Nagoya, 12 Oct (Lim Li Ching*) – In the early hours of 11 October 2010, a negotiating group under the Cartagena Protocol on Biosafety completed the Nagoya – Kuala Lumpur Supplementary Protocol on Liability and Redress to the Cartagena Protocol on Biosafety.

 

The text of this international law on liability and redress for damage caused by living modified organisms (LMOs) will now be forwarded for adoption to the fifth Conference of the Parties serving as the Meeting of the Parties (COP-MOP5) to the Cartagena Protocol, which is meeting in Nagoya, Japan from 11-15 October 2010.

 

(The Cartagena Protocol uses the term “living modified organisms” for what is commonly known as genetically modified organisms (GMOs). The Protocol is a treaty under the Convention on Biological Diversity, CBD.)

 

The two main substantive issues that were the subject of the negotiations – whether or not “products thereof” should be included in the scope of the Supplementary Protocol, and on financial security – were finally resolved after very long and difficult negotiations which dragged on for an extra two days beyond the scheduled time.

 

While mention of “products thereof” was eventually removed from the operative text of the Supplementary Protocol, the report of the meeting records an understanding thatParties may apply the Supplementary Protocol to damage caused by processed materials that are of LMO-origin, provided that a causal link is established between the damage and the LMO in question.

 

This understanding is significant as it clarifies that the Supplementary Protocol may apply to damage caused, not only by LMOs, but also by their products, which may be dead material. The scope of the Cartagena Protocol is limited only to living modified organisms, however the issue of products thereof is covered by the Cartagena Protocol with regards to information sharing, and in information required in notifications for the advance informed agreement (AIA) and simplified procedure, as well as in the principles for risk assessment.

 

The right of Parties to provide for financial security is also enshrined in the Supplementary Protocol. Financial security is important to ensure that, if for any reason the responsible party cannot pay for the damage caused by an LMO, there will be some means available to do so.

 

 

The Group of the Friends of the Co-Chairs on Liability and Redress in the Context of the Cartagena Protocol on Biosafety had scheduled its fourth meeting in Nagoya from 6-8 October 2010, just prior to COP-MOP5, to further negotiate international rules and procedures on liability and redress. The Co-Chairs are Rene Lefeber from the Netherlands and Jimena Nieto from Colombia.

 

The Group of the Friends comprises six representatives each from the African Group, the Latin America and Caribbean Group, and Asia-Pacific; two representatives of the European Union and from Central and Eastern Europe; and one representative each from New Zealand, Norway, Switzerland and Japan.

 

The liability and redress negotiations have been underway since 2005, with a working group under the Cartagena Protocol having met five times. Its last meeting was held in March 2008, in an endeavour to complete the process within the four years as specified in the Cartagena Protocol. Because of the deep divisions on the issue, the negotiations could not be completed as mandated, despite extra small group meetings of the Friends in Bonn before and during COP-MOP4 in 2008.

 

As such, another two meetings of the Group of the Friends were mandated by a decision in Bonn. However, as the difficult issues still could not be resolved, another meeting was held in June 2010. Furthermore, a decision was made to meet again in October 2010.

 

 

At the last meeting of the Group of the Friends in June, the issue of financial security proved to be the most contentious. At the meeting in Nagoya, the entrenched and polarized positions among the Parties were still apparent when Co-Chair Lefeber began the discussion by asking whether there were any objections to the principle in Article 10.1 enshrining the right of Parties to provide for financial security in their domestic law.

 

Paraguay called for the deletion of the Article, with Brazil, Mexico and South Africa also indicating that they could not accept this concept.

 

Brazil further indicated that while their “instructions at this stage are to not to accept the article as it stands”, they could work with a compromise solution. Such a compromise could include the idea of asking the Executive Secretary to conduct studies on the environmental and financial consequences of providing for financial security, to enable the COP-MOP of the Supplementary Protocol to make a more informed decision on this issue.

 

The Friends were then asked which Parties could not accept a Supplementary Protocol without a provision on financial security.

 

Malaysia reminded the meeting of the history of the provision and how it has been watered down over the course of the negotiations. The current language is now couched in non-obligatory language (“may”), and merely reiterates this right of Parties. There is also a qualifier (which has not been agreed on) – “consistent with international law/obligations”. Malaysia asked, even with these concessions in place, why should some Parties still insist on depriving others of their sovereign rights?

