WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/WGTTT/M/41 
19 December 2012 
 (12-6939) 
Working Group on Trade and Transfer of Technology 
Forty-First Session  
 
 
 
NOTE ON THE MEETING OF 8 NOVEMBER 2012 
 
Chairperson:  Mr. Carlos Rossi (Peru) 
  
A. 
ADOPTION OF THE AGENDA  ......................................................................................................... 1  
B.  ANALYSIS OF THE RELATIONSHIP BETWEEN TRADE AND TRANSFER OF TECHNOLOGY  .............. 1  
C.  ANY POSSIBLE RECOMMENDATIONS ON STEPS T HAT MIGHT BE TAKEN WITHIN THE 
MANDATE OF THE WTO TO INCREASE FLOWS OF TECHNOLOGY TO DEVELOPING 
COUNTRIES  .............................................................................................................................. .... 2 
D.  WORKSHOP ON TRADE AND TRANSFER OF TECHNOLOGY - SUBMISSION BY COLOMBIA , 
COSTA  RICA , MEXICO AND PERU (DOCUMENT WT /WGTTT /W/19) ................................................ 2  
E.  OTHER BUSINESS  ......................................................................................................................... 3  
 
 
A. ADOPTION OF THE AGENDA  
1. The agenda contained in Airgram WTO/AIR/ 4011/Rev.1 of 30 October 2012 was adopted.  
B. ANALYSIS OF THE RELATIONSHIP BETWEEN TRADE AND TRANSFER OF TECHNOLOGY  
2. Under the agenda item relating to  the relationship between trade and transfer of technology, 
UNCTAD made a presentation on the impact of Bilateral Investment Treaties (BITs), Regional Trade 
Agreements (RTAs) and Non-Equity Modes (NEMs)  on Transfer of Technology were made on the 
role and importance of GVCs and technology transfer.   
3. Based on two UNCTAD publications – "The World Investment Report 2011" and "Local 
Production of Pharmaceuticals and Related Technol ogy Transfer in Developing Countries", the 
presentation highlighted that NEMs were contract ual relationship, throug h licensing arrangements, 
franchising or contract manufacturing, between local  business and transnational corporations (TNCs).  
NEMs characterized control over host country busin ess by means other than equity holding.  The 
presentation also found that the NEMs were a middl e ground between FDI (where TNCs keep control 
of assets) and Trade (where the trading partner abroad has no control over assets).  NEMs are 
commonly found in pharmaceuticals, automotive compone nts, IT services, electronics sectors.  By the 
year 2010 the cross border trade through NEMs ha d reached US$2.1 trillion and the NEM-related 
(under the licensing sales) had tripled between 1990 a nd 2009.  In underscoring the benefits of NEMs 
for the TNCs, the presentation found that in the NE Ms:  (i) offer the possibility of low upfront capital 
expenditure;  (ii) result in reduced risk exposure (a factor which was of immense importance for the 
TNCs);  (iii) help greater adaptability to cha nges in business cycles and de mand in line with local 
conditions;  and (iv) allow TNCs to focus on their core objectives and functions through 
externalization of non-core activities, under licensing or contract manufacturing to local producers in 
host countries e.g. in pharmaceuticals.  On the othe r hand the local partners also benefited from NEMs 
through better access to technology, acquisiti on of skills, technological and productive capacity WT/WGTTT/M/41 
Page 2  
 
