RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/WGTTT/W/15 
9 December 2008 
 (08-6052) 
Working Group on Trade and Transfer of Technology  
  
 
DRAFT 
 
REPORT (2008) OF THE WORK ING GROUP ON TRADE AND  
TRANSFER OF TECHNOLOGY TO THE GENERAL COUNCIL 
 
 
I. INTRODUCTION 
1. At the Doha Ministerial Conference Ministers ag reed to "an examination, in a Working Group 
under the auspices of the General Council, of th e relationship between trade and transfer of 
technology, and of any possible recommendations on st eps that might be taken within the mandate of 
the WTO to increase flows of technology to developing countries".
1   
2. Since its report to the General Council in 20072, the Working Group has held four formal 
sessions (10 March, 14 July, 21 October and 10 Decem ber 2008).  The minutes of these meetings are 
contained in documents WT/WGTTT/M/23, WT/WGTTT/M/24, WT/WGTTT/M/25 and WT/WGTTT/M/26
3, respectively.  At these meetings, Members continued the analysis of the 
relationship between trade and transfer of technol ogy, and considered possible recommendations that 
might be taken within the mandate of the WTO to increase flows of technology to developing 
countries.   
II. RELATIONSHIP BETWEEN TRADE AND TRANSFER OF TECHNOLOGY 
3. In 2008, work on the relationship between trade and transfer of technology continued largely 
on the basis of a country presentation by the Philip pines and a World Bank study made available to 
the Working Group at its 20th and 23rd Sessions, respectively.  
4. In continuing the analysis of the relationship between trade and transfer of technology, 
Members focused their deliberations on a country presentation introduced at the 20th Session by the 
Philippines on its experience with technology genera tion and its transfer.  The presentation stressed 
that the successful transfer of tech nology 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 th e country's economic development.  In addition, 
an improved allocation of resources among economic se ctors and industries, as well as the generation 
and adaptation of technology had resulted in a bette r organization of firms which had led to greater 
competitiveness, growth and productivity across the country's economy.   
5. The presentation also showed that foreign direct investment (FDI) had led to a strong 
technological base and high-value addition in the Ph ilippines' semi-conductor sector.  In addition, the 
Intellectual Property Philippines (IP Philippines) had also  played a crucial role in technology transfer.  
In order to promote technology transfer, IP Ph ilippines had expanded its relationship with other 
                                                      
1 Paragraph 37 of WT/MIN/(01)/DEC/1. 
2 WT/WGTTT/9. 
3 To be issued. WT/WGTTT/W/15 
Page 2  
 
  partners in the private sector so as to increase t echnology dissemination, diffusion and absorption.  As 
a matter of policy, the Government encouraged  the expansion of a cross-country network of 
intermediaries comprising provincial research  and innovation organizations, university research 
centres and the private sector.  Foreign study and trai ning were also effective tools in the transfer of 
technology and know-how.  The Philippines had also  attempted to tap the expertise of overseas 
Filipino experts and scientists.   
6. Some of the policy challenges that the Philippi nes had 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 viewed by th e Philippines as an impediment in this regard.  The 
designing of appropriate incentive measures and an institutional support 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-sized enterpri ses' (SMEs) capabilities and their linkages to large 
enterprises had also been a major challenge. 
7. 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.  In 
that context, a number of provisions in the WTO agreements such as Articles 7, 8, 62 and 66 of the 
TRIPS Agreement were cited.  The importance of public policy in encouraging public-private 
partnership, the linkage of foreign investment w ith SMEs and the interface between technology and 
human resources were also highlighted.  The role of  Aid for Trade in the context of capacity building 
and the development of human capital was underscored .  The role of public policy, linkage between 
foreign investment and the small and medium ente rprises, and the development of human capital in a 
country's efforts to develop its technological base was also highlighted .  The Philippines intends to 
provide sectoral examples on its experience with t echnology transfer at future meetings of the 
Working Group.  
8. Members agreed that sharing of national expe riences in technology transfer had value in 
broadening the scope of their deliber ations and helped clarify some of the complex issues they were 
grappling with in the Working Group.  It was felt that such knowledge-sharing exercises would 
facilitate a better understanding of the complex nexu s between trade and tran sfer of technology and 
hence help make progress in the Working Group.   
9. Another useful contribution in the Working Group, which facilitated further work on the 
analysis of the relationship between trade and transf er of technology, was a recent study by the World 
Bank, entitled " Global Economic Prospects: Technol ogy Diffusion in the Developing World" .  The 
representative of the World Bank made a presentation on the study to the Working Group at its 23
rd 
Session.  In addition to underscoring the crucial role  of trade, FDI, direct access through internet and 
migration, the study found that technology and innovation were two critical drivers of economic growth and productivity increases in the global market.   
10. While underscoring the critical link that technology could provide in contributing to 
sustainable economic growth and in helping to reduce poverty, the study also took an in-depth look at 
recent trends in technological advancements and how various factors influenced the diffusion of 
technology in developing countries.  It highlighted the central link between technology and innovation.  The study also recognized that technology was a major driver of growth and often accounted for more than half of the increase in per capita income.  Citing the example of East Asia, 
the study found that virtually all of economic growth over the 1990 to 2005 period was associated  WT/WGTTT/W/15 
 Page 3 
 
