1 Foreword2 Scope of this discussion paper2 Having your say3 Summary

1 Introduction to Bioprospecting

5 Bioprospecting Defined6 Benefits of Bioprospecting7 Bioprospecting Activities in New Zealand8 Funding Bioprospecting Activities in New Zealand

2 Policy Context

10 Existing Regulatory Framework for Biological Resources in New Zealand12 International Policy Context

3 Problem Definition

14 Nature of the Problem15 Size of the Problem16 Have Your Say - 1

4 Proposed Principles and Policy Objectives for Bioprospecting

17 Analytical Framework17 Government Policy Goals19 Links with Other Government Strategies and Policies20 Possible Principles and Objectives to Guide Policy Development on Bioprospecting20 Have Your Say - 221 Have Your Say - 3

5 Policy Options

22 Overview of Options22 Government Policy Statement22 Have your say – 423 Enhanced Co-ordination and Information Sharing25 Have Your Say - 526 Establishing A Framework for Benefit-Sharing From Bioprospecting28 Have Your Say - 628 Recognition of Maori interests in relation to Biological Resources31 Have Your Say – 731 Other Issues32 Have Your Say - 832 Use of existing legislative frameworks

6 Making a Submission

35 Appendix I: Bioprospecting Policy in Australia36 Appendix II: Useful Web links

page

Published by

Resources and Networks Branch, Ministry of Economic Development, 33 Bowen Street, PO Box 1473, Wellington, New Zealand.

Ph: +64 4 472 0030, Fax: +64 4 499 0969, Email: bioprospecting@med.govt.nz

November 2002, ISBN 0-478 26318X

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Bioprospecting is a field of scientific research that can create a widerange of benefits for New Zealand. The government’s Growing anInnovative New Zealand framework has emphasised the contributioninnovative scientific research, particularly in the field ofbiotechnology, can make to the New Zealand economy.

In addition, New Zealand has a number of obligations in relation tobiological resources under the 1992 Convention on BiologicalDiversity. The Convention requires countries to establish access andbenefit-sharing regimes for other countries seeking access to their

biological resources. The New Zealand Biodiversity Strategy was launched in March 2000 toestablish a framework for implementation of our obligations under the Convention.

Last year, I asked the Ministry of Economic Development to lead an interdepartmental review of New Zealand’s policy framework for the regulation of bioprospecting activities. My concernswere that New Zealand was not fully realising the potential benefits of bioprospecting research,and that we could improve the fulfilment of our obligations under the Convention on Biological Diversity.

This discussion paper sets out the issues that have emerged from this review. The paper exploresthe legislative and policy context for bioprospecting activities, and presents some possible policyobjectives and options to address problems with the status quo. It has been produced to giveinterested parties the opportunity to express their views on bioprospecting issues.

Examples of bioprospecting are given throughout this paper to indicate the scope of relevantactivities, from high-tech pharmaceutical projects to small enterprises capturing the benefits oftraditional knowledge.

The breadth and complexity of issues that arise in relation to bioprospecting require detailedinput from stakeholders and interested New Zealanders in order to ensure further policydevelopment effectively addresses the identified problems. I am particularly interested in hearingof any experiences related to undertaking bioprospecting activities, as these will help indetermining a robust bioprospecting policy framework.

The review process will benefit from having the widest possible input from interested parties.Submissions close 28 February 2003. To make a difference, I urge you to take the time to make asubmission and contribute to this important review.

Hon Pete Hodgson

Associate Minister of Economic Development

Foreword

The paper presents background information on the legislative and policy framework forbioprospecting to enable informed discussion on the topic. It discusses the bioprospecting ‘policyproblem’ followed by possible policy objectives and policy options.

This paper does not present the government’s position on bioprospecting issues. The policyobjectives and options considered here are intended for discussion purposes only.

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Scope of this Discussion Paper

HAVING YOUR SAY

You are invited to make comments on the proposed bioprospecting policy

objectives and policy options outlined in this discussion paper. Please

forward your comments to the Ministry of Economic Development by

28 February 2003.

Your submission will become public information. For this reason, you

should indicate clearly if your comments are commercially sensitive, or if,

for some other reason, you consider they should not be disclosed. Any

request for non-disclosure will be considered in terms of the Official

Information Act 1982.

Submissions can be made by post, or hand delivered, to:

Bioprospecting Review

Natural Resources Policy Group

Level 10

Ministry of Economic Development

PO Box 1473

Wellington

or by e-mail, to:

bioprospecting@med.govt.nz

or by fax to (04) 499 0969

The Ministry will analyse submissions and make a summary document

available. Officials will develop policy recommendations once the

submissions are analysed and policy options assessed.

Please see Chapter 6 for more information on making a submission.

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Bioprospecting is the examination of biological resources (e.g. plants, animals, micro-organisms)for features that may be of value for commercial development. These features may includechemical compounds, genes and their products or, in some cases, the physical properties of thematerial in question. The main distinguishing feature from other biotechnology research is theconcept of ‘prospecting’ – the search for biological material for as-yet undiscovered applications.

Bioprospecting can create a wide range of benefits for the source nation. In New Zealand, there issome bioprospecting occurring. There needs to be consideration of how to best realise thepotential benefits for us from bioprospecting. The analysis of potential benefits is stronglyinfluenced by the fact that much research takes place in collaboration with overseas agencies.This raises questions about how the benefits can be shared in a way that maximises returns toNew Zealand, while recognising the cost and risks borne by research collaborators.

The regulatory framework for bioprospecting in New Zealand is ad hoc, fragmented and reliant onlegislation designed for other purposes. It is not well suited to maximising potential benefits ormanaging potential risks from bioprospecting activities.

Three major problems have been identified:

■ the lack of an overarching framework for bioprospecting;

■ uncertainty of the policy environment and lack of information; and

■ ad hoc controls over access by foreign interests.

The current policy context and government goals have been examined to identify possibleprinciples and objectives to guide further consideration of bioprospecting policy. The proposedprinciples and objectives are:

■ New Zealand has a right to gain benefit from the use of its own biological resources;

■ bioprospecting can contribute to the growth of an innovative economy, and to increasingthe skills of New Zealanders;

■ there is a requirement for an integrated policy and legislative framework for managingbioprospecting, including arrangements for sharing benefits;

■ policy should facilitate responsible access to biological resources, with prior informedconsent of the owners/managers of the resource, on mutually agreed terms;

■ there should be a fair and equitable sharing of benefits arising from bioprospectingactivities;

■ bioprospecting policy should recognise the principles of the Treaty of Waitangi;

■ the value of Maori knowledge about biological resources should be recognised and protected;and

■ the environment should be protected from any possible adverse effects of bioprospecting.

Summary

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These principles and objectives have been used to determine a proposed overarching policyobjective for bioprospecting activities:

To ensure New Zealand takes advantage of economic development opportunities and other benefitsfrom the bioprospecting of our biological resources, while safeguarding associated environmental,social and cultural values, by:

■ establishing clear rules about access to biological resources on Crown-owned/managed areas;

■ ensuring bioprospecting policy recognises the principles of the Treaty of Waitangi;

■ establishing mechanisms to facilitate the capture of benefits from bioprospecting activities;

■ gathering information on bioprospecting activities to ensure New Zealand can track the use of itsbiological resources; and

■ ensuring clear and consistent rules to manage the environmental effects of bioprospectingactivities in Crown-managed areas.

To help meet this objective, three policy options are presented here for discussion:

■ a proposed government policy statement on bioprospecting;

The government currently does not have a stated bioprospecting policy. Formulating agovernment policy statement would give government agencies guidance in the discharge oftheir statutory functions

■ mechanisms for enhanced co-ordination and information sharing;

Better co-ordination and information sharing in relation to bioprospecting activities could beachieved through giving oversight responsibility on bioprospecting to an existing or newgovernment authority.

■ a framework for benefit-sharing arrangements.

A framework could be developed to help researchers structure their activities, fundingarrangements and intellectual property management in a manner that will help maximisepossible benefits to New Zealand, and provide for better involvement of relevantstakeholders, and Maori.

BIOPROSPECTING DEFINED

1.1 Bioprospecting is the examination of biological resources (e.g. plants, animals, micro-organisms) for features that may be of value for commercial development. These featuresmay include chemical compounds, genes and their products, or in some cases, the physicalproperties of the material in question. The main distinguishing feature from otherbiotechnology research is the concept of ‘prospecting’ - the search for biological material foras-yet undiscovered applications.

1.2 Bioprospecting is usually a ‘targeted search’ for a certain use. The number of screeningtechniques available to modern science, along with the huge complexity of living organisms,means the researcher often starts with an end in mind, and prospects biological material heor she considers more likely to provide a specific use.

1.3 In the context of this paper, ‘bioprospecting’ is also taken to include the downstream testingand development activities following discovery of a useful substance. This is because thegreatest benefit from the initial discovery is obtained at these stages.

1.4 Bioprospecting is not genetic modification. For this reason, this paper does not considergenetic modification issues. Genetic modification is one possible technique used indownstream development that could be applied to a bioprospecting ‘discovery’. However,genetic modification research can occur in a number of different ways. Bioprospecting isonly one example of how such research may be initiated. Genetic modification issues arebeing dealt with in response to the report of the Royal Commission on Genetic Modification.This is discussed further in Chapter 4.

