Bridges Trade BioRes • Volume 6 • Number 12 • 30th June 2006

MODEL AGREEMENT ADOPTED FOR ACCESS & BENEFIT-SHARING OF GENETIC RESOURCES

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MODEL AGREEMENT ADOPTED FOR ACCESS & BENEFIT-SHARING OF GENETIC RESOURCES

After two years of negotiations, a model contract to facilitate access and benefit sharing of genetic resources was agreed to at the first session of the governing body of the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA) on 12-16 June. The Standard Material Transfer Agreement (SMTA) was adopted by Parties to the Treaty as a guide for legal contracts to facilitate access and standardize benefit-sharing requirements for the 35 different crops covered by the multilateral system established by the ITPGRFA. Under the transfer agreement, companies who sell patented seeds from ITPGRFA material are required to pay 1.1 percent of their revenue to the providers of genetic resources.

Many seed varieties around the world are held in seed banks, which are owned by governments, companies or international agricultural research bodies. These seed banks tell the Secretariat of the ITPGRFA that they are contributing their varieties of the covered crops to the multilateral system. Although the seeds themselves will physically stay at the seed bank, they will then fall under the jurisdiction of the multilateral system. Under that system, any plant breeding company, farmer or research institute that wants access to the seed for plant reproduction will have to sign a material transfer agreement modelled on the SMTA as a legal contract necessary for access. This system will build on the previous regime for plant genetic resources, the original International Undertaking for Plant Genetic Resources for Food and Agriculture (see Bridges Trade BioRes, 22 November 2001), by setting out terms not only for access, but also benefit-sharing.

The ITPGRFA was negotiated under the auspices of the UN Food and Agriculture Organization and entered into force in June 2004. The Treaty aims to ensure the conservation and sustainable use of plant genetic resources for food and agriculture and equitable benefit-sharing, in harmony with the Convention on Biological Diversity, for sustainable agriculture and food security. It was the first legally-binding international agreement to explicitly recognize Farmers’ Rights as including the right to save, use, exchange and sell farm-saved seed. The Mulilateral System (MS) is one part of the treaty, and aims to establish facilitated access to a list of plant genetic resources on the basis of fair benefit-sharing. Negotiations on the SMTA, as the model contract to access these resources, began in 2004 in an expert group and, later, a contact group (see Bridges Trade BioRes, 19 May 2006).

Scope of coverage

A key issue in the negotiations was how to define the "product" that would be covered by the SMTA. There was consensus that commodities and other products used for food, feed and processing (such as wheat grain) should be excluded, leaving only seeds for plant reproduction. However, debate continued regarding how to deal with plant genetic resources for food and agriculture (PGRFA) under development, with Asian countries arguing that these transfers should be subject to benefit-sharing requirements. A last-minute deal was struck that specifies that benefit-sharing requirements would not be required for transfers of such material. Instead a new category of "PGRFA under development" was created, where transfers from one company to another would be allowed, a new transfer agreement would be required to cover the transfer, the company making the transfer would be allowed to charge for the material under development, but no benefit-sharing payments would be required. This would enable, for example, one plant breeder to begin development of a variety, then transfer it to another breeder for the completion of the breeding process. Once this second breeder commercialised the resulting seed, it would then be required to share the benefits.

Benefit-sharing required once commercialised

The benefit-sharing requirements are triggered only if the recipient of material covered by the multilateral system "commercializes a product that is a PGRFA and incorporates MS material" and only if the product "is not available without restriction to others for further research and breeding". This means that commercialisation for chemical, pharmaceutical and industrial products are not included and that only products that use the material covered by the multilateral system are included. The "restriction" clause means that benefit-sharing of revenue from commercialisation is only necessary if others can’t also commercialise the variety that has been developed.

While future sessions of the Governing Body would have to clarify what type of "restriction" would trigger benefit-sharing requirements, it would clearly be the case, for example, if the variety has been patented; if the company selling the seed doesn’t have a patent for it but nonetheless requires farmers to sign strong contracts that forbids them from replanting or breeding the seed; or for technical restrictions, such as genetic use restriction technologies (GURTS, also known as "terminator technologies"). This would cover seed varieties in the US and GM seeds, which are generally covered by patent protection. The SMTA also stipulates that once a patent expires, the company who sold it should give the seed to the multilateral system to ensure that the genetic material does not get "lost".

The payment schemes

The SMTA recognises legal consent to the agreement by ‘clicking’ online to order a seed or by ripping open a seed package ("click-wrap" and "shrink-wrap" respectively) in addition to a physical signature on a paper contract. Once signed, the contract would require the recipient to make benefit-sharing payments for covered products commercialised under restriction, and the money which would go into a fund administered by the Governing Body for distribution to farmers and other providers of genetic resources. The payment requirements are calculated as percentages of revenues from commercialisation minus thirty percent, with the latter deduction incorporated to allow for transportation, marketing and related costs.

There are two possible payment schemes that recipients can choose from. The first, proposed by the EU, would require the recipient to pay 1.1 percent of the revenues (minus thirty percent) from the restricted commercialisation of a particular variety that is based on material from the international system. Under an alternative option, a company could decide to pay 0.5 percent of revenues from commercialisation on all of its varieties which are covered by the multilateral system, regardless of whether their commercialisation has been restricted or whether the varieties contain material provided by the multilateral system. This latter option, which was a last-minute addition from African countries, would enable the multilateral system to generate income right away and allow companies to issue an overall payment.

Notification, arbitration processes established

After debate on whether the dispute resolution process should include a binding arbitration option, delegates decided to adopt a three-stage process that allows the provider or recipient of the genetic resources, or the Governing Body, to initiate amicable negotiations between the two parties to the MTA; mediation by a mutually-agreed third party; and binding arbitration under the auspices of an international dispute body such as the International Criminal Court using experts from a list set up by the FAO.

In a separate resolution, delegates agreed that the FAO would take on the legal responsibilities of the Governing Body between the meetings of the latter. As part of the SMTA, the recipient of the genetic resources has to inform the FAO, as the "third party beneficiary" representing the Governing Body, that the SMTA has been signed; if the genetic resources have been transferred to anyone; of any commercialisation; and, in reaction from developing country demands, all the non-confidential research and development information conducted with the resources. This will enable developing countries to access information about the potential value of a plant variety, such as whether it is resistant to drought or salinity. Notwithstanding initial opposition from African, Latin American and Asian countries, delegates from North America and the Southwest Pacific succeeded in taking out a reference to reporting requirements on intellectual property rights obtained on plant varieties developed using material from the international system.

Additional Resources

The text of the SMTA will be available online at http://www.fao.org/AG/cgrfa/Default.htm

For daily coverage of the Governing Body meeting provided by Earth Negotiations Bulletin, see http://www.iisd.ca/biodiv/itpgrgb1/

ICTSD Reporting; ENB, 19 June 2006, Vol 9 No. 369.