[Federal Register Volume 67, Number 177 (Thursday, September 12, 2002)]
[Proposed Rules]
[Pages 57767-57770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-23099]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 020813189-2189-01]
RIN 0691-AA44


Direct Investment Surveys: BE-12, Benchmark Survey of Foreign 
Direct Investment in the United States--2002

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This notice sets forth a proposed rule to revise the reporting 
requirements for the BE-12, Benchmark Survey of Foreign Direct 
Investment in the United States.
    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-12 survey is a mandatory survey and is conducted once 
every 5 years by the Bureau of Economic Analysis (BEA), U.S. Department 
of Commerce, under the International Investment and Trade in Services 
Survey Act. The proposed benchmark survey will be conducted for 2002. 
BEA will send the survey to potential respondents in February 2003; 
responses will be due by May 31, 2003. The last benchmark survey was 
conducted for 1997. The benchmark survey covers virtually the entire 
universe of foreign direct investment in the United States 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 this proposed rule are: Raising the reporting threshold 
on the BE-12(SF) short form and the BE-12 Bank form from $3 million to 
$10 million; directing that only nonbank majority-owned U.S. affiliates 
of foreign companies report on the BE-12(LF) long form; raising the 
reporting threshold on the BE-12(LF) long form from $100 million to 
$125 million; and directing bank holding companies to file a fully 
consolidated report, including all nonbank operations, on the BE-12 
Bank form. (Previously, the nonbanking operations were reported on a 
separate BE-12(LF) long form or BE-12(SF) short form.) These changes 
will reduce respondent burden, especially for small companies and bank 
holding companies.

DATES: Comments on this proposed rule will receive consideration if 
submitted in writing on or before November 12, 2002.

ADDRESSES: Direct all written comments to the Office of the Chief, 
International Investment Division (BE-50), Bureau of Economic Analysis, 
U.S. Department of Commerce, Washington, DC 20230. Because of slow 
mail, and to assure that comments are received in a timely manner, 
please consider using one of the following delivery methods: (1) Fax to 
(202) 606-5318, (2) deliver by courier to U.S. Department of Commerce, 
Bureau of Economic Analysis, BE-49(A), Shipping and Receiving, Section 
M100, 1441 L Street NW., Washington, DC 20005, or (3) e-mail to 
[email protected]. Comments received will be available for public 
inspection in Room 7005, 1441 L Street NW., between 8:30 a.m. and 4:30 
p.m., eastern time 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: This proposed rule amends 15 CFR 806.17 to 
set forth the reporting requirements for the BE-12, Benchmark Survey of 
Foreign Direct Investment in the United States--2002. 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(b) of 
the Act requires that:
    ``* * * With respect to foreign direct investment in the United 
States, the President shall conduct a benchmark survey covering year 
1980, a benchmark survey covering year 1987, and benchmark surveys 
covering every fifth year thereafter. In conducting surveys [of U.S. 
direct investment abroad and foreign direct investment in the United 
States] 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 
the 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

[[Page 57768]]

