STATUS REPORT ON CCCT STUDY ON HIGH TECHNOLOGY INDUSTRIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83M00914R001200030012-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 20, 2016
• Document Release Date: November 19, 2007
• Sequence Number: 12
• Content Type: MEMO

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j $7 I The Under Secretary for internationai Trade
Washington, D.C. 20230
MEMORANDUM FOR: Working Group on High Technology Industries
FROM: Lionel O.lmer, Chairman -
SUBJECT: Status Report on CCCT Study on High Technology
Industries
1. In order to prepare the report quickly, the CCCT Study was
divided into four parts. Each part was assigned to a member of a
working group of experts for preparation of draft chapters. The
four components are:
(i) overview of U.S. high technology trade competitiveness,
(ii) examination of specific industrieso(for example,
software, robotics, etc.)
(iii) examination of economic, national security implications,
(iv) relevant factors affecting competitiveness
- financial
- human resources
- industrial polices
- industrial organization
Work on all but the first section and part of the second, has
progressed to the stage of a preliminary draft. Compilation of
the separately drafted component parts into a preliminary draft
is underway. A first draft should be completed by April 2. The
study is being coordinated by Dr. William Finan, whose background
is in international economics, who recently joined my staff.
2. In addition to the preparation of materials by the working group
of experts, the following activities have been conducted to
broaden the information base used to prepare the study:
(a) Consultation with relevant Industry Sector Advisory
Committees,
(b) Informal contact with individuals at the following
agencies: Labor; Defense; USTR; ITC; and State,
(c) Informal contact with the following Congressional Groups:
Office of Technology Assessment; Congressional Budget
Office; the Joint Economic Committee; and the Ways and
Means Committee, -..-
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(d) Meetings with an ad hoc panel of executives of U.S. high
technology companies,
(e) Contact with groups also currently conducting research on
issues related to high technology industries, such as the
National Academy of Science,
(f) Request to The Bureau of Industrial Economics to provide
assistance in industry sector analyses.
3. High technology industries are difficult to identify with
precision. But, regardless of the alternative definition used,
the basic conclusions regarding U.S. competitiveness remain
unaffected. For the purposes of the CCCT Study, high technology
industries are those broadly defined as resgarch intensive. The
industries identified as high technology are components of the
following sectors:
- aerospace
- chemicals
- machinery (electrical and non-electrical)
scientific equipment
Research and development effort relative to sales for these
industries is markedly greater than for all other manufacturing
sectors.
Some service activities such as software development or Qomputer
aid design are integrally related to high technology
manufacturing sectors such as computer equipment or semiconductor
production. This blurs the clean distinction often made in
international negotiations between services and goods. While we
discuss the linkages between these sectors, service activities
are not directly identified as high technology,
Regardless of the way high technology industries are identified,
measures of competitiveness, such as share of world exports, show
a consistent decline.
4. There are several policy initiatives relating to issues of high
technology trade, either already underway or likely to begin in
the near future. For example:
- U$TR is pressing to have high technology discussed in the
GATT Ministerical and a working group formed afterwards,
- the Secretary General of the OECD has identified high
technology issues as potentially needing attention,
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the Japanese have suggested that a bilateral "forum" be
established to discuss high technology industry issues.
The CCCT study will form the backdrop for possible USG
initiatives on high technology issues in these forums.
Despite difficulties in precisely defining the term "high
technology" industry and the fact that industries covered by the
definition represent a wide variety of industrial activities,
there seem be compelling reasons for the USG to seek to have
certain issues addressed under the high technology label. The
following preliminary observations illustrate why we have a
greater stake than our major trading partners in addressing
issues related to high technology industries.
- U.S. exports are more heavily tilted towards high
technology goods than those of- any ether country,
U.S. high technology goods have lost competitiveness in
world markets; this is especially evident in third world
countries;
- the maturation of world economies, especially those of
Japan, France, and Germany, has eroded the relative
advantage the U.S. used to enjoy in research; the
industrial infra-structures-of these countries are
approaching the U.S. in sophistication; for example, while
the U.S. maintains an absolute lead in the number`s of
scientific and technical personnel, the relative advantage
has declined,.
other governments are actively channeling resources into
high technology sectors -- these activities may intensify
the process of general erosion of U.S. technical lead,
Japan has closed rapidly on the U.S. lead in a number of
high technology sectors; the likely result is that in the
future both countries will be specializing in exporting
similar products; this underscores the need to gain access
to the Japanese markets for U.S. high technology products.
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