The ITC, an independent, nonpartisan, factfinding federal agency, compiles the report annually. The report presents a statistical overview of U.S. trade in services and provides industry-specific analyses focused on exports, imports, and trade balances during 2002. These annual data are compared to the trend for the previous five years, the most recent period for which annual services trade data are available. The report also examines services provided to U.S. and foreign consumers by multinational firms' overseas affiliates. The sector-specific chapters conclude by discussing the factors that underlay growth or decline in these industries during 1990-2001. Highlights of this year's report follow:

• Cross-border services trade accounted for 22 percent of total U.S. cross-border trade volume in 2002. The U.S. current account reported a surplus on trade in private services of $74.3 billion in 2002, in contrast to a U.S. merchandise trade deficit of $482.9 billion. This represented a slight increase over the 2001 surplus, marking a departure from the 4.3 percent average annual decrease experienced during 1997-2001. In 2001, services sales by majority-owned, foreign-based affiliates of U.S. companies increased by 4.5 percent to $432.2 billion.

• Travel and tourism services remained the leading U.S. service exports, accounting for 23.8 percent of U.S. service exports in 2002. Other industries accounting for large shares of total exports were those related to intangible intellectual property (resulting in the payment of royalties and license fees), which represented 15.8 percent; maritime and air freight transport services (including port services), 10.4 percent; and business, professional, and technical services, 10.3 percent.

• In 2002, as in most other years, the majority of U.S. service industries registered cross-border trade surpluses. Notable exceptions included telecommunication, insurance, freight transport, and passenger transport services. The deficit on telecommunication services, however, continues to decline in response to the significant reductions in international settlement rates. Certain professional service industries also experienced trade deficits in 2002, although the industry as a whole posted an $18.1 billion surplus.

• The U.S. direct investment position in foreign service industries totaled $1.1 trillion in 2002, reflecting 11.5 percent growth over the previous year. This exceeded the 7.3 percent average annual growth rate recorded during 1999-2001. The U.S. direct investment position in foreign services markets is largest in holding companies, the financial services industry, and the wholesale trade industry. The foreign direct investment position in U.S. service industries posted a slight increase to $816.7 billion in 2002.

The foregoing information is from the ITC report Recent Trends in U.S. Services Trade, 2004 Annual Report (Investigation No. 332-345, USITC publication 3703, June 2004). The report may be obtained from Publications section of the ITC Internet site at www.usitc.gov, by calling 202-205-1809, or by writing the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Requests may also be made by fax to 202-205-2104.