United States WT/TPR/S/235 
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I. ECONOMIC ENVIRONMENT 
(1) NATIONAL INCOME AND ECONOMIC BALANCES  
1. During the period under review (first quarter of  2008 to first quarter of 2010), the U.S. 
economy experienced a severe and protracted re cession following a sharp downturn in the housing 
market and associated banking and credit crisis.  Real GDP contracted in five out of the nine quarters 
covered by the Review.  The four consecutive quart ers of negative GDP growth during the second 
half of 2008 and the first half of 2009 largely reflected sharp falls in business and residential 
investment and consumption (Chart I.1). 
-10-8-6-4-20246
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2007 2008 2009 2010Chart I.1
Contribution to real GDP growth, 2007-10
(Percentage points)
Source:  Bureau of Economic An alysis, online information.Consumption
Government  expenditurePrivate investment
Net exports
 
2. An economic recovery has been under way since the second half of 2009, amid monetary and 
fiscal easing.1  Real GDP increased at seasonally adjusted annual rates of 2.2% and 5.6% in the last 
two quarters of 2009, and 3% in the first quarter of 2010, largely supported by private inventory 
investment and consumption.  Exports, boosted by recovery abroad, have also made a significant 
contribution to recent growth.  The Administra tion projects real GDP growth of 3% in 2010.2  
However, the recovery faces several challenges,  including the continued need for households to 
rebuild their wealth, the expected slow process of  financial sector repair and deleveraging, and 
continued weakness in the labour market.3 
                                                      
1 IMF (2010). 
2 From fourth quarter 2009 to fourth quarter 2010.  Council of Economic Advisers (2010). 
3 IMF (2010). WT/TPR/S/235 Trade Policy Review 
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3. The impact of the recession on the labour mark et has been severe.  The unemployment rate 
peaked at 10.1% in October 2009, five percentage points above its level in December 2007.  Although 
employment has grown since early 2010, the labour force participation rate has increased too, resulting in only a modest improvement in the unemp loyment rate, to 9.7% in March 2010 (Table I.1).  
After a substantial increase in labour productivity in the second half  of 2009, increases in output per 
worker have begun to slow. 
4. For several years before the onset of th e recession in December 2007, U.S. household 
spending was a key engine of U.S. and global ec onomic growth.  Rising house and equity prices, 
alongside falling interest rates and loosening lending  standards provided a st rong boost to household 
spending and pushed household debt to an unpreceden ted 140% of disposable income in 2007, from 
around 100% in 2000 (Chart I.2).  The recession reduced household wealth by around a quarter 
between the middle of 2007 and early 2009, contributing to a significant fall in spending, as households increased saving to rebuild asset s and hedge against economic uncertainty. 
Table I.1 
Selected macroeconom ic indicators, 2004-10 
(US$ billion and %) 
 2004 2005 2006 2007 2008 2009 I-2010a
GDP (US$ billion) 11,867.8 12,638. 4 13,398.9 14,077.6 14,441.4 14,256.3 14,601.4
 % change 
Real GDP 3.6 3.1 2.7 2.1 0.4 -2.4 3.0
Private consumption 3.5 3.4 2.9 2.6 -0.2 -0.6 3.5
Gross private domestic investment 10.0 5.5 2.7 -3.8 -7.3 -23.2 14.7
Fixed investment 7.3 6.5 2.3 -2.1 -5.1 -18.3 0.1
Non-residential 6.0 6.7 7.9 6.2 1.6 -17.8 3.1
Residential 9.8 6.2 -7.3 -18.5 -22.9 -20.5 -10.7
Exports (goods and services) 9.5 6.7 9.0 8.7 5.4 -9.6 7.2
Imports (goods and services) 11.0 6.1 6.1 2.0 -3.2 -13.9 10.4
Government consump tion and investment 1.4 0.3 1.4 1.7 3.1 1.8 -1.9
Federal 4.1 1.3 2.1 1.3 7.7 5.2 1.2
State and local -0.2 -0.2 0.9 2.0 0.5 -0.2 -3.9
Saving and investment  % of GDP 
Gross national saving 14.5 15.1 16.2 14.5 12.6 10.6 10.1
Private 15.8 15.1 15.4 14.0 15.2 17.0 16.9
Public -1.3 -0.1 0.9 0.5 -2.6 -6.4 -6.9
Net national saving 2.5 2.9 3.8 2.0 -0.2 -2.5 -2.7
Personal saving rate (% of disposable income) 3.4 1.4 2.4 1.7 2.7 4.3 3.4
Gross domestic investment 19.7 20.3 20.5 19.5 18.2 15.0 15.5
Private 16.6 17.2 17.4 16.3 14.8 11.4 12.1
Public 3.1 3.1 3.2 3.3 3.4 3.6 3.4
Net domestic investment 7.7 8.1 8.1 7.0 5.4 2.0 2.8
Money and prices  
M2 (December-December, % change) 5.6 4.1 6.0 6.1 9.8 3.4 1.5b
Consumer price index (annual average, % 
change) 2.7 3.4 3.2 2.8 3.8 -0.4 0.8c
Interest rates % 
Federal funds rate, effectived 1.35 3.22 4.97 5.02 1.92 0.16 0.16e
Treasury note (10-year) 4.27 4.29 4.80 4.63 3.66 3.26 3.73e
Exchange rate Broad index, 1997=100 
Nominal effective exchange rate 113.63 110.71 108.52 103.40 99.83 105.87 102.13e
Real effective exchange rate 99.38 97.75 96.64 92.03 88.29 91.84 87.71e
Table I.1 (cont'd)United States WT/TPR/S/235 
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 2004 2005 2006 2007 2008 2009 I-2010a
Fiscal balance % of GDP 
Federal -3.5 -2.6 -1.9 -1.2 -3.2 -9.9 -10.6f
State and local -1.3 -0.9 -0.8 -0.9 -1.3 -1.4 ..
Total government -4.8 -3.5 -2.6 -2.1 -4.5 -11.3 ..
Federal public debt 
Value (US$ billion, fiscal year end) 4,307 4,601 4,843 5,049 5,809 7,552 8,290
% of GDP 36.3 36.4 36.1 35.9 40.2 53.0 56.8
Employment    
Unemployment rate 5.5 5.1 4.6 4.6 5.8 9.3 9.7e
 
