RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/45
14 July 1998
(98-2805)
Council for Trade in Services
COMPUTER  AND RELATED SERVICES
Background Note by the Secretariat
I. INTRODUCTION1. This note has been prepared at the request of the Council for Trade in Services.  It provides
background information on computer and related serv ices for discussion in the information exchange
programme of the Council. The note contains basic and general information on trade of these services
in order to facilitate further discussion of relevant issues and should not be considered exhaustive.
Computer services were not among the sectors separately addressed in the course of the Uruguay
Round sectoral testing exercise or its sectoral working groups and therefore were not the subject of
any previous background note.
2. Many of the sources of data and information drawn upon for this note deal with computer
services in the context of the information technology (IT) industry. At the core of the IT industry is
the computer industry, comprised of computer ha rdware, software, and computing services. Software
consists of both "packaged" (or standardized) and customized products and computer services are
defined generally as computer-related consultancy services. It became apparent, however, thataddressing computer services in isolation made little sense for two reasons:  as noted below, hardware
and software companies are significant suppliers of computer services, in competition with
independent services firms and due to the increasing interdependence of the various components of
the IT industry.  Depending on the source, the IT industry may also include electronics and
communications equipment, telecommunications services, and a variety of content-oriented
information services, including, those drawing upon broadcast and new multimedia technologies.
Moreover, little in the way of detailed information specific to computer services or on the individualsub-sectors subject to GATS commitments was available. Finally, since the various sources do not
apply a uniform definition of the IT industry nor necessarily of the activities counted among computer
"services", data presented from different sources is not directly comparable.   
3. All of the sources emphasize, however, the important linkages between the equipment,
software and communications components of the in formation technology market and developments in
the computer services sector. Strong demand for these services stems from evolving business needs
for the more efficient, electronic transaction processing, higher productivity, improved customer
service and for nearly immediate access to financial and other commercial information as businesses
seek to improve their global competitiveness. It is also rooted in increasing availability of reasonably
priced personal computers (PCs) for businesses and residential consumers in some markets, as well asthe network connectivity increasingly sought both at home and in the workplace.
4. The IT industry has grown out of a convergen ce of telecommunications , computer technology
and software as well as more content-oriented i ndustries such as broadcasting and publishing. The blend
can yield hybrid IT services difficult to categorize in to any particular sector. For instance, there may be a
fine line, if any, between certain on-line com puter services and value-added telecommunications
services. Some examples of IT services include el ectronic mail, electronic funds transfer and electronic
data interchange, electronic information services such as bulletin boards, online databases and CD-ROM
databases and computer consulting services such as  software development and systems integration. The
fast-growing and lucrative IT market has wrought head-on competition between the computer andS/C/W/45
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telecommunications services industries, offering c onsumers not only a wider va riety of technologies and
products but also attractive prices.  The IT industr y also includes companies which not only use, but,
more importantly, design, build and supply the mean s for electronic commerce.  Electronic commerce is,
after all, made possible by an assemblage of co mputers, networks, software, and related computer
services.
5. However, the very different histories of these converging sectors gives rise to concern that the
traditionally unregulated computer services industry could begin to face constraints that governments
apply to the often heavily regulated telecommunications and broadcast sectors.  The latter, despite
much of the deregulation under way, remain much  more subject to intervention than the computer
industry. In contrast to the telecommunications and media markets, the fact that the computer industry
developed in an open competitive environment is often credited with having driven its rapid growth.
As the industry has matured, however, some segments have shown a tendency to concentration inlarge companies. So while sector-specific regulation is nearly non-existent, competition authorities in
some countries have had an influence on the development of the computer industry and related
services.
6. While the GATS directly addresses the progressive liberalization of computer services and
other IT-related service sectors, it should be born in mind that the WTO agreements to eliminate tariffand non-tariff barriers on information and communication technology products are also of great
importance to these services.  The Information Technology Agreement and the Mutual Recognition
Agreements on conformity assessment are expected to  help reduce the cost of equipment essential to
trade in computer and other services.  They are also forecast to stimulate the growth of the IT industry
and electronic commerce generally, and computer services in particular.
II. DEFINITION OF THE SECTOR
7. The GATS Services Sectoral Classification List (MTN.GNS/W/120) includes computer
services as a sub-sector of business and professional services.  This sub-sector, designated 1B in the
List, includes 5 sub-categories:  a) consultancy services related to the installation of computer
hardware, b) software implementation services, c) data processing services, d) data base services, and
e) other.  These are more amply defined in the corresponding items of the Provisional UN Central
Product Classification (UNCPC), as illustrated in Figu re 1.  Two issues with respect to classification
that are worth noting include the relationship of the activities included under this sub-sector to
telecommunications services and their relationship to the creation and supply of computer software.
8. With regard to telecommunications, there would appear to be considerable overlap,
particularly as it is increasingly common for activities such as data base and data processing servicesto be performed and/or supplied on-line. First, the corresponding UNCPC entry for data base services
(844), while specifying that the services may be provided through a communications network,  states
that it explicitly excludes electronic data and message transmission services classed under UNCPC
7523. However, it is not apparent from the text whether the exclusion applies to some or all of the
activities listed under 7523, which corresponds to several of the value-added telecommunicationsservices in the GATS Classification List (h. Electronic mail, i. Voice mail, l. Value-added facsimile
services, j. On-line information and data base retrieval and k. Electronic data interchange). Moreover,
for telecommunications, the GATS Classification List in fact, applies a cross-reference to a UNCPC
computer services item - 843 data processing services - for its own item n (on-line information and/or
data processing).  Given the interplay between the two sector's listed activities, it may not be clearwhen telecommunications services, computer services, or both are being supplied.S/C/W/45
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Figure 1
Computer and Related Services: UNCPC Descriptions of the GATS Sectoral Classification List Entries
W/
120UN
CPCUNCPC description
Ba 841 Consultancy services related to the installation of computer hardware: assistance services to the
clients in the installation of computer hardware  and computer networks.
Bb 842 Software implementation services:  all services involving consultancy on, development and
implementation of software, and defines "software" as the sets of instructions required to make
computers work and communicate, which may include a number of different programmes
developed for specific applications (application software) and  situations in which the customermay have a choice of ready-made off-the-shelf programmes (packaged software), specificallydeveloped programmes for its requirements (customized software) or a combination of the two.
The sub-categories are:
8421 Systems and software consulting services:  services of a general nature prior to the development
of data processing systems and applications.  It might be management services, project planning
services, etc,
8422 Systems analysis services:  include analysing the clients' needs, defining functional
specification, and setting up the team, as well as project management, technical coordination and
integration and definition of the systems architecture
8423 Systems design services:  include technical solutions, with respect to methodology, quality-
assurance, choice of equipment software packages or new technologies, etc.
8424 Programming services: the implementation phase, i.e. writing and debugging programmes,
conducting tests, and editing documentation
8425 Systems maintenance services:  consulting and technical assistance services of software
products in use, rewriting or changing existing programmes or systems, and maintaining up-to-
date software documentation and manuals and specialist work, such as conversions
Bc 843/
8431Data processing services:  or "input preparation services" include data recording services such as
key punching, optical scanning or other methods for data entry
8432 Data-processing and tabulation services consisting of services such as data processing and
tabulation services, computer calculating services, and rental of computer time
8433 Time-sharing services: UNCPC states that there is no clear distinction between 8432 and 8433,
noting that computer time only is bought;  if it is bought from the customer's premises,
telecommunications services are also bought. Data processing or tabulation services may also be
bought from a service bureau.
