[Federal Register Volume 64, Number 153 (Tuesday, August 10, 1999)]
[Notices]
[Pages 43346-43353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20560]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-823]


Professional Electric Cutting Tools From Japan: Preliminary 
Results of Antidumping Duty Administrative Review and Intent To Revoke 
Order in Part

AGENCY: Import Administration, International Trade Administration, U.S. 
Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty 
administrative review and intent to revoke order in part.

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SUMMARY: In response to a request by the respondents, Makita 
Corporation and Makita U.S.A., Inc., the U.S. Department of Commerce is 
conducting an administrative review of the antidumping duty order on 
professional electric cutting tools from Japan. The period of review is 
July 1, 1997, through June 30, 1998.
    We have preliminarily found that no sales of subject merchandise 
have been made below normal value. If these preliminary results are 
adopted in our final results of administrative review, we will instruct 
the Customs Service not to assess antidumping duties on the subject 
merchandise exported by Makita Corporation. Furthermore, if these 
preliminary results are adopted in our final results of this 
administrative review, we intend to revoke the antidumping duty order 
with respect to Makita Corporation, based on three consecutive review 
periods of sales at not less than normal value (see 19 CFR 
351.222(b)(i)). See Intent to Revoke section of this notice.

EFFECTIVE DATE: August 10, 1999.

FOR FURTHER INFORMATION CONTACT: Brian Smith, at (202) 482-1766, 
Barbara Wojcik-Betancourt at (202) 482-0629, or Brian Ledgerwood, at 
(202) 482-3836, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, 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, as amended 
(``the Act''), by the Uruguay Round Agreements Act (``URAA''). In 
addition, unless otherwise indicated, all references are made to the 
U.S. Department of Commerce's (``the Department's'') final regulations 
at 19 CFR Part 351 (1998).

Case History

    On July 12, 1993, the Department published in the Federal Register 
an antidumping duty order on professional electric cutting tools from 
Japan. See 58 FR 37461. On July 1, 1998, the Department published a 
notice providing an opportunity to request an administrative review of 
this order for the period July 1, 1997, through June 30, 1998 (63 FR 
35909). On July 24, 1998, we received a timely request for an 
administrative review from Makita Corporation (``Makita Japan'') and 
Makita U.S.A. Inc. (``Makita USA''), Makita Japan's affiliated selling 
agent in the United States. In addition, Makita

[[Page 43347]]

Japan and Makita USA (hereafter ``Makita'' when referenced 
collectively) requested that the Department revoke the antidumping duty 
order with respect to Makita. On August 27, 1998, we published the 
notice of initiation of this review (63 FR 45796).
    On August 31, 1998, we issued an antidumping questionnaire to 
Makita. Because the Department disregarded sales below the cost of 
production (``COP'') in the last completed review (see Notice of Final 
Results of Fourth Antidumping Duty Review: Professional Electric 
Cutting Tools from Japan, 63 FR 54441 (October 9, 1998)), the 
Department had reasonable grounds to believe or suspect that sales of 
the foreign like product under consideration for the determination of 
normal value (``NV'') in this review may have been made at prices below 
the COP as provided by section 773(b)(2)(A)(ii) of the Act. Therefore, 
pursuant to section 773(b)(1) of the Act, we initiated an investigation 
to determine whether Makita Japan made home market sales during the POR 
at prices below its COP, and required Makita Japan to respond to the 
COP section of the questionnaire issued in August 1988.
    The Department received the questionnaire responses in October 
1998. We issued supplemental questionnaires in January 1999. We 
received responses to these questionnaires in February 1999. Because 
Makita requested revocation of the order, the Department verified the 
company's response pursuant to section 782(i)(2) of the Act.
    In December 1998, the Department requested submissions of factual 
information regarding revocation of the antidumping order in part. Such 
submissions were received from the petitioner and Makita in February 
and March, 1999, and were also verified by the Department.
    On March 5, 1999, the Department published a notice postponing the 
preliminary results of this review until August 2, 1999 (64 FR 10621).

Scope of Review

    Imports covered by this review are shipments of professional 
electric cutting tools (``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. These are generally 
distinguishable from other stationary tools by size and ease of 
movement.
    The scope of the PECTs 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, Makita, and the period July 1, 1997 
through June 30, 1998.

