[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]
BILLING CODE 3510-DS-P