[Federal Register Volume 63, Number 15 (Friday, January 23, 1998)]
[Rules and Regulations]
[Pages 3459-3462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1541]
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DEPARTMENT OF COMMERCE
Bureau of Economic Analysis
15 CFR Part 806
[Docket No. 970918231-7231-01]
RIN 0691-AA29
Direct Investment Surveys: BE-12, Benchmark Survey of Foreign
Direct Investment in the United States--1997
AGENCY: Bureau of Economic Analysis, Commerce.
ACTION: Final rule.
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SUMMARY: These final rules revise 15 CFR 806.17 to set forth reporting
requirements for the BE-12, Benchmark Survey of Foreign Direct
Investment in the United States--1997, and to delete the rules now in
15 CFR 806.17, which were for the last benchmark survey covering 1992.
The BE-12 benchmark survey is conducted by the Bureau of Economic
Analysis (BEA), U.S. Department of Commerce, under Section 3103(b) of
the International Investment and Trade in Services Survey Act, which
requires that a benchmark survey of foreign direct investment in the
United States be conducted every five years. The last benchmark survey
was conducted for 1992. The benchmark survey will obtain universe data
on the financial and operating characteristics of, and on positions and
transactions between, U.S. affiliates and their foreign parents. The
data from the quinquennial survey will provide benchmarks for deriving
current universe estimates of foreign direct investment from sample
data collected in other BEA surveys in nonbenchmark years. The data are
needed to measure the economic significance of foreign direct
investment in the United States, measure changes in such investment,
assess its impact on the U.S. economy, and based upon this assessment,
make informed policy decisions regarding foreign direct investment in
the United States. They are also required for compiling the U.S.
international transactions, input-output, and national income and
product accounts, and for preparing estimates of the international
investment position of the United States.
Key changes from the previous benchmark survey include reducing
respondent burden, particularly for small companies, by: increasing the
exemption level for reporting on the survey to $3 million (measured by
the company's total assets, sales, or net income) from $1 million in
the 1992 survey; increasing the exemption level at which reporting on
the long form version of the survey is required from $50 million to
$100 million; and requiring reporting companies with assets, sales, or
net income between $3 million and $30 million to report only selected
data items on the short form version. In addition, the survey bases
industry coding of reporting companies on the new North American
Industry Classification System (NAICS) in place of the previous system
which was based on the U.S. Standard Industrial Classification system;
it collects new information on affiliated services transactions by type
of service; and it modifies the detail collected on the
[[Page 3460]]
composition of external financing of the reporting enterprise, on
exports and imports of goods by product, and on the operations of
foreign-owned businesses in individual States.
Forms for the 1997 benchmark survey are scheduled to be mailed out
at the end of February 1998. Completed reports will be due to BEA on
May 31, 1998.
EFFECTIVE DATE: These rules will be effective February 23, 1998.
FOR FURTHER INFORMATION CONTACT: R. David Belli, Chief, International
Investment Division (BE-50), Bureau of Economic Analysis, U.S.
Department of Commerce, Washington, DC 20230; phone (202) 606-9800.
SUPPLEMENTARY INFORMATION: In the October 8, 1997 Federal Register,
Volume 62, No 195, pages 52515-52518, the Bureau of Economic Analysis
published a notice of proposed rulemaking to revise 15 CFR 806.17 to
set forth reporting requirements for the BE-12, Benchmark Survey of
Foreign Direct Investment in the United States--1997. No comments on
the proposed rule were received. Thus, this final rule is the same as
the proposed rule.
The benchmark survey is to be conducted by the Bureau of Economic
Analysis, U.S. Department of Commerce, under the International
Investment and Trade in Services Survey Act (Pub. L. 94-472, 90 Stat.
2059, 22 U.S.C. 3101-3108, as amended by P.L. 98-573 and P.L. 101-533),
hereinafter, ``the Act.'' Section 3103(b) of the Act, as amended,
requires that ``With respect to foreign direct investment in the United
States, the President shall conduct a benchmark survey covering year
1980, a benchmark survey covering year 1987, and benchmark surveys
covering every fifth year thereafter * * *.'' In conducting surveys
pursuant to this subsection, the President shall, among other things
and to the extent he determines necessary and feasible--
(1) Identify the location, nature, and magnitude of, and changes in
the total investment by any parent in each of its affiliates and the
financial transactions between any parent and each of its affiliates;
(2) Obtain (A) information on the balance sheet of parents and
affiliates and related financial data, (B) income statements, including
the gross sales by primary line of business (with as much product line
detail as necessary and feasible) of parents and affiliates in each
country in which they have significant operations, and (C) related
information regarding trade, including trade in both goods and
services, between a parent and each of its affiliates and between each
parent or affiliate and any other person;
(3) Collect employment data showing both the number of United
States and foreign employees of each parent and affiliate and the
levels of compensation, by country, industry, and skill level;
(4) Obtain information on tax payments by parents and affiliates by
country; and
(5) Determine, by industry and country, the total dollar amount of
research and development expenditures by each parent and affiliate,
payments or other compensation for the transfer of technology between
parents and their affiliates, and payments or other compensation
received by parents or affiliates from the transfer of technology to
other persons.
