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Free trade and science policy's research agenda
TecI~nolog~ in Society, Vol. 11, pp. 291-295 (1989) Printed in the USA. All tights reserved.
Copyright
0160-791X189 $3.00 + .OO 0 1989 Pergamon Press plc
Free Trade and Science Policy’s Research Agenda Andrew H. Wilson
ABSTRACT. The purpose of this paper is to set out a research age&a for science and tecbnology policy which arose out of discussions at the ISPF Kingston Conference. I This agenda is intended to draw attention to elements in the science and technology policies of the governments in Canada and the United States that should be re-examined in the /igbt of the Free-Trade Agreement and its operation.
Introduction
As this paper is being written, towards the end of October 1988, election campaigns are in full swing in both Canada and the United States. In the US one, little or nothing is being heard about the Canada-US Free Trade Agreement (FTA). The Congress has in fact passed the legislation that will allow the Agreement to go into effect on January 1, 1989. In the Canadian one, it has become a hot issue, principally as a result of the debate seen on television between the leaders of the three parties contesting the election. In Canada, only the House of Commons has passed corresponding legislation to implement the agreement. The Senate, dominated as it is by one of the opposition parties, has refused to do so, and this was undoubtedly a factor in precipitating the election call. The Free- Trade Agreement
(FTA)
The FTA was reached on October 4, 1987, after months of negotiations between Canadian and American trade representatives and political leaders. The document to which reference has been made for the purposes of this paper is The CanadaUS Free-Trade Agreement, published by the Department of External Affairs in Ottawa. The Overview to this document states: The Canada-United States Trade Agreement . . . is the biggest trade agreement ever concluded between two countries. It covers more trade and more trade-related issues than any other trade agreement and breaks important new ground which will be of lasting value to the Canadian and US economies. . . The Agreement sets a new standard for trade agreements concluded under the General Agreement on Tariffs and Trade (GATT). . . . Andrew H. Wilson is an Ottawa-basedconsultantin researchpolicy and management and a member of the Management Committee of the ISPF/NAC. 291
A. H. Wilson
292
Once in force, the Agreement will chart a new course for the largest and most important trading relationship in the world. . . . The accord sends a powerful Neither
science
signal against protectionism
nor technology
figured
as major-or
and for trade liberalization. even minor-areas
of nego-
during the discussions between the two countries, as far as can be determined from published material. There are, however, a number of technology-related matters in the text of the agreement. The following are examples. Chapter 6 of the agreement deals with Technical Bamkrs. One of the explanatory notes states: tiation
This means that the two governments have agreed to avoid the use of standards-related measures as unnecessary obstacles to trade. Standards-related measures are defined to include specifications and regulations, standards and rules for certification systems that apply to goods, and processes and production methods.
Chapter 13, on Government Procwement, includes a provision that may significantly influence the procurement process in both countries, if rigorously implemented. The explanatory paragraph reads as follows: [This] chapter increases the amount of procurement open for competition between Canadian and US suppliers in each other’s market. It lowers the threshold in the GATT Code from US $171,000 (about CDN $238,000), for purchases by Code-covered entities of covered goods to US $25,000 (about CDN $33,000).All government purchases above this new threshold will be open to competition unless they are reserved for small business or excluded for reasons of national security.
Chapter 14 deals with Services, and with the removal of barriers to trade in specific ones. Among these are included: engineering, architectural and surveying, scientific and technical, and computer services; commercial physical and biological research services; and commercial testing laboratory services. Chapter 15 deals with Temporay Entry for Buiness Persons. The first explanatory paragraph says: In this chapter, the two Parties establish a unique set of obligations to deal with an increasingly vexing problem in international trade. Export sales today require more than a good product at a good price. They also require a good sales network and, most of all, reliable after-sales service. Free and open trade conditions, therefore, require . . . that the people required to make sales and manage investments or provide before and after sales service to those sales and investments should be able to move freely across the border. Furthermore, trade in professional and commercial services cannot take place unless people can move freely across the border.
