[Federal Register: August 22, 2005 (Volume 70, Number 161)]
[Proposed Rules]
[Page 48920-48923]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22au05-35]
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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.
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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 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: Obie.Whichard@bea.gov.
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
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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 pbugg@omb.eop.gov, 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
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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.
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[FR Doc. 05-16601 Filed 8-19-05; 8:45 am]
BILLING CODE 3510-06-P