[Federal Register Volume 64, Number 172 (Tuesday, September 7, 1999)]
[Proposed Rules]
[Pages 48568-48572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23148]
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DEPARTMENT OF COMMERCE
Bureau of Economic Analysis
15 CFR Part 806
[Docket No. 99810212-9212-01]
RIN 0691-AA36
Direct Investment Surveys: BE-10, Benchmark Survey of U.S. Direct
Investment Abroad--1999
AGENCY: Bureau of Economic Analysis, Commerce.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document sets forth proposed rules to revise regulations,
to present the reporting requirements for the BE-10, Benchmark Survey
of U.S. Direct Investment Abroad.
The Department of Commerce, as part of its continuing effort to
reduce paperwork and respondent burden, invites the general public and
other Federal agencies to comment on proposed and/or continuing
information collections, as required by the Paperwork Reduction Act of
1995. The BE-10 survey is a mandatory survey and is conducted once
every 5 years by the Bureau of Economic Analysis (BEA), US Department
of Commerce, under the International Investment and Trade in Services
Survey Act. The proposed benchmark survey will be conducted for 1999.
BEA will send the survey to potential respondents in March of the year
2000; responses will be due by May 31, 2000 for respondents required to
file fewer than 50 forms and by June 30, 2000 for those required to
file 50 or more forms. The last benchmark survey was conducted for
1994. The benchmark survey covers virtually the entire universe of US
direct investment abroad in terms of value, and is BEA's most
comprehensive survey of such investment in terms of subject matter.
Changes proposed by BEA in the reporting requirements to be
implemented in these proposed rules are: Increasing the exemption level
for reporting on the BE-10B(SF) short form and the BE-10B BANK form
from $3 million to $7 million; directing that minority-owned nonbank
foreign affiliates, regardless of size, be reported on the BE-10B(SF)
short form; increasing the exemption level for reporting on the BE-
10B(LF) long form from $50 million to $100 million; and requiring U.S.
reporters with total assets, sales or gross operating revenues, and net
income less than or equal to $100 million (positive or negative) to
report only selected items. These changes will reduce respondent
burden, particularly for small companies. BEA is also proposing several
changes in the format and content of the survey that, on balance, also
reduce respondent burden.
DATES: Comments on these proposed rules will receive consideration if
submitted in writing on or before November 8, 1999.
ADDRESSES: Mail comments to the Office of the Chief, International
Investment Division (BE-50), Bureau of Economic Analysis, US Department
of Commerce, Washington, DC 20230, or hand deliver comments to room M-
100, 1441 L
[[Page 48569]]
Street, NW, Washington, DC 20005. Comments will be available for public
inspection in room 7005, 1441 L Street, NW, between 8:30 a.m. and 4:30
p.m., Monday through Friday.
FOR FURTHER INFORMATION CONTACT:
R. David Belli, Chief, International Investment Division (BE-50),
Bureau of Economic Analysis, US Department of Commerce, Washington, DC
20230; phone (202) 606-9800.
SUPPLEMENTARY INFORMATION: These proposed rules propose to amend 15 CFR
part 806.16 to set forth the reporting requirements for the BE-10,
Benchmark Survey of US Direct Investment Abroad--1999. The Bureau of
Economic Analysis (BEA), US Department of Commerce, will conduct the
survey under the International Investment and Trade in Services Survey
Act (22 U.S.C. 3101-3108), hereinafter, ``the Act.'' Section 4(b) of
the Act requries that with respect to United States direct investment
abroad, the President shall conduct a benchmark survey covering year
1982, a benchmark survey covering year 1989, 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
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 is 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.
In Section 3 of Executive Order 11961, the President delegated
authority granted under the Act as concerns direct investment to the
Secretary of Commerce, who has redelegated it to BEA.
The benchmark surveys are BEA's censuses, intended to cover the
universe of US direct investment abroad in terms of value. US direct
investment abroad is defined as the ownership or control, directly or
indirectly, by one US person of 10 percent or more of the voting
securities of an incorporated foreign business enterprise or an
equivalent interest in an unincorporated foreign business enterprise,
including a branch.