The notes go on to say that the Canadian government’s objectives in this case were determined by the increasing frustration experienced by Canadian entrepreneurs when marketing and servicing sales to their US customers. This chapter establishes four categories of business travel: business visitor; professional; trader or investor; and intracompany transferee. It identifies seven spe-
Free Trade and Science Policy
293
cific purposes for business visitors: research and design; growth, manufacture and production; marketing; sales; distribution; after sales service; and general services. Among the professionals are: engineers; scientists (in 14 disciplines); research assistants; mathematicians; computer systems analysts; scientific technicians/ technologists; and college and university teachers. Chapter 20 deals with Other Provisions. Two of them are of interest. One is intellectual property, about which an explanatory paragraph says: During the course of the negotiations, the two governments worked on an overall framework covering the protection of intellectual property rights. . . In the end, a substantive chapter was dropped. Nevertheless, in Article 2004, the two governments agree to continue to cooperate and work toward better international intellectual property rules, particularly in the Uruguay Round of Multilateral Trade Negotiations where a working group on traderelated intellectual property issues has been established. The other concerns cultural industries, which are generally exempt from the agreement, and which are principally concerned with films and videos, publishing, recording and broadcasting. Science and technology are not, therefore, considered to be cultural industries. Nor are the universities. They are not therefore protected against the agreement. In Canada, the two opposition parties in the House and the majority in the Senate are against the agreement. Not all of the provinces have given their support. The Government of Ontario opposes it, and it is the country’s principal manufacturing province and slated to gain from increased trade in manufactured products. The Ontario government is not against free trade, as such. It simply does not view this particular agreement as being a good deal for Canada (or Ontario). Too much has been surrendered in terms of the government’s ability to develop appropriate economic, social and science policies, and more concessions will be required in the future. One of the best summations of the dichotomy of Canadian views was made by the ex-Chairman of the Science Council of Canada, Stuart Smith. He said, in part: I think what I see in the arguments over the Free-Trade Agreement is a difference in two philosophies. One philosophy says that Canada requires government in order to maintain its autonomy. The nation-state is particularly important in this country, and if it is withering away, that is a serious threat to the autonomy of the country. The other school of thought says that the role of government is really no longer needed, for Canada can handle itself quite well in the marketplace with market forces. These two schools of thought are both respectable, however. And the rhetoric about the FTA has far too much exaggeration on both sides, and perhaps not enough consideration for the fact that there is a fundamental philosophical difference which is being played out against a background of change right across the world.
With regard to the United States, the Canada-US Agreement has been overshadowed in the Congress and in the national trade debate by the massive, and recently signed into law, Omnibus Trade and Competitiveness Act of 1988 in which technology plays several important supporting roles. For example, the bill has a number of provisions explicitly supporting US industry, and one which affects the
294
A. H. Wilson
treatment of American-owned intellectual property in international trade. The bill also embodies the Technology Competitiveness Act, which has implications for government assistance for industrial technology and technology transfer, and for national technology policy. The Office of the US Trade Representative has recently been reorganized and has established an Office of Services, Investment, Intellectual Property, and Science and Technology to reflect the new importance of these areas internationally. Rather than being considered a negative influence by Canada and by small countries generally, the FTA could be considered useful for counteracting the protectionist influence of the Omnibus Bill. General Issues Since science and technology and S&T policy had not been part of the CanadaUS free-trade negotiations, there is little to go on- at least from the Canadian side-when it comes to assessing the agreement’s impact. The direct benefits will be elusive and the disadvantages harder to detect. Clearly, it will be some time before any of its effects on science, technology and S&T policy can be measured. Nevertheless, the business of collecting information for those items chosen for the agenda should begin right away. The Research Agenda for Science and Technology PO/icy The initial list of possible items for this agenda was a long one. But after looking at the related items and applying the kind of framework presented by Chris Hill, the number was reduced considerably and overlapping was avoided. A further examination indicated that some of the items were not really research but called for the collection and analysis of existing information and not for the assembling of new material. The three items that follow are in this category: 1. Comparative experience of other free-trade regimes with one another and with the Canada-US Agreement; 2. An examination of education and training and related research at all levels in Canada and the US; and 3. An examination of current science and technology policies at the national, provincial and state levels in Canada and the US. The first of these is, effectively, an extension of the work reported by John Bell and Chris Hill in their papers. GATT experience will also be relevant. The emphasis throughout should be on science and technology policy impacts. It is possible that, given several years of the FTA, this item may become research rather than data gathering. Such work might be done under joint contract to the Ministry of State for Science and Technology in Canada and the National Academy of Engineering or the National Science Foundation in the United States. Parts of the work might be done for the Canadian and US agencies by a single contractor.
Free Trade and Science Policy
The second three items will need to be researched.
295
They are:
4. A study of the implementing legislation for the FTA, together with the study of legislation governing intellectual property, technological protection, and nontariff barriers and, where legislation or regulations are not in place, a study of actual practices in these areas; 5. A study of the problems of mobility and flow of highly qualified people between Canada and the United States, before and after the implementation of the FTA; and 6. A study of entrepreneurship, the innovation process and the roles of engineers in support of both, with particular reference to the post-implementation period of the FTA. Joint studies are unlikely in these cases because of the more sensitive nature of the research and because each item will need to be directed to policies in the two countries. In Canada the work might be assigned to the Science Council of Canada, under the direction of the Minister responsible for Science. In the United States, it might be assigned to the Office of the Science Advisor.
Note 1. For a complete review of the ISPF Symposium, see A.H. Wilson, posium,” Science and Pub/it Policy (London, in press).
