Biodiversity Treaty and Trade
(BIODIV)
CASE NUMBER: 102
CASE MNEMONIC: BIODIV
CASE NAME: Biodiversity Treaty and Trade
A. IDENTIFICATION
1. The Issue
The Convention on Biological Diversity was one of two
agreements signed at the United Nations Conference on Environment
and Development (UNCED) held in Rio de Janeiro from June 3-14,
1992. This agreement was unique in that its objective was to
protect all species and ecosystems in the world as opposed to
specified endangered species. In the convention, biological
diversity is defined as: the variability among living organisms
from all sources including, among other things, terrestrial,
marine and other aquatic ecosystems and the ecological complexes of
which they are part; this includes diversity within species, between
species and of ecosystems. The objectives of the convention are
as follows: the conservation of biological diversity, the
sustainable use of its components and the fair and equitable sharing
of the benefits arising out of the utilization of genetic resources,
including by appropriate access to genetic resources and by
appropriate transfer of relevant technologies, taking into
account all rights over those resources and to technologies, and by
appropriate funding. The point of contention arising out of this
convention centered on the transfer of biotechnology and the
subsequent protection of intellectual property rights.
2. Description
Although the conservation of biological diversity has only
been in the public consciousness for less than two decades,
scientists have been concerned about the issue for more than half
a century. Soviet Academician Nikolai Ivanovich Vavilov, one of
the earliest advocates of biological diversity and an agronomist
and geneticist, pointed out the great importance of conserving
biological diversity in plant life. In 1932 during the 6th
International Congress of Genetics held at Ithaca, New York, the
Soviet pioneer pointed out that:
"The growing needs of civilized man and the development
of industry make the introduction of new plants
necessary. The vast resources of wild species,
especially in the tropics, have been practically
untouched by investigation".
This early notion of biodiversity as a valuable resource
remains. What has been added now to the issue is the absolute
and daunting scarcity of this resource which is life sustaining to
people and to the earth. The great importance and indeed
necessity of biodiversity cannot be underemphasized. Biodiversity is
essential to agriculture, development of medicines, clean water,
flood control, resource-based industries such as fisheries, and
maintaining ecological balance. For example, it is estimated
that there are between 5 million and 30 million species on this
planet of which only 1.7 million have been studied and classified.
The scientific projections of species loss numbering in the hundreds
of thousands by the year 2000 and the most visible image of the
burning tropical rain forests, the home of over half of all
species on earth.
In 1987 the United Nations Environment Programme first
called on the governments of the world to consider a legal instrument
to conserve biological diversity and the sustainable use of
biological resources. The Ad Hoc Working Group of Experts on
Biological Diversity was established to research and analyze the most
efficient ways in which to save our planet's biosphere. The UNEP
then established the Intergovernmental Negotiating Committee for
a Convention on Biological Diversity in order to negotiate and
draft an agreement all nations could agree to. The final convention
was adopted on May 22 in Nairobi just prior to the Earth Summit. The
convention provides for:
1. adoption of national regulations to conserve
biological resources,
2. imposition of legal responsibility on
countries for the environmental impacts of
their private companies in other countries.
3. technology transfer on concessional terms,
4. regulation of biotechnology firms, and
5. access to and ownership of genetic material,
6. compensation to developing countries for
extraction of their genetic materials.
Overall, there are three main objectives to the convention:
the conservation of biological diversity, the sustainable use of
its components, and the fair and equitable distribution of
benefits derived from "genetic resources" (defined as the diverse
gene pool of life on earth). All contracting parties to the
convention are thus required to enact regulations in order to
conserve biological diversity for both present and future
generations including the enactment of laws similar to the Endangered
Species Act of the United States. All parties to the convention are
also to promote "environmentally sound and sustainable development in
areas adjacent to protected areas with a view to further protection
of these areas."
Another provision was intended to ensure bio-safety by
controlling the risks associated with the use and release of
genetically modified organisms. This byproduct of biotechnology
could have adverse effects on biodiversity. The promotion and
encouragement of public education and training were other
dominant themes in the treaty. The importance of traditional
knowledge of indigenous peoples regarding biodiversity and its uses
was emphasized as well. Article 8(j) provides that traditional
knowledge, innovations, and practices of indigenous peoples
relevant to the conservation and sustainable use of biodiversity
must be preserved, protected, and maintained.
Much of the convention focused on providing help to
developing countries who had special needs. The help was to be
provided by the industrialized countries through training, technology
access and transfer, and funding. It is this theme of the
industrialized nations paying for these ambitious endeavors which has
caused most of the controversy over this significant convention.
