EN Official Journal of the European Union C 161/73

Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilisation in the Union’

COM(2012) 576 final — 2012/0278 (COD)

2013/C 161/14

Rapporteur without a study group: Lutz RIBBE

On 19 November 2012 the European Parliament and on 5 November 2012 the Council decided to consult the European Economic and Social Committee, under Article 192(1) of the Treaty on the Functioning of the European Union, on the:

Proposal for a Regulation of the European Parliament and of the Council on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization in the Union

COM(2012) 576 final — 2012/0278 (COD).

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 5 March 2013.

At its 488th plenary session, held on 20 and 21 March 2013 (meeting of 20 March), the European Economic and Social Committee adopted the following opinion by 82 votes to 2 with 1 abstention.

1. Conclusions and recommendations

1.1 The EESC welcomes the submission of the proposal for a regulation. It sees the effective implementation of the Nagoya Protocol, which is intended to implement some of the objectives of the Convention on Biological Diversity (CBD), as a major opportunity for a bio-based economy in the EU. As this is often dependent on the import of genetic resources, improved access to these resources is clearly in the European interest.

1.2 The Nagoya Protocol was not concluded, however, purely in order to promote bio-based research and product development but rather to ensure fair sharing of benefits from the utilisation and marketing of genetic resources. In this way the countries (or indigenous peoples) which provide these genetic resources and traditional knowledge of their use may profit from their marketing, and the marketing industry may itself be freed from the accusation of bio-piracy.

1.3 The EESC has identified a number of shortcomings in the draft regulation in relation to this very issue of benefit sharing, for which the Nagoya Protocol was primarily negotiated. These should be eliminated as a matter of urgency and certain areas which are open to interpretation should be clarified.

1.4 The areas in question are: — the rules on benefit sharing (points 3.1– 3.6), — the establishment of an effective system of control, monitoring and sanctions (points 3.7 – 3.10), — the date from which the benefit sharing shall apply (point 4.1), — the consideration of biotechnology and derivatives (points 4.2.1 – 4.2.2), as well as the sharing of the benefits of "traditional knowledge" (points 4.2.3 – 4.2.4), — the late timing of the reporting of use (points 4.3.1 – 4.3.5), — the question as to whether privately financed research and the products derived from it are subject to reporting (point 4.3.5), — the prosecution of cases of bio-piracy reported by third parties (point 4.3.6), and — the effectiveness of the system of sanctions (point 4.3.7).

2. Introduction

2.1 In 1992, in the framework of the Rio Conference on Environment and Development, the Convention on Biological Diversity (CBD) was concluded, to which 193 UN member states have now acceded (The only UN member states not to have acceded so far are Andorra, the Vatican, South Sudan and the USA).

2.2 The CBD has three objectives: 1) protection of biodiversity; 2) its sustainable use, and 3) "the fair and equitable sharing of the benefits arising out of the utilization of genetic resources".

2.3 Article 15(1) of the CBD recognises "the sovereign rights of States over their natural resources". The individual states are granted the right to determine access to genetic resources.

2.4 Article 15(7) requires the CBD member states to "take legislative, administrative or policy measures" to share "in a fair and equitable way the results of research and development and the benefits arising from the commercial and other utilization of genetic resources with the Contracting Party providing such resources".

2.5 Article 8(j) calls on the members of the CBD "subject to (their) national legislation" to respect the traditional knowledge of indigenous and local communities "relevant for the conservation and sustainable use of biological diversity" and to "encourage the equitable sharing of the benefits arising from the utilization of such knowledge, innovations and practices".

2.6 Given the failure to date to implement this requirement of international law for benefit sharing adopted in 1992, at the World Summit on Sustainable Development (WSSD) in Johannesburg in 2002 the heads of state and government decided to negotiate an "international regime to promote and safeguard the fair and equitable sharing of benefits arising out of the utilization of genetic resources" within the framework of the CBD (Plan of Implementation, paragraph 42(o)).

2.7 At the 7th Meeting of the Conference of the Parties to the CBD, held in Kuala Lumpur in 2004, the CBD contracting states agreed to effectively implement all relevant elements of the CBD by means of an agreement on access to genetic resources and benefit-sharing (ABS).

2.8 The result of this work was presented and adopted in October 2010 - after more than six years of negotiations - at the 10th Meeting of the Conference of the Parties to the CBD in Nagoya, Japan: the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity (Nagoya Protocol).

2.9 All members of the CBD can ratify the Nagoya Protocol: twelve states have already done so (as of February 2013) and 92 states signed the protocol after its adoption, including the European Commission and 24 out of the 27 EU Member States (except Latvia, Malta and Slovakia).

2.10 Whilst the developing countries called for a protocol binding in international law at the WSSD in 2002, it was only shortly before the beginning of the final round of negotiations in the ABS working group on the drafting of the protocol that the EU came out in favour of a protocol with "legally binding and non-binding provisions" (Decision of the Environment Council of 15.3.2010).

