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20–973 PDF 2016

S. HRG. 114–324 

TREATIES 

HEARING 

BEFORE THE

COMMITTEE ON FOREIGN RELATIONS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MAY 19, 2016 

Printed for the use of the Committee on Foreign Relations 

( 

Available via the World Wide Web: 

http://www.fdsys.gpo.gov 

COMMITTEE ON FOREIGN RELATIONS

BOB CORKER, TENNESSEE, Chairman

JAMES E. RISCH, Idaho 

MARCO RUBIO, Florida 

RON JOHNSON, Wisconsin 

JEFF FLAKE, Arizona 

CORY GARDNER, Colorado 

DAVID PERDUE, Georgia 

JOHNNY ISAKSON, Georgia 

RAND PAUL, Kentucky 

JOHN BARRASSO, Wyoming 

BENJAMIN L. CARDIN, Maryland 

BARBARA BOXER, California 

ROBERT MENENDEZ, New Jersey 

JEANNE SHAHEEN, New Hampshire 

CHRISTOPHER A. COONS, Delaware 

TOM UDALL, New Mexico 

CHRISTOPHER MURPHY, Connecticut 

TIM KAINE, Virginia 

EDWARD J. MARKEY, Massachusetts 

TODD WOMACK, Staff Director

CHRIS LYNCH, Democratic Staff Director

CHRIS FORD, Majority Chief Counsel

MARGARET TAYLOR, Minority Chief Counsel

JOHN DUTTON, Chief Clerk

(II)

C O N T E N T S 

Page 

Garber, Hon. Judith G., Acting Assistant Secretary, Bureau of Oceans and 

International Environmental and Scientific Affairs, U.S. Department of 

State, Washington, DC ........................................................................................ 40 

Prepared statement .......................................................................................... 5 

Additional questions for the record submitted by Senator Cafdin ............... 23 

Isakson, Hon. Johnny, U.S. Senator From Georgia .............................................. 1 

Kim, John J., assistant legal adviser for private international law, U.S. Department of State, Washington, DC ................................................................... 7 

Prepared statement .......................................................................................... 9 

Schoenecker, John, director, intellectual property, HM.CLAUSE, on behalf 

of American Seed Trade Association, Davis, CA ............................................... 14 

Prepared statement .......................................................................................... 15 

Shaheen, Hon. Jeanne, U.S. Senator From New Hampshire .............................. 2 

Prepared statement .......................................................................................... 3 

Smith, Edwin E., Partner, Law Offices of Morgan, Lewis & Bockius, LLP, 

Boston, MA ........................................................................................................... 17 

Prepared statement .......................................................................................... 19 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Letters submitted in support of The Trearty on Plant Genetic Resourced 

for Food and Argiculture ..................................................................................... 25 

Letters submitted in support of The Convention on the Law Applicable to 

Certain Rights in Respect of Securities Held With an Intermediary .............. 47 

(III) 

(1) 

TREATIES 

Thursday, May 19, 2016 

U.S. SENATE, COMMITTEE ON FOREIGN RELATIONS, Washington, DC. 

The committee met, pursuant to notice, at 10:04 a.m., in Room 

SD–419, Dirksen Senate Office Building, Hon. Johnny Isakson presiding. 

Present: Senators Isakson [presiding], Johnson, Gardner, 

Shaheen, and Murphy. 

OPENING STATEMENT OF HON. JOHNNY ISAKSON, 

U.S. SENATOR FROM GEORGIA 

Senator ISAKSON. I will call to order the hearing of the Senate 

Foreign Relations Committee. We welcome our guests and our two 

people to testify. I will make opening remarks, and then I will turn 

it over to Senator Shaheen for her opening remarks. 

Today’s hearing will review two treaties that will advance U.S. 

interests in the agricultural and financial sectors, the International 

Treaty on Plant Genetics and The Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary. 

Our first treaty is the International Treaty on Plant Genetic Resources. The plant genetic treaty was voted out of this committee 

by a voice vote December 2010. Unfortunately, the Senate did not 

take up the treaty before the end of the 110th Congress. 

As our witnesses will explain in their testimony, our food security and the future of United States agriculture depends on access 

to the plant germplasm that will be made available through the 

terms of this treaty. 

The United States is the global leader in agriculture, and I might 

add, parenthetically, so is my State of Georgia, so I have a personal 

and parochial interest in this as well. 

In fact, the multilateral germplasm system established under the 

treaty is based on our own national plant germplasm system, 

which has been in operation for years. 

Without full participation under the treaty, our farmers and researchers are placed in a competitive disadvantage. Without it, 

they have to engage in costly, time-consuming, bilateral negotiations to access materials that would be fully available under the 

Treaty. 

This treaty entered into force in 2004 and has 139 parties. We 

look forward to hearing from our witnesses today on how ratification of this treaty will help our national interests. 

2 

The second treaty we will consider is The Hague Convention. In 

this treaty, we will address significant, complex and conflicting 

laws and issues in global financial markets. Financial markets 

have evolved over the last couple decades. The Hague Convention 

represents the other step forward in the evolution of securities law 

and financial markets. 

The capital markets are now global with the presence of new 

challenges with numerous parties trading securities across national 

borders. Under the indirect system, intermediaries in the United 

States manage accounts owned by people all over the world. Although the financial transactions managed by the intermediaries 

are global, the owners live in different countries from where the 

law is applicable. Those accounts may vary dramatically from one 

country to the next. 

Determining which laws are applicable and which courts apply 

brings new challenges with numerous parties trading securities 

across national borders. Legal issues that once would be resolved 

under U.S. law now face complex issues regarding the choice of 

laws and choice of forum. 

By providing a set of fallback rules for reconciliation of conflicts 

of the law, The Hague Convention represents another step forward 

in the evolution of securities law and financial markets. The Hague 

Convention would improve upon the current framework, providing 

a simpler method to resolve these conflicts. If ratified, this convention would reduce risk in global financial markets and reduce costs. 

The United States has a natural advantage under The Hague 

Convention. The Convention is based on U.S. legal principles and 

the U.S. Uniform Commercial Code. 

I look forward to discussing this today and look forward to hearing from our witnesses. 

I will now introduce the ranking member, Senator Shaheen. 

STATEMENT OF HON. JEANNE SHAHEEN, 

U.S. SENATOR FROM NEW HAMPSHIRE 

Senator SHAHEEN. Thank you, Mr. Chairman. Thank you for 

chairing this hearing. I am glad we are having this hearing today 

because consideration of treaties is one of the critical duties the 

Constitution assigns to the Senate, and I believe that we need to 

take that duty seriously. 

I am not going to repeat what Senator Isakson has said about 

the treaties that we are going to be considering this morning, but 

I just want to make a few points. 

First, as Senator Isakson said, the Treaty has been signed by the 

U.S. and ratified by 139 countries. My understanding is that our 

ratification will require no changes in U.S. law. 

On The Hague Securities Convention, I understand the Convention’s principles are based on our own Uniform Commercial Code, 

which means they are entirely compatible with those already in effect across the United States, and they will not require any implementing legislation. The Uniform Law Commission, the body instrumental in drafting the code, has registered its strong support 

for ratification of the Convention, as have all of the relevant stakeholders, including banks, stockbrokers, investment firms, the U.S. 

Chamber of Commerce. 

3 

So I will submit my full statement for the record, Mr. Chairman, 

and apologize in advance that I have to leave early to go to a markup in the Appropriations Committee. 

Senator ISAKSON. Without objection, your remarks will be made 

a permanent part of the record. 

[The prepared statement of Senator Shaheen follows:] 

PREPARED STATEMENT OF SENATOR SHAHEEN

Thank you, Mr. Chairman. 

I am glad that we are having this hearing today. Consideration of treaties is one 

of the critical duties the Constitution assigns to the Senate, and I believe we need 

to take that duty seriously. So thank you, Senator Isakson, for chairing this hearing. 

Global access to plant genetic resources is greatly valuable to America’s farmers, 

our academic institutions, our researchers, and the private sector. With these materials, we can develop new crop varieties that provide more nutrients, better resist 

pests and diseases, show improved yields, better tolerate environmental stress, and 

can therefore feed the growing number of people inhabiting this earth. The United 

States is the world’s largest market for seeds, as well as the largest seed exporter. 

The International Treaty on Plant Genetic Resources for Food and Agriculture 

creates a global system for the management of plant genetic resources. Ratification 

of this treaty will ensure the United States can protect our national interests in the 

deliberations of the International Treaty Governing Body, which establishes and 

manages that global system. Once the U.S. ratifies this treaty, our companies and 

agricultural researchers will be able to engage in a streamlined exchange process 

for plant genetic resources rather than being forced to negotiate separate bilateral 

agreements. This shift will reduce uncertainty, logistical challenges and costs. 

This treaty has already been ratified by 139 countries, and my understanding is 

that ratification will require no changes to U.S. laws. 

I look forward to hearing the views of our distinguished witnesses on the merits 

of the Treaty. 

We have before us another important treaty: the Hague Securities Convention, 

which will remove legal uncertainties for cross-border securities transactions. I understand all of the relevant stakeholders, including banks, broker-dealers, investment firms and the U.S. Chamber of Commerce strongly favor its ratification. 

These days, cross-border electronic transactions in stocks, bonds and other securities are occurring in higher numbers than ever before. However, uncertainty about 

what law governs the aspects of these transactions can carry costs. The Convention 

resolves these uncertainties by providing choice-of-law rules for securities and is intended to modernize the conduct of these transactions. 

I understand the Convention’s principles are based on our own Uniform Commercial Code, which means they are entirely compatible with those already in effect 

across the United States and will not require any implementing legislation. The 

Uniform Law Commission, the body instrumental in drafting the code, has registered its strong support for ratification of the Convention. 

