1 Tracking and Monitoring of International Flows of Genetic Resources: Why, How and, Is It Worth the Effort?

Jos谷 Carlos Fern芍ndez Ugalde1

Executive summary

Ever since the entry into force of the Convention on Biological Diversity (CBD) there have been considerable efforts to develop specific access to genetic resources and benefit-sharing (ABS) policies at the national and international level; however, the limitations in the existing ABS regime are still apparent. Implementation of the few existing national laws has become an almost insurmountable task (given their very complex nature and features) for many reasons. Countries of origin have not been able to secure their legitimate interests not least because of the role ex-situ conservation facilities are playing. Expectations about the role that genetic resources can play in conservation have decreased, particularly due to failures in producing the ※billion dollar wonder drug or product§ frequently described or expected in the original ABS negotiations and subsequent processes. Therefore the anticipated financial benefits for countries have not materialized.

This chapter argues that one of the important limitations in the current ABS regime is the lack of a monitoring, tracking and documentation system (MTDS) which provides all involved actors in the exchange of genetic resources chain with timely and relevant information regarding flows and uses of these resources. It also proposes that a MTDS could reduce costs of accessing genetic resources; gradually decrease asymmetries of information between users and providers; facilitate the capture of non-monetary benefits; generate a more positive social environment towards bioprospecting; and create incentives for users to comply with ABS legislation.

The key objective of the MTDS would be to ensure a cost-effective tracking and monitoring of genetic resources that would establish a linkage between access and use, particularly outside of the jurisdiction of the country of origin. For this objective to materialize, the MTDS needs to incorporate basic information related to: a certain degree of description of accessed resources; documentation evidencing compliance with national ABS legislation; inclusion of use conditions over genetic resources and general contact details, especially of national ABS competent authorities.

This information could be located and managed as part of a centralized clearing house and the certificate of origin/source/legal provenance may serve as the standardized tool issued by national ABS authorities to support and incorporate this information.

A fresh review of the provisions of the Convention on Biological Diversity (CBD) reveals what is, in essence, the makings of a deal to enhance and redistribute the value of genetic resources. The third objective of the CBD establishes that the benefits arising out of the utilization of genetic resources should be shared fairly and equitably, ※including by appropriate access to genetic resources and by appropriate transfer of relevant technologies... and by appropriate funding§ (Article 1).2 In general terms, implementation of its provisions requires specific changes at three distinct stages:

Under an ideal regime, the user would find coordinated measures directed at each distinct stage, monitored and enforced by those in the best position to do so from the point of view of efficiency and effectiveness. It would seem obvious that this would require some form of international coordination given the global nature of those industries that utilize genetic resources.

In practice, however, the implementation of these provisions has taken a highly unilateral form: benefits in exchange for access on the basis of prior informed consent and mutually agreed terms on the basis of national access legislation, in other words, a contractual approach under the framework of national access legislation. This emerging model consists of two basic types of countries: those that see themselves as providers of genetic resources, which try to implement some form of access regulations; and those that consider they would gain more from the facilitated use, and which do not regulate access for the purposes of CBD and basically encourage their nationals to comply with national access legislation.

More than a decade since the entry into force of the CBD, the failure of the current regime is apparent. Only a limited number of countries have passed access legislation and most of them seem to have difficulties in effectively applying their provisions (Cabrera 2004). The Secretariat of the CBD has records of only 26 national access laws and regulations specifically designed to meet CBD access objectives (Ogolla 2005), and a recent study of access regulations in the Pacific basin has found that only 29 access permits were granted between 1994 and 2004 in the nine countries that had some form of access regulations (Carrizosa et al.). The reason this situation has not led to a standstill of biotechnological research, even in those countries, is that users have been able to secure access from ex-situ sources and take advantage of the fuzzy line between commercial and scientific use as well as the lack of clear rules on the status of derivatives. In this process, however, they have avoided benefit sharing in many cases.

The expectation of a much greater role of biotechnology in the world economy fueled much of the discussion regarding genetic resources during the early days of the negotiation of the CBD. The CBD recognizes the value of biodiversity as information, the need to enhance this value through facilitated access, and the need to provide a level playing field for all countries in this new technological revolution. Ten years on, however, we face a striking paradox: The value of all global sales for biochemical resources has grown significantly and is currently estimated at almost US$ 500 billion, with more than US$ 50 billion devoted to research and development (R&D) annually.3 At the same time, the documented benefits being shared in compliance with CBD obligations remains extremely low. Even Costa Rica's INBio has fetched only a few million dollars after about a decade of experience in access contracts4 (Guevara 2004). This paradox has been fueling part of the international allegations of biopiracy, considering this to be unfair and inequitable.

