TECHNOLOGY: THE ENGINE OF ECONOMIC GROWTH America can compete and win, but only if we have a positive vision guiding our economic policies. Our economic future depends on our capacity not only to invent and master the new technologies of the future, but to ensure that these ideas move rapidly to market to spur growth, create new jobs for our people and strengthen our industrial performance.

In Putting People First, Bill Clinton, announced his support for a revenue-neutral transfer from unnecessary defense R&D to civilian and dual-use R&D. On September 8, 1992, Governor Clinton announced how the details of his new civilian technology initiative would explicitly strengthen our manufacturing base. Today, Governor Clinton details further how his strategy will strengthen the ability of American firms to commercialize new technologies. America's competitiveness rests ultimately with the private sector. U.S. firms must expand employee involvement and participation, continuously improve their product and process technology, increase their investments in R&D, plant and equipment, worker training, forge better relationships with their suppliers and customers, and shorten the time required to bring products to market.

Yet, it is imperative that we recognize that government has a role in encouraging pre-competitive technology development, encouraging dual-use technologies, supporting industry-led consortia, and making the most of technological advances.

Al Gore has been a leader for more than ten years in high technology and telecommunication policy. As Vice-President, Al Gore will head efforts to implement the Clinton/Gore national technology strategy.

In particular, we must move forward with the following reforms:

o Build Information Superhighways: to develop an advanced communications network, which will help companies collaborate on research and design for advanced manufacturing, allow doctors across the country to communicate, put immense resources at the fingertips of American teachers and students and much more.

o Reform federal R&D programs to focus on critical technologies: The funding will be focused so that more resources are devoted to critical technologies, such as advanced materials, information technology and new manufacturing processes.

o Reform our National Labs: Federal labs will have ten to twenty percent of their existing budget assigned to establish joint ventures with industry.

o Create a world-class business environment for private sector investment and innovation: Changes in America's tax, trade and regulatory policies are also needed to help restore America's industrial and technological leadership.

o Invest in technology programs that empower America's small businesses. The Clinton/Gore economic plan will create 170 market driven manufacturing extension centers over four years.

o Establish education and training programs for a high-skill workforce: The U.S. education and training system must make sure that American workers have the requisite skills for a technology intensive workforce.

TECHNOLOGY: THE ENGINE OF ECONOMIC GROWTH A National Technology Policy for America September 18, 1992


Last June, I introduced a National Economic Strategy called Putting People First. It will create 8 million new jobs and a higher standard of living for the American people and for our children. My Technology Policy is part of the ongoing effort to further define that vision and describe how we will implement it. I have every confidence that America has the energy and the talent to regain its industrial and technological leadership. Unfortunately, the Bush-Quayle Administration has done nothing while wages have stagnated and our economic leadership has eroded. Despite the growing consensus on what needs to be done, they refuse to act, recycling the tired and failed policies of the past. America can compete and win, but only if we have a positive vision guiding our economic policies. Leadership in developing and commercializing new technologies is critical to regaining industrial leadership, creating high-wage jobs, and ensuring our long-term prosperity. Investments in research and development are important not only to high-tech industries such as aerospace and electronics, but to basic manufacturing industries, and to small businesses which must be innovative to survive. Although the government has a role to play in restoring America's competitiveness, most responsibility rests with the private sector. U.S. firms must expand employee involvement and participation, continuously improve their product and process technology, increase their investments in research, development and technology, plant and equipment, and worker training, shorten the time required to bring products to market, and forge better relationships with their suppliers and customers.

Government can and must support these efforts. Our most successful competitors help their businesses -- large and small -- to compete more effectively. We must go beyond support for basic research and a reliance on "spin-offs" from defense R&D. My technology policy consists of six broad initiatives aimed at helping Americans develop and quickly utilize new technologies:

1. Investing in a 21st century infrastructure; 2. Establishing education and training programs for a high-skills workforce; 3. Investing in technology programs that empower America's small businesses; 4. Refocusing federal R&D programs on critical technologies that enhance industrial performance; 5. Leveraging the national R&D investment; and 6. Creating a world-class business environment for private sector investment and innovation.

I will give our Vice President Al Gore the responsibility and authority to coordinate the Administration's vision for technology and lead all government agencies, including research groups, in aligning with that vision. This is a real job for a distinguished national leader whose experience, energy and intellect are a perfect match for the challenge.

