WORLD TRADE
ORGANIZATIONWT/WGTTT/W/6
7 May 2003
(03-2439)
Working Group on Trade and Transfer of Technology Original:  English
THE WORKING GROUP ON TRADE AND TRANSFER OF TECHNOLOGY
Communication from Cuba, Indi a, Indonesia, Kenya, Pakistan, Tanzania and Zimbabwe
The following communication, dated 5 May 2003, has been received from the above
delegations with the request that it be circulated.
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POSSIBLE RECOMMENDATIONS ON STEPS THAT MIGHT BE TAKEN WITHIN THE
MANDATE OF THE WTO TO INCREASE FLOWS OF TECHNOLOGY
TO DEVELOPING COUNTRIES
1. Transfer of Technology has been a long-standing and recurrent issue in international
development agenda.  Considering the growing importance of knowledge and technology as a
production factor determining costs, price, marketability and competitiveness in general, it would be
useful to examine the impact of these on international trade and how they affect opportunities for
development.  Since, technology is the most cr itical determinant of competitiveness, there is
widespread acknowledgement that mastering technolo gy is critical for development.  However, the
process of generation, access, transfer and dissemination of technology is not a simple or a costless
process.  It requires, among others, appropriate skills, institutions, policies, a friendly internationalenvironment and international rules that facilitate tr ansfer of technology.  It is against this backdrop
that a group of developing countries submitted a proposal (WT/GC/W/443), in September 2001, for
the establishment of a Working Group for the stud y of the inter-relationship between trade and
transfer of technology.  Based on this proposal, Ministers decided at Doha to establish a Working
Group with a mandate to examine the relationship between trade and transfer of technology and ofany possible recommendations on steps that might be taken within the mandate of the WTO to
increase the flow of technology to developing countries.
2. So far, the analytical work in the Workin g Group on the relationship between trade and
transfer of technology included an examination of patterns and channels of transfer of technology,
conditions for effective use of those channels, identification of provisions related to transfer oftechnology in the WTO Agreements, and other issu es related to transfer of technology from the
perspective of both host and home countries. Several international organizations briefed the Working
Group on their work in areas of transfer and development of technology.
3. A number of important issues have emerged from the presentations made by the
representatives of international organisations and some members (reflected in documentsWT/WGTTT/M/1-5), which will need to be kept in mind by the Working Group.  While the
discussion in the Working Group has helped delegations to gain some understanding of the subject, it
has to be recognised that there is a need to focus attention on concrete and practical steps that might
be taken within the broad mandate of the WTO, to facilitate transfer of technology to developing
countries.WT/WGTTT/W/6
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POSSIBLE RECOMMENDATIONS THAT MIGHT BE CONSIDERED AT THE PRESENT STAGE OF THE
DELIBERATIONS
(i) A paper was submitted by a group of developing countries in October 2002 highlighting
provisions relating to transfer of technology in WTO Agreements (WT/WGTT/3/Rev.1).  In most
cases, these provisions contain only "best endeavour" commitments and are not mandatory rules.
Experience also shows that because of the non-operational and non-mandatory nature of almost all the
provisions relating to transfer of technology contained in different WTO Agreements, the developing
countries have not derived any meaningful benefit from these provisions.  The reports received in
response to a request by the Working Group from various WTO bodies on the work they may have
done or that they plan to carry out in relation to trade and transfer of technology have not beenencouraging.
Therefore, the first recommendation could be that there should be a detailed
examination of different provisions contained in various WTO Agreements
relating to technology transfer with a view to making these provisionsoperational and meaningful from the point of view of developing countries
including least-developed countries (LDCs).
