E5-1030. Final Negative Countervailing Duty Determination: Live Swine from Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce has made a final determination that countervailable subsidies are not being provided to producers or exporters of live swine from Canada.

EFFECTIVE DATE:

March 11, 2005.

FOR FURTHER INFORMATION CONTACT:

Melani Miller Harig, Stephen Cho, Daniel J. Alexy, and Marc Rivitz, AD/CVD Operations, Office 1, Import Administration, U.S. Department of Commerce, Room 3099, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone [phone], and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Petitioners

The petitioners in this investigation are the Illinois Pork Producers Association, the Indiana Pork Advocacy Coalition, the Iowa Pork Producers Association, the Minnesota Pork Producers Association, the Missouri Pork Association, the Nebraska Pork Producers Association, Inc., the North Carolina Pork Council, Inc., the Ohio Pork Producers Council, and 119 individual producers of live swine¹ (collectively, “the petitioners”).

Case History

The following events have occurred since the publication of the preliminary determination in the Federal Register on August 23, 2004. See Preliminary Negative Countervailing Duty Determination and Alignment of Final Countervailing Duty Determination With Final Antidumping Duty Determination: Live Swine from Canada, 69 FR 51800 (August 23, 2004) (“Preliminary Determination”).

On September 9, 2004, the petitioners submitted comments on the upcoming verifications.

On September 14, 2004, the petitioners submitted arguments relating to certain requests made by the Government of Canada (“GOC”) for business proprietary treatment in its questionnaire responses. The GOC filed a response to this submission on September 22, 2004.

On September 17 and 27, 2004, Sureleen-Albion Agra Inc. (“Sureleen”)/Bujet Sow Group (“BSG”) and Hytek Ltd. (“Hytek”), respectively, submitted new factual information and corrections to their previous responses. The GOC also submitted revised information from its questionnaire responses on October 5, 2004.

From September 27, 2004 through October 8, 2004, and October 18, 2004 through October 21, 2004, we conducted verification of the questionnaire responses submitted by the GOC; the Governments of Ontario, Manitoba, Saskatchewan, and Alberta; Sureleen/BSG; Hytek; Premium Pork Canada Inc.; Hart Feeds Limited; Elite Swine Inc./Maple Leaf Foods Inc.; Park View Colony Farms Ltd.; and Willow Creek Colony Ltd. We also verified the information submitted by M & F Trading Inc., Maximum Swine Marketing, and Excel Swine Services, the three trading companies/cooperatives covered by this investigation, as part of the verification of the GOC and the provincial governments.

We received case briefs from the petitioners and the Government of Saskatchewan on January 7, 2005. The respondents (collectively) and the petitioners submitted rebuttal briefs on January 14, 2005. We held a hearing in this investigation on January 19, 2005. Public transcripts from this hearing are available in the Department of Commerce's (“Department”) Central Records Unit in Room B-099 of the main Department building (“CRU”).

Period of Investigation

The period for which we are measuring subsidies, or the period of investigation, is calendar year 2003.

Scope of Investigation

The merchandise covered by this investigation is all live swine (“swine” or “subject merchandise”) from Canada except breeding stock swine. Live swine are defined as four-legged, monogastric (single-chambered stomach), litter-bearing (litters typically range from 8 to 12 animals), of the species sus scrofa domesticus. This merchandise is currently classifiable under Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings 0103.91.00 and 0103.92.00.

Specifically excluded from this scope are breeding stock, including U.S. Department of Agriculture (“USDA”) certified purebred breeding stock and all other breeding stock. The designation of the product as “breeding stock” indicates the acceptability of the product for use as breeding live swine. This designation is presumed to indicate that these products are being used for breeding stock only. However, should the petitioners or other interested parties provide a reasonable basis to believe or suspect that there exists a pattern of importation of such products for other than this application, end-use certification for the importation of such products may be required.

Although the HTSUS headings are provided for convenience and customs purposes, the written description of the merchandise under investigation is dispositive.

