[Federal Register Volume 63, Number 172 (Friday, September 4, 1998)]
[Notices]
[Pages 47235-47238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23929]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-122-404]
Live Swine from Canada; Final Results of Countervailing Duty
Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of countervailing duty administrative
review.
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SUMMARY: On April 30, 1998, the Department of Commerce (``the
Department'') published in the Federal Register its preliminary results
of administrative review of the countervailing duty order on live swine
from Canada for the period April 1, 1996 through March 31, 1997 (63 FR
23723). The Department has now completed this administrative review in
accordance with section 751(a) of the Tariff Act of 1930, as amended.
For information on the net subsidy, please see the Final Results of
Review section of this notice. We will instruct the U.S. Customs
Service (``Customs'') to assess countervailing duties as detailed in
the Final Results of Review section of this notice.
EFFECTIVE DATE: September 4, 1998.
FOR FURTHER INFORMATION CONTACT: Gayle Longest or Lorenza Olivas,
Office of CVD/AD Enforcement VI, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-2786.
SUPPLEMENTARY INFORMATION:
Background
The Department has determined that it is not practicable to conduct
a company-specific review of this order because of the large number of
producers and exporters which requested the review. Therefore, pursuant
to section 777A(e)(2)(B) of the Tariff Act of 1930, as amended, 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.
Since the publication of the preliminary results on April 30, 1998
(63 FR 23723), the following events have occurred. We invited
interested parties to comment on the preliminary results. On June 10,
1998, case briefs were submitted by the Government of Quebec (``GOQ''),
and the National Pork Producers Council (``petitioner''). On June 17,
1998, rebuttal briefs were submitted by the Government of Canada
(``GOC''), GOQ, and the Canadian Pork Council (``CPC''). At the request
of the GOQ, the Department held a public hearing on July 9, 1998.
Applicable Statute
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''). The Department is conducting this administrative review
in accordance with section 751(a) of the Act. In addition, unless
otherwise indicated, all citations to the Department's regulations are
to the regulations codified at 19 CFR Part 351, published in the
Federal Register at 62 FR 27296 (May 19, 1997).
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 Customs purposes. The written
description of the scope remains dispositive.
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
the 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 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, 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 nonrecurring 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. IRS Class Life Asset Depreciation Range System (see Swine Tenth
Review Results), which is a period of three years.
The GOQ submitted a comment on the allocation period. The GOQ
agreed with the Department that the IRS tax tables are appropriate for
allocating nonrecurring grants in this review. However, because better
sources of information may be available in future reviews of this case,
the GOQ argues that the Department should accept suggestions from
interested parties in future reviews regarding more appropriate sources
to calculate the allocation period. In future reviews, the Department
will allow interested parties to submit information and comment on any
other reasonable and practicable approaches for complying with the
Court's ruling with respect to the appropriate allocation period.
Analysis of Programs
Based upon the responses to our questionnaire, and written comments
from the interested parties, we determine the following:
I. Programs Conferring Subsidies
In the preliminary results, we found that the following programs
conferred countervailable benefits on the subject merchandise. We did
not receive any comments on these programs from the interested parties,
and our review of the record has not led us to change any findings or
calculations. Accordingly, the net subsidies for each of these
[[Page 47236]]
programs (less than Can$0.0001 per kilogram, except for the National
Transition Scheme for Hogs Program, which is Can$0.0041 per kilogram),
remain unchanged from the preliminary results.
1. National Transition Scheme for Hogs Program
2. Alberta Crow Benefit Offset Program (ACBOP)
3. Ontario Livestock and Poultry and Honeybee Compensation Program
4. Saskatchewan Livestock Investment Tax Credit
5. Saskatchewan Livestock Facilities Tax Credit
6. New Brunswick Livestock Incentives Program
7. New Brunswick Swine Industry Financial Restructuring and
Agricultural Development Act--Swine Assistance Program
II. Programs Found Not To Confer Subsidies
In the preliminary results, we found the following program did not
confer subsidies during the POR. Our analysis of the comments submitted
by the interested parties, summarized below, has not led us to change
our findings from the preliminary results.
