(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."