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American Electronics Association 3/7/90 [OA 6854]
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American Electronics Association 3/7/90 [OA 6854]
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Speech Backup Chronological Files
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Originally Processed With FOIA(s):
FOIA Number:
S
S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Speechwriting, White House Office of
Series:
Speech File Backup Files
Subseries:
Chron Files, 1989-1993
OA/ID Number:
13708
Folder ID Number:
13708-006
Folder Title:
American Electronics Association 3/7/90 [OA 6854]
Stack:
Row:
Section:
Shelf:
Position:
G
26
19
6
7
THE WHITE HOUSE
WASHINGTON
Vogt
Policy - product licrility
Eisenhower Mas EdAn
Jim-p.4 Jim P.4 70%4 for
1 NES D.D
Abbott 377-4772
FACSIMILE TRANSMITTAL SHEET
NUMBER OF PAGES INCLUDING COVER
11
DATE 3.2.90
TO DAVID DEMAREST
FAX NUMBER 619.341.8922 PALM SPRINGS
OFFICE NUMBER 619.341.8900
STAFF OFC.
COMMENTS
AMERICAN ELECTRONICS ASSN.
INFO.
FROM CAROLYN CAWLEY
FAX NUMBER 202.456.6218
OFFICE NUMBER 202.456.7750
PLEASE CALL IF You NEED MORE! !
If
OP.S.E
DIVAO
авиляг MJAY SSP8 IHE PIJ
070 TRATZ
0018
. MEZA NADISIMA
Y3JWAO HYHORAD
8152.334.505 8152. . Jaw sos
!ssoM азяй way it HAD 32A3.R
THE WHITE HOUSE
WASHINGTON
March 2, 1990
MEMORANDUM
TO:
DAVID DEMAREST
FROM:
CAROLYN CAWLEY
SUBJECT: AMERICAN ELECTRONICS ASSOCIATION SPEECH
Mark Lange called this afternoon to say that you needed
information on (1) Super 301 and (2) the work/industries that the
AEA represents.
I. SUPER 301
I spoke with Steve Farrar, Associate Director for
International Economic Policy (upstairs, OEOB). He tells me that
THIS MORNING Secretary Brady sent a detailed memo to the
President out in California. This memo contains all of the
information you would need for the AEA speech.
Governor Sununu has personal interest in this speech so I
hope that you are able to see the Brady memo through him. As a
backup though, I am attaching 2 background papers from Steve
Farrar's office. One discusses US trade policy in general; the
other outlines US-Japan trade issues.
II. RANGE OF INDUSTRIES REPRESENTED BY THE AEA
Mr. John Mancini, PAO for the AEA, has provided me with a
list of the various kinds of industrial efforts that the AEA
represents. He calls them a "food chain" of sorts: developments
in one field of the industry have profound effects in other
endeavors.
They run the gamut of:
semiconductors
superconductors
personal computers
defense electronics
circuit boards
microchips
telecommunications equipment
business machines
test & measurement instruments
search & navigation equipment
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
...
01. Memo
Page 2 of memo to David Demarest, re: Etc., etc., etc.;
n.d.
P-6, (b)(6)
personal information redacted. (1 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Speechwriting, White House Office of
Series:
Speech File, Backup
Subseries:
WHORM Cat.:
File Location:
American Electronics Association 3/7/90
Date Closed:
10/14/2004
OA/ID Number:
06854
FOIA/SYS Case #:
Re-review Case #:
2004-2265-S
P-2/P-5 Review Case #:
MR Case #:
Appeal Case #:
MR Disposition:
Appeal Disposition:
Disposition Date:
Disposition Date:
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRA]
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
gift.
financial institutions [(b)(8) of the FOIA]
(b)(9) Release would disclose geological or geophysical information
PAGE 2 OF MEMO TO DAVID DEMAREST
III. ETC. ETC. ETC
I will be home all weekend so please call me if you need
anything more. My number at home is (202)
Richard Steinberg is with the Counsel's Office at USTR and
has "big picture" information. He has said that he will be in
this weekend and to please call if he can be of assistance. His
number at the office is (202) 395-6800.
John Mancini, PAO for the AEA, has also offered his home
phone number if we should need to speak with him:
His number at work is (202) 682-9110.
Finally, Jeff Vogt is the project officer for the AEA event.
He is in Arizona for the weekend and can be reached at :
(602) 948-4753.
Trade
Poling
March 2, 1990
BACKGROUND PAPER
U.S. Trade Policy
Introduction
When President Bush assumed office last year, there was much
controversy surrounding U.S. trade policy. Trade deficits were
large and expected to continue indefinitely. The size and
persistence of the bilateral trade deficit with Japan had added
to the frustration with the global deficit. Congress had passed
the Omnibus Trade and Competitiveness Act of 1988 that was in
part an expression of this frustration and in part a reflection
of suspicion that the Executive Branch would not effectively deal
with the problem. So deep was this suspicion that Ambassador
Hills was pressed hard during her confirmation hearings for a
commitment that she would implement the Trade Act.
In retrospect, the first year turned out remarkably well.
Much of the credit is due to the Administration's trade strategy,
which was built upon the following principles.
1.
Strengthening and expanding the multilateral trading system
through the Uruguay Round negotiations.
Our leading trade priority has been the Uruguay Round of
multilateral trade negotiations. We have proposed far-reaching
reforms of the global trading system, with the aim of bringing
trade in agriculture, services, intellectual property, and
investment under effective GATT rules and disciplines. In April,
Ambassador Hills broke a deadlock that threatened to prevent the
talks from moving forward. At the Paris Summit in July, the
President strengthened the commitment among heads of government
to a successful Uruguay Round.
2.
Implementing the Trade Act of 1988 in a way that meets both
Congressional expectations. and Administration trade
objectives.
The President's decision to identify specific Japanese
practices under Super 301 showed that the Administration would
implement the Trade Act in good faith. At the same time, the
decision promoted our Uruguay Round objectives and did not put
undue strain on our relations with key trading partners.
-2-
3.
Restoring good relations with the Congress.
In contrast to the persistent frictions over trade policy
during the Reagan Administration, Congress has generally
supported the Bush Administration's trade strategy. Congress
appears satisfied that the Bush Administration is consulting
closely with it and is committed to working out problems in a
constructive way.
4.
Addressing the bilateral trade imbalance with Japan through
market-oriented solutions rather than managed trade.
Despite pressure to manage trade with Japan, we have
insisted that bilateral trade concerns be addressed by seeking to
open Japanese markets to imports, rather than by specifying trade
targets for individual industries or closing our own markets. In
Super 301 and in other contexts, we have pushed Japan hard to
eliminate unfair trade practices and provide reciprocal access to
American firms. Last July, the President and then Prime Minister
Uno launched the Structural Impediments Initiative (SII) aimed at
removing systemic and cultural barriers to U.S. exports.
5.
Phasing out existing protection in a way that moves steadily
toward a system of free and fair trade.
The President's steel VRA decision successfully struck a
balance between the steel industry, which wanted five additional
years of protection, and steel consumers, who were concerned
about the long-term effects of VRAs on their competitiveness.
The decision was perceived as a strong and politically courageous
move toward open markets.
Current Status
Based on discussions with members of Congress,
representatives of the business community, and foreign officials,
a common perception has emerged that the Bush Administration:
Is pragmatic rather than ideological;
Places a higher priority on free and fair trade while
de-emphasizing free-trade rhetoric;
Is tough and committed to seeking fair access for
American exports, but in a manner consistent with free
trade and market-oriented principles; and
Strongly opposes "managed trade" and industrial policy.
-3-
The basic perceived distinction between the Bush
Administration and the Reagan Administration is that, while the
Bush Administration is equally committed to an open, market-
oriented trading system, it assigns a higher priority to
addressing day-to-day trade problems practically.
While there has been some foreign criticism of U.S.
"unilateralism", most governments appear to understand that our
long-term priority is to strengthen the GATT system and that we
are using Super 301 and other authorities to help achieve that
objective.
Outlook for 1990
The coming year will be a difficult one to implement a
successful trade strategy. The following economic and political
factors will combine to produce sustained controversy.
1.
The trade deficit is unlikely to improve quickly.
Many economic forecasters project that the two-year
improvement in the trade deficit may have stalled in the $100
billion range. While the recently announced deficit of $7.2
billion for December (a decline of $3.1 billion from November)
offers some encouragement, sustained improvement is likely to be
slow. Also the bilateral deficit with Japan is expected to
remain in the $50 billion range.
2.
Bilateral pressures with Japan will persist.
During the first half of the year, the Administration must
resolve a series of sensitive trade issues with Japan. We face
deadlines on section 301 cases involving construction and
telecommunications, and on the three Super 301 cases initiated
last year involving satellites, supercomputers, and forest
products. The Administration must also decide in April whether
to initiate additional Super 301 cases. Finally, the Admin-
istration must issue an interim SII report by mid-April and a
final report in July.
The increasing public concern about Japanese trade and
investment and the lack of movement in the bilateral trade
deficit will increase the difficulty of managing the vitally
important U.S.-Japan relationship. The bilateral deficit is, of
course, mainly the result of macroeconomic imbalances and will
diminish only when those imbalances are corrected. With respect
to trade barriers, we are moving now to take advantage of the
favorable outcome of the Japanese election to seek rapid progress
in the outstanding negotiations. Lack of progress could
-4-
jeopardize public and Congressional support for our policy,
leading to pressure for a more confrontational strategy.
3.
As the November election approaches, the Democrats are
likely to resurrect the theme of economic nationalism.
From discussions with trade and political experts, there is
no doubt that the Democrats are looking for a way to take
advantage of an increasingly negative public attitude toward
trade in general and Japan in particular. They believe that the
themes of economic nationalism and managed trade offer a way not
only to criticize Republican stewardship but to offer a new model
of the role of government in the economy. We can expect them to
advocate an inward-looking policy in the name of protecting
American jobs and our national security. These themes were
hinted at by House Speaker Foley in his response to the
President's State of the Union address.
4.
The Uruguay Round will take concerted effort to achieve
success.
The 1992 "single market" program and the challenge of
responding to the dramatic events in Eastern Europe have diverted
the attention and resources of the European Community, thus
weakening its already uncertain commitment to the Uruguay Round.
In addition, the EC is reluctant to dismantle existing farm
subsidy programs and border protection, as proposed by the United
States.
Some elements of the U.S. farm community are also uncertain
whether it is in their long-term interest for agricultural
distortions to be removed both here and abroad. Without
substantial movement on agriculture, it is likely that the
Uruguay Round could stall.
Strategy for 1990
Given the obstacles that we will face this year, we will
need to be especially adroit in implementing our trade strategy.
The following four elements are key to an effective strategy.
1.
Our top priority should be achieving a success in the
Uruguay Round by December 1990.
-5-
A successful Uruguay Round will set a positive tone for
trade relations for many years. A failure in the Round would
threaten the existence of the multilateral trading system.
While some elements of the Uruguay Round are outside our
direct control, it is becoming clear that nothing will happen
without the President's visible support and participation. The
President will have opportunities to build support during the
Houston Economic Summit. It may also be desirable this spring
for the President to deliver a speech on trade policy, which
would underscore the importance of the negotiations.
As the talks move forward, we will be faced with tough
political decisions on agriculture, textiles, and antidumping
measures.
2.
Maintain our firm opposition to managed trade.
The best counter to managed trade is to define the debate in
terms of a strong program for strengthening U.S. competitiveness.
This means continuing to develop the theme that articulated in
the President's State of the Union address, highlighting the
international implications of his proposals to increase the
savings rate, to promote research and development, to strengthen
our education system, and to set reasonable boundaries on product
liability. Our broad aim should be to reshape business thinking
to encourage greater emphasis on corporate responsibility,
managing for the long term, and quality.
In addition, the Administration must produce results in
bilateral negotiations with Japan and on SII. The Uruguay Round
does not offer a credible solution to the problems that our
companies face in penetrating the Japanese market.
3.
Continue to develop regional trade opportunities.
There are several regions in which trade can be an important
adjunct to achieving foreign policy and other goals. For
example, we need a better response to the economic issues raised
at the drug summit. Trade can also be an important part of our
response in East Europe. We should also press ahead with
negotiations toward a trade agreement with the Soviet Union.
Finally, initiatives with Mexico, the Caribbean, and the Pacific
Rim will help reinforce market-oriented trends in those areas.
4.
Continue to pursue a policy of free and fair trade.
We must continue to implement carefully the market-opening
provisions of the 1988 Trade Act, particularly Super 301. Other
countries could interpret additional pressure as evidence of U.S.
-6-
unilateralism, thus jeopardizing the Uruguay Round. On the other
hand, failure to use section 301 aggressively to open foreign
markets and address unfair trade practices could lead to renewed
conflict with the Congress.
March 2, 1990
BACKGROUND PAPER
U.S.-Japan Trade Issues
Introduction
Pressure on bilateral trade relations is due in part to a
series of deadlines imposed by the Omnibus Trade and
Competitiveness Act of 1988 and in part to self-imposed deadlines
under the Structural Impediments Initiative (SII) talks. The
most significant ones are listed below.
By mid-April, U.S. and Japanese participants in the SII
talks must produce an interim assessment of progress.
o
By April 30, the U.S. must decide what (if any) new
actions to take under Super 301 against Japanese
practices that inhibit our exports.
O
By June 16, the U.S. must decide whether negotiations
begun last year under Super 301 (on forest products,
supercomputers, and satellites) have been successful.
By mid-July, a final report is due on the SII talks.
There is a growing popular sentiment in this country that
our economic troubles can be traced to unfair practices of the
Japanese. Many observers have suggested that Japan does not
abide by normal market rules, and that "managed trade" is the
only way to ensure our national economic security. This
viewpoint has many adherents in the Congress.
This bilateral friction threatens to undercut the
Administration's international trade strategy, which rejects
managed trade and is built around the successful completion of
the Uruguay Round negotiations by the end of the year.
Status of Negotiations
The third session of the SII talks was held in Tokyo on
February 22-23. There was little progress. The next session is
scheduled for March 20 in New York.
The Super 301 negotiations have been underway in Tokyo this
week on all three product areas identified: forest products,
supercomputers, and satellites. Although negotiations have been
difficult, practical solutions can be reached in all negotiations
if there is sufficient political leadership from the Japanese
side. The next rounds of talks will occur in mid-March. Other
-2-
politically charged bilateral negotiations are also underway on
telecommunications, construction, and semiconductors.
We need to renew and reinvigorate the political commitment
to substantial and timely conclusions to the bilateral trade
negotiations now underway. In particular, it is important to
agree on meaningful progress to include in the April SII interim
report and to resolve the ongoing Super 301 cases. A successful
SII is important economically in two ways.
O
First, it will lower barriers to U.S. exports in many
sectors of the Japanese economy.
O
But more importantly, it will contribute to lasting
balance-of-payments adjustment.
A successful conclusion to the Super 301 cases is also important
to demonstrate the Administration's commitment to opening foreign
markets.
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
02a. Memo
Carolyn Cawley to Mark Lange, re: American Electronics
02/28/90
P-6, (b)(6)
Association; personal information redacted. (1 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Speechwriting, White House Office of
Series:
Speech File, Backup
Subseries:
WHORM Cat.:
File Location:
American Electronics Association 3/7/90
Date Closed:
10/14/2004
OA/ID Number:
06854
FOIA/SYS Case #:
Re-review Case #:
2004-2265-S
P-2/P-5 Review Case #:
MR Case #:
Appeal Case #:
MR Disposition:
Appeal Disposition:
Disposition Date:
Disposition Date:
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRAJ
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
gift.
financial institutions [(b)(8) of the FOIA]
(b)(9) Release would disclose geological or geophysical information
February 28, 1990
INFORMATION
MEMORANDUM
TO:
MARK LANGE
FROM:
CAROLYN CAWLEY
SUBJECT: American Electronics Association
*** A brief note before this begins
Jeff Vogt would really
like to discuss this with you on the phone, and I think it's a
good idea too because he really knows this stuff and it's safer
than me relaying it. He'd like you to call him at home tonight
P-6,00)(6)
(2/28) after 11:00 EST. His number is:
Among his suggestions were: to really beef up, in the front
of the speech, a big pat on the back to the AEA. Highlight the
leadership role they have played in the industry for the last
century, especially in innovation and product development. Also,
you'll see from reading the fax I sent you (the letter and TP's
from AEA, re: the Governor) that the AEA agrees with this
Administration on EVERYTHING and it's rare to speak to a group so
supportive.
