Transfer of Technology in International Economic Law

Transnational Corporations (TNCs) should conform to the transfer of technology laws and regulations of the countries in accordance with they operate. They should avoid practices which adversely affect the international flow and technology. They should follow the relevant provisions of the International Code of Conduct on the Transfer of Technology adopted by the General Assembly of UN (Art. 36).

Transfer of technology under this Code is the transfer of systematic knowledge for the manufacture of a product, for the application of a process or for the rendering of a service and does not extend to the transactions involving the mere sale or mere lease of goods.

Objectives of the Code of Conduct:

  1. To establish general and equitable standards on which to base the relationships among parties to transfer of technology transactions.
  2. To promote mutual confidence between parties as well as their governments.
  3. To encourage transfer of technology transactions, particularly those relating to developing countries.
  4. To facilitate and increase the international flow of technological information, particularly on the availability of alternative technologies.
  5. To facilitate and increase the international flow of proprietary and non-proprietary technology.
  6. To increase the contributions of technology to the identification and solution of social and economic problems of all countries.

Principles of the Code of Conduct:

  1. The Code of Conduct is universally applicable in scope.
  2. States have the right to adopt all appropriate measures for facilitating and regulating the transfer of technology.
  3. The principles of sovereignty and political independence of States and sovereign equality of States should be recognized.
  4. Mutual benefits should accrue to technology supplying and recipient parties.
  5. Recognition of the protection of industrial property rights under national law.
  6. Technology supplying parties when operating in an acquiring country should respect the sovereignty and the laws of that country.

National Regulation of technology Transaction:

  1. Finance. Currency regulations of foreign exchange payments and remittances and conditions of domestic credit and financing facilities that remain of transferability of payments.
  2. Renegotiation. Terms, conditions and objective criteria for the renegotiation of transfer of technology transactions.
  3. Technical aspects.

The regulation of practices and arrangements involving the transfer of technology:

  1. Grant-back provision
  2. Challenges to the validity of transfer
  3. Exclusively dealing with transfer of technology
  4. Restriction on research

Responsibilities and Obligations of Parties:

  1. Be responsive to economic and social development before transaction
  2. Both parties should be responsive to economic and social development in the agreement each other.
  3. Well-negotiated in the transaction of both parties should be observed for business practices.
  4. Information must be kept secret.
  5. Relevant information must consider requests to inform both parties.
  6. Access to improvement
  7. Provision for accessories of spare parts and components of machines.
  8. Suitability for use.

International collaboration

The state recognizing the international collaboration between governments at the bilateral or multilateral, sub-regional, regional or inter-regional levels may include the following measures:

  1. Exchange of available information on the availability of technologies.
  2. Exchange of available information in seeking solutions to problems relating to the transfer of technology.
  3. Exchange of information on development of national legislation.
  4. Promotion of the conclusion of international agreements which should provide equitable treatment of countries.
  5. Consultations which may lead to greater harmonization of national legislation with respect to the transfer of technology.
  6. Promotion common programmes for searching for acquiring and disseminating technologies.
  7. Action through international agreements to avoid, as far as possible, imposition of double taxation on earnings and payments of transfer of technology transactions.

International Institutional Machinery. its functions as follow:

  • To provide a forum and modalities for consultations, discussion, and exchange of views.
  • To undertake and disseminate periodically studies and research on transfer of technology to the application and implementation of the Code.
  • To collect and disseminate information relating to the Code.
  • To make appropriate reports and recommendations to States.
  • To organize symposia, workshops and similar meetings concerning the application of the provisions of the Code.
  • To submit reports at least once a year on its work to the Trade and Development Board.

In the performance of its functions, the International Institutional Machinery may not act like a tribunal or otherwise pass judgement on the activities or conduct of individual Governments or of individual parties in connection with a specific transfer of technology transaction. The International Institutional Machinery should avoid becoming involved when parties in a specific transfer of technology transaction are in dispute.

The International Institutional Machinery shall establish such procedures as may be necessary to deal with issues related to confidentiality.


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