RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTTT/M/4
20 January 2003
(03-0290)
Working Group on Trade and Transfer of Technology
Fourth Session
NOTE ON THE MEETING OF 28 NOVEMBER 2002
Chairman:  H.E. Mr. Stefán Jóhannesson (Iceland)
A. ADOPTION OF THE DRAFT AGENDA
1. The draft agenda, contained in Airgram WT O/AIR/1970 of 15 November 2002 was adopted.
B. PRESENTATION BY WORLD BANK
2. A presentation was made by Mr. Maurice Schiff, Lead Economist in the Development
Research Group of the World Bank.1  He discussed studies the World Bank had carried out on the
impact of trade-related technology diffusion on total factor productivity.  These studies pointed to the
importance of economic openness for north-south technology diffusion.  The speaker noted that
transfer of technology could only result in economic gains if the recipient country was willing and
able to absorb the technology.  If the transferred technology was too advanced, or did not fit with theproduction structure or the capacities or skills of the workers in the recipient country, it would have
little impact on productivity in that country.  He pointed out that macro-economic policies and general
governance issues, such as the protection of property rights, could play a role in attracting technology.
He stated that of the two major channels used  for technology transfer, namely foreign direct
investment (FDI) and trade, the productivity gains resulting from trade were clearer than those
resulting from FDI.  Studies had shown that trade with developed countries had a strong impact on
productivity in high-tech industries in developing countries, while trade among developing countrieshad a stronger impact on productivity in low-tech industries.  Thus, he concluded that lowering tariff
barriers on both developed and developing countries would lead to increased productivity in both
high-tech and low-tech industries.
3. The presentation was followed by an active discussion with Members asking questions and
seeking clarifications from the speaker.  Factors which could influence technology diffusion such asregional integration, level of education, national policies and protection of property rights were
discussed.  The question of what developing countries should do to attract technology transfer and
FDI was raised.  Some developing countries felt that openness did not necessarily lead to technology
transfer or FDI and that the opposite was true in some instances.  One delegation mentioned that
studies had shown that developing countries only attract marginal shares of foreign investors'research.  Information relating to production adaptation and technical support in the form of know-
how was transferred, instead of information relating to innovation in the form of know-why.  Some
delegations supported the statement that an open trading and investment system coupled with
domestic efforts was the best means to enhance te chnology transfer in the long term.  Another
delegation stated that it was important to examine how developing countries' capacity to generate andcreate their own technology could be improved a nd how that technology could be incorporated into
                                                     
1 The slide presentation is available in Room 2028.WT/WGTTT/M/4
Page 2
goods and services for exportation.  This delegation also stated that developing countries could not
imitate mechanisms used by developed countries, such as subsidies and institutional fine-tuning that
provided incentives to companies to innovate and produce technology, because developing countries
did not have the financial resources and macro-economic stability to implement those mechanisms.
Another delegation commented that the presentation made a strong point in favour of tradeliberalisation in the sense that trade-related technology diffusion had an important dynamic effect on
productivity and that openness was important to north-south technology diffusion and productivity
growth.
C. B
ACKGROUND NOTE BY THE SECRETARIAT (WT/WGTTT/W/3)
4. This Agenda item was not discussed due to time constraints and was referred to the next
meeting of the Working Group.
D. SUBMISSIONS BY MEMBERS
5. Canada's submission on "Technology Transfer – the Canadian Experience" (WT/WGTTT/2),
had been introduced at the third session of the Working Group.  The Canadian representative
reiterated that his country's experience with technology transfer showed that the measures taken tostrengthen domestic innovation capacity had also strengthened the ability to import, export and
transfer technology internally.  Domestic policie s to encourage internal conditions for stronger
innovation capacity had been complemented and re inforced by the commitments that the Canadian
Government had undertaken in the WTO and through regional trade agreements in areas such as
investment, intellectual property, standards, market access for trade in goods and services, andgovernment procurement.  A few delegations indicated that they were pleased with the Canadian
delegation's view that discussions in the Working Group should not foreclose considering the broad
array of domestic and international opportunities for facilitating the flow of technology to developing
countries.  Another delegation supported the view in the submission that strengthening the domestic
policy framework played a critical role in the generation, transfer and diffusion of technologyinternally;  that a fair, efficient and competitive marketplace was an essential prerequisite for transfer
of technology;  that it was important to strengthen domestic framework policies, which in turn
strengthened the ability to transfer technology inte rnally and to export technology abroad;  and that
many of the domestic measures taken to improve innovation and technology transfer could reinforced
by the commitments under the WTO and other agreements.  This delegation felt that the WTO could
play a direct and substantial role in encouragin g the adoption of effective framework policies within
all Member countries that would strengthen the flow of technology between all Members countries,especially to developing countries.  One delegation noted that the Canadian experience was that of a
developed country and could not be replicated by de veloping countries.  This delegation felt that the
Canadian policies had been reinforced and complemented by WTO commitments, since these
commitments did not limit the latitude of developed countries to subsidise their technology industries.
