Direct Investment Surveys: Change in Reporting Requirements for the Annual Survey of U.S. Direct Investment Abroad (BE-11)

DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

RIN 0691-AA25

Direct Investment Surveys: Change in Reporting Requirements for

the Annual Survey of U.S. Direct Investment Abroad (BE-11)

agency: Bureau of Economic Analysis, Commerce.

action: Final rule.

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summary: These final rules revise the reporting requirements for the

BE-11, Annual Survey of U.S. Direct Investment Abroad. The BE-11 is a

mandatory survey of U.S. direct investment abroad conducted by the

Bureau of Economic Analysis (BEA), U.S. Department of Commerce. The

final rules will: Raise the overall exemption level for the survey, and

the exemption level for reporting individual nonbank foreign affiliates

on Forms BE-11B(LF) and BE-11C, from $15 million to $20 million;

institute a short form, Form BE-11B(SF), for U.S. companies to report

their majority-owned nonbank foreign affiliates with assets, sales, and

net income in the $20 to $50 million range; and for fiscal year 1997

only, require the largest nonbank foreign affiliates owned between 10

and 20 percent to reported on Form BE-11C, along with affiliates owned

between 20 and 50 percent. In all years, nonbank foreign affiliates

owned between 20 and 50 percent by all U.S. Reporters (U.S. parent

companies) of the affiliate combined must be reported on Form BE-11C if

their assets, sales, or net income exceed $20 million. For fiscal year

1997 only, Form BE-11C must also be filed for nonbank foreign

affiliates owned, directly and/or indirectly, at least 10 percent by

one U.S. Reporter (i.e., U.S. parent company), but less than 20 percent

by all U.S. Reporters of the affiliate combined, if the affiliate's

total assets, sales, or net income exceed $100 million.

effective date: These rules will be effective November 24, 1995.

for further information contact: Betty L. Barker, Chief, International

Investment Division (BE-50), Bureau of Economic Analysis, U.S.

Department of Commerce, Washington, DC 20230; phone (202) 606-9800.

supplementary information: In the August 1, 1995 Federal Register,

Volume 60, No. 147, 60 FR 39128, BEA published a notice of proposed

rulemaking to revise the reporting requirements for the BE-11, Annual

Survey of U.S. Direct Investment Abroad. No comments on the proposed

rules were received. Thus, these final rules are the same as the

proposed rules.

The BE-11 annual survey is part of BEA's regular data collection

program for U.S. direct investment abroad. The survey is mandatory and

is conducted pursuant to the International Investment and Trade in

Services Survey Act (Pub. L. 94-472, 90 Stat. 2059, 22 U.S.C. 3101-

3108, as amended).

The BE-11 survey consists of an instruction booklet, a claim for

not filing the BE-11, and the following report forms:

1. Form BE-11A for reporting by a U.S. Reporter that is not a bank;

2. Form BE-11B(LF) (Long Form) for reporting majority-owned nonbank

foreign affiliates with assets, sales, or net income greater than $50

million (positive or negative);

3. Form BE-11B(SF) (Short Form) for reporting majority-owned

nonbank foreign affiliates with assets, sales, or net income greater

than $20 million, but not greater than $50 million (positive or

negative); and

4. Form BE-11C for reporting minority-owned nonbank foreign

affiliates.

A Form BE-11A must be filed by each nonbank U.S. person having a

foreign affiliate reportable on Form BE-11B(LF), BE-11B(SF), or BE-11C.

Under these final rules, the exemption level for reporting individual

foreign affiliates on Form BE-11B(LF) or (SF) or BE-11C--and, thus, for

determining whether a U.S. person has to file Form BE-11A--is raised

from $15 million to $20 million. The exemption level is the level of a

foreign affiliate's assets, sales, or net income below which a Form BE-

11B(LF) or (SF) or BE-11C is not required. Raising the exemption level

lowers the number of reports that otherwise must be filed, thus

reducing the reporting and processing burdens. The new exemption level

of $20 million is the same as that recently approved for the related

quarterly Form BE-577, Direct Transactions of U.S. Reporter With

Foreign Affiliate.

In addition to raising the exemption level, these final rules will

institute the BE-11B(SF) short form. Majority-owned nonbank foreign

affiliates for which assets, sales, or net income is greater than $20

million (positive or negative), but for which no one of these items is

greater than $50 million (positive or negative), will be required to be

reported on Form BE-11B(SF). The use of a short form means that, for

about 3,700 foreign affiliates, U.S. companies will now report

significantly fewer data items than on the last (1993) annual survey.

For fiscal year 1997 only, these final rules will require the

largest nonbank foreign affiliates owned between 10 and 20 percent to

be reported on Form BE-11C, along with affiliates owned between 20 and

50 percent. In all years, reporting on Form BE-11C is required if an

affiliate is owned between 20 and 50 percent by all U.S. Reporters

combined and if its assets, sales, or net income exceed $20 million.