1. Research Program under the Canada/Quebec Subsidiary Agreement on
Agri-Food Development
III. Programs Found To Be Not Used
In the preliminary results, we found that the producers and/or
exporters of the subject merchandise did not apply for or receive
benefits under the following programs:
1. Western Diversification Program
2. Farm Income Stabilization Insurance
3. Federal Atlantic Livestock Feed Initiative
4. Agricultural Products Board Program
5. Newfoundland Farm Products Corporation Hog Price Support Program
6. Newfoundland Hog Price Stabilization Program
7. Newfoundland Weanling Bonus Incentive Policy
8. Nova Scotia Improve Sire Policy
9. Ontario Bear Damage to Livestock Compensation Program
10. Ontario Rabies Indemnification Program
11. Ontario Swine Sales Assistance Policy
We did not receive any comments on these programs from the
interested parties, and our review of the record has not led us to
change our findings from the preliminary results.
IV. Programs Found To Be Terminated
In the preliminary results, we found the following programs to be
terminated and that no residual benefits were being provided. Our
analysis of the comments submitted by the interested parties,
summarized below, has not led us to change our findings from the
preliminary results.
1. New Brunswick Swine Assistance Policy on Boars
2. 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 noncountervailable 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, (2) Technology Innovations, and
(3) Support for Strategic Alliances.
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 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, we have
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) of the Act. 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. 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, the Support for Strategic Alliances program and
the
[[Page 47237]]
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.
Analysis of Comments
Comment 1: Treatment of the Ontario Export Sales Aid Program--
Termination
According to the petitioners, the Ontario Export Sales Aid Program
should not be treated as a terminated program. The petitioners cite
section 355.50(b)(2) of the Department's 1989 Proposed Regulations and
claim that it is the Department's practice not to recognize a subsidy
program as terminated unless there is an official law, decree, or
regulation that has been enacted that terminates the program. (See
Notice of Proposed Rulemaking and Request for Public Comment, May 31,
1989). In addition, the petitioners cite various cases and assert that
the Department has only treated programs as terminated when the
respondent has presented evidence of the termination with official
documentation and, if possible, when the Department has verified that
the program was actually terminated.
The petitioners contend that with respect to the Ontario Export
Sales Aid program, the evidence on the record does not meet the
standard for this program to be treated as a terminated program.
According to petitioners, the only document on the record pertaining to
this program, the ``Background Document'' issued by the Ontario
Ministry of Economic Development, Trade and Tourism, is insufficient to
support the conclusion that the Export Sales Aid program is terminated
for purposes of this review, because this document only establishes
that the program is being eliminated and does not reflect the official
legal status of the program.
The petitioners further argue that the Department's treatment of
the Ontario Export Sales Aid program is not consistent with its
treatment of the Farm Products Board Hog Price Stabilization Program
which has a similar status but the Department treated as not used. The
petitioners maintain that the Government of the Province of
Newfoundland submitted a budget document issued by the Newfoundland
Ministry of Finance that clearly shows that subsidies under the Hog
Price Stabilization Program had been ``eliminated'' and that this
documentation is of a similar nature to the documentation presented
with regard to the Ontario program. Therefore, to be consistent with
the record evidence and with other findings in this review, the
petitioners argue that the Department should revise its finding with
respect to the Ontario Export Sales Aid program and find the program to
be not used in these final results.
In rebuttal, the GOQ and the CPC argue that the Department's
determination that the Ontario Export Sales Aid program was terminated
is correct. The GOQ asserts that the petitioners have not cited any
facts to dispute the Department's finding that the program was
terminated. Moreover, the CPC claims that the documentation on the
record provided by the Government of Ontario supports the decision and
cites Live Swine from Canada; Preliminary Results of Administrative
Review, 62 FR 47460 (September 9, 1997) and Live Swine from Canada;
Final Results of Administrative Review, 63 FR 2204 (January 14, 1998)
(Swine Eleventh Review Results) in which the Department made a
determination that the Hog Price Stabilization program was terminated
based on an announcement from the Government of Prince Edward Island's
Department of Agriculture. The CPC also cites Swine Tenth Review
Results in which the Department found the Livestock and Beeyard Damage
Compensation Program terminated based on the Government of Alberta's
submission of a memorandum from the program's administrator regarding
the program's termination. The CPC asserts that the petitioners did not
contest either of these determinations.
