[Federal Register Volume 62, Number 195 (Wednesday, October 8, 1997)]
[Proposed Rules]
[Pages 52515-52518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26658]
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DEPARTMENT OF COMMERCE
Bureau of Economic Analysis
15 CFR Part 806
[Docket No. 970918231-7231-01]
RIN 0691-AA08
Direct Investment Surveys: BE-12, Benchmark Survey of Foreign
Direct Investment in the United States--1997
AGENCY: Bureau of Economic Analysis, Commerce.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document sets forth proposed rules to revise 15 CFR
806.17 to present the 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, and the proposed survey will be conducted for
1997. 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 balance of
payments, international investment position, and national income and
product accounts of the United States.
Key changes proposed by BEA 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,
BEA proposes to base industry coding of reporting companies on the new
North American Industry Classification System (NAICS) in place of the
current system which is based on the U.S. Standard Industrial
Classification system; to collect new information on affiliated
services transactions by type of service; and to modify the detail
collected on the 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.
DATES: Comments on the proposed rules will receive consideration if
submitted in writing on or before November 24, 1997.
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
Room M-100, 1441 L Street NW, Washington, DC 20005. Comments received
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, 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-12, Benchmark Survey of Foreign Direct
Investment in the United States--1997. 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 by Pub. L. 98-
573 and Pub. 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;
[[Page 52516]]
(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 foreign
direct investment in the United States has been delegated to the
Secretary of Commerce, who as 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 and national income and product accounts, and for annual
estimates of the foreign direct investment position in the United
States at book value and of the operations of the U.S. affiliates of
foreign companies.
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
include, among other things, trade in both goods and services,
employment and employee compensation, taxes, and technology.
As proposed, the survey will consist of an instruction booklet, an
industry coding 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 proposed 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.
In designing this survey, BEA solicited comments from an extensive
number of representatives of both data users and survey respondents.
BEA held a meeting with interagency data users on May 2, 1997 to
solicit views on the proposed benchmark survey. It solicited and
received input from several nongovernment data users. BEA also
solicited comments from respondents by sending a packet with forms and
proposed changes to 13 large companies that are current respondents to
BEA surveys. The proposed draft incorporates BEA's responses to
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 the respondents' books), and its experience in previous
benchmark surveys.
Key changes proposed by BEA from the previous benchmark survey
include reducing respondent burden, particularly for small companies,
by: (1) 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; (2) increasing the
exemption level at which reporting on Form BE-12(LF) (Long Form) is
required from $50 million to $100 million; and (3) 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, BEA proposes to base industry coding of reporting
companies on the new North American Industry Classification System
(NAICS) in place of the current system which is based on the U.S.
Standard Industrial Classification system; to collect new information
on affiliated services transactions by type of service; and to modify
the detail collected on the 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.
A copy of the proposed survey forms may be obtained from the Direct
Investment in the United States Branch, International Investment
Division, BE-49(A), Bureau of Economic Analysis, U.S. Department of
Commerce, Washington, DC 20230; phone (202) 606-5577.
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. The collection of
information requirement contained in the proposed rule has been
submitted to the Office of Management and Budget for review under
section 3507 of the Paperwork Reduction Act.
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
[[Page 52517]]
sources, gathering and maintaining the data needed, and completing and
reviewing the collection of information.
Comments are requested concerning: (a) Whether the proposed
collection of information is necessary for the proper performance 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), U.S. Department of
Commerce, Washington, DC 20230; and 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 this proposed
rulemaking, if adopted, 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 proposed rules, companies
with assets, sales, or net income above $3 million, but not above $100
million, would 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.
J. Steven Landefeld,
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 806.17 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 the 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. (2) 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 survey, covers businesses 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
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(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. 97-26658 Filed 10-07-97; 8:45 am]
BILLING CODE 3510-06-M