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July 1 -- This proposed rule would amend regulations of the Department of Commerce's Bureau of Economic Analysis (BEA) to set forth the reporting requirements for the 2022 BE-12, Benchmark Survey of Foreign Direct Investment in the United States. The BE-12 survey is conducted every five years; the prior survey covered 2017. The benchmark survey covers the universe of foreign direct investment in the United States and is BEA's most detailed survey of such investment. For the 2022 BE-12 survey, BEA proposes changes in data items collected, the design of the survey forms, and the reporting requirements for the survey to satisfy changing data needs and to improve data quality and the effectiveness and efficiency of data collection. Comments on this proposed rule will receive consideration if submitted in writing on or before August 30, 2022.

The BE-12, Benchmark Survey of Foreign Direct Investment in the United States, is a mandatory survey and is conducted once every five years by BEA under the authority of the International Investment and Trade in Services Survey Act (22 U.S.C. 3101-3108), hereinafter, “the Act.” The data reported to BEA through this survey are confidential and may be used only for analytical and statistical purposes. A response is required from persons subject to the reporting requirements of the BE-12, whether or not they are contacted by BEA.

The BE-12 survey covers the universe of foreign direct investment in the United States in terms of value and is BEA's most detailed survey of such investment. Foreign direct investment in the United States is defined as the ownership or control, directly or indirectly, by one foreign person (foreign parent) 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 BE-12 survey is to obtain universe data on the financial and operating characteristics of U.S. affiliates and on positions and transactions between U.S. affiliates and their foreign parent groups (which are defined to include all foreign parents and foreign affiliates of foreign parents). These data are needed to measure the size and economic significance of foreign direct investment in the United States, measure changes in such investment, and assess its impact on the U.S. economy. Such data are generally found in enterprise-level accounting records of respondent companies. These data are used to derive current universe estimates of direct investment from sample data collected in other BEA surveys in non-benchmark years. In particular, they serve as benchmarks for the quarterly direct investment estimates included in the U.S. international transactions, international investment position, and national income and product accounts, and for annual estimates of the foreign direct investment position in the United States and of the activities of the U.S. affiliates of foreign companies. The BE-12 survey, as proposed, is expected to result in the filing of reports from approximately 26,400 U.S. affiliates.

This proposed rule would amend 15 CFR 801 to set forth the reporting requirements for the BE-12, Benchmark Survey of Foreign Direct Investment in the United States. The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520 (PRA).

The proposed changes would amend the regulations and the survey forms for the BE-12 benchmark survey. These amendments include changes in data items collected and the design of the survey forms. BEA proposes to add, delete, and modify some items on the BE-12 survey forms. Most of the additions are proposed in response to suggestions from data users and to provide more information about foreign direct investment in the United States. The following items would be added to, or modified on, the BE-12 survey:

(1) A question will be added to collect the city of each foreign parent and ultimate beneficial owner (UBO) on all forms. This will be used to validate the countries of foreign investors and provide additional information on the location of investors.

(2) The balance sheet and income statement sections on the BE-12A form will be modified to separately collect the investment in, and income from, (a) “unconsolidated U.S. affiliates” and (b) “foreign entities,” which were previously collected as a combined total. This will assist in ensuring complete coverage of unconsolidated U.S. affiliates and in better aligning the BE-12 survey data with other direct investment surveys.

(3) Supplemental sections A and B, which collect identification information on business enterprises owned by the U.S. affiliate, will be modified on all BE-12 forms to request more information on the reasons the U.S. business enterprises changed since the last report. This will include options for “newly acquired” or “newly established” if an enterprise is being reported on a supplement for the first time, and options to report U.S. business enterprises that had a name change, were sold, merged or liquidated. A follow-up question will be added requesting the date of the corporate change for new enterprises. This information will allow BEA to inform entities about potential reporting requirements on other surveys of foreign direct investment in the United States.

(4) Questions will be added on the BE-12A form to collect sales data for certain service types where there is no clear link between the industry of sales and the type of services supplied. Those service types are (1) intellectual property (IP) rights and (2) advertising. These questions will contribute to BEA's efforts to develop a more complete and consistent picture of the types of services supplied by U.S. companies worldwide.

(5) Questions will be added to collect sales data on the BE-12A form related to the provision of selected services generally recognized as prevalent in the digital economy. These selected services are (1) cloud computing and data storage and (2) digital intermediation services. In addition, checkboxes will be added to the BE-12A for respondents to identify the percentage of their sales of services delivered remotely, sales of services that were digitally ordered, and sales of goods that were digitally ordered, along with checkboxes to identify if this information was sourced from their accounting records or from recall/general knowledge. These questions will contribute to BEA's efforts to measure the digital economy.

BEA also proposes to eliminate the following items from the benchmark survey:

(1) Expensed petroleum and mining expenditures will be removed from the BE-12A form.

(2) Commercial property will be removed from the state schedule of the BE-12A and BE-12B forms. Respondents have been confused by this concept, which can vary by state or industry, and have indicated that the information may not be readily available from their records.

(3) Part III of the BE-12A and BE-12B forms, which collects information on investment and transactions between the U.S. affiliate and the affiliated foreign group will be scaled back to include only the following items:

Foreign parent ownership and classification information
A question on reverse investment
Intercompany debt balances for U.S. affiliates with less than $60 million in assets, sales, or net income

BEA will also modify the survey forms to improve question wording, layout, and instructions.

This proposed rule would amend 15 CFR part 801 by modifying § 801.10 to clarify the timing of this benchmark survey. The next BE-12 survey will apply to the 2022 fiscal reporting year, and will be conducted once every five years thereafter, for reporting years ending in 2 and 7.

Each time a benchmark survey is to be conducted, BEA will describe any proposed changes to the information collected through the survey (including the addition, deletion, and/or modification of existing questions and definitions) in a public notice and will solicit comments as part of the requirements of the Paperwork Reduction Act (PRA). Any changes to reporting requirements or significant expansions in scope of the surveys would be conducted by rulemaking.

BEA New Foreign Direct Investment in the US: https://www.bea.gov/data/intl-trade-investment/new-foreign-direct-investment-united-states
BE-12 proposed rule: https://www.federalregister.gov/d/2022-14100
BE-12 submission to OMB: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202206-0608-003 Click IC List for data collection instruments, View Supporting Statement for technical documentation.

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