Benefit-sharing, the Benefit-sharing Fund and the touchy issue of money

The negotiations on the benefit-sharing provisions (Article 13) of the MLS were closely related to those on facilitated access (Article 12) and on the Treaty’s Funding Strategy (Article 18).

Defining benefit-sharing

Benefits should be fairly and equitably shared by way of the exchange of infor­mation (Article 13.2(a)), access to and transfer of technology (13.2(b)), capacity building (13.2(c)), and the sharing of monetary and other benefits of commer­cialization (13.2(d)). According to Article 13.1, the primary benefit of the MLS is the facilitated access to the material in itself. To uncover major issues related to benefit-sharing, three points will be dealt with: the Funding Strategy and financial resources of the Treaty; monetary and non-monetary benefit-sharing obligations; and the Benefit-sharing Fund.

Financial resources of the Treaty under the Funding Strategy

Funding is needed for two kinds of expenditures: money to allow for the func­tioning of the Treaty’s Governing Body, Secretariat and other bodies (i.e. the Core Administrative Budget), and funds to implement the Treaty obligations

(i.e. the Special Fund for Agreed Purposes, the Benefit-sharing Fund and the Fund to support the Participation of Developing Countries to Treaty meet­ings).

Article 18 provides the ‘skeleton’ of the funding strategy, which includes ‘the decision for its establishment, a general objective, a list of possible fund­ing sources and some basic priorities’ (Treaty Secretariat, 2013 : 9). Article 18.5 insists that priority will be given to ‘funding activities that target farmers who conserve and sustainably use PGRFA, especially in developing countries’. The Funding Strategy is therefore a tool to finance Treaty activities and obligations, including those related to benefit-sharing, whether monetary or non-monetary. Indeed, implementing non-monetary benefit-sharing provisions also requires financial resources.

Monetary and non-monetary benefits

While Article 18 provides the general rules guiding the establishment and func­tioning of the Funding Strategy, Treaty Article 13 and the related provisions of the SMTA define the procedures to collect and share the monetary and non­monetary benefits.

Monetary provisions address how to obtain money from the use of PGRFA in order to implement the fair and equitable sharing obligations of the MLS. Mon­etary benefit-sharing are referred to in several Treaty Articles: Article 13.2(d); Article 15.1(b)(iii) in relation to the CGIAR; and Article 18.4(e) on Financial Resources.

Under Article 6.7 of the SMTA, the recipient is the only SMTA contracting party who bears monetary benefit-sharing obligations. Whenever the recipient

The Treaty on Plant Genetic Resources 107 commercializes a product derived from material originating from the MLS, which availability is restricted to others for further research and breeding, he/ she has to pay 1.1 per cent of the gross sales of the product, minus 30 per cent (i.e. 0,77 per cent of the gross sales) for the period equivalent to the duration of such restriction (mainly 20 years for IPR-based restrictions). The 30 per cent is a lump sum that includes the administrative costs, taxes, shipping costs, etc. that would probably be subtracted from the gross income anyway (i.e. the difference between gross sales and net sales).

The alternative payment scheme was proposed by the African Group (Frison et al., 2011a: 53) in the hope to guarantee a faster monetary flow back to the BSF. According to SMTA Article 6.11 and its Annex 4, the recipient may pay 0.5 per cent on the sales of all PGRFA products of the same crop accessed (regardless of whether the products include material obtained from the MLS or not).

Non-monetary benefit-sharing are of two types. This first one is the facili­tated access to PGRFA itself covered by Article 13.1. The second covers the exchange of information and results of technical, scientific and socio-economic research on PGRFA (Article 13.2 (a)); the access to and transfer of technology (Article 13.2 (b)); and capacity building (Article 13.2 (c)). The second type of benefits is not possible without the realization of the first, as transfer of technol­ogy related to a specific improved material, for example, is useless if the recipient has no access to the improved material first. However, this raises the question about the direct access by farmers of Annex I material. The Treaty does not explicitly provide a direct access to Annex I material to farmers, but farmers are positioned as the first benefit-sharing beneficiaries, and facilitated access to seeds is viewed as the first benefit................... Something is going wrong in this loop.