I look forward to hearing from our witnesses on the merits of this treaty as well. 

Senator ISAKSON. And without objection, I will note that we are 

all going to be out of here pretty fast, because we have votes coming up pretty soon. So I do not want our two witnesses to think 

we are being rude or unprofessional, but we do have votes, I think 

at 11 o’clock, if I am not mistaken. 

So we will go right to our testimony. 

I want to first, without objection, enter into the record various 

letters that have been submitted by agricultural interests and financial interests around the country in support of the United 

States participation in both of the treaties we will discuss today. 

Without objection, they will become part of the record. 

[The information referred to is located at the end of this document.]] 

Senator ISAKSON. Our first witness is the Honorable Judith 

Garber, Acting Assistant Secretary for the Bureau of Oceans and 

4 

International Environmental and Scientific Affairs at the Department of State. 

We welcome you, and you will be the first to testify. 

Our second witness today is Mr. John Kim, assistant legal adviser for private international law at the Department of State. 

Ms. Garber, you are recognized for up to 5 minutes. 

STATEMENT OF HON. JUDITH G. GARBER, ACTING ASSISTANT 

SECRETARY, BUREAU OF OCEANS AND INTERNATIONAL ENVIRONMENTAL AND SCIENTIFIC AFFAIRS, U.S. DEPARTMENT 

OF STATE, WASHINGTON, DC 

Ms. GARBER. Mr. Chairman, Ranking Member Shaheen, thank 

you for the opportunity to testify today in support of the International Treaty on Plant Genetic Resources for Food and Agriculture. 

With your permission, I have a longer statement that I would 

like to submit for the record. 

Senator ISAKSON. Without objection. 

Ms. GARBER. The American people depend on U.S. agriculture, 

which in turn depends on stable, high yields of U.S. crops, which 

in turn depend on the continual development of new crop varieties. 

The crops we grow are under constant threat from diseases and 

pests, droughts, and floods. Our food security and the future of 

U.S. agriculture will depend on our ability to breed resilient new 

crops that require less water, less fertilizer, and less energy to 

grow, and still reliably produce high-quality yields. 

To develop these new crop varieties, breeders and researchers require access to a broad spectrum of plant germplasm. Plant 

germplasm includes the seeds, the bulbs, the roots, and other propagating raw materials from which plants can be reproduced. 

These materials for plant breeding contain key traits, such as immunity to virulent pests and diseases or tolerance for drought. Because plant genetic diversity is spread across the globe, U.S. access 

to germplasm from other countries is critical to develop the crops 

we need. This means facilitating guaranteed access to what is 

termed ‘‘plant genetic resources’’ is a very high priority for the 

United States and the international community. This is the reason 

the Treaty was established. 

This treaty creates a stable legal framework for international 

plant germplasm exchanges. It benefits both research and commercial interests in the United States. 

The Treaty also promotes U.S. and global food security through 

the conservation and sustainable use of plant genetic resources. 

The Treaty’s centerpiece is the establishment of a multilateral 

system. Its purpose is to facilitate access by public and private entities to, and benefit-sharing regarding, certain plant genetic resources to be used for research, breeding, and training for food and 

agriculture. 

Currently, 64 food, feed, and grazing crops are listed in the Treaty. Access is granted through a standard material transfer agreement, essentially a contract that defines the terms of access and 

benefit-sharing. 

As a global leader in agricultural production, research, and 

breeding, the United States was intensively involved in negotiating 

5 

the Treaty and the standard material transfer agreement. President George W. Bush signed the Treaty in 2002. And as you noted, 

Mr. Chairman, it entered into force in 2004 and now has 139 parties. 

Throughout the Treaty’s negotiating process, the United States 

was firmly committed to creating a system that promotes U.S. and 

global food security, protects U.S. access to genetic resources held 

outside our borders, and supports research and breeding in both 

the public and private sectors. 

The U.S. also sought to protect the ability of International Agricultural Research Centers, the institutions largely responsible for 

the Green Revolution, which saved hundreds of millions of lives, to 

continue to breed crops that are the foundation for global food security. We were successful in achieving these objectives. 

U.S. ratification of the Treaty enjoys strong support among 

stakeholders such as the American Seed Trade Association, the 

American Farm Bureau Federation, the Association of Land-Grant 

Universities, and the National Farmers Union. 

Mr. Chairman, the Treaty is consistent with existing U.S. practice and can be implemented under existing U.S. authorities. The 

United States is already in compliance with key provisions of the 

Treaty. 

The Agricultural Research Service would play a major role in domestic treaty implementation. Ratification would not entail major 

policy or technical changes. 

For more than 60 years, the U.S. National Plant Germplasm System has distributed samples to plant breeders and researchers 

worldwide and without restriction. 

One notable example of collaboration is the crop gene bank in 

Griffin. The gene bank of the Agricultural Research Service and 

the University of Georgia is working to collect, conserve, and distribute plant genetic resources for sorghum, peanut, vegetables, 

cowpeas, and other crops and crop wild relatives. 

Ratification of the Treaty would not only underscore continued 

leadership in agricultural research, breeding, and markets, it 

would also help U.S. farmers and researchers sustain and improve 

their crops, and promote food security for future generations. 

Finally, it would enable the United States to effectively guide the 

trajectory of the Treaty and its material transfer agreement as 

they evolve to meet future challenges and changing conditions. 

Thank you for the opportunity to testify today. I would be happy 

to answer any questions you may have. 

[The prepared statement of Ms. Garber follows:] 

PREPARED STATEMENT OF JUDITH G. GARBER

Mr. Chairman, Ranking Member Shaheen, and Members of the Committee: 

Thank you for the opportunity to testify today in support of the International 

Treaty on Plant Genetic Resources for Food and Agriculture (‘‘the Treaty’’). 

U.S. agriculture depends on the stable high yields of U.S. crops which, in turn, 

depend on the continual development of new crop varieties. The crops we grow are 

under constant threat from diseases and pests, droughts and floods. Our food security and the future of U.S. agriculture will depend upon our ability to breed new 

crops that require fewer inputs, such as water, fertilizers, and energy, to grow; new 

crops that are more resilient or resistant to pests and diseases; and new crops that 

still reliably produce high-quality yields. To develop these new crop varieties, breeders and researchers require access to a broad spectrum of plant germplasm. Plant 

6 

germplasm includes the seeds, bulbs, roots, and other propagating raw materials 

from which plants can be reproduced. These materials for plant breeding contain 

key traits, such as immunity to virulent pests and diseases, or tolerance for drought. 

Because plant genetic diversity is spread around the world, the United States needs 

to have access to germplasm from other countries in order to be best equipped to 

develop the crops we need. This means that facilitating access to what is termed 

‘‘plant genetic resources’’ is a critical priority for the United States. It is also a critical priority for the entire international community. This is exactly why the Treaty 

was created. 

Technological advances have significantly improved our ability to identify, characterize, and utilize plant genetic materials, meaning that now more than ever it is 

important for us to be able to access the diversity of plant genetic resources outside 

our borders. However, U.S researchers have found it increasingly difficult to gain 

access to plant genetic resources in other countries. This Treaty establishes a stable 

legal framework for international plant germplasm exchanges, benefitting both research and commercial interests in the United States, and promoting U.S. and global food security through the conservation and sustainable use of plant genetic resources for food and agriculture. 

The centerpiece of the Treaty is the establishment of a ‘‘Multilateral System’’ for 

access to, and benefit-sharing regarding, certain plant genetic resources to be used 

for research, breeding, and training for food and agriculture. The Multilateral System currently applies to 64 food, feed and grazing crops that are maintained by 

International Agricultural Research Centers or that are under the management and 

control of national governments and in the public domain. Access to germplasm in 

the multilateral system is granted through a Standard Material Transfer Agreement 

(SMTA), a contract that defines the terms of access and benefit-sharing. 

As a global leader in agricultural production, research and breeding, the United 

States was intensively involved in negotiating the Treaty and the SMTA, which accompanies every transfer of materials under the multilateral system. President 

George W. Bush signed the Treaty in 2002. It entered into force in 2004 and now 

has 139 Parties including Australia, Brazil, Canada, Japan, and the EU. President 

Bush forwarded the Treaty to the Senate for consideration in July 2008, after negotiation of the SMTA was completed. 

Throughout the Treaty negotiating process, the United States was firmly committed to creating a system that promotes U.S. and global food security, protects 

U.S. access to genetic resources held outside our borders, and supports research and 

breeding in both the public and private sectors. The United States also sought to 

protect the ability of the International Agricultural Research Centers—the institutions largely responsible for the ‘‘Green Revolution’’ which saved hundreds of millions of lives—to continue to breed crops that are the foundation for global food security. We were successful in achieving these objectives. 

U.S. ratification of the Treaty enjoys broad stakeholder support, including support 

from major U.S. companies as well as prominent industry organizations such as the 

American Seed Trade Association, the American Farm Bureau Federation, the National Farmers Union, the National Association of Wheat Growers, the National 

Corn Growers Association, the Biotechnology Industry Organization, and the Intellectual Property Owners of America. In addition, the Association of Public Landgrant Universities also supports ratification. 

U.S. stakeholders strongly support ratification because it would guarantee U.S. 

users what is known as ‘‘facilitated access,’’ that is, access on consistent terms for 

little or no cost, to plant genetic materials held by other Treaty Parties. Currently 

U.S. entities are at a disadvantage, as they are not assured access to these resources due to our non-party status. When they do gain access, they sometimes have 

to engage in lengthy ad hoc negotiations of terms of access, and those terms are not 

always as favorable as those in the SMTA. If the United States were a Party to the 

Treaty, U.S. users would have guaranteed access under the SMTA, and the United 

States could ensure that any revisions to the SMTA were consistent with U.S. interests. 

