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The 1992 European Market Integration Bush Administration Policies . DR. PRESS: Today we are dealing with important issues such as stan- dards setting, certification, testing, and the implications for our industries, then strategies for the European market, and, finally, strategies for U.S.-EC cooperation as well as competition in the years ahead. It is very appro- priate that we open the day with a talk by Dr. Allan Bromley. Dr. Bromley is assistant to the president for science and technology and director of the Office of Science and Technology Policy. He was formerly professor of physics at Yale University, where he was founder and director of the A. W. Wright Nuclear Structures Laboratory. Dr. Bromley has pub- lished some 450 papers in science and technology and has edited 18 books. He has received numerous honors and awards, including the National Medal of Science. In more than two decades he has been a leader in the national and international science policy communities. In the early 1970s he chaired the National Academy of Sciences' Physics Survey, which contributed in a central way to charting the future of that science in the subsequent decade. He was president of the American Association for the Advancement of Science, the world's largest scientific society, and also was president of the International Union of Pure and Applied Physics, a world-coordinating body for physics. Prior to his present appointment, Dr. Bromley served as a member of the White House Science Council throughout the Reagan ad- ministration and as a member of the National Science Board. He has been awarded 10 honorary degrees from universities in the United States and abroad, honors richly deserved. It is a pleasure to introduce Allan Bromley. DR. BROMLEY: It is a great pleasure for me to be here this morning to talk to you about the Bush administration's view of this important subject. As I think all of you will recall, back in the 1920s quantum mechanics taught us that it was very frequently necessary to view a single phenomenon 56

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BUSH ADMINISTRATION POLICIES 57 from at least two different points of view which frequently seem contra- dictorywaves and particles. The state of world affairs today seems to me to be characterized in many ways by similarly contradictory viewpoints. On the one hand, the world is becoming, as is quite obvious, increasingly diverse. A simple division of the world into East-West or North-South is losing relevance as new centers of economic strength continue to develop. Countries and formerly autonomous parts of countries are exerting their rights to independence and self-determination, and a strong resurgence of democracy around the world is enabling countries to express their national aspirations free of external oppression. At the same time, the forces of unification around the world have never been stronger. East and West Germany are rushing toward unification with an irresistible momentum. The European Community is moving toward a single integrated market that will make it an economic superpower that is certainly comparable to, if not larger than, the United States or Japan. Throughout the world countries are embracing the promise of economic modernization despite the social changes that such modernization will inevitably cause. I firmly believe that science and technology are among the strongest unifying forces in our world today. Science and technology have always constituted perhaps the most truly international of all our human activities. It is frequently the case that scientists and engineers have much more in common with colleagues on the other side of the globe than with those on the other side of the hall. Furthermore, science has always been public knowledge, because its results, before they truly become science, are freely available to all. But science is even more than public knowledge; it is international knowledge and an international resource. Today, most research results from the United States or Germany or the Soviet Union are available almost immediately. The fax machine works with remarkable effectiveness, and the international language of science, which is frequently a combination of mathematics, jargon, and badly distorted English, ensures that anybody with proper training is able to read and understand the results almost as soon as they become available. We in the United States have derived much of our scientific and techni- cal tradition from Europe, and for that reason our scientific and technological ties with Europe remain stronger than those with any other part of the world. Indeed, until World War II our contacts in science and technology were almost exclusively with western Europe, particularly in the years before the war when, because of the great strength of European science and technology, the flow of scientists and engineers was almost entirely from America to western Europe. After World War II, with particular impetus from the Marshall and Fulbright programs, and with the burgeoning growth of American science and technology,

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58 EUROPE 1992 this flow to a large extent reversed, and it became traditional for young European scientists and engineers to feel that their education had not been complete until they had spent at least some period in the United States. In recent years, however, we have tended to lose focus on this very important exchange, as we have become more and more preoccupied in this country with the technological prowess of the Pacific Rim nations and with our role in working with the nations of the Third World. Although the absolute number of European students studying science and engineering in the United States has not generally declined, their fraction of the total has diminished as more students from non-European countries have chosen to come here to take advantage of our universities and our research opportunities. With the unification of the European Community, many in this country feel that there is at least the possibility of substantial weakening of U.S.- European ties in science and technology as European researchers, for very obvious reasons, look inward to new challenges and new opportunities closer to home. I believe very strongly that any weakening of the linkages between the United States and Europe in science and technology would be a tremendous mistake. Both the United States and Europe, in my opinion, have much to gain from a greater rather than a lesser degree of contact between our scientists and engineers. Even in aspects of research and development that are closely related to commercialization, I feel that cooperation in science and technology can pay handsome dividends to all participants. I noticed that Filippo Pandolfi and Erich Bloch spoke with you yesterday, so you may have already discussed many of the detailed issues in science and technology that surround EC 92. I had the pleasure of speaking with Dr. Pandolfi myself yesterday. I thought that perhaps it might be useful if I were to address some of these issues from a slightly broader viewpoint the viewpoint of the Bush administrationand tell you something about our policies toward the Single Market plan and our overall approach to international science and technology. There are several broad principles that underlie this administration's ap- proach to these matters. First of all, let me say that our support for a free market of ideas and researchers as they flow back and forth across the Atlantic is strong and sure. The vast majority of science and technology n~er`;nanges lake place wornout any government sponsorship, recognition, interference, or even knowledge, and that is precisely as it should be. The backbone of cooperation rests in the individual-to-individual and institution- to-institution bonds that are created over long periods of joint work, cooperation, and general friendship. For those interactions that do occur under formal government-to-government agreements, a somewhat more rigid and formal set of criteria will always be required. We believe very strongly, for example, that there should be shared ~ _ 1_ _ __ _ _ _ _ 1 _ _ _ ~ _ _ _ , 1

