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TWN
Info Service on Biodiversity and Traditional Knowledge (Nov24/05) Geneva, 14 Nov (Nithin Ramakrishnan) – In a landmark move, the 16th Meeting of the Conference of the Parties (COP16) to the Convention on Biological Diversity (CBD) adopted initial modalities for operationalizing a multilateral mechanism to share benefits arising from the use of digital sequence information (DSI) on genetic resources. Amendments proposed by India were incorporated in the last hours of negotiations during the final plenary session, helping developing country Parties to preserve their sovereign rights over genetic resources (see forthcoming article). COP16 was held in Cali, Colombia, from 21 October to 1 November 2024. However, the decision on DSI was formally adopted in the early morning of 2 November, around 7:30am, following an extended plenary session, before COP16 lost quorum and had to be suspended. (See Biodiversity talks run out of time amidst major wins for Indigenous Peoples and Afro-descendants, 12 November.) The final decision on DSI comprises four major points: (i) adoption of the initial set of modalities, contained in an Annex; (ii) further development of additional modalities for adoption at COP17; (iii) operationalization of monetary benefit sharing through a global fund named the “Cali Fund”; and (iv) exploration of possible tools and models, including databases, to ensure DSI is publicly available and accessible to all Parties, in a transparent and accountable manner. When the President of COP16 introduced the L-document (CBD/COP/16/L.32/Rev.1) India raised specific concerns relating to national sovereign rights over DSI as well as on fund utilisation. After prolonged negotiations, the phrase “without prejudice to national legislation” was added to paragraphs 1 and 21 of the Annex, that deal with the scope of the multilateral mechanism and reservation of funds for indigenous peoples and local communities, respectively. Overall, the COP16 outcomes on this issue can be viewed as a “win” for developing countries, as it initiates a global fund to collect monetary benefits from DSI usage while safeguarding national sovereignty over genetic resources, including DSI. Overview of initial modalities The adopted modalities for operationalizing the multilateral mechanism, including the global fund, are annexed to the decision. In the Annex, paragraph 1 sets out the scope, and paragraph 2 obligates all users to share benefits arising from the use of DSI. Paragraphs 3 to 5 outline an initial understanding about the flow of money into the Cali Fund. This understanding could be confirmed or revised through a future COP17 decision. Paragraphs 6 to 8 address non-monetary benefit sharing in addition to monetary benefits, and Paragraph 9 states that particular actors, such as academia and public institutions, are not expected to contribute monetary benefits. Paragraph 10 explains what entities operating databases need to do, while paragraphs 11 to 13 detail what Parties and other governments have to do. Paragraphs 14 to 23 address the collection by and utilization of the global fund. Paragraphs 24 to 28 cover general governance, while paragraphs 29 to 31 address review processes and further adjustments to be made at COP18. Additionally, the modalities include several enclosures dealing with (i) an indicative list of commercial sectors expected to contribute initially to the global fund; (ii) indicative criteria for fund allocation; (iii) terms of reference for an Ad-hoc Technical Expert Group (AHTEG) on Fund Allocation Methodology; (iv) terms of reference for a Steering Committee, which includes representatives of indigenous peoples and local communities as members; (v) functions of the Secretariat of the Multilateral Mechanism; and (vi) factors to be considered during the review. Scope and limitations All users of DSI on genetic resources under the multilateral mechanism should share benefits, arising from their use, in a fair and equitable manner. However, the multilateral mechanism only covers those DSI when three conditions are met: (i) It should be made publicly available, in compliance with national legislation, where applicable; (ii) It should not be subject to mutually agreed terms established at the time of access to the genetic resources from which the DSI on genetic resources is derived, unless those terms allow for the making of the DSI freely available; and (iii) The fair and equitable sharing of benefits for the use of such DSI is not provided by other international agreements on access and benefit sharing, except if those instruments choose the multilateral mechanism for that purpose. Most importantly, the scope of the multilateral mechanism is without prejudice to national legislation, meaning that Parties are free to exercise their policy space in managing their own national access and benefit sharing (ABS) systems for DSI. Contributions to the Cali Fund The users of DSI that directly or indirectly benefit from its use in their commercial activities are expected to contribute a proportion of their profits or revenue to the global fund, according to their size. Such users, according to the decision, come largely from a few sectors including (i) pharmaceuticals; (ii) nutraceuticals (food and health supplements); (iii) cosmetics; (iv) animal and plant breeding; (v) biotechnology; (vi) laboratory equipment associated with the sequencing and use of DSI on genetic resources, including reagents and supplies; and (vii) information, scientific and technical services. These sectors are included in Enclosure A of the decision. The “entities” which, on their balance sheet dates, exceed at least two out of three of these thresholds (i) total assets: USD 20 million; (ii) sales: USD 50 million; and (iii) profit: USD 5 million, averaged over the preceding three years, should contribute one percent of their profits or 0.1 percent of their revenue to the