Technological Imperatives of the Transatlantic Market
At the Dupont Summit "The New Administration Tackles Science & Technology: Priorities for Discovery and Advancement," the Streit Council sponsored this Plenary Session - December 5, 2008
Richard Conn Henry
President, the Streit Council for a Union of Democracies
Professor of Physics and Astronomy, Johns Hopkins University
President, European-American Business Council
Subject of address: Regulatory Harmonization: Market size problems in defense and technology procurements, market regulatory harmonization as a means of creating an adequate market size for new technologies.
Senior Fellow, Peterson Institute for International Economics
Subject of address: Exchange rate coordination and financial regulation: Dialogue as a means to market-size stability adequate for large-scale technological development and procurement?
Professor, John F. Kennedy School of Government, Harvard University
Subject of address: Economic and Political Merger as means to more adequately funded technology development programs, consistent joint regulation of dangerous technologies and technology exports, and consistent large markets for new technologies.
Visiting Professor, Political Science, Reed College
Subject of address: Avoid regulatory islands for nanotechnology regulation: New technologies require predictable and harmonized regulatory frameworks to minimize transaction costs. Compatibility, not leniency on matters of risk regulation: Incompatible regulatory regimes reduce effective market size and increase compliance cost.
Richard Conn Henry:
Click here to view Mr. Henry's presentation slides
Click here to view Mr. Maibach's presentation slides
"Policy Coordination: Exchange Rates and Financial Regulations"
Click here for a full outline of Mr. Williamson's remarks
"The world financial crisis of 2008 has raised concerns that the laissez-faire of the preceding years has been an error, and hence revived discussion of whether some of the proposals that were dismissed over preceding years might have merit. One such proposal is that with which I was associated, for agreeing on target exchange rates and surrounding those targets by 'target zones' within which exchange rates would be free to fluctuate, while modifying macroeconomic policies to prevent exchange rates deviating from those target zones. Another set of ideas have involved more extensive financial regulations: these ideas are currently much more actively discussed, though they have less intellectual pedigree. The purpose of today's panel is to discuss whether such ideas would be likely to create a more propitious atmosphere for trans-Atlantic technology development.
I will argue that, while these ideas still have merit, they would be unlikely to be important in stimulating trans-Atlantic technology development, for two reasons. The first is that the problems are widely perceived to be global rather than just trans- Atlantic, or just applying to the industrial world, and hence the solutions will have to be global as well. It is perfectly true, for example, that the gyrations of the dollar-euro exchange rate have been unhelpful, and doubtless if one could depend on that rate staying far more constant in future this would give an advantage to trans-Atlantic technological development. However, the biggest troubles in recent years have stemmed from misalignments in such non-industrial country currencies as the RMB, and industrial countries like the US and the EU are likely be foremost in insisting that any new agreement would apply to China as well. Similarly, European banks got into trouble in part because they bought sub-prime loans and securities embodying them from the US, but new rules will have to be worldwide rather than specifically trans-Atlantic for fear of regulatory arbitrage otherwise diverting business outside the trans-Atlantic area. Since we no longer live in a world that is dominated by the trans-Atlantic powers, or even by the industrial countries, effective agreements will have to apply over a wider area than was envisaged in the 1980s.
The second reason for doubting the potential of target zones or common approaches to financial regulation to facilitate trans-Atlantic technology is that the solutions envisaged are not going to create anything like a single market. Firms within a single country face a single national market because they use a common money, they face a single tax system, they have to confront common rules and regulations, and they are certain that these conditions will continue into the future. In contrast, a system of target zones would at most limit the extent to which the several national monies would fluctuate against one another in real terms. What is usually envisaged is that the international level would specify and police the observance of minimum standards for financial regulations, and now that it would cooperate in enforcing regulations (that seems to be the import of the collages of supervisors who are to be created), but not that it would take over the task of regulation. The solutions under discussion are specifically designed so as to minimize the requisite loss of national sovereignty, with the object of making them palatable to the United States and some of the Asian powers, which have rather similar attitudes to sovereignty. But as long as integration takes this limited form, firms will not face the same degree of certainty that international differences in regulation would not undermine their competitive position as they now face nationally.
