grantedexpeditiously, and – of importance for ourquestion – without the need to track indi-vidual accessions back to their origin.Together with the accession, all availablepassport data and other associated descrip-tive information are to be made available‘subject to applicable law’. This informa-tion may well encompass TK elements.From this argument it follows that, if TKelements are included in the passport dataof varieties integrated in the MLS andstored in an ex situ facility, there is nonecessity for PIC to be given by the originalholders of the knowledge for the transfer ofthe information.28

Transfer of the PGRFA and associ-ated information integrated in the MLSis facilitated by the utilization of stan-dardized contracts, i.e. the standard mate-rial transfer agreement (MTA), which isalso to apply to all subsequent transfers ofthe PGRFA it covers. The MTA is to beadopted by the Governing Body of thetreaty.

As to benefit sharing, facilitated accessto PGRFA included in the MLS is in itselfconsidered to be a major benefit. Furthertypes of benefit sharing include the

exchange of information; access to andtransfer of technology; capacity-building;and the sharing of benefits arising fromcommercialization (Article 13.2).29 There isa monetary benefit sharing clause that istriggered when a recipient of material fromthe MLS incorporates that material into anew product, and subsequently restrictsaccess to the product to disallow its use forresearch purposes. In such cases, the partywould be obliged to make a contribution toan international fund, at a rate yet to beestablished by the Governing Body, to beused to support conservation efforts (Arti-cle 13.3).

If the MLS is examined in view of thecreation of direct incentives for local in situconservators of traditional PGRFA, the fol-lowing aspects must be considered.

The Multilateral System includes onlyPGRFAs that are under the managementand control of the Contracting Parties andin the public domain. Natural and legal per-sons who are holders of listed varieties arethus not automatically part of the system,but are invited to include their varieties inorder to participate in the system and haveaccess to the stored resources. However,during a 2-year pilot period, access to theresources included in the MLS is to begranted to all legal and natural persons whoare under the jurisdiction of a contractingparty. The decision as to whether thisregime will continue in the future is to betaken by the Governing Body at the end ofthe 2-year period.

The system seems to be primarilymeant to provide facilitated access to thepublic ex situ collections of the listed vari-eties. Access to listed PGRFA in in situ con-ditions is to be provided according tonational legislation, otherwise according to


28 But PIC would be needed at the time of collecting the accessions in situ; PIC would have to encompassthe fact that the knowledge is handed on without getting back to the original holder once the sample and theassociated knowledge is integrated in the MLS (see also below). However, according to the research byIPGRI, at present there is very little ethnobotanical information stored in the passport data (Chapter 4, thisvolume).29 The Governing Body is mandated to determine the level of the payments. It may differentiate the levels ofthe payments for various categories of recipients who commercialize products resulting from the use of thePGRFA integrated in the System. In particular it may exempt small farmers in developing countries frompayments (Article 13(d)(ii)).

standards set by the Governing Body of theTreaty (Article 12.3(h)).30

The position of the small-scale farmerswithin this system of access and benefit-sharing at present is not clear. On the onehand, the access to in situ resources, eitherfor collection for an ex situ facility or in thesense of direct bioprospecting, is not (yet)specified. On the other hand, at present it isnot quite clear how these farmers will beable to benefit directly from the system.

As the treaty has only recently beenconcluded and come into force,31 thedetails are still in a state of flux. Withregard to the strengthening of the positionof the individual small-scale farmers, andfarming communities or corporationswithin the MLS, the following points mustbe taken account of.

In view of access to PGRFA in in situconditions,32 two goals are to be kept inmind. First, it must remain possible to col-lect in situ accessions and related addi-tional information for integration into theMLS; and secondly, incentives must be cre-ated for the maintenance and further devel-opment of traditional PGRFA. This isbound to remain difficult as long as thelegal position and benefit for the in situbreeders is not clear.33

Two types of benefits can be imaginedin this context. First, the benefits of theMLS itself; secondly, the benefits of market-ing or selling traditional varieties whichhave been improved, such as in semi-

formal on-farm breeding (see Chapter 4, thisvolume), using a variety from an ex situfacility.

An initial question, therefore, is howto make the benefits of the MLS, namely,facilitated access in itself, the exchange ofinformation, access to technology, capacity-building and the sharing of benefits of com-mercialization (Articles 31.1 and 13.2)directly beneficial for small-scale farmers,thus creating an incentive for them to con-tribute their varieties to the MLS.34 This ispart of the more general issue of how thechallenge of extending the MLS to small-scale farmers and farming communities,and of making it directly operational andbeneficial, can best be met at the legal,political and also practical levels.

Secondly, there is a need to clarifyunder which conditions varieties bred onthe basis of varieties integrated in thesystem, or making use of them, can be com-mercialized by their breeders, such as onlocal or regional markets. Two regulationsgoverning the MLS might be relevant: Arti-cle 12.3(b) prescribes that within thesystem varieties are to be exchanged ‘free ofcharge’. Article 12.3(d) prescribes that noIPR of any kind limiting facilitated accessmight be claimed on the PGRFA in the formreceived. Thus, it can be concluded thatonly varieties ‘in the form received’ fallunder the system and therefore must beexchanged free of charge. Accordingly,whether a variety can be commercialized


30 It is submitted that in the case of absence of national legislation or standards set by the Governing Body,the CBD ABS regime applies.31 In accordance with Article 28, the Treaty entered into force on the 90th day after the deposit of the 40thinstrument of ratification, acceptance, approval or accession, provided that at least 20 instruments of ratifi-cation, acceptance, approval or accession have been deposited by Members of FAO. On 31 March 2004, 13instruments (including the European Community) were deposited with the Director-General of FAO. Accord-ingly the date of entry into force was 29 June 2004.32 As long as national legislation or subsidiary regulation by the Governing Body are lacking, access to theseresources depends on the CBD ABS regime. See below. 33 It seems that the present insecure legal situation, and the hope of gaining benefits from the ABS proce-dures, prevents farmers donating their varieties.34 There is at present no indication as to how the facilitated access of holders of in situ resources will be han-dled after the expiry of the 2-year trial period of facilitated access. If access to the system is being restricted,without including the in situ preserved PGRFA, access by local farmers or farming communities would belimited to communities maintaining ex situ collections of their seeds and integrating these collections intothe system. It is submitted that, in any case, facilitated access should be granted for small-scale farmers, theircommunities and organizations.

depends on the term ‘in the form receivedfrom the system’, which is highly in need ofinterpretation.

It seems that this wording allows forthe IPR or other protection of ‘new forms’ ofvarieties that are developed on the basis ofmaterials received from the MLS. The ques-tion in this case is what would be the crite-ria to define a ‘new form’? Do theycorrespond to the PBR or patenting criteria?In this case traditionally bred landraceswould in any case remain under the pre-scriptions of the system and under its obli-gation to facilitate exchange. It is submittedthat for reasons of equity, means ought to befound to recognize ‘new forms’ (contra Arti-cle 12.3(d))35 of varieties developed byfarmers traditionally breeding on the basisof a MLS variety received from an ex situfacility. This would provide a legitimiza-tion to limit the facilitated access and allowthe breeder to sell his variety to interestedformal breeders or in regional markets, thusrewarding his breeding efforts.

VARIETIES AND TK OUTSIDE THE MULTILATERAL

SYSTEM

Given this, a rather complex pattern ofaccess situations arises, as by far not allPGRFA are yet included in the MS.

For instance, the MLS is not applicableto:

● All varieties in countries which are notparties to the Treaty (unless they are heldin public international institutions whichvolunteer that they are in the MLS).

● Varieties which are not listed in Annex 1and associated knowledge.

● Varieties in private ex situ facilitieswhich are not integrated in the MS.

● Varieties in situ and associated knowl-edge.

● Varieties protected by intellectual prop-erty rights.

● Materials under development.36

It is submitted that in these cases if thecountry is a signatory to the CBD, then therules of the CBD regime on ABS apply. TheCBD provisions on ABS cover access toPGR of all kinds, so they can thus be con-sidered as a general and subsidiary rule.This solution is supported by Article 1 ofthe ITPGRFA that points out the need toclosely link the IT to the CBD.

With a view to in situ accessions, it cantherefore be argued that in the absence ofnational legislation or specification by theGoverning Body of the ITPGRFA, access toand collection of accessions in situ is sub-mitted to the ABS regime of the CBD. Thatmeans that for each accession the conditionsof this system are to be fulfilled. As for thevarieties which are included in the MLS andcollected to be stored in an ex situ facility,this also encompasses the informed consentto future facilitated access, which means,first, that neither the accession nor associ-ated TK is to be tracked back to its originalholders; and, secondly, that the sharing ofbenefits follows the rules of the MLS.

In this context, the question arises as tohow the collection from in situ resourcesfor ex situ facilities and other uses can bemade operational in the future. First,whether it is possible to find the means andconsensus to simplify the PIC requirementsfor those PGRFA and, secondly, whatwould be the benefit to the holders of in situresources for contributing their varieties toex situ facilities? It is submitted that inorder to create an incentive for grantingaccess, it is necessary that some sort of ben-efit accrues directly to the donors of thegermplasm.

Conclusions and discussion

The contractual ABS system is highly com-plex and diverse, covering various subjectmatters, a great variety of stakeholders anddifferent systems for ruling ABS.

The CBD system, which is applicable


35 From the rather obscure formulation of Article 12.3(d) it seems to follow that the interdiction to limit thefacilitated access covers only the varieties as received by the ex situ facility and not changed by any breed-ing efforts (cases of ‘pure’ biopiracy).36 For further exemptions see Articles 11–13 ITPGRFA.

for PGR (including PGRFA and TK), can beused as the basis upon which to establishnational frameworks to facilitate bilateralcontractual agreements negotiated betweenthe involved stakeholders. The correspon-ding provisions regulating ABS are directedto the Contracting Parties, and their imple-mentation is explicitly subject to nationallegislation. Thus, the details for the opera-tion of the system – such as the determina-tion of the stakeholders to be involved inthe negotiations, the procedures and thesharing of benefits between the stakehold-ers of the providing countries – mostly needto be defined on the national level, theBonn Guidelines giving some interpretativeassistance to this end. This is also true forthe holders of in situ traditional PGRFA andassociated TK.

Notwithstanding the provisions of theBonn Guidelines and the greater degree ofdifferentiation provided by the ITPGRFA,many questions remain, in particularregarding the involvement of grassrootsstakeholders. The main question is, ofcourse, how to implement the system ofABS on both the national and internationallevel, and also to make it rewarding forsmall-scale farmers. With regard to the MLSit is to be asked how to make the systemwork for local stakeholders. In order to besupportive of the in situ maintenance ofdiversity of PGRFA it is essential that theadvantages of the system, be they the accessto ex situ collections or the other benefitsprovided by the system, have a low thresh-old of accessibility for farmers, their com-munities and organizations.

With regard to operationalizing theABS system for PGRFA not otherwise inte-

grated into the system, the challenge will beto create standardized instruments (MTAs)which allow for transparent and swift nego-tiations.37 Supporting institutions, such asclearing house mechanisms or private col-lecting societies (Chapter 6) could proveuseful to facilitating information in supportof the marketing and the conclusion of con-tracts.

7.3.3 The ABS system at the interface withmarkets: issues to consider

Introduction

Bilateral contractual instruments for themanagement of ABS to TK associated withPGR and traditional PGRFA have theadvantage of adaptive flexibility, allowingfor solutions to be determined on a case-by-case basis according to the needs of the par-ties.

However, up to now, few success sto-ries have been reported relating to both theintegration of local people in the ABSprocess and their sharing of benefits. Theoperation of the principles proves to be dif-ficult in practice.38

The following problem areas can beidentified in the context of internationaltrade:

● The marketability of the goods and theinformation per se.

● The identification of the relevant stake-holders and their integration into theprocess and the possible inequality of thenegotiating partners.


37 It has been suggested that the FAO code of conduct should be referred to for the basic elements of suchagreements.38 See, for example, the Case Studies on Access to Genetic Resources and Benefit Sharing of the CBD(http://www.biodiv.org/programmes/socia-eco/benefit/case-studies). The major part of the studies treats insti-tutional matters or describes projects. The same is true for WIPO’s contracts database:http://www.wipo.int/globalissues/databases/contracts/summaries/ind One (or maximum two) model agree-ments out of 16 are about the cooperation between a research institute and a holder of TK (Model Agree-ment between the National Institute for Pharmaceutical Research and Development, Nigeria and aconsultant Herbalist, 1997); the actual agreements published on the website all involve governmental agen-cies, research institutes and companies. But see the initiatives in India (Case study, Chapter 3 and the descrip-tion of the initiatives of SRISTI/Honeybee and the National Innovation Foundation in Chapter 7(Registration)). Compare also Ruiz Muller (2000).

http://www.biodiv.org/programmes/socia-eco/benefit/case-studies

http://www.wipo.int/globalissues/databases/contracts/summaries/ind

● The internationality of the trade relationsand the limited reach of national legisla-tion, which could bring about problemsof control, implementation and enforce-ment.

● The dichotomy between the rationale toprotect PGR and associated TK from ille-gitimate use on the one hand and thewish to promote and facilitate trade onthe other.

