RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTTT/M/2
20 August 2002
(02-4503)
Working Group on Trade and Transfer of Technology
Second Session
NOTE ON THE MEETING OF 11 JUNE 2002
Chairman:  H.E. Mr. Stefan Johannesson (Iceland)
A. ADOPTION OF THE AGENDA
1. The draft agenda contained in Airgra m WTO/AIR/1815 of 30 May 2002 was adopted.
B. PRESENTATION OF COUNTRY EXPERIENCES
2. The work relating to the sharing of country experiences on technology transfer began with
presentations by national experts from Brazil and China.  The Head of Brazil's Science andTechnology Division presented his country's experience and highlighted some of the key issues that
his Government had addressed in trying to ensure flow of appropriate technology.  The Deputy
Director of China's Department of Science and Tec hnology also highlighted some of the critical issues
relating to technology transfer, including in the co ntext of foreign direct investment (FDI) flows and
intellectual property rghts (IPR) regimes.  Their presentations are annexed to this report.
3. During the ensuing discussion one delegation spoke of the possible linkage between FDI and
transfer of technology and wished to know whether the countries whose experiences had been
presented, had made technology transfer a pre-condition for FDI.  The issue of the impact of public
funding on research and development and its implications for facilitating technology transfer was
raised.  A mention was also made of the possible negative impact of IPR regimes on technology
transfer.  Another delegation felt that having a good IPR would in fact facilitate the transfer of
technology, specially technology otherwise viewed as being sensitive.  Other delegations touched
upon the issue of building, retaining, and attracting back, human resources in the context of building
national technological capacity.  They felt that such a human resource policy could contribute
positively to technology development and technology transfer.  Some delegations also suggested that
future presentations should be somewhat more structured, with the invited national experts being
requested to mainly focus on the steps and policy approaches that their Governments may have takento facilitate technology transfer.  In that context they sought clarifications from the two speakers about
the kind of policies that may have facilitated technology transfer in their countries.
4. It was generally felt that the sharing of national experiences was a useful contribution to the
understanding of the relationship between trade and transfer of technology.  Accordingly, other
delegations were invited to consider making such  presentations in the subsequent meetings.  The
Working Group agreed that the Chairman would follow  that up with delegations, so as to ensure that
at least some presentations of government policies and experiences relating to transfer of technology
were made in the following meeting.  The Working Group also agreed that the possibility of inviting
experts from other international organisations and academia to make presentations should continue to
be explored.  In addition, the Chairman suggested th at it would be useful if the Secretariat was asked
to produce a factual compilation of country experiences in co-operation with UNCTAD and  other
international organisations. While accepting the Chair's proposal, some delegations added that thereWT/WGTTT/M/2
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should be an adequate balance, in any such compilation, among the perspectives of different
organisations which had expertise in this area.
C. WORK PROGRAMME
5. The Chairman reminded Members of the submission made by the delegations of Bangladesh,
Cuba, Dominican Republic, Egypt, Honduras, India, I ndonesia, Jamaica, Kenya, Mauritius, Pakistan,
Sri Lanka, Tanzania, Uganda, and Zimbabwe (WT/WGTTT/W/2).  He mentioned that a
communication had been received from the European Communities (WT/WGTTT/1) on the
relationship between trade and transfer of technology.  That paper also contained some suggestions on
the Work Programme.  The Chairman briefed Members about the informal consultations he had
conducted and indicated that the draft Work Programme, prepared on his own responsibility that had
been circulated to Members earlier, would be discussed in an open ended informal meeting,immediately after the conclusion of the formal session.
6. The representative of the European Communities wh ile introducing its paper, said that in its
examination of the relationship between trade and transfer of technology, the Working Group should
focus on (1) developing a common understanding of the definition of technology transfer;  (2) an
identification of the various channels of transfer of technology;  and (3) the conditions under whichthose channels could be most effective.  In particular he highlighted the importance of FDI;  trade in
goods and services;  licensing of technology subject to intellectual property rights;  government
procurement; development co-operation;  multilateral environment agreements;  as well as private and
public partnerships in facilitating transfer of technology.  He felt that an understanding reached on
those issues could constitute a basis for possible recommendations on steps that might be taken,within the mandate of the WTO, to increase flows of technology to developing countries.