 
  purely with technological progress.  Similarly, in Eastern Europe and South Asia, the high rate of 
technological progress could also be a ttributed to this phenomenon.   
11. While noting the large technology gap that exis ted between rich and poor countries, the study 
pointed to the fact that it was rapidly narrowing as developing countries adapted pre-existing technologies.  The technology index in a country was based upon three major components:  
(i) scientific innovation and invention;  (ii) the pene tration of older technologies;  and (iii) pre-existing 
know-how and rate of literacy.  Comparing the pace of change of technological achievement between 
1990s and 2000s, it found that low-income countri es had improved their measurement scores on the 
technological index at a much faster rate than hi gh-income countries, primarily by adapting existing  
and lower-level technologies at a more rapid pace.   There was a clear flow of technology being 
generated in the rich countries, but flowing very  rapidly to the poor countries suggesting the rapid 
spread of technology.  In the 1880s, it took 100 years for a major invention in the rich countries to filter down to 80 per cent of the developing countries.   Today it only takes, on average, 25 years to 
reach those levels.   
12. The study also found that four channels in the global market place were important drivers of 
technology diffusion, technological performance and productivity increases, therefore also enhancing 
economic growth.  These included;  trade, FDI, direct access and migrations.  Trade, especially imports, was an important factor in driving producti vity increases in developing countries.  In that 
context, import competition directly forced firms to be more competitive through the adoption of new 
technologies or become irrelevant in the global ma rket place.  Cheap access to cheap inputs was an 
important driver of total factor productivity and, therefore, growth in developing countries.  The 
research and development (R&D) content of imports was another important aspect in this regard.  A 
number of studies on the subject substantiated the fact that high-tech imports as a percentage of Gross 
Domestic Product (GDP), have been an indicator of  the technological advancement of a country.  In 
addition, export-based economies could have a highe r degree of technological advancement and hence 
productivity.  FDI is another channel which might a ffect total factor productivity as when foreign 
investors moved into a local economy they often brought with them technology know-how, new ways 
of doing things, that resulted in improving the produc tivity of the economy overall, as well as their 
own enterprise.  Competition in the market place always forced the firms to adopt the latest 
technologies.  Direct access, for example through the internet, was another important factor in making 
technology much more available to producers in the fa rthest corners of the world.  Another important 
element that could have contributed to total fact or productivity was the diaspora and migration.  All 
said, these channels were not automatic in themse lves.  A lot depended on the regulatory framework 
and the incentive regime of the host country.  These must be mutually supportive to best achieve the 
objectives set out in a country’s development strategy.  
13. The study went on to identify four dimensions of absorptive capacity that could be crucial in 
reaping optimum benefits from opportunities that th e global market place offered.  These included: 
appropriate macro-economic enviro nment;  financial structure and intermediation;  regulatory 
environment and governance and, basic/advanced t echnological literacy and education.  The basic 
message from the study was that there was a signi ficant improvement in the macro and the finance 
sector, but a somewhat slower progress had been registered in the regulatory field and literacy in the developing countries that, consequently, hamper ed significant improvements in technological 
absorptive capacity.   
14. In their discussions, Members welcomed the World Bank study as a positive contribution to 
the work of the Working Group.  The discussions unde rscored that the private sector and the efficient 
functioning of markets are crucial to technological progress.  In this context, one Member highlighted 
the importance of a predictable regulatory framework, an appropriate physical infrastructure and good governance.  Information and clarifications were s ought on various elements of the study, including 
on the technology life-cycles;  technology dumping by developed countries and what the multilateral WT/WGTTT/W/15 
Page 4  
 