Scope Comments

In the Notice of Initiation of Countervailing Duty Investigation: Live Swine From Canada, 69 FR 19818 (April 14, 2004), we invited comments on the scope of this proceeding. On May 4, 2004, we received a request from the GOC to amend the scope of this investigation and the companion antidumping duty (“AD”) investigation. Specifically, the GOC requested that the scope be amended to exclude hybrid breeding stock. According to the GOC, domestic producers use hybrid breeding stock instead of purebred stock to strengthen their strains of swine. The GOC stated that no evidence was provided of injury, or threat of injury, to the domestic live swine industry from the importation of hybrid breeding stock. Furthermore, the GOC noted that the petition excluded USDA certified purebred breeding swine from the scope of the above-mentioned investigations. The GOC argued that the documentation which accompanies imported hybrid breeding swine makes it easy to distinguish hybrid breeding swine from other live swine.

On August 4, 2004, the petitioners submitted a response to the GOC's scope exclusion request and proposed modified scope language. The petitioners stated they did not oppose the GOC's request to exclude hybrid breeding stock, but were concerned about the potential for circumvention of any AD or countervailing duty (“CVD”) order on live swine from Canada through non-breeding swine entering the domestic market as breeding stock. Thus, the petitioners proposed modified scope language that would require end-use certification if the petitioners or other interested parties provide a reasonable basis to believe or suspect that there exists a pattern of importation of such products for other than this application. Moreover, on July 30, 2004, the petitioners submitted a request to the International Trade Commission (“ITC”) to modify the HTSUS by adding a statistical breakout that would separately report imports of breeding animals other than purebred breeding animals, allowing the domestic industry to monitor the import trends of hybrid breeding stock.

On August 9, 2004, both the GOC and the respondent companies submitted comments to respond to the petitioners' proposed revised scope. Both the GOC and the respondent companies stated that they generally agreed with the petitioners' modified scope language, with the two following exceptions: 1) they contended that the petitioners' language setting forth the mechanics of any end use certification procedure was premature and unnecessary, and 2) they argued that the petitioners' language stating that “all products meeting the physical description of subject merchandise that are not specifically excluded are included in this scope” was unnecessary because the physical description of the merchandise in scope remains determinative.

On August 12, 2004, the petitioners submitted a response to the August 9, 2004 comments from the GOC and the respondents. The petitioners reiterated their support for their proposed modification to the scope language. They argued that 1) their proposed language had been used before by the Department in other proceedings; 2) since U.S. importers bear the burden of paying the duties, the importers should be required to certify to the end use of the product; and 3) with the petitioners' concerns about circumvention, the “physical description” language provided an important clarification that all live swine except for the excluded products are included in the scope.

As further discussed in the August 16, 2004 memorandum entitled “Scope Exclusion Request: Hybrid Breeding Stock” (on file in the Department's CRU), we preliminarily revised the scope in both the CVD and companion AD proceedings based on the above scope comments. See Preliminary Determination, 69 FR 81800, 51801-51802, and Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Live Swine from Canada, 69 FR 61639, 61640-61641 (October 20, 2004). No further scope comments were received from any party subsequent to these preliminary determinations. Thus, we have adopted the revised scope from the Preliminary Determination for this final determination. The revised scope language is included in the “Scope of Investigation” section, above.

Injury Test

Because Canada is a “Subsidies Agreement Country” within the meaning of section 701(b) of the Tariff Act of 1930, as amended by the Uruguay Round Agreements Act effective January 1, 1995 (“the Act”), the ITC is required to determine whether imports of the subject merchandise from Canada materially injure, or threaten material injury to, a U.S. industry. On May 10, 2004, the ITC transmitted to the Department its preliminary determination that there is a reasonable indication that an industry in the United States is being materially injured by reason of imports from Canada of the subject merchandise. See Live Swine From Canada, 69 FR 26884 (May 14, 2004).

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this investigation are addressed in the March 4, 2005 “Issues and Decision Memorandum” from Barbara E. Tillman, Acting Deputy Assistant Secretary for Import Administration, to Joseph A. Spetrini, Acting Assistant Secretary for Import Administration (“Decision Memorandum”), which is hereby adopted by this notice. Attached to this notice as an appendix is a list of the issues which parties have raised and to which we have responded in the Decision Memorandum. Parties can find a complete discussion of all issues raised in this investigation and the corresponding recommendations in this public memorandum, which is on file in the CRU. In addition, a complete version of the Decision Memorandum can be accessed directly on the Internet at http://ia.ita.doc.gov/​frn/​ under the heading “Canada.” The paper copy and electronic version of the Decision Memorandum are identical in content.