7. It was agreed that this paper (WT/WGTTT/1) would remain on the agenda for the next
meeting of the Working Group.
D. BACKGROUND NOTE BY THE SECRETARIAT (DOCUMENTS WT/WGTTT/W/1 AND ADD.1)
8. The Working Group considered a factual background paper and corresponding bibliography
on Trade and Transfer of Technology prepared by the Secretariat (WT/WGTTT/W/1 and Add.1).
After a brief introduction of its salient points by the Secretariat, Members made a number of
interventions.  Though delegations generally appreciated the paper, some delegations did question the
basis of some of the conclusions drawn in the paper,  particularly relating to the impact that patents
could have on technology transfer, and an implied legitimacy, which they felt had been given in one
specific reference, to imitation as a channel of technology transfer.  One delegation questioned theexistence of any linkage between intellectual property regimes and technology transfer, saying that
the former could not be a precondition for ensuring the latter and that at times patents only made the
transfer of technology more expensive.  Another delegation suggested that the Secretariat should also
identify the kind of technologies that may in the past have been transferred from developed countries
to developing countries.  This delegation felt that developing countries often only received obsoletetechnologies, with the sharing of the more advanced technologies being limited amongst developed
countries only.  A third delegation, giving a particular example from the paper, said that there should
not be any reference to specific countries where the illustration may have a negative connotation.  The
issue of patenting of new technologies developed out  of public sector funding was also raised and it
was asked whether those patents were entirely owned by the private sector, or whether the concernedgovernments which had provided funding for their development, had any control over the transfer of
the technology covered by such patents.WT/WGTTT/M/2
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ANNEX I
Presentation by Mr. Guilherme de Aguiar Patriota,
Head of Science and Technology Division, Foreign Ministry, Brazil
Second Session of the WTO Working Gro up on Trade and Transfer of Technology
11 June 2002
I would like to say how much I value the opportunity to be here and share with you some
views on the issue of trade and technology flows to de veloping countries.  I am very grateful for the
invitation to address this Working Group today, not as a Government official, but as a designatedexpert from Brazil.  I will try and make the most of it by concentrating on the issue, not on any
particular position.  I will speak on what Brazil is doing to develop a national scientific and
technological base, how the Doha mandate could best be tackled in support of developing countries
and what crucial issues could be considered by this working group.
It is never too much to emphasize the importance of the mandate contained in paragraph 37 of
the Doha Declaration.  The relationship between trade and transfer of technology and
recommendations on steps within the WTO to increase  flows of technology to developing countries
are a window of opportunity to introduce the fundamental issues of science and technology and
research and development within the scope of the multilateral rules based trading system.
Considering the growing importance of know ledge and technology as a production factor
determining costs, price, efficiency, marketability and competitiveness in general, it is really the
obvious thing to discuss them in light of their impact on international trade and how they affect
opportunities for development countries.  Other factors of production, such as labor and capital, wereactually in the minds of the founding fathers of the GATT, when the first initiatives were taken in the
forties towards setting up the agreements that would unleash a succession of multilateral negotiations,
aimed at reducing impediments and distortions to trade, taking into account the special situation of
developing countries (more so at later stages).
The idea of an international agreement or organization dealing with labor and capital
unfortunately didn't evolve as expected.  Labor mobility wasn't as popular a concept as the mobility ofgoods.  And regulation of capital flows was an even less popular idea to capitalists and investors
world wide.  The Bretton Woods institutions were as close as the international community came to
creating organizations dealing with capital flows, and even then, it was limited to Government
finances (balance of payments monitoring and crisis assistance), or to financing for development –
initially a concern with the reconstruction of post-World War Europe, and, subsequently, an option fordevelopment assistance at the reach of developing countries by means of "soft loans" and "hard
policies" (fiscal controls, structural readjustments, trade liberalization and privatization policies in
exchange for debt restructuring, aid, etc.).
Technology, however, was never a priority negotiating issue, in spite of its importance to
trade and development.  More than fifty years latter, perhaps we can now have a better chance at
widening the scope of the WTO by introducing the issue of technology through the modest but
compelling breakthrough provided by Doha's paragraph 37.  Let’s not waste this opportunity micro-
analyzing the scope and nature of the mandate.
