Australia releases model for implementing the Nagoya Protocol

In brief

The Federal Government has released a model for the implementation of the Nagoya Protocol that will have major implications for those who use genetic resources and associated traditional knowledge for biodiscovery. Partner Sarah Matheson and Lawyer Julieane Bull provide an overview of changes proposed by the new model and its implications for research and commercialisation pathways.

What is biodiscovery?

Biodiscovery is scientific research on the genetic or biochemical make-up of a plant, animal, fungus or microbe with the purpose of developing a product or process that has commercial or other value. Biodiscovery may lead to the discovery and commercialisation of new products or processes in the pharmaceutical, nutraceutical, cosmetic, agricultural or other sectors.

The Nagoya Protocol

The Nagoya Protocol implementing the access and benefit-sharing obligations in the Convention on Biological Diversity has been ratified by 34 countries. It will enter into force 90 days after the fiftieth ratification.

A number of countries in the Asia Pacific region have already ratified the Nagoya Protocol, including Mongolia, Indonesia, India, Vietnam, Laos, Myanmar and Micronesia. We understand the European Union also intends to enact legislation to implement the protocol by July 2014.

Australia signed the Nagoya Protocol in January 2012, and is currently seeking submissions on the preferred approach to its implementation. We expect Australia will only ratify the protocol once appropriate legislative, policy and administrative changes are implemented.

A model for implementing the Nagoya Protocol in Australia

The Nagoya Protocol contains obligations on signatories as both providers of genetic resources, and users of resources and associated traditional knowledge.

The Federal Government is currently of the view that existing legislation, which requires a permit for taking biological resources of native Australian species from Commonwealth areas for biodiscovery, meets the requirements of the Nagoya Protocol for 'provider' countries. However, legislative reform will be required to meet the obligations of a 'user' country.

Allens has previously reported:

For Australia, as a 'megadiverse' country and also the leading location of biotechnology companies in Asia Pacific, the challenge will be to implement the protocol in a way that allows Australia to protect and benefit from its own biodiversity, and at the same time preserve the growth and competitiveness of its biotechnology industry vis-à-vis other developed countries.¹

 

Below, we outline the current legislative framework for the regulation of biodiscovery at the Commonwealth level, and identify key changes currently proposed to meet Australia's obligations under the Nagoya Protocol as a 'user' country.

Current regulatory framework for biodiscovery in Commonwealth areas

Section 301 of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the EPBC Act) and Part 8A of the Environment Protection and Biodiversity Conservation Regulations 2000 (Cth) regulate the taking of biological resources of native Australian species in Commonwealth areas for research and development on any genetic resources or biochemical compounds comprising or contained in the biological resources. This is known as 'access to biological resources'.

The Regulations establish a permit system for both commercial and non-commercial access to biological resources. It is an offence to access biological resources without a permit.

Commercial access to biological resources

An applicant for a permit to access biological resources for commercial purposes, or 'potential' commercial purposes, must enter into a benefit-sharing agreement with the access provider, before the Federal Minister for the Environment may issue a commercial permit.

Although the Regulations provide that the Minister may publish a model benefit-sharing agreement in the Government Notices Gazette, the Minister has not yet done so. However, the Department of the Environment has for a number of years published, on its website, a model agreement (which was revised in April 2012). According to an explanatory guideline, the purpose of publishing the model agreement is to reduce the transaction costs associated with obtaining a commercial permit.

The guideline also identifies the key provisions of the model agreement. Critically for industry, the benefits negotiated under a particular benefit-sharing agreement (which can be monetary benefits based on a percentage of gross revenue and differentiated across sectors, non-monetary benefits or a combination of both) continue to flow to the access provider in perpetuity, even if the permit holder enters into a subsequent agreement with a third party to further develop or commercialise the biological resources, products or intellectual property.

Further, permit applicants should be aware that, if the biological resources proposed to be taken are on Indigenous peoples land, then the Regulations require the landowner or native title holder to give informed consent to any benefit-sharing agreement.

Non-commercial access to biological resources

By comparison, the regulation of non-commercial access to biological resources at the Commonwealth level is relatively streamlined. An applicant for a non-commercial permit is not required to enter into a benefit-sharing agreement. However, research institutions and government clients in particular should note that an applicant for a non-commercial permit must obtain the written consent of the access provider, as well as giving a statutory declaration that no commercial use will be made of the biological resources until a benefit-sharing agreement is in force.

Ministerial exemptions

The Minister may declare certain biological resources, or collections of biological resources, to be exempt from Part 8A of the Regulations.

Proposed amendments to the regulatory framework

The following changes are proposed to meet Australia's obligations under the Nagoya Protocol as a 'user' country:

• It be will be an offence to use 'illegally acquired' genetic resources or traditional knowledge associated with genetic resources, in certain circumstances.
• The Federal Government will be empowered to audit and monitor the use of genetic resources and associated traditional knowledge for potential breaches of the new offence provision discussed above.
• A user of genetic resources will be able to 'remedy' the legal status of potentially illegally acquired resources by obtaining written permission from the provider country, as well as mutually agreed terms.
• An agreement will be required between users of traditional knowledge associated with genetic resources and the holders of that knowledge. The agreement must be negotiated in accordance with a community protocol, guidelines published by the Australian Institute of Aboriginal and Torres Strait Islander Studies, or a code developed in consultation with Indigenous people.
• Recipients of Federal Government funding for research using genetic resources will be required to report on, and provide evidence for, the legal provenance of the resources. Where associated traditional knowledge will also be used, evidence of an agreement with the holders of that knowledge must be provided.
• Codes of conduct will be developed for different user sectors.
• 'Trusted institutions' will be accredited to provide genetic resources for use in biodiscovery activities.

Critically, these reforms will only apply to genetic resources, and associated traditional knowledge, acquired after the Nagoya Protocol is implemented domestically.

Other unresolved reform recommendations

In 2011, the former Labour Government responded to an independent review of the EPBC Act by Dr Allan Hawke AC, which was tabled in Parliament on 21 December 2009 (the Hawke Report).

In its response to the Hawke Report, the former Government agreed to increase the statutory penalties for non-compliance with Part 8A of the Regulations as a mechanism of general deterrence. This outcome was to be achieved by moving Part 8A into the EPBC Act and subjecting the new provisions to streamlined compliance and enforcement provisions proposed by the Hawke Report (and largely accepted by the Government).

The biodiscovery recommendations of the Hawke Report have not yet been implemented. However, with the approaching target for entry into force of the Nagoya Protocol, and a model for its implementation in Australia currently available for public comment, it will be interesting to observe whether (and how) these statutory reforms are progressed.

What next?

The regulation of biodiscovery has the potential to undergo significant reform at both the international and national levels. The Federal Government is currently seeking submissions on its model for implementing the Nagoya Protocol in Australia. Biotechnology and pharmaceutical companies, research institutions and venture capital/investment funds with an interest in biodiscovery should consider making a submission by 31 May 2014.