[Federal Register Volume 83, Number 23 (Friday, February 2, 2018)]
[Rules and Regulations]
[Pages 4834-4838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02065]


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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 801

[170322303-8069-01]
RIN 0691-AA87


International Services Surveys: BE-120 Benchmark Survey of 
Transactions in Selected Services and Intellectual Property With 
Foreign Persons

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Final rule.

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SUMMARY: This final rule amends regulations of the Department of 
Commerce's Bureau of Economic Analysis (BEA) to set forth the reporting 
requirements for the mandatory BE-120 Benchmark Survey of Transactions 
in Selected Services and Intellectual Property with Foreign Persons. 
This survey applies to the 2017 fiscal reporting year. The benchmark 
survey covers the universe of transactions in selected services and 
intellectual property and is BEA's most comprehensive survey of such 
transactions. For the 2017 benchmark survey, BEA is making changes to 
the reporting requirements of the survey, the data items collected, and 
the design of the survey form to satisfy changing data needs and to 
improve data quality and the effectiveness and efficiency of data 
collections.

DATES: This final rule is effective March 5, 2018.

FOR FURTHER INFORMATION CONTACT: Christopher Stein, Chief, Services 
Surveys Branch (BE-50), Balance of Payments Division, Bureau of 
Economic Analysis, U.S. Department of Commerce, 4600 Silver Hill Rd., 
Washington, DC 20233; phone (301) 278-9189; or via email at 
[email protected].

SUPPLEMENTARY INFORMATION: On November 15, 2017, BEA published a notice 
of proposed rulemaking that set forth the revised reporting criteria 
for the BE-120 Benchmark Survey of Transactions in Selected Services 
and Intellectual Property with Foreign Persons (82 FR 52863). No 
comments on the proposed rule were received.
    This final rule amends 15 CFR part 801 to set forth the reporting 
requirements for the BE-120 Benchmark Survey of Transactions in 
Selected Services and Intellectual Property with Foreign Persons.
    BEA typically conducts the BE-120 survey once every five years 
under the authority of the International Investment and Trade in 
Services Surveys Act (22 U.S.C. 3101-3108).
    In 2012, BEA established regulatory guidelines for collecting data 
on international trade in services and direct investment (77 FR 24373; 
April 24, 2012). This final rule, unlike most annual or quarterly BEA 
surveys conducted pursuant to the Act, amends those regulations to 
require a response from persons subject to the reporting requirements 
of the BE-120, whether or not they are contacted by BEA.
    The benchmark survey covers the universe of selected services and 
intellectual property transactions with foreign persons and is BEA's 
most detailed survey of such transactions. In nonbenchmark years, the 
universe estimates covering these transactions are derived from the 
sample data reported on BEA's BE-125 Quarterly Survey of Transactions 
in Selected Services and Intellectual Property with Foreign Persons. 
The purpose of the benchmark

[[Page 4835]]

survey is to obtain universe data, including data from respondents not 
subject to filing on an ongoing quarterly basis, that will be used, in 
conjunction with quarterly data collected on the companion BE-125 
survey, to produce estimates of selected services components for BEA's 
international transactions accounts (ITAs), national income and product 
accounts, and industry accounts. These data are also used to monitor 
U.S. trade in services, to analyze the impact on the U.S. economy and 
on foreign economies, to compile and improve the U.S. economic 
accounts, to support U.S. commercial policy on trade in services, to 
conduct trade promotion, and to improve the ability of U.S. businesses 
to identify and evaluate market opportunities.

