[Federal Register Volume 63, Number 72 (Wednesday, April 15, 1998)]
[Proposed Rules]
[Pages 18344-18345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9964]


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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

[[Page 18345]]

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]
BILLING CODE 3510-07-P