Does this mean that it is impossible to envisage agreements among industrial countries that are specific to industrial countries rather than worldwide? I find it difficult to envisage such agreements without an explicit limitation of national sovereignty, as in the EU. If there were proposals for such agreements, they would be widely condemned as discriminatory. I therefore judge that we are unlikely to see countries that place a high value on national sovereignty, like the United States, drawn deeper into industrial-country integration."
Economic and Political Merger as the Possible Output of Technology and Economies of Scale between the United States and Europe.
Click here to view a transcript of Prof. Rosecrance's address.
"The development of international technology is changing the character of states. Economies of scale that typically applied to firms are now beginning to apply to states. The financial crises of 1997-98, and 2007-08 demonstrate that not only small economies are vulnerable to short selling and large withdrawals by hedge funds. Europe, Japan and the United States were also beset with crises which collapsed their stock markets and undermined their currencies. This is because the globalized sector is far larger than any state or existing combinations of states. In the net, the trend toward an agglomeration of political-economic units is enhanced, with a European-United States tie representing the most logical initial combination."
"My paper seeks to develop a better understanding of emerging nanotechnology risk regulation in the United States and Europe. The purpose of this assessment and its policy recommendation is advice for the creation of mutually compatible rules on both sides of the Atlantic, and thus pre-emption of transatlantic contention over nanotechnology regulation. Such regulation would not only avoid transatlantic political strife but it would also benefit industries in creating predictability and similarity in market access and limitations for nanoproducts.
Nanotechnology has the potential to provide for at least as much transatlantic contention as biotechnology has done in the past. Similar to genetic engineering, nanotechnology is marked by a combination of great economic potential with an unknown, but potentially great, risk. Under such conditions, European countries have tended to display a more risk-averse regulatory stance than the United States has. Biotechnology has already contributed to much transatlantic strife through the existence of incompatible regulatory regimes, ultimately necessitating dispute settlement by the WTO.
Given the diverging regulatory stances on both sides of the Atlantic, nanotechnology poses a deep harmonization challenge; that is, it requires adaptation in regulatory cultures and basic domestic-level institutions. This is mirrored in debates over the Precautionary Principle; however, the real contest goes deeper than the proper role of precaution in risk management. Regulatory harmonization disputes diverging domestic approaches to regulating a certain issue area, and requires substantial concessions by the parties that need to change their domestic regulations as a result. As such, regulatory harmonization is a difficult task because it questions existing domestic regulations that are not only a product of complex political bargaining processes but which also reflect what is considered the proper and right way of regulating an issue area."
Following the individual presentations, Dr. Henry opened the floor and fielded questions from the audience.
Vice President for Europe and Eurasia of the United States Chamber of Commerce
Mr. Litman was unable to attend meeting due to a conflict in his schedule. In lieu of his presence he submitted a set of recommendations for the work of the Transatlantic Economic Council, prepared jointly by US Chamber of Commerce and BusinessEurope.
Click here to read Mr. Litman's set of recommendations
Michael C. Maibach is the President & CEO of the European-American Business Council. EABC member companies include 75 European and North American-based global enterprises. The EABC mission is "promoting Trans-Atlantic investment, innovation and integration." The Council has offices in Brussels and Washington DC. It was founded in 1989. Michael Maibach may have been the first American elected under 21 years of age, elected in 1972 to the Dekalb County Board (Illinois) just after the 26th Amendment went into effect. Prior to his election he was a Governor's Fellow at the Illinois Department of Local Government during the summers of 1969 and 1970. After completing a BS and MA in Political Science at Northern Illinois University, he served as an Illinois State Senate Legislative Fellow. In 1976 Maibach joined the Caterpillar Tractor Co., first as a machine shop foreman, then as a Government Affairs Manager in Illinois, California, and Washington DC. He opened Caterpillar's California Government Affairs Office. While in California he completed a BS in American & Latin American History at California State University.