Doha's paragraph 37 may be worded in terms that do not satisfy every country in this
Working Group, but it does provide a basis for dealing with an issue that is central to all.  The
necessary analytical work to be done should be approached in good faith as a fundamental starting
point, not an end in itself.  Recommendations will surely ensue to the degree that discussions
progress.  It is essential not to kill this unique chance to introduce the multilateral trading system toWT/WGTTT/M/2
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the issues of S&T and R&D, and their relation to trade, on their own merit.  Important as it may be, it
is necessary to go beyond the mere examination of a few provisions dispersed among different
agreements dealing with other subject matters.  Treating science and technology as a stand-alone issue
within the WTO, would represent, of itself, a successful outcome of the Working Group.
Traditional views on public policies for the promotion of scientific and technological
development are going through serious revision and upgrading in Brazil.  Changes are being carried
out which would seem ill advised for a developing country some years back.  But now they make
sense.  Most importantly, Brazil understands that in today's world promoting an early start in new
areas of technology (as opposed to catching up on old ones) is the only way forward towards
competitiveness.
Though the relative importance of technology fields change rapidly at the forefront of
research, it seems clear that in the not so distant future two areas of work will be of particular
relevance for development and economic growth – the life sciences, including biotechnology, on the
one hand, and information and communications technology, including digital revolution and
convergence, on the other.  Both technologies are crosscutting, multidisciplinary and affect theeconomy at many different levels.  In many respects, they are infrastructure (or structuring)
technologies that will work to countries advant age much the same way machines and transportation
systems did during the industrial revolution.
To achieve an early start in new fields of R&D or to boost technology in established research
areas that are relevant from the point of view of trade and development, there is growing awareness
regarding the importance of adopting a better degree of "symmetry" in Brazil's relationship with
cooperating or engaged foreign counterparts.  Traditional donor-recipient relationships have been
proved very limited in what concerns transfer of technology.
Symmetry, however, requires a certain degree of self-support on the part of the developing
country.  There is need for appropriate funding mechanisms, an aspect that Brazil has been able to
improve on by approving a series of sector specific funds for financing research and development in
priority areas such as agriculture, biotechnology, information technology, energy and oil, among
others.
Public financing for technology should increase tw ofold in only a few years time thanks to the
new funding mechanism, rising to over 2,5 billion US dollars in 2002, that is, less than one per cent of
GDP – a considerable increase in terms of Brazil, bu t still an insignificant effort compared to funding
in developed technology leaders.
A vexing problem in Brazil is the reliance of the research community on public initiative and
funding.  The Government funds about 80 per cent of all research in the country.  The private sector
(in particular the multinational companies) contributes very little.  Additionally, most R&D is
performed within the University system and is too academy oriented to produce the desired local
impact on the national economy.  There is therefore little spillover effect on industry and trade.
Linkages between academic work and market oriented entrepreneurial demands have to be induced byappropriate public policies, regulations and financing mechanisms.
Priority areas also change over time, as new frontiers are opened and old ones prove not as
promising as originally though.  Therefore, it is essential for countries to establish some sort of
permanent foresight type work, in order to keep changes in the direction of R&D world wide underconstant surveillance.  This type of work could be performed by international organizations as an
early warning system of sorts for developing countr ies in terms of changes at the state of the art in
R&D.WT/WGTTT/M/2
Page 5
There is the complex issue of innovation, an area in which developing countries are
particularly ill equipped to compete with the developed countries, and that requires not only
Government inducements through appropriate public policies but also a very complex and elaborate
national regulatory environment.  One of the few remaining important pieces of legislation which the
Government of Brazil intends to approve still in 2002 is an Innovation Law, introducing new rules onthe relationship between researchers and academic institutions, facilitating appropriation and
commercial exploitation of scientific work by researchers in publicly funded institutions, and creating
incubator type mechanisms.
The IPR regime is also of great concern in the context of a new and more coherent Brazilian
Innovation Policy and Legislation.  This is a central theme and there is certainly much to say about it.
Though it might seem a strong statement, studies based on patent applications and use of patentinformation for reverse engineering or working around protected technology, or merely for the
purpose of promoting the advancement of research, indicate that Brazil is particularly unsuited to take
advantage of the IPR system.  Enhancement of the IPR system through the TRIPS agreement seems
only to have made things worse.