The Treaty is consistent with existing U.S. practice and can be implemented 

under existing U.S. authorities. The United States is already in compliance with key 

provisions of the Treaty. The Agricultural Research Service, in its capacity as manager of the National Plant Germplasm System, would play a major role in domestic 

Treaty implementation. Ratification would not entail major policy or technical 

changes to current National Plant Germplasm System operations. For more than 60 

years, the U.S. National Plant Germplasm System has distributed samples of 

germplasm to plant breeders and researchers worldwide and without restriction. 

One notable example of collaboration is the Agricultural Research Service-University of Georgia crop genebank in Griffin, Georgia, which is working to collect, charVerDate Nov 24 2008 09:23 Aug 03, 2016 Jkt 123456 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 S:\FULL COMMITTEE\HEARING FILES\20973.TXT MIKE
7 

acterize, conserve, and distribute plant genetic resources for sorghum, peanut, vegetables, cowpeas, and other crops and crop wild relatives. 

The U.S. Department of Agriculture has long been recognized as the world leader 

in plant germplasm conservation and distribution. If the United States were to ratify the Treaty, U.S. entities would gain guaranteed access to plant genetic resources 

covered by the Treaty’s Multilateral System. This guaranteed access is critical to the 

efforts of researchers and plant breeders to develop new crop varieties that are more 

nutritious, that are resistant to pests and diseases, that show improved yields of 

high-quality products, and that are better able to tolerate environmental stresses. 

The emergence of new plant breeding tools only heightens the importance of open 

access to plant genetic resources. 

Ratification of the Treaty would not only underscore our continued leadership in 

agricultural research, breeding, and markets; it would also help U.S. farmers and 

researchers sustain and improve their crops and promote food security for future 

generations. Finally, it would enable the United States effectively to guide the trajectory of the Treaty and its Material Transfer Agreement as they evolve to meet 

future challenges and changing conditions. 

Thank you for the opportunity to testify today. I would be happy to answer any 

questions. 

Senator ISAKSON. Thank you, Ms. Garber. 

Mr. Kim? 

STATEMENT OF JOHN J. KIM, ASSISTANT LEGAL ADVISER FOR 

PRIVATE INTERNATIONAL LAW, U.S. DEPARTMENT OF 

STATE, WASHINGTON, DC 

Mr. KIM. Chairman Isakson, Ranking Member Shaheen, members of the committee, I appreciate this opportunity to testify today 

in support—— 

Senator SHAHEEN. Mr. Kim, could you just pull your microphone 

a little closer, so we can hear a little better? 

Mr. KIM. Okay, excuse me. I will start again. 

Chairman Isakson, Ranking Member Shaheen, members of the 

committee, I appreciate this opportunity to testify today in support 

of The Hague Convention on the Law Applicable to Certain Rights 

and Respective Securities Held with an Intermediary. 

The Convention was adopted by The Hague Conference on Private International Law on July 5, 2006, and was signed by the 

United States and Switzerland that same day. Switzerland and 

Mauritius have ratified the Convention. The Convention will enter 

into force after the deposit of a third instrument of ratification. 

Many countries are looking to the United States, upon whose law 

the Convention largely was based, to become a party before they 

take action. 

In brief, the rules in the Convention provide a narrow technical 

fix to a serious problem in cross-border securities markets that has 

already been fixed domestically through adoption by all U.S. States 

of Articles 8 and 9 of the Uniform Commercial Code. 

The Convention, if widely adopted, would basically extend current U.S. law and practice to the global financial markets. In particular, the rules in the Convention solve the current quandary of 

determining which country’s law apply to certain aspects of a crossborder transaction in which the issuer, the clearing corporation, the 

security owner’s bank or broker, and the owner may be located in 

different countries. 

First, I would like to provide some brief background explaining 

the nature of the problem that the Convention is designed to address. Over the years, financial markets have moved from a system 

8 

of direct holding of security certificates or recordings on a share 

registry to a system of securities clearance, settlement, and ownership where the ownership information is held electronically as a 

book entry. 

This so-called indirect system consists of one or more tiers of 

intermediaries between the issuer and the owner. These so-called 

intermediated securities are maintained through clearing corporations for the accounts at banks and brokers, which in turn maintain accounts for the customers. 

In the movement toward book entry systems, it has become increasingly difficult for financial market participants to determine 

which country’s law would apply to transactions involving securities held through these systems that involve different countries. It 

is crucial that market participants be able to identify the relevant 

law easily and with certainty for a variety of purposes, including, 

among many others, ensuring the perfection of interest in the 

intermediated securities. This problem affects U.S. banks and financial institutions every day and increases legal uncertainty and 

raises costs. 

The Uniform Law Commission and the American Law Institute 

addressed this problem within the United States by revising the 

UCC in 1994. The rules and the Convention are based on the rules 

contained in UCC Articles 8 and 9. 

Second, I would like to turn to the solution to this problem provided by the Convention. 

The Convention’s focus is important but narrow. It deals with 

intermediated securities, but not securities directly held by the investor from the issuer. The Convention does not prescribe substantive law. Rather, it simply selects a governing law for certain 

issues related to an intermediated securities transaction, thereby 

providing legal certainty on issues. These issues include the legal 

rights and obligations of the intermediary, and the resolution of 

priority conflicts among the buyer, the secured party, and a judgment lien creditor, if there are conflicting claims to the securities. 

The primary role of the Convention for determining the applicable law is to look to the law of the jurisdiction whose law governs 

the account agreement between the customer and the intermediary. 

Virtually all book entry systems are covered by an account agreement, and a very large majority of those agreements specify governing law. 

Third, the Convention is consistent with and is largely based on 

U.S. law. The Convention generally follows the approach to choice 

of law for the indirect holding system already contained in Article 

8 of the UCC. In particular, UCC Article 8 permits the intermediary and the customer to determine the law that governs a 

transaction by express agreement. 

My last and perhaps most important point is that we expect that 

there will be many benefits of U.S. ratification of the Convention. 

The Convention would contribute to the practical need in the large 

and growing global financial markets for greater legal certainty as 

to the laws applicable to interests in securities held through indirect holding systems. 

It would reduce the cost of cross-border security transactions for 

securities investors, market actors, and custodians. U.S. businesses 

9 

and individuals would benefit, in particular, because the Convention sets forth modern rules, which already their domestic transactions, and extend those rules more globally, thereby reducing 

costs and enhancing certainty. 

As the Convention was largely based on U.S. law, and given this 

country’s significant role in cross-border transactions, other countries are looking to the leadership of the United States. If United 

States becomes a party, we expect that many other countries, including Canada, as well as countries in Asia, South America, and 

Africa, will be encouraged to join the Convention and adopt the 

same rules on choice of law. 

Thank you, Mr. Chairman, Ranking Member. I am happy to answer any questions. 

[The prepared statement of Mr. Kim follows:] 

PREPARED STATEMENT OF JOHN J. KIM

Chairman Isakson, Ranking Member Shaheen, and Members of the Committee, 

I appreciate this opportunity to testify today in support of the Hague Convention 

on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary (‘‘the Convention’’). 

The Convention was adopted by the Hague Conference on Private International 

Law on July 5, 2006, and it was signed by the United States and Switzerland that 

same day. The Convention will enter into force after the deposit of the third instrument of ratification. Switzerland and Mauritius have ratified the Convention. Many 

countries are looking to the United States, upon whose law the Convention largely 

was based, to become a party before they take action. 

In brief, the rules in the Convention provide a narrow, technical fix to a serious 

problem in cross-border securities markets that has already been fixed domestically 

through adoption by all U.S. states of Articles 8 and 9 of the Uniform Commercial 

Code (UCC). The Convention, if widely adopted, would basically extend current U.S. 

law and practice to the global financial markets. 

In particular, the rules in the Convention solve the current quandary of determining which country’s law applies to certain aspects of a cross-border transaction 

in which the investor or owner, the issuer, the clearing corporation, and the owner’s 

bank or broker may be located in different countries. As a result, the Convention 

(1) reduces the legal and systemic risks in cross-border investment securities transactions; (2) reduces costs; and (3) facilitates capital flows. 

My statement will consist of three parts. First, I will provide some background 

on the Convention explaining the nature of the problem that the Convention was 

designed to address. Second, I will explain how the Convention addresses the problem and briefly run through its basic provisions. Third, I will indicate the Convention’s relation to domestic law and its importance to U.S. banks, brokers and others. 

I. BACKGROUND—THE NATURE OF THE PROBLEM

Historically, owners of securities had a direct relationship with the issuer. Investors or owners would either have physical possession of the securities certificates, 

or be recorded on the issuer’s share registry. The location of the certificate or registry was readily identifiable. 

Over time, however, financial markets have expanded and moved to a system of 

securities clearance, settlement, and ownership where the ownership information is 

held electronically and indirectly as a book entry. This so-called ‘‘indirect system’’ 

consists of one or more tiers of intermediaries between the issuer and the owner. 

These so-called ‘‘intermediated’’ securities are maintained through clearing corporations (or central securities depositories) for the accounts of banks, brokers, and other 

financial institutions which in turn maintain accounts for their customers (the beneficial owners of the securities). The owners do not appear on any registry maintained by the issuer, nor do they have actual possession of certificates. 

In the movement towards book-entry systems, it has become increasingly difficult 

for financial market participants to determine which country’s law would apply to 

transactions involving securities held through these systems that involve different 

countries. (For example, suppose that a New York broker holds stock issued by Japanese and Singapore companies for a South American customer.) Also, these crossborder transactions take place very quickly and in huge volumes. 

