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[Federal Register Volume 79, Number 224 (Thursday, November 20, 2014)]
[Rules and Regulations]
[Pages 69041-69044]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27421]

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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 801

[Docket No. 1206013202-4700-01]
RIN 0691-AA83

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 reinstate reporting 
requirements for the 2014 BE-10, Benchmark Survey of U.S. Direct 
Investment Abroad. Benchmark surveys are conducted every five years; 
the prior survey covered 2009. The benchmark survey covers the universe 
of U.S. direct investment abroad, and is BEA's most comprehensive 
survey of such investment in terms of subject matter. For the 2014 
benchmark survey, BEA will make changes in the data items collected. No 
changes will be made to the reporting requirements for the survey. This 
mandatory survey will be conducted under the authority of the 
International Investment and Trade in Services Survey Act (the Act). 
Unlike many other BEA surveys conducted pursuant to the Act, a response 
will be required from persons subject to the reporting requirements of 
the BE-10, Benchmark Survey of U.S. Direct Investment Abroad, whether 
or not they are contacted by BEA, in order to ensure that respondents 
subject to the requirements for U.S. direct investment abroad are 
identified.

DATES: This final rule is effective December 22, 2014.

FOR FURTHER INFORMATION CONTACT: Patricia Abaroa, Chief, Direct 
Investment Division (BE-50), Bureau of Economic Analysis, U.S. 
Department of Commerce, Washington, DC 20230; phone (202) 606-9591.

SUPPLEMENTARY INFORMATION: On August 14, 2014, BEA published a notice 
of proposed rulemaking that set forth revised reporting criteria for 
the BE-10, Benchmark Survey of U.S. Direct Investment Abroad (79 FR 
47599-47603). On September 9, 2014, BEA published a correction to the 
notice of proposed rulemaking to correct the Regulation Identifier 
Number (RIN) that was listed in the first notice (79 FR 53355). BEA 
received two comments on the proposed rule.

[[Page 69042]]

    One comment was written on behalf of hedge fund managers that are 
subject to BE-10 reporting requirements. The letter suggested that the 
BE-10 survey is not well suited to hedge funds and that for these 
respondents the burden of reporting is significant. The commenter made 
several recommendations, including (1) that entities that are not 
contacted by BEA should have no reporting responsibilities (similar to 
other BEA surveys), (2) that BEA should not require reporting by U.S. 
investment managers on their management of non-U.S. investment funds, 
and (3) that BEA should provide survey instructions specific to hedge 
fund filers. BEA is very concerned about respondent burden and has 
employed several strategies to reduce the burden where possible. BEA 
cannot implement the first two recommendations because of the legal 
requirements and the statistical needs that govern how the data are 
collected and tabulated. To address the third recommendation, BEA will 
consider what additional guidance it can offer to hedge fund filers, 
possibly in the form of Frequently Asked Questions (FAQs).
    The other commenter was a data user that urged BEA to reorient the 
BE-10 survey to address current issues related to global value chains 
and trade in value added. The commenter recommended that BEA 
systematically capture data on firm sales of goods and services by 
business function and international surveys industry (ISI) code, 
imports and exports by country, and distribution of sales and purchases 
by type of customer. The commenter also suggested that BEA reorganize 
the BE-10 survey to collect data in matrix format. BEA does not collect 
sales by business function and would need to explore the feasibility of 
collecting this information by conducting outreach to respondent 
companies to determine what information classified by business function 
might be available in their records. BEA will consider this addition 
for future surveys. BEA does collect sales data by ISI code and by type 
of customer as well as data on trade in services by country and on 
affiliated goods trade by country. To offer additional information that 
will be useful in analysis of trade in value added, BEA will add 
questions to the BE-10 survey to collect a regional breakdown of 
unaffiliated goods trade by U.S. parent companies. The BE-10 does not 
cover purchased inputs and BEA believes that this information would be 
more accurately reported on establishment level surveys. Regarding 
survey design, BEA has tended to minimize use of matrix formatting on 
the BE-10 survey because of feedback from experts in survey response 
indicating that matrix formatting leads to unit and item nonresponse on 
surveys.
    The additional questions related to unaffiliated trade in goods 
(described in the Description of Changes section below) will be 
reflected in the final versions of the forms. This final rule adds 15 
CFR 801.8 to set forth the reporting requirements for the BE-10, 
Benchmark Survey of U.S. Direct Investment Abroad. BEA conducts the BE-
10 survey under the authority of the International Investment and Trade 
in Services Survey Act (22 U.S.C. 3101-3108).
    By rule issued in 2012 (77 FR 24373), BEA established guidelines 
for collecting data on international trade in services and direct 
investment through notices, rather than through rulemaking. This final 
rule amends the regulations to require a response from persons subject 
to the reporting requirements of the BE-10, whether or not they are 
contacted by BEA, in order to ensure complete coverage of U.S. direct 
investment abroad.
    The benchmark survey covers the U.S. direct investment abroad 
universe and is BEA's most comprehensive survey of such investment in 
terms of subject matter. 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 benchmark 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. 
These data are used to derive current universe estimates of direct 
investment from sample data collected in other BEA surveys in non-
benchmark years. In particular, they would 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 
operations of U.S. parent companies and their foreign affiliates.

