Box 5, Folder 9 – General Speeches
February 6, 1985 – Council of 100 Business Leadership Award, Arizona State University, Phoenix, AZ
Packard was selected as the first recipient of this award and these are the remarks he presented on that occasion
2/6/85, Handwritten 3X5” cards, written by Packard outlining his remarks. These are very brief and cryptic.
“Attention on President Reagan’s budget and State of the Union Address. Tax reform, deficit, what the economy will do, interest rates
“I don’t have any special insight on these issues. I don’t like a lot of things I have been hearing.
“US – Japan Advisory Commission [See speech folder 11/27/84].
Appointed by President Reagan and Prime Minister Nakasone, May 1983
8 US members
7 Japanese members
Held 8 meetings
Made report to Pres. And PM September 1984
[He lists the names of all the members]
“[Commission considered] all aspects of US- Japan relationships
Yen/$ relationship
Agriculture, industrial policy
Security, technology
Long range serious
“US-Japan relationship over past four decades has developed into most unusual relationship between two major nations.
Complete dependence after war
1960 [Japan production] 1/12 of US
Today ½, nearly equal on per capita basis
“US & Japan [together] 1/3 of world production, ¾ of Pacific Basin
Wide range of common interests
Few areas of basic conflict
New era of lasting peace, prosperity in Pacific Basin
“There are some problems, these must be managed better in future
Trade
US – Japan’s largest market for manufactured products
Japan – US’ largest agricultural [market]
“Bilateral deficit
20 Billion 1983 – 30 billion 1984
Will probably grow further, 1985 Automobile, Electronic equipment
“Character of Japan’s economy
Export manufactured goods to pay for energy, raw materials and food
US – large domestic market much less incentive to export
“Strong dollar, weak yen. 1979 costs more nearly equal yen below 200/$ Since 1979 cost spread 30%
“Japan labor practices
Heavy emphasis on quality
Automobile 1975 2.9 B
Auto costs 1981 13.7B
Quota on Japanese automobiles, increased costs by $1000
Electronic Products 15B last year
“What can be done?
Voluntary action – open Japanese market
Quotas – tariffs, protections
Japanese know problem serious
Japan does not have advantage in technology
Better management
More competitive spirit
Better teamwork between industry and government
Better education
“Some progress
US must work harder at Japanese market
Industry cooperation
Agriculture
Security Situation in Pacific
US, Japan, PRC
Developing countries doing well
The US-Japan relationship is one of the brightest spots in a troubled world
We must give it a high priority”
10/12/84, Letter to Packard from Marilyn Seymann, Ph.D., telling him that he has “been selected as the first recipient of the Council of 100 Business Leadership Award”
1/31/85, Typewritten sheet listing Packard’s schedule for the day of the award, February 6, 1985
1/31/85, Typewritten note from Laurie O’Brien, Arizona State, enclosing a typewritten membership list of the Council of 100
2/7/85, Letter to Packard from L. William Seidman, Dean College of Business, Arizona State, saying it was an honor to have him visit with them and receive the Award
2/11/85, Letter to Packard from Ron K. Schilling, Arizona State, enclosing copies of some press articles
2/14/85, Letter to Packard from Anne Marie Shanks, Development Director of the Arizona Center for Law in the Public Interest, enclosing a news article from the Business Journal
Box 5, Folder 10 – General Speeches
September 9, 1985, Interex Conference, Washington D. C.
Packard was invited to speak at the 1985 Interex North American Conference, a group devoted to the interests of users of HP equipment, particularly computers.
Packard says he is not going to discuss specific products or programs, explaining that both he and Bill Hewlett have not been involved in the day to day business of the company. He does say that the main message he wants to give is that “…the HP computer users groups have become very important to our company because we have had a strong commitment to HP users from the very early days of the company.” He contrasts the typical characteristics of users when HP made general purpose electronic instruments – “essentially all electronic engineers,” with those of the users of HP’s computer products, “people of all kinds, in every aspect of the economy.”
He makes the point that when most of their customers were engineers they understood their needs very well and had a good rapport with them; but now, with a much more diverse group he says, “It would be impossible for us to keep in good contact with all of our users without organizations like these users groups.”
Continuing on the subject of change, Packard says, “Some people have suggested that Hewlett-Packard is changing from a company dominated by engineers to a company dominated by marketing. I do not see it that way at all.
“From the beginning we had a close coupling between our development engineers, our manufacturing people and the users of our products. We have always had strong connections between engineering and marketing. Our basic philosophy in this regard has not changed at all but has simply been adapted to a new and vastly larger group of users. The development of the HP users groups has made these possible and you have become important members of our team.