 building and technical know-how.  However, the ke y to acquiring optimal benefits lay in the 
absorptive capacity of the host country.  Among others, economic, political and social stability, 
infrastructure, stable commercial & contract law and sound intellectual property regime played an 
important role in attracting trade through NEMs.  In addition to economic, political and social 
stability, infrastructure, bilateral and internationa l investment protection and investment promotion 
and incentives were important determinants of FDI flows. 
4. It was also pointed out in the presentation that  in the context of technology transfer, NEMs 
played a crucial role in helping in diffusion of tec hnology and skills to local partners.  For example, in 
the pharmaceutical value chain in Bangladesh in itial local capacity was built through licensing 
agreements with the TNCs.  However, upgrading of local skills and training primarily depended upon 
the nature and content of the contractual agreem ent.  For instance, in the licensing arrangement 
between the US firms Warner Lambert/Pfizer and an  Argentinian firm Alea resulted in a limited 
technology transfer.  Similarly, there could be a rrangements where a TNC may only grant the right of 
distribution and not production.  It was also unde rscored that extent of technology uptake and 
know-how among local firms had lot to do with the domestic capacity to absorb and assimilate.  The 
presentation also highlighted that intellectual propert y protection was also one of the elements that 
encouraged investor to opt for an NEM.  
5. In conclusion, the presentation made some recommendations on how development benefits 
from the NEMs could be maximized which, among ot hers, included:  (i) embedding NEM policies in 
overall development strategies through providing c oherence in trade, investment and technology 
policies;  (ii) building domestic productive capacity ;  (iii) facilitating and promoting NEMs through 
stable and enabling legal framework;  and (iv) addressing negative effects through strengthening the 
bargaining power of local firms viz a viz  foreign firms.  
6. Following the presentation Members engaged in a useful discussion and raised a few 
questions for example on UNCTAD's work, if an y, on guidelines and best practices that could 
facilitate technology transfer or wh at elements countries need to cons ider while devising a strategy for 
attracting NEMs that come with technology content.  
7. Members were also briefed on a Workshop on Intellectual Property Rights and Trade and 
Transfer of Technology that was jointly organized by the Government of Peru and the WTO in Lima, 
Peru in September 2012. 
C. 
ANY POSSIBLE RECOMMENDATIONS ON  STEPS THAT MIGHT BE TAKEN WITHIN THE MANDATE 
OF THE WTO TO INCREASE FLOWS OF TECHNOLOGY TO DEVELOPING COUNTRIES  
8. Under the agenda item on possible recommendations  that the Working Group could make in 
the future, Members continued their discussion of  an earlier submission entitled ''Facilitating Access 
to Information on Appropriate Technology Sourcing – Steps to Increase Flows of Technology to Developing Countries''.  The proponents informed that they were currently in the process of 
consolidating the room document and would, in th e near future, table a formal submission in the 
Working Group. 
D. 
WORKSHOP ON TRADE AND TRANSFER OF TECHNOLOGY - SUBMISSION BY COLOMBIA , 
COSTA  RICA , MEXICO AND PERU (DOCUMENT WT /WGTTT /W/19) 
9. Members considered a communication received from Colombia, Costa Rica, Mexico and Peru 
which proposed a workshop, later this year or early  next year, in Geneva, on Trade and Transfer of 
Technology under the auspices of the Working Group.   The proposal included a draft programme of 
the workshop.  While, in principle no Member obj ected to the holding of the workshop, divergent 
views were heard across the room on the possible ob jectives of the workshop and the topics to be  WT/WGTTT/M/41 
 Page 3 
 
 
 covered.  While most of the Members believed th at the programme of the workshop was too broad 
and lacked focus, some Members felt that it was unnecessarily prejudiced towards a number of topics 
such as the role of GVCs and IPRs and hence the ne ed for a more balanced approach in drafting the 
agenda.  Some Members favoured discussion on climat e change as part of the workshop programme.  
Views were also expressed on the possible speaker s list for the workshop and suggestions, by some 
Members, were made to invite the South Cent re and Third World Network as speakers to the 
workshop.  Quite a few Members stressed that they were open to discussion on the idea of the 
proposed workshop but any process or discussion on this  issue must be Member-driven.  While they 
wanted the proponents to elaborate further on the ultimate objective of the workshop, they also 
expressed their disappointment that the regular meet ings of the Working Group were not being used 
to discuss some of the relevant topics.  The Chai rman concluded the discussion by stating that a 
formal decision on holding of the workshop woul d be taken only when Me mbers had developed a 
consensus on the elements of the workshop.  He encouraged Members to discuss the proposal 
amongst them with a view to developing a common view on it. 
E. OTHER BUSINESS  
10. No issue was raised under "Other  Business".  However, under this agenda item, the Chairman 
shared his thoughts on the Annual Report that the Working Group was mandated to make to the General Council at the end of each year.  He stated that the annual report, as in the past years, would 
be objective, factual and would cover the work ca rried out since the Working Group last reported in 
2011.  He informed Members that the draft would be  sent to Members next week after appropriately 
reflecting in it the proceedings of the current m eeting.  Members would have a week's time to 
communicate their comments, if any, to the Secretariat after which he intended to adopt the report by 
circulation, rather than convening an additional four th meeting.  This would also help the Working 
Group to save costs during the current tight budgetary times.  Members agreed to the Chair's proposal.  
11. The meeting was adjourned.   
 
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