This technology policy outlines the kind of strong action I will take to bring America back to a leadership role in the world economy. Please join us in this history-making endeavor. I welcome your support and ideas.

Bill Clinton A TECHNOLOGY POLICY FOR AMERICA'S ECONOMIC FUTURE America's economic performance and international influence rest, in large part, on its technology base. Technology has accounted for the bulk of U.S. productivity gains during the past half-century, spawned entire new industries, created millions of jobs, and been a primary source of America's ability to maintain a high standard of living for its citizens. We are the world leaders in biotechnology, information technology, aerospace technology and many other fields on the frontiers of science applied to human life. As a result of intense international competition, however, the U.S. technology edge has eroded in some of our prominent industries.

Unfortunately, by losing the lead in the commercialization of many American invented technologies we are losing control of our own economic growth and prosperity. If U.S. productivity growth had grown at the same rate in the 1970's and 1980's that it did in the 1950's and 1960's, the standard of living of the American family would be 40 percent higher. Instead of struggling to get by, working men and women would be better able to buy a home, pay their health care costs, and send their kids to college. The United States must act now to establish a technology policy that will help U.S. companies to succeed in world markets and help American citizens earn a good living in the global economy.


At the end of World War Il, Vannevar Bush defined the framework for U.S. science policy in his report, Science. The Endless Frontier. This policy has paid tremendous dividends to the nation. It made the United States a world leader in science; made America's university education and research system the best in the world; allowed us to supply ourselves and other nations with skilled scientists and engineers; and made it possible to provide technology to academia, industry and the government on a scale that no single company or laboratory could have accomplished alone.

For several decades after the war, we did not perceive the need for a technology policy to complement this science policy. After all, the U.S. economy enjoyed significant spillover dividends from defense R&D expenditures, and the largely self-sufficient U.S. private sector was ahead of other countries in its capability to invest in technology and capture the economic benefits of basic research. Today, the United States faces a new environment: Natural resources, what we dig out of the ground, are being replaced by knowledge and technology, what we dig out of our minds, as the source of national economic competitiveness. Leading-edge technologies often find their first application in the civilian sector and only much later in defense, if at all. For example, the 8088 Intel microprocessor used in the Patriot missile, which symbolized U.S. high-tech defense systems in the Gulf war, is three generations old and is not even used in today's personal computers. The resources needed to develop technology are increasing dramatically and, in many cases, are far greater than any individual company can afford. It can cost $1 billion to bring to market a new jet engine for commercial airliners. On average, it takes about 12 years and over $200 million for a pharmaceutical firm to develop a new drug. Increased international competition has led to shorter product cycles, putting even more stress on resources. The product life for many electronic components today is less than one year, which, puts incredible pressure on firms to constantly upgrade existing products and develop new ones. Some foreign competitors have succeeded by exploiting a new innovation system that links R&D tightly to market needs. In 1975, the Japanese auto industry held only 10% of the U.S. market; today, it has about 30% of the U.S. market. It did so, not by devoting massive resources to basic research, but by stressing incremental improvements in existing technology, rigorous quality control, rapid time-to-market, and tight inventory controls.

R&D results flow quickly around the world, but production know-how does not. As a result, many foreign competitors are able to rapidly absorb the results of America's research, while U.S. firms must often work for years to master the production systems that give industry in other countries an edge. For example, the research breakthrough in superconductors that was achieved in an IBM lab in Switzerland was soon confirmed in Japan and China, and within weeks extended by researchers in the United States. By contrast, it has taken years for American companies to begin to master the lean production system that the Japanese automobile industry developed.

Science policy alone does not address these issues. In essence, science policy is a supply-push policy in which the government supports science education, basic research and some applied R&D that relates to specific national missions. During the Cold War, this policy worked well because U.S. industry dominated world markets and massive U.S. defense spending for high-tech weapons systems provided a big demand for leading edge technology. Today, however, U.S. industry faces intense international competition, and the global civilian market, not the Department of Defense, is the testing ground for most of the new technologies.

Technology policy picks up where science policy leaves off. It is not limited to just research and development. It also focuses on the rapid application of new ideas. The absence of a coherent technology policy is one of the key reasons why America is trailing some of its major competitors in translating its strength in basic research into commercial success, and why America is losing its lead in technology. Even in the technologies where we still lead, we face the challenge of translating the world's best research into the world's best jobs for American workers.


