COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization in the Union Part 1

This report commits only the Commission's services involved in its preparation and does not prejudge the final form of any decision to be taken by the Commission.

TABLE OF CONTENT

1............ Introduction. 4

2............ Procedural Issues and Consultation of Interested Parties. 5

2.1......... Inter-service group. 5

2.2......... Consultations. 6

2.3......... Impact Assessment Board. 7

3............ The results of the public consultation were summarised in much greater detail. Problem definition  8

3.1......... Implementing the Nagoya Protocol: is the EU legal framework fit for the purpose?. 9

3.2......... Current practices of access to and utilization of genetic resources and associated traditional knowledge (the "EU baseline") 12

3.3......... The EU's right to act and justification. 19

4............ Objectives. 20

4.1......... General objective. 20

4.2......... Specific objectives. 20

4.3......... Operational objectives. 21

5............ Policy Options. 21

5.1......... The Business as Usual (BAU) 22

5.2......... Options for addressing the Access pillar of the Protocol 23

5.3......... Options for addressing the User-Compliance pillar of the Protocol 23

5.4......... Options on the Temporal Application of binding EU-level measures. 26

5.5......... Options for Complementary measures in support of the Protocol implementation. 27

6............ Analysis of Impacts. 29

6.1......... General remarks. 29

6.2......... Access Pillar 33

6.3......... User-Compliance Pillar 36

6.4......... Temporal Application of Binding EU-level measures. 43

6.5......... Hypothetical scenarios. 44

6.6......... Complementary Measures. 45

6.7......... Overview of the analysis results. 48

7............ Monitoring and Evaluation. 51

Glossary of key terms used in the context of "Access and Benefit-sharing" 54

Overview of Tables and Boxes. 58

1.           Introduction

Genetic resources - the gene pool in both natural and cultivated stocks - play a significant and growing role in many economic sectors: food, the development of medicines, development of bio-based sources of renewable energy, etc. 26% of all new approved drugs over the last 30 years are either natural products or have been derived from a natural product.[1]

The European Union and all of its 27 Member States are Parties to the Convention on Biological Diversity[2] (CBD). The CBD recognizes that states have sovereign rights over genetic resources found within their jurisdiction and the authority to determine access to such resources. The Convention obliges all Parties to facilitate access to genetic resources over which they hold sovereign rights. It also obliges all Parties to share in a fair and equitable way the results of research and development and the benefits arising from the commercial and other utilization of genetic resources with the Party providing these resources.

The CBD also addresses the rights of indigenous and local communities that hold traditional knowledge associated with genetic resources, and which may provide important lead information for the scientific discovery of interesting genetic or biochemical properties.

However, the CBD currently provides little detail on how access and benefit-sharing (ABS) for the use of genetic resources and associated traditional knowledge should be done in practice. Particularly industrialized country Parties have been very reluctant to adopt measures supporting effective benefit-sharing of their researchers and companies. As one consequence, some countries have established increasingly restrictive conditions for access to genetic resources or associated traditional knowledge. At the same time and in the absence of clear rules, European researchers and companies have been accused of 'biopiracy' by countries claiming a violation of their sovereign rights. These problems have seriously undermined global progress to conserve and sustainably use biological diversity; not least since states that are considered as 'biodiversity-hotspots' stand to gain the most from an effective ABS framework.

The issue of ABS is also relevant in international fora outside the Biodiversity Convention. Most prominently, the International Treaty on Plant Genetic Resources for Food and Agriculture was negotiated and in November 2001 adopted in the framework of the UN Food and Agriculture Organization as a specialised ABS instrument. The FAO Commission on Genetic Resources for Food and Agriculture has embarked on a multi-year programme of work on the relevance of ABS to different types of genetic resources used for food or agriculture purposes. More recently, members of the World Health Organization have adopted a Pandemic Influenza Preparedness Framework that balances interests in the rapid sharing of virus samples with the interest in sharing related benefits. The issue of ABS is also being discussed under the UN General Assembly in the context of a broader framework of measures to protect biological diversity in the high seas. In addition, intellectual property rights aspects of protecting innovations based on the utilisation of genetic resources and traditional knowledge associated with such resources are discussed in both the World Intellectual Property Organization and in the WTO Agreement on Trade Related Aspects of Intellectual Property Rights.

The "Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from Their Utilization to the Convention on Biological Diversity" (hereinafter: Nagoya Protocol) is a new international treaty adopted on 29 October 2010 by the 193 Parties to the CBD by consensus. It is a treaty with legally binding effects that significantly expands the general ABS framework of the CBD. The Nagoya Protocol is expected to enter into force in 2014. Once operational, the Nagoya Protocol will generate significant benefits for biodiversity conservation in states that make available the genetic resources over which they hold sovereign rights. It will in particular:

- Establish more predictable conditions for access to genetic resources.

- Ensure benefit-sharing between users and providers of genetic resources.

- Ensure that only legally acquired genetic resources are used.

The EU and its Member States are politically committed to become Parties to the Protocol to secure access of EU researchers and companies to quality samples of genetic resources, based on reliable access decisions at low transaction costs.[3] This will create new opportunities for nature-based research, and contribute to the development of a bio-based economy.[4]

This report presents the assessment of the impacts of EU implementation of the Nagoya Protocol. Starting from the main obligations of Parties to the Nagoya Protocol, particularly those on access and on user-compliance, it identifies different options for meeting these obligations (as there is still flexibility on key issues), and it analyses for each option how it would impact on the EU acquis and on existing practices of providing and utilizing genetic resources and associated traditional knowledge in the EU, and on our relationship with major international partners. In particular, it examines the value-added of EU action in the form of coordinating and setting common rules compared to a baseline where Member States decide to implement the Nagoya Protocol in their own way.

2.           Procedural Issues and Consultation of Interested Parties

The CWP 2012 foresees the adoption of an "ABS package" implementing the Nagoya Protocol for the third quarter of 2012 (2012/ENV/002).

2.1.        Inter-service group

A Commission Impact Assessment Steering Group was established in February 2012. The group was led by DG Environment. The following Commission services indicated their interest to follow the work: SG, AGRI, DEVCO, EEAS, ENTR, JUST, LS, MARE, MARKT, RTD, SANCO, TAXUD, TRADE. The group met 3 times to discuss drafts of the consultant study, and 2 times to discuss this IA study. All members of the group were regularly informed and consulted by email.

2.2.        Consultations

Consultations with the EU Member States

The Commission regularly informed Member States in meetings at Council Working Party level on the state of play in the development of EU implementing measures without prejudging in any shape or form the necessary discussion between Commission services. Regular informal meetings with ABS experts of Member States confirmed that the two Member States (ES, DK) that initially indicated their intention to unilaterally move ahead to implement and ratify the Nagoya Protocol, have decided to wait for the presentation of an eventual EU proposal. The broad majority of Member States, particularly those with major user interests (DE, UK, FR), have consistently stressed that they would see the need for an EU-coordinated approach to implementation. The need for an EU-coordinated approach to implementation and ratification was also stressed in an opinion of the Council Legal Service.

Public Consultation

The Commission held a web-based public consultation from 24 October to 30 December 2011 to seek feedback on a list of questions that addressed key aspects of Nagoya Protocol implementation. 43 replies were received that represented a much broader number of respondents, since the majority of replies came from European or international associations with hundreds or thousands of members each. The respondents covered most sectors potentially affected by implement measures under the Nagoya Protocol. All respondents (except a few neutral replies) pleaded for an EU-harmonised approach to user-compliance measures, with a clear majority considering an EU-Regulation as the most appropriate instrument for achieving harmonised implementation. The majority of respondents considered that implementing measures could have positive effects on competitiveness and on administrative burden, but stressed that such effects depend on the specific implementing measures chosen. Industrial users (e.g. pharmaceutical, biotechnology, seeds, health&beauty) stressed their lengthy supply chains and that information about prior informed consent and benefit-sharing arrangements is currently not available at points in the chain where it may be needed. Research institutions stressed the importance of clear, simple and transparent rules and the need for clarifying ABS-related issues at the time of access to avoid difficulties later on. A summary of the public consultation is included in Annex 3.

Ad hoc consultations

DG Environment organised a technical meeting with EU stakeholders on 26 January 2012. It invited all respondents to the public consultation, Brussels-based representatives of stakeholders, and experts nominated by Member States. At the meeting, the Commission presented its summary of the public consultation, whereas members of the consultant team presented tentative findings of their work. Participants used the opportunity to challenge the consultant team on some of their findings.

DG Environment officials held many meetings with representatives of botanical gardens, culture collections, industry federations or individual companies and participated in various expert conferences on the Nagoya Protocol. The consultant team conducted semi-structured interviews with representatives of stakeholders and companies.

Consultations with third countries

In 2011, DG Environment asked several EU delegations in third countries to seek information from major partner countries on the state of play and their concrete ideas for Nagoya Protocol implementation. The feedback received was complemented by more detailed bilateral discussions with Australia, Brazil, India, Japan, Mexico and Switzerland.

Expert study

To support the impact assessment process, the Commission contracted external consultants to analyse the legal and economic impacts of implementing the Nagoya Protocol in the European Union. Information from the consultant study was used as input to this IA. The consultant work included twelve sectoral studies on different groups and sectors utilising genetic resources in the Union. The sectoral studies were complemented by interviews with experts from the groups and sectors studied and overall helped – together with the information already available to the Commission – to understand the relevance of genetic resources to EU users, current approaches to ABS by users, existing bottlenecks, as well as the expectations of stakeholders and their views on main policy options.

2.3.        Impact Assessment Board

The draft Impact Assessment was submitted to the Board on 20 June 2012 and discussed at the Board meeting of 18 July 2012.

The key amendments made to the impact assessment following the issuing of the Board opinion are:

– A clearer description of the international legal and political context through amendments to the introduction and the problem definition of the study.

– A more elaborate explanation of current practices of genetic resources utilisation in the Union.

– A clearer explanation on why a unilateral implementation of the user-compliance pillar of the Protocol is likely to negatively affect the internal market including by providing more specific examples.

– Clarification on the appropriate legal basis for implementing the Nagoya Protocol and more detailed considerations on why binding EU-level measures on access currently would not seem justified.

– Development of more elaborate monitoring indicators linked to the objectives and the proposed implementing measures.

– A general explanation on the rationale behind the design of the policy options considered in this study and particularly how the due diligence option would be implemented, monitored and enforced, and the sanctions envisaged. These additions are complemented by more detailed considerations on eventual impacts and costs.

– More detailed considerations as regards the creation of a level playing field, and the impacts and benefits of the due diligence option particularly for SMEs and effects on the use of public funds.

– A clearer explanation of the rationale for and benefits of introducing a system of 'trusted sources'.

– The results of the public consultation were summarised in much greater detail.

3.           Problem definition

The EU and most of its Member States[5] have signed the Nagoya Protocol and thereby committed themselves to work towards its implementation and ratification. This political commitment is also expressed in statements by the European Parliament, the Council of the European Union, and by the Commission.[6]

Other industrialized countries that have signed are Australia, Japan, Norway, Korea, Switzerland and the Ukraine. The US cannot ratify the Protocol as it is not a Party to the CBD. Only Norway has so far put in place implementing legislation. Switzerland is advanced in developing implementing legislation, but likely to wait with finalization until there is more clarity on the EU's approach. Other major partners (e.g., Korea, Japan) have signaled their intention to develop implementing measures in view of the EU's approach to achieve a level-playing field for their researchers and companies. Australia arguably has the worlds best functioning domestic access framework and would thus benefit from ratification and indeed it has expressed its interest in close collaboration with the EU on user-compliance measures. Nevertheless, like New Zealand and Canada, Australia is engaged in discussion with its indigenous communities as regards rights over resources, including genetic resources. These three countries may not ratify the Protocol before they have significantly advanced their domestic discussion on this matter.

Many countries from the emerging economies and developing countries group had put in place domestic access frameworks prior to the adoption of the Nagoya Protocol. The main political reason for the launching of the Nagoya Protocol negotiation was a perception by these countries that their efforts on access would not be supported by complementary efforts of user countries, such as the EU and its Member States. After the Protocol's adoption and its signature by many industrialized countries, there is now a strong expectation that industrialized countries such as the EU and its Member States will take effective implementing measures, particularly in the field of user-compliance. Some emerging economies and developing countries are now revising their access frameworks in light of the Protocol. Most have little experience with the user-compliance measures required under the Nagoya Protocol. Particularly emerging economies that need to balance provider with user interest (e.g., Brazil, India) have expressed their interest in a close dialogue with the EU particularly on user-compliance measures.

Overall, there is a major expectation that the EU and its Member States will swiftly ratify and implement the Nagoya Protocol. This expectation also presents a major opportunity, since the EU's approach to user-compliance will become a main reference point for user-compliance measures taken by other industrialized countries and in emerging economies. It also seems that failure of the EU and its Member States to ratify and implement the Nagoya Protocol would deepen the frustration of major provider countries, particularly from the so called "mega-diverse" group of countries. This would very likely result in increasing restrictions on EU researchers and companies that wish to access quality samples of genetic resources from these countries and thereby compromise important EU objectives and hamper the commercial and non-commercial interests of EU users (see 3.2.1 below).

The problem addressed in this IA is to identify a legally sound, effective and efficient way of implementing the Nagoya Protocol in the Union, through measures that satisfy our international obligations under the Protocol and that create legal certainty and an enabling context for those involved in research and development on genetic resources in the EU.[7]

3.1.        Implementing the Nagoya Protocol: is the EU legal framework fit for the purpose?

Box 1 sets out a hypothetical, best-practice case of access and benefit-sharing that would be consistent with the basic access and benefit-sharing framework of the CBD.

Box 1: A hypothetical, best-practice case of access and benefit-sharing

A French researcher seeks to collect a little-known marine sponge from the Great Barrier reef in north-eastern Australia for basic research on its genetic and biochemical properties. The researcher logs on to the internet and applies electronically to the Queensland ABS authority for a permit to collect marine sponges for non-commercial research in a specified area of the reef. He receives the permit within ten working days after the Queensland ABS authority has done a basic check on the information provided. The collecting activity takes place after the french researcher has also (electronically) signed the standardised benefit-sharing arrangement for non-commercial research, which is a private law contract under Australian law. The contract allows the french researcher to do non-commercial research on the collected samples, it excludes any use for commercial purpose. He must put a reference sample of each collected species in the collection of Queensland University and also commits to sending them a copy of publications resulting from research on the collected sponges. Publications must mention the existence of the benefit-sharing contract and the use restrictions on the samples. The researcher is allowed to pass on samples to other researchers provided that these also agree to be bound by the conditions set out in the benefit-sharing contract.

A small biotech company in Germany is specialised in developing molecules for use in cancer medication. One of its scientists reads a paper published by the above french researcher on molecules from marine sponges from the Great Barrier reef, and considers that these molecules could help in an ongoing project. He gets in touch with the reference collection at Queensland University and applies for access to the samples identified in the publication, he indicates the commercial interest and accepts paying the standardised small fee for preparation and shipment of the samples. He also signs a standardised benefit-sharing contract that allows patenting of discoveries made in return for a commitment to sharing 2% of economic revenues that may result from an invention. The german biotech company discovers that one of the samples from Queensland University contains a molecule that is highly reactive with a specific type of tumor cells. Through various steps and modifications, company scientists manage to suppress unwanted properties of the molecule, while maintaining its reactivity. The company successfully obtains a patent on this discovery.

Practice has shown, however, that effective ABS transactions may face typical "problem" situations. For example:

– Genetic resources are collected in violation of the laws of the country of origin. International law would not support a claim by a representative of this country in the court of an EU Member State where the illegally acquired resources are utilised.

– The responsible authorities of a country grant a permit for bioprospecting in indigenous territories without prior consultation with indigenous representatives. Is the European researcher allowed to use the obtained samples or not?

– A benefit-sharing contract between a provider and a research institute in the EU excludes commercial uses, samples are nevertheless passed on to other users for applied research without mentioning the ABS-related restrictions. One of these samples is used some years later by a company for developing a nature-based product. The company that successfully sells its nature-based product is alleged of "biopiracy". Is the lack of awareness by that company an acceptable defense? Is the person that broke the information-chain liable?

Access and Benefit-sharing according to the Nagoya Protocol

The CBD does not provide clarity how its Parties must address these and other "problem" situations. The Nagoya Protocol is much more detailed. It rests on two main pillars.

The access pillar leaves Parties discretion whether they wish to regulate access, and require prior informed consent and benefit-sharing for the use of their genetic resources or not. However, if a Party decides to do so, then it must implement the fairly detailed "international access standards" set out in the treaty. The Protocol also clarifies that states must engage with their indigenous and local communities in case access is sought to traditional knowledge or to genetic resources held by these communities. Main Protocol ideas in relation to access include: (i) government authorities or indigenous representatives must give their prior informed consent before access can take place, (ii) specific benefit-sharing obligations must be set out in private law contracts between a provider and a user, and (iii) access frameworks must be clear and transparent, based on non-arbitrary rules, and result in reliable and timely decisions, in a cost-effective manner.

The discretion of Parties to require prior informed consent or not means that states may ratify the Nagoya Protocol without requiring prior informed consent and benefit-sharing for the use of genetic resources over which they hold sovereign rights. Nevertheless, Parties that choose to require prior informed consent must comply with the Protocol obligations on access; it is not possible to comply with these access-provisions through voluntary measures.

The user-compliance pillar of the Protocol obliges all Parties to the Protocol to take measures that only legally acquired genetic resources and associated traditional knowledge are utilized within their jurisdiction. Parties must monitor the compliance of users within their jurisdiction and designate one or more checkpoints for this task. They must also take appropriate, effective and proportionate measures in cases where users within their jurisdiction do not comply with their ABS-related obligations. Parties must also ensure that disputes arising from specific benefit-sharing contracts can be taken to court.

It is not possible for a Party to comply with the user compliance obligations of the Protocol without taking legally binding measures. However, different than in the case of access, the user-compliance provisions of the Nagoya Protocol leave Parties quite some discretion on the type and mix of implementing measures chosen.

The Nagoya Protocol does not make an explicit statement on its temporal application. Academic commentators hold different views on this issue.[8] Parties must therefore address the temporal application of their implementing measures: whether these will apply only to genetic resources and associated traditional knowledge acquired after the Protocol's entry into force (expected for 2014) or also to uses of genetic resources and traditional knowledge that were acquired after the entry into force of the CBD in December 1993.

Further aspects that must be addressed concerns: (a) the obligation of Parties to respect existing specialized ABS instruments[9] and to establish a mutually supportive relationship with other relevant instruments and processes, (b) the obligation to promote and encourage non-commercial research, (c) the obligation to pay due regard to genetic resources with pathogenic properties, and (d) to consider the special characteristics of genetic resources for food and agriculture. Another important issue concerns (e) the management of relations with non-Parties to the Protocol.

The Protocol also obliges its Parties to establish a National Focal Point on ABS to liaise with the international Secretariat and to respond to information requests by stakeholders. Parties must also designate one or more Competent National Authority responsible for granting access and advising on applicable procedures for requiring prior informed consent and entering into mutually agreed terms. Parties may designate a single entity to fulfill the functions of both focal points and competent national authority.

Is EU law fit for the purpose?

The Nagoya Protocol is a so called "mixed agreement". It allows both the Union and the Member States to become Parties to the treaty at the same time. In this case, the Union and each of its Member States must be able to demonstrate for itself full compliance with all Protocol obligations. How this is achieved is an entirely internal matter to the EU and its Member States. In principle, the spectrum of possibilities ranges from the adoption of legally binding measures only at the level of the Member States with supportive, soft measures at Union-level to a full harmonization of legally binding measures at Union level supported by soft measures at the level of the Member States. The concrete approach chosen for implementing the Nagoya Protocol in the EU and its Member States rests on legal and practical considerations: any EU-level intervention presupposes the existence of Union competence and the demonstration of added value that will not be achieved through implementing measures under the sole responsibility of Member States.

The Protocol's access pillar is not implemented at the Union-level, as currently no Union-level law would establish whether access to genetic resources in the EU requires prior informed consent and benefit-sharing. Some Member States strongly feel that the decision whether to require prior informed consent and benefit-sharing or not is an issue of national sovereignty and cannot be regulated in Union law. Nevertheless, if a Member States chooses to require prior informed consent and benefit-sharing, its domestic access framework could become relevant to the acquis: EU nature legislation seems indirectly relevant for collecting activities in the wild. Other EU laws regulate the exchange of specific genetic resources used for agriculture or health purposes. It can also not be excluded that Member State access systems could come in tension with fundamental principles of non-discrimination, or that widely differing approaches to access could negatively affect the freedom of researchers or the free movement of goods.

A survey of ABS laws and policies of eight EU Member States conducted in preparing this IA[10] showed that only two Member States (ES, BG) have so far developed access legislation. Other Member States have explicitly decided not to require prior informed consent (NL). Upon ratification of the Nagoya Protocol, further Member States might decide to require prior informed consent in the future. France, for instance, has indicated that it is working on domestic access legislation at least for its overseas territories. Member States that decide to move into this direction must comply with the detailed access-provisions of the Nagoya Protocol. In doing so, they can also build on experience with domestic access frameworks in, for example, Australia or Latin America.

The Protocol's user-compliance pillar is not implemented at Union-level. Nevertheless, the activities that must be regulated are closely related to the EU internal market. Differing obligations on users to manage ABS-related information in different Member States, for example, could create significant costs and barriers for EU researchers and companies that are active in more than one Member State. Furthermore, some user measures, particularly where these would require changes in product approval procedures, cannot be implemented without changes to the acquis.

The above-mentioned survey of ABS laws and policies of eight EU Member States showed that none of the Member States surveyed has so far taken user-compliance measures as required under the Protocol. Member States legislating on user-compliance would have significant discretion how to design such measures. Only few examples are in place worldwide (eg, Norway) or under development (eg, Switzerland), and these are based on conceptually different intervention logics.

The analysis concludes that:

– the access pillar of the Nagoya Protocol establishes detailed obligations on Parties that decide to require prior informed consent and benefit-sharing for the use of their genetic resources. A main problem addressed in this study hence is to analyze whether it seems appropriate to leave this part of the Protocol implementation to the Member States or whether an EU-level intervention for implementing the access pillar of the Protocol would create clear added value.

– The user-compliance pillar requires legally binding measures but leaves significant discretion on the design and mix of implementing measures chosen. One main problem addressed in this study is to analyze whether it seems possible to leave this part of the Protocol implementation to the Member States or whether an EU-level intervention for implementing the user-compliance pillar of the Protocol is needed.

3.2.        Current practices of access to and utilization of genetic resources and associated traditional knowledge (the "EU baseline")

ABS is a new field of policy and activity, thus data limitations have been encountered in the course of this study. Gaps exist particularly with respect to the amount of genetic resources utilised within sectors and the economic relevance of such utilisation within the EU. Nevertheless, the sectoral studies conducted in support of this IA provide a thorough understanding of the current practices of access to and utilization of genetic resources and associated traditional knowledge within the EU. This section highlights important features of these practices. A much more detailed description is found in Annex 8 to this study and served as the "EU baseline" for identifying suitable implementing measures and for understanding their impacts.

3.2.1.     Access and use of genetic resources and associated traditional knowledge in the EU today

Genetic resources are utilized for a wide range of purposes, by a wide range of different actors with different interests. Traditional knowledge associated with genetic resources is relevant in specific cases but of limited relevance overall.

Multiple actors intervene at different stages of the genetic resources value chain. This value chain ranges from collecting, storing, and making available genetic resources for research and development, over basic and applied research on genetic resources, to the eventual development and commercialization of products and services.[11] Box 2 introduces the main actors and their place in the EU genetic resources value chain and explains how genetic resources and associated traditional knowledge are important to them (Annex 8 contains more information).

The importance of genetic resources for the EU varies across sectors. For some EU actors use of genetic resources is their core-business. This includes collections and some academic researchers. However, it also includes all commercial uses that by definition innovate and develop products on the basis of organisms, genes or biochemicals, such as plant and animal breeding companies, biotechnology companies, or the bio-control industry. Other actors use material found in nature mainly for its informational value, when searching for molecules or genes with interesting properties that might help meeting specific challenges in product development (e.g. industrial biotechnology or pharmaceutical industries). Other actors again build products on extracts from material found in nature. This is in particular the case for some companies in the cosmetics or food and beverage industry. A disruption of the supply of genetic resources from the wild and from collections would negatively affect all EU users, although to different degrees. For plant and animal breeders and the biocontrol industry it would effectively disrupt their business. For pharmaceutical or industrial biotechnology companies it would limit the range of available sources of information and inspiration in R&D activities and thus lower their innovation potential. Companies in the cosmetics or food and beverage industry would need to search for different sources for the needed extracts, identify synthetic substitutes or modify the recipes used. They might also need to stop the sale of products that are branded as based on specific natural ingredients.[12]

Traditional knowledge about properties and functions of plants and animals in relation to their environments is generally recognized as important, particularly as regards adaptation to climate change. Such knowledge may provide lead information in scientific research for interesting properties of plants or species. Overall, however, EU users make only limited use of traditional knowledge associated with genetic resources.[13]

Box 2: Main actors and their placement in the EU genetic resources value chain

Botanic gardens, hold documented collections of living plants for scientific research, conservation, display and education. 550 botanic gardens out of 3021 worldwide are within the EU and the EU botanic gardens are amongst the largest in the world (more than 50% of living plant accessions are collected in Europe). Botanic gardens collect some of their new samples in the wild, but also exchange samples with other botanic gardens. They also provide samples to outside users.

Culture collections acquire, conserve and distribute microorganisms and information about them to foster research and education. Among the 601 culture collections worldwide 207 are located in Europe and 161 in the EU. Culture collections rely heavily on the collecting of new material from the wild (45% of their acquisitions); since most microbial genetic resources are still unknown and since material collected must be stored alive.

Gene banks[14] collect, process, store, and distribute biological specimens and associated information to support scientific research. Plant gene banks ensure that the varieties and landraces of crops that underpin our food supply are secure and that they are easily available for use by farmers, plant breeders and researchers. Animal genebanks mainly fulfill conservation purposes and are less involved in the exchange of genetic material for breeding purposes. Gene banks in the EU make a major contribution to the conservation and utilisation of cultivated / domesticated diversity and related wild species.

Academic research institutions conduct basic research on genetic resources to identify its taxonomic nature or new properties or ingredients. Academic researchers frequently collect genetic resources in the wild. Their research on genetic resources, including through consideration of associated traditional knowledge, is critical for biodiversity conservation. Some findings of academic researchers are later used in product development.

The farm animal breeding industry breeds animals for agriculture production. Its most important species are cattle, sheep, goats, pigs and chicken. European breeders are world leaders. They usually source material from within their company or from connected farmers. The industry currently makes little use of species found in the wild. Its future demand for wild species is, however, expected to increase because of climate change.

The plant breeding or seed industry[15] develops seed grains, cuttings, seedlings, and other plant propagation material as an essential input for crop production, especially for agricultural, vegetable and fruit plants. Plant breeders depend on the utilisation of genetic resources. Most of the genetic resources used exist in ex-situ collections. Indeed, breeders base their activity on a fairly small number of species developed over decades (100-200 species in floriculture and approximately 500 species as house plants). In 2009, the EU had a global market share of more than 20%.

The biocontrol industry develops and sells techniques for crop-protection that uses 'biocontrol agents' (ie select predatory or parasitic living organisms) to control pests. This industry entirely relies on the utilization of genetic resources. They heavily source new material from the wild, but some also from ex-situ collections. Europe is the largest market in the world for this industry in constant growth.

The cosmetics industry develops, manufactures and sells traditional cosmetics products (e.g. perfumes, make-up) and personal hygiene products (e.g. shampoos, soaps, tooth-care). The overall demand for wild genetic resources in the sector is limited. However, collecting activities in the wild are very important for a niche market. European cosmetics companies are among the 10 world leaders of the sector. The EU has a 50% share of the global market.

The food and beverage industry is one of the largest industrial sectors in the world and the largest manufacturing sector in the EU. It covers a wide range of activities from farming to food processing. However, parts of the industry rely on genetic resources collected in the wild for developing new products on the basis of new natural ingredients and extracts.

The horticulture industry includes activities that range from amateur plant breeding to commercial production for ornamental purpose. New products are developed by utilising genetic resources that are mainly taken from ex situ collections and sometimes collected in the wild. The size of the industry in Europe and worldwide is relatively small.

Companies in the field of industrial biotechnology develop, manufacture and sell products and services that use or contain biological material as catalysts or feedstock to make industrial products. The industry relies by definition on the use of genetic resources and heavily invests in R&D. The EU is one of four established biotechnology centres globally, next to the US, Canada and Australia. 90% of new material in this sector is taken from the wild.

The pharmaceutical industry engages in the discovery, development, and manufacture of drugs and medications. It partially relies on access to genetic resources collected from the 'wild' to identify promising compounds for product development. Biotechnology-based pharmaceuticals account for an increasing share of the market and access to genetic resources is particularly important for segments of the industry involved in natural products research. In the last 30 years, 26 percent of new approved drugs were either natural products or had been derived from a natural product. The future trend is unclear. The market for pharmaceuticals is one of the biggest world-wide, dominated by the US, and followed by the EU and Japan.

As regards the sourcing of genetic resources and associated traditional knowledge, EU users may be grouped in two broad categories. On the one hand side, there are collecting activities in the wild, on the other hand side, users acquire samples and related information from ex situ collections (gene banks, seed banks, databases). The discovery of new or rare genetic diversity in nature is of great interest for scientific research and some ex situ collections. It is therefore mostly university-based researchers and scientists affiliated with ex situ collections that engage in bioprospecting activities, mostly with an explicitly non-commercial purpose. Commercial users of genetic resources, in contrast, rarely collect genetic resources in the wild, except in some particular niches of innovation, such as the biocontrol industry, parts of industrial biotechnology, and some small pharmaceutical biotechnology companies. Overall, however, it seems that the interest of commercial users to engage in bioprospecting has declined. In part this reflects reluctance to directly deal with provider countries, in part collecting activities in the wild have become less important for some of the economically important and research-intensive sectors such as the seed industry and a great proportion of the pharmaceutical and cosmetics industries.[16]

In contrast, the research done for this study shows that EU ex situ collections play a fundamental role in the EU user chain, acting as direct providers to both commercial and non-commercial users. In fact, several commercial sectors including the horticultural and seed industry source almost all of their genetic resources from ex situ collections. Private and in-house collections are also important in various sectors including the horticulture and seed industry, where in-house collections are integral to the plant breeding process. Non-commercial sectors rely on ex situ collections even more strongly. This is particularly the case for the academic research sector, which often owns or is affiliated to particular ex situ collections for the purposes of scientific research. However, it is also the case for research done in botanical gardens or culture collections (e.g. taxonomic work). Such research often relies on genetic material exchanged with other collections, also to keep their collections and conservation activities alive.[17]

Box 3: The Korean National Biodiversity Research Institute (NIBR)

The NIBR was established in 2007. It is mandated to conserve Korean biological resources that are considered as national assets and precious source materials for the country's biotechnology industry. NIBR provides the Korean bio-industry with access to samples and/or information on wild species for basic and applied research. NIBR has developed a national biological resources database network. It supports policy development on biodiversity issues and also serves as an educational centre for the general public to raise awareness about the importance of conserving and wisely using biological resources. The Institute collaborates with various international partners such as botanic gardens, museums or biological institutes to exchange samples and further enrich its own collections as well as to exchange staff and experience, to establish educational and training programmes, and to engage in joint research activities

Source: <http://www.nibr.go.kr/english/main/main.jsp>

3.2.2.     How Demand for genetic resources and associated traditional knowledge will evolve

The research undertaken for this study indicates that demand for access to ‘wild’ genetic resources has declined in most sectors, while interest in research and development on genetic resources has increased overall. The future demand for genetic resources is therefore expected to grow or at least to remain stable. Securing continued and improved access to genetic resources therefore seems a major EU priority. As explained above, this also suggests that the EU has a genuine interest not to frustrate important partners particularly from the mega-diverse group of countries. More restricted access practices in provider countries in the future could compromise important EU objectives (see Box 4) and also hamper the commercial and non-commercial interests of EU users.

Overall, the future demand for traditional knowledge associated with genetic resources is likely to decline even further. Such knowledge will remain relevant for some niche markets in the cosmetic and food industries. However, advances in scientific research methods make traditional knowledge less and less relevant as lead information for discovering interesting properties of genetic resources found in the wild. This latter finding applies to all research-intensive value chains, including the pharmaceutical, green, red and white biotechnology[18].

Box 4: Some examples how genetic resources utilisation contributes to public goods

Future breeding programmes: Conserving and documenting wild relatives of plant and animal species for future breeding programmes is widely considered as an insurance against the impacts of climate change on food production systems.

Source: <http://www.fao.org/docrep/meeting/022/mb393e.pdf>

Environmentally sustainable pest control: Pest control with biological agents is an important component of integrated pest management and reduces the use of plant protection products such as pesticides.

Source: <http://lamar.colostate.edu/~hufbauer/Pages/biologicalcontrol.html>

Identifying active compounds for medicine development: In April 2012, the Danish company LEO obtained FDA-approved for a topical gel against a precursor to skin cancer. The main active ingredient of this gel is derived from the Euphorbia peplus plant found in Australia, after an extraction, purification and crystallization process of about five months. LEO will now seek market approval in other major markets.

Source: <http://www.leo-pharma.us/>

Genetic resources also play a major role in developing nature-based renewable energy to face the energy challenges of a growing word population while ensuring biodiversity and environmental protection and make the transition to a post-petroleum economy.

Source: Commission press release on the "Bioeconomy for Europe" (Memo/12/97 of 13 February 2012)

3.2.3.     The EU genetic resources value chain

The beginning of the EU genetic resources value chain is characterized by long-term perspectives, low-risks, low-costs, and the predominance of public funding; while the end of the genetic resources value chain is characterized by high investments, high costs and high-risks.

Genetic resources, and sometimes also associated traditional knowledge, are of diverse importance across and within sectors, be it for commercial or non-commercial activities. Analytically, it is useful to distinguish between activities and players at the beginning of the genetic resources value chain ("upstream") and activities and players at its end ("downstream"). Those involved in "upstream" activities (collecting in the wild, description of collected material, storing in collections) face many common challenges in relation to access and benefit-sharing, the same goes for those involved in "downstream" activities (basic and applied research, product development and commercialisation).

Actors at the beginning of the genetic resources value chain (mostly collections and academic researchers) are in direct contact with the laws and authorities of provider countries and must play a key role in establishing ABS-related information and linking it to specific samples collected or stored. Upstream actors are heavily dependent on public funding. In itself, their activity is neither costly nor risky. These first actors pass on samples of genetic resources and first research results to other users that engage in basic or applied research. Actors situated at the end of the genetic resources value chain make substantial investments in developing new products. They often take on huge economic risks. They engage in often lengthy development activities with uncertain outcomes and work in highly competitive markets. Many of these downstream actors are strongly interested in collaborating with academic research to reduce risks and accelerate product development. These downstream actors largely depend on material and information passed on to them from earlier users in the chain, including in relation to ABS.

EU users of genetic resources are world leaders or play important roles globally at the high-value end of the genetic resources value chain as well as at its beginning

EU collections, particularly culture collections and botanical gardens, are amongst the largest in the world, holding millions of samples and undertaking yearly thousands or even millions of exchange transactions between themselves as well as with collections outside the EU. Collections are the major supplier of research and development material and related information for users further down in the chain. As regards the latter, several EU companies, especially the pharmaceutical, breeding, food or biotechnology industries are world leaders in their field with substantial market shares. They contribute substantially to the EU's gross domestic product.

SMEs are very important in some sectors using genetic resources (e.g. biocontrol, plant and animal breeding, horticulture), they are also important in some steps of the genetic resources value chain (e.g. cosmetics, food, pharmaceuticals) where the major investments are made by large, multinational corporations. In sectors such as cosmetics or food, SMEs and micro-enterprises are dominating the market close to some multinational companies that are world leaders. In other sectors, such as the breeding or biocontrol industries, particularly the medium-sized companies are themselves international players.

3.2.4.     ABS best practices and voluntary measures

Since the entry into force of the CBD in 1993, some EU users have engaged in the development of codes of conduct, the formalization of transactions of genetic resources through material transfer agreements, and the improvement of documentation systems. Primarily actors in the up-stream part of the EU user chain (particularly culture collections and botanic gardens) have taken significant steps to bring their conduct in line with the ABS requirements of the CBD and to respect the laws of provider countries. Further advances in this regard have been hampered by the lack of appropriate financial and human resources of individual collections. As regards downstream activities, ABS best practices exist but appear to be of less significance overall. This reflects some variability in the level of awareness and commitment to ABS-compliance practices in different sectors using genetic resources as well as the fact that existing voluntary codes have different levels of ambition and detail. Some examples of ABS best practice codes of conduct are described in Box 5. Overall, it seems important to consider existing voluntary initiatives on ABS as stepping stones for a credible system of EU implementing measures.

Box 5: Examples of ABS best practice codes of conduct

Code of conduct developed by the World Federation for Culture Collections: The code of conduct (“MOSAICC”) translates the CBD provisions on ABS into practical procedures for facilitated access to and transfer of microbial genetic resources. One important part addresses the collection of new samples of microorganisms in the wild. The code of conduct further promotes the systematic use of a Global Unique Identifier to be attached to any item accessed in situ either at the point of isolation of the microbial genetic resource or at the point of deposit in the culture collection. MOSAICC also seeks to achieve full transparency for all transactions from and between culture collections, ranging from the request of specific ABS-related information, to the use of model contracts, and standardised procedures for the transfer of microbial genetic resources. While MOSAICC falls short of measures for monitoring the user chain but, its implementation helps that members of the WFCC have readily accessible information on the origin and conditions related to any microbial genetic resources they hold, receive or transfer. It is expected that this will greatly facilitate efforts of tracking the use of microbial genetic resource throughout the value chain.

Source: <http://bccm.belspo.be/projects/mosaicc/#brochure>

The International Plant Exchange Network (IPEN): IPEN was initially developed by the association of botanic gardens in german speaking countries. Since 2002, IPEN is managed by the European Consortium of Botanic Gardens. Presently, 150 botanic gardens worldwide actively participate in the network, of which 130 are based in the EU; this is about one-fourth of botanic gardens in the EU. The network facilitates the exchange of living plant material between its members, while respecting the ABS requirements of the CBD. The Code of Conduct addresses four main aspects: 1) ensuring the legality of living plant material that enters the network, 2) clear terms and conditions for the circulation of material within IPEN, 3) sharing benefits arising from non-commercial use with countries of origin, 4) transfers of plant material to users outside the network.

Source: http://www.bgci.org/resource/ipen/

IFPMA “Guidelines on Access to Genetic Resources and Equitable Sharing of Benefits Arising out of their Utilization”: The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) represents national industry associations and research-based pharmaceutical, biotechnology and vaccine companies from both developed and developing countries. It has developed “Guidelines on Access to Genetic Resources and Equitable Sharing of Benefits Arising out of their Utilization”. These guidelines set out best practices to be followed by companies that engage in bioprospecting, they do not take into consideration sourcing from intermediaries. One recommended best practice is to obtain prior informed consent for the acquisition and use of genetic resources controlled by a country or indigenous people. Another is to disclose the intended nature and field of use of the genetic resources when obtaining prior informed consent.

Source: <www.ifpma.org>

BIO "Guidelines for Bioprospecting": The Biotechnology Industry Organization (BIO) is the world's largest biotechnology association. Its "Guidelines for Bioprospecting" seek to assist BIO members involved in bioprospecting activities. They envision that BIO members would enter into a “Bioprospecting Agreement” before collecting physical samples of genetic resources in situ or accessing such resources maintained ex situ. Such agreement would address the granting of prior informed consent and list terms and conditions governing the collection and use of the genetic resources. The guidelines further stipulate that records should be maintained on the handling, storage and physical movement of collected material and that companies should be prepared to share such records upon request with the country providing the genetic resources. The guidelines also stipulate that companies should not accept samples of collected genetic resources from a third party that is not able to provide evidence of compliance with PIC and established conditions governing the use of a sample.

Source: <http://www.bio.org/articles/bio-bioprospecting-guidelines>

3.3.        The EU's right to act and justification

The Nagoya Protocol to the Convention on Biological Diversity is a global environmental agreement that establishes a legally binding framework for maximising the benefits of genetic resources use in favour of the conservation and sustainable use of biological diversity worldwide. The system of EU measures for implementing the Nagoya Protocol can therefore be based on the Union's environment competence. The creation of an EU-wide system of user-compliance measures could, in principle, also be based on the Union's competence for the internal market as it avoids negative effects on the internal market in nature-based products and services that would result from a fragmentation of user-compliance systems in the Member States. Nevertheless, given the context and overarching objective of the system of measures, a use of the Union's environment competence seems more pertinent.

An EU-harmonised approach to implementing the user-compliance pillar of the Protocol would provide for legal certainty and establish a level playing field for all actors in the EU genetic resources value chain, minimising their risks of operation and maximising research and development opportunities for researchers and companies. It would also prevent situations where differences in user-compliance obligations between different Member States create costs and barriers for researchers and companies that are active in more than one Member State. Notably, stakeholders unanimously supported an EU harmonised approach to user-compliance in the public consultation.[19]

However, the EU competence is not so evident in addressing the provisions of the access pillar of the Protocol, Some Member States strongly feel that the Union does not have competence to decide whether access to genetic resources over which Member States hold sovereign rights shall in the future be subject to prior informed consent and benefit-sharing requirements or not. Arguably, Union competence is much clearer in case where a Member State has decided to require prior informed consent and benefit-sharing and the specific design of the domestic access framework of that Member State will need to respect fundamental treaty disciplines on non-discrimination or sectoral EU laws for instance in the field of the exchange of agricultural genetic resources. Whatever the case may be, it seems that there is currently no need for the Union to take binding Union-level measures on access.  So far, only two Member States have  legislated on access, there is very limited practical experience with the functioning of their access frameworks, and no indication that these would raise issues under the acquis. Thus, in ratifying the Nagoya Protocol the Union may choose to implement measures that repond to only some of the Protocol's requirements, leaving others to its Member States.

4.           Objectives

4.1.        General objective

The general objective of this IA study is to identify appropriate measures for implementing the Nagoya Protocol in the EU and to enable the Union to ratify and comply with the Protocol.

4.2.        Specific objectives

Union ratification of the Nagoya Protocol and appropriate implementing measures should contribute to the following specific objectives:

– Support the conservation and sustainable use of biological diversity within the EU and worldwide;

– Provide EU collections, and researchers and companies in Europe with improved and reliable access to quality samples of genetic resources at low cost and with high legal certainty for acquired material;

– Maximise opportunities for research, development and innovation in nature-based products and services, while establishing a level playing field for all EU users of genetic resources, with particular benefits for SMEs and for publicly funded, non-commercial research;

– Protect the rights of indigenous and local communities that grant access to their traditional knowledge associated with genetic resources in accordance with the domestic laws of Parties to the Nagoya Protocol;

– Fully respect other international specialised access and benefit-sharing instruments and be mutually supportive with other relevant international instruments and processes.

4.3.        Operational objectives

The chosen implementing measures should also support achieving the following operational objectives:

– Establish a credible system for user-compliance measures;

– Improve information on access and utilisation of genetic resources in the EU;

– Minimise overall implementation costs and burdens, particularly for affected SMEs.

5.           Policy Options

The policy options developed and considered for the purpose of this study were drawn from a range of sources: the Nagoya Protocol, existing legislation in third countries, EU experts, academic literature, etc. The main criteria applied was that an option would need to implement particular aspects of the Nagoya Protocol and that the totality of options developed would need to address all aspects of the Protocol implementation. The main options analysed in this study were also, where appropriate, discussed with experts and stakeholders to sharpen their focus and to deepen the understanding of their eventual impacts.

Table 1 summarises all policy options that were considered in the course of this IA. The table highlights those options that are described and analysed in detail in the report. More options were identified in the initial screening of options, however they have been discarded. Annex 4 presents more information on options that were considered but discarded and explains clearly the reasons for discarding them. The main motivations related to doubts about EU competence, no apparent need to intervene at EU-level, or apparent and major legal and practical difficulties.

