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Global IT trade barriers threaten cloud, software providers

Kenneth Corbin | Aug. 2, 2012
Trade protectionism is hurting the tech sector.

An increasing number of countries, particularly those in emerging economic regions, have been erecting trade barriers that have restricted access to lucrative foreign markets for U.S. IT firms, software leaders warned on Wednesday.

The market-access restrictions have taken many forms, including government mandates supporting domestic companies, regulatory hurdles, tariffs and the manipulation of technology standards.

"Protectionism is not new, but the scale and the scope ... is unprecedented," said Robert Holleyman, president and CEO of the Business Software Alliance (BSA), a leading trade group representing the software sector. "The challenge we face is steep. It is particularly challenging in what should otherwise be the fastest-growing markets."

The BSA recently released a report, entitled " Lockout," enumerating various instances of market restrictions in nations such as China, India and Brazil, and has been working to raise awareness of the issue among policymakers.

In that spirit, the BSA convened a panel discussion here on Capitol Hill where Holleyman and other industry representatives argued that lawmakers and administration officials must consider the impediments to global trade that have hindered technology companies and the industries they serve as they hammer out new trade agreements or revise existing ones.

Also on hand was Rep. Kevin Brady (R-Texas), who chairs the House Ways and Means Committee's subcommittee on trade. Brady professed concern at the numerous instances of digital protectionism the BSA study outlined, warning, for instance, that restrictions on cross-border data flow threaten to roll back the gains in efficiency and computing capacity that cloud computing has achieved.

"I am troubled, as you are, to see that governments in several of these fast-moving markets are coming up with new ways to shut off world- leading IT products and services to promote their own companies," Brady said.

In August 2011, for example, authorities in Indonesia issued a draft amendment to that country's law governing electronic transactions that would require data service providers to establish a physical presence -- including data centers -- in the country. A similar provision described in the BSA report that is under consideration in Vietnam would establish new cross-border restrictions on IT services and require cloud service providers to set up shop within the country.

Alternatively, some countries, including China and India, have been establishing their own laws and policies that seem designed to circumvent global efforts to achieve consensus on open standards.

Chinese authorities, for instance, have undertaken an effort to modernize that country's standards which, in some cases, invites conflict with existing standards promulgated by groups like the International Organization for Standardization or the Internet Engineering Task Force.

"What we're seeing in some countries is actually an intrusion in the standards-setting process," said Cheri McGuire, Symantec's vice president of global government affairs.


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