2.11 The proposal for a regulation submitted by the Commission is intended to implement the objectives of the Nagoya Protocol.

2.12 In addition to the CBD, the adoption of the United Nations Declaration on the Rights of Indigenous Peoples should also be mentioned in connection with the Commission document. Article 31(1) of the Declaration establishes the right of indigenous peoples to "maintain, control, protect and develop" genetic resources and related intellectual property. Article 31(2) calls on States to "take effective measures to recognise and protect the exercise of these rights". The implementation of the Nagoya Protocol should be one of these effective measures for the implementation of the UN Declaration.

3. General comments

3.1 In the explanatory memorandum to the draft regulation the Commission states that "Union implementation and ratification of the Protocol will create new opportunities for nature-based research, and contribute to the development of a bio-based economy" (1). The Commission goes on to argue that "the EU and its Member States are politically committed to become Parties to the Protocol to secure access of EU researchers and companies to quality samples of genetic resources, based on reliable access decisions at low transaction costs" (2).

3.2 The EESC also sees in implementation of the Nagoya Protocol great opportunities for the bio-based economy in the EU. It points out, however, that the main objective of the Nagoya Protocol is the implementation of the third objective of the CBD, the "sharing of the benefits of the utilization of genetic resources". Appropriate access to genetic resources, appropriate transfer of the relevant technologies with due regard to all rights over these resources and technologies and appropriate financing are the decisive aspects of benefit sharing.

3.3 The Nagoya Protocol thus rests on three pillars: — Measures for access to genetic resources and associated traditional knowledge, which ensure transparent and non-arbitrary procedures, — Measures to ensure the sharing of benefits from the utilisation and marketing of genetic resources and associated traditional knowledge, and — Measures for the establishment of an effective national monitoring system, particularly regarding the implementation of benefit sharing.

3.4 When, by contrast, the European Commission asserts in its proposal for a regulation that "the Protocol rests on two main pillars: measures on access, and measures on user-compliance" (3) , it fails to explicitly stress benefit sharing as an essential objective of the Nagoya Protocol, a requirement of the WSSD and an international-law obligation under the CBD.

3.5 The draft regulation thus gives the impression that the Nagoya Protocol is intended to ensure unhindered access for the EU Member States to raw materials in developing countries.

3.6 Not only is this almost complete failure to take account of the essential objective of the Nagoya Protocol a serious failing in the Commission draft, but an ineffective and unsatisfactory solution could also have serious consequences for European companies. Without clear rules on benefit sharing (and monitoring), companies will find it difficult to refute the frequently raised accusations of bio-piracy.

3.7 The Commission's draft regulation builds on the principle of due diligence (Article 4). This assigns to the user of the genetic resource and associated traditional knowledge the main role in ensuring compliance with the applicable national and foreign laws on access and benefit sharing.

3.8 The EESC welcomes this approach, based on the responsibilities of the research and industrial sectors. It would, however, point to the international-law obligation entered into with ratification of the Nagoya Protocol to adopt "legislative, administrative or policy measures" to ensure that the benefits derived by the user from the utilisation and marketing of genetic resources and associated traditional knowledge are actually shared with the country of origin or the indigenous and local communities.

3.9 The draft regulation also largely omits this important part of the commitments deriving from the Nagoya Protocol, and the EESC recommends that the Council and the Parliament, in the course of the further procedure, adopt sufficient rules for monitoring compliance with these responsibilities. This also means that national governments must not be absolved of their responsibility for monitoring the rules.

3.10 The proposal for a regulation is thus not sufficient to build a basis for mutual trust between the EU Member States, their companies and researchers, and the countries of origin, which is needed to promote bilateral ABS treaties and for the constructive continuation of the international ABS negotiations. The EESC is concerned that the proposed ABS system will hinder rather than promote European industry and research.

4. Specific comments: specific elements of the proposal for a regulation

4.1 Scope in the broader sense (Article 2)B

4.1.1 Article 2 of the draft regulation states that the rules on benefit sharing would only apply to genetic resources and associated traditional knowledge that are acquired after the entry into force of the Nagoya Protocol for the EU. The Commission has failed to draft rules on benefit sharing which would apply to current use and marketing of genetic resources and associated traditional knowledge which have reached the EU since 1993 without ABS treaties.

4.1.2 The draft regulation thus lags behind the text of the Nagoya Protocol and the CBD (IUCN 2012, pp. 84-85), and it ignores the CBD's international-law commitment to benefit sharing from 1993. Article 3 of the Nagoya Protocol explicitly confirms that the rules of the Protocol apply to all genetic resources falling within the scope of the CBD. The implementation of the Nagoya Protocol must be used to correct this implementation shortcoming and to draw up effective rules on the sharing of benefits which have arisen since 1993.

4.1.3 In its provision on the relationship to other international treaties the draft regulation fails to incorporate the decisive passage from Article 4(4) of the Nagoya Protocol. This makes it clear that genetic resources can only be covered by the rules of another agreement "provided that they are supportive of and do not run counter to the objectives of the Convention and this Protocol". This stipulation is missing and must be incorporated into the draft regulation in order to implement the Nagoya Protocol correctly. The decision on whether the ABS rules of another agreement apply to specific genetic resources must be taken by the relevant international organisations and EU institutions.