The most conflictual segment of the convention, especially
in the eyes of the United States, centered on the connection between
the environmental aspects of the treaty and its trade impacts.
The key trade implications of the convention may be summarized with
one word; biotechnology, which has been seen by some to become too
closely associated with biodiversity. It is interesting to note
for example, that the terms in the convention and in general
discussion have obtained an economic base, some say to the
detriment of the overall objective of the convention. For
example, some of the terms generally used throughout the document
include: genetic resources, biological resources, biotechnology,
country of origin of genetic resources, country providing genetic
resources and regional economic integration organization. Yet, it is
persuasively argued that only by couching this serious issue in
economic terms will it garner the attention and support it deserves.
Biotechnology, as defined in the treaty, is any technological
application that uses biological systems, living organisms, or
derivatives thereof, to make or modify products or processes for
specific use. The convention states that "Each contracting
party...undertakes...to provide and/or facilitate access for and
transfer to other Contracting Parties of technologies that...make use
of genetic resources and do not cause significant damage to the
environment." Furthermore, technology transfer to developing
countries must be "under fair and most favorable terms," while
providing for "adequate and effective protection of intellectual
property rights" (Article 16). It is this delicate balance which
is at the center of the controversy. It is the fear, particularly
of the Bush Administration at the time of the signing, that U.S.
businesses would be harmed by the convention, particularly the
booming U.S. biotechnology firms.
Other provisions of the treaty protecting genetic resources
and underscoring the sovereign ownership of such resources also
made the U.S. biotechnology and drug industries hesitant.
Several European nations including the United Kingdom as well as
Japan issued interpretive statements regarding these sensitive issues
which directly affected their trade and general economies.
Funding too is always an issue of controversy. The Global
Environment Facility (GEF) is the current financing institution
for the implementation of the convention. The industrialized nations
are to provide new and additional funding in order for the developing
nations to be able to effectively meet the provisions.
In addition to the GEF, a Secretariat has been established
for administrative purposes as well as a scientific and technological
advisory committee. A Conference of the Parties will meet regularly
to monitor compliance and implementation.
3. Related Cases
Keyword Clusters
(1): Scope = MULTIlateral
(2): Bio-geography = GLOBAL
(3): Environmental Problem = Biodiversity [BIODIV]
4. Draft Author: Lauren E. Crowley
B. LEGAL Cluster
5. Discourse and Status: AGReement and COMplete
As of September 1994, 167 countries had signed the
convention and 89 states had ratified it. Thirty signatories must
have ratified the convention before it entered into force. Thus, for
the ratifiers, the convention is in force. 178 nations participated
at the UNCED in Rio; thus, a little under half of the states present
actually ratified the convention. While this is a non-self executing
convention, it may take longer for national legislatures to approve
such a treaty. This is because the convention requires implementing
legislation. Overall, this is a completed negotiated agreement;
however, the success of its implementation is won only with the full
or near full participation of the nations of the world. Of
particular importance is the participation of the major
industrialized nations like the United States not only because of
their wealth of financial resources, but because of their wealth of
technological resources.
6. Forum and Scope: UN and MULTIlateral
The United Nations Conference On Environment and Development
was held in Rio de Janeiro from June 3-14, 1992. The Rio Earth
Summit was the largest international conference ever held with
over 100 heads of state or governments in attendance, 8,000
delegates, 9,000 members of the press, and 3,000 accredited
representatives of NGO's. It was in this multilateral setting that
the Convention on Biological Diversity was signed (see RIOTRADE
case).
7. Decision Breadth: 89
Number of Parties Affected: Currently standing at 89
ratifiers but is thought to have grown to over 90 by the
submission of this paper.
8. Legal Standing: TREATY
The Biodiversity Convention is certainly an international
treaty but it does involve eventually all of the sub fields under
this section. National and local law will be needed to implement
the various provisions of the convention and NGO's will be called
upon as experts needed for investigation and research.
C. GEOGRAPHIC Clusters
9. Geographic Locations
a. Geographic Domain: GLOBAL
b. Geographic Site: GLOBAL
c. Geographic Impact: GLOBAL
10. Sub-national Factors: YES
The implementation of the convention specifically cites and
directly involves the local indigenous communities of various
participating states.
11. Type of Habitat: GLOBAL
D. TRADE Clusters
12. Types of Measure: MANY
Possible related measures include: licensing (LICEN),
regulatory standards (REGSTD), and intellectual property rights
(IPROP), and administration (ADMIN). Licensing is the tool used
to insure intellectual property rights. Since this is an issue of
such great importance to the industrialized nations, this will
play a great role in the implementation of the agreement's provisions
dealing with technology transfer and the sharing of benefits.
