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Introduction Collaboration in science and technology is a hallmark of the late twentieth century. Cooperation across national frontiers is expanding, aided by new com- munications technologies and motivated by the global nature of many scientific challenges. Within nations, cooperation between government and industry is ex- panding to meet national goals and common technological challenges. Strategic alliances among businesses also are expanding dramatically, enabling firms to meet a variety of goals, from sharing expertise and costs to establishing global standards and ensuring market access for final products. The global nature of many technological challenges and the enormous expense associated with devel- oping new technologies have made international cooperation an essential element of national science and technology policy. Successful collaboration, among both nations and firms, requires care and commitment. Care is necessary because much depends on the choice of partner and the clear articulation of goals and responsibilities. The sustained commit- ment of individuals and institutions and, not least, sustained funding, are essential for cooperative activities to bear fruit. To fully realize the benefits of interna- tional collaboration, substantial vision and commitment are required of research- ers and policy makers alike. The December 1997 signature of the Agreement for Scientific and Techno- logical Cooperation Between the European Community and the Government of the United States of America (US-KU S&T Agreement)i represented a signifi- cant achievement, creating a bridge between the research and development (R&D) iSee the Annex for the text of the Agreement.
2 INTRODUCTION systems on both sides of the Atlantic. To ensure that the Agreement had an immediate and positive effect on transatlantic cooperation, both parties agreed to hold a major conference during the British presidency of the European Union on June 8-9, 1998. Organized under the auspices of the National Research Council's Board on Science, Technology, and Economic Policy, the conference had three objectives: First, it served as an important opportunity to publicize the Agree- ment within the research community and among policy makers on both sides of the Atlantic. Second, the conference brought together experts in substantive ar- eas where opportunities for fruitful collaboration were believed to exist. Third, the conference sought to examine crosscutting issues of common interest in areas such as the framework for R&D collaboration, small business development, and the internationalization of the technical workforce. To achieve these objectives, the conference deliberations were organized around three broad categories: · the policy context, articulated by senior officials; · specific research topics discussed in small meetings of researchers and policymakers interested in collaboration and · crosscutting issues of broad interest to the two communities. THE POLICY CONTEXT FOR THE U.S.-EU S&T AGREEMENT As Under Secretary of State Stuart Eizenstat noted in his opening remarks, the US-KU S&T Agreement is part of the New Transatlantic Agenda of 1995, which seeks to strengthen ties between the European Union and the United States. The European Commission's Ambassador to the United States, Hugo Paemen, noted that the new S&T agreement complements both the New Transatlantic Agenda and the EU's Fifth Framework Programme. The Ambassador also ob- served that the Agreement has taken effect at a time when the United States has launched its 21St Century Research Fund. This confluence of events makes the Agreement especially timely. The Deputy Director of the National Science Foundation, Joseph Bordogna, reminded the audience that scientific and technological advance must take place with human consequences in mind. Dr. Bordogna urged the gathering of scien- tists and policy makers to use the new U.S.-EU S&T Agreement to address hu- man needs within the context of a global imperative to reduce inequality and protect the environment. Professor Jorma Routti, Director General of DO XII, highlighted the socioeconomic dimension of the Fifth Framework Programme by laying out some of its specifics. This Programme will focus on the life sciences and biotechnology, information technologies, competitive and sustainable growth of industries, as well as energy and the environment. International cooperation is a key element in the Programme, as are promoting innovation in small businesses and improving worker training.
