1. Susan Strange maintains that the high tariffs of the 1930s had little impact on the volume of world trade or its direction and that the notion that protectionism was the main cause of the Great Depression is a liberal “myth,” albeit one held by most U.S. policymakers. “Protectionism and World Politics,” International Organization 39:2 (Spring 1985): 239–40.Google Scholar

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12. Ibid., 165. The most well-known examples of this form of voluntary export restraint included a deal with Japan on automobiles beginning in 1981, import restraints on steel negotiated with the European Community in 1982, machine tool import restraints concluded with Japan and Taiwan in 1986, and the U.S.-Japan semiconductor arrangement of 1986.

13. For a discussion of the reasons for the growth in NTBs, see Ray, Edward John, “Changing Patterns of Protection: The Fall in Tariffs and the Rise in Non-Tariff Barriers,” Northwestern Journal of International Law and Business 8 (1987): 286–326.Google Scholar

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17. Baldwin, “U.S. Trade Policy Since World War II,” 23. Charles Lipson observes that “there has been some increase in protection and some decline in rule adherence. These changes are best understood as changes within the [trade] regime, not changes of the regime. … the trade regime may have weakened but it has not collapsed. Instead it has been quietly subdivided by a series of ad hoc solutions: VERs and ‘managed’ trade for some sectors, greater liberalization in others,” “The Transformation of Trade: The Sources and Effects of Regime Change,” International Organization 36:2 (Spring 1982): 439Google ScholarPubMed, 446.

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27. Ibid., 8.

28. Lipson, “The Transformation of Trade: The Sources and Effects of Regime Change,” 490.

29. Ibid. Arthur Stein notes a hegemon's efforts to maximize system-wide absolute economic gain through providing a larger share of the collective goods necessary to maintain openness ultimately comes at a cost to the hegemon's relative power capabilities. “The Hegemon's Dilemma: Great Britain, the United States, and the International Economic Order,” International Organization 38:2 (Spring 1984): 355–86.

30. For a discussion of the concessions made by hegemonic economic powers, see Ibid., 355.

31. Defense Production Act of 1950, 50 U.S.C. App. 2158 et seq.

32. 19 U.S.C. 1332 (1982 and Supp. IV, 1986).

33. See, for example, National-Science Foundation, National Patterns of Science and Technology Resources, 1984 (NSF Report 84–311); and W. C. Boesman, “U.S. Civilian and Defense Research and Development Funding,” Congressional Research Service, 23 August 1983.

34. 50 U.S.C. app. 5(b).

35. 50 U.S.C. 1701 et seq.

36. 50 U.S.C. app. Sections 2031 et seq. (1964) (terminated 1969).

37. The only other actions taken under Section 232, ot its predecessors, have resulted from government-activated national security investigations and have been confined to petroleum and petroleum products.

38. Owens, Mackubin, “Expand the Military-Industrial Complex? Yes—Preparedness Requires It,” Orbis 33:4 (Fall 1989): 541.Google Scholar

39. DOD's support for co-development of the FSX aircraft with Japan indicates that on occasion this view still predominates.

40. Ruggie, “International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order,” 399.

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42. Strange, “Protectionism and World Politics,” 234; Holsti, Kal, “Politics in Command: Foreign Trade as National Security Policy,” International Organization 40:3 (Summer 1986): 643–71CrossRefGoogle Scholar; Rosecrance, Richard, International Relations: Peace or War (New York, 1973).Google Scholar

43. Ibid., 236.

44. Ibid.

45. Ibid., 6.

46. Hirschman, National Power and the Structure of Foreign Trade, 8.

47. Stephen Krasner, “Trade Conflicts and the Common Defense: the United States and Japan,” 805.

48. Stuart Auerbach and John Burgess, “U.S. Foreign Debt Up 25% to $663 Billion in 1989,” Washington Post, 3 July 1990, C2.

49. W. F. Finan, Perry D. Quick, and Karen Sandberg, The U.S. Position in High Technology: 1980–86. A report prepared for the Joint Economic Committee (Washington, D.C.: Quick, Finan and Associates, October 1986).

50. Price, Lee, “Give Industrial Policy a Second Chance,” SAIS Review 6:1 (Winter-Spring 1986): 44.CrossRefGoogle Scholar

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52. Japan currently leads the world in the development of ten of twelve advanced technologies deemed critical to future economic prosperity, such as biotechnology, digital imaging, and superconductivity. Council on Competitiveness, Challenges 3:9 (July 1990): 2.

53. For example, in 1978 DOD initiated the Very High Speed Integrated Circuit program to reduce delays in getting advanced state-of-the-art integrated circuits into military applications because DOD reognized commercial application of semiconductor technology preceded military usage by as much as ten years. See Glenn J. McLoughlin and Nancy R. Miller, “The U.S. Semiconductor Industry and the sematech Proposal,” The Congressional Research Service, U.S. Library of Congress, 23 April 1987.

