[Federal Register Volume 59, Number 51 (Wednesday, March 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6001]


[[Page Unknown]]

[Federal Register: March 16, 1994]


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DEPARTMENT OF COMMERCE
[C-122-404]

 

Live Swine From Canada; Final Results of Countervailing Duty 
Administrative Review

AGENCY: International Trade Administration/Import Administration 
Department of Commerce.

ACTION: Notice of Final Results of Countervailing Duty Administrative 
Review.

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SUMMARY: On October 20, 1993, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
review of the countervailing duty order on live swine from Canada (58 
FR 54,112). We have now completed that review and determine the total 
subsidy to be Can$0.0295 per kilogram for all live swine.

EFFECTIVE DATE: March 16, 1994.

FOR FURTHER INFORMATION CONTACT: Dana Mermelstein or Stephanie Moore, 
Office of Countervailing Compliance, International Trade 
Administration, U.S. Department of Commerce, Washington, DC 20230; 
telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On October 20, 1993, the Department of Commerce (the Department) 
published in the Federal Register (58 FR 54,112) the preliminary 
results of its administrative review of the countervailing duty order 
on live swine from Canada (50 FR 32,880; August 15, 1985). The 
Department has now completed that administrative review in accordance 
with section 751 of the Tariff Act of 1930, as amended (the Act).
    Case briefs were submitted by the National Pork Producers' Council, 
Petitioner, the Government of Canada (GOC), the Gouvernement du Quebec 
(GOQ), the Canadian Pork Council (CPC), Pryme Pork, Ltd. (Pryme), P. 
Quintaine & Son (Quintaine), and Earle Baxter Trucking LQ (Baxter). 
Rebuttal Briefs were submitted by Petitioner, the GOC, the GOQ, and the 
CPC. On December 1, 1993 the Department held a public hearing at the 
request of Petitioner and the GOQ.
    In response to the comments made by the parties, the Department has 
recalculated benefits under the Alberta Crow Benefit Offset Program, 
the Feed Freight Assistance Program, and the Saskatchewan Hog Assured 
Returns Program. The total subsidy determined in the preliminary 
results of review, Can$0.0289/kg, has been recalculated. The Department 
now determines the total subsidy to be Can$0.0295/kilogram.

Scope of Review

    The merchandise covered by this review is all live swine, except 
breeding swine, from Canada. Such merchandise is 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. The 
review covers the period April 1, 1990 through March 31, 1991 and the 
following programs: (1) Feed Freight Assistance Program; (2) National 
Tripartite Stabilization Scheme for Hogs (Tripartite); (3) Quebec Farm 
Income Stabilization Insurance Program (FISI); (4) Saskatchewan Hog 
Assured Returns Program (SHARP); (5) Alberta Crow Benefit Offset 
Program (ACBOP); (6) Alberta Livestock and Beeyard Compensation Program 
(Livestock Predator Sub-Program); (7) Ontario Farm Tax Rebate Program; 
(8) Livestock Improvement Program for Northern Ontario; (9) Ontario 
Pork Industry Improvement Plan (OPIIP); (10) Ontario Rabies 
Indemnification Program; (11) Saskatchewan Livestock Investment Tax 
Credit; (12) Saskatchewan Livestock Facilities Tax Credit Program; (13) 
Canada/British Columbia Agri-Food Regional Development Subsidiary 
Agreement; (14) Canada/Quebec Subsidiary Agreement of Agri-food 
Development; (15) Canada/Manitoba Agri-Food Development Agreement; (16) 
Western Diversification Program; (17) Agricultural Products Board 
Program; (18) Canada/Alberta Swine Improvement Programs Study; (19) 
Canada/Ontario Canadian Western Agribition Livestock Transportation 
Assistance Program; (20) British Columbia Swine Herd Improvement 
Program; (21) Ontario Export Sales Aid; (22) Ontario Bear Damage to 
Livestock Program; (23) Ontario Dog Licensing and Livestock and Poultry 
Compensation Program; (24) New Brunswick Agriculture Development Act--
Swine Assistance Program; (25) New Brunswick Swine Industry Financial 
Restructuring Program; (26) British Columbia Farm Income Insurance 
Program; (27) New Brunswick Livestock Incentives Program; (28) New 
Brunswick Hog Marketing Program; (29) New Brunswick Hog Price 
Stabilization Program; (30) New Brunswick Swine Assistance Policy on 
Boars; (31) Prince Edward Island Hog Price Stabilization Program; (32) 
Prince Edward Island Swine Development Program; (33) Prince Edward 
Island Interest Payment on Assembly Yard Program; (34) Nova Scotia 
Swine Herd Health Policy; (35) Nova Scotia Improved Sire Policy; (36) 
Newfoundland Farm Products Corporation Hog Price Support Program; (37) 
Newfoundland Weanling Bonus Incentive Policy; (38) Canada-Saskatchewan 
Agri-Food Development Agreement; (39) British Columbia Feed Grain 
Market Development Program; (40) Ontario Soil Conservation and 
Environmental Assistance Program; (41) Ontario Weaner Pig Stabilization 
Plan; (42) Nova Scotia Natural Products Act--Pork Price Stabilization 
Program; and, (43) Quebec Productivity and Consolidation of Livestock 
Production Program. Of the above-listed programs, we found subsidies 
were provided to live swine producers during the review period under 12 
programs. See Final Results of Review section below.