It is submitted that further measuresare essential to meet the goal of successfulABS arrangements, such as the develop-ment of markets, information and capacity-building, and also the establishment ofsupportive measures on the side of therecipients. These will be discussed in thefollowing section.

Further, the (contractual) ABS systemitself seems not to be without controversy.The respective positions of the USA andBrazil, as expressed in their statements tothe Council for TRIPS in regard to review ofthe provisions of Article 27.3(b), may serveas an example for two opposite positions:39

The US is in favour of the instruments ofbilateral contracts on ABS backed bynational or local legislation. It perceivesthe contracts as means to make clear fromthe start (all of) the conditions for access,including the rights and duties of partiesinvolved as well as additional issues suchas questions of court jurisdiction, and con-ditions to be met by contracts concludedwith third parties.40

Brazil claims that a contractual approach isclearly insufficient to protect transfer ofTK. It points out that bilateral contracts arenot easily enforceable, in particular ininternational trade relationships.41 Further-more, it argues that there is no way toensure that the consent received from the

communities is an informed one, neitherthat the benefit sharing will be fair andequitable, as they may be the result ofnegotiations between unequal parties. It issubmitted that only a proprietary protec-tion will ensure that market forces willoperate to generate fairness and equity.42

An important step in the future evolu-tion of the ABS regime is the recommenda-tion of the Johannesburg World Summit tonegotiate a binding instrument or bindinginstruments for its concretization andimplementation. It will also be crucial thatin this process the aspects of the market andthe marketing of PGRs and TK are takenaccount of.

Value of PGRFA and TK and the creation ofmarkets

The value of PGR, PGRFA and associatedTK for research and development in indus-trial production processes is controversial(see Chapter 1, this volume).

In the pharmaceutical sector, indus-tries show some interest in TK as a ‘poten-tially valuable source of creativity andinvention outside the communities fromwhich the knowledge originates’(WBCSD/WZB, 2003). However, some firmslike Novartis point out that ‘the potentialcontribution of bio-prospecting to thebiotechnology industry and the communi-ties involved may not be as substantial … aspreviously believed’ (1999, p. 5).43 Accord-ingly, Baruffol (2003) concludes that, evenif natural compounds and their derivativesmay continue to be of interest for the phar-maceutical industry, ‘bioprospecting, atleast within the next years, will not havethe potential to create ... conservationincentives to a larger extent’ (p. 112).


39 WTO, Council for TRIPS. The Protection of Traditional Knowledge and Folklore: Summary of Issues raisedand Points made. IP/C/W/370, 8 August 2002, No. 23. 40 WTO Doc. IP/C/W/209, Review of the Provisions of Article 27.3(b): Further views of the United States, p.6.41 WTO Doc. IP/C/W/228, No. 23. Compare also the statement by India: ‘the time, effort and moneyinvolved in getting individual patents examined and revoked in foreign patent offices is prohibitive’(WT/CTE/W/156, No. 10). 42 WTO Doc. IP/C/W/228, Review of Article 27.3(b), Communication from Brazil, No. 34.43 See also the statements in Baruffol (2002, p. 112).

For PGRFA, Correa (2000) draws a sim-ilar conclusion. He maintains that themarket value produced by the gene flowfrom farmers’ varieties to privately mar-keted cultivars is very modest,44 and con-cludes that ‘though it is expected that thedemand for primitive materials mayincrease in the future … it would be unreal-istic to think that substantial value may bederived from current gene flow of farmers’varieties held in in-situ conditions’ (p. 10).The International Association of PlantBreeders (ASSINSEL) points out thatgenetic diversity in landraces and wildspecies represents resources with limitedpresent value for breeding purposes formost species. It is argued that they require agreat deal of time and effort to explore,investments which – as a rule – commercialbreeders cannot afford (1998, p. 1). Fromthis it can be concluded that the benefitsresulting from industrial companiesprospecting PGR, PGRFA and additionalTK will be less substantial than formerlyexpected or hoped for.

Therefore, it is submitted that the gen-eration of benefits first requires the devel-opment of respective markets. In thiscontext, two aspects are perceived as beingessential: first, it seems to be crucial notonly to market the genetic, biochemical orinformational resource as such, but also toidentify and develop markets for primary,semi-processed and processed products,produced on the basis of the biologicalresources and their associated TK. Accord-ingly, the markets for the ‘raw’ productsneed not only to be situated in an interna-tional (‘South–North’) context, but produc-tion chains and markets for processedproducts may also be created and found on

the local, regional and national level.45 Thisline of thought indicates that the issue ofaccess to genetic resources and associatedTK might not only be an issue in the inter-national North–South context, but also onthe local or national level. From this fol-lows, secondly, that ‘benefits’ may notexclusively consist of direct, economicremuneration and compensation, but mayalso be generated by the sharing of the out-comes of (cooperative) research, whichallows for the generation of a value-addedproduct in the provider country itself.

The creation of markets and successfulmarketing, including the exploitation ofinstruments to support the marketing ofparticularly high-value or high-qualityproducts, such as geographical indications,trade marks and labelling, all need to beevaluated and the option to create support-ing measures in the framework of the worldtrade order are to be assessed (Chapters 6and 8, this volume).

Marketing and access legislation

Important factors influencing the market forgenetic resources and associated TK are thetransaction costs and legal security in viewof the legitimacy of the transaction.46

Novartis, for example, cautions against toocomplicated access procedures and pointsout the connection between access legisla-tion and marketability of the information:‘if access to biodiversity becomes toobureaucratic, time consuming and expen-sive, then the importance of biodiversitymay become limited to research and aca-demic arenas, instead of market-orientedindustrial applications’ (Novartis, 1999).47


44 According to one study, materials from ex situ gene banks contributed 3% of the germplasm used by indus-trial breeders, and materials from in situ conservation areas a further 1% (Swanson and Luxmoore, cited inCorrea, 2000, p. 10).45 See Gupta (1999/2000) Securing traditional knowledge and contemporary innovations: can global tradelinks help grassroots innovation? See also as examples the initiatives of community-based commercial culti-vation of indigenous medicinal plants by the International Centre of Insect Physiology and Ecology (ICIPE)and the University of Nairobi (http://www.icipe.org). 46 No pharmaceutical company finds favourable, after having carefully negotiated a contract with a com-munity, acquired the information, and developed a product, to be then ‘in the last minute’ accused of bio-piracy.47 See also WBCSD-WZB (2002, pp. 18–23, in particular Nos 76 and 77).

http://www.icipe.org

In this context, Cabrera Medaglia(2003) points out that – instead of promot-ing access – the national regulations ofsome countries have focused more ondefensive measures, introducing strict con-trols to prevent ‘biopiracy’. This generateshigh transaction costs and bureaucratic pro-cedures and the absence of applications foraccess. He argues that ‘as long as the ideapersists that access represents a way ofcolonialism instead of a mechanism for thegeneration of appropriate joint initiativesfor all participating parties, the possibilitiesof generating desirable results will be muchmore limited’. That means, first, that inorder to promote the marketing of TK andPGRFA, access procedures must be trans-parent, flexible and as simple as possible.48

They must assure legal security in provid-ing a clear legal basis for the transaction,and designate the parties to be integrated onthe provider side in the negotiation andconclusion of the contract.

The question is whether ways can befound to make these criteria compatiblewith the option to integrate the grassrootsproviders of the information into theprocess. It is suggested that such integrationmight even be advantageous: the assent ofall stakeholders could be secured, mutualtrust created and the risk of (political)opposition minimized.

However, specific conditions must befulfilled in order not to complicate the pro-cedure: the process and its participants,including the holders or owners of theresources, must be defined clearly. Fromthe perspective of the communities or indi-vidual holders of the information, it wouldbe advantageous to clearly identify the mar-ketable information; this might in particu-lar be the case where the information isintegrated in a sacred, spiritual context.Documentation and registration might be asuitable means to this end (see (d), below

and Chapter 6). Further, the competenciesand decision processes within the commu-nities must be established.49

Control on the side of the users of theinformation

According to Cabrera Medaglia (2003),there exists a connection between thedefensive access legislation of donor statesand the lack of control mechanisms on theside of the users of the information. Hemaintains that implementation problemsare the reason behind the defensive, ‘dra-conian’ and prohibitive access regulationsadopted by the provider countries to pre-vent biopiracy.

The problem is that bilateral contrac-tual agreements on ABS are effective onlybetween the parties to the contract: thirdparties are not bound by their terms. There-fore it is difficult for the providing party tofollow the R&D process, to be aware of pos-sible resulting IPR and to control the legiti-mate use of the information by itsrecipients. This is true for state agencies ofthe providing countries,50 but even more sofor providers at the community level.

The same is also true for the control ofbenefit-sharing agreements. Apart from anyup-front payments, a fair sharing of the ben-efits requires the disclosure of acquiredbenefits and transparency with a view tonet gains, which is all based on mutualtrust.

Decision 391 of the Andean Pact coun-tries provides for sanctions of infractionsagainst its provisions outside the AndeanCommunity. According to Articles 46 and47 and the second complementary provi-sion, illicitly attributed property rightsmust not be acknowledged within theAndean Community, and further access toPGR and TK by the violator can be denied.This solution, which applies only to the


48 This is in particular true for access for academic research; the ITPGRFA might provide valuable inspira-tion to this end.49 See, for example, the Novartis-Uzachi case, where it was an important prerequisite for success that thecommunities had established decision processes in the management of their natural resources. Baruffol(2003, p. 114).50 See Communication from Brazil to the Review of Article 27.3 TRIPS (IP/C/W/228) No. 24.

Member States of the Cartagena Agreement,illustrates the imperfection of the system inview of the international or global dimen-sion of the interests involved and the inter-national character of the markets.

In sum: the implementation problemsbrought about by the internationality of theissue and the details of the contractual solu-tion encompass not only the control of thelegitimate use of the information, but alsothe question of bringing about fairness inthe sharing of benefits.

The proposed remedy is the adoptionof control measures on the side of the recip-ients and users of the information. It isargued that this would enable the providersto streamline their legislation in a moreuser-friendly way, supporting the buildingof trust and the generation of joint initia-tives for all participating parties.51

This conclusion is furthermore backedby an equity argument. It is submitted thatthe principle of equity demands that theburden of regulating ABS be borne by bothproviders of genetic resources and TK andthe recipients. This is a strong argument forthe obligation to create supportive meas-ures, such as the control of the legitimateaccess to genetic resources and related TK,to be applied on the side of the recipients.

The designation and integration of holders ofTK, including capacity-building

Another problem of the contractualapproach is that we have to deal with acomplex situation involving a variety ofstakeholders on different political levelsand in different countries. As mentionedabove, in order to determine participationin access negotiations, it is crucial to deter-mine the holders of TK and/or PGRFA. Theabsence or uncertainty regarding ownershipimplies difficulties in securing PIC.

This issue has two aspects: on the one

hand, the original owners or holders of theinformation must be determined; and onthe other hand, transparency is to besecured throughout the process, whichmight imply various ‘layers’ of stakehold-ers.

THE NECESSITY OF IDENTIFYOMG THE HOLDERS OF

THE INFORMATION

The approach for identifying or designatingthe holders or owners of PGRFA seems todiffer from that applied to associated TK.

The issue is complex because of thegreat variety of possible situations. Thenature of TK, access to it and competenceover it all depend on the social, environ-mental and cultural context in which it isfound. It might be in some cases that farm-ers’ varieties can be clearly allocated to spe-cific farming communities (see Chapter 4,this volume), whereas TK associated withmedicinal plants is considered to becommon to an entire biogeographicalregion. On the other hand, medicinal TKcan be entirely in the hands of one individ-ual shaman, whereas PGRFA may not evenbe specifically considered as the result of acreative process.

Whereas it seems to be generallyacknowledged that the negotiation of anABS contract has to include the holders ofthe knowledge, and that contracts must bebased on their prior informed consent andon terms mutually agreed with them,52 thisis not always the case for the on-farm-bredPGRFA. For instance, in the AndeanCommon Regime on Access to GeneticResources53, the rights over all geneticresources are considered to belong to thepatrimony of the Nation of each MemberCountry. They are – as ‘goods of the Nation’– assigned to the state, independent of thelegal regime applicable to the biologicalresources, meaning the physical entity that


51 See CBD COP Dec. V/26, No. 4, reiterated in COP CBD Dec. VI/24, No. 8 (c).52 See, for example, Guidelines Nos. 17 ff.; Peru, Law No. 27811 on the Protection of Collective Knowledgeof Indigenous Peoples derived from Biological Resources, Chapter 2, this volume; Costa Rica, Law on Bio-logical Diversity, described in Cabrera Medaglia (2003).53 Decision 391 ‘Common Regime on Access to Genetic Resources’, Commission of the Cartagena Agree-ment, July 1996.

contains them or the associated knowl-edge.54 Similarly, in Costa Rica, genetic andbiochemical wild and domesticatedresources apparently belong to the state(Cabrera Medaglia, 2003).

However, it is also maintained that inthe case of PGRFA55 the farmers or tradi-tional on-farm breeders ought to be desig-nated as the holders of their varietieswherever possible, particularly in the caseof semi-formal on-farm breeding of tradi-tional varieties. As discussed earlier, thiswould allow their participation in the con-tractual ABS system or in the MS.