“From the beginning we had a close coupling between our development engineers, our manufacturing people and the users of our products. We have always had strong connections between engineering and marketing. Our basic philosophy in this regard has not changed at all but has simply been adapted to a new and vastly larger group of users. The development of the HP users groups has made these possible and you have become important members of our team.
“In the early days of our company we required just as much understanding of what HP users needed and wanted as we do today. The essential difference was that the users of electronic instruments were a small, reasonably coherent group with a limited variety of requirements. We concentrated our work on the development of general purpose products in order to have as many users as possible, but the number was still relatively small.
“We had a special advantage,” he says, “in that all of our technical people in our development laboratories and in our factories and in our marketing organization were electronic engineers, and so were almost all of our customers. We knew that if we developed a new electronic voltmeter or a
signal generator that would do a better job for us in our laboratories and our factories, it would also do a better job for our customers.
Packard says they would allude to that relationship as the ‘next bench syndrome.’ “If the engineer at the next bench in the HP laboratories thought the new development was going to be a useful product, it would almost always be a commercial success when we put it on the market.”
Packard talks about the organization of the company – a large number of relatively small divisions, each having responsibility for a specific group of products. “This structure,” he says, “enabled our development people to specialize in the needs of the users of that product group. Thus this particular management structure was determined in large part to maintain the most effective relationship with the users of our products. We could have developed larger manufacturing organizations which might have had better efficiency in production. There were two considerations that influenced this choice of structure. One was that we believed it would enable us to remain closer to our users. The other was we felt a smaller unit would provide a more friendly, more personal and a more cooperative environment for our employees.”
“This particular corporate structure did not work as well when we became involved in computers and closely related data products such as computer peripherals, and during the last few years we have modified the relationship between our divisions to accommodate the important relationship between products in groups
“Our products were much simpler in the early days, often with only five to ten active elements or vacuum tubes, in contrast to millions of active elements in computer systems today.
“Even though the problems we dealt with were vastly simpler than the products of today, and even though we had a good understanding of what our users might need, we still gave our users a great deal of personal attention.”
“The corporate structure that we had developed to support the users of general purpose electronic instruments worked fairly well during the early years of our involvement with computers, but we were already beginning to deal with a larger and more complex group of users of HP products. We had entered the field of medical electronics and electronic instruments for chemical analysis and we soon learned that the ‘next bench syndrome’ was no longer working.
“ We tried a number of different approaches to establish better rapport with this new group of users in medicine and chemistry. We used doctors and chemists as consultants, established ties with university people in these fields and with medical schools and hospitals. It took time to learn how to work effectively with this new group of HP users but we now have a very good position in both of these fields.
“It was not long after we became involved in the computer business that we realized we were really in the business of developing and marketing general purpose computers and related data products and that we had a great opportunity in a vastly larger and more complex market.
“I do not think any of us felt that new basic principles were involved in the computer market. We simply had to find a better way to serve a new and much larger group of users and we have found it.
“You people who are here tonight and all the other members of the HP users groups around the world have become an important part of the HP team. Because you are members of our team I want to say a word about some of the basic HP objectives which I do not see as changing in any significant way.
“One of our objectives has always been to make a contribution to our field of endeavor, not to be just a ‘me-too’ company. We have tried to be at the forefront of new technology and we will continue to endeavor to do that. As I think you all know, we have always supported a relatively large research and development program. Over the years we have often been first in applying new technology to a new product. That emphasis will not change and in fact, should be enlarged because we will try to find ways to apply the latest technology not only in hardware but in computer architecture and artificial intelligence.”
Packard speaks of the importance of basic integrity. “One of the most important assets of any organization is its basic integrity. We have always expected all of our people to adhere to the highest standards of integrity in everything they do related to our business. We expect all of our people to play it straight with our customers, with our suppliers, with each other and with the public at large. We expect no less of each of you in our user groups.”
“Now I suppose all of you want me to say something about the Spectrum program. The program is going well but we will not tell you anything this week about performance, price or delivery. I want to tell you a story that will explain why.
“As some of you may remember, I served as Deputy Secretary of Defense from 1969 until 1972. During that time I dealt with many problems in the development of new weapons. They wouldn’t perform up to specifications or they cost more than predicted, often both. I concluded that the basic problem was that these new weapons were quite often put into production before they were fully developed and almost always before they had been fully tested in the environment in which they were expected to operate.
“I put into effect some new regulations to insure that production would not start until development and testing had been completed. After I left those regulations were largely disregarded and the problems I tried to deal with are still there.
“Shortly after I came back to HP we started to develop the 3000 computer. I thought our people at HP were smart enough not to announce the performance of a new product before it had been developed and tested to make sure it would meet the published specifications. I did not get back into the day to day detail of these developments but we did have a full scale review of the project when the new product was ready for the market.
