312. The EU takes note of the document RD/IP/24 submitted by the LDC Group. The EU and its Member States take their commitments and obligations under Article 66.2 of the TRIPS Agreement very seriously, trying to make the annual submissions on technology transfer more transparent and comprehensive. Reporting on ongoing and future technology transfer projects every year, in which LDCs are among the beneficiaries, helps interested parties to be aware and benefit from these projects. It is still crucial though that the annual reports are also circulated by the LDCs in their country to make sure that it really reaches all the interested institutions and stakeholders.
313. The EU and its Member States gave proof to promptly reacting to natural, social, health, climate and economic changes by putting in place projects specifically tailored to the current needs of LDCs and their regional organizations.
314. In the annual reports it is clear that the EU actions often target groups of countries or regions. The reason is because the EU strongly supports regional integration, which fosters better understanding and political and economic links between neighbouring countries. Even more importantly, many of the problems these projects try to address do not stop at borders. That is why many technology transfer programmes of the EU and Member States target regions including both LDCs and also other developing countries. We find it counter-productive to exclude the reporting of these joint projects, as the LDC Group seems suggesting.
315. Many of the EU's technology transfer projects have an obvious regional footprint. Projects that aim at introducing an Integrated Aquaculture based on sustainable water recirculation and sanitary system for the Victoria Lake Basin, for instance, are equally important for LDCs and developing countries around the Victoria Lake.
316. It is crucial to have a common understanding what technology transfer means and includes. If we apply the well-researched definition used by the OECD in its most recent study on international technology transfer, we can say that technology transfer refers to the ways and means through which companies, individuals and organizations acquire technology or know-how from third parties, whether such technology is IPR-protected or not.
317. Technology transfer is often one component of a more complex matter, rather than a stand-alone activity. The acquisition by LDCs of a sound and viable technological base does indeed not depend solely on the provision of technology or equipment, but also on acquisition of know-how, management and production skills, improved access to knowledge sources as well as on adaptation to local economic conditions.
318. Therefore, training and education of university graduates, exchanges of qualified staff, and joint research projects must accompany the buying or licensing of IP rights related to the transferred technology. We know that the mere transfer of technology without the training of local employees does not enable the recipients to achieve the internalization of the provided technology and to reduce the technology gap with developed countries. Several projects put in place by the European Union and its Member States are accordingly aimed at providing such training and education.
319. As the OECD rightly pointed out in its recent study on technology transfer, one of the most important pre-conditions of technology transfer is the improvement of the absorption capacity of LDCs. Absorptive capacity can be defined as availability of human capital and presence of technological capability and other factors, such as good governance, access to finance and infrastructure, which helps assimilate and replicate knowledge gained from external sources. Absorptive capacity is key for diffusion of any knowledge, originating domestically or abroad, and thus for determining how technology can contribute to economic transformation and "catching-up" of a country. Together with IP protection, it can also influence technology holders' incentives to promote transfer and diffusion of knowledge. Policies aimed at improving absorptive capacity can help to remove some of the key bottlenecks to technology transfer, particularly in least developed countries.
320. Aimed at increasing the ability to absorb, internalise and utilise new knowledge, absorptive capacity policies encompass a wide range of measures addressing workforce, organisational and adjustment deficiencies. Increasing the pool of trained workforce able to understand and assimilate technology, improving the quality of higher educational institutions and scientific infrastructure as well as of networks between these educational and research institutions and enterprises, and better access to finance and efficient institutions, can all have significant impact on technology absorption, and thus stimulate technology transfer.
321. The EU questions the need for any indicative list of what would constitute an incentive to enterprises and institutions to transfer their technologies. Governments have to remain free to decide how to incentivise their enterprises to transfer technology to LDCs and other developing countries to find the most effective means. The current model, which, among others, is based on direct financial support, results in hundreds of technology transfer projects year after year, which show that the incentives system of the EU and its Member States work well.
322. The EU would rather suggest the TRIPS Council to focus on suitable policies, such as absorptive capacity improving policies or appropriate intellectual property rights protection measures that can create the environment for companies and other stakeholders to voluntarily apply and transfer their technology generating inward investment and technology transfer to LDCs.