(ii) There is a widespread feeling that provisions contained in some of the WTO Agreements
hinder rather than help transfer of technology to developing countries.  One example is the TRIPS
Agreement.  Though one of the objectives of the Agreement is that protection and enforcement ofintellectual property rights (IPRs) should contribute  to the technological innovation and to the transfer
and dissemination of technology, to the mutual advantage of producers and users of technological
knowledge, there is widespread recognition now, that the developing countries are facing more
hardships than benefits because of the TRIPS Agreement and that the balance between private profits
and public policy objectives has not been properly reached in this Agreement.  In the light of this, it isnecessary to examine carefully those provisions  in different WTO Agreements including the
provisions in the TRIPS Agreement, which hinder rather than facilitate transfer of technology.  For
example, the stringent provisions relating to compulsory licensing in the TRIPS Agreement as well as
the provision relating to the term of protection (20 years from the date of filing of patent applications),
are generally believed not to be particularly conducive for easy or quick transfer of technology.  The
initial identification of such provisions can be made in two ways:  (a) the WTO Secretariat can
prepare a paper on the basis of reports/studies by international organizations like World Bank, WHO,UNCTAD, UNDP as well as the Commission on Intellectual Property Rights set up by the UK
Government, and list out provisions in different WTO Agreements which are being referred to in
these or other reports as being controversial or as causing concern;  and (b) interested Members can
indicate provisions in different WTO Agreements, which in their experience or assessment hinder
transfer of technology.
In light of this, the second recommendation could be to look at those provisions
of various WTO Agreements, which may have the effect of hindering transfer of
technology to developing countries and come up with recommendations as to
how to mitigate the negative effects of these provisions.
(iii) It is well known that multinational enterprises (MNEs) adopt a number of restrictive policies
on transfer of technology.  In the past licensing was a route through which at least some transfer of
technology was taking place.  However, the onset of globalization has removed barriers to investment.
As a result, MNEs set up their own production facilities in developing countries and are reluctant to
transfer technology through licensing because of the fear that such an approach will createWT/WGTTT/W/6
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competition for their own subsidiaries.  There are al so situations in which MNEs put restrictions on
the export of products which are manufactured utilizing the technology transferred.
A third recommendation could be that the Working Group should examine the
restrictive practices adopted by MNEs in the area of transfer of technology andcome up with recommendations as to how to prevent MNEs from taking
recourse to such restrictive practices.  Simultaneously, recommendations could
be made as to the methods through which MNEs could be made to effectively use
the licensing route for transfer of technology.
(iv) It is recognized that the continued existence of tariff peaks and tariff escalation in developed
countries limit the scope for technology transfer and reduce opportunities for learning and innovation
in developing countries.
A fourth recommendation could be that the Working Group should examine the
impact of tariff peaks and tariff escalation in developed countries on technology
transfer and come up with recommendations to remove the adverse impact.
(v) It is well known that developing countries face a number of problems in knowing about and
meeting the new trade standards set within the WTO.  One example of this is sanitary and
phytosanitary standards.  Another example is technical standards.  It is basically the technological
backwardness of developing countries, which comes in the way of their meeting the required technical
or SPS standards.  Though there are provisions in these two agreements for technical assistance
(Article 9 of SPS and Article 11 of TBT Agreement), in reality, developed countries do not seem tohave initiated serious action to help developing countries in terms of these provisions.
In light of this, the Working Group should  examine the difficulties faced by the
developing countries in meeting the standards set by different agreements
because of non-availability of the relevan t or required technology.  It should also
make recommendations as to how to overcome these difficulties by facilitating
transfer of the relevant technology on terms which could be considered
reasonable from the point of view of de veloping countries.  The Working Group
could also deliberate on the practicality of developing an early warning system
with regard to standards and a mechanism to facilitate adjustment by
developing countries to meet the new standards.
(vi) It is well known that the ongoing process of globalization is rather skewed.  While barriers to
investment are coming down rapidly and consequently capital is becoming highly mobile, the
mobility of other factors of production like labor a nd technology is becoming increasingly restricted.
The problem is that there are no internationally agr eed rules  for facilitating transfer of technology.