This paper argues that this situation is not due to lack of interest of Contracting Parties, particularly those that are developing countries, to regulate access, but is the direct result of a limited regulatory model based on access conditions but poor monitoring and enforcement mechanisms at the point where actual benefits occur and should be shared. Countries drafting their access legislation have drafted and passed their regulations in the absence of direct and coordinated support from regulations in countries with users of their genetic resources under their jurisdiction. The perception that as soon as the genetic resources leave the country they ※are gone§ is often voiced in national discussion on access. There is, therefore, pressure to increase requirements and proofs of compliance with CBD provisions at the point of collection of the materials, increasing transaction costs and discouraging access. The scientific community is often negatively affected, being the first link in the chain.

As a result of this situation, some countries have even started to take stock of their experience and are exploring alternatives to make them more functional, notable examples being the Andean Community and the Philippines. In the case of the latter, it has already passed a reform to make its ABS system less burdensome. Ultimately, however, the degree of flexibility and relaxation of ABS provisions will depend on the effective implementation of supportive measures closer to the point where the actual obligation to share benefits materializes, i.e. during the research and development stages and the point of commercial and other utilization. At the international level, these implementation problems and the need for a more balanced regulatory regime fueled the discussion on the role of user measures during the negotiation of the Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing of Benefits Arising out of their Utilization and the central drive of the international regime on ABS being negotiated under the CBD.

In order for these complementary measures to be effective, a link between the resource that was accessed and the one being utilized, with some form of monitoring, tracking and documentation system (MTDS) for genetic resources and their utilization must be put in place. This is necessary, of course, if we are to pursue compliance with CBD obligations under the current contractual approach. The CBD has initiated these discussions under the heading of a proposed Certificate of Legal Origin/Source/ Provenance. Regardless of the name, the essence of the proposal is the same: to establish some form of documentation requirement that involves proof of legal acquisition of the materials, i.e. acquisition compliant with CBD obligations.

The aim of this paper is to analyze the role of MTDS, the context in which they would be applied and to derive some implications for their design. Section 1 presents the case for MTDS by introducing a number of inefficiencies created by the lack of such systems within the current ABS regime. Section 2 discusses a number of facts in the industry that must be addressed by the MTDS and draws several implications for MTDS design. Section 3 presents a possible set of concrete features for the design of the MTDS. Finally, Section 4 provides a set of recommendations to overcome remaining challenges in establishing the linkage between access and utilization.

1.1 The need for a monitoring, tracking and documentation system (MTDS)

An MTDS, in the context of the current discussion, is simply a system in which users of genetic resources are required to (1) keep minimum documentation on the genetic resources they use, particularly those that are used in connection with the access and benefit-sharing conditions/permits; (2) transfer that information to any third parties that receive materials from them; and (3) provide that information at specific check-points (e.g. intellectual property right applications and product approval processes, etc.). This system requires that there be regulatory agencies responsible for verifying and enforcing documentation requirements. These features, as well as other design considerations, will be described in greater detail in the next sections. In the international negotiations, there has been some argument regarding the nature of the information that needs to be maintained and transferred, namely, source, origin or legal provenance. All of the choices, however, involve the same basic elements and will suffice for this analysis.

From that basic understanding of what an MTDS implies, it is clear that the current ABS regime lacks such a system. As stated above, some mechanism to monitor, track and document genetic resources and their utilization is needed to enable a more efficient regulatory system to comply with CBD provisions regarding genetic resources. Some of the inefficiencies caused by the lack of MTDS include:

In essence, the development of an effective MTDS would contribute to the elimination of these sources of inefficiency in the current regulatory system. It should be noted, however, that on its own, the value of an MTDS is limited. In the absence of a coordinated response, the value of an MTDS would be significantly reduced. There are complementary measures that should be taken in order to take full advantage of the MTDS. Some of the complementary measures include: sanctions for non-compliance with monitoring, tracking and documentation measures as well as ABS provisions, reduced regulatory burden at the point of access, measures to increase awareness of users as well as the public in relation to ABS and the MTDS, and measures to increase the transparency of the transactions.

