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has also had a higher rate of population growth in the recent past than has been the case for most of the OECD countries.

I will defer to the Department of State on questions concerning the positions of other countries on the climate change issue.

The Department of Commerce believes that the primary instrument for transferring technology to the developing countries should be the private sector. It is the private sector that has developed and owns most of the technology involved, and U.S. private firms can expeditiously and efficiently accomplish the transfer process through commercial transactions. The U.S. Government can facilitate this process through its mechanisms for advancing international commerce. These include programs and agencies already established for export insurance, foreign investment guarantees, and export promotion.

The Department of Commerce has had an extensive export promotion program for over a quarter of a century. Pollution control equipment and equipment for the energy sector, which are particularly relevant for addressing climate change, have been key areas of focus for the export promotion program for many years and will continue to be so in the future.

Recent export promotion activities for environmental technology companies include, as an example, participation of two environmental technology companies as a part of an eight-American-company delegation in a 35-nation meeting of the Conference on Security and Cooperation in Europe—referred to as CSCE, which is in Bonn, Germany—for the purpose of educating delegates from Eastern Europe about free economics and the dynamics of American industry; and, two, we recently formed a United States-Mexico Environmental Business Committee in which 14 of our companies meet regularly with Mexican firms in the environmental field and with senior Mexican Government decisionmakers as well. These companies feel that technology cooperation with Mexico in solving its environmental problems makes good business sense.

Within the International îrade Administration, in the past 2 years we have organized exhibitions in Mexico and Korea and trade missions to Poland, Czechoslovakia, Bulgaria, Romania, Hungary, Korea, Hong Kong, Taiwan, Indonesia, Thailand, Singapore, and Mexico. Next week we will taking 12 companies on a 2 week mission to Bulgaria, Romania and Poland to facilitate their efforts to market technology.

In these missions, we schedule site visits, arrange for mission members to make technical presentations in a seminar setting, and visit appropriate ministerial level officials, and we arrange individual meetings—on the average, 12 to 15 of them-for each firm in each country that is visited with these types of end users or potential partners that have been requested.

With respect to the two exhibitions that I noted earlier, some 17,000 trade leads were generated for over 200 American companies; 187 agency agreements, and 32 licensing agreements were signed. Moreover, off-the-floor sales in these two exhibitions totaled over $18 million, and individual company projections of sales potential over a 1-year period aggregated $140 million. We think results of that magnitude demonstrate the value of the current trade development efforts.

We will continue to monitor worldwide developments in the environmental field. We will sponsor trade missions, exhibitions, and special types of events with increasing frequency as the world's concern for environmental protection matures.

I might also add that the International Trade Administration is currently undergoing a restructuring which will permit an increased emphasis on these export promotion efforts. Additionally, a large number of State and municipal governments in the United States have established trade promotion organizations that can assist in the transferring of technology. There are also several international organizations, such as the World Bank and the U.N. Industrial Development Organization, that can facilitate technology transfer as well.

Mr. Chairman, this concludes my statement, and a copy of the two DRI/McGraw-Hill studies that are completed to date for the Department will be made available, and a Trade Development Competitiveness Study that was recently completed on the United States will be provided to the committee for the record, and now I would be pleased to answer any questions after we have passed it on to Mr. Gruenspecht.

[Testimony resumes on p. 114.]

The prepared statement and attachment of Mr. Volcansek follow:]

TESTIMONY OF

Frederick W. Volcansek
Deputy Assistant Secretary for Basic Industries

International Trade Administration

U.S. Department of Commerce

BEFORE

The Subcommittee on Energy and Power
U.S. House of Representatives

Washington, D.C.

March 3, 1992

My name is Frederick Volcansek. I serve as Deputy Assistant Secretary for Basic Industries in the International Trade Administration, U.s. Department of Commerce. On behalf of J. Michael Farren, Undersecretary for the International Trade Administration, I want to thank you for the opportunity to comment on global climate change policy alternatives and the implications for the international competitiveness of u.s. industry.

Role of Department of Commerce in the Formulation of Global climate Change Policy

The Department of Commerce is involved in formulating the U.S. position on climate change and in analyzing the implications for the U.S. of alternative policies. The Department is represented in the U.S. government inter-agency groups addressing climate change, such as the OES Policy Coordinating Committee Working Group on climate Change (PCC), the Committee on Earth and Environmental Sciences (CEES), and in the senior policy level discussions chaired by the President's Science Adviser. The Department is also actively involved in the technical assessments taking place through the Intergovernmental Panel on climate Change (IPCC) and the negotiations on a Framework Convention on climate Change through the Intergovernmental Negotiating Committee (INC), for signing at the UN Conference on Environment and Development in June 1992. The Department has commissioned three major studies by DRI/McGraw Hill to assess the economic and trade competitiveness effects of multilateral measures to control emissions of carbon dioxide, one of the principal anthropogenic greenhouse gasses. Two of these studies have been completed and publicly released. The third study is under way and is expected to be completed this spring. These efforts are being directed and coordinated through the commerce Task Force on the Environment and Competitiveness which was established by Secretary Mosbacher in December 1989. The Task Force is composed of ranking officials in the major agencies of the Department

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the International Trade Administration, the Technology Administration, the Economics and Statistics Administration, the Economic Development Administration, and the National Oceanic and Atmospheric Administration. The Task Force has responsibility to coordinate the Department's efforts on environmental issues with trade and competitiveness implications. The climate change issue and proposals to mitigate climate change have been a major concern of the Task Force.