The creation of registration systems,possibly combined with a licensing system,is proposed to resolve the problem of theidentification and allocation of associatedTK to its holders (Chapter 6).

THE NECESSITY OF TRANSPARENCY IN TRADE

In respect of companies and research insti-tutes seeking access, the body responsiblefor negotiations is the agency designated bythe state. The problem frequently is thatboth within purchasing and providingcountries several ‘layers’ of stakeholderexist, and the information is passed on byseveral intermediary institutions or agen-cies.56 In order to be able to verify the legit-imacy of the access it is necessary to makesuch procedures transparent. Proposedinstruments to do this include certificatesof origin, or licensing systems57 to provethe legitimacy of acquisition, and thus guar-antee legal security. In all these systems,however, the tracing of processes and theproof of legitimacy are bound to be compli-

cated. In any case, a great amount ofcapacity-building is necessary, not only onthe side of the holders of TK, but also on theside of intermediary agencies and pur-chasers.

7.3.4 Conclusions

The application of the system of ABS to TKreveals a highly complex situation. Despiteinterpretative assistance provided by theBonn Guidelines and the more exact differ-entiation found in the ITPGRFA, manyquestions remain unanswered, especiallyregarding the involvement of grassrootsstakeholders. The management of ABS ofTK associated with PGR and traditionalPGRFA in bilateral contractual instrumentshas the advantage of flexibility, whichallows its adaptation to different situations,on a case-by-case basis. However, until thepresent time few success stories have beenreported relating to either the sharing ofbenefits or to the integration of local people,and, as described above, the operation ofthe principles proves to be difficult in prac-tice and it has the negative impact of actu-ally discouraging exchanges of materialsthat are essential to breeding, research andconservation.

Approaches for the solution of theseproblems might lie in the further evolutionof the Bonn Guidelines and, within theITPGRFA, in the implementation of farm-ers’ rights and the further development ofthe elements of the Multilateral System(Material Transfer Agreements and FundingSystem).


54 See in detail Rosell (1997). Rosell takes a critical approach to this solution, stating that the property rightsregime envisaged by the Decision might be less effective than one based on private property rights. ‘From apolicy point of view, Decision 391 could have gone further towards recognizing the individual as the ownerof the genetic resource, so as to benefit directly the national who has conserved and made available theresource. This in turn might have enhanced the control and enforcement mechanisms which constitute itsweak aspects’ (p. 282). 55 As to the problems of allocation of traditionally ‘on farm’-bred varieties see Chapter 4, this volume.56 Example of Zimbabwe: Local healers transmitted information and plant samples to the local university.The local university transmitted the samples to a Swiss university. The Swiss university sold the results ofresearch to an American company.57 Tobin (1997, p. 337); Peruvian Law No. 27811 on the protection of the collective traditional knowledgeof indigenous peoples, Articles 25–33. Certificates of origin to prove the legitimate acquisition of a good area common instrument to control, for example, trade in endangered species.

It is submitted that a broad variety ofsupporting measures are needed to allowthe providers of TK and traditional PGRFAto increase the benefits received from theirresources and wisdom. The followingpoints are considered to be essential:

● Instruments and institutions for the clearidentification of local stakeholders are tobe created, such as documentation, regis-tration and sui generis erga omnesrights.58 It is necessary to support abottom-up approach, where the entitledstakeholders are clearly designated andintegrated in the instruments.

● Capacity-building measures are neces-sary for both the providers and pur-chasers of the biological resources.

● The obligation by the providers and pro-viding countries to facilitate access mustbe balanced against the obligation ofrecipients to create control instruments.Control instruments (for legitimateaccess) are to be created either on thenational or international level (or both).

● Technology transfer is to be furthered, inparticular to support the development ofprocessed products and to encouragetrade on the local, regional and/or inter-national level. Instruments to supporttrade in high-level products should beevaluated and the options within WTOassessed.

● It might be advisable to find means toassess the cost-benefit ratio of measures,e.g. the potential market value of theresources in question in particular coun-tries, so as not to go down the route ofexpensive regulation for no return bene-fits.

7.4 Financial Mechanisms forCompensation of Non-assignable

Traditional Plant Genetic Resources andTraditional Knowledge59

7.4.1 The role of a future financial mecha-nism in the context of access to genetic

resources

Aims and functions of a future financialmechanism

This section examines the possibility ofestablishing an international mechanismfor providing financial resources for the val-uation of TK associated with PGR and tra-ditional PGRFA, where neither IPR nor suigeneris rights can be allocated.60 In theabsence of allocated rights, the challengewill be to design a financial mechanism thatcan substitute the compensation of TKholders through the exercise of the relevantrights by these holders. Ways and meansmust be found to generate financial meansand to direct them to the holders of theknowledge in a way that supports thepreservation and maintenance of TK, thepromotion of its wider application with theapproval and involvement of the holders,and the equitable sharing of the benefits, asset out in Article 8(j) of the Convention onBiological Diversity (CBD). Ultimately, thefinancial mechanism should contribute tofurthering the aims of the CBD as they relateto plant genetic resources, and those of theITPGRFA, namely the conservation andsustainable use of the genetic resource baseand the equitable sharing of benefitsderived from it.

In order to achieve this overarchingobjective, the mechanism should fulfil thespecific functions outlined below.

First, a central function of a futurefinancial mechanism will be to promote theequitable sharing of benefits derived fromplant genetic resources, and to compensate


58 See WTO IP/C/W/370, 24–28.59 Author: Katharina Kummer Peiry. I wish to thank Juliette Voïnov, Martin Girsberger and Susette Biber-Klemm for their input and comments on earlier drafts of this section.60 The problem of allocation of intellectual property rights and sui generis rights is discussed in Chapter 4,this volume.

holders of TK associated with PGR and tra-ditional PGRFA for the service they provideto users of the resources and to the interna-tional community at large. As far as thefinancial burden of contributing to themechanism is concerned, this should beshared among interested persons and enti-ties in a manner that is perceived as fair andequitable by all. This will enhance the legit-imacy of the mechanism and the willing-ness of actors to contribute to it. Criteria tobe considered in equitable burden sharinginclude the financial capacities of the actorson the one hand and the extent of their useof the resources on the other.

Secondly, sufficient financial means,the availability of which is assured on along-term basis, are indispensable for afunctioning financial mechanism. Withoutsuch a basis, a mechanism is not able tooperate in accordance with an ongoingwork plan and budget. In addition, projectsaimed at sustainable resource managementoften have a long life span. An importantelement of the predictability of funding isquantification of the incoming funds. Thecreation of a broad financial basis also callsfor the inclusion of as many sources offunding as possible. In building a financialmechanism, a central question thus con-cerns the means by which the most fundingcan be generated in the most reliable andpredictable manner.

Thirdly, a future financial mechanismshould ideally influence the behaviour ofrelevant actors by creating incentives forpreserving and maintaining TK associatedwith PGR and traditional PGRFA. Thisincludes the valuation and support ofefforts at conservation and sustainable useof plant genetic resources, and the empow-erment of TK holders. In accordance withthe nature of the mechanism, these incen-tives will be of a financial nature. Themechanism should provide the appropriateincentives both for users of PGR andPGRFA, who are the prospective contribu-tors to the mechanism, and for holders ofTK associated with PGR and traditionalPGRFA, who are the prospective recipients.As regards users, the creation of incentivesfor the private sector (in particular, relevant

industry depending on access to specificresources) to contribute to the mechanismis a particularly important aim.

Elements of a future financial mechanism

If an international financial mechanism isto be established for the purpose of achiev-ing the above aims and functions, the fol-lowing elements of the mechanism willneed to be defined.

First, as the financial mechanism is tooperate at the international level, it shouldbe established in an international frame-work, either as part of an existing interna-tional body or as an independentinternational institution. The mechanismshould be established by an internationallegal instrument, which would constitutethe legal basis of its operation. As a mini-mum, it needs to feature an executive bodywith the competence of generating financialmeans, in general by collecting contribu-tions, and of disbursing funds to recipients.It should also have a supreme organ towhich the executive body is accountable.Rules must be elaborated for the generation,administration and disbursement of funds.This will include a procedure for submis-sion of claims and for decisions regardingthe disbursement of funds. Depending onthe size of the operation, the body will needto be supported by a secretariat. The futuremechanism must have a legal personalityrecognized by all parties involved in itsoperation. As it will be established at theinternational level, this must include recog-nition by the legal systems of participatingstates.

Secondly, the sources of funding andthe methods of generating funds must bedefined. There are various possibleavenues. In view of achieving a stable andpredictable financial basis, the most obvi-ous is the establishment of a system bywhich defined contributors (states and/orprivate entities) must make regular finan-cial contributions to the financial mecha-nism. This can be done, for example, byusing a scale of assessment setting out cri-teria for the level of contribution, in accor-dance with the financial position of the


contributor.61 Another method to be con-sidered is a levy on a certain type of activ-ity or on the use or consumption of acertain type of good. In the present case,this would mean any direct or indirect useof TK associated with PGR and traditionalPGRFA. This approach has the advantage ofplacing the financial burden on the personsbenefiting directly from the pertinent activ-ity, and making the size of the contributiondirectly dependent on the extent of eco-nomic benefit derived from the TK andresulting genetic resources. This wouldconstitute a contribution to equitableburden sharing.

Thirdly, the contributing entities mustbe defined. Bearing in mind the function ofcompensating holders of TK associatedwith PGR and traditional PGRFA, for theirservice to those using the resultingresources, contributors to the financialmechanism should be entities that reason-ably can be assigned financial responsibil-ity in this context. An obvious motivationfor assigning such responsibility is the factthat the contributor directly or indirectlybenefits from TK associated with PGR andtraditional PGRFA. This is the case for any‘user’ of such knowledge, notably privateenterprises (for instance, seed companies)and research institutions. The motivationfor assuming financial obligations couldalso be the more general role of the state inensuring the protection of fundamentalinterests of its nationals as well as the con-servation and sustainable management ofits genetic resources base. Thus it would beconceivable also to devise a system bywhich contributions are made by states(Girsberger, 1998). In view of achieving abroad financial basis, the establishment of afinancial mechanism involving contribu-tions both by states and by private entitiesmay be the most efficient approach.

Fourthly, the claimants need to bedefined. As the mechanism has the functionof providing financial compensation to

holders of TK associated with PGR and tra-ditional PGRFA, in cases where the alloca-tion of traditional or sui generis IPR is notpossible, the definition of the claimantsshould not be too restrictive. At the sub-stantive level, it should be possible todefine as claimant any entity that is either aholder of TK, or working to promote theinterests of TK holders, independently ofwhether or not the entity in questionassumes a recognized legal form, in order toaccommodate the often informal characterof TK holders. At the procedural level,however, it will be necessary to define theholder as a natural or legal person, in par-ticular for the purposes of the procedure tobe established for the submission of claimsand the disbursement of funds. In order toreconcile these conflicting needs, it will benecessary to find a way of designating per-sons or organizations as formal representa-tives of relevant informal communities, andto require appropriate legitimization. Henceclaimants could be defined as organizationsformed by holders of TK associated withPGR and traditional PGRFA (for instance,village council or similar), or NGOs with arecognized curriculum in the pertinentfield.62 In the case of utilization of generallyknown information in the context of PGR(for instance, neem), it is conceivable thatentire countries, provinces or communitiesbe defined as recipients. The verification ofa claimant’s legitimacy will be one of thetasks of the body operating the fund.

Fifthly, it will be necessary to define thecriteria for disbursement of funds. The flowof financial resources must be designed soas to support the aims as outlined above. Inview of the often informal nature of holdersof TK associated with PGR and PGRFA, andtraditional PGRFA, which may make repre-sentation by a natural or legal person neces-sary, it is important that suchrepresentatives can only obtain funding foractivities that demonstrably support theaims. An approach to be investigated is to


61 This is the method of defining contributions to certain UN institutions or conventions by member states.The UN scale of assessment is based on the GNP of the states.62 Girsberger (1998, p. 308) mentions the possibility of claimants being NGOs representing holders of Farm-ers’ Rights.

disburse funds for the implementation ofprogrammes or projects that promote one ormore of the aims outlined above. Such proj-ects would have to be submitted to the bodyadministering the fund, which would deter-mine whether or not the project met the cri-teria.63

7.4.2 Analysis of existing mechanisms aspossible models

This paragraph analyses a number of exist-ing multilateral financial mechanisms ininternational law, with a view to establish-ing their potential usefulness as models fora future financial mechanism for TK associ-ated with PGR and traditional PGRFA,taking into account the aims discussedabove. Emphasis is placed on financialmechanisms that feature the elements dis-cussed above. Where it is considered to beof particular interest, instruments will alsobe discussed that are not financial mecha-nisms but include one or more of the aboveelements. The following paragraphs discusstwo different types of financial mechanismsused in international environmental law,namely assistance funds and compensationfunds, as well as the Flexible Mechanismsof the Kyoto Protocol, which may providesome interesting insights. It then goes on toprovide an overview of pertinent ongoingwork within the framework of FAO.

