[Federal Register Volume 64, Number 90 (Tuesday, May 11, 1999)]
[Notices]
[Pages 25277-25288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11887]


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DEPARTMENT OF COMMERCE

INTERNATIONAL TRADE ADMINISTRATION
[C-122-834]


Preliminary Negative Countervailing Duty Determination; Live 
Cattle From Canada

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

EFFECTIVE DATE: May 11, 1999.

FOR FURTHER INFORMATION CONTACT: Zak Smith, Stephanie Hoffman, James 
Breeden, or Melani Miller Office I, AD/CVD Enforcement, Import 
Administration, U.S. Department of Commerce, Room 3099, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
0189, (202) 482-4198, (202)

[[Page 25278]]

482-1174, or (202) 482-0116, respectively.

Preliminary Determination

    The Department of Commerce preliminarily determines that 
countervailable subsidies are not being provided to producers and 
exporters of live cattle in Canada.

Petitioner

    The petition in this investigation was filed on November 12, 1998, 
by the Ranchers-Cattlemen Action Legal Foundation (R-Calf, referred to 
hereafter as the ``petitioner'').

Case History

    Since the publication of the notice of initiation in the Federal 
Register (see Initiation of Countervailing Duty Investigation of Live 
Cattle From Canada, 63 FR 71889 (December 30, 1998) (``Notice of 
Initiation'')), the following events have occurred. On January 28, 
1999, we issued a countervailing duty questionnaire to the Government 
of Canada (``GOC''). In our questionnaire, we indicated that we would 
be limiting our investigation to the four largest cattle producing 
provinces in Canada: Alberta, Manitoba, Ontario, and Saskatchewan. 
Thus, we have not investigated provincial or federal/provincial 
programs that are not related to the above four provinces. 
Specifically, we have not included in our investigation the following 
programs included in our Notice of Initiation: the British Colombia 
Livestock Feeder Loan Guarantee Program, the Quebec Farm Financing Act, 
the Technology Innovation Program Under the Agri-Food Agreement, and 
the Quebec Farm Income Stabilization Insurance Program (FISI).
    On January 27, 1999, we postponed the preliminary determination of 
this investigation until May 3, 1999 (see Postponement of Preliminary 
Countervailing Duty Determination: Live Cattle From Canada, 64 FR 4073) 
on the basis that it was extraordinarily complicated.
    We received a response to our initial questionnaire from the GOC, 
which included responses from the provincial governments of Alberta 
(``the GOA''), Manitoba (``the GOM''), Ontario (``the GOO''), and 
Saskatchewan (``the GOS''), on March 24 and April 8, 1999. On March 24, 
1999, the petitioner filed an indirect subsidy allegation regarding 
silage production. However, there was insufficient evidence to support 
its claim; therefore, we are not investigating that allegation. On 
April 7 and 13, 1999, we issued supplemental questionnaires to the GOC 
and received responses to the supplemental questionnaires on April 16 
and 22, 1999.

Scope of Investigation

    For purposes of this investigation, the product covered is all live 
cattle except imports of dairy cows for the production of milk for 
human consumption and purebred cattle specially imported for breeding 
purposes and other cattle specially imported for breeding purposes.
    The merchandise subject to this investigation is currently 
classifiable under subheading 0102.90.40 of the Harmonized Tariff 
Schedule of the United States (``HTSUS''), with the exception of 
0102.90.40.72 and 0102.90.40.74. Although the HTSUS subheadings are 
provided for convenience and customs purposes, the Department's written 
description of the scope of this proceeding is dispositive.

The 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 of Commerce's (``the Department's'') regulations are 
to the current regulations as codified at 19 CFR Part 351 (April 1998). 
Although Subpart E of 19 CFR Part 351, published on Novemer 25, 1998 
(63 FR 65348) does not apply to this investigation, Subpart E 
represents the Department's interpretation of the requirements of the 
Act. See 19 CFR 351.702(b).

Injury Test

    Because Canada is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, the International Trade 
Commission (``ITC'') is required to determine whether imports of the 
subject merchandise from Canada materially injure, or threaten material 
injury to, a U.S. industry. On January 25, 1999, the ITC published its 
preliminary determination finding that there is a reasonable indication 
that an industry in the United States is being materially injured, or 
threatened with material injury, by reason of imports from Canada of 
the subject merchandise (ee 64 FR 3716).

Period of Investigation

    The period for which we are measuring subsidies (``the POI'') is 
the GOC's fiscal year, April 1, 1997, through March 31, 1998.

Subsidies Valuation Information

Allocation Period

    We have used three years as the allocation period in this 
investigation. Based on information provided by the petitioner, three 
years is the average useful life (``AUL'') of productive assets for the 
Canadian cattle industry. Parties are not contesting this AUL.

Subsidy Rate Calculation

    Due to the extremely large number of cattle producers in Canada, we 
have collected subsidy information on an industry-wide or ``aggregate'' 
basis (i.e., the total amount of benefits provided under a particular 
program). Moreover, as noted above, we have limited our investigation 
to the four largest cattle producing provinces in Canada. Therefore, 
unless otherwise noted, for each program preliminarily found to be 
countervailable, we have calculated the ad valorem subsidy rate by 
dividing the total amount of the benefit attributed to cattle producers 
in the four relevant provinces during the POI by the total sales of all 
cattle in the same four provinces.

Benchmarks for Long-Term Loans and Discount Rates

    To calculate the countervailable benefit from loans and 
nonrecurring grants, we have used a previously verified benchmark 
interest rate charged by Canadian commercial banks on loans made to the 
farming sector. This rate is equal to the prime rate plus one and one-
half percentage points. See Live Swine From Canada; Preliminary Results 
of Countervailing Duty Administrative Review, 63 FR 23723, 23726 (April 
30, 1998). Accordingly, we have used the average prime rates based on 
the figures published by the Bank of Canada plus one and one-half 
percentage points.

Loan Guarantee Programs

    For certain loan guarantee programs that we have preliminarily 
found to be countervailable, the respondents were unable to provide the 
specific loan information required to perform a precise calculation of 
the countervailable benefit attributable to cattle producers during the 
POI. Their inability to provide the data arose because of the nature of 
the underlying loan instrument (i.e., lines of credit which had no 
predetermined time frame for the disbursal of principal or set 
repayment schedule), the extremely large number of loans provided, and 
the large number of transactions (withdrawals and payments) conducted 
pursuant to those loans. Therefore, for

[[Page 25279]]

these programs, we have estimated the countervailable benefit by 
calculating the difference between the interest actually paid in the 
POI and the interest that would have been paid for a commercial loan 
absent a guarantee. See Extruded Rubber Thread From Malaysia: Final 
Affirmative Countervailing Duty Determination and Countervailing Duty 
Order, 57 FR 38472 (August 25, 1992). In effect, we are applying our 
short-term loan methodology to these long-term loan instruments. This 
approach does not yield a precise measure of the benefit because the 
loan instruments being examined are effectively lines of credit with 
balances and interest rates varying from month-to-month. Nonetheless, 
we believe this methodology is reasonable under the circumstances 
presented by this investigation.
    Also, the respondents reported various fees they paid in connection 
with the guaranteed loans. However, the information they presented with 
respect to fees payable on commercial loans was unclear. So, as to 
avoid a comparison of nominal benchmark rates with effective interest 
rates on the government-guaranteed loans, we have generally not 
included the fees in calculating the amounts paid under the government-
guaranteed loans. Consequently, we are comparing nominal rates to 
nominal rates. The one exception to this is the fee specifically paid 
to FIMCLA for the guarantee, which is an allowable offset under section 
771(6)(A) of the Act. We intend to seek further information on the fees 
that would be paid on commercial loans for our final determination.