There is enough evidence to suggest that the IPR system actually hampers development of
R&D in developing countries.  Among the medium income developing countries Brazil has achieved
one of the smallest increase in patent applications over time.  The inequity of the system is clearly
reflected on Table 2 of the "background note" prepared by the secretariat for this meeting: the number
of patents filed by all of Latin America and the Caribbean was only 0.3 per cent of the world total inthe year 2002, amounting to 252 deposits – insignificant in comparison to the 38,171 filed by the US,
or the 34,526 by Europe.
Evidently, there is room for improving Brazil's extremely modest performance in this field,
for example, through the creation of a patent bank with a service component and a lengthy and wideranging program for inducing awareness among entrepreneurs regarding the use of the patent system
as a source of technological information.
Despite these efforts being worthwhile, there is little reason to expect them to make a
considerable impact in the short to medium term.  As pointed out by Doctor Lynn Mytelka, in her
presentation to this Working Group:  the patent system will work as a stimulus to invention only
where a "solid knowledge base, a developed R&D and enterprise structure and the financing to sustaina process of innovation are well established".  "In most developing countries firms have neither the
capacity nor the resources to scan broadly and to detect useable ideas.  Were they able to do so, it is
highly unlikely that they would have the resources to innovate "around the patent" especially where
both process and products are patented."
This natural disadvantage developing countries face regarding the inadequacy of the patent
system to their R&D and innovation requirements will most likely not change in a short period of
time.  The fact that R&D is capital intensive, requires abundant skilled labor and presents a very long
maturity curve means that, in practice, the IPR system may actually function as an impediment to
technology flows to developing countries under the conditions prevailing in those countries,
characterized by inadequate or expensive financing, inappropriate or unenforceable regulatory
environment for innovation, insufficient skilled labor and modest installed research base.
Rates of return on investments in R&D are generally uncertain, which explains, to some
degree, why Governments in developed countries provide great incentives to, and bear the costs ofR&D funding through direct or indirect grants, subsidies, tax breaks or tax incentives.  The system is
developed to such an extent that even military spending and public funding of higher learning
institutions, as University laboratories and expensive post-graduate courses, can be construed to have
a subsidy-like effect on R&D financing that will ultimately work to the benefit of private companies
from those countries in a position (financially and market wise) to exploit the results of this publicWT/WGTTT/M/2
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investment.  This is an issue of major importance to discussions in this Working Group.  I will come
back to it later.
Brazil's efforts to improve the efficacy of its national policies in the area of science and
technology is being redesigned to take into cons ideration certain characteristics and endowments of
the country:
• Large scale economy and the possibility of exploiting both the domestic and the international
markets (though economic and social problems are also large scale);
• Installed industrial capacity;
• Competitive agriculture and farming;
• Brazil's "mega" biodiversity;
• The country's geographical dimensions which require large scale use of technological solutions
in such fields as transportation, energy, telecom, long distance learning, telemedicine, etc;
• Reasonable tradition in basic research, in certain areas as tropical medicine and public health,
of relevance to biotechnology.
Though not usually though of as areas of concern for the transfer of technology, development
problems faced by Brazil and other developing countries more often than not involve dealing with
social, anthropological and cultural issues.  This has to do with the pursuit of economic growth and
development under conditions of poverty and unequal income distribution.  And curiously enough,technology is becoming more and more central to tackling these matters, as is being proven by
South Africa’s initiatives in dealing with AIDS through lower priced technology intensive drugs.
Even the use and preservation of Brazil’s rich cultural and ethnical heritage, in a world
threatened by homogeneity through ICTs, has become in fact an economic and trade related issue in
many respects.  Cultural diversity and ethnical heritage, together with traditional knowledge, in face
of progressive global homogeneity, are fundamental elements of the national identity and may evenhave a market value or become sought after inputs for science and R&D.  Traditional knowledge of
Brazilian Indians regarding medicinal use of Amaz onian plants, for example, is being tapped by
foreign companies as a short cut towards research of  new plant based drugs.  The possibility of using
culture, traditional knowledge and other heritage assets to the benefit of the people that have
generated them is related to IPRs, to the extensive use of ICTs for development, to financing ofcultural enterprises, among many other considerations. In many ways, cultural, ethnical, social and
anthropological matters have acquired a business component to them that involves extensive use of
and access to technology related goods and services and capabilities.