“Science,
Free Trade and the ISPF Sym-
Copyright
0160-791X189 $3.00 + .OO 0 1989 Pergamon Press plc
Free Trade and Science Policy’s Research Agenda Andrew H. Wilson
ABSTRACT. The purpose of this paper is to set out a research age&a for science and tecbnology policy which arose out of discussions at the ISPF Kingston Conference. I This agenda is intended to draw attention to elements in the science and technology policies of the governments in Canada and the United States that should be re-examined in the /igbt of the Free-Trade Agreement and its operation.
Introduction
As this paper is being written, towards the end of October 1988, election campaigns are in full swing in both Canada and the United States. In the US one, little or nothing is being heard about the Canada-US Free Trade Agreement (FTA). The Congress has in fact passed the legislation that will allow the Agreement to go into effect on January 1, 1989. In the Canadian one, it has become a hot issue, principally as a result of the debate seen on television between the leaders of the three parties contesting the election. In Canada, only the House of Commons has passed corresponding legislation to implement the agreement. The Senate, dominated as it is by one of the opposition parties, has refused to do so, and this was undoubtedly a factor in precipitating the election call. The Free- Trade Agreement
(FTA)
The FTA was reached on October 4, 1987, after months of negotiations between Canadian and American trade representatives and political leaders. The document to which reference has been made for the purposes of this paper is The CanadaUS Free-Trade Agreement, published by the Department of External Affairs in Ottawa. The Overview to this document states: The Canada-United States Trade Agreement . . . is the biggest trade agreement ever concluded between two countries. It covers more trade and more trade-related issues than any other trade agreement and breaks important new ground which will be of lasting value to the Canadian and US economies. . . The Agreement sets a new standard for trade agreements concluded under the General Agreement on Tariffs and Trade (GATT). . . . Andrew H. Wilson is an Ottawa-basedconsultantin researchpolicy and management and a member of the Management Committee of the ISPF/NAC. 291
A. H. Wilson
292
Once in force, the Agreement will chart a new course for the largest and most important trading relationship in the world. . . . The accord sends a powerful Neither
science
signal against protectionism
nor technology
figured
as major-or
and for trade liberalization. even minor-areas
of nego-
during the discussions between the two countries, as far as can be determined from published material. There are, however, a number of technology-related matters in the text of the agreement. The following are examples. Chapter 6 of the agreement deals with Technical Bamkrs. One of the explanatory notes states: tiation
This means that the two governments have agreed to avoid the use of standards-related measures as unnecessary obstacles to trade. Standards-related measures are defined to include specifications and regulations, standards and rules for certification systems that apply to goods, and processes and production methods.
Chapter 13, on Government Procwement, includes a provision that may significantly influence the procurement process in both countries, if rigorously implemented. The explanatory paragraph reads as follows: [This] chapter increases the amount of procurement open for competition between Canadian and US suppliers in each other’s market. It lowers the threshold in the GATT Code from US $171,000 (about CDN $238,000), for purchases by Code-covered entities of covered goods to US $25,000 (about CDN $33,000).All government purchases above this new threshold will be open to competition unless they are reserved for small business or excluded for reasons of national security.
Chapter 14 deals with Services, and with the removal of barriers to trade in specific ones. Among these are included: engineering, architectural and surveying, scientific and technical, and computer services; commercial physical and biological research services; and commercial testing laboratory services. Chapter 15 deals with Temporay Entry for Buiness Persons. The first explanatory paragraph says: In this chapter, the two Parties establish a unique set of obligations to deal with an increasingly vexing problem in international trade. Export sales today require more than a good product at a good price. They also require a good sales network and, most of all, reliable after-sales service. Free and open trade conditions, therefore, require . . . that the people required to make sales and manage investments or provide before and after sales service to those sales and investments should be able to move freely across the border. Furthermore, trade in professional and commercial services cannot take place unless people can move freely across the border.