8439 Other data processing services:  consisting of services which manage the full operations of a
customer's facilities under contract:  computer-room environmental quality control services;
management services of in-place computer equipment combinations;  and management servicesof computer work flows and distributions
Bd 844 Data base services:  all services provided from primarily structured databases through a
communication network. The UNCPC specifically excludes "data and message transmission
services"  which it classifies under telecommunications services (as 7523) and  excludes
documentation retrieval services classified as library services (as 96311)
Be 849 Other computer services:  services for which UNCPC lists two sub-categories
8491 Data preparation services: services for clients not involving data processing services
8499 Other computer services n.e.c.:  training staff of clients and other professional servicesS/C/W/45
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9. With respect to computer software, it would appear not to be covered in the existing
classification scheme. GATS sub-sector 1Bb, as  defined by UNCPC 842, refers only to the
"consultancy" services related to "development and implementation" of software. Several
uncertainties arise concerning where to draw the line between the software and services. It may be
assumed that packaged (or standardized) software is treated as a good, but are consultants, or otherprofessionals, hired by a firm producing packaged software covered by GATS mode four
commitments? Furthermore, when packaged software is supplied wholly on-line, an increasingly
popular practice, is it then a service rather than a good? It may also be the case that customized
software represents a service.
III. ECONOMIC IMPORTANCE OF THE SECTOR
10. The OECD Information Technology Outlook 1997  notes that the world IT market experienced
a series of structural changes from 1985-1995. Firs t, there was a downward trend in the relative
importance of hardware and a corresponding rise in software/services, which climbed from 47% to
52% of the world IT market, primarily due to gr owth in software. Second, PCs and workstations
became increasingly important, rising from 21% to almost 31% of the world IT market, while larger-
scale computer systems and mini-computers dropped from 30% to 13%.  These trends have led to
substantial growth in certain segments of the computer services market. As firms move tomicrocomputers, PC environments and packaged software, the relative importance of customized
software has declined. Meanwhile, the use of system integration services, which have become less
standardized, has grown. In addition, with the continuing trend in corporate reorganization, firms turn
increasingly to IT services and resort more freque ntly to consultancy services to facilitate their
adoption of the new technologies. Finally, outsourcing of information systems has become a commonelement of new corporate strategies, due to priority  placed on controlling costs. Outsourcing services,
once used mainly for large-scale computing, have realised market growth in many countries, having
been recast to accommodate the corporate shift to microcomputers and PCs.
Table 1
Access to internet and person al computers, by region, 1996
InternetEstimated Personal
Computers
Total hosts
('000s)Per 10,000
inhabitantsTotal users
('000s)Per 10,000
inhabitantsTotal ('000s) Per 100
inhabitants
Africa  107 1.4 684 9.9 2 985 0.6
America 10 882 139.2 24 435 315.6 113 093 15.9
Asia 1 043 3.0 9 210 29.1 38 608 1.3
Europe 3 622 45.7 13 455 169.8 72 864 9.6
Oceania 600 208.7 2 305 808.9 6 650 30.3
WORLD 16 253 28.1 50 089 91.9 234 200 4.7
Source: ITU, World Telecommunication Indicators, 1998
11. Also according to the OECD report, the global IT market in 1995 was estimated to be worth
nearly US$528 billion. Between 1987 and 1994, its growth  rate averaged nearly twice that of global
GDP growth and was particularly high in certai n Asian and South American countries. In 1994 OECD
countries accounted for almost 92% of the market, compared with nearly 94% in 1987.  This decrease
in share was captured mainly by Asia (excluding Japan). Markets outside Asia and the OECD area
remained with about a 4% share of the global total.  Although the world IT market is mainly
concentrated in the G7 countries, by 1995 countries such as the Republic of Korea, Brazil and ChinaS/C/W/45
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had markets that were comparable to or larger th an some European markets. On average, the market
growth in non-OECD countries is nearly double that in OECD countries.  With respect to IT
penetration ratio (market size as a percentage of GDP), countries such as Singapore are at levels
similar to some OECD countries. However, fairly low IT penetration ratios in parts of Asia
(e.g. China, India, Indonesia) and South America demonstrate a great deal of potential for growth. Forexample, in Argentina and Venezuela the growth differential since 1987 between IT markets and GDP
is among the highest in the world.
12. It is worth noting that, although the main suppliers and major markets are at present centred in
industrialized countries and certain high-growth indus trializing regions, the client base and emerging
opportunities for the IT industry are truly global.  For example, one company, Systems Union - a
subsidiary of SunSystems has established resellers in  nine African countries. It reports that its products
are in use in over 950 sites in Africa, which accounts for 7% of the firm's global revenue.  In this region,the company has seen market-growth opportunities in offering service to mid-sized businesses and
public sector entities.
13. Annual IT expenditure patterns in non-OECD count ries show that PCs and workstations as a
share of total IT spending grew at more than doubl e the rate recorded in OECD countries.  The OECD
report suggests that this reveals a bypassing by so me non-OECD countries of the older technologies --
traditional computer mainframes -- with a movement  directly into a predominant use of PCs and
workstations. However, non-OECD expenditures on pack aged software showed little growth, unlike the
OECD area which recorded  considerable growth in purchases of software as a share of all IT purchases.
With respect to services, the market in non-OECD countries is less advanced than that of other IT
segments, with the exception of countries like Singa pore, India, Brazil, Chile  and South Africa where
the well-developed industrial or servi ce sectors contribute to strong demand.
14. In the Asia-Pacific Region, the Asian-Oceanian Computing Industry Organization (ASOCIO)
estimates that the value of the IT markets in 1995 totalled US$154 billion, up from the US$132.4 billion
in 1994. This represented a growth rate of 16%, co mpared to a 14% in the global IT market. By 1995,
the Asia-Pacific IT market represented over 27% of  the world market, up from 23% three years earlier.
Reasons ASOCIO cited for high market growth mark et include:  rapid growth in the region's economies
contributing to a rise in the overall level of inve stment in information technology; increasing focus by
governments on setting up modern telecommunications networks and national information
infrastructures (and the institution of related e ducation programmes); the establishment of many
multinational companies who contribute to purchas es of both computer equipment and computer
services to support their corporate operations; and, finally, the continuing fall in the price of PCs
resulting in rapid growth in the consumer market s for computer and IT-related services.  In 1995,
Japan's IT market was the largest in the Asia-Pacific region, accounting for US$118 billion or nearly
77% of the regional market. Other Asia-Pacific c ountries combined accounted for 23%, of which the
Republic of Korea accounted for one-fourth, making it the second largest regional IT market, followed
by Australia with one-fifth of the total market excluding Japan. While low PC penetration in some
countries in the region results in lower market shar es, such countries are nevertheless experiencing high
growth in the IT market. For example, from 1994- 1995 the markets of India and Thailand recorded IT
market growth of 36% and 25%, respectively.S/C/W/45
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Table 2
Asia-Pacific Information Services and Information Technology Markets, 1993
(in million US$)
INFORMATION SERVICES INFORMATION
TECHNOLOGY1
Production
valueExports Export
ratioDomestic
market
valueGrowth
rateImports Import
ratioDomestic
market
valueGrowth
rate
Australia 1,534 195 13% 2,139 14% 800 37% 4,788 15%
India 655 340 52% 390 26% 75 19% 1,195 36%
Japan - - - 59,276 8% - - 89,448 -3%
New
Zealand456 45 10% 573 13% 162 28% 1,121 10%
Singapore - - - 444 17% - - 1,302 11%
South
Korea1,471 12 1% 1,665 32% 206 12% 4,458 20%
Thailand 120 1.1 1% 243 45%***123 50% 833 25%
1Hardware plus information services markets.