1. p. 1/Introductions: Neither David Packard nor Bob Noyce
will be present. If we want a historical twist, we can say that
"from your ranks have come David Packard, one of the founders of
Hewlett-Packard, and Ed Zschau."
Also, someone who WILL be present is Mr. Gary Tooker,
President of Motorola and last year's recipient of the Baldridge
Award.
2. p. 3/paragraph 1: The Savings and Economic Growth Act was
introduced on February
2
since this AEA speech will be in
March, we need to say "early last month we sent to Congress
"
The Savings and Economic Growth Act has three prongs:
capital gains
IRAs
family savings
a. We discuss capital gains and IRAs but not family
savings. My man at Treasury (Asst. Secretary) recommends that we
mention family savings as well because POTUS discussed family
savings specifically in the State o' the Union. How about:
"We're proposing new incentives for IRAs as well as an innovative
family savings account."
b. Secondly, he suggests that we move the cap gains graph
to be within the context of SEGA (Savings and Econ Growth Act).
He says that AEA is our primary private industry supporter of
this, so: first, it would be good to beef up the cap gains
graph.
We can not let the AEA split cap gains from the rest of SEGA
in their own minds, and it was an administration decision to keep
them together. Let's discuss cap gains within the context of
SEGA along with IRAs and family savings.
3. p.3/paragraph 4: "a new National Math and Science Scholars
Program" is incorrect, it combines two different programs.
There is a NATIONAL SCIENCE SCHOLARS PROGRAM proposal. It
includes a proposal of $5 million to provide undergraduate
scholarships of up to $10,000 to students demonstrating
proficiency in the sciences.
Then there is the EISENHOWER MATH AND SCIENCES EDUCATIONAL
PROGRAM. In this, the Administration is requesting $231 million
in FY 91, a 70% increase over the current program, to better
prepare teachers and raise student achievement.
WHICH ONE DO WE MEAN?
4. p.4/paragraph 1: Vogt offered a couple of suggestions
regarding this graph about trade and Japan. Briefly, he thinks
we should highlight the difference between multilateral talks
(GATT) and bilateral ones (SII) Also, he'd like to see mention
of Super 301 and the fact that Carla Hills has announced that we
will be enforcing the semiconductor agreement. The Kaifu stuff
will be very important
hope Palm Springs goes well.
5. p. 4/paragraph 4: First of all, I spoke with Lehmann Li of
the ECP; he was part of the EPC decision which is the basis of
all this and he authored a memo to the President for approval.
Unfortunately, the President has not signed off on it yet and is
not expected to do so before this speech is given. Lehmann and
Vogt had a chance to speak and agreed that this is too big an
issue and announcement to do at this time, especially since the
President has not yet OK'ed it and Vogt says he other events
upcoming which would be good forums.
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
02b. Memo
Carolyn Cawley to Mark Lange, re: American Electronics
n.d.
P-6, (b)(6)
Association; personal information redacted. (1 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Speechwriting, White House Office of
Series:
Speech File, Backup
Subseries:
WHORM Cat.:
File Location:
American Electronics Association 3/7/90
Date Closed:
10/14/2004
OA/ID Number:
06854
FOIA/SYS Case #:
Re-review Case #:
2004-2265-S
P-2/P-5 Review Case #:
MR Case #:
Appeal Case #:
MR Disposition:
Appeal Disposition:
Disposition Date:
Disposition Date:
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRA]
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
gift.
financial institutions [(b)(8) of the FOIA]
(b)(9) Release would disclose geological or geophysical information
But, if you feel strongly, talk to Vogt and see.
Secondly, if it should be decided to mention this joint
production issue, there have to language changes. Here are the
nuts and bolts that I got from Commerce and EPC, obviously they
need work to be used in a speech:
All firms would have to register an "intent" statement with
the Justice Department and the Federal Trade Commission. Then,
they would be subject to no more than "single damages" in a
private anti-trust suit. (Apparently this is a big change.)
( (the problem with the original draft wording was that it
sounded like Justice would be administering the judgments
read
on...))
There is pending legislation on the Hill on this issue, and
they are NOT OUR PROPOSALS, as it says in the draft. We are
looking to support whatever the Hill turns out
so, we could
say:
"We will seek to support proposals that would assure that
the competitive realities of joint production ventures are
assessed/judged by the courts, on a case-by-case basis.' " (Under
the Anti-Trust Rule of Reason, which removes the blanket
judgement and requires the courts to look at each case alone.)
"This initiative would enhance the competitive strength of
American industries by allowing firms to share investment risks
and pool their complementary skills in building new production
facilities."
( (remove the wording about R&D because it is
already provided for in existing laws. ))
Mark, I'll call the Embassy in Paris tomorrow morning first
thing. Don't hesitate, to call me anytime for anything. Home
phone:
and I'll be on beeper. Hope you're
P-6,
having a good time! Get sun and drinks cocktails with tiny
(b)(6)
little umbrellas in them!!!
"Hi" to Stephanie $ Dave
Tack to you later
Cawlay
AMERICAN ELECTRONICS ASSOCIATION
MARCH 7, 1990 11:30 A.M.
WASHINGTON COURT HOTEL
(BRIEF REMARKS AT LUNCHEON)
Audience: approx. 400 presidents/execs
Contact: John Mancini
682-9110 or 682-4452
The President will be dropping by the AEA luncheon to deliver
Confititure brief remarks.
PURPOSE: to highlight Administration proposals to promote
capital formation and high-tech industrial development, including
r & e tax credit permanence and a reduction in capital gains.
SII, cocom
BACKGROUND: The AEA is the largest trade association serving the
electronics and high-tech industries, representing over 2,900
companies.
AEA has been one of the Administration's core supporters to
reduce the capital gains tax rate and is also committed to making
the r & e tax credit permanent.
AEA affords a strong grassroots network which was
effectively activated during the key capital gains battles on the
Hill last year. They have pledged their full support this year
as well.
We need to renew commitment to see these policies enacted
this year. We could use this opportunity to recognize America's
preeminence in the high-tech industry in the global marketplace,
address fair trade concerns, highlight our progress in the GATT
talks in removing trade barriers and note our progress in the
Structural Impediments Initiative (SII) vis-a-vis Japan.
A FEW BASIC FACTS ABOUT THE AEA
(more complete info will be faxed by them)
The American Electronics Association was formed in 1943 on the
West Coast. One of the original founder was Mr. David Packard of
Hewlett-Packard.
The AEA was formed under different names but became the AEA
in 1978 was active from its very beginning with Rep. Steiger on
the original capital gains cut.
The AEA represents 21 chapters nation-wide. These chapters
represent over 3500 companies as members.
President Bush has spoken to the group before. Most recently was
their meeting in San Diego in 1988.
THE PROGRAM:
Mitchell Kertzman is the AEA Chairman. He will be
introducing POTUS.
The program also features a choral group from the Duke
Ellington School for Performing Arts. They will be singing the
National Anthem and other patriotic songs.
THE WHITE HOUSE
WASHINGTON
Dept. of commerce
Special Asst. to general Counsel
Alden Abott 377-3151
(Re: anti-trust reform,
joint manufacturing)
02/27/90
11:26
002
gist
A quick reference aid on U.S. foreign relations
Not a comprehensive policy statement
Bureau of Public Affairs Department of State
US Exports: Strategic Technology Controls November 1989
Background: The export of strategically significant technology to
Warsaw Pact and certain other countries is controlled in order to deny
them access to technology that would increase the effectiveness of
their military establishments. Because modern weapons depend on many
advanced supporting technologies that have both civilian and military
applications ("dual use"), some commercial technology transfers could
undermine US national security. Consequently, the Export
Administration Act requires the Commerce Department to issue a license
before any such dual-use technology or equipment can be exported from
the US to a potential adversary. This permits a review of the
potential military use of the technology, to ensure that transfers of
militarily significant technologies do not occur under the guise of
civil projects. The value of more effective strategic export controls
is highlighted by conclusive documentation of the USSR's past and
continuing reliance on advanced Western technological know-how to
modernize its military and strengthen the industrial base that
supports Soviet war-making capability.
COCOM: The Soviet Union seeks to obtain controlled Western equipment
and technology by any means it can, including circumventing export
controls. The US, acting alone, cannot prevent such diversions of
controlled items, because we are not the sole source of many of these
products. The 17-member :Coordinating Committee for Multilateral
Export Controls (COCOM) is, therefore, of great importance in
facilitating multilateral cooperation to control strategic goods and
technology. The COCOM countries' determination to maintain and
improve the COCOM system has led to the application of additional
resources to their efforts.
Organization: Established in 1949, COCOM now includes: Australia,
Belgium, Canada, Denmark, France, the Federal Republic of Germany,
Greece, Italy, Japan, Luxembourg, Netherlands, Norway, Portugal,
Spain, Turkey, the UK, and the US. (Spain joined in late 1985 and
Australia, in April 1989.) COCOM has no formal relationship to NATO.
It is not based on a treaty or executive agreement but operates
instead by informal agreement and according to the rule of unanimity.
A permanent COCOM secretariat is located in Paris. All 17 member
countries are represented by permanent delegates. These
representatives are joined routinely by teams of technical experts and
policy-level personnel from their countries during substantive
meetings and negotiations on new or revised export controls.
Major functions of COCOM: Member countries cooperate in three major
areas:
- Publishing the control lists of embargoed equipment and enacting
effective export control systems (the lists are grouped into three
categories--direct military use, dual use, and atomic energy use);
02/27/90
11:27
003
- Evaluating and clearing potential exports of specific embargoed
items from member countries to proscribed countries; and
- Harmonizing national licensing practices for strategic exports and
coordinating export control enforcement activities.
Agreements reached in COCOM are implemented similarly by each
individual member country.
Improving COCOM's effectiveness: COCOM members face continued efforts
by the USSR and other Warsaw Pact countries to obtain militarily
sensitive equipment and technologies. Since 1981 a series of
high-level COCOM meetings have been held. A January 1988 meeting,
held against the backdrop of the Toshiba-Kongsberg diversion of
advanced submarine technology to the USSR, led to increased efforts by
members to ensure effective enforcement of controls. At an October
1989 high-level meeting, members reaffirmed their collective
commitment to COCOM, emphasized their support for "streamlining" of
the COCOM control lists, and renewed their commitment to effective
enforcement. Working-level consultations are held regularly to work
on implementation of directives from the high-level meetings.
Relations with non-COCOM countries: COCOM must protect against the
export or reexport of embargoed commodities from non-COCOM countries
to the countries of concern. The US deals with this problem in part
by requiring licenses for reexport of US-origin embargoed products.
COCOM members also maintain dialogues with a growing number of other
countries regarding cooperation on export controls and prevention of
diversions. Some nonmember countries have adopted COCOM-like export
control systems to protect embargoed high-technology products and
cooperate in the protection of militarily relevant items.
Munitions controls: Commercial export of arms and other defense
articles and services are controlled by the Arms Export Control Act
and the International Traffic in Arms Regulations (ITAR). Export
licenses must be obtained from the State Department's Office of
Munitions Control. The US denies export and reexport authorizations
for the USSR, other Warsaw Pact members, and most other communist
countries. Licensing decisions for munitions exports to noncommunist
countries are based on compliance with the ITAR and US arms control,
national security, and foreign policy considerations.
For further information: Also see Department of State GISTS on "US
Exports: Foreign Policy Controls" and "US Export Controls and China."
Harriet Culley, Editor (202) 647-1208
02/27/90 11:26
001
DEPARTMENT OF STATE
OFFICE OF COCOM AFFAIRS FAX COVER SHEET
UNCLASSIFIED
Number of Pages: 2
(Excluding Cover Sheet)
Date Sent: 2/27/90
Time Sent:
TO:
Carolyn Cawley
Recipient's Tel#: 456-7750
White House - -
FAX Machine Tel#: 456-6218
Speechwriter's
FAX Verification#:
Office
ATTN:
FROM:
George A. Gowen
Sender's Tel# : 647-2870
EB/ITC/OCA/STC
Sender's FAX Tel: 202-647-0173
FAX Verification#: 202-647-1719
SPECIAL INSTRUCTIONS/REMARKS:
I
Public background on cocom,
as regulated
UNCLASSIFIED
Mark
©COCOM
a. John geover: things are on hold till the us
completes a strategic review; hoped to
complete by may "COCOM undersee. Mtg. in
June of Houston summit in July"
the problem is that the us wants to differentiate
between EE/USSR. The push is to export more
to EE, but they are Atill members of Warsaw, and
USSR is still a threat. Wei like them to provide
safeguaras such as on site inspection,
software safeguards. etc.
b. may be good chance to show our sincerely in
aiding emerging devocracies ; economies
Beef up COCOM #
2p.3: over $ 71 B in R&D
3
expand product liability? (VP)
Last fall, this admin will make prod. liab. reform a top
competitiveness priority
goals: enc. us bus. innovation, improve int'l competitiveness,
continue to ensure safety for consumers
remove self inflicted burden on U.S. competitiveness , help
restore trasic principles of fairness
Vost p.2 # 3,4,5,6,7
p.3 # 2
p.4
product liability
N
THE AMERICAN REVOLUTIONS
ML
THE CHIP
Electronics engineers of the 1950s
were trapped in mazes of wiring until a
laconic engineer and an entrepreneurial physicist
showed the way out.
BY T.R. REID
ALDO
IBM'S experimental memory chip packs
more than two million microscopic versions of
the transistors. capacitors. and
Cresistors piled behind it onto a
morsel of silicon % inch by n/a inch. IRM claims
every one of the dup H 648,526
memory cells is fortorional That along
imjor accomplishment
J
ACK ST. CLAIR KILBY is an imposing
blad for 20 years. His car, an aging white
wrong. Back then, however, he didn't
figure, not fat but big: six feet six
Mercedes two-seater, passed 100,000
really have time to sit around and brood
inches tall, wide shoulders, massive
miles some time back and will probably
about his fate. The rejection letter cre-
hands. Any hint of menace, though,
go double the distance before Kilby
ated a practical crisis: Kilby had not both-
is immediately dispelled by an easy smile
thinks about purchasing anything more
ered to apply to any other college. After
that telegraphs a friendly, casual, unruf-
up-to-date.
some scrambling, he was admitted to his
fled personality. He spends a good deal
Because of the more or less parallel
parents' alma mater, the University of
of time alone with his thoughts, working
development of quantum theory and
Illinois. He had been there less than four
through ideas. In conversation, he is not
semiconductor technology, Kilby's work
months when the Japanese bombed
quick. Ask him a question about semi-
has regularly taken him near or right up
Pearl Harbor. Freshman Kilby became
conductors, politics, the best route to the
to the leading edge of physics. But Kilby
Sergeant Kilby, assigned to a radio repair
airport, and he will take a long puff on a
insists, quite firmly, that he is not a scien-
shop at an Army outpost on a tea planta-
Carlton, consider in absolute silence,
tist. He is an engineer. "There's a pretty
tion in northeastern India.
take another puff, and then answer,
key difference," he says. "A scientist is
After the war, Kilby went back to Illi-
softly, slowly, in structured sentences
motivated by knowledge; he basically
nois, eager to learn about radar and
that flow perfectly from beginning to
wants to explain something. An engi-
other wartime advances in electronics.
end without digression or detour.
neer's drive is to solve problems, to make
On the whole, he was disappointed. The
In the semiconductor industry,
something work.