The Department has also been working with the FCCSET/CEES subgroups on Mitigation and Adaptation Resource Strategies (MARS), Global Change, and the Private Enterprise and Government International (PEGI) to act as a catalyst to encourage government and private sector researchers to work together collaboratively.

Additionally, the Department consults with the business community on climate change matters through the Industry Sector Advisory Committee on Energy for Trade Policy Matters, which considers climate change as one of the principal policy issues facing the energy industry. In order to gain better insight into the ramifications of this issue for the basic industry sector as a whole, members of my staff and I have interviewed executives of nearly 50 companies concerning the global climate change issue.

International Competitiveness Concerns for U.S. Industry

Economic studies carried out for the Department by DRI/McGraw Hill have shown that addressing climate change by only focussing on industrialized country carbon dioxide emissions would adversely affect u.s. international competitiveness. In 1990 the OECD countries accounted for 47 percent of global carbon dioxide emissions, with the former USSR and other Eastern European countries being responsible for 28 percent, and the developing countries for the remaining 25 percent, without consideration of deforestation. In the 1992 update of the IPCC 1990 "business as usual" scenario, including actions promised by OECD countries to reduce their emissions (Scenario IRS91b), total world carbon dioxide emissions more than triple from the current level by the year 2100. But the share of the OECD drops to 17 percent of the total, and that of the Eastern countries to 13 percent, while the share of the developing countries would rise to 70 percent. Even if OECD emissions were stabilized at the current level, global emissions under this scenario would still triple, due to the very large expansion in the emissions of the developing countries. Hence OECD action alone on carbon dioxide would have little effect on global net greenhouse gas emissions.

Accordingly the United States has suggested a comprehensive approach to global climate change including all countries and all sources and sinks of all greenhouse gases.

In furtherance of this approach the Department of has taken a unique initiative in order to help strengthen the competitive position of U.s. industry in this area. Many of the Federal laboratories are doing important research work in environmental areas and many projects are likely to have

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commercial potential. Last fall, the Committee on Earth and Environmental Services Working Group on Global Change, including the Department of Commerce and numerous trade associations • (including the u.s. Chamber of Commerce and the National Association of Manufacturers) sponsored a conference for the private sector presenting opportunities for cooperative research under the Federal Technology Transfer Act and the Cooperative Research and Development Act. As a part of such cooperative projects, the private parties could jointly share intellectual property resulting from the research and capitalize on the commercial implications of the work. The conference also provided the private sector participants with briefings on specific market opportunities for environmental technologies in Eastern Europe. The conference was attended by more than 200 representatives and introduced the participants to important new sources of technologies, as well as to attractive market opportunities. The PEGI group is also working to facilitate this initiative.

The opportunities for the commercialization of energy and environmental technologies will also be the focus of several of the ten regional conferences of the National Technology Initiative, which is being spearheaded by DOC, DOE, DOT, and NASA. Cost Effectiveness of u.s. Actions

The actions that the U.S. has proposed under America's climate Change Strategy, an Action Agenda, and the National Energy Strategy, and in recent INC negotiations, are cost effective actions that will reduce net greenhouse gas emissions and that are justified under the current state of knowledge concerning climate change. Our studies have shown that measures such as carbon taxes would be economically costly. For example, based on their assumed demand elasticities, these studies have shown that using tax measures to achieve a 20 percent reduction in 2020 in carbon dioxide would require in the U.S. a tax of $721 per ton of carbon in 2020 and would reduce U.S. GNP by 3.1 percent over a 25 year period. Even if adopted throughout the OECD these measures would be relatively more harmful to the U.S. economy than to those of many of our major foreign competitors.

Comparison of u.s. Ability to Reduce Greenhouse Gas Emissions with Abilities of other countries

Although a number of gases, including carbon dioxide, methane, CFCs, and nitrous oxide, may be contributing to the greenhouse effect, carbon dioxide accounts for about one-half of the current greenhouse gas emissions caused by human activity. Data are more plentiful on carbon dioxide sources than on some other sources. Consequently carbon dioxide has been a principal focus of analysis of greenhouse gas limitation policies. Fossil fuel combustion is the main source of carbon dioxide emissions.

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