VIEWPOINTS : THE DARK SIDE OF THE FSX DEBATE : The crux of criticism of the fighter jet deal with Japan is the belief that U.S. firms are selling off our expertise.
Underlying the bitter debate in Washington over the U.S. deal with Japan to build a new fighter aircraft, the FSX, is an assertion about America and high technology: We don’t possess the discipline to control access to our know-how when it is in the best long-term interests of the country.
In the FSX project, the Pentagon and General Dynamics, the prime contractor with Japan’s Mitsubishi Heavy Industries, are accused of settling for a leaky deal that turns over American technology and expertise to Japan for little in return.
In particular, critics say, General Dynamics is selling out American competitiveness in the commercial aircraft market--where we enjoy a strong trade surplus--for the $400 million or so the company is guaranteed in the development phase of the aircraft. It is reputed to be yet another example of a depressing pattern of behavior that has been common in the history of American defense companies’ dealings with our commercial rivals overseas.
Similar arguments were heard in recent years in the highly emotional debate over government export controls on strategic technology. At their worst, government officials resorted to impugning companies’ patriotism, charging that they indeed would sell the Soviets the rope necessary to hang capitalism.
Now it’s true that companies in free-market economies, especially ours, are fixated on the short-term bottom line. It is not wise for the government to avert its eyes from the actions of business, whether it is foreign sales or labor practices at home.
But the FSX flap has brought to the fore a certain skewed view of international technological development. In this view, development is a one-way street in which the source of all technological intelligence--the United States--distributes neat slices of know-how to those deserving of such favors. It’s a nice theory, especially if you believe in American infallibility, but if it ever was the case, it’s not the way the world works now.
In our technological relations with Japan, some focus on the way both government and industry have “given away the store” in the series of cooperative ventures, licensing agreements and military deals negotiated since the Second World War. There were plenty of porous agreements, to be sure. RCA and General Electric licensed black and white television technology to the Japanese in the 1950s, a move that came back to haunt them.
But to focus on these kinds of episodes implies that the U.S. should have acted to limit access to our industrial advances so that Tokyo would never become a potent competitor. How this is done--and who determines the guidelines--isn’t clear. It certainly assumes a great deal of foresightedness about markets and economic trends. It also doesn’t say much for Japanese initiative and intelligence.
Obviously, the time has come to be more vigilant about what we hand out to our international competitors. It’s absurd that the Commerce Department and the Trade Representative’s office weren’t brought into deliberations about the FSX until earlier this year. Now, after several months of negotiations with the Japanese, U.S. officials say they are nearing an arrangement that will guarantee the United States a 40% share of the production work on the plane and will protect essential U.S. technology. And any agreement with the Japanese would still be subject to congressional approval.
If the Japanese were planning a grand rip-off of American technology through the FSX deal, they sure went about it in a strange way. Much is made of what Tokyo will acquire in aircraft production skills from the arrangement. The Japanese didn’t seem to see it that way. They initially demanded the right to build the plane themselves but we persuaded them to join us in a co-production deal.
The Aerospace Industries Assn. of America, the major trade group in the field, supports the FSX deal. This may have been an act of loyalty to a fellow member, General Dynamics. It might have also involved a little hubris, since the $17-billion U.S. trade surplus in aerospace goods makes the industry our country’s leading exporter (in contrast, the American Electronics Assn., whose members have been burned by Japanese imports, didn’t back the FSX arrangement).
Yet, observes Gregg A. Rubinstein, a Washington consultant who has worked in the Pentagon and the defense industry, aerospace companies and other military-oriented firms are very wary of the Japanese these days. “In some ways they (the companies) have become paranoid,” he says. “Sometimes you have to pull them back and say, ‘Hey, there are opportunities as well as risks.’ ”
The opportunities in the FSX deal include “flow-back” provisions that will give us access to technology developed in co-production. Critics of the deal discount the suggestion the Japanese will make anything for the jet that we will want, but this attitude is just another example of the arrogance that presumes only America is capable of innovation.
In fact, U.S. companies are joining with Japanese firms in cooperative deals at an unprecedented rate. The collaboration ranges from advanced steel-making to semiconductor design and manufacture, where nearly all the major American firms have cooperative arrangements. Texas Instruments and Hitachi recently announced such a venture; they will work together to develop a 16-megabite DRAM, which is expected to be an industry mainstay in the next decade.
The Japanese also participated in the development and production of Boeing’s 767, where they are major subcontractors, and they played a significant role in the Boeing 7J7 (the supply of aircraft components and parts, by the way, is where most analysts expect the Japanese will stay in the next few decades, FSX or no FSX).
These deals aren’t taking place because the participants are in some kind of mutual admiration society (although each side does have a grudging respect for the other). They are driven by competitive forces and cold calculation. Americans are entering the deals because they need Japanese money, ideas and production skills. The Japanese would like to share the risk involved in developing new technologies or acquire experience in new industrial fields.
Detractors of the FSX deal have at heart a very pessimistic view of American resilience in technology affairs. Protect our aircraft sector, they say, because it’s the only lead we have over the Japanese. This seems to presume that we can never be competitors in other fields again. If that is the case, then even a 100% share of the world aircraft market isn’t going to save us.
