[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]


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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.

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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