4.1.4 The EESC therefore considers that Article 2 of the draft regulation does not clearly implement central elements of the Nagoya Protocol and must therefore be revised or amplified.

4.2 Definitions (Article 3)

4.2.1 The Commission's draft regulation differs significantly from the text of Article 2 of the Nagoya Protocol. The Commission fails to incorporate the important principle of Article 2(c) of the Nagoya Protocol, that the utilisation of genetic resources includes "the application of biotechnology as defined in Article 2" of the CBD. This definition is of enormous importance in connection with the benefit sharing. In almost all cases of successful product development from genetic resources, e.g. in the fields of medicine and cosmetics, it is no longer the resources themselves but rather extracts or ingredients ("derivatives") obtained via the use of biotechnology which are marketed for profit. In this connection the draft regulation should also include in its provisions the concept of "derivative", as defined in Article 2(e) of the Nagoya Protocol.

4.2.2 This abbreviation of the definitions will have a serious impact on the benefit sharing obligations. Benefits arising from the use of derivatives would not have to be shared. It should be borne in mind that it is from these very derivatives - isolated biochemical substances such as medically active ingredients and ingredients of cosmetics - that the profits from the marketing of products developed via the use of genetic resources are made.

4.2.3 It is to be welcomed that in many cases the draft regulation treats genetic resources and associated traditional knowledge on an equal footing. The draft regulation does define traditional knowledge (Article 3(8)), but only in the context of its importance as an aid to research and development involving genetic resources. According to the regulation, details will be laid down later in contracts to be concluded between users and indigenous peoples and local communities.

4.2.4 It is not clear to the EESC how these provisions will ensure satisfactory benefit sharing in line with the relevant articles of the Nagoya Protocol. The Commission, the Council and the Parliament are asked to clarify this in the course of the procedure.

4.3 Monitoring compliance with the due diligence requirement (Articles 7, 9 and 11)

4.3.1 Article 7(2) of the draft regulation requires the use of genetic resources and associated knowledge to be declared only at the time of the market approval or commercialisation of a product. The earliest time at which the authorities have to be informed by the user is thus after utilisation (which, within the meaning of the Nagoya Protocol, constitutes research and development, and not marketing). Logically, research and development precede market access.

4.3.2 It is well known that only a proportion of R&D utilisation ultimately leads to marketable products. In the nature of things, use for purely scientific purposes is not aimed at product development. This will mean that the competent authorities will never be informed of a large proportion of use, as long as the reporting requirement does not apply at the beginning of use, i.e. at the research and development stage.

4.3.3 This provision actually runs counter to the draft regulation's political objective. Recital 8 states that "it is also essential to prevent the use of illegally acquired genetic resources or traditional knowledge associated with genetic resources in the Union" (4). Requiring reporting only after conclusion of the research and development phase makes it impossible to prevent use which is illegal or in breach of contract; at best, sanctions can only be applied after the event.

4.3.4 It cannot be in the interests of the industrial or research sector to operate within a legal framework which fails to perform its essential task, that of preventing bio-piracy.

4.3.5 The EESC also notes that Article 7(1) of the draft regulation leaves scope for interpretation, which must be clarified by the Commission, the Council and the Parliament as a matter of urgency. The text of the regulation could be interpreted to mean that privately financed users are exempt from the reporting requirement. If this interpretation were correct, this, in combination with the late reporting deadline under Article 7(2), would mean that most use and marketing of genetic resources and associated knowledge could be carried out without the competent authorities being informed. This would make official checks on the compliance of privately financed research and development and the resulting marketing with benefit sharing arrangements impossible.

4.3.6 Article 9(3) of the draft regulation leaves it up to competent authorities whether to conduct checks on a user on the basis of substantiated concerns provided by third parties, e.g. reports of bio-piracy from NGOs or indigenous peoples. This provision also runs counter to the regulation's political objective and must be reformulated in a binding way.

4.3.7 Failure to comply with the due diligence requirement can result in the imposition of sanctions (Article 11), including "seizure of illegally acquired genetic resources". These proposals are intended to ensure that only legally acquired genetic resources are used. These sanctions only apply during the utilisation phase, in the sense of research and development, but not during the marketing phase. As the proposed monitoring system, under Article 7(2), is effective only during the marketing phase, and even then only partially, the threat of sanctions can be regarded as largely ineffective. The EESC is concerned that the draft regulation will lead to a situation in the EU in which products which have been obtained in a way which is illegal or in breach of contract can be marketed freely.

Brussels, 20 March 2013. The President of the European Economic and Social Committee Staffan NILSSON

(1) COM(2012) 576 final, p. 4.

(2) COM(2012) 576 final, p. 5.

(3) COM(2012) 576 final, p. 3.

(4) COM(2012) 576 final, p. 8.