Reporting in the survey is mandatory. The responsibility for
conducting benchmark surveys of foreign direct investment in the United
States has been delegated to the Secretary of Commerce, who has
redelegated it to BEA.
The benchmark surveys are BEA's censuses, intended to cover the
universe of foreign direct investment in the United States in value
terms. Foreign direct investment in the United States is defined as the
ownership or control, directly or indirectly, by one foreign person of
10 percent or more of the voting securities of an incorporated U.S.
business enterprise or an equivalent interest in an unincorporated U.S.
business enterprise, including a branch.
The purpose of the benchmark survey is to obtain data on the
amount, types, and financial and operating characteristics of foreign
direct investment in the United States.
The data from the survey will be used to measure the economic
significance of such investment and to analyze its effects on the U.S.
economy. They will also be used in formulating, and assessing the
impact of, U.S. policy on foreign direct investment.
They will provide benchmarks for deriving current universe
estimates of direct investment from sample data collected in other BEA
surveys. In particular, they will serve as benchmarks for the quarterly
direct investment estimates included in the U.S. international
transactions, input-output, and natural income and product accounts,
and for preparing estimates of the international investment position of
the United States.
The benchmark surveys are also the most comprehensive of BEA's
surveys in terms of subject matter in order that they obtain the
detailed information on foreign direct investment needed for policy
purposes. As specified in the Act, policy areas of particular interest
that should be addressed by the survey include, among other things,
trade in both goods and services, employment and employee compensation,
taxes, and technology.
The survey consists of an instruction booklet, a claim for not
filing the BE-12, and the following report forms:
1. Form BE-12(LF) (Long Form) for reporting by nonbank U.S.
affiliates with assets, sales, or net income of more than $100 million;
2. Form BE-12(SF) (Short Form) for reporting by nonbank U.S.
affiliates with assets, sales, or net income of more than $3 million,
but not more than $100 million;
3. Form BE-12 Bank for reporting by U.S. affiliates that are banks
with assets, sales, or net income of more than $3 million.
Although the survey is intended to cover the universe of foreign
direct investment in the United States, in order to minimize the
reporting burden, U.S. affiliates with assets, sales, and net income
each equal to or less than $3 million are exempt from reporting on
Forms BE-12(LF), BE-12(SF), and BE-12 Bank, but are required to file,
on Form BE-12(X), a claim for exemption from filing in the benchmark
survey.
Key changes from the previous benchmark survey include reducing
respondent burden, particularly for small companies, by: increasing the
exemption level for reporting on the survey to $3 million (measured by
the company's total assets, sales, or net income) from $1 million in
the 1992 survey; increasing the exemption level at which reporting on
Form BE-12(LF) (Long Form) is required from $50 million to $100
million; and requiring reporting companies with assets, sales, or net
income between $3 million and $30 million to report only selected data
items on Form BE-12(SF) (Short Form). In addition, industry coding of
reporting companies will be based on the new North American Industry
Classification System (NAICS) in place of the system which is based on
the U.S. Standard Industrial Classification system; new information
will be collected on affiliated services transactions by type of
service; and the detail collected on the composition of external
financing of the reporting enterprise will be modified, along with
exports and imports of goods by product, and the operations of foreign-
owned businesses in individual States.
Executive Order 12612
These rules do not contain policies with Federalism implications
sufficient
[[Page 3461]]
to warrant preparation of a Federalism assessment under E.O. 12612.
Executive Order 12866
These rules have been determined to be not significant for purposes
of E.O. 12866.
Paperwork Reduction Act
The collection of information required in these final rules has
been approved by OMB (OMB No. 0608-0042).
Notwithstanding any other provisions of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection-of-information subject to the
requirements of the Paperwork Reduction Act unless that collection
displays a currently valid Office of Management and Budget Control
Number; such a Control Number (0608-0042) has been displayed.