Source: ASOCIO Database
15. The world market for software and computing services in 1995 was worth nearly
US$312 billion.  Of this, the United States held th e largest share with 42%, followed by Western
Europe with 30%.  Japan held a 14% share of the world market. Estimates for 1997, place the world
market value at US$375 billion, representing 10% annual growth from 1995-97. However, the highest
growth, estimated at 18% annually from 1995-97, is outside the industrialized world, reflecting thestrong IT emphasis and growth in Asia. Eastern Europe's annual growth during the period is estimated
at 11%, although retaining a small market share 1997. The 1997 estimates show the market shares of
Western Europe and Japan falling slightly in 1997, to 29% and 13% respectively. Worldwide,
computing services accounted for 70% of the total software and computing services market in 1995.
In Western Europe and the United States computing se rvices are less significant relative to the world
average. However, in Japan and in the "rest of the world" computing services represented an 80% and
84% market share, respectively. Nevertheless, software was estimated to have grown faster thancomputing services from 1995-97 in all regions exception Japan.
Table 3 World Market Values for Software and Computing Services
(in million US dollars at constant 1994 exchange rates)
Total
1995% Share
software% Share
servicesTotal
1997% Share
software% Share
servicesAnnual
growth
1995-
1997
Western Europe 94336 37 63 107259 39 61 6.6
Eastern Europe 1766 37 63 2191 38 62 11.4
United States 129539 34 66 160377 36 64 11.3
Japan 45140 20 80 48044 20 80 3.2
Rest of world 40865 16 84 57163 23 77 18.3
World 311645 30 70 375031 33 67 9.7
Source: European Commission, Panorama of EU Industry '97S/C/W/45
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16. In 1995, the packaged software market in OECD countries was worth US$88 billion, or 94%
of the world packaged software market.  In relation to total IT expenditure, the OECD area spent more
on packaged software than non-OECD countries (19 and 11% respectively).  Packaged software was
one of the main contributors to growth in IT markets within the OECD area from 1987-95.  The
United States was the leading world market in 19 95, accounting for almost half the OECD market.
This represents, however, a decline from a U.S. share of 53% in 1987. The Japanese market followed
with its relative growth slightly higher than the OE CD average, due in large part to sustained demand
for PCs and growing markets for multimedia.  However, packaged software accounted for only 15%
of the overall software market in 1995, a share level that has remained fairly constant since 1990. In
Europe, markets in Netherlands, Germany, Greece and Portugal grew fairly strongly, while those in
the United Kingdom, Italy, Belgium, Finland and Sweden recorded slower growth. By 1995,
Germany had overtaken the United Kingdom to become the largest European market for packagedsoftware, attributable mainly to the de velopment of client/server applications.
17. The computer services market in the OECD area was worth US$161 billion in 1995 and, with
an annual growth rate averaging 10% since 1987, it is the second largest contributor, after PCs and
workstations, to overall IT market growth in OECD countries since 1994. The market has remained
extremely concentrated since 1987, some 90% of it in the G7 countries. The United States, by far thelargest market in terms of size, saw a slight decrease in its share (from 46.2 to 45.5%), while Canada's
and Germany's market share grew faster than the OECD average. Japan's share also rose slightly, but
due in part to currency appreciation. Mexico, Canada and Hungary experienced strong growth over
the same period.
18. In the United States, exports of computer and da ta processing services amounted to 3.1 billion
dollars, while exports of data base and other information services totalled 1.6 billion dollars. The
average annual growth in those exports was 12 per ce nt and 29 per cent, respectively.  High growth in
those exports, particularly for the latter, is a reflection of the recent expansion of electronic
information services such as on-line data base services.  Europe has been the largest overseas market
for U.S. exporters of those services, followed by Japan and Canada.  Growth in the Asia and Pacificregion (except Japan) was particularly high from 1995 to 1996.  The growth in imports of those
services was also high, but the value of those imports was still just above 10 per cent of  total export
value in 1996.  Growth in sales of computer and data processing services to foreign persons by
foreign affiliates of U.S. companies amounted to 23 billion dollars, a 21 per cent growth over the
previous year, while sales to U.S. persons by U.S. affiliates of foreign companies amounted to
3.5 billion in 1995, growing by 11 per cent from 1994 .1  This would seem to imply that for computer
and data processing services, at least, sales by affi liates tend to be far more important than direct sales
cross-border of those services, especially for overseas sales of U.S. companies.  It is reported that the
number of foreign affiliates of U.S. companies in computer services climbed from 97 in 1982 to 398 in
1993.  The vast majority of those computer servi ces affiliates were located in the OECD area,
particularly in Europe.  Over those twelve years,  employment in U.S. computer services affiliates
expanded by around 68,000 jobs, almost as many as in electronic components affiliates and more than in
computers and office machinery affiliates.  With regard  to sales of U.S. affiliates of foreign companies
in 1995, affiliates of European companies held more than 72 per cent of the total, while affiliates of
Canadian and Japanese companies accounted for 14 and 8 per cent, respectively.  (See Appendix
tables A1a-d).
19. The rapid market growth of the IT sector has led it to be a substantial generator of new
employment, and of skilled, well-paying jobs in particular, not only in industrialized markets but in
emerging markets as well. In the United States, shortage of labour with the necessary computing skills
has emerged, with, for example, the software industry alone producing 135,000 new positions in 1996
and U.S. universities graduating only 36,000 computer science students. Industry estimates assert that
one in ten such positions in IT companies lie vacant.   Consequently, competition in the U.S. market for
                                                     
1 No separate data were available for sales by affiliates of data base and other information services.S/C/W/45
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skilled computer professionals is expected to increa se labour costs in the IT industry by 35 to 50% by
the year 2000. In Western Europe, where it is es timated that over 16,000 software and services
companies employ over 300,000 persons and near ly 100,000 independent service providers engage
another 200,000 persons, computing skills shortages ar e exacerbated by a combination of the impending
introduction of the Eurocurrency and the need to adap t information systems to cope with the millenium
bug. Given these labour-demand characteristics, supply of computer and related services through the
GATS mode of movement of natural persons ta kes on a great deal of economic significance for future
sectoral growth.
IV. TRADE AND REGULATORY ENVIRONMENT
20. As noted earlier,  the IT environment was char acterized by computer mainframes until the early
1980s and thereafter it became one in which desk top computers or PCs prevailed.  In the 1990s,
however, there was a shift in emphasis to interconne cted computer networks drawing upon client-server
computing and open architectures like the Internet. The use of computer servers, the backbone of the
networked environment, is growin g rapidly to connect desktop com puters to networks with highly
sophisticated applications that depend not only on th e availability of appropriate hardware but also on
the computing services of software and related se rvice suppliers. As networked computing requires the
client and server computers, companies who alr eady have desktop computers in place are investing
more in servers and a variety of networking software . In efforts to accommodate this shift and the satisfy
the growth in  demand, IT companies are competin g fiercely to introduce new products and to reduce
prices. Indeed, 83% of firms responding to the 1996/97 Software Business Pr actices Survey conducted
by Price Waterhouse characterized businesses as their target market.