10 

Many countries’ legal systems have not kept up with the book-entry system, and 

their rules remain different than those in the United States. This problem affects 

U.S. financial institutions every day, and increases legal uncertainty and raises 

costs associated with the often-complicated determination of which country’s law 

may apply. 

That is why the Uniform Law Commission (ULC) and the American Law Institute 

in 1994 addressed this problem domestically in revising the UCC. The rules in the 

Convention reflect the modern finance law of the United States in Articles 8 and 

9 of the UCC, adopted by all U.S. states and the District of Columbia. The Convention would bring this modern approach to the global markets. 

II. THE PROPOSED SOLUTION

I turn now to the solution to this problem that is provided by the Convention. 

The Convention’s focus is important but narrow. It deals with intermediated securities but not securities directly held by the investor from the issuer. The Convention does not prescribe substantive law for securities intermediaries, and it has no 

effect on regulatory law. The Convention simply selects a governing law for certain 

issues related to an intermediated securities transaction, thereby providing legal 

certainty on the law applicable to those issues, and avoiding the need to comply 

with the laws of multiple jurisdictions for the same transaction. 

The issues covered by the Convention include the legal rights and obligations of 

the intermediary; the legal nature and effect of a disposition of the investor’s interest in the securities by the investor’s bank or broker, to a buyer or a secured lender; 

and how priority conflicts among the buyer, the secured party and a judgment lien 

creditor are resolved if there are conflicting claims to the securities. 

The primary rule of the Convention for determining the applicable law is to look 

to the law of the jurisdiction whose law governs the account agreement between the 

customer and the intermediary. Virtually all book-entry systems are covered by an 

account agreement, and the very large majority of those agreements specify a governing law. 

Under the Convention, some minimal nexus must be established for the choice of 

that law, such as an office (a place of business) of the intermediary that performs 

certain functions in the chosen jurisdiction dealing with securities, even if those 

functions are unrelated to any particular securities account. This is generally not 

an issue for U.S. banks or brokers. They would normally require that the governing 

law of the account agreement be that of a jurisdiction in which they maintain an 

office. 

If the applicable law cannot be determined pursuant to an agreement between the 

customer and the intermediary, certain fallback provisions in the Convention would 

ultimately apply the law of the jurisdiction in which the intermediary is organized. 

III. RELATION TO U.S. DOMESTIC LAW

Turning now to the third part of my presentation, the Convention is 

consistentwith, and was largely based on, U.S. law. 

The Convention generally follows the approach to choice of law for the indirect 

holding system contained in Article 8 of the UCC. Article 8 was specifically revised 

in 1994 to reflect the increasing use of securities accounts without physically identifiable securities or issuer share registries. In particular, UCC Article 8 permits the 

intermediary and the customer to determine the law that governs the transaction 

by express agreement. 

As previously noted, the Convention has no effect on regulatory law or the jurisdictional scope or mandate of any banking, securities, or other regulators. 

Federal law does not cover these types of commercial transactional matters, so 

there is no federal law that would be displaced. In addition, the Convention would 

not affect any other legal rules or contractual provisions that are not specified in 

the Convention. 

UCC Articles 8 and 9 will continue to cover any issues not covered by the Convention and issues related to securities held directly by the investor or owner. 

There are some minor differences between the Convention and UCC Articles 8 

and 9, relating to perfection by filing, and regarding the consequences of a change 

in the governing law of the agreement (which would be a rare occurrence). Also, 

UCC Article 8, while permitting the intermediary and the customer to select the applicable law, does not contain a ‘‘qualifying office’’ rule. 

None of these differences are significant, and none of the interested U.S. industry 

associations or the ULC has indicated any difficulty with these differences. These 

minor differences are not expected to create any difficulties for U.S. practices under 

UCC Articles 8 and 9. 

11 

The Administration has proposed that the Convention be self-executing. No federal or state legislation would be required to implement the Convention. This method of domestic implementation was supported by the ULC. There is no need to craft 

federal legislation that would intersect with Articles 8 and 9 of the UCC since the 

terms of the Convention itself would do that adequately. 

Finally, the Convention does not permit reservations, and the Administration has 

not proposed any understandings or declarations. 

IV. BENEFITS OF U.S. RATIFICATION

My last and perhaps most important point is that I hope the Senate will appreciate the many benefits of U.S. ratification of the Convention. 

The Convention would contribute to the practical need in the large and growing 

global financial markets for greater legal certainty as to the laws applicable to interests in securities held through indirect holding systems, and would reduce the costs 

of cross-border securities transactions for securities investors, market actors, and 

custodians. As a result, the Convention would facilitate the flow of capital to both 

developed and emerging markets. 

In addition to the aforementioned benefits to the United States, U.S. banks and 

brokers would benefit in particular because the Convention sets forth modern rules 

with which U.S. intermediaries already are familiar and are generally applying. 

Further, U.S. investors would benefit. For example, many Americans have pension 

funds or 401(k) accounts, and these pension funds have large holdings in securities 

that are managed under the book-entry systems I have described. Widespread adoption of the Convention would enhance harmonization and lower the costs of crossborder transactions involving these funds. 

It is therefore not surprising that industry trade associations such as the International Swaps and Derivatives Association, the Securities Industry and Financial 

Markets Association, the Association of Global Custodians, and the Trade Association for the Emerging Markets (EMTA) have written to this Committee indicating 

their support for U.S. ratification. Also, notably, the President of the ULC sent a 

letter to this Committee supporting U.S. ratification of the Convention. 

In view of the successful development of UCC Articles 8 and 9 in the United 

States, and given this country’s significant role in cross-border securities transactions, other countries are looking to U.S. leadership on the Convention. 

If the United States becomes a party, we expect that many other countries, including Canada, as well as countries in Asia, South America, and Africa, will be encouraged to join the Convention and adopt the same rules on choice of law for crossborder securities transactions. As other countries proceed to adopt the Convention, 

legal certainty will continue to increase for all securities transactions, including 

those carried out by banks, brokers and other market participants in the United 

States. 

Senator ISAKSON. Thank you very much, Mr. Kim. 

We will have an opening round of 5-minute questions. I will start 

on that. 

Ms. Garber, your recognition of the University of Georgia was 

duly noted. I want to tell you how much I appreciate that. [Laughter.] 

Senator ISAKSON. They do have a great agriculture extension 

service throughout the State and a great research center in Griffin, 

which you acknowledged in your remarks, which I appreciate. 

That brings me, actually, to the key question that I have been 

asking, given the genetically modified organisms issue. It used to 

be in Asia, but now it seems like the Europeans are using it as 

well. Will our participation in this treaty help us in having GMOs 

recognized as being safe and secure as a component part of our agricultural products? Or does it have anything to do with that? 

Ms. GARBER. Thank you for that question, Senator. 

This treaty deals with the particular product or plant material, 

the building blocks of plants, but it does not deal with the particular processes or techniques that were used to create any particular seed or bulb or propagating material, so it is completely 

neutral on the question of genetically modified organisms. It just 

12 

deals with access and the particular seeds or tubers or bulbs or 

plant propagating material. 

Senator ISAKSON. Carrying that same thought a little bit further, 

in terms of trade agreements, we have TPP that is pending in the 

United States Senate, and hopefully TTIP will be pending at some 

time in the next Congress, in terms of Europe and Scandinavia, 

will it be of any help to us? 

One of our problems in trade around the world is people will use 

standards in their country for health and safety and security and/ 

or financial standards, Mr. Kim, in their country to be a reason 

why they do not want to have free and fair and open trade with 

United States. 

Will this help us, either one of those treaties, by getting into 

them and having a more level playing field? 

Ms. GARBER. This treaty is distinct from that, but what this treaty does do is it creates a level playing field in terms of guaranteed 

access for our public and private plant breeders, as well as our agricultural researchers. 

Senator ISAKSON. Mr. Kim, like most Americans who are not attorneys and not bankers or financial services personnel, I have always been worried about losing a stock certificate, but I am even 

more worried about an electronic recording of stock ownership that 

I can never touch, feel, and put in a safety deposit box. 

Our participation in this financial Convention with The Hague, 

will that help in assuring people that their ownership is secure and 

safe in the event of a cyberattack or some other electronic problem? 

Mr. KIM. Senator, this convention will certainly enhance the 

global financial markets by introducing legal certainty as to the 

choice of law in a situation where there is currently no certainty. 

When there are many different countries involved, people do not 

know which law applies, and they often try to comply with many 

different laws. 

So it would reduce legal and systemic risk, and reduce costs. I 

think that would be good for U.S. investors, as well as U.S. banks 

and brokers, and will enhance the integrity of the indirect holding 

system through which much of our securities trade proceeds. 

Senator ISAKSON. To that point, and I want to make sure I am 

right on this, the laws governing financial transactions in the residence of the owner of the account under this convention will be the 

laws that govern handling the financial services of that account. Is 

that correct? 

In other words, if I have a financial manager in the United 

States of America, and I am a resident of the United States of 

America, and there is a question about an account transfer, this 

would guarantee the determination that U.S. law prevailed? Is that 

right? 

Mr. KIM. In practical reality, yes, because almost all U.S. banks 

or brokers and U.S. residents would choose U.S. law to govern their 

account agreements. 

Senator ISAKSON. Thank you very much, Mr. Kim. 

Thank you very much, Ms. Garber. 

Senator Shaheen? 

Senator SHAHEEN. Thank you. 

13 

Ms. Garber, can you talk about how and whether the treaty 

would help address the challenges of global food insecurity? 

Ms. GARBER. Thank you for that question, Senator. 