 

Bolivia, Cameroon (speaking on behalf of the African Group, with the exception of South Africa), Peru, India, Ukraine and Norway also spoke up in strong support of having a provision on financial security in the Supplementary Protocol.

 

The Co-Chairs then allowed a further discussion on the issue to try to see if common ground could be found. When it became apparent that a large gulf still remained, with the EU raising concerns that the whole negotiations could collapse on this issue, the Co-Chairs then proposed that they convene “confessionals” with the Parties who had indicated that financial security is an issue either way, so that they could indicate their bottom lines and to see if a way out could be found. (“Confessionals” are a practice that have been routinely carried out in the WTO negotiations, and involve countries speaking privately with the Chair as opposed to negotiating directly with other Parties.)

 

The Parties that had to “confess” were Brazil, Mexico, Paraguay and South Africa on the one hand, and Bolivia, Peru, Malaysia, India, the African Group (except for South Africa), Ukraine and Norway on the other hand.

 

However, the next morning, the Co-Chairs had to conclude that, “we are not within a zone of possible agreement” and pleaded with delegations to reconsider their instructions. They then decided to convene a meeting with those Friends – Brazil, Mexico, Paraguay and South Africa – who had objected to financial security.

 

This was followed by further discussions in plenary, wherein Brazil elaborated on its compromise proposal, which would comprise preambular language on the rights of countries to have financial security and a specific decision by the Parties recognizing the need for studies and mandating the Secretariat to put together a technical paper so that the first meeting of the Supplementary Protocol’s COP-MOP can take a decision on the issue.

 

Malaysia pointed out that there have been several studies on the issue already, and urged instead for a proposal in the operational text, because there cannot be a situation where widespread damage goes uncompensated because no funds are available. In response to the concerns that there could be trade implications, he stressed that we “cannot have commerce destroying biodiversity.”

 

After ascertaining that there was now willingness from Parties to engage, the Co-Chairs invited Paraguay, Brazil, Mexico and South Africa on the one side, and Malaysia, Bolivia, Africa, Peru and India on the other side, to a closed-session meeting that evening. These discussions continued the next day.

 

On Friday afternoon, Malaysia reported back to the meeting that they had reached agreement on Article 10 on financial security. He presented the package that was agreed, namely, deletion of the current text in brackets and new provisions that:

 

(i) retained the right of Parties to provide, in their domestic law, for financial security; (ii) obliged Parties to exercise that right in a manner consistent with their rights and obligations under international law, taking into account the final three preambular paragraphs of the Protocol; 

(iii) mandated the first COP-MOP of the Supplementary Protocol to request the Secretariat to undertake a comprehensive study on the modalities of financial security mechanisms, an assessment of the environmental, economic and social impacts of such mechanisms, in particular on developing countries and an identification of the appropriate entities to provide financial security; and

(iv) mandated the first review of the effectiveness of the Supplementary Protocol (contained in Article 13) to include a review of the effectiveness of Article 10.

 

Paraguay asked for its concern that the reference to the last preambular paragraph of the Cartagena Protocol in Article 10 be reflected in the report of the meeting. (The final three preambular paragraphs of the Cartagena Protocol find a delicate balance in the relationship between the Protocol and other international agreements and need to be read together).

 

After a short discussion, the new Article 10 on financial security was adopted. It was particularly significant for the Parties that had fought very hard for the inclusion of a provision on financial security, for the administrative approach contained in the Supplementary Protocol places obligations on the Party of import, which may have cost implications. Without provision for financial security, the Supplementary Protocol would have placed obligations on importing Parties without addressing the issue of financial security.  

 

The draft decision of COP-MOP 5 adopting the Supplementary Protocol also contains a provision on additional and supplementary compensation measure for situations where the costs of response measure have not been covered. The COP-MOP of the Supplementary Protocol can address arrangements for these measures.

 

 

The Co-Chairs opened discussion on “products thereof” by recalling their proposal made at the last meeting in Kuala Lumpur – to replace “and products thereof” in Articles 3.2 and 3.3 dealing with scope, with “including products containing LMOs.”

 

Bolivia responded that they did not agree with the Co-Chairs’ proposal, suggesting instead the formulation found in Article 20.3(c) of the Cartagena Protocol, as well as in Annexes I and III: “processed materials that are of living modified organism origin, containing detectable novel combinations of replicable genetic material obtained through the use of modern biotechnology.” 

