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TWN
Info Service on Health Issues (Oct24/04) Briefing Note for UN Biodiversity Conference 2024 Digital Sequence Information Draft Decision Reveals Gaps & Uncertainties An analysis by Third World Network Examination of the draft decision “Digital sequence information (DSI) on genetic resources” (CBD/COP/16/2) that will be considered at the upcoming governing body meetings of the Convention on Biological Diversity and its Nagoya Protocol, uncovers a draft text unfit for delivering fair and equitable benefit-sharing from the use of DSI. The 16th Meeting of the Conference of Parties (COP16) to the Convention on Biological Diversity (CBD), will be held along with the 11th Meeting of Parties to the Cartagena Protocol on Biosafety (CP-MOP11) and 5th Meeting of Parties to the Nagoya Protocol on Access and Benefit Sharing (NP-MOP5). These will take place in Cali, Colombia, from 21st October to 1st November 2024 under the title “United Nations Biodiversity Conference 2024”. COP16 and NP-MOP5 shall consider the DSI document under Agenda Items 9 and 14 respectively. In December 2022, CBD COP15 decided “to establish, as part of the Kunming-Montreal Global Biodiversity Framework, a multilateral mechanism for benefit-sharing from the use of digital sequence information on genetic resources, including a global fund” (CBD/COP/DEC/15/9). Since then, discussion on a multilateral mechanism (MLM) has taken place. The draft decision text from recommendation 2/1 of the Ad hoc Open-ended Working Group on Benefit Sharing from the Use of DSI on Genetic Resources, is now presented for the consideration of COP16. The draft comprises a main text and an Annex outlining the modalities for operationalizing the MLM. Many developing countries are eager for the decision to immediately deliver benefits – both monetary and non-monetary – that will support the conservation and sustainable use of biodiversity. However, the draft falls far short of these expectations. While certain aspects of the text offer some hope, the text is mostly riddled with gaps and uncertainties, failing to meet the ambition set out in the COP15 decision, which called for a solution for fair and equitable benefit-sharing on DSI that is "efficient, feasible, and practical," "effective," and capable of providing "certainty and legal clarity for providers and users of DSI". A flawed decision on DSI risks not only the failure of the MLM but will also undermine the development of national access and benefit sharing (ABS) measures and specialized ABS approaches in other intergovernmental fora, such as the World Health Organization (WHO), where discussions on DSI are equally important. Shortcomings in the current draft decision threatens to impede progress towards a fair, equitable, and functioning system for benefit-sharing – one that is essential for the global biodiversity framework. CBD negotiators must proceed with caution and avoid rushing to make decisions simply to reach an outcome. Scope is not clear Most striking from analysing the text is the lack of clarity on the scope of application of the MLM. While the first paragraph of the Annex on modalities for operationalizing the MLM mentions contribution of benefits by commercial users of DSI on genetic resources (GR) held in “public databases”, it is unclear whether the MLM applies exclusively to DSI in “public databases.” Furthermore, the term "public databases" itself lacks precision – while platforms like the International Nucleotide Sequence Database Collaboration (INSDC) provide public access to data, they operate without public accountability in their activities. It is also unclear which other databases fall under the definition of "public databases." This lack of clarity on the scope of the MLM creates an uncertain environment for the operation of national ABS systems, that extends to DSI and related national databases and repositories that might be made accessible to the public as well. Without a clear definition of scope, even privately owned databases or databases owned by a few Parties to the CBD may be considered as “public databases”, just because they make DSI publicly available. At the same time the CBD will lack any control over management and governance of such databases. Monetary Benefit Sharing The text concerning monetary benefit sharing in the draft decision does not generate confidence that an effective system is being developed. Who should pay in monetary benefit sharing? Generally, all users of DSI on GR should be required to contribute to monetary benefit sharing. The bracketed text reveals an attempt by some developed countries to limit such payment to “commercial users” of DSI. This suggests that there is a clear line between commercial and non-commercial users. In reality, this is not the case. Users that may be “non-commercial” users such as academic institutions and researchers may engage in commercial activity such as licensing their DSI-based research outcome to a commercial user, for regular or one-off payment of royalties. If the text is limited to “commercial