.. Not available.  
a Seasonally adjusted at annual rates, unless otherwise specified. 
b March 2009-March 2010. c March, 3-month % change. 
d The federal funds rate is the cost of borrowing immediately av ailable funds, primarily for one day.  The effective rate is a 
 weighted average of rates on brokered trades. e March 2010. 
f Estimate for the entire year. 
 
Source:  WTO Secretariat, based on:  Bureau of Economic Anal ysis online information [http://www.bea.gov];  Board of 
Governors of the Federal Reserve System onlin e information [http://www.federalreserve.gov/ 
econresdata/releases/statis ticsdata.htm];  Budget of the Unit ed States Government FY11 [http://www.g 
poaccess.gov/usbudget/];  and Bureau of Labor Sta tistics online informa tion [http://www.bls.gov]. 
Chart I.2
Wealth, debt, and consumption, 1995-2009
(% of disposable income and % of GDP)
0100200300400500600700
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009646566676869707172
Source :  Bureau of Economic Analysis online information. Viewed at: http://www.b ea.gov.HH net worth Consumption (right-hand axis) HH liabilities
% of GDP% of disposable personal income
 
5. The share of consumption reached an unpreced ented 70% of GDP in 2003.  A substantial 
amount of the remainder of GDP in the years lead ing to the recession was in the form of housing 
construction.  According to the Council of Economic  Advisers, this may have "crowded out" other WT/TPR/S/235 Trade Policy Review 
Page 4 
 
 
kinds of investment.4  Business investment in equipment and software fell sharply as a share of GDP 
between 2000 and 2003, and then plummeted in la te 2008 and early 2009, reflecting falling business 
confidence. 
6. The U.S. current account deficit widened betw een 2001 and 2006, reaching a peak of 6% of 
GDP in 2006, before narrowing to 2.7% of GDP in 2009 (Chart I.3 and Table AI.1).  Rising oil prices 
contributed significantly to the expanding deficit.  The share in the trade balance of petroleum and 
petroleum product imports went from 28% in 2001 to  40% in 2006, and to 65% in 2008, when oil 
prices spiked.  Petroleum and petroleum products  accounted for around 21% of total merchandise 
imports in 2008, up from 9% in 2001.  During the recession, the trade balance narrowed rapidly, as 
merchandise imports fell more than exports (see sec tion (3) developments in trade).  This led to a 
sharp reduction in the current account deficit, which in  2009 reached its lowest level in nominal terms 
since 2001. 
7. The narrowing current account deficit primarily reflects the sharp fall in investment during 
the recession.  The rise in household saving from 1.7%  in 2007 to 4.3% in 2009 was largely offset by 
negative government saving resulting from  a widening federal budget deficit. 
Chart I.3
Composition and level of the current account, 1995-2009
(US$ billion and % of GDP)
Source :  Bureau of Economic Analysis online information.
% of GDPUS$ billion
-1000-800-600-400-2000200
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-10-8-6-4-202
Unilateral transfers Trade balance Income balance
Current account (right-hand axis)
 