1.2 Facts and trends in the industry

While an MTDS is desirable, its specific design should take into consideration several characteristics of the economic sectors that access and use genetic resources. The absence of such considerations could result in an MTDS that is either impractical or too costly. This section analyzes a number of facts related to the process of access and use of genetic resources, particularly in the biotechnological sector, and attempts to identify for each of them a number of desirable features that might be included in an MTDS.

It should be noted that many of the features highlighted here correspond to the blue (marine) or white (industrial) biotechnological sectors, while some of the features may be shared equally by the agricultural (green) biotechnology sector. None of these is the primary focus of this paper. Some [many?] of the examples used relate more to the pharmaceutical (red) sector. While it is true that the pharmaceutical model is only one of many in the industry, it is a paradigmatic one, since even relatively distant segments, such as the cosmetic industry, are undergoing changes and gradually becoming more like the former. Some of these changes include regulatory changes, product safety concerns, scientific backing of product claims, demand for ※environmentally friendly§ and natural products, as well as influence by the animal rights movement (Kumar 2005). Some regulatory initiatives have even considered the creation of ※cosmeceuticals§ as a new product classification.

1.2.1 Key points 每 essential inputs and multiplicity of genetic resources

This section will consider two primary facts about R&D. First, research and development of products is a lengthy and risky process, involving both high investment and skilled labor. Second, it is critical to remember that multiple genetic resources are typically involved in a single project. Biotechnological research is, economically speaking ※intensive§ 每 that is, it depends on a number of inputs: skilled labor, capital, and genetic resources. All of these inputs need to be adequately compensated in the industry in order to be economically viable in a future CBD compliant world. This would mean a world where source countries all have ABS legislation that is operational and complemented by international measures to ensure that benefits from use are equitably shared. Creative work needs to be rewarded, capital investments need to have an attractive return, and genetic resources need to be recognized so that their providers receive a fair and equitable share of the benefits. A major complication is that, while all of these potential compensations must come from the same revenue pot, there is no simple way of separating the individual contributions of these three distinct inputs. Moreover, a single input will not always ultimately result in a specific profit (although it may be a basis from which informational benefits and other benefits may be derived), in which case all inputs would be without financial compensation. The long periods of time involved in product development also imply that there are financial costs which accumulate over time and, in fact, constitute a significant portion of total costs in the industry.

Implications: Based on the foregoing facts, one can derive the following possible implications for the system that creates and applies the MTDS:

1.2.2 The role of natural products is increasing in complexity, with many genetic resources used in the development of a single product

While one is often drawn to the image of the single researcher working in the jungle and finding the cure for a terrible disease in an extract directly derived from one species, the reality of product discovery is far more complex and the role of a single genetic resource is less clear. A more realistic model would picture the process of searching for useful traits as one involving many genetic resources from many different sources in many institutions interlinked through different types of collaborative agreements. Moreover, once a useful activity is found in a compound, it is possible that the compound would be further refined and improved to enhance its value. In some cases, the compound may be more cost effective if it is extracted from a completely different species that shares the same trait.

Recent analysis of the role of natural products as sources of new drugs (Newman and Cragg 2003) has found that, while natural products still play a major role in drug development, their participation is not necessarily very direct. Natural products provide knowledge or basic genetic/biochemical structure, which is then sometimes turned into a semi-synthetic modification or a full synthesis. The actual participation (direct involvement) of genetic resources/natural products (in this form) in the product or output is harder to characterize, and may be resolved through efforts to clarify the notion of derivatives or the scope of the benefit-sharing obligation. The fact that there appears to be a proportional increase in the share of these products in the marketplace, stresses the importance of addressing this issue in the context of MTDS design.

Therefore, most genetic resources entering a R&D process do not result in ※hits§ (direct, marketable products). There are multiple processes and exchanges of materials. Information needs to be shared in order to maximize the chances of success.

