Technology and Trade: Competing in a Global Economy
Sunday, March 17, 2013
With
the advent of the truly global marketplace, exports are a major determinant of
national economic success. The nation that successfully markets its wares to
the world while maintaining or raising the living standards of its citizens has
by definition produced healthy, competitive companies that are the prerequisite
for a healthy, growing economy. In contrast, the nation that fails to do so
relegates its citizens to declining economic opportunities and a stagnant or
falling standard of living. And if growing exports can lift a nation's economic
prospects, then expanding high-technology exports are the strongest levers in a
nation's goods and services basket.
The
manufacture and sale of high-technology products produces disproportionate
benefits in boosting national productivity, raising worker skill levels,
advancing technology development, and creating high-wage, stable jobs.
Consequently, the Clinton Administration is committed to developing and
implementing trade policies and programs that foster strong growth in
high-technology exports consistent with the Nation's national security
interests. The Administration's policies and programs support this goal through
two main approaches:
- assuring that U.S. businesses have the information, technical assistance, financial resources, and government support necessary to achieve dynamic export growth; and
- improving access to foreign markets for U.S. exports by reducing barriers to the sale of U.S. goods and services and strengthening internationally agreed upon rules governing trade.
Trade Promotion Coordinating Committee
On
September 29, the President released the first annual report to Congress of the
Trade Promotion Coordinating Committee (TPCC), representing a substantial step
toward producing results in the first of these approaches.
Chaired
by Commerce Secretary Ronald H. Brown, the Committee includes 19 different
Federal agencies with export promotion roles. Preparation of Toward a National
Export Strategy involved an extensive 6-month collaboration by those 19
agencies, plus input from the National Security Council, the National Economic
Council, and more than 2,000 representatives from small, medium, and large
businesses, trade associations, academia, private-sector export service
providers, labor unions, and State and local governments.
The
report calls for more than 60 specific actions many targeted at high-technology
products designed to strengthen U.S. export promotion efforts. According to the
report, "as a direct consequence of the innovations, efficiencies, and
other actions of the National Export Strategy, U.S. exports of goods and
services can reach $1 trillion by the beginning of the next decade and can
produce over 6 million new jobs. These achievements could mean that, in the
year 2000, more than 13 million Americans will be earning their living as a
direct consequence of exports. What is more, they will be paid better wages
because, on average, export-related jobs pay almost one-fifth more than other
American jobs."
Opening Up Foreign Markets
Substantial
progress on the second major trade front opening up foreign markets and
strengthening international trading rules is also at hand. On the multilateral
level, the Office of the U.S. Trade Representative (USTR) is leading an
Administration-wide effort to conclude the Uruguay Round of Multilateral Trade
Negotiations by December 15. The goal of these negotiations is a major updating
and strengthening of the General Agreement on Tariffs and Trade (GATT), which
governs more than four-fifths of world trade.
At
the regional level, the Administration has concluded negotiation of the North
American Free Trade Agreement, designed to increase U.S. exports by eliminating
barriers to trade between the United States, Canada, and Mexico and to improve
the competitiveness of U.S. companies by creating the largest market in the
world, with more than 370 million consumers and over $6.5 trillion in
production. The Administration is making a major effort to win congressional
approval for the agreement.
Other
efforts include developing a trade strategy for the Asia-Pacific region and
launching the U.S.-Japan Framework negotiations. In these and other
initiatives, the Administration is working to reduce barriers to exports of
U.S. technology-related goods and services and to restructure trade rules to
ensure a level playing field for American companies.
For
example, the USTR and the Commerce Department's Office of Air and Space
Commercialization and other agencies completed negotiations for the Commercial
Space Launch Trade Agreement with Russia signed by Vice President Gore and
Deputy Prime Minister Chernomyrdin this summer. The agreement allows Russian
entry into the international commercial launch market, while encouraging
market-oriented reforms in the Russian space launch sector, and preventing
disruptions of the international commercial launch market. Similar negotiations
are currently under way to renegotiate the U.S. commercial launch agreement
with China.
Commerce
is also working closely with industry to develop a commercial remote sensing
policy that balances legitimate national security concerns with the desires of
U.S. companies to extend America's lead in this important area. One issue is
restrictions on U.S. operators facing foreign competition.
Another
example is the recently concluded Memorandum of Understanding between the
United States and Russia to develop expedited procedures whereby
pharmaceuticals approved by the Food and Drug Administration can be marketed in
Russia without having to undergo extensive recertification by the Russian
government.
Toward a National Export Strategy Recommendations Now Being
Implemented
Specific
Administration actions related to technology and trade include:
- Reform current exports controls to eliminate or significantly reduce regulations on an estimated $35 billion worth of high-technology U.S. exports, while still protecting America's important national security and foreign policy interests.
Following
recommendations made by the TPCC, the Administration has raised the threshold
for licensing authorization of computer exports to many destinations from 12.5
MTOPS (millions of theoretical operations per second) to 194 MTOPS. It has
proposed to the Coordinating Council for Multilateral Export Controls (COCOM)
that this threshold be further raised to 500 MTOPS.
