[Federal Register Volume 59, Number 165 (Friday, August 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20975]
[[Page Unknown]]
[Federal Register: August 26, 1994]
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DEPARTMENT OF COMMERCE
Bureau of Economics Analysis
15 CFR Part 806
[Docket No. 940828-4228]
RIN 0691-AA22
Direct Investment Surveys: BE-10, Benchmark Survey of U.S. Direct
Investment Abroad--1994
AGENCY: Bureau of Economic Analysis, Commerce.
ACTION: Notice of proposed rulemaking.
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SUMMARY: Section 4(b) of the International Investment and Trade in
Services Survey Act requires that a benchmark survey of U.S. direct
investment abroad be conducted covering 1982, 1989, and every fifth
year thereafter. These proposed rules set forth reporting requirements
for the survey covering 1994 and replace the rules for the last
benchmark survey covering 1989. The major change in the reporting
requirements to be implemented in these proposed rules is the raising
of the exemption level for determining whether a long form or a short
form must be filed for nonbank foreign affiliates of nonbank U.S.
parent companies.
DATES: Comments on these proposed rules will receive consideration if
submitted in writing on or before October 11, 1994.
ADDRESSES: Comments may be mailed to the Office of the Chief,
International Investment Division (BE-50), Bureau of Economic Analysis,
U.S. Department of Commerce, Washington, DC 20230, or hand delivered to
Shipping and Receiving, Section M-100, 1441 L Street, NW., Washington,
DC 20005. Comments will be available for public inspection in Room
7006, 1441 L Street, NW., between 8:30 a.m. and 4:30 p.m., Monday
through Friday.
FOR FURTHER INFORMATION CONTACT:
Betty L. Barker, Chief, International Investment Division (BE-50),
Bureau of Economic Analysis, U.S. Department of Commerce, Washington,
DC 20230; phone (202) 606-9800.
SUPPLEMENTARY INFORMATION: These proposed rules set forth the reporting
requirements for the BE-10, Benchmark Survey of U.S. Direct Investment
Abroad--1994. This 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) hereinafter, ``the Act.''
Section 4(b) of the Act, as amended, requires 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 an 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.
The responsibility for conducting benchmark surveys of U.S. direct
investment abroad has been delegated by the President to the Secretary
of Commerce, who has redelegated by the President to the Secretary of
Commerce, who has redelegated it to the Bureau of Economic Analysis
(BEA).
The benchmark surveys are BEA's censuses, intended to cover the
universe of U.S. direct investment abroad in value terms. U.S. direct
investment abroad is defined as the ownership or control, directly or
indirectly, by one U.S. 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 he benchmark survey is to obtain comprehensive data
on the overall operations of U.S. parent companies and their foreign
affiliates, and on positions and transactions between them. The survey
is mandated by Congress to provide a factual framework for addressing
the concerns of policymakers and the general public about the effects
of direct investment abroad on the U.S. and foreign economies. The data
from the survey are needed to record the size of U.S. direct investment
abroad, measure changes in such investment, and assess its impact. The
data will provide benchmarks for deriving current universe estimates of
direct investment from 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 U.S.
international transactions and the national income and product
accounts, and for annual estimates of the U.S. direct investment
position abroad and of the operations of U.S. parent companies and
their foreign affiliates.
The benchmark surveys are the most comprehensive of BEA's surveys
in terms of subject matter in order that they obtain the detailed
information on U.S. direct investment abroad needed for policy
purposes. As specified in the Act, policy areas of particular interest
include, among other things, trade in both goods and services,
employment and employment compensation, taxes, and technology.
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 for reporting by a U.S. Reporter that is not a bank;
2. Form BE-10A BANK for reporting by a U.S. Reporter that is a
bank;
3. Form BE-10B(LF) (Long Form) for reporting nonbank foreign
affiliates of nonbank U.S. parents with assets, sales, or net income
greater than $50 million (positive or negative);
4. Form BE-10B(SF) (Short Form) for reporting nonbank foreign
affiliates of nonbank U.S. parents with assets, sales, or net income
greater than $3 million, but not greater than $50 million (positive or
negative); and
5. Form BE-10B BANK for reporting foreign affiliates that are banks
with assets, sales, or net income greater than $3 million (positive or
negative).