“I had been back a couple of years when we had the full scale review of the 3000 project. We found much to my embarrassment that it would barely support itself and wouldn’t even come close to meeting the target performance specifications. Worse yet, literature had been published and distributed to customers six months before this review.
“We had to send the team back to the lab and it took nearly another year before this model 3000 would perform to its published specifications.
“I know that all of our developing and marketing people got the message at that time. It would not bode well for them to forget today.
“The happy outcome was a good product, for as you know the 3000 series which began with that incident has done very well. I do not have the slightest doubt but that Spectrum will do better.”
Packard says he would like to conclude with a word about the future.
“As far as the general outlook for the computer business is concerned I am very optimistic. There is considerable distance yet to go in hardware. There are probably several orders of magnitude yet to go in DSI geometry. There are opportunities for improvement in materials. There are a number of attractive improvements in software. There will be better mass storage, better terminals, printers and communication. In general, computers will continue to become more powerful and less expensive for some time to come.
“The opportunities will be just as exciting in computer applications, the work most of you here are involved in. We are not using computers very effectively in education and I predict impressive gains in this field in the years ahead.
“Good progress is being made in business management but there is much yet to be done all the way from small business to large and complex manufacturing. Super computers will become less expensive and make it possible to better deal with some of the big, complex problems of the next century.
“Hewlett-Packard is proud to be at the forefront of this exciting field and we intend to say there. We are especially pleased to have these user groups working with us. All of our people involved in the computer business have recognized that the HP computer users are not just important customers, you are also key players on our team – and it’s going to continue to be a winning team.”
10/17/84, Letter to Pam Tower, HP User Group Liaison, from Christopher C. Sieger, Conference Chairman extending an invitation to Packard to speak at the 1985 Interex North American Conference to be held in Washington D. C.
1/11/85, Letter to Packard from Christopher Sieger saying he is gratified to learn that Packard has accepted their invitation to speak at the Conference and giving details of the arrangements
2/14/85, HP internal memo to Packard from Dick Harmon of Press Relations saying that a reporter of INTERACT magazine would like to interview him before the Conference for a promotional article, and he gives several sample questions
9/26/85, Internal HP memo from Pam Tower to Packard thanking him for speaking at the Conference
Undated, Copy of the Bylaws of the International Users Group for HP Computer Professionals
Box 5, Folder 11 – General Speeches
September 17, 1985 – Statement before the Subcommittee on Trade, Committee on Ways and Means, U.S. House of Representatives, Washington D. C.
9/17/85, Typewritten text of Packard’s speech
Packard says he is “delighted” to appear before this Subcommittee to give his views on the U.S. trade deficit, as well as possible ways that might be taken to bring exports and imports into better balance. “This is an extremely important subject”, he says, “and I congratulate you and your associates for holding this hearing and for working to develop a legislative response to deal with our country’s unprecedented and growing trade deficit.
“Packard says he plans to describe what he believes [are] some of the major causes of the deficit, as well as comment on the difficulties he sees in the proposed import surcharge bills before Congress.
The U.S. Trade Deficit
Packard says he sees several reasons for the severe deterioration in the U.S. Trade balance.
- “The consistently high value of the dollar abroad has caused sharp declines in U.S. exports and dramatic increases in imports. The strength of the dollar is a direct result of the reputation of the U.S. as a ‘safe haven’ for foreign funds, a strong U.S. economic performance, and extraordinarily high U.S. interest rates – in turn a direct result of massive and ever growing federal budget deficits.
- “The huge U.S. market has been an almost irresistible attraction to many foreign competitors. In order to gain market share, many of these firms are willing to sell here at lower profit margins than are acceptable to U.S. suppliers.
- “Our exporters face tariff and non-tariff barriers abroad, that are often more than our foreign competitors face in this country. The European Community has high tariffs on many products and heavily subsidizes agriculture. Many of the newly industrialized countries – South Korea, Taiwan, India, Mexico. Brazil and others — have high tariffs, import quotas and licensing requirements, and restrictions on incoming investment. Although some of these may be justifiable as temporary debt reduction measures, U.S. exporters have been strongly affected by reduced trade with the less developed areas of the world, especially the high debt countries in South America. Japan has lowered some trade barriers in recent years and has removed most legal restrictions to its markets. Nevertheless, Japan still retains some quotas and other restrictions. In addition its traditional buying habits, close industry-government relations and archaic distribution systems make it an extremely difficult market to penetrate. Moreover, the Japanese export industries of such concern to us today grew strong in a domestic market that was protected from U.S. competitors until well past the time when our firms enjoyed a competitive advantage and could build a market in Japan.
