Adduci, Mastriani & Schaumberg LLP

Green Light Subsidies:Technology Policy in International Trade

Green Light Subsidies:Technology Policy in International Trade
By Michael L. Doane

Published in Syracuse Journal of International Law and Commerce (Spring 1995)

Introduction

As the world's foremost trading nation and leader in scientific discovery and technological development, the United States is increasingly required to combine international trade policy and technology policy. This connection is reflected in the objectives pursued by the United States in the General Agreement on Tariffs and Trade ("GATT") Uruguay Round negotiations, the North American Free Trade Agreement ("NAFTA") negotiations, and bilateral trade negotiations, such as the strengthening of intellectual property protection. Major trade disputes between the United States and Japan involve access for U.S. companies into the Japanese semiconductor and telecommunications markets.1 The Clinton Administration is taking a more activist approach than the Bush Administration toward technology policy and economic policy in general, with significant implications for international trade. This change in approach was clearly demonstrated by the broad changes in the non-actionable research and development subsidies section of the GATT Subsidies Code negotiated just prior to the conclusion of the Uruguay Round.

The ongoing debate in the technology policy arena concerns the proper role of government in promoting high technology industries. Free market advocates argue that the development of the high technology sector should be determined by the marketplace; others assert that the unique attributes of this sector require governments to actively create comparative advantage for their high technology industries. The Bush Administration took a relatively market-oriented approach to international trade policy and technology policy. The role of the government was to provide an economic and legal environment conducive to technological development, including certain incentives, while recognizing that "competitive market forces determine, for the most part, an optimal allocation of U.S. technological resources."2 As part of its overall economic policy, the Bush Administration advocated reduction of the capital gains tax rate, permanent extension of the research and experimentation tax credit, liberalization of export controls, reformation of product liability and antitrust laws, and removal of other unwarranted regulatory barriers to technological innovation.3

The focus of these proposals was on limiting governmental obstructions to commercial research and development, rather than increasing government involvement in what was viewed as private commercial decision-making. Direct government involvement was generally limited to support for education and training in math, science, and engineering, funding for basic research, and development of products for which the government was the sole or primary customer such as defense products. Although support was provided for commercial-oriented activities such as the SEMATECH semiconductor research consortium and the Advanced Technology Program (ATP), a philosophical opposition to large-scale government involvement in commercial research and development dominated Bush Administration technology policy.

Although limited by budgetary constraints, the Clinton Administration advocates a more direct role for government in the technology sector. Many of the initial Clinton proposals such as the permanent extension of the research and experimentation tax credit, antitrust reform, and support for math and science education are continuations of Bush proposals. However, there is now a greater emphasis on direct government involvement, or "partnership", in commercial research and development activities. Proposed government involvement includes participating in the creation of a new generation of cars with the U.S. automobile industry, development of the "information superhighway," and increased research and development funding through the ATP and the Advanced Research Projects Agency (“ARPA”).4 In addition to increased funding, changes are being made in the composition of this funding placing greater emphasis on dual-use and non-defense research and development, following a trend started in the Bush Administration. This new conception of economic and technology policy has already had a significant impact on international trade policy.

International trade policy under both Reagan and Bush reflected their overall free market economic philosophy. Consequently, both viewed subsidization as a trade distortion and negotiated to strengthen the Subsidies Code in the Uruguay Round. The proposed agreements outlined in the Dunkel Draft included a strengthened Subsidies Code with specific limitations on non-actionable or "green light" government subsidization of commercial research and development. Just prior to finalizing the Uruguay Round agreements, the Clinton Administration changed the United States' position, substantially altering the non-actionable subsidies section of the Subsidies Code. The changes increased the allowable proportions of government support of research and development and expanded the definitions of subsidizable activities. This action is justified by the Administration as necessary to protect American programs for funding research and development.5 Such a sudden change in international trade policy and technology policy has drawn significant opposition, particularly in the United States Senate.

The general purpose of United States technology policy is to enhance the competitiveness of American high technology businesses in the international marketplace. The ongoing debate concerning technology policy, and now international trade policy, is over the appropriate role of government. The Bush Administration asserted that the government should limit itself to supporting basic research and providing an economic and legal environment conducive to innovation and economic growth. The Clinton Administration is taking a more interventionist approach, advocating government partnerships with private enterprises and other forms of government funding and support for research and development, while negotiating to "green light" these actions under the GATT Subsidies Code. Although the actual changes in technology policy may be limited due to budget constraints, the actions taken by the Clinton Administration, particularly in the area of international trade policy, are a significant deviation from previous policies and signal at least the intent to increase government involvement in the high technology marketplace.

II. REAGAN AND BUSH TECHNOLOGY POLICY

Throughout the 1980s, technology policy was based on a free market economic philosophy, which included a general opposition to the development of what could be considered an "industrial policy." Competitiveness in all sectors of the economy, including the high technology sector, was encouraged through market-oriented policies which maintained an environment conducive to innovation and economic growth. Government funding of research and development was limited to basic research and areas in which the government is the primary consumer, such as defense. In the international trade sector, the emphasis was on the elimination of barriers to free trade through the GATT, NAFTA, bilateral negotiations such as the Structural Impediments Initiative ("SSI") with Japan, and other international fora. As technology-based industries became increasingly important in the American and world economy, public and Congressional pressure grew for more direct government involvement in the development of high technology industries.6 As a result, the Bush Administration announced a "National Technology Initiative" which included more government support for dual-use and commercial research and development. However, the free market remained as the primary force in the development of United States high technology industries.

Economic growth and technological innovation were encouraged, in part, through supportive tax and fiscal policies. Throughout his administration, President Bush asserted that the reduction of capital gains taxes would spur investment by providing an incentive to investors to shift funds into productive ventures.7 Theoretically, a capital gains tax cut would attract new investors and encourage others to liquidate older investments to free up capital for new, more productive investments, such as high technology-oriented businesses. Along with a capital gains tax reduction, the Bush Administration advocated enhancing and permanently extending the research and experimentation tax credit as a method of providing more direct assistance to high technology industries.8 The uncertainty caused by the temporary nature of the research and experimentation tax credit discourages the long term investment needed for the development of many high technology products. The capital gains tax reduction and enhanced research and experimentation tax credit were conceived of as method for providing "patient" capital for long term investment in high technology projects. Using tax and fiscal policy in this manner to create a favorable environment for investment in the technology sector was viewed as an appropriate role for government.

