[Federal Register Volume 61, Number 104 (Wednesday, May 29, 1996)]
[Notices]
[Pages 26879-26890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13318]



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DEPARTMENT OF COMMERCE
[C-122-404]


Live Swine From Canada; Notice of Preliminary Results of 
Countervailing Duty Administrative Reviews; Initiation and Preliminary 
Results of Changed Circumstances Review and Intent To Revoke Order in 
Part

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

ACTION: Notice of Preliminary Results of Countervailing Duty 
Administrative Reviews; Notice of Initiation and Preliminary Results of 
Changed Circumstances Review and Preliminary Determination to Revoke 
Order in Part.

SUMMARY: The Department of Commerce (the Department) is conducting 
three administrative reviews of the countervailing duty order on live 
swine from Canada. We preliminarily determine the net subsidy to be 
Can$0.0594 per kilogram for the period April 1, 1991 through March 31, 
1992, Can$0.0609 per kilogram for the period April 1, 1992 through 
March 31, 1993, and Can$0.0099 per kilogram for the period April 1, 
1993 through March 31, 1994. If the final results remain the same as 
these preliminary results of administrative reviews, we will instruct 
the U.S. Customs Service to assess countervailing duties as indicated 
above. Interested parties are invited to comment on these preliminary 
results.
    In accordance with 19 C.F.R Sec. 355.22(h)(1)(i), the Department is 
initiating a changed circumstances countervailing duty administrative 
review and issuing a preliminary determination of its intent to revoke, 
in part, the countervailing duty order on live swine from Canada. On 
December 11, 1995, petitioners requested that the Department revoke the 
order, in part, as to slaughter sows and boars and weanlings, effective 
April 1, 1991. Based on the fact that this portion of the order is no 
longer of interest to domestic parties, we preliminarily determine that 
this order should be revoked, in part, with respect to slaughter sows 
and boars and weanlings. Interested parties are invited to comment on 
these preliminary results.

EFFECTIVE DATE: May 29, 1996.

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

SUPPLEMENTARY INFORMATION:

Background

    On August 15, 1985, the Department published in the Federal 
Register (50 FR 32880) the countervailing duty order on live swine from 
Canada. On August 12, 1992, the Department published a notice of 
``Opportunity to Request Administrative Review'' (56 FR 41506) of this 
countervailing duty order for the period April 1, 1991 through March 
31, 1992. We received a timely request for review from the Government 
of Canada (GOC). Wood Lynn Farms and Pryme Pork Ltd. (Pryme), Canadian 
exporters of live swine, timely requested an individual administrative 
review. We initiated the review, covering April 1, 1991 through March 
31, 1992, on September 28, 1992 (56 FR 44551).
    On August 3, 1993, the Department published a notice of 
``Opportunity to Request Administrative Review'' (58 FR 41239) of this 
countervailing duty order for the period April 1, 1992 through March 
31, 1993. We received a timely request for review from the GOC; Pryme 
also made a timely request for an individual administrative review. We 
initiated the review, covering April 1, 1992 through March 31, 1993, on 
September 30, 1993 (58 FR 51053).

[[Page 26880]]

    On August 3, 1994, the Department published a notice of 
``Opportunity to Request Administrative Review'' (59 FR 39543) of this 
countervailing duty order for the period April 1, 1993 through March 
31, 1994. We received a timely request for review from the GOC; Pryme 
also made a timely request for an individual administrative review. We 
initiated the review, covering April 1, 1993 through March 31, 1994, on 
September 16, 1994 (59 FR 47609). These three administrative reviews 
cover all producers/exporters of the subject merchandise and 46 
programs.
    On December 11, 1995, petitioners requested the partial revocation 
of the order on live swine from Canada with respect to slaughter sows 
and boars and weanlings due to lack of interest, effective April 1, 
1991. As a result, the Department is initiating and simultaneously 
issuing the preliminary results of a changed circumstances review 
preliminarily determining that the order should be revoked, in part, 
with respect to slaughter sows and boars and weanlings.

Applicable Statute and Regulations

    The Department is conducting these administrative reviews in 
accordance with section 751(a) of the Tariff Act of 1930, as amended 
(the Act). Unless otherwise indicated, all citations to the statute and 
to the Department's regulations are in reference to the provisions as 
they existed on December 31, 1994. However, references to the 
Department's Countervailing Duties; Notice of Proposed Rulemaking and 
Request for Public Comments, 54 FR 23366 (May 31, 1989) (Proposed 
Regulations), are provided solely for further explanation of the 
Department's countervailing duty practice. Although the Department has 
withdrawn the particular rulemaking proceeding pursuant to which the 
Proposed Regulations were issued, the subject matter of these 
regulations is being considered in connection with ongoing rulemaking 
proceeding which, among other things, is intended to conform the 
Department's regulations to the Uruguay Round Agreements Act. (See 60 
FR 80) (Jan. 3, 1995)).

Scope of Review

    The merchandise covered by these administrative reviews is live 
swine, except U.S. Department of Agriculture certified purebred 
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 merchandise covered by the changed circumstances review are 
slaughter sows and boars and weanlings (weanlings are swine weighing up 
to 27 kilograms or 59.5 pounds).

Requests for Administrative Reviews of Individual Exporters

    On August 28, 1992, Wood Lynn Farms submitted a timely request 
under 19 C.F.R 355.22(a)(2) that the Department conduct an 
administrative review of Wood Lynn Farms' exports of the subject 
merchandise to the United States for the 1991-92 review period. On 
August 10, 1993, the Department denied Wood Lynn Farms' request because 
the certifications it submitted did not comply with the requirements of 
19 C.F.R 355.22(a)(2). Specifically, the certifications failed to state 
that during the period of review no net subsidy was bestowed upon Wood 
Lynn Farms or its suppliers with respect to the subject merchandise. 
For further discussion of the Department's position on Wood Lynn Farm's 
request, see letter from Barbara E. Tillman to Wood Lynn Farms dated 
August 10, 1993, which is on file in the Central Records Unit (Room B-
099 of the Main Commerce Building)(CRU).
    On August 31, 1992, Pryme submitted a request under 19 C.F.R 
355.22(a)(2) that the Department conduct an administrative review of 
Pryme's exports of the subject merchandise to the United States for the 
1991-92 review period. The Department found Pryme's certifications 
deficient (see letter from Barbara E. Tillman to Pryme Pork, Ltd. dated 
August 4, 1993, which is on file in the CRU). Subsequently, Pryme 
clarified its certifications, based on which the Department found that 
Pryme's request complied with 19 C.F.R. 355.22(a)(2)(see Memorandum to 
the File from Team E regarding the Countervailing Duty Administrative 
Review on Live Swine from Canada dated August 10, 1995, which is on 
file in the CRU). Based on Pryme's request, the Department initiated a 
review of Pryme's entries for the 1991-92 review period.
    On August 30, 1993, Pryme submitted its request under 19 C.F.R. 
355.22(a)(2) that the Department conduct an administrative review of 
Pryme's exports of the subject merchandise to the United States for the 
1992-93 review period. Since this request was timely and met the 
provisions of 19 C.F.R. 355.22(a)(2), the Department initiated the 
review as requested (see Memorandum on Pryme's Request for an 
Individual Administrative Review to Barbara E. Tillman from The Team 
dated January 18, 1994, which is on file in the CRU).
    On August 30, 1994, Pryme submitted a timely request under 19 
C.F.R. 355.22(a)(2) that the Department conduct an administrative 
review of Pryme's exports of the subject merchandise to the United 
States for the 1993-94 review period. Since this request was timely and 
met the provisions of 19 C.F.R. 355.22(a)(2), the Department initiated 
the review as requested.
    Pryme has since submitted a letter to the Department indicating 
that it is withdrawing its request for individual reviews in the 7th, 
8th, and 9th reviews if the Department revokes the order with respect 
to weanlings and sows and boars. Since we are preliminarily determining 
to revoke the order, in part, with respect to the above products, we 
are also preliminarily determining to terminate the individual reviews 
of Pryme in the 7th, 8th, and 9th review periods.

Verification

    Pursuant to 19 C.F.R. Sec. 355.36(a)(1), the petitioner requested 
that the Department conduct a verification of the 1991-92 review period 
because the Department did not verify all information submitted in the 
two prior reviews. As provided in section 776(b) of the Act, we 
verified all information submitted in the 1991-92 review period. We 
also verified, as required under Sec. 355.22(f) all certifications 
submitted with the requests for individual reviews in each of the three 
review periods. In conducting verification, we followed standard 
verification procedures, including meeting with government and company 
officials, and examining relevant accounting records and original 
source documents. Our verification results are outlined in the public 
versions of the verification reports, which are on file in the CRU.