21. The most significant recent development in networked computing as demonstrated by its
dramatic growth, is the Internet, which is increasingly a commercial service, rather than  academic .  In
addition, intranets used by companies to enable employees to access a wide range of corporate
information, are growing briskly, w ith roughly half of the servers on the world wide web thought to be
intranets. Intranets afford ample business opportuni ties for IT companies. For example, 70% of the
software sold by Netscape is destined for intran ets and 30% for the Internet. The Internet is also
presently the principal vehicle for electronic comm erce.  Moreover, direct electronic commerce -- the
on-line ordering, payment and supply of services  such as computer software is increasing.
22. As a complement to off-the-shelf sales of so ftware, both direct and "mail-order" electronic
commerce are often used by the same company. Fo r the computer software and services industry,
already equipped with the requisite technical know -how, the appeal of the direct, on-line electronic
supply is undeniable and expanding constantly. Wh ereas "mail-order" electronic commerce depends on
such factors as the efficiency of transport or mail systems, the on-line supply of software enables the
firms in this industry to conduct end-to-end trans actions across borders swiftly and cost-effectively.
According to Software Business Practices Survey, 30%  of responding U.S. software companies said that
they used electronic distribution as one of the ways to deliver their products in 1995; the figure rose to
48% when asked whether they planned to use electr onic distribution in the co ming year. Also, 12% of
responding companies specified that they used electr onic means to deliver their products internationally,
while an even higher proportion (16%) of sma ller companies (revenue below US$1m) employed
electronic distribution. Regarding internet use, 43% of companies said that in 1995 they used it for
customer support and 37% used it for marketing, but ma rketing over internet took  the lead in the future
business plans of 63% of the firms, with internet for customer support also rising, but to 59%. While
17% of responding firms reported that they had used internet for sales in 1995, as many as 32% said
they planned to do so in 1996. Here, the largest companies (revenue over US$50m) showed greater
enthusiasm, with 21% having conducted internet sale s already and 41% anticipating use of internet for
sales the following year.
23. The software and computing services market c onsists of different types of companies with
particular, though not mutually exclusive, product specializations – hardware vendors, independentS/C/W/45
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software vendors and independent services compan ies. Independent software vendors accounted for
60% of the software products market as well as 84%  of the professional computer services market in
1995. Hardware vendors, as they traditionally integrat e systems software into a complete IT package,
accounted for 40% of the software market in 1995, t hough their share is falling. Meanwhile, hardware
vendors also participate in the provision of comput er services and accounted for 16% that market in
1995. Software companies' role in providing computer  services is also substantial. In the Price
Waterhouse Business Practices Survey, software firms reported that services, including the
custom/contract software (incl uding customization services), support and maintenance, systems
integration, training, and other consulting and pr ofessional services, taken together accounted on
average for nearly 45% of revenue.  Independent service companies normally focus on facilities
management, processing servi ces, IT consulting and training.
FIGURE 2
STRUCTURE OF SOFTWARE INDUSTRY
Products and Services Produced by other
Industries
↓↓
Equipment Manufacturers←                ←
Software Industry→ ↓
↓↓ ↓
Distributors Systems Integrators Value-added Resellers ↓
↓↓ ↓
Retailers→→
Business and
Government←←  ↓
         ↓ ↓
Households←← ← ←   ↓
Source:  Business Software Alliance, Building an Information Economy
24. As illustrated in Figure 2, various segments of the computer industry sell products both to and
through one another. For example, while 54% of U.S. companies (67% of the largest companies)
responding to the Software Business Practices Su rvey described their core business as packaged
software, 30% (34% for smaller companies) said thei r primary focus was customization of software and
12%, overall, (but 22 and 29%, respectively, of la rge and mid-sized companies) said they primarily
specialized in software being inte grated into hardware products. Another illustration of the cross-cutting
structure of the industry is the use of corporat e marketing alliances. Again, the Business Practices
Survey provides a number of examples. Nearly ha lf of the surveyed U.S. software firms reported
forming domestic market alliances.  Of these, they allied not only hardware manufacturers (30%) but
also with software developers (35%), consultants (32%), complementary software providers (30%) and
systems integrators (29%). About one-fifth of the fi rms reported forming intern ational market alliances.
These firms most commonly formed international al liances with systems integrators (28%), hardwareS/C/W/45
Page 10
manufacturers (22%), software developers (21%),  complementary software providers (20%) and
consultants (18%). Some firms also reported formin g alliances with  and internet access providers or
other on-line service providers (7-8% domestic and 4-5% international).
25. U.S. companies are major players in the softwa re market, especially for systems and horizontal
software.  European companies tend to focus on ver tical software solutions. In the desktop business
applications market, Microsoft holds a leading global market share, while Lotus Development
Corporation, recently acquired as an IBM subsidiary, records the second largest, though much smaller,
share and Novell ranks third.  The prominent U.S. positi on in the industry has been attributed to factors
such as: a large single market with over 60 million PCs in use; its large venture-capital market and a
stock-market dedicated to small, high-growth companies; and the Silicon Valley which groups together
many design firms and a host of other supplier and customer enterprises. Three U.K. firms are among
the world's top 50 suppliers -- Misys, JBA Interna tional and the Micro Focus Group. In Germany, the
two largest companies SAP AG and Software AG specia lize in client-server software. French companies
produce state-of-the-art programming tools but fo cus less on mass-market applications. Meanwhile,
Japan's share of the software market is small, except with respect to video games. Finally, due to
relatively high labour costs of software development, several software companies have established
presences in Eastern Europe and India to develop their products.
26. In computer services, proximity to the customer  is essential because the best way to clearly
identify market opportunities is through familiarity with cultural, administra tive and regulatory issues
which clients need to address. As a result, most service companies concentrate on regional and national
markets, implying that commercial presence, in vari ous forms, is an important mode of supply. Given
their flexibility, independent software companies are mo re successful in this regard.  They represented a
78% share of the market in 1993, compared with 22%  for systems vendors. In the professional services
segment, European independent software vendors he ld a market share of 63% in 1993 compared to 15%
for U.S. independent software vendors. Meanwhile, co mpetition in computing services is increasing, as
global hardware companies improve their skills at facilities management and systems integration and as
new networking and multimedia opportunities prom pt telecommunications and media companies to
enter the market for these services.