Regulatory standards will be necessary in order to effectively
protect endangered species and maintain fragile ecosystems.
Regulations in fact will be the most visible implementation
through the local and national laws which will be created.
The United States in fact is already in compliance with
the convention, in light of the environmental regulations enacted
over the past decade. Developing and underdeveloped nations in the
South, who own the world's greatest wealth of biological
resources now, under the convention, may establish regulations
governing access to their resources.
In a statement issued by the Patent and Trademark Office of
the U.S. Department of Commerce, the Agreement on Trade-related
Aspects of Intellectual Property, concluded at the Uruguay Round
of GATT was stated to be in agreement with the Biodiversity Treaty.
The denial of intellectual property rights or the inadequate
protection of them was stated to be an "egregious burden to trade."
The paper went on to state that:
"improved protection of intellectual property will
strengthen the economic incentives outlined in the
Convention on Biological Diversity. Strong intellectual
property systems facilitate research, development and
commercialization of new technologies. Global
consistency in such systems will facilitate international
cooperation and technology transfer."
Furthermore, according to Commerce, by promoting
intellectual property rights, "countries will establish market
conditions that will encourage sound and sustainable commercial
development of biodiversity."
13. Direct vs. Indirect Impact: INDirect
The impact is indirect because regulations and agreements
between states must first be enacted which will then have an
impact on trade between contracting parties. Such environmental
regulations and transfer agreements between countries take place
"inside the border."
14. Relation of Measure to Environmental Impact
a. Directly related: YES BIOTECHnology
b. Indirectly related: NO
c. Not related: NO
d. Related to process: YES Biodiversity [BIODIV]
The implementation of intellectual property rights by the
licensing of patents is directly related to the product of
biotechnology.
15. Trade Product Identification: MANY
Biodiversity may be divided into three major groupings in
terms of products or biological resources: (1) pharmaceutical,
(2)genetic, and (3) agricultural. More specifically, biodiversity
provides us with food, fiber, medicines. Also, according to Tim
Wirth in the Senate hearings on the convention, "biological
materials are fundamental in our industrial processes and enable
development of new products from the rapidly expanding field of
biotechnology."
16. Economic Data
Pharmaceutical industry output: Plant species provide the
active ingredient of an estimated 25 percent of the prescription
drugs sold in the United States, with an annual market value well
over $10 billion. Also, a number of important medical compounds
have been developed from marine organisms. Sponges, for example,
are the source of anti-viral drugs with annual sales of $50-$100
million. Discoveries from biodiversity have also been translated
into savings on the health and productivity of the work force.
For example, a bacteria discovered in Yellowstone's hot springs has
permitted a dramatic reduction in time needed to analyze medical
tests. The fantastic uses of biotechnology are best illustrated
by the use of genetic diversity in plant breeding. U.S. wheat
farmers are using wild strains from the Near East which are resistant
to aphids and other pests. Economically speaking, experts have
estimated that such uses of biodiversity have added a value of
$3.2 billion to our $11 billion annual production of soybeans, and
about $7 billion in added value to our $18 billion annual corn crop.
17. Impact of Measure on Trade Competitiveness: N/A
No analysis of trade protection exists at this time.
However, if the convention is not ratified by industrialized nations,
the South could impose export quotas on its resources in retaliation
for the lack of respect for their nations ecosystems.
18. Industry Sector: MANY (FOOD, STONE, WOOD, TOUR, CHEM)
Many industries are effectively involved with biodiversity
(as was described above) including even the tourism industry in the
sense that national parks are to be preserved and some have
suggested that fees for entrance to these national parks are a
good source of funding to implement the convention.
19. Exporters and Importers: MANY and MANY
E. ENVIRONMENT Clusters
20. Environmental Problem Type: MANY
The problems include biodiversity, deforestation, habitat
loss, coral loss, and species loss of air, land and sea (BIODIV,
DEFOR, HABIT, CORAL, SPLL, SPLA, and SPLS).
21. Name, Type, and Diversity of Species
Name: MANY
Type: MANY
Diversity: MANY
22. Impact and Effect: HIGH and REGULatory
The impact on the environment from biodiversity loss at
current rates is very high as demonstrated by the figure in the
next section.. The treaty provides for standards of protection
for biodiversity and trade provisions relating to the protection of
IPR's in the transfer of technology.
23. Urgency and Lifetime: HIGH and 100s of Years
It has been projected by scientists that by the year 2020,
some 20 percent of the earth's species may become extinct if
current trends continue.