Calculation Methodology for Assessment and Cash Deposit Purposes

    For each review period, we calculated the net subsidy on a country-
wide basis by first calculating the subsidy rate for each province 
subject to the administrative review. We then weight-averaged the rate 
received by each province using as the weight the province's share of 
total Canadian exports to the United States of subject merchandise. We 
then summed the individual provinces' weight-averaged rates to 
determine the subsidy rate from all programs benefitting exports of the 
subject merchandise to the United States. In prior proceedings, a 
separate

[[Page 26881]]

rate was calculated for sows and boars and for all other live swine. In 
these reviews, we are only calculating the rate for all other live 
swine. The calculation of the rate in these reviews is not affected by 
the partial revocation of sows and boars and weanlings.

Analysis of Programs

I. Programs Conferring Subsidies

A. Programs Previously Determined to Confer Subsidies
    1. Federal Program. Feed Freight Assistance Program. The Feed 
Freight Assistance Program (FFA) is administered by the Livestock Feed 
Board of Canada (the Board) under the Livestock Feed Assistance Act of 
1966 (LFA). The Board acts to ensure: (1) The availability of feed 
grain to meet the needs of livestock feeders; (2) the availability of 
adequate storage space in Eastern Canada to meet the needs of livestock 
feeders; (3) reasonable stability in the price of feed grain in Eastern 
Canada to meet the needs of livestock feeders; and (4) equalization of 
feed grain prices to livestock feeders in Eastern Canada, British 
Columbia, the Yukon Territory and the Northwest Territories. Although 
this program is clearly designed to benefit livestock feeders, FFA 
payments are also made to grain mills that transform the feed grain 
into livestock feed whenever these mills are the first purchasers of 
this grain. The Board makes payments related to the cost of feed grain 
storage in Eastern Canada, and payments related to the cost of feed 
grain transportation to, or for the benefit of, livestock feeders in 
Eastern Canada, British Columbia, the Yukon Territory and the Northwest 
Territories, in accordance with the regulations of the LFA.
    In Live Swine from Canada; Preliminary Results of Countervailing 
Duty Administrative Review (55 FR 20613) (May 21, 1990)), and Live 
Swine from Canada; Final Results of Countervailing Duty Administrative 
Review (56 FR 10410) (March 12, 1991)) (Swine Second and Third Review 
Results), the Department found this program de jure specific and thus 
countervailable because, based on the language of the LFA, benefits are 
only available to a specific group of enterprises or industries 
(livestock feeders and feed mills). Subsequently, a U.S.-Canada Free 
Trade Agreement (FTA) binational panel (See In the Matter of Live Swine 
From Canada, USA-91-1904-04 (June 11, 1993) at 33-36)) affirmed the 
Department's determination in Live Swine from Canada; Preliminary 
Results of Countervailing Duty Administrative Review (56 FR 29224) 
(June 26, 1991)), and Live Swine from Canada; Final Results of 
Countervailing Duty Administrative Review (56 FR 50560) (October 7, 
1991)) (Swine Fifth Review Results), regarding the countervailability 
of this program. No new information or evidence of changed 
circumstances has been submitted in this proceeding to warrant 
reconsideration of this finding.
    To determine the FFA benefit in each review period, we used the 
methodology applied in Live Swine from Canada; Preliminary Results of 
Countervailing Duty Administrative Review (58 FR 54112, 54114) (October 
20, 1993)), and Live Swine from Canada; Final Results of Countervailing 
Duty Administrative Review (59 FR 12243) (March 16, 1994)) (Swine Sixth 
Review Results). We first divided the feed transportation assistance to 
live swine producers in each province by the total weight of live swine 
produced in that province during the correspondent review period, 
calculating the benefit per kilogram on a province-by-province basis. 
We then weight-averaged each exporting province's benefit by that 
province's share of total Canadian exports of live swine to the United 
States during the same review period; we then summed the resulting 
weighted benefits, calculated for each province during the 
correspondent review period. On this basis, we preliminarily determine 
the benefits from this program to be less than Can$0.0001 per kilogram 
for the 1991-92, 1992-93, and 1993-94 review periods.
    2. Federal/Provincial Program. (A) National Tripartite 
Stabilization Scheme for Hogs Background. The National Tripartite 
Stabilization Program (NTSP) was created in 1985 by an amendment to the 
Agricultural Stabilization Act (ASA). This amendment, codified at 
section 10.1 of the ASA, provides for the introduction of cost-sharing 
tripartite or bipartite stabilization schemes involving the producer, 
the federal government and the provinces. Pursuant to this amendment, 
federal and provincial ministers signed NTSP agreements covering 
specific commodities.
    The general terms of the NTSP for Hogs are as follows: all 
participating hog producers receive the same level of support per 
market-hog unit; the cost of the scheme is shared equally between the 
federal government, the provincial government, and the producers, with 
each government's contribution, federal as well as provincial, capped 
at 3 percent of the aggregate market value; producer participation in 
the scheme is voluntary; the provinces may not offer separate 
stabilization plans or other ad hoc assistance for hogs (with the 
exception of Quebec's FISI program); the federal government may not 
offer compensation to swine producers in a province not party to an 
agreement; and the scheme must operate at a level that limits losses 
but does not stimulate over-production.
    Stabilization payments are made when the market price falls below 
the calculated support price. The difference between the support price 
and the average market price is the amount of the stabilization 
payment. Hogs eligible for stabilization payments under NTSP must index 
above 80 on a hog carcass grading scale.
    In Swine Fifth Review Results (56 FR 29225), the Department 
determined that NTSP was de facto specific because benefits were being 
provided to a specific enterprise or industry or group thereof. The 
binational panel, in its August 26, 1992 decision, affirmed the 
Department's determination (USA-91-1904-04). See, also, Swine Sixth 
Review Results (58 FR 54115).
    Integral Linkage Allegation. In the questionnaire response in the 
1991-92 review, the GOC submitted new facts pertaining to NTSP, based 
on which the GOC argues that NTSP is no longer specific. As of April 1, 
1991, all NTSP Agreements were brought under the statutory authority of 
the Farm Income Protection Act (FIPA), designed to cover all 
agricultural products. FIPA is an agricultural income stabilization act 
which covers four programs: (1) national tripartite stabilization 
programs (NTSPs), (2) net income stabilization accounts (NISA), (3) 
gross revenue insurance program (GRIP), and (4) crop insurance (CI). 
FIPA unifies all federal-level income stabilization initiatives for 
farmers under a single statute; it incorporates key concepts from 
existing programs and integrates them into a new system. As part of 
this process, the Crop Insurance Act, the Agricultural Stabilization 
Act (ASA), and the Western Grain Stabilization Act were repealed.
(1) NTSP
    NTSP provides insurance coverage against market-price fluctuations 
for designated commodities. Income stabilization payments are triggered 
when the market price falls below a calculated support price. This 
program, thus, moderates the economic effects of losses to farmer's 
income due to short-term market fluctuations.
(2) NISA
    NISA is designed to stabilize an individual farm's overall 
financial performance through a voluntary