Description of Changes

    This final rule amends the regulations (15 CFR part 801) and the 
survey form for the BE-120 benchmark survey. These amendments include 
changes to the reporting requirements for those not subject to 
reporting on the mandatory schedule(s) of the survey, changes in data 
items collected, and changes to the design of the survey form.
    BEA changes the reporting requirements for reporters with 
transactions in covered services below the threshold for mandatory 
reporting on the schedule(s) of the survey ($2 million in combined 
sales or $1 million in combined purchases for fiscal year 2017). All 
reporters, regardless of the amount of their transactions in covered 
services are required to provide a total dollar amount for their sales 
and purchases, as applicable, by transaction type.
    BEA adds and modifies some items on the benchmark survey form. The 
following items are added to the benchmark survey:
    (1) Mandatory questions are added to collect information on 
contract manufacturing services. Reporters are required to provide a 
description of the primary manufactured (finished) good and the 
materials received or provided for further processing. Reporters are 
required to identify, on mandatory Schedule(s) A and B, as applicable, 
the foreign country(ies) involved in the transaction(s) and to 
distribute the amounts reported for each country according to whether 
the foreign person is the U.S. person's foreign affiliate, part of the 
U.S. person's foreign parent group, or an unaffiliated foreign person. 
As a result of respondent feedback obtained through various agency 
outreach efforts, BEA has decided not to collect the additional 
proposed aggregate and country-level detail on sales and purchases to 
foreign persons for: (1) The cost of materials received or provided for 
use in the manufacturing process, (2) the primary country of origin of 
the inputs used, (3) the final value of the product returned after the 
manufacturing service was completed, and (4) the primary country of 
destination of the finished product.
    (2) Mandatory questions are added to collect new information on 
services transactions that were conducted remotely, e.g. where both the 
supplier and the consumer are in their respective territories when the 
service is delivered. This information will be collected for both sales 
of services performed remotely for foreign persons by U.S. persons and 
for purchases of services performed remotely by foreign persons for 
U.S. persons. For transactions in selected services, respondents are 
required to check a box identifying the percentage of their 
transactions that were conducted remotely, and to identify if this 
information was sourced from their accounting records or from recall/
general knowledge. As a result of respondent feedback obtained through 
various agency outreach efforts, BEA has deciced not to collect this 
new information for other modes of delivery of services.
    In addition, this final rule makes the following modifications to 
the survey form:
    (1) Mandatory Schedules A and B are expanded to collect additional 
detail on intellectual property (IP) transactions. A U.S. person who 
engages in IP transactions with foreign persons is required to 
distribute their sales (receipts) and/or purchases (payments) according 
to the type of transaction and the type of IP. The covered transaction 
types are: (1) Transactions for the rights to use IP, (2) transactions 
for the rights to reproduce and/or distribute IP, and (3) transactions 
for the outright sales or purchases of IP. Reporters are required to 
identify the foreign country(ies) involved in the transaction(s) and to 
distribute the amounts reported for each country according to whether 
the foreign person is the U.S. person's foreign affiliate, part of the 
U.S. person's foreign parent group, or an unaffiliated foreign person.
    (2) Research and development services are broken out into two 
categories: (1) Provision of customized and non-customized R&D 
services, and (2) other R&D services, including testing.
    (3) Engineering, architectural, and surveying services are broken 
out into three categories: (1) Architectural services; (2) engineering 
services; (3) surveying, cartography, certification, testing, and 
technical inspection services. The current category of industrial 
engineering services has been dropped and captured within engineering 
services.
    (4) Management, consulting, and public relation services are broken 
out into three categories: (1) Market research services; (2) public 
opinion polling services; and (3) other management, consulting, and 
public relations services. Trade exhibition and sales convention 
services are collected separately.
    (5) Database and other information services are broken out into two 
components: (1) News agency services, and (2) other information 
services.
    (6) Computer services are expanded into three categories: (1) 
Computer software, including end-user licenses and customization 
services; (2) cloud computing and data storage services; and (3) other 
computer services.
    (7) Several service categories previously collected under ``Other 
selected services'' are collected separately. These services include 
audiovisual services, artistic-related services, health services, 
heritage and recreational services, other personal services, 
disbursements for sales promotion and representation, photographic 
services (including satellite photography), and space transport 
services.
    (8) Mandatory Schedule C only collects related goods details for 
construction services. Mining services as well as the three new 
categories that replace engineering, architectural, and surveying 
services (see (3) above) are collected on Schedule A.
    (9) The identification of transaction types and voluntary reporting 
of additional country and affiliation detail has been streamlined. All 
reporters, regardless of the amount of their transactions in covered 
services are required to provide a total dollar amount for their sales 
and purchases, as applicable, by transaction type. Reporters with 
transactions below the threshold have the option to voluntarily report 
information on transactions by country and by affiliation on the 
standard reporting schedules.
    In addition, BEA has redesigned the format and wording of the 
survey. The new design incorporates improvements made to other BEA 
surveys as well as enhancements from a recent cognitive review 
conducted with selected survey respondents. Survey instructions and 
data item descriptions have been changed to improve clarity and ensure 
the benchmark survey form is more consistent with other BEA surveys.

