[Federal Register Volume 63, Number 83 (Thursday, April 30, 1998)]
[Notices]
[Pages 23723-23728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11528]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-122-404]


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

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

ACTION: Notice of preliminary results of countervailing duty 
administrative review.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty order on live swine 
from Canada for the period April 1, 1996 through March 31, 1997. For 
information on the net subsidy for all producers covered by this order, 
see the Preliminary Results of Review section of this notice. If the 
final results remain the same as these preliminary results of 
administrative review, we will instruct the U.S. Customs Service to 
assess countervailing duties as detailed in the Preliminary Results of 
Review section of this notice. Interested parties are invited to 
comment on these preliminary results. See Public Comment section of 
this notice.

EFFECTIVE DATE: April 30, 1998.

FOR FURTHER INFORMATION CONTACT: Gayle Longest or Lorenza Olivas, 
Office CVD/AD Enforcement VI, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 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 4, 1997, the Department published a notice of 
``Opportunity to Request Administrative Review'' (62 FR 41925) of this 
countervailing duty order. We received timely requests for review and 
on September 25, 1997, we initiated the review, covering the period 
April 1, 1996 through March 31, 1997 (62 FR 50292).
    The Department has determined that it is not practicable to conduct 
a company-specific review of this order because a large number of 
producers and exporters requested the review. Therefore, pursuant to 
section 777A(e)(2)(B) of the Tariff Act of 1930, as amended (the Act), 
we are conducting a review of all producers and exporters of subject 
merchandise covered by this order on the basis of aggregate data. This 
review covers 27 programs.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended by 
the Uruguay Round Agreements Act (URAA) effective January 1, 1995 (the 
Act). In addition, unless otherwise indicated, all citations to the 
Department's regulations are to the regulations codified at 19 CFR 
section 351, published in the Federal Register at 62 FR 27296 (May 19, 
1997). The Department is conducting this administrative review in 
accordance with section 751(a) of the Act.

Scope of the Review

    The merchandise covered by this order is live swine, except U.S. 
Department of Agriculture (USDA) certified purebred breeding swine, 
slaughter sows and boars, and weanlings, (weanlings are swine weighing 
up to 27 kilograms or 59.5 pounds) from Canada. The merchandise subject 
to the order 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 U.S. Customs Service (Customs) purposes. 
The written description of the scope remains dispositive.

Analysis of Programs

Allocation Methodology

    In the past, the Department has relied on information from the U.S. 
Internal Revenue Service (IRS) on the industry-specific average useful 
life of assets in determining the allocation period for nonrecurring 
grant benefits. See General Issues Appendix appended to Final 
Countervailing Duty Determination; Certain Steel Products from Austria, 
58 FR 37063, 37226 (July 9, 1993). However, in British Steel plc. v. 
United States, 879 F. Supp. 1254 (CIT 1995) (British Steel), the U.S. 
Court of International Trade (the Court) ruled against this allocation 
methodology. In accordance with the Court's remand order, the 
Department calculated a company-specific allocation period for

[[Page 23724]]

nonrecurring subsidies based on the average useful life (AUL) of non-
renewable physical assets. This remand determination was affirmed by 
the Court on June 4, 1996. See British Steel, 929 F. Supp. 426, 439 
(CIT 1996).
    The Department has not appealed the Court's decision and, as such, 
we intend to determine the allocation period for nonrecurring subsidies 
using company-specific AUL data where reasonable and practicable. In 
Live Swine from Canada; Preliminary Results of Countervailing Duty 
Administrative Review (62 FR 52426; October 7, 1996) and Live Swine 
from Canada; Final Results of Countervailing Duty Administrative Review 
(62 FR 18087; April 14, 1997) (Swine Tenth Review Results), the 
Department determined that it is not reasonable and practicable to 
allocate non-recurring subsidies using company-specific AUL data 
because it is not possible to apply a company-specific AUL in an 
aggregate case (such as the case at hand). Accordingly, in this review, 
the Department has continued to use as the allocation period the 
average useful life of depreciable assets used in the swine industry, 
as set forth in the U.S. Internal Revenue Service (IRS) Class Life 
Asset Depreciation Range System (see Swine Tenth Review Results), which 
is a period of three years.