“The Federal Reserve estimates that last year’s $123 billion trade deficit cost the U.S. some two million jobs and 2-3 percent lost growth in gross national product. These estimates, however, must be put in perspective,” he says. The Federal Government has been spending more than it has been taking in, he explains. “As a result imports of both goods and capital have been absolutely essential to U.S. economic growth since 1983. Lower priced foreign goods have helped moderate inflation while imports of foreign capital have offset the shortfall, estimated to be equal to about forty percent of domestic savings, needed to finance both the U.S. budget deficit and an investment boom. If foreign sources of capital had not been available the federal Reserve would have had to either expand the money supply, which would have increased inflation, or permit a strong rise in interest rates. Either action would have reduced growth rates.
“Though some U.S. workers have been displaced by imports, 7.3 million new jobs were created between 1982-84 without a surge in inflation. Estimates are that imports reduced the inflation rate by 1.0-1.5 percent by pressuring domestic producers to maintain competitive prices and resist demands for excessive wage increases. As a result, many U.S. firms have moved or are moving to modernize plants and adopt efficient manufacturing processes.
- “U.S. business has traditionally focused its efforts on the domestic market while export markets have had second priority. This preoccupation with domestic concerns has meant that in certain areas, United States business has not kept up with its foreign competitors. These competitors have been able to produce higher quality, lower priced products by increasing their capital investments and productivity, and by becoming more technically sophisticated.
Congressional Response
Packard says the Administration has not done enough to stem the growth of the trade deficit. “Furthermore, the efforts of some government agencies have actually increased the deficit. for example, the Defense Department has authorized co-production of U.S. designed weapons in several foreign countries. These arrangements have made significant contributions to our trade deficit, while at the same time increasing the cost of the weapons to the U.S. taxpayers. Some of these actions have been based on legitimate non-economic reasons; but if the effort on the U.S. trade deficit had been considered, I’m sure not all of these co-production arrangements would have been approved.”
With the Administration’s lack of attention on stemming the trade deficit, Packard says the pressure has been on Congress to try to narrow the trade gap – mainly by imposing temporary import surcharges. He says he thinks these surcharges are a bad idea for several reasons:
- “Even if such surcharges are permissible under our GATT obligations, other countries would be certain to demand compensation or to retaliate by closing parts of their markets to U.S. products. The result would be more lost U.S. jobs (and less tax revenues to apply against the federal deficit!).
- “The imposition of an across-the-board import surcharge would severely limit the ability of the developing countries to repay their debts.
- “Such measures would immeasurably complicate the efforts of the U.S. Trade Representative to maintain an open international trading system and to conduct further liberalizing negotiations with our trading partners.
- “Broad surcharges would not focus on specific import situations and therefore, would not serve to stimulate the bilateral negotiations necessary to achieve permanent solutions.
- “U.S. consumers will bear the brunt of increased prices for imported and, inevitably, U.S. products. The inflationary impact of surcharges is likely to be enormous and its effect on low income consumers most severe.
Packard says that a current bill under consideration in the House (H.R. 3035) has many of the same problems. He explains that this bill would establish a 25 percent across-the-board surcharge imposed on the imports from specific countries, those that:
- “Limit access to their own markets;
- “Run a substantial trade surplus with the United States and/or the entire world; and,
- “Do not take steps to reduce their surpluses by 5 percent the first year and 10 percent each year thereafter.”
Packard agrees that “Conceptually, there are some positive points to [this feature of H.R. 3035]. First” he says, “it sends a strong message from the Congress to some of our trading partners and to the Executive Branch that there is strong public support for decisive action to reduce our trade deficit. Second, it is designed to reduce the trade deficit by putting in place a prospective weapon that can be used if certain countries do not take action to reduce their trade surpluses. Finally, the import surcharge could be removed quickly once a country reduced its trade imbalance.
But, Packard says H.R. 3035 is not an “acceptable response to our present trade problem.”
He outlines some specific problems he sees:
- “The statistical provisions that would be used to determine when the ‘standby’ surcharges would be employed and which countries they would affect seem to me to be quite arbitrary. There is no reason to assert that drastic action should be considered to reduce imports when the trade deficit of a country such as the United States exceeds 1.5 percent of Gross National Product. Several major European countries, including the U.K. and Italy, ran merchandise trade deficits in the 5.5 percent range in the 1970’s. The U.S. would have been aghast at that time if they had proposed surcharge measures such as these to reduce their deficits or, for example, to ‘open’ the U.S. market to more British woolens or to more Italian suits and shoes.