The private-sector Council on Competitiveness put the problem bluntly in its report, Gaining New Ground: Technology Priorities for America's Future: "The U.S. position in many critical technologies is slipping and, in some cases, has been lost altogether. Future trends are not encouraging." This conclusion is based on U.S. industry's assessment of the evidence, accumulated by detailed studies of nine major sectors of the economy and a review of over 90 different critical technologies. It is supported by the experiences of many different industries. Several billion dollars and more than a decade are required to bring a new commercial aircraft to market. While U.S. military R&D is providing fewer and fewer spillovers to America's commercial aircraft industry, Europe's Airbus Industry has received $25 billion in direct government subsidies since its founding. Buoyed by these subsidies, Airbus has displaced McDonnell Douglas as the world's second largest aircraft manufacturer and is beginning to take significant orders away from the industry leader, Boeing. If these market losses continue, they will seriously erode Boeing's ability to invest in the next generation of aircraft technology and put hundreds of U.S. high technology contractors at risk.

As a science-based business, the chemical industry has benefitted from America's strong research base. But over half of the chemical industry's products are sold to other manufacturing industries, and the growing weakness in segments of the U.S. manufacturing base has serious repercussions for the future health of the U.S. chemicals industry. The U.S. electronic components industry developed a significant amount of the basic technologies used by the industry today and has led in the formation of new electronic companies. Nonetheless, its inability to cross-subsidize businesses, its loss of volume markets, its manufacturing problems, and the high relative cost of capital in the United States over the past decade have allowed foreign competitors to dominate many market segments. U.S. industry is weak in actuators, optoelectronic components and hardcopy technology, and it is losing badly in memory chips, electronic packaging and interconnections; and display technologies. The U.S. machine tool industry is in trouble. The U.S. share of world production has declined from about 50% in 1955 to about 15% today, and imports account for half of the U.S. domestic market. The U.S. machine tool industry is made up mostly of small companies that do not have the resources to sustain the necessary investments in new technology or systematically upgrade the manufacturing skills of their employees. For many people, the U.S. computer industry symbolizes U.S. technological preeminence. Advances in computers and software have driven major changes in virtually every other sector of the economy and are also critical to national defense. U.S. computer systems firms are still the dominant producers in world equipment and software markets, but their leadership is under assault. The U.S. balance of trade in computers has deteriorated substantially in the last decade. The world market share of U.S. computer companies fell from 81% in 1983 to 61% in 1989, and the U.S. industry is increasingly dependent on foreign components for its products.

The growing problems of U.S. technology-intensive industries are backed up by economic indicators: The U.S. high-tech trade balance posted a deficit for the first time in 1986. It has since swung back into slight surplus, but remains negative in semiconductors and is approaching a zero balance in computers. In a recent high school career interest survey, the top five career choices of American students were lawyer, musician, psychologist, fashion designer and photographer. The bottom five were computer engineer, mechanical engineer, chemist, civil engineer and physicist. As a result, not enough U.S. students are pursuing training in technical fields. Over half of the doctoral degrees from U.S. universities in engineering, 40 percent of those in math and a third of those in physics go to foreign students who are increasingly choosing to return home after they graduate. Foreign companies are collecting almost half of all new U.S. patents and boosting their share every year. In 1990 the top four recipients of U.S. patents were Hitachi, Toshiba, Canon and Mitsubishi.

The United States invests only 1.9% of its GNP in non-defense R&D, while Germany invests 2.8% and Japan invests 3.0%. In 1991 U.S. investment in plant and equipment hit a 14 year low of 10.7% of GDP, down from 11.4% in 1990. Even more alarming is the fact that the United States invested a smaller share of GDP in plant and equipment last year than any other Summit 7 country. The U.S. investment level is half Japan's rate of 22% and below Germany's rate of 14.5%. Using current exchange rates, the United States invested $550 billion in plant and equipment in 1991 and Japan invested $662 billion, despite the fact that Japan's economy is only 60% the size of the U.S. economy.

America cannot afford to ignore these warning signals. If we are to safeguard the standard of living of American citizens and improve the ability of U.S. industry to compete in world markets, we must develop a coherent technology policy. III. A NEW FRAMEWORK FOR U.S. TECHNOLOGY POLICY In order to implement an effective U.S. technology policy, I will declare that U.S. technological leadership is a national priority and organize the government for results.

