Direct Investment Surveys: BE-12, Benchmark Survey of Foreign Direct Investment in the United States1997

Summary

These final rules revise 15 CFR 806.17 to set forth 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.

Full text

SUMMARY: These final rules revise 15 CFR 806.17 to set forth 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. 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 U.S. 
international transactions, input-output, and national income and 
product accounts, and for preparing estimates of the international 
investment position of the United States.
    Key changes 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, the survey bases 
industry coding of reporting companies on the new North American 
Industry Classification System (NAICS) in place of the previous system 
which was based on the U.S. Standard Industrial Classification system; 
it collects new information on affiliated services transactions by type 
of service; and it modifies 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.
    Forms for the 1997 benchmark survey are scheduled to be mailed out 
at the end of February 1998. Completed reports will be due to BEA on 
May 31, 1998.

EFFECTIVE DATE: These rules will be effective February 23, 1998.

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: In the October 8, 1997 Federal Register, 
Volume 62, No 195, pages 52515-52518, the Bureau of Economic Analysis 
published a notice of proposed rulemaking to revise 15 CFR 806.17 to 
set forth reporting requirements for the BE-12, Benchmark Survey of 
Foreign Direct Investment in the United States--1997. No comments on 
the proposed rule were received. Thus, this final rule is the same as 
the proposed rule.
    The benchmark 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 P.L. 98-573 and P.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;
    (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.
    Reporting in the survey is mandatory. The responsibility for 
conducting benchmark surveys of foreign direct investment in the United 
States has been delegated to the Secretary of Commerce, who has 
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, input-output, and natural income and product accounts, 
and for preparing estimates of the international investment position of 
the United States.
    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 
that should be addressed by the survey include, among other things, 
trade in both goods and services, employment and employee compensation, 
taxes, and technology.
    The survey consists of an instruction 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 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.
    Key changes 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 
Form BE-12(LF) (Long Form) 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 Form BE-12(SF) (Short Form). In addition, industry coding of 
reporting companies will be based on the new North American Industry 
Classification System (NAICS) in place of the system which is based on 
the U.S. Standard Industrial Classification system; new information 
will be collected on affiliated services transactions by type of 
service; and the detail collected on the composition of external 
financing of the reporting enterprise will be modified, along with 
exports and imports of goods by product, and the operations of foreign-
owned businesses in individual States.

Executive Order 12612

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

Executive Order 12866

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

Paperwork Reduction Act

    The collection of information required in these final rules has 
been approved by OMB (OMB No. 0608-0042).
    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 sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information.
    Send comments regarding this burden estimate or any other aspect of 
this collection of information, including suggestions for reducing this 
burden to: Director, Bureau of Economic Analysis (BE-1), U.S. 
Department of Commerce, Washington, DC 20230; and to 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 these rules 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 rules, companies with assets, sales, or net income above $3 
million, but not above $100 million, will 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.

    Dated: December 22, 1997.
J. Steven Landefeld,
Director, Bureau of Economic Analysis.

    For the reasons set forth in the preamble, BEA amends 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 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. (1) 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 business 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 (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. 98-1541 Filed 1-22-98; 8:45 am]
BILLING CODE 3510-06-M  

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