There are a variety of existing andprospective financial mechanisms in inter-national environmental law. Their structureand functioning are conceptually differentin accordance with the aims for which theyhave been established. The following fun-damentally different purposes of a mecha-nism of this type can be distinguished.

Financial mechanisms aiming at the provisionof assistance to developing and transitional

countries (‘assistance funds’)

This type of financial mechanism is used inthe field of environmental protection. Its

aim is generally to assist recipient states inmeeting their obligations under interna-tional law, and to develop or strengthentheir capacities and infrastructure for adopt-ing environmental protection measures atthe national level. Where the mechanism isestablished in the framework of an MEA, itsfunction is to assist party states in theimplementation of that MEA at the nationallevel. Assistance funds are established by aninternational legal instrument, and operatedby a multilateral organization. The estab-lishing instrument determines their man-agement and administration, as well as themeans of generating funds and the criteriafor distribution. Both donors and recipientscan only be states: this type of fund does notprovide for contributions or claims by non-state entities. The establishing instrumentdefines donor and recipient states, and thescale of assessment for contributions ofdonor states and the criteria for financingactivities in recipient states. As a generalrule, donor states are industrialized coun-tries, whereas recipient states are develop-ing countries and countries with economiesin transition. Where the financial mecha-nism is linked to an MEA, only contractingparties can be donors and recipients.

Special types of assistance funds aretrust funds for particular activities to be car-ried out in the framework of an MEA. Thesefunds also aim at supporting the implemen-tation of the MEA, but their focus is nar-rower: they support activities related to theoperation of the MEA and the participationof a particular category of countries in theseactivities. Examples of MEAs establishingtrust funds are the conventions for whichUNEP acts as Secretariat, including theCBD, the Basel Convention on hazardouswastes, CITES, and the Vienna Conventionand its Montreal Protocol on ozone-deplet-ing substances. A trust fund has also beenestablished for the Climate Convention andits Kyoto Protocol. Under the Kyoto Proto-col, a number of funds to support climate-related activities are to be established afterits entry into force.64 This type of trust fund


63 For a similar line of argument see Girsberger (1998, p. 308).64 COP Decision 5/CP.6 (2001), Section I.

is established and operated as a part of theinstitutional framework of the relevantagreement; no special body is establishedfor this purpose.

In some cases, the entire budget of aconvention is financed through a trust fund,to which all contracting parties contributein accordance with an agreed scale ofassessment (for instance, Basel Convention,CBD, CITES, ozone treaties). In these cases,the budget is determined by the Conferenceof the Parties (COP). By contrast, contribu-tions to trust funds established for specialpurposes are usually voluntary. Such trustfunds support a fairly narrow and clearlydefined range of activities. Beneficiaries areusually developing countries, in some casesincluding countries with economies intransition. Purposes for which special trustfunds are set up include the participation ofdeveloping and transition countries innegotiating meetings within the frameworkof the convention (Climate Convention,CBD, Basel Convention), technical assis-tance to developing countries (Basel Con-vention, Ramsar Convention on wetlands),and financing of special Secretariat supportto Parties, for instance, workshops, semi-nars and websites (Climate Convention).65

THE GLOBAL ENVIRONMENTAL FACILITY66

The Global Environmental Facility (GEF)was established in 1991 and restructured in1994 through the adoption of the Instru-ment for the Establishment of the Restruc-tured Global Environment Facility (‘theInstrument’). The Instrument lays down thefundamental principles of the operation ofthe GEF, including, inter alia, governanceand structure, principles of decision-making, beneficiaries, as well as contribu-tions of participating countries during thefirst replenishment period (from 1994 to1997).

The objective of the restructured GEF is

to serve as a mechanism for internationalcooperation for the purpose of providingnew and additional grant and concessionalfunding to meet the agreed global environ-mental needs in the following focal areas:(i) global warming/climate change; (ii)pollution of international waters; (iii) lossof biological diversity; (iv) depletion ofthe stratospheric ozone layer; (v) persis-tent organic pollutants; and (vi) land degra-dation. The GEF supports activities in theabove areas through projects on a grantor concessional basis. The projects andother activities are generally carried out incooperation with the institutional mecha-nism of the conventions addressing theissues in question, where such a conven-tion exists.

The GEF is jointly operated by theWorld Bank, the United Nations Develop-ment Programme (UNDP) and the UnitedNations Environment Programme (UNEP).Its principal mechanism is the GEF TrustFund. Other features are the independentScientific and Technical Advisory Panel toassist in the development of criteria forproject selection and to review and com-ment on project proposals, and the SmallGrants Programme for NGOs. There are alsoadditional co-financing agreements. TheWorld Bank carries out the secretariat func-tions for the GEF and is Trustee of the GEFTrust Fund. It is also responsible for theGEF-financed investment projects. UNDPprovides technical assistance, identifiesprojects and runs the Small Grants Pro-gramme for NGOs. UNEP provides the sec-retariat for the Scientific and TechnicalAdvisory Panel and contributes environ-mental experience. Any member state of theUN or of any of its specialized agencies maybecome a participant in the GEF by deposit-ing an instrument of participation in accor-dance with the Instrument. With 174participants (as of April 2003), membershipof the GEF is nearly universal.


65 This is discussed by Ten Kate and Lasén Diaz (1997, p. 289); in the Yearbook of International Coopera-tion on Environment and Development 1999/2000, p. 92 (Climate), p. 108 (Basel Convention), p. 169 (CBD)and p. 174 (CITES); and by Bragdon (2001, p. 2).66 See Glowka et al. (1994, p. 107); Yearbook of International Cooperation on Environment and Develop-ment 1999/2000, p. 220; GEF website: http://www.gefweb.org

http://www.gefweb.org

The governing bodies of the GEF arethe Assembly and the Council. The Assem-bly, in which all participating states arerepresented, reviews the general policies ofthe GEF, and evaluates its operation on thebasis of reports submitted by the Council.The Council is the main governing body,responsible for developing, adopting andevaluating the operational policies and pro-grammes for GEF-financed activities. It iscomposed of 32 members (16 from develop-ing countries, 14 from developed countriesand two from Central and Eastern Europeancountries).

In accordance with the Instrument,beneficiaries of the GEF are the countrieseligible to borrow from the Word Bank,or eligible for technical assistance fromUNDP, i.e. countries with a percapita income of less than US$4000per year. The following principal criteriafor project selection (grants) are applied:(i) the project must benefit the globalenvironment, and (ii) the project must beinnovative.

Any country (developed, developing ortransitional) can pledge contributions to theGEF in accordance with the criteria laiddown in the Instrument. Contributions bydeveloped countries as laid down in AnnexC to the Instrument are roughly in line witha formula based on their shares in theWorld Bank’s International DevelopmentAssociation. For the second replenishment,28 countries announced pledges to theGEF Trust Fund, including ten developingcountries.

In accordance with Article I para.6 of the Instrument, the GEF operates themultilateral financial mechanisms of sev-eral environmental conventions. In operat-ing the financial mechanism of aconvention, the GEF carries out projectsand other activities related to the aims, pri-ority areas and work programmes of theconvention in question. These activities aredetermined in close cooperation between

the COP to the agreements in question andthe Council of the GEF. The COP to themultilateral agreements, in accordance withthe applicable provisions of the agree-ments, regularly provides guidance to theGEF with respect to the operation of thefinancial mechanism, and the Council ofthe GEF regularly reports to the COP of theagreements on activities carried out andplanned in accordance with guidancereceived. Under the UN Framework Con-vention on Climate Change (Climate Con-vention), the COP has adopted a number ofdecisions providing guidance to the GEF infulfilling its function as the financial mech-anism of the Convention, in accordancewith its Articles 11 and 21 and with ArticleI para. 6 of the GEF Instrument.67 At itssecond session in 1996, the COP adopted aDecision that brought into force a Memo-randum of Understanding between theCOP and the GEF Council concerningoperation of the financial mechanismby the GEF on an interim basis.68 At itsfourth session in 1998, the COP desig-nated the GEF as the entity operating thefinancial mechanism on a permanent basis,subject to review every four years.69 TheGEF is also available to meet the agreed fullcosts of activities under Article 12 of theClimate Convention. Investment projectsfinanced by the GEF under the Climate Con-vention focus on the reduction ofgreenhouse gas emissions by increasingenergy efficiency and the use of renew-able energies, as well as support to devel-oping countries to implement the Conven-tion and to prepare nationalcommunications to the COP. The GEF alsopromotes bilateral and multilateral co-financing and the leveraging of privatesector participation and resources. In itsrole as the operating entity of the financialmechanism of the Climate Convention, theGEF has to date provided about US$1.125billion in the form of grants from the GEFTrust Fund for climate change projects in


67 Cf. COP Decisions 10/CP.1, 11/CP.1, 12/1 (1995), 10/CP.2, 11/CP.2 (1996), 2/CP.4, 12/CP.4 (1998), and8/CP.5 (1999).68 COP Decision 12/CP.2 (1996).69 COP Decision 3/CP.4 (1998).

non-Annex I countries.70 In accordancewith Article 11 of the Kyoto Protocol, finan-cial assistance to developing countriesadopting measures under the Protocol is tobe provided, inter alia, through the GEF asthe financial mechanism of the ClimateConvention.71 This task of the GEF willbecome operational after the entry intoforce of the Protocol.

On an interim basis, the GEF also oper-ates the financial mechanism of the CBDand its Cartagena Protocol on Biosafety, andthat of the Stockholm Convention on Per-sistent Organic Pollutants (POPs), as pro-vided in these agreements. The modalitiesare largely the same as under the ClimateConvention.

THE MULTILATERAL FUND OF THE MONTREAL

PROTOCOL ON SUBSTANCES THAT DEPLETE THE

OZONE LAYER72

The Multilateral Fund of the Montreal Pro-tocol is the best-known example of a finan-cial mechanism set up within theframework of an MEA to assist developingcountry parties in complying with theirobligations under the agreement in ques-tion. Its establishment in the early 1990swas considered a major breakthrough infavour of developing countries, which gen-erally prefer an independent financialmechanism to a mechanism under theresponsibility of the Bretton Woods Institu-tions, including the GEF (Lang, 1992).Indeed, the Multilateral Fund of the Mon-treal Protocol remains the only independ-ent financial mechanism in a multilateralenvironmental agreement to date, latertreaties having entrusted the operation oftheir financial mechanism to the GEF (seeabove). In accordance with Article 10 of theMontreal Protocol, which forms part of theso-called London Amendment of 1990, the

Fund was established initially on aninterim basis to meet agreed incrementalcosts to developing countries of implement-ing the control measures of the Protocol. In1993, the Multilateral Fund was establishedon a permanent basis. The implementingagencies are UNEP, UNDP, the World Bankand – as of 1992 – UNIDO, with UNEP alsoserving as treasurer. Contrary to the treatiesdiscussed in the previous section, the Mon-treal Protocol does not entrust the govern-ing of the financial mechanism to anoutside UN institution, but assigns thisfunction to the Executive Committee,which is composed of Parties to the Proto-col. The Meeting of the Parties (MOP) to theMontreal Protocol periodically approves athree-year budget of roughly US$500 mil-lion.

Beneficiaries of the Multilateral Fundare Parties that benefit from a morefavourable schedule under Article 5 of theMontreal Protocol (i.e. Parties that aredeveloping countries and have a yearly percapita consumption of less than 0.3 kg ofCFCs and halons). Contributions are madeby Parties that do not operate under Article5, in accordance with the UN scale ofassessment. Other Parties may contributeon a voluntary basis. The Fund has beenreplenished four times to date: US$240 mil-lion (1991–1993), US$455 million(1994–1996), US$466 million (1997–1999)and US$440 million (2000–2002). As at 28February 2001, the contributions made tothe Multilateral Fund by some 32 non-Article 5 countries amounted to US$1.22billion.

The Executive Committee of the Multi-lateral Fund, in which 14 Parties are repre-sented (seven Article 5 and sevennon-Article 5 countries), governs the opera-tion of the Fund. It is elected by the MOPfor one calendar year. The positions of


70 The countries not listed in Annex I of the Climate Convention comprise all developing countries parties tothe Convention.71 See Yearbook of International Cooperation on Environment and Development 1999/2000, p. 90 ff.;UNFCCC website: http://www.unfccc.de72 On the Multilateral Fund of the Montreal Protocol, see generally Yearbook of International Cooperationon Environment and Development 1999/2000, p. 98; website of the Ozone Fund: http://www.unep.org/ozone/finances.shtml

http://www.unfccc.de

http://www.unep.org/ozone/finances.shtml

http://www.unep.org/ozone/finances.shtml

Chairperson and Vice-Chairperson alter-nate between the two groups of countries.The Executive Committee is responsible forthe development of operational policies ofthe Fund, criteria for project eligibility aswell as other guidelines and administrativearrangements, monitoring of the implemen-tation of these policies, approval of imple-menting agencies’ business plans and workprogrammes, approval of expenditures forinvestment projects and other activities,allocation and disbursement of resources,and the monitoring and evaluation of per-formance.