The purpose of the benchmark survey is to obtain universe data on
the financial and operating characteristics of, and on positions and
transactions between, US parent companies and their foreign affiliates.
The data are needed to measure the size and economic significance of US
direct investment abroad, measure changes in such investment, and
assess its impact on the US and foreign economies. The data will
provide benchmarks for deriving current universe estimates of direct
investment form sample data collected in other BEA surveys in
nonbenchmark years. In particular, they will serve as benchmarks for
the quarterly direct investment estimates included in the US
international transactions and national income and product accounts,
and for annual estimates of the US direct investment position abroad
and of the operations of US parent companies and their foreign
affiliates.
As proposed, the survey will consist of an instruction booklet, a
claim for not filing the BE-10, and the following report forms:
1. Form BE-10A--Report for US Reporters that are not banks;
2. Form BE-10A BANK--Report for US Reporters that are banks;
3. Form BE-10B(LF) (Long Form)--Report for majority-owned nonbank
foreign affiliates of nonbank US parents with assets, sales, or net
income greater than $100 million (positive or negative);
4. Form BE-10B(SF) (Short Term)--Report for majority-owned nonbank
foreign affiliates with assets, sales, or net income greater than $7
million, but not greater than $100 million (positive or negative),
minority-owned nonbank foreign affiliates of nonbank parents with
assets, sales, or net income greater than $7 million (positive or
negative); and all nonbank affiliates of bank parents; and
5. Form BE-10B BANK--Report for foreign affiliates that are banks.
Although the proposed survey is intended to cover the universe of
US direct investment abroad, in order to minimize the reporting burden,
foreign affiliates with assets, sales, and net income each equal to or
less than $7 million (positive or negative) are exempt from being
reported on Form BE-10B(SF) or BE-10B BANK (but must be listed, along
with selected identification information and data, on Form BE-10A
SUPPLEMENT or BE-10A BANK SUPPLEMENT).
BEA maintains a continuing dialogue with respondents and with data
users, including its own internal users through the Bureau's Source
Data Improvement and Evaluation Program, to ensure that, as far as
possible, the required data serve their intended purposes and are
available from existing records, that instructions are clear, and that
unreasonable burdens are not imposed. In designing the survey, BEA
contacted data users outside the Bureau and survey respondents to
obtain their views on the proposed benchmark survey. The proposed draft
reflects users' and respondents' comments. In reaching decisions on
what questions to include in the survey, BEA considered the
Government's need for the data, the burden imposed on respondents, the
quality of the likely response (e.g. whether the data are readily
available on respondents' books), and BEA's experience in previous
benchmark and related annual surveys.
Changes proposed by BEA from the previous benchmark survey include
reduction of respondent burden, particularly for small companies, by
(1) Increasing the exemption level for reporting on the BE-10B(SF)
short form and the BE-10B BANK form from $3 million to $7 million; (2)
directing that minority-owned nonbank foreign affiliates, regardless of
size, be reported on the BE-10B(SF) short form; (3) increasing the
exemption level for reporting on the BE-10B(LF) long form from $50
million to $100 million; and (4) requiring US Reporters with total
assets, sales or gross operating revenues, and net income less than or
equal to $100 million (positive or negative) to report only selected
items. In addition, BEA proposes to adopt the North American Industry
Classification System (NAICS) to replace the current industry
classification system, which is based on the US Standard Industrial
Classification system; consolidate 12 product categories previously
used to collect trade in goods on the BEA-10A and the BE-10B(LF) forms
into 10 product categories; and reduce the
[[Page 48570]]
detail collected on the composition of selected asset and liability
positions and on the balance sheet of the US Reporter.
BEA is also proposing improvements in the layout of the survey
forms, and the placement and clarity of instructions. Items have been
reordered to conform more closely to the order in which they appear in
company financial statements. Specific line item instructions that have
broad application continue to appear as part of the item on the face of
the form, but instructions that provide an extended explanation or
address unique situations have been moved to the back of each form,
along with relevant instructions that previously appeared only in the
separate Instruction Booklet.
