[Federal Register Volume 64, Number 90 (Tuesday, May 11, 1999)]
[Notices]
[Pages 25277-25288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11887]
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DEPARTMENT OF COMMERCE
INTERNATIONAL TRADE ADMINISTRATION
[C-122-834]
Preliminary Negative Countervailing Duty Determination; Live
Cattle From Canada
AGENCY: Import Administration, International Trade Administration,
Department of Commerce
EFFECTIVE DATE: May 11, 1999.
FOR FURTHER INFORMATION CONTACT: Zak Smith, Stephanie Hoffman, James
Breeden, or Melani Miller Office I, AD/CVD Enforcement, Import
Administration, U.S. Department of Commerce, Room 3099, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
0189, (202) 482-4198, (202)
[[Page 25278]]
482-1174, or (202) 482-0116, respectively.
Preliminary Determination
The Department of Commerce preliminarily determines that
countervailable subsidies are not being provided to producers and
exporters of live cattle in Canada.
Petitioner
The petition in this investigation was filed on November 12, 1998,
by the Ranchers-Cattlemen Action Legal Foundation (R-Calf, referred to
hereafter as the ``petitioner'').
Case History
Since the publication of the notice of initiation in the Federal
Register (see Initiation of Countervailing Duty Investigation of Live
Cattle From Canada, 63 FR 71889 (December 30, 1998) (``Notice of
Initiation'')), the following events have occurred. On January 28,
1999, we issued a countervailing duty questionnaire to the Government
of Canada (``GOC''). In our questionnaire, we indicated that we would
be limiting our investigation to the four largest cattle producing
provinces in Canada: Alberta, Manitoba, Ontario, and Saskatchewan.
Thus, we have not investigated provincial or federal/provincial
programs that are not related to the above four provinces.
Specifically, we have not included in our investigation the following
programs included in our Notice of Initiation: the British Colombia
Livestock Feeder Loan Guarantee Program, the Quebec Farm Financing Act,
the Technology Innovation Program Under the Agri-Food Agreement, and
the Quebec Farm Income Stabilization Insurance Program (FISI).
On January 27, 1999, we postponed the preliminary determination of
this investigation until May 3, 1999 (see Postponement of Preliminary
Countervailing Duty Determination: Live Cattle From Canada, 64 FR 4073)
on the basis that it was extraordinarily complicated.
We received a response to our initial questionnaire from the GOC,
which included responses from the provincial governments of Alberta
(``the GOA''), Manitoba (``the GOM''), Ontario (``the GOO''), and
Saskatchewan (``the GOS''), on March 24 and April 8, 1999. On March 24,
1999, the petitioner filed an indirect subsidy allegation regarding
silage production. However, there was insufficient evidence to support
its claim; therefore, we are not investigating that allegation. On
April 7 and 13, 1999, we issued supplemental questionnaires to the GOC
and received responses to the supplemental questionnaires on April 16
and 22, 1999.
Scope of Investigation
For purposes of this investigation, the product covered is all live
cattle except imports of dairy cows for the production of milk for
human consumption and purebred cattle specially imported for breeding
purposes and other cattle specially imported for breeding purposes.
The merchandise subject to this investigation is currently
classifiable under subheading 0102.90.40 of the Harmonized Tariff
Schedule of the United States (``HTSUS''), with the exception of
0102.90.40.72 and 0102.90.40.74. Although the HTSUS subheadings are
provided for convenience and customs purposes, the Department's written
description of the scope of this proceeding is dispositive.
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions of the Tariff Act of 1930, as amended by
the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995
(``the Act''). In addition, unless otherwise indicated, all citations
to the Department of Commerce's (``the Department's'') regulations are
to the current regulations as codified at 19 CFR Part 351 (April 1998).
Although Subpart E of 19 CFR Part 351, published on Novemer 25, 1998
(63 FR 65348) does not apply to this investigation, Subpart E
represents the Department's interpretation of the requirements of the
Act. See 19 CFR 351.702(b).
Injury Test
Because Canada is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Act, the International Trade
Commission (``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 January 25, 1999, the ITC published its
preliminary determination finding that there is a reasonable indication
that an industry in the United States is being materially injured, or
threatened with material injury, by reason of imports from Canada of
the subject merchandise (ee 64 FR 3716).
Period of Investigation
The period for which we are measuring subsidies (``the POI'') is
the GOC's fiscal year, April 1, 1997, through March 31, 1998.
Subsidies Valuation Information
Allocation Period
We have used three years as the allocation period in this
investigation. Based on information provided by the petitioner, three
years is the average useful life (``AUL'') of productive assets for the
Canadian cattle industry. Parties are not contesting this AUL.
Subsidy Rate Calculation
Due to the extremely large number of cattle producers in Canada, we
have collected subsidy information on an industry-wide or ``aggregate''
basis (i.e., the total amount of benefits provided under a particular
program). Moreover, as noted above, we have limited our investigation
to the four largest cattle producing provinces in Canada. Therefore,
unless otherwise noted, for each program preliminarily found to be
countervailable, we have calculated the ad valorem subsidy rate by
dividing the total amount of the benefit attributed to cattle producers
in the four relevant provinces during the POI by the total sales of all
cattle in the same four provinces.
Benchmarks for Long-Term Loans and Discount Rates
To calculate the countervailable benefit from loans and
nonrecurring grants, we have used a previously verified benchmark
interest rate charged by Canadian commercial banks on loans made to the
farming sector. This rate is equal to the prime rate plus one and one-
half percentage points. See Live Swine From Canada; Preliminary Results
of Countervailing Duty Administrative Review, 63 FR 23723, 23726 (April
30, 1998). Accordingly, we have used the average prime rates based on
the figures published by the Bank of Canada plus one and one-half
percentage points.
Loan Guarantee Programs
For certain loan guarantee programs that we have preliminarily
found to be countervailable, the respondents were unable to provide the
specific loan information required to perform a precise calculation of
the countervailable benefit attributable to cattle producers during the
POI. Their inability to provide the data arose because of the nature of
the underlying loan instrument (i.e., lines of credit which had no
predetermined time frame for the disbursal of principal or set
repayment schedule), the extremely large number of loans provided, and
the large number of transactions (withdrawals and payments) conducted
pursuant to those loans. Therefore, for
[[Page 25279]]
these programs, we have estimated the countervailable benefit by
calculating the difference between the interest actually paid in the
POI and the interest that would have been paid for a commercial loan
absent a guarantee. See Extruded Rubber Thread From Malaysia: Final
Affirmative Countervailing Duty Determination and Countervailing Duty
Order, 57 FR 38472 (August 25, 1992). In effect, we are applying our
short-term loan methodology to these long-term loan instruments. This
approach does not yield a precise measure of the benefit because the
loan instruments being examined are effectively lines of credit with
balances and interest rates varying from month-to-month. Nonetheless,
we believe this methodology is reasonable under the circumstances
presented by this investigation.
Also, the respondents reported various fees they paid in connection
with the guaranteed loans. However, the information they presented with
respect to fees payable on commercial loans was unclear. So, as to
avoid a comparison of nominal benchmark rates with effective interest
rates on the government-guaranteed loans, we have generally not
included the fees in calculating the amounts paid under the government-
guaranteed loans. Consequently, we are comparing nominal rates to
nominal rates. The one exception to this is the fee specifically paid
to FIMCLA for the guarantee, which is an allowable offset under section
771(6)(A) of the Act. We intend to seek further information on the fees
that would be paid on commercial loans for our final determination.