Calculation Methodology for Assessment and Cash Deposit Purposes

    For the period of review (POR), we calculated the net subsidy on a 
country-wide basis by determining the subsidy rate for each program 
subject to the administrative review in the following manner. We first 
calculated the subsidy rate on a province-by-province basis; we then 
weight-averaged the rate received by each province using the province's 
share of total Canadian exports to the United States of the subject 
merchandise. We then summed the individual provinces' weight-averaged 
rates to determine the subsidy rate of each program. To obtain the 
country-wide rate, we then summed the subsidy rates from all programs.

I. Programs Conferring Subsidies

A. Programs Previously Determined to Confer Subsidies

1. Federal/Provincial Programs
    a. National Transition Scheme for Hogs. After termination of the 
National Tripartite Stabilization Program (NTSP) for Hogs in July 1994, 
hog producers became eligible to participate in the National Transition 
Scheme for Hogs (Transition Scheme), which provided for one-time 
payments to producers of hogs marketed from April 3, 1994 through 
December 31, 1994. The Transition Scheme provided payments to hog 
producers of Can$1.50 per hog from the federal government and a 
matching Can$1.50 from the provincial government.
    In Swine Tenth Review Results, the Department found this program to 
be de jure specific, and thus countervailable, because the Transition 
Scheme Agreement expressly limits its availability to a specific 
industry (swine). We determined that the amounts provided by both the 
federal and provincial governments to the hog producers during that POR 
under the Transition Scheme represented a grant. We also found that 
these grants were non-recurring because the transitional payments are 
exceptional; the recipient cannot expect to receive benefits on an 
ongoing basis from POR to POR; and the government approved funding 
under the Transition Scheme for one year only. No new information or 
evidence of changed circumstances has been submitted in this proceeding 
to warrant reconsideration of this finding.
    In Live Swine From Canada; Preliminary Results of Countervailing 
Duty Administrative Review 62 FR 47460 (September 9, 1997) and Live 
Swine From Canada; Final Results of Countervailing Duty Administrative 
Review 63 FR 2204 (January 14, 1998) (Swine Eleventh Review Results) 
the following provinces received benefits under this program: Alberta, 
Manitoba, New Brunswick, Ontario, Quebec, and Saskatchewan.1 
The amount received under this program by live swine producers was 
greater than 0.50 percent of the value of total live swine sales in 
Canada. 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 IRS Class Life Asset 
Depreciation Range System. We calculated the discount rate using the 
same methodology applied in previous reviews. (See 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 61 FR 26879, 
26884 (May 29, 1996) and Live Swine From Canada; Final Results of 
Countervailing Duty Administrative Reviews 61 FR 52408 (October 7, 
1996) Swine 7,8,9 Review Results. We used, as a discount rate, the 
simple average of the monthly medium-term corporate bond rates for the 
eleventh POR, from the Bank of Canada Review Autumn (1996), published 
by the Bank of Canada. We applied our standard grant methodology to 
calculate each province's benefit.
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    \1\ We note that the provinces of British Columbia, Manitoba, 
New Brunswick, Nova Scotia, Prince Edward Island and Saskatchewan 
received payments under this program during the 1994-1995 POR which 
were expensed in the year of receipt. See Swine Tenth Review 
Results.
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    During the POR, there were no payments given under this program. 
However, residual benefits from provinces receiving payments in the 
1995-1996 POR continue to provide countervailable benefits during the 
POR now under review, which is the second year of the three-year 
allocation period. To derive the benefit in this review, we took the 
portion of the benefit allocated to this POR from the Swine Eleven 
Review Results and, using each province's calculated total weight of 
market hogs produced during the POR, derived a benefit per kilogram for 
each province. We used only the weight of market hogs because only 
market hogs were eligible to receive NTSP benefits. We then weight 
averaged the benefits by each province's share of total Canadian 
exports of market hogs to the United States during the POR and summed 
the weighted averages. On this basis, we preliminarily determine the 
net subsidy for this program to be Can$0.0041 per kilogram for the POR.
    The Transition Scheme program has been terminated. Because the last 
date residual benefits may accrue is the last day of the three-year 
allocation period, which is March 31, 1998, prior to the publication of 
these preliminary results, we determine that this program is terminated 
with no residual benefits. Moreover, there is no evidence on the record 
which would indicate that residual benefits are being provided or 
received or that a substitute program has been implemented. See e.g., 
Swine Eleventh Review Results. Therefore, for cash deposit purposes, 
the cash deposit rate for this program will be adjusted to zero due to 
the program-wide change which became effective April 1, 1998. However, 
we will continue to examine this program in the subsequent 
administrative review, if conducted, which would cover the last year of 
the three-year allocation period for purposes of duty assessment.
2. 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