Verification

    As provided in section 782(i)(2) of the Act, we verified 
information provided by Makita. We used standard verification 
procedures, including on-site inspection of the manufacturer's 
facilities and examination of relevant sales and financial records. Our 
verification results are outlined in the verification reports placed in 
the case file.

Duty Absorption

    On September 24, 1998, the petitioner requested that the Department 
determine whether antidumping duties had been absorbed during the POR. 
Section 751(a)(4) of the Act provides for the Department, if requested, 
to determine during an administrative review initiated two or four 
years after the publication of the order, whether antidumping duties 
have been absorbed by a foreign producer or exporter, if the subject 
merchandise is sold in the United States through an affiliated 
importer. In this case, Makita Japan sold to the United States through 
an importer that is affiliated within the meaning of section 771(33) of 
the Act.

[[Page 43348]]

    Section 351.213(j)(2) of the Department's regulations provides that 
for transition orders (i.e., orders in effect on January 1, 1995), the 
Department will conduct duty absorption reviews, if requested, for 
administrative reviews initiated in 1996 or 1998. Because the order 
underlying this review was issued prior to January 1, 1995, and this 
review was initiated in 1998, we will make a duty absorption 
determination in this segment of the proceeding. As we have 
preliminarily found that there is no dumping margin for Makita with 
respect to its U.S. sales, we have also preliminarily found that there 
is no duty absorption. See Preliminary Results of Antidumping 
Administrative Review: Certain Hot-Rolled Lead and Bismuth Carbon Steel 
Products from Germany, 64 FR 16703 (April 6, 1999).

Fair Value Comparisons

    We compared the constructed export price (``CEP'') to the NV, as 
described in the Constructed Export Price and Normal Value sections of 
this notice. Pursuant to section 777A(d)(2) of the Act, we compared the 
CEPs of individual transactions to contemporaneous monthly weighted-
average prices of sales of the foreign like product (where there were 
sales that passed the COP test, as discussed in the Cost of Production 
Analysis section below, and were otherwise in the ordinary course of 
trade).

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by Makita Japan covered by the description in the 
Scope of the Review section, above, to be foreign like products for 
purposes of determining appropriate product comparisons to U.S. sales. 
We compared U.S. sales to sales made in the home market, where 
appropriate, in a month within the contemporaneous window period, which 
extends from three months prior to the U.S. sale until two months after 
the sale. Where there were no sales of identical merchandise in the 
home market made in the ordinary course of trade to compare to U.S. 
sales, we compared U.S. sales to sales of the most similar foreign like 
product made in the ordinary course of trade. In making the product 
comparisons, we matched foreign like products based on the physical 
characteristics reported by the respondents in the following order of 
importance: configuration, capacity, number of battery cells, power, 
speed, housing type and size.