- Continuing his critique of what he sees as problems with H.R. 3035, Packard says that “The rather arbitrary exclusion of petroleum trade from the ‘formula’ may discriminate against a whole sector of developing countries and even Japan and the European Community (except the U.K.) that rely upon imported oil to operate their economies. It’s difficult for me to see how any country’s trade activities can be properly evaluated by excluding such a vital commodity. For example, $55 billion of the $123 billion 1984 U.S. trade deficit was due to imports of crude oil and petroleum products.
- “I believe,” he says, “H.R. 3035 contains an overly mechanical set of thresholds, levels and action points. International trade is complex and constantly changing and no one is smart enough to be able to prescribe appropriate actions several years in advance. For this reason, I favor provisions that permit a flexible response rather than some sort of doomsday device; which, set to go off more or less automatically years in the future, could produce completely unexpected results.
- “The surcharge provisions of the bill hit quite hard at the newly industrialized countries most of whom need to export to help pay their debts. If we consider current account balances, a more accurate way than simple exports and imports to view international transactions because they capture trade in services including interest and royalty payments, Brazil was $1.8 billion in deficit in 1984 and is projected to be about the same in 1985. This year, Brazil must make $10 billion in payments on its $100 billion debt (owed in large part to U.S. banks). This amount virtually eliminates its projected overall $12.9 billion trade surplus. South Korea, although not in as desperate shape, ran both a $1.1 billion trade deficit and a $1.4 billion current account deficit in 1984, and its current account is projected to be $1.7 in the red this year. It must meet nearly $5 billion in payments on its $49 billion debt in 1985. Taiwan is the only one of the three newly industrialized countries most affected by HR. 3035 that has an increasing current account surplus and low debt. Even so, projections are that Taiwan’s trade surplus will decrease over the next two years.”
“…these [newly industrialized] countries view as major barriers any restrictions the U.S. places on products such as textiles, apparel, shoes, and steel where the have a clear comparative advantage. It is unrealistic to think that they will not attempt to protect these and other important industries. We should expect protectionism and be working with them to define standards by which we can assure that such protectionism is temporary and does not support continued inefficiencies.
- As another problem with surcharges imposed by H.R. 3035, Packard says that “No authority exists for a GATT member country to impose large tariff increases on all the exports of one or a limited number of other countries simply because its trade deficit, either with an individual country or overall, has reached certain predetermined, arbitrary levels. To comply with GATT, any action a country takes to restrict market access must apply to all other GATT members and be limited to a specific imported product (or products) that are causing serious injury. GATT members affected by such actions have a right to receive compensation or to retaliate.
“I believe,” Packard says, “the prospects for retaliation would be quite limited – after all, this would hardly be in the interest of countries that wish to remain major exporters to the U.S. market. Nevertheless, the bill, if enacted by the United States, the leading country in the industrialized world, would signal a major shift toward a ‘market sharing’ approach to world trade, away from the concept that trade flows should be primarily determined by market forces. The legislation would distort trade and stunt growth rates as many countries, developed and developing, began to ‘manage’ their trade with the United States and the world to avoid punitive duties that would be imposed if the arbitrary levels within the bill was exceeded. These maneuvers could deprive sectors of the U.S. economy of the most efficiently produced goods at the lowest prices.
“In addition, a possible, even likely, consequence of U.S. action would be passage of similar legislation in both industrialized and developing countries, with each defining ‘excessive trade deficits’ to suit its own needs. Under these conditions countries would soon have to negotiate annually with each other to determine the amount and character of trade they would accept!
Trade Relations With Japan
“Our trade relationship with Japan, the cause of $37 billion of last years’ $123 billion U.S. trade deficit, is especially important. Japan presently bears the brunt of U.S. criticism for loss of export related jobs and the deterioration of our international trade. In part, this is due to past history. In the 1960’s Japanese textile imports caused a reduction in U.S. textile employment – a market that Japan subsequently lost as well. Then it was television sets, then steel, then autos and now we see our high technology semiconductor-conductor, computer, and communication markets threatened by Japanese imports. It is also due to a certain amount of envy and frustration. There is no denying Japan exports high-quality, well-styled, favorably-priced products which have created a market of well-satisfied U.S. customers. There is also no doubt that for a variety of reasons the Japanese market is extraordinarily difficult to penetrate.
“My recent experience,” Packard says, “as the U.S. Co-chairman of the U.S.-Japan Advisory commission has led me to two conclusions. First, the current large U.S. deficit in trade with Japan poses very real risks for both countries. Second, I believe Japanese leaders recognize that a substantial part of the solution to the problem of their U.S. and worldwide trade imbalance rests with them. Let me elaborate on these two points and then suggest a way our country can provide an impetus to help our Japanese trading partners make the kinds of fundamental changes required.”
