U.S. Foreign Trade in Services: Definition, Patterns and Policy Challenges

The term services refers to a broad and widening range of economic activities such as accounting and legal services, banking, transportation, tourism, and telecommunications. Services are a significant sector of the U.S. economy, accounting for more than 50 of U.S. gross domestic product GDP and for nearly 80 of U.S. civilian employment. Services have become an important element of U.S. foreign trade, consistently generating surpluses. The European Union is by far the most important U.S. trade partner in services, accounting for more than 50 of U.S. trade in services. The increasing importance of services in domestic and global trade have placed them on the U.S. agenda for bilateral and regional trade agreements, and services trade occupies a prominent place on the agenda of the United States and the other 147 members of the World Trade Organization WTO in the Doha Development Agenda round of multilateral negotiations. Furthermore, disputes related to trade in services have arisen increasingly between the United States and the European Union, Japan, Canada, and other major trading partners.