users” (which itself is also not defined), non-commercial users that may, from time to time, engage in a commercial deal, will get a free pass. As a matter of principle, all users that generate revenue from using DSI should be required to contribute a share of monetary benefit to the MLM. Options for Monetary Benefit Sharing The draft decision text presents 4 options on the formula for users’ contribution to monetary benefit-sharing: Option A: Users of DSI on GR “[are encouraged to][will][should][shall] contribute to the global fund [X] per cent of the [profits][revenue][turnover] generated by products [and services] placed on the market that have benefited from the use of digital sequence information on genetic resources in their development”. Option B. Users of DSI on GR “[in sectors that are highly reliant on][directly or indirectly benefit from]” the use of DSI “in their commercial activities][in sectors that [have benefited from][rely on] the use of digital sequence information on genetic resources] [are encouraged to][will][should][shall] contribute to the global fund [X] per cent [as an indicative rate, depending on their circumstances] of their [profits][revenue][turnover][sales]. [A][An indicative] list of [such sectors][sectors to which such users may belong] is contained in enclosure A.” Option C. “A contribution to the global fund of 1 per cent of the retail value of all products [and services] [that have been developed or created using][linked to the utilization of] [digital sequence information on genetic resources][biological resources]”. Option D. “Users of digital sequence information on genetic resources that actively use digital sequence information on genetic resources [are encouraged to][will][should][shall] contribute a portion of their [revenue][profit] to the global fund. [Brackets around text indicates lack of consensus.] The first point to highlight is that Parties’ right to monetary benefit sharing from the use of DSI cannot be operationalized through voluntary approaches. Such text should be a no-go. Of the options presented, Option A borrowing elements from Option B based on % of revenue should be considered. Use of “profits” should not be accepted as many successful companies tend to downplay their profits to limit/avoid taxes. “Sales” is more limited as it will not cover other types of income such as royalties for licensing etc. “Turnover” is a much broader term i.e. referring to total amount of money a company generates from its operations. The use of “revenue” may thus be the best as it can specifically refer to the total amount of money a user generates from various activities relating to the products and services that have used DSI in their development. Option C is not clear about who will make payments and when. It simply says 1 percent of retail value of products and services will be contributed. Previously the Africa Group that proposed option C maintained a position that the payments will have to be made by consumers on the assumption all costs that manufacturers entail will be transferred to the consumers via the value chain. However, the above assumption is not fully true because the transmission of such costs to consumers can be influenced by various factors, such as price elasticity, market competition, and production efficiency. These factors will limit the straightforward transfer of costs, meaning consumers may not be directly affected by upfront collection of benefits from the manufacturers. Moreover, the consumer (who did not access the DSI), is being asked to pay while the product/service developers and manufacturers that gained revenue from using DSI are let off the hook. Also important to note is that a decision to collect 1 percent from all retail sales on products using biological resources or DSI could be politically sensitive and difficult to implement without involving national tax authorities. Except for Option C, no percentage has been indicated. However, it is understood that the Africa Group is advocating for 1 percent as the rate for monetary benefit-sharing based on a calculation of financial resources needed for implementing the Kunming-Montreal Global Biodiversity Framework. Option B suggests that the rate may be based on circumstances. Elsewhere the suggestion is that the rate may vary sector by sector. Whatever the case may be, if the negotiations are going to conclude on the assumption the multilateral mechanism will start operating soon after the COP16 decision, it should agree to at least a basic rate of 1 percent of revenue generated. Leaving the rate to be negotiated sector by sector at a later date, risks endless discussions and delay. Voluntary vs Mandatory Payments As a general principle, a mandatory requirement for monetary benefit sharing is always preferable to a voluntary one. Terms like 'will,' 'should,' and 'are encouraged to' must be removed from the decision. The text should clearly state that users of DSI are required to make monetary contributions. A more significant issue is the fragmented approach to monetary contributions. If all 196 Parties to the