Survey of Current Business
October 2018
Volume 98, Number 10

U.S. International Services

Trade in Services in 2017 and Services Supplied Through Affiliates in 2016

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This article highlights statistics on international services that the Bureau of Economic Analysis (BEA) releases annually. These statistics cover both U.S. international trade in services and services supplied by majority-owned U.S. and foreign affiliates of multinational enterprises (MNEs).1 Trade in services refers to exports and imports of services—that is, services traded between U.S. residents and nonresidents—that are included in the broader set of U.S. international transactions accounts (ITAs) released by BEA. Services supplied through affiliates refers to services supplied by MNEs through the channel of direct investment. This set of statistics covers transactions between majority-owned foreign affiliates of U.S. companies and foreign residents, both in the host country and in other foreign markets, and transactions between majority-owned U.S. affiliates of foreign companies and U.S. residents.2

Because of the importance of physical proximity to customers in the delivery of certain types of services, many MNEs serve foreign markets partly or wholly through their affiliates located in, or close to, the markets they serve rather than through trade. As in recent years, about two-thirds of the services provided internationally both by and to the United States in 2016—the latest year for which statistics on services supplied through affiliates are available—were through affiliates (table A and chart 1).3

Table A. U.S. International Services Supplied and Received, 2015–2017
  Services supplied Services received
Total Through trade
(U.S. exports)
Through foreign affiliates of U.S. companies Total Through trade
(U.S. imports)
Through U.S. affiliates of foreign companies
Billions of dollars
2015 2,218.1 755.3 1,462.8 1,449.8 492.0 957.8
2016 2,215.2 758.9 1,456.3 1,504.9 509.8 995.1
2017 n.a. 797.7 n.a. n.a. 542.5 n.a.
Percent change from preceding year
2015 −2.5 1.9 −4.7 2.0 2.3 1.9
2016 −0.1 0.5 −0.4 3.8 3.6 3.9
2017 n.a. 5.1 n.a. n.a. 6.4 n.a.
n.a.
Not available

In 2016, total services supplied by the United States to foreign persons through both trade and foreign affiliates of U.S. companies was $2,215.2 billion, and total services received by the United States from foreign persons through both trade and U.S. affiliates of foreign companies was $1,504.9 billion. The difference between total services supplied to and received from foreign persons was $710.3 billion. Total services supplied to foreign persons decreased $2.9 billion, or less than 1 percent, in 2016 after decreasing $57.8 billion, or 3 percent, in 2015. Total services received from foreign persons increased $55.1 billion, or 4 percent, in 2016 after increasing $28.7 billion, or 2 percent, in 2015.

In 2017, U.S. exports of services were $797.7 billion, and U.S. imports of services were $542.5 billion (chart 1), resulting in a services trade surplus of $255.2 billion. The United States accounted for 15 percent of the world’s exports and for 11 percent of the world’s imports in 2017.4

Exports of services increased $38.8 billion, or 5 percent, in 2017 after increasing $3.6 billion, or less than 1 percent, in 2016. The largest increases in exports occurred in other business services, primarily research and development services and professional and management consulting services, and in financial services. While exports grew, the U.S. share of worldwide exports fell slightly.

Imports of services increased $32.6 billion, or 6 percent, in 2017 after increasing $17.9 billion, or 4 percent, in 2016. The largest increase in imports occurred in “travel (for all purposes including education)” (henceforth “travel”).5 The increase in travel abroad by U.S. residents continues the upward trend in this category since 2009 after the Great Recession, coinciding with rising U.S. consumer spending over this period. The U.S. share of worldwide imports rose slightly in 2017.

In 2016, services supplied to foreign markets through foreign affiliates of U.S. MNEs were $1,456.3 billion, down $6.5 billion, or less than 1 percent, from 2015. The largest decrease was in the mining industry.

Services supplied to the United States through U.S. affiliates of foreign MNEs were $995.1 billion, up $37.2 billion, or 4 percent, from 2015. This partly reflected an increase in services supplied by U.S. affiliates of foreign MNEs in insurance and related activities.

As part of the international services statistics released in October 2018, BEA has included new historical U.S. trade in services statistics for the expanded geographic detail it introduced in October 2016, when it increased the number of separately published countries and areas from 49 to 90.6 For more information, see the box “Data Availability and Release of Additional Historical Data for BEA’s Trade in Services Statistics.”

The remainder of this article includes a Services Spotlight discussing insurance services and discussions of U.S. trade in services in 2017, U.S. trade in information and communications technology (ICT) and potentially ICT-enabled services (presenting an alternate aggregation of part of the trade in services statistics) in 2017, services supplied through affiliates in 2016, and future enhancements to BEA’s international services statistics.

 

 

Insurer Aon Benfield reported that 2017 was the costliest year on record for weather-related disasters since 1900, with an estimated total bill of $132.0 billion in insured losses worldwide. Almost 70 percent of those insured losses were related to hurricanes Harvey, Irma, and Maria as well as the wildfires in California in the United States.7 However, these events did not have a large impact on U.S. trade in insurance services in 2017, because insurance services are measured in a way that recognizes that insurers provide a steady level of service to their customers. That is, they stand ready to cover losses, whether or not those losses occur.

