[Federal Register Volume 84, Number 218 (Tuesday, November 12, 2019)]
[Rules and Regulations]
[Pages 60912-60915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24414]


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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 801

[Docket No. 191104-0074]
RIN 0691-AA89


Direct Investment Surveys: BE-10, Benchmark Survey of U.S. Direct 
Investment Abroad

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 2019 BE-10, Benchmark Survey of U.S. Direct 
Investment Abroad (``BE-10 survey''). The BE-10 survey is conducted 
every five years; the prior survey covered 2014. The BE-10 survey 
covers the universe of U.S. direct investment abroad and is BEA's most 
comprehensive survey of such investment. For the 2019 BE-10 survey, BEA 
will make changes in data items collected, the design of the survey 
forms, and the reporting requirements for the survey to satisfy 
changing data needs and improve data quality and the effectiveness and 
efficiency of data collection.

DATES: This final rule will be effective December 12, 2019.

FOR FURTHER INFORMATION CONTACT: Ricardo Limes, Chief, Multinational 
Operations Branch (BE-69), Bureau of Economic Analysis, U.S. Department 
of Commerce, Washington, DC 20233; phone (301) 278-9659; or via email 
[email protected].

SUPPLEMENTARY INFORMATION: The BE-10, Benchmark Survey of U.S. Direct 
Investment Abroad, is a mandatory survey and is conducted once every 
five years by BEA under the authority of the International Investment 
and Trade in Services Survey Act (22 U.S.C. 3101-3108).
    The BE-10 survey covers the U.S. direct investment abroad universe 
and is BEA's most comprehensive survey of such investment. U.S. direct 
investment abroad is defined as the ownership or control, directly or 
indirectly, by one U.S. person of 10 percent or more of the voting 
securities of an incorporated foreign business enterprise or an 
equivalent interest in an unincorporated foreign business enterprise, 
including a branch.
    The purpose of the BE-10 survey is to obtain universe data on the 
financial and operating characteristics of, and on positions and 
transactions between, U.S. parent companies and their foreign 
affiliates. 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. 
Such data are generally found in enterprise-level accounting records of 
respondent companies. The benchmark data provide a baseline for 
subsequent sample-based estimates in non-benchmark years. In 
particular, they serve as benchmarks for the quarterly direct 
investment estimates included in the U.S. international transactions, 
international investment position, and national income and product 
accounts, and for annual estimates of the U.S. direct investment abroad 
position and of the activities of U.S. multinational enterprises.
    On August 7, 2019, BEA published a notice of proposed rulemaking 
that set forth the reporting requirements for the BE-10, Benchmark 
Survey of U.S. Direct Investment Abroad (84 FR 38583). Two

[[Page 60913]]

comments on the proposed rule were received.
    The Global Legal Entity Identifier Foundation (GLEIF), an 
international organization supporting the implementation and use of the 
Legal Entity Identifier (LEI), expressed support for BEA's proposal to 
collect the 20-digit LEI of each U.S. parent and foreign affiliate on 
the BE-10A, BE-10B, and BE-10C forms. Collecting the LEI on the BE-10 
survey will assist in matching entities across internal and external 
databases, enabling better verification of data and linking to other 
surveys and publicly available information.
    The Bank Policy Institute (BPI) expressed support for the survey 
and BEA's efforts to measure the digital economy. BPI requested 
clarification on several aspects of the proposed questions on the 
digital economy and regional headquarters. BEA will include definitions 
of new terms and guidance for survey respondents in the final version 
of the survey forms. BPI also recommended that BEA not change the 
reporting requirements for the BE-10 Claim for Not Filing because of 
concerns about burden. BEA clarified that a BE-10 Claim For Not Filing 
only needs to be filled out for those foreign affiliates that do not 
meet the reporting requirements of the survey and for which BEA 
contacts the reporter. By providing a standard form for notifying BEA 
that a foreign affiliate no longer meets the survey requirements, BEA 
is reducing respondent burden.
    This final rule amends 15 CFR part 801 to set forth the reporting 
requirements for the BE-10, Benchmark Survey of U.S. Direct Investment 
Abroad. Under this final rule, persons subject to the reporting 
requirements of the BE-10 survey would be required to respond, whether 
or not they are contacted by BEA.