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BUSH ADMINISTRATION POLICIES 59 responsibilities for both basic and applied research; access to foreign re- search and development processes and facilities that is comparable to the access granted foreign researchers in the United States; and adequate protection of intellectual property rights (this becomes an ever more important issue as the world becomes smaller in the commercial sense). We also need effective protection for truly sensitive knowledge. We have to recognize that perhaps for too long we have tried to protect too much in the way of knowledge. What we must do instead is to decide upon those specific technologies or areas of system integration that are truly sensitive, focus upon whatever protection we deem appropriate for them, and make everything else freely available worldwide. The United States will continue to pursue these overall goals in both our bilateral and multilateral agreements with international science and technology partners. These goals will be made part of all of our specific R&D endeavors. I want to talk about three particular categories basic science, precompetitive research and development, and competitive product development and then mention a few general issues. Let me talk first about basic research. The United States has always been and remains firmly committed to the free and open international flow of basic scientific knowledge. Open communication eliminates duplication of effort, increases the pace of scientific advance, and ultimately benefits all countries. Protectionism in my view is just as damaging in science as it is in trade. This philosophy also underlies the U.S. approach to a very important subset of our scientific effort today, namely the large, or "mega," projects in science, particularly in the basic sciences. These projects which include such things as the Superconducting Supercollider, Space Station Freedom, the mapping of the human genome, the compact ignition tokamak, global change research . . . I could go on at some length- are all expensive and of great international interest. The results they produce, once they are completed, will be additions to the international reservoir of fundamental knowledge. Consequently, in my view it is not only desirable but necessary to coordinate the planning and support of these projects. The outline of international cooperation is at least partly in place for a number of these projects. For example, ESA, Japan, and Canada are contributing laboratory modules and other hardware valued at more than $7 billion to Space Station Freedom. The total initial U.S. investment in the space station is about $16 billion. This so far is the largest international research and development project that has ever been undertaken. On the other hand, the largest basic research project that has even been conceived is the Superconducting Supercollider, the 54-mile ring planned for Waxahachie, Texas. The Department of State and my office have been working closely with the Department of Energy and other agencies to develop

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60 EUROPE 1992 a plan so that we can involve other countries in the planning, building, use, and management of the Superconducting Supercollider. Similarly, the importance, complexity, and cost of the effort to map and sequence the human genome make international cooperation essential. Co- operation already exists on this project between the United States and the EC and between the United States and the United Kingdom. Many other developed and developing countries are already involved or are working to become involved because of the tremendous interest that all have in the future use of this very fundamental knowledge. In the past in part because of the great differences in funding mechanisms between the United States and many of our collaborating countries there have been misunderstandings about levels of support. Indeed, the United States has in some cases come to be known as an unreliable partner. In significant measure this reflects the fact that in most other countries, once a large project is approved, the funding for the entire project, whatever dura- tion its construction may be, is also approved. In this country, of course, we have an annual congressional budget cycle and in that cycle priorities can change. My office is now undertaking a study, in collaboration with a number of other agencies and countries, of ways in which we can put the support of megaprojects on a more formal, reliable, and steady base. It seems desirable to us that we should consider megaprojects not as individual projects but as an international opportunity, if you will, spanning a large range of projects. If we do this, it will be easier to develop equitable funding arrangements and a satisfactory geographical distribution for these one-of-a-kind facilities. On our side the United States needs to develop more stable and credible agreements to cover our participation in these international programs. At some point we may wish to consider agreements that ensure multiyear commitments. These agreements obviously will have many if not all of the features of treaties. We are not yet ready to make a specific recommendation, but we are working both within the administration and with the Congress on these topics. Important as these major facilities and devices are, however, they are nowhere near as important as the people who use them. It is very important for us to keep a firm focus on the training, and particularly in this context the international exchange, of scientists and engineers. These are the kinds of exchanges that build the person-to-person bonds that I have already mentioned. International cooperation is a habit-forming activity. Once a young scientist has experience in international cooperation, he or she finds it very easy to do it again and again. It is important that we make this exposure part of the career experience of as many of our young people as we possibly can. We in the United States believe, and have always believed, in open and equitable access to our educational institutions, not only for students from

