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Highlights

Trade in business, professional, and technical (BPT) services associated with offshoring needs to be accurately tracked, but a gap exists between U.S. and Indian data. The extent of and reasons for this gap are important to understand in order to address questions about the magnitude of offshoring and to analyze its future development. Under the authority of the Comptroller General of the United States, and as part of a body of GAO work on the issue of offshoring of services, this report (1) describes the extent of the gap between U.S. and Indian data, (2) identifies factors that contribute to the difference between the two countries' data, and (3) examines the challenges the United States has faced in collecting services trade data. GAO has addressed this report to the congressional committees of jurisdiction.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Commerce 1. The Secretary of Commerce should direct BEA to systematically expand its sources of information for identifying firms to survey. BEA should consider ways to improve its identification of the appropriate survey forms to send to firms and the information requested about services imports, particularly with regard to affiliated imports.
Closed - Implemented
GAO reported in October 2005 (GAO-06-116) a gap between U.S. and Indian trade data in category of services associated with offshoring. The GAO report identified a number of factors contributing to the difference, and reported on the challenges the U.S. Bureau of Economic Analysis (BEA) experiences in identifying all U.S. services importers and obtaining quality survey data from importers. To improve the overall quality of services trade data, GAO recommended that the Secretary of Commerce direct BEA to expand its sources of information for identifying firms to survey and consider ways to improve its administration of surveys in order to collect needed information on services imports, particularly with regard to affiliated imports. In response to GAO's recommendations, BEA has undertaken a number of actions. First, BEA has made improvements to its mailing lists of firms to survey. To better identify potential respondents for its benchmark survey, BEA purchased a commercial mailing list of potential survey respondents and established an internal mailing list team to identify new services importers. Second, to improve its identification of the appropriate survey forms to send to firms and the information requested about services imports, particularly with regard to affiliated imports, BEA redesigned its surveys covering trade in services to consolidate coverage of affiliated and unaffiliated trade in services in the same survey. Beginning in the first quarter of 2007, BEA expanded and moved survey questions on affiliated trade in services from the quarterly survey of US direct investment abroad (BE-577) and the quarterly survey of foreign direct investment in the United States (BE-605) to the quarterly survey of selected services (BE-125) and the quarterly survey of financial services (BE-185), which had previously collected only inabilities trade data. Third, to help identify services importers, in 2007 BEA requested and received authorized access to company information from the Bureau to supplement BEA sample frames for its surveys of US direct investment abroad, foreign direct investment in the United States, and US international services transactions. In addition, following BEA request the Census Bureau added two questions to the 2006 Company Organization Survey (COS) requesting data from firms on services purchased from any foreign entities and whether the purchases exceeded a threshold amount. At BEA request, Census sent the COS survey to an additional 20,000 smaller firms to identify smaller services importers.
Department of Commerce 2. The Secretary of Commerce should direct BEA to pursue additional company information from previous Census surveys and consider requesting Census to add questions to future surveys to help identify services importers.
Closed - Implemented
GAO reported in October 2005 (GAO-06-116) a gap between U.S. and Indian trade data in category of services associated with offshoring. The GAO report identified a number of factors contributing to the difference, and reported on the challenges the U.S. Bureau of Economic Analysis (BEA) experiences in identifying all U.S. services importers and obtaining quality survey data from importers. To improve the overall quality of services trade data, GAO recommended that the Secretary of Commerce direct BEA to expand its sources of information for identifying firms to survey and consider ways to improve its administration of surveys in order to collect needed information on services imports, particularly with regard to affiliated imports. In response to GAO's recommendations, BEA has undertaken a number of actions. First, BEA has made improvements to its mailing lists of firms to survey. To better identify potential respondents for its benchmark survey, BEA purchased a commercial mailing list of potential survey respondents and established an internal mailing list team to identify new services importers. Second, to improve its identification of the appropriate survey forms to send to firms and the information requested about services imports, particularly with regard to affiliated imports, BEA redesigned its surveys covering trade in services to consolidate coverage of affiliated and unaffiliated trade in services in the same survey. Beginning in the first quarter of 2007, BEA expanded and moved survey questions on affiliated trade in services from the quarterly survey of US direct investment abroad (BE-577) and the quarterly survey of foreign direct investment in the United States (BE-605) to the quarterly survey of selected services (BE-125) and the quarterly survey of financial services (BE-185), which had previously collected only inabilities trade data. Third, to help identify services importers, in 2007 BEA requested and received authorized access to company information from the Bureau to supplement BEA sample frames for its surveys of US direct investment abroad, foreign direct investment in the United States, and US international services transactions. In addition, following BEA request the Census Bureau added two questions to the 2006 Company Organization Survey (COS) requesting data from firms on services purchased from any foreign entities and whether the purchases exceeded a threshold amount. At BEA request, Census sent the COS survey to an additional 20,000 smaller firms to identify smaller services importers.

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