RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTTT/M/5
24 March 2003
(03-1678)
Working Group on Trade and Transfer of Technology
Fifth Session
NOTE ON THE MEETING OF 3 MARCH 2003
Chairman:  H.E. Mr. Stefán Jóhannesson (Iceland)
A. ADOPTION OF THE DRAFT AGENDA
1. The draft agenda, contained in Airgram WT O/AIR/2035 of 17 February 2003 was adopted.
B. BACKGROUND NOTE BY THE SECRETARIAT (WT/WGTTT/W/3)
2. It had been earlier agreed that the Secretariat would assist the Working Group by producing
some background material on trade and transfer of technology.  The Secretariat had accordingly
prepared a second background paper entitled "A Ta xonomy of Country Experiences on International
Technology Transfers" contained in document WT/WGTTT/W/3 .
3. Members generally considered the paper to be a valuable and substantive input into the
discussions in the Working Group.  However, some concerns were raised.  Some delegations felt thatthe paper did not  focus enough on the constraints that developing countries face in obtaining
technology from abroad.  With respect to the sugges tions in the paper on how developing countries
could attract more foreign technology and support their domestic demand for foreign technology, one
delegation stated that, although some developing c ountries had taken the particular steps suggested,
the practical experiences had not been as positive as the ones suggested in the paper.  The paper
needed to consider the steps that developed countries were taking, and should take, to facilitate the
transfer of technology to developing countries.  It also needed to consider the compatibility of WTOrules with the steps proposed to ensure the transfer of technology.  It would be highly unfortunate if
developing country members, in order to acquire technology, took steps that would be inconsistent
with their WTO obligations.  One delegation felt that members needed to proceed on a more
intellectual basis in terms of policy examination ra ther than pursuing specific elements relating to
WTO rules.  A suggestion was made to also include case studies where developing countries hadfailed in their efforts to acquire technology from abro ad, as this would illustrate where the problems in
acquiring technology existed.
4. Other delegations said that studies carried out by the Institute for International Economics
(IIE) and by the World Bank had shown that an effort to steer foreign direct investment (FDI) to
heavily protected industries might have a negative effect on transfer of technology.  The useful roleplayed by multilateral and bilateral agencies in the transfer of technology was secondary to the role
played by developing country Governments themselves.  Some delegations believed that it was in fact
the policies of developing countries that could contribute to the successful transfer of technology.
Absorptive capacity, such as the level and nature of the domestic education system was a critical
element in a country's ability to attract foreign t echnology.  One delegation believed that trade related
capacity building for which the WTO had expertise was not geared to support the initiatives that
would help developing countries attract foreign technology.  Members therefore needed to look atWT/WGTTT/M/5
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other possibilities to improve the quality of development cooperation for technology transfer.  A view
was also expressed that there was no evidence to suggest that multinationals were more likely to
engage in predatory practises and anti-competitive behaviour than comparable domestic companies.
It was important for Members to bear in mind that the existence of a patent in an exporting country
should not be automatically considered to be a barrier to the transfer of technology.  It was alsoimportant to make a clear distinction between issues that arose when considering international
technology transfer and questions of how technol ogy was diffused within a country once a certain
technological element had been introduced, for exampl e as a result of FDI or a local invention.  That
would help in establishing the role that developing and developed country policy could play in
promoting greater flows of technology transfer.
5. The representative of UNCTAD made a mention of three cases studies on Transfer of
technology for Successful Integration into the Global Economy and made these available to Members.These case studies were on the aircraft industry in Brazil, the pharmaceutical industry in India and the
automobile industry in South Africa.  Members were  informed that these studies had been carried out
under the UNCTAD/UNDP Global Programme on Globalization, Liberalization and Sustainable
Human Development.  The representative of UNCTAD highlighted that the issues raised included
how international competitiveness had led to new lines of productive activities and whether similarpolicy approaches could work in a more open and rules-based global trading environment.  The
withdrawal of protectionist measures was essential for the emergence of competitive industries.  Too
rapid a withdrawal of a protectionist measure was at  times problematic;  but too slow a withdrawal of
a protectionist measure was equally problematic.  Domestic policies were important in helping to
ensure that foreign investment and strategic partnerships actually supported national development.Institutional support by governments, particularly for scientific research and standards, could help
companies acquire technological capacity, w ithout directly subsidising their production .  National
policies could play a crucial role in enhancing technological capacities, provided governments availed
themselves fully of the flexibilities available in the WTO rules, made optimal use of the special and
differential treatment provisions built into the Agreements, and participated actively in the ongoingnegotiations to protect existing policy space.
C. S
UBMISSIONS BY MEMBERS
- European Communities (IP/C/W/398 - WT/WGTTT/W/5)
6. The representative of the European Communities,  in introducing their submission "Reflection
Paper on Transfer of Technology to Developing  and Least Developed Countries" (IP/C/W/398,
WT/WGTTT/W/5), said that the Working Group needed to focus on the efforts made to identify thedifferent components that made up the concept of transfer of technology and the way in which those
components could compliment and interact with each other.  That included not just tangible goods,
but also intangible aspects such as knowledge and know how, and specific production arrangements
that were particularly important for least-developed countries (LDCs) who often lacked the ability to
develop technology independently.  The private sector was the main source of technologies and thetransfer of technology was only one component of a more complex process where governments set the
regulatory structure and gave direction.  An idea behind submitting the paper to the Working Group
was to also ensure a discussion on the definitional questions related to technology transfer and the
mechanisms by which it could take place.
