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• The Federal government must help create a worldclass infrastructure for the twenty-first century to support U.S. industry and promote commerce.

• The United States must develop a world-class workforce capable of participating in a rapidly changing, knowledge-based economy. This goal is addressed in the chapter entitled “Human Resources."

These initiatives will help ensure that technology remains our engine of economic growth, creating highwage jobs in the United States and improving the standard of living and quality of life for our people.

CREATING A HEALTHY BUSINESS ENVIRONMENT

The primary role of the Federal government in technology policy is to create a business environment in which the innovative and competitive efforts of the private sector can flourish. This role includes eliminating unnecessary legal, regulatory, and economic barriers to the development and commercialization of new technologies; assessing the impact of proposed laws and regulations on U.S. competitiveness; and developing new policies that foster innovation.

ECONOMIC POLICY. Fiscal policies affect the cost and availability of capital that firms need to invest in technology, product development, and manufacturing. By cutting the deficit and balancing the budget, government borrows less, freeing capital for these private sector investments. The Clinton Administration has made great strides in reducing the Federal budget deficit and has proposed a viable plan to balance the budget while maintaining our investments for the future in areas such as science, technology, training, and modern infrastructure. The Administration proposed permanently extending the research and experimentation tax credit in 1993 to provide an incentive for American firms to invest in the new technologies that will underpin tomorrow's products and services. The Administration continues to support the credit and has proposed working with Congress to extend it.

REGULATORY POLICY. The Administration has taken care to reform Federal regulations in a way that achieves goals in the environment, public health and safety, consumer protection and other areas with the lowest possible burden to businesses. The Administration has already instituted reforms that streamlined regulatory paperwork and eliminated unnecessary regulatory barriers. It has worked to ensure that regulations encourage, instead of stifle, the development of innovative technologies which can meet both public and business objectives.

For example:

• In 1993, President Clinton signed legislation amending the 1984 National Cooperative Research Act to reduce antitrust barriers to joint production ventures, offering U.S. firms a new way to cope with the escalating cost of establishing production facilities.

• In March 1995, the President and Vice President launched the "Reinventing Environmental Regulation" initiative to make environmental protection work better and cost less. The initiative contains 25 priority actions to both improve the existing environmental protection system and build the foundation. for a fundamentally new performance-based system. • In April 1995, the National Institutes of Health (NIH) dropped the "reasonable pricing" clause from its cooperative research and development agreements, a provision seen by industry as a significant barrier to partnership with NIH.

• With the passage of the Telecommunications Act of 1996, the United States took a bold step into the future. These reforms will unleash a wave of investment, creativity, and new technology that will spur growth, create jobs, and revolutionize our lives in ways we cannot imagine today.

TRADE POLICY. The Administration has also placed heavy emphasis on ensuring fair competition for U.S. technology products in international markets. Fair access to world markets is essential for most technologically innovative U.S. firms. Export controls on key telecommunication, supercomputer, and other products have been rewritten in ways that open billions of dollars worth of international markets to U.S. high-technology firms.

The North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) play critical roles in ensuring fair treatment for U.S. technologies in global markets. NAFTA creates the highest standard any international agreement has provided for protection of patents and other intellectual property. The Trade Related Aspects of Intellectual Property, an accord reached under GATT, raised the standard of protection for copyrights, trademarks, patents, industrial designs, and trade secrets for members of the World Trade Organization.

GATT also provides protection against foreign governments that attempt to give their companies an unfair advantage by directly subsidizing late-stage technology development. It ensures efficient operation of free international markets by permitting government support of industrial R&D only through the precompetitive stage of non-manufactured prototypes.

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The 1986 Federal Technology Transfer Act established the framework for partnerships between Federal laboratories and the private sector. In 1996, Congress gave private sector partners greater assurances about retaining the intellectual property rights from these partnerships. Federal agencies and their laboratories have worked diligently to make technology transfer to the private sector an integral part of their laboratory functions. These efforts have paid off. Today, 13 Federal agencies are engaged in more than 3,500 cooperative research and development agreements (CRADAs) with the private sector, an increase of 177 percent since 1992. Between 1992 and 1994, the number of licenses on Federal patents granted to industry nearly doubled, and licensing royalties paid to the Federal government jumped 77 percent to a record $24.5 million annually.

