[Federal Register Volume 62, Number 2 (Friday, January 3, 1997)]
[Notices]
[Pages 386-391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-73]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
[A-588-823]
Professional Electric Cutting Tools From Japan; Final Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review.
-----------------------------------------------------------------------
SUMMARY: On September 4, 1996, the Department of Commerce (the
Department) published the preliminary results of its administrative
review of the antidumping duty order on professional electric cutting
tools (PECTs) from Japan. This review covers the period of July 1, 1994
through June 30, 1995.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have changed the results from those presented in the preliminary
results of review.
EFFECTIVE DATE: January 3, 1997.
FOR FURTHER INFORMATION CONTACT: Rebecca Trainor or Maureen Flannery,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 20230; telephone: (202) 482-4733.
Applicable Statutes and Regulations
Unless otherwise stated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations are to the
current regulations, as amended by the interim regulations published in
the Federal Register on May 11, 1995 (60 FR 25130).
SUPPLEMENTARY INFORMATION:
Background
On September 4, 1996, we published in the Federal Register (61 FR
46624) the preliminary results of administrative review of the
antidumping duty order on PECTs from Japan (58 FR 37461; July 12,
1993). We received case briefs from the respondent, Makita Corporation
and
[[Page 387]]
Makita U.S.A., Inc. (Makita) and the petitioner, Black and Decker
(U.S.), Inc. (Black & Decker) on October 18, 1996. Petitioner and
respondent submitted rebuttal briefs on October 24, 1996. We held a
public hearing on October 29, 1996. We are conducting this
administrative review in accordance with section 751 of the Act.
Scope of the Review
Imports covered by this review are shipments of PECTs from Japan.
PECTs may be assembled or unassembled, and corded or cordless.
The term ``electric'' encompasses electromechanical devices,
including tools with electronic variable speed features. The term
''assembled`` includes unfinished or incomplete articles, which have
the essential characteristics of the finished or complete tool. The
term ``unassembled'' means components which, when taken as a whole, can
be converted into the finished or unfinished or incomplete tool through
simple assembly operations (e.g., kits).
PECTs have blades or other cutting devices used for cutting wood,
metal, and other materials. PECTs include chop saws, circular saws, jig
saws, reciprocating saws, miter saws, portable bank saws, cut-off
machines, shears, nibblers, planers, routers, joiners, jointers, metal
cutting saws, and similar cutting tools.
The products subject to this order include all hand-held PECTs and
certain bench-top, hand-operated PECTs. Hand-operated tools are
designed so that only the functional or moving part is held and moved
by hand while in use, the whole being designed to rest on a table top,
bench, or other surface. Bench-top tools are small stationary tools
that can be mounted or placed on a table or bench. The are generally
distinguishable from other stationary tools by size and ease of
movement.
The scope of the PECT order includes only the following bench-top,
hand-operated tools: cut-off saws; PVC saws; chop saws; cut-off
machines, currently classifiable under subheading 8461 of the
Harmonized Tariff Schedule of the United States (HTSUS); all types of
miter saws, including slide compound miter saws and compound miter
saws, currently classifiable under subheading 8465 of the HTSUS; and
portable band saws with detachable bases, also currently classifiable
under subheading 8465 of the HTSUS.
This order does not include: professional sanding/grinding tools;
professional electric drilling/fastening tools; lawn and garden tools;
heat guns; paint and wallpaper strippers; and chain saws, currently
classifiable under subheading 8508 of the HTSUS.
Parts or components of PECTs when they are imported as kits, or as
accessories imported together with covered tools, are included within
the scope of this order.