The President alone has the authority to focus the national will and galvanize the necessary resources. When elected, I will do just that. First and foremost, a Clinton-Gore Administration will emphasize the need to renew our civilian technology base. America cannot continue to rely on trickle down technology from the military to maintain competitiveness of its high-tech and manufacturing industries. Civilian industry, not the military, is the driving force behind advanced technology today. Only by strengthening our civilian technology base can we solve the twin problems of national security and economic competitiveness.

The Vice President will take on the task of organizing all facets of government to develop and implement my Administration's technology policy. As a first step, he will establish a central focus for the coordination of government activities related to civilian technology and create a forum for systematic private sector input into U.S. government deliberations about technology policy and competitiveness.

At present, three obstacles prevent close government industry interaction. First, the diffused nature of government technology programs, which span many departments and agencies, makes them hard to coordinate and manage. The Federal Coordinating Council for Science, Engineering and Technology (FCCSET) lends itself to planning these programs, but not to managing them. Second, some provisions of the Federal Advisory Committee Act (FACA) and the Freedom of Information Act prompt premature disclosure of information that is essential to U.S. long-term competitiveness by forcing open meetings and giving foreign competitors immediate access to sensitive material. Third, conflict of interest regulations, that were put in place for valid reasons, nevertheless inhibit the participation of knowledgeable private sector individuals in government discussions about how to strengthen America's competitiveness position in crucial technologies. These issues must be addressed to make sure that government technology programs are responsive to private sector needs.

Within the Administration, the Office of Science and Technology Policy (OSTP) and FCCSET play an important role in coordinating policy and enhancing cooperation between the private and public sectors. We will significantly strengthen both of these organizations. For example, the U.S. needs to strengthen its ability to monitor the position of the U.S. in critical technologies and industries, and to increase the collection and dissemination of foreign scientific and technical information. We rarely know what our market share is in a given industry, what our foreign competitors are doing to target the industries of the future, and what steps are needed to restore U.S. competitiveness. A Clinton-Gore Administration will work with Congress to review the way it handles the budget process. The federal R&D budget is currently considered piecemeal by numerous Congressional authorization and appropriations committees, which makes it nearly impossible to set priorities among competing programs or make trade-offs among related activities. Furthermore, although Congress must exercise oversight over technology programs, micro-management and pork-barrel politics will destroy the effectiveness of these programs. I will push for a line-item veto, and will aggressively use the Presidential rescission authority to stop these practices.


The Clinton-Gore technology policy consists of six broad initiatives that together will restore America's technological leadership: 1) investing in a 21st century infrastructure, 2) establishing education and training programs for a high-skill workforce, 3) investing in technology programs that empower America's small businesses, 4) refocusing federal R&D programs on critical technologies that enhance industrial performance, 5) leveraging the national R&D investment, and 6) creating a world-class business environment for private sector investment and innovation.

1. Building a 21st Century Technology Infrastructure.

Infrastructure has traditionally been the responsibility of federal and state governments. Investing in infrastructure means more than repairing bridges, harbors and highways. Today, the United States faces a new series of communications, transportation and environmental needs for the 21st century. The creation of a 21st century infrastructure program would serve as a critical technology driver for the nation. It would stimulate major new national R&D efforts; create large, predictable markets that would prompt significant private sector investments; and create millions of new jobs.

A 21st century infrastructure would address many practical problems. For example, the government can serve as a catalyst for the private sector development of an advanced national communications network, which would help companies collaborate on research and design for advanced manufacturing; allow doctors across the country to access leading medical expertise; put immense educational resources at the fingertips of American teachers and students; open new avenues for disabled people to do things they can't do today; provide technical information to small businesses; and make telecommuting much easier. Such a network could do for the productivity of individuals at their places of work and learning what the interstate highway of the 1950s did for the productivity of the nation's travel and distribution system.

Each year, I plan to devote a significant portion of my four year, $80 billion Rebuild America fund to laying the groundwork for the nation's infrastructure needs in the 21st century. Federal funding for the National Research and Education Network is one example of how the federal government can serve as a catalyst for private sector infrastructure investment. We will also provide additional funding to network our schools, hospitals and libraries.

As part of the effort to assess U.S. needs and develop appropriate programs, the federal government must monitor, or "benchmark", what foreign governments are doing. For example, the Japanese government has committed to invest over $120 billion by 1995 to develop a digital broadband communication infrastructure called the Information Network System, and plans to invest another $150 billion to establish model programs for business and residential users.

