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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 promulgatedóregarding 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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