Table Of ContentS. HRG. 103-193
DEPARTMENT OF COMMERCE FIRST ANNUAL
REPORT ON THE INTERNATIONAL ECONOMIC
POSITION OF THE UNITED STATES-1993
Y4.B
22/3: S. HRG. 103-193
Departnent of Connerce First Annual..
:ing
BEFORE THE
COMMITTEE ON
BANKING, HOUSING, AND URBANAFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
ON
REPORT ON THE CURRENT EFFORTS TO IMPROVE AMERICA'S INTER-
NATIONAL TRADE POSITION AS REQUIRED UNDER THE EXPORT EN-
HANCEMENT ACT OF 1992
JUNE 23, 1993
Printed for the use of the Committee on Banking, Housing, and Urban Affairs
U.S. GOVERNMENT PRINTING OFFICE ^ttflOs
72-259CC WASHINGTON : 1993 '*'CJ||>>>^ ^DT^f
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-041590-X
72-259 0-93-1
S. HRG. 10&-193
DEPARTMENT OF COMMERCE FIRST ANNUAL
REPORT ON THE INTERNATIONAL ECONOMIC
POSITION OF THE UNITED STATES-1993
y 4. B 22/3: S. HRG. 103-193
Department of Cortnerce First Annual. . JNG
BEFORE THE
COMMITTEE ON
AND URBANAFFAIRS
BANKING, HOUSING,
UNITED STATES SENATE
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
ON
REPORT ON THE CURRENT EFFORTS TO IMPROVE AMERICA'S INTER-
NATIONAL TRADE POSITION AS REQUIRED UNDER THE EXPORT EN-
HANCEMENT ACT OF 1992
JUNE 23, 1993
Printed for the use of the Committee on Banking, Housing, and Urban Affairs
SSSLo,^.
U.S. GOVERNMENT PRINTING OFFICE
''''^l»V> *^6faftl/
72-259CC WASHINGTON : 1993 " *^D7>fj-
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-041590-X
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
DONALD W. RIEGLE, JR., Michigan, Chairman
PAUL S. SARBANES, Maryland ALFONSE M. D'AMATO, New York
CHRISTOPHER J. DODD, Connecticut PHIL GRAMM, Texas
JIM SASSER, Tennessee CHRISTOPHER S. BOND, Missouri
RICHARD C. SHELBY, Alabama CONNIE MACK, Florida
JOHN F. KERRY, Massachusetts LAUCH FAIRCLOTH, North Carolina
RICHARD H. BRYAN, Nevada ROBERT F. BENNETT, Utah
BARBARA BOXER, California WILLIAM V. ROTH, JR., Delaware
BEN NIGHTHORSE CAMPBELL, Colorado PETE V. DOMENICI, New Mexico
CAROL MOSELEY-BRAUN, Illinois
PATTY MURRAY, Washington
STEVEN B. Harris, StaffDirector and ChiefCounsel
HOWARD A. MENELL, Republican StaffDirector
PATRICK A. MULLOY, Senior CounselIInternational Affairs Adviser
GILLIAN G. GARCIA, Financial Institutions Specialist
PATRICK J. Lawler, ChiefEconomist
PAMELA Ray Strunk, Republican Professional StaffMember
CHERYL WASHINGTON, Republican Professional StaffMember
Edward M. Malan, Editor
(ID
CONTENTS
WEDNESDAY, JUNE 23, 1993
Page
Opening statement ofChairman Riegle 1
Opening statements, comments, or prepared statements of:
Senator D'Amato 7
Prepared statement 43
SenatorFaircloth 9
Senator Bennett 11
Senator Dodd 13
Senator Bond 25
SenatorSarbanes 29
WITNESS
Ronald H. Brown, Secretary, U.S. Department of Commerce, Washington,
DC 3
Prepared statement 41
Report on U.S. export competitiveness 44
I. Assessment ofU.S. competitiveness 47
II. Promoting technological innovation and commercialization of new
technologies to improve U.S. international competitiveness 58
III. Increasing U.S. exports through market access initiatives, pro-
motional assistance, trade law enforcement, and a strong public-
private partnership in trade 66
Response to written questions of:
SenatorRiegle 92
Senator Bond 96
Senator DAmato 99
(III)
DEPARTMENT OF COMMERCE FIRST ANNUAL
REPORT ON THE INTERNATIONAL ECO-
NOMIC POSITION OF THE UNITED STATES—
1993
WEDNESDAY, JUNE 23, 1993
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The committee met at 10:10 a.m., in room SD-538 ofthe Dirksen
Senate Office Building, Senator Donald W. Riegle, Jr. (chairman of
the committee) presiding.