Like many other developing countries, Brazil has been a firm believer in International
Cooperation for Science and Technology.  Nowadays, however, the idea of accelerating the transfer of
technology through Government-to-Government collaborative actions, or actions involving
International Organizations, is being met with increasing scepticism by Brazilian stakeholders.  While
at the level of basic research (where most of Brazil's capabilities lie) there is a tendency for
governments to treat knowledge and research as a public good, this is not the case in the area ofapplied sciences (in which Brazil really needs foreign collaboration).  In the former area, foreign
countries are happy to cooperate under general and non-intrusive agreements;  they gain access to
Brazilian Universities and to institutional research, most of them the result of Brazilian Government
public funding.  They will be happy to take the results of such collaboration at the basic science level
with them to be exploited at a subsequent stage through industrial application and property protection
of inventions that may be extracted from them by enterprises in a market position to do so, or that
have the financial clout and technological capability to do so.WT/WGTTT/M/2
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Therefore, traditional international cooperation schemes tend to facilitate the free diffusion of
basic sciences, including areas in which developing countries may have acquired capabilities.  When
one attempts to cooperate in the more market oriented and commercially charged sectors of applied
sciences, the developed countries apply all sorts of restrictions.  In other words, if one is not careful,
international cooperation may lead to a reverse transfer of basic sciences from the developingcountries to the developed countries, while transferring very little or no applied technology at all to
developing countries, as these remain under strict protection and centralized control through IPR
regimes, trade secrets rules and other restrictive practices.
There is an obvious asymmetry here.  As in the case of Government funding mechanisms of
S&T and R&D, the asymmetry is embedded in the system.  And international cooperation is not a
sufficiently strong tool these days to overcome  the asymmetry issue to the benefit of developing
countries, quite the contrary.
To the extent that technology, knowledge, k now-how and information have become factors of
production, and very relevant ones in the determination of value-added to goods and services, their
relation to trade is obvious and a direct one.  In addition to capital and labor, technology determines toan ever-increasing extent the costs of production, the costs of financing, of transportation, of
marketing and, what is even more important, the competitiveness of the good or service in the
marketplace.
Additionally, public funding of basic sciences, which may have been discarded in earlier days
from the purview of the rules based trading system under characterisations of "pre-competitive
inputs", cannot continue to be ignored in today's world of technology dominated production,
marketing and financing processes.  In such se ctors as software, the relationship between a PHD
highly skilled in programming and the final product is a direct one.  Said PHD functions almost as a
production factor himself, this being the reason why developed countries are increasingly regulating,under innovation promotion and protection laws, the relationship between academic researchers and
their respective Universities.  Enterprise type relationships are coming to bear on relationships that in
the developing world are still purely academic.
How much Government money actually goes into funding for basic science and for R&D in
general is a matter that this group should look into.  How much of it is trade distorting?  How much of
it is a direct or indirect subsidy or subsidy equi valent for R&D only to be appropriated by private
companies from the subsidizing country itself at later stages of the production chain?  And
subsequently exported to the rest of the world under what I would definitely claim to be "non-level
playing field" or asymmetrical funding and financing conditions?  Isn’t this precisely the type of issue
that the TWO should be concerned about?
What exactly is the difference between subsidies for agriculture and subsidies for Science and
Technology and Research and Development?  I would say, in fact, that the amount of public money in
the technology leading countries that goes into maintaining the technology leadership of their
industries would be possibly greater than money spen t on agriculture subsidies.  I think that from the
point of view of a developing country -- struggling as they have been throughout the years to gainaccess to a share of the higher value added international trade in technology goods and services -- this
issue has to be dealt with under trade related considerations.  The possibility that these public funding
schemes might in fact be extremely trade distorting, to the disadvantage of money deprived
Governments of the South, can be proven perh aps the single most important impediment to
technology flows to developing countries.
Developing countries cannot compete with the level of public spending in technology that
goes on in the developed world, much the same way they cannot compete against subsidies in
agriculture.  This is an issue for analytical study by the Working Group.  Just by skimming through
the OECD publication on Basic Science and Technology Statistics for 2001, it is possible to get anWT/WGTTT/M/2
Page 8
idea of the magnitude of public money going into S&D and R&D in the developed country
technology leaders.  The following  figures, acco rding to the OECD publication they were extracted
from, cover all R&D carried out on national territory in the year concerned.
