[Federal Register Volume 65, Number 184 (Thursday, September 21, 2000)]
[Proposed Rules]
[Pages 57123-57126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24215]


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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 000714208-0208-01]
RIN 0691-AA40


Direct Investment Surveys: BE-11, Annual Survey of U.S. Direct 
Investment Abroad

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document sets forth proposed rules to amend the reporting 
requirements for the BE-11, Annual 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-11 survey is a mandatory survey and is conducted annually 
by the Bureau of Economic Analysis (BEA), U.S. Department of Commerce, 
under the International Investment and Trade in Services Survey Act. 
BEA will send the annual survey to potential respondents in March of 
each year; responses will be due by May 31. The last BE-11 annual 
survey was conducted for 1998. (A BE-11 survey is not conducted in a 
year, such as 1999, when a BE-10 Benchmark Survey of U.S. Direct 
Investment Abroad is conducted.) The survey is a cut-off sample survey 
that obtains financial and operating data covering the overall 
operations of nonbank U.S. parent companies and their nonbank foreign 
affiliates.
    Changes proposed by BEA in the reporting requirements to be 
implemented in these proposed rules include reduction of respondent 
burden, particularly for small companies, by increasing the exemption 
level for reporting on the BE-11B(SF) short form and the BE-11C form 
from $20 million to $30 million; increasing the exemption level for 
reporting on the BE-11B(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 on the BE-11A 
form.
    Raising the exemption level lowers the number of reports that 
otherwise must be filed, thus reducing respondent burden. BEA is also 
proposing to extend the North American Industry Classification System 
to the annual survey, and to make other changes in the format and 
content of the survey; these changes, on balance, do not materially 
affect respondent burden.

DATES: Comments on these proposed rules will receive consideration if 
submitted in writing on or before November 20, 2000.

ADDRESSES: Mail comments 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 delivery comments 
to room M-100, 1441 L 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

[[Page 57124]]

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 amend 15 CFR Part 
806.14 to set forth the reporting requirements for the BE-11, Annual 
Survey of U.S. Direct Investment Abroad. The Bureau of Economic 
Analysis (BEA), U.S. 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(a) of the Act 
requires that with respect to United States direct investment abroad, 
the President shall, to the extent he deems necessary and feasible--
    (1) Conduct a regular data collection program to secure current 
information on international capital flows and other information 
related to international investment and trade in services, including 
(but not limited to) such information as may be necessary for computing 
and analyzing the United States balance of payments, the employment and 
taxes of United States parents and affiliates, and the international 
investment and trade in services position of the United States; and
    (2) Conduct such studies and surveys as may be necessary to prepare 
reports in a timely manner on specific aspects of international 
investment which may have significant implications for the economic 
welfare and national security of the United States.
    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 annual survey of U.S. direct investment abroad provides a 
variety of measures of the overall operations of U.S. parent companies 
and their foreign affiliates, including total assets, sales, net 
income, employment and employee compensation, research and development 
expenditures, and exports and imports of goods. The BE-11 is a cut-off 
sample survey that covers all foreign affiliates (and their U.S. parent 
companies) above a size-exemption level. The sample data are used to 
derive universe estimates in nonbenchmark years by extrapolating 
forward similar data reported in the BE-10, Benchmark Survey of U.S. 
Direct Investment Abroad, which is taken every five years. The data are 
needed to measure the size and economic significance of direct 
investment abroad, measure changes in such investment, and assess its 
impact on the U.S. and foreign economies. The data are disaggregated by 
country and industry of the foreign affiliate and by industry of the 
U.S. parent.
    As proposed, the survey will consist of an instruction booklet, a 
claim for not filing the BE-11, and the following report forms:
    1. Form BE-11A--Report for nonbank U.S. Reporters;
    2. Form BE-11B(LF) (Long Form)--Report for majority-owned nonbank 
foreign affiliates with assets, sales, or net income greater than $100 
million (positive or negative);
    3. Form BE-11B(SF) (Short Form)--Report for majority-owned nonbank 
foreign affiliates with assets, sales, or net income greater than $30 
million, but not greater than $100 million (positive or negative); and
    4. Form BE-11C--Report for minority-owned nonbank foreign 
affiliates with assets, sales, or net income greater than $30 million 
(positive or negative).
    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 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 
respondent's books), and BEA's experience in previous annual surveys. 
Because BEA's proposed changes to the BE-11 are minimal and mirror 
those introduced in conjunction with the 1999 BE-10 benchmark survey, 
additional consultations outside the agency, beyond those held last 
year in conjunction with the benchmark survey design, were not 
conducted.
    Changes proposed by BEA from the last annual survey include 
reduction of respondent burden, particularly for small companies, by 
(1) increasing the exemption level for reporting on the BE-11B(SF) 
short form and BE-11C form from $20 million to $30 million; (2) 
increasing the exemption level for reporting on the BE-11B(LF) long 
form from $50 million to $100 million; and (3) 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 on the BE-11A form. 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. The exemption 
levels for the BE-11 survey were last raised following the 1994 
benchmark survey and were effective with the annual survey covering the 
year 1995.
    For fiscal year 2002 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 $30 million 
(positive or negative). Primarily to reduce reporting burden of the 
survey, affiliates owned less than 20 percent do not have to be 
reported annually. 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 1999 is now being conducted; the next 
survey will cover the year 2004. 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, submission of Form 
BE-11C 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 (positive or negative) would 
be required for fiscal year 2002 only. A similar requirement was 
imposed in the 1987, 1992, and 1997 annual surveys, which fell between 
earlier benchmark surveys.
    BEA is proposing a few changes to the report forms themselves. BEA 
proposes to extend the use of the North American Classification System 
(NAICS) to the annual survey. NAICS is the new industry classification 
system of the United States, Canada, and Mexico; in the United States, 
it supplants the 1987 Standard Industrial Classification. Among other 
improvements, NAICS

