babel: cli and register: sub-packages are not compiled, .babelrc ignored

Bug Report

Current Behavior Using the following directory structure:

package.json
server.js
components/cmp1/package.json
components/cmp1/.babelrc
components/cmp1/core.js

Babel CLI and babel register ignore the sub-package in components/cmp1. For some reason, the only way to get it to work is if the contents of .babelrc are passed directly to @babel/register. Below you will find the code, but first the detailed errors and outputs.

It is not possible to compile core.js from the root directory using the CLI:

$ babel components/cmp1/core.js
import path from 'path';
console.log(path.basename("test.js"));

This should have transformed the import statement.

Neither is it possible to require the file using @babel/register if you don’t pass any options to it:

$ npm start
> babel-bug@ start /babel-bug
> node server.js

/babel-bug/components/cmp1/core.js:1
(function (exports, require, module, __filename, __dirname) { import path from 'path';
                                                                     ^^^^

SyntaxError: Unexpected identifier
    at new Script (vm.js:73:7)
    at createScript (vm.js:245:10)
    at Object.runInThisContext (vm.js:297:10)
    at Module._compile (internal/modules/cjs/loader.js:657:28)
    at Module._compile (/babel-bug/node_modules/pirates/lib/index.js:83:24)
    at Module._extensions..js (internal/modules/cjs/loader.js:700:10)
    at Object.newLoader [as .js] (/babel-bug/node_modules/pirates/lib/index.js:88:7)
    at Module.load (internal/modules/cjs/loader.js:599:32)
    at tryModuleLoad (internal/modules/cjs/loader.js:538:12)
    at Function.Module._load (internal/modules/cjs/loader.js:530:3)
npm ERR! code ELIFECYCLE
npm ERR! errno 1
npm ERR! babel-bug@ start: `node server.js`
npm ERR! Exit status 1
npm ERR! 
npm ERR! Failed at the babel-bug@ start script.
npm ERR! This is probably not a problem with npm. There is likely additional logging output above.

npm ERR! A complete log of this run can be found in:
npm ERR!     /.npm/_logs/2018-08-27T11_02_54_837Z-debug.log

Input Code

server.js:

require('@babel/register')
// ({        // BUG: without options, core.js is not transformed! Even thought there is a .babelrc
//     "presets": [
//       [
//         "@babel/preset-env",
//         {
//           "targets": {
//             "node": "current",
//             "browsers": "> 0.5%, not dead"
//           }
//         }
//       ]
//     ]
// });

require('./components/cmp1/core.js');

components/cmp1/core.js:

import path from 'path';
console.log(path.basename("test.js"));

Expected behavior/code I would expect the following:

• @babel/register looks into the closest .babelrc and/or package.json and uses that config
• babel CLI works from the root directory and compiles the given file(s) according to the nearest config

After I cd components/cmp1, babel CLI correctly complains about multiple configuration files (package.json and .babelrc), so I would also expect it to do the same when called from the root, but it doesn’t, it just ignores both.

Babel Configuration (.babelrc, package.json, cli command)

package.json

{
  "name": "babel-bug",
  "scripts": {
    "start": "node server.js"
  },
  "devDependencies": {
    "@babel/core": "7.0.0-rc.3",
    "@babel/preset-env": "7.0.0-rc.3",
    "@babel/register": "7.0.0-rc.3"
  },
  "babel": {
    "presets": [
      [
        "@babel/preset-env",
        {
          "targets": {
            "node": "current",
            "browsers": "> 0.5%, not dead"
          }
        }
      ]
    ]
  }
}

components/cmp1/package.json

{
  "name": "component",
  "devDependencies": {
    "@babel/core": "7.0.0-rc.3",
    "@babel/register": "7.0.0-rc.3",
    "@babel/preset-env": "7.0.0-rc.3"
  },
  "babel": {
    "presets": [
      [
        "@babel/preset-env",
        {
          "targets": {
            "node": "current",
            "browsers": "> 0.5%, not dead"
          }
        }
      ]
    ]
  }
}

components/cmp1/.babelrc

{
    "presets": [
      [
        "@babel/preset-env",
        {
          "targets": {
            "node": "current",
            "browsers": "> 0.5%, not dead"
          }
        }
      ]
    ]
}

Environment

• Babel version(s): v7.0.0-rc.3
• Node/npm version: Node 10.9/npm 6.2
• OS: Linux
• How you are using Babel: cli, register