Implications: For the MTDS, these facts suggest that the system:

1.2.3 Ever more complex economic and legal interactions between academia and industry

With an increasing role for collaboration and exchange among academia and business, the constellation of contracts and relationships is increasing and becoming more difficult to handle under existing frameworks. As noted by Binns and Driscoll, ※at least in the outset of the project, it may be difficult for a party to identify all of its relevant background rights 每 indeed, many organizations are unaware of all the intellectual properties (IP) 每 particularly know-how 每 that they own§ (Binns et al. 1998). I would argue that this extends to liabilities, i.e. in connection with IP of others that is held (used, not owned) by a party. In this context, developing an effective intellectual rights system to address genetic information and know-how will require institutions to devote more resources to due diligence in biotechnology transactions, analyzing the required patent scope and its validity to ensure freedom from infringement and relevant third party agreements (Gogoris et al. 2001). While the proposed MTDS is a new explicit requirement, it represents a lower cost mechanism to inquire about potential liabilities and rights to use specific materials.

Some evidence has been provided to suggest that there are more alliances, particularly in the area of discovery and leads (Cavalla 2003). According to their data, alliances in the top 20 US biotechnology companies rose from 85 in 1988 to 226 in 1998. Of those, the increase at the discovery and lead phase grew more significantly, namely from 62 to 162 (Cavalla 2003). A recent survey found that the total number of licenses and options executed by US universities had increased by more than 20% (Bouchie 2005).

This fact also indicates that the traditional line dividing the commercial and academic work is becoming increasingly blurred, creating challenges for those seeking to secure exemptions for academic research. To illustrate these trends, a study found that at least 39% of new chemical and biological entities approved by the US Federal Drug Administration originated from outside pharmaceutical companies, with some 24% originating from biotech firms and some 15% from public research. Most of the drugs from public research were licensed to biotechnology companies and pharmaceutical companies (Kneller 2005). In this ※relay race§ for product discovery and development, without an MTDS that is directly associated with benefit-sharing triggers down the development path, providers will not be able to effectively capture non-monetary benefits effectively from the ※first runner.§ Monetary benefits, e.g. royalties, can be more easily transferred as obligations to other users, while other benefits, such as results from research or access to technologies, are more difficult to secure.

Implications: This development suggests that:

1.2.4 New frontiers of genetic-related exploration

Most exploration of genetic resources has, over the years, focused on plant and animal genetic resources. Recently, and given developing technologies and industrial needs, micro-organisms and genetic resources in extreme environments have become a new source of interest. Scientific and technological developments, however, have created new opportunities, and enabled the exploration of the natural world to extend to areas previously beyond our reach. This is particularly true in the case of microorganisms (Rondon et al. 1999). Likewise, recent years have seen an increase in the exploration of the seas as technical barriers which limited past work in this area have been overcome (Colwell 2002). These new frontiers challenge our previous understanding on which we decided which genetic resources were of potential value (and with use are becoming resources with actual value). In addition, this expansion is also taking us into new legal realms, such as bioprospecting in areas beyond national jurisdictions (Lohan et al. 2005).

Implications: This development suggests that the MTDS must be able to:

At a minimum, the various management regimes should coexist without hindering the effectiveness of each other.

1.2.5 Ex-situ collections are still valuable and coexist with new collections

Existing biological resources in ex-situ collections are still sources of inputs for biotechnological research. Technological advances create opportunities to look at the same materials with new tools and in that sense, constitute materials that are partially ※renewed.§ This means that a significant proportion of materials currently being exchanged have originally been obtained from ex-situ collections, both private and public. Ex-situ collections are also more valuable to the extent that they are well curated and contain significant information. Accessions of ※genetic resources§ predating the CBD may release the accessor from ABS obligations; on the other hand, it can also be validly argued that even if materials were obtained prior to the CBD entering into force, the actual transfer or utilization of these materials and genetic resources after the CBD entered into force could be subject to the CBD rules and principles.

Implications: When following the MTDS approach:

1.2.6 Increased use of intellectual property to secure market value for inventions

The intellectual property rights (IPR) regime represents an important solution for promoting innovation and attracting investment. In an area very dependent on investments and highly skilled innovators, the biotechnological sector relies on IPRs to secure an option to obtain market exclusivity and capture benefits from marketed products. The number of patents in the field of biotechnology has grown significantly in the past few years and even academic institutions have made increasing use of patents for the protection of potentially valuable inventions. The rapid growth and distinct characteristics of biotechnology have created new technical and ethical challenges to the current intellectual property regime (Welch 2002; Lawson 2004), some of which have to do with the adequate recognition of the genetic resources in the development of new inventions and the distinction between an invention and a discovery.

