Who's Bashing Whom?: Trade Conflict in High Technology Industries

by Laura D'Andrea Tyson

Overview

This study seeks to resolve the "free trade vs. managed trade" debate. It provides innovative recommendations for US policy based on detailed and rigorous case studies of high-technology trade conflicts between the United States, Japan and Europe in aircraft, telecommunications, electronics and supercomputers.The study addresses three key issues: What trade policy should the United States adopt to support its high-technology industries? What domestic policy initiatives are necessary to realize this goal? Are new international rules needed to reduce trade conflicts over high-technology industries? Tyson, formerly Chair of the President's Council of Economic Advisers, develops a "cautious activist" policy agenda to promote US competitiveness in high-technology sectors and to strengthen international rules to encourage trade and reduce conflicts among nations.

Product Details

ISBN-13:	9780881321067
Publisher:	Peterson Institute for International Economics
Publication date:	11/01/1992
Edition description:	New Edition
Pages:	352
Product dimensions:	6.00(w) x 9.00(h) x (d)
Age Range:	18 Years

About the Author

Laura D'Andrea Tyson was a professor in economics and business administration, director of the Institute of International Studies, and Research Director of the Berkeley Roundtable on the International Economy at the University of California, Berkeley.

Table of Contents

	Preface	xiii
	Acknowledgments	xvii
1	America's High-Technology Trade Challenge: The Perspective of a Cautious Activist	1
	Introduction	1
	Setting the Stage: The Nature of Trade Conflict in High-Technology Industries	3
	High-Technology Trade Conflict with Japan and Europe	5
	Should the United States Care? The Answer of a Cautious Activist	9
	The Plan of the Book	14
2	Trade and System Conflict in Technology-Intensive Industries	17
	Trends in High-Technology Competition Between the Developed Countries	17
	The Roots of High-Technology Trade Conflict: Trade Barriers, Structural Impediments, and Structural Differences	29
	Why High-Technology Industries Matter for US Economic Welfare	32
	A Brief Concluding Comment	45
3	From MOSS to Motorola and Cray: Managing Trade by Rules and Outcomes	53
	The Real Japan Problem	53
	The MOSS Talks in Technology-Intensive Products: Trade Management Through Sectoral Rules	58
	Motorola and Japan's Cellular Telephone Market: A Step Closer to Managed Trade	66
	The Third-Party Radio Conflict: A Successful Managed Trade Resolution	71
	Lessons from Motorola's Experiences in Gaining Access to the Japanese Market	73
	Cray and the Japanese Supercomputer Market: Procurement, Infant-Industry Tractics, and Reciprocity	76
	Concluding Remarks	82
4	Managing Trade and Competition in the Semiconductor Industry	85
	Industry Economics and the Evolution of Comparative Advantage	88
	From Manipulated to Managed Trade: The US-Japan Semiconductor Trade Agreement	106
	The Effects of the Agreement on Trade and Pricing	111
	The New Semiconductor Trade Agreement: The Story Continues	130
	An Overall Assessment of the SCTA	132
	Lessons for US Trade Policy from the Semiconductor Experience	133
5	Industrial Policy and Trade Management in the Commercial Aircraft Industry	155
	Historical Decisions in a Strategic Industry	155
	Economics of the Industry	161
	History of the Industry	176
	The Economic Analysis of Government Intervention in the Commercial Aircraft Industry: The Case of Airbus	192
	Trade Friction in the Aircraft Industry	195
	Challenges Facing the American Commercial Aircraft Industry	210
	Conclusions	214
6	Managing Trade and Investment: Europe's Evolving Strategy in the Electronics Industry	217
	Videocassette Recorders: From Managed Trade to Managing Investment	220
	High-Definition Television: The Strategy to Create European Champions	237
	Understanding Europe's Evolving Strategy Toward the Electronics Industry	244
	Lessons for US Trade and Industrial Policy	249
7	A Cautious Activist Agenda for U.S. Policy in High-Technology Industries	253
	Expanding Market Access	255
	The Pros and Cons of Antidumping Remedies	267
	Strategic Threats in High-Technology Industries	274
	Subsidies, Foreign Targeting, and Countervailing Duties	280
	The Need for Complementary Technology and Industrial Policies	286
	Some Concluding Thoughts	295
	Index	311
	Tables
1.1	Cases of trade conflict in technology-intensive industries treated in this book	15
2.1	Alternative classification schemes for high-technology industries	20
2.2	High-technology exports as a share of total manufactures exports, selected countries, 1970-86	22
2.3	Shares of world high-technology exports, selected countries, 1970-89	23
2.4	Revealed comparative advantage in selected high-technology products, selected countries, 1970-89	24
2.5	Shares of world trade in R&D-intensive electronics products, selected countries, 1970-89	25
2.6	United States, Japan, and Europe: export shares in selected electronics products, 1980-88	26
2.7	United States and Japan: trade in electronics products, by type of product, 1980-91	27
2.8	United States: trade in high-technology products, 1980-88	28