CBD adopt different measures to require payments from users, it will create a complex web of regulations, likely deterring compliance and fostering uncertainty. It is also unclear how different measures in different countries will result in regular monetary contributions. Moreover, there are no consequences for users who fail to comply with the COP decision's requirements. Any reasonable observer would question how the MLM can function effectively to support ABS while also providing legal certainty to both providers and users of DSI. The obvious solution which developing countries should aim for is to create a system whereby databasea hosting DSI require users to register and agree to contribute to benefit sharing at the point of access. Such a commitment is more likely to deliver results and be enforceable (see discussion below). Triggers for Payment & Collection of Monetary Benefit Sharing The paragraphs addressing monetary benefits contain several critical gaps. There is no clear explanation of the payment triggers, whether payments are to be made annually or as one-off contributions, or when these payments are expected to commence. Additionally, the text lacks any mention of the CBD Secretariat's role in facilitating the collection process. This includes identifying relevant users, educating them about requirements under the decision, issuing invoices, and tracking both completed and outstanding payments. The success of the WHO's Pandemic Influenza Preparedness Framework (PIP Framework) demonstrates the pivotal role that a central authority like the Secretariat plays in ensuring an effective system for monetary benefit sharing. The current draft implies that each CBD Party is independently responsible for collecting monetary benefits from users. This raises concerns about practicality, particularly when dealing with multinational corporations operating across numerous countries. Under the proposed approach, each of the countries will attempt to collect payments and transfer them to the global fund, somehow bypassing national bureaucracy – an unlikely scenario. Alternatively, the text appears to assume that users will voluntarily contribute to the global fund, a naive assumption at best. While a few users might initially comply, widespread free riding is likely to occur once it becomes evident that compliance is neither enforced nor monitored. These omissions in the paragraphs dealing with monetary benefit sharing suggest that the Parties are on the path to creating a disorganized and ineffective system. Ultimately, this could fuel criticism from opponents of the CBD and its Nagoya Protocol, who might argue that ABS is just unworkable. Non-Monetary Benefit Sharing Paragraphs 5, 6 and 7 of the draft decision address non-monetary benefit sharing. For effective non-monetary benefit sharing, specific frameworks need to be developed. At this stage, general references such as technology transfer are less useful, as they risk being diluted by developed countries with the addition of qualifiers such as “mutually agreed terms”. What amounts to non-monetary benefit sharing must be thought through carefully. This is to avoid usual business practices of companies such as sales of goods to be considered as non-monetary benefit sharing. Provision of non-monetary benefits should not displace or dilute monetary benefit sharing. Paragraphs 5,6 and 7 also reveal confusion between the use of the global fund for purposes of capacity building and technology acquisition, with non-monetary benefit sharing. For example, a line in paragraph 7 states, “The sharing of non-monetary benefits could be further facilitated by the global fund”. Effectively this suggests monetary benefits from a user will be used to pay another user to obtain a non-monetary benefit (e.g. acquire technology). But then this is no longer a non-monetary benefit. In fact, it skews the very concept of non-monetary benefit sharing. Parties must separate and not conflate the subject of how Parties should use the monies in the global fund with non-monetary benefit sharing which concerns the ABS obligation of a user. Right to Maintain National ABS System for DSI Nothing in the draft decision explicitly recognizes that the decision text is without prejudice to the right of Parties to maintain a national ABS system that governs access to, and benefit sharing from, the use of DSI. This explicit mention is essential to avoid any doubt on this matter. Specialized International Instrument on ABS Under Article 4 of the Nagoya Protocol, Parties can develop specialised ABS agreements. Discussions are ongoing in the WHO on a Pathogen Access and Benefit Sharing (PABS) system that includes DSI. Developing countries, especially the Africa Group and Brazil, supported by other developing countries have made meaningful proposals to govern ABS with respect to DSI. This includes ensuring all users that access DSI are identifiable through user registration and have agreed to certain terms and conditions through a click-wrap agreement, at the point of access. These types of systems are widely used in the digital