I. Programs Preliminarily Determined To Be Countervailable

Loan and Loan Guarantee Programs

A. Farm Improvement and Marketing Cooperative Loans Act (``FIMCLA'')
    FIMCLA provides federal government guarantees on loans extended by 
private commercial banks and other lending institutions to farmers 
across Canada. Created in 1987, the purpose of this program is to 
increase the availability of loans for the improvement and development 
of farms and the marketing, processing and distribution of farm 
products by cooperative associations. Persons engaged in farming 
operations are eligible for a FIMCLA guarantee if the loan is for one 
of the following activities: purchase or repair of tools, purchase or 
repair of machinery, purchase of livestock, alteration or improvement 
of machinery, erection or construction of fencing or works for 
drainage, construction or alteration of any building or structure on a 
farm, or the purchase of additional land. FIMCLA guarantees payment to 
the lender of up to 95 percent of any loss on a loan made under a 
FIMCLA loan guarantee. The maximum amount of money that an individual 
can borrow under this program is C$250,000. For marketing cooperatives, 
the maximum amount is C$3,000,000. The GOC reported that beef and hog 
farmers, which are categorized as one group by the FIMCLA 
administration, received approximately 25 to 30 percent of all 
guarantees between 1994 and 1998, while other users such as poultry, 
fruit and vegetables, and dairy producers received less than ten 
percent of the guarantees.
    A loan guarantee is a financial contribution, as described in 
section 771(5)(D)(i) of the Act, which provides a benefit to the 
recipients equal to the difference between the amount the recipients of 
the guarantee pay on the guaranteed loans, after adjusting for 
guarantee fees, and the amount the recipients would pay for a 
comparable commercial loan absent the guarantee. Because the beef and 
pork industries received a disproportionate share of benefits between 
1994 and 1998, we preliminarily determine that the program is specific 
under section 771(5A)(D)(iii) of the Act. Therefore, we preliminarily 
determine that these loan guarantees are countervailable subsidies, to 
the extent that they lower the cost of borrowing, within the meaning of 
section 771(5) of the Act.
    In its questionnaire response, the GOC provided a sample of loans 
guaranteed under the program for beef and hog producers throughout 
Canada. Because of the large number of loans reported, we agree with 
the GOC's argument that this sample yields an accurate reflection of 
all loans provided to beef and hog producers that receive FIMCLA 
guarantees.
    To calculate the subsidy conferred by this program, we used our 
long-term fixed-rate or variable-rate loan methodology (depending on 
the terms of the reported loans) to compute the total benefit on the 
sampled loans. We then calculated the subsidy per dollar loaned to beef 
and hog producers. This ratio was multiplied by the total value of 
guaranteed loans outstanding to beef and hog producers in the POI to 
arrive at the total subsidy. We then divided the total subsidy 
attributable to the POI by Canada's total sales of live cattle during 
the POI. On this basis, we preliminarily determine the total benefit 
from this program to be 0.05 percent ad valorem. Ideally, the 
denominator used to calculate the total benefit from this program would 
include Canadian hog sales, but the GOC did not provide the necessary 
sales data.
B. Alberta Feeder Associations Guarantee Program
    The Alberta Feeder Associations Guarantee Act was established in 
1938 to encourage banks to lend to cattle producers. The program is 
administered by the Alberta Department of Agriculture, Food and Rural 
Development. Under this program, up to 15 percent of the principal 
amount of commercial loans taken out by feeder associations for the 
acquisition of cattle is guaranteed. Eligibility for the guarantees is 
limited to feeder associations located in Alberta. Sixty-two 
associations received guarantees on loans which were outstanding during 
the POI.
    A loan guarantee is a financial contribution, as described in 
section 771(5)(D)(i) of the Act, which provides a benefit to the 
recipients equal to the difference between the amount the recipients of 
the guarantee pay on the guaranteed loans and the amount the recipients 
would pay for a comparable commercial loan absent the guarantee. 
Because eligibility is limited to feeder associations, we preliminarily 
determine that the program is specific under section 771(5A)(D)(i) of 
the Act. Therefore, we preliminarily determine that these loan 
guarantees are countervailable subsidies, to the extent that they lower 
the cost of borrowing, within the meaning of section 771(5) of the Act.
    To calculate the subsidy conferred by the loan guarantees we 
applied our short-term loan methodology and compared the amount of 
interest actually paid during the POI by the associations to the amount 
that would have been paid at the benchmark rate, as described in the 
Subsidies Valuation Information section, above. We then divided the 
associations' interest savings by the investigated provinces' total 
sales of live cattle during the POI. On this basis, we preliminarily 
determine the total benefit from this program to be 0.04 percent ad 
valorem.
C. Manitoba Cattle Feeder Associations Loan Guarantee Program
    The Manitoba Cattle Feeder Associations Loan Guarantee Program was 
established in 1991 to assist in the diversification of Manitoba farm 
operations. The program is currently administered by the Manitoba 
Agricultural Credit Corporation (``MACC''). The provincial government, 
through MACC, guarantees 25 percent of the principal amount of loans 
for the

[[Page 25280]]

