[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]
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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.
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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.
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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