7. Members engaged in an active discussion and raised a number of points relating to the
submission.  One delegation supported the concept that capacity building and institution building
were important to ensure proper management of technology transfer.  An analysis of the absorptive
capacity of developing countries showed that th is was directly associated with the structural
difficulties faced by those countries in acquiring technology from abroad.  That lead to a discussionWT/WGTTT/M/5
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of the reasons why those countries faced such difficulties and the responsibility of the international
community to change that situation.  It was said th at any analysis of the transfer of technology should
be done in conjunction with an analysis of the flow of financing for development.  Some studies
demonstrated that developing countries would only reap long term benefits from a strong application
of intellectual property rights (IPRs), once they had achieved a certain level of industrialisation.Others felt that the effects of IPRs on the transfer of technology were dependent on a country's level
of economic development and technological advancement.  It was only after a developing country had
acquired sufficient national scientific and technological capacity that it could engage in creative
imitation; at which stage the protection of intellectual property (IP) became an important element in
the transfer of technology.
8. Some delegations supported the view in the subm ission that the enabling environment of the
host country, including human capital, infrastructure, legal framework and macroeconomic conditionswere the key elements in determining FDI flows and technology transfer.  The pre-establishment
assessment and long term commitment of foreign direct investors increased the likelihood that any
technology transferred would be adapted to local ne eds and would be suitable for the local production
environment.  That reinforced the case of FDI as a critical mechanism for technology transfer.  It was
also pointed out that many of the technologies needed by the developing country firms were alreadyavailable in the public domain, which meant that there were no significant price or legal obstacles to
their acquisition or imitation.  The IP system could play a crucial role in technology transfer as an
inducement to direct investment; as a stimulus to innovation; and as a source of inexpensive
technological know how.  Others felt that althoug h FDI resulted in the transfer of technology, its
importance had been overstated.  In many cases in developing countries FDI had resulted in thetransfer of low levels of technology and the transfer of those technologies was not related to IPR
regimes, but rather to opportunity costs.  One delegation said that it failed to understand how
transparency in government procurement could facilitate the transfer of technology.  In that
delegation's experience the reduction of tariffs had not resulted in an increase in technology flows.  It
was said that the submission needed to consider more closely the restrictive business practices ofmultinational corporations and technology owners in order to see how that could be addressed within
the mandate of the WTO.
D. I
DENTIFICATION OF PROVISIONS RELATED TO TRANSFER OF TECHNOLOGY IN THE WTO
AGREEMENTS
- Joint Submission by Cuba, Egypt, Hondur as, India, Indonesia, Jamaica, Kenya,
Mauritius, Pakistan, Zambia and Zimbabwe (WT/WGTTT/3/Rev.1)
9. The submission made by the delegations of Cuba, Egypt, Honduras, India, Indonesia,
Jamaica, Kenya, Mauritius, Pakistan, Zambia and Zimbabwe (WT/WGTTT/3/Rev.1) on "Provisions
Relating to Transfer of Technology in WTO Agreements" did not give rise to any substantive debate
as it had been taken up for discussion at the Fourth Session of the Working Group.  India indicated
that it intended to shortly submit another paper to the Working Group, possibly in conjunction withother developing country Members, that would contribute to the work members could do in the lead
up to the Fifth Ministerial Conference, including in the context of the recommendations that the
Working Group was to make at that time.  This delegation believed that it would be useful for the
Working Group to assess the implementation of WTO provisions relating to technology transfer and
to identify appropriate steps to increase technology flows to developing countries as envisaged in theDoha Ministerial Declaration.WT/WGTTT/M/5
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E. INPUTS FROM OTHER WTO B ODIES ON TRADE AND TRANSFER OF TECHNOLOGY
10. The Chairman informed Members that subseque nt to the Fourth Session of the Working
Group, 16 additional responses from other WTO bodies relating to the work that they had carried out
on the issue of technology transfer were received.  Three of the responses indicated that some work
had been done or would be done with respect to transfer of technology.  Those came from the TRIPSCouncil, the Working Group on the Interaction between Trade and Competition Policy and the
Special Session of the Committee on Trade and Development.  One delegation stated that the meagre
inputs were reflective of the ineffectiveness of the provisions related to the transfer of technology.
F. O
THER BUSINESS
11. Members were informed that the Technology Foresight Summit 2003 organised by UNIDO
would be held in Budapest on 27-29 March 2003.  It would mainly concentrate on technologyforesight tools, instruments and perspectives fo r Central and Eastern European Countries.  The
summit would consist of Technology Foresight Panels, a Biotechnology Prospective Forum, a
Ministerial Round Table and the Fair of the Futu re where chief executive officers (CEO's) and
industrial decision makers would present their vi sions of the future, their views on the likely
development of their respective industries and on industry led future trends and perspectives in thearea.
12. As requested, the OECD Guidelines for Multinational Enterprises are annexed to this report.WT/WGTTT/M/5
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ANNEX
The OECD Guidelines for Multinational Enterprises
VIII. SCIENCE AND TECHNOLOGY
Enterprises should:
1. Endeavour to ensure that their activities are compatible with the science and technology
(S&T) policies and plans of the countries in which they operate and as appropriate contribute to the
development of local and national innovative capacity.
2. Adopt, where practicable in the course of their business activities, practices that permit the
transfer and rapid diffusion of technologies a nd know-how, with due regard to the protection of
intellectual property rights.
3. When appropriate, perform science and technology development work in host countries to
address local market needs, as well as employ host country personnel in an S&T capacity and
encourage their training, taking into account commercial needs.
4. When granting licenses for the use of intellectual property rights or when otherwise
transferring technology, do so on reasonable terms and conditions and in a manner that contributes tothe long term development prospects of the host country.
5. Where relevant to commercial objectives, develop ties with local universities, public research
institutions, and participate in co-operative research projects with local industry or industry
associations.
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