JISA Basic Position
on Trade Negotiations of ICT Services

August 2013
Public Policy Committee
Japan Information Technology Services Industry Association (JISA)

The innovative advancement of information processing technology, universal use of theInternet, the spread of cloud computing and use of wireless communications, thedevelopment of social networking services, the popularity of smart devices, thedevelopment of M2M communication, and the use of big data have created an environment
where people around the world can use data via a network as well as an ubiquitousenvironment where the required data and information can be freely accessed fromanywhere in the world. We are now in the age of “founding a new economic society utilizing
advanced ICT services” that have developed from the fusion of these developments. Thisis the advent of new innovation in the digital economic society and will lead to theappearance of a more advanced knowledge economic society.

This revolution using ICT will have a major impact on industry and the economy as wellas on society overall including medical and social security, education, social infrastructure,
culture and art, labor, disaster prevention, the environment, living safely and securely, andthe form politics will take, and is expected to contribute to solving a variety of problems.
Japan must overcome the issues it faces, such as the declining birth rate and aging
population and the energy problem, and realize new advanced growth industries and a vital
economic society.

To achieve these outcome, Japan should put in place the necessary policy measuresthat support a daring re-making the overall national infrastructure, such as developing
people who drive innovation, supplying risk money, strengthening the potential growthability of small and medium size business activities, promoting use of ICT in the public
sector, and advanced utilization of data by using organic linkage of policy measures
regarding the building of a leading edge ICT nation and policies for promoting innovation.
This process also requires Japan to further strengthen its position as a member of theinternational economic society and a contributor to the development of the global economicsociety.

According to the METI Annual Survey for IT Services Industry 2010, information services

1industry sales accounted for approximately 4% of the nominal GDP (2010). In addition,employment in the IT services industry accounted for approximately 1.5% of employment
for all industries (2010). The white paper “IT Services Industry in Japan 2013” analysis
stated that although there remains uncertainty in the economic situation in Japan andabroad, “offensive and aggressive IT investment,” such as CRM and BI (businessintelligence), is being promoted by companies and the movement toward businessglobalization and information system service implementation is developing steadily to turndifficulty into opportunity.

On the other hand, it is also true that along with the positive view of the development ofglobalization and the way technology is progressing, there are also concerns about their
negative impact on economic society. For example, the problems of personal information
protection and security or of protecting a diverse and unique culture are coming to light. To
deal with these issues, some have proposed limited access to information, segmenting thefreely open network, and implementing regulatory policies to inhibit the flow of information.
In the same way, when making and implementing policy for investment and trade policy, amovement toward protectionism against the promotion of advanced use of international
ICT services can be seen. These policy measures, especially the regulation of personal
information protection and the free flow of information could have a considerable impact onbusiness growth.

In particular, small and medium sized IT service companies, on which such regulations
have a relatively large impact on business, have difficulty to take a flexible approach on theregulations for handling data amidst the global flow of information, the liability of service
providers, restrictions on trade, etc., so the environmental changes resulting from thesepublic policies could become a major issue.

As the trade association for the ICT services industry, which will found the new economic
society, JISA cannot agree with the implementation of such excessive regulation andprotectionist policies. However, we also think it is necessary to create new rules for thedevelopment of new business models and to respond to the coming new economic society.
The main fields relating policy issues that JISA would like to be achieved by thegovernment and the economic organizations when Japan participates in the TPP
negotiations are listed below. We think most of these can be achieved by the creation ofconstructive new rules through the cooperation of the various national governments andrelated parties from the private sector. Therefore, we would like the contents of this list to be
actively taken up not only during the TPP negotiations but also during the other various
trade negotiations and government policy studies to quickly create rules that will be
acceptable internationally.

We want to actively contribute to creating new international rules by revising theless-effective, outdated legal system framework and its operation both domestically andinternationally to play a role in the development of the ICT services industry.

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Main fields in which new rules should be prepared(In consideration of TPP and other trade negotiations)

Cloud computing and service trade liberalization
The effective handling of the principle of non-discrimination and liberalization
Response to “new trade issues”
New rules on ICT services and ICT enhanced (enabled) services
The Rules on E-commerce (the scope and obligation)
Prohibition of excessive performance requests
Liability and exemption on service providers
The effective measures on Intellectual Property Rights (IPR)
Rules on data transfer across national borders, cross-border services,telecommunications, and investment
Rules on personal information protection, data protection, and security
International tax system for PE , foreign corporation tax, etc. (to avoid doubletaxation )Rules on technical regulations, standards and conformity etc. (use an international
standard as far as possible and do not create or employ separate national rules, etc.,that would create non-tariff barriers)3