I. Programs Preliminarily Determined To Be Countervailable
Loan and Loan Guarantee Programs
A. Farm Improvement and Marketing Cooperative Loans Act (``FIMCLA'')
FIMCLA provides federal government guarantees on loans extended by
private commercial banks and other lending institutions to farmers
across Canada. Created in 1987, the purpose of this program is to
increase the availability of loans for the improvement and development
of farms and the marketing, processing and distribution of farm
products by cooperative associations. Persons engaged in farming
operations are eligible for a FIMCLA guarantee if the loan is for one
of the following activities: purchase or repair of tools, purchase or
repair of machinery, purchase of livestock, alteration or improvement
of machinery, erection or construction of fencing or works for
drainage, construction or alteration of any building or structure on a
farm, or the purchase of additional land. FIMCLA guarantees payment to
the lender of up to 95 percent of any loss on a loan made under a
FIMCLA loan guarantee. The maximum amount of money that an individual
can borrow under this program is C$250,000. For marketing cooperatives,
the maximum amount is C$3,000,000. The GOC reported that beef and hog
farmers, which are categorized as one group by the FIMCLA
administration, received approximately 25 to 30 percent of all
guarantees between 1994 and 1998, while other users such as poultry,
fruit and vegetables, and dairy producers received less than ten
percent of the guarantees.
A loan guarantee is a financial contribution, as described in
section 771(5)(D)(i) of the Act, which provides a benefit to the
recipients equal to the difference between the amount the recipients of
the guarantee pay on the guaranteed loans, after adjusting for
guarantee fees, and the amount the recipients would pay for a
comparable commercial loan absent the guarantee. Because the beef and
pork industries received a disproportionate share of benefits between
1994 and 1998, we preliminarily determine that the program is specific
under section 771(5A)(D)(iii) of the Act. Therefore, we preliminarily
determine that these loan guarantees are countervailable subsidies, to
the extent that they lower the cost of borrowing, within the meaning of
section 771(5) of the Act.
In its questionnaire response, the GOC provided a sample of loans
guaranteed under the program for beef and hog producers throughout
Canada. Because of the large number of loans reported, we agree with
the GOC's argument that this sample yields an accurate reflection of
all loans provided to beef and hog producers that receive FIMCLA
guarantees.
To calculate the subsidy conferred by this program, we used our
long-term fixed-rate or variable-rate loan methodology (depending on
the terms of the reported loans) to compute the total benefit on the
sampled loans. We then calculated the subsidy per dollar loaned to beef
and hog producers. This ratio was multiplied by the total value of
guaranteed loans outstanding to beef and hog producers in the POI to
arrive at the total subsidy. We then divided the total subsidy
attributable to the POI by Canada's total sales of live cattle during
the POI. On this basis, we preliminarily determine the total benefit
from this program to be 0.05 percent ad valorem. Ideally, the
denominator used to calculate the total benefit from this program would
include Canadian hog sales, but the GOC did not provide the necessary
sales data.
B. Alberta Feeder Associations Guarantee Program
The Alberta Feeder Associations Guarantee Act was established in
1938 to encourage banks to lend to cattle producers. The program is
administered by the Alberta Department of Agriculture, Food and Rural
Development. Under this program, up to 15 percent of the principal
amount of commercial loans taken out by feeder associations for the
acquisition of cattle is guaranteed. Eligibility for the guarantees is
limited to feeder associations located in Alberta. Sixty-two
associations received guarantees on loans which were outstanding during
the POI.
A loan guarantee is a financial contribution, as described in
section 771(5)(D)(i) of the Act, which provides a benefit to the
recipients equal to the difference between the amount the recipients of
the guarantee pay on the guaranteed loans and the amount the recipients
would pay for a comparable commercial loan absent the guarantee.
Because eligibility is limited to feeder associations, we preliminarily
determine that the program is specific under section 771(5A)(D)(i) of
the Act. Therefore, we preliminarily determine that these loan
guarantees are countervailable subsidies, to the extent that they lower
the cost of borrowing, within the meaning of section 771(5) of the Act.
To calculate the subsidy conferred by the loan guarantees we
applied our short-term loan methodology and compared the amount of
interest actually paid during the POI by the associations to the amount
that would have been paid at the benchmark rate, as described in the
Subsidies Valuation Information section, above. We then divided the
associations' interest savings by the investigated provinces' total
sales of live cattle during the POI. On this basis, we preliminarily
determine the total benefit from this program to be 0.04 percent ad
valorem.
C. Manitoba Cattle Feeder Associations Loan Guarantee Program
The Manitoba Cattle Feeder Associations Loan Guarantee Program was
established in 1991 to assist in the diversification of Manitoba farm
operations. The program is currently administered by the Manitoba
Agricultural Credit Corporation (``MACC''). The provincial government,
through MACC, guarantees 25 percent of the principal amount of loans
for the
[[Page 25280]]
acquisition of livestock by feeder associations. Eligibility for the
guarantees is limited to feeder associations located in Manitoba.
Associations must be incorporated under the Cooperatives Act of
Manitoba, have a minimum of fifteen members, an elected board of
directors, and a registered brand for use on association cattle. Ten
associations received guarantees on loans which were outstanding during
the POI.
A loan guarantee is a financial contribution, as described in
section 771(5)(D)(i) of the Act, which provides a benefit to the
recipients equal to the difference between the amount the recipients of
the guarantee pay on the guaranteed loans and the amount the recipients
would pay for a comparable commercial loan absent the guarantee.
Because eligibility is limited to feeder associations, we preliminarily
determine that the program is specific under section 771(5A)(D)(i) of
the Act. Therefore, we preliminarily determine that these loan
guarantees are countervailable subsidies, to the extent that they lower
the cost of borrowing, within the meaning of section 771(5) of the Act.
To calculate the subsidy conferred by the loan guarantees, we
applied our short-term loan methodology and compared the amount of
interest actually paid during the POI by the associations to the amount
that would have been paid at the benchmark rate, as described in the
Subsidies Valuation Information section, above. We then divided the
associations' interest savings by the investigated provinces' total
sales of live cattle during the POI. On this basis, we preliminarily
determine the total benefit from this program to be less than 0.01
percent ad valorem.
D. Ontario Feeder Cattle Loan Guarantee Program
The Ontario Feeder Cattle Loan Program was established in 1990 to
assist cattle producers. The program is administered by the Ontario
Ministry of Agriculture, Food and Rural Affairs (``OMAFRA''). OMAFRA
provides a start-up grant of $10,000 to new feeder associations and a
25 percent government guarantee on loans to associations for the
purchase and sale of cattle. Eligibility for the guarantees is limited
to feeder associations which have at least twenty individuals who own
or rent land in Ontario and are not members of other feeder
associations. Eighteen associations received guarantees on loans which
were outstanding during the POI.
Loan guarantees and grants are financial contributions, as
described in section 771(5)(D)(i) of the Act. Loan guarantees provide a
benefit to the recipients equal to the difference between the amount
the recipients of the guarantee pay on the guaranteed loans and the
amount the recipients would pay for a comparable commercial loan absent
the guarantee. In the case of grants, the benefit to recipients is the
amount of the grant. Because eligibility for the loan guarantees and
grants under this program is limited to feeder associations, we
preliminarily determine that the program is specific under section
771(5A)(D)(i) of the Act. Therefore, we preliminarily determine that
these loan guarantees and grants are countervailable subsidies within
the meaning of section 771(5) of the Act.
To calculate the subsidy conferred by the loan guarantees, we
applied our short-term loan methodology and compared the amount of
interest actually paid during the POI by the associations to the amount
that would have been paid at the benchmark rate, as described in the
Subsidies Valuation Information section, above. We then divided the
associations' interest savings by the investigated provinces' total
sales during the POI. On this basis, we preliminarily determine the
total benefit from this program to be 0.01 percent ad valorem.
