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February 10, 2006
December - and 2005 - trade in intangibles
The US ran a record trade deficit of $725.8 billion in 2005, $108.2 billion more than the 2004 deficit of $617.6 billion. News on intangibles trade was more mixed. The good news is that the intangibles surplus for the year increased to $92.4 billion - the highest it has been. However, revisions in this morning's BEA trade data show that our balance of trade in intangibles actually declined in November, while increasing by only $22 million in December -- essential flat at a surplus of $6.9 billion monthly. The monthly intangibles surplus is still below the peak surplus of almost $7.5 billion in December 2004.
And while our annual intangibles surplus has almost doubled since 1992, the current rate of growth in export is slightly lower than the growth rate in imports. This means that we can not count on a rapidly growing surplus in intangibles to offset the rest of our trade deficit.
The deficit in Advanced Technology Products narrowed in December to $3.2 billion, as exports grew while imports were basically unchanged. However, the total deficit grew from $36.9 billion in 2004 to $44.4 billion in 2005. 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 February 10, 2006 9:26 AM
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Comments
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