U.S. GOVERNMENT PROGRAMS AND REGULATIONS THAT AFFECT THE MACHINE TOOL INDUSTRY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-01156R000300380006-8
• Release Decision: RIFPUB
• Original Classification: U
• Document Page Count: 15
• Document Creation Date: December 21, 2016
• Document Release Date: August 28, 2008
• Sequence Number: 6
• Content Type: REPORT

Approved For Release 2008/08/28: CIA-RDP85-011568000300380006-8 "
f s. :: ;..
~,
IV-1
IV. U.S. GOVERNMENT PROGRAMS AND REGULATIONS THAT
AFFECT THE MACHINE TOOL INDUSTRY
The U.S. Government has a number of programs and regulations that
affect the machine tool industry. A brief description of their
impact upon the industry's ability to meet emergency mobilization
requirements is discussed below.
_A. Trade Adjustment Assistance:
The U.S. Government is authorized by the 1974 Trade Act to provide
trade adjustment assistance to firms and workers that are adversely
affected by imports. Trade adjustment assistance to firms is
administered by the Commerce Department and assistance to workers is
administered by the Labor Department.
The Commerce Department, Office of Trade Adjustment Assistance has
determined that the machine tool industry is being injured by
foreign competition. Under the Commerce program, thirteen machine
tool firms have been certified as eligible for assistance. These
certified firms have received or are in the process of receiving a
total of $120,000 in technical assistance, and it is possible that
an additional $150,000 will be made available. The assistance
provided is to help firms diagnose their problems and opportunities,
and implement recovery strategies.
Under the Labor program, 56 petitions for trade adjustment
assistance were received between April 1975 and March 1983. As of
August 1983, the Department found that, in plants covered by seven
of the petitions, 516 workers had been adversely affected by
imports. In 33 of the petitions, the Department found that 2941
laid off workers had not been affected by imports as the primary
cause for their unemployment. Between April 1975 and March 1983,
the Labor Department paid $3.9 million in assistance to machine tool
workers.
Impact: These programs have a minimal impact in preserving overall
U.S. machine tool production capacity or in assisting the industry
in meeting mobilization requirements.
B. Export Promotion
The Commerce Department has cooperated with the machine tool
industry in a number of trade promotion activities. With the active
participation of the NMTBA, the Department completed machine tool
exhibits in Mexico, China, and Indonesia in 1983.
Impact: U.S. Government export promotion initiatives have had
negligible impact on the industry's ability to preserve or expand
capacity to meet mobilization requirements.
iy
 C. Export Controls
IV-2 ~,,,--.~ ~~..e..,:r~~.,
. :;
;.~ ..:
U.S. machine tool export controls are multilateral and are developed
in consultation with our COCOM partners. (COCOM is a non-treaty
voluntary export control organization that includes all the NATO
countries plus Japan minus Iceland.)'
Although controls are multilateral, member countries occasionally
have different interpretations of items on the COCOM list. In the
machine tool area, the U.S. may tend to be more conservative than
some other members. However, exact comparisons cannot always be
made because machine tools manufactured in different countries are
not always identified with precision and the COCOM list is subject
to individual country interpretation. There have been allegations
by the U.S. industry that other COCOM members allow machine tool
exports to Soviet Bloc countries which cannot be exported from the
U.S. The Commerce Department's Office of Export Administration
notes that these allegations usually lack sufficient information for
a follow-up investigation. Allegations that were investigated could
not be confirmed.
Impact: U.S. export controls are not a significant detriment to the
machine tool industry's ability to preserve or expand capacity.
D. Anti-Trust Laws
The Justice Department has informed us that "anti-trust laws are
unlikely to impede continuing structural change in the U.S. machine
tool sector through individual decisions to expand, merge, acquire
or divest operations; only mergers and acquisitions that
substantially lessen competition in some relevant market will he
~~
prevented. There are at present no pending Department of Justice
or federal Trade Commission suits involving the machine tool
industry.
Impact: U.S. anti-trust laws do not hamper the machine tool
industry's ability to make management decisions to preserve or
expand capacity.
E. Machine Tool Trigger Order Program (MTTOP)
To help meet national security requirements, the Federal Government
has in place the Machine Tool Trigger Order Program (MTTOP>. The
MTTOP is a cooperative effort between government and industry to cut
mobilization lead-times by speeding delivery of machine tools
essential to defense production.
 Approved For Release 2008/08/28: CIA-RDP85-01156800030~03~8i0006-8 '
IV-3 ~.~E~~~~9~t a determination as to whether the direct
defense, indirect defense and essential civilian machine tool
requirements for a three year global war preceded by a one year
mobilization can be met by a combination of domestic production,
inventories and reliable foreign supplies; and 2> in those cases in
-which requirements cannot be met by total available supply, a
determination as to whether imports are a principal cause for the
shortfall.
In order to perform this two part review, the following steps were
taken:
o Scenario: NSDD-47 was approved by the President on July
22, 1982. It states that. "It is the policy of the
United States to have a capability to mobilize industry in
order to achieve timely and sufficient production of
military and essential civilian material needed to
prosecute successfully a major military conflict, to lend
credibility to national strategic policy, and to respond
to national security emergencies." On the basis of this
policy directive, the Emergency Mobilization Preparedness
Board scenario for a three year war preceded by a one year
mobilization was selected as the basis for economic,
industrial mobilization, geopolitical and national
security determinations.'
o Requirements: Based on the above noted scenario, FEMA
generated machine tool requirements for the mobilization
year and each year of the conflict.
o Supply: In order to estimate total available supplies to
meet the projected requirements, DOC conducted.a survey of
domestic machine tool manufacturers-arfQ~~Tmporters to
determine- surge production capabilities and available
inventories. Machines held in reserve by the Defense
Department were also included as part of the domestic
supply base.
o Foreign Availability: An assessment regarding
availability of imports was made based on conditions
specified in the scenario and on inputs from the relevant
Federal agencies and departments.
A. Mobilization Requirements
The Federal Emergency Management Agency (FEMA) was tasked to provide
machine tool requirements to meet the needs of industry during the
~..! - y~ < ~ irk Y'. 1
t"Gjt `~zk:l
?b i.E'4~r ~ a-"
 Approved For Release 2008/08/28: CIA-RDP85-011568000300380006-8 ~ i~
scenario of a three year global conflict preceded by a one year
warning period, based on projected increases in defense expenditures
as well as production to meet required civilian needs.
The Department of Defense