[Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
[Notices]
[Pages 34209-34215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16250]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-122-404]
Preliminary Results of Full Sunset Review: Live Swine From Canada
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of full sunset review: Live swine
from Canada.
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SUMMARY: On December 2, 1998, the Department of Commerce (``the
Department'') initiated a sunset review of the countervailing duty
order on live swine from Canada (63 FR 66527) pursuant to section
751(c) of the Tariff Act of 1930, as amended (``the Act''). On the
basis of a notice of intent to participate filed on behalf of a
domestic interested party and substantive comments filed on behalf of a
domestic interested party and three respondent interested parties, the
Department is conducting a full (240 day) review. As a result of this
review, the Department preliminarily finds that termination of the
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy. The net countervailable
subsidy and the nature of the subsidy are identified in the Preliminary
Results of Review section of this notice.
For Further Information Contact: Scott E. Smith or Melissa G. Skinner,
Office of Policy for Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th & Constitution
Avenue, Washington, D.C. 20230; telephone: (202) 482-6397 or (202) 482-
1560, respectively.
EFFECTIVE DATE: June 25, 1999.
Statute and Regulations
This review was conducted pursuant to sections 751(c) and 752 of
the Act. The Department's procedures for the conduct of sunset reviews
are set forth in Procedures for Conducting Five-year (``Sunset'')
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516
(March 20, 1998) (``Sunset Regulations'') and in 19 C.F.R. Part 351
(1998) in general. Guidance on methodological or analytical issues
relevant to the Department's conduct of sunset reviews is set forth in
the Department's Policy Bulletin 98:3--Policies Regarding the Conduct
of Five-year (``Sunset'') Reviews of Antidumping and Countervailing
Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset
Policy Bulletin'').
Scope
The merchandise subject to this countervailing duty order is
shipments of live swine, except U.S. Department of Agriculture
(``USDA'') certified purebred breeding swine, slaughter sows and boars,
and weanlings from Canada.1 Weanlings are swine weighing up
to 27 kilograms or 59.5 pounds.2
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\1\ On August 29, 1996, the Department issued the final results
of a changed circumstances review revoking the order, in part, with
respect to slaughter sows and boars. The revocation became effective
on April 1, 1991 (see Live Swine from Canada; Final Results of
Changed Circumstances Countervailing Duty Administrative Review, and
Partial Revocation In Part of Countervailing Duty Order, 61 FR 45402
(August 29, 1996).
\2\ In the Final Affirmative Countervailing Duty Determination;
Live Swine and Fresh, Chilled and Frozen Pork Products from Canada,
50 FR 25097 (June 17, 1985), the Department also calculated a net
subsidy for dressed-weight swine. However, the Department terminated
its investigation with respect to fresh, chilled, and frozen pork
products from Canada based on a finding by the Commission that no
material injury, threat of material injury, or retardation of an
infant industry existed.
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The merchandise subject to the order is currently classifiable
under the Harmonized Tariff Schedule (``HTS'') item numbers 0103.91.00
and 0103.92.00. The HTS item numbers are provided for convenience and
customs purposes. The written description remains dispositive.
Background
On December 2, 1998, the Department initiated a sunset review of
the countervailing duty order on live swine from Canada (63 FR 66527),
pursuant to section 751(c) of the Act. The Department received a Notice
of Intent to Participate on behalf of the National Pork Producers
Council (``NPPC'') 3 on December 17, 1998, within the
deadline specified in section 351.218(d)(1)(i) of the Sunset
Regulations. The NPPC claimed interested party status under 19 U.S.C.
1677(9)(C) and (F), as an association whose members are producers of
live swine. In addition, the NPPC notes that it was the original
petitioner in the underlying investigation. We received complete
substantive responses from the NPPC, the Gouvernement du Quebec
(``GOQ''), the Government of Canada (``GOC'') and the Canadian Pork
Council and its Members (``CPC'') on January 6, 1999, within the
deadline specified in the Sunset Regulations under section
351.218(d)(3)(i).
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\3\ The NPPC is a trade organization representing U.S. hog and
pork producers through a federation of 44 affiliated state pork
producer associations with a total membership of 85,000. NPPC's
membership consists of small family farms and large hog operations.
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In their substantive responses, the GOQ and the GOC claimed
interested party status under 19 U.S.C. 1677(9)(B), as a provincial and
national government, respectively, of the country in which the subject
merchandise is produced and from which it is exported. The GOQ also
claimed interested party status under 19 U.S.C. 1677(3). The CPC
claimed interested party status, under 19 U.S.C. 1677(9)(A), as a
council whose members are hog producing organizations whose registered
members are producers of the subject merchandise. The CPC also stated
that a majority of its member organizations also serve as importers of
record of the subject merchandise, whose imports are supplied by their
registered producers. The Department, on January 13, 1999, received
timely rebuttals from the NPPC, the GOQ, the GOC, and the CPC.
Because the Department received complete substantive responses from
a domestic interested party and from the Canadian Government (both the
GOC and the GOQ), and the CPC, and in accordance with section
351.218(e)(2)(i) of the Sunset Regulations, the Department is
conducting a full (240 day) sunset review.