Actions were also taken to alleviate legal obstacles to innovation such as potential antitrust liability for cooperative research activities. This problem was first addressed by the Reagan Administration with the signing of the National Cooperative Research Act of 1984.9 The primary effect of the statute was to apply rule of reason analysis to joint research and development ventures thereby preventing such ventures from being declared per se illegal. Furthermore, if a research and development joint venture registers with the Attorney General and the Federal Trade Commission under this Act, it can only be held liable for actual damages in a subsequent antitrust challenge, not treble damages.10 The rule of reason analysis was also eventually extended to joint production ventures for high technology products.11 "Reducing the uncertainties about antitrust enforcement related to inter-firm cooperation in research and technology development" remained an important element of technology policy.12

Legal reform was also pursued in the area of product liability to provide more uniform product liability standards. Proposed reforms included liability based on responsibility for harm and not ability to pay, fair compensation for actual damages, and the development of alternatives to litigation.13 The purpose of these proposed reforms was to "restore balance to the tort system and reduce uncertainty-- particularly for new products."14 The principle behind these legal reforms was to reduce many forms of legal uncertainty facing high technology industries in the development and production of new products. With a more certain legal environment, high technology industries could focus more attention and financing on research and development and less on potential and actual litigation.

As the leading exporter of high technology products, the United States consistently supported the development of strong international intellectual property protection as part of its international trade and technology policies. The Reagan and Bush Administrations actively negotiated for strengthened international intellectual property protection in both multilateral and bilateral fora.15 Throughout the 1980s, the United States pursued the development of international intellectual property rights standards under the auspices of the GATT. This persistence was rewarded by the conclusion of the Agreement on Trade Related Aspects of Intellectual Property Rights, Including Trade in Counterfeit Goods (TRIPS). This agreement mandates substantive standards and national enforcement measures, as well as providing an international dispute resolution mechanism. In addition, the United States was able to include strong intellectual property protection in the North American Free Trade Agreement (NAFTA). Intellectual property protection was also aggressively pursued through bilateral negotiations initiated under the “Special 301” mechanism established by the Omnibus Trade and Competitiveness Act of 1988.16 With the growing importance of technology in the United States economy and the international marketplace, international intellectual property protection will continue to play an important role in international trade policy, as well as technology policy.

These attempts to develop an economic and legal environment conducive to innovation were supplemented by the traditional government support for basic research. The United States government provides support for basic research at universities and other institutions through such channels as the National Science Foundation ("NSF") and the National Institutes of Health ("NIH"). However, the government has also supported more directed research through the Defense Department, the National Aeronautics and Space Administration ("NASA"), and the Defense Advanced Research Projects Agency ("DARPA"; now "ARPA") which produced dual-use technologies with commercial value including computers, semiconductor chips, and improved aircraft. This focus on support for basic research and directed research for government use has traditionally occupied a central position in U.S. technology policy. However, as policymakers came to realize that a full assessment of the market potential of technology developed through the basic research stage was not always possible, many began to argue for a government role in the support of certain pre-competitive research to further develop potentially viable technology.

The government became further involved in the development of commercially viable technology when Congress created the ATP.17 The ATP was established "for the purpose of assisting United States businesses in creating and applying the generic technology and research results necessary to (1) commercialize significant new scientific discoveries and technologies rapidly; and (2) refine manufacturing technologies."18 Although not funded until 1990, the National Technology Initiative caused the ATP to quickly become an important element of technology policy. In addition, the Small Business Innovation Research Program ("SBIR") began awarding grants for research and development at small and medium-sized firms, based on such factors as project feasibility, development, and commercialization.19 Cooperative research and development agreements ("CRADA") between federal laboratories and private entities were also encouraged.20 Under the National Technology Initiative, government participation in "pre-competitive research on generic, enabling technologies that have the potential to contribute to a broad range of government and commercial applications" was viewed as appropriate; however, research in these areas was to remain industry led.21 The focus was on identifying and supporting various generic "critical technologies," such as flexible integrated manufacturing, materials synthesis and processing, microelectronics, software, and advanced imaging technologies.22 However, many in the Administration continued to oppose such activity as the first steps toward the establishment of an industrial policy and resisted further expansion of such programs.23 This opposition, along with budget constraints, ensured that direct government support for pre-competitive research would remain limited.

In spite of the Reagan and Bush Administrations' general adherence to market-oriented economic and technology policy, the movement toward a larger government role in the development of dual-use and commercial technology gained increasing momentum. Reports from Congress, think tanks, and other institutions argued for more government funding and support of research and development.24 From an international trade perspective, a more aggressive stance in encouraging and supporting American high technology industries in the international marketplace was also advocated.25 The Reagan and Bush Administrations' policies intended to create an environment conducive to innovation through tax and fiscal policies and legal reform remain an important element of technology policy in the Clinton Administration. However, with the end of the Cold War, an opportunity arose to shift federal funding for research and development away from defense-related projects and towards commercial projects in the increasingly competitive international high technology markets. Advocates of this course of action found a receptive audience in the Clinton Administration.

III. CLINTON TECHNOLOGY POLICY

The development of high technology industries as a vehicle for national economic growth is a centerpiece of Clinton Administration economic policy. As noted above, advocates of a more direct government role in commercial research and development activity occupy significant policy-making positions. The establishment of a National Economic Council ("NEC") in the White House clearly signaled that the Clinton Administration did not share the Reagan and Bush reluctance to become involved in the marketplace. Although some of the legal reforms and tax incentives for innovative activity continue to be advocated, the focus of technology policy became "government partnerships" with business to develop promising technologies. Budget constraints initially inhibited increases in government support of research and development, but substantial increases in funding for ATP and ARPA were included as part of the Administration's proposals. Although the wisdom of this course of action is questioned by free market advocates, the increasing importance of the high technology sector to the United States economy and the high costs of all forms of research and development has led the Clinton Administration to view government involvement in this sector as vital to U.S. economic competitiveness.

Ensuring that "tax, trade, regulatory, and procurement policies encourage private sector investment and innovation..." continues to be a goal of U.S. technology policy.26 Proposals for the permanent extension of the research and experimentation tax credit and antitrust reform were carried over from the Bush Administration. The research and experimentation tax credit was extended for three years; however, the long-term value of this extension is questionable due to its limited duration and the fact that overall corporate taxes were raised.27 As noted in the Clinton Administration's initial technology policy statement:

"The credit cannot induce additional R&E expenditures unless its future availability is known when the businesses are planning R&E projects and projecting costs. R&E activity, by its nature, is long term and businesses should be able to plan their research activity knowing that the credit will be available when the research is actually undertaken. Thus if the R&E credit is to have the intended incentive effect, it should be permanent."28

Reduction of the capital gains tax rate is no longer a major element of economic policy, but an incremental investment tax credit to encourage investment in new capital equipment has been proposed.29 In addition, Administration technology policy proposals include a vague statement that the Administration "will send legislation to Congress designed to provide incentives for those who make high-risk, long-term venture capital investments in startups and other small enterprises."30 This proposal sounds suspiciously like some form of targeted capital gains tax reduction. Other areas are receiving more attention, but market incentives remain a central element of technology policy.