Packard says he believes the “Japanese know that they cannot prosper in the long run by selling into economies which have continuing, negative balances of trade. For trade to endure over time, it must be mutually beneficial to the countries involved. Such is not the case in the current U.S.-Japan trade relationship. Further, the growing perception of Japanese market protection coupled with a Japanese export drive to the U.S. market undermines a commitment to an open trading environment.
“This negative view of the Japanese approach to trade results from specific Japanese actions. Because their economy is so dependent on adding value for export, they have not pursued policies which might encourage domestic consumption, imports, or unrestricted investment abroad. Thus far, business and government leaders have been politically unable to adjust these policies or to moderate their exports. On the other hand, the policy of the United States, for example in unilaterally opening our telecommunications market without seeking reciprocal agreements, have provided little incentive for the Japanese to change their policies.
“We need a strategy for dealing specifically with Japanese trade over the short and long term. As a means of addressing the long-term issue of U.S.-Japan trade, a member of the Advisory Commission has proposed affirmative action to reach:
1. “Agreement on the principle that a persisting, lopsided trade balance between us can have a dangerously destabilizing effect on the relationship;
- “Agreement on an objective of bringing under control our current trade imbalance by concerted actions to progressively reduce its size.
- “Agreement on a program of specific goals and timetables for achieving this objective, such as actions to gain more access to Japanese markets, restrain various Japanese exports, encourage more Japanese investment in U.S. production facilities, stimulate more imports by Japan, and adjust the yen-dollar exchange rate; and,
- “Agreement on a mechanism for periodically examining and
adjusting good faith actions taken to achieve established goals.
“These are all positive steps for correcting the current misalignment. However, nothing will happen until they are put into effect, and given the enormity of our trade deficit, this should be as soon as possible. In my opinion, the only course of action that will have a significant immediate effect on our trade imbalance with Japan is for the United States to:
- “Determine by the end of this year (and each succeeding year) the specific amounts on an industry sector, by industry sector basis, by which we want to change our trade deficit with Japan – hopefully reduced, but certainly not increased;
- “Construct specific short-term time tables for the achievement of such changes; and,
- “Establish appropriate sanctions such as import quotas that would be applied to limit access to the U.S. Market if the timetables were not met.
“With these measures in place, the four points listed by my fellow commissioner could be pursued with the Japanese and their agreement sought to the specific amounts we have previously determined our trade imbalance should be changed. If, at the end of the first six months of 1986, (and each succeeding year) it is determined that the timetables are not being met, the previously determined sanctions would be imposed to remain in effect until the changes have occurred, and the timetables restored.”
“There is a concern that arbitrary quotas or other restrictions might present some dangers. However given the size of Japan’s trade surplus with the United States, its desire to remain a major factor in our market and the selectivity of the approach I’m advocating, I don’t think Japan would press a case for compensation in the GATT, or seek to retaliate. Indeed, I believe continuation of the current trade imbalance and the tension it creates pose even graver concerns. The measures I’ve suggested, could have substantial impact on the future growth of the bilateral deficit. Hopefully, they would be used to achieve more openness in the Japanese market were any sanctions quickly removed upon achieving the desired results. I don’t think our Japanese partners would consider them unfair, and hopefully such measures would provide the much needed impetus they require to address the long-range actions vital to the continued health of our trading relationship.
Alternate Approaches
“Restricting access to the U.S. market through quotas or import surcharges, whether ‘triggered’ automatically or not, is a cumbersome process, difficult to achieve with any degree of precision and certainly not a long range solution. Several longer range steps come to mind which I believe would reduce trade restrictions and lower the large and growing U.S. trade deficit:
- “Our government needs to make U.S. trade policy a high priority. The government must recognize that free (or freer) trade, while an excellent goal, cannot be achieved unilaterally. It requires consideration and cooperation from our trading partners. This means that engaging in multi-lateral and bi-lateral trade negotiations and working to strengthen the GATT is not enough. The U.S. must, in addition, rigorously defend its rights. For example, the little used provisions of Section 301 of the Trade Act of 1974 can and should be a powerful tool to stimulate negotiations and, if necessary penalize our trading partners for their unfair trade practices, including those which restrict our ability to sell in their markets. 301 actions, judiciously and aggressively used, would strengthen the world trading community rather that invite retaliation. Countries realize when the are doing something wrong and, if not corrected will, like children, soon engage in other wrong or illegal acts.
“More laws are not needed to permit the Administration to make trade policy a high priority. Instead, the Administration needs to make better use of the laws the Congress has already provided to obtain fair and equal trade practices. One way to help in this process would be for the President to give the U.S. Trade Representative more influence in making trade decisions. If this were to occur, trade decisions could be reached more quickly and without being subject to so many political considerations.”
