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. 980331081-8081-01]

RIN 0607-AA22

Foreign Trade Statistics Regulations; Reporting the Value of

Foreign Military Sales Shipments

AGENCY: Bureau of the Census, Commerce.

ACTION: Notice of proposed rulemaking and request for comments.

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SUMMARY: The Bureau of the Census (Census Bureau) proposes 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 would 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 also is 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 rule.

DATES: Written comments must be submitted on or before May 15, 1998.

ADDRESSES: Direct all written comments on this proposed rulemaking to

the Acting Director, Bureau of the Census, Room 2049, Federal Building

3, Washington, D.C. 20233.

FOR FURTHER INFORMATION CONTACT: Requests for additional information

should be directed to 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 (Public Law 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 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 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

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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 proposing to add 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 enable 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 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 proposing to amend 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.

Rulemaking Requirements

This rule is exempt from all requirements of Section 553 of the

Administrative Procedure Act because it deals with a foreign affairs

function (5 U.S.C. (A)(1)). However, this rule is being published as a

proposed rule, with an opportunity for public comment because of the

importance of the issues raised by this rulemaking.

Regulatory Flexibility Act

Because a notice of proposed rulemaking is not required by 5 U.S.C.

553 or any other law, a Regulatory Flexibility Analysis is not required

and has not been prepared (5 U.S.C. 603(a)).

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 reporting-hour burden

requirements as approved under OMB control number 0607-0152 under

provisions of the Paperwork Reduction Act of 1995, Public Law 104-13.

List of Subjects in 15 CFR Part 30

Economic statistics. Foreign trade. Exports. Reporting and record

keeping requirements.

For the reasons set out in the preamble, it is proposed that part

30 be amended as follows:

PART 30--FOREIGN TRADE STATISTICS REGULATIONS

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 Camp., 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 proposed to be 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, 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 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: March 25, 1998.

James F. Holmes,

Acting Director, Bureau of the Census.

[FR Doc. 98-9964 Filed 4-14-98; 8:45 am]

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