^† UNCTAD: An International Code of Conduct on Transfer of Technology, U.N. Doc. TD/B/C.6/AC.1/2/Supp. 1/Rev. 1, 3 (1975).

¹ It is recognized that technology transfers fall well short of a universal panacea. “It would be a mistake to perpetuate further the one factor approach to development. Views... now emphasize abundant labour, capital, and a ‘residual’ considered to be education and training. But technological progress is also being recognized as a major element, even if in isolation it is not enough”: Ewing, A., “UNCTAD and the Transfer of Technology,” 10 J. World Trade L. 197 (1976).Google Scholar

² The term “LDC” applies to the category of nations known as the Third World and all the members of the “Group of 77,” an alliance of the less developed countries formed during the first meeting of UNCTAD at Geneva in the spring of 1976. For discussions therein, see U.N. Doc. TD/B/AC.1/1 (1965). The developed countries include all the members of the Organization for Economic Co-Operation and Development (OECD) plus Australia, Finland, and New Zealand and are also known as the “West,” “western,” “advanced,” and the “B Group” according to UNCTAD terminology. See Jeffries, C., “Regulation of Transfer of Technology: An Evaluation of the UNCTAD Code of Conduct,” 18 Harv. Int’l L.J. 309, n. 1 (1977).Google Scholar

³ From the beginning, UNCTAD was organized in response to the needs of LDCs in their economically dependent relationship with the “West.” See Gosovic, B., UNCTAD: Conflict and Compromise (1972)Google Scholar; Hagras, K., United Nations Conference on Trade and Development (1966).Google Scholar For a helpful selection of essays in this area of conflict, see Wilber, C.K., The Political Economy of Development and Underdevelopment (1973).Google Scholar

⁴ UNCTAD, The Possibility and Feasibility of an International Code of Conduct of Transfer of Technology, U.N. Doc. TD/B/AC.11/22, at 1 (1974).

⁵ In so doing, we add to a growing volume of literature chronicling the progress of UNCTAD’s negotiations. See Ewing, supra note 1; Jeffries, supra note 2 ; Patel, , “Transfer of Technology and Third UNCTAD,” 7 J. World Trade L. 226 (1973)Google Scholar; Roffe, , “International Code of Conduct on Transfer of Technology,” 11 J. World Trade L. 186 (1977)Google Scholar (hereinafter referred to as “Roffe: Code of Conduct”); Roffe, , “Code of Conduct on Transfer of Technology: A Progress Review,” 12 J. World Trade L. 351 (1978)Google Scholar (hereinafter referred to as “Roffe : Progress Review”) ; Zaphiriou, , “An International Code of Conduct on Transfers of Technology,” 26 Int’l & Comp. L.Q. 210 (1977)CrossRefGoogle Scholar; Zuijdwijk, T.J.M., “The UNCTAD Code of Conduct on the Transfer of Technology,” 24 McGill L.J. 562 (1978).Google Scholar

⁶ Ewing, supra note 1, at 205; see also UNCTAD, Mid-Term Review and Appraisal of the Implementation of the International Development Strategy, U.N. Doc. TD/B/530 (1975).

⁷ Ewing, supra note 1, at 205; cf. Sri Lanka’s experience with the U.S.S.R. on a packaged project for the building of a tire factory. See UNCTAD, Major Issues Arising from the Transfer of Technology: A Case Study of Sri Lanka, U.N. Doc. TD/B/C.6/6 (1975).

⁸ The profit theory of corporate management does not necessarily exclude the possibility of other theories of corporate welfare. Cf. Galbraith, J.K., The New Industrial State (1967).Google Scholar But the prospect of profit and certainly the protection of technological advantage as a key to profits for the present and, more importantly, for the future, must figure significantly in any company equation determining whether it will do business in an LDC or, for that matter, anywhere else.

⁹ Ewing, supra note 1, at 199; see UNCTAD, Promotion of National Scientific and Technological Capabilities and Revision of the Patent System, U.N. Doc. TD/B/C.6/AC.2/2 (1975); UNCTAD, The Role of the Patent System in the Transfer of Technology to Developing Countries, U.N. Doc. TD/B/AC.11/19/Rev. 1, at 14 ff. (1975).

¹⁰ UNCTAD, The International Patent System as an Instrument of Policy for National Development, U.N. Doc. TD/B/C.6/AC.2/3 (1975). The patent protections afforded to foreign technology suppliers have allowed them to build various restrictions into “packaged transactions” which LDCs usually have had no choice but to accept. Such “abusive” practices as identified by UNCTAD include: restrictions on exports produced under licence or otherwise in the LDC; restrictions on the source of supply of capital goods, material inputs, and competing technologies; high royalties and excessively long periods for payment — sometimes even after patent protections are exhausted; requirements for guarantees against changes in taxes, tariffs, and exchange rates affecting profits, royalties, and remittances; limitations on competing sources of supply by restricting competing exports, preventing competition for local resources, and obtaining local patents to eliminate competition; constraints limiting the dynamic effects of the transfer through excessive use of expatriate personnel, grant-back provisions, and discouragement of the development of local research and development (R and D) capabilities. See U.N. Doc. TD/B/AC. 11/22, at 1, 7, 8 (1974), supra note 4; UNCTAD, Major Issues Arising from the Transfer of Technology to Developing Countries, U.N. Doc. TD/B/AC.1 1/10/Rev. 2, at 1, 7-39 (1975). The net effect of these restrictive practices is that many benefits of the technology conferred are thereby negated for the LDC. These considerations are apart from the issue of the “quality” or “appropriateness” of the technology supplied to LDCs. See discussion infra note 40.