1.5 This discussion paper does not consider any issues associated with the collection and use ofhuman tissues or genetic material, such as DNA banking or human genetic research. Some ofthese issues will be considered by a review of the Human Tissues Act, being led by theMinistry of Health.

1.6 A typical pharmaceutical bioprospecting research project could involve the following steps:

■ Discovery: collecting material, screening for useful properties or ‘bio-activities’, isolatingand purifying new and active chemicals, describing new chemical structures;

■ Protection of intellectual property: largely the patenting of new structures and/orspecific types of bioactivity (e.g. antibiotic, insecticidal or anti-tumour properties);

■ Product development: modifying chemical structures to improve their efficacy,conducting clinical and/or field trials to demonstrate and compare the effectiveness andsafety of the product with others currently on the market;

■ Manufacturing: developing techniques for larger scale industrial production of thechemicals (e.g. by total laboratory synthesis or by purification from cultivated biologicalmaterial); and

■ Marketing the final product.

1.7 This definition of bioprospecting is deliberately broad, so as to capture the range of activitycurrently taking place in New Zealand. Examples of bioprospecting are given throughout thispaper to indicate the scope of relevant activities, from high-tech pharmaceutical projects tosmall enterprises capturing the benefits of traditional knowledge.

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1 Introduction to Bioprospecting

Crown-managed environments and private land

1.8 Bioprospecting takes place both on private land, and in environments owned or managed bythe Crown. (For the sake of simplicity, the latter environments are referred to as ‘Crown land’although many bioprospecting activities take place in the marine environment.) Thediscussion in this paper is equally applicable to both Crown and private land, although thedifferent legislative frameworks relating to each create significant differences in how policiesmay be implemented.

BENEFITS OF BIOPROSPECTING

1.9 Bioprospecting activities can create a wide range of potential benefits, as discussed below,when implemented within the proper framework. This paper discusses the possible downsidesof an inadequate bioprospecting framework in Chapter 3.

Adding value through the chain of development

1.10 One means of securing benefit is to add as much value as possible throughout the chain oftesting and development. Rather than focusing on an end point of commercialisation, New Zealand institutions can look to involve themselves in earlier steps, such as preliminaryscreening. This creates direct financial benefits, for example, through the sale of valuableknowledge. It also creates flow-on effects in employment and capacity-building in localbiotechnology industries.

1.11 For example, if a New Zealand institution discovers a potentially useful bioactive compoundin collaboration with an overseas agency, the two organisations could arrange for initialscreening work to be done in New Zealand, rather than immediately sending samplesoffshore. This creates work in New Zealand, and adds value to the product. Eventually it maybe the case that all further work will have to be done overseas, but New Zealand will havecontributed as far as possible, and maximised benefits from the discovery of the compound.

Benefit to local communities

1.12 Value-adding through the chain of development can also include benefit-sharing regimeswith the local community. For example, bioprospecting activities undertaken in Costa Ricainvolved the training and employment of local people to collect biological samples. In theNew Zealand context, there are opportunities for benefit-sharing arrangements with localcommunities in general and Maori in particular, should there be a connection betweenindigenous knowledge and the biological material in question.

Downstream production related to scientific discoveries

1.13 Bioprospecting also has the potential to lead to industries around the production of valuablesubstances. This could involve the production of the raw biological material. For example, ajoint initiative between NIWA, the University of Canterbury and an offshore biotechnologycompany looked at the feasibility of an aquaculture project to grow sea sponges containing asubstance of potential use as an anti-cancer drug. New industries could also involveproduction of a finished product, for example natural skincare products.

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Royalties from eventual commercial development

1.14 It is possible to secure royalty streams for New Zealand researchers through the retention ofintellectual property in a downstream commercial product. Such benefits, however, rely oneventual commercialisation. A small proportion of bioactive substances make it to the stageof commercial production. In addition, the complexity of inputs into commercialisationmeans intellectual property around a substance discovered in New Zealand may be aproportionately small part of the end product.

Increased capacity of New Zealand’s scientific sector

1.15 Involvement in bioprospecting projects enhances the skills and knowledge of New Zealandresearchers. This also improves the downstream opportunities for New Zealand to add valuethrough the development chain of a substance.

1.16 Research can therefore contribute to the economic development of New Zealand in waysother than the direct discovery of bioactives with commercial potential. The education andtraining of new researchers with valuable skills is an input into the New Zealand economy inits own right.

Increased scientific knowledge of biology and ecology

1.17 Bioprospecting increases the understanding of our natural systems, regardless of whether thesubstance in question eventually leads to financial returns. This knowledge has intrinsicvalue in its own right. It may also contribute to conservation and environmentalmanagement practices.

BIOPROSPECTING ACTIVITIES IN NEW ZEALAND

1.18 The main bioprospecting agencies in New Zealand are Crown Research Institutes (CRIs),universities and private biotechnology companies. There are several foreign biotechnologycompanies and universities undertaking bioprospecting in New Zealand, although usually incollaboration with local agencies.

1.19 Interest in bioprospecting New Zealand’s resources is partly driven by the nature of thecountry’s biodiversity. As a group of isolated islands, our indigenous biodiversity hasdeveloped in a particular way. New Zealand also has a large Exclusive Economic Zone,providing a rich source of marine biodiversity. For example, the large number ofhydrothermic vents in New Zealand’s Exclusive Economic Zone offers an opportunity tostudy micro-organisms that have developed in extreme environments.

1.20 In the context of bioprospecting, possible scientific discoveries from New Zealand’sbiodiversity are not necessarily unique. While there are some species endemic to New Zealand, the bioactive properties identified by bioprospecting could possibly be foundin other species, in other parts of the world. In some cases, it is also possible to synthesisesubstances in a laboratory, without prior knowledge of their existence in nature.

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FUNDING BIOPROSPECTING ACTIVITIES IN NEW ZEALAND

1.21 New Zealand does not have the capacity to fund all proposed bioprospecting research. Manyresearchers collaborate with overseas biotechnology companies and universities. Collaborationenables research that otherwise would not take place. These joint ventures, however, alsoraise issues of how risks and benefits can be shared fairly between New Zealand and thecollaborator. Overseas collaboration can allow benefits to flow offshore, through intellectualproperty and physical access to biological material.

1.22 Bioprospecting research can be an expensive activity. Collecting samples and screening forbioactive substances requires a high level of expertise and investment. Downstream activities- such as the development, testing and approval of pharmaceutical drugs - can requiremulti-million dollar investments.

1.23 There is an element of risk involved with investment. Bioprospecting is a field wherediscoveries can be very valuable, but hard won. It may take a large amount of money tosearch for and develop a substance that never becomes a commercial product.

FRST and other public funding

1.24 Some researchers receive public funding through the Foundation for Research, Science and Technology. The Foundation is the major distributor of public research funds in New Zealand. Public research funds are also available through the Health Research Council,the Marsden Fund and direct funding to public bodies such as universities. The majority ofthe Foundation’s research providers are Crown Research Institutes and universities.

1.25 The Foundation’s purchasing policies and related contractual obligations with researchproviders impose a number of conditions relevant to bioprospecting. Research providers:

■ are required to make the primary results of their research available to New Zealanders.However, they may choose not to distribute these results widely if to do so would becontrary to the benefit of New Zealand;

■ have the right to apply for intellectual property rights over their research, and they arerequired to endeavour to ensure the exploitation of intellectual property is for the benefitof New Zealand; and

■ are required to report to the Foundation on transactions they conclude with overseasparties, including income streams from intellectual property sale, licensing, orassignment.

Living Nature is a New Zealandcompany based in Kerikeri whichproduces natural skin and body careproducts that contain no syntheticchemicals, genetically modified oranimal ingredients. The ingredientsused in its products are essencesextracted from over 80 uniquemedicinal plants. Living Natureproducts are exported to the UnitedKingdom, Germany, Holland and theUnited States

evolu is a New Zealand company producing a plant-derived skincare range. Air New Zealand has selectedevolu as its preferred cosmetic range for its first andbusiness class amenity packs on all long haul flights.evolu currently exports to the United Kingdom, theUnited States and Switzerland, targeting high endconsumers.

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1.26 In addition, major science providers will soon be required to submit a confidential annualreport on Foundation-supported intellectual property, detailing:

■ registered intellectual property developed during the previous year, and what is beingdone with it;

■ changes from previous reports in what has been done with existing registered intellectualproperty;

■ the sale or licensing of intellectual property outside New Zealand, and why (this isrequired now);

■ plans to develop, or assign to its inventors, codified intellectual property still not usedafter three years; and

■ income generated from intellectual property, by item.

The Marine Chemistry Group at theUniversity of Canterbury is involved inscreening New Zealand marine flora, faunaand micro-organisms to identify speciesthat contain bioactive components. TheGroup is funded primarily by the Spanishpharmaceutical companies PharmaMar SAand Instituto BioMar SA. Additionally,collaborative links are in place with the USNational Cancer Institute, the DanishTechnical University, the School ofPharmacy, University of London, and theCentre for Polymer Therapeutics, CardiffUniversity. The Marine Chemistry Groupis an integral part of the BioCaNZconsortium, which is being formedbetween the University of Canterbury, theCanterbury Health Laboratories andCanterbury Development Corporation toact as a focal point for coordinateddiscovery and development of drugsderived from New Zealand naturalproducts.