Additionally, we preliminary determine that the grants provided
under this program are non-recurring because the recipients could not
expect to receive them on an on-going basis. However, because the
subsidy was below 0.50 percent of the investigated provinces' sales in
the year of receipt in each of the relevant years, we expensed the
benefit from the grants. For the POI, we divided the grants received
during the POI by the investigated provinces' total sales of live
cattle during the POI. On this basis we preliminarily determine the
countervailable subsidy to be less than 0.01 percent ad valorem.
To calculate the total benefit to cattle producers under this
program, we summed the benefit calculated for the loan guarantees and
grants. On this basis, we preliminarily determine the total benefit
from this program to be 0.01 percent ad valorem.
E. Saskatchewan Feeder Associations Loan Guarantee Program
The Saskatchewan Feeder Associations Loan Guarantee Program was
established in 1984 to facilitate the establishment of cattle feeder
associations in order to promote cattle feeding in Saskatchewan. The
program is administered by the Livestock and Veterinary Operations
Branch of the Saskatchewan Agriculture and Food Department. This agency
provides a government guarantee for 25 percent of the principal amount
on loans to feeder associations for the purchase of feeder heifers and
steers. Eligibility for the guarantees is limited to feeder
associations with at least twenty members over the age of eighteen, who
are not active in other feeder associations. One hundred and sixteen
associations received guarantees on loans which were outstanding during
the POI.
A loan guarantee is a financial contribution, as described in
section 771(5)(D)(i) of the Act, which provides a benefit to the
recipients equal to the difference between the amount the recipients of
the guarantee pay on the guaranteed loans and the amount the recipients
would pay for a comparable commercial loan absent the guarantee.
Because eligibility for the guarantees is limited to feeder
associations, we preliminarily determine that the program is specific
under section 771(5A)(D)(i) of the Act. Therefore, we preliminarily
determine that these loan guarantees are countervailable subsidies, to
the extent that they lower the cost of borrowing, within the meaning of
section 771(5) of the Act.
To calculate the subsidy conferred by the loan guarantees, we
applied our short-term loan methodology and compared the amount of
interest actually paid during the POI by the associations to the amount
that would have been paid at the benchmark rate, as described in the
Subsidies Valuation Information section, above. We then divided the
associations' interest savings by the investigated provinces' total
sales during the POI. On this basis, we preliminarily determine the
total benefit from this program to be 0.01 percent ad valorem.
F. Saskatchewan Breeder Associations Loan Guarantee Program
The Saskatchewan Breeder Associations Loan Guarantee Program was
established in 1991 to facilitate the establishment of cattle breeder
associations, in an effort to promote cattle breeding in Saskatchewan.
The program is administered by the Livestock and Veterinary Operations
Branch of the Saskatchewan Agriculture and Food Department. This agency
provides a guarantee on 25 percent of the principal amount of loans to
breeder associations for the purchase of certain breeding cattle.
Eligibility is limited to breeder associations which consist of at
least twenty individuals who are residents of Saskatchewan and over the
[[Page 25281]]
age of eighteen. One hundred and seven associations received guarantees
on loans which were outstanding during the POI.
A loan guarantee is a financial contribution, as described in
section 771(5)(D)(i) of the Act, which provides a benefit to the
recipients equal to the difference between the amount the recipients of
the guarantee pay on the guaranteed loans and the amount the recipients
would pay for a comparable commercial loan absent the guarantee.
Because eligibility is limited to feeder associations, we preliminarily
determine that the program is specific under section 771(5A)(D)(i) of
the Act. Therefore, we preliminarily determine that these loan
guarantees are countervailable subsidies, to the extent that they lower
the cost of borrowing, within the meaning of section 771(5) of the Act.
To calculate the subsidy conferred by the loan guarantees, we
applied our short-term loan methodology and compared the amount of
interest actually paid during the POI by the associations to the amount
that would have been paid at the benchmark rate, as described in the
Subsidies Valuation Information section, above. We then divided the
associations' interest savings by the investigated provinces' total
sales during the POI. On this basis, we preliminarily determine the
total benefit from this program to be 0.01 percent ad valorem.
Provision of Goods or Services
G. Prairie Farm Rehabilitation Community Pasture Program
The Prairie Farm Rehabilitation Administration (``PFRA'') was
created in the 1930s to rehabilitate drought and soil drifting areas in
the Provinces of Manitoba, Saskatchewan, and Alberta. The PFRA
established the Community Pasture Program to facilitate improved land
use through its rehabilitation, conservation, and management. The goal
of the common Pasture Program is to utilize the resource primarily for
the summer grazing of cattle to encourage long-term production of high
quality cattle. In pursuit of its objectives, the PFRA operates 87
separate pastures encompassing approximately 2.2 million acres. At
these pastures, the PFRA offers grazing privileges and optional
breeding services for fees as established by PFRA. The fees are based
upon recovery of the costs associated with the grazing and breeding
services.
The provision of a good or service is a financial contribution as
described in section 771(5)(D)(iii) of the Act. To determine whether a
benefit is conferred in the provision of the service, it is necessary
to examine whether the provider receives adequate remuneration.
According to section 771(5)(E) of the Act, the adequacy of remuneration
with respect to a government's provision of a good or service ``* * *
shall be determined in relation to prevailing market conditions for the
good or service being provided or the goods being purchased in the
country which is subject to the investigation or review. Prevailing
market conditions include price, quality, availability, marketability,
transportation, and other conditions of purchase or sale.'' Therefore,
to judge the adequacy of remuneration we compared the prices charged
for public pasture services to those charged by private providers.
Based on this comparison, we preliminarily determine that the price for
private pastures is higher than the price for public pastures. The GOC
has argued that lower prices for public pasture services should be
expected because the quality of services offered is lower. In
particular, cattle in public pastures are commingled, while farmers
prefer to graze cattle in an exclusive environment. We have not
considered making adjustments for differences in the types of services
offered at public and private pastures because the GOC was unable to
quantify them.
Because use of Community Pastures is limited to Canadian farmers
involved in grazing livestock, we preliminarily determine that the
program is specific under section 771(5A)(D)(i) of the Act. Therefore,
we preliminarily determine that the provision of public pasture
services is a countervailable subsidy within the meaning of section
771(5) of the Act.
To measure the benefit, we calculated the difference between the
price for public pasture service and the price for privately provided
pasture. This difference was multiplied by the total number of cow/calf
pairs serviced by the PFRA during the POI. We treated the resulting
amount as a recurring benefit and divided it by the investigated
provinces' total sales during the POI. On this basis, we determine the
countervailable subsidy to be 0.04 percent ad valorem.
H. Alberta Crown Lands Basic Grazing Program
Over time, Alberta has developed a system for granting grazing
rights on public land. Grazing rights began to be issued on public
lands in the early 1930s. Today, through Alberta Agriculture and
Municipal Affairs, over 10.5 million acres of land are managed by the
GOA including a grazing component of approximately two million animal
unit months (``AUM's''). AUMs are defined as the amount of forage
required to feed one animal for one month while maintaining the
vegetative state of the land in good condition.
Leases for grazing rights range from one to twenty year terms, but,
in practice, all leases are renewed if the lessee is in good standing.
Alberta's Public Lands Act dictates how rental prices will be set.
Specifically, section 107 states that annual rent will be equal to a
percentage of the forage value of the leased land. When determining the
forage value of the land, the administering authority is required to
consider the grazing capacity of the land, the average gain in weight
of cattle on grass, and the average price per pound of cattle sold in
the principal livestock markets in Alberta during the preceding year.
