LIBERALIZING TRADE IN SERVICES

The services sector—certainly compared with other sectors—is well informed and ready to take advantage of the next round of World Trade Organization (WTO) services negotiations set to begin later this year. The United States has a particularly big stake in these negotiations, a stake rising to the level of a national economic security imperative. I believe these negotiations will further expand U.S. global markets, enabling our service sector to increase its 77 percent share of U.S. employment, its 79 percent share of gross domestic product, its trade surplus of about $80 billion, and its 30 percent share of U.S. exports. Because foreigners have a great tendency to consume U.S. services, negotiations that reduce barriers across a wide range of highly pro-tected foreign services markets could materially stimulate U.S. trade. The United States is very competitive in virtually every category of services trade (see appendix). One recent suggestion has been that successful multilateral services negotiations could offset the structural goods deficit. Catherine Mann (1999: 9) wrote as follows: As income in a foreign country grows, its imports of U.S. services tend to rise disproportionately. Successful broad-based negotiations on trade in services will likely increase U.S. exports of services even further, with a positive effect on the trade deficit. The long-term trajectory of the U.S. external balances could be altered significantly by the combination of successful service-sector negotiations and broad-based liberalization and deregulation at home and especially abroad. These together would unleash higher productivity and faster growth at home and abroad, which would narrow the U.S. current account deficit