The National Institute of Water andAtmospheric Research (NIWA) has a MarineBiotechnology Programme, under which a widerange of marine organisms are collected andscreened for bioactivity. NIWA handles thecollection of material, some screening andchemistry work, with additional screening andchemistry outsourced to other institutes, CrownResearch Institutes, universities and biotechcompanies. Typically, the collaboration willdepend on which institution has the appropriateexpertise to deal with the organism.

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2.1 The consideration of bioprospecting issues requires an understanding of the legal and policycontext within which they take place. This context also helps in assessing which policyoutcomes and objectives may be appropriate for policy development.

EXISTING REGULATORY FRAMEWORK FOR BIOLOGICAL RESOURCES IN NEW ZEALAND

Ownership of resources

2.2 The legal framework for the ownership of biological material is fragmented. The Wildlife Act1953 grants Crown ownership over all indigenous land mammals, most birds, reptiles and some invertebrates. Common law vests ownership of specimens of plants, micro-organisms andfauna not covered by the Wildlife Act with the relevant landowner (including privatelandowners). The Continental Shelf Act 1964 exerts Crown jurisdiction over sedentaryorganisms on the seafloor.

2.3 Where species are not vested, the Crown may nonetheless assert management rights for thepublic good. The Fisheries Act 1996 and Marine Mammals Protection Act 1978 give the Crown management rights over marine fauna.

2.4 The Department of Conservation is responsible for access to, and granting possession of,indigenous plant or animal material in areas administered by the department. It is alsoresponsible for the preservation of indigenous freshwater fisheries and the protection ofrecreational freshwater fisheries and freshwater fish habitats.

Access to resources – private land

2.5 There are currently no direct controls on bioprospecting on private land. The ResourceManagement Act 1991 could potentially apply if the environmental effects of the activity werenot permitted under the relevant regional or district plans. Researchers are free to negotiatewith the landowner and arrange access and benefit-sharing arrangements on a case-by-casebasis. Current work on a Biodiversity National Policy Statement may have future implicationsfor the Resource Management Act regime as it relates to bioprospecting.

Access to resources – Crown-managed areas

Public Conservation Areas - Conservation Act 1997

2.6 Bioprospecting activities are considered under the Concessions Regime established under Part3B of the Conservation Act 1997, which governs the regulation of activities in conservationareas. The Minister of Conservation may grant a concession in the form of a lease, licence,permit, or easement in respect of an activity, such as bioprospecting research, on publicconservation land.

2.7 In granting a concession, the Minister may impose such conditions considered appropriate forthe activity, including conditions relating to carrying out the activity, and paying rent, fees,and royalties. The concessions regime allows the Minister to maintain a high level of controlover the nature of bioprospecting activities and possible benefits that may accrue.

2 Policy Context

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Marine Environments - Fisheries Act 1996

2.8 Researchers collecting fauna from the marine environment require a Ministry of Fisheriesspecial permit. Under section 97 of the Fisheries Act, the chief executive may issue a specialpermit for a number of purposes, including investigative research, and

For any other purpose approved by the Minister after consultation with such persons andorganisations as he or she considers are representative of those classes of persons having aninterest in the granting of a special permit for such a purpose…

2.9 The chief executive of the Ministry of Fisheries may authorise the holder of a special permitto take and dispose of fish, aquatic life, or seaweed subject to such terms and conditions thechief executive may set out in the permit. As with the Department of Conservationconcessions regime, there is considerable scope to influence the nature of bioprospectingactivities and downstream issues such as benefit-sharing.

Continental Shelf Act 1964

2.10 The Continental Shelf Act enables the Crown to regulate the exploitation of natural resourceson the continental shelf. The definition of natural resources includes ‘living organismsbelonging to sedentary species’. The Act also makes the Minister of Energy responsible fordecisions on mineral activities on the continental shelf. Permission from the Minister ofForeign Affairs is required to gain any other access.

Foreign Research Vessels

2.11 Overseas research cruises in New Zealand waters are obliged to obtain permission from theMinistry of Foreign Affairs and Trade for their activities. The Ministry’s policy is to consultwith relevant government departments before deciding whether to grant permission. Whilethis provides a mechanism to regulate access, the system is not explicitly designed tomaximise benefits to New Zealand.

INTERNATIONAL POLICY CONTEXT

Bioprospecting Policies in Other Countries

2.12 Countries around the world deal with bioprospecting issues according to their particularcircumstances. In the Philippines, for example, concerns about ‘biopiracy’ have resulted in atough regulatory system perceived by some as an active disincentive to investment. InAustralia, on the other hand, the policy considerations around bioprospecting issues are verysimilar to those in New Zealand, due to our comparable legal systems and level of economicdevelopment. Australia is in the process of implementing regulations to control access tobiological resources in Commonwealth areas. For more information on bioprospecting inAustralia refer to Appendix 1.

2.13 Despite these differences, consideration of bioprospecting issues around the world is unifiedto a certain extent by a number of international agreements and forums. For example, the1992 Convention on Biological Diversity has seen work on access and benefit-sharing issues.In addition, the World Intellectual Property Organisation is examining the adequacy ofintellectual property frameworks in protecting the knowledge of indigenous peoples.

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1992 Convention on Biological Diversity

2.14 New Zealand has signed and ratified the 1992 Convention on Biological Diversity. Theunderlying principle of the Convention is expressed in Article 3:

States have… the sovereign right to exploit their own resources pursuant to their ownenvironmental policies, and the responsibility to ensure that activities within their jurisdiction orcontrol do not cause damage to the environment of other States or of areas beyond the limits ofnational jurisdiction.

2.15 Article 15(2) of the Convention states that parties should

endeavour to create conditions to facilitate access to genetic resources for environmentally sounduses by other contracting parties. Access should be through the prior informed consent of thesovereign state and on mutually agreed terms.

2.16 Article 8j is directly relevant to Maori traditional knowledge and practices, calling on parties to:

…respect, preserve and maintain knowledge, innovations and practices of indigenous and localcommunities embodying traditional lifestyles relevant for the conservation and sustainable use ofbiological diversity and promote their wider application with the approval and involvement of theholders of such knowledge, innovations and practices and encourage the equitable sharing of thebenefits arising from the utilisation of such knowledge, innovations and practices.

2.17 Parties to the Convention have produced a series of policy guidelines to promote goodpractice, known as the Bonn Guidelines.

2.18 Parties to the Convention have also established a Working Group on Article 8j, which,among other things, is developing guidelines aimed at ensuring indigenous and localcommunities obtain a fair and equitable share of the benefits arising from the use andapplication of their traditional knowledge.

2.19 Further information on the Convention and the two Working Groups can be obtained on theinternet at <www.biodiv.org>.

World Intellectual Property Organisation

2.20 The World Intellectual Property Organisation (‘WIPO’) is an international organisationdedicated to protecting the rights of creators and owners of intellectual property.

2.21 WIPO has established an Intergovernmental Committee on Intellectual Property and GeneticResources, Traditional Knowledge and Folklore. The work of the committee includesconsidering ways to promote effective benefit-sharing from the use of biological resources,including effective benefit-sharing with indigenous people.

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Landcare Research is the custodian of the nationally-significant databaseand collection ‘International Collection of Microorganisms on Plants'. It isbeginning work with a private companyto search for potential bioactivecompounds from selected micro-organismsthat are held within the collection. Thiswork aims to add value to the collectionsand potentially support the developmentof new industries. It is bioprospectingpredominantly from within existingcollections.

Industrial Research Limited undertakes a wide range ofbioprospecting activities. It is involved in screening marinespecies, waste streams from meat and milk processing andnative terrestrial and marine plants for bioactive molecules(in collaboration with the Wellington School of Medicine)and functional food ingredients. The bioactives aredeveloped into food ingredients, nutritional supplements,nutraceuticals and natural health products using hightechnology extraction processes, in collaboration with anumber of New Zealand and overseas companies.

Crop and Food Research is under-taking a screening programme ofnative New Zealand plants for bioactivematerials. This work is funded by FRST.Some work is carried out withinternational partners, with whomCrop and Food Research has developedagreements to maximise intellectualproperty (IP) retention and commercialreturns to New Zealand.

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3.1 This chapter sets out a number of problems with the existing policy framework identified todate. Your feedback on how you perceive the ‘bioprospecting problem’ will be an importantcomponent of future policy development.

THE NATURE OF THE PROBLEM

3.2 Current policy work on bioprospecting stems from concern from New Zealand scientists thatforeign researchers were benefiting from easy access to our biological resources, withoutbenefiting New Zealand. Further investigation into the problem suggests the currentframework governing bioprospecting activities in New Zealand is not well suited tomaximising possible benefits, and minimising possible risks, that may arise frombioprospecting activities.

Lack of an overarching framework for bioprospecting

3.3 The legal and policy frameworks governing access to biological resources are a fragmentedsystem of rules, contained under legislation designed for other purposes. There is nooverarching government bioprospecting policy to provide consistency in the implementationof different statutory functions.

3.4 In an institutional sense, there is no body to take a strategic view of bioprospectingactivities, and no central point of contact for overseas investors and researchers. There is no systematic gathering of information on what bioprospecting activities are occurring inNew Zealand, or on the outcomes and benefits of bioprospecting research. This means it ishard to track the scope and nature of interest in our biological resources, and whetherbenefits are accruing to New Zealand.

3.5 In the domestic policy context, research activities are sometimes undertaken without thelinks and synergies that could promote a greater net benefit to New Zealand as a whole.

