U.S. Service export opportunities are booming. In fact, since 1980, U.S. exports of services have grown 130% faster than exports of goods. As a result, every year for almost three decades, the U.S. service sector has enjoyed a trade surplus that has consistently reduced the U.S. deficit.

The U.S. Dominates Trade in World Services

In 1999, the United States captured a world marketshare of service exports and imports of 18.8% and 13.4%, respectively. The next largest share was held by the United Kingdom, with 7.5% and 9.9%, respectively — considerably less than the United States.

According to the U.S. Commerce Department, strength in business services, which includes software development, data processing, communications, and multimedia services has been identified with the “new economy,” and has contributed to rapid growth in many U.S. states. The U.S. service-producing sector has grown so large it now accounts for 80.5% of U.S. nonfarm employment, according to the U.S. Department of Labor.

There is no doubt that the benefits currently derived from services and the huge potential offered by the service sector in terms of economic growth, personal income, employment, and exports are tremendous. And, as the sector continues to grow, companies will increasingly develop new and innovative ways to sell services abroad.

Trade Services Broken Down

Trade in services is conducted through two principal channels: cross-border trade (which entails sending individuals, information, or money across national borders) and U.S.-owned affiliate transactions (entailing U.S.-owned companies located abroad selling services abroad).

Cross-Border Trade

According to Recent Trends in U.S. Services Trade published by the U.S. International Trade Commission, a large share of cross-border trade in 1998 was the exports of intangible intellectual property (reported as royalties and license fees). This was followed by business, professional, and technical services; maritime and air freight transportation services; and passenger fares.

U.S.-Owned Affiliate Transactions

Since the sale of some services requires the service provider to be close to the customer or to sidestep foreign country trade barriers, the best way to sell the service is through a U.S.-owned affiliate abroad. For example, U.S.-owned employment agencies operating in Europe interview hundreds of European candidates each day for local jobs. Thus, this service could not be delivered without daily face-to-face meetings.

In 1997, sales by U.S.-owned insurance affiliates in foreign markets accounted for the largest share of total U.S.-owned affiliate transactions. Following were computer and data processing; wholesale; financial services; transportation; communication; architectural, engineering, and surveying services; accounting, research, and management services; and motion pictures.

U.S. Service Exports to Accelerate

The U.S. service sector is extremely advanced and internationally competitive. And, with the recent introduction and availability of new and inexpensive technology — led by telecommunications, computers, and the internet — millions of people and companies worldwide are obtaining the ability to purchase services from the United States.

As a result, it is anticipated that the export of business, professional and technical services (accounting, advertising, engineering, franchising, consulting, public relations, testing and training) will increase rapidly.

This article appeared in January 2001. (CB)
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella is a world-recognized author and speaker on global business, competitive strategies and the latest economic trends. He also is CEO of World Trade Center BN, chair of the Upstate New York District Export Council, and founder of The Manzella Report and Manzella Trade Communications Inc. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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