acquisition of livestock by feeder associations. Eligibility for the 
guarantees is limited to feeder associations located in Manitoba. 
Associations must be incorporated under the Cooperatives Act of 
Manitoba, have a minimum of fifteen members, an elected board of 
directors, and a registered brand for use on association cattle. Ten 
associations received guarantees on loans which were outstanding during 
the POI.
    A loan guarantee is a financial contribution, as described in 
section 771(5)(D)(i) of the Act, which provides a benefit to the 
recipients equal to the difference between the amount the recipients of 
the guarantee pay on the guaranteed loans and the amount the recipients 
would pay for a comparable commercial loan absent the guarantee. 
Because eligibility is limited to feeder associations, we preliminarily 
determine that the program is specific under section 771(5A)(D)(i) of 
the Act. Therefore, we preliminarily determine that these loan 
guarantees are countervailable subsidies, to the extent that they lower 
the cost of borrowing, within the meaning of section 771(5) of the Act.
    To calculate the subsidy conferred by the loan guarantees, we 
applied our short-term loan methodology and compared the amount of 
interest actually paid during the POI by the associations to the amount 
that would have been paid at the benchmark rate, as described in the 
Subsidies Valuation Information section, above. We then divided the 
associations' interest savings by the investigated provinces' total 
sales of live cattle during the POI. On this basis, we preliminarily 
determine the total benefit from this program to be less than 0.01 
percent ad valorem.
D. Ontario Feeder Cattle Loan Guarantee Program
    The Ontario Feeder Cattle Loan Program was established in 1990 to 
assist cattle producers. The program is administered by the Ontario 
Ministry of Agriculture, Food and Rural Affairs (``OMAFRA''). OMAFRA 
provides a start-up grant of $10,000 to new feeder associations and a 
25 percent government guarantee on loans to associations for the 
purchase and sale of cattle. Eligibility for the guarantees is limited 
to feeder associations which have at least twenty individuals who own 
or rent land in Ontario and are not members of other feeder 
associations. Eighteen associations received guarantees on loans which 
were outstanding during the POI.
    Loan guarantees and grants are financial contributions, as 
described in section 771(5)(D)(i) of the Act. Loan guarantees provide a 
benefit to the recipients equal to the difference between the amount 
the recipients of the guarantee pay on the guaranteed loans and the 
amount the recipients would pay for a comparable commercial loan absent 
the guarantee. In the case of grants, the benefit to recipients is the 
amount of the grant. Because eligibility for the loan guarantees and 
grants under this program is limited to feeder associations, we 
preliminarily determine that the program is specific under section 
771(5A)(D)(i) of the Act. Therefore, we preliminarily determine that 
these loan guarantees and grants are countervailable subsidies within 
the meaning of section 771(5) of the Act.
    To calculate the subsidy conferred by the loan guarantees, we 
applied our short-term loan methodology and compared the amount of 
interest actually paid during the POI by the associations to the amount 
that would have been paid at the benchmark rate, as described in the 
Subsidies Valuation Information section, above. We then divided the 
associations' interest savings by the investigated provinces' total 
sales during the POI. On this basis, we preliminarily determine the 
total benefit from this program to be 0.01 percent ad valorem.
    Additionally, we preliminary determine that the grants provided 
under this program are non-recurring because the recipients could not 
expect to receive them on an on-going basis. However, because the 
subsidy was below 0.50 percent of the investigated provinces' sales in 
the year of receipt in each of the relevant years, we expensed the 
benefit from the grants. For the POI, we divided the grants received 
during the POI by the investigated provinces' total sales of live 
cattle during the POI. On this basis we preliminarily determine the 
countervailable subsidy to be less than 0.01 percent ad valorem.
    To calculate the total benefit to cattle producers under this 
program, we summed the benefit calculated for the loan guarantees and 
grants. On this basis, we preliminarily determine the total benefit 
from this program to be 0.01 percent ad valorem.
E. Saskatchewan Feeder Associations Loan Guarantee Program
    The Saskatchewan Feeder Associations Loan Guarantee Program was 
established in 1984 to facilitate the establishment of cattle feeder 
associations in order to promote cattle feeding in Saskatchewan. The 
program is administered by the Livestock and Veterinary Operations 
Branch of the Saskatchewan Agriculture and Food Department. This agency 
provides a government guarantee for 25 percent of the principal amount 
on loans to feeder associations for the purchase of feeder heifers and 
steers. Eligibility for the guarantees is limited to feeder 
associations with at least twenty members over the age of eighteen, who 
are not active in other feeder associations. One hundred and sixteen 
associations received guarantees on loans which were outstanding during 
the POI.
    A loan guarantee is a financial contribution, as described in 
section 771(5)(D)(i) of the Act, which provides a benefit to the 
recipients equal to the difference between the amount the recipients of 
the guarantee pay on the guaranteed loans and the amount the recipients 
would pay for a comparable commercial loan absent the guarantee. 
Because eligibility for the guarantees is limited to feeder 
associations, we preliminarily determine that the program is specific 
under section 771(5A)(D)(i) of the Act. Therefore, we preliminarily 
determine that these loan guarantees are countervailable subsidies, to 
the extent that they lower the cost of borrowing, within the meaning of 
section 771(5) of the Act.
    To calculate the subsidy conferred by the loan guarantees, we 
applied our short-term loan methodology and compared the amount of 
interest actually paid during the POI by the associations to the amount 
that would have been paid at the benchmark rate, as described in the 
Subsidies Valuation Information section, above. We then divided the 
associations' interest savings by the investigated provinces' total 
sales during the POI. On this basis, we preliminarily determine the 
total benefit from this program to be 0.01 percent ad valorem.
F. Saskatchewan Breeder Associations Loan Guarantee Program
    The Saskatchewan Breeder Associations Loan Guarantee Program was 
established in 1991 to facilitate the establishment of cattle breeder 
associations, in an effort to promote cattle breeding in Saskatchewan. 
The program is administered by the Livestock and Veterinary Operations 
Branch of the Saskatchewan Agriculture and Food Department. This agency 
provides a guarantee on 25 percent of the principal amount of loans to 
breeder associations for the purchase of certain breeding cattle. 
Eligibility is limited to breeder associations which consist of at 
least twenty individuals who are residents of Saskatchewan and over the

[[Page 25281]]

age of eighteen. One hundred and seven associations received guarantees 
on loans which were outstanding during the POI.
    A loan guarantee is a financial contribution, as described in 
section 771(5)(D)(i) of the Act, which provides a benefit to the 
recipients equal to the difference between the amount the recipients of 
the guarantee pay on the guaranteed loans and the amount the recipients 
would pay for a comparable commercial loan absent the guarantee. 
Because eligibility is limited to feeder associations, we preliminarily 
determine that the program is specific under section 771(5A)(D)(i) of 
the Act. Therefore, we preliminarily determine that these loan 
guarantees are countervailable subsidies, to the extent that they lower 
the cost of borrowing, within the meaning of section 771(5) of the Act.
    To calculate the subsidy conferred by the loan guarantees, we 
applied our short-term loan methodology and compared the amount of 
interest actually paid during the POI by the associations to the amount 
that would have been paid at the benchmark rate, as described in the 
Subsidies Valuation Information section, above. We then divided the 
associations' interest savings by the investigated provinces' total 
sales during the POI. On this basis, we preliminarily determine the 
total benefit from this program to be 0.01 percent ad valorem.