That same latitude was not available to developing countries wanting to adopt industrial policies insupport of basic industries.  That pointed to an asymmetry in the system that had to be addressed.  In
his concluding remarks, the representative of Canada stated that although he had presented views and
experiences from a developed country perspective, trade and investment liberalisation were tools that
were available to all developing countries to increase technology transfer.
6. While reintroducing the joint submission by the delegations of Cuba, Egypt, Honduras, India,
Indonesia, Jamaica, Kenya, Mauritius, Pakistan and Zimbabwe (WT/WGTTT/3/Rev.1) on "Provisions
Relating to Transfer of Technology in WTO Agreemen ts", the delegation of Pakistan stated that the
first step in fulfilling the Working Group's mandate  would be to examine the extent to which the
existing WTO provisions relating to transfer of technology had been effectively implemented and theWT/WGTTT/M/4
Page 3
difficulties that developing countries had experienced in utilising the existing provisions.
Subsequently, the Working Group could come up with concrete proposals and suggestions which
could address those concerns.  The delegation of Zambia associated itself with the paper.  One
delegation agreed that WTO provisions were underpinned by several priorities such as integrating
developing countries into world trade, protecting intellectual property rights, increasing the flow ofinvestment and promoting the flow of sustainable development.  The same delegation also believed
that the paper advanced a useful concept of tec hnology which emphasised that skills and knowledge
could be of greater developmental value than the transfer of tangible goods and input.  It was noted
that most of the provisions cited in the paper identified technical assistance, training, provision of
information and other forms of developmental cooperation as the principle means of promoting
transfer of technology.  It was also noted that the provisions cited in the paper reflected the broad
acceptance by WTO Members of two principles, namely that in free, market-based economies,commercially applicable technology was in the hands of private actors beyond the reach of
governments, and that a critical role of governments at all levels of development was to establish
national policies and undertake international obligations that would facilitate the flow of innovation
and knowledge among people.  Another delegation supported the examination of the impact of the
WTO Agreements on transfer of technology, whether or not those agreements had specific provisionsrelating to transfer of technology.  That delegation also believed that most technology was in the
hands of governments and was often transferred to the private sector at low cost.  That issue should be
examined and quantified.  Due to time constraints, the discussion could not be concluded and it was
agreed that the paper would be on the agenda for the next meeting.
E. I
NPUTS FROM OTHER WTO B ODIES ON TRADE AND TRANSFER OF TECHNOLOGY
7. This Agenda item was not discussed due to time constraints and was referred to the next
meeting of the Working Group.
F. ELEMENTS OF THE WORK PROGRAMME FOR 2003 AND THE SCHEDULE OF MEETINGS
8. The draft work programme for 2003 was adopted.
9. There was, however, a divergence of views existed with respect to the schedule of meetings
of the Working Group for 2003.  It was proposed to have two substantive meetings and one further
meeting, to adopt the Working Groups report to the General Council before the Fifth Ministerial
Conference.  Some delegations suggested that two fo rmal meetings would be sufficient.  On the other,
several developing country delegations indicated that at least three meetings should be held before the
Fifth Ministerial Conference.  The Chairman stated that it was clear that there was consensus onholding at least two meetings tentatively scheduled for 3 March and 13 May which could therefore be
held as proposed.  He indicated that he would continue informal consultations on the need to hold a
third meeting.
G. A
NNUAL REPORT TO THE GENERAL COUNCIL
10. The draft annual report of the Working Group to the General Council (WT/WGTTT/W/4)
was adopted.WT/WGTTT/M/4
Page 4
H. OTHER BUSINESS
11. The Chairman informed delegates that UNCTAD had made available a number of case
studies at the back of the room.  He also stated that as agreed the next meeting of the Working Group
would be held on 3 March 2003.
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