[[Page 23725]]

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 this proceeding to warrant 
reconsideration of this finding.
    To determine the benefit to swine producers from this program, we 
followed the methodology used in Swine Tenth Review Results. Using the 
Alberta Supply and Disposition Tables, we first estimated the quantity 
of grain consumed by livestock in Alberta during the POR. Then we 
multiplied the number of swine produced in Alberta during the POR by 
the estimated average grain consumption per hog, and divided the result 
by the amount of total grains used to feed livestock during the POR. We 
thus calculated the percentage of total livestock consumption of all 
grains in Alberta attributable to live swine during the POR. We then 
multiplied this percentage by the total value of ``A'' certificates and 
farm-fed claim payments received by producers during the POR. We 
divided this amount by the total weight of live swine produced in 
Alberta during the POR. We then weight-averaged this per-kilo benefit 
by Alberta's share of total Canadian exports of market hogs to the 
United States. On this basis, we preliminarily determine the benefit to 
be less than Can$0.0001 per kilogram for the POR.
    ACBOP was terminated on March 31, 1994. Benefits for ``A'' 
certificates had to be claimed by June 30, 1994, and benefits tied to 
farm-fed grains had to be claimed by August 31, 1994. The original 
deadline for any payment of benefits under the program was March 31, 
1996, however, producers could receive payments until May 17, 1996. 
Since no payments could be received after the publication of these 
preliminary results, we determine this program terminated with no 
residual benefits. Moreover, there is no evidence on the record which 
would indicate that residual benefits are being provided or received or 
that a substitute program has been implemented. Therefore, we will not 
examine this program in the future, and the cash deposit rate will 
continue to be zero for this program. (See Swine Eleventh Review 
Results).
    b. 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, and 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, poultry farmers, and 
beekeepers). No new information or evidence of changed circumstances 
has been submitted in this proceeding to warrant reconsideration of 
this finding.
    To calculate the benefit, we used the methodology applied in Swine 
Sixth Review Results (58 FR 54119) and subsequent reviews. We divided 
the total payment to hog producers during the POR by the total weight 
of live swine produced in Ontario. We then weight-averaged the result 
by Ontario's share of Canadian exports of market hogs to the United 
States during the POR. On this basis, we preliminarily determine the 
benefit from this program to be less than Can$0.0001 per kilogram for 
the POR.
    c. Saskatchewan Livestock Investment Tax Credit. Saskatchewan's 
1984 Livestock Tax Credit Act provides tax credits to individuals, 
partnerships, cooperatives, and corporations who owned and fed 
livestock marketed or slaughtered by December 31, 1989. Claimants had 
to be residents of Saskatchewan and pay 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 through the end of fiscal year 1996 (April 1, 1995 
through March 31, 1996). 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 this proceeding to 
warrant reconsideration of this finding.
    To calculate the benefit for the POR, we used the methodology 
applied in Swine Sixth Review Results (58 FR 54120) and subsequent 
reviews (see Swine Tenth Review Results). In the questionnaire 
responses, the GOC provided estimates of the amount of tax credits used 
by hog producers in Saskatchewan during the POR, since the actual 
amounts cannot be determined. We divided the amount of benefit by the 
total weight of live swine produced in Saskatchewan during the POR. We 
then weight-averaged the result by Saskatchewan's share of total 
exports of market hogs to the United States. On this basis, we 
preliminarily determine the benefit from this program to be less than 
Can$0.0001 per kilogram for the POR.
    The Saskatchewan Livestock Investment Tax Credit was terminated on 
December 31, 1989 and the last year for disbursement of benefits was 
fiscal year 1996 (April 1, 1995 through March 31, 1996). Therefore, we 
consider this program terminated. Moreover, there is no evidence on the 
record which would indicate that residual benefits are being provided 
or received or that a substitute program has been implemented. 
Therefore, we will not examine this program in the future, and the cash 
deposit rate will continue to be zero for this program.
    d. Saskatchewan Livestock Facilities Tax Credit. 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 or until no later than 
fiscal year 1996 (April 1, 1995 through March 31, 1996). Livestock 
covered by this program includes cattle, horses, sheep, swine, goats, 
poultry, bees, fur-bearing animals raised in captivity, or any other 
designated animals; covered livestock 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