OPENING STATEMENT OF CHAD1MAN DONALD W. RIEGLE,JR.
The Chairman. The committee will come to order. Let me wel-
come all those in attendance this morning and let me particularly
welcome the Secretary ofCommerce, Ron Brown, to our committee.
When we scheduled this hearing we could not know at that time
that we would be bringing the reconciliation bill from the Finance
Committee to the Senate floor today. There are a series ofmeetings
underway right now to prepare for that, so members will be coming
and going this morning.
Today we are receiving the report, the first annual report of the
Secretary of Commerce on America's export competitiveness, clear-
ly a key issue facing our country which affects our economic and
job future. These annual reports are required by section 206 of the
Export Enhancement Act of 1992, a law that was formulated by
this committee.
Over the past 4 years, the Banking Committee has conducted
over thirty hearings examining the position ofthe United States in
the global economy. We have heard from experts across the entire
range of opinion, most in a position to bring expert testimony to
that subject. The most consistent theme of the testimony at these
hearings has been that the U.S. industrial and technology base has
weakened considerably in relation to our principal foreign competi-
tors. We have also had a number of distinguished outside groups
do lengthy analyses and present important national reports, such
as the U.S. Commission on Competitiveness as well as others, that
lay that out very clearly.
In response to these facts, this committee has enacted several
pieces of legislation designed to strengthen America's industrial
base and our international trade position. Included among these
was the Export Enhancement Act of 1992, which reformed our
country's export promotion and financing programs. Among other
(1)
things, that legislation established in statute a Trade Promotion
Coordinating Committee, chaired by the Secretary of Commerce,
and charged it to develop a Government-wide strategic plan to bet-
ter coordinate all U.S. export promotion activities among the nine-
teen relevant executive branch agencies. I want to particularly
commend Senator Sarbanes for his leadership in drafting that pro-
vision.
The committee also included in last year's legislation a provision
that I authored which requires the Secretary of Commerce to pre-
pare an annual report on U.S. Export Competitiveness and to ap-
pWeeardihdertehistointeostridfeyrotno fito,cuwshivcehryiscotnhceenotcrcaatseidonatotfetnotdiaoyn'sonheAamreirnig-.
ca's continuing massive trade deficit and the need for coordinated
technology and trade policies to strengthen our international eco-
nomic
position.
I want to again thank the Secretary for his leadership and for
being here, and I want to say that I've read your statement and
I am very much impressed with a number of the points that you
make.
First, I think in your statement it's clear that you not only fully
understand and acknowledge the importance of the manufacturing
and industrial sector of our economy to the strength of our Nation
and our national security, but that you intend to act in accord with
that fact.
Second, you state in your testimony, and I quote:
We will pursue a relentlessly pragmatic trade policy.
And then you go on to say, and I again quote:
We will insist that our products and services be able to enter overseas markets
on equal terms.
I want to say that, by itself, is a very important policy statement.
I think it marks a necessary and important change in the position
of our Government. And I think it indicates that our administra-
tion can and will do much more to open up foreign markets to
American goods and demand fair treatment from our trading part-
ners.
Finally, I want to also indicate that I appreciate your statement
that this administration's, and I again quote:
Pragmatism isexemplifiedby our new approach toJapan..
Your acknowledgement that Japan must open up its market to
our auto parts manufacturers is just the first step. But I think
you're on the right track when you state, and I again quote:
We must promote critical sectors and technologies in our market-opening efforts.
And while I agree with your statement that, again quoting:
Our assistance on measuring the results ofour efforts to open the Japanese mar-
ket to high-quality American auto parts has begun to pay off in terms of substan-
tially increased sales.
I must tell you from my vantage point, I think we've got a lot
more to do in that area and I know you share that view.
Clearly, this new administration recognizes the need to improve
the international economic competitiveness of United States indus-
try and therein lies a large part ofourjob future.
We have a situation now where the new President has committed
our country and his administration to fostering the creation of
some 8 million new private-sector jobs over his 4 years. That's a
demanding goal and it's important that we achieve it. Our ability
to be able to sell across the board in foreign markets is critical to
our ability to meet that kind ofnecessary goal.
So we appreciate your testimony today and I want to commend
you for your approach in revitalizing our manufacturing and indus-
trial base and by linking our U.S. trade negotiating priorities with
our technology policies.