Level of Trade/CEP Offset

    In accordance with section 773(a)(7) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the EP or CEP transaction. The NV 
LOT is that of the starting-price sales in the comparison market or, 
when NV is based on CV, that of the sales from which we derive selling, 
general, and administrative (``SG&A'') expenses and profit. For EP 
sales, the U.S. LOT is also the level of the starting-price sale, which 
is usually from the exporter to the importer. For CEP sales, it is the 
level of the constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine the stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP Offset provision). See Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel 
Plate from South Africa, 62 FR 61731 (November 19, 1997).
    In order to determine whether Makita warrants a LOT adjustment or 
CEP offset, as claimed, we compared the CEP sales to the HM sales in 
accordance with the principles discussed above. For purposes of our 
analysis, we examined information regarding the distribution systems in 
both the United States and Japanese markets, including the selling 
functions, classes of customers, and selling expenses for the company.
    In this review, Makita Japan reported two channels of distribution 
in the home market: (1) Sales made at the wholesale/distributor price 
level; and (2) sales made at the dealer/retail price level. Makita 
Japan based the channels of distribution on the entity (i.e., 
wholesaler, subwholesaler or retailers) in the distribution chain to 
which Makita Japan had billed or shipped the merchandise. We 
preliminarily determine that these sales constitute two LOTs in the 
home market. As explained below, we found that while Makita Japan 
performs some of the same selling functions for both distribution 
channels, the level of activities performed varies.
    Makita Japan reported only CEP sales in the U.S. market. For the 
U.S. market, Makita reported three channels of distribution from Makita 
USA to unaffiliated customers, as follows: (1) Sales made at the 
wholesaler price level; (2) sales made at the retailer price level, and 
(3) sales made directly to the end user. However, the LOT of the CEP 
sales was based on sales made by Makita Japan to its wholly-owned U.S. 
subsidiary, Makita USA. Because Makita Japan's sales to the United 
States were all CEP sales made by an affiliated company, we considered 
only the parent company's selling activities reflected in the price 
after the deduction of expenses and profit, pursuant to section 772(d) 
of the Act, and determined that they were the same for all three 
reported channels of distribution. Therefore, we preliminarily 
determine that all CEP sales constitute a single LOT in the United 
States.
    To determine whether sales in the comparison market were at a 
different LOT than CEP sales, we first compared the relevant selling 
functions performed in the different channels of distribution in the 
home market. We then examined the relevant selling functions performed 
at the CEP level and compared those selling functions to the selling 
functions performed in each home market LOT.
    Makita Japan reported thirteen separate selling functions which it 
performed with respect to sales in the home market and five selling 
functions performed in the United States at the CEP level (see chart in 
Addendum 1 to Section A of Makita's October 26, 1998 questionnaire 
response). The home market selling functions are: (1) Inventory 
maintenance, (2) market research, (3) after sales service and 
warranties, (4) technical advice, (5) advertising, (6) R&D/product 
development, (7) freight/delivery arrangement, (8) procurement and 
sourcing, (9) competitive pricing (offering discounts, rebates, and 
other price incentives), (10) pricing negotiations with customers, (11) 
sales calls and demonstrations, (12) interaction with end users, and 
(13) processing of daily order updates.
    In contrast, Makita Japan only performs the following selling 
functions in the U.S. market: (1) Inventory maintenance, (2) technical 
advice, (3) R&D/product development, (4) procurement and sourcing, and 
(5)

[[Page 43349]]

processing daily order updates. Thus, Makita Japan performs eight 
selling functions with respect to its home market channels of 
distribution that it does not perform in the U.S. market. (See, Makita 
Japan / Makita USA Sales and Cost Verification report dated July 9, 
1999, at pages 24-33; hereafter ``Sales Verification Report.'')
    In comparing the two home market LOTs claimed by Makita (i.e., 
wholesaler, subwholesaler or retailers), we noted that, although Makita 
Japan performs some of the same selling functions in both LOTs, the 
level of activities performed varies. For example, Makita Japan's 
interaction with retailers is higher in the following sales functions 
than for wholesalers and subwholesalers: inventory maintenance, 
freight/delivery arrangements, and sales calls and demonstrations (see 
Sales Verification Report at pages 24-33). Therefore, we preliminarily 
determine that sales to wholesalers/subwholesalers and sales to 
retailers constitute separate LOTs.
    When we compare the CEP LOT to either the home market wholesale LOT 
or the home market retail LOT, we note that there is only one selling 
function which is similar in both function and level of activity 
performed: R&D/product development (see Sales Verification Report at 
pages 31-33). We noted at verification that of the five selling 
functions performed in the United States, four of those functions 
involved substantially less selling activity than in the home market. 
For example, evidence reviewed at verification indicates that inventory 
maintenance is an important function in the home market, where products 
are frequently purchased (by both retailers and wholesalers/
subwholesalers) directly from inventory. In contrast, we found at 
verification that inventory maintenance activities are minimal in the 
U.S. market, since production is primarily requested through specific 
purchase orders (i.e., produced to order). Similarly, with respect to 
technical advice, procurement and sourcing, and processing of daily 
order updates, we found that Makita Japan performs more significant 
activities in the home market (for sales to both wholesalers and 
retailers) than in the U.S. market (see Sales Verification Report at 
pages 24--33). Based on our analysis of the selling functions, which 
include differences in levels of activity performed, we find that both 
home market LOTs are at a more advanced stage of distribution than that 
of the CEP level. Therefore, we agree with Makita Japan's assertion 
that there is no home market level equivalent to the CEP LOT.
    Based on our verification findings and the data on this record, the 
Department determines for the preliminary results that (1) significant 
differences exist in the selling functions associated with each of the 
two home market LOTs, and the CEP LOT, and (2) the CEP LOT is at a less 
advanced stage of distribution than either home market LOT. Because 
there is not a common LOT between the two home market and the CEP LOTs, 
we were unable to quantify a LOT adjustment in accordance with section 
773(a)(7)(A) of the Act. Consequently, we have granted Makita's request 
for a CEP offset adjustment in accordance with section 773 (a)(7)(B) of 
the Act (the CEP offset provision).