In 1983 Maibach joined the Intel Corporation as assistant to Intel co-founder and co-inventor of the integrated circuit, Dr. Robert Noyce. In that year he created Intel's Government Affairs Department, and in 1986 opened Intel's Washington office. During 18 years at Intel he helped build a global team of over 70 professionals on every continent - opening Government Affairs offices from Brussels to Beijing. From 1983 - 1986 Maibach participated in President Reagan's Commission on Industrial Competitiveness. From 1988 - 1992 he participated in President Bush's National Advisory Committee on Semiconductors. Maibach was named an Intel Vice President in 1996. He was an industry leader in numerous policy initiatives, including successful results on the Semiconductor Chip Protection Act, the R&D Tax Credit, the US-Japan Semiconductor Agreement, SEMATECH funding, the GATT Uruguay Round, the 21st Century Patent Reform Act, NAFTA and China WTO membership. Intel awarded Maibach three Individual Achievement Awards, a company record. He came to be a leading spokesman for America's electronics industry on trade and technology issues, testifying 15 times before the United States Congress. In 1992 he was a candidate for the US Congress from the Silicon Valley. While at Intel, Maibach earned a BA in International Business at American University, and an MA in Political Philosophy at Georgetown University.
Since 2003 Maibach has been the President & CEO of the European-American Business Council, an association of 75 major companies forging policy alliances to enhance Trans-Atlantic investment, innovation and integration. Under his leadership the Council has quadrupled membership and opened its first Brussels Office. Maibach is a past Board Director of the Peoria, Illinois Jaycees, the World Affairs Council of Central Illinois, the World Forum of San Jose, California, and the World Affairs Council of Washington DC. He also served on the Boards of the National Association of Manufacturers, the Churchill Club, the California Council on International Trade, the Congressional Economic Leadership Council, and the Information Technology Industry Council. Today he is a member of the US State Department's Advisory Committee on International Economic Policy, the RFID Technology Council Steering Committee, the National Board of the World Affairs Councils of America, and the Advisory Council of the Institute of World Politics. Maibach is an EABC Board member, and also serves on the Board of BritishAmericanBusiness, a US-UK business council. He is also the first Chairman of the European Business Organizations Worldwide Network. Maibach has published over 70 essays on business, trade, technology and government. His ‘Washington Wire' column ran in Upside magazine for several years; he is a current guest columnist for the Alexandria Times (Virginia) newspaper. He is a regular guest lecturer at the Industrial College of the Armed Services. Maibach serves on the Advisory Council to the Optimos Inc. Board of Directors. He speaks frequently to civic groups and university classes, and has been a visiting lecturer at Oxford University, England, and the Anglo-American College in Prague. Today he is a graduate student at the Institute of World Politics in Washington DC. Mr. Maibach resides in Old Town Alexandria, Virginia.
John Williamson, senior fellow, has been associated with the Peterson Institute for International Economics since 1981. He was project director for the UN High-Level Panel on Financing for Development (the Zedillo Report) in 2001; on leave as chief economist for South Asia at the World Bank during 1996-99; economics professor at Pontifica Universidade Católica do Rio de Janeiro (1978-81), University of Warwick (1970-77), Massachusetts Institute of Technology (1967, 1980), University of York (1963-68), and Princeton University (1962-63); adviser to the International Monetary Fund (1972-74); and economic consultant to the UK Treasury (1968-70).
He is author, coauthor, editor, or coeditor of numerous studies on international monetary and development issues, including Reference Rates and the International Monetary System (2007), Curbing the Boom-Bust Cycle: Stabilizing Capital Flows to Emerging Markets (2005), Dollar Adjustment: How Far? Against What? (2004), After the Washington Consensus: Restarting Growth and Reform in Latin America (2003), Delivering on Debt Relief: From IMF Gold to a New Aid Architecture (2002), Exchange Rate Regimes for Emerging Markets: Reviving the Intermediate Option (2000), The Crawling Band as an Exchange Rate Regime (1996), What Role for Currency Boards? (1995), Estimating Equilibrium Exchange Rates (1994), The Political Economy of Policy Reform (1993), Economic Consequences of Soviet Disintegration (1993), Trade and Payments after Soviet Disintegration (1992), From Soviet Disunion to Eastern Economic Community? with Oleh Havrylyshyn (1991), Currency Convertibility in Eastern Europe (1991), Latin American Adjustment: How Much Has Happened? (1990), and Targets and Indicators: A Blueprint for the International Coordination of Economic Policy with Marcus Miller (1987).
