[Federal Register Volume 64, Number 172 (Tuesday, September 7, 1999)]
[Proposed Rules]
[Pages 48568-48572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23148]


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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 99810212-9212-01]
RIN 0691-AA36


Direct Investment Surveys: BE-10, Benchmark Survey of U.S. Direct 
Investment Abroad--1999

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document sets forth proposed rules to revise regulations, 
to present the reporting requirements for the BE-10, Benchmark Survey 
of U.S. Direct Investment Abroad.
    The Department of Commerce, as part of its continuing effort to 
reduce paperwork and respondent burden, invites the general public and 
other Federal agencies to comment on proposed and/or continuing 
information collections, as required by the Paperwork Reduction Act of 
1995. The BE-10 survey is a mandatory survey and is conducted once 
every 5 years by the Bureau of Economic Analysis (BEA), US Department 
of Commerce, under the International Investment and Trade in Services 
Survey Act. The proposed benchmark survey will be conducted for 1999. 
BEA will send the survey to potential respondents in March of the year 
2000; responses will be due by May 31, 2000 for respondents required to 
file fewer than 50 forms and by June 30, 2000 for those required to 
file 50 or more forms. The last benchmark survey was conducted for 
1994. The benchmark survey covers virtually the entire universe of US 
direct investment abroad in terms of value, and is BEA's most 
comprehensive survey of such investment in terms of subject matter.
    Changes proposed by BEA in the reporting requirements to be 
implemented in these proposed rules are: Increasing the exemption level 
for reporting on the BE-10B(SF) short form and the BE-10B BANK form 
from $3 million to $7 million; directing that minority-owned nonbank 
foreign affiliates, regardless of size, be reported on the BE-10B(SF) 
short form; increasing the exemption level for reporting on the BE-
10B(LF) long form from $50 million to $100 million; and requiring U.S. 
reporters with total assets, sales or gross operating revenues, and net 
income less than or equal to $100 million (positive or negative) to 
report only selected items. These changes will reduce respondent 
burden, particularly for small companies. BEA is also proposing several 
changes in the format and content of the survey that, on balance, also 
reduce respondent burden.

DATES: Comments on these proposed rules will receive consideration if 
submitted in writing on or before November 8, 1999.

ADDRESSES: Mail comments to the Office of the Chief, International 
Investment Division (BE-50), Bureau of Economic Analysis, US Department 
of Commerce, Washington, DC 20230, or hand deliver comments to room M-
100, 1441 L

[[Page 48569]]

Street, NW, Washington, DC 20005. Comments 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, US Department of Commerce, Washington, DC 
20230; phone (202) 606-9800.

SUPPLEMENTARY INFORMATION: These proposed rules propose to amend 15 CFR 
part 806.16 to set forth the reporting requirements for the BE-10, 
Benchmark Survey of US Direct Investment Abroad--1999. The Bureau of 
Economic Analysis (BEA), US Department of Commerce, will conduct the 
survey under the International Investment and Trade in Services Survey 
Act (22 U.S.C. 3101-3108), hereinafter, ``the Act.'' Section 4(b) of 
the Act requries 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 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 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.
    In Section 3 of Executive Order 11961, the President delegated 
authority granted under the Act as concerns direct investment to the 
Secretary of Commerce, who has redelegated it to BEA.
    The benchmark surveys are BEA's censuses, intended to cover the 
universe of US direct investment abroad in terms of value. US direct 
investment abroad is defined as the ownership or control, directly or 
indirectly, by one US 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 the benchmark survey is to obtain universe data on 
the financial and operating characteristics of, and on positions and 
transactions between, US parent companies and their foreign affiliates. 
The data are needed to measure the size and economic significance of US 
direct investment abroad, measure changes in such investment, and 
assess its impact on the US and foreign economies. The data will 
provide benchmarks for deriving current universe estimates of direct 
investment form 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 US 
international transactions and national income and product accounts, 
and for annual estimates of the US direct investment position abroad 
and of the operations of US parent companies and their foreign 
affiliates.
    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--Report for US Reporters that are not banks;
    2. Form BE-10A BANK--Report for US Reporters that are banks;
    3. Form BE-10B(LF) (Long Form)--Report for majority-owned nonbank 
foreign affiliates of nonbank US parents with assets, sales, or net 
income greater than $100 million (positive or negative);
    4. Form BE-10B(SF) (Short Term)--Report for majority-owned nonbank 
foreign affiliates with assets, sales, or net income greater than $7 
million, but not greater than $100 million (positive or negative), 
minority-owned nonbank foreign affiliates of nonbank parents with 
assets, sales, or net income greater than $7 million (positive or 
negative); and all nonbank affiliates of bank parents; and
    5. Form BE-10B BANK--Report for foreign affiliates that are banks.
    Although the proposed survey is intended to cover the universe of 
US direct investment abroad, in order to minimize the reporting burden, 
foreign affiliates with assets, sales, and net income each equal to or 
less than $7 million (positive or negative) are exempt from being 
reported on Form BE-10B(SF) or BE-10B BANK (but must be listed, along 
with selected identification information and data, on Form BE-10A 
SUPPLEMENT or BE-10A BANK SUPPLEMENT).
    BEA maintains a continuing dialogue with respondents and with data 
users, including its own internal users through the Bureau's Source 
Data Improvement and Evaluation Program, to ensure that, as far as 
possible, the required data serve their intended purposes and are 
available from existing records, that instructions are clear, and that 
unreasonable burdens are not imposed. In designing the survey, BEA 
contacted data users outside the Bureau and survey respondents to 
obtain their views on the proposed benchmark survey. The proposed draft 
reflects users' and respondents' comments. 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 response (e.g. whether the data are readily 
available on respondents' books), and BEA's experience in previous 
benchmark and related annual surveys.
    Changes proposed by BEA from the previous benchmark survey include 
reduction of respondent burden, particularly for small companies, by 
(1) Increasing the exemption level for reporting on the BE-10B(SF) 
short form and the BE-10B BANK form from $3 million to $7 million; (2) 
directing that minority-owned nonbank foreign affiliates, regardless of 
size, be reported on the BE-10B(SF) short form; (3) increasing the 
exemption level for reporting on the BE-10B(LF) long form from $50 
million to $100 million; and (4) requiring US Reporters with total 
assets, sales or gross operating revenues, and net income less than or 
equal to $100 million (positive or negative) to report only selected 
items. In addition, BEA proposes to adopt the North American Industry 
Classification System (NAICS) to replace the current industry 
classification system, which is based on the US Standard Industrial 
Classification system; consolidate 12 product categories previously 
used to collect trade in goods on the BEA-10A and the BE-10B(LF) forms 
into 10 product categories; and reduce the