Analysis of Comments

    Comment 1: Petitioner urges the Department to reexamine its 
practice of not finding a program de jure specific based on its 
availability only to the agricultural sector. Petitioner argues that 
the Department's practice with respect to agricultural subsidies is 
inconsistent with its treatment of subsidies bestowed upon other 
sectors of the economy, and is reminiscent of the discarded ``general 
availability test,'' presuming that a program available to all of 
agriculture is somehow ``generally available.'' Petitioner cites both 
Federal Circuit and Court of International Trade opinions in advancing 
the argument that the Department has considerable discretion in 
determining when a subsidy program is de jure specific and what 
practices are countervailable. Petitioner argues that the Department 
should exercise its discretion, and focus on factors such as the size 
of the agricultural sector relative to the economy as a whole, and 
therefore conclude that Tripartite is de jure specific because it is 
limited, by law, to an enterprise or industry or group of enterprises 
or industries.
    Both the GOC and the CPC argue that it would be inappropriate for 
the Department to now reverse a longstanding practice with regard to 
agricultural programs, and to do so would be tantamount to rulemaking. 
The GOC states that ``[b]y any standard, the agricultural sector is too 
broad to constitute a `specific * * * group of enterprises or 
industries' as required by the statute.'' The CPC states that what 
Petitioner refers to as ``misguided policy'' has been upheld by the 
Court of International Trade as a reasonable exercise of the 
Department's discretion. See Roses Inc. v. United States, 774 F. Supp. 
1376, 1383 (CIT 1991).
    Department's Position: The Department's policy with respect to 
agricultural programs has been incorporated into the proposed 
regulations, which provide that the Department ``will not regard a 
program as being [de jure] specific * * * solely because the program is 
limited to the agricultural sector.'' Notice of Proposed Rulemaking and 
Request for Public Comments (54 FR 23,366, 23,380; May 31, 1989) 
(Proposed Regulations), at section 355.43(b)(8). See, e.g., Fuel 
Ethanol from Brazil (51 FR 3361; 1986). Although these proposed 
regulations are not final, we have determined that, for the present, it 
is appropriate to maintain the current policy with respect to subsidies 
provided to the industries within the agricultural sector. We 
recognize, however, that certain policies such as this one may warrant 
reconsideration in the future, and we agree with Petitioner that the 
Department's discretion permits it the authority to reverse such 
policies by way of the proper procedure, depending upon the policy in 
question.
    We note, in addition, that, as with other subsidy programs, in 
publishing the proposed regulation relating to the current agricultural 
sector exception, the Department emphasized in its commentary that ``an 
agricultural program may be deemed specific if, for example, benefits 
under the program are limited to, or provided disproportionately to, 
producers of particular agricultural products.'' 54 FR at 23,368 
(emphasis added). The use of the disjunctive ``or'' demonstrates the 
Department's recognition that an affirmative finding based upon a 
single factor could reasonably support a determination of de facto 
specificity within the meaning of section 771(5) of the Act.
    Comment 2: Petitioner argues that the Department should conduct its 
de jure specificity analysis of the Tripartite program by focusing on 
the individual Tripartite plans and their implementing subsidiary 
agreements, rather than on the implementing legislation, Canada's 
Agricultural Stabilization Act (ASA), as amended by Bill C-25 to 
provide for Tripartite agreements. Petitioner argues that this approach 
is appropriate because the Tripartite Agreement for Hogs is not 
integrally linked with any of the other Tripartite agreements. Contrary 
to the Department's determination in the fourth review of this order, 
Petitioner argues that all Tripartite schemes were not part of one 
program because they are ``structured pursuant to the enabling 
legislation and basic principles in Bill C-25 * * *'' Final Results of 
Countervailing Duty Administrative Review; Live Swine from Canada (56 
FR 28,531; June 21, 1991) (Fourth Review Final).
    According to Petitioner, the basis of the Department's 
determination appears to have been its consideration of only one 
factor, the purpose of the program as stated in the enabling 
legislation. Petitioner argues, however, that there is no evidence of a 
government policy to treat industries equally under the agreements 
because each individual agreement specifies the manner in which 
benefits are calculated and paid, thereby describing the class of 
eligible producers. Petitioner cites Certain Fresh Atlantic Groundfish 
from Canada; Final Affirmative Countervailing Duty Determination (51 FR 
10,041, 10,049; March 24, 1986) (Groundfish), aff'd, Comeau Seafoods v. 
United States, 13 CIT 923, 724 F. Supp. 1407, 1416 (1989), in which the 
Court of International Trade (CIT) affirmed the Department's 
determination to examine the specificity of the Canadian Economic and 
Regional Development Agreements by focusing on the terms of the 
individual ERDA subsidiary agreements.
    Petitioner also argues that even if the Department examines the 
Tripartite schemes collectively, they are de jure limited to a specific 
group of industries, namely the eleven commodities covered by 
Tripartite agreements during this review period.
    Respondents counter that it is appropriate for the Department to 
employ an integral linkage analysis when the Department is determining 
whether to examine two or more programs as one. Applying the integral 
linkage policy here shows that the Tripartite agreements meet all of 
the integral linkage criteria and should therefore be considered as one 
program, consistent with the Department's practice in reviewing this 
program. According to the GOC and the CPC, the analogy which Petitioner 
draws between Tripartite and the regional development agreements in 
Groundfish provides no support for the approach endorsed by Petitioner. 
The GOC and the CPC also object to Petitioner's arguments on the basis 
that the Department has already determined Tripartite to be de jure not 
specific in earlier reviews of this order, and Petitioner has presented 
no new facts or evidence of changed circumstances which would justify 
reconsideration of this determination. Therefore, the Department should 
not revisit the question of de jure specificity.
    Department's Position: For purposes of the Department's de jure 
specificity analysis, we have continued to treat Tripartite as a single 
subsidy program providing benefits to several identifiable 
beneficiaries through individual agreements reached between the federal 
government, the provincial governments and the various agricultural 
commodity producers.
    Petitioner's reliance on Groundfish and Comeau Seafoods is 
misplaced. In upholding the Department's determination in Comeau 
Seafoods, the CIT correctly identified the determinative issue as being 
``at what level Commerce may apply the specificity test.'' Comeau 
Seafoods, 724 F. Supp. at 1416 (emphasis in original). As the CIT 
found, the individual Economic and Regional Development Agreements 
(ERDAs) at issue there were ``designed to `establish programs, 
delineate administrative procedures and set up the relative funding 
commitments of the federal and provincial governments.''' Id. at 1415 
(quoting Groundfish From Canada, 51 FR at 10,049). In addition, the 
ERDAs were designed to provide only a procedure for ``the establishment 
of economic development programs with stated general economic 
development goals.'' Id. at 1415 n. 13. For these reasons, the 
``agreements'' in Groundfish were effectively separate subsidy 
programs, making the proper level of specificity analysis the 
agreements themselves.
    By contrast, as the Department found in the fourth administrative 
review, Tripartite's enabling legislation, Canada's ASA, as amended by 
Bill C-25, provides for established administrative procedures and 
funding commitments. Fourth Review Final, 56 FR at 28,532. Moreover, 
Tripartite's enabling legislation creates a framework for providing 
only one type of assistance, income stabilization to producers of 
agricultural commodities which establish agreements. See id. Therefore, 
although the record is not clear as to whether the Government of Canada 
retains discretion regarding when to enter into particular agreements, 
it is clear that Tripartite is a single program, of which the 
Tripartite agreements, or product-specific schemes, are ``integral 
parts.'' Accordingly, the appropriate level for the Department's 
specificity analysis is not the individual agreements but the 
Tripartite program itself. In reaching this determination, we note 
that, contrary to the arguments of Respondents, the Department did not 
conduct an integral linkage analysis of Tripartite in the fourth 
administrative review or at any other time. See id.
    Finally, as we found in the preliminary results, Petitioner has not 
presented any new facts or evidence of changed circumstances during the 
present review which would warrant reconsideration of the issue of 
whether the Tripartite is de jure specific. Preliminary Results at 
54,116. Therefore, we have declined to reconsider the Department's 
determination that Tripartite is not de jure specific.
    Comment 3: The GOC disagrees with the Department's preliminary 
determination that Tripartite is not integrally linked to the other 
provisions of the Agricultural Stabilization Act (ASA), in accordance 
with the Department's proposed regulations, and that the programs 
examined together are not de facto specific. Furthermore, the GOC 
considers unreasonable the Department's reliance on non-regulatory 
factors such as ``a documentary statement of an overall government 
policy to treat industries equally'' and the expectation of identical 
treatment and benefits among the different programs at the operational 
level. In relying on these factors, the Department is introducing a 
more stringent standard than is required by the proposed regulations 
and is, therefore, acting contrary to law.
    More specifically, the GOC argues that the relationship between 
Tripartite and the named and designated commodity provisions of the ASA 
satisfies all of the Department's regulatory factors for finding 
integral linkage. According to the GOC, there is one statute which 
provides the same benefits, for the same purpose, under a centralized 
administration ``to the producers of all agricultural commodities in 
Canada.'' The GOC further states that the Department errs by equating a 
policy to treat industries equally with a requirement that benefits, 
purposes, and administration be identical; a policy to treat industries 
equally is evident under the ASA, the GOC argues, because it provides 
every Canadian agricultural producer access to stabilization payments, 
when needed, in the amounts required, without regard to regional 
differences in a complementary fashion.
    The GOC further argues that, because identicality should not be 
expected or required, the Department's conclusion is unwarranted that 
the existence of Tripartite Stabilization Committees indicates that the 
programs are not administered in common. Equally unwarranted is the 
Department's distinction between Tripartite (which requires producer 
contributions) on the one hand, and named and designated commodities on 
the other (which require no producer contributions). According to the 
GOC, the Tripartite producer contribution requirement does not 
disadvantage producers because producers enter Tripartite agreements 
only if the benefits, such as flexibility in negotiating a payment 
schedule, outweigh the drawbacks.
    Petitioner agrees with the Department's finding that Tripartite is 
not integrally linked to any other support program. Citing Carbon Steel 
Wire Rod from Saudi Arabia; Final Results of Countervailing Duty 
Administrative Reviews (57 FR 8303; March 9, 1992), Petitioner argues 
that the GOC has failed to demonstrate that the factors considered by 
the Department are outside the Department's scope of authority under 
its proposed regulations, or otherwise not in keeping with earlier 
determinations. Petitioner argues that, unless the Department 
interprets the integral linkage standard in a strict fashion, despite 
the GOC's claim that the Department's interpretation is ``more 
stringent'' than that which is required by the proposed regulations, 
any government would be able to immunize its support programs against 
findings of specificity by merely articulating a very broad purpose 
which encompasses all programs.
    Petitioner also argues that the analysis of equal treatment applied 
by the Department is neither extraregulatory nor unreasonable. Contrary 
to the GOC's allegations, neither the Department's analysis in this 
case, nor the linkage test in general, requires identical treatment, 
but rather equality in receipt of benefits.
    Department's Position: We disagree with Respondents and affirm our 
preliminary determination that the ``named'' and ``designated'' 
provisions of the ASA are not integrally linked to the Tripartite 
provision of the ASA. Contrary to the contention of Respondents, the 
Department's interpretation of the integral linkage policy, and the 
Department's integral linkage analysis in this case, are not more 
stringent than permitted by the Department's authority. The integral 
linkage policy is only an exception to the normal application of the 
specificity test. As the drafting of the integral linkage provision in 
the proposed regulations indicates, the policy was created to permit 
evaluating whether, in particular circumstances, the Department should 
deviate from its normal approach to analyzing de facto specificity in 
order to consider the coverage of two or more programs together instead 
of just one. See Proposed Regulations at Sec. 355.43(b)(6). Considering 
the purpose of the specificity test as a whole, we have interpreted the 
standard narrowly for granting an affirmative integral linkage 
determination.
    The specificity test was designed to avoid carrying the 
countervailing duty law to absurd results by countervailing government 
actions or programs such as public highways and bridges which clearly 
benefit the economy at large, as opposed to identifiable and specific 
segments of the economy. See, e.g., Carlisle Tire & Rubber Co. v. 
United States, 564 F. Supp. 834, 838 (CIT 1983). In implementing the 
appropriate standard to determine whether to permit a particular 
exception to the specificity test, however, such as an affirmative 
integral linkage finding, the Department cannot create a loophole which 
would allow de facto specific subsidy programs benefiting only 
particular segments of the economy--or particular segments of the 
agricultural sector--to escape the imposition of countervailing duties.
    Permitting respondent governments to loosely connect two or more 
programs which are otherwise designed to serve different purposes would 
create just the type of loophole the Department seeks to avoid. Besides 
being contrary to the Department's specificity practice, doing so would 
also be contrary to Congress' express requirement in the legislative 
history that Commerce avoid taking an ``overly narrow'' or ``overly 
restrictive'' view of its authority to determine specificity. S. Rep. 
No. 71, 100th Cong., 1st Sess. 123 (June 12, 1987). This statement, 
implies that Congress intended the Department to view its authority to 
find specificity broadly and its authority to create exceptions to its 
normal approach narrowly. The very fact that the programs at issue must 
be found to be ``integrally linked'' rather than merely ``linked'' 
demonstrates the limited circumstances which would warrant an 
affirmative finding.
    The evidentiary standard for establishing that two or more programs 
are integrally linked is two-fold. First, as we explained in the 
preliminary results, the government must point to an express statement 
in the statute or elsewhere, either at the time the first program was 
created or later when the additional programs were added, which 
reasonably documents the government's underlying intent to develop two 
or more programs designed as ``complementary parts of an overarching 
governmental policy directive.'' Integral Linkage Analysis Memorandum, 
October 13, 1993 (on file in Room B-099, Department of Commerce) 
(quoting Carbon Steel Wire Rod From Saudi Arabia, 57 FR at 8303) 
(Integral Linkage Memo). The need to provide this type of objective 
legal evidence relates to all of the integral linkage factors set forth 
in the proposed regulations. The government must also provide factual 
evidence documenting that its original intent has been implemented, and 
that the programs are actually functioning in a complementary manner. 
This type of evidence also relates to each of the proposed factors and 
other relevant evidence.
    Contrary to the claim of the GOC, the Department does not require 
that the programs be ``identical'' in order to prevail on a claim of 
integral linkage. As petitioner correctly notes, however, the 
supporting evidence must go beyond simply identifying a broad 
underlying purpose encompassing several otherwise distinct programs 
which provide access to benefits to all or most eligible industries. 
For instance, in this case, the Department's linkage standard requires 
more than the GOC's broad statement that Tripartite and the other ASA 
provisions are each designed to provide income stabilization to all 
agricultural industries. See Integral Linkage Memo at 4.
    As stated above, the respondent government must demonstrate through 
objective record evidence that, due to an ``overall policy or national 
development plan,'' it created two or more programs with the express 
purpose that they complement one another, not only in terms of breadth 
of availability and coverage, but in similarity of intent, purpose, and 
administration as well. Preliminary Results at 54,115 (quoting Carbon 
Steel Wire Rod from Saudi Arabia). Furthermore, the evidence must 
establish that any differences between the nature and administration of 
the programs are necessary because of differences in the nature of the 
industries being offered benefits; and despite these differences, the 
recipient industries are actually treated equally in terms of 
availability, type, and receipt of benefits.
    As the Department indicated in the preliminary results, the GOC was 
unable to point to the necessary documentation demonstrating the 
existence of an overall policy or development plan to create two or 
more complementary programs. That fact alone renders a claim of 
integral linkage insupportable. See id.; Integral Linkage Memo at 3-4. 
The Department also found that the information in the record does not 
establish that the named, designated, and Tripartite provisions of the 
ASA are administered in an equal or complementary manner. Id.
    In light of these basic, essential requirements, the Department's 
interpretation of the integral linkage policy in the preliminary 
results, is fully consistent with the Department's practice, proposed 
regulations and the legislative guidance regarding the appropriate 
approach to specificity analysis in general. See, e.g., Groundfish.
    Comment 4: The GOC and the CPC disagree with the Department's 
determination that Tripartite is de facto specific. They argue that the 
Department's reliance on its finding that there are ``too few users'' 
of Tripartite is legally insufficient. According to Respondents, the 
statute and proposed regulations require consideration of all four 
factors enumerated in the proposed regulations at section 355.43(b)(2) 
before the Department can determine whether benefits under this program 
are provided to a specific enterprise or industry or group of 
enterprises or industries. The GOC argues that in reaching its 
preliminary results, the Department misinterpreted and misapplied Final 
Results of Review: Carbon Black from Mexico, 51 FR 30,385 (1986) and 
Cabot Corp. v. United States, 620 F. Supp. 722 (CIT 1985) (Cabot). 
According to the GOC, Cabot does not stand for the proposition that the 
Department may halt its specificity analysis upon finding ``too few 
users'' without consideration of the other regulatory factors and 
relevant evidence. As support, Respondents argue that a single-factor 
specificity test has been consistently rejected by the CIT, the Court 
of Appeals for the Federal Circuit, and several United States Canada 
Free Trade Agreement (FTA) binational panels. See Live Swine from 
Canada, USA-91-1904-03, at 25 (October 30, 1992) (Second Swine IV Panel 
Decision); In the Matter of Softwood Lumber from Canada, USA-92-1904-01 
(May 6, 1993); see also Roses, Inc. v. United States 774 F. Supp. 1376 
(CIT 1991) (Roses II); and Roses, Inc. v. United States, 743 F. Supp. 
870 (CIT 1990) (Roses I).
    Respondents point out that although the binational panel reviewing 
the fifth administrative review of live swine from Canada upheld the 
Department's specificity finding with regard to Tripartite, it did not 
uphold the use of a single-factor specificity test. In fact, the panel 
rejected the Department's finding that Quebec's Farm Income 
Stabilization Insurance scheme is specific based upon only one factor.
    Petitioner argues that the sequential application of the 
specificity test is not inconsistent with U.S. law and has been held 
repeatedly to be a reasonable interpretation of the statute. 
Furthermore, according to Petitioner, Cabot supports a de facto 
specificity finding based solely on the existence of too few users, 
with no inquiry into policy or discretion. On the other hand, the 
binational panel decisions on which the GOC relies have no precedential 
value, and are only to be considered if they are ``intrinsically 
persuasive.'' Accordingly, they do not supersede the binding case law 
which uniformly supports the Department's sequential application of the 
specificity test. Petitioner also notes that binational panel decisions 
on this issue directly contradict one another. Compare Second Swine IV 
Panel Decision; In the Matter of Live Swine from Canada, USA-91-1904-04 
(August 26, 1992) (Swine V Panel Decision); and In the Matter of Pure 
and Alloy Magnesium from Canada, USA-92-1904-03 (August 16, 1993) 
(Magnesium). Petitioner also disagrees with the claim of the GOC and 
the CPC that the Department did not consider all factors in its 
analysis.
    Department's Position: The test for determining de facto 
specificity requires that the Department ``consider, among other 
things,'' several particular factors. Proposed Regulations at section 
355.43(b)(2). Respondents misinterpret the purpose of the Department's 
inquiry, as set forth in the proposed regulations, when they 
incorrectly argue that the Department's practice ``plainly calls for a 
finding on all four factors.'' As the Department has stated previously, 
