New treaty on liability for GMO damage

One important achievement of the UN biodiversity and biosafety meetings in Nagoya was the adoption of a new treaty establishing an international liability and redress regime to address damage resulting from genetically modified organisms (GMOs). Lim Li Ching explains the background and significance of this move.

IN the early hours of 11 October, a negotiating group under the Cartagena Protocol on Biosafety completed the Nagoya-Kuala Lumpur Supplementary Protocol on Liability and Redress to the Cartagena Protocol on Biosafety.

This international law on liability and redress for damage caused by 'living modified organisms' (LMOs) was then adopted by the fifth Conference of the Parties serving as the Meeting of the Parties (COP-MOP 5) to the Cartagena Protocol, which met in Nagoya from 11-15 October.

The Cartagena Protocol is a treaty under the Convention on Biological Diversity (CBD). The Protocol uses the term 'living modified organisms' (LMOs) for what is commonly known as genetically modified organisms (GMOs).

The two main substantive issues that were the subject of the negotiations - whether or not products of LMOs ('products thereof') should be covered by the scope of the Supplementary Protocol, and the provisions on financial security - were finally resolved after very long and difficult negotiations which dragged on for an extra two days beyond the scheduled time.

While mention of 'products thereof' was eventually removed from the operative text of the Supplementary Protocol, the report of the meeting records an understanding that Parties may apply the Supplementary Protocol to damage caused by processed materials that are of LMO origin, provided that a causal link is established between the damage and the LMO in question.

This understanding is significant as it clarifies that the Supplementary Protocol may apply to damage caused not only by LMOs but also by their products, which may be non-living material. The scope of the Cartagena Protocol is limited only to living modified organisms; however, the issue of products thereof is covered by the Cartagena Protocol with regard to information sharing, and in information required in notifications for the advance informed agreement (AIA) and simplified procedure, as well as in the principles for risk assessment.

The right of Parties to provide for financial security is also enshrined in the Supplementary Protocol. Financial security is important to ensure that, if for any reason, the responsible party cannot pay for the damage caused by an LMO, there will be some means available to do so.

Background to the negotiations

The Group of the Friends of the Co-Chairs on Liability and Redress in the Context of the Cartagena Protocol on Biosafety had scheduled its fourth meeting in Nagoya from 6-8 October, just prior to COP-MOP 5, to further negotiate international rules and procedures on liability and redress. The Co-Chairs are Rene Lefeber from the Netherlands and Jimena Nieto from Colombia.

The Group of the Friends comprises six representatives each from the African Group, the Latin America and Caribbean Group, and Asia-Pacific; two representatives of the European Union and from Central and Eastern Europe; and one representative each from New Zealand, Norway, Switzerland and Japan.

The liability and redress negotiations have been underway since 2005, with a working group under the Cartagena Protocol having met five times. Because of the deep divisions on the issue, the negotiations could not be completed as mandated, and several extra small-group meetings of the Friends were held, with the last finishing on 11 October.

Financial security

The issue of financial security proved to be the most contentious at the previous meeting of the Friends. At the recently concluded meeting in Nagoya, the entrenched and polarised positions among the Parties were still apparent when Co-Chair Lefeber began the discussion by asking whether there were any objections to the principle in Article 10.1 enshrining the right of Parties to provide for financial security in their domestic law.

Paraguay called for the deletion of the Article, with Brazil, Mexico and South Africa also indicating that they could not accept this concept.

Brazil further indicated that while its 'instructions at this stage are to not accept the article as it stands', it could work with a compromise solution. Such a compromise could include the idea of asking the Executive Secretary (of the CBD) to conduct studies on the environmental and financial consequences of providing for financial security, to enable the COP-MOP of the Supplementary Protocol to make a more informed decision on this issue.

The Friends were then asked which Parties could not accept a Supplementary Protocol without a provision on financial security.

Malaysia reminded the meeting of the history of the provision and how it had been watered down over the course of the negotiations. The current language was now couched in non-obligatory language ('may'), and merely reiterated this right of Parties. There was also a qualifier (which had not been agreed on) - 'consistent with international law/obligations'. Even with these concessions in place, Malaysia asked, why should some Parties still insist on depriving others of their sovereign rights?

