Global trade rules have not kept up with rapid innovation in software-driven products and services such as cloud computing and data analytics.
This is according to a new report from BSA | The Software Alliance, titled "Powering the Digital Economy: A Trade Agenda to Drive Growth". To stop the spread of digital protectionism, BSA proposes a forward-looking trade agenda that enables digital commerce, promotes innovation and creates level playing fields for information technology.
According to BSA, global trade is going digital in the 21st century, propelled by more than $2 trillion in annual spending on information technologies and services such as mobile and cloud computing, big data and analytics.
This trend has far-reaching significance, not just for the IT sector, but for the world economy as a whole, as enterprises of all types and sizes capitalise on new ways to boost productivity, streamline operations and facilitate creativity and problem solving, which, in turn, spurs job creation and growth, it adds.
"Software-driven technologies are sparking transformative innovation throughout the economy and in all aspects of modern life. To capture the maximum possible benefit from these advances, governments need to foster rather than inhibit digital trade," says BSA president and CEO Victoria Espinel.
"We need modern trade rules that prevent new forms of IT-focused protectionism and ensure information can flow freely across borders. With regional agreements being negotiated in the Atlantic and Pacific, plus separate talks on services and IT products, we have a historic opportunity to craft the right trade agenda for the digital age," Espinel adds.
"Agreements that recognise the transformative impact of digital trade will empower enterprises of all sizes to innovate and grow, give consumers access to the world's best products and services, create jobs and improve quality of life," she says.
Digital protectionism
The report catalogues examples of digital protectionism that undercut the social and economic benefits of software-enabled products and services. Examples of these non-traditional market barriers include restrictions on the flow of information across borders, nationalistic technology-certification and standard-setting policies, and favouritism for local IT products and services in government procurement.
To spur trade in digital age products and services, BSA says governments must first modernise trade rules to reflect the realities of digital commerce as it is being conducted today. This requires facilitating trade in innovative services such as cloud computing, keeping borders open to the free flow of data, and preventing mandates on where servers or other computing infrastructure must be located, it explains.
Second, it says governments must promote the continued progress of technology innovation. For this, a trade agenda must secure modern intellectual property protections and encourage the use of voluntary, market-led technology standards.
Finally, BSA urges governments to create level playing fields for all competitors, saying this requires governments to lead by example. 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, it explains.
"Any country that wants to compete globally in the information age needs a comprehensive digital agenda that includes forward-looking trade policies," Espinel says. "Governments must recognise that walling off information in a networked world is self-defeating; no national economy can grow as fast in isolation as it can with solid trade relationships."
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