``Corded'' and ``cordless'' PECTs are included within the scope of
this order. ``Corded'' PECTs, which are driven by electric current
passed through a power cord, are, for purposes of this order, defined
as power tools which have at least five of the following seven
characteristics:
1. The predominate use of ball, needle, or roller bearings (i.e., a
majority or greater number of the bearings in the tool are ball,
needle, or roller bearings;
2. Helical, spiral bevel, or worm gearing;
3. Rubber (or some equivalent material which meets UL's
specifications S or SJ) jacketed power supply cord with a length of 8
feet or more;
4. Power supply cord with a separate cord protector;
5. Externally accessible motor brushes;
6. The predominate use of heat treated transmission parts (i.e., a
majority or greater number of the transmission parts in the tool are
heat treated); and
7. The presence of more than one coil per slot armature.
If only six of the above seven characteristics are applicable to a
particular ``corded'' tool, then that tool must have at least four of
the six characteristics to be considered a ``corded'' PECT.
``Cordless'' PECTs, for the purposes of this order, consist of
those cordless electric power tools having a voltage greater than 7.2
volts and a battery recharge time of one hour or less.
PECTs are currently classifiable under the following subheadings of
the HTSUS: 8508.20.00.20, 8508.20.00.70, 8508.20.00.90, 8461.50.00.20,
8465.91.00.35, 85.80.00.55, 8508.80.00.65 and 8508.80.00.90. Although
the HTSUS subheading is provided for convenience and customs purposes,
the written description of the merchandise under review is dispositive.
This review covers one company and the period July 1, 1994 through
June 30, 1995.
Analysis of the Comments Received
Comment 1: Makita argues that the Department's usage of the term
``professional'' to define the scope of the subject merchandise is
inaccurate, and that power tools cannot be distinguished by the terms
``professional'' or ``non-professional.'' Makita claims that, in the
less-than-fair-value (LTFV) investigation, the Department used an
arbitrary and shifting set of physical characteristics, not recognized
by producers, consumers or end-users in the tool industry, in its
effort to create a generally-accepted definition of the subject
merchandise.
Petitioner argues that Makita submitted its views on the scope of
the order to the Department during the LTFV investigation, and that the
Department rejected Makita's argument that there is no distinction
between professional and consumer electric cutting tools. Petitioner
asserts that Makita has not submitted any valid grounds on which the
scope issue should be reopened. Furthermore, petitioner argues, the
Department should not reconsider this matter until the Court of
International Trade (CIT) has reached its decision on issues related to
the LTFV investigation.
Department's Position: Makita's argument that we should reconsider
the scope of the order is unpersuasive, as there is nothing on the
record of this review to suggest that our scope is incorrect. During
the LTFV investigation, we gave all parties an opportunity to present
their views concerning the scope. Makita appealed our determination of
the scope, among other issues concerning the LTFV investigation, to the
CIT. The CIT has not yet issued its determination on these matters, and
thus altering the scope at this time is unwarranted.
Comment 2: Makita argues that, in failing to use average-to-average
price comparisons in the calculation of the dumping margin, the
Department ignored the changes to the U.S. antidumping law pursuant to
the World Trade Organization's Agreement on Implementation of Article
VI of the General Agreement on Tariffs and Trade (``WTO Antidumping
Agreement'') and the Department's own practice. Makita states that,
prior to the WTO-mandated amendments to the antidumping law, the
Department had the discretion to use averaging in both investigations
and administrative reviews pursuant to 19 U.S.C. Sec. 1677f-1(a)(1).
With the amendments to the law, however, Makita argues that the
Department is now required to use either average-to-average or
transaction-to-transaction price comparisons in investigations, with a
preference for the average-to-average approach.
Although the new law does not specifically provide for the use of
average-to-average price comparisons during administrative reviews,
Makita argues that the Department is required
[[Page 388]]
to use this methodology in reviews for the following reasons: (1) the
new law does not specifically except administrative reviews from the
requirement of using average-to-average price comparisons; (2)
administrative reviews and investigations are identical proceedings,
different in name only; and (3) there is no justification or logical
reason for the application of different standards to investigations and
reviews. Makita asserts that the argument that average-to-average price
comparisons may mask targeted dumping is not a justification for
failing to use this methodology in reviews when it is used in
investigations, because the likelihood of targeted dumping is equally
present in both investigations and reviews.