Description of Changes

    The changes amend the regulations and the survey forms for the BE-
10 benchmark survey. These amendments include changes in the data items 
collected and questionnaire design.
    Under the revised regulations, unlike many other BEA surveys 
conducted pursuant to the Act, persons subject to the reporting 
requirements of the BE-10, Survey of U.S. Direct Investment Abroad, are 
required to respond whether or not they are contacted by BEA.
    BEA will add and delete some items on the benchmark survey forms. 
Most of the additions are made in response to suggestions from data 
users. The following items will be added to the benchmark survey:
    (1) For U.S. parent companies, questions will be added to collect 
data on the U.S. imports of goods by the intended use of the goods and 
by whether the shipper of the goods is a foreign affiliate or an 
unaffiliated foreign entity.
    (2) For U.S. parent companies, questions will be added to collect 
data on U.S. exports to and imports from unaffiliated foreigners in the 
following regions: Canada, Europe, Latin America and other Western 
Hemisphere, Africa, Middle East, and Asia and Pacific.
    (3) For larger U.S. parent companies (those with assets, sales, or 
net income greater than $300 million), questions will be added to 
collect information on assets, liabilities, and interest receipts and 
payments that are related to banking activities. These questions are 
collected on the Annual Survey of U.S. Direct Investment Abroad (BE-
11).
    (4) A question will be added to collect the city in which each 
foreign affiliate is located.
    (5) For majority-owned foreign affiliates with assets, sales, or 
net income greater than $80 million, a question will be added to the 
balance sheet to collect data on cash and cash equivalents.
    (6) For larger majority-owned foreign affiliates (those with 
assets, sales, or net income greater than $300 million), questions will 
be added to the section on sales to collect the top five countries 
(besides the U.S. and the country of the affiliate) to which the 
affiliates made sales. For each country, sales will be categorized by 
customer: ``other foreign affiliates of the U.S. Reporter(s)'' and 
``unaffiliated customers.'' An ``all other'' item will also be added 
after the top five countries. Questions on sales by region of 
destination will be retained.
    (7) For majority-owned foreign affiliates with assets, sales, or 
net

[[Page 69043]]

income greater than $80 million, questions will be added to the section 
on royalties and license fees to collect receipts from U.S. parents, 
receipts from other U.S. persons, payments to U.S. parents, and 
payments to other U.S. persons. On the previous benchmark survey, this 
section only included receipts from and payments to foreign persons.
    (8) For foreign affiliates with assets, sales, or net income 
greater than $25 million, several check-box questions will be added to 
ensure that certain types of finance companies do not report 
intercompany debt to BEA that is already reported on Treasury 
International Capital surveys. Similar questions are included in the 
Quarterly Survey of U.S. Direct Investment Abroad (BE-577).
    (9) For foreign affiliates with assets, sales, or net income 
between $25 million and $80 million, a question will be added to 
collect expenditures for research and development performed by the 
foreign affiliate.
    Several questions will be modified:
    (1) Questions on contract manufacturing will be updated to 
incorporate improved wording.
    (2) The cash item on the balance sheet for U.S. parent companies 
will be modified to include cash equivalents.
    BEA will eliminate several items from the benchmark survey because 
they are no longer used:
    (1) Official foreign identification numbers issued by host-country 
governments to foreign affiliates on BE-10B.
    (2) Withholding taxes on interest received from and paid to U.S. 
parent companies by foreign affiliates on BE-10B.
    In addition, BEA will redesign the survey questionnaires. The new 
design will incorporate improvements made to other BEA surveys. Survey 
instructions and data item descriptions will be changed to improve 
clarity and make the benchmark survey forms more consistent with those 
of other BEA surveys.