The Fund Secretariat was establishedin 1991 to assist the Executive Committeein the discharge of its functions. Its activi-ties include the development of a 3-yearplan and budget as well as a system for dis-bursement, the management of the businessplanning cycle of the Fund, the monitoringof expenditures and activities of the imple-menting agencies, the preparation of policypapers and other documents, the reviewand assessment of investment projects,country programmes and the businessplans and work programmes of the imple-menting agencies, liaising between theCommittee, governments and implement-ing agencies, and servicing meetings of theExecutive Committee. The Secretariat alsocarries out the function of monitoring andevaluating the effectiveness of the Fund,which was introduced by the ExecutiveCommittee in May 1997. The Secretariatthus has important substantive functions inthe operation of the Fund, which go farbeyond the administrative and supportingfunctions generally entrusted to secretariatsof international agreements and institu-tions.

OTHER ASSISTANCE FUNDS IN THE ENVIRONMENTAL

FIELD

Additional assistance funds includenotably the World Heritage Fund of theUNESCO Convention Concerning the Pro-

tection of the World Cultural and NaturalHeritage, the Small Grants Fund of theRamsar Convention on wetlands, and theGlobal Mechanism of the UN Convention toCombat Desertification (Bragdon, 2001).The objective of these mechanisms is tofund projects in developing countries tosupport the implementation of the agree-ment in question. The institutional struc-ture and management of funds are similarto the Montreal Protocol Fund. Some fundsprovide for assessed obligatory contribu-tions from industrialized states parties tothe MEA, which are generally rathermodest. However, the larger part of the con-tributions is of a voluntary nature. Accord-ingly, the financial basis is generally moremodest than that of the Montreal ProtocolFund.73

ASSISTANCE FUNDS AS MODELS FOR PLANT GENETIC

RESOURCES AND TRADITIONAL KNOWLEDGE

Funds of this type feature all the elementsdiscussed above. As far as the institutionalinfrastructure governing the mechanism isconcerned, the existing assistance fundsmay well have a certain model function forequivalent efforts in the field of PGR. Interms of generating a stable and predictablefinancial basis, the system of compulsorycontributions based on a scale of assess-ment could also provide a useful model.

The function of assistance funds, how-ever, is a different one from that underlyinga future mechanism for PGR, namelycapacity-building for states to undertakeenvironmental protection activities at thenational level. Consequently, states are theonly actors in this type of financial mecha-nism, and the mechanisms depend entirelyon contributions from states, whether on acompulsory or on a voluntary basis. Inorder to fulfil the function of compensatingTK holders who often have an informalcharacter and are nearly always non-stateactors, appropriate changes would thereforeneed to be made if the concept of an assis-


73 The 1997 Budget of the UNESCO Fund was US$3.5 million: the yearly budget of the Global Mechanismof the Desertification Convention is similar, and that of the Ramsar Small Grants Fund is a few hundred thou-sand Swiss francs. See Bradgon (2001).

tance fund were to be used as a model. Another constraint is the absence of

incentives for contributors. As discussedabove, an important factor in devising afinancial mechanism for plant geneticresources is the creation of incentives forpreserving the genetic resource base. Also, afinancial mechanism is likely to be moresuccessful if there is a direct or indirect ben-efit flowing from contribution. By contrast,the assistance funds offer no incentives forcontributors. Donor states derive no con-crete benefit from their contribution, butcontribute on the basis of the concept of ahistorical and economic responsibility ofthe richer towards the poorer states, and ofthe shared interest in the conservation of thenatural resources of the globe. The absenceof direct incentives makes this mechanisminherently less attractive for donors. As faras recipients are concerned, an assistancefund does provide certain incentives foracting in accordance with the aims of anMEA, as only pertinent activities are finan-cially supported in the recipient state.

Precedents show that the establishmentof an assistance fund is generally a difficultissue in international negotiations, and onethat creates a fundamental North–Southdivide. Developing countries usually favouran independent financial mechanism, as inthe Montreal Protocol, an attitude in partdue to these countries’ inherent mistrust ofthe GEF. Developing countries also gener-ally want to endow the fund with far-reach-ing responsibilities. Arguing that they lackcapacities for implementing MEAs, theystrongly support making the extent of theirimplementation of a given treaty dependenton the level of funding they receive fromthe mechanism.

Developed countries, on the otherhand, are usually opposed to the establish-ment of an assistance fund. Since suchmechanisms are generally administered by abody with equal representation of recipientand donor countries, as in the case of theMultilateral Fund of the Montreal Protocol,or with a majority of recipient countries, asin case of the GEF, developed countries feel

they would be contributing to a mechanismover which they do not have control. Theyare also reluctant towards the creation ofnew institutional infrastructure with theresulting additional costs and bureaucracy.Developed countries therefore generallyprefer existing bilateral channels, namelyoverseas development cooperation, to beused for financial support of implementa-tion of an MEA by developing and transitioncountries. In addition, budget cuts in manygovernment administrations in recent yearshave led to a reduction of the amount ofmoney available for international financialmechanisms, which is an additional reasonfor prevailing reluctance on the part of mostdeveloped countries. This political diffi-culty should also be taken into account ifthis type of financial mechanism were to beconsidered as a model.

Financial mechanisms forming part of a treatysystem on civil liability for environmentaldamage caused by potentially hazardous

activities (‘compensation funds’)74

The financial mechanisms discussed in thisparagraph, often referred to as ‘compensa-tion funds’, are designed to supplement aninternational civil liability regime throughprovision of compensation to personshaving sustained damage as a result of apotentially hazardous transaction, in caseswhere compensation is unavailable or onlypartly available under the civil liability pro-visions. They are established within theframework of an international legal regimeon civil liability for damage caused bypotentially hazardous activities, either bythe treaty addressing civil liability, or by aseparate treaty that has a link to the civilliability treaty. The objectives of a compen-sation fund are to ensure adequate compen-sation of victims of environmental damage,and to spread the financial burden of com-pensation among the potential perpetratorsof damage (Doeker and Gehring, 1992;Kummer, 1995/1999). In this respect, it ful-fils a similar function to insurance.

There is an inherent close relationship


74 For an analysis see Kummer (1995/1999, p. 252 ff.).

between the civil liability agreement andthe compensation fund. The civil liabilityagreement sets out the obligation of the per-petrator of damage, generally an operatorcarrying out a potentially hazardous activ-ity, to pay compensation to persons havingsuffered damage as a result of that activity,if his liability is established. This approachconstitutes a unification of laws, designedto overcome the procedural obstacles inher-ent in the perpetrator and the victim beingsubject to the jurisdiction of different coun-tries with different legal systems. An inter-national agreement on civil liability isself-executing, i.e. creates enforceablerights and obligations for private personsunder the jurisdiction of contracting partiesto the treaty. The liable persons, as well asthe victims, are generally private persons.The state as such does not have a roleexcept where it is the perpetrator (forinstance, as operator of a hazardous instal-lation) or the victim of damage (forinstance, as owner of contaminated land).

As a general rule, civil liability treatiesestablish a financial limit of liability of theoperator. In addition, there is usually anexclusion clause, for instance, wheredamage is the result of force majeure,armed conflict or acts of terrorism. Also,practical reasons may make it impossible toobtain full compensation under the liabilityregime: for instance, where the identity ofthe perpetrator is not known, the perpetra-tor cannot be held liable in accordance withthe liability treaty, the damage exceeds thefinancial ceiling set by the regime and/orcompulsory insurance, or the liable opera-tor is unable to meet his financial obliga-tions. Thus, in some instances, fullcompensation for damage sustained is notavailable under a civil liability treaty. Inthese cases, the role of the fund is to replaceor supplement the compensation receivedunder the liability treaty.

Due to its aims and nature, compensa-tion funds directly involve private persons,in contrast to the assistance funds

described previously. In accordance withthe nature of a civil liability agreement, thecontributors to a compensation fund, aswell as the claimants, are natural or legalpersons under the jurisdiction of a contract-ing party. The state can be a contributor ora claimant if it is an operator, or if it has suf-fered damage. Otherwise, the state mayhave the role of facilitator, i.e. by collectingfunds from the contributors and forwardingthem to the compensation fund. However,it is also possible for the international insti-tution operating the fund to collect the con-tributions without the involvement ofnational authorities.

Compensation funds have a legal per-sonality that is recognized by the legal sys-tems of the contracting parties to theconstituting international legal instrument.The constituting instrument determines thecriteria for contributions, conditions fordisbursement of funds and the claims pro-cedure. Contributions are made by opera-tors that are potentially liable under thecorresponding regime, often levied on thegoods or services they provide. Claimantsare persons having suffered damage as aresult of a hazardous activity who do notreceive full compensation under the corre-sponding liability agreement. Most com-pensation funds place a limit on theamount to be paid in a single incident.

The funds have an institutional infra-structure established by the constitutingtreaty. This normally consists of an execu-tive body responsible for making decisionsregarding collection and disbursement offinancial means; a supervisory body con-sisting of all parties to the establishingagreement, which determines the policyand management criteria, and gives guid-ance to the executive body; and a secretariatresponsible for administrative matters.

In practice, both international agree-ments on civil liability for environmentaldamage and compensation funds estab-lished within their framework have provedso far to be difficult to negotiate.75 Only the


75 For an overview of ongoing work in international fora and difficulties encountered, see the Synthesis ofdevelopments in the field of liability and redress prepared by the Secretariat of the Convention on BiologicalDiversity (Document UNEP/CBD/COP/5/16, 1 March 2000).

International Oil Pollution CompensationFunds discussed below are based on a legalinstrument that has entered into force; theyare thus the only ones that have been inoperation for a number of years. The otherinstruments are not operational, and thereis hence no possibility of judging theireffectiveness in practice.

THE INTERNATIONAL OIL POLLUTION COMPENSATION

FUNDS (IOPC FUNDS)76

The first IOPC Fund was set up under the1971 Convention on the Establishment ofan International Fund for Compensation ofOil Pollution Damage (1971 Fund Conven-tion), which supplements the 1969 Conven-tion on Civil Liability for Oil PollutionDamage. Both conventions were adoptedunder the auspices of the IMO. Prior toentry into force of these instruments, the oilindustry established its own fundingschemes, namely the Tanker Owners’ Vol-untary Agreement concerning Liability forOil Pollution (TOVALOP, 1968) and theContract Regarding an Interim Supplementto Tanker Liability for Oil Pollution(CRISTAL, 1971), both financed by cargointerests. The industry schemes coverednearly 90% of the world tanker fleet withina short time, which shows the degree ofsupport from the relevant industry for thistype of scheme.

In 1992, both the 1969 and the 1971Conventions were amended by respectiveProtocols. The amended instruments areknown as the 1992 Civil Liability Conven-tion (CLC) and the 1992 Fund Convention(FC), which set up the 1992 IOPC Fund.The amended Conventions entered intoforce in 1996. The industry schemesTOVALOP and CRISTAL, having becomeobsolete with the entry into force of theamended Conventions, were terminated in1997. After a transitional period, duringwhich both the 1971 Fund and the 1992Fund were operational concurrently, the1992 regime replaced the ‘old’ 1969/71

regime. On 24 May 2002, the 1971 FundConvention ceased to be in force. The fun-damental aims, structure and mode of oper-ation basically remain the same. Thisdiscussion focuses on the 1992 IOPC Fund.

The 1992 IOPC Fund covers damageoccurring in connection with the bulktransportation of oil by sea. It has a dualaim: first, to provide a compensationsystem supplementary to the system estab-lished by the 1992 CLC, in order to ensurefull compensation to victims of damagecaused by persistent oil spilled from ladentankers; and secondly, to distribute the eco-nomic burden among the shipping industryand cargo interests. Compensation from theFund can be claimed in cases where fullcompensation is not available under theCLC. As the CLC permits ship owners tolimit their liability under certain condi-tions, this may be the case where the actualdamage sustained goes beyond the limitestablished. It may also be the case if thetanker owner cannot be identified, or isinsolvent and uninsured, or is exoneratedfrom liability under the provisions of theCLC.

The IOPC Fund is an internationalorganization with legal personality, inde-pendent of IMO or other UN organizations.Every Party to the Convention automati-cally becomes a member of the Fund.

The Fund is financed by levies on cer-tain types of oil carried by sea. These arecollected by the Fund directly from theentities that receive oil after sea transport,which can be private or state-owned com-panies, or a state itself. Annual contribu-tions are levied on entities receiving morethan 150,000 tons of crude oil and/or heavyfuel oil in a party state, after sea transport,during a calendar year. The contributionsare determined in proportion to the quan-tity received, and on the basis of antici-pated payments of compensation andestimated administrative expenses duringthe forthcoming year. Each party must com-municate annually to the Fund Secretariat a


76 For a further discussion see Doeker and Gehring (1992, p. 418); Rengifo (1997); Report in the Yearbookof International Cooperation on Environment and Development 1999/2000, pp. 128–129; Gold (1999, p.31); and White (2001).

list of oil-receiving entities under its juris-diction, and the amount of oil received byeach. These lists are confidential, and areclosely monitored by the Secretariat. TheFund Convention does not provide for con-tributions by states except where they areoil-receiving entities.