Provision of Goods or Services

G. Prairie Farm Rehabilitation Community Pasture Program
    The Prairie Farm Rehabilitation Administration (``PFRA'') was 
created in the 1930s to rehabilitate drought and soil drifting areas in 
the Provinces of Manitoba, Saskatchewan, and Alberta. The PFRA 
established the Community Pasture Program to facilitate improved land 
use through its rehabilitation, conservation, and management. The goal 
of the common Pasture Program is to utilize the resource primarily for 
the summer grazing of cattle to encourage long-term production of high 
quality cattle. In pursuit of its objectives, the PFRA operates 87 
separate pastures encompassing approximately 2.2 million acres. At 
these pastures, the PFRA offers grazing privileges and optional 
breeding services for fees as established by PFRA. The fees are based 
upon recovery of the costs associated with the grazing and breeding 
services.
    The provision of a good or service is a financial contribution as 
described in section 771(5)(D)(iii) of the Act. To determine whether a 
benefit is conferred in the provision of the service, it is necessary 
to examine whether the provider receives adequate remuneration. 
According to section 771(5)(E) of the Act, the adequacy of remuneration 
with respect to a government's provision of a good or service ``* * * 
shall be determined in relation to prevailing market conditions for the 
good or service being provided or the goods being purchased in the 
country which is subject to the investigation or review. Prevailing 
market conditions include price, quality, availability, marketability, 
transportation, and other conditions of purchase or sale.'' Therefore, 
to judge the adequacy of remuneration we compared the prices charged 
for public pasture services to those charged by private providers. 
Based on this comparison, we preliminarily determine that the price for 
private pastures is higher than the price for public pastures. The GOC 
has argued that lower prices for public pasture services should be 
expected because the quality of services offered is lower. In 
particular, cattle in public pastures are commingled, while farmers 
prefer to graze cattle in an exclusive environment. We have not 
considered making adjustments for differences in the types of services 
offered at public and private pastures because the GOC was unable to 
quantify them.
    Because use of Community Pastures is limited to Canadian farmers 
involved in grazing livestock, we preliminarily determine that the 
program is specific under section 771(5A)(D)(i) of the Act. Therefore, 
we preliminarily determine that the provision of public pasture 
services is a countervailable subsidy within the meaning of section 
771(5) of the Act.
    To measure the benefit, we calculated the difference between the 
price for public pasture service and the price for privately provided 
pasture. This difference was multiplied by the total number of cow/calf 
pairs serviced by the PFRA during the POI. We treated the resulting 
amount as a recurring benefit and divided it by the investigated 
provinces' total sales during the POI. On this basis, we determine the 
countervailable subsidy to be 0.04 percent ad valorem.
H. Alberta Crown Lands Basic Grazing Program
    Over time, Alberta has developed a system for granting grazing 
rights on public land. Grazing rights began to be issued on public 
lands in the early 1930s. Today, through Alberta Agriculture and 
Municipal Affairs, over 10.5 million acres of land are managed by the 
GOA including a grazing component of approximately two million animal 
unit months (``AUM's''). AUMs are defined as the amount of forage 
required to feed one animal for one month while maintaining the 
vegetative state of the land in good condition.
    Leases for grazing rights range from one to twenty year terms, but, 
in practice, all leases are renewed if the lessee is in good standing. 
Alberta's Public Lands Act dictates how rental prices will be set. 
Specifically, section 107 states that annual rent will be equal to a 
percentage of the forage value of the leased land. When determining the 
forage value of the land, the administering authority is required to 
consider the grazing capacity of the land, the average gain in weight 
of cattle on grass, and the average price per pound of cattle sold in 
the principal livestock markets in Alberta during the preceding year. 
Beyond paying the lease fee, lessees are also required to construct and 
maintain capital improvements necessary for livestock and must comply 
with all multiple-use and conservation restrictions imposed by the 
government on the land. Lastly, lessees must pay school and municipal 
taxes charged on the land being leased.
    The provision of a good or service is a financial contribution as 
described in section 771(5)(D)(iii) of the Act. As discussed above in 
connection with the PFRA, a benefit is conferred in the provision of a 
good or service when the prices charged for government-provided goods 
or services are less than the prices charged by private suppliers. In 
the case of the Alberta Crown Lands Basic Grazing Program, a simple 
comparison of the fees charged would not be appropriate because the 
grazing rights being offered by the GOA differ from those offered by 
private suppliers. In this regard, the GOA has provided certain 
quantifiable adjustments. Specifically, we adjusted the private price 
downward by deducting costs for the construction and maintenance of 
fences and water improvements, and the cost of paying property taxes. 
Although the GOA argued that there were other differences that should 
be taken into account for such things as multiple-use and conservation 
requirements, we have not considered making adjustments for such costs 
because the GOA was unable to quantify them. Comparing the public 
grazing lease to the adjusted private lease price, we preliminarily 
determine that the price for private leases is higher than the price 
for a public grazing lease. This provides a benefit to the recipients 
equal to the difference between the amount the recipients pay for the 
good

[[Page 25282]]

and the amount the recipients would pay for a comparable good.
    Because the use of the Alberta Crown Lands Basic Grazing Program is 
limited to people grazing livestock, we preliminarily determine that 
the program is specific under section 771(5A)(D)(i) of the Act. 
Therefore, we preliminarily determine that the provision of public 
grazing rights is a countervailable subsidy within the meaning of 
section 771(5) of the Act.
    To measure the benefit, we calculated the difference between the 
price per AUM for a public grazing lease and the adjusted price per AUM 
for a private grazing lease. We multiplied this difference by the total 
AUMs provided through Alberta's grazing programs. We treated the 
resulting amount as a recurring benefit and divided it by the 
investigated provinces' total sales during the POI. On this basis, we 
determine the countervailable subsidy to be 0.18 percent ad valorem.
I. Manitoba Crown Lands Program
    Agricultural Crown land is managed by Manitoba Agriculture Crown 
Lands (``MACL'') whose primary objective is to administer the 
disposition of Crown lands and to improve the lands' productivity. 
Crown agricultural land is made available to farmers through 
cultivation and grazing leases. Lease holders are required to pay an 
amount-in-lieu of municipal taxes as well as to construct and maintain 
fences and watering facilities. Also, the public has access to Crown 
lands at all times without prior permission of the lessee for such 
activities as wildlife hunting, forestry, winter sports, hiking, and 
berry picking. During the POI, MACL administered 1.6 million acres of 
grazing leases accounting for 707,699 AUMs.
    Leases for grazing dispositions range from one to fifty year terms. 
MACL sets rental rates each year by multiplying the number of AUMs the 
leased land is capable of producing in an average year by an annual AUM 
rental rate. The AUM rental rate is based on recovering the 
administrative costs for the program using the previous year's actual 
costs.
    The provision of a good or service is a financial contribution as 
described in section 771(5)(D)(iii) of the Act. As discussed above in 
connection with the PFRA, a benefit is conferred in the provision of a 
good or service when the prices charged for government-provided goods 
or services are less than the prices charged by private suppliers. In 
the case of the Manitoba Crown Lands Program, a simple comparison of 
the fees charged would not be appropriate because the grazing rights 
being offered by the GOM differ from those offered by private 
suppliers. In this regard, the GOM has provided certain quantifiable 
adjustments. Specifically, we adjusted the private price downward by 
deducting costs for the construction and maintenance of fences and 
watering facilities and the cost of paying an amount-in-lieu of 
municipal taxes. Although the GOM argued that there were other 
differences that should be taken into account for such things as 
multiple-use requirements and the isolated nature of Manitoba's Crown 
lands, we have not considered making the adjustments for such costs 
because the GOM was unable to quantify them. Comparing the public 
grazing lease to the adjusted private lease price, we preliminarily 
determine that the price for private leases is higher than the price 
for a public grazing lease.
    Because use of the Manitoba Crown Lands Program is limited to 
people involved in grazing livestock, we preliminarily determine that 
the program is specific under section 771(5A)(D)(i) of the Act. 
Therefore, we preliminarily determine that the provision of public 
grazing rights is a countervailable subsidy within the meaning of 
section 771(5) of the Act.
    To measure the benefit, we calculated the difference between the 
price per AUM for a public grazing lease and the adjusted price per AUM 
for a private grazing lease. We multiplied this difference by the total 
AUM provided by MACL. We treated the resulting amount as a recurring 
benefit and divided it by the investigated provinces' total sales 
during the POI. On this basis, we determine the countervailable subsidy 
to be 0.01 percent ad valorem.
J. Saskatchewan Pasture Program
    The Saskatchewan Pasture Program has been in place since 1922. It 
is designed to provide supplemental grazing to Saskatchewan livestock 
producers and maintain grazing and other fragile lands in permanent 
cover to promote soil stability. Saskatchewan Agriculture and Food 
(``SAF'') operates 56 provincial community pastures encompassing 
804,000 acres. Through these pastures, the SAF offers grazing, 
breeding, and health services for fees as established by SAF. Fees are 
based upon recovery of the costs associated with the grazing and 
breeding services of each pasture.
    The provision of a good or service is a financial contribution as 
described in section 771(5)(D)(iii) of the Act. As discussed above in 
connection with the PFRA, a benefit is conferred in the provision of a 
good or service when the prices charged for government-provided goods 
or services are less than the prices charged by private suppliers. 
Based on a comparison of these prices, we preliminarily determine that 
the price for private pastures is higher than the price for public 
pastures. The GOS has argued that lower prices for public pasture 
services should be expected because the quality of services offered is 
lower. In particular, cattle in public pastures are commingled, while 
farmers prefer to graze cattle in an exclusive environment. We have not 
considered making adjustments for differences in the types of services 
offered at public and private pastures because the GOS was unable to 
quantify them.
    Because use of the Saskatchewan Pasture Program is limited to 
Canadian farmers involved in grazing livestock, we preliminarily 
determine that the program is specific under section 771(5A)(D)(i) of 
the Act. Therefore, we preliminarily determine that the provision of 
public pasture services is a countervailable subsidy within the meaning 
of section 771(5) of the Act.
    To measure the benefit, we calculated the difference between the 
price for public pasture service and the price for privately provided 
pasture. This difference was multiplied by the total number of AUM 
provided by SAF during the POI. We treated the resulting amount as a 
recurring benefit and divided it by the investigated provinces' total 
sales during the POI. On this basis, we determine the countervailable 
subsidy to be 0.01 percent ad valorem.

