Article 18 – Financial Resources

Article 18 of the Treaty provides for the implementation by the Contracting Parties of a funding strategy for the implementation of the Treaty. It is important to note that the funding strategy is not an actual fund or financial mechanism (although the establishment of an “appropriate mechanism such as a Trust account for receiving funds” is envisaged under Article 19). These provisions are entirely different from, and in no way connected to the financial mechanism established under Article 21 of the CBD – a role now permanently assigned to the Global Environmental Facility. Unlike CBD Article 20, the Article does not place any obligation on Contracting Parties to provide new funds. The funding strategy is rather an agreed strategy for mobilizing funds primarily from existing sources and through existing channels, though it will also cover financial resources provided for in the Treaty itself, such as the mandatory and voluntary payments to be made under Article 13.2(d)(ii).

Article 18.1 requires Contracting Parties to implement a funding strategy for the implementation of the Treaty in accordance with the provisions of this Article. The actual adoption, and periodic revision, of the funding strategy is the responsibility of the Governing Body under Article 19. This paragraph indicates that the Contracting Parties, severally and jointly, undertake to implement the funding strategy as adopted by the Governing Body. As we shall see, this may entail taking stances in other funding forums to ensure that the conservation and sustainable utilization of plant genetic resources for food and agriculture are adequately funded. It may also include cooperating in the establishment and operation of other funding mechanisms, such as the new Global Crop Diversity Trust (see Box 20).

Besides enhancing the availability of financial resources, Article 18.2 makes it clear that the funding strategy must also seek to enhance the transparency, efficiency and effectiveness of the provision of those resources. Transparency refers to the concern of countries that the mechanisms for the allocation and provision of financial resources do not operate behind closed doors, but take their funding decisions in a transparent and accountable manner. Efficiency and effectiveness refer to the provision of financial resources as well as their use.

The financial resources are to be used to implement activities under the Treaty. For the most part, these would obviously include activities under Articles 5, 6, 7, 8, 14, 16 and 17 of the Treaty, although the Treaty's supporting components could also be targeted. The balance will of course be for the Governing Body to decide.

As noted above, it is the Governing Body that is to adopt the funding strategy under Article 19, and Article 18.3 makes it clear that the Governing Body is also to periodically establish targets for funding under the strategy. The Treaty does not specify the criteria for establishing such targets; however, in giving the decision-making role to the Governing Body it requires that the decision take into account the rolling GPA, presumably necessitating some recognitions of priority activity areas established through the GPA processes. It must be assumed by this reference that the Parties expect the GPA, as periodically revised, to provide an agreed scientific and technical framework for financial decisions (as it does for other national and international action in the area of plant genetic resources conservation and sustainable use.)

Paragraph (a) obliges Contracting Parties to actively seek support within “relevant international mechanisms, funds and bodies” to ensure that the proper priority and attention is given in those forums to the “effective allocation of predictable and agreed resources”. The paragraph does not identify what those “relevant international mechanisms, funds and bodies” are. However, they may include, for example, the Global Environment Facility (GEF), the Global Crop Diversity Trust, the CGIAR and the World Bank.

The GEF, now permanently established as the Financial Mechanism of the CBD, specifically lists agricultural Biological Diversity as a focal area. Under its operational strategy, however, the use of GEF resources for biodiversity projects must to conform to the guidance received from the Conference of Parties to the CBD. Recent decisions by the GEF Council in response to decisions taken by the Conference of the Parties to the CBD, call for direct reference to the Revised Undertaking (Treaty), as well as the GPA, in the GEF operational programme on conservation and sustainable use of biological diversity important to agriculture, and note the importance of collaboration with FAO and other institutions working in the field of agriculture.

The Global Crop Diversity Trust is now being set up to provide endowment and other funds to support ex situ collections of PGRFA (see Box 20). Other “relevant international mechanisms, funds and bodies” would presumably include the CGIAR, the importance of whose activities is emphasized in the Treaty (see Article 15 in particular), as well as the World Bank, regional development banks, etc.

Use of the terms “agreed” and “predictable” mean that the financing should be agreed between the recipient countries and the financing mechanisms, and that the funds should be allocated in such a way as to allow the recipient to make plans for the disbursement of the funds and to rely upon the timeliness of delivery (i.e. annual, biennial and so on).

It is important to note that the obligation being undertaken by the Contracting Parties is not one of ensuring the effective allocation of predictable and agreed resources. It is merely the obligation to ensure that “due priority and attention” is given to allocating such resources. The negotiators made it clear that they could not bind themselves further than this, because each of these bodies has its own governance determining the body's respective priorities and budget allocation. However it does mean that Contracting Parties to the Treaty have bound themselves to make sure that funding for the Treaty is not overlooked by the appropriate funding bodies and that the Treaty activities are appropriately prioritized.

This paragraph reflects the provisions of Article 20.4 of the CBD. In the case of the Convention, the developing countries were referring to the commitments for new and additional financial resources to enable developing countries to meet the agreed full incremental costs to them of implementing measures to fulfil their obligations under the CBD and to benefit from its provisions. In the present paragraph of the Treaty, the reference is to the outcome of the efforts of the developed countries, in particular, in mobilizing financial resources, both through the mechanisms referred to in the preceding paragraph and through their own bilateral and regional assistance programmes. Developing countries and countries with economies in transition, on the other hand, are to give due priority in their plans and programmes to the capacitybuilding in PGRFA. In so doing, this Article reinforces the commitments set out in Articles 5, 6, 7 and 13.2(c).