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BUSH ADMINISTRATION POLICIES 61 our own country but for students from any country. Many countries have taken advantage of this access, and indeed there are many who would argue, I think correctly, that graduate education may well be our most important export. More than 50 percent of the advanced degrees in engineering in this country are now being awarded to people who have foreign citizenship. This certainly does not mean that there are too many foreign engineering students in the United States. It means that there are far too few Americans. This is a problem that we in this country have to address. We already face shortages numbering in the hundreds of thousands in field after field of engineering and science in the 1990s, and there is not a thing we can do about it within our own boundaries. In fact, the situation is getting worse. Over the past two decades the population of 18 to 24 year olds in the United States has declined by 19 percent. Even more disturbing are the results of a recent survey of freshmen interests that asked young people entering the nation's universities and colleges what fields they had chosen for their major. It shows very disturbing trends. In the last two decades interest in majoring in science or engineering has dropped by a third. Interest in engineering dropped by a quarter in the last seven years, and interest in computer science dropped by two-thirds in the last four years. Without a very large flow of foreign students into our educational institutions who remain here to pursue their careers, we would face devastating shortages. The U.S. economy depends critically on the influx of bright young people from abroad for its health and vitality. Regarding exchanges with Europe, we have not yet begun to see a decrease in students studying abroad that many predicted would be a consequence of European unification. But there is a very widespread perception throughout the scientific community that this will happen, and unhappily this is the kind of perception that can be self-fulfilling. If we are to maintain the strong bonds that arise from exchanges between Europe and the United States, then we in the United States must give greater encouragement than we have to Americans going abroad and European scientists spending time in this country. For example, in the case for which I have the best statistics, in the exchange between West Germany and the United States, for the past two decades, Germany has borne more than 70 percent of the total cost of the exchange, both for Americans going to Germany and for German scientists coming to the United States. It is essential that we develop new sources of support for this kind of exchange, so that something more approaching reciprocity can be put in place. We are working toward that goal. Let me turn to the question of competitive research and development. The question always arises: At what point does one draw the line between what is freely open and available and what requires protection of some

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62 EUROPE 1992 kind, either for economic competitiveness reasons or for national security reasons? It seems to me that there is a reasonably clear line of demarcation that can be drawn. We all understand what we mean by basic research, by the discovery of new knowledge, and we all know what we mean by production of attractive goods and services. It is in that interface where we move from the basic discovery to the production phase that much of our difficulty arises, and I believe that this is an area where cooperation can yield handsome dividends to all concerned. It can reduce the risk, cost, and time required in the development of generic technologies. These are technologies that may underlie a great many aspects of our national life, civilian economy, and national security, but by their very nature it is difficult for any single industrial organization to reap sufficient benefit to justify their support. We in the federal government have an important role to play in helping to arrange, support, and seed this kind of cooperation. We have a rather peculiar problem in this country regarding cooperation. It has been recognized for many years in the Congress, and not only in this but in prior administrations, that it was very important for us to change our antitrust legislation, and as a result the legislation has been changed in many ways to make such cooperation possible. What we have not succeeded in doing, perhaps for obvious reasons, is making our industrial leaders trust either the administration or the Congress in these matters. There is an understandable feeling: "You say that you encourage cooperation, but what will the people who replace you say, and what will happen two congresses from now?" It is terribly important in this country to make it increasingly evident that this administration and this Congress believe that it is important, that it is worthy of federal support, to have competition and collaboration. They are not antithetical in the development of generic technologies. When you move into the production phase, of course, this administration believes that none of us is wise enough to make better decisions than is the private sector. For that reason we do not wish to be in a position of picking winners and losers at the production level. We do believe, however, that it is important for us to level the playing field where the technology development that underlies production takes place. This applies not only nationally but internationally. One of the key areas in achieving this international cooperation is arriv- ing at agreements on intellectual property rights. This becomes increasingly important as we move into new areas like biotechnology, software development, or other areas where the results of research and development are very easily moved from one country to another. One of the problems we faced in the past was that Congress quite understandably and I believe rightlyrequired a few years ago that in all of our science and technology agreements we incorporate specific language on intellectual property rights. The intent was excellent, but unfortunately specific language makes it very difficult

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BUSH ADMINISTRATION POLICIES 63 for some collaborating countries to adjust that language to their laws, and it is not reasonable for us to expect them to do so in some cases. As a result. my office is arranging a more flexible set of criteria that will ensure the appropriate protection of intellectual property rights and yet leave flexibility for negotiations, within the conditions unique to specific countries with which we are negotiating. At some point in the continuum from basic research through product development, we cross the obvious line that separates competition from the precompetitive phase. It is my experience thus far that not only we but most other countries as well are overly cautious in defining where that line should be. I am convinced that the results of fundamental research are clearly public knowledge, and as I said before I am convinced that much more than we now make publicly available should be publicly available. We must decide carefully and thoughtfully what is truly important to us and important for us to protect, limit it strictly, and then protect it as thoroughly as we know how. The basic position of the U.S. government toward European unification is that we commend the EC's effort to increase competition and stimulate economic growth within Europe by removing internal barriers. However, as an administration and as a nation, we want to be sure that the unification of the European market does not decrease competition between Europe and the rest of the world. In other words, we want to be sure that when trade barriers are removed within Europe, new barriers are not erected between Europe and the rest of the world. This concern touches upon the first of two general issues I want to discuss that extend across the entire spectrum of our international science and technology agreements. By harmonizing the standards and regulations required of goods and services, the European Community could make it much easier for all industrial organizations to compete in the formerly fragmented European economy. However, if standards and regulations are used to delay, inhibit, or otherwise obstruct competition from outside the EC, it would have a most deleterious effect, not only on U.S. sales and marketing but also on the R&D activities necessary to compete effectively in quality and in innovation. In the past the European process of creating and adopting standards in some cases was not particularly open, and we congratulate the EC for taking steps within the past year to increase the transparency of the standards-setting process. For example, the Commission has encouraged European standards' bodies to work with outsiders in developing standards. Some problems, of course, still remain, as in the case of biotechnology, where the issue of social need as a determining factor in the regulation of biotechnology is one that is still a matter of debate between the EC and the United States. What we have to ensure is that the standards are applied fairly to all participants in the market and that the testing and certification requirements are applied uniformly.

