WORLD TRADE  
ORGANIZATION  WT/WGTI/W/52  
21 August 1998 
 (98-3261) 
Working Group on the Relationship  
between Trade and Investment Original:   English 
 
 
 
COMMUNICATION FROM UNCTAD  
 
  Reproduced below is a paper prepared by the UNCTAD secretariat on the differences and similarities between the draft United Nations Code of Conduct on Transnational Corporations and the 
OECD Guidelines for Multinational Enterprises.  Anne xed to this paper are the texts of the draft 
United Nations Code of Conduct on Transnational Co rporations (1983 and 1990 versions), the Set of 
Multilaterally Agreed Equitable Principles and Ru les for the Control of Restrictive Business 
Practices (1980) and the draft international C ode of Conduct on the Transfer of Technology 
(1985 version).  This paper and the texts in the a nnexes have been submitted in response to a request 
made by the Working Group at its meeting of 16-17 June 1998. 
 
_______________  
 
 
The Draft United Nations Code of Con duct on Transnational Corporations and
 
The OECD Guidelines for Multinational Enterprises  
 
Similarities and Differences 
  
 General characteristics
:  The Draft United Nations Code of Conduct on Transnational 
Corporations (the "Draft Code") - attached for easy  reference in two versions : the 1986 version, which 
reflects the status of the negotiations at that time,  and the 1990 version, which was prepared by the 
Chairperson of the negotiations and sent to the Economic and Social Council - was intended to be a 
comprehensive framework addressing the rights and obligations of states and foreign investors.  On a number of topics, the Draft Code referred to th e provisions of other instruments that addressed 
specific aspects of the operations of transnati onal corporations (TNCs), notably the Set of 
Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices 
and the Draft International Code of Conduct on the Transfer of Technology (both are attached for 
easy reference).  
 The OECD Guidelines for Multinational Enterp rises ("the Guidelines") (which were made 
available earlier to the Working Group) were part of a package that also contained instruments on 
national treatment, incentives and disincentives and conflicting requirements, and were included in 
the OECD Declaration on International Investme nt and Multinational Enterprises.  These OECD 
instruments, together with the Code of Libera lisation of Capital Movements and the Code of 
Liberalisation of Current Invisible Operations, also addressed in a comprehensive manner the rights 
and obligations of States and investors.   The OECD Guidelines were completed in 1976 and subsequently applied and amended.  The 
Draft Code was never fully completed, even thoug h some formulations were widely accepted during 
the negotiations.  The Set of Multilaterally Agreed Equitable Principles and Rules for the Control of 
Restrictive Business Practices was adopted by the United Nations General Assembly in 1980.  The 
Draft International Code of Conduct on the Transf er of Technology was not fully completed, even 
though there was agreed language for many provisions. WT/WGTI/W/52 
Page 2  
 
  Geographical coverage
:  The Draft Code was intended to be a universal instrument.  The 
Guidelines are formally applicable within the OECD area only, although the international character of 
the issues they address and their relevance to all countries were emphasized;  thus, the Guidelines 
provide a basis for guiding the behaviour of  transnational corporations more widely. 
 
 Objective :  The Draft Code and the Guidelines share the overall objective of maximizing the 
positive contributions of TNCs to  growth and development and mi nimizing the difficulties to which 
their operations may give rise.  
 Legal nature
:  There was a tacit understanding as to the voluntary character of the Draft Code.  
The OECD Guidelines are voluntary in nature;  th ey are recommendations jointly addressed by the 
Governments of the OECD to TNCs operating in their territories.   Definition of transnational corporations
:  The Draft Code included a broad definition of TNCs 
covering public and private enterprises and equity  and non-equity forms of investment.  The 
Guidelines do not contain a precise legal definition of TNCs, but note that these usually comprise 
private and public enterprises, and clarify that, wh erever relevant, the Guidelines reflect good practice 
for all enterprises (domestic and transnational).   Follow-up
:  The Draft Code was intended to have follow-up, review and amendment 
mechanisms; these however, were not fully spelled out  and were never put in use.  The follow-up, 
review and amendment mechanisms of the Guidelines have been in operation for more than 20 years, 
during which the instrument has been widely disse minated, and consultati ons, clarifications and 
amendments have taken place.  The principal area in  which the Guidelines have had an impact is that 
of employment and labour relations. 
 
Issues addressed regarding the conduct of TNCs  
 Both instruments contain provisions on: 
 
(a) applicability of host country national laws to TNCs; 
(b) adherence to general polic y goals and development objectives of host countries; 
(c) cooperation with host country Governments; 
(d) non-interference in political affairs of host countries; 
(e) abstention from corrupt practices; 
(f) disclosure of information; 
(g) competition; 
(h) balance of payments and financing; 
(i) taxation and transfer pricing; 
(j) employment and labour relations; 
(k) environmental protection; WT/WGTI/W/52 
Page 3 
 
 
(l) consumer protection; 
(m) transfer of technology. 
 In addition, the Draft Code contains provisions on: 
 
(a) respect for human rights and fundamental freedoms; 
(b) adherence to socio-cultural values of host countries; 
(c) review and renegotiation of contracts. 
 (With regard to standards of treatment for TN Cs, the Draft Code covered a number of issues 
not found in the OECD Declaration and related in struments, such as expropriation and settlement of 
disputes.) 
 
 Most of the provisions of the Draft Code dea ling with the behaviour of TNCs were agreed 
ad referendum  while most of the outstanding issues concer ned the provisions relating to the treatment 
of TNCs.  
 Formulation of specific principles and standards
:  It would be difficult to compare specific 
formulations of the Draft Code and the Guidelin es since over the course of the negotiations on the 
Code, many different versions of its provisions  were proposed and discussed, and only some 
provisions were agreed ad referendum . 
 WT/WGTI/W/52 
Page 4  
 
ANNEX 1
 
 
DRAFT UNITED NATIONS CODE OF CONDUCT ON TRANSNATIONAL 
CORPORATIONS* 
[1983 version]  
 
 
 
The elaboration of the United Nations Code of Co nduct on Transnational Corporations was one of the 
main tasks of the Commission on Transnational Corporations (established by the Economic and 
Social Council under resolution 1913 (LVII) of 5 Decem ber 1974).  The preparation of the text of the 
Draft Code was entrusted first to an Ad Hoc Inter-Governmental Working Group.  The Group submitted its report to the Commission at its eight session in 1982 (United Nations document E/C.10/1982/6).  The next stage of the nego tiations was entrusted to a special session of the 
Commission on Transnational Corporations which be gan deliberations in 1983 and was open to the 
participation of all States.  The special session was reconvened a number of times between 1983 and 
1990.  In 1988, the Chairman of the reconvened sp ecial session and the Secretary-General of the 
United Nations prepared a text of a draft c ode (E/1988/39/Add.1), drawing upon discussions and 
proposals presented over the years.  In an effort to facilitate compromise while preserving the already 
agreed texts, the Chairman, at the meeting on 24  May 1990, transmitted to the Economic and Social 
Council a revised text of the draft code of conduct,  based on the 1988 draft.  The text of the draft 
Code of Conduct on Transnational Corporations reproduced in this  volume reflects the status of 
negotiations as at 1986.  
  
PREAMBLE AND OBJECTIVES
** a/ 
 
DEFINITIONS AND SCOPE OF APPLICATION  
 
 1. (a) [The term "transnationa l corporations" as used in this  Code means an enterprise, 
comprising entities in two or more countries, regard less of the legal form and fields of activity 
of these entities, which operates under a system of decision-making, permitting coherent policies and a common strategy through one or  more decision-making centres, in which the 
entities are so linked, by ownership or otherwise,  that one or more of them may be able to 
exercise a significant influence over the activities of others, and, in particular, to share 
knowledge, resources and responsibilities with the others.] 
 
 [The term "transnational corporation" as used in this Code means an enterprise 
whether of public, private or mixed ownership,  comprising entities in two or more countries, 
regardless of the legal form and fields of activity of these entities, which operates under a 
system of decision-making, permitting coherent  policies and a common strategy through one 
or more decision-making centres, in which the entities are so linked, by ownership or 
otherwise, that one or more of them [may be  able to] exercise a significant influence over the 
                                                     
 
* Source : Commission on Transnational Corporations, Repo rt on the Special Session (7-18 March and 
9-21 May 1983)  Official Records of the Economic and Social Council , 1983, Supplement No. 7 
(E/1983/17/Rev.1), Annex II.  This text of the Code was also reproduced in United Nations Centre on 
Transnational Corporations (1986).  The United Nations Code of Conduct on Transnational Corporations , 
Current Studies, Series A (New York: United Nations) United Nations publication sales No. E.86.II.A.15, 
(ST/CTC/SER.A/4), Annex I, pp.28-45 [Note added by the editor]. 
** No final decision regarding the use and contents of headings and subheadings appearing in the text 
has yet been taken. WT/WGTI/W/52 
Page 5 
 
 
activities of others, and, in particular, to share knowledge, resources and responsibilities with 
the others.] 
 
(b) The term "entities" in the Code refers to both parent entities - that is, entities which 
are the main source of influence over others - and other entities, unless otherwise specified in 
the Code. 
 
(c) The term "transnational corpor ation" in the Code refers to the enterprise as a whole or 
its various entities. 
 
(d) The term "home country" means the country in which the parent entity is located.  
The term "host country" means a country in whic h an entity other than the parent entity is 
located. 
 
(e) The term "country in which a transnationa l corporation operates" refers to a home or 
host country in which an entity of a tran snational corporation conducts operations. 
 2. [The Code is universally a pplicable in, and to this end is  open to adoption by, all States.] 
  [The Code is universally app licable in [home and host countries of transnational corporations] 
[as defined in paragraph 1(a)], a nd to this end is open to adoption by, all States [regardless of their 
political and economic systems and their level of development].] 
  [The Code is open to adoption by all States and is applicable in all States where an entity of a 
transnational corporation conducts operations.]  
 [The Code is universally applicable to all States regardless of their political and economic 
systems and their level of development.]  3. [This Code applies to all enterpri ses as defined in paragraph 1(a) above.] 
 [To be placed in paragraph 1(a).] 
 
[4. The provisions of the Code addressed to tran snational corporations reflect good practice for 
all enterprises.  They are not intended to intr oduce differences of conduc t between transnational 
corporations and domestic enterprises.  Wherever th e provisions are relevant to both, transnational 
corporations and domestic enterprises  should be subject to the same e xpectations in regard to their 
conduct.] 
[to be deleted]
* 
 [5. Any reference in this Code to States, countries or Governments also includes regional 
groupings of States, to the extent that the provisions of this Code relate to matters within these groupings' own competence, with respect to such competence.] 
 
[To be deleted] 
                                                     
 
* On the grounds, inter alia , that the text within the first pair of brackets goes beyond the mandate of 
the Intergovernmental Working Group on a Code of Conduct. WT/WGTI/W/52 
Page 6  
 
 
ACTIVITIES OF TRANSNATIONAL CORPORATIONS  
 
A.  General and political  
 
Respect for national sovereignty and obser vance of domestic laws, regulations and 
administrative practices  
 
6. Transnational corporations should/shall resp ect the national sovereignty of the countries in 
which they operate and the right of each State to  exercise its [full permanent sovereignty] [in 
accordance with international law] [in accordance with agreements reached by the countries 
concerned on a bilateral and multilateral basis]  over its natural resources [wealth and economic 
activities] within its territory.  7. [Transnational corporations] [Entities of tr ansnational corporations] [shall/should observe] 
[are subject to] the laws, regulati ons [jurisdiction] and [administrative practices] [explicitly declared 
administrative practices] of the countries in wh ich they operate.  [Entities of transnational 
corporations are subject to the jurisdiction of the c ountries in which they operate to the extent required 
by the national law of these countries.]  8. Transnational corporations should/shall respect  the right of each State to regulate and monitor 
accordingly the activities of their en tities operating within its territory. 
 
Adherence to economic goals and developmen t objectives, policies and priorities  
 
9. Transnational corporations shall/should carry  on their activities in conformity with the 
development policies, objectives and priorities set out  by the Governments of the countries in which 
they operate and work seriously towards making a positive contribution to the achievement of such 
goals at the national and, as appropriate, the re gional level, within the framework of regional 
integration programmes.  Transnational corporations  shall/should co-operate with the Governments of 
the countries in which they operate with a view to contributing to the development process and 
shall/should be responsive to requests for consultatio n in this respect, thereby establishing mutually 
beneficial relations with these countries. 
 10. Transnational corporations shall/should carry ou t their operations in conf ormity with relevant 
intergovernmental co-operative arrangements c oncluded by countries in which they operate. 
 Review and renegotiation of contracts  
 
11. Contracts between Governments and transna tional corporations s hould be negotiated and 
implemented in good faith.  In such contracts, especially long-term ones, review or renegotiation 
clauses should normally be included.  
 In the absence of such clauses and where th ere has been a fundamental change of the 
circumstances on which the contract or agreement was based, transnational corporations, acting in 
good faith, shall/should co-operate with  Governments for the review or renegotiation of such contract 
or agreement.  
 Review or renegotiation of such contracts or agreements shall/should be subject to [the laws 
of the host country] [relevant national laws  and international legal principles]. 
 WT/WGTI/W/52 
Page 7 
 
 
Adherence to socio-cultural objectives and values  
 
12. Transnational corporations should/shall respect  the social and cultural objectives, values and 
traditions of the countries in which they operate.  While economic and technological development is 
normally accompanied by social change, transnati onal corporations should/ shall avoid practices, 
products or services which cause detrimental effect s on cultural patterns and socio-cultural objectives 
as determined by Governments.  For this purpose,  transnational corporations should/shall respond 
positively to requests for consultati ons from Governments concerned. 
 
Respect for human rights and fundamental freedoms  
 
13. Transnational corporations should/shall r espect human rights and fundamental freedoms in 
the countries in which they operate.  In their social  and industrial relations, transnational corporations 
should/shall not discriminate on the basis of race, co lour, sex, religion, language, social, national and 
ethnic origin or political or other opinion.  Transnational corporations should/shall conform to 
government policies designed to extend equality of opportunity and treatment. 
 
Non-collaboration by transnational corporations  with racist minority regimes in southern 
Africa  
 
14. In accordance with the efforts of the inte rnational community towards the elimination of 
apartheid  in South Africa and its continue d illegal occupation of Namibia, 
  [(a) Transnational corporations sha ll progressively reduce their business activities 
and make no further investment in South Africa and immediately cease all business activities in Namibia; 
 
 (b) Transnational corporations shall refrain from collaborating directly or 
indirectly with that regime especially w ith regard to its racist practices in 
South Africa and illegal occupation of Namibia to ensure the successful implementation of United Nations reso lutions in relation to these two 
countries.] 
 
 [Transnational corporations operating in southern Africa 
  (a) Should respect the national laws a nd regulations adopted in pursuance of 
Security Council decisions concerning southern Africa; 
 
 (b) Should within the framework of  their business activities engage in 
appropriate activities with a view to contributing to the elimination of racial discrimination practices under the system of apartheid.] 
 
Non-interference in internal political affairs  
 
15. Transnational corporations should/shall not interfere [illegally] in the internal [political] 
affairs of the countries in which they operate [by resorting to] [They should refrain from any] [subversive and other [illicit] ] activities [aimed at ] undermining the political and social systems in 
these countries. 
 
16. Transnational corporations should/shall not e ngage in activities of a political nature which are 
not permitted by the laws and established policies and administrative practices of the countries in 
which they operate.  WT/WGTI/W/52 
Page 8  
 
Non-interference in intergovernmental relations  
 
17. Transnational corporations should/shall not interfere in [any affairs concerning] 
intergovernmental relations [, which ar e the sole concern of Governments]. 
 
18. Transnational corporations shall/should not request Governments acting on their behalf to 
take the measures referred to in the second sentence of paragraph 65.  19. With respect to the exhaustion of local reme dies, transnational corpor ations should/shall not 
request Governments to act on their behalf in  any manner inconsistent with paragraph 65. 
 
Abstention from corrupt practices  
 
20. [Transnational corporations shall refrain, in th eir transactions, from the offering, promising or 
giving of any payment, gift or other advantage to or  for the benefit of a public official as consideration 
for performing or refraining from the performance of his duties in connection with those transactions. 
  Transnational corporations shall maintain accu rate records of payments made by them, in 
connection with their transactions, to any public offi cial or intermediary.  They shall make available 
these records to the comp etent authorities of the countries in which they operate, upon request, for 
investigations and proceedings concerning those payments.] 
 
 [For the purposes of this Code, the principles set out in the International Agreement on Illicit 
Payments adopted by the United Nations should apply in the area of abstention from corrupt 
practices.]
* 
 
B.  Economic, financial and social  
 
Ownership and control  
 
21. Transnational corporations s hould/shall make every effort so to allocate their decision-making 
powers among their entities as to enable them to c ontribute to the economic and social development 
of the countries in which they operate. 
 22. To the extent permitted by national laws, polic ies and regulations of the country in which it 
operates, each entity of a transnational corporation should/shall co-operate with the other entities, in 
accordance with the actual distribution of responsibilities among them and consistent with 
paragraph 21, so as to enable each entity to meet  effectively the requirements established by the laws, 
policies and regulations of the country in which it operates.  23. Transnational corporations shall/should co-ope rate with Governments and nationals of the 
countries in which they operate in the implem entation of national objectives for local equity 
participation and for the effective exercise of c ontrol by local partners as determined by equity, 
contractual terms in non-equity arrangeme nts or the laws of such countries. 
 24. Transnational corporations should/shall carry  out their personnel policies in accordance with 
the national policies of each of the countries in which they operate which give priority to the 
employment and promotion of its [adequately qualifi ed] nationals at all leve ls of management and 
direction of the affairs of each entity so as to enhan ce the effective participation of its nationals in the 
decision-making process.  
                                                     
 
* To be included in one of the substantive introductory parts of the Code. WT/WGTI/W/52 
Page 9 
 
 
25. Transnational corporations should/shall contri bute to the managerial and technical training of 
nationals of the countries in which they operate and facilitate their employm ent at all levels of 
management of the entities and enterprises as a whole.  Balance of payments and financing  b
/ 
 
26. Transnational corporations should/shall carry on their operations in conformity with laws and 
regulations and with full regard to the policy objec tives set out by the countries in which they operate, 
particularly developing countries, relating to bala nce of payments, financial transactions and other 
issues dealt with in the subsequent paragraphs of this section. 
 