and as the Court of Appeals for the Federal Circuit has agreed, we 
``must consider all of these factors in light of the evidence on the 
record in determining specificity in a given case.'' PPG Indus. v. 
United States, 928 F.2d 1568, 1577 (Fed. Cir. 1991) (PPG I). Moreover, 
while decisions of binational panels may be considered intrinsically 
persuasive, they are not binding on the Department. We have carefully 
reviewed the panel decisions cited by the GOC and do not consider them 
intrinsically persuasive for the reasons set forth below. See also the 
Department's response to Comment 12, below, regarding the specificity 
of Quebec's FISI program.
    The GOC's reliance on the CIT's two Roses decisions is misplaced as 
well. In Roses, the CIT did not reject an affirmative de facto 
specificity determination based upon evidence relating to only one 
factor. Instead, the CIT rejected a finding of non-specificity which 
was reached without considering evidence relating to all four factors. 
It was in this context, after examining the Department's determination 
that a program was not specific based on the large number of users, 
that the Court properly held that the Department ``does not perform a 
proper de facto specificity analysis if it merely looks at the number 
of companies that receive benefits under a program; the discretionary 
aspects of the program must be considered from the outset.'' Roses II, 
774 F. Supp. at 1380. Although the CIT did not rule on the question of 
whether the Department could properly base an affirmative specificity 
determination on evidence related to only one factor, the context of 
the two decisions supports the Department's interpretation. See id.; 
see also Magnesium at 35 (cited in the Preliminary Results at 54,116).
    In this review, the Department determined that Tripartite provided 
de facto specific benefits to swine producers based upon its 
examination of evidence related to the first factor, the number of 
actual users or beneficiaries. We considered the evidence in the record 
regarding dominant users and disproportionate use, and the exercise of 
government discretion. We determined that this evidence did not detract 
from an affirmative de facto specificity determination on the basis of 
too few users. Preliminary Results at 54,116-17. Accordingly, the 
Department's determination is based upon substantial evidence and is 
otherwise in accordance with law.
    Comment 5: The GOC contests the Department's failure to 
specifically identify, and reach a finding regarding, ``a discrete, 
selective, targeted'' class, industry or group of industries 
benefitting from Tripartite. The GOC cites PPG I, 928 F.2d at 1577 and 
PPG Indus., Inc. v. U.S., 978 F.2d 1232, 1240 (Fed. Cir. 1992) (PPG 
II), in support of its claim that the Department must identify a 
beneficiary class or industry which includes live swine producers 
before concluding that Tripartite is specific.
    Petitioner argues that neither the statute nor the regulations 
require governmental targeting or intent as a precondition for 
determining de facto specificity; the fact that the Department declined 
to make this finding is reasonable and in accordance with law.
    Department's Position: We disagree with the GOC's contention that 
absent a finding that a bestowing government intended to benefit a 
``discrete, selective or targeted class,'' we may not properly find a 
program de facto specific regardless of how few users there are or 
other relevant evidence. The statute does not require and the 
Department's policy has not established that the Department must 
ascertain, or base its specificity determinations upon, the intent of 
the bestowing government. See 19 U.S.C. Sec. 1677(5)(B); Proposed 
Regulations at section 355.43(b)(2). The Department's interpretation of 
the statute has been expressly upheld by the CIT. Saudi Iron and Steel 
Co. (Hadeed) v. United States, 675 F. Supp. 1362, 1367 (1987), appeal 
after remand, 686 F. Supp. 914 (CIT 1988); see also Cabot, 620 F. Supp. 
at 732. Moreover, a binational panel in an earlier review of this order 
cited the legislative history underlying section 771(5)(B) of the Act 
to reject the GOC's same basic argument: ``Under the statutory scheme, 
the pertinent inquiry is not whether Canada has intentionally targeted 
benefits to swine producers, but rather whether it has done something, 
intentionally or otherwise, that confers a benefit upon a `specific 
enterprise or industry or group of enterprises or industries.''' In the 
Matter of Live Swine From Canada, USA-91-1904-03, at 19-20 (May 19, 
1992) (First Swine IV Panel Decision).
    Similarly, the Court of Appeals for the Federal Circuit did not 
hold, in either PPG I or PPG II, that the Department must find intent. 
The court recognized that the statute provides a two-part test for 
specificity and that the de facto aspect is purely an inquiry into the 
factual question of whether, ```in its application, the program results 
in a subsidy only to an enterprise or industry or specific group of 
enterprise or industries.''' PPG II, 978 F.2d at 1239 (quoting PPG I, 
928 F.2d at 1576) (emphasis in original). While the court certainly did 
not attempt to foreclose the possibility that intent might be shown, 
see PPG II at 1240 n. 12, nowhere did the court indicate that the 
statute requires an express finding of intent in order to support an 
affirmative de facto specificity determination. In both decisions, the 
court merely used the phrase ``discrete, selective, or targeted 
industry'' to describe the industry, enterprise or group thereof that, 
as a factual matter, was eligible for (or should have been eligible 
for) or had actually received a benefit under the programs at issue. 
PPG II at 1240; PPG I at 1577.
    In this regard, we note the decision of yet another binational 
panel which rejected the GOC's argument by finding that the authorities 
cited by the GOC ``generally use the term `targeting' as a synonym for 
`specific' or `exercise of discretion.''' Swine V Panel Decision at 16 
n. 17. Similarly, we have interpreted the Court of Appeals' use of the 
same term in PPG as a synonym for ``specific'' or the ``exercise of 
discretion.'' Therefore, no further findings are required by law to 
determine specificity in this review.
    Comment 6: Petitioner argues that the Department's determination 
that there are ``over 80 agricultural commodities'' produced in both 
Canada and Quebec understates the actual number of agricultural 
commodities which are eligible for benefits under the Tripartite and 
FISI programs, respectively. Petitioner states that the 1991 
Agricultural Profile of Canada, provided to the Department by the GOC, 
represents the best quantification of agricultural commodities produced 
in Canada. It lists 131 commodities and supports the Department's 
determination in previous reviews that there are over 100 agricultural 
commodities produced in Canada.
    Petitioner further argues that the Department found in its 
memorandum on The Universe of Agriculture in Canada and Quebec, 
Memorandum from Dana Mermelstein to Barbara Tillman, dated October 12, 
1993 (Agricultural Universe Memo), that ``the GOC has provided no 
indication of the criteria it applies to determine how and when a 
product should be listed in the [Farm Cash Receipts],'' and ``it is not 
possible to determine * * * how the GOC would reasonably and 
objectively determine which of the 131 commodities listed in the 
Profile meet these criteria.''
    According to Petitioner, this uncertainty is a result of the 
failure by the GOC to provide information regarding Tripartite 
eligibility criteria. Therefore, Petitioner argues, the Department 
should draw an adverse inference and base its determination of the 
extent of the agricultural universe for purposes of the de facto 
specificity analysis on the 1991 Profile.
    Petitioner makes the same argument with regard to Quebec's FISI 
program, alleging that the Government of Quebec's failure to provide 
information about FISI eligibility requires the Department to rely on 
the Profile, and to make adverse inferences in determining the number 
of agricultural commodities produced in Quebec.
    The GOC counters that Petitioner's criticisms of the Department's 
reasoning are invalid especially in light of the Petitioner's failure 
to provide substitute criteria for determining which products to 
include in the universe, a substitute list of products, or a definite 
final tally. The GOC and the CPC argue that the shortcomings in the 
explanation of how the Profile and the FCRs are compiled do not relate 
to Tripartite eligibility, nor would the law allow the Department to 
make the adverse assumptions Petitioner urges.
    The GOQ responds with three points: first, there is ample record 
evidence explaining and illustrating the ``reasonable limitations'' on 
FISI eligibility; second, adverse inferences are unwarranted in light 
of Quebec's responsiveness to the Department's inquiries; and third, 
the Profile lists products at a level of aggregation which is not 
appropriate for defining the universe of products eligible for FISI.
    Department's Position: We agree with the GOC, GOQ and CPC that 
Respondents' failure to provide information regarding the eligibility 
requirements for Tripartite and FISI is not a basis for the Department 
to draw an adverse inference with regard to the number of agricultural 
commodities produced in Canada and Quebec, which are eligible for 
coverage. As the Department stated in the preliminary results, the goal 
of determining the number of commodities produced in Canada and Quebec 
is to approximate the extent of the relevant agricultural universes and 
thus evaluate the coverage of the programs under consideration for the 
purpose of performing the de facto specificity analysis. We fully 
explained in the Agricultural Universe Memo how we evaluated the 
various sources of information in reaching the determination that there 
are over 80 agricultural commodities produced in both Canada and 
Quebec.
    Comment 7: The GOC argues that substantial record evidence does not 
support a finding that there are ``too few users'' of Tripartite; 
therefore, Tripartite is de facto non-specific. According to the GOC, 
benefits under Tripartite were provided during the review period to a 
``sizeable portion of the agricultural universe.''
    With regard to the number of Tripartite users, the GOC argues that 
the Department's counting of the products shows that at least 9 
industries or groups thereof, or 11 percent of the universe by number 
of products is covered by Tripartite. The GOC avers that a program need 
not reach all eligible users to be found not specific. The GOC points 
out that the binational panel ruling on the final results in the fourth 
review refused to sustain the Department's finding that Tripartite was 
specific based upon ``too few users.'' In this review period, the 
Department's determination of specificity on the same grounds is all 
the more inappropriate because there are two more Tripartite agreements 
covering two additional commodities.
    Because Tripartite reaches more than a ``trivial'' number of users 
but less than the entire agricultural universe, the GOC claims that the 
Department's inquiry should extend into non-statistical factors, such 
as the availability of other stabilization options, and the length and 
complexity of the Tripartite negotiating process, to understand the 
reason for the limited number of Tripartite agreements. The GOC also 
reiterates its argument that Tripartite is an expanding program; 
products were added through the fifth review period, and enrollees were 
added in the current (sixth) review period.
    In addition, the CPC argues that in analyzing whether Tripartite is 
de facto specific, the Department must also consider the fact that 
commodities participating in Tripartite accounted for 33 percent of the 
total value of Canadian agricultural production during the review 
period. The Department asked for this information and, according to the 
CPC, cannot now simply ignore it.
    Petitioner rebuts that Respondents are attempting to inject into 
the specificity analysis several criteria that do not exist. Petitioner 
claims that the Department has consistently used statistical analyses 
in determining whether a program is de facto specific by virtue of the 
number of program users; in fact, the regulations require the 
Department to consider the number of users. Moreover, Petitioner, 
citing the Department's redetermination in the fifth review of this 
order, notes that the Department correctly does not consider that a 
program covering a variety of industries is necessarily de facto not 
specific. Petitioner further agrees with the Department's 
redetermination regarding the number of industries currently using 
Tripartite: it does not represent a variety of different types of 
agricultural commodities.
    Department's Position: We disagree with the GOC. As we explained in 
the preliminary results, the Department determined that there were 11 
beneficiaries of Tripartite during the review period (which the GOC now 
disaggregates into 13 beneficiaries), covered by eight agreements. 
Preliminary Results at 54,116. Tripartite's enabling legislation, Bill 
C-25, an amendment to the ASA, states that Tripartite benefits are 
available to ``all natural or processed products of agriculture,'' thus 
requiring a determination that the program is not de jure specific 
under the Department's current policy toward agricultural subsidy 
programs. For purposes of its de facto specificity analysis, the 
Department has determined the appropriate universe of potential users 
in Canada against which to evaluate the number of actual users of 
Tripartite. That universe was comprised of over 80 agricultural 
commodities during the period of review. See Agricultural Universe 
Memorandum. Based on the Department's comparison of this evidence, we 
have reasonably determined that only 11 (or 13) out of over 80 is a 
sufficiently small number of actual beneficiaries so as to warrant a 
determination that Tripartite benefits a ``specific enterprise or 
industry or group thereof'' within the meaning of section 771(5)(B) of 
the Act.
    The Department disagrees with the GOC's claim that comparing the 
number of users to the number of potential users of a subsidy program 
is not probative of de facto specificity. This analysis is more than 
mere counting, as asserted by the GOC. The proposed regulations 
correctly provide that the Department will examine the number of 
enterprises or industries actually benefitting from a program in 
determining de facto specificity. See Proposed Regulations at section 
355.43(b)(2). That is what the Department did here. In addition, the 
GOC itself acknowledges that, based upon the number of agricultural 
commodities, only 11 percent of the agricultural universe in Canada is 
covered by Tripartite. Such a finding would certainly not detract from 
a determination that Tripartite is de facto specific based upon the 
small number of users.
    In this same regard, we have considered the CPC's argument that the 
agricultural commodities participating in Tripartite accounted for 33 
percent of the total value of Canadian agricultural production during 
the review period based on FCRs. This evidence also does not detract 
from a determination that Tripartite is de facto specific based upon 
the small number of only 11 (or 13) actual users. The statute states 
that a domestic subsidy is countervailable if it is limited to a 
specific enterprise or industry or group thereof, and the Department's 
proposed regulations provide that the Department will examine the 
number of actual beneficiaries, whether industries or enterprises, in 
determining de facto specificity. The Department has previously not 
engaged in an analysis of the percentage of production value covered by 
a program in making specificity determinations. However, because the 
CPC has raised this issue and because the proposed regulations provide 
that other factors may be considered, we have now considered this 
information in our specificity analysis. As discussed below, the 
Department determines that in the context of Tripartite this 
information has little, if any significance, in light of the relatively 
small number of actual beneficiaries compared to the relatively large 
number of eligible beneficiaries.
    The Department found that several of the relatively few commodities 
benefiting from Tripartite were produced in very small quantities 
during the review period. Thus, each accounted for a relatively small 
percentage of the total value of Canadian agricultural production. At 
the same time, certain Tripartite beneficiaries (e.g., swine and 
cattle) accounted for relatively large percentages of total 
agricultural production. Similarly, of the relatively large number of 
remaining commodities in the agricultural universe which did not 
receive Tripartite, some accounted for a small percentage of production 
value while others accounted for a large percentage. Because the 
relative value of agricultural production accounted for by a particular 
commodity is apparently, and properly, not determinative of whether it 
may receive Tripartite benefits, it follows that each of these non-
covered commodities, whether large or small, must be equally eligible 
for Tripartite benefits. Accordingly, the fact that the relatively 
small number of commodities receiving Tripartite benefits happened to 
account for 33 percent of the total agricultural production value 
during the review period is of little, if any, significance when viewed 
alongside the fact that a far greater number of both large and small 
commodities in Canada did not receive Tripartite benefits. Finally, we 
note that 33 percent of production value, viewed alone, still 
represents only a small percentage of the eligible universe, and if 
that were the sole factor that we had considered, the Department would 
find Tripartite de facto specific.
    In addition, we have determined that Tripartite is not integrally 
linked to other income stabilization programs in Canada. Therefore, the 
Department is precluded from examining evidence such as that regarding 
the availability of other stabilization programs, which may or may not 
explain why there were a small number of Tripartite agreements during 
the review period.
    Similarly, we do not consider the growth of the Tripartite program 
during past review periods to be relevant to an analysis of whether 
Tripartite is de facto specific during this review period. We 
acknowledge that commodities were added during the fifth review period. 
The Department found that Tripartite was de facto specific during that 
review, however, based upon evidence related to the small number of 
users, among other things. That determination was upheld by the 
binational panel reviewing the Department's findings following remand. 
Swine V Panel Decision at 17-19. Had additional agricultural 
commodities been added to Tripartite's coverage during this review 
period, the Department would have considered that evidence and 
reevaluated the determination that there are too few users of 
Tripartite to find it not de facto specific. Furthermore, although 
Tripartite may have added enrollees during this review period, this 
evidence does not detract from the Department's finding, which properly 
focused upon the industries, or agricultural commodities, receiving 
benefits. The additional enrollees produce the same 11 (or 13) 
commodities that we have determined comprise a specific group of 
enterprises or industries.
    Based upon this analysis, we determine that substantial evidence 
supports the Department's determination that there were too few 
beneficiaries of Tripartite during the review period to warrant finding 
the program not de facto specific.
    Comment 8: The GOC argues that the Department's determination that 
live swine producers benefit disproportionately from Tripartite 
improperly ignores the nature of payments under the program. The GOC 
claims that dollar payout levels do not show dominant or 
disproportionate use. First, because payouts are determined by market 
forces, there will always be variations in the amount of payouts to 
different commodities and even to the same commodity at different 
times. Second, the percentage of payouts received by hog producers 
declined substantially during the review period, suggesting that over 
time, the percentage of Tripartite benefits received by hog producers 
will return to relatively low levels. In addition, the GOC questions 
the value of the dominant or disproportionate use criteria in 
evaluating Tripartite. Because the benefits are determined by market 
forces, the dominant use test yields inconsistent findings regarding 
Tripartite's specificity.
    Petitioner argues that the Department's analysis of dominant or 
disproportionate use is supported by substantial evidence in the 
record, and is otherwise in accordance with law. The GOC's argument, on 
the other hand, is unsupported by law. Petitioner contends that the 
Department has previously considered arguments regarding the role of 
market forces in triggering payments and has concluded that these 
effects relate to whether a particular industry receives benefits 
rather than the de facto specificity of a program.
    Department's Position: We disagree with the GOC. First, we note 
that in the preliminary results, the Department determined that 
Tripartite was de facto specific solely on the basis of the small 
number of actual beneficiaries during the review period in relation to 
the large universe of eligible beneficiaries. Preliminary Results at 
54,116. We also found that swine producers were dominant users of 
Tripartite based upon the fact that they have received 70 percent of 
the benefits over the history of the program. In making this dominant 
use finding, the Department intended to demonstrate only that, assuming 
the Department had made no finding regarding the number of users, 
Tripartite could still have been found de facto specific. Id. at 
54,117. Therefore, because we reasonably determined that the number of 
actual Tripartite users was small, no dominant use finding was required 
by the statute. Accordingly, inasmuch as the Department's dominant use 
finding was not necessary in order to support our affirmative de facto 
specificity finding on the basis of the small number of users, we have 
considered the parties' dominant use arguments only to determine 
whether they identify evidence in the record which would somehow 
detract from the Department's affirmative determination. We have 
determined that no such evidence has been identified.
    Contrary to the argument of the GOC, a dominant or disproportionate 
use finding could well be relevant to an income stabilization program 
such as Tripartite if we were unable to make a specificity finding 
based upon the small number of users. However, the question of whether 
the subject merchandise happens to constitute a large or small industry 
(agricultural commodity) is immaterial to the Department's specificity 
analysis when the Department has already determined that a program is 
