We have reached a pivotal new phase in the information technology revolution. The biggest centers of growth for IT products and services are no longer established powers like the United States and Europe, but emerging markets such as China, India, and Brazil.
New personal computer sales in China already outstrip sales in the United States, for example, and Brazil recently became the third-largest market for new PCs, overtaking Japan. In fact, the four so-called BRIC countries (Brazil, Russia, India, and China) now account for a quarter of all PC sales globally, up from less than one-sixth just five years ago.
This shift should be good news -- a harbinger of long-term vitality for the global IT industry and the millions of jobs it supports. But a new BSA report shows how multinational technology companies are instead faced with a new wave of IT-focused trade barriers, which threaten to lock them out of critical emerging markets. Worse, the study finds that as these IT-focused market barriers take hold in places like China and India, there is a domino effect as other emerging economies are emboldened to impose protectionist measures of their own.
This trend has dangerous implications for the global economy -- for producers and consumers of IT alike -- at a time when we can ill-afford any new barriers to growth. BSA's report calls on the US, Europe, and other leading IT economies to press an eight-point trade agenda for the digital economy that removes IT-focused market barriers where they already exist and prevents them from spreading further.
The first challenge, however, is learning to recognize these IT-focused barriers, because they don't always look like traditional trade barriers. In some cases, they are couched as policies to promote innovation. In others, they are ostensibly to enhance security or advance other domestic priorities. BSA's study catalogues them in five groups, providing case studies for each one. The five categories include:
- Stacking procurement by government or state-influenced enterprises in favor of domestic products or IP, or biasing particular technologies or business models.
- 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.
- In addition to pernicious new forms of protectionism, there are tariff barriers that persist because the WTO's Information Technology Agreement doesn't cover many new technologies or key markets.
Download the full report for more detail, www.bsa.org/tradelockout (PDF).
This post was also featured on the Business Software Alliance's blog, BSA TechPost. The Business Software Alliance is a trade group that represents software makers against copyright infringement.