The world now invests nearly $4 trillion a year on information and communications technologies. This is propelling rapid evolution in the global economy, transforming everything from the way manufacturers manage their supply chains and retailers serve their customers, to the way doctors provide healthcare and police monitor crime statistics to improve public safety.
But capturing the maximum possible benefit from all this innovation — to spur growth, create jobs and improve people’s quality of life — will require modernizing global trade rules to promote rather than inhibit international sales and exports of the kinds of products and services that are powered by software, cloud computing and data analytics.
With major trade negotiations now underway in the Atlantic and Pacific — plus separate multilateral talks progressing on services and IT products — we have a historic opportunity to enact such an agenda and drive long-term growth in the digital economy. That is the main conclusion of a new report from BSA | The Software Alliance, titled, “Powering the Digital Economy: A Trade Agenda to Drive Growth.”
Highlighting the need for trade rules to keep up with technology innovation, the report catalogues examples of digital protectionism that have begun taking hold in critical markets from Europe to China and Brazil. The phenomenon has involved not just traditional trade barriers such as tariffs, but also novel restrictions on the flow of commercial data across borders; nationalistic technology-certification and standard-setting policies; and favoritism for local IT products and services in government procurement. Left unchecked, these policies will stifle innovation, inhibit digital trade and slow economic growth.
Any country that wants to compete globally in the information age must have a comprehensive digital agenda at the core of its growth and development strategy. It should include domestic initiatives from investing in education and skills training to developing IT infrastructure through broadband deployment and other means. But it is also essential to have a forward-looking trade agenda. Governments must recognize that walling off data in today’s networked world is both futile and ill-advised; no national economy can grow as fast in isolation as it can if it is connected with others.
Having served as the first chief US negotiator for intellectual property and innovation, I know firsthand the challenges involved in reaching agreement on difficult trade issues. But negotiators can succeed in laying the groundwork for broad-based growth in the digital age if they focus on three big priorities:
- First, trade agreements need to facilitate the growth of innovative services such as cloud computing. As part of that, we need rules that allow information to move freely across borders and prevent governments from mandating where servers must be located.
- Second, to promote innovation, trade agreements must secure intellectual property protections and encourage the use of voluntary, market-led technology standards instead of country-specific criteria that force companies to jump through different technical hoops every time they enter a new local market.
- Third, governments should ensure there are level playing fields for all competitors so customers have access to the best products and services the world has to offer. As part of this, they should be fully transparent in how they choose which technologies to buy, basing decisions on whether a product or service best meets their needs and provides good value, not on where the technology was developed.
There is precedent for navigating periods of change such as this in the global trade arena. Policymakers stood at a similar inflection point in the 1980s when they recognized the keys to growth in the coming decades would be intellectual property, services and foreign direct investment. With foresight and hard work, they updated trade rules in the Uruguay Round of multilateral negotiations to ensure commitments were in place to provide a check against protectionist impulses in those areas. Now, as governments pursue robust growth agendas for the digital economy, it is critical that negotiators modernize trade rules once again.