The United States has historically been a net importer of insurance services, and a portion of the insurance paid to cover damages from these hurricanes came from insurers abroad. U.S. imports of insurance services are predominantly—by a factor of about 10 to 1—in reinsurance rather than in direct insurance. U.S. property/casualty insurers—the direct insurers—often enter into reinsurance agreements with other insurance companies to protect their solvency when catastrophic events such as hurricanes threaten to drain their reserves through the payout of policyholder claims. Even the National Flood Insurance Program, administered by the Federal Emergency Management Agency, manages a portion of its risk exposure through reinsurance contracts with private companies.8 Although some U.S. direct insurers purchase reinsurance from domestic providers, a significant amount of reinsurance is purchased from insurance companies in other countries. Countries such as Bermuda, Switzerland, and Ireland lead the world in providing these services (table B).

Table B. Reinsurance Imports 2016–2017
[Billions of dollars]
  2016 2017
All countries 43.9 45.1
Total for the top 5 countries1 37.1 38.3
Bermuda 21.1 19.3
Switzerland 7.0 8.4
Ireland 3.1 4.8
United Kingdom Islands, Caribbean2 3.2 3.3
Germany 2.6 2.5
Other countries 6.8 6.8

 

U.S. imports of insurance services are measured as gross premium payments to foreign insurers plus investment income on foreign insurers’ reserves minus claims payable by foreign insurers on covered U.S. losses; this net measure reflects compensation to foreign insurers for the costs borne in providing the insurance. To adjust for claims volatility, BEA’s trade in insurance services methodology uses an estimate of expected or “normal” losses—which are inferred from the relationship between actual losses and premiums averaged over several years—to determine the level of service provided each period by insurance firms.9 Using normal losses rather than actual losses reflects the fact that a given amount of insurance coverage held in a period provides the same service (protection against risk) to the policyholder whether or not an insured event occurs that period; it also provides a better measure of long-term production and pricing of insurance.

Because normal losses are used to calculate insurance services, insurance services imports do not display large swings when disasters occur (chart 2). In particular, using normal losses avoids sharply decreasing insurance services imports in years such as 2017. For example, imports of insurance services rose to $50.7 billion in 2017 from $49.9 billion in 2016, while losses recovered from foreign insurers rose to $111.4 billion in 2017 from $79.7 billion in 2016. Although statistics for services supplied have not yet been released for 2017, services supplied through U.S. affiliates are likewise not expected to reflect a noticeable impact from the record payouts, because a similar methodology that incorporates normal losses is used to estimate insurance services supplied through affiliates.

Chart 2. Annual Change in Losses Recovered and Insurance Imports

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Although large insurance payouts have little effect on imports of insurance services, they do affect the broader ITAs and National Income and Product Accounts (NIPAs). In BEA’s national economic accounts, insured losses that exceed 0.1 percent of gross domestic product (GDP) (approximately $19 billion at the time of writing) are deemed to be appreciable reductions in the country’s net worth. Thus, the actual payouts for these large insurance claims are recorded as capital transfers both in BEA’s NIPAs and ITAs; the difference is that the ITAs capture only the losses covered by insurers abroad (chart 3).10,11 Capital transfers are recorded in the capital account of the ITAs.

Chart 3. Capital Transfers

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Trade in services transactions consist of transactions between U.S. residents and nonresidents arising from productive activities that change the condition of the consumer or that facilitate the exchange of products and financial assets. Also included in trade in services are certain transactions for the sale, distribution, or use of intellectual property. The statistics in this article are consistent with statistics published in table 3.1 of the ITAs.12

In 2017, U.S. exports of services were $797.7 billion, and U.S. imports of services were $542.5 billion, resulting in a services trade surplus of $255.2 billion (chart 4). Historically, the U.S. has recorded a surplus on trade in services as the value of exports has exceeded the value of imports. The surplus increased $6.2 billion in 2017 after decreasing $14.3 billion in 2016 (the first decrease since 2003). The increase in 2017 reflected a $38.8 billion, or 5 percent, increase in exports of services and a $32.6 billion, or 6 percent, increase in imports of services.

Chart 4. U.S. International Services Trade Surplus, 2008–2017

[Click chart to expand]

The remainder of this section discusses trade in services in 2017 by service type, by trading partner, and by affiliation. Tables that accompany this article and that are available on BEA’s website provide additional detail broken out in these dimensions and as combinations of these dimensions.

Trade by service type

BEA classifies services trade transactions into nine major service-type categories. In 2017, travel accounted for the largest share of both exports and imports (table C). Exports of services in six of the nine major service types exceeded imports of services; the combined surplus in these six categories was partly offset by the combined deficit in the other three (chart 5). Surpluses were largest in financial services, charges for the use of intellectual property, and travel.