The Department determined that the sunset review of the
countervailing duty order on live swine from Canada is extraordinarily
complicated. In accordance with section 751(c)(5)(C)(v) of the Act, the
Department may treat a review as extraordinarily complicated if it is a
review of a transition order (i.e., an order in effect on January 1,
1995). (See section 751(c)(6)(C) of the Act.) Therefore, on March 22,
1999, the Department extended the time limit for completion of the
preliminary results of this review until not later than June 21,
[[Page 34210]]
1999, in accordance with section 751(c)(5)(B) of the Act.4
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\4\ See Live Swine From Canada: Extension of Time Limit for
Preliminary Results of Five-Year Review, 64 FR 14884 (March 29,
1999).
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Determination
In accordance with section 751(c)(1) of the Act, the Department is
conducting this review to determine whether termination of the
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy. Section 752(b) of the Act
provides that, in making this determination, the Department shall
consider the net countervailable subsidy determined in the
investigation and subsequent reviews, and whether any change in the
program which gave rise to the net countervailable subsidy has occurred
that is likely to affect that net countervailable subsidy. Pursuant to
section 752(b)(3) of the Act, the Department shall provide to the
International Trade Commission (``the Commission'') the net
countervailable subsidy likely to prevail if the order is revoked. In
addition, consistent with section 752(a)(6), the Department shall
provide to the Commission information concerning the nature of the
subsidy and whether the subsidy is a subsidy described in Article 3 or
Article 6.1 of the Subsidies Agreement.
The Department's determinations concerning continuation or
recurrence of a countervailable subsidy, the net countervailable
subsidy likely to prevail if the order is revoked, and nature of the
subsidy are discussed below. In addition, parties' comments with
respect to each of these issues are addressed within the respective
sections.
Continuation or Recurrence of a Countervailable Subsidy
Party Comments
In its substantive response, the NPPC states that there is a strong
likelihood that, were the countervailing duty order on live swine from
Canada revoked, a countervailable subsidy would continue or recur. The
NPPC claims that there are a number of Canadian hog subsidies currently
in place and there is evidence that suggests the possibility of
additional subsidies in the future. Further, the NPPC argues that the
Canadian government has a history of replacing terminated programs with
new ones and, for these reasons, the Department should not revoke the
order on live swine from Canada.
The NPPC argues that the history and scope of subsidization of live
swine from Canada demonstrates that subsidies will recur absent
continuation of the order. The NPPC asserts that the Canadian federal
and provincial governments have maintained a large number of subsidies
intended to benefit pork producers and that the number of subsidies
have increased over time. Further, the NPPC argues, as indicated in the
Statement of Administrative Action (``the SAA'') H.R. Doc. No. 103-316,
vol. 1 at 888 (1994), that continuation of a program is highly
probative of the likelihood of continuation or recurrence of
countervailable subsidies. Given the continued maintenance of a number
of subsidy programs, the NPPC argues that the Department should
conclude that a CVD order is necessary to prevent subsidies from
continuing.
The NPPC also questions the method with which the Canadian federal
and provincial governments terminate pork subsidy programs and, more
importantly, the permanence of such terminations. The NPPC states,
citing the Sunset Policy Bulletin, that the Department should consider
the legal method by which the government eliminated the program and
whether the government is likely to reinstate the program. The NPPC
claims that the governments have demonstrated a pattern of eliminating
and then replacing pork subsidy programs with new ones (e.g., according
to the NPPC, the National Tripartite Stabilization Plan was terminated
and then replaced, for all intents and purposes, with the National
Transition Scheme). The NPPC claims that, due to this factor, the small
number of programs that have been eliminated have had little, if any,
effect on the overall subsidization of the Canadian pork industry. The
NPPC argues that as long as programs exist there is a real possibility
of continued subsidization. The NPPC further claims that termination
through administrative action, rather than through legislative means,
is insufficient for the Department to determine that the program has
indeed been terminated (e.g., the Ontario Export Sales Program). In
addition, the Department should not find programs terminated that have
simply not been funded for a particular period or have expired (e.g.,
the Alberta Livestock and Beeyard Compensation Program and the Canada/
Ontario Western Agribition Livestock Transportation Assistance Program,
respectively).
The NPPC also argues that there is a possibility of additional
subsidies for Canadian hog producers that further supports the
likelihood of continued subsidization. The NPPC notes that extremely
low hog prices currently exist in North America and that the Department
has recognized this situation as a trigger for subsidies. Further, the
NPPC provided Canadian newspaper articles which suggest that the
Canadian federal and provincial governments are discussing the
possibility of establishing new subsidies for Canadian swine producers.
In addition, the NPPC claims that the Department should examine
certain subsidies given to Canadian cattle producers in the context of
swine subsidization. The NPPC argues that there are several programs
being investigated by the Department in the ongoing investigation of
cattle from Canada which may be applicable to swine. However, the NPPC
notes that the Department has not yet made any determination on whether
these programs confer countervailable benefits to cattle or swine.
Nevertheless, the NPPC argues that Department should consider the
existence of these programs in its sunset determination of live swine
from Canada.
The NPPC notes that, over the life of this order, the level of
subsidization for subject merchandise has reached a de minimis level on
three occasions. It argues that three instances of de minimis subsidy
rates, out of thirteen, are insufficient to determine that subsidies
have permanently reached de minimis levels and that the CVD order is
unneeded.