27. Transnational corporations should/shall r espond positively to requests for consultation on 
their activities from the Governments of the countr ies in which they operate, with a view to 
contributing to the alleviation of pressing problems of balance of payments and finance of such 
countries. 
 
28. [As required by government regulations a nd in furtherance of government policies] 
[Consistent with the purpose, nature and extent of their operations] transnational corporations 
should/shall contribute to the promotion of exports and the diversification of  exports [and imports] in 
the countries in which they operate and to an increased utilization of goods, services and other 
resources which are available in these countries. 
 
29. Transnational corporations should/shall be responsive to requests by Governments of the 
countries in which they operate, particularly developing countries, concerning the phasing over a 
limited period of time of the repatriation of cap ital in case of disinvestment or remittances of 
accumulated profits, when the size and timing of such transfers would cause serious 
balance-of-payments difficulties for such countries. 
 30. Transnational corporations s hould/shall not, contrary to generally accepted financial practices 
prevailing in the countries in which they operate,  engage in short-term financial operations or 
transfers or defer or advance foreign exchange pa yments, including intra-corporate payments, in a 
manner which would increase currency instability and thereby cause serious balance-of-payments 
difficulties for the countries concerned. 
 31. Transnational corporations should/shall not  impose restrictions on their entities, beyond 
generally accepted commercial practices prevailing in  the countries in which they operate, regarding 
the transfer of goods, services and funds which would cause serious balance-of-payments difficulties 
for the countries in which they operate. 
 32. When having recourse to the money and capital markets of the countries in which they 
operate, transnational corporations should/shall no t, beyond generally accepted financial practices 
prevailing in such countries, engage in activities which would have a significant adverse impact on 
the working of local markets, particularly by restri cting the availability of funds to other enterprises.  
When issuing shares with the objec tive of increasing local equity par ticipation in an entity operating 
in such a country, or engaging in long-term borrowi ng in the local market, transnational corporations 
shall/should consult with the Government of the coun try concerned upon its request on the effects of 
such transactions on the local money and capital markets.  Transfer pricing  
 
33. In respect of their intra-corporate transacti ons, transnational corporations, should/shall not use 
pricing policies that are not based on relevant market  prices, or, in the absence of such prices, the 
arm's length principle, which have the effect of  modifying the tax base on which their entities are 
assessed or of evading exchange control measure s [or customs valuation regulations] [or which WT/WGTI/W/52 
Page 10  
 
[contrary to national laws and re gulations] adversely affect economic and social conditions] of the 
countries in which they operate.  
Taxation  
 34. Transnational corporations should/shall not, contrary to the laws and regulations of the 
countries in which they operate, use their corporate structure and modes of operation, such as the use 
of intra-corporate pricing which is not based on the arm's length principle, or other means, to modify 
the tax base on which their entities are assessed.  Competition and restrictive business practices  
 
35. For the purpose of this Code, the relevant provisions of the Set of Multilaterally Agreed 
Equitable Principles and Rules for the Control of  Restrictive Business Practices adopted by the 
General Assembly in its resolution 35/63 of 5 De cember 1980 shall/should also apply in the field of 
restrictive business practices.  c
/ 
 
Transfer of technology  
 
36. [Transnational corporations shall conform to th e transfer of technology laws and regulations 
of the countries in which they opera te.  They shall co-operate with the competent authorities of those 
countries in assessing the impact of international transfers of technology in their economies and 
consult with them regarding the various technol ogical options which might help those countries, 
particularly developing countries, to attain  their economic and social development. 
  Transnational corporations in their tran sfer of technology transactions, including 
intra-corporate transactions, shall avoid practices wh ich adversely affect the international flow of 
technology, or otherwise hinder the economic and technological development of countries, 
particularly developing countries.   Transnational corporations shall contribut e to the strengthening of the scientific and 
technological capacities of developing countries, in  accordance with the science and  technology 
policies and priorities of those countries.  Transn ational corporations sh all undertake substantial 
research and development activities in developing co untries and make full use of local resources and 
personnel in this process.]   [For the purposes of this Code the relevant pr ovisions of the International Code of Conduct on 
the Transfer of Technology adopted by the Gene ral Assembly in its resolution ___________ of 
____________ shall/should apply in the fi eld of transfer of technology.]
* 
 
Consumer protection  
 
37. Transnational corporations shall/should carry  out their operations, in particular production 
and marketing, in accordance with national laws, regulations, administrative practices and policies 
concerning consumer protection of the countries in wh ich they operate.  Transnational corporations 
shall/should also perform their activities with due regard  to relevant internatio nal standards, so that 
they do not cause injury to the health or endanger th e safety of consumers or bring about variations in 
the quality of products in each market which would have detrimental effects on consumers. 
 
                                                      
* To be included in one of the substantive introductory parts of the Code. WT/WGTI/W/52 
Page 11 
 
 
38. Transnational corporations shall/should, in respect of the products and services which they 
produce or market or propose to produce or market in any country, supply to the competent authorities 
of that country on request or on a regular basis, as specified by these authorities, all relevant information concerning:  
Characteristics of these products or services which may be injurious to the health and safety 
of consumers including experimental uses and related aspects; 
 
Prohibitions, restrictions, warnings and other public regulatory measures imposed in  other 
countries on grounds of health and safety protection on these products or services. 
 
39. Transnational corporations shall/should disclo se to the public in the countries in which they 
operate all appropriate informati on on the contents and, to the extent known, on possible hazardous 
effects of the products they produce or market in the countries concerned by means of proper 
labelling, informative and accurate advertising or other appropriate methods.  Packaging of their 
products should be safe and the contents of  the product should not be misrepresented. 
 40. Transnational corporations shall/should be responsive to requests from Governments of the 
countries in which they operate and be prepared to co -operate with internationa l organizations in their 
efforts to develop and promote nati onal and international standards for the protection of the health and 
safety of consumers and to meet the basic needs of consumers. 
 
Environmental protection  
 
41. Transnational corporations shall/should carry  out their activities in accordance with national 
laws, regulations, administrative practices and polici es relating to the preservation of the environment 
of the countries in which they operate and with due  regard to relevant in ternational standards.  
Transnational corporations shall/should, in perform ing their activities, take steps to protect the 
environment and where damaged to [restore it to th e extent appropriate and feasible] [rehabilitate it] 
and should make efforts to develop and a pply adequate technologies for this purpose. 
 42. Transnational corporations shall/should, in respect of the products, processes and services 
they have introduced or propose to introduce in a ny country, supply to the competent authorities of 
that country on request or on a regular basis, as spec ified by these authorities, all relevant information 
concerning:  
Characteristics of these products, processes and ot her activities including experimental uses 
and related aspects which may harm the environment and the measures and costs necessary to 
avoid or at least to mitigate their harmful effects; 
 
Prohibitions, restrictions, warnings and othe r public regulatory measures imposed in other 
countries on grounds of protection of the e nvironment on these products, processes and 
services. 
 
43. Transnational corporations shall/should be responsive to requests from Governments of the 
countries in which they operate and be prepared wh ere appropriate to co-ope rate with international 
organizations in their efforts to develop and pr omote national and international standards for the 
protection of the environment. 
 
C.  Disclosure of information  
 
44. Transnational corporations should disclose to the public in the countries in which they operate, by appropriate means of communication, clear, full and comprehensible information on the 
structure, policies, activities and operations of the transnational corporation as a whole.  The WT/WGTI/W/52 
Page 12  
 
information should include financial as well as non-fi nancial items and should be made available on a 
regular annual basis, normally within six months and in any case not later than 12 months from the 
end of the financial year of the corporation.  In  addition, during the financial year, transnational 
corporations should wherever appropriate make  available a semi-annual summary of financial 
information. 
 
 The financial information to be disclosed a nnually should be provided where appropriate on a 
consolidated basis, together with suit able explanatory notes and should include, inter alia , the 
following:  
 (a) A balance sheet; 
  (b) An income statement, incl uding operating results and sales; 
  (c) A statement of allocation of net profits or net income; 
 
 (d) A statement of the sources and uses of funds;   (e) Significant new long-term capital investment;   (f) Research and development expenditure. 
 
 The non-financial information referred to in the first subparagraph should include, inter alia : 
  (a) The structure of the transnational corpor ation, showing the name and location of the 
parent company, its main entities, its percen tage ownership, direct and indirect, in 
these entities, including shareholdings between them; 
  (b) The main activity of its entities;   (c) Employment information including average number of employees;  
 (d) Accounting policies used in compiling a nd consolidating the information published; 
  (e) Policies applied in respect of transfer pricing.   The information provided for the transna tional corporation as a whole should as far as 
practicable be broken down: 
 
By geographical area or country, as appropriate , with regard to the activities of its main 
entities, sales, operating results, significant new investments and number of employees; 
  By major line of business as regards sales and significant new investment. 
 
 The method of breakdown as well as details of information provided should/shall be determined by the nature, scale and interrelationships  of the transnational corporation's operations, 
with due regard to their significan ce for the areas or countries concerned. 
 
 The extent, detail and frequency of the info rmation provided should take into account the 
nature and size of the transnational corporation as a whole, the requirements of confidentiality and 
effects on the transnational corporation's comp etitive position as well as the cost involved in 
producing the information.  WT/WGTI/W/52 
Page 13 
 
 
 The information herein required should, as nec essary, be in addition to information required 
by national laws, regulations and administrative pr actices of the countries in which transnational 
corporations operate.  45. Transnational corporations should/shall supply to the competent authorities in each of the 
countries in which they operate, upon request or on a regular basis as specified  by those authorities, 
and in accordance with national legislation, all info rmation required for legislative and administrative 
purposes relevant to the activities and policies of their entities in the country concerned. 
  Transnational corporations should/shall, to the extent permitted by the provisions of the 
relevant national laws, regulations, administrative practices and policies of the countries concerned, 
supply to competent authorities in the countries in which they operate information held in other 
countries needed to enable them to obtain a true a nd fair view of the operations of the transnational 
corporation concerned as a whole in so far as the in formation requested relates to the activities of the 
entities in the countries seeking such information. 
 
 The provisions of paragraph 51 concerning conf identiality shall apply to information supplied 
under the provisions of this paragraph.  46. With due regard to the relevant provisions of the ILO Tripartite Declaration of Principles 
concerning Multinational Enterprises and Social  Policy and in accordance with national laws, 
regulations and practices in the field of labour relations, transnational corporations should/shall 
provide to trade unions or other representatives of employees in their entities in each of the countries 
in which they operate, by appropriate means of  communication, the necessary information on the 
activities dealt with in this code to enable them to  obtain a true and fair view of the performance of 
the local entity and, where appropriate, the corpor ation as a whole.  Such information should/shall 
include, where provided for by national law and practices, inter alia , prospects or plans for future 
development having major economic and social effects on the employees concerned.   Procedures for consultation on matters of mu tual concern should/shall be worked out by 
mutual agreement between entities of transnati onal corporations and trade unions or other 
representatives of employees in accordance with national law and practice. 
 
 Information made available pursuant to the provi sions of this paragraph should be subject to 
appropriate safeguards for confidentiality so that no damage is caused to the parties concerned. 
  
TREATMENT OF TRANSNATIONAL CORPORATIONS  
 
A.  General treatment of transnational corpor ations by the countries in which they operate  
 
 47. States have the right to regulate the entry and establishment of transnational corporations 
including determining the role that such corporations may play in  economic and social development 
and prohibiting or limiting the extent of  their presence in specific sectors. 
 48. Transnational corporations should receive [fair and] equitable [and non-discriminatory] 
treatment [under] [in accordance with] the laws, re gulations and administrative practices of the 
countries in which they operate [as well as intergov ernmental obligations to which the Governments 
of these countries have freely subscribed] [consistent with their international obligations] [consistent 
with international law].  WT/WGTI/W/52 
Page 14  
 
49. Consistent with [nationa l constitutional systems and] national needs to [protect 
essential/national economic interests,] maintain public  order and to protect national security, [and 
with due regard to provisions of agreements am ong countries, particularly developing countries,] 
entities of transnational corporations should be gi ven by the countries in which they operate [the 
treatment] [treatment no less favourable than that] [appropriate treatment].
*  accorded to domestic 
enterprises under their laws, regulations and administrative practices [when the circumstances in 
which they operate are similar/iden tical] [in like situations].  [Tra nsnational corporations should not 
claim preferential treatment or the incentives and c oncessions granted to domestic enterprises of the 
countries in which they operate.]  [Such treatment  should not necessarily include extension to entities 
of transnational corporations of incentives and con cessions granted to domestic enterprises in order to 
promote self-reliant development or protect essential economic interests.]** 
 [50. Endeavouring to assure the clarity and stab ility of national policies, laws, regulations and 
administrative practices is of acknowledged importa nce.  Laws, regulations and other measures 
affecting transnational corporations should be public ly and readily available.  Changes in them should 
be made with proper regard to the legitimate right s and interests of all concerned parties,  including 
transnational corporations.]  [To be deleted]  51. Information furnished by transnational corpora tions to the authorities in  each of the countries 
in which they operate containing [legitimate busin ess secrets] [confidentia l business information] 
should be accorded reasonable safeguards normally app licable in the area in which the information is 
provided, particularly to protect its confidentiality.  [52. In order to achieve the purpo ses of paragraph 25 relating to managerial and technical training 
and employment of nationals of the countries in whic h transnational corporations operate, the transfer 
of those nationals between the entiti es of a transnational corporation s hould, where consis tent with the 
laws and regulations of the count ries concerned, be facilitated.] 
 [To be deleted]  
53. Transnational corporations should be able to transfer freely and without restriction all 
payments relating to their investments such as in come from invested capital and the repatriation of 
this capital when this investment is terminated, and licensing and technical assistance fees and other royalties, without prejudice to the relevant provisi ons of the "Balance of payments and financing" 
section of this Code and, in particular, its paragraph 29.] 
 
[To be deleted]  
B.  Nationalization and compensation  
 
54. [In the exercise of its right to nationalize or  expropriate totally or partially the assets of 
transnational corporations operating in its terr itory, the State adopting those measures should pay 
adequate compensation taking into account its own laws and regulations a nd all the circumstances 
which the State may deem relevant.  When the ques tion of compensation gives rise to controversy or 
should there be a dispute as to whether a nationaliza tion or expropriation has taken place, it shall be 
settled under the domestic law of the nationalizing or expropriating State and by its tribunals.] 
 
                                                     
 
* In this alternative, the sentence will end here. 
** Some delegations preferred not to have a second sentence. WT/WGTI/W/52 
Page 15 
 
 
 [In the exercise of their sovereignty, States have the right to nationalize or expropriate 
foreign-owned property in their territory.  Any such taking of property whether direct or indirect, consistent with international law, must be non- discriminatory, for a public purpose, in accordance 
with due process of law, and not be in violation of sp ecific undertakings to the contrary by contract or 
other agreement;  and be accompanied by the payment of prompt, adequate and effective 
compensation.  Such compensation should correspond to  the full value of the property interests taken, 
on the basis of their fair market value, including going concern value, or where appropriate other internationally accepted methods of valuation, dete rmined apart from any effects on value caused by 
the expropriatory measure or measures, or the e xpectation of them.  Such compensation payments 
should be freely convertible and tr ansferable, and should not be subject to any restrictive measures 
applicable to transfers of payments, income or capital.] 
  [In the exercise of its sovereignty, a State has the right to nationalize or expropriate totally or partially the assets of transnational corporations in  its territory, and appropriate compensation should 
be paid by the State adopting such measures, in a ccordance with its own laws and regulations and all 
the circumstances which the State deems relevant .  Relevant internatio nal obligations freely 
undertaken by the States concerned apply.]   [A State has the right to nationalize or expropriate the assets of transnational corporations in its territory against compensati on, in accordance with its own laws and regulations and its 
international obligations.] 
 
C.  Jurisdiction  
 
[55.] [Entities of transnational corporations are s ubject to the jurisdiction of the countries in which 
they operate.] 
 
[An entity of a transnational corporation operating in a given country is subject to the jurisdiction of 
such a country] [in respect of its operations in that country.]  [To be deleted]  
56. [Disputes between a State and an entity of a tr ansnational corporation operating in its territory 
are subject to the jurisdiction of the courts and other competent authorities of that State unless amicably settled between the parties.]   [Disputes between a State and an entity of a tr ansnational corporation which are not amicably 
settled between the parties or re solved in accordance with previ ously agreed dispute settlement 
procedures, should be submitted to competent courts or  other authorities, or to other agreed means of 
settlement, such as arbitration.]   [Disputes between States and entities of transn ational corporations, which are not amicably 
settled between the parties, shall/s hould be submitted to competent na tional courts or authorities in 
conformity with the principle of paragraph 7.  Where the parties so agree, such disputes may be 
referred to other mutually acceptable dispute settlement procedures.]  [57. In contracts in which at least one party is an entity of a transnational corporation the parties 
should be free to choose the applicable law and the form for settlement of disputes, including 
arbitration, it being understood that such a choice ma y be limited in its effects by the law of the 
countries concerned.]  [To be deleted]  WT/WGTI/W/52 
Page 16  
 
58. [States should [use moderation and restraint in  order to] [seek to] avoid [undue] encroachment 
on a Jurisdiction more [properly appertaining to, or more] appropriately exercisable, by another 
State.]  Where the exercise of jurisdiction over tr ansnational corporations and their entities by more 
than one State may lead to conflicts of jurisd iction, States concerned should endeavour to adopt 
mutually acceptable [principles and procedures, b ilaterally or multilaterally, for the avoidance or 
settlement of such conflicts,] [arrangements] on the b asis of respect for [their mutual interests] [the 
principle of sovereign equality and mutual interests.]  [To be placed in the section on intergovernmental co-operation.]  
 