3.6 There is also no benefit-sharing framework to ensure individual cases of bioprospectingresearch maximise possible benefits to New Zealand. There are many opportunities to addvalue to bioprospecting activities down the chain of development. In some cases, it appearsthese potential benefits are not being realised.

Uncertainty of policy environment and lack of information

3.7 There is evidence some researchers are discouraged from undertaking bioprospectingactivities due to a lack of information on how to access resources on Crown land, and, whenrelevant, how to deal with issues such as consultation with Maori. In the case of researcherswith limited funding, these uncertainties can impose transaction costs that prevent aproposal from ever getting underway.

3.8 There is some evidence that, in same cases, the Waitangi Tribunal Wai 262 claim, relating toindigenous flora and fauna, has created uncertainty in relation to bioprospecting activities.Some researchers have expressed concern about how the claim may impact on their researchactivities. There is also anecdotal evidence of foreign researchers withdrawing frominvestment in New Zealand because of the perceived uncertainty and risk created by Wai262. For more information on Wai 262 refer to paragraphs 5.35 to 5.40.

3.9 Also, lack of awareness about the possible benefits of bioprospecting can mean thatindividual cases of bioprospecting research may not create as much value to New Zealand as possible.

3 Problem Definition

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Ad hoc controls over access by foreign interests

3.10 Access to our resources by foreign researchers raises the problem of benefits flowing offshorewith insufficient returns to New Zealand. Foreign investment is often a prerequisite forresearch, as the required funding and expertise cannot always be sourced in New Zealand.

3.11 Without a co-ordinated system for managing foreign activities, there is no process in placefor balancing the need for investment with the opportunity to benefit New Zealand.

3.12 The Ministry of Foreign Affairs and Trade grants permission for foreign research vessels toundertake marine scientific research in areas under New Zealand’s jurisdiction. Thispermission is sought and granted within the context of the United Nations Convention onthe Law of the Sea.

3.13 These procedures are under review. Currently they do not explicitly provide for foreignresearch maximising benefits to New Zealand. There is no equivalent consent system in place for the terrestrial environment, aside from the need to obtain access to the resource in question.

THE SIZE OF THE PROBLEM

3.14 Work to date has been unable to quantify the extent to which New Zealand may be missingout on potential benefits from bioprospecting activities. Such quantification is difficultbecause:

■ the bioprospecting sector in New Zealand is relatively small and diverse;

■ there is no co-ordinated gathering of information on bioprospecting activities; and

■ bioprospecting, by its very nature, is about the search for as-yet unknown discoveries,making it difficult to gauge the level of undiscovered benefit inherent in New Zealand’sbiodiversity.

3.15 There is, however, an increasing interest in bioprospecting New Zealand’s resources. Theexisting policy framework is not suited to maximising benefits from bioprospecting andcapturing the possible benefits of this increased activity.

3.16 A major consideration in the design of policy options is timing. There may be a narrowwindow of opportunity for New Zealand to maximise possible economic benefits from accessto our biological resources. Australian policy work on bioprospecting has suggested there isa five to seven-year window of opportunity available in which to attract investment, createdby factors such as our robust legal system and well developed scientific capacity. Thesefactors give countries such as New Zealand and Australia a comparative advantage oversome other (particularly developing) countries.

3.17 There is also the possibility that the longer New Zealand waits to develop its bioprospectingpolicies, the more likely it is that:

■ valuable discoveries may be made from New Zealand’s biodiversity, without benefiting New Zealand; and

■ potential discoveries will either have been made elsewhere or synthesised in a laboratory.

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HAVE YOUR SAY - 1

Is there a policy problem to be addressed in relation to bioprospecting?

How ‘big’ do you think the ‘bioprospecting problem’ is?

Are there additional problem areas that have not been identified here?

What are the barriers to New Zealand obtaining potential benefits from

bioprospecting activities?

The Institute of Geological and NuclearSciences is undertaking a research projectthat focuses on biogeology – the interactionbetween living and non-living componentsof the environment. They are currentlystudying life in high temperaturegeothermal systems in collaboration withother scientific organisations.

Phytomed Medicinal Herbs is aNew Zealand company whichmanufactures and supplies liquidextracts and dried herbs to healthpractitioners and other herbalmanufacturers. It also producesand sells the Kiwiherb productrange to retailers. It has a rangeof more than 190 different liquidextracts and tinctures. PhytomedMedicinal Herbs promotes the useof native New Zealand plants, andworks with local iwi in theUreweras and East Coast to ensurethe harvest and use of nativeplants is sustainable and ethicallysound. It applies the GoodManufacturing Practice (GMP)principles and is working towardsGMP certification.

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ANALYTICAL FRAMEWORK

4.1 This chapter develops a proposed policy objective for bioprospecting, through:

4.2 This overarching policy objective, and subsequent policy options in Chapter 5, are intendedto address the policy problem defined in Chapter 3.

GOVERNMENT POLICY GOALS

Key government goals

4.3 Issues surrounding bioprospecting are directly relevant to four of the six goals thegovernment has formulated to guide public sector policy and performance:

■ Grow an inclusive, innovative economy for the benefit of all.

■ Improve New Zealanders’ skills.

■ Protect and enhance the environment.

■ Strengthen national identity and uphold the principles of the Treaty of Waitangi.

4.4 Bioprospecting can lead to economic returns and enhance the capacity for innovation in thebiotechnology sector. Bioprospecting activities have to be managed in terms of theirenvironmental effects. The Treaty is an important consideration with bioprospectingactivities, especially when related to indigenous flora and fauna and traditional knowledge.

Growth and Innovation Framework

4.5 In February 2002, the government released the Growth and Innovation Framework. Theframework provides a focus for government economic policy and activity, and focuses onfour areas:

■ enhancing New Zealand’s innovation framework;

■ developing New Zealander’s skills and talents;

■ increasing New Zealand’s global connectedness; and

■ focusing innovation initiatives in areas that will have maximum impact across the economy: biotechnology, information and communications technology and the creative industries.

4.6 The aim of the Growth and Innovation Framework is to return New Zealand’s GDP per capitaranking to the top half of OECD countries.

Analysing government policy goals relating to bioprospecting

Identifying links to other government strategies and priorities

Identifying values and objectives that will informconsideration of bioprospecting policy

Formulating an overarching policy objective

4 Proposed Principles and Policy Objectives for Bioprospecting

4.7 The review of New Zealand’s bioprospecting framework is relevant to many aspects of theGrowth and Innovation Framework. Bioprospecting activities fall under the biotechnology‘umbrella’, and can also enhance the innovation and skills of New Zealand researchers. A morecoherent bioprospecting policy could also enhance global connectedness, by encouragingcollaborative research and investment from other countries.

LINKS WITH OTHER GOVERNMENT STRATEGIES AND POLICIES

New Zealand Biodiversity Strategy

4.8 The purpose of the New Zealand Biodiversity Strategy is to establish a strategic framework forthe conservation, sustainable use and management of New Zealand’s biological resources. Thestrategy is a means of implementing New Zealand’s obligations under the Convention onBiological Diversity, and is the key policy instrument for the consideration of bioprospectingissues.

4.9 Objective 4.3 of the strategy is directly relevant to bioprospecting

Develop an integrated policy and legislative framework for managing bioprospecting in NewZealand, including arrangements for sharing benefits from the use of genetic resources, which areconsistent with international commitments.

4.10 The strategy lists two actions for the implementation of this objective:

(a) Develop policy on access to, and the use of, New Zealand’s indigenous genetic resources and thesharing of benefits from their use, taking into account Maori interest in these resources andproviding as much certainty as possible for all parties.

(b) Review existing controls and legislation regulating the bioprospecting of indigenous geneticresources, with a view to developing a more integrated framework for managing bioprospectingand distributing its benefits.

4.11 The Strategy also has objectives relevant to Maori and biological resources. Theme Seven of theNew Zealand Biodiversity Strategy addresses the interests and roles of Maori in conservationand sustainable use of New Zealand's biodiversity. The desired outcome for 2020 is that:

The relationship that Maori have with New Zealand's indigenous biodiversity, as tangata whenua, isrecognised and valued in the process of conserving and sustainably using biodiversity. TraditionalMaori knowledge, or matauranga Maori, about biodiversity is respected and preserved and informsbiodiversity management.

Effective working relationships, founded on the Treaty of Waitangi, are continuing to be builtbetween government agencies and iwi and hapu, enabling their involvement at all levels ofbiodiversity management. The resolution of Treaty claims has expanded the roles Maori play inbiodiversity management, enhanced the integration of cultural values, and informed how benefitsfrom the use of indigenous biodiversity can be shared by New Zealanders. There is greatercommunity understanding of Maori customary use of native species and this continues to beecologically sustainable.

Maori are managing their interests in biodiversity reflecting different iwi and hapu priorities, andsharing in the benefits of its use, to support their economic and social aspirations and fulfil theirresponsibilities as kaitiaki.

4.12 A number of these issues relate to bioprospecting, particularly the protection of traditionalMaori knowledge, effective working relationships between government and Maori in relation tobiodiversity management, and Maori sharing in benefits from the use of biodiversity.

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19

Royal Commission on Genetic Modification

4.13 The Royal Commission on Genetic Modification was established on 8 May 2000, and releasedits report on 30 July 2001. The report explores a wide range of genetic modification relatedissues, some of which are relevant to bioprospecting.

