News and Analysis • Volume 2 • Number 1 • March 2008

Biodiversity and FTAs: Implications for access and benefit-sharing negotiations

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A growing number of bilateral and regional free trade agreements (FTAs) incorporate provisions relevant to biodiversity. Meanwhile, there are ongoing negotiations on an international regime governing access to and the equitable sharing of benefits from genetic resources derived from biodiversity under the Convention on Biological Diversity (CBD).

While there are clear linkages between the two sets of regimes, scant research has been conducted on the implications – both positive and negative – of the trade and intellectual property provisions included in FTAs on the international regime for access and benefit-sharing (ABS). Of the analysis undertaken so far, most has focused on the issue of disclosure requirements.

This article highlights the potential relationship between FTAs and the negotiations on an international regime for access and benefit-sharing within the context of the CBD, and identifies some questions requiring further scrutiny.

Disclosure of origin: Are FTAs restrictive or supportive?

Rules governing access and benefit-sharing are linked to intellectual property rules in several ways, among these:

ABS rules may pose restrictions on intellectual property right (IPR) applications for inventions derived from genetic resources for which an access permit was granted. For example, the Biodiversity Law of Bhutan requires prior notification, and India’s Biodiversity Law requires prior written authorisation.

ABS-related rules may require the disclosure of the origin of the materials in an IPR application that concerns or makes use of accessed materials in an invention (incorporated in ABS or Biodiversity Laws, for instance in the Andean Pact Decisions 391 and 486; the Costa Rica Biodiversity Law; the Provisional Measure of Brazil).

One of the first measures suggested to achieve a synergistic relationship between the CBD and intellectual property systems – in particular the WTO Trade-related Intellectual Property Rights Agreement – was a disclosure of origin requirement with regard to genetic resources or associated traditional knowledge in intellectual property right applications, particularly in patents. At various forums at the international level – including the CBD, the WTO, and the World Intellectual Property Organisation – developing countries have stressed the need to require disclosure of origin in IPR applications. Many countries have incorporated different forms of such requirements into national legislation.

With regard to free trade agreements, concerns have been raised that in some cases their IP provisions may limit or preclude the opportunities to introduce disclosure of origin requirements. For example, the language used in the US-Central American Free Trade Agreement (CAFTA), states that “Each party shall provide that a disclosure of a claimed invention shall be considered to be sufficiently clear and complete if it provides information that allows the invention to be made and used by a person skilled in the art, without undue experimentation, as of the filing” (article 15.9.9). Doubts have been raised as to whether this text implies a restriction on additional information being requested when the patent is disclosed. The author - for legal and technical reasons - does not agree with this interpretation. However, it deserves mention as a potential implication of FTAs on disclosure requirements.

FTAs have generally not incorporated a mandatory requirement for the disclosure of origin in the substantive IPR Chapter. However, the issue has sometimes been addressed elsewhere. For instance, in the case of the US-Peru FTA, the following elements have been agreed in a side letter:

a) Recognition of the importance of traditional knowledge (TK) and biodiversity, as well as their contribution to development.

b) Recognition of the importance of i) prior informed consent from the appropriate authority; ii) equitable sharing of benefits from the use of TK and genetic resources; iii) promoting quality patent examination to ensure the conditions of patentability are satisfied.

c) Recognition of the fact that access and benefit sharing can be adequately addressed by contracts.

Despite the recognition of the issues in the side letter, the text agreed is essentially on uncontroversial matters (e.g the importance of TK). In other words, the side letter does not address or respond to the more controversial aspects of disclosure of origin. Therefore, these provisions may not have an impact on critical issues discussed in the negotiations on an international regime.

ABS and services and investment disciplines

The relationship between ABS and services and investment rules in FTAs is also of interest. For example, research services – including biodiversity-related research – is mentioned in the services chapter of CAFTA.

