Government

GOVERNMENT IT REPORT

Trade Agreements Push US IT Export Gains

The perception that the United States lags behind other countries, especially Asian nations, in exporting information technology deserves another look, according to a recent market report. The U.S. actually recorded a trade surplus in IT in 2011, partly as the result of international trade agreements, according to the TechAmerica Foundation.

The value of U.S. exports in technology goods and services combined amounted to US$501 billion in 2011, versus imports valued at $496 billion, for a surplus of $5 billion. The trade status was based on the most recent year for tabulating all components involved in such trade.

Those components include IT goods, IT services provided via cross-border trade with Mexico and Canada, and IT services arranged through foreign affiliates around the globe. Exports of goods have remained strong, moving from $198 billion in 2011, to $203 billion in 2012 and $205 billion in 2013.

“The largest destinations for tech goods go to our closest trading partners, Mexico and Canada, which is a testament to the importance of free trade agreements to the American technology industry,” said Burak Guvensoylar, manager of government affairs at TechAmerica.

More Agreements, Better Opportunities

“As the U.S. continues to negotiate robust 21st century free trade agreements, such as the proposed Trans-Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP), the Trade in Services Agreement (TISA) and the expansion of the Information Technology Agreement (ITA), these agreements have the potential to increase market access, eliminate tariffs, strengthen intellectual property rights, and ensure the movement of data across the globe,” he said.

“The tech surplus in 2011 was largely driven by the significant trade surpluses in tech services, particularly the tech services that are provided by the foreign affiliates of U.S. firms.The largest surpluses in this sector are those in Internet services, prepackaged software, and customized software and computer systems,” Matthew Kazmierczak, senior director of research and market intelligence at the TechAmerica Foundation, told the E-Commerce Times.

It is likely that the U.S. will maintain a positive trade position in the near future. While the 2011 surplus was an improvement over a 2010 deficit of $21 billion, in 2009 the deficit was only $1 billion.

“The increased deficit in 2010 was largely driven by the U.S. recovery. As the U.S. economy was improving, it imported more products, while the recovery overseas has not been at the same rate as the United States. In 2011, the growth of U.S. tech imports slowed, while tech exports continued to grow at the same rate, enabling the surplus in 2011,” Kazmierczak said.

“We would anticipate that if the overseas markets can improve their economies, that tech exports would continue to experience healthy growth, with continuing surpluses,” he added.

“Tech services are a key growth driver of tech exports.Telecommunications in particular feed both exports in goods and services, noted by the 9 percent increase in telecommunications services from 2011 to 2012, and a 6.6 percent increase in communications goods from 2012 to 2013,” Kazmierczak said.

Telecom Trade Recovers

That positive export outlook for the telecom component also was reflected in the recently released 2014 Market Review and Forecast from the Telecommunications Industry Association (TIA). After slipping from $19.3 billion in 2008 to just $15.4 billion in 2009, the U.S. telecom export trade gradually has recovered from a recessionary period dip to $15.8 billion in 2010, to $16.8 billion in 2011 and to $17.6 billion in 2012.

“Exports have been growing during the 2010-12 period, and we expect that pattern to continue, aided by improved economic conditions in the rest of the world. The NAFTA countries are our top two buyers of U.S. telecom equipment,” Arthur Gruen, an economist at Wilkofsky Gruen, told the E-Commerce Times.

“Between 2010 and 2012, spending by Canada on U.S. telecom equipment rose up 7 percent but was down 2 percent from Mexico over the same period. Stronger economies in these countries should have a positive impact on U.S. exports,” he said. Gruen was chief author of the TIA report.

While U.S. telecom exports are likely to continue at a brisk pace, the sector itself will continue to operate in a foreign trade deficit between the U.S. and the rest of the world.

“Because the U.S. spends so much more on national defense than other countries, the U.S. will necessarily have a net trade deficit on total non-defense goods and services. Also, because the economy in Western Europe has been so weak, exports to that region have plummeted. Between 2009 and 2012, exports to the Netherlands, the United Kingdom and Germany fell by 9 percent, Gruen said. Partly as a result of increased demand for data services, U.S. spending on network equipment, wireless equipment and enterprise equipment rose by 25 percent, a portion of which was spent on imports.

“With respect to Asia, the U.S. is running trade deficits on most products, including telecom equipment. The telecom equipment market is not unique in this regard and largely reflects a concerted policy in China to restrain domestic consumption in order to promote exports,” Gruen said.

“Consumption spending in China accounts for only a third of GDP, which is half its share in most other countries. In short, a trade deficit by itself is not a cause for concern, as deficits are often the result of a faster-growing economy or, in the case of China, low domestic consumption,” he added.

The Federal Buzz: Accenture Contract; Cyber Stakeholders

Treasury IT Contract: Accenture Federal Services has been awarded a five-year, $48 million contract by the U.S. Department of the Treasury to support IT and financial management services across the department’s bureaus and offices. The contract goes beyond providing functional IT resources, to include technology recommendations, acquisition support, systems security, financial systems, project and program management, enterprise architecture and development, and support services. The company also will update and execute the department’s IT strategy, focusing on reducing operational costs and improving efficiency across the agency.

“Treasury sought support for planning and managing programs within the Office of the CIO with the primary goals of reducing IT spend, increasing operational effectiveness, and enabling shared services,” Ed Meehan, managing director, U.S. federal civilian portfolio at Accenture, told the E-Commerce Times.

“This will require coordination across the main CIO functions of strategy, infrastructure, applications and security,” he said.

Accenture was awarded the task order as the result of a competition on the department’s TIPSS-4 Information Technology Services multiple award procurement vehicle, which includes 32 vendors qualified to receive such contracts.

Cyber Session: The National Institute of Standards and Technology (NIST) will conduct a workshop on the Framework for Improving Critical Infrastructure Cybersecurity, Oct. 29 and 30, hosted by the Florida Center for Cybersecurity at the University of South Florida in Tampa. The purpose of the Cybersecurity Framework Workshop is to gather input from industry and other sectors to help NIST understand stakeholder awareness of, and initial experiences with the framework and related activities to support its use.

The target audience is critical infrastructure owners and operators and cybersecurity staff, specifically those who have operational, managerial and policy experience and responsibilities for cybersecurity, technology, and standards development for critical infrastructure companies.

John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.

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