A copy of the proposed survey forms may be obtained from: Office of
the Chief, Direct Investment Abroad Branch, International Investment
Division (BE-69(A)), Bureau of Economic Analysis, US Department of
Commerce, Washington, DC 20230; phone (202) 606-5566.
Executive Order 12612
These proposed rules do not contain policies with Federalism
implications sufficient to warrant preparation of a Federalism
assessment under E.O. 12612.
Executive Order 12866
These proposed rules have been determined to be not significant for
purposes of E.O. 12866.
Paperwork Reduction Act
These proposed rules contain a collection of information
requirement subject to the Paperwork Reduction Act (PRA) and have been
submitted to the Office of Management and Budget for review under the
PRA.
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.
The survey, as proposed, is expected to result in the filing of
reports from about 3,500 respondents. The respondent burden for this
collection of information is estimated to vary from 14 to 8,500 hours
per response, with an average of 130 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. Thus the total respondent burden of the
survey is estimated at 458,000 hours (3,500 respondents times 130 hours
average burden).
Comments are requested concerning: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the burden estimate; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
Comments should be addressed to: Director, Bureau of Economic Analysis
(BE-1), US Department of Commerce, Washington, DC 20230; and to the
Office of Management and Budget, O.I.R.A., Paperwork Reduction Project
0608-0049, Washington, DC 20503 (Attention PRA Desk Officer for BEA).
Regulatory Flexibility Act
The Chief Counsel for Regulation, Department of Commerce, has
certified to the Chief Counsel for Advocacy, Small Business
Administration, under the provisions of the Regulatory Flexibility Act
(5 U.S.C. 605(b)), that this proposed rule making, if adopted, will not
have a significant economic impact on a substantial number of small
entities. A BE-10 report is required of any US company that had a
foreign affiliate--that is, that had direct or indirect ownership or
control of at least 10 percent of the voting stock of an incorporated
foreign business enterprise, or an equivalent interest in an
unincorporated foreign business enterprise--at any time during the US
company's 1999 fiscal year. Companies that have direct investments
abroad tend to be quite large. To minimize the reporting burden on
smaller US companies, US Reporters with total assets, sales or gross
operating revenues, and net income less than or equal to $100 million
(positive or negative) are required to report only selected items on
the BE-10A form for US Reporters in addition to forms they may be
required to file for their foreign affiliates.
List of Subjects in 15 CFR Part 806
Balance of payments, Economic statistics, U.S. investment abroad,
Penalties, Reporting and recordkeeping requirements.
Dated: August 6, 1999.
Rosemary D. Marcuss,
Acting Director, Bureau of Economic Analysis.
For the reasons set forth in the preamble, BEA proposes to amend 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 806.16 is revised to read as follows:
Sec. 806.16 Rules and regulations for BE-10, Benchmark Survey of U.S.
Direct Investment Abroad--1999.
A BE-10, Benchmark Survey of US Direct Investment Abroad will be
conducted covering 1999. All legal authorities, provisions,
definitions, and requirements contained in 806.1 through 806.13 and
806.14(a) through (d) are applicable to this survey. Specific
additional rules and regulations for the BE-10 survey are given in
paragraphs (a) through (e) of this section. More detailed instructions
are given on the report forms and instructions.
(a) Response required. A response is required from persons subject
to the reporting requirements of the BE-10, Benchmark Survey of US
Direct Investment Abroad--1999, contained in this section, whether or
not they are contacted by BEA. Also, a person, or their agent, who is
contacted by BEA about reporting in this survey, either by sending them
a report form or by written inquiry, must respond in writing pursuant
to 806.4. They may respond by:
(1) Certifying in writing, within 30 days of being contacted by
BEA, to the fact that the person had no direct investment within the
purview of the reporting requirements of the BE-10 survey;
(2) Completing and returning the ``BE-10 Claim for Not Filing''
within 30 days of receipt of the BE-10 survey report forms; or
(3) Filing the properly completed BE-10 report (comprising form BE-
10A or BE-10A BANK and Forms BE-10B(LF), BE-10B(SF), and/or BE-10B
BANK) by May 31, 2000, or June 30, 2000, as required.