Furthermore, the CPC argues that these examples show that the
Department has never articulated a blanket rule requiring an official
law, decree or regulation before finding a program terminated. The CPC
argues that when a provincial program is of a limited size and involves
a limited number of users, the termination of the program may be
carried out administratively without the passage of a separate law. In
these cases, the CPC argues, if the Department were to require an
official law, these programs, which are terminated and providing no
benefits, would be reinvestigated year after year because their
termination had been accomplished by means other than an official law.
The GOQ and the CPC contend that the result would be a burden on the
Department to continue investigating terminated programs that were
providing no benefits. Therefore, the GOQ and the CPC assert, that the
Department's preliminary findings that the Ontario Export Sales Aid
program is terminated is correct and should be maintained in these
final results.
Department's Position: The Department's practice is to treat a
program as terminated when the respondent presents satisfactory
documentation to demonstrate that the program is terminated and not
merely suspended. See e.g., Final Affirmative Countervailing Duty
Determination: Certain Pasta from Turkey, 61 FR 30366, 30370 (June 14,
1996); Certain Iron-Metal Castings from India; Final Results of
Administrative Review, 60 FR 44843, 44844 (August 29, 1995). In this
instance, the GOC submitted official documentation from the Ontario
Ministry of Economic Development demonstrating that the Export Sales
Aid program has terminated as a consequence of a provincial-wide
initiative to eliminate certain forms of direct monetary assistance to
Ontario businesses. Because this official report was prepared by the
authority responsible for administering the subsidy program, we are
satisfied that the Export Sales Aid program was terminated on March 31,
1996 and not merely suspended. Therefore, our determination that the
Ontario Export Sales Aid program is terminated remains unchanged in
these final results.
In the case of Newfoundland's Farm Products Board Hog Price
Stabilization program, there were no exports of the subject merchandise
from Newfoundland during the POR. Therefore, we did not find it
necessary to make a finding regarding the termination of this program
during the POR.
Comment 2: Green Box Claim
The petitioners assert that, although the Department did not
address the countervailability of two components of the Agri-Food
Agreement and the Agricultural Disaster Insurance Program (ADIP), these
programs are providing potentially countervailable benefits to live
swine producers. The petitioners contend that because these benefits
could increase in the future, the Department should treat the ADIP
program and these Agri-Food programs as not used to preserve the
Department's ability to address the countervailability of these
programs should the level of benefits increase in subsequent reviews.
Department's Position: The Department's practice is to treat
programs under which producers of the subject merchandise receive no
[[Page 47238]]
assistance during the POR as not used. (See Swine Eleventh Review
Results). During this POR, producers of live swine received benefits
under the Technology Innovations and Support for Strategic Alliances
programs under the Canada/Quebec Subsidiary Agreement on Agri-Food
Development and the ADIP program. Therefore, treating these programs as
``not used'' would be inconsistent with our longstanding practice. We
note, however, that we will continue to examine these programs in
future reviews.
Comment 3: The Countervailability of Benefits under the Research
Program Under the Canada/Quebec Subsidiary Agreement on Agri-Food
Development
The petitioners assert that the Department should not rely upon the
public availability test as the basis for finding that the Research
program under the Canada/Quebec Subsidiary Agreement on Agri-Food
Development (``Research program'') is noncountervailable. The
petitioners point out that under the URAA, the countervailability of
research subsidies are analyzed under the ``green light'' provision,
and thus, the public availability test is outdated.
The petitioners further argue that during this proceeding neither
the GOC nor the GOQ has shown that the projects carried out under the
Research program satisfy the criteria for noncountervailability. The
petitioners contend that the public availability test is no longer
sufficient to avoid a finding of noncountervailablity for research
subsidies. Therefore, the petitioners argue that the Research program
can only satisfy the test for noncountervailability if it meets all of
the statutory green light criteria.
In rebuttal, the GOC and CPC contend that the petitioners'
arguments that the Research program should be examined under the green
light provisions are untimely. The GOC maintains that the Department's
policy since 1995, which is applied in this review, requires a
submission of ``green'' claims much sooner than the case brief stage.