Table 1: Overview of all policy options considered for this IA (* identifies discarded options)

Business as Usual || - No Union ratification* - Union ratification without implementing measures by Union or Member States (BAU)

Access pillar || Binding measures at MS level || - No EU action (A-1) - EU platform (A-2)

|| Binding measures at EU-level || - EU-wide waiver of PIC requirement* - EU-wide minimum standards on access to genetic resources* - EU-wide minimum standards on access to traditional knowledge*

User-compliance pillar || Binding measures at MS level || Member States take binding measures with soft coordination at EU-level (UC-1)

|| Binding measures at EU-level || - Amending EU legislation on recognition of judgements* - Broad understanding of traditional knowledge associated with genetic resources* - Prohibition on EU nationals to collect in violation of third country laws* - Prohibition on botanical gardens, gene banks and culture collections to include illegally acquired samples into their collection* - General due diligence obligation on EU users (UC-2) - General due diligence obligation on EU users and system for formal recognition of collections as "trusted sources" (UC-3) - Prohibition to utilise illegally acquired genetic resources and "downstream" monitoring (UC-4)

Temporal application || In case of binding EU-level measures…decision on - Application of binding rules to future acquisitions of genetic resources (T-1) - Application of binding rules as of entry into force of the CBD in 1993 (T-2)

Complementary measures || - Bilateral agreements between EU and major provider countries or regions (C-1) - Sectoral codes of conduct and contractual model clauses (C-2) - Technical tools for tracking and monitoring (C-3) - Awareness raising and training activities (C-4) - Obligation on those collecting genetic resources in Member States with a free access policy to place reference samples in identified collections*

As regards business as usual, the study considered two distinct options: first, the Union decides not to ratify the Protocol and second, the Union ratifies the Protocol but implementing measures are not taken neither at Member State nor at Union level.

Different options are considered for implementing the Protocol's access pillar and for implementing its user-compliance pillar. To fully implement the Protocol, one access-option and one user-compliance option must be chosen. For both categories of measures, the study analyses a situation where binding measures are only taken at the level of the Member States as baseline for identifying the value added of a possible EU-level intervention.

In the case of support for binding EU-level rules, a further decision is needed on the temporal application of such rules.

To complete the picture, the IA also analyses complementary measures that could be combined with the main options on access and on user-compliance to enhance their effectiveness and to lower costs. The value added of selecting one or all of these complementary measures depends on primary choices on access and on user-compliance.

5.1.        The Business as Usual (BAU)

Option BAU: Union ratification without implementing measures at Union or Member State level

As shown in the problem definition, main obligations of the Nagoya Protocol are currently neither implemented at Union level nor by the Member States. If the Union ratifies the Protocol without action at Member State or Union level, it will be in breach of its international obligations. This would expose the Union to potential challenges under the Protocol's non-compliance mechanism.[20] As one likely consequence, European collections, researchers and companies would face more restrictive access conditions in third countries. The "EU baseline" shows, however, that EU users depend on reliable conditions for access to quality samples of genetic resources. Union non-compliance would also have broader consequences for the EU's credibility in global biodiversity policy-making and could undermine the effectiveness of the CBD as the main global framework for addressing the dramatic loss of species and habitats worldwide.[21] Union ratification of the Nagoya Protocol requires implementing measures at Member State or Union level. This option is therefore not further analyzed in this IA.

The EU baseline of current user practices as described in the problem definition and further detailed in Annex 8 constitutes the main reference point for assessing and comparing all other options analyzed in this IA.

5.2.        Options for addressing the Access pillar of the Protocol

Option A-1: No EU level action

Option A-1 leaves it entirely to the discretion of Member States whether to require benefit-sharing or not, and if so, how to comply with the relevant obligations of the Nagoya Protocol. It reflects that currently no Member State has an operational access framework in place and that most Member States consider it outside of Union competence to determine through Union law the legal status of genetic resources under the sovereignty of Member States.

Option A-2: EU platform for discussing access to genetic resources and sharing best practices

The establishment of an EU platform on access to genetic resources would be a flexible way for discussing access practices between EU ABS focal points, competent national authorities, and EU stakeholders. Deliberations would not be legally binding on participants and could include: access to genetic resources in Member States requiring PIC and MAT; simplified access for non-commercial research; access practices of EU ex-situ collections; access of EU stakeholders in non-EU countries; and the sharing of best practices. The deliberations of this platform would also help in identifying a need for EU-level measures on access.

5.3.        Options for addressing the User-Compliance pillar of the Protocol

Each of the four options presented would apply to the utilisation of genetic resources and to traditional knowledge that is directly associated with such resources. Each option also addresses relevant monitoring measures, sanctions, and administrative aspects.

Option UC-1: Open method of coordination

This option leaves maximum discretion to Member States on how to implement the user-compliance provisions of the Nagoya Protocol. Supportive EU-level coordination would aim at harmonising the approach to implementing measures taken by the Member States. Coordination could, for instance, include the basic approach to user-compliance taken by Member States, the choice of checkpoints for monitoring user-compliance, the type of information that would need to be collected or disclosed, and who would carry the burden of information.

Option UC-2: Self-standing general due diligence obligation on EU users

Under this option EU users would need to take steps to the best of their ability to ensure that genetic resources and associated traditional knowledge utilised have been acquired in line with access laws of provider countries and that resulting benefits are fairly and equitably shared. This due diligence obligation would apply to all activities that constitute "utilization of genetic resources" as defined in Article 2(c) Nagoya Protocol. This means to all conducting research and development on the genetic or biochemical composition of genetic resources within EU jurisdiction (i.e. basic research, applied research, product development). The basic due diligence obligation and its core elements would be set out in an EU Regulation.

An important feature of the due diligence concept is that it does not establish an absolute obligation of result, but only requires meeting a reasonable standard of care. For example, it would not constitute a breach of the obligation if a user has been diligent but it eventually turns out that a specific genetic resource utilised was illegally acquired in a provider country by an earlier actor in the chain. The required standard of care under a due diligence system varies depending on the type of user, its capacity to take measures, its placement in the genetic resources value chain, or sectoral characteristics. What is reasonable will also evolve over time and may, for example, reflect new developments in codes of conduct or best practices in a sector, or progress in technical tools for tracking and monitoring genetic resources flow.

Option UC-2 foresees that the implementation of (existing or future) best practice codes of conduct groups of users (eg., botanical gardens, cosmetics industry, breeding industries) can be considered as evidence of compliance with the due diligence obligation. To support consistent implementation, the Commission would complement the Regulation with guidance documents for specific groups of EU users. Monitoring of user compliance with the due diligence obligation could focus on observable activities within EU jurisdiction. It would be proportionate under this system to oblige users of genetic resources to declare at identified points that they (have) exercise(d) due diligence.

Suitable points for such declarations are, for instance, the receipt of public research funds or when users intent to market a product. Such declarations would be made upon the occasion of the marketing of a product but formally independently from eventually needed product approval permits. The declarations would be made to the competent national authorities of Member States designated for the purpose of implementing the EU Regulation, they would not be made to the authorities eventually involved in granting a permit. Information about user-compliance could also be included in regular company audit reports. Furthermore, designated Member State authorities would be empowered to do ad hoc compliance checks on users. Such compliance check would be undertaken on a risk-based approach. Competent authorities would check compliance with the obligation of users to make declarations as well as compliance with the due diligence obligation more generally. Checks could include the gathering of information on due diligence measures taken, the check of documentation on how due diligence was exercised in specific cases as well as the physical inspection of sites. In case of non-compliance with the Regulation users would be subject to penalties that should includes administrative fines, but might also include in certain situations the confiscation of illegally acquired genetic resources. The competent national authorities of the Member Statess would be obliged to regularly report in summary form to the Commission on due diligence declarations received and checks and eventual findings made. and to the EU competent national authority. The Commission would make  information on the main features and the performance of the EU's due diligence system available to the global information sharing portal established by the Nagoya Protocol (the so called "Access and Benefit-sharing Clearing House Mechanism").

Given the importance of the details for the reliable functioning of the system and for creating legal certainty to stakeholders, an EU Regulation would seem appropriate to ensure the highest level of harmonization and avoid the existence of different approaches to implementation between Member States.

Option UC-3: General due diligence obligation on EU users complemented with a system to formally recognize collections as "trusted sources" of genetic resources

Option UC-3 has two elements. It combines a due diligence system as described in Option UC-2 with a system to identify collections with control measures in place to assure that only well documented samples of genetic resources are made available for utilisation. The concept of "trusted sources" reflects that EU ex situ collections play a fundamental role in the EU user chain, acting as direct providers to both commercial and non-commercial users. It is assumed that a system of trusted sources would substantially lower the risk that illegally acquired genetic resources enter the genetic resources value chain, and that EU users more easily comply with their due diligence obligation in case they are sourcing their material from a trusted source.

The contact details of collections identified as "trusted sources" would be listed in an EU-level register, which would simply be a web-site.[22] The EU Regulation would make explicit that users of genetic resources which acquire samples from a collection listed in the EU-register would comply with a major part of their due diligence obligation. The substantive criteria for identifying collections as "trusted source" would build on existing best practice standards, such as IPEN[23], and be set out in an EU implementing act. The Option would leave it to Member States to identify collections under their jurisdiction on the basis of the EU-level criteria and to enter the contact details of such collections in the EU-level register.

Option UC-4: Prohibition to utilise illegally acquired genetic resources or associated traditional knowledge with a "downstream" monitoring system

Opion UC-4 reflects the preferred user-compliance approach of developing countries in the Nagoya Protocol negotiation. The option is based on a general prohibition on users within EU jurisdiction to utilise genetic resources or associated traditional knowledge that were illegally acquired in Parties requiring prior informed consent and the establishment of mutually agreed terms. Compliance with the prohibition is monitored by obliging users to declare to public authorities at specific points whether they utilised genetic resources in conformity with applicable ABS requirements. The focus of the monitoring measures is to establish whether present uses of genetic resources were/ are consistent with applicable rules of provider countries and eventual benefit-sharing obligations. The basic prohibition and the disclosure obligations would be set out in an EU Regulation.

Collections and those conducting non-commercial research within the EU would not be affected by disclosure obligations as they do not aim to create genetic resources based products and services. Such obligations would be established towards the end of the genetic resources value chain, when an intellectual property right is applied for or a market approval is sought. Users would be obliged to disclose at designated points whether an innovation or a product is directly based on the utilisation of genetic resources or associated traditional knowledge. In the affirmative case, they would be further obliged to provide information on the origin or source of genetic resources or associated traditional knowledge used and whether relevant ABS requirements were complied with.

To comply with their disclosure obligation, downstream users would need to determine whether earlier actors in the chain utilised genetic resources or associated traditional knowledge to an extent that this use must be disclosed. Disclosed information – for example on the origin or source of genetic resources utilised, on compliance with provider country laws at the time of access, or on compliance with eventually applicable benefit-sharing obligations – would hence often depend and build on information made available by earlier actors in the chain.

The designated monitoring authorities (e.g., intellectual property rights offices, product approval authorities) would channel the information received to the competent authorities of the Member State or the EU that would have the obligation to check for compliance with applicable ABS requirements, or to provider Parties or to the global ABS Clearing House Mechanism. Failure to disclose, disclosure of false information, or a violation of the prohibition to utilise illegally acquired genetic resources would be subject to sanctions.

5.4.        Options on the Temporal Application of binding EU-level measures

Option T-1: Applying implementing measures to genetic resources or associated traditional knowledge acquired after entry into force of the Nagoya Protocol for the EU

It is a legally sound interpretation of the Protocol's temporal scope to apply implementing measures only to genetic resources or associated traditional knowledge acquired (and utilized) after the entry into force of the Nagoya Protocol for a party.[24] Option T-1 would exclude all material acquired before entry into force of the Nagoya Protocol from the scope of implementing measures. This includes, for example, samples held in collections in the EU that were acquired after the entry into force of the CBD from a country that had established access legislation. Option T-1 is consistent with the political position of the EU throughout the Protocol negotiation.

Option T-2: Applying implementing measures to genetic resources or associated traditional knowledge acquired since entry into force of the CBD and utilized after entry into force of the Nagoya Protocol for the EU

In the view of some legal scholars the Protocol applies to genetic resources or associated traditional knowledge acquired in the future but also to new uses of genetic resources that were acquired after the entry into force of the CBD on 29 December 1993.[25] Compared with Option T-1, Option T-2 would bring an amount of samples of genes and naturally occurring biochemicals currently held in EU collections, gene banks and catalogues into the scope of implementing measures. This would expose EU researchers and companies to legal and economic risks that are difficult to reconcile with the principle of legal certainty and might raise constitutional problems in some Member States. Option T-2 has nevertheless been retained for transparency purposes as it corresponds with the expectations of some of our international partners, particularly biodiverse-rich developing countries, and of civil society groups.

5.5.        Options for Complementary measures in support of the Protocol implementation

The options in this section could be combined with the main options on access and on user-compliance described above to enhance their effectiveness and efficiency, and to lower costs. In part, they reflect soft obligations of Parties under the Protocol (C2, C3, C4). In all cases, their specific added value to EU implementation depends on the main choices made on access and on user-compliance.

Option C-1: Bilateral cooperation between the EU and provider countries or regions

Bilateral cooperation between the EU and major provider countries or regions of genetic resources, particularly with countries that are recognised as "biodiversity hotspots", could usefully complement EU measures implementing the Protocol. Bilateral cooperation could become important for targeted capacity building measures to help partner countries implement the quite demanding Protocol obligations on access to genetic resources and associated traditional knowledge. It would also allow for collaborative projects focussing, for example, on building partnerships between researchers involved in non-commercial biodiversity research that involves the documenting and description of genes and naturally occurring biochemicals found in situ conditions in partner countries. Such cooperation should also include strenghtening networks of ex situ collections in Parties to the agreement. It would also provide opportunities for developing a mutual understanding on how access for non-commercial research is practically facilitated to researchers and collections from both sides and might also raise the mutual understanding of user-compliance systems in the Parties involved. Bilateral cooperation might also allow discussing, in close dialogue with relevant collections on both sides, potential modalities for applying access and benefit-sharing principles to pre-Nagoya Protocol acquisitions of genetic resources that originate in Parties to the agreement.

Bilateral cooperation could take many forms ranging from regular dialogues over Memoranda of Understanding to formal bilateral agreements. EU measures implementing the Nagoya Protocol could include a general reference to the possibility of bilateral cooperation in support of more effective implementation of the Nagoya Protocol in the Union. Such cooperation would normally start with dialogues or joint projects, and if there is mutual interest, eventually move to more formalised cooperation in the form of a Memorandum of Understanding or even a bilateral agreement. The latter would require a formal authorisation from the Council of the European Union.

Option C-2: Supporting the development of sectoral codes of conduct and model contractual clauses

Parties to the Nagoya Protocol must encourage the development, updating and use of model contractual clauses and of voluntary codes of conduct, guidelines and best practices or standards. Model contractual clauses would facilitate and lower costs for transactions of genetic resources and ABS-related information, particularly for the benefit of academic researchers and SMEs with only limited capacity and also for developing country partners that provide genetic resources. Different models for material transfer agreements already exist and are widely used, particularly in basic and applied research in the biosciences to facilitate exchanging samples between research teams. Although these model agreements were not developed for the purpose of ABS, they may be expanded to this end.[26] Parts of the research community and commercial users of genetic resources have furthermore developed best practice codes of conduct specifically for the purpose of ABS. The specific contribution of sectoral codes and of model clauses to ABS compliance will depend on the design of the primary compliance measures taken for implementing the Nagoya Protocol in the Union. Under Option C-2, the Commission would work with EU stakeholders to identify the specific contribution of codes of conduct and of model clause to ABS compliance and for identifying and further developing codes and clauses considered as best practice.

Option C-3: Supporting the development and deployment of technical tools for tracking and monitoring genetic resources flow

The Nagoya Protocol obliges its Parties to encourage the use of cost-effective communication tools and systems in support of monitoring user-compliance. States involved in the Nagoya Protocol negotiation asked the CBD Secretariat to launch a study on the availability of technical tools for tracking and monitoring genetic resources flow. This study identifies a range of relevant tools that would – with some adjustments – be available at very low or no cost. It also sets out the steps needed for deploying such tools in practice.[27] Under option C-3, the Commission would work with information technology experts and ABS stakeholders to support the rapid testing and more widespread deployment of technical tools for tracking and monitoring genetic resources flow.

Option C-4: Awareness raising and training activities

ABS is a new field of activity. Awareness raising and training activities would help EU stakeholders to understand their relevant obligations better and achieve more effective implementation at lower cost. Actors broadly familiar with the concept would benefit from information about the specificities of EU implementing measures. Under this option, the Commission and the Member States would support targeted awareness raising and training activities in collaboration with major stakeholders groups.

6.           Analysis of Impacts

6.1.        General remarks

6.1.1.     Methodology for analysing impacts and data limitations encountered

The analysis proceeds in four steps. Step 1 involves an analysis of the policy options on access followed by an analysis of the policy options on user-compliance. Each of the options for implementing the access and the user-compliance pillar of the Protocol are analysed on the basis of the full set of impact assessment criteria described below.

To facilitate a comparison between options from the same pillar, the performance of each option against specific impact assessment criteria is graded.[28] The specific IA criteria cover four wider issues and impacts examined, i.e. issues specific to the Protocol, as well as economic, social and environmental impacts. The IA criteria are not excluding each other, some are relevant only for analysing options implementing one of the pillars of the Protocol.

This part of the IA report presents the main observations from the detailed analysis, illustrative examples supporting them and a summary table that shows the grading given to this option with regard to the assessment criteria. The detailed analysis of the options on access and on user-compliance and the motivation for each grading are included in Annex 5 (access pillar) and Annex 6 (user-compliance pillar). The analysis proceeds with a comparison between the identified options for the two pillars of the Protocol. Step 1 concludes with a tentatively identified best performing option on access and a tentively identified best performing option on user-compliance.

Step 2 of the analysis addresses how different choices on the temporal application of binding EU-level measures would impact on their performance. Rather than applying again the full set of IA criteria, particular attention is given to understand the implications for legal certainty and how these would relate to the overall effectiveness of EU-level measures, and ultimately achieving the objectives identified. Step 2 concludes by identifying the best performing option on access and the best peforming option on user-compliance.

Step 3 brings together the preferred options for implementing the access and the user-compliance pillar of the Protocol. The analysis presents by way of hypothetical scenarios how the preferred access and the preferred user-compliance options would work together in practice. These scenarios also help to analyse the potential added value of the complementary measures set out in Options C-1 to C-4.

Step 4 analyses for each complementary option if it would create additional costs but also if there are expected gains in effectiveness, efficiency and cost-savings for the retained choices on access and on user-compliance.

ABS is a new field of policy and activity, thus data limitations have been encountered. There is little quantitative information available on the use and exchange of genetic resources at sector level. Gaps exist particularly with respect to the amount of genetic resources utilised within sectors and the economic relevance of such utilisation (eg., figures on sales/profits deriving from products based on genetic resources, importance of genetic resources for the turnover of the sector, jobs). Available figures are often rough or indirect indicators of what is being sought, and generally do not allow for comparison within or between sectors. Thus the IA mostly builds upon qualitative arguments that are developed against the detailed description of current user practices set out in the EU baseline. To give one example: an option is considered to be low cost and preferable if it corresponds with existing practices of genetic resources use as identified in the EU baseline. An option is considered problematic or costly where it would necessitate a sigificant change in practices, and generally as unacceptable where it would run against the basic economic model of a specific sector.

6.1.2.     Criteria stemming from the specificities of Access and Benefit-sharing and from the Nagoya Protocol

Access and benefit-sharing for genetic resources and associated traditional knowledge is addressed not only in the CBD and its Nagoya Protocol, but also in various other international instruments. Attention is given to analysing how an option would respect existing specialised international ABS instruments and be mutually supportive with other relevant international instruments and processes. An option that fully respects specialised ABS instruments and is fully supportive of other relevant instruments and processes is preferable over an option that only partially achieves these aims.

Another important consideration concerns the legal and practical effects of an option for the relationship between Parties and non-Parties to the Nagoya Protocol. The Protocol obliges its Parties to encourage non-Parties to adhere to the Protocol. It does not oblige them to take special safeguards in the relationship with non-Parties. An option is considered preferable if it encourages ABS-conformity in the interaction with ABS stakeholders from non-Parties and does not disrupt existing collaboration or partnerships simply because they involve partners from non-Parties.

As regards coherence with existing EU law, options that would entail a focussed regulatory intervention consistent with the overall design and approach of the EU acquis are considered preferable over options that would introduce new legal concepts or require revising a broad set of existing EU laws.

The analysis also examined issues specific to the Nagoya Protocol implementation. These relate to:

· Special considerations: The Nagoya Protocol obliges Parties to give special consideration to non-commercial research, to eventual threats or danger to human, animal or plant health, and to the special nature of genetic resources for food and agriculture. Options that better allow for these special considerations are considered preferable over others that offer less flexibility.

· Accomodating for differences between sectors: The Nagoya Protocol in principle applies to all uses and all types of genetic resources unless explicitly excluded from its scope. Since genetic resources are used by a wide range of different actors for different purposes and with different interests, it seems important that implementing measures offer some flexibility to accommodate for differences between different sectors utilising genetic resources. An option is considered preferable if it better balances the need for clear and certain rules with flexibility to accommodate for sectoral differences.

· Flexibility to allow for future developments: Access and benefit-sharing for genetic resources is a new field of activity for the EU and its Member States. Given the discretion of the Parties on how precisely to implement their obligations under the Nagoya Protocol, it is considered as advantageous if an option allows for future development and fine-tuning of measures in light of implementing measures taken by partner countries and in light of future sectoral initiatives. Conversely, it is considered a disadvantage if the EU system of implementing measures would "lock-in" one system that might prove to be disfunctional in the medium or long-term and can only be changed at high cost.

· Improving the knowledge base: Given the data limitations encountered, it is considered as important that an option helps to improve the information base on how genetic resources are acquired, transferred and utilised in the Union. This will facilitate future evaluations of the policy.

6.1.3.     Assessing Economic impacts

An EU-level playing field for access and benefit-sharing activities implies more opportunities for engaging in research and development on genetic resources, lower transaction costs and lower risks. An EU-level playing field would be particularly beneficial to SMEs and also ensure a more efficient use of public funds spent in favour of gene banks, botanical gardens, academic or applied research. It would also generate more positive effects for the conservation of biodiversity. Options that create an EU-level playing field are therefore considered as preferable over options that would leave significant differences in applicable rules throughout the EU.

An option is generally considered to be more cost-effective and thus preferable if it provides for user-compliance but better corresponds with existing practices of genetic resources use as identified in the EU baseline. It is generally considered problematic if an option would necessitate a sigificant change in practices, and as unacceptable where it would run against the basic economic model of a specific sector.

Innovations flowing from research and development on genetic resources must not be compromised by legal risks. As evidenced by the stakeholder consultation, legal certainty is a major priority for all those potentially affected by access and benefit-sharing requirements. An option is considered preferable if it would provide a greater level of legal certainty to those involved in ABS activities. Where an option entails some legal risk, an important consideration is whether such risks can be controlled by those exposed and if so, at what cost. Options that allow users to control a risk at reasonable costs are considered preferable over options that do not offer such possibilities and leave users exposed. Furthermore, the same type of risk seems generally more preferable at the beginning of the genetic resources value chain, where activities generally have low economic value; rather than at the end of the chain, that is characterised by high investments, high economic value and potentially significant economic losses.

The analysis also considers the distribution of impacts along the genetic resources value chain, which stakeholders would be affected and how. An overburdening of any one activity in the genetic resources value chain would imply the breaking down of the chain, the discontinuation of research and development activities and ultimately the loss of benefits and related conservation gains. An option is considered acceptable if it is proportional to the respective capacities of all particular actors in the genetic resources value chain; it is not considered acceptable where it would clearly overburden a particular player in the chain.

Particular attention is given to analysing the impacts on SMEs. An option is preferable if it maximises economic opportunities for SMEs at low cost, if it is compatible with existing business models and provides for legal certainty and if remaining risks can be controlled at low costs.

Improved access to quality samples of genetic resources with high legal certainty and at the lowest possible transactions costs will maximise research and development opportunities on genetic resources. Although favourable conditions for research and development are no guarantee for important scientific discoveries and the development of valuable products and services, there is nevertheless a clear correlation between improved conditions for R&D in nature-based industries and an increase in the likelihood of important discoveries that will result in innovative products and services. Options that maximise research and development opportunities for EU users are therefore considered preferable over options that create less opportunities, while options that could stifle research and development on genetic resources are considered as prima facie unacceptable.

At last, economic impacts analysed include also a consideration of the effects of an option on the EU's international competitiveness.

The Nagoya Protocol requires that compliance of users with implementing measures is effectively monitored. It is considered as easier and more effective to monitor an observable activity within EU jurisdiction rather than to identify the presence or absence of non-tangible information that relates to facts and findings in a third country, often many years ago. It is also considered more cost-effective to collect relevant information as part of already established activities rather than to establish new monitoring procedures. Furthermore, it is considered more cost-effective to focus on monitoring activities/ information that is available without confidentiality concerns involved. At last, monitoring costs can be reduced, where it is practical and proportional to put the burden of information on economic operators. Costs for monitoring will vary with the effectiveness of monitoring and enforcement measures taken. An option is preferable if it creates the maximum amount of pertinent information at the lowest possible cost.

As regards additional administrative costs for implementation, the IA distinguishes between one-off costs and recurring costs. Generally, low cost options are preferred over high cost options. And costs that occur only once or over a clear time-frame are preferred over costs that are of recurring nature.

6.1.4.     Assessing Social impacts

Innovation in nature-based industries is expected to contribute to the achievement of important social objectives, be it health, nutrition, food security, or else. Options that maximise research and development opportunities for EU users are therefore considered preferable over options that create less such opportunities. More benefit-sharing arrangements with providers from developing countries would also contribute to the transfer of knowledge and technology to partners in those countries. Furthemore, it is expected that jobs in the sectors utilising genetic resources will be safeguarded and even increased if access to these resources is assisted and if the user compliace requirements create legal certainty, minimise risks and generate more opprotunities for a wider use of these resources. Although it is not possible to quantify this impact, due to the significance of the sectors utilising genetic resources in the European and global economy, it is expected that impacts to whichever direction could be of a significant magnitude.

A particular social aspect in this IA is the contribution of an option to the effective protection of the rights of indigenous and local communities over their traditional knowledge associated with genetic resources. Options that effectively protect indigenous rights are preferable over options that do not achieve this aim.

6.1.5.     Assessing Environmental impacts

Better conditions for R&D in innovative nature-based industries, will enhance the knowledge-base for effective biodiversity conservation and environmentally sound uses of natural resources. It will also raise the likelihood of important discoveries and developments and related benefit-sharing in favour of biodiversity conservation. An enabling and effective access and benefit-sharing system will also raise awareness of the economic value of genetic diversity found in nature and held in ex situ collections. Options that maximise research and development opportunities for EU users are therefore considered preferable from an environmental impact perspective over options that create less such opportunities. More benefit-sharing arrangements with providers from developing countries would also contribute to the transfer of knowledge and technology to partners in those countries.

Conversely, options that create higher costs or that stifle research and development are considered to generate less knowledge and less benefits for biodiversity conservation.

6.2.        Access Pillar

6.2.1.     Option A-1: No EU level action

Under Option A-1 all Member States and the Union will have ratified the Nagoya Protocol by the time of its entry into force in 2014 or 2015. Before ratifying, Member States must decide whether to require prior informed consent and benefit-sharing or not; and if so, implement their access-related obligations under the Protocol. The Union will not have to make any decision of the kind. It seems almost certain that by 2015 Member States with free access systems will co-exist with other Member States that require prior informed consent. This situation would be in conformity with the Nagoya Protocol that recognises the sovereign right of each Party to require benefit-sharing for the utilisation of its genetic resources or not.

Although the Protocol regulates domestic access frameworks in quite some detail, it is an apparent shortcoming of Option A-1 that it would not support a coordinated approach to addressing issues that will arise. One such issue concerns the choices taken by Member States on how their domestic access-framework relates to specialised ABS agreements. The most important example of a specialised agreement is the International Treaty on Plant Genetic Resources for Food and Agriculture. The Nagoya Protocol obliges Parties to respect specialised ABS agreements. However, the precise relationship between Nagoya Protocol implementing measures and the use of genetic resources in accordance with the FAO International Treaty is not clear. It could raise questions on the EU's compliance with the Nagoya Protocol if Member States were to take differing choices on this matter. Similar difficulties could arise in relation to the obligation to apply special considerations in relation to research or to public health concerns, if Member States were to implement these fairly general obligations in different ways.

Another draw-back of Option A-1 is that it leaves the management of eventual tensions between access frameworks of Member States and the acquis to ad hoc interventions by the Commission. It seems much preferable to discuss relevant questions at the time when Member States that wish to require prior informed consent and benefit-sharing are developing access frameworks rather than forcing a re-opening of such frameworks once established.

As indicated in the below table, it is difficult to precisely identify further impacts – whether positive or negative – of Option A-1. These will depend on future choices taken by the Member States. Clearly, Option A-1 will not result in an EU-level playing field on access: Member States with free access systems will co-exist with Member States that require prior informed consent and benefit-sharing. One general issue of concern is, however, that it could have negative economic impacts for EU researchers and also for SMEs if Member States would establish widely differing substantive access conditions. For example, it is typical for parts of the biotechnology industry (with a high level of SMEs) to conduct high-throughput screening of tens of thousands of samples in search for new compounds. Obviously, such activities benefit from a streamlining of access conditions, as generally also legal certainty will increase and legal risks will be minimal if access conditions are harmonised across the EU. While Option A-1 does not provide a basis for establishing a solid response, at least it would not create costs at EU-level; costs at Member State-level would depend on the choices taken by them.

6.2.2.     Option A-2: EU platform for discussing access to genetic resources and sharing best practices

Under Option A-2, by 2014 or 2015 all Member States and the Union would have ratified the Nagoya Protocol and Member States with free access systems will co-exist with other Member States that require prior informed consent. However, the EU platform for discussing access-related issues and for sharing best practices would actively engage the Member States, the Commission and EU stakeholders in a discussion on the design and the performance of access frameworks in the Member States. It seems reasonable to assume that the platform would contribute to collective learning and thus influence choices made by Member States in relation to specialised ABS systems, on how to apply special considerations, how to deal with access requests by researchers or companies from non-Parties, etc. The deliberations of the platform would also be beneficial for any future consideration of a focussed EU-level policy intervention on access.

The EU platform would have some potential to streamline access conditions applied by Member States that require prior informed consent, although this will not result in an EU-level playing field on access. Nevertheless any narrowing of differences between Member State access frameworks will lower transaction costs and hence be particularly beneficial for SMEs and recipients of public funds.

Another effect of the EU platform is that it would showcase best practices on access. This would not only help Member States to learn from each other. It would also help potential users to identify the Member State with the best functioning access frameworks. Both aspects could positively contribute to research and development opportunities in the EU.

It is difficult to precisely identify further impacts of this option – whether positive or negative; this depends on future choices taken by the Member States. A well-functioning EU platform on access will likely influence these choices; however, it cannot determine them. The operation of the EU platform would create limited costs at EU-level.[29]

6.2.3.     Comparison of Options A-1 and A-2

The results of the analysis as summarised in Table 2 below shows that Option A-2 creates limited costs at EU-level, whereas Option A-1 would entail no costs. The added value of Option A-2 over Option A-1 is nevertheless apparent. Option A-2 would create benefits for Member States, for the Commission, and for EU stakeholders. It would particularly benefit academic researchers and SMEs or micro-enterprises. Option A-2 is therefore tentatively identified as the preferable option for implementing the access-pillar of the Nagoya Protocol.

Table 2: Comparison of Options for the access pillar of the Protocol

Criteria for analysing impacts || Grading ||

|| Option A-1 || Option A-2

Specific Criteria to Access and Benefit-sharing and to the Nagoya Protocol ||

- Specialised ABS agreements and processes (respect and mutually supportive) || - || +

- Handling of Party-non-Party relationships || Unclear || +

- Coherence with existing EU acquis || - || +

- Support to special considerations || - || +

- Ability to accommodate differences between sectors || n.a. || n.a.

- Flexibility to allow for future development and fine-tuning || + || +

- Improving the knowledge base about acquisitions, transfer and use of genetic resources in the EU || 0 || +

Economic impacts ||

- Creation of an EU-level playing field || -/0 || +

- Correspondence with existing utilisation practices || n.a. || n.a.

- Legal certainty and legal risks || -/0 || +

- Distribution of impacts along the value chain || 0 || 0

- SMEs and micro-enterprises || - || 0/+

- Research and development opportunities || 0 || 0/+

- International competitiveness || 0 || 0

- Obligatory monitoring related to user-compliance (effectiveness, efficiency, and costs) || n.a. || n.a.

- Administrative costs (EU-level, MS level, one-off, recurring) || + (Union level) || 0 (Union level)

Social impacts ||

- Potential to contribute to social objectives (health, food security, nutrition etc) || Unclear || Unclear

- Job creation or maintaining existing jobs in the sectors || Unclear || Unclear

- Protection of the rights of indigenous and local communities || Unclear || Unclear

Environmental impacts ||

- Enhancing knowledge base for biodiversity conservation || Unclear || Unclear

- Potential for generating non-monetary and monetary benefits in favour of conservation and sustainable use of biological diversity || Unclear || Unclear

Note: "n.a." identifies criteria that have not been analysed as they are specific to the user-compliance pillar of the Protocol.

6.3.        User-Compliance Pillar

6.3.1.     Option UC-1: Open method of coordination

Under Option UC-1 all Member States and the Union become Parties to the Nagoya Protocol, and all Member States will adopt legally binding measures on user-compliance at national level; the Union would not adopt binding measures in the field.

There is little practical experience with user-compliance measures, the Protocol leaves significant discretion on how to design such measures, and different reference points exist.[30] Despite the soft EU-level coordination, one would expect that Member States develop user-compliance measures primarily on the basis of their national interests. For example, the NL would carefully consider the interests of its plant and animal breeding companies. In DE, FR, UK and IT the interests of the pharmaceutical and chemical industries might receive particular attention. FR might also pay special attention to its cosmetics industry as some companies are world leaders. It is thus assumed that Member States would take differing choices on the design of user-compliance measures. This may result in conceptually different user-compliance systems in different Member States. It would certainly result in differences in the details of applicable requirements; such details are nonetheless critical for implementation efforts "on the ground" (e.g. exactly what is considered as "utilisation of genetic resources", how to manage ABS-related information, rules on burden of proof, etc.). The need for 27 national legislative proceedings finally suggests that not all Member States would become Parties to the Nagoya Protocol at the same time. These basic assumptions translate into mostly negative scores for Option UC-1.

The analysis of current user practices in the EU suggests that even small differences in user compliance requirements between the Member States could create major difficulties and costs for EU researchers and companies active in more than one Member State. One Member State might generally require users to manage ABS-related information in the most suitable form. Another Member State might oblige users to present so called "internationally recognised certificates of compliance". Both systems would oblige users to take a different approach to managing ABS-related information. It is against this background, that respondents in the public consultation unanimously pleaded for an EU-harmonised approach to user-compliance measures, preferably on the basis of an EU-Regulation.

The existence of the EU-internal market and the fundamental freedoms also implies that different Member State approaches to user-compliance would result in an overall lower performance of national systems. For example, Member State A might largely exempt basic research from its user-compliance system, whereas the user-compliance system of Member State B might oblige those involved in basic research to pass on minimum information on ABS. Researchers that participate in the European Research Area would need to manage these differences. In result, costs for ABS compliance in Member State A would increase, despite the exemption for basic research, and there would likely be an increase in the non-compliance risks of researchers in Member State B.

A fragmented approach to user-compliance could also lower the benefits for Member States of ratifying the Protocol. To give one hypothetical example: Spain ratifies the Nagoya Protocol before most other Member States. A Spanish biotechnology company applies for a permit to collect samples of marine genetic resources in the Exclusive Economic Zone of a biodiversity-rich island state in the Indian Ocean. The competent authority of the island state requests that collected samples are only used in Spain, not in other EU Member States that have not yet ratified the Protocol. Would Spanish authorities that support the enforcement of such conditions comply with Spain's obligations under the EU Treaties? The answer is not straightforward and the island state might refuse granting access if it expects that material collected may also be used in other EU Member States that are not Parties to the Protocol.

6.3.2.     Option UC-2: Self-standing general due diligence obligation on EU users

One important positive feature of the due diligence approach is that it would actively support the functioning of specialised ABS agreements and systems. By generally obliging EU users to be diligent, EU users would also be diligent that genetic resources are utilised in accordance with specialised ABS systems. This would be beneficial for the ABS system established through the FAO International Treaty on Plant Genetic Resources for Food and Agriculture, but also for the Pandemic Influenza Preparedness Framework recently adopted by the World Health Organization. The due diligence approach would similarly support respect for the special considerations that are obligatory under the Protocol.

The due diligence obligation would generally apply to all activities of utilisation within EU jurisdiction. It would thereby create a common baseline of user-compliance efforts throughout the EU and establish an EU-level playing field. In effect, all users of genetic resources in the Union would each at their respective place in the utilisation chain seek, keep and transfer information relevant to ABS. The establishment of an EU-level playing field on user compliance measures is particularly beneficial for SMEs that would face disproportionately higher costs than larger companies to cope with differing user-compliance standards in different Member States of the Union. An EU-level playing field of user-compliance measures also implies a more efficient use of public funds spent in favour of academic or applied research, as researchers need to spend less of their time to cope with potentially different user-compliance standards. The positive aspects of an EU level playing field on user-compliance are particularly apparent when comparing this Option with the concerns related to the expected fragmentation of user-compliance measures that would most likely result from Option UC-1. It must also be stressed in this regard that respondents in the public consultation unanimously pleaded for an EU-harmonised approach to user compliance, precisely because of concerns over high costs from fragmentation. Furthermore, it is noteworthy that the International Chamber of Commerce explicitly supports a due diligence approach to implementing the user-compliance pillar of the Nagoya Protocol.[31]

The due diligence approach is also flexible to accommodate differences between sectors utilising genetic resources and associated traditional knowledge. Users could identify for themselves a suitable and cost-effective way of meeting their obligation. Considering current utilisation practices in the EU, it is assumed that users will take different measures, reflecting their specific placement in the EU genetic resources value chain. An SME in the biotechnology sector might decide making use of standardised contracts when acquiring or passing on research material. Academic research groups could decide to deploy a low-cost, open source software tool for tracking and monitoring the use of genetic resources amongst members of the group. Companies from the biocontrol or cosmetics industries that directly collect genetic resources in the wild might subscribe to an industry-wide best practice code of conduct. Users in specific sectors of the EU economy could further reduce their eventual compliance costs and raise legal certainty by implementing a recognised best practice. As detailed in Annex 8 to this study, a range of codes of conduct have already been developed for different sectors and activities, currently their practical relevance varies. This option would very likely raise the practical relevance of such existing codes. It would also reward those users which have already in the past, absent binding rules, made an effort to comply with the ABS provisions of the CBD.

The ability of users to comply with their due diligence obligation by implementing best practice codes of conduct would have further positive effects for the interaction with partners from non-Parties to the Protocol. Partners in non-Parties are outside the reach of EU user-compliance rules. Nevertheless, if non-EU partners were to apply the same or similar best practice standards on ABS, they would effectively also comply with EU user compliance rules. It seems significant in this context that some existing best practice codes are indeed of global nature or used well beyond the EU.[32]

It would largely be in the hands of users and their professional associations to identify the most cost-effective ways of implementing the due diligence obligation for their respective utilisation activities. The flexibility inherent in the due diligence concept will ensure that users can tailor their due diligence measures as much as possible to their existing practices, and thereby also reduce eventual costs. In that regard it seems very significant that not one respondent in the public consultation, no participant in the many ad hoc meetings, and no person interviewed by the consultant team indicated that it would, in principle, be impossible or unworkable to add some basic consideration of ABS issues to its current utilisation practices.

The monitoring costs for users would be limited. The declarations would need to be made at points where users would anyhow already be obliged to summarise and evaluate relevant information on their research and development activities. As regards declarations in the context of public research funding, it is already standard practice today that recipients of EU funds commit themselves to respect applicable laws when using public funds and later on need to declare their compliance with this general obligation. As regards declarations on the occasion of a product approval or the commercialisation of a product, users already today prepare a dossier describing the product for which a permit is sought or that is put on the market. The only situations where real costs might arise is indeed in cases where a user has not been diligent and failed to seek relevant information on ABS when acquiring a genetic resource, and later on needs to re-establish such information.

As regards administrative costs, these would fall primarily fall on the Member States and the competent authorities designated for receiving due diligence declarations by users and for checking compliance. Notably, the due declarations could be made to already existing authorities of the Member States or to the national competent authority(ies) that each Party to the Nagoya Protocol must establish. The compliance checks would most likely be done by specialised authorities existing in a given sector. Importantly, competent authorities of different Member States could cooperate amongst each other and with the Commission if this would be more effective. This is one apparent advantage in effectiveness and costs over a situation where 27 Member States develop 27 distinct user-compliance systems with distinct monitoring systems and different types of checks.

As regards the distribution of costs, it appears that the limited costs for making due diligence declarations would arise for all researchers using public funds, it would not arise for privately funded research. Furthermore declarations would need to be made by users that have successfully developed a product on the basis of genetic resources. They would not need to be made by other users in case their research and development activities never result in a product. As regards administrative costs, it seems that costs will be higher in those Member States where more utilisation activities occur and where more genetic resource based products are commercialised. This suggests that public costs for monitoring will tend to correlate with benefits related to the successful marketing of products based on genetic resources (e.g., additional tax revenues).The main effect of this option would be that all those utilising genetic resources or traditional knowledge associated with such resources in the EU will establish and maintain a baseline of ABS-related information throughout the EU genetic resources value chain. In some cases, such information would be trivial: for genetic resources acquired prior to 1993, the CBD and the concept of ABS did not apply. So any material identified as stemming from before this date could comfortably be utilised. Nevertheless, it would be important also for subsequent users that this specific information is actively passed on with the eventual transfer of a sample. In other cases, information passed on by a previous user might indicate that a specific set of samples may only be utilised for non-commercial purposes and convey information about the contact point of the Party holding the sovereign right for seeking permission to undertake applied research.

6.3.3.     Option UC-3: General due diligence obligation on EU users complemented by identifying collections that are "trusted sources" for genetic resources

Option UC-3 combines a due diligence system as described and analysed in Option UC-2 with a system to identify collections with control measures in place to assure that only well documented samples of genetic resources are made available for their utilisation. The EU Regulation would clarify that users of genetic resources that acquire samples from a "trusted source" would thereby comply with a major part of their due diligence obligation. This option scored higher than Option UC-2 in respect to key implementation aspects (EU-level playing field, legal certainty, impacts on SMEs) due to two main reasons:

First, the identification of certain collections as "trusted sources" would add a focus on the quality of research material utilised to the basic due diligence system; the latter focuses on the activity of utilisation. To recall: situations might occur where a user was diligent but it eventually turns out that a concrete genetic resource used was illegally acquired. This would not constitute a breach of the due diligence obligation. A system of "trusted sources" would, however, very significantly reduce the risk that illegally acquired or incompletely documented genetic resources enter the EU genetic resources value chain. The analysis of current utilisation practices shows that the very large majority of commercial EU users acquire new samples of genetic resources from ex-situ collections; mostly from collections within the EU. A system of "trusted sources" would hence have further positive effects for establishing an EU-level playing field of quality samples of genetic resources, it would improve legal certainty and lowers risks for all users that source from recognised collections. It would also lower costs for monitoring user compliance, as it seems reasonable to assume less risk of non-compliance by users sourcing from recognised collections.

Second, it is apparent that the additional compliance benefits of Option UC-3 would particularly arise for those EU users that acquire their research and development material from EU collections. In the EU this includes academic researchers and several commercial sectors. The horticultural industry, for example, predominantly relies on ex situ collections for its research and development. The industrial biotechnology sector heavily relies on culture collections. Culture collections are also important sources of material for industries involved in natural products research as well as for the pharmaceutical and the food and beverage industries. Private and in-house collections are particularly important in the seed industry, in addition to public gene banks and the centres of the Consultative Group on International Agricultural Research. Importantly, actors from these groups that acquire the material from collections are to a very significant extent individual academic researchers, SMEs and micro-enterprises. Particularly this group would benefit from the lower costs and enhanced legal certainty of Option UC-3.

These particular characteristics of Option UC-3 also translate into significantly high scores for the expected impact on research and development opportunities in the EU and will have positive social and environmental impacts.

6.3.4.     Option UC-4: Prohibition to utilise illegally acquired genetic resources or associated traditional knowledge with a "downstream" monitoring system

Particular features of Option UC-4 are a general prohibition to utilise illegally acquired genetic resources, a focus on specific uses of specific material, and a monitoring system based on obligations for users to actively disclose at certain points in the genetic resources value chain how they comply with eventually applicable ABS requirements. The negative or very negative grading of this option reflects fundamental problems that stand in stark contrast to the initial reaction of many which, when first exposed to the issue of ABS, would support a prohibition to utilise illegally acquired genetic resources.