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 survey is a census; it covers virtually the entire 
universe of foreign direct investment in the United States in terms of 
value, and is BEA's most comprehensive survey of such investment in 
terms of subject matter. Foreign direct investment in the United States 
is defined as the ownership or control, directly or indirectly, by one 
foreign person (foreign parent) of 10 percent or more of the voting 
securities of an incorporated U.S. business enterprise or an equivalent 
interest in an unincorporated U.S. 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, U.S. affiliates and their foreign parent groups 
(which are defined to include all foreign parents and foreign 
affiliates of foreign parents). The data are needed to measure the size 
and economic significance of foreign direct investment in the United 
States, to measure changes in such investment, and to assess its impact 
on the U.S. economy. Such data are generally found in enterprise-level 
accounting records of respondent companies. The data are disaggregated 
by industry of U.S. affiliate, by country and industry of foreign 
parent or ultimate beneficial owner, and, for selected items, by State.
    The data will provide benchmarks for deriving current universe 
estimates of direct investment from sample data collected in other BEA 
surveys. In particular, they will serve as benchmarks for the quarterly 
direct investment estimates included in the U.S. international 
transactions and national income and product accounts, and for annual 
estimates of the foreign direct investment position in the United 
States and of the operations of the U.S. affiliates of foreign 
companies. Data from the benchmark survey on U.S. affiliates' employee 
compensation, profits, interest receipts and expenses, depreciation, 
and income and other taxes are used by BEA to compute U.S. affiliates' 
gross product or value added. The estimates are used to measure U.S. 
affiliates' share of U.S. gross domestic product and to evaluate 
affiliates' profitability and productivity. Data on employment by 
affiliates are used to link enterprise-level data on foreign-owned 
companies collected in the benchmark survey to establishment-level data 
for the same companies collected by the Census Bureau.
    It should be noted that, aside from their use in compiling the U.S. 
national and international economic accounts, the benchmark survey data 
are primarily intended as general purpose statistics. Based on past 
experience, areas of particular and lasting analytical and policy 
interest include trade in goods and services, employment and employee 
compensation, profitability, regional location, taxes, and technology. 
These areas, all of which are addressed by the proposed survey, are 
also ones for which the Act specifically requires data to be collected. 
Another area of continuing policy interest, particularly at the State 
and local levels, is the impact of foreign direct investment on 
individual States. The data in the survey disaggregated by State are 
intended to address needs in this area.
    The forms to be used in the survey are:
    1. Form BE-12(LF) (Long Form)--Report for nonbank majority-owned 
U.S. affiliates (a ``majority-owned'' U.S. affiliate is one in which 
the combined direct and indirect ownership interest of all foreign 
parents of the U.S. affiliate exceeds 50 percent) with assets, sales or 
gross operating revenues, or net income greater than $125 million 
(positive or negative);
    2. Form BE-12(SF) (Short Form)--Report for nonbank majority-owned 
U.S. affiliates with assets, sales or gross operating revenues, or net 
income greater than $10 million, but not greater than $125 million 
(positive or negative) and nonbank minority-owned U.S. affiliates 
(owned 50 percent or less) with assets, sales or gross operating 
revenues, or net income greater than $10 million (positive or 
negative). U.S. affiliates with total assets, sales or gross operating 
revenues, and net income between $10 million and $30 million (positive 
or negative) will be required to report only selected data items on the 
short form;
    3. Form BE-12 Bank--Report for U.S. affiliates that are banks, bank 
holding companies, or banking and nonbanking operations of bank holding 
companies; and
    4. BE-12(X)--Report for claiming exemption from filing a BE-12(LF) 
long form, BE-12(SF) short form, or BE-12 Bank form.
    BEA maintains a continuing dialog with respondents and 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 to 
the maximum extent possible 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 responses (for example, whether the data are 
readily available from 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) raising the reporting threshold on the BE-12(SF) short form and the 
BE-12 BANK form from $3 million to $10 million; (2) directing that only 
nonbank majority-owned U.S. affiliates of foreign companies be reported 
on the BE-12(LF) long form; (3) raising the reporting threshold on the 
BE-12(LF) long form from $100 million to $125 million; and (4) 
directing bank holding companies (BHC's) to file a fully consolidated 
report, including all banking and nonbanking operations, on the BE-12 
Bank form.
    Previously, the banking and non-banking operations of a BHC were 
required to file separate reports: the nonbank operations of the BHC 
filed on the BE-12(LF) long form or BE-12(SF) short form, and the BHC 
itself and its banking operations filed on the BE-12 Bank form.

[[Page 57769]]

    In addition, BEA proposes to: (1) Add questions to the BE-12 (LF) 
long form to collect detail on premiums earned and claims paid for U.S. 
affiliates operating in the insurance industry; collect detail on 
finished goods purchased for resale for U.S. affiliates operating in 
the wholesale and retail trade industries; and collect the percentage 
of total sales or gross operating revenues that represents e-commerce 
sales (for example, sales transacted over the Internet). (2) Add four 
items to the short form that are needed to assure the quality of BEA's 
estimates of U.S. affiliates' gross product--certain realized and 
unrealized gains and losses; U.S. income taxes; interest received, and 
interest paid. (3) Add questions to the BE-12 Bank form to collect 
information on debt flows with the foreign parent for certain 
nonbanking subsidiaries included in the fully consolidated BE-12 Bank 
report; sales of services; interest received and paid; and premiums 
earned and claims payable by insurance companies included in the 
consolidated report.
    To offset the burden imposed by these additional questions, BEA 
proposes to remove questions on: (1) Whether a foreign government or 
government-run pension fund has a voting ownership of at least 5 
percent, in any foreign parent or any entity in the parent's ownership 
chain; (2) the balance sheet classification of land and other property, 
plant, and equipment (BE-12 long form only); (3) acres of mineral 
rights owned or leased from others (BE-12 long form only); and (4) the 
gross book value of land owned (BE-12 short form only).

Executive Order 13132

    This proposed rule does not contain policies with Federalism 
implications as that term is defined in E.O.13132.

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of E.O. 12866.

