Spain outlines ambitious plan for its high-tech industries

Spain's National Development Plan for Electronics and Informatics (PEIN) is a highly ambitious undertaking, designed to propel Spain within five years to technological equivalency with the rest of the developed West. By using the power of the purse, stimulating demand through government-owned entities, protecting infant industries behind tariff barriers and by creating high-volume export-oriented sectors, the government intends to guide Spain to accomplish what it feels the marketplace could not accomplish on its own.

The plan proposes separate measures for microelectronics, consumer electronics, components, telecommunications, computers, defense electronics, industrial electronics, and "electronic medicine." It calls for changes in the laws on public entity purchases and on technology development, as well as for modifying the government structure to handle these sectors. Several of the proposed measures within the plan are autocratic in nature, and might lead to problems for Spain in the GATT and the OECD. Analysis of the plan

This article is based on an analysis prepared by the U.S. Consulate in Barcelona of the draft National Development Plan for Electronics and Informatics (PEIN--Plan Electronico e Informatico Nacional). Approved early in 1984 by the Council of ministers, the PEIN has been sent to the Cortes for debate and approval because of its importance.

The PEIN takes as its foundation the fact that in 1982, 58 percent of Spain's apparent consumption of computers and electronics was imported, and that productive capacity within the country should be raised dramatically, not only for internal consumption but also for export. The implicit philosophical underpinning of the plan is the strategic necessity to modernize Spanish industry, starting with the sectors where Spain is further behind, electronics and informatics. The four basic objectives of the PEIN are: 1) to increase Spanish demand for and consumption of electronic goods and services; 2) to increase the spanish value-added content of products offered; 3) to increase exports dramatically; and 4) to decrease dependence on foreign technology, by emphasizing Spanish research and development efforts.

The PEIN forecasts apparent consumption of electronic goods and services to grow by a cumulative 10.1 percent annually, reaching 690,000 million constant pesetas ($4.4 billion) in 1987 from 428,000 million pesetas ($2.7 billion) in 1982. PEIN objectives for exports are 35.7 percent cumulative annual growth in the same period to 203,000 million pesetas from 44,000 million ($1.3 billion), respectively (at one dollar equals 157 pesetas). The planned growth in productivity increase, expressed in percentage of GNP, is from 2.2 to 3.1 percent in real terms. Imports are expected to rise by an average of only 8 percent yearly to 360,400 million pesetas ($2.3 billion) by 1987, up from 245,400 million pesetas in 1982 ($1.6 billion). This would represent a significant decrease in the import growth rate experienced during the period 1976-82.

The instruments to be used to accomplish these goals include investment loans, export credits, adn R&D subsidies. In order to double production, cut the rate of growth of imports in half, and multiply exports fivefold, the PEIN estimate calls for financial ($955 million) over four years, although press speculation has it that the figure will be trimmed to 100,000 million pesetas ($636 million). Of the planned amount, approximately two-thirds will be earmarked for official credits for investment in both public and private firms at interest rates 3 percent below the rate presently offered by the Banco de Credito Industrial. Export credits totaling 62,000 million pesetas ($394 million) will be offered as well.

The remaining funds will support research and development projects, prototypes and software, under three different government commissions. These commissions will also develop a harmonized public sector purchase policy, set standards, determine Spanish content requirements in joint-venture arrangements, and rule on investment applications in the sector. The plan also calls for changes in duties and customs rulings on imported goods, software, and services, and for changes in labor laws. Reaction of the press

The Spanish trade press has reacted with cautious optimism to the PEIN, pointing out that it is by far the most ambitious of the industrial plans submitted to date, and that it remains to be seen whether Spanish firms will demonstrate the initiative and ability to change rapidly, which the PEIN would require. Six ministries insisted on having their views reflected in the PEIN, particularly on the matter of public sector purchases and on technological promotion. The members of the Spanish National Association of Electronics Industries (ANIEL) are overwhelmingly in favor of the PEIN, and were consulted throughout its preparation. They worry about the delay in implementation, adn the consequent delay in grants and subsidies they seek. One ANIEL source suggested to U.S. Embassy officers that without the PEIN, prospects for a viable national electronics industry within ten years in Spain would be virtually nil. Already, a number of suspension of payments cases (similar to U.S. Chapter 11 receivership) have brought that point home, particularly in the consumer electronics sector.

the PEIN could present major opportunities for U.S. firms in hardware, software, and services. Perhaps one-fourth of all near-term expenditures will be for goods and services from overseas, simply because Spain will be starting from a relatively small base.

This means potential sales of $1.1 billion for the firms most prepared to cooperate with Spain in the PEIN. Good prospects include: 1) electronic component production and test equipment and software; 2) integrated circuit design and manufacturing equipment and software; 3) teletext, telefacsimile and video text technology, and electronic teaching systems; 4) communications satellite technology and launch services; 5) fiber optics technology, data transmission systems, local network software and equipment; 6) sales of sophisticated components not yet manufactured in Spain; 7) services for pilot informatics programs in schools, municipal offices, courts, and for the Olympic Games of 1992; 8) services in software translation and adaptation; 9) technology in CAD/CAM; and 10) goods and services for electromedicine.

Unfortunately, a large number of negative aspects are present in the PEIN as drafted, including tariff and non-tariff barriers, potentially unfair subsidies to exports, and local-content requirements. For example, the plan proposes: 1) increased duties on imported electronics products competing with those manufactured in Spain; 2) increased certification requirements for imports (possibly a non-tariff barrier); 3) local content requirements; 4) obligatory exports; 5) countertrade; 6) export subsidies; 7) outright grants; 8) below market-rate loans; 9) "Buy Spanish" requirements for public sector firms and those taking advantage of private sector incentives; 10) obligatory maintenance contracts let to Spanish firms; and 11) directed export marketing requirements for multinationals manufacturing in Spain.

As the PEIN is prescriptive rather than descriptive, most of the negative features will not be firmly established until the publication of both the new law on public sector purchases, adn the appropriate modifications to Spanish customs and certification regulations. It is too early to say whether, for example, national content will be set by negotiation in each case, or by a set percentage in all cases. Reaction can be expected from the European Community, the OECD, GATT and other bodies, should these measures exceed code guidelines of the respective organizations.

The full text of the U.S. Consulate's analysis of the PEIN is available from the Office of Western Europe, Spain/Portugal Desk, Room 3043, U.S. Department of Commerce, Washington, D.C. 20230.

COPYRIGHT 1984 U.S. Government Printing Office
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