Buying From Bermuda!

By: kekepana.com

Still working my way through Commerce’s new report on U.S. services trade. If you were with me yesterday, you have a sense of what services America buys and the services that we successfully export. What might surprise you is that the United States has a trade surplus for services with almost any country you can think of. Our biggest surplus is with Canada, but we also sell more than we buy with Japan, Ireland, Brazil, the United Kingdom, Mexico and even the current bogeyman of trade, China.

Who do we buy and sell services with?

Who do we have a deficit with? India is not too surprising, given all those computer services we buy from them. But our biggest deficit of all? Bermuda! Who knew that Bermuda was a major trading partner? But most of the re-insurance that our insurance companies buy from overseas comes from Bermuda companies. Who knew? Other big re-insurers include Switzerland, Caribbean nations, Ireland, Germany and the United Kingdom.

China has a big appetite for U.S. services.

The Commerce report highlights China, presumably because so many people are either bashing the Chinese over the value of the yuan, or complaining about Chinese trade barriers. There are indeed barriers that apply to services, but our service exporters seem to be finding ways to deal with them. Despite the thousands of American travelers streaming to Xian, Beijing and other Chinese sights, China spends even more coming to Disneyworld, Broadway and Vegas. Educational services are huge winners for us in China, both for U.S. institutions opening up Chinese campuses and for those that attract Chinese students to the United States. Licensing, financial services and even construction services are big winners in the Chinese market. About the only services for which we have run a deficit with China are freight and port fees, computer services and R&D – and these are dwarfed by our surpluses.

It's not just call centers ...

Bermuda aside, our largest services deficit is with India. No surprises here, that deficit is due to all the computer services we buy from India. Not just computer help lines, but software engineering on a huge scale. The image software I use, purchased from a U.S. company, has an engineering staff that looks totally Indian. India is also selling us management consulting services and R&D services. That doesn’t mean that we can’t sell services in India. They spend plenty on travel to the United States and for the software licenses on the programs they need to develop new software.