Implications: Based on this analysis, it appears that the MTDS:

1.2.7 Various related data management challenges to ensure adequate exchange

The sharp reduction in costs of genetic analysis as well as the sheer volume of data involved has created a need for greater capacity to store and analyze biological data, in the face of concerns that free access to this information will enable the use of genetic resources without benefit sharing. The entire field of bioinformatics is emerging to meet that very need. One particular challenge, however, is data exchange. Data needs to be exchanged for a variety of reasons, from validation of results to expansion of analysis; this, however, becomes more complex in the absence of data standards and exchange protocols. A somewhat related issue, although with a contrasting objective, is the building and management of medical data. The main issue has to do with ensuring the confidentiality of personal data while promoting data exchange among the scientific community. This has led to a range of initiatives aimed at developing data standards (Knoppers et al. 2005). These initiatives contribute to reducing the costs of MTDS.

Effective communication among various types of databases is also essential as well as improvements in search techniques. In terms of intellectual property law and practice, none of the existing ※traditional knowledge databases§ are comprehensive enough to meet the standards by which an applicant can use them in an adequate search for ※prior art.§ If they were to be used in this way, the applicant would have to search a great many databases to get a better response (Simmons 1998; Xu et al. 2002).

Just as intellectual property databases could be improved to accommodate MTDS, product approval databases are another area to explore further. For example, in the case of New Biological Entities with marketing approval by the US Food and Drug Administration, it would be difficult to know if it has been in-licensed since information about the patents covering a NBE is not published (Kneller 2005). The tracing of ABS obligations at the product approval level would require that the minimum documentation of the MTDS be requested and published through public databases or that sufficient information is released to perform that link, e.g. through publishing of patent and licensed data for approved products.

Implications: For the MTDS, this suggests that:

1.3 Toward an effective and feasible MTDS

The following discussion provides a summary of the desirable features discussed above as well as some of the benefits of each of them.

Taking into consideration the rationale as well as the desirable features that have been discerned in reviewing the characteristics of the biotechnological sector, it is possible to advance in the delineation of a possible MTDS. This section provides a brief description of an MTDS incorporating the following considerations (Table 1). The intention of this section is to narrow further the set of alternatives available for the MTDS in order for them to be effective, feasible and practical.

Table 1. Desirable features and benefits of an MTDS

Desirable features Benefits Challenges
Few relevant check points at end of R&D pipeline. -Low transaction costs;
-Enables facilitated exchange of the genetic resource at intermediate R&D stages;
-Serves as trigger for negotiations.
Loss of a degree of control but promotes legal certainty for a source country.
Conveys notion that access conditions, state rights and obligations of users were fulfiled. Gives some level of certainty to investors. The MTDS should provide both users and investors with a sufficient and reliable level of certainty.
Rules for assessing relative participation of genetic resources and jurisdictional reach of benefit-sharing obligations. Provides certainty regarding the limits and problems of practical implementation of benefit-sharing obligations. It will be necessary to develop an analytical valuation system.
Electronic codes as primary documentation to be conveyed and linked to clearing house. -Flexibility to use in various platforms;
-Takes advantage of emerging technologies developed by industry;
-Can accompany materials as well as data;
-Low-cost transmission of users' rights and obligations;
-Could serve as platform to manage other third-party agreements.
It may be appropriate to consider the costs of developing, implementing, and updating the system.
Self-declares (through a sworn declaration maybe) the degree of quantitative and qualitative linkage of the technological development to the genetic resource contribution. Provides a more realistic basis on which to negotiate benefit-sharing arrangements.
Provision to enable application to new sources. Creates an integrated system which assists in the management of genetic materials beyond national jurisdictions and ex-situ materials. Would also imply a need to address issues of making the MTDS binding on successors along the value-adding chain and in relation to enforcement of contractual obligations.
Creates exemptions for particular uses that would not fit the contractual model. Reflects the sharp contrast between the plant breeding model and the model used in this discussion. -Plant breeding and possibly other sectors may require separate treatment;
-There may be difficulties in specifying the differences between types of use, application, research, etc.
Clearing house should include description of materials and, when possible, other relevant information. -May contribute, as a basis for reviewing ※prior art§ and describing it in IPR reviews;-Facilitates identification of those with right to file IPR applications. One problem may arise in the area of non-IPR related uses and potential costs for addressing these situations.