That is basically
one thing he can recall now about his
"tough" and "aggressive" are terms of
what I have always wanted to do, to solve
electronics classes was that none of the
high praise; Kilby is famous as a nice guy.
technical problems. It is quite satisfying,
experiments turned out the way the in-
As he treks through the meandering halls
extremely satisfying, to go through the
structors said they would. There were
of Texas Instruments' Dallas headquar-
process and find a solution that works."
courses at Illinois on quantum physics
ters-walking with the wary, stooped
The essence of engineering, Kilby says, is
and semiconductor phenomena, but
gait of a man who has bumped his head
cost consciousness. "You could design a
they were restricted to science majors.
too often on low ceilings-he greets ev-
nuclear-powered baby bottle warmer,
"They weren't going to expose that
erybody by name, from top management
and it might work," he says, "but it's not
funny stuff to simpleminded engineers,"
to messenger boys. Everyone at the com-
an engineering solution. It won't make
Kilby says. He graduated in 1947 with a
pany where he has worked on and off for
sense in terms of cost. The way my dad
traditional engineering education and
a quarter-century seems to have a story
always liked to put it was that an engineer
decent, but not outstanding, grades. He
or three about some act of kindness on
could find a way to do for one dollar
went to work in Milwaukee at Centralab,
Kilby's part.
what everybody else could do for two."
for the excellent reason that it was the
This man, who conceived and built the
As a boy growing up in Kansas, Kilby
only firm that offered him a job.
first integrated circuit, or semiconductor
built a ham radio set, improved it, scav-
One night at Marquette University he
chip-he is recognized, along with the
enged some parts, improved it again. By
heard physicist John Bardeen describe a
better-known Robert Noyce, as the
the time he got to Great Bend High
new invention that worked like a vacuum
chip's coinventor-has an old-fashioned
School, it was clear that he would make
tube but was made out of solid semicon-
streak. He won't wear a digital watch; he
his career in electrical engineering, and
ducting materials. Kilby read everything
has concluded that the older kind better
he set his sights on the engineer's mecca,
he could find about this solid-state de-
conveys the seamless passage of time. A
the Massachusetts Institute of Technol-
vice. After Bell Labs announced in 1951
computer would be useful in his work
ogy. He took the entrance exam to qual-
that it would issue licenses for produc-
but he doesn't use one; "I don't really
ify for MIT-and flunked. On a June day
tion of its newly patented transistor,
know how," he confesses. Probably the
in 1941 he boarded the New England
Centralab put up the $25,000 license fee
person most responsible for the demise
States, the crack train connecting the
and dispatched Kilby to Bell's five-day
of the slide rule, he still keeps his favorite
midwestern plains with the great centers
crash course in the new technology.
Keuffel & Esser Log-Log Decitrig handy
of learning and commerce on the East
There he got a detailed look at the fan-
in the center drawer of his desk, and in
Coast, and rode to Cambridge to take a
tastic new world that would be possible
some ways he prefers it to the handheld
course to prepare him for a second shot
without the limitations imposed by vac-
calculators that rendered it obsolete.
at the test.
uum tubes. He came back to Milwaukee
"It's an elegant tool," he says with affec-
Forty years later, having launched the
full of ideas. Gradually, however, he
tion. His hobby is photography (black-
second Industrial Revolution, received
came to realize that the new electronic
and-white, of course), for which he has
more than 50 patents, and won all of the
world had a limit of its own.
contentedly used the same trusty Hassel-
leading engineering awards, Kilby still
Working in a relatively small firm,
feels the sting of flunking that second
where the circuit designers in the engi-
Excerpted from The Chip: The Microelectronics Revolution
exam. He can remember his score-497,
neering lab had regular contact with the
and the Men Who Made It by T.R. Rnd Capyright 1985
- T.R. Rnd Represed wath permission of Semon and
three points short of passing-and the
plant managers, Kilby learned. probably
Schuler.
algebra problems he thinks he got
sooner than many other people in the
34
SCIENCE 85
FEBRUARY
Jack St. Clair Kilby:
He saw in silicon
the answer
to the Tyranny of
Numbers.
business, exactly how the realities of the
manufacturing process restricted the
complexity of transistorized circuitry.
MINKITY
Kilbv and his colleagues upstairs in the
lab could design a hearing aid or a radio
amplifier that squeezed unheard-of
numbers of components into minute
spaces. But down on the factory floor,
those circuits could not be built. There
were just too many interconnections too
close together for the human hand to
make them.
"For some time now," wrote J.A. Mor-
ton, a vice president of Bell Labs, in a
1958 article celebrating the 10th anni-
versarv of the transistor, electronic
man has known how in principle to ex-
tend greatly his visual, tactile. and mental
abilities through the digital transmission
and processing of all kinds of informa-
tion. However, all these functions suffer
from what has been called 'the tyranny of
numbers.' Such svstems. because of their
complex digital nature, require hun-
dreds, thousands. and sometimes tens of
thousands of electron devices." And
each of these devices. Morton noted in a
later article, "must be made, tested,
packed. shipped, unpacked, retested,
and interconnected one-at-a-time to pro-
duce a whole system. Each element and
its connections must operate reliably if
the system is to function as a whole." The
consequence? "The tyranny of large SVS-
tems," he said. "sets up a numbers barrier
to future advances if we must rely on
individual discrete components for pro-
ducing larger systems."
'Tyranny of numbers' was a per-
fect term for it," savs Kilby, recalling
Morton's articles. "The simple fact was
that you could not do everything that an
engineer would want to do."
For Kilbv, the recognition of this ma-
jor new problem was electrifving. Just as
he was coming into his own as an engi-
neer, a problem solver, the world of
electronics was up against a baffling
problem of premier importance. The
transistor offered enormous, world-
shaking possibilities-but they would
never be realized unless somebody found
a way around the problem of numbers.
Building a circuit is like building a
sentence. There are certain standard
components-nouns, verbs, adjectives.
FEBRU ARY SCIENCE 85 35
From Sailing shops to silicon
and adverbs in a sentence: resistors, ca-
hand-soldered connections: the cost of
for a route across the numbers barrier.
pacitors. diodes. and transistors in a cir-
labor for wiring and testing each connec-
Like everyone else in the industry, Jack
cuit-each with its own function. By
tion was greater than the total cost of the
Kilby plunged into the search for a
joining the components in different
components themselves. Production of
solution.
ways. one can get circuits, or sentences.
the first of the completely transistorized.
It was evident. though. that solving the
that perform different functions.
or "second generation." computers-
tvranny of numbers. if indeed a solution
Writers of sentences are taught to
the Control Data CD 1604. containing
could be found. was a task that would
keep their designs short and simple. This
25,000 transistors. 100,000 diodes. and
require resources considerably larger
rule does not apply in electronics. Some
hundreds of thousands of resistors and
than a firm the size of Centralab could
of the most useful circuits are big and
capacitors-gave engineers nightmares
muster. "I felt." he wrote later.
that
complicated. with hundreds or thou-
because of the sheer difficulty of con-
it would not be possible for ven small
sands of components wired together. In
necting the parts. By the end of the
groups with limited funding to be com-
the era of vacuum tubes. the designers'
decade. people were alreadv planning
petitive." Early in 1958 he sent out his
implicit awareness of power. heat. and
the computers that would somedav guide
résumé to a number of larger firms.
size restraints limited the scope of any
a rocket to a landing on the moon. But
Among the engineers he wrote to was
circuit design: there was just no point in
those plans called for circuits with 10
Willis Adcock of Texas Instruments.
designing a machine that would melt as
million components. Who could pro-
In 1958 Texas Instruments was just
soon as it was turned on. With the tran-
duce a circuit like that? How could it fit
beginning to make a mark in the elec-
sistor. those fundamental design limita-
into a rocket?
tronics business. An audacious gambit
tions disappeared. Now the designers
In essence. the small community of
by the firm's postwar president. Patrick
could draw up plans for exotic communi-
engineers exploring the frontiers of elec-
Haggerty, started TI on its road to domi-
cations and computer circuits using
nance. In 1952. when transistors were
50,000 or 500,000 transistors and simi-
still exotic, unreliable devices costing
lar numbers of diodes. resistors, and ca-
$15 or more each. Haggerty gave engi-
pacitors. On paper. these supercircuits
Writers of sentences
neer Mark Shepherd. Jr., an assignment:
could outperform anything that had
Develop a reliable mass-production tran-
been designed before. All you had to do
are taught to keep
was wire them together and but that
their designs
sistor that would sell for $2.50. Shep-
herd did it. In 1954. Haggerty launched
was the problem That was where the
short and simple.
his most famous initiative: He put his
numbers barrier came in.
This rule does not
cheap. reliable transistors into a con-
An electric circuit has to be a com-
plete. unbroken path along which cur-
apply in electronics.
sumer product-the pocket radio. The
idea was a smash hit in the marketplace.
rent can flow. That means that all the
More important, it made the transistor a
components of the circuit must be con-
common household item. and Texas In-
nected in a continuous loop: resistors
struments became a common name in
wired to diodes. diodes to transistors.
tronics in the 1950s faced the same ab-
electronics.
transistors to other resistors. and SO on.
ject frustration that had confronted the
The first pocket radios, like all transis-
Each component can have two, 10. even
small community of seamen exploring
torized equipment of the day, used tran-
20 interconnections with other parts of
the frontiers of navigation in the 1590s.
sistors made of germanium. a semi-
the circuit. Making the connections—
At the far western extremity of the Atlan-
conductor material easy to work with but
wring the parts together-was almost
tic. hard against the shores of Central
unsatisfactory for many uses because it
entirely hand labor: It was expensive.
America. the explorers could look west-
could not operate at high temperatures.
time-consuming. and inherently unreli-
ward from the masthead and see, "with a
Another semiconductor. silicon. could
able A circuit with 100.000 components
wild surmise." a vast new ocean. a whole
withstand heat but was brittle and con-
could easily require 1.000.000 different
new world. beckoning across the isth-
sidered too difficult to purify for transis-
soldered connections linking the
mus. But there was no wav-no was
for manufacturing. Convinced of the su-
components.
short of the impossibly expensive. time-
periority of silicon. Haggerty hired
Even it somebody could pay for that
consuming. and unreliable vovage
Gordon Teal. a physicist who had worked
much hand labor. there was no was
around the tip of South America-to get
extensively with the material at Bell Labs.
humans could put together a million of
to that wonderfully promising new
Then Teal and Willis Adcock. a physical
anything without turning out a few that
stretch of sea. Just SO for Jack Kilby and
chemist, set about to devise a silicon
were faulty. By the late 1950s the elec-
his colleagues A vast new electronic
transistor The project was pursued un-
tronics industry had come head-to-head
world was right there on the blueprints
der security arrangements that any spv
with this implacable limit. The Naws
but impossible to achieve And so physi-
agency would admire. At a professional
newest destrovers had 350.000 elec-
cists and electronics engineers embarked
conference in May 1954. Teal listened to
tronk components, requiring millions of
on a great vovage of discovers. searching
speaker after speaker bemoan the insu-
3n
SCIENCE
85
FEBRU ARY
A simple combination of
trates the basic architec-
transistor is between
three electronic compo-
ture of any chip.) Impuri-
them. The three are elec-
nents-a transistor and
ties are added to specific
trically connected through
two resistors, about twice
areas of a tiny bar of pure
aluminum paths, topmost
their normal size, top il-
silicon-a process called
dark areas. The aluminum
hustration-could be du-
doping-to create
is deposited atop a layer
plicated on a pinhead-
successive layers of semi-
of silicon oxide, an elec-
sized chip as shown at
conductor material that
trical nonconductor that
perable problems posed by silicon. Then
bottom in the three-di-
will conduct electricity.
confines the metal to its
Teal rose. "Our company," he noted
mensional cutaway. (Such
On the chip shown, resis-
designated pathways. Ex-
calmly, "now has two types of silicon
a simple chip would not,
tor 1 is the region at the
ternal connections to the
transistor in production I just hap-
of course, be cost-effective
top left, resistor 2 is at
chip would be made to the
pen to have some here in my coat
to produce, but it illus-
bottom right, and the
pads on its outside edge.
pocket." An assistant appeared, carrying
a record player that employed a germa-
nium transistor in its circuits. As a record
played, Teal dunked the transistor into a
vat of hot oil; the sound stopped. Next
Teal wired in one of the silicon transis-
TRANSISTOR
tors and lowered it into the hot oil. The
RESISTOR 1
band played on. The meeting ended in
pandemonium; Texas Instruments was
on its way.
RESISTOR 2
The tyranny of numbers revealed itself
soon enough, and Adcock was placed in
EMITTER
charge of a major research effort to
BASE
defeat it, organized around the broad
concept of microminiaturization. When
COLLECTOR
Kilby arrived at Adcock's lab in May of
1958, one of many ideas being pursued
was the Micro-Module. Because of its
record in getting silicon to behave, TI had
ALUMINUM PATHWAYS
landed a small research contract from
RCA, which had come up with the inspira-
tion for the Micro-Module. The theory
was that all the components of a circuit
could be made in one uniform size and
shape, with wiring built right in. These
identical modules could then be snapped
together, like a child's Lego blocks, to
BASE PAD
make instant circuits. The concept was
important to the U.S. Army. Each of the
BASE
military services was pursuing its own
TRANSISTOR
solution to the interconnection problem.
and the Army keenly desired that its
proposal should prevail.
Kilby disliked the Micro-Module from
FLASH FLEISCHER
SILICON
the start. This feeling was partly an engi-
OXIDE
neer's intuition; the Micro-Module bore
PURE SILICON
some resemblance to an idea that had
flopped at Centralab. The real flaw,
though, was more basic. The real prob-
lem posed by the tyranny of numbers was
numbers, and the Micro-Module did
EMITTER PAD
nothing to reduce the huge quantities of
individual components in sophisticated
circuits. No engineer could work with
much enthusiasm on a solution to the
wrong problem; Kilby's heart sank at the
thought that he had left a good job and
COLLECTOR
moved his family across the country only
EMITTER
to work on a project that was funda-
COLLECTOR PAD
mentally off target.
At that time, everybody at Texas In-
FEBRUARY
SCIENCE
85
37
struments took their vacation the same
resistor. It wouldn't be as good as a
ered incredibly expensive. To make a
few weeks in July. Kilby hadn't been
standard carbon resistor, but it would
one-cent carbon resistor from good-
around long enough to earn vacation
work. For that matter, by taking advan-
quality semiconductor seemed foolish."
time and was left alone in the semi-
tage of the peculiarities of the junction
Building a resistor out of silicon seemed
conductor lab. He was "discouraged,"
between differently doped regions of a
about as sensible as building a boxcar out
he wrote later; "I felt it likely that I
piece of silicon, you could make a capac-
of gold; you could probably do it, but
would be put to work on a proposal for
itor. Not much of one-its performance
why bother? Even Kilby was a little skep-
the Micro-Module program when vaca-
wouldn't equal that of a standard metal-
tical at first: "You couldn't be sure that
tion was over unless I came up with a
and-ceramic capacitor-but it would
there weren't some real flaws in the
good idea very quickly."
work. Come to think of it-and this was
scheme somewhere." The only way to
He plunged in, soaking up every fact
the idea that would revolutionize elec-
find out was to build a model of this
he could about the problem at hand and
tronics-if you could make any compo-
integrated circuit and give it a test. To do
the ways Texas Instruments might solve
nent from one material, you could put
that, Kilby would need the boss's okay.
it. Among much else, he took a close,
the components of an entire circuit in a
When everybody came back from va-
analytical look at his new firm and its
monolithic block of that material.
cation, eager to get back to cutting cir-
operations. The obvious fact that
The more Kilby thought, the more
cuitry down to size, Kilby showed his
emerged was the company's heavy com-
appealing this notion became. If all the
notebook sketches to Willis Adcock.
mitment to silicon. To capitalize on its
parts were integrated on a single slice of
"Willis was not as high on it as I was,"
victory in the race to develop silicon
silicon, you wouldn't have to wire any-
Kilby recalled later. Adcock was in-
transistors, TI had invested millions of
thing together. Connections could be
trigued with the idea but had doubts
dollars in equipment and techniques to
laid down internally within the semi-
about its practicality; "it was pretty damn
purify silicon and manufacture transis-
conductor chip; no matter how complex
cumbersome," he said later. To build
tors with it. "If Texas Instruments was
Kilby's model, Adcock would have to
going to do something," Kilby explained
divert people to the previously untried
later, "it probably had to involve
task of building a complete circuit out of
silicon."
Kilby nervously
semiconductors. Kilby and Adcock made
This conclusion gave Kilby the focus
fiddled with
a deal: If Kilby could make a resistor and
he needed. He began to think hard about
the dials. He checked
a capacitor out of separate pieces of
silicon. What could you do with silicon?
silicon, Adcock would authorize the far
Kilby's answer to that question has
the connections.
costlier effort to construct an integrated
come to be known as the Monolithic
He took a deep breath.
circuit on a single semiconductor chip.
Idea. The idea has so changed the world
that it is just about impossible today to
He pushed the switch.