There may be legal implications of considering bioprospecting as a service, and investment disciplines in FTAs may also be applicable. A common discipline in investment provisions is the prohibition (or restriction) of “performance” and other requirements placed on the investor and the investment. Arguably, such restrictions could limit the rights of countries to require, as part of ABS rules or procedures, technology transfer from the potential user of the genetic resources. Such technology transfer has been noted as an important benefit in the biodiversity context. Whether in fact this mandatory requirement for a foreign company imposed in the context of an ABS permit would constitute a violation of the investment disciplines remains unclear.

Nevertheless, a common feature of FTAs is a provision providing that, in case of contradiction between the investment chapter and other chapters, the latter prevail. Thus, the environmental chapter, which requires compliance with environmental laws in the country – including any access law or biodiversity law – would prevail over conflicting investment disciplines. A potential solution would be to require the investor/access applicant to comply with any technology transfer or other benefit sharing provisions in the context of the ABS permit. Any condition imposed on the applicant/investor would thus have its legal basis in the CBD and domestic environmental law.

Certificate of origin and commercial rules

In order to respond to the call for user country measures, and to contribute to solving problems related to the monitoring and traceability of genetic resources, ABS negotiations have focused on developing some form of certificate of origin/source/legal provenance – more recently named ‘certificate of compliance’.

Differing views on the design options for the certificate and on its features and utility for the purposes of the international regime exist. However, the basic idea of the certificate is to prevent or minimise problems generated by the existence of two different jurisdictions for ABS arrangements – one where the material is collected and another where research and development activities are carried out.

An internationally recognised document would make it possible to check the legality of access at the point where the activity (patent, product approval, etc.) generates value, and to follow the subsequent use of the resources and the origin of the corresponding benefit-sharing. In this way, monitoring and regulation would be less strict during the access phase and stricter during the research and development phase, where control or check points would be established. This implies that the documentation would need to pass through the various buyers, but the monitoring points would be reserved only for certain milestones in the research and development process, such as those related to product approval, IPR applications, publications, or the presentation of funding proposals.

Depending on the certificate’s final design, some rules of the trade system (WTO or FTA) might apply to it, especially those related to technical barriers to trade. For instance, this may be the case if the certificate is checked at customs, and the legal consequence of not showing the certificate is the prohibition of entry of the genetic resources. However, the potential implications of such rules on the certificate need to be better understood.

Capacity building

Studies on the implementation of national ABS laws confirm the difficulties provider countries face in adequately complying with their current legislation. In the opinion of the author, in order to achieve CBD objectives, the importance of national frameworks and their application should not be neglected. This topic is closely related to capacity building. From this perspective, the international regime should contribute decisively to ensure the best possible application of existing legal frameworks on ABS, the strengthening of legal certainty and the creation of national capacities for that purpose.

FTAs often contain provisions on environmental cooperation (including capacity building activities) either in an Environment Chapter and/or in an Environmental Cooperation Agreement to be ratified separately. In each case, preliminary priorities have been set out for cooperation and capacity development in different areas. ABS could be considered one of these and receive financial and other support from trade partners. These programmes could support capacity building activities under the international regime.

Some concluding remarks

This article has highlighted a number of links between FTAs and the international regime for ABS that is currently being negotiated under the CBD (see Box I). Despite the theoretical speculations, it is still uncertain if and how FTAs might have an impact on the negotiating dynamics and country positions with regard to the international regime. So far, this has not seemed to be the case. With regard to the substantive content of the proposals submitted by the different countries or by regional groups in the negotiations, it is difficult to link the modifications of recent country proposals to the content of their FTAs (especially because the proposals do not include specific negotiating language).

More time and analysis will thus be needed in order to identify the potential impact of FTAs on the negotiations and final outcome of an international regime for ABS.

Jorge Cabrera Medaglia is Legal Adviser INBio/Professor of Environmental Law at the University of Costa Rica. The opinions expressed are of a personal nature.