Although the proposed survey is intended to cover the universe of
U.S. direct investment abroad, in order to minimize the reporting
burden, foreign affiliates with assets, sales, and net income each to
or less than $3 million (Positive or negative) are exempt from being
reported on Form BE-10B(SF) or BE-10B BANK (but must be listed on Form
BE-10A SUPPLEMENT or BE-10A BANK SUPPLEMENT).
In designing the survey, BEA made substantial efforts to consult
with data users outside the Bureau and survey respondents to obtain
their views on the proposed benchmark survey, including the
availability and need for the data, the data items to be reported, and
the clarity of instructions.The proposed draft incorporates comments
received from users and respondents. 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 responses (e.g., whether the data are readily available on
respondents' books), and BEA's experience in previous benchmark
surveys.
The major change from the last (1989) survey to the 1994 survey
that is reflected in these proposed rules is the raising, from $15
million to $50 million, of the exemption level for reporting foreign
affiliates on the more complex long form. In the 1994 survey, nonbank
foreign affiliates for which assets, sales, or net income is greater
than $50 million (positive or negative) will be required to be reported
on Form BE-10B(LF) (Long Form); nonbank foreign affiliates for which
assets, sales, or net income is greater than $3 million (positive or
negative), but for which no one of these items is greater than $50
million (positive or negative), will be required to be reported on Form
BE-10B(SF) (Short Form). In the 1989 benchmark survey, the long-form
exemption level was $15 million. This proposed change means that
approximately 6,000 foreign affiliates that previously would have been
reported on the long form will now be reported instead on the short
form, thus reducing both reporting and editing burden from what it
would otherwise have been.
Other proposed changes in the survey from 1989 to 1994 include
revision of the instructions--primarily for purposes of clarification--
and modification, addition, deletion, or combination of some items on
the forms. These changes do not require changes to the rules.
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, U.S. 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. A request for
review of the forms has been submitted to the Office of Management and
Budget under section 3504(h) of the Paperwork Reduction Act.
The public reporting burden for this collection of information is
estimated to vary from 14 to 8,500 hours per response, with an average
of 159.4 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.
Comments from the public regarding the burden estimate or any other
aspect of this collection of information should be addressed to:
Director, Bureau of Economic Analysis (BE-1), U.S. Department of
Commerce, Washington, DC 20230; and to the Office of Management and
Budget, Washington, DC 20503, Attention: Desk Officer for the
Department of Commerce.
Regulatory Flexibility Act
The General Counsel, 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
the proposed rules will not have a significant economic impact on a
substantial number of small entities. The exemption level is set in
terms of the size of a U.S. company's foreign affiliates. If an
affiliate is owned 10 percent or more by the U.S. company and has
assets, sales, or net income greater than $3 million (positive or
negative), it must be reported. Usually, the U.S. parent company (the
one required to file the report) is many times larger. Also, to
minimize the reporting burden on smaller U.S. businesses, nonbank
foreign affiliates with assets, sales, and net income all below $50
million will be reported on the abbreviated BE-10B(SF), or short form,
rather than the BE-10B(LF), or long form.
List of Subjects in 15 CFR Part 806
Balance of payments, Economic statistics, U.S. investment abroad,
Penalties, Reporting and recordkeeping requirements.
Dated: August 5, 1994.
Carol S. Carson,
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--1994.
A BE-10, Benchmark Survey of U.S. Direct Investment Abroad will be
conducted covering 1994. All legal authorities, provisions,
definitions, and requirements contained in Secs. 806.1 through 806.13
and Sec. 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.
(a) Response required. A response is required from persons subject
to the reporting requirements of the BE-10, Benchmark Survey of U.S.
Direct Investment Abroad--1994, contained herein, 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
Sec. 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, 1995, or June 30, 1995, as required.
(b) Who must report. (1) A BE-10 report is required of any U.S.
person 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 U.S. person's 1994 fiscal year.