Beyond paying the lease fee, lessees are also required to construct and
maintain capital improvements necessary for livestock and must comply
with all multiple-use and conservation restrictions imposed by the
government on the land. Lastly, lessees must pay school and municipal
taxes charged on the land being leased.
The provision of a good or service is a financial contribution as
described in section 771(5)(D)(iii) of the Act. As discussed above in
connection with the PFRA, a benefit is conferred in the provision of a
good or service when the prices charged for government-provided goods
or services are less than the prices charged by private suppliers. In
the case of the Alberta Crown Lands Basic Grazing Program, a simple
comparison of the fees charged would not be appropriate because the
grazing rights being offered by the GOA differ from those offered by
private suppliers. In this regard, the GOA has provided certain
quantifiable adjustments. Specifically, we adjusted the private price
downward by deducting costs for the construction and maintenance of
fences and water improvements, and the cost of paying property taxes.
Although the GOA argued that there were other differences that should
be taken into account for such things as multiple-use and conservation
requirements, we have not considered making adjustments for such costs
because the GOA was unable to quantify them. Comparing the public
grazing lease to the adjusted private lease price, we preliminarily
determine that the price for private leases is higher than the price
for a public grazing lease. This provides a benefit to the recipients
equal to the difference between the amount the recipients pay for the
good
[[Page 25282]]
and the amount the recipients would pay for a comparable good.
Because the use of the Alberta Crown Lands Basic Grazing Program is
limited to people grazing livestock, we preliminarily determine that
the program is specific under section 771(5A)(D)(i) of the Act.
Therefore, we preliminarily determine that the provision of public
grazing rights is a countervailable subsidy within the meaning of
section 771(5) of the Act.
To measure the benefit, we calculated the difference between the
price per AUM for a public grazing lease and the adjusted price per AUM
for a private grazing lease. We multiplied this difference by the total
AUMs provided through Alberta's grazing programs. We treated the
resulting amount as a recurring benefit and divided it by the
investigated provinces' total sales during the POI. On this basis, we
determine the countervailable subsidy to be 0.18 percent ad valorem.
I. Manitoba Crown Lands Program
Agricultural Crown land is managed by Manitoba Agriculture Crown
Lands (``MACL'') whose primary objective is to administer the
disposition of Crown lands and to improve the lands' productivity.
Crown agricultural land is made available to farmers through
cultivation and grazing leases. Lease holders are required to pay an
amount-in-lieu of municipal taxes as well as to construct and maintain
fences and watering facilities. Also, the public has access to Crown
lands at all times without prior permission of the lessee for such
activities as wildlife hunting, forestry, winter sports, hiking, and
berry picking. During the POI, MACL administered 1.6 million acres of
grazing leases accounting for 707,699 AUMs.
Leases for grazing dispositions range from one to fifty year terms.
MACL sets rental rates each year by multiplying the number of AUMs the
leased land is capable of producing in an average year by an annual AUM
rental rate. The AUM rental rate is based on recovering the
administrative costs for the program using the previous year's actual
costs.
The provision of a good or service is a financial contribution as
described in section 771(5)(D)(iii) of the Act. As discussed above in
connection with the PFRA, a benefit is conferred in the provision of a
good or service when the prices charged for government-provided goods
or services are less than the prices charged by private suppliers. In
the case of the Manitoba Crown Lands Program, a simple comparison of
the fees charged would not be appropriate because the grazing rights
being offered by the GOM differ from those offered by private
suppliers. In this regard, the GOM has provided certain quantifiable
adjustments. Specifically, we adjusted the private price downward by
deducting costs for the construction and maintenance of fences and
watering facilities and the cost of paying an amount-in-lieu of
municipal taxes. Although the GOM argued that there were other
differences that should be taken into account for such things as
multiple-use requirements and the isolated nature of Manitoba's Crown
lands, we have not considered making the adjustments for such costs
because the GOM was unable to quantify them. Comparing the public
grazing lease to the adjusted private lease price, we preliminarily
determine that the price for private leases is higher than the price
for a public grazing lease.
Because use of the Manitoba Crown Lands Program is limited to
people involved in grazing livestock, we preliminarily determine that
the program is specific under section 771(5A)(D)(i) of the Act.
Therefore, we preliminarily determine that the provision of public
grazing rights is a countervailable subsidy within the meaning of
section 771(5) of the Act.
To measure the benefit, we calculated the difference between the
price per AUM for a public grazing lease and the adjusted price per AUM
for a private grazing lease. We multiplied this difference by the total
AUM provided by MACL. We treated the resulting amount as a recurring
benefit and divided it by the investigated provinces' total sales
during the POI. On this basis, we determine the countervailable subsidy
to be 0.01 percent ad valorem.
J. Saskatchewan Pasture Program
The Saskatchewan Pasture Program has been in place since 1922. It
is designed to provide supplemental grazing to Saskatchewan livestock
producers and maintain grazing and other fragile lands in permanent
cover to promote soil stability. Saskatchewan Agriculture and Food
(``SAF'') operates 56 provincial community pastures encompassing
804,000 acres. Through these pastures, the SAF offers grazing,
breeding, and health services for fees as established by SAF. Fees are
based upon recovery of the costs associated with the grazing and
breeding services of each pasture.
The provision of a good or service is a financial contribution as
described in section 771(5)(D)(iii) of the Act. As discussed above in
connection with the PFRA, a benefit is conferred in the provision of a
good or service when the prices charged for government-provided goods
or services are less than the prices charged by private suppliers.
Based on a comparison of these prices, we preliminarily determine that
the price for private pastures is higher than the price for public
pastures. The GOS has argued that lower prices for public pasture
services should be expected because the quality of services offered is
lower. In particular, cattle in public pastures are commingled, while
farmers prefer to graze cattle in an exclusive environment. We have not
considered making adjustments for differences in the types of services
offered at public and private pastures because the GOS was unable to
quantify them.
Because use of the Saskatchewan Pasture Program is limited to
Canadian farmers involved in grazing livestock, we preliminarily
determine that the program is specific under section 771(5A)(D)(i) of
the Act. Therefore, we preliminarily determine that the provision of
public pasture services is a countervailable subsidy within the meaning
of section 771(5) of the Act.
To measure the benefit, we calculated the difference between the
price for public pasture service and the price for privately provided
pasture. This difference was multiplied by the total number of AUM
provided by SAF during the POI. We treated the resulting amount as a
recurring benefit and divided it by the investigated provinces' total
sales during the POI. On this basis, we determine the countervailable
subsidy to be 0.01 percent ad valorem.
Other Programs
K. Northern Ontario Heritage Fund Corporation Agriculture Assistance
The Northern Ontario Heritage Fund Corporation (``NOHFC'') was
established in 1988 as a Crown corporation for the purpose of promoting
and stimulating economic development in northern Ontario. NOHFC focuses
on funding infrastructure improvements and development opportunities in
northern Ontario. Assistance for these projects is available through
forgivable performance loans, incentive term loans, and loan
guarantees. With respect to agricultural projects, all assistance
provided by NOHFC is in the form of forgivable performance loans. The
types of agricultural projects funded include capital projects,
marketing projects and research and development projects. Fifty percent
of capital project costs may be eligible for funding, up to a maximum
of C$2.5 million. For marketing projects, fifty percent of the project
costs may receive funding, up to a maximum of C$500,000. For research
and development projects, 75 percent of
[[Page 25283]]
the project costs may receive funding, up to a maximum of C$500,000.
The loans made available to these projects are normally forgiven over
two to three years. The extent of debt forgiveness is dependent upon
the project meeting its target of increasing the value of farm
production by an amount equal to the NOHFC contribution. We do not
currently have information on the record as to whether the terms of the
loans provide a potential countervailable benefit. However, prior to
the issuing of our final determination, we plan on gathering such
information.