A comprehensive infrastructure program must also include effective standards and regulations. By establishing reasonable standards and a constructive regulatory environment, the government can send clear signals to industry about important, emerging markets and spur private sector investment. For example, the digital standard that the Federal Communications Commission (FCC), in cooperation with industry, established for high resolution television provides an excellent indication of the future technical direction of the industry and will do much to facilitate private sector R&D.

A 21st century infrastructure program should consist of the following five elements: Funding the establishment of key networks and demonstration projects; Benchmarking U.S. programs against those of other major industrial nations; Establishing standards and a regulatory climate that fosters private sector investment; Involving the federal labs, companies, and universities in conducting R&D on key technical issues; and Providing training for users of networks and databases.

2. Establishing Education and Training Programs for a High-Skill Workforce. The workplace place of the future will be technology intensive. The U.S. education system must make sure that American workers have the requisite skills. The focus should be not only on the top American students who measure up to world-class standards, but also on average and disadvantaged students. It must also take into account the need to upgrade workers' skills and help people make the difficult transition from repetitive, low-skill jobs to the demands of a flexible, high-skill workplace. Unlike Germany, the United States does not have a sophisticated vocational education program, and unlike Japan, U.S. firms do not have a strong incentive to invest in the training and retraining of their workers. We need more of both, geared to meet the needs of the mobile U.S. workforce. I will implement the following programs to strengthen the skills of America's workforce: Establish tough standards and a national examination system in core subjects like writing, communication, math and science; level the playing field for disadvantaged students; reduce class sizes; and give parents the right to chose the public schools their child attends. Establish a national apprenticeship program that offers non-college bound students training in a marketable skill.

Give every American the right to borrow money for college by establishing a National Service Trust Fund. Students can repay their borrowing as a percent of their earnings over time, or by serving their communities for one or two years doing work their country needs. Stimulate industry to provide continuing, high skills training to its frontline workers.

For small manufacturers to compete today, it is not good enough simply to have access to new equipment and new technologies if their workers do not have the skills and know-how to operate them efficiently, and engage in truly flexible production. Yet, too much of our training is for only top executives or workers after they have lost their jobs. My plan calls for companies with over 50 employees to ensure that 1.5 percent of their payroll goes to training throughout the workforce -- not just for the top executives. But we must do more for smaller companies who cannot afford to set up the training programs. These companies need to adapt to new technologies and new equipment and the constantly new demands. New production technology should be worker-centered and skill-based, not skill-eliminating. In the high-performance workplace, workers have more control over production and worker responsibility is increased. Some companies that have invested billions in new capital equipment have found that genuine employee involvement and good labor-management relations are ultimately more important. Therefore we need to undertake the following: Manufacturing training centers:

We need to promote private sector-led efforts to set up training for small companies. These can be done by building off community colleges training and should be an integral part of the network of Manufacturing Extension provisions. These would also be integrated with my Apprenticeship initiative so that young people will have the opportunity to learn specific skills needed for specific manufacturing jobs or industries. Councils including private sector and academic leaders as well as workers would help decide generic areas for training. Certificate of training guarantees:

In order to be eligible for federal funds for manufacturing training centers, such centers would have to provide all future employers with a Certificate of Guarantee. This would ensure that, when workers do not pick up the necessary skills the first time, these centers would provide additional training -- at no additional cost to the employer.

Best Practices on Worker Participation:

An integral function of the Manufacturing Extension Centers will be to collect and disseminate information on "best practices" with regards to worker participation. Increasing worker productivity is one of the keys to increasing overall manufacturing productivity.

3. Investing in Technology Programs that Empower America's Small Businesses.

A healthy and growing small-business sector is essential to America's economic well-being. America's 20 million small businesses account for 40 percent of our GNP, half of all employment, and more than half of the job creation. My technology policy will recognize the importance of small and medium-sized business to America's economic growth with: Market-driven extension centers: Creating 170 manufacturing centers will put the best tools in the hands of those companies that are creating the new jobs on which the American economy depends by helping small- and medium- sized manufacturers choose the right equipment, adopt the top business practices, and learn cutting-edge production techniques. In order to enhance U.S. industrial competitiveness, public policy must promote the diffusion and absorption of technology across the U.S. industrial base. Some state and local governments are already involved in technology diffusion using manufacturing centers. They are helping small businesses improve the productivity of their existing machinery and equipment, adopt computer-integrated or flexible manufacturing techniques, and identify training needs.