  trading system could do to reduce the technology gap among countries.  On the question of 
unevenness among developing countries with respect to their ability to absorb and adapt technologies, 
some Members agreed with the findings of the study that more open economies seemed better positioned to realize gains from technology transf er and spill-over effects of localized research, 
development and training.  One Member pointed out that diffusion remained the weakest link in the 
technology transfer process in most developing coun tries.  Recognizing the usefulness of such studies 
for the work of the Working Group, a suggestion was made that other inte rnational organizations, 
including for instance, the Organisation for Ec onomic Co-operation and De velopment (OECD), be 
invited to make a presentation to the Working Gr oup, especially on how the international trading 
system could facilitate technology transfer.  One Member, however, noted that the approach taken by 
the World Bank in the study was less focused on identifying ways which could facilitate technology 
transfer to developing countries. 
15. The discussions on the World Bank study continued at the 25
th Session of the Working 
Group.  Referring to the World Food Summit that t ook place earlier in the year, one Member stated 
that technology transfer presented the biggest challenge  to agriculture development.  It was suggested 
that the Working Group invite the FAO to make  a presentation on the linka ge between technology 
transfer and productivity gains in ag riculture.  Member s also agreed to  request similar presentations 
from organizations like OECD, UNIDO, WIPO, FAO a nd others which have also worked on transfer 
of technology, to share their studies/experiences on the subject.   
III. ANY POSSIBLE RECOMMENDATIONS ON STEPS THAT MIGHT BE TAKEN 
WITHIN THE MANDATE OF THE WTO TO INCREASE FLOWS OF 
TECHNOLOGY TO DEVELOPING COUNTRIES 
16. Under the agenda item relating to the consider ation of possible recommendations on steps that 
might be taken within the mandate of the WTO to increase flows of technology to developing 
countries, Members continued their discussion on th e two revised room documents that had been 
tabled by India, Pakistan and the Philippines at the 17th and the 19th Sessions of the Working Group.  
These two room documents had, in fact, built upo n an earlier submission (WT/WGTTT/W/10) tabled 
by them.  In addition, this room document ela borated upon the recommendations contained therein 
and provided responses to some of the clarifications  that had earlier been sought by some developed 
Members.   
17. Again, at the 24th Session, a new room document entitled "Facilitating Access to Information 
on Appropriate Technology Sourcing – A step to increase flows of technology to developing 
countries", was introduced by India, Pakistan and the Philippines.  The new room document further 
built upon earlier submissions tabled by the propone nts on the issue.  While emphasising the critical 
role of technology and innovation in improving productivity, promoting export growth and thus 
bridging the technological gap and facilitating th e realization of development aspirations of 
developing countries, the room document also dr ew Members' attention to the importance of 
promoting access to and dissemination of information in the technology transfer process.   
18. The submission stated that both the acquisition of technology and its diffusion fostered 
productivity and growth.  Traditionally, the in novation and creation process had remained, 
overwhelmingly the province of the developed countri es and hence much of the developing world had 
had to rely largely on imported technology, mo stly outdated and obsolete, as a source of new 
productive knowledge.  However, in recent years, a considerable amount of follow-up innovation and 
adaptation was occurring in the developing countri es which subsequently had effectively driven 
technological change in the developing world.  WT/WGTTT/W/15 
 Page 5 
 
