The United States is the world's largest services market and was the world’s leading exporter and importer of services in 2019, reports the U.S. International Trade Commission (USITC) in its new publication Recent Trends in U.S. Services Trade, 2021 Annual Report.
The USITC, an independent, nonpartisan, factfinding federal agency, compiles the report annually. Each year's report presents a qualitative and quantitative overview of U.S. trade in services and highlights some of the services sectors and geographic markets that contribute substantially to recent services trade performance.
This year’s report focuses on professional services and includes sections detailing trends in six specific industries: research and development services, legal services, management consulting services, education services, architecture and engineering services, and healthcare services. Each section analyzes global market conditions in the industry and summarizes the industry’s outlook.
The report describes trade in services via cross-border transactions through 2019 and via affiliate sales through 2018 (latest available data). Highlights include:
- The services sector represents the largest sector of the U.S. economy, and the United States is the world’s top cross-border exporter and importer of services. In 2019, U.S. exports of private services totaled $853.3 billion, whereas imports totaled $564.3 billion.
- Within the services sector, sales by foreign affiliates of U.S. firms – the leading channel by which many U.S. services are delivered to foreign markets – totaled $1.7 trillion in 2018 while the value of services purchased from foreign-owned affiliates in the United States totaled $1.2 trillion.
- The professional services sector includes a variety of activities that generally require highly skilled labor and, in many cases, specific licenses or credentials are required to provide the services. Professional services accounted for 34 percent of total cross-border services exports and 25 percent of imports in 2019. They represented 15 percent of total sales by the foreign affiliates of U.S. firms and 15 percent of total purchases from the U.S. affiliates of foreign firms.
- In recent years, some professional service sectors have changed the way their services are provided, whether by introducing new business models and suppliers or by shifting from providing services in person to providing them online. In particular:
- legal services - alternative legal service providers (ALSPs), a diverse group of companies including legal process outsourcing firms (LPOs) and the Big Four accounting firms, have outpaced the growth of traditional law firms;
- management consulting (MC) - an evolving trend towards the digital supply of MC services preceded the COVID-19 pandemic, but COVID-19 travel restrictions have hastened this trend, and MC providers now mostly supply services remotely;
- education - the volume of university-level foreign students studying in the United States has experienced systemic declines, which were further aggravated by COVID-19 in 2020.
- For other professional services sectors, changing consumer preferences due to the COVID-19 pandemic have driven recent developments, including:
- architecture and engineering - COVID-19 has created strong demand for project design in essential business segments, such as hospitals, water management, and pharmaceutical manufacturing, and for pandemic-related redesign services for medical, home, education, and office space;
- heathcare - the adoption of telemedicine in the United States has accelerated since March 2020, as the share of U.S. consumers who have used telemedicine went up by 35 percent in 2020 from 11 percent in 2019.
The USITC hosted its 14th annual services roundtable, which was held virtually for the first time on October 27, 2020. The discussion, summarized in the report, focused on the impact of the COVID-19 global pandemic on demand, output, modes of supply, business practices, labor, and productivity in U.S. and global services industries, and the impact of establishing a presence in one or more foreign markets on U.S. services firms’ operations and overall employment in the United States.
Recent Trends in U.S. Services Trade, 2021 Annual Report (Investigation No. 332-345, USITC publication 5129, April 2021) is available on the USITC's Internet site at https://www.usitc.gov/publications/332/pub5192.pdf.