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A Catalogue of Worry for US IT Companies

Every year, the Office of the United States Trade Representative issues a National Trade Estimate. It serves as a comprehensive catalogue of the market barriers American companies face around the world. In a public filing this week, BSA has recommended that a slew of alarming, IT-focused barriers be added to the list.

As we highlighted in our recent Lockout report, trade barriers to IT products and services are on the rise in the world’s fastest-growing IT markets. They include onerous restrictions on procurement by government agencies and state-owned enterprises, manipulation of technology standards, overreaching security regulations, burdensome obstacles to cloud computing, and persistent tariffs. In practice, many of these barriers completely exclude foreign players from the market.

Persuading trading partners to eliminate these kinds of behind-the-border regulations is critical for the continued growth prospects of the US IT sector. Software companies now depend on overseas sales for roughly 60 percent of their business, for example — and that balance is likely to tilt even further in the years ahead. Consider that new PC sales in China now outstrip sales in the United States, and Brazil recently became the third-largest market for PCs, overtaking Japan. If foreign IT companies are locked out of these and other rapidly emerging markets, the impact will be felt widely.

Cataloguing trade barriers is an important step for US officials — but the ultimate goal is to remove them. Our Lockout report outlines a specific action plan for pushing back on the new wave of IT-focused protectionism through bilateral, multilateral, and regional trade discussions. It will require updating World Trade Organization frameworks, taking appropriate measures in new trade agreements such as the Trans-Pacific Partnership (TPP), and marshaling support for open markets in regional dialogues such as the Asia-Pacific Economic Cooperation forum.

We should employ existing trade tools wherever possible — and also consider where new ones may be needed. Opening overseas markets to US exporters is a key to spurring economic growth and creating jobs for America and its trading partners alike.

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