Federal laboratories have reached out aggressively to the private sector, forming alliances that allow industry and government to bring complementary assets to bear on research in areas of mutual interest. Although enabling and emerging technologies are the fundamental building blocks for future economic growth, individual companies may be unable to develop them in a competitive time frame (if at all) due to their high cost, high risk, and delayed returns on investment. Consequently, the Federal government

must share the burden of the applied research necessary to bring these technologies to market.

ADVANCED TECHNOLOGY PROGRAM. The Commerce Department's Advanced Technology Program (ATP) addresses the problem of developing enabling and emerging technologies by sharing the costs and risks with the private sector. ATP forms partnerships with companies and joint ventures that have the greatest potential for meeting the primary objective of the program: developing technologies to achieve broad-based economic benefits with high rates of social return for the nation.

While government provides the catalyst, industry conceives, co-funds, and executes ATP projects. Specific R&D projects are selected from proposals submitted by industry, and all awards are made through a competitive merit-based selection process that evaluates technical and business merit. Industry is also the source of ideas for particular technology areas that offer important opportunities for economic growth. These are multi-year efforts aimed at specific, well-defined technology and business goals. By managing groups of projects that complement each other, the ATP fosters synergy and, over the long run, can have a strong impact on the U.S. technology base and the economy.

The Advanced Technology Program has supported a number of near-term accomplishments.

The Auto Body Consortium (ABC): A 1992 ATP award catalyzed the formation of this partnership involving a group of eight small- and medium-sized automobile technology suppliers, together with Chrysler, General Motors, and two universities in the "2 mm Program." They have developed new manufacturing technologies, practices, and training techniques capable of controlling variations in the fit of automobile body parts to 2 millimeters about the thickness of a nickel- or less. The ABC technologies are not only effective, they are “agile" — readily adapted to other industries involved with the automated assembly of sheet metal parts. These technologies have been implemented at several assembly plants — already resulting in significant improvements in customer satisfaction scores.

Tissue Engineering, Inc., a Massachusetts company, received an ATP award for developing technologies at the leading edge of tissue engineering integrating advances both in cellular biology and textile manufacturing. The company has created "prosthetic tissue" manufactured like cloth for biodegradable implants. This project has already resulted in a whole new range of reconstructive treatments for dam

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aged periodontal, orthopedic, skin, and vascular tissues and created a line of early spin-off products for the research and testing markets.

Diamond Semiconductor Group (DSG) credits the ATP with helping the company attract outside development capital from Varian Associates for a prototype ion-implant machine for semiconductor manufacture. DSG and Varian Associates were able to announce, early in 1996, an "industry first" successful ion-implantation of a 300-mm wafer (the next-generation semiconductor wafer size) using the new technology.

Nanophase Technologies Corporation (Burr Ridge, Illinois), a small start-up company (two people), received an ATP award to develop an innovative process for producing ultra-fine ceramic and metal powders at the nanometer scale for applications ranging from skin-care products to high-performance engine parts. The ATP research enabled the company to attract support from major industrial organizations and venture capital firms, who furthered commercial development. The company has launched new products, and negotiated an agreement with Merck for international distribution of one early product. The company has opened the world's first facility devoted to commercial-scale production of nanocrystalline materials, and expects to employ several hundred workers within the next two years.

Accuwave, a 12-person California company, received a 1992 ATP award that enabled it to extend its new technology (which uses laser holography to "write" very high-resolution optical elements such as filters into the interior of crystals) to the rapidly growing fiber-optics communications industry. In 1994, the company introduced three new products that were early spin-offs of the ATP-sponsored technology: an optical network monitor, a wavelength standard, and a "wavelength locker." In 1995, Accuwave began selling these products to major telecommunications companies in the United States, Japan, and Europe. Since then, it has been developing a wavelength division multiplexing system based on the core results of the ATP project.

