New Wave of IT-Focused Trade Barriers Locks Multinational Firms Out of Emerging Markets

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Jun 20, 2012, 09:00 ET

BSA study catalogues obstacles, calls for multi-pronged policy response

WASHINGTON, June 20, 2012 /PRNewswire-USNewswire/ -- A new wave of IT-focused trade barriers is locking US and other multinational IT firms out of many of the world's fastest-growing emerging markets, the Business Software Alliance reported today in a study it released on its blog, BSA TechPost (www.bsa.org/techpost).

The report finds that market barriers imposed by large emerging economies like China and India are not only inhibiting multinational companies' access to those markets, but also emboldening other emerging economies to follow suit by adopting protectionist measures of their own.

"We are seeing a domino effect," said BSA President and CEO Robert Holleyman. "Two years ago, we started seeing discriminatory 'indigenous innovation' policies in China. Now we see them in India, Brazil, and Indonesia, among others. It's a similar story with policies that limit companies' ability to offer cloud computing services across borders — we are seeing them start to take hold all over Asia and Latin America. Exacerbating the problem with this kind of IT protectionism is the fact that many of the trade barriers we are talking about are masked as policies to promote innovation, enhance security, or advance other domestic priorities. This makes them far more difficult to challenge using traditional WTO rules or trade remedies. We need a new trade agenda for the digital economy."

BSA's report catalogues five types of IT-focused market barriers, providing specific case studies for each one. They include:

Stacking procurement by government or state-influenced enterprises in favor of domestic products or IP, or biasing particular technologies.
Manipulating technology standards to bolster domestic firms and insulate them from foreign competition.
Invoking security concerns to block or tie up foreign IT products in red tape while giving advantage to local alternatives.
Inhibiting multinational cloud service providers with data-location requirements or restrictions on cross-border transactions.
Tariff barriers that persist because the WTO's Information Technology Agreement doesn't cover many new technologies or key markets.

The report calls on the United States and other leading IT economies to urgently pursue bilateral, multilateral, and regional trade agreements to combat these barriers. BSA proposes the following eight-point action plan:

Press trading partners to adopt transparent, nondiscriminatory government procurement policies.
Ensure that commercial procurement by state-owned or state-influenced enterprises is undertaken without government intrusion.
Use trade agreements to establish rules that promote market-led technology standards.
Establish clear rules allowing data to flow across international borders.
Strengthen IP protection and enforcement, and oppose market-access restrictions based on the location of IP ownership or development.
Enforce existing trade commitments and ensure that new trade agreements address IT barriers.
Expand the WTO's Information Technology Agreement.
Intensify bilateral engagement with key trading partners to promote best practices that spur innovation.

The report, titled "Lockout: How a New Wave of Trade Protectionism Is Spreading through the World's Fastest-Growing IT Markets — and What to Do about It," can be downloaded from BSA's blog, www.bsa.org/techpost.

About BSA

The Business Software Alliance (www.bsa.org) is the leading global advocate for the software industry. It is an association of more than 70 world-class companies that invest billions of dollars annually to create software solutions that spark the economy and improve modern life. Through international government relations, intellectual property enforcement and educational activities, BSA expands the horizons of the digital world and builds trust and confidence in the new technologies driving it forward.

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