Other Programs

K. Northern Ontario Heritage Fund Corporation Agriculture Assistance
    The Northern Ontario Heritage Fund Corporation (``NOHFC'') was 
established in 1988 as a Crown corporation for the purpose of promoting 
and stimulating economic development in northern Ontario. NOHFC focuses 
on funding infrastructure improvements and development opportunities in 
northern Ontario. Assistance for these projects is available through 
forgivable performance loans, incentive term loans, and loan 
guarantees. With respect to agricultural projects, all assistance 
provided by NOHFC is in the form of forgivable performance loans. The 
types of agricultural projects funded include capital projects, 
marketing projects and research and development projects. Fifty percent 
of capital project costs may be eligible for funding, up to a maximum 
of C$2.5 million. For marketing projects, fifty percent of the project 
costs may receive funding, up to a maximum of C$500,000. For research 
and development projects, 75 percent of

[[Page 25283]]

the project costs may receive funding, up to a maximum of C$500,000. 
The loans made available to these projects are normally forgiven over 
two to three years. The extent of debt forgiveness is dependent upon 
the project meeting its target of increasing the value of farm 
production by an amount equal to the NOHFC contribution. We do not 
currently have information on the record as to whether the terms of the 
loans provide a potential countervailable benefit. However, prior to 
the issuing of our final determination, we plan on gathering such 
information.
    Debt forgiveness is a financial contribution as described in 
section 771(5)(D)(i) of the Act, which provides a benefit to the 
recipients equal to the amount of the debt forgiven. Because benefits 
under this program are only available in northern Ontario, we 
preliminarily determine that the program is regionally specific under 
section 771(5A)(D)(iv) of the Act. Therefore, we preliminarily 
determine that this debt forgiveness is countervailable within the 
meaning of section 771(5) of the Act.
    We further preliminarily determine that this debt forgiveness is 
non-recurring because the recipients could not expect to receive it on 
an ongoing basis. However, because the benefit to cattle producers in 
Ontario was below 0.50 percent of the investigated provinces' sales in 
the year of receipt in each of the relevant years, we expensed the debt 
forgiveness in the year received. To calculate the benefit for the POI, 
we divided the total amount of the forgiven debt by the investigated 
provinces' total sales during the POI. On this basis, we preliminarily 
determine the countervailable subsidy to be 0.01 percent ad valorem.
L. Ontario Livestock, Poultry, and Honeybee Protection Act
    This program, which is administered by the Ontario Ministry of 
Agriculture, Food and Rural Affairs, provides compensation, inter alia, 
to livestock producers whose animals are injured or killed by wolves or 
coyotes. Producers apply for, and receive, compensation through the 
local municipal government. The Ontario Ministry of Agriculture, Food 
and Rural Affairs reimburses the municipality. Grants for damage to 
live cattle cannot exceed C$1,000 per head. Although the Ministry of 
Agriculture does not track the proportion of benefits under this 
program going to dairy cattle or beef cattle producers, the GOO has 
reported that beef cattle producers are believed to derive the majority 
of the benefits from the program.
    A grant is a financial contribution as described in section 
771(5)(D)(i) of the Act, which provides a benefit to recipients in the 
amount of the grant. Because this program is limited by law to 
livestock producers, poultry farmers, and beekeepers, we preliminarily 
determine that the program is specific under section 771(5A)(D)(i) of 
the Act. Therefore, we preliminarily determine that these grants are 
countervailable within the meaning of section 771(5) of the Act.
    We treated the grants received as a recurring benefit because 
livestock producers can expect to receive the grants every year. To 
calculate the benefit, we divided the total amount of grants received 
by the investigated provinces' total sales of live cattle during the 
POI. On this basis, we determine the countervailable subsidy to be 0.01 
percent ad valorem.
M. Ontario Rabies Indemnification Program
    This program is administered by the Farm Assistance Branch of the 
Ontario Ministry of Agriculture, Food and Rural Affairs. It is designed 
to encourage farmers to report cases of rabies in livestock by 
compensating livestock producers for damage caused by rabies. Farmers 
may receive grants up to a maximum of C$1,000 per head of cattle under 
this program of which 60 percent is funded by the GOO and 40 percent by 
the GOC.
    A grant is a financial contribution as described in section 
771(5)(D)(i) of the Act which provides a benefit to recipients in the 
amount of the grant. Because the legislation administering this program 
expressly makes it available only to livestock producers, we 
preliminarily determine that the program is specific under section 
771(5A)(D)(i) of the Act. Therefore, we preliminarily determine that 
these grants are countervailable within the meaning of section 771(5) 
of the Act.
    We treated the grants received as a recurring benefit because 
farmers can expect to receive the grants every year. To calculate the 
benefit, we divided the total amount of grants received by the 
investigated provinces' total sales of live cattle during the POI. On 
this basis, we determine the countervailable subsidy to be less than 
0.01 percent ad valorem.
N. Saskatchewan Livestock and Horticultural Facilities Incentives 
Program
    The purpose of this program is to promote the diversification of 
the rural economy by encouraging investment in livestock and 
horticultural facilities. This program allows for an annual rebate of 
education and health taxes paid on building materials and stationary 
equipment used in livestock operations as well as greenhouses, and 
vegetable and raw fruit storage facilities.
    A tax benefit is a financial contribution as described in section 
771(5)(D)(ii) of the Act which provides a benefit to the recipient in 
the amount of the tax savings. Because the legislation administering 
this program expressly makes it available only to the livestock and 
horticulture industries, we preliminarily determine that the program is 
specific under section 771(5A)(D)(i) of the Act. Therefore, we 
preliminarily determine that this tax benefit is countervailable within 
the meaning of section 771(5) of the Act.
    In calculating the benefit, we treated the tax savings as a 
recurring benefit and divided the tax savings received by the 
investigated provinces' total sales during the POI. On this basis, we 
preliminarily determine the countervailable subsidy to be less than 
0.01 percent ad valorem.