[[Page 23726]]

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 20820), 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 this proceeding to 
warrant reconsideration of this finding.
    To calculate the benefit, we used the methodology applied in Swine 
Sixth Review Results (58 FR 54121) and subsequent reviews (see Swine 
Tenth Review Results). In the questionnaire responses, the GOC provided 
estimates of the amount of tax credits used by hog producers in 
Saskatchewan, since the actual amounts cannot be determined. We divided 
the amount of benefit by the total weight of live swine produced in 
Saskatchewan during the POR. We then weight-averaged the result by 
Saskatchewan's share of total exports of market hogs to the United 
States. On this basis, we preliminarily determine the benefit from this 
program to be less than Can$0.0001 per kilogram for the POR.
    The Saskatchewan Livestock Facilities Tax Credit was terminated on 
December 31, 1989 and the last year for use of tax credits was fiscal 
year 1996 (April 1, 1995 through March 31, 1996). Therefore, we 
consider this program terminated. Moreover, there is no evidence on the 
record which would indicate that residual benefits are being provided 
or received or that a substitute program has been implemented. 
Therefore, we will not examine this program in the future, and the cash 
deposit rate will continue to be zero for this program.
    e. New Brunswick Livestock Incentives Program. This program, which 
operates under the Livestock Incentives Act, provides loan guarantees 
to livestock producers purchasing cattle, sheep, swine, foxes, and mink 
for breeding purposes, and for feeding and finishing livestock for 
slaughter. Loans in amounts ranging from Can$1,000 to Can$90,000 are 
granted by commercial banks or credit unions and guaranteed by the 
Government of New Brunswick (GONB) to an individual, partnership, 
corporation or incorporated co-operative association engaged in farming 
in New Brunswick. Swine producers submit an application for a loan 
under this program to a bank. The bank evaluates the loan application 
based upon standard loan criteria and either approves or rejects the 
application. A consideration for obtaining the loan is the presentation 
to the GONB of a farm plan established at the time the loan is taken 
out. For loans given for the purchase of animals for breeding purposes, 
the term of the loan is not more than seven years and the first payment 
of the principal is due two years after the date on which the loan was 
given. For loans given for the purchase of animals for feeding 
purposes, the loan is due when the animals have been sold which shall 
not exceed a period of eighteen months. The interest rate for these 
loans is set at the prime rate plus one percentage point.
    At the end of three years after loans are issued, the GONB may give 
20 percent of the loan amount to the farmer in the form of a grant. To 
be eligible for this grant, the farmer must have implemented, in a 
satisfactory manner, the farm plan established at the time the loan was 
taken out. The grant portion of this program was terminated for loans 
issued after July 15, 1992. No grants were provided during the POR and 
the GOC reported that no further grants will be issued under this 
program.
    In Swine Second and Third Review Results (55 FR 20817), the 
Department found this program to be de jure specific, and therefore 
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 this proceeding to 
warrant reconsideration of this finding.
    In accordance with section 771(5)(E)(iii) of the Act, a benefit 
from a loan obtained with a government guarantee shall normally be 
treated as conferred ``if there is a difference, after adjusting for 
any difference in guarantee fees, between the amount the recipient of 
the guarantee pays on the guaranteed loan and the amount the recipient 
would pay for a comparable commercial loan if there were no guarantee 
by the authority.'' While there are no guarantee fees, the recipients 
are paying interest at the prime rate plus one percentage point. In 
Swine Tenth Review Results we found that the predominant lending rates 
in Canada for comparable long-term variable-rate loans are based on the 
prime rate plus a one or two-point spread. Therefore, in accordance 
with the Swine Tenth Review Results methodology, as our benchmark 
during the POR, we used the prime rate as published by the Bank of 
Canada in the Bank of Canada Review Summer (1997) plus one and one-half 
percentage points. This rate represents the simple average of the 
spread above prime charged by commercial banks on comparable loans. 
Comparing the benchmark interest rate to the interest rate charged on 
these loans, we preliminarily determine that the amount the recipient 
paid on these loans is less than the recipient would have paid on a 
comparable commercial loan. We note that because this review is 
conducted on an aggregate basis we are using a national-average short-
term benchmark rather than a company-specific benchmark rate.
    We calculated the benefit from the loan portion of this program as 
follows. For loans outstanding during the POR, either without 
repayments or paid off during the POR, we followed the methodology 
outlined in Swine Tenth Review Results. We determined the amount of the 
benefit attributable to the POR by calculating the difference between 
what the recipient paid during the POR under loans guaranteed by the 
GONB and what the recipient would have paid during the POR under the 
benchmark interest rate. We divided the benefit from all outstanding 
loans and loans paid off during the POR by the total weight of live 
swine produced in New Brunswick during the POR. We then weight-averaged 
the benefit by New Brunswick's share of Canadian exports of market hogs 
to the United States during the POR. On this basis, we preliminarily 
determine the net subsidy from this program to be less than Can$0.0001 
per kilogram.
    f. New Brunswick Swine Industry Financial Restructuring and 
Agricultural Development Act--Swine Assistance Program. The Swine 
Assistance program was established in fiscal year 1981-82, by the Farm 
Adjustment Board, under the Farm Adjustment Act, to provide interest 
subsidies on medium-term loans to hog producers. The program was 
available only to hog producers who entered production or underwent 
expansion after 1979. In 1985, the Farm Adjustment Act changed to the 
Agricultural Development Act. In 1984-85, this program was combined 
with the Swine Industry Financial Restructuring program under the New 
Brunswick Regulation 85-19. At that time, all obligations and 
outstanding loans under the Swine Assistance program were rolled over 
into the Swine Industry Financial Restructuring program.
    The Swine Industry Financial Restructuring program was created by 
the Farm Adjustment Act (OC 85-98) and became effective April 1, 1985. 
Under this program the Government of New Brunswick granted hog 
producers indebted to the Board a rebate of the interest on that 
portion of their total debt (the residual debt) that, on March 31, 
1984, exceeded the ``standard debt