(2) If the U.S. person had no foreign affiliates during its 1994
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 U.S. person had any foreign affiliates
during its 1994 fiscal year, a BE-10 report is required and the U.S.
person is a U.S. 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 U.S. person's 1994 fiscal year.
(c) Forms for nonbank U.S. Reporters and foreign affiliates. (1)
Form BE-10A (Report for the U.S. Reporter). A BE-10A report must be
completed by a U.S. Reporter that is not a bank. If the U.S. Reporter
is a corporation, Form BE-10A is required to cover the fully
consolidated U.S. domestic business enterprise.
(i) If a nonbank U.S. Reporter had any foreign affiliates, whether
held directly or indirectly, for which any one of the following three
items--total assets, sales or gross operating revenues excluding sales
taxes, or net income after provision for foreign income taxes--was
greater than $3 million (positive or negative) at any time during the
affiliate's 1994 fiscal year, the U.S. Reporter must file a complete
Form BE-10A and, as applicable, a BE-10A SUPPLEMENT listing each, if
any, exempt foreign affiliate. 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 a nonbank U.S. Reporter had no foreign affiliates for which
any one of the three items listed in paragraph (c)(1)(i) of this
section was greater than $3 million (positive or negative) at any time
during the affiliate's 1994 fiscal year, then only items 1-4 of Form
BE-10A and the BE-10A SUPPLEMENT, listing all exempt foreign
affiliates, must be completed.
(2) Form BE-10B(LF) or (SF) (Report for foreign affiliate).
(i) A BE-10B(LF) (Long Form) must be filed for each nonbank foreign
affiliate of a nonbank U.S. 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 $50 million
(positive or negative) at any time during the affiliate's 1994 fiscal
year.
(ii) A BE-10B(SF) (Short Form) must be filed.
(A) For each nonbank foreign affiliate of a nonbank U.S. Reporter,
whether held directly or indirectly, for which any one of the three
items listed in (c)(2)(i) above was greater than $3 million, but for
which no one of these items was greater than $50 million (positive or
negative), at any time during the affiliate's 1994 fiscal year, and
(B) For each nonbank foreign affiliate of a U.S. bank Reporter,
whether held directly or indirectly, for which any one of the three
items listed in (c)(2)(i) above was greater than $3 million (positive
or negative) at any time during the affiliate's 1994 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 U.S. Reporter that owns another nonexempt foreign
affiliate of that U.S. 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 U.S. 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 U.S.
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 U.S. Reporter that is a bank). A
BE-10A BANK report must be completed by a U.S. Reporter that is a bank.
For purposes of filing Form BE-10A BANK, the U.S. Reporter is deemed to
be the fully consolidated U.S. domestic business enterprise and all
required data on the form shall be for the fully consolidated domestic
entity.
(i) If a U.S. bank had any foreign affiliates at any time during
its 1994 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 $3
million (positive or negative) at any time during the affiliate's 1994
fiscal year, the U.S. Reporter must file a complete Form BE-10A BANK
and, as applicable, a BE-10A BANK SUPPLEMENT listing each, if any,
exempt foreign affiliate, whether bank or nonbank. It must also file a
Form BE-10B(SF) for each nonexempt nonbank foreign affiliate and a Form
BE-10B BANK for each nonexempt foreign bank 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 $3 million (positive or negative) at any time
during the affiliate's 1994 fiscal year, then only items 1-4 of Form
BE-10A BANK and the BE-10A BANK SUPPLEMENT, listing all exempt foreign
affiliates, should be completed.
(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 U.S. 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 $3 million
(positive or negative) at any time during the affiliate's 1994 fiscal
year.
(ii) Notwithstanding paragraph (d)(3)(i) of this section, a Form
BE-10B BANK must be filed for a foreign bank affiliate of the U.S.
Reporter that owns another nonexempt foreign affiliate of that U.S.
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 U.S.
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, 1995 for those U.S. Reporters filing
less than 50, and June 30, 1995 for those U.S. Reporters filing 50 or
more, Forms BE-10B(LF), (SF), or BANK.
[FR Doc. 94-20975 Filed 8-25-94; 8:45 am]
BILLING CODE 3510-EA-M