ACCESSION NUMBER:288123 FILE ID:ECO306 DATE:06/09/93 TITLE:REPORT SAYS TRADE POLICIES HAMPER U.S. COMPETITIVENESS (06/09/93) TEXT:*93060906.ECO ECTECHLD COMPETITIVENESS /te REPORT SAYS TRADE POLICIES HAMPER U.S. COMPETITIVENESS (Seeks greater government-industry cooperation) (610) By Jim Fuller USIA Science Writer Washington -- The current U.S. decisionmaking process for technology and trade issues is inflexible and may be outmoded in view of rising foreign competition, according to a new study. The Council on Competitiveness, a private, non-profit coalition of business leaders and university presidents, said in a report released June 9 that the effectiveness of future U.S. trade actions will largely depend on how well government and industry cooperate to formulate policy. The findings of the one-year study are based on an analysis of the most hotly debated trade policy decisions of recent years, including the 1991 imposition of antidumping duties on flat panel computer displays and the U.S.-European Community negotiations over commercial aircraft subsidies. More than 150 trade experts and industry representatives participated in the study. "U.S. trade and investment policies treat issues related to high technology industries as discreet, isolated problems when they need to be treated as part of a broader, competitiveness strategy," said George Fisher, council chairman and chief executive officer of Motorola, Incorporated. The report said that in cases where an industry's problems stemmed not from foreign trade barriers but from such competitiveness factors as insufficient industry research and development or a cumbersome regulatory 1nvironment, excessive reliance on a narrow range of trade tools does little to aid the affected industry. "This was clearly the case with the flat panel display industry and the U.S. government's 1991 decision to impose antidumping duties on imported displays," said Eric Garfinkel, former assistant secretary for import administration at the U.S. Department of Commerce. Garfinkel said that no attempt was ever made to spur investment in the domestic industry, and no significant technology strategy was developed to aid U.S. display manufacturers. And, he said, the imposition of antidumping duties actually penalized domestic consumers of displays, notably laptop and portable computer producers, who were forced to move part of their computer assembly operations offshore to avoid having to pay high duties. "This was not a good result from the standpoint of American competitiveness," Garfinkel said. "We benefited one industry perhaps, but we hurt another. It would have been preferable, from our respect, to have looked at a broader range of options. We unfortunately were forced to focus on this strictly as a trade problem." The report also calls for greater coordination between government and private industry in the development and execution of trade policies in the advanced technology sector. "Consensus, both within and between industry and government, can make a powerful contribution to an effective trade policy," the report said. It said that one of the major factors that allowed the U.S. government to negotiate the 1991 Semiconductor Arrangement with Japan was prior support for explicit market access commitments by both the association representing most U.S. semiconductor producers and the Computer Systems Policy Project, representing the main domestic semiconductor consumers. The report said that another failing in the current system was what it called a fragmented information and intelligence system within government. "When industry and government lack sufficient information about global markets, technological developments and the extent and nature of foreign government subsidy programs, they are forced to react to trade problems, instead of anticipating them," the report said. In its study, the council found that the Airbus challenge to U.S. industry was underestimated by both industry and government partly because of insufficient analysis of Airbus government supports and "because of the Airbus consortium's secretive and opaque operating procedures." NNNN .