Chart 5. Trade in Services by Type, 2016 and 2017

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These three categories have been the largest contributors to the services surplus since 2006; 2017 was the first year in which the surplus on financial services, $80.7 billion, exceeded the other two. The surplus in financial services partly reflects the fact that the United States is a major hub for global securities trading. In 2017, U.S. stock exchanges accounted for nearly half (46 percent) of the value of equities traded on all the world’s exchanges.13 The surplus in charges for the use of intellectual property partly reflects the high level of research and development (R&D) performed in the United States. In 2015 (the most recent year for which statistics are available), the United States accounted for 26 percent of R&D performed worldwide.14

U.S. exports of services were $797.7 billion in 2017. Of the nine major service types, the top four—travel (26 percent of the total), other business services (19 percent), charges for the use of intellectual property (16 percent), and financial services (14 percent)—accounted for about three-fourths of total exports of services. U.S. imports of services were $542.5 billion. The top four major service types—travel (25 percent of the total), other business services (19 percent), transport (19 percent), and charges for the use of intellectual property (9 percent)—accounted for nearly three-fourths of total imports of services.

U.S. exports of services increased $38.8 billion, or 5 percent, in 2017. Exports increased for each of the nine major service types, but almost three-quarters of the aggregate increase was in the combined increase of four service types: other business services, financial services, transport, and travel.

  • Other business services. Exports of other business services increased for the 17th consecutive year. Exports increased $10.5 billion to $154.3 billion in 2017, led by an increase in research and development services. An increase in exports to Switzerland accounted for nearly a third of the increase in other business services exports.
  • Financial services. Exports of financial services increased $10.3 billion to $109.6 billion, led by an increase in financial management, financial advisory, and custody services. The increase in financial services partly reflected increases in exports to the United Kingdom Islands, Caribbean and to the United Kingdom, which together accounted for 42 percent of the increase.
  • Transport. Exports of transport services increased $3.9 billion to $88.6 billion. The increase partly reflected a $1.3 billion increase in air passenger services due to increases in the number of foreign visitors traveling on U.S. carriers and in average airfares.
  • Travel. Exports of travel services increased $3.8 billion to $210.7 billion, led by an increase in education-related travel. Much of the increase in total travel exports was attributable to increases in exports to two countries, Canada ($1.4 billion) and China ($1.3 billion).

U.S. imports of services increased $32.6 billion, or 6 percent, to $542.5 billion in 2017. Eight of the nine major service types increased. The largest increase was in travel, followed by other business services, transport, and charges for the use of intellectual property. Maintenance and repair services decreased slightly.

  • Travel. Imports of travel services increased $11.5 billion, or 9 percent, to $135.0 billion. The increase mostly reflected an increase in personal travel excluding health-related and education-related travel.
  • Other business services. Imports of other business services increased $4.9 billion, or 5 percent, to $104.4 billion. There were increases in all subcategories, but an increase in professional and management consulting services accounted for 43 percent of the increase. The largest increase by country was in imports from the United Kingdom, which accounted for approximately one-quarter of the increase.
  • Transport. Imports of transport services increased $4.8 billion, or 5 percent, to $101.7 billion, partly reflecting a $2.8 billion increase in air transport services. The increase in air transport mainly reflected an increase in air passenger transport services. The largest increases by country in transport services were in imports from the United Kingdom and Japan.
  • Charges for the use of intellectual property. Imports associated with the use of intellectual property increased $4.7 billion, or 10 percent, to $51.3 billion, mainly reflecting increases in charges associated with computer software and industrial processes. The largest increases by country in imports associated with the use of intellectual property were from Germany and the United Kingdom.

Trade by partner country

The top 10 trading partners of the United States based on total trade (exports plus imports) are shown in chart 6. The top 10 trading partners accounted for 56 percent of services exports and 52 percent of services imports in 2017. The United Kingdom remained the largest trading partner for services; it was both the largest market for U.S. exports and the largest source for U.S. imports (table C). The top categories of exports to the United Kingdom were financial services and travel, while the top categories for imports from the United Kingdom were other business services, mainly professional and management consulting services, and travel. Canada was the second-largest trading partner. It was the second-largest market for exports in 2017, reclaiming the position after being overtaken by China in 2016; the top categories of exports to Canada were travel and other business services, primarily professional and management consulting services. Germany was the second-largest provider of services to the United States in 2017; the top import categories were transport and charges for the use of intellectual property.

