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INTERNATIONAL TRADE, TECHNOLOGY TRANSFER, NATIONAL SECURITY, AND 92 DIPLOMACY 4â International Trade, Technology Transfer, National Security, and Diplomacy CONTROLLING TECHNOLOGY TRANSFER Trade, technology transfer as part of trade, and national security interact in complex ways that affect the U.S. economy and the U.S. position in the international marketplace. The most visible traditional involvement of the U.S. government with the air transport and aircraft manufacturing industries has been through three categories of activities: (1) regulation of air transport, administration of air traffic control, certification of aircraft, and the funding of airways infrastructureâairports and air traffic control systems, and R&D related to the latter; (2) the funding of research and technology development through the National Aeronautics and Space Administration (NASA) and DOD; and (3) the funding of DOD-contracted development and engineering. Items (2) and (3), of course, have a major influence on the pace and direction of aeronautical technology development. The government is also increasingly involved in technology transfer, not just through NASA and its unclassified civil R&D, but also through DOD military programs with our allies. Inevitably, such cooperative programs result in the transfer of military technologies, many of which are applicable to civil aircraft as well. The increasing proclivity to use control of international trade as an instrument of foreign policy adds further complexity to the issue. Control of the export of technologyâeither in direct form or when embedded in advanced equipmentâin the interests of national security is unquestionably a legitimate responsibility of government. The task requires balancing national security or foreign policy objectives with those of strengthening the economy and preserving the U.S. position in advanced technology. This balancing process inherently produces occasional inconsistencies and is vulnerable to indecision, which in itself is detrimental to trade. The U.S. aircraft manufacturing industry is inevitably a
INTERNATIONAL TRADE, TECHNOLOGY TRANSFER, NATIONAL SECURITY, AND 93 DIPLOMACY participant in this process. With exports now representing about two-thirds of sales of large jets and external markets projected to continue to grow more rapidly than domestic ones, the impact of export restrictions intended to limit and control technology transfer can become serious indeed. One consequence is to cast a shadow over the reliability of U.S. manufacturers as sources of supply: the U.S. government may unilaterally terminate sales of aircraft, engines, and parts, and products manufactured by foreign companies may be cut off from U.S. components. Questions that should be addressed in policy deliberations on the control of technology transfer include the following: ⢠How effective will given restraints be? And for how long? ⢠What alternatives are available to the foreign country or firm? ⢠What avenues for retaliation or compensatory action by foreign competitors or customers are available for both near and long term? ⢠What near-term and long-term commercial damage will U.S. firms suffer? ⢠What damage will the U.S. economy suffer? With respect to the first and second questions, the growing technological parity shown by the competitive evaluation of technology by this panel leads increasingly to the answer that the foreign firm simply turns to another source of supplyâeven if it has to develop one (e.g., the certification of the Aeritalia G222 transport with Rolls Royce Tyne engines instead of CT64 engines so that the plane could be sold to Libya). With respect to the other questions, the evaluation should consider more than the possible loss of sales on a particular transaction. The result could be not only permanent loss of a particular market (because the customer resolves not to be trapped again), but also the creation of new competitors who could challenge in other markets as well (e.g., Airbus Industrie's plan to develop a European environmental control system for the A320 to replace the Garrett system used on the A300 and A310). The panel is concerned about the effectiveness of the institutional mechanisms for addressing this complex policy issue. National security and foreign policy have powerful and articulate advocates within the institutional structure of government. Marshalling and integrating the interests of the private sector is complex, and the institutional mechanisms for doing so are comparatively much less well structured. Even within aircraft manufacturing, the interests and priorities of the large transport, commuter, business aircraft, and helicopter manufacturers are