Description of Changes

    The final rule amends the regulations (15 CFR part 801) and the 
survey forms for the BE-10 survey. These amendments include changes in 
data items collected, the design of the survey forms, and the reporting 
requirements for the survey.
    BEA will change the reporting requirements for certain private 
funds that file the BE-10 survey. BEA, in cooperation with the U.S. 
Department of the Treasury, will instruct reporters of investments in 
private funds that meet the definition of direct investment (that is, 
ownership by one person of 10 percent or more of the voting interest of 
a business enterprise) but display characteristics of portfolio 
investment (specifically, investors who do not intend to control or 
influence the management of an operating company) to report through the 
Treasury International Capital (TIC) reporting system. Reporting 
through TIC is more efficient because other related portfolio 
investments are already being reported there. Such private funds should 
not report on the BE-10 survey and BEA's other direct investment 
surveys. Direct investment in operating companies, including investment 
by and through private funds, will continue to be reported to BEA. This 
change has already been implemented on BEA's other surveys of U.S. 
direct investment abroad: The BE-577, Quarterly Survey of U.S. Direct 
Investment Abroad; and the BE-11, Annual Survey of U.S. Direct 
Investment Abroad. Additional information on the change in reporting 
requirements for investments in private funds can be found in the 
Direct Investment Surveys: BE-577, Quarterly Survey of U.S. Direct 
Investment Abroad-Transactions of U.S. Reporter With Foreign Affiliate, 
and Changes to Private Fund Reporting on Direct Investment Surveys 
Federal Register notice issued in 2016 (81 FR 33658).
    BEA will add, delete, and modify some items on the BE-10 survey 
forms. Most of the additions are in response to suggestions from data 
users and to provide more information about U.S. direct investment 
abroad. The following items will be added or modified on the BE-10 
survey:
    (1) The form of organization question for the U.S. reporter (item 2 
on the BE-10A form, the form that collects information on the domestic 
operations of U.S. parent companies) will be modified to include more 
options: Corporations (except for S corporations); partnerships; S 
corporations; limited liability companies (LLCs); individual, estate, 
or trust; and other (specify). This information will help BEA to 
produce economic statistics by sector.
    (2) A question will be added to collect the 20[hyphen]digit Legal 
Entity Identifier of each U.S. parent and foreign affiliate on the BE-
10A, BE-10B, and BE-10C forms (the BE-10B and BE-10C forms collect 
information on foreign affiliate operations). This information will 
assist in matching entities across databases, enabling better 
verification of data and linking to other surveys and publicly 
available data.
    (3) For each publicly traded company, the stock exchange on which 
it is listed and the ticker symbol will be collected on the BE-10A 
form. This information will assist in matching entities across 
databases, enabling better verification of data and linking to other 
surveys and publicly available data.
    (4) The income statement item on income from equity investments 
(item 44) on the BE-10A form will be modified to separately collect 
income from unconsolidated U.S. investments and from foreign 
investments. This will aid in resolving discrepancies between the BE-10 
and the BE-577 surveys.
    (5) Item 73 on the BE-10A and item 127 on the BE-10B forms collect 
the amount of restatement in a company's property, plant, and 
equipment. This question will be modified to separately collect 
restatement due to ``change in entity'' and due to ``change in 
accounting methods or principles.'' A checkbox question will be added 
to the BE-10A and BE-10B forms asking if the change due to accounting 
methods or principles is due in whole or in part to implementation of 
FASB ASU No. 2016-02, Leases (Topic 842). This information will allow 
BEA to assess the impact on BEA's statistics of the change in 
accounting standards on leases.
    (6) Questions will be added to collect sales, employment, and costs 
and expenses (excluding compensation) on the BE-10A form, and sales on 
the BE-10B form, related to the provision of selected services 
generally recognized as prevalent in the digital economy. These 
selected services are (1) cloud computing, (2) digital intermediation 
services on both the BE-10A and BE-10B forms, and (3) advertising on 
the BE-10B form. In addition, checkboxes will be added to the BE-10A 
and BE-10B forms to collect the percentage of the respondent's sales of 
services delivered remotely, sales of services that were digitally 
ordered, and sales of goods that were digitally ordered, along with 
checkboxes to identify if this information was sourced from accounting 
records or from recall/general knowledge. These questions will 
contribute to BEA's efforts to measure the digital economy.
    (7) A checkbox question will be added to the BE-10B and BE-10C 
forms to capture whether the affiliate serves as a regional 
headquarters. This information will support research into the role and 
impact of regional headquarters in the operations of multinational 
enterprises.
    (8) A checkbox question will be added to the BE-10B forms to 
collect information on the value of R&D performed by the U.S. parent 
for the foreign affiliate under a collaborative R&D agreement, such as 
a cost-sharing agreement. This question will help BEA follow the 
production and use of intellectual property in global value chains and 
their impacts on economic statistics.

