April trade in intangibles

In a reversal from last month’s good news, this morning’s trade data from BEA shows the deficit widening by $3 billion to $47.2 billion from the revised figure of $44.2 billion for March. Imports were up and exports down. And the bad news could not be blamed on oil imports as the deficit in petroleum good declined slightly. Economists had expected a much smaller deficit. (Note the data contains revised figures going back to 1999.)
The somewhat good news is that our trade surplus in pure intangibles continued to improve, slightly. The April surplus increased by $215 million to $16.2 billion. (Note that this revised data shows the March improvement was not as large as previously reported). Royalty receipts (exports),royalty payments (imports), business service exports and business service imports all increased – with exports growing faster than imports.
The really bad news is the huge jump in our Advanced Technology deficit – which grew from $3.9 billion in March to almost $8.4 billion in April. The increase was due to an increase in imports and a drop in exports in information and communications technology and life sciences combined with a drop in aerospace technology exports.
Advanced Technology goods also represent trade in intangibles. These goods are competitive because their value is based on knowledge and other intangibles. While not a perfect measure, Advanced Technology goods serve as an approximation of our trade in embedded intangibles. Adding the pure and embedded intangibles shows an overall surplus of approximately $7.8 billion in April, down from $12.2 billion in March.
Note that the BEA has revised its categories of services trade. I will begin reporting trade in intangibles using the new categories next month.
Intangibles trade-Apr14.png
Intangibles and goods-Apr14.png
Oil goods intangibles-Apr14.png

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.

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