II. Programs Preliminarily Determined To Be Not Countervailable

A. Canadian Wheat Board

    The Canadian Wheat Board (``CWB'') has the exclusive authority to 
market Canadian wheat and barley in export markets and when sold for 
human consumption in Canada. The petitioner alleged that the CWB 
pooling system and its control over exports of feed barley send 
distorted market signals to Canadian farmers with the result that 
exports of feed barley are less than they otherwise would be and, 
consequently, that prices in Canada are artificially low. Although 
there is not an explicit export restriction as was the case in Certain 
Softwood Lumber Products from Canada, 57 FR 22570, 22605 (1992) 
(``Lumber'') and Leather from Argentina, 55 FR 40212 (1990) 
(``Leather''), in the petitioner's view, the CWB's actions have the 
same result as the export restrictions which the Department found 
countervailable in those cases.
    The CWB operates four separate annual pool accounts for the four 
types of grains it markets. At the start of a pool year (August), the 
CWB issues initial prices that it will pay for the various grades and 
grains. Barley farmers look at that initial payment and the projected 
pool return and determine whether they want to sell their barley 
domestically or offer it to the CWB for export. The amount of barley 
offered to the CWB is solely the farmer's decision, although this 
decision could be influenced by the CWB's published initial price. The 
CWB accepted all

[[Page 25284]]

barley offered to it for export during the POI.
    The petitioner has alleged that the CWB's actions have resulted in 
significant price differentials for feed barley in the Canadian and 
U.S. markets, and that the U.S. price reflects what the price would be 
in Canada but for the CWB's control of exports. In making our price 
comparisons, we reviewed the record evidence with respect to domestic 
prices of feed barley (specifically, grade Number 1 CW Feed) in Canada, 
the prices paid by the CWB to Canadian barley farmers, the prices 
received by the CWB for feed barley exported to the United States, and 
feed barley prices in the United States (U.S. Number 2 feed). To 
calculate a Canadian domestic price, we took a simple average of all 
Canadian ``Off-Board'' prices on the record for the four provinces 
under investigation (information is not currently on the record to 
calculate a weighted average price based upon barley production in each 
of the four provinces). The U.S. domestic price we examined is based on 
quotes from Great Falls, Montana (the only U.S. domestic price series 
currently on the record and the U.S. pricing point used in several 
economic studies of U.S. and Canadian feed barley prices cited or 
provided in the record). All prices were quoted at an elevator or 
feedlot and did not include any elevation or handling charges. 
Therefore, we did not make any adjustments to the reported prices. We 
observed that the price differential between the U.S. and Canadian 
markets was insignificant during the POI. In fact, the Canadian 
domestic price was actually higher in portions of the POI and after the 
POI. Therefore, we preliminarily determine that, assuming arguendo that 
the CWB controlled exports, it did not thereby provide a benefit to 
Canadian producers of live cattle during the POI.
    Notwithstanding the above analysis, we note that the Canadian 
domestic feed barley market was especially strong during the POI. 
Because we do not have pricing data on previous years, we cannot 
determine whether the POI provides a reliable basis upon which to 
conduct our analysis. Therefore, prior to our final determination, we 
intend to seek more information on historical pricing in the Canadian 
domestic market, CWB export prices to the United States and U.S. 
domestic prices. Furthermore, we intend to do a more extensive analysis 
of how actions of the CWB may affect market prices in Canada. The fact 
that there was no significant differential between export and domestic 
prices in the POI does not necessarily support the conclusion that the 
actions of the CWB have not resulted in domestic feed barley prices 
being lower than they otherwise would be.
    We note that in a submission dated April 29, 1999, the petitioner 
has objected to the use of export prices to the United States reported 
by the CWB. We have determined that these prices can be used for our 
preliminary determination, but we intend to verify these reported 
amounts and the underlying data, and may request more detailed data.

B. Net Income Stabilization Account

    The Net Income Stabilization Account (``NISA'') is designed to 
stabilize an individual farm's overall financial performance through a 
voluntary savings plan. Participants enroll all eligible commodities 
grown on the farm. Farmers may then deposit a portion of their net 
sales of eligible NISA commodities (up to three percent of net eligible 
sales) into individual savings accounts, receive matching government 
deposits (matching funds come from both the federal and provincial 
governments), and make additional, non-matchable deposits (up to 20 
percent of net sales).
    NISA provides stabilization assistance on a ``whole farm'' basis. A 
producer can withdraw funds from a NISA account under a stabilization 
or minimum income trigger. The stabilization trigger permits withdrawal 
when the gross profit margin from the entire farming operation falls 
below an historical average, based on the previous five years. If poor 
market performance of some products is offset by increased revenues 
from others, no withdrawal is triggered. The minimum income trigger 
permits the producer to withdraw the amount by which income from the 
farm falls short of a specific minimum income level.
    In Live Swine From Canada; Final Results of Changed Circumstances 
Countervailing Duty Administrative Review, and Partial Revocation, 61 
FR 45402 (August 29, 1996), we found that NISA is not de jure specific. 
Moreover, for hog producers, we found that NISA was not de facto 
specific. Therefore, the issue in this investigation is whether NISA is 
de facto specific with respect to cattle producers.
    To make our determination, we have examined whether cattle 
producers are dominant users of the program, or whether cattle 
producers receive disproportionately large benefits under the program. 
We found no evidence that cattle producers are dominant users or 
receive disproportionate benefits from the NISA program. Specifically, 
the GOC provided information on farmer withdrawals of NISA funds during 
the POI and the two preceding years. Because NISA does not collect or 
maintain information concerning withdrawals on a commodity-by-commodity 
basis, the GOC reported farmer withdrawals by categorizing farms by the 
source of the majority of their revenues. That is, a farm with over 
fifty percent of its revenues from cattle sales was classified as a 
cattle farm. On this basis the GOC reported that, during the POI, 
cattle farms accounted for 7.7 percent by value of total withdrawals 
from NISA.
    The petitioner also raised a concern that NISA may be regionally 
specific because cattle in certain provinces are not covered under the 
program. However, we preliminarily determine that NISA is not limited 
to a particular region. While several provinces choose not to 
participate in NISA for particular commodities, the provinces and 
producers of the commodity do so at their own choice, not because the 
program is limited to an enterprise or industry located in a particular 
region.
    Based on the above analysis, we preliminarily determine that NISA 
assistance is not limited to a specific enterprise or industry, or 
group of enterprises or industries. Therefore, we preliminarily 
determine that assistance received by cattle producers under the NISA 
program is not countervailable.
    Prior to the initiation of our investigation, the GOC announced a 
government initiative to aid farmers over the coming years. Information 
on the proposed aid indicated that it may be administered by the same 
body that administers NISA. Therefore, when investigating NISA, we 
asked whether this new aid would constitute a change in the NISA 
program. The GOC responded that the new program, Agriculture Income 
Disaster Assistance, would be separate from NISA and NISA's 
administration. Therefore, because the program is unrelated to NISA and 
no funds were distributed in the POI, we are not able to make a 
determination as to whether aid provided through this program 
constitutes a countervailable subsidy.

