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US and World Trade in Services - ISSIP Economics Community of Interest - 4/30/15
This presentation provides an overview of the US service sector and its trade in services with other countries. It discusses that the service sector now employs over 80% of the US workforce and has seen significant employment growth. The US runs a large trade surplus in services, exporting over $700 billion in services annually, with its largest trading partners being Canada, Europe, and Asia. However, global trade talks have stalled and countries are pursuing more bilateral and regional trade agreements to reduce barriers in services.
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US and World Trade in Services - ISSIP Economics Community of Interest - 4/30/15
- 1. Dr. Stephen K.Kwan Professor, Service Science Associate Dean Lucas Graduate School of Business San José State University, CA, USA http://www.cob.sjsu.edu/kwan_s Contact: stephen.kwan@sjsu.edu ISSIP Economics Community of Interest April 30, 2015 US and World Trade in Services 1Kwan 2015 This presentation looks at service at a macro level as an increasingly important sector of national economies. We will review the extent of the service sector in the US and its trade in services with the rest of the world. We will also discuss some of the current Free Trade Agreements under consideration by the US.
- 2. Quick Facts aboutUS Service Sector The largest labor force migration in human history is underway, driven by global communications, business and technology growth, urbanization and regional variations in labor and infrastructure costs and capabilities. Numeric change in wage-salary employment by industry sector, projected 2004-14 (Thousands) Professional and business service 4566 Healthcare and social assistance 4303 CIA Handbook, International Labor Organization Note: Pakistan, Vietnam, and Mexico now larger LF than Germany 42%643331.4Germany 37%2611632.1Bangladesh 19%2010701.6Nigeria 45%672852.2Japan 64%6921102.4Russia 61%6614203.0Brazil 34%3916453.5Indonesia 23%762315.1U.S. 35%23176014.4India 142%29224925.7China 40yr Service Growth S % G % A % Labor % Nation World’s Large Labor Forces A = Agriculture, G = Goods, S = Service 2010 2010 US shift to service jobs (A) Agriculture: Value from harvesting nature (G) Goods: Value from making products (S) Service: Value from enhancing the capabilities of people and their ability to interconnect and co-create value Employment Change Kwan 2015 2011:1.6 17.3 81.1 2
- 3. 3 -10,000 0 10,000 20,000 30,000 40,000 50,000 60,000 2002 2003 20042005 2006 2007 2008 US$Million Canada Europe Latin America & Other Western Hemisphere Africa Middle East Asia and Pacific International Organizations & Unallocated US Services Trade Surplus
- 4. 4 US Service SectorEmployees Total Service Sector 86.3 86.6 88.2 89.9 91.6 93.1 93.1 93.1/116=80.25% Private Sector Jobs
- 5. 5Kwan 2015 Percent Employmentin the Services Industry
- 6. Kwan 2012 6 TheWorld Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. 157 members
- 7. Kwan 2012 7 BroadAreas of Trade: Goods Services Trade-related Aspects of Intellectual Property Rights Ranging from architecture to voice-mail telecommunications and to space transport, services are the largest and most dynamic component of both developed and developing country economies. Important in their own right, they also serve as crucial inputs into the production of most goods. Their inclusion in the Uruguay Round of trade negotiations led to the General Agreement on Trade in Services (GATS). Since January 2000, they have become the subject of multilateral trade negotiations.
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- 12. 12Kwan 2015 US ServiceExport Surplus vs. other Countries
- 13. 13Kwan 2015 Adapted fromWTO definitions Modes of Trade Some Examples Cross Border Trade Software, Insurance, tele-diagnosis from country B into A Consumption Abroad A’s residents obtain education or hospital treatment in B Commercial Presence Bank, telecommunications firm, hospital from B set up subsidiary in A Movement of Natural Persons Engineers, doctors from B provide services in A Different Types of Trade in Services Cloud Computing? The World is now more complex in Politics and Commerce.
- 14. 14 What happened inthe last few years? WTO Doha Round of Trade Talks with goals of Reduce Trade Barriers Open Market Access…. “..fundamental disagreements between the developed nations and the major developing countries…” BRIC nations… Agriculture Goods Services Services Goods Agriculture vs.
- 15. 15 Doha Talks Aftermath Withplurilateral agreements derailed, nations are now engaged in more (inefficient) negotiations for • Bilateral agreements • Regional agreements – e.g., NAFTA – to be renewed soon • Sector/Sector Agreements – US has service sector agreements with Japan and EU • Free Trade Agreements (FTA) – US has FTA (or pending) with Australia, Andean Countries, Bahrain, CAFTA, Chile, Colombia, FTAA, Korea, Malaysia, Morocco, Oman, Panama, Peru, Singapore, SACU
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- 17. 17 Technical regulations andproduct standards may vary from country to country. Having many different regulations and standards makes life difficult for producers and exporters. If regulations are set arbitrarily, they could be used as an excuse for protectionism. The Agreement on Technical Barriers to Trade tries to ensure that regulations, standards, testing and certification procedures do not create unnecessary obstacles. Technical Barriers to Trade (TBT) Conformity Assessment Problems
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- 19. 19Kwan 2012 China –Complainant and Respondent
- 20. 20Kwan 2012 US –Complainant and Respondent
- 21. 21Kwan 2015 Service SectorChallenges
- 22. 22Kwan 2015 China’s NascentPackage Delivery Service
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Editor's Notes
- #3 Agriculture includes agriculture, forestry, hunting, and fishing. Industry includes manufacturing, mining, and construction. Services includes transportation, communication, public utilities, trade, finance, public administration, private household services, and miscellaneous services. For Spain, BLS estimates of sectoral employment are not available. See employment section of definitions page in this report for definitions. Bureau of Labor Statistics