[Federal Register Volume 60, Number 147 (Tuesday, August 1, 1995)]
[Proposed Rules]
[Pages 39128-39130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18804]



 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 60, No. 147 / Tuesday, August 1, 1995 / 
Proposed Rules  


[[Page 39128]]


DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 950710175-5175-01]
RIN 0691-AA25


Direct Investment Surveys; Change in Reporting Requirements for 
the Annual Survey of U.S. Direct Investment Abroad (BE-11)

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: These proposed rules will amend 15 CFR 806.14 to revise the 
reporting requirements for the BE-11, Annual Survey of U.S. Direct 
Investment Abroad. The BE-11 is mandatory survey of U.S. direct 
investment abroad conducted by the Bureau of Economic Analysis (BEA), 
U.S. Department of Commerce. The proposed rules will:
    (1) Raise the overall exemption level for the survey, and the 
exemption level for reporting individual nonbank foreign affiliates on 
Forms BE-11B(LF) and BE-11C, from $15 million to $20 million.
    (2) Institute a short form, Form BE-11B(SF), for U.S. companies to 
report their majority-owned nonbank foreign affiliates with assets, 
sales, and net income in the $20 to $50 million range.
    (3) For fiscal year 1997 only, require the largest nonbank foreign 
affiliates owned between 10 and 20 percent to be reported on Form BE-
11C, along with affiliates owned between 20 and 50 percent. In all 
years, nonbank foreign affiliates owned between 20 and 50 percent by 
all U.S. Reporters (U.S. parent companies) of the affiliate combined 
must be reported on Form BE-11C if their assets, sales, or net income 
exceed $20 million. For fiscal year 1997 only, Form BE-11C must also be 
filed for nonbank foreign affiliates owned, directly and/or indirectly, 
at least 10 percent by one U.S. Reporter (i.e., U.S. parent company), 
but less than 20 percent by all U.S. Reporters of the affiliate 
combined, if the affiliate's total assets, sales, or net income exceed 
$100 million. Reporting for the largest affiliates owned between 10 and 
20 percent is needed in at least one year between benchmark surveys, in 
order to maintain reliable estimates of data for the universe of 
foreign affiliates (which is defined by law to include all foreign 
business enterprises owned 10 percent or more by a U.S. person). A 
similar requirement was imposed in the 1987 and 1992 annual surveys, 
which fell between earlier benchmark surveys.
    Raising the overall exemption level will reduce the number of U.S. 
parent companies and foreign affiliates that must be reported in the 
survey, and instituting a short form for smaller majority-owned 
affiliates will reduce the number of items to be reported for those 
affiliates. Thus, the proposed changes will reduce both the reporting 
and processing burdens of the survey. (As noted below, however, BEA is 
proposing to add several items to the survey forms, which does not 
require a rule change; the addition of the items will increase the 
reporting burden, partially offsetting the reduction in burden due to 
raising the exemption level and instituting the short form).

DATES: Comments on these proposed rules will receive consideration if 
submitted in writing on or before September 15, 1995.

ADDRESSES: Comments may be mailed to the Office of the Chief, 
International Investment Division (BE-50), Bureau of Economics 
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 received 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: The BE-11, Annual Survey of U.S. Direct 
Investment Abroad, is part of BEA's regular data collection program for 
U.S. direct investment abroad. The survey is mandatory and is conducted 
pursuant to the International Investment and Trade in Services Survey 
Act (Pub. L. 94-472, 90 Stat. 2059, 22 U.S.C. 3101-3108, as amended).
    The BE-11 survey consists of an instruction booklet, a claim for 
not filing the BE-11, and the following report forms:
    1. Form BE-11A for reporting by a U.S. Reporter that is not a bank;
    2. Form BE-11B(LF) (Long Form) for reporting majority-owned nonbank 
foreign affiliates with assets, sales, or net income greater than $50 
million (positive or negative);
    3. Form BE-11B(SF) (Short Form) for reporting majority-owned 
nonbank foreign affiliates with assets, sales, or net income greater 
than $20 million, but not greater than $50 million (positive or 
negative); and
    4. Form BE-11C for reporting minority-owned nonbank foreign 
affiliates.
    A. Form BE-11A must be filed by each nonbank U.S. person having a 
foreign affiliate reportable on Form BE-11B(LF), BE-11B(SF), or BE-11C. 
Under these proposed rules, the exemption level for reporting 
individual foreign affiliates on Form BE-11B(LF) or (SF) or BE-11C--
and, thus, for determining whether a U.S. person has to file Form BE-
11A--would be raised from $15 million to $20 million. The exemption 
level is the level of a foreign affiliate's assets, sales, or net 
income below which a Form BE-11B(LF) or (SF) or BE-11C is not required. 
Raising the exemption level lowers the number of reports that otherwise 
must be filed, thus reducing the reporting and processing burdens. The 
proposed exemption level of $20 million is the same as that recently 
approved for the related quarterly Form BE-577, Direct Transactions of 
U.S. Reporter With Foreign Affiliate. The exemption level for the BE-11 
survey was last raised following the 1989 benchmark survey and was 
effective with the annual survey covering the year 1990.
    In addition to raising the exemption level, these proposed rules 
will institute the BE-11B(SF) short form. Majority-owned nonbank 
foreign affiliates for which assets, sales, or net income is greater 
than $20 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-11B(SF). The use of a short form 
means that, for about 