8. According to the Administration, there is a n eed to "rebalance" the U.S. economy by reducing 
the reliance on household spending and residentia l investment as engines of economic growth, and 
increasing the share of non-residential i nvestment and exports in total output.5  The U.S. authorities 
note that improved financial regul ation and smaller wealth effects from asset prices should restore 
household savings closer to historical rates.  Fu rthermore, they state that the United States is 
                                                      
4 Council of Economic Advisers (2010). 
5 Council of Economic Advisers (2010). United States WT/TPR/S/235 
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committed to increasing the national saving rate in pa rt through a reduction in the fiscal deficit.  The 
authorities consider that in addition to these changes,  a successful shift toward a more balanced world 
growth model, generated by increased consumption in nations with current account surpluses, could 
improve net exports even more and bring the curre nt account deficit toward its mid 1990s level of 
roughly 1% to 2% of GDP. 
9. As part of its rebalancing efforts, the United States is also focusing on encouraging export 
growth through promotion and enforcement activities (see Chapters II(1) and III(2)(vii)). 
(2) MONETARY AND FISCAL POLICIES  
10. During the period under review, the United States used a wide range of monetary and fiscal 
policy instruments to address worsening economic c onditions.  The Federal Reserve cut the target 
short-term interest rate repeatedly during 2008, fro m 4.25% early in the year to nearly zero.  The 
target rate remained at this level during 2009 and th e first quarter of 2010.  In early 2010, the Federal 
Reserve indicated that economic conditions "are li kely to warrant exceptionally low levels of the 
federal funds rate for an extended period".  Accordin g to the Federal Reserve, inflation is likely to be 
subdued amid substantial resource slack and st able longer-term inflation expectations.6 
11. The Federal Reserve's response to the economic  crisis involved also "less conventional" 
monetary policy tools, including large-scale purchase s of Treasury securities and securities issued or 
guaranteed by the housing govern ment-sponsored enterprises (GSEs), including Fannie Mae and 
Freddie Mac.  These purchases "lowered mortga ge interest rates, which made housing more 
affordable and allowed millions of American s to reduce their payments by refinancing".7 
12. The U.S. dollar depreciated in nominal and r eal terms until mid 2008, extending a period of 
depreciation that began in 2002.  This was followe d by significant nominal and real appreciation until 
the first quarter of 2009, and depreciation for the rest of that year (Table I.1).  In this context, the U.S. 
authorities note the important role of safe-haven flows in boosting the value of the dollar during the crisis, and observe that the recent depreciation reflects the unwinding of such flows, and the 
increasing use of the dollar for funding of financ ial trades on the back of a favourable interest 
differential.
8 
13. The United States adopted a fiscal stimulus package under the American Recovery and 
Reinvestment Act of 2009 (ARRA), at an estimat ed cost of US$787 billion during fiscal years 
2009-19.9  Roughly one third of ARRA funds is in the fo rm of tax cuts to individuals and business tax 
incentives, including a credit for working families, refunds for low-income families and families with 
children, and credits for education and first-time hom e buyers.  Aid to states  represents another 20% 
of stimulus funds, and social safety spending a bout 11%.  The remaining one third of the ARRA 
encompasses direct government investment spending and equivalent programmes, including spending 
on infrastructure, health information technology, r esearch on renewable energy, and tax credits for 
particular types of private investment such as advanced energy manufacturing.  The Council of 
                                                      