In their substantive responses, the GOC, GOQ, and the CPC argue
that the likely effect of revocation is that the value of any
countervailable subsidy would continue to be de minimis, or,
effectively zero. The three respondents argue collectively that net
benefits conferred by any remaining countervailable subsidies are so
small as to be effectively non-existent.
The GOC and the CPC claim that the Department has reviewed 43
different federal and provincial subsidy programs since the original
investigation in 1985. Of these, 28 have been found by the Department
to have been terminated, with no residual benefits or replacement
programs. Of the remaining 15 programs, eight have been determined not
to provide countervailable benefits to live swine. Finally, of the
remaining seven programs, four have been found in the most recently
completed administrative review of the order (63 FR 47235, September 4,
1998) to convey de minimis benefits. The last three programs, according
to the respondents, were found by the Department to have not been used.
The GOC and the CPC assert that the de minimis benefits conferred on
producers and the non-use of the remaining three programs
[[Page 34211]]
indicate that revocation of the order would not lead to continuation or
recurrence of countervailable subsidies.
The GOC and the CPC also argue that the programs terminated over
the life of the order accounted for nearly all of the subsidization
applicable to live swine. Termination of these and other programs led
to the de minimis deposit and subsidy rates in the most recently
completed reviews.
The GOQ echoes many of the same arguments as the GOC and the CPC.
The submissions of the GOQ, however, deal more directly with the
subsidy programs of Quebec. The GOQ asserts that, of the seven programs
found by the Department to confer countervailable subsidies in the
final results of the latest administrative review (63 FR 47235,
September 4, 1998), none was a Quebec program and only one was a
national program (the National Transition Scheme for Hogs Program).
According to the GOQ, this last remaining national program was
terminated prior to the completion of the latest administrative review
and has now been found to confer no benefits to hog producers.
The GOQ also claims that three other programs, two of which were
created by the GOQ, were found to have no impact on the net subsidy
rate from the latest administrative review because the benefits
conveyed were too small. These two programs were the Technology
Innovations Program and the Support for Strategic Alliances
Program.5 According to the GOQ, hog producers, as of March
31, 1998, can no longer apply for benefits under the Technology
Innovations Program. As for the Support for Strategic Alliances
Program, the GOQ states that it expired on March 31, 1998.
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\5\ Despite the Department's treatment of these two programs as
separate, the GOQ claims that these programs are not separate
programs but represent two of the three components of the Canada/
Quebec Subsidiary Agreement on Agri-Food Development.
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Finally, the GOQ notes that the Department examined another Quebec
program in the latest administrative review--Quebec's Farm Income
Stabilization Insurance program (``FISI''). The GOQ states that the
Department found this program not to be used because no hogs benefiting
from FISI were exported to the United States. Moreover, the GOQ claims
that FISI has not been used with respect to hogs exported to the United
States, from April 1, 1996 to the present.
Collectively, the GOQ, GOC, and CPC argue that, in light of the
criterion for revocation as outlined in the Sunset Policy Bulletin, the
termination without replacement of all major countervailed programs,
combined with the findings of non-countervailability, non-usage, and no
impact of the remaining programs, compels the conclusion that subsidies
would not be likely to continue or recur were the order to be revoked
(see January 6, 1999, Substantive Response of the GOC).
Parties' Rebuttal Comments
In its rebuttal, the NPPC argues that the GOC, GOQ, and CPC
assessments of the likelihood of continued subsidization is flawed
because it focuses on active, ``non-terminated'' countervailable
subsidy programs and ignores those subsidies that continue to exist,
but have been found to be ``not used.'' The NPPC asserts that such an
assessment is invalid with respect to the Department's determination of
whether subsidization will continue. They argue that a program
determined to confer benefits in one period may provide benefits in
another and that the distinction between these ``sets'' of programs is
irrelevant.
The NPPC also argues that the GOC and CPC are incorrect in claiming
that there have been no replacements for programs that have been
terminated over the life of the order. The NPPC asserts that the fact
that some programs have been terminated while other new countervailable
programs have been created demonstrates that there has been replacement
of terminated programs.
The CPC, GOQ, and GOC assert that the NPPC has incorrectly reported
the most recent administrative review as covering 27 subsidy programs.
The respondents argue that the NPPC has reported that 27
countervailable programs continue to exist, but has ignored the fact
that many of these programs never existed, were never used by hog
producers, or never provided countervailable benefits. Further, the CPC
argues that the NPPC's attempts to discredit the Department's findings
concerning program terminations is not only unfounded, but has already
been resolved in the most recent administrative review (63 FR 47235,
September 4, 1998).
The GOQ, GOC, and CPC argue that the NPPC's allegations concerning
the possible future creation of countervailable subsidies is
irrelevant. First, the respondents' argue that there is no credible
evidence to suggest that new countervailable subsidy and/or price
stabilization programs are likely to be created. Second, respondents
argue that the NPPC has failed to provide ``good cause'' for the
Department to consider any programs not previously examined by the
Department. Therefore, such accusations should play no part in the
Department's likelihood and net subsidy determinations.
Department's Determination
Drawing on the guidance provided in the legislative history
accompanying the Uruguay Round Agreements Act (``URAA''), specifically
the SAA, H.R. Doc. No. 103-316, vol. 1 (1994), the House Report, H.R.
