WORLD TRADE  
ORGANIZATION  WT/WGTTT/W/10 
13 October 2005 
 
 (05-4665) 
Working Group on Trade and Transfer of Technology Original:   English 
  
 
STEPS THAT MIGHT BE TAKEN WITHIN THE MANDATE OF THE WTO  
TO INCREASE FLOWS OF TECHNOLOGY TO DEVELOPING COUNTRIES 
 
Submission to the Working Group on Trade and Transfer of Technology 
 
by India, Pakistan and the Philippines  
 
  The communication, dated 10 October 2005, is being circulated at the request of the Delegations of India, Pakistan and the Philippines.  
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1. Technology and technical know-how are essen tial for improving productivity, promoting 
export growth and attaining the development aspirati ons of countries.  Therefore, technology transfer 
is seen as an important tool to narrow the growing technological gap between developed and 
developing countries, for integrating developi ng countries into the global economy and enabling 
developing countries meet their international obligations.  
2. For this reason, countries agreed to examine "in a Working Group under the auspices of the 
General Council, of the relationship between tr ade and transfer of technology, and of any possible 
recommendations on steps that might be taken with in the mandate of the WTO to increase flows of 
technology to developing countries.  The General Council shall report to the Fifth Session of the 
Ministerial Conference on progress in the examination. " 
3. The discussion of the relationship between trad e and transfer of technology needs to be 
continued in recognition of the important role that transfer of technology can play for the development 
of countries and in promoting the participati on of developing countries in global trade.  
4. Secondly, technology transfer often involves trans actions in technology products and services.  
Such transactions may include the assignment, sale and licensing of industrial property and the 
provision of know-how, technical expertise and tech nological knowledge necessary to acquire, install 
and use machinery, equipment, intermediate  goods and/or raw materials, among others.  
5. Thirdly, most of the trade-related policies,  such as competition, incentives, export, and 
taxation policies as well as intellectual property right s, among others, affect technology transfer.  
More importantly, the market for technology is  not even and the buyer often has very little 
information on the technology product or service.  
   WT/WGTTT/W/10 
Page 2  
 