6 Board of Governors of the Federal Reserve System online information, "Press Release", 16 March 
2010.  Viewed at:  http://www.federalreserve .gov/newsevents/press/monetary/20100316a.htm. 
7 "Economic Challenges:  Past, Present, and Future ", Speech by Chairman Ben S. Bernanke at the 
Dallas Regional Chamber, 7 April 2010.  Viewed at:  http://www.federalreserve.gov/newsevents/speech/2010 
speech.htm. 
8 IMF (2009). 
9 CBO (2010). WT/TPR/S/235 Trade Policy Review 
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Economic Advisers estimates that the level of GDP in  the fourth quarter of 2009 was slightly more 
than 2% higher than it would have been in the absence of the stimulus.10 
14. The federal budget deficit widene d substantially during the revi ew period, reflecting increases 
in spending and falling revenues.  From 1.2% of GDP in 2007, the federal budget deficit increased to 
3.2% of GDP in 2008, and nearly 10% in 2009 (Table  I.1).  Apart from the automatic effect of the 
weak economy on spending and revenues the cost of fiscal stimulus packages under the Economic 
Stimulus Act of 2008 and the ARRA, assistance to  the housing GSEs, and outlays under the Troubled 
Asset Relief Program also contributed to the increase in the deficit. 
15. As indicated in the report for the previous Re view of the United States, tax reductions under 
the Economic Growth and Tax Relie f Reconciliation Act of 2001 and the Jobs and Growth Tax Relief 
Reconciliation Act of 2003 are set to expire in  2011.  However, the Budget for fiscal year 2011 
proposes to extend several of these tax reductions, a nd to index for inflation the amounts exempted 
from the alternative minimum tax, at a cost of US$3 trillion during the next ten years.11  T h e  
Administration projects that the federal budget defi cit will be close to 11% of GDP in fiscal 2010.12  
Policies in the 2011 Budget will bring down the defi cit to 3.9% of GDP in fiscal year 2014, from 
10.6% of GDP in fiscal year 2010. 
16. As a result of accumulating budget deficits, th e share of the federal public debt in GDP 
continued to rise during the review period, from ap proximately 36% in fiscal year 2007 to 53% in 
fiscal 2009.  The public debt is projected to reach  almost 64% of GDP in 2010.  The Congressional 
Budget Office (CBO) projects that the debt is on a "trajectory that poses significant economic risks 
and becomes unsustainable".13  According to the CBO, the key choices for medium- and long-term 
policy are "how quickly and in what way to restrain federal borrowing".  In February 2010, the President established the National Commission on Fiscal Responsibility and Reform, an 18-member 
bipartisan commission charged with "identifying policies to improve the fiscal situation in the 
medium term and to achieve fiscal sustainability over the long run".
14 
17. The recession has caused steep falls in state reve nues, resulting in projected budget shortfalls 
in 48 states totalling US$196 billion in fiscal year 2010.15  Given that sub-federal governments 
represent 20% of GDP, 38% of general government revenues, 45% of general government spending, 
and 88% of public investment, falling state spending risked amplifying the effects of the crisis.  The ARRA allocated approximately  US$286 billion to stabilize sub -federal budgets.  Although these 
funds have helped prevent some spending reduc tions, the fiscal situation of state and local 
governments remains difficult. 
                                                     
