With the government on an endless skirmish with nations around the globe, the captains of industry are a little anxious. Now one group has issued five recommendations for improving policy making, trade and national security. With the whys and wherefores, the CEO of the Information Technology Industry Council, Jason Oxman, joined Federal Drive with Tom Temin.
Insight by ProPricer: During this webinar James Woolsey, the president of the Defense Acquisition University, Frank Kelley, the vice president of the Defense Acquisition University and Michelle Currier, the professor of contract management at the Defense Acquisition University, will discuss the future of DoD contracting, pricing and acquisition. In addition, Michael Weaver, the professor of contract management at ProPricer will provide an industry perspective.
Tom Temin: Jason, good to have you back.
Jason Oxman: Tom, thanks. Good to be with you.
Tom Temin: Now, these ideas seem a little boilerplate. Are we really talking about Huawei and China and ZTE here and some of the rules we’re expecting from the DOJ if they ever get them out? Or what’s the basis for what you’re suggesting?
Jason Oxman: Well, certainly, that’s part of the discussion. But our idea here is to kind of broaden out the discussion and make it about principles to address legitimate national security concerns. So we’ve seen the US government very focused on addressing technology imported into the US from other countries and specifically talking about some companies you mentioned Huawei, ZTE, as a focus there. And, you know, the security interests of the US government are paramount. And indeed, the role of government is to ensure the national security of its citizens. So we don’t have any quarrel with the Trump administration taking on the issue of national security. What we’re concerned about is we want to make sure the analysis is risk based and specific to those companies and doesn’t broaden out to a point where we are banning trade, we are banning import of components from other countries. That’s the concern we have here. That’s why we think we need a principle based approach to national security issues,
Tom Temin: Because specifically with the supply chain issue, that is I guess the deadline for implementation of an NDAA provision is going to come and go without any actual rulemaking from DoD with respect to those Chinese companies in the supply chain of any of the Defense Department’s contractors. I think the absurd example of the extreme that could happen going around right now is if the company has Chinese made cameras in its parking lot surveillance that could rule it out of DoD contracts. Is that the kind of thing you mean by risk based decisions?
Jason Oxman: That’s right, we need to make this a fact specific risk based analysis. So a good example is the government does an analysis of Huawei and determines whether it’s appropriate for the government to buy equipment from Huawei. That’s a fact specific risk based analysis that incorporates national security interests that frankly, industry is not qualified to address. That’s the role of government to make those determinations. But as you noted, where that gets broader, and where we’re concerned is where we conflate together those specific national security interests applicable to perhaps one company. And we broaden that out and we conflate it together with economic interests, with trade interests, with policy interests, even with political interests, and we start talking about how we have to have these wide sweeping bans of importation or use of products from entire country’s entire regions. Or even worst case scenario, anything international. That’s what we don’t want to see. And that’s why we’ve proposed these principles to bring the analysis back down to earth, if you will, and make sure it’s that risk based analysis.
Tom Temin: And two of the principles seem related. The one is that effective national security requires technological leadership, it’s hard to disagree with that one. And that technological leadership in turn depends on economic openness. And there, you’re talking not so much with, say, Russia or I don’t know, or China again, but openness with countries that tend to share the same interest as the United States. And so what what is new there? What would you do differently than is going on now with respect to cooperation on technological leadership with friendly nations?
Jason Oxman: Well, that’s right. And that’s a concern of ours. As you noted, it is paramount importance that the US government protect US national security interests. You mentioned Russia. You mentioned some concerns with the way the Chinese government has done business. While we’re making good progress there. Iran as another good example of a country a risk that the US government has determined. But what we’re confused about, frankly, is the decision to deprioritize positive trade relations with the EU, for example, our relations with the European Union, strong ally, both as a bloc and individual nations. We’ve moved away from trade agreements and toward trade disputes. We’ve seen it with the UK although we’re starting to negotiate agreements there, we’re not there yet. We’ve seen it with other allies around the world. So as you noted, it’s really important that we focus those national security questions on legitimate national security risks, and don’t adopt this blanket worldwide approach where we are de emphasizing the global supply chain where we’re de emphasizing the importance of trade. You know, for US companies, 95% of consumers on planet earth live outside of the United States. It’s incredibly important that we address those markets. And of course, we have a global supply chain where companies from outside of the US manufacturer here in the US. US companies manufacturer outside the US that global supply chain works very well and we want to see it continue to.