The centerpiece of Clinton Administration technology policy is the development of government partnerships with various industries to advance critical technologies. Although initiated during the Reagan Administration, the SEMATECH semiconductor chip consortium is viewed as "a model for federal consortia funded to advance other critical technologies.31 The most visible proposals are for the creation of the information superhighway and the Clean Car Initiative.32 However, a U.S. Display Consortium for the development of a high-definition display manufacturing capability and a consortium for the creation of an advanced communications technology satellite are being funded along with SEMATECH.33 On a smaller scale, funding for a variety of projects through the ATP and ARPA is also being proposed. To support these projects, the ratio of government funding for dual-use and commercial research and development to military research and development is to be increased to the point where the commercial and dual-use research and development share will exceed fifty percent.34 Financing these various high technology proposals during a period of severe budgetary problems has presented a significant obstacle. Some initial funding proposals were limited due to budget considerations; others were included as part of the controversial economic stimulus package which was rejected by the Senate. However, proposals for FY 1995 and FY 1996 include significant increases in funding for ATP, ARPA, and NSF. For example, under the proposed National Competitiveness Act of 1994, the ATP was to receive a budget increase of one hundred and thirty-nine percent over the fiscal year of 1994 reaching $575 million in the fiscal year of 1996.35 This emphasis on large scale government financing of dual-use and commercial research and development represents a dramatic shift in technology policy and may cause significant changes in how high technology products are developed.

In the international sector, the Clinton Administration completed important negotiations initiated by the Reagan and Bush Administrations with the signing and ratification of the TRIPS Agreement and the ratification of the NAFTA with its strong intellectual property provisions. A particularly aggressive stance is being taken with Japan on a variety of high technology market access issues. For example, agreement was reached concerning access to the Japanese cellular telephone market after sanctions were threatened. Numerical targets, as were used to demonstrate progress in the opening of the Japanese semiconductor chip market, are being ardently pursued for other Japanese high technology markets. The end of the Cold War has led to the discontinuation of export controls on a wide range of high technology products thereby eliminating a major impediment to trade.36 However, the most controversial action taken in the international sector is the last minute changes made in the non-actionable subsidies section of the GATT Subsidies Code. These changes are a result of the increased interest in government/industry partnerships in commercial research and development and are a significant change in U.S. international trade policy. The Clinton Administration completed several important initiatives started by the Reagan and Bush Administrations, but other Administration actions clearly demonstrate that free trade policies are being replaced by more aggressive government involvement in the international marketplace.

The evolution of technology policy has had a dramatic effect on international trade policy. With the end of the Cold War, pressure grew to shift funds away from defense-related to civilian research and development. Consequently, the Clinton Administration moved to dramatically increase government funding for commercial and dual-use research and development. Although this action was challenged by free trade advocates and other opponents of industrial policy, the high cost of research and development, the economic benefits of a strong high technology sector, and the intense international competition in this sector convinced the Administration that this more active policy was necessary to maintain the competitiveness of U.S. industries. In order to achieve the goals envisioned by its technology policy, the Clinton Administration asserts that it was necessary to make changes in the GATT Subsidies Code. These changes were made to prevent the proposed government/industry partnerships from being countervailable by U.S. trading partners, but may also force the United States into an international subsidies race. An analysis of these changes is required to determine their effect; however, it is clear that the Clinton Administration has engineered a major change of course for United States technology policy and international trade policy.

IV. NON-ACTIONABLE RESEARCH AND DEVELOPMENT SUBSIDIES

The development of the United States' position on the non-actionable subsidies section of the Subsidies Code in the Uruguay Round negotiations occurred as part of a conflict between two different perspectives on research and development subsidies. The international trade policy perspective of the trade negotiators held that any subsidy was a trade distortion and should be subject to the GATT provisions.37 Technology policy advocates asserted that non-actionability was necessary to permit government support for pre-competitive research.38 The Reagan and Bush Administration negotiators adhered to the international trade policy perspective throughout the negotiations, but the influence of the technology policy perspective grew in the Clinton Administration. As a result, the non-actionable subsidies section of the Final Text of the Subsidies Code includes some substantial changes from the Dunkel Draft. These changes include increases in the permissible levels of government support for various research activities and a new provision allowing for assistance in meeting new environmental requirements. The Final Text also includes some modified and additional footnotes to clarify certain provisions and further expand and define important terms. Some argue that these changes are merely the result of greater coordination between technology policy and international trade policy. However, in this case it appears that technology policy considerations largely overruled international trade policy concerns. The potential impact of these changes on the use of research and development subsidies for high-tech industries has significant implications for the role of government in the U.S. economy, as well as the international marketplace.

The non-actionable subsidies section of the Dunkel Draft negotiated by the Reagan and Bush Administrations took a relatively limited view as to which subsidies would be permissible under the Subsidies Code. The United States agreed to include limited green light categories only when its trading partners accepted additional GATT discipline in other areas to be covered by the Subsidies Code. The Dunkel Draft provided that government assistance for research "conducted by firms or by higher education or research establishments on a contract basis with firms" would be non-actionable if it does not exceed fifty percent of the costs of "basic industrial research" or twenty-five percent of the costs of "applied research."39 Basic industrial research was defined as "original theoretical and experimental work whose objective is to achieve new or better understanding of the laws of science and engineering as they might eventually apply to an industrial activity."40 Applied research was defined as "investigation or experimental work based on the results of basic industrial research to acquire new knowledge to facilitate the attainment of specific practical objectives such as the creation of new products, production processes, or services."41 These definitions are fairly vague and appear intended to limit government support to general research activities which might have commercial applications. Under these definitions, government funding targeted for the research and development of specific products could at most cover twenty-five percent of costs and would risk being labeled an actionable subsidy.