AERONAUTICS. Aeronautical research and technology play a vital role in promoting U.S. economic growth and national security. The challenges facing this $15 billion industry include growth in air traffic, demanding environmental standards, an aging aircraft fleet, and foreign competition. The continued safety and productivity of the nation's air transportation system and future U.S. competitiveness in aeronautics depend on national investments in aeronautical research and technology.

The jet fighter cockpit is one of the most complex workplaces for any human operator. Early WWI combat aircraft contained only the most basic flight instruments, but the number of controls and displays has risen dramatically over the years. Today, a combat pilot has to integrate a tremendous number of discrete pieces of information into a complete "picture" of the battlefield in order to successfully accomplish the mission. The next generation of cockpit technology will include Helmet Mounted and Wide Area Displays that will automate the data fusing process for enhanced battlefield awareness and aircraft operability.

To help meet these challenges, the National Aeronautics and Space Administration's (NASA) Aeronautics Enterprise identifies and develops high pay-off aeronautics technologies, and helps commercialize successful applications. This enterprise works closely with U.S. industry, universities, the Department of Defense, and the Federal Aviation Administration (FAA) to coordinate R&D investments and to ensure that NASA's technology products and services add value and are developed to the level at which customers can confidently make decisions regarding the applications of those technologies. Additionally, under the Space Act, NASA has established more than 3,500 partnerships with industry.

Other aviation innovations on the horizon include: • Information technologies that can dramatically decrease the time and cost of designing aircraft, reducing time to production by 30 to 50 percent. • The use of global positioning satellites, advanced computers and sensors onboard the aircraft, and a new generation of digital communication technologies to revolutionize air traffic control and lead to major improvements in air safety.

• New Air Traffic Management (ATM) technologies

emerging from NASA's research and jointly developed with the FAA will reduce en route flight restrictions by 90 percent and safely increase landing rates under low visibility conditions by 25 percent. Improved air traffic management can make a major contribution to energy efficiency and environmental goals. Industry estimates that airlines worldwide I will save as much as $5 billion annually in fuel and other costs when this capability is fully implemented in conjunction with other evolutionary improvements in air traffic management capabilities.

ARTNERSHIP FOR A NEW GENERATION OF VEHICLES. 1 the Partnership for a New Generation of Vehicles PNGV), seven Federal agencies and 20 national laboatories have partnered with the Big Three automoile manufacturers and more than 400 suppliers to chieve R&D goals in three areas: advanced manufaciring methods; technologies that can lead to nearerm improvements in automobile efficiency, safety, nd emissions; and research that could lead to vehicle rototypes with a threefold improvement in fuel effiency. These super-fuel-efficient family-sedan-size ehicles should cost no more to own or operate than oday's cars; offer comparable performance, roomiess, and utility; and meet or exceed all safety and missions standards.

PNGV has the potential to boost economic growth and meet important national goals. Because one in every seven jobs in the United States is automotive related, global competitiveness of this industry is extremely important to our economic well-being. PNGV will benefit the U.S. automotive industry by establishing manufacturing processes that are less costly and produce higher quality products. In addition to improving the competitiveness of the industry and preserving American jobs, PNGV aims to reduce our country's dependence on foreign oil and ensure a cleaner environment.

Significant progress has already been made toward PNGV goals. In 1996, each of the Big Three U.S. automakers produced a PNGV vehicle that demonstrated various "Supercar" possibilities. At the 1996 Detroit Auto Show, both Ford and Chrysler released their PNGV experimental concept cars - Ford's Synergy 2010 and Chrysler's Intrepid ESX. And in December 1996, General Motors introduced the industry's first electric car, the EV1, which incorporates a range of PNGV technologies.

