December trade in intangibles – and 2010

This morning’s BEA’s trade data for December showed a slight increase in the trade deficit, up $2.3 billion to $40.6 billion. However, as Chart 3 below shows, most of the worsening of the deficit was due to increased oil imports. Our non-petroleum goods deficit improved in December as exports rose faster than imports.
Our intangible trade surplus increased every so slightly as exports (both royalty income and business services exports) increased faster than imports (as Chart 1 shows). The trade surplus in intangibles is still overwhelmed by the goods trade deficit (Chart 2).
On an annual basis, our intangibles trade resumed it’s growth trajectory in 2010 after dipping in 2009 (Chart 4). But as Chart 5 shows, that growth was miniscul compared with the return of larger trade deficits in goods in 2010.
The good news in the trade figures was in Advanced Technology Products. The deficit dropped dramatically in December to $5.5 billion from November’s record setting deficit of $11.2 billion. The improvement was due to a major drop in imports of information and communications technologies (ICT) (of about $2.8 billion) combined with an increase in aerospace exports (of roughly $1.3 billion) and ICT (of $660 million). 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.
Chart 1Intangibles trade-Dec10.gif
Chart 2Intangibles and goods-Dec10.gif
Chart 3Oil good intangibles-Dec10.gif
Chart 4Intangibles trade-2010.gif
Chart 5Annual - intangibles v goods 2010.gif

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.

One thought on “December trade in intangibles – and 2010”

  1. January trade in intangibles — and 2010 revisions

    From a trade perspective, 2011 is not starting well. BEA reports that the trade deficit rose sharply in January — increasing to $46.3 billion from $40.3 billion in December, revised. An increase in the deficit was expected, but not such…


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