RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/WGTTT/M/20 
1 October 2007 
 (07-4121) 
Working Group on Trade and Transfer of Technology 
Twentieth Session  
 
 
 
NOTE ON THE MEETING OF 4 JULY 2007 
 
Chairperson:  H.E. Mr. Manuel A. J. Teehankee (Philippines)  
  
 
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 ............................................................................................................................... ...3 
D. OTHER BUSINESS .........................................................................................................................3  
 
A. ADOPTION OF THE AGENDA  
1. The agenda contained in Airgram WT O/AIR/3033 of 19 June 2007 was adopted .   
2. Due to unforeseen circumstances the Chairman of the Working Group, Ambassador Kwabena 
Baah-Duodu, was unable to chair the meeting.  Members agreed that Ambassador Manuel A. J. 
Teehankee of the Philippines, former Chairman of the Working Group should chair the meeting. 
B. ANALYSIS OF THE RELATIONSHIP BETWEEN TRADE AND TRANSFER OF TECHNOLOGY  
3. Members continued their consideration of the relationship between trade and transfer of 
technology on the basis of a presentation made by  the Philippines.  The presentation highlighted the 
Government of the Philippines' belief that technolog y and its successful transfer played an important 
role in stimulating the formation and growth of  advanced technology entrepreneurial start-ups, 
contributed to increased revenues of existing firms and made a positive contribution to the country's 
economic development.  In addition, improved a llocation of resources among economic sectors and 
industries, as well as generation and adaptation of  technology had resulted in better organization of 
firms which had led to greater competitiveness, growth and productivity across the economy.  
4. The representative of the Philippines explained that the industrialization process had begun in 
1912 when machinery for its first sugar mill was imported from Europe.  By 1930, local adaptation 
had seen the sugar mill grow into a milling complex,  drawing a total foreign investment of over 
US$20 million.  To regulate investment flows and tr ansfer of technology, the Government of the 
Philippines introduced an Investment Act in 1967  which focused on the discrimination between 
pioneer and non-pioneer industries.  Later, a Presi dential Decree resulted in the establishment of a 
Technology Transfer Board (TTB), which made it obligatory to obtain prior approval of technology 
transfer agreements before project implementation. WT/WGTTT/M/20 
Page 2  
 
