with a more sophisticated and balanced use of incentives, regulatory coercion, and voluntary agreement—is needed.

Recommendation 13.2: To maximize industry involvement in research on counterterrorism technologies and in their deployment, broad government– industry dialogue on a variety of topics is needed. These include counterterrorism research agendas, implementation of technologies, antitrust exemptions, indemnification, the role of regulation and subsidies, government procurement and acquisition rules, dual-use technologies, codes and standards, and policies related to insurance. The purpose of the dialogue is to inform law, regulation, and the federal research strategy, and OHS should identify for each industrial sector a suitable forum for this dialogue.

Effective government–industry communication in a number of sectors will be vital for responding to the vulnerabilities and developing the solutions identified earlier in this report. For example, the pharmaceutical industry will be a critical component of the national strategy to protect against bioterrorism, the IT industry will be a key player in any plan to improve cybersecurity, and the energy industry could be a significant beneficiary of new technologies. An example of how government–industry dialogue and cooperation can bring significant benefits to both groups and to the public can be seen in the Health Effects Institute, a successful co-funded partnership between the EPA and industry.

Before implementing new approaches, the federal government must understand how incentives and regulations might drive behavior and consider how changes in laws might affect international competitiveness. In some sectors, private investment in counterterrorism technologies may actually provide a competitive advantage. The committee did not have the opportunity or the expertise to fully explore the myriad options for government policy in these areas, but it briefly discusses below some relevant issues in four areas: commercial value for counterterrorism technologies, indemnification from legal risks, select antitrust exemptions, and government procurement and acquisition rules.

Commercial Value for Counterterrorism Technologies

Most firms are highly competitive and operate with narrow profit margins; they are understandably reluctant to make major investments against unknown risks if their competitors are not doing the same. Trying to compel industry to reduce its vulnerabilities to catastrophic terrorism through massive subsidies or draconian regulations is neither an efficient nor a politically viable approach.

A more effective approach is to give the private sector the widest possible latitude for innovation and, where appropriate, to design R&D strategies in which commercial uses and security uses of technologies rest on a common base of investment. Companies then have the potential to address vulnerabilities while increasing the robustness of public and private infrastructures against unintended

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