Bolivia, Cameroon (speaking on behalf of the African Group, with the exception of South Africa), Peru, India, Ukraine and Norway also spoke up in strong support of having a provision on financial security in the Supplementary Protocol.

The Co-Chairs then allowed a further discussion on the issue to try to see if common ground could be found.

When it became apparent that a large gulf still remained, with the EU raising concerns that the whole negotiations could collapse on this issue, the Co-Chairs then proposed that they convene 'confessionals' with the Parties who had indicated that financial security was an issue either way, so that they could indicate their bottom lines and to see if a way out could be found. ('Confessionals' are a practice that has been routinely carried out in the World Trade Organisation negotiations, and involve countries speaking privately with the Chair, as opposed to negotiating directly with other Parties.)

The Parties that had to 'confess' were Brazil, Mexico, Paraguay and South Africa on the one hand, and Bolivia, Peru, Malaysia, India, the African Group (except for South Africa), Ukraine and Norway on the other hand.

However, the next morning, the Co-Chairs had to conclude that 'we are not within a zone of possible agreement' and pleaded with delegations to reconsider their instructions. They then decided to convene a meeting with those Friends - Brazil, Mexico, Paraguay and South Africa - who had objected to financial security.

This was followed by further discussions in plenary, wherein Brazil elaborated on its compromise proposal, which would comprise preambular language on the rights of countries to have financial security and a specific decision by the Parties recognising the need for studies and mandating the Secretariat to put together a technical paper so that the first meeting of the Supplementary Protocol's COP-MOP can take a decision on the issue.

Malaysia pointed out that there had been several studies on the issue already, and urged instead for a proposal in the operational text, because there could not be a situation where widespread damage goes uncompensated because no funds are available. In response to the concerns that there could be trade implications, it stressed that 'we cannot have commerce destroying biodiversity.'

After ascertaining that there was now willingness from Parties to engage, the Co-Chairs invited Paraguay, Brazil, Mexico and South Africa on the one side, and Malaysia, Bolivia, Africa, Peru and India on the other side, to a closed-session meeting that evening. These discussions continued the next day.

In the afternoon of 8 October, Malaysia reported back to the meeting that they had reached agreement on Article 10 on financial security.

It presented the package that was agreed, namely, deletion of the original text in brackets, with new provisions that: (i) retained the right of Parties to provide, in their domestic law, for financial security; (ii) obliged Parties to exercise that right in a manner consistent with their rights and obligations under international law, taking into account the final three preambular paragraphs of the Protocol; (iii) mandated the first COP-MOP of the Supplementary Protocol to request the Secretariat to undertake a comprehensive study on the modalities of financial security mechanisms, an assessment of the environmental, economic and social impacts of such mechanisms, in particular on developing countries, and an identification of the appropriate entities to provide financial security; and (iv) mandated the first review of the effectiveness of the Supplementary Protocol (contained in Article 13) to include a review of the effectiveness of Article 10.

Paraguay asked for its concern regarding the reference to the last preambular paragraph of the Cartagena Protocol in Article 10 to be reflected in the report of the meeting. (The final three preambular paragraphs of the Cartagena Protocol reflect a delicate balance in the relationship between the Protocol and other international agreements and need to be read together.)

After a short discussion, the new Article 10 on financial security was adopted. It was particularly significant for the Parties that had fought very hard for the inclusion of a provision on financial security, for the administrative approach contained in the Supplementary Protocol places obligations on the Party of import, which may have cost implications. Without provision for financial security, the Supplementary Protocol would have placed obligations on importing Parties without addressing the issue of financial security.

The decision of COP-MOP 5 adopting the Supplementary Protocol also contains a provision on additional and supplementary compensation measures for situations where the costs of response measures have not been covered. The COP-MOP of the Supplementary Protocol can address arrangements for these measures.

'Products thereof'

The Co-Chairs opened discussion on 'products thereof' by recalling their proposal made at the June 2010 meeting in Kuala Lumpur - to replace 'and products thereof' in Articles 3.2 and 3.3 dealing with scope, with 'including products containing LMOs'.