The Final Text of the Subsidies Code, as negotiated by the Clinton Administration, includes increases in the amounts of allowable subsidies while also expanding the activities which may be supported. Government assistance for research activities which does not exceed seventy-five percent of the costs of "industrial research" or fifty percent of the costs of "pre-competitive development activity" is permitted.42 Support for "fundamental research," which seeks the "enlargement of general scientific and technical knowledge not linked to industrial or commercial objectives," and is performed independently by higher education or research establishments is expressly excluded from coverage by the Subsidies Code.43 This definition, in many ways, resembles the "better understanding of the laws of science and engineering" language of the definition of basic industrial research in the Dunkel Draft. The fundamental research category was added to prevent the extensive federal and state support provided to research activities performed at U.S. universities and other research institutions from being declared actionable subsidies.44 The definitions of industrial research and pre-competitive development activity were similarly crafted to protect other United States research and development programs from countervailability.

The increases in the levels of governmental research support considered non-actionable is a significant change; however, the new and expanded definitions of supportable research are equally important. Industrial research (the term "basic" is dropped in the Final Text) which may have seventy-five percent of its costs subsidized is defined as a "planned search or critical investigation aimed at discovery of new knowledge, with the objective that such knowledge may be useful in developing new products, processor services, or in bringing about a significant improvement to existing products, processes, or services."45 This language permits the research to have the development of new products as a specific objective and is thus far broader than basic industrial research which "might eventually apply to industrial activity..." covered in the Dunkel Draft. It is much closer to the applied research definition covering research "to facilitate the attainment of specific practical objectives." Consequently, it appears that some research which under the Dunkel Draft could only have twenty-five percent of its costs subsidized as applied research may have seventy-five percent subsidized under the Final Text.

The Final Text then adds the new category of pre-competitive development activity allowing government subsidies beyond the stage of research and into prototyping and product design. Pre-competitive development activity includes "the translation of industrial research findings into a plan, blueprint, or design for new, modified, or improved products, processes, or services whether intended for sale or use, including the creation of a first prototype which would not be capable of commercial use."46 The development of prototypes was not even considered in the Dunkel Draft. Proponents of these changes argue that this change was required to close an alleged loophole in the applied research definition which would have theoretically "encompassed development of specific products by specific firms."47 However, the USTR stated that these changes are actually an expansion of the areas of permissible support.48 The applied research definition limited support to the acquisition of "... knowledge to facilitate the attainment of specific practical objectives...", whereas the definition of pre-competitive development activity specifically mentions the development of prototypes. Consequently, these changes to the Subsidies Code open the door to much broader government support of and involvement in research and development activities than was previously considered appropriate.

The non-actionable subsidies section of the Final Text also includes miscellaneous explanatory provisions which were not included in the Dunkel Draft. The Final Text includes a footnote providing that the Subsidies Code does not restrict Members from providing assistance which does not qualify for non-actionable treatment. A footnote was also added to address programs which may overlap the industrial research and pre-competitive development activity categories.49 The Final Test further provides that within eighteen months after "entry into force of the Agreement Establishing the MTO the Committee shall review the operation of the provisions… with a view to making all necessary modifications to improve the operation of these provisions." This will include a review of the definitions of the categories. These provisions serve primarily to clarify and explain the operation of the research and development sections of the non-actionable subsidy articles.

The potential role of subsidies in research-oriented or knowledge-based industries was greatly enhanced by the modifications made in the Final Text of the non-actionable subsidies section of the GATT Subsidies Code. The pursuit of these changes is a major change in international trade policy from the Bush Administration, which steadfastly opposed the use of subsidies for commercial research and development. Members of the Senate publicly questioned the advisability of taking what was considered to be a step towards establishing an expensive industrial policy.50 However, the changes are defended as necessary to protect the enhanced U.S. technology development programs advocated by President Clinton. Whether or not these changes prove to be necessary or beneficial, they are a significant deviation from previous international trade policy and will allow broad governmental involvement in commercial research and development.

V. NON-ACTIONABLE SUBSIDIES AND U.S. TECHNOLOGY POLICY

The debate over the non-actionable research and development subsidies section of the Subsidies Code and the role of such subsidies in U.S. technology policy began soon after agreement on the Final Text was reached. All of the Republican members of the United States Senate expressed concern about the agreement in a letter to the USTR stating that "the subsidies agreement raises a fundamental question about the proper relationship between government and the private sector.''51 In response, the Administration points to the agreement's strengths including the requirement that all members of the new World Trade Organization be signatories of the new Subsidies Code, the inclusion of de facto, as well as de jure, export subsidies on the list of prohibited practices, and the retention of U.S. countervailing duty practice with respect to the specificity of sub-national subsidies.52 The changes in the non-actionable research and development subsidies provisions are defended as necessary to "protect the type of technology programs the U.S. currently has, while excluding the type of development and production assistance which other countries typically grant.53 Many high technology industries supported the changes, but questioned whether any green lighting of research and development subsidies was necessary due to the difficulty of proving injury and lack of challenges to research and development programs under the old Subsidies Code. The necessity and potential effect of these changes in the green light categories are uncertain, but it is clear that the United States has embarked on a new path in international competition.

The potential vulnerability of U.S. technology policy programs, particularly the more ambitious programs, under the Dunkel Draft Subsidies Code becomes apparent with a review of its provisions. In order for a subsidy to be actionable, it first must be specific as defined by Article 2 of the Subsidies Code. A subsidy is specific if it is explicitly limited to certain enterprises.54 If criteria for eligibility are established, such criteria must be strictly adhered to and eligibility automatic upon meeting the requirements, otherwise the subsidy is specific.55 An otherwise non-specific subsidy may lose this status if factors such as predominant use by certain enterprises or the granting of disproportionately large amounts of the subsidy to certain enterprises demonstrate that it is being applied in an essentially specific manner.56 These specificity standards are retained in the Final Text. Most of the research and development grants awarded by the ATP, ARPA, and other U.S. technology support programs fall under the specificity definitions of Article 2.1 (a) and (b). Criteria for eligibility are used to review proposals, but for most programs a peer review system is used and eligibility is not automatic. Consequently, these programs are specific subsidies and, if injury can be proven, are actionable unless covered by the non-actionable subsidy provisions.

As stated above, under the terms of the Dunkel Draft Subsidies Code, research and development subsidies are non-actionable if support is limited to fifty percent of basic industrial research or twenty-five percent of applied research. Furthermore, the assistance had to be limited to Personnel costs, costs of equipment, land, and buildings used exclusively for research activity, consulting and equivalent services, overhead costs, and other running costs.57 These limitations on covered costs were retained in the Final Text. However, the percentage limitations were in direct conflict with the Clinton technology proposals modeled after the financing framework used for the SEMATECH Consortium which involved a fifty percent investment by the government.58 Rather than adjust the technology support programs to meet these limitations, the Clinton Administration chose to negotiate for an increase to seventy-five percent for industrial research and fifty percent for pre-competitive development activity. Without this increase, many U.S. technology programs would risk potential GATT challenges and possible countervailing duties as an actionable subsidy.

