America's Secret Trade Surpluses

Private Services, Royalties, License Fees & Travel Profit Most

Feb 25, 2009 Daniel Workman

Exported U.S. services like travel purchases offer opportunities for America to reverse its formidable trade deficit by building on strategic competitive advantages.

As the global economy veers into a severe recession, the fearful naturally fixate on bad news. Sure it’s hard to overlook the overall US$677 billion trade deficit that the USA accumulated in 2008, up almost 500% from 1988.

But while the American trade balance for goods last year was a staggering $821 billion, few online or hard-copy journalists are writing about another area of international trade where U.S. revenues and trade surpluses continue to grow at high double-digit rates.

This article presents a statistical analysis of America’s continued success in global trade services. The latter accounted for a remarkable $144.1 billion surplus last year.

Trade Services Defined

Trade services fall under 8 categories. The largest and most profitable category is Other Private Services, specific transactions made by foreign residents in the U.S. or American citizens residing in a foreign land. Transactions range from educational, financial, insurance and telecommunications services. Also included are business, professional and technical services such as advertising and data processing.

Royalties And License Fees involve payments for the use of copyrights or trademarks (royalties), as well as patents or industrial processes (license fees).

Travel is a category that includes purchases by foreign visitors to America and by U.S. travelers abroad who stay in a foreign country less than 1 year. Expenditures for food, lodging, recreation and gifts are eligible under the Travel category.

Other Transportation Charges refers to expenses paid for the transportation of goods by air, pipeline, railway or water to and from America. Passenger Fares means the amounts that residents of one country pay to residents of other countries for transportation services.

Transfers Under U.S. Military Sales Contracts is an export-only service category specific to American government military agency items, ranging from equipment to training.

A category for imports only, Direct Defense Expenditures covers expenditures that U.S. military agencies make abroad such as payment of wages to foreign residents or for foreign goods or contractual services.

U.S. Government Miscellaneous Services is a services category for non-military agency transactions.

US Trade Surpluses From 1988 To 2008

In 2008, the American trade surplus in services is up more than 10.5 times from US$12.4 billion in 1988.

• 2008 … US$144,054 billion trade surplus (up 20.9% from prior year)
• 2007 … $119.1 billion (up 40.2%)
• 2006 … $85 billion (up 12.4%)
• 2005 … $75.6 billion (up 22.2%)
• 2004 … $61.8 billion (up 14.6%)
• 2003 … $54 billion (down 11.8%)
• 2002 … $61.2 billion (down 4.9%)
• 2001 … $64.4 billion (down 14%)
• 2000 … $74.9 billion (down 9.5%)
• 1999 … $82.7 billion (up 0.8%)
• 1998 … $82.1 billion (down 9%)
• 1997 … $90.2 billion (up 3.7%)
• 1996 … $86.9 billion (up 11.8%)
• 1995 … $77.8 billion (up 15.5%)
• 1994 … $67.3 billion (up 8.4%)
• 1993 … $62.1 billion (up 7.7%)
• 1992 … $57.7 billion (up 25.9%)
• 1991 … $45.8 billion (up 51.8%)
• 1990 … $30.2 billion (up 22.6%)
• 1989 … $24.6 billion (up 98.6%
• 1988 … $12.4 billion (up 57.4%).

At $144.1 billion last year, the U.S. trade surplus from services now represents 17.5% of America’s trade deficit of $821.2 billion from goods. That’s much higher than the 5% for the similar percentage during 1988.

Most Profitable U.S. Trade Services

In 2008, the following services contributed positive trade balances to America.

1. Other Private Services … US$86.9 billion (up 9% from prior year)
2. Royalties And License Fees … $63.3 billion (up 9%)
3. Travel … $31.1 billion (up 33.9%).

U.S. Trade Services Showing Deficits

Four services categories had trade deficits last year.

1. Transfers Under U.S. Military Sales Contracts … US-$20.7 billion (up 14.3% from prior year)
2. Other Transportation … -$12.6 billion (down 22.9%)
3. U.S. Government Miscellaneous Services … -$3.1 billion (up 2.2%)
4. Passenger Fares … $827 million (up 0.6%).

Fastest-Growing U.S. Trade Export Services

Exports for trade services categories are ranked below by the highest growth percentages in 2008.

1. Passenger Fares … US$31.4 billion (up 18.5% from prior year)
2. Other Transportation … $60.2 billion (up 14.4%)
3. Travel … $111.5 billion (up 13.2%)
4. Royalties And License Fees … $91.1 billion (up 9.4%)
5. Other Private Services … $241 billion (up 7.3%)
6. U.S. Government Miscellaneous Services … $1.2 billion (up 1.8%).

Transfers Under U.S. Military Sales Contracts at $15.1 billion were down 6.2% last year.

Fastest-Growing U.S. Trade Import Services

Imports for trade services categories are ranked below by the highest growth percentages in 2008.

1. Passenger Fares … US$32.2 billion (up 11.6% from prior year)
2. Royalties And License Fees … $27.9 billion (up 10.1%)
3. Direct Defense Expenditures … $35.8 billion (up 8.3%)
4. Other Transportation … $72.8 billion (up 7.9%)
5. Other Private Services … $154.1 billion (up 6.3%)
6. Travel … $80.4 billion (up 5.2%)
7. U.S. Government Miscellaneous Services … $4.4 billion (up 4.4%).

Sources for this Article

This article presents independent calculations and insights based on trade balance data from U.S. Census Bureau, Foreign Trade Division.

The copyright of the article America's Secret Trade Surpluses in International Trade is owned by Daniel Workman. Permission to republish America's Secret Trade Surpluses in print or online must be granted by the author in writing.

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