The first fundamental problem of Option UC-4 is that currently EU users do not have sufficient information to determine where they stand in relation to the prohibition. The prohibition would initially only be relevant for a small fraction of genetic resources utilised within the EU: it would not apply to genetic resources acquired prior to the CBD entry into force, nor to genetic resources collected in countries that do not require prior informed consent and benefit-sharing, nor to genetic resources collected in areas beyond national jurisdiction. Nevertheless, to comply with the prohibition EU users would need to know for each individual sample utilised where it came from, when it was acquired, and if some ABS-related obligations apply. To be on the safe side, users would need to have this information for all genetic resources utilised, not only for those that actually come within the scope of the Nagoya Protocol. The analysis of utilisation practices in the EU shows that the necessary information is currently not available at all places of the EU genetic resources value chain. It seems that the prohibition would have relatively small negative impacts on well-staffed and funded botanical gardens where almost all samples held are fully documented. However, it would most likely create very significant legal uncertainty for some commercial users of genetic resources. Biochemical libraries, for example, include molecules isolated from biological material as well as molecules developed through computerised permutations. Once the chemical structure of a naturally occurring molecule is known, it can be re-built and further modified[33], irrespective of where it originally came from; information on the origin of molecules has often not been kept. Parties to the Nagoya Protocol must apply their user-compliance measures to the "utilisation of genetic resources", and this term explicitly includes research and development on the biochemical composition of genetic resources.[34] A prohibition to utilise illegally acquired genetic resources would therefore also become relevant for research and development on biochemicals already extracted from natural material and currently held in biochemical libraries used by the pharmaceutical, chemical and biotechnology industries. It seems unrealistic in the short- and medium-term to generate ABS-related information for all entries in such catalogues.[35]

A second fundamental problem of Option UC-4 is one of legal delimitation: it would require very careful consideration to avoid that a prohibition has potentially disruptive effects on the functioning of specialised access and benefit-sharing systems. One unresolved question in this respect is on the legal nature of specialised systems for them to be excluded from the Nagoya Protocol, and hence from the prohibition. Must a specialised ABS system in the sense of the Nagoya Protocol necessarily be established through a binding international agreement, like the FAO International Treaty on Plant Genetic Resources? Or does it suffice to have an international framework with only some legally binding elements, such as the recently established Pandemic Influenza Preparedness Framework in the World Health Organization? This question is of practical relevance not only in the area of human, animal and plant health, but also for the ongoing work of the FAO Commission on Genetic Resources for Food and Agriculture that plays a critical role in global food security policies.

A third fundamental problem of this Option is its negative impacts on individual researchers, SMEs and micro-enterprises. While the prohibition would apply to all utilisation activities, the system of disclosure obligations would only selectively apply to some utilisation activities in the downstream part of the utilisation chain. This would very likely result in an uneven distribution of costs and risks. Collections and non-commercial researchers would normally not face disclosure obligations. However, such obligations would be unavoidable for SMEs and micro-enterprises in the middle part of the genetic resources value chain that depend on intellectual property protection for creating commercial value and, where relevant, being able to sell innovations to bigger companies downstream. This group of actors would be caught between a rock and a hard place. A non-commercial researcher that has no risk of being checked has no reason to take on legal responsibility for the good legal status of material passed on for applied research. Larger companies at the end of the value chain (particularly in the pharmaceutical and chemical industry), however, would not be able to accept a legal guarantee from a SME as sufficient assurance that things are in order, knowing that SMEs regularly have limited means to verify ABS-compliance. It is thus very likely that Option UC-4 would cause disruptions in the genetic resources value chain where research material moves from collections or non-commercial research to SMEs and again, where research and development activities move from SMEs to larger companies that create the real economic value. This disruption may also cause negative impacts on jobs, in particular within SMEs. Thus a prohibition to utilise illegally acquired genetic resources would stifle innovation in different sectors, and thus achieve exactly the opposite of what the Nagoya Protocol wants to achieve.

6.3.5.     Comparison of Options UC-1 to UC-4

Table 3: Analysis of options addressing the User Compliance pillar of the Protocol

Criteria for analysing impacts || Grading

|| Option UC-1 || Option UC-2 || Option UC-3 || Option UC-4

Criteria specific to Access and Benefit-sharing and to the Nagoya Protocol

- Specialised ABS agreements and processes (respect and mutually supportive) || --/- || ++ || ++ || -

- Handling of Party-non-Party relationships || -- || + || ++ || -

- Coherence with existing EU laws || - || + || + || -

- Support to special considerations || -- || ++ || ++ || -

- Ability to accommodate differences between sectors || -- || ++ || ++ || --

- Flexibility to allow for future development and fine-tuning || 0/+ || + || + || -

- Improving the knowledge base about acquisitions, transfer and use of genetic resources in the EU || 0 || + || ++ || -

Economic impacts

- Creation of an EU-level playing field || -- || + || ++ || -/0

- Correspondence with existing utilisation practices || -- || +/++ || +/++ || -

- Legal certainty and legal risks || -- || 0/+ || + || --

- Distribution of impacts along the value chain || 0 || 0/+ || + || --

- SMEs and micro-enterprises || -- || 0/+ || + || --

- Research and development opportunities || -- || + || ++ || --

- International competitiveness || - || + || ++ || --

-Obligatory monitoring related to user-compliance (effectiveness, efficiency, and costs) || Unclear || 0/+ || 0/+ || --

- Administrative costs (EU-level, MS level, one-off, recurring) || - || 0 || 0 || -/0

Social impacts

- Potential to contribute to social objectives (health, food security, nutrition etc) || -/0 || + || ++ || --

- Jobs (creation or maintaining) || || + || ++ || --

- Protection of the rights of indigenous and local communities || -/0 || + || ++ || --

Environmental impacts

- Enhancing knowledge base for biodiversity conservation || -/0 || + || ++ || --

- Potential for generating non-monetary and monetary benefits in favour of conservation and sustainable use of biological diversity || -/0 || + || ++ || --

As Table 3 suggests, Option UC-1 will almost certainly result in a fragmentation of user-compliance systems in the EU with very negative effects on EU stakeholders and partially disruptive effects in some genetic resources value chains. Option UC-2 and 3C both create workable systems compatible with the concerns and utilisation practices of EU economic sectors and other stakeholders. Option UC-3, however, has better scores than Option UC-2 in respect to key implementation aspects (EU-level playing field, legal certainty, impacts on SMEs, positive economic impacts). It will particularly be more beneficial to academic researchers, SMEs and micro-enterprises. Option 3D combines high legal and economic risks for EU stakeholders with a low probability that the etablished user-compliance system will function. Thus Option UC-3 is therefore tentatively identified as the preferable option for implementing the user-compliance pillar of the Nagoya Protocol.

6.4.        Temporal Application of Binding EU-level measures

This part of the study analyses how different choices on the temporal application of EU-level measures would impact on their performance. The binding EU-level measures analysed are Options UC-2, UC-3 and UC-4. Rather than applying again the full set of IA criteria, particular attention is given to understanding the implications for legal certainty and how these would relate to the overall effectiveness of measures on access and on user-compliance, and ultimately on achieving social and environmental objectives.

6.4.1.     Option T-1: Applying implementing measures to genetic resources or associated traditional knowledge acquired after entry into force of the Nagoya Protocol for the EU

The option creates a high level of legal certainty and clarity for EU users. This is particularly important for industries where research and development processes typically span many years (e.g. pharmaceutical industry, plant breeding), and where a new legal regime that creates doubt on its implications for an activity that started 10 years ago, could put ongoing research and development activities under threat.

Option T-1 would be consistent with and support the smooth functioning of Options UC-2 or UC-3. It would also be consistent with Option UC-4, although it would not be able to soften the fundamental problems of this option.

6.4.2.     Option T-2: Applying implementing measures to genetic resources or associated traditional knowledge acquired since entry into force of the CBD and utilised after entry into force of the Nagoya Protocol for the EU

The main drawback of Option T-2 is its effect on legal certainty of EU users. The creation of new obligations under EU law for "new or continuous" utilisation activities would raise many legal and practical questions. When would a research and development activity be considered as sufficiently different to earlier research to be qualified as "new "? It is typical for research and development processes, particularly in the early part of the genetic resources value chain, that discovery processes are "chaotic" in the sense that it is not clear at the beginning what will come out at the end. Would it, for instance, constitute a "new utilisation" if the result of an experiment is different from what was initially expected, but then the course of research is changed to profit from the unexpected discovery? Legal uncertainty would arise particularly in industries where research and development processes typically span 5, 10 or even 20 years (e.g., pharmaceutical industry, plant breeding). It would also take multiple years and a fairly large number of concrete cases before courts in the Member States would have established a typology of cases representative for the different sectors. Option T-2 might also conflict with constitutional principles on the retroactive application of laws in some of the Member States.

The legal uncertainty associated with Option T-2 would most likely stifle research and development on material acquired post-CBD, particularly for actors with little (legal) capacity or where high economic stakes are involved. This also suggests that the expanded coverage of material under Option T-2 would most likely not translate into enhanced benefit-sharing opportunities and conservation gains; but just the opposite. Option T-2 could also call into question initiatives of collections in the EU that voluntarily apply ABS principles to all samples held, whenever these were acquired.

The legal uncertainty associated with Option T-2 would clearly lower the performance and functioning of Options UC-2 or UC-3. Option T-2 would add another challenge to the already fundamental problems of Option UC-4.

6.4.3.     Comparison on Temporal Application and identification of best performing options on access and on user-compliance

Option T-1 is clearly preferable. It combines legal certainty for EU users with a higher likelihood to meet important social and environmental objectives. Conversely, Option T-2 would raise many economic and legal, in part constitutional, concerns and also would be unlikely to contribute to fulfilling the set social and environmental objectives.

Overall assement for options on Access, User Compliance and Temporal scope

Against this background, the preferable option on access is the establishment of an EU platform for discussing access to genetic resources and sharing best practices (Option A-2), whereas the preferable option on user-compliance is a due diligence obligation on EU users complemented by a system to formally recognise collections as "trusted sources" of genetic resources (Option UC-3). The measures under Option UC-3 would only apply to genetic resources and associated traditional knowledge that are acquired and utilised after the entry into force of the Nagoya Protocol for the EU (Option T-1).

6.5.        Hypothetical scenarios

Up to this point, the access pillar options and the user-compliance pillar options were analysed separately. The hypothetical scenarios in Box 6 seek to illustrate how Options A-2 and UC-3 would work together in practice. The scenarios also facilitate the subsequent analysis of the complementary measures.

Box 6: Hypothetical scenarios

Scenario 1: By 2020, ES and FR are the only two EU Member States that require prior informed consent and benefit-sharing for the use of their genetic resources. Both have put in place transparent, well-functioning access frameworks and both have decided to establish a national centre of excellence for biodiversity research similar to the NIBR established in South Korea[36]. Discussions between Member State experts and EU stakeholders in the EU access platform show that academic researchers and SMEs favour 'regulated' access in ES and FR over access in Member States that have a 'free access' policy but do not provide any support in identifying and acquiring quality samples for research and development.

Scenario 2: In 2021, a small UK company, specialised in developing ingredients for the food industry, works with the ABS competent national authority of Kenya and a representative of the Maasai tribe to obtain access to leafs of a plant traditionally used by the Maasai for its hunger-suppressant properties. After concluding a benefit-sharing agreement with the Maasai, the UK company receives the access permit by the Kenyan authority. Company scientists identify the hunger suppressant ingredients of the plant and develop a process for extracting and stabilising them. The UK company sells its innovation to a multinational company specialised in functional foods that markets its products mainly in Europe and the US. The legal compliance unit of the multinational company, mindful of the due diligence obligation, seeks information from the UK company on eventually applicable ABS requirements. After acquiring the innovation, the multinational company negotiates a benefit-sharing agreement with the Maasai that includes establishing a fund in support of education projects in the Maasai community fed by a percentage of royalties from the sales of functional foods developed on the basis of the plant.

Scenario 3: A scientific journal publishes an article on marine sponges from the Great Barrier Reef. The article provides unique identification numbers of samples held in a collection listed in the EU register of "trusted sources". A scientist from a small biotech company seeks access to the samples. The collection website informs that these specific samples are owned by the University of Queensland in Australia and are available for non-commercial use based on a standardised contract; however, requests for commercial use must be directed to the reference collection of Queensland University.

Scenario 4: Researchers based at the Berlin botanical garden cooperate with Cuban colleagues to collect particular flowers in Cuba. In a dinner conversation, team members discover that a flower species held in the Berlin garden, which was collected by Alexander von Humboldt in Cuba in 1799, is apparently extinct in the wild. This raises the question of a "repatriation" of this flower to Cuba.

Scenario 5: The Nagoya Protocol enters into force in 2014. In early 2015, an expert group set up by the World Federation of Culture Collections (WFCC)[37] presents a report to the Executive Board of the WFCC on potential adjustments to the practices of WFCC members to ensure full compliance with the Nagoya Protocol. The report proposes developing a standardised Material Transfer Agreement for the supply of samples to outside users, building on work done by European members of the federation. It also proposes establishing a fully electronic system for tracking the exchange of samples within the WFCC network. The group also recommends that all members of the WFCC that can demonstrate use of the tracking tool and the standard Material Transfer Agreement should seek registration in the EU register of "trusted sources".

6.6.        Complementary Measures

To recall, the analysis of complementary measures is only undertaken in relation to the identified package of main measures (Options A-2 and UC-3) to understand how the additional costs incurred by them would relate to expected gains in effectiveness, efficiency and cost-savings for these main choice on access and on user-compliance.

6.6.1.     Option C-1: Bilateral cooperation between the EU and major provider countries or regions

The eventual costs of bilateral cooperation depend on what is being done, the benefits on what is being achieved. There is a spectrum of cooperation activities ranging from bilateral /regional dialogues, project-based cooperation, to more formal cooperation on the basis of a Memorandum of Understanding or a formal bilateral agreement. Bilateral dialogues on ABS and the Nagoya Protocol are already ongoing between the Commission and important partners and managed within existing resources. Further collaborative projects could be developed, particularly by using existing Science and Technology Agreements with third countries.

Given the flexibility inherent in core obligations of the Nagoya Protocol, particularly in relation to user-compliance, one major focus of bilateral cooperation would be to enhance the mutual understanding of implementing measures taken. This will facilitate access of EU researchers and companies to quality samples of genetic resources and to associated traditional knowledge in non-EU countries (see scenario 2 in Box 6). Scientific cooperation projects, particularly where it involves collections recognised as "trusted sources", would also enhance access of EU researchers to quality samples of genetic resources with positive effects on research and development opportunities and new discoveries important for conservation efforts and benefit-sharing (scenario 4). A particularly sensitive issue, also touched upon in scenario 4, concerns the issue of "repatriation" of samples held in EU collections by their countries of origin. Bilateral cooperation seems an appropriate framework for addressing such issues.[38]

Overall, soft cooperation under Option C-1 is considered to have a very positive cost-benefit-ratio, particularly in the early stages of Nagoya Protocol implementation. More formalised cooperation in the form of bilateral agreements would require prior formal authorisation by the Council and possibly a self-standing impact assessment.

6.6.2.     Option C-2: Support developing sectoral codes of conduct and contractual model clauses

Sectoral codes of conduct and contractual model clauses have very significant potential for enhancing the effectiveness of EU implementation measures that are based on a due diligence system. As was explained earlier, the availability of best practice codes of conduct would support compliance of EU users with their due diligence obligation. This would be particularly beneficial to SMEs and non-commercial resarchers with little capacity. As regards access to genetic resources, model clauses could support a streamlining of access practices in Member States that do require prior informed consent and benefit-sharing (scenario 1 in Box 6). Such streamlining would be particularly beneficial for non-commercial researchers and SMEs. Model clauses are also useful tools for strengthening collections and the networks between them (scenario 5). A further aspect that could be addressed in codes of conduct is how to document acquisitions in states wih a free access policy (scenario 1).

If the EU implements the Nagoya Protocol based on a due diligence approach, it seems reasonable to assume that some user sectors in the EU, possibly also at global level, will take the initiative for refining or developing sectoral codes and contractual model clauses that work best for them. Foreseeably, Commission representatives would be invited to participate in such processes. Initially such participation could be done within existing resources. However, it might require resources additional to the competent authority / focal point the Commission must designate if the Union ratifies the Nagoya Protocol. As part of this option, the Commission should also undertake an initial stock-taking exercise of existing relevant codes of conduct and model clauses. This should be supported by an expert study.

Overall, there appear to be very significant first-mover advantages on this issue. EU-based researchers and industries utilising genetic resources constitute a critical mass of ABS stakeholders globally. Codes and model clauses that support compliance in the EU thus have the potential for becoming de facto best practice standards at global level. An early priority to Option C-2 would thus create lasting benefits for EU stakeholders.

Option C-2 entails some costs at EU-level. However, an early priority on this option is considered to create lasting benefits for EU stakeholders that far outweigh initial costs.

6.6.3.     Option C-3: Support developing and deploying technical tools for tracking and monitoring

A "common thread" of all considerations on user-compliance in this IA is that without a common baseline of ABS-related information throughout the EU genetic resources value chain, it challenging to expect respect by users for applicable ABS requirements set out in access-permits of provider countries and in benefit-sharing contracts between the provider and the first recipient of material. The EU due diligence obligation on user-compliance would create a strong incentive for all EU users of genetic resources to systematically seek, keep and transmit ABS-related information (scenarios 2, 3 and 5 in Box 6). The EU baseline of current practices of genetic resources use suggests that this is a feasible approach for EU users of genetic resources and associated traditional knowledge. The costs for meeting this challenge could, however, be minimised by employing low cost, technical tools for tracking and monitoring genetic resources flow. The expert study (see Annex 9) underlines that the challenge is not one of availability of technical tools or potential costs. Tools that could be deployed are readily available with few adjustments. Some tools are open-source and could be available at minimal costs to users. What is necessary, however, is to deploy the available technical tools in a specific regulatory context.

Under this option, the Commission would immediately after adoption of the EU Regulation work with information technology experts and EU stakeholders to support the rapid testing and more widespread use of technical tools for monitoring genetic resources flow. This requires some human resources (approx. 1/3 desk officer for 2 years) time and the organisastion of a limited number of meetings (4 per yer for 2 years), while an initial technical scoping study would be helpful.

Option C-3 has some but limited costs at EU level. An early priority to this option is, however, assumed to create lasting benefits for EU stakeholders and for an effective implementation of the EU Regulation that far outweigh the initial costs.

6.6.4.     Option C-4: Awareness raising and training activities

Access and benefit-sharing is a new field of activity. The Nagoya Protocol obliges its Parties to take awareness raising measures, and gives an indication of suitable measures to this end.[39]

EU-internally, the early and effective implementation of the EU Regulation would strongly benefit from full awareness of EU stakeholders (scenario 2 in Box 6). As regards awareness raising activities, the necessary Q&A material accompanying the EU Regulation will be an important first step. This information will be prepared by the Commission and made available on the Europa web-site. It is assumed that this work will be undertaken by the desk officer(s) responsible for the EU Regulation. As regards training activities, it seems premature to determine what exactly is required and where the main needs will be. For the purpose of this study it is assumed, however, that training activities are primarily undertaken by the Member States and only complemented by Commission activities (e.g., by "training the trainers").

Internationally, if the EU has ratified the Nagoya Protocol it will be expected to contribute to awareness raising and training activities also internationally, mostly in favour of developing country Parties. As regards the CBD, the Commission currently uses funds from the ENRTP to support internationally agreed activities that it considers as political priorities. The ability of the Union to contribute to international awareness raising activities agreed by Parties to the Nagoya Protocol will in any case depend on the outcome of the ongoing discussion on the Multiannual Financial Framework 2014-2020, and cannot be prejudged in this IA study.

Option C-4 has limited EU-level costs for EU-internal awareness raising and capacity building activities. The importance and benefits of stakeholder awareness and capacity for an early and effective implementation of an EU Regulation do, however, seem very significant and far outweigh the limited costs incurred. Option C-4 does not prejudge eventual future EU support for international-level awareness raising activities.

              6.7     Overview of the analysis results

Table 4 below provides a synoptic overview of the results of the analysis on the policy options.

Table 4: Overview of the results of the analysis on the policy options

Business as Usual || - Union ratification without implementing measures by Union or Member States (BAU) => The BAU option is clearly not workable. Nevertheless, together with the detailed description of current user practices in the EU in Annex 8, it was used as the main reference point for assessing and comparing all other options.

Access pillar || Binding measures at MS level || - No EU action (A-1) - EU platform (A-2) => Option A-2 is preferable over Option A-1 with only limited additional costs at EU-level

|| Binding measures at EU-level ||

User-compliance pillar || Binding measures at MS level || Member States take binding measures with soft coordination at EU-level (UC-1) => Option UC-1 will almost certainly result in a fragmentation of user-compliance systems in the EU with very significant costs to EU stakeholders and partially disruptive effects in some genetic resources value chains.

|| Binding measures at EU-level || - General due diligence obligation on EU users (UC-2) - General due diligence obligation on EU users and system for formal recognition of collections as "trusted sources" (UC-3) => Option UC-2 and 3C both create workable systems compatible with the concerns and utilisation practices of EU stakeholders. Option UC-3, however, has better gradings than Option UC-2 in respect to key implementation aspects (EU-level playing field, legal certainty, impacts on SMEs). It will be more beneficial to academic research, SMEs and micro-enterprises. - Prohibition to utilise illegally acquired genetic resources and "downstream" monitoring (UC-4) => Option UC-4 combines high legal and economic risks for EU stakeholders with a low probability that the etablished user-compliance system will function.

Temporal application || In case of binding EU-level measures…decision on - Application of binding rules to future acquisitions of genetic resources (T-1) - Application of binding rules as of entry into force of the CBD in 1993 (T-2) => Option T-1 is clearly preferable. It combines legal certainty for EU users with a higher likelihood to meet important social and environmental objectives. Conversely, Option T-2 would raise many economic and legal, in part constitutional, concerns and also would be unlikely to contribute to the identified social and environmental objectives.

Complementary measures || - Bilateral cooperation between EU and major provider countries or regions (C-1) - Sectoral codes of conduct and contractual model clauses (C-2) - Technical tools for tracking and monitoring (C-3) - Awareness raising and training activities (C-4) => Options C-1 to C-4 would all create contribute positively to the functioning of the main measures identified in the study (A-2 and UC-3).

Table 5 indicates how the particular mix of implementing measures identified as the most preferable support achieving the objectives of this IA study. The preferable options are a combination of A-2 (EU platform), UC-3 (General due diligence obligation on EU users and system for formal recognition of collections as "trusted sources"), T-1 (application of binding rules to future acquisitions of genetic resources) and the different complementary actions (C-1, C-2, C-3, and C-4).

Table 5: How the implementing measures identified support achieving the set objectives

General objective || Identified measures supporting the objectives

Identify appropriate measures for implementing the Nagoya Protocol in the EU and to enable the Union to ratify and comply with the Protocol. || - The totality of measures in the package would allow Union ratification and achieve full EU compliance. - Member States would have discretion whether or not to require prior informed consent and benefit-sharing for genetic resources that belong to them. Their decisions on this would not be a precondition for Union ratification.

Specific objectives ||

Support the conservation and sustainable use of biological diversity within the EU and worldwide. || - The combination of a due diligence obligation for all EU users with a system of 'trusted sources' of collections would maximise research and development opportunities on quality samples of genetic resources. The resulting new scientific insights about biodiversity are an important conservation contribution in itself. - The maximising of research and development opportunities would translate into benefit-sharing opportunities in favour of the conservation and sustainable use of biological diversity within the EU and worldwide. - Bilateral agreements with major provider countries would provide opportunities for strengthening commitments to channel benefits to conservation purposes.

Provide EU collections, and researchers and companies in Europe with improved and reliable access to quality samples of genetic resources at low cost and with high legal certainty for acquired material. || - The system of 'trusted sources' would enhance the availability of quality samples at low cost and with high legal certainty. - Bilateral agreements with major provider countries or regions would create further opportunities for accessing quality samples. - The support to model clauses and technical tools for monitoring and tracking would strengthen EU and international networks of collections, including by improving the availability of quality samples and information about their availability.

Maximise opportunities for research, development and innovation in nature-based products and services, while establishing a level playing field for all EU users of genetic resources, with particular benefits for SMEs and for publicly funded, non-commercial research. || - The combination of a due diligence obligation for all EU users with a system of 'trusted sources' of collections would maximise research and development opportunities on quality samples of genetic resources. - The due diligence obligation as such would apply to all EU users and thus establish an EU-level playing field. This would be particularly beneficial to SMEs and publicly funded research. - Publicly funded research and SMEs would also particularly benefit from the establishment of the system of 'trusted sources' of collections. - Support for model contractual clauses would also particularly benefit SMEs and non-commercial research with little capacity.

Protect the rights of indigenous and local communities that grant access to their traditional knowledge associated with genetic resources in accordance with the domestic laws of Parties to the Nagoya Protocol. || - The combination of a due diligence obligation for all EU users with a system of 'trusted sources' of collections will ensure that traditional knowledge associated with genetic resources documented in domestic access permits and in benefit-sharing contracts is only used for the identified purposes and that agreed benefits are shared. - The work on contractual model clauses would help indigenous and local communities achieving fair and equitable terms when giving access to their knowledge

Fully respect other international specialised access and benefit-sharing instruments and be mutually supportive with other relevant international instruments and processes || - The due diligence approach would not only respect but actively support the performance of specialised ABS instruments and other relevant international instruments and processes

Operational objectives ||

Establish a credible system for user-compliance measures. || - The basic due diligence obligation for all EU users would ensure that future utilisation activities in the EU comply with applicable ABS requirements set out in domestic access permits and in benefit-sharing contracts. - The system of 'trusted sources' of collections would step by step increase the share of 'ABS proof' quality samples of genetic resources utilised in the EU and gradually squeeze out the utilisation of genetic resourcse that are not properly documented in relation to ABS. - The due diligence approach also gives a strong incentive to EU users to implement ABS best practice codes of conduct and use contractual model clauses. The early priority on supporting users in developing further such codes and clauses has a strong potential for making the EU approach to user-compliance de facto the global standard.

Improve information on access and utilisation of genetic resources in the EU || - User declarations on their compliance with the due diligence obligation will generate information on activities utilising genetic resources in the EU; - The system of 'trusted sources' of collections will generate information about specific genetic resources accessions; - The increased utilisation of low-cost electronic monitoring and tracking tools by collections and some user groups will further add information about genetic resources flow; - Member States deciding to require prior informed consent will also contribute information about access permits issued.

Minimise overall implementation costs and burdens, particularly for affected SMEs || - The general due diligence approach allows users to identify ways for seeking, keeping and passing on ABS-related information that fits best to their activities, their business model, and their placement in the EU genetic resources value chain. - The system of 'trusted collections' will considerably lower compliance efforts by all those sourcing their research material from registered collections and subsequent users of such material. - Existing best practice policies of collections in the EU mean that these could seek to become 'trusted sources' with minimal further effort, thus rewarding the early measures taken. - Complementary measures on model clauses, codes of conduct, technical tools for tracking and monitoring, or awareness raising all combine to an enabling operating environment for EU users of genetic resources and assoiated traditional knowledge. The ability to build on existing codes of coduct and best practice standars rewards early movers in the field, be it collections.

7.           Monitoring and Evaluation

Parties to the Nagoya Protocol must regularly report to the Meeting of the Parties on the implementing measures undertaken, in a format and at intervals that will be determined by the Meeting of the Parties.[40] The Protocol also establishes that Parties will undertake four years after the Protocol's entry into force (likely in 2018 or 2019) a review of the Protocol's effectiveness.[41] These obligations will apply equally to the EU and its Member States. Monitoring and evaluation measures done for the purpose of this EU Regulation should ideally provide the majority of input for complying with these global level obligations.

While Member State authorities would be expected to report to the Commission on the way the EU Regulation is applied by their designated competent authorities, the Commission will receive, keep and analyse such information.

The following information will be available on the basis of the implementing measures and may be used for monitoring and evalution purposes:

– Information on Union trusted collections and eventual difficulties in their operations;

– Records on genetic resources and related information that were supplied by Union trusted collections to third persons;

– Declarations by users of genetic resources on how they exercised due diligence;

– Records  on checks of user-compliance conducted by competent authorities and eventualy remedial actions and measures taken.

– information obtained through regular meetings of the EU Platform on access, with the help and participation of the Member States experts on issues relevant to the access pillar of the Protocol.

The Commission would launch in 2017 or 2018 a technical study documenting practices of EU sectors utilising genetic resources. This study should take the empirical work underpinning this IA study as starting point and analyse through appropriate means, also drawing on some of the information listed above, the effects and effectiveness of the EU Regulation for implementing the Nagoya Protocol in the EU.

Key indicators for monitoring and evaluation will be developed together with Member States experts, but could include 1) number of collections identified as Union trusted sources, and relevance of these collections to EU users of genetic resources; 2) number of declarations made by users on their compliance with the due diligence obligation, and relevance of missing, incomplete or false declarations in relation to all declarations made. 3) Number of checks conducted on users and number of non-compliance situations identified; 4) Number of non-compliance situations that occurred where material was sourced from a trusted collection as compared to the overall number of non-compliance situations; 5) Availability of best practices to EU users, and relative importance of best practices for utilisation activities overall; 6) Number of non-compliance situations that occurred where a user was implementing a best practice as compared to the overall number of non-compliance situations.

              Glossary of key terms used in the context of "Access and Benefit-sharing"

ABS: Acronym for "Access and Benefit-Sharing". It is used to refer to the way in which genetic resources or traditional knowledge associated with such resources is accessed and how the benefits that result from uses of such resources and knowledge are shared with the countries or indigenous and local communities providing them.

Access to genetic resources: The term is used to describe the acquisition of genetic resources in line with the access rules of a providing country that requires prior informed consent and the establishment of a benefit-sharing contract.

Access and Benefit-sharing Clearing-House Mechanism: The term refers to the global information portal that is established by the Nagoya Protocol and will be maintained by its international Secretariat. The Protocol identifies information that Parties must submit to the Clearing-House as well as information that they may submit.

Acquisition of genetic resources: The term is used to describe the activity of obtaining physical possession of samples of genetic resources.

Biodiversity: Is a term defined in the CBD and refers to the variability that exists among living organisms from all sources including among other things, terrestrial, marine and other aquatic ecosystems and the ecological complexes which they are part of. It includes diversity within species, between species and their ecosystems.

Biological resources: Is a term defined in the CBD and refers to genetic resources, organisms or parts thereof, populations, or any other biotic component of ecosystems with actual or potential use or value for humanity.

Bio-piracy: There is no common understanding of the term ‘bio-piracy’. It is mostly used to denounce situations in which companies or researchers seek intellectual property protection over traditional seeds or traditional knowledge on particular properties of plants or animals without sharing benefits with the rightful holders. Sometimes the term is used to reject, in principle, the idea of private property rights in relation to nature.

Bioprospecting: The term refers to the process of looking for potentially valuable genetic resources and biochemical compounds in nature.

Convention on Biological Diversity (CBD): the CBD is one of the three global environmental agreements adopted by the 172 states that participated in the 1992 UN Conference on Environment and Development in Rio de Janeiro. 108 heads of state and government attended the meeting.

Competent National Authorities (CNAs): Domestic administrations established by governments and responsible for granting access to their genetic resources. They represent providers on a local or national level. The Nagoya Protocol obliges its Parties to establish competent national authorities for ABS.

Compliance: Compliance is either a state of being in accordance with established guidelines, specifications, or legislation or the process of becoming so. In the context of public international law and the Nagoya Protocol it describes the situation where a state fulfils its obligations as they arise from an international treaty. The term user-compliance in contrast is used when referring to the fulfilment of users of genetic resources or associated traditional knowledge with specific ABS requirements that may be set out in domestic access frameworks of provider countries, in access permits, in specific benefit-sharing contracts, or in general user-compliance laws of countries where genetic resources and associated traditional knowledge are being utilised.

Genetic material: Is a term identified in the CBD and means any material of plant, animal, microbial or other origin containing functional units of heredity.

Genetic resources: Is a term identified in the CBD and means all genetic material of actual or potential value. Essentially, the term encompasses all living organisms (plants, animals and microbes) that carry genetic material potentially useful to humans. Genetic resources can be taken from the wild, domesticated or cultivated. They are sourced from: Natural environments (in situ) or human-made collections (ex situ) (e.g. botanical gardens, gene banks, seed banks and microbial culture collections)

Genetic resources value chain: The term is used to describe the totality of typical steps taken to create environmental, social and economic value on genes and naturally occurring biochemicals found in nature. The genetic resources value chain starts with the collection of some material and possibly ends with the successful commercialization of a final product. Typical steps taken are the collection of genetic resources, the storage of collected material, basic research on genetic resources, applied research on genetic resources, the development of products and eventually the commercialization of products. Not all these steps will necessarily be taken for each sample collected in the wild. Not all collected material is stored in collections. In a few cases material is collected by an agent of a company specifically interested in a sample of a known organism. Also, most basic research will not result in concrete applications. And much applied research ends unsuccessfully without moving to the development of a product. Likewise, many development efforts never make it to the product approval stage. The genetic resources value chain is generally explained in Annex 7. The particular characteristics of the genetic resources value chain in the EU are detailed in Annex 8.

Indigenous and Local Communities (ILCs): The CBD and the Nagoya Protocol do not define this term. It is left to the Parties of the Protocol to define this term in their implementing measures. In the context of the Nagoya Protocol the term ILCs is generally understood to encompass communities living close to nature and holding genetic resources of traditional knowledge associated to such resources. ILCs play an important role in achieving the objectives of the Nagoya Protocol.

In-situ & Ex-situ: Genetic resources can be wild, domesticated or cultivated. "In-situ" genetic resources are those found within ecosystems and natural habitats. "Ex-situ" genetic resources are those found outside their normal ecosystem or habitat, such as in botanical gardens or seed banks, or in commercial or university collections.

Internationally recognised certificate of compliance: The Nagoya Protocol establishes that domestic access permits that are made available to the Protocol's Clearing-House Mechanism shall constitute "internationally recognised certificates of compliance". All Parties with users in their jurisdiction must recognise such certificates as evidence of legal acquisition of the genetic resource covered. The possession of an internationally recognised certificate of compliance thus shields a user against allegations of "bio-piracy".

Meeting of the Parties: As per usual practice, the Nagoya Protocol identifies that the regular meetings of the collective of the Parties to the Protocol function as its supreme decision-making body. These meetings are referred to as "meeting of the parties" or "meeting of the Parties to the Protocol". The Protocol establishes that the first meeting of the Parties to the Nagoya Protocol, after its entry into force must be organised concurrently with the first meeting of the supreme decision-making body of the CBD, the "conference of the parties", that is scheduled after the Protocol's entry into force. This will likely be in 2014.

Mutually Agreed Terms (MAT): Is a term used in Article 15 CBD and establishes that specific benefit-sharing conditions must be "mutually agreed" between providers and users of genetic resources. The term is also used in the Nagoya Protocol. Given their "mutually agreed" nature, MAT are contractual arrangement and will normally be set out in private law contracts.

National Focal Points (NFPs): Domestic administrations responsible for providing information on ABS, such as the requirements for gaining access to genetic resources. All Parties to the Nagoya Protocol must establish a National Focal Point.

Prior Informed Consent (PIC): In the context of ABS and the Nagoya Protocol PIC refers to the administrative permit given by the competent national authority of a provider country to a user, prior to accessing genetic resources. However, the term is also used in relation to the right of indigenous and local communities to take a free and informed choice on whether they wish to give access to traditional knowledge associated with genetic resources. Parties to the Nagoya Protocol are obliged to protect this right of ILCs and to take measures that traditional knowledge associated with genetic resources is accessed with the "prior informed consent or the approval and involvement" of ILCs.

Providers of genetic resources: States have sovereign rights over their natural resources. Within the exercise of this sovereignty, states will determine who holds rights over genetic resources in their domestic legal order and who has the authority to grant access to genetic resources and who should be involved in the negotiation of mutually agreed terms with potential users. The possibilities range from public ownership over genetic resources, to a system where the rights over genetic resources follow the private property rights over the land. Even in case of public ownership over genetic resources, a national government will typically delegate the authority to grant prior informed consent to a sub-national (e.g. regional authority) or non-state entity (e.g. a reference collection).

Traditional knowledge associated with genetic resources: The CBD and the Nagoya Protocol do not define this term; it is left to the Parties of the Protocol to define this term in their implementing measures. Eventually, a definition may result from ongoing negotiation in the World Intellectual Property Organization. In the Nagoya Protocol, the term is used in relation to the knowledge, innovations and practices of indigenous and local communities that result from the close interaction of such communities with their natural environment, and specifically to knowledge that may provide lead information for scientific discoveries on the genetic or biochemical properties of genetic resources. It is characteristic of traditional knowledge that it is not known outside the community holding such knowledge. In the context of ABS this means, that traditional knowledge may easiest be identified if described or referred to in a specific benefit-sharing contract.

Users of genetic resources: A diverse group, including botanical gardens, industry researchers such as pharmaceutical, agriculture and cosmetic industries, collectors and research institutes. They seek access for a wide range of purposes, from basic research to the development of new products. The main users in the EU genetic resources value chain are described in Box 2 of the main IA study.

              Overview of Tables and Boxes

Boxes

Box 1: A hypothetical, best practice case of access and benefit sharing               p. 6

Box 2: Main actors and their placement in the EU genetic resources chain                      p.10

Box 3: The Korean National Biodiversity Research Institute                                            p.12

Box 4: Some examples how genetic resources utilisation contributes to public goods      p.12

Box 5: Examples of ABS best practice codes of conduct                                                    p.14

Box 6: Hypothetical scenarios illustrating the preffered options                                        p.39

Tables

Table 1: Overview of all policy options considered for the IA                                            p.18

Table 2: Comparison of options for the Access pilar of the Nagoya Protocol                    p.30

Table 3: Analysis of options addressing the User Compliance pillar of the Protocol        p.36

Table 4: Overview of the results of the analysis on the policy options                               p.44

Table 5: How identified implementing measures support the IA objectives                      p.45

[1]               Newman and Cragg (2012), "Natural Products as Sources of New Drugs over the 30 Years from 1981 to 2010". Journal of Natural Products, 75(3), pp 311–335.

[2]               Convention on Biological Diversity (Rio de Janeiro, 5 June 1992, in force 29 December 1993). The treaty is available at <http://www.cbd.int/convention/text/>.

[3]               See Council Conclusions of 20 December 2010 (paragraphs 1 and 21), 23 June 2011 (paragraph 14), European Parliament Resolution of 20 April 2012 (paragraph 101), Commission Communication on an EU Biodiversity Strategy to 2020 (COM (2011) 244) (Action 20).

[4]               Commission Communication on a Bioeconomy for Europe (COM (2012) 60 final).

[5]               Except Latvia, Malta and Slovakia.

[6]               See Council Conclusions of 20 December 2010 (paragraphs 1 and 21), 23 June 2011 (paragraph 14), European Parliament Resolution of 20 April 2012 (paragraph 101), Commission Communication on an EU Biodiversity Strategy to 2020 (COM (2011) 244) (Action 20).

[7]               A more detailed description of the legal framework established by the Nagoya Protocol is found in Annex 1. A synoptic overview of all 36 Articles of the Protocol is included in Annex 2.

[8]               See Annex 1 for a detailed description of the differing views.

[9]               For example, the International Treaty on Plant Genetic Resources for Food and Agriculture concluded in 2001 in the context of the UN Food and Agriculture Organization and to which the EU is a Party. For details see Annex 1.

[10]             The country studies focussed on BE, BG, DE, ES, FR, NL, PL, and the UK.

[11]             The typical steps in the genetic resources value chain are described in Annex 9 to this IA.

[12]             For details see Annex 8, pp. 57-59.

[13]             The contrast between the principled recognition of the importance of traditional knowledge and its limited use in practice reflects the practical challenges and often significant costs involved in working with indigenous and local communities to obtain access to some of their knowledge.

[14]             Botanic gardens, culture collections and other ex situ collections are very much linked because they are often hosted by the same institutions, generally universities or public research institutes.

[15]             “Seed” refers to all planting material used in crop production, including seed grains, cuttings, seedlings, and other plant propagation materials.

[16]             For details see Annex 8 pp. 77-79.

[17]             For details see Annex 8 pp. 79-81.

[18]             "Green" biotechnology refers to biotechnological applications in agriculture, "red" to its application in medical processes, "white" to uses of biotechnology in industrial processes.

[19]             See summary of the public consultation in Annex 3.

[20]             Article 30 Nagoya Protocol

[21]             It must also be noted that the US, which is not a Party to the CBD and therefore unlikely to ratify the Nagoya Protocol, has established domestic legislation (eg, US Lacey Act, specialised legislation for some US national parks) and guidelines (eg, for the National Institutes of Health) that at least partially support taking user-compliance measures as required under the Nagoya Protocol. The US furthermore seeks to minimise eventual negative impacts from its non-Party status on US researchers, collections and companies by engaging with major provider countries of genetic resources through large-scale public-private partnership projects (e.g. US Panama).

[22]             To indicate the magnitude: there are 550 botanical gardens in the EU of which 130 participate in IPEN.

[23]             See Box 5 above.

[24]             The different academic views on the Protocol's temporal application are described in Annex 1.

[25]             The different academic views on the Protocol's temporal application are described in Annex 1.

[26]             See for example the model agreements made available by the US National Institutes of Health <http://www.ott.nih.gov/forms_model_agreements/>.

[27]             The full reference and executive summary of this study are included in Annex 9.

[28]             The 5-step grading system applied ranges from "++" for significant positive impact; over "0" for neutral impact; to "--" for a significant negative impact; "n.a." indicates that an assessment criteria is not meaningful for analysing a specific measure (e.g., a criteria that is relevant only for user-compliance is not meaningful for analysing the performance of an access-related measure); "unclear" indicates instances, where an analysis cannot be made because of date limitations.

[29]             Essentially staff time for organising meetings of the platform 2-4 times per year and travel costs in case of meetings outside of Brussels.

[30]             Norway, for example, has adopted user-compliance measures that are conceptually based on Option UC-4, although it seems unclear how monitoring and enforcement works (for a critical account see Tvedt and Fauchald, The Journal of World Intellectual Property (2011), Vol. 14, no. 5, pp. 383–402). Switzerland opened a public consultation in May 2012 on a legislative proposal that seems similar to Option UC-2 (see <http://www.sib.admin.ch/?id=756&L=1>).

[31]             See ICC Document "Nagoya Protocol Implementation in the EU", No. 450/1075 of 18 June 2012.

[32]             See the examples in Box 5.

[33]             This is markedly different from genetic material as such.

[34]             Article 2c) Nagoya Protocol.

[35]             To show the magnitude of this challenge, one major company providing biochemical compounds for industrial users offers well over 90 million different molecules in its catalogue (see, for example, www. http://www.sigmaaldrich.com/).

[36]             See Box 3.

[37]             <http://www.wfcc.info/home/>.

[38]             For an interesting project by Kew botanical garden in the UK to "repatriate" information on herbarium data for North-Eastern Brazil see <http://www.kew.org/science/tropamerica/repatriation.htm>.

[39]             Article 21 Nagoya Protocol.

[40]             Article 29 Nagoya Protocol.

[41]             Article 31 Nagoya Protocol.

Commission Staff Working Document

Proposal for a Regulation of the European Parliament and of the Council

ON ACCESS TO GENETIC RESOURCES AND THE FAIR AND EQUITABLE SHARING OF BENEFITS ARISING FROM THEIR UTILISATION IN THE UNION

Part 2 - Annexes

Annex 1: The Legal Framework established by the Nagoya Protocol 3

Annex 2: Synopsis of all provisions of the Nagoya Protocol 7

Annex 3: results of the public consultation conducted in support of the IA.. 16

Annex 4: Policy options considered but discarded in the IA.. 24

Annex 5: Detailed analysis of options for implementing the access pillar of the Nagoya Protocol 29

Annex 6: Detailed analysis of options for implementing the user-compliance pillar of the Nagoya Protocol 35

Annex 7: The genetic resources Value Chain. 63

Annex 8:  The "EU Baseline" - current practices of utilisation of genetic resources and associated traditional knowledge in the European Union. 65

Annex 9: Tracking and Monitoring Genetic Resources Flow.. 100

Annex 1: The Legal Framework established by the Nagoya Protocol

Genetic resources are widely used for a broad range of purposes. A significant part of EU researchers and industries directly or indirectly depend on reliable conditions for accessing and exchanging high quality samples of genetic resources. Examples include plant and animal breeding, natural material as input for modern biotechnology, or the analysis of genes found in nature as basis for developing new drugs.

States hold sovereign rights over genetic resources that originate within their jurisdiction (similar to crude oil). The CBD establishes a general obligation on its Parties to facilitate access to their genetic resources and to share benefits for resources utilised from other Parties. The general ABS framework set out by the CBD has not performed well. This has created frustrations on both sides of the ABS relationship: the technical capability for nature-based research have increased dramatically, however, EU users often face restrictions and legal risks when acquiring research material in other countries. Countries providing genetic resources in contrast, are reluctant to provide access if there is no commitment that agreed benefit-sharing obligations will be respected once a resource has left their jurisdiction and is used in another country.