 6. Fourthly, several trade-related barriers, such as technical standards, price undercutting and 
tariff peaks and escalations among others, also affect technology transfer.  Standards may be too high 
for firms to upgrade at an economic price within a short time, tariffs may encourage the export of raw 
materials and price undercutting may deter technol ogy advancement.  Taken together, they can 
discourage technology transfer.  Further, as TRIPS re cognises in its first preambular paragraph, it may 
be possible that measures and procedures taken to enforce IPRs could themselves becomes barriers to 
legitimate trade. 
7. Therefore, trade could affect the flow of technology and vice versa.  On the other hand, the 
literature points out clearly that, particularly in developing countries, firms having 'absorptive 
capacity' is a pre-requisite for transfer of technology.   This makes capacity a pre-requisite for effective 
transfer of technology.  It is for this reason that  several agreements contain provisions relating to the 
transfer of technology.  However, most of th e provisions in WTO Agreements lack financing, 
implementation, monitoring and technical assistan ce mechanisms in this area.  To facilitate 
technology transfer, development of clear implem entation and monitoring processes, including fiscal 
support, may be important.  Such mechanisms as those in multilateral e nvironmental agreements 
(e.g. the Montreal Protocol which mentions transf er of technologies needed to phase out the use of 
ozone depleting industrial substa nce) could serve as models.  
In this light, a possible recommendation is to expand technical assistance under the 
TRIPS Agreement by linking Article 67 to Articles 66.2 and 7.  As is, Article 67 does not deal with measures or incent ives needed to facilitating tec hnology transfer.  The support 
built into Article 67 could then be targeted at facilitating technology transfer to 
institutions and firms in developing countries, especially LDCs. 
8. The technology transfer-related provisions in WTO agreements are, in most cases, only 
voluntary (see WT/WGTTT/3/Rev.1).  This has made the operationalisation of these provisions difficult and made them less bene ficial to developing countries. 
Therefore, a possible recommendation is to en courage the formal adoption of voluntary 
guidelines, such as those of the OECD to Multinational Firms.  Governments could 
incentivise their multinational firms to "perform science and technology development work in host countries", grant licences "on reasonable terms and conditions", and adopt 
"practices that permit the transfer and rapid diffusion of  technology and know-how" to 
developing countries.  
9. Most of the WTO provisions relating to technolog y transfer and control of restrictive business 
practices function well in a competitive technology market.  Some developing countries, especially 
LDCs, have a limited capacity in developing , implementing and managing competition policies 
relating to technology packaging (e.g. such as cer tain cartels, exclusive grant back clauses and 
coercive packaging licenses restricting use of comp eting technologies, sources of intermediate inputs, 
etc.). 
A possible recommendation is to help deve loping countries improve or implement 
competition policies capable of monitoring and discouraging use of restrictive business 
practices by technology owners and by ensuri ng firms adopt similar or better practices 
at home and abroad.  Alternatively, deve loped country competition authorities could 
consider undertaking a commitment to examin e practices whose effect is felt only 
outside their own jurisdictions, namely in developing countries.  In addition, developed 
countries could encourage licensing and subcontracting, and support firms in 
developing countries access technological in formation and drafting of contracts. 
  WT/WGTTT/W/10 
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 10. Technical standards are important aspects of in ternational trade in good and services as they 
build trust, improve quality and protection of th e environment and public health.  However, many 
developing countries do not have the capacity to form ulate, assess and defend technical standards due 
to lack of technical know-how.  WTO agreements co ntain provisions requiring developed countries to 
assist developing countries to formulate and impl ement technical standard s through provision of 
credits, loans, expertise and equipment, among others.  
Given the importance of technical standards in  international trade and in protection of 
public health in a globalized world, the Working Group may wish to establish mechanisms of helping developing countries'  standard monitoring authorities acquire 
necessary technology needed to achieve a level that is internationally recognized, at least 
at sub-regional level.  Such a mechanism co uld be tailored along the model for national 
biosafety clearing house.   
11. Training and increased exchange of scientists plays an important role in the transfer of 
technology between countries.  There are fears that countries are increasingly limiting the movement of labour and, as a result, exchange of information.  
A possible recommendation is for Members to  seek ways of expanding or encouraging 
the mobility of scientists, technologists and technicians under GATS, develop science and technology agreements to promote int ernational scientific and industrial R&D 
collaboration, and encourage their firms and public institutions to employ, at least 
temporally, fresh graduates and offer consul tancy services or contracts and attachment 
to experts from developing countries to facilitate transfer of knowledge.  
12. The provision of incentives can play a catalytic ro le in stimulating private sector interest to 
technology generation and transfer.  A host of de veloped and developing countries provide various 
forms of incentives to firms to facilitate inv estment, in research and development, technology 
acquisition or generation.  However, the incentiv es are neither targeted to facilitate technology 
transfer nor reciprocal.  
To this end, the Working Group may wish to  exchange information on investment and 
technology-related incentives provided to fi rms, develop mechanisms to disseminate 
such information and ways to encourage best practice in technology transfer, as well as 
in encouraging R&D investment or expenditure, and creating new technology. 
13. There are other measures that could facilitate exchange and use of technical information.  In 
particular, patent applications and patent databases are important potential sources of technological 
information.  In order to maximize the beneficial effects of such tools: 
(a) Countries may wish to encourage their pa tent offices to cooperate in sharing 
information and regulatory standards.  They could help develop databases for 
some developing countries, especially tho se that are not available on the internet, 
to make the information accessible to potential domestic users.  
(b) The Working Group could develop ways in which developing countries may 
make full use of the provisions under Article 29 TRIPS Agreement which requires patent applicants, when disclosi ng their invention, to indicate the best 
mode  for carrying out the invention to enha nce the practical value of a patent as 
a source of publicly available technological information.  
 
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