The U.S. service sector, which accounted for 81 percent of both U.S. private-sector gross domestic product and U.S. employment in 2001, continued to exert a positive effect on U.S. trade performance despite reduced services exports that year, reports the U.S. International Trade Commission (ITC) in its publication Recent Trends in U.S. Services Trade, 2003 Annual Report.

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 2001, the most recent period for which annual services trade data are available. The report also compares the 2001 data to the trend of the previous five years. The report also examines services provided to U.S. and foreign consumers by multinational firms' overseas affiliates. Industry discussions include a brief examination of issues and trends influencing global competitive conditions.

The ITC, an independent, nonpartisan, factfinding federal agency, publishes this report as a companion to its separate annual report Shifts in U.S. Merchandise Trade, issued annually in July.

Following are highlights of the report:

• The U.S. current account balance registered a surplus on trade in private-sector services of $74 billion in 2001. The private-sector cross-border services trade surplus decreased at an average annual rate of 3 percent during 1996-2000, and by a further 2 percent in 2001. Exports decreased by 4 percent to $266.2 billion in 2001, following the average annual growth of 6 percent experienced during 1996-2000. Imports decreased by 5 percent in 2001, after growing at an average annual rate of 10 percent during 1996-2000.

• In 2001, as in most other years, the majority of U.S. service industries registered cross-border trade surpluses. Prominent exceptions included passenger transport, freight transport, and insurance services. Certain professional service industries, such as advertising and accounting, also experienced trade deficits in 2001 despite the $21.7 billion surplus registered on overall trade in professional services. In a pronounced departure from historical patterns, U.S. telecommunication carriers posted a small surplus in 2001, as staged reductions in international settlement rates continued to drive down imports.

• Sales by majority-owned, foreign-based affiliates of U.S. companies increased by 11 percent to $392.8 billion in 2000, the most recent year for which affiliate trade data is available. U.S.-owned affiliates in the public utilities industry and the financial services industry each accounted for 10 percent of total services sales. Purchases from majority- owned, U.S.-based affiliates of foreign firms totaled $346.7 billion in 2000, up 18 percent over the previous year.

• U.S. direct investment in foreign service industries totaled $885.5 billion in 2001. Such investment increased by 3 percent in 2001, slower than the 13 percent average annual growth rate recorded during 1996-2000. Foreign direct investment in U.S. service industries increased by 19 percent to $655.5 billion in 2001. This was in line with average annual growth of 18 percent recorded during 1996-2000.

The foregoing information is from the ITC report Recent Trends in U.S. Services Trade, 2003 Annual Report (Investigation No. 332-345, USITC publication 3599, May 2003). The report may be obtained from the Publications section of the ITC Internet site (www.usitc.gov) or 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.