54. Mackubin T. Owens, “Expand the Military-Industrial Complex? Yes—Preparedness Requires It,” 539, 541.

55. Ibid., 539.

56. Gansler, Jacques S., “Needed: A U.S. Defense Industrial Strategy,” International Security 12:2 (Fall 1987): 50.CrossRefGoogle Scholar

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58. In 1989, the General Accounting Office concluded: “Although evidence of DOD's foreign dependence for critical items in certain weapons systems exists, it is impossible to measure the overall impact or extent of such dependence because DOD has no reliable system to identify foreign dependencies in parts, components, and technologies essential to defense production.” U.S. General Accounting Office, Industrial Base: Adequacy of Information on the U.S. Defense Industrial Base, November 1989, 2.

59. See, for example, U.S. Department of Defense, Bolstering Defense Industrial Competitiveness: Preserving Our Heritage, Securing Our Future, Report to the Secretary of Defense by the Undersecretary of Defense (Acquisition), July 1988, 327–29; Defense Science Board, The Defense Industrial and Technological Base, Final Report of the Defense Science Board 1988 Summer Study, October 1988, chap. 5.

60. Theodore Moran, “The Globalization of American Defense Industries: What Is the Threat? How Can It Be Managed?” paper presented at Georgetown University's School of Foreign Service, 10 October 1989, 1.

61. Owens, “Expand the Military-Industrial Complex? Yes—Preparedness Requires It,” 545.

62. Ibid., 24.

63. Ibid., 541–42. See also Gansler, “Needed: A U.S. Defense Industrial Strategy,” 52.

64. U.S. Department of Defense, Critical Technobgies Plan, 15 March 1989, ES-1.

65. Edward A. Olsen, “A Case for Strategic ‘Protectionism,’” Strategic Review 15:4 (Fall 1987): 66.

66. Moran, “The Globalization of American Defense Industries: What Is the Threat? How Can It Be Managed?” 19.

67. See, for example, Olsen, “A Case for Strategic ‘Protectionism,’ “66.

68. Gansler, “Needed: A U.S. Defense Industrial Strategy,” 46, 49.

69. Moran, “The Globalization of American Defense Industries: What Is The Threat? How Can It Be Managed?” 32.

70. Gansler, “Needed: A U.S. Defense Industrial Strategy,” 56.

71. See, for example, Paul Krugman, ed., Strategic Trade Policy and the New International Economics (Cambridge, Mass., 1986); Klauss Stegemann, “Policy Rivalry among Industrial States: What Can We Learn from Models of Strategic Trade Policy?” International Organization 43, no. 1 (Winter 1989).

72. Moran, “The Globalization of American Defense Industries: What Is The Threat? How Can It Be Managed?” 51.

73. See Long, William J., “Expand the Military-Industrial Complex? No—It's Unnecessary and Inefficient,” Orbis 33:4 (Fall 1989): 549–59.Google Scholar

74. Moran, “The Globalization of American Defense Industries: What Is The Threat? How Can It Be Managed?” 52.

75. 19 U.S.C. Section 1862(b).

76. 19 U.S.C. Section 232(c).

77. “Arrangement Between the Government of Japan and the Government of the United States of American Concerning Trade in Certain Machine Tools,” 16 December 1986 (mimeograph); “Arrangement Between the Coordination Council for North American Affairs and the American Institute in Taiwan Concerning Trade in Certain Machine Tools,” 15 December 1986 (mimeograph).

78. Machine Tool Domestic Action Plan, A Report to the President by the Secretary of Commerce and the Secretary of Defense, November 1980; see also “Administration Announces Import Restraints, Other Measures to Aid Machine Tool Industry,” International Trade Reporter 3:51 (24 December 1986): 1537.Google Scholar

79. The administration's decision not to provide formal relief under Section 232 was also influenced by the existence of a pending dumping case against bearings imported from Europe and Asia that was believed to offer the domestic industry a preferred venue for protection.

80. Pub. L. No. 100–418, 102 Stat. 1107.

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82. In addition, the Secretary of Commerce may request that the Secretary of Defense provide an assessment of the defense requirements of articles subject to investigation.

83. From 1981 to 1986, for example, foreign acquisitions of U.S. high-technology firms increased from an annual rate of approximately 30 to more than 130. Moran, “The Globalization of American Defense Industries: What Is The Threat? How Can It Be Managed?” 54.

84. CFIUS agencies include the Departments of Treasury (chair), State, Commerce, and Defense, the U.S. Trade Representative, the Council of Economic Advisors, the Attorney General, and the Director of the Office of Management and Budget. Other agencies participate as appropriate.

85. Executive Order 11858, 7 May 1975 (40 Fed. Reg. 20263).

86. Named after its sponsors, Senator J. James Exon (D-Neb.) and Representative J. Florio (D-N.J.), the provision amended Title VII of the Defense Production Act of 1950 by adding a new section, Section 721. 50 U.S.C. App. 2158 et seq., as added to by the Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100–418, 102 stat. 1107, 1425–26.

87. Under Executive Order 12661, the president designated CFIUS to conduct investigations under the statute and to report its findings along with a recommendation to the president.

88. Omnibus Trade and Competitiveness Act of 1988 Conference Report, House Report No. 100–576, 100th Cong. 2d sess., 20 April 1988.

