Remarks of

The Honorable John H. Gibbons

Director, Office of Science and Technology Policy

to the


International Business Council

Washington, DC

July 27, 1993

It is a great pleasure to appear before this distinguished group today.First, I want to thank you for inviting me. You, as members of the Washington International Business Council, play an important role in the policy process.As the Washington-based representatives of major corporations, you have animportant responsibility in dealing not only with the U.S. Government, but withforeign embassies and international organizations as well, on a multitude ofinternational trade and business issues.

As I understand the purpose of the Council, it is to develop among its membersa better understanding of government policies affecting international bu siness,and to provide an important communications link between the corporate world andgovernment. This is an honorable purpose, by its nature one that requirestwo-way communication. I am pleased to be personally involved in this processthrough my pr esence here today.

I also appreciate your recognition of the importance of science and technologyto America's international economic competitiveness. Clearly, internationaleconomic policies are related to national polices related to science and technology. The reverse is also true.

In preparing for this occasion, I took time to review the December 1992Washington International Business Council statement on "International Trade andCompetitiveness: Principles for the New Administration ." There is a lot toreflect on in that statement. To my reading, it contains a lot that isrelevant to technology policy--probably more than the drafters of the statementintended at the time. I'll return to this Council statement later on in myremar ks.


Let me now say a few words about the President's technology initiatives andtheir potential impact on the economy. The technology initiatives, introducedFebruary 22 in Technology for America's Econom ic Growth: A New Direction toBuild Economic Strength, focus American technology on 3 central goals:

-- Long-term economic growth that creates jobs and protects the environment;

-- Making government more efficient and more responsive;

-- World leadership in basic science, mathematics, and engineering.

I'll first address the initiatives specific to the civilian economy. I willthen say a few words about defense conversion -- the effort to reinvest defenseassets in the civilia n economy and then, I will summarize initiatives designedto spur technological innovation and create a business climate hospitable tothe opportunities presented by science and technology.

Technology Initiatives for the Civilian Sector

The technology initiatives encompass many efforts to aid directly companiesdeveloping new technologies. This represents a critical change of course forthe United States. Compared to Japan and our other competitors, governmentsupport for civilian technology development has been minimal in the UnitedStates. Our focus has been on basic research and the development oftechnologies related to defense and space exploration, which have onlyindirectly led to new technologies for the civilian sector.< p>

That is no longer sufficient. In many high-tech fields, foreign companieshave either matched or surpassed the best American companies. In many cases,most notably in Japan, they have done so by working closely with each other andwith their government to accelerate the development and application of newtechnologies.

The Administration intends to dramatically increase funding for development ofcivilian technologies over the next five years. The programs designed tostrengthen ind ustry-government cooperation and to provide more federal supportfor commercial R&D include:

(1) Federal laboratories will devote a growing percentage of their budget toR&D partnerships with industry.

(2) There will be a dramatic expansion of the Advanced Technology Program atthe National Institute of Standards and Technology.

(3) A new multi-agency program will be established at EPA to fund developmentand diffusion of new environmental technologies.

(4) The Smal l Business Innovation Research (SBIR) Program will be expanded.

The Technology Initiative includes a number of different programs toaccelerate the commercialization and use of new technologies, including:

(1) Regional Technology Alliances to bring together firms and researchinstitutions in a particular region.

(2) Manufacturing Extension Centers, which work in much the same way as theagricultural extension programs.

Technology Initiatives for Defense Conversion

Defense conversion, broadly defined, is an integral part of PresidentClinton's vision for using science and technology as engines of economicgrowth.

R&D programs that support dual use technologies have an important place inPreside nt Clinton's vision. He has announced his intention to shift from thepresent ratio in Federal R&D spending, which is 41 percent civilian and 59percent military, to more than 50 percent civilian and dual use by 1998.

The Advanced Research Pr ojects Agency (ARPA) has been given the responsibilityfor most of the technology programs in the defense conversion package Congresspassed last year, which the Clinton Administration is now aggressivelyimplementing.

Fiscal and Regulatory P olicies

While Federal technology programs are important, they cannot succeed unlesscoupled with government policies that encourage American businesses to developand apply new technologies. Unfortunately, many of our current fiscal andregu latory policies stymie rather than encourage investment in new technologiesand new products. The Administration intends to change that by:

(1) Making the Research and Experimentation (R&E) Tax Credit permanent.