Access and Benefit-sharing in the CBD/ Nagoya Protocol and other international instruments

Access and benefit-sharing for genetic resources and for traditional knowledge associated with such resources is addressed in the framework of the CBD and its Nagoya Protocol, but also in other international institutions. This includes the FAO International Treaty on Plant Genetic Resources for Food and Agriculture, the FAO Commission on Genetic Resources for Food and Agriculture, the WTO Agreement on Trade Related Aspects of Intellectual Property Rights, the World Intellectual Property Organization, the World Health Organization, the UN Convention on the Law of the Sea, and various indigenous and human rights bodies.

The CBD has the character of a global framework agreement that is based on principled ideas and obligations. It applies to all genetic resources over which states hold sovereign rights. The Nagoya Protocol has the same broad coverage than its "mother instrument". However, its provisions are much more specific and operational. It is therefore important that the Nagoya Protocol explicitly clarifies how it relates to activities in other international fora. The Protocol explicitly does not apply to specialized access and benefit-sharing instruments. Instruments in this sense are the 2001 FAO International Treaty on Plant Genetic Resources for Food and Agriculture and the 2011 WHO Pandemic Influenza Preparedness Framework. Furthermore, Parties to the Protocol must seek to establish a mutually supportive relationship with other relevant international instruments and processes.

Another reflection of the Protocol's broad coverage is its explicit mentioning of some "special considerations": 1) Each Party must create conditions to promote research that contributes to the conservation of biological diversity, including through simplified access for non-commercial research; 2) Each Party must pay due regard to cases of present or imminent emergencies that threaten or damage human, animal or plant health; and 3) each Party must give special consideration to the importance of genetic resources for food and agriculture and their role for food security.

Objective, geographic and temporal scope of the Nagoya Protocol

The fair and equitable sharing of benefits arising from the utilization of genetic resources is the main objective of the Protocol (Article 1). Effective benefit-sharing is considered as an important incentive for the conservation and sustainable use of biological diversity. The geographical scope of the Protocol is on genetic resources over which states hold sovereign rights (Article 3). The Protocol does not apply to genetic resources that are found in areas beyond national jurisdiction, such as the high seas or Antarctica. As regards temporal scope, the Protocol applies to all genetic resources and traditional knowledge associated with such resources that are accessed and utilized after the entry into force of the Nagoya Protocol for a Party. It does not apply to genetic resources that were acquired prior to the entry into force of the CBD, i.e. 29 December 1993. In the view of some legal scholars, the Protocol also applies to the new or continued utilization of genetic resources that were acquired after the entry into force of the Convention, but before the entry into force of the Protocol for a Party. However, this interpretation is contested by other scholars. Parties must make a choice whether to follow this interpretation in their implementing measures or not. The Nagoya Protocol also does not apply to plant genetic resources covered by the FAO International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA).

Access to genetic resources and to traditional knowledge associated with such resources

The Nagoya Protocol establishes detailed obligations how Parties must regulate access if they decide to require benefit-sharing for the utilization of their genetic resources (Article 6). Importantly, the Protocol defines that "utilization of genetic resources" means to conduct research and development on the genetic or biochemical composition of genetic resources (Article 2c)). This means the Protocol expects Parties to address in their domestic access framework not only the use of genes, but also the use of naturally occurring biochemicals found in acquired genetic material.

The Protocol obliges Parties that require benefit-sharing for the use of their genetic resources to establish a domestic regulatory framework that oblige potential users to obtain an access permit (so called prior informed consent, PIC) and also enter into a contract that sets out specific benefit-sharing conditions (so called mutually agreed terms, MAT). The Protocol provisions on access oblige Parties to create clear and transparent access frameworks, based on fair and non-arbitrary rules, which result in robust and reliable access decisions, in a cost-effective manner and within a reasonable period of time.

Special access obligations apply in relation to research with non-commercial purpose (Article 8(a)), in case genetic resources have pathogenic properties that threaten or damage human, animal or plant health (Article 8(b)), as well as in relation to genetic resources for food and agriculture (Article 8(c)).

The Protocol also establishes obligations for Parties on how to involve indigenous and local communities whenever access is sought to traditional knowledge associated with genetic resources held by a community or to genetic resources over which a community holds established rights (Articles 7, 12, 5.2 and 6.2). Effective implementation of these obligations will pose a challenge to some developing countries with little administrative and scientific capacity. This underlines the importance of targeted capacity-building, for example through bilateral partnerships.

EU laws do not regulate access to genetic resources or to associated traditional knowledge within the Union. EU nature legislation is indirectly relevant for in-situ collecting activities in EU protected areas. Furthermore, Member States which decide to require benefit-sharing and to develop an access framework in accordance with the Protocol, will need to ensure that eventual restrictions on access are consistent with the fundamental freedoms and with applicable EU legislation on, for example, plant variety protection, or animal and plant health.

User-compliance

The Nagoya Protocol obliges Parties to take measures to ensure that only legally acquired genetic resources and associated traditional knowledge are utilised within their jurisdiction (Articles 15 and 16). Parties must take measures to monitor compliance of users under their jurisdiction, including by designating one or more checkpoints for this task (Article 17). They must take appropriate, effective and proportionate measures to address situations where users do not comply with their obligations. Parties must also ensure an opportunity for recourse in case of disputes arising from benefit-sharing agreements set out in MAT (Article 18). Importantly, the Protocol leaves Parties some flexibility through which measures to ensure user-compliance. The main user-compliance obligations of the Protocol are complemented by provisions on model contractual clauses (Article 19), codes of conduct (Article 20), or awareness raising activities (Article 21).

EU laws do not specifically address user-compliance. The only exception is a reference to the eventual utility of patent disclosure requirements in recital 27 of Directive 98/44/EC on the legal protection of biotechnological inventions as a means to monitor the use of genetic resources. User compliance measures have an apparent link to the functioning of the EU internal market. It depends on the design of EU implementing measures (point of intervention in value chain, type of measure) whether existing Union laws on intellectual property rights or product-approval are affected. As regards disputes arising from benefit-sharing agreements, Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters seems relevant.

Benefit-sharing

The Nagoya Protocol establishes a general obligation on Parties to take measures so that benefits arising from the utilization of genetic resources as well as subsequent applications and commercialization are shared in a fair and equitable way with the Party providing such resources (Article 5(1) and (3)). This obligation is closely related to the general objective of the Protocol (Article 1). Importantly, concrete benefit-sharing shall be on mutually agreed terms (MAT), that is on the basis of private law contracts negotiated between providers and users of genetic resources or associated traditional knowledge (Article 5(1), (2), and (5)). The Protocol makes conclusion of MAT an integral part of the administrative process of access-decisions of Parties that require benefit-sharing for the use of their resources. The content of MAT determines the type, time and amount of benefits to be shared. Users of genetic resources will need to know the content of applicable MAT to understand the reach of concrete benefit-sharing obligations in specific cases. Complementary measures on model contractual clauses or training in contract negotiations may help users and providers to more effectively engage in ABS activities.

EU laws do not specifically address benefit-sharing for genetic resources or associated traditional knowledge, be it in general terms or in relation to benefit-sharing contracts.

Institutional provisions, capacity-building, technology transfer, international cooperation

Parties to the Nagoya Protocol must designate a national focal point on access and benefit-sharing (Article 13(1)) and one or more competent national authorities responsible for practical decision-making on access and benefit-sharing (Article 13(2)). Furthermore, the Protocol establishes an international information-sharing portal, the so called Access and Benefit-sharing Clearing House Mechanism, through which relevant information is made available. Parties are obliged to submit minimum information to the Clearing House on, for instance, domestic ABS measures and national focal points (Article 14(2)). They may submit further information, such as on model contractual clauses or codes of conduct (Article 14(3)).

The Nagoya Protocol also obliges Parties to cooperate in capacity-building (Article 22). It establishes a softly worded obligation on technology transfer to developing country Parties (Article 23). Various Articles oblige Parties to cooperate internationally for implementing the Protocol. This includes, for example, international cooperation in technical and scientific research and development programmes (Article 23), cooperation in case the same genetic resources are found in the territory of more than one Party (Article 11(1)), or cooperation in specific cases of alleged violations of domestic ABS requirements of a Party (Article 15(3) and 16(3)).

EU laws do not specifically address these aspects of Nagoya Protocol implementation. The Commission currently supports an ABS-capacity building initiative in the ACP countries, that aims at linking ABS policies to the management of protected areas.

ABS laws and policies of EU Member States

A survey of ABS laws and policies of eight EU Member States conducted in preparing this IA[1] showed that two Member States (ES, BG) have developed but currently do not apply access legislation, and none of the Member States surveyed had taken user-compliance measures as required under the Protocol. Some Member States (DK, NL, DE) have in the past or currently support ABS-related capacity-building activities, particularly in Africa.

              Annex 2: Synopsis of all provisions of the Nagoya Protocol

Article of the Nagoya Protocol || Description || Operational contents

1 || This provision presents the general objectives of the Protocol: fair and equitable benefit sharing contributing to the conservation and sustainable use of biological diversity. || Implementing measures must be consistent with the objectives of the Protocol.

2 || The provision defines key terms used in the treaty || Implementing measures must be consistent with the terms defined in the Protocol.

3 || This provision describes the treaty's scope || The scope of implementing measures must be consistent with this Article

4 || This provision explains the relationship of the Nagoya protocol with other international agreements and instruments. || Special agreements must be respected and a mutually supportive relationship to other relevant international agreements and instruments must be established

5(1) and (3) || The provision sets out the basis benefit-sharing obligation of Parties as regards the utilisation of genetic resources || Paragraph 1, first sentence establishes a general obligation to share benefits arising from research and development on the genetic or biochemical composition of genetic resources as well as from subsequent applications and commercialisation. The second sentence clarifies that concrete benefit-sharing commitments must be mutually agreed between provider and user, this means set out in (private law) contracts. Paragraph 3 obliges Parties to take appropriate measures for implementing paragraph 1.

5(2) || The provision addresses benefit-sharing in situations where genetic resources are owned by indigenous and local communities. || Parties with indigenous and local communities must take measures in support of channelling benefit-sharing to communities, wherever the domestic law of that state establishes rights of communities over genetic resources.

5(4) || The provision addresses types of benefits that may be shared. || The paragraph together with the Annex to the Nagoya Protocol provides Parties and stakeholders with an indicative list of benefits that may be considered when establishing concrete benefit-sharing agreements.

5(5) || The provision addresses benefit-sharing for the use of traditional knowledge held by indigenous and local communities. || Parties with indigenous and local communities must take measures that concrete benefit-sharing arrangements are concluded in case use is made of traditional knowledge associated with genetic resources that is held by a community in the jurisdiction of that Party and that the communities are the recipients of eventual benefits.

6(1) and (3) || This is the main Protocol provision on access to genetic resources. || All Parties to the Protocol that decide to require prior informed consent and benefit-sharing for the use of genetic resources over which they hold sovereign rights must establish domestic rules that comply with the "international access standards" in paragraph 3. The international access standards establish basic obligations in relation to legal certainty, clarity and transparency; and non-arbitrary rules. Parties must furthermore set out clear criteria and procedures for obtaining prior informed consent decisions and for the establishment of benefit-sharing contracts.

6(2) and 6(3) f || These are the main Protocol provisions dealing with access to genetic resources that are "owned" by indigenous and local communities || Parties with indigenous and local communities must take measures so that the prior informed consent or approval & involvement of indigenous and local communities is obtained where these have, in accordance with the domestic law of this Party, the established right to grant access to genetic resources.

7 || This is the main Protocol provision on access to traditional knowledge associated with genetic resources that is held by indigenous and local communities. || Parties with indigenous and local communities must take measures with the aim of ensuring that traditional knowledge of their indigenous and local communities is accessed with the prior informed consent or approval and involvement of these communities and that benefit-sharing agreements are established. Parties have some flexibility on how to implement this obligation to accommodate for their specific domestic situations ("in accordance with domestic law").

8 || The Nagoya Protocol, in principle, applies to all genetic resources over which states hold sovereign rights. Article 8 is a reflection of this broad coverage and identifies specific issues Parties must address in their implementing measures. These are non-commercial research, public health emergencies, and the special role of genetic resources for food and agriculture for food security and || In implementing the Protocol Parties must (a) create conditions to promote and encourage biodiversity research, particularly in developing countries, including through simplified access for non-commercial purposes (b) avoid that the Protocol's bilateral approach to access and benefit-sharing stands in the way of access to genetic resources in emergency situations that threaten, human, animal and plant health (c ) reinforce food security through specific treatment and consideration of genetic resources for food and agriculture

9 || The provision establishes that benefits-sharing must contribute to the conservation and sustainable use of biological diversity || Parties shall encourage users and providers to direct benefits arising from utilisation of GR to biodiversity conservation and sustainable use. The Protocol does not set out specific measures to this end.

10 || The provision addresses the so called Global Multilateral Benefit-sharing Mechanism || The Protocol does not establish a Global Multilateral Benefit-sharing Mechanism. However, it obliges the collective of the Parties to consider the need for and modalities of such mechanism. If Parties agree that there is such need, the mechanism could be established at the earliest by a decision of the first meeting of the Parties to the Nagoya Protocol.

11 || The provision deals with transboundary cooperation in situations of shared resources or shared traditional knowledge || The Article sets out a best endeavour obligation on Parties to cooperate with each other (i) where the same genetic resources are found within the territory of more than one Party, and (ii) where the same traditional knowledge associated with genetic resources is shared by one or more indigenous and local communities in several Parties.

12 || This is the main Protocol provision on traditional knowledge associated with genetic resources. || The Article establishes different obligations that are primarily directed at Parties with indigenous and local communities. (1) In implementing the Protocol Parties must take into consideration customary laws, community protocols and procedures of indigenous and local communities (2) Parties must establish mechanisms for informing potential users of traditional knowledge about their obligations. These mechanisms must be developed with the effective participation of the communities concerned. (3) Parties must make a best endeavour effort to support indigenous and local communities in developing community protocols, minimum requirements for benefit-sharing contracts, and model contractual clauses. (4) Parties are obliged not to restrict the customary use and exchange of genetic resources and traditional knowledge within and amongst indigenous and local communities.

13 || The provision sets out the roles of national focal points and competent national authorities that Parties must establish. || The Article obliges each Party must designate an ABS focal point for liasing with the international Secretariat and responding to information requests by stakeholders. Each Party must also designate one or more competent national authority that is responsible for granting access and advising on applicable procedures for requiring prior informed consent and entering into mutually agreed terms.

14 || The provision establishes a global information-sharing portal managed by the international Secretariat, the so called Access and Benefit-sharing Clearing-House and identifies information that must or may be shared by Parties. || Paragraph 1 establishes the ABS Clearing-House. Paragraph 2 lists information that Parties must provide, without prejudice to the protection of confidential information. This includes national ABS laws, information on focal points and competent authorities and information on national access permits. Paragraph 3 lists information that Parties may make available. This includes information on indigenous authorities, on model contractual clauses, on codes of conduct, or technical tools for monitoring genetic resources flow. Paragraph 4 mandates the first meeting of the Parties to the Protocol to decide on the specific operating modalities of the Clearing-House.

15 || This is the main Protocol provision on obligations of Parties in relation to the ABS-compliance of users of genetic resources within their jurisdiction. || Paragraph 1 obliges each Party to take domestic measures with legal effect so that users of genetic resources within its jurisdiction only utilise genetic resources that were legally acquired in provider countries in accordance with applicable requirements of these countries on prior informed consent and the establishment of mutually agreed terms. Paragraph 2 obliges each Party to take measures if users within its jurisdiction do not comply with its domestic measures on user-compliance. Paragraph 3 sets out a best endeavour obligation on Parties to cooperate with each other in case of alleged violations of domestic access frameworks of provider countries.

16 || This is the main Protocol provision on obligations of Parties in relation to the ABS-compliance of users of traditional knowledge associated with genetic resources within their jurisdiction. || Paragraph 1 obliges each Party to take domestic measures with legal effect so that users of traditional knowledge associated with genetic resources within its jurisdiction only utilise knowledge that was legally acquired in accordance with applicable requirements of provider countries on prior informed consent and the establishment of mutually agreed terms. Paragraph 2 obliges each Party to take measures if users within its jurisdiction do not comply with its domestic measures on user-compliance. Paragraph 3 sets out a best endeavour obligation on Parties to cooperate with each other in case of alleged violations of domestic access frameworks of provider countries.

17 || This is the main Protocol provision on monitoring the utilisation of genetic resources || Paragraph 1 first sentence obliges each Party to take appropriate measures for monitoring and enhancing transparency regarding the utilisation of genetic resources within its jurisdiction. The scope of the monitoring obligation is informed by the definition of "utilisation of genetic resources". The second sentence of Article 17.1 introduces a non-exhaustive list of ideas for monitoring and enhancing transparency. Each Party must designate at least one "checkpoint" with generally described functions, each Party must encourage users and providers to make use of contracts as monitoring mechanisms, and each Party must encourage the use of cost effective communication tools and systems for monitoring purposes Paragraph 2 establishes that domestic access permits that are made available to the Clearing-House Mechanism shall constitute internationally recognised certificates of compliance. All Parties must recognise such certificates as evidence of legal acquisition of the genetic resource covered (paragraph 3). Paragraph 4 sets out the minimum content of internationally recognised certificates.

18 || This is the main Protocol provision on measures in support of compliance with benefit-sharing contracts || Paragraph 1 obliges each Party to encourage providers and users of genetic resources to include appropriate dispute resolution clauses in benefit-sharing contracts, as these will per se raise issues on where and how eventual disputes must be settled, and which laws would apply. Paragraph 2 obliges each Party to provide that opportunities for recourse are available under their legal systems in cases of disputes arising from benefit-sharing contracts. Paragraph 3 sets out a general obligation on access to justice and the use of mechanisms regarding mutual recognition of foreign judgments and arbitral awards. Paragraph 4 establishes that the effectiveness of Article 18 will be reviewed in accordance with the general review under Article 31.

19 || The provision deals with model contractual clauses || The Article obliges each Party to encourage the development, update and use of model contractual clauses for benefit-sharing agreements. It also instructs the collective of the Parties to periodically take stock of the use of clauses.

20 || The provision deals with codes of conduct, guidelines and best practices or standards || The Article obliges each Party to encourage the development, update and use of codes of conduct, guidelines and best practices or standards in relation to ABS. It also instructs the collective of the Parties to periodically take stock of the use of such codes, guidelines or practices and standards, and consider recognising some as best practice in the field.

21 || The provision deals with awareness-raising || The Article obliges all Parties to take awareness raising measures, it also sets a non-exhaustive list of measures that may be taken for awareness-raising purposes.

22 || The provision deals with capacity-building activities || The Article in its paragraph 1 sets out a general obligation on Parties to cooperate in capacity-building and capacity development to effectively implement the Protocol. The Article singles out the particular needs of developing country Parties in this regard. It also includes a detailed and non-obligatory list of areas and measures for building capacity.

23 || The provision deals with technology transfer || The Article refers back to the relevant CBD provisions on technology transfer and stipulates in addition that the objective of such transfer is "to enable the development and strengthening of a sound and viable technological and scientific base for attainment of the objectives of the Convention and this Protocol."

24 || The provision addresses the relationship of Parties to the Protocol with non-Parties. || The Article obliges Parties to encourage non-Parties to adhere to the Protocol and to contribute appropriate information to the Access and Benefit-sharing Clearing-House.

25 || The provision deals with the Protocol's Financial Mechanism || The Article establishes that the financial mechanism of the CBD – the Global Environment Facility - shall also be the financial mechanism of the Protocol. The Article also addresses how guidance to the financial mechanism must be developed and that the interests of developing and least developed countries must be considerations in developing such guidance.

26 || The provision deals with Meetings of the Parties to the Nagoya Protocol || The Article establishes the meeting of the Parties to the Protocol as the supreme decision-making authority in Protocol matters. It addresses issues of participation in meetings, identifies a non-exhaustive list of functions of meetings of the parties, it also deals with rules of procedure. Importantly, it is established that the first meeting of the Parties to the Nagoya Protocol must be held concurrently with the first meeting of the Conference of the Parties to the CBD that is scheduled after the Protocol's entry into force.

27 || The provision deals with Subsidiary Bodies || The Article establishes that subsidiary bodies of the CBD may also serve the Nagoya Protocol. It also addresses the participation status of CBD Parties that are not (yet) Parties to the Protocol in meetings of subsidiary bodies that serve the Protocol.

28 || The provisions deals with the international Secretariat || The Article establishes that the Secretariat to the CBD also serves as Secretariat for the Nagoya Protocol and that necessary budgetary arrangements must be decided by the first meeting of the parties.

29 || The provision deals with monitoring and reporting. || Each Party to the Protocol must regularly report on the measures taken for implementing the Protocol. The reporting dates and format are determined by the conference of the Parties.

30 || The provision deals with the Protocol's compliance mechanism || The Nagoya Protocol does not establish a compliance mechanism. However, Article 30 obliges the first meeting of the Parties to "consider and approve cooperative procedures and institutional mechanisms to promote compliance" with the Protocol provisions and to address cases of non-compliance.

31 || The provision deals with the assessment and review || The provision establishes that a first review of the effectiveness of the Protocol shall be undertaken four years after the Protocol's entry into force and at to be determined intervals thereafter.

32 || The provision deals with the Protocol signature || The provision establishes that the Protocol was open for signature from 2 February 2011 to 1 February 2012. During that time it received 92 signatures.

33 || The provision deals with the Nagoya Protocol's entry into force || Paragraph 1 establishes that the Protocol shall enter into force on the ninetieth day after the deposit of the fiftieth instrument of ratification. Paragraph 2 addresses the entry into force of the Nagoya Protocol for a Party. Paragraph 3 establishes that instruments of ratification deposited by regional economic integration organizations (such as the EU) are not counted additional to those deposited by its member states.

34 || The provision addresses the issue of reservations. || The Article establishes that Parties are not allowed to make reservations to the Protocol. This is standard practice in multilateral environmental agreements. The Article is necessary since general rules of international treaty law would enable states to make specific reservations when ratifying the Protocol.

35 || The provision deals with the possibility of a Party to the Protocol to withdraw from being a Party. || Paragraphs 1 and 2 establish set out the substantive and formal conditions for withdrawing from the Protocol.

36 || The provision deals with the authentic texts of the Protocol || The Nagoya Protocol was negotiated in English. The Article establishes that the Arabic, Chinese, English, French, Russian and Spanish language versions of the Protocol are considered as equally authentic. This is important for interpretation purposes.

              Annex 3: results of the public consultation conducted in support of the ia

I. Summary

The list of questions together with the results of the web-based public consultation have been published in the website of the European Commission under the following link:

http://ec.europa.eu/environment/consultations/abs_en.htm

1. Overview of the participants

The Commission received 42 responses to the questionnaire and one contribution by the Government of Norway. The relatively small number of replies received actually represents a much broader number of respondents, since more than 40% of the replies came from stakeholder associations with hundreds or thousands of members each. The breakdown of the respondents is as follows:

– Associations of stakeholders: 17 replies (41% of the total answers)

– Universities, collections and Research Institutions: 17 replies (40% of the total answers)

– Individual Industries: 4 replies (10% of the total answers)

– EU Working Groups on genetic resources: 2 replies (5% of the total answers)

– NGOs: 1 reply (2% of the total answers)

– Indigenous and local communities: 1 reply  (2% of the total answers)

2. Main messages from the consultation

a) The vast majority of respondents pleaded for a harmonised approach at EU level especially on user compliance to effectively implement the NP and its objectives in the EU, while certain of them even pleaded for a harmonised approach worldwide. Respondents judged a harmonised approach at EU level as cost effective, non-discriminatory and supportive of research activities All respondents (except few neutral replies) agreed on the need for a harmonised approach at EU level to effectively implement the NP and its objectives in the EU.             REASONS:     - Avoid increase in administrative burden, time and costs             - Mechanisms to access, transport and control of genetic resources must be international             - Avoid discrimination against holders of traditional knowledge and fail to protect them                                     - Avoid limitation for intra-EU commerce of finished products                                     - Support to research activities                                     - Ensuring common interpretation             Several times it was even emphasized to strive for harmonisation worldwide. Except for CABI (International Non-Profit Organisation occupied with environmental and agricultural issues) and the neutral replies, all respondents strive for a harmonised approach at EU level regarding establishing access legislation in the EU.             CABI's reason not to support the idea of a harmonised approach: Additional legislation is not necessary at the EU-level; controls should be implemented at national level and these may simply be community operational guidance where failure to comply means exclusion from the market.

b) The major part of respondents prefer a Regulation as the most appropriate legislative instrument for guaranteeing harmonised application of ABS rules in the EU, among them most industries and industry associations, gene banks and NGOs. Regulations bring clarity and legal certainty thus facilitating transactions related to genetic resources utilization. 1. The respondents striving for a regulation being the most appropriate legislative instrument for EU legislation on ABS are (24/42 = 57%):             - GROUP I (most industries and associations within pharmaceutical, health&beauty, breeding, seeds, and biotechnology sectors) (19)                         - Genebank (1)                         - NGO supportive of Indigenous and Local Communities (ILCs) (1) REASONS:     - On the issue of respect for ILCs rights, a regulation harmonising obligations of EU MS is more appropriate - A regulation will enforce MS to implement directly into their national legislation and guarantee harmonisation                                     - assures clarity and legal certainty 2. The respondents striving for a directive being the most appropriate legislative instrument for EU legislation on ABS are (5/42 = 12%):    - Botanical Garden (1) - National Museum (1) - University (1) - Industry (herbal medicinal products) (1) REASONS:     - Assures that main goals will be achieved while some adaptation remains possible - Although it will require time for assessment and practices, this is the preferable legislative instrument - For BGs, assures the continuous role of supporting and explaining issues pertaining to the biodiversity crisis 3. Certain respondents do not prefer one or the other, however, they express clearly that any legislative instrument should not impede the good functioning of the organisation (3/42 = 7%). The remaining respondents voted blanco (10/42 = 24%).

c) Regarding the administrative burden, respondents can be divided into two groups, one that expects an increase, another which considers the effects will depend on the way of implementation.

d) With regard to the effects on competitiveness and the economy, respondents generally agree that it will depend on the way the Protocol will be implemented. There will be positive effects if the EU ABS regime promotes wider sustainable use of genetic resources on the basis of clear, transparent and predictable rules.             positive effects when:            - Regime promotes wider sustainable use and confidence - Regime is user-friendly leading to smooth flow in R&D and innovation - Regime is transparent, simple, clear and predictable negative effects when:           - Regime promotes extra administrative burden                                                 - Unclear ABS requirements lead to uncertainties                                                 - Loss of business confidential information (loss of competitive                                       advantage)                                                 - Lack of clearly designated approval authorities - Regime is unclear, creates trade barriers and has lack of uniformity

e) particular categories of users, especially the group of industries and associations found in the health & beauty, seeds, breeding, pharmaceutical and biotechnological sectors expressed certain specific concerns such as :-

– The need to take into consideration the lengthy supply chains and their implications for the burden of compliance;

– Non-existence of information on PIC and MAT does not imply lack of compliance with national rules (bio-piracy);

– Checkpoints should be effective and not be seen as a 'policing' mechanism

f)  Institutions and organisations within the health sector are mainly concerned about the threat on development of new (veterinary) medicinal products, and its consequences on (animal/public) health and the competitiveness of the industry. To avoid complication or delay of both R&D and production, in particular for emerging diseases, within this sector it is stated clearly that pathogens used in the pharmaceutical industry should be excluded from the NP.

g) Botanical Gardens especially emphasized their concern about staff reallocation problems (in particular for the smaller gardens). Furthermore, whatever the legislative instrument will be, it must not impede botanical gardens being facilitators of the 3 objectives of the CBD.

h) Research Institutions mostly communicated the importance of clear, simple, transparent and accessible procedures to avoid missed opportunities for collaborations with providers. Within this sector, the risk of something not fully clarified at the time of access and the possible sanctions later on, often discourages researchers to collaborate. Consequently, benefits from such collaborations will not accrue nor add to the conservation of biodiversity.

i) Many respondents proposed the use of standard clauses or model contracts for MAT, such as found in the ITPGRFA.

II. DETAILS OF THE RESPONSES TO THE PUBLIC CONSULTATION

1. MAJOR CHALLENGES ARISING FROM THE ENTRY INTO FORCE OF THE NAGOYA PROTOCOL

Concerns of stakeholders with respect to the new legal situation that will result from the entry into force of the Nagoya Protocol

Mechanisms, countries will put in place to implement the Nagoya Protocol, as well as the multiplication of national legislations and competent authorities in provider countries, will impact on research activities in the EU and exchanges of samples. Access to genetic material used for sustainable, non-profit public activities may be compromised or denied and R&D discouraged.

The lack of harmonisation between legal frameworks worldwide may increase administrative burdens and huge upfront costs. For instance, certain sectors collecting in the wild, like microbial collections, are not in a position to negotiate in advance individual agreements since the number and nature of collected microorganisms are at this stage unknown and the isolated microorganisms are multifunctional and can be utilised in many different sectors. It will be not envisageable for them to sign agreements for each individual organism for each use as the number of agreements will be enormous. A different solution for benefit sharing might be useful in this case such as an end use triggered sharing of benefits.

Several users also pointed out that insecurity and insufficient capacity of authorities in provider countries to deliver in conformity with the Protocol may create disruption even in the existing raw materials supply chain while others pointed out the risk of competition between users in the case they request access to the same genetic resource.

There will be a challenge to maintain close relationship between the 3 objectives of the CBD if interpretation/application of the NP is not consistent i.e. ABS regulatory frameworks focus only on monetary incentives and do not integrate broader social values associated with the use/exchange of GRs such as conservation and sustainable use.

Problems deriving from the absence of a clear legal framework in provider countries

Existing ABS regimes are very different and diverse while the research activities, especially those based on biotechnology, are global and located inside and outside the EU. Rules and procedures in existing ABS regimes are not clear for obtaining PIC and users are facing a series of difficulties to verify conformity with existing rules. This is worsened by different and diverse bureaucratic systems which are often ineffective and inefficient.

Since a few years many countries are making the rules for obtaining GRs more stringent and the process for obtaining PIC seems to become more and more politicised, including for example a link between obtaining IPRs and ABS, or introducing retroactive measures, thereby substantially increasing legal uncertainty.

Rights and obligations as defined in national implementation regulations are neither clear nor practical; the absence of clear rules creates legal uncertainty and increases costs. As a consequence users might decide that obtaining GRs entails too much risk because:

· Access is time-consuming and burdensome

· Users might face further requirements or sanctions later, while further developing or commercialising products, thereby undermining the value of an eventual commercial product, or even facing a situation of alleged non-compliance with rules that came into existence years after work on a specific product began. 

· Users will not be able to obtain PIC and MAT in case a provider country has unrealistic views on the potential commercial value of a GR

Expected positive/negative economic impacts in comparison with current practices

Bring awareness, guidance and legal certainty for ethical sourcing practices is a positive expectation of most of the users. Clarification of procedures will help users to secure long-term sourcing while managing scientific risks.

The entry into force of the ABS Protocol is an opportunity for the EU to develop an all-encompassing ABS regime providing for clear predictable rules, guaranteeing access to GRs and providing for a workable and fair benefit sharing mechanism. Such a regime could be beneficial for users and result in an ABS regime that promotes wider sustainable use of GRs and increases confidence in the way ABS is taking place.

The adoption of a user-friendly ABS regime in the EU will encourage a smooth flow in R&D and innovation involving users. The EU has a wide range of very reputed and important academia, research institutions and companies which in addition are working together with stakeholders in developed and developing countries, thereby enhancing biodiversity on a global scale.

If access rules in provider countries are too restrictive, unclear or discriminatory users could avoid entire markets as sources for new innovation and if disparate rules are adopted in the different EU countries, the legal certainty will decrease and this will have a negative competitive impact on all EU stakeholders or stakeholders with European interests. Such negative impacts might include:

· The need for increased investments of time and resources due to the potentially unclear, impractical and non-transparent rules and administrative requirements. Users may have to deploy more financial, personal and time resources for these activities.

· A decrease in development and commercialisation of products based upon or derived from GRs, undermining the promotion of biodiversity conservation and the use of biodiversity to create benefits and products for the society as a whole.

· A decrease of the importance of the EU as a region for R&D activities in biotechnology and commercialisation of products developed through it; all sectors might be severely harmed.

2. ADDED VALUE OF EU IMPLEMENTING MEASURES

Appropriate level for establishing implementing legislation

Laws and regulations on ABS should seek to inform, facilitate and promote good practices, encouraging the responsible engagement of users and take into account the specificities of different sectors. The EU should ensure that harmonised rules and procedures are applied throughout the EU and avoid inconsistencies among various national legislations implementing the Nagoya Protocol. This approach will ensure a common interpretation of the key elements of the Protocol such as the rules on compliance; it will ensure legal certainty regarding applicable rules in the EU as a whole and will ensure that the implementation of the Protocol in the EU provides for a coherent example for national or regional implementation elsewhere, thereby safeguarding the interest of the EU user and provider sectors.

Certain users pointed out that national implementing legislation on individual Member States might be sufficient for implementing the Protocol but might not be the appropriate direction to take. Access to national resources should be regulated by national norms but common aspects should be regulated at EU level. This will ensure one common interpretation of and approach to some key elements of the Protocol such as compliance, certificates or checkpoints. 

Other users put the accent on the need to avoid creating barriers to collaboration that eventually counteract the objectives of the CBD. A positive attitude should be adopted allowing the necessary development of research activities supporting sustainable use of biodiversity. For instance the same check points at European level could be opportunities to facilitate relationship between users and between users and providers and serve as leverage for development activities. National solutions would impose another layer of administrative burden and barriers of entry as well as limitation for intra-EU commerce of finished products.

Effects on the internal market

The application of different ABS rules in different Member States could have an impeding effect on the free movement of material and goods in the EU, thereby hindering exchange of material in the framework of R&D activities and the free movement of commercial products.  Every intended exchange of material would need extra tie to find out the special conditions of the particular country and transaction costs will become too high. If the Protocol is implemented at Member States level without any harmonisation at EU level, there may be a risk that the different interpretations/application of key provision will result in obstacles to the internal market. In order to be sure that the free movement of goods is not hindered in such a way within the EU, harmonized application at least of key provisions of the Protocol would be necessary. From a business point of view it would be very useful to have the same kind of checkpoints in all Member States; it should be also ensured that once a document is accepted as evidence of PIC and MAT by one Member State, the movement of material and goods is not blocked in another Member State because the latter does not accept the same document as evidence or requires further documents.

Botanical gardens and other scientific institutions with non-commercial focus pointed out that a harmonised approach would even be desirable on a global basis. For those institutions an EU harmonised approach with simplified, legally validated procedures is likely to reduce administrative burdens. The same approach is also likely to reduce administrative burden at government level, especially if elements of best practices and simplified models for material exchange between scientific institutions for scientific purposes are included.

3. SPECIFIC IMPLEMENTING ISSUES

Maintaining current practices

It needs to be stressed that it is an established practice in certain sectors such as the biotech sector that all transfers of GRs between users and providers are done under a material transfer agreement to define terms and conditions of the transfer, rights and obligations of all parties and secure traceability of GRs. Respondents to the public consultation indicated that currently used practices that function well must be maintained.

Certain user/providers have developed sector specific standard clauses/model contracts for MAT.  These MAT include the grant of PIC and define the conditions governing the collection and use of GRs, including benefit sharing. A degree of flexibility needs also to be acknowledged, taking into account specific and unique circumstances of each case. 

These are contractual arrangements between provider and user creating MAT and forming a legal framework within which transfer of material (including GRs) can take place.  These contractual arrangements are in principle governed by national contract laws. As to arrangements in relation to benefit sharing, it needs to be noted that the Protocol recognises that it should be based upon MAT and can take the form of monetary and non-monetary benefit sharing.

Advantages both for users and for providers can be derived from such agreements as they provide the necessary legal certainty for the access and transfer of GRs. While expectations must be realistic and take into account the potentially high failure rate of projects, benefits that may become available from such arrangements include up-front payments, investment in infrastructure, technology transfer arrangements, and collaboration agreements. In fact, many of these advantages will be available even in cases where no commercial product is ever developed. Where new commercial products are developed as a result of such arrangements, they provide the possibility of including provisions on royalties derived from future revenue streams, where those may exist.

Moreover, the Bonn Guidelines represent until today a useful tool in providing guidance to providers and users on potential contractual terms for the drafting of ABS arrangements.  In the seed industry, a relevant example of model agreements are the “Bioprospecting agreements” which are included in the Guidelines developed in 2005 by BIO.  These Guidelines also provide for a “Model Material Transfer Agreement”.

Below are examples with respect to model clauses/contracts in a few industries:

- Biotechnology: Relevant examples of model agreements are the “Bioprospecting Agreements” which are included in the Guidelines developed in 2005 by the Biotechnology Industry Organization and are therefore implemented by its members. (see http://www.bio.org/articles/bio-bioprospecting-guidelines). In practice, such agreements, which are concluded between the Transferor and the Transferee of a GR in the case of collection of the resource, include the regulation and grant of prior informed consent and set out the conditions governing the collection and use of regulated genetic resources, including benefit sharing.  In order to provide greater clarity, the above mentioned Guidelines also provide for a “Model Material Transfer Agreement” (which can be incorporated into a Bioprospecting Agreement or even replace one in specific situations) whose primary purpose is that of transferring possession of GR. 

- Plant genetic resources for plant breeding: The IT PGRFA has, in its Article 10.2, set up a Multilateral System in order to ensure access and benefit-sharing in respect of PGRFA. Facilitated access to PGRs in the Multilateral System is realized through a standardised simplified contractual mechanism.

Costs and Administrative burden

Compliance with additional rules on ABS will logically impose an additional burden on all stakeholders and involve the need for more financial, personnel and time resources into activities which involve genetic resources such as gathering knowledge on the applicable ABS rules, checkpoints and compliance requirements, and dealing with the competent authority (ies).

Art 14 of the Protocol foresees the establishment of an ABS clearing house. Upon the condition that information provided through the ABS clearing house is always up to date and legally reliable, this could be a real facilitating mechanism to enhance transparency and reduce the administrative burden and transaction costs. 

The administrative burden and transaction costs can also be substantially reduced in case the reality of lengthy supply chains is acknowledged and the burden of compliance is traced back to the party originally accessing the GR. To minimise the administrative burden, the EU should ensure that there is a harmonised approach, or at a minimum harmonised rules and procedures applicable in each EU country.   

To minimize administrative burden and costs, respondents suggest:

-  A harmonized EU implementation of the NP as far as compliance elements are concerned;

- Implementation of Article 15 (Compliance) in a way that recognizes the reality of lengthy supply and development chains for many sectors, and places the burden of compliance on the original party accessing the GR and/or associated TK;

- Preferably an EU authority on ABS as check point, since it will also be the most familiar with original accessing parties which obtained PIC and MAT at the point of access; 

- Clarity as to what the ABS regime will and will not cover with specific regard to the single industries.

              Annex 4: Policy options considered but discarded in the IA

OPTION ON BUSINESS AS USUAL

1) No Union ratification

This business as usual option was considered for the sake of completeness. It is outside the instruction given to DG Environment to analyse and develop measures for implementing the Nagoya Protocol in the Union. It also seems inconsistent with the proactive political engagement of the Union in the Nagoya Protocol negotiation that lasted from 2004 to 2010, and the fact that the Union joined the consensus of the 194 Parties to the CBD that adopted the Protocol in October 2010. It furthermore contradicts the formal act of Union signature of the Protocol in June 2011 and repeated statements on swift Union implementation and ratification.[2]. By signing the Protocol, the Union has committed itself under international law to work towards implementation and ratification, and to abstain from any action that could undermine the objective or purpose of the Nagoya Protocol.

If the Union would not ratify the Protocol, it seems certain that some Member States will do so unilaterally to participate at COP/MOP1 in 2014 as a Party and thereby avoid that the interests of their researchers and companies that are involved in nature-based research and development, or their interests as provider of genetic resources suffer from the non-Party status. The governments of ES and DK have – in view of a Commission proposal – so far delayed presenting legislative proposals for implementing the Nagoya Protocol to their parliaments. Presumably, these Member States would move swiftly ahead with legislation and ratification should the Commission indicate that it does not anymore plan to propose implementing measures at Union-level. BE, DE, FR, NL and UK have held public consultations or initiated studies that equally prepare the ground for domestic implementing measures. Of these Member States at least FR and DE would appear committed to ratify unilaterally in the absence of Union ratification. Other Member States with little nature-based research and development activities and low levels of biodiversity might, however, decide to stay out. If the Union does not ratify the Nagoya Protocol, it seems almost certain that by 2014 some Member States would be Parties to the Protocol while others would not.

The expected negative effects of such a situation are of the same quality as those identified in the analysis of Option UC-1, only of even greater magnitude.[3] It would certainly have very negative impacts on researchers and companies within the EU, and negatively affect the functioning of the EU internal market and the European Research Area. It would also result in systems of implementing measures at Member State level that are less effective and efficient than in the case of an EU-coordinated approach. At last, it would create a politically much more challenging starting point for any future consideration of EU-level measures for implementing the Nagoya Protocol. – This option was therefore considered but discarded.

POLICY OPTION ON ACCESS TO GENETIC RESOURCES AND ASSOCIATED TRADITIONAL KNOWLEDGE

1) EU-wide waiver of the PIC requirement

Some Member States explicitly give free access to the genetic resources over which they hold sovereign rights. The option of an EU-wide waiver of the PIC requirement was therefore considered. However, this option was not retained for further analysis. Some Member States have already developed access legislation, although it is not yet applied in practice (ES, BG), and others are in the process of doing so (FR).[4]

2) EU-wide minimum requirements on access-frameworks of Member States deciding to require PIC

Furthermore, the option of an EU Framework Directive establishing EU-wide minimum requirements on access-frameworks of Member States deciding to require prior informed consent was considered. This option would establish an EU-level playing field in all Member States requiring prior informed consent. In abstract, this would seem particularly beneficial to researchers and SMEs. However, this option was not retained for further analysis. No Member State presently requires benefit-sharing for the use of its genetic resources and only three Member States are likely to do so in the future. So there is simply no need for EU-wide minimum access requirements. In addition, the choice of user-compliance Option UC-2, and particularly the choice of the preferred Option UC-3, would actively encourage EU ex-situ collections to streamline their practices of making available genetic resources to outside users. These measures will reduce the eventual need for EU-wide minimum requirements on access for material held in ex situ collections; which – as is shown in the EU baseline – are the predominant sources of new material for EU users.

3) EU-level regulation of access to traditional knowledge held by indigenous and local communities

It was furthermore considered to regulate access to traditional knowledge held by indigenous and local communities at EU level but regarded as unnecessary. Only few Member States (for example SE, FI, ES) have ILCs under their jurisdiction. And although it is possible to argue for the existence of Union competence in the field, one must note that Member States have throughout the Nagoya Protocol negotiation stressed that in their view access to traditional knowledge held by ILCs falls in the exclusive competence of MS.

POLICY OPTIONS ON USER-COMPLIANCE

1) Amending EU legislation on the recognition and enforcement of judgements

The option was considered to amend EU legislation on the recognition and enforcement of judgements[5] in view of Article 18 Nagoya Protocol. However, this option was discarded. The Protocol does not oblige its Parties to take such measures. It is sufficient if Parties provide a general system for the ajudication of contractual disputes related to ABS. This  corresponds with a major EU demand in the negotiation. An amendment of the Brussels I and II Regulations is also not necessary for implementing the soft obligation of Parties as regards access to justice. This can efficiently be done through soft measures (eg., information on applicable rules, financial aid) at Union or Member State levels.

2) General prohibition on EU nationals to acquire genetic resources and associated traditional knowledge in a Party to the Protocol in violation of obligations set out in the domestic access legislation or regulatory requirements of this Party

It was also considered to establish a general prohibition on EU nationals to acquire genetic resources and associated traditional knowledge in a Party to the Protocol in violation of obligations set out in the domestic access legislation or regulatory requirements of this Party. However, this option was discarded. First, the Nagoya Protocol does not oblige its Parties to take such measures. Article 15 and 16 oblige Parties to take measures in view of the utilisation of genetic resources and associated traditional knowledge within their jurisdiction; they do not oblige Parties to take measures in view of activities of their nationals in other jurisdictions. Second, the option is difficult to reconcile with legal certainty and the principle of proportionality. If violations of the EU prohibition would be a simple/ automatic reflex of the violation of regulatory requirements in a third country, then EU authorities would need to establish a breach of EU laws based on factual and legal considerations established in a non-EU jurisdiction. This type of recognition of administrative and judicial decisions of foreign countries is normally only done on the basis of strict reciprocity. Strict reciprocity helps avoiding difficult situations, such as, for example, that a behaviour must be sanctioned within the EU, although it would be perfectly legal if conducted within EU jurisdiction, or that an EU national would need to be punished under EU law although it only breached an administrative ordinance in a third country. Establishing a more flexible approach for enforcing such prohibition would raise political problems - in addition to concerns about the lack of predictability for EU users – as it would necessarily imply value judgements by EU officials or EU courts on the credibility and integrity of findings of administrative and judicial authorities of third countries.