27. The fact that computer and related services face little or no sector-specific regulation, does not
mean that government policies and practices lack sign ificance for the sector.  On the contrary, a variety
of government measures have an effect on the growth and development of these services.  Relevant
areas include labour policies (work permits/visas, education and training), research and development
support, protection of intellectual property rights to address software piracy, technical standards, tariffs
on computer equipment, and government procurem ent of information services. In addition, recent
government initiatives related to the Global Inform ation Infrastructure (GII) or Global Information
Society (GIS) serve to stimulate demand for these services.  Moreover, as on-line supply of computer
services becomes increasingly commonplace, issues of  legal contract/software license enforcement and
many of the internet/e-commerce related concerns  such as authentification, encryption, protection of
individual privacy, and protection of  the consumer assume ever greater importance for the computer
industry.  This is because the computer services sector is not only well positioned to use the new
electronic means of commerce, but is also responsible  for creating the necessary software solutions that
makes it possible. It is probably true that effort s to improve global market access for computer and
related services will hinge less on traditional trade or regulatory barriers, than on consideration of a
diverse range of public policy issues.S/C/W/45
Page 11
28. The IT industry is concerned about the possibility of increased regulation both as a result of the
maturity of the sector and from convergence. There are, however, factors which argue against increased
regulation of the industry and which differentiat e it, for instance, from telecommunications. Most
importantly, the IT industry is highly competitive. Su ch competition can, in itself, obviate the need for
much of the kind of oversight applied to the te lecommunications industry characterized by monopoly
supply. Secondly, since the telecommunications industry itself is now experiencing widespread
deregulation, it would seem counterintuitive to, at th e same time, erect new regulatory constraints on IT
services. Thirdly, a need for public-interest re gulation typical of the telecommunications and
broadcasting sectors is much less evident in the IT industry. Nonetheless, the advent of computer-based
multimedia services has led to concerns on the part of  regulatory authorities in some countries. Industry
associations argue that convergence may not necessar ily imply the need for more regulation of computer
services. Rather, they maintain that, in some re spects, other sectors coul d learn from the computer
industry's experience thus helping to encourage and sust ain the deregulatory trends in the more regulated
IT sectors. Industry associations point out that the increased application of regulation to computer and
other IT services could stifle the innovation and gr owth that have served as a source of growth and
modernization of other sector s such as telecommunications.
29. In efforts to prevent what it calls "regulatory creep", the U.S.-based Business Software Alliance
(BSA) has described some pending regulatory initiati ves as threatening the health of existing software
products and services markets. It notes with concern an increasing focus of telecommunications
regulatory authorities on IT products and services, citing, for example, proposals to establish
government-mandated standards on communica tions software or to apply monopoly-era
telecommunications rate structures, local access f ees, or universal service contributions on Internet
access and other new data communications technologies, as having the potential to dampen demand for
software and services under development for the grow ing Internet applications market. Other computer
and software industry representatives are concerne d about the potential impact of greater regulation on
the incipient success and growth of business-to-bus iness electronic commerce, since, as noted above,
enterprises tend to be the industry's principal target  market. Noting that businesses are now beginning to
take advantage of many of the new computer-bas ed technologies, (for example, point to multipoint
broadcast is used in many business applications), industry representatives argue that the application of
new regulatory constraints on such services c ould disrupt on-line business already taking place.
30. Labour policies and the movement of natural persons:  Despite efforts in many countries to
encourage education and training programs oriented toward high-technology skills, shortages of skilled
labour remain persistent in the IT industry and are pr edicted to become even more acute. As a result, the
movement of natural persons is increasingly important as many firms seek to tap foreign markets toimport labour with the sought-after skills. Some companies have sought to alleviate labour shortages by
cross-border, often on-line, relationships contracted  with foreign computer service suppliers such as
software design or computer programming firms. This approach, while offe ring new opportunities for
developing countries, may not be sufficient, since some IT and co mputer industry associations are
urging their governments to ease restrictions on work permits and visas for foreign labour. However,like GATS commitments on most other service sectors,  those on computer services related to supply
through the movement of natural persons is constrained by limitations listed both in the sector and in the
horizontal section of schedules.
31. Research and development (R&D) incentives: R&D is one of the stages in bringing new
computer and software products to the market and th ere is widespread evidence that, while expenditures
on R&D for IT have declined somewhat, at least in OECD countries, the share of services suppliers in
IT R&D is increasing. Partly, this is because software firms are increasingly outsourcing R&D to
specialized firms and because research has become mo re and more essential in relation to new markets
created by technological convergence (e.g. multimedi a) for which a particular firm may lack the full
range of necessary expertise. Convergence has al so contributed to a trend toward conducting R&D
through alliances between firms in different segments of the IT market. As Table 4 illustrates,  the ITS/C/W/45
Page 12
firms spending most intensively on R&D as a propor tion of sales revenue, are among some of the most
notable global players.
Table 4. Top 10 IT firms by R&D intensity, 1995
(R&D/sales)
Company name Country R & D intensity (%)
Adobe Systems United States 18.2
Cray Research United States 18.2
Novell United States 18.0
Advanced Micro Devices United States 16.4
Lotus Development United States 16.4
SAP Germany 16.3
Ericsson Sweden 15.3
Northern Telecom Canada 14.8
Microsoft United States 14.5
Analog Devices United States 14.3
Source: OECD, Information Technology Outlook 1997 .
32. Government research and development (R&D) policies play an important role in the IT
industry, particularly because the industry tends to  be high-risk and to depend on short product cycles.
Some governments have prioritized R&D in the sector due to its role in generating economic growth and
employment and its contribution to improving access to  global information infrastructures. In addition,
some governments have designed research and deve lopment programmes with the aim of enhancing the
global competitiveness of their IT firms. As defe nce-related government-sponsored initiatives that
frequently promoted R&D in computer and related IT industries have declined in major markets such as
the United States, the industry itself has taken up a greater share of R&D expenditure. Nevertheless,
computer and software industry associations mainta in that government R&D incentives continue to be
important to their efforts.
33. Government procurement practices: Governme nts are important purchasers of computer
hardware, software and services.  While this is the case in almost all countries, in relative terms, it is
particularly true in markets where the private sector is less well developed. The use of IT services bygovernments is used to reduce the transaction costs a nd inefficiencies in the administration of a variety
of government social and public programmes. Fo r example, government procurement of IT and
computer services tends to be most significant in the areas of transportation, health, science and
education. It is also increasingly essential for go vernments' record keeping, fiscal and statistical
responsibilities and in relation to governments' economic activities as consumer, intermediary and seller.At present, however, the development of rules under GATS Article XIII on government procurement
remains under discussion.  GATS commitments and ob ligations do not extend to the procurement of
services by government entities.