This treaty would absolutely help address the challenge of global 

food security. So many regions of the world that suffer from global 

food insecurity, such as in Africa, South Asia, or the Caribbean, 

suffer from low agricultural productivity. What this treaty does is 

it provides guaranteed access for those who are trying to produce 

new plant varieties that will be stronger and more resistant to part 

of the undercurrent reasons why we have low agricultural food productivity or, for example, pests and diseases that may affect certain 

crops. 

So by providing the system of access, it enhances not only the 

food security of the United States, but food security globally. 

Senator SHAHEEN. Thank you. 

Mr. Kim, you pointed out that the Convention was signed in July 

2006, which is almost a decade ago, that there are only two countries that have actually ratified it today. So why is it taking so 

long? 

Mr. KIM. Thank you, Senator, for the question. 

Other countries are looking to the United States for leadership 

on this convention, as this convention was based on our law and 

rules, and in view of the significant role that the United States 

plays in global markets. 

U.S. ratification of this convention would lead to the entry into 

force of the Convention, and we believe that would create momentum to encourage other countries to join the treaty. 

I have had conversations with the Canadians. We have heard 

voices from Japan and Korea that they are very interested in what 

the United States does with The Hague Securities Convention. 

Senator SHAHEEN. I understand that. That makes sense to me. 

But why has it taken so long for the Convention to come before the 

Senate? 

Mr. KIM. Well, the treaty transmittal package was submitted by 

President Obama in May 2012. 

Senator SHAHEEN. So we have been slow to take it up? 

Mr. KIM. Well, it has been before the committee, certainly, but 

I am sure there have been many other priorities and has taken 

some time. 

Senator SHAHEEN. I guess what I am trying to get at is, given 

that we heard that the stakeholders seem to all be supportive, have 

there been objections coming from some areas that are not apparent, that we need to better understand? 

Mr. KIM. Thank you, Senator. 

No, we are not aware of any opposition or objections posed to this 

convention. It has near universal support. Almost every industry 

trade association has written to the committee in support of U.S. 

ratification of the Convention, as has the Uniform Law Commission, which promulgates the UCC. They have all written in support 

of the Convention. 

I think it is high time we take action. Thank you. 

Senator SHAHEEN. Thank you. 

Thank you, Mr. Chairman. 

14 

Senator ISAKSON. I would comment, Senator Shaheen, that it is 

understandable why Mr. Kim works for a diplomatic agency of the 

government. [Laughter.] 

Senator SHAHEEN. He did that very well. 

Senator ISAKSON. The answer to his question is that it is our 

fault, number one, that it is so late in coming up. I would compliment Chairman Corker and Senator Cardin on the fact that we 

are having this hearing, which I think sends a clear signal that we 

are ready to take action. But I appreciate your diplomacy very 

much in answering the question. 

Senator Johnson? 

Mr. JOHNSON. No questions. 

Senator ISAKSON. Senator Murphy? 

Senator MURPHY. No questions. 

Senator ISAKSON. See, you did so good, nobody even has a question. Thank you very much for your testimony, we are going to 

move to our second panel. 

For members, we will leave the record open until the end of business on Monday for questions or additional comments, and would 

ask the witnesses from the first panel to be sure to reply quickly, 

if you do receive any additional questions from the committee. 

It is now my privilege to recognize our second panel. We have 

two witnesses. The first is Mr. John Schoenecker, director of intellectual property at the American Seed Trade Association. Our second witness is Mr. Edwin Smith, partner at the Law Offices of 

Morgan, Lewis & Bockius. 

We recognize Mr. Schoenecker for his comments up to 5 minutes. 

STATEMENT OF JOHN SCHOENECKER, DIRECTOR, INTELLECTUAL PROPERTY, HM.CLAUSE, ON BEHALF OF AMERICAN 

SEED TRADE ASSOCIATION, DAVIS, CA 

Mr. SCHOENECKER. Thank you, Mr. Chairman and members of 

the committee. I would just point out that I work for HM.CLAUSE, 

a vegetable seed company out of Davis, California. 

But I want to thank you for the opportunity to testify today in 

support of the International Treaty on Plant Genetic Resources for 

Food and Agriculture, which I will call the treaty. I am here on behalf of the members of the American Seed Trade Association. 

Founded in 1883, ASTA represents over 700 companies engaged in 

plant breeding, production, and distribution of many seed types, including grains, oil, seeds, rice, cotton, vegetables, flowers, forages, 

cover crops, and grasses, what we in the vegetable seed business 

like to call everything from asparagus to zucchini. 

ASTA members are research-intensive companies in the business 

of discovery, development, and marketing of seed varieties with enhanced production and end-use qualities. 

As you know, our global food system is highly interdependent. 

For example, 70 percent of the food we eat and grow in the U.S. 

comes from crops that are not native to the U.S. As such, not all 

plant genetic resources needed to improve these crops are found in 

the U.S. The treaty is an agreement that aims to address this and 

enhance global food security by providing access to, and exchange 

of, the plant materials required to improve seed varieties. 

15 

A notable example of the impact of plant breeding, which our 

previous speaker talked about, is the Green Revolution. It demonstrates that you need all these sources of plant genetics to be 

successful. It was credited with feeding millions and saving countless lives. 

The wheat of Dr. Norman Borlaug was developed based on varieties from the United States, Japan, and Mexico, which in turn 

thrived in India and Pakistan. 

In the days of Dr. Borlaug, all plant breeders enjoyed much freer 

access to global plant genetic resources. However, certain countries 

began restricting access to their germplasm, and the treaty was 

drafted to stabilize the situation, with the U.S. playing a key role 

in its development. The intent was to establish rules and standards 

to facilitate access and provide benefit-sharing for the global seed 

resources needed for agriculture. 

Recently, the implementation of the Nagoya Protocol under the 

Convention on Biological Diversity, or CBD, is further threatening 

the global exchange of germplasm. 

With ratification of the treaty, the U.S. would be able to resume 

its leadership position, enhance the treaty’s functioning, and greatly diminish the uncertainty created by Nagoya and the CBD. 

Our national plant germplasm system is one of the best in the 

world. It stores, maintains, and distributes worldwide over a halfmillion accessions, but almost 2 million more are held in seed 

banks outside the U.S. 

Access to this crop diversity is equally important to all sectors of 

agriculture, including organic, conventional, public, and private. 

Lack of access means lost opportunities to improve yield, enhance 

nutrition, better adapt crops to changing weather, and to address 

the threats posed by evolving pests and diseases. 

As we know, U.S. farmers are global leaders in productivity. Secure access to global plant material will enable public and private 

breeders working with organic, biotech, and conventional varieties 

to benefit from the treaty and to supply the best seeds to growers, 

so they can produce more of the best food tomorrow and well into 

the future. 

As noted, we came close to ratification in 2010 when this committee submitted the treaty and recommended ratification. Today, 

support for ratification remains broad and committed. More than 

80 companies and organizations representing plant breeders, academics, and seed users have expressed support to the committee 

for ratification. These groups include the American Farm Bureau 

Federation, American Society of Plant Biologists, Association of 

Public and Land Grant Universities, National Corn Growers Association, National Cotton Council, and the National Farmers Union, 

to name a few. 

The treaty provides a simple and noncontroversial solution for a 

pressing problem. As a specialized system to exchange plant materials, the treaty puts all member countries on a level playing field 

and provides all plant breeders with clear terms and conditions of 

use. 

No new U.S. laws are required to implement the treaty, and no 

new appropriations are needed. In fact, most of the obligations of 

the treaty are currently being met by the U.S. system. 

16 

With this, and on behalf of the American seed trade and farmers 

and researchers who support the treaty, I urge the committee to 

recommend ratification and support passage in the Senate. This access is critical and will greatly assist the U.S. seed industry in developing new varieties to benefit the U.S. farmer and consumer, 

and enhance global security food security. 

Thanks for this opportunity to comment, Mr. Chairman. 

[The prepared statement of Mr. Schoenecker follows:] 

PREPARED STATEMENT OF JOHN SCHOENECKER

Mr. Chairman and Members of the Committee: 

Thank you for the opportunity to testify today in support of the International 

Treaty on Plant Genetic Resources for Food and Agriculture (the Treaty). I am here 

on behalf of my company HM.CLAUSE and the American Seed Trade Association 

which was founded in 1883. ASTA’s broad membership includes over 700 companies 

engaged in plant breeding, production, and distribution of seed varieties including 

grains, oilseeds, rice, cotton, vegetables, flowers, forages, cover crops and grasses. 

ASTA members are research-intensive companies in the business of discovery, development and marketing of seed varieties with enhanced agronomic and end-use 

qualities. Ratification of the Treaty by the U.S. has always been an important issue 

for the American seed industry. Since its inception, the Treaty has been considered 

the preferred mechanism for plant breeders to move seed and plant materials between countries in order to improve varieties for the world’s farmers. 

Many people are not aware of the highly interdependent nature of our global food 

system. Seventy percent of the food we eat and grow comes from crops that are not 

native to the U.S. The resources to improve these crops have been brought into the 

U.S over time. The Treaty is an agreement that aims to enhance global food security 

through the continued access and exchange of materials used to improve seeds for 

farmers. Perhaps the most notable example of the impact of exchanging plant materials is the Green Revolution which is credited with saving millions of lives. The 

wheat that Norman Borlaug developed was based on a combination of materials 

from the U.S., Japan and Mexico which, in turn, thrived in India and Pakistan. We 

still use relatives of that wheat today in our breeding programs. There are many 

examples across crops. In vegetables, some disease and pest resistance in carrots 

has come from materials from South America and Europe. Green beans have disease 

resistance from French seed banks bred into commercial varieties. 

