The federal government and the domestic data-processing industry have joined forces to fight a French government regulation levying higher customs duties on computer programs imported into France. The duties are calculated according to the value of the research that lies behind them, not just on the tapes or discs that transmit them.
The French rule, adopted with little notice two years ago, is only beginning to affect computer and data-processing firms outside France, industry sources said. But its long-term implications are immense: It could cut U.S. and Japanese suppliers out of the sophisticated French market.
Most nations traditionally have valued creative commodities such as books or phonograph records according to their material content, not the work that went to produce them. According to a trade-law expert here, the new French system is "tantamount to putting a bigger duty on a record by the Mormon Tabernacle Choir than on a record by a soloist because it cost so much more to train and assemble all those musicians."
Opinion here is divided about whether France was motivated by a desire to raise revenue, a desire to assist its own highly developed computer industries, or both. But whatever the reason, software suppliers fear that other countries with sophisticated data-processing industries will adopt the French system, setting off a wave of protectionist measures.
"The French are very good at this industry, and what they are trying to do is protect it," said Jerry Dryer, president of the Association of Data Processing Service Organizations. "They are forcing us, economically, out of the marketplace in France."
In fact, industry sources said U.S. suppliers have felt little direct impact from the French rule, partly because International Business Machines Corp. and other major data-processing companies already have French subsidiaries and partly because the material still can be shipped into France duty-free through Great Britain and other countries in the European Common Market that do not use the French system. Spokesmen for both IBM and Control Data Corp., two of the biggest companies, said they knew of no sales lost because of the French rule.
"I don't think any companies have actually lost business yet, but if the European Comunity harmonizes its policies internally, we could be in trouble," said David Shark, an assistant to U.S. Trade Representative Bill Brock.
Shark said that he has been negotiating with Common Market representatives and with the Committee on Customs Valuation in Geneva in search of an "agreed interpretation" of international customs rules.
The problem arose in 1980 when the Common Market nations acceded to an international agreement on customs valuation. The French customs service, in an official bulletin instructing its agents how to apply the code, said duties on computer software are to be levied on "the total billed price, including the costs relative to the development of the program when these are included in the price."
Because development costs always are included in the price, Shark said "you pay extensive duties, even if the tariff rate itself is low, because the value of the program might be 10,000 times what the tape itself is worth." The rate of duty is about 6 percent.
Lloyd Kaufman, director of foreign trade for the Computer and Business Manufacturers' Association, said the French took advantage of a loophole in the new code, which neglected "to mention software as an intangible like books, works of art and phonograph records. The French unilaterally seized on this, and made a determination that software had a value other than the transporting medium."
He said the domestic industry sought help from Brock's office, and "we have an oral agreement from the European Community saying, in effect, 'You guys are right on this issue.' I believe we should get some firm ruling in a month or so."