Makita argues that, in general, the application of a different
methodology in administrative reviews than was used in LTFV
investigations will result in higher margins in reviews than were found
in investigations, with the effect that exporters will not be able to
rely on margins established in the investigation as a guide for future
corrective conduct. Citing Shikoku Chemicals Corp. v. U.S., 795 F.Supp.
417, 421 (CIT 1992) (Shikoku ), Makita further states that it has a
right to rely on the consistent and fair application of methodologies
from one proceeding to the next. The fact that the Department did not
use average-to-average price comparisons in the LTFV investigation in
this case is, according to Makita, irrelevant for the reasons stated
above.
In support of its contention that Congress intended for average-to-
average price comparisons to be used in both investigations and
administrative reviews, Makita states that Congress did not expressly
or implicitly disapprove of the Department's longstanding practice
under the earlier antidumping law of using the same price comparison
methodology in both investigations and reviews. Thus, Congress intended
for the Department to continue this practice. Makita cites Harris v.
Sullivan, 968 F.2d 263, 265 (2nd Cir. 1992) (Harris). Makita asserts
that the fact that the Statement of Administrative Action (SAA) may
suggest otherwise is irrelevant, since the SAA is not law, nor is it
appropriate to use it to interpret a statutory provision that is
neither vague nor ambiguous, pursuant to Marcel Watch Co. v. U.S., 11
F.3d 1054, 1058 (Fed. Cir. 1992). See SAA, House Doc. 103-316, Vol. 1,
103d Cong. 2nd Sess., September 27, 1994.
Furthermore, Makita argues, the SAA itself may be in violation of
the WTO Antidumping Agreement, because using a different price
comparison methodology in reviews than was used in investigations may
by itself increase antidumping duties in a manner not contemplated by
the WTO.
Petitioner states that the correctness of the Department's approach
in the preliminary results is confirmed by the statute, the SAA, and
the Department's proposed regulations, and that Makita's arguments are
based on an incorrect reading of the law. Petitioner cites the SAA at
843, and Antidumping Duties: Proposed Rule, 61 FR 7308, 7348, section
351.414 (February 27, 1996) (Proposed Regulations).
Petitioner argues that Makita's reliance on Shikoku and Harris is
misplaced. The Department has not changed a long-standing practice;
rather, Congress has mandated a new approach, which requires different
price comparison methodologies in investigations and reviews. As
evidence that Congress intended to treat investigations separately from
reviews, petitioner points out that 19 U.S.C. Sec. 1677f-1(d) contains
different provisions for investigations and reviews: section (d)(1)
deals with investigations, and requires the Department to compare
weighted average normal values (NVs) to weighted-average export prices,
with the alternative of comparing transaction-by-transaction prices on
both sides of the equation, while section (d)(2) deals with reviews,
and requires the Department to compare weighted average NVs to
individual export prices, as the Department did in this case.
Another justification for treating investigations and reviews
differently, according to petitioner, is that respondents should be
held to higher, stricter standards in reviews, since by the time of the
administrative review, they are on notice that further dumping will be
penalized. Petitioner argues that Makita's case confirms this
proposition, since Makita has failed to correct its dumping practices
since issuance of the LTFV determination, and should therefore be held
to a higher standard during the administrative review.
Department's Position: We agree with petitioner. The Act, as
amended by the URAA, distinguishes between price comparison
methodologies in investigations and reviews. Section 777A(d)(1) states
that in investigations, generally the Department will make price
comparisons on an average-to-average or transaction-to-transaction-
specific basis. See also SAA at 842-43; Proposed Regulations at 7348-49
and Proposed Rule 351.414.
