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October 12, 2007
August trade in intangibles
The US trade deficit once again improved in August, according to yesterday's BEA trade data. Intangible trade balance also improved, reversing last month’s decline. Our surplus in intangibles grew in August ever so slightly by $40 million compared to a $230 million decline in July. The August surplus was $10.2 billion. Both royalty payments (imports) and receipts (exports) grew by a small amount, as did both imports and exports of business services. The result was the surplus remaining essentially changed, with that $40 million increase.
The deficit in Advanced Technology Products improved slightly over last month’s dramatic decline. The August deficit was $4.7 billion compared to $4.9 billion in July. While an improvement, the August deficit was still above the running average for 2007 of $4 billion and well above last year’s level. 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 October 12, 2007 9:30 AM
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