Michaela D. Platzer
Specialist in Industrial Organization and Business
The United States is the world’s largest advertising market. According to
one estimate, domestic advertising revenue totaled $219 billion in 2012,
accounting for about 1% of U.S. gross domestic product (GDP). Almost every
major medium of information, including the press, entertainment, and
online services, depends on advertising revenue. Advertising accounts for
60%-80% of total revenue at many newspapers and magazines and for most
revenue at search engines and social networking sites.
Television still remains the main choice for advertisers, with ad revenue at
almost $76 billion in 2012. However, spurred by the growth of paid search,
online video, social networks, and mobile devices, advertising is moving
to online platforms. Digital advertising revenue is estimated to have
reached $36 billion, or 16% of total ad revenue, in 2012.
Companies can more easily track and measure consumer behavior online, which
allows them to develop detailed profiles of their customers. Some Members
of Congress have raised concerns about the business practices of online
advertisers, particularly since their activities are largely unregulated
in the United States. Digital publishers favor targeted consumer tracking
because it allows them to provide free or low-cost ad-supported content.
Without it, they argue, their ad supported businesses could be harmed or
possibly destroyed. Yet more than two-thirds of Americans do not like
having their online behavior tracked and analyzed, according to a recent Pew
Research Survey. Privacy and consumer advocates argue for more expansive
federal regulations to protect consumers’ online privacy.
Because of these concerns, recent Congresses, including the 113th, have focused on issues
relating to digital advertising. They have held hearings on data privacy
and proposed legislation including “Do Not Track” to give consumers the
online equivalent of a “Do Not Call” option. In addition, lawmakers have
proposed legislation to protect consumers from unlawful geolocation tracking of mobile
devices. Congress is also looking at search advertising (where companies sell
ads around consumer-initiated search results on web browsers) and
fraudulent marketing over social networks.
The growing use of online and mobile tracking has raised regulatory concerns.
The Federal Trade Commission (FTC) has published updated “Dot Com”
disclosures for online ads; recommended a voluntary Do Not Track (DNT)
function; and released new guidance on mobile advertising. The Food and
Drug Administration (FDA) is studying pharmaceutical marketing in social media,
with guidance required by June 2014. Since 2012, the Obama Administration
and the FTC have introduced new privacy frameworks.
Other countries are debating, and some already have and others might adopt, new
privacy laws. In particular, digital advertising in the European market is
becoming more challenging as European lawmakers consider much stricter DNT
rules, raising ever greater compliance hurdles for U.S. businesses. A
patchwork of state regulations, including California’s eraser law, also affects
online advertising.
Date of Report: October 31, 2013
Number of Pages: 26
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William H. Cooper
Specialist in International Trade and Finance
The term “services” refers to an expanding range of economic activities,
such as construction, retail and wholesale sales, e-commerce, financial
services, professional services (such as accounting and legal services),
transportation, tourism, and telecommunications. They have become an
important priority in U.S. foreign trade flows and trade policy and of global
trade in general, although their intangibility, the requirement for direct
buyer-provider contact, and other characteristics have limited the types
and volume of services that can be traded. Congress is expected to consider
in the future U.S. trade agreements currently under negotiation that include services
as significant components.
Services constitute an important component of U.S. trade flows. The United
States is the largest exporter of services (14% of the global total in
2011) and the largest importer (10% of the global total in 2011). In 2012,
services accounted for 29% of total U.S. exports and 7% of total
imports. Rapid advances in information technology and the related growth
of global value or supply chains have reduced barriers to trade in
services, making an expanding range of services tradable across national
borders.
A number of economists have argued that foreign government barriers prevent
U.S. trade in services from expanding to their potential. The United
States has negotiated trade agreements to lower these barriers. It has
been a leading force in doing so under the General Agreement on Trade in
Services (GATS) in the World Trade Organization (WTO) and in free trade
agreements, all of which contain significant provisions on market access
and rules for liberalizing trade in services. The United States is in the
midst of negotiating with 11 other countries the Trans-Pacific Partnership
(TPP) agreement and is also one of 23 countries negotiating a possible
plurilateral Trade in Services Agreement (TISA). Services trade is also an
important component of the recently launched negotiations on the
Transatlantic Trade and Investment Partnership (TTIP) agreement between
the United States and the European Union (EU), two of the world’s
largest providers of and traders in services.
The outlook for these trade negotiations remains uncertain. In each case, the
participants have difficult issues to overcome. Perhaps one of the most
difficult issues is whether regional and plurilateral agreements will
support or undermine the pursuit of a more extensive,
multilateral agreement in the GATS. A related issue is whether
participants in the regional and plurilateral agreements can/should
encourage recalcitrant countries, such as the emerging
economies—Brazil, China, and India—to join.
Congress and U.S. trade negotiators face other issues, including how to balance
the need for effective regulations with the objective of opening markets
for trade in services; ensuring adequate and accurate data to measure
trade in services to better inform trade policy; and determining whether
renewed trade promotion authority is needed to credibly negotiate
trade agreements on services.
Date of Report: October 24, 2013
Number of Pages: 28
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Rebecca M. Nelson
Analyst in International Trade and Finance
Sovereign debt, also called public debt or government debt, refers to debt
incurred by governments. Since the global financial crisis of 2008-2009,
public debt in advanced economies has increased substantially. A number of
factors related to the financial crisis have fueled the increase,
including fiscal stimulus packages, the nationalization of private-sector debt,
and lower tax revenue. Even if economic growth reverses some of these
trends, such as by boosting tax receipts and reducing spending on
government programs, aging populations in advanced economies are expected to
strain government debt levels in coming years.
High levels of debt in advanced economies arose as an issue for concern for
some analysts following the global financial crisis, after decades of
attention on debt levels in developing and emerging markets. Four Eurozone
countries, Greece, Ireland, Portugal, and Cyprus, have turned to the
International Monetary Fund (IMF) and other European governments for financial assistance.
Some analysts and policymakers are also concerned about are also concerned
about debt levels in other advanced economies.
To date, many advanced-economy governments have embarked on fiscal austerity
programs (such as cutting spending and/or increasing taxes) to address
historically high levels of debt. This policy response has been criticized
by some economists as possibly undermining a weak recovery from the global
financial crisis. Others argue that the austerity plans do not go far enough,
and that more reforms are necessary to bring debt levels down, especially
considering the aging populations in many countries.
Issues for Congress
• Is the United States headed for a Eurozone-style debt crisis? Some
economists and Members of Congress fear that, given historically high
levels of U.S. public debt, the United States is headed towards a debt crisis
similar to those experienced by some Eurozone countries. Others argue that
important differences between the United States and Eurozone economies, such as
growth rates, borrowing rates, and type of exchange rate (floating or
fixed), put the United States in a stronger position. The United States has a
long historical record of debt repayment, and bond spreads indicate that
investors currently view the United States as far less risky than Greece,
Ireland, or Portugal.
• Impact on U.S. economy. The focus of most advanced economies on
austerity programs to lower debt levels could slow growth in advanced
economies and depress demand for U.S. exports. Financial instability
stemming from high debt levels could also impact U.S. markets and
financial institutions.
• Policy options for Congress. Congress is debating proposals to reduce
federal debt levels in the United States. Congress could urge the
Administration to coordinate fiscal policies multilaterally to avoid
simultaneous austerity measures that undermine the economic recovery.
Date of Report: October 28, 2013
Number of Pages: 32
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