Changes were made in the definitions of subsidizable research and development categories to better fit existing U.S. technology programs. An important objective was achieved when the "cut-off for activity which can be supported by the government was expanded slightly going from immediately before creation of any prototype to allowing involvement in the creation of the first non-commercial prototype.59 Without these changes, the government would not be able to support activity in a crucial stage of research and development, which is perceived to be a shortcoming in U.S. high technology industries; moving a project from the research stage to the creation of a potential product. Although any challenge to a U.S. research and development subsidy program would have to prove injury to a domestic industry under both the Dunkel Draft and the Final Text to succeed,60 without the percentage increases and definitional changes major elements of Clinton Administration technology policy would be vulnerable to challenge. The domestic opposition to these changes does not challenge their necessity to protect the proposed technology programs. The opposition questions the advisability of expanding U.S. technology programs and exempting such United States and foreign research and development subsidies from GATT discipline.

On January 31, 1994, the Republican members of the United States Senate sent a letter written by Senator John Danforth (R-MO) to Ambassador Kantor expressing their concern over the changes made in the Subsidies Code.61 The Senators questioned the wisdom of this course of action, raising the possibility that the United States would be drawn into a subsidies war.62 Beyond the obvious questions of availability of funding and possible Congressional pork barrel interference in the project selection process is how technologies will be selected for government support. Giving the government power to "pick winners and losers" will have a significant impact on the course of development of U.S. high technology industries. Theoretically, those industries not chosen for support would not only face competition from those domestic industries that were chosen, but would also have little or no recourse against foreign products which received non-actionable research and development subsidies. These questions are at the core of the opposition to the changes in the GATT Subsidies Code. In order to underline the concern over these changes, a filibuster was initiated against the proposed National Competitiveness Act of 1994 which contained increased funding for many of the Administration's technology programs.63 This dispute was partially resolved by an agreement between Senator Max Baucus (D-MT) and Senator Danforth requiring a strict interpretation of the green light definitions in the implementing legislation.64 These concerns present an important challenge to current technology policy and international trade policy and will remain controversial as the United States attempts to further develop its high technology industries.

The Clinton Administration attempted to frame the changes in the Subsidies Code as a matter of necessity to protect U.S. technology programs from GATT challenges. However, the real debate does not concern the necessity of the changes, but the wisdom of expanding government support for commercial research and development. The opposition views the debate to be over the proper role of government in the international economy.65 The unique nature of high technology industries requires a certain amount of government involvement including the enforcement of intellectual property rights and support for basic research. The Clinton Administration believes that the continued development of U.S. high technology industries requires a higher level of government investment. From this perspective, the changes in the Subsidies Code were necessary to protect U.S. technology programs. However, the long-term effect of these programs on the development of U.S. high technology industries and the U.S. economy remains to be seen.

VI. TRADE, TECHNOLOGY, AND SUBSIDIZATION

The debate over international trade and technology policy spans the entire spectrum of economic theory and legal thought. The current course of U.S. policy in this area is generally being set by advocates of what is termed "managed trade." A central thesis of managed trade advocates in the high technology sphere is that comparative advantage in this type of industry must be created through supportive government policies.66 High technology industries are by nature reliant on expensive research and development and require the existence of a well-educated and skilled work force. Support for education and some forms of research and development are necessary to create a comparative advantage in high technology industries and it is, therefore, argued that this is an appropriate role for the government. At the other end of the spectrum, free traders question the foundations of managed trade theory with some trade theorists challenging the concept, espoused by President Clinton, that nations compete.67 Between these two positions lies a school of thought which recognizes some role for government in high technology industries and international trade, but still maintains the primacy of the marketplace. The government is taking a more active role in high technology trade; however, the form this involvement eventually takes will be crucial in determining the effectiveness of the governmental actions.

The primary thrust of the free trade challenge to an active technology policy involving direct research and development subsidization is that such activity involves "the picking of winners and losers" which inevitably leads to failure. For example, industries selected as winners by the Japanese Ministry of International Trade and Industry ("MITI"), such as supercomputers and pharmaceuticals, failed to perform up to expectations while other sectors ignored by MITI, such as the automobile industry, became overwhelming successes.68 It is argued that the selection of a particular industry or company for government subsidization of any activity acts as a distortion of the terms of trade by permitting the subsidized entity to divert resources to other activities. By anointing a particular technology through granting government support, the government may make it difficult for competing technologies or industries to attract private capital. In addition, the changes in the GATT Subsidies Code arguably leaves these industries with no remedy to foreign subsidization. These objections are centered around the belief that this policy will lead to misallocation of resources and a substitution of bureaucratic judgment for business judgment which would thereby subject the economy to potential governmental failures brought on by bureaucratic ineptitude or shortsightedness. There is a potential for these problems, particularly if the focus of technology policy remains on large corporations and consortia, but there are mechanisms which can counter them.

While embracing the concept of government subsidization of some forms of research and development, the Clinton Administration has recognized the potential problems of government involvement. This is viewed as a minimal concern compared to the problems currently faced by U.S. high technology industries, such as under-investment in research and development by private organizations due to the relatively high potential risk involved in such investments.69 In addition, mechanisms exist which can limit the possibility of governmental failure. These mechanisms include requiring the participating entities to bear a significant portion of the project cost (usually at least 50 percent) to ensure that it has market applications, the use of independent experts in a peer review system for the review of proposals, the maintenance of competition between the various technical fields for limited government funds, and an ongoing review procedure to evaluate progress. These mechanisms to a certain extent act to ensure that the marketplace retains a role in determining the success of subsidized projects and that the evaluation of the merits of a particular technology is performed by independent experts and not government bureaucrats. A competitive award procedure with peer review limits the potential for governmental failure and pork barrel politics; however, the other problems may arise if the focus of technology policy continues to be on large corporate projects.