[[Page 60914]]

    (9) A section will be added to the BE-10 Claim for Not Filing to be 
filled out for those foreign affiliates for which BEA contacts the 
reporter but do not meet the reporting requirements of the survey. This 
section will make it easier for reporters to indicate to BEA which 
affiliates should be removed from the survey.
    a. The section will include a private funds exemption option. This 
is a change to prior reporting requirements described above.
    b. There will also be an option to select if the U.S. reporter no 
longer owns the foreign affiliate and if this was due to the affiliate 
being sold or liquidated, or because the U.S. reporter's ownership 
interest in the affiliate fell below 10 percent.
    The final rule will also eliminate or consolidate the following 
items from the BE-10 survey:
    (1) Item 8 on the BE-10A, which asks if the U.S. reporter is a 
bank, will be removed. This question was used in the past when 
reporting requirements for direct investment surveys were different for 
banks than other industries but is no longer needed.
    (2) Questions on contract manufacturing services will be deleted 
(items 33-35 on the BE-10A form). The data collected have been 
burdensome for companies to provide and have not been widely used by 
data users. Alternative methods are being developed to measure and 
study contract manufacturing.
    (3) The petroleum and mining exploration and development 
expenditures item will be removed from the BE-10A form (item 80) and 
BE-10B form (item 135). This item was used to calculate the current 
cost adjustment to the direct investment statistics in the 
international transactions accounts (ITAs) but is not used in the 
current methodology.
    (4) The trade in goods by world region questions (items 99-104 and 
109-114) on the BE-10A form will be removed. The data collected have 
been burdensome for companies to provide and have not been widely used 
by data users. BEA is exploring alternative methods to produce 
geographical detail on trade by U.S. multinational companies.
    (5) Option 2 of item 11 on the BE-10B form and item 8 on the BE-10C 
form, which collect information on why the affiliate will no longer 
report on the survey, will be removed. This information will now be 
captured on the BE-10 Claim for Not Filing (as discussed in item 9 of 
the additions and modifications section above). U.S. reporters will no 
longer be required to complete the rest of the BE-10B or BE-10C form 
with partial year information for foreign affiliates that were sold, 
merged, reorganized, liquidated, seized, or otherwise ceased to exist 
at some point during, but before the end of, their fiscal year that 
ended in the calendar year covered by the BE-10 survey.
    (6) Items 18 and 19 on the BE-10B form, and 14 and 15 on the BE-10C 
form, which collect the direct ownership interest held by ``foreign 
persons in this affiliate's country of location'' and by ``all other 
foreign persons,'' will be combined into one item on each of the forms.
    (7) Questions collecting information on sales by world region 
(items 105-110) and on sales to the top five countries outside of the 
country of location of the affiliate (items 111-116) on the BE-10B form 
will be removed. The data collected have been burdensome for companies 
to provide and have not been widely used by data users. BEA will 
continue to collect items 101-104, which allow sales to be 
disaggregated into goods and services and by whether the sales are to 
the United States, to the host country, or to other foreign countries. 
These items are more widely used.
    (8) Several items of Part V of the BE-10B form and Part III of the 
BE-10C form will be removed, except for the items noted below. These 
data were used to validate the information collected on the quarterly 
survey, but data reported elsewhere in the BE-10 forms are sufficient 
for this purpose. The following items will be retained:
    a. A question on reverse investment (item 167 on the BE-10B form).
    b. Intercompany debt balances (items 63-65 on the BE-10C form) for 
foreign affiliates with less than $60 million in assets, sales, or net 
income.