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64 EUROPE 1992 Of course, the process of European integration looks much different to- day than it did even a year ago because of the astonishing changes that have taken place in eastern Europe. As Vaclav Havel said just a week ago, speaking before a joint session of Congress, "We live in very extraordinary times. The human face of the world is changing so rapidly that none of the familiar political speedometers are adequate." Certainly, the changes going on in eastern Europe have already had a dramatic impact on my own office. Delegations from Czechoslovakia, East Germany, the Soviet Union, and Hungary have all visited OSTP within the past few weeks to explore the possibility of upgrading our existing scientific and technology agreements or initiating new ones. The East Germans and the Czechoslovakians in particular were very quick to point out at the opening of our discussions that their new science ministers were not communists but rather respected scientists who will be putting together their national policies. The countries of eastern Europe have a marked need for western science and western technology. The challenge facing both the United States and western Europe is to transform and adapt existing arrangements and multilateral institutions so that they can accommodate the new relationships that are required with eastern Europe. We in the United States will be looking for opportunities to integrate science and technology cooperation with the president's broad foreign policy goals of encouraging the independence and democratization of eastern Europe. We look forward to working with our colleagues in the EC in making this happen. As the walls between East and West come tumbling down, both figuratively and literally, an old chasm takes on new importance. The different levels of development between North and South have become ever more apparent. More and more, science and technology in the United States, Europe, and Japan will be called upon to solve problems that are not local or national but rather truly global. Increasingly, the axis of these global problems is not East-West but rather North-South. These problems will raise additional issues; they will have to be taken into account in all of our bilateral and multilateral agreements. At the same time, they offer unparalleled opportunities for increased worldwide cooperation in science and technology. Global environmental change offers perhaps the most stark example of these new and truly global problems. There are a great many changes about which we must be concerned the destruction of the ozone layer, acid rain, pollution of the earth's oceanI could go on at great length, as could anyone in this room. The prospect of environmental change on a global scale is going to force all nations to examine a wide range of policies in the light of new scientific and economic understanding of the earth's system and of human influence on that system. Next month the president will host the White House Conference on Sci- ence and Economics Research Related to Global Change. The intent will be

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BUSH ADMINISTRATION POLICIES 65 to bring together leading scientists, economists, and environmentalists from a representative cross section of the world's nations to focus on how, by working together, we can improve our understanding and use of the analytic tools and data available to us. We can make at least a start on developing the framework for an international research program that will draw on the expertise, the data, and the resources of all the participant nations. The results of this meeting will feed into the United Nations-sponsored Intergovernmental Panel on Climate Change, a panel in which all of us have played an important role. This is truly an international process involving some 60 nations, hundreds of scientists, and nongovernmental as well as governmental organizations. Its charge is to form an international consensus on science-based climate change so that agreements can be forged on these issues before legal and regulatory actions are taken. In turn, the IPCC process feeds into an International Framework Convention. President Bush has issued an invitation to the world's nations to hold the first negotiating session for that convention here in Washington. This is a situation typical of what will be a rapidly growing class of problems that can no longer be addressed on any national or regional basis but that truly demand the best of us acting on a global basis. Such problems will pose a major challenge, not only to science and technology but also to international diplomacy. The important thing is that channels that are open for science and technology have a long history of opening wider with the passing years, to encompass all sorts of topics that are important to the nations on either end of the agreement. I would close simply by quoting Louis Pasteur, who said, "Science knows no country, because knowledge belongs to humanity and is the torch that illuminates our world." MS. HOLDEN: Constance Holden, Science magazine. I am glad to hear you talk so much about global environmental problems, but I have not heard any mention of the underlying cause, rapid population growth. Does this mean you do not think science and technology have any contribution to make to this? DR. BROMLEY: Not at all, and I agree with you that population growth worldwide is clearly a very important part of the problem that we all share, of keeping this planet habitable. However, science and technology, while they have a great deal to contribute to this problem, are no longer in any sense the dominant issue involved in population control. It has become a political problem. We scientists and technologists will certainly be expected to continue to contribute. I think there are real opportunities in some of the new discoveries and developments, in molecular biology, for example, but fundamentally the major problem areas in this whole question of population control remain social, political, and cultural, not scientific or technological. DR. DUBY: Jean-Jaques Duby, IBM Europe. Yesterday we spent some