No country, including the U.S., is self-sufficient when it comes to seed for the future. U.S. seed banks store, maintain and distribute over 560,000 crop varieties. 

However, over two million more crop lines and their relatives are held in seed banks 

outside of the U.S. Public and private plant breeders once enjoyed much freer access 

to seeds for research and development. However, certain countries began restricting 

access to their germplasm and the Treaty was drafted to try to stabilize this situation. The U.S. played a key role in negotiations leading up to the creation of the 

final text of the Treaty during the Bush Administration. The intent was to create 

international rules and standards around access and benefit sharing with regard to 

seed used for agriculture. Recently, the implementation of the Nagoya Protocol 

(Nagoya) under the Convention on Biological Diversity (CBD) is further threatening 

our ability to exchange germplasm globally. With ratification, the U.S. would be able 

to resume its leadership position to enhance the functioning of the Treaty and greatly diminish the uncertainty created by the CBD and Nagoya. 

Currently, the Treaty has 139 Contracting Parties, many of which are important 

sources of seed exchange and also competitors of the U.S., including all EU countries, India, Brazil and Japan. If those countries chose to, they could restrict access 

to their germplasm to only other contracting parties. Without ratification, U.S. agriculture could then be at a huge disadvantage. 

Access to crop diversity is equally important to all sectors of agriculture including 

organic, conventional, public and private. Lack of access to global crop diversity will 

lead to lost opportunities to better adapt crops to changing weather and drought, 

and to address the threats posed by evolving pests and diseases. Improving yields 

will help us feed a growing global population. In the vegetable sector we are looking 

for new crop characteristics to enhance nutritional content, improve flavors and extend shelf-life to reduce food waste. Responding to these agricultural challenges requires a much deeper understanding of individual crop varieties, which have been 

developed under diverse conditions across the globe, and their wild ancestors. High 

throughput DNA sequencing technologies and bioinformatics tools provide new opVerDate Nov 24 2008 09:23 Aug 03, 2016 Jkt 123456 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 S:\FULL COMMITTEE\HEARING FILES\20973.TXT MIKE
17 

portunities for university researchers to mine international collections of regional 

plant materials. These collections can be characterized and leveraged to provide important agronomic, nutritional, and other traits of societal value that can be utilized 

through traditional plant breeding. This work is hindered when the mechanism to 

exchange materials isn’t in place, and instead has to be negotiated on an ad hoc 

basis. 

The Treaty will benefit public and private breeders working on a variety of crop 

types, in addition to U.S. farmers who are already global leaders in productivity. 

As a specialized system to exchange plant materials, the Treaty puts all member 

countries on a level playing field and provides their plant breeders with clear terms 

and conditions. Secure access to global materials will enable U.S. researchers and 

the broader industry to supply the best seeds to our customers to grow more of the 

best food for tomorrow and into the future. 

Support for ratification is broad. More than 80 companies, organizations and universities representing plant breeders, academics and seed users have expressed support for ratification to the Committee. In addition to ASTA, these groups include 

American Farm Bureau Federation, American Society of Plant Biologists, Crop 

Science Society, Association of Public and Land-grant Universities’ Board on Agriculture Assembly, National Corn Growers Association, National Cotton Council, National Farmers Union and National Wheat Growers Association. 

The Treaty provides a simple and non-controversial solution for a pressing problem. We came close to completing the ratification process in 2010 when the Treaty 

was passed by this Committee. No new laws are required to implement the Treaty 

in the U.S. and no new appropriations are needed. In fact, most of the obligations 

of the Treaty are already being met by the U.S. systems that are already in 

place.On behalf of the American Seed Trade and the farmers and researchers who 

also support the Treaty, I urge the Committee to recommend ratification and support passage in the Senate. After ratification, the U.S. can resume the leadership 

role it once played guiding the system that supports all seed research and development to the benefit of U.S. farmers and consumers, as well as food security around 

the world. 

Senator ISAKSON. Thank you very much. 

Mr. Smith? 

STATEMENT OF EDWIN E. SMITH, PARTNER, LAW OFFICES OF 

MORGAN, LEWIS & BOCKIUS, LLP, BOSTON, MA 

Mr. SMITH. Chairman Isakson and members of the committee, 

thank you for the opportunity to testify before you today on The 

Hague Securities Convention. 

I am a partner in the law firm of Morgan, Lewis & Bockius, 

where I regularly represent clients in cross-border transactions and 

insolvencies, including transactions that would be covered by the 

Convention. I am also a Uniform Law commissioner, and I participated in the drafting of revisions to the Uniform Commercial Code. 

I appreciate the opportunity to appear before you today to express my support for the Convention. The Convention would solve 

a vexing problem for market participants in cross-border security 

transactions. That problem is determining which country’s law applies to security interests and property rights in intermediated securities. 

The problem arises from the fact that the owner of the security, 

the holder of the security interest in the securities, the issuer of 

the securities, and the location of the securities, may all be in different countries. 

Currently, each country has its own choice of law rules that govern these transactions, and the lack of uniformity creates real uncertainty and risk for market participants in the financial system. 

To solve this problem, the Convention would establish clear 

choice of law rules that are based largely on the choice of law rules 

in the Uniform Commercial Code that is in effect throughout the 

18 

United States. By ratifying the Convention, the United States 

would take an important step that would not only facilitate international commerce by preventing disputes over property rights and 

securities, but it would also help mitigate potential systemic risk 

created by the lack of clarity over the governing law for cross-border security transactions. 

To demonstrate the importance of the Convention, let me give 

you an example drawn from a real situation on which I had to advise a client. A customer of a U.S. bank custodian owned securities 

of a Japanese issuer. The U.S. bank custodian held those securities 

for the customer. The customer wanted to pledge those securities, 

grant a security interest in those securities, to secure a loan from 

the bank. 

The pledge would work very well under U.S. law. The custodian’s 

interest in the securities would be protected from creditors of the 

customer that try to use U.S. courts to reach the securities. In this 

case, there would be very little additional cost to the customer. 

The problem is that these were securities issued by a Japanese 

issuer. Could a creditor of the customer ignore the effective pledge 

under U.S. law and try to reach those securities in Japan? The answer, it turned out, based on advice from Japanese counsel, was 

yes. 

Now, how can that be? It is because we learned that a court in 

Japan would apply traditional conflict of law rules. Their rule 

would look to the location of the asset to determine which country’s 

law governs whether the pledge is a good one. Since the securities 

were issued by Japanese issuers, they were viewed to be located in 

Japan. 

Without them undertaking steps to get a good pledge under Japanese law, the securities could be reached by a creditor of the customer who has a passport to go to Japan and can bring a lawsuit 

there. 

Moreover, if the customer became a debtor under the U.S. bankruptcy code, there would not even need to be an actual creditor who 

goes to Japan for the pledge to be vulnerable. The customer’s bankruptcy trustee likely would have the rights of any creditor who 

could go to Japan to attach the securities, even if the creditor did 

not actually do so. 

Well, would the pledge then be protected if the lender went 

through the steps of protecting the pledge under both U.S. and 

Japanese law? Not necessarily. If the securities were evidenced by 

stock certificates, a court in Japan or another country might view 

the applicable law to be the country where the certificates were located. And if the securities were held through a clearing corporation, it might view the applicable law to be where the clearing corporation operates. 

Under current law, neither the bank nor the custodian could be 

sure where a lawsuit could be brought or what country’s law might 

apply. The uncertainty creates risk, and risk reduces the availability and increases the cost of credit for the customer. 

The situation would be even worse if there were multiple pledges 

of securities of different issuers in different countries being 

pledged, because then you are multiplying the governing laws that 

could possibly apply. 

19 

The Convention would solve this troublesome problem. It would 

create a simple conflict of law rule that points to the law of the 

country whose law governs the custody agreement between the 

bank custodian and the customer, so long as the bank custodian 

has an office in that country that generally deals with securities. 

That law would be readily apparent from the agreement. 

The Convention also mitigates systemic risk by facilitating the 

resolution of financial institutions in case of financial distress or 

market failure by making the receiver’s or trustee’s job easier in 

determining which governing law applies. 

Then we also talked about the fact that this convention is totally 

consistent with U.S. law, in terms of choice of law rules. 

So in conclusion, the convention creates significant benefits with 

little practical downside. For that reason, market participants, with 

no opposition of which I am aware, urge its ratification. 

Thank you very much. I would be happy to answer any questions 

any of you may have. 

[The prepared statement of Mr. Smith follows:] 

PREPARED STATEMENT OF EDWIN E. SMITH

Chairman Isakson, Ranking Member Shaheen, and the members of the committee, thank you for the opportunity to testify before you today on the Hague Securities Convention. I am a partner at the law firm of Morgan, Lewis and Bockius 

LLP, where I regularly represent clients in cross-border transactions and insolvencies, including transactions that would be covered by the Convention. I am also a 

Uniform Law Commissioner and have participated in the drafting of revisions to the 

Uniform Commercial Code. I appreciate the opportunity to appear today to express 

my support for the Hague Securities Convention. 

The Hague Securities Convention, formerly known as the Convention on the Law 

Applicable to Certain Rights in Respect of Securities Held with an Intermediary (the 

‘‘Convention’’), was promulgated in 2006 by the Hague Conference on Private International Law and has been adopted thus far by Mauritius and Switzerland. The 

Convention has been signed by the United States but has not been ratified. The 

Convention requires that at least three countries adopt the Convention for the Convention to go into effect. If the United States were to ratify the Convention, the Convention would then go into effect among the adopting countries, and many more 

countries would likely follow the lead of the United States in adopting the Convention. 

