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U.S. domination is not really as sweeping as this picture might suggest. By the end of this year, direct U.S. business investment in European companies will amount to about $20 billion, which falls a long way short of hegemony. In no European country do U.S.-owned firms account for more than about 5% of total business. What upsets Europeans is that the American activity is concentrated in a few high-technology industries which powerfully shape today's economic life (such as oil, autos, chemicals) or promise to remold tomorrow's global environments (aerospace, electronics, computers). U.S. companies sell three-quarters of all computers in Europe. The oil industry is 40% U.S.-owned in Britain and Germany. U.S.-owned or -controlled companies account for a third of European auto sales, 35% of the British tire market, 40% of France's tractors and farm machinery, 70% of its sewing machines, 75% of its electrical and statistical machines, 90% of its synthetic rubber.
It was almost more than Charles de Gaulle could bear when he found that he could not sell France's famed Caravelle jetliners to Red China because they contain enough American electronics equipment to fall under the U.S. Battle Act against trading with the enemy. In the significant international balance-of-patent payments, the U.S. has a 5-to-l margin over Europe. At last count, the U.S. paid $45 million a year for European patents, but collected $251 million for U.S. patents. Theoretically, the Europeans could just sit back, manufacture under U.S. licenses and still make attractive profits (in fact, many firms do). But there is the matter of national pride and the fear of complete scientific and technical stagnation. The imbalance worries Washington because European resentment, whether justified or not, could lead to all sorts of international troubles.
Interlocking Causes
What causes the gap? Not a lack of continental brainpower. Europe's mastery of theoretical science and engineering remains impressive. Its scientists gave the world penicillin, autogiros, jet engines and radar. Most postwar advances in steelmaking originated in Europe. The British remain foremost in Hovercraft and vertical takeoff planes. Du Pont first produced Dacron under a license from Britain's Imperial Chemical Industries. But Europe flounders when it comes to 1) translating its laboratory discoveries into sophisticated hardware, and 2) organizing and marketing its achievements. Again and again U.S. companies, in addition to their own prodigious inventiveness, reap what Europe has sown. Britain boasted the world's first nuclear power stations, but in recent years it sold only two abroad, while General Electric and Westinghouse sold 15. The swing-wing principle of General Dynamics' F-111 fighter-bomber and the Boeing SST design were devised by a British aircraft engineer. In many ways, what Europe faces is not a technology gap but a management and money gap. Its interlocking causes run deep in European history, culture and institutions, but they can be summarized under several headings.