INTERGOVERNMENTAL CO-OPERATION  
 
59. [It is acknowledged] [States agree] that intergovernmental co-operation is essential in 
accomplishing the objectives of the Code. 
 
60. [States agree that] intergovernmental co-ope ration should be establishe d or strengthened at 
the international level and, where appropriate, at th e bilateral, regional and in terregional levels [with a 
view to promoting the contribution of transnati onal corporations to th eir developmental goals, 
particularly those of developing countries, while controlling and eliminating their negative effects].
* 
 
61. States [agree to] [should] exchange informa tion on the measures they have taken to give 
effect to the Code and on their experience with the Code.  62. States [agree to] [should] consult on a bilateral or multilateral basis, as  appropriate, on matters 
relating to the Code and its application [in pa rticular on conflicting requirements imposed on 
transnational corporations by the countries in wh ich they operate and issues of conflicting national 
jurisdictions] [in particular in relation to conf licting requirements imposed by parent companies on 
their entities operating in different countries] and w ith respect to the development of international 
agreements and arrangements on issues related to the Code. 
 63. States [agree to] [should] take into consideration the objectives of the Code as reflected in its 
provisions when negotiating bilateral or multi lateral agreements concerning transnational 
corporations.  64. States [agree not to use] [should not use] transnational corporations as instruments to 
intervene in the internal or extern al affairs of other States [and agree to take appropriate action within 
their jurisdiction to prevent transnational corpor ations from engaging in activities referred to in 
paragraph 15 to 17 of this Code].  65. Government action on behalf of a transnati onal corporation operating in another country 
should/shall be subject to the principle of exhaus tion of local remedies provided in such a country 
and, when agreed among the Governments concerned,  to procedures for dealing with international 
legal claims.  Such action should not in any event am ount to the use of any type of coercive measures 
not consistent with the Charter of the Unite d Nations and the Declaration on Principles of 
International Law concerning Fr iendly Relations and Co-operation among States in accordance with 
the Charter of the United Nations.  
                                                     
 
* It is agreed that the last bracketed text will be deleted provided that the concept embodied therein is 
referred to in the section on objectives. WT/WGTI/W/52 
Page 17 
 
 
 
IMPLEMENTATION OF THE CODE OF CONDUCT  
 
A.  Action at the national level  
  
66. In order to ensure and promote implementati on of the Code at the national level, States 
shall/should, inter alia : 
  (a) Publicize and disseminate the Code; 
 
 (b) Follow the implementation of the Code within their territories;  
(c) Report to the United Nations Commissi on on Transnational Corporations on the 
action taken at the national level to prom ote the code and on the experience gained 
from its implementation; 
 
(d) Take actions to reflect their support for the Code and take into account the objectives 
of the Code as reflected in its provi sions when introducing implementing and 
reviewing laws, regulations and administra tive practices on matters dealt with in the 
Code. 
 
B.  International institutional machinery  
 
67. The United Nations Commission on Transnationa l Corporations shall assume the functions of 
the international institutional machinery for the im plementation of the Code.  In this capacity, the 
Commission shall be open to the participation of all States having accepted the Code.  [It may 
establish the subsidiary bodies and specific proce dures it deems necessary for the effective discharge 
of its functions.]  The United Nations  Centre of Transnational Corporations shall act as the secretariat 
to the Commission.  68. The Commission shall act as the focal intern ational body within the United Nations system 
for all matters related to the Code.  It shall est ablish and maintain close contacts with other United 
Nations organizations and specialized agencies dea ling with matters related to the Code and its 
implementation with a view to co-ordinating work related to the Code.  Wh en matters covered by 
international agreements or arrangements, specifi cally referred to in the Code, which have been 
worked out in other United Nations forums, arise, the Commission shall forward such matters to the 
competent bodies concerned with such agreements or arrangements. 
 69. The Commission shall have the following functions:  
(a) To discuss at its annual sessions matters related to the Code.  If agreed by the Governments engaged in consu ltations on specific issues related to the Code, the Commission 
shall facilitate such intergovernmental consultati ons to the extent possible.  [Representatives 
of trade unions, business, consumer and othe r relevant groups may express their views on 
matters related to the Code through the non-gove rnmental organizations represented in the 
Commission.] 
 
(b) Periodically to assess the implementation of the Code, such assessments being based 
on reports submitted by Governments and, as appropriate, on documentation from United 
Nations organizations and specialized agencies performing work relevant to the Code and 
non-governmental organizations represented in the Commission.  The first assessment shall 
take place not earlier than two years and not later than three years after the adoption of the 
Code.  The second assessment shall take place two years after the first one.  The Commission WT/WGTI/W/52 
Page 18  
 
shall determine whether a periodicity of two y ears is to be maintained or modified for 
subsequent assessments.  The format of assessments shall be determined by the Commission. 
 
[(c) To provide [, upon the request of a Govern ment,] clarification of the provisions of the 
Code in the light of actual situations in whic h the applicability and implications of the Code 
have been the subject of intergovernmental cons ultations.  In clarifying the provisions of the 
Code, the Commission shall not draw conclusi ons concerning the conduct of the parties 
involved in the situation which led to the request for clarification.  The clarification is to be 
restricted to issues illustrated by such a s ituation.  The detailed procedures regarding 
clarification are to be determined by the Commission.] 
 
[To be deleted.] 
 
(d) To report annually to the General As sembly [through the Economic and Social 
Council] on its activities regarding the implementation of the Code. 
 
(e) To facilitate intergovernmental arrang ements or agreements on specific aspects 
relating to transnational corporations up on request of the Governments concerned. 
 70. The United Nations Centre on Transnational Co rporations shall provide assistance relating to 
the implementation of the Code, inter alia , by collecting, analysing and disseminating information 
and conducting research and surveys, as required and specified by the Commission. 
 
C.  Review procedure  
 
71. The Commission shall make recommendati ons to the General Assembly [through the 
Economic and Social Council] for the purpose of revi ewing the Code.  The first review shall take 
place not later than six years after the adoption of th e Code.  The General Assembly shall establish, as 
appropriate, the modalities for reviewing the Code.
* 
  
Notes  
 
a
/ No drafting was done on the Preamble and Obj ectives of the Code.  However, the following 
text was drafted during the discussion on other parts of the Code and the decision was taken to place it 
in one of the substantive introductory parts of the Code:  
"For the purposes of this Code, the principles set out in the Tripartite Declaration of Principles 
concerning Multinational Enterprises and Social Policy, adopted by the Governing Body of the International Labour Office, should apply in the fiel d of employment, training, conditions of work and 
life and industrial relations." (No decision has yet been taken on the exact location of this paragraph.)  
b
/ Some delegations accepted paragraphs 26, 30,  31 and 32 on balan ce of payments and 
financing on an ad referendum basis. 
 c
/ The placement of this paragraph has not yet been decided. 
                                                      
* Further discussion of this provi sion will take place after related issu es, such as the mode of adoption 
and the legal nature of the code, have been settled. WT/WGTI/W/52 
Page 19 
 
 
 
Appendix  
 
NON-COLLABORATION BY TRANSNATIONAL CORPORATIONS WITH  
RACIST MINORITY  
 
REGIMES IN SOUTHERN AFRICA  a/ 
 14. In accordance with the efforts of the inte rnational community towards the elimination of 
apartheid
 in South Africa and its illegal occupation of Namibia, 
 
(a) Transnational corporations shall/shoul d refrain from operations and activities 
supporting and sustaining the racist minority regime of South Africa in maintaining the system of apartheid
 and the illegal occupation of Namibia; 
 
(b) Transnational corporations shall/should e ngage in appropriate activities within their 
competence with a view to eliminating racial discrimination and all other aspects of the system of apartheid
; 
 
(c) Transnational corporations shall/should co mply strictly with obligations resulting 
from Security Council decisions and shall/should fully respect those resulting from all 
relevant United Nations resolutions; 
 
(d) With regard to investment in Namibia, transnational corporations shall/should comply 
strictly with obligations resulting from Security Council resolution 283 (1970) and other relevant Security Council decisions and sh all/should fully respect those resulting from all 
relevant United Nations resolutions. 
  
Notes  
 
a
/ The text of paragraph 14 was agreed ad referendum in the working group on paragraph 14, 
but no final decision thereon was taken by the Commission. 
 WT/WGTI/W/52 
Page 20  
 
ANNEX 2
 
 
UNITED NATIONS  
ECONOMIC AND SOCIAL COUNCIL  
 Distr.  GENERAL 
  E/1990/94  12 June 1990  
 ORIGINAL: ENGLISH 
_________________________________________________________________________________  Second regular session of 1990 Item 7(d) of the provisional agenda
* 
 
 
DEVELOPMENT AND INTERNATIONAL ECONOMIC CO-OPERATION: 
TRANSNATIONAL CORPORATIONS 
 
Letter dated 31 May 1990 from the Ch airman of the reconvened special  
session of the Commission on Transnational Corporations to the  
President of the Economic and Social Council  
   In accordance with Economic and Social Counc il resolution 1990/204, the special session of 
the Commission on Transnational Corporations was reconvened on 24 May 1990 "with a view to 
concluding the work on the formulation of the c ode of conduct on transnational corporations for 
transmission to the Economic and Social Council at its second regular session".  That resolution was 
in consonance with the decision of the enlarged Bu reau of the reconvened special session to conclude 
negotiations by May 1990.  Those negotiations began more than a decade ago and in recent years they 
have concentrated on a few important outstanding issues.  In 1988, the Chairman of the reconvened 
special session and the Secretary-General prepared a text of the draft code, drawing upon the 
discussions and proposals presented over the years.  That text was reproduced in document E/1988/39/Add.1.   During the meetings of the enlarged Bureau in  January 1990, a number of amendments were 
submitted, which were discussed in April and May.   In the light of the April discussions, the 
Secretary-General prepared a draft code of conduc t, which was distributed informally.  Although it 
was not possible to agree on a final draft code of cond uct, it is important to note that the vast majority 
of its provisions have already been accepted.  It should therefore not be difficult to reach agreement 
on compromise formulations of the remaining provisi ons.  In an effort to facilitate that compromise 
while preserving the already agreed texts, the Chai rman, at the meeting on 24 May 1990, announced 
that he would transmit to the Economic and Social Council the text of a draft code of conduct, based 
on document E/1988/39/Add.l and bearing in mind the informal draft of the Secretary-General and the discussion in the enlarged Bureau.  That text is annexed hereto. 
 
                                                     
 
* E/1990/92 
 90-14844 1652e (E) WT/WGTI/W/52 
Page 21 
 
 
  The Bureau considers that the work of the reconvened special session of the Commission on 
Transnational Corporations has been concluded an d it is the Chairman's impression that the text 
annexed will receive the support of the overwhelmi ng majority of countries from all regional groups. 
 
 
 (Signed) Miguel Marin-Bosch  Chairman  Reconvened special session of the  Commission of Transnational Corporations 
 WT/WGTI/W/52 
Page 22  
 
 
Annex
 
 
PROPOSED TEXT OF THE DRAFT CODE OF CONDUCT 
ON TRANSNATIONAL CORPORATIONS 
 
CONTENTS 
          P a r a g r a p h s  
 PREAMBLE  
DEFINITIONS AND SCOPE OF APPLICATION    1 - 6 
 ACTIVITIES OF TRANSNATIONAL CORPORATIONS   7 – 46  A. General
         7  -  2 0  
 
 Respect for national sovereignty and observance of domestic  laws, regulations and administrative practices    7 – 9   Adherence to economic goals and development objectives,  policies and priorities       10 - 11 
 
 Review and renegotiation of c ontracts and agreements   12 
  Adherence to socio-cultural objectives and values   13  
 Respect for human rights and fundamental freedoms   14 
  Non-collaboration by transnational corporations with the  racist minority regime in South Africa     15   Non-interference in internal affairs of host countries   16 
 
 Non-interference in intergover nmental relations    17 - 19 
  Abstention from corrupt practices     20  
B. Economic, financial and social
      21 – 43 
  Ownership and control       21 – 24   Employment conditions and industrial relations    25  
 Balance of payments and financing     26 – 32 
  T r a n s f e r  p r i c i n g         3 3    T a x a t i o n         3 4  WT/WGTI/W/52 
Page 23 
 
 
 
CONTENTS (continued) 
 
          P a r a g r a p h s  
 
 Competition and restrictive business practices    35 
  Transfer of technology       36   Consumer protection       37 - 40 
 
 Environmental protection      41 - 43  C. Disclosure of information
      44 – 46 
 
TREATMENT OF TRANSNATIONAL CORPORATIONS   47 – 58 
 A. General provisions relating to the treatment of
 
 transnational corporations       4 7  -  5 4  
 B. Nationalization and compensation
     5 5  
 
C. Jurisdiction         5 6  
 D. Dispute Settlement
       57 – 58 
 
INTERGOVERNMENTAL CO-OPERATION     59 – 65 
 IMPLEMENTATION OF THE CODE OF CONDUCT    66 - 71  A. Action at the national level
      6 6  
 
B. International institutional machinery      67 – 70 
 C. Review procedure
       7 1  
 WT/WGTI/W/52 
Page 24  
 
 
PREAMBLE 
 
 The General Assembly
, 
  Recalling
 Economic and Social Council resolutio ns 1908 (LVII) of 2 August 1974 and 
1913 (LVII) of 5 December 1974, establishing the Commission on Transnational Corporations and 
the United Nations Centre on Transnational Corporati ons with the mandate, as their highest priority of 
work, of concluding a Code of Conduct on Transnational Corporations,   Convinced
 that a universally accepted, comprehens ive and effective Code of Conduct on 
Transnational Corporations is an essential elemen t in the strengthening of international economic and 
social co-operation and, in particular, in achievi ng one of the main goals and objectives in that 
co-operation, namely, to maximize the contributi ons of transnational corporations to economic 
development and growth and to minimize the negativ e effects of the activities of these corporations. 
 
Decides  to adopt the following Code of Conduct on Transnational Corporations: 
  
DEFINITIONS AND SCOPE OF APPLICATION 
 1. (a) This Code is universally  applicable to enterprises, i rrespective of their country of 
origin and their ownership, including private, publ ic or mixed, comprising entities in two or more 
countries, regardless of the legal form and fields of activity of these entities, which operate under a 
system of decision-making, permitti ng coherent policies and a common strategy through one or more 
decision-making centres, in which th e entities are so linked, by ownership or otherwise, that one or 
more of them may be able to exercise a significa nt influence over the activities of others and, in 
particular, to share knowledge, resources and res ponsibilities with the others.  Such enterprises are 
referred to in this Code as transnational corporations. 
  (b) The term "entities" in the Code refers to both parent entities - that is, entities which 
are the main source of influence over others - a nd other entities, unless otherwise specified in the 
Code. 
 
 (c) The term "transnational cor poration" in the Code refers to  the enterprise as a whole or 
its various entities.   (d) The term "home country" means the country in which the parent entity is located.  
The term "host country" means a country other than the home country in which an entity other than 
the parent entity is located.   (e) The term "country in which a transnationa l corporation operates" refers to a home or 
host country in which an entity of a tran snational corporation conducts operations. 
 
2. For the application of this Code, it is irrele vant whether or not enterprises as described in 
paragraph 1(a) above are referred to in any country as transnational corporations. 
 3. The Code is universally applicable in all States, regardless of their political and economic 
systems or their level of development. 
 WT/WGTI/W/52 
Page 25 
 
 
4. The provisions of the Code addressed to tran snational corporations reflect good practice for 
all enterprises.  Subject to the provisions of para graph 52, wherever the provisions of the Code are 
relevant to both, transnational corporations and domestic enterprises shall be subject to the same 
expectations with regard to their conduct.  
5. Subject to the relevant constitutions, charte rs or other fundamental laws of the regional 
groupings of States concerned, any reference in this  Code to States, countries or Governments, also 
includes regional groupings of States, to the extent th at the provisions of this Code relate to matters 
within these groupings' own competence, with respect to such competence.  
6. In their interpretation and application the pr ovisions of this Code ar e interrelated and each 
provision should be construed in the context of the other provisions.  
ACTIVITIES OF TRANSNATIONAL CORPORATIONS 
A.  General
 
 
Respect for national sovereignty and observance of  domestic laws, regulations and administrative  
practices  
 7. Transnational corporations shall respect th e national sovereignty of the countries in which 
they operate and the right of each State to exercise its permanent sovereignty over its natural wealth 
and resources.  
8. An entity of a transnational corporation is subject to the laws, regulations and established 
administrative practices of the country in which it operates.  9. Transnational corporations shall respect th e right of each State to regulate and monitor 
accordingly the activities of their en tities operating within its territory. 
 
Adherence to economic goals and devel opment objectives, policies and priorities
 
 10. Transnational corporations should carry out their activities in conformity with the 
development policies, objectives and priorities set out  by the Governments of the countries in which 
they operate and work seriously towards making a positive contribution to the achievement of such 
goals at the national and, as appropriate, the re gional level, within the framework of regional 
integration programmes.  Transnational corporations  should co-operate with the Governments of the 
countries in which they operate with a view to c ontributing to the development process and should be 
responsive to requests for consultation in this respect, thereby establishing mutually beneficial 
relations with these countries. 
 
11. Transnational corporations should carry out th eir operations in conformity with applicable 
intergovernmental co-operative arrangements conc luded by the countries in which they operate. 
 Review and renegotiation of  contracts and agreements
 
 
12. (a) Contracts or agreements between Gove rnments and transnational corporations should 
be negotiated and implemented in good faith.  In su ch contracts or agreements, especially long-term 
ones, review or renegotiation clauses should normally be included.  WT/WGTI/W/52 
Page 26  
 
 (b) In the absence of such clauses and where there has been a fundamental change of the 
circumstances on which the contract or agreement was based, transnational corporations, acting in 
good faith, should co-operate with Governments for th e review or renegotiation of such contract or 
agreement.  
Adherence to socio-cultural objectives and values
 
 13. Transnational corporations should respect the social and cultural objectives, values and 
traditions of the countries in which they operate.  While economic and technological development is 
normally accompanied by social change, transnati onal corporations should avoid practices, products 
or services which cause detrimental effects on cultural patterns and socio-cultural objectives as 
determined by Governments.  For this purpose, tr ansnational corporations should respond positively 
to requests for consultations from Governments concerned. 
 Respect for human rights and fundamental freedoms
 
 
14. Transnational corporations shall respect human rights and fundamental freedoms in the 
countries in which they operate.  In their social and industrial relations, transnational corporations shall not discriminate on the basis of race, colour , sex, religion, language, social, national and ethnic 
origin or political or other opinion.  Transnationa l corporations shall conf orm to government policies 
designed to extend equality of opportunity and treatment. 
 
