Foreign Trade Statistics Regulations; Reporting the Value of Foreign Military Sales Shipments

DEPARTMENT OF COMMERCE

Bureau of the Census

15 CFR Part 30

[Docket No. 980331081-8171-02]

RIN 0607-AA22

Foreign Trade Statistics Regulations; Reporting the Value of

Foreign Military Sales Shipments

AGENCY: Bureau of the Census, Commerce.

ACTION: Final rule.

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SUMMARY: The Bureau of the Census (Census Bureau) is amending the

Foreign Trade Statistics Regulations (FTSR) by adding a section

requiring exporters or their designated agents to include a foreign

military sales indicator code on the Shipper's Export Declaration (SED)

Form, Automated Export System (AES) Record Layout, and Automated Export

Reporting Program (AERP) Record Layout. This will apply whenever a

commercial exporter is shipping goods or reporting the repair of

military equipment under provisions of the Foreign Military Sales (FMS)

program. The Census Bureau is taking this action to assist the Bureau

of Economic Analysis (BEA), Department of Commerce, in improving the

accuracy and reliability of data collected on the value of exports made

under the FMS program. Exports under the FMS program are a component of

the U.S. balance of payments accounts and of the U.S. Gross Domestic

Product (GDP). The Census Bureau is also taking this action to assist

both the Census Bureau and BEA in improving the accuracy and

reliability of estimates presented in the Department of Commerce's

monthly release ``U.S. International Trade in Goods and Services.'' The

BEA has reviewed and approved this proposed rulemaking. The Department

of Treasury concurs with the provisions contained in this final rule.

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DATES: Effective: September 1, 1998. Compliance date: Electronic filers

will have until November 1, 1998, to implement program changes to meet

this requirement.

FOR FURTHER INFORMATION CONTACT: C. Harvey Monk, Jr., Chief, Foreign

Trade Division, Bureau of the Census, Room 2104, Federal Building 3,

Washington, D.C. 20233-6700, by telephone on (301) 457-2255 or by fax

on (301) 457-2645.

SUPPLEMENTARY INFORMATION:

Background

The FMS program is authorized under the provisions of the Arms

Export Control Act of 1976 (Pub. L. 90-629, as amended) and predecessor

legislation. Under this program, goods and services are transferred

directly to foreign governments and international organizations by the

U.S. Department of Defense (DOD). The delivery is recorded by the DOD

at the time ownership is transferred to the foreign government or

international organization. This recording is consistent with balance

of payments accounting principles. The transfer may be made abroad, in

the United States for shipment abroad, or for use in the United States.

In the latter case, although the goods physically remain in the United

States (for example, equipment to train foreign personnel), ownership

is transferred to a foreign government. Transfers also may be made from

stocks at U.S. military installations abroad. The SEDs are not required

for FMS transactions by DOD agencies; SEDs are required by commercial

exporters, but these SEDs do not separately identify FMS transactions.

Program Requirements

The DOD submits quarterly reports to the BEA under provisions of

the Office of Management and Budget's (OMB) Statistical Policy

Directive No. 19, ``Reports of the Department of Commerce on

International Transactions.'' These reports contain details of FMS

deliveries by broad product category, by country of destination, and by

military agency (Army, Navy, Air Force, and other DOD agencies). The

reports include deliveries carried out by both DOD and commercial

exporters. The BEA prepares estimates of FMS deliveries based on these

reports for the quarterly balance of payments accounts.

The DOD also submits monthly reports to the Census Bureau that

contain detailed statistics on military assistance (Foreign Aid/Grant

Aid) shipments made from the United States by the DOD and shipments

made under the FMS program by the military agencies. These monthly

reports are furnished to the Census Bureau in lieu of the SED in order

to facilitate shipments of material under Grant Aid and FMS auspices.

However, these reports do not cover FMS deliveries by commercial

exporters, which comprise a significant share of FMS deliveries.