[[Page 23727]]

load.'' The standard debt load is defined in the program's regulations 
as the amount of debt which the farmer, in the opinion of the Board, 
can reasonably be expected to service. The residual debt does not begin 
to accrue interest again until the debt load is no longer 
``excessive.''
    In Swine Second and Third Review Results (55 FR 20816, 20817), the 
Department examined these two programs separately. The Department found 
(1) the Swine Assistance program to be countervailable because loans 
were provided to a specific industry on terms inconsistent with 
commercial considerations, and (2) the New Brunswick Swine Industry 
Financial Restructuring program to be countervailable because it was 
limited to a specific industry and the government's rebate of interest 
and the interest repayment holiday were loan terms inconsistent with 
commercial considerations. No new information or evidence of changed 
circumstances has been submitted in this proceeding to warrant 
reconsideration of these findings.
    In Swine Tenth Review Results, we found that no new loans were 
provided for the past ten years, and that there was no recent activity 
on the outstanding loans. The loans given to producers were ``set 
aside'' in a provincial account and were not accruing any interest. The 
Department found that interest not accruing on the outstanding loan 
balance constituted a benefit to live swine producers. No changes to 
this program were reported in the instant review.
    To calculate the benefit from this program, we multiplied the total 
outstanding debt at the beginning of the POR by the benchmark interest 
rate. We used, as a benchmark interest rate, the prime rate, as 
published by the Bank of Canada in the Bank of Canada Review Summer 
(1997), plus one and one-half percentage points. This rate represents 
the simple average of the commercially available rates for comparable 
loans. (See Swine Tenth Review Results). Next, we divided the benefit 
by the total weight of live swine produced in New Brunswick during the 
POR. We then weight-averaged the benefit by New Brunswick's share of 
Canadian exports of market hogs to the United States during the POR. On 
this basis, we preliminarily determine the benefit to be less than 
Can$0.0001 per kilogram for the POR.