Primarily to reduce reporting burden of the survey, affiliates owned

less than 20 percent do not have to be reported. However, U.S. direct

investment abroad is defined by law to include all foreign business

enterprises owned 10 (not 20) percent or more, directly or indirectly,

by a U.S. person. BEA conducts periodic benchmark surveys of U.S.

direct investment abroad (the BE-10), covering all foreign affiliates

owned 10 percent or more. A benchmark survey for the year 1994 is now

being conducted; the next survey will cover the year 1999. In order to

maintain reliable estimates of data for the universe of all foreign

affiliates in nonbenchmark years, reporting for the largest affiliates

owned between 10 and 20 percent is needed for at least one year between

benchmark surveys. Although the U.S. ownership percentages in these

affiliates are low, some of the affiliates are very large and have a

sizable impact on the estimates. Under these final rules, reporting of

Form BE-11(C) for nonbank foreign affiliates owned directly and/or

indirectly, at least 10 percent by one U.S. Reporter, but less than 20

percent

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by all U.S. Reporters of the affiliate combined, and for which assets,

sales, or net income exceed $100 million would be required for fiscal

year 1997 only.

These new rules will be effective with the survey covering fiscal

year 1995. The 1995 forms will be mailed out in March 1996 and will be

due May 31, 1996. The last BE-11 survey covered the year 1993. (A BE-11

survey is not conducted in a year, such as 1994, when a BE-10 benchmark

survey is conducted.)

Executive Order 12612

These final rules do not contain policies with Federalism

implications sufficient to warrant preparation of a Federalism

assessment under E.O. 12612.

Executive Order 12866

These final rules have been determined to be not significant for

purposes of E.O. 12866.

Paperwork Reduction

The collection of information in these final rules has been

approved by OMB (OMB No. 0608-0053).

Notwithstanding any other provision of law, no person is required

to respond to nor shall a 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 of information

displays a currently valid OMB Control Number.

The public reporting burden for a U.S. company for this collection

of information can range from 4 hours for the smallest and least

complex U.S. Reporter that has one affiliate, to approximately 3,000

hours for a large U.S. Reporter that has up to 150 affiliates with a

wide range of activities; the average burden per Reporter is 62 hours.

The estimated burden includes time for reviewing instructions,

searching existing data sources, gathering and maintaining the data

needed, and completing and reviewing the collection of information.

Comments from the public regarding the burden estimate or any other

aspect of this collection of information should be addressed to: Acting

Director, Bureau of Economic Analysis (BE-1), U.S. Department of

Commerce, Washington, DC 20230; and to the Office of Management and

Budget, Washington, DC 20503, Attention: Desk Officer for the

Department of Commerce (OMB Control No. 0608-0053).

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 the provisions of the

Regulatory Flexibility Act (5 U.S.C. 605(b)), that these final rules

will not have a significant economic impact on a substantial number of

small entities. The exemption level is set in terms of the size of a

U.S. company's foreign affiliates. Only if the affiliate's assets,

sales, or net income exceeds $20 million must it be reported. Usually,

the U.S. parent company (the one required to file the report) is many

times larger.

In addition, by raising the exemption level from $15 million to $20

million, U.S. parent companies will no longer have to report for

affiliates between $15 and $20 million. This change should reduce the

reporting burden on smaller U.S. businesses that own these affiliates.

Also, to minimize the reporting burden on smaller U.S. businesses,

majority-owned affiliates with assets, sales, and net income in the

range of $20 million to $50 million will be reported on the abbreviated

BE-11B(SF), or short form, rather than the BE-11B(LF), or long form.

List of Subjects in 15 CFR Part 806

Balance of payments, Economic statistics, Foreign investments in

United States, Reporting and recordkeeping requirements, United States

investments abroad.

J. Steven Landefeld,

Acting Director, Bureau of Economic Analysis.

For the reasons set forth in the preamble, 15 CFR Part 806 is

amended 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 806.14(f)(3) introductory text, (f)(3)(i), (f)(3)(ii),

(f)(e)(iii), (f)(3)(iv) (A) through (C), and (f)(3)(v) are 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 Forms(s) BE-11B(LF), BE-11B(SF),

and/or BE-11C, is required of each nonbank U.S. Reporter who, at the

end of the Reporter's fiscal year, had a nonbank foreign affiliate

reportable on Form BE-11B(LF), BE-11B(SF), 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), BE-11B(SF), or BE-11C.

(ii) Form BE-11B (LF) or (SF) (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 $50 million (positive or

negative) at the end of, or for, the affiliate's fiscal year.

(B) A 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 $20 million (positive or negative), but

for which no one of these items was greater than $50 million (positive

or negative), at the end of, or for, the affiliate's fiscal year.

(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 $20 million (positive or negative) at the

end of, or for, the affiliate's fiscal year. In addition, for the

report covering fiscal year 1997 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) * * *

(A) None of its exemption level items is above $20 million.

(B) For fiscal year 1997 only, it is less than 20 percent owned,

directly or indirectly, by all U.S. Reporters of the affiliate combined

and one of its

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exemption level items exceeds $100 million.

(C) For fiscal years other than 1997, it is less than 20 percent

owned, directly or indirectly, by all U.S. Reporters of the affiliate

combined.

* * * * *

(v) Notwithstanding paragraph (f)(3)(iv) of this section, a Form

BE-11B(LF), BE-11B(SF), or BE-11C must be filed for a foreign affiliate

of the U.S. Reporter than owns another nonexempt 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.

* * * * *

[FR Doc. 95-26327 Filed 10-24-95; 8:45 am]

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