 
10 White House online information, "Economic Impact of the Ameri can Recovery and Reinvestment 
Act of 2009, Second Quarterly Repo rt", 13 January 2010.  Viewed a t:  http://www.whitehouse.gov/the-press-
office/economic-impact-american-r ecovery-and-reinvestment-act-2 009-second-quarterly-report. 
11 CBO (2010). 
12 Council of Economic Advisers (2010). 
13 "Fiscal Policy Choices", Presentation by Douglas W. Elmendorf to the National Association for 
Business Economics, 8 March 2010.  Viewed at:  http://www.cbo.gov/doc.cfm ?index=11277&zzz=40483. 
14 Executive Order – National Commission on Fiscal Responsibility and Reform, 18 February 2010.  
Viewed at:  http://www.whitehouse.gov/the-press-o ffice/executive-order-national-commission-fiscal 
responsibility-and-reform. 
15 McNichol and Johnson (2010). United States WT/TPR/S/235 
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(3) DEVELOPMENTS IN TRADE AND INVESTMENT  
(i) Merchandise trade16 
18. Merchandise exports increased approximately  12% each year in 2007 and 2008, reaching 
almost US$1.3 trillion in 2008 (Table AI.2).  The relatively strong performance of exports in 2007 
and the first half of 2008 was supported by so lid economic growth abroad and the continued 
depreciation of the U.S. dollar.  Exports decelerated in the third quarter of 2 008, and then declined in 
the fourth quarter of 2008 and the first half of 2 009, as economic activity abroad worsened.  Despite a 
strong rebound in the second half of 2009, refl ecting the global economic recovery, in 2009 
merchandise exports declined almost 19% with r espect to the year before, to US$1.1 trillion. 
19. Although manufacturing continues to be the main export category, its share in total 
merchandise exports declined approximately ten pe rcentage points between 2006 and 2009, to 69% 
(Chart I.4).  At the same time, the share of fu els in total merchandise exports rose as a result of 
increases in the price and volume of crude oil and petroleum product exports. 
20. Merchandise imports rose ar ound 5% in 2007, and 7% in 2008, reaching US$2.2 trillion 
(Table AI.3).  Imports followed the same path as exports during 2007-09, rising in 2007 and the first 
half of 2008, and declining in the fourth quarter  of 2008 and the first half of 2009, as domestic 
demand fell.  Imports rebounded strongly across majo r product categories in the second half of 2009.  
However, for 2009 as a whole, they totall ed US$1.6 trillion, 26% less than in 2008. 
21. Manufacturing represented 70% of total merchandi se imports in 2009, the same share as in 
2006 (Chart I.4).  The share of fuels in total merc handise imports rose markedly in 2008, despite the 
decline in the volume of crude oil imports.  In 20 09, the share of fuels in total merchandise imports 
fell below its 2006 level. 
22. U.S. trade is geographically diversified.  Although the share of NAFTA countries in total 
merchandise exports declined slightly between  2006 and 2008, they continued to serve as the 
destination for almost 32% of total U.S. exports , with 19% going to Canada, and 12% to Mexico 
(Chart I.5 and Table AI.4).  The European Union is the second largest export market, with a share of 
21% in 2009, roughly the same as three years earlier.  China and Japan are the main export 
destinations in Asia.  The share of all remaining U. S. trading partners has increased steadily in recent 
years, reaching 36% in 2009. 
23. On the import side, the NAFTA countries remain  the main supplier of goods to the U.S. 
market, with approximately 25% of the total in 2009, roughly the same share as three years earlier 
(Chart I.5 and Table AI.5).  Of this, around 14% come from Canada, and 11% from Mexico.  In 2009, 
China replaced the European Union as the second largest  source of U.S. imports;  its share increased 
from 16% in 2006 to 19% in 2009.  The share of the European Union has rema ined relatively stable 
since 2006, at around 18%.  Japan's sh are has been falling steadily. 
                                                      