The GOC and CPC contend that the questionnaire in the instant review
instructed respondents to make green light or green box claims within
two weeks. Moreover, the GOC and the CPC argue that petitioners had
ample time to make this claim which is extraordinarily untimely at the
case brief stage. The GOC cites several cases in which the Department
rejected allegations that were not raised until the case briefs. The
GOC and the CPC assert that the Department is not required to address
petitioners' green light claim at this late stage in the preceding.
The GOC also contends that even if the petitioners' green light
claim was timely, petitioners' arguments reflect analytical errors. In
rebuttal to petitioners' claim that the public availability test is
outmoded, the GOC, GOQ, and the CPC argue that the public availability
test is still U.S. law and administrative practice. The GOC and GOQ
maintain that there is nothing in the WTO agreements or U.S.
implementing legislation that repeals the Department's practice of
using the public availability test or preempts its application and
cites several cases in which the Department has applied the public
availability test under post-WTO cases. Although the Department's
proposed regulations omit the prior proposed regulation on public
availability, the GOC and the GOQ argue that no final regulations have
been issued that actually change the policy.
Furthermore, the GOQ maintains that the Department has found the
Research program noncountervailable in eight previous administrative
reviews and should no longer examine this program in future reviews.
The GOQ argues that in the Delverde case, the Department's practice not
to initiate investigations on programs previously found not to be
countervailable was affirmed, citing Delverde v. United States, No. 96-
08-01997, Slip Op. at 10 (CIT December 1, 1997). As an example of the
Department's practice, the GOQ cites the investigation in Fresh,
Chilled, and Frozen Pork from Canada, in which the Department did not
initiate on several programs previously found not to be countervailable
in an administrative review on live swine from Canada. (See Initiation
of the Countervailing Duty Investigation; Fresh, Chilled, and Frozen
Pork from Canada, 54 FR 5537 (February 3, 1989)). In addition, the GOC,
GOQ, and the CPC argue that the petitioner has provided no new
information or evidence of changed circumstances requiring the
Department to reconsider its analysis of the Research program during
the POR. Therefore, the GOC, GOQ, and CPC assert that the Department
should maintain its determination that the Research program is
noncountervailable in these final results.
Department's Position: We disagree with the petitioners that we
must analyze the Research program under the green light provisions.
Unless parties make a timely green light claim, the Department does not
examine whether a program meets the green light criteria for
noncountervailability. Absent such a claim, we followed our standard
practice for determining whether this program was countervailable. (See
Swine Eleventh Review Results, 62 FR 47460 at 47469 (September 9,
1997)).
However, we disagree with the GOQ's assertion that the Research
program does not warrant reexamination in future reviews. The
Department's current practice with regard to research and development
programs is that research results must be publicly available with no
restrictions. The standard contracts under the Research program contain
a patent clause authorizing non-disclosure of research results with
commercial value. As we explained in Swine Eleventh Review Results, the
ability to restrict disclosure of research results requires a
determination on the public availability of research results until
projects are completed. (See 63 FR 2204, at 2207 (January 14, 1998)).
Accordingly, we will continue to examine the Research program in future
reviews.
Final Results of Review
For the period April 1, 1996 through March 31, 1997, we determine
the net subsidy for live swine from Canada to be Can$0.0041 per
kilogram. This rate is de minimis.
We will instruct Customs to liquidate without regard to
countervailing duties all shipments of the subject merchandise from
Canada exported on or after April 1, 1996, and on or before March 31,
1997. The Department will also instruct Customs to waive cash deposits
on all shipments of live swine from Canada entered, or withdrawn from
warehouse, for consumption on or after the date of publication of the
final results of this review.
This notice serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR Sec. 355.34(d). Timely written
notification of return/destruction of APO materials or conversion to
judicial protective order is hereby requested. Failure to comply with
the regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are issued and published in
accordance with section 751(a)(1) and 777(i)(1) of the Act (19 U.S.C.
1675(a)(1)).
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-23929 Filed 9-3-98; 8:45 am]
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