[Federal Register Volume 62, Number 195 (Wednesday, October 8, 1997)]
[Proposed Rules]
[Pages 52515-52518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26658]


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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 970918231-7231-01]
RIN 0691-AA08


Direct Investment Surveys: BE-12, Benchmark Survey of Foreign 
Direct Investment in the United States--1997

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document sets forth proposed rules to revise 15 CFR 
806.17 to present the reporting requirements for the BE-12, Benchmark 
Survey of Foreign Direct Investment in the United States--1997 and to 
delete the rules now in 15 CFR 806.17, which were for the last 
benchmark survey covering 1992.
    The BE-12 benchmark survey is conducted by the Bureau of Economic 
Analysis (BEA), U.S. Department of Commerce, under Section 3103(b) of 
the International Investment and Trade in Services Survey Act, which 
requires that a benchmark survey of foreign direct investment in the 
United States be conducted every five years. The last benchmark survey 
was conducted for 1992, and the proposed survey will be conducted for 
1997. The benchmark survey will obtain universe data on the financial 
and operating characteristics of, and on positions and transactions 
between, U.S. affiliates and their foreign parents. The data from the 
quinquennial survey will provide benchmarks for deriving current 
universe estimates of foreign direct investment from sample data 
collected in other BEA surveys in nonbenchmark years. The data are 
needed to measure the economic significance of foreign direct 
investment in the United States, measure changes in such investment, 
assess its impact on the U.S. economy, and based upon this assessment, 
make informed policy decisions regarding foreign direct investment in 
the United States. They are also required for compiling the balance of 
payments, international investment position, and national income and 
product accounts of the United States.
    Key changes proposed by BEA from the previous benchmark survey 
include reducing respondent burden, particularly for small companies, 
by: Increasing the exemption level for reporting on the survey to $3 
million (measured by the company's total assets, sales, or net income) 
from $1 million in the 1992 survey; increasing the exemption level at 
which reporting on the long form version of the survey is required from 
$50 million to $100 million; and requiring reporting companies with 
assets, sales, or net income between $3 million and $30 million to 
report only selected data items on the short form version. In addition, 
BEA proposes to base industry coding of reporting companies on the new 
North American Industry Classification System (NAICS) in place of the 
current system which is based on the U.S. Standard Industrial 
Classification system; to collect new information on affiliated 
services transactions by type of service; and to modify the detail 
collected on the composition of external financing of the reporting 
enterprise, on exports and imports of goods by product, and on the 
operations of foreign-owned businesses in individual States.

DATES: Comments on the proposed rules will receive consideration if 
submitted in writing on or before November 24, 1997.

ADDRESSES: Comments may be mailed to the Office of the Chief, 
International Investment Division (BE-50), Bureau of Economic Analysis, 
U.S. Department of Commerce, Washington, DC 20230, or hand delivered to 
Room M-100, 1441 L Street NW, Washington, DC 20005. Comments received 
will be available for public inspection in Room 7005, 1441 L Street NW, 
between 8:30 a.m. and 4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: R. David Belli, Chief, International 
Investment Division (BE-50), Bureau of Economic Analysis, U.S. 
Department of Commerce, Washington, DC 20230; phone (202) 606-9800.

SUPPLEMENTARY INFORMATION: These proposed rules set forth the reporting 
requirements for the BE-12, Benchmark Survey of Foreign Direct 
Investment in the United States--1997. This survey is to be conducted 
by the Bureau of Economic Analysis, U.S. Department of Commerce, under 
the International Investment and Trade in Services Survey Act (Pub. L. 
94-472, 90 Stat. 2059, 22 U.S.C. 3101-3108, as amended by Pub. L. 98-
573 and Pub. L. 101-533), hereinafter, ``the Act.'' Section 3103(b) of 
the Act, as amended, requires that ``With respect to foreign direct 
investment in the United States, the President shall conduct a 
benchmark survey covering year 1980, a benchmark survey covering year 
1987, and benchmark surveys covering every fifth year thereafter . . . 
In conducting surveys pursuant to this subsection, the President shall, 
among other things and to the extent he determines necessary and 
feasible--
    (1) Identify the location, nature, and magnitude of, and changes in 
the total investment by any parent in each of its affiliates and the 
financial transactions between any parent and each of its affiliates;
    (2) Obtain (A) information on the balance sheet of parents and 
affiliates and related financial data, (B) income statements, including 
the gross sales by primary line of business (with as much product line 
detail as necessary and feasible) of parents and affiliates in each 
country in which they have significant operations, and (C) related 
information regarding trade, including trade in both goods and 
services, between a parent and each of its affiliates and between each 
parent or affiliate and any other person;

[[Page 52516]]