C. Alberta Public Grazing Lands Improvement Program

    Established in 1970 and terminated in 1995, this program provided a 
partial credit toward the payment of rent on a public grazing land 
disposition if the lessee undertook certain pre-approved capital range 
improvement projects. The leaseholder was required to pay for all the 
costs incurred for these capital

[[Page 25285]]

improvements, and was reimbursed for 25 to 50 percent of these costs 
through credits on the rental fees otherwise due annually. All 
improvements belong to the government and, once the improvements are 
created, the lessee is required to maintain them at his or her own 
expense.
    In order for a financial contribution to exist under this program, 
the GOA must forego rental fees, or a portion thereof, that are 
otherwise due as described in section 771(5)(D)(ii) of the Act. 
However, in this case the reduction in the rental fees corresponds to 
range improvements on behalf of the government. Furthermore, the 
increased value of the land as a result of the improvements is captured 
upon the next setting of rental fees. Based on the above analysis, we 
preliminarily determine that this program does not provide a financial 
contribution and, therefore, we preliminarily determine that the 
program is not countervailable.

D. Saskatchewan Crown Land Improvement Policy

    The Crown Land Improvement Policy is designed to provide rental 
adjustments when Crown land lease holders make capital improvements to 
the land, such as clearing, bush removal, or breaking and reseeding. In 
return for the lessee's funding of these improvements, Saskatchewan 
Agriculture and Food (``SAF'') agrees not to increase the rental rate 
for a certain period of time, depending on the length of the 
improvement project or may reduce the basis for rent. SAF is willing to 
reduce the rental rate or freeze the rate because during the 
improvement project the actual stocking rate of the land is lower than 
the potential, the improvements do not result in an immediate increase 
in the productive value of the land, and any improvements belong to the 
Crown.
    In order for a financial contribution to exist under this program 
the GOS must forego rental fees, or a portion thereof, that are 
otherwise due as described in section 771(5)(D)(ii) of the Act. 
However, in this case the reduction in the rental fees corresponds to a 
reduction in the land's carrying capacity while improvements are 
undertaken. The increased value of the land as a result of the 
improvements is captured upon the next setting of rental fees. Based on 
the above analysis, we preliminarily determine that this program does 
not provide a financial contribution and, therefore, we preliminarily 
determine that the program is not countervailable.

Provision of Goods or Services

E. Alberta Grazing Reserve Program

    Like the federal government's PFRA Community Pasture Program, 
Alberta developed community pastures (reserves) on which multiple 
ranchers' herds can graze. Traditionally, government employees 
supervised and managed the animals on the reserves and maintained and 
built range infrastructure. Grazing reserves also provided multiple-use 
opportunities to other users. As of April 1, 1999, the GOA no longer 
performs management activities on 32 of its 37 grazing reserves 
covering 897,920 acres of public land due to a privatization 
initiative. Under the privatization initiative, livestock management 
responsibilities were shifted to grazing associations and new 
negotiated fees have been established. However, during the POI, the 
government operated 20 reserves, accounting for 180,117 AUMs. The 17 
remaining reserves were privately operated and accounted for 149,950 
AUMs.
    Priority in issuing permits for the public reserves is given to 
residents who operate a ranch or farm. The Minister of Lands and 
Forests establishes the amount to be paid for stock grazing on each 
pasture. The GOA reported that the grazing revenues obtained from this 
program exceed the cost of the grazing aspects of the program and cover 
many of the multiple-use functions of the land.
    The provision of a good or service is a financial contribution as 
described in section 771(5)(D)(iii) of the Act. As discussed above in 
connection with the PFRA, a benefit is conferred in the provision of a 
good or service when the prices charged for government-provided goods 
or services are less than the prices charged by private suppliers. In 
the case of the Alberta Grazing Reserve Program, we preliminarily 
determine that the government is charging more than the private 
providers of the same services. Specifically, the fees charged by the 
private grazing associations to its members were lower than those 
charged by the government. Based on the above, we preliminarily 
determine that the government is receiving adequate remuneration for 
its provision of grazing services and, thus, no countervailable subsidy 
exists.
    On a final note, the questionnaire response provided information on 
the costs faced by the private grazing associations. One element of 
these costs is a fee paid to the government for use of the land. We 
have examined whether this fee is in accordance with prevailing market 
conditions for grazing leases in Alberta. We preliminarily find that 
this fee is comparable to the adjusted private grazing lease price as 
discussed in the Alberta Crown Lands Basic Grazing Program, above. 
Therefore, we preliminarily determine that the government is being 
adequately remunerated for its provision of grazing land to grazing 
associations and, thus, no countervailable subsidy exists.
F. Saskatchewan Crown Lands Program
    Agricultural Crown land is managed by Saskatchewan Agriculture and 
Food and is made available to all Saskatchewan agricultural producers 
for lease. Activities carried out on the land include: grazing, 
cultivation, community pastures, petroleum and gas leases, and sand, 
gravel, and quarry leases. Leases for grazing dispositions range from 
one to 33 year terms. As of 1997, SAF sets rental rates using a formula 
which takes account of the average price of cattle marketed over a 
period in the previous year, the average pounds of beef produced from 
one AUM, the AUM productivity rating of the land in question, reduced 
stocking expectations, and a fair return for the use of the land and 
resources. Lessees are responsible for paying taxes, developing and 
maintaining water facilities and fences, and providing for public 
access to the land.
    The provision of a good or service is a financial contribution as 
described in section 771(5)(D)(iii) of the Act. As discussed above in 
connection with the PFRA, a benefit is conferred in the provision of a 
good or service when the prices charged for government-provided goods 
or services are less than the prices charged by private suppliers. In 
the case of the Saskatchewan Crown Lands Grazing Program, a simple 
comparison of the fees charged would not be appropriate because the 
grazing rights being offered by the GOS differ from those offered by 
private suppliers. In this regard, the GOS has provided certain 
quantifiable adjustments. Specifically, we adjusted the private price 
downward by deducting costs for the construction and maintenance of 
fences and water improvements, and the cost of paying property taxes. 
Although the GOS argued that there were other differences that should 
be taken into account for such things as multiple-use requirements, we 
have not considered making adjustments for such costs because the GOS 
was unable to quantify them. Comparing the public grazing lease to the 
adjusted private lease price, we preliminarily determine that the price 
for private leases is lower than the price for a public grazing lease. 
Therefore, we preliminarily determine

[[Page 25286]]

that the government is adequately remunerated for its provision of 
grazing land and, thus, no countervailable subsidy exists.
G. Manitoba Tripartite Cattle Stabilization Program/Industry 
Development Transition Fund
    The petitioner alleged that when the Manitoba Tripartite Cattle 
Stabilization Plan was terminated, the cow/calf and feeder cattle plans 
had surplus funds which allegedly resulted in premium refunds to 
producers.
    In its response, the GOC stated that the producer refunds came 
solely from producer contributions and did not include government 
money. Moreover, the refund occurred in 1994, prior to the three-year 
AUL. Therefore, we preliminarily determine that producers did not 
receive a countervailable benefit during the POI.
    With respect to the second part of this allegation, the Industry 
Development Transition Fund, the correct name for this program is the 
Beef Industry Development Fund and the Department declined to initiate 
on this program. See Notice of Initiation at 63 FR 71889, 71891.