[[Page 4836]]

Executive Order 12866

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

Executive Order 13771

    This rule is not an Executive Order 13771 regulatory action because 
this rule is not significant under Executive Order 12866. Additionally, 
this rule is not subject to the requirements of Executive Order 13771 
because this rule results in no more than de minimis costs.

Executive Order 13132

    This final rule does 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 in this final rule was submitted to 
the Office of Management and Budget (OMB) pursuant to the requirements 
of the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520 (PRA). OMB 
approved the reinstatement of the information collection under OMB 
control number 0608-0058.
    Notwithstanding any other provisions of 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 PRA unless that collection displays a currently valid OMB 
control number.
    The BE-120 survey is expected to result in the filing of reports 
from approximately 15,500 respondents. Approximately 11,500 respondents 
will report mandatory data on the survey, and approximately 4,000 will 
file exemption claims. The respondent burden for this collection-of-
information will vary from one respondent to another but is estimated 
to average (1) 23 hours for the 5,000 respondents that file mandatory 
or voluntary data by country and affiliation for relevant transaction 
types on the mandatory schedules; (2) 4 hours for the 6,500 respondents 
that file mandatory data by transaction type but not by country or 
affiliation--including time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information; and (3) 1 hour 
for other responses. Thus, the total respondent burden for this survey 
is estimated at 145,000 hours, or about 9.5 hours (145,000 hours/15,500 
respondents) per response, compared to 105,000 hours, or about 7 hours 
(105,000/15,000) for the previous BE-120 benchmark survey in 2011. The 
increase in burden hours is due to an increase in the size of the 
respondent universe as well as changes to the reporting requirements 
and content of the survey.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in the 
final rule should be sent to both BEA via email at 
[email protected] and to OMB, O.I.R.A., Paperwork Reduction 
Project 0608-0058, Attention PRA Desk Officer for BEA, Kerrie Leslie, 
via email at [email protected].

Regulatory Flexibility Act

    The Chief Counsel for Regulation, Department of Commerce, certified 
to the Chief Counsel for Advocacy, Small Business Administration, under 
the provisions of the Regulatory Flexibility Act (RFA), 5 U.S.C. 
605(b), that this action will not have a significant economic impact on 
a substantial number of small entities. The factual basis for the 
certification was published in the proposed rule and is not repeated 
here. No final regulatory flexibility analysis was prepared, as no 
comments were received regarding the determination that this action 
will not have a significant economic impact on a substantial number of 
small entities.

List of Subjects in 15 CFR Part 801

    Economic statistics, Foreign trade, International transactions, 
Penalties, Reporting and recordkeeping requirements.

     Dated January 17, 2018.
Brian C. Moyer,
 Director, Bureau of Economic Analysis.

    For reasons set forth in the preamble, BEA amends 15 CFR part 801 
as follows:

PART 801--SURVEY OF INTERNATIONAL TRADE IN SERVICES BETWEEN U.S. 
AND FOREIGN PERSONS AND SURVEYS OF DIRECT INVESTMENT

0
 1. The authority citation for 15 CFR part 801 continues to read as 
follows:

    Authority:  5 U.S.C. 301; 15 U.S.C. 4908; 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); and E.O. 12518 (3 CFR, 1985 Comp. p. 348).


0
 2. Revise Sec.  801.3 to read as follows:


Sec.  801.3  Reporting requirements.

    Except for surveys subject to rulemaking in Sec. Sec.  801.7, 
801.8, 801.9, 801.10, and 801.11, reporting requirements for all other 
surveys conducted by the Bureau of Economic Analysis shall be as 
follows:
    (a) Notice of specific reporting requirements, including who is 
required to report, the information to be reported, the manner of 
reporting, and the time and place of filing reports, will be published 
by the Director of the Bureau of Economic Analysis in the Federal 
Register prior to the implementation of a survey;
    (b) In accordance with section 3104(b)(2) of title 22 of the United 
States Code, persons notified of these surveys and subject to the 
jurisdiction of the United States shall furnish, under oath, any report 
containing information which is determined to be necessary to carry out 
the surveys and studies provided for by the Act; and
    (c) Persons not notified in writing of their filing obligation by 
the Bureau of Economic Analysis are not required to complete the 
survey.

0
 3. Add Sec.  801.11 to read as follows:


Sec.  801.11  Rules and regulations for the BE-120 Benchmark Survey of 
Transactions in Selected Services and Intellectual Property with 
Foreign Persons--2017.