The notes go on to say that the Canadian government’s objectives in this case were determined by the increasing frustration experienced by Canadian entrepreneurs when marketing and servicing sales to their US customers. This chapter establishes four categories of business travel: business visitor; professional; trader or investor; and intracompany transferee. It identifies seven spe-
Free Trade and Science Policy
293
cific purposes for business visitors: research and design; growth, manufacture and production; marketing; sales; distribution; after sales service; and general services. Among the professionals are: engineers; scientists (in 14 disciplines); research assistants; mathematicians; computer systems analysts; scientific technicians/ technologists; and college and university teachers. Chapter 20 deals with Other Provisions. Two of them are of interest. One is intellectual property, about which an explanatory paragraph says: During the course of the negotiations, the two governments worked on an overall framework covering the protection of intellectual property rights. . . In the end, a substantive chapter was dropped. Nevertheless, in Article 2004, the two governments agree to continue to cooperate and work toward better international intellectual property rules, particularly in the Uruguay Round of Multilateral Trade Negotiations where a working group on traderelated intellectual property issues has been established. The other concerns cultural industries, which are generally exempt from the agreement, and which are principally concerned with films and videos, publishing, recording and broadcasting. Science and technology are not, therefore, considered to be cultural industries. Nor are the universities. They are not therefore protected against the agreement. In Canada, the two opposition parties in the House and the majority in the Senate are against the agreement. Not all of the provinces have given their support. The Government of Ontario opposes it, and it is the country’s principal manufacturing province and slated to gain from increased trade in manufactured products. The Ontario government is not against free trade, as such. It simply does not view this particular agreement as being a good deal for Canada (or Ontario). Too much has been surrendered in terms of the government’s ability to develop appropriate economic, social and science policies, and more concessions will be required in the future. One of the best summations of the dichotomy of Canadian views was made by the ex-Chairman of the Science Council of Canada, Stuart Smith. He said, in part: I think what I see in the arguments over the Free-Trade Agreement is a difference in two philosophies. One philosophy says that Canada requires government in order to maintain its autonomy. The nation-state is particularly important in this country, and if it is withering away, that is a serious threat to the autonomy of the country. The other school of thought says that the role of government is really no longer needed, for Canada can handle itself quite well in the marketplace with market forces. These two schools of thought are both respectable, however. And the rhetoric about the FTA has far too much exaggeration on both sides, and perhaps not enough consideration for the fact that there is a fundamental philosophical difference which is being played out against a background of change right across the world.
With regard to the United States, the Canada-US Agreement has been overshadowed in the Congress and in the national trade debate by the massive, and recently signed into law, Omnibus Trade and Competitiveness Act of 1988 in which technology plays several important supporting roles. For example, the bill has a number of provisions explicitly supporting US industry, and one which affects the
294
A. H. Wilson
treatment of American-owned intellectual property in international trade. The bill also embodies the Technology Competitiveness Act, which has implications for government assistance for industrial technology and technology transfer, and for national technology policy. The Office of the US Trade Representative has recently been reorganized and has established an Office of Services, Investment, Intellectual Property, and Science and Technology to reflect the new importance of these areas internationally. Rather than being considered a negative influence by Canada and by small countries generally, the FTA could be considered useful for counteracting the protectionist influence of the Omnibus Bill. General Issues Since science and technology and S&T policy had not been part of the CanadaUS free-trade negotiations, there is little to go on- at least from the Canadian side-when it comes to assessing the agreement’s impact. The direct benefits will be elusive and the disadvantages harder to detect. Clearly, it will be some time before any of its effects on science, technology and S&T policy can be measured. Nevertheless, the business of collecting information for those items chosen for the agenda should begin right away. The Research Agenda for Science and Technology PO/icy The initial list of possible items for this agenda was a long one. But after looking at the related items and applying the kind of framework presented by Chris Hill, the number was reduced considerably and overlapping was avoided. A further examination indicated that some of the items were not really research but called for the collection and analysis of existing information and not for the assembling of new material. The three items that follow are in this category: 1. Comparative experience of other free-trade regimes with one another and with the Canada-US Agreement; 2. An examination of education and training and related research at all levels in Canada and the US; and 3. An examination of current science and technology policies at the national, provincial and state levels in Canada and the US. The first of these is, effectively, an extension of the work reported by John Bell and Chris Hill in their papers. GATT experience will also be relevant. The emphasis throughout should be on science and technology policy impacts. It is possible that, given several years of the FTA, this item may become research rather than data gathering. Such work might be done under joint contract to the Ministry of State for Science and Technology in Canada and the National Academy of Engineering or the National Science Foundation in the United States. Parts of the work might be done for the Canadian and US agencies by a single contractor.
Free Trade and Science Policy
The second three items will need to be researched.
295
They are:
4. A study of the implementing legislation for the FTA, together with the study of legislation governing intellectual property, technological protection, and nontariff barriers and, where legislation or regulations are not in place, a study of actual practices in these areas; 5. A study of the problems of mobility and flow of highly qualified people between Canada and the United States, before and after the implementation of the FTA; and 6. A study of entrepreneurship, the innovation process and the roles of engineers in support of both, with particular reference to the post-implementation period of the FTA. Joint studies are unlikely in these cases because of the more sensitive nature of the research and because each item will need to be directed to policies in the two countries. In Canada the work might be assigned to the Science Council of Canada, under the direction of the Minister responsible for Science. In the United States, it might be assigned to the Office of the Science Advisor.
Note 1. For a complete review of the ISPF Symposium, see A.H. Wilson, posium,” Science and Pub/it Policy (London, in press).
“Science,
Free Trade and the ISPF Sym-