V. ANALYSIS OF NATIONAL SCHEDULES34. An overall total of 62 GATS schedules (coun ting as one the EU 12 schedule) contain
commitments on computer and related services.  Of these, 52 commit on sub-sector (a) consultancy
services related to the installation of hardware, 57 commit on (b) software implementation services, 55
commit on (c) data processing services, 49 commit on (d) data base services and 30 on (d) "other"
computer services. Looking at the level of commitments for sub-services (a)-(d) as a whole (see Table5), the proportion of unrestricted, or full, mark et access commitments on cross border supply ranges
between sub-sectors from 60-63%, the proportion of full commitments on consumption abroad from 70-
76% and the corresponding range for commercial pr esence is 68-77% (but which falls to 29-33% when
horizontal limitations on mode 3 are taken into account).  The proportion of full commitments on market
access for presence of natural persons is lowest at 4-7% (falling to 2% when horizontal limitations are
factored in).S/C/W/45
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Table 5
Analysis of Market-access commitments on Computer and Related Services
(by mode of supply, as percentages of the number of schedules including each sub-sector)
No. of
Sched.Cross-borderConsumptio
n
abroadCommercial
presenceNatural
persons
FPN FPN FPN FPN
a.Consultancy  related to the
installation of computer
hardware52 63 13 23 73 12 15 77 21 2 6 90 4
b.Software implementation
services57 60 21 19 70 19 11 68 30 2 7 88 5
c.Data processing services 55 60 20 20 71 18 11 69 29 2 5 89 5
d.Data base services 49 63 14 22 76 14 10 71 27 2 4 92 4
e.Other 30 53 40 7 57 37 7 53 47 0 0 97 3
F: Full commitment (indicated by "none" in the market access column of the Schedule)
P: Partial commitment (limitations inscribed in the market access column of the Schedule)N: No commitment (indicated by "unbound" in the market access column of the Schedule)
Note: The figures in this table reflect only those entries inscribed under the computer services commitments in
the schedules.  It should, however, be borne in mind that entries made in the horizontal section of the
Schedule relate to commitments made in this and all other scheduled sectors.Percentages may not add up to 100 due to rounding
35. Reflecting the unregulated nature of these serv ices, the entry of sector-specific limitations is
rare, although (see Table 6) , limitations indicated in the horizontal section of schedules would of course
apply. Where sector-specific limitations are listed, they more frequently relate to commercial presence
and most of them concern the type of legal entity re quired and restrictions on the level of participation of
foreign equity. The sector-specific limitations liste d under presence of natural persons usually concern
quantitative limitations of the number of persons and are slightly more common in respect to sub-service
(a), consultancy services related to the installati on of hardware. "Other" market access restrictions also
are somewhat more common in respect to commerci al presence than to other modes of supply. For
cross-border supply and consumption abroad, the listing of limitations is much more rare, so what few
limitations appear in these modes consist of "other" measures.
36. No WTO Members have listed MFN exemptions specific to computer and related services.
However, given the importance of commercial presence and movement of natural persons, some ofthe horizontal MFN exemptions listed relating to  these modes of supply would have an impact.S/C/W/45
Page 14
Table 6
Analysis of the Types of Measures Listed in the 62 Schedules Containing Commitments on
Computer and Related Services
(in number of measures, by type of measure and mode of supply)
Mode Type of Measure
Sectors and Subsectors a b c d
a. Consultancy services related to the installation of computer CB - - - 3
CA - - - 2
CP 3 3 1
NP 4 - - 4
b. Software implementation services CB - - - 3
CA - - - 2
CP - 3 3 5
NP 3 - - 4
c. Data processing services CB - - - 3
CA - - - 1
CP - 1 2 4
NP 1 - - 2
d. Data base services CB - - - 2
CA - - - -
CP - 2 3 4
NP 2 - - 2
CB - 1 - 1
CA - - - -
CP - 2 1 1e. Other
NP - - - -
Mode of supply: (CB) Cross border supply (CA) Consumption abroad
(CP) Commercial presence (NP) Natural persons
Type of measure:(a) Number of natural persons(b) Type of legal entity(c) Participation of foreign capital
(d) Other market access measure
Note: The numbers of "Other measures n.e.c." is high bec ause a wide variety of the entries in the Schedules could
not be classified into one or the other of the distinct categories of  limitations used. In some cases, this was due to alack of specificity in the description of the measure, while in others, it was because the measure itself did notcorrespond to any of the categories
VI. Themes for further consideration
37. Definition of the sector
- Is the existing classification of computer and related services adequate? Would adjustments
be useful in view of areas of overlap with certain telecommunication services? Does it
already, or should it, cover customized software?  Does it, or should it, take into account
software which firms supply entirely on-line through electronic commerce?
- What is the status, in terms of the classification used, for commitments on the content element
of these services, particularly but not only data base services, which can be, for example,
financial, medical, educational, or with  the advent of multimedia, audio-visual?
- How does the definition of computer and related services relate to computer reservation
system (CRS) services, listed in the Annex on Air Transport?S/C/W/45
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38. Economic importance of the sector
- Are there other or more complete sources of information regarding the economic importance
of the sector, particularly for developing country markets, apart from those cited in the text?
Are there any sources of data to help better understand whether cross-border trade incomputer and related services is growing faster than sales by affiliates of these services, or
vice versa?
- How is the global structure of the industry changing?  What effects would recent mergers and
restructuring, including those among the computer industry and other "converging" industries,
have on the industry structure?  How will they affect competition in this industry?
- Would it be correct to assume that commercial presence and movement of natural persons are
presently the most important modes of supply for these services?  To what extent will the
increasing popularity of services operated and/or supplied on-line services enhance the
importance of cross-border supply?
- Given the high content of labour with technical, computer skills in the supply of those
services, do certain developing countries have comparative advantage in international trade of
these services? If so, would cross-border s upply and movement of national persons be
particularly important for these economies?
39. Trade and regulatory environment
- What measures have or are likely to have restrictive effects on trade in computer and related
services, particularly in relation to Articles VI and XIV?  What, most commonly, are the
underlying policy objectives? (Techncial standards, professional qualifications, privacy,
content regulation, etc) Do some Members apply sector-specific measures which this notemay have overlooked?
- What effect would various technological advances in computer and related technology (e.g.
use of internet, multimedia) have on the application or relevance of government measures?
- How important are the effects of horizontal restrictions on commercial presence (e.g. foreign
equity participation) and the movement of natural persons (e.g. labour with technical skills)on this sector?
- Are there particular issues, such as transparency, taxes or subsidies (including r&d
incentives), competition policy or government procurement or other, which might benefit
from further consideration in relation to trade in these services?
40. Analysis of national schedules
- What were the principal interests of Members in terms of the negotiation of commitments on
these services in the Uruguay Round?  Do Members  believe their computer services
providers have benefitted from the commitments taken, and how?
- Also during the Uruguay Round, to what extent were cross-cutting sectoral issues, e.g. with
telecommunications, audiovisual, or broadcast, important and, if so, what were the relevant
issues taken into consideration by delegations?S/C/W/45
Page 16
- While commitments made on these services are relatively comprehensive, what are the
prospects of measures used in the telecommunications or broadcast industries being applied to
these services, and how would the application of such measures relate to the commitments
made?