Tom Temin: Interestingly, I was looking at Baldwin pianos, and they’re now made in China. They used to be made in Arkansas, not a high tech product, but still one of high value. And one of the principles that national security measures should focus on identified national security risks. Where do you think those ideas are at variance at this point? Where could they be brought closer together?
Jason Oxman: Well, I think the focus on national security risks has worked in the past issues raised related to Russia to Venezuela to Iran, even to China, in some circumstances have been addressed as national security threats and have been addressed by public policy addressing those risks specifically, but what we’ve seen happen and where it hasn’t worked out well is national security risk based policies can call out certain countries, but the overarching policy has to be country agnostic. You know, the specific enforcement actions are fine if they’re fact based. If we can work together with industry and government partnering to mitigate those risks, the problem that we have is the unintended consequences of those policies boiling over, if you will, from those risks into political issues into trying to advance trade interests into trying to advance economic policy by handicapping particular countries or particular regions. That’s that’s where we think it breaks down.
Tom Temin: And the idea of technological cooperation and economic cooperation with like minded economies. I mean, in some ways, it seems like there should be more technological innovation coming from countries that it doesn’t seem to come out of that much these days. I’m thinking of, you know, what happened to Japan industrial leadership, they were such pioneers in the 70s and 80s and even into the 90s, and Australia, you know, decent sized country and some pretty good engineering and science skills going on down there. What’s the thinking on that one?
Jason Oxman: Certainly it shifts over time. As you noted, we look at the television manufacturing industry, for example, it once upon a time it was in the US, and then it was in Japan. And then it was in South Korea, and then China, things like that do move. And countries specialize in various manufacturing expertise, the automotive industry, obviously important to Japan, and that’s spread worldwide as well. That’s a great example of our argument as to why the US should work in concert with like minded economies, you know, given the cross border flow of goods and services and data and the constant change in innovation, constant change in manufacturing. Obviously, we’ve seen a lot of manufacturing historically happen in China, but it’s also happening in India, it’s happening in Indonesia, it’s happening in Vietnam — so we want to make sure that our policies are mindful of the need not to write off entire countries or write off entire regions as part of that global flow of goods and services and data and manufacturing. Some things are made in the US, some things are made outside the US and that’s good, that’s a an important way that the global economy works.
Tom Temin: And who are all of these principles aimed at, to whom are you promulgating these ideas and what do you expect to happen as a result?
Jason Oxman: Our target audience for this effort is US policymakers. We want to make sure that as they protect national security interests of citizens, which again, is the most important responsibility of government, we want to make sure that the US government works with the industry. We’ve seen some executive orders come out of the administration that have come out as final rules as opposed to soliciting input from industry and working with industry to harness us technological leadership. We’re concerned about economic openness worldwide. Again, good move with the early stages of trade negotiations with China but more to be done. We need a trade agreement with the EU we need an agreement with the UK. We want to make sure that national security principles and supply chain rules that come out of the administration don’t handicap the ability of the US government and the US economy to grow through important trade agreements.
Tom Temin: And I guess without rendering judgment, good or bad and relative to other administrations, would it be fair to say that perhaps the policymaking of the current administration is maybe somewhat less consistent than we might have expected from earlier administration’s?
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Jason Oxman: Well, I think all administrations have pluses and minuses in their trade policies and economic policies. I think the Trump administration has spoken very clearly about the interest in and the need for robust trade agreements that are beneficial to the US and beneficial internationally. Prior administrations have negotiated trade agreements that have worked well. I think the hallmark trade success of the current administration is the US-Mexico-Canada agreement signed into law in January and in the process of being implemented, that’s a huge positive development for trade. So I think the Trump administration deserves a lot of credit for that. So our argument is not that this administration is better or worse than any other on trade. In fact, you can make the argument this administration has done more on trade than many prior administrations. Our argument is simply that we want to make sure that on these national security issues, that we don’t conflate them together with trade and economic policy issues, so that we in any way constrain our ability to continue to move forward on positive trade agreements.
Tom Temin: Jason Oxman is CEO of the Information Technology Industry Council — thanks so much for joining me.
Jason Oxman: Tom thanks, it was a pleasure.