Services have also become a significant component of U.S. international trade, accounting for $752.4 billion of U.S. exports in 2016. As such, it is an increasingly important component of U.S. trade policy and of global trade in general. Rapid advances in information technology and the related growth of global value chains are making an expanding range of services tradable across national borders. A number of economists have argued that foreign government barriers prevent U.S. trade in services from expanding to its full potential. Under the Trump Administration, the United States may continue to engage in trade negotiations on multilateral, plurilateral, bilateral, and regional agreements with one goal being to lower these barriers. This report provides background information and analysis on U.S. international trade in services, including the types and volumes of traded services. The report also examines emerging issues and current and potential trade agreements, including renegotiation of the North American Free Trade Agreement (NAFTA), the Trade in Services Agreement (TiSA), and the Transatlantic Trade and Investment Partnership (T-TIP). To address this complexity, members of the World Trade Organization (WTO) have adopted a system of classifying four modes of delivery for services to measure trade in services and to classify government measures that affect trade in services in international agreements (see Figure 1 ). For cross-border trade, in 2016, services accounted for 34.1% of the $2,208 billion total in U.S. exports (of goods and services) and 18.6% of the $2,713 billion in total U.S. imports. Conventional trade data are not measured on a value-added basis and do not attribute any portion of the traded value of manufactured and agricultural products to services inputs, such as research and development, design, transportation costs, and finance. Trade by Type of Service

The U.S. Bureau of Economic Analysis divides services into nine categories:
Maintenance and repair; Transport; Travel (for all purposes including tourism, education); Insurance; Financial; Charges for the use of intellectual property (IP) (e.g., patents, trademarks, franchise fees); Telecommunications, computer, and information; Other business services (e.g., research and development, accounting, engineering); and Government goods and services. The United States is a major exporter and importer of services in global markets. The GATS
binds each member to its commitments once it has made them, that is, a member country may not impose less favorable treatment than that to which it has committed; provides market access by prohibiting member-country governments from placing limits on suppliers of services from other member countries regarding the number of foreign service suppliers, the total value of service transactions or assets, the number of transactions or value of output, the type of legal entity or joint venture through which services may be supplied, and the share of foreign capital or total value of foreign direct investment; requires that member governments accord service suppliers from other member countries national treatment , that is, a foreign service or service provider may not be treated any less favorably than a domestic provider of the service; and allows members to negotiate further reductions in barriers to trade in services. Trade in Services Agreement (TiSA) 57

Largely because of the lack of progress in the WTO, negotiations on a proposed Trade in Services Agreement (TiSA) were launched in April 2013 to achieve a sector-specific, plurilateral agreement to liberalize trade in services. North American Free Trade Agreement (NAFTA) 70

Discussions to renegotiate NAFTA with Canada and Mexico began on August 16, 2017. U.S.-South Korea Free Trade Agreement (KORUS FTA)74

On March 15, 2012, the U.S.-South Korean FTA (KORUS FTA) entered into force. In addition to its KORUS commitments, South Korea has also committed to opening up its legal services market to foreign law firms in its free trade agreements with the EU, the UK, Australia, and Canada. The outlook for the ongoing negotiations remains uncertain, as participants in each negotiation deal with difficult and complex issues. Potential policy issues for Congress and negotiators to address include the following:
To what extent are U.S. positions on trade in services in the renegotiation of NAFTA, potential renegotiation of KORUS, TiSA, and T-TIP negotiations consistent with U.S. trade negotiating objectives on services as defined in the TPA legislation? How might Congress work with the Administration in relation to these pending negotiations?
Trade in "services" refers to a wide and growing range of economic activities. These activities include transport, tourism, financial services, use of intellectual property, telecommunications and information services, government services, maintenance, and other professional services from accounting to legal services. Compared to goods, the types and volume of services that can be traded are limited by factors such as the requirement for direct buyer-provider contact, and other unique characteristics such as the reusability of services (e.g., professional consulting) for which traditional value measures do not account. In addition to services as independent exports, manufactured and agricultural products incorporate and depend on services, such as research and development or shipping of intermediate or final goods. As services account for 82% of U.S. private sector jobs, U.S. trade in services, both services as exports and as inputs to other exported products, can have a broad impact across the U.S. economy.
Rapid advances in information technology and the related growth of global value chains have expanded both the level and the range of services tradable across national borders. As a result, services have become a priority in U.S. trade policy, and a significant part of U.S. trade flows and of global trade in general, accounting for $752.4 billion in U.S. exports. As the United States is the world's largest exporter and importer of services (15% and 10% of the global total in 2016), the Administration's discussions on potential and existing trade agreements that include services are significant.
A number of economists argue that "behind the border" barriers imposed by foreign governments prevent U.S. trade in services from expanding to its full potential. The United States continues to negotiate trade agreements to lower these barriers. It was a leading force in concluding the General Agreement on Trade in Services (GATS) in the World Trade Organization (WTO) in 1994, and in past U.S. free trade agreements, all of which contain significant provisions on market access and rules for liberalizing trade in services. Trade agreements involving trade in services currently under discussion include the following.
Renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico. Review of the U.S.-South Korea Free Trade Agreement (KORUS). Potential continued negotiation of the Trade in Services Agreement (TiSA), a plurilateral agreement outside of the WTO with 22 other countries, or of the Transatlantic Trade and Investment Partnership (T-TIP) free trade agreement with the European Union (EU). Potential new and updated bilateral free trade agreements with other partners.
In each case, participants have difficult issues to address and the outlook for progress is uncertain. For each agreement, Congress may consider legislation to implement agreements potentially concluded in the future.
Congress and U.S. trade negotiators face additional issues, including how to balance the need for effective regulations of services with the objective of opening markets for U.S. exports and trade in services; ensuring adequate and accurate data to measure trade in services to inform trade policy; and determining whether further international cooperation efforts are needed to improve the regulatory environment for services trade beyond initial market access. This report provides background information and analysis on these and other emerging issues related to U.S. international trade in services. In addition, it examines existing and potential trade agreements as they relate to services trade.