The Commerce Department has five Manufacturing Technology Centers across the country and has plans for two more. Unfortunately, these efforts are only a drop in the bucket compared to those of our major competitors. Germany has over 40 contract R&D centers (Fraunhofer Gesellschaft) and a broad network of industry associations and research cooperatives that effectively diffuse technology across industry. In Japan, major government-sponsored research projects, 170 kohsetsushi technology support centers for small businesses, and tight links between companies and their suppliers serve much the same function. There is no comparable system in the United States. A Clinton-Gore Administration will build on the efforts of state and local governments to create a national technology extension program, designed to meet the needs of the millions of small businesses that have difficulty tracking new technology and adapting it to their needs. The involvement of workers is critical to developing and executing successful industrial extension programs. In technology, as in other area, we must put people first. New production technology should be worker-centered and skill-based, not skill-eliminating. In the high-performance workplace, workers have more control over production and worker responsibility is increased. Some companies that have invested billions in new capital equipment have found that genuine employee involvement and good labor-management relations are ultimately more important.

No less than 25 of these new manufacturing centers will be regional technology alliances devoted to regions hit hard by defense cut-backs. These alliances could promote the development of dual-use technologies and manufacturing processes on a regional basis. Extending the Small Business Innovation Research Program (SBIR)

In addition to creating a national technology extension service for small and medium-sized businesses, I will also expand the Small Business Innovation Research Program. By requiring that federal agencies set-aside 1.25 percent of their R&D budget for small businesses, this program has helped create billions of dollars of new commercial activity while improving the research programs of the federal government. Given this track record, the SBIR program should be doubled over a period of four years to 2.5% to accelerate the development of new products by innovative small businesses. Funding private sector-led training centers We also need a fundamental change in the way we deal with R&D and technology if we are to lead a new era of American manufacturing. Currently, our R&D budget reflects neither the realities of the post-Cold War era nor the demands for a new national security. At present, 60% of the federal R&D budget is devoted to defense programs and 40% percent to non-defense programs. The federal government should aim to restore a 50-50 balance between defense and non-defense R&D. That is why I have called for a new civilian research and development program to support research in the technologies that will launch new growth industries and revitalize traditional ones.

This civilian technology program will: Invest in Private-Sector Led Consortia: When the private sector creates consortia to share risks, pool resources, avoid duplication and make investments that they would not make without such agreements, government should be willing to do its part. Support for consortia such as the SEMATECH, National Center for Manufacturing Sciences and the Advanced Battery is appropriate. By requiring firms to match federal contributions on at least a 50:50 basis, the government can insure that we are leveraging public dollars and that they are market-led and market-oriented. Often major companies are reluctant to invest in their suppliers and assist them in quality management techniques, because they fear they will go to another company. Private-sector-led consortia allow the major companies to cure that problem by coming together and agreeing on industry-wide efforts to invest in smaller suppliers. Some of these consortia will be funded by the Advanced Technology Program.

Inward Technology Transfer: While we must strengthen the links between American R&D and American jobs, we must also develop a strategy for acquiring, disseminating, and utilizing foreign technologies. Our Government must increase the collection, translation and dissemination of foreign scientific and technical information. 4. Increasing Dramatically the Percentage of Federal R&D for Critical Technologies. I will view the support of generic industrial technologies as a priority mission. The government already spends $76 billion annually on R&D. This funding should be refocused so that more resources are devoted to critical technologies, such as advanced materials, information technology and new manufacturing processes that boost industrial performance. At present, 60% of the federal R&D budget is devoted to defense programs and 40% percent to non-defense programs. This level of support for defense R&D is a holdover from the massive arms build-up of the 1980s. At the very least, in the next three years the federal government should shift the balance between defense and non-defense programs back to a 50-50 balance, which would free-up over $7 billion for non-defense R&D. Having achieved this balance, the government should examine whether national security considerations and economic conditions warrant further shifts. I will also create a civilian research and development program to support research in the technologies that will launch new growth industries and revitalize traditional ones. This civilian technology program will: Help companies develop innovative technologies and bring new products to market; Take the lead in coordinating the R&D investments of federal agencies; and Cooperate and consult with industry, academia and labor in the formulation and implementation of technology policy and R&D programs.