Debt forgiveness is a financial contribution as described in
section 771(5)(D)(i) of the Act, which provides a benefit to the
recipients equal to the amount of the debt forgiven. Because benefits
under this program are only available in northern Ontario, we
preliminarily determine that the program is regionally specific under
section 771(5A)(D)(iv) of the Act. Therefore, we preliminarily
determine that this debt forgiveness is countervailable within the
meaning of section 771(5) of the Act.
We further preliminarily determine that this debt forgiveness is
non-recurring because the recipients could not expect to receive it on
an ongoing basis. However, because the benefit to cattle producers in
Ontario was below 0.50 percent of the investigated provinces' sales in
the year of receipt in each of the relevant years, we expensed the debt
forgiveness in the year received. To calculate the benefit for the POI,
we divided the total amount of the forgiven debt by the investigated
provinces' total sales during the POI. On this basis, we preliminarily
determine the countervailable subsidy to be 0.01 percent ad valorem.
L. Ontario Livestock, Poultry, and Honeybee Protection Act
This program, which is administered by the Ontario Ministry of
Agriculture, Food and Rural Affairs, provides compensation, inter alia,
to livestock producers whose animals are injured or killed by wolves or
coyotes. Producers apply for, and receive, compensation through the
local municipal government. The Ontario Ministry of Agriculture, Food
and Rural Affairs reimburses the municipality. Grants for damage to
live cattle cannot exceed C$1,000 per head. Although the Ministry of
Agriculture does not track the proportion of benefits under this
program going to dairy cattle or beef cattle producers, the GOO has
reported that beef cattle producers are believed to derive the majority
of the benefits from the program.
A grant is a financial contribution as described in section
771(5)(D)(i) of the Act, which provides a benefit to recipients in the
amount of the grant. Because this program is limited by law to
livestock producers, poultry farmers, and beekeepers, we preliminarily
determine that the program is specific under section 771(5A)(D)(i) of
the Act. Therefore, we preliminarily determine that these grants are
countervailable within the meaning of section 771(5) of the Act.
We treated the grants received as a recurring benefit because
livestock producers can expect to receive the grants every year. To
calculate the benefit, we divided the total amount of grants received
by the investigated provinces' total sales of live cattle during the
POI. On this basis, we determine the countervailable subsidy to be 0.01
percent ad valorem.
M. Ontario Rabies Indemnification Program
This program is administered by the Farm Assistance Branch of the
Ontario Ministry of Agriculture, Food and Rural Affairs. It is designed
to encourage farmers to report cases of rabies in livestock by
compensating livestock producers for damage caused by rabies. Farmers
may receive grants up to a maximum of C$1,000 per head of cattle under
this program of which 60 percent is funded by the GOO and 40 percent by
the GOC.
A grant is a financial contribution as described in section
771(5)(D)(i) of the Act which provides a benefit to recipients in the
amount of the grant. Because the legislation administering this program
expressly makes it available only to livestock producers, we
preliminarily determine that the program is specific under section
771(5A)(D)(i) of the Act. Therefore, we preliminarily determine that
these grants are countervailable within the meaning of section 771(5)
of the Act.
We treated the grants received as a recurring benefit because
farmers can expect to receive the grants every year. To calculate the
benefit, we divided the total amount of grants received by the
investigated provinces' total sales of live cattle during the POI. On
this basis, we determine the countervailable subsidy to be less than
0.01 percent ad valorem.
N. Saskatchewan Livestock and Horticultural Facilities Incentives
Program
The purpose of this program is to promote the diversification of
the rural economy by encouraging investment in livestock and
horticultural facilities. This program allows for an annual rebate of
education and health taxes paid on building materials and stationary
equipment used in livestock operations as well as greenhouses, and
vegetable and raw fruit storage facilities.
A tax benefit is a financial contribution as described in section
771(5)(D)(ii) of the Act which provides a benefit to the recipient in
the amount of the tax savings. Because the legislation administering
this program expressly makes it available only to the livestock and
horticulture industries, we preliminarily determine that the program is
specific under section 771(5A)(D)(i) of the Act. Therefore, we
preliminarily determine that this tax benefit is countervailable within
the meaning of section 771(5) of the Act.
In calculating the benefit, we treated the tax savings as a
recurring benefit and divided the tax savings received by the
investigated provinces' total sales during the POI. On this basis, we
preliminarily determine the countervailable subsidy to be less than
0.01 percent ad valorem.
II. Programs Preliminarily Determined To Be Not Countervailable
A. Canadian Wheat Board
The Canadian Wheat Board (``CWB'') has the exclusive authority to
market Canadian wheat and barley in export markets and when sold for
human consumption in Canada. The petitioner alleged that the CWB
pooling system and its control over exports of feed barley send
distorted market signals to Canadian farmers with the result that
exports of feed barley are less than they otherwise would be and,
consequently, that prices in Canada are artificially low. Although
there is not an explicit export restriction as was the case in Certain
Softwood Lumber Products from Canada, 57 FR 22570, 22605 (1992)
(``Lumber'') and Leather from Argentina, 55 FR 40212 (1990)
(``Leather''), in the petitioner's view, the CWB's actions have the
same result as the export restrictions which the Department found
countervailable in those cases.
The CWB operates four separate annual pool accounts for the four
types of grains it markets. At the start of a pool year (August), the
CWB issues initial prices that it will pay for the various grades and
grains. Barley farmers look at that initial payment and the projected
pool return and determine whether they want to sell their barley
domestically or offer it to the CWB for export. The amount of barley
offered to the CWB is solely the farmer's decision, although this
decision could be influenced by the CWB's published initial price. The
CWB accepted all
[[Page 25284]]
barley offered to it for export during the POI.
The petitioner has alleged that the CWB's actions have resulted in
significant price differentials for feed barley in the Canadian and
U.S. markets, and that the U.S. price reflects what the price would be
in Canada but for the CWB's control of exports. In making our price
comparisons, we reviewed the record evidence with respect to domestic
prices of feed barley (specifically, grade Number 1 CW Feed) in Canada,
the prices paid by the CWB to Canadian barley farmers, the prices
received by the CWB for feed barley exported to the United States, and
feed barley prices in the United States (U.S. Number 2 feed). To
calculate a Canadian domestic price, we took a simple average of all
Canadian ``Off-Board'' prices on the record for the four provinces
under investigation (information is not currently on the record to
calculate a weighted average price based upon barley production in each
of the four provinces). The U.S. domestic price we examined is based on
quotes from Great Falls, Montana (the only U.S. domestic price series
currently on the record and the U.S. pricing point used in several
economic studies of U.S. and Canadian feed barley prices cited or
provided in the record). All prices were quoted at an elevator or
feedlot and did not include any elevation or handling charges.
Therefore, we did not make any adjustments to the reported prices. We
observed that the price differential between the U.S. and Canadian
markets was insignificant during the POI. In fact, the Canadian
domestic price was actually higher in portions of the POI and after the
POI. Therefore, we preliminarily determine that, assuming arguendo that
the CWB controlled exports, it did not thereby provide a benefit to
Canadian producers of live cattle during the POI.
Notwithstanding the above analysis, we note that the Canadian
domestic feed barley market was especially strong during the POI.