¹¹ WIPO was created at the Stockholm meeting of the Paris Union in 1967 to succeed the United International Bureaux for the Protection of Intellectual Property (BIRPI) in inter alia the promotion of “the protection of intellectual property” and “administrative co-operation among the intergovemmental Unions....” See Convention Establishing the World Intellectual Property Organization, WIPO Pub. 251 (E) par. 118 (Geneva, 1970).

¹² Done at Washington, June 19, 1970, WIPO Pub. 275 (E) (Geneva, 1970).

¹³ Wasserman, U., “Key Issues in Development: Interview with UNCTAD’s Secretary-General,” 10 J. World Trade L. 17, 20 (1976).Google Scholar

¹⁴ Although not to the exclusion of alternatives such as licensing and management contracts or direct purchases of equipment and technological expertise. See Jeffries, supra note 2, at 312–13. The “packaged” technology transfer frequently takes the form of a joint venture involving direct capital inputs by the foreign investor and equity participation by the host country. This is especially true of mineral contracts. See Smith, D. and Wells, L., Negotiating Third-World Mineral Agreements: Promises as Prologue (1975)Google Scholar; petroleum agreements, on the other hand, usually take the form of service contracts with fewer damages to the host country and reflect a stronger bargaining position for LDCs on this type of agreement. See Commentary in 67 Proc. Am. Soc. Int’l L. 236, 240 (1973).

¹⁵ The members of ANCOM are Bolivia, Chile, Columbia, Ecuador, Peru, and Venezuela.

¹⁶ E.g., Declaration No. 6 of the Code states that “national enterprises must have the best possible access to the modern technology and new administrative practices of the contemporary world. At the same time it is necessary to establish efficient mechanisms and procedures for the production and protection of technology in the territory of the subregion and to improve the terms under which foreign technology is acquired.” Taken from codified text, Registro Official (R.O.) No. 264, December 31, 1969, reprinted in n Int’l Leg. Mat. 126, 127 (1972).

¹⁷ Mexico, Law on the Registration of Contracts and Agreements Regarding the Transfer of Technology: Bill Concerning Registration of the Transfer of Technology and the Use and Working of Patents, Trade Names and Trade-Marks, December 28, 1972, D.O. December 30, 1972, reprinted in 12 Int’l Leg. Mat. 421 (1973); Law on the Promotion of Mexican Investment and the Regulation of Foreign Investment, May 8, 1973, D.O. March 9, 1973, reprinted in 12 Int’l Leg. Mat. 643 (1973). See generally Schill, , “The Mexican and Andean Investment Codes: An Overview and Comparison,” 6 Law Pol. Int’l Bus. 437 (1974).Google Scholar

¹⁸ Brazilian law controlling technology is interspersed throughout Brazilian legislation. See UNCTAD, Selected Principal Provisions in National Laws, Regulations and Policy Guidelines, U.N. Doc. TD/B/C.6/AC. 1 /2/Supp. 1/Add., 1, at 13, 15, 23, 24 (1975); Jeffries, supra note 2, at 321, n. 57.

¹⁹ For a full account of the existing legislation on point, see generally U.N. Doc. TD/B/C.6/AC.i/2/Supp. i/Add., 1, supra note 18. On abusive practices, see supra note 10.

²⁰ See the Foreign Investment Review Act of 1973, S.C. 1973–74, c. 46, enacted following publication by the Government of Canada of Foreign Direct Investment in Canada (1971) (the Gray Report); see generally Franck, T.M. and Gudgeon, K.S., “Canada’s Foreign Investment Control Experiment: The Law, the Context and the Practice,” 50 N.Y.U. L. Rev. 76 (1975)Google Scholar; Glover, G., “Canada’s Foreign Investment Review Act,” 29 Bus. Law 805 (1974)Google Scholar; Hayden, P.R. and Burns, J.H., The Regulation of Foreign Investment in Canada (1976)Google Scholar; Hughes, G., A Commentary on the Foreign Investment Review Act (1975).Google Scholar

²¹ For a good discussion of the unilateral Canadian response in the context of UNCTAD’s concerns, see Zuijdwijk, supra note 5, at 582–86.

²² Zaphiriou, supra note 5, at 212.

²³ These countries include Belgium, France, Italy, Luxembourg, the Federal Republic of Germany, and the United Kingdom. See ibid.; Zaphiriou, G., European Business Law 190–91 (1970).Google Scholar

²⁴ Cf. Hartford Empire Co. v. United States, 323 U.S. 386 (1945); United States v. National Lead Co., 332 U.S. 319 ( 1947).

²⁵ 298 U.N.T.S. 11 (1957).

²⁶ Ibid., Arts. 85 and 86.