    (3) Collect employment data showing both the number of United 
States and foreign employees of each parent and affiliate and the 
levels of compensation, by country, industry, and skill level;
    (4) Obtain information on tax payments by parents and affiliates by 
country; and
    (5) Determine, by industry and country, the total dollar amount of 
research and development expenditures by each parent and affiliate, 
payments or other compensation for the transfer of technology between 
parents and their affiliates, and payments or other compensation 
received by parents or affiliates from the transfer of technology to 
other persons.''
    The responsibility for conducting benchmark surveys of foreign 
direct investment in the United States has been delegated to the 
Secretary of Commerce, who as redelegated it to BEA.
    The benchmark surveys are BEA's censuses, intended to cover the 
universe of foreign direct investment in the United States in value 
terms. Foreign direct investment in the United States is defined as the 
ownership or control, directly or indirectly, by one foreign person of 
10 percent or more of the voting securities of an incorporated U.S. 
business enterprise or an equivalent interest in an unincorporated U.S. 
business enterprise, including a branch.
    The purpose of the benchmark survey is to obtain data on the 
amount, types, and financial and operating characteristics of foreign 
direct investment in the United States.
    The data from the survey will be used to measure the economic 
significance of such investment and to analyze its effects on the U.S. 
economy. They will also be used in formulating, and assessing the 
impact of, U.S. policy on foreign direct investment.
    They will provide benchmarks for deriving current universe 
estimates of direct investment from sample data collected in other BEA 
surveys. In particular, they will serve as benchmarks for the quarterly 
direct investment estimates included in the U.S. international 
transactions and national income and product accounts, and for annual 
estimates of the foreign direct investment position in the United 
States at book value and of the operations of the U.S. affiliates of 
foreign companies.
    The benchmark surveys are also the most comprehensive of BEA's 
surveys in terms of subject matter in order that they obtain the 
detailed information on foreign direct investment needed for policy 
purposes. As specified in the Act, policy areas of particular interest 
include, among other things, trade in both goods and services, 
employment and employee compensation, taxes, and technology.
    As proposed, the survey will consist of an instruction booklet, an 
industry coding booklet, a claim for not filing the BE-12, and the 
following report forms:
    1. Form BE-12(LF) (Long Form) for reporting by nonbank U.S. 
affiliates with assets, sales, or net income of more than $100 million;
    2. Form BE-12(SF) (Short Form) for reporting by nonbank U.S. 
affiliates with assets, sales, or net income of more than $3 million, 
but not more than $100 million;
    3. Form BE-12 Bank for reporting by U.S. affiliates that are banks 
with assets, sales, or net income of more than $3 million.
    Although the proposed survey is intended to cover the universe of 
foreign direct investment in the United States, in order to minimize 
the reporting burden, U.S. affiliates with assets, sales, and net 
income each equal to or less than $3 million are exempt from reporting 
on Forms BE-12(LF), BE-12(SF), and BE-12 Bank, but are required to 
file, on Form BE-12(X), a claim for exemption from filing in the 
benchmark survey.
    In designing this survey, BEA solicited comments from an extensive 
number of representatives of both data users and survey respondents. 
BEA held a meeting with interagency data users on May 2, 1997 to 
solicit views on the proposed benchmark survey. It solicited and 
received input from several nongovernment data users. BEA also 
solicited comments from respondents by sending a packet with forms and 
proposed changes to 13 large companies that are current respondents to 
BEA surveys. The proposed draft incorporates BEA's responses to 
comments received from users and respondents. In reaching decisions on 
what questions to include in the survey, BEA considered the 
Government's need for the data, the burden imposed on respondents, the 
quality of the likely responses (e.g., whether the data are readily 
available on the respondents' books), and its experience in previous 
benchmark surveys.
    Key changes proposed by BEA from the previous benchmark survey 
include reducing respondent burden, particularly for small companies, 
by: (1) Increasing the exemption level for reporting on the survey to 
$3 million (measured by the company's total assets, sales, or net 
income) from $1 million in the 1992 survey; (2) increasing the 
exemption level at which reporting on Form BE-12(LF) (Long Form) is 
required from $50 million to $100 million; and (3) requiring reporting 
companies with assets, sales, or net income between $3 million and $30 
million to report only selected data items on Form BE-12(SF) (Short 
Form). In addition, BEA proposes to base industry coding of reporting 
companies on the new North American Industry Classification System 
(NAICS) in place of the current system which is based on the U.S. 
Standard Industrial Classification system; to collect new information 
on affiliated services transactions by type of service; and to modify 
the detail collected on the composition of external financing of the 
reporting enterprise, on exports and imports of goods by product, and 
on the operations of foreign-owned businesses in individual States.
    A copy of the proposed survey forms may be obtained from the Direct 
Investment in the United States Branch, International Investment 
Division, BE-49(A), Bureau of Economic Analysis, U.S. Department of 
Commerce, Washington, DC 20230; phone (202) 606-5577.