3) General prohibition on EU collections to hold genetic resources or associated traditional knowledge in their collection unless there is proper documentation giving evidence of the legal acquisition

It was also considered to establish a general prohibition on EU collections to hold genetic resources or associated traditional knowledge in their collection unless there is proper documentation giving evidence of the legal acquisition. However, this option was discarded. The apparent benefit of an early and strong intervention in the genetic resources value chain under EU jurisdiction is clearly outweighed by the expected difficulties of particularly smaller EU collections to comply with such norm and also the very significant costs for monitoring compliance of collections with thousands or even hundreds of thousands of samples that were collected often long-time ago.

4) Applying a broad concept of traditional knowledge associated with genetic resources

As regards user-compliance measures in relation to the utilisation traditional knowledge associated with genetic resources, the option was considered to base implementing measures on a broad understanding of this concept. However, this option was discarded. The Protocol does not define the term "traditional knowledge associated with genetic resources". It leaves Parties a wide margin of discretion to define in their domestic law what traditional knowledge means to them and how to engage with indigenous and local communities holding such knowledge. It would create unacceptable legal uncertainties to base EU user-compliance measures on something not clearly defined in EU law but varying with the respective definition of this term found in the domestic laws of potentially more than 170 countries. For legal certainty, it is imperative that EU implementing measures have a clear and identifiable scope. Legal certainty can be achieved, if implementing measures focus only on traditional knowledge that is directly associated with genetic resources as documented in domestic access permits and in mutually agreed terms. This excludes all other types of traditional knowledge that may indirectly become relevant to the utilisation of genetic resources within the EU.[6] This approach is also supported by consistency arguments. Applying a broad concept of traditional knowledge when implementing the Nagoya Protocol would, at this stage, most likely conflict with ongoing negotiations in the Intergovernmental Committee on Genetic Resources, Folklore and Traditional Cultural Expressions of the World Intellectual Property Organization. There, the international community considers whether international rules on intellectual property rights will be modified to provide for an effective protection of traditional knowledge holders under international law. These negotiations have implications that go much beyond the specific context of traditional knowledge associated with genetic resources. Indeed, the CBD COP10 decision adopting the Nagoya Protocol also suggests that implementing measures should be developed in consideration of the ongoing WIPO negotiations.[7]

POLICY OPTIONS ON COMPLEMENTARY MEASURES

1) Placing reference samples collected in free access situations in identified collections

Option C-5 would have multiple benefits. It would facilitate compliance by all users with their due diligence obligation if reference samples of genetic resources acquired in free access situations were available in reference collections, preferably collections enlisted in the EU register of "trusted sources", with unique identification numbers and documentation showing that these samples were collected under a free access policy. It would also significantly contribute to the conservation of genetic resources. Samples stored in collections are prevented from disappearing and can be used. A recent study on wild varieties of agricultural crops concluded that the key reason for the dramatic loss of genetic diversity in this area is the insufficient availability of quality samples and related information.[8] Another apparent benefit of this option is that it would create research and development opportunities on quality samples of genetic resources that may be used without benefit-sharing obligations attached. This translates into a more enabling context for achieving the social and conservation objectives.

Despite these benefits, the option was discarded because of unclear cost-implications. As regards costs for those collecting genetic resources these were assumed to be minimal. It is routine practice today to include GSP positioning data into documentation of samples collected in the wild.[9] The only additional costs for collectors above the baseline of their collecting activity would thus be eventual costs for shipping reference samples to identified collections. Quite unclear, though, would be the costs of this Option for the reference collections where such samples would be deposited. The costs for such collections depend on the number of samples received and the costs of handling and storage per sample. Recent studies on ex situ plant conservation, that also consider new storage technologies such as cryopreservation, suggest that storage costs per sample could be between 0.20 to 50 € per sample per year[10]. This would need to be multiplied by the number of samples collected under free access conditions. Depending on the number of samples, this could be limited or indeed very significant. In that context, one would also need to consider that the option does not predetermine who would incur the costs. If the Member State holding the sovereign right decides that such samples should be included in a public reference collection under its own jurisdiction, the Member State would presumably also compensate this collection for the additional costs incurred. If the Member State would identify a private collection or a collection in another country as recipient, the question of who carries the costs would depend on the specific agreement reached. Overall, the costs of this option would primarily arise for the Member State holding the sovereign right, although financial contributions from philanthropic sponsors can also be imagined.[11]

              Annex 5: Detailed analysis of options for implementing the access pillar of the Nagoya Protocol

Section I presents a comprehensive analysis of the 2 options considered in detail for implementing the access pillar of the Nagoya Protocol in the EU. To facilitate comparison, the substantive arguments are translated into a grading. We apply the following categories:

“0”  neutral impact

“+” positive impact

“++” significant positive impact

“-“ negative impact

“--“ significant negative impacts

“unclear” – not possible to assess because of data limitations

“n.a.” – the criteria is not meaningful for analysing the specific measure

Option A-1: No EU level action

Criteria for analysing impacts || Grading || Motivation of the grading against the criteria

Criteria specific to Access and Benefit-sharing and to the Nagoya Protocol

- Specialised ABS agreements and processes (respect and mutually supportive) || - || It is considered a disadvantage that the EU would not be directly involved in choices by Member States on the relationship of their domestic access-measures to specialised ABS systems.

- Handling of Party-non-Party relationships || unclear || It seems unclear and would entirely depend on choices by Member States how to address the relationship with researchers or companies from non-Parties to the Protocol.

- Coherence with existing EU laws || - || Some EU laws (eg, nature legislation, sectoral legislation on agricultural genetic resources and on human, plant or animal health) may be affected by domestic access-frameworks of Member States.  Although the Commission has the authority under the treaties to take action in case a domestic access framework is considered to conflict with the EU treaties or an obligation under the acquis (e.g. if criteria applied are openly discriminatory), it seems preferable to discuss eventual questions at the time when access requirements are developed rather than forcing a re-opening of (access) legislation once it is established. The option does not provide a basis for such discussion.

- Support to special considerations || - || The EU would not be involved the choices of Member States on special considerations in relation to access for non-commercial research, in case of emergency situations that threaten and damage health, and as regards the special role of genetic resources for food and agriculture. If different Member States take diverging decisions on how to address these situations it could raise questions on the Union's compliance with the Protocol.

- Ability to accommodate differences between sectors || n.a. || The criteria is relevant for user compliance measures, not for access

- Flexibility to allow for future development and fine-tuning || + || A positive feature of this option, that it leaves room for future development in the form of a focussed intervention at Union-level, should the need for such intervention become apparent.

- Improving the knowledge base about acquisitions, transfer and use of genetic resources in the EU || 0 || The knowledge base might improve at the Member State level, depending on their choices.

Economic impacts

- Creation of an EU-level playing field || -/0 || It seems certain that Option A-1 will not result in an EU-level playing field on access to genetic resources. Member States with free access systems will exist alongside other Member States that require prior informed consent for access to their genetic resources. This will create additional costs, for example if a publicly funded biodiversity research project foresees field research in three Member States with differing access systems.

- Correspondance with existing utilisation practices || n.a. || The criteria is relevant for user compliance measures, not for access

- Legal certainty and legal risks || -/0 || If Member States requiring prior informed consent would establish widely different substantive preconditions for granting access or for sharing of benefits, it will raise transaction costs for users and could create legal risks to them. To give one example: it is typical for SMEs in parts of the biotechnology industry to conduct high-throughput screening of thousands or tens of thousands of samples against a specific target to identify interesting compounds. Obviously, this type of utilisation activity would be facilitated if the specific conditions for utilising genetic resources were streamlined, at least to some extent. Option A-1 does not provide a basis for such streamlining.

- Distribution of impacts along the value chain || 0 || Access conditions are relevant for those actors in the genetic resources value chain that either collect in the wild or that source from existing collections. Differing access conditions create different challenges and costs for the same actors in the chain; those that seek access as part of their activities. Such differences do not appear to result in different distributions of impacts along the value chain.

- SMEs and micro-enterprises || - || Significant differences in the possibility to use samples would create the highest relative costs for SMEs and micro-enterprises with the least capacity to adjust their operations.

- Research and development opportunities || 0 || It is assumed that Member States deciding to require prior informed consent will establish domestic access frameworks that better facilitate access to genetic resources and that create more research and development opportunities than Member States that do not invest in facilitating access to their genetic resources, but simply decide to allow for free access. This said, it seems too far-fetched to draw any conclusions on positive or negative effects on research and development opportunities

- International competitiveness || 0 || Expanding on the above, it equally seems too far-fetched to draw any conclusions on positive or negative effects on the EU's international competitiveness.

- Monitoring (effectiveness, efficiency) and costs) || n.a. || The criteria is relevant for user compliance measures, not for access

- Public costs (EU-level, MS level, one-off, recurring) || + (Union level) unclear (MS) || The Option would not entail any costs at Union level. Costs at Member State level depend on choices taken by them.

Social impacts

- Potential to contribute to social objectives (health, food security, nutrition etc) || unclear || Difficult to identify, it depends on choices taken by the Member States

- Protection of the rights of indigenous and local communities || unclear || Difficult to identify, it depends on choices taken by the Member States

Environmental impacts

- Enhancing knowledge base for biodiversity conservation || unclear || Difficult to identify, it depends on choices taken by the Member States

- Potential for generating non-monetary and monetary benefits in favour of conservation and sustainable use of biological diversity || unclear || Difficult to identify, it depends on choices taken by the Member States

Option A-2: EU platform for discussing access to genetic resources and sharing best practices

Criteria for analysing impacts || Grading || Motivation of the grading against the criteria

Criteria specific to Access and Benefit-sharing and to the Nagoya Protocol

- Specialised ABS agreements and processes (respect and mutually supportive) || + || An EU platform for discussing access to genetic resources and for the sharing of best practices would actively engage the Member States, the Commission and EU stakeholders in a discussion on the design and performance of domestic access frameworks of the Member States. Although shared conclusions by the participants would not be binding, they would nevertheless likely influence considerations made by Member States and reduce eventual frictions with other specialised ABS systems

- Handling of Party-non-Party relationships || + || The EU Platform will likely influence considerations made by Member States in the relationship to non-Parties to the Protocol and help reducing frictions.

- Coherence with existing EU laws || + || The EU platform would facilitate identifying and resolving eventual tensions between domestic access frameworks and the EU acquis.

- Support to special considerations || + || Member State participants to the platform would benefit from the experiences of each other and thus contribute to collective learning. This seems particularly valuable regarding the special considerations on non-commercial research, emergency situation that threaten and damage health, and genetic resources for food and agriculture that Parties to the Protocol must address.

- Ability to accommodate differences between sectors || n.a. || The criteria is relevant for user compliance measures, not for access

- Flexibility to allow for future development and fine-tuning || + || The option leaves scope for future development and fine-tuning of measures.

- Improving the knowledge base about acquisitions, transfer and use of genetic resources in the EU || + || The EU platform would improve the knowledge base and also help building the case for an eventual binding EU-level intervention on access.

Economic impacts

- Creation of an EU-level playing field || + || Option A-2 will not result in an EU-level playing field on access to genetic resources. Member States with free access systems will co-exist with other Member States that require prior informed consent for access to their genetic resources. It seems, however, reasonable to assume that the deliberations of the platform would result in some streamlining of access conditions in Member States requiring prior informed consent.

- Correspondance with existing utilisation practices || n.a. || The criteria is relevant for user compliance measures, not for access

- Legal certainty and legal risks || + || It seems reasonable to expect that – compared to Option A-1 – Option A-2 will reduce eventual legal risks associated with highly diverging access conditions.

- Distribution of impacts along the value chain || 0 || Access conditions are relevant for those actors in the genetic resources value chain that either collect in the wild or that source from existing collections. Differing access conditions create different challenges and costs for the same actors in the chain; those that seek access as part of their activities. Such differences do not appear to result in different distributions of impacts along the value chain.

- SMEs and micro-enterprises || 0/+ || It is assumed that the EU platform will contribute to some streamlining of access procedures. This will be beneficial for SMEs and recipients of public funds.

- Research and development opportunities || 0/+ || It is assumed that the EU platform would make a limited but positive contribution to research and development opportunities on genetic resources. Another effect of the EU platform is that it would showcase best practices. This would help Member States to learn from each other and create more favourable conditions for access to their genetic resources. It would also help users in identifying Member States with the most favourable access conditions. It is assumed to make a limited but positive contribution to research and development opportunities on genetic resources.

- International competitiveness || 0 || It seems too far-fetched to relate the assumed moderate increase in research and development opportunities to an increase of the EU's international competitiveness in nature-based products and services.

- Monitoring (effectiveness, efficiency) and costs) || n.a. || The criteria is relevant for user compliance measures, not for access

- Public costs (EU-level, MS level, one-off, recurring) || 0/+ (Union level) Unclear (MS) || The operation of the EU platform would create limited costs. Depending on the number of meetings per year, it would require some staff time for preparing, participating in and following-up to meetings of the platform as well as travel costs to meetings for the Commission participant(s)

Social impacts

- Potential to contribute to social objectives (health, food security, nutrition etc) || unclear || Difficult to identify, it depends on choices taken by the Member States.

- Protection of the rights of indigenous and local communities || unclear || Difficult to identify, it depends on choices taken by the Member States

Environmental impacts

- Enhancing knowledge base for biodiversity conservation || unclear || Difficult to identify, it depends on choices taken by the Member States

- Potential for generating non-monetary and monetary benefits in favour of conservation and sustainable use of biological diversity || unclear || Difficult to identify, it depends on choices taken by the Member States

              Annex 6: Detailed analysis of options for implementing the user-compliance pillar of the Nagoya Protocol

             

Section I presents a comprehensive analysis of the 4 options considered in detail for implementing the user-compliance pillar of the Nagoya Protocol in the EU. To facilitate comparison, the substantive arguments are translated into a grading. We apply the following categories:

“0”  neutral impact

“+” positive impact

“++” significant positive impact

“-“ negative impact

“--“ significant negative impacts

“unclear” – not possible to assess because of data limitations

“n.a.” – the criteria is not meaningful for analysing the specific measure

Option UC-1: Open method of coordination

Under this Option, each Member State would establish legally binding user-compliance measures for itself to implement the relevant Articles of the Nagoya Protocol and coordinate its own measures with those taken by other Member States.

Criteria for analysing impacts || Grading || Motivation of the grading against the criteria

Criteria specific to Access and Benefit-sharing and to the Nagoya Protocol

- Specialised ABS agreements and processes (respect and mutually supportive) || --/- || One key legal and practical concern is on the exact scope of application of user-compliance measures of Member States in relation to existing specialised international ABS instruments. For example, it will be important to clarify how material transferred by means of the standardised Material Transfer Agreement adopted under the FAO Treaty on Plant Genetic Resources for Food and Agriculture would be treated by designated monitoring authorities of a Member State . The apparent draw-back of Option UC-1 is that it cannot guarantee finding an EU-harmonised solution to incompatible approaches taken by Member States. This might be damaging to the EU-interest, particularly where, the EU is a Party to a specialised ABS instrument - as is the case of the FAO Treaty.

- Handling of Party-non-Party relationships || -- || Option UC-1 has apparent draw-backs as regards managing the relationship between Parties and non-Parties to the Protocol. First, in the absence of harmonised EU user-compliance measures, and given the very likely situation that not all Member States will ratify at the same time, Party-non-Party situations would arise within the EU itself. This could create very complex situations that conflict with fundamental freedoms under the treaties and negatively affect the performance of user-compliance systems of Member States that are Parties to the Protocol. Would, for example, Spain be allowed to prohibit its nationals to conduct research and development on Spanish genetic resources in other Member States of the Union? Or to restrict the sale of products that have received a market approval in another Member State on the basis that this product was allegedly developed using illegally acquired Spanish genetic resources? Even if one sets aside the possibility that a Member State could adopt user-compliance measures that would discriminate against EU nationals of other Member States or products approved in other Member States that have not yet ratified the Protocol, it seems a real possibility that differences in the approach of Member States to the treatment of researchers and companies from non-Parties would negatively affect the functioning of the European Research Area. For example, EU co-funding under the framework programmes for research promotes collaboration of research institutions from a minimum of 3 EU Member States. Significant differences in user-compliance obligations for research activities that involve the utilisation of genetic resources might mean that some projects, although they would be worthwhile, could not be funded.

- Coherence with existing EU laws || - || It seems an apparent advantage of Option UC-1 that it does not require legislative action at Union level. The Option leaves it entirely to the Member States to take such action. At the same time, though – and given the close relationship of user-compliance measures to internal market rules and relevant EU laws on the approval of products (eg. medicines, cosmestics, food) – Member States may face challenges in developing user-compliance systems that are effective and in full-compliance with the Nagoya Protocol while avoiding interferences with applicable EU law. To give one example: it would likely raise legal concerns if a Member State would wish to make compliance with applicable ABS obligations an additional condition for issuing a  market approval for medicinal or cosmetic products. It would seem equally problematic if a Member State tasks a market approval authority established under EU law with the additional task of monitoring compliance of users with Nagoya Protocol implementing measures of this Member State. Overall, it seems that the apparent benefit of not legislating at EU-level will be outweighed by the constraints on Member States to effectively legislate on user-compliance measures, which could raise non-compliance concerns for them, but in consequence also for the Union.

- Support to special considerations || -- || Option UC-1 has the further disadvantage that it cannot guarantee that Member States take a harmonious approach to the special considerations on non-commercial research, to situations of emergency  health threats or damages, or to the special nature of genetic resources for food and agriculture. One particularly important issue here concerns the treatment of pathogens for the purpose of resistance breeding. This activity clearly does not qualify as an emergency situation addressed in Article 8b) Nagoya Protocol. However, it might be addressed under the special considerations given to genetic resources for food and agriculture. Differences in approach by the Member States on this issue could disrupt activities in the plant and animal breeding industries. However, it could also raise questions on the EU's compliance with the Nagoya Protocol.

- Ability to accommodate differences between sectors || -- || Option UC-1 would not result in an EU-harmonised system of user-compliance measures.  Member States would be free to explore the flexibility in relation to their obligations on user-compliance as they see best fit for their national interest. For example, the NL would carefully consider the interests of its plant and animal breeding companies. In DE, FR, UK and IT the interests of the pharmaceutical and chemical industries might receive particular attention. FR might also pay special attention to its cosmetics industry as some companies are world leaders. It is thus assumed that Member States would take differing choices on the design of user-compliance measures. This may result in conceptually different user-compliance systems in different Member States. It would certainly result in differences in the details of applicable requirements; such details are nonetheless critical for implementation efforts "on the ground" (e.g. exactly what is considered as "utilisation of genetic resources", how to manage ABS-related information, rules on burden of proof, etc.). These basic assumptions suggest that the "flexibility" of Option UC-1 would most likely not translate into advantages of EU user sectors that their respective sectoral interests are adequately addressed. Different approaches in different Member States for accommodating differences between sectors would have clearly negative effects on all users that operate in more than one Member State. For EU stakeholders it is important that the same basic user-compliance rules and the same flexibilities in implementing user-compliance measures apply. It would, for instance, seem quite ineffective if one Member State would recognise participation in a sectoral code of conduct as proof of user-compliance, whereas another Member State would oblige all users to present certificates of compliance or issue statutory declarations that they have fully complied with all relevant ABS requirements. Indeed, the main and unanimous message from the public consultation exercise was that stakeholders prefer an EU-harmonised approach to user-compliance measures as they would expect high costs from a fragmented approach to implementing these parts of the Protocol. The challenges for users seem obvious, if different Member States were to require different approaches to managing ABS-related information, if they would apply different rules on the burden of proof, allow for different exemptions, or apply different understandings of what exactly qualifies as "utilisation of genetic resources", etc.. While Option UC-1 would likely reduce some of these frictions, it would not give any assurance to EU stakeholders that their user-compliance efforts in one Member State would be recognised in another Member State.

- Flexibility to allow for future development and fine-tuning || 0/+ || Option UC-1 would not prejudge future developments at Union level. It would contribute in a limited way to gathering experience and information about user-compliance measures.

- Improving the knowledge base about acquisitions, transfer and use of genetic resources in the EU || 0 || It would entirely depend on the user-compliance and monitoring measures adopted by Member States whether these improve the knowledge based.

Economic impacts

- Creation of an EU-level playing field || -- || Despite the open method of coordination at EU-level, it seems that Option UC-1 would almost certainly result in some fragmentation of user-compliance rules throughout the Union. Considering the importance of details for the functioning of a system, an uneven playing field is much more likely to emerge than an EU-level playing field. This very real risk is echoed by the strong concerns from EU-stakeholders about such scenario. Fragmentation, if it occurs, could disrupt the practices of some players in the genetic resources value chain (particularly those of SMEs and micro-enterprises with little capacity) and stifle research and development on genetic resources. There is also the risk of "regulatory lock-in". If significant differences have been established, it is much more difficult to re-open such systems. A fragmentation of user-compliance systems would be particularly challenging in sectors such as plant, animal breeding or green biotech that are heavily populated by SMEs and micro-enterprises and thus face disproportionately higher costs when operating under different legal regimes. A fragmentation of user-compliance measures would also create difficulties for large companies that conduct research and development on genetic resources (pharmaceutical, cosmetics, food and beverage industries). Different user-compliance systems might also apply openly incompatible methods for monitoring user-compliance (e.g., based on the approach analysed in option UC-2 or the approach analysed in option UC-4) which would drastically raise transaction costs of EU users that operate in multiple jurisdictions.

- Correspondance with existing utilisation practices || -- || Some user-compliance systems of Member States will likely correspond better with existing practices of genetic resources use than others. However, as shown in the above analysis on "sectoral flexibilities" it is the difference in user-compliance systems between the Member States that would raise significant costs and risks and will not be avoided under this Option.

- Legal certainty and legal risks || -- || Even when assuming that all Member States would establish user-compliance rules that are clear and transparent, and which – by themselves –provide users with legal certainty, differences between such rules are likely to create legal incompatibilities or risks that are beyond the control of researchers and companies conducting research and development in more than one Member State.

- Distribution of impacts along the value chain || 0 || As regards the distribution of impacts along the EU genetic resources value chain, it seems that all actors in the value chain frequently act in more than one Member State , at least to some extent. It is thus assumed that all actors in the user chain would be equally negatively affected by a fragmentation of user-compliance systems.

- SMEs and micro-enterprises || -- || The previous assumption on distribution of impacts also implies that a fragmentation of user-compliance systems will place a disproportionate burden on SMEs and micro-enterprises with limited capacities to comply. Concretely, this means it would particularly affect the plant and animal breeding industries, the biocontrol industry, and more generally publicly funded research.

- Research and development opportunities || -- || A fragmented system of user-compliance measures could disrupt would very likely disrupt some research and development activities and negatively affect the European Research Area. Considering the particularly negative impacts of this option on SMEs and micro-enterprises, and the particular role of these actors in the early and middle part of the EU genetic resources value chain, it seems that disruptions would most likely arise where research material moves from collections or non-commercial research to SMEs and again, where research and development activities move from SMEs to larger companies that create the real economic value.

- International competitiveness || - || Major provider countries, particularly from the so called mega-diverse group of countries, would certainly consider a fragmented approach to user-compliance systems in the EU as a second-best solution and potentially as ineffective in protecting their sovereign rights over genetic resources or the rights of their indigenous and local communities over traditional knowledge associated with genetic resources. An ambitious user compliance system in one Member State , for example, might be quite ineffective where researchers and companies are free to move in the European Research Area and the EU internal market, and where approval procedures for nature-based products often result in an EU-wide approval. Given the clear political and legal links between provider country decisions on access and the existence of credible user-compliance systems in user countries, it seems that Option UC-1 would result in less secure access to quality samples of genetic resources for European researchers and companies. This would constrain the innovation potential of EU nature-based industries and is thus considered to be negative for the EU's international competitiveness in the field of nature-based research and development..

- Monitoring (effectiveness, efficiency) and costs) || unclear || The impacts entirely depend on user-compliance and monitoring measures adopted by Member States.

- Public costs (EU-level, MS level, one-off, recurring) || - || The initial public costs of Option UC-1 at EU-level would be minimal; Member States would have to bear the costs for administering their user-compliance systems. However, the costs for EU stakeholders would likely be very high. This also suggests that the future public costs for dealing with a fragmented landscape of user-compliance systems would be considerably higher than the costs of establishing a workable EU-level system in the first place. Costs at Member State level would entirely depend on the choices taken by them.

Social impacts

- Potential to contribute to social objectives (health, food security, nutrition etc) || -/0 || Option UC-1 has a significant risk of stifling research, development and innovation in some nature-based industries, with resultant reduction in potential welfare gains.

- Protection of the rights of indigenous and local communities || -/0 || Given the difficulties of EU users to comply with differing user-compliance systems, it seems that this option would not result in an effective protection of the rights of indigenous and local communities over their traditional knowledge associated with genetic resources.

Environmental impacts

- Enhancing knowledge base for biodiversity conservation || -/0 || Taken together, the above consideration suggest that Option UC-1 would make only a limited contribution to generating critical knowledge for biodiversity conservation

- Potential for generating non-monetary and monetary benefits in favour of conservation and sustainable use of biological diversity || -/0 || Taken together, the above consideration suggest that Option UC-1 would only generate limited benefits in favour of conservation efforts

Option UC-2: Self-standing general due diligence obligation on EU users

Criteria for analysing impacts || Grading || Motivation of the grading against the criteria

Criteria specific to Access and Benefit-sharing and to the Nagoya Protocol

- Specialised ABS agreements and processes (respect and mutually supportive) || ++ || The due diligence approach would allow for full recognition of specialised ABS systems. Indeed, it seems to enhance the functionality of such specialised systems, as diligent EU users will also respect the specific rules of specialised ABS systems. A due diligence approach would also provide a good basis for establishing mutual supportiveness between Nagoya Protocol implementing measures and implementing measures under specialised ABS systems. Under this option, the Commission would develop and update EU-level guidance documents articulating how EU users would exercise their due diligence to establish mutual supportiveness in a specific context, for example in relation to the important work done by the FAO Commission on Genetic Resources for Food and Agriculture. It also seems possible to reference internationally agreed guidance documents (such as the FAO Interlaken Global Plan of Action on Animal Genetic Resources and future guidance developed by the FAO Commission on Genetic Resources for Food and Agriculture on invertebrates, trees, aquaculture etc.) for the purpose of the EU due diligence system. One significant advantage of the due diligence approach that can hardly be overstated is that it would side-step the very complex and ongoing international debate on how much legally binding force a specialised ABS system must have to be recognised as "specialised international ABS agreement" under the Nagoya Protocol. The FAO International Treaty on Plant Genetic Resources for Food and Agriculture is so far the only example for a legally binding specialised international treaty. The recently adopted Pandemic Influenza Preparedness Framework in the World Health Organization in contrast, appears to be a hybrid: it uses legally binding standard contracts for the sharing and transfer of virus samples in a non-legally binding framework. The legal status of this specialised ABS framework under the Nagoya Protocol is not entirely clear. Other issues arise in relation to the important work undertaken by the FAO Commission on Genetic Resources for Food and Agriculture, as a contribution to  food security. Nevertheless, under current circumstances it is unclear whether there is a critical mass and sufficient momentum for agreeing on legally binding ABS systems beyond the 2001 International Treaty on Plant Genetic Resources. Certainly, however, the FAO Commission will conclude important guidance documents clarifying the expectations of states on how to apply ABS considerations to the use of animal genetic resources, in aquaculture, in the case of forest genetic resources, invertebrates etc.  The due diligence approach would not only accommodate but actively support the effective implementation of such guidance.

- Handling of Party-non-Party relationships || + || A due diligence approach would facilitate interaction of EU stakeholders with partners from non-Parties to the Protocol. Partners in non-Parties are outside the reach of EU law on user-compliance. However, the possibility of complying with the due diligence obligation by implementing a recognised best practice standards also means that partners employing the same or similar standards, wherever they are located, would effectively also comply with EU user compliance rules. It must be noted in this context, that some existing best practice (BIO biotechnology industry organisation, IFPMA International Federation of Pharmaceutical Manufacturers & Associations) are as such of global nature or are used well beyond the EU (IPEN International plant exchange network, MOSAICC Micro-Organisms Sustainable use and Access regulation International Code of Conduct). Regularly, it is in the best economic interest of all sides to a partnership to employ the same or very similar management standards to reduce transaction costs and raise legal certainty. An EU-level due diligence system would actively encourage such approach.

- Coherence with existing EU laws || + || - Option UC-2 would require a focussed regulatory intervention by establishing a new norm of Union law in a new field of activity. It is considered as an advantage that the option would not require the re-opening of existing EU laws. - EU users, particularly those involved in applied research, product development and commercialisation are familiar with the due diligence concept. On 18 June 2012, the International Chamber of Commerce Task Force on ABS has explicitly identified a due diligence approach as suitable for implementing the Nagoya Protocol in a way that allows industry buy-in.

- Support to special considerations || ++ || Option UC-2 allows establishing special considerations on genetic resources for food and agriculture or on public health concerns and would actively work in support in support of such specialised rules.

- Ability to accommodate differences between sectors || ++ || It is characteristic of the due diligence approach that the required standard of care varies depending on the type of user, its capacity to take measures, its placement in the genetic resources value chain, or sectoral characteristics. Option UC-2 would therefore fully meet the requirements of EU stakeholders for flexibility to accommodate for their widely different situations and capabilities. On 18 June 2012, the International Chamber of Commerce Task Force on ABS explicitly identified a due diligence approach as suitable for implementing the Nagoya Protocol in a way that allows industry buy-in and that accommodates for the widely differing realities in different parts of industry. Under this option, the Commission would, where it seems necessary to support consistent implementation, develop guidance documents that would articulate specific facets of the due diligence obligation for specific groups of users.

- Flexibility to allow for future development and fine-tuning || + || Option UC-2 is also well suited to adjust to future developments, particularly where the EU Regulation only sets out a "headline" due diligence obligation on EU users and leaves the articulation of this obligation in specific contexts to the users themselves, eventually supported by Commission guidance documents. In such setting, the general due diligence obligation set out in the EU Regulation would not need to be changed to account, for instance, to new developments in technical tools for tracking and monitoring genetic resources flow. It would only be necessary to inform users about the availability of such tools and eventually update relevant guidance documents.

- Improving the knowledge base about acquisitions, transfer and use of genetic resources in the EU || + || The due diligence approach is focussing on the activity of utilising genetic resources rather than on the tracking of individual transactions of specific genetic resources. All those engaged in utilisation activities would be obliged to seek, keep and pass-on the minimum information required for access and benefit-sharing to work. This suggests that, over a few years of operation, the due diligence system would very significantly improve the information base for assessing genetic resources flow and use in the EU and for evaluating the effectiveness of the policy.

Economic impacts

- Creation of an EU-level playing field || + || The due diligence obligation would generally apply to all activities of utilisation within EU jurisdiction. It would create a common baseline of user-compliance efforts throughout the EU and establish an EU-level playing field. An EU-level playing field is particularly beneficial for SMEs and for the efficient use of public funds spent in favour of gene banks, botanical gardens, academic or applied research.

- Correspondance with existing utilisation practices || +/++ || The due diligence approach would maximize correspondence with existing utilisation practices of genetic resources in the EU. As identified in the EU baseline, these practices are very diverse. Users face different challenges and opportunities in relation to ABS in different industries. Nevertheless, there are some common characteristics and common challenges in the upstream and in the downstream part of the genetic resources value chain in the EU. To comply with their due diligence obligation, EU users would need to add an ABS-specific element to their existing practices. They would need to identify for themselves how best to seek, keep and pass-on the minimum information required for access and benefit-sharing to work. This includes information on the origin or source of genetic material, on the time of acquisition and on eventually applicable benefit-sharing obligations set out in a benefit-sharing contract. It would be left to users to identify the most suitable and cost-effective way for meeting their obligation. Responses found will depend on their specific placement in the genetic resources value chain and on the type of research and development activity conducted. To give some examples: An SME in the biotechnology sector might decide making use of standardised or model material transfer agreements when acquiring or passing on research material. An academic research groups could decide to deploy a low-cost software tool for tracking and monitoring the flow of genetic resources utilised amongst members of the group. Companies from the biocontrol or cosmetics industries that directly collect genetic resources in the wild might subscribe to an industry-wide recognised best practice code of conduct.

- Legal certainty and legal risks || 0/+ || Option UC-2 foresees that the Commission would, where it seems useful to support consistent implementation, develop guidance documents that would articulate specific facets of the due diligence obligation for specific groups of users. The EU Regulation would furthermore establish that implementation of best practice codes of conduct is a way of complying with the due diligence obligation. Users of genetic resources that act in conformity with the guidance documents or that decide to implement a best practice code of conduct would have legal certainty of complying with their due diligence obligation.

- Distribution of impacts along the value chain || 0/+ || As regards the distribution of costs along the genetic resources value chain, it seems that two main factors are at play: First, the due diligence obligation requires all users to seek, keep and pass on minimum information required for access and benefit-sharing to work. Not one of the stakeholders that responded to the public consultation, that participated in ad hoc meetings, or that was interviewed by the external study team has indicated that it would be in principle impossible or unworkable for them to add some basic consideration on ABS issues to their current practices. Many stakeholders have clearly stressed, however, that they would prefer an approach to implementation that provides for flexibility across sectors and that minimizes necessary changes to current practices. On this basis, it seems safe to assume that the due diligence approach would not overburden any of the actors in the genetic resources value chain in the EU. Second, it is characteristic of the due diligence approach that the required standard of care varies depending on the type of user, its capacity to take measures, its placement in the genetic resources value chain, or sectoral characteristics. This means that the approach has flexibility to keep eventual costs proportional to the respective capacities of all particular actors in the value chain. It can, however, not be excluded that individual researchers, SMEs and micro-enterprises would face relatively higher costs for implementing the due diligence obligation than other actors with more capacity.

- SMEs and micro-enterprises || 0/+ || SMEs, micro-enterprises and individuals involved in basic research on genetic resources would particularly benefit from the creation of an EU-level playing field for the utilisation of genetic resources. As is apparent from the EU baseline, SMEs and micro-enterprises play critical roles in different sectors utilising genetic resources in the EU. One example for this is the biocontrol industry where SMEs represent the vast majority of companies in the market. Another example is the research-based pharmaceutical industry, where SMEs play a very important role in developing lead substances or candidate products for the large multinational companies. SMEs also play an important role in the cosmetics industry, where they co-exist with a few major international cosmetics companies. The positive effects on SMEs of creating an EU-level playing field for user-compliance measures might, however, be partially compensated by the relatively higher costs that SMEs would have for implementing their due diligence obligation, when compared with other actors with more capacity.

- Research and development opportunities || + || It is assumed that the legal certainty, low transactions costs and sectoral flexibility associated with Option UC-2 will translate into an enabling context for research on genetic resources or associated traditional knowledge. This will maximise research and development opportunities for EU researchers and EU companies engaged in markets for nature-based products and services.

- International competitiveness || + || Enhanced research and development opportunities are further expected to benefit the EU's international competitiveness. This effect will be particularly nuanced in relation to states with major user interests that have not (yet) ratified the Nagoya Protocol. Researchers and companies from non-Parties with predominant user interests might face increasing difficulties to secure access to quality samples of genetic resources, particularly from the so called mega-diverse group of countries.

- Monitoring (effectiveness, efficiency) and costs) || 0/+ || The compliance of EU users with their due diligence obligation would be monitored by public research funding agencies at EU and Member State levels and other designated authorities of the Member States. Both cases would not require the establishment of new administrative structures. To reduce the administrative burden from monitoring, users would be obliged to declare at designated points that they complied with their due diligence obligation.

- Public costs (EU-level, MS level, one-off, recurring) || 0 || Monitoring under this option would be primarily based on declarations by users at identified points that they have been diligent when utilising genetic resources. Such declarations would be channelled to already existing Member State authorities or to the national competent authority(ies) that each Party to the Nagoya Protocol must establish. In addition, Member State authorities would be empowered to do ad hoc compliance checks. These considerations suggest that the monitoring costs for this option would primarily arise at the level of the Member States, but would not require setting up new institutions or structures beyond those required for becoming a Party to the Protocol in the first place.

Social impacts

- Potential to contribute to social objectives (health, food security, nutrition etc) || + || Option UC-2 would create an enabling context for research, development and innovation in nature-based industries. It would therefore positively contribute to the achievement of important social objectives, be it health, nutrition, food security or else.

- Protection of the rights of indigenous and local communities || + || The general due diligence obligation would also extend to benefit-sharing for the use of traditional knowledge associated associated with genetic resources as documented in domestic access permits and in mutually agreed terms. Option UC-2 would thus contribute to an effective protection of the rights of indigenous and local communities over their traditional knowledge.

Environmental impacts

- Enhancing knowledge base for biodiversity conservation || + || Option UC-2 would maximise the likelihood of important discoveries

- Potential for generating non-monetary and monetary benefits in favour of conservation and sustainable use of biological diversity || + || Option UC-2 would maximise the generation of benefits that could flow to conservation purposes.

Option UC-3: General due diligence obligation on EU users complemented by formally recognising those collections that are "trusted sources" for genetic resources

Option UC-3 combines a due diligence system as described and analysed in Option UC-2 with a system to give formal recognition to collections with control measures in place to assure that only well documented samples of genetic resources are made available for their utilisation. Users of genetic resources that acquire sample from a recognised collection would thereby comply with a major part of their due diligence obligation. The below analysis repeats the analysis already done for Option UC-2 and highlights in form of underlined text aspects that are additional or different from Option UC-2 and where different gradings emerge.

Criteria for analysing impacts || Grading || Motivation of the grading against the criteria

Criteria specific to Access and Benefit-sharing and to the Nagoya Protocol

- Specialised ABS agreements and processes (respect and mutually supportive) || ++ || The due diligence approach would allow for full recognition of specialised ABS systems. Indeed, it could enhance the functionality of such specialised systems, by obliging EU users to be diligent that the specific rules of specialised ABS systems are respected. A due diligence approach would also provide a good basis for establishing mutual supportiveness. The Commission could develop and update EU-level guidance documents that would articulate how EU users would exercise their due diligence to establish mutual supportiveness in a specific context, for example in relation to the important work done by the FAO Commission on Genetic Resources for Food and Agriculture. It would also seem possible to reference internationally agreed guidance documents (such as the FAO Interlaken Plan of Action on Animal Genetic Resources) for the purpose of the EU due diligence system.

- Handling of Party-non-Party relationships || ++ || The due diligence approach would also facilitate interaction of EU stakeholders with partners from non-Parties to the Protocol. Partners in non-Parties are outside the reach of EU law on user-compliance. However, the possibility of complying with the due diligence obligation by implementing a recognised best practice standards also means that partners that employ the same or similar standards, wherever they are located, would effectively also comply with EU user compliance rules. It must be noted in this context, that some existing best practice (BIO, IFPMA) are as such of global nature or are used well beyond the EU (IPEN, MOSAICC). Regularly, it is in the best economic interest of all sides to a partnership to employ the same or very similar management standards to reduce transaction costs and raise legal certainty. An EU-level due diligence system would actively encourage such approach. A system for formally recognising collections as trusted sources would strengthen networks of collections with major partner countries, including with collections from non-Parties to the Protocol. The EU baseline shows that it is a constitutive feature of collections in the EU and beyond to exchange samples between themselves. The system for recognizing collections as "trusted sources" would build on existing best practice codes of conduct such as IPEN or MOSAICC and thus increase their relevance and reach. The formal recognition of a collection under the EU system would thus strengthen its credibility in EU and international networks. One important benefit of this would be a more facilitated exchange with collections in major partner countries, including non-Parties. The recent case of the Svalbard Global Seed Vault shows that some countries are quite hesitant to deposit in permafrost duplicates of their genetic resources over which they hold sovereign rights in collections outside their jurisdiction, even if the depositor remains the owner of the deposit (no transfer of ownership to the seed vault).

- Coherence with existing EU laws || + || The due diligence approach would require a focussed regulatory intervention by establishing a new norm of Union law in a new field of activity. It is considered as an advantage that the option would not require the re-opening of existing EU laws. EU users, particularly those involved in applied research, in product development and commercialisation, are familiar with the due diligence concept. On 18 June 2012, the International Chamber of Commerce Task Force on ABS has explicitly identified a due diligence approach as suitable for implementing the Nagoya Protocol in a way that allows industry buy-in.

- Support to special considerations || ++ || The due diligence approach allows establishing special considerations on genetic resources for food and agriculture or on public health concerns. Indeed, as explained above, the general due diligence obligation could be used to strengthen, for example, the proper use of the WHO system on the rapid sharing of virus samples in case of pandemic threats.

- Ability to accommodate differences between sectors || ++ || It is characteristic of the due diligence approach that the required standard of care varies depending on the type of user, its capacity to take measures, its placement in the genetic resources value chain, or sectoral characteristics. The due diligence approach would therefore fully meet the requirements of EU stakeholders for flexibility to accommodate for their widely different situations and capabilities. Under this option, the Commission would, where it seems necessary to support consistent implementation, develop guidance documents that would articulate specific facets of the due diligence obligation for specific groups of users.

- Flexibility to allow for future development and fine-tuning || + || The general due diligence obligation is well suited to adjust to future developments. The general due diligence obligation would not need to be changed to account, for instance, to new developments in technical tools for tracking and monitoring genetic resources flow. It would only be necessary to inform users about the availability of such tools through an update of relevant guidance documents.

- Improving the knowledge base about acquisitions, transfer and use of genetic resources in the EU || ++ || The due diligence approach is focussing on the activity of utilising genetic resources rather than on the tracking of individual transactions of specific genetic resources. All those engaged in utilisation activities would be obliged to seek, keep and pass-on the minimum information required for access and benefit-sharing to work. This focus will, over a few years of operation, very significantly improve the information base for assessing genetic resources flow and use in the EU and for evaluating the effectiveness of the policy. Recognised collections would need to keep records of all genetic resources made available for their utilisation, establish unique identifiers and deploy low costs tracking tools to monitor the exchange of samples with other collections and the transfer of samples to commercial and non-commercial users outside their network. The EU baseline shows that the large majority of EU users acquire their samples for conducting research and development from collections, mostly from collections in the EU. Establishing an EU-system for recognising collections as trusted sources would therefore significantly improve the information base on how genetic resources in the EU are acquired and transferred. This improvement would be additional to the one achieved through Option UC-2 that is focussing more on utilisation activities.

Economic impacts

- Creation of an EU-level playing field || ++ || The due diligence obligation would generally apply to all activities of utilisation within EU jurisdiction. It would create a common baseline of user-compliance efforts throughout the EU and establish an EU-level playing field. This would be particularly beneficial for SMEs and for the efficient use of public funds spent in favour of gene banks, botanical gardens, academic or applied research. Collections formally recognised as "trusted sources" under this option would become highly credible sources of genetic resources and would also be considered as particularly reliable partners in EU and international networks of collections. The existence of these collections would contribute to the establishment of a transparent EU market for quality samples of genetic resources and thus to establishing an EU-level playing field

- Correspondance with existing utilisation practices || +/++ || The due diligence approach would maximize correspondence with existing utilisation practices of genetic resources in the EU. As identified in the EU baseline, these practices are very diverse. Users face different challenges and opportunities in relation to ABS in different industries. Nevertheless, there are some common characteristics and common challenges in the upstream and in the downstream part of the genetic resources value chain in the EU. To comply with their due diligence obligation, EU users would need to add an ABS-specific element to their existing practices. They would need to identify for themselves how best to seek, keep and pass-on the minimum information required for access and benefit-sharing to work. This includes information on the origin or source of genetic material, on the time of acquisition and on eventually applicable benefit-sharing obligations set out in a benefit-sharing contract. It would be left to users to identify the most suitable and cost-effective way for meeting their obligation. Responses found will depend on their specific placement in the genetic resources value chain and on the type of research and development activity conducted. To give some examples: An SME in the biotechnology sector might decide making use of standardised material transfer agreements when acquiring or passing on research material. An academic research groups could decide to deploy a low-cost software tool for tracking and monitoring the flow of genetic resources utilised amongst members of the group. Companies from the biocontrol or cosmetics industries that directly collect genetic resources in the wild might subscribe to an industry-wide recognised best practice code of conduct.

