Washington – High tech CEOs has called for the expansion of barrier-free trade and the immediate passage the Central American Free Trade Agreement (CAFTA). As part of the Business Software Alliance’s (BSA) CEO Initiative for the Future, the CEOs also released a new trade study emphasizing the vital contributions that the technology sector makes to the U.S. and global economies.
The CEO study, Trade in the Digital Age, outlines a number of recommendations for policymakers aimed at spurring greater innovation and continued economic growth.
According to the study, as much as 65 percent of revenues for leading U.S. high tech companies are now generated from sales outside the U.S. The paper outlines how outdated trade rules and continued software piracy will hinder growth for domestic enterprises around the globe. In the absence of barrier-free trade, U.S. high tech industry would be a fraction of its size and deliver only a portion of its potential, according to the study.
“Free trade globally is vital to the software industry. With economics dominated by fixed costs to create and sustain intellectual property, the larger the market, the more wherewithal we have for the R&D required to maintain our leadership,” said Greg Bentley, CEO of Bentley Systems, Incorporated. “Its importance is underscored by this new study. In 2004, compared to the increasing deficits generated in so many other sectors, packaged software generated a $21.5 billion trade surplus for the United States.”
“Beyond its direct trade benefits, however, global commerce in business software is also crucial to the continued growth of all other knowledge-based services, which depend heavily on software advances to prosper internationally. Likewise, it's crucial to the United States' trading partners with smaller domestic markets, which need free trade to foster their own software industries,” Bentley said.
Since 2001, the U.S. trade deficit has deepened at an average annual rate of 24.6 percent while the U.S.-owned software industry’s annual trade surplus has grown 6.3 percent per year. In 2002, the IT sector employed more than nine million people, contributed hundreds of billions of dollars in taxes each year, and added nearly a trillion ancillary dollars a year to the global economy, according to a 2004 IDC study.
“The high tech industry is leading global economic expansion and progress, but in order to achieve the full contribution of technology, trade rules must serve the unique requirements of the digital age,” said Dale Fuller, President and CEO of Borland Software. “We live in a world where technology accelerates change at an unprecedented pace; where software, global networks and instantaneous communication serve as the lifeblood for businesses and where business models evolve at a frequency second to none. Promoting fair and free global trade is vital to ensuring technology can continue to spur growth and innovation, and expand economic opportunities around the world.”
Losses due to software piracy also hinder free trade. The 2004 BSA/IDC study on software piracy found an increase from $29 billion to $33 billion in losses due to piracy, despite a one percentage point decrease in the piracy rate overall (35 percent in 2004 compared to 36 percent in 2003). “Piracy robs innovators of revenue for R&D and governments of tax revenues while deterring investment in new technologies and rapid dissemination of the latest software applications,” said Robert Holleyman, BSA President and CEO.
As part of its annual CEO Forum, the BSA CEOs will deliver letters to Members of Congress calling for the immediate passage of CAFTA. The CEOs will also encourage policymakers to make continued progress in global trade talks, including the current Doha round of trade discussions at the World Trade Organization (WTO).
“Policymakers must continue to expand our ability to engage new markets, while also ensuring trade agreements reflect the dynamics of the digital world in terms of services and electronic transactions, such as software downloads and applications,” according to Holleyman.
The trade study also calls on countries to take action on their own to open markets. This includes the elimination of market barriers by reducing tariffs, refraining from extending copy levies onto digital products, ensuring standards are open and aren’t used as a tool to manage competition and refraining from adopting procurement rules that limit a government’s ability to utilize the appropriate technologies for the right applications at market determined prices.
Trade in the Digital Age is the final installment of the CEO Initiative for the Future, announced last year at BSA's annual CEO Forum. In addition to today’s study, this project included a series of CEO-led initiatives on education, intellectual property protection and cyber security.
Source: LinuxElectrons
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