Kilby painstakingly carved a resistor out
of a strip of silicon. Then he made a
reconstruct what things were like before
capacitor from another strip of silicon.
he thought of it-and thus almost im-
He wired these strange devices into a test
possible to appreciate how ingenious,
the circuit was, nobody would have to
circuit, and they worked. Adcock then
and how daring, the answer was. The
solder anything together. The numbers
okayed the attempt to construct a com-
Monolithic Idea has become an elemen-
barrier would disappear. And without
plete circuit on a single chip.
tary part of modern science, as funda-
wiring or connections, an awful lot of
The design that Kilby chose was a
mental, and as obvious, as J.J. Thomson's
components could be squeezed into a
phase-shift oscillator, a classic for testing
daring suggestion that there were tiny
pretty small chip. On July 24, 1958,
purposes because it incorporates resis-
charged particles swirling around inside
Kilby opened his lab notebook and wrote
tors, capacitors, and transistors-the
the atom. In July of 1958, though,
down the Monolithic Idea: "The follow-
three most important circuit elements.
Kilby's answer was hardly elementary.
ing circuit elements could be made on a
An oscillator turns a steady flow of direct
What could you do with silicon? It was
single slice: resistors, capacitor, distrib-
current into alternating current, electric-
already known in 1958 that the standard
uted capacitor, transistor." He made
ity that constantly changes direction,
semiconductor devices, diodes and tran-
rough sketches of how each of the com-
surging back and forth. (The power avail-
sistors, could be made of silicon, if it was
ponents could be realized by proper ar-
able at a wall outlet is an everyday exam-
"doped" with the proper impurities to
rangements of semiconductor material.
ple. It goes through 120 changes of di-
make it conduct electric charges. Now,
This suggestion was, to use one of
rection, or 60 complete cycles, every
this doped silicon is a far-from-perfect
Kilby's favorite words, nonobvious. "No-
second.) The transformation from DC to
conductor; it tends to impede the flow of
body would have made these compo-
AC. shows up nicely on an oscilloscope, a
current. That is the very function of an
nents out of semiconductor material
piece of test equipment with a screen
ordinary resistor. Kilby thought about
then." he has explained. "It didn't make
much like a small TV set. If you connect a
that: a silicon resistor. Why not? A strip
very good resistors or capacitors, and
source of direct current-for example, a
of properly doped silicon could act as a
semiconductor materials were consid-
battery-to the oscilloscope, the steady
38
SCIENCE 85
FEBRUARY
Although Jack Kilby had
cal components: A transis-
internal workings of a
the semiconductor mate-
tor is at the center of the
modern chip, below. Made
rial silicon in mind for fu-
germanium; a capacitor is
by Motorola. it is a
ture chips, he used germa-
at the left side; and the
microprocessor-the
nium for the first crude
germanium bar provides
heart of a computer-with
integrated circuit, top.
the functional equivalent
200,000 transistors on one
The germanium on which
of three resistors. Kilby
piece of silicon. The pho-
the circuit is built is the
made some of the connec-
tomicrograph conveys a
current will trace a straight line across
thin rectangle at center.
tions on the chip with tiny
sense of the chip's func-
the screen. like this:
No bigger than a piece of
gold wires rather than
tional areas. The dark sec-
toothpick, the wafer is
depositing metallic circuit
tions at the top and upper
glued to a larger rectangle
paths, prompting some
left, for example, are
of glass, which is glued to
engineers to refer deri-
memory areas; the vital
yet another piece of glass.
sively to the "flying wire"
control section is just
But if you put a phase-shift oscillator
The circuit, a phase-shift
chip. Its inelegant design
above the middle of the
between the battery and the oscilloscope,
oscillator, has five electri-
contrasts sharply with the
chip.
a gracefully curving line-a sine wave-
will undulate across the screen:
On September 12, 1958, Jack Kilby's
oscillator-on-a-chip, less than half an
inch long and narrower than a toothpick,
was finally ready for viewing. A group of
Texas Instruments executives gathered
COURTE SY TEXAS INSTRUMENTS INCORPORATED
in Kilby's area in the lab to see if this tiny
and wholly new species of circuit would
really work. Kilby knew it should; as any
engineer would have done, he had tested
it a day or two before. But would it
behave now, in the presence of the TI
brass? Kilby was nervous as he hooked up
the wires from the battery to his small
monolithic circuit and from the circuit to
the oscilloscope. He fiddled with the di-
als on the oscilloscope. He checked the
connections. He looked up at Adcock,
who gave a here-goes-nothin' shrug. He
checked the connections again. He took
a deep breath. He pushed the switch.
Immediately a bright green thread of
light snaked across the screen in a per-
fect, unending sine wave. The integrated
circuit, the answer to the tyranny of
numbers, had worked. The men in the
room looked at the sine wave, looked at
Kilby, looked at the chip, looked at the
sine wave again. Then everybody broke
into broad smiles. A new era in electron-
ics had been born.
A terrifying rumor raced through the
semiconductor labs at Texas Instruments
the morning of January 28, 1959: Some-
body at RCA had invented an integrated
circuit. Like many false alarms, it had the
salutary effect of scaring people into ac-
tion. More than four months had passed
since Jack Kilby had successfully demon-
strated his prototype integrated circuit.
but development of the concept had pro-
duced no further results. Kilby's superi-
ors hoped to announce their great new
FEBRUARY
SCIENCE
85
39
Robert Noyce:
He saw
the way to connect
microscopic components
without wires.
product in March. but at the end of
January the only integrated circuits in
existence were the crude models Kilby
had built by hand for his demonstration:
CHK
nobody had figured out yet how to turn
out a production version.
The rumor that reached Dallas did, in
fact. contain a germ of truth. though no
one at TI knew that. Five davs earlier
Robert Novce, in his office at Fairchild
Semiconductor in the tiny California
town of Mountain View, had scratched
his first sketchv concept of the Mono-
lithic Idea in his notebook.
Unlike Kilbv, who had been rushed by
II's lawvers into filing for a patent before
he had worked out the problem of inter-
connections within the chip, Novce's for-
mulation of the idea covered both inte-
gration and interconnection. The two
inventors had arrived at the integrated
circuit bv different routes. Kilbv had first
hit upon the concept of integration-of
building all the parts of a circuit in a
monolithic chip of silicon-and had
moved from there to consideration of
interconnections. Novce, in contrast,
had first recognized the possibility of
printing connecting strips of metal on a
chip. and interconnection had led him to
integration.
The Monolothic Idea occurred to
Robert Novce in the depth of what
passes for winter in the valley south of
San Francisco Bav that is known today,
because of that idea, as Silicon Valley.
Unlike Kilby, Bob Novce did not have to
check with the boss when he got an idea;
at 31. Novce was the boss.
It was January of 1959. The valley was
still largely an agricultural domain, with
only a handful of electronics firms in-
truding on the peach and prune or-
chards. Fairchild Semiconductor. one of
those pioneering firms, had been started
late in 1957 by a group of physicists and
engineers who guessed. correctly, that
they could become fantastically rich bv
producing improved versions of transis-
tors and other microelectronic devices.
The group was long on technical talent
and short on managerial skills. But one
of the founders turned out to have both:
Robert Novce. Slender and square-
jawed. exuding the easv self-assurance of
a jet pilot, Novce has an unbounded
40
SCIENCE 85
FEBRUARY
curiosity that has led him to take up
before Fairchild started working on the
bers. Today, Kilby is generous in describ-
hobbies ranging from singing madrigals
idea; four more months passed before
ing Noyce's work on the invention, and
to flying seaplanes. His doctorate was in
Noyce got around to filing for a patent.
Noyce is equally generous about Kilby.
physics, and his specialty was the physics
The reason, Noyce explained later,
In the textbooks, Kilby gets credit for the
of electronic devices; at Fairchild,
was that Fairchild at the start of 1959 was
idea of integrating components on a
though, he became fascinated with man-
just beginning to sell its first important
chip, and Noyce for working out a practi-
agement, and gravitated to the position
product, a new kind of transistor. "We
cal way to connect those components.
of director of research and development.
were still a brand-new company," Noyce
Among their fellow engineers, Kilby and
There Noyce spent much of his time
recalled. "We were worried about basic
Noyce are referred to as coinventors of
looking for profitable solutions to the
survival. That meant getting transistors
the chip, a term that both men find
electronics industry's nagging problems.
out the door. The integrated circuit
satisfactory. And after years of legal
In the winter of 1958-59, one of the
seemed interesting, it was something that
wrangling over the patent, TI and Fair-
things he thought about was the tyranny
might make you some money somewhere
child conceded that each company had
of numbers.
down the road, but that was not a period
some right to the invention. At a summit
Unlike Kilby, who does his best work
when you had a lot of time for it."
meeting in 1966 attended by more than a
alone, Noyce is loquacious and impul-
Fairchild, like Texas Instruments, was
dozen semiconductor makers, the two
sive; he needs somebody to listen to his
prodded into action by a rumor-but in
companies agreed to grant licenses to
ideas and point out the ones that
this case it was true. In late February or
each other to make integrated circuits,
couldn't possibly work. That winter
early March, word arrived in Silicon Val-
and any other firm wanting to enter the
Noyce's sounding board was his friend
ley that Texas Instruments was about to
market would have to arrange separate
Gordon Moore, a physical chemist and
do away with discrete electronic compo-
licenses with both firms.
another co-founder of Fairchild Semi-
Professional and technical awards
conductor. "I spent a lot of time explain-
have become so common that for the
ing to Gordon on the blackboard how
most part neither Noyce nor Kilby pays
you might do some of these things,"
Unlike Kilby, Noyce
much attention these days when word of
Novce recalled later.
did not have to
a new one comes in the mail. But one day
Gradually, in the first weeks of 1959,
check with the boss
in 1982 Jack Kilby received an honor
he worked out the idea; on January 23,
that really mattered to him, because it
he remembers, "all the bits and pieces
when he got an idea.
was proof he had succeeded at his cho-
came together." He grabbed his lab
For at 31, Noyce
sen trade. He was inducted into the Na-
notebook and wrote down the Mono-
was the boss.
tional Inventors Hall of Fame, an august
lithic Idea, in words quite similar to those
group of five dozen people-Edison,
Jack Kilby had entered in his notebook
Bell, Ford, Shockley, the Wright Brothers.
six
months
before:
it
would
be
de-
Noyce was inducted the following year.
sirable to make multiple devices on a
nents by integrating all the parts of a
On a sunny winter Sunday, a group of
single piece of silicon, in order to be able
circuit into a single silicon chip. For any
people gathered in the lobby of the Pat-
to make interconnections between de-
company that made its money selling
ent Office, just across the Potomac from
vices as part of the manufacturing pro-
individual components-like Fairchild's
the Washington Monument, for the hall
cess, and thus reduce size, weight, etc. as
transistors-this was disconcerting news.
of fame ceremony. Five inventors were
well as cost per active element."
Somebody at Fairchild called a meeting.
honored that year, only two still alive-
Like Kilby, Noyce felt fairly sure right
At this session Noyce formally laid out,
Kilby and Max Tishler, who svnthesized
away that he was onto something impor-
for the first time, his basic concept of an
Vitamin B₂ in 1941. When Kilbv's turn
tant. "There was a tremendous motiva-
integrated circuit. By the spring of 1959,
came, he stood up for the briefest mo-
tion then to do something about the
Fairchild was hard at work on chips.
ment, looked around shyly at the audi-
numbers barrier," he recalled later.
The integrated circuit emerged as the
ence, and quietly said, "Thank you."
this looked like a wav to deal with that
most important new product in the his-
That was all.
I can remember telling Gordon one day
tory of electronics. The market grew ex-
"He really didn't say a word during the
that we might have here a solution to a
plosively and economies of production
whole thing." recalled Fred Zeisenheim,
real big problem."
drove costs down to the point that many
the hall of fame's president. "He just sat
Like their counterparts at Texas In-
common chips can be purchased at a
there like he was thinking about some-
struments, the people at Fairchild Semi-
local Radio Shack for under a dollar.
thing. It looked like
no kidding, I sort
conductor took their time about devel-
And the scientific community agreed
of thought he was sitting there working
oping the Monolithic Idea into a
that Kilbv and Novce deserved joint
out his next invention."
-
practical integrated circuit. It was nearly
credit for the Monolithic Idea. Both men
two months after Bob Novce had set
were awarded the National Medal of Sci-
T.R. Reid as Rocky Mountain bureau chief
down the basic concept in his notebook
ence for overcoming the tvranny of num-
for the Washington Post.
FEBRUARY SCIENCE 85
41
AEA -
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- Summer asked group to good
Good mix
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software, computers,
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11:30 3 3/7
Washington COUR their
THE WHITE HOUSE
WASHINGTON
Jelf how XX
SCHEDULE PROPOSAL
FEBRUARY 1990
TO:
JOSEPH HAGIN, DEPUTY ASSISTANT TO THE PRESIDENT
FOR APPOINTMENTS AND SCHEDULING
THROUGH:
DAVID DEMAREST, ASSISTANT TO THE PRESIDENT FOR
COMMUNICATIONS
BK
FROM:
BOBBIE KILBERG, DEPUTY ASSISTANT TO THE PRESIDENT
FOR PUBLIC LIAISON
JEFF VOGT ASSISTANT DIRECTOR, PUBLIC LIAISON
REQUEST:
To address the American Electronics
Association's 1990 Capital Caucus dinner.
PURPOSE:
To highlight Administration proposals to promote
capital formation and high-tech industrial
development, including r & e tax credit permanence
and a reduction in the capital gains tax rate.
BACKGROUND:
The American Electronics Association (AEA)
is the largest trade association serving the
electronics and high-tech industries, representing
over 2,900 companies. AEA has been one of the
Administration's core supporters to reduce the
capital gains tax rate and is also committed to
making the r & e tax credit permanent.
AEA affords a strong grassroots network which was
effectively activated during the key capital gains
battles on the Hill last year. They have pledged
their full support this year as well. An
appearance by the President would help to
demonstrate the Administration's renewed
commitment to see these policies enacted this
year. Moreover, the President could recognize
America's preeminence in the high-tech industry in
the global marketplace, address fair trade
concerns, highlight our progress in the GATT talks
in removing trade barriers and note our progress
in the structural impediments initiative (SII)
vis-a-vis Japan.
PREVIOUS
PARTICIPATION: None.
DATE AND TIME: March 6, 1990, between 7-9 p.m.
LOCATION:
Westin Hotel, Washington, D.C.
PARTICIPANTS:
400 senior high-tech executives from around the
country.
OUTLINE OF
EVENT: The President arrives Westin Hotel
The President participates in brief photo-op
The President makes remarks
The President departs
REMARKS
REQUIRED:
Speech. >> BRIEF Acruse
MEDIA
COVERAGE: Open press.
8:18
AMERICAN ELECTRONICS ASSOCIATION
DEPT. (TX) : PRESIDENT
American ElectronicsAssociation
AEA
5201 Great America Parkway. Santa Clara. California 95054. Telephone. (408) 987-4200
1225 Eye Street. N.W.. Suite 950. Washington, D.C 20005. Telephone: (202) 682-9110
February 5, 1990
Governor John H. Sununu
Chief of Staff to the President
The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20500
Dear Governor Sununu:
John Moriarity, Mitchell Kertzman, and I want to thank you for
the time you gave us in Boston on February 2. I believe we
now have a better understanding of the Administration's
appreciation of the electronics industry.
You agreed to consider our request that the President speak at
the annual Capital Caucus of the American Electronics
Association on March 6, 1990. Per your request, we are
enclosing our suggested topics, most of which I think you will
agree with. Their pronouncement by the President would do
much to reduce the tension that the industry feels with the
Administration.
Since our meeting on Friday, I have received a letter from Mr.
Joseph W. Hagin II advising that the President will be unable
to speak at our meeting. I hope in light of the concern that
we expressed in our discussions with you that you can ask the
President to reconsider.
Thanks again for the time that you were able to spend with us.
I think it was useful to everyone.
Sincerely
Durk Sueren
J. Richard Iverson
President and CEO
JRI:efs
Enclosures
$147 - $167
$ 88 Sat # # the
$ $ $
$9950
$7500 on Whend -
2 a shis
8:19
AMERICAN ELECTRONICS ASSOCIATION
3.
DEPT. (TX) : PRESIDENT
Talking Points
American Electronics Association
Speech by President George Bush
Tuesday evening, March 6, 1990
I want to thank the American Electronics Association for the
support it gave me nation wide during my run for the
Presidency. I especially remember the meetings at Applied
Materials and Ford Aerospace.