- Legal certainty and legal risks || + || The basic due diligence approach foresees that the Commission would, where useful to support consistent implementation, develop guidance documents articulating specific facets of the due diligence obligation for specific groups of users. The EU Regulation would furthermore establish that implementation of best practice codes of conduct is a way of complying with the due diligence obligation. Users of genetic resources that act in conformity with the guidance documents or that decide to implement a best practice code of conduct would have legal certainty of complying with their due diligence obligation. Users of genetic resources within the EU that acquire samples from recognised collections would have full legal certainty that they comply with their due diligence obligation insofar as it requires users to seek relevant information on eventually applicable ABS requirements. Users that acquire samples from other sources would need to be more diligent that information received with a sample is complete and reliable.

- Distribution of impacts along the value chain || + || As regards the distribution of costs along the genetic resources value chain, two main factors are at play: First, the due diligence obligation requires all users to seek, keep and pass on minimum information required for access and benefit-sharing to work. Not one of the stakeholders that responded to the public consultation, that participated in ad hoc meetings, or that was interviewed by the external study team has indicated that it would be in principle impossible or unworkable for them to add some basic consideration on ABS issues to their current practices. Many stakeholders have clearly stressed, however, that they would prefer an approach to implementation that provides for flexibility across sectors and that minimizes necessary changes to current practices. On this basis, it seems safe to assume that the due diligence approach would not overburden any of the actors in the genetic resources value chain in the EU. Second, it is characteristic of the due diligence approach that the required standard of care varies depending on the type of user, its capacity to take measures, its placement in the genetic resources value chain, or sectoral characteristics. This means that the approach has flexibility to keep eventual costs proportional to the respective capacities of all particular actors in the value chain. It can, however, not be excluded that individual researchers, SMEs and micro-enterprises would face relatively higher costs for implementing the due diligence obligation than other actors with more capacity. The main benefits of recognising collections as "trusted sources" would arise for EU users that typically acquire their research and development material from collections. The EU baseline shows that this includes academic researchers and several commercial sectors utilising genetic resources in Europe. Academic researchers heavily rely on genetic material from public collections, particularly from botanical gardens. Commercial users of genetic resources in contrast source material from public as well as from private collections. The horticultural industry, for example, predominantly relies on ex situ collections for its research and development; this includes in-house collections, commercial collections, or botanical gardens. The industrial biotechnology sector heavily relies on culture collections. Culture collections are also important sources of material for industries involved in natural products research as well as for the pharmaceutical and the food and beverage industries. Private and in-house collections are particularly important in the seed industry, in addition to public gene banks and the centres of the Consultative Group on International Agricultural Research. The benefits of Option UC-3 would particularly arise in the early and middle part of the genetic resources value chain.

- SMEs and micro-enterprises || + || SMEs, micro-enterprises and individuals involved in basic research on genetic resources would particularly benefit from the creation of an EU-level playing field for the utilisation of genetic resources. As is apparent from the EU baseline, SMEs and micro-enterprises play critical roles in different sectors utilising genetic resources in the EU. One example for this is the biocontrol industry where SMEs represent the vast majority of companies in the market. Another example is the research-based pharmaceutical industry, where SMEs play a very important role in developing lead substances or candidate products for the large multinational companies. SMEs also play an important role in the cosmetics industry, where they co-exist with a few major international cosmetics companies. The positive effects on SMEs of creating an EU-level playing field for user-compliance measures might, however, be partially compensated by the relatively higher costs that SMEs would have for implementing their due diligence obligation, when compared with other actors with more capacity. The above identified likely distribution of benefits from establishing recognised collections in the early and middle part of the genetic resources value chain also suggests that Option UC-3 would be particularly beneficial to academic researchers and to SMEs and micro-enterprises. As shown in the EU baseline, SMEs and micro-enterprises are particularly active in the research intensive part of the pharmaceutical industry value chain, in the food and beverage industries, but also in the seed and horticulture industries.

- Research and development opportunities || ++ || It is assumed that the legal certainty, low transactions costs and sectoral flexibility associated with the basic due diligence obligation will translate into an enabling context for research on genetic resources or associated traditional knowledge. This will maximise research and development opportunities for EU researchers and EU companies engaged in markets for nature-based products and services. The particular advantages of Option UC-3 translate into a better operating environment for academic researchers, SMEs and micro-enterprises which are the "powerhouse" for nature-based innovation in the EU. This suggests that Option UC-3 has a higher potential than Option UC-2 to maximise research and development opportunities on genetic resources.

- International competitiveness || ++ || Enhanced research and development opportunities are further expected to benefit the EU's international competitiveness. This effect will be particularly nuanced in relation to states with major user interests that have not (yet) ratified the Nagoya Protocol. Researchers and companies from non-Parties with predominant user interests might face increasing difficulties to secure access to quality samples of genetic resources, particularly from the so called mega-diverse group of countries. The more favourable innovation effects of Option UC-3 translate into a higher potential than Option UC-2 to benefit the EU's international competitiveness.

- Monitoring (effectiveness, efficiency) and costs) || 0/+ || The compliance of EU users with their due diligence obligation would be monitored by public research funding agencies at EU and Member State levels and other designated authorities of the Member States. Both cases would not require the establishment of new administrative structures. To reduce the administrative burden from monitoring, users would be obliged to declare at designated points that they complied with their due diligence obligation.

- Public costs (EU-level, MS level, one-off, recurring) || 0 || Monitoring under this option would be primarily based on declarations by users at identified points that they have been diligent when utilising genetic resources. Such declarations would be channelled to already existing Member State authorities or to the national competent authority(ies) that each Party to the Nagoya Protocol must establish. In addition, Member State authorities would be empowered to do ad hoc compliance checks. These considerations suggest that the monitoring costs for this option would primarily arise at the level of the Member States, but would not require setting up new institutions or structures beyond those required for becoming a Party to the Protocol in the first place. Collections that already implement best practice standards on access and benefit-sharing would incur only very limited costs for being formally recognised as "trusted sources". We do not have information on the costs for collections that do not yet meet these standards but wish to become registered. However, it seems important to recall that not becoming formally recognised as "trusted source" would entail no costs at all for collections. It would clearly be consistent with Option UC-3 if a Member State or the Commission decides to work with specific collections to help them being recognised as "trusted source" for genetic resources and thereby further add to an enabling context for those conducting research and development on genetic resources within the EU. The public costs for this Option would be the same at the EU-level as for Option UC-2. The administrative costs for recognising collections would fall on the Member States, but would be limited; they would not require establishing new administrative structures. The costs of establishing the EU-level register of recognised collections would be minimal. Such register, essentially a web-site, could be administered by the EU focal point for the Nagoya Protocol. The establishment of a focal point is an obligation on all Parties to the Protocol anyhow. Overall, it can be assumed that the limited additional costs for Option UC-3 compared to Option UC-2 would be outweighed by reduced costs for monitoring compliance of users with their due diligence obligation, particularly where monitoring is done on a risk-based approach. It would prima facie seem reasonable to assume that there is less risk of non-compliance by users sourcing from recognised collections, so less compliance checks would be in order for them.

Social impacts

- Potential to contribute to social objectives (health, food security, nutrition etc) || ++ || Option UC-2 would create an enabling context for research, development and innovation in nature-based industries. It would therefore positively contribute to the achievement of important social objectives, be it health, nutrition, food security or else. Option UC-3 would contribute even more than Option UC-2 to an enabling context for research, development and innovation in nature-based industries. It would positively contribute to the achievement of important social objectives, be it health, nutrition, food security or else.

- Protection of the rights of indigenous and local communities || ++ || The general due diligence obligation would also extend to benefit-sharing for the use of traditional knowledge associated associated with genetic resources as documented in domestic access permits and in mutually agreed terms. Option UC-2 would thus contribute to an effective protection of the rights of indigenous and local communities over their traditional knowledge. Option UC-3 seems to have the same effect as Option B as regards protecting the rights of indigenous and local communities over their traditional knowledge.

Environmental impacts

- Enhancing knowledge base for biodiversity conservation || ++ || Option UC-3 would contribute even more than Option UC-2 to raising the likelihood of important discoveries

- Potential for generating non-monetary and monetary benefits in favour of conservation and sustainable use of biological diversity || ++ || Option UC-3 would contribute even more than Option UC-2 to generating increased uses of genetic resources and consequently benefits that could benefit to conservation purposes

Option UC-4: Prohibition to utilise illegally acquired genetic resources or associated traditional knowledge with a "downstream" monitoring system

The main feature of Option UC-4 is a prohibition to utilize illegally acquired genetic resources or associated traditional knowledge in combination with a monitoring system that is based on an obligation of users to declare to public authorities at specific points in the value chain that genetic resources were utilised in conformity with applicable access and benefit-sharing requirements.

Criteria for analysing impacts || Grading || Motivation of the grading against the criteria

Criteria specific to Access and Benefit-sharing and to the Nagoya Protocol

- Specialised ABS agreements and processes (respect and mutually supportive) || - || It would require very careful consideration to avoid that the prohibition has potentially disruptive effects on specialised access and benefit-sharing systems. One key question in this respect is on the nature of such systems to be excluded from the prohibition. Would a specialised ABS system necessarily be established through a binding international agreement, like the FAO Treaty on Plant Genetic Resources for Food and Agriculture? Would it suffice to have an international framework with some binding elements, such as the Pandemic Influenza Preparedness Framework recently agreed in the World Health Organization? Or would even genetic resource exchange in accordance with soft law instruments like the FAO Action Plan on Animal Genetic Resources for Food and Agriculture be excluded? And how to account for the fact that the standardised Material Transfer Agreement of the FAO Treaty is used for transactions of genetic resources that are not part of the multilateral system of this treaty? All of this is not clear. In part, it depends on global level considerations by the collective of the Parties to the Nagoya Protocol, in part on considerations and decisions taken by state representatives in the World Health Organization or in the UN Food and Agriculture Organization. This also means that the EU proposal would take a particular position on an issue that may well be decided in a different direction at global level a few years later, which would require a modification of the acquis and potentially significant adjustments to the practices of EU users of genetic resources.

- Handling of Party-non-Party relationships || - || In relation to non-Parties, it seems that a prohibition to utilise illegally acquired genetic resources could result in legal problems for maintaining collaborative partnerships and eventually also put EU users into a competitive disadvantage.

- Coherence with existing EU laws || - || A prohibition in an EU Regulation to utilise illegally acquired genetic resources is a new concept in Union law particularly in relation to the suggested system of disclosure obligations for monitoring compliance of users with the prohibition. Normally, the obligation of applicants to disclose information in intellectual property rights or product approval proceedings is balanced by legal protection received in form of an intellectual property right or a product approval. Option UC-4, however, suggests that disclosed information would potentially serve as basis for sanctions. This raises important questions on how to treat inadvertent disclosure of false or incomplete information, particularly considering the major challenge to users to obtain reliable information (see below). Option UC-4 would require the opening of a broad set of EU laws related to the marketing of products. This is a challenge in itself, as it might be difficult to limit the legislative discussion to only the issue of introducing a disclosure requirement. The alternative approach, waiting for a review of sectoral legislation, would not seem satisfactory for swift implementation and compliance with the Nagoya Protocol.

- Support to special considerations || - || It also seems unclear how the prohibition to utilise would relate to the special considerations required under the Protocol; particularly the link to genetic resources for food and agriculture would require clarification. One particularly important example concerns the treatment of pathogenic strains that are used for the purpose of plant resistance breeding. This activity clearly does not qualify as an emergency situation addressed in Article 8b) Nagoya Protocol. However, it might be addressed under the special considerations given to genetic resources for food and agriculture, or Parties may make it subject to their general ABS user-compliance system. The situation is not clear, but must be addressed and clarified by the collective of the Parties to the Nagoya Protocol to achieve a harmonious approach to implementation in an essentially global industry where the international exchange of breeding material and pathogenic strains for resistance breeding purposes is common day practice. It thus seems important not to pre-judge the basic approach taken to this matter. However, Option UC-4 would not give this flexibility.

- Ability to accommodate differences between sectors || -- || It would seem equally unclear whether it is possible to craft the prohibition so that it works satisfactorily in all different sectors utilising genetic resources in the EU. The EU baseline shows different EU sectors utilise genetic resources in widely different ways and for different purposes. However, if the same prohibition applies to widely different research and development activities, EU users that wish to be on the right side of the law will need to determine very precisely for themselves when genetic resources were used to an extent that the prohibition applies and a utilisation activity must be disclosed. The definition of "utilisation of genetic resources" in Article 2(c) Nagoya Protocol provides a helpful starting point in this regard. However, it does not provide a clear conclusion in each and every case. It does not address, for instance, how to address situations where a genetic resource is used as a tool for facilitating other research and development projects (e.g. the use of laboratory animals in pharmaceutical research); it also does not give an indication whether an insight drawn from earlier research on genetic resources with ABS requirements attached that causally influences other research on genetic resources unrelated to ABS would still trigger the prohibition and disclosure obligations or not. These questions are anything but trivial. Absent full legal certainty on this point, some users – particularly those with limited profit margins (e.g. in the biocontrol industry) or limited means to obtain legal advice (e.g SMEs), or where very significant investments are made (e.g. pharmaceutical industry) - will rather discontinue the use of specific genetic resources than risking potentially heavy sanctions or losing an investment made.

- Flexibility to allow for future development and fine-tuning || - || Another downside of Option UC-4 is its limited flexibility for future development. There is no stricter measure than a prohibition to utilise. This means that any future adjustments to the Option could only go into the direction of softening the effects of the prohibition, by establishing specific exclusions or grace periods. This would be politically challenging.

- Improving the knowledge base about acquisitions, transfer and use of genetic resources in the EU || - || Option UC-4 would furthermore make only a limited contribution to improving the knowledge base. As it is designed, the system of prohibition and disclosure obligations would primarily generate information in cases where users have all necessary information at hand to proof their own compliance. It seems quite unlikely, however, that a user would voluntarily provide a public authority with information on its own non-compliance, with potential legal and economic consequences. The information generated under this Option would thus be largely irrelevant for understanding real flows of genetic resources throughout the EU economy or for analysing bottlenecks.

Economic impacts

- Creation of an EU-level playing field || -/0 || Although the prohibition to utilise illegally acquired genetic resources would apply to all EU users, it is quite certain not to result in an EU-level playing field. The main reason for this is the monitoring system that goes with the prohibition. Disclosure obligations would only selectively apply to some utilisation activities and thus result in a very uneven distribution of costs and risks. Collections and non-commercial researchers would normally not face disclosure obligations. However, such obligations would be unavoidable particularly for SMEs and micro-enterprises in the middle part of the genetic resources value chain that depend on intellectual property protection for creating commercial value and, where relevant, being able to sell innovations to bigger companies downstream. This group of actors would be caught between a rock and a hard place. A non-commercial researcher that has no risk of being checked has no reason to take on legal responsibility for the good legal status of material passed on for applied research. Larger companies at the end of the value chain (particularly in the pharmaceutical sector), however, would not be able to accept a legal guarantee from a SME as sufficient assurance that things are in order, knowing that SMEs regularly have limited means to verify ABS-compliance.

- Correspondance with existing utilisation practices || - || A prohibition to utilise illegally acquired genetic resources would apply to all activities defined as "utilisation" and all users that undertake such activities. In some case, such as collections (botanical gardens, culture collections, gene banks), a prohibition to utilise seems a manageable task. However, it would certainly create very significant if not insurmountable challenges where large sets of genetic resources are utilised. For example, it is typical for the applied research step in the pharmaceutical value chain to do high-throughput screening of tens of thousands of samples of a particular category in search of active compounds that react to a specified target. The screening activity as such qualifies as "utilisation of genetic resources" in the sense of the Nagoya Protocol. However, it would seem very unclear how, for example, a SME that is specialised on identifying and selling active compounds to the big pharmaceutical companies, could oversee or even verify at reasonable efforts or costs the good legal status of each of the tens of thousands of samples ordered from the catalogue of molecules of another company. This seems an unrealistic task. It is an entirely realistic task though, as would be the result of Option UC-2 or Option UC-3, to oblige the same company to actively seek information on the good legal status of a sample in relation to ABS if this sample has produced a "hit" in the screening exercise and now the SME wishes to research its properties in more detail with a view to identifying and isolating the active compound.

- Legal certainty and legal risks || -- || A prohibition to utilise illegally acquired seems a clear obligation at face value. However, the EU baseline developed for the purpose of this IA shows that there is a real risk that establishing such prohibition would create legal uncertainty and legal risks for different EU users of genetic resources, particularly for SMEs and micro-enterprises. Two aspects appear particularly problematic: (i) knowing exactly when in legal terms the prohibition applies and disclosure must happen (see above) and (ii) the availability of critical information that allows users to determine where they factually stand in relation to the prohibition. This is a major challenge, particularly since the prohibition to utilise illegally acquired genetic resources would initially only be relevant for a fraction of genetic resources utilised in the EU; it would not apply to genetic resources acquired prior to the Convention's entry into force, nor to genetic resources collected in areas beyond national jurisdiction or to resources from free access jurisdictions. The EU baseline clearly shows that currently critical information about the origin or source of genetic resources and eventually applicable ABS requirements is not readily available to users. Worse, as shown above, the incentives created through this option would rather work against creating more transparency and information if early users in the chain have little incentive to provide all relevant information to subsequent users and indeed will regularly not be willing nor capable of issuing a legal guarantee for the good status of research material in relation to ABS. This means that users that must disclose would be left with a legal risk of disclosing false or incomplete information; a risk they could not manage themselves, if only through disrupting certain activities. Notably, the decision to disrupt an activity or not would be unrelated to the actual problematic character of material. In fact, it would be more likely on the expense of utilising genetic resources that are legitimately outside of the scope of ABS obligations, as it is easier for user to document compliance with ABS obligations where these exist (eg by presenting an internationally recognised certificate of compliance) rather than documenting the absence of such obligations. Users that are under the obligation to disclose will intend to negotiate with upstream user access conditions and guarantees that create legal certainty for them. To the extent the latter refuse, the user chain will be seriously disrupted.

- Distribution of impacts along the value chain || -- || Option UC-4 would selectively apply to only some utilisation activities and thus result in a very uneven distribution of costs and risks. Collections and non-commercial researchers would normally not face disclosure obligations. However, such obligations would be unavoidable particularly for SMEs and micro-enterprises in the middle part of the genetic resources value chain that depend on intellectual property protection for creating commercial value and, where relevant, being able to sell innovations to bigger companies downstream. This group of actors would be caught between a rock and a hard place. A non-commercial researcher that has no risk of being checked has no reason to take on legal responsibility for the good legal status of material passed on for applied research. Larger companies at the end of the value chain (particularly in the pharmaceutical sector), however, would not be able to accept a legal guarantee from a SME as sufficient assurance that things are in order, knowing that SMEs regularly have limited means to verify ABS-compliance. As a result, one would need to expect disruptions in the genetic resources value chain where research material moves from collections or non-commercial research to SMEs and again, where research and development activities move from SMEs to larger companies that create the real economic value. This suggests that the prohibition to utilise illegally acquired genetic resources could stifle innovation in different sectors, and thus achieve exactly the opposite of what the Nagoya Protocol wants to achieve.

- SMEs and micro-enterprises || -- || The costs of compliance under this option would fall on those involved in applied research and product development, be it public or private research institutes, SMEs or large companies. So a part of the user chain that is heavily populated by SMEs or micro-enterprises. Some of these players might decide to discontinue an utilisation activity rather than risking non-compliance with the prohibition. This also means that disruptive effects would likely affect the plant breeding and biocontrol sectors and also occur in the pharmaceutical value chain.

- Research and development opportunities || -- || As regards research and development opportunities, one could argue that Option 3D essentially meet the demands of our international partners and will thus facilitate access to genetic resources for the benefit of EU users. However, this line of argument is not convincing. The EU-approach to user-compliance measures is unrelated to the capacity challenges of provider Parties, particularly those that are developing countries. Indeed, the more rigorous and inflexible the EU approach to user-compliance, the more difficult it would be to accept any but perfect implementation of the access provisions of the Protocol by provider countries. Second, the argument ignores that initially most genetic resources utilised in the EU will be legitimately outside of ABS requirements. It does not seem acceptable to make research and development on these genetic resources more difficult and reduce innovation potential by establishing a system that only works for genetic resources that have been acquired in third countries and that come with ABS requirements attached. Taken together, Option UC-4 as a real potential for stifling research and development, and innovation in different sectors. It would thus achieve exactly the opposite of what the Nagoya Protocol is supposed to achieve.

- International competitiveness || -- || It is assumed that the negative impacts of this option on research and development and on innovation would translate into negatively effects for the EU's international competitiveness.

- Monitoring (effectiveness, efficiency) and costs) || -- || As regards monitoring user compliance, it has already been observed that a prohibition that is linked to a system of disclosure obligations would systematically favour collecting information about compliant behaviour, but be unlikely to result in pertinent information on situations of non-compliance or reasons for non-compliance. - Another challenge, particularly for user sectors with long and complex innovation chains, is the focus of the disclosure obligation on facts and activities that happened in the past, often many years ago; when relevant information about legal access was generated or when such information should have been generated but actually was not. As shown above, under current circumstances it seems that users will face real difficulties in disclosing relevant information, when this is required. - It is even clearer though, that it is mostly beyond the means of public authorities of the Member States or the EU to identify situations where genetic resources were utilised in a relevant way and access and benefit-sharing obligations apply. - Indeed, the only way to establish this information with some certainty is if one knows the benefit-sharing contract concluded between the provider of a genetic resource and the first user. And this might be a document considered as partially confidential by providers and users. This suggests that the probation to utilise illegally acquired genetic resources cannot be effectively monitored unless there is an obligation on users to disclose relevant information and thereby self-identify as compliant with applicable ABS requirements or not. However, would it be consistent with notions of legal proportionality if a monitoring system only works if users are obliged to self-identify as potentially non-compliant and eventually face sanctions for utilising an illegally acquired genetic resource? In most situations, the burden of proof for illegal conduct rests on public authorities. Obligation on operators to document legal compliance before engaging in an activity is normally done for dangerous or inherently risky activities. Or it is done in situations where illegal behaviour would otherwise be the norm rather than the exception. Both aspects are not characteristic of the activity of utilising genetic resources. So Option UC-4 might raise concerns about being disproportionate as regards ends and means.

- Public costs (EU-level, MS level, one-off, recurring) || -/0 || - A monitoring system based on an obligation on users to disclose relevant information would as such have limited costs. - However, as explained above, the proposed system is unlikely to be effective, except for identifying situations where users do comply with their obligations. The system would be largely ineffective in identifying situations of non-compliance. Obviously, monitoring authorities could put significant efforts into researching potential ABS-related problems of claims for intellectual property rights or product approvals. This might improve the effectiveness of this option, but would of course be quite costly and time-consuming.

Social impacts

- Potential to contribute to social objectives (health, food security, nutrition etc) || -- || Option UC-4 would very likely be damaging to research and development opportunities on genetic resources in the EU and thus not contribute to achieving important EU objectives on health, nutrition, or food security.

- Protection of the rights of indigenous and local communities || -- || It would also not effectively support the protection of the rights of indigenous and local communities over their traditional knowledge that is associated with genetic resources.

Environmental impacts

- Enhancing knowledge base for biodiversity conservation || -- || Option UC-4 would very likely be damaging to research and development opportunities on genetic resources in the EU. It is thus assumed to negatively affect the enhancement of the knowledge base for biodiversity conservation.

- Potential for generating non-monetary and monetary benefits in favour of conservation and sustainable use of biological diversity || -- || Given its overall difficulties, Option UC-4 would be unlikely to generate benefits in favour of the conservation and use of biological diversity.

              Annex 7: The genetic resources Value Chain

The Nagoya Protocol establishes a framework for acquiring and utilizing genetic resources over which states hold sovereign rights and primarily addresses the two sides of the ABS-relationship (providers and users). To better understand the implications of this framework, it is helpful to distinguish the typical steps taken in the genetic resources value chain. The value chain starts with the collection of some material and possibly ends with the successful commercialization of a final product.[12]

Step 1: Collecting genetic resources: Samples of genetic resources are collected from nature in a country. In-situ collecting activities are often complex endeavors, particularly where they require access to remote or sensitive areas, or engaging with indigenous and local communities. Foreign collectors will often collaborate with in-country-partners, such as local university institutes that participate in expeditions, help with identification of collected material, and keep reference-samples for inclusion in domestic collections.

Parties to the Nagoya Protocol that decide to require benefit-sharing for the use of their genetic resources must comply with the detailed access-related obligation of the Protocol. If implemented properly, these will result in transparent and enabling access frameworks with non-discriminatory, reliable, cost-effective and timely decisions.

Step 2: Storing samples of genetic resources in ex-situ collections: Samples of genetic resources, once identified and documented, are typically stored and maintained in ex-situ collections (botanical gardens, culture collections, gene banks). Collections in the countries where genetic resources were collected but also in third countries. Collections will keep relevant documentation on samples (scientific description, time and place of acquisition; collecting expedition, permits etc). They also exchange between each other information about samples or physically exchange samples through established (international) networks or cooperations. Collections also make samples available for R&D purposes. Very often, ex-situ collections in countries of origin will function as 'intermediaries' between those collecting samples in the wild and those conducting research on genetic resources.

The Nagoya Protocol does not explicitly mention ex-situ collections. However, Parties will work with ex-situ collections in the Protocol implementation. Collections in the countries where genetic resources were collected seem well placed to grant prior informed consent for access to genetic resources over which this Party holds sovereign rights. Ex-situ collections also hold critical information that helps assessing whether specific samples come with ABS-related rights and obligations.

Step 3: Basic research on genetic resources: Basic research does not pursue an economic purpose. Basic research on the genetic or biochemical properties of genetic resources is done within ex-situ collections and by researchers from universities or other research institutes. Such research generates critical knowledge important for biodiversity conservation and characterisation. It is thus directly linked to the ability of Parties to meet their conservation obligations under the Convention. Typically, the results of basic research are published. They are also used as basis for further applied research. However, researchers involved in basic research will normally not be aware at this stage of an eventual commercial relevance of their findings.

The Nagoya Protocol considers basic research as "utilization of genetic resources". This reflects that basic research is normally the basis and starting point for further, applied and commercially oriented uses. The Protocol obliges its Parties to give consideration to the important role of non-commercial research, including through simplified access measures. Other important considerations include focusing on non-monetary benefit-sharing during this phase of utilization. The effective implementation of these obligations by provider Parties rest in part on credible user-compliance measures taken in 'user jurisdictions' to avoid that privileges given to non-commercial research create loopholes for benefit-sharing. Indeed, a key challenge for credible user compliance systems is to ensure that those engaged in non-commercial research maintain the link to eventual ABS-obligations, especially in case of change in intent.

Step 4: Applied research on genetic resources: Applied research seeks to identify specific value of genetic resources in a specific context. Interesting discoveries will normally be protected through available forms of intellectual property rights before publishing important findings in specialized journals. Applied research on genetic resources is done by a broad set of actors that includes publicly funded research institutes and many SMEs, particularly in the biotechnology sector. Applied research also happens in R&D departments of large companies that develop and sell products.

The Nagoya Protocol considers applied research as "utilization of genetic resources". Specific benefit-sharing obligations during this phase must be established in MAT. The key challenge for credible user compliance systems is to ensure that those engaged in applied research maintain the link to eventual ABS-obligations. This is also important for legal certainty. No responsible company will move from applied research to product development, and decide on the necessary investments, unless it can oversee the legal and economic risks involved.

Step 5: Developing products involving R&D on genetic resources: Genetic resources play a direct or indirect role in the development of a broad range of products in a wide range of industries. The EU situation in this regard is detailed in Annex 8.

The Nagoya Protocol considers the development of products that involve R&D on the genetic and/ or biochemical composition of genetic resources as "utilization" of such resources". Specific benefit-sharing obligations are established in MAT. They will constitute part of the economic calculation of the company developing a product.

Step 5: Commercializing products that are based on genetic resources: Genetic resources play a direct or indirect role in the development of products put on the market. In some sectors of activity, companies will need to obtain a permit or approval prior to the marketing of a product.

The Nagoya Protocol establishes that benefit-sharing claims for "subsequent applications or commercialization" of R&D on genetic resources must be pursued on the basis of MAT. Indeed, the scope and form of eventual benefit-sharing obligations can only be determined on the basis of a concrete benefit-sharing arrangement.

              Annex 8:  The "EU Baseline" - current practices of utilisation of genetic resources and associated traditional knowledge in the European Union

Introduction

The information presented here provides an overview of the use and exchange of genetic resources and traditional knowledge associated with such resources as addressed in the Nagoya Protocol, for both commercial and non-commercial sectors affected by ABS issues in the EU. The information presented builds on 12 sectoral studies done by the external consultant team that are included in Annex 3 to the final report of the study[13].

Sectors analyzed were academic research, botanic gardens, culture collections, pharmaceutical industry, cosmetics industry, food and beverage industry, seed and propagating sector and horticulture, cultivated forest, animal breeding sector, biological control (“biocontrol”) and industrial biotechnology. The baseline summarizes the findings of the sectoral studies and deals with issues such as the relevance of genetic resources and access and benefit sharing for each of these sectors, the different activities involved in the genetic resource user chain, the size and characteristics of the sectors, the types and role of genetic resources in the sectors, the relevance of research and development on genetic resources for innovation in the sectors, the sourcing of genetic resources and the sectoral approaches and practices regarding ABS.

As highlighted in the IA study proper, it must be noted that relatively little quantitative information is available on the use and exchange of genetic resources at sector level. Information gaps especially exist with respect to the amount of genetic resources (and ‘wild’ genetic resources in particular) utilised within most of the sectors; the sourcing of genetic resources (e.g. figures on the extent to which genetic resources are obtained from each type of source); and the economic relevance of the utilization of genetic resources (e.g. figures on revenues and profits from the sale of genetic resource based products). Available figures are often rough or indirect indicators of what is being sought. Therefore the analysis below is mainly qualitative rather than quantitative.

EU sectors involved in or affected by ABS activities

EU sectors “utilizing” genetic resources and/or traditional knowledge associated with genetic resources and commercializing products developed on the basis of such utilization are very diverse. The purpose and patterns of use and exchange of genetic resources as well as the structure of the sectors differ widely.

The following “sectors” were analyzed in developing the EU baseline:

· Botanic gardens, defined as “institutions holding documented collections of living plants for the purposes of scientific research, conservation, display and education”;

· Culture collections, defined as “organizations established to acquire, conserve and distribute microorganisms and information about them to foster research and education”;[14]

· Academic research (universities and research institutes);

· The biocontrol sector, which mainly develops techniques for crop protection whereby predatory or parasitic living organisms (so-called “biocontrol agents”) are being used to control pests;

· The industrial biotechnology sector, where companies develop, manufacture and sell products and services that “use or contain biological material as catalysts or feedstock to make industrial products”, some of which develop enzymes, apply enzymes in biotransformation, develop whole cell catalysts and apply these in fermentation systems (HM Government, 2010);

· The plant breeding or seed industry, which engages in developing seeds and propagating material which are an essential input in crop production;[15]

· The horticulture sector, which includes a range of activities from plant breeding for ornamental purposes or amateurs (e.g. hobby gardening) to commercial production. The distinction between horticultural and agricultural production is difficult to make, but can be judged based on the scale of production;

· The cosmetics industry, which develops, manufactures and sells a range of products that include “traditional” cosmetics products, such as make-up and perfumes, as well as personal hygiene products such as tooth-care products, shampoos and soaps;

· The pharmaceutical industry, which engages in the discovery, development, and manufacture of drugs and medications;

· The farm animal breeding sector, which engages in the breeding and reproduction of farmed and companion animals. The five most important species for global agriculture are cattle, sheep, goats, pigs and chickens;

· The food and beverage industry;

· The Forestry and cultivated forest-based and related industries.

Relevance of genetic resources and ABS for the sectors

Issues related to access and benefit-sharing to genetic resources affect many activities and sectors of the EU economy. While demand for access to ‘wild’ genetic resources has declined in most sectors, interest in research and development on genetic resources has increased overall (Laird and Wynberg, 2012). While some sectors, such as the biocontrol sector, rely heavily on genetic resources sourced from the wild, other sectors build most of their innovation on genetic resources that have already been subjected to improvements. Nevertheless there are common issues facing this wide range of sectors. These include: compliance with legislation in countries of origin related to the access to genetic resources and/or traditional knowledge associated with genetic resources, the difficulty of tracing the country of origin of genetic resources and conditions attached to their utilisation when resources are accessed through intermediaries, the issue of development costs and related issues of benefit sharing and good governance.

According to Laird and Wynberg (2012), demand for access to wild genetic resources has declined in most sectors, though interest in genetic resources overall has increased. The importance of ABS may vary amongst (and within) these sectors, as some sectors rely more on wild genetic resources than others.

The pharmaceutical industry relies partially on wild genetic resources: 26% of all new approved drugs over the last 30 years are either natural products or have been derived from a natural product (Newman and Cragg, 2012). ABS is particularly important for those pharmaceutical companies that are involved in natural products research, which only represents one segment of pharmaceutical R&D.

In the plant breeding or seed sector conventional breeders rely on modern varieties, though old varieties, landraces and crop wild relatives are still used to introduce specific features such as insect and disease resistance into breeding populations (Schloen et al, 2011). Therefore demand continues to be low for wild genetic resources. In fact demand for wild genetic resources in this sector has reduced in recent years to be replaced by sourcing from ex situ and private collections (Laird and Wynberg, 2012).

In the horticulture and animal breeding sectors, demand for wild genetic resources is also limited. In the horticulture sector, some companies continue to search for wild genetic resources with the aim to introduce novel ornamental species or to provide new variations of colour or other traits (Laird and Wynberg, 2012). In the animal breeding sector, demand for wild resources might increase somewhat in the future because of climate change. Many of the traits necessary to adapt to climate change may be found in locally adapted breeds (Hiemstra et al, 2010).

Overall the demand for wild genetic resources in the cosmetics sector is limited, as most cosmetics are reformulations of existing products. However, there is a niche market in cosmetics for which wild genetic resources are very important.

The food and beverage industries, on the other hand, rely significantly on wild genetic resources for their product development and marketing. In recent years interest in wild novel species and associated traditional knowledge has even increased. Demand for access to wild resources from these sectors is likely to be maintained as these help companies to market their products in competitive markets (Laird and Wynberg, 2012).

The biocontrol sector relies most heavily on wild genetic resources. The genetic resources used in biocontrol include plants, viruses, bacteria, fungi, insects, nematodes and invertebrates and are very often collected in situ as living organisms. Furthermore, EU in situ collections are as important as non-EU in situ collections (FAO, 2009).

For the forestry sector (Ad Hoc Working Group III on Climate Change and Forestry, November 2010), forest ecosystems play an important role in the global biochemical cycles. Forests act both as sources and sinks of greenhouse gases (GHG), through which they have significant influence on the climate. EU forests cover very varied environments, ranging from sub-arctic to Mediterranean and from alpine to lowland, including flood plains and deltas. Forests are home to the largest number of species on the continent (the Mediterranean region alone has 30,000 vascular plants), compared with other habitats, and provide important environmental functions.

For the non-commercial sectors, genetic resources originating from the wild are also very important. Botanic gardens, in fact, still substantially engage in bioprospecting activities, identification and documentation of new plant varieties, storage, basic research and, in particular, exchanges of plant genetic resources (mostly in the form of seeds) with other ex situ collections. Bioprospecting and basic research on microbial genetic resources also remains an essential activity for culture collections and microbiologists, due to the fact that most microbial genetic resources are still unknown.

Steps involved in the use and exchange of genetic resources – a general introduction

Figures 1 and 2 give a general cross-sectoral overview of the use and exchange of genetic resources in the EU. For the purpose of this study, a distinction has been made between “upstream” and “downstream” activities in the genetic resources user chain. "Upstream" activities are those at the beginning of the user chain and include collecting in situ genetic resources, importing genetic resources into the EU, storing genetic resources in ex situ collections (including identifying and documenting them for this purpose) and handing out genetic resources (see Figure )."Downstream" activities usually follow the upstream activities and include research (basic and applied) and development on genetic resources for both commercial and non-commercial purposes – i.e. activities that fall within the Protocol’s definition of “utilization” of genetic resources – and commercialization of genetic resource based products (see Figure 2). Figures 1 and 2 indicate that some players in the genetic resources user chain are typically involved in upstream activities, whereas others are typically involved in downstream activities. Actors typically involved in upstream activities include botanic gardens, culture collections, seed banks and other public or private ex situ collections. They are mainly involved in bioprospecting, collecting, identifying and storing genetic resources for public good purposes. These activities are also often linked because different collection types are often hosted by the same institutions, generally universities or public research institutes. A wide range of industries such as the biotechnology industry, the pharmaceutical industry, the plant breeding industry, the horticultural industry, the biocontrol industry, the cosmetic industry and the food & beverage industry are involved in downstream uses of genetic resources.

The distinction between upstream and downstream activities is useful for analytical purposes and for effectively implementing the Protocol in the EU. Firstly, actors engaged in the upstream part of the genetic resources user chain typically supply downstream users with genetic resource samples or valuable data related to genetic resources that may subsequently be used for commercial R&D and eventually become the basis for a product. Secondly, the Protocol as it stands does not distinguish between upstream and downstream; it simply establishes a general obligation on Parties to ensure that genetic resources utilised in their jurisdiction were legally acquired in the country of origin. In the EU, it seems that upstream users, such as culture collections or botanic gardens, assume a major role as intermediaries in that they constitute the link between concrete access activities in source countries and subsequent utilization activities within the EU.

The upstream/downstream distinction applies to “types of activity” in the genetic resources user chain. While some sectors only engage in upstream or in downstream activities, other sectors (e.g. horticulture and academic research) are both involved in the upstream and downstream activities. Figures 1 and 2 below indicate the typical “placement” of sectors upstream and downstream.

In the following sections, we explain in more detail the upstream and downstream parts of the EU genetic resource user chain on the basis of the flowcharts in Figures 1 and.2.

Figure 1: EU upstream activities and actors involved

EU upstream activities and actors concerned

The first flow chart (Figure1) focuses on the upstream activities within the EU user chain. "Upstream" activities include collecting in situ genetic resources, importing genetic resources into the EU, storing genetic resources in ex situ collections (including identifying and documenting them for this purpose) and handing out genetic resources to downstream users or other ex situ collections. Actors typically involved in upstream activities include botanic gardens, culture collections, seed banks and other public or private ex situ collections. They are mainly involved in bioprospecting, collecting, identifying and storing genetic resources for public good purposes, except for private collections held by companies to support their commercial R&D. Ex situ collections (at least the public ones) are very much linked because they are often hosted by the same institutions, generally universities or public research institutes.

The flow chart shows that the bioprospecting or collecting of genetic resources in situ (either within or outside the EU) is mainly undertaken by botanic gardens, culture collections, universities and research institutes (referred to as “research collections” in the flow chart) and other ex situ collections (e.g. genebanks).[16] However, actors which engage more in commercial downstream activities (e.g. R&D) may also undertake bioprospecting; these include biocontrol companies and healthcare biotech companies. Bioprospecting can be done either directly or indirectly through partnerships with local universities and research institutes.

The indirect bioprospecting option is generally favoured as it provides for technical, scientific and administrative support. Local partners, for instance, can be helpful in dealing with the domestic procedures to obtain authorization for access to genetic resources. Where ABS procedures exist, authorities in the provider countries may require those who seek access to obtain “prior informed consent” (PIC) from the right holder – this right holder can be a private party (landowner), a national or regional authority or an indigenous or local community. Provider countries with authorization/ABS procedures in place usually also require those who seek access to negotiate mutually agreed terms (MAT) with the right holder on the further utilization of the genetic resources and the sharing of benefits arising from their utilisation. The PIC and MAT documents specify whether they cover utilisation for commercial or non-commercial purposes.

It should also be noted that EU actors (whether mostly active at the upstream or downstream level) might also source genetic resources from third country ex situ collections.

Major exchanges of genetic resources occur among the various ex situ collections both among EU ex situ collections and between EU and non-EU ex situ collections. This results inter alia from the need for identification of genetic resources by the collections. As this requires the scarce expertise of highly specialised taxonomists, international transfers of genetic resources are indispensable.

As Figure 1 shows, the actors that engage primarily in downstream activities (such as research and development on genetic resources) either obtain their genetic material directly from provider countries (through bioprospecting or third country ex situ collections) or indirectly through the EU ex situ collections.

When genetic material is transferred from ex situ collections (such as culture collections and botanic gardens) to commercial sectors active at the downstream level of the user chain, it must be checked whether the PIC and MAT documents that accompany the genetic resources coming from these ex situ collections allow for utilization with a commercial intent. This is often not the case. Hence, in many cases the downstream user or the ex situ collection will have to go back to the original provider country to obtain new prior informed consent from the right holder and to negotiate new mutually agreed terms in order to allow the genetic resources to be utilised for commercial purposes.

Figure 2: EU downstream activities and actors involved

EU downstream activities and actors concerned

The second flow chart (Figure 2) focuses on the downstream activities within the EU user chain. "Downstream" activities include research (basic and applied) and development on genetic resources for both commercial and non-commercial purposes – i.e. activities that fall within the Protocol’s definition of “utilization” of genetic resources – and commercialization of genetic resource based products which falls under the Protocol's provision for a fair and equitable benefit sharing. A wide range of industries such as the biotechnology industry, the pharmaceutical industry, the plant breeding industry, the biocontrol industry, the cosmetics industry and the food & beverage industry are involved in the downstream part of the genetic resources value chain.

In addition to the commercial sectors, the academic research sector is a major user of genetic resources, as it undertakes a lot of (primarily basic but also applied) research on genetic resources.Basic research on genetic resources is a fundamental starting point for further utilization of genetic resources. The academic sector is typically non-commercial; however, it maintains connections with commercial utilization of genetic resources. Academic publications, for instance, are freely used by economic sectors as inputs for commercial research and development. Furthermore, active collaboration with companies, including biotechnology firms, may result in applied research conducted within the academic sector contributing directly to commercial R&D. Finally, the academic sector undertaking applied research may seek intellectual property protection on innovations where industrial applications are possible and then negotiate license agreements with other downstream commercial users.

Another noteworthy sector in the downstream part of the user chain is the biotechnology sector. The sector is very much linked with agricultural input industries (such as the seed and animal breeding industry), the pharmaceutical industry and others, such as manufacturing industries, the “bioenergy” industry and the biomaterials industry, as it contributes directly to their research and development. Biotechnology can be subdivided as green, red and white biotechnology: green biotechnology refers to agricultural biotechnology; red biotechnology refers to pharmaceutical and medical biotechnology; and white biotechnology refers to industrial biotechnology. In reality, these subsectors may overlap. White biotechnology firms are separate in the flow chart as they are less dependent of the more downstream industries for the completion of a marketable product. This is different for instance from the red biotechnology companies which usually take care of the first stages of pharmaceutical research[17] and subsequently pass on – through outlicensing or acquisition – their products to the big pharmaceutical companies for further R&D and other subsequent stages in the value chain such as marketing (see also Figure 3).

At the most downstream part of the user chain one finds industries which undertake more downstream R&D and commercialize products; in terms of size the pharmaceutical industry and the food and beverage industries are the most significant, and the biocontrol industry is the smallest (see section 1.3 for more details). As far as the sourcing of genetic material is concerned, the industrial biotechnology sector differs from the agriculture and pharmaceutical biotechnology sectors. Industry biotechnology researchers regularly collect their own samples of materials, contrary to the case in the agricultural and pharmaceutical sectors (ten Kate & Laird, 1999). The biocontrol sector is also a special case as it relies heavily on its own bioprospecting activities.

Size and characteristics of relevant sectors

Global market/size and development prospects

Sectors primarily operating upstream include academic research, botanic gardens and culture collections. They often engage in non-commercial/not-for-profit activities, their main source of funding is public bodies and their activities are of important public, scientific and (downstream) commercial interest (biodiversity conservation, public education, storage and provision of genetic resources for downstream scientific research and product development).

Conversely, downstream users of genetic resources generally operate in larger markets. For instance, the global food and beverage industry was valued at $5.7 trillion in 2008, the global pharmaceutical market at $808 billion in 2009 (IMAP, 2011), the cosmetics market at $136 billion in 2006 (Global Insight, 2007), the global biotechnology industry revenues at $84.6 billion in 2010 (Ernst & Young, 2011) and the commercial seed market at $42 billion (ISF, 2011d). The global market for augmentative biocontrol was estimated at US$100-135 million in 2008 (FAO, 2009).

In summary, it can be concluded that economically very important activities take place downstream, whereas upstream activities are often non-commercial in nature, and often supported by public funds.

