SEVERAL YEARS ago, Brazil was the leading customer for several kinds of light aircraft built in the United States. Its government decided, however, that the country might save foreign exchange and provide domestic jobs by making the planes at home. The problem was that nobody in Brazil knew how to do it.
Like many other nations, Brazil turned to Yankee technology. After levying a stiff tariff on all imported aircraft, the Brazilians contracted with the Piper company to show them what to do. Brazil was soon filling its own light aircraft needs and finally became a supplier to other Latin American countries, all but easing U.S. producers out of that market. Adding insult to injury, Brazil is now seeking to sell its planes in the United States.
This is an old horror story for American business and labor, or so their most vocal elements would have us believe. Time and again, it is said, technology sent elsewhere has been turned against us, costing us markets abroad and jobs at home. The Romanians are building computers, Mexicans are making aircraft parts, Venezuelans are producing steel and Korea is building ships, all with U.S. technology in competition with U.S. products.
All this is prompting a new kind of protectionism, aimed not at halting cheap imports that threaten U.S. jobs and profits but at exports, the dissemination overseas of information and American know-how.
"Technology is a form of property," said Marcus B. Finnegan, testifying for the U.S. Chamber of Commerce before the Senate subcommittee on science and technology last December. "When it is shared it is entitled to adequate protection." The Chamber would like to see the government affirm the right of U.S. business to set conditions on the use of its technology overseas as a form of self-defense.
Labor goes further. In testimony before the same subcommittee, Benjamin Sharman of the International Association of Machinists said labor should be allowed to screen any technical know-how being sent abroad in order to protect U.S. jobs.
"Under no circumstances should any capital-intenstive technology be transferred more easily, and no technology that has been developed with the use of public funds should be transferred without the lead time that is necessary to keep the United States competitive," he said.
The difficulty with such positions is that they come at a particularly sensitive time in U.S. relations with developing countries. President Carter joined the leaders of six other industrialized nations at the Bonn trade summit talks last week in promising to aid the less developed lands, where one-quarter of the earth's people live in grinding poverty.
Two United Nations conferences next year deal specifically with multinational corporations' behavior and with science and technology in development. The latter one arose from the realization that a series of previous U.N. conferences on hunger, population, water, housing and deserts had the common theme that technical know-how was crucial in enabling the world's poor countries to begin to deal with these problems themselves.
The central demand of the most vocal Third World nations, in fact, is that the United States clear away some of the thicket of regulations U.S. business has set up around its technology so that poor countries may use it to learn to fish for themselves.
But in the face of resistance from both business and labor, a resistance that has intensified as domestic economic pressures have increased, the government is not likely to respond.
"We're just not in a position to deliver, even when the suggestions [of Third World nations] make some sense," said Stanley Marcuss, senior deputy assistant secretary of commerce for trade and industry. "We're really poles apart on many, many issues, and the prospects are slim." Helping the Poor - for a Price
Americans have always had a hard time dealing with the world's poor. It is just about impossible to visit Calcutta, Paraguay or Nigeria or almost any nation outside western Europe and not come away profoundly moved by the gut experience of real poverty, the attempt to live on less than $100 a year. One wants to do something to help.
At the same time, America sprang to national greatness from a tried, poor and hungry stock of immigrants, so contempt and bewilderment become the companions of pity. Why can't these other countries do the same things we did?
The ambivalence has forever been reflected in our uneven foreign aid policies and in the response of the recipients of that aid. Where Americans expected gratitude, we often reaped resentment; where we expected miraculous growth, we often made things worse. The literature is full of windmills that worked fine in Nebraska but clogged in the desert winds of Africa, of tractors that rusted because local fuel wouldn't work, or of processes that demanded literate, punctual operators in sleepy towns without schools.
U.S. business neatly resolved the dilemma. Help was available - for a price. What has been called the creeping Coca-Colanization of the world has been the major U.S. business story since World War II, with international activity now accounting for one-third of all U.S. corporate profits.
Fully $4 billion of those profits comes from royalties and fees for the use of U.S. technology: advice processes, patents, services and computer printouts - everything, that is, except labor and capital. U.S. firms would have to sell $85 billion of conventional trade goods to reap a similar $4 billion profit, according to Chamber of Commerce figures.
But in the view of the Third World, these royalties and fees are too high and must be paid too often. Discontent with U.S. practices has been exhaustively documented at the dozens of international meetings where blame is placed for the ills of the planet: there are limitations on the number of products a country can make with U.S. technology and restrictions on where they may be sold.
If a second factory is built, the country may have to pay a second fee to a U.S. firm for using the same processes. Often there are prohibitions on buying competing processes from other firms or countries, and the receiving nation may be forced to buy additional parts, materials or companion processes whether it wants to or not, occasionally in a package deal. Some countries say they simply do not have the foreign exchange to purchase any technology at all.