Constructed Export Price

    We calculated CEP, in accordance with section 772(b) of the Act, 
because the sale to the first unaffiliated purchaser took place after 
importation to the United States. We based CEP on packed and delivered 
prices to all unaffiliated purchasers in the United States. Where 
appropriate, we added to the starting price revenues earned from drop-
ship fees. Where appropriate, we made deductions from the starting 
price for discounts and rebates. We also made deductions, where 
appropriate, for movement expenses in accordance with section 
772(c)(2)(A) of the Act. These expenses included foreign and U.S. 
inland freight, ocean freight, foreign and U.S. brokerage, and handling 
expenses.
    In accordance with section 772(d)(1) of the Act, we deducted from 
CEP those direct and indirect selling expenses associated with Makita 
Japan's economic activities occurring in the United States. These 
expenses included credit expenses, inventory carrying costs, and other 
indirect selling expenses. Finally, in accordance with section 
772(d)(3) of the Act, we deducted from CEP an amount for profit.

Normal Value

1. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
the aggregate volume of home market sales of the foreign like product 
is equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared Makita Japan's volume of home market sales of 
the foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1)(C) of the Act. 
Because Makita Japan's aggregate volume of home market sales of the 
foreign like product was greater than five percent of its aggregate 
volume of U.S. sales for the subject merchandise, we determined that 
the home market was viable, and, in accordance with section 
773(a)(1)(B)(i) of the Act, we based NV on the prices at which the 
foreign like products were first sold for consumption in Japan.

2. Affiliated-Party Transactions and Arm's-Length Test

    It is the Department's practice, in situations where home market 
sales are made to affiliated parties, to determine whether such sales 
to affiliated parties are appropriate to use as the basis for 
calculating NV (i.e., whether such sales are made at arm's-length 
prices). See Final Results of Antidumping Duty Administrative Reviews, 
Partial termination of Administrative Reviews, and Revocation in Part 
of Antidumping Duty Orders; Antifriction bearings (Other Than Tapered 
Roller Bearings) and Parts Thereof from France, et al., 60 FR 10899, 
10900 (February 28, 1995) and 19 CFR 351.403(c). To test whether Makita 
Japan's sales to affiliated parties were made at arm's-length prices, 
we compared, on a model-specific basis, prices of sales to its 
affiliated and unaffiliated customers at the same LOT net of all 
movement charges, direct selling expenses, discounts, and packing. 
Where, for the tested models, prices to the affiliated party were on 
average 99.5 percent or more of the price to the unaffiliated parties, 
we determined that sales made to the affiliated party were at arm's 
length. See Final Results of Antidumping Duty Administrative Review; 
Certain Welded Carbon Steel Pipes and Tubes from Thailand, 62 FR 5308, 
53817 (October 16, 1997); 19 CFR 351.403(c); and Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27355 (May 19, 1997) 
(preamble to the Department's regulations). In this instance all sales 
to affiliated parties passed the arm's-length test.

3. Cost-of-Production Analysis

    As we stated above in the Case History section, because we 
disregarded sales below the COP in the last completed segment of the 
proceeding (i.e., the fourth administrative review), we had reasonable 
grounds to believe or suspect that sales of the foreign like product 
under consideration for the determination of NV in this review may have 
been made at prices below the COP, as provided by section 
773(b)(2)(A)(ii) of the Act. Therefore, pursuant to section 773(b)(1) 
of the Act, we initiated a COP investigation of sales by Makita Japan 
in the home market. We

[[Page 43350]]

