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February 10, 2005
Dec trade in intangibles
The December trade figures came out this morning and show that our balance of trade in intangibles holding steady at slightly over $6.5 billion monthly. Both export and import have steadily increased. For the year, our intangibles balance is $76.4 billion up slightly from $76.2 billion in 2003 and $73.9 billion in 2002.
(As discussed last month, we are defining trade in intangibles as the sum of "royalties and license fees" and "other private services" - see the official BEA/Census definitions of these two categories below).
The overall trade deficit improved somewhat in December with a total trade deficit of $56.4 billion compared to the November deficit of $59.3 billion. But, the 2004 deficit was a record $617.7 billion, up significantly from the 2003 deficit of $496.5 billion.
I repeat what I said last month: intangibles are not, and can not, offset our huge and growing deficit in goods. While we are an intangible economy, trade in pure intangible will not save us. The power of intangibles is how they operate within all sectors of the economy, not as a separate sector. We need to harness our intangibles to re-invigorate our goods trade if we are to get our dangerous trade deficit under control.
BEA/Census Bureau definitions:
Royalties and License Fees - Transactions with foreign residents involving intangible assets and proprietary rights, such as the use of patents, techniques, processes, formulas, designs, know-how, trademarks, copyrights, franchises, and manufacturing rights. The term "royalties" generally refers to payments for the utilization of copyrights or trademarks, and the term "license fees" generally refers to payments for the use of patents or industrial processes.
Other Private Services - Transactions with affiliated foreigners, for which no identification by type is available, and of transactions with unaffiliated foreigners. (The term "affiliated" refers to a direct investment relationship, which exists when a U.S. person has ownership or control, directly or indirectly, of 10 percent or more of a foreign business enterprise's voting securities or the equivalent, or when a foreign person has a similar interest in a U.S. enterprise.) Transactions with unaffiliated foreigners consist of education services; financial services (includes commissions and other transactions fees associated with the purchase and sale of securities and noninterest income of banks, and excludes investment income); insurance services; telecommunications services (includes transmission services and value-added services); and business, professional, and technical services. Included in the last group are advertising services; computer and data processing services; database and other information services; research, development, and testing services; management, consulting, and public relations services; legal services; construction, engineering, architectural, and mining services; industrial engineering services; installation, maintenance, and repair of equipment; and other services, including medical services and film and tape rentals.
Posted by Ken Jarboe at February 10, 2005 11:06 AM
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