The Clinton Administration, as a part of its advocacy of government/industry partnerships, has consistently held up the SEMATECH semiconductor consortium as a model. Administration proposals center around such large scale projects as the Clean Car Initiative, the U.S. Display Consortium, and the Information Superhighway.71 Since the establishment of SEMATECH in 1987, the U.S. semiconductor industry has experienced significant success in the international marketplace and SEMATECH has received much of the credit. However, there are several other factors which can explain this success as well as reveal problems with the SEMATECH framework. Although the coordination provided by SEMATECH and the government research funding it received provided some benefits, the success of the U.S. semiconductor industry is better explained by a shift in the marketplace away from DRAM memory chips to the more advanced microprocessor, the market for which is dominated by U.S. companies.72 Large consortia, such as SEMATECH, also raise several contentious questions including membership, membership dues, and control of the research agenda. When SEMATECH was created, many of the more innovative small chip makers chose not to join because of the possible domination of the consortium by the large producers. In fact, the two smallest members of SEMATECH were the first to withdraw.73 Some large members are also considering withdrawing.74 Many of the small producers were already competing successfully against the Japanese in niche markets and saw no need for the consortium. The president of one small chip producer stated, "Consortia are formed by people who have lost."75 SEMATECH provided some benefits to the U.S. semiconductor industry, but the core of innovative and competitive activity in this and other high technology industries in the United States is in small high technology companies. The focus of technology policy should be the support of these companies, not consortia developed around large corporations.

It is estimated that between 1987 and 1992, small companies created over 2.5 million new jobs in the United States.76 These same businesses are on the cutting edge of innovation in technologies ranging from liquid crystal flat panel displays to environmental technologies. However, private capital is particularly difficult to obtain by innovators in such fields as flat panel displays because many large companies and investors view these areas as lost to the dominance of the Japanese. Government timing in the form of seed money is therefore vital to these small innovative companies to further develop and thereby attract private investment. Small and medium-sized high technology companies are also the primary success stories of government research and development support as provided through ARPA and the SBIR.77 In addition, government research and development grants to small high technology companies are more conducive to the mechanisms established to prevent government failure and ensure the continued influence of the marketplace. Determination of success is easier, peer review is more effective, and the time period of government involvement is generally shorter and more easily terminated. In larger projects such as SEMATECH, the project tends to develop a constituency and government involvement may continue longer than necessary. For example, although slated to end after five years, funding for SEMATECH was renewed even though the U.S. semiconductor industry now has the largest share of the world semiconductor market.78 However, it should be noted that SEMATECH has announced its intention to forego additional government funding by fiscal year 1997.79 Small high technology companies are the leaders in innovation and job creation and should be the focus of U.S. technology policy.

Whether prudent or not, the United States has moved to expand the use of research and development subsidies in both the domestic and international marketplaces. The government has established guidelines for the purpose of limiting the potential problems of government involvement in the marketplace, but their effectiveness is yet to be determined. The primary problem with the current course of U.S. technology policy is its tendency to focus on large consortia which involve large corporations. Although the leading example of such consortia, SEMATECH, has met with some success, it has also caused many problems including exclusion of smaller competitors. The leading American innovators and competitors both domestically and internationally are consistently the small and medium-sized high technology companies. They account for much of the recent job creation in the United States. Many of these companies also make effective use of existing U.S. government programs for research and development such as ARPA and SBIR in areas ranging from biotechnology and environmental technologies to semiconductors and flat panel displays. A technology policy which includes free market incentives as well as subsidies for basic research and pre-competitive development would function most effectively and provide the greatest benefits if it focuses on the needs of small high technology companies.

VII. CONCLUSION

The purpose of technology policy is to encourage the development of high technology industries in the United States. As various high technology industries have become the leading job creators as well as exporters, international trade policy and technology policy have become increasingly intertwined. The technology and international trade policies of the Bush and Clinton Administrations are generally a reflection of their overall economic philosophies. Although many of the market-oriented incentives proposed by the Reagan and Bush Administrations remain a part of technology policy, the focus is now on an expanded government role in technological development through direct government funding of commercial research and development. Debate on this issue was intensified by the last minute changes in the GATT Subsidies Code to permit subsidization of certain types of research and development. These changes are justified by the Administration as necessary to protect U.S. technology programs; however, some proposed technology programs stretch the limits of even the expanded provisions of the Final Text. For example, the new "National Flat Panel Display Initiative" requires that a company attempting to obtain certain government support for research and development in flat panel displays demonstrate commitment "to new investments in volume production facilities."80 Although the government is only providing research and development funds, the attached requirement that recipients shift resources to the creation of volume production facilities is a direct attempt by the government to use green lighted subsidies to support the development of a manufacturing capability.81 This controversial change in international trade and technology policy underlines the expanded government involvement in the high technology sector and represents the first step in the Administration's attempt to address the perceived needs of the U.S. high technology sector.

High technology industries require high levels of "patient" funding for research and development which is a comparatively risky investment. Much of the debate over technology policy involves the appropriate mechanism for providing this funding. Supporters of the change in policy assert that the risky nature of commercial research and development prevents many high technology industries from receiving the amount of private capital necessary to convert the results of basic research into a viable product; therefore, it is necessary for the government to fill the void. Although market incentives such as the research and experimentation tax credit and antitrust reform have had some benefits, their effectiveness is limited by the temporary nature of the tax credit and the general increase in corporate taxes. In addition, the cost of capital in the United States has remained relatively high due to a low national savings rate.82 A consumption-based tax system has been proposed to address this problem.83 The apparent inadequacy and unavailability of private capital has led to increasing demands for government support.

An effective research and development capability is vital as trade in all forms of high technology products continues to grow. Since negotiating the expanded research and development subsidies provisions, the Clinton Administration has moved to substantially increase the budgets of the various U.S. technology support programs such as the ATP and ARPA. The highest priority is being given to large corporate consortia modeled after SEMATECH even though small and medium-sized high technology companies have proven to be the leaders in technology development, international competitiveness, and job creation. If the U.S. government is to develop an effective technology policy, it must maintain respect for general free market principles while recognizing the unique nature of high technology industries. Government support in the form of seed money for research and development in the many dynamic small and medium-sized high technology companies within the proposed GATT Subsidy Code limitations can effectively meet the unique requirements of high technology industries while limiting many of the distortions caused by subsidization.