conducted the COP analysis described below.
A. Calculation of COP
    We calculated the COP based on the sum of Makita Japan's cost of 
materials and fabrication for the foreign like product, plus amounts 
for home market SG&A expenses and packing costs in accordance with 
section 773(b)(3) of the Act. We generally relied on the COP 
information provided by Makita Japan it its questionnaire responses. 
However, based on our verification findings, we adjusted the reported 
COP amounts to correct errors made in calculating cost of manufacturing 
(``COM''), including factory overhead expenses (see Sales Verification 
Report at page 5).
B. Test of Home Market Prices
    We compared the weighted-average COP for Makita Japan, adjusted 
where appropriate, to home market sales of the foreign like product as 
required under section 773(b) of the Act. In determining whether to 
disregard home market sales at prices below the COP, we examined (1) 
whether within an extended period of time, such sales were made in 
substantial quantities, and (2) whether such sales were made at prices 
which permitted the recovery of all costs within a reasonable period of 
time. On a product-specific basis, we compared the COP to the home 
market prices, less any applicable movement charges, discounts and 
rebates.
C. Results of the COP Test
    Pursuant to 773(b)(2)(C)(i) of the Act, where less than 20 percent 
of the respondent's sales of a given product are at prices less than 
the COP, we do not disregard any below-cost sales of that product 
because we determine that the below-cost sales are not being made in 
``substantial quantities.'' Where 20 percent or more of the 
respondent's sales of a given product during the POI are at prices less 
than the COP, we determine such sales to have been made in 
``substantial quantities'' within an extended period of time in 
accordance with section 773(b)(2)(B) of the Act. In such cases, because 
we are comparing prices to POR-average costs, we also determine that 
such sales are not made at prices which would permit recovery of all 
costs within a reasonable period of time, in accordance with section 
773(b)(2)(D) of the Act. Therefore, we disregard the below-cost sales.
    In this case, we found that, for certain models of PECTs, more than 
20 percent of Makita Japan's home market sales within an extended 
period of time were at prices less than the COP. Further, the prices 
did not provide for the recovery of costs within a reasonable period of 
time. We therefore disregarded the below-cost sales and used the 
remaining sales as the basis for determining NV, in accordance with 
section 773(b)(1). For those U.S. sales of PECTs for which there were 
no comparable home market sales in the ordinary course of trade, we 
compared CEPs to constructed value (``CV'') in accordance with section 
773(a)(4) of the Act.

Calculation of CV

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of the Makita Japan's cost of materials, fabrication, 
SG&A (including interest expenses), U.S. packing costs, and profit. As 
noted above, we adjusted Makita Japan's COP by recalculating total COM, 
including factory overhead expenses (see Sales Verification Report at 
page 5).
    In accordance with section 773(e)(2)(A) of the Act, we based SG&A 
and profit on the amounts incurred and realized by Makita Japan in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade for consumption in Japan. We used the 
weighted-average home market selling expenses.

Price-to-Price Comparisons

    We based NV on packed, delivered prices to unaffiliated home market 
customers and prices to affiliated customers that we have determined to 
be at arm's length. We made adjustments to the starting price for 
discounts and rebates, where appropriate. We also made deductions, 
where appropriate, for inland freight (i.e., plant to warehouse and 
warehouse to customer) pursuant to section 773(a)(6(B) of the Act. In 
addition, we made adjustments for differences in the merchandise in 
accordance with section 773(a)(6)(C)(ii) of the Act. We also deducted 
the home market direct selling expenses, including credit, in 
accordance with section 773 (a)(6)(C)(iii) of the Act. Finally, we 
deducted home market packing costs and added U.S. packing costs, in 
accordance with section 773(a)(6) of the Act.
    For the reasons stated in the LOT/CEP Offset section of this notice 
and pursuant to section 773(a)(7)(B) of the Act, we have allowed a CEP 
offset for comparisons made at different levels of trade. To calculate 
the CEP offset, we deducted from NV the indirect selling expenses 
included on home market sales which were compared to CEP sales. We 
limited the home market indirect selling expense deduction by the 
amount of the indirect selling expenses deducted in calculating the CEP 
under section 772(d)(1)(D) of the Act.
    No other adjustments to NV were claimed or allowed.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act. Where CV was compared to 
CEP, we deducted from CV the weighted-average home market direct 
selling expenses, including credit, in accordance with section 
773(a)(6)(C)(iii) of the Act. Also, pursuant to section 773(a)(7)(B) of 
the Act, we made a CEP offset adjustment as described above in the 
Price-to-Price Comparisons section above.