The Benefit-sharing Fund

The Benefit-sharing Fund is the main Treaty instruments implementing ABS obligations. The BSF (i.e. the Trust Account) was established following Reso­lution 1/2006, when the Funding Strategy of the Treaty was adopted (Treaty Secretariat, 2013: 42-45), to administer the financial resources over which the Governing Body has direct control. The BSF has three priorities: information exchange, technology transfer and capacity building (i.e. non-monetary bene­fits); on-farm (in situ) management and conservation of PGRFA; and sustainable use of PGRFA. The BSF is therefore the most important tool through which contracting parties implement their benefit-sharing obligations. The BSF is the recipient of the financial benefit-sharing originating from contracting parties, or of voluntary payment made by stakeholders.

especially in least developed countries, and in countries with economies in transition, who conserve and sustainably utilize PGRFA’ (Article 18.5). The BSF fund activities which fulfil the three priority areas, when assessing what project is eligible for the call for proposals to its projects portfolio. Up to date, three calls have taken place, and the fourth call is ongoing (Treaty Secretariat, 2013). The BSF may be (and up to now has been mainly) financed by voluntary pay­ments from contracting parties or international organizations.³⁹ These voluntary contributions are the result of innovative approaches to provide money to the Funding Strategy. Implementing benefit-sharing obligations in the MLS with an empty purse.

In 2005 already, Brush had anticipated that

[t]he weakness of that [T]reaty, however, is that it does not give proper emphasis to the obligations of industrial countries and developing countries alike to support conservation of crop resources beyond funds raised in connec­tion to commercializing improved crop varieties.

(emphasis added; Brush, 2005: 108-109)

Indeed, the SMTA mechanism was created around the hope that financial returns would flow back to the system upon access, use and commercialization of improved Annex I material. Following this scenario though, benefits would only arise 5 to 20 years (depending on the technology used) after initial facilitated accesses were granted, due to the long research and development period prior to the commercialization of a new product (Drucker and Caracciolo, 2012: 57). Shortly after the adoption of the SMTA, countries, especially developing con­tracting parties, started to claim that the breeding development cycle was too long for the Benefit-sharing Fund to receive enough income within a reason­able period of time.

Implementation of the financial resources provisions

Contracting parties have designed the Funding Strategy mainly between 2006 and 2009. With Resolution 1/2006, a notable aspect of the strategy was the recognition of the Global Crop Diversity Trust (GCDT)⁴⁰ as an essential element for ex situ conservation and availability (IT/GB-1/06/Report: §§ 35-40). The GCDT is an endowment fund, which provides funds in perpetuity to support long-term conservation of PGRFA and ensure conservation and availability of PGRFA which are most relevant for food security and sustainable agriculture.

Although the GCDT is an independent international organization, it operates within the framework of the Treaty as it receives policy guidance from the Governing Body. Its focus is limited to ex situ conservation activities. Therefore, contracting parties and the Treaty Secretariat should continue to enhance direct efforts for the implementation of the benefit-sharing and other conservation and use provisions, in particular on farm and in situ activities.

Unfortunately, Brush’s prediction materialized into lack of funding. As a consequence, contracting parties explored other sources of income within the Funding Strategy (e.g. additional voluntary contributions⁴¹ not derived from SMTA-related monetary benefit-sharing), to implement their benefit-sharing obligation with ‘farmers in all countries, especially in developing countries, and countries with economies in transition, who conserve and sustainably utilize [PGRFA]’ (Treaty Article 13.3). Contracting Parties committed to raise US$ 116 million between July 2009 and December 2014 through the ‘Strategic Plan for the Implementation of the [BSF] of the Funding Strategy’ (Resolution 3/2009). The plan was to secure cumulative targets over a five-year period to launch the calls for project cycles under the BSF By the end of 2016, the target was far from been reached (Resolutions 2/2013; 2/2015).⁴² This shortage has slowed down the pace of the calls for project cycles under the BSF (see below). Following this failure, the GB decided to change strategy and to adopt a dynamic and synergis­tic programmatic approach, i.e. a ‘new vision’ as follow: ‘The Funding Strategy enables the Governing Body, contracting parties, funding agencies, farmers and other relevant actors to secure funding and other resources for the programmatic implementation of the International Treaty in a long-term, coordinated, syner­gistic and effective manner’ (Resolution 3/2017: point 4). It remains to be seen whether this new vision, which embeds the Funding Strategy in a wider map by connecting with other existing funding sources and partners (i.e. the GEF, the 2030 Agenda target, etc.), will succeed in securing long-term sufficient funding.