4.14 Chapter 10 of the report relates to intellectual property issues, and explores a number of areasrelevant to bioprospecting activities, particularly intellectual property rights and life forms;and protection of traditional knowledge. Recommendation 10.6 of the report urges all partiesconcerned to work to resolve the Wai 262 and Wai 740 claims currently before the WaitangiTribunal as soon as possible.

4.15 Paragraphs 105 and 106 of Chapter 10 relate directly to bioprospecting issues, and note theneed for a framework to protect cultural concerns and benefit local communities who have anassociation with particular biological resources. The report also notes concerns have beenexpressed about foreign researchers gaining access to New Zealand’s biological resources,without any subsequent benefit to New Zealanders.

Biotechnology Strategy

4.16 One of the key recommendations from the Royal Commission is the development of aBiotechnology Strategy

to ensure that New Zealand is kept abreast of developments in biotechnology, and that these areused to national advantage while preserving essential social, cultural and environmental values.

4.17 The government subsequently agreed to this recommendation, and further work is being led bythe Ministry of Research, Science and Technology.

4.18 The Biotechnology Strategy will include a vision, principles and actions encompassing thegovernance structure, regulation, social, science, infrastructure, and commercialisation aspectsof biotechnology. (The latter is being developed more fully through the BiotechnologyTaskforce, an initiative arising from the Growth and Innovation Framework.) A BiotechnologyStrategy discussion document was released in October 2002. The final strategy is timed to belaunched early 2003.

4.19 The Biotechnology Strategy will provide an overarching framework for the development andmanagement of biotechnology in New Zealand. In this way, it will provide a reference pointfor specific aspects of biotechnology, such as bioprospecting and, accordingly, will be takeninto consideration in the development of bioprospecting policy.

4.20 While the strategy document is unlikely to have detailed reference to bioprospecting, some ofthe recommendations for future action, such as in relation to ethics, commercialisation orgovernance structures, may appropriately encompass bioprospecting and, accordingly, will betaken into consideration in the development of bioprospecting policy.

Oceans Policy Review

4.21 The current Oceans Policy review is examining issues associated with managing New Zealand’smarine environment. The Oceans Policy will focus on managing the impact of humanbehaviour on the marine environment within the jurisdiction of New Zealand. The purpose ofthe recently completed Stage One of the project was to define a collective vision and identifythe values New Zealanders believe should inform decision-making about the oceans in ourjurisdiction. As bioprospecting is an activity that can take place within the marineenvironment, work on bioprospecting policy should retain consistency with the direction ofthe Oceans Policy review.

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4.22 The report of the Oceans Policy Ministerial Advisory Committee listed a number of vision andvalues statements reflecting New Zealanders’ perspectives on the marine environment. Thoserelevant to bioprospecting include the need to:

■ enjoy economic benefits without compromising the health and well-being of the oceans;

■ have certainty and clarity of the rights and responsibilities associated with use andenjoyment of the marine environment;

■ integrate separate management processes;

■ provide open and transparent decision-making that allows for informed participation;

■ provide fair and equitable means to balance competing aspirations;

■ reflect the range of values held in relation to the marine environment;

■ provide for the optimal realisation of economic benefits without compromising the qualityof the environment; and

■ ensure that management decisions are informed by adequate knowledge and due caution isexercised.

4.23 More generally, the report notes that an Oceans Policy must provide a clear, fair and equitableprocess for allocating access to the sea and associated resources that reflects the wide range ofvalues held in relation to marine space and resources.

POSSIBLE PRINCIPLES AND OBJECTIVES TO GUIDE POLICY DEVELOPMENT ON BIOPROSPECTING

4.24 After considering government policy goals, and the problem definition in Chapter 3, a rangeof possble principles and objectives to guide policy development on bioprospecting have beendeveloped.

Proposed Principles and objectives for bioprospecting policy in New Zealand:

■ New Zealand has a right to gain benefit from the use of its own biological resources;

■ bioprospecting can contribute to the growth of an innovative economy, and to increasing theskills of New Zealanders;

■ there is a requirement for an integrated policy and legislative framework for managingbioprospecting, including arrangements for sharing benefits;

■ policy should facilitate responsible access to biological resources, with prior informed consent ofthe owners / managers of the resource on mutually agreed terms;

■ there should be fair and equitable sharing of benefits arising from bioprospecting activities;

■ bioprospecting policy should recognise the principles of the Treaty of Waitangi;

■ the value of Maori knowledge about biological resources should be recognised; and

■ the environment should be protected from any possible adverse effects of bioprospecting.

HAVE YOUR SAY 2

Are these proposed principles and objectives appropriate and relevant?

Do you think some should be given a higher or lower priority?

Are there any other principles or objectives you think need to be added?

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Global Technologies is a biotechcompany, based in Dunedin, whosefocus is the study of sheep and deer. Itaims to screen for bioactives fromthese animals.

Tairawhiti Pharmaceuticals, located inTe Araroa, East Coast, is a privatecompany, predominantly owned by localMaori, that manufactures manuka andkanuka extract oils. It has conductedresearch, in collaboration with Crop andFood Research, on the isolation ofbioactive compounds and the rate ofgrowth of source plants.

Biodiscovery New Zealand is a biotechcompany that collects bacteria andscreens them for bioactive materials. Itconcentrates on the application ofbioactives for agricultural uses.

Possible bioprospecting policy objective

4.25 Based on the above broad principles and objectives, a possible high level overarching policyobjective for bioprospecting could be expressed as follows:

To ensure New Zealand takes advantage of economic development opportunities and other benefitsfrom the bioprospecting of our biological resources, while safeguarding associated environmental, socialand cultural values, by:

■ establishing clear rules about access to biological resources on Crown-owned/managed areas;

■ ensuring bioprospecting policy recognises the principles of the Treaty of Waitangi;

■ establishing mechanisms to facilitate the capture of benefits from bioprospecting activities;

■ gathering information on bioprospecting activities to ensure New Zealand can track the use of itsbiological resources; and

■ ensuring clear and consistent rules to manage the environmental effects of bioprospectingactivities in Crown-managed areas.

HAVE YOUR SAY 3

This possible policy objective is a draft for discussion purposes. Do you

think it is appropriate? Does it sufficiently capture what you think a

bioprospecting policy should achieve?

Can you suggest any alternative(s)?

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5.1 This chapter discusses a range of options to implement the possible policy objective outlinedin Chapter 4. The options have been grouped into three general categories:

■ a government policy statement on bioprospecting;

■ enhanced co-ordination and information sharing; and

■ establishing benefit-sharing frameworks.

GOVERNMENT POLICY STATEMENT

5.2 The government currently does not have a stated bioprospecting policy. While some policyinstruments, in particular the New Zealand Biodiversity Strategy, present some relevantgoals, these do not in themselves constitute a specific and comprehensive position onbioprospecting.

5.3 Formulating a government policy statement would give government agencies guidance inthe discharge of their statutory functions. A government policy statement would be a formalrecognition of the overarching principles and objectives. For example, the granting ofMinistry of Fisheries special permits, or Department of Conservation concessions, couldaddress issues such as benefit-sharing, if explicitly provided for in a policy statement.

5.4 A policy statement on bioprospecting could potentially cover the following issues:

■ recognition of the potential benefits from bioprospecting, and their potential to help thegovernment meet key policy goals;

■ New Zealand’s perspective on foreign investment in bioprospecting;

■ benefit-sharing arrangements;

■ Treaty of Waitangi issues relevant to bioprospecting; and

■ environmental effects of bioprospecting.

5.5 There are a number of ways in which a statement could be expressed. A Cabinet minutecould be used to establish a high-level policy position, but there is also the opportunity touse mechanisms specific to different policies and legislation – for example a statement ofgeneral policy under the Conservation Act. Such statements could lay the foundation for theimplementation of further policy options, as discussed below.

5 Policy Options

HAVE YOUR SAY 4

Is there a need for a government policy statement on bioprospecting?

What would be appropriate subject matter for a policy statement?

What are appropriate mechanisms to express a government policy

statement?

ENHANCED CO-ORDINATION AND INFORMATION SHARING

5.6 A fragmented policy framework, and the lack of accurate information on the bioprospectingof New Zealand’s resources, are two major aspects of the policy problem. Better co-ordination and information sharing in relation to bioprospecting activities could be achievedthrough giving oversight responsibility on bioprospecting to an existing or new governmentauthority.

Establishment of a co-ordinating authority

5.7 Access to biological resources is managed by a number of different agencies, underlegislation primarily designed for other purposes. There is no co-ordination of how thesedifferent agencies manage access to ensure New Zealand can maximise benefits andminimise risks.

5.8 A government authority could act as a central co-ordinator for bioprospecting activities. Theauthority would have responsibility for promoting government objectives in relation tobioprospecting policy. It would be a means of co-ordinating the different agencies involvedas well as being a point of contact for foreign investors and researchers.

5.9 Having a more co-ordinated approach may also boost domestic capacity in bioprospectingby encouraging links and synergies within New Zealand’s research community. Appendix Iincludes discussion of how Environment Australia is proposing to act as a co-ordinatingagency for bioprospecting in Australian Commonwealth areas.