Public reporting burden for this collection of information is
estimated to vary from 1 to 715 hours per response, with an average of
22 hours per response, including time for reviewing instructions,
searching existing data sources, gathering and maintaining the data
needed, and completing and reviewing the collection of information.
Send comments regarding this burden estimate or any other aspect of
this collection of information, including suggestions for reducing this
burden to: Director, Bureau of Economic Analysis (BE-1), U.S.
Department of Commerce, Washington, DC 20230; and to the Office of
Management and Budget, O.I.R.A., Paperwork Reduction Project 0608-0042,
Washington, DC 20503.
Regulatory Flexibility Act
The Assistant General Counsel for Legislation and Regulation,
Department of Commerce, has certified to the Chief Counsel for
Advocacy, Small Business Administration, under provisions of the
Regulatory Flexibility Act (5 U.S.C. 605(b)), that these rules will not
have a significant economic impact on a substantial number of small
entities. Most small businesses are not foreign owned, and many that
are will not be required to report in the benchmark survey because
their assets, sales, and net income are each equal to or less than the
$3 million exemption level below which reporting is not required. Also,
under these rules, companies with assets, sales, or net income above $3
million, but not above $100 million, will report on the abbreviated BE-
12 short form, rather than on the BE-12 long form. In addition,
companies with assets, sales, or net income between $3 million and $30
million will report only selected data items on the BE-12 short form.
These provisions are intended to significantly reduce the reporting
burden on smaller companies.
List of Subjects in 15 CFR Part 806
Balance of payments, Economic statistics, Foreign investments in
the United States, Reporting and recordkeeping requirements.
Dated: December 22, 1997.
J. Steven Landefeld,
Director, Bureau of Economic Analysis.
For the reasons set forth in the preamble, BEA amends 15 CFR part
806 as follows:
PART 806--DIRECT INVESTMENT SURVEYS
1. The authority citation for 15 CFR part 806 continues to read as
follows:
Authority: 5 U.S.C. 301; 22 U.S.C. 3101-3108; and E.O. 11961 (3
CFR, 1977 Comp., p. 86), as amended by E.O. 12013 (3 CFR, 1977
Comp., p. 147), E.O. 12318 (3 CFR, 1981 Comp., p. 173), and E.O.
12518 (3 CFR, 1985 Comp., p. 348).
2. Section 806.17 is revised to read as follows:
Sec. 806.17 Rules and regulations for BE-12, Benchmark Survey of
Foreign Direct Investment in the United States--1997.
A BE-12, Benchmark Survey of Foreign Direct Investment in the
United States will be conducted covering 1997. All legal authorities,
provisions, definitions, and requirements contained in Secs. 806.1
through 806.13 and Sec. 806.15 (a) through (g) are applicable to this
survey. Specific additional rules and regulations for the BE-12 survey
are given in this section.
(a) Response required. A response is required from persons subject
to the reporting requirements of the BE-12, Benchmark Survey of Foreign
Direct Investment in the United States--1997, contained in this
section, whether or not they are contacted by BEA. Also, a person, or
their agent, contacted by BEA concerning their being subject to
reporting, either by sending them a report form or by written inquiry,
must respond in writing pursuant to Sec. 806.4. This may be
accomplished by completing and returning either Form BE-12(X) within 30
days of its receipt if Form BE-12(LF), Form BE-12(SF), or Form BE-12
Bank do not apply, or by completing and returning Form BE-12(LF), Form
BE-12(SF), or Form BE-12 Bank, whichever is applicable, by May 31,
1998.
(b) Who must report. A BE-12 report is required for each U.S.
affiliate, i.e., for each U.S. business enterprise in which a foreign
person owned or controlled, directly or indirectly, 10 percent or more
of the voting securities if an incorporated U.S. business enterprise,
or an equivalent interest if an unincorporated U.S. business
enterprise, at the end of the business enterprise's 1997 fiscal year. A
report is required even though the foreign person's ownership interest
in the U.S. business enterprise may have been established or acquired
during the reporting period. Beneficial, not record, ownership is the
basis of the reporting criteria.
(c) Forms to be filed. (1) Form BE-12(LF)--Benchmark Survey of
Foreign Direct Investment in the United States--1997 (Long Form) must
be completed and filed by May 31, 1998, by each U.S. business
enterprise that was a U.S. affiliate of a foreign person at the end of
its 1997 fiscal year, if:
(i) It is not a bank, and
(ii) On a fully consolidated, or, in the case of real estate
investment, an aggregated basis, one or more of the following three
items for the U.S. affiliate (not just the foreign parent's share)
exceeded $100 million (positive or negative) at the end of, or for, its
1997 fiscal year:
(A) Total assets (do not net out liabilities);
(B) Sales or gross operating revenues, excluding sales taxes; or
(C) Net income after provision for U.S. income taxes.