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66 EUROPE 1992 time discussing the participation of non-European-held companies in Euro- pean research programs. I would like to ask you, what is your administration's view on the reciprocal, the participation of non-U.S.-held companies in research programs that are partially supported by the federal government? DR. BROMLEY: I think that we would take exactly the same point of view that was taken in the case, for example, of IBM's participation in European activities. We treat them on a case-by-case basis, and we are quite prepared to do so. DR. INGRAM: John Ingram, Schlumberger, Ltd. American universities have long been bastions of basic research and, as such, our communication with Europe and the rest of the world. We do a certain amount of basic research ourselves in conjunction with American universities. I see a trend- and perhaps I only see a very small part a trend toward sensitivity in American universities to the commercial importance of basic research and toward the locking up of the intellectual property rights on that, which to some extent is interfering with the publication of that research and its dis- semination, at least in some of our projects. What I would like to ask you, is that a general trend, are we worried about it, and are we doing anything about it? DR. BROMLEY: Let me take the questions in order. Yes, we are worried about it. Yes, we are trying to do something about it. Yes, the problem is real, but it is not in any sense a generic problem. It occurs in specific cases and it should be stamped out wherever it occurs, and I think that it really is the responsibility of the individual university, in the first order, to take appropriate action. I was involved before coming here, for example, as chairman of a committee in my own university at Yale considering these topics. What we discovered was that as we began to rebuild bridges between the universities and the private sector, it was a new concept for both sides, so there was a period of jousting as the lawyers on both sides tried out the system to see what they could obtain. I well remember our first encounter with a very distinguished private sector organization whose lawyers came in with a set of requirements that would have tied up the university thoroughly and forever. We spent about a week looking in horror at this document, saying, "My God, is this what university-industry relations are going to be like?" Then we had a meeting and said, "You know, this is ridiculous." The lawyers on the other side said, "Well, if you feel that way," and took out most of the stuff. It was a trial balloon; it was shot down and we then proceeded. I think what it requires is an understanding that both sides are in unknown and uncharted territory, as well as a lot of goodwill. I do believe that the kind of secrecy or proprietary control, whatever you want to call it, is antithetical to the spirit of American universities. It should not be there any more than classified research for the military should be in universities. It is

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BUSH ADMINISTRATION POLICIES 67 one of the things that would most quickly destroy the most precious aspects of our academic community, a community that we more than any other developed nation make enormous demands on, not only for new knowledge but for the young minds trained to use it in a creative fashion. DR. REMBSER: Josef Rembser, Federal Republic of Germany. The philosophy of the U.S. government toward megaprojects seems to be to decide upon a megaproject and then invite others to participate. Do you also think that in the future there could be a joint discussion about the decisions for such projects? DR. BROMLEY: That is precisely the point that I am making. I think that we have tended to view these projects as originating in this country, particularly because science policy relating to those projects typically comes from the bottom up in the United States: A large community of scholars decide that they must have something, and it rises higher and higher on our view screens until something happens. That being the case, there is an unhappy tendency for us to think about international cooperation only after the program has gone a considerable way beyond initial conception, toward planning, funding, design, and so on. I do not think that this situation is viable anymore. In fact, I think in the case of some of our existing megaprojects that we have failed in a very important way to communicate effectively with our international partners, who understandably are upset if they feel that they are engaged with us in a joint research program and find out about major changes in the scope or character of that program only after we have made them. That is not what we mean by cooperation, and I think that a major cultural readjustment is required in our science and technology com- munity. Perhaps some adjustment will be required in others, but I do believe that we, again with goodwill, can work toward a situation where the international aspects are considered right at the beginning. MR. ANDERSON: Chris Anderson, Nature magazine. Yesterday, Vice President Pandolfi said that he had talked to you about the possibility of a joint international task force on cooperation. What do you think about that proposal, and what are the prospects of seeing such a task force? DR. BROMLEY: We talked about the general question of cooperation in a number of areas. The idea of a specific task force is one that we agreed to look into. I think that we will very probably end up with slightly different mechanisms on both sides of the Atlantic. For example, on our part, we have two mechanisms. One is FCCSET, which with strong cabinet support I am in the process of revitalizing and restructuring to deal with intragovernmental coordination and integration of U.S. participation in research activities. In addition, as you noted, a few weeks ago the president announced his appointment of PCAST. That was designed in part to take care of one of the fundamen- tal weaknesses of the FCCSET mechanism, namely that it had no provision for bringing private sector, industrial, academic, foundation, or other input

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68 EUROPE 1992 into its deliberations. Since I have the privilege of chairing both PCAST and FCCSET, if they do not talk to one another it is my responsibility and my fault. I would certainly look upon the PCAST-FCCSET axis as playing a very important role as we establish our end of what I hope to build with Dr. Pandolfi and his associates: a very real and effective bridge between this country's science and technology enterprise and that in the EC. DR. PRESS: The next speaker on this morning's session is W. Arthur Porter. It is his job to be a respondent. I am not sure what a respondent is supposed to do, but I guess we will soon find out. Dr. Porter received his Ph.D. in interdisciplinary engineering from Texas A&M University. Since 1985 he has been president and chief executive officer of the Houston Advanced Research Center, a nonprofit research consortium that includes such fields as materials science, lasers, high-energy physics, supercomputing, geotechnology, space, and policy studies. Located in the greater Houston area, its membership consists of some nine institutions, universities, and research centers. Previous to that, Dr. Porter was professor of electrical engineering at Texas A&M University. He was a member of the technical staff of Texas Instruments in the semiconductor R&D labs, and there he developed the first fully automated system used in manufacturing integrated circuits. He currently serves on the Governor's Business Development and Jobs Creation Task Force and is a member of the U.S. Department of Commerce's Semiconductor Technical Advisory Committee. DR. PORTER: I am pleased to have the opportunity to respond to Dr. Bromley's comments and to try to incorporate the questions and answers that followed his presentation on the EC 92 integration and the Bush policies. when asked to be a respondent, Prank, l asked the same question. I was asked to bring a perspective from American industry, but bringing a perspective from American industry is like trying to bring a perspective from Congress: It will always be mixed. But let me proceed. Dr. Bromley, I think, has done an excellent job of reviewing the histori- cal relationships between Europe and America and the importance that sci- ence and technology have and are playing to unify people from different cultures as well as to drive the world economy into a single marketplace. Europe and America can benefit together by seeking newly formed win-win partnerships, as opposed to the more historically traditional win-lose games that we have often tried to play. It is critically important that we define ~ 4~7 ~~ red 1 _ 1 ~ 1 ~ . ~ these new w~n-w~n partnerships In a world that is changing at absolutely breathtaking speeds. It is my thesis today that industry must take the lead and that governments must support that action. Let me repeat that. Industry must take the lead and governments must support that action. I make this point for two reasons. One, which Dr. Bromley has already made, is that science and technology are public knowledge and the results