de facto specific based on the small number of users. Assuming the 
number of users in a case was not small, which is not the situation 
here, the Department could very well determine that the subject 
merchandise was a dominant user regardless of its relative size.
    Similarly, the fact that Tripartite payments are triggered by 
market forces cannot be considered in determining whether the program 
is de facto specific. It may be that swine producers consistently 
receive a disproportionate share of benefits because they happen to 
experience consistently bad years which trigger higher payouts. 
Subsidies are often provided when companies or industries experience 
downturns in their markets, and it would be unreasonable for the 
Department to find that such market forces render subsidies not 
specific and thus not countervailable. Neither the statute nor the 
proposed regulations permit the Department to alter its specificity 
analysis on this basis.
    Comment 9: The GOC also takes issue with the Department's findings 
that the ``government of Canada may exercise discretion in the 
administration of'' Tripartite, and that this evidence does ``not 
detract from [our] finding of specificity'' based on evidence relating 
to the small number of users. The GOC argues first that in relying on 
the legislative history of the Tripartite program to show that the 
Minister of Agriculture has a great amount of discretion, the 
Department has improperly relied on non-record evidence. According to 
the GOC, documents submitted by Petitioner as Tripartite legislative 
history were stricken from the record, and may not be considered in the 
Final Results.
    The GOC argues that, as a matter of law, the Department's proposed 
regulations require the Department to consider ``the extent to which a 
government exercises discretion in conferring benefits under a 
program.'' The Department's consistent practice has been to look for 
the actual exercise of discretion, and the Swine V panel specifically 
declined to sustain the Department's approach to the contrary. 
Therefore, according to the GOC, the Department's finding that the 
government ``may retain'' discretion is erroneous.
    The GOC claims that the record on Tripartite fails to show that the 
GOC has ever exercised the relevant discretion, and the verification 
report establishes that there have been no actions limiting the 
availability of Tripartite agreements. Moreover, the Department 
persists in overlooking the extensive criteria provided in the ASA for 
evaluating Tripartite agreement requests. The GOC urges the Department 
to consider the nature of the program, which in the case of Tripartite 
precludes government manipulation. The government cannot control the 
market factors which dictate when payouts are made. Neither can the 
government control which producer groups will seek Tripartite 
agreements, and which producers will enroll once an agreement is 
reached. Therefore, there is no opportunity for the GOC to influence, 
or use its discretion in, the granting of benefits under Tripartite. 
The absence of evidence of government discretion must weigh against a 
de facto specificity determination.
    Petitioner claims that it is not improper for the Department to 
rely on the legislative history of the ASA in analyzing whether the 
government retains discretion. Petitioner cites the CIT decision in 
Central Soya Co. v. United States, 15 CIT 35, 13 ITRD 1085, 1087 
(1991), which held that ``the court has broad power or discretion to 
take judicial notice of legislative facts.''
    Moreover, Petitioner argues that record evidence indicates that 
Tripartite benefits may be awarded in a discretionary manner; the 
negotiating process is discretionary in and of itself. The government 
does not automatically establish a Tripartite agreement for any 
producer group interested in obtaining one. Therefore, Petitioner 
argues that the Department's finding with regard to discretion is 
supported by substantial evidence in this review. Petitioner concludes 
that, regardless, a flawed discretion finding does not nullify the 
Department's specificity determination since the Department stated in 
the preliminary results that it ``historically has not placed great 
emphasis on this factor.''
    Department's Position: We disagree with the GOC regarding the 
Department's approach to the evidence relating to the exercise of 
government discretion during this review. The Department found that the 
Government of Canada ``may exercise discretion'' in the administration 
of Tripartite. The Department did not base its determination of 
specificity on this evidence, however. As explained in the previous 
comments, the Department determined that Tripartite was de facto 
specific solely on the basis of the small number of only 11 (or 13) 
actual beneficiaries during the review period in relation to the 
universe of eligible beneficiaries. Preliminary Results at 54,116. At 
the same time, after reviewing all the information in the record, we 
were not able to identify an established, publicized and consistent 
review process leading to Tripartite agreements. The fact that 
negotiations are involved appears to indicate that the outcome may be 
unpredictable and inconsistent from one agreement to another. Thus, the 
resulting Tripartite agreements do not necessarily reflect identical 
terms or conditions. Preliminary Results at 54,117.
    We also disagree with the GOC that the Department may not rely upon 
the Canadian legislative history relating to the Tripartite program. 
First, the legislative history is arguably publicly available, 
published information and it may be relied on at any time during the 
proceeding. We determined earlier in the review, however, that it was 
not appropriate to permit Petitioner to add this information to the 
record after the deadline provided for in the Department's regulations 
for submitting factual information. See 19 CFR 355.31(a)(1)(ii). 
Regardless, the Department's regulations do not preclude the Department 
from adding factual information to the record at any time during a 
proceeding, id. at Sec. 355.31(b)(1), especially prior to the 
preliminary results.
    Therefore, the fact that the Department did not permit Petitioner 
to add this information to the record did not preclude the Department 
from adding it to the record itself and relying upon the same 
information in reaching its determination. Because it was plain that 
the Department had indeed relied upon this information, the parties had 
an adequate opportunity to comment upon it substantively.
    Comment 10: The GOQ argues that the Department's reexamination of 
the FISI program, notwithstanding the decisions of two binational 
panels, is inconsistent with administrative practice and with the 
international obligations of the United States. According to the GOQ, 
the panels reviewing the fourth and fifth administrative reviews held 
that the evidence on the record did not support a determination of 
countervailability. By reinvestigating FISI, the Department is 
departing from its administrative practice not to revisit a decision 
absent new evidence or facts which indicate a change in the program. 
There is no new evidence regarding FISI; the program has remained 
essentially unchanged from prior reviews. The GOQ also maintains that 
the Department is reexamining FISI because it has never managed to 
compile a record sufficient to find FISI countervailable. This 
continuous and unjustifiable examination of FISI constitutes a 
restraint of international trade in violation of U.S. obligations under 
the General Agreements on Tariff and Trade and the FTA.
    Petitioner responds that the countervailability of FISI has neither 
been explicitly affirmed by a reviewing binational panel, nor 
explicitly rejected. The panel in Fresh, Chilled and Frozen Pork from 
Canada, USA-89-1904-06, at 19 (March 8, 1991), and Fresh, Chilled and 
Frozen Pork, USA-89-1904-06, at 2 (June 3, 1991) (collectively Pork), 
concluded that the evidence on the record was insufficient to sustain 
the Department's countervailability determination regarding FISI. The 
binational panel in the fifth review of the order on live swine ordered 
the Department to remove FISI benefits from its calculation for the 
review period because of defects in the supporting record. Thus, by 
examining FISI in this review, the Department has not violated its own 
practice of not reinvestigating a program previously found not 
countervailable.
    Department's Position: The Department's practice is not to 
reexamine a specificity finding made in the investigation or in a 
subsequent review absent new facts or evidence of changed 
circumstances. In this review, however, as we explained in the 
preliminary results, the Department's determination to reexamine FISI 
is reasonable in light of new evidence compiled by the Department 
regarding the number of potential beneficiaries of the program and 
other evidence. Preliminary Results at 54,117-18. In each proceeding 
reviewed by a binational panel, the panel highlighted what it 
considered to be deficiencies either in the supporting evidence or in 
the Department's analysis. For instance, the Swine V panel found that 
the Department had failed to provide a ``properly articulated rationale 
for determining that FISI was countervailable'' based on record 
evidence, and ordered the Department ``to remove FISI benefits from its 
duty calculations for that review period.'' The Pork panel's holding 
was the same. Therefore, in this review, as explained above and in the 
preliminary results, we have compiled new evidence.
    Comment 11: If the Department does not rescind its investigation of 
FISI, the GOQ urges the Department not to consider FISI in isolation 
but together with two other Quebec programs: Crop Insurance and Supply 
Management. According to the GOQ, these programs serve jointly to meet 
the province-wide objective of stabilizing farm income. Taken together 
they cover 81.2 percent of the value of Quebec's agricultural 
production; they also meet the differing needs of the agricultural 
sector, covering each farmer's most significant risk. Furthermore, this 
common purpose is best demonstrated by the administrative overlap 
between FISI and Crop Insurance, which are both administered by the 
Regie des Assurances Agricoles du Quebec (the Regie). These facts 
illustrate a unified provincial objective, fulfilled through 
complementary activities which reflect the diverse production and 
market risks faced by Quebec's farmers. On this basis, the Department 
must conclude that FISI benefits are not de facto specific.
    Petitioner counters that the GOQ is really arguing that these 
various programs are integrally linked. Therefore, Petitioner argues, 
the Department should reject this argument because, having been raised 
only at the briefing stage of the administrative review, it is 
untimely. Should the Department entertain the GOQ's argument, 
Petitioner argues that there is insufficient record evidence to support 
a claim that the programs should be considered together. At the very 
least, the GOQ's arguments fail to address two of the factors the 
Department must consider when examining an integral linkage argument: 
funding and equality of treatment.
    Department's Position: Although the GOQ did provide timely 
information about the programs which it now appears to contend are 
integrally linked to FISI, the GOQ did not present a timely allegation 
that these programs were integrally linked. Without a timely allegation 
during the investigation or administrative review that a program is 
integrally linked to other programs, the Department is unable to 
solicit and consider evidence relating to this question, and other 
parties are unable to comment on any determination the Department might 
reach. Therefore, for purposes of the Department's de facto specificity 
analysis, we have continued to base our determination of the 
specificity of FISI on the availability and use of that program 
standing alone. See Proposed Regulations at section 355.43(b)(6).
    Comment 12: Like the GOC, the GOQ takes issue with the Department's 
interpretation of the statute that a de facto specificity determination 
may be based on only one of the factors listed in the proposed 
regulations. Consequently, the GOQ contests the Department's 
determination that FISI is de facto specific based only upon the small 
number of users participating in the program. It is the GOQ's view that 
the Department only briefly mentioned the other factors in its 
preliminary results, determining summarily that no other factors 
detracted from the specificity finding.
    The GOQ maintains that the Department must collect and fully 
evaluate all reasonably available evidence, and that it ``may not rely 
on isolated tidbits of data which suggest a result contrary to the 
clear weight of the evidence.'' USX Corporation v. United States, 655 
F. Supp. 487, 489 (CIT 1987). See also Universal Camera Corp. v. United 
States, 340 U.S. 474 (1950). In addition, the GOQ states that every 
binational panel, except one, which has examined this issue has agreed 
that the Department cannot find specificity after examining only a 
single factor. The GOQ argues that the Magnesium panel, which held that 
the Department may find specificity after examining only one of the de 
facto specificity criteria, did not face this issue squarely because it 
found that the Department had considered three of the four specificity 
criteria, and there was evidence in the record indicating specificity 
under the fourth. The GOQ also argues that because there are different 
bases for analyzing de jure and de facto specificity, the Department 
may not properly rely upon its practice of basing a specificity finding 
on the single de jure factor as a justification for relying upon a 
single factor to determine de facto specificity.
    In rebuttal, Petitioner cites Alberta Pork v. United States, 669 F. 
Supp. 445, 451-52 (CIT 1987), the CIT decision which held that FISI is 
countervailable expressly because of the limited number of program 
users.
    Department's Position: We disagree with the GOQ's interpretation of 
the Department's statutory and regulatory requirements as well as the 
GOQ's assessment of how the Department conducted its analysis of FISI. 
Under Universal Camera (and USX Corp.), the Department and other 
administrative agencies are required to base determinations upon 
substantial evidence ``when viewed in the light that the record in its 
entirety furnishes, including the body of evidence opposed to the 
[agency's] view.'' Universal Camera, 340 U.S. at 488.
    Like the GOC, the GOQ implies that in a situation like the present 
one, in which the Department considers evidence regarding several 
evidentiary factors in reaching a determination, we are somehow 
required to reach affirmative findings on two or more of those factors 
in order to support an affirmative determination.
    This reading of the statute and applicable case law is mistaken. 
The holding of the Supreme Court in Universal Camera and other cases 
requires only that the Department consider all evidence.
    In addition, the statute does not draw a distinction between 
consideration of de jure and de facto evidence, as the GOQ claims. As 
with de facto specificity, when determining whether a program is de 
jure specific, the Department will consider any evidence in the record 
which fairly detracts from an affirmative determination. As a matter of 
practice and logic, however, once the Department determines that a 
program is de jure specific on the basis of a finding relating to 
certain evidence, the Department is not required to reinforce that 
finding with additional findings supporting an affirmative 
determination. Similarly, when the Department determines that a program 
is de facto specific based upon too few users (or evidence relating to 
a different factor), that finding alone warrants an affirmative 
specificity determination, provided the Department views the evidence 
``in the light that the record in its entirety furnishes, including the 
body of evidence opposed to the [Department's] view.'' Universal 
Camera, 340 U.S. at 488.
    In the present review, the Department correctly applied this 
standard. As the preliminary results demonstrate, we considered 
evidence related to all four factors outlined in the proposed 
regulations. As with Tripartite, we concluded that FISI was defacto 
specific during the review period based upon the small number of actual 
beneficiaries in relation to the very large number of eligible 
beneficiaries. Preliminary Results at 54,117-18. No evidence in the 
record fairly detracts from this determination. Thus, it is clear that 
the Department properly examined and considered all relevant evidence 
in the record, and its determination that FISI was de facto specific 
based upon the small number of users is supported by substantial 
evidence and is otherwise in accordance with law.
    Comment 13: The GOQ challenges the Department's determination that 
FISI is de facto specific based upon what the Department found to be 
the small number of users. According to the Department's findings, FISI 
covered 15 products out of an eligible universe of over 80 during the 
review period. The GOQ states that this conclusion is flawed.
    First, the Department's finding that there are ``over 80 
agricultural commodities produced in Quebec'' is based on incorrect 
assumptions and is not consistent with other information in the record. 
While the Department defined Quebec's agricultural universe with 
reference to the combined product listings applicable to both FISI and 
Crop Insurance, the Department never determined whether products 
covered by Crop Insurance are defined at the same level of aggregation 
as those covered by FISI.
    Further, the list provided by the Department in its November 4, 
1993 memorandum includes 66 products and appears to have aggregated 
some products listed in the original documents but not others. This 
list includes certain products which were not produced in Quebec during 
the review period, while not providing an accounting of this 
aggregation or the basis for combining various products. It also 
includes certain other products on the basis that they were produced in 
quantities and values similar to other livestock covered by FISI. 
However, there is no information about the value of production in the 
1991 Agricultural Profile, and the fact that certain livestock were 
produced in similar quantities is not relevant to whether the products 
were produced at commercially comparable levels. In addition, in at 
least two instances, the Department double-counted: the Department 
should not have listed ewes and wethers separately because the Profile 
doesn't indicate whether both were produced in Quebec; and the 
Department should not have listed bee colonies because it already 
counted honey (and bee colonies are not a commercial product).
    According to the GOQ, the 29-product listing which it provided 
defines the agricultural universe at the same level of aggregation as 
the FISI-covered products. Based on this list, FISI covered 15 out of 
the 29 products produced in Quebec, which would render the program not 
specific based on the number of users.
    In addition, this simple comparison is an inadequate evidentiary 
basis for finding de facto specificity. The Department must examine the 
program coverage in terms of other factors such as the percentage of 
the total farm production. Agricultural commodities covered by FISI in 
this review accounted for 38.6 percent of the total value of 
agricultural production. The GOQ maintains that coverage of over a 
third of Quebec's farm sector contradicts the Department's conclusion 
that FISI covered too few users.
    Petitioner responds that the assumptions the Department made with 
regard to Quebec's agricultural universe are based on record evidence, 
and that in assessing the number of FISI-eligible products, the 
Department conducted extensive analysis, consulting three different 
alternative sources in addition to examining the undocumented list 
provided by the GOQ. Petitioner asserts that the GOQ's claim that the 
Department's classification methodology is imprecise is without merit, 
because the GOQ itself neglected to provide adequate guidelines to the 
Department. Finally, Petitioner states that the GOQ's suggested product 
aggregations themselves demonstrate the absurdity of their complaints.
    Department's Position: We disagree with the GOQ. It is undisputed 
that during the period of review, FISI covered only 15 agricultural 
commodities under 11 schemes. As the Department explained at length in 
the preliminary results, in order to estimate the universe of eligible 
agricultural commodities in Quebec, we examined the two different lists 
provided by the GOC (Farm Cash Receipts (FCRs)) and the GOQ, both of 
which listed 29 commodities. We determined that these estimates were 
not sufficiently reasonable because they disaggregated commodities much 
too broadly and contained unexplained inconsistencies. For instance, 
while listing ``all vegetables for processing'' as one category, the 
GOQ listed feeder hogs and piglets as two categories. By contrast, the 
actual coverage of FISI is disaggregated on a much more reasonable and 
consistent individual commodity basis, providing FISI schemes for such 
narrowly defined commodities as grain corn, sugar beets and silage 
wheat. See Agricultural Universe Memorandum.
    Therefore, as Petitioner notes, the Department relied upon several 
independent sources of information, including the 1990-91 Annual Report 
of the Regie des Assurances Agricoles du Quebec (Regie Report) and the 
1991 Agricultural Profile of Canada, and found that there are over 80 
agricultural commodities in Quebec which should reasonably be eligible 
for FISI schemes. We determined that compared to this relatively large 
number of eligible recipients, the 15 agricultural commodities actually 
receiving FISI benefits was a small number of recipients.
    In this regard, we noted that the Department considers FISI de jure 
not specific because, according to the FISI Act, it is supposed to be 
available to all ``farm products'' in Quebec. The GOQ's arguments above 
demonstrate the difficulty of agreeing on what is the appropriate 
definition of ``farm products'' (or ``agricultural commodities'') for 
the purpose of assessing which farm products reasonably should be 
eligible for FISI. For instance, the GOQ appears to argue in its brief 
that a commodity's level of ``commercial significance'' bears on 
whether it should be eligible for FISI. However, record evidence 
indicates that although sugar beets remained covered by a FISI scheme 
during the review period, none were actually produced in the province. 
Similarly, the GOQ's arguments regarding wethers and ewes and bee 
colonies are largely unsupported in the record. Even if the GOQ is 
correct, the Department stressed that its estimate of the agricultural 
universe in Quebec (and Canada) could not be expected to be an exact 
count. We also stressed, however, that the Department's estimate was 
conservative.