The Convention addresses certain important conflict of laws issues that arise 

under current law when securities are held with a bank, broker or clearing corporation through the so-called ‘‘indirect holding system.’’ The uncertainty under current 

law on these issues creates significant risks for securities customers, banks, brokers, 

clearing corporations and third party lenders. The Convention, if widely adopted, 

would resolve these issues. Ratification of the Convention by the United States is 

supported by the American Bar Association, the Association of Global Custodians, 

the International Swaps and Derivatives Association, the Securities Industry and 

Financial Markets Association and the Uniform Law Commission. The United 

States should ratify the Convention. 

I will first explain why the United States should ratify the Convention and then 

briefly describe the indirect holding system, explain the conflict of laws problems 

that arise under current law and describe how the Convention will solve those problems without disrupting current practices in the United StatesThe Indirect Holding 

System 

In the indirect holding system, the registered owner of securities of an issuer is 

typically a clearing corporation, such as Depository Trust Company, Clearstream or 

Euroclear. The clearing corporation maintains accounts that reflect that the interests in the securities are for the benefit of a bank or broker. The ultimate beneficial 

owner of the securities may be a customer of the bank or broker. So, if a retail securities customer says ‘‘I own IBM securities,’’ what the customer really means in the 

indirect holding system is that the customer has a right to the securities against 

the customer’s bank or broker and that the bank or broker has a right to the securities against the clearing corporation. 

20 

THE CONFLICT OF LAWS PROBLEMS UNDER CURRENT LAW

The Problems in General 

The cross-border holding of securities in the indirect holding system raises conflict 

of laws issues that are not easily resolved under the current law. Securities may 

be issued by a company located in Country A to a clearing corporation located in 

Country B which holds the securities for a bank or broker in Country C and that 

in turn credits interests in the securities to the account at the bank or broker of 

a customer located in Country D. A third party lender to the customer, relying on 

recourse to the securities in extending credit to the customer, may even be located 

in Country E. Current law is very unclear as to which country’s laws govern the 

following issues: 

• The disposition of the customer’s interest in the securities by the bank or broker 

to a buyer of the securities with or without the customer’s consent; 

• The perfection steps that need to be taken for a customer to grant a security 

interest in the customer’s interest in the securities to the bank or broker or to 

a third party lender to the customer; 

• The right of a judgment creditor of the customer to attach or levy on the interest of the customer in the securities; 

• Whether any interest in the securities obtained by the buyer, secured party or 

judgment lien creditor extends to dividends and other distributions on the securities; 

• How the priority conflict among the buyer, the secured party and the judgment 

lien creditor is resolved if they all claim an interest in the securities; and 

• How any transfer of an interest in the securities is characterized for purposes 

of determining whether the transfer is a sale or merely creates a security interest that secures an obligation. 

Under current law, the resolution any of these conflict of laws issues—i.e., determining which jurisdiction’s substantive law applies to the issue—may depend upon 

where any litigation raising the issue is brought. The court in the country in which 

the litigation is brought would apply the conflict of laws rules of that country. Those 

rules might point to the substantive law of that country or to the substantive law 

of another country to resolve the issue. However, if litigation were brought in a 

court of another country, the court in that other country may, using its conflict of 

laws rules, apply its own substantive law or the substantive law of an entirely different country to resolve the issue. 

An Example 

To illustrate, let’s assume that a bank located in New York acts as a securities 

custodian. The bank custodian credits to an account of its customer an interest in 

securities issued by an issuer in Country X and held by a clearing corporation for 

the account of the custodian. A third party lender extends credit to the customer, 

obtains a security interest in the customer’s interest in the securities under New 

York law to secure the repayment of the credit and takes all appropriate steps 

under New York law to perfect the security interest. Later, a creditor of the customer obtains a judgment against the customer and seeks a judgment lien on the 

customer’s interest in the securities. 

Under New York’s conflict of laws rules, so long as the custody agreement designates New York as the ‘‘securities intermediary’s jurisdiction’’ or, absent that designation, is governed by New York law, New York substantive law will determine 

how the creditor obtains the judgment lien and how the priority conflict between 

the lender as secured party and the judgment lien creditor is resolved. Applying 

New York substantive law, the attachment of the lien must be made by service of 

process on the custodian. And, under New York substantive law, the lender, holding 

a perfected security interest in the securities, prevails over the judgment lien creditor. 

However, if the creditor brings a lawsuit against the customer in Country X, the 

court in Country X will apply its own conflict of laws rules. It is possible that the 

conflict of laws rules of Country X may follow a very common rule that looks to the 

situs of the asset (often referred to as lex re sitae). Under that conflict of laws rule, 

the issues are resolved under the substantive law of the jurisdiction in which the 

securities are viewed to be located. Let’s say that under the law of Country X securities issued by an issuer located in Country X are themselves viewed to be located 

in Country X. In that case, the substantive law of Country X will determine how 

the creditor obtains the judgment lien and how the priority conflict between the 

lender as secured party and the judgment lien creditor is resolved. The creditor may 

under the substantive law of Country X attach the securities by serving process on 

21 

the issuer in Country X. Moreover, any judgment lien of the creditor arising from 

the service of process may under the substantive laws of Country X have priority 

over the lender’s security interest if the lender has not previously taken steps under 

the law of Country X for its security interest in the securities to obtain priority over 

a subsequent judgment lien. (A similar analysis would apply if, under the conflict 

of laws rules of Country X, the securities were viewed to be located in Country Y 

where the clearing corporation is located or where share certificates for the securities are physically held.) 

This problem is especially acute under United States bankruptcy law. If the customer were to become a debtor under the U.S. Bankruptcy Code, the customer’s 

bankruptcy trustee would have the hypothetical status of a creditor who has obtained a judgment lien against the customer’s interest in the securities at the time 

of the commencement of the bankruptcy case. If the lender’s security interest in the 

customer’s interest in the securities would not prevail over a judgment lien under 

applicable non-bankruptcy law, the security interest will be set aside in the bankruptcy case, and the lender will be treated as a general unsecured creditor of the 

customer. It is unclear under the Bankruptcy Code whether the bankruptcy trustee’s status as a hypothetical judgment lien creditor could be that of a hypothetical 

judgment lien creditor in Country X. If that were the case, then the bankruptcy 

trustee could set aside the lender’s security interest and treat the lender as a general secured creditor even though the lender’s security interest in the customer’s interest in the securities would have been senior to the judgment lien under New 

York’s substantive law. 

As a result, for the lender to have confidence that its security interest would be 

given priority over the lien of the judgment lien creditor or even would not be set 

aside in the customer’s bankruptcy case, the lender would need to comply with not 

only New York substantive law but also the substantive law of Country X. The lender’s doing so will involve additional expense that may decrease the availability or 

increase the cost of credit to the customer. Moreover, if the lender were extending 

the credit to the customer based on a security interest in securities issued by issuers 

or held through clearing corporations in numerous countries, the costs of complying 

with the substantive law that might be applicable under the conflict of laws rules 

of each country in which litigation might be brought could be prohibitive. 

HOW THE CONVENTION WOULD ADDRESS THE PROBLEMS

The Convention would address these problems by creating a single, uniform conflict of laws rule that would apply the substantive law of the country whose law is 

chosen by the custody or securities account parties to govern their agreement or, 

alternatively, to govern the issues covered by the Convention. The only limitation 

is that the chosen law must be that of a country in which the relevant bank, broker 

or clearing corporation maintains an office for dealing in securities—often referred 

to as the ‘‘Qualifying Office’’ test. 

In our example, if the United States and Country X had adopted the Convention 

and litigation were brought in Country X and so long as the custodian and the customer have agreed that the custody agreement or, alternatively, the issues covered 

by the Convention are governed by New York law, Country X would apply New York 

substantive law to determine how the creditor obtains the judgment lien and how 

the priority conflict between the lender as secured party and the judgment lien creditor is resolved. 

Accordingly, the Convention, by applying a single, uniform conflict of laws rule 

would simplify very complex conflict of laws issues that arise under current law, 

provide greater certainty for transacting parties, dramatically reduce transaction 

costs and potential litigation claims, and provide a basis for increasing the availability and reducing the cost of credit. The Convention would also, by resolving the 

relevant conflict of laws issues, reduce risks in the entire cross-border securities 

clearance and settlement system that could arise in resolving competing claims in 

times of financial crisis. 

NO DISRUPTION OF CURRENT PRACTICES IN THE UNITED STATES

Adoption of the Convention would not in any material respect disrupt current 

practices in the United States. The Convention is largely consistent with the domestic commercial law in the United States, namely Article 8 of the Uniform Commercial Code as adopted in every state of the United States and the District of Columbia. Article 8 contains choice of law rules that are substantially the same as the 

conflict of laws rules of the Convention. The main difference is that Article 8 does 

not have a Qualifying Office test. However, this difference is expected to have little 

effect in practice. 

22 

If the Convention were to become effective, it would apply to pre-effective date 

transactions. Nevertheless, on account of interpretive rules contained in the Convention, it should not be necessary in most cases for pre-effective date agreements to 

be modified to account for the Convention. Even so, many private parties have already been inserting into their contracts a clause that would address the Convention if the Convention were to come in effect. 

Senator ISAKSON. Thank you for your testimony. I have only two 

questions to ask. 

One is, on all treaties, there is usually some question about U.S. 

ceding sovereignty. Have you heard of any objection in either case 

on these two treaties to the sovereignty question of the United 

States? 

Mr. SCHOENECKER. Not I, Mr. Chairman. 

Mr. SMITH. No, Mr. Chairman. 

Senator ISAKSON. That is the right answer, and that is a good 

answer. Thank you very much. 