Non-collaboration by transnational corporations w ith the racist minority regime in South Africa
 
 15. In accordance with the efforts of the inte rnational community towards the elimination of 
apartheid
 in South Africa, 
 
 (a) Transnational corporations shall refra in from operations and activities supporting and 
sustaining the racist minority regime of South Africa in maintaining the system of apartheid ; 
  (b) Transnational corporations shall enga ge in appropriate activities within their 
competence with a view to eliminating racial discr imination and all other aspects of the system of 
apartheid
; 
  (c) Transnational corporations shall comply strictly with obligations resulting from Security Council decisions and shall fully respect  those resulting from all relevant United Nations 
resolutions. 
 
Non-interference in internal affairs of host countries
 
 16. Without prejudice to the participation of tr ansnational corporations in activities that are 
permissible under the laws, regulations or established administrative practices of host countries, and without prejudice to paragraph 8 of the Code, tran snational corporations shall not interfere in the 
internal affairs of host countries. 
 Non-interference in inte rgovernmental relations
 
 17. Transnational corporations shall not interfere in  intergovernmental relations provided that this 
provision shall not preclude such activities as are sa nctioned within the framework of bilateral or 
multilateral co-operation.  18. Transnational corporations should not request Governments acting on their behalf to take the 
measures referred to in the second sentence of paragraph 65. 
 WT/WGTI/W/52 
Page 27 
 
 
19. With respect to the exhaustion of local re medies, transnational corporations should not 
request Governments to act on their behalf in  any manner inconsistent with paragraph 65. 
 Abstention from corrupt practices
 
 
20. (a) Transnational corporations shall refra in, in their transactions, from the offering, 
promising or giving of any payment, gift or other adva ntage to or for the benefit of a public official as 
consideration for performing or refraining from the pe rformance of his duties in connection with those 
transactions.  
 (b) Transnational corporations shall maintain  accurate records of any payments made by 
them to any public official or intermediary.  They  shall make available these records to the competent 
authorities of the countries in which they operate,  upon request, for investigations and proceedings 
concerning those payments.  
B.  Economic, financial and social
 
 Ownership and control
 
 21. Transnational corporations should make ever y effort so to allocate their decision-making 
powers among their entities as to enable them to c ontribute to the economic and social development 
of the countries in which they operate. 
 22. To the extent permitted by na tional laws, policies and established administrative practices of 
the country in which it operates, each entity of a tr ansnational corporation should co-operate with the 
other entities, in accordance with the actual distribution of responsibilities among them and consistent 
with paragraph 22, so as to enable  each entity to meet effectively the requirements established by the 
laws, policies and regulations of the country in which it operates. 
 23. Transnational corporations should carry out their personnel policies in accordance with the 
national policies of each of the countries in which they  operate which give priority to the employment 
and promotion of its nationals at all levels of mana gement and direction of the affairs of each entity so 
as to enhance the effective participation of its nationals in the decision-making process. 
 24. Transnational corporations should contribute to the managerial and technical training of 
nationals of the countries in which they operate and facilitate their employm ent at all levels of 
management of the entities and enterprises as a whole. 
 
Employment conditions and industrial relations
 
 25. For the purposes of this Code, the principles set  out in the Tripartite Declaration of Principles 
concerning Multinational Enterprises and Social Policy, adopted by the Governing Body of the International Labour Office, should apply in the fiel d of employment, training, conditions of work and 
life and industrial relations. 
 Balance of payments and financing
 
 26. Transnational corporations shall carry out th eir operations in conformity with laws and 
regulations and with full regard to the policy obj ectives set out by the Countries in which they 
operate, particularly developing c ountries, relating to balance of payments, financial transactions and 
other issues dealt with in the subsequent paragra phs of this section.  These obligations are without 
prejudice to multilaterally agreed trade rules and sound commercial practices.  WT/WGTI/W/52 
Page 28  
 
27. Transnational corporations  should respond positively to re quests for consultation on their 
activities from the Governments of the countries in which they operate, with a view to contributing to 
the alleviation of pressing problems of balance of payments and finance of such countries. 
 28. Transnational corporations should, where appropriate, contribute to the promotion and 
diversification of exports in the countries in whic h they operate and to an increased utilization of 
goods, services and other resources which are available in these countries.  29. Transnational corporations should be responsiv e to requests by Governments of the countries 
in which they operate, particularly developing co untries, concerning the phasing over a limited period 
of time of the repatriation of capital in case of disinvestment or remittances of accumulated profits, 
when the size and timing of such transfers woul d cause serious balance-of-payments difficulties for 
such countries.  30. Transnational corporations should not, contrary to genera lly accepted financial practices 
prevailing in the countries in which they operate,  engage in short-term financial operations or 
transfers or defer or advance foreign exchange pa yments, including intra-corporate payments, in a 
manner which would increase currency instability and thereby cause serious balance-of-payments 
difficulties for the countries concerned.  31. Transnational corporations should not impose restrictions on their entities, beyond generally 
accepted commercial practices prevailing in the countries in which they operate, regarding the transfer 
of goods, services and funds which would cause se rious balance-of-payments difficulties for the 
countries in which they operate.  32. When having recourse to the money and capital markets of the countries in which they 
operate, transnational corporations should not , beyond generally accepte d financial practices 
prevailing in such countries, engage in activities which would have a significant adverse impact on 
the working of local markets, particularly by restri cting the availability of funds to other enterprises.  
When issuing shares with the objec tive of increasing local equity par ticipation in an entity operating 
in such a country, or engaging in long-term borrowi ng in the local market, transnational corporations 
should consult with the Government of the country concerned upon its request on the effects of such 
transactions on the local money and capital markets. 
 Transfer pricing
 
 33. In respect of their intra-corporate transac tions, transnational corporations should not use 
pricing policies that are not based on relevant market  prices, or, in the absence of such prices, the 
arm's length principle, which have the effect of adversely affecting the tax revenues, the foreign 
exchange resources or other aspects of the econom y of the countries in which they operate. 
 Taxation
 
 
34. Transnational corporations shall not, contrary to the laws and regulations of the countries in 
which they operate, use their corporate structur e and modes of operation, such as the use of 
intra-corporate pricing which is not based on the arm' s length principle, or other means, to modify the 
tax base on which their entities are assessed.  
Competition and restrictive business practices
 
 35. For the purposes of this Code, the relevant provisions of the Set of Multilaterally Agreed 
Equitable Principles and Rules for the Control of  Restrictive Business Practices adopted by the 
General Assembly in its resolution 35/63 of 5 December 1980 apply in the field of restrictive business 
practices. WT/WGTI/W/52 
Page 29 
 
 
 Transfer of technology
 
 36. (a) Transnational corporations shall conf orm to the transfer of technology laws and 
regulations of the countries in which they operate .  They shall co-operate with the competent 
authorities of those countries in assessing the impact of international transfers of technology in their 
economies and consult with them re garding the various technological options which might help those 
countries, particularly developing countries, to attain their economic and social development. 
  (b) Transnational corporations in their transfer of technology transactions should, in 
accordance with the criteria set forth in the Se t of Multilaterally Agreed Equitable Principles and 
Rules for the Control of Restric tive Business Practices, avoid restrictive practices which adversely 
affect the international flow of technology, or  otherwise hinder the economic and technological 
development of countries, particularly developing countries.  
 (c) Transnational corporations should contribute to the strengthening of the scientific and 
technological capacities of developing countries, in accordance with the science and technology 
established policies and priorities of those countries .  Transnational corporations should undertake 
substantial research and development activities in developing countries and should make full use of 
local resources and personnel in this process.  
Consumer protection
 
 37. Transnational corporations shall carry out their operations, in particular production and 
marketing, in accordance with national laws, re gulations, administrative practices and policies 
concerning consumer protection of the countries in wh ich they operate.  Transnational corporations 
shall also perform their activities with due regard to relevant international standards, so that they do 
not cause injury to the health or endanger the safet y of consumers or bring about variations in the 
quality of products in each market which w ould have detrimental effects on consumers. 
 38. Transnational corporations shall, in respect  of the products and services which they produce 
or market or propose to produce or market in any country, supply to the competent authorities of that 
country on request or on a regular basis, as specified by these authorities, all relevant information 
concerning:   Characteristics of these products or services whic h may be injurious to the health and safety 
of consumers including experimental uses and related aspects; 
 
 Prohibitions, restrictions, warnings and othe r public regulatory measures imposed in other 
countries on grounds of health and safety protection on these products or services. 
 39. Transnational corporations should disclose to th e public in the countries in which they operate 
all appropriate information on the contents and, to the extent known, on possible hazardous effects of 
the products they produce or market in the countries concerned by means of proper labelling, 
informative and accurate advertising or other appr opriate methods.  Packaging of their products 
should be safe and the contents of the product should not be misrepresented.  40. Transnational corporations should be r esponsive to requests from Governments of the 
countries in which they operate and be prepared to co -operate with internationa l organizations in their 
efforts to develop and promote nati onal and international standards for the protection of the health and 
safety of consumers and to meet the basic needs of consumers.  WT/WGTI/W/52 
Page 30  
 
Environmental protection
 
 41. Transnational corporations shall carry out their activities in accordance with national laws, 
regulations, established administrative practices and policies relating to the preservation of the 
environment of the countries in which they operate and with due regard to relevant international 
standards.  Transnational corporations should, in performing their activities, take steps to protect the 
environment and where damaged to rehabilitate it and should make efforts to develop and apply 
adequate technologies for this purpose.  42. Transnational corporations shall, in respect  of the products, processes and services they have 
introduced or propose to introduce in any country, su pply to the competent authorities of that country 
on request or on a regular basis, as specified by th ese authorities, all relevant information concerning: 
  Characteristics of these products, processes and other activities including experimental uses and 
related aspects which may harm the environment a nd the measures and costs necessary to avoid or at 
least to mitigate their harmful effects; 
  Prohibitions, restrictions, wa rnings and other public regulat ory measures imposed in other 
countries on grounds of protection of the envi ronment on these products, processes and services. 
 43. Transnational corporations should be r esponsive to requests from Governments of the 
countries in which they operate and be prepared wh ere appropriate to co-ope rate with international 
organizations in their efforts to develop and pr omote national and international standards for the 
protection of the environment.  
C.  Disclosure of information
 
 
44. Transnational corporations should disclose to the public in the countries in which they operate, by appropriate means of communication, clear, full and comprehensible information on the 
structure, policies, activities and operations of the transnational corporation as a whole.  The 
information should include financial as well as non-fi nancial items and should be made available on a 
regular annual basis, normally within six months and in any case not later than 12 months from the 
end of the financial year of the corporation.  In  addition, during the financial year, transnational 
corporations should wherever appropriate make  available a semi-annual summary of financial 
information.   The financial information to be disclosed a nnually should be provided where appropriate on a 
consolidated basis, together with suit able explanatory notes and should include, inter alia , the 
following:   (a) A balance sheet;   (b) An income statement, incl uding operating results and sales; 
 
 (c) A statement of allocation of net profits or net income;   (d) A statement of the sources and uses of funds;  
 (e) Significant new long-term capital investment; 
  (f) Research and development expenditure.   WT/WGTI/W/52 
Page 31 
 
 
  The non-financial information referred to in the first subparagraph should include, inter alia : 
  (a) The structure of the transnational corpor ation, showing the name and location of the 
parent company, its main entities, its percentage ownership, direct and indirect, in these entities, 
including shareholdings between them; 
  (b) The main activity of its entities;   (c) Employment information including average number of employees; 
 
 (d) Accounting policies used in compiling a nd consolidating the information published; 
  (e) Policies applied in respect of transfer pricing.  
 The information provided for the transna tional corporation as a whole should as far as 
practicable be broken down:   By geographical area or country, as appropriate , with regard to the activities of its main 
entities, sales, operating results, significant new investments and number of employees;  
 By major line of business as regards sales and significant new investment. 
  The method of breakdown as well as details of in formation provided should be determined by 
the nature, scale and interrelationships of the transna tional corporation's operati ons, with due regard to 
their significance for the areas or countries concerned. 
 
 The extent, detail and frequency of the info rmation provided should take into account the 
nature and size of the transnational corporation as a whole, the requirements of confidentiality and 
effects on the transnational corporation's comp etitive position as well as the cost involved in 
producing the information.  
 The information herein required should, as nec essary, be in addition to information required 
by national laws, regulations a nd established administrative practices of the countries in which 
transnational corporations operate.  45. (a) Transnational corporations shall suppl y to the competent authorities in each of the 
countries in which they operate, upon request or on a regular basis as specified  by those authorities, 
and in accordance with national legislation, all info rmation required for legislative and administrative 
purposes relevant to the activities and policies of their entities in the country concerned. 
  (b) Transnational corporations shall, to the extent permitted by the provisions of the 
relevant national laws, regulati ons, established administrative practices and policies of the countries 
concerned, supply to competent authorities in the coun tries in which they operate information held in 
other countries needed to enable them to obtain a true and fair view of the operations of the transnational corporation concerned as a whole in so  far as the information requested relates to the 
activities of the entities in the c ountries seeking such information. 
 
 (c) The provisions of paragraph 52 concerni ng confidentiality shall apply to information 
supplied under the provisions of this paragraph.  WT/WGTI/W/52 
Page 32  
 
46. (a) With due regard to the relevant provi sions of the ILO Tripartite Declaration of 
Principles concerning Multinational Enterprises a nd Social Policy and in accordance with national 
laws, regulations and practices in the field of labour relations, transnational co rporations shall provide 
to trade unions or other representatives of employees in their entities in each of the countries in which 
they operate, by appropriate means of communi cation, the necessary information on the activities 
dealt with in this Code to enable them to obtain a true and fair view of the performance of the local 
entity and, where appropriate, the corporation as a whole.  Such information shall include, where 
provided for by national law and practices, inter alia , prospects or plans for future development 
having major economic and social effects on the employees concerned.  
 (b) Procedures for consultation on matters of  mutual concern should be worked out by 
mutual agreement between entities of transnati onal corporations and trade unions or other 
representatives of employees in accordance with national law and practice.   (c) Information made available pursuant to the provisions of this paragraph should be 
subject to appropriate safeguards for confidentialit y so that no damage is caused to the parties 
concerned.   
TREATMENT OF TRANSNATIONAL CORPORATIONS 
 
A.  General provisions relating to the treatment
 
of transnational corporations  
  47. In all matters relating to the Code, States sha ll fulfil, in good faith, their obligations under 
international law. 
 48. States have the right to regulate the entry and establishment of transnational corporations 
including determining the role that such corpora tions may play in economic and social development 
and prohibiting or limiting the extent of  their presence in specific sectors. 
 
49. Transnational corporations shall receive fair and equitable treatment in the countries in which 
they operate.  50. Subject to national requirements for maintain ing public order and protecting national security 
and consistent with nati onal constitutions and basic laws, and without prejudice to measures specified 
in legislation relating to the declared developmen t objectives of the developing countries, entities of 
transnational corporations should be entitled to treatment no less favourable than that accorded to 
domestic enterprises in similar circumstances.  51. The importance of endeavouring to assure the clarity and stability of national policies, laws, 
regulations and established administ rative practices is ac knowledged.  Laws and regulations affecting 
transnational corporations should be publicly and readily available.  To the extent appropriate, 
relevant information regarding d ecisions of competent administrative bodies relating to transnational 
corporations should be disseminated.  52. Information furnished by transnational corpora tions to the authorities in  each of the countries 
in which they operate containi ng confidential business informati on shall be accorded reasonable 
safeguards normally applicable in the area in which th e information is provided, particularly to protect 
its confidentiality.  WT/WGTI/W/52 
Page 33 
 
 
53. In order to achieve the purposes of paragraph 24  relating to managerial and technical training 
and employment of nationals of the countries in whic h transnational corporations operate, the transfer 
of those nationals between the entities of a transnat ional corporation should, subject to the laws and 
regulations of the countries concerned, be facilitated.  
54. Transnational corporations are entitled to transfer  all payments legally due.  Such transfers are 
subject to the procedures laid down in the relevant  legislation of host countries, such as foreign 
exchange laws, and to restrictions for a limited pe riod of time emanating from exceptional balance of 
payment difficulties.  
B.  Nationalization and compensation
 
 55. It is acknowledged that States have the right  to nationalize or expropriate the assets of a 
transnational corporation operating in their territories,  and that adequate compen sation is to be paid by 
the State concerned, in accordance with th e applicable legal rules and principles. 
 
C.  Jurisdiction
 
 56. An entity of a transnational corporation is subj ect to the jurisdiction of the country in which it 
operates.  
D.  Dispute settlement
 
 57. Disputes between States and entities of transn ational corporations, which are not amicably 
settled between the parties, shall be submitted to co mpetent national courts or authorities.  Where the 
parties so agree, or have agreed, such disputes shall be referred to other mutually acceptable or 
accepted dispute settlement procedures. 
 58. Where the exercise of jurisdiction over transna tional corporations and their entities by more 
than one State may lead to conflicts of jurisdic tion, States concerned should endeavour to avoid or 
minimize such conflicts, and the problems to whic h they give rise by following an approach of 
moderation and restraint, respecting and accommodating the interests of Other States. 
 
 
INTERGOVERNMENTAL CO-OPERATION 
 59. It is acknowledged that intergovernmental co-operation is essential in accomplishing the 
objectives of the Code. 
 60. Intergovernmental co-operation should be est ablished or strengthened at the international 
level and, where appropriate, at the bila teral, regional and interregional levels. 
 61. States should exchange informa tion on the measures they have taken to give effect to the 
Code and on their experience with the Code. 
 62. States should consult on a bilateral or multilate ral basis, as appropriate , on matters relating to 
the Code and its application and with respect to the development of international agreements and 
arrangements on issues related to the Code. 
 