[[Page 26882]]

savings plan. The participant is required to enroll all eligible 
commodities grown on the farm. Farmers may then deposit a portion of 
their net sales of eligible NISA commodities (up to two percent of net 
eligible sales) into individual savings accounts, receive matching 
government deposits (up to one percent of net sales from both the 
provincial and the federal governments), and make additional, non-
matchable deposits (up to 20 percent of net sales).
    NISA provides stabilization assistance on a ``whole farm'' basis. A 
producer can withdraw funds from a NISA account when the gross profit 
margin from the entire farming operation falls below an historical 
average, based on the previous five years. If poor market performance 
of some products is offset by increased revenues from others, no 
withdrawal is triggered.
(3) GRIP
    GRIP is a voluntary plan offering farmers revenue insurance 
protection or revenue insurance combined with crop insurance 
protection. Under GRIP, producers must register their total production 
of all eligible crops whether they select the revenue insurance 
protection component of GRIP or the combined revenue insurance and crop 
insurance protection. Premiums are shared by farmers and the provincial 
and federal governments. Payouts are triggered when market revenue or 
yield of any of the covered crops falls below certain historical 
levels. GRIP's revenue insurance protection component provides for full 
offsets between yield and price; for example, if a producer received a 
crop price below the reference value, but produced a higher-than-
average yield, no insurance payment would be triggered to the extent 
that the extra revenue earned from the extra yield offsets the lower 
price.
(4) Crop Insurance
    The crop insurance component of FIPA stabilizes a farmer's income 
by moderating the economic effects of crop losses caused by natural 
events. The producers and the governments (federal and provincial) 
share the payment of the premiums. Payouts are based on a farmer's 
average crop yield and are triggered when a farmer suffers a yield loss 
due to a covered hazard.
    The GOC argued that for specificity purposes the Department should 
examine NTSP, NISA, GRIP and CI under FIPA as one program that 
established a (1) common policy of offering income stabilization on 
equal terms throughout the country, (2) common administration by the 
provinces, Agriculture Canada, and through interlocking national 
committees, and (3) tripartite funding (funds contributed by the 
federal government, provincial governments and producers). The GOC 
further argued that FIPA covers a substantial proportion of Canadian 
producers of agricultural commodities.
    The Department examined the information submitted by the GOC on the 
FIPA legislation, the agreements establishing the programs covered by 
FIPA, the types of benefits provided by the programs and previous 
determinations in similar cases. Although FIPA provides the statutory 
authority for the various separate programs, the federal/provincial 
agreements that established NISA and GRIP retain substantial 
discretion, while NTSP and crop insurance predated FIPA itself. 
Therefore, the Department preliminarily found it more appropriate to 
examine the NTSP, NISA, GRIP, and CI as separate programs. See 
Memorandum on Farm Income Protection Act, to Barbara E. Tillman from 
CVD team dated April 13, 1994, which is on file in the CRU.
    The GOC also alleged that if the Department determines that NTSP, 
NISA, GRIP and CI under FIPA do not constitute one program, then the 
Department should find NTSP, NISA, GRIP and CI integrally linked within 
the meaning of section 355.43(b)(6) of the Department's Proposed 
Regulations.
    Integral Linkage Analysis and Preliminary Determination. Section 
355.43(b)(6) of the Proposed Regulations sets forth the criteria that 
the Department examines, among others, in determining whether programs 
are integrally linked:
     The purposes of the programs as stated in their enabling 
legislation;
     The administration of the programs;
     Evidence of a government policy to treat industries 
equally; and
     The manner of funding the programs.
    First, to examine whether the purpose of NTSP is similar to the 
purpose of the other programs, we analyzed whether basically the same 
type of assistance is being provided to distinct users. We 
preliminarily find that the purposes of the programs are different, 
with NTSP providing coverage against market price fluctuations; NISA 
stabilizing the farmer's net income fluctuations; GRIP providing 
coverage against market price fluctuations and weather-related 
disasters, and CI provides coverage against weather-related disasters.
    Second, in examining the administration of the programs, we 
preliminarily find that although the GOC and the provincial governments 
participate in the administration of each of the programs, there are 
clear differences in the manner in which the programs are administered. 
For instance, NTSP and NISA are federally administered, because it is 
more efficient to centralize the management of these programs in order 
to administer them uniformly throughout Canada. On the other hand, it 
was more efficient to grant provincial governments substantially 
heavier administrative responsibilities for crop insurance under GRIP 
and CI, because provincial governments are in a position to provide 
faster relief to farmers in the event of a weather-related disaster. 
(Questionnaire response dated June 23, 1993, I-42.)
    Third, our analysis of the information submitted on the record 
regarding the government's policy to treat industries equally yielded 
inconclusive results, because the diversity of the programs did not 
allow for a comparison of benefits on a commodity by commodity basis. 
In fact, the four programs are structured to meet different purposes 
(insurance programs versus savings plan), are designed to cover 
different types of risks, and involve government participation of 
unequal proportional amounts. As a result, it is not possible to 
ascertain whether or not there is evidence of a government policy to 
treat industries equally.
    Finally, although the funding for the four programs is provided by 
the same three sources, the federal and provincial governments and the 
producers, there are two distinct funding mechanisms. Under NISA, the 
GOC and the provincial government provide matching funds to the farmers 
who may make annual deposits up to 2 percent of eligible net sales. The 
other three programs are premium-funded insurance programs, in which 
producers and provincial and federal governments share the payment of 
the premiums. Moreover, the shares of the premiums funded by each 
source are different under the three programs. Under NTSP, the producer 
and the federal and provincial governments each contribute 33.3 
percent. Under GRIP, the producers contribute 33.3 percent, the 
provincial government 25 percent, and the federal government 41.67 
percent. On the other hand, for crop insurance, the producer 
contributes 50 percent and the federal and provincial governments 
contribute the remaining 50 percent equally.
    As a result of our analysis, we preliminarily determine that the 
NTSP, NISA, GRIP and CI are not integrally linked. For a further 
discussion, see Decision Memorandum on Farm Income Protection Act--
Integral Linkage, to

[[Page 26883]]

Paul L. Joffe from The Team dated May 15, 1996, which is on file in the 
CRU. Therefore, we preliminarily determine to continue to review NTSP 
as a separate program. We also examined the specificity of the NISA 
program because the petitioners alleged that its farm-fed provision 
allows farmers to make a deposit on the grain that is fed to their 
livestock, which can benefit live swine. For further discussion of the 
NISA program, see section II(B) of this notice.
    Determination of Benefit from NTSP. In Swine Sixth Review Results 
(58 FR 54115) and (59 FR 12246), we determined NTSP to be de facto 
specific, and thus countervailable. No new information or evidence of 
changed circumstances has been submitted in these reviews, which would 
warrant reconsideration of this finding. The information on the record 
shows that the terms of the NTSP agreement on hogs did not change 
during the periods currently under review. During the 1991-92 and 1992-
93 review periods, payouts for hogs were made under this program in 
each of the nine signatory provinces. There were no NTSP payments made 
to hog producers during the 1993-94 review period.
    To calculate the benefit, we used the methodology applied in Swine 
Sixth Review Results (58 FR 54117). We first divided two-thirds of the 
stabilization payments (representing the federal and provincial 
contributions) made to producers in each province in each review period 
by the total weight of live swine produced in that province during the 
same review period, and calculated a benefit per kilogram on a 
province-by-province basis. We then weight-averaged each exporting 
province's per-kilo benefit by that province's share of total Canadian 
exports of live swine to the United States during the corresponding 
review period. We then added the weight-averaged benefits of all 
exporting provinces to calculate the average benefit per kilogram. On 
this basis, we preliminarily determine the benefit from this program to 
be Can$0.0508 per kilogram for the 1991-92 review period, Can$0.0578 
for the 1992-93 review period, and zero for the 1993-94 review period.
    3. Provincial Income Stabilization Programs. (A) Quebec Farm Income 
Stabilization Insurance Program (FISI).
    Background. FISI was established in 1976 under the ``Loi sur 
l'assurance-stabilisation des revenus agricoles.'' The program is 
administered by the Regie des Assurances Agricoles du Quebec (Regie). 
The purpose of the program is to guarantee a positive net annual income 
to participants whose income is lower than the stabilized net annual 
income. Since Quebec joined the federal government's NTSP for Hogs in 
February 1989, the FISI scheme for hogs has been covering only the 
difference between payments made under the NTSP for Hogs and what FISI 
payments would have been in the absence of the NTSP. FISI is the only 
provincial stabilization scheme that continues to operate in 
conjunction with the NTSP for Hogs. There are two FISI schemes which 
provide payments to the subject merchandise, the FISI scheme for Hogs 
and the FISI scheme for Piglets.
    Two-thirds of the funding for the FISI program is provided by the 
provincial government and one-third by producer assessments. 
Participation in FISI is voluntary. However, once enrolled in the 
program, a producer must make a five-year commitment. Each farmer may 
insure a maximum of 5,000 feeder hogs and 400 sows. Whenever the 
balance in the FISI account is insufficient to make payments to 
participants, the provincial government lends the needed funds to the 
program at market rates. The principal and interest on these loans are 
repaid by the Regie using the producer and provincial contributions.
    Integral Linkage Allegation. In the 1991-92 administrative review, 
the GOQ alleged that the FISI program is integrally linked to the crop 
insurance program. The GOQ also alleged that because the federal supply 
management programs are related in purpose and effect to these two 
provincial programs, the supply management program is integrally linked 
to FISI and crop insurance within the meaning of Sec. 355.43(b)(1)(6).
    Integral Linkage Analysis and Preliminary Determination. We 
conducted this analysis in accordance with the criteria set forth in 
section 355.43(b)(6) of the Proposed Regulations, and listed in the 
NTSP section of this notice. In our analysis of the first factor, we 
begin by reviewing the purpose of each program and then we examine 
whether the purpose of FISI is similar to the purpose of crop insurance 
and supply management. We preliminarily find that the purposes of the 
programs are different. FISI insures against market price fluctuations; 
crop insurance provides coverage against weather-related disasters; and 
supply management programs prevent fluctuations in the market price of 
covered commodities by regulating their supplies.
    Second, in examining the administration of the programs, we 
preliminarily find that many of the procedures for enrolling in and 
receiving insurance payments under FISI and crop insurance are similar. 
However, because FISI and crop insurance have distinct purposes, the 
timing of the benefits is different. On the other hand, the supply 
management programs operate at both the national and provincial levels 
because total cooperation from producers of the commodity in all 
provinces is necessary to manage the supply of a commodity on the 
market. In addition, the supply management programs are administered 
independently from the agency that administers the FISI and the crop 
insurance programs.
    Third, our analysis of the information submitted on the record 
regarding the government's policy to treat industries equally yielded 
inconclusive results. The actuarial study which the GOQ argued shows 
equal treatment among users of FISI and crop insurance was not 
sufficiently detailed to support this conclusion with respect to the 
subject merchandise.
    Finally, regarding the manner of funding, we preliminarily find 
that the funding for the three programs is different. FISI and crop 
insurance are funded by premium payments shared between the producer 
and the GOQ; supply management is funded by producer levies only.
    As a result of our analysis, we preliminarily determine that the 
FISI, crop insurance and supply management programs are not integrally 
linked. For a further discussion, see Decision Memorandum on Farm 
Income Stabilization Insurance--Integral Linkage to Paul L. Joffe from 
The Team, dated May 15, 1996, which is on file in the CRU. Therefore, 
we preliminarily determine to continue to review FISI as a separate 
program.
    In Swine Sixth Review Results (58 FR 54117), we determined FISI to 
be de facto specific, and thus countervailable. No new information or 
evidence of changed circumstances has been submitted in these reviews, 
which would warrant reconsideration of this finding.
    To calculate the benefit, we used the methodology applied in Swine 
Sixth Review Results (58 FR 54118). We multiplied the total payments 
made under both the piglet and feeder hog schemes during each review 
period by two-thirds (representing the provincial contribution). We 
divided this amount by the total weight of live swine produced in 
Quebec during the same review period to get the average benefit per 
kilogram. We then weight-averaged the benefit by Quebec's share of 
total Canadian exports of live swine to the United States during the 
corresponding review period. On this basis, we preliminarily determine 
the benefit from