[[Page 48570]]

detail collected on the composition of selected asset and liability 
positions and on the balance sheet of the US Reporter.
    BEA is also proposing improvements in the layout of the survey 
forms, and the placement and clarity of instructions. Items have been 
reordered to conform more closely to the order in which they appear in 
company financial statements. Specific line item instructions that have 
broad application continue to appear as part of the item on the face of 
the form, but instructions that provide an extended explanation or 
address unique situations have been moved to the back of each form, 
along with relevant instructions that previously appeared only in the 
separate Instruction Booklet.
    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, US 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 (PRA) and have been 
submitted to the Office of Management and Budget for review under the 
PRA.
    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.
    The survey, as proposed, is expected to result in the filing of 
reports from about 3,500 respondents. The respondent burden for this 
collection of information is estimated to vary from 14 to 8,500 hours 
per response, with an average of 130 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. Thus the total respondent burden of the 
survey is estimated at 458,000 hours (3,500 respondents times 130 hours 
average burden).
    Comments are requested concerning: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions 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), US Department of Commerce, Washington, DC 20230; and to the 
Office of Management and Budget, O.I.R.A., Paperwork Reduction Project 
0608-0049, Washington, DC 20503 (Attention PRA Desk Officer for BEA).

Regulatory Flexibility Act

    The Chief Counsel for 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 this proposed rule making, if adopted, will not 
have a significant economic impact on a substantial number of small 
entities. A BE-10 report is required of any US company 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 US 
company's 1999 fiscal year. Companies that have direct investments 
abroad tend to be quite large. To minimize the reporting burden on 
smaller US companies, US Reporters with total assets, sales or gross 
operating revenues, and net income less than or equal to $100 million 
(positive or negative) are required to report only selected items on 
the BE-10A form for US Reporters in addition to forms they may be 
required to file for their foreign affiliates.

List of Subjects in 15 CFR Part 806

    Balance of payments, Economic statistics, U.S. investment abroad, 
Penalties, Reporting and recordkeeping requirements.

    Dated: August 6, 1999.
Rosemary D. Marcuss,
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).

    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--1999.

    A BE-10, Benchmark Survey of US Direct Investment Abroad will be 
conducted covering 1999. All legal authorities, provisions, 
definitions, and requirements contained in 806.1 through 806.13 and 
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. More detailed instructions 
are given on the report forms and instructions.
    (a) Response required. A response is required from persons subject 
to the reporting requirements of the BE-10, Benchmark Survey of US 
Direct Investment Abroad--1999, contained in this section, 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 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, 2000, or June 30, 2000, as required.
    (b) Who must report. (1) A BE-10 report is required of any US 
person that

[[Page 48571]]