There are deeper complaints.The U.S. economy is oil-based. Raw materials are cheap here and labor is expensive. The technology we produce assumes those facts, even though just the reverse is usually the case in poor nations, which might do better to skip the oil phase of development altogether and go directly to solar energy, water power or other renewable energy resources.
Unemployment is the major curse of impoverished areas. Yet a World Bank loan was made to Pakistan, for example, to purchase 18,000 tractors in the 1960s wihtout considering that fact. The tractors led to a doubling of farm size, displacement of hundreds of families and a farm labor use reduction of about 40 percent, according to a World Bank study.
Many developing nations have begun taking steps to change all this, and that is what worries American business. The complaints coalesced in 1974 with a call at Geneva for a new international economic order, a phrase now so overworked as to be embedded in the concrete of its acronym, NIEO. The new order, the "Group of 77" poor countries said, would open the stock of world technical knowledge to them for free. A multinational firm would come in only on the host country's terms and would behave according to a binding international code of conduct.
"The countries can put conditions on [technology] transfer and foreign investment, but they can't force U.S. companies to invest under those terms, and neither can we," said Commerce's Marcuss. "Many U.S. companies won't go into countries where they don't control their investment." Adjusting to Reality
Business, though, does not have a monolithic position, and neither do the developing nations. "Many companies have discovered they can make money without having 100 percent control, and they're going from colonial-style to commonwealth arrangements," said Jack Baranson, president of Developing World industry and Technology, Inc., a Washington consulting firm specializing in technical aspects of development.
The Sycor, Inc., computer firm fo Ann Arbor, Mich Baranson said, is an example. Sycor found it couldn't fight DigiBras, Brazil's state computer manufacturing coordinating body, which refused authorization for Sycor's new computer line in order to hold out for a Brazil-based operation. Sycor joined Digibras as minority partner last year and is now producing the technology for design and manufacture of the equipment. "It was just hard-headed adjustment to market reality," Baranson said.
Other corporations are finding it easier to negotiate "turnkey" deals in which they supply goods, services and training and then turn the operation entirely over to local interests: In 1972 for example, General Telephone and Electronics agreed to use Algerian raw materials and manpower to build a plant that would process local material into components and assemble radios, tape decks and other consumer items, training 300 Algerians in the United States to run the plant when it is finished.
"There is much money to be made in such an agreement," said Mohammed Habib, a Washington-based agent for U.S. firms seeking business in the Arab world. "Anything a company does that is a service or out of their major line is very profitable. You can ask anything you want for services; they cannot give you specifications for that. "The Algerian deal was for $223 million.
At the same time, countries that loudly denounce U.S. imperialism often run glossy advertisements soliciting U.S. investment.
The effort to come up with a coherent U.S. position on all these matters meant "getting into a barrel of eels" for Jean Wilkowski, former ambassador to Zambia, who is to coordinate the U.S. delegation to the coming U.N. Conference on Science and Technology for Development (UNCSTD).
Business and labor groups have insisted on the need to hold and line against any uncontrolled transfer, and the view was bolstered by President Carter's action last week to block technological acquisitions by the Soviet Union. A study done for Sen. Henry Jackson (D-Wash.), who once called technology diffusion "uncontrolled hemorrhaging," noted that Poland and other communist nations occasionally had obtained U.S. technology that was barred to them by setting up dummy corporations in poor nations.
The contrary argument holds that it is in the long-range interests of both business and labor to promoted technical progress overseas and create new markets for U.S. products. Even the Chamber of Commerce makes that point. But it warns that there will be no transfer of technology at all unless business is allowed to set the terms.
"The labor concerns are one of the biggest problems we have," said Ann Keatley, who is working on UNCSTD preparations in the President's Office of Science and Technology Policy. "We have the view that in the long term, industrialization of the developing world will be to our benefit, but it's extremely difficult to get them [the unions], to buy that, almost a lost cause."
Preparations for UNCSTD, to be held in Vienna in August, 1979, have been slow getting started, and there is considerable worry that it will be just another arm-waving session.
Some critics have argued that technology can be at best only about 10 percent of any country's development; that it begs the central issue of redistribution of income and power, and that until those questions are resolved, any technical advance will only benefit rich elites already in control of much of the world.
Conference backers, however, hope the meeting may help sort out the distinction between what private technologymust be closely held and what public technology can be freed for general use. It might provide a U.S. commitment to free or cheap supply of low-level "appropriate" technology that is far from being the latest thing on the market, and it might result in some concrete projects, tax incentives or new organizations to achieve specific goals.
"There is no way of being responsive to the less developed countries and not incurring some costs to the United States," summed up John Logsdon, director of George Washington University's graduate program in science, technology and public policy. "The labor people have a point. There will be competition. But one of the jobs of political leadership is making those kinds of choices.