Persons having suffered pollutiondamage in a state that is a party to the Con-vention may make a claim against the IOPCFund for compensation. Under the 1992Fund Convention, the maximum amount ofcompensation payable from the Fund for asingle incident, including the amount paidby the ship owner or his insurer under the1992 CLC, is 135 million SDR77 (aboutUS$174 million). Where at least three partystates have received at least 600 milliontons of oil in the previous year, the limitmay be increased to 200 million SDR (aboutUS$257). Under a 2000 Amendment thatentered into force in 2003, the maximumwas increased to 203 million SDR (aboutUS$260 million) for a single incident.

The institutional infrastructure con-sists of the Assembly as the supreme gov-erning body of the Fund, composed of allparties to the Fund Convention; the Execu-tive Committee, composed of 15 members,with the main function of approving settle-ment of claims, to the extent that the Direc-tor is not authorized to do so; and theSecretariat headed by the Director, respon-sible for the conduct of business, includingcollection of contributions and settlementof claims up to a certain amount.

The CLC Convention has been ratifiedby 91 countries, representing 91% of theworld tonnage, and the 1992 Fund Conven-tion has been ratified by 85 countries, rep-resenting 87% of the world tonnage.78 Inthis respect, the system can thus be consid-ered successful (White, 1999).

COMPENSATION FUNDS TO BE ESTABLISHED UNDER

THE HNS AND BASEL CONVENTIONS

Under the International Convention on Lia-bility and Compensation in Connectionwith the Carriage of Hazardous and Nox-ious Substances by Sea (HNS) of 1996, acompensation fund is to be established tosupplement the liability provisions underthe Convention.79 The HNS Conventioncovers potentially hazardous chemical sub-stances transported by sea. The objectives,mode of operation and structure are similarto the IOPC Funds. As only two states haveratified the Convention,80 it has not yetentered into force, and it is increasinglyunlikely that the HNS Fund will everbecome operational.

Under the Basel Convention on haz-ardous wastes, two types of funds with thepurpose of compensating damage caused byhazardous wastes have been under consid-eration for many years, although neither islikely to be established in the foreseeablefuture. The first fund under discussion is acompensation fund to be set up in theframework of the 1999 Protocol on civil lia-bility to the Basel Convention, with a struc-ture, mode of operation and objectivessimilar to the IOPC and HNS Funds. How-ever, when adopting the Protocol, stateswere unable to agree on an explicit legalbasis for a compensation fund. The secondprospective mechanism is a so-calledrevolving fund, for which Article 14 para. 2of the Convention provides the legal basis.This fund would provide financialresources for emergency measures in theevent of damage caused by hazardouswastes. The parties to the Conventionwould contribute on the basis of a scale ofassessment. After settlement of the liabilityclaim, the revolving fund would havethe right of recourse to the liable person


77 The 1992 Fund Convention uses the Special Drawing Right (SDR), defined by the International MonetaryFund as a unit of account. As of October 2001, the applicable exchange rate was 1 SDR = US$1.287.78 Data as of February 2003. See list of ratifications published on the IMO website: http://www.imo.org 79 On the HNS Convention and Compensation Fund, see generally Rengifo (1997) and the Yearbook of Inter-national Cooperation on Environment and Development 1999/2000, p. 130. The information provided herehas been obtained from the IMO website: http://www.imo.org80 See status of Conventions published on the IMO website: http://www.imo.org

http://www.imo.org

http://www.imo.org

http://www.imo.org

or the compensation fund, as the case maybe.81

COMPENSATION FUNDS AS MODELS FOR PLANT

GENETIC RESOURCES AND TRADITIONAL KNOWLEDGE

As is the case with the assistance fundsanalysed above, the compensation fundsfeature all the necessary institutional ele-ments outlined previously (pp. 302–303).The fundamental difference between thistype of mechanism and a potential mecha-nism in the context of PGR is that this typeof fund is tied to the concept of liability andcompensation: funds are disbursed in theevent of damage caused by acts entailingcivil liability. The element of providing anincentive for recipients of funds to adhere toa certain manner of behaviour is thus absentin this context. As concerns incentives forcontributors, these are directly linked to therelated legal regime establishing civil liabil-ity. Within this framework, the funds serveas insurance, and there is thus an incentivefor industry to participate, as the example ofthe IOPC Fund demonstrates. This can,however, not be easily replicated in the con-text of PGR, and incentives would thereforeneed to be created by other means.

In addition, two features of the com-pensation funds appear interesting in thecontext of a future mechanism for PGR,namely the involvement of private entitiesboth as contributors and as claimants, andthe generation of funds through levies onspecified activities carried out by the rele-vant industry. In this sense, the compensa-tion funds appear to be better placed toserve as potential models of a future mech-anism for PGR than the assistance funds. Itshould be noted, however, that the dis-bursement of funds requires the status of alegal or natural person, on the one hand,and a clearly defined claim, establishedunder the corresponding civil liabilityregime, on the other. In this sense, adjust-ments would need to be made if this type offund were to serve as a model for the area ofTK associated with PGR and traditional

PGRFA. As in the case of an assistancefund, the political difficulties inherent inadopting such an instrument should not beunderestimated. As stated above, the IOPCFund, though obviously successful,remains the only financial mechanism ofthis type that is actually operational. As theanalysis shows, this is in large part due tothe interest of the oil industry itself, whichset up its own scheme even before the entryinto force of the intergovernmental scheme.

Mechanisms to provide incentives forimplementation under the Kyoto Protocol82

The Kyoto Protocol to the Climate Conven-tion provides three market-based instru-ments, the so-called Flexible Mechanismsor ‘Flex Mex’, to promote the aim of reduc-ing the emissions of greenhouse gases byproviding incentives to states and to privateentities to act in conformity with this aim.In contrast to the mechanisms discussedabove, these instruments are not financialmechanisms. They do not feature a multi-lateral fund, and adopt a fundamentally dif-ferent approach to the problem of providingincentives. However, the underlying con-cepts may be interesting vis-à-vis a futurefinancial mechanism in the context of PGR.In particular, the approach taken by theKyoto mechanisms to the problem of pro-viding incentives to the private sector tocontribute to the solution of an environ-mental problem is worthy of investigation,as this has been identified as one of thefunctions of a future financial mechanismfor PGR.

The Flex Mex comprise Joint Imple-mentation (JI) (Article 6), the Clean Devel-opment Mechanism (CDM) (Article 12) andEmissions Trading (Article 17). In accor-dance with the relevant provisions of theProtocol, the modalities and operation of JIand the CDM will be elaborated by the COPto the Convention serving as the Meeting ofthe Parties to the Protocol (COP/MOP), andthose of Emissions Trading by the COP tothe Convention. The Kyoto Protocol has not


81 For a more detailed discussion see among others Kummer (1995/1999, p. 253).82 See Arquit Niederberger (1998, p. 9) and Yamin (1999, p. 265).

yet entered into force,83 but the COP hasbeen working on the elaboration of themodalities of all three Flex Mex for the lastfew years,84 with the aim of developing themechanisms prior to entry into force of theProtocol85 and laying down the concreterights and obligations of countries in thiscontext in a sufficiently clear way to pro-vide a basis for ratification. At the resumedsixth session of the COP, held in Bonn inJuly 2001 (COP 6), and at the seventh ses-sion, held in Marrakesh in November 2001(COP 7), agreement was reached on themodalities of the mechanisms (generallyreferred to as the Bonn Agreement and theMarrakesh Accords, respectively). The COPhas prepared relevant decisions for adop-tion by the COP/MOP after entry into forceof the Protocol.86

In view of this situation, the Flex Mexcan at the present time be discussed only ina theoretical way. It is not possible to assesstheir functioning in practice, as they are notas yet operational.

Under the Kyoto Protocol, only a spe-cific category of countries, namely devel-oped countries and countries witheconomies in transition, have quantifiedobligations to reduce greenhouse gas emis-sions. These countries are listed in Annex Ito the Climate Convention. The reductionobligations allocated to each Annex I coun-try are specified in Annex B to the Protocol,and can be measured in quantified units. Inother words, every Annex I country mustachieve a certain number of quantifiedunits within a given time period. The Flex

Mex provide the possibility for countries toexchange these units. The terms designat-ing the units and their definitions are dis-tinct for each of the three mechanisms: theyare denominated as Emission ReductionUnits (ERUs) in the context of JI, as Certi-fied Emission Reductions (CERs) in the con-text of the CDM and as Assigned AmountUnits (AAUs) in the context of EmissionsTrading. In addition, COP 7 agreed to iden-tify as Removal Units (RMUs) net green-house gas removals resulting from sinksactivities.

The concept underlying this system isto couch the reduction units in a tradableform. This allows a Party to fulfil a part ofits reduction obligations by assistinganother Party in meeting its own obliga-tions, or to exchange ERUs against a finan-cial contribution.87 As Parties may imposecorresponding obligations on their nation-als, including industry, the possibility oftrade-offs or financial compensation mayprovide an incentive for the private sectorto comply with these obligations.

JOINT IMPLEMENTATION

Joint Implementation (JI), regulated in Arti-cle 6 of the Kyoto Protocol, is a mechanismby which an Annex I country, through apertinent project, supports activities inanother Annex I country, by which a cer-tain number of ERUs are achieved, either byreducing greenhouse gas emissions or byenhancing sinks. Through provision of thissupport, the donor country may fulfil part


83 In accordance with Article 25, the Kyoto Protocol will enter into force upon ratification by 55 countries,including industrialized countries accounting for at least 55% of the total carbon dioxide emissions for 1990from this group. As of July 2003, 111 countries, including industrialized countries accounting for 44.2% ofthe emissions, had ratified the Protocol (see UNFCC website: http://www.unfccc.int). 84 At COP 4 in 1998, Parties agreed on a work programme to elaborate principles, modalities, rules andguidelines on all three mechanisms, with priority to be given to the Clean Development Mechanism, for sub-mission to COP 6 (COP Decision 7/CP.4 (1998), the so-called Buenos Aires Plan of Action). COP 6 was heldin two parts in November 2000 and July 2001, respectively. The so-called Bonn Agreement, adopted in July2001, provided the basis for finalizing the modalities of the mechanisms at COP 7 in November 2001 in theframework of the so-called Marrakesh Accords (COP Decision 5/CP.6 (2001)). 85 See, for example, UNFCCC Press Release ‘Bonn Decisions Promise to Speed Action on Climate Change’(27 July 2001); Yamin (1999, p. 268).86 See the text of the Marrakesh Accords, available on the UNFCCC website: http://www.unfccc.int87 For a full analysis of the quantified units defined under the Kyoto Protocol, and of the nature of countries’rights to them, see Yamin (1999, p. 268).

http://www.unfccc.int

http://www.unfccc.int

of its own reduction commitment, i.e. thenumber of ERUs achieved through the proj-ect is in part allocated to the donor country.The project can be financed from state orprivate sources in the donor country. Thismechanism is likely to be applied primarilybetween more developed and less devel-oped countries of the Annex I category,namely between Western industrializedcountries and Central and Eastern Euro-pean countries with economies in transi-tion. A project must meet the followingconditions to qualify for JI:

● It must be approved by the countriesinvolved.

● It must be proved that the reduction inemissions by sources, or the enhance-ment of removals by sinks, is additionalto what would have occurred without theproject.

● The countries involved must have mettheir obligations to set up a nationalsystem for estimating emissions (Article5) and to have submitted inventories andnational communications (Article 7)under the Kyoto Protocol.

● Acquisition of ERUs by the donor coun-try must be supplemental to reductionsachieved by domestic action, i.e. domes-tic action shall constitute a ‘significantelement’ of the effort made by each Partyto reduce its emissions.

The incentive for donor countries andtheir industries lies in the fact that in arecipient country with a less developedeconomy and infrastructure, a given finan-cial investment will achieve a more sub-stantive reduction of greenhouse gasemissions than in the donor country itself.The concept of JI has initially been subjectto criticism, based on the argument that thispossibility detracts from the more devel-oped countries’ domestic obligations at theexpense of less developed countries (Gupta,1999/2000).

THE CLEAN DEVELOPMENT MECHANISM

The establishment of the CDM (Article 12)will enable Annex I Parties to implementprojects that reduce greenhouse gas emis-sions or enhance sinks in non-Annex I Par-ties, which do not have reductionobligations under the Protocol, and tocredit the reductions achieved in thismanner to the achievement of their ownreduction targets. The CDM thus allowsdeveloped countries to achieve a part oftheir reduction commitments through proj-ects in developing countries, with the addi-tional goal of assisting non-Annex I Partiesin achieving sustainable development andcontributing to the ultimate objective of theClimate Convention. Under the CDM, emis-sion reductions generated by project activi-ties in non-Annex I Parties will be certifiedby operational entities designated by theCOP/MOP, on the basis of measurable crite-ria. These reductions are denoted as Certi-fied Emission Reductions (CERs). The CDMwill be supervised by the Executive Boardof the mechanism. A ‘share of the pro-ceeds’, i.e. a part of the CERs generatedunder a CDM project, will be used to assistparticularly vulnerable developing coun-tries in meeting the costs of adaptation.