This untenable situation is sometimes sought to be defended on the argument that technology is
privately held and that therefore, governments cannot make rules relating to transfer of technology.  Inthis context, one cannot forget the fact that IPRs are essentially private rights and that there is a full-
fledged WTO Agreement relating to IPRs.  One cannot also ignore the fact that there is a demand for
international rules on investment in the WTO, though investment is essentially a private sector
activity.  It cannot be anybody’s case that only those topics/subjects/issues where developing
countries have to undertake commitments without receiving commensurate benefits, should bebrought into the WTO.
In light of these considerations, the Wo rking Group should examine the need for
and desirability of internationally agreed disciplines on transfer of technology
with a view to promote trade and development and come up with appropriaterecommendations.  In particular, the Working Group should examine and comeWT/WGTTT/W/6
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up with recommendations regarding possible internationally agreed
commitments in the field of transfer of technology to developing countries and
LDCs in areas such as:
(a) Expanding global technological exchange:
• To expand the global technological exchange, Members should facilitate access by firms and
experts of other Members to scientific and technological support and capability.  This may
include the commitment to provide access to results emanating from publicly funded R & D
institutions and activities.
• Restrictions on public funding of R & D activities, like limiting them to only national firms
and experts, could be removed.  This would enable firms, experts and institutions from
developing countries to participate in R & D consortia/R & D activities in other Members.
• The application of policy measures should be in a way that makes entry into certain industries
feasible.  This is particularly important in areas and fields where intellectual property rules
may operate more as barriers to entry than as incentives to innovation.
(b) Special treatment for developing countries
• With a view to facilitate and encourage the in itiation and strengthening of the scientific and
technological capabilities of developing countries, Members should ensure access by
developing countries to scientific literature and databases.
• Additional technical and financial assistance will be needed for developing countries and in
particular LDCs to facilitate achievement of their educational, scientific and technological
objectives.
• Commitment to support programmes for providing scientific and technological goods to all
countries.
• To encourage firms to carry out science and technology development work in host developing
countries.
• To encourage the training of personnel from developing countries.
• To transfer technology on reasonable terms and conditions and in a manner that contributes to
the long term development prospects of the host developing country.
• To encourage firms and public funded institutions from developed countries to participate in
cooperative research projects with local partners in developing countries and to adopt
practices that permit the transfer and rapid diffusion of technology and know-how.
With a view to expand technological exchange and diffusion, improved policy coherence in
developed countries is needed in the area of sectoral, tax, and fiscal measures related to transfer of
technology.  These measures should, in order to be effective, be transparent, stable and predictable
with a view to encouraging the transfer of technology to developing countries.
Commitments on the above lines will provide mutual and reciprocal benefits to all countries
by accelerating the rate of scientific and technological advance, and will facilitate free and enhanced
flow of trade among them.WT/WGTTT/W/6
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(vii) It is widely acknowledged that the technological gap between developing and developed
countries is increasing.  This is because of the difficulties developing countries face in acquiring
technology from developed countries even on commercial terms as well as the inadequate attention
paid to R & D aimed at developing new technology.  In order to reduce this gap the problem has to betackled on both fronts, transfer of technology as well as development of technology through research.
In order to encourage developing countries to engage in technology research, it is desirable that the
measures implemented by developing countries with a view to strengthen technology research are
treated as a non-actionable subsidy.
In light of this, the Working Group shou ld examine ways and means of helping
developing countries to strengthen their technology base and come up withappropriate recommendations.
(viii) After examining various issues relating to technology transfer, the Working Group should
examine the need and desirability of a self contained agreement on trade related technology transfer
and development, since it is becoming increasingly clear that technology transfer is a cross cutting
issue and make appropriate recommendations in this regard including on the desirability of initiatingnegotiations aimed towards such an agreement as part of the Doha Work Programme.
4. The proposed recommendations are based on our initial reflection and we reserve the right to
make additional suggestions.  We look forward to discussion on these recommendations in the
Working Group.  The discussion would no doubt help in the finalization of possible recommendationsfor inclusion in the report of the Working Group to the General Council.
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