INTRODUCTION 3 Acting Assistant Secretary of State, Melinda Kimble, focused her remarks on implementation of the Agreement. Article 6 of the Agreement calls for con- vening a joint consultative group (JCG) to discuss implementation. The informal JCG meeting, scheduled immediately following the conference, addressed many of the topics taken up by the conference. These included endocrine disrupters, information science and technology, materials research, intermodal transporta- tion and intelligent transportation systems, measurement equivalents, health and environmental effects of radiation, and climate-change prediction. Ms. Kimble emphasized that a cornerstone of the strategy to realize the U.S.-EU S&T Agreement's potential will be to enlist the public and private sectors in joint efforts to implement and publicize the Agreement. In offering his perspective on the Agreement, Rainier Gerold, Director Gen- eral of the European Commission, stressed that the U.S.-EU S&T Agreement is particularly important to Europe in light of the growing importance of the Fifth Framework Programme to the overall European research and development (R&D) enterprise. R&D to be funded by the Fifth Framework Programme totals 3.5 billion ecu. Although this is three times larger than the First Framework Programme in real terms, it amounts to only 5 percent of all S&T funding among EU members. However, the Framework Programme is increasingly important because it addresses strategic issues, such as health and the environment. Be- cause the policy challenges are global in nature, the payoffs from cooperation can be great. The New Transatlantic Agenda's section on R&D recognizes this real- ity and explicitly calls for wider cooperation between the United States and Euro- pean Union in science and technology. Notwithstanding the widespread recognition of the benefits of greater trans- atlantic cooperation, Dr. Gerold recalled the challenges the negotiators faced in reaching the Agreement. For example, he noted the difficulties encountered in engaging separate R&D systems and the specific differences that emerged on intellectual property and rules for foreign participation. Dr. Gerold concluded that the new S&T Agreement will work best if it mobilizes researchers and stimu- lates bottom-up cooperation on both sides of the Atlantic. Italy's Director General for Research, Dr. Paolo Fasella, provided the per- spective of a leading European member state on the accord. Dr. Fasella reminded the audience of the current importance and likely continued prominence of bilat- eral cooperation between the United States and individual European countries. For example, the large European intergovernmental research organization for particle physics, CERN, operates outside the framework of the S&T Agreement and will undoubtedly continue to be the focal point for cooperation on this type of research. Citing an example from his own country, Dr. Fasella pointed to the Agreement between the U.S. National Aeronautics and Space Administration and the Italian Space Agency to work together to develop technology for the Interna- tional Space Station. As valuable as the new S&T Aagreement is, Dr. Fasella
4 INTRODUCTION emphasized that bilateral cooperation will continue to play an important and complementary role in the future. POTENTIAL AREAS FOR COLLABORATION The afternoon session of the first day consisted of breakout sessions on each of the four topical areas: information technologies, transportation, climate predic- tion (forecasting applications and impacts), and human environmental health sci- ences (endocrine disrupters). More than one topic was covered in these areas, and the assembled scientific and policy specialists spent two hours exploring potential areas of transatlantic cooperation. After the breakout sessions, session chairs reported their recommendations to all conference participants. For information technology, Ray Kammer, Director of the National Insti- tutes of Standards and Technology, reported on electronic commerce, cross-lin- gual information management, and the Next Generation Internet. In general, each group identified specific issues in each field in which the United States and the European Union might collaborate. An important issue, particularly for elec- tronic commerce and cross-lingual information management, will be standards setting. Global standards are inherently transnational. Agreement on standards is essential if we are to realize the full potential of many new information technolo- gies. The groups also urged that a process be put in place to facilitate collabora- tion between the United States and the European Union in information technolo- g~es. U.S. Associate Deputy Secretary of Transportation John Horsely reported on the three topics covered by the breakout sessions on transportation: intermodal transportation, intelligent transportation systems, and strategic enabling research. Mr. Horsely noted that an important goal of transportation research is to encour- age sustainable and competitive growth, while working to decouple traffic growth from economic growth. The transportation conferees identified specific common research interests and suggested convening a workshop on the institutional im- pediments to transatlantic collaboration on transportation research. John Krebs, a member of the United Kingdom's National Environmental Research Council, summarized the breakout session on climate prediction, fore- casting applications and impacts. Dr. Krebs noted that the climate research com- munity is already very well connected internationally beause of the global nature of climate research. Any mechanism established under the U.S.-EU S&T Agree- ment must therefore be transparent and more convenient than existing mecha- nisms. The climate group cautioned strongly against "double jeopardy" in an application process that requires researchers to clear bureaucratic hurdles in both Brussels and Washington. The climate breakout group identified a number of areas for potential collaboration, such as the terrestrial environment and the pre- cision of climate forecasting, encouraged further dialogue, and suggested that
