[Federal Register Volume 70, Number 161 (Monday, August 22, 2005)]
[Proposed Rules]
[Pages 48920-48923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-16601]


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

DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 050726200-5200-01]
RIN 0691-AA58


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

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: This proposed rule amends regulations of the Bureau of 
Economic Analysis, Department of Commerce (BEA) to set forth the 
reporting requirements for the BE-11, Annual Survey of U.S. Direct 
Investment Abroad. The BE-11 survey is conducted annually and is a 
sample survey that obtains financial and operating data covering the 
overall operations of nonbank U.S. parent companies and their nonbank 
foreign affiliates. To address the current needs of data users while at 
the same time keeping the respondent burden as low as possible, BEA 
proposes modification, addition, or deletion of items on the survey 
forms and in the reporting criteria. Most of the changes are proposed 
to bring the BE-11 forms and related instructions into conformity with 
the 2004 BE-10, Benchmark Survey of U.S. Direct Investment Abroad.

DATES: Comments on this proposed rule will receive consideration if 
submitted on or before 5 p.m. October 21, 2005.

ADDRESSES: You may submit comments, identified by RIN 0691-AA58, and 
referencing the agency name (Bureau of Economic Analysis), by any of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. For agency, select 
``Commerce Department--all.''
     E-mail: [email protected].
     Fax: Office of the Chief, International Investment 
Division, (202) 606-5318.
     Mail: Office of the Chief, International Investment 
Division, U.S. Department of Commerce, Bureau of

[[Page 48921]]

Economic Analysis, BE-50, Washington, DC 20230.
     Hand Delivery/Courier: Office of the Chief, International 
Investment Division, U.S. Department of Commerce, Bureau of Economic 
Analysis, BE-50, Shipping and Receiving, Section M100, 1441 L Street, 
NW., Washington, DC 20005.
    Public Inspection: Comments may be inspected at BEA's offices, 1441 
L Street NW, Room 7006, between 8:30 a.m. and 5 p.m., Eastern Time 
Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Obie G. Whichard, Chief, International 
Investment Division (BE-50), Bureau of Economic Analysis, U.S. 
Department of Commerce, Washington, DC 20230; phone (202) 606-9890.

SUPPLEMENTARY INFORMATION: This proposed rule would 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 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.

Description of Changes

    The BE-11 survey is a mandatory survey and is conducted annually by 
BEA under the International Investment and Trade in Services Survey Act 
(22 U.S.C. 3101-3108), hereinafter, ``the Act.'' BEA will send the 
survey to potential respondents in March of each year; responses will 
be due by May 31.
    As described below, BEA is proposing several changes to the survey. 
Most of the changes are to bring the survey into conformity with the 
most recent Benchmark Survey of U.S. Direct Investment Abroad, which 
covered 2004. Changes also are proposed to introduce a statistical 
sampling procedure and to introduce a schedule for reporting summary 
information on foreign affiliates that were established or acquired 
during the year but fell below the threshold for being reported on 
separate foreign-affiliate report forms.
    BEA proposes to introduce a sampling procedure that will utilize a 
new BE-11B(EZ) form. This form will provide a few basic indicators for 
non-sample foreign affiliates that can be used as a basis for 
estimating data that otherwise would have to be reported on the 
lengthier BE-11B(LF) and BE-11B(SF) forms. To reduce respondent burden, 
BEA proposes the following changes to the Code of Federal Regulations: 
(1) Direct U.S. Reporters to file selected affiliates on the BE-11B(EZ) 
form; (2) increase the exemption level for reporting on the BE-11B(SF) 
form and BE-11C form from $30 million to $40 million; (3) increase the 
exemption level for reporting on the BE-11B(LF) form from $100 million 
to $150 million; and (4) increase the exemption level for reporting 
only selected items on Form BE-11A from $100 million to $150 million. 
In addition to certain identification items, U.S. Reporters with total 
assets, sales or gross operating revenues, and net income (loss) less 
than or equal to $150 million would report only selected items on the 
BE-11A report. The foreign affiliate exemption level is the level of a 
foreign affiliate's assets, sales, or net income below which a Form BE-
11B(LF), (SF), (EZ) or BE-11C is not required. The exemption levels for 
the BE-11 survey were last raised following the 1999 benchmark survey 
and were effective with the annual survey covering the year 2000.
    In conjunction with the increase in the exemption level for 
reporting on Forms BE-11B(SF) and BE-11C, BEA proposes to introduce a 
schedule on Form BE-11A to collect a few data items for affiliates with 
assets, sales, and net income between $10 million and $40 million that 
were established or acquired during the year. The information collected 
on the new schedule is needed to maintain data quality in the face of 
the proposed increase in the short-form exemption level, and will help 
to avoid understatement of estimates for foreign-affiliate activities 
in emerging economies, where there may be significant entry of smaller 
affiliates between benchmark surveys.
    BEA is proposing a few changes to the report forms themselves. BEA 
proposes to add questions to the BE-11A form, BE-11B(LF) form, and BE-
11B(SF) form to bring the annual survey into conformity with the BE-10 
benchmark survey. BEA proposes to collect information on: (1) The broad 
occupational structure of employment, (2) premiums earned and claims 
paid by U.S. Reporters and foreign affiliates operating in the 
insurance industry, and (3) finished goods purchased for resale for 
U.S. Reporters and foreign affiliates operating in the wholesale and 
retail trade industries. In addition, BEA proposes to expand the 
ownership section on the BE-11B(LF) and (SF) forms to include 
components that are collected on the benchmark survey and to add a 
retained earnings reconciliation section on the BE-11B(LF) form similar 
to that on the benchmark survey.

Survey Background

    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, conduct a regular data collection program to 
secure current information on international financial 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.
    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 is a sample survey that 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 sample data are 
used to derive universe estimates in nonbenchmark years from 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.