Intent To Revoke

    On July 24, 1998, Makita Japan requested that, pursuant to 19 CFR 
351.222(b), the Department revoke the antidumping duty order in the 
above-referenced proceeding with respect to Makita Japan at the 
conclusion of this administrative review. Makita Japan submitted along 
with its revocation request a certification stating that: (1) the 
company sold subject merchandise at not less than NV during the POR, 
and that in the future it would not sell such merchandise at less than 
NV (see 19 CFR 351.222(e)(i)); (2) the company has sold the subject 
merchandise to the United States in commercial quantities during each 
of the past three years (see 19 CFR 351.222(e)(ii)); and (3) the 
company agrees to immediate reinstatement of the order, if the 
Department concludes that the company, subsequent to revocation, sold 
the subject merchandise at less than NV (see 19 CFR 351.222(b)(iii)).
    The Department ``may revoke, in whole or in part'' an antidumping 
duty order upon completion of a review under section 751 of the Act. 
While Congress has not specified the procedures that the Department 
must follow in revoking an order, the Department has developed a 
procedure for revocation that is described in 19 CFR 351.222. This 
regulation requires, inter alia, that a company requesting revocation 
must submit the following: (1) a certification that the company has 
sold the subject merchandise at not less than NV in the current review 
period and that the company will not sell at less than NV in the 
future; (2) a certification that the company sold the subject 
merchandise in each of the three years forming the basis of the request 
in commercial quantities; and (3) an agreement to reinstatement of the 
order if the Department concludes that the company, subsequent to the 
revocation,

[[Page 43351]]