63. States should take into consideration the objec tives of the Code as reflected in its provisions 
when negotiating bilateral or multilateral agreem ents concerning transnational corporations. 
  WT/WGTI/W/52 
Page 34  
 
64. States should not use transnational corporations as instruments to intervene in the internal or 
external affairs of other States and should take appr opriate action within their jurisdiction to prevent 
transnational corporations from engaging in activiti es referred to in paragr aphs 16 and 17 of this 
Code.  
65. Government action on behalf of a transnationa l corporation operating in another country shall 
be subject to the principle of exhaustion of local  remedies provided in such a country and, when 
agreed among the Governments concerned, to procedur es for dealing with international legal claims.  
Such action should not in any event amount to the u se of any type of coercive measures not consistent 
with the Charter of the United Nations and the Declaration on Principles of International Law 
concerning Friendly Relations and Co-operation among States in accordance with the Charter of the 
United Nations.   
IMPLEMENTATION OF THE CODE OF CONDUCT 
 
A.  Action at the national level
 
 66. In order to ensure and promote the implemen tation of the Code at the national level, States 
should, inter alia : 
 
 (a) Publicize and disseminate the Code; 
  (b) Follow the implementation of the Code within their territories;   (c) Report to the United Nations Commissi on on Transnational Corporations on the 
action taken at the national level to promote the Code and on the experience gained from its 
implementation;   (d) Take action to reflect their support for the Code and take into account the objectives 
of the Code as reflected in its provisions when  introducing, implementin g and reviewing laws, 
regulations and administrative practices on matters dealt with in the Code. 
 
B.  International institutional machinery
 
 67. The United Nations Commission on Transnationa l Corporations shall assume the functions of 
the international institutional machinery for the im plementation of the Code.  In this capacity, the 
Commission shall be open to the participation of all States.  Consistent with United Nations practices, 
it may establish the subsidiary bodies and specifi c procedures it deems necessary for the effective 
discharge of its functions.  The United Nations Cent re on Transnational Corporations shall act as the 
secretariat to the Commission.  68. The Commission shall act as the international body within the United Nations system for all 
matters related to the Code.  It shall establish a nd maintain close contacts with other United Nations 
organizations and specialized agencies dealing with matters related to the Code and its 
implementation with a view to co-ordinating work related to the Code.  Wh en matters covered by 
international agreements or arrangements, specifi cally referred to in the Code, which have been 
worked out in other United Nations forums, arise, the Commission shall forward such matters to the 
competent bodies concerned with such agreements or arrangements. 
 WT/WGTI/W/52 
Page 35 
 
 
69. The Commission shall have the following functions:   (a) To discuss at its annual sessions matters related to the Code.  If agreed by the Governments engaged in consulta tions on specific issues related to the Code, the Commission shall 
facilitate such intergovernmental c onsultations to the extent possible.  Representatives of trade unions, 
business, consumer and other relevant groups may e xpress their views on matters related to the Code 
through the non-governmental organiza tions represented in the Commission. 
  (b) Periodically to assess the implementation of the Code, such assessments being based 
on reports submitted by Governme nts and, as appropriate, on doc umentation from United Nations 
organizations and specialized agencies performing wo rk relevant to the Code and non-governmental 
organizations represented in the Commission.  The first assessment shall take place not earlier than two years and not later than three years after th e adoption of the Code.  The second assessment shall 
take place two years after the first one.  The Commission shall determine whether a periodicity of two years is to be maintained or modified for subse quent assessments.  The format of assessments shall be 
determined by the Commission. 
  (c) To develop in the light of experience procedures for providing clarifications on provisions of the Code.   (d) To report annually to the General Assembly through the Economic and Social 
Council on its activities regarding the implementation of the Code. 
  (e) To facilitate intergovernmental arra ngements or agreements on specific aspects 
relating to transnational corporations up on request of the Governments concerned. 
 
70. The United Nations Centre on Transnational Co rporations shall provide assistance relating to 
the implementation of the Code, inter alia , by collecting, analysing and disseminating information 
and conducting research and surveys, as required and specified by the Commission.  
C.  Review procedure
 
 
71. The Commission shall make recommendations  to the General Assembly through the 
Economic and Social Council for the purpose of reviewing the provisions of the Code.  The first review shall take place not later than six years afte r the adoption of the Code.  The General Assembly 
shall establish, as appropriate, the modalities for reviewing the Code.  WT/WGTI/W/52 
Page 36  
 
ANNEX 3
 
 
THE SET OF MULTILATERALLY AGREED EQUITABLE PRINCIPLES AND RULES 
FOR THE CONTROL OF RESTRICTIVE BUSINESS PRACTICES*1 
AND  
RESOLUTION ADOPTED BY THE CONFERENCE STRENGTHENING THE 
IMPLEMENTATION OF THE SET** 
 
 
 
The Set of Multilaterally Agreed Equitable Princi ples and Rules for the Control of Restrictive 
Business Practices was adopted by the United Nations General Assembly at its thirty-fifth session on 5 December 1980 by its resolution 35/63.  The Second United Nations Conference to Review all 
Aspects of the Multilaterally Agreed Equitable Prin ciples and Rules for the Control of Restrictive 
Business Practices was held in Geneva from 26 November to 7 December 1990.  That Conference 
adopted a resolution on "Strengthening the implem entation of the Set" at its sixth meeting on 
7 December 1990.  A Third Review Conference  took place on 13-21 November 1995.  This 
Conference adopted a resolution calling for a number of concrete actions to give effect to the 
implementation of the Set.  
 
 
THE SET OF MULTILATERALLY AGREED EQUITABLE PRINCIPLES AND RULES 
FOR THE CONTROL OF RESTRICTIVE BUSINESS PRACTICES  
 
 
 The United Nations Conference on Restrictive Business Practices, 
  Recognizing  that restrictive business practices can adversely affect international trade, 
particularly that of developing countries, a nd the economic development of these countries, 
  Affirming  that a set of multilaterally agreed equitable principles and rules for the control of 
restrictive business practices can contribute to atta ining the objective in the establishment of a new 
international economic order to eliminate rest rictive business practices adversely affecting 
international trade and thereby contribute to deve lopment and improvement of international economic 
relations on a just and equitable basis,  
 Recognizing  also the need to ensure that restrictiv e business practices do not impede or negate 
the realization of benefits that should arise from the liberalization of tariff and non-tariff barriers 
affecting international trade, particularly those affecting the trade and de velopment of developing 
countries,  
                                                     
 
* Source : United Nations Conference on Trade and Development (1981). The Set of Multilaterally 
Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices , United Nations 
document TD/RBP/CONF/10/Rev.1 (New York: United Nations) [Note added by the editor]. 
1 The Set of Principles and Rules was adopted by the United Nations Conference on Restrictive 
Business Practices as an annex to its resolution of 22 April 1980. 
** Source : United Nations Conference on Trade and Development (1991). "Resolution Adopted by the 
Conference Strengthening the Implementation of the Set", Report of the Second United Nations Conference to 
Review all Aspects of the Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive 
Business Practices , United Nations document TD/RBP/CONF.3/9 (Geneva: United Nations), Annex, pp.48-51 
[Note added by the editor]. WT/WGTI/W/52 
Page 37 
 
 
 Considering  the possible adverse impact of restrictive business practices, including among 
others those resulting from the increased activities of  transnational corporations, on the trade and 
development of developing countries,   Convinced  of the need for action to be taken by co untries in a mutually reinforcing manner at 
the national, regional and internationa l levels to eliminate or effectively deal with restrictive business 
practices, including those of transnational corpora tions, adversely affecting international trade, 
particularly that of developing countries, a nd the economic development of these countries, 
  Convinced also  of the benefits to be derived from a un iversally applicable set of multilaterally 
agreed equitable principles and rules for the cont rol of restrictive business practices and that all 
countries should encourage their enterprises to follow in all respects the provisions of such a set of 
multilaterally agreed equitable principles and rules,   Convinced further  that the adoption of such a set of multilaterally agreed equitable principles 
and rules for the control of restrictive business practices will thereby facilitate the adoption and 
strengthening of laws and policies in the area of restrictive business practices at the national and regional levels and thus lead to improved conditions and a ttain greater efficiency and participation in 
international trade and development, particularly that of developing countries, and to protect and 
promote social welfare in general, and in particul ar the interests of consumers in both developed and 
developing countries, 
 
 Affirming also  the need to eliminate the disadvantages to trade and development which may 
result from the restrictive business practices of transnational corporations or other enterprises, and thus help to maximize benefits to international trade and particul arly the trade and development of 
developing countries, 
 
 Affirming further  the need that measures adopted by the States for the control of restrictive 
business practices should be applied fairly, equitabl y, on the same basis to all enterprises and in 
accordance with established procedures of law; and fo r States to take into account the principles and 
objectives of the Set of Multilaterally Agreed Equitable Principles and Rules,  
 Hereby agrees on  the following Set of Principles and Rules for the control of restrictive 
business practices, which take the form of recommendations:  
A.  Objectives  
  Taking into account the interests of all countries,  particularly those of developing countries, 
the Set of Multilaterally Agreed Equitable Principl es and Rules are framed in order to achieve the 
following objectives:   1. To ensure that restrictive business practi ces do not impede or negate the realization of 
benefits that should arise from the liberalization of  tariff and non-tariff barriers affecting world trade, 
particularly those affecting the trade a nd development of developing countries; 
  2. To attain greater efficiency in internatio nal trade and development, particularly that of 
developing countries, in accordance with national aims of economic and social development and 
existing economic structures, such as through: 
 
 (a) The creation, encouragement and protection of competition;   (b) Control of the concentration of capital and/or economic power;  
 (c) Encouragement of innovation; WT/WGTI/W/52 
Page 38  
 
  3. To protect and promote social welfare in general and, in particular, the interests of 
consumers in both develope d and developing countries; 
  4. To eliminate the disadvantages to trad e and development which may result from the 
restrictive business practices of transnational corpor ations or other enterprises, and thus help to 
maximize benefits to internationa l trade and particularly the trad e and development of developing 
countries;   5. To provide a Set of Multilaterally Agr eed Equitable Principles and Rules for the 
control of restrictive business practices for adoption at  the international level and thereby to facilitate 
the adoption and strengthening of laws and policies in  this area at the national and regional levels. 
 
B.  Definitions and scope of application  
  For the purpose of this Set of Multilaterally Agreed Equitable Principles and Rules: 
 
(i) Definitions  
 
 1. Restrictive business practices means acts or behaviour of enterprises which, through 
an abuse or acquisition and abuse of a dominant position of market power, limit access to markets or 
otherwise unduly restrain competition, having or bei ng likely to have adverse effects on international 
trade, particularly that of developing countries, and on the economic development of these countries, 
or which through formal, informal, written or unwritten agreements or  arrangements among 
enterprises, have the same impact.  
 2. Dominant position of market power refers to a situation where an enterprise, either by 
itself or acting together with a few other enterprises, is in a position to control the relevant market for 
a particular good or service or group of goods or services.   3. Enterprises means firms, partnerships, corporations, companies, other associations, 
natural or juridical persons, or any combination thereo f, irrespective of the mode of creation or control 
or ownership, private or State, which are e ngaged in commercial activities, and includes their 
branches, subsidiaries, affiliates, or other entiti es directly or indirectly controlled by them. 
 
(ii) Scope of application  
  4. The Set of Principles and Rules applies to restrictive business practices, including 
those of transnational corporations, adversely aff ecting international trade, particularly that of 
developing countries and the economic development of  these countries.  It applies irrespective of 
whether such practices involve enterprises in one or more countries.   5. The "principles and rules for enterprises,  including transnationa l corporations" apply 
to all transactions in goods and services. 
  6. The "principles and rules for enterpri ses, including transnational corporations" are 
addressed to all enterprises.  
 7. The provisions of the Set of Principles and Rules shall be universally applicable to all 
countries and enterprises regardless of the parties i nvolved in the transactions, acts or behaviour. 
  8. Any reference to "States" or "Gover nments" shall be construed as including any 
regional groupings of States, to the extent that they  have competence in the area of restrictive business 
practices. WT/WGTI/W/52 
Page 39 
 
 
  9. The Set of Principles and Rules shall not  apply to intergovernmental agreements, nor 
to restrictive business practices dir ectly caused by such agreements. 
 
C.  Multilaterally agreed equitable principles for the control of restrictive business practices  
 
 In line with the objectives set forth, the following principles are to apply: 
 
(i) General principles  
  1. Appropriate action should be taken in a mutually reinforcing manner at national, 
regional and international levels to  eliminate, or effectively deal with, restrictive business practices, 
including those of transnational corporations, adversel y affecting international trade, particularly that 
of developing countries and the econom ic development of these countries. 
 
 2. Collaboration between Governments at bilateral and multilatera l levels should be 
established and, where such collaboration has been es tablished, it should be im proved to facilitate the 
control of restrictive business practices.   3. Appropriate mechanisms should be devised at the international level and/or the use of 
existing international machinery improved to fac ilitate exchange and dissemination of information 
among Governments with respect to restrictive business practices. 
  4. Appropriate means should be devised  to facilitate the holding of multilateral 
consultations with regard to policy issues relati ng to the control of restrictive business practices. 
 
 5. The provisions of the Set of Princi ples and Rules should not be construed as 
justifying conduct by enterprises which is unlawful un der applicable national or regional legislation. 
 
(ii) Relevant factors in the application of the Set of Principles and Rules  
 
 6. In order to ensure the fair and equitable application of the Set of Principles and Rules, 
States, while bearing in mind the need to ensure  the comprehensive application of the Set of 
Principles and Rules, should take due account of the extent to which the conduct of enterprises, whether or not created or controlled by States, is accepted under applicable le gislation or regulations, 
bearing in mind that such laws and regulations sh ould be clearly defined and publicly and readily 
available, or is required by States. 
 
(iii) Preferential or differential treatment for developing countries  
 
 7. In order to ensure the equitable applicat ion of the Set of Principles and Rules, States, 
particularly developed countries, should take into account in their control of restrictive business 
practices the development, financial and trade needs of  developing countries, in particular of the least 
developed countries, for the purposes esp ecially of developing countries in: 
  (a) Promoting the establishment or developm ent of domestic industries and the economic 
development of other sectors of the economy,  and 
 
 (b) Encouraging their economic developmen t through regional or global arrangements 
among developing countries. WT/WGTI/W/52 
Page 40  
 
 
D. Principles and rules for enterprise s, including transnational corporations  
 
 1. Enterprises should conform to the re strictive business practices laws, and the 
provisions concerning restrictive business practices in other laws, of the countries in which they 
operate, and, in the event of proceedings under these laws, should be subject to the competence of the 
courts and relevant administrative bodies therein.   2. Enterprises should consult and co-opera te with competent authorities of countries 
directly affected in controlling restrictive business practices adversely affecting the interests of those 
countries.  In this regard, enterprises should also provide information, in particular details of 
restrictive arrangements, required for this purpose, including that which may be located in foreign 
countries, to the extent that in the latter event such production or disclosure is not prevented by 
applicable law or established public policy.  When ever the provision of information is on a voluntary 
basis, its provision should be in accordance with safeguards normally applicable in this field. 
 
 3. Enterprises, except when dealing with each  other in the context of an economic entity 
wherein they are under common control, including thr ough ownership, or otherwise not able to act 
independently of each other, engaged on the market  in rival or potentially rival activities, should 
refrain from practices such as the following when, through formal, informal, written or unwritten 
agreements or arrangements, they limit access to markets or otherwise unduly restrain competition, 
having or being likely to have adve rse effects on international trade, particularly that of developing 
countries, and on the economic de velopment of these countries: 
  (a) Agreements fixing prices, including as to exports and imports;  
 (b) Collusive tendering; 
  (c) Market or customer allocation arrangements;   (d) Allocation by quota to sales and production;  
 (e) Collective action to enforce arrangement s, e.g. by concerted refusals to deal; 
  (f) Concerted refusal of supplies to potential importers;   (g) Collective denial of access to an arrangement, or association, which is crucial to 
competition. 
  4. Enterprises should refrain  from the follow ing acts or behaviour in a relevant market 
when, through an abuse
* or acquisition and abuse of a dominan t position of market power, they limit 
access to markets or otherwise unduly restrain compe tition, having or being li kely to have adverse 
effects on international trade, particularly th at of developing countries, and on the economic 
development of these countries: 
                                                      
* Whether acts or behaviour are abusive or not should be examined in terms of their purpose and effects 
in the actual situation, in particular  with reference to whether they limi t access to markets or otherwise unduly 
restrain competition, having or being likely to have advers e effects on international trade, particularly that of 
developing countries, and on the economic development of these countries, and to whether they are: 
 (a) Appropriate in the light of the organizational, managerial and legal relationship among the 
enterprises concerned, such as in the context of relations within an economic entity and not having restrictive 
effects outside the related enterprises; 
 WT/WGTI/W/52 
Page 41 
 
 
  (a) Predatory behaviour towards competitors, such as using below-cost pricing to 
eliminate competitors; 
  (b) Discriminatory (i.e. unjustifiably differen tiated) pricing or terms or conditions in the 
supply or purchase of goods or services, in cluding by means of the use of pricing 
policies in transactions between aff iliated enterprises which overcharge or 
undercharge for goods or services purchased or supplied as compared with prices for similar or comparable transactions outside the affiliated enterprises; 
 
 (c) Mergers, takeovers, joint ventures or ot her acquisitions of control, whether of a 
horizontal, vertical or a conglomerate nature; 
  (d) Fixing the prices at which goods exported can be resold in importing countries;  
 (e) Restrictions on the importation of goods which have been legitimately marked abroad 
with a trademark identical with or similar to  the trademark protected as to identical or 
similar goods in the importing country where the trademarks in question are of the same origin, i.e. belong to the same owne r or are used by enterprises between which 
there is economic, organizational, manageri al or legal interdependence and where the 
purpose of such restrictions is to maintain artificially high prices; 
 
 (f) When not for ensuring the achievement of legitimate business purposes, such as 
quality, safety, adequate distribution or service: 
   (i) Partial or complete refusals to d eal on the enterprise's customary commercial 
terms; 
   (ii) Making the supply of particul ar goods or services dependent upon the 
acceptance of restrictions on the distribution or manufacture of competing or other goods; 
 
  (iii) Imposing restrictions concerning where, or to whom, or in what form or 
quantities, goods supplied or other g oods may be resold or exported; 
   (iv) Making the supply of particul ar goods or services dependent upon the 
purchase of other goods or services from the supplier or his designee. 
 