Exports to the top 10 trading partners (the countries shown in chart 6) accounted for $24.2 billion, or 62 percent, of the $38.8 billion increase in total services exports in 2017. Exports to Switzerland, Canada, and India increased the most. Among the notable increases in exports were the following:

  • Switzerland. Exports to Switzerland increased $4.6 billion, or 14 percent, to $37.3 billion in 2017, mostly reflecting a $3.4 billion increase in other business services, mainly research and development services.
  • Canada. Exports to Canada increased $4.1 billion, or 8 percent, to $58.4 billion, primarily reflecting increases of $1.4 billion in both other business services and in travel. The increase in other business services primarily reflected an increase in advertising services; the increase in travel mainly reflected increases in other business travel and other personal travel.
  • India. Exports to India increased $3.1 billion, or 15 percent, to $23.7 billion, mainly reflecting an increase of $1.3 billion in travel and an increase of $1.0 billion in charges for the use of intellectual property. The increase in exports of travel largely reflected an increase in education-related travel.
  • United Kingdom. Exports to the United Kingdom increased $2.8 billion, or 4 percent, to $69.6 billion, primarily reflecting an increase of $1.9 billion in financial services.
  • China. Exports to China increased $2.7 billion, or 5 percent, to $57.6 billion, primarily reflecting an increase of $1.3 billion in travel and a $0.8 billion increase in charges for the use of intellectual property. The increase in travel mainly reflected an increase in education-related travel. The increase in charges for the use of intellectual property was primarily due to an increase in charges associated with industrial processes.
  • Brazil. Exports to Brazil (not shown in chart 6) increased $2.5 billion, or 11 percent, to $26.4 billion, mainly reflecting a $1.4 billion increase in other business services, primarily professional and management consulting services.

Imports from the top 10 trading partners accounted for $21.9 billion, or 67 percent, of the $32.6 billion increase in total services imports in 2017 (chart 6). Imports from the United Kingdom, Switzerland, and Ireland increased the most. Among the notable changes in imports are the following:

  • United Kingdom. Imports from the United Kingdom increased $4.6 billion, or 9 percent, to $56.9 billion, mostly reflecting increases in travel, other business services, and financial services. Imports of travel increased $1.5 billion, largely reflecting increases in other business travel and other personal travel. Imports of other business services increased $1.3 billion, reflecting increases in technical, trade-related, and other business services and in business and management consulting and public relations services. Imports of financial services increased $1.1 billion.
  • Switzerland. Imports from Switzerland increased $3.2 billion, or 13 percent, to $26.9 billion, reflecting an increase in insurance services of $1.4 billion, mostly reinsurance services.
  • Ireland. Imports from Ireland increased $2.6 billion, or 15 percent, to $20.1 billion, mainly reflecting increases in insurance services and charges for the use of intellectual property. Imports of insurance services increased $1.7 billion, reflecting an increase in reinsurance services. Imports associated with the use of intellectual property increased $0.9 billion.
  • Canada. Imports from Canada increased $2.4 billion, or 8 percent, to $33.0 billion, mainly reflecting an increase in other business services. Imports of other business services increased $1.0 billion, partly reflecting a 25 percent increase in technical, trade-related, and other business services.
  • India. Imports from India increased $2.3 billion, or 9 percent, to $28.1 billion, mainly reflecting increases in other business services and in telecommunications, computer, and information services. Imports of other business services increased $1.0 billion, largely reflecting increases in business and management consulting and public relations services and in research and development services. Telecommunications, computer, and information imports increased $0.8 billion, reflecting a $0.9 billion increase in computer services.
  • Bermuda. Imports from Bermuda (not shown in chart 6) decreased $2.0 billion, or 8 percent, to $23.6 billion, reflecting a $2.1 billion decrease in insurance, mostly reinsurance.

Trade by affiliation

U.S. services trade includes trade between unaffiliated parties and trade within MNEs (affiliated trade). Affiliated trade accounted for 30 percent of U.S. services exports and imports in 2017 (table D). Affiliated services exports grew at a slightly faster rate than unaffiliated services exports in 2017. In contrast, unaffiliated services imports grew at a slightly faster rate than affiliated services imports.

BEA’s statistics on trade in ICT and potentially ICT-enabled services complement BEA’s standard presentation of international trade in services statistics by providing insight into the extent to which ICT may be used to facilitate trade in services. ICT services facilitate information processing and communication; ICT-enabled services are services delivered over ICT networks.15 BEA’s statistics on ICT services include three categories of services from BEA’s published statistics on international trade in services: telecommunications services, computer services, and charges for the use of intellectual property associated with computer software.

It is not possible to precisely identify services trade that is ICT-enabled, because BEA collects data on trade in services by category based on the Extended Balance of Payments Services Classification (EBOPS 2010), which is based on the type of service traded and not on the mode of delivery.16 BEA, therefore, measures a related but more broadly defined concept of potentially ICT-enabled services, which include services that can predominantly be delivered remotely over ICT networks without identifying the services that are delivered over ICT networks. BEA’s statistics on potentially ICT-enabled services are composed of BEA’s published statistics on international trade in insurance services; financial services; charges for the use of intellectual property; telecommunications, computer, and information services; and certain other services included in other business services. Potentially ICT-enabled services include ICT services.