Richard Rosecrance is an Adjunct Professor at Harvard's John F. Kennedy School of Government, a Research Professor of Political Science at the University of California, Los Angeles, and a Senior Fellow of the International Security Program at the Belfer Center for Science and International Affairs. He was formerly a Professor at the University of California, Berkeley, and the Walter S. Carpenter, Jr., Professor of International and Comparative Politics at Cornell University. He served in the Policy Planning Council of the Department of State. He has written or edited more than a dozen books and many scholarly articles. The singly authored works include Action and Reaction in World Politics (1963); Defense of the Realm: British Strategy in the Nuclear Epoch (1968); International Relations: Peace or War? (1973); The Rise of the Trading State: Commerce and Conquest in the Modern World (1986); America's Economic Resurgence (1990); and The Rise of the Virtual State: Wealth and Power in the Coming Century (1999). The edited volumes include The Dispersion of Nuclear Weapons: Strategy and Politics (1964); The Future of the International Strategic System (1972); America as an Ordinary Country (1976); The Domestic Bases of Grand Strategy (1993); The Costs of Conflict (1999); and The New Coalition of Great Powers (2001).
He is the principal investigator of UCLA's Carnegie Project on "Globalization and Self Determination." He has received Guggenheim, Rockefeller, Ford, Fulbright, NATO, and many other fellowships. He was President of the International Studies Association and served as Director of UCLA's Center for International Relations from 1992 to 2000. He has held research and teaching appointments in Florence (the European University Institute); Paris (the Institut de Sciences Politiques), London (Kings College London, the London School of Economics, and the International Institute for Strategic Studies); and Canberra (The Australian National University). He has lectured widely in East Asia and Europe. His recent book on the "virtual state" has been translated into Japanese, Chinese (Taiwan), German, and will shortly appear in Arabic and Mandarin as well as a French volume of colloquy and comments by French scholars titled "Débat sur L'État Virtuel." Professor Rosecrance is now at work on a book on international mergers which compares US and European political and economic strategies.
Marcus Schaper is a Visiting Assistant Professor of Political Science at Reed College. His research deals with transatlantic policy issues from a comparative institutionalist perspective with an emphasis on trade and environmental topics. Prior to pursuing his doctorate he was a project manager at the Aspen Institute Berlin where he was in charge of developing and conducting projects which sought to defuse potential transatlantic disagreements before they evolved into open political conflicts. He also held fellowships at SWP (the German Institute for International and Security Affairs) and the American Institute for Contemporary German Studies (Johns Hopkins University), and worked at the World Bank Institute.
He has worked extensively on transatlantic environmental policy and produced both academic and policy papers. Other interests include broader transatlantic policy issues, the regulation of nanotechnology, and the efficiency of innovative environmental policy instruments. Recent publications include "Transparency, Information Disclosure and Participation in Export Credit Agencies' Cover Decisions" (with Benjamin Görlach and Markus Knigge) in Sophie Thoyer and Benoit Martimosso (eds.), Participation for Sustainability in Trade, Ashgate, 2007; "Export Credit Agencies and Climate Change: What Can They Do about It?" Intact Working Paper, Stiftung Wissenschaft und Politik (SWP), Berlin; "Exportkreditagenturen und erneuerbare Energien: Chancen und Herausforderungen, Deutsches Institut für Wirtschaftsforschung" (DIW), Berlin; and "Europäische Interessen und Transatlantische Umweltpolitik" (with Alexander Ochs) in Thomas Jäger, Alexander Höse, and Kai Oppermann (eds.), Transatlantische Beziehungen. Sicherheit - Wirtschaft - Öffentlichkeit, VS Verlag für Sozialwissenschaften, 2005. Schaper holds graduate degrees from the University of Maryland (Ph.D., government and politics) and Universität Potsdam (Diploma, Political Science).
Tiziana Stella, Streit Council Executive Director (left) with John Williamson (right)
From left to right: Michael Maibach, John Williamson, Marcus Schaper, Richard Rosecrance