However, the language of 777A(d)(2) reflects Congress's
understanding that the Department would use a monthly average NV to a
U.S. transaction-specific methodology during reviews, in keeping with
the Department's past practice, and both the SAA and the Department's
proposed regulations expressly state that the monthly average-to-
transaction-specific comparison is the preferred methodology in
reviews. See SAA at 843; Proposed Regulations at 7348-49. Hence, the
Department is under no legal obligation to apply an average-to-average
approach in a review merely because 777A(d)(1) permits such a
comparison in investigations. However, in appropriate circumstances,
such as in the case of highly perishable products, for example,
average-to-average price comparisons may be used. See Floral Trade
Council of Davis v. United States, 606 F. Supp. 695,703 (CIT 1991).
Makita has not demonstrated that similar circumstances exist with
respect to the sale of PECTs that would warrant a departure from our
stated preference of making monthly average-to-transaction-specific
price comparisons in reviews.
Moreover, contrary to Makita's assertion, an LTFV investigation and
an administrative review are not ``identical proceedings,'' but are two
distinct segments of a single antidumping proceeding. The Act expressly
distinguishes between investigations and reviews. See Sec. 733; 735;
751; 19 CFR 353.2(l). They differ in several respects, such as
initiation requirements and outcome--an investigation may or may not
end upon the issuance of an antidumping duty order, while only a review
will result in the actual assessment of duties. Further, investigations
and reviews are based on different sets of sales, and both are subject
to separate judicial review.
The WTO Antidumping Agreement also distinguishes between
investigations and reviews in antidumping matters. (See also Comment
3). Article 2.4.2 of the WTO Antidumping Agreement explicitly requires
that an average-to-average price comparison be used in the
``investigation phase'' of an antidumping proceeding. The SAA
elucidates the intent of the WTO Antidumping Agreement that the
Department continue to treat investigations and reviews differently
with respect to price comparisons. As the SAA states:
The Agreement reflects the express intent of the negotiators
that the preference for the use of an average-to-average or
transaction-to-transaction comparison be limited to the
``investigation phase'' of an antidumping proceeding. Therefore, as
permitted by Article 2.4.2, the preferred methodology in reviews
will be to compare average to individual export prices.
SAA at 843.
[[Page 389]]
Finally, Makita claims that it has a right to rely on the
consistent and fair application of methodologies from one segment of a
proceeding to the next. Makita argues that by not applying an average-
to-average comparison in this review, the Department is not consistent
with what it is required to do under the new law for investigations--
make average-to-average price comparisons. Hence, following Makita's
logic, the Department must now apply an average-to-average methodology
in this review to be consistent with the new methodology used in
investigations. Makita is incorrect in two respects. The law now
requires the Department to apply an average-to-average price comparison
in investigations only. Secondly, by comparing monthly average NVs to
transaction-specific U.S. prices in this review, we are being
consistent with our longstanding practice, which was not changed by the
passage of the URAA, as discussed above. Moreover, during the
investigation of this order, which occurred under the old law, we did
compare average foreign market values (FMVs) to transaction-specific
U.S. prices. Thus, we are being consistent from one segment of the
proceeding to another.
Finally, Makita's reliance on Shikoku is misplaced. That case dealt
with a situation in which the Department failed to follow a particular
case-specific calculation methodology that it had repeatedly used in
several reviews with respect to the sales of a particular respondent.
Here, there has been no change in methodology, as discussed above.
Comment 3: Makita argues that, if the Department had used average-
to-average price comparisons in the preliminary results, Makita's
margin would have been de minimis pursuant to the 2 percent de minimis
standard mandated by Article 5.8 of the WTO Antidumping Agreement (see
19 U.S.C. Secs. 1673b(b)(3) and 1673(a)(4)). Since the WTO Antidumping
Agreement makes no distinction between investigations and
administrative reviews, Makita argues, the 2 percent de minimis
standard should also apply to reviews, for the same reasons Makita
discussed with respect to using average-to-average price comparisons in
reviews.