INTRODUCTION s representatives of the business and polar science communities be included in future meetings. Paul Foster of the Chemical Industry Institute of Toxicology summarized the breakout session on human environmental health science, which focused on en- docrine disrupters. These are chemicals released into the environment that can function as hormones. Some believe that they may have a serious impact on humans, wildlife, and vegetation. Breakout participants identified risk assess- ment and further examination of the fundamental biology of endocrine disrupters as possible areas for collaborative research. The breakout group suggested that the procedure for obtaining funds under the Agreement be made clear to the re- search community and that a panel of experts be gathered to flesh out additional collaborative opportunities. The group also raised the prospect of trade issues arising from endocrine disrupters, because government intervention into the man- agement of chemicals easily could have trade consequences. KEYNOTE SPEAKERS At the end of the first day, the conference heard from John Cadogan, Direc- tor General, Research Councils of the United Kingdom, and, for the evening's keynote address, from Gordon Moore, Chairman Emeritus of Intel. Interestingly, both speakers placed innovation in the broader context of the advancement of knowledge, and both emphasized the need to ensure adequate support for curios- ity-driven research. Dr. Cadogan pointed out that the creativity of scientists in the laboratory must be harnessed in order to make collaboration between the United States and the European Union effective. A conference is not enough to realize the potential of the Agreement; it is necessary to cultivate the innovators in the laboratory. Dr. Cadogan observed that in Europe, scientists have become skilled in collabora- tion, but must do better at making new discoveries. In the same way that the latter half of this century was transformed by the electronics revolution, he expects that biotechnology will prove the most fruitful ground for discovery in the next cen- tury. Dr. Moore presented an overview of the semiconductor industry's history of innovation, based on his personal experience with Intel, the leading U.S. semi- conductor producer. He highlighted the role that international cooperation could play in tomorrow's innovation. Dr. Moore explained that, from its earliest days, when the transistor was invented at Bell Laboratories, the semiconductor industry has been a beneficiary of the industrial research system. From their modest be- ginnings, semiconductors have become a pervasive part of every industry. The semiconductor industry now has over $150 billion in annual revenues and sup- ports a larger electronics industry of $1 trillion worldwide. The ability to pack more and more processing capability on the same piece of silicon has led to the spectacular cost declines and functionality improvements that have been the hall
6 INTRODUCTION mark of the industry. A few years after the invention of the semiconductor in 1948, it was estimated that the cost of making a single transistor soon would be 60 cents. Today, a single transistor costs less than one-eighth of a microdollar, or 120 nanobucks.2 The system that brought about such innovations is, however, under stress. Large industrial labs have been downsized in recent years and the R&D that many companies conduct is increasingly short term in nature. Long-term re- search is less frequently undertaken, not only because it is costly and uncertain, but also because companies find it difficult to fully capture its benefits. Yet the need for long-term research in the semiconductor industry remains as urgent as ever. Optical lithography is approaching the physical limits of its abil- ity to etch circuit lines onto silicon.3 Alternative technologies are under develop- ment, but the research is expensive and it will take several years for promising alternatives to come into production. For example, x- ray lithography shows promise, but there are technical and financial challenges to overcome. To ad- dress these common challenges, the semiconductor industry established the Na- tional Technology Roadmap for Semiconductors as a mechanism to identify tech- nical challenges and coordinate industry, government, and university research. Partly as a result of the road-map approach, funding shortfalls for some basic research increasingly are recognized. Dr. Moore explained that it generally is accepted that it is most appropriate for government to support widely applicable university research, noting that "even if the research fails, you still get trained students." For this reason, the semiconductor industry has created a number of programs designed to support university research, but additional government sup- port for university research would be a worthwhile investment. In conclusion, Dr. Moore noted that international collaboration is bound to be valuable in meet- ing future research challenges, especially among firms and universities. CROSSCUTTING ISSUES Developing Small Business The second day of the conference focused on additional topics of interest to the technological and economic development of Europe and the United States. Recognizing the importance of entrepreneurship to ensuring a technologically dynamic economy, conferees discussed their efforts to promote small business development. One case drawn from the U.S. experience focused on the Ameri 2A microdollar is one millionth (10-6) of a dollar and a nanobuck is one billionth (10-9) of a dollar. 3At one time, it was thought that optical lithography would be able to manufacture chips whose line-widths were no smaller than 250 nanometers (nm). However, existing optical techniques have proven capable of reaching the lOOnm line-width level.