The last time that I spoke before your group was at your
Board meeting in San Diego at the kick-off of Air/Space
America. I remember that as a very special evening.
45 years ago, the U.S. set out to create a multipolar,
democratic world. We have succeeded.
In the post Cold War world we now face, there will be two
primary determinants of world power. technological
leadership and market share in major commercial markets. As
the industry at the intersection of these two forces at work
in the world, you are key to America's future world
leadership.
My Administration recognizes the importance of the
electronics industry to the future of the United States.
Not only are you the largest manufacturing segment, but you
provide the fuel for modernization of all of our industries,
and you are a major exporting segment.
We recognize that while you have been growing over the last
several years the industry has lost market share in many
important areas. I am here tonight to tell you that this
Administration -- and the Republican Party -- is committed
to working with you to insure that America regains its lead
in high technology.
I do not pretend to have all of the answers as we struggle
with this fundamental problem. I will tell you that this
Administration stands committed to working with you to forge
solutions. Government and industry -- as partners -- must
work to reclaim U.S. leadership in advanced technology.
I would like to spend some time tonight talking about the
efforts this Administration has already initiated. I
emphasize that this is just the beginning; the beginning of
a long-term effort.
This Administration is dedicated to increasing saving,
investment and productivity. Items to mention: permanent
R&D credit, permanent capital gains differential, deficit
reduction, savings incentives, joint manufacturing relief.
(Note: AEA was one of the original advocates for the 1978
capital gains reduction)
FEB,
8:19
AMERICAN ELECTRONICS ASSOCIATION
DEPT. (TX) PRESIDENT
o We are also committed to enhancing research and development.
Investment in research and development is a top priority for
an Administration that believes in investing in the future.
Items to mention: Continued doubling of NSF budget,
increases in science and engineering education, intellectual
property protection in Uruguay Round, R&D tax credit,
encouraging R&D by transnational companies, and increased
support for robotics, x-ray lithography, space exploration,
and developing a national high-speed information structure.
(Note: AEA was one of the originators of the R&D credit.)
We should always remember that without a world class
workforce, we will not be a world class economic power.
Investing in human capital is a long-time personal concern,
and one that is of vital importance to your industry.
Issues to mention: math and science education initiative,
education summit, head start increases, industry
partnerships. (Note: For over a decade, AEA has been an
industry leader in the education area.)
Few things are of greater importance to me than protecting
the environment. Your industry has been in the forefront of
innovative efforts to protect the environment. In
particular, I salute your commitment to eliminating CFC
emissions on a schedule that goes well beyond the Montreal
Protocols. Issues to mention: need for continued
international action on CFCs and for Clean Air Act
permitting provisions especially tailored to environmental
protection.
And finally, the Bush Administration pledges to preserve our
national security and be an active advocate for America's
interests abroad. Issues to mention: Commitment to US
interests (eg., FSX improvements), use of U.S. market
leverage to open foreign markets, export control reform
through a strong and unified multilateral commitment to
COCOM, orderly reductions in defense spending that preserve
our basic industrial base, savings through Defense
Management Review implementation, SEMATECH and DARPA
funding, NIST Advanced Technology Program.
In closing, let me note that I have always believed, and
continue to believe, that the fundamental responsibility for
competitiveness rests with thousands of individual
companies. We believe that the industry has an obligation to
improve its own performance. We would encourage all of your
companies to try to win the Baldridge Award.
o I do not believe we are at the beginning of an era of
decline. I believe we are poised on the threshold of a
century of greatness. All we need to do is make the
commitment -- in government and in companies -- to
leadership.
Sunum: Ref. specific industries in Price matership.
Super 301
(Lange/Cawley)
February 27, 1989
5:30 P.M.
[AEA.DOC]
[BRIEF]
PRESIDENTIAL REMARKS:
AMERICAN ELECTRONICS ASSOCIATION
WASHINGTON COURT HOTEL
WEDNESDAY, MARCH 7, 1990
11:30 A.M.
(( Thank you, Mitchell [Kertzman]. Dick Iverson, David
Packard, Bob Noyce it's good to see so many familiar faces.
Many of you came a long way to be here, so I won't compel you to
sit through a long speech. The punishment should fit the crime.
Which reminds me of a story. An orchestra was having a
bad season. The critics were howling. Then one day the first
violinist was murdered. Turns out the conductor did it.
He was tried, and convicted, and on the morning he was going
to the electric chair they asked him if he had any last requests.
He said, "I would like a banana."
So they let him eat a banana. Then they turned on the
voltage. No effect. So they doubled it. Still no effect. He
just sat there grinning. They asked him, "How is this possible?
Was it the banana?" And he said, "No, I guess I'm just a bad
conductor." 111 ))
It's an honor and a pleasure to have you here today. You
have the people -- and the products -- that keep this country
competitive.
For almost 50 years now, you've been at the center of a
remarkable revolution: in the way work is done, the way ideas
are managed -- even the way time and the vast reaches of space
are understood.
And along the way, you've also become the nation's largest
manufacturing industry -- creating jobs for over two and a half
million Americans. Modernizing services and industries of every
Assuring our national security.
kind. And providing a vital export market.
As technologies, economies, and geopolitics change almost
weekly, your industries stand at a threshold of tremendous
opportunity.
So we intend to work with you -- closely, constantly, and
consistently -- to see that American electronics and technologies
regain and retain a preeminent position both in world markets.
We're committed to a program of immediate and long-term
n
competitive strategies for the future. And while we're only at
the start of a process that shows great promise, today I want to
outline briefly what we're already doing. [cours LAY out as 4 5PT. PRAND
Our first priority is to encourage productivity gains,
savings, and long-term investment in high-tech industries, by
lowering the cost of capital.
We believe that one of the most crucial Federal priorities
is to encourage planning for the long term --- because for too
long, where investment is concerned, the Federal government has
been more of a hindrance than a help.
So we're fighting hard -- with your support -- for a
business-building, job-creating, revenue enhancing cut in the
capital gains differential.
Earlier this month we sent to Congress our Savings and
Economic Growth Act, to stimulate domestic savings. We're
proposing new incentives for IRAs. And we've proposed a budget
that will bring the deficit down below the Gramm-Rudman-
Hollings targets without raising taxes.
Along with encouraging investment, we're committed to
unprecedented support for research and development efforts.
We believe that the R & E tax credit should be made permanent.
And our budget includes a record-breaking $70 billion in Federal
direct investment for research and development.
Om
ludget
devotes unprecedented resources to space. Education.
The National Science Foundation. Drug abuse control.
Environmental initiatives. And other crucial investments in
America's future.
But we understand, as you do, that no investment is more
important than our human resources. So together with the
nation's governors, we've set ambitious goals for America's
students. As an incentive to the nation's students, we've
created a new National Math and Science Scholars program.
We're committed: By the year 2000, our kids can be first in
the world in science and math achievement -- and with enough
involvement and leadership from groups like this one, they will
be.
Your industries face some unique challenges. The
marketplace is tough enough without undue constraints and unfair
restrictions.
So we've pledged to make sure that trade is free, and fair.
We're making progress through the GATT to remove barriers to
god
trade. And we're moving forward with Japan, through the
Structural Impediments Initiative. Just last weekend I met with
Prime Minister Kaifu, who agreed
I've made the relaxing of export controls a personal
priority -- especially with an eye toward Eastern Europe.
This week at COCOM in Paris, we have a team negotiating an
interim policy.
Given the pace of political change, new developments in
technology, and the competitive position of American industry,
I'm confident that we'll be able to revise and modernize our
export controls without compromising national security.
To provide further competitive benefits for American firms,
we're also working on legislation to allow them to join forces in
SUBJECT
joint production ventures. On a case-by-case basis, the Justice
Department will consider relaxing anti-trust limits for firms
REVISION
interested in making use of complementary skills and facilities,
shared R & D, and shared investment risks.
One risk you all face, of course -- to a great and
unfortunate degree -- is product liability. And the Council on
Competitiveness, chaired by Vice President Quayle, is already
working for significant reform of our cumbersome and expensive
product liability system.
Today I'm going to offer that council another challenge: to
form a working group, to find ways that American industry can
better translate new ideas and technologies into marketable
products.
So many of the world's most advanced technologies, from
robotics to the VCR, were first developed here. And so many
of those concepts were ultimately brought to the marketplace by
our competitors. We can do better. And we will do better.
Today I've outlined some of what we're doing to level the
field. But it will be leaders like you that have to take the
ball and run with it.
You represent the vital core of America's competitive
potential, with over 3500 of the most dynamic, technologically
advanced, forward-thinking companies in the country.
Your ideas are important to us. And your success is crucial
to America's future. So let me encourage you to work together,
and with us, on a long-term program to meet the competitive
challenge of a new century.
Thank you. And God bless you.
###
Carolyn
THE WHITE HOUSE
WASHINGTON
MEMORANDUM
TO:
David Demarest
FROM:
JOSEPH W. HAGIN
SUBJECT:
APPROVED PRESIDENTIAL ACTIVITY
EVENT:
Address the American Electronics Association
Luncheon
DATE:
March 7, 1990
Wednesday
TIME:
90 FEB21 All 30
11:30 p.m.
DURATION:
20 minutes
LOCATION:
Westin Hotel
ATTIRE:
Business suit
REMARKS REQUIRED:
se tech. semark in BothCardin
Brief Femarks
MEDIA COVERAGE:
Open Press
Cap fairs
FIRST LADY
No
PARTICIPATION:
Factshets
Savingst EconContRoct
ADDITIONAL
INFORMATION:
Educ Book - And of math
CONTACT:
,
work Compet Cound: Biotechnology
TELEPHONE: OFFICE
HOME taby setting constrs
similar grouplator
NOTE: PROJECT OFFICER, SEE ATTACHED CHECKLIST
Ed Rogers
Marlin Fitzwater
David Bates
Bill KoBtal?
James Cicconi
David Demarest
David Valdez
A
Fred McClure
Jean Lamb
USSS - PPD Pos
Farry's Dar
Susan Porter Rose
Sig Rogich
John Keller
WHCA Gary Walters Audio/Visual F backiers to frandating
waking part or R&D:
Patty Presock
Chriss Winston
Tim McBride
Laurie Firestone
WHCA Operations fechoology to matplace
J. Bonnie Newman
C. Boyden Gray
William Kristol
Paul Bateman
Kat VCR))
John Herrick
Jackie Kennedy
Direz Taspeluk, Commerce
EPC Jaiof money concept
COCOM/EXPORT CONTROLS:
State Department: East-West Trade Office
Contact: George Gowen 647-2870
COCOM: Coordinating Committee for Multi-lateral Export Controls
We are working with the 16 COCOM member-countries to revise and
expand the multi-lateral export control system.
COCOM is broken down into three priority areas:
1. Telecommunications
2. Machine Tools
3. Computers
( (The 3rd priority is especially important for the AEA
because of their business in superconductors and computers. ))
National Security Council: Technology Transfer Affairs
Contact: Rich Barth X 3550
The President can say:
The issue of relaxing export controls has become a
particularly important for this Administration and it has become
a personal priority. ( (POTUS chaired an NSC working group
meeting on this, but we don't need to tell them that. ))
He has ordered our negotiators to work with their partners
to delve into the issue with a keen eye toward the changes in
Eastern Europe.
He has ordered a detailed analysis of the changing national
security threat with respect to Eastern Europe. Therefore we are
optimistic that we can revise and modernize export controls in
light of Eastern Europe/ changes in technology/ and the
competitiveness of American business.
This is a "Here and Now" issue therefore part of his mandate
is to develop an interim policy for changes in, for example,
computers. The US will be negotiating in Paris next week (the
week of the speech) and part of their package is calling for
significant control reductions.
2829
Cocour: (33) 142 96 1202- 96
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American Elearonics/Association
AEA
5201 Great America Parkway, Santa Clara, California 95054. Telephone: (408) 987-4200
1225 Eye Street, N.W., Suite 950, Washington, D.C. 20005. Telephone: (202) 682-9110
To:
Caroline Cawley
From: Mancini
p1065
As we discussed, additional material from John Moriarty.
From a political perspective, in thinking about the major
points that the Administration might want the attendees to
remember, I'd consider these
1. The Administration acknowledges the importance of
electronics to our long-term national security and standard
of living.
2. Point out the many fundamental strengths of the U.S. in the
global battle for technology: an entrepreneurial culture,
the world's finest basic research capability, the world's
largest market, and a heterogeneous population.
3. The Administration acknowledges that despite growing faster
than any other segment of the economy, U.S. leadership in
electronics has eroded over the last decade relative to the
rest of the world. This is a matter of concern, and a
condition that cannot be allowed to continue.
4. Indicate the leadership of the Administration in dealing
with the macroeconomic factors that are hurting high-tech
(all of the good things we've previously discussed).
5. Acknowledge the need for companies to cooperate with each
other and the legitimate role of government in creating an
infrastructure to allow this to happen.
6. Acknowledge that the current mix of federal R&D funding (70%
defense) needs to be changed to foster cooperation among
companies in early stage-precompetitive GENERIC
technologies. Indicate that this is really the fundamental
point within the emotional debates about what is industrial
policy and what is not. Indicate the answers are not yet
clear about what should be done -- either within industry or
government -- but commit to working together with industry
to develop solutions.
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LAPSTOP
456
PORTABLE COMPUTER & FAX RENTALS
wis
February 26, 1990
The Honorable John Sununu
Chief of Staff
Executive Office of the President
The White House
washington, D.C. 20500
Dear Governor Sununu:
As a member of the American Electronics Association and on
behalf of the entire organization I want to thank you for
your efforts in arranging for President Bush to speak to our
organization on March 7th.
As a follow-up to our earlier correspondence and a subsequent
conversation I had with Jackie, I am including with this
letter some suggested speaking points that the White House
staff might find helpful in preparing the President's remarks
to AEA. In addition, I am also transmitting another copy of
the speaking points list Dick Iverson previously submitted to
you.
In my speaking points I have tried to capture the spirit of
the comments you made to us when we met in Boston on February
2nd. I have also offered some suggestions on a "packaging"
approach which might help convey all that is being done by
the Administration in a simple and concise way. I hope you
find these suggestions helpful.
In any event, I look forward to seeing you next week. Thanks
again, for all you help in broadening the channels of
communication between the Administration and the electronics
industry.
Best regards,
John W. Moriarty
JWM/loc
Attachment
136 Museum Place . Salem, MA 01970 0 (508) 744-6673 e FAX (508) 744-6518
=
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SUGGESTED TALKING POINTS FOR PRESIDENT BUSK'S ADDRESS TO THE
AMERICAN ELECTRONICS ASSOCIATION MARCH 7, 1990
JOHN. W. MORIARTY
(508) 744-6673
I. BACKGROUND ON AEA CAPITAL CAUCUS
A. Forum
American Electronics Association Capital Caucus 300-350 CEO-
level industry executives in Washington for two days to lobby
for AEA's policy agenda.
B. Key Policy Positions
1. Tax Policy:
- Permanent R&D and Basic Research Tax Credit
- Regulatory Change in 861-8 (IRS)
- Eliminate Double Taxation of Dividends
- capital Gains Differential
2. capital Rebalance:
- Reduce Deficit
- Increase Demestic Savings
- Reduce Interest Rates
- Anti-Trust Amendments to Permit Joint Production
Ventures
3. Education and Science Policy:
- Increased Funding for NSF
- Student Incentives for Teaching Math & science
- Support for NIST's If Advanced Technology Program"
- support for NSF's Basic Science & Research Programs
- Support for DARPA's Initiative for High Def. R&D
4. Market Access:
- support for Super 301
- support for the Structural Impediments Initiative
5. Export Controls:
- Support for License-free Zone in COCOM
- Support for Amending Supercomputer Definition
- Commerce Dept. Control Over Dual-Use Control List
20 'd
57:25 92/20 06.
FROM LAPSTOP CORP.
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In addition to these fundamental policy concerns, AEA members
are increasing interested in exploring additional ways to
encourage "patient capital" -- longer-term capital investment
in the U.S. manufacturing sector. Chief among the issues
being explored are:
- Semiannual or Annual Financial Reporting
- Tax Polices that Favor Long-Term Real Estate Investment
over Long-Term Manufacturing Investment
- Reinstatement of the Investment Tax Credit
II. POLITICS OF THE HIGH TECH SECTOR
For the most part, the AEA agenda mirrors that of the
Administration. But there are growing divisions within the
industry and there is growing support for direct government
intervention in the form of controlled trade, more
government-industry collaborations, and direct applied
research subsidies. While these proposals are not universally
embraced, the frustration level throughout the industry is
high.