(2) Reforming procurem ent policies.

(3) Encouraging patient capital.

Education and Training

Business leaders tell us their companies' most important resource istheir people. Productivity and profits depend upon having well-educa ted,well-trained employees. For that reason, the Administration is committed tohelping all Americans have access to world-class educational and workertraining programs.

Technology has a key role to play in this area, and we intend to:

(1) Expand access to the Internet computer network to connect moreuniversities, community colleges, and high schools to each other and to a broadrange of information resources.

(2) Create an interagency task force to address educational softwar e issues.

(3) Transfer some of the education and training technology developed by themilitary to the civilian sector.

Information Infrastructure

The President has repeatedly emphasized the need to improve this country'sinfr astructure. Today, that means not only roads and bridges and airports, butalso high-speed telecommunications networks and computer systems that form a"National Information Infrastructure." This National InformationInfrastructure will soon provide alm ost all Americans with access tounprecedented amounts of information, when they want it, where they want it.The Administration will use a number of mechanisms to implement the informationinfrastructure, including:

(1) The High-Performance Co mputing and Communications Program established bythe High-Performance Computing Act of 1991.

(2) An Information Infrastructure Technology and Applications Program to assistindustry in the development of the hardware and software.

(3) Netw orking pilot projects through the National Telecommunications andInformation Administration (NTIA) of the Department of Commerce.

(4) Dissemination of Federal information.

(5) Reforming Telecommunications Policy.

Nurturing the S eed Bed of Technology

The President's proposals to create a business climate more hospitable totechnological innovation is related to the President's commitment to worldleadership in basic science, mathematics, and engineering -- the fields inwhich technology grows.

Our basic science program provides an ongoing sense of adventure andexploration while improving the knowledge base and lays the foundation for newtechnologies. The federal government will provide stable funding for ba sicresearch in the context of improved management of basic science can ensuresustained support for high-priority programs.


Let me now address the Council's December 1992 statement on principles forinternational trade and competitiveness. That statement set out acomprehensive agenda, and it's clear that I can in no way cover the manyelements of the statement in the short time available.

I would like to point out, however, that many of the points covered in thatstatement are related directly or indirectly to science and technology. Forexample, the statement strongly supports further liberalization of trade inservices. Many of these services are closely coupled to science andtechnology--engineering and software development are two examples. Others areeducational in character, with large science and engineering components. TheU.S. is currently running a $5 billion annual surplus in educational services,mainly related to the large number of foreign g raduate and undergraduatestudents attracted to our excellent universities. Many, if not most of thesestudents are in science and engineering.

Much more of this world-wide trade in services depends on technology. Amundane activity such as the processing of credit card transactions depends onstate-of-the-art computers and broad-band, reliable and inexpensivetelecommunications.

Other issues identified in your December statement are being addressed withvigor by this Administration:

Deficit Reduction

Skilled Workforce

Commercialization of R&D results

Energy Policy

Business-Government Relations that emphasize a common approach toproblem-solving. This is crucial in implementing successfully the President 'stechnology policy.

Science and technology manifest themselves in the international trade arena inmyriad ways. Two of the most crucial are in intellectual property rights andin the setting of standards. These are but two examples of the inte rsection oftechnology policy and trade policy.

I would like to close with a few observations on the interaction of trade andtechnology, and of the process of policy development for each. Your Decemberstatement emphasizes trade policy, as it s hould. I should point out, however,that technology policy is just as important. We must insure that new productsand services enter the trade stream, and thus enhance the living standards ofAmerican citizens, by a wise technology policy.

Techn ology policy affects trade policy, and vice-versa. The challenge that weface together, in government and in industry, is to integrate technology andtrade policies in a way that optimizes the benefits from both. To do so, thediverse and divergent trad e and technology communities need to know more abouteach other. Their different cultures and vocabularies need to be understood byeach other.

It's true the trade and the technology people think about the world in verydifferent ways. I'm sure you see this in your own companies. When did youlast take your R&D director to lunch? Or, for that matter, when did youlast talk with him or her? We have homework to do in both communities, inindustry as well as government.

Thank you fo