INTRODUCTION 7 can Textile Partnership. This is an effort by the entire U.S. textile industry in cooperation with the national laboratories to promote the use of advanced tech- nology in textile manufacturing. The U.S. national laboratories develop a wide range of technologies to meet national defense missions, and many of these tech- nologies can have applications in industry. Having defense laboratories and in- dustry work together on common technological challenges is often a way for both parties to gain expertise while increasing taxpayers' return on their investment in the national laboratories. Another example of U.S. efforts to promote the small business sector is the Small Business Innovation Research (SBIR) program. This program, established by Congress in 1982, sets aside a fixed percentage of selected U.S. agencies' R&D budgets for grants to small businesses. The program's purpose, as laid out in its authorizing legislation, is to augment private-sector commercialization of publicly funded R&D, increase small business participation in federal R&D pro- grams, and improve the dissemination of federal R&D opportunities, particularly to small businesses owned by women or socially and economically disadvan- taged individuals.4 In working toward those goals, the government hopes to take greater advantage of the innovative capacities of small businesses. Recent re- search suggests that this program has registered some success for national re- search programs. An empirical analysis presented by Professor Joshua Lerner of the Harvard Business School showed that recipients of SBIR awards perform better than similar small businesses that have not received SBIR awards.5 The European Commission has programs with similar goals. Dr. Patrice Laget of the European Commission's delegation to Washington described the EU's efforts to increase collaboration among small- and medium-sized enter- prises (SMEs) throughout Europe. Some success has been achieved: From the Third Framework Programme to the Fourth, the number of SMEs participating in EU research programs doubled. It is anticipated that SME participation will con- tinue to grow in the Fifth Framework Programme. International Cooperation on Semiconductors Turning to broader issues of transatlantic R&D cooperation, the conference heard presentations on several existing international cooperative R&D enterprises. One major new international initiative, called the I300I, is developing next-gen- eration tools for the semiconductor industry to manufacture chips on 300-mm 4For legislative background on SBIR, see Robert B. Archibald and David H. Finifter, "Perspectives on the evaluation of the SBIR program with an application to the NASA-Langley research center." Paper presented at the American Economic Association meetings, December, 1998. 5Joshua Lerner. 1999. "Public venture capital: Rationales and evaluation." In National Research Council, The SBIR Program: Challenges and Opportunities. Washington, D.C.: National Academy Press.
8 INTRODUCTION silicon wafers, as opposed to the current 200-mm standard. Organized as a sub- sidiary of the U.S. semiconductor consortium SEMATECH, the I300I initiative is open to international membership. It now includes firms from Europe, Korea, and Taiwan. Japan has also launched a 300-mm conversion project, called Sili- con Leading Edge Technology (SELETE), all of whose shareholders are Japa- nese firms.6 Whether national or international in orientation, consortia are nec- essary to meet the staggering cost of industrywide conversion to 300 mm, which may reach $20 billion. Unlike some previous conversions, this cost is well be- yond the means of any single firm. Similar cooperative efforts are under way in Europe. For example, the High Epsilon Materials Cluster Optimized Rapid Deposition project complements the 300-mm conversion project, albeit on a smaller scale. This project ensures that appropriate materials for 300-mm manufacturing will be available when the en- tire 300-mm tool set is ready. Funded at $11 million annually, the project has European and American membership. Internationalization of the Technical Workforce The third panel discussed the internationalization of the technical workforce, a topic of growing importance on both sides of the Atlantic. This panel empha- sized improving exchanges of students between the United States and Europe. As one European observed, many European scientists receive their training in the United States, but there has been a drop-off of U.S. students seeking training or postdoctorate positions in Europe. Encouraging further ties, whether through professor-to-professor contacts or more formal programs, will require the interest of individuals and the availability of funding. U.S. scientists-in-training must be encouraged to view international experience as beneficial to their career, and it was suggested that business in the United States promote such internationaliza- tion. For transatlantic collaboration to work, individuals must be engaged; for it to endure, engagement of individuals early in their career is paramount. Effective collaboration is rarely an easy task; individuals, institutions, and countries naturally have different perspectives and objectives in carrying out re- search. Nevertheless, the global character of society's most pressing problems and the rising cost of addressing them, provide great incentives for international collaboration. Fortunately, the explosive growth in communications made pos- sible by information technology will facilitate transatlantic collaboration. A1- though face-to-face meetings are often essential in the early stages of business 6For an excellent analysis of I300I and SELETE, see Rose Marie Ham, Greg Linden, and Melissa Appleyard, "The evolving role of semiconductor consortia in the U.S. and Japan," California Man- agementReview, Vol. 41, No. 1, Fall 1998. pp. 137-163. Korea's Samsung Electronics is listed as a participant in SELETE, but it is not a shareholder.
INTRODUCTION 9 and academic relationships, advanced information networks are making long- distance professional collaboration a daily occurrence. The combination of ex- panded personal contacts and today's information technologies can move transat- lantic cooperation to a new level. For individuals and their institutions to work together effectively, leadership at the highest levels is required. To develop and maintain such leadership, and thereby realize the enormous benefits possible from European and American col- laboration, a policy framework that accepts institutional and philosophical differ- ences is needed. The new S&T Agreement holds the promise of such a frame- work, offering the United States and Europe the opportunity to jointly address the challenges of the twenty-first century. Charles W. Wessner