This chapter focuses on the policies regulating trade in goods and direct investment across national borders. It identifies the international context in which national trade policies are formed, in particular the GATT and OECD provisions regarding foreign investment review. It then examines Australia's foreign investment review policy. As high technology industry increasingly becomes a global activity, the trade policies of firms and governments are critical to the prospects for innovation. Yet neither the goals of policy nor their mode of implementation can be said to be unproblematic. Free trade is a rallying point today but it must not be forgotten that, while free trade might increase the sum total of innovation worldwide, countries are just as intent on securing a place for their local industry in the high technology economies and appropriating some of the benefits for their own regions.

FREE TRADE AND NEO-MERCANTILISM

This section identifies the free trade and neo-mercantilist currents running through contemporary trade policies. It considers their implications for the policies adopted towards both trade in goods and direct foreign investment.

GOVERNMENT POLICIES

We should begin by briefly elaborating these tensions in policy. National governments pursue strategies aimed at aiding high technology innovators to break into markets overseas, especially of course the lucrative large markets of the United States, the EC and Japan, but also the growing markets of the smaller industrialized and developing countries. This strategy may involve the pursuit on a multilateral or bilateral basis of open, liberal markets for goods, services and capital.