In order to reconcile the two sets of data provided by DOD, the

Census Bureau is adding an FMS indicator code to the SEDs and the

electronic transmissions required from commercial exporters. The

addition of this indicator code will assure more accurate

identification of FMS transactions in the goods data reported to the

Census Bureau and will enable the BEA to make a more accurate estimate

of this class of FMS transactions when it removes them from the goods

data to avoid counting these transactions twice when it compiles the

balance of payments accounts. An FMS indicator code on the SEDs and

electronic transmissions from commercial exporters will permit the BEA

and the Census Bureau to improve the accuracy and reliability of its

balance of payments and GDP estimates, as well as the estimates

published in the ``U.S. International Trade in Goods and Services''

release.

The Census Bureau is amending Section 30.7(p) of the FTSR to add

paragraph (5) requiring commercial exporters to identify those exports

that represent FMS deliveries with an ``M'' indicator code in Item (16)

on Commerce Form 7525-V and in Item (23) on Commerce Form 7525-V-ALT

(Intermodal) on the paper SEDs, with an ``FS'' Export Information Code

on the Commodity Line Item Description (CL1) record on the AES record

layout, and with a ``3'' indicator code in field 2 (Type) of the AERP

record layout for participants of the AERP.

Response to Comments

The Census Bureau published a Notice of Proposed Rulemaking and

Request for Comments in the Federal Register (63 FR 18344) on April 15,

1998. The Bureau of the Census received three letters commenting on the

proposed rule. All of the comments received have been addressed and

resolved by the Census Bureau. As a result of the comments, one

revision was made to the final rule to clarify that the indicator code

also applies to FMS shipments financed under the Foreign Military

Finance (FMF) Program.

Executive Orders

This rule has been determined to be not significant for purposes of

Executive Order 12866. This rule does not contain policies with

federalism implications sufficient to warrant preparation of a

federalism assessment under Executive Order 12612.

Paperwork Reduction Act

Notwithstanding any other provisions 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 (PRA) unless that collection of

information displays a currently valid OMB control number.

This rule covers collections of information subject to the

provisions of the PRA, which are cleared by the OMB under OMB control

number 0607-0152.

This rule will not impact the current response burden requirements

as approved under OMB control number 0607-0152 under provisions of the

PRA of 1995, Public Law 104-13.

List of Subjects in 15 CFR Part 30

Economic statistics, Foreign trade, Exports, Reporting and

recordkeeping requirements.

For the reasons set out in the preamble, Part 30 is amended as

follows:

PART 30--FOREIGN TRADE STATISTICS

1. The authority citation for 15 CFR part 30 continues to read as

follows:

Authority: 5 U.S.C. 301; 13 U.S.C. 301-307; Reorganization Plan

No. 5 of 1950 (3 CFR 1949-1953 Comp., 1004); Department of Commerce

Organization Order No. 35-2A. August 4, 1975, 40 CFR 42765.

Subpart A--General Requirements--Exporter

2. Section 30.7 is amended by adding paragraph (p)(5) to read as

follows:

Sec. 30.7 Information required on Shipper's Export Declarations.

* * * * *

(p) * * *

(5) Foreign Military Sales (FMS) indicator. For any export that

represents the delivery of goods or the repair of military equipment

under provisions of the FMS program (including those financed under the

Foreign Military Finance (FMF) Program), an ``M'' indicator code should

be included in Item (16) on Commerce Form 7525-V and in Item (23) on

Commerce Form 7525-V-ALT (Intermodal) of the paper SED, with an ``FS''

Export Information Code on the Commodity Line Item Description (CL1)

field of the Automated Export System (AES) record layout, and a ``3''

indicator code in field

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2 (Type) of the Automated Export Reporting Program (AERP) record

layout. This indicator code should be used in lieu of the domestic (D)

or foreign (F) indicator code required in those fields on the SED Form,

the AES record, and the AERP record. The FMS indicator code will serve

to identify more accurately that segment of U.S. exports that represent

FMS deliveries in the U.S. export statistics.

* * * * *

Dated: July 16, 1998.

Bradford R. Huther,

Deputy Director, Bureau of the Census.

[FR Doc. 98-20616 Filed 7-31-98; 8:45 am]

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