Viewpoints : High-Tech Alliance With Europe : Trade: The United States should establish links with the European Community in leading-edge technologies like high-definition television and semiconductors.
The Japanese buy a stake in the venerable Rockefeller Center. At almost the same moment, the Berlin Wall, symbol of East-West confrontation, comes crashing down.
This historical coincidence aptly reflects the new world of trade and diplomacy that will confront the United States in the 1990s: an economically dynamic and politically more self-assertive Japan emerging from its postwar American tutelage and a Europe from the Atlantic to the Urals where the traditional military alliances are unraveling and economic concerns will be paramount.
In this new environment, Washington should move on two policy fronts. The United States needs to respond to the Japanese trade and investment challenge, and with the instability produced by the dissolving of the Eastern Bloc, America must maintain close ties with the European Community--a nascent economic superpower and important pole of political stability.
The United States has an opportunity to pursue both goals--boosting its economic competitiveness and cementing transatlantic ties--with a single initiative. The Bush Administration should make the legal and regulatory decisions necessary to establish new institutional links between firms in the United States and the European Community to pursue cooperation in leading-edge technologies such as high-definition television and semiconductors.
A high-tech commercial alliance between the United States and the 12-nation EC would redress the economic balance of power that is tilting toward Japan, but in a positive way. It would avoid protectionist, retaliatory threats, such as the Super 301 clause of the 1988 trade act, and avoid lecturing Japan about its social and cultural faults, such as in the ongoing structural impediments talks. Moreover, a U.S.-EC united commercial front, by facilitating transatlantic joint ventures, will prevent the EC from crowding out the United States from the chase for Eastern Europe’s commercial prizes.
A partnership between U.S. and European companies will inevitably be seen in Tokyo as an attempt to gang up against it and as further proof that American economic policy-making is not free of racist, anti-Japanese attitudes. But there should be nothing racist in Washington’s deciding that, on balance, its most important interests lie in Europe. And with American confidence in its economic competitiveness strengthened by its European connection, the current mood of Japanophobia, which is already straining the U.S.-Japan bilateral relationship, should begin to ebb.
In any case, the Japanese are pressing the United States at the structural impediments talks to take its own actions to improve its long-term industrial strength. That is what a U.S.-EC high-tech alliance is meant to do.
Americans and Europeans are already accustomed to working together on defense-related high-tech issues through NATO and the Coordinating Committee for Multilateral Export Controls, the 17-nation Paris-based group that monitors strategic exports to communist countries. There also exists an informal U.S.-EC High-Technology Working Group that regularly examines issues of joint concern. But most important is the natural fit between U.S. and European industries in the two key areas of HDTV and semiconductors.
Though Europe is struggling to retain a domestic chip industry, the United States is still strong in this sector, despite growing Japanese competition. On the other hand, the United States is years behind the Europeans in HDTV commercialization. In fact, it is nearly impossible to imagine a U.S. effort in HDTV without European help. Zenith is the sole remaining U.S.-owned producer of TV sets, while two European companies, Thomson of France and Philips of the Netherlands, own four U.S.-based TV manufacturers between them. Philips has devoted considerable resources to HDTV research and development--all of which has been performed in the United States.
Private think tanks like the Economic Policy Institute, government-sponsored groups like the National Advisory Committee on Semiconductors, as well as congressmen on both sides of the aisle, have stressed the importance of a domestic HDTV and chip industry. The Sematech consortium already pools U.S. companies to research chip-manufacturing techniques, but the United States needs an equivalent HDTV consortium, like the Advanced Television Corp. proposed by the American Electronics Assn.
On the European side, the EC Commission has sponsored two endeavors, the Joint European Submicron Silicon project (JESSI) for semiconductor research, as well as a new European Economic Interest Group merging broadcasters, program makers and equipment manufacturers to catch up with the Japanese lead on HDTV commercialization.
As its first move toward a U.S.-EC commercial partnership, Washington should endorse the EC’s HDTV standard. The United States has dropped its earlier support for the Japanese standard, but the Federal Communications Commission has not come up with a replacement. A common standard will rationalize both research and commercialization efforts.
Sematech and JESSI, as well future HDTV consortia, should also grant membership rights to firms from both sides of the Atlantic. Officials from International Business Machines Corp. and the Franco-Italian firm SGS Thomson have already sought such reciprocal participation, but without much luck.
Right now, there is a “Fortress America” approach governing high-tech research in the United States. The Defense Advanced Research Projects Agency, which partially funds current chip and HDTV research, requires that only U.S.-owned companies be recipients of their grants. This should be dropped. A step in this direction is a bill sponsored by Sen. Ernest F. Hollings (D-S.C.), which, under certain conditions, would make government funding available for foreign companies participating in U.S. high-tech research efforts.
In the short term there will be strains in U.S.-Japan ties as American and European firms set up joint high-tech efforts. Washington will need to explain to Tokyo that, of all the possible options for responding to the weakening U.S. high-tech industrial base and the domestic political pressures that come with it, commercial alliance-building with the Europeans is the least harmful to the global trading system.
Whatever the temporary damage done to relations with Japan, America’s prospects in the evolving economic landscape in Europe will take a turn for the better. Although American anxiety about the EC’s 1992 plan turning into an inward-looking Fortress Europe has eased, new fears about a German-led European commercial invasion of Eastern Europe are arising. European firms certainly have a leg up on U.S. firms in dealing with the East Bloc, given their historical and cultural ties. But with the interdependency created by formal U.S.-EC high-tech linkages, American business will be able to make up for some of its lost time.
With any luck, one day Poles, Hungarians and Czechs will watch their news on (partially) American-made high-definition TV sets.