Rep. No. 103-826, pt.1 (1994), and the Senate Report, S. Rep. No. 103-
412 (1994), the Department issued its Sunset Policy Bulletin providing
guidance on methodological and analytical issues, including the basis
for likelihood determinations. The Department clarified that
determinations of likelihood will be made on an order-wide basis (see
section III.A.2 of the Sunset Policy Bulletin). Additionally, the
Department normally will determine that revocation of a countervailing
duty order is likely to lead to continuation or recurrence of a
countervailable subsidy where (a) a subsidy program continues, (b) a
subsidy program has been only temporarily suspended, or (c) a subsidy
program has been only partially terminated (see section III.A.3.a of
the Sunset Policy Bulletin). Exceptions to this policy are provided
where a company has a long record of not using a program (see section
III.A.3.b of the Sunset Policy Bulletin).
In its final affirmative countervailing duty determination (50 FR
25097, June 17, 1985), the Department determined that the net subsidy
from the 23 programs investigated for live swine from Canada was
Can$0.02602/lb. (bonding rate Can$0.04390/lb.).6 Since
[[Page 34212]]
the original investigation in 1985, the Department has determined,
during various administrative reviews of this order, that a number of
the programs examined in the original investigation have been
terminated.7 Furthermore, the Department has determined, in
the final results of administrative reviews, that some of the remaining
programs from the original investigation do not confer countervailable
benefits.8 The Department finds that there are four
countervailable subsidy programs from the original investigation which
continue to exist.9
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\6\ In the Final Affirmative Countervailing Duty Determination;
Live Swine and Fresh, Chilled and Frozen Pork Products from Canada,
50 FR 25097 (June 17, 1985), the Department also calculated a net
subsidy for dressed-weight swine of Can$0.03272/lb. (bonding rate
Can$0.025523/lb.). However, the Department terminated its
investigation with respect to fresh, chilled, and frozen pork
products from Canada based on a finding by the Commission that no
material injury, threat of material injury, or retardation of an
infant industry existed. Further, on August 29, 1996, the Department
issued the final results of a changed circumstances review revoking
the order, in part, with respect to slaughter sows and boars. The
revocation became effective on April 1, 1991 (see Live Swine from
Canada; Final Results of Changed Circumstances Countervailing Duty
Administrative Review, and Partial Revocation In Part of
Countervailing Duty Order, 61 FR 45402 (August 29, 1996). The
programs determined by the Department in the original investigation
to confer, or have the potential to confer, countervailable
subsidies were:
1. Agricultural Stabilization Act
2. Record of Performance Program
3. Quebec Special Credits for Hog Producers
4. Prince Edward Island Interest Payments on Assembly Yard Loan
5. Saskatchewan Hog Assured Returns
6. British Columbia Farm Income Insurance Plan
7. Manitoba Hog Income Stabilization Plan
8. New Brunswick Hog Price Stabilization Plan
9. Newfoundland Hog Price Support Program
10. Nova Scotia Pork Price Stabilization Program
11. Prince Edward Island Price Stabilization Program
12. Quebec Farm Income Stabilization Insurance Programs
13. New Brunswick Swine Assistance Program
14. New Brunswick Livestock Incentives Program
15. New Brunswick Hog Marketing Program
16. Saskatchewan Financial Assistance for Livestock and
Irrigation
17. Nova Scotia Swine Herd Health Policy
18. Nova Scotia Transportation Assistance
19. Ontario Farm Tax Reduction Program
20. Ontario (Northern) Livestock Programs
21. Prince Edward Island Hog Marketing and Transportation
Subsidies
22. Quebec Meat Sector Rationalization Program
23. Price Edward Island Swine Development Program
\7\ The Department has determined that the following programs,
examined in the original investigation, have been terminated with no
present residual benefits:
1. Hog Stabilization Payments under Agricultural Stabilization
Act (Tripartite Agreement) (terminated prior to April 1, 1994) (62
FR 18087, April 14, 1997)
2. Ontario (Northern) Livestock Programs (terminated April 1,
1991) (58 FR 54112, October 20, 1993)
3. Prince Edward Island Interest Payments on Assembly Yard Loan
(terminated prior to April 1, 1991)( 61 FR 26879, May 29, 1996)
4. Saskatchewan Hog Assured Returns (terminated March 31, 1991)
(62 FR 47460, September 9, 1997)
5. British Columbia Farm Income Insurance Plan (terminated July
2, 1994)(61 FR 52426, October 7, 1996)
6. Manitoba Hog Income Stabilization Plan (terminated June 28,
1986)(53 FR 22189, June 14, 1988)
7. New Brunswick Hog Price Stabilization Plan (terminated March
31, 1991)(61 FR 26889, May 29, 1996)
8. Nova Scotia Pork Price Stabilization Program (terminated
prior to March 31, 1991)(58 FR 54112, October 20, 1993)
9. Prince Edward Island Price Stabilization Program (terminated
prior to March 31, 1991)(59 FR 12243, March 16, 1994)
10. New Brunswick Swine Assistance Program (program transferred
to New Brunswick Swine Industry Financial Restructuring Program; 62
FR 47460, September 9, 1997 (see footnote 11))
11. Nova Scotia Swine Herd Health Policy (terminated March 31,
1996)(62 FR 47460, September 9, 1997)
\8\ Of the 23 programs originally investigated, the following
have been determined by the Department not to confer countervailable
benefits:
1. New Brunswick Hog Marketing Program (determination 55 FR
20812, May 21, 1990)
2. Ontario Farm Tax Reduction Program (determination 61 FR
26888, May 29, 1996)
3. Quebec Meat Sector Rationalization Program (determination 50
FR 25097, June 17, 1985; 50 FR 32880, August 15, 1985))
4. Prince Edward Island Hog Marketing and Transportation
Subsidies (determination 55 FR 20812, May 21, 1990)
5. Record of Performance Program (determination 54 FR 651,
January 9, 1989)
6. Nova Scotia Transportation Assistance Program (determination
53 FR 22189, June 14, 1988)
7. Prince Edward Island Swine Development Program (determination
55 FR 20812, May 21, 1990)
8. Saskatchewan Financial Assistance for Livestock and
Irrigation (determination 53 FR 22189, June 14, 1988)
9. Quebec Special Credits for Hog Producers (determination 53 FR
22189, June 14, 1988)
In the original investigation (50 FR 25097, June 17, 1985), the
Department determined that the Quebec Meat Sector Rationalization
Program conferred benefits for the establishment, standardization,
expansion, or modernization of slaughterhouses, processing plants,
or plants preparing foods that contain meat. Because this program
only confers benefits to those producers/exporters of fresh, chilled
and frozen pork products, it is not applicable to producers/
exporters of live swine.