[[Page 57125]]

better reflects new and emerging industries, industries involved in the 
production of advanced technologies, and the growth and diversification 
of services industries. BEA used NAICS to collect industry information 
on the 1999 BE-10 benchmark survey of U.S. direct investment abroad.
    In addition to the change in industry classification, BEA proposes 
to add equity ownership, interest received, and interest paid to the 
BE-11B(LF); expand the owner's equity section on the BE-11B(LF); reduce 
the detail collected on the composition of external finances of the 
foreign affiliate on the BE-11B(LF); and delete production royalty 
payments on the BE-11B(LF). Most of the proposed changes will conform 
the BE-11 more closely to the BE-10 benchmark survey for 1999. Finally, 
BEA is proposing improvements in the layout of the survey forms, and in 
the placement and clarity of instructions. The design follows that used 
for the BE-10 benchmark survey. The changes in the format and content 
of the survey forms, on balance, do not affect respondent burden.
    A copy of the proposed 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 12866

    These proposed rules are not significant for purposes of E.O. 
12866.

Executive Order 13132

    These proposed rules do not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism 
assessment under E.O. 13132.

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 1,500 respondents. The respondent burden for this 
collection of information is estimated to vary from 4 to 3,000 hours 
per response, with an average of 68.4 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 102,600 hours (1,500 respondents times 68.4 
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), U.S. Department of Commerce, Washington, DC 20230; and to the 
Office of Management and Budget, O.I.R.A., Paperwork Reduction Project 
0608-0053, 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 rulemaking, if adopted, will not 
have a significant economic impact on a substantial number of small 
entities. Few, if any, small U.S. businesses are subject to the 
reporting requirements of this survey. U.S. companies that have direct 
investments abroad tend to be quite large. The exemption level for the 
BE-11 survey is set in terms of the size of a U.S. company's foreign 
affiliates (foreign companies owned 10 percent or more by the U.S. 
company); if a foreign affiliate has assets, sales, or net income 
greater than the exemption level, it must be reported on Form BE-
11B(LF), BE-11B(SF), or BE-11C. Usually, the U.S. parent company that 
is required to file the report is many times larger than its largest 
foreign affiliate. With the proposed increase in the exemption level 
for the BE-11 survey from $20 million to $30 million, even fewer small 
U.S. businesses will be required to file. To further reduce the 
reporting burden on small businesses, U.S. 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-11A form for U.S. 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: September 15, 2000.
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 806.14(f)(3)(i), (f)(3)(ii), (f)(3)(iii), and 
(f)(3)(iv)(A) through (C), are revised to read as follows:


Sec. 806.14  U.S. direct investment abroad.

* * * * *
    (b) * * *
    (3) * * *
    (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. If the U.S. reporter is a corporation, 
Form BE-11A is required to cover the fully consolidated U.S. domestic 
business enterprise.
    (A) If for a nonbank U.S. 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 the end of, or for, the 
Reporter's fiscal year, the U.S. Reporter must file a complete Form BE-
11A. It must also file a Form BE-11B(LF), BE-11B(SF), or BE-11C, as 
applicable, for each nonexempt foreign affiliate.
    (B) If for a nonbank U.S. Reporter no one of the three items listed 
in paragraph (f)(3)(i)(A) of this section was greater than $100 million 
(positive or negative) at the end of, or for, the Reporter's fiscal 
year, the U.S. Reporter is required to file on Form BE-11A only items 1 
through 27 and Part IV. It must also file a Form BE-11B(LF), BE-

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11B(SF), or BE-11C, as applicable, for each nonexempt foreign 
affiliate.
    (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 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 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 $30 million (positive or negative), but 
for which no one of these items was greater than $100 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 $30 million (positive or negative) at the 
end of, or for, the affiliate's fiscal year. In addition, for the 
report covering fiscal year 2002 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 the three items listed in paragraph (f)(3)(ii)(A) of 
this section exceeds $30 million (positive or negative).
    (B) For fiscal year 2002 only, it is less than 20 percent owned, 
directly or indirectly, by all U.S. Reporters of the affiliate combined 
and none of the three items listed in paragrarph (f)(3)(ii)(A) of this 
section exceeds $100 million (positive or negative).
    (C) For fiscal years other than 2002, it is less than 20 percent 
owned, directly or indirectly, by all U.S. Reporters of the affiliate 
combined.
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[FR Doc. 00-24215 Filed 9-20-00; 8:45 am]
BILLING CODE 3510-06-M