(2) Form BE-12(SF)--Benchmark Survey of Foreign Direct Investment
in the United States--1997 (Short Form) must be completed and filed by
May 31, 1998, by each U.S. business enterprise that was a U.S.
affiliate of a foreign person at the end of its 1997 fiscal year; if:
(i) It is not a bank, and
(ii) On a fully consolidated, or, in the case of real estate
investments, an aggregated basis, one or more of the following three
items for the U.S. affiliate (not just the foreign parent's share)
exceeded $3 million, but no one item exceeded $100 million (positive or
negative) at the end of, or for, its 1997 fiscal year:
(A) Total assets (do not net out liabilities);
(B) Sales or gross operating revenues, excluding sales taxes; or
(C) Net income after provision for U.S. income taxes.
(3) Form BE-12 Bank--Benchmark Survey of Foreign Direct Investment
in the United States--1997 BANK must be completed and filed by May 31,
1998, by each U.S. business enterprise that was a U.S. affiliate of a
foreign person at the end of its 1997 fiscal year, if:
(i) The U.S. affiliate is in ``banking'', which, for purposes of
the BE-12
[[Page 3462]]
survey, covers business enterprises engaged in deposit banking or
closely related functions, including commercial banks, Edge Act
corporations engaged in international or foreign banking, U.S. branches
and agencies of foreign banks whether or not they accept domestic
deposits, savings and loans, savings banks, and bank holding companies,
i.e., holding companies for which over 50 percent of their total income
is from banks which they hold, and
(ii) On a fully consolidated basis, one or more of the following
three items for the U.S. affiliate (not the foreign parent's share)
exceeded $3 million (positive or negative) at the end of, or for, its
1997 fiscal year:
(A) Total assets (do not net out liabilities);
(B) Sales or gross operating revenues, excluding sales taxes; or
(C) Net income after provision for U.S. income taxes.
(4) Form BE-12(X)--Benchmark Survey of Foreign Direct Investment in
the United States--1997, Claim for Exemption from Filing BE-12(LF), BE-
12(SF), and BE-12 Bank must be completed and filed within 30 days of
the date it was received, or by May 31, 1998, whichever is sooner, by:
(i) Each U.S. business enterprise that was a U.S. affiliate of a
foreign person at the end of its 1997 fiscal year (whether or not the
U.S. affiliate, or its agent, is contacted by BEA concerning its being
subject to reporting in the 1997 benchmark survey), but is exempt from
filing Form BE-12(LF), Form BE-12(SF), and Form BE-12 Bank; and
(ii) Each U.S. business enterprise, or its agent, that is
contacted, in writing, by BEA concerning its being subject to reporting
in the 1997 benchmark survey but that is not otherwise required to file
the Form BE-12(LF), Form BE-12(SF), or Form BE-12 Bank.
(d) Aggregation of real estate investments. All real estate
investments of a foreign person must be aggregated for the purpose of
applying the reporting criteria. A single report form must be filed to
report the aggregate holdings, unless written permission has been
received from BEA to do otherwise. Those holdings not aggregated must
be reported separately.
(e) Exemption. (1) A U.S. affiliate as consolidated, or aggregated
in the case of real estate investments, is not required to file a Form
BE-12(LF), BE-12(SF), or Form BE-12 Bank if each of the following three
items for the U.S. affiliate (not just the foreign parent's share) did
not exceed $3 million (positive or negative) at the end of, or for, its
1997 fiscal year:
(i) Total assets ( do not net out liabilities);
(ii) Sales or gross operating revenues, excluding sales taxes; and
(iii) Net income after provision for U.S. income taxes.
(2) If a U.S. business enterprise was a U.S. affiliate at the end
of its 1997 fiscal year but is exempt from filing a completed Form BE-
12(LF), BE-12(SF), or Form BE-12 Bank, it must nevertheless file a
completed and certified Form BE-12(X).
(f) Due date. A fully completed and certified Form BE-12(LF), Form
BE-12(SF), or BE-12 Bank is due to be filed with BEA not later than May
31, 1998. A fully completed and certified Form BE-12(X) is due to be
filed with BEA within 30 days of the date it was received, or by May
31, 1998, whichever is sooner.
[FR Doc. 98-1541 Filed 1-22-98; 8:45 am]
BILLING CODE 3510-06-M
