U.S. trade in private services totaled $526.6 billion in 2010, representing a trade surplus of $168 billion — fueled in large part by travel, which is the largest category of service exports in the United States, according to a new report released yesterday by the U.S. Department of Commerce's Economics and Statistics Administration (ESA).
The report, titled "U.S. Trade in Private Services," is the first in a series of ESA issue briefs. Part of President Barack Obama's National Export Initiative, which seeks to double U.S. exports by 2015, it asserts that the increase in exports of private services — defined as "non-tangible items of value that are either consumed when purchased or at a later date by their terms of sale," such as school tuition or an airplane ticket — has outpaced the rise in imports since 2003, with exports growing an average of 9.2 percent per year versus an average of 7.4 percent for imports.
While the largest U.S. surpluses in services are with Canada, Japan, Ireland, Brazil and the United Kingdom, there also is a surplus with China that grew from $2.4 billion in 2007 to $10.4 billion in 2010, thanks to a sharp increase in exports and relatively flat imports.
"The findings reported today are a remarkable statement about the strength of America's trade in services," said U.S. Commerce Secretary Gary Locke. "While much attention is given to the overall trade balance — and the Obama administration is committed to working to narrow the trade deficit — today's report highlights an often overlooked but important and increasingly robust dimension of America's role in global trade."
Overall Trade Deficit Rises
Speaking of the overall trade balance: The Commerce Department also released yesterday its "March 2011 U.S. International Trade in Goods and Services" report, produced by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. Despite the trade surplus in private services, it found, the country experienced a 6 percent increase in its overall trade deficit in March. That deficit now totals $48.2 billion due to a $10.4 billion increase in imports that eclipsed a record $7.7 billion increase in exports.
"Now more than ever, America's ability to create jobs here at home depends on our ability to export goods and services around the world," Locke said. "We have seen the private sector add 2.1 million jobs across industries from manufacturing to education to retail, and exports supported more than 9 million U.S. jobs in 2010. We are off to a strong start in achieving the goals of the National Export Initiative, but we still have more work to do to ensure that our economy continues to grow and that small- and medium-sized businesses have the right tools to compete in the global marketplace."
The Travel Industry Reacts
Speaking on behalf of the travel industry, U.S. Travel Association Senior Vice President of Research David Huether called the Commerce Department report "worrisome."
"After stalling in February, exports of travel and passenger fares rebounded in March, increasing 1.1 percent to $11.8 billion," he said in an analysis released yesterday by the U.S. Travel Association. "As a result, travel exports rose at an annual rate of 5.7 percent in the first quarter of this year. While this increase is welcome, it is just half of the 11.7 percent pace attained last year, which is a worrisome sign.
"At $134.4 billion in 2010, travel was the single largest industry export last year, topping domestic exports of major manufacturing industries such as machinery, aircraft, and computers and electronics. The slowdown that has occurred so far this year is a cause for concern for the U.S. economic recovery.
"Thankfully, there are steps that the U.S. government can take to improve the competitiveness of U.S. travel exports."
The No. 1 way to reduce the overall trade deficit, according to Huether: Improve the visitor visa and entry process for international travelers visiting the United States.
"On May 12, the U.S. Travel Association will present the first comprehensive review of the negative impact that inefficient and unpredictable U.S. visitor visa and entry processes have on U.S. jobs, economic growth and exports," Huether concluded. "The report documents that travel is America's largest industry export sector and the easiest export sector to expand, since the barriers to increased international visitation to the United States are largely self-imposed. The report shows how commonsense reforms that are relatively easy to implement could create 1.3 million more U.S. jobs and add $859 billion to the U.S. economy by 2020 — all with little or no cost to taxpayers."