Agricultural Universe Memorandum

    Finally, we have considered the GOQ's argument that commodities 
covered by FISI accounted for 38.6 percent of the total agricultural 
production value in Quebec during the review period. We determine that 
this evidence does not detract from a determination that FISI is de 
facto specific based upon the small number of only 15 actual users. The 
statute provides that a domestic subsidy is countervailable if it is 
provided to a specific enterprise or industry or group thereof, 19 
U.S.C. 1677(5)(B), and the Department's proposed regulations provide 
that the Department will examine the number of actual beneficiaries, 
whether industries or enterprises, in determining de facto specificity. 
Thus, although the Department has not previously engaged in an analysis 
of the percentage of production value covered by a program, as we 
explained in Comment 7 above with regard to Tripartite, we have done so 
here pursuant to the GOQ's argument. As discussed below, the Department 
has determined that, in the context of FISI, as with Tripartite, it has 
little, if any, significance in light of the relatively small number of 
actual beneficiaries compared to the relatively large number of 
eligible beneficiaries.
    Like Tripartite, FISI benefits are apparently granted and 
administered on an equal basis, without consideration of the 
commodity's relative production value. The production value of some 
commodities receiving FISI is small, while that of others is large. The 
same holds for commodities not receiving FISI. Therefore, it is 
reasonable to assign roughly equal significance to each beneficiary for 
the purpose of determining whether the actual coverage of FISI is 
small. Accordingly, the fact that the relatively small number of 
commodities receiving FISI benefits happened to account for 38.6 
percent of the total agricultural production value during the review 
period is of little, if any, significance when viewed alongside the 
fact that a far greater number of both large and small commodities in 
Quebec did not receive FISI benefits. Finally, we note that 38.6 
percent of production value, viewed alone, still represents a small 
percentage of the eligible universe, and if that were the sole factor 
that we had considered, the Department would find FISI de facto 
specific.
    In conclusion, the Department has determined that Quebec's 
arguments are unpersuasive. Accordingly, the Department determines that 
the relatively small number of 15 actual FISI users out of over 80 
eligible agricultural commodities is small and, on that basis, FISI is 
de facto specific within the meaning of section 771(5)(B).
    Comment 14: The GOQ argues that live swine producers are not 
dominant users of the FISI program, nor did they receive 
disproportionate benefits. The Department used ``insured value'' as the 
measure of dominant use when, in fact, this data provides no measure of 
the benefits which FISI participants actually receive. According to the 
GOQ, the fact that the insured value of live swine is greater than the 
insured value of other FISI-covered products does not indicate anything 
more than that the actual value of live swine is greater than the value 
of other relevant products. The actual benefit is the provincial 
government's share of the payouts, not the relative insured values of 
the products. The Regie Report shows that live swine received less than 
20 percent of the payouts made under FISI during the review period; 
thus, according to the GOQ, live swine producers are clearly not 
dominant users of FISI.
    The GOQ further argues that swine producers did not receive 
disproportionate FISI benefits during the review period. Although the 
Department did not address the issue of disproportionality in its 
preliminary results, the GOQ asserts that it must do so now, assuming 
the Department finds that swine producers are not dominant users of 
FISI. Having received less than 20 percent of total FISI payouts during 
the review period, the GOQ claims that swine producers received far 
less than their proportional share of the payouts.
    Department's Position: We agree with the GOQ that the insured value 
of a product is not an appropriate measure of whether a particular 
beneficiary is a dominant or disproportionate user of the program in 
question. Contrary to the assertion of the GOQ, however, it would be 
equally inappropriate to compare the percentage of FISI benefits 
received by swine producers during the review period (approximately 20 
percent) to the total FISI-insured production value of live swine 
(approximately 51 percent) in an effort to determine whether swine 
producers received a disproportionate share of benefits. Most 
importantly, this is because FISI only benefited a small segment of the 
relevant universe, rendering it unnecessary to also determine whether 
live swine or any other beneficiary was a dominant user or received a 
disproportionate share of benefits. If live swine were one of two 
actual beneficiaries, the Department would not need to determine that 
one of the two was a dominant or disproportionate user in order to 
reasonably determine that the program provided de facto specific 
benefits. Similarly, even in light of all of the other evidence in the 
record, the fact that swine producers are one of only fifteen actual 
beneficiaries out of a much larger universe of over 80 eligible 
beneficiaries warrants a determination that FISI is de facto specific. 
Accordingly, inasmuch as no dominant use finding was necessary in order 
to support our affirmative de facto specificity finding on the basis of 
the small number of users, we have considered the GOQ's dominant use 
arguments only to determine whether they identify evidence in the 
record which would somehow detract from the Department's affirmative 
determination. We have determined that no such evidence has been 
identified.
    Only if the number of beneficiaries of a program is sufficiently 
large so as to call into question a determination of de facto 
specificity based upon the number of users would it be necessary to 
determine whether one or more of the beneficiaries was a dominant or 
disproportionate user. See Final Affirmative Countervailing Duty 
Determinations: Certain Steel Products from Brazil, 58 FR 37,295, 
37,299 (1993). In other words, a comparison similar to that advocated 
by the GOQ could be meaningful in the context of ``a program in which 
virtually every segment of the economy [or the agricultural sector] in 
the market naturally participates to some extent.'' Final Affirmative 
Countervailing Duty Determinations and Negative Critical Circumstances 
Determinations: Certain Steel Products from Korea, 58 FR 37,338, 37,343 
(1993). That is not the case here, and it would not be meaningful to 
compare swine producers' share of FISI benefits to their proportionate 
share of FISI production coverage because FISI covered so few 
industries.
    Comment 15: The GOQ argues that there is no evidence that the 
government exercised discretion in administering FISI: each of the 
propositions on which the Department relied in concluding that the FISI 
Act ``appears to allow the GOQ considerable discretion in determining 
which products receive schemes'' is taken out of context, inaccurate 
and must be reexamined.
    As for the Department's conclusion that discretion is evident 
because ``schemes are established for any product * * * which the 
Gouvernement `indicates,''' the GOQ argues that the producers 
themselves request the Regie to create a FISI scheme. Moreover, the GOQ 
claims that the Department's determination that the FISI Act contains 
no explicit criteria for the establishment of a scheme is clearly 
erroneous. For one, only farm products which are marketed under a joint 
plan created at the producers' discretion, and products derived from 
the participant's own operations are eligible for FISI.
    The GOQ also argues that in citing the possibility of regional FISI 
schemes as evidence of possible government discretion, the Department 
overlooked the fact that the producers themselves, not the GOQ, 
determine the geographic scope of a FISI scheme. Moreover, the fact 
that the FISI Act permits the establishment of regional FISI schemes 
merely ensures that all joint plans created under the Farm Products 
Marketing Act, even plans reflecting a collection of producers grouped 
by region, are eligible for FISI if the producers so desire. Finally, 
the record demonstrates that no regional FISI scheme has ever been 
created.
    The GOQ also contests the Department's finding of discretion on the 
basis that the FISI hog scheme was the only scheme during the review 
period which did not set a limit on the maximum level of insurance 
available. The GOQ contends that the ceilings were administratively 
burdensome and had virtually no economic impact, and that it eliminated 
the ceiling for the hog scheme in August 1988. Ceilings under other 
FISI schemes were deemed burdensome as well, and by 1992 most of them 
had been eliminated. Thus, the absence of a ceiling for the hog scheme 
during the review period, which the Department deemed to be evidence of 
discretion, was merely an administrative matter; its elimination cannot 
be cited as evidence of discretion.
    Finally, the GOQ argues that differences among FISI schemes in the 
method of computing net annual income and stabilized net annual income, 
and differences in eligibility and participation requirements are not 
evidence of discretion. The GOQ argues that these differences are 
necessitated because each FISI scheme experiences a unique cycle of 
income fluctuation, and each scheme must be self-sustaining over the 
life of the program. In addition, the self-sustaining level which must 
be achieved reflects the same income level for all of Quebec's farmers 
as reflected in the average farm worker's salary in Quebec. The GOQ 
argues that this is not evidence of discretion, but illustrates the 
non-discriminatory provision that, over the long term, all schemes will 
render the same degree of protection.
    Department's Position: Like the GOC, the GOQ mischaracterizes the 
Department's findings in the preliminary results with regard to 
government discretion in the administration of FISI. The Department 
found that the FISI Act ``appears to allow the GOQ considerable 
discretion in determining which products receive schemes.'' Preliminary 
Results at 54,118. We did not base our determination that FISI is de 
facto specific on this evidence, however. As explained in the previous 
comments, the Department determined that FISI was de facto specific 
solely on the basis of the small number of only 15 actual beneficiaries 
during the review period in relation to the universe of over 80 
eligible beneficiaries. Id. At the same time, after reviewing all the 
information in the record, we were not able to identify an established, 
publicized and consistent review process leading to FISI schemes. Thus, 
the resulting FISI schemes do not necessarily reflect identical terms 
or conditions. Id.
    Comment 16: The GOQ argues that the Department has incorrectly 
calculated FISI benefits by aggregating FISI payments paid to hog 
producers with those paid to piglet producers. The GOQ points out that 
during the review period, Quebec exported no piglets to the United 
States. In addition, there is no evidence in the record which indicates 
that benefits paid to piglet producers are passed on to hog producers. 
Citing the upstream subsidies test provided for in section 771A of the 
Act (19 U.S.C. 1677-1(a)), the GOQ argues that the majority of piglets 
raised in Quebec are sold to hog producers at arm's-length market 
prices. There is no evidence to support the assertion that payments 
received by piglet producers under the FISI piglet scheme have any 
effect on the price at which these piglets are sold. Therefore, the 
piglet payments provide no ``competitive benefit'' to the exported 
hogs, as required by 19 U.S.C. 1677-1(a), and this analysis fails on 
the second and third prongs of the upstream subsidies test. Should the 
Department determine in the final results that FISI bestows 
countervailable benefits on live swine, the Department should eliminate 
the payments under the piglet scheme and only countervail the payments 
under the hog scheme.
    Petitioner counters that payments under the piglet scheme are not 
upstream subsidies, but rather payments which directly benefit 
producers of market hogs, the merchandise which is subsequently 
exported. Because payments under the piglet scheme reduce the 
production costs in farrowing operations, the costs of producing market 
hogs are thus reduced. Furthermore, Petitioner rejects the GOQ's 
argument that ``arm's-length, market price'' transactions negate the 
benefits to hog producers from the piglet scheme: If there were no 
subsidies to piglets, fewer would be produced, driving up the price and 
therefore increasing the cost of hog production. Therefore, the 
Department has correctly countervailed payments to hog producers at all 
phases of production regardless of whether pigs are exported in all 
phases of development.
    Department's Position: We disagree with the GOQ. Both piglets and 
market hogs are included within the class or kind of merchandise 
subject to the order on live swine from Canada. When calculating the 
benefits attributable to the FISI program, the Department has 
consistently aggregated the benefits provided under the scheme for 
piglets and the scheme for hogs. In this regard, the Swine IV 
binational panel correctly stated that ``[a]n upstream subsidy inquiry 
is only required when benefits are provided to an input producer that 
does not produce the product under investigation.'' Swine IV Panel 
Decision at 73.
    The GOQ's argument that benefits provided by the piglet scheme 
should be analyzed under the statute's upstream subsidy provision is 
misplaced. An upstream subsidy analysis is concerned with determining 
the effect of benefits received by producers of a product which itself 
is not subject to a countervailing duty investigation or order, but 
which is an input into the subject merchandise. 19 U.S.C. Sec. 1677-
1(a). For instance, in Final Affirmative Countervailing Duty 
Determination; Steel Wheels from Brazil (54 FR 15,523, 15,525-28; April 
18, 1989), the Department examined whether subsidies provided to the 
Brazilian steel industry constituted upstream subsidies within the 
meaning of section 771A. The steel was an input product; it was not 
included in the class or kind of merchandise being investigated.
    As noted, piglets are subject to the countervailing duty order on 
live swine. Therefore, they cannot be considered recipients of an 
``upstream subsidy'' and section 771A does not apply. Because FISI is a 
domestic subsidy program, because the class or kind of merchandise 
includes all live swine, and because live swine were exported to the 
United States during the review period, the fact that Quebec did not 
export piglets during the review period is not relevant to the 
Department's analysis. Whether or not benefits to piglets benefited 
market hogs, domestic subsidies conferred on the class or kind of 
merchandise are countervailable. The benefits bestowed on the entire 
class or kind of merchandise, including piglets, are appropriately 
included in the Department's calculations.
    Comment 17: The CPC, Quintaine, and Baxter argue that sows and 
boars are a lawful subclass, and based upon its own practice and its 
statutory authority, the Department should reconsider its preliminary 
determination to eliminate the sows and boars subclass. According to 
these respondents, in the first review of this order, the Department's 
decision to calculate a separate rate for sows and boars was compelled 
by what the Department referred to as ``exceptional circumstances'' and 
the ``considerable'' differences between sows and boars and market 
hogs. The Department also found that the ``distinction between 
slaughter sows and boars and other live swine cannot be used as a means 
to circumvent the countervailing duty order.'' Furthermore, Petitioner 
did not object to the Department's decision. These circumstances and 
differences still exist, as do the Department's statutory authority and 
considerable discretion to establish a subclass. In the absence of a 
change in circumstances, Respondents argue that the Department must 
carefully consider whether such a change should be made sua sponte.
    Respondents acknowledge the Department's determination that the 
criteria adopted in Diversified Products v. United States, 572 F. Supp. 
883 (CIT 1983), should only be used to distinguish between, not within, 
a class or kind of merchandise. Respondents argue, however, that the 
original sows and boars subclass determination was also based upon the 
Department's comparative analysis of the amount of subsidies applicable 
to sows and boars and the amount of subsidies applicable to the other 
products within the class or kind. While the Department explained its 
recent rejection of the Diversified Products criteria for 
distinguishing among products within a class or kind, the Department 
failed to explain its apparent repudiation of the second part of the 
test, which the statute clearly supports. According to the CPC, 
although the statute ``creates a presumption in favor of a country-wide 
rate,'' it does provide for separate rates whenever a state-owned 
enterprise is involved or when there are substantial differences 
between companies in terms of subsidies received. Therefore, the law 
requires the Department to take into account extreme differences in 
subsidies received, and when necessary, to overcome the presumption in 
favor of a country-wide rate.
    Respondents cite section 355.47(a) of the proposed regulations to 
argue that the Department's statutory responsibility requires it to 
ensure that there is a rational connection between the countervailable 
benefits received by a product, and the calculation of a countervailing 
duty for that product. Quintaine and Baxter also cite U.S. v. Zenith 
Radio Corp., 562 F. 2d 1209 (1977), affirmed 437 U.S. 443 (1978), in 
which the Court of Customs and Patent Appeals held that 
``countervailing duties should equate to the true bounty actually 
conferred.''
    Finally, the CPC argues that the Department's subclass methodology 
has been contemplated in at least two previous investigations, Certain 
Steel Products from the United Kingdom (47 FR 35,668; August 16, 1982) 
(UK Steel), and Fresh Chilled and Frozen Pork from Canada (54 FR 
30,774, 30,787; July 24, 1989) (Pork). Moreover, the binational panel 
reviewing the Department's fourth administrative review of this order 
determined that the Department's initial subclass analysis was 
reasonable. The binational panel reviewing the fifth administrative 
review of this order upheld the Department's determination that 
information about the existence and value of benefits is necessary for 
the agency to make a subclass determination.
    Petitioner acknowledges that the Department's reconsideration of 
the sows and boars subclass decision is consistent with the statute and 
the regulations, which create the presumption in favor of country-wide 
countervailing duty rates.
    Department's Position: We disagree with Respondents. As we 
explained in the preliminary results, the Department has determined 
that the methodology relied upon to separate the class or kind of 
merchandise into ``subclasses'' was inappropriate, and we will no 
longer calculate a separate rate for sows and boars or any other 
product on this basis. See Preliminary Results at 54,113; Memorandum on 
Product-Specific Rates in Countervailing Duty Administrative Reviews, 
from Barbara Tillman to Joseph Spetrini, July 19, 1993 (Subclass 
Memorandum).
    The decision during the first administrative review to grant sows 
and boars a separate countervailing duty rate based upon the subclass 
determination represented an exception to the Department's normal 
practice of calculating one rate for the entire class or kind of 
merchandise subject to a countervailing duty order. See 19 U.S.C. 
Sec. 1677e(a). The Department based its finding of a subclass exception 
upon a test consisting of two parts, each of which we considered 
necessary to warrant granting the separate rate. See Preliminary 
Results of Countervailing Duty Administrative Review; Live Swine From 
Canada (53 FR 22,189; June 14, 1989); Preliminary Results at 54,113. 
However, during the present review, we determined that the Diversified 
Products criteria, the first part of the test, ``were designed to 
differentiate between classes or kinds of merchandise, not among 
products within a class or kind.'' Preliminary Results at 54,113. On 
this basis, we determined ``that it was inappropriate to grant the 
slaughter sows and boars`subclass' exception on the basis of a 
Diversified Products criteria analysis.'' Id. Because the reversal of 
the subclass exception was premised upon the Department's decision that 
the Diversified Products criteria were not appropriate for this 
purpose, it was not necessary to attempt to repudiate the second part 
of the subclass test, i.e., the comparative analysis of the difference 
in benefits granted to the producers of slaughter sows and boars vis-a-
vis those granted to the producers of other products within the class 
or kind of merchandise. See id.
    The CPC's reliance on UK Steel is misplaced. That investigation was 