Executive Order 12612

    These proposed rules do not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism 
assessment under E.O. 12612.

Executive Order 12866

    These proposed rules have been determined to be not significant for 
purposes of E.O. 12866.

Paperwork Reduction Act

    These proposed rules contain a collection of information 
requirement subject to the Paperwork Reduction Act. The collection of 
information requirement contained in the proposed rule has been 
submitted to the Office of Management and Budget for review under 
section 3507 of the Paperwork Reduction Act.
    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 Office of Management and Budget Control 
Number, such a Control Number (0608-0042) has been displayed.
    Public reporting burden for this collection of information is 
estimated to vary from 1 to 715 hours per response, with an average of 
22 hours per response, including time for reviewing instructions, 
searching existing data

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sources, gathering and maintaining the data needed, and completing and 
reviewing the collection of information.
    Comments are requested concerning: (a) Whether the proposed 
collection of information is necessary for the proper performance 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; and the Office of Management and 
Budget, O.I.R.A., Paperwork Reduction Project 0608-0042, Washington, DC 
20503.

Regulatory Flexibility Act

    The Assistant General Counsel for Legislation and Regulation, 
Department of Commerce, has certified to the Chief Counsel for 
Advocacy, Small Business Administration, under 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. Most small businesses are not 
foreign owned, and many that are will not be required to report in the 
benchmark survey because their assets, sales, and net income are each 
equal to or less than the $3 million exemption level below which 
reporting is not required. Also, under these proposed rules, companies 
with assets, sales, or net income above $3 million, but not above $100 
million, would report on the abbreviated BE-12 short form, rather than 
on the BE-12 long form. In addition companies with assets, sales, or 
net income between $3 million and $30 million will report only selected 
data items on the BE-12 short form. These provisions are intended to 
significantly reduce the reporting burden on smaller companies.

List of Subjects in 15 CFR Part 806

    Balance of payments, Economic statistics, Foreign investments in 
the United States, Reporting and recordkeeping requirements.
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; and E.O. 11961 (3 
CFR, 1977 Comp., p. 86), as amended by E.O. 12013 (3 CFR, 1977 
Comp., p. 147), E.O. 12318 (3 CFR, 1981 Comp., p. 173), and E.O. 
12518 (3 CFR, 1985 Comp., p. 348).

    2. Section 806.17 is revised to read as follows:


Sec. 806.17  Rules and regulations for BE-12, Benchmark Survey of 
Foreign Direct Investment in the United States--1997

    A BE-12, Benchmark Survey of Foreign Direct Investment in the 
United States will be conducted covering 1997. All legal authorities, 
provisions, definitions, and requirements contained in Secs. 806.1 
through 806.13 and Sec. 806.15 (a) through (g) are applicable to this 
survey. Specific additional rules and regulations for the BE-12 survey 
are given in the this section.
    (a) Response required. A response is required from persons subject 
to the reporting requirements of the BE-12, Benchmark Survey of Foreign 
Direct Investment in the United States--1997, contained in this 
section, whether or not they are contacted by BEA. Also, a person, or 
their agent, contacted by BEA concerning their being subject to 
reporting, either by sending them a report form or by written inquiry, 
must respond in writing pursuant to Sec. 806.4. This may be 
accomplished by completing and returning either Form BE-12(X) within 30 
days of its receipt if Form BE-12(LF), Form BE-12(SF), or Form BE-12 
Bank do not apply, or by completing and returning Form BE-12(LF), Form 
BE-12(SF), or Form BE-12 Bank, whichever is applicable, by may 31, 
1998.
    (b) Who must report. A BE-12 report is required for each U.S. 
affiliate, i.e., for each U.S. business enterprise in which a foreign 
person owned or controlled, directly or indirectly, 10 percent or more 
of the voting securities if an incorporated U.S. business enterprise, 
or an equivalent interest if an unincorporated U.S. business 
enterprise, at the end of the business enterprise's 1997 fiscal year. A 
report is required even though the foreign person's ownership interest 
in the U.S. business enterprise may have been established or acquired 
during the reporting period. Beneficial, not record, ownership is the 
basis of the reporting criteria.
    (c) Forms to be filed. (2) Form BE-12(LF)--Benchmark Survey of 
Foreign Direct Investment in the United States--1997 (Long Form) must 
be completed and filed by May 31, 1998, by each U.S. business 
enterprise that was a U.S. affiliate of a foreign person at the end of 
its 1997 fiscal year; if:
    (i) It is not a bank, and
    (ii) On a fully consolidated, or, in the case of real estate 
investment, an aggregated basis, one or more of the following three 
items for the U.S. affiliate (not just the foreign parent's share) 
exceeded $100 million (positive or negative) at the end of, or for, its 
1997 fiscal year:
    (A) Total assets (do not net out liabilities);
    (B) Sales or gross operating revenues, excluding sales taxes; or
    (C) Net income after provision for U.S. income taxes.
    (2) Form BE-12(SF)--Benchmark Survey of Foreign Direct Investment 
in the United States--1997 (Short Form) must be completed and filed by 
May 31, 1998, by each U.S. business enterprise that was a U.S. 
affiliate of a foreign person at the end of its 1997 fiscal year, if:
    (i) It is not a bank, and
    (ii) On a fully consolidated, or, in the case of real estate 
investments, an aggregated basis, one or more of the following three 
items for the U.S. affiliate (not just the foreign parent's share) 
exceeded $3 million, but no one item exceeded $100 million (positive or 
negative) at the end of, or for, its 1997 fiscal year.
    (A) Total assets (do not net out liabilities);
    (B) Sales or gross operating revenues, excluding sales taxes; or
    (C) Net income after provision for U.S. income taxes.
    (3) Form BE-12 Bank--Benchmark Survey of Foreign Direct Investment 
in the United States--1997 BANK must be completed and filed by May 31, 
1998, by each U.S. business enterprise that was a U.S. affiliate of a 
foreign person at the end of its 1997 fiscal year, if:
    (i) The U.S. affiliate is in ``banking'', which, for purposes of 
the BE-12 survey, covers businesses enterprises engaged in deposit 
banking or closely related functions, including commercial banks, Edge 
Act corporations engaged in international or foreign banking, U.S. 
branches and agencies of foreign banks whether or not they accept 
domestic deposits, savings and loans, savings banks, and bank holding 
companies, i.e., holding companies for which over 50 percent of their 
total income is from banks which they hold, and
    (ii) On a fully consolidated basis, one or more of the following 
three items for the U.S. affiliate (not the foreign parent's share) 
exceeded $3 million