Makita argues that no basis can be found in either the WTO
Antidumping Agreement, or in U.S. law or policy, for using 0.5 percent
as the de minimis standard for reviews, since there is no mention of
this particular figure in any of the relevant documents. Makita asserts
that using a stricter standard for reviews than for investigations is
illogical if the underlying purpose is to punish exporters who are
caught dumping, since it would make more sense to apply a stricter
standard in the investigation phase. Finally, Makita claims that this
practice could by itself result in increased dumping liability for
exporters, and is a possible violation of the WTO by the United States.
Petitioner argues that Makita misreads the law, which requires that
the new de minimis level of two percent be applied in investigations
only. Thus, the Department must continue to use its regulatory standard
of 0.5 percent during reviews, as stated in the SAA and the
Department's proposed regulations (61 FR 7308, 7355).
Department's Position: We disagree with respondent that the 0.5
percent de minimis standard set forth in 19 CFR 353.6 should not
continue to apply to reviews. Article 5.8 of the WTO Antidumping
Agreement explicitly requires signatories to apply the two percent de
minimis standard only in antidumping investigations. See Article 5.8.
There is no such requirement regarding reviews. Moreover, Makita is
incorrect in claiming that the WTO Antidumping Agreement makes no
distinction between investigations and administrative reviews. See eg.,
Article 5; Article 11.
In conformity with Article 5.8 of the WTO Antidumping Agreement,
sections 733(b) and 735(a) of the Act were amended by the URAA to
require that, in investigations, the Department treat the weighted
average dumping margin of any producer or exporter which is below two
percent ad valorem as de minimis. Hence, pursuant to this change, the
Department is now required to apply a two percent de minimis standard
during investigations initiated after January 1, 1995, the effective
date of the URAA (see sections 733(b)(3) and 735(a)(4)). However, the
Act does not mandate a change to the Department's regulatory practice
of using a 0.5 percent de minimis standard during administrative
reviews. As discussed above, the WTO Antidumping Agreement, the Act,
the SAA and the Department's regulations recognize investigations and
reviews to be two distinct segments of an antidumping proceeding.
The SAA also clarifies that ``[t]he requirements of Article 5.8
apply only to investigations, not to reviews of antidumping duty orders
or suspended investigations.'' See SAA at 845. The SAA further states
``* * * in antidumping investigations, Commerce [shall] treat the
weighted-average dumping margin of any producer or exporter which is
below two percent ad valorem as de minimis.'' SAA at 844. Likewise,
``[t]he Administration intends that Commerce will continue its present
practice in reviews of waiving the collection of estimated cash
deposits if the deposit rate is below 0.5 percent ad valorem, the
existing regulatory standard for de minimis.'' SAA at 845 (emphasis
added). See Proposed Regulations at 7355, Proposed Rule 351.106; see
also High-Tenacity Rayon Filiment Yarn from Germany; Final Results of
Antidumping Duty Administrative Review, 61 FR 51421 (October 2, 1996).
Comment 4: Makita claims that the Department's preliminary margin
calculation program misapplied the sales below cost test by deducting
from the gross unit price certain costs which were included in the
total cost against which the net price is compared. As a result, the
number of sales below cost was overstated in the preliminary results.
Petitioner did not comment on this issue.
Department's Position: We agree with Makita, and have made the
requested corrections to the margin calculation program for the final
results.
Comment 5: Makita claims that the Department's computer program
incorrectly calculated constructed value (CV) and constructed export
price (CEP) profit, based on only those home market sales that were
used as matches for U.S. sales. Makita argues that, since the profit
calculations must be made on the basis of all sales of the foreign like
product, using this reduced home market database results in overstated
profit rates for both CV and CEP profit.