world and do not hinder research and innovation, although certain scientific lobbies funded by the European Union might claim so. The interests of developing countries in the WHO negotiations on ABS risk being jeopardised, by text in paragraph 25 of the draft decision for COP16. This paragraph is heavily bracketed and includes text that can undermine WHO negotiations, especially positions of developing countries. For example, some text in paragraph 25 suggests that the MLM should be able to adapt to developments in other forums e.g. by a collective arrangement with those instruments. It is unclear how the MLM will do that given its many flaws (described above), impacting its ability to gain benefit sharing. Further, in the event the MLM fails to deliver on its objective, such failure will also extend to all other international ABS instruments. This proposed approach will also adversely impact WHO’s ability to develop a specialised international instrument for pathogens with pandemic potential, and consequently to obtain monetary contributions and non-monetary benefits specific to addressing public health needs during a health emergency. Proposals by developing countries in the WHO will also be undermined. Paragraph 25 also refers to the need to avoid “duplicative payments”. But there is no possibility of duplicative payments as the scope of the PABS system in the WHO would differ from the scope of the MLM. It is essential for CBD negotiators to safeguard the right of their counterparts in other international forums such as the WHO to develop their own ABS instrument for specific genetic resources and purposes, to address the specificities of the forum and the corresponding benefit sharing needs. Notably, the PIP Framework has been a successful ABS system in the context of WHO. CBD decisions must therefore not prejudice positions of developing countries in other fora. Aspects of Draft Decision to Seriously Consider Certain elements of the draft decision are worth pursuing. A preambular paragraph highlights concerns with public databases, in particular inconsistency of the operations of the databases with principles of good governance and international law. The paragraph states: “[Recognizing the lack of accountability, transparency and inclusive governance in existing public databases and data-sharing practices that do not align with international instruments on access and benefit-sharing, which limits the fair and equitable benefit distribution from the use of digital sequence information on genetic resources, and acknowledging that insufficient national capacity in developing countries further constrain their ability to benefit fairly and equitably from those resources, …]”. Subsequently, bracketed paragraph 9 calls on entities operating these databases to: · Make known to users accessing the database, requirements of the MLM; · To ensure compliance with national and international ABS obligations through user registration and clickwrap agreements; · Require provision of information on the country of origin, evidence of lawful access to GR and/or TK and permission from the country of origin to publish the DSI; · Provide open access to DSI subject to the principles of good data governance including recommendations set out in [section III of] the United Nations Educational, Scientific and Cultural Organization Recommendation on Open Science. The draft text also contains several visionary elements. To address the abovementioned challenges of unaccountable and non-transparent databases that erode ABS rights of States, the draft text, albeit bracketed, advocates also for the creation of a database under the auspices of the CBD. Paragraph 2 states, “Requests the Executive Secretary to establish a database for digital sequence information on genetic resources under the clearing-house mechanism, to facilitate the fair and equitable sharing of benefits arising from the use of such information”. Paragraph 3 elaborates on the elements of such a database as follows: “3. Decides that the digital sequence information on genetic resources database shall: (a) Enable a safe, secure, accountable and legitimate method of making digital sequence information on genetic resources and associated traditional knowledge publicly available in accordance with applicable national law, and with the prior and informed consent of the provider of the genetic material from which such information is generated, and to secure benefits in line with the present decision; (b) Provide to developing country Parties that lack capacities facilities to generate, store, share and use digital sequence information on genetic resources, and to receive benefits from such use in accordance with their national access and benefit-sharing systems; (c) Support non-monetary benefit-sharing by enabling capacity-building, technology transfer, training opportunities and information-sharing among all Parties, in particular developing country Parties” Developing countries should expand on these elements and stand firm on this provision.+
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