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1. Louise Kehoe, Trade Relations in Jeopardy, U.S. Manufacturers Warn Clinton: Tokyo 'Backsliding' on Chips Accord, FIN. TIMES, Feb. 9, 1994, at 6. See also Michiyo Nakamoto & Paul Abrahams, Little Progress in Market Access Discussions, FIN. TIMES, Feb. 10, 1994, at 4.
2. OFFICE OF SCIENCE AND TECHNOLOGY POLICY, EXECUTIVE OFFICE OF THE PRESIDENT, U.S. TECHNOLOGY POLICY 7-8 (1990)[hereinafter U.S. TECHNOLOGY POLICY].
3. Id. at 7-8.
4. PRESIDENT WILLIAM J. CLINTON & VICE PRESIDENT ALBERT GORE, JR., TECHNOLOGY FOR AMERICA'S ECONOMIC GROWTH, A NEW DIRECTION TO BUILD ECONOMIC STRENGTH 8, 16 (1993) [hereinafter TECHNOLOGY FOR AMERICA].
5. Letter from Ambassador Michael Kantor, United States Trade Representative, Executive Office of the President, to Senator John C. Danforth (R-MO)(Feb. 7, 1994)[hereinafter Kantor Letter].
6. Jonathan Weber, U.S. Unable to Formulate Competitiveness Strategy, L.A. TIMES, Oct. 5, 1992, at Al; see also Both Parties Fault U.S. on Competitiveness, N.Y. TIMES, June 21 1990, at A18.
7. "We need to cut the tax on capital gains, encourage risk-takers, especially those in our small businesses, to take those steps that translate into economic reward, jobs and a better life for all of us." President George Bush, State of the Union Address, (January 31, 1990) in N.Y. TIMES, Feb. 1, 1990, at D22. See also Adam Clymer, Renewed Republican Call for Tax Cut is Led by Bush, N.Y. TIMES, Oct. 18, 1991, at Al8.
8. U.S. TECHNOLOGY POLICY, supra note 2, at 3.
9. 15 U.S.C. §§ 4301-4306, Pub. L. No. 98-462, 98 Stat. 1815 (1984).
10. 15 U.S.C. § 4303.
11. 15 U.S.C. §§ 4301-4306, Pub. L. No. 98-462, 98 Stat. 1815 (1984)(codified as amended at Pub. L. No. 103-42, 107 Stat. 117-119 (1993).
12. U.S. TECHNOLOGY POLICY, supra note 2, at 4.
13. Id.
14. Id.
15. Michael L. Doane, Trips and International Intellectual Property Protection in an Age of Advancing Technology, 9 AM. U. J. Int’l. L. Pol'y 465 (1994).
16. Pub. L. No. 100-418, § 1303, 102 Stat. 1107 (1988).
17. Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, § 5131, 102 Stat. 1107 (1988).
18. Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, § 5131, 102 Stat. 1107 (1988).
19. NATIONAL ACADEMY OF SCIENCES, THE GOVERNMENT ROLE IN CIVILIAN TECHNOLOGY, BUILDING A NEW ALLIANCE 65 (1992).
20. U.S. TECHNOLOGY POLICY, supra note 2, at 12; see also COUNCIL ON COMPETITIVENESS, INDUSTRY AS A CUSTOMER OF THE FEDERAL LABORATORIES (1993).
21. U.S. TECHNOLOGY POLICY, supra note 2, at 9.
22. See National Critical Technologies Panel, Second Biennial Report, Jan. 1993; see also Susan Dentzer, Sharpening Our High-Tech Edge, U.S. NEWS & WORLD REP., Dec. 16, 1991.
23. Democratic Bill to Aid Advanced Technologies Draws Administration Opposition at Hearing, Int'l Trade Daily (BNA)(Trade Policy Sept. 19, 1991).
24. See COUNCIL ON COMPETITIVENESS, PICKING UP THE PACE: THE COMMERCIAL CHALLENGE TO AMERICAN INNOVATION (1988); see also U.S. CONGRESS, OFFICE OF TECHNOLOGY ASSESSMENT, COMPETING ECONOMIES: AMERICA, EUROPE, AND THE PACIFIC RIM (1991). At the time this report was issued, the Director of the Office of Technology Assessment was John H.Gibbons. He subsequently became Director of the Office of Technology Policy in the Clinton Administration.
25. LAURA D'ANDREA TYSON, WHO'S BASHING WHOM? TRADE CONFLICT IN HIGH-TECHNOLOGY INDUSTRIES (1992). The author subsequently became the Chairman of the Council of Economic Advisors and then Head of the National Economic Council in the Clinton Administration.
26. TECHNOLOGY FOR AMERICA, supra note 4, at 12.
27. TECHNOLOGY FOR ECONOMIC GROWTH: PRESIDENT'S PROGRESS REPORT (Nov. 1993)[hereinafter TECHNOLOGY FOR ECONOMIC GROWTH].
28. TECHNOLOGY FOR AMERICA, supra note 4, at 12.
29. Id.
30. Id.
31. Id.
32. Edmund Andrews, New Tack on Technology: U.S. Tries Coaxing, Not Crash Program For the Advanced Information Network, N.Y. TIMES, Jan. 12, 1994, at Al; see also Bill Carter, Gore Outlines Data Highway Policy, N.Y. TIMES, Jan. 12, 1994, at D5.
33. TECHNOLOGY FOR ECONOMIC GROWTH, supra note 27.
34. TECHNOLOGY FOR AMERICA, supra note 4, at 8.
35. S. 4, 103d Cong., 2d Sess. (1994). This bill was passed by the Senate, but later died in conference committee.
36. Thomas L. Friedman, U.S. Ending Curbs on High-Tech Gear to Cold War Foes, N.Y. TIMES, Mar. 31, 1994, at Al; see also Asra Q. Nomani, U.S. Lifts Curbs on Exporting of Computers, WALL ST. J., Mar. 31, 1994, at A2.
37. COUNCIL ON COMPETITIVENESS, ROADMAP FOR RESULTS: TRADE POLICY, TECHNOLOGY AND AMERICAN COMPETITIVENESS 2 (1993)[hereinafter ROADMAP FOR RESULTS]
38. Id. at 2.
39. Agreement on Subsidies and Countervailing Measures, GATT Doc. No. MTN.TNC/W/FA, art. 8.2(a) (1991)[hereinafter Dunkel Draft].
40. Id. at n.2.
41. Id. at n.3.
42. Agreement on Subsidies and Countervailing Measures, GATT Doc. No. MTN/FA II-13, art. 8.2(a)[hereinafter Final Text].
43. Id. at n.24.
44. Hearing on GATT Agreement on Subsidies and Countervailing Measures before the Senate Committee on Finance, 103d Cong., 2d Sess. (1994)(statement of Senator Jeff Bingaman).
45. Final Text, supra note 42, at n.27.
46. Id. at n.28.
47. Statement of Senator Jeff Bingaman, supra note 44.
48. Kantor Letter, supra note 5.
49. The Final Text states that in the case of overlap "the allowable level of non-actionable assistance shall not exceed the simple average of the allowable levels of non-actionable assistance applicable to the above two categories, calculated on the basis of all eligible costs …" Final Text, supra note 42, at n.25.
50. Letter from Senator John C. Danforth (R-MO) to Ambassador Michael Kantor, the United States Trade Representative, Executive Office of the President (Jan. 31, 1994)[hereinafter Danforth Letter]
51. Id.
