United States International Trade Commission doc Digital Trade in the U.S. and Global Economies, Part 2

At the request of the U.S. Senate Committee on Finance, the U.S. International Trade Commission (“Commission”) undertook an investigation to better understand the role of digital trade—domestic commerce and international trade conducted via the Internet—in the U.S. and global economies, as well as the effects of barriers and impediments to digital trade that impede U.S. access to global markets. The Commission’s analysis provides findings at three levels: at the firm level, through 10 case studies; at the industry level, through a survey of U.S. businesses; and at the economy-wide level, using computable general equilibrium and econometric models. This analysis shows that digital trade contributes to economic output by improving productivity and reducing trade costs. Digital trade also contributes to the economy as a whole as it facilitates communication, expedites business transactions, improves access to information, and improves market opportunities for small and medium-sized enterprises (SMEs). Digital trade’s combined effects of increased productivity and lower trade costs are estimated to have increased U.S. real gross domestic product (GDP) by $517.1−$710.7 billion (3.4−4.8 percent), and increased U.S. aggregate employment by 0.0 to 2.4 million full-time equivalents (0.0 to 1.8 percent). These estimates of the effects of digital trade are not exhaustive, however, as other effects of digital trade were not captured in these findings. According to survey results, U.S. firms in digitally intensive industries sold $935.2 billion in products and services online in 2012, including $222.9 billion in exports; they purchased $471.4 billion in products and services online in 2012, including $106.2 billion in imports. Online sales by U.S. SMEs in digitally intensive industries totaled $227.1 billion in 2012. However, the Commission’s analysis suggests that foreign trade barriers are having discernible effects on U.S. digital trade. According to the Commission’s econometric estimates, removing these barriers would increase the U.S. real GDP by an estimated $16.7−$41.4 billion (0.1–0.3 percent).