Advancing NAEGA’s goals for international outreach on issues of contracting, since 2009, NAEGA has conducted international Contract Seminars in Canada, Japan, Korea, Mexico and throughout the United States. These sessions have proved to be very helpful in improving the understanding of contract terms used in world markets. They help to facilitate trade by providing an explanation of how effective contracting can eliminate potential contractual disputes and help provide a venue for dispute resolution and by providing an explanation of how contracts interact and must comply with USA and international regulatory prerequisites in the execution of these contracts.
A major success driven largely by NAEGA actions occurred late in 2010 with agreement by the Parties on implementation of the BSP. A review of the status of Liability and Redress provisions of the BSP is evidence of this success. The international grain trade has been concerned since the initial adoption of the Cartagena Protocol on Biosafety (“The Protocol”) about the implications to the trade of the liability and redress provisions of that international treaty, now adopted by 160 countries. The Protocol provides that international rules for liability and redress shall be adopted regarding damage to biodiversity resulting from living modified organisms (“LMO”). The grain trade’s concern is premised on the fact that grain traders normally are shippers of products that are produced by others, and ultimately utilized as feed or food by persons and entities not connected to the shipper.
Grain traders are essentially middlemen in transactions in which they decide neither the nature of the products that are planted and grown, nor the products that are purchased. The grain traders consolidate products from numerous sources, place those products in ships holding millions of bushels and valued at millions of dollars, and ship them to wherever the buyers direct anywhere in the world. This trade is vital to the world’s food supply and therefore the world’s health. And yet, because recent developments in biotechnology have led to new and improved crops (more than 12 million farmers grow biotech crops on over 2 billion acres of land) while not every country in the world is equally receptive to the use of the new biotechnology, nor approves new biotech “events” at the same pace, the result has been that shippers have a tremendous risk in shipping products that might ultimately be rejected by the country to which they are shipped. If grain traders use due diligence in their trading and shipping practices, and yet are potentially subject to liability because biotech products cause environmental harm, the potential for disruption of the grain trade, and ultimately distribution of the world’s food supply, is severe. The industry’s efforts over the past decade have been designed to assure that the liability and redress provisions enacted and utilized as an outgrowth of the Cartagena Protocol do not undermine this world-wide commerce.
Following a December meeting of the BSP Parties in Nagoya, Japan important increases in certainty and predictability resulted. The liability and redress provisions of the Protocol have proceeded on two paths. First, the countries that have become signatories to the Protocol have worked for a decade to develop rules on liability and redress. Non-signatory countries (such as the United States, Canada, Russia, Australia and South Korea) have provided input into these negotiations, as have industry representatives (such as the biotechnology companies and the grain trade) but have not had the ability to vote on the various provisions.
After a decade of work, these negotiations resulted in the adoption of The Nagoya-Kuala Lumpur Supplementary Protocol on October 15, 2010. This Supplementary Protocol is essentially a combination of new internationally binding legal rules and the use of existing (or prospective) civil liability systems in the signatory countries. Participating countries may sign the Supplementary Protocol beginning on March 7, 2011. It will come into force if 40 Parties to The Protocol ratify it before March 6, 2012.
The second path for implementation of liability and redress has been promoted and adopted by the technology companies that invent, design and produce the biotechnology traits themselves. They have worked through their trade association, CropLife International. For the past five years, the technology companies have worked to develop a liability and redress system that is an alternative to the formal system adopted as part of the Cartagena Protocol, now formalized in the Supplementary Protocol. The technology companies have now finalized their system as well. It is known as “The Compact: An International System for Addressing Damage to Biological Diversity.” It was adopted in May 2010, but the text was amended and the relevant document is now dated November 19, 2010. This is a voluntary, but binding contract among the participating parties, all of which (BASF, Bayer CropSciences, Dow Agrosciences, DuPont, Monsanto and Syngenta) have committed to a mechanism that will allow redress to countries for damage to biological diversity. The Compact is designed to allow signatory states to opt into an arbitration system set forth therein after they conclude that there has been an event that has caused damage to biological diversity. If they decide to use the Compact to determine liability and damages, they must agree not to proceed against the participants in the arbitration process through other means.