Executive Order 12866

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

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 (PRA). OMB approved the information 
collection under OMB control number 0608-0049.
    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 PRA unless that collection displays a currently 
valid OMB control number.
    The BE-10 survey is expected to result in the filing of reports 
from approximately 18,000 respondents. A complete response includes a 
BE-10A form for the U.S. parent's domestic operation and one or more 
BE-10B, BE-10C, or BE-10D forms for its foreign affiliates. BEA 
estimates that U.S. parents will submit 18,000 BE-10A forms, 19,100 BE-
10B forms, 14,500 BE-10C forms, 18,000 BE-10D forms, and 2,000 BE-10 
Claims for Not Filing. Total annual burden is calculated by multiplying 
the estimated number of submissions of each form by the average hourly 
burden per form, which is 10 hours for the BE-10A form, 19 hours for 
the BE-10B form, 6 hours for the BE-10C form, 3 hours for the BE-10D 
form, and 0.5 hours for the BE-10 Claim for Not Filing. The estimated 
total respondent burden for this survey is estimated at 684,900 hours. 
The respondent burden for this collection of information is expected to 
vary considerably among respondents because of differences in company 
structure, size, and complexity. The burden includes time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. The average respondent burden is 38 hours 
per response (684,900 hours/18,000 respondents), compared to an average 
burden of 144 hours and total burden of 561,100 hours for the previous 
(2014) BE-10 survey. The increase in the estimated total respondent 
burden reflects an increase in the respondent universe of U.S. and 
foreign entities that are required to file the BE-10 survey. The 
average burden decreased because the newer respondents on average file 
fewer and more abbreviated forms and because the changes to the survey 
will result in a net decrease in the amount of information collected on 
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 OMB, OIRA, Paperwork Reduction Project 0608-
0049, Attention PRA Desk Officer for BEA, via email at 
[email protected].

[[Page 60915]]

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, International transactions, Multinational 
companies, Penalties, Reporting and record keeping requirements, U.S. 
direct investment abroad.

Paul W. Farello,
Associate Director of International Economics, 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.  801.8 to read as follows:


Sec.  801.8  Rules and regulations for the BE-10, Benchmark Survey of 
U.S. Direct Investment Abroad.