The objective of the MTDS would be to provide a means to monitor and track genetic resources to create a link between access and utilization of genetic resources beyond the jurisdiction of provider countries. As such, the main documentation in the MTDS includes:

  1. description of the basic resources, including its geographical origin;
  2. evidence of compliance with access and benefit-sharing obligations arising from the CBD and from national legislation;
  3. conditions for use, including rights and obligations of users; and
  4. contact information of the national authority providing access.

Most of this information would be located in a central clearing house and, as such, the only piece of information to be passed on among users would be the registry number or code associating the material or information being exchanged with the basic documentation outlined above and stored in a public database (clearing house). This code or registry would embody what has been referred to in current negotiations as the ※Certificate of Source/Origin/Provenance.§

This certificate (or code) would be issued by a designated national authority and according to an internationally agreed standard to avoid duplication of certificates. A single certificate could cover multiple genetic resources, to the extent that they all share the same basic documentation information, particularly with regard to the rights and obligations of users.

The user is then legally forced to maintain the link between the certificate and the material/information by any means necessary, and must convey it to whoever receives the material or the information derived from the genetic resource, as well as pass the obligation to do the same if the materials are passed on (whether by sale, transfer, or indirect methods) to third parties. Just as one would cite an author whose idea we are using in an argument, or acknowledge funding institutions or special collaborations in the resulting work, so the certificate's information identifying and describing genetic resources essential for the development of discoveries or inventions should be disclosed in publications or be incorporated into property rights applications or product approval processes.

Of course, since the total number of species is enormous, not all genetic resources should be recorded 每 only the essential ones. Criteria should be developed to determine what constitutes an essential contribution. In principle, if the same discovery/invention could have reasonably been developed by substituting specific genetic resources with others previously known, then the contribution of that genetic resource was non-essential. However, again, there are technological challenges and questions as to whether the specific genetic resource was non-essential in a particular case. This is the situation, for example, if the genetic resource is an alternative to the salicylates in aspirin. Does possible use of salicylates in aspirin make the genetic resource non-essential? This criterion implies that some derivatives incorporated in discoveries and inventions would not have to be recorded, because they do not have direct contact with the genetic resource.5 This criterion, in effect, represents the scope of the benefit-sharing obligation. In order to convey a clearer idea of the degree of contribution of the genetic resource to the overall invention, the disclosure requirement could be complemented with a self-declaration of degree of participation of the genetic resource. A simple but powerful classification system like the one used by Newman and Cragg, consisting of biological and natural products, derivatives from natural products, total synthetics, natural mimics, etc. could form the basis for such categories (Newman et al. 2003).

The certificate/code stored would only be requested at specific check-points toward the end of the R&D process, including applications for IPR or product approval. At these stages, the number of genetic resources is not only significantly lower, but their expected value is much higher. Border controls, while in principle appealing as check points, present a number of problems. They are not only difficult to enforce, but they would be involved in significantly low-value transactions, increasing the cost and reducing the effectiveness of the system.

In the case of discoveries/inventions made from ex-situ collections or from areas beyond national jurisdictions, specific certificates/codes could be agreed. The rights and obligations arising from such collections would depend on the individual policies as well as international obligations. This, however, would ensure that most biotechnological applications would have a code, minimizing the risk of diluting the obligation by simply saying that the source is unknown.6 Efforts to identify the relevant certificates and their derived obligations should become part of the due diligence of users of genetic resources.

With regard to the consequences of non-disclosure, there is often some tension in the international debates since, on the one hand, without some penalties for non-disclosure, there is little incentive to comply and on the other, it is often difficult for the enforcement body (or party to the contract) to know that a violation has occurred. Moreover, it has been difficult legally to justify some proposed penalties, such as revocation of patents. A middle-ground solution is to provide for some time to satisfy the requirement, encouraging the companies to research the origin of their materials 每 through which the system would raise a ※red flag§ for the corresponding authorities in the source country through the clearing-house mechanism and contemplating the adoption of a sanction for the administrative fault, possibly delaying the permit or patent processing until some explanation is provided. It should be the responsibility of the designated authority to deal with violations of access and benefit-sharing conditions.

For cases where a genetic resource originated in a country that does not have ABS regulations in place, some special codes could be developed by the clearing house and receive a formal acceptance by this country to ensure its legal validity. This could either note that there is no further obligation, or set some minimum benefit-sharing requirements if they were to be agreed upon at the international level. This discussion leaves out the question of equity which could be the subject of another paper.