[[Page 26884]]

this program to be Can$0.0050 per kilogram for the 1991-92 review 
period, Can$0.0001 per kilogram for the 1992-93 review period, and 
Can$0.0002 per kilogram for the 1993-94 review period.
    (B) British Columbia Farm Income Insurance Program (FIIP). The FIIP 
was established in 1979 in accordance with the Farm Income Insurance 
Act of 1973 (Farm Act) in order to assure income to farmers when 
commodity market prices fluctuate below the basic costs of production. 
Schedule B of the Farm Act lists the guidelines for the individual 
commodities receiving benefits; Schedule B section 4 is the guideline 
for swine producers.
    The program is administered by the provincial Ministry of 
Agriculture and Food and the British Columbia Federation of 
Agriculture, and is funded equally by producers and the provincial 
government. Premiums are paid in all quarters regardless of market 
returns.
    In Swine Second and Third Review Results (55 FR 20615), the 
Department found this program to be countervailable because the program 
is limited to producers of commodities listed in Schedule B, a specific 
group of enterprises or industries. No new information or evidence of 
changed circumstances has been submitted in these proceedings to 
warrant reconsideration of this finding.
    British Columbia did not export live swine to the United States 
during the 1991-92 period. However, British Columbia exported live 
swine to the United States during the 1992-93 and 1993-94 review 
periods. Since the government of British Columbia funds one-half of 
this program, we calculated the benefit for these review periods by 
dividing one-half of the total stabilization payments in each review 
period by the total weight of live swine produced in British Columbia 
during the same period. We then weight-averaged the result by British 
Columbia's share of total exports of live swine to the United States 
during the same review period. On this basis, we preliminarily 
determine the benefit from this program to be less than Can$0.0001 per 
kilogram for the 1992-93 review period and Can$0.0004 per kilogram for 
the 1993-94 review period.
    (C) Saskatchewan Hog Assured Returns Program (SHARP). SHARP was 
established in 1976, pursuant to the Saskatchewan Agricultural Returns 
Stabilization Act which authorized provincial governments to establish 
stabilization plans for any agricultural commodity. SHARP provided 
income stabilization payments to hog producers in Saskatchewan when 
market prices fell below a designated ``floor price'', calculated 
quarterly. The program was administered by the Saskatchewan Pork 
Producers' Marketing Board (the Board) on behalf of the Saskatchewan 
Department of Agriculture. The program was funded by levies from 
participating producers on the sale of hogs covered by the program; 
they ranged from 1.5 to 4.5 percent of market returns and were matched 
by the provincial government. When the balance in the SHARP account was 
insufficient to cover payments to producers, the provincial government 
provided financing on commercial terms. The principal and interest on 
these loans was to be repaid by the Board from the producer and 
provincial contributions. After the NTSP for Hogs was implemented on 
July 1, 1986, SHARP payments were reduced by the amount of the NTSP 
payments.
    In Swine First Review Results (53 FR 22192), the Department found 
the SHARP program to be de jure specific, and thus countervailable, 
because the legislation expressly made the program available only to a 
single industry (hog producers). No new information or evidence of 
changed circumstances was submitted in the 1991-92 and 1992-93 review 
periods to warrant reconsideration of these findings.
    In accordance with the NTSP agreement, SHARP was terminated on 
March 31, 1991. At the time of termination, the SHARP fund had a 
sizeable deficit because of the cumulation over the operating years of 
loans from the provincial government. In Swine Sixth Review Results (58 
FR 54118), the Department found that interest on the loans had stopped 
accruing on October 31, 1989. The Department determined that interest 
not accruing on the outstanding loan balance constituted a residual 
benefit to live swine producers.
    To determine the benefit for the 1991-92 review period, we used the 
methodology applied in Swine Sixth Review Results (59 FR 12260). Since 
the government of Saskatchewan provided half of the funds of the SHARP 
program, we calculated the benefit for this review period by 
multiplying half of the outstanding principal amount at the end of the 
review period by the benchmark interest rate. 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 Canada in 
the Financial Statistics Monthly, published by the Organization for 
Economic Cooperation and Development (OECD). We selected this benchmark 
because the interest rates provided in the questionnaire response 
pertained to years prior to 1991 and were therefore inappropriate as 
benchmarks for loans provided during the review period. We selected a 
short-term rate because the duration of these loans was uncertain, 
since no indication was provided by respondents on the final 
disposition of these loans. Next, we divided the amount thus obtained 
by the total weight of live swine produced in Saskatchewan during the 
review period. We then weight-averaged the benefit by Saskatchewan's 
share of total Canadian exports of live swine to the United States 
during the review period. On this basis, we preliminarily determine the 
benefit to be Can$0.0009 per kilogram for the 1991-92 review period.
    To calculate the benefit from the outstanding loans during the 
1992-93 review period, we followed the methodology outlined above. 
However, during the 1992-93 review period, live swine producers also 
received residual stabilization payments. The residual payments were 
due to live swine producers as of the 1991-92 fiscal year, but were 
paid during the 1992-93 fiscal year. Because the residual payments are 
co-funded by the government, we divided the total payment amount by 
two, and added the result to the interest amount calculated on the 
outstanding loans. We thus obtained the full benefit to swine producers 
during the review period. On this basis, we preliminarily determine the 
benefit to be Can$0.0006 per kilogram for the 1992-93 review period.
    During the 1993-94 review period, the government canceled the 
outstanding SHARP deficit. To calculate the benefit from the loan 
forgiveness, we treated one-half of the amount written off as a grant 
in accordance with section 355.49 (b)(1) of the Proposed Regulations. 
We took into account only half of the amount because this was the share 
of the outstanding loans that the producers were responsible for 
repaying.
    The Department's policy with respect to grants is (1) to expense 
recurring grants in the year of receipt or (2) to allocate non-
recurring grants over the average useful life of assets in the 
industry, unless the sum of grants provided under a particular program 
is less than 0.50 percent of a firm's total or export sales (depending 
on whether the program is a domestic or export subsidy) in the year in 
which the grants were received. (See section 355.49(a) of the Proposed 
Regulations and the General Issues Appendix, at 37226, which is 
attached to the Final Countervailing Duty Determination; Certain Steel 
Products from Austria (58