global fund. This rate is also an indicative one, meaning that it could change. The threshold factors and the indicative rate will be confirmed with or without modifications at COP17, and will be kept under periodic review thereafter. COP17 may thus introduce tiers of entities based on thresholds and may introduce differential rates. Non-monetary benefit sharing Non-monetary benefit sharing is intended as an addition to contributions made to the Cali Fund. This will be facilitated through an existing clearing-house under the Convention, which will primarily provide information on capacity-building needs, knowledge exchange, and the showcasing and reporting of on-going non-monetary benefit-sharing activities. (The CBD Secretariat already hosts several such clearing-houses, including the Clearing-House Mechanism and the ABS Clearing-House.) Considering their contribution of non-monetary benefits, particular public institutions like academia, databases and research institutions, are not expected to contribute monetary benefits to the Cali Fund for now. Role of Parties and entities operating databases Both Parties and non-Parties are invited to take administrative, policy or legislative measures, consistent with national legislation, to incentivise contributions from users in their jurisdiction to the global fund in line with the modalities of the multilateral mechanism. In addition, Parties funding, sponsoring or hosting sequence databases should ensure that entities operating such databases take measures to ensure the effective implementation of the present decision and other relevant future decisions of the COP. Entities that operate databases, and tools and models dependent on DSI, and that make DSI publicly available should also perform a few key functions: (i) inform its users about the multilateral mechanism; (ii) inform DSI submitters about the need to comply with national and international ABS laws; (iii) require key metadata including country of origin and information about involvement of indigenous peoples and local communities and traditional knowledge; (iv) operate consistently with FAIR, CARE, and TRUST principles as well as the UNESCO recommended principles of open science; and (v) request data submitters to indicate that they are not subject to restrictions on further sharing of DSI. [FAIR = Findable, Accessible, Interoperable, Reusable; CARE = Collective Benefits, Authority to Control, Responsibility and Ethics; TRUST = Transparency, Responsibility, User-focus, Sustainability and Technology.] Fund administration, allocation and utilisation The United Nations through the United Nations Multi-Partner Trust Fund Office has been selected to administer the Cali Fund, in accordance with decisions of the COP, and under the authority of, and accountable to, the COP. The money collected by the Cali Fund will be directly allocated to Parties, based on an allocation formula, to be decided at COP17. This formula will be first developed by an (AHTEG) on Fund Allocation Methodology. Indicative criteria for building the formula are provided in Enclosure B: – “Biodiversity richness, and other biodiversity-related criteria for which data is readily available at the national level. – The geographical origin of the genetic resources from which digital sequence information in the database was derived (noting that this data is currently often incomplete or unrepresentative). – Capacity needs for the conservation and sustainable use of biodiversity, taking into account the circumstances of developing countries, in particular the least developed countries and small island developing States and those with economies in transition, and of indigenous peoples and local communities”. Further, at least half of the “funding from the global fund” is reserved for indigenous peoples and local communities, where appropriate and subject to national circumstances and legislation. This fund is also mandated to support “the self-identified needs of indigenous peoples and local communities, including women and youth within those communities, through government or by direct payments through institutions identified by indigenous peoples and local communities”. Additional modalities, review and adjustments It is clear that the current modalities are incomplete, with critical elements of accountability and compliance still missing. According to Decision 15/9, exceptions to multilateral approaches need to be developed. Additionally, thresholds and rates for monetary contributions to the Cali Fund need to be finalised, along with a fund allocation formula to fairly distribute funds to countries. The focus of additional modalities will be on these elements, as well as improved data governance elements to ensure that, when DSI is made publicly accessible, there is accountability to, and transparency for, all Parties. For this purpose, the decision signals the possibility of exploring possible new tools and models, such as databases. The African Group had called for the establishment of a CBD sequence database and CBD-recognized databases. While many of these elements are expected to be addressed at COP17, further enhancements to the system could be made following a review of its operationalization at COP18. If benefit sharing is not sufficiently robust within the next four years, COP18 could adopt stronger language and compliance mechanisms to ensure fair and equitable benefit sharing. On the other hand, users might also wait to see how additional modalities evolve before starting to comply with the multilateral mechanism. The lack of formal text-based negotiations during the contact group sessions and high-level discussions that forged the political consensus have somewhat compromised the legal language of the decision, potentially leading to confusion in implementation. In that sense, additional opportunities to refine the system at COP17 and COP18 are welcome steps. +
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