Jensen writes policy vignette on benefits of services sector
Senior Policy Scholar Brad Jensen has written an economic policy vignette, “Overlooked Opportunities for U.S. Exports of Business Services,” based on testimony he gave to the House Ways and Means Committee on September 20th. In the piece Dr. Jensen argues that the United States is missing a large opportunity for growth through exporting services to large countries experiencing tremendous growth, such as India, China, and Brazil. The business service sector is large (twice the size of the manufacturing sector), pays high wages, and many business service activities are tradable. Further, the U.S. has comparative advantage in tradable business service activities and should be pushing aggressively for liberalization of services trade.
While manufacturing trade experiences barriers such as tariffs, Jensen said that business services must navigate a, “thicket of domestic regulations, policies, and industrial practices,” that make exporting these services quite difficult. These include such rules as requiring a commercial presence, economic needs tests, requirements for joint ventures, licensing accreditation, differential tax treatments, and government procurement practices. The Trans-Pacific Partnership, a possible International Services Agreement, and a potential FTA between the US and the EU offer exciting opportunities to advance services liberalization.