[Federal Register Volume 65, Number 243 (Monday, December 18, 2000)]
[Rules and Regulations]
[Pages 78919-78920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32090]


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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: Final rule.

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SUMMARY: These final rules amend the reporting requirements for the 
quarterly BE-577, Direct Transactions of U.S. Reporter With Foreign 
Affiliate.
    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.
    These final rules increase the exemption level for the survey--the 
level at or below which reports are not required--from $20 million to 
$30 million in total assets, sales or gross operating revenues, and net 
income (positive or negative) of the U.S.-owned foreign business 
enterprise. This change will reduce the number of respondents that 
otherwise must report in the survey, thus reducing respondent burden, 
particularly for small companies.

EFFECTIVE DATE: These final rules will be effective January 17, 2001.

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: On September 21, 2000 the Bureau of Economic 
Analysis (BEA), U.S. Department of Commerce, published in the Federal 
Register, volume 65, No. 184, FR 57121-57123, a notice of proposed 
rulemaking setting forth revised reporting requirements for the BE-577, 
Direct Transactions of U.S. Reporter With Foreign Affiliate. No 
comments on the proposed rules were received. Thus, these final rules 
are the same as the proposed rules.
    These final 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. BEA 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 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.
    Under these final rules, BEA is increasing 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, sales 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 first applicable to the quarterly survey covering the 
second quarter of 1995. The current changes in exemption level will 
first apply to the reports for the first quarter of 2001.
    BEA has made a few changes to the report forms themselves in 
addition to raising the exemption level. These changes, however, did 
not require rule changes and are not reflected in the final rules. BEA 
is extending 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

[[Page 78920]]

benchmark survey of U.S. direct investment abroad. In addition, BEA is 
modifying 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 measurement and consulting 
and research and development categories. BEA is also clarifying the 
instructions.

Executive Order 12866

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

Executive Order 13132

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

Paperwork Reduction Act

    The collection of information required in these final rules has 
been approved by OMB (OMB No. 0608-0004) under 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.
    The survey 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 
hours 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 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 regarding the burden estimate or any other aspect of this 
collection of information 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 these final rules 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 
investments 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 
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 to a U.S. business reporting for five or fewer foreign 
affiliates is estimated to be less than $1,000.

List of Subjects in 15 CFR Part 806

    Balance of payments, Economic statistics, Penalties, Reporting and 
recordkeeping requirements, United States investment abroad.

    Dated: December 1, 2000.
J. Steven Landefeld,
Director, Bureau of Economic Analysis.

    For the reasons set forth in the preamble, BEA amends 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 removing ``$20,000,000'' and 
adding ``$30,000,000'' in its place.
[FR Doc. 00-32090 Filed 12-15-00; 8:45 am]
BILLING CODE 3510-06-M