[[Page 26885]]

FR 37217, 37226)) (General Issues Appendix).
    The Department considers a grant non-recurring when the benefits 
are exceptional, the recipient cannot expect to receive benefits on an 
ongoing basis from year to year, and/or the provision of funds by the 
government must be approved every year. The Department has 
preliminarily determined that the write-off of the SHARP deficit is a 
non-recurring grant because debt forgiveness is exceptional, and it is 
a one-time event. On this basis, we allocated the benefit from this 
grant over three years, which is the average useful life of depreciable 
assets used in the swine industry, as set out in the U.S. Internal 
Revenue Service Class Life Asset Depreciation Range System. We used, as 
a discount rate, the simple average of the quarterly medium-term 
government bond rates (for the review period) from the International 
Financial Statistics, published by the International Monetary Fund. 
Next, we divided the benefit allocated to the period by the total 
weight of live swine produced in Saskatchewan during the review period 
to obtain the average benefit per kilogram. We then weight-averaged the 
per-kilogram benefit by Saskatchewan's share of total Canadian exports 
of live swine to the United States during the same review period. On 
this basis, we preliminarily determine the benefit to be Can$0.0051 per 
kilogram for the 1993-94 review period. Since residual benefits from 
this program will continue, we will continue to examine this program in 
any future administrative reviews.
    4. Other Provincial Programs. (A) Alberta Crow Benefit Offset 
Program (ACBOP). This program, administered by the Alberta Department 
of Agriculture, is designed to compensate producers and users of feed 
grain for market distortions in feed grain prices, created by the 
federal government's policy on grain transportation. Assistance is 
provided for feed grain produced in Alberta, feed grain produced 
outside Alberta but sold in Alberta, and feed grain produced in Alberta 
to be fed to livestock on the same farm. The government provides ``A'' 
certificates to registered feed grain users and ``B'' certificates to 
registered feed grain merchants to use as partial payments for grain 
purchased from grain producers. Feed grain producers who feed their 
grain to their own livestock submit a Farm Fed Claim directly to the 
government for payment.
    Hog producers receive benefits in one of three ways: hog producers 
who do not grow any of their own feed grain receive ``A'' certificates 
which are used to cover part of the cost of purchasing grain; hog 
producers who grow all of their own grain submit a Farm Fed Claim to 
the government of Alberta for direct payment; and hog producers who 
grow part of their own grain but also purchase grain receive both ``A'' 
certificates and direct payments.
    In Swine Second and Third Review Results (56 FR 10412), the 
Department found this program to be de jure specific, and thus 
countervailable, because the legislation expressly makes it available 
only to a specific group of enterprises or industries (producers and 
users of feed grain). No new information or evidence of changed 
circumstances has been submitted in these proceedings to warrant 
reconsideration of this finding.
    To determine the benefit to swine producers from this program, we 
followed the methodology used in calculating ACBOP benefits in our 
redetermination on remand in the U.S.-Canada Binational Panel 
proceedings on the 1989-1990 (fifth) review period. In the Matter of 
Live Swine from Canada, USA-91-1904-04 (June 11, 1993) at 33-36. 
However, we further improved on this methodology by using more accurate 
information submitted in the 1991-92 questionnaire response. See also 
the verification report at 31-32, which is available in CRU.
    Thus, we calculated the benefit from this program as follows. Using 
the Alberta Supply and Disposition Tables, we first estimated the 
quantity of grain consumed by livestock in Alberta during the 
correspondent review period. Then, we multiplied the number of swine 
produced in Alberta during the same review period by the estimated 
average grain consumption per hog, and divided the result by the amount 
of total grains used to feed livestock during the review period. We 
thus calculated the percentage of total livestock consumption of all 
grains in Alberta attributable to live swine during the corresponding 
review period. We then multiplied this percentage by the total value of 
``A'' certificates and farm-fed claim payments received by producers 
during the same review period. We divided this amount by the total 
weight of live swine produced in Alberta during the same review period. 
We then weight-averaged this per-kilo benefit by Alberta's share of 
total Canadian exports of live swine to the United States during the 
corresponding review period. On this basis, we preliminarily determine 
the benefit to be Can$0.0023 per kilogram for the 1991-92 review 
period, Can$0.0019 per kilogram for the 1992-93 review period, and 
Can$0.0017 per kilogram for the 1993-94 review period.
    (B) Alberta Livestock and Beeyard Compensation Program (Livestock 
Predator Compensation Sub-program). This program compensates Alberta 
livestock producers for losses of food-producing livestock, including 
cattle, sheep, hogs, goats, rabbits and poultry, to predators. The 
Alberta Department of Agriculture administers this program, and 
provides assistance in the form of grants, compensating farmers for up 
to 100 percent of the value of the depredated livestock.
    In Swine Fifth Review Results (56 FR 29227), the Department found 
this program to be de jure specific and thus countervailable because 
the legislation expressly makes it available only to a specific group 
of enterprises or industries (livestock farmers). No new information or 
evidence of changed circumstances has been submitted in these 
proceedings to warrant reconsideration of this finding.
    To calculate the benefit, we used the methodology applied in Swine 
Sixth Review Results (58 FR 54119). We divided the total payments to 
hog producers during each review period by the total weight of live 
swine produced in Alberta during the same review period. We then 
weight-averaged the result by Alberta's share of Canadian exports of 
live swine to the United States during the same review period. On this 
basis, we preliminarily determine the benefit from this program to be 
less than Can$0.0001 per kilogram for the 1991-92, 1992-93, and 1993-94 
review periods.
    (C) Ontario Rabies Indemnification Program. This program, 
administered by the Farm Assistance Branch of the Ontario Ministry of 
Agriculture and Food, and Rural Affairs compensates livestock 
producers, including producers of cattle, horses, sheep, swine, and 
goats, for damage caused by rabies. Producers apply for compensation 
through a federal inspector, who determines that the animal is rabid 
and must be destroyed. Farmers receive a maximum of Can$100 per hog 
under this program.
    In Swine Fifth Review Results (56 FR 29228), the Department found 
this program to be de jure specific, and thus countervailable, because 
the program's legislation expressly makes it available only to 
livestock producers. No new information or evidence of changed 
circumstances has been submitted in these proceedings to warrant 
reconsideration of this finding.
    To calculate the benefit, we used the methodology applied in Swine 
Sixth Review Results (58 FR 54120). We divided the total payments to 
swine producers during each review period by

[[Page 26886]]