[[Page 39129]]
3,700 foreign affiliates, U.S. companies will now report significantly 
fewer data items than on the last (1993) annual survey.
    For fiscal year 1997 only, these proposed rules will require the 
largest nonbank foreign affiliates owned between 10 and 20 percent to 
be reported on Form BE-11C, along with affiliates owned between 20 and 
50 percent. In all years, reporting on Form BE-11C is required if an 
affiliate is owned between 20 and 50 percent by all U.S. Reporters 
combined and if its assets, sales, or net income exceed $20 million. 
Primarily to reduce reporting burden of the survey, affiliates owned 
less than 20 percent do not have to be reported. However, U.S. direct 
investment abroad is defined by law to include all foreign business 
enterprises owned 10 (not 20) percent or more, directly or indirectly, 
by a U.S. person. BEA conducts periodic benchmark surveys of U.S. 
direct investment abroad (the BE-10), covering all foreign affiliates 
owned 10 percent or more. A benchmark survey for the year 1994 is now 
being conducted; the next survey will cover the year 1999. In order to 
maintain reliable estimates of data for the universe of all foreign 
affiliates in nonbenchmark years, reporting for the largest affiliates 
owned between 10 and 20 percent is needed for at least one year between 
benchmark surveys. Although the U.S. ownership percentages in these 
affiliates are low, some of the affiliates are very large and have a 
sizable impact on the estimates. Under these proposed rules, reporting 
of Form BE-11(C) for nonbank foreign affiliates owned directly and/or 
indirectly, at least 10 percent by one U.S. Reporter, but less than 20 
percent by all U.S. Reporters of the affiliate combined, and for which 
assets, sales, or net income exceed $100 million would be required for 
fiscal year 1997 only. A similar one-year requirement was imposed in 
the 1987 annual survey (between the 1982 and 1989 benchmark surveys) 
and in the 1992 annual survey (between the 1989 and 1994 benchmark 
surveys).
    These new rules, if approved, will be effective with the survey 
covering fiscal year 1995. The 1995 forms will be mailed out in March 
1996 and will be due May 31, 1996. The last BE-11 survey covered the 
year 1993. (A BE-11 survey is not conducted in a year, such as 1994, 
when a BE-10 benchmark survey is conducted.)
    BEA is proposing a number of other changes to the report forms 
themselves--such as modifications, additions, and deletions. These 
changes, however, do not require rule changes and are not reflected in 
these proposed rules. The major changes are the addition of five items 
on Form BE-11A to facilitate the estimation of U.S. parent companies' 
gross product in the United States annually; the addition of three 
items on Form BE-11B(LF) to collect affiliates' equity investment in 
other foreign affiliates needed to arrive at the correct values for 
affiliates' income and owners' equity; and the addition of an item on 
Form BE-11B(LF) (which is also included on new Form BE-11B(SF)) to 
collect property, plant, and equipment (PP&E) expenditures. Projected 
and actual expenditures for PP&E had been collected on the BE-133 B and 
C surveys, which were discontinued in June 1993. At that time, 
respondents were informed that an item on actual expenditures would be 
added to the annual survey. All the items being added are currently 
only available on benchmark surveys.
    Other changes to the survey include the collection of ``total 
sales,'' rather than ``sales of services,'' by transactor on Form BE-
11A; the collection of research and development expenditures on a 
performed ``by'' basis (the basis used by the National Science 
Foundation), rather than a performed ``for'' basis, on Form BE-11A and 
Forms BE-11B (LF) and (SF); the addition of an item on Forms BE-11B 
(LF) and (SF) to obtain information on an indirectly-owned foreign 
affiliate's foreign parent's identify and ownership interest in its 
subsidiary; and the replacement on Form BE-11C of one item, on U.S. 
ownership in the affiliate, with two items--one on direct ownership 
interest and the other on indirect ownership interest.
    The reporting burden for the 1995 BE-11 (OMB Control No. 0608-0053) 
survey is estimated at 88,940 hours, 16,360 less than the estimate 
currently in the OMB inventory. The reduction in burden is more than 
accounted for by raising the exemption level from $15 million to $20 
million and by instituting the BE-11B short form, partly offset by 
natural growth in the universe and the addition of new items.
    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 a U.S. company for this collection 
of information can range from 4 hours for the smallest and least 
complex U.S. Reporter that has one affiliate, to approximately 3,000 
hours for a large U.S. Reporter that has up to 150 affiliates with a 
wide range of activities; the average burden per Reporter is 62 hours. 
The estimated burden includes 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: Acting 
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. (OMB Control No. 0608-0053).