Makita argues that the law does not intend for profit to be
calculated using only the products in the home market which are the
closest matches to models sold in the United States. Makita cites to
the Department's explanation of its proposed regulations, with respect
to section 351.405(b), which states that this would ``undermine the
predictability of the statute'' by giving the Department ``the
discretion to pick and choose the sale of the foreign product from
which profit and SG&A would be taken'' (61 FR 7335).
With respect to CEP profit, Makita points out that the law is clear
that the calculation is to be based on total expenses ``incurred with
respect to the subject merchandise sold in the United States and the
foreign like product sold in the exporting country.'' 19 U.S.C.
Sec. 1677a(f)(2)(C)(i).
Petitioner argues that the Department correctly calculated CEP
profit based on data for the foreign like product. Petitioner claims
that the term foreign like product is defined by the statute as
[[Page 390]]
the sales used as a basis of comparison with sales to the United States
(19 U.S.C. Sec. 1677b(a)). Petitioner notes that 19 U.S.C.
Sec. 1677(16)(A)(B)(C) requires the Department to select as the foreign
like product merchandise that is, in the first instance, identical to
that sold in the United States. If identical merchandise does not
exist, the Department may select similar merchandise as the foreign
like product, the objective being to develop a pool of comparable
products, the prices of which are used to calculate NV. Petitioner
cites Koyo Seiko Co., Ltd. v. United States, 66 F.3d 1204, 1209
(C.A.Fed. 1995) (Koyo Seiko) in support of its contention that the pool
of matched models is the foreign like product from which the home
market portion of the CEP profit is derived.
Petitioner concludes that if the foreign like product is expanded
beyond the pool of matched models to include all similar products, as
respondent requests, the resulting profit figure would be
unrepresentative of the products that were used to determine NV.
Department's Position: We agree that we incorrectly limited the
home market data base to those models used as matches for U.S. sales
for the purposes of calculating CV and CEP profit in the preliminary
results. For the final results, we have used all sales of the foreign
like product for the purposes of calculating CV and CEP profit.
Newly amended sections 772(f) and 773(e)(2)(A) now require that the
Department calculate CV and CEP profit based on a respondent's actual
profits made from home market sales of the foreign like product,
provided the home market is found viable. While neither side disputes
that actual profits will be used in this regard, petitioner believes
that the Department should disregard its past practice of determining
profit for CV based on sales in the home market on an aggregated basis,
i.e., based on sales of the same general class or kind as the
merchandise under consideration. See 773(e)(1)(B) of the pre-URAA
statute. Instead, petitioner argues that newly amended 771(16) now
requires that the Department arrive at the actual home market profit
using only those home market sales which can be matched most closely to
the subject merchandise applying the descending hierarchy of 771(16).
For purposes of calculating CV and CEP profit, we interpret the
term ``foreign like product'' to be inclusive of all merchandise sold
in the home market which is in the same general class or kind of
merchandise as that under consideration. We do not believe the change
in terminology from ``such or similar merchandise to ``foreign like
product'' was intended as a substantive change in this regard. Thus,
``foreign like product'' includes all of the merchandise covered by the
descending hierarchy of section 771(16) (A), (B) & (C). This comports
with our past practice. Moreover, were we to adopt petitioner's view,
the Department would have the discretion to pick and choose the sale of
the foreign like product from which profit would be taken, which would
undermine the prodictability of the statute, as Makita correctly points
out. See Proposed Regulations at 7335. In this case, since all models
of PECTs comprise the same general class or kind of merchandise,
regardless of whether they were matched to U.S. sales in the margin
calculation, we determine the foreign like product to include all of
Makita's reported home market models. See Professional Electric Cutting
Tools and Professional Electric Sanding/Grinding Tools from Japan:
Final Determinations of Sales at Less Than Fair Value, 58 FR 30144 (May
26, 1993) (the Department determined that PECTs comprise one class or
kind). See also Large Newspaper Printing Presses and Components
Thereof, Whether Assembled or Unassembled, from Japan; Final
Determination of Sales at Less Than Fair Value Investigation, 61 FR
38139 (July 23, 1996).