III. SUGGESTED CONTEXT FOR THE PRESIDENT'S REMARKS
President Bush has a high technology policy. He is well ahead
of the Congress on almost every policy position of AEA. He
should take credit for that.
The President might best do so by enunciating his policy as a
comprehensive 5 point program:
1. Capital Rebalance
2. Education
3. Research & Development
4. Market Access
5. Export Controls
These are the basic pillars of a "pre-competitive"
infrastructure that is seriously in disrepair. They favor no
particular industry, but by focusing on them collectively,
the Administration recognizes the strategic importance of a
vibrant high technology sector.
The AEA Capital Caucus gives the President the opportunity to
dramatically flesh out his view on how these policy
initiatives - his policy initiatives - interrelate, and how
they can best be accomplished under Gramm-Rudman.
The President can and should ask AEA's 3,500 high tech
companies to support his plan vigorously. And they will.
Many AEA members would also like to see the President use his
P.04
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office as a "Bully Pulpit" on capital formation issues. Not
only on the subject of personal savings (which they support),
but on the short-sightedness of financial analysts who force
corporate capital allocation decisions to favor short-term
rewards. This is an issue President Bush expressed passing
concern about in his interview in BusinessWeek on January 22.
Perhaps he could direct secretary Brady to undertake a report
on the impact of the current short-term focus.
The President might also touch on what will be the then
concluded meetings with Prime Minister Kaifu and on the up-
coming Houston Summit.
AEA members, like most Americans, know that the Japanese have
violated the principles of Bretton Woods on the issue of
balancing trade surpluses and deficits. America, for a time,
erred here as well, but no longer.
Americans want the President to take a strong stand with the
Japanese and most feel that such a stand can be taken without
fear of retaliation vis-a-vis Japan's strong position in
Treasury Notes. There is a fundamental fairness issue here.
The U.S. rebuilt the world economy through open access to our
markets. That was in the best interests of all concerned. And
it continues to be. But our powerful trading partners must be
made to understand this as well,
AEA members increasingly feel that we should use access to
our vast market as a trade negotiating tool much the way we
have used nuclear weapons as B bargaining tool in peace
negotiations - a threat. It is a widely held belief in the
industry that the state Department ultimately dictates trade
policy and that all too often diplomatic considerations win
out over free and fair trade. All too often the industry has
watched as the State Department steered the White House away
from vigorous enforcement of 301.
IV. CONCLUSION
There is clearly an opportunity here for the President to
cluster together all of his initiatives aimed at investing in
America's industrial infrastructure (education, R&D, capital
rebalancing, etc.) and issuing them as a policy statement.
The electronics industry is generally in harmony with the
Administration but its members are worried about the future
and they need to hear that their concerns are shared and
being intelligently and comprehensively addressed.
H hope that this information is helpful. Please call if I can
be further assistance.
ca'd
10am - Stef
2pm
West Basement
am. 4pm
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American Electronics Association
Washington, DC Office
Telephone:
202-682-9110
FAX:
202-682-9111
Address:
1225 Eye Street, NW #950
Washington, DC 20005
Fax From:
John Mancini
FAX To:
Person:
Caroline Cawley
Company:
FAX Number: 456-6218
Page
1
of
9
Caroline. Please call me if you have any questions.
Mancini
One thing very specific that occured to me. The Administration is
on the verge (I think) of endorsing antitrust reform to encourage
joint manufacturing This could be good place to announce this.
JM
The
Kriston USTR wornan
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Possible Talking Points
American Electronics Association
Speech by President George Bush
Wednesday morning, 11:30, March 7, 1990
Previous appearances before AEA
o
May, 1988 -- San Diego
First quarter, 1985 -- Santa Clara
Will be introduced by Mitchell Kertzman, President of
Computer Solutions, Inc. of Burlington, Massachusetts and
1990 Chairman of AEA. Acknowledge Dick Iverson, President
of AEA.
Major players in AEA's history
David Packard, one of AEA's founders
Bob Noyce, currently head of SEMATECH
Some major past chairmen
Former Congressman Ed
Zschau, Hewlett-Packard's Dean Morton and Bill Hewlett
Background on AEA (see attachment)
Approaching 50th anniversary
Founded in 1943 by 25 electronics companies from
Northern and Southern California to help secure a more
equitable share of the nation's government contracts.
Originally called West Coast Electronics Manufacturing
Association, later renamed the Western Electronics
Manufacturing Association.
Became American Electronics Association in 1978 to
mirror the growth of the industry, the geographic
expansion of the industry, and expanding scope of
activities.
A lot has happened in the nearly half a century since AEA's
formation
Some things to think about Just one example of
the massive changes that have occurred
The fundamental building block of any electronic device
is a simple on-off switch.
When AEA was founded, could hold only one of these
basic switches at a time. The country was just on the
edge of the era of electronics, but with roots back in
a mechanical era.
Since then, the technology of this basic switch has
moved to semiconductors. News reports this week noted
that both IBM and Texas Instruments announced
prototypes of a new chip that holds 16 million of these
switches on a sliver of silicon the size of the end of
a finger.
A revolution has occurred over the past 50 years, and AEA
has been squarely in the middle of this revolution. During
the time that AEA has grown from those first 25 members to
FEB. 23 90
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nearly 3,500 members, electronics has become the largest
manufacturing industry in the nation, providing jobs to over
2.5 million US citizens.
In the post Cold War world we now face, there will be two
primary determinants of world power
technological
leadership and market share in major commercial markets. As
the industry at the intersection of these two forces at work
in the world, you are key to America's future world
leadership.
Administration recognizes the importance of the electronics
industry to the future of the United States. Not only are
you the largest manufacturing segment, but you provide the
fuel for modernization of all of our industries, and you are
a major exporting segment.
We recognize that while you have been growing over the last
several years the industry has lost market share in many
important areas. This Administration -- and the Republican
Party -- is committed to working with you to insure that
America regains its lead in high technology.
I do not pretend to have all of the answers as we struggle
with this fundamental problem. I will tell you that this
Administration stands committed to working with you to forge
solutions. Government and industry -- as partners -- must
work to reclaim U.S. leadership in advanced technology.
I would like to spend some time this morning talking about
the efforts this Administration has already initiated. I
emphasize that this is just the beginning; the beginning of
a long-term effort.
This Administration is dedicated to increasing saving,
investment and productivity. Items to mention: permanent
R&D credit, permanent capital gains differential, deficit
reduction, savings incentives, joint manufacturing relief.
(Notes: a) AEA was one of the original advocates for the
1978 capital gains reduction b) The Administration has not
yet formally announced support for joint manufacturing
reform; this might be good time to do so)
We are also committed to enhancing research and development.
Investment in research and development is a top priority for
an Administration that believes in investing in the future.
Items to mention: Continued doubling of NSF budget,
increases in science and engineering education, intellectual
property protection in Uruguay Round, R&D tax credit,
encouraging R&D by transnational companies, and increased
support for robotics, space exploration, and developing a
national high-speed information structure. (Note: AEA was
one of the originators of the R&D credit.)
E
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We should always remember that without a world class
workforce, we will not be a world class economic power.
Investing in human capital is at long-time personal concern,
and one that is of vital importance to your industry.
Issues to mention: math and science education initiative,
education summit, head start increases, industry
partnerships. (Note: For over a decade, AEA has been an
industry leader in the education area.)
Few things are of greater importance to me than protecting
the environment. Your industry has been in the forefront of
innovative efforts to protect the environment. In
particular, I salute your commitment to eliminating CFC
emissions on a schedule that goes well beyond the Montreal
Protocols. Issues to mention: need for continued
international action on CFCs and for Clean Air Act
permitting provisions especially tailored to environmental
protection.
And finally, the Bush Administration pledges to preserve our
national security and be an active advocate for America's
interests abroad. Issues to mention: Use of U.S. market
leverage to open foreign markets, export control reform
through a strong and unified multilateral commitment to
COCOM, orderly reductions in defense spending that preserve
our basic industrial base, savings through Defense
Management Review implementation, SEMATECH and DARPA
funding, NIST Advanced Technology Program.
In closing, let me note that I have always believed, and
continue to believe, that the fundamental responsibility for
competitiveness rests with thousands of individual
companies.
As an entrepreneur, I have a great affinity for small
companies, and new companies and fierce individualism have
been a major part of the miracle of the electronics
industry. However, we must also realize that cooperation
among companies is also needed to be an effective
participant in the new global economy.
We believe that the industry has an obligation to improve
its own performance. We salute Motorola, one of last year's
winners of the Baldrige Award, and one of this year's
winners, Xerox, both long-time members of AEA. (Gary
Tooker, President of Motorola, will be at the head table.)
I encourage all of the companies in this room to make the
Award. commitment to world-class quality embodied in the Baldridge
I do not believe we are at the beginning of an era of
decline. I believe we are poised on the threshold of a
century of greatness. All we need to do is make the
commitment -- in government and in companies -- to
leadership.
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American ElectronicsAssociation
AEA
5201 Great America Parkway, Santa Clara, California 95054. Telephone: (408) 987-4200
1225 Eye Street, N.W., Suite 950, Washington, D.C. 20005. Telephone: (202) 682-9110
QUESTIONS AND ANSWERS ON THE AMERICAN ELECTRONICS ASSOCIATION
What is the American Electronics Association (AEA)?
AEA is a national trade association representing U.S.
electronics and information technology companies with common
interests and goals. AEA's fundamental purpose is to foster a
healthy business environment for the electronics industry and
to engage in activities that strengthen its competitive
position in marketplaces throughout the world. Most AEA
members are electronics manufacturers. An "Associate Member"
category is open to professional organizations that provide
service to electronics companies. U.S. universities and
colleges offering engineering and technical education also are
eligible for associate membership.
How many members does AEA have?
In 1988, AEA has more than 3,500 member companies located
throughout the United States.
When and why was the association started?
In 1943, 25 electronics firms from Northern and Southern
California joined together to help secure a more equitable
share of the nation's government contracts. Originally
called the West Coast Electronics Manufacturing Association
(WCEMA), it later was renamed the Western Electronics
Manufacturing Association, and then WEMA. In 1978, the
association's name was changed to the American Electronics
Association to reflect its growing national membership and the
scope of its activities.
What types of companies does AEA represent?
AEA member companies come from such high technology fields as
hardware and software; semiconductors; telecommunications
electronic data processing, including all types of computers,
equipment; medical instrumentation; and defense electronics.
Although AEA members include the giants of the industry, over
65 percent are small firms with less than 250 employees.
(more)
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2-2-2
HOW does AEA define the industry it represents?
AEA defines the electronics industry as all firms that
manufacture electronic components, or products or systems that
require electronic components to perform their intended
function.
Included are software firms and companies that provide
electronics research and development or engineering services.
Distributors and retailers of electronics products and
services and companies that market telecommunications or data
processing services are not included.
What does AEA do?
Through a public affairs staff headquartered in Washington,
D.C., AEA maintains a strong and flexible legislative advocacy
program for national, international and state issues that
impact the electronics industry. This group tracks
legislation and represents the industry and its members on
such issues as taxation, international trade, science and
technology policy, engineering education, government
procurement, and the federal budget, to name but a few.
AEA provides its members with a strong link to the academic
community via its Electronics Education Foundation and other
programs. In addition to its series of public company and
emerging growth financial conferences, a spectrum of
management education programs are presented annually. AEA is
active with both national and regional environmental and
occupational health programs, offers quality and productivity
seminars and provides a breadth of cost-saving programs
designed primarily for small firms.
In the councils, the association provides a unique networking
capability through regular dinner and other meetings. These
permit both representatives of both small and large companies
to communicate on a one-to-one basis in their own geographic
region and to be able to formulate policy questions and
concerns that can be raised to the national level for
resolution.
How is AEA organized?
Policy decisions are made by a 55-member Board of Directors
comprised of industry executives from various size companies
throughout the electronics product range and the United States
Currently, AEA has 21 councils in high technology
concentrations
(more)
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3-3-3
throughout the country. They are located in New England,
Connecticut, New York, New Jersey, the Potomac area (the
District of Columbia, Virginia, and Maryland), Florida, the
Southeast, the Midwest, Minnesota, Texas, the Mountain States,
Arizona, Washington, Oregon, and both Northern and Southern
California. Policy recommendations and implementation are made
by national AEA steering committees, operating committees and
task forces.
How large is AEA and how many offices does it have?
AEA employs 130 people in its 12 offices. National
headquarters are located in Santa Clara, California, and
Washington, D.C. Other facilities are located in New England,
metropolitan New York, Minnesota, Texas, Oregon, Washington
state, Florida, Orange County (California), and San Diego.
Also, the association has a representative office in Tokyo and
a recently established industry presence in Beijing.
What are AEA's major missions?
1/ To achieve vigorous and fair competition within the
electronics and information technology global marketplace.
2/ To actively promote and help insure the availability of,
and access to, capital, including risk capital.
3/ To foster a business climate that encourages innovation
entrepreneurs. and provides commensurate return for risk-taking
workforce. 4/ To insure the availability of a qualified technical
5/ To provide the necessary opportunities for management
education at all levels and in all fields of endeavor.
community. 6/ To encourage a synergism between industry and the academic
7/ To encourage the maintenance of a safe and healthful
workplace for employees and the active participation of
electronics companies in community affairs.
8/ To work for a positive and active relationship between the
electronics community and all elements of federal, state and
local government.
05/07/88
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1990 Capital Caucus
Executive Summary: Capital Costs and Job Creation
The challenge for advanced technology
U.S. capital costs are among the highest in the industrialized world.
The economic growth of any society -- capitalist or socialist -- depends
directly on the cost and availability of capital.
As the global volume of trade and investment accelerates, companies
based in countries with persistently higher capital costs are a
significant disadvantage.
High capital costs threaten the long-term standard of living in the
United States.
Developing solutions
There are both short-term and long-term dimensions to this problem.
In the long-term, the key factor driving up real interest rates in the
U.S. is the complicated interplay between restrictive monetary policy by
the Federal Reserve, the massive federal deficit, and a low U.S. savings
rate.
We do not have solutions to this fundamental problem at
this time. AEA member companies will begin to address
some long-term solutions at an upcoming industry summit
(April 27-29) on the cost of capital.
In the short-term, there are things that Congress can do to help address
this fundamental problem (see reverse side for details).
Leverage existing capital -- including human capital --through:
1.
a permanent R&D credit
2.
a permanent solution to the Section 861 allocation rules related
to R&D
3.
Section 127 educational assistance
Increase the pool of long-term capital through:
1.
a permanent capital gains differential
2.
national incentives for savings
Encourage cooperation through:
1.
elimination of uncertainty surrounding joint manufacturing
2.
basic research credit for consortia
1990 Capital Caucus
America's Future
at Stake
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Summary of Short-Term Actions Needed to Address High Capital Costs
Leveraging Existing Capital
Permanent R&D tax credit: AEA supports S. 570
(Danforth/Baucus) and H.R. 1416 (Frenzel/Pickle/Jenkins). AEA is
working to ensure that the interests of start-ups and small to mid-size
high tech companies are represented in the coalition.
Regulation 1.861-8: In addition to a permanent R&D credit, AEA is
working for a permanent moratorium on Treasury regulations
(Regulation 1.861-8 Rules) requiring U.S. R&D to be treated as if it
were partly foreign R&D on the basis of a sales or income formula.
Section 127 educational assistance: AEA supports making Section
127 of the tax code permanent. This provision acts as an incentive for
corporate continuing education activities by excluding employer-provided
educational assistance benefits from the gross income of employees.
Increasing the Pool of Long-Term Capital
Permanent capital gains differential: A number of bills have been
introduced in the 101st Congress related to this issue. AEA does not
support a specific bill at this time, but is working closely with the
Administration and a bipartisan coalition in Congress to pass a
permanent capital gains differential. AEA's goals for capital gains
legislation include permanence, a significant rate differential, and
preferential treatment for assets held for longer periods of time.
National savings incentives: While AEA has not yet endorsed any
particular proposal, AEA believes that some national incentive for
savings is needed and will be reviewing this issue over next few months.