the total weight of live swine produced in Ontario during the same 
review period. We then weight-averaged the result by Ontario's share of 
total Canadian exports of live swine to the United States during the 
same review period. On this basis, we preliminarily determine the 
benefits from this program to be less than Can$0.0001 per kilogram for 
the 1991-92, 1992-93, and 1993-94 review periods.
    (D) Ontario Livestock and Poultry and Honeybee Compensation 
Program. This program, administered by the Farm Assistance Programs 
Branch of the Ontario Ministry of Agriculture, Food, and Rural Affairs, 
provides assistance in the form of grants which compensate producers 
for livestock and poultry injured or killed by wolves, coyotes, or 
dogs. Swine producers apply for and receive compensation through the 
local municipal government. The Ontario Ministry of Agriculture, Food, 
and Rural Affairs reimburses the municipality.
    In Swine Fifth Review Results (56 FR 29227), the Department found 
this program to be de jure specific, and thus countervailable, because 
the legislation expressly makes it available only to a specific group 
of enterprises or industries (livestock and poultry farmers). No new 
information or evidence of changed circumstances has been submitted in 
these proceedings to warrant reconsideration of this finding.
    To calculate the benefit, we used the methodology applied in Swine 
Sixth Review Results (58 FR 54119). We divided the total payment to hog 
producers during each review period by the total weight of live swine 
produced in Ontario during the same review period. We then weight-
averaged the result by Ontario's share of Canadian exports of live 
swine to the United Stated during the same review period. On this 
basis, we preliminarily determine the benefits from this program to be 
less than Can$0.0001 per kilogram for the 1991-92, and 1993-94 review 
periods.
    (E) Saskatchewan Livestock Investment Tax Credit. Saskatchewan's 
1984 Livestock Tax Credit Act provides tax credits to individuals, 
partnerships, and corporations residents in Saskatchewan on livestock 
raised in Saskatchewan that were marketed or slaughtered by December 
31, 1989. Claimants had to be residents of Saskatchewan, paying 
Saskatchewan income taxes. Eligible claimants received credits of Can$3 
for each hog. Although this program was terminated on December 31, 
1989, tax credits are carried forward for up to seven years. In Swine 
First Review Results (53 FR 22198), the Department found this program 
to be de jure specific, and thus countervailable, because the program's 
legislation expressly made it available only to livestock producers. No 
new information or evidence of changed circumstances has been submitted 
in these proceedings to warrant reconsideration of this finding.
    To calculate the benefit, we used the methodology applied in Swine 
Sixth Review Results (58 FR 54120). In the questionnaire responses, the 
GOC provided estimates of the amount of tax credits used by hog 
producers in Saskatchewan in each review period, since the actual 
amounts are unavailable. At verification, we reviewed the methodology 
used to calculate these estimates and found it reasonable and 
consistent with that used in prior reviews. (See Verification Report 
dated June 8, 1994, p. 24). We divided this amount by the total weight 
of live swine produced in Saskatchewan during each review period. We 
then weight-averaged the result by Saskatchewan's share of total 
exports of live swine to the United States during the same review 
period. On this basis, we preliminarily determine the benefit from this 
program to be Can$0.0002 per kilogram for the 1991-92, 1992-93, and 
1993-94 review periods.
    (F) Saskatchewan Livestock Facilities Tax Credit Program. This 
program, which was terminated on December 31, 1989, provided tax 
credits to livestock producers based on their investments in livestock 
production facilities. The tax credits can only be used to offset 
provincial taxes and may be carried forward for up to seven years. 
Livestock covered by this program includes cattle, horses, sheep, 
swine, goats, poultry, bees, fur-bearing animals raised in captivity, 
or any other designated animals; it can be raised for either breeding 
or slaughter. Investments covered under the program include new 
buildings, improvements to existing livestock facilities, and any 
stationary equipment related to livestock facilities. The program pays 
15 percent of 95 percent of project costs, or 14.25 percent of total 
costs.
    In Swine Second and Third Review Results (55 FR 20610), the 
Department found this program to be de jure specific, and thus 
countervailable, because the program's legislation expressly made it 
available only to livestock producers. No new information or evidence 
of changed circumstances has been submitted in these proceedings to 
warrant reconsideration of this finding.
    To calculate the benefit, we used the methodology applied in Swine 
Sixth Review Results (58 FR 54120). In the questionnaire responses, the 
GOC provided estimates of the amount of tax credits used by hog 
producers in Saskatchewan, for each review period, since the actual 
amounts are unavailable. At verification, we reviewed the methodology 
used to calculate these estimates and found it reasonable and 
consistent with that used in prior reviews. (See Verification Report 
dated June 8, 1994, p. 24). We divided each amount by the total weight 
of live swine produced in Saskatchewan during the correspondent review 
period. We then weight-averaged the result by Saskatchewan's share of 
total exports of live swine to the United States during the same 
period. On this basis, we preliminarily determine the benefit from this 
program to be Can$0.0001 per kilogram for the 1991-92, 1992-93, and 
1993-94 review periods.
B. Programs Preliminarily Found to Confer Subsidies
    1. Provincial Programs. (A) Saskatchewan Interim Red Meat 
Production Equalization Program. In the 1992-93 administrative review, 
the Department received a timely allegation from the petitioner stating 
that this program may provide benefits to live swine producers in 
Canada. The Department initiated an investigation of the program and 
verified the information provided in the questionnaire response. See 
Memorandum on New Allegations of Canadian Subsidy Programs, to Barbara 
E. Tillman from The Team dated February 18, 1994, which is on file in 
the CRU.
    The Saskatchewan Interim Red Meat Production Equalization Program 
(IRMPEP), administered by the Saskatchewan Department of Agriculture 
and Food, was established by the Government of Saskatchewan (GOS) in 
November 1992. IRMPEP provides grants to livestock producers who raise 
and feed their livestock in Saskatchewan. In order to qualify for 
IRMPEP, producers must have sold a minimum number of the eligible 
livestock which includes steers, heifers and virgin bulls, cull cows, 
hogs, lambs, kid goats, and horses. Once the minimum number of eligible 
livestock has been sold, the producer fills out an application and, if 
the criteria are met, is automatically eligible to receive grants under 
this program.
    Because the program's legislation expressly limits its availability 
to a specific group of enterprises or industries (livestock producers), 
we preliminarily determine that benefits from this program are de jure 
specific, and thus countervailable. See Decision

[[Page 26887]]

Memorandum on the Saskatchewan Interim Red Meat Production Equalization 
Program, to Paul L. Joffe from The Team dated May 15, 1996, which is on 
file in the CRU.
    The Department has preliminarily determined that these grants are 
recurring because the recipient can expect to receive benefits on an 
ongoing basis from review period to review period. (See General Issues 
Appendix (58 FR at 37226)). Therefore, to calculate the benefit, we 
have allocated the amounts of the grants to the year of receipt. 
Consequently, we divided the amount of IRMPEP grants to live swine 
producers for the 1992-93 and for the 1993-94 review periods, by the 
total weight of live swine produced in Saskatchewan in the 
correspondent review period. We then weight-averaged the result by 
Saskatchewan's share of total exports of live swine to the United 
States during the same review period. On this basis, we preliminarily 
determine the benefit from this program to be Can$0.0002 per kilogram 
for the 1992-93 review period, and Can$0.0021 for the 1993-94 review 
period.
    (B) Ontario Export Sales Aid Program. The Ontario Export Sales Aid 
Program was established in 1987 to assist producers and processors of 
Ontario agricultural and food products to develop their export markets. 
It was not used in prior reviews. It was used in the 1991-92 and 1993-
94 review periods; it was not used during the 1992-93 review period.
    The Ontario Export Sales Aid Program is administered by the Ontario 
Ministry of Agriculture, Food and Rural Affairs which reimburses 
producers or processors for the costs they incur in developing their 
export marketing materials. Grants are made on a per-project basis, 
limited to two projects per producer or company, per fiscal year. The 
Ministry provides reimbursements for up to 50 percent of the project 
costs, with a maximum dollar amount. Producers submit a completed 
application form outlining the objectives of the market development 
plan, anticipated costs, and forecasted benefits to a review committee 
for approval. Upon approval, the producer or company receives the grant 
and initiates the project.
    Because receipt of benefits from this program is contingent upon 
actual or anticipated exportation, the Department preliminarily 
determines this program to be a countervailable export subsidy. The 
benefits under this program are provided in the form of grants for 
specific projects. Assistance is provided on a project-specific basis, 
and approved by a review committee (with no repeat projects allowed). 
Therefore, the Department has preliminarily determined that these are 
non-recurring grants because the recipient cannot expect to receive 
benefits on an ongoing basis from review period to review period. See 
Decision Memorandum on the Ontario Export Sales Aid Program, to Paul L. 
Joffe from The Team dated May 15, 1996, which is on file in the CRU. 
However, because the amount received by live swine producers in both 
review periods is less than 0.50 percent of the value of live swine 
exports from this province, we are allocating the benefit to the year 
of receipt. (See General Issues Appendix  (58 FR at 37226)).
    To calculate the benefit received in the 1991-92 and the 1993-94 
review periods, we divided the total grant amount in the correspondent 
review period by the total weight of live swine produced in Ontario in 
the same review period. We then weight-averaged the result by Ontario's 
share of total exports of live swine to the United States during the 
same review period. On this basis, we preliminarily determine the 
benefit from this program to be less than Can$0.0001 per kilogram for 
the 1991-92, and 1993-94 review periods.