In July 1996, PNGV and USCAR - the precompetitive research consortia representing Ford, Chrysler, and General Motors in the PNGV program — released the PNGV Technical Accomplishments report which details the significant progress of PNGV in fuel cell

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he Partnership for a New Generation of Vehicles is a cooperative effort between the Federal government and the utomobile industry to foster breakthrough technologies in personal vehicles. The goal is a production prototype vehicle capable 80 miles per gallon by 2004. The program has identified areas of technical potential to reduce vehicle weight by 40 percent, to ore than double energy conversion efficiency, and to lower aerodynamic drag and rolling resistance by up to 30 percent. This ord Synergy 2010, a new concept car exploring the technological frontiers, was unveiled in Detroit at the 1996 North American ternational Auto Show.

FUEL CELLS: CLEAN, QUIET POWER FROM HYDROGEN

Fuel cells are an emerging power generation technology for the efficient, economical, and environmentally acceptable production of electricity. Fuel cells produce electricity by oxidizing hydrogen, which is typically "reformed" from natural gas, coal gas, petroleum, or methane. Because there is no combustion, fuel cells create very little pollution and are extremely quiet. The combination

of high efficiency and environmental compatibility has made fuel cells an attractive alternative for electric power generation.

There is little dispute that automotive powerplants based on fuel cell technology have the potential to dramatically reduce tailpipe emissions. Partnership for a New Generation of Vehicles (PNGV) objectives call for a vehicle capable of driving 80 miles on a gallon of gasoline, and a number of advanced technologies are being considered to meet this difficult challenge. Among them are hybrid vehicles with compression ignition and gas turbine engines, and electric cars powered by fuel cells.

Because the United States has invested $200 billion in its gasoline distribution infrastructure, the recently announced fuel cells that can reform ordinary gasoline are a promising, if interim, development, in this technology. Fuel cell technology can also be applied to a broad range of heavy-duty applications including buses, ships, trucks, and locomotives. Considering that transportation represents more than one third of our energy budget, the potential market impact is tremendous.

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Transportation technologies are key in
the Administration's strategy for real-
izing energy security, economic, and envi-
ronmental goals. Long-term development
efforts include government-industry pro-
grams seeking breakthrough technologies
capable of increasing fuel efficiency, such as
this lightweight 50-kW fuel cell engine
being developed by International Fuel Cells
with the Department of Energy and Ford
Motor Company.

One example of Federal participation in the PNGV initiative is the Department of Energy's core research program on fuel cells at Los Alamos National Laboratory, which has concentrated on the basic and applied research necessary to bring fuel cell technology to the performance and cost levels required for widespread use in transportation. A major barrier to the use of fuel cells in passenger vehicles has been the cost of the platinum required for the catalyst to achieve high power densities. Research conducted at Los Alamos yielded a membrane that needs one-sixteenth the amount of this precious metal.

Another remarkable achievement of the PNGV collaboration is the development of an advanced largescale test stand by Allied Signal. This facility is capable of testing fuel cell stacks with outputs of more than 50 kW, and will allow designers to check system performance under a wide range of operating conditions, including pressure, temperature, flow rate, and humidity. This capability is critical to the development of fuel cells and is not otherwise available in the United States.

system development, advanced battery chemistries
and other energy storage devices, and new manufactur-
ing processes. Most recently, in January 1997, Chrysler
announced that it will develop a vehicle prototype that
uses PNGV-developed gasoline fuel cell technology.

HIGH PERFORMANCE COMPUTING AND COMMUNICATIONS. The Federal High Performance Computing and Communications (HPCC) Program observed its fifth anniversary in October 1996 with an impressive array of accomplishments to its credit. Throughout its existence, the HPCC Program has conducted long-term research and development in

advanced computing, communications, and information technologies, and in ways to apply those technologies to the missions of the participating Federal departments and agencies. The use of advanced information technologies across the Federal government and throughout the economy demonstrates the significant impact of the HPCC Program.

An exciting recent achievement of the HPCC Program was the development of computing technologies that can execute one trillion floating point operations per second. New computing and communications technologies can be used to conduct basic scientific research and to prototype solutions to large science and

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