WORLD TRADE  
ORGANIZATION  WT/WGTTT/W/11 
27 October 2005 
 (05-4968) 
Working Group on Trade and Transfer of Technology  
  
 
DRAFT 
 
REPORT (2005) OF THE WORK ING GROUP ON TRADE AND  
TRANSFER OF TECHNOLOGY TO THE GENERAL COUNCIL 
 
 
I. INTRODUCTION 
1. The Working Group on Trade and Transfer of Technology was established at the Fourth 
Ministerial Conference in Doha in November 2001, with the following mandate:1 
"We agree to an examination,  in a Working Group under the auspices of the General 
Council, of the relationship between trade and transfer of technology, and of any 
possible recommendations on steps that might  be taken within the mandate of the 
WTO to increase flows of technology to de veloping countries.  The General Council 
shall report to the Fifth Session of the Ministerial Conference on progress in the 
examination." 
2. Since its report to the General Council in 20042, the Working Group has held three formal 
sessions on 11 April 2005, 6 July 2005 and 11 Oc tober 2005.  The minutes of these meetings are 
contained in documents WT/WGTTT/M/11, WT/WGTTT/M/12 and WT/WGTTT/M/133 
respectively.  As in the previous year, Members pur sued the work by continuing the analysis of the 
relationship between trade and transfer of technology, as well as discussing any possible recommendations on steps that might be taken with in the mandate of the WTO to increase flows of 
technology to developing countries.   
II. RELATIONSHIP BETWEEN TRADE AND TRANSFER OF TECHNOLOGY 
3. This issue was taken up at the Eleventh, Twel fth and Thirteenth Sessions of the Working 
Group.  In addition to continuing discussions on some  of the elements of the relationship between 
trade and transfer of technology highlighted in earlier submissions
4, the Members benefited from the 
presentation of three useful studies by UNCTAD name ly on:  (i) Facilitating Transfer of Technology 
to Developing Countries:  A Survey of Home Country  Measures;  (ii) A Case Study on the Electronics 
Industry in Thailand;  and (iii) Taxation and Technol ogy Transfer:  Key Issues, in their deliberations 
on the relationship between trade and transfer of technology.   
4. At the Eleventh Session, Members engage d in a useful discussion on the study on 
''Facilitating Transfer of Technology to Devel oping Countries:  A Survey of Home-Country 
Measures'', that had been intr oduced by UNCTAD at the earlier se ssion of the Working Group.  The 
study provided a useful compilation of home-country measures and highlighted the important role 
                                                      
1 Paragraph 37 of WT/MIN/(01)/DEC/1 
2 WT/WGTTT/6 
3 To be issued. 
4 WT/WGTTT/1 and WT/WGTTT/W/5 WT/WGTTT/W/11 
Page 2  
 
 home-country measures could play in encouraging fl ows of technology to developing countries.  The 
ensuing discussion underscored the importance of investme nt in research and the role that transfer of 
technology to developing countries could play as a powerful tool for development.  Underpinning the 
significance of a holistic approach to a better unders tanding of the interface between trade and transfer 
of technology, it was suggested that further studies on 'host-country measures' and 'domestic research 
and development programmes' that have been su ccessful in generating industrial development and 
economic growth, could be useful in furthering the work of the Working Group.  There was a broad 
acknowledgement that both the private and public sector  had an important role to play in technology 
transfer through cohesive partnerships.  
5. At this session UNCTAD also introduced ''A Case Study on the Electronics Industry in 
Thailand" that highlighted the contribution of the manufacturing sector of Thailand to the country's 
rapid export growth in recent years.  The study underlined the role of host-country measures in 
technology transfer by throwing light on some of the pro-active policies pursued by the Government 
of Thailand.  These policies, according to the study,  played a crucial role in creating a favourable 
environment for export-oriented FDI, promotion of  technology transfer, its diffusion, innovation in 
the industry and an enabling framework for the em ergence of domestic support industries.  These 
initiatives had played an important role in integra ting domestic contract manufacturers into the global 
production networks of trans-na tional corporations (TNCs) and in acquiring assembly process 
capabilities, enhancing export competitiveness, and bu ilding up domestic supp lier networks in the 
electronics industry.   
6. At the Twelfth Session, the Group considered UNCTAD's study on ''Taxation and 
Technology Transfer:  Key Issues''.  The study raised a number of issues with regard to the 
implications of various tax instruments on tran sfer of technology from the perspective of both 
technology importing and exporting countries.  In  identifying some of the tax-related policy 
instruments that could be used to promote technology transfer to developing countries, the study underlined the important role that tax policy coul d play on flows of technology, both as an incentive 
to attract technology and as a stimulant to technology exports.  The tax structure of a country was a 
determinant factor in the nature and flow of tec hnology.  The study showed that the challenge for the 
technology importing countries was to balance the need to facilitate technology acquisition by 
providing tax incentives with the need to maximi ze revenue collection.  Similarly, technology 
exporting countries had to find the balance between the level of tax incentives that could be provided 
to encourage local firms to export technology, and the need to maximize tax revenue collection from 
income generated by the activities of these firms abroad .  It also highlighted the mitigating effects of 
excessive corporate income tax, high import duti es, excessive taxation of dividends, royalties and 
technical fees and high withholding taxes on tec hnology transfer.  A clear vision of national 
development goals with prioriti zation of economic activities coupled with carefully targeted tax 
incentives was considered to play an important role  in investment decisions and efforts to acquire 
technology through trade and FDI fl ows.  Consideration of these issues continued at the Thirteenth 
Session. 
III. ANY POSSIBLE RECOMMENDATIONS ON STEPS THAT MIGHT BE TAKEN 
WITHIN THE MANDATE OF THE WTO TO INCREASE FLOWS OF TECHNOLOGY TO DEVELOPING COUNTRIES 
7. Members continued their consideration of any possible recommendations on steps that might 
be taken within the mandate of the WTO to in crease flows of technology to developing countries 
based on a joint submission tabled by a group of developing countries.
 5  These submissions indicated 
a number of areas where the proponents felt that recommendations could be made by the Working 
Group on steps that could be taken to facilitate tr ansfer of technology to developing countries.  
                                                      
