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May 10, 2007
March trade in intangibles
This morning's BEA trade data shows that the overall trade deficit worsened in March, as imports surged. The deficit grew by $6 billion to $63.9 billion. Imports jumped by over $8 billion while exports rose by $2 billion. About half of the increase in imports came from a rise in oil, gas and petroleum products.
The good news is a slight increase in the intangibles surplus – up by $74 million to $8.53 billion. The increase was due completely to exports of business services rising faster than imports. The balance on royalty payments remained the same as imports (payments) and exports (revenue) grew by the same amount.
The other good news is that our deficit in Advanced Technology Products declined by over $1 billion to $2.9 billion. The change was the result of increased exports in aerospace and electronics.
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 May 10, 2007 9:20 AM
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