Gross domestic expenditure on R&D financed by
Direct Government and General university funds,
Relative to 1999
1.2 Billion constant US D (1995 prices and PPP)
USA 70.3
Japan 17.7
Germany 14.7
France 10.6
Italy 6.5
UK 6.4
Canada 4.6
Total for G7 Countries 165.0
However, they do not include the effect of tax breaks or incentives for R&D, nor do they take
into account the effect of other important instruments for the inducement and concentration of R&D
within the subsidizing developed home country, such as:
• The use of Government purchasing power as a means to ensure returns on investments that
would otherwise remain uncertain, too long  term or simply economically unviable;
• The fact that technology holders can raise margins of profits on their technology intensive
goods and services through negotiated elevation of the standard of protection and enforcementof IPRs world wide.  A strengthening of IPRs, as the one following the Uruguay Round,
provided technology owners, mostly concentrated in the developed world, huge additional
gains (rule based;  not market oriented, mind you).  Furthermore, coverage of IPRs was
extended to non-inventive activities such as different types of software and integrated circuits,which obtained protection not through patents, but through sui-generis type agreements, more
in line with copyright applied to authorship work.  This was a means of locking up technology
and/or knowledge that could be more easily transferred to the developing countries by
imitation, reverse engineering or copying.
Another point I would like to raise is that the spread of certain types of technologies,
particularly Information and Communications Technologies, actually promote spontaneous, non-negotiated, trade liberalization, not necessarily to the advantage of developing countries.  As ICTs and
ICT infrastructure spread out to developing countries by means of greater connectivity and access to
digital networking facilities and, specially, as it pr omotes access to the Internet, they put people in far
away and less developed markets in close contact with patterns of consumption more typical of
developed countries.  There is no judgment of value in this; but the fact is that the Internet brings withit greater amounts of information produced in the developed world, much of it trade related and trade
promoting.WT/WGTTT/M/2
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That is to say that we cannot look at the impact that digital technologies have on trade only
through the prism of trade in goods under digitalized form through the Internet.  We must also
consider the Internet's trade facilitating and promotion effect, working as an incredibly efficient
mechanism for the reduction of transaction costs.  The Internet places citizens in markets in
developing countries in direct contact with information on goods and services produced mostly in thedeveloped countries and often times for the consumers those countries.  The possibility of providing
remote technical assistance through Internet based systems, for example, can increase exports to the
detriment of FDI associated with a physical presence in the importing market.
Above all, in tackling our challenging and fundamental mandate from Doha on technology
flows to developing countries we must closely inspec t claims to the effect that transfer of technology
is promoted through:
• Further raising IPR standards of protection and enforcement in developing countries;  and
• Increasing developing countries level of importation of technology goods and services,
including intermediary goods.
Empirical evidence must be produced to back up such affirmations. Brazil's experience in the
telecommunications sector, for example, does not confirm such claims.  It is a well-known fact thatBrazil promoted one of the world's largest transfers of public owned telecom companies to the private
sector during the nineties.  Some positive results were thus obtained, mostly as a result of mobile
operators entry into a market where demand for fixed phone lines had been left unmet for many years.
Privatization helped meet demand for phones mostly through sales of mobiles and represented an
improvement on the quality of services rendered.  Rates, however, remained high as minimummargins were negotiated under the sales agreements.  But the negative side of the story is the fact that
privatization generated an increase in imports of integrated circuits and other mobile phone related
components to such a degree that it generated one of Brazil's largest trade imbalances in any given
sector during last year.  Some 8 billion US dollars were spent by Brazil in 2001 on electronic
components related to the ICT and Telecom industries.  This illustrates how privatization can lead toclosing down of R&D departments or facilities in the host developing countries, substituting them
with imports that weigh heavily on developing countries' trade and technology balances.
Evidently, the Working Group cannot ignore the fact that many existing WTO Agreements
contain technology related clauses that may be relevant to facilitating or creating flows of technologyto developing countries.  An in-depth examination of these provisions, as proposed by a group of
developing countries, is practically obligatory work and I think there is much to gain from it.