Advanced Manufacturing R&D: The United States is currently underinvesting in advanced manufacturing R&D. The federal government should work with the private sector -- with the private sector taking the lead -- to develop an investment strategy for those technologies critical to 21st century manufacturing. Following the lead of my running mate, Al Gore, and several of his colleagues, we must do more to support industry's efforts to develop the advanced computer-controlled equipment ("intelligent machines") and the electronic networks that will enable American factories to work as quickly and efficiently as their Japanese counterparts. These technologies also include flexible micro- and nanofabrication, simulation and modeling of manufacturing processes, tools for concurrent engineering, electronic networks that allow firms to share business and product data within and between firms, and environmentally-conscious manufacturing. According to industry experts, the United States has an opportunity to capitalize on the emerging shift from mass production to flexible or "agile" manufacturing.

5. Leveraging the Existing Federal Investment in Technology to Maximize its Contribution to Industrial Performance. R&D conducted at the federal labs and consortia should be carefully evaluated to assure that it has a maximum impact on industrial performance. Furthermore, cooperation between universities and industry should be encouraged.

America's 726 federal laboratories collectively have a budget of $23 billion, but their missions and funding reflect the priorities that guided the United States during the Cold War. Approximately one-half of their budget is directed toward military R&D. By contract, the budget for the National Institute for Standards and Technology (NIST) - the only federal agency whose principal mission is to assist industry - accounts for less than one percent of the total federal lab budget. Despite several years of legislative reform and many new directives, the labs still do not have the autonomy or funding to pursue joint ventures and industry aggressively.

These labs and other private non-profit research centers are national treasures because they house large, multi-disciplinary teams of researchers who have honed the skills of balancing basic and applied research for long-term, mission-oriented projects. It would take years to match these special capabilities elsewhere. Today, the labs and industry cooperate on defense needs; we need to change regulations and orientation to get this cooperation on technology development for commercial usage.

To remedy these problems, I propose the following: The budget of the National Institute of Standards and Technology should be doubled. Federal labs which can make a significant contribution to U.S. competitiveness should have ten to twenty percent of their existing budget assigned to establish joint ventures with industry.

Private corporations should compete for this funding through review by panels managed by the labs and made up of corporate and academic experts. Lab directors should have full authority to sign, fund and implement cooperative R&D agreements with industry. Some labs, such as NIST, already have this authority, but others do not.

Industry and the labs should jointly develop measures to determine how well the technology transfer process is working and review progress after 3 years. If these goals have not been met, industry and the labs should reevaluate their involvement, and funds should be redirected to consortia, universities and other organizations that can work more effectively with industry for results. University research accounts for a large part of the federal basic research budget. Funding for basic university research should continue to be provided for a broad range of disciplines, since it is impossible to predict where the next breakthrough may come. While maintaining America's leadership in basic research, government, universities and industry must all work together to take advantage of these new breakthroughs to enhance U.S. competitiveness. Cooperative R&D programs represent another opportunity. Consortia can help firms share risks, pool resources, avoid duplication, and make investments that they would not undertake individually. By requiring that firms match federal contributions on at least a 50:50 basis, the government can leverage its investments and ensure that they are market-oriented. Many industries are demonstrating a new found willingness to cooperate to meet the challenge of international competition: SEMATECH has proven to be an important investment for the industry and the Nation. It has helped improve U.S. semiconductor manufacturing technology, helped reversed the decline in world-wide market share of U.S. semiconductor manufacturing equipment companies, and improved communications between users and suppliers. U.S. automakers have recently formed the United States Council for Automotive Research to develop batteries for electric cars, reduce emissions, improve safety, and enhance computer-aided design. The Michigan-based National Center for Manufacturing Sciences, which now has 130 members, is helping to develop and deploy the technologies necessary for world-class manufacturing. The Microelectronics Computer Technology Corporation (MCC) is developing an information infrastructure which will enable businesses to develop, manufacture, deliver and support products and services with superior speed, flexibility, and quality. U.S. steel-makers are cooperating to develop manufacturing processes which would use less energy, create fewer pollutants, and slash the time required to turn iron ore and coal into steel.

A Clinton-Gore Administration will work to build a productive partnership between government, research labs, universities, and business.