II. Programs Preliminarily Found Not To Confer Subsidies

(1) Federal/Provincial Programs
    (A) Canada/British Columbia Agri-Food Regional Development 
Subsidiary Agreement Canada/Manitoba Agri-Food Development Agreement 
Canada/Quebec Subsidiary Agreement on Agri-Food Development. On July 
25, 1985, the GOC and British Columbia signed an agreement to promote 
agricultural development cooperation between the two governments. The 
objectives of this agreement are to improve the competitiveness of the 
agri-food industry in British Columbia, increase economic output and 
employment opportunities in the industry, and conserve and improve the 
province's agricultural resources. Under this agreement, the federal 
and provincial governments share funding for projects in the following 
areas: (1) Productivity enhancement, (2) resource development, and (3) 
commodity development.
    On May 30, 1984, the GOC and Manitoba signed an agreement to 
support research programs for the development of agriculture. Under 
this agreement, the federal and provincial governments share funding 
for research in the following areas: (1) Enhanced agricultural 
productivity, (2) enhanced soil and water resource management, (3) 
human resources management, and (4) analysis, evaluation, and public 
relations.
    On December 14, 1984, the GOC entered into an Economic and Regional 
Development Agreement with the Province of Quebec. Under this 
agreement, the federal and provincial governments share the funding of 
projects in the following areas: (1) Research and development, (2) 
technological innovations and new initiatives, and (3) soil 
conservation and improvement.
    The Department has examined these three programs, focusing its 
inquiry on the public availability of the results of swine-related 
projects. After finding that the results of the projects funded by 
these programs were made publicly available, the Department has 
preliminarily determined in each review that the programs provided no 
countervailable benefit to producers of live swine in accordance with 
section 355.44(l) of the Proposed Regulations, which states that 
``assistance provided by a government to a firm in order to finance 
research and development does not confer a countervailable benefit 
where the Secretary determines that the results of such research and 
development have been, or will be, made available to the public, 
including competitors of the firm in the United States.''
    (B) NISA. In the 1991-92 administrative review the National Pork 
Producers Council, petitioner, alleged that the farm-fed grain 
provision of NISA constitutes a countervailable benefit to hog 
producers who grow grains. The farm-fed grain provision of NISA is an 
administrative mechanism that ensures that farm-fed grains are offered 
the same coverage under that program as marketed grains. Without this 
provision, NISA's method of calculating deposit entitlements would 
exclude grains that are fed ``on farms'' rather than sold. To provide 
coverage to farm-fed grains, NISA treats fixed portions of a farmer's 
net sales of cattle, calves, swine, sheep, and lambs, which are not 
covered under NISA, as sales of covered products, i.e., as sales of the 
grain the animals were fed.
    In the instant case, the relevant program is NISA. The farm-fed 
provisions of that program are an administrative mechanism to deal with 
special circumstances concerning one of the numerous eligible products 
under that program. Livestock producers, including hog producers, who 
also produce NISA-eligible products may receive benefits under NISA 
regardless of whether they utilize the farm-fed grain provisions. Thus, 
any benefits

[[Page 26888]]

received under NISA are countervailable only if NISA is specific.
    In order to determine the specificity of NISA to ascertain whether 
the benefits provided to hog producers under its farm-fed provision are 
countervailable, the Department's Proposed Regulations at section 
355.43(b)(2) direct us to examine four factors, among others:
    (i) The extent to which a government acts to limit the availability 
of a program;
    (ii) The number of enterprises, industries, or groups thereof that 
actually use a program;
    (iii) Whether there are dominant users of a program, or whether 
certain enterprises, industries, or groups thereof receive 
disproportionately large benefits, under a program; and
    (iv) The extent to which a government exercises discretion in 
conferring benefits under a program.
    In analyzing the first factor, we preliminarily find that NISA's 
enabling legislation is de jure not specific based on its stated 
purpose to cover all agricultural products. Section 355.43(b)(8) of the 
Proposed Regulations does not regard a program as being specific solely 
because the program is limited to the agricultural sector. However, 
section 771(5)(B) of the Tariff Act of 1930, as amended, states that 
``[n]ominal general availability, under the terms of the law, * * * of 
the benefits thereunder is not a basis for determining that the bounty, 
grant, or subsidy is not, or has not been, in fact provided to a 
specific enterprise or industry, or group thereof''; thus, we turn to 
our de facto specificity analysis. The second factor, the number of 
users of the program, goes to the de facto analysis of the specificity 
of NISA. In its first year of operation NISA covered 65 products, which 
accounted for 70 percent of the products grown in Canada. (See 
Verification Report dated June 8, 1994, page 82). In our analysis of 
the third factor, we found no evidence that hog producers were dominant 
users or were receiving disproportionate benefits from the NISA 
program. Finally, we found no evidence that the GOC exercises 
discretion in conferring benefits under the NISA program.
    Because NISA covers a large number and variety of agricultural 
products, no evidence of dominance or disproportionality, and lack of 
the GOC's discretion in conferring benefits under NISA, we 
preliminarily determine that the NISA farm-fed grain provision is not 
limited to a specific enterprise or industry, or group of enterprises, 
or group thereof. For further discussion, see Decision Memorandum on 
the Specificity of the Net Income Stabilization Account Program to Paul 
L. Joffe from The Team dated May 15, 1996, which is available in CRU.
    (C) Cash Flow Enhancement Program. In the 1991-92 administrative 
review, the petitioner alleged that the Cash Flow Enhancement Program 
provides countervailable benefits to live swine producers. Therefore, 
the Department examined whether this program provided countervailable 
benefits to live swine producers.
    The Cash Flow Enhancement Program provides farmers with interest-
free cash advances on loans under the Prairie Grain Advance Payment Act 
and under the Advance Payments for Crops Act. Both of these Acts 
specifically state that the advances are strictly for crops that are 
sold, not used on the farm. Therefore, we preliminarily find this 
program does not provide countervailable benefits to hog producers 
because the advances are tied to products other than the subject 
merchandise. See Decision Memorandum on the Cash Flow Enhancement 
Program, to Paul L. Joffe from The Team dated May 15, 1996, which is on 
file in the CRU.
    2. Provincial Programs. (A) Saskatchewan Livestock Cash Advance 
Program. Information provided in the 1991-92 review indicates that the 
correct name for the Saskatchewan Livestock Advance Program is the 
Saskatchewan Livestock Cash Advance Program (SLCAP). The Department 
found this program not countervailable in the first review. (Swine 
First Review Results) (53 FR 22198)). Therefore, absent new 
information, the Department will no longer examine this program.
    (B) Ontario Farm Tax Rebate Program. This program provides eligible 
farmers with rebates of up to 75 percent of the taxes levied on their 
properties for municipal and school purposes or for local improvements. 
These taxes are levied under the Local Improvement Act, the Provincial 
Land Tax Act, or the Local Roads Boards Act, and imposed under the 
Local Services Boards Act. Eligible farm properties are properties used 
in a farming enterprise that produces agricultural products.
    Any resident of Ontario may receive a rebate if he or she owns or 
rents and pays taxes on eligible properties. Before January 1, 1990, 
the minimum gross production level requirements for eligibility varied 
among regions: Can$8,000 for residents of Southern and Western Ontario 
and Can$5,000 for residents of Northern and Eastern Ontario. In Swine 
First Review Results (53 FR 22196), the Department found this program 
to be de jure specific, and thus countervailable, because the 
eligibility criteria varied depending on the region of Ontario in which 
the farm was located.
    In the 1991-92 administrative review, we verified that, as of April 
1, 1991 all farmers in Ontario with a minimum gross production value of 
Can$7,000 are eligible to receive tax rebates. Since there is no 
restriction on the types of farm products that receive these rebates, 
and we found no evidence at verification that the government exercises 
discretion in distributing these rebates, we have reconsidered our 
prior decision and preliminarily determine that this program is not 
specific, and therefore, not countervailable. See Memorandum on the 
Ontario Farm Tax Rebate Program, to Barbara E. Tillman from The Team 
dated March 5, 1996, which is on file in the CRU.
    (C) Prince Edward Island Pro Pork Assistance Program. The Prince 
Edward Island (PEI) Pro Pork Assistance Program replaced the Prince 
Edward Island Swine Incentive Policy Program which terminated September 
30, 1990. The Pro Pork Assistance Program was established on January 
12, 1991, to improve the profitability, efficiency, and market quality 
of pork production in PEI; to improve the quality of pork marketed as 
measured by weight and index; and to develop an equitable marketing 
system for quality weaner pigs.
    This program is administered by the PEI Department of Agriculture 
in cooperation with the PEI Hog Commodity Marketing Board. Eligible 
producers submit an application to the Ministry and receive assistance 
under two sub-programs. Under the Swine Enterprise Analysis and 
Consulting Service sub-program, Ministry consultants analyze farmers' 
production records and financial statements to identify areas in which 
changes to production systems and financial management systems will 
lead to more profitable operations. The data collected from individual 
producers is then averaged and used to set an industry benchmark. Thus, 
a producer can compare his farm's performance with that of other farms 
and identify areas where improvements can lead to greater productivity 
and profits. Under the Market Hog Weight and Index Targeting sub-
program, producers receive assistance from Ministry consultants in 
improving swine carcass weights and lean meat yield. Qualifying 
producers also receive payments for ``slaughtered'' hogs meeting 
stipulated weight and index criteria, which are adjusted annually in 
response to market