Bolivia responded that it did not agree with the Co-Chairs' proposal, suggesting instead the formulation found in Article 20.3(c) of the Cartagena Protocol, as well as in Annexes I and III: 'processed materials that are of living modified organism origin, containing detectable novel combinations of replicable genetic material obtained through the use of modern biotechnology'.

Japan opposed the inclusion of either 'products thereof' or 'products containing LMOs', arguing that these phrases would expand the scope of the Supplementary Protocol beyond the scope of the Cartagena Protocol.

South Africa, the Philippines, Brazil, Paraguay and China agreed with this argument.

On the other hand, Namibia noted that the African Group (with the exception of South Africa) was in favour of including reference to 'products thereof' and that the group could go along with the Bolivian proposal. This was supported by Malaysia, Ukraine and South Korea.

The rationale for the inclusion of 'products thereof' lies in their mention in the Cartagena Protocol in relation to risk assessment, which places them squarely within liability considerations as mandated by Article 27 of the Cartagena Protocol, for if that risk materialises, then there must be provisions for liability and redress. Therefore, the inclusion of 'products thereof' would provide for a comprehensive and adequate protocol dealing with damage from LMOs. According to Malaysia, anything less would be 'Cartagena Protocol-minus'.

Moreover, as pointed out by Bolivia, developments in the technology, and a fuller consideration of LMOs beyond just genetically engineered plants, mandated that Parties should carefully consider if damage from certain 'products thereof' would not be captured if that concept were to be excluded from the Supplementary Protocol.

Mexico proposed that the phrase 'and which can replicate in the environment' be added to the Bolivian proposal, to clarify that the products contain 'living' modified organisms.

After a broad-ranging discussion, the meeting agreed to reflect on the proposal to include the Bolivian text, as amended by Mexico, in Article 2 of the Supplementary Protocol, on the use of terms. The Co-Chairs' proposal ('including products containing LMOs') and a proposal by Japan to replace 'and products thereof' with 'including LMOs contained in products' would also still be on the table.

The next day, discussions continued with Parties mainly reiterating their positions. Some, like Paraguay and the Philippines, threw their support behind the Japanese proposal. Others, like the African Group (with the exception of South Africa), Bolivia, Malaysia and Ukraine, urged for sticking to the description of 'products thereof' used in the Cartagena Protocol, as it was already agreed language. Still others, like Brazil and Ecuador, preferred the Mexican amendment. The EU favoured the Co-Chairs' proposal, but that proposal was eventually withdrawn by the Co-Chairs following further debate.

Informal consultations then took place, with Malaysia reporting back that the Friends were working on the Bolivian-Mexican proposal. In the spirit of compromise, Malaysia offered a modification to the Mexican proposal, namely, using the description of 'products thereof' in the Cartagena Protocol with the addition of the phrase, 'and that are capable of replicating in the environment'. After more discussion on this proposal, the Philippines proposed that the text be modified to read, '(and that) are capable of naturally reproducing in the environment'.

When the meeting came back to the issue on 8 October afternoon, the Friends agreed to include a definition of 'products thereof' in the Supplementary Protocol and hence to its inclusion in Articles 3.2 and 3.3 dealing with scope.

However, discussion as to whether to use the compromise proposal of 'replicating' or the Philippines' proposal of 'naturally reproducing' sparked more entrenched positions.

Co-Chair Lefeber reminded the meeting that the agreement of some of the Friends was that they could accept the term 'replicating' on the condition that there would be a declaration in the report of the meeting clarifying that the definition of 'products thereof' applies to LMOs only. He proposed this as a way out of the impasse.

Malaysia then strongly objected, saying that the text was already a compromise and a reflection of the common understanding.

Following some discussion, Co-Chair Lefeber proposed that clean text be adopted for the definition of 'products thereof' in Article 2 - '"Products thereof" means processed materials that are of living modified organism origin, containing detectable novel combinations of replicable genetic material obtained through the use of modern biotechnology, and that are capable of replicating in the environment' - and that the brackets in Articles 3.2 and 3.3 be removed.