Possible tasks of a co-ordinating Authority

Central point of contact for foreign interests seeking access to New Zealand’s biological resources

5.10 A central approving authority would ensure New Zealand has a formal process to approveforeign research activities in our jurisdiction. Many offshore research companies now requireofficial permission from the host government to undertake research activities on biologicalresources. In New Zealand, no agency or Minister is formally mandated to give suchpermission (although, as noted, the Ministry of Foreign Affairs and Trade do have a processfor approving foreign research cruises in the marine environment).

5.11 Creation of a central point of approval would assist New Zealand in meeting Convention onBiological Diversity obligations to enable appropriate access by other countries forenvironmentally sound uses.

5.12 A more centralised, systematic approach to permitting foreign research would make it easierto gather information on what activities are occurring and could provide a mechanism forachieving greater benefits to New Zealand. For example, foreign researchers could beencouraged to form links with New Zealand research institutions as a condition of theirresearch permit.

Gathering data on bioprospecting activities

5.13 Better information on the interest in, and use of, New Zealand’s biological resources couldhelp facilitate a more strategic approach to capturing benefits. Comprehensive collection ofaccurate information on past, current and proposed activities would allow New Zealand tomonitor the use of our resources. This would help address the problem of resources movingoffshore to the sole benefit of foreign researchers. Better information on different activitieswould also assist researchers in building links and finding synergies with other work thatmay be occurring in New Zealand.

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Databases on New Zealand’s biodiversity

5.14 There is a wide range of databases detailing different aspects of New Zealand’s biodiversity,held by different agencies for different purposes. There is scope to improve and standardiseaccess to these databases. A greater degree of co-ordination of this knowledge would prove apowerful tool for conservation management and state of the environment reporting. Thiswould also help implement work on the Global Biodiversity Information Facility. Thepurpose of this organisation is to compile, link, standardise, digitise and disseminate theworld’s biodiversity data globally. It is charged with achieving this within an appropriateframework for property rights and due attribution. Such a database may not necessarily bethe responsibility of the co-ordinating authority, but it would facilitate lower transactioncosts associated with bioprospecting research through easy access to accurate information.

Facilitating links between different agencies

5.15 There is a wide range of agencies involved in bioprospecting. In addition to the governmentdepartments that administer access, there are the public and private sector researchorganisations who actually undertake bioprospecting research, as well as members of thepublic who have an interest in a particular resource.

5.16 A co-ordinating authority could have the role of facilitating the links between these agenciesto remove transaction costs, promote good practice and encourage investment. In relation togovernment departments, this would encourage a common approach to bioprospectingissues, insofar as this is possible under differing statutory frameworks.

5.17 A co-ordination authority could assist research agencies in such ways as providing contacts,information on technical matters such as benefit-sharing contracts, or advice on appropriatemethods of consultation with Maori.

Facilitation of benefit-sharing arrangements

5.18 A policy option discussed later is a requirement for researchers to negotiate benefit-sharingarrangements in relation to their use of a biological resource. A co-ordinating authoritycould facilitate and oversee the consistent implementation of these arrangements.

Education and capacity-building

5.19 Anecdotal evidence suggests, in some cases, the broader scope of possible benefits to New Zealand is not considered in the arrangement of specific bioprospecting projects. There may be some scope for raising awareness among bioprospecting researchers aboutpossible wider opportunities arising from their research.

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Example 1 How a co-ordinating authority could work in practice

A United States biotechnology company is interested in screening some sea sponges offKaikoura for anti-cancer agents. It has also expressed interest in looking at some nativeNew Zealand plants.

The company applies to New Zealand’s co-ordinating bioprospecting authority forpermission to undertake these activities. The authority puts them in touch with a New Zealand university and a CRI who will be able to assist with the collection andscreening work. The company, CRI and the university determine how the collection andscreening will take place, and start to negotiate a benefit-sharing contract. The co-ordinating agency assists the New Zealand agencies in their negotiations through access to information and expertise on model contractual and intellectual property terms.

As the contract is under negotiation, the co-ordinating agency is in touch with theMinistry of Fisheries and the Department of Conservation, as their statutory approval isrequired to permit the activities. When a final contract has been determined to thesatisfaction of the co-ordinating agency, and the environmental impacts of collectiondetermined, the co-ordinating agency submits an application to the departments for their consideration. A Memorandum of Understanding between the departments and theco-ordinating agency ensures there are clear timelines for decision-making, and decisionsare in accord with government guidelines on bioprospecting.

The research is approved, and when completed, information from the research is lodgedwith the co-ordinating agency and entered into a biodiversity database.

HAVE YOUR SAY 5

Is there a need for an authority to co-ordinate access to biological resources?

What are the potential benefits of such an authority?

What would be appropriate tasks?

ESTABLISHING A FRAMEWORK FOR BENEFIT-SHARING FROM BIOPROSPECTING

5.20 The proposed policy objective outlined in Chapter 4 states the need to enhance possibleopportunities and benefits from bioprospecting activities. One way to enhance opportunitiesand benefits is to encourage more bioprospecting to take place, in other words ‘growing thepie’. The second is to ensure appropriate benefit-sharing, in other words ensuring ‘the pie isappropriately divided’. This section discusses possible frameworks to promote benefit-sharing.

5.21 Benefit-sharing issues arise at a number of different levels. The highest is the national level,by which one can assess the extent to which New Zealand is benefiting from thebioprospecting activity. Benefit-sharing is also relevant at levels closer to the resource ‘onthe ground’ – for example benefit to an iwi from research into their traditional medicinalplants. Capturing benefits to New Zealand from bioprospecting at both these levels currentlyoccurs on an ad hoc basis.

5.22 A framework could be developed to help researchers structure their activities, fundingarrangements and intellectual property management in a manner that will help maximisepossible benefits to New Zealand, and provide for better involvement of relevantstakeholders, and Maori. To a certain extent, some of these issues would be captured byenhanced education and capacity building in the bioprospecting sector, as discussed earlier.This option focuses more on the ways which benefit-sharing frameworks may beimplemented.

5.23 Benefit-sharing mechanisms are discussed in two contexts – capturing benefits at thenational level, and sharing benefits with Maori.

Benefit-sharing mechanisms at the national level

5.24 Contracts are one means of providing for benefit-sharing at a national scale, setting outlegally enforceable rights and obligations between the different parties. The strengths ofcontracts as a mechanism for benefit-sharing are:

■ they provide certain and clear rights and obligations;

■ they are negotiable to individual circumstances; and

■ they are legally enforceable.

5.25 The subsequent discussion of benefit-sharing frameworks is based around a contractualframework.

5.26 Contracts are a flexible mechanism, that can impose whatever lawful terms and conditionsthe parties see fit. Three examples are presented here to illustrate how benefit-sharingcontracts can operate in practice

■ Contracts such as the Co-operative research and development agreements (CRADA) thathave been used by Costa Rica’s INBio agency can be used to establish the roles andobligations of bioprospecting researchers and the host state. Some CRADA also include athird offshore collaborating party, when appropriate. These agreements require that thesource country participate in the research, and specify the form and nature of benefit-sharing arrangements.

■ Another option, used in connection with a specific research activity, is licensing. Licencesdetermine the terms on which the researcher can gain access to the material, and how itcan and cannot be used. Licences can impose benefit-sharing mechanisms such ascharging fees for sample transfer or progress payments from downstream research.

26

■ Transfers of the physical material in question can be accommodated using mechanismssuch as Material Transfer Arrangements (MTAs). MTAs limit the right to transferspecimens of biological material to third parties. This allows some control over thephysical products, and creates opportunities for re-supply payments.

Australian approach

5.27 Australia has adopted a contract-based approach to benefit-sharing from bioprospecting incommonwealth areas (refer Appendix I). The corollary of this situation in New Zealandwould be for appropriate benefit-sharing mechanisms in relation to all bioprospecting fromCrown land, negotiated under the legislation relevant to the activity (Department ofConservation concessions regime, or Ministry of Fisheries special permits). There are,however, no equivalent systems in New Zealand to control access to private land.

Mandatory or voluntary?

5.28 A benefit-sharing framework could impose mandatory obligations on bioprospectors. Forexample, any researcher dealing with biological material from Crown land could be requiredto negotiate an appropriate contract as a term of their access.

5.29 Design of such a regime would have to balance the need to regulate access with the desire toencourage investment in research. Biotechnology is a global industry. New Zealand has toensure it does not raise barriers that may place us at a comparative disadvantage to othercountries. In the domestic context, many researchers have indicated a heavy-handed,mandatory regulatory scheme may in fact stifle research, especially given much research is‘done on the sniff of an oily rag’ and negotiated through informal networks over tighttimeframes.

5.30 The alternative to a mandatory benefit-sharing regime would be a more facilitative process,whereby researchers were made aware of good practice guidelines and given access toexpertise on benefit-sharing mechanisms. This may be particularly useful in relation tobioprospecting on private land, where the Crown has less opportunity to regulate access.Australia has taken the approach of compiling what is referred to as an ‘encyclopaedia’ ofcontractual models and clauses, which researchers and investors can draw on to arrive atappropriate benefit-sharing arrangements. The Australian system, however, still requires theMinister for the Environment and Heritage’s agreement before bioprospecting can proceed.In this respect, the terms of contract are not prescriptive, but it is still mandatory for benefit-sharing issues to be addressed in some way.

5.31 The disadvantage of a voluntary good practice scheme is that it may not prove rigorousenough to enhance benefit-sharing materially. The design of a benefit-sharing frameworkhas to address the tension between repressing research through over restriction, and provingineffective through a lack of precision.

