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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6203for determining a surrogate ESP-offsetamount. Guizhou Machinery et al.refute Petitioner’s argument as beingincompatible with the Department’s useof the 10-percent statutory minimumSG&A, which includes direct andindirect selling expenses. To adjust the10-percent minimum SG&A expense byusing an unsubstantiated surrogatevalue for an indirect ESP-offset amountwould, Guizhou Machinery et al. claim,result in an apples-to-orangescomparison.Department’s PositionWe agree with Petitioner. We have reevaluatedour practice concerning thededuction of expenses incurred by U.S.affiliates of respondent companies inNME cases and have concluded thatsuch deductions are explicitly requiredby the statute, which states that ESPshall be reduced by the amount of‘‘expenses generally incurred by or forthe account of the exporter in theUnited States in selling identical orsubstantially identical merchandise.’’See Final Determination of Sales at LessThan Fair Value: Bicycles from the PRC,61 FR 19026, 19031 (April 30, 1996)(Bicycles), 2 and TRBs IV-VI at 65535.The statute provides no exceptions forcases involving NME countries.Therefore, we have subtracted directand indirect selling expenses incurredby such U.S. affiliates in deriving theUSP.We have made an ESP offset to FMVwhich, in conformity with section353.56 of our regulations, is in anamount not to exceed indirect sellingexpenses incurred in the United States.We based this offset on the ‘‘otherexpenses’’ item from the SKF report andsubtracted from this item the amount fordebentures as indicated in a footnote to‘‘other expenses’’ in the SKF report. TheSKF report notes that the generalcategory of expenses containing the‘‘other expenses’’ item includes ‘‘sellingexpenses.’’ However, none of the nameditems (e.g., ‘‘power and fuel’’) pertain toselling expenses. We have concludedthat, as suggested by Petitioner, the‘‘other expenses’’ item, minusdebentures, represents these ‘‘sellingexpenses.’’Comment 15Petitioner claims that the Departmentincorrectly calculated freight rates bymultiplying the surrogate freight rate by2 Although the statutory citation in this case isto the law as it existed on December 31, 1994,whereas the relevant citation in Bicycles is to thelaw as it exists subsequent to that date, bothversions of the provision explicitly require thededuction of expenses generally incurred by or forthe account of the exporter in the United States.the net weight of each bearing ratherthan by the gross weight of the bearingas packaged for shipment. Petitionerstates that a reasonable allowance forthe weight of packaging materialsshould be made in calculating bothocean freight and inland freightexpenses, arguing that packaging doesnot travel free of charge. Petitionersuggests that the Department could use,as a PI source on the record for thisreview, a packing list of CMC Guizhou,submitted by DSL Distribution Services,Ltd., on September 27, 1995. Petitionerstates that the packing list shows bothgross and net weights of pallets ofseveral common TRB models and thatthe average weight difference is abouteight percent. Therefore, Petitionerasserts, the Department should multiplythe net weights by 1.08 to reflect theweight of packaging.Guizhou Machinery et al. state thatthe Department’s freight calculationsbased on net weight are entirelyconsistent with the methodology it usedin the prior administrative reviews ofthis case and Petitioner has not provedany legal citation or support for itsclaim that the Department should usegross weight. Guizhou Machinery et al.argue further that there is no evidencein the sources the Department used tovalue ocean freight and inland freightwhich would indicate that the rates arebased on gross weights.Guizhou Machinery et al. also statethat the Department did not instruct therespondents to report freight expenseson a gross-weight basis. GuizhouMachinery et al. argue that theDepartment should not use, asPetitioner suggests, a public packing listof CMC Guizhou submitted onSeptember 27, 1995, because, first, theyare not aware of such a document beingsubmitted on September 27, 1995, andsecond, even if it was submitted, itcannot be considered because it wouldhave been untimely as this date is afterthe publication of the preliminaryresults.Department’s PositionWe agree with Petitioner that a cost isincurred with respect to shipment ofpacking materials. Upon reviewing thepacking list of CMC Guizhou, we havedetermined that the packing documentDSL Distribution Services submitted inthe 1994–95 review is an independentand reliable source for suchinformation. We have therefore addedthis public document to the record ofthis review. Accordingly, for the finalresults, we have calculated ocean-freightexpenses by multiplying the net weightby 1.08 to reflect the gross weight.Comment 16Petitioner states that the Departmentcalculated ocean-freight rates based onfreight rates per ton provided by theFederal Maritime Commission forshipments from Shanghai to Cincinnativia the U.S. West Coast and that, tocalculate the distance, the Departmentadded the distance between Shanghaiand San Francisco in nautical mileswith the overland distance between SanFrancisco and Cincinnati. Petitionerargues that one of the two distancesshould be converted into the other inorder to obtain a consistent basis for thedistance calculation. Petitioner alsonotes that, in the sample calculations inthe Factors of Production Memorandum,the Department states that it obtained afreight rate per kilogram per kilometer,but the sample calculation does notdemonstrate the conversion from milesto kilometers. Petitioner states that theDepartment made the same errors in thecalculation of the insurance rate basedon distance and should correct theseerrors.Guizhou Machinery et al. respondthat, while Petitioner’s argumentappears to be correct, the Departmentshould correct another clerical errorregarding the conversion of miles tokilometers in its ocean-freightcalculation. Guizhou Machinery et al.claim that, although the Department’sFactors of Production Memorandumstates that it obtained a ‘‘per kilogramper kilometer’’ ocean-freight rate, thecalculation reveals that the Departmentobtained a ‘‘kilogram per mile’’ rate butneglected to convert the distance statedin kilometers into miles.Department’s Position:We agree that we made the clericalerrors noted by Petitioner and byGuizhou Machinery et al. However, theissue is moot because we have changedthe methodology for calculating oceanfreight for the final results. We havecalculated ocean-freight rates based onquotes from Maersk Inc., a U.S. shippingcompany. We prefer information fromMaersk because it was able to provideport-specific information regardingshipping rates from the PRC to theUnited States. For these final results, wecalculated average shipping rates forshipments to the east coast of the UnitedStates and west coast of the UnitedStates. We note that the differencesamong the east-coast ports and westcoastports are minimal. Maerskprovided the basic rates for both 20-footand 40-foot containers, destinationsurcharges, FAF fuel surcharge, andregion-specific surcharges. Maerskreported that the maximum payloads