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EUROPE 1992
The Implications of Market Integration
for R&D Intensive Firms
Academy industry Program
of the National Research Council
in cooperation with the
Office of International Affairs
National Academy Press
Washington, D.C. 1991
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National Academy Press · 2101 Constitution Avenue, N.W. · Washington, DC 20418
NOTICE: This book is based on a symposium sponsored by the Academy Industry Program.
It has been reviewed according to procedures approved by the National Research Council.
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of
distinguished scholars engaged in scientific and engineering research, dedicated to the further-
ance of science and technology and to their use for the general welfare. Upon the authority of
the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to
advise the federal government on scientific and technical matters. Dr. Frank Press is president
of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the
National Academy of Sciences, as a parallel organization of outstanding engineers. It is
autonomous in its administration and in the selection of its members, sharing with the National
Academy of Sciences the responsibility for advising the federal government. The National
Academy of Engineering also sponsors engineering programs aimed at meeting national needs,
encourages education and research, and recognizes the superior achievements of engineers.
Dr. Robert M. White is president of the National Academy of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences to
secure the services of eminent members of appropriate professions in the examination of policy
matters pertaining to the health of the public. The Institute acts under the responsibility given
to the National Academy of Sciences by its congressional charter to be an adviser to the
federal government and, upon its own initiative, to identify issues of medical care, research,
and education. Dr. Samuel O. Thier is president of the Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in
1916 to associate the broad community of science and technology with the Academy's purposes
of furthering knowledge and advising the federal government. Functioning in accordance with
general policies determined by the Academy, the Council has become the principal operating
agency of both the National Academy of Sciences and the National Academy of Engineering in
providing services to the government, the public, and the scientific and engineering communi-
ties. The Council is administered jointly by both Academies and the Institute of Medicine. Dr.
Frank Press and Dr. Robert M. White are chairman and vice chairman, respectively, of the
National Research Council.
Support for this project was provided by the Academy Industry Program.
Library of Congress Catalog Card Number 90-62811
International Standard Book Number 0-309-04332-8
Copies of this book are available from:
Academy Industry Program
2101 Constitution Avenue, N.W.
Washington, DC 20418
Additional copies are available for sale from:
National Academy Press
2101 Constitution Avenue, N.W.
Washington, DC 20418
S-215
Printed in the United States of America
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ACADEMY INDUSTRY PROGRAM
STEPHEN A. MERRILL, Director
LOIS PERROLLE, Associate Director
SHIRLEY E. COLE, Administrative Assistant
The Academy Industry Program was established in 1983 to enhance
communication between the National Research Council and industry on
issues related to science and technology. It serves as a two-way channel of
communication by disseminating the work of the National Research Coun-
cil to industry and by providing a forum in which business leaders can bring
their views on important issues in science, technology, and health to the
attention of the Research Council's leadership. The program also provides
support for institutionally initiated studies for which government funding
may be inappropriate or unavailable.
. . .
Liz
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Contents
Preface ....
Introduction ...........
Science and Technology and European Market Integration:
Changes and Continuity ...........................
Views and Concerns of the U.S. Science and Technology
Community ._
. .
V11
Access to Precompetitive Research Programs of the European
Communities ..............................................
The View from Congress .........................................
The 1992 European Market Integration: Bush Administration
Policies ................................................
.. 24
47
..... 56
EC Standards Setting, Certification, and Testing Processes: Roles and
Implications for U.S. it&D-Intensive Industries 76
Strategic Implications of European Market Integration for U.S.
it&D-Intensive Industry and the Science and Technology Base
Suggested Strategies for U.S./EC Cooperation and Competition
APPENDIX A ................................................
Agenda
APPENDIX B................
Science and Technology and the 1992 European Market
Integration: Implications for it&D-Intensive Industries
Patrice Zechman
APPENDIX C...........
List of Participants
List of Acronyms
v
... 103
126
155
........ 160
........... 174
...... 195
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Preface
The economic and political relationships among the West European countries
are in the process of dramatic transformation. The 12 member nations of the
European Economic Community are engaged in a bold effort to overcome
the enormous historical, cultural, and political barriers that have separated
their economies over many centuries, with the aim of creating a Single
European Market by the end of 1992. Proponents of the plan, which will
create the largest integrated market in the world, argue that it will benefit
businesses by allowing economies of scale, more efficient marketing, and
increased demand for goods and services from outside the European Community.
In non-EC countries such as the United States, however, there is some
concern that the Single European Market may serve to exclude or limit the
participation of non-European competition.
Undoubtedly, the changes brought about by the European market integra-
tion will have a major impact on U.S. industry. Regulations and policies
adopted in Brussels by the Commission of the European Communities can
influence the transfer of information and technology across borders and can
affect the market position of both large multinational corporations and smaller,
high-tech companies. The impact is likely to be particularly pronounced in
industries with heavy involvement in research and development. U.S. R&D-
intensive companies have major concerns, for example, about the policies
that the EC may establish or has already promulgated—regarding technical
standards, intellectual property rights, and access to (and possible participation
in) the results of EC-supported basic research, to name only a few.
Because these issues are also directly relevant to the work of the National
Research Council, the Academy Industry Program, the NRC's principal channel
of communication with industry, decided in 1989 to convene a major inter-
national symposium on the subject. The AIP turned to the NRC's Office of
. .
V11
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. . .
Vlll
PREFACE
International Affairs to organize the event, which was held on March 5-6,
1990, at the National Academy of Sciences in Washington, D.C. The Office
of International Affairs consulted closely with representatives of EC member
countries and the CEC in organizing the sessions and inviting speakers.
(The agenda for the event is included as Appendix A.) The audience for the
symposium included industry members of the AIP, other interested industry
representatives, officials of the U.S. and foreign governments, and academic
experts.
This report is a transcript of the speakers' remarks and of the question-
and-answer sessions. It also includes as Appendix B a paper prepared by
Patrice Zechman as background reading for symposium participants. The
AIP wishes to express its appreciation to Mitchel B. Wallerstein and Patrice
Zechman of the NRC's Office of International Affairs and Louis Blair, a
consultant, for their extensive efforts in the planning and execution of this
symposium.
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EUROPE 1992
The implications of Market integration
for it&D-Intensive Firms
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