The
Administration has also proposed a dramatic change in the definition of a
supercomputer, moving from 195 to 2,000 MTOPS, and the removal of prior export
licensing requirements for most telecommunications exports.
- Create one-stop shops in a pilot program in four major cities in January 1994, consolidating all Federal export promotion services in each location. Additional cities will be added each year until a national network of one-stop shops has been created. Each shop will eliminate the maze of Federal offices that exporters must now contact. This will be particularly helpful to U.S. high-technology companies, many of which are fledgling enterprises headed by scientists and engineers rather than entrepreneurs with business backgrounds who may be more familiar with government export policies and programs.
- Develop a commercial strategic plan for each country that is a key U.S. export market. These plans will consolidate and improve upon information currently provided by numerous Federal agencies and better coordinate overseas activities.
- Provide high-level U.S. government advocacy on behalf of U.S. companies pursuing major foreign government procurement opportunities. Create an interagency "Advocacy Network" to coordinate these efforts.
- Combat tied-aid practices of competitors; increase the Overseas Private Investment Corporation's project limit from $50 million to as much as $200 million; and combine into one agency the more than $80 million spent annually on feasibility studies for infrastructure projects.
- Increase Federal Government participation in standards and certification activities, including promotion of U.S. standards in foreign countries, acceptance of U.S. certification and accreditation, dissemination of information on ISO 9000 standards, and conversion of the United States to the metric system.
- Develop a national export strategy that helps U.S. companies better tap the estimated $275 billion to $300 billion world market for environmental technologies. (The Interagency Environmental Technologies Exports Working Group, chaired by the Commerce Department, will soon release a report with detailed recommendations for increasing exports of these important technologies.)
Uruguay Round of Multilateral Trade Negotiations Benefits
for U.S. Technology Companies
Worldwide
Economic Growth: Successful completion of the negotiations by December 15 and
subsequent Congressional approval of the Uruguay Round agreement will
substantially strengthen the international trading system, reducing barriers to
trade worldwide, providing greater certainty for business operations, and
stimulating worldwide economic growth that expands the markets for U.S.
high-technology products.
Trade
Rules for Services: Successful conclusion of the Uruguay Round of negotiations
will produce the first set of internationally agreed upon rules for services,
reducing barriers, and stimulating demand for U.S. engineering, research,
banking, accounting, tourism, and many other kinds of services.
Protection
of Intellectual Property: The proposed Uruguay Round agreement provides for
unprecedented international agreement on patents, copyrights, trade names, and
other intellectual property issues. This directly affects the competitiveness
of U.S. high-technology companies, which each year lose billions in royalties
and product sales to international piracy.
Dispute
Settlement: The United States is negotiating, for the first time, a speedy and effective
set of mechanisms for the international settlement of intellectual property and
other types of disputes.
North American Free Trade Agreement (NAFTA) Benefits for
U.S. Technology Companies
Computers
and Software: NAFTA immediately eliminates Mexican tariffs (currently 10 to 20
percent) on 70 percent of U.S. exports in the computer equipment and software
sector. Mexican duties on the remaining 30 percent, which includes central
processing units, impact printers, and certain other peripheral devices, are
eliminated in equal annual stages over a 5-year period. Canadian tariffs on
these products already have been eliminated in the Canadian Free Trade
Agreement (CFTA).
- Telecommunications: NAFTA provides immediate duty-free treatment on more than 80 percent of current U.S. telecommunications equipment exports to Mexico. Duties on the remaining U.S. exports of telecommunications equipment are phased out over 5- or 10-year periods. Most Canadian duties on telecommunications equipment were eliminated in the CFTA.
- Electronic Components: NAFTA eliminates immediately Mexican tariffs on 49 percent of U.S. exports, including capacitors, printed circuit boards, switches, piezoelectric crystals, and some categories of resistors and tubes. Duties on the remaining 51 percent of U.S. exports are phased out in 5 or 10 years.
- Semiconductors: Under NAFTA, Mexico, Canada, and the United States agreed to immediately eliminate tariffs on each other's semiconductors.
- Medical Equipment: NAFTA immediately eliminates tariffs on 50 percent of U.S. exports to Mexico, totaling $211 million, in the medical equipment sector. Tariffs on another 37 percent of U.S. exports to Mexico in this sector are phased out over a 5-year period. Tariffs on the remaining 13 percent are eliminated over a 10-year period.
- Environmental Technologies: NAFTA will immediately remove tariff and non-tariff barriers to U.S. exports of environmental technologies to Mexico and open up Mexican government procurement opportunities for U.S. firms. In addition, experience shows that national environmental policies stimulate the demand for environmental goods and services. As part of the NAFTA process, the Supplemental Agreement on Environmental Cooperation between Mexico and the United States provides for improved environmental training, enforcement, monitoring, and financing by the Mexican government that will stimulate substantial demand for U.S. environmental technologies.
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