²⁷ Deutsche Grammophon v. Metro, [1971] C.M.L.R. 531, 2 CCH Common Market Rep. 8106; Van Zuylen Frères v. Hag A.G., [1974] C.M.L.R. 127, CCH Common Market Rep. 8230; Centrafarm B.V. v. Sterling Drug Inc. and Centrafarm B.V. v. Winthrop B.V., [1974] C.M.L.R. 480, CCH Common Market Rep. 8246, 8247; Re Sirdar’s Agreement, 15 C.M.L.R. D.73 (1975) ; see Bellamy, and Child, , Common Market Law of Competition 901–30 (1973).Google Scholar

²⁸ Moreover, it has been pointed out that “preliminary statistics concerning new direct foreign investment in the Ancom Group countries seem to demonstrate such a trend.” McGlynn, , “Technology Transfer and Industrial Property Law in Developing Countries,” 8 Law of the Americas, at 394, 396 (1976)Google Scholar; it has been observed further that “the loss of foreign capital through divestment may be permanent if an investor does not wish to remain in the regulated environment, or if he cannot obtain the approval necessary for new investment.” Schill, supra note 19, at 473; further points to like effect are made by Jeffries, supra note 2, at 327–30.

²⁹ Wasserman, supra note 13, at 19; cf. supra note 10.

³⁰ The lack of capital, internal infrastructure, and skilled labour, induced in part by the practices of TNCs, operates in turn to necessitate an extenuated corporate presence in LDCs. See Chudson, W., UNITAR Research Report No. 13: The International Transfer of Technology to Developing Countries 44 (1971).Google Scholar

³¹ The major weakness of this kind of approach, according to one UNCTAD study, is that it “would not legislate the rights and duties of supplier States; the brunt of the regulation of the transfer of technology would thus be borne by the importers of technology. The lines between supplier States and recipient States would be drawn even more sharply …” : UNCTAD, The Possibility and Feasibility of an International Code of Conduct of Transfer of Technology, U.N. Doc. TD/B/AC. 11/12, at 36 (1975).

³² The term “universally applicable” need not necessarily be co-extensive with the concept of a “legally binding” instrument. See preliminary draft objectives of the Group “B” countries, U.N. Doc. TD/B/C.6/1 Annex II ( 1975) ; reprinted in 14 Int’l Leg. Mat. 1329 (1975).

³³ Lall, S., “The Patent System and the Transfer of Technology to Less-Developed Countries,” 10 J. World Trade L. 1 (1976).Google Scholar

³⁴ One authority has commented: “The principle of reciprocity came first under attack when, during the early sixties, the development of the economically underdeveloped nations became an urgent necessity. As far as these nations were concerned, it became doubtful if it were justified to ask them for concessions, in the name of the principle of reciprocity, if and when the industrialized countries lowered trade barriers. In the end, the contracting parties [of GATT] … recognized that the developing countries as a whole were entitled to some sort of infant-nations-protection, a parallel to infant-industries-protection”: Kramer, H., “Changing Principles Governing International Trade,” 8 J. World Trade L. 227 (1974).Google Scholar

³⁵ GATT Section IV, Art. XXXVI, par. 8, decision of February 8, 1965, in force June 27, 1966.

³⁶ See Graham, T.R., “Results of the Tokyo Round,” 9 Ga. J. Int’l & Comp. L. 153, 170 (1979)Google Scholar; Graham, T.R., “Reforming the International Trading System: The Tokyo Round Trade Negotiations in the Final Stage,” 12 Cornell Int’l L.J. 1 (1979).Google Scholar

³⁷ Kramer, supra note 34, at 228-29. See, for example, EEC Reg. Nos. 1308/ 71 to 1314/71, EEC Off. Gazette L., 142, at 1, 13, 57, 63, 69, 75, 85 (•970.

³⁸ S. 2592, 92nd Cong., ist Sess. (1971); H.R. 10,914, 92nd Cong., ist Sess. (1971) ; see comment of Senator Hartke that “this bill would help stop the export of American jobs due to transferred technology.” Cong. Record 33583 September 28, 1971; see Mirabito, A., “The Control of Technology Transfer: The Burke-Hartke Legislation and the Andean Investment Code,” 9 Int’l Law 215, 216 (1976).Google Scholar

³⁹ Mirabito, op. cit. supra, 218–19.

⁴⁰ “What has happened in the 1960s and continues is that American corporations, via licensing agreements … and other international arrangements, have given away for a very small portion of real cost and value … advanced technology and with it, the jobs it created.” Statement of Nathaniel Brenner, Director of Marketing, Coates & Wells Corp. reported in Goldfinger, , “The Case for Burke-Hartke,” 6 Col. J. Wor. Bus. 24 (1973).Google Scholar But this argument is of questionable merit faced with evidence supporting the proposition that TNCs very seldom “sell” or disclose to subsidiaries their frontline technologies. See United States Tariff Commission, Implications of Multinational Firms for World Trade and Investment and for U.S. Trade and Labour, Report to the Committee on Finance of the U.S. Senate and its Subcommittee on International Trade: Inv. No. 332–69, T.C. Pub. 537, at 49–50 (1973). J.J. Servan-Schreiber has argued that in sales of computer technology by the United States to France, the latter received only “third generation” technologies whereas American firms already had “fourth” and “fifth” generation technologies in their possession: Le Défi américain (1967)• Consequently, it appears that technology transfers need not jeopardize the “technological advantage” held by western nations. See Mirabito, supra note 38, at 221, 237. Moreover, the “highest quality” technology in specialized areas may not necessarily be the most “suitable” technology for employment in LDCs.

