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Working Paper 08-10

Recent Trade Patterns and Modes of Supply in Computer and Information Services in the United States and NAFTA Partners

by Jacob Funk Kirkegaard, Peterson Institute for International Economics

October 2008

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Jacob Funk KirkegaardThis paper evaluates the statistical strengths and weaknesses of available data on US trade in computer and information services and estimates the scope of delivery through General Agreement on Trade in Services (GATS) modes 1 (cross-border supply), 3 (commercial presence), and 4 (presence of foreign nationals). Trade values are estimated using a new methodology that adheres, to the greatest extent possible, to the definitions of modes of supply in the 2002 Manual on Statistics of International Trade in Services.

Kirkegaard finds that US trade (particularly exports) in computer and information services is overwhelmingly and increasingly delivered through mode 3. He finds that the United States experienced declining overall revealed comparative advantage (RCA) in traditional mode-1 computer and information services trade from 1986 to 2006, while having a stable, positive RCA in mode-3 trade. A new methodology for tentatively estimating US imports of computer and information services in GATS mode 4 suggests that the information technology services sector dominates US mode-4 imports and that these imports are several times larger than US traditional mode-1 imports of computer and information services.