Because we do not have pricing data on previous years, we cannot
determine whether the POI provides a reliable basis upon which to
conduct our analysis. Therefore, prior to our final determination, we
intend to seek more information on historical pricing in the Canadian
domestic market, CWB export prices to the United States and U.S.
domestic prices. Furthermore, we intend to do a more extensive analysis
of how actions of the CWB may affect market prices in Canada. The fact
that there was no significant differential between export and domestic
prices in the POI does not necessarily support the conclusion that the
actions of the CWB have not resulted in domestic feed barley prices
being lower than they otherwise would be.
We note that in a submission dated April 29, 1999, the petitioner
has objected to the use of export prices to the United States reported
by the CWB. We have determined that these prices can be used for our
preliminary determination, but we intend to verify these reported
amounts and the underlying data, and may request more detailed data.
B. Net Income Stabilization Account
The Net Income Stabilization Account (``NISA'') is designed to
stabilize an individual farm's overall financial performance through a
voluntary savings plan. Participants enroll all eligible commodities
grown on the farm. Farmers may then deposit a portion of their net
sales of eligible NISA commodities (up to three percent of net eligible
sales) into individual savings accounts, receive matching government
deposits (matching funds come from both the federal and provincial
governments), and make additional, non-matchable deposits (up to 20
percent of net sales).
NISA provides stabilization assistance on a ``whole farm'' basis. A
producer can withdraw funds from a NISA account under a stabilization
or minimum income trigger. The stabilization trigger permits withdrawal
when the gross profit margin from the entire farming operation falls
below an historical average, based on the previous five years. If poor
market performance of some products is offset by increased revenues
from others, no withdrawal is triggered. The minimum income trigger
permits the producer to withdraw the amount by which income from the
farm falls short of a specific minimum income level.
In Live Swine From Canada; Final Results of Changed Circumstances
Countervailing Duty Administrative Review, and Partial Revocation, 61
FR 45402 (August 29, 1996), we found that NISA is not de jure specific.
Moreover, for hog producers, we found that NISA was not de facto
specific. Therefore, the issue in this investigation is whether NISA is
de facto specific with respect to cattle producers.
To make our determination, we have examined whether cattle
producers are dominant users of the program, or whether cattle
producers receive disproportionately large benefits under the program.
We found no evidence that cattle producers are dominant users or
receive disproportionate benefits from the NISA program. Specifically,
the GOC provided information on farmer withdrawals of NISA funds during
the POI and the two preceding years. Because NISA does not collect or
maintain information concerning withdrawals on a commodity-by-commodity
basis, the GOC reported farmer withdrawals by categorizing farms by the
source of the majority of their revenues. That is, a farm with over
fifty percent of its revenues from cattle sales was classified as a
cattle farm. On this basis the GOC reported that, during the POI,
cattle farms accounted for 7.7 percent by value of total withdrawals
from NISA.
The petitioner also raised a concern that NISA may be regionally
specific because cattle in certain provinces are not covered under the
program. However, we preliminarily determine that NISA is not limited
to a particular region. While several provinces choose not to
participate in NISA for particular commodities, the provinces and
producers of the commodity do so at their own choice, not because the
program is limited to an enterprise or industry located in a particular
region.
Based on the above analysis, we preliminarily determine that NISA
assistance is not limited to a specific enterprise or industry, or
group of enterprises or industries. Therefore, we preliminarily
determine that assistance received by cattle producers under the NISA
program is not countervailable.
Prior to the initiation of our investigation, the GOC announced a
government initiative to aid farmers over the coming years. Information
on the proposed aid indicated that it may be administered by the same
body that administers NISA. Therefore, when investigating NISA, we
asked whether this new aid would constitute a change in the NISA
program. The GOC responded that the new program, Agriculture Income
Disaster Assistance, would be separate from NISA and NISA's
administration. Therefore, because the program is unrelated to NISA and
no funds were distributed in the POI, we are not able to make a
determination as to whether aid provided through this program
constitutes a countervailable subsidy.
C. Alberta Public Grazing Lands Improvement Program
Established in 1970 and terminated in 1995, this program provided a
partial credit toward the payment of rent on a public grazing land
disposition if the lessee undertook certain pre-approved capital range
improvement projects. The leaseholder was required to pay for all the
costs incurred for these capital
[[Page 25285]]
improvements, and was reimbursed for 25 to 50 percent of these costs
through credits on the rental fees otherwise due annually. All
improvements belong to the government and, once the improvements are
created, the lessee is required to maintain them at his or her own
expense.
In order for a financial contribution to exist under this program,
the GOA must forego rental fees, or a portion thereof, that are
otherwise due as described in section 771(5)(D)(ii) of the Act.
However, in this case the reduction in the rental fees corresponds to
range improvements on behalf of the government. Furthermore, the
increased value of the land as a result of the improvements is captured
upon the next setting of rental fees. Based on the above analysis, we
preliminarily determine that this program does not provide a financial
contribution and, therefore, we preliminarily determine that the
program is not countervailable.
D. Saskatchewan Crown Land Improvement Policy
The Crown Land Improvement Policy is designed to provide rental
adjustments when Crown land lease holders make capital improvements to
the land, such as clearing, bush removal, or breaking and reseeding. In
return for the lessee's funding of these improvements, Saskatchewan
Agriculture and Food (``SAF'') agrees not to increase the rental rate
for a certain period of time, depending on the length of the
improvement project or may reduce the basis for rent. SAF is willing to
reduce the rental rate or freeze the rate because during the
improvement project the actual stocking rate of the land is lower than
the potential, the improvements do not result in an immediate increase
in the productive value of the land, and any improvements belong to the
Crown.
In order for a financial contribution to exist under this program
the GOS must forego rental fees, or a portion thereof, that are
otherwise due as described in section 771(5)(D)(ii) of the Act.
However, in this case the reduction in the rental fees corresponds to a
reduction in the land's carrying capacity while improvements are
undertaken. The increased value of the land as a result of the
improvements is captured upon the next setting of rental fees. Based on
the above analysis, we preliminarily determine that this program does
not provide a financial contribution and, therefore, we preliminarily
determine that the program is not countervailable.
Provision of Goods or Services
E. Alberta Grazing Reserve Program
Like the federal government's PFRA Community Pasture Program,
Alberta developed community pastures (reserves) on which multiple
ranchers' herds can graze. Traditionally, government employees
supervised and managed the animals on the reserves and maintained and
built range infrastructure. Grazing reserves also provided multiple-use
opportunities to other users. As of April 1, 1999, the GOA no longer
performs management activities on 32 of its 37 grazing reserves
covering 897,920 acres of public land due to a privatization
initiative. Under the privatization initiative, livestock management
responsibilities were shifted to grazing associations and new
negotiated fees have been established. However, during the POI, the
government operated 20 reserves, accounting for 180,117 AUMs. The 17
remaining reserves were privately operated and accounted for 149,950
AUMs.
Priority in issuing permits for the public reserves is given to
residents who operate a ranch or farm. The Minister of Lands and
Forests establishes the amount to be paid for stock grazing on each
pasture. The GOA reported that the grazing revenues obtained from this
program exceed the cost of the grazing aspects of the program and cover
many of the multiple-use functions of the land.
The provision of a good or service is a financial contribution as
described in section 771(5)(D)(iii) of the Act. As discussed above in
connection with the PFRA, a benefit is conferred in the provision of a
good or service when the prices charged for government-provided goods
or services are less than the prices charged by private suppliers. In
the case of the Alberta Grazing Reserve Program, we preliminarily
determine that the government is charging more than the private
providers of the same services. Specifically, the fees charged by the
private grazing associations to its members were lower than those
charged by the government. Based on the above, we preliminarily
determine that the government is receiving adequate remuneration for
its provision of grazing services and, thus, no countervailable subsidy
exists.