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 the provisions of the 
Regulatory Flexibility Act (5 U.S.C. 605(b)), that these proposed 
rules, if adopted, 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. Only if the 
affiliate's assets, sales, or net income exceeds $20 million must it be 
reported. Usually, the U.S. parent company (the one required to file 
the report) is many times larger.
    In addition, by raising the exemption level from $15 million to $20 
million, U.S. parent companies will no longer have to report for 
affiliates between $15 and $20 million. This change should reduce the 
reporting burden on smaller U.S. businesses that own these affiliates. 

[[Page 39130]]
Also, to minimize the reporting burden on smaller U.S. businesses, 
majority-owned affiliates with assets, sales, and net income in the 
range of $20 million to $50 million will be reported on the abbreviated 
BE-11B(SF), or short form, rather than the BE-11B(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: June 30, 1995.
J. Steven Landefeld,
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).
Sec. 806.14  [Amended]

    2. Section 806.14(f)(3) introductory text, (f)(3)(i), (f)(3)(ii), 
(f)(3)(iii), (f)(3)(iv) (A) through (C), (f)(3)(v) are revised to read 
as follows:
* * * * *
    (f) * * *
    (3) BE-11--Annual Survey of U.S. Direct Investment Abroad: A 
report, consisting of Form BE-11A and Form(s) BE-11B(LF), BE-11B(SF), 
and/or BE-11C, is required of each nonbank U.S. Reporter who, at the 
end of the Reporter's fiscal year, had a nonbank foreign affiliate 
reportable on Form BE-11B(LF), BE-11B(SF), or BE-11C. Forms required 
and the criteria for reporting on each are as follows:
    (i) Form BE-11A (Report for U.S. Reporter) must be filed by each 
nonbank U.S. person having a foreign affiliate reportable on Form BE-
11B(LF), BE-11B(SF), or BE-11C.
    (ii) Form BE-11B(LF) or (SF) (Report for Majority-owned Foreign 
Affiliate).
    (A) A BE-11B(LF) (Long Form) is required to be filed for each 
majority-owned nonbank foreign affiliate of a nonbank U.S. Reporter for 
which any one of 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 the end of, or for, the affiliate's fiscal year.
    (B) A BE-11B(SF) (Short Form) is required to be filed for each 
majority-owned nonbank foreign affiliate of a nonbank U.S. Reporter for 
which any one of the three items listed in paragraph (f)(3)(ii)(A) of 
this section was greater than $20 million (positive or negative), but 
for which no one of these items was greater than $50 million (positive 
or negative), at the end of, or for, the affiliate's fiscal year.
    (iii) Form BE-11C (Report for Minority-owned Foreign Affiliate) 
must be filed for each minority-owned nonbank foreign affiliate that is 
owned at least 20 percent, but not more than 50 percent, directly and/
or indirectly, by all U.S. Reporters of the affiliate combined, and for 
which any one of the three items listed in paragraph (f)(3)(ii)(A) of 
this section was greater than $20 million (positive or negative) at the 
end of, or for, the affiliate's fiscal year. In addition, for the 
report covering fiscal year 1997 only, a Form BE-11C must be filed for 
each minority-owned nonbank foreign affiliate that is owned, directly 
or indirectly, at least 10 percent by one U.S. Reporter, but less than 
20 percent by all U.S. Reporters of the affiliate combined, and for 
which any one of the three items listed in paragraph (f)(3)(ii)(A) of 
this section was greater than $100 million (positive or negative) at 
the end of, or for, the affiliate's fiscal year.
    (iv) * * *
    (A) None of its exemption level items is above $20 million.
    (B) For fiscal year 1997 only, it is less than 20 percent owned, 
directly or indirectly, by all U.S. Reporters of the affiliate combined 
and none of its exemption level items exceeds $100 million.
    (C) For fiscal years other than 1997, it is less than 20 percent 
owned, directly or indirectly, by all U.S. Reporters of the affiliate 
combined.
    (D) * * *
    (E) * * *
    (v) Notwithstanding the above, a Form BE-11B(LF), BE-11B(SF), or 
BE-11C 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. That is, all 
affiliates upward in the chain of ownership must be reported.
* * * * *
[FR Doc. 95-18804 Filed 7-31-95; 8:45 am]
BILLING CODE 3510-DT-M