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(positive or negative) at the end of, or for, its 1997 fiscal year:
    (A) Total assets (do not net out liabilities);
    (B) Sales or gross operating revenues, excluding sales taxes; or
    (C) Net income after provision for U.S. income taxes.
    (4) Form BE-12(X)--Benchmark Survey of Foreign Direct Investment in 
the United States--1997, Claim for Exemption from Filing BE-12(LF), BE-
12(SF), and BE-12 Bank must be completed and filed within 30 days of 
the date it was received, or by May 31, 1998, whichever is sooner, by:
    (i) Each U.S. business enterprise that was a U.S. affiliate of a 
foreign person at the end of its 1997 fiscal year (whether or not the 
U.S. affiliate, or its agent, is contacted by BEA concerning its being 
subject to reporting in the 1997 benchmark survey), but is exempt from 
filing Form BE-12(LF), Form BE-12 (SF), and Form BE-12 Bank; and
    (ii) Each U.S. business enterprise, or its agent, that is 
contacted, in writing, by BEA concerning its being subject to reporting 
in the 1997 benchmark survey but that is not otherwise required to file 
the Form BE-12(LF), Form BE-12(SF), or Form BE-12 Bank.
    (d) Aggregation of real estate investments. All real estate 
investments of a foreign person must be aggregated for the purpose of 
applying the reporting criteria. A single report form must be filed to 
report the aggregate holdings, unless written permission has been 
received from BEA to do otherwise. Those holdings not aggregated must 
be reported separately.
    (e) Exemption. (1) A U.S. affiliate as consolidated, or aggregated 
in the case of real estate investments, is not required to file a Form 
BE-12(LF), BE-12(SF), or Form BE-12 Bank if each of the following three 
items for the U.S. affiliate (not just the foreign parent's share) did 
not exceed $3 million (positive or negative) at the end of, or for, its 
1997 fiscal year:
    (i) Total assets (do not net out liabilities);
    (ii) Sales or gross operating revenues, excluding sales taxes; and
    (iii) Net income after provision for U.S. income taxes.
    (2) If a U.S. business enterprise was a U.S. affiliate at the end 
of its 1997 fiscal year but is exempt from filing a completed Form BE-
12(LF), BE-12(SF), or Form BE-12 Bank, it must nevertheless file a 
completed and certified Form BE-12(X).
    (f) Due date. A fully completed and certified Form BE-12(LF), Form 
BE-12(SF), or BE-12 Bank is due to be filed with BEA not later than May 
31, 1998. A fully completed and certified Form BE-12(X) is due to be 
filed with BEA within 30 days of the date it was received, or by May 
31, 1998, whichever is sooner.

[FR Doc. 97-26658 Filed 10-07-97; 8:45 am]
BILLING CODE 3510-06-M