EU Market (size of market/sector and importance for EU economy)

Non-commercial sectors in the EU are quite important in terms of their share in their sectors’ activities globally. For botanic gardens, of 3,021 botanic gardens worldwide, around 550 are based in the EU (van den Wollenberg et al, interview 2012).[18] In 2001, moreover, it was estimated that 50% of all living plant accessions in the world were collected in Europe (Wyse Jackson, 2001). Kew Gardens in the UK holds the largest living plant collection and one of the largest herbaria in the world.[19] As far as culture collections are concerned, of 593 worldwide, 158 collections are based in the EU, holding 33% of the global collection of strains. Japan follows with 13% and the US with 12% of the global share of strains collected.[20]

The commercial sectors in the EU utilizing genetic resources also tend to have significant shares in their respective global markets, with the highest shares in the animal breeding, cosmetics and biocontrol sectors[21]:

· Pharmaceutical industry: size of the global market was $808 billion in 2009 with global market share for the EU of nearly 15% (IMAP, 2011);[22]

· Food and beverage industry: size of the EU market was €954 billion in 2009 with a share of global exports of 18.6% in 2009 (CIAA, 2010);

· Cosmetics industry: size of the EU market was $63.5 billion in 2006 with a global market share of 46.6% (Global Insight, 2007);[23]

· Biotechnology industry: revenues of the EU biotechnology industry amounted to $13 billion in 2010 with a share in global revenues of 15% and a share of 34.5% of global biotechnology patent applications at the European Patent Office (Ernst&Young, 2011; EC, 2007);

· Seed industry: size of the EU market was $6.8 billion in 2009 with a global market share of more than 20% (www.esa.org); the Netherlands was the global leader in vegetable crop seed exports in 2010 ($1 billion) and was second to the US in flower seed exports (US exports were $72 million, and Dutch exports were $57 million) (ISF, 2010c and 2010d). The top ten exporters of vegetable crops seeds also include France, Italy, Germany and Denmark; the top ten exporters of flower seeds include Germany, France and the UK. For agricultural crops, France is the largest agricultural crop seed exporter.

· Biocontrol industry: the EU is the largest market in the world for beneficial insects and the second largest for microbial biopesticides (FAO, 2009);

· Animal breeding industry: the economic gain (or added value) of animal breeding in Europe amounts to €1.89 billion per year, with global market shares of 90% for ducks, 100% for turkeys, 72% for broilers (poultry), 95% for layers (poultry) and 28.5% for pigs (figures from 2007) (FARBE-TP, 2008).

· Forestry: 2 million jobs in the forest sector in EU.

Economic relevance of “utilization” of genetic resources for the sector in Europe

The Nagoya Protocol defines “utilization of genetic resources" as “the conduct of research and development on the genetic or biochemical composition of genetic resources”. While there is virtually no data specifically on the economic relevance of the utilisation of genetic resources, figures on R&D expenditure that are provided below, when combined with the qualitative information on the relevance of genetic resources for each sector under section 0, provide an indicative picture on the economic importance of the utilisation of genetic resources. A more qualitative assessment of the role of research and development on genetic resources for innovation in the sectors is provided in section 0.

As far as the pharmaceutical industry is concerned, it is estimated that it takes 10-15 years and costs $1.3 billion to develop a new drug (Laird and Wynberg, 2012; PhRMA, 2009). The research-based pharmaceutical industry amounts to 18.9% of total worldwide business R&D expenditure. In 2010 an estimated €27 million was invested in pharmaceutical R&D in Europe (EFPIA, 2011). Nevertheless, R&D productivity of the big pharmaceutical companies declined by 20% in the 2001-2007 period (IMAP, 2011). It should be noted however that natural products research is only one segment of pharmaceutical R&D. In addition, the probability that any genetic resource sample will lead to a commercial product is very low. It is estimated that one in 10,000 samples makes it into a commercial pharmaceutical product (PhRMA, 2005; Laird and Wynberg, 2008).

The seed and horticulture industries are also very research intensive. It can take for instance 5 to 10 years to identify and evaluate agronomically important traits from exotic germplasm and it might take another 10 years to develop a new improved crop variety that is acceptable to the farmer (Smith and Grace, 2007). The development of one wheat variety for instance may involve “thousands of plant breeding crosses and dozens of different individual lines, including wild ones” (Schloen et al, 2011). It is estimated that 10-14% of turnover in the seed industry is spent on R&D (ESA, 2012). Given that the size of the EU market was $6.8 billion in 2009, R&D spending in the European seed industry was probably between $680 million and $950 million.

In the cosmetics industry R&D investments are much lower than in the pharmaceutical and biotechnology sectors, though investments have increased in recent years. Time horizons for developing new products vary considerably. In some cases time horizons are very short and R&D is minimal. In other cases time horizons may be considerably longer, e.g. when cosmetics companies run screens involving as many as 100 substances to identify active compounds and undertake clinical trials. In those cases it may take 6 to 8 years to bring a product to market (EC public consultation, 2012).

Development cycles in the industrial biotechnology sector and food sector are much shorter. The development of food products generally does not take more than three years, whereas the development of an industrial biotechnology product – e.g. enzymes for biofuels or detergents – usually takes no more than one to two years from the moment a lead enzyme is identified (Laird and Wynberg, 2012; sCBD, 2008).

In the global animal breeding industry R&D investments are significantly lower than in the crop seed industry. R&D intensity (i.e. R&D spending as a percentage of sales) in 2006-2007 for the (global) animal breeding sector represented 7.3% across species, compared to 10-15% for the crop seed industry (15% in 2000 and 10.5% in 2009). Private R&D into animal breeding and genetics grew from $253 million in 1994 to $316 million in 2010. In nominal US dollars, private R&D spending in 2010 reached $339 million for animal breeding and genetics, whereas R&D spending in 2010 was $3,726 million for crop seed and biotechnology (Fuglie et al, 2011).

The activities of ex situ collections such as botanic gardens or culture collections are primarily non-commercial and relate to the collection (in situ or ex situ), storage, and further transfer of genetic resources to downstream users. Genetic resources are “utilised” by those actors as far as the majority of ex situ collections engage in basic research on the genetic or biochemical composition of the material collected inter alia to identify and cataloguing new genetic material (Wyse Jackson et al, 2001). Ex situ collections further engage in utilization through scientific collaborations with academic institutions and downstream industrial users. For culture collections in particular, moreover, basic research activities consist not only of identifying the taxonomic nature of microbial strains, but also characterising their biological function and sequencing them to identify the genetic code (Stromberg et al., 2012). Thus, they clearly engage in the utilization of genetic resources in the sense of the Protocol. Apart from public funding, well organized culture collections generate additional income through the sale of microbial genetic resource samples and the provision of scientific services to customers (identification, characterization of strains, creation of databases with information on the genetic and biochemical composition of microbial genetic resources held in the collection) (Stromberg et al, 2012).

Are EU companies market leaders? Are EU organisations leaders in the sector?

EU companies are market leaders in a few sectors, such as the biocontrol and animal breeding sectors. The Dutch company Koppert for instance is a world market leader in biological crop protection. Examples of European world market leaders in animal breeding are Aviagen (Wesjohann GE Europe), with a global market share in the poultry sector (broliers) of 50% in 2007, and Hendrix (NL) with a share of 50% in the poultry sector (layers). The EU company PIC (= Genus) leads the global pig breeding market with a 10% share (FARBE-TP, 2008).

EU companies also play major roles in other economic sectors, despite not necessarily being world market leaders. Of the top 15 global pharmaceutical companies (2004-2008), seven companies have their headquarters in Europe: Novartis AG (Switzerland), Roche Holding AG (Switzerland), Bayer AG (Germany), GlaxoSmithKline PLC (UK), Sanofi-Aventis SA (France), AstraZeneca PLC (UK) and Boehringer Ingelheim Gmbh (Germany) (IMAP, 2011).

Of the 20 global companies that exceeded $100 million in total seed sales in 2009, 13 were based in Europe. Limagrain, KWS AG and Bayer ranked respectively fourth, fifth and sixth in 2009.

A significant number of major international cosmetics companies are based in Europe, primarily in France and Germany (Global Insight, 2007).

With regard to botanic gardens, the Royal Botanic Gardens Kew (UK) hold the largest living plant collection in the world and one of the largest herbaria. It also significantly engages in scientific research on plant material, producing around 350 publications per year. The garden employs 744 staff and has an annual income of €55.7 million (year 2010/2011), more than half of which originates from public funding with the rest mostly coming from private grants and fees charged for visiting the gardens (1.6 million visitors in 2010-11).[24]

Relevance of SMEs

The role of SMEs in the sectors varies. While some EU sectors such as the green biotechnology sector are dominated by big multinational enterprises, others such as the biocontrol sector are dominated by SMEs. SMEs also play different roles in relation to utilisation of genetic resources for innovation. While the field of pharmaceutical biotechnology, for example, is dominated by research-intensive SMEs, research on genetic resources for innovation in the horticulture industry is mostly carried out by large multinationals.

The pharmaceutical industry is dominated by large multinational companies, though SMEs (especially biotechnology companies) do also play a major role, especially in the early stages of the user chain (see Figure 3). On the one hand there are large pharmaceutical companies which need to be big because of uncertainties in the drug development process. On the other hand, there are smaller biotechnology companies, most of which do not have the capital or market access to commercialize a product (IMAP, 2011). A large proportion of companies working in healthcare biotechnology are research-intensive SMEs (Degen et al, 2011;Croplife, interview., 2012). Many of these SMEs are micro-enterprises consisting of 10 or fewer employees (Degen et al, 2011). Currently, some very large companies with big sales/marketing organizations and the capital and knowledge for late-stage clinical developments are systematically acquiring small biotechnology companies with interesting candidate products. Licensing deals with small biotech companies are also becoming increasingly important (IMAP, 2011).

The seed industry includes a significant number of SMEs, although the general trend is towards convergence and consolidation. There are many breeding companies in Europe with five or fewer employees (Plantum, interview, 2012). The green biotech sector, however, mainly comprises big multinational companies (Croplife, interview, 2012). There is however a small number of small and medium-sized green biotechnology companies, that generally do not sell seed but rather seek to commercialize a new genetic trait or biotechnology service or tool to other companies (Heisey and Fuglie, 2011).

The horticulture sector includes a small number of large multinational companies that represent most of the worldwide sales, and hundreds of SMEs (ten Kate, 1999). Nevertheless, it is the first group of large multinationals that deals the most with genetic resources by investing significant resources into the development of new products (ten Kate, 1999).

SMEs employing an average of 2-10 people represent the vast majority of biocontrol companies (FAO, 2009). 

The cosmetics market is composed of hundreds of SMEs spread across the EU27, though a significant number of major international cosmetics companies are based in Europe, primarily in France and Germany (Global Insight, 2007).

A large number of SMEs dominate the food industry: 99% of the enterprises are SMEs, which employ 61% of the workers in the industry and account for 49% of the industry’s total turnover. More specifically, micro-enterprises (1-9 employees) represent 79% of all companies. Small (10-49 employees) and medium-sized (50-249 employees) companies account for 17% and 4% respectively, while large companies (250+ employees) account for close to 1% percent of all European food industry companies (EMCC).

The animal breeding sector includes many SMEs, as well as several medium-sized and large international players. However, differences exist among the various animal breeding subsectors. For instance, most European beef cattle breeders are individual farmers who are members of farmer’s cooperatives or breed societies, whereas dairy cattle breeders are mostly dairy farmer cooperatives. In the poultry sector, however, just a few large-scale but still relatively small (max €500-700 million annual turnover) private companies supply breeding stocks. European pig breeding organizations (only 14 in 2007) are half organized into cooperatives and half privately owned companies (FARBE-TP, 2008).

The forestry sector: In the EU, 60% of forests are private and 40% public; private forest holdings are managed by an estimated 16 million forest owners, being in most cases small-scale private forest owners. In 2005, forest-based industries in the EU employed about 3 million people in 350,000 enterprises, with a turnover of about EUR 380 billion, producing added value of around EUR 116 billion (Source: Eurostat, Statistics in focus 74/2008).

Types and role of genetic resources used in sectors in the EU / particular characteristics of some user chains

Types and role of genetic resources used in the various sectors

Diverse types of genetic resources are utilised within the various economic sectors in the EU. The pharmaceutical industry uses natural products or genetic resources from animal, plant and microbial origin (and their derivatives) from both terrestrial and marine environments as a starting point in developing active compounds for medicines, as inactive elements of final products, and as tools in the research and production processes (EFPIA, 2007).

The cosmetics industry uses harvested or cultivated products in many of its products. The raw materials used are typically bulk sourced and consist mainly of dried plant products and oils from a variety of organisms (Laird and Wynberg, 2012; Beattie, 2005). This includes a large number of derivatives, such as saponins, flavonoids, amino acids, anti-oxidants, and vitamins (Beattie, 2005).

The biological pest control sector uses a very broad range of genetic resources, including plants, viruses, bacteria, fungi, insects, nematodes and invertebrates. They are almost always collected directly in situ as living organisms (FAO, 2009).

Conventional and biotech seed companies rely on different types of plant genetic resources for use in breeding and variety development. The development of new varieties is usually based on the use of advanced genetic material, as it takes time and effort to bring less-advanced genetic material to the same performance levels (Schloen et al, 2011). The main source for genetic material for conventional breeders is modern varieties, though old varieties, landraces and crop wild relatives may be used to introduce specific features into breeding populations which allow for the development of varieties adapted to less favourable environmental conditions and low-input production systems (Schloen et al, 2011).

The industrial biotechnology sector uses microorganisms as the primary genetic resource. Companies are interested in genetic resources found in “areas with high species diversity, as well as in extreme or unique environments”, including salt lakes, deserts, caves and hydrothermal vents (CBD, 2011).

In the animal breeding sector, exchange of (animal) genetic material between owners is crucial for the development of livestock breeds and the livestock sector in many parts of the world. Genetic variation within lines or breeds is the main source for genetic improvement. Although (new) breeds and lines are being developed continuously in commercial breeding programmes, the introduction of “foreign” genetic material or “wild relatives” is much less relevant in animal breeding than in plant breeding (Kaal-Lansbergen and Hiemstra, 2003). For many domesticated livestock species no wild relatives exist, as they have become extinct, and for others wild relatives are very rare (Schloen et al, 2011). Furthermore, little or no demand exists in developed countries for breeding animals or specific (adaptive) traits from developing countries. This situation could however change as a result of climate change. Many of the traits necessary to adapt to climate change may be found in locally adapted breeds. Climate change is therefore likely to increase the exchange of genetic material across the board, but might also lead to a bigger flow of genetic material from the South to the North (FAO, 2009; Schloen et al, 2011).

Relevance of research and development on genetic resources for (innovation in) the sectors

Research and development of commercial products from genetic resources is important for a wide range of sectors. However, the ways in which and the extent to which the sectors undertake research and development vary.

The pharmaceutical industry, for instance, is very R&D intensive. Drug development relies on the collaboration and effort of highly trained scientists at universities and private companies (see also Figure 10.1 which shows how the value chain in the sector might look). It takes about 10 to 15 years for a compound to make its way through R&D into commercialization. Only one in approximately 10,000 compounds screened is commercialized (PhRMA, 2005; Laird and Wynberg, 2008). According to EFPIA (2007), many thousands or even hundreds of thousands of samples must be screened to identify potential leads for investigation. Identified leads rarely generate compounds that merit serious research. Even fewer generate compounds that possess properties that merit the filing of a patent application; from these, only some are commercialized. As noted before, the research-based pharmaceutical industry amounts to 18.9% of the total worldwide business R&D expenditure. In 2010 an estimated €27 million was invested in pharmaceutical R&D in Europe (EFPIA, 2011). Nevertheless, R&D productivity of the big pharmaceutical companies declined by 20% in the 2001-2007 period (IMAP, 2011).

R&D on genetic resources, in casu natural products research, receives inconsistent support and is only one of many segments of pharmaceutical R&D (Laird and Wynberg, 2012). Currently only four large pharmaceutical companies maintain natural products programmes of any size, and have the capacity to undertake all facets of natural product drug discovery (Novartis, Wyeth, Merck and Sanofi-Aventis). Nevertheless, natural products research plays a major role in the discovery of leads for drug development and hence in innovation in the pharmaceutical sector. Most natural products research (especially research that involves bioprospecting) is done in academic and government research institutes or smaller discovery (biotech) companies (sCBD, 2008). Large pharmaceutical companies which engage in natural products research usually collaborate with this type of player, e.g. through in-licensing deals or acquisitions.

Figure 3: Value chain in the pharmaceutical industry

Source: Advances in Strategic Management

The seed or plant breeding industry, which relies entirely on genetic resources, is characterised by important R&D investments. It is estimated that 10-14% of turnover is spent on R&D (ESA, 2012). Research intensity (R&D spending as a percentage of sales) for seed increased during the 1990s (related to the increasing dominance of modern biotechnology or genetic engineering) and has fallen since 2000, though it is still higher than for other “agricultural input industries” with high research intensities such as animal genetics and animal health. R&D investment varies by crop (Smolders, 2005). R&D investments in the European seed and biotechnology sector are both focused on biotechnology and conventional breeding. Plant breeding is traditionally characterised by long time horizons over which research and development of new products evolves from the original point of access to genetic resources. Often multiple plant genetic resources are used in species improvement (see Figure 4): the development of one wheat variety may involve “thousands of plant breeding crosses and dozens of different individual lines, including wild ones, from many countries and over many centuries” (Beattie et al, 2005; Schloen et al, 2011). In other words, plant breeding is a global activity in which many breeders from many different countries are involved.

The relevance of public R&D on unimproved material (landraces, crop wild relatives, etc) is rather high. Characterization, evaluation and pre-breeding largely take place in the public sector, with the product freely available to all breeders on a non-exclusive basis. The private sector is rather reluctant to work with unimproved material (Smolders, 2005).

Figure 4: pedigree picture of a particular wheat line

Source: CIMMYT

In the horticulture sector the relevance of R&D on genetic resources varies among the subsectors. There are many companies involved in the horticulture industry growing, distributing and selling ornamental plant varieties; few of these work directly with genetic resources (ten Kate, 1999). Those that do work with genetic resources include a small number of large companies that represent most of the worldwide sales in this industry, a larger number of national companies and hundreds of SMEs. It is the first group of large multinationals that invest significant resources into developing new products. Some breeding programmes use advanced technological approaches to plant breeding, which can cost several million dollars (e.g. for vegetables), while ornamental plants can be introduced with little selection or breeding in a relatively short period of time (ten Kate, 1999). It can be concluded that some segments of the horticulture sector are characterised by long time horizons over which R&D of new products evolves from the original point of access to genetic resources, whereas other segments have relatively short time horizons for R&D on genetic resources (i.e. selection and breeding of genetic material).

In the biocontrol sector the relevance of research and development on genetic resources is very high. At the planning stage, surveys about the pest and its natural enemies need to be undertaken to obtain information about the area of origin of the pest and the best places to look for natural enemies. Subsequently, natural enemies are identified and detailed studies undertaken to assess their potential use as biocontrol agents. This includes developing breeding methods for use in the laboratory and conducting impact studies in the field or in the laboratory (FAO, 2009). The last step consists of an evaluation by the target country authority of the risks and potential benefits of the introduction of the relevant pest. Permission for release may or may not be given. When permission is granted, release strategies and protocols will be developed together with monitoring and evaluation procedures (FAO, 2009).

In the cosmetics and food and beverage industries, R&D investments are much lower than in the pharmaceutical and biotechnology sectors. However, investments in R&D have increased in recent years as a result of rising demand for proven, effective and safe products. Research and development of new products, however, varies significantly. In some cases time horizons are very short and the input of science and technology is minimal (e.g. when companies sell bulk unprocessed herbs and as such may or may not “utilise” genetic resources, or when companies process plants into extracts). In other cases time horizons may be considerably longer, e.g. when cosmetics companies run screens involving as many as 100 substances to identify active compounds and undertake clinical trials. In those cases it may take 6 to 8 years to bring a product to market (EC public consultation, 2012; Laird and Wynberg, 2012).

In the global animal breeding industry R&D investments are significantly lower than in the crop seed industry. R&D intensity in 2006-2007 for the (global) animal breeding sector accounted for 7.3% across species, compared to 10-15% for the crop seed industry (15% in 2000 and 10.5% in 2009) (Fuglie et al, 2011). In the animal breeding sector basic scientific research is mostly conducted in the public domain, whereas companies protect their knowledge generated in more applied research and breeding (Hiemstra et al, 2010). Like in the crop seed industry, the emergence of biotechnology has been very relevant for the animal breeding industry.

The forestry sector: (1) natural regeneration with the existing genetic resources at the stand is used as an important source for regeneration of the forests. Due to climate change, research is done on the genetic variation of natural regeneration and on possible reactions on the impact of climate change. The percentages of afforested and reforested forests vary between the Member states. (2) The genetic resources used for cultivated forest planting are usually seeds from identified stands or naturally regenerated trees. The source of breeding material is usually known. Genetic material is sometimes acquired from ex situ collections. In few cases, propagated material could be used for regeneration (e.g. poplar, willow). Due to climatic changes genetic resources are looked e.g. in the Mediterranean Region for a useful application in future climatic conditions in the European Union. At the moment the interest is mainly on a scientific level (research). Today, except for the overseas regions, the genetic resources coming from mega diverse countries are not of relevance for cultivated forests within the EU. The questions concern access to forest diversity for food, feed, renewable resources and energy. Plant genetic resources are located in situ and ex situ and are maintained by public and private forest owners as well as private or public forest companies.

Relevance of basic/academic research 'utilizing genetic resources' (for innovation) in sectors

Though it is hard to determine the exact relevance of basic/academic research for innovation in the sectors, one can state that in general basic academic research plays a major role for innovation in various economic sectors, though the relevance might vary across and within sectors.

Basic/academic research may indirectly contribute to a commercial innovation through publicly available publications/data (see box below). Published research results may be used by players with commercial interests as input for product development. Depending on the field of academic research, the likelihood of research results contributing to the development of new commercial products may vary. Academic disciplines such as taxonomy or ecology are less likely to contribute directly to commercial innovation, at least in the short term, than those such as clinical pharmacology or genomics.

Academic research institutes can also be actively involved in commercial R&D through partnerships with the private sector. The business sector indeed finances up to 6.6% of higher education R&D in the EU (EC, 2005). For instance, to improve knowledge sharing and to cut costs, pharmaceutical companies are highly interested in collaborating with academic laboratories. Partly funded by the government, academia invests effort in basic research to identify potential new targets for drugs (e.g. membrane or intracellular receptors and their signaling pathways) and biomarkers to monitor the effect of a drug. Furthermore, academia can contribute by optimizing technology to accelerate drug development. In addition, academic laboratories are highly stimulated to collaborate with pharmaceutical companies. In the EU FP7 Health program for instance, projects are only selected for funding if a certain percentage of the EU budget goes to SMEs. Furthermore, in project application forms from national governmental agencies, academic researchers have to describe how they will valorise the results of the project. Other initiatives to stimulate interaction between academia and industry include platforms such as the Innovative Medicines Initiative (IMI), a European public-private initiative that supports collaborative research projects and builds networks of industrial and academic experts to boost pharmaceutical innovation in Europe (Smits, interview, 2012).

Role of academic publications used by the pharmaceutical industry for the development of a medicine (utilizing genetic resources/natural products) An example is green fluorescent protein. This bioluminescent protein was extracted and purified from the hydromedusan Aequorea victoria by Osamu Shimomura (Shimomura, 1962). Later, the primary structure of the protein was revealed and published, also at an academic lab (Prasher et al, 1992). Now, it is widely used as a marker for gene expression, and also by pharmaceutical companies in order to study drug effects (Chalfie et al, 1994).

Basic research utilizing genetic resources is integral to the activity of culture collections and botanic gardens. For culture collections, for example, the key process of isolation and profiling of strains involves the basic study of biochemical and genetic properties of the strain. The added value of basic research consists not only of identifying the taxonomic nature of microbes, but also characterizing their biological function and sequencing them to identify the genetic code. Such information is organized in databases with molecular and physiological information diffused on collections’ electronic databases, which may be used by downstream commercial and non-commercial users (Stromberg et al, 2012). Scientific or technical (basic) research on plant genetic resources is also a core activity of botanic gardens. Basic research on the properties of plant genetic resources may be undertaken by the garden on its own, e.g. taxonomic research for the purpose of identification and cataloguing of new species or varieties. Because of the specific expertise of the scientists working in those sectors, further basic research utilizing genetic resources is also undertaken through collaborations between those institutions and universities/research institutes or the private sector (Wyse Jackson, 2001; van den Wollenberg et al, interview, 2012).

As botanic gardens and culture collections also provide economic sectors with their genetic resources, the basic research carried out by them in terms of identification, documentation, profiling and further scientific research on the properties of genetic resources held in their collections is definitely relevant for some sectors. In a survey carried out in 2005, it was found that 23% of the genetic material provided by culture collections went directly to private sector users, whereas the other 77% went to universities, research institutes and other culture collections (Stromberg et al, 2006). The relevance of microbial genetic resources held in culture collections for commercial sectors is likely to be higher when one considers the further linkages down the utilisation chain between academic research institutes and private companies. The microbial genetic resources and information on their properties and genetic profiles held by culture collections are mostly used for the biological control of pests and diseases in agriculture and horticulture, the production of natural products (e.g. valuable drugs, enzymes, and metabolites) for pharmaceutical, food and other applications, as well as the production of biofuels and bioplastics (agricultural and industrial biotechnology) (WFCC, 2008). Botanic gardens are mostly providers of genetic resources and related taxonomic information to universities and public research institutes, though they might also less frequently supply other downstream sectors such as green biotechnology, plant breeders, horticulture and the pharmaceutical sector (Wyse Jackson, 2001; van den Wollenberg et al, 2012).

Relevance of applied research 'utilising genetic resources' (for innovation) in the sector

Applied research is understood here as research with the objective of adding value to genetic resources to enable the potential development and commercialization of genetic resource based products. This stage of the innovation process involves the academic sector, but to a larger extent the biotechnology sector, which is engaged in a number of fields such as pharmaceuticals, agriculture and industry. This is an important stage of the value chain and it explains, for instance, the targeted acquisition within the pharmaceutical industry of small biotechnology firms to gain access to specific products or technologies (sCBD, 2008). The further development of products is generally undertaken by the downstream companies’ own R&D departments.

Protection of innovations in the sectors (e.g. patents, plant variety rights and trade secrets)

Legal protection of innovations becomes particularly important in the 'downstream' part of the genetic resources user chain. However, currently the conditions for granting legal protection for an innovation are independent from the specific role the utilization of genetic resources or traditional knowledge has played in the creation of an innovation. A unique genetic resource may have been the decisive input enabling innovation. Conversely, a genetic resource with related ABS-obligations may have been only one of tens of thousands of reference samples used in the screening for an active ingredient. Furthermore, intellectual property rights such as patents or plant variety protection only cover the part of innovations involving the utilisation of genetic resources. Innovations of major economic importance may often fall outside the scope of intellectual property protection and kept as trade secret. The distribution of the different practices is explained below.

· Plant variety rights: Innovations in the conventional plant breeding industries are mostly protected through the plant variety protection system. As mentioned above, however, the development of a new wheat variety may involve thousands of plant breeding crosses and dozens of different individual lines (Schloen et al, 2011). EU legislation authorises only the protection of a new plant variety by means of the Community Plant Variety Right system (CPVR – Regulation (EC) No 2100/94) or national plant variety protection systems; those systems are conform to the UPOV convention (Union pour la Protection des Obtentions Végétales); the CPVR system protects mainly ornamental species (60%), agricultural crops (25%), vegetable crops (12%) and fruit species. Currently, less than 14% of registered varieties on the EU Common Catalogues (agricultural and vegetable crops) are protected within the CPVR. More than 18,000 protection titles are in force at EU level. The CPVR and UPOV systems are open systems because the variety, even protected for commercial use, remains free for research and breeding (compulsory breeder exemption) and for private use.

· Patents: Among the sectors covered by the present study, one of the most reliant on patents for protecting innovations is the pharmaceutical industry. In 2011, pharmaceuticals operators based in Europe filed 5,759 applications before the European Patent Office (EPO), representing 4% of the overall number of European patent applications before the EPO. Those figures represent a strong decline compared to the previous year (6,879 applications, representing 4.5% of the overall number of European patent applications).[25] In this sector, while only a small number of new chemical entities are approved annually, thousands of patents are applied for to protect variants of existing products and manufacturing processes. Patents are usually obtained by the time lead compounds have entered the stage of lead optimisation, even though many uncertainties with respect to commercial return remain (EFPIA, 2007).

The number of patent protection applications has grown significantly in recent years in the field of biotechnology (Ugalde, 2007), which is now among the 10 most active fields for applications before the EPO. In 2011, biotechnology operators based in Europe filed 5,865 applications before the EPO, representing 4.1% of the overall number of European patent applications before the EPO.[26] While a number of innovations in the academic research sector are not protected because the main aim of academic research is to increase scientific knowledge by disseminating research results through publications, patenting has increased in this sector since the 1990s in the field of biotechnology, where basic research is often likely to lead to industrial applicability (van Zeebroeck et al, 2008). In 2005, patent applications before the EPO from the government and higher education sectors amounted to merely 3.2%, whereas business enterprise sectors were responsible for 85.7% of the overall number of patent applications (Eurostat, 2010). In the field of biotechnology in 2002 university patent filings before the EPO accounted for 13% of the overall number of applications (van Zeebroeck, 2008).

To a smaller extent the cosmetics, food & beverage and farm animal breeding industries are also increasingly making use of patents to protect their inventions (ETB, 2010; Schloen et al., 2011).

Figure 5: Overall number of new applications received at the EPO in the field of Biotechnology

Source: S. Yeats EPO, 2011

· Trade secret: Protection of inventions through trade secrets is carried out by a number of sectors including the cosmetics, food & beverages, animal breeding, plant breeding and biocontrol industries. Information covered by trade secrets may range from production know-how in the biocontrol industry (i.e. the rearing methods used in the laboratory) to genetic information (Krattiger, 2007).

· Geographical indications: They are forms of identification which identify a product as originating in a region or locality in a particular country. For a GI product, its reputation for quality or authenticity is intimately linked to its geographical origin. Geographical Indications are usually geographical names. But non-geographical names can also be protected if they are linked to a particular place. There are three major conditions for the recognition of a sign as a geographical indication: it relates to a good although, in some countries, services are also included; these goods must originate from a defined area; the goods must have qualities, reputations or other characteristics which are clearly linked to the geographical origin of goods

Relevance of traditional knowledge associated with genetic resources for innovation in the sectors

The relevance of traditional knowledge varies by sector. The role of traditional knowledge in pharmaceutical discovery has been relatively small in recent decades and is likely to become even smaller. Several reasons are put forward for this trend: the emphasis of pharmaceutical drug development on disease categories that do not feature prominently in traditional medicine; the decreased role of plants in discovery; the increasing role of micro-organisms in discovery; and the fact that new research approaches do not easily integrate the type of information available through traditional knowledge (sCBD, 2008; Laird and Wynberg, 2012).

In the seed sector, companies rely on their own private collection or prefer to work with material characterized through joined research projects with public institutions. The plant biotechnology avoids collecting traditional/farmer knowledge as far as possible because of legal and ethical implications. Most prefer to pass the responsibility of resolving these difficult benefit-sharing issues on to the gene banks, governments or intermediary institutions with whom they work (Laird and Wynberg, 2012).

The cosmetic and food and beverage industries, however, rely much more on traditional knowledge as the starting point for new product development. Novel species have become increasingly important in this sector, as well as the traditional knowledge associated with these species. In some countries, traditional knowledge is used as a marketing tool to demonstrate product efficacy and safety. These industries, however, are the least informed about CBD, the Protocol and their ABS requirements (Ibid).

As for the upstream sectors, it should be noted that a survey showed that 20% of academic research projects linked with genetic resources worked with traditional knowledge associated to these resources (WG-ABS, 2006). Botanic gardens often keep, alongside the plant material itself, related objects and information of ethno-botanical nature, e.g. information about use by indigenous and local communities of the relevant plant materials (botanic gardens, pers. comm. 2012). Furthermore, traditional knowledge often figures in scientific publications on the properties and uses of certain plant varieties (van den Wollenberg et al, interview, 2012).

In conclusion, with the exception of the cosmetic and food industries the use of traditional knowledge associated with genetic resources is relatively small in most commercial sectors in the EU. Traditional knowledge associated with genetic resources nevertheless still plays a relatively important role in the basic research activities of non-commercial sectors, as it may provide valuable insights into the properties and functions of certain genetic resources.

Sourcing of genetic resources (genes or naturally occurring biochemicals)

Relevance of bioprospecting

Bioprospecting involves searching for, collecting, and deriving genetic material from samples of biodiversity (plants, animals, microorganisms) for scientific research or commercial development. As Figure 1 shows, EU users engage either in direct or indirect bioprospecting. The reliance on ‘wild’ genetic resources and hence the relevance of bioprospecting varies across sectors (see also section 0).

For most botanic gardens and culture collections, bioprospecting remains a fundamental activity. For botanic gardens the collection and discovery of new species is an integral part of their conservation, educational and scientific activities: 42% of European threatened taxa, for example, is accessible in ex situ collections within their region of origin (Sharrock and Jones, 2009). According to a study based on data provided from 84 botanical gardens in Germany, Austria, Switzerland and Luxembourg, 12% of the plant material acquired by the botanic gardens every year was directly collected from the wild (Krebs et al, 2003).

For culture collections, in situ collection of microbial samples is also fundamental due to the fact that more than 99% of existing microbial genetic resources are still unknown.[27]45% of genetic resources deposited every year come from the direct bioprospecting efforts of the collection itself (Stromberg et al., 2006). As micro-organisms easily develop novel properties in response to different environmental stresses, collection from industrial regions may often be as important as collection from gene-rich countries (Fritze, 2010).

Bioprospecting is very relevant in the biocontrol sector, which relies the most on wild genetic resources among the commercial sectors studied. The genetic resources used in biocontrol include plants, viruses, bacteria, fungi, insects, nematodes and invertebrates and are very often collected in situ as living organisms. EU in situ collections are as important as non-EU in situ collections (FAO, 2009).

The food and beverage industries also rely significantly on wild genetic resources for their product development and marketing. Materials are often bioprospected and bioprospecting activities are expected to continue to grow, as they help companies to market their products in competitive markets. New ingredients are regularly sought in nature, and identified through traditional knowledge.

The same conclusions hold for one particular segment in the cosmetics sector for which wild genetic resources are very important. However, the demand for wild genetic resources and the relevance of bioprospecting for the sector as a whole is limited.

Industrial biotechnology researchers regularly collect their own samples of materials, contrary to the case in the agricultural and pharmaceutical sectors (ten Kate & Laird, 1999). Ten Kate & Laird (1999) found that of the companies and organisations surveyed for their study, this collecting activity was a relatively unimportant method of acquisition for half of the respondents. For the other half, however, staff collecting activities represented more than 90% of their acquisitions. Many of these collectors come from universities, or from small companies spun off from universities.

In the pharmaceutical industry, which only relies partially on ‘wild’ genetic resources, bioprospecting is directly relevant for companies that are involved in natural products research. Many small (biotechnology) companies increasingly carry out (specific aspects of) research on natural products such as biosynthetic engineering and other genomic research. These smaller biotechnology companies develop hits and leads and form alliances with big pharmaceutical companies for the development of pharmaceuticals. This implies smaller companies are more likely than the largest companies to seek access to wild genetic resources (sCBD, 2008). These companies (and the few big pharmaceutical companies which still engage in natural products research, such as Novartis) usually work together with worldwide local partners such as universities, research institutions, botanic gardens and culture collections to undertake bioprospecting, as the practice of bioprospecting generally requires specific taxonomic expertise. Some bioprospecting might also be done by in-house scientists (such as marine biologists) (EFPIA, 2007; sCBD, 2008).

In the plant breeding or seed sector bioprospecting is very limited. Though a small demand continues to exist for old varieties, landraces and crop wild relatives to introduce specific features such as insect and disease resistance into breeding populations (Schloen et al, 2011), the demand for wild genetic resources has been replaced in recent years by ex situ and private collections (Laird and Wynberg, 2012). In the plant biotechnology sector, direct in situ bioprospecting activities are virtually non-existent (Europabio, interview, 2012).

In the horticulture sector bioprospecting is also very limited. In the animal breeding sector the introduction of “foreign” genetic material or “wild relatives” and hence bioprospecting is even less relevant than in the plant breeding sector.

In conclusion, the relevance of bioprospecting is highly variable across different sectors in the EU. Bioprospecting remains an important activity in non-commercial sectors. The discovery of new or rare genetic diversity in nature, in fact, is still of great interest for both scientific research and the conservation activities of some ex situ collections. In the commercial sectors, while bioprospecting remains important for some particular niches of innovation, such as biocontrol, industrial biotechnology and some small pharmaceutical biotechnology industries, the activity has declined or is no longer relevant for economically important research-intensive sectors such as the seed industry and a great proportion of the pharmaceutical and cosmetics industries.

Relevance of ex situ collections, gene banks, seed banks, databases

Culture collections are specialised deposits of microbial genetic resources which function as providers of microbial genetic resources to a wide range of downstream sectors. Generally, the addressees of 77% of the material provided by culture collections are public sector institutions, in particular research institutes, universities and other culture collections, while 23% goes to private sector users (Stromberg et al, 2006). The uses of microbial genetic resources stored in culture collections include the biological control of pests and diseases in agriculture and horticulture (biocontrol sector), the production of natural products (e.g. valuable drugs, enzymes, and metabolites) for pharmaceutical, food and other applications, and the production of biofuels and bioplastics (agricultural and industrial biotechnology). They also play a major role in soil fertility and plant and animal health and are employed in diagnostics, efficacy testing of drugs, biocides, vaccine production and disinfectants (WFCC, 2008).

Botanic gardens are mostly providers to universities and public research institutes. This does not exclude the possibility of other private downstream sectors utilizing genetic resources (e.g. green biotechnology, plant breeders, horticulture and pharmaceutical sector) sourcing from those institutions (van den Wollenberg et al, interview, 2012). This is particularly the case for well-established botanic gardens and others associated with or owned by the private sector, such as horticultural, agro-botanical and germplasm gardens, functioning as ex situ collections for plants of economic value (Wyse Jackson, 2001).

In the seed sector, conventional breeders usually source their material (mostly modern varieties) from private collections (i.e. breeding collections of private companies) and from other breeding companies (i.e. from their varieties available on the market in which case the breeder’s exemption applies). Genebanks – such as national public genebanks and the centres of the Consultative Group on International Agricultural Research (CGIAR) – are also sources, but these are mainly used by universities, small companies and national agricultural research systems in developing countries (Fowler et al, 2001; sCBD, 2008). Most green biotechnology companies mainly source their material from their own collections, followed by national genebanks, ‘in trust’ collections maintained by CGIAR centres, and university collections (ten Kate & Laird, 1999). They only rarely source from botanic gardens. Many green biotech companies leverage investment in smaller companies and track exploratory work done in universities and small companies. Green biotech companies might enter into an in-licensing agreement with universities or small companies. Conventional breeding companies and green biotech companies source from both within and outside the EU. Green biotech companies source the majority of genetic resources from outside the EU (Croplife, interview, 2012).

It is difficult to get a clear picture of the exact significance of ex situ collections for pharmaceutical companies. The value creation chain in the sector is complex and continuously reshaped: many different steps need to be taken and many intermediaries are involved. A pharmaceutical company might outsource several activities or buy and/or sell certain intermediate products (IMAP, 2012). The following information might give some indication as to where companies source their genetic R&D material and the role of ex situ collections within the sector. Aside from direct bioprospecting, pharmaceutical companies that intend to develop drugs on the basis of natural products may source the required genetic resources from: academic and government research institutes engaged in natural products research; the collections of smaller discovery/biotech companies (such as Pharmamar); culture collections (see above); or private suppliers of chemical compounds whose libraries/collections may include natural products or their derivatives and from in-house collections. As pharmaceutical companies are global players they source from both EU and non-EU ex situ collections.

The horticultural industry predominantly relies on genetic resources in ex situ collections, which represent the core of the industry. Most genetic resources, therefore, are sourced from in-house collections, commercial collections, national collections and botanic gardens (ten Kate, 1999).

The biocontrol sector almost always collects its genetic material in situ. From time to time, however, material is sourced from ex situ collections, such as microbial culture collections (FAO, 2009).

Next to bioprospecting, the industrial biotechnology sector relies heavily on culture collections to obtain genetic resources. Most of the cultures held in these collections predate the CBD (CABI, interview 2012). Samples are also obtained by companies and organisations from intermediaries including universities or from external collectors based in the country that provides the resources. Companies also maintain their own collections of genetic resources and their derivatives. For some of these, building and improving their collections is their primary activity, in order to license these to other users for research and product development (i.e. culture collections). For others, their collections form the basis for in-house product development (ten Kate & Laird, 1999).

European animal breeders usually source their material from within the company or from farmers, from both within and outside Europe. The majority of AnGR are kept in the form of live animals in situ (in their production environments). Only a limited amount of AnGR is stored ex situ for conservation purposes or for breeding activities such as artificial insemination and embryo transfer breeding. Relatively few AnGR are held in the public domain. Public ex situ collections and genebanks mainly fulfill conservation purposes and are less involved in the exchange of genetic material and its provision for breeding purposes (FAO, 2009; Schloen et al, 2011).

EU ex situ collections are not only relevant with regard to the provision of genetic resources to downstream users, but also for supplying genetic resources to other ex situ collections around the world. For example, it was estimated in 2003 that 58% of the plant material entering botanic gardens in the EU every year comes from other gardens through international exchange networks (Krebs et al, 2003). These benefit all members as they have the primary aim of keeping the collections around the world alive (Van den Wollenberg et al, interview 2012. The number of non-commercial transactions in plant material between botanic gardens in the EU is estimated to fluctuate around two million per year (Van den Wollenberg et al, interview, 2012; see also Krebs et al, 2003). Transactions with botanic gardens outside the EU are considerably lower but on the increase, with limitations imposed by legal uncertainties and low scientific standards in some collections and countries (Van den Wollenberg et al, interview, 2012). For culture collections the proportion of material coming from other service collections is lower (20%); a further estimated 30% however is actively deposited from research collections and individual scientists to maintain a safe backup copy of important reference material (Stromberg et al, 2006).[28] The majority of the latter transactions are carried out nationally. However, a substantial number of depositors from India, the Philippines, China, Brazil, Columbia and Uruguay directly deposit strains from their countries in OECD collections, including EU collections (FAO, 2009).

In summary, EU ex situ collections play a fundamental role in the user chain acting as direct providers to both commercial and non-commercial users. In fact, several commercial sectors including the horticultural and seed industry source almost all their genetic resources from ex situ collections. The role of private and in-house ex situ collections is also important in various sectors including the horticulture and seed industry, where in-house collections are integral to the plant breeding process. Non-commercial sectors rely on ex situ collections even more strongly. This is particularly the case for botanic gardens, which rely on genetic material from other botanic gardens to keep their collections and conservation activities alive, but also for the academic research sector, which often owns or is affiliated to particular ex situ collections for the purposes of scientific research.

Existing approaches to ABS in each sector

Since the coming into force of the CBD in 1993 the general trend for EU sectors with regard to ABS has been towards the development of codes of conduct to ensure compliance with local ABS legislation, the formalization of transactions in genetic resources through Material Transfer Agreements (MTAs) and the improvement of documentation systems. Generally, sectors primarily operating upstream in the EU such as culture collections and botanic gardens have taken significant steps to bring their conduct into line with the ABS requirements of the CBD. Despite the general willingness to comply with the CBD by those sectors, however, the level of awareness of ABS legislation, formalisation of transactions and documentation of collections is often hampered by the lack of appropriate financial and human resources of the individual collections. Codes of conduct and other voluntary measures have also been developed by sectors primarily operating downstream. The level of awareness and commitment to ABS-compliant practices is however variable across those sectors.

As regards sectors primarily operating upstream, since the CBD, botanic gardens and culture collections have taken substantial steps towards the establishment of codes of conduct for bioprospecting and the formalization of transactions through the use of formal networks and MTAs to ensure compliance of users with local PIC and MAT requirements and ensure a climate of confidence in provider countries with regard to their practices. However, smaller gardens and collections lacking the necessary financial and human resources still engage in a high number of informal transactions (i.e. transactions of genetic material that are not subject to any written contract or agreement) (van den Wollenberg et al, interview, 2012; FAO, 2009; Stromberg et al, 2006). In 2005 it was found that only 13% of culture collections had a written policy for complying with the CBD and only 40% of the strains received were estimated to be accompanied by a formal MTA (Stromberg et al, 2006). With regard to botanic gardens, around 10 years since the development of the IPEN network only 130 out of 550 gardens in the EU are taking part in its code of conduct and formalised transactions.[29]The aim of this network is to facilitate the exchange of living plant material between members while respecting the ABS requirements of the CBD.