VII. POINTS OF CONTACT AND SOURCES OF STATISTICS
International or Regional
Asian-Oceanian Computing Industry
     Organization (ASOCIO)
Registered office:Yusei Gojokai Kotohira Building, 4th F1,
1-14-1 Toranomon,
Minato-Ku Tokyo 105, Japan
However, its "floating" Secretariat is located in
 the country or Region of the PresidentInternet: http://www.asocio.org/
European Information Technology Observatory
c/o VDMA
Lyoner Strasse 18D-60528 Frankfurt
Tel: 49/69/6603-1518 Fax: 49/69/6603-1510
Internet:http://www.fvit-eurobit.de/DEF-
EITO.HTM
European Association of Manufacturers of
Business Machines and Information
Technology
 Industry  (Eurobit)
D-60528 Frankfurt
Tel: 49/69/6603-1531 Fax: 49/69/6603-1510
Internet:  http://www.fvit-eurobit.de/
World Information Technology and Services
   Alliance (WITSA)
c/o ITAA
1616 North Fort Myer Drive, Suite 1300Arlington, Virginia 22209
Tel: 1 703-522-5055 Fax: 1 703-525-2279
Internet:  http://www.itaa.org/witsa.htm
Southeast Asia Information Technology
Organization (SITO)Australia
Australian Information Industry
 Association(AIIA)
P.O. Box 246, Deakin West
ACT 2600,Tel: 02 6282 4700 Fax: 02 6285 1408
Internet: http://www.aiia.com.au/
Bangladesh
Bangladesh  Computer Samity (BCS)
House # 2 – 2nd Floor
Road 32 (New), Dhanmondi
Dhaka 1209 Bangladesh
Canada
Information Technology Association of Canada
(ITAC)
Czech Republic
Asociace Pro Pora denstvi v Podnikani (APP)
Veletrzni 21
PO Box 44 - 170 01 Praha 7
NY 10019 Czech Republic
Finland
Information Technology Services Association
(TIPAL)Tekniikantie 12
FIN-0215 Espoo DC 20003 Finland
France
Syntec Informatique
3 rue Leon Bonnat
Paris 75016 France
Germany
Bundesverband Informationstechnologien
(BVITeV)
Adenauerallee 18-22
Bonn D 53113 GermanyS/C/W/45
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Greece
Federation of Hellenic Information Technology
   Enterprises
23 Lagoumitzi str
GR17671 AthensTel: (30) 9249540/1 Fax: (30) 9249542
E-mail: sepe@hol.gr
Internet: http://www.hol.gr/sepe/
Hong Kong
Hong Kong Information Technology
Federation601 Glenealy Tower
1 Glenealy, Central
Hong Kong
India
National Association of Software and Service
   Companies (NASSCOM)
#109, Ashok Hotel, Chanakyapuri
 New Delhi 110 021, India
Tel:+91-11-688-5474 _Fax: +91-11-688-5475E-mail: nasscom@nasscom.ernet.in_
Indonesia
ASSPILUKI
Indonesia Computer Software Associationc/o PT. SISINDOSAT
 Gedung Menara Thamrin, 15th Fl., JIMH
Thamrin Kav. 3
Jakarta 10340, Indonesia
Tel: +62-21-230-2812
Fax: +62-21-230-3817
Israel
Israeli Association of Software Houses (IASH)
Industry House - 29 Hamered Street
Tel Aviv 68125 Israel
Italy
Associazione Nazionale Aziende Service Info.
   e Telematica
Via Santa Tecla 4
Milano 20122 Italy
Japan
Japan Information Service Industry Association
(JISA)
17th Fl., TIME24 Bldg., 2-45, Aomi, Koto-ku,Tokyo 135-73 Japan
Tel. 81-3-5500-2610 Fax. 81-3-550-2630
E-mail: info@jisa.or.jp
Internet: http://www.jisa.or.jp/Malaysia
Association of the Computer Industry (PIKOM)
 25th Fl., Menara Tun Razak, Letter Box 18,
Jalan Raja Laut,50350 Kuala Lumpur,_Malaysia
Tel: +60-3-292-0297 _Fax: +60-3-291-1504
E-mail: pikom@po.jaring.my
Mongolia
Mongolian National Information Technology
  Association (MONITA)46/672, Ulaanbaatar, Mongolia
Tel: 976-1-32-9081  Fax: 976-1-32-4121
Morocco
L’Association des Professionnels de
   L’Informatique de la Bureau
Tour Atlas - 1 Place Zellaqua
Casablanca CO 01 Morocco
Netherlands
Federation of Dutch Branch Associations in
   Information Technology
Nepal
Computeter Associat ion of Nepal (CAN)
PO Box No. 956, Bagbazaar
Kathmandu, Nepal
Tel: 977-1-22-0773 Fax: 977-1-22-5407
E-mail: can@beltronx.wlink.com.np
New Zealand
Information Technology Association of New
   Zealand (ITANZ)
 Level 9, 108 Te Terrace, Box 1710
 Wellington, New Zealand
Tel: 64-4-472-2731 _Fax: 64-4-499-3318
E-mail: info@itanz.org.nz
Republic of Korea
Federation of Korean Information Industries
(FKII)
13th Fl., FKI Bldg.Yoido-dong, Youngdeungpo-ku
 Seoul 150-756, Korea
Tel: 82-2-780-0207 _Fax: 82-2-782-1266
E-mail: webmaster@fkii.or.krS/C/W/45
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Philippines
Philippine Software Association (PSA)
c/o Ayala Systems Technology Inc.
 3rd Fl., Ayala Life Building,,_Ayala Ave.
 Makati City, Metro Manila, PhilippinesTel: 632-813-2494 _Fax: 632-813-2493
Singapore
Singapore Federation of the Computer Industry
(SFCI)
71 Science Park Drive
NCB BuildingSingapore 118253
Tel : (65) 775 1927 Fax : (65) 778 4968
E-mail : sfcii@singnet.com.sg
Internet: http://www.asianconnect.com/sfci/
Spain
Asociacion Espanola Empresas Informatica
(SEDISI)
Sri Lanka
(FITIS)
Federation of the Information Technology
 Industry Sri Lanka
No. 5, Clifford Avenue
Colombo 3, Sri LankaTel: 94-1-573326 Fax: 94-1-574799
Thailand
The Association of Thai Computer Industry
(ATCI)
6th Fl., Payatai plaza Bldg.
120 Phayathai Rd.Bangkok 10400, Thailand
Tel: 662-216-5862 Fax: 662-216-5867
E-mail: atci@mail.bdg.co.th_United Kingdom
Computing Services & Software Association
(CSSA)
20 Red Lion Street  (see new map)
London
WC1R 4QN
Tel:  0171 395 6700 Fax:  0171 404 4119
United States
Information Technology Association of
America(ITAA)
1616 North Fort Myer Drive, Suite 1300
Arlington, Virginia 22209
Tel: 1 703-522-5055 Fax: 1 703-525-2279
Internet: http://www.itaa.org/
American Electronics Association
601 Pennsylvania Avenue, NW
North Building, Suite 600
Washington, D.C. 20004Tel:  202-682-9110 Fax: 202-682-9111
Email:research_analysis@aeanet.org
Business Software Alliance
1150 18th StreetSuite 700
Washington, DC 20036
Tel: 202-872-5500 Fax: 202-872-5501
Email: software@bsa.org
Internet:  http://www.bsa.org
Zimbabwe
Computer Suppliers Association (COMSA)S/C/W/45
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REFERENCES
Asian-Oceanian Computing Industry Organization, ASOCIO News Letter , 1997 and 1995 Editions at
http://www.asocio.org/newsmenu.htm.
Asian-Oceanian Computing Industry Organization, ASOCIO Database , at http://www.asocio.org/
dbmain.htm.
Australian Information Industry Association, Agenda for Growth: Building the IT&T Industry in
Australia , at http://www.aiia.com.au/4a4growth.html.
Australian Information Industry Association, Self-Regulation in the In formation and Communications
Industries,  Submission to the Select Committee on In formation Technologies, February 1998, at
http://www.aiia.com.au/4submission.SelfRegulation.html.
Australian Information Industry Association, AIIA Response: Regulatory Framework for On-line
Services , Version 1.0, 12 August 1997.
Business Software Alliance, Building an Information Economy: Sof tware Industry Positions U.S. for
New Degital Era , June 1997, c. Business Software Alliance, 1997.
Business Software Alliance, "Consequences Of C onvergence: Why the Software Industry Cares about
Telecommunications Policy" c. Business Software Alliance, 1998.
Business Software Alliance, "E-Commerce: Policy Principles Developed by  Members of the BSA on
Critical Issues Facing the Future of Electronic Co mmerce" Study released by the Third Annual Business
Software Alliance CEO Forum ,  June 1998.