II. Programs Preliminarily Determined Not to Confer Subsidies

A. Research Program under the Canada/Quebec Subsidiary Agreement on 
Agri-Food Development

    The GOC and the GOQ reported that all projects completed under the 
Research program during the POR were made publicly available. Because 
the research results are publicly available, we preliminarily determine 
that the Research program did not confer countervailable subsidies to 
live swine during the POR. (See e.g., Certain Cut-to-Length Carbon 
Steel Plate from Sweden; Preliminary Results of Countervailing Duty 
Administrative Review, 62 FR 51683 (October 3, 1996) and Certain Cut-
to-Length Carbon Steel Plate from Sweden; Final Results of 
Countervailing Duty Administrative Review, 62 FR 16551 (April 7, 1997).

III. Programs Preliminarily Determined to be Not Used

    We also examined the following programs and preliminarily determine 
that the producers and/or exporters of the subject merchandise did not 
apply for or receive benefits under these programs during the POR:
    A. Western Diversification Program
    B. Farm Income Stabilization Insurance
    C. Federal Atlantic Livestock Feed Initiative
    D. Agricultural Products Board Program
    E. Newfoundland Farm Products Corporation Hog Price Support Program
    F. Newfoundland Hog Price Stabilization Program
    G. Newfoundland Weanling Bonus Incentive Policy
    H. Nova Scotia Improve Sire Policy
    I. Ontario Bear Damage to Livestock Compensation Program
    J. Ontario Rabies Indemnification Program
    K. Ontario Swine Sales Assistance Policy

IV. Programs Preliminarily Determined to be Terminated

    We have examined the following programs and preliminarily determine 
they were terminated prior to the beginning of the POR (April 1, 1996), 
and there is no evidence which would indicate that residual benefits 
are being bestowed or that a substitute program has been implemented:
    A. New Brunswick Swine Assistance Policy on Boars
    B. Ontario Export Sales Aid

V. Other Programs Examined

    On November 17, 1997, the GOC and the GOQ requested ``green box'' 
treatment for the Agri-Food Agreement. Under section 771(5B)(F) of the 
Act, domestic support measures provided with respect to the 
agricultural products listed in Annex 1 to the 1994 WTO Agreement on 
Agriculture shall be treated as non-countervailable if the Department 
determines that the measures conform fully with the provisions of Annex 
2 of that same Agreement. The GOQ and the GOC claimed that the Agri-
Food Agreement met these criteria, and therefore, funding under the 
Agri-Food Agreement should be noncountervailable pursuant to section 
771(5B)(F) of the Act.
    The initial Agri-Food Agreement was signed on February 17, 1987 and 
remained in effect from 1987 to 1991. On August 26, 1993, a new Agri-
Food Agreement was enacted by the governments of Canada and Quebec 
covering the period April 1, 1993 through March 31, 1998. Funding for 
this agreement is shared 50/50 by the federal and provincial 
governments. Through this Agreement, grants are made to private 
businesses and academic organizations to fund projects under the 
following program areas:

(1) Research

    The purpose of this program area is to increase and diversify 
scientific and technical expertise, in both the area of industrial 
production and in university-based studies. Specific areas of expertise 
to be covered include: food production, processing, storage and 
marketing.

(2) Technology Innovation

    The purpose of this program area is to speed up the rate of 
adoption and dissemination of technologies and innovation and the 
development of new products. This program operates through awarding 
financial assistance and technical support to groups wishing to carry 
out testing projects or develop new technologies to promote agri-food 
development.

(3) Support for Strategic Alliances

    The purpose of this program area is to stimulate cooperation and 
promote strategic activities intended to improve competitiveness in 
domestic and foreign markets. Funding for projects is made available to 
an ``industry network'' (which includes all stakeholders in an agri-
food industry, from the producer of the raw material to the final 
processor) through an application and approval process.
    The Department has previously examined each of the three components 
under the Agri-Food Agreement (Research, Technology Innovation, and 
Support for Strategic Alliances) as three