[[Page 26889]]

requirements. Payments to producers are only made on dressed pork 
(after slaughter).
    In order for the producers to qualify for payments under this 
program, the swine must have been slaughtered on PEI or in New 
Brunswick. Since producers are not eligible for, and cannot receive 
benefits under this program unless hogs are slaughtered in Canada, we 
preliminarily determine that this program does not benefit live swine 
exported to the United States. See Decision Memorandum on the Pro Pork 
Assistance Program, to Paul L. Joffe from The Team dated May 15, 1996, 
which is on file in the CRU.

III. Programs Preliminarily Found to be Not Used

    We have examined the following programs and preliminarily determine 
that Canadian exporters of live swine to the United States did not use 
them during the periods under review: (1) Agricultural Products Board 
Program; (2) Federal Atlantic Livestock Feed Initiative (New Brunswick, 
Newfoundland, Nova Scotia, and Prince Edward Island); (3) Western 
Diversification Program; (4) British Columbia Special Hog Payment 
Program; (5) New Brunswick Agriculture Development Act--Swine 
Assistance Program; (6) New Brunswick Livestock Incentive Program; (7) 
New Brunswick Swine Assistance Policy on Boars; (8) New Brunswick Swine 
Industry Financial Restructuring Program; (9) Newfoundland Farm 
Products Corporation--Hog Price Support; (10) Newfoundland Weanling 
Bonus Incentive Policy; (11) Nova Scotia Improved Sire Policy; (12) 
Ontario Bear Damage to Livestock Compensation Program; and (13) Ontario 
Swine Sales Assistance Policy.

IV. Program Preliminarily Found to be Terminated

(A) New Brunswick Hog Price Stabilization Plan
    The New Brunswick Hog Price Stabilization Plan (NBHPSP) was 
established in 1974 to assure hog producers income stabilization during 
periods of both high and low market prices. The plan was administered 
jointly by the New Brunswick Department of Agriculture Hog 
Stabilization Board and the New Brunswick Hog Marketing Board. The plan 
operated as follows: the board established a base price based on 
production costs; when the average weekly market price exceeded the 
base price by Can$5.00, producers paid into the stabilization fund. 
When the same market price fell below the base price, producers 
received payments to make up the difference between the two prices. 
Half of the payment to producers was provided by the Government of New 
Brunswick as a grant to the producer and the other half was drawn from 
the producers' equity in the fund. When the producers exhausted their 
equity in the fund, the provincial government assumed the producers' 
portion of the payment by providing an interest-free loan, which was to 
be repaid when the fund was in surplus. In Swine First Review Results 
(53 FR 22194), the Department found this program to be de jure 
specific, and thus countervailable, because the legislation expressly 
made it available only to a specific group of enterprises or industries 
(hog producers). In these reviews, neither the GOC nor the government 
of New Brunswick submitted new information or evidence of changed 
circumstances to warrant reconsideration of this finding.
    The program was terminated on March 31, 1989, with the fund showing 
a sizeable deficit. This deficit represents the cumulation over the 
operating years of loans made by the provincial government to cover 
payouts to producers. These loans were written off by the provincial 
government by Order-in-Council 89,1016 on December 21, 1989.
    The Department's Proposed Regulations, at section 355.49(g), state 
that ``where during a year, a government forgives all or part of a 
loan, the Department will treat the forgiven amount as a grant and will 
expense or allocate it.'' The Department considers this grant to be 
non-recurring because the benefits are exceptional. (General Issues 
Appendix) (58 FR 37226)). Because the grant allocation period is three 
years, the last year in which producers of live swine may have received 
benefits under this program was 1991-92. However, New Brunswick did not 
export to the United States during that review period. Therefore, we 
preliminarily determine that this program was terminated and that no 
residual benefits accrued to swine producers after the 1991-92 review 
period. For a more detailed discussion on the Department's decision see 
Memorandum on the New Brunswick Hog Price Stabilization Plan, to 
Barbara E. Tillman from The Team dated May 15, 1996, which is on file 
in the CRU.
(B) Other Programs
    We have also examined the following programs and preliminarily 
determine that they were terminated prior to April 1, 1991, and that no 
residual benefits were provided during the 1991-92, 1992-93 and 1993-94 
review periods: (1) Canada/Alberta Swine Improvement Program Study; (2) 
Canada/Ontario Western Agribition Livestock Transportation Assistance 
Program; (3) Canada/Ontario Stabilization Plan for Hog Producers; (4) 
Alberta Red Meat Interim Insurance; (5) Ontario Livestock Improvement 
Program for Northern Ontario; (6) Ontario Pork Industry Improvement 
Plan; (7) Prince Edward Island Interest Payments on Assembly Yard Loan; 
and (8) Prince Edward Island Swine Incentive Policy.

Preliminary Results of Review

    We preliminarily determine the total net subsidy on live swine from 
Canada to be Can$0.0594 per kilogram for the 1991-92 review period, 
Can$0.0609 per kilogram for the 1992-93 review period, and Can$0.0099 
per kilogram for the 1993-94 review period.
    If the final results of these reviews remain the same as these 
preliminary results, the Department intends to instruct the U.S. 
Customs Service to assess countervailing duties of Can$0.0594 per 
kilogram on shipments of live swine exported on or after April 1, 1991 
and on or before March 31, 1992, Can$0.0609 per kilogram on shipments 
of live swine exported on or after April 1, 1992 and on or before March 
31, 1993, and Can$0.0099 per kilogram on shipments of live swine 
exported on or after April 1, 1993 and on or before March 31, 1994.
    Furthermore, if our final determination upholds our preliminary 
determination to revoke, in part, with respect to slaughter sows and 
boars and weanlings, the Department intends to instruct the U.S. 
Customs Service to liquidate, without regard to countervailing duties, 
and to refund any estimated countervailing duties collected for all 
unliquidated entries of slaughter sows and boars and weanlings made on 
or after April 1, 1991, the effective date of the partial revocation, 
in accordance with 19 C.F.R. 355.25(d)(5). We will also instruct the 
U.S. Customs Service to refund interest for entries of slaughter sows 
and boars and weanlings made on or after April 1, 1991, in accordance 
with section 778 of the Act.
    The Department also intends to instruct the U.S. Customs Service to 
collect a cash deposit of estimated countervailing duties of Can$0.0099 
per kilogram on shipments of all live swine, except slaughter sows and 
boars and weanlings, entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of the final results of 
these reviews.

[[Page 26890]]

    Parties to the proceeding may request disclosure of the calculation 
methodology and interested parties may request a hearing not later than 
10 days after the date of publication of this notice. Interested 
parties may submit written arguments in case briefs on these 
preliminary results within 30 days of the date of publication. Rebuttal 
briefs, limited to arguments raised in case briefs, may be submitted 
seven days after the time limit for filing the case brief. Parties who 
submit argument in this proceeding are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument. Any hearing, if requested, will be held seven days after the 
scheduled date for submission of rebuttal briefs. Copies of case briefs 
and rebuttal briefs must be served on interested parties in accordance 
with 19 C.F.R. section 355.38(e).
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under administrative protective order no 
later than 10 days after the representative's client or employer 
becomes a party to the proceeding, but in no event later than the date 
the case briefs under 19 C.F.R. section 355.38(c) are due. The 
Department will publish the final results of these administrative 
reviews including the results of its analysis of issues raised in any 
case or rebuttal briefs.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. section 1675(a)(1)) and 19 
C.F.R. 355.22.

    Dated: May 20, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-13318 Filed 5-28-96; 8:45 am]
BILLING CODE 3510-DS-P