Suspension of Liquidation

In the Preliminary Determination, the total net countervailable subsidy rate was de minimis and, therefore, we did not suspend liquidation. For the final determination, because the rate remains de minimis, we are not directing U.S. Customs and Border Protection to suspend liquidation of live swine from Canada.

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determination.

Return or Destruction of Proprietary Information

This notice serves as the only reminder to parties subject to Administrative Protective Order (“APO”) of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.

This determination is published pursuant to sections 705(d) and 777(i) of the Act.

Dated: March 4, 2005.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

Appendix

List of Comments and Issues in the Decision Memorandum

Comment 1: Specificity

Comment 2: Green Box Claims

Comment 3: Agricultural Income Disaster Assistance Program Recurring vs. Nonrecurring

Comment 4: Quebec Farm Income Stabilization Insurance/Agricultural Revenue Stabilization Insurance Program

Comment 5: Saskatchewan Short-Term Hog Loan Program

Comment 6: Saskatchewan Livestock and Horticultural Facilities Incentives Program

Footnotes

1.  Alan Christensen, Alicia Prill-Adams, Aulis Farms, Baarsch Pork Farm, Inc., Bailey Terra Nova Farms, Bartling Brothers Inc., Belstra Milling Co. Inc., Berend Bros. Hog Farm LLC, Bill Tempel, BK Pork Inc., Blue Wing Farm, Bornhorst Bros, Brandt Bros., Bredehoeft Farms, Inc., Bruce Samson, Bryant Premium Pork LLC, Buhl's Ridge View Farm, Charles Rossow, Cheney Farms, Chinn Hog Farm, Circle K Family Farms LLC, Cleland Farm, Clougherty Packing Company, Coharie Hog Farm, County Line Swine Inc., Craig Mensick, Daniel J. Pung, David Hansen, De Young Hog Farm LLC, Dean Schrag, Dean Vantiger, Dennis Geinger, Double “M” Inc., Dykhuis Farms, Inc., E & L Harrison Enterprises, Inc., Erle Lockhart, Ernest Smith, F & D Farms, Fisher Hog Farm, Fitzke Farm, Fultz Farms, Gary and Warren Oberdiek Partnership, Geneseo Pork, Inc., GLM Farms, Greenway Farms, H & H Feed and Grain, H & K Enterprises, LTD, Ham Hill Farms, Inc., Harrison Creek Farm, Harty Hog Farms, Heartland Pork LLC, Heritage Swine, High Lean Pork, Inc., Hilman Schroeder, Holden Farms Inc., Huron Pork, LLC, Hurst AgriQuest, J D Howerton and Sons, J. L. Ledger, Inc., Jack Rodibaugh & Sons, Inc., JC Howard Farms, Jesina Farms, Inc., Jim Kemper, Jorgensen Pork, Keith Berry Farms, Kellogg Farms, Kendale Farm, Kessler Farms, L.L Murphrey Company, Lange Farms LLC, Larson Bros Dairy Inc., Levelvue Pork Shop, Long Ranch Inc., Lou Stoller & Sons, Inc., Luckey Farm, Mac-O-Cheek, Inc., Martin Gingerich, Marvin Larrick, Max Schmidt, Maxwell Foods, Inc., Mckenzie-Reed Farms, Meier Family Farms Inc., MFA Inc., Michael Farm, Mike Bayes, Mike Wehler, Murphy Brown LLC, Ned Black and Sons, Ness Farms, Next Generation Pork, Inc., Noecker Farms, Oaklane Colony, Orangeburg Foods, Oregon Pork, Pitstick Pork Farms Inc., Prairie Lake Farms, Inc., Premium Standard Farms, Inc., Prestage Farms, Inc., R Hogs LLC, Rehmeier Farms, Rodger Schamberg, Scott W. Tapper, Sheets Farm, Smith-Healy Farms, Inc., Square Butte Farm, Steven A. Gay, Sunnycrest Inc., Trails End Far, Inc., TruLine Genetics, Two Mile Pork, Valley View Farm, Van Dell Farms, Inc., Vollmer Farms, Walters Farms LLP, Watertown Weaners, Inc., Wen Mar Farms, Inc., William Walter Farm, Willow Ridge Farm LLC, Wolf Farms, Wondraful Pork Systems, Inc., Wooden Purebred Swine Farms, Woodlawn Farms, and Zimmerman Hog Farms.