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BUSH ADMINISTRATION POLICIES 69 are freely available worldwide. Second, only companies within R&D-inten- sive industries are capable of rapidly responding to the type of change that is occurring in today's global marketplace. I will return to this point of industry leadership in a moment. American industries, to remain competitive, must form partnerships with European industries to leverage off of the R&D that is utilized to manufac- ture products in order to take advantage of new market opportunities, particularly as EC 92 approaches. Value added from existing technologies and new R&D results must be pursued through these win-win European-American partnerships. To do this will require that we pay attention, as has been mentioned, to international versus national laws, to intellectual property rights, and that we take advantage of events such as are occurring today in eastern Europe, to develop these emerging markets through creative multigovernment support that encourages collaboration between industries, particularly between America and Europe. Now, in response, I concur and I applaud the point made about protectionist policies not working. I firmly believe that in our changing world, given the economic importance and mobility of intellectual products, nationalist pro- tectionist measures will be no more effective than trying to legislatively regulate the migration of wild geese. A good idea or a valuable solution to an important problem is as mobile and as fast as a satellite communication, which we all know can be instantaneously transmitted anywhere in the world. Intellectual products, the basis for future wealth, are much more mobile at any stage of developmentwhether we are speaking of basic, precompetitive, or competitive than a shipload of spices or silks ever was. I want to pause here and talk about two cultures, not cultures of nations but the culture of scientific and technological knowledge and the culture of business. The differences pose a challenge for all of us in this global village. These two cultures have basic, fundamental differences that have been spoken of particularly here today. Science and technology are a culture of openness. Those of us in this room from this country and our neighbors in Europe have communicated openly. In this country we have always had communications with our colleagues in Russia, even when America and Russia were in the most stressed relationship politically. But the business community, which must take this new set of intellectual products and get value added from them, has a culture of proprietariness, of secrecy. There is a big gap between the scientific and technology community, with a culture of openness, and the business community, with a culture of proprietariness. We must address that gap within nations and across nations. What does this all mean? It means that human talent is the critical factor for any nation that will remain competitive. Dr. Bromley has already pointed to the importance and value of European-American student exchange programs, as well as collegial scientific person-to-person relationships. I suggest,

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70 EUROPE 1992 however, that we must do more, and I fully support the proposal of Mr. Pandolfi for creating a joint task force to help us learn how. Any competi- tive region of our new world will discover new mechanisms for networking intellectual talent from industry, academia, and government laboratories, crossing traditional political boundaries to meet new challenges. Being able to mix and match existing technologies to meet new needs as well as collaborating to develop new technologies through R&D are important in meeting opportunities in our changing world. Together, we will have to make long-term commitments to investments in the future, coupled with a balanced emphasis on near-term exploitation of our present capabilities. In spite of the differences and complexities such as were mentioned yesterday by Mr. Duby of IBM and again this morning in the questions, we have to learn to form cooperative alliances and partnerships, to lower the risk of investments and share the benefits. We have to do a much better job of collecting and distributing high-technology information, and we must create a new culture of shared interest and understanding of management, business, and technology. We must lower the barriers to the flow of knowledge and encourage people to learn about entirely new fields and apply their knowledge to solutions of economically important problems. Science and technology, as well as scientists and engineers, are becoming commodities commodities that will be pursued as never before. Europe and America have an opportunity today to build upon our common cultural history and to celebrate the differences that can be taken advantage of to help our partnerships compete in the global marketplace. I can tell you that in President Bush's hometown of Houston we are seeking to do just that. This point, of talented people, leads to what I believe is the most important role for any government and that is education. Above all, every nation's government must work to see that its citizens have access to quality, competitive education. America faces its greatest challenge on that single topic today. Support of R&D and the process of getting value added by encouraging and endorsing university/industry/government collaborations are also vital gov- ernment roles. We must pursue these collaborations by every means. As EC 92 approaches, it seems to me that one of the greatest longer- range impacts on American it&D-intensive industries will be determined by the European cooperative educational and R&D programs that develop and support EC 92 as well as a technology learning environment. We know of many newly created programs in the EC: DELTA, AIM, DRIVE, BRITE, ERASMUS, COMETT, plus others known even better, such as those mentioned often here, ESPRIT and JESSI. These programs collectively could dwarf American efforts and again point to the value of collaboration between America and Europe. Let me give a specific example, from an industry point of view, of many of the discussions that have already come out in our deliberations. One of the