⁴¹ Johnson, H., “Technological Change and Comparative Advantage: An Advanced Country’s Viewpoint,” 9 J. World Trade L. 1, 7, 8 (1975).Google Scholar

⁴² S. Lall, supra note 33, at 3. This argument draws upon recent “dependence” literature supported by institutional studies including those of the World Bank. See O’Brien, P., “A Critique of Latin American Theories of Dependency,” in Oxaal, I., Barnett, T., Booth, D. (eds.), Beyond the Sociology of Development (1975),Google Scholar Chenery, H. et al., Redistribution with Growth (1974).Google Scholar

⁴³ Lall, op. cit. supra note 42, at 3.

⁴⁴ Ibid., 14.

⁴⁵ Ibid. : “The costs of LDCs, in terms of non-use, import monopoly and various restrictive practices, are exaggerated and cannot be attributed to patents as distinct from other sources of market power (with the possible exception of pharmaceuticals).”

⁴⁶ “Transfer induced by protection of national markets increases overall resource costs of world production and nurtures technological stagnation.” Berenson, J., “Technology Transfer through the International Firm,” 60 Am. Econ. Rev. 435, 440 (1970).Google Scholar This argument would appear to apply as a general limitation to the trading of technology and not uniquely (or even predominantly) to relationships with LDCs.

⁴⁷ Ewing has described UNCTAD’s program of work on the transfer of technology as falling into the following categories: advice on national laws and policies; revision of the patent and trademark systems; preparations for the adoption of an international Code of Conduct on the Transfer of Technology; the reverse transfer of technology (the brain drain); establishment of national, regional, and subregional linkages for the transfer and development of technology. Supra note 1, at 198.

⁴⁸ See U.N. Doc. TD/B/AC. 11 /12, at 27 (1974).

⁴⁹ See The Role of Patents in the Transfer of Technology to Developing Countries, U.N. Doc. E. 3961 (1964).

⁵⁰ ECOSOC Res. 1013 (XXXVII), July 27, 1964; and G.A. Res. 2091 (XX), December 20, 1965, which also approved of the initiatives taken by UNCTAD I at its Geneva meeting in the spring of 1965.

⁵¹ See UNCTAD, Proposals for Action in the Field of Transfer of Technology, U.N. Doc. TD/B/C.6/11, at 2–3 (1975).

⁵² UNCTAD, Res. 39 (III) 3rd Sess., April-May 1972, Santiago de Chile (Agenda Item 19), reprinted in Patel, , “Transfer of Technology and Third UNCTAD,” 7 J. World Trade L. 226, 233 (1973).Google Scholar

⁵³ See UNCTAD Trade and Development Board, Off. Records nth Sess., Annexes, (Agenda Item 7(e)), U.N. Doc. TD/B/365 annex (1972); the Intergovernmental Working Group was established by UNCTAD Trade and Development Board Res. 74 (X), a decision subsequently endorsed by the General Assembly in G.A. Res. 2726 (XXV) as was the Work Program drafted by the Working Group; cf. G.A. Res. 2821 (XXVI).

⁵⁴ UNCTAD, Res. 39 (III) s. II.

⁵⁵ Ibid., s. III.

⁵⁶ G.A. Res. 3201, Sixth special Sess., U.N. GAOR Supp. 1 at 3 U.N. Doc. A/9559 (1974), s. 4; reprinted in 13 Int’l Leg. Mat. 715, 717 (1974).

⁵⁷ G.A. Res. 3202, S.V., ibid., 5; reprinted in 13 Int’l Leg. Mat. 720, 728 (1974).

⁵⁸ G.A. Res. 3281, 29 U.N. GAOR Supp. 31, at 50, U.N. Doc. A/9631 (1974), cf. Art. 13; reprinted in 14 Int’l Leg. Mat. 251 (1975); see Rozental, , “The Charter of Economic Rights and Duties of States and the New International Economic Order,” 16 Va. J. Int’l L. 310 (1976).Google Scholar

⁵⁹ See G.A. Res. 32/188, U.N. GAOR, Supp. No. 45, 117; U.N. Doc. А/ 33/45 (1977).