sold subject merchandise at less than NV. (See 19 CFR 351.222(e)(1).) 
Upon receipt of such a request, the Department may revoke an order, in 
part, if it concludes that: (1) The company in question has sold 
subject merchandise at not less than NV for a period of at least three 
consecutive years; (2) it is not likely that the company will in the 
future sell the subject merchandise at less than NV; and (3) the 
company has agreed to immediate reinstatement of the order if the 
Department concludes that the company, subsequent to the revocation, 
sold subject merchandise at less than NV. See 19 CFR 351.222(b)(2). See 
Final Results of Antidumping Duty Administrative Review and 
Determination Not To Revoke Order in Part: Pure Magnesium from Canada 
(``Pure Magnesium''), 64 FR 12977, 12982 (March 16, 1999).
    We allowed parties to comment on Makita Japan's request for 
revocation. Petitioner opposes the request for revocation, arguing that 
it is likely that Makita Japan will resume selling subject merchandise 
below NV if the order is revoked. Specifically, petitioner argues that 
Makita Japan has avoided dumping margins in the past by drastically 
reducing its import volumes, and Makita Japan's pricing practices and 
loss in market share indicate that Makita Japan is not able to compete 
effectively in the U.S. market without lowering prices. Additionally, 
petitioner argues that Makita Japan could easily expand its production 
capacity in Japan in order to begin selling at below NV in the future. 
Finally, petitioner purports that market demand in Japan is in decline, 
thereby increasing Makita's dependance on the U.S. market. As these 
comments and the relevant analysis require discussion of proprietary 
information, please see the Memorandum Regarding Revocation of the 
Antidumping Duty Order on Professional Electric Cutting Tools from 
Japan (August 2, 1999).
    In response, Makita Japan argues that its sales have in fact been 
in commercial quantities, and that the record clearly indicates that it 
is not likely that Makita Japan will sell at below NV in the future if 
the order were revoked. In particular, Makita Japan argues that it has 
experienced a drastic change in circumstance as a result of the 
building of its U.S. manufacturing facility, where a majority of Makita 
Japan's electric cutting tools are now produced. Thus, Makita Japan 
stresses, most of its production of ``subject merchandise'' occurs in 
the United States, and consequently such products are no longer subject 
to the antidumping duty order. Makita Japan notes that it has made 
substantial investment in the U.S. facility, and that maintaining the 
U.S. facility is consistent with the company's objective of producing 
in close proximity to its customers. Finally, Makita Japan states that, 
while it has expanding capacity in its U.S. production facility, it has 
limited remaining production capacity in its facilities in Japan. As 
such, Makita Japan claims that it is not likely that Makita Japan would 
ever shift production of its power tools back to Japan.
    With regard to the market conditions and pricing levels, Makita 
Japan argues that it has no need to sell at below NV, because the U.S. 
electric power tool and electric cutting tool markets are healthy, 
growing, and stable, and the Japanese electric power tool market is 
relatively stable. Makita Japan further argues that it is able to 
charge premium prices because of its reputation for quality. Thus, 
Makita Japan contends, it can make sales in the U.S. market, even when 
its prices are higher than its competitors' prices. As these comments 
and the relevant analysis require discussion of proprietary 
information, please see the Memorandum Regarding Revocation of the 
Antidumping Duty Order on Professional Electric Cutting Tools from 
Japan (August 2, 1999).
    Upon review of the three criteria outlined at section 351.222(b) of 
the Department's regulations, the comments of the parties, and all of 
the evidence in the record, we have preliminarily determined that the 
Department's requirements for revocation have been met. Based on the 
preliminary results in this review and the final results of the two 
preceding reviews, Makita Japan has preliminarily demonstrated three 
consecutive years of sales at not less than NV. Furthermore, we find 
that Makita Japan's aggregate sales to the United States have been made 
in commercial quantities during all segments of this proceeding. 
Finally, our review of the record and the comments of the parties 
indicates that it is not likely that Makita Japan will sell at below NV 
in the future.
    First, although Makita Japan's sales to the United States have 
decreased substantially since the imposition of the antidumping order, 
its exports to the United States remain significant. Thus, regardless 
of any decrease in shipments during the course of this proceeding, 
Makita Japan is currently selling in commercial quantities. 
Additionally, Makita has maintained consistent sales levels since 1995. 
(See Sales Verification Report at pages 34-40, and Appendices 2 and 4 
of Makita's March 15, 1999, submission). Based on these facts 
(confirmed at verification) and our review of Makita Japan's sales 
practices, we find that we can reasonably conclude that the de minimis 
margins calculated for Makita Japan are reflective of the company's 
normal commercial experience. Compare Pure Magnesium 64 FR 12977, 12982 
(March 16, 1999) (finding that because sales and volume figures were so 
small, both in absolute terms and in comparison with the period of 
investigation (``POI''), the Department could not conclude that the 
reviews were reflective of what the company's normal commercial 
experience would be without the discipline of an antidumping duty 
order); see also Memorandum Regarding Revocation of the Antidumping 
Duty Order on Professional Electric Cutting Tools from Japan (August 2, 
1999), at 10-11.
    With respect to whether it is not likely that Makita Japan will in 
the future sell merchandise at less than NV, we have considered various 
factors. As we stated in Brass Sheet and Strip from Germany, Final 
Results of Antidumping Administrative Review and Determination to 
Revoke in Part, 61 FR 49728, 49731 (Sept. 23, 1996), ``[i]n prior cases 
where revocation was under consideration and the likelihood of 
resumption of dumped sales was at issue, the Department has considered, 
in addition to the respondent's prices and margins in the preceding 
periods, such other factors as conditions and trends in the domestic 
and home market industries, currency movements, and the ability of the 
foreign entity to compete in the U.S. marketplace without LTFV sales.'' 
See also Brass Sheet and Strip from Canada: Preliminary Results of 
Antidumping Duty Administrative Review and Notice of Intent to Revoke 
Order in Part, 63 FR 6519, 6523 (Feb. 9, 1998).
    Based upon the relevant factors in this case, we find that it is 
not likely that Makita Japan will sell at less than NV if the order is 
revoked. First, the record indicates that the electric power tool 
industry, including PECTs, in the United States and around the world is 
stable and/or growing, as applicable (see Sales Verification Report at 
pages 34-39; the July 13, 1999, Makita Corporation of America (``MCA'') 
verification report at pages 14; Makita's February 9, 1999, submission 
at pages 33-42; and Memorandum Regarding Revocation of the Antidumping 
Duty Order on Professional Electric Cutting Tools from Japan (August 2, 
1999), at 14-15). Thus, the price stability characteristic of the 
electric power tool industry mitigates against the heightened 
possibility of dumping, as

[[Page 43352]]