24. Substitutes: SYNTHetics
Conservation and sustainable use are two dominant themes of
the convention. Included also is the protection of the
biotechnology industries which are very much involved with
biogenetic engineering which involves efforts to duplicate and
preserve certain genetic structures of various plant strains used
for agricultural and medicinal purposes.
F. OTHER Factors
25. Culture: NO
26. Trans-Boundary Issues: YES
The main conflict surrounding the ratification of this
convention is a trans-boundary issue between the industrialized
nations of the North and the less developed nations of the South.
The issue involves that of benefit sharing which as mentioned
throughout this case seemingly conflicts with the protection of
intellectual property rights. The convention, again in its
wisdom and vision, has been able to attain equitable sharing and
protection of IPRs. Essentially, under the convention, the South
has more control over the use of its raw material, biological
resources while the North maintains its ability to require the
South to purchase licenses for its technology. This benefits
sharing scheme is intended to facilitate equitable trade. A
prime example of the potential success of such a plan is the
Merck-INBio agreement as described by Dr. Walter Reid of WRI (see
MERCK case).
A 1991 agreement between Merck Pharmaceuticals and the
Costa Rican National Biodiversity Institute (INBio) under
which Merck receives chemical extracts from INBio in
return for an up-front payment, royalties, and technology
transfer to the country. The benefits returning to the
country all support conservation initiatives. Merck,
Costa Rica, and biodiversity conservation all benefit
from this business alliance premised on negotiated terms
for exchange of financial, technological, and genetic
resources.
Other similar agreements have already been concluded and
prove hopeful that this convention is mutually beneficial for both
the North and South. See also Shaman Pharmaceuticals case for
example.
27. Rights: YES
Many times the global ecology may be at odds with local
ecology. This conflict can manifest itself in one of two ways.
The local cultural tradition for harvesting resources may be at
odds with a conservation decision made at a global level. Also,
there exists the fundamental conflict which arises in the South
when they are called to conserve their resources. They make the
effective argument that their development demands an unfettered
use of their natural endowments and furthermore, that the North was
able to become the economic giant it is today because of its
unrestricted exploitation of its resources and of the resources
of the South as well. The writers of the Treaty were sensitive to
these conflicts.
There are several international treaties, both declaratory
and legally binding, which spell out the rights of indigenous
populations with regard to natural resources and development.
For example, in the Draft Declaration on the Rights of Indigenous
Peoples, paragraph 18, it is stated that,
"Indigenous peoples have the right to the protection and
where appropriate, the rehabilitation of the total
environment and productive capacity of their lands and
territories, and the right to adequate assistance
including international cooperation to this end."
The Convention on Biodiversity seeks to comply with these
other treaties in the respect for these people's culture and
traditional knowledge and experience.
28. Relevant Literature
Books, Addresses and Professional Papers
Gardner, Richard N., Negotiating Survival Four Priorities After
Rio. New York: Council on Foreign Relations Press, 1992.
Middleton, O'Keefe, and Moyo, The Tears of The Crocodile from Rio
to Reality in the Developing World. London: Pluto Press,
1993.
Posey, Dr. Darrell A., Oxford Center For The Environment, Ethics,
and Society, Mansfield College, Oxford University,
Traditional Resource Rights: Protection, Compensation,
and Conservation, May 19, 1994.
Reid, Dr. Walter V., Vice President For Program, World Resources
Institute, Hearings on the Convention on Biological
Diversity, April 12, 1994.
Rogers, Adam, The Earth Summit A Planetary Reckoning. Los
Angeles: Global View Press, 1993.
Sachs, Wolfgang, ed., Global Ecology A New Arena of Political
Conflict. Halifax: Fernwood Publishing, 1993.
Scherr, S. Jacob, One Year After Rio Keeping the Promises of the
Earth Summit: A Country-by-Country Progress Report, Earth
Summit Watch: National Resources Defense Council, 1993.
Wirth, Timothy E., Counselor, Department of State, Testimony to
the Senate Foreign Relations Committee of the United
States Senate, April 12, 1994.
Periodicals
BIONET, Biodiversity Action Network, an advocacy network of U.S.
organizations working to conserve biological diversity.
Newsletters One and Two.
International Environment Reporter, Vol. 16, Number 7, April 7,
1993, p. 247. "Draft Statements To Interpret Treaty Said
Under Examination By United States."
National Review, July 9, 1992, 32-35.
Nature Magazine, July 9, 1992, 97.
U.N. Chronicle, June 1992, 53.
References
[ENDNOTES WILL BE ADDED]
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