Clinton’s New Export Strategy Still Needs a Push
President Clinton made a smart move last week, launching a National Export Strategy that will lift restrictions on selling high technology equipment to foreign countries, including former Cold War adversaries, Russia, China and Eastern Europe.
Calling the policy a “marked change from past times,” Clinton said his action would add $24 billion in exports of computers and related equipment. And that’s an understatement of the potential market for advanced U.S. computers, which have been restricted by export license requirements and Defense Department vetoes.
But in policy as in football, execution is everything. And if Clinton and the White House don’t follow up with action throughout the federal government, bureaucratic inertia will stifle export initiatives and a whole lot of U.S. jobs.
Even now, State Department restrictions threaten to hobble the space satellite business, one of America’s--and California’s--truly promising growth industries. Sales of Hughes and Martin Marietta satellites to Australian and Asian customers are under a cloud because State’s office of International Security Affairs may not allow them to be launched by China.
Restrictions could even imperil one of the world’s largest satellite projects, Motorola’s $3.4-billion Iridium communications network in which the 66 satellites will be put into orbit by China’s Long March and Russia’s Proton rockets.
State’s aim, which nobody quarrels with, is to control the spread of nuclear delivery systems. But satellite makers and California’s political leaders argue that buying launch services from China does not transfer war technology but that restricting U.S. companies costs jobs and business.
In fact, Hughes Chairman Michael Armstrong wrote to Clinton last month that State’s sanctions against China “could cost us thousands of California jobs.” Armstrong later proposed a way to satisfy State’s policy and still ship satellites into China for launch.
Good sense may prevail. Satellite producers, backed by California’s Congressional delegation, are in discussion with the State Department now, and a bipartisan delegation from Sacramento is heading to Washington.
The irony is that one government policy should threaten an industry that represents today’s overriding policy goal, defense conversion. Commercial satellites, used for communications and environmental sensing, are now a $4-billion annual business--and growing faster than the defense and space agency parts of the industry.
It’s a field led by U.S. companies--Hughes Aircraft, Martin Marietta, Loral, TRW, Lockheed and smaller firms such as Orbital Sciences.
And like most advanced industries, it’s a business more global than national. Clinton wants to lift restrictions on such industries because he understands how intricate world commerce has become: Motorola’s proposed network already has investments from 14 companies in nine countries, and Loral Space Systems, of Palo Alto, is contracting with Lockheed and two Russian companies to launch satellites from Baikonur, Kazakhstan, where Yuri Gagarin and Valentina Tereshkova pioneered space flight three decades ago.
Yes but, you ask, if U.S. companies build the satellites, why don’t U.S. rockets launch them? The answer is that an earlier government policy distorted and then lost most of the business. To gather support for the Space Shuttle, the National Aeronautics and Space Administration used to offer bargains on satellite launches. The Challenger disaster in 1986 stopped the program and when shuttle flights resumed, NASA barred commercial launches.
That’s when leadership of the business passed to France’s Arianespace program, which launches from French Guiana--for about $60 million per launch. Now China and Russia are attracting business by launching for less--as low as $36 million in Russia’s case.
The satellites themselves cost $60 million to $100 million apiece, and the business is taking off with demand from the many new vistas in communications--from Hughes’ direct broadcast satellite TV to the Asia-wide visions of Ted Turner and Rupert Murdoch.
Furthermore, with the proliferation of satellites comes mounting opportunities for U.S. entertainment programming.
Clearly, it’s a business in which U.S. government policies should be supportive and not try to rule by yesterday’s yardsticks--as happened in the computer field.
The regulations that Clinton is lifting are hopelessly dated, restricting exports of computers that can do 12.5 million operations per second when technology has advanced to hundreds of millions of operations per second.
The restrictions explain why the United States runs a trade deficit in computers, despite being far and away the world leader, even as it enjoys growing trade surpluses in semiconductors, medical equipment and just about every other form of high technology. Watch for computer exports to surge thanks to Clinton’s action.
A point to keep in mind: When Clinton speaks of an export strategy, he’s dealing from strength. The United States leads the world in most advanced industries; fears of competitive decline are out of date and should be retired along with Cold War policies.
Clinton’s goals are not modest. He wants to increase U.S. exports of both merchandise and services from about $700 billion last year to $1 trillion in this decade, a growth rate of 6% a year.
“I don’t believe a wealthy country can grow much richer without expanding exports,” Clinton said last week. His understanding is solid--now let’s see his follow through.