On a final note, the questionnaire response provided information on
the costs faced by the private grazing associations. One element of
these costs is a fee paid to the government for use of the land. We
have examined whether this fee is in accordance with prevailing market
conditions for grazing leases in Alberta. We preliminarily find that
this fee is comparable to the adjusted private grazing lease price as
discussed in the Alberta Crown Lands Basic Grazing Program, above.
Therefore, we preliminarily determine that the government is being
adequately remunerated for its provision of grazing land to grazing
associations and, thus, no countervailable subsidy exists.
F. Saskatchewan Crown Lands Program
Agricultural Crown land is managed by Saskatchewan Agriculture and
Food and is made available to all Saskatchewan agricultural producers
for lease. Activities carried out on the land include: grazing,
cultivation, community pastures, petroleum and gas leases, and sand,
gravel, and quarry leases. Leases for grazing dispositions range from
one to 33 year terms. As of 1997, SAF sets rental rates using a formula
which takes account of the average price of cattle marketed over a
period in the previous year, the average pounds of beef produced from
one AUM, the AUM productivity rating of the land in question, reduced
stocking expectations, and a fair return for the use of the land and
resources. Lessees are responsible for paying taxes, developing and
maintaining water facilities and fences, and providing for public
access to the land.
The provision of a good or service is a financial contribution as
described in section 771(5)(D)(iii) of the Act. As discussed above in
connection with the PFRA, a benefit is conferred in the provision of a
good or service when the prices charged for government-provided goods
or services are less than the prices charged by private suppliers. In
the case of the Saskatchewan Crown Lands Grazing Program, a simple
comparison of the fees charged would not be appropriate because the
grazing rights being offered by the GOS differ from those offered by
private suppliers. In this regard, the GOS has provided certain
quantifiable adjustments. Specifically, we adjusted the private price
downward by deducting costs for the construction and maintenance of
fences and water improvements, and the cost of paying property taxes.
Although the GOS argued that there were other differences that should
be taken into account for such things as multiple-use requirements, we
have not considered making adjustments for such costs because the GOS
was unable to quantify them. Comparing the public grazing lease to the
adjusted private lease price, we preliminarily determine that the price
for private leases is lower than the price for a public grazing lease.
Therefore, we preliminarily determine
[[Page 25286]]
that the government is adequately remunerated for its provision of
grazing land and, thus, no countervailable subsidy exists.
G. Manitoba Tripartite Cattle Stabilization Program/Industry
Development Transition Fund
The petitioner alleged that when the Manitoba Tripartite Cattle
Stabilization Plan was terminated, the cow/calf and feeder cattle plans
had surplus funds which allegedly resulted in premium refunds to
producers.
In its response, the GOC stated that the producer refunds came
solely from producer contributions and did not include government
money. Moreover, the refund occurred in 1994, prior to the three-year
AUL. Therefore, we preliminarily determine that producers did not
receive a countervailable benefit during the POI.
With respect to the second part of this allegation, the Industry
Development Transition Fund, the correct name for this program is the
Beef Industry Development Fund and the Department declined to initiate
on this program. See Notice of Initiation at 63 FR 71889, 71891.
Green Box Programs
The GOC has requested ``green box'' treatment for three programs
which we are examining in this investigation: the Canada-Alberta Beef
Industry Development Fund (``CABIDF''), the Feed Freight Assistance
Adjustment Fund (``FFAF''), and the Saskatchewan Beef Development Fund
(``SBDF''). Under section 771(5B)(F) of the Act, domestic support
measures provided with respect to the agricultural products listed in
Annex 1 to the 1994 WTO Agreement on Agriculture shall be treated as
noncountervailable if the Department determines that the measures
conform fully with the provisions of Annex 2 of that same Agreement.
The GOC claimed that these programs meet these criteria and, therefore,
funding for each program should be noncountervailable pursuant to
section 771(5B)(F) of the Act. The claims made relating to CABIDF and
SBDF are discussed in more detail below. Because the FFAF was not used
during the POI, we do not reach the issue of green box treatment for
FFAF. See the Programs Preliminarily Determined To Be Not Used section,
below.
H. Canada-Alberta Beef Industry Development Fund
This fund, which was established by the GOC and the GOA in April
1997, supports research, development, and related activities connected
to the beef industry in Alberta. It is administered by the Alberta
Department of Agriculture, Food, and Rural Development and run by the
Alberta Cattle Commission and the Alberta Agricultural Research
Institute. Applicants first submit a pre-proposal application, which is
evaluated by the Beef Industry Development Committee (``BIDC''), a
panel consisting of five voting industry representatives and two non-
voting government advisors. Projects are evaluated on the basis of the
project's relationship to the Funds's research priorities, its
scientific merits, and the usefulness of the project results to the
beef industry, directly or indirectly. The Fund's research priorities
include projects that will improve regional beef production
efficiencies, enhance the ability to sustain beef production in
Alberta, and increase the intellectual resources available to Alberta
beef producers at educational institutions. Applicants for projects
chosen by the Committee are then asked to submit a more detailed
proposal, which is evaluated for technical merit by a scientific
committee consisting of industry experts and scientists. The scientific
committee makes its recommendations to the BIDC which, in turn, further
evaluates the proposals based on the objectives listed above and either
approves or rejects the proposal.
In order to determine whether CABIDF qualifies for green box
treatment under section 771(5B)(F) of the Act, we examined whether
CABIDF met the criteria specified in the Act and further detailed in
the Department's regulations. A more detailed discussion of the
Department's analysis of this issue can be found in the Department's
Memorandum to Richard Moreland: ``Green Box Claims Made by the
Government of Canada,'' dated May 3, 1999, which is on file in the
Central Records Unit.
According to the Act and the Department's regulations, we will
treat as noncountervailable domestic support measures relating to
agricultural products that conform to the criteria of Annex 2 of the
WTO Agriculture Agreement. The Department's regulations further state
that we will determine that a particular domestic support measure
conforms fully to the green box criteria in the Agreement if we find
that the measure (1) is provided through a publicly-funded program
(including government revenue forgone) not involving transfers from
consumers; (2) does not have the effect of providing price support to
producers; and (3) meets the relevant policy-specific criteria and
conditions laid out in Annex 2 of the Agreement.
With regard to the first criterion, the GOC has stated that the
program in question meets the requirement set forth. In the original
and supplemental questionnaire responses, the GOC showed that all
monies used to fund this program came directly from the government,
whether on a provincial or on a federal level. Although the program's
authorizing legislation allows for contributions to the Fund to come
from producers, producer organizations, or other parties, the GOC
reconfirmed with the Department that no funds were received from any
entity other than federal and provincial governments during the POI.
Those funds went directly to CABIDF applicants. No transfers from
consumers were involved.
As for the second criterion, according to the questionnaire
response, none of the projects that have been approved by CABIDF have
the effect of providing price support to producers.
Finally, with regard to the last criterion, the policy-specific
criteria that must be met are those which are listed under paragraph 2,
Annex 2 of the Agriculture Agreement, which focuses on policies which
involve expenditures in relation to programs which provide services or
benefits to the agriculture or rural community. This includes sub-
paragraph (a), which covers projects for research, including general
research, research in connection with environmental programs, and
research programs relating to particular products. According to its
authorizing statute, the purpose of CABIDF is to ``provide financial
contributions in the form of grants to enhance research and industry
development activities with the objective of promoting and enhancing
the competitiveness of the beef industry in Alberta.'' Twenty-nine
projects have been approved for CABIDF funds since the program's
creation in April 1997. Although the program's legislation allows for
approval of other types of projects covered under paragraph 2 (i.e.,
marketing and promotion, extension and advisory services, and
training), the projects that have been approved by CABIDF to date have
been related to scientific research activities relating to the beef
industry and the agriculture industry in general. All of the approved
projects have consisted of grants, not revenue forgone, and none have
been paid directly to producers or processors.
