WORLD TRADE
ORGANIZATIONIP/C/W/357
5 July 2002
(02-3753)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
MECHANISM FOR ENSURING THE MONITORING AND FULL IMPLEMENTATION OF
THE OBLIGATIONS UNDER ARTICLE 66.2 OF THE TRIPS AGREEMENT IN
ACCORDANCE WITH PARAGRAPH 11.2 OF THE DOHA DECISION ON
IMPLEMENTATION-RELATED ISSUES AND CONCERNS
Communication from Least-Developed Countries
The following is the final text of a communication, as received from the Permanent Mission
of Uganda on behalf of least-developed countries on 25 June 2002, which was circulated as anadvance copy for the Council's meeting of 25-27 June 2002.
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Background
1. The TRIPS Agreement in similar fashion to a number of other international Agreements
includes technology transfer provisions.  These provisions are included both as objectives and
principles of the TRIPS Agreement and in Article 66.2 as an operational provision.  Experience with
the implementation of international agreements with  transfer of technology provisions, including the
TRIPS Agreement, has however shown that beyond the negotiating rooms, the provisions on
technology transfer have often turned out to be pape r promises.  It is an effort to ensure that the
obligation of developed country Members under Article 66.2 of the TRIPS Agreement does not turn
into a paper promise that paragraph 11.2 of the Doha Decision on Implementation-Related Issues and
Concerns (WT/MIN(01)/17) mandated the TRIPS Council to develop a mechanism for ensuring the
monitoring and full implementation of the obligations of developed country Members to provide
incentives to enterprises and institutions in their te rritories to promote transfer of technology to least-
developed country Members.  In particular, the Decision provides that:
Reaffirming that the provisions of Article 66.2 of the TRIPS Agreement are
mandatory, it is agreed that the TRIPS C ouncil shall put in place a mechanism for
ensuring the monitoring and full implementation of the obligations in question. To
this end, developed country Members shall submit prior to the end of 2002 detailedreports on the functioning in practice of the incentives provided to their enterprises
for the transfer of technology in pursuance of their commitments under Article 66.2.
These submissions shall be subject to a review in the TRIPS Council and the
information shall be updated by Members annually.
2. Paragraph 11.2 confirms the understanding of all Members that Article 66.2 is tantamount to
special and differential treatment for least-developed country Members and that the obligation under
that Article is of a mandatory and continuing nature.  Secondly, the Decision makes clear the aim of
the envisaged mechanism.  The mechanism is aimed at: (1) ensuring that the obligation under
Article 66.2 is fully implemented by developed country Members by providing for a reporting
obligation on the steps taken by these countries and (2) establishing a review system to monitor theIP/C/W/357
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steps taken, their timeliness, appropriateness and effectiveness.  The first purpose requires the TRIPS
Council to identify the type and nature of measurable actions that developed country Members need to
take so as to comply with the obligation under Article 66.2.  The second deals with the question of
how to measure the steps taken against the stated objectives of Article 66.2 read together with the
Preamble and Articles 7 and 8 of the TRIPS Agreement.
Considerations for Establishing a Monitoring Mechanism under Article 66.2
3. The process of establishing a mechanism to ensure the monitoring and full implementation of
the obligation of developed country Members under Article 66.2 was already started by the
Ministerial Conference in Doha itself.  Three basic parameters for establishing the mechanism were
set down in the Ministerial Decision.  First, the Ministers agreed that as part of ensuring that the
obligation under Article 66.2 is fully implemente d, developed country Members must, by the end of
2002 submit to the TRIPS Council detailed reports (initial reports) on the functioning in practice of
the incentives provided to their enterprises for the transfer of technology.  Second, the Ministerial
Declaration established that the reports shall be s ubject to a review in the TRIPS Council.  The third
condition set by the Ministers is that the information provided in reports shall be updated annually.
4. To establish an effective monitoring mechanism and live up to these expectations, the TRIPS
Council needs to establish four basic parameters:  (1) the type and nature of the reports to be
submitted by developed country Members in terms of the information contained and the level of
specificity;  (2) When and how the review should be carried out and what the review of each report
should achieve?  (3) What information the annual updates should contain and when they should be
submitted?  (4) What measures should be taken in case of failure to comply with the reportingmechanism?  In this regard, it would be desirable if such failure could amount to a breach of WTO
obligations.
5. To assist the Council in answering the above questions, several considerations should be
taken into account.  The type of mechanism that is established must ensure that:
(a) the initial reports submitted and the annual updates of those reports are sufficiently
detailed and specific so as to identify the incentive, the correlation between the
particular regime of incentives and the obligation under Article 66.2, the enterprise or
institution given the incentive, the type and cost of the technology transferred, the
terms under which technology is transferred, the least-developed country Members
where the technology was transferred, the appropriateness and local adaptability of
the technology transferred and the beneficiary enterprise or institution in the least-
developed Member;
(b) the initial reports and annual updates include information showing that the type of
incentives reported are specific only to enterprises and institutions transferring
technology to least-developed country Members and do not fall within the general
rubric of overseas development assistance;
(c) the annual updates include information in response to questions, requests and
concerns of least-developed country Members raised during previous reviews;
(d) the annual updates are submitted on time and sufficient time is given to other
Members, especially least-developed country Members, to consider the information
provided by each developed country Member;
(e) a comprehensive review is undertaken by the TRIPS Council of the initial reports and
annual updates;IP/C/W/357
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(f) there are  measures to take against developed country Members if they fail to comply
with the reporting mechanism and if such failure could amount to a breach of WTO
obligations;
(g) the terms under which technology is transferred meet certain standards of
competitiveness and in particular, a mechanism that fully preserves the rights of least-developed country Members under Article 40 of the TRIPS Agreement.
6. In this regard, it should be accepted that reference to "taking measures" envisages the taking
of specific legislative policy and regulatory actions by the developed country Members.
Conclusion
7. In conclusion, Members should agree at the onset of this process that the mechanism in
question should not be an ad hoc system.  Once a monitoring mechanism is worked out, it will becritical that such a mechanism become a permanent part of and is incorporated into the TRIPS
Agreement.
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