compared to other industries where market prices are volatile.
    Second, with regard to capacity utilization, the record establishes 
that Makita Japan has very limited remaining capacity in its Japanese 
facilities, while it has significant (and growing) remaining capacity 
at MCA. Makita has made significant investments in its U.S. facility, 
and all evidence in the record indicates that MCA intends to produce 
PECTs in the United States for the long-term. The majority of the 
cutting tools sold by Makita USA is now being produced in the United 
States. Moreover, as confirmed at verification, Makita Japan has never 
shifted production of any tool from MCA back to Japan. Additionally, 
Makita Japan is currently producing only specialty tools for export to 
the U.S. market, and there is no evidence on the record indicating that 
it would be economically advantageous for Makita to shift existing 
production in Japan, which is primarily geared toward production for 
the home market, to production of non-specialty tools for export to the 
United States.
    Third, with respect to specialty tools (imports from Makita Japan), 
Makita has consistently priced its products higher than its competition 
in the United States. Thus, the record indicates that Makita has not 
needed to lower prices of its Japan-produced tools in order to remain 
competitive or to maintain a consistent level of sales (i.e., 
quantity). Although Makita has lost U.S. market share in recent years, 
it has maintained consistent annual sales in significant quantities.
    Based upon these factors, and other proprietary information 
discussed in the Memorandum Regarding Revocation of the Antidumping 
Duty Order on Professional Electric Cutting Tools from Japan (Aug. 2, 
1999), at 11-16, we find that it is not likely that Makita will sell at 
less than NV in the future.
    Because all three requirements under the regulation have been 
satisfied, we preliminarily intend to revoke the antidumping duty order 
with respect to Makita Japan. If these preliminary findings are 
affirmed in our final results, we intend to revoke the order with 
respect to all PECTs produced by Makita Japan and that are also 
exported by Makita Japan. In accordance with 19 CFR 351.222 (f)(3), we 
will terminate the suspension of liquidation for any such merchandise 
entered, or withdrawn from warehouse, for consumption on or after the 
first day after the period under review, and will instruct Customs to 
refund any cash deposit.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following margin exists for the period July 1, 1997--June 30, 1998:

------------------------------------------------------------------------
        Manufacturer/exporter                   Margin (percent)
------------------------------------------------------------------------
Makita Corporation...................  0.07 (de minimis).
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Any interested party may 
request a hearing within 30 days of publication. Any hearing, if 
requested, will be held 44 days after the date of publication or the 
first business day thereafter.
    Issues raised in hearings will be limited to those raised in the 
respective case briefs and rebuttal briefs. Case briefs from interested 
parties and rebuttal briefs, limited to the issues raised in the 
respective case briefs, may be submitted not later than 30 days and 37 
days, respectively, from the date of publication of these preliminary 
results. Parties who submit case briefs or rebuttal briefs in this 
proceeding are requested to submit with each argument (1) a statement 
of the issue and (2) a brief summary of the argument. Parties are also 
encouraged to provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations and cases cited.
    The Department will subsequently issue the final results of this 
administrative review, including the results of its analysis of issues 
raised in any such written briefs or at the hearing, if held, not later 
than 120 days after the date of publication of this notice.
    Interested parties who wish to request a hearing or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, Room B-099, within 30 days of the 
date of publication of this notice. Request should contain: (1) The 
party's name, address and telephone number; (2) the number of 
participants; and (3) a list of issues to be discussed.

Cash Deposit and Assessment Requirements

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Upon completion 
of this review, the Department will issue appraisement instructions 
directly to the Customs Service. If these preliminary results are 
adopted in our final results, we will instruct the Customs Service 
liquidate all entries subject to this review without regard to 
antidumping duties.
    If these preliminary results are not adopted in the final results, 
we will instruct the Customs Service to assess antidumping duties on 
all appropriate entries covered by this review if any importer-specific 
assessment rates calculated in the final results of this review are 
above de minimis (i.e., at or above 0.5 percent). For assessment 
purposes, we intend to calculate importer-specific assessment rates for 
the subject merchandise by aggregating the antidumping duty margins 
calculated for all U.S. sales examined and dividing the amount by the 
total entered value of the sales examined.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of PECTs from Japan that are entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(2)(c) of the Act: (1) No cash deposit will be required for PECTs 
from Japan that are produced by Makita Corporation and that are also 
exported by Makita Corporation (unless the margin established for the 
company in the final results of this review is above de minimis); (2) 
for previously reviewed or investigated companies noted 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 review, a prior review, or the less-than-fair-value (``LTFV'') 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) if neither the exporter nor the manufacturer 
is a firm covered in this or any previous review conducted by the 
Department, the cash deposit rate will be 54.5 percent, the ``All 
Others'' rate established in the LTFV investigation. These cash deposit 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) 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.

[[Page 43353]]

    This administrative review and notice are in accordance with 
sections 751(a)(1) of the Act and 19 CFR 351.213.

    Dated: August 2, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-20560 Filed 8-9-99; 8:45 am]
BILLING CODE 3510-DS-P