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January 12, 2006
November trade in intangibles
This morning's BEA trade data contained some good news as the overall trade deficit declined slightly. However, the surplus in our balance of trade in intangibles remained flat at $6.9 billion in November. The intangibles surplus is almost exactly what it was a year ago in November of 2004 and is still below the peak surplus of almost $7.5 billion in December 2004.
Even with the improvement in this month's deficit, the total deficit for the first 11 months of 2005 ($661.8 billion) is already significantly above the total for all of 2004 (at a record setting $617.6 billion). At this rate, the deficit for 2005 could run as high as $720 billion.
The deficit in Advanced Technology Products declined slighly in November to $4.8 billion, as exports grew slightly while imports were basically unchanged. The last monthly surplus in Advanced Technology Products was in June 2002 and the last sustained series of monthly surpluses were in the first half of 2001.
Note: we define trade in intangibles as the sum of "royalties and license fees" and "other private services". The BEA/Census Bureau definitions of those categories are as follows:
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 January 12, 2006 8:51 AM
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