E.  Principles and rules for States at national, regional and subregional levels  
 
 1. States should, at the national level or  through regional groupings, adopt, improve 
and effectively enforce appropriate legislati on and implementing judicial and administrative 
procedures for the control of restrictive business practices, including those of transnational 
corporations. 
 
                                                                                                                                                                    
 
(b) Appropriate in light of speci al conditions or economic circumst ances in the relevant market 
such as exceptional conditions of supply and demand or the size of the market; 
 (c) Of types which are usually treated as acceptable  under pertinent national or regional laws and 
regulations for the control of restrictive business practices; 
 (d) Consistent with the purposes and objec tives of these principles and rules. WT/WGTI/W/52 
Page 42  
 
 2. States should base their legislation primarily on the principle of eliminating or effectively dealing with acts or behaviour of ente rprises which, through an abuse or acquisition and 
abuse of a dominant position of market power, limit access to markets or otherwise unduly restrain competition, having or being likely to have adverse effects on their trade or economic development, or 
which through formal, informal, written or unwritte n agreements or arrangements among enterprises 
have the same impact. 
  3. States, in their control of restrictiv e business practices, should ensure treatment of 
enterprises which is fair, equitable, on the same  basis to all enterprises, and in accordance with 
established procedures of law.  The laws and regul ations should be publicly and readily available. 
 
 4. States should seek appropriate remedial  or preventive measures to prevent and/or 
control the use of restrictive business practices with in their competence when it comes to the attention 
of States that such practices adversely affect inte rnational trade, and particularly the trade and 
development of the developing countries. 
 
 5. Where, for the purposes of the contro l of restrictive business practices, a State 
obtains information from enterprises containing le gitimate business secrets, it should accord such 
information reasonable safeguards normally applicable  in this field, particularly to protect its 
confidentiality.  
 6. States should institute or improve procedures for obtaining information from 
enterprises, including transnational corporations, ne cessary for their effective control of restrictive 
business practices, including in this respect details of restrictive agreements, undertakings and other 
arrangements.  
 7. States should establish appropriate mech anisms at the regional and subregional 
levels to promote exchange of information on rest rictive business practices and on the application of 
national laws and policies in this area, and to assi st each other to their mutual advantage regarding 
control of restrictive business practices at  the regional and s ubregional levels. 
  8. States with greater expertise in the opera tion of systems for the control of restrictive 
business practices should, on request, share their e xperience with, or otherwise provide technical 
assistance to, other States wishing to develop or improve such systems.   9. States should, on request, or at their own initiative when the need comes to their attention, supply to other States, particularly de veloping countries, publicly available information and, 
to the extent consistent with their laws and est ablished public policy, other information necessary to 
the receiving interested State for its effec tive control of restrictive business practices. 
 
F.  International measures  
 
 Collaboration at the international level should ai m at eliminating or effectively dealing with 
restrictive business practices, including those of tr ansnational corporations , through strengthening and 
improving controls over restrictive business practices adversely affecting international trade, particularly that of developing countries, and the economic development of these countries.  In this 
regard, action should include:  
 1. Work aimed at achieving common approaches in national policies relating to 
restrictive business practices compatible w ith the Set of Principles and Rules. 
 WT/WGTI/W/52 
Page 43 
 
 
 2. Communication annually to the Secret ary-General of UNCTAD of appropriate 
information on steps taken by States and regional groupings to meet their commitment to the Set of Principles and Rules, and information on the adopti on, development and appli cation of legislation, 
regulations and policies concerning restrictive business practices.  
 3. Continued publication annually by UNCTAD of a report on developments in 
restrictive business practices legislation and on restrictive business practices adversely affecting international trade, particularly the trade a nd development of developing countries, based upon 
publicly available information and as far as possible ot her information, particularly on the basis of 
requests addressed to all member States or provided at their own initiative and, where appropriate, to 
the United Nations Centre on Transnational Cor porations and other competent international 
organizations.   4. Consultations:  
 (a) Where a State, particularly of a deve loping country, believes that a consultation 
with another State or States is appropriate  in regard to an issue concerning control 
of restrictive business practices, it may requ est a consultation with those States with 
a view to finding a mutually acceptable solution.  When a consultation is held, the States involved may request the Secretary-General of UNCTAD to provide mutually agreed conference f acilities for such a consultation; 
 
 (b) States should accord full considerati on to requests for consultations and, upon 
agreement as to the subject of and the procedures for such a consultation, the 
consultation should take place at an appropriate time; 
 
 (c) If the States involved so agree, a joint report on the consultations and their results 
should be prepared by the States involved a nd, if they so wish, with the assistance 
of the UNCTAD secretariat, and be made available to the Secretary-General of UNCTAD for inclusion in the annual report on restrictive business practices. 
  5. Continued work within UNCTAD on the elaboration of a model law or laws on 
restrictive business practices in order to assist developi ng countries in devising appropriate legislation.  
States should provide necessary information and experience to UNCTAD in this connection. 
  6. Implementation within or facilitation by  UNCTAD, and other relevant organizations 
of the United Nations system in conjunction with  UNCTAD, of technical assistance, advisory and 
training programmes on restrictive business practi ces, particularly for developing countries: 
  (a) Experts should be provided to assist developing countries, at their request, in 
formulating or improving restrictive busin ess practices legislation and procedures; 
  (b) Seminars, training programmes or courses should be held, primarily in developing 
countries, to train officials involved or likely to be involved in administering 
restrictive business practices legislation and, in this connection, advantage should be 
taken, inter alia , of the experience and knowledg e of administrative authorities, 
especially in developed countries, in detecting the use of restrictive business practices; 
 
 (c) A handbook on restrictive business practices should be compiled;   (d) Relevant books, documents, manuals and any other information on matters related 
to restrictive business practices should be collected and made available, particularly 
to developing countries; WT/WGTI/W/52 
Page 44  
 
  (e) Exchange of personnel between restri ctive business practices authorities should be 
arranged and facilitated; 
  (f) International conferences on restrictiv e business practices legislation and policy 
should be arranged; 
  (g) Seminars for an exchange of views on restrictive business practices among persons 
in public and private sectors should be arranged. 
 
 7. International organizations and financ ing programmes, in particular the United 
Nations Development Programme, should be calle d upon to provide resources through appropriate 
channels and modalities for the fina ncing of activities set out in para graph 6 above.  Furthermore, all 
countries are invited, in particular the developing  countries, to make volunt ary financial and other 
contributions for the above-mentioned activities. 
 
G.  International institutional machinery  
 
(i) Institutional arrangements  
 
 1. An Intergovernmental Group of Expert s on Restrictive Business Practices operating 
within the framework of a Committee of UNCTA D will provide the institutional machinery. 
  2. States which have accepted the Set of Principles and Rules should take appropriate 
steps at the national or regional levels to meet th eir commitment to the Set of Principles and Rules. 
 
(ii) Functions of the Intergovernmental Group  
 
 3. The Intergovernmental Group shall have the following functions:    (a) To provide a forum and modalities for the multilateral consultations, discussion and 
exchange of views between States on matters  related to the Set of Principles and 
Rules, in particular its operation a nd the experience arising therefrom; 
  (b) To undertake and disseminate periodi cally studies and research on restrictive 
business practices related to the provisions of the Set of Principles and Rules, with a 
view to increasing exchange of experience and giving greater effect to the Set of 
Principles and Rules; 
  (c) To invite and consider relevant st udies, documentation and reports from relevant 
organizations of the United Nations system; 
  (d) To study matters relating to the Set of Principles and Rules and which might be 
characterized by data covering business tr ansactions and other relevant information 
obtained upon request addressed to all States; 
  (e) To collect and disseminate information on matters relating to the Set of Principles 
and Rules to the over-all attainment of its goals and to the appropriate steps States 
have taken at the national or regional levels to promote an effective Set of Principles 
and Rules, including its objectives and principles; 
  (f) To make appropriate reports and recomme ndations to States on matters within its 
competence, including the application and implementation of the Set of 
Multilaterally Agreed Equitable Principles and Rules; WT/WGTI/W/52 
Page 45 
 
 
  (g) To submit reports at least once a year on its work.   4. In the performance of its functions, neither the Intergovernmental Group nor its 
subsidiary organs shall act like a tribunal or othe rwise pass judgement on the activities or conduct of 
individual Governments or of individual enterprises in connection with a specific business transaction.  
The Intergovernmental Group or its subsidiary  organs should avoid becoming involved when 
enterprises to a specific business transaction are in dispute.   5. The Intergovernmental Group shall estab lish such procedures as may be necessary 
to deal with issues related to confidentiality. 
 
(iii) Review procedure  
 
 6. Subject to the approval of the General A ssembly, five years after the adoption of the 
Set of Principles and Rules, a United Nations Conf erence shall be convened by the Secretary-General 
of the United Nations under the auspices of UNCTAD for the purpose of reviewing all aspects of the 
Set of Principles and Rules.  Towards this end, the Intergovernmental Group shall make proposals to 
the Conference for the improvement and further development of the Set of Principles and Rules.   
 WT/WGTI/W/52 
Page 46  
 
 
RESOLUTION ADOPTED BY THE CONFERENCE STRENGTHENING THE 
IMPLEMENTATION OF THE SET  
 
 
 The Second United Nations Conference to Revi ew all Aspects of the Set of Multilaterally 
Agreed Equitable Principles and Rules for th e Control of Restrictive Business Practices, 
  Having reviewed all aspects of th e Set, 10 years after its adoption, 
 
 Reaffirming the importance of the Set of Multilaterally Agreed Equitable Principles and 
Rules for the Control of Restrictive Business Practic es ("the Set") adopted by the General Assembly 
in its resolution 35/63 of 5 December 1980,   Further reaffirming the need to ensure that restrictive business practices do not impede or 
negate the realization of benefits that should ar ise from the liberalization of tariff and non-tariff 
barriers affecting world trade, particularly those affecting the trade and de velopment of developing 
countries,   Recalling the agreement in the Final Act of the seventh session of the United Nations 
conference on Trade and Development, paragraph 105 (18), to continue and strengthen the ongoing 
work in UNCTAD in respect of restrictive business practices, particularly with a view to ensuring 
transparency and to defining consultation pro cedures, and to continue the UNCTAD technical 
assistance programme in the field of restrictive business practices,   Decides that the implementation of the Se t should be strengthened and to this end: 
 
 1. Expresses
 concern at the continued existen ce of restrictive business practices 
adversely affecting international trade, particul arly the trade and development of developing 
countries, and calls upon  States to implement fully all provisions of the Set in order to ensure its 
effective application;  
 2. Considers
 that one of the important means of achieving this goal is the adoption and 
effective enforcement of national restrictive bus iness practices legislation and that the increasing 
number of countries which have taken such acti on since the First Review Conference is an 
encouraging development, and therefore calls upon  all States to adopt, improve and effectively 
enforce appropriate legislation and to implement judicial and administrative procedures; 
 
 3. Suggests  to this end that: 
 
(a) States without any legislation to control restrictive business practices may wish to request information on restrictive business practi ces legislation and seek consultations with 
developed and developing countri es which have experience of introducing such laws, as well 
as appropriate technical assistance.  The latter may consist of introductory seminars directed 
at an audience which would include government  officials and academics, as well as business 
and consumer-oriented circles; 
 
(b) States which are in the process of drafting restrictive business practice legislation or 
have recently done so may wish to request  information on restrictive business practice 
legislation and consultations with countries ha ving experience of such laws, as well as 
technical assistance.  This may consist of advisory services and assistance, training workshops and seminars for national officials for implementing restrictive business practice 
control legislation and on-the-j ob training with restrictive busin ess practice control authorities 
in countries having experience in restrictive business practice control; WT/WGTI/W/52 
Page 47 
 
 
 
(c) States which have already adopted such legislation and seek to enforce those laws 
more effectively, as well as all other States, ma y wish to seek information or consultations 
with other countries on general matters of restrictive business practice legislation, issues of importance to restrictive business practice au thorities in actual enforcement and specific 
restrictive business practices cases.  Such St ates may also seek appropriate technical 
assistance; 
 
(d) Any State so addressed should give full and sympathetic consideration to such requests and supply such publicly available inform ation, and, to the extent consistent with 
their laws and established public policy, other information; 
 
Information
 
  4.   Considers
 that, in the light of States' needs for information, a list of RBP authorities 
through which requests for information should be ch annelled is a useful device for increasing the flow 
of information, and requests the Secretary-General of UNCTAD to issue a directory of restrictive business practices authorities and to update it regularly;   5. Considers
 further that it would be helpful for States requesting information to have 
guidance and requests  the Secretary-General of UNCTAD to prepare an indicative checklist of items 
which may include inter alia : 
  (a) A description of the restrictive business practice case in question;   (b) The enterprises involved; 
 
 (c) The legal basis for instituting proceedings;   (d) The reasons for requesting the information;   (e) The specific information sought; 
 
 (f) The intended use of the information.   6. Requests
, on the basis of paragraphs 2 and 3 of section F of the Set, that: 
 
(a) States supply to the UNCTAD secretaria t annually or as the information becomes 
available if appropriate, preferably in one of  the official languages of the United Nations: 
   (i) Information concerning new restri ctive business practice legislation or 
amendments to existing laws, with a co py of the legislation or amendments; 
 
  (ii) A report on their activities concerning the control of RBPs including details 
of the more important cases dealt with, as provided for in section F, paragraph 3 of the Set; 
   (iii) Any relevant studies, guidelines or  reports on restrictive business practices 
matters or details thereof whic h they may have published; 
 WT/WGTI/W/52 
Page 48  
 
(b) The UNCTAD secretariat, on the basis of the information received and of other available information: 
   (i) Maintain its data base and ma ke it available to States upon request; 
 
  (ii) Disseminate this informat ion through appropriate publications; 
   (iii) Complete and update the Ha ndbook on restrictive business practices 
legislation. 
 
Consultations
 
  7. Considering that the existing provis ions of the Set provide a good basis for 
consultations, emphasizes
 the importance of section F, paragraph 4 of the Set and, in order to improve 
implementation of the Set in this respect, request s the UNCTAD secretariat to prepare a checklist of 
possible steps which countries may wish to follow in th e preparation of a case, and in their request for 
consultation.  Such a checklist could include, inter alia , explaining the reasons for the request for 
consultations, and indicating the specific details of the behaviour or activity about which the 
consultation is   8. Recommends
 that, following a request for consultation, the state addressed should 
take whatever action it considers appropriate, in cluding action under its legislation on restrictive 
business practices or administrative measures, on a voluntary basis and considering its legitimate interests;   9. Considers
 that the multilateral consultations, discussions and exchanges of views 
that have taken place under section G, paragraph 3 (a) of the Set among restrictive business practices 
experts at sessions of the Intergovernmental Group of Experts on Restrictive Business Practices have provided a useful forum for consideration of particular restrictive business practices issues and have served to establish important c ontacts between experts from interested countries, and requests
 the 
Intergovernmental Group of Experts to serve as a forum for exchanges of information and consultations at each of its sessions.  Topics shoul d be selected in advance of each session and time 
made available for the discussions; 
 
Technical assistance
 
  10. Recognizes
 the importance of both bilateral and multilateral technical assistance as 
an important way to secure the implementation of th e Set.  Both types of technical assistance are 
especially effective in introducing large groups of of ficials from several countries to basic restrictive 
business practices control principles and have been ve ry effective in provid ing in-depth technical 
co-operation between restrictive business practice cont rol authorities, particularly where it can be 
tailored to specific needs;  
 11. Notes
 the commitment of States members of Group B to continue to provide 
technical assistance on both a bilateral and multilateral basis, subject to the availability of resources 
and tailored to the requirements of indi vidual countries or groups of countries; 
  12. Concludes
 that the UNCTAD secretariat's propo sals for a framework for technical 
assistance in its report TD/RBP/CONF.3/4 contain useful  elements.  In order to facilitate a meaningful 
evaluation of the secretariat's proposed framework , the secretariat should suggest priorities from 
among the different types of technical assistance set out in paragraph 71 of its  report and taking into 
account the three categories of countries requesti ng assistance identified in paragraph 3 above; 
 WT/WGTI/W/52 
Page 49 
 
 
 13. Requests  the UNCTAD secretariat to take into account the costs of the various types 
of technical assistance and the most effective use of resources and to undertake a regular evaluation of 
its technical assistance activities in or der to determine their effectiveness; 
  14. Invites
 the UNCTAD secretariat to continue  organizing national, regional and 
subregional seminars, workshops and symposia, as appropriate, including with respect to regional 
grouping of States willing to adopt restrictive business practices control systems;   15. Urges
 intergovernmental organizations and fi nancing programmes, in particular the 
United Nations Development Programme (UNDP),  to provide the necessary resources for the 
activities mentioned above; 
  16. Appeals
 to States, in particular developed countries, to increase voluntary financial 
contributions and to provide necessary expertise for the implementation of the activities mentioned 
above; 
 
Review procedure  
  17. Recommends
 to the General Assembly that a Third Review Conference be 
convened in 1995.   
 
 
6th (closing) meeting  
7 December 1990  
 WT/WGTI/W/52 
Page 50  
 
ANNEX 4
 
 
DRAFT INTERNATIONAL CODE OF CONDUCT ON THE TRANSFER OF 
TECHNOLOGY* 
[1985 VERSION] 
 
 
The Draft International Code of Conduct on the Transfer of Technology was negotiated under the 
auspices of the United Nations Conference on Trad e and Development between  1976 and 1985.  The 
text reproduced in this volume is that the Draft Code as it stood at the close of the sixth session of the 
Conference on an International Code of Conduct on the Transfer of Technology on 5 June 1985.  The 
Draft Code includes a number of appendices that reflect outstanding issues and alternative wording 
proposed for portions of the Draft Code.  The append ices have not been reproduced in this volume.  
The Draft Code has not been adopted by the United Nations General Assembly.  
  
