[Federal Register Volume 65, Number 184 (Thursday, September 21, 2000)]
[Proposed Rules]
[Pages 57121-57123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24217]


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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 000817239-0239-01]
RIN 0691-AA37


Direct Investment Surveys: BE-577, Direct Transactions of U.S. 
Reporter With Foreign Affiliate

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 quarterly BE-577, Direct Transactions of U.S. 
Reporter With Foreign Affiliate.
    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-577 survey is a mandatory survey and is conducted 
quarterly 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 BE-577 survey forms to potential respondents 
each quarter; responses will be due within 30 days after the close of 
each fiscal quarter, except for the final quarter of the fiscal year, 
when reports should be filed within 45 days. The survey is a cut-off 
sample survey that obtains data on transactions and positions between 
U.S.-owned foreign business enterprises and their U.S. parents.
    The change proposed by BEA in the reporting requirements to be 
implemented in these proposed rules is to reduce respondent burden, 
particularly for small companies, by increasing the exemption level for 
the survey--the level below which reports are not required--from $20 
million to $30 million in total assets, sales or gross operating 
revenues, or net income (positive or negative) of the U.S.-owned 
foreign business enterprise. Raising the exemption level lowers the 
number of reports that otherwise would have to be filed, thus reducing 
respondent burden. BEA is also proposing changes in the content of 
survey that, on balance, do not affect respondent burden.

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

[[Page 57122]]


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 deliver 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 
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 reporting requirements for the BE-577, Direct 
Transactions of U.S. Reporter With Foreign Affiliate. 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 and trade in services 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 quarterly survey of U.S. direct investment abroad collects data 
on transactions and positions between U.S.-owned foreign business 
enterprises and their U.S. parents. The BE-577 is a cut-off sample 
survey that covers all foreign affiliates 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 used in the preparation of the U.S 
international transactions accounts, the input-output accounts, and the 
national income and product accounts. The data are needed to measure 
the size and economic significance of U.S. 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 foreign affiliate.
    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 responses (e.g., whether the data are readily available on 
respondents' books), and BEA's experience in previous quarterly 
surveys. Because BEA's proposed changes to the BE-577 are minimal and 
to a large extent mirror those introduced in connection 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.
    BEA is proposing to increase the exemption level for reporting on 
the BE-577 quarterly survey from $20 million to $30 million. The 
exemption level is the level of a foreign affiliate's assets, sales, or 
net income at or below which a Form BE-577 is not required. Thus, if a 
foreign business is owned 10 percent or more by the U.S. parent, but 
its total assets, sale or gross operating revenues, and net income all 
are $30 million (positive or negative) or less, the U.S. parent will 
not have to report it. The exemption level for the BE-577 survey was 
last raised following the 1994 benchmark survey and was effective with 
the quarterly survey covering the second quarter of 1995. The proposed 
changes would be effective commencing with the reports for the first 
quarter of 2001.
    BEA is proposing a few changes to the report forms themselves. BEA 
proposes to extend the use of the North American Industry 
Classification System (NAICS) to the BE-577 survey. NAICS is already 
being used on all BEA surveys of foreign direct investment in the 
United States and BEA used NAICS to collect industry information on the 
1999 BE-10 benchmark survey of U.S. direct investment abroad. BEA also 
proposes to modify the detail on affiliated services by type of service 
by dropping the category for communication services in the by-type 
breakdown and adding the presumably larger management and consulting 
and research and development categories. BEA is also proposing 
improvements in the clarity of the instructions. The changes in format 
and content of the survey, on balance, do not affect respondent burden.
    A copy of the proposed form 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 
about 12,500 foreign affiliate reports by an estimated 1,500 U.S. 
parent companies. A parent company must file one form per affiliate. 
The respondent burden for this collection of information is estimated 
to vary from 0.5 hour to 4 hours per response, with an average of 1.25 
hours per response, including time for reviewing instructions, 
searching existing data sources, gathering and

[[Page 57123]]

maintaining the data needed, and completing and reviewing the 
collection of information. Because reports are filed 4 times per year, 
50,000 responses annually are expected. Thus the total annual 
respondent burden of the survey is estimated at 62,500 hours (12,500 
respondents times 4 times 1.25 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 
0608-0004, 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. Although the BE-577 survey does 
not itself collect data on the size of the U.S. companies that must 
respond, data collected on related BEA surveys indicate that the U.S. 
companies that have direct investment abroad tend to be quite large. 
The exemption level for the BE-577 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. Usually, the U.S. parent company that is required to file 
the report is many times larger than its largest foreign affiliate.
    Small U.S. businesses tend to have few, if any, foreign affiliates 
and the foreign affiliates that they do own are small. With the 
proposed increase in the exemption level for the BE-577 survey from $20 
million to $30 million (stated in terms of the foreign affiliate's 
assets, sales, and net income), even fewer small U.S. businesses will 
be required to file reports for their foreign affiliates. The estimated 
annual cost of a U.S. business reporting for five or fewer foreign 
affiliates is estimated to be less than $1,000. Therefore, based on the 
forgoing, this proposed rule, if adopted, will not have a significant 
economic impact on a substantial number of small entities.

List of Subjects in 15 CFR Part 806

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

    Dated: August 10, 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).


Sec. 806.14  [Amended]

    2. Section 806.14 (e) is amended by deleting ``$20,000,000'' and 
inserting ``$30,000,000'' in its place.

[FR Doc. 00-24217 Filed 9-20-00; 8:45 am]
BILLING CODE 3510-06-M