The CDM can be seen as the counter-part of JI: both are an extension and furtherdevelopment of the AIJ pilot phase, but JItakes place among Annex I Parties, whereasthe CDM allows for joint projects betweenAnnex I and non-Annex I Parties. Theincentives for donor states and their indus-try is essentially the same as in the case ofJI. Like JI, the concept of a CDM was ini-tially criticized by some developing coun-tries, with the argument that it constitutes away for developed countries to solve aproblem for which they are primarilyresponsible in the developing worldinstead of seeking domestic solutions.88

EMISSIONS TRADING

Emissions Trading, as set out in Article 17,permits an Annex I Party to transfer AAUs,


88 See, for example, Centre for Science and Environment India: The Kyoto Protocol – What It Says, NewDelhi (1998, p. 10).

i.e. a part of the quantified units of reduc-tion that Party is in a position to achieveduring the commitment period, to anotherAnnex I Party. This permits the secondParty to add the so acquired AAUs to itsown emission reduction. In general, thefirst Party will receive payment for thisservice.

Like the other mechanisms, the con-cept of Emissions Trading is not undis-puted, since it basically provides thepossibility for a country to transfer its obli-gations under the Protocol to another coun-try. Emissions Trading is likely to be ofinterest to countries that – for reasons ofeconomic decline – achieve an emissionreduction greater than their commitmentunder the Protocol, the so-called ‘hot air’(which is the case for a number of Centraland Eastern European countries followingthe collapse of the former Soviet Union),and to countries that have difficulties inachieving their reduction targets withoutresorting to expensive and politically diffi-cult domestic measures, and hence prefer toacquire AAUs at a lower cost (which is thecase for some developed Western states).

THE ROLE OF NON-STATE ACTORS

If the Flex Mex are to become truly market-based instruments, concrete ways will needto be designed to involve non-state actors,in particular private companies and otherinvestors, in their application. In otherwords, it must be possible for non-stateactors to exercise the rights and duties per-taining to the allocation of the quantifiedunits under the three mechanisms. In orderto create a true incentive, private entitieswill have to be able to obtain the financialbenefits to be gained by the application ofthe mechanisms.

The obvious way of involving privateactors is through the domestic legislation ofthe Parties to the Protocol. This is expresslyprovided by the Kyoto Protocol in Articles6 para. 3 (for JI) and 12 para. 9 (for theCDM), as well as in the respective guide-

lines for all three mechanisms. The alterna-tive option of giving non-state actors stand-ing under international law, their actions tobe subject to control by the COP/MOP, hasa weak basis both in theory and in practice(Yamin, 1999). Accordingly, states willneed to enact domestic legislation, underwhich private actors under their jurisdic-tion can apply the mechanisms of the KyotoProtocol. In order to comply with its emis-sion reduction obligations, an Annex I statewill impose corresponding obligations onits subjects by domestic law. By the sametoken, the Kyoto mechanisms can be trans-posed into national law, and non-stateactors can be assigned the correspondingrights. Thus, a company in an Annex I Partyinitiating or supporting a project in anotherstate Party to the Protocol, which con-tributes to emission reductions in that state,will be able to deduct the reductionsachieved from its own national reductionobligation in accordance with JI (if the proj-ect is carried out in an Annex I Party) or theCDM (if it is carried out in a non-Annex IParty). Likewise, non-state actors will beable to acquire or sell AAUs under theEmissions Trading system. Involvement ofnational actors requires a national emis-sions inventory that includes reductionsachieved by non-state actors under theKyoto mechanisms.89 In Switzerland, thelegal basis for the involvement of privateactors has been created with the new CO2Law, which entered into force in May 2000.

The functioning of this concept inpractice can only be fully assessed once theKyoto Protocol is in force and all Annex IParties have enacted and implemented rele-vant national legislation.

THE KYOTO MECHANISMS AS MODELS FOR PLANT

GENETIC RESOURCES AND TRADITIONAL KNOWLEDGE

As stated above, the main interest in theKyoto mechanisms in the context of afuture financial mechanism for plantgenetic resources is the way in which finan-cial incentives are created for the imple-


89 For a more detailed discussion of the role of the private sector using the Swiss example, see Arquit Nieder-berger (1998, p. 9).

mentation of an international agreementboth for states and for private entities. Thisis the element that may possibly have amodel function in that context. As is thecase with the depletion of the geneticresource base and related TK, climatechange is an area where it is not possible toclearly identify actors that are entitled tofinancial compensation. This is a funda-mental difference for issues such as oil pol-lution or contamination with hazardousmaterials, where an approach based on civilliability and compensation can be taken.With genetic resources as with the globalclimate, the interest in protection, for theindividual, is thus a fairly abstract andlong-term one, and methods for ensuringprotection must be adjusted to this reality.The approach of providing economic incen-tives instead of assigning liability fordamage caused is thus a concept to be con-sidered. A prerequisite for the use of thisconcept as a model is a substantive obliga-tion to private entities that can be fulfilledthrough a financial contribution, as is thecase in the Kyoto mechanisms. This type ofobligation has yet to be created in the con-text of plant genetic resources.

More specifically, the concept of pro-viding an economic incentive in the shapeof the CDM, and imposing a levy on theproceeds from this mechanism as a contri-bution to a fund which is to be used for thesupport of adaptation measures, may be avery interesting approach that is as welladapted to the nature of the problem ofgenetic resources as it is for climate change.The nature and functioning of the fund willneed to be further developed, possiblythrough reliance on models elaborated else-where in this study.

Relevant work in the framework of the FAO

The issue of a financial mechanism for PGRhas thus far been addressed only in a verypreliminary fashion within the framework

of the FAO. Under the International Under-taking on Plant Genetic Resources (IU), anon-binding instrument adopted by theFAO Conference in 1983, the FAO Fund forPlant Genetic Resources was established onan interim basis in 1988. Donors (govern-ments, NGOs and individuals) were to con-tribute to the Fund to support plant geneticresource conservation and use. By Resolu-tion 4/89 adopted in 1989, the FAO Confer-ence agreed that the conservation,management and use of plant geneticresources could be achieved through finan-cial mechanisms, in particular the FAOFund for Plant Genetic Resources. How-ever, no contributions have been made todate, and the Fund has therefore neverbecome operational. In 1991, the FAO Con-ference by Resolution 3/91 approvedAnnex III to the IU, which endorsed theconcept of implementing Farmers’ Rightsthrough an international fund on plantgenetic resources to support conservationand utilization programmes, particularly indeveloping countries. The priorities of thefund are to be overseen by the FAOCGRFA.90 The Secretariat of the FAOCGRFA considers that the FAO Fund forPlant Genetic Resources should assume therole of this mechanism. However, no fur-ther work has been undertaken to render itoperational, and it therefore remains ‘deadletter’.91

In November 2001, the FAO Confer-ence adopted the ITPGRFA, a binding legalinstrument elaborated by the CGRFA.92 TheTreaty constitutes a revision of the IU. Oneof the core elements of the ITPGRFA is theestablishment of the Multilateral System forFacilitated ABS, in which the resourceslisted in Annex I shall be included. One ofthe aims of the System is to share monetarybenefits of these resources through a finan-cial mechanism, which is to be establishedin accordance with Article 19.3(f).

Unlike the CBD, which set up a finan-cial mechanism from the beginning (see


90 Girsberger (1998, p. 304), Yearbook of International Cooperation on Environment and Development1999/2000, p. 181.91 Information received from the Secretariat of the FAO/CGRFA, December 2001.92 For a detailed discussion of the ITPGRFA see Chapter 2, this volume.

point 1 above), the ITPGRFA addresses theissue of funding in a much more prelimi-nary way. Articles 18 and 19 constituteenabling provisions for a funding strategyand a financial mechanism. Article 18 setsout a number of elements of a financialstrategy to be elaborated by the Parties. Thepurpose of the strategy is to promote thesupport by developed countries of efforts toimplement the ITPGRFA undertaken bydeveloping and transition countries. Article19 para. 3(f) mandates the Governing Bodyof the Treaty to ‘establish, as needed, anappropriate mechanism, such as a TrustAccount, for receiving and utilizing finan-cial resources that will accrue to it for pur-poses of implementing this Treaty’. Finally,Article 13.2(d) states that sharing of mone-tary benefits resulting from the use of plantgenetic resources included in the Multilat-eral System should be subject to payment ofan equitable share of the benefits into afuture mechanism, to be established underArticle 19.3(f).

Article 19.3(f) is an enabling provisionof the more open variety: the wording ‘asneeded’ and ‘appropriate’ leaves it to theGoverning Body to decide what form ofmechanism would be appropriate. The pro-vision does not provide much guidanceconcerning elements of such a mechanism.The wording of Article 19.3(f) (‘for the pur-poses of implementing this Treaty’) doesgive an indication that the type of fund tobe established may be what has beentermed here an assistance fund. Article13.2(d) points in the direction of a similarmethod to the one to be used in the contextof the CDM under the Kyoto Protocol,namely the generation of funds throughlevies on benefits derived from related eco-nomic transactions.

As in equivalent discussions in thecontext of most MEAs, there is fundamentaldisagreement between industrialized anddeveloping countries as to whether or not afinancial mechanism should be established.

However, the issue did not figure among theprominent topics in the debates leading tothe adoption of the ITPGRFA.

By a Resolution on interim arrange-ments,93 the FAO Conference mandated theCGRFA to act as Interim Committee pend-ing the entry into force of the Treaty, atwhich time the Governing Body will beestablished. The Resolution outlines anumber of priority actions to be undertakenby the Interim Committee, concluding withthe general clause ‘perform such other func-tions as may be necessary for the effectiveimplementation’ of the Treaty. As work ona future financial mechanism does notfigure on the list of priority actions, butcomes within the purview of the generalclause, one may conclude that the Confer-ence did not consider this a priority. As thefinancial strategy is to be adopted by theGoverning Body of the Treaty at its firstmeeting, the issue will be addressed at thesecond meeting of the Interim Committee.94

7.4.3 Options for a financial mechanism inthe context of access to genetic resources

Based on the above discussion, we mayderive a number of central elements andoptions for a future financial mechanismfrom existing models.

Structure, organization and legal personality

As is the case of all the existing financialmechanisms that have been discussed, aninternational legal instrument should estab-lish the future mechanism for plant geneticresources. It should be endowed with alegal personality recognized by all contract-ing parties to the instrument in question,and all parties should be members of themechanism. Its infrastructure should com-prise an assembly as supreme governingbody, consisting of all members, an execu-tive body to direct the generation and attri-


93 Conference Resolution 3/2001, 3 November 2001, Section B. Interim Arrangements, para. 3 (published onthe FAO website: http://www.fao.org). 94 Provisional work programme of the Interim Committee at its second meeting (Doc. CGRFA/MIC/-1/02/9,October 2002).

http://www.fao.org

bution of financial resources, and a secre-tariat. All assistance funds and compensa-tion funds discussed could serve as modelsin this respect.

The question arises as to whether a newlegal instrument should be negotiated forthis purpose and a new mechanism estab-lished, or whether the functions of thefinancial mechanism could be attributed toan existing mechanism. The latter would bemore efficient in terms of avoiding duplica-tion of efforts and resources. It would, how-ever, presuppose the existence of a financialmechanism with a similar scope, structure,aims and functions. None of the mecha-nisms established in environmental law thatare described above would meet thisrequirement: the assistance funds do notprovide for a role of private entities as con-tributors and recipients of funding, and thecompensation funds are conceptually tied toa legal instrument on civil liability and com-pensation. The only feasible option seems tobe the attribution of the pertinent functionsto the financial mechanism to be establishedwithin the framework of the ITPGRFA. Assubstantive work on this mechanism has yetto begin, there may be sufficient leeway toaccommodate the functions discussed here.This would of course be subject to decisionby the Governing Body of the ITPGRFA. Itmust also be noted that the ITPGRFA – andhence also its financial mechanism –applies to plant genetic resources for foodand agriculture only, whereas the scope ofthe mechanism discussed here should coverall plant genetic resources. Should the dif-ference in scope between the ITPRGFA andthe future financial mechanism be consid-ered too significant an obstacle, the optionof establishing separate funds in the frame-work of different related treaties could beinvestigated. Thus, a mechanism for plantgenetic resources food and agriculture couldbe set up in the framework of the ITPGRFA,a mechanism for other types of plant geneticresources in the framework of the CBD.

Generation of funds: contributors

In order to achieve stability and pre-dictability, a compulsory contribution to

the mechanism on a regular basis should beinstituted. In view of the creation of a broadfinancial basis, the funds should be derivedfrom as many sources as possible. However,the concepts of fair and equitable distribu-tion of the financial burden and creation ofincentives call for collecting funds specifi-cally from persons and entities benefitingfrom the resources. Equally, the contribu-tions should be based on criteria such as thefinancial situation of the contributor (in thiscontext, exemptions could be provided forspecific actors such as small farmers indeveloping countries) and the extent of theuse of resources. In this respect, the assis-tance funds cannot provide guidance, beingbased on the concept of assistance to stateslacking financial capacity by more affluentstates, and excluding private entities ascontributors and as recipients of funding.The compensation funds, on the otherhand, could serve as models in this respect.In particular, the system by which contri-butions are levied on specific activities is amore useful model than the scale of assess-ment for contributions used by the assis-tance funds, which takes into account onlythe financial status of the contributor. Anoption to be considered would thus be tolevy contributions on plant geneticresources accessed or used by a givenentity, which could be a private enterpriseor a government institution. If this wereenvisaged at the international level, the dif-ficulty would be that this would requiremonitoring of the access to and use of theresources. An institution to undertake thistask, as well as a relevant procedure, wouldhave to be created. The same internationallegal instrument that establishes the finan-cial mechanism could establish this. If thefunctions of the mechanism were assignedto the financial mechanism of the ITP-GRFA, this problem could largely beavoided, as the Treaty’s Multilateral Systemfor Facilitated ABS creates the frameworkfor tracking resources, and the future finan-cial mechanism of the ITPGRFA willadminister funds derived from resourcesincluded in the Multilateral System.Should this solution be pursued, issues ofpolitical acceptability and scope would


arise, as mentioned above. Alternatively,levies could be considered as a methodfor states to generate resources to paytheir contributions to the financial mecha-nism. While this would need to beaddressed at the national level and is thusbeyond the scope of this study, it would bean interesting option for states to investi-gate.