In 2017, U.S. exports of ICT services were $70.9 billion, and U.S. imports of ICT services were $47.4 billion, resulting in an ICT services trade surplus of $23.5 billion (chart 7). The surplus decreased $1.9 billion from 2016, as exports of ICT services increased $2.8 billion, and imports of ICT services increased $4.8 billion. U.S. exports of potentially ICT-enabled services were $439.1 billion, and U.S. imports of potentially ICT-enabled services were $266.6 billion, resulting in a potentially ICT-enabled services trade surplus of $172.6 billion. The surplus increased $12.4 billion from 2016, as exports of potentially ICT-enabled services increased $29.1 billion, and imports of potentially ICT-enabled services increased $16.7 billion. Potentially ICT-enabled services accounted for 55 percent of all trade in services exports and 49 percent of imports in 2017. Both shares increased slightly over their 2016 values of 54 and 49 percent, respectively. The remainder of this section discusses trade in potentially ICT-enabled services in 2017 by service type, by trading partner, and by affiliation. Tables that accompany this article and that are available on BEA’s website provide additional detail on trade in ICT and potentially ICT-enabled services.

Trade by service type

In 2017, potentially ICT-enabled services in other business services, primarily professional and management consulting services and research and development services, accounted for the largest share of exports (32.1 percent) and imports (35.9 percent) (chart 8). Exports in four of the major categories exceeded imports; the combined surpluses in these four categories more than offset a deficit in insurance services. The surplus was largest in financial services. Both exports and imports increased in all five of the major categories in 2017. The largest increases for exports were in potentially ICT-enabled services in other business services, which increased $10.6 billion to $140.9 billion, and financial services, which increased $10.3 billion to $109.6 billion. The largest increases for imports were in potentially ICT-enabled services in other business services, which increased $5.4 billion to $95.6 billion, and charges for the use of intellectual property, which increased $4.7 billion to $51.3 billion.

Trade by partner country

Exports, imports, and the balance of trade in potentially ICT-enabled services for the top 10 trading-partner countries by total trade (exports plus imports) are shown in chart 9.

In 2017, the United Kingdom was the top trading partner in potentially ICT-enabled services. Exports to the United Kingdom were $45.5 billion, more than a third of which was in financial services. Imports from the United Kingdom were between $31.7 and $35.1 billion (see the box “Calculating Ranges for Suppressed Values of Trade in Potentially ICT-Enabled Services”), led by potentially ICT-enabled services in other business services. The United Kingdom was the top country for imports and the second ranked country for exports of potentially ICT-enabled services. Ireland was the second ranked trading partner in potentially ICT-enabled services, primarily as a result of being the top country for exports, which were between $46.8 and $47.2 billion in 2017.

The largest increases in 2017 in potentially ICT-enabled services exports and imports by country were with Switzerland. Exports to Switzerland increased $4.8 billion, or 17 percent, to $32.8 billion; the largest increase was in potentially ICT-enabled services in other business services. Imports from Switzerland increased $2.6 billion, or 15 percent, to $19.7 billion in 2017; the largest increase was in insurance services.

 

Trade by affiliation

Affiliated trade accounted for 54 percent of exports of potentially ICT-enabled services and for 57 percent of imports of potentially ICT-enabled services in 2017. These shares are much higher than the affiliated shares of total services exports and imports, highlighting the importance of providing services over ICT networks for intrafirm trade. Unaffiliated exports of potentially ICT-enabled services increased 9 percent in 2017, and affiliated exports increased 6 percent. Unaffiliated imports of potentially ICT-enabled services increased 6 percent, and affiliated services imports increased 7 percent.

U.S. international services delivered via the channel of direct investment consist of (1) services supplied to the host country and other foreign markets by foreign affiliates of U.S. multinational enterprises (MNEs) and (2) services supplied to the U.S. market by U.S. affiliates of foreign MNEs. The statistics in this article are consistent with services supplied statistics published in BEA’s statistics on the activities of multinational enterprises (“AMNE statistics”) except AMNE statistics include services supplied to all customers regardless of the residency of the customer.

In 2016, the latest year for which statistics are available, services supplied by U.S. MNEs to foreign markets through their affiliates decreased $6.5 billion, or less than 1 percent, to $1,456.3 billion (chart 10). Services supplied by foreign MNEs to the U.S. market through their affiliates increased $37.2 billion, or 4 percent, to $995.1 billion. The difference between international services supplied through affiliates to foreign markets and the services supplied to the U.S. market was $461.2 billion in 2016, compared with $504.9 billion in 2015.

Chart 10. Services Supplied Through Affiliates, 2007–2016

[Click chart to expand]

The remainder of this section discusses services supplied through affiliates in 2016 by industry of affiliate, by country of affiliate or country of ultimate beneficial owner (UBO), and by destination.17 Tables that accompany this article and that are available on BEA’s website provide additional detail on services provided by affiliates of MNEs, along with detail cross classified by country and industry.

