[Federal Register Volume 71, Number 40 (Wednesday, March 1, 2006)]
[Proposed Rules]
[Pages 10454-10456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1877]


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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 060131020-6020-01]
RIN 0691-AA57


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 proposed rule amends regulations of the Bureau of 
Economic Analysis, Department of Commerce (BEA) to set forth the 
reporting

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requirements for the quarterly BE-577, Direct Transactions of U.S. 
Reporter With Foreign Affiliate. The BE-577 survey is conducted 
quarterly and is a sample survey that obtains data on transactions and 
positions between U.S.-owned foreign business enterprises and their 
U.S. parents.
    To address the current needs of data users while at the same time 
keeping the respondent burden as low as possible, BEA proposes 
modification of items on the survey form and in the reporting criteria. 
Changes are proposed to bring the BE-577 forms and related instructions 
into conformity with the 2004 BE-10, Benchmark Survey of U.S. Direct 
Investment Abroad, and to exclude data that have recently begun to be 
collected on other Government surveys.

DATES: Comments on these proposed rules will receive consideration if 
submitted on or before 5 p.m. May 1, 2006.

ADDRESSES: You may submit comments, identified by RIN 0691-AA57, 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 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-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.

Description of Changes

    The BE-577 survey is a mandatory survey and is conducted quarterly 
by BEA under the International Investment and Trade in Services Survey 
Act (22 U.S.C. 3101-3108). 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 will be due within 45 days.
    To reduce respondent burden, BEA proposes to increase the exemption 
level for reporting from $30 million to $40 million. The exemption 
level is stated in terms of the foreign affiliate's assets, sales, and 
net income. BEA expects this change to result in a decrease of 
approximately 1,800 affiliates reported on the BE-577 from the total of 
about 15,500 now required to be reported. The decrease in the number of 
reportable affiliates due to raising the exemption level will offset 
the increase in reportable affiliates due to natural growth since the 
exemption level was last increased (from $20 to $30 million) in 2000.
    In addition, BEA is proposing a few changes to the survey form and 
instructions. BEA proposes to:
    1. Revise the survey form and instructions to bring them into 
conformity with the most recent BE-10 benchmark survey instructions for 
reporting capital gains and losses.
    2. Collect information on payments to and receipts from foreign 
affiliates for interest, royalties and license fees and other private 
services gross of any taxes withheld, to align reporting of these items 
with current international statistical standards for balance of 
payments accounts. Previously, this information was collected net of 
taxes withheld.
    3. Modify the survey instructions to indicate that positions and 
transactions in financial derivatives contracts that are reported on or 
derived from the Treasury Department's recently instituted 
International Capital Form D, Report of Holdings of, and Transactions 
in, Financial Derivatives Contracts with Foreign Residents should be 
excluded from BE-577 reports.
    4. Remove the requirement for reporting certain affiliated 
insurance transactions that have been problematic to collect on the BE-
577. BEA plans to move the reporting requirement for these transactions 
to specialized services surveys that BEA conducts in the near future.

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.'' 
Title 22 United States Code, Section 3103(a)(1) of the Act requires 
that with respect to United States direct investment abroad, the 
President shall conduct a data collection program to obtain current 
information on international capital flows and other information 
related to international investment and trade in services including 
information that 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 quarterly 
survey of U.S. direct investment abroad is a sample survey that covers 
all foreign affiliates above a size-exemption level. The survey 
collects data on transactions and positions between U.S.-owned foreign 
business enterprises and their U.S. parents. The sample data are used 
to derive quarterly universe estimates 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 used in the preparation of the 
U.S. international transactions accounts, input-output accounts, and 
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.

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

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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 Office of Management and Budget 
(OMB) under the Paperwork Reduction Act. The requirement has been 
submitted to OMB for approval as a revision to a collection currently 
approved under OMB control number 0608-0004.
    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 
about 13,500 foreign affiliate reports by an estimated 1,500 U.S. 
parent companies. A parent company must file one form per affiliate. 
BEA proposes to change the survey in two ways--first, to collect 
information on payments to and receipts from foreign affiliates for 
interest, royalties and license fees and other private services gross 
rather than, as in the past, net of any taxes withheld, and second, to 
remove the requirement for reporting certain affiliated insurance 
transactions that have been problematic to collect on the BE-577. (BEA 
plans to move the reporting requirement for these transactions to 
specialized services surveys that BEA conducts in the near future.) 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 maintaining the data 
needed, and completing and reviewing the collection of information. 
Because reports are filed 4 times per year, 54,000 responses annually 
are expected. Thus, the total annual respondent burden of the survey is 
estimated at 67,500 hours (13,500 respondents times 4 times 1.25 hours 
average burden). This estimate is the same as the burden hours 
currently carried for this collection in the OMB inventory.
    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 the Office of Management and Budget, O.I.R.A., Paperwork 
Reduction Project 0608-0004, 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 (SBA), 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. 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 about 100 of the 
estimated 1,500 U.S. parent companies that must respond to the BE-577 
survey are small businesses according to the standards established by 
the Small Business Administration. 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.
    The 100 U.S. businesses that meet the SBA small business standards 
tend to have few 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 $30 million to $40 million (stated in 
terms of the foreign affiliate's assets, sales, and net income), small 
U.S. businesses will be required to file fewer reports for their 
foreign affiliates than would be required in the absence of this 
increase. 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

    International transactions, Economic statistics, U.S. investment 
abroad, Penalties, Reporting and recordkeeping requirements.

    Dated: February 21, 2006.
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 is revised 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. 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 ``$30,000,000'' and 
inserting ``$40,000,000'' in its place.

[FR Doc. 06-1877 Filed 2-28-06; 8:45 am]
BILLING CODE 3510-06-P