As concerns creating incentives forfinancial efforts that go beyond paying con-tributions for the access to certainresources, the concept underlying themechanisms of the Kyoto Protocol could beof interest as a model. The Kyoto Protocolestablishes concrete obligations that can beimposed on private entities, coupled withthe possibility of fulfilling these obligationsthrough the provision of financial resources– for instance, funding of a project inanother country. In the case of JI and theCDM, the incentive lies especially in thefact that it is often more cost-effective toimplement the obligations by financingprojects through these mechanisms than byadopting direct emission reduction meas-ures. In sum, the incentive lies in the factthat contributing to the mechanism is a sim-pler or more cost-effective way for the con-tributors to meet their obligations. Thisapproach presupposes an internationallegal instrument imposing obligations onstates and providing for states in turn toimpose obligations on their nationals,which the nationals may then implementthrough contributing to, or participating in,a pertinent mechanism. An equivalent obli-gation remains to be established in a futureregime on PGR.

Disbursement of funds: claimants

The absence of clearly defined claimants orrecipients of financial means, due to thefact that traditional or sui generis rightscannot be allocated, is not accommodatedby the concept of the compensation funds,which function on the basis of claims sub-mitted by persons having suffered damage.The assistance funds could serve as modelsin that they provide funding for projects ina certain field that are submitted by

national authorities, rather than disbursingfunds to individuals. This concept could bedeveloped in the present context. In thisrespect, the Adaptation Fund to be estab-lished under the CDM of the Kyoto Proto-col, which will use financial meansgenerated by levies on proceeds of the CDMfor supporting concrete adaptation projectsand programmes in developing countries,could be a useful precedent. The systemused by the Montreal Protocol Fund and theGEF to assess and approve pertinent proj-ects would also be interesting. Accordingly,a system could be established under whichpotential recipient countries would bedefined on the basis of criteria that ensuredequitable access to the funds, such as theirfinancial capacity, the amount and natureof genetic resources held under theirnational jurisdiction, and the presence oflocal or indigenous communities that areTK holders in their territory. The nationalauthorities of these countries would be eli-gible to submit project proposals to theexecutive body of the mechanism for possi-ble funding. The projects would have to beproven to benefit TK holders who are pro-ducers of genetic resources, and to supportthe aims outlined in the first section of thischapter; this would be verified by the exec-utive body as part of the decision-makingprocess. Projects approved by the mecha-nism for funding would be carried out bycompetent national authorities, or undertheir responsibility. The authorities wouldbe accountable to the financial mechanism.This approach would support the aim ofproviding incentives for the valuation of TKand conservation and sustainable use ofgenetic resources, since only projects thatfurther these aims would be financed by themechanism.

7.4.4 Conclusions and recommendations

As a first conclusion, it should be noted thata future financial mechanism that couldsubstitute financial compensation of TKholders in cases where traditional or suigeneris IPR cannot be allocated, wouldneed to be established by an international


legal instrument. The negotiation of suchan instrument and the establishment of therequisite institutional infrastructure wouldrequire the relevant political will of theinternational community, the leadership ofan international organization and financialresources that may be considerable. Thegeneral wariness of the international com-munity in relation to the establishment ofnew international mechanisms would be afactor to be taken into account. Therequired infrastructure would comprise asupreme body made up of all memberstates, an executive body and a secretariat.In this respect, there are a number of prece-dents in international environmental lawthat could serve as models.

An alternative would be to assign thefunctions of such a mechanism to an exist-ing institution established in the frameworkof an existing international legal instru-ment. The most obvious choice would bethe ITPGRFA, which establishes a legalbasis for a financial mechanism. The neces-sary adjustments would have to be made, inparticular as concerns the scope of theTreaty. A pertinent decision would need tobe taken by the Governing Body of the ITP-GRFA. Alternatively, the establishment ofseparate mechanisms within more than oneinternational legal instrument in accor-dance with their respective scope could beconsidered. Apart from the ITPGRFA, anobvious candidate is the CBD.

In order to create a broad, predictableand stable financial basis, indispensable tothe success of the mechanism, the legalinstrument establishing the fund should setout an obligation to users of geneticresources – whether private entities or gov-ernment institutions – to make contribu-tions to the fund. The levels of contribution

could be detailed on the basis of criteriathat take into account the aim of equitablesharing of the financial burden, such as theamount and type of resources used, andpossibly the financial situation of the con-tributor. In order to create an incentive tousers of the resources to contribute, contri-butions could be levied on the amount andnature of resources used. Existing compen-sation funds could serve as models in thisrespect. This could also be envisaged at thenational level, as a means for states to gen-erate their contribution to the fund. Look-ing to the future, a further incentive tocontribute to the fund could be created ifsubstantive obligations imposed on privateentities by an international legal instrumentcould be met by making financial contribu-tions, as in the Flexible Mechanisms of theKyoto Protocol.

As regards disbursement of funds, thelegal instrument should designate a cate-gory of countries that could submit relevantprojects to the mechanism for funding. Cri-teria for designating countries as recipientsshould include financial capacity below ameasurable level, the amount and nature ofresources held or generated under theirnational jurisdiction, and the presence ofindigenous or local communities that areTK holders. The projects submitted wouldhave to be proven to benefit holders of TKand support the fundamental aims of themechanism. The decision on fundingwould be taken by the executive body basedon these criteria. The projects would be car-ried out under the responsibility of thecompetent government authorities, whichwould be accountable to the financialmechanism. The assistance funds and theAdaptation Fund of the Kyoto Protocolcould serve as models in this respect.


Bibliography

Arquit Niederberger, A. (1998) Marktwirtschaftliche Anreize für den Klimaschutz: Fallbeispiel ‘JointImplementation’. Bankverein/Der Monat Nr. 4.

ASSINSEL (1998) Position on access to plant genetic resources for food and agriculture and the equi-table sharing of benefits arising from their use. http://www.worldseed.org./multie.htm

Baruffol, U. (2003) Contractual regulation of access to information on biodiversity for scientific and

http://www.worldseed.org./multie.htm

commercial use – the Novartis-UZACHI Biolead Project. Contribution 30: Forest Science, SwissFederal Institute of Technology, Zürich (on file with author).

Blakeney, M. (2002) Protection of plant varieties and farmers’ rights. European Intellectual PropertyReview 24, 9.

Bragdon, S.H. (2001) Financing treaty operations and implementation: a survey of mechanisms. FAOBackground Study Paper No. 13.

Cabrera Medaglia, J.A. (2003) Access to genetic resources, protection of traditional knowledge andintellectual property rights: lessons learned from the Costa Rican experience. WIPO Intergovern-mental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge andFolklore, Fifth Session, Geneva, 7–15 July 2003, advance copy (on file with author).

Correa, C. (2000) Options for the implementation of farmers’ rights at the national level. South Centre,Geneva, T.R.A.D.E. Working Paper No. 8.

Doeker, G. and Gehring, T. (1992) Liability for environmental damage. In: Sand, P.H. (ed.) The Effec-tiveness of International Environmental Agreements. Grotius, Cambridge, UK.

Dutfield, G. (2001) TRIPS-related aspects of traditional knowledge. Case Western Reserve Journal ofInternational Law 33, 233.

Esquinas-Alcázar, J. (1996) The realisation of farmer’s rights. In: Swaminathan, M.S. (ed.) Agrobiodi-versity and Farmers’ Rights. Konark Publishers, New Delhi, India, p. 2.

Fowler, C., Smale, M. and Gaiji, S. (2000) Germplasm flows between developing countries and theCGIAR: an initial assessment. Paper prepared for the Global Forum on Agricultural Research,FAO and IPGRI, Rome. http://www.sgrp.cgiar.org/GermplasmFLowsgfar0065.pdf

Girsberger, M.A. (1998) The Protection of Traditional Plant Genetic Resources for Food and Agricultureand Related Know-How by Intellectual Property Rights in International Law. Berne, Switzerland.

Girsberger, M.A. (1999) Biodiversity and the Concept of Farmers’ Rights in International Law – Fac-tual Background and Legal Analysis. Peter Lang, Berne, Switzerland.

Glowka, L. (1998) A Guide to Designing Legal Frameworks to Determine Access to Genetic Resources.IUCN, Gland, Switzerland.

Glowka, L. et al. (1994) A Guide to the Convention on Biological Diversity. IUCN, Gland, Switzerland. Gold, E. (1999) Liability and compensation for ship-source marine pollution. Yearbook of Interna-

tional Cooperation on Environment and Development 1999/2000. Earthscan, London, pp. 31–38.Gupta, J. (1999/2000) Evaluation of the climate change regime and related developments. Yearbook of

International Cooperation on Environment and Development 1999/2000. Earthscan, London, pp.19–30.

Kummer, K. (1995/1999) International Management of Hazardous Wastes: The Basel Convention andRelated Legal Rules. Oxford University Press, Oxford, UK.

Lang, W. (1992) Ozone layer. Yearbook of International Environmental Law 3, 225.Novartis (1999) Bio-prospecting and benefit sharing. Report of a UNED-UK/Novartis Workshop hosted

by the Rockefeller Foundation New York. Towards Earth Summit III-2002.Rengifo, A. (1997) The International Convention on Liability and Compensation for Damage in Con-

nection with the Carriage of Hazardous and Noxious Substances by Sea, 1996. Review of Euro-pean Community & International Environmental Law 6, 191–197.

Rosell, M. (1997) Access to genetic resources: a critical approach to Decision 391 ‘Common Regimeon Access to Genetic Resources’ of the Commission of the Cartagena Agreement. Review of Euro-pean Community & International Environmental Law 6, 274–283.

Ruiz Muller, M. (2000) ¿Es necesario un nuevo marco jurídico para la bioprospección en la regiónandina? Breve revision crítica de la Decisión 391. In: Serie de Politica y Derecho Ambiental 14(February), 1–8. Sociedad Peruana de Derecho Ambiental, Lima, Peru.

Seiler, A., van den Daele, W. and Döbert, R. (2003) Protection of Traditional Knowledge. Deliberationsfrom a Transnational Stakeholder Dialogue Between Pharmaceutical Companies and Civil Soci-ety Organizations. Wissenschaftszentrum Berlin (WZB) Discussion Paper No. SPIV 2003–102.

Swaminathan, M.S. (ed.) (1995) Farmers’ Rights and Plant Genetic Resources – Recognition & Reward.Macmillan, Madras, India.

Swanson, T. and Göschl, T. (2000) Property rights issues involving plant genetic resources: implica-tions of ownership for economic efficiency. Ecological Economics 32, 75–92.

Ten Kate, K. and Lasén Diaz, C. (1997) The undertaking revisited – A commentary on the revision ofthe International Undertaking on Plant Genetic Resources for Food and Agriculture. Review ofEuropean Community & International Environmental Law 6, 284–292.


http://www.sgrp.cgiar.org/GermplasmFLowsgfar0065.pdf

Tobin, B. (1997) Certificates of origin: a role for IPR regimes in securing prior informed consent. In:Mugabe, J. et al. (eds) Access to Genetic Resources. Strategies for Sharing Benefits. IUCN, Bonn,Germany.

WBCSD/WZB Stakeholder Dialogue Process on the Issues of Intellectual Property Rights in Biotech-nology: Summary Report (2003) Available at: http://www.wz-berlin.de/ipr-dialogue/wbcsd_wzb_final_report.pdf

White, I.C. (1999) Oil spill compensation. Available at: http://www.itopf.comWhite, I.C. (2001) The International Oil Pollution Compensation Fund: Explanatory Note prepared by

the 1992 Fund Secretariat. London, available at http://www.imo.orgYamin, F. (1999) Equity, entitlements and property rights under the Kyoto Protocol: the shape of

‘things’ to come. Review of European Community & International Environmental Law 8, 265–274.Yearbook of International Cooperation on Environment and Development 1999/2000. Earthscan,

London.Young, M. and Gunningham (1997) Mixing instruments and institutional arrangements for optimal

biodiversity conservation. In: Investing in Biological Diversity. OECD, Paris, pp. 141–165.


http://www.wz-berlin.de/iprdialogue/wbcsd_wzb_final_report.pdf

http://www.itopf.com

http://www.imo.org

http://www.wz-berlin.de/iprdialogue/wbcsd_wzb_final_report.pdf

Documents

IELRC.ORG - New Collective Policies