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Strategic Implications of European Market Integration for U.S. R&D-Intensive Industry and the Science and Technology Base
Pages 103-125

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From page 103...
... Also, I have been in Brussels for only eight months, and I still have much to learn there. Our first speaker is John McTague, vice president of technical affairs for Ford Motor Company.
From page 104...
... That also goes for the Single Market in the EC. The environment elsewhere in the world the most obvious example being eastern Europe may change any predictions that we might make.
From page 105...
... That has occurred over time. In fact, now on the design of a vehicle in Europe, the design team, the engineering team might come half from Cologne, half from England; they literally fly back and forth on a day-to-day basis, work together, and then go home at night in their own respective countries.
From page 106...
... What is more important for most industrial corporations, and indeed for R&D, because civilian R&D is closely tied to it, is manufacturing production. If you look at manufacturing, in fact the world looks like it is naturally divided up into three supercountries, the United States with about a third of the manufacturing, the European Community with almost an identical amount, and Japan with a slightly lesser but rapidly growing amount.
From page 107...
... However, from the point of view of a large corporation, the Single Market is just a natural evolution that we have been responding to due to the greatly changed environment relative to communications and the cost of transportation.
From page 108...
... The motivations behind this explicit and implicit protectionism are in many ways laudable: the enhancement of national research and innovational power, the requirements for national sovereignty or autonomy, protection of employment, prestige, and so forth. Of course, what it led to was the dominance in each European country of a small number of national suppliers, to uncompetitively high prices for some products compared with truly international competitors, and reduced innovation flow.
From page 109...
... The consequence of protectionism, of course, has been the domination of national markets by leading national competitors, in public switches, pharmaceuticals, and clearly also some of the aerospace markets. This, of course, causes those European companies and industries to be technologically uncompetitive only if the critical mass of R&D investment internationally cannot be supported by their national markets.
From page 110...
... At this point I want to stress that when we think about Europe in the late 1990s, the 1992 event and everything associated with it must be considered alongside the opening of the eastern European frontiers. This second major discontinuity is bound to some extent to distract the German companies to look eastward for markets and partners, and many other European companies will do the same.
From page 111...
... One could go on; I just want to encourage us all to think about how these trends may interact before launching into a 1992 strategy that simply adds up today's European markets and European competitors and treats them as a measure of the future Single Market. What are the challenges that Europe in the 1990s will represent for companies, and how should they think about responding?
From page 112...
... One of the things that has struck me in my eight months in Brussels is the fact that the real European companies in Europe are the American companies or non-European companies; they could very well be from other parts of the world companies such as the Ford Motor Company. Ford has been in Europe since 1903 and does not think of itself as being a national champion of the United Kingdom, Germany, Spain, or any other market.
From page 113...
... We are also involved with cellular technology in Hungary. We have a joint venture with the Hungarian PTT to build and operate nationwide cellular services.
From page 114...
... I also mean maintaining our expertise in voice recognition, expert systems, advanced software development, user interface technology, network architecture, and a lot of the standards development that we heard about this morning. User interface, for example, means user friendliness.
From page 115...
... The first customers to benefit from this research might be in the European Community and in Hong Kong and potentially even in eastern Europe. Thanks to the modified final judgment, American businesses and consumers could be denied access to the next generation of advanced services.
From page 116...
... We certainly are aware of cases in the past where well-intended efforts to enhance domestic competition resulted in creating foreign competition for us. One example is the creation of Aluminum of Canada Ltd.
From page 117...
... But in the last few years Europe has become a much more vibrant economy, and it has become vibrant not least because EC 92 has induced European firms to shed their habitual patterns of thought and to think about new possibilities. One manifestation of that change is the accelerating number of mergers and acquisitions in Europe since the 1985 White Paper, Completing the Internal Market.
From page 118...
... That will change. The change might not be completed by the end of 1992, although that is the target date for common standards or sometimes only common minimum standards for the whole range of industrial products and services throughout Europe.
From page 119...
... A code that covers some government procurement dates from 1979, negotiated in the Tokyo Round of GATT, under which Americans should exercise their rights. The current Uruguay Round of trade negotiations provides an opportunity to broaden the coverage of government procurement open to international competition.
From page 120...
... At a minimum, however, the situation implies that the United States must back off from the position that it has taken in practice so far, that anything that is militarily useful not militarily significant but militarily useful should be denied to the Soviet Union and its east European allies, and we should establish an apparatus that attempts, however imperfectly, to accomplish that end. given the recent developments in eastern Europe.
From page 121...
... The psychological changes in Europe, to my way of thinking, are almost more important than the negotiations that are under way and the changes within the European Community as far as regulations, unification of rules, etc. There is a sense of optimism, There is a certain sense of unease right now because of what is going on in eastern Europe, particularly in Germany, but there is a very optimistic, dynamic spirit.
From page 122...
... Government procurement is something that we have very much on the agenda between now and the end of the year, parallel with the Uruguay Round talks, the talks on extending the government procurement code to these four famous excluded sectors: telecommunications, water supply, transportation, and power generation. The European Community has now made an offer, in a sense, by adopting a directive that unifies the European market in these areas.
From page 123...
... I guess I would not want to answer the general question in the negative, but my basic view that I tried to suggest is that Europe has been there for some time. It has been a great opportunity for some time, and most of the firms that have opportunities there, apart from those areas where government procurement has confined the market very sharply, should already have been doing the things that they now might think of doing as a result of EC 92.
From page 124...
... The problem that we have encountered, and to which you allude, is a rather restricted one. It involves antidumping cases arising from Japanese market success in Europe, and anticircumvention arrangements designed to ensure that so-called screwdriver plants set up by the Japanese elsewhere in one case the Ricoh Company moving into California—do not have the effect of getting around the antidumping requirements.
From page 125...
... This may be an idealistic point of view, but the optimum location of your manufacturing facilities globally should be regarded as very much an open question. There are European countries such as my own that have pretty low labor costs and pretty high skill levels.


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