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Eight-Fold Increase In Travel & Tourism Trade Surplus Since 2009 MDCP Launch
U.S. travel and tourism exports to China increased from $6.9 b in 2009 to $34.7 b in 2017. At the same time, the U.S. trade surplus with China for this industry increased to an astonishing $29.1 b in 2017. (See a detailed calculation of the surplus here.) This is up from only $3.6 b in 2009. This year is important because it marked the beginning of the National Tour Association's (NTA) MDCP project.
Federal Engagement Removed Barrier to U.S. Travel & Tourism Services Exports
Prior to 2008, China did not allow travel agencies to sell packaged group travel for leisure purposes to Chinese citizens. Such tours are the bread and butter of NTA's member companies. U.S. companies wanted this barrier removed so that Chinese tourists could enjoy tour package travel in the United States. An interagency team led by the National Travel & Tourisms Office (NTTO) staff in International Trade Administration's (ITA) Industry & Analysis (I&A) unit began to work with Chinese officials to see if the barrier to group leisure travel could be removed. NTA supported the combined federal effort.
The barrier was removed with a memorandum of understanding (MOU) signed by then-Secretary of Commerce Gutierrez in December 2007. The MOU established a cooperative tourism framework without necessitating changes in existing U.S. visa policy. NTA's tour operator members could now partner with Chinese travel agents to sell package tours to Chinese travelers wishing to visit the United States.
With the barrier gone, NTA explored how it could best help its member companies to take advantage of the MOU. After some reflection, NTA decided that it should try to match Chinese travel agents with U.S. tour operators. With a limited amount of resources of its own, NTA turned to I&A's NTTO staff for advice. NTTO suggested that NTA ptich a proposal in the next MDCP competition set to open in 2009. Odds at winning an MDCP award are low, one in six, but NTA succeeded in its first attempt and received a $281,255 MDCP award.
NTA's MDCP Project: Success During & After the Project Period
Named an MDCP award winner in late 2009, by late 2010, NTA had hired staff and established a presence in China. NTA leveraged these resources to broker deals between Chinese travel agents and U.S. tour operators. It was a huge success. NTA first reported exports for the last quarter of 2010. From this period through the end of 2013, NTA's efforts resulted in nearly 108,000 travelers from China to the United States. This translates to $6.5 billion in exports of travel & tourism services. Travel & tourism services exports generated by NTA's MDCP project alone accounted for over 10 percent of all such U.S. exports during the years the project was active.
The MDCP project period ended at the end of 2013. But the continued rise in exports of U.S. travel & tourism services to China suggests that NTA's work continues to help its members to sell to Chinese clients. In fact, even though ITA's formal MDCP support ended in 2013, NTA has continued to coordinate its export expansion efforts. It does so through its China Inbound program.
NTA's continued work is noteworthy, particularly in the context of generating export increases in the billions of dollars year after year. But export development activity after the end of formal MDCP support during the project period is actually pretty common. Post-project sustainability is a hallmark of the program.
Read more about the NTA MDCP project.
U.S.-China Tourism Trade Surplus Balloons After Trade Barrier Removal
The impressive growth of U.S. travel and tourism exports to China may be leading a trend toward a reduction in the overall U.S. and worldwide trade deficit with China. In a June 12, 2018, article the Financial Times observed that China's current account surplus with the rest of the world has been shrinking. The Financial Times further specified that "the main contributing factor to China’s dwindling surplus is a widening tourism deficit, caused both by the flood of Chinese tourists abroad and a drop in arrivals in China."
ITA continues to address barriers and other distortions that contribute to an overall U.S.-China merchandise trade deficit. But the U.S. travel & tourism industry, with its growing balance of trade surplus with China, is contributing to what could be someday an overall U.S.-China goods and services trade surplus.
Read selected highlights of MDCP projects addressing trade barriers.
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