Paperwork Reduction Act

    This proposed rule contains a collection of information subject to 
the Paperwork Reduction Act (PRA) and has 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 approximately 17,700 respondents. The respondent burden 
for this collection of information is estimated to vary from 20 minutes 
to 715 hours per response, with an average of 11.3 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 about 199,500 hours (17,700 times 
11.3 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 
0608-0042, 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 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 small businesses as defined by the RFA are foreign owned; 
those that are and have total assets, sales or gross operating 
revenues, and net income each equal to or less than $10 million are not 
required to report on the BE-12(SF) short form or BE-12 Bank form. To 
further reduce reporting burden for smaller companies, the reporting 
threshold for filing a BE-12(LF) long form has been raised to $125 
million, from $100 million in the 1997 survey, and companies with total 
assets, sales or gross operating revenues and net income (positive or 
negative) between $10 million and $30 million will be required to 
report only selected data items on the BE-12(SF) short form.

List of Subjects in 15 CFR Part 806

    International transactions, Economic statistics, Foreign investment 
in the United States, Penalties, Reporting and recordkeeping 
requirements.

    Dated: August 1, 2002.
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 806.17 is revised to read as follows:


Sec.  806.17  Rules and regulations for BE-12, Benchmark Survey of 
Foreign Direct Investment in the United States--2002.

    A BE-12, Benchmark Survey of Foreign Direct Investment in the 
United States will be conducted covering 2002. All legal authorities, 
provisions, definitions, and requirements contained in Sec. Sec.  806.1 
through 806.13 and Sec.  806.15(a) through (g) are applicable to this 
survey. Specific additional rules and regulations for the BE-12 survey 
are given in this section.
    (a) Response required. A response is required from persons subject 
to the reporting requirements of the BE-12, Benchmark Survey of Foreign 
Direct Investment in the United States--2002, contained in this 
section, whether or not they are contacted by BEA. Also, a person, or 
their agent, contacted by BEA concerning their being subject to 
reporting, either by sending them a report form or by written inquiry, 
must respond in writing pursuant to Sec.  806.4, or electronically 
using BEA's Automated Survey Transmission and Retrieval (ASTAR) system. 
This may be accomplished by completing and returning either Form BE-
12(X) within 30 days of its receipt or by May 31, 2003, whichever is 
sooner, if Form BE-12(LF), Form BE-12(SF), or Form BE-12 Bank do not 
apply, or by completing and returning Form BE-12(LF), Form BE-12(SF), 
or Form BE-12 Bank, whichever is applicable, by May 31, 2003.
    (b) Who must report. A BE-12 report is required for each U.S. 
affiliate, i.e., for

[[Page 57770]]