International relations are changing rapidly as a consequence of developments in technology,
particularly the digital revolution.  Quoting from a concept note prepared by UNCTAD in
collaboration with Professor Calestous Juma, from  Harvard University's School of Government, this
Working Group should bear in mind that "innovations  in global governance are likely to occur on the
margins of the UN system, especially in forums that  allow for creative participation of the scientific
community and civil society.  Forums that assume that States are the only actors will hold onto their
traditional roles, but will not contribute to the emer ging diplomatic scene".  I think that this Working
Group, to the extent that it actually engages h ead on dealing with the fundamental issues brought
under its purview by Ministers at Doha, without constraints and taking onboard inputs fromdeveloping countries, scientists and civil society, it wi ll contribute to an increase in credibility in the
process of multilateral trade negotiations.
The more science and technology can be dealt with by consensus under the rules bases trading
system the stronger the system.  Leaving it out migh t eventually mean killing the chicken that lays the
golden eggs, as the world progresses towards a new technology based economy and society.WT/WGTTT/M/2
Page 10
ANNEX II
Presentation by Mr. Zhijun Wu, Deputy Director,
Department of Science and Technology, Ministry of Foreign Trade and Economic Cooperation, China
Second Session of the WTO Working Gro up on Trade and Transfer of Technology
11 June 2002
We are now in the era of economic globalization and knowledge economy.  Technology plays
a crucial role in economic development.  As production is increasingly knowledge-intensive, the
issues of transfer of technology and technological capacity-building in developing countries havebecome ever-important for achieving sustained growth and development.
Technology trade holds quite an important place in international trade and technical
exchange.  To advance its economic development, and scientific and technical progress, China always
attaches great importance to energetic developmen t of technology trade with various countries and
regions in the world on the basis of equality and mutual benefit.  Especially since the policy of
opening to the outside world was put into practice in 1979, the Chinese government has adopted a
series of significant measures and thus brought China's foreign technology trade into a new
development period .  It is no doubt that national policies play a key role in encouraging the
enterprises to import advanced technology and im prove their own technological capacity.  China'
technology import began in 1952.  And up to now, it ha s about 50 years of history.  Since the reform
and opening to the outside world, the technology import has developed quickly and obtained great
achievements.  From 1979 to 2001, China has signed nearly 50,000 contracts with total amount of
US$149.8 billion with foreign countries (only a small proportion of contracts was signed by foreign-
invested enterprises in China.).  China's technol ogy import quickened the technical transformation of
the existing enterprises, promoting technical progress of industries, shortened technical differences
between China and foreign countries, filled in some  gaps in China's technology, thus pushing the
manufacturing technology for important products to ward modernization.  Meanwhile, through
technology import, China introduced a lot of ways and means of scientific administration and brought
up a large group of technicians and administrative personnel, which gave impetus to raising technical
and administrative level of China's industrial enterprises.  On the other hand, technology import is
helpful to enhance China's independent innovation capacity and the ability of commodities exportingfor foreign exchange.  In short, technology import plays an important role in expediting development
of China's economy.
Chinese government attaches great importance to the administration of technology import,
trying its utmost to abide by those international laws and rules of protection of intellectual propertyand international practices, considering China's real situation and promulgated some laws and
regulations governing the technology import.  It is well known that China entered into WTO on
11 December 2001.  It indicates that as Chinese economy melted into the world economy, further
development of China's socialist market economy, and further opening to the outside world.  Under
such a circumstance, Chinese government studies the common practices of WTO Members and
promulgated Regulations on Administration of Technology Import and Export, which became
effective as of 1 January 2001 .  According to this Regulation, the Chinese government administrates
the issue of technology import in three categories: technology which is prohibited to import,
technology which is licensed to import, and technology which is to be imported freely.  Meanwhile,
the Management Regulations on the registration of the Technology Import Contracts and theManagement Regulations on the prohibited-import and Controlled-import Technology were made
public, encouraging the enterprises, including priv ate companies, to absorb actively the foreign
advanced technology under a very relaxed condition.WT/WGTTT/M/2
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The Catalog of the Technology which are Prohibited or Controlled to Import is also enacted.