terminated when the petition was withdrawn. Therefore, the Department 
never reached a final determination nor did it issue an order. 
Accordingly, the Department neither reached a final determination 
regarding the scope of that investigation nor fully considered the 
scope issues referred to by the CPC.
    Further, the fact that the statute provides exceptions to the 
presumption in favor of country-wide rates does not imply that the 
subclass exception should be continued simply because sows and boars 
receive a different amount of subsidies. As we stated in the 
preliminary results, the express exceptions under the statute recognize 
differences between individual companies (and government ownership), 
not between products within the class or kind of merchandise covered by 
the order. See 19 U.S.C. 1671e(a)(c). Therefore, the Department is only 
required to examine the possibility of a significant differential when 
the producer or exporter is government-owned. Beyond government-owned 
companies, the Department may examine, to the extent practicable, other 
producers or exporters whose benefits differ significantly from the 
country-wide rate. See id.; 19 CFR 355.22(d)(1).
    Finally, Respondents misinterpret the Department's proposed 
regulations with regard to the requirement that the countervailing duty 
rate accurately reflect the benefits bestowed on the merchandise under 
review. Section 355.47 of the proposed regulations only draws a 
distinction between subject merchandise and non-subject merchandise, 
and precludes the Department from countervailing benefits tied to non-
subject merchandise. Sows and boars are clearly merchandise subject to 
the countervailing duty order on live swine from Canada.
    Comment 18: Quintaine argues that the Department cannot discontinue 
its recognition of the sows and boars subclass and its practice of 
calculating a separate rate for the subclass for the following reasons. 
First, because the Department specifically sought information in its 
questionnaire with which to calculate a separate rate for the sows and 
boars subclass, and this information was provided by the GOC, the 
Department must use the information to calculate a separate rate. 
Second, nothing in the proceeding prior to the preliminary results 
indicated the Department's intention to abandon its established 
practice of recognizing sows and boars as a subclass and granting them 
a separate rate of duty on that basis. Third, the Department's 
methodology for calculating the de minimis threshold specifically 
contemplates the differences between sows and boars and the rest of the 
class of live swine and uses sales data specifically pertaining to sows 
and boars as the basis for achieving a weighted-average price for all 
live swine.
    Quintaine and Baxter also argue that in abandoning its subclass 
practice, the Department has acted without notice and created an ex 
post facto burden on trade not contemplated by the parties at the time 
of export. Sows and boars which entered during the review period were 
subject to a product-specific deposit rate substantially lower than the 
rate for other live swine. The producers and exporters did not 
contemplate that these entries would be liquidated at the much higher 
live swine rate determined in the preliminary results in light of the 
Department's recognition of the sows and boars subclass since the first 
administrative review of the order. Therefore, Respondents claim that 
the Department's abandonment of its subclass practice is unfair, 
inequitable, unprecedented, and an arbitrary abuse of the Department's 
discretion.
    Quintaine, Baxter, and Pryme add that the implication in the 
Department's Subclass Memorandum, that it may further analyze the use 
of product-specific rates in future cases, will likely result in a 
product-specific application of the countervailing duty law. Thus, 
although sows and boars will no longer be entitled to subclass 
treatment, other products may enjoy such treatment in the future.
    Department's Position: We disagree with Respondents. Although the 
Department collected the information necessary to calculate a separate 
rate for sows and boars, we subsequently determined that doing so was 
not appropriate for the reasons articulated in the Subclass Memorandum, 
the preliminary results and the above comment. After the preliminary 
results, all parties had ample opportunity to comment on the 
Department's decision. Respondents provided comments, which we have 
fully considered.
    Respondents are also mistaken in claiming that the Department is 
precluded from changing its policy in this area. ``The mere fact that 
an agency reverses a policy, or a statutory or regulatory 
interpretation, does not indicate the agency's decision is 
unreasonable, arbitrary, or capricious.'' Mantex, Inc. v. United 
States, Slip Op. 93-242 at 27 (CIT December 22, 1993) (citing Rust v. 
Sullivan, ------ U.S. ------, 111 S. Ct. 1759, 1769 (1991)). The courts 
have long recognized that agency policies must be permitted to evolve 
under judicial supervision. See, e.g., Motor Vehicle Mfrs. Assn. of 
United States v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 42 
(1983). An agency ``is not required to `establish rules of conduct to 
last forever,''' Rust v. Sullivan, 111 S.Ct. at 1769 (citations 
omitted), but rather ``must be given ample latitude to adapt [its] 
rules and policies to the demands of changing circumstances.'' Motor 
Vehicle Mfrs. Assn., 463 U.S. at 42. The Supreme Court has repeatedly 
upheld the fundamental principle that an agency's ``revised 
interpretation deserves deference because `[a]n initial agency 
interpretation is not instantly carved in stone' and the `agency, to 
engage in informed rulemaking, must consider varying interpretations 
and the wisdom of its policy on a continuing basis.''' Rust v. 
Sullivan, 111 S.Ct. at 1769 (citations omitted).
    It is clear that this necessary decision-making process may be 
accomplished on a case-by-case basis, permitting the Department to 
adapt its policy during successive reviews, with the only limitation 
being that it ``justi[fy a] change of interpretation with a `reasoned 
analysis.''' Id. (citations omitted). As explained by the Department in 
the previous comment and elsewhere, the record in this proceeding 
reflects the Department's ``reasoned'' analysis and the justification 
for its change of interpretation. See, e.g., Subclass Memorandum.
    Furthermore, contrary to Respondents' claims, the Department's 
change in policy does not create an unjustified ex post facto burden 
for exporters and importers of slaughter sows and boars. It is not 
uncommon for a product covered by an order to enter with a low (or 
zero) cash deposit rate and to ultimately be assessed a much higher 
rate as a result of an administrative review covering those entries. 
Such entries are also routinely assessed interest as required by the 
regulations. See 19 CFR 355.24. This is a reasonable contingency of 
which importers and exporters are well aware when entering merchandise 
under an order and making deposits of estimated duties.
    Moreover, the Department's statement in the Subclass Memorandum 
that we ``may further analyze the issue of granting product-specific 
rates in future cases'' in no way qualified the Department's rejection 
of the subclass policy. With this statement, the Department indicated 
that it had not determined whether to consider product-specific rates 
on some other basis, outside the framework of the rejected subclass 
analysis. Therefore, we affirm our determination in the preliminary 
results that one country-wide rate will be assessed on all subject 
merchandise.
    Finally, we also disagree with Quintaine regarding the de minimis 
calculation methodology. Because countervailing duties on live swine 
are calculated on a per-kilogram basis, rather than ad valorem, we must 
determine what de minimis is on a per-kilogram basis. Our methodology 
for determining this merely accounts for the price differences between 
sows and boars and the rest of the class or kind of merchandise within 
the order on live swine. We must recognize this difference, just as we 
recognize and account for the difference in provincial prices of other 
live swine, in order to establish an overall weighted-average price per 
kilogram for the subject merchandise, from which we then determine the 
de minimis value, in Canadian dollars (i.e., 0.5 percent of the 
weighted average price per kilogram). The subject merchandise includes 
slaughter sows and boars. Therefore price data for sows and boars must 
be factored into that calculation. However, mere recognition that sows 
and boars sell at a different price level for purposes of this 
calculation does not require the Department to calculate a separate 
rate for sows and boars, as Quintaine would suggest.
    Comment 19: For many of the same reasons given above, Pryme argues 
that the Department must recognize a subclass for weanlings. First, the 
recognition of subclasses has been an established and consistent 
expression of the Department's analysis since the determination in the 
first administrative review to calculate a separate countervailing duty 
rate for sows and boars. In the case of weanlings, in the fourth and 
fifth reviews of this order, the Department concluded that it lacked 
sufficient information in the record to calculate a subclass rate. See 
Fourth Review Final at 28536; see also Final Results of Countervailing 
Duty Administrative Review; Live Swine from Canada (56 FR 50,560, 
50,564; October 7, 1991) (Fifth Review Final). Pryme argues that the 
Department's statement in the Final Results of the fifth review that 
``[t]he Department has considered Pryme's request, but determines that 
further information would be required to reach a determination, and 
that it would be inappropriate to delay the processing of the review to 
solicit such information,'' indicates that a timely request and the 
proper information could have resulted in the finding of a weanling 
subclass in the fifth review. By virtue of Pryme's timely request in 
this review, the Department solicited and Pryme and the GOC provided 
information in order to establish a subclass for weanlings. Therefore, 
provided the established subclass criteria are met, Pryme argues that 
the weanling subclass should be granted.
    Department's Position: As we determined in our preliminary results, 
and as explained in Comments 17 and 18 above, we have determined that 
it is inappropriate to establish subclasses within the class or kind of 
merchandise covered by an order, as the Department previously did with 
regard to sows and boars. The fact that the Department denied Pryme's 
requests to establish a subclass for weanlings in two earlier reviews, 
based on the untimeliness of the requests and insufficient information 
with which to conduct the two-part analysis, is not relevant to the 
issue of whether to grant weanlings a subclass in this review. The 
Department may alter its practice provided it gives a reasoned analysis 
for doing so, as explained above. Furthermore, as discussed in Comment 
18 above, the Department is not required to establish a subclass for 
weanlings merely because Pryme made a timely request and responded to 
the Department's requests for information in this review.
    Comment 20: Pryme argues that the Department's failure to recognize 
the weanlings subclass results in an inaccurate assessment of 
countervailing duties in contradiction of the purposes of the 
countervailing duty law. Citing Zenith, Pryme argues that 
countervailing duties must be equivalent to the benefits conferred. 
Pryme argues that weanlings qualify for substantially different 
benefits than the other live swine covered by this order because it 
falls within the company-specific exception to the presumption in favor 
of country-wide rates provided for in the statute. See 19 U.S.C. 
1671e(a)(2). Pryme argues that benefits received by weanling exporting 
companies as compared with those received by other exporters of live 
swine demonstrate the significant difference in the subsidies received 
by the companies.
    Department's Position: We disagree with Pryme that the statute 
requires the Department to calculate a separate rate for weanlings. 
Pryme's reliance on the statute's language allowing the Department to 
determine ``that there is a significant difference between companies 
receiving subsidy benefits'' to support this argument is misplaced. 
This provision requires the Department to consider whether to 
distinguish among companies receiving different subsidies, not among 
different products included in the class or kind of merchandise covered 
by an order. Pryme's request for a weanling subclass is not premised 
upon its status as a company, but upon its status as a weanling 
exporter. See Department's Position at Comment 18, above.
    Comment 21: Pryme argues that it has met all of the Department's 
requirements for a company-specific rate. Pryme made a timely request 
for an individual review, and provided the Department with information 
with which to calculate a company-specific rate. Record evidence 
indicates that Pryme received no benefits on its exports of live swine 
during the review period, and any benefits which Pryme did receive 
during the review period were de minimis. According to Pryme, in its 
preliminary results, the Department improperly declined to calculate a 
company-specific rate for Pryme based on what the Department referred 
to as an ``incomplete'' or ``incorrect'' certification. Pryme argues 
that this finding ignores the fact that there is no prescribed form of 
certification in the statute or the regulations. See 19 CFR 355.22(a). 
The Department's verification report states that the certifications 
were accurate as presented with regard to weanlings, but notes that the 
Department found that, during the review period, Pryme had received 
Tripartite benefits on market hogs sold in the quarter prior to the 
review period. Pryme argues that these benefits were de minimis; 
therefore, the certifications were neither incorrect nor incomplete, 
since Pryme received no cognizable benefits.
    In addition, Pryme argues that the Department should not be 
concerned with the Tripartite payment received by Pryme during the 
review period because it was made on merchandise sold prior to the 
review period. As support, Pryme cites the Department's regulations, 
which provide that an ``administrative review * * * normally will cover 
entries or exports of the merchandise during the most recently 
completed reporting year of the government of the affected country.'' 
19 CFR 355.22(b).
    Department's Position: We disagree with Pryme. In addition to the 
subclass request addressed above, Pryme made two other requests. First, 
Pryme requested what it referred to as a ``company-specific rate,'' 
i.e., ``individual rate'' in accordance with section 706(a)(2)(A) of 
the Act and Sec. 355.22(d) of the Department's regulations. As we 
explained to Pryme after receiving its request, because of the very 
large number of exporters of live swine, the Department conducts 
reviews of this order on an aggregate basis and does not collect 
individual sales and export data. Therefore, we have determined that it 
is not practicable to examine whether a significant differential exists 
between the country-wide rate and the net subsidies received by 
individual producers. See 19 CFR 355.22(d); 53 FR at 52,325-26 
(December 27, 1988) (commentary to the proposed regulations).
    In addition, Pryme requested an individual review, in accordance 
with Sec. 355.22(a)(2) of the Department's regulations, which requires 
that several conditions be met before the Department may review an 
individual producer or exporter. First, a person requesting an 
individual review must provide the Department with a certification that 
the person did not apply for or receive benefits on the subject 
merchandise from any programs which the Department had previously found 
countervailable, and that the person will not do so in the future. The 
person must also provide certifications from the government of the 
affected country stating that no benefits were provided to the person 
requesting the review or to any of the person's suppliers. Finally, the 
person must provide the certifications of its suppliers of the subject 
merchandise, and of the government regarding those suppliers, stating 
that they did not apply for or receive benefits under the 
countervailable programs, and that they will not do so in the future. 
19 CFR 355.22(a)(2).
    The Department must then verify that all certifications ``are 
complete and accurate.'' Id. at Sec. 355.22(f)(2). If the Department 
determines that the certifications are complete and accurate, that is, 
there was no net subsidy received on the merchandise covered by the 
request, as provided for in Sec. 355.22(f)(1), that person is assessed 
a zero rate and a corresponding zero cash deposit rate.
    Pending the verification required pursuant to Sec. 355.22(f)(1) of 
the Department's regulations, we accepted Pryme's timely filed 
certifications which stated that Pryme ``did not apply for or receive 
any net subsidy on the merchandise, i.e., Weanlings, swine weighing 
less than 40 kg., under the National Tripartite Scheme'' during the 
review period. Although weanlings are part of, but not the entire class 
or kind of merchandise, the Department accepted the certifications, 
pending verification, based on the assumption that during the review 
period, Pryme produced and sold only weanlings and had not received any 
subsidies on any of the subject merchandise during the review period. 
However, at verification, we found that during the review period, Pryme 
had sold market hogs and had received benefits under the Tripartite 
program, based on market hog sales prior to the review period. See 
Verification Report at 4.
    Pryme argues that because the Tripartite payments it received 
during the review period were based on sales prior to the review 
period, it is inappropriate for the Department to examine these 
Tripartite payments. We disagree. The Department's standard practice is 
to countervail benefits when they affect the cash flow of the company. 
See Proposed Regulations at Sec. 355.48(a). In all reviews of this 
order since the inception of the Tripartite program, the Department has 
requested, and the GOC has provided information regarding Tripartite 
payments made during the review period. The record shows that quarterly 
payments are made based on hog sales and hog prices in the prior 
quarter. Therefore, the payments made in the first quarter of the 
review period regularly reflect sales and prices in the quarter prior 
to the review period. Under the Department's methodology the benefits 
associated with these payments are countervailed during this review 
period. Similarly, Tripartite payments for hog sales in the fourth 
quarter of a particular review period are made in the following 
quarter, outside the review period. They are not examined by the 
Department until the next review period. Accordingly, we properly 
accounted for Tripartite payments Pryme received during this review 
period and determined that Pryme's certifications were not complete and 
accurate with regard to the subject merchandise.
    In a memorandum on Pryme Pork's request for an individual review, 
dated April 7, 1993 (on file in Room B-099, Department of Commerce), we 
stated that ``although Pryme's certifications were accurate with regard 
to weanlings [i.e., Pryme received no benefits on its sales of 
weanlings], the discovery that Pryme did receive benefits on sales of 
market hogs, other subject merchandise, rendered Pryme's certifications 
* * * incomplete.'' In the preliminary results, we stated that Pryme's 
certification was incorrect, effectively terminating the individual 
review of Pryme. Preliminary Results at 54,113. In addition, although 
we stated in the preliminary results that ``we found that, during the 
review period, Pryme sold only weanlings'' (Preliminary Results at 
54,113), we have reexamined the record evidence, and it shows that 
weanlings were the subject merchandise exported by Pryme during the 
review period, but that Pryme also sold market hogs in April, June and 
November, 1990, and January and March, 1991 (Verification Report at 7). 
The Department therefore concluded that Pryme's certifications did not 
cover Pryme's sale of market hogs during the review period, or Pryme's 
receipt of benefits on the sale of market hogs during the review 
period.
    Although Pryme argues that there is ``no prescribed form of 
certification,'' the regulations clearly provide that the 
certifications must state that the ``person did not apply for or 
receive any net subsidy on the merchandise.'' 19 CFR 355.22(a)(2) 
(emphasis added). Pryme's certifications, inasmuch as they only applied 
to weanlings, when in fact, Pryme also sold market hogs, were 
incomplete.
    Furthermore, in reexamining the record pursuant to Pryme's 
arguments after the preliminary results, we have determined that 
ManitobaPork, est., which administers Tripartite in Manitoba, declined 
to certify that Pryme had not received Tripartite payments during the 
review period. Therefore, Pryme's request for an individual review was 
not properly accompanied by the government certifications required 
under Sec. 355.22(a)(ii) of the Department's regulations.