Preamble
 
 The United Nations Conference on an International Code of Conduct on the Transfer of Technology
, 
 
 
 1. Recognizing  the fundamental role of science and technology in the socio-economic 
development of all countries, and in particular , in the acceleration of the development of the 
developing countries;  
 2. Believing
 that technology is key to the progress of mankind and that all peoples have 
the right to benefit from the advances and develo pments in science and technology in order to 
improve their standards of living;   3. Bearing in mind
 relevant decisions of the General Assembly and other bodies of the 
United Nations, in particular UNCTAD, on the transfer and development of technology; 
 
 4. Recognizing  the need to facilitate an adequa te transfer and development of 
technology so as to strengthen the scientific and te chnological capabilities of all countries, particularly 
the developing countries, and to co-operate with th e developing countries in their own efforts in this 
field as a decisive step in the progress towards the establishment of a new international economic 
order; 
  5. Desirous
 of promoting international scientific  and technological co-operation in the 
interest of peace, security and national inde pendence and for the benefit of all nations; 
  6. Striving
 to promote an increase of the international transfer of technology with an 
equal opportunity for all countries to participate irre spective of their social and economic system and 
of their level of economic development;  
                                                     
 
* Source : United Nations Conference on Trade and Development (1985). "Draft International Code of 
Conduct on the Transfer of Technology", Note by th e UNCTAD Secretariat to th e United Nations Conference 
on an International Code of Conduct on the Transfer of Technology, Document TD/CODE TOT/47 (New York: UNCTAD).  The Appendices A, B, C, D, E and F referred to in the text and the endnotes can be found in the 
source document.  In the present text, the following key is used to identify the sponsorship of a text, where the 
text is not an agreed one: Group of 77 text: *; Group B: **; Group D and Mongolia: ***. [Note added by the editor]. WT/WGTI/W/52 
Page 51 
 
 
 7. Recognizing  the need for developed countries to  grant special treatment to the 
developing countries in the field of the transfer of technology;   8. Drawing attention
 to the need to improve the flow of technological information, and 
in particular to promote the widest and fullest flow  of information on the availability of alternative 
technologies, and on the selection of appropriate technologies suited to the specific needs of 
developing countries;   9. Believing
 that a Code of Conduct will effectively assist the developing countries in 
their selection, acquisition and effective use of te chnologies appropriate to their needs in order to 
develop improved economic sta ndards and living conditions; 
  10. Believing
 that a Code of Conduct will help to create conditions conducive to the 
promotion of the international transfer of technol ogy, under mutually agreed  and advantageous terms 
to all parties; 
 
 11. 1 / 
  12. 1
/ 
 
Chapter 1  
 
Definitions and scope of application  
 l.l. For the purposes of the present Code of Conduct:  
 (a) "Party" means any person, either natural or  juridical, of public or private law, either 
individual or collective, such as corporations, comp anies, firms, partnerships and other associations, 
or any combination thereof, whether created, owne d or controlled by States, Government agencies, 
juridical persons, or individuals, wherever they operate, as well as States, Government agencies and 
international, regional and subregiona l organizations, when they engage in an international transfer of 
technology transaction which is usua lly considered to be of a commercial nature.  The term "party" 
includes, among the entities enumerated above, inco rporated branches, subsidiaries and affiliates, 
joint ventures or other legal entities regardless of the economic and other relationships between and 
among them.  2
/ 
  (b) "Acquiring party" means the party whic h obtains a licence to use or to exploit, 
purchases or otherwise acquires technology of a prop rietary or non-proprietary nature and/or rights 
related thereto in a transfer of technology.   (c) "Supplying party" means the party whic h licenses, sells, assigns or otherwise 
provides technology of a proprietary or non-propriet ary nature and/or rights related thereto in a 
transfer of technology. 
 
1.2. Transfer of technology under this Code is  the transfer of systematic knowledge for the 
manufacture of a product, for the application of a process or for the rendering of a service and does 
not extend to the transactions involving th e mere sale or mere lease of goods. 
 
1.3. Transfer of technology transactions are a rrangements between parties involving transfer of 
technology, as defined in para graph 1.2 above, particularly in each of the following cases: 
  (a) The assignment, sale and licensing of all forms of industrial property, except for trade marks, service marks and trade names when they ar e not part of transfer of technology transactions; 
 WT/WGTI/W/52 
Page 52  
 
 (b) The provision of know-how and technical expertise in the form of feasibility studies, plans, diagrams, models, instructions, guides, formulae, basic or detailed engineering designs, 
specifications and equipment for training, services involving technical advisory and managerial personnel, and personnel training;  
 (c) The provision of technological knowledge necessary for the installation, operation 
and functioning of plant and equipment, and turnkey projects;   (d) The provision of technological knowledge necessary to acquire, install and use machinery, equipment, intermediate goods and/ or raw materials which have been acquired by 
purchase, lease or other means; 
  (e) The provision of technological contents  of industrial and technical co-operation 
arrangements.  
1.4. International transfer of technology transactions.  3
/ 
 1.5. The Code of Conduct is universally applicab le in scope and is addressed to all parties to 
transfer of technology transactions and to all coun tries and groups of countries, irrespective of their 
economic and political systems and their levels of development. 
 
l.6. Regional groupings of States.  4
/ 
  
Chapter 2
 
 
Objectives and principles  
 2. The Code of Conduct is based on the following objectives and principles:  2.1. Objectives
 
 
 (i) To establish general and equitable st andards on which to base the relationships 
among parties to transfer of technology transactions and governments concerned, taking into consideration their legitimate interests, and giving due recognition to 
special needs of developing countries for the fulfilment of their economic and social development objectives. 
 
 (ii) To promote mutual confidence between parties as well as their governments.   (iii) To encourage transfer of technology transactions, particularly those involving 
developing countries, under conditions wher e bargaining positions of the parties to 
the transactions are balanced in such a wa y as to avoid abuses of a stronger position 
and thereby to achieve mutually satisfactory agreements. 
  (iv) To facilitate and increase the intern ational flow of technological information, 
particularly on the availability of altern ative technologies, as a prerequisite for the 
assessment, selection, adaptation, development and use of technologies in all 
countries, particularly in developing countries. 
 
 (v) To facilitate and increase the internati onal flow of proprieta ry and non-proprietary 
technology for strengthening the growth of the scientific and technological capabilities of all countries, in particular de veloping countries, so as to increase their 
participation in world production and trade. WT/WGTI/W/52 
Page 53 
 
 
 
 (vi) To increase the contributions of technology  to the identification and solution of social 
and economic problems of all countries, particularly the developing countries, 
including the development of basic sectors of their national economies. 
 
 (vii) To facilitate the formulation, adoption and implementation of national policies, laws 
and regulations on the subject of transfer of technology by settin g forth international 
norms. 
 
 (viii) To promote adequate arrangements as regards unpackaging in terms of information 
concerning the various elements of the tec hnology to be transferred, such as that 
required for technical, institutional and fina ncial evaluation of the transaction, thus 
avoiding undue or unnecessary packaging. 
 
 (ix) To specify restrictive [business] prac tices from which parties to technology transfer 
transactions [shall] [should] refrain.  5 / 
  (x) To set forth an appropriate set of respons ibilities and obligations of parties to transfer 
of technology transactions, taking into consid eration their legitima te interests as well 
as differences in their bargaining positions. 
 
2.2. Principles
 
  (i) The Code of Conduct is uni versally applicable in scope. 
  (ii) States have the right to adopt all a ppropriate measures for facilitating and regulating 
the transfer of technology, in a manner cons istent with their international obligations, 
taking into consideration the legitimate interests of all parties concerned, and 
encouraging transfers of technology under mu tually agreed, fair and reasonable terms 
and conditions. 
  (iii) The principles of sovereignty and political independence of States (covering, 
inter alia , the requirements of foreign policy and national security) and sovereign 
equality of States, should be recognized in  facilitating and regulating transfer of 
technology transactions. 
  (iv) States should co-operate in the intern ational transfer of technology in order to 
promote economic growth throughout the world, especially that of the developing 
countries.  Co-operation in such transfer should be irrespective of any differences in political, economic and social systems; this  is one of the important elements in 
maintaining international peace and secur ity and promoting international economic 
stability and progress, the general welfare of  nations and international co-operation 
free from discrimination based on such differences.  Nothing in this Code may be 
construed as impairing or derogating from th e provisions of the Charter of the United 
Nations or actions taken in pursuance thereof.   It is understood that special treatment 
in transfer of technology should be accord ed to developing countries in accordance 
with the provisions in this Code on the subject. 
 
 (v) The separate responsibilities of parties to transfer of technology transactions, on the 
one hand, and those of governments when not acting as parties, on the other, should 
be clearly distinguished. 
  (vi) Mutual benefits should accrue to tec hnology supplying and recipient parties in order 
to maintain and increase the international flow of technology. WT/WGTI/W/52 
Page 54  
 
  (vii) Facilitating and increasing the access to  technology, particularly for developing 
countries, under mutually agreed fair and reasonable terms and conditions, are 
fundamental elements in the process of technology transfer and development. 
 
 (viii) Recognition of the protection of industr ial property rights granted under national law. 
  (ix) Technology supplying parties when operating in an acquiring country should respect 
the sovereignty and the laws of that country, act with proper regard for that country's 
declared development policies and priorities and endeavour to contribute substantially 
to the development of the acquiring country .  The freedom of parties to negotiate, 
conclude and perform agreements for th e transfer of technology on mutually 
acceptable terms and conditions should be based on respect for the foregoing and 
other principles set forth in this Code. 
 
 
Chapter 3
 
 
National regulation of transfer of technology transactions  
 3.1. In adopting, and in the light of evolving circumstances making necessary changes in laws, 
regulations and rules, and policies with respect to tr ansfer of technology transactions, States have the 
right to adopt measures such as those listed in para graph 3.4 of this chapter and should act on the 
basis that these measures should:   (i) Recognize that a close relationship ex ists between technology flows [and] the 
conditions under which such fl ows are admitted and treated; 
  (ii) Promote a favourable and beneficial climate for the international transfer of 
technology; 
  (iii) Take into consideration in an equitabl e manner the legitimate inte rests of all parties; 
 
 (iv) Encourage and facilitate transfers of te chnology to take place under mutually agreed, 
fair and reasonable terms and conditions having regard to the principles and 
objectives of the Code; 
 
 (v) Take into account the differing factors characterizing the transac tions such as local 
conditions, the nature of the technology and the scope  of the undertaking; 
  (vi) Be consistent with th eir international obligations. 
 3.2. Measures adopted by States including decisi ons of competent administrative bodies should be 
applied fairly, equitably, and on the same basis to all parties in accordance with established 
procedures of law and the principles and objectives of the Code.  Laws and regulations should be 
clearly defined and publicly and readily available.  To the extent appropriate, relevant information 
regarding decisions of competent admini strative bodies should be disseminated.  
 
3.3. Each country adopting legislation on the prot ection of industrial prope rty should have regard 
to its national needs of economic a nd social development, and should en sure an effective protection of 
industrial property rights granted under its national law and other related rights recognized by its 
national law.  WT/WGTI/W/52 
Page 55 
 
 
3.4. Measures on regulation of the flow and eff ects of transfer of technology, finance and 
technical aspects of technology transactions and on organizational forms and mechanisms may deal 
with:  Finance
 
 
 (a) Currency regulations of foreign exchange payments and remittances; 
  (b) Conditions of domestic credit and financing facilities;   
 (c) Transferability of payments; 
  (d) Tax treatment;   (e) Pricing policies; 
 
Renegotiation
 
  (f) Terms, conditions and objective criteri a for the renegotiation of transfer of 
technology transactions;  
Technical aspects
 
  (g) Technology specifications and standards fo r the various components of the transfer of 
technology transactions and their payments;  
 (h) Analysis and evaluation of transfer of te chnology transactions to assist parties in their 
negotiations;   (i) Use of local and imported components;  Organizational forms and mechanisms
 
 
 (j) Evaluation, negotiation, and registrati on of transfer of technology transactions; 
  (k) Terms, conditions, duration, of transfer of technology transactions; 
 
 (l) Loss of ownership and/or control of domestic acquiring enterprises; 
  (m) Regulation of foreign co llaboration arrangements and agreements that could displace 
national enterprises from the domestic market;   (n) The definition of fields of activity of foreign enterprises and the choice of channels, 
mechanisms, organizational forms for the transfer of  technology and the prior or subsequent approval 
of transfer of technology transactions and their registration in these fields;   (o) The determination of the legal effect of transactions which are not in conformity with 
national laws, regulations and administrativ e decisions on the transfer of technology; 
 
 (p) The establishment or strengthening of national administrative mechanisms for the 
implementation and application of the Code of Conduct and of nati onal laws, regulations and policies 
on the transfer of technology;  WT/WGTI/W/52 
Page 56  
 
 (q) Promotion of appropriate channels for th e international exchange of information and 
experience in the field of the transfer of technology.   
Chapter 4
  6/ 
 
[The regulation of practices and arrangements involving the  
transfer of technology] [Restrictive business practices]  
[Exclusion of political discrimination and restrictive  
business practices ]  7/ 
 
 Section A
:  (Chapeau)  8 / 
 Section B
:  (List of practices)  9 / 
 
1. [Exclusive] ** Grant-back provisions   10/ 
  Requiring the acquiring party to transfer or gran t back to the supplying party, or to any other 
enterprise designated by the supplying party, im provements arising from the acquired technology, on 
an exclusive basis [or]* without offsetting consider ation or reciprocal obligations from the supplying 
party, or when the practice will constitute an abus e of a dominant market position of the supplying 
party.  2. Challenges to validity
  10/ 
 
 [Unreasonably] ** requiring the acquiring party to refrain from challenging the validity of 
patents and other types of protection for inventions involved in the transfer or the validity of other 
such grants claimed or obtained by the supplying  party, recognizing that any issues concerning the 
mutual rights and obligations of the parties follo wing such a challenge will be determined by the 
appropriate applicable law and the terms of the agreem ent to the extent consistent with that law.  11 / 
 
3. Exclusive dealing  
  Restrictions on the freedom of the acquiring party to enter into sales, representation or 
manufacturing agreements relating to similar or competing technologies or products or to obtain 
competing technology, when such restrictions are not needed for ensuring the achievement of 
legitimate interests, particularly including securing the confidentiality of the technology transferred or 
best effort distribution or promotional obligations.  4. Restrictions on research
  10/ 
  [Unreasonably] **/*** restricting the acquiri ng party either in undertaking research and 
development directed to absorb and adapt the tr ansferred technology to local conditions or in 
initiating research and development programmes in  connection with new products, processes or 
equipment.  5. Restrictions on use of personnel
  10/ 
 
 [Unreasonably] ** requiring the acquiring part y to use personnel designated by the supplying 
party, except to the extent neces sary to ensure the efficient transmission phase for the transfer of 
technology and putting it to use or  thereafter continuing such requirement beyond the time when 
adequately trained local personnel are available or  have been trained; or prejudicing the use of 
personnel of the technology acquiring country. WT/WGTI/W/52 
Page 57 
 
 
 6. Price fixing
  10/ 
  [Unjustifiably] ** imposing regul ation of prices to be charge d by acquiring parties in the 
relevant market to which the technology was tr ansferred for products manufactured or services 
produced using the technology supplied. 
 7. Restrictions on adaptations
  10/ 
  Restrictions which [unreasonably] ** preven t the acquiring party from adapting the imported 
technology to local conditions or introducing innovati ons in it, or which oblige the acquiring party to 
introduce unwanted or unnecessary design or specifi cation changes, if the acquiring party makes 
adaptations on his own responsibility and without using the technology supplying party's name, trade 
or service marks or trade names, and except to the ex tent that this adaptation unsuitably affects those 
products, or the process for their manufacture, to be s upplied to the supplying party, his designates, or 
his other licensees, or to be used as a component or spare part in a product to be supplied to his 
customers.  8. Exclusive sales or representation agreements
 
  Requiring the acquiring party to grant exclusive sales or representation rights to the supplying 
party or any person designated by the supplying pa rty, except as to subcontracting or manufacturing 
arrangements wherein the parties have agreed that  all or part of the production under the technology 
transfer arrangement will be distributed by the supplying party or any person designated by him. 
 9. Tying arrangements
  10/ 
 
 [Unduly] ** imposing acceptance of additiona l technology, future inventions and 
improvements, goods or services not wanted by the acquiring party or [unduly] ** restricting sources 
of technology, goods or services, as a condition for obtaining the technology required when not 
required to maintain the quality of the product or service when the supplier's trade or service mark or 
other identifying item is used by the acquiring party,  or to fulfil a specific performance obligation 
which has been guaranteed, provided further that adequate specification of the ingredients is not 
feasible or would involve the disclosure of add itional technology not cove red by the arrangement. 
 10. Export restrictions
  8/ 
 
11. Patent pool or cross-licensing agreements and other arrangements  
  Restrictions on territories, quantities, prices, cu stomers or markets arising out of patent pool 
or cross-licensing agreements or other internationa l transfer of technology interchange arrangements 
among technology suppliers which unduly limit access to new technol ogical developments or which 
would result in an abusive domination of an industry or market with adverse effects on the transfer of 
technology, except for those restrictions appropriate  and ancillary to co-operative arrangements such 
as co-operative research arrangements.  12. Restrictions on publicity
  10/ 
 
 Restrictions [unreasonably] ** regulating the a dvertising or publicity by the acquiring party 
except where restrictions of such publicity may be re quired to prevent injury to the supplying party's 
goodwill or reputation where the advertising or pub licity makes reference to the supplying party's 
name, trade or service marks, trade names or othe r identifying items, or for legitimate reasons of 
avoiding product liability when the supplying party may be subject to such liability, or where WT/WGTI/W/52 
Page 58  
 
appropriate for safety purposes or to  protect consumers, or when n eeded to secure the confidentiality 
of the technology transferred.  13. Payments and other obligations after expiration of industrial property rights
 
