Foreign trade statistics: Foreign military sales shipments; value reporting requirement,

[Federal Register: August 3, 1998 (Volume 63, Number 148)]

[Rules and Regulations]

[Page 41186-41188]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr03au98-6]

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.

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. 98-20616Filed7-31-98; 8:45 am]

   BILLING CODE 3510-07-U