Services supplied through affiliates by industry

In the international services statistics, BEA classifies services supplied through affiliates into nine major industry categories (table F). In 2016, other industries (primarily transportation and warehousing; administration, support, and waste management; and accommodation and food services) accounted for the largest share of the services supplied by U.S. MNEs to foreign markets through their foreign affiliates.18 Information; professional, scientific, and technical services; wholesale trade; and finance and insurance also accounted for large shares of the total. Together, these five industries accounted for 83 percent of services supplied by foreign affiliates.

For services supplied by foreign MNEs to U.S. markets through their U.S. affiliates, wholesale trade, other industries (primarily transportation and warehousing, and administration, support, and waste management), and finance and insurance accounted for the three largest shares. Together these three industries accounted for 56 percent of total services supplied by U.S. affiliates.

In 2016, decreases in six of the nine major industry categories contributed to the $6.5 billion aggregate decrease in services supplied by U.S. MNEs through foreign affiliates. Decreases were largest for affiliates in mining and wholesale trade (chart 11). Among the notable changes in services supplied through foreign affiliates were the following:

  • Mining. Services supplied to foreign markets by mining affiliates decreased $8.0 billion to $36.1 billion, reflecting a $7.9 billion decrease in services supplied by affiliates in mining services other than oil and gas extraction.
  • Wholesale trade.19 Services supplied by wholesale trade affiliates decreased $6.4 billion to $227.7 billion, reflecting decreases in services supplied in professional and commercial equipment and supplies and in electrical and electronic goods.
  • Finance and insurance. Services supplied by affiliates in finance and insurance decreased $5.5 billion to $224.5 billion, reflecting a $6.6 billion decrease in finance, mostly by nonbanks, that was partly offset by a $1.1 billion increase in insurance and related activities.
  • Chart 11. Services Supplied Through Affiliates by Industry, 2015 and 2016

    [Click chart to expand]

  • Other industries. Services supplied by affiliates in other industries decreased $3.0 billion to $264.8 billion. Services supplied by affiliates in transportation and warehousing decreased $7.8 billion, and services supplied by affiliates in utilities decreased $5.3 billion. These decreases were partly offset by a $6.5 billion increase in services supplied by affiliates in administrative and support services.
  • Professional, scientific, and technical services. Services supplied by affiliates in professional, scientific, and technical services decreased $1.8 billion to $234.2 billion. Decreases in architectural, engineering, and related services and in scientific research and development services totaling $5.5 billion were partly offset by a $3.6 billion increase in computer systems design and related services.
  • Information. Services supplied by affiliates in information increased $12.5 billion to $257.6 billion. The increase in information was the largest change among major industries in 2017 and reflected an $11.6 billion increase in other information services, particularly from affiliates in Europe.20
  • Real estate and rental and leasing. Services supplied by affiliates in real estate and rental and leasing increased $4.7 billion.

Increases in services supplied through U.S. affiliates in six of the nine major industries in 2016 contributed to the aggregate $37.2 billion increase in services supplied to the U.S. market by foreign MNEs. Affiliates in finance and insurance accounted for nearly half of the total increase. Among the notable changes in services supplied through U.S. affiliates were the following:

  • Finance and insurance. Services supplied by finance and insurance affiliates increased $17.6 billion to $179.2 billion. This increase reflected a $17.6 billion increase in services supplied by affiliates in insurance and related activities. Over half of the total increase in finance and insurance was due to affiliates with Canadian UBOs, for which services supplied increased $9.6 billion, or 38 percent.
  • Professional, scientific, and technical services. Services supplied by affiliates in professional, scientific, and technical services increased $8.5 billion to $120.1 billion, led by increases in computer systems design and related services; other professional, scientific, and technical services; and management, scientific, and technical consulting.
  • Wholesale trade. Services supplied by wholesale trade affiliates increased $7.5 billion to $189.0 billion. The increase reflected increases in services supplied by wholesalers of petroleum and petroleum products and by affiliates in the other wholesale trade, including distributors of machinery, equipment, and supplies.
  • Retail trade.21 Services supplied by retail trade affiliates increased $6.6 billion to $60.9 billion. The increase reflected increases in services supplied by food and beverage store affiliates and in services supplied by retail trade affiliates in other retail trade, which includes retailers of goods such as furniture and home furnishings and general merchandise.
  • Information. Services supplied by affiliates in information increased $6.0 billion to $120.7 billion, reflecting an increase in services supplied by European-owned affiliates.
  • Mining. Services supplied by affiliates in mining decreased $6.2 billion, or 19 percent, to $26.8 billion, mostly reflecting a $5.7 billion decrease in services supplied by affiliates in mining other than oil and gas extraction. In mining other than oil and gas extraction, services supplied by affiliates with UBOs in Latin America and Other Western Hemisphere decreased $3.2 billion.

Services supplied through affiliates by country

Table F shows, for 2016, the top 10 countries for (1) services supplied through foreign affiliates of U.S. MNEs to foreign markets, by country of the foreign affiliate, and (2) services supplied through U.S. affiliates of foreign MNEs to the U.S. market, by country of the UBO.