CSSA (UK), The State of the IT Nation: A CSSA Survey, at
htp://192.129.23.97/home/indus try/it/state.htm.
European Commission, "Information Society" in Panorama of EU Industry 97 , Volume 2, c. ECSC-EC-
EAEC. Brussels, Luxembourg, 1997.
European Commission,  "A European Initiative in  Electronic Commerce", Communication to the
European Parliament, the Council, the Economic and Social Committee and the Committee of the
Regions, COM(97) 157, 15/04/97
European Information Technology Observators, EITO  98: The Technologi cal Evolution of ICT and
Standards ,
"The Global Internet 100 Survey 1998, Special Report"  Information Strategy , June 1998.
International Telecommunication Union, World Telecommunication Development Report/ World
Telecommunication Indicators 1998, c. ITU, Geneva, March 1998.
ITAA, Procurement Reform and Info rmation Technology Funding.  at http://www.itaa.org/informat.htm.
ITAA, Human Resource Issues.  at http://www.itaa.org/laborand.htm.
Organization for Economic C ooperation and Development, Information Technology Outlook 1997 , c.
OECD: Paris, 1997.S/C/W/45
Page 20
Mann, Michael A., Daniel J. Athert on, Larua I Brokenbaugh and Sylvie E. Bargas, "U.S. International
Sales and Purchases of Private Services", Survey of Current Business , U.S. Department of Commerce,
Vol.77, No. 10, October 1997, pp. 95-138.
Ministry of International Trade and Industry, Japan, Towards the Age of the Digital Economy  (Draft),
May 1997.
Murray, Peter and Andrew Myers,  "The Facts About Knowledge",  Information Strategy , June 1998,
Ungerer, Herbert, "EU Competition Law in th e Telecommunications, Media and Information
Technology Sectors", Speech to Fordham Cor porate Law Institute, 22nd Annual Conference on
International Antitrust Law & Policy, Fordham Un iversity School of Law,  New York City, 27/10/1995
United States Department of Commerce, U.S. Industry and Trade Outlook 1998 , Chapter 26.
Information Services and Chapter 28. Computer Software and Networki ng. Washington, D.C. 1998.
United States Depart ment of Commerce, The Emerging Digital Economy , Washington, D.C. April 1998.
Bureau of Economic Analysis, United States Department  of Commerce,  Survey of Current Business ,
Vol. 77, No. 10, October 1997.
Price Waterhouse, ITAA and Mass achusetts Software Council, 1996/97 Software Business Practices
Survey,  electronic publication at http://www.ita.org/PWTABLE.htm.S/C/W/45
Page 21
APPENDIX
Table A1a
U.S. Computer Services Transactions with Unaffilliated Foreign Persons 1996
Computer services sector/subsector          (billion U.S. Dollars) Exports Share
All computer services, total receipts 4.7 100%
Total computer and data processing services  3.1 66% 100%
Data entry, processing and tabulation 1.8 58%
Systems analysis, design, engineering and custom
programming0.4 13%
Software royalties and license fees 0.4 13%
Integrated hardware/software systems 0.3 10%
Other 0.2 6%
Total data base and other information services 1.6 34% 100%
Business and economic data base services 1.2 75%
Miscellaneous data base services 0.1 6%
Other 0.3 19%
Tables A1a-A1d:  Source: USDOC, Survey of Current Business
Table A1b
U.S. Computer Services Transactions with Unaffilliated Foreign Persons: Comparison with
total receipts for business and professional services and all private services, 1986-96
 (million U.S. Dollars)Exports
1986 1991 1996Average/
annum
growth
1986-96
Total private services 77 167 152 413 221 234 11%
Total business and professional services 4 426 11 249 19 247 16%
 - Computer and data processing services 985 1 738 3 142 12%
 - Data base and other information services 124 442 1 629 29%
Imports
Total private services 66 421 102 671 143 086 8%
Total business and professional services 1 263 2 785 6 253 17%
 - Computer and data processing services 32 116 334 26%
 - Data base and other information services 23 51 174 22%S/C/W/45
Page 22
Table A1c
U.S. Computer Services Transactions* with Unaffilliated Foreign Persons,
by Country or Region, 1993/1996
(million U.S. Dollars) Exports Imports
1993 Share 1996 Share 1993 Share 1996 Share
All countries 3 002 100% 4771 100% 414 100% 508 100%
Africa 51 2% 109 2% ** - ** -
Canada  306 10% 442 9% 25 6% 48 9%
Other Americas 216 7% 354 7% 15 4% 14 3%
Europe 1 413 47% 2 245 47% 318 77% 315 62%
Japan 391 13% 625 13%  17 4% 75 15%
Other Asia & Pacific 460 15% 813 17% 33 8% 48 9%
Middle East 154 5% 124 3% ** - 2 -
Int'l Orgs.+ other 11 - 18 - 8 2% 7 1%
* Combined figures for "computer and data processing" and "data base and other info services"
** Less than US$500,000
Table A1d
Sales of computer and data processing services by U.S and Foreign Affilliates, 1994-1995
(million U.S. Dollars)Sales to foreign persons by foreign
affilliates of U.S. companies*Sales to U.S. persons by U.S.
affilliates of foreign companies**
1994 1995 1994 1995
All countries 18 777 22 662 3 146 3 504
Australia 806 1 366 (D) 61
Canada 853 1 009 450 508
Other Americas (D) 710 13 15
Europe 13 131 16 544 2 324 2 536
Japan (D) (D) 212 295
Other countries  (D) 3033+ 366++ 86
United States n.a. n.a. 2 3
*by country of affilliate
**by country of ultimate beneficial owner
(D) suppressed to avoid disclosure of individual companies  + includes Japan       ++ includes AustraliaS/C/W/45
Page 23
Table A2. Evolution of IT market for selected non-OECD countries, 1987-95
(In percentages of total market)
1987 1995
HardwarePackaged
softwareServices HardwarePackaged
softwareServices
Chinese Taipei 76.3 6.6 17.1 69.9 10.7 19.4
Hong Kong 79.5 10.4 10.1 70.0 10.8 19.2
Republic of Korea 71.9 4.6 23.5 79.8 5.9 14.4
Malaysia 75.9 11.6 12.4 66.1 17.1 16.9
Singapore 78.4 9.2 12.4 59.1 16.4 24.5
Thailand 84.2 2.6 13.2 69.8 12.9 17.3
DAEs 75.4 6.4 18.2 73.7 9.3 17.0
China (PRC) 91.6 6.3 2.1 88.1 4.6 7.3
India 67.1 3.1 29.8 62.2 5.7 32.1
Indonesia 83.2 5.0 11.7 81.0 7.4 11.6
Philippines 73.5 12.3 14.2 72.4 14.0 13.6
Argentina 57.2 8.4 34.3 52.1 12.3 35.5
Brazil 53.3 13.5 33.2 52.7 15.0 32.2
Chile 57.3 11.7 31.0 57.5 14.1 28.4
Colombia 69.4 6.9 23.7 72.4 12.0 15.6
South Africa 61.5 12.2 26.3 49.2 19.9 30.9
Venezuela 50.6 20.4 29.0 51.0 14.5 34.5
Total 67.6 9.2 23.2 67.4 10.9 21.7
OECD 24 51.8 14.1 34.1 45.9 19.1 35.0
Source: OECD, Information Technology Outlook 1997.
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