[Federal Register Volume 63, Number 148 (Monday, August 3, 1998)]
[Rules and Regulations]
[Pages 41186-41188]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20616]


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DEPARTMENT OF COMMERCE

Bureau of the Census

15 CFR Part 30

[Docket No. 980331081-8171-02]
RIN 0607-AA22


Foreign Trade Statistics Regulations; Reporting the Value of 
Foreign Military Sales Shipments

AGENCY: Bureau of the Census, Commerce.

ACTION: Final rule.

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SUMMARY: The Bureau of the Census (Census Bureau) is amending the 
Foreign Trade Statistics Regulations (FTSR) by adding a section 
requiring exporters or their designated agents to include a foreign 
military sales indicator code on the Shipper's Export Declaration (SED) 
Form, Automated Export System (AES) Record Layout, and Automated Export 
Reporting Program (AERP) Record Layout. This will apply whenever a 
commercial exporter is shipping goods or reporting the repair of 
military equipment under provisions of the Foreign Military Sales (FMS) 
program. The Census Bureau is taking this action to assist the Bureau 
of Economic Analysis (BEA), Department of Commerce, in improving the 
accuracy and reliability of data collected on the value of exports made 
under the FMS program. Exports under the FMS program are a component of 
the U.S. balance of payments accounts and of the U.S. Gross Domestic 
Product (GDP). The Census Bureau is also taking this action to assist 
both the Census Bureau and BEA in improving the accuracy and 
reliability of estimates presented in the Department of Commerce's 
monthly release ``U.S. International Trade in Goods and Services.'' The 
BEA has reviewed and approved this proposed rulemaking. The Department 
of Treasury concurs with the provisions contained in this final rule.


[[Page 41187]]


DATES: Effective: September 1, 1998. Compliance date: Electronic filers 
will have until November 1, 1998, to implement program changes to meet 
this requirement.

FOR FURTHER INFORMATION CONTACT: C. Harvey Monk, Jr., Chief, Foreign 
Trade Division, Bureau of the Census, Room 2104, Federal Building 3, 
Washington, D.C. 20233-6700, by telephone on (301) 457-2255 or by fax 
on (301) 457-2645.

SUPPLEMENTARY INFORMATION:

Background

    The FMS program is authorized under the provisions of the Arms 
Export Control Act of 1976 (Pub. L. 90-629, as amended) and predecessor 
legislation. Under this program, goods and services are transferred 
directly to foreign governments and international organizations by the 
U.S. Department of Defense (DOD). The delivery is recorded by the DOD 
at the time ownership is transferred to the foreign government or 
international organization. This recording is consistent with balance 
of payments accounting principles. The transfer may be made abroad, in 
the United States for shipment abroad, or for use in the United States. 
In the latter case, although the goods physically remain in the United 
States (for example, equipment to train foreign personnel), ownership 
is transferred to a foreign government. Transfers also may be made from 
stocks at U.S. military installations abroad. The SEDs are not required 
for FMS transactions by DOD agencies; SEDs are required by commercial 
exporters, but these SEDs do not separately identify FMS transactions.

Program Requirements

    The DOD submits quarterly reports to the BEA under provisions of 
the Office of Management and Budget's (OMB) Statistical Policy 
Directive No. 19, ``Reports of the Department of Commerce on 
International Transactions.'' These reports contain details of FMS 
deliveries by broad product category, by country of destination, and by 
military agency (Army, Navy, Air Force, and other DOD agencies). The 
reports include deliveries carried out by both DOD and commercial 
exporters. The BEA prepares estimates of FMS deliveries based on these 
reports for the quarterly balance of payments accounts.
    The DOD also submits monthly reports to the Census Bureau that 
contain detailed statistics on military assistance (Foreign Aid/Grant 
Aid) shipments made from the United States by the DOD and shipments 
made under the FMS program by the military agencies. These monthly 
reports are furnished to the Census Bureau in lieu of the SED in order 
to facilitate shipments of material under Grant Aid and FMS auspices. 
However, these reports do not cover FMS deliveries by commercial 
exporters, which comprise a significant share of FMS deliveries.
    In order to reconcile the two sets of data provided by DOD, the 
Census Bureau is adding an FMS indicator code to the SEDs and the 
electronic transmissions required from commercial exporters. The 
addition of this indicator code will assure more accurate 
identification of FMS transactions in the goods data reported to the 
Census Bureau and will enable the BEA to make a more accurate estimate 
of this class of FMS transactions when it removes them from the goods 
data to avoid counting these transactions twice when it compiles the 
balance of payments accounts. An FMS indicator code on the SEDs and 
electronic transmissions from commercial exporters will permit the BEA 
and the Census Bureau to improve the accuracy and reliability of its 
balance of payments and GDP estimates, as well as the estimates 
published in the ``U.S. International Trade in Goods and Services'' 
release.
    The Census Bureau is amending Section 30.7(p) of the FTSR to add 
paragraph (5) requiring commercial exporters to identify those exports 
that represent FMS deliveries with an ``M'' indicator code in Item (16) 
on Commerce Form 7525-V and in Item (23) on Commerce Form 7525-V-ALT 
(Intermodal) on the paper SEDs, with an ``FS'' Export Information Code 
on the Commodity Line Item Description (CL1) record on the AES record 
layout, and with a ``3'' indicator code in field 2 (Type) of the AERP 
record layout for participants of the AERP.