⁶⁰ Resolutions of the General Assembly have been interpreted as “evidence” of the practice of states and customary international law but their creative function is limited. See Schachter, O., “The Evolving International Law of Development,” 15 Colum. J. Transnat’l L. 1 (1976)Google Scholar; Sohn, L., “The Shaping of International Law,” 8 Ga. J. Int’l and Comp. L. 1 (1978).Google Scholar

⁶¹ Perhaps more instructive are the six negative votes recorded against the Charter of Economic Rights and Duties (Belgium, Denmark, Federal Republic of Germany, Luxembourg, United Kingdom, United* States) and the ten abstentions (Austria, Canada, France, Ireland, Israel, Italy, Japan, The Netherlands, Norway, Spain). One hundred and four nations supported the Charter and ten nations abstained. See generally Rubin, , “Developments in the Law and Institutions of International Economic Relations: Reflections Concerning the United Nations Commission on Transnational Corporations,” 70 Am. J. Int’l L. 73, 77 (1976).CrossRefGoogle Scholar

⁶² See U.N. Doc. TD/B/AC.и/19/Rev. 1, at 30 (1975).

⁶³ See UNCTAD, Report of the Working Group on Code of Conduct on Transfer of Technology, U.N. Doc. TD/B/AC.ti/L. 12 (1974).

⁶⁴ Council of OECD, Recommendation of Council Concerning Action against Restrictive Business Practices Related to Use of Patents and Licenses, January 25, 1974, OECD Doc. С(7з) 238 (Final) (1974). The Recommendation enumerated such restrictive practices as the operation of “patent pools” across licensing agreements, territorial limitations on patent licences, “tied sales,” grant-back clauses restraining competition and price fixing. Cf. supra note 12.

⁶⁵ See Bellamy and Child, supra note 27, at 930–50; Zaphiriou, supra note 22, at 215; Zisler, , “Work of the OECD Committee of Experts on Restrictive Business Practices,” 19 Antitrust Bull. 289 (1974).Google Scholar

⁶⁶ See UNCTAD, Draft International Code of Conduct on the Transfer of Technology, U.N. Doc. TD/CODE TOT/25, May 6, 1980 (hereinafter referred to as the “consolidated” text).

⁶⁷ See U.N. Doc. TD/CODE TOT/20, November 16, 1979 (Second Session); U.N. Doc. TD/CODE TOT/14, March 1979 (First Session).

⁶⁸ An International Code of Conduct on Transfer of Technology, Report of the UNCTAD Secretariat, U.N. Doc. TD/B/C.6/AC.i/2/Supp. 1/Rev. 1 (’975)) at 3 (hereinafter referred to as the “Secretariat Report”).

⁶⁹ Ibid., 6. The UNCTAD position appears to be that the Code would create the necessary balance between legitimate interests of suppliers and recipients by providing orderly and predictable bases for operation of the technology market. The need for such standards is emphasized by divergencies in national legislation. See generally, U.N. Doc. TD/B/AC. 11/22, at 31, 35 (1975).

⁷⁰ See generally, supra notes 10, 14, and accompanying text; Jeffries, supra note 2, at 331.

⁷¹ Membership in this group has not precluded interest in the objectives of other blocs. For example, Canada can be viewed as technologically deprived since much of its industrial capacity and hence technological development is controlled by foreign investors. Interview with Dirk T. de Vos, Department of Industry, Trade and Commerce, Ottawa, January 29, 1976. See generally, Department of National Revenue, Foreign Direct Investment in Canada (1970). See also Zuijdwijk, supra note 5, at 582–87.

⁷² The Group of 77 now includes representatives from over one hundred nations. Cf. supra note 2.

⁷³ The IGE was established by UNCTAD to prepare a draft outline to serve as the basis for the negotiation of a universally applicable code of conduct. See Official Records of the Trade and Development Board, Fourteenth Session, First Part, Annexes, Agenda item 8, U.N. Doc. TD/B/520, Annex I. See generally Roffe, Progress Review, supra note 5, at 352. Six sessions were held by the IGE from 1976 to 1978. See Zuijdwijk, supra note 5, at 567.

⁷⁴ Roffe, Code of Conduct, supra note 5, at 187.

⁷⁵ The legal nature of the Code will be discussed infra note 163 ff. and accompanying text.

⁷⁶ Roffe, Code of Conduct, supra note 5, at 187; Jeffries, supra note 2, at 311.

⁷⁷ This concern is expressly identified in various Group В drafts which specify freedom of contract and respect for industrial property rights. See, for example, U.N. Doc. TD/B/C.6/14 (1975), Annex 1.

⁷⁸ See generally, Roffe, Progress Review, supra note 5, at 352.

⁷⁹ Secretariat Report, supra note 68, at 6–8.

⁸⁰ Unpackaged transfer involves a detailed disclosure of the contents of the technology with a precise indication of prices. It contemplates greater domestic participation in the operation of technology-importing enterprises. Ibid., 6.

⁸¹ The objective is to establish an agreed legal framework within which the “normal value” of products and a means of establishing price discrepancies can be determined. Ibid., 7. The definition of prices by governments has not been covered in the draft Code and could present difficulties. In determining the measurements for appraising the reasonableness of prices, some uniform accounting method will be required to prevent divergent procedures in calculation of costs. See Jeffries, supra note 2, at 332–33.

⁸² This objective contemplates the fulfilment of recipient expectations concerning the capacity of imported technology to meet development objectives and its suitability for such purposes. While an equitable balance is to be maintained between the interests of suppliers and recipients, the special needs of recipients will require preferential treatment, according to UNCTAD. Secretariat Report, supra note 68, at 8.