Based on the above analysis, we preliminarily find that CABIDF is
eligible for green box treatment under section 771(5B)(F) of the Act,
and, thus, is not countervailable. However, if an
[[Page 25287]]
order is issued, and an administrative review requested, and any of
these facts are different, we will re-examine the green box status of
this program.
I. Saskatchewan Beef Development Fund
SBDF, which is administered by the Agriculture Research Branch of
the Saskatchewan Ministry of Agriculture and Food, supports the
development and diversification of Saskatchewan's beef industry through
the funding of various projects related to production research,
technology transfer, and development and promotion of new products. The
ministry-appointed, producer-run governing board, the Saskatchewan Beef
Development Board, meets once a year to review and approve project
proposals that it deems to be of general benefit to the cattle and beef
industries. Priority is given to public research institutions
conducting research, development, and promotion activities that will be
generally available to the industry.
As was mentioned above, the GOC has requested green box treatment
for this program. In order to determine whether SBDF qualifies for
green box treatment under section 771(5B)(F) of the Act, we examined
whether the SBDF met the criteria specified in the Act and further laid
out in the Department's regulations. A more detailed discussion of the
Department's analysis of this issue can be found in the Department's
Memorandum to Richard Moreland: ``Green Box Claims Made by the
Government of Canada,'' dated May 3, 1999, which is on file in the
Central Records Unit.
As noted above, we will treat as noncountervailable domestic
support measures relating to certain agricultural products that conform
to the criteria of Annex 2 of the WTO Agriculture Agreement. Under the
Department's regulations, a particular domestic support measure
conforms fully to the green box criteria in the Agreement if we find
that the measure (1) is provided through a publicly-funded program
(including government revenue forgone) not involving transfers from
consumers; (2) does not have the effect of providing price support to
producers; and (3) meets the relevant policy-specific criteria and
conditions laid out in Annex 2 of the Agreement.
With regard to the first criterion, the GOC has stated that this
program meets the necessary requirements. In the original and
supplemental questionnaire responses, the GOC indicated that all monies
used to fund this program came directly from the government, whether on
a provincial or on a federal level. Those funds went directly to SBDF
applicants. No transfers from consumers were involved.
As for the second criterion, according to the questionnaire
responses, none of the projects that have been approved by SBDF have
the effect of providing price support to producers.
Finally, with regard to the last criterion, the policy-specific
criteria that must be met are those which are listed under paragraph 2,
Annex 2 of the Agriculture Agreement. This includes the criteria set
forth in sub-paragraphs (a), (c), (d), and (f) of paragraph 2, which
focus on programs relating to research, training services, extension
and advisory services, and marketing and promotion services. The
regulations governing SBDF state that the purpose of the fund is to
provide for the enhancement of the Saskatchewan beef and beef cattle
industry through research, development, and promotional activities that
the board considers to be in the best interests of the industry. The
vast majority of projects that have been approved by SBDF to date have
been related to scientific research activities relating to the beef
industry and the agriculture industry in general. Programs related to
training services, marketing and promotion service, and extension and
advisory services were also considered and approved. All of these
approved projects have consisted of grants, not revenue forgone, and
none have been paid directly to producers or processors.
Based on the above analysis, we preliminarily find that SBDF is
eligible for green box treatment under section 771(5B)(F) of the Act
and, thus, is not countervailable. However, if an order is issued, and
an administrative review requested, and any of these facts are
different, we will re-examine the green box status of this program.
III. Programs Preliminarily Determined To Be Not Used
Based upon the information provided in the responses, we determine
that the producers of the subject merchandise under investigation did
not apply for or receive benefits under the following programs during
the POI.
A. Feed Freight Assistance Adjustment Fund
Of the four responding provinces in this investigation, only one,
Ontario, participated in the Feed Freight Assistance Adjustment Fund
program. Specifically, in the year prior to the POI, the first year of
the FFAF, a grant was provided to Ontario producers. However, because
the benefit was below 0.50 percent of the investigated provinces' total
sales, we expensed this grant in the year received. Thus, cattle
producers received no benefit during the POI from grants received prior
to the POI. During the POI, the respondents reported that Ontario did
not receive benefits under FFAF. Therefore, we preliminarily determine
that the FFAF program was not used during the POI.
B. Canadian Adaptation and Rural Development (CARDS) Program in
Saskatchewan
C. Western Diversification Program
IV. Programs Preliminarily Determined To Be Terminated
A. Ontario Export Sales Aid Program
V. Other Programs Reviewed
The GOC demonstrated that, for the following programs, any benefit
to the subject merchandise would be so small that there would be no
impact on the overall subsidy rate, regardless of a determination of
countervailability. In light of this, we do not consider it necessary
to determine whether benefits conferred under these programs to the
subject merchandise are countervailable.
A. Ontario Bear Damage to Livestock Compensation Program
B. Ontario Livestock Programs for Purebred Dairy Cattle, Beef, and
Sheep Sales Assistance Policy/Swine Assistance Policy
C. Ontario Artificial Insemination of Livestock Act
Verification
In accordance with section 782(i) of the Act, we will verify the
information submitted by the respondent prior to making our final
determination.
Summary
The total estimated preliminary net countervailable subsidy rate
for all producers or exporters of live cattle in Canada is 0.38 percent
ad valorem, which is de minimis. Therefore, we preliminarily determine
that countervailable subsidies are not being provided to producers, or
exporters of live cattle in Canada.
ITC Notification
In accordance with section 703(f) of the Act, we will notify the
ITC of our determination. In addition, we are making available to the
ITC all nonprivileged and nonproprietary information relating to this
investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC
confirms that it will
[[Page 25288]]
not disclose such information, either publicly or under an
administrative protective order, without the written consent of the
Assistant Secretary, Import Administration.
If our final determination is affirmative, the ITC will make its
final determination within 75 days after the Department makes its final
determination.
Public Comment
In accordance with 19 CFR 351.310, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
this preliminary determination. The hearing is tentatively scheduled to
be held 62 days from the date of publication of this notice in the
Federal Register at the U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230. Individuals who wish
to request a hearing must submit a written request within 30 days of
the publication of this notice in the Federal Register to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, 14th Street and Constitution Avenue, N.W., Washington, DC 20230.
Parties should confirm by telephone the time, date, and place of the
hearing 48 hours before the scheduled time.
Requests for a public hearing should contain: (1) The party's name,
address, and telephone number; (2) the number of participants; and, (3)
to the extent practicable, an identification of the arguments to be
raised at the hearing. In addition, six copies of the business
proprietary version and six copies of the nonproprietary version of the
case briefs must be submitted to the Assistant Secretary no later than
50 days from the date of publication of the preliminary determination.
As part of the case brief, parties are encouraged to provide a summary
of the arguments not to exceed five pages and a table of statutes,
regulations, and cases cited. Six copies of the business proprietary
version and six copies of the nonproprietary version of the rebuttal
briefs must be submitted to the Assistant Secretary no later than 55
days from the date of publication of the preliminary determination. An
interested party may make a hearing presentation only on arguments
included in that party's case or rebuttal briefs. Written arguments
should be submitted in accordance with 19 CFR 351.309 and will be
considered if received within the time limits specified above.
This determination is published pursuant to sections 703(f) and
777(i) of the Act.
Dated: May 3, 1999.
Robert LaRussa,
Assistant Secretary for Import Administration
[FR Doc. 99-11887 Filed 5-10-99; 8:45 am]
BILLING CODE 3510-DS-P
