[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