⁸³ UNCTAD, Major Issues Arising from the Transfer of Technology to Developing Countries, U.N. Doc. TD/B/AC. 11/10/Rev. 2, at 47: “the technology suppliers view the matter as one of barriers to commercial operations involving the transfer of technology and not as one of obstacles to development which may arise from the transfer process.”

⁸⁴ See generally Jeffries, supra note 2, at 331.

⁸⁵ It should be noted that matters pertaining to the registration, harmonization, and international protection of patents, trade marks, and industrial designs are covered by international conventions and therefore remain outside the scope of a Code of Conduct. See Zaphiriou, supra note 5, at 214.

⁸⁶ Specific references to the consolidated text are hereinafter identified by their respective chapter and paragraph designation.

⁸⁷ Preamble, para. (1).

⁸⁸ The Group of 77 had proposed such language in the various IGE drafts. See supra note 77, Preamble, para. (1).

⁸⁹ Preamble, para. (2).

⁹⁰ See generally, supra notes 56–61, and accompanying text. Draft texts emerging from the IGE sessions did not reflect agreement on references to the new international economic order. See, for example, U.N. Doc. TD/AC.1/7.

⁹¹ See supra notes 58, 61 and accompanying text.

⁹² The composite Group of 7 7/Group D draft text calls on countries to “ensure” that their enterprises “shall conform” to the Code, whereas the Group В draft text merely affirms that countries should encourage enterprises to follow the provisions of the Code. Preamble, para. (11).

⁹³ See infra note 163 ff. and accompanying text.

⁹⁴ Preamble, para. (12) and (13). The choice is between adoption of an “international legally binding Code of Conduct” and a code of conduct “consisting of guidelines for the international transfer of technology.”

⁹⁵ U.N. Doc. TD/B/C.6/AC.i/2/Supp. i/Rev. 1 (1975), at 48. The Secretariat concluded that the varying approaches need not be mutually exclusive. As a legally binding instrument, the Code would remain a set of guidelines for those states not becoming parties to it. They could therefore enact selected provisions into domestic law without acceding to the Code. See generally Zuijdwijk, supra note 5, at 580–82.

⁹⁶ See supra note 67. The first session text included alternative Group В and Group of 77/Group D paragraphs which endeavoured to identify in some detail the transactions to which the Code would apply. The second session text reduced the alternative drafts to a single composite paragraph which still contained controversial language.

⁹⁷ Chapter 1, para. 1.5.

⁹⁸ Ibid., para. 1.6.

⁹⁹ Ibid., para, 1.1(a).

¹⁰⁰ Secretariat Report, supra note 68.

¹⁰¹ See, for example, U.N. Doc. TD/B/C.6/14 (1975). See generally Roffe, Code of Conduct, supra note 5, at 187, 189.

¹⁰² most controversial topics are restrictive practices and responsibilities/ obligations, which appear in Chapters 4 and 5, respectively, of the consolidated text. The text of paragraphs 2.1 (ix) and (x) of the consolidated text, which refer to these items, has not been settled and awaits the outcome of negotiations on those chapters.

¹⁰³ See U.N. Doc. TD/AC.1/7 (1975), Annex V, at 4, item ii.

¹⁰⁴ Chapter 2, para. 2.1(11).

¹⁰⁵ Ibid., para. 2.1 (iii).

¹⁰⁶ Ibid., para. 2.2 (v).

¹⁰⁷ See supra note 98.

¹⁰⁸ Chapter 3, para. 3.3 provides that measures on the flow and effects of transfer of technology “may deal with” the enumerated criteria, but places no restriction on other considerations which states may seek to regulate.

¹⁰⁹ See generally Zuijdwijk, supra note 5, at 578–79.

¹¹⁰ See Jeffries, supra note 2, at 334–35.

¹¹¹ See U.N. Doc. TD/AC.1/7 (1975), Annex I, at 8; U.N. Doc. TD/B/C.6/ 14 (1975)) Annex I, sections III and VIII.

¹¹² Chapter 3, para. 3.1 (vi).

¹¹³ Ibid., para. 3.2.

¹¹⁴ Ibid. This was accepted by the Group of 77 and Group D during the first session of the Conference. See U.N. Doc. TD/CODE TOT/9 (1978), para. 3.2, C.

¹¹⁵ Ibid., para. 3.3(f).

¹¹⁶ “If successful, the Code will provide a basis for the convergence of national legislation in both developed and developing countries.” Jeffries, supra note 2, at 342.

¹¹⁷ See Zuijdwijk, supra note 5, at 579.

¹¹⁸ UNCTAD, Restrictive Business Practices, U.N. Doc. TD/B/C.2/104/Rev. 1 (1971), at 33.

¹¹⁹ See, for example, U.N. Doc. TD/B/C.6/14 (1975), Annex II, at 10, para. 4.1.

¹²⁰ Ibid., Annex I, at 11, para. 5.

¹²¹ Notable exceptions include the agreed language on exclusive dealing (para. 4.B.3), exclusive sales agreements (para. 4.B.8), and patent pool on cross-licensing agreements (para. 4.B.11). See generally Zuijdwijk, supra note 5, at 570.