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 has been submitted 
to the Office of Management and Budget (OMB) under the Paperwork 
Reduction Act (PRA). OMB has pre-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 3,900 respondents. The respondent burden for this 
collection of information will vary from one company to another, but is 
estimated to average 144 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 for this 
survey is estimated at 561,100 hours, compared to 459,400 hours for the 
previous (2009) benchmark survey. The increase in burden hours is due 
to an increase in the size of the respondent universe.
    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 
Patricia.Abaroa@bea.gov, and to OMB, O.I.R.A., Paperwork Reduction 
Project 0608-0049, Attention PRA Desk Officer for BEA, via email at 
pbugg@omb.eop.gov or by FAX at (202) 395-7245.

Regulatory Flexibility Act

    The Chief Counsel for Regulation, Department of Commerce, certified 
at the proposed rule stage 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 final rule 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 comments were received 
regarding the certification or the economic impact of the rule more 
generally. No final regulatory flexibility analysis was prepared.

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.

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 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 and 
801.8, 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.  801.8 to read as follows:

Sec.  801.8  Requirements for the BE-10, Benchmark Survey of U.S. 
Direct Investment Abroad--2014.

    A BE-10, Benchmark Survey of U.S. Direct Investment Abroad will be 
conducted covering 2014. 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 requirements 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.

[[Page 69044]]

    (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--2014, contained herein, whether or not they 
are contacted by BEA. Also, a person, or their agent, that is contacted 
by BEA about reporting in this survey, either by sending them a report 
form or by written inquiry, must respond in writing pursuant this 
section. This may be accomplished by:
    (1) Certifying in writing, by the due date of the survey, to the 
fact that the person had no direct investment within the purview of the 
reporting requirements of the BE-10 survey;
    (2) Completing and returning the ``BE-10 Claim for Not Filing'' by 
the due date of the survey; or
    (3) Filing the properly completed BE-10 report (comprising Form BE-
10A and Form(s) BE-10B, BE-10C, and/or BE-10D) by May 29, 2015, or June 
30, 2015, as required.
    (b) Who must report. (1) 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 any time during the U.S. person's 2014 fiscal year.
    (2) If the U.S. person had no foreign affiliates during its 2014 
fiscal year, a ``BE-10 Claim for Not Filing'' must be filed by the due 
date of the survey; no other forms in the survey are required. If the 
U.S. person had any foreign affiliates during its 2014 fiscal year, a 
BE-10 report is required and the U.S. person is a U.S. Reporter in this 
survey.
    (3) Reports are required even if the foreign business enterprise 
was established, acquired, seized, liquidated, sold, expropriated, or 
inactivated during the U.S. person's 2014 fiscal year.
    (4) The amount and type of data required to be reported vary 
according to the size of the U.S. Reporters or foreign affiliates, and, 
for foreign affiliates, whether they are majority-owned or minority-
owned by U.S. direct investors. For purposes of the BE-10 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; all other affiliates are referred 
to as ``minority-owned'' affiliates.
    (c) Forms to be filed. (1) Form BE-10A must be completed by a U.S. 
Reporter. If the U.S. Reporter is a corporation, Form BE-10A is 
required to cover the fully consolidated U.S. domestic business 
enterprise. It must also file Form(s) BE-10B, C, and/or D for its 
foreign affiliates, whether held directly or indirectly.
    (2) Form BE-10B must be filed for each majority-owned foreign 
affiliate for which any of the following three items--total assets, 
sales or gross operating revenues excluding sales taxes, or net income 
after provision for foreign income taxes--was greater than $80 million 
(positive or negative) at any time during the affiliate's 2014 fiscal 
year.
    (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 any time during the affiliate's 2014 
fiscal year, and
    (ii) For each minority-owned foreign affiliate for which any one of 
the three items listed in (c)(2) of this section was greater than $25 
million (positive or negative), at any time during the affiliate's 2014 
fiscal year.
    (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 any time during the affiliate's 2014 fiscal year. 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.
    (d) Due date. A fully completed and certified BE-10 report 
comprising Form BE-10A and Form(s) BE-10B, C, and/or D (as required) is 
due to be filed with BEA not later than May 29, 2015, for those U.S. 
Reporters filing fewer than 50, and June 30, 2015, for those U.S. 
Reporters filing 50 or more, foreign affiliate Forms BE-10B, C, and/or 
D. If the U.S. person had no foreign affiliates during its 2014 fiscal 
year, it must file a BE-10 Claim for Not Filing by May 29, 2015.

[FR Doc. 2014-27421 Filed 11-19-14; 8:45 am]
BILLING CODE 3510-06-P
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