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 
US person's 1999 fiscal year.
    (2) If the US person had no foreign affiliates during its 1999 
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 US person had any foreign affiliates during 
its 1999 fiscal year, a BE-10 report is required and the US person is a 
US 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 US person's 1999 fiscal year.
    (c) Forms for nonbank US Reporters and foreign affiliates--(1) Form 
BE-10A (Report for the US Reporter). A BE-10A report must be completed 
by a US Reporter that is not a bank. If the US Reporter is a 
corporation, Form BE-10A is required to cover the fully consolidated US 
domestic business enterprise.
    (i) If for a nonbank US Reporter any one of the following three 
items--total assets, sales or gross operating revenues excluding sales 
taxes, or net income after provision for U.S. income taxes--was greater 
than $100 million (positive or negative) at any time during the 
Reporter's 1999 fiscal year, the US Reporter must file a complete Form 
BE-10A and, as applicable, a BE-10A SUPPLEMENT listing each, if any, 
foreign affiliate that is exempt from being reported on Form BE-
10B(LF), BE-10B(SF), or BE-10B BANK. 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 for a nonbank US Reporter no one of the three items listed 
in paragraph (c)(1)(i) of this section was greater than $100 million 
(positive or negative) at any time during the Reporter's 1999 fiscal 
year, the US Reporter is required to file on Form BE-10A only items 1 
through 27 and items 30 through 35 and, as applicable, a BE-10A 
SUPPLEMENT listing each, if any, foreign affiliate that is exempt from 
being reported on Form BE-10B(LF), BE-10B(SF), or BE-10B BANK. It must 
also file a Form BE-10B(LF), BE-10B (SF), or BE-10B BANK, as 
appropriate, for each nonexempt foreign affiliate.
    (2) Form BE-10B(LF) or (SF) (Report for nonbank foreign affiliate). 
(i) A BE-10B(LF) (Long Form) must be filed for each majority-owned 
nonbank foreign affiliate of a nonbank US 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 $100 
million (positive or negative) at any time during the affiliate's 1999 
fiscal year.
    (ii) A BE-10B(SF)(Short Form) must be filed:
    (A) For each majority-owned nonbank foreign affiliate of a nonbank 
US Reporter, whether held directly or indirectly, for which any one of 
the three items listed in paragraph (c)(2)(i) of this section was 
greater than $7 million but for which no one of these items was greater 
than $100 million (positive or negative), at any time during the 
affiliate's 1999 fiscal year, and
    (B) For each minority-owned nonbank foreign affiliate of a nonbank 
US Reporter, whether held directly or indirectly, for which any one of 
the three items listed in paragraph (c)(2)(i) of this section was 
greater than $7 million (positive or negative), at any time during the 
affiliate's 1999 fiscal year, and
    (C) For each nonbank foreign affiliate of a US bank Reporter, 
whether held directly or indirectly, for which any one of the three 
items listed in paragraph (c)(2)(i) of this section was greater than $7 
million (positive or negative), at any time during the affiliate's 1999 
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 US Reporter that owns another nonexempt foreign 
affiliate of that US 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 US 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 US 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 US Reporter that is a bank). A 
BE-10A BANK report must be completed by a US Reporter that is a bank. 
For purposes filing Form BE-10A BANK, the US Reporter is deemed to be 
the fully consolidated US domestic business enterprise and all required 
data on the form shall be for the fully consolidated domestic entity.
    (i) If a US bank had any foreign affiliates at any time during its 
1999 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 $7 million 
(positive or negative) at any time during the affiliate's 1999 fiscal 
year, the US Reporter must file a Form BE-10A BANK and, as applicable, 
a BE-10A BANK SUPPLEMENT listing each, if any, foreign affiliate, 
whether bank or nonbank, that is exempt from being reported on Form BE-
10B (SF) or BE-10A BANK. It must also file a Form BE-10B(SF) for each 
nonexempt nonbank foreign affiliate and a Form BE-10B BANK for each 
nonexempt bank foreign 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 $7 million (positive or negative) at any time 
during the affiliate's 1999 fiscal year, the US Reporter must file a 
Form BE-10A BANK and a BE-10A BANK SUPPLEMENT, listing all foreign 
affiliate exempt from being reported on Form BE-10B(SF) or BE-10 BANK.
    (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 US 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 $7 million 
(positive or negative) at any time during the affiliate's 1999 fiscal 
year.

[[Page 48572]]

    (ii) Notwithstanding paragraph (d)(3)(i) of this section, a Form 
BE-10B BANK must be filed for a foreign bank affiliate of the US 
Reporter that owns another nonexempt foreign affiliate of that US 
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 US 
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, 2000 for those US Reporters filing 
fewer than 50, and June 30, 2000 for those US Reporters filing 50 or 
more, Forms BE-10B(LF), (SF), or BANK.
[FR Doc. 99-23148 Filed 9-3-99; 8:45 am]
BILLING CODE 3510-06-M