89. The Report further advises that relevant factors include, but are not limited to, domestic production needed for projected defense requirements; industrial capacity and capability to meet national defense needed for projected defense requirements; the availability of human resources, products, technology, materials, and other supplies and services; and the control by foreign ownership of domestic industries as it affects the ability of the United States to meet its national security requirements. Ibid., 926–27.

90. 134 Cong. Rec. H2296 (daily ed., 13 April 1988).

91. 54 Fed. Reg. 29744 (14 July 1989).

92. Commenting on the committee's approach to defining national security, Stephen J. Canner, chairman and director of the Treasury Department's Office of International Investment said, the approach is “case-by-case, from the various perspectives of the interests of the agencies, and within the context of Exon-Florio, which says that we should define it broadly.” Martin Tolchin, “Agency on Foreign Takeovers Wielding Power,” New York Times 24 April 1989, D6.

93. Stuart Auerbach, “President Tells China to Sell Seattle Firm,” Washington Post, 3 February 1990, Al, 9.

94. Clyde H. Farnsworth, “U.S. Stops Acquisition by Japanese,” New York Times, 18 April 1989, Dl.

95. John W. Chierichella and Douglas E. Perry, “Foreign Investment in Defense- Related Companies,” Federal Contracts Report, 8 May 1989, 837.

96. “Bush Won't Block Swiss Electrical Deal After CFIUS Exon-Florio Investigation,” International Trade Reporter 6:21 (24 May 1989): 664.Google Scholar

97. Although willing to exercise this new authority, CFIUS has not established clear guidelines as to what foreign investments constitute a threat to national security. A recent Government Accounting Office audit of CFIUS concluded that given its case-by-case approach, the committee is not equipped to answer broad concerns about the impact of foreign investment on national security. U.S. General Accounting Office, Foreign Investment: Analyzing National Security Concerns, March 1990.

98. “National Security Review Process Sharply Criticized at House Hearing,” International Trade Reporter, 27 February 1991, 320.

99. See “Defense Department Task Force Will Urge Stronger CFIUS, Restricted Market Access,” International Trade Reporter, 14 February 1990, 227.

100. Joseph Dennin, “Getting a Transaction Past CFIUS: A Businessman's Guide to Exon-Florio,” International Trade Reporter, 22 March 1989, 375.

101. “National Security Review Process Sharply Criticized at House Hearings,” 320.

102. U.S. Congress, Congressional Budget Office, The Benefits and Risks of Federal Funding for Sematech, September 1987.

103. U.S. Congress, Office of Technology Assessment, U.S. Industrial Competitiveness: A Comparison of Steel, Electronics, and Automobiles, July 1981, 103–4.

104. Dorinda Dallmeyer, “National Security and the Semiconductor Industry,” Technology Review, November—December 1987, 55.

105. Peter Waldman and Eduardo Lachica, Wall Street Journal, 5 March 1987, 9.

106. Generically, semiconductors are any material with properties of both a conductor and an insulator, often enclosed in silicon. The specific trade dispute between the United States and Japan centered on EPROM and DRAM semiconductor chips. EPROM (Erasable Programmable Read Only Memory) chips permit the storage of frequently used information that the user may erase and replace with new information when necessary. DRAM (Dynamic Random Access Memory) chips store digital information that can be changed by the user and constitute the basic storage element in a computer.

107. Michael Borrus, James Millstein, and John Zysman, “Trade and Development in the Semiconductor Industry: Japanese Challenge and American Response,” in John Zysman and Laura Tyson, eds., American Industry in International Competition, 142–50.

108. SIA filed the unfair trade petition under Section 301 of the Trade Act of 1974. Specifically, the U.S. industry alleged that a number of structural elements in the Japanese semiconductor market, taken together, operate as “unreasonable” barriers to U.S. sales, and these elements have resulted from policies of the Japanese government. The unfair trade petition also asserted that the Japanese market barriers are inconsistent with U.S. rights under the GATT and with Japanese commitments made in 1983 to promote enhanced sales opportunities for U.S. companies in Japan. SIA Press Conference, 14 June 1985. The original dumping petition was filed by Micron Technology. The antidumping law, 19 U.S.C. section 1673, affords a domestic industry compensatory relief from injurious imports sold in the U.S. market either below their home market price or below the cost of production. Later that year the U.S. chip manufacturers launched a second round of dumping complaints against Japanese manufacturers, and, on 6 December 1985, the Reagan administration, in response to industry pressure, took the virtually unprecedented step of self-initiating a dumping investigation against Japanese chips.

109. See Inside U.S. Trade, 29 November 1985, 5.

110. Polsby, Nelson, Political Innovation in America (New Haven, Conn., 1984), 8.Google Scholar

111. Ibid., 158.

112. Goldstein, Judith, “The Impact of Ideas on Trade Policy: The Origins of U.S. Agricultural and Manufacturing Policies,” International Organization 43:1 (Winter 1989): 71.CrossRefGoogle Scholar

113. Martin Tolchin, “Twenty-two Critical Technologies Listed by White House,” New York Times, 26 April 1991, C7.