 

Japan opposed the inclusion of either “products thereof” or “products containing LMOs,” arguing that these phrases would expand the scope of the Supplementary Protocol beyond the scope of the Cartagena Protocol. South Africa, the Philippines, Brazil, Paraguay and China agreed with this argument.

 

On the other hand, Namibia noted that the African Group, with the exception of South Africa, was in favor of including reference to “products thereof” and that the group could go along with the Bolivian proposal. This was supported by Malaysia, Ukraine and South Korea.

 

The rationale for the inclusion of “products thereof” lies in their mention in the Cartagena Protocol in relation to risk assessment, which places them squarely within liability considerations as mandated by Article 27 of the Cartagena Protocol, for if that risk materializes then there must be provisions for liability and redress. Therefore the inclusion of “products thereof” would provide for a comprehensive and adequate protocol dealing with damage from LMOs. According to Malaysia, anything less would be “Cartagena Protocol-minus”.

 

Moreover, as pointed out by Bolivia, developments in the technology, and a fuller consideration of LMOs beyond just genetically engineered plants, mandated that Parties should carefully consider if damage from certain “products thereof” would not be captured if that concept were to be excluded from the Supplementary Protocol.

 

Mexico proposed that the phrase “and which can replicate in the environment” be added to the Bolivian proposal, to clarify that the products contain living modified organisms. After a broad-ranging discussion, the meeting agreed to reflect on the proposal to include the Bolivian text, as amended by Mexico, in Article 2 of the Supplementary Protocol, on the use of terms. The Co-Chairs’ proposal (“including products containing LMOs”) and a proposal by Japan to replace “and products thereof” with “including LMOs contained in products” would also still be on the table.

 

The next day, discussions continued with Parties mainly reiterating their positions. Some, like Paraguay and the Philippines, threw their support behind the Japanese proposal. Others, like the African Group (with the exception of South Africa), Bolivia, Malaysia and Ukraine, urged for sticking to the description of “products thereof” used in the Cartagena Protocol, as it was already agreed language. Still others, like Brazil and Ecuador, preferred the Mexican amendment. The EU favoured the Co-Chairs’ proposal, but that proposal was eventually withdrawn by the Co-Chairs following further debate.

 

Informal consultations then took place, with Malaysia reporting back in the afternoon that the Friends were working on the Bolivian-Mexican proposal. In the spirit of compromise, Malaysia offered a modification to the Mexican proposal, namely using the description of “products thereof” in the Cartagena Protocol with the addition of the phrase, “and that are capable of replicating in the environment.” After more discussion with views for and against the proposal, the Philippines proposed that the text be modified to read, “(and that) are capable of naturally reproducing in the environment”.

 

When the meeting came back to the issue on Friday afternoon, the Friends agreed to include a definition of “products thereof” in the Supplementary Protocol and hence to their inclusion in Articles 3.2 and 3.3 dealing with scope.

 

However, discussion as to whether to use the compromise proposal of “replicating” or the Philippines’ proposal of “naturally reproducing” sparked more entrenched positions. Malaysia, supported by the African Group with the exception of South Africa and Ukraine, explained that they had already given the concession of modifying the description of “products thereof” in the Cartagena Protocol and hence would like to use the term “replicating”. He highlighted that this was a compromise agreement that came out of the informal consultations of a large group of the Friends.

 

On the other hand, the Philippines and Paraguay insisted on “naturally reproducing” to make it clear that “products thereof” must only apply to LMOs. They were later supported by India.

 

Co-Chair Lefeber reminded the meeting that the agreement of some of the Friends was they could accept the term “replicating” on the condition that there would be a declaration in the report of the meeting clarifying that the definition of “products thereof” applies to LMOs only. He proposed this as a way out of the impasse.

 

Malaysia then strongly objected, saying that the text was already a compromise and a reflection of the common understanding. Following some discussion, Co-Chair Lefeber proposed that clean text be adopted for the definition of “products thereof” in Article 2: ““Products thereof” means processed materials that are of living modified organism origin, containing detectable novel combinations of replicable genetic material obtained through the use of modern biotechnology, and that are capable of replicating in the environment”, and that the brackets in Articles 3.2 and 3.3 be removed. In addition, he suggested that those Friends who had difficulty with the language record their understanding in a footnote in the text or in the meeting’s report.