(b) Who must report. (1) A BE-10 report is required of any US
person that
[[Page 48571]]
had a foreign affiliate--that is, that had direct or indirect ownership
or control of at least 10 percent of the voting stock of an
incorporated foreign business enterprise, or an equivalent interest in
an unincorporated foreign business enterprise--at any time during the
US person's 1999 fiscal year.
(2) If the US person had no foreign affiliates during its 1999
fiscal year, a ``BE-10 Claim for Not Filing'' must be filed within 30
days of receipt of the BE-10 survey package; no other forms in the
survey are required. If the US person had any foreign affiliates during
its 1999 fiscal year, a BE-10 report is required and the US person is a
US Reporter in this survey.
(3) Reports are required even though the foreign business
enterprise was established, acquired, seized, liquidated, sold,
expropriated, or inactivated during the US person's 1999 fiscal year.
(c) Forms for nonbank US Reporters and foreign affiliates--(1) Form
BE-10A (Report for the US Reporter). A BE-10A report must be completed
by a US Reporter that is not a bank. If the US Reporter is a
corporation, Form BE-10A is required to cover the fully consolidated US
domestic business enterprise.
(i) If for a nonbank US Reporter any one of the following three
items--total assets, sales or gross operating revenues excluding sales
taxes, or net income after provision for U.S. income taxes--was greater
than $100 million (positive or negative) at any time during the
Reporter's 1999 fiscal year, the US Reporter must file a complete Form
BE-10A and, as applicable, a BE-10A SUPPLEMENT listing each, if any,
foreign affiliate that is exempt from being reported on Form BE-
10B(LF), BE-10B(SF), or BE-10B BANK. It must also file a Form BE-
10B(LF), BE-10B(SF), or BE-10B BANK, as appropriate, for each nonexempt
foreign affiliate.
(ii) If for a nonbank US Reporter no one of the three items listed
in paragraph (c)(1)(i) of this section was greater than $100 million
(positive or negative) at any time during the Reporter's 1999 fiscal
year, the US Reporter is required to file on Form BE-10A only items 1
through 27 and items 30 through 35 and, as applicable, a BE-10A
SUPPLEMENT listing each, if any, foreign affiliate that is exempt from
being reported on Form BE-10B(LF), BE-10B(SF), or BE-10B BANK. It must
also file a Form BE-10B(LF), BE-10B (SF), or BE-10B BANK, as
appropriate, for each nonexempt foreign affiliate.
(2) Form BE-10B(LF) or (SF) (Report for nonbank foreign affiliate).
(i) A BE-10B(LF) (Long Form) must be filed for each majority-owned
nonbank foreign affiliate of a nonbank US Reporter, whether held
directly or indirectly, for which any one of the three items--total
assets, sales or gross operating revenues excluding sales taxes, or net
income after provision for foreign income taxes--was greater than $100
million (positive or negative) at any time during the affiliate's 1999
fiscal year.
(ii) A BE-10B(SF)(Short Form) must be filed:
(A) For each majority-owned nonbank foreign affiliate of a nonbank
US Reporter, whether held directly or indirectly, for which any one of
the three items listed in paragraph (c)(2)(i) of this section was
greater than $7 million but for which no one of these items was greater
than $100 million (positive or negative), at any time during the
affiliate's 1999 fiscal year, and
(B) For each minority-owned nonbank foreign affiliate of a nonbank
US Reporter, whether held directly or indirectly, for which any one of
the three items listed in paragraph (c)(2)(i) of this section was
greater than $7 million (positive or negative), at any time during the
affiliate's 1999 fiscal year, and
(C) For each nonbank foreign affiliate of a US bank Reporter,
whether held directly or indirectly, for which any one of the three
items listed in paragraph (c)(2)(i) of this section was greater than $7
million (positive or negative), at any time during the affiliate's 1999
fiscal year.
(iii) Notwithstanding paragraphs (c)(2)(i) and (c)(2)(ii) of this
section, a Form BE-10B(LF) or (SF) must be filed for a foreign
affiliate of the US Reporter that owns another nonexempt foreign
affiliate of that US Reporter, even if the foreign affiliate parent is
otherwise exempt, i.e., a Form BE-10B(LF), (SF), or BANK must be filed
for all affiliates upward in a chain of ownership.