    In the case of incomplete or inaccurate certifications, the 
regulations make no provision for further examination of existing 
benefits, thus precluding the Department from reaching the issue of 
whether the benefits received by Pryme are de minimis. In objecting to 
the Department's preliminary determination, which effectively 
terminated the individual review of Pryme, Pryme contends that although 
its certifications were not complete and accurate, they were close. 
Therefore, in Pryme's view, the Department should have accepted them. 
We disagree. The Department addressed this issue when promulgating the 
regulations, and stressed that ``we must be reasonably satisfied that 
the producer or exporter is entitled to a zero rate. Thus, we require 
the requester's and the government's certifications that the requester 
is so entitled.'' 53 FR at 52,328. As described above, the 
certifications provided by Pryme were not complete and accurate, as 
required by the regulations. On that basis, the Department should not 
have initiated an individual review. Once it did, and once the 
Department determined that Pryme's certifications were not complete and 
accurate, we properly terminated, in effect, the individual review.
    Comment 22: The CPC argues that the Department should reconsider 
its determination that the Ontario Rabies Indemnification Program is 
specific to livestock producers and therefore countervailable. The 
benefits provided under this program reimburse livestock producers for 
the value of animals which a federal inspector requires to be destroyed 
because they are determined to be rabid. The CPC argues that such rabid 
animals are destroyed in the interest of public health and safety; the 
loss which livestock producers incur is in the interest of a larger, 
more general good. The CPC cites the General Agreement on Tariffs and 
Trade to support its proposition that this type of government action is 
an exception to the countervailing duty laws of member countries: 
``Nothing in this agreement shall be construed to prevent the adoption 
or enforcement by any contracting party of measures: * * * necessary to 
protect human, animal or plant life or health * * *.'' General 
Agreements on Tariff and Trade, 1947, Art. XX, T.I.A.S. 1700.
    Department's Position: We disagree. The reimbursements provided 
under the Ontario Rabies Indemnification Program are limited by law to 
livestock producers, and therefore, contrary to the CPC's argument, 
this is a de jure specific program.
    Once an animal is determined to have rabies, the producer has a 
clear incentive to destroy the animal in order to protect the remaining 
livestock. It is also in the interest of the public to have the animal 
destroyed. However, it is unclear to the Department how the fact that 
the government then compensates the producer could be viewed as also in 
the interest of the public health and safety. Because the government 
payment does not create an incentive to destroy the animal that is not 
already present (i.e., since the payment is not necessary to ensure 
destruction of the animal), we determine that the payment serves no 
preventive health or safety purpose whatsoever. Payments for the value 
of the animal cannot be construed to be ``necessary to protect human, 
animal or plant life and health.'' The payment is, instead, a 
countervailable benefit under U.S. law and GATT.
    Comment 23: Petitioner argues that the Department should revise its 
calculation methodology for the Alberta Crow Benefit Offset Program 
(ACBOP) to account more accurately for grain consumed by swine in 
Alberta. Specifically, Petitioner argues that the Department's current 
methodology does not accurately account for grain eaten by breeding 
sows and boars. The sows and boars adjustment which the Department 
currently uses to determine the grain eaten by hogs only accounts for 
an additional weight gain by a sow or boar of 2.1 kilograms; according 
to Petitioner, this adjustment is insufficient to reflect the grain 
eaten daily by sows and boars as an integral part of swine production.
    Petitioner argues that the Department has the discretion to revise 
its ACBOP calculations, and should do so using another Alberta 
Agriculture study provided by the GOC in the questionnaire response. 
Petitioner maintains that this study is a reliable source for feed and 
grain consumption information because it is recent, comprehensive, and 
published by Alberta Agriculture.
    Petitioner has provided an alternative methodology using 
information in this study, which Petitioner argues more accurately 
accounts for grain consumed in the production of swine in Alberta. 
Petitioner also argues that its methodology simplifies the Department's 
attempt to account for the difference in weight between market hogs and 
slaughter sows and boars by recognizing that the grain fed to sows and 
boars to bring them up to market weight (which they surpass during 
their breeding careers), as well as the grain they consume during their 
breeding careers are inputs into the production of live swine.
    The CPC counters that Petitioner's proposal is an unsupported and 
illogical attempt to increase the ACBOP benefit by double-counting the 
grain consumed by sows and boars. The CPC maintains that the production 
figures used by the Department already account for grain consumed by 
sows and boars. Petitioner's methodology also ignores the fact that the 
Department has carefully examined the issue of average weights for 
market hogs versus sows and boars in the first review of this order. 
Those averages accurately reflect the much higher weights and much 
lower production of sows and boars vis-a-vis market hogs.
    The CPC also takes issue with Petitioner's proposal that ACBOP 
benefits should be allocated on the basis of hog production rather than 
hog marketings. The CPC argues that such a change in the Department's 
calculation methodology requires the Department to examine the census 
of the entire Canadian hog population during the review period rather 
than relying on a simple accounting of all hogs marketed, as it did in 
the calculations for the preliminary results and all other reviews. The 
CPC further argues that Petitioner's proposed methodology misuses data 
from two entirely different sources and is flawed by an inaccurate 
conversion from pounds to kilograms. Finally, the CPC notes that the 
ACBOP methodology has evolved over time; its present incarnation has 
been upheld by the binational panel reviewing the fifth review of this 
order and Petitioner has not advanced any evidence which warrants the 
Department's reconsideration of the ACBOP methodology.
    Department's Position: We agree with the CPC regarding the 
alternative methodology Petitioner proposes. The Department fully 
analyzed the record document relied upon by Petitioner before rejecting 
it in favor of the source document which the Department has relied upon 
in the past. We determine that the study relied upon by Petitioner is 
not comprehensive, as Petitioner asserts, and therefore the Department 
chose not to use it in the ACBOP calculation. Petitioner acknowledged 
that its proposed alternative study does not include information about 
the composition of ``starter'' diets, which is necessary to the ACBOP 
calculation. The study on which the Department did rely, ``Diets for 
Swine,'' includes complete information about hog diets at all stages of 
growth. Moreover, we agree with the CPC that it is inappropriate to 
``mix and match'' information from these two distinct sources, because 
they are based on different underlying assumptions regarding the 
composition of hog diets.
    We also disagree with Petitioner regarding the manner in which the 
ACBOP methodology accounts for all grain consumed in the production of 
live swine in Alberta. The sow and boar weight adjustment, while 
seemingly small, provides an average weight which accurately reflects 
the much higher weight of sows and boars but the much lower production 
level. This adjustment enables the Department to accurately account for 
the additional grain consumed by sows and boars during their breeding 
careers, and the Department's ACBOP methodology overall reasonably and 
accurately accounts for grain consumed in the production of swine in 
Alberta. In addition, we agree with the CPC that Petitioner's reliance 
on production rather than marketings represents too great a departure 
from the Department's methodology in this case for us to consider it at 
this late stage in the review. Moreover, Petitioner's failure to 
illustrate that the Department's methodology is flawed or unreasonable 
further supports the Department's decision not to change its 
methodology.
    Comment 24: The CPC alleges that the Department's preliminary ACBOP 
calculations contain significant clerical errors which must be 
corrected: the Department must use the correct figures for the number 
of live swine produced and for the amount of barley, wheat, and oats 
grown in Alberta. The correct figures were reported in the 
questionnaire response, and must be used.
    Department's Position: After examining the CPC's allegation, we 
found minor clerical errors, and have corrected our calculations 
accordingly. We now determine that the ACBOP benefit is Can$0.0027 per 
kilogram for all live swine.
    Comment 25: Petitioner argues that the Department should adjust its 
calculations for the Saskatchewan Hog Assured Returns Program (SHARP) 
to account for the deficit in the stabilization fund accrued over the 
life of the program. Petitioner maintains that because SHARP was 
terminated during this review period, with a large cumulative deficit, 
the Department must address additional benefits which should have been 
accounted for in earlier reviews. The size of the deficit indicates 
that in every year in which the program was operational, payouts to hog 
producers exceeded contributions by the hog producers and the Province 
of Saskatchewan. This deficit was financed by loans from the provincial 
government to the stabilization fund; no repayments appear to have been 
made. Petitioner argues that, in prior reviews of this order, the 
Department should have countervailed total payouts to producers, net of 
any producer contributions into the fund. Thus, the remainder of the 
fund deficit (the total fund deficit minus the amount of the deficit 
countervailed in this review) constitutes a subsidy that has never been 
countervailed. Because the program has been terminated, there is now no 
hope that the deficit will be repaid with future contributions. 
Petitioner argues that the record shows that the Government of 
Saskatchewan has decided to write off this deficit, and forgive the 
loans which financed it.
    Petitioner now urges the Department to treat the deficit amount, 
less any amounts previously countervailed, as a grant to Saskatchewan 
swine producers during the review period. Petitioner further argues 
that this grant does not constitute the full benefit realized by swine 
producers. The Department must also calculate the benefit attributable 
to the apparently interest-free nature of this loan since October 31, 
1989, the date of an Order-in-Council which provided that no interest 
will accrue on the loans.
    The CPC, in rebuttal, submits that there is no basis for the 
Department to countervail the entire SHARP deficit. While the SHARP 
account remains in deficit, without a final decision about the 
resolution of the fund, there is clearly no benefit to any party, 
including Saskatchewan live swine producers. The CPC further argues 
that in its preliminary results, the Department has incorrectly 
calculated SHARP benefits, by adopting a methodology, without 
explanation, which is a departure from that established in earlier 
reviews. The CPC argues that the facts support the Department's use of 
the earlier established methodology: the Department countervailed one-
half of the total stabilization payments made to live swine producers, 
which accurately reflected the equal contributions made by the 
provincial government and the live swine producers into the SHARP fund.
    Department's Position: Prior to its termination, SHARP provided 
stabilization payments to hog producers in Saskatchewan at times when 
market prices fell below a designated ``floor price.'' Hog producers 
provided one-half of the funds for the SHARP program and the provincial 
government provided the remaining one-half. Therefore, the Department's 
practice, in past reviews, has been to countervail one-half of all 
SHARP payouts to hog producers. In accordance with the establishment of 
the Tripartite Scheme for Hogs, SHARP was terminated on March 31, 1991, 
during the review period.
    Whenever the balance in the SHARP account was insufficient to cover 
stabilization payments to participants, the provincial government 
loaned the needed funds to the program at terms consistent with 
commercial considerations. As of its termination date, the SHARP fund 
had a sizeable deficit, representing the cumulation over the operating 
years by which SHARP payouts were greater than the producers' and 
government's contribution to the SHARP fund. Therefore, the SHARP 
deficit represents payments already made to hog producers, half of 
which the Department has already countervailed in prior reviews.
    The Department has reconsidered the calculation methodology used in 
the preliminary results, and has determined that we will countervail 
one-half of the SHARP payouts for the current review period, as in 
previous reviews. While the SHARP account remains in deficit, however, 
without a final decision on the resolution of the deficit, there is no 
benefit to Saskatchewan live swine producers beyond the interest not 
accruing on the deficit. Thus, there is no reason for the Department to 
conduct a benefit analysis of the deficit as Petitioner suggests. If 
the Department learns in a later review that the deficit has been 
forgiven by the Government of Saskatchewan, it will at that time 
determine whether the loan forgiveness constitutes a countervailable 
benefit and apply the appropriate methodology to measure it.
    However, we have information on the record indicating that 
effective October 31, 1989, interest stopped accruing on this deficit. 
We determine that interest not accrued constitutes a benefit to live 
swine producers. To measure that benefit, we are treating the deficit 
as a short-term loan. See Memorandum on SHARP Calculation Methodology, 
from Swine Team to Barbara Tillman, on file in Room B-099, Department 
of Commerce.
    To determine the benefit, we first calculated the average amount of 
the deficit during the review period by taking a simple average of the 
balance of the deficit at the beginning and the end of the review 
period. We then multiplied the benchmark interest rate by half of the 
average deficit. We used as our benchmark interest rate the simple 
average of the monthly rates (for the review period) reported as 
``Typical Short-Term Interest Rates'' in the Financial Statistics 
Monthly, Section 2, Domestic Markets--Interest Rates, published by the 
Organization for Economic Cooperation and Development, February, 1991, 
and January 1992. We then added this interest-related benefit to the 
payout-related benefit (one-half of the SHARP payments to live swine 
producers during the review period, consistent with our methodology in 
previous reviews). We divided this amount by the total weight of live 
swine produced in Saskatchewan. We then weight-averaged the benefit by 
Saskatchewan's share of total Canadian exports of live swine to the 
United States. On this basis, we preliminarily determine the benefit 
from SHARP to be Can$0.0022 per kilogram for all live swine during the 
review period.
    Comment 26: The GOQ and the CPC allege that the Department 
incorrectly allocated the benefits attributable to the Feed Freight 
Assistance (FFA) program. According to Respondents, the Department 
recognized, in the first part of its calculations, that not all swine 
production in the provinces covered by FFA is eligible to receive 
benefits under this program. However, when the Department weight-
averaged the per-kilogram benefit by the respective provinces' share of 
total Canadian exports of live swine, the Department erroneously 
assumed that all exports of swine from the FFA-eligible provinces were 
eligible for assistance. To correct this error, Respondents urge the 
Department to apply the same ratio it uses to determine FFA-eligible 
production for the purpose of determining FFA-eligible exports. The 
Department should then weight-average the per kilogram benefit by the 
share of total Canadian exports accounted for by this adjusted export 
figure.
    Petitioner argues that the Department's calculation methodology 
correctly translated the FFA benefits provided on a per-kilo basis of 
hog production to the applicable proportion of exports of live swine to 
the United States. Petitioner argues that following the Respondents' 
methodology, which requires adjusting provincial exports downward, 
results in the ``double-subtraction'' of the exports used to weight-
average the benefit.
    Department's Position: We agree with Respondents that the 
methodology used to calculate FFA benefits was flawed. However, we are 
correcting the flaw using a different approach. Although we recognize 
that FFA availability is limited to certain areas within the 
participating provinces, we determine it is not appropriate to adjust 
provincial production downward, as we did in the past. This adjustment 
is not required because the appropriate denominator for this federal 
program available in only some provinces is the total production in the 
provinces in which FFA operates. We determine that adjusting the 
denominator as we did in the past results in overstating the FFA 
benefit.
    To determine the FFA-benefit per kilo of live swine we first 
divided the amount of feed transportation assistance to all live swine 
producers by the weight of all live swine produced in all FFA-eligible 
provinces. We then used the ratio of the total amount of exports from 
the provinces in which the FFA is available to total Canadian exports 
of live swine in order to calculate the weighted benefit. The result is 
accurate because in doing the calculations we weight-averaged all the 
benefits for each province by the total amount of exports from that 
province. We then summed the resulting weighted benefits to determine 
the country-wide rate. Having discontinued the adjustment in 
production, there is no need to adjust the exports in the manner 
Respondents suggest. Using this methodology, we have calculated the FFA 
benefit to be Can$0.00018 per kilogram for all live swine.
    Comment 27: The CPC argues that two provincial programs, the New 
Brunswick Hog Price Stabilization Program, and the Prince Edward Island 
Hog Price Stabilization Program should be added to the Department's 
list of terminated programs. Proper documentation of these programs' 
terminations was provided in the questionnaire response.
    Department's Position: We agree with the CPC regarding the Prince 
Edward Island Hog Price Stabilization Program. The GOC provided 
documentation that this program was terminated, and that documentation 
indicates that no residual benefits will accrue to hog producers. 
Therefore, we will include this program in our list of terminated 
programs and will no longer examine it.
    However, we disagree with the CPC regarding the New Brunswick Price 
Stabilization Program. While the New Brunswick provincial government 
stated that the program was terminated, the GOC has provided neither 
adequate documentation of the program's termination, nor information 
regarding residual benefits. Therefore, we will continue to list this 
program as ``not used'' until such evidence is provided in a future 
review.
    Comment 28: The CPC argues that the Department should issue a final 
determination which, as in past reviews, directs Customs to use the 
exchange rate in effect on the date of entry of the subject merchandise 
for both deposit rates and final assessments. In the preliminary 
results, the Department proposed using two different exchange rate 
methodologies: for the cash deposit rate, Customs will convert the 
assessment amount in Canadian dollars using the exchange rate in effect 
on the date of entry; for the final assessment of entries made during 
the period of review, Customs will convert using a simple annual 
average exchange rate. To institute two different methodologies for 
these calculations which have always shared the same methodology would 
constitute a retroactive change in prior agency practice.
    Petitioner argues that the use of a simple average exchange rate by 
the Department is not contrary to its regulations. Petitioner claims 
that pursuant to 19 CFR 353.60 there was no ``sustained change'' in the 
prevailing exchange rate during the review period that would materially 
distort the value of the Customs assessment. Consequently, the 
Department's method is acceptable under the regulations and should be 
retained in its final determination.
    Department's Position: After consideration of the CPC's argument, 
we will instruct Customs to assess duties on live swine during the 
review using the appropriate exchange rate in accordance with Customs' 
regulations. Petitioner has misapplied section 353.60(b) of the 
Department's regulations, which guides the Department's use of exchange 
rates in antidumping proceedings.