2.9	United States: high-technology exports and imports as a share of total value added, by industry, 1980-88	29
2.10	United States: high-technology expenditures for R&D, by industry, selected years, 1979-89	33
2.11	United States: production and value added in selected high-technology industries, 1989	34
2.12	United States: employment in selected high-technology industries, 1989	35
2.13	United States: scientists and engineers employed in selected high-technology industries, 1989	36
2.14	United States: value added per worker in selected high-technology industries, 1989	37
2.15	United States: compensation in selected high-technology industries, 1989	38
2A.1	Assessments of US and Japanese comparative standings in selected technologies, Japanese Ministry of International Trade and Industry, 1983 and 1988	46
2A.2	Relative US position in critical defense technologies	47
2A.3	Position of the US computer industry in selected critical computer technologies, 1990 and projected 1995	48
2A.4	Assessments of US standing in selected high technologies by the Council on Competitiveness	49
3.1	Relative performance of Japanese imports in industries addressed in the MOSS negotiations, 1985-88	62
4.1	United States: trade in semiconductors, by product type, 1966-91	94
4.2	Joint research and development projects in microelectronics sponsored by the Japanese Ministry of International Trade and Industry (MITI)	96
4.3	Japan: trade in semiconductors, 1967-90	104
4.4	Average selling prices for 256-kilobyte and 1-megabyte DRAMs, 1984-92	115
4.5	Average selling prices for 256-kilobyte and 1-megabyte EPROMs, 1984-89	122
4.6	United States: semiconductor imports as a share of total semiconductor consumption, 1982-89	129
4.7	Japan: semiconductor imports as a share of total semiconductor consumption, 1982-89	130
4.8	Japan: semiconductor imports from the United States and semiconductor sales by US companies in Japan, 1984-89	131
4.9	Shares of production of integrated circuits produced offshore, by home country of parent	144
5.1	Orders of narrow- and wide-body commercial aircraft, by company and model	158
5.2	Aircraft company revenues from military aircraft and related sales, 1989	160
5.3	Costs to develop selected commercial aircraft	163
5.4	Public launch aid for Airbus Industrie, by country and aircraft model	174
5.5	Production of narrow-body commercial jet aircraft, by model, 1952-90	178
5.6	Production of wide-body commercial jet aircraft, by model, 1969-90	180
5.7	Geographical composition of world imports of aircraft, 1976-87	196
5.8	Geographical composition of world exports of aircraft, 1976-87	197
5.9	Geographical composition of world imports of aircraft engines, 1976-87	198
5.10	Geographical composition of world exports of aircraft engines, 1976-87	199
6.1	Trade balances in information technology and telecommunications, by region, 1986-89	218
6.2	European Community: trade deficit in electronics, 1988 and 1989	219
6.3	Costs of protection in videocassette recorders	226
6.4	Europe: trade deficit in videocassette recorders, 1980-88	227
6.5	Japanese share of the European videocassette recorder market, 1986	229
6.6	Market shares in videocassette recorders, by country, 1988	235
6.7	Japan: exports of videocassette recorders, 1981-88	236
7.1	From multilateral rules to bilaterally managed outcomes: an anatomy of the cases	256
	Figures
3.1	United States: trade surplus with Japan in selected commodities, 1987 and 1990	54
3.2	United States: trade deficit with Japan in key machinery industries, 1987 and 1990	55
4.1	United States, Japan, and Europe: shares of the worldwide semiconductor market, 1981-90	105
4.2	United States, Japan, Europe, and Korea/Taiwan: shares of the worldwide DRAM market, 1978-91	106
4.3	United States, Japan, and Europe: shares of the worldwide EPROM market, 1978-89	108
4.4	Japan: shares of the semiconductor market held by non-Japanese companies, 1985-91	111
4.5	Prices for 256-kilobyte and 1-megabyte DRAMs, by country of manufacturer, 1987-89	116
4.6	Cost estimates and average selling prices for 1-megabyte DRAMs, 1987-91	118
4.7	Cost estimates and average selling prices for 1-megabyte EPROMs, 1987-91	123
4.8	Prices for 256-kilobyte EPROMs, by country of manufacturer, 1987-89	124
4.9	Shares of the worldwide 1-megabyte EPROM market, by company, 1990	125
4.10	Shares of the worldwide microprocessor market, by company, 1990	127
5.1	Commonality of components among Airbus models	164
	Boxes
5.1	Excerpts from the GATT Agreement on Trade in Civil Aircraft	200
5.2	Provisions of the 1992 agreement between the United States and the European Community on trade in civil aircraft	208

Editorial Reviews

Laura Tyson's pathbreaking work on international competitiveness and trade, on manufacturing and technology issues, has improved our understanding of what it will take for America to prosper in the new global economy.

Bill Clinton

Challenges the orthodoxy in a level-headed and well-reasoned way... Required reading for those interested in U.S. trade policy.

Journal of Economic Literature - Gene M. Grossman

A superbly argued, even courageous book... Who's Bashing Whom? will alter the terms of policy debates about trade, competitiveness, and technology.

American Political Science Review - Richard Lehne