 
  19. The room document also invited Members to examine the possibility of establishing a 
specialized WTO webpage that could serve as a bri dge between various technology-related links, as 
well as provide information on reasonably priced available technology options besides serving as a 
forum for matchmaking.  Drawing Members' attenti on to the effects of "asymmetric information" and 
the importance of the exchange of the right information between the technology owner and the 
recipients in the technology transfer process, the document proposed that inte rnational organizations, 
such as the WTO, could serve as a conduit for knowledge about successful technology-acquisition programmes that had been undertaken by nationa l and sub-national governments in the past.   
20. Going further, the room document flagged the issue of little knowledge and information 
among the developing countries on the structure of international transfer of technology (ITT) 
contracts and other related issues, including, the r easonable royalty rates, conditions that sellers of 
technology had been willing to accept, and the type of clauses in the contracts that could encourage 
local technological development.  Dissemination of information on these aspects, among others, required concerted efforts on the part of the public a nd private sector in the developed countries.  In 
this context, experience sharing on lessons lear nt by countries that underwent rapid technological 
development could play an important role in facilita ting technology transfer to the less developed.   
21. In addition, it alluded to specific provisions on technology transfer in the WTO agreements, 
such as Articles 7 and 66.2 of the TRIPS Agreemen t and highlighted that the fulfilment of the 
objectives set out therein was the subject of regular discussions in the TRIPS Council through regular reports on efforts of the developed countries in that  regard.  It suggested that these reports be made 
available on the proposed webpage to promote a wi der diffusion of information on such incentives 
and activities.   
22. Members shared the view that the submission was a useful contribution to the deliberations of 
the Working Group.  While some Members believed that the creation of a webpage was a reasonable 
proposal in terms of cost-effectiveness and the potenti al benefits, others rais ed a number of questions 
relating to the possible location of the web-portal, the legal and commercial implications of such a 
website to the extent that it could become a forum fo r bids and offers.  In th is regard, questions were 
also flagged with respect to the competence of th e WTO.  One Member also asked how the proposed 
website in the WTO would relate to the work be ing undertaken, in that context, by the World 
Intellectual Property Organization (WIPO) and what would be the added-value in locating it in the 
WTO.  The question as to whether WIPO would be a good location for such a web-portal was raised.  
In another Member's view, while the work in WI PO and WTO might be related and complementary, 
the focus in WIPO remained on intellectual prope rty and development, whereas in the WTO, the 
focus of work was specifically on technology transfer and trade. 
23. In continuing their discussion on the new room document, at the 25
th Session, Members' 
attention was drawn to the fact that technology tr ansfer had been a part of several international 
agreements.  For example, the Montreal Protocol  established a financing mechanism for effective 
technology transfer in relation to the depletion of the ozone layer and could present a good model to 
explore.  In that context, among others, the im portance of experience sharing from countries that 
underwent rapid technological development and the important lessons drawn in their development 
process was underscored.  The rapid technological  advancement of Korea in recent years was 
mentioned in terms of how technol ogy had facilitated the Korean economy's diversification in a 
number of sectors like automobile, telecommunications, manufacturing, construction, mining, etc.  
Views were expressed that information disseminatio n and experience sharing could help developing 
countries make more informed choices.  Pointing to how technology could help developing countries 
to address the problems associated with climate change, one Member urged the Working Group to 
consider how concrete flows of green  technology could be facilitated.   WT/WGTTT/W/15 
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  24. At the 24
th Session, some Members again flagged the question as to whether the WTO would 
be a good location for such a web-portal.  These Me mbers also cautioned against the idea of using the 
WTO website as a matchmaker for buyers and sellers.  This could raise a host of legal and technical 
issues and therefore was viewed by some to be outside the central mission of the WTO.   
25. In concluding the discussion, the proponents requested Members to provide their questions in 
writing so as to facilitate the formation of appropriate  responses to them.  It was also proposed that the 
Working Group invite WIPO to one  of its future meetings, to make a presentation on the related 
website presently maintained by them.   
IV. FUTURE WORK 
26. Although the work carried out in the Working Group has continued to contribute to a better 
understanding of the issues involved, much work still remains to be done  with the objective of 
fulfilling the mandate as contained in Paragr aph 37 of the Doha Ministerial Declaration .  In the 
coming year, the Working Group will continue its work on the examination of the relationship between trade and transfer of technology, as we ll as on any possible recommendations on steps that 
might be taken within the mandate of the WTO to increase flows of technology to developing 
countries.  While the discussions on the relations hip issue are likely to benefit from national 
experiences with technology gene ration and its transfer, as well as presentations from other 
intergovernmental organizations, the focus of work  on the possible recommendations continues to be 
pursued on the basis of room documents  and future submissions by Members. 
__________