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BUSH ADMINISTRATION POLICIES 71 other hats I wear is chairman of the board of a company called Electro- Scientific Industries in Portland, Oregon. Fifteen years ago as a professor at Texas A&M, I was consulting for this company as we developed a laser system that today holds market share throughout the world as a critical device for building DRAM chips. As I sit as chairman of the board of this $100 million company, selling systems built in Portland, Oregon, and marketed throughout the world, I look at these new technologies that are emerging- precompetitive, competitive, or basic and think about how they will drive future companies and what impact that may have on this company's ability to market throughout the world. It brings very close to home the importance of this collaborative research, how it will impact new competitive technologies, and how Europe 92 and the regulatory issues of manufacturing in one country and selling in another will impact the profitability of companies such as ESI. I am very much interested in discovering and better understanding that issue. In summary, America must act, not just react. We must~reach out to suggest new partnerships that embrace the objectives of our partners, respecting the complexities of different cultures but building upon our commonalities. The economic wind that is blowing across our globe is clearly headed to America. The wind may not be tropical, as we are used to seeing, but it packs forces that destroy structures like the Berlin Wall. If we do not see it coming in this country, or simply do not act to prepare for it, the damage will be tremendous. We all know that European-American collaborative opportunities will be influenced and shaped by Asian Rim competition. Collaboration among Europe, America, and Asia must also be a focus and a consideration for all it&D-intensive industries. In any event, we must position ourselves to use the force of these new winds that are blowing and to put them to work to build a stronger economy, not simply let them destroy one that refuses to adapt. Partnerships will need new organizations to help overcome critical barriers that traditionally inhibit industry/university/government collaborations, and these organizations are being developed. To follow up on the question after Dr. Bromley's presentation, that cultures coming together from academia and industry must have a place in which they can develop a focused effort, to bring together the cultures of openness and proprietariness for the common benefit of a nation and a market in my own organization in Houston, we are doing this. We are working in projects and technologies such as magnetic resonance imaging, superconducting magnetic energy storage, MAG-LEV trains all new technologies that have spun out of magnets that we designed for the Superconducting Supercollider. And we are working collaboratively with university, industry, and government entities to bring these technolo- gies to the fore. We are also working through our European liaison to develop new microwave remote-sensing capabilities for holographic imag- ing, working with Europe and developing a new company in Spain.

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72 EUROPE 1992 Those of us at this conference must lead. Otherwise, who will? This conference helps America focus on EC 92 and its importance, and I hope it encourages Europe to proceed with its worthy objective. We must discover how to proceed together, and I suggest early task forces can help. Now I will return to my point about industry leading. Recognizing that industries and companies are not of nations but of markets is critically important to our collaboration. Let me restate that. I suggest that industries and companies are not of nations but of markets. Markets may be of nations or certain regions of the global single marketplace, but industries track and respond to those markets. Companies that are capable of anticipating and responding to market changes will lead, and nations that adapt to the change and encourage responsive companies to collaborate will create economic advantage for the people of their nation. Finally, in response to the major global issues that Dr. Bromley so appropriately pointed to, I remind us that industries have as much responsibility as nations to pay attention to how science and technology can be applied to help address such problems as climatic change, acid rain, pollution of our oceans, the ozone hole, and so forth. Here again, collaboration between Europe and America in a united approach to the solution of these problems will far more effectively influence our own populations as well as our Third World neighbors who share this globe with us. In conclusion, Europe and America have every reason to pursue this collaborative opportunity together. To reuse Dr. Bromley's quote from Louis Pasteur, "Science knows no country, because knowledge belongs to humanity and is the torch which illuminates the world." I would only add that it is our opportunity now to work together to get mutual benefit from this product of humanity that has never before in the history of man been so valuable and so important to the health of our world. DR. PRESS: While you are thinking of questions, let me start off with an issue that I raised yesterday that reappeared in the two talks today, the issue of asymmetries between European attitudes, for example, toward economic development, industrial development, and American ones. These asymme- tries have their bases in different traditions, different cultures, and different political attitudes about the roles of governments. A good example is the number of EC projects that have been mentioned ESPRIT, JESSI, and the others, half a dozen or perhaps even more, whereas in the United States one or two counterparts come to mind. Certainly SEMATECH derived its rationale of government support not in terms of a critical economic need but in terms of a strategic military need, and that is why it is being supported by the Defense Department. This is an example of a European initiative that makes good sense in Europe, whereas in this country we do not have that kind of a model. It is interesting to talk about foreign-held companies participating in each other's

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BUSH ADMINISTRATION POLICIES 73 programs, but we do not have very many, whereas Europe does. How do you see our own policy evolving, Dr. Porter? Do you think that we will have such things as a civilian DARPA, being driven by what we see happening in Europe, where the criticality will not be in terms of defense needs but in terms of the needs of economic competition? DR. PORTER: I think we are not likely to see an industry policy, as Dr. Bromley alluded to earlier. I think that we can certainly be guided by the experience of our European neighbors' programs. On the issue of how this country has been able to leverage off of research for national security purposes, it is well known that the aerospace industry has had strong R&D support for development of products that otherwise had military requirements but that the technology developed there could be applied in the private sector. I think that has effectively been done. Our opportunity is to look collaboratively for these types of science and technology programs that serve the economic health of a global marketplace and to work collaboratively to find and discover the ways in which we can do this together. MR. KAPLAN: Gadi Kaplan, IAAA Spectrum magazine. Do you have any cooperation with Germany, for example, on such advanced things as MAG-LEV? As I understand, Germany and Japan are leading in terms of . . app. Cations. DR. PORTER: We have been in conversation with the Germans, the French, and the Japanese on those three separate technologies for MAG- LEV. It is only very recently that we have pursued the potential of our superferric magnets that are self-shielding in this new technological application, so we are in the very early stages of identifying with those potential partners. On the other hand, in magnetic resonance imaging we have already worked closely with Siemens and Brucker, both German companies, and with others from around the world. DR. NICHOLSON: Geoff Nicholson, 3M. Several remarks have been made about the openness and availability of basic science, and I think we all agree and support that. I think one of the concerns that we may have about Europe, about Japan, is that whereas U.S. industry is very comfort- able with working in the basic science area with universities, there seems to be more and more basic science being done in other countries that is outside of the university environment and therefore not as readily available, such as in consortia. I wonder if anyone has any comments or views on that subject. DR. BARKER: Richard Barker, McKinsey and Company. This is an issue that I have also been thinking about recently, and I do not think it is one-sided. You have a number of U.S. companies that not only have col- laborated very closely with U.S. universities but have overtaken U.S. universities in their basic science programs. I was visiting a West Coast biotechnology company the other day, and I said, which of the academic centers do you