\9\ Of the 23 programs originally investigated, the following
countervailable programs continue to exist:
1. Ontario Sales Swine Assistance (determined to confer benefits
in the original investigation; 50 FR 25097, June 17, 1985)
2. Quebec Farm Income Stabilization Program (determined to
confer benefits in original investigation; 50 FR 25097, June 17,
1985)
3. New Brunswick Livestock Incentives Program (determined to
confer benefits in original investigation; 50 FR 25097, June 17,
1985)
4. Newfoundland Hog Price Support Program (determined to confer
benefits in the original investigation; 50 FR 25097, June 17, 1985)
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In addition, the Department can confirm, through the final results
of administrative reviews, that there are several countervailable
subsidy programs created by the national and provincial governments of
Canada after the original investigation. A number of these programs are
also still in existence.10
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\10\ The following are countervailable subsidy programs still in
existence and created after the imposition of the order, which have
not been officially terminated, and which confer, or have the
potential to confer, countervailable benefits:
1. Nova Scotia Improved Sire Program (identified in 86/87
review; 56 FR 10410, March 12, 1991)
2. Technology Innovation Program Under the Agri-Food Agreement
(identified in 94/95 review; 62 FR 18087, April 14, 1997)
3. Ontario Livestock and Poultry and Honeybee Compensation
Program (identified in 89/90 review; 56 FR 50560, October 7, 1991)
4. Ontario Bear Damage to Livestock Compensation Program
(identified in 94/95 review; 62 FR 18087, April 14, 1997)
5. Ontario Rabies Indemnification Program (identified in 89/90
review; 56 FR 29224, June 26, 1991)
6. New Brunswick Swine Industry Financial Restructuring Program
(identified in the 85/86 review; 53 FR 22189, June 14, 1988)
7. Western Diversification Program (identified in 89/90 review;
56 FR 50560, October 7, 1991)
8. Support for Strategic Alliances Program Under the Agri-Food
Agreement (determined to confer benefits prior to 94/95 review; 62
FR 18087, April 14, 1997)
9. Agricultural Products Board Program (identified in 91/92
review; 61 FR 52408, October 7, 1996)
10. Newfoundland Weanling Bonus Incentive Policy (identified in
86/87 review; 56 FR 10410, March 12, 1991)
11. Newfoundland Hog Price Stabilization Program (determined to
confer benefits in April 1985)
12. Federal Atlantic Livestock Feed Initiative (identified in
91/92 review; 61 FR 52408, October 7, 1996)
13. Newfoundland Farm Products Corporation Hog Price Support
Program (identified in 96/97 review; 63 FR 23723, April 30, 1998 and
63 FR 47235, September 4, 1998)
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As claimed by the GOQ, one countervailable subsidization program
examined in the original investigation, the Quebec Farm Income
Stabilization Insurance Program, is not currently being used. In
addition, two subsidy programs created after the imposition of the
order are also not currently being used. However, current use is not
the standard employed by the Department in sunset reviews. As stated in
the Sunset Policy Bulletin, ``where a company has a long track record
of not using a program, including during the investigation, the
Department normally will determine that the mere availability of the
program does not, by itself, indicate likelihood of continuation or
recurrence of a countervailable subsidy.'' Therefore, with respect to
the three programs addressed by the GOQ, the Department preliminarily
determines that these three programs do not have a ``long track
record'' of non-use.11
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\11\ The three programs are: (1) The Ontario Bear Damage to
Livestock Compensation Program, (2) the Ontario Rabies
Indemnification Program and (3) the Quebec Income Stabilization
Program. The last known use of the Ontario Bear Damage to Livestock
Compensation Program was during the 1994/1995 Administrative Review
(63 FR 2204, January 14, 1998). The last known use of the Quebec
Farm Income Stabilization Insurance Program was April 1, 1996 (see
Substantive Response of GOQ at 11). The last known use of the
Ontario Rabies Indemnification Program was during the 1993/1994
Administrative Review (61 FR 52408, October 7, 1996; Amended, 61 FR
58383, November 14, 1996). The Department finds the recent use of
these three programs does not constitute a long track record of non-
use.