¹²² The UNCTAD Secretariat would make provision for exemptions in this area solely on the basis of the recipient’s public interest, or exceptionally where the supplier is engaged in the actual manufacture of goods in the host state. In the absence of such manufacture, the licensee should be free to export. U.N. Doc. TD/B/C.6/14 (•975)• Group В has inserted the word “unreasonably” in certain, otherwise agreed texts (e.g., challenges to validity, s. B.2; restrictions on research, s. B.4; export restrictions, s. B.io). See, generally, Zuijdwijk, supra note 5, at 570.

¹²³ The Group of 77 text provides that parties to technology transfer transactions “shall refrain from the following practices or practices having similar effects” (Chapter 4, s. A). The Group В text states merely that parties “should” refrain from the enumerated practices.

¹²⁴ See generally Jeffries, supra note 2, at 336–37.

¹²⁵ The Restrictive Practices Group of Experts established two categories of restrictions. Class A arrangements should not be retained or imposed since they were likely to have significant adverse effects. Class В restrictions presented problems as the adverse effects were not clearly established and corresponding advantages could exist. Accordingly, while no general case for retention could be accepted, each arrangement would have to be examined with respect to the economic circumstances. See UNCTAD, Restrictive Business Practices in Relation to the Trade and Development of Developing Countries, U.N. Doc. TD/B/C.2/119/Rev. 1 (1974), at 8-9. For example, with respect to grant-back requirements, UNCTAD recommended complete prohibition except where consideration was payable, the arrangement was not mandatory, a fair price was paid on a reciprocal and non-obligatory basis, and the requirement was not against the public interest of the recipient. U.N. Doc. TD/B/C.6/14 (1975), at 35–36.

¹²⁶ “One of the primary reasons that TNCs include restrictions on volume of products manufactured and limitations of exports in the contracts is to prevent the recipient enterprise from competing with the TNC. . .. If such limitations are eliminated from transfer of technology agreements, the TNC may simply refuse to supply a potential competitor or include in the cost of the technology its projection of lost sales due to competition by the recipient.” Jeffries, supra note 2, at 336. This reasoning is an effective response to arguments adopted by the UNCTAD Secretariat with respect to particular restrictive practices. For example, the Secretariat has recommended prohibition of measures restricting or eliminating challenges to validity of patents. See U.N. Doc. TD/B/C.6/14 (1975), at 38. To the extent that such measures are designed to limit competition, their prohibition could increase technology costs.

¹²⁷ See supra note 117, and accompanying text.

¹²⁸ These are the alternative designations of the Group of 77, Group В and Group D, respectively. See Zuijdwijk, supra note 5, at 570.

¹²⁹ Ibid., 570–71.

¹³⁰ See, for example, Chapter 5, para. 5.3(a) (i) ; para. 5.4.

¹³¹ See, for example, the Group В draft of Chapter 5, para. 5.2(c), which provides that suppliers of technology “should” make adequate arrangements for the unpackaging of technology. See also supra notes 10, 14.

¹³² Interview with an official of the Industry, Investment and Competition Policy Division of the Department of External Affairs, Ottawa, June 27, 1980.

¹³³ See supra notes 112, 122, and accompanying text.

¹³⁴ U.N. Doc. TD/B/C.6/AC.1/2/Supp. i/Rev. 1 (1975), at 41.

¹³⁵ Roffe, supra note 74, at 357.

¹³⁶ Chapter 6, para. 6.1(1).

¹³⁷ Chapter 6, para. 6.2.

¹³⁸ Ibid., para. 6.2(vii).

¹³⁹ Supra notes 56-61, and accompanying text.

¹⁴⁰ See, for example, Part IV, General Agreement on Tariffs and Trade, Basic Instruments and Selected Documents, Vol. IV (Sales No.: GATT/1969-1 ), at 53, which sanctions departures from the principle of reciprocity in order to take into account the special needs and circumstances of developing countries. See supra notes 34–36, and accompanying text.

¹⁴¹ Chapter 7, para. 7.1.

¹⁴² Ibid., para. 7.2. Chapter 7 also calls for action through international agreements to avoid imposition of double taxation on earnings and payments arising out of transfer of technology transactions. See para. 7.2 (ix).

¹⁴³ Chapter 8, para. 8.1(a). Alternative texts refer to a “Special Committee on the Code Established within UNCTAD” and “The Committee on Transfer of Technology.”

¹⁴⁴ See UNCTAD, Establishment of Centres for the Transfer and Development of Technology, U.N. Doc. TD/B/C.6/g/Add. 3 (1975); see also Secretariat Report, supra note 68, Chapter XIII.

¹⁴⁵ Chapter 8, para. 8.2.1 (b), (e), and (f).

¹⁴⁶ Ibid., para. 8.2.2.

¹⁴⁷ Jeffries, supra note 2, at 340. Such incentives could include access to local banks, loans at special rates, tax incentives, and credits for activity in areas of priority development.

¹⁴⁸ In addition to fines, legal protection to the transaction under the laws of the recipient could be withdrawn, a third party suit against either supplier or recipient could be instituted, and in the event of non-compliance the fact of such violation could be cited as a defence by the recipient to any action brought by the supplier. See Secretariat Report, supra note 68, at 58.