We'll make your full statement a part of the record and I'd like
you to go ahead now and present your thoughts to us.
STATEMENT OF RONALD H. BROWN, SECRETARY, U.S.
DEPARTMENT OF COMMERCE, WASHINGTON, DC
Secretary Brown. Thank you very much, Mr. Chairman. It's al-
ways a pleasure to be with you in any forum. I'd like to thank you
and members of this committee for the opportunity to appear be-
fore you today for the purpose of reporting on the administration's
plan for real economic growth and U.S. export competitiveness.
We
take great pride in this effort. It's really a report on the im-
portant role that trade and technology policies play in achieving
that goal.
I don't believe that there's anything more important that we can
do than promote exports.
Ifyou look at economic performance in America over the last sev-
eral years of recession and stagnation, about the only bright spot
has been exports. But I don't believe that we have scratched the
surface yet. We can and must do much more.
For every $1 billion increase in exports, we create 19,000 new
jobs for the American people. This administration can have no
more important goal than job creation and sustained economic
growth.
I'd also like to thank you, Mr. Chairman, as author of the provi-
sion mandating this report which we present today. Your efforts to
bring these issues before the Congress and the public are indeed
worthy of commendation as is your hard work to emphasize the
centrality oftrade policy to our economic agenda.
The litmus test ofAmerican economic strength is indeed our abil-
ity to produce products that meet the test of the global market-
place, while raising the standard ofliving for all the American peo-
ple here at home.
Although the United States has the most prosperous and produc-
tive economy in the world, economic indicators reveal that we face
serious long-term structural problems. I think the recognition of
that is also new. There are many who have argued for years that
our problems are just cyclical. Ifwe just sat on our hands and wait-
ed long enough, they would go away. We knew that was not true.
The fact is that many of our problems are structural. We must deal
with them as serious structural problems.
Over the past 20 years, our standard of living has grown more
slowly than that of our leading industrial competitors, including
Japan and Germany. From 1981 to 1991, our growth in manufac-
turing productivity trailed France, Italy, Japan, and the United
We
Kingdom. are just not investing enough in factories, in equip-
ment, and in civilian research and development, core requirements
for future economic growth.
The administration's goal is nothing less than the revitalization
of the American economy and the establishment of 21st-century
America as the most prosperous, the most productive, and the most
competitive nation on e—arth. —
But this goal cannot I repeat, cannot be reached through Gov-
ernment efforts alone. We must create a public/private partnership,
for it is the private sector that fuels the engine that pulls the train
of economic growth and job creation. It is the private sector that
creates jobs. It is the private sector that designs new products and
technology. Government efforts are designed to support, not to sup-
plant, those ofthe private sector.
The Department of Commerce is determined to create this new
partnership with the private sector. We will listen to the private
sector and, with its help, we will determine how Government can
best help create thejobs that we're talking about. We need to foster
a rising standard of living and increase economic opportunity for
all ofthe American people.
The Departmen—t is tackling this task head-on by focusing on two
key policy areas trade and technology. And I might say, Mr.
Chairman, that this is also new, since trade and technology as far
as Federal policy is concerned, h; really been on two separate
tracks. We need to create a confluence of those tracks, to bring
trade and technology policy together.
We are pursuing a comprehensive technology and trade strategy
that will aggressively promote technological innovation and the
commercialization ofnew technologies.
We in America have been geniuses at creating Nobel Prize win-
ners, but we haven't been very good at commercializing those new
technologies, at creating profits from that technological innovation
that can then be used to create jobs here in America. And we need
to significantly increase our exports through more effective trade
promotion programs, targeted market access initiatives, and strong
enforcement ofour trade laws.
Let me first, Mr. Chairman, address the issue of technology.
Technology plays a critical role in economic growth and in creating
and preserving high-wage jobs for American workers. This is why
President Clinton made technology leadership a national priority.
Manufacturing is the expertise that turns our technology into
wealth. The Nation's investment in new technologies and in im-
proving our manufacturing capabilities will pay dividends well into
the 21st century. The Department of Commerce is a focal point in
the development and commercialization of new civilian tech-
nologies. R&D
One key area of technology activity relates to increasing
funding for generic civilian technologies for use by private industry
through our advanced technology program. We're very proud ofthis
program. It's a bottom-up program. It's private sector-driven, it has
a peer-review process, just the kind of thing that we know works
and that connects Government in an effective and appropriate way
with the private sector.
So far, we have funded projects covering critical technologies, in-
cluding a number of manufacturing projects with a variety of com-