In addition, he suggested that those Friends who had difficulty with the language record their understanding in a footnote in the text or in the meeting's report.

India proposed a footnote in the text of the Supplementary Protocol stating that China, India, Japan, Paraguay and the Philippines are of the understanding that 'replicating' means 'naturally reproducing LMO' and that Paraguay reserved its right to reopen the debate in the plenary of the COP-MOP. Paraguay also asked for its reservation to be in the report of the meeting.

Malaysia then requested that the following be also reflected in the meeting's report: '(The) text with regard to products thereof, arrived at after protracted negotiations, reflects a compromise by a large number of countries. Its aim is to give maximum leeway for Parties to fully implement the liability and redress provisions with regard to damage arising out of living modified organisms and products thereof.'

What followed then was a scramble of Parties associating themselves with either of the two statements, which raised concerns that such an exercise was not useful, as the two were not mutually exclusive, neither was it productive to have different understandings of a definition. When it was clear that this issue could not be resolved, the Co-Chairs proposed to revert to the agreement that Parties had reached on 8 October afternoon, after the informal consultations.

On 9 October, the Friends were in informal consultations throughout the day. When the meeting reconvened, Malaysia, supported by Ukraine, proposed that the references to 'and products thereof' in Articles 3.2 and 3.3 be replaced by the phrase 'within the context of the Protocol'. India proposed 'as defined in the Protocol' instead, as it felt it brought more clarity. This was supported by China, Japan, Paraguay and the Philippines. Colombia forwarded 'as referred to in the Protocol' as a compromise, but this was opposed by India.

Further consultations took place, after which Paraguay proposed that the Colombian proposal be amended to specifically refer to Article 3 of the Cartagena Protocol on the use of terms. The Friends could not come to an agreement and asked for more time to consult with capitals.

Informal consultations continued on 10 October. The Co-Chairs convened and facilitated a meeting of Friends representing both sides of the divide to understand each other's positions. Co-Chair Lefeber reported back on the meeting, explaining that the Friends concerned had recognised that if a State so wishes, it could expand the scope of the Supplementary Protocol to 'products thereof' in its domestic law and nothing in the Supplementary Protocol prevents that.

They had then discussed various scenarios of damage and came to an understanding that in some cases, two readings are possible with regard to whether the Supplementary Protocol applies to damage caused by 'products thereof'. Further discussion among the Friends eventually produced the following text that has been included in the report of the Group of the Friends and in the report of COP-MOP 5.

'It emerged during the negotiation of the Supplementary Protocol that Parties to the Protocol hold different understandings of the application of Article 27 of the Protocol to processed materials that are of living modified organism-origin. One such understanding is that Parties may apply the Supplementary Protocol to damage caused by such processed materials, provided that a causal link is established between the damage and the living modified organism in question.'

With that, the references to 'products thereof' in Article 3 were then removed, resolving the final substantive issue that had dogged the negotiations for years. As other outstanding issues in the preamble had already been dealt with, the clean text of the Supplementary Protocol was then adopted to applause.

Some conclusions

The birth of this new multilateral environmental agreement has been a difficult one, with many compromises made along the way. A major change has been the shift from a civil liability regime to an administrative approach focusing on response measures, which emerged from the ashes of the near-collapsed negotiations in Bonn in 2008.

However, many delegates considered that the Supplementary Protocol, among other things: (i) has a legally binding provision on civil liability with an in-built review mechanism that could provide for the potential further development of international civil liability rules and procedures; (ii) includes the concept of 'sufficient likelihood of damage' which allows Parties to take preventive measures to avoid such damage; and (iii) enshrines the right of Parties to provide for financial security in their domestic law.

Furthermore, the understanding that Parties may apply the Supplementary Protocol to processed materials  that  are  of  LMO  origin  is clearly reflected in the report of the meeting.                                        

Lim Li Ching is a researcher with the Third World Network. This article was written with inputs from Doreen Stabinsky. It is reproduced from the South-North Development Monitor (SUNS, No. 7018, 14 October 2010), which is published by TWN.

*Third World Resurgence No. 242/243, October-November 2010, pp 33-36