each U.S. business enterprise in which a foreign person (foreign 
parent) owned or controlled, directly or indirectly, 10 percent or more 
of the voting securities if an incorporated U.S. business enterprise, 
or an equivalent interest if an unincorporated U.S. business 
enterprise, at the end of the business enterprise's 2002 fiscal year. A 
report is required even though the foreign person's ownership interest 
in the U.S. business enterprise may have been established or acquired 
during the reporting period. Beneficial, not record, ownership is the 
basis of the reporting criteria.
    (c) Forms to be filed. (1) Form BE-12(LF)--Benchmark Survey of 
Foreign Direct Investment in the United States--2002 (Long Form) must 
be completed and filed by May 31, 2003, by each U.S. business 
enterprise that was a U.S. affiliate of a foreign person at the end of 
its 2002 fiscal year and that was majority-owned by one or more foreign 
parents (a ``majority-owned'' U.S. affiliate is one in which the 
combined direct and indirect ownership interest of all foreign parents 
of the U.S. affiliate exceeds 50 percent), if:
    (i) It is not a bank or a bank holding company, and is not owned 
directly or indirectly by a U.S. bank holding company, and
    (ii) On a fully consolidated basis, or, in the case of real estate 
investment, on an aggregated basis, one or more of the following three 
items for the U.S. affiliate (not just the foreign parent's share) 
exceeded $125 million (positive or negative) at the end of, or for, its 
2002 fiscal year:
    (A) Total assets (do not net out liabilities);
    (B) Sales or gross operating revenues, excluding sales taxes;
    (C) Net income after provision for U.S. income taxes.
    (2) Form BE-12(SF)--Benchmark Survey of Foreign Direct Investment 
in the United States--2002 (Short Form) must be completed and filed by 
May 31, 2003 by each U.S. business enterprise that was a U.S. affiliate 
of a foreign person at the end of its 2002 fiscal year, if:
    (i) It is not a bank or a bank holding company, and is not owned 
directly or indirectly by a U.S. bank holding company, and
    (ii) On a fully consolidated basis, or, in the case of real estate 
investment, on an aggregated basis, one or more of the following three 
items for a majority-owned U.S. affiliate (not just the foreign 
parent's share) exceeded $10 million, but no one item exceeded $125 
million (positive or negative) at the end of, or for, its 2002 fiscal 
year:
    (A) Total assets (do not net out liabilities);
    (B) Sales or gross operating revenues, excluding sales taxes;
    (C) Net income after provision for U.S. income taxes, or
    (iii) On a fully consolidated basis, or, in the case of real estate 
investment, on an aggregated basis, one or more of the following three 
items for a minority-owned U.S. affiliate (not just the foreign 
parent's share) exceeded $10 million (positive or negative) at the end 
of, or for, its 2002 fiscal year (a ``minority-owned'' U.S. affiliate 
is one in which the combined direct and indirect ownership interest of 
all foreign parents of the U.S. affiliate is 50 percent or less):
    (A) Total assets (do not net out liabilities);
    (B) Sales or gross operating revenues, excluding sales taxes;
    (C) Net income after provision for U.S. income taxes.
    (3) Form BE-12 Bank--Benchmark Survey of Foreign Direct Investment 
in the United States--2002 BANK must be completed and filed by May 31, 
2003, by each U.S. business enterprise that was a U.S. affiliate of a 
foreign person at the end of its 2002 fiscal year, if:
    (i) The U.S. affiliate is in ``banking'', which, for purposes of 
the BE-12 survey, covers business enterprises engaged in deposit 
banking or closely related functions, including commercial banks, Edge 
Act corporations engaged in international or foreign banking, U.S. 
branches and agencies of foreign banks whether or not they accept 
domestic deposits, savings and loans, savings banks, and bank holding 
companies, including all subsidiaries or units of a bank holding 
company and
    (ii) On a fully consolidated basis, one or more of the following 
three items for the U.S. affiliate (not just the foreign parent's 
share) exceeded $10 million (positive or negative) at the end of, or 
for, its 2002 fiscal year:
    (A) Total assets (do not net out liabilities);
    (B) Sales or gross operating revenues, excluding sales taxes;
    (C) Net income after provision for U.S. income taxes.
    (4) Form BE-12(X)-Benchmark Survey of Foreign Direct Investment in 
the United States-2002 Claim for Exemption from Filing BE-12(LF), BE-
12(SF), and BE-12 Bank must be completed and filed within 30 days of 
the date it was received, or by May 31, 2003, whichever is sooner, by:
    (i) Each U.S. business enterprise that was a U.S. affiliate of a 
foreign person at the end of its 2002 fiscal year (whether or not the 
U.S. affiliate, or its agent, is contacted by BEA concerning its being 
subject to reporting in the 2002 benchmark survey), but is exempt from 
filing Form BE-12(LF), Form BE-12(SF), and Form BE-12 Bank; and
    (ii) Each U.S. business enterprise, or its agent, that is 
contacted, in writing, by BEA concerning its being subject to reporting 
in the 2002 benchmark survey but that is not otherwise required to file 
the Form BE-12(LF), Form BE-12(SF), or Form BE-12 Bank.
    (d) Aggregation of real estate investments. All real estate 
investments of a foreign person must be aggregated for the purpose of 
applying the reporting criteria. A single report form must be filed to 
report the aggregate holdings, unless written permission has been 
received from BEA to do otherwise. Those holdings not aggregated must 
be reported separately.
    (e) Exemption. (1) A U.S. affiliate as consolidated, or aggregated 
in the case of real estate investments, is not required to file form 
BE-12(LF), BE-12(SF), or Form BE-12 Bank if each of the following three 
items for the U.S. affiliate (not just the foreign parent's share) did 
not exceed $10 million (positive or negative) at the end of, or for, 
its 2002 fiscal year:
    (i) Total assets (do not net out liabilities);
    (ii) Sales or gross operating revenues, excluding sales taxes; and
    (iii) Net income after provision for U.S. income taxes.
    (2) If a U.S. business enterprise was a U.S. affiliate at the end 
of its 2002 fiscal year but is exempt from filing a completed Form BE-
12(LF), BE-12(SF), or Form BE-12 Bank, it must nevertheless file a 
completed and certified Form BE-12(X).
    (f) Due date. A fully completed and certified Form BE-12(LF), Form 
BE-12(SF), or BE-12 Bank is due to be filed with BEA not later than May 
31, 2003. A fully completed and certified Form BE-12(X) is due to be 
filed with BEA within 30 days of the date it was received, or by May 
31, 2003, whichever is sooner.

[FR Doc. 02-23099 Filed 9-11-02; 8:45 am]
BILLING CODE 3510-06-P