Improved funding arrangements

5.32 Another means of increasing benefits is for the government to increase funding forbioprospecting activities. If more research is taking place, there may be a higher probabilityof benefits accruing to New Zealand.

5.33 It is, however, hard to argue such increased funding would automatically result in increasedbenefits. Bioprospecting is but one of many fields of research competing for public sciencefunds, and it is a field in which commercial discoveries are comparatively rare. Also, it is notyet clear whether a lack of government funding is an impediment to future bioprospectingprojects. 27

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RECOGNITION OF MAORI INTERESTS IN RELATION TO BIOLOGICAL RESOURCES

5.34 Benefit-sharing issues also arise in relation to Maori and their connection with indigenousbiological resources. This issue is expressed through the Convention on Biological Diversityand the New Zealand Biodiversity Strategy. The Wai 262 claim to the Waitangi Tribunal isalso relevant to bioprospecting policy.

Wai 262 Claim

5.35 The Wai 262 claim, part of which relates to indigenous flora and fauna, was lodged with theWaitangi Tribunal in 1991 by members of Ngati Kuri, Ngati Wai, Te Rarawa, Ngati Koata,Ngati Porou, Ngati Kahungunu, and Whanau a Rua.

5.36 The claim exerts exclusive and comprehensive rights to flora, fauna and other taonga. It isargued, among other things, that all rights relating to indigenous flora and fauna, and thegenetic make-up of these resources, belong to Maori. The claimants argue the Crown hasfailed to be active in protecting the exercise of tino rangitiratanga and kaitiakitanga by theclaimants over indigenous flora and fauna, and matauranga Maori (traditional knowledge). Itis further argued that the Crown has failed to protect the indigenous flora and fauna itself.

5.37 The subsequent filing of evidence and amended statements of claim has broadened the scopeof Wai 262. It can now be seen as encompassing the following issues:

■ Maori cultural and intellectual property rights, particularly: intellectual propertylegislation; law reform and international obligations; patenting of inventions concernedwith human, animal and plant life; registration of culturally offensive trademarks; andthe failure of intellectual property legislation to protect Maori cultural and intellectualproperty.

■ Retention and protection of matauranga Maori.

■ Environmental, resource and conservation management, and ownership claims to baseresources and species.

■ Tino rangitiratanga.

5.38 The claimants note that traditional knowledge is being increasingly targeted internationally,particularly in pharmaceutical research; environmental, resource and conservationmanagement (including concerns about bioprospecting and biotechnological development ofgenetic material from native flora and fauna); and ownership claims to base resources andspecies.

HAVE YOUR SAY 6

Does New Zealand need a benefit-sharing framework for bioprospecting

activities?

Is a contract-based system appropriate?

What are some alternatives?

Should benefit-sharing frameworks impose mandatory or voluntary

obligations on bioprospecting researchers?

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5.39 Some researchers have expressed concern about how the claim may impact on theiractivities. There is also anecdotal evidence of foreign researchers withdrawing frominvestment in New Zealand because of the perceived uncertainty and risk created by Wai 262.

5.40 It is not the purpose of this paper to address the larger policy issues raised by Wai 262, suchas the ownership of indigenous flora and fauna, or the suitability of New Zealand’sintellectual property system for the protection of indigenous knowledge. This paper examinesthe means by which a bioprospecting policy framework could facilitate or improveconsultation between bioprospectors and Maori, and improve the extent to which Maori canshare in benefits derived from the use of biological resources.

Intellectual property vs. contract

5.41 Intellectual property mechanisms are one means of recognising Maori interests in indigenousflora and fauna. Work under the Convention on Biological Diversity and by the WorldIntellectual Property Organisation is examining ways in which intellectual propertyframeworks can better provide for issues such as the protection of indigenous knowledge. InNew Zealand, the Patents Act Review is currently considering issues around the patenting oflife forms, and the protection of traditional knowledge.

5.42 This paper explores a contractual approach to protecting indigenous interests, rather thansuggesting improvements to our current intellectual property system, which are beingconsidered elsewhere (such as through the Patents Act Review). Intellectual property clausesmay, however, be an important component of any benefit-sharing contract.

General comments on contractual protection of indigenous rights

5.43 The contractual approach relies on an ability to assert ownership or a property right, such asconnection to the land, or specific traditional knowledge of the flora and fauna being present.Indigenous knowledge may have more than just economic significance. In the context of New Zealand, traditional ecological knowledge is far more than a simple compilation of factsabout medicines. It is a knowledge that derives from, and is rooted in, the traditional way oflife of indigenous peoples. It is their accumulated knowledge and understanding of the humanplace in the universe: understandings which are reflected in the language, social organisation,values, institutions and laws.

5.44 This significance of traditional knowledge may make recognition in a contract difficult. Twoways to deal with this issue may be to ensure economic benefit-sharing as a means ofrecognising the contribution of the knowledge, or to give indigenous peoples stakeholderstatus.

Benefit-sharing with indigenous peoples

5.45 Contractual benefit-sharing gives indigenous populations a stake in benefits accrued by thesource-country. Benefits can be given direct to indigenous people involved in the research, tothe local indigenous community, or to the state to allocate for indigenous purposes. Benefitswhich may accrue include financial donations, upskilling and equipment, royalties, orpromotion of traditional processes and medicines. Benefit-sharing can be promoted in ethicalguidelines for the use of indigenous knowledge and interactions with indigenous peoples.However, such guidelines also recognise that benefit-sharing alone is insufficient. There alsohas to be meaningful consultation. This consultation can be facilitated through givingstakeholder status to indigenous communities.

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Stakeholder status

5.46 Stakeholder status recognises the right of indigenous people to manage resources associatedwith traditional knowledge. The significance of stakeholder status is reflected inrecommendations on New Zealand policy on native flora and fauna, especially through theNew Zealand Biodiversity Strategy. The Foundation for Research, Science and Technologyrecommends contract negotiations and stakeholder status as the most suitable methods forbenefit-sharing and control of spiritually significant resources. Contract negotiation andstakeholder status may be appropriate mechanisms to explore, taking into account anyrelevant and applicable international law, including in the intellectual property area.

5.47 Stakeholder status, and contractual mechanisms for recognising Maori knowledge, could beexpressed in a wider benefit-sharing framework. This would provide for Maori concerns, andalso help facilitate good practice for researchers who are unsure of how to deal with Maoriconsultation and benefit-sharing issues. In practice, it would involve the recognition of whenMaori should be consulted in relation to bioprospecting research, and how this should takeplace. Currently there is considerable uncertainty around these issues.

Example 2 How a benefit-sharing framework could work in practice

A United States company is seeking access to biological material in New Zealand’s marineand terrestrial environments, as discussed in Example 1. In initial discussions about access toNew Zealand, the co-ordinating agency facilitates discussion with other New Zealandresearchers who would be appropriate partners in their venture.

The next stage is the negotiation of a benefit-sharing contract between the US companyand the New Zealand partners. It is decided the US company will retain intellectual propertyrights over any discoveries, but New Zealand institutions have first right of refusal over anyscreening and testing work. Also, a material transfer agreement limits the extent to whichthe US company can dispose of the biological material. Any non-commercially sensitiveinformation arising from the research is to be shared with New Zealand institutions.

It is discovered that the US company is interested in screening some indigenous plantsbecause of their traditional use in Maori medicine, and a local iwi have an interest in howtheir knowledge will be used. The co-ordinating agency facilitates negotiations between theresearchers and the iwi to ensure an equitable sharing of benefits arising from the use oftheir indigenous knowledge. In return for access to information about their traditionalmedicines, the iwi is entitled to progress payments from downstream research and royaltystreams if the research ever produces a commercial product.

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OTHER ISSUES

Environmental effects of bioprospecting activities

5.48 Bioprospecting is usually a low environmental-impact activity, with only small samplesrequired for subsequent study. There are, however, instances where more significantenvironmental impacts may occur. For example, when the sampled environment is verysensitive or rare, or when there are proposals to ‘farm’ material in order to create sufficientquantities for commercial production.

5.49 This paper does not explore the detail of how the environmental effects of bioprospectingactivities will be assessed. The existing Department of Conservation and Ministry of Fisheriesframeworks allow for the assessment of bioprospecting activities on a case-by-case basis.The same is true of activities on private land (under the Resource Management Act). Furtherpolicy work will explore the extent to which these mechanisms can effectively manage theenvironmental effects of bioprospecting activities.

Commercial and non-commercial research

5.50 Bioprospecting is research that aims to produce commercial benefits through scientificknowledge. The policy options in this paper are directed at commercial research, and are notintended to raise constraints to non-commercial research. It can be difficult, however, todefine where one type of research ends and another begins. For example, a PhD student mayundertake screening work as part of his or her thesis work, with no intention ofcommercialising the results. Years later, another researcher could use the knowledge fordevelopment of a pharmaceutical product.

5.51 Mechanisms for defining what types of research are covered by a bioprospecting frameworkwill be an important consideration in future policy work. One approach could be to include aclause in research permits for collections on Crown land that requires researchers to notifythe government when seeking to commercialise their research.

Role of ethical guidelines

5.52 Biotechnology issues in general raise a number of ethical questions. The government hasdecided to establish Toi te Taiao: The Bioethics Council, to advise, provide guidelines andpromote dialogue on the cultural, ethical and spiritual issues associated with biotechnology.