The technologies which are backward, low-efficient, energy-consuming, environment-polluting
should be prohibited to import; while those which might be of harm to national security, public
interests, people's lives and health and environment should be controlled to import.  What's more,
Chinese government also make some preferential policies, encouraging foreign companies to transfer
their advanced technology to China.  The foreign companies who transfer the advanced technology to
the Chinese enterprises will be considered to be give n tax-free or tax-cutting treatment.  This is also
helpful- for absorbing foreign advanced technology.
To develop the technology trade, Chinese government also urges the technology import
administrations authorities to provide better servic e to the enterprises.  The technology import affairs
are administrated at two levels of central and loca l governments.  According to the Foreign Trade Law
of P.R.C.  and the Administration Regulations on Technology Import and Export, the Ministry of
Foreign Trade and Economic Cooperation (MOFTEC)  is in charge of the administration of
technology import of the whole country.  MOFTEC  authorizes departments, commissions, bureaus of
foreign trade and economic cooperation of provinces, autonomous regions, municipalities under
jurisdiction of the central government, to administrate the technology import affairs in their respectiveareas.
To ensure the sustained, healthy developm ent of national economy, importing technology
from abroad is a long-term policy.  China always abides by the principle of equality and mutual
benefit in developing its technology trade with all the countries and regions in the world.  Someexperiences are gained as follows:
• To combine advances of technologies and their applications, and to attach great importance to
their economic and social results.  The technology advances refers to the ripe andindustrialized ones at international front place.  Application means that the imported
technology is suitable to China's technical status and can be mastered and digested throughsome efforts.  Any technology imported should be both advanced and applicable.
• The focus of import is technologies for producing products and for productions management.
• Various forms are used to import technology, including license trade, production cooperation,
technical service, advisory consultancy, and key equipment.  The proper forms are chosen
according to different needs.
• To honour contracts and keep promises.  For the supplied technology, the Chinese side strictly
implements its obligations and protects suppliers' intellectual properties according to the
articles of contracts.
Of course, China also has some difficulties in importing technology.  Since some developed
countries are not active in transferring technology to China due to some political reasons, or they
quoted unreasonable, much more higher prices.  They control the transit of advanced technologies and
equipment to China.  Thus the Chinese enterprises are very hard to acquire the needed advancedtechnology and equipment.  Some countries misuse "national security exception provision" of WTO
and practice discrimination against China during the process of transfer of technology.
With the deepening of economic globalization,  the issues of transfer of technology and
technical capacity-building in developing countries have become more and more important.  Some of
the WTO Agreements also mention explicitly or allude on this.  These international instruments
express the willingness of development partners to cooperate internationally with regard to thetechnology transfer.  Nevertheless, much more remains to be done.  An obvious fact is that most
technology-related provisions are of a "best endeavour" nature, rather than of obligation.  We think
that the Working Group is facing two challenges:  (i ) How to enhance the effectiveness of the relevant
WTO international instruments for transfer of technology and capacity-building in developing
countries;  (ii)  How to push the developed countries to make operational policies to transferWT/WGTTT/M/2
Page 12
technology to the developing countries in  the context of implementing various existing WTO
agreements.  The issues under the purview of the Working Group are important, as they relate to
opportunities and challenges for transfer of technology to and capacity-building in developing
countries that could be offered by international agreements.
In accordance with the Doha  Ministerial Declaration, the General Council shall report to the
5th Ministerial Conference on the progress of examination in the Working Group on the Relationship
between Trade and Transfer of Technology and, of any possible recommendation on steps that might
be taken within the mandate of the WTO to increase flows of technology to developing countries.
The Doha  Declaration identified two central issues:  (i) the relationship between trade and
TOT;  (ii) possible steps that might be taken to increase flows of technology to developing countries.The "Possible  Terms of Reference" put forward by the 15 countries at the 1
st Session of the Working
Group addressed those issues in concrete terms.  The work of the Working Group  should be pragmatic
and result-oriented. It should not be purely academic and educative.  It should be noted that on the one
hand, all the issues in the possible "Possible Terms of Reference" are of crucial importance and need
to be addressed in depth.  It would be a pragmatic approach to identify a limited number of issues forits work and that the Working Group first focuses on those issues mentioned in paragraphs 4, 6, 9, 12,
13 and 18 of the "Possible Terms of Reference".  To solicit inputs and expertise from other
international organizations would also be helpful .
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