6. Creating a World-Class Business Environment for Private Sector Investment and Innovation. Changes in America's tax, trade and regulatory policies are also needed to help restore America's industrial and technological leadership. In a global economy in which capital and technology are increasingly mobile, we must make sure that the United States has the best business environment for private sector investment. Tax incentives can spur investment in plant and equipment, R&D and new businesses. Trade policy can ensure that U.S. firms have the same access to foreign markets that our competitors enjoy in the U.S. market. Antitrust reform will enable U.S. firms to share risks and pool resources. Strengthening commercial sections of our embassies will increase our ability to promote U.S. goods abroad. Streamlining export controls will reduce the bureaucratic red tape which can undermine competitiveness. And an overhaul of cumbersome defense procurement regulations will strengthen both our civilian and defense industrial bases. Permanent incentives for private sector investment:

Too many federal incentives meant to spur innovation are on-again-off-again programs that industry views as unreliable. As a result, they have not realized their full impact. Several permanent tax measures should be put in place immediately to stimulate commercial activity. They include the following: Make the R&D tax credit permanent to provide incentives for U.S. companies that invest in developing new technology. Place a permanent moratorium on Treasury Regulation 1.861-8: This regulation increases the effective rate of U.S. taxation of R&D and creates a disincentive for companies to conduct R&D in the United States. Provide a targeted investment tax credit to encourage investment in the new equipment that we need to compete in the global economy, and ensure that depreciation schedules reflect the rapid rate of technological obsolescence of today's high-tech equipment. Help small businesses and entrepreneurs by offering a 50% tax exclusion to those who take risks by making long-term investments in new businesses. An effective trade policy:

The Bush-Quayle Administration has failed to stand up for U.S. workers and firms. We need a President who will open foreign markets and respond forcefully to unfair trade practices. I will: - Enact a stronger, sharper Super 301 to ensure that U.S. companies enjoy the same access to foreign markets that foreign companies enjoy to our market. Furthermore, although the U.S. has negotiated many trade agreements, particularly with Japan, results have been disappointing. I will ensure that all agreements are lived up to, including agreements in sectors such as auto parts and semiconductors. Countries that fail to comply with trade agreements will face sanctions. - Successfully complete the Uruguay Round. This will help U.S. manufacturers and high-tech companies by reducing foreign tariffs, putting an end to the rampant theft of U.S. intellectual property, and maintaining strong disciplines against unfair trade practices. - Insist on results from our trade agreements. Although the U.S. has negotiated many trade agreements, particularly with Japan, results have been disappointing. I will ensure that all trade agreements are lived up to, including agreements in sectors such as telecommunications, computers and semiconductors. Countries that fail to comply with trade agreements will face sanctions. Promote manufactured goods exports by small and medium companies: To promote exports of manufactured goods, I will strengthen the commercial sections of our embassies abroad so that they can promote U.S goods, participate in foreign standards-setting organizations, and support the sales efforts of small and medium-sized businesses. We should also provide matching funds to trade associations or other organizations who establish overseas centers to promote U.S. manufactured goods exports. Streamline Exports Controls: Export controls are necessary to protect U.S. national security interests and prevent the proliferation of nuclear, biological and chemical weapons. Nonetheless, these controls are often overly restrictive and bureaucratic, creating a mountain of red tape and costing the U.S. tens of billions of dollars in exports -- while undermining the competitiveness of the high-tech industries on which our national security depends. The United States should:

- Further liberalize East-West export controls that are unnecessary given the end of the Cold War.

- Avoid unilateral export controls and controls on technology widely available in world markets. Unilateral controls penalize U.S. exporters without advancing U.S. national security or foreign policy interests.

- Streamline the current decision-making process for export controls. While our competitors use a single agency to administer export controls, the United States system is often characterized by lengthy bureaucratic turf wars between the State Department, the Commerce Department, the Pentagon's Defense Technology Security Agency, the Arms Control and Disarmament Agency, the Department of Energy, and the National Security Agency. Antitrust Reform: Increasingly, the escalating cost of state-of-the-art manufacturing facilities will require firms to share costs and pool risks. To permit this cooperation, the United States should extend the National Cooperative Research Act of 1984 to cover joint production ventures. Civil-military integration: Department of Defense procurement regulations are so cumbersome that they have resulted in an unnecessary and wasteful segregation of our civilian and defense industrial bases. The military specification for sugar cookies is 10 pages long. Government procurement is so different from private sector practices that companies now set up separate divisions and manufacturing facilities to avoid distorting the commercial part of their business. The U.S. must review and eliminate barriers to the integration of our defense and civilian industrial base. These barriers include cost and price accounting, unnecessary military specifications, procurement regulations, inflexibility on technical data rights, and a failure to develop technologies in a dual-use context. ******* Taken together, the six initiatives discussed above comprise a technology policy that will restore economic growth at home, help U.S. firms succeed in world markets, and help American workers earn a good standard of living in the international economy.