The top country through which U.S. MNEs supplied services to foreign markets through their foreign affiliates in 2016 was the United Kingdom, followed by Ireland, which overtook Canada as the second-highest ranked country in 2016. For services supplied to the U.S. market through U.S. affiliates, the top UBO country was Japan, followed by the United Kingdom and Germany.

The top 10 countries as measured by the sum of 2016 services supplied by foreign affiliates and by U.S. affiliates are shown in chart 12; the chart shows services supplied for both 2015 and 2016. Decreases in services supplied by affiliates in four of these countries contributed to the $6.5 billion decrease in services supplied to foreign markets in 2016. Other than services supplied by Irish affiliates, which increased, no other 2016 change for the countries shown in chart 12 exceeded 10 percent. Among the notable 2016 decreases in services supplied are the following:

  • Canada. Services supplied by Canadian affiliates decreased $4.4 billion to $117.2 billion. Most of the decrease was in other industries, particularly utilities.
Chart 12. Services Supplied Through Affiliates of MNEs for Selected Countries, 2015 and 2016

[Click chart to expand]

  • Hong Kong. Services supplied through affiliates in Hong Kong (not shown in chart 12) decreased $3.9 billion to $26.0 billion; $2.4 billion of the decrease was in finance and insurance.
  • Brazil. Services supplied through affiliates in Brazil (not shown in chart 12) decreased $3.1 billion to $39.1 billion, partly reflecting a decrease in other industries, primarily in utilities.
  • Singapore. Services supplied by Singaporean affiliates decreased $2.8 billion to $77.8 billion, reflecting decreases in finance and insurance and in information.

Despite the overall decrease in services supplied through foreign affiliates, services supplied by affiliates in several countries increased in 2016, most notably in Ireland.

  • Ireland. Services supplied by Irish affiliates of U.S. MNEs increased $13.0 billion, or 12 percent, to $125.2 billion. Of this increase, $4.6 billion was in information; $3.3 billion was in professional, scientific, and technical services; and $3.2 billion was in administration, support, and waste management services.
  • The Netherlands. Services supplied by affiliates in the Netherlands increased $5.0 billion to $66.2 billion, primarily in repair and maintenance services.
  • Japan. Services supplied by Japanese affiliates increased $4.3 billion to $72.0 billion, reflecting an increase in information.

Services supplied through U.S. affiliates of foreign MNEs to the U.S. market increased $37.2 billion in 2016. The largest increase was Canada, followed by the Netherlands and the United Kingdom. Services supplied by German affiliates notably decreased.

  • Canada. Services supplied by Canadian-owned affiliates increased $11.5 billion, or 12 percent, to $108.5 billion in 2016. Affiliates in finance and insurance accounted for $9.6 billion of this increase, mostly insurance carriers and related activities.
  • The Netherlands. Services supplied by Netherlands-owned affiliates increased $6.4 billion to $51.9 billion.
  • United Kingdom. Services supplied by U.K.-owned affiliates increased $4.9 billion to $143.3 billion, reflecting a $5.0 billion, or 97 percent, increase in services supplied by retail trade affiliates.
  • Japan. Services supplied by Japanese-owned affiliates increased $4.6 billion to $158.6 billion, reflecting a $5.5 billion increase in finance and insurance.
  • France. Services supplied by French-owned affiliates increased $2.4 billion, mostly reflecting an increase in professional, scientific, and technical services.
  • Spain. Services supplied by Spanish-owned affiliates (not shown in chart 12) increased $2.3 billion. Nearly half of the increase was explained by an increase in other industries.
  • China. Services supplied by Chinese-owned affiliates increased $2.3 billion, reflecting broad increases across industries.
  • India. Services supplied by Indian-owned affiliates (not shown in chart 12) increased $2.3 billion, mostly reflecting an increase in professional, scientific, and technical services.
  • Germany. The largest decrease in 2016 was for affiliates with German UBOs. Services supplied by German-owned U.S. affiliates decreased $2.7 billion, reflecting a decrease for affiliates in primary and fabricated metals manufacturing.

Services supplied by destination

Foreign affiliates not only supply services to foreign markets, but they also supply services to the U.S. market.22 Services supplied to foreign markets, which include local markets and other foreign markets, accounted for 88 percent of the $1,663.1 billion in services supplied by foreign affiliates worldwide in 2016. Services supplied to the U.S. market, which are not included in the international services statistics discussed in this article, accounted for the remaining 12 percent (table G). In 2016, transactions in the affiliates’ local market accounted for 65 percent of services supplied worldwide through affiliates, while transactions in other foreign markets accounted for 22 percent.

U.S. affiliates not only supply services to the U.S. market, but they also supply services to other markets (which are mostly classified as U.S. exports of services). However, transactions in the U.S. market account for the vast majority of the services supplied by U.S. affiliates worldwide. In 2016, transactions in the U.S. market accounted for 91 percent of the $1,097.9 billion in services supplied by U.S. affiliates worldwide. Services supplied to foreign markets, which are not included in the international services statistics discussed in this article, accounted for the remaining 9 percent.