16 Based on data in the United Nations COMTRADE database, which differs from U.S. balance-of-
payments data. WT/TPR/S/235 Trade Policy Review 
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Chart I.4
Merchandise trade by product, 2006 and 2009
2006 2009
(a)    Exports and re-exports (f.o.b.)
Total: US$1,037 billion
(b)    Im ports (c.i.f.)
Manufactures
Total: US$1,919 billion Total: US$1,602 billion
Source:    UNSD, Comtrade database (SITC Rev.3).Total: US$1,057 billionFood
6.7%
Fuels
5.2%Other 
agriculture
2.3%
Other manuf.
13.3%
Machinery & 
transpt. eqpt.
47.7%Agri.
Chemicals
13.1%Other
11.7%Other 
agriculture
2.1%
Other mining
3.2%
Chemicals
15.1%Other manuf.
13.1%Food
9.2%
MiningAgri.
Mining
Other 
agriculture
1.2%
Chemicals
7.6%
Other semi-
manuf.
6.7%Machinery & 
transpt. eqpt.
37.7%Other manuf.
18.3%
Other mining
2.8%Fuels
18.0%Other
3.5%Food
4.2%
Chemicals
9.6%Other 
agriculture
0.9%Food
5.4%
Agri.
ManufacturesMiningAgri.
MiningFuels
17.4%
Other 
mining
2.0%
Other semi-
manuf.
5.8%Machinery & 
transpt. eqpt.
36.2%Other manuf.
18.3%Other
4.3%Fuels
3.4%
Manufactures ManufacturesOther mining
3.5%Other
4.3%
Other semi-
manuf.
5.9%
Other semi-
manuf.
5.7%Machinery & 
transpt. eqpt.
34.7%
 United States WT/TPR/S/235 
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Chart I.5
Merchandise trade by main orig in and destination, 2006 and 2009
2006 2009
(a)    Ex ports and re-ex ports (f.o.b. )
Total: US$1,037 billion
(b)    Im ports (c.i.f.)
Total: US$1,919 billion Total: US$1,602 billion
Source:    UNSD, Comtrade database (SITC Rev.3).Brazil
1.9%
Total: $1,057 billionCanada
22.2%Others
6.3%
Mexico
12.9%Canada
19.4%
Other America
6.7%Other Europe
0.6%
Canada
16.0%China
5.3%Other Asia
15.9%
AmericaMexico
12.2%
EFTA
1.7%
EU(27)
20.8%Other America
7.9%China
6.6%Japan
4.8%
EFTA
1.9%Other Europe
0.7%Other 
Asia
15.6%Others
7.3%
EuropeAsiaAmerica
EuropeAsia
Venezuela
2.0%Mexico
10.4%
Other America
5.3%
EU (27)
17.8%Other Europe
1.5%Japan
7.9%
China
15.9%Other Asia
13.5%Others
9.6%
Mexico
11.1%
Venezuela
1.8%Canada
14.2%
Other 
America
5.3%
EU (27)
17.9%Other Europe
1.7%Japan
6.1%
China
19.3%Other Asia
13.2%Others
9.3%
America America
EuropeEuropeAsiaAsiaEU(27)
21.1%Japan
5.8%
Brazil
2.5%
 WT/TPR/S/235 Trade Policy Review 
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(ii) Trade in services 
24. In contrast to the persistent deficit on goods trade, the United States has traditionally had a 
surplus on services trade.  The surp lus in cross-border private services trade totalled US$152 billion in 
2009, up nearly 60% with respect to 2006.  The la rgest surplus in 2009 was in "other royalties and 
licence fees" (which represent receipts and paymen ts for intellectual property rights), financial 
services, and business, professional and technical services,  while the largest deficit was in insurance. 
25. Cross-border imports totalled US$330 billion in 2 009, a 9% decrease from 2008 (Table AI.6).  
They had increased 8% in 2007-08, the same rate as  in 2006-07.  Declines in 2009 were greatest in 
other transportation, financial services, and p assenger fares.  The United Kingdom is the main 
supplier of U.S. services imports, with almost 12% of  the total in 2009, followed by Germany, with 
10%, and Japan, with approximately 7% of the total. 
26. Cross-border exports of private services were  US$482 billion in 2008 (Table AI.7).  They 
decreased 9% in 2009, after increasing 10% in 2008, and 16% in 2007.  Declines in 2009 were 
greatest in passenger fares and other transportation.  Only insurance services, education, and other 
private services grew in 2009.  The United Kingdom is the main destination for U.S. services exports, 
with around 11% of the total in 2009, followed by Canada and Japan, each with approximately 9% of 
the total. 
27. Services sold to foreign persons by U.S. co mpanies through their majority-owned affiliates 
totalled US$1 trillion in 2007, up 15% from a year earlie r.  The value of services sold to U.S. persons 
by foreign companies through their majority-o wned affiliates in the United States totalled 
US$678 billion in 2008, 5% more than a year earlier. 
(iii) Foreign direct investment 
28. The stock of foreign direct investment in the United States was US$2.3 trillion at end 2008 
(latest available), compared with US$1.8 trillion at end 2006.17  The United Kingdom accounted for 
the largest share, with 20% of th e total, followed by Japan and the Netherlands, each with 11%.  The 
next largest shares were for Canada (10%) and Germ any (9%).  Inward direct investment increased 
8% in 2008, down from a 15% increase in 2007.  The sl ower growth was the result of larger negative 
valuation adjustments and a decrease in net intercom pany debt investment.  These changes more than 
offset a sizeable increase in equity  capital.  Apart from several acquisitions, the increase in equity 
capital partly reflects capital contributions by fore ign companies to their U.S. affiliates, especially 
banks and other financial institutions, which su ffered significant capital losses during the financial 
crisis.18 
                                                      
17 Valued at historical cost, that is, the book value of foreign direct investors' equity in and outstanding 
loans to, their U.S. affiliates. 
18 Ibarra and Koncz (2009). United States WT/TPR/S/235 
 Page 11 
 
 
29. The stock of U.S. direct investment abroad was US$3.2 trillion at end 2008, compared with 
US$2.4 trillion at end 2006.19  The Netherlands, the United Kingdom, and Canada accounted for 
approximately one third of the total.  Outward direct investment grew 8% between 2007 and 2008, 
down significantly from the 18% growth rate in 2007.   The slowdown reflected lower equity capital 
flows and a shift in valuation adjustments from posi tive to negative.  Equity capital increases were 
down 47% between 2007 and 2008, largely reflecting a slowdown in acquisitions and establishments 
of new foreign affiliates.  Among industries, acqui sitions of foreign businesses or establishment of 
new affiliates by U.S. direct investors were la rgest in "finance (except banks) and insurance," 
banking, and manufacturing, particularly machin ery and electrical equipment, appliances, and 
components. 
 
                                                      
19 Valued at historical cost.