Encouraging Cooperation
Joint manufacturing ventures: A number of bills have been
introduced in the 101st Congress related to this issue. AEA supports an
approach consistent with the National Cooperative Research Act of 1984,
or NCRA (notification, rather than certification).
Basic research credit for consortia: There is some uncertainty
whether the university basic research credit as currently structured also
applies to participation in R&D consortia. AEA believes that the credit
should encourage this type of innovative cooperation to help spread risk
more effectively among companies.
UNCLASSIFIED
CLASSIFICATION
CIRCLE ONE BELOW
MODE
PAGES 13
IMMEDIATE
SECURE FAX
DTG 0100582mA
PRIORITY
ROUTINE
ADMIN FAX #
RELEASER AG
FROM - LOCATION:
1. CAROLYN CAWLEY - WHITE HOUSE SPEECHWRITING
TO - LOCATION - TIME OF RECEIPT:
1. MARK LANGE - SPEECHWRITER To THE
2.
PRESIDENT
3. (213)277-4061 LA STAFF OFC.
4.
(415) 399 - 1979 SF. STAFF OFC. #10
5.
6.
7.
INFORMATION ADDEES - LOCATION - TIME OF RECEIPT:
1.
2.
SPECIAL INSTRUCTIONS - REMARKS:
LANGE: HERE ARE THE AEA LETTER,
THE DRAFT, $ A MEMO To You.
CALL ME. -c2
UNCLASSIFIED
CLASSIFICATION
American ElectronicsAssociation
AEA
5201 Great America Parkway. Santa Clara, California 95054. Telephone: (408) 987-4200
1225 Eye Street, N.W., Suite 950, Washington, D.C. 20005. Telephone: (202) 682-9110
To:
Caroline Cawley
From: Mancini
p1065
As we discussed, additional material from John Moriarty.
From a political perspective, in thinking about the
major
points that the Administration might want the attendees to
remember, I'd consider these
1. The Administration acknowledges the importance of
electronics to our long-term national security and standard
of living.
2. Point out the many fundamental strengths of the U.S. in the
global battle for technology: an entrepreneurial culture,
the world's finest basic research capability, the world's
largest market, and a heterogeneous population.
3. The Administration acknowledges that despite growing faster
than any other segment of the economy, U.S. leadership in
electronics has eroded over the last decade relative to the
rest of the world. This is a matter of concern, and a
condition that cannot be allowed to continue.
4. Indicate the leadership of the Administration in dealing
with the macroeconomic factors that are hurting high-tech
(all of the good things we've previously discussed).
I.E., AN
5. Acknowledge the need for companies to cooperate with each
NOUSTRIAL
other and the legitimate role of government in creating an
infrastructure to allow this to happen.
POLICY
6. Acknowledge that the current mix of federal R&D funding (70%
defense) needs to be changed to foster cooperation among
companies in early stage-precompetitive GENERIC
technologies. Indicate that this is really the fundamental
point within the emotional debates about what is industrial
policy and what is not. Indicate the answers are not yet
clear about what should be done - either within industry or
government -- but commit to working together with industry
to develop solutions.
ver 1, (1A). 0000
LAPSTOP
456
PORTABLE COMPUTER & FAX RENTALS
February 26, 1990
The Honorable John Sununu
Chief of Staff
Executive Office of the President
The White House
washington, D.C. 20500
Dear Governor Sununu:
As a member of the American Electronics Association and on
behalf of the entire organization I want to thank you for
your efforts in arranging for President Bush to speak to our
organization on March 7th.
As a follow-up to our earlier correspondence and a subsequent
conversation I had with Jackie, I am including with this
letter some suggested speaking points that the White House
staff might find helpful in preparing the President's remarks
to AEA. In addition, I am also transmitting another copy of
the speaking points list Dick Iverson previously submitted to
you.
In my speaking points I have tried to capture the spirit of
the comments you made to us when we met In Boston on February
2nd. I have also offered some suggestions on a "packaging"
approach which might help convey all that is being done by
the Administration in a simple and concise way. I hope you
find these suggestions helpful.
In any event, I look forward to seeing you next week. Thanks
again, for all you help in broadening the channels of
communication between the Administration and the electronics
industry.
Best regards,
John W. Moriarty
JWM/100
Attachment
FEB. 28 90 11:28
AMERICAN ELECTRONICS ASSOCIATION
P, 3/ 5
DEPT. (TX) : 0005
SUGGESTED TALKING POINTS FOR PRESIDENT BUSH'S ADDRESS TO THE
AMERICAN ELECTRONICS ASSOCIATION MARCH 7, 1990
JOHN. W. MORIARTY
(508) 744-6673
I. BACKGROUND ON AEA CAPITAL CAUCUS
A. Forum
American Electronics Association Capital Caucus 300-350 CEO-
level industry executives in Washington for two days to lobby
for AEA's policy agenda.
B. Key Policy Positions
1. Tax Policy:
- Permanent R&D and Basic Research Tax Credit
- Regulatory Change in 861-8 (IRS)
- Eliminate Double Taxation of Dividends Cap Gains
- Capital Gains Differential
2. Capital Rebalance:
- Reduce Deficit
- Increase Domestic Savings
- Reduce Interest Rates
- Anti-Trust Amendments to Permit Joint Production
Ventures
EPC says can't gf out with
3. Education and Science Policy:
- Increased Funding for NSF
- Student Incentives for Teaching Math & Science
- Support for NIST's " Advanced Technology Program"
- support for NSF's Basic Science & Research Programs
- Support for DARPA's Initiative for High Def. R&D
4. Market Access:
- Support for Super 301
- support for the Structural Impediments Initiative
5. Export Controls:
- Support for License-free Zone in COCOM
- Support for Amending Supercomputer Definition
- Commerce Dept. Control Over Dual-Use Control List
In addition to these fundamental policy concerns, AEA members
are increasing interested in exploring additional ways to
encourage "patient capital" -- longer-term capital investment
in the U.S. manufacturing sector. Chief among the issues
being explored are;
- Semiannual or Annual Financial Reporting
- Tax Polices that Favor Long-Term Real Estate Investment
over Long-Term Manufacturing Investment
- Reinstatement of the Investment Tax Credit
II. POLITICS OF THE HIGH TECH SECTOR
(... these ase
For the most part, the AEA agenda mirrors that of the
Prief smoke)
Administration. But there are growing divisions within the
industry and there is growing support for direct government
intervention in the form of controlled trade, more
government-industry collaborations, and direct applied
research subsidies. While these proposals are not universally
high. embraced, the frustration level throughout the industry is
III. SUGGESTED CONTEXT FOR THE PRESIDENT'S REMARKS
President Bush has a high technology policy. He is well ahead
of the Congress on almost every policy position of AEA. He
should take credit for that.
The President might best do so by enunciating his policy as a
comprehensive 5 point program:
2, 1. Education Capital Rebalance i.e, costof capitall (or pool )
3. Research & Development
4. Market Access
(sil, cocon)
6.
IPUS
5. Export Controls
These are the basic pillars of a "pre-competitive"
7. Compet.Courcil-- mhttle products
infrastructure that is seriously in disrepair. They favor no
particular industry, but by focusing on them collectively,
vibrant high technology sector.
the Administration recognizes the strategic importance of a
dramatically flesh out his view on how these policy
The AEA Capital Caucus gives the President the opportunity to
they can best be accomplished under Gramm-Rudman.
initiatives - his policy initiatives - interrelate, and how
The President can and should ask AEA's 3,500 high tech
companies to support his plan vigorously. And they will.
Many AEA members would also like to sea the President use his
PO'd
97150 92/20 06,
FROM LAPSTOP CORP.
office as a "Bully Pulpit" on capital formation issues. Not
only on the subject of personal savings (which they support),
but on the short-sightedness of financial analysts who force
corporate capital allocation decisions to favor short-term
rewards. This is an issue President Bush expressed passing
concern about in his interview in BusinessWeek on January 22.
Perhaps ne could direct secretary Brady to undertake a report
on the impact of the current short-term focus.
The President might also touch on what will be the then
concluded meetings with Prime Minister Kaifu and on the up-
coming Houston Summit.
AEA members, like most Americans, know that the Japanese have
violated the principles of Bretton Woods on the issue of
balancing trade surpluses and deficits. America, for 4 time,
erred here as well, but no longer.
Americans want the President to take a strong stand with the
Japanese and most feel that such a stand can be taken without
fear of retaliation vis-a-vis Japan's strong position in
Treasury Notes. There is a fundamental fairness issue here.
The U.S. rebuilt the world economy through open access to our
markets. That was in the best interests of all concerned. And
it continues to be. But our powerful trading partners must be
made to understand this as well,
AEA members increasingly feel that we should use access to
our vast market as a trade negotiating tool much the way we
have used nuclear weapons as a bargaining tool in peace
negotiations - a threat. It is a widely held belief in the
industry that the state Department ultimately dictates trade
policy and that all too often diplomatic considerations win
out over free and fair trade. All too often the industry has
watched as the State Department steered the White House away
from vigorous enforcement of 301.
IV. CONCLUSION
There is clearly an opportunity here for the President to
cluster together all of his initiatives aimed at investing in
America's industrial infrastructure (education, R&D, capital
rebalancing, etc.) and issuing them as A policy statement.
The electronics industry is generally in harmony with the
Administration but its members are worried about the future
and they need to hear that their concerns are shared and
being intelligently and comprehensively addressed.
be further assistance.
I hope that this information is helpful. Please call if I can
50 'd
90:50 92/20 DF.
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
03a. Memo
Carolyn Cawley to Mark Lange, re: American Electronics
02/28/90
P-6, (b)(6)
Association; personal information redacted. (1 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Speechwriting, White House Office of
Series:
Speech File, Backup
Subseries:
WHORM Cat.:
File Location:
American Electronics Association 3/7/90
Date Closed:
10/14/2004
OA/ID Number:
06854
FOIA/SYS Case #:
Re-review Case #:
2004-2265-S
P-2/P-5 Review Case #:
MR Case #:
Appeal Case #:
MR Disposition:
Appeal Disposition:
Disposition Date:
Disposition Date:
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRA]
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
gift.
financial institutions [(b)(8) of the FOIA]
(b)(9) Release would disclose geological or geophysical information
February 28, 1990
INFORMATION
MEMORANDUM
TO:
MARK LANGE
FROM:
CAROLYN CAWLEY
SUBJECT: American Electronics Association
*** A brief note before this begins
Jeff Vogt would really
like to discuss this with you on the phone, and I think it's a
good idea too because he really knows this stuff and it's safer
than me relaying it. He'd like you to call him at home tonight
(2/28) after 11:00 EST. His number is:
P-6, (b) (6)
Among his suggestions were: to really beef up, in the front
of the speech, a big pat on the back to the AEA. Highlight the
leadership role they have played in the industry for the last
century, especially in innovation and product development. Also,
you'll see from reading the fax I sent you (the letter and TP's
from AEA, re: the Governor) that the AEA agrees with this
Administration on EVERYTHING and it's rare to speak to a group so
supportive.
1. p. 1/Introductions: Neither David Packard nor Bob Noyce
will be present. If we want a historical twist, we can say that
"from your ranks have come David Packard, one of the founders of
Hewlett-Packard, and Ed Zschau."
Also, someone who WILL be present is Mr. Gary Tooker,
President of Motorola and last year's recipient of the Baldridge
Award.
2. p. 3/paragraph 1: The Savings and Economic Growth Act was
introduced on February 2. since this AEA speech will be in
March, we need to say "early last month we sent to Congress
"
The Savings and Economic Growth Act has three prongs:
capital gains
IRAs
treat in trio
family savings
Harlow
a. We discuss capital gains and IRAs but not family
savings. My man at Treasury (Asst. Secretary) recommends that we
mention family savings as well because POTUS discussed family
savings specifically in the State o' the Union. How about:
"We're proposing new incentives for IRAs as well as an innovative
family savings account."
b. Secondly, he suggests that we move the cap gains graph
to be within the context of SEGA (Savings and Econ Growth Act)
He says that AEA is our primary private industry supporter of
this, so: first, it would be good to beef up the cap gains
graph.
We can not let the AEA split cap gains from the rest of SEGA
in their own minds, and it was an administration decision to keep
them together. Let's discuss cap gains within the context of
SEGA along with IRAs and family savings.
3. p.3/paragraph 4: "a new National Math and Science Scholars
Program" is incorrect, it combines two different programs.
There is a NATIONAL SCIENCE SCHOLARS PROGRAM proposal. It
includes a proposal of $5 million to provide undergraduate
scholarships of up to $10,000 to students demonstrating
proficiency in the sciences.
Then there is the EISENHOWER MATH AND SCIENCES EDUCATIONAL
PROGRAM. In this, the Administration is requesting $231 million
in FY 91, a 70% increase over the current program, to better
prepare teachers and raise student achievement.
WHICH ONE DO WE MEAN?
4. p.4/paragraph 1: Vogt offered a couple of suggestions
regarding this graph about trade and Japan. Briefly, he thinks
we should highlight the difference between multilateral talks
(GATT) and bilateral ones (SII). Also, he'd like to see mention
of Super 301 and the fact that Carla Hills has announced that we
will be enforcing the semiconductor agreement. The Kaifu stuff
will be very important
hope Palm Springs goes well.
5. p. 4/paragraph 4: First of all, I spoke with Lehmann Li of
the ECP; he was part of the EPC decision which is the basis of
all this and he authored a memo to the President for approval.
Unfortunately, the President has not signed off on it yet and is
not expected to do so before this speech is given. Lehmann and
Vogt had a chance to speak and agreed that this is too big an
issue and announcement to do at this time, especially since the
President has not yet OK'ed it and Vogt says he other events
upcoming which would be good forums.
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
03b. Memo
Carolyn Cawley to Mark Lange, re: American Electronics
n.d.
P-6, (b)(6)
Association; personal information redacted. (1 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Speechwriting, White House Office of
Series:
Speech File, Backup
Subseries:
WHORM Cat.:
File Location:
American Electronics Association 3/7/90
Date Closed:
10/14/2004
OA/ID Number:
06854
FOIA/SYS Case #:
Re-review Case #:
2004-2265-S
P-2/P-5 Review Case #:
MR Case #:
Appeal Case #:
MR Disposition:
Appeal Disposition:
Disposition Date:
Disposition Date:
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRA]
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
gift.
financial institutions [(b)(8) of the FOIA]
(b)(9) Release would disclose geological or geophysical information
But, if you feel strongly, talk to Vogt and see.
Secondly, if it should be decided to mention this joint
production issue, there have to language changes. Here are the
nuts and bolts that I got from Commerce and EPC, obviously they
need work to be used in a speech:
All firms would have to register an "intent" statement with
the Justice Department and the Federal Trade Commission. Then,
they would be subject to no more than "single damages" in a
private anti-trust suit. (Apparently this is a big change.)
((the problem with the original draft wording was that it
sounded like Justice would be administering the judgments
read
on...))
There is pending legislation on the Hill on this issue, and
they are NOT OUR PROPOSALS, as it says in the draft. We are
looking to support whatever the Hill turns out
so, we could
say:
"We will seek to support proposals that would assure that
the competitive realities of joint production ventures are
assessed/judged by the courts, on a case-by-case basis. (Under
the Anti-Trust Rule of Reason, which removes the blanket
judgement and requires the courts to look at each case alone.)
"This initiative would enhance the competitive strength of
American industries by allowing firms to share investment risks
and facilities." pool their complementary skills in building new production
( (remove the wording about R&D because it is
already provided for in existing laws.))
Mark, I'll call the Embassy in Paris tomorrow morning first
thing. Don't hesitate to call me anytime for anything. Home
and I'll be on beeper. Hope you're
p-6,
little umbrellas in them!!!
having a good time! Get sun and drinks cocktails with tiny
(b)(6)
"Hi" to Stephanie & Dave.
Tack to you later
Cawlay
(Lange/Cawley)
February 27, 1989
5:30 P.M.
[AEA.DOC]
PRESIDENTIAL REMARKS:
AMERICAN ELECTRONICS ASSOCIATION
WASHINGTON COURT HOTEL
WEDNESDAY, MARCH 7, 1990
11:30 A.M.
(( Thank you, Mitchell [Kertzman]. Dick Iverson David
Packard, Bob Noyce
it's good to see so many familiar faces.
Many of you came a long way to be here, so I won't compel you to
sit through a long speech. The punishment should fit the crime.