    A BE-10, Benchmark Survey of U.S. Direct Investment Abroad, will be 
conducted every five years and covers years ending in 4 and 9. All 
legal authorities, provisions, definitions, and requirements contained 
in Sec. Sec.  801.1 and 801.2 and 801.4 through 801.6 are applicable to 
this survey. Specific additional rules and regulations for the BE-10 
survey are given in paragraphs (a) through (d) of this section. More 
detailed instructions are given on the report forms and instructions.
    (a) Response required. A response is required from persons subject 
to the reporting requirements of the BE-10, Benchmark Survey of U.S. 
Direct Investment Abroad, contained in this section, whether or not 
they are contacted by BEA. Also, a person, or their agent, contacted in 
writing by BEA about reporting in this survey must respond by filing a 
properly completed BE-10 report (BE-10A and BE-10B, BE-10C, BE-10D, 
and/or BE-10 Claim for Not Filing).
    (b) Who must report. A BE-10 report is required of any U.S. person 
that had a foreign affiliate--that is, that had direct or indirect 
ownership or control of at least 10 percent of the voting stock of an 
incorporated foreign business enterprise, or an equivalent interest in 
an unincorporated foreign business enterprise, including a branch--at 
the end of the U.S. person's fiscal year that ended in the calendar 
year covered by the survey. Foreign affiliates that are private funds 
and meet certain criteria are exempt from the BE-10 survey. 
Specifically, if a foreign affiliate meets all of the criteria in 
paragraphs (b)(1) though (3) of this section, the U.S. reporter is not 
required to file a BE-10 form for that affiliate except to indicate 
exemption from the survey if contacted by BEA:
    (1) The foreign affiliate is a private fund; and
    (2) The private fund foreign affiliate does not own, directly or 
indirectly through another business enterprise, an ``operating 
company''--i.e., a business enterprise that is not a private fund or a 
holding company--in which the consolidated U.S. reporter owns at least 
10 percent of the voting interest; and
    (3) If the U.S. reporter owns the private fund indirectly (through 
one or more other business enterprises), there are no ``operating 
companies'' between the consolidated U.S. reporter and the indirectly-
owned foreign private fund.
    (c) Forms to be filed. (1) Form BE-10A must be completed by a U.S. 
reporter. Form BE-10A is required to cover the fully consolidated U.S. 
domestic business enterprise. It must also file Form(s) BE-10B, BE-10C, 
and/or BE-10D for its foreign affiliates, whether held directly or 
indirectly.
    (2) Form BE-10B must be filed for each majority-owned foreign 
affiliate (for purposes of this survey, a ``majority-owned'' foreign 
affiliate is one in which the combined direct and indirect ownership 
interest of all U.S. parents of the foreign affiliate exceeds 50 
percent) for which any of the items in paragraph (c)(2)(i) through 
(iii) of this section (not just the U.S. reporter's share) was greater 
than $80 million (positive or negative) at the end of, or for, its 
fiscal year that ended in the calendar year covered by the survey:
    (i) Total assets (without netting liabilities);
    (ii) Sales or gross operating revenues, excluding sales taxes; or
    (iii) Net income after provision for foreign income taxes.
    (3) Form BE-10C must be filed:
    (i) For each majority-owned foreign affiliate for which any one of 
the three items listed in paragraph (c)(2) of this section was greater 
than $25 million but for which none of these items was greater than $80 
million (positive or negative) at the end of, or for, its fiscal year 
that ended in the calendar year covered by the survey; and
    (ii) For each minority-owned foreign affiliate (for purposes of 
this survey, a ``minority-owned'' foreign affiliate is one in which the 
combined direct and indirect ownership interest of all U.S. parents of 
the foreign affiliate is 50 percent or less) for which any one of the 
three items listed in paragraph (c)(2) of this section was greater than 
$25 million (positive or negative) at the end of, or for, its fiscal 
year that ended in the calendar year covered by the survey.
    (4) Form BE-10D must be filed for majority- or minority-owned 
foreign affiliates for which none of the three items listed in 
paragraph (c)(2) of this section was greater than $25 million (positive 
or negative) at the end of, or for, its fiscal year that ended in the 
calendar year covered by the survey. Form BE-10D is a schedule; a U.S. 
reporter would submit one or more pages of the form depending on the 
number of affiliates that are required to be filed on this form.
    (5) BE-10 Claim for Not Filing will be provided for response by:
    (i) Persons that are not subject to the reporting requirements of 
the BE-10 survey but have been contacted by BEA concerning their 
reporting status; or
    (ii) U.S. reporters that have been contacted by BEA concerning 
their reporting status for foreign affiliates that are no longer 
subject to the reporting requirements of the BE-10 survey.
    (d) Due date. A fully completed and certified BE-10 report 
comprising Form BE-10A and Form(s) BE-10B, BE-10C, BE-10D, and/or BE-10 
Claim for Not Filing (as required) is due to be filed with BEA not 
later than May 31 of the year after the year covered by the survey, for 
those U.S. reporters filing fewer than 50, and June 30, for those U.S. 
reporters filing 50 or more, foreign affiliate Forms BE-10B, BE-10C, 
and/or BE-10D.

[FR Doc. 2019-24414 Filed 11-8-19; 8:45 am]
 BILLING CODE 3510-06-P