However, virtually all nations do make use of capital controls, especially with regard to direct investment abroad, and such controls can be an inhibition to the transfer of technology. The Panel found that tariffs are virtually insignificant as a factor affecting technology transfer.1 However, non-tariff barriers have become relatively more important restrictions on the movement of goods and hence to the transfer of technology. On the part of business, the Panel found a very outgoing attitude. Business generally favors the transfer of technology and prefers not to have any restrictions whatsoever on technology flow. The so-called "international corporation" has proved to be an important vehicle for the transfer of technology. However, such corporations must continue to be sensitive and creative in handling conflicts with the national interests of the host nation. The Panel found that in the past social and labor policies in Europe and Japan have tended to impede the transfer of technology. However, the situation is changing throughout most of Europe and Japan but the continued reliance in Europe on small, national markets still impedes technology transfer. In essence, the Panel found that many of the heralded impediments to the flow of technology have either no effect or minimal effect; the positive influences far outweigh the negative; if the desire is present there are many opportunities, especially for the European nations and Japan, to stimulate the flow. The Panel believes that the United States national interest would be served by advancing the flow of technology beyond present levels. The United States should exert its leadership among Free World nations and use its technological bargaining power to promote multilateral efforts to reduce barriers to the international flow of technology. There are benefits to be derived from a continuing program of multilateral actions involving all developed nations to facilitate the flow of technology across national boundaries on mutually advantageous terms. RECOMMENDATIONS 1. FOREIGN DIRECT INVESTMENT a. Financial Investment Controls-The Department of Commerce should abolish its Office of Foreign Direct Investment as soon as the U.S. balance of payments permits. Controls on foreign direct investment by any government may hamper the flow of technology and should be removed as soon as possible. b. Reciprocity of Treatment-The Department of Commerce should take the lead in assuring that U.S. firms operating overseas receive the same treatment in other countries that foreign firms receive in the United States. United States policy permits foreign firms to establish themselves in this country and operate as "American" companies. This is not the case for U.S. firms operating in many countries overseas. 2. EXPORT CONTROLS The Department of Commerce should continue its current efforts to (1) relax or remove export licensing controls when no longer necessary for policy purposes; and (2) improve, simplify, and clarify the U.S. export control program and its administration. The Department of Commerce should endeavor to persuade other trade control agencies of the government to adopt a similar approach. In administering U.S. export controls the Department of Commerce has the obligation to ensure (1) U.S. international commitments on security export controls, and (2) statutory policy objectives in regard to safeguarding national security, fulfilling foreign policy and international commitments and protecting the domestic economy from excessive foreign drain of scarce materials. 3. GOVERNMENT PROCUREMENT The Bureau of the Budget should take the lead among agencies of the United States Government in examining U.S. procurement policies to see what, if any, concessions might be offered as an inducement to other countries to improve their procurement policies. All governments discriminate through their procurement policies and such policies restrict the transfer of technology. 4. PATENTS The Department of Commerce should press for a multilateral arrangement to simplify the filing and processing of patent applications where protection is desired in a number of countries, such as the proposed international filing system of the Patent Cooperation Treaty (PCT); the strengthening of the quality of patent grants and the procedures for determining the quality, such as the international search feature of the proposed PCT; and, eventually, the harmonization of those points of substantive patent law which are significant in improving the predictability of patent protection available in foreign markets. 5. NONTARIFF BARRIERS The Office of the Special Representative for Trade Negotiations should exert every effort toward the elimination or reduction of nontariff barriers to trade. As tariffs are reduced internationally, nontariff barriers have become a more important impediment to trade and the transfer of technology. The United States and other developed countries, consistent with their national interests, should endeavor to eliminate such barriers. 6. STANDARDS AND STANDARDIZATION The Department of Commerce should promote efforts to strengthen standardization activity domestically, both inside and outside Government. It should also encourage all nations to take all feasible steps to accelerate the harmonization of standards internationally. 7. GENERAL The Department of Commerce, Department of Justice, Department of State, and, in fact, practically all government departments, should, on a continuing basis, identify those laws, regulations, or policies, domestic and foreign, which may hamper the flow of technology across international boundaries. (Many of those restrictive policies have been identified herein.) Such barriers should be eliminated or moderated when their effects are significant and their existence is not essential to the national interest. It is recommended, (a) that the United States and other developed countries, in revising their laws and policies to facilitate the flow of technology among themselves, keep in mind that obstacles to the flow of technology between themselves and the developing countries present, in many respects, more serious difficulties; and (b) that they shape their policies with a view to facilitating the flow of technology to the developing countries as well. 8. THE DEVELOPING NATIONS It is recommended that the Commerce Technical Advisory Board determine in what way CTAB might bring to bear its expertise in assisting the developing countries in the solution of some of their development problems; and that if the Board believes that it can make a contribution in this field, it establish the necessary panel or panels to do the work. POSITIVE U.S. GOVERNMENT POLICIES National governments are guided primarily by their own objectives and interests, and their attitudes toward the same factors affecting the flow of technology will vary from country to country. For instance, while many governments welcome the establishment of foreign firms or manufacturing plants in their countries, and the substantial transfer of technology that normally accompanies such operations, others, such as Japan, stress licensing of technology by their indigenous firms. The attitude of a developing country towards particular kinds of technology and particular channels for its transfer frequently differs significantly from the attitude of a country which already possesses a highly advanced technological base. Thus, the development and transfer of technology must take place in a real world in which constantly conflicting interests must be served. Whether a particular policy or practice affecting the international transfer of technology is desirable depends upon the eyes and interests through which it is viewed. In recent decades, the United States Government has consistently favored the international flow of technology, within the normal conditions governing the disposition of industrial or other property rights. This position has been entirely consistent with the Government's attitude toward maximizing international trade in general, and reducing artificial barriers to trade wherever both feasible and equitable. A number of government agencies have positive policies regarding the flow of technology. The Atomic Energy Commission, in carrying out the mandate specified in the Atomic Energy Act of 1954, has 33 agreements for cooperation now in force with 29 nations and 2 international organizations. It has more than 40 technology exchange arrangements with most of the Free World countries. It also has a visitation and training program which has involved more than 4,500 foreign nationals in AEC facilities since 1955. The Department of Defense is involved in a wide range of international programs and activities involving the transfer or exchange of technology. Among these efforts are numerous cooperative research and development programs with NATO countries on military equipment, bilateral co-production and broader consortia production programs with NATO countries and other Allies, plus extensive military sales to European nations as well as Japan, Australia, and a number of other countries. Under its authorizing legislation, the National Aeronautics and Space Administration is called upon to directly stimulate appropriate practical appli |