Response to Comments

    The Census Bureau published a Notice of Proposed Rulemaking and 
Request for Comments in the Federal Register (63 FR 18344) on April 15, 
1998. The Bureau of the Census received three letters commenting on the 
proposed rule. All of the comments received have been addressed and 
resolved by the Census Bureau. As a result of the comments, one 
revision was made to the final rule to clarify that the indicator code 
also applies to FMS shipments financed under the Foreign Military 
Finance (FMF) Program.

Executive Orders

    This rule has been determined to be not significant for purposes of 
Executive Order 12866. This rule does not contain policies with 
federalism implications sufficient to warrant preparation of a 
federalism assessment under Executive Order 12612.

Paperwork Reduction Act

    Notwithstanding any other provisions of law, no person is required 
to respond to, nor shall a person be subject to a penalty for failure 
to comply with, a collection of information subject to the requirements 
of the Paperwork Reduction Act (PRA) unless that collection of 
information displays a currently valid OMB control number.
    This rule covers collections of information subject to the 
provisions of the PRA, which are cleared by the OMB under OMB control 
number 0607-0152.
    This rule will not impact the current response burden requirements 
as approved under OMB control number 0607-0152 under provisions of the 
PRA of 1995, Public Law 104-13.

List of Subjects in 15 CFR Part 30

    Economic statistics, Foreign trade, Exports, Reporting and 
recordkeeping requirements.

    For the reasons set out in the preamble, Part 30 is amended as 
follows:

PART 30--FOREIGN TRADE STATISTICS

    1. The authority citation for 15 CFR part 30 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 13 U.S.C. 301-307; Reorganization Plan 
No. 5 of 1950 (3 CFR 1949-1953 Comp., 1004); Department of Commerce 
Organization Order No. 35-2A. August 4, 1975, 40 CFR 42765.

Subpart A--General Requirements--Exporter

    2. Section 30.7 is amended by adding paragraph (p)(5) to read as 
follows:


Sec. 30.7  Information required on Shipper's Export Declarations.

* * * * *
    (p) * * *
    (5) Foreign Military Sales (FMS) indicator. For any export that 
represents the delivery of goods or the repair of military equipment 
under provisions of the FMS program (including those financed under the 
Foreign Military Finance (FMF) Program), an ``M'' indicator code should 
be included in Item (16) on Commerce Form 7525-V and in Item (23) on 
Commerce Form 7525-V-ALT (Intermodal) of the paper SED, with an ``FS'' 
Export Information Code on the Commodity Line Item Description (CL1) 
field of the Automated Export System (AES) record layout, and a ``3'' 
indicator code in field

[[Page 41188]]

2 (Type) of the Automated Export Reporting Program (AERP) record 
layout. This indicator code should be used in lieu of the domestic (D) 
or foreign (F) indicator code required in those fields on the SED Form, 
the AES record, and the AERP record. The FMS indicator code will serve 
to identify more accurately that segment of U.S. exports that represent 
FMS deliveries in the U.S. export statistics.
* * * * *
    Dated: July 16, 1998.
Bradford R. Huther,
Deputy Director, Bureau of the Census.
[FR Doc. 98-20616 Filed 7-31-98; 8:45 am]
BILLING CODE 3510-07-U