Petitioner confuses section 771(16)'s hierarchy of what encompasses
the foreign like product with how the Department uses this hierarchy
for purposes of model-matching to arrive at a comparison based on the
most physically similar merchandise. Petitioner's reliance on Koyo
Seiko is misplaced, as that case dealt with the issue of the model-
matching hierarchy set out for such or similar merchandise under the
old law. (``Congress has implicitly delegated authority to Commerce to
determine and apply a model-match methodology necessary to yield `such
or similar' merchandise under the statute.'') However, here we are
concerned with calculating actual profits under the newly amended law
for CV and CEP, and whether home market profits and SG&A should be
inclusive of all sales of the foreign like product in making this
calculation.
We note that for calculating the actual selling, general and
administrative expenses for the purposes of CV for these final results,
we have also based said expenses on all of Makita's home market sales
of PECTs, for the same reasons set out above.
Lastly, petitioner's concern that basing the CEP profit calculation
on a larger group of models than is used to calculate NV will result in
an unrepresentative profit figure is unfounded. As the SAA states, even
if the Department determined total profit on the basis of a broader
product line than the subject merchandise, no distortion in the profit
allocable to U.S. sales is created, because the total expenses are also
determined on the basis of the same expanded product line. See SAA at
825.
Comment 6: Petitioner claims that the Department's margin
calculation program incorrectly subtracted home market indirect selling
expenses from NV. Petitioner points out that indirect selling expenses
are only properly deducted under certain limited circumstances, such as
an offset for selling commissions in the United States and as an offset
to CEP.
Makita argues that the deduction of indirect selling expenses from
NV was not a mistake, since it satisfies the requirements for
establishing a ``fair comparison'' as required by the WTO Antidumping
Agreement and 19 U.S.C. Sec. 1677b(a). Makita states that, according to
the new law, the Department must reduce NV by the amounts included in
the price that are ``attributable to any additional costs, charges, and
expenses.'' 19 U.S.C. Sec. 1677b(6)(B). Reducing NV by the amount of
indirect selling expenses, Makita claims, would therefore be
appropriate.
Makita argues that, since greater selling expenses for a specific
service are incurred in the home market than are incurred for the same
service for products destined for the U.S. market, deducting direct
selling expenses from NV, while not also deducting indirect selling
expenses, does not represent a ``fair comparison'' under the new law.
Finally, Makita asserts that there is no reasonable basis for arriving
at any relevant or meaningful distinction between ``direct'' and
``indirect'' selling expenses.
Department's Position: We agree with petitioner that our deduction
of indirect selling expenses from NV was a clerical error. The amended
statute permits the deduction of indirect selling expenses from NV as a
CEP offset only when a level-of-trade (LOT) adjustment is warranted,
but the data available do not provide an appropriate basis to determine
a LOT adjustment. See Sec. 773(a)(7)(B). In addition, the SAA clearly
states that the CEP offset is to be used in lieu of a LOT adjustment.
See SAA at 829. In the preliminary results, we made a LOT adjustment to
NV in accordance with Sec. 773(a)(7)(B). Therefore, we have not
deducted indirect selling expenses from NV in our final margin
calculation.
[[Page 391]]
Makita's reliance on 773(a)(6)(B) in support of its position that
the new law now requires that all expenses be deducted from NV is
erroneous. This statutory provision explicitly provides for the
deduction of all movement expenses from NV, but not for the deduction
of all expenses in general, and indirect selling expenses in
particular, as Makita suggests. Were we to do so, we would clearly be
in violation of the Act. Moreover, we disagree with Makita's assertion
that the language in 773(a) stating that a ``fair comparison'' shall be
made between the export price or CEP and NV now requires the Department
to make additional adjustments to NV not specifically set out in
773(a). Rather, 773(a) expressly states that, in order to achieve a
``fair comparison,'' NV will be determined as set out in 773(a), which
we have followed in this review.
