President Reagan yesterday announced that he is establishing a National Commission on Industrial Competitiveness that aides hope will help counter growing pressure for quotas and other protectionist steps to insulate U.S. businesses from foreign competition.
The commission, which will be headed by John A. Young, president and chief executive officer of Hewlett-Packard Co., also is seen by the administration as a high-profile alternative to calls from Democrats--particularly Democratic presidential candidates--for a national industrial policy. In addition, White House officials said, the commission may serve to help hold down domestic labor costs as unions are emboldened by the end of the recession and raise their wage and benefits demands.
Administration officials said they fear that industry concessions to unions in the next year could set off a new round of inflation and reduce the competitiveness of U.S. products abroad.
But there was no talk of such interventionism yesterday.
"Government's legitimate role is not to dictate detailed plans or solutions to problems for particular companies or industries," the president said in his announcement. "No, the government serves us best by protecting and maintaining the marketplace, by ensuring that the rules of free and fair trade, both at home and abroad, are properly observed."
"I think the whole point is that American competitiveness worldwide lies with . . . private enterprises, not the government," Young said in a recent interview.
"But the federal government spends 50 percent of all money invested in research and development so it does have a role in laying down public policy structure." The commission's emphasis will be on technological developments, both to make declining American industries more competitive and as "intellectual property," to be exported only under conditions that protect American firms from theft of innovation, particularly by Soviet bloc nations.
Also yesterday Reagan met with members of the Congressional Steel Caucus and agreed to set up a task force to recommend ways of helping the domestic steel industry.
"The president has come to the realization that we have got to act, we are the victims of unfair trade with Japan and others," Sen. Jennings Randolph (D-W.Va.) said.
The members of the president's industrial commission include Robert Anderson of Rockwell International; George Low, president of Rensselaer Polytechnic Institute; Rimmer DeVries, senior vice president of Morgan Guaranty; Michael Porter, a professor of business at Harvard Business School; Kipling Hagopian, a venture capitalist in California's Silicon Valley, and Mark Shepherd, head of Texas Instruments. There are no union representatives.
Young, the Hewlett-Packard executive whose Silicon Valley company is one of the world's largest exporters of computers, said the commission will focus on easing antitrust barriers to joint research and development of high technology by American firms, increasing tax credits for research and development and improving the capability of American universities to do research.
The commission will focus on improved control of the $40 billion in research money spent annually by the government. The administration regards this as preferable to ideas put forth by Democrats of a national industrial policy, which in some formulations involves aiding "high-tech" firms with direct subsidies while increasing quotas and tariffs on imports.
"With every industry, every business, every group, the textile companies, the oil companies, agricultural firms, representing their interests and pleading for tariffs and quotas, there is a need to show a different route to taking on foreign competition," said Edwin L. Harper, the chief proponent of the commission on the White House staff until he left for private industry last week and a membership on the commission.
Industrial policy will be the subject of hearings to be held in October by Rep. John J. LaFalce (D-N.Y.), chairman of the House Banking subcommittee on economic stabilization.
La Falce said in a recent interview with Business Week magazine that he believes the White House is using the new commission to "co-opt any initiatives Congress wants to take by saying they're studying the issue and then, if the issue looks hot, come in before election day and say they've got their own plan."