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May 09, 2008
March trade in intangibles
On the surface, the March BEA trade data released this morning looks good – as the deficit declined by $3.5 billion to $58.2 billion, down from $61.7 billion in February. However, the good news of declining imports was matched by the bad news of declining exports. Thus the lower deficit is more a sign of the economic slowdown than of the effects of currency changes (which should have boosted exports). As the Wall Street Journal points out, “The decrease in the trade gap followed two straight months of widening deficits, as trade has provided less of a boost to the economy so far this year than it did in late 2007.”
Our intangible trade balance virtually unchanged in March, with an ever so slight increase of $45 million. Both imports and exports of both business services and royalties increased. But the trade surplus in business services actually declined as import outpaced exports in that category. The trade surplus in royalty payments made up the difference to produce that very slight overall positive growth in intangibles trade. The revised numbers for February show a larger decrease in our monthly surplus than previously reported (declining by $76 million rather than the earlier reported $37 million).
The deficit in Advanced Technology Products was also almost unchanged, with a very small decline in March of $67 million to a deficit of $3.27 billion. Unlike the overall trade situation, both imports and exports grew slightly - mainly in electronics and information and communications technology (ICT). 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 May 9, 2008 08:58 AM
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