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74 EUROPE 1992 need to collaborate with to make sure you are at the leading edge? Their response was, we have overtaken them, we are way ahead. So I think on both sides of the Atlantic we have the issue of the disappearance, if you will, of precompetitive R&D into companies and the only mechanism I can see is the international collaboration and consortia between companies rather than an expectation of freely available, precompetitive R&D. DR. PRESS: Where that works, that is fine, but recent trends show that, with an exception perhaps for the pharmaceutical industry, the trends are down for the support of basic science within companies. The issue is an important one, and I have been involved in some discussions with the Japanese on this. In Japan they do not have the research university system that we have here. Perhaps that is changing, but they still do not have it, and much of the kind of research that takes place at Stanford or MIT or the University of California can be found in Japan in government laboratories or in the central research laboratories of industry. So if one wants symmetrical access to the American research university in Japan, one has to find it, in many cases, within industry or within government laboratories. The Japanese understand that case, and they are trying to open up these centers and these central research facilities where the basic science gets done. They accept the principle, but the progress is very small. In Europe I think it is a mixture of the American and the Japanese system. Of course, it varies from country to country, but I think it is a real issue that has to be explored as well. DR. REMBSER: I would like to give a comment from the German side. In Germany about half of the R&D capacity in the public sector comes from universities and half from what we call the extrauniversity sector. The extrauniversity sector includes the Max Planck Institute and the national laboratories. In the 1960s and 1970s the science went more to extrauniversity institutes. Now there is a trend to include and integrate science more in universities. This is also due to a gradually decreasing number of students, so universities will have more capacity for research in the 1990s. In all extrauniversity institutes that are funded by federal and state governments, there is compulsory publication, so all results are published; they are open. When Professor Bromley talked about the exchange of scientists, a very large part of the American scientists coming to Germany are going to this part of the German research landscape, the Max Planck Institute and national laboratories, so at least from the standpoint of secrecy and proprietariness, there is no problem and no difference between universities in Germany and the extrauniversity institutes. DR. PRESS: That is a good example of the way somewhat different systems can be made to match and link up between our two countries. MR. EISELE: Albert Eisele, Cornerstone Associates. Dr. Porter, you mentioned very briefly toward the end of your remarks that European-American

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BUSH ADMINISTRATION POLICIES 75 collaboration opportunities will be influenced and shaped by Asian Rim competition. It seems to me that is a fairly important and perhaps critical point in the subject we are addressing here, and I wonder if you could expand on that and tell us whether you think that we can build on the common heritage and celebrate our differences with Asian competitors as well as European. DR. PORTER: Obviously we could have a whole other conference on that topic, but certainly I made the point about celebrating the heritage of commonality and taking advantage of our differences. That cultural link between this country and the Asian Rim is not really as historically common as it is between America and Europe, although as we look at this global marketplace, it is clear that there are three major centers of economic force. I know from my own experience in the microelectronics world from Texas Instruments to doing research in publicly funded universities to being involved with a company marketing a system that is critically important in the manufacture of DRAMthat we have to pay attention to what is happening, particularly in Japan. The R&D efforts that are forthcoming there will generate technologies that will be competitive with what we produce. So the question from the corporate perspective- being of a market is where do you find the partnership? Which one does it make the most sense to make the alignment with, as you try to maintain your opportunity to participate in a viable economic way and still be profitable? I think in all of these leading-edge technologies, the companies that serve the future global markets will be looking for partnerships where they can find them, where they are the most responsive to their need to effectively compete and the partnership can bring the most rewards. I suggest that we will find ever-increasing opportunities in the strengthening of the Asian Rim market and the competitive intellect that is driving that market and that capability. All I was trying to suggest today, following the theme of this conference, is that America and the EC have a cultural and historical base for becoming partners at this time, if we seize the moment today and this nation embraces EC 92 and encourages Europe. I know that the formation of such partnerships is not easily done from within Europe; there is still much debate about how it will happen, exactly what will it mean. I think by America coming forth to encourage that to happen, and by us building upon these historical com- monalities, we may be able to develop today partnerships that even a short period from now we may not have as much flexibility to develop, as they will be influenced. My point was and is that all partnerships will be influ- enced by a strengthening technological base that comes from the Asian Rim, and no one will be able to ignore that.