The wording of this paragraph is expressed as a description, rather than a commitment. The effect of the provision is thus to signify that existing, and future, flows of financial assistance using bilateral, regional and multilateral channels form a part of the funding strategy. These also include the “appropriate mechanism” to be set up by the Governing Body under Article 19.3(f) to receive financial resources accruing to it for the purpose of implementing the Treaty, including of course the monetary and other benefits arising from commercialization under Article 13.2(d)(ii), and voluntary resources made available under Article 13.6.

This paragraph states that each Contracting Party will carry out national activities for the conservation and sustainable use of PGRFA and will be responsible for the financing of those national activities. The national activities referred to are primarily those listed in Article 5, 6 and 7. While the wording does not explicitly qualify those national activities as being its own national activities, it is clear that this is what is meant. The paragraph is thus supportive of the obligations in Articles 5, 6 and 7. The obligation undertaken here is also qualified. It is qualified in that it does not refer to all national activities as set out in the Treaty, but merely to national activities. It is also qualified by the limitation “in accordance with its national capabilities and financial resources”. The Contracting Parties have an obligation to carry national activities, but only to the extent of their national scientific, technical, financial and human resources. Subject to that limitation, each Contracting Party must make its best efforts to meet the goal that is set. The paragraph falls under the heading of “financial resources” and the accent is thus on the responsibility of each Contracting Party for the financing of its own national activities.

The final sentence of the paragraph states that that the financial resources provided are not to be used towards ends that are inconsistent with the provisions of the Treaty, particularly in areas related to international trade in commodities. The intended purpose of this sentence is to prevent Contracting Parties from providing subsidies and other support measures to agriculture that are not really for the purpose of implementing the Treaty, so much as for subsidizing agricultural production and in particular agricultural exports, and thus distorting trade patterns. The provision mirrors a similar caveat expressed in the expression “fair agricultural policies” in Article 6.2(a).

As examined above, Article 13.2(d) addresses the sharing of benefits from the commercialization of PGRFA covered by the multilateral system. As can be expected, the financial benefits arising from that mechanism are to form part of the funding strategy. It is to be noted that the reference is to the entire Article 13.2(d), although the reference to financial benefits refers primarily to the mandatory and voluntary payments to be made under Article 13.2(d)(ii).

These voluntary contributions appear to include:

The Governing Body is to consider how to promote such voluntary contributions.

Building on Article 18.3, Article 18.5 states that priority will be given to the implementation of agreed plans and programmes for farmers who conserve and sustainably utilize PGRFA, particularly in developing countries, least developed countries, and in countries with economies in transition. Note that this priority for funding is consistent with the statement in Art.13.3 on sharing benefits arising from the use of PGRFA under the Multilateral System.

Consistent, with the rest of the Treaty, this Article acknowledges the contribution of farmers in their conservation and sustainable use of PGRFA, and the need to promote and support future contributions of farmers. The reference to “agreed” plans and programmes appears to mean that the plans and programmes will have to be agreed with the recipient countries themselves and with the full participation of both farmers and breeders. It may also in part constitute an oblique reference to the agreed plans and programmes set out in the rolling GPA.

Box 20. Global Crop Diversity Trust

Article 5.1(e) of the Treaty provides that Contracting Parties shall, as appropriate, cooperate to promote the development of an efficient and sustainable system of ex situ conservation. Article 18 provides for a funding strategy for the implementation of the Treaty. Priority Activity Area 5 of the GPA calls, inter alia for appropriate financial support to be provided for sustaining existing ex situ collections.

As a step to implement the above, FAO and the CGIAR Centres, in particular through IPGRI, have promoted the establishment of an endowment fund, to be known as the Global Crop Diversity Trust, to provide funds in perpetuity to support the long-term conservation of the ex situ germplasm, and to ensure the conservation and availability of the plant genetic resources of greatest importance to global food security and sustainable agriculture. The Trust will, in particular, support the maintenance of eligible PGRFA that meets agreed standards of management and availability, and support the upgrading of collections and other providers of services needed to maintain them, so that they may become eligible for maintenance grants, with the objective of promoting an efficient goal-oriented, economically efficient and sustainable global system of ex situ conservation in accordance with the GPA. The Trust has been set up as an independent international fund, with its own Executive Board. It will, however, operate within the framework of the Treaty, will form an essential element of the Treaty's funding strategy, and will receive overall policy guidance from the Governing Body of the Treaty. The Executive Board will be composed of members nominated by the Governing Body of the Treaty and by the donors of funds (Donors' Council) as well as FAO and the CGIAR. There will also be a Donors' Council that will provide financial management oversight over the activities of the Trust. It is envisaged that the Trust will enter into a relationship agreement with the Governing Body of the Treaty.

The Agreement establishing the Trust entered into force on 21 October 2004 and the Trust has accordingly now been formally set up and indeed has already started fund disbursement. Pending the first session of the Governing Body of the Treaty, the functions of the Executive Board are being carried out by an Interim Panel of Eminent Experts.

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