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With respect to the termination of programs, the Department has
preliminarily determined, in this case, to follow prior administrative
review determinations concerning terminated programs. In these prior
determinations, the Department addressed evidence demonstrating that
programs were terminated and not merely suspended. In addition, the
Department addressed the NPPC's arguments concerning the
[[Page 34213]]
Department's criteria and/or methodology in determining whether a
program had been terminated (see Live Swine from Canada; Final Results
of Countervailing Duty Administrative Review, 63 FR 47235 (September 4,
1998)).
With respect to the NPPC's argument that certain programs were
terminated solely through administrative action, the Department agrees
that the elimination of a program administratively is not as strong a
basis for termination as elimination through legislative action (see
Sunset Policy Bulletin). However, where a program was put in place
administratively, it is reasonable to expect that the government would
terminate the program in the same manner (see Final Results of
Expedited Sunset Review: Heavy Iron Construction Castings from Brazil,
64 FR 30313 (June 7, 1999). In these circumstances, unless there is a
basis for concluding that the government is likely to reinstate the
program, we believe it is appropriate to treat the program as
terminated. The NPPC has argued that reinstatement will be likely in
this case because many new programs have been put in place during the
life of the order. In this case, the record does not indicate a
connection between the programs that have been terminated and the new
programs. Therefore, the Department does not view the creation of new
programs as supporting the conclusion that terminated programs will be
reinstated.
The Department finds that the continued existence of
countervailable subsidies is highly probative of the likelihood of
continuation or recurrence of countervailable subsidies. Because the
Government of Canada currently maintains countervailable subsidy
programs, as acknowledged by the GOC, the GOQ, and the CPC, and as
evidenced by the most recent administrative review, because there are
programs that have not been officially terminated, and because no
program has a ``long track record'' of non-use, the Department finds
that there is a likelihood of continuation or recurrence of a
countervailable subsidy if the order were to be revoked. As noted
above, there are countervailable subsidy programs created after the
imposition of the order which continue to exist.12 The
Department finds that the creation and maintenance of countervailable
subsidies after the imposition of the order strongly suggests and
supports the conclusion that revocation of the order would likely lead
to continuation or recurrence of countervailable subsidies.
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\12\ See supra n.11. and accompanying text.
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Because the Department is basing its likelihood determination on
the current existence and maintenance of countervailable subsidy
programs benefitting, or potentially benefitting, swine producers and/
or exporters by the federal and provincial governments of Canada, the
Department finds no reason to examine programs which have not been
previously reviewed by the Department.
Net Countervailable Subsidy
Party Comments
The NPPC argues that the net subsidy calculated in the original
investigation of live swine from Canada is not representative of the
net subsidy likely to prevail if the order were revoked. Instead, the
NPPC asks that, as stipulated in the Sunset Policy Bulletin, the
Department use a more recently calculated rate. The NPPC states that
there are several factors that require adjustment of the original
subsidy rate (see Substantive Response of NPPC at 16). The NPPC argues
that the chief subsidy programs driving this order have always been
stabilization programs. These programs are designed to increase
payments to producers when market prices fall below support prices. The
NPPC claims that, as hog prices are at historically low levels, subsidy
payments will be at historically high levels. Furthermore, the NPPC
states that Canadian federal and provincial governments are currently
considering additional subsidy programs in response to the hog crisis.
Lastly, the NPPC argues that a review of the case history indicates
that only a few of the programs from the original investigation
continue to exist and the majority of the countervailable programs
which exist at present are programs created after the imposition of the
order.
For these reasons, the NPPC argues that the Department should not
use the net subsidy from the original investigation, but instead should
use the net subsidy rate from the seventh or eighth administrative
review. 13 The NPPC argues that these reviews cover the
largest number of programs ever investigated and also resulted in high
net subsidy rates as a result of price stabilization programs.
Alternatively, the NPPC suggests the Department use the net subsidy
from the fifth administrative review as it represents the highest rate
ever calculated.14
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\13\ The net subsidy from the seventh administrative review is
Can$0.0587/lb. and the net subsidy from the eighth administrative
review is Can$0.0611/lb. (See Live Swine from Canada; Final Results
of Countervailing Duty Administrative Review, 61 FR 52408 (October
7, 1996) and Live Swine from Canada; Amended Final Results of
Countervailing Duty Administrative Review, 61 FR 58383 (November 14,
1996)).
\14\ The net subsidy from the fifth administrative review is
Can$0.0927/lb. (See Live Swine from Canada; Final Results of
Countervailing Duty Administrative Review, 56 FR 50560 (October 7,
1991) and Live Swine from Canada; Amended Final Results of
Countervailing Duty Administrative Review, 58 FR 47123 (September 7,
1993)).
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The GOC and CPC agree with the NPPC about the use of a net subsidy
rate other than that calculated in the original investigation. The GOC
and CPC argue, collectively, that the net subsidy from the original
investigation is not reflective of the rate likely to prevail if the
order were revoked. They point out that a number of the programs
examined in the original investigation have since been terminated or
deemed non-countervailable, and that adjustments would need to be made
to this rate to reflect these changes. Collectively, the respondents
argue that the net subsidy likely to prevail, after these corrections
have been made, will be de minimis or, effectively zero.