 

 

 


  1. More information on the definitions, coverage, and methodology of trade in services and services supplied through affiliates is available on the Bureau of Economic Analysis website.
  2. The term “affiliates” in this article refers to majority-owned affiliates. The statistics on services supplied through affiliates cover the full value of services provided by majority-owned affiliates, irrespective of the percentage of ownership.
  3. The statistics on trade in services and services supplied through affiliates are not directly comparable, because of differences in coverage and classification. For example, wholesale and retail trade distributive services are included in services supplied through affiliates but not in trade in services statistics. Trade in services are collected and published by type of service, but services supplied through affiliates are collected and published by the affiliate’s primary industry. For more information, see “Definition of International Services” on BEA’s website.
  4. World Trade Organization and United Nations Conference on Trade and Development Quarterly Trade in Commercial Services.
  5. Travel (for all purposes including education) is the name used in the trade in services statistics to encompass a broadly defined travel category. This category includes business travel and personal travel. Business travel includes expenditures by border, seasonal, and other short-term workers and other business travel. Personal travel includes health-related travel, education-related travel, and other personal travel. Note that airfares or other expenditures associated with transporting travelers between the United States and foreign countries are not classified in travel; these expenditures are included in transport services.
  6. See Alexis N. Grimm and Maya Ortiz, “U.S. International Services: Trade in Services in 2015 and Services Supplied Through Affiliates in 2014,” Survey 96 (December 2016) for a discussion of the geographic detail added to BEA’s trade in services statistics in 2016.
  7. Aon Benfield, Weather, Climate & Catastrophe Insight – 2017 Annual Report, January 24, 2018.
  8. National Flood Insurance Program’s (NFIP) Reinsurance Program.
  9. See Christopher L. Bach, “Annual Revision of the U.S. International Accounts, 1992–2002,” Survey 83, (July 2003): 32–45.
  10. For detailed descriptions of the fundamental concepts, definitions, classifications, and accounting framework that underlie the NIPAs and the general sources and methods that are used to prepare the estimates, see NIPA Handbook: Concepts and Methods of the U.S. National Income and Product Accounts on BEA’s website.
  11. When insured losses do not exceed the 0.1 percent of GDP threshold, losses covered by insurers abroad are deemed to be “regularly occurring” and are recorded as current transfers in the secondary income account of the ITAs.
  12. The statistics in this article supersede those presented in the October 2017 Survey of Current Business. Revisions of trade in services statistics for 2010 to 2017 were published in June of 2018 and are already reflected in the ITAs and monthly trade statistics found on BEA’s website.
  13. Based on data from the December 2017 monthly report from the World Federation of Exchanges.
  14. National Science Board, Science and Engineering Indicators 2018 (Alexandria, VA: National Science Foundation, 2018 (NSB–2018–1)).
  15. For a detailed description of how ICT and potentially ICT-enabled statistics are defined, see Alexis N. Grimm, “Trends in U.S. Trade in Information and Communications Technology (ICT) Services and in ICT-Enabled Services,” Survey of Current Business 96 (May 2016).
  16. The EBOPS guidelines were established by the Manual on Statistics of International Trade in Services (Geneva: United Nations Department of Economic and Social Affairs, 2010) and Balance of Payments and International Investment Position Manual, Sixth Edition (Washington, DC: International Monetary Fund, 2009).
  17. The UBO of a U.S. affiliate is that person or entity, proceeding up the affiliate’s ownership chain, beginning with and including the foreign parent, that is not owned by more than 50 percent by another person. Unlike the foreign parent, the UBO of an affiliate may be located in the United States. The UBO of each affiliate ultimately owns or controls the U.S. affiliate and therefore ultimately derives the benefits from ownership or control.
  18. Other industries includes agriculture, forestry, fishing, and hunting; utilities; construction; transportation and warehousing; management of nonbank companies and enterprises; administration, support, and waste management; health care and social assistance; accommodation and food services; and miscellaneous services.
  19. Wholesale trade includes motor vehicles and other motor vehicle parts and supplies; professional and commercial equipment and supplies; electrical and electronic goods; petroleum and petroleum products; drugs and druggists’ sundries; and other wholesale trade.
  20. Other information services covers businesses engaged in supplying information, storing and providing access to information, searching and retrieving information, operating websites that use search engines to allow for searching information on the Internet, or publishing and/or broadcasting content exclusively on the Internet.
  21. Retail trade includes general merchandise stores; clothing and clothing accessories stores; food and beverage stores; nonstore retailers; and other retail trade.
  22. Services supplied by foreign affiliates to the U.S. market are mostly classified as U.S. imports of services. However, data from BEA’s direct investment surveys on these services supplied are not used to estimate U.S. imports of services; data on these services are collected along with data on other U.S. services imports in BEA’s services trade collection program. Of the services supplied by foreign affiliates to the U.S. market, distributive services in wholesale and retail trade are generally not included as U.S. imports of services.