  5. The acquisition of cheap and effective forei gn technology was highlighted, as it had always 
been an important policy option for improving the technological profile of the country.  The primary tools employed in this context included foreign direct investment (FDIs), import of capital goods, 
technological purchase through licensing agreements, a nd the foreign study or training of scientists 
and technicians abroad. 
6. The presentation revealed that the strong technological base and the high value addition had 
been achieved in the Philippines'  semi-conductor sector as a result of FDIs.  However, the role of 
foreign investments in upgrading technologies varied  from one industry to the other.  Independent 
studies focusing on the Philippines' experience with  the FDI during 1980 and 1990s showed that the 
correlation between investment rate over a si gnificant time-period and the improvement in 
technological stock was not necessarily positive.  In  addition,  increasing the ratio of capital goods 
imports to the GDP had the potential of reducing t echnological backlog.  In the 1960s, the Philippines 
had experienced a decrease in this ratio which led to firms becoming relatively technologically 
backward and less efficient compared with newe r and larger plants in other ASEAN countries. 
7. Intellectual Property Philippines (IP Philippines) also played a crucial role in technology 
transfer.  With an aim to promote technology tr ansfer, IP Philippines expa nded its relationship with 
other partners in the private sector to increase te chnology dissemination, diffusion and absorption.  
Expansion of a cross-country network of inte rmediaries comprising provincial research and 
innovation organizations, university research centres and the private sector was encouraged as a matter of policy.   
8. Foreign study and training were also effective tools in the transfer of technology and 
know-how.  The Philippines had attempted to tap the expertise of overseas Filipino experts and 
scientists through the Balik-Scientist (Return-Scien tist) programme and the TOKTEN (Transfer of 
Knowledge through Expatria te Nationals) in the Philippines.  However, these efforts needed to be 
further improved  and institutionalized. 
9. The Science and Technology Coordinating Counc il in the Philippines had increasingly 
emphasized the importance of making Research & Development (R&D) responsive to the needs of 
the private sector and the economy.  Effective technol ogy transfer generally required adaptation to the 
country’s situation.  All things being equal, th e higher the R&D expenditure, the greater the likelihood 
of adaptation success.  During 1990 to 2000, the Ph ilippines ratio of R&D expenditures to GNP was 
much lower compared to that of other countries in the region (2 per cent of GNP). 
10. Some of the policy challenges that the Philippi nes faced in its efforts to create a sound 
knowledge and technological base included:  technology contracts containing provisions relating to 
exclusive rights for the supply of machinery;  technology contracts demanding guarantees against 
changes in taxes, tariffs, currency exchange rates,  remittances and royalties and contracts containing 
provisions for the excessive use of foreign techni cians and limited use of competing technologies.  
The high cost of technology transfer, specially in  monopolistic arrangements and the manipulation of 
payments in joint ventures, was also identified as an  impediment in this regard.  The designing of 
appropriate incentive measures and an institutional s upport system that would ensure a more effective 
and widespread use and diffusion of foreign technology throughout the whole economy had also been a  crucial policy challenge.  The  need to enhance a sub-contracting system by strengthening small and 
medium enterprises (SME) capabilities and their linka ges to big enterprises had also been a major 
challenge. 
11. The Philippines is to provide specific sectoral examples in technology generation and its 
transfer at the next meeting of  the Working Group.  WT/WGTTT/M/20 
 Page 3 
 
 
  12. During the discussion, a number of Members expressed the view that international 
agreements in the area of technology transfer had an important role to play in technology transfer such 
as Articles 7, 8, 62 and 66 of  the TRIPS Agreement.   The importance of  public policy in encouraging 
public-private partnership, the li nkage of foreign investment with  SMEs and the interface between 
technology and human resources was also highlighted.  The role of Aid for Trade in the context of 
capacity building and the development of human cap ital was also underscored.  The delegations of 
China and India indicated their interest in sh aring their own country experience in technology 
generation and its transfer at future  meetings of the Working Group.  
C. ANY POSSIBLE RECOMMENDATIONS ON  STEPS THAT MIGHT BE TAKEN WITHIN THE MANDATE 
OF THE WTO  TO INCREASE FLOWS OF TECHNOLOGY TO DEVELOPING COUNTRIES  
13. Discussions under the agenda item relating to the consideration of possible recommendations 
on steps that might be taken within the mandate of the WTO to increase flows of technology to 
developing countries, continued on the basis of the re vised room document tabled by India, Pakistan 
and the Philippines at the 17th  Session of the Working Group.  In the revised room document, the 
proponents had built upon the recommendations contained in their earlier submission (WT/WGTTT/W/10) and provided responses to some of the clarification that had been sought by some developed country Members.  Members ge nerally endorsed the focus and content of the 
document.  The representative of Brazil shared th e proponents' views on the need to clarify the 
linkage between Articles 67, 66.2 and 7 of the TRIPS Agreement and on the importance of 
information sharing and cooperati on among patent offices.  The representative of Canada asked 
whether the proponents were proposing an add itional mechanism when they had asked for 
clarification of the linkage between the above Artic les of the TRIPS Agreement.  Clarification was 
also sought on whether the proponents had intended to  expand the application of Article 66.2 to all 
developing countries.  Some Members stated that they were still reviewing the document and would 
make comments on it at future meetings of the Working Group.  
D. 
OTHER BUSINESS  
14. The Chairman  informed Members that the next meeting of the Working Group had been 
tentatively scheduled for Wednesday, 17 October 2007.  
 
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