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Tech CEOs want free trade

As much as 65 percent of revenues for leading U.S. high-tech companies are generated from sales outside the U.S., research shows.

Count software executives firmly in the camp of free traders.

In the absence of barrier-free trade, the U.S. high-tech industry would be a fraction of its size and deliver only a portion of its potential, according to a report released Monday by the Business Software Alliance industry group. BSA also said chief executive officers will deliver letters to members of Congress calling for the immediate passage of the Central American Free Trade Agreement.

"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 (research and development) required to maintain our leadership," Greg Bentley, chief executive of Bentley Systems, said in a statement.

According to BSA's research, as much as 65 percent of revenues for leading U.S. high-tech companies are now generated from sales outside the United States. What's more, 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, according to BSA.

The report adds to a growing debate over the rules for global trade, especially as it relates to the high-tech industry. In the short run, at least, U.S. tech workers may be more in global trade arrangements. A report last year sponsored by the Information Technology Association of America trade group on offshore outsourcing of software and information technology services indicated that sacrifices by American IT workers would result in an improved U.S. economy overall.

Labor advocates have been critical of trade pacts including CAFTA. In a report last month, two labor groups and an inventors' rights organization claimed CAFTA would harm people in both Central America and the United States, including American tech workers.

According to BSA, the United States faces market access barriers in Central America, and CAFTA should allow U.S. exports to the region to increase substantially.

CAFTA is a proposed treaty that covers the United States, the Dominican Republic and five Central American nations. Under its terms, 80 percent of U.S. exports of consumer and industrial goods will become duty-free in Central America and the Dominican Republic initially, with remaining tariffs phased out over 10 years.

BSA also said its latest research outlines how "outdated trade rules and continued software piracy will hinder growth for domestic enterprises around the globe." 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 with 36 percent in 2003).