(d) Forms for US Reporters and foreign affiliates that are banks or
bank holding companies. (1) For purposes of the BE-10 survey,
``banking'' covers a business entity engaged in deposit banking or
closely related functions, including commercial banks, Edge Act
corporations engaged in international or foreign banking, foreign
branches and agencies of US banks whether or not they accept deposits
abroad, 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 that they hold. If the bank or bank holding company is
part of a consolidated business enterprise and the gross operating
revenues from nonbanking activities of this consolidated entity are
more than 50 percent of its total revenues, then the consolidated
entity is deemed not to be a bank even if banking revenues make up the
largest single source of all revenues. (Activities of subsidiaries of a
bank or bank holding company that may not be banks but that provide
support to the bank parent company, such as real estate subsidiaries
set up to hold the office buildings occupied by the bank parent
company, are considered bank activities.)
(2) Form BE-10A BANK (Report for a US Reporter that is a bank). A
BE-10A BANK report must be completed by a US Reporter that is a bank.
For purposes filing Form BE-10A BANK, the US Reporter is deemed to be
the fully consolidated US domestic business enterprise and all required
data on the form shall be for the fully consolidated domestic entity.
(i) If a US bank had any foreign affiliates at any time during its
1999 fiscal year, whether a bank or nonbank and whether held directly
or indirectly, for which any one of the three items--total assets,
sales or gross operating revenues excluding sales taxes, or net income
after provision for foreign income taxes--was greater than $7 million
(positive or negative) at any time during the affiliate's 1999 fiscal
year, the US Reporter must file a Form BE-10A BANK and, as applicable,
a BE-10A BANK SUPPLEMENT listing each, if any, foreign affiliate,
whether bank or nonbank, that is exempt from being reported on Form BE-
10B (SF) or BE-10A BANK. It must also file a Form BE-10B(SF) for each
nonexempt nonbank foreign affiliate and a Form BE-10B BANK for each
nonexempt bank foreign affiliate.
(ii) If the U.S. bank Reporter had no foreign affiliates for which
any one of the three items listed in paragraph (d)(2)(i) of this
section was greater than $7 million (positive or negative) at any time
during the affiliate's 1999 fiscal year, the US Reporter must file a
Form BE-10A BANK and a BE-10A BANK SUPPLEMENT, listing all foreign
affiliate exempt from being reported on Form BE-10B(SF) or BE-10 BANK.
(3) Form BE-10B BANK (Report for a foreign affiliate that is a
bank). (i) A BE-10B BANK report must be filed for each foreign bank
affiliate of a bank or nonbank US Reporter, whether directly or
indirectly held, for which any one of the three items--total assets,
sales or gross operating revenues excluding sales taxes, or net income
after provision for foreign income taxes--was greater than $7 million
(positive or negative) at any time during the affiliate's 1999 fiscal
year.
[[Page 48572]]
(ii) Notwithstanding paragraph (d)(3)(i) of this section, a Form
BE-10B BANK must be filed for a foreign bank affiliate of the US
Reporter that owns another nonexempt foreign affiliate of that US
Reporter, even if the foreign affiliate parent is otherwise exempt,
i.e., a Form BE-10B(LF), (SF), or BANK must be filed for all affiliates
upward in a chain of ownership. However, a Form BE-10B BANK is not
required to be filed for a foreign bank affiliate in which the US
Reporter holds only an indirect ownership interest of 50 percent or
less and that does not own a reportable nonbank foreign affiliate, but
the indirectly owned bank affiliate must be listed on the BE-10A BANK
SUPPLEMENT.
(e) Due date. A fully completed and certified BE-10 report
comprising Form BE-10A or 10A BANK, BE-10A SUPPLEMENT (as required),
and Form(s) BE-10B(LF), (SF), or BANK (as required) is due to be filed
with BEA not later than May 31, 2000 for those US Reporters filing
fewer than 50, and June 30, 2000 for those US Reporters filing 50 or
more, Forms BE-10B(LF), (SF), or BANK.
[FR Doc. 99-23148 Filed 9-3-99; 8:45 am]
BILLING CODE 3510-06-M
