Innovation, Economic Integration, and Trade

A key component of economic security lies in economic integration with the world's nations. Such integration would increase opportunities for U.S. firms in rapidly growing markets; encourage other nations to adopt the norms of free trade, thereby reducing international tensions; provide the United States with access to the capabilities found abroad that strengthen our economy; and strengthen international economic growth and political stability.

Promoting Economic Integration and Trade
Through Innovation Policies

Rapid economic growth in other economies of the world provide the United States with vast opportunities for increased integration and trade with these nations. This Administration has placed a high priority on facilitating this integration by pressing for the removal of barriers to trade and investment and through its strong support of the formation of the World Trade Organization.

In October of 1994, the Administration released the National Export Strategy, which describes the priority it places on promoting trade and removing impediments to exports. The Administration is targeting 65 areas in which it improves its support for the export opportunities of the nation's firms. Types of actions undertaken include supporting U.S. bidders in global competitions, improving trade finance, removing obstacles to exporting such as export controls, helping small and medium-sized businesses, and promoting U.S. exports of environmental technologies and services.

A central element of the National Export Strategy is the attention it gives to high-priority emerging markets. Ten economies are expected to account for over 40 percent of total global imports over the next 20 years: Mexico, Argentina, Brazil, the Chinese Economic Area, India, Indonesia, South Korea, Poland, Turkey, and South Africa. These countries are geographically large, have significant populations, are growing very rapidly, and represent major markets for a wide range of products.

An important link in strengthening economic and political integration, as well as trade, with these economies is collaboration in science and technology. The Office of Science and Technology Policy is coordinating the development of strategies in international collaboration to support and complement the National Export Strategy and the Big Emerging Market Strategies of the Department of Commerce. As noted in the examples of South Africa and China in the box on page 68 entitled, "Strategic Science and Technology Cooperation and Emerging Markets," this coordination of strategies enhances the economic and political value of our international science and technology activities.

In addition to collaboration, this Administration will continue to press for the removal of barriers to collaboration and trade, and promote the use of internationally recognized standards for technology development and testing. The Administration has placed a high priority on ensuring the protection of intellectual property rights, which fosters innovation and the absence of which inhibits international joint ventures.

Strategic Science and Technology Cooperation
and Emerging Markets

The White House Office of Science and Technology Policy (OSTP) is developing strategic priorities for science and technology cooperation with other countries. As decribed in Chapter 4, priority is placed on countries that are key to the stability of their region, that have a sufficient science and technology base to attract long-term trade and investment, and that represent emerging markets for U.S. goods and services. The primary objectives of these "country strategies" are to identify strategic goals that agencies may wish to pursue in planning future cooperative activities and to promote the integration of cooperative science and technology policy into the larger realm of U.S. foreign and economic policy.

Trade promotion is an important aspect of the "country strategies." OSTP is seeking to use cooperation in science and technology to create opportunities for U.S. industries to increase exports, expand their investment base, and gain access to useful science and technology investments. To achieve this goal, each "country strategy" is based on an analysis of potential markets for U.S. technologies and includes bilateral cooperative activities that can expand U.S. market share. Areas of collaboration include energy, environment, telecommunications, health, agriculture, space, standards, and basic science. Some specific examples follow.

Energy. In the energy sector, the United States and China have signed agreements on clean coal technology utilization and fossil energy research and development, and the Department of Energy is currently planning a joint demonstration combined-cycle coal-fired power plant. These projects are positioning U.S. firms to capture a share of China's projected $90 billion market in power-generating equipment. At the same time, they contribute to the strategic goals of environmental stability and economic development of the region.

Standards. U.S. manufacturers often face standards-related barriers which limit or delay their access to export markets. The Department of Commerce's National Institute of Standards and Technology (NIST) seeks to remove these barriers by collaborating with emerging markets on the development of standards. NIST now has standards experts in many important markets. Workshops with U.S. and foreign standards and trade specialists are used to develop contacts needed to successfully negotiate the removal of technical barriers to trade. In South Africa, the new government has recognized that sound technical standards contribute to more efficient economic growth and has begun reviewing all standards, accreditation, and certification programs. NIST is taking advantage of the opportunity to influence the development of standards through science and technology cooperation. For example, NIST is developing a cooperative agreement with the South African Council for Scientific and Industrial Research on materials, manufacturing, and building technologies, which will facilitate trade in these sectors. NIST is also working with the South African Bureau of Standards to organize a workshop in Pretoria on the use of standard reference materials.

Telecommunications. International cooperation in telecommunications is critical to expanding trade with countries that represent big emerging markets. The current $33 billion market for telecommunications outside the United States is projected to double to $64 billion by 1998, with the highest demand for know-how, technology, and investment expected in developing countries. The development of a Global Information Infrastructure (GII) will facilitate the sharing of information, creating a global information marketplace. A GII could serve U.S. industry by opening overseas markets, eliminating barriers caused by incompatible standards, and examining international and domestic regulations.

Promoting Innovation Through Collaboration
With Other Economies

Recognizing that leading-edge technology is now increasingly developed overseas, the United States must take advantage of opportunities to understand and access foreign scientific knowledge and innovations to enhance domestic economic growth and the competitiveness of U.S. firms. Assessing technologies against international benchmarks and integrating international developments into domestic research and development in a timely manner are challenges that have begun to receive greater priority by both government and industry in the United States.

The U.S. Government assists industry, particularly small and medium-size enterprises, by facilitating international, industry-led cooperative efforts to develop advanced technology and by providing information on foreign technical expertise. For example, programs such as the Manufacturing Technology Fellowship Program and the Intelligent Manufacturing Systems Initiative expose U.S. engineers and firms to the best foreign manufacturing practices and improve communication with foreign firms which may become customers, suppliers, or partners. These projects also establish international "rules of the game" for collaboration. Ensuring adequate protection of intellectual property rights and accommodating the array of international competitive dimensions of our agreements are important to realizing effective global cooperation in technology. To balance the benefits and the risks inherent in international agreements, we must also be vigilant of the potential for an adverse national security impact.

Finally, other programs such as the Japan Technical Literature Program allow U.S. firms access to hard-to-obtain information on the technological capabilities of our international competitors. This makes it possible for U.S. firms to more readily obtain the world's best technology and management practices. The National Critical Technologies Report also provides information that compares the state of advance of science and technology in the United States with principal competitors overseas to identify areas of our strengths as well as areas of possible policy concern.