HAVE YOUR SAY 7

What are appropriate mechanisms to recognise the relationship of Maori

with indigenous biological resources?

If relevant, how have you found that issues around Maori consultation

and Wai 262 have affected your research activities?

Are you aware of any instances where Maori knowledge has been utilised

by bioprospecting researchers without the prior informed consent of Maori?

Do you know any ‘good practice’ examples of researchers working in

partnership with Maori?

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5.53 New Zealand could also benefit from the experience of the Queensland government, whichhas developed the Code of Ethical Practice for Biotechnology in Queensland. The Code is toapply automatically to Queensland government agencies that conduct biotechnologyactivities, or to organisations funded by the state to undertake biotechnology activities.Features of relevance to bioprospecting include:

■ researchers are obliged to ensure appropriate permits are obtained from the stategovernment for the collection of biological samples, and to negotiate reasonable benefit-sharing arrangements with the state in return for access to the samples;

■ transfer of samples from state-owned lands will only take place with the prior informedconsent of the state; and

■ before collecting samples from private land, researchers are to ensure the prior informedconsent of the landowner is obtained, and that reasonable benefit-sharing arrangementswith the landowner are negotiated.

5.54 In the New Zealand context, an ethical code could be developed to promote goodbioprospecting practice. This work could be developed in association with the BiotechnologyStrategy, which is proposed to include development of a code of ethics and good practice.

Use of existing legislative frameworks

5.55 The Department of Conservation concessions regime and Ministry of Fisheries special permitregime are the two primary means of regulating access to Crown-managed areas forbioprospecting. They provide flexibility in being able to deal with individual activities on theirmerits, albeit within the context of their particular legislation. The policy options discussedabove provide a context and co-ordination for the exercise of these departmental functions,possibly without a requirement for legislative changes. Non-legislative policy options, such asprotocols between government departments, or statements of government policy, have theadvantage of being faster to implement, and easier to change, than legislation.

HAVE YOUR SAY 8

How could existing statutory frameworks work more effectively to enable

bioprospecting research?

Are existing statutory frameworks sufficient to deal with any

environmental concerns associated with bioprospecting activities?

Should bioprospecting policy distinguish between commercial and non-

commercial research. If so, how do you think boundaries should be

determined?

Would there be any problems with non-commercial research eventually

being used for commercial purposes, outside of an established

bioprospecting framework?

Is there a need for ethical guidelines for bioprospecting activities?

How could existing statutory frameworks work more effectively to enable

bioprospecting research?

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6.1 This discussion document has been produced to give an opportunity to interested parties toexpress their views on bioprospecting. You are encouraged to make a submission to ensurethe policy development process takes account of the widest possible range of views andexperiences.

6.2 While you can make a submission in whatever form is most convenient to you, there are anumber of factors that will make it easy for us to process your submission, and keep youinformed.

Please supply your name and address

6.3 This information will allow us to send you an acknowledgement letter, and to send you asummary of submissions if desired.

Organisation or group

6.4 If the views given are the official views of an organisation or group, please state the name ofthe organisation or group and the position or office you hold.

Experience of bioprospecting activities

6.5 If you are currently involved, or have been involved in the past, in bioprospecting activities,please let us know about them. Further policy development will benefit from a clearerunderstanding of what research is currently taking place in New Zealand.

Submissions on listed questions

6.6 The preceding chapters feature a range of focusing questions in relation to specific topics. Ifyou would like to make a submission in relation to any of these specific questions, pleaseindicate the question number with your response.

Submissions on other issues

6.7 The breadth of issues associated with bioprospecting means you may also wish to commenton other areas. Feel free to comment on any topics you think are relevant, but if possible tryto link your comments to a relevant section of the discussion document, e.g. policyobjectives.

Summary of submissions

6.8 Please indicate whether you would like a summary of submissions to be sent to you, andwhether you prefer to receive it as hard copy or by e-mail. The summary of submissions willpresent information in an aggregated form, and will not link specific comments or positionsto any named person or organisation.

Please note that your submission is public information

6.9 Please indicate clearly if your comments are commercially sensitive, or if, for some otherreason, you consider they should not be disclosed. Any request for non-disclosure will beconsidered in terms of the Official Information Act 1982.

6 Making a Submission

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Contact details

6.10 Submissions can be made by post, or hand delivered, to:

Bioprospecting ReviewNatural Resources Policy GroupLevel 10Ministry of Economic DevelopmentPO Box 1473Wellington

or by e-mail, to:

bioprospecting@med.govt.nz

or by fax to (04) 499 0969

6.11 The deadline for submissions is 28 February 2003.

General enquiries

6.12 If you have any general enquiries about this discussion document, or bioprospecting ingeneral, please contact the Ministry of Economic Development by e-mail, fax, or letter.

Appendix I:

Bioprospecting Policy in Australia

Bioprospecting is an issue of considerable interest in the international arena, as evidenced byforums such as the Working Group on Article 8j of the Convention on Biological Diversity. Somecountries, such as Australia, are in the process of developing and implementing policyframeworks for bioprospecting. The Australian example is presented here to provide a comparisonwith the New Zealand situation, and to present ideas New Zealand could possibly draw on.

Australia is currently in the process of implementing a regulatory framework for bioprospectingin commonwealth areas. The similarities between the New Zealand and Australian legal systems,and the similar drivers for change in both countries, make the Australian system worthy of study.

The Australian government has undertaken a commonwealth public inquiry into Access toBiological Resources in Commonwealth Areas. The inquiry was the primary consultative tool ofEnvironment Australia’s Access Work Program under Biotechnology Australia. The findings of theinquiry were released in July 2000.

The terms of reference required the inquiry to advise on a scheme that could be implementedthrough regulations to ‘provide for the control of access to biological resources in commonwealthareas’.

The driver for change in Australia was a concern that not enough bioprospecting was occurring.The government wanted to attract investment and get systems in place to capture a perceived 5 to7 year window of opportunity in the area. The absence of a clear legal framework forbioprospecting was perceived as an active disincentive for investment. Agencies were dealingwith the issue on an ad hoc basis in line with legislation designed to achieve different goals.

Access and benefit-sharing regime

The inquiry’s proposed scheme provides for an access permit and a benefit-sharing contractscheme. The commonwealth government has adopted the scheme through a set of draftregulations. The regulations are currently out for public consultation. Under the scheme, a partyseeking access to biological resources in commonwealth areas is required to apply for an accesspermit. As the regulatory agency under the scheme, Environment Australia would assess theapplication, in consultation with any other relevant commonwealth agency, and make arecommendation to the Minister for the Environment and Heritage to grant or refuse the permit.

Ownership of biological resources is not vested in the commonwealth. Ownership is not seen as aprerequisite for a permitting scheme - the ability to control access ultimately provides the basison which benefits can be negotiated.

While the assessment is underway, the applicant would be required to negotiate, with the holder(or owner) of the biological resources, a benefit-sharing contract which covers the commercialand other aspects of the agreement. The contract would be based on a model contract developedand agreed by commonwealth and state governments, industry, indigenous organisations andother stakeholders.

The scheme recognises the need for flexibility in benefit-sharing arrangements, which shouldoccur on ‘mutually agreed terms’. The scheme aims to assist and facilitate transactions throughmodel, voluntary contracts, where parties can draw on clauses as needed in their particularcircumstances. The model contract will not be prescriptive, but will contain such a wide range ofclauses that parties will be able draw from it all the key elements they need for their agreement. Itwill be there to assist or guide parties.

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At the end of the day, however, the applicant must come to some sort of agreement which will beconsidered by the Minister before an access permit is granted. The test to be applied will mostlikely be whether the agreement was one that was reasonable for the parties to make.

The Minister may issue the permit on being satisfied, among other things, that:

■ environmental assessment (if required) was undertaken and the process is complete;

■ submissions from persons and bodies registered under s266A of the EPBC have been takeninto account; and

■ there is a benefit-sharing contract between the parties which addresses prior informedconsent, mutually agreed terms, and adequate benefit-sharing arrangements, includingprotection for and valuing of indigenous knowledge and environmental benefits in the areafrom which the resource was obtained.

The contract would only have effect if the Minister issues an access permit.

To date, Environment Australia has prepared draft amendments to the Environmental Protectionand Biodiversity Conservation Act regulations for public consultation.

One of the objectives of the Access Work Program is to establish a nationally consistent system.The inquiry, therefore, sought the views of commonwealth agencies and state and territorygovernments on the issue. State and territory governments that have considered access issuessupported the development of a nationally-consistent approach, and the report recommendsfurther consultations be held to achieve this objective.

The Australian system is intended to facilitate investment, promote benefit-sharing practices, andprovide for environmental assessment. In this respect a similar approach could address some ofthe concerns in New Zealand, especially regarding inconsistent rules around access, and the lackof guidance for benefit-sharing and benefit maximisation.

An important design question would be whether such a centralised permit system creates undueregulatory barriers for investment and research.

Appendix II:

Useful Web links

Convention on Biological Diversity homepage - www.biodiv.org

Department of Conservation – www.doc.govt.nz

Foundation of Research, Science and Technology – www.frst.govt.nz

Global Biodiversity Information Facility homepage - www.gbif.net/index.html

Ministry for the Environment – www.mfe.govt.nz

Ministry of Economic Development – www.med.govt.nz

Ministry of Research, Science and Technology – www.morst.govt.nz

Te Puni Kokiri – www.tpk.govt.nz

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