Implementation of non-monetary benefitt-sharing obligations

Besides Article 13, non-monetary benefit obligations are explicitly expressed in several Articles throughout the Treaty: Articles 7 and 8 on international coopera­tion and technical assistance; Article 9.2(b) on FRs; Article 14 on the Global Plan of Action; Article 17 on the Global Information System on PGRFA; Article 18 on Financial Resources through the design of the Funding Strategy. They were not at the core of contracting parties’ attention during the early implementa­tion of the Treaty. However, their rapid implementation constitutes, in my view, an essential element to facilitate the smooth and effective application of most Treaty’s obligations. Indeed, some parties, especially from developing countries, do not consider access to PGRFA as a major benefit of the MLS because they have limited financial and technological capacity to utilize PGRFA. They find more important to ensure that benefits derived from the use of genetic resources reach those who need them most and that capacity building and transfer of tech­nology and information is effectively implemented. They consider the exchange of information and results of technical, scientific and socio-economic research on PGRFA as more important benefits to be shared.

After 2013, collaborations with other international organizations were set up to implement specific capacity building activities as part of the non-monetary benefit-sharing obligations (Resolution 2/2013: point 15; Resolution 10/2015). Few examples of technology transfer and capacity building projects outside the BSF activities exist (IT/ACSU-2/15 /Inf.2; Resolution 7/2013).⁴³ Not­withstanding these initiatives, non-monetary benefit-sharing under the Treaty remains limited and many contracting parties voice their discontentment (Frison et al., 2011a: chapter 4; Mwila, 2013), resulting in numerous Governing Body Resolutions on the subject (Resolution 4/2009, Resolution 4/2011, and Reso­lution 1/2013 for aspects related to the implementation of the benefit-sharing obligations in the MLS; Resolution 1/2006, Resolution 3/2009, Resolution 3/2011 and Resolution 2/2013 for aspects related to the financial issues in the Funding Strategy). All of these illustrate and confirm that by the end of the biennium 2011—2012 a number of important Treaty obligations were still not complied with and that the MLS did not produce the excepted outcomes (see the four reports of the Ad Hoc Advisory Technical Committee on the Standard Material Transfer Agreement and the Multilateral System of the Treaty). This led to the decision taken at GB5 to review the MLS and the Funding Strategy (Resolution 1/2013; 2/2013).

Implementation of the Benefit-sharing Fund

The BSF became operative in 2008 with voluntary contributions from a few contracting parties. The Strategic Plan for the implementation of the BSF aimed at improving the funding set a funding target of US$ 116 million to be raised by 2014 (Resolution 3/2009; IT/GB-3/09/Report: §§ 26-30). Moreover, Norway pledged to implement a national policy where an amount corresponding to 0.1 per cent of all seed sales are to be transferred by the Norwegian government to the fund (Treaty Secretariat, 2013 : 17). Notwithstanding this positive initiative and the four calls for BSF projects that have already been launched, the total amount of money remains far below the US$ 116 million target set in 2009. Since 2013, regular decisions are taken to speed up the review process and accel­erate the resource mobilization (Resolution 2/2013; IT/GB-5/13/Report: §§ 22-26 and Appendix A.2; Resolution 1/2015: point 2; Resolution 2/2015: point 3; IT/GB-6/15/Report, Appendix A.2). Although contracting parties have welcomed the financial contributions made by Indonesia, Italy, Austria, Norway and Sweden during the 2014-2015 biennium in support of the fourth round of the BSF project cycle as well as the contribution made by the European Seed Association at Governing Body 6 as the first collective contribution from actors of the European seed sector (Resolution 2/2015), the financial crisis in which the Treaty is stuck remains critical. By GB5, only UD$ 20 million had funded projects involving 340,000 farmers in 55 countries. Major efforts will have to be made in order to comply with Treaty Article 18.2 on the importance of the

The Treaty on Plant Genetic Resources 111 availability, transparency, efficiency and effectiveness of the provision of financial resources. Transparency does not seem to be a major obstacle, but compliance with the obligations of efficiency, effectiveness and above all availability of funds is clearly not met.