The second question is, I am a Swedish—and I am Swedish, so 

I can use that as an example. This is a hypothetical. I am a Swede 

who owns stock in a U.S.-based corporation. I take a legal action 

against that company. If we are a member of this treaty, that guarantees that the legal action would be governed under the laws of 

who? Sweden or the United States? 

Mr. SMITH. The convention does not deal with that issue, Mr. 

Chairman. It does not deal with actions against the issuers of the 

securities. It just deals with who has property rights of the securities. 

So all of the normal rules dealing with rights of action against 

an issuer of securities, or security law disclosures, are not impacted 

at all by this convention. 

Senator ISAKSON. So in that same example, if I was the corporation and had a question with the owner of the stocks, U.S. law 

would govern any action I took against the owner? Is that correct? 

Mr. SMITH. It would govern any action dealing with whatever 

property rights the investor had in the securities. 

Senator ISAKSON. Which is why this is so important to domestic 

companies in the United States of America. 

Mr. SMITH. It is. It is, Mr. Chairman. That is why it is important 

for mutual funds, 401(k)s, for lots of investors who want certainty 

on what law governs their property rights. 

Senator ISAKSON. Mr. Schoenecker, I have been told many times, 

and heard in many hearings, that we have about a 90-day supply 

of food available in the world, at any given point in time. It is the 

most important commodity we have for nutrition and security and 

safety. 

This will help enhance the food security of the United States and 

the rest of the world. Am I correct? 

Mr. SCHOENECKER. Absolutely, without a doubt. 

Crop varieties and productivity of agriculture is fundamental to 

having reasonable access under clear terms to these resources, so 

that we can build new varieties to solve problems and increase productivity for farmers in the U.S. and around the world. 

Senator ISAKSON. We appreciate both of your willingness to be 

here today to testify. I hope you will not take all the Senators leaving as any affront to your testimony. In fact, it is acknowledgment 

23 

that we needed to have done what we are doing now a long time 

ago. 

I will do everything I can to expedite the hearing and passage 

of this legislation from the subcommittee to the full committee. 

We will keep the record open for 5 days until the end of the business day on Monday, if anybody has additional questions. I would 

ask both of you to try to respond as quickly as possible, if you get 

any additional questions from the committee. 

Senator ISAKSON. Unless there are any other comments, we will 

stand adjourned, and I thank everybody for their testimony. 

[Whereupon, at 10:43 a.m., the hearing was adjourned.] 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

RESPONSES TO QUESTIONS SUBMITTED TO JUDITH G. GARBER BY SENATOR CORKER

Question. In its transmittal documents, the Administration suggested the Senate 

include in its resolution of consent to ratification an understanding with respect to 

U.S. laws on intellectual property laws and the operation of Article 12.3(d). Please 

explain why this recommended understanding is necessary. 

Answer. Article 12.3(d) of the Treaty states that recipients shall not claim intellectual property rights that limit access to the plant genetic materials in the form 

received from the Multilateral System. Our understanding would underscore that an 

invention derived from material obtained from the Multilateral System could be patented or protected by plant variety protection. For example, if corn germplasm is 

taken from the Multilateral System and used to create a new corn hybrid that is 

distinct from the original material, intellectual property protection would be available for the new variety. Similarly, a modified gene sequence or modified extract 

from the corn or a method of use of material isolated from plant genetic materials 

from the Multilateral System could also be patentable. A number of other Parties, 

including Japan, the United Kingdom and Germany, have submitted similar declarations; no country has submitted a declaration to the contrary. 

Question. It is my understanding that, because the U.S. has not ratified the Treaty, U.S. citizens may not take full advantage of the rights provided under the Standard Materials Transfer Agreement. U.S. agriculture must instead negotiate for plant 

germplasm under the Nagoya Protocol to the Convention on Biological Diversity 

which came into effect in October 2014. It is also my understanding that the Convention on Biological Diversity requires a benefit sharing arrangement, negotiated 

on a bilateral contractual basis, in order to exchange germplasm. United States industry and public researchers have raised concerns about requirements under the 

Nagoya Protocol, such as the necessity of obtaining government-issued proof of prior 

informed consent to acquire materials, and have characterized such compliance 

issues as posing significant logistical problems, and likely to be both cumbersome 

and costly. 

Please describe the difficulties and challenges presented to U.S. agriculture by the 

requirements of the Nagoya Protocol. 

Answer. Because the United States is not a party to the Treaty, U.S. users do 

not have guaranteed access to plant genetic resources for food and agriculture from 

other nations under the terms of the International Treaty on Plant Genetic Resources for Food and Agriculture and the Standard Material Transfer Agreement 

(SMTA). U.S. users therefore often must negotiate access and the terms of transfer 

on a case-by-case basis. Some U.S. entities seeking access to foreign genetic resources have been subjected to burdensome terms and conditions. These circumstances threaten to impede U.S. government and stakeholders’ access to and use 

of genetic resources, their ability to conduct research and even, in some cases, to 

obtain overseas patents, public funding, or market access. In some cases, countries 

cite their domestic legislation implementing the Nagoya Protocol when imposing 

terms of access and benefit sharing on U.S. industry and other users. However, with 

regard to covered plant genetic resources for food and agriculture, if the provider’s 

and user’s countries both are Party to the Treaty, then access to those resources is 

governed by the Treaty and guaranteed to be under the terms of the Standard Material Transfer Agreement. Being a Party to the International Treaty on Plant Genetic Resources for Food and Agriculture would therefore offer U.S. researchers and 

24 

breeders guaranteed access, on the predictable terms of the SMTA, to the covered 

plant germplasm collections of the other 140 Parties. 

Question. It is my understanding that the Treaty covers the exchange of plant materials that are used in traditional breeding within a single species. Is the Treaty 

related in any way to the development or use of transgenic biotech crops? 

Answer. The focus of the Treaty is on propagating materials (e.g., seeds and 

cuttings)—the building blocks for crop improvement—as opposed to specific technologies or traits. The Treaty is neutral on the question of genetically modified organisms and does not address the regulation of genetically engineered crops, genetically modified organisms, or biotechnology. However, being a Party to the Treaty 

would benefit all breeders—regardless of whether they use techniques of biotechnology, techniques of conventional breeding, or a combination—by ensuring access on predictable terms to genetic resources that are important to researchers and 

breeders seeking to improve plant varieties and ensure food security. 

Question. Explain how the treaty’s benefit sharing regime will work. How will 

payments made to the treaty’s Trust Account be allocated and for what purposes 

will they be used? 

Answer. The centerpiece of the Treaty is the Multilateral System under which a 

Party provides access to other Parties and its users, upon request, to listed plant 

genetic resources held in national and international gene banks and collections. 

As part of the Multilateral System, the Treaty provides for non-monetary benefit 

sharing that is consistent with longstanding USDA and USAID work to advance agricultural progress and support global food security. The Treaty also established a 

Benefit Sharing Fund. If an entity using the Standard Material Transfer Agreement 

commercializes a product containing plant genetic material covered by the Treaty, 

the entity can choose either to make the product freely available for further research and breeding, or can pay a relatively small royalty into the Fund. Contracts 

with royalty provisions are already in widespread use commercially for such plant 

genetic material, and the rate specified by the Treaty is well within range of terms 

used by agricultural industry. The Fund supports projects to improve on-the-ground 

efforts to conserve plant genetic resources for food and agriculture, especially in developing countries. This in turn promotes global food security. 

The Treaty’s Governing Body oversees the Fund, which is managed by the Treaty’s Secretariat. As a Party to the Treaty, the United States would be able to participate in decisions regarding operation of the Fund and block consensus on any proposals contrary to U.S. interests. The Administration’s policy on the appropriate 

uses of these funds will include consideration of consistency with the Treaty’s objectives, as well as efficiency, effectiveness and accountability in the use of such funds. 

Question. What is the relationship between this Treaty and the Convention on Biological Diversity (CBD) which the U.S. has not ratified? Does ratification of this 

Treaty imply acceptance of any of the obligations under the CBD? 

Answer. This Treaty and the Convention on Biological Diversity (CBD) are separate instruments, with separate implementation. Joining the Treaty does not imply 

acceptance of or incur any obligation for the United States under the CBD. 

Question. If the United States becomes a party to the treaty, what financing commitments will the U.S. be adopting with respect to capacity-building resources for 

the conservation and use of agricultural biodiversity globally and for the implementation of the MLS provisions by developing countries. 

Answer. The Treaty does not obligate Parties to contribute specific amounts of financial resources for national activities in developing countries for the conservation 

and sustainable use of plant genetic resources. Further, there are no mandatory 

contributions from Parties to the Treaty. The Treaty is funded through voluntary 

contributions from Parties and other sources. There are no plans to make voluntary 

financial contributions toward the Treaty’s budget at this time. 

(25) 

Letters Submitted in Support of 

The Treaty on Plant Genetic 

Resources for Food and Agriculture, 

Treaty Doc. 110–19 

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0519-1A.eps
28 


0519-3AB.eps
29 


0519-8A.eps
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33 


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42 


0519-10A.eps
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0519-10C.eps
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0519-10D.eps
(47) 

Letters Submitted in Support of 

The Convention on the Law Applicable to 

Certain Rights in Respect of Securities 

Held With an Intermediary, 

Treaty Doc. 112–6 

(49) 


Hague-5A.eps
50 


Hague-7A.eps
51 


Hague-8A.eps
52 


Hague-1A.eps
53 


Hague-1B.eps
54 


Hague-2A.eps
55 


Hague-2B.eps
56 


Hague-3A.eps
57 


Hague-3B.eps
58 


Hague-4A.eps
59 


Hague-4B.eps
60 


Hague-6A.eps
61 

Æ 


Hague-6B.eps