Final Results of Review

    As a result of our review, we determine the net subsidy to be 
Can$0.0295 per kilogram for the period April 1, 1990 through March 31, 
1991. The net subsidy determined for each program is as follows: 

------------------------------------------------------------------------
                                                              Rate per  
                          Program                               kilo    
------------------------------------------------------------------------
(1) Feed Freight Assistance Program.......................      $0.00018
(2) National Tripartite Stabilization Scheme for Hogs.....       0.01910
(3) Quebec Farm Income Stabilization Insurance Program....       0.00420
(4) Saskatchewan Hog Assured Returns Program..............       0.00221
(5) Alberta Crow Benefit Offset Program...................       0.00268
(6) Alberta Livestock and Beefyard Compensation Program                 
 (Livestock Predator Sub-Program).........................       0.00000
(7) Ontario Farm Tax Rebate Program.......................       0.00000
(8) Livestock Improvement Program for Northern Ontario....       0.00000
(9) Ontario Pork Industry Improvement Plan................       0.00043
(10) Ontario Rabies Indemnification Program...............       0.00000
(11) Saskatchewan Livestock Investment Tax Credit.........       0.00045
(12) Saskatchewan Livestock Facilities Tax Credit.........       0.00028 
                                                           -------------
      Total...............................................       0.0295 
------------------------------------------------------------------------

    Therefore, the Department will instruct the Customs Service to 
assess countervailing duties of $Can0.0295 per kilogram on all 
shipments from Canada of the subject merchandise exported on or after 
April 1, 1990 and on or before March 31, 1991.
    Further, as provided for by section 751(a)(1) of the Act, the 
Department will collect cash deposits of estimated countervailing 
duties of $Can0.0295 per kilogram on all shipments of the subject 
merchandise from Canada, entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice. This 
deposit requirement shall remain in effect until publication of the 
final results of the next administrative review.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

    Dated: March 9, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-6001 Filed 3-15-94; 8:45 am]
BILLING CODE 3510-DS-P