 
 Requiring payments or imposing other obliga tions for continuing the use of industrial 
property rights which have been invalidated, cancel led or have expired recognizing that any other 
issue, including other payment obligations for tech nology, shall be dealt with by the appropriate 
applicable law and the terms of the agreement to  the extent consistent with that law.  11 / 
 
14. Restrictions after expiration of arrangement .  8/ 
  
Chapter 5
 
 
Responsibilities and Obligations of Parties  
 Common provision on negotiating as well as contractual phase
 
 5.1. When negotiating and concluding a technology transfer agreement, the parties should, in 
accordance with this chapter, be responsive to the economic and soci al development objectives of the 
respective countries of the parties and particularly of the technology acquiring country, and when 
negotiating, concluding and performing a technology transfer agreement, the parties should observe 
fair and honest business practices and take into acco unt the specific circumstances of the individual 
case and recognition should be given to certain circ umstances, mainly the stage of development of 
technology, the economic and technical capabilities of  the parties, the nature and type of the 
transaction such as any ongoing or continuous flow of technology between the parties. 
 Negotiating phase
 
 5.2. In being responsive to the economic and so cial development objectives mentioned in this 
chapter each party should take into account the othe r's request to include in the agreements, to the 
extent technically and commercially practicable an d for adequate consideration, when appropriate, 
such as the case in which the supplying party incurs a dditional costs or efforts, items clearly related to 
the official economic and social development obj ectives of the country of the requesting party as 
enunciated by its government.  Such items include, inter alia , where applicable: 
 
 (a) Use of locally available resources
 
  (i) specific provisions for the use for the tasks concerned of adequately trained or 
otherwise suitable local personnel to be d esignated and subsequently made available 
by the potential technology recipient including managerial personnel, as well as for the training of suitably skilled local pers onnel to be designated and subsequently 
made available by the potential technology recipient; 
  (ii) specific provisions for the use of locally  available materials, technologies, technical 
skills, consultancy and engineering services a nd other resources to be indicated and 
subsequently made available by th e potential technology recipient; 
 
 (b) Rendering of technical services
 
  Specific provisions for the rendering of techni cal services in the introduction and operation of 
the technology to be transferred; 
 WT/WGTI/W/52 
Page 59 
 
 
 (c) Unpackaging  
  Upon request of the potential acquiring party,  the potential supplying party should, to the 
extent practicable, make adequate arrangements as regards unpackaging in terms of information 
concerning the various elements of the technology to be transferred, such as that required for 
technical, institutional and financial evaluati on of the potential supplying party's offer. 
 5.3. Business negotiating practices
 
  When negotiating a technology transfer agreemen t, the parties should observe fair and honest 
business practices and therefore: 
 (a) Both potential parties
 
  (i) Fair and reasonable terms and conditions
 
 
  (i) Should negotiate in good faith with the aim of reaching, in a timely manner, 
an agreement containing fair and r easonable commercial terms and conditions, 
including agreement on payments such as licence fees, royalties and other considerations; 
 
  (ii) The price or consideration to be charged should be fair and reasonable, it 
should be clearly indicated and, to the exte nt practicable, specified in such a manner 
that the acquiring party would be able to appreciate its reasonableness and fairness by 
comparing it to the price or consideration for other comparable technologies transferred under similar conditions , which may be known to him; 
 
 (ii) Relevant information
 
  Should consider requests to inform each other,  to the extent appropriate, about their prior 
arrangements which may affect the contemplated technology transfer;  
 (iii) Confidential information
 
  Should keep secret, in accordance with any oblig ation, either legal or contractual, all 
confidential information received from the other part y and make use of the confidential information 
received from a potential party only for the purpose of ev aluating this party's offe r or request for other 
purposes agreed upon by the parties; 
  (iv) Termination of negotiations
 
  May cease negotiations if, during the negotiations, either party determines that a satisfactory 
agreement cannot be reached; 
 
(b) The potential acquiring party
 
  Relevant information
 
 
 Should provide the potential technology supplie r in a timely manner with the available 
specific information concerning the technical conditions and official economic and social 
development objectives as well as legislation of the acquiring country relevant to the particular 
transfer and use of the technology under negotiati on as far as such informa tion is needed for the 
supplying party's responsiveness under this chapter; 
 WT/WGTI/W/52 
Page 60  
 
(c) The potential supplying party
 
  Relevant information
 
  (i) Should disclose, in a timely manner, to the potential technology acquiring party any 
reason actually known to him, on account of  which the technology to be supplied, 
when used in accordance with  the terms and conditions of the proposed agreement, 
would not meet particular health, safety  and environmental requirements in the 
technology acquiring country, already known to him as being relevant in the specific 
case or which have been specifically drawn to his attention, as well as any serious 
health, safety and environmental risks known by the supplier associated with the use 
of the technology and of products to be produced by it; 
  (ii) Should disclose to the potential technology acquiring party, to the actual extent 
known to him, any limitation, including any pending official procedures or litigation 
which adversely concerns, in a direct manner, the existence or validity of the rights to 
be transferred, on his entitlement to gran t the rights or render the assistance and 
services specified in the proposed agreement; 
  Provision of accessories, spare parts and components
 
 
 (iii) Should to the extent feasible, take in to account the request of the acquiring party to 
provide it for a period to be specified with accessories, spare parts and components produced by the supplying party and necessar y for using the technology to be 
transferred, particularly where alternative sources are unavailable. 
 
Contractual phase - Chapeau
 
 5.4. The technology transfer agreement should, in accordance with 5.1., provide for mutually 
acceptable contractual obligations, including those relating to payments and, where appropriate, 
inter alia , the following: 
 
 (i) Access to improvements
 
  Access for a specified period or for the life time of the agreement to improvements to the 
technology transferred under the agreement;  
 (ii) Confidentiality
  12/ 
  (iii) Dispute settlement and applicable law
  12/ 
  (iv) Description of the technology
 
 
 The technology supplier's guarantee that the t echnology meets the description contained in the 
technology transfer agreement;   (v) Suitability for use
 
 
 The technology supplier's guarantee that the technology, if used in accordance with the 
supplier's specific instructions given pursuant to th e agreement, is suitable for manufacturing of goods 
or production of services as agreed upon by th e parties and stipulated in the agreement; 
 WT/WGTI/W/52 
Page 61 
 
 
 (vi) Rights to the technology transferred  
  The technology supplier's representation that on the date of the signing of the agreement, it is, 
to the best of its knowledge, not aware of third par ties' valid patent rights or similar protection for 
inventions which would be infringed by the use of  the technology when used as specified in the 
agreement; 
  (vii) Quality levels and goodwill
 
  The technology recipient's commitment to ob serve quality levels agreed upon in cases where 
the agreement includes the use of th e supplier's trade marks, trade names or similar identification of 
goodwill, and both parties' commitment to avoid taki ng actions primarily or deliberately intended to 
injure the other's goodwill or reputation;   (viii) Performance guarantees
 
 
 Specification to technical performance paramete rs which the supplying party has agreed to 
guarantee, including specification of requirements for the achievement of such parameters, details of 
the manner of determining whether the performance h as been met and the consequences of failure to 
meet that performance;  
 (ix) Transmission of documentation
 
  The supplying party's commitment that rele vant technical documen tation and other data 
required from him for a particular purpose defined in terms directly specified in the agreement will be 
transferred in a timely manner and as correctly and completely for such purpose as agreed upon; 
 
 (x) Training of personnel and provision of accessories, spare parts and components
 
  Where negotiations under paragra phs 5.2 (a) (i) and 5.5 (c) ( iii) have taken place, suitable 
provisions for training of personne l and supply of accessories, spare parts and components would be 
made, consistent with the results of the negotiations; 
 
 (xi) Liability
 
  Disposition concerning liability for the non-fulf ilment by either party of its responsibilities 
under the technology transfer agreement includi ng questions of loss, damage or injury. 
 
 
Chapter 6
 
 
Special treatment for developing countries  
 
6.1. Taking into consideration the needs and probl ems of developing countries, particularly of the 
least developed countries, governments of develope d countries, directly or through appropriate 
international organizations, in or der to facilitate and encourage th e initiation and strengthening of the 
scientific and technological capabilities of developing  countries so as to assist and co-operate with 
them in their efforts to fulfil their economic a nd social objectives, should take adequate specific 
measures, inter alia , to: 
  (i) facilitate access by developing countri es to available information regarding the 
availabilities, description, location and, as far as possible, approximate cost of 
technologies which might help those countri es to attain their economic and social 
development objectives; WT/WGTI/W/52 
Page 62  
 
  (ii) give developing countries the freest and fullest possible access to technologies 
whose transfer is not subject to private decisions;  13
/ 
  (iii) facilitate access by developing countries,  to the extent practicable, to technologies 
whose transfer is subject to private decisions;  13
/ 
  (iv) assist and co-operate with developi ng countries in the assessment and adaptation 
of existing technologies and in the de velopment of national technologies by 
facilitating access, as far as possible, to ava ilable scientific and industrial research 
data; 
  (v) co-operate in the development of scientific and technological resources in 
developing countries, including the crea tion and growth of innovative capacities; 
 
 (vi) assist developing countries in strengthening their technological capacity, 
especially in the basic sect ors of their national economy, through creation of and 
support for laboratories, experimental facilities and institutes for training and research; 
  (vii) co-operate in the establishment or strengthening of national, regional and/or 
international institutions, including technol ogy transfer centres, to help developing 
countries to develop and obtain the t echnology and skills required for the 
establishment, development and enhancement of their technological capabilities including the design, construction and operation of plants; 
 
 (viii) encourage the adaptation of research a nd development, engineering and design to 
conditions and factor e ndowments prevailing in developing countries; 
  (ix) co-operate in measures leading to  greater utilization of the managerial, 
engineering, design and technical experi ence of the personnel and the institutions 
of developing countries in specific ec onomic and other development projects 
undertaken at the bilatera l and multilateral levels; 
  (x) encourage the training of personnel from developing countries.  6.2. Governments of developed countries, dir ectly or through appr opriate international 
organizations, in assisting in the promotion of transfer of technology to developing countries - 
particularly to the least developed countries - should, as a part of programmes for development 
assistance and co-operation, take into acc ount requests from developing countries to: 
  (i) contribute to the development of na tional technologies in developing countries by 
providing experts under development assistance and research exchange 
programmes; 
  (ii) provide training for research, engineering, design and other personnel from 
developing countries engaged in the deve lopment of national technologies or in 
the adaptation and use of technologies transferred; 
 
 (iii) provide assistance and co-operation in the development and administration of laws 
and regulations with a view to f acilitating the transfer of technology; 
 WT/WGTI/W/52 
Page 63 
 
 
 (iv) provide support for projects in de veloping countries for the development and 
adaptation of new and existing technologies suitable to the particular needs of developing countries; 
  (v) grant credits on terms more favourab le than the usual commercial terms for 
financing the acquisition of capital and intermediate goods in the context of 
approved development projects involving tran sfer of technology transactions so as 
to reduce the cost of projects and improve the quality of technology received by the developing countries; 
 
 (vi) provide assistance and co-operation in the development and administration of laws 
and regulations designed to avoid h ealth, safety and environmental risks 
associated with technology or the products produced by it. 
 6.3. Governments of developed countries shoul d take measures in accordance with national 
policies, laws and regulations to encourage and to  endeavour to give incentive to enterprises and 
institutions in their countries, either individually or  in collaboration with ente rprises and institutions in 
developing countries, particularly those in the leas t developed countries, to make special efforts, 
inter alia , to: 
  (i) assist in the development of tec hnological capabilities of the enterprises in 
developing countries, including special training as required by the recipients; 
  (ii) undertake the development of technology appropriate to the needs of developing 
countries; 
 
 (iii) undertake R and D activity in developing countries of interest to such countries, as 
well as to improve co-operation between enterprises and scientific and technological institutions of deve loped and developing countries; 
  (iv) assist in projects by enterprises and institutions in developing countries for the 
development and adaptation of new a nd existing technologies suitable to the 
particular needs and conditions  of developing countries. 
 6.4. The special treatment accorded to deve loping countries should be responsive to their 
economic and social objectives vis-à-vis their relativ e stage of economic and social development and 
with particular attention to the special problems and conditions of the least  developed countries.  
 
 
Chapter 7
 
 
International collaboration  
 
7.1. The States recognize the need for appropria te international collaboration among governments, 
intergovernmental bodies, and organs and agencies of the United Nations system, including the international institutional machinery provided for in this Code, with a view to facilitating an expanded 
international flow of technolog y for strengthening the technological capabilities of all countries, 
taking into account the objectives and principles of this Code, and to promoting the effective 
implementation of its provisions. 
 WT/WGTI/W/52 
Page 64  
 
7.2. Such international collaboration between governments at the bilateral or multilateral, 
subregional, regional or inte rregional levels may include, inter alia , the following measures: 
  (i) Exchange of available informati on on the availability and description of 
technologies and technological alternatives; 
 
 (ii) Exchange of available information on experience in seeking solutions to problems 
relating to the transfer of technology, particularly restrictive [business] ** practices in the transfer of technology;  14
/ 
 
 (iii) Exchange of information on developmen t of national legislation with respect to 
the transfer of technology; 
  (iv) Promotion of the conclusion of inte rnational agreements which should provide 
equitable treatment for both technology supplying and recipient parties and 
governments; 
  (v) Consultations which may lead to gr eater harmonization, where appropriate, of 
national legislation and policies with respect to the transfer of technology; 
  (vi) Promotion, where appropriate, of common programmes for searching for, 
acquiring and disseminating technologies; 
  (vii) Promotion of programmes for the adaptation and development of technology in 
the context of development objectives; 
 
 (viii) Promotion of the development of  scientific and technological resources and 
capabilities stimulating the development of indigenous technologies; 
  (ix) Action through interna tional agreements to avoid, as far as possible, imposition of 
double taxation on earnings and payments ar ising out of transfer of technology 
transactions. 
 
 
Chapter 8
 
 
International Institutional Machinery  
 
8.1. Institutional arrangements  
  (a) 15
/ 
  (b) 15
/ 
 
 (c) States which have accepted the Code of Conduct on the Transfer of Technology should take appropriate steps at the national level to meet their commitment to the Code. 
 8.2. Functions of the International Institutional Machinery
 
 
8.2.1. The International Institutional Mach inery shall have the following functions: 
  (a) To provide a forum and modalities for consultations, discussion, and exchange of 
views between States on matters related to the Code , in particular its application and its greater 
harmonization, and the experien ce gained in its operations; WT/WGTI/W/52 
Page 65 
 
 
  (b) To undertake and disseminate periodically studies and research on transfer of technology related to the provisions of the code, with a view to incr easing exchange of experience and 
giving greater effect to the application and implementation of the Code;  
 (c) To invite and consider  relevant studies, documentatio n and reports from within the 
United Nations system, particularly from UNIDO and WIPO;   (d) To study matters relating to the Code and which might be characterized by data 
covering transfer of technology transactions and ot her relevant informati on obtained upon request 
addressed to all States; 
  (e) To collect and disseminate information on matters relating to the Code, to the over-all attainment of its goals and to the appropriate steps States ha ve taken at the national level to 
promote an effective Code, including its objective and principles; 
 
 (f) To make appropriate reports and reco mmendations to States on matters within its 
competence including the application and implementation of the Code;   (g) To organize symposia, workshops and si milar meetings concerning the application 
of the provisions of the Code, subject to the a pproval of the Trade and Development Board where 
financing from the regular budget is involved; 
  (h) To submit reports at least once a year on its work to the Trade and Development 
Board.  
8.2.2. In the performance of its functions, the In ternational Institutional Machinery may not act like 
a tribunal or otherwise pass judgement on the activ ities or conduct of individual Governments or of 
individual parties in connection with a specific tran sfer of technology transaction.  The International 
Institutional Machinery should avoid becoming invol ved when parties in a specific transfer of 
technology transaction are in dispute.  
8.2.3. The International Institutional Machinery shall establish such procedures as may be necessary 
to deal with issues related to confidentiality.  8.3. Review procedure
  15/ 
 
8.4. Secretariat  
  The secretariat for the International Institutiona l Machinery shall be the UNCTAD secretariat.  
At the request of the Internationa l Institutional Machinery the secretariat shall submit relevant studies, 
documentation and other information to the Interna tional Institutional Machinery.  It shall consult 
with and render assistance, by the relevant services, to States, particularly the developing countries, at 
their request, in the application of the Code at th e national level, to the extent that resources are 
available.  8.5. General provisions
  15/ 
 WT/WGTI/W/52 
Page 66  
 
 
Chapter 9
 
 
Applicable law and settlement of disputes   16/ 
 
 
ENDNOTES  
 
1/ For texts under consideration, see appendices A and F. 
 
2/ Group 2 accepts inclusion of this sentence subject to agreement to be reached on 
qualifications relating to the appli cation of the Code to the relations of these entities in relevant parts 
of the Code.  3
/ For texts under consideration, see appendices A and C. 
 
4/ Text under consideration.  See proposal in appendix C. 
 5
/ Text under consideration.  See also appendix A. 
 6
/ In view of continuing negotiations on the chap ter, no attempt has been made to number the 
provisions of this chapter consis tently with the other chapters. 
 7
/ Title of Chapter 4 under consideration. 
 8
/ For texts under consideration, see appendices A and D. 
 
9/ With regard to practices 15 to 20, see appendix A.l for text of agreed statement for inclusion 
in the report of the Conference, and for texts under consideration see appendix D. 
 10
/ Text under consideration.  See appendix A. 
 
11/ The spokesman for the regional groups noted that their acceptance of agreed language which 
makes reference to the term "applicable law" is conditional upon acceptable resolution of differences 
in the group texts concerning applicable law and national regulation of this Code. 
 l2
/ For text under consideration, see appendix A. 
 
13/ The term "private decision" in the particular  context of this chapter should be officially 
interpreted in the light of the legal order of the respective country.  14
/ Text under consideration;  see also appendix A. 
 
15/ For texts under consideration, see appendices A and E. 
 16
/ For texts under consideration, see appendices A and F. 
  
__________