Other significant codes of conduct developed by those sectors include the OECD Guidelines for Biological Research Centres (BRCs), which apply to a wide range of ex situ collections that intend to be part of the Biological Resource Centre Network. Practices of disclosure of information on the country of origin, documentation and respect of MAT when further transferring a certain material are requirements with which an ex situ collection will have to comply in order to be accredited as a BRC. Specific to culture collections is the MOSAICC code of conduct, which sets minimum standards for bioprospecting, promotes the use of the World Data Centre for Microorganisms tagging systems as a way to attach to new strains a global unique identifier as tracking device and the use of standard contracts such as the European Culture Collections Organisation core MTA for the further distribution of microbial genetic resources to other users in the chain.

With regard to the state of documentation systems in ex situ collections, in 2009 it was estimated that around 90% of all living plant collections of botanic gardens around the world pre-dated the entry into force of the CBD (Wyse Jackson, 2001). While it is common practice for botanic gardens to hold information on the year of access and country of origin of plant material, there is no consistent practice and much data has been lost through the widespread informal transfers of plant material that have taken place both before and after the CBD (van den Wollenberg et al, interview, 2012). For culture collections, it is estimated that 50% of the strains held worldwide were acquired before the CBD (FAO, 2009). In light of the well-developed electronic documentation systems of culture collections it would not be problematic to distinguish pre- and post-CBD material, although information on the country of origin has started to be systematically documented by culture collections only since the coming into force of the CBD (Fritze, 2010; Desmeth, interview, 2012).

The approach to ABS of universities and research institutes in the EU is generally characterised by informal transactions and relationships based on mutual trust, except when collaborating with other entities with well-established ABS practices (e.g. botanic gardens, culture collections, pharmaceutical firms etc) (Desmeth, interview, 2012). Microbial research collections, for example, are estimated to contain a much higher quantity of microbial strains than culture collections, which is nevertheless often not thoroughly documented and exchanged with other research institutes on an informal basis (FAO, 2009).[30] That said, sector specific voluntary instruments have recently been developed, including the “Guidelines on the Access to Genetic Resources and their Transfer” (2011) developed by CIRAD, INRAD and IRND (three major French public research institutes engaging with genetic resources) and the “Agreement on ABS for Non-Commercial Research” (2012), a standard contract developed by the Swiss Academy of Sciences to guide researchers in the negotiation of MAT.

As regards sectors primarily operating downstream, the approaches towards ABS and the level of awareness of ABS rules are highly variable across sectors.

In the pharmaceutical industry, the level of awareness and compliance with ABS requirements is high only for large pharmaceutical and pharmaceutical biotechnology companies that still substantially engage in natural products research (e.g. Novartis, Merck & Co.) (EFPIA et al, interview, 2012). For pharmaceutical companies in general, while the IFPMA (the International Federation for Pharmaceutical Manufacturers and Associations) has developed “Guidelines on Access to Genetic resources and Equitable Sharing of Benefits Arising out of their Utilisation”, these are purely voluntary and were mostly conceived to respond to external political pressures rather than a reflection of common practice. The exercise of due diligence when sourcing genetic resources from intermediaries, for example, is not covered by the guidelines and is outside the practice of most pharmaceutical companies. Exercising due diligence over the origin of genetic resources sourced from intermediaries is considered impractical by most pharmaceutical companies due to the complexity of the utilisation chain (EFPIA et al, interview, 2012). The “Guidelines for Bioprospecting for BIO Members” are relevant for pharmaceutical biotechnology companies. Those guidelines are more far reaching than the ones developed by the IFPMA, establishing best practices for documentation and prohibiting the acquisition of genetic resources from intermediaries when unable to provide evidence on PIC and MAT. Regarding the general state of documentation systems in chemical libraries of pharmaceutical companies, apart from the specialised internal collections of companies systematically engaging in natural product research, it is estimated that the origin of collected compounds is often not documented. (EFPIA et al, interview, 2012).

In the plant breeding sector, while many exchanges between breeders, scientists, private people take place informally because of the breeder’s exemption, scientific and private exemptions under the CPVR and UPOV plant variety protection systems, there is a general trend towards formalization of transactions (MTAs) in transfers from genebanks and other ex situ collections (Scholen et al, 2011). As far as PGRFA listed under Annex I of the ITPGRFA are concerned, exchange of plant genetic resources within the plant breeding sector (seed industries and research institutes) are carried out under the standard Material Transfer Agreement (sMTA) established under the multilateral system, covering around 440,000 transfers of genetic material per year (ITPGRFA, 2012). The same sMTA is also used by several genebanks for transfers of plant genetic resources falling outside the scope of Annex I. SMTAs are used inter alia because standard contracts keep transaction costs low compared to ad hoc bilateral agreements (Scholen et al, 2011). The ornamental sector, on the other hand, is considered to have low levels of awareness concerning ABS requirements. This may be partially due to the sector’s low overall reliance on wild genetic resources (Laird and Wynberg, 2012). As a result, no specific sectoral code of conduct with regard to ABS has yet been developed, although there is ample evidence of ABS agreements being concluded in provider countries in partnerships with botanic gardens and local organisations.

For the biotechnology industry generally, the “Guidelines for Bioprospecting for BIO Members” issued by BIO, the world’s largest biotechnology association, is the most important code of conduct regarding ABS (see above). For the green biotechnology sector, for example, it was maintained that the exercise of due diligence to ensure that genetic material has been properly sourced is a key practice of companies, which generally will only work with material acquired through MTAs. Because of the remaining legal uncertainties in the use of the IT-PGRFA sMTA, only 1 to 5% of PGRFA are accessed under such standard contracts. (CropLife International, interview, 2012).

In the biocontrol sector, genetic resources are often exchanged through free multilateral exchanges of biocontrol agents that take place through informal networks of practitioners or the International Organisation of Biological Control (FAO, 2009). The utilization of MTAs is common as far as sourcing from culture collections is concerned. As regards bioprospecting, no code of conduct has been developed but ABS agreements are often concluded with local research institutes. Because of the low profit margin of this sector, benefit sharing is generally non-monetary, taking the form of capacity building, training and joint research projects (FAO, 2009).

The cosmetics industry, while increasingly developing industry-wide as well as internal voluntary ABS due diligence systems, has historically been characterized by a general lack of awareness regarding ABS obligations (Laird and Wynberg, 2012). From 2007 onwards this sector has started participating in several initiatives aimed at improving awareness and compliance with ABS standards. This includes participation in the Union for Ethical Biotrade (2007), which provides for annual progress reports and external audits on companies’ performance with regards to CBD objectives and the National Resources Stewardship Council guidelines (2010).

Access to and exchanges of genetic material and benefit sharing in the animal breeding industry are primarily regulated by private law agreements and a common understanding among breeders/providers on the rights over the material. As a result no ABS code of conduct has been developed by this sector. In fact, AnGR are generally protected by physical ownership, i.e. the owner of the farm animal determines to what extent and under which conditions their germplasm may be made available to prospective users (Kaal-Lansbergen and Hiemstra, 2003). Pig and poultry breeding companies, for example, use contracts forbidding the buyer from selling breeding material from the purchased animals or requiring the payment of a royalty on future profits (Hiemstra et al., 2006; FAO, 2009).

In the cultivated forestry sector existing approaches as regards ABS are not known. Such approaches may exist in the forest research sector.

Conclusion

The above description underlines that:

· Genetic resources and issues relating to ABS affect many activities and sectors of the EU economy - from botanic gardens, culture collections and research collections, to biocontrol, seed banks, agriculture/green biotech, to pharmaceuticals and industrial biotech, to cosmetics, horticulture, and the food and beverage sector (see also sectoral sheets in Annex 3).

· There are common issues facing this wide range of sectors. These include: compliance with legislation in countries of origin related to the access to genetic resources and/or traditional knowledge associated with genetic resources; the difficulty of tracing the country of origin of genetic resources and conditions attached to their utilisation when resources are accessed through intermediaries; the issue of development costs and related issues of benefit sharing and good governance.

· There is a diversity both across and within sectors (e.g. across large and small players and across subsectors) of the role and importance of genetic resources and traditional knowledge, used both for commercial and non-commercial activities.

· It is possible to differentiate between upstream players/activities (botanical gardens, cultural collections and research collections & private collectors) and downstream sectors/players (biocontrol, seed banks, agriculture/green biotech, pharmaceuticals and industrial biotech, cosmetics, horticulture, and the food and beverage sector) as they face many common challenges as regards the Protocol and have some common or at least inter-related activities.

· Some sectors have undertaken activities related to ABS issues of the Protocol – these are generally voluntary sector measures (e.g. codes of conduct and some ad hoc ABS agreements) in response to growing PIC/MAT requirements by providers in third countries.

· There is a significant gap between current practices and the requirements of the Nagoya Protocol.

BIBLIOGRAPHY

Beattie, A J, Barthlott, W, Elisabetsky, E, Farrel, R, Teck Kheng, C, Prance, I (2005) ‘New Products and Industries from Biodiversity,’ in R Hassan, R Scholes and N Ash (Eds.) Ecosystems and Human Well-being: Current State and Trends, volume 1, Island Press, Washington.

CBD (2011) ‘Access and benefit-sharing information kit’, http://www.cbd.int/abs/information-kit-en/powerpoint.shtml.

Chalfie M, Tu Y, Euskirchen G, Ward W, Prasher D (1994) "Green fluorescent protein as a marker for gene expression", in: Science, 263 (5148): pp 802–5.

Degen, A, de Giacomoni, A-C, Galecka, K, Reschwamm, K, Ripperger, J and Viseur, J (2011) The voice of biomedical SMEs. Performance factors in moving from research to market. Report of the KAPPA health project. 52 p. Available at: http://www.kappa-health.org/media/docs/KAPPA-Health%20booklet.pdf

EC(2005)Key Figures 2005 -Towards a European Research Area Science, Technology and Innovation, European Commission, Available at: http://www.eurosfaire.prd.fr/7pc/bibliotheque/consulter.php?id=258

EFPIA (2011) The Pharmaceutical Industry in Figures. Key Data. 2011 Update. European Federation of Pharmaceutical Industries and Associations.

EFPIA (2010) The Pharmaceutical Industry in Figures. European Federation of Pharmaceutical Industries and Associations.

EFPIA (2007) Good business practice & case studies on biodiversity. EFPIA submission in response to CBD COP Decision VIII/8. European Federation of Pharmaceutical Industries and Associations.

Ernst & Young (2011) ‘Beyond borders: Global biotechnology report 2011’, http://www.ey.com/GL/en/Industries/Life-Sciences/Beyond-borders--global-biotechnology-report-2011.

Europabio (2011) Healthcare Biotech Facts & Figures. 19 August 2011. Available at: http://www.europabio.org/healthcare-biotech-facts-figures

FABRE-TP (2008) Strategic Research Agenda. Working Group "Farm Animal Breeding and Reproduction Technology Platform", 32 p. Available at: http://www.certh.gr/dat/30154066/file.pdf

FAO (2006) Livestock’s long shadow. Environmental issues and options, by H Steinfeld, P Gerber, T Wassenaar, V Castel, M Rosales & C de Haan. Rome.

FAO (2007) Global Plan of Action for Animal Genetic Resources and the Interlaken Declaration. Rome. Available at http://www.fao.org/docrep/010/a1404e/a1404e00.htm.

FAO (2009) The use and exchange of animal genetic resources for food and agriculture. Commission on Genetic Resources for Food and Agriculture, Background study paper No 43, July 2009, 55 p.

FAO (2009) The use and exchange of biological control agents for food and agriculture.Commission on Genetic Resources for Food and Agriculture. Background study paper No 47, October 2009.

FoodDrink Europe (2010), “Data & Trend of the European Food and Drink Industry”. Available at http://www.aijn.org/file.handler?f=juicynews%2FCIAA%20Data%20and%20Trends%202011-27-05.pdf

Fritze, D. (2010) ‘A common basis for facilitated legitimate exchange of biological materials, proposed by the European Culture Collections’ Organisation (ECCO)’ International Journal of the Commons,  Vol. 4(1), pp. 507–527.

Fuglie, K O et al (2011) Research Investments and Market Structure in the Food Processing, Agricultural Input, and Biofuel Industries Worldwide, Executive Summary, United States Department of Agriculture (USDA), Economic Information Bulletin, No 90, December 2011.

Global Insight (2007) ‘A Study of the European Cosmetics Industry’, prepared for the European Commission, Directorate General for Enterprise and Industry, October, http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=497.

Heisey, P W and Fuglie, K O (2011) Private Research and Development for Crop Genetic Improvement, in: Fuglie, K O et al (2011) Research Investments and Market Structure in the Food Processing, Agricultural Input, and Biofuel Industries Worldwide, Economic Research Report Number 130, United States Department of Agriculture (USDA), December 2011. Available at: http://www.ers.usda.gov/Publications/ERR130/ERR130.pdf

Hiemstra, S J, Drucker, A G, Tvedt, M W, Louwaars, N, Oldenbroek, J K, Awgichew, K, Abegaz Kebede, S, Bhat P N & da Silva Mariante, A (2006) Exchange use and conservation of animal genetic resources. Policy and regulatory options. Wageningen, Centre for Genetic Resources, the Netherlands (CGN), Wageningen University and Research Centre.

Hiemstra, S J, Visser, B and Oldenbroek, K (2010) Exploring the need for specific measures for Access and Benefit-Sharing (ABS) of Animal Genetic Resources for Food and Agriculture (AnGRFA). Report of the International Technical Expert Workshop Exploring the Need for Specific Measures on Access and Benefit Sharing in Animal Genetic Resources for Food and Agriculture. 8-10 December 2010. Wageningen, the Netherlands.

IMAP (2011) IMAP’s Pharma & Biotech Industry Global Report 2011. An IMAP Healthcare report. 12 p + appendixes.

ISF (2011) Estimated value of the domestic seed market in selected countries, International Seed Federation, Updated March 2011. Available at: http://www.worldseed.org/cms/medias/file/ResourceCenter/SeedStatistics/Domestic_Market_Value_2011.pdf

International Seed Federation (ISF) (2011a) Seed Import of Flower Seed – Calendar year 2010. Available at:http://www.worldseed.org/cms/medias/file/ResourceCenter/SeedStatistics/SeedImports/Seed_Imports_2010_Flower_Seed.pdf.

International Seed Federation (ISF) (2011b) Seed Import of Vegetable Crops – Calendar year 2010. Available at:http://www.worldseed.org/cms/medias/file/ResourceCenter/SeedStatistics/SeedImports/Seed_Imports_2010_Veg_Crops.pdf.

Kaal-Lansbergen, L and Hiemstra, S J (2003) Relevance of Access and Benefit Sharing for Farm Animal Genetic Resources, North-South Policy Brief 2003-5. Wageningen UR.

LNV (2002) National Report on Animal Genetic Resources, the Netherlands. A strategic policy document. Ministry of Agriculture, Nature and Food Quality (LNV), 80 p.

ten Kate, K (1999) ‘Horticulture’ in: ten Kate, K and Laird, S (Eds)The Commercial Use of Biodiversity: Access to genetic resources and benefit-sharing, London: Earthscan.

Krattiger, A et al (2007) Editor’s Summary, Implications and Best Practices (Chapter 4.4 and 4.5). From the online version of Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices. MIHR: Oxford, U.K., and PIPRA: Davis, U.S.A. Available online at www.ipHandbook.org.

Krebs, B., M. von den Driesch, F. Klingenstein & W. Lobin (2003): Samentausch von Botanischen Gärten in Deutschland, Österreich und der deutschsprachigen Schweiz und Luxemburg.  Gärtnerisch Botanischer Brief 151: pp.10-17.

Laird S, Wynberg R (2008) Access and Benefit Sharing in Practice: Trends in Partnerships across Sectors, CBD Technical Series no. 38, 140p.

Laird, S and R Wynberg (2012) ‘Diversity and Change in the Commercial Use of Genetic Resources: Implications for Access and Benefit Sharing Policy’, International Journal of Ecological Economics & Statistics, 26(3).

Newman, D.J. and Cragg, G.M. (2012) Natural Products as Sources of New Drugs over the 30 Years from 1981 to 2010. Journal of Natural Products, 75(3), pp 311–335.

Prasher D, Eckenrode V, Ward W, Prendergast F, Cormier M (1992) "Primary structure of the Aequorea victoria green-fluorescent protein" in : Gene 111 (2): 229–33.

sCBD (2008) Access and Benefit-Sharing in Practice: Trends in Partnerships Across Sectors. Secretariat of the Convention on Biological Diversity. Montreal, Technical Series No. 38, 140 pages.

Shimomura O, Johnson F and Saiga Y (1962) "Extraction, purification and properties of aequorin, a bioluminescent protein from the luminous hydromedusan, Aequorea", in:  J Cell Comp Physiol, 59 (3): pp 223–39.

Stromberg, P., Dedeurwaerdere, T. and Pascual, U. (2012) ‘Ex-situ collections for microbial research: heterogeneity in their conservation practices and industry spillovers’ unpublished article.

Available at: http://biogov.uclouvain.be/staff/dedeurwaerdere/ex_situ_collections.PDF

Sharrock, S. and Jones, M. (2009) Conserving Europe’s threatened plants: Progress towards Target 8 of the Global Strategy for Plant Conservation: p.18. Richmond, UK:Botanic Gardens Conservation International.

Schloen, M, Louafi, S and Dedeurwaerdere, T (2011) Access and benefit-sharing for genetic resources for food and agriculture – current use and exchange practices, commonalities, differences and user community needs. Report from a multi-stakeholder expert dialogue. Background study paper No 59, July 2011.

WG-ABS (2006) Access and Benefit Sharing of Genetic Resources, Ad Hoc Open-Ended Working Group on Access and Benefit Sharing, 4thmeeting, Granada, Spain, 30 January-3 February 2006. Available at http://www.cbd.int/doc/meetings/abs/abswg-04/information/abswg-04-inf-10-en.pdf

Wyse Jackson, P. et al (2001) An International Review of the Ex-Situ Plant Collections of the Botanic Gardens of the World: reviewing the plant genetic resource collections of botanic gardens worldwide, as a contribution to decision V/26 on Access to Genetic Resources of the Conference of the Parties to the Convention on Biological Diversity. Richmond, UK:Botanic Gardens Conservation International.

van Zeebroeck, N, van Pottelsberghe de la Potterie, B and Guellec, D(2008) “Patents and Academic Research: A State of the Art”in:Journal of Intellectual Capital, Volume 9, Issue 2, pp. 246-263.

Interviews

Brendan Barnes (European Federation of Pharmaceutical Industries and Associations), David Rosenberg, GlaxoSmithKline (UK) and Axel Braun, Laroche (Switzerland), Brussels, 6 February 2012.

Smits, E, FWO Postdoctoral Researcher, Laboratory of Experimental Hematology (LEH) Vaccine and Infectious Disease Institute (Vaxinfectio), University of Antwerp, e-mail correspondence in April 2012

Philippe Desmeth, President of WFCC and International Coordination Officer of BCCM, Brussels, 8 February 2012.

Dr. Bert Van den Wollenberg, IPEN Task Force representative, Dr. Steven Dessein, Director of National Botanic Garden of Belgium and Dr. Jan Rammeloo, Former Director of the National Botanic Garden of Belgium, Meise, 2 February 2012.

Garlich Von Essen, Secretary General, European Seeds Association (ESA) and Anke van den Hurk, Plantum NL, the Dutch Seed Association, 7 February 2012, Brussels

Valentina Siddi, Europabio and Dominic Muyldermans, Croplife International, 13 February 2012, Brussels

David Smith (CABI), 11 January 2012

PUBLIC CONSULTATION MATERIAL

European Commission (EC), Public Consultation on the Implementation and Ratification of the Nagoya Protocol on Access to Genetic Resources and the fair and Equitable Sharing of Benefits Arising from their Utilisation to the Convention on Biological Diversity, October-December 2011.

              Annex 9: Tracking and Monitoring Genetic Resources Flow

Executive summary of G.M. Garrity, L.M. Thompson, D.W. Ussery, N. Paskin, D. Baker, P. Desmeth, D.E. Schindel and P.S. Ong, "Studies on Monitoring and Tracking Genetic Resources", Document UNEP/CBD/WG-ABS/7/INF/2 of 2 March 2009.

Available at: www.cbd.int/doc/meetings/abs/abswg-07/information/abswg-07-inf-02-en.doc

Executive Summary

Introduction

Technological innovations, in areas such as DNA sequencing and information technology are characterized by exponential development rates and lead to results that are typically unanticipated when first introduced. Three examples demonstrate this clearly. In 1995 it took Fleischmann et al. thirteen months to sequence the complete genome of the bacterium, Haemophilus. influenzae at a cost of approximately fifty cents per base pair. Today a bacterial genome can be sequenced in less than a day for pennies per base pair and the possibility of sequencing a complete bacterial genome in a few hours for under $1000 looms in the near future. In 1983 TCP/IP, the underlying protocol of the internet became operational (Internet, 2009). As of June 30, 2008, 1.463 billion people use the Internet according to Internet World Stats (2009) with the greatest growth in usage between 2000-2008 occurring in Africa (1,031.2 %), Latin America/Caribbean (669.3 %) and Asia (406.1 %). On August 6, 1991, the European Organization for Nuclear Research (CERN) publicly announced the new World Wide Web project. Eighteen years later the Indexed Web contains at least 25.9 billion pages (worldwidewebsize, 2009). According to the UN (2007), 64% of all mobile phone users can now be found in the developing world. With a compound annual growth rate of 49.3% over the last seven years Africa has become a key market for global telecom operators; and it is expected that this market will continue to grow faster than any other region over the next three to five years (Bachelerle et al, 2009) In parts of Africa, health teams are synchronizing their mobile devices and collecting data from rural clinics to provide better health care (Vital Wave, 2009). Clearly the digital divide that once existed is closing rapidly and databases and other digital resources are accessible to anyone anywhere today with an internet connection and a browser on a computer or handheld device, which may be a cell phone.

It is in this environment of rapid technological innovations and global information access in which the Convention on Biological Diversity (CBD) must work to ensure the sustainable use of biodiversity as a means to justify and underwrite its preservation. As part of this effort an international regime (IR) on accessing genetic resources and sharing benefits derived from their utilization (Article 15 of the CBD, Access and Benefit Sharing, ABS) is currently being negotiated by the Conference of Parties (COP) of the CBD. The purpose of this paper is to assist the COP in these negotiations by providing a detailed examination of the following technical issues:

(a) Recent developments in methods to identify genetic resources directly based on DNA sequences;

(b) Identification of different possible ways of tracking and monitoring genetic resources through the use of persistent global unique identifiers (GUIDs), including the practicality, feasibility, costs and benefits of the different options.

Genetic resources

Genetic resources are used worldwide by many different industries, academic institutions and environmental organizations to achieve various goals, ranging from developing new commercial products and processes to exploring new research avenues for cataloging and preserving biotic specimens arising from biodiversity inventories. In Article 2 of the CBD, genetic resources are defined as “genetic material of actual or potential value” and are further defined as “any material of plant, animal, microbial or other origin containing functional units of heredity.” The value of these resources need not be exclusively genetic material. It may also be derived information, such as functional or regulatory pathways, structural polymers or biological functions of an organism that are encoded for by the genetic material, including metabolic products that have some practical applications (e.g., low molecular weight organic acids; anti-microbial agents, such as antibiotics, and other biopharmaceuticals, flavors and fragrances, enzymes for industrial applications).

Establishing provenance of genetic resources and tracking their movements and defining the terms of use

Currently, the use of, and access to, specified genetic resources are governed by contractual agreements between the providers and users of those resources. For the purpose of this study it is assumed that such agreements are in compliance with all the relevant existing legal and other instruments at national, regional and international levels relating to ABS.[31]  Contractual negotiations that follow the voluntary Bonn Guidelines result in a set of accompanying documents that explicitly detail the terms of any agreement including prior informed consent (PIC) and material transfer agreements (MTAs) and possibly Mutually Agreed Terms (MATs) and Certificates of Origin (CoO). Such documents by themselves do not provide a means by which a specified genetic resource(s) can be singled out and tracked, but do establish an important part of the baseline information that must be collected and made accessible to various parties to the agreement. These agreements also establish the conditions for access to both the resources and information over time and should also specify what types of information are required to follow along with any genetic resource and any real or abstract derived products, either for fixed periods of time or in perpetuity. With this minimal information in hand, it becomes possible to devise reasonable and extensible models to track each genetic resource as it moves from its point of origin through one or more user organizations for a variety of purposes.

It should be understood that a large-scale tracking system that meets the needs of the IR does not yet exist. Smaller-scale implementations do, however; and have features that are desirable in the anticipated tracking system for genetic resources. These are discussed in detail in Part II: Genetic Resources: Use of identifiers in tracking genetic resources. We have drawn from prior experience with those smaller scale systems to gain useful insights into the requirements of a robust, reliable and trustworthy tracking system that could accommodate the needs of a diverse end-user community working in pure and applied research, international trade, regulation and enforcement. It is important to stress that development of a complete tracking system for genetic resources must consider non-technical issues as well, including realistic policies that address complex social, business, and scientific requirements. This will ensure widespread acceptance and usage. It is not uncommon for technically sound information systems to fail because user needs were not met or the system rigidly modelled practices that became obsolete because of changes in technologies external to the system, but critical to the organizational goals, that were not anticipated or could not be incorporated into the system. This is particularly true in the life sciences and is discussed in Part III: Advances in genetic identification. 

Redefinition of genetic resources and consequences for tracking

Whereas whole organisms or parts of organisms were once the subject of study and trade, contemporary biology has expanded its focus to incorporate molecular and informatics methods (in silico). These newer methods allow us to describe living systems not only on the basis of readily observable traits, but also upon their genetic potential based on a direct analysis of selected portions of the genome or the entire genome. As a result, genetic resources are now being used in various forms ranging from extracted DNA (including from mixed populations in metagenomic studies) to various types of sequence data that are stored in public and private databases. These derived genetic resources are readily copied, mobile and readily accessible to a global audience and can be used for a variety of purposes (e.g., expression in heterologous hosts, engineered chimeric pathways, synthetic life forms) that may have not been intended or anticipated in original agreements.

Therefore, it can be argued that rights and obligations under the IR may extend to the exploitation of genetic resources, regardless of how those resources are constituted. Although a discussion of the merits of such thinking is beyond the scope of our charge, we believe it prudent to consider the consequences. Under such an interpretation, a system for tracking genetic resources would have to provide a means for providers to track the uses of the data and information derived from their genetic resources. The task of tracking successive uses of such information, although complex, is theoretically feasible and would require the crafting of appropriate metadata, careful utilization and implementation of a persistent identifier (PID) system and development of custom tracking applications. However, it should also be understood that such a system would have to accurately reflect our current and future knowledge of biology. The vast majority of gene sequences is ubiquitous in nature and oftentimes occurs in distribution patterns that do not necessarily conform to national boundaries. It should also be understood that current technology allows the rapid synthesis and evolution of genes and pathways in vitro and in silico. Therefore, apparent misuse of a resource by a user or third party may not be actual misuse. Rather, it may be an instance of coincidental use of a like resource obtained independently. It is with these points in mind, that we offer the Secretariat and the COP our observations and recommendations on the agreed upon topics.

Single gene based identification methods

The rapid development of molecular technologies that enables characterization of organisms at a genetic level has opened new possibilities in species identification. In 1977 Woese and Fox produced the first phylogenetic classification of prokaryotes[32] based on the comparison of the nucleotide sequence of the 16S rRNA gene. This gene is universally distributed, highly conserved, evolves very slowly, and plays a key structural role in the ribosome, which in turn is part of the cellular machinery involved in protein synthesis. All life forms, as we know them, possess ribosomes, so according to the early proposals of Pauling and Zukerkandel, the sequence of this molecule could serve as a molecular chronometer, by which the evolution of different species could be traced.

Woese's work revealed that bacteria and archaea formed two deep and very distinct evolutionary lineages. The third lineage, based on this model of evolution, encompasses the eukaryotes (the plants and animals), which characteristically posses a membrane enclosed nucleus and organalles (including the mitochondria and chloroplasts). Eukaryotes possess ribosomes, which in turn contain an 18S rRNA. The eukaryotic 18S rRNA gene shares many homologous regions with the prokaryotic 16S rRNA gene. Thus, it is possible to make meaningful comparisons of all species based on the sequence of this gene. Since the sequence of the 16S rRNA gene is approximately 1540 nucleotides in length, there is sufficent information content to allow for very far reaching comparisons.

Woese's discovery has led to a radically different understanding of the evolutionary history of all life, which is generally well accepted and has led to the abandonment of alternative models of classification (e.g., Whittaker's five kingdoms). 16S rRNA Sequence analysis has become the principal method by which bacteria and archeae are now classified. In the past two decades, thousands of new taxa have been described based on this method, along with numerous taxonomic rearrangements. Concurrent improvements in sequenceing methodologies of have greatly accelerated this process. Today, 16S rRNA sequence data is routinely used to presumptively identify bacteria and archaea to the genus level and to deduce community composition in environmental surveys and in metagenomic analyses.  These efforts are well supported by publicly available tools and highly curated data sets of aligned 16S rRNA (e.g., the Ribosomal II Database, ARB/Sylva  project, GreenGenes).

But it is now well understood that a single gene may not be adequate to yield an accurate identification to the species or subspecies level and additional gene sequences along with other data may be required. Confounding issues include non-uniform distribution of sequence dissimilarity among different taxa and instances in which multiple copies of the 16S rRNA gene may be present in the same organism that differ by more that 5% sequence dissimilarity. This can lead to different presumptive identifications for the same individual, depending on which 16S rRNA gene is analyzed. We also understand that numerous instances of misidentification and taxonomic synonomies have accumulated prior to the widespread adoption of these methods and that discrepancies between names and correct classification remain to be resolve. In such instances, molecular evidence needs to be used to support taxonomic revision rather than attempting to force-fit earlier concepts into a classification based on reproducible molecular and genomic evidence.

These observations are relevant to the development of a tracking system for genetic resources because taxonomic names are commonly used in the scientific, technical and medical literature as well as in numerous laws and regulations governing commerce, agriculture, public safety and public health. But taxonomic names are not suitable for use as they are not unique, not persistent and do not exist in a one-to-one relationship with the abstract or concrete objects they identify.

Analogous developments are currently underway in the fields of botany and zoology. Sequence based methods have been applied on a limited basis to various species of eukaryotes for many years. However, it was not until recently that the community began to accept the possibility that a single gene could be used for identification of eukaryotes. This approach is now being applied in a highly coordinated fashion to build useful resources to identify plants, animals, fungi, protists and other distinct eukaryotic lineages. Consensus is beginning to emerge on a small number of preferred target genes, of which a partial sequence of the mitochondrial cytochrome c oxidase subunit I gene is preferred. This highly coordinated effort is much more recent than the corresponding activities in microbiology, and championed by the Consortium for the BarCode of Life (CBoL) program.

Whole genome sequencing and its impact on tracking genetic resources

In Part III: Advances in genetic identification this paper provides an in-depth review of next generation sequencing (NGS) technologies. Because of the rapid pace at which these technologies are evolving this section should be viewed as a set of “snapshots” of the current state of the art, and a harbinger of the future of DNA based identification methods. We discuss methods that are currently in use; those that have just recently become available on the market, (near-future NGS methods); and those that are still under development. These NGS sequencing technologies enable the rapid evaluation of specific regions of the genome of a biological entity to determine to which genus, species, or strain it belongs. (e.g., the 16S rRNA gene for taxonomic purposes for bacteria; the use of cytochrome c-oxidase subunit I (cox1) for eukaryotes).

Fuelled by innovations in high-throughput DNA sequencing, high-performance computing and bioinformatics, the rate of genomic discovery has grown exponentially. To date, there are more than 500 complete genome sequences and more than 4000 ongoing genome and metagenome sequencing projects covering species ranging from bacteria to yeast to higher eukaryotes. The results that stream forth from these studies are constantly refining and reshaping our understanding of biological systems. As part of the funding requirement of various governmental and non-governmental agencies, the vast majority of these sequences are made publicly available from the INSDC databases (GenBank, DDBJ and EMBL) after brief embargo periods during which time the funding recipients may publish their results. Typically, after one year, the sequence data is open to anyone wanting to publish their own findings or mine those data for other purposes.

All indications are that future genome-based technologies will be “smaller, cheaper, faster”. This will make genome-enabled detection tools available to a wide audience in both developed and developing nations. Clearly, very low cost sequencing technology along with sophisticated bioinformatics tools will soon be available to presumptively identify a genetic resource, with a high degree of accuracy and reliability, at the point of need.

Tracking genetic resources

The concept of identification is central to the goals of the CBD ABS regime, which rests on the fundamental principle that a user is legally obliged to share in the benefits obtained through the use of a particular genetic resource with the provider. Identification is one of the first steps in tracking an item over time. Under some circumstances, identification to the family, genus or species level may be adequate and identification methods based on a single gene may be appropriate (e.g., biotic inventories, wild-life management, ecological studies). However, there is ample evidence based on over half a century of natural product screening and supporting genomic data that such approaches may be inadequate if the trait of interest occurs in subpopulations within a species or is widely distributed across taxonomic boundaries as a result of horizontal gene exchange.  A useful tracking system must accurately reflect current knowledge and readily incorporate new knowledge via continuous feedback over a long time frame as transactions involving genetic resources may be long lived (>20 yrs).

The number of items to be identified and tracked within the anticipated system is a challenge and the extent of the task will depend largely on the legally required “granularity” of the identification. Although there is a tendency to view this as a taxonomic problem and the anticipated tracking system as a taxonomic resource, it is decidedly distinct. What is required is a mechanism to track the fate of multiple genetic resources as each is transferred from one party to another and various abstract and concrete products are generated along the way. In some cases the product may be useful for taxonomic purposes and in other cases taxonomic information may be useful for predictive purposes, but in most cases taxonomic information would be ancillary. Systems of such design are challenging as they are open-ended and must work with data of varying granularity. The point is not to define all the types of data a priori, but to define lightweight metadata models that define genetic resources and allow them to be permanently bound other to varying amounts and types of information that accumulate about that genetic resource over time. Inherent in such designs are links established through aggregates of foreign keys that may exist within a single system or on a remote systems accessible via the internet.

Persistent identifiers

In their simplest form, persistent identifiers are nothing more than unique labels that are assigned to objects in a one-to-one relationship. Such identifiers are well understood in computing systems and we present examples of identifiers as used in a large-scale laboratory information management system (LIMS) in Part II: Genetic Resources: Use of identifiers in tracking genetic resources. When used in the context of the internet, the concept of persistent identification is frequently coupled with the concept of "actionability", implying that the PID is persistently linked to a specific object and when actuated, will always return the same response to the end-user (typically a hyperlink to a specific web page or other form of digital content). In this context PIDs differ from URLs, which are used to create hyperlinks and provide the internet address of where a given object is stored. As the storage location is not persistent, some "behind-the-scenes" mapping of object identifiers to object locations is required (resolution). This topic is covered in more detail in Part IV: Persistent identifiers.

Persistent identifiers are a powerful enabling technology that provides a way to efficiently cope with chronic problems such as broken links and the general difficulty of reliable and reproducible information retrieval on the Internet. For example, PIDs associated with published articles allows rapid and accurate tracking of written works.  PIDs are also in use within the life sciences such as the INSDC identifiers (e.g., sequence accession numbers used at GenBank, EMBL, and DNA Database of Japan). However, these are largely institution specific, i.e., used only within the institutions for which they were created, or are controlled by those organizations, such as the PubMed ID, issued by the National Library of Medicine.

Six PID schemes currently used across different domains and by a number of different organizations are reviewed and include: Uniform Resource Name (URN); Persistent Uniform Resource Locator (PURL); Archival Resource Key (ARK); Life Science Identifiers (LSID); Handle System (Handle); Digital Object Identifier System (DOI). This review also addresses the questions that need to be answered when an organization is assessing the need to incorporate a PID scheme into its data management plan.

Each of these identifiers is used in well-defined settings in which the data and metadata models of the underlying repositories were established a priori. The identifiers serve as a means of directly accessing a specific record or other form of digital content or the associated metadata. If the identifier is actionable, then it is possible to retrieve the linked object using the familiar interface of a web-browser. However, with the use of web services that provide structured access to the content of interest automatically (e.g. from a database or application on a handheld device using embedded PIDs), similar results can be achieved where an interactive interface is not suitable.

An effective and durable PID scheme requires ongoing maintenance and therefore ongoing resources. While some tasks can be automated, responsibility for this ongoing task must be assigned to an agency, program or office or to a trusted third-party who can guarantee reliability and virtually constant up-time to meet the needs of various end-user communities. In the case of integrating a persistent identifier scheme within the ABS process, the use of a trusted third party with the appropriate expertise and resources is probably the best option, especially if that third party is already engaged in such activity for other purposes.

The selection of an appropriate PID for the CBD ABS and related activities will be critical for its broad utility and community acceptance. However, it does not obviate the importance of carefully defining precisely what the identifiers refer to, and what will be returned by queries of various types. It is possible to develop a range of PID services that could, for instance, provide a direct link to digital and paper copies of entire documents, such as PICs, MTAs, CoOs and other relevant agreements or permit tracking of genetic resources or parts of genetic resources in a future proof method, or do so on-the-fly. It could also be possible to track the transfer of materials and the corresponding agreements to third parties in a manner that is consistent with the rights and obligations of all parties to the initial agreement or to subsequent agreements. Similarly, the ability to track these genetic resources into the STM, general interest and patent literature is technically feasible.

Services such as these could be facilitated through the use of a trusted third party acting as a clearinghouse for registering ABS-related events (e.g., PIC, MTAs, CoO and other relevant agreements) according to a set of well-understood business rules. With such a clearinghouse in place, it becomes possible to traverse a series of transactions backward and forward in time, even in instances where some ambiguity may exist. By drawing on highly interconnected information, it is possible to follow events, and to accurately recreate those events, when adequate documentation is available. Such a system would be useful for monitoring the use of genetic resources, especially since there will be instances in which long periods of time may exist between the time PICs, MTAs, and CoO are executed and some commercial or non-commercial product results. With the selection of the appropriate PID system a system of this design could support human and machine queries and facilitates the retrieval of all relevant documents from public and private databases, including the STM literature, patent and regulatory databases. This is discussed in more depth in Part IV: Persistent Identifiers: Discussion (CBD/ABS services)

Conclusion and Recommendations

Reduction to practice will require a commitment of interested parties from different sectors (e.g., government, industries, botanical gardens, museums, academia, etc) to define standards for the key documents that are instrumental to implementing the ABS. Business rules and policies also need to be established in concrete terms so that useful prototypes can be built and assumptions (technical, legal and social) tested and refined.  In Part V:  Conclusions and Recommendations we offer the Secretariat and COP five broad recommendations along with our reasoning. In summary, these are:

1. Promptly establish the minimum information that must be contained in all relevant documents that are required for compliance with the IR (PIC, MTA, MAT, CoO). Stipulate which documents are mandatory and which are optional.

2. Adopt a well-developed and widely used Persistent Identifier PID system (e.g. DOI) that leverages an existing infrastructure and derives support from multiple sources rather than developing a new system or adopting one that is untested in commercial applications.

3. Carefully consider the current and future needs of genetic resource providers and users as the concept of resource tracking is deliberated. Biological and functional diversity of genetic resources are decidedly distinct. The system, including its human resource component, must be able to accommodate both with priority given to the latter as functional diversity is what leads to practical utility.

4. Deploy light-weight applications that use browser technology for interactive use and publish well documented application program interfaces to support other web service. Develop strong policies governing access and use of the resource to avoid data abuse

5. Deploy one or several prototype tracking systems to validate underlying concepts and refine critical elements that will be needed in a fully operational system. During the developmental phase address erroneous preconceptions and focus on making the system as transparent as possible.

[1]               See Chapter 5 and the country case-studies on BE, BG, DE, ES, FR, NL, PL, UK found in Annex 1 of the IEEP/ECOLOGIC/GHK final report.

[2]               Council Conclusions of December 2010, of June 2011, of June 2012,

[3]               For an overview see table XX in the main part of the study.

[4]               For details see expert study pp. XX

[5]               Regulations XXXX Brussels I and II Regulations

[6]               For example, if information about TKaGR is published in a scientific journal that is read by a university-based researcher and inspires this person to look into a specific direction in an ongoing research project.

[7]               CBD decision X/1 adopting the Nagoya Protocol decided in paragraph 6 that the first review of the effectiveness of the Protocol under Article 31 of the Protocol shall assess the implementation of Article 16 in light of developments in other relevant international organizations, including, inter alia, the World Intellectual Property Organization.

[8]               See the study contracted by DG AGRI "Independent Expert Valuation of Council Regulation (EC) No. 870/2004 of 1 June 2012.

[9]               See, for instance, element 3.A. of the data standard for barcode records (standard v.2.4 of 28 February 2012) used by the Global Barcoding of Life consortium (http://www.barcodeoflife.org/).

[10]             See Li and Pritchard (2009) The science and economics of ex situ plant conservation. Trends in Plant Science 14:614-621. The range reflects that different types of plants require different storage techniques. Costs at the higher end of this range seem, however, less likely for Option C-5 since the figures are based on average maintenance costs of collections of different sizes, whereas it must be assumed that reference collections identified by a Member State will be amongst the larger collections in the field. Larger collections have significantly lower costs per sample stored.

[11]             See for instance, the list of contributors to the Global Crop Diversity Trust (<http://www.croptrust.org/content/donors>).

[12]             It must be noted that these steps will not necessarily be taken for each sample of genetic material collected in the wild. Not all collected material is stored in collections. In a few cases material is collected by an agent of a company specifically interested in a sample of a known organism. Also, most basic research will not result in concrete applications. And much applied research ends unsuccessfully without moving to the development of a product. Likewise, many development efforts never make it to the product approval stage.

[13] All bibliographic references have been taken from the contractors sectoral studies. Data collection methods for the sectoral studies involved a review of published and ‘grey’ literature, a review of the replies of stakeholders to the European Commission’s public consultation on the implementation of the Nagoya Protocol and semi-structured interviews, phone calls and e-mail correspondence with stakeholders from each of the sectors (industry, government, NGOs and research institutions).

[14]Botanic gardens and culture collections (and other ex situ collections) are very much linked because they are often hosted by the same institutions, generally universities or public research institutes. In 2001, for example, 30% of the world’s botanic gardens belonged to universities or higher education research institutes (Wyse Jackson et al, 2001). As for culture collections, 75% are estimated to belong to public sector entities (FAO, 2009).

[15]“Seed” refers to all planting material used in crop production, including seed grains, cuttings, seedlings, and other plant propagation materials.

[16]Plant genebanks provide safe storage to ensure that the varieties and landraces of crops that underpin our food supply are secure and that they are easily available for use by farmers, plant breeders and researchers. Though genebanks are mainly used by universities, small companies and national agricultural research systems in developing countries, they are also sources of genetic material for plant breeding companies (Fowler et al, 2001; sCBD, 2008). Animal genebanks mainly fulfill conservation purposes and are less involved in the exchange of genetic material and its provision for breeding purposes (FAO, 2009; Schloen et al, 2011).

[17]Biotechnology companies are active across the user chain in the pharmaceutical industry, but their primary area of expertise is in the gene identification and target identification and validation stages upstream of product development and commercialisation.

[18] For details on numbers of botanic gardens worldwide and in the EU seehttp://www.bgci.org/garden_search.php

[19]http://www.kew.org/collections/index.htm

[20] WFCC website (http://wdcm.nig.ac.jp/statistics.html#1)

[21] Note that figures/numbers and percentages in relation to EU markets do not necessarily match the figures on global markets. For some sectors the sources for global and EU figures differ (and hence the methods for generating these figures), for others the reference years differ. Only for some sectors have figures been found that entirely match. Also note that the percentages usually refer to the EU’s share in the global market in terms of sales, but in some cases might refer to other types of shares such as the share in global number of patents or the share in global exports.

[22] Note that the IMAP report does not provide a figure for the size of the EU market. It only provides a figure for the global market and the EU’s global market share as a percentage. On the basis of these data, the size of the EU market can be calculated (about $121 billion).

[23]The “global” market in casu refers to the whole of the markets of the US, the EU27, Norway, Switzerland, Japan and China (Global Insight, 2007).

[24]Kew Annual Report and Accounts 2010/11, Available at: http://www.kew.org/ucm/groups/public/documents/document/kppcont_038136.pdf

[25]http://www.epo.org/about-us/statistics/patent-applications.html

[26]Ibid.

[27]http://www.mirri.org/background.html

[28]The number of deposits in 119 WFCC culture collections in 2005 was approximately 10,000 overall.

[29]http://www.bgci.org/resources/ipen/

[30]http://www.mirri.org/background.html

[31] An in-depth overview of recent developments at national and regional levels relating to ABS can be found in UNEP/CBD/WG-ABS/5/4 (Ad Hoc Group ABS, 2007).

[32] The term prokaryote is a contentious but commonly used name to group bacteria and archaea together based on their absence of a nucleus; a feature found in all eukaryotes