¹⁴⁹ Secretariat Report, supra note 68, at 60.

¹⁵⁰ See the Group of 77 draft text at the close of the sixth session of the IGE, U.N. Doc. TD/CODE TOT/1/Add. 1 (1978), Annex I, (ch. VIII) 23, para. 8.1. See generally Zuijdwijk, supra note 5, at 572–74.

¹⁵¹ Appendix D, s. I.A., para. 1

¹⁵² Ibid., para. 3.

¹⁵³ Ibid., para. 6.

¹⁵⁴ Appendix D, Section LB., para. 2. Thus courts and tribunals of the technology-acquiring country shall have jvirisdiction over disputes concerning public policy. Ibid., para. i. Similarly, where public policy is not in issue, the contract may be subject to a choice of forum. However, the forum chosen must have a “direct, effective and permanent relationship” with the contract. Ibid., para. 2.

¹⁵⁵ Appendix D, s. Ill, para. 7.1.

¹⁵⁶ Ibid., para. 7.2 (First Alternative).

¹⁵⁷ Ibid., para. 7.2 (Second Alternative).

¹⁵⁸ The parties to a technology transfer contract would therefore be free to choose a forum, such choice to be given effect unless there is no “reasonable basis” for the selection or it imposes an onerous burden on one of the parties. Ibid., para. 7.4.

¹⁵⁹ Zuijdwijk, supra note 5, at 574, 576.

¹⁶⁰ Appendix D, Section LB., para. 4 (Group of 77); ibid. Section III, para. 7.6 (Group B).

¹⁶¹ One of the more difficult issues stemming from the exercise of jurisdiction by domestic courts involves the extraterritorial application of “public” law such as antitrust and securities legislation. See generally, The International Law Association, Report of the 51^st Conference (Tokyo), 1964, at 304–592; Roffe, , The International Corporation: Statement and Conclusions on the Congress Theme, 22 Congress of the I.C.C. (1969), at 82–84 Google Scholar; Jennings, , “Extraterritorial Jurisdiction and the United States Antitrust Laws,” 33 Brit. Yb. Int’l L. 146, at 175 (1957).Google Scholar Efforts to assert extraterritorial investigatory jurisdiction in furtherance of these laws have been rejected by Anglo-Canadian courts. See Re Westinghouse Electric Corporation and Duquesne Light Company et al. (1977), 16 O.R. (2d) 273; Rio Tinto Zinc Corporation v. Westinghouse Electric Corporation, [1978] 1 All E.R. 439; Gulf Oil Corporation v. Gulf Canada Limited, (1980), 31 N.R. 451 (S.C.C.). It is at least conceivable that conferring jurisdiction on national courts to try issues arising from technology transfer agreements could present similar conflicts, particularly where restrictive practices are involved.

¹⁶² Supra note 160; see generally Zuijdwijk, supra note 5, at 577.

¹⁶³ See U.N. Doc. TD/B/AC. 11/23, at 35 (1975).

¹⁶⁴ See G.A. Res. 3041 (XXVII), para. 15/30; see also supra note 48 and accompanying text.

¹⁶⁵ See U.N. Doc. A/Conf. 39; 8 Int’l Legal Mat. 679 (1969).

¹⁶⁶ See U.N. Doc. TD/CODE/1, para. 5.

¹⁶⁷ See, for example, U.N. Doc. TD/B/C.6/14 (1975).

¹⁶⁸ Preamble, para. (13).

¹⁶⁹ Ibid.

¹⁷⁰ See generally, supra notes 117, 127, and accompanying text.

¹⁷¹ The doctrine of changed circumstances (“rebus sic stantibus”) was codified in Article 62 of the Vienna Convention, supra note 165. A majority of modern writers accept the doctrine as customary international law. See generally Brownlie, , Principles of Public International Law 598–99 (2nd ed., 1973)Google Scholar; Lissitzyn, , “Treaties and Changed Circumstances,” 61 Am. J. Int’l L. 895 (1967).CrossRefGoogle Scholar The Permanent Court of International Justice accepted the existence of the doctrine in Free Zones of Upper Savoy and the District of Gex, P.C.I.J., Ser. A/B, No. 46, at 156, 158 (1932), but refused to apply it in the circumstances of that case.

¹⁷² The extent to which consensus is required before principles of international law become established is of particular significance in this and other aspects of the new international economic order. Requiring the explicit consent of each state or even a number of states before any particular norm or custom may be applied effectively rejects the flexible process of customary development and confers a veto power over the emergence of general law. See generally Feliciano, , “Legal Problems of International Business Enterprises: An Introduction to the International Law of Private Business Associations and Economic Development,” 118 Académie de Droit International: Recueil des Cours 213, 257 (II, 1966).Google Scholar See generally supra note 60, and accompanying text.

¹⁷³ See Jeffries, supra note 2, at 342.

¹⁷⁴ See Secretariat Report, supra note 68, at 47.

¹⁷⁵ See Zuijdwijk, supra note 5, at 582. The originator of this concept is Professor Gabriel Wilner of the UNCTAD Secretariat.