Which reminds me of a story. An orchestra was having a
bad season. The critics were howling. Then one day the first
violinist was murdered. Turns out the conductor did it.
He was tried, and convicted, and on the morning he was going
to the electric chair they asked him if he had any last requests.
He said, "I would like a banana."
So they let him eat a banana. Then they turned on the
voltage. No effect. So they doubled it. Still no effect. He
just sat there grinning. They asked him, "How is this possible?
Was it the banana?" And he said, "No, I guess I'm just a bad
conductor." ))
It's an honor and a pleasure to have you here today. You
have the people -- and the products -- that keep this country
competitive.
For almost 50 years now, you've been at the center of a
remarkable revolution: in the way work is done, the way ideas
are managed -- even the way time and the vast reaches of space
are understood.
And along the way, you've also become the nation's largest
Nones:
manufacturing industry -- creating jobs for over two and a half
million Americans. Modernizing services and industries of every
kind. And providing a vital export market.
As technologies, economies, and geopolitics change almost
weekly, your industries stand at a threshold of tremendous
opportunity.
So we intend to work with you -- closely, constantly, and
consistently -- to see that American electronics and technologies
regain and retain a preeminent position in world markets.
We're committed to a program of immediate and long-term
competitive strategies for the future. And while we're only at
the start of a process that shows great promise, today I want to
VUST
outline briefly what we're already doing.
7545
Our first priority is to encourage productivity gains,
savings, and long-term investment in high-tech industries, by
lowering the cost of capital.
We believe that one of the most crucial Federal priorities
is to encourage planning for the long term -- because for too
long, where investment is concerned, the Federal government has
been more of a hindrance than a help.
So we're fighting hard -- with your support -- for a
business-building, job-creating, revenue enhancing cut in the
capital gains differential.
Last
Earlior this month we sent to Congress our Savings and
Economic Growth Act, to stimulate domestic savings. We're
proposing new incentives for IRAs 0 And we've proposed a budget
that will bring the deficit down 11 below the Gramm-Rudman-
Hollings targets without raising taxes.
Along with encouraging investment, we're committed to
unprecedented support for research and development efforts.
We believe that the R & E tax credit should be made permanent.
And our budget includes a record-breaking $70 billion in Federal
direct investment for research and development.
It devotes unprecedented resources to space. Education.
The National Science Foundation. Drug abuse control.
Environmental initiatives. And other crucial investments in
America's future.
But we understand, as you do, that no investment is more
important than our human resources. So together with the
nation's governors, we've set ambitious goals for America's
students. As an incentive to the nation's students, we've
created a new National Math and Science Scholars program.
We're committed: By the year 2000, our kids can be first in
the world in science and math achievement -- and with enough
involvement and leadership from groups like this one, they will
be.
Your industries face some unique challenges. The
marketplace is tough enough without undue constraints and unfair
restrictions.
So we've pledged to make sure that trade is free, and fair.
VIEN
We're making progress through the GATT to remove barriers to
trade. And we moving forward with Japan, through the
Structural Impediments Initiative. Just last weekend I met with
Prime Minister Kaifu, who agreed
I've made the relaxing of export controls a personal
priority -- especially with an eye toward Eastern Europe.
This week at COCOM in Paris, we have a team negotiating an
interim policy.
Given the pace of political change, new developments in
technology, and the competitive position of American industry,
I'm confident that we'll be able to revise and modernize our
export controls without compromising national security.
REMOVE
LEN
To provide further competitive benefits for American firms,
we're also working Support on legislation to allow them to join forces in
joint production ventures. On a case-by-case basis, the Justice
Department will consider relaxing anti-trust limits for firms
interested in making use of complementary skills and facilities,
shared R & D, and shared investment risks.
One risk you all face, of course -- to a great and
Expand?
Mevio
unfortunate degree -- is product liability. And the Council on
Competitiveness, chaired by Vice President Quayle, is already
working for significant reform of our cumbersome and expensive
product liability system.
Today I'm going to offer that council another challenge: to
form a working group, to find ways that American industry can
better translate new ideas and technologies into marketable
products.
So many of the world's most advanced technologies, from
robotics to the VCR, were first developed here. And so many
of those concepts were ultimately brought to the marketplace by
our competitors. We can do better. And we will do better.
Today I've outlined some of what we're doing to level the
field. But it will be leaders like you that have to take the
ball and run with it.
You represent the vital core of America's competitive
potential, with over 3500 of the most dynamic, technologically
the
advanced, forward-thinking companies in the country.
Your ideas are important to us. And your success is crucial
to America's future. So let me encourage you to work together,
and with us, on a long-term program to meet the competitive
challenge of a new century.
Thank you. And God bless you.
# # #
619 341 Jak
MLinLA
Fax: 213/277-4061
Phone: 213/277-3484
8922
THE WHITE HOUSE
WASHINGTON
216
277-3481-281)
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(Lange/Cawley)
February 27, 1989
5:30 P.M.
[AEA.DOC]
PRESIDENTIAL REMARKS:
AMERICAN ELECTRONICS ASSOCIATION
WASHINGTON COURT HOTEL
WEDNESDAY, MARCH 7, 1990
11:30 A.M.
gary
John
(( Thank you, Mitchell [Kertzman]. Dick Iverson, David
Mancini
Packard, Bob Noyce
it's good to see so many familiar faces.
Many of you came a long way to be here, so I won't compel you to
sit through a long speech. The punishment should fit the crime.
Which reminds me of a story. An orchestra was having a
bad season. The critics were howling. Then one day the first
violinist was murdered. Turns out the conductor did it.
He was tried, and convicted, and on the morning he was going
to the electric chair they asked him if he had any last requests.
He said, "I would like a banana."
So they let him eat a banana. Then they turned on the
voltage. No effect. So they doubled it. Still no effect. He
just sat there grinning. They asked him, "How is this possible?
Was it the banana?" And he said, "No, I guess I'm just a bad
conductor." \\\ ))
It's an honor and a pleasure to have you here today. You
have the people -- and the products -- that keep this country
competitive.
XXXXX
Mancini
For almost 50 years now, you've been at the center of a
2
remarkable revolution: in the way work is done, the way ideas
are managed -- even the way time and the vast reaches of space
are understood.
And along the way, you've also become the nation's largest
Mancin
manufacturing industry -- creating jobs for over two and a half
million Americans. Modernizing services and industries of every
kind. And providing a vital export market.
As technologies, economies, and geopolitics change almost
weekly, your industries stand at a threshold of tremendous
opportunity.
So we intend to work with you -- closely, constantly, and
consistently -- to see that American electronics and technologies
regain and retain a preeminent position in world markets.
We're committed to a program of immediate and long-term
competitive strategies for the future. And while we're only at
the start of a process that shows great promise, today I want to
VOGT
outline briefly what we're already doing.
7845
Our first priority is to encourage productivity gains,
savings, and long-term investment in high-tech industries, by
lowering the cost of capital.
We believe that one of the most crucial Federal priorities
is to encourage planning for the long term -- because for too
long, where investment is concerned, the Federal government has
been more of a hindrance than a help.
So we're fighting hard -- with your support -- for a
business-building, job-creating, revenue enhancing cut in the
capital gains differential.
Jost Earlier surfus Last Feb.2
3
this month we sent to Congress our Savings and
Legis
Economic Growth Act, to stimulate domestic savings. We're
proposing new incentives for IRAs And we've proposed a budget
that will bring the deficit down below the Gramm-Rudman-
Hollings targets without raising taxes.
Along with encouraging investment, we're committed to
unprecedented support for research and development efforts.
VOGT
We believe that the R & E tax credit should be made permanent.
FY '91 Budget
over $718
And our budget includes a record-breaking $70 billion in Federal
p.92
direct investment for research and development.
It devotes unprecedented resources to space. Education.
The National Science Foundation. Drug abuse control.
Environmental initiatives. And other crucial investments in
America's future.
But we understand, as you do, that no investment is more
important than our human resources. So together with the
Edti scholers
nation's governors, we've set ambitious goals for America's
Tom
of
students. As an incentive to the nation's students, we've
Dept
created a new National Math and Science Scholars program.
of
Shathwon
We're committed: By the year 2000, our kids can be first in
the world in science and math achievement -- and with enough
involvement and leadership from groups like this one, they will
be.
Your industries face some unique challenges. The
marketplace is tough enough without undue constraints and unfair
restrictions.
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export more to Ea Europe
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need them TO provide safeguards
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So we've pledged to make sure that trade is free, and fair.
quiti
VOGT
We're making progress through the GATT to remove barriers to
trade. And we're moving forward with Japan, through the
Structural Impediments Initiative. Just last weekend I met with
Prime Minister Kaifu, who agreed
.
I've made the relaxing of export controls a personal
priority -- especially with an eye toward Eastern Europe.
This week at COCOM in Paris, we have a team negotiating an
Rich chrin
interim policy.
X3630
Given the pace of political change, new developments in
technology, and the competitive position of American industry,
I'm confident that we'll be able to revise and modernize our
export controls without compromising national security.
REMOVE
{ To provide further competitive benefits for American firms,
we're also working Support on legislation to allow them to join forces in
joint production ventures. On a case-by-case basis, the Justice
Department will consider relaxing anti-trust limits for firms
interested in making use of complementary skills and facilities,
shared R & D, and shared investment risks.
One risk you all face, of course -- to a great and
Expand?
unfortunate degree -- is product liability. And the Council on
Memo
Competitiveness, chaired by Vice President Quayle, is already
working for significant reform of our cumbersome and expensive
product liability system.
Today I'm going to offer that council another challenge: to
form a working group, to find ways that American industry can
better translate new ideas and technologies into marketable
products.
So many of the world's most advanced technologies, from
robotics to the VCR, were first developed here. And so many
of those concepts were ultimately brought to the marketplace by
our competitors. We can do better. And we will do better.
Today I've outlined some of what we're doing to level the
field. But it will be leaders like you that have to take the
ball and run with it.
You represent the vital core of America's competitive
phanein
potential, with over 3500 of the most dynamic, technologically
advanced, forward-thinking companies in the country.
Your ideas are important to us. And your success is crucial
to America's future. So let me encourage you to work together,
and with us, on a long-term program to meet the competitive
challenge of a new century.
Thank you. And God bless you.
###
front of speech
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WEESF Recempacy
COCOM
Mike geoder
(Lange/Cawley)
March 3, 1990
4:00 P.M.
[AEA.DOC]
PRESIDENTIAL REMARKS:
AMERICAN ELECTRONICS ASSOCIATION
WASHINGTON COURT HOTEL
WEDNESDAY, MARCH 7, 1990
11:30 A.M.
" Thank you, Mitchell [Kertzman]. It's good to see so many
familiar faces. Many of you came a long way to be here -- so I
won't ask you to sit through a long speech. The punishment
should fit the crime.
Which reminds me of a story. An orchestra was having a bad
season. The critics were howling. Then one day the first
violinist was murdered. Turns out the conductor did it.
He was tried, and convicted, and on the morning he was going
to the electric chair they asked him if he had any last requests.
He said, "I would like a banana."
So they let him eat a banana. Then they turned on the
voltage. No effect. So they doubled it. Still no effect. He
just sat there grinning. They asked him, "How is this possible?
Was it the banana?" And he said, "No, I guess I'm just a bad
conductor." III ))
It's an honor and a pleasure to have you here today.
You are the leaders of a vital range of our most innovative and
interrelated industries -- from semiconductors, microchips and
circuit boards to PCs, mainframes, telecommunications, and
defense electronics.
2
But at every stage of that impressive technological "food
chain," yours are the people -- and the products -- that keep
this country competitive. I'd add a special tip of the hat to
President Gary Tooker of Motorola, winner of last year's
Malcolm Baldridge Quality Award.
For almost 50 years now, your industries have been at the
center of a remarkable revolution: in the way work is done, the
way ideas are managed -- even the way time and the vast reaches
of space are understood.
And along the way, you've also become the nation's largest
manufacturing industry -- creating jobs for over two and a half
million Americans. Modernizing services and industries of every
kind. Assuring our national security. And providing a vital
export market.
As technologies, economies, and geopolitics change almost
weekly, your industries stand at a threshold of tremendous
opportunity.
So we intend to work with you -- closely, constantly, and
consistently -- to see that American electronics and technologies
regain and retain a preeminent position in world markets.
We're committed to a comprehensive program of both immediate
and long-term competitive strategies for the future. And while
we're only at the start of a process that shows great promise,
today I want to outline briefly what we're already doing.
3
Our first priority is to encourage productivity gains,
savings, and long-term investment in high-tech industries, by
lowering the cost of capital.
We believe that one of the most crucial Federal priorities
is to encourage planning for the long term -- because for too
long, where investment is concerned, the Federal government has
been more of a hindrance than a help.
So last month we sent to Congress our Savings and Economic
Growth Act -- which includes an innovative family savings plan,
to stimulate capital formation. New incentives for IRAs. And
a business-building, job-creating, revenue-enhancing cut in the
capital gains differential.
Without it, every business in America -- of every size -- is
at a competitive disadvantage abroad. So we're fighting hard,
with your continued support, for that crucial tax cut.
We've proposed a budget that will bring the deficit down.
Below the Gramm-Rudman-Hollings targets. Without raising
taxes.
Along with encouraging investment, we're committed to
unprecedented support for research and development efforts.
We believe that the R & E tax credit should be made permanent.
And our budget includes a record-breaking $70 billion in Federal
direct investment for research and development.
Our budget devotes unprecedented resources to
The
Education. The National Science Foundation. Drug abuse control
4
Environmental initiatives. And other crucial investments in
America's future.
But we understand, as you do, that no investment is more
important than our human resources. So together with the
nation's governors, we've set ambitious goals for America's
students. As an incentive, we've proposed a new National Science
Scholars program of scholarships, and requested a 70 percent
increase for the Eisenhower Math and Sciences Educational
Program.
We're committed: By the year 2000, our kids can be first in
the world in science and math achievement -- and with enough
involvement and leadership from groups like this one, they will
be.
Your industries face some unique challenges. The
marketplace is tough enough without undue. constraints and unfair
restrictions.
So we've pledged to make sure that trade is free, and fair
-- through judicious but firm implementation of the 1988 trade
Act, and vigorous enforcement of the Super 301 provisions. This
month, at the next round of talks, we intend to
.
We're moving forward with Japan, through the Structural
Impediments Initiative -- and by working to develop a more
productive relationship overall.
Just last weekend I met with
Prime Minister Kaifu, who agreed
But we're also committed to strengthening and expanding the
multilateral talks, through the Uruguay Round. We've proposed
5
far-reaching reforms of the global trading system, working to
bring a wide range of new trade areas under the GATT. These
crucial negotiations will help us create a more equitable, more
efficient trade climate
worldwide.
I've made the relaxing of export controls a personal
priority -- especially with an eye toward Eastern Europe-
This week at COCOM in Paris we have a team negotiating an
interim policy:
Given the pace of political change, new developments in
technology, and the competitive position of American industry,
tal Lell to the
I'm confident that we "Il be able to revise and modernize our
benecracies
export controls, without compromising national security.
To provide further competitive benefits for American firms,
we're looking at legislation to allow them to join forces in
joint production ventures. We would support a proposal where
are
anti-trust aspects would be & assessed by the courts, on a case-
by-case basis. This initiative would build on the competitive
strength of American business, by allowing firms to pool skills,
build new production facilities, and share investment risks.
One risk you all face, of course -- to a great and
unfortunate degree -- is product liability. And the Council on
Competitiveness, chaired by Vice President Quayle, is already
working for significant reform of our cumbersome and expensive
product liability system.
6
Today I'm going to offer that council another challenge: to
form a working group, to find ways that American industry can
better translate new ideas and technologies into marketable
products.
So many of the world's most advanced technologies, from
robotics to the VCR, were first developed here. And so many
of those concepts were ultimately brought to the marketplace by
our competitors. We can do better. And we will do better.
Today I've outlined some of what we're doing to level the
field. But it will be leaders like you that have to take the
ball and run with it.
You represent the vital core of America's competitive
potential, with over 3500 of the most dynamic, technologically
advanced, forward-thinking companies in the country.
Your ideas are important to us. And your success is crucial
to America's future. So let me encourage you to work together,
and with us, on a long-term program to meet the competitive
challenge of a new century.
Thank you. And God bless you.
# # #