The GOQ also argues that the net subsidy likely to prevail will be
de minimis and, therefore, the order should be revoked. The GOQ argues
that as subsidy programs have been terminated, consistently not used,
determined to be non-countervailable, and created throughout the life
of the order, the rate from the investigation as well as from any final
results of administrative review would not accurately reflect the net
subsidy likely to prevail if the order were revoked.
Parties' Rebuttal Comments
With respect to the net countervailable subsidy likely to prevail,
the NPPC argues that the GOC, GOQ, and CPC incorrectly focus on the
most recent subsidy rates calculated for the order. According to the
NPPC, the Department's regulations clearly state that the original
investigation should be the starting point for predicting future
subsidy rates as these are the only rates that reflect the behavior of
exporters and foreign governments without the discipline of the order.
In their focus on this most recent rate, the NPPC argues, the
respondents have ignored the fluctuations in the benefit levels which
have occurred over the life of order.
The CPC claims that the NPPC's suggested choice of net subsidy
rates for the Department are unsupported by the record. The CPC argues
that several of the programs included in the calculation of these rates
have since been terminated and, therefore, the net subsidy rates from
the NPPC's suggestions are invalid. Lastly, the GOC reiterates its
argument that the net
[[Page 34214]]
subsidy rate from the original investigation is an inappropriate choice
as the rate likely to prevail if the order were revoked.
Department's Determination
In the Sunset Policy Bulletin, the Department stated that,
consistent with the SAA and House Report, the Department normally will
select a rate from the investigation, because that is the only
calculated rate that reflects the behavior of exporters and foreign
governments without the discipline of an order or suspension agreement
in place. The Department noted that this rate may not be the most
appropriate rate if, for example, the rate was derived from subsidy
programs which were found in subsequent reviews to be terminated, there
has been a program-wide change, or the rate ignores a program found to
be countervailable in a subsequent administrative review.15
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\15\ See Section III.B.3 of the Sunset Policy Bulletin.
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The Department agrees with all parties that the net countervailable
subsidy rate from the original investigation is not probative of the
net countervailable subsidy rate likely to prevail if the order were to
be revoked. As noted above, sections III.B.3.a and III.B.3.c of the
Sunset Policy Bulletin provide that the Department may adjust the net
countervailable subsidy where, ``* * * the Department has conducted an
administrative review of the order * * * and found that a program was
terminated with no residual benefits and no likelihood of reinstatement
* * *'' or where, ``* * * the Department has conducted an
administrative review of the order * * * and found a new
countervailable program, or found a program previously not used but
subsequently found to be countervailable. * * *'' 16
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\16\ See Section III.B.3.a and Section III.B.3.c of the Sunset
Policy Bulletin.
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Several programs from the investigation have been terminated, found
not to confer countervailable subsidies, or have never been used. These
terminated programs provide no residual benefits which persist.
Additionally, several new programs have been created since the
imposition of the order. Of these new programs, the Department has
determined that some have been terminated. Therefore, pursuant to the
Sunset Policy Bulletin, the net countervailable subsidy from the
original investigation has been adjusted to reflect the termination of
programs, as well as the identification of new programs found to be
countervailable in subsequent administrative reviews. Consequently, the
Department preliminarily determines that the net subsidy rate that
would be likely to prevail in the event of revocation of the order
would be Can$0.01802234/lb. 17 See Memorandum to File
Regarding Calculation of the Net Countervailable Subsidy, June 21,
1999.
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\17\ Please note that the Department considers anything less
than 0.5 percent (or Can$0.0030/lb.) to be de minimis. See Live
Swine From Canada; Final Results of Countervailing Duty
Administrative Review, 56 FR 50560 (October 7, 1991).
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In determining the net countervailable subsidy rate likely to
prevail, the Department combined the benefits from ten programs that
continue to exist.18 The individual subsidy rates for these
ten programs, consistent with the Sunset Policy Bulletin, were those
calculated in the original investigation because these are the only
rates that reflect the behavior of exporters and/or foreign governments
without the discipline of the order. For subsidy programs established
after the imposition of the order, we have included in this
calculation, the subsidy rates from the final results of the first
administrative review in which rates were calculated. We note that a
review of the countervailable subsidy rates, for each of post-order
established programs, does not demonstrate a pattern of increased usage
after introduction.
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\18\ The following countervailable programs have been determined
by the Department not to have been officially terminated by
administrative decree or legislative repeal. The programs are:
1. Nova Scotia Improved Sire Program (Can$0.0002/lb., first rate
calculated in 95/96 review; 62 FR 47460, September 9, 1997)
2. Technology Innovation Program Under the Agri-Food Agreement
(Can$0.0002/lb., found to be used in the 94/95 review; 62 FR 18087,
April 14, 1997 (used most recently in 96/97 review))
3. Ontario Livestock and Poultry and Honeybee Compensation
Program (Can$0.0002/lb., found to be used in 89/90 review; 56 FR
29224 (first rate calculated in 93/94 review; 61 FR 26879, May 29,
1996) (used most recently in 96/97 review))
4. Ontario Bear Damage to Livestock Compensation Program
(Can$0.0002/lb., found to be used in the 94/95 review; 62 FR 18087,
April 14, 1997 (used most recently in 94/95 review))
5. Ontario Rabies Indemnification Program (Can$0.0001/lb., found
to be used in the 89/90 review; 56 FR 29224 (used most recently in
93/94 review))
6. Support for Strategic Alliances Program Under the Agri-Food
Agreement
7. Newfoundland Hog Price Support Program (Can$0.00013/lb.,
found to be used in investigation; 50 FR 25097 (used most recently
in 85/86 review))
8. New Brunswick Swine Industry Financial Restructuring Program
(Can$0.00000154/lb.,
9. Quebec Farm Income Stabilization Program (Can$0.01696/lb.,
found to be used in the investigation; 50 FR 25097 (used most
recently in the 95/96 review)) and
10. New Brunswick Livestock Incentives Program (Can$0.00003/lb.,
found to be used in investigation; 50 FR 25097 (used most recently
in 96/97 review) found to be used 85/86 review; 53 FR 22189 (used
most recently in 96/97 review).