    The BE-120 Benchmark Survey of Transactions in Selected Services 
and Intellectual Property with Foreign Persons will be conducted 
covering fiscal year 2017. All legal authorities, provisions, 
definitions, and requirements contained in Sec. Sec.  801.1 and 801.2 
and Sec. Sec.  801.4 through 801.6 are applicable to this survey. 
Specific additional rules and regulations for the BE-120 survey are 
given in paragraphs (a) through (e) of this section. More detailed 
instructions are given on the report form and in instructions 
accompanying the report form.
    (a) Response required. A response is required from persons subject 
to the reporting requirements of the BE-120 Benchmark Survey of 
Transactions in Selected Services and Intellectual Property with 
Foreign Persons--2017, contained in this section, whether or not they 
are contacted by BEA. Also, a person, or its agent, that is contacted 
by BEA about reporting on this survey, either by sending them a report 
form or by written inquiry, must respond in writing pursuant to this 
section. This may be accomplished by:
    (1) Completing and returning the BE-120 by the due date of the 
survey; or
    (2) If exempt, by completing the determination of reporting status 
section of the BE-120 survey and returning it to BEA by the due date of 
the survey.
    (b) Who must report. A BE-120 report is required of each U.S. 
person that had sales to foreign persons or purchases from foreign 
persons in the services and

[[Page 4837]]

intellectual property categories covered by the survey during its 2017 
fiscal year.
    (c) What must be reported. (1) A U.S. person that had combined 
sales to foreign persons that exceeded $2 million or combined purchases 
from foreign persons that exceeded $1 million in the services and 
intellectual property categories covered by the survey during its 2017 
fiscal year, on an accrual basis, is required to provide data on total 
sales and/or purchases of each of the covered types of services and 
intellectual property transactions and must disaggregate the totals by 
country and by relationship to the foreign transactor (foreign 
affiliate, foreign parent group, or unaffiliated). The $2 million 
threshold for sales and the $1 million threshold for purchases should 
be applied to services and intellectual property transactions with 
foreign persons by all parts of the consolidated domestic U.S. 
Reporter. Because the $2 million threshold for sales and $1 million 
threshold for purchases apply separately to sales and purchases, the 
mandatory reporting requirement may apply only to sales, only to 
purchases, or to both. The determination of whether a U.S. company is 
subject to this reporting requirement may be based on the judgment of 
knowledgeable persons in a company who can identify reportable 
transactions on a recall basis, with a reasonable degree of certainty, 
without conducting a detailed manual records search.
    (2) A U.S. person that had combined sales to foreign persons that 
were $2 million or less or combined purchases from foreign persons that 
were $1 million or less in the intellectual property or services 
categories covered by the survey during its 2017 fiscal year, on an 
accrual basis, is required to provide the total sales and/or purchases 
for each type of transaction in which they engaged. The $2 million 
threshold for sales and the $1 million threshold for purchases should 
be applied to services and intellectual property transactions with 
foreign persons by all parts of the consolidated domestic U.S. 
Reporter. Because the $2 million threshold for sales and $1 million 
threshold for purchases apply separately to sales and purchases, the 
mandatory reporting requirement may apply only to sales, only to 
purchases, or to both.
    (i) Voluntary reporting: If, during fiscal year 2017, combined 
sales were $2 million or less, on an accrual basis, the U.S. person 
may, in addition to providing the required total for each type of 
transaction, report sales at a country and affiliation level of detail 
on the applicable mandatory schedule(s). Provision of this additional 
detail is voluntary. The estimates may be judgmental, that is, based on 
recall, without conducting a detailed records search.
    (ii) If, during fiscal year 2017, combined purchases were $1 
million or less, on an accrual basis, the U.S. person may, in addition 
to providing the required total for each type of transaction, report 
purchases at a country and affiliation level of detail on the 
applicable mandatory schedule(s). Provision of this additional detail 
is voluntary. The estimates may be judgmental, that is, based on 
recall, without conducting a detailed records search.
    (3) Exemption claims: Any U.S. person that receives the BE-120 
survey form from BEA, but is not subject to the reporting requirements, 
must file an exemption claim by completing the determination of 
reporting status section of the BE-120 survey and returning it to BEA 
by the due date of the survey. This requirement is necessary to ensure 
compliance with reporting requirements and efficient administration of 
the Act by eliminating unnecessary follow-up contact.
    (d) Covered types of services. Services transactions covered by 
this survey consist of sales and purchases related to certain 
intellectual property rights (see paragraphs (d)(1) through (18) of 
this section for a list of intellectual property-related transactions 
covered by this survey) and sales and purchases of selected services 
(see paragraphs (d)(19) through (59) of this section for a list of 
services covered by this survey). The transactions (sales or purchases) 
between U.S. companies and foreign persons covered by the BE-120 survey 
are:
    (1) Rights related to the use of a patent, process, or trade secret 
to produce and/or distribute a product or service;
    (2) Outright sales of proprietary rights related to patents, 
processes, and trade secrets;
    (3) Rights to use books, music, etc., including end-user rights 
related to digital content;
    (4) Rights to reproduce and/or distribute books, music, etc.;
    (5) Outright sales of proprietary rights related to books, music, 
etc.;
    (6) Rights to use trademarks;
    (7) Outright sales of proprietary rights related to trademarks;
    (8) Rights to use recorded performances and events, including end-
user rights related to digital content;
    (9) Rights to reproduce and/or distribute recorded performances and 
events;
    (10) Outright sales of proprietary rights related to recorded 
performances and events;
    (11) Rights to broadcast and record live performances and events;
    (12) Rights to reproduce and/or distribute general use computer 
software;
    (13) Outright sales of proprietary rights related to general use 
computer software;
    (14) Fees associated with business format franchising;
    (15) Outright sales of proprietary rights related to business 
format franchising;
    (16) Rights to use other intellectual property;
    (17) Rights to reproduce and/or distribute other intellectual 
property;
    (18) Outright sales of proprietary rights related to other 
intellectual property;
    (19) Accounting, auditing, and bookkeeping services;
    (20) Advertising services;
    (21) Auxiliary insurance services;
    (22) Computer software, including end-user licenses and 
customization services;
    (23) Cloud computing and data storage services;
    (24) Other computer services;
    (25) Construction services;
    (26) News agency services (excludes production costs related to 
news broadcasters);
    (27) Other information services;
    (28) Education services;
    (29) Architectural services;
    (30) Engineering services;
    (31) Surveying, cartography, certification, testing and technical 
inspection services;
    (32) Financial services;
    (33) Maintenance services;
    (34) Installation, alteration, and training services;
    (35) Legal services;
    (36) Market research services;
    (37) Public opinion polling services;
    (38) Other management, consulting, and public relations services;
    (39) Merchanting services (net receipts);
    (40) Mining services;
    (41) Operational leasing;
    (42) Trade-related services, other than merchanting services;
    (43) Artistic-related services;
    (44) Premiums paid on primary insurance;
    (45) Losses recovered on primary insurance;
    (46) Provision of customized and non-customized research and 
development services;
    (47) Other research and development services;