[[Page 23728]]

separate programs. See Swine Tenth Review Results. During the POR, 
producers of the subject merchandise received assistance under the 
three component programs of the Agri-Food Agreement for which the GOC 
and the GOQ have requested green box treatment.
    Specifically, with regard to the Research program as discussed 
above in the section II, we have preliminarily determined that this 
program does not confer countervailable benefits because the results of 
the research are publicly available. As such, there is no need to 
address whether it is non-countervailable in the context of section 
771(5B)(F). With regard to the Technology Innovations program and the 
Support for Strategic Alliances program, any benefit to the subject 
merchandise under either program or both programs combined is so small 
(Can$ 0.0000013 and Can$ 0.0000008 per kilogram, respectively) that 
there is no cumulative impact on the overall subsidy rate. Accordingly, 
because there is no impact on the overall subsidy rate in the instant 
review, we have not included the benefits from Technology Innovations 
program and the Support for Strategic Alliances program in the 
calculated subsidy rate for the POR, and do not consider it necessary 
to address the issue of whether benefits under these programs are 
noncountervailable as green box subsidies pursuant to section 
771(5B)(F) of the Act. See, e.g., Final Affirmative Countervailing Duty 
Determination: Steel Wire Rod from Germany, 62 FR 54990, 54995 (October 
22, 1997); Certain Carbon Steel Products from Sweden; Preliminary 
Results of Countervailing Duty Administrative Review 61 FR 64062, 64065 
(December 3, 1996) and Certain Carbon Steel Products from Sweden; Final 
Results of Countervailing Duty Administrative Review 62 FR 16549 (April 
7, 1997); Final Negative Countervailing Duty Determination: Certain 
Laminated Hardwood Trailer Flooring (``LHF'') From Canada 62 FR 5201 
(February 4, 1997); Industrial Phosphoric Acid From Israel; Preliminary 
Results of Countervailing Duty Administrative Review 61 FR 28845 (June 
6, 1996) and Industrial Phosphoric Acid From Israel; Final Results of 
Countervailing Duty Administrative Review 61 FR 53351 (October 11, 
1996).
    In addition, some farmers in Prince Edward Island received payments 
during the POR under the Agricultural Disaster Insurance Program 
(ADIP), which is authorized under section 12(5) of the Farm Income 
Protection Act (FIPA) and a provincial statute. ADIP is a voluntary 
whole farm program under which a farmer may apply for income support 
when his current income margin falls below 70 percent of the average of 
the three previous years. Because ADIP provides income assistance based 
on a ``whole farm'' basis, it is not possible to segregate out benefits 
to individual agricultural products. Furthermore, it is not clear 
whether live swine producers benefitted from this program during the 
POR. The GOC stated that this program was designed to meet the ``green 
box'' criteria under the 1994 WTO Agreement on Agriculture. With regard 
to the ADIP program, any benefit to the subject merchandise under this 
program is so small (Can$ 0.0000081 per kilogram) that there is no 
impact on the overall subsidy rate, even when taking into account the 
assistance provided under the Technology Innovations program and the 
Support for Strategic Alliances program. In other words, when the 
benefits from the Technology Innovations program and the Support for 
Strategic Alliances program and the ADIP program are summed, the 
aggregate benefit from these three programs has no impact on the 
overall subsidy rate. Accordingly, because there is no impact on the 
overall subsidy rate in the instant review, we have not included the 
benefits from ADIP in the calculated subsidy rate for the POR, and do 
not consider it necessary to address the issue of whether benefits 
under this program are countervailable in this review.

Preliminary Results of Review

    We preliminarily determine the total net subsidy on live swine from 
Canada to be Can$0.0041 per kilogram for the period April 1, 1996 
through March 31, 1997. This rate is de minimis. If the final results 
of this review remain the same as these preliminary results, the 
Department intends to instruct Customs to liquidate without regard to 
countervailing duties all shipments of the subject merchandise from 
Canada.
    Because the calculated net subsidy of Can$0.0041 per kilogram is de 
minimis, the cash deposit rate will be zero. Accordingly, for all 
shipments of the subject merchandise from Canada, entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
the final results of this review, the cash deposits of estimated 
countervailing duties will be zero, if the final results remain the 
same as the preliminary results.

Public Comment

    Parties to the proceeding may request disclosure of the calculation 
methodology and interested parties may request a hearing not later than 
30 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 
five 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 two 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 CFR 351.303(f).
    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 CFR 351.309(c)(ii), are due. The Department 
will publish the final results of this administrative review, including 
the results of its analysis of issues raised in any case or rebuttal 
brief or at a hearing.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. section 1675(a)(1)), 19 CFR 
section 351.213.

    Dated: April 23, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-11528 Filed 4-29-98; 8:45 am]
BILLING CODE 3510-DS-P