“The Administration also needs to make a serious effort to correct various self-imposed practices which have an adverse effect on U.S. exports. These include unnecessary restrictions under the Export Administration and the Foreign Corrupt Practices Acts, the effects of various U.S. tax measures, and limitations on export financing.”
“The Congress can make an important contribution to the reduction of our trade deficit by taking actions that will help United States industry become more efficient. Among these actions are those which will encourage capital formation, reduce the costs of meeting regulatory requirements, stimulate the modernization of manufacturing facilities, and encourage increased investments in research and development, including R&D to improve manufacturing technology.
- “The U.S. government must get its own economic house in order. This means a substantial reduction of the Federal budget deficit, preferably through cuts in spending; a leaner and more effective defense program, some reduction in ‘automatic’ entitlements, and actual curtailment or elimination of some programs. If sufficient cuts should prove impossible, an increase in taxes will be required.”
- U.S. productivity must be increased. This means corporations must take a somewhat longer view, modernizing production facilities, insisting on competitive labor settlements and, above all, assessing the need for increased productivity against foreign, as well as domestic, competition.
- U.S. businesses should be encouraged to go after foreign markets, and particularly the Japanese market. In doing so, it is essential to realize that these markets have to be approached very differently from those of the U.S. Patience, persistence, understanding and a willingness to invest for the long term are all required. However, whenever it becomes apparent that foreign governments or competitors are acting unfairly or not in accord with their agreements they have undertaken, U.S. businesses should not hesitate to move quickly and publicly to make their concerns known to the U.S. Trade Representative, nor should they shy away from preparing and filing the paperwork necessary to support their claims. Standing up for U.S. rights will do much to restore the world’s trading system to vigorous good health.
- “The government and the business community should actively support changes necessary to update the GATT and bring more international trade transactions under its auspices. The principle of non-discrimination must be reinforced to reduce the number of actions taken outside the GATT such as ‘voluntary restraint’ agreements, agricultural subsidies and quotas, limits on textile and apparel imports, etc. Third World countries should no longer be able to exempt themselves easily from the principles and standards of the GATT since such actions tend to keep trade barriers in place in both the developing and industrialized worlds. Finally, the GATT codes, principally those on subsidies and government procurement, need strengthening and the GATT dispute settlement process should be reformed to speed decisions and reduce political considerations.”
Box 5, Folder 12 – General Speeches
October 22, 1985, Statement Before Science Policy Task Force, Committee on Science & Technology, U.S. House of Representatives
10/22/85, Copy of typewritten text of Packard’s remarks to the Committee
Packard says he is pleased to be here “to discuss the subject of science in the mission agencies and the government laboratories. This…is a subject that is of considerable interest to me”
“The Federal government has provided an enormous amount of support for American science during the last four decades. It is in a large part because of this massive Federal support that the United States has taken a leadership role in science over the rest of the world.”
“Although the Federal support for American science has been very large in magnitude, it has not been as effective as it should have been. I believe there are a number of specific things that could be done to improve the way the Federal government supports American science, in the agencies, in the Federal laboratories and in the colleges and universities of our country. I would like to make some observations on how I believe our Federal science policy should be improved.
Saying that “Progress in science comes from two basic endeavors, people who think, and people who carefully design and conduct experiments,” Packard offers two guidelines for supporting science.
“First: The scientists are the ‘people who think.’ They should be selected and supported on the basis of the quality of their scientific work, not simply on how well they can write a proposal asking for support. When they are supported, they should not be burdened with preparing unnecessary progress reports, effort reporting and other unnecessary work which takes away the time in which they are to do their real work.
“Second: Scientists must have the proper equipment in order to carefully design and conduct experiments. The equipment needed to keep scientific work at the forefront of scientific knowledge is much more complex and more expensive today than it was in the past. Modern instruments are more accurate and often include computation capability which makes them much more efficient. It is a serious handicap for a scientist to have inadequate equipment and facilities for the work to be done.”
Packard also offers “specific recommendations on how the agencies can do a much better job in selecting the scientists they want to support.”
Packard says he believes the “peer review process should not be carried too far.…[This process] should focus more on what the scientist has actually done, not just on what he says he can do.”
“In our report on the Federal laboratories [See speech May 27, 1984, Report on Federal Laboratory Review Panel] we recommended that each laboratory have a review committee and that the review committee should report not to the laboratory director but to the agency or organization responsible for the laboratory. It was intended that this review committee work would serve to reduce the number of routine reports required of the laboratory. An objective review of work done by a review committee of peers would be a much better way to evaluate the performance of a laboratory.”
