Summary of Panel Discussion
The panel discussion indicated general agreement that trade policy is a good tool for dealing with problems of market access. This is the positive side of the U.S.-Japan semiconductor trade agreement, according to David Yoffie. The downside to trade policy becomes clear when the problems relate more to management failures, prolonged trade dispute resolution mechanisms that cannot address the immediate problems of a high-technology industry adversely affected by dumping, or the disincentives associated with foreign government subsidization. The somewhat controversial conclusion that Yoffie drew from this second set of problems was as follows: If governments wish to promote or assist high-technology firms, a "direct" approach is better than trade policy.
Thinking realistically about trade policy requires an appreciation of the integration that is occurring across the boundaries of firms—through alliances, consortia, and other mechanisms. There was a substantial amount of disagreement as to whether these new forms of alliance transcend the power of the nation state. Hans Decker noted that Europe is moving away from policies of state support for protected industry. His presentation focused on new issues such as standards and intellectual property rights that deserve attention at the international level. Decker concluded, however, that although the nation state has been called too small for the big things and too big for the small things that deserve attention, its role is not over. Decker emphasized that the objectives of national strategy (which focus on high
The Panel on Technology Challenges to Trade Policy was chaired by David Yoffie. Other panelists were Han Decker, Henry Lichstein, and William J. Spencer.
technology as integral to national welfare) depend on maintaining of some sort of international system.
Henry Lichstein brought another set of perspectives to the discussion by stressing the need for trade policy to take account of the interests of the users. The service industry, he noted, dominates economic activity in every developed world economy. Services, which make up 77 percent of employment and 85 percent of gross national product, are the major users of high-technology goods. Too often, Lichstein argued, trade policies are made without attention to the users. Based on this line of reasoning, Lichstein argued for the "freest possible" international trade regime as the one most likely to bring low-cost and high-quality goods and services to the users. In contrast to some of the other panelists, Lichstein argued that policies that support individual industries can only distort innovative and competitive capabilities. Instead, policymakers should focus on building up fundamental assets (the "educational and commercial infrastructure") needed by a variety of industries.
William Spencer brought manufacturing into focus as the key ingredient for U.S. competitiveness. He noted that the United States has a "manufacturing lag" in relation to the Pacific Rim countries who, in the 1980s began to manufacture better integrated circuits. Viewed from this angle, the critical issue for the United States is not technology per se but manufacturing. We have plenty of technology, Spencer said. "What we lack is leadership in manufacturing." If we get our manufacturing on track, it will be the horse that will pull the technology policy cart. And if we get our technology strategy together, that will lead naturally to some trade policy steps, he suggested.
The discussion opened up a variety of perspectives on technology policy. In response to a question about whether U.S. government policies could induce Intel to return to the business of manufacturing dynamic random access memory chips (DRAMs), Gordon Moore reiterated the difficulty that U.S. firms face in going head-to-head with the Japanese in fields such as DRAMs. The solutions to our dilemma (focusing on manufacturing and taking the long-term view) will not salvage industries like DRAMs.
There was a good deal of discussion about Sematech as a model for U.S. technology policy. As a direct approach to the management and manufacturing issues, Sematech is more attractive than trade policy tools such as the U.S.-Japan semiconductor trade agreement, which provided a pricing umbrella for Japanese producers. Theodore Moran questioned whether there is adequate analysis to support choices by the U.S. government about which industries to support. Granger Morgan and others expressed concern that the international trading system might disintegrate if we "start subsidizing industries." Alexander Flax reminded the audience that the only way the United States can implement technology policy is to use the "defense fig
leaf." Sematech, he argued, is the exception rather than the standard U.S. approach. There is no agreement in the United States on how to proceed.
Gerald Dinneen directed attention to the problems of consensus-building in the United States by asking whether it might be possible to get a trade and technology policy that is more effective and coherent if we learn from the experiences of the large, successful companies. Spencer stressed the need for cooperation among companies and Sematech as an important experiment in that vein. William Whyman called on the symposium participants to examine organizational problems that reflect differences in the technology and trade policy communities. The expertise of these two communities must be combined in order to link technology and trade policies, but in the United States there are different institutional bases, different cultures, and different legal mandates that affect the ability of agencies like the Office of Science and Technology Policy and the Office of the U.S. Trade Representative to work together.