Executive Order 12866

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

Executive Order 13132

    This proposed rule does not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism 
assessment under E.O. 13132.

Paperwork Reduction Act

    This proposed rule contains a collection-of-information requirement 
subject to review and approval by the

[[Page 48922]]

Office of Management and Budget (OMB) under the Paperwork Reduction Act 
(PRA). The requirement has been submitted to the OMB for approval as a 
revision to a collection currently approved under OMB control number 
0608-0053.
    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 OMB control number.
    The survey, as proposed, is expected to result in the filing of 
reports from approximately 1,500 respondents. The respondent burden for 
this collection of information will vary from one company to another, 
but is estimated to average 78.4 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 117,600 hours (1,500 respondents times 78.4 
hours average burden). This estimate is slightly below the burden of 
118,400 hours currently requested for this survey in the OMB inventory. 
The decrease in the burden is largely due to proposed changes in 
reporting requirements.
    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; (fax: 202-
606-5311); and to the Office of Management and Budget, O.I.R.A., 
Paperwork Reduction Project 0608-0053, Attention PRA Desk Officer for 
BEA, via the Internet at [email protected], or by fax at 202-395-7245.

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), BE-11B(EZ), or BE-11C. With the increase in the 
exemption level for the BE-11 survey from $30 million to $40 million, 
about 200 fewer U.S. businesses will be required to file. Therefore, 
the burden on small businesses would not increase and is likely to 
decrease since the U.S. parent company required to file the report is 
usually many times larger than its largest foreign affiliate. To 
further reduce the reporting burden on smaller businesses, U.S. 
Reporters with total assets, sales or gross operating revenues, and net 
income less than or equal to $150 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.
    Because there are few small businesses that are impacted by this 
rule, and because those small businesses that are impacted by this rule 
are subject to only minimal recordkeeping burdens, the Chief Counsel 
for Regulation certifies that this proposed rule will not have a 
significant economic impact on a substantial number of small entities.

List of Subjects in 15 CFR Part 806

    U.S. investment abroad, Multinational corporations, Economic 
statistics, Penalties, Reporting and recordkeeping requirements.

    Dated: August 12, 2005.
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; E.O. 11961 (3 CFR, 
1977 Comp., p. 86), as amended by E.O. 12318 (3 CFR, 1981 Comp., p. 
173); E.O. 12518 (3 CFR, 1985 Comp., p. 348).

    2. Section 806.14(f)(3) is revised to read as follows:


Sec.  806.14  U.S. direct investment abroad.

* * * * *
    (f) * * *
    (3) BE-11--Annual survey of U.S. Direct Investment Abroad: A 
report, consisting of Form BE-11A and Form(s) BE-11B(LF)(Long Form), 
BE-11B(SF)(Short Form), BE-11B(EZ), and/or BE-11C, is required of each 
nonbank U.S. Reporter that, at the end of the Reporter's fiscal year, 
had a nonbank foreign affiliate reportable on Form BE-11B(LF), (SF), 
(EZ), or BE-11C. Forms required and the criteria for reporting on each 
are as follows:
    (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), (SF), (EZ), 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. However, where a U.S. Reporter's primary line of 
business is not in banking (or related financial activities), but the 
Reporter also has ownership in a bank, banking activities should be 
included on the BE-11A using the equity method of accounting.
    (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 $150 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), (SF), (EZ), 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 $150 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), (SF), 
(EZ), or BE-11C as applicable, for each nonexempt foreign affiliate.
    (ii) Forms BE-11B(LF), (SF), and (EZ) (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 $150 million (positive or 
negative) at the end of, or

[[Page 48923]]

for, the affiliate's fiscal year, unless the nonbank foreign affiliate 
is selected to be reported on Form BE-11B(EZ).
    (B) 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 $40 million (positive or negative), but 
for which no one of these items was greater than $150 million (positive 
or negative), at the end of, or for, the affiliate's fiscal year, 
unless the nonbank foreign affiliate is selected to be reported on Form 
BE-11B(EZ).
    (C) A BE-11B(EZ) is required to be filed for each nonbank foreign 
affiliate that is selected to be reported on this form in lieu of Form 
BE-11B(LF) or Form BE-11B(SF).
    (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 $40 million (positive or negative) at the 
end of, or for, the affiliate's fiscal year. In addition, for the 
report covering fiscal year 2007 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) Based on the preceding, an affiliate is exempt from being 
reported if it meets any one of the following criteria:
    (A) None of the three items listed in paragraph (f)(3)(ii)(A) of 
this section exceeds $40 million (positive or negative). (However, 
affiliates that were established or acquired during the year and for 
which at least one of these items was greater than $10 million but not 
over $40 million must be listed, and key data items reported, on a 
supplement schedule on Form BE-11A.)
    (B) For fiscal year 2007 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 paragraph (f)(3)(ii)(A) of this 
section exceeds $100 million (positive or negative).
    (C) For fiscal years other than 2007, it is less than 20 percent 
owned, directly or indirectly, by all U.S. Reporters of the affiliate 
combined.
    (D) Its U.S. parent (U.S. Reporter) is a bank.
    (E) It is itself a bank.
    (v) Notwithstanding paragraph (f)(3)(iv) of this section, a Form 
BE-11B(LF), (SF), (EZ) or BE-11C must be filed for a foreign affiliate 
of the U.S. Reporter that owns another non-exempt foreign affiliate of 
that U.S. Reporter, even if the foreign affiliate parent is otherwise 
exempt. That is, all affiliates upward in the chain of ownership must 
be reported.
* * * * *
[FR Doc. 05-16601 Filed 8-19-05; 8:45 am]
BILLING CODE 3510-06-P