“After a scientist, either in a Federal laboratory or at a college or university, has demonstrated good work, that program should be supported to provide long time stability for the work; no routine progress reports but a periodic evaluation of performance by the review committee should be made.”
“Research at colleges and universities deserves continuing support, particularly what is generally known as basic research. Federal agencies and Federal laboratories find it difficult to place research contracts at universities because of the many detailed requirements placed on the contracting procedures.
“All Federal agencies and Federal laboratories should be given specific authority to give contracts to colleges and universities on a sole source basis. There is absolutely no place for competitive bidding for research placed with colleges and universities.”
“I expect it is too much to ask the Congress to refrain from ‘log rolling’ activities where research at colleges and universities is involved. It would be great if this work could be supported strictly on the basis of its contribution to the quality of American science.
“Universities are also having a problem with the equipment and facilities available for their research people. The Federal government has done a fine job in the area of high energy physics where facilities costing hundreds of millions of dollars have been provided. There are many areas of science which may make a much more important contribution to our economic well being, the health of our citizens, and the quality of life than high energy physics. A few tens of millions of dollars for equipment and facilities would bring a big return in the productivity of scientific work in these other areas.”
Talking about tax credits for equipment corporations give to colleges and universities, Packard says one problem is that, while all companies should give equipment to universities where quality work is being done, some use this as an advertising or sales gimmick.”
Another problem [he sees] with the tax credit program is that it does not extend to all colleges and universities on the basis of their real need. “The tax credit program should be supplemented by direct grants for equipment by Federal agencies. The Federal agencies will receive more for their money if they take the responsibility for providing equipment where it is needed in the programs they support.”
Packard says the Department of Energy “has a special problem that needs to be corrected….Our committee on the Federal laboratories noted this problem and I have discussed it with two Secretaries of the department but the bureaucracy has refused to change.
“The DoE treats research grants like contracts to do construction rather than contracts to do research. They have field offices that look over the work being done, they require monthly reports. This requires paper work by the ton. Most of it useless and this poses a large and unnecessary burden on the people doing the research work. They do this to the laboratories they support and they also do it to the people in universities doing research.”
Packard says this apparatus should be phased out, thereby saving many millions of dollars a year, and provide scientists an environment where they would have more time to do scientific work instead of paper work.
“I want to say a word about government owned – government operated laboratories….Because these laboratories are under civil service regulations they are not able to hire, motivate or retain the best scientific people, scientists and engineers. Our laboratory committee recommended that these Federal laboratories be allowed to establish a better personnel management program. This could be patterned after an experimental program which has been operating at the Navel Ordnance Laboratory at China Lake in California. I visited this laboratory and discussed the program with the director. He has been able to improve the quality of his professional staff because of this program. I hope your committee will support this program we recommended.
“I note that the Department of Defense has proposed a similar program for all of the professional people in the department. I believe that would be a big step forward and I support their program. It may be difficult for the Congress to take the big step at this time but I hope they will at least support the smaller step we are recommending for the Federal laboratories only.
“All federally owned laboratories are not federally operated and one choice would be to put all of the laboratories under private sector management. I do not believe it would be wise to do so. I believe the present mix of federally operated and company operated laboratories is about right, but if the Federal government is going to operate a laboratory, it should be able to do so with a commitment to excellence and under policies that would encourage excellence. That is not the case today.
“The Federal laboratory Panel recommended that research people should be allowed to spend part of their time on ideas of their own choice. This would include areas of science other than that of their main program. We thought at least 5% of free time should be allowed, some Committee members thought it should be 10%. This idea is one that is supported by almost everyone who has had experience administering a scientific project.
“This free time is probably the most important source of innovative ideas. Innovative ideas sometimes come from the laboratory director. Innovative ideas that contribute to the quality of American science never come from the Federal bureaucracy. Their ‘innovative ideas’ almost always do the opposite.
“The idea of independent research and development (IRD) for defense programs was originally based on an understanding of the importance of giving scientists and engineers some time free from their assigned work to explore their own innovative ideas.
“This program was effectively destroyed by the ‘Mansfield Amendment’ in 1970 when the Congress required IRD to be limited to ideas related to military work. This required that the justification for IRD be documented to demonstrate the independent work had a military potential. While this requirement has been repealed, the practice has not improved very much. This country would receive much better commercial fall out benefit from the vast sums of money spent on military research and development if the original idea for having independent research and development were restored.
“I hope some of these ideas will be useful to this Committee in its work to help assure that Federal support for science and technology will be as effective as possible. I know that many other committees of the Congress, probably too many, are involved in this issue. I believe, however, this Committee is in a good position to provide leadership and for that reason, I appreciate the opportunity to give you my recommendations.
“I will be please to respond to your questions.”
No other papers in folder