For six additional programs, no subsidy rate has ever been
calculated by the Department. Therefore, although these programs
have not been determined to be terminated, we have not included them
in our calculation.
1. Newfoundland Farm Products Corporation Hog Price Support
Program (not used or published)
2. Western Diversification Program (not used or published)
(Can$0.0000008/lb., first rate calculated in 96/97 review; 63 FR
23723, April 30, 1998)
3. Agricultural Products Board Program (not used or published)
4. Newfoundland Weanling Bonus Incentive Policy (not used or
published)
5. Federal Atlantic Livestock Feed Initiative (not used or
published)
6. Ontario Sales Swine Assistance (not used or published).
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Nature of the Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with section 752(a)(6) of the Act, the Department will
provide information to the Commission concerning the nature of the
subsidy and whether the subsidy is a subsidy described in Article 3 or
Article 6.1 of the Subsidies Agreement.
Given that receipt of benefits under any of the programs included
in our calculation are not contingent upon export. Therefore, none of
these programs fall within the definition of an export subsidy under
Article 3.1(a) of the Subsidies Agreement.
Each of these programs are, however, programs that could be found
inconsistent with Article 6 if the net countervailable subsidy exceeds
5 percent, as measured in accordance with Annex IV of the Subsidies
Agreement.19 The Department, however, has no information
with which to make such a calculation, nor do we believe it appropriate
to attempt such calculation in the course of a sunset review. Rather,
we intend to provide to the Commission the following program
descriptions.
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\19\ The GOC and the GOQ have previously requested ``green
box'' treatment for the Support for Strategic Alliances and
Technology Innovation programs under the Agri-Food Agreement.
However, the Department has not made a determination on whether
benefits from these programs are non-countervailable as ``green
box'' subsidies pursuant to section 771(5B)(F) of the Act. See Live
Swine from Canada; Final Results of Countervailing Duty
Administrative Review, 63 FR 47235 (September 4, 1998) and Live
Swine from Canada; Preliminary Results of Countervailing Duty
Administrative Review, 63 FR 23723 (April 30, 1998).
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Subsidy Programs
The subsidy programs identified by the Department and used in its
determination of the net subsidy likely to prevail if the order were
revoked are listed below. A description of each is also included.
New Brunswick Livestock Incentives Program
This program provides loan guarantees to livestock producers
[[Page 34215]]
purchasing cattle, sheep, swine, foxes, and mink for breeding purposes,
and for feeding and finishing livestock for slaughter.
Ontario Bear Damage to Livestock Compensation Program
This program provides compensation for the destruction of, or
injury to, certain types of livestock by bears.
Ontario Livestock and Poultry and Honeybee Compensation Program
This program provides grants to compensate producers for livestock
and poultry injured or killed by wolves, coyotes, or dogs.
Ontario Rabies Indemnification Program
This program compensates livestock producers, including producers
of cattle, horses, sheep, swine, and goats, for damage caused by
rabies.
Quebec Farm Income Stabilization Insurance Program
Schemes under this program guarantee a positive net annual income
to participants when their income falls below the stabilized net annual
income.
Technology Innovation Program Under the Agri-Food Agreement
This program provides grants to producers within a designated
geographical region of Canada (i.e., Quebec) for technology innovation.
New Brunswick Swine Industry Financial Restructuring Program
This program provides subsidies on medium-term loans to hog
producers. This program was available to hog producers who entered
production or underwent expansion after 1979.
Newfoundland Hog Price Support Program
This program is a price stabilization program which provides pork
producers interest-free loans from the provincial government equal to
the difference between a stabilization price based on the cost of
production and the market price for hogs.
Nova Scotia Improved Sire Program
This program provides grants to purebred and commercial swine
producers for the purchase of boars.
Support for Strategic Alliances Under the Agri-Food Agreement
The purpose of this program area is stimulate cooperation and
promote strategic activities intended to improve competitiveness in
domestic and foreign markets.
Preliminary Results of Review
Any interested party may request a hearing within 30 days of
publication of this notice in accordance with 19 CFR 351.310(c). Any
hearing, if requested, will be held on August 18, 1999. Interested
parties may submit case briefs no later than August 9, 1999, in
accordance with 19 CFR 351.309(c)(1)(i). Rebuttal briefs, which must be
limited to issues raised in the case briefs, may be filed not later
than August 16, 1999. The Department will issue a notice of final
results of this sunset review, which will include the results of its
analysis of issues raised in any such comments, no later than October
28, 1999.
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: June 21, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-16250 Filed 6-24-99; 8:45 am]
BILLING CODE 3510-DS-P