 

India proposed a footnote in the text of the Supplementary Protocol stating that China, India, Japan, Paraguay and the Philippines are of the understanding that “replicating” means “naturally reproducing LMO” and that Paraguay reserved its right to re-open the debate in the plenary of the COP-MOP. Paraguay also asked for its reservation

to be in the report of the meeting.

 

Malaysia then requested that the following be also reflected in the meeting’s report: “(The) text with regard to products thereof, arrived at after protracted negotiations, reflects a compromise by a large number of countries. Its aim is to give maximum leeway for Parties to fully implement the liability and redress provisions with regard to damage arising out of living modified organisms and products thereof”.

 

What followed then was a scramble of Parties associating themselves with either of the two statements, which raised concerns that such an exercise was not useful as the two were not mutually exclusive, neither was it productive to have different understandings of a definition. When it was clear that this issue could not be resolved the Co-Chairs proposed to revert back to the agreement that Parties had reached on Friday afternoon, after the informal consultations.

 

On Saturday, the Friends were in informal consultations throughout the day. When the meeting reconvened, Malaysia, supported by Ukraine, proposed that the references to “and products thereof” in Articles 3.2 and 3.3 be replaced by the phrase “within the context of the Protocol”. India proposed “as defined in the Protocol” instead, as it felt it brought more clarity. This was supported by China, Japan, Paraguay and the Philippines. Colombia forwarded “as referred to in the Protocol” as a compromise, but this was opposed by India.

 

Further consultations took place, after which Paraguay proposed that the Colombian proposal be amended to specifically refer to Article 3 of the Cartagena Protocol on the use of terms. The Friends could not come to agreement and asked for more time to consult with capitals.

 

Informal consultations continued on Sunday. The Co-Chairs convened and facilitated a meeting of Friends representing both sides of the divide – China, India, Japan, Paraguay and the Philippines on the one side, and the African Group with the exception of South Africa, Bolivia, Malaysia and Peru on the other. The objective was to understand each other’s positions.

 

Co-Chair Lefeber reported back on the meeting, explaining that the Friends concerned had recognized that if a State so wishes, it could expand the scope of the Supplementary Protocol to “products thereof” in their domestic law and nothing in the Supplementary Protocol prevents that.

 

They had then discussed various scenarios of damage and came to the understanding that in some cases, for example, where country A exports living modified soy to country B, which is then processed, enters the food chain and causes damage, two possible readings of the phrase “damage resulting from LMOs”, as contained in Article 3 of the Supplementary Protocol, are possible. This ambiguity can be traced back to Article 27 of the Cartagena Protocol.

 

If the words “products thereof” are not included, one reading is that “damage resulting” means damage directly resulting from living organisms and therefore according to that interpretation, products thereof are not covered by the Supplementary Protocol. The other reading is that if an LMO is processed, but causes damage for which a causal link is established, then according to that interpretation, it is covered by the Supplementary Protocol.

 

To reflect and allow for the fact that two interpretations are possible, and that the Friends should “agree to disagree”, the Co-Chairs proposed language to be included in the report of the meeting and the report of COP-MOP5. This language captured the idea that Parties may apply the Supplementary Protocol to damage caused by non-living material that finds its origin in a transboundary movement of a LMO.

 

The EU proposed adding language describing negotiations as they transpired. Further discussion eventually produced the following text that has been included in the report of the Group of the Friends of the Co-Chairs:

 

 

With that, the references to “products thereof” in Article 3 were then removed, resolving the final substantive issue that had dogged the negotiations for years. As other outstanding issues in the preamble had already been dealt with, the clean text of the Supplementary Protocol was then adopted to applause.

 

 

The birth of this new multilateral environmental agreement has been a difficult one, with many compromises made along the way. A major change has been the shift from a civil liability regime to an administrative approach focusing on response measures, which emerged from the ashes of the near-collapsed negotiations in Bonn in 2008.

 

However, many delegates considered that the Supplementary Protocol, among other things, (i) has a legally binding provision on civil liability with an in-built review mechanism that could provide for the potential further development of international civil liability rules and procedures; (ii) includes the concept of “sufficient likelihood of damage” which allows Parties to take preventive measures to avoid such damage; and (iii) enshrines the right of Parties to provide for financial security in their domestic law.

 

Furthermore, the understanding that Parties may apply the Supplementary Protocol to processed materials that are of LMO-origin is clearly reflected in the report of the meeting.

 

A TWN analysis of the Supplementary Protocol will follow shortly. +

 

(* With inputs from Doreen Stabinsky.)