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TRADE WARS
Trade protectionism stifling IT sector: study
by Staff Writers
Washington (AFP) June 20, 2012


Big emerging markets led by China are increasing protectionist measures in the tech sector, hurting one of the most dynamic parts of the global economy, a US industry study said Wednesday.

The Business Software Alliance (BSA) report said the new trade barriers which discriminate against foreign information technology products and services are often disguised as measures to spur local innovation or to protect security.

The alliance said the trend is troubling because the developing markets are seeing the fastest growth in the IT sector but are shutting out a lot of goods and services from the US and Europe.

"These barriers -- in China, India, Brazil, and elsewhere -- are having a contagion effect, emboldening other emerging markets to impose protectionist measures of their own," the report said.

"The global scope of the problem poses immediate and long-term threats to the IT industry and the broader global economy. These threats cannot be overstated or ignored."

The report noted that new personal computer sales in China already outstrip those of the United States, and Brazil recently became the third-largest market for PCs, overtaking Japan.

Robert Holleyman, chief executive of the alliance, told AFP these measure often show up in government procurement, which is the largest source of IT spending.

"Governments are the single largest purchasers of IT products in the world, and we are concerned when we see some governments stacking the deck," he said.

The impetus for some moves has been China's so-called domestic innovation policy, which favors domestic firms, Holleyman said. This often affects products which may be made in China but whose underlying design is owned by a US firm.

"The existence of some of these policies in China provides a kind of safety net for other governments to think they will not be criticized if they adopt similar policies," Holleyman said.

He added that these policies "will not do what they were intended to do, they will not create innovation, they will allow home companies to be insulated from competition, and will only work in that one country."

The BSA report cited tariffs, technical standards, procurement and other policies in Brazil, Indonesia and Vietnam and "burdensome security testing" in India which keeps out many foreign firms.

In the growing area of cloud computing, the report said, a number of nations are locking out foreign companies in order to ensure that data centers are housed within their borders.

Holleyman said the US and Europe should press for open markets during bilateral discussions and within the World Trade Organization, encouraging more nations to sign the WTO agreement on procurement which opens up government bids to foreign competition.

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