1.4 Conclusions and final remarks

The preceding sections have attempted to provide both a rationale for an MTDS within the access and benefit-sharing regime being negotiated, as well as some design considerations and possible concrete formulations. Clearly, some challenges remain in the applicability of the MTDS. One of the most critical is to minimize the cost of the overall system or, as noted above, to ensure there is an adequate relation between the system's cost and the value it offers to different countries and actors. The MTDS would add to an industrial sector already burdened with regulations. This, however, does not mean that the ABS obligations should be the first to go.

A second challenge relates to the need to strike a balance between creating and capturing value of genetic resources. While creating value requires exchange, this could be limited if the effort to ensure that those benefits are captured by the provider countries discourages or blocks access. A third challenge is that of articulating the complementary policies and measures needed for the operation of the MTDS and for achieving the ultimate goal, which is the effective implementation of CBD obligations. If user measures are not in place, including credible checkpoints, or access conditions are not relaxed, the efficiency gains of the MTDS will be limited.

On the positive side, there seem to be a number of synergies, particularly in the field of data management and searches, where current efforts to resolve the industries' own problems could pave the way for the MTDS. Similarly, the MTDS could be expanded to serve as a platform to reduce the cost of tracking legal obligations related to other agreements, thereby creating a more functional system overall.

Finally, there is one final but most relevant consideration: the MTDS will ultimately assist in supporting the contractual approach on which the current access and benefit-sharing model is based. However, this approach has limitations. Several authors have suggested that a purely contractual approach may be too costly to implement (Janssen 1999; Artuso 2002; Lawson 2004). A recent article by IUCN (Young 2004) suggests that the contractual approach does not have to be the only form of implementation of the obligations under the Convention. However, Young also notes that this approach appears to be dominant in the mindset of negotiators.

But costs are not the only concern. It is true that there will be some form of competition among providers of genetic resources unless they are differentiated in the marketplace (Artuso 2002). This could, in fact, result in lower values for individual contracts. If the contractual approach is not feasible, either because even with the best MTDS design costs are too high, or because contracts are still inefficient, States should be prepared to change the approach altogether to implement the objective of the CBD effectively.


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1 At the time of this writing, Jos谷 Carlos Fern芍ndez Ugalde is an economist, and researcher at the National Institute for Ecology (INE) in Mexico.

2 In order to articulate this broad objective, the CBD includes a set of specific provisions which include obligations to (a) facilitate access to environmentally sound uses (Article 15.2); (b) endeavour to develop and carry out research with the full participation of and, where possible, in countries providing resources (Articles 15.6 and 19.1); (c) take measures to share the results of research and development as well as the benefits from commercial and other utilization (15.7); (d) provide and/or facilitate access for and transfer of technologies (Article 16.1), including measures with the aim that the private sector facilitates access to joint development and transfer of technology (Article 16.4), as well as technologies protected by patents and other intellectual property rights (Article 16.3). Moreover, a greater emphasis is placed on sharing benefits with developing countries (Articles 16.3 and 20.2).

3 Artuso. 2002. This estimate was calculated simply by estimating that for any company, R&D accounts for approximately 10% of gross sales.

4 About US$ 600,000 from 1991每2002 directed to conservation (10% of research budgets) (Guevara 2004). Of course, INBIO is not the only case of benefit-sharing arrangements, although it is probably the longest extant, and the most advanced. The main idea is simply that there is a sharp contrast in orders of magnitude between what is generated in revenue and invested and what is shared in individual contracts.

5 A recent proposal by the European Union (WIPO/GRTKF/IC/8/11) in the context of disclosure requirements in intellectual property rights applications provides for mandatory disclosure of the origin of resources, but only if the inventor had direct contact with the genetic resource, given the rapid growth in bioinformatics and the ability to produce semisynthetic products which still derive value from knowledge gained from genetic resources.

6 Both the proposals by the EU and Switzerland (PCT/R/WG/4/13, PCT/R/WG/6/11, WIPO/GRTKF/IC/7/INF/5) call for the disclosure of the origin and source of genetic materials, if known. Furthermore, they propose that there should be no additional obligation on the applicant to carry out research to identify such information. This exclusion significantly diminishes the effectiveness of the disclosure requirement.

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