[[Page 4838]]

    (48) Telecommunications services;
    (49) Health services;
    (50) Heritage and recreational services;
    (51) Audiovisual and production services;
    (52) Contract manufacturing services;
    (53) Disbursements for sales promotion and representation;
    (54) Photographic services (including satellite photography 
services);
    (55) Space transport services;
    (56) Trade exhibition and sales convention services;
    (57) Agricultural services;
    (58) Waste treatment and depollution services; and
    (59) Other selected services n.i.e. (not included elsewhere).
    (e) Types of transactions excluded from the scope of this survey. 
(1) Sales and purchases of goods. Trade in goods involves products that 
have a physical form, and includes payments or receipts for 
electricity.
    (2) Sales and purchases of financial instruments, including stocks, 
bonds, financial derivatives, loans, mutual fund shares, and negotiable 
CDs. (However, securities brokerage is a service).
    (3) Income on financial instruments (interest, dividends, capital 
gain distributions, etc).
    (4) Compensation paid to, or received by, employees.
    (5) Penalties and fines and gifts or grants in the form of goods 
and cash (sometimes called ``transfers'').
    (f) Due date. A fully completed and certified BE-120 report, or 
qualifying exemption claim with the determination of reporting status 
section completed, is due to be filed with BEA not later than June 29, 
2018 (or by July 30, 2018 for respondents that use BEA's eFile system).

[FR Doc. 2018-02065 Filed 2-1-18; 8:45 am]
 BILLING CODE 3510-06-P