Vanderbilt Journal of Transnational Law


Joel Davidow

First Page



It has been rumored that some political strategists would like to channel negotiations between developed countries of the North and developing countries of the South toward a trade-off allowing unrestricted access to Northern technology in exchange for decartelized supplies and prices for Southern raw materials. Each side would give away some of its heritage in exchange for improved access to the primary asset of the other. The negotiation shave faltered. In regard to many crucial issues they have never really begun, and in some respects the two sides have moved further apart over time. The classical economist sees no reason why either side should fear such a trade-off. In theory the free flow of goods and technology will make markets less imperfect, increase innovation, and give Northern and Southern consumers greater choice at lower prices. Governments and private firms, however, are hesitant to act in accord with this thesis. Most nations value export promotion, job protection, and self-sufficiency at least as much as they do free trade and consumer welfare. Most private firms are unwilling to develop or transfer technology without guarantees of sufficient exclusivity to limit competitive risks and ensure an adequate return on their research and development investment.

Antitrust, the handmaiden of classical economics, can be used to police restrictive clauses in technology transfer agreements. Such restrictions are frequently restraints of trade in two senses. They limit trading freedom of the licensee and often restrain international trade in the products produced with the transferred technology. The Sherman Antitrust Act prohibits agreements that restrain trade among the states or with foreign nations.