52. Hearing before the Senate Committee on Finance, 103d Cong., 2d Sess. (1994)(testimony of Rufus H. Yerxa, Deputy U.S. Trade Representative).
53. Kantor Letter, supra note 5.
54. Dunkel Draft, supra note 39, at art. 2.1(a).
55. Id. at art. 2.1(b)
56. Id. at art. 2.1(c)
57. Id. at art. 8.2(a)
58. "To put it more bluntly, it made absolutely no sense to have our technology programs require both government and industry put up 50 percent each, while exposing a company to challenge if the government investment exceeded 25 percent!" Testimony before the Senate Finance Committee, 103d Cong., 2d Sess. (1994)(testimony of Mary Lowe Good, under Secretary of Commerce for Technology).
59. Kantor Letter, supra note 5.
60. Final Text, supra note 42, at art. 5.1(a).
61. Danforth Letter, supra note 50.
62. "Here is the dilemma: Either we match subsidies for foreign industries from their governments or we will not. If we match foreign subsidies, we must find the money for substantial new federal spending. But if we sit on the sidelines, we will lose out as foreign industries grab American sales and jobs." Senator John C. Danforth, Trade Accord Should Be Renegotiated, ST. LOUIS POST DISPATCH, Feb. 13, 1994, at B3; see also John Maggs, Danforth Says Document Leak Exposes Clinton Subsidy Plan, J. OF COM., Jan. 26, 1994, at 3A.
63. John Maggs, White House Subsidy Plan Faces Bipartisan Opposition, J. OF COM., Mar. 10, 1994; see also Nancy Dunn, US Technology Bill Clears Hurdle, FIN. TIMES, Mar. 18, 1994, at 8.
64. "The implementing legislation must require a strict interpretation of all aspects of the green light categories to ensure that none of these categories are misused in such a way as to indirectly subsidize production or export of a product." Letter from Senator John C. Danforth (R-MO) and Senator Max Baucus (D-MT) to Ambassador Michael Kantor, the United States Trade Representative, Executive Office of the President, (June 22, 1994)[hereinafter Danforth/Baucus Letter].
65. Senator John Danforth stated: "Do you believe the genius of the federal government can guide the economy along? Or do you believe the government should get out of the way and let the marketplace work?" Charlotte Grimes, Danforth Blasts GATT, Foresees 'Subsidies War' ST, LOUIS POST DISPATCH, Feb. 14, 1994, at A1.
66. "A nation's competitive position in industries with these characteristics is less a function of its national endowments and more a function of strategic interactions between its firms and government, and between them and the firms and governments of other nations." TYSON, supra note 25, at 3.
67. "The idea that a country's economic fortunes are largely determined by its success on world markets is a hypothesis, not a necessary truth; and as a practical, empirical matter, that hypothesis is flatly wrong. That is, it is simply not the case that the world's leading nations are to any important degree in economic competition with each other, or that any of their major economic problems can be attributed to failures to compete on world markets." Paul Krugman, Competitiveness: A Dangerous Obsession, 73 FOREIGN AFF., Mar./Apr. 1994, at 28.
68. Peter F. Drucker, Trade Lessons From the World Economy, 73 FOREIGN AFF., Jan./Feb. 1994, at 105-6.
69. "The goal of technology policy is not to substitute the government's judgment for that of private industry in deciding which potential 'winners' to back. Rather, the point is to correct a genuine and significant market failure—underinvestment in basic research and in precommercial R&D resulting from the divergence between private and social returns to those activities." Economic Report of the President, Transmitted to the Congress, Feb. 1994, at 191.
70. Id. at 192-93.
71. TECHNOLOGY FOR ECONOMIC GROWTH, supra note 27.
72. T. Michael Nevens, What's Really Behind the Resurgence of U.S. Semiconductor Manufacturers; Industry Overview, 19 ELECTRONIC BUS., July 1993, at 39; see also Thomas McCarroll, Chips Ahoy, TIME, Nov. 23, 1992, at 62.
73, Uncle Sam's Helping Hand, ECONOMIST, Apr. 2, 1994, at 78.
74. Jeff Dorsch, AT&T Ponders SEMATECH/SRC Exit: AT&T May Withdraw From SEMATECH and the Semiconductor Research Corporation, ELECTRONIC NEWS, Feb. 7, 1994, at 1.
75. See supra note 72.
76. Stuart Anderson, Industrial Policy's Dubious Gains, J. OF COM., Feb. 9, 1994, at 6A.
77. Brian Robinson, Promises, Promises: Clinton and the Technology Policy He Now Fosters, TECH. TRANSFER BUS., Winter 1994, at 36.
78. See supra note 72.
79. Daniel Southerland, Elizabeth Corcoran, Computer Chip Group to End Reliance on U.S. Funds, WASH. POST, July 18, 1994, at A4.
80. Department of Defense, National Flat Panel Display Initiative, Apr. 28, 1994, at 12; see also Keith Bradsher, Pentagon Tests New Policy In Subsidizing An Industry, N.Y. TIMES, Apr. 28, 1994, at D1; Louise Kehoe, U.S. To Plug Holes in Flat Panel Industry, FIN. TIMES, Apr. 29, 1994; John Maggs, Explanation Sought On Effect Of Subsidy Law On Screen Plan, J. OF COM., May 6, 1994, at 3A.
81. The National Flat Panel Display Initiative also appears to be the type of program Senators Danforth and Baucus intended to prohibit with their agreement concerning the strict interpretation of the green light subsidy definitions. Danforth/Baucus Letter, supra note 64.
82. Paul R. Krugman, Technology and International Competition: A Historical Perspective, in LINKING TRADE AND TECHNOLOGY POLICIES: AN INTERNATIONAL COMPARISON OF THE POLICIES OF INDUSTRIALIZED NATIONS 25 (Martha C. Harris & Gordon E. Moore eds., 1992).
83. Senators Nunn, Domenici Propose Tax Code Overhaul in 10 Year Deficit Reduction Plan, 1992 Daily Rep. for Executives 191 (BNA)(Taxation, Budget, and Accounting Oct. 1, 1992).

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