5 WT/WGTTT/W/6 and Add.1  WT/WGTTT/W/11 
 Page 3 
 
 
 Members have, thus far, undertaken some work on  the first two recommendations namely:  (i) an 
examination of the different provisions contained in various WTO agreements relating to technology 
transfer;  and (ii) the provisions contained in va rious WTO agreements which may have the effect of 
hindering transfer of technology to developing countries.   
8. At the Eleventh Session, the Working Group w as briefed on the work carried out by the 
Council for Trade in Services in the context of Articles IV and XXV of the GATS.  Members were 
informed that the architecture of GATS tended to place many of the actual commitments undertaken 
by Members in the sphere of negotiated bilateral comm itments.  It was also indicated that the Special 
Session of the Services Council had held discussion s on operationalizing Article  IV, mainly through 
the examination of the Category II S&D proposals referre d to it by the General Council, in 2003.  The  
issue of transfer of technology had come up in those discussion as well, in particular in the context of 
Article IV:1. 
9. At the Twelfth Session, Members considered a communication from Cuba6, which 
underscored the need to review th e effectiveness of the provisions on technology transfer in the WTO 
agreements and to assess the extent to which thes e agreements hindered flows of technology to 
developing countries.  The communication also str essed the need to make concrete recommendations, 
at least as regards the first two recommendations, to th e Sixth Ministerial Conference.  In that context, 
it was suggested that at the General Council meeti ng in July, Members approve decisions that could 
guide the work of the Working Group in the run up  to the Hong Kong Ministerial Conference.  During 
the course of the discussion on Cuba's communicat ion, some Members thought that stepping up the 
work of the Working Group in the run up to the Hong Kong Ministerial Conference was crucial to 
making progress on possible recommendations.  Others  felt that since the issue was complex and 
Members' understanding of it was still superficial, it  called into question the repeated demand for 
developing recommendations.  In their view, Members needed to fully explore all related aspects of 
the issue to develop a clear understanding of the nexus between trade and transfer of technology, 
before looking at possible recommendations    
10. In the Thirteenth Session, Members engaged in a constructive discussion on a new 
submission7 by India, Pakistan and the Philippines, which highlighted the crucial role of technology 
and technical know-how in im proving productivity, promoting export growth and attaining 
developmental goals.  The  submission stressed that the possible recommendations which the Working Group could make might, among others, in clude:  steps to expand technical assistance under 
the TRIPS Agreement; measures to encourage a nd incentivize multinational firms in developed 
countries to perform science and technology devel opment work in host countries;  adoption of 
practices that facilitate technology transfer and its  rapid diffusion in the developing countries;  
discouraging use of restrictive business practices by  technology owners;  a nd ways of expanding or 
encouraging the mobility of scientists, technol ogists and technicians under GATS Agreement.  
11. A number of Members thought that the su bmission was useful as it was focused and 
contained pragmatic elements for possible recomme ndations that the Working Group could consider 
in future.  A few Members again questioned the competence of the Working Group to address some 
of the issues raised in the submission.  Tho se Members felt that these issues should ideally be 
addressed in relevant WTO bodies which were equi pped with the necessary kn owledge and expertise 
to do so.  However, other Members, reiterated that the Working Group was the appropriate forum to 
discuss these issues because Ministers at Doha ha d mandated it to do so, and perhaps even more 
importantly, because transfer of technology was a cr oss-cutting issue which could only be considered 
in a holistic manner by a body which had a broad perspective.  
                                                     
 
6 WT/WGTTT/W/9 
7 WT/WGTTT/W/10 WT/WGTTT/W/11 
Page 4  
 
 IV. FUTURE WORK 
12. The Working Group on Trade and Transfer of Technology has proceeded with the 
examination of the relationship between trade a nd transfer of technology and has continued the 
consideration of any possible recommendations on step s that might be taken within the mandate of the 
WTO to increase flows of technology to developi ng countries.  Discussions have taken place on a 
number of issues, including in the context of s ubmissions by Members and studies presented by other 
intergovernmental organizations.  Although th e work carried out in the Working Group has 
contributed to a better understanding of the issues invol ved, a lot of work still remains to be done.  In 
view of the relevance of the relationship between tr ade and transfer of technology to the development 
dimension of the Doha Work Programme, Memb ers recommend that the Working Group should 
continue the work with a view to fulfilling the mandate contained in Pa ragraph 37 of the Doha 
Ministerial Declaration. 
 
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