Comment 7: Petitioner argues that the Department should correct an
error in the computer program involving the difference in merchandise
(difmer) adjustment. Petitioner points out that, according to the
Department's methodology, the difmer is found by subtracting the
variable manufacturing costs in the U.S. market from the variable
manufacturing costs in the home market. If the U.S. manufacturing costs
exceed the home market manufacturing costs, the difference should be
added to NV in accordance with the procedures described in the Import
Administration Antidumping Manual (see Chapter 8 at 44, July 1993 Rev.)
Petitioner points out that the Department's computer program
incorrectly deducted from NV the positive amount by which U.S. costs
exceed home market costs.
Makita states that, in most cases, the difmer should not be added
to NV. However, in this case, no difmer adjustment should be made at
all, pursuant to 19 U.S.C. Sec. 1677b(a), which requires the Department
to make fair comparisons. Makita claims that the main physical
characteristics of the merchandise at issue should not result in any
difmer adjustment because they are not amenable to precise measurement
for purposes of arriving at price differences. Since all physical
differences are minor variations or features mandated to meet U.S. and
Japanese technical and safety standards, their inclusion was a
necessary condition to Makita's sale of the subject merchandise in both
the U.S. and Japan. Makita argues that price comparisons within
antidumping proceedings should focus on the voluntary action of a
respondent in raising or not raising its U.S. prices rather than on
issues relating to the technical need for additional costly features of
the product. Makita requests that the Department disregard differences
in voltage, amperage, and wattage in its application of the difmer.
Department's Position: We agree with petitioner that we made a
clerical error by adding difmer to NV instead of subtracting it. We
have made the necessary correction to our margin calculations for the
final results.
When we make price comparisons based on similar models, it is our
longstanding practice to adjust NV for the differences in the variable
costs associated with manufacturing those products. See e.g., Tapered
Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan
and Tapered Roller Bearings, Four Inches or Less in Outside Diameter
and Components Thereof, From Japan; Final Results of Antidumping Duty
Administrative Review and Revocation in Part of an Antidumping Finding,
61 FR 57629 (November 7, 1996). We calculated difmer based on the
variable cost information Makita provided in its questionnaire
response. In choosing to sell its products to the United States, Makita
made the decision to adapt the models sold to U.S. voltage and amperage
requirements. Makita admits that there are legitimate cost differences
between home market models and U.S. models. For our purposes, the
reasons behind why there are cost differences are irrelevant. It is
well-established law that establishing an intent to dump is not
required under the Act. (See USX v. United States, 682 F.Supp. 6068
(CIT, 1988).
Final Results of Review
As a result of our review, we have determined that the following
margins exist:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Makita Corporation........................ 7/1/94-6/30/95 4.36
------------------------------------------------------------------------
The Department shall determine, and the Customs service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and NV may vary from the
percentage stated above. The Department will issue appraisement
instructions directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of review for all
shipments of PECTs from Japan entered, or withdrawn from warehouse, for
consumption on or after the publication date, as provided by section
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed
company will be that established in these final results of this
administrative review; (2) for previously reviewed or investigated
companies not listed above, the cash deposit rate will continue to be
the company-specific rate published for the most recent period; (3) if
the exporter is not a firm covered in this or a previous review or the
LTFV investigation, but the manufacturer is, the cash deposit rate will
be the most recent rate established for the manufacturer of the
merchandise; and (4) the cash deposit rate for all other manufacturers
or exporters will be the ``all others'' rate of 54.52 percent, the all
others rate established in the LTFV investigation.
These deposit requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
review.
This notice also serves as a reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d). Timely written notification of
return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22
of the Department's regulations.
Dated: December 24, 1996.
Jeffrey P. Bialos,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-73 Filed 1-2-97; 8:45 am]
BILLING CODE 3510-DS-P
