Protectionism in the computer services industry

Measures in many developed and a number of developing countries which affect computer services impede the movement of software and data across national borders. A frequently used measure is the requirement that data-processing functions have to be performed as far as possible within the country. Thus, transnational corporations may be required to maintain local data-processing facilities which could involve higher operating costs. There is a growing tendency in many countries to require that data files remain within the country rather than be transmitted to computers and computer banks located abroad. Other measures may affect access to government-controlled communication lines required for the transmission of data and the establishment of international computer networks. In some countries, foreign firms face a surcharge that is added to the normal leasing rates for communication lines. With regard to tariffs to be levied on imports of software, several developed countries have made efforts to establish workable valuation methods, involving a formula which would allow import duties to be levied on the value of the data. To date, tariffs have been confined to valuations of data communication hardware.