TechAmerica Foundation Whitepaper Underscores the Importance of Free Trade Agreements
U.S. tech trade of goods and services tops more than $1 trillion according to the latest whitepaper by the TechAmerica Foundation. The paper examines the latest data on the exports and imports of both tech goods and services, showing their significance to the U.S. economy.
"The largest destinations for tech goods go to our closest trading partners, Mexico and Canada, which is a testament to the importance of free trade agreements to the American technology industry," said Burak Guvensoylar, manager of government affairs at TechAmerica. "As the U.S. continues to negotiate robust 21st century free trade agreements, such as the proposed Trans-Pacific Partnership (TPP), Transatlantic Trade & Investment Partnership (TTIP), the Trade in Services Agreement (TISA) and the expansion of the Information Technology Agreement (ITA), these agreements have the potential to increase market access, eliminate tariffs, strengthen intellectual property rights, and ensure the movement of data across the globe."
The United States has trade agreements with 20 countries, and is looking to create two new large scale agreements, one in the Pacific and one in the Atlantic. These new agreements could expand U.S. free trade markets to 53 countries, creating significant opportunities for U.S. technology companies.
Many of the goods imported into the United States are part of a global supply chain, where U.S. multinational companies create and design tech products in the United States and produce the finalized product overseas. In these cases, the bulk of the profit from the products is accrued to the U.S. firm. Often the importation of a technology good represents an intra-company transfer as U.S. firms brings their products into the United States for sale from their overseas production facilities.
The United States has a tech trade surplus of nearly $5 billion when both tech goods and services are combined, with $501 billion in exports compared with $496 billion in imports. Goods exports and imports have been fairly flat for the last three years after rebounding from the global market crash in 2009.
For tech goods, tech imports totaled $351 billion compared to $205 billion in exports in 2013. For tech services, exports exceeded imports with $303 billion in exports compared to $161 billion in imports in 2011, the most recent year complete data are available.
"Tech services are a key growth driver of tech exports. Telecommunications in particular feed both exports in goods and services, noted by the 9 percent increase in telecommunications services from 2011-2012 and the 6.6 percent increase in communications goods from 2012-2013," said Matthew Kazmierczak, senior director of research and market intelligence at TechAmerica Foundation. "Other key tech services include systems design, software, R&D and testing, and Internet services such as cloud computing and mobility strategy."
The report also provides the latest tech goods exports by state. Texas continued to build on its status as the leading state by tech goods exports, growing from $45.1 billion in 2012 to $48.2 billion in 2013, a 6.7 percent growth rate, compared to a national growth rate of 0.8 percent. California is a close second to Texas in revenue of exports, but the state saw a 5.1 percent decline in year-to-year exports. Texas and California combine for 44 percent of America's total tech good exports. As the U.S. tech industry continues to look to overseas markets for growth, new trade agreements could directly increase the exports of tech goods for many states.