Green Box Programs

    The GOC has requested ``green box'' treatment for three programs 
which we are examining in this investigation: the Canada-Alberta Beef 
Industry Development Fund (``CABIDF''), the Feed Freight Assistance 
Adjustment Fund (``FFAF''), and the Saskatchewan Beef Development Fund 
(``SBDF''). 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 GOC claimed that these programs meet these criteria and, therefore, 
funding for each program should be noncountervailable pursuant to 
section 771(5B)(F) of the Act. The claims made relating to CABIDF and 
SBDF are discussed in more detail below. Because the FFAF was not used 
during the POI, we do not reach the issue of green box treatment for 
FFAF. See the Programs Preliminarily Determined To Be Not Used section, 
below.
H. Canada-Alberta Beef Industry Development Fund
    This fund, which was established by the GOC and the GOA in April 
1997, supports research, development, and related activities connected 
to the beef industry in Alberta. It is administered by the Alberta 
Department of Agriculture, Food, and Rural Development and run by the 
Alberta Cattle Commission and the Alberta Agricultural Research 
Institute. Applicants first submit a pre-proposal application, which is 
evaluated by the Beef Industry Development Committee (``BIDC''), a 
panel consisting of five voting industry representatives and two non-
voting government advisors. Projects are evaluated on the basis of the 
project's relationship to the Funds's research priorities, its 
scientific merits, and the usefulness of the project results to the 
beef industry, directly or indirectly. The Fund's research priorities 
include projects that will improve regional beef production 
efficiencies, enhance the ability to sustain beef production in 
Alberta, and increase the intellectual resources available to Alberta 
beef producers at educational institutions. Applicants for projects 
chosen by the Committee are then asked to submit a more detailed 
proposal, which is evaluated for technical merit by a scientific 
committee consisting of industry experts and scientists. The scientific 
committee makes its recommendations to the BIDC which, in turn, further 
evaluates the proposals based on the objectives listed above and either 
approves or rejects the proposal.
    In order to determine whether CABIDF qualifies for green box 
treatment under section 771(5B)(F) of the Act, we examined whether 
CABIDF met the criteria specified in the Act and further detailed in 
the Department's regulations. A more detailed discussion of the 
Department's analysis of this issue can be found in the Department's 
Memorandum to Richard Moreland: ``Green Box Claims Made by the 
Government of Canada,'' dated May 3, 1999, which is on file in the 
Central Records Unit.
    According to the Act and the Department's regulations, we will 
treat as noncountervailable domestic support measures relating to 
agricultural products that conform to the criteria of Annex 2 of the 
WTO Agriculture Agreement. The Department's regulations further state 
that we will determine that a particular domestic support measure 
conforms fully to the green box criteria in the Agreement if we find 
that the measure (1) is provided through a publicly-funded program 
(including government revenue forgone) not involving transfers from 
consumers; (2) does not have the effect of providing price support to 
producers; and (3) meets the relevant policy-specific criteria and 
conditions laid out in Annex 2 of the Agreement.
    With regard to the first criterion, the GOC has stated that the 
program in question meets the requirement set forth. In the original 
and supplemental questionnaire responses, the GOC showed that all 
monies used to fund this program came directly from the government, 
whether on a provincial or on a federal level. Although the program's 
authorizing legislation allows for contributions to the Fund to come 
from producers, producer organizations, or other parties, the GOC 
reconfirmed with the Department that no funds were received from any 
entity other than federal and provincial governments during the POI. 
Those funds went directly to CABIDF applicants. No transfers from 
consumers were involved.
    As for the second criterion, according to the questionnaire 
response, none of the projects that have been approved by CABIDF have 
the effect of providing price support to producers.
    Finally, with regard to the last criterion, the policy-specific 
criteria that must be met are those which are listed under paragraph 2, 
Annex 2 of the Agriculture Agreement, which focuses on policies which 
involve expenditures in relation to programs which provide services or 
benefits to the agriculture or rural community. This includes sub-
paragraph (a), which covers projects for research, including general 
research, research in connection with environmental programs, and 
research programs relating to particular products. According to its 
authorizing statute, the purpose of CABIDF is to ``provide financial 
contributions in the form of grants to enhance research and industry 
development activities with the objective of promoting and enhancing 
the competitiveness of the beef industry in Alberta.'' Twenty-nine 
projects have been approved for CABIDF funds since the program's 
creation in April 1997. Although the program's legislation allows for 
approval of other types of projects covered under paragraph 2 (i.e., 
marketing and promotion, extension and advisory services, and 
training), the projects that have been approved by CABIDF to date have 
been related to scientific research activities relating to the beef 
industry and the agriculture industry in general. All of the approved 
projects have consisted of grants, not revenue forgone, and none have 
been paid directly to producers or processors.
    Based on the above analysis, we preliminarily find that CABIDF is 
eligible for green box treatment under section 771(5B)(F) of the Act, 
and, thus, is not countervailable. However, if an

[[Page 25287]]

order is issued, and an administrative review requested, and any of 
these facts are different, we will re-examine the green box status of 
this program.
I. Saskatchewan Beef Development Fund
    SBDF, which is administered by the Agriculture Research Branch of 
the Saskatchewan Ministry of Agriculture and Food, supports the 
development and diversification of Saskatchewan's beef industry through 
the funding of various projects related to production research, 
technology transfer, and development and promotion of new products. The 
ministry-appointed, producer-run governing board, the Saskatchewan Beef 
Development Board, meets once a year to review and approve project 
proposals that it deems to be of general benefit to the cattle and beef 
industries. Priority is given to public research institutions 
conducting research, development, and promotion activities that will be 
generally available to the industry.
    As was mentioned above, the GOC has requested green box treatment 
for this program. In order to determine whether SBDF qualifies for 
green box treatment under section 771(5B)(F) of the Act, we examined 
whether the SBDF met the criteria specified in the Act and further laid 
out in the Department's regulations. A more detailed discussion of the 
Department's analysis of this issue can be found in the Department's 
Memorandum to Richard Moreland: ``Green Box Claims Made by the 
Government of Canada,'' dated May 3, 1999, which is on file in the 
Central Records Unit.
    As noted above, we will treat as noncountervailable domestic 
support measures relating to certain agricultural products that conform 
to the criteria of Annex 2 of the WTO Agriculture Agreement. Under the 
Department's regulations, a particular domestic support measure 
conforms fully to the green box criteria in the Agreement if we find 
that the measure (1) is provided through a publicly-funded program 
(including government revenue forgone) not involving transfers from 
consumers; (2) does not have the effect of providing price support to 
producers; and (3) meets the relevant policy-specific criteria and 
conditions laid out in Annex 2 of the Agreement.
    With regard to the first criterion, the GOC has stated that this 
program meets the necessary requirements. In the original and 
supplemental questionnaire responses, the GOC indicated that all monies 
used to fund this program came directly from the government, whether on 
a provincial or on a federal level. Those funds went directly to SBDF 
applicants. No transfers from consumers were involved.
    As for the second criterion, according to the questionnaire 
responses, none of the projects that have been approved by SBDF have 
the effect of providing price support to producers.
    Finally, with regard to the last criterion, the policy-specific 
criteria that must be met are those which are listed under paragraph 2, 
Annex 2 of the Agriculture Agreement. This includes the criteria set 
forth in sub-paragraphs (a), (c), (d), and (f) of paragraph 2, which 
focus on programs relating to research, training services, extension 
and advisory services, and marketing and promotion services. The 
regulations governing SBDF state that the purpose of the fund is to 
provide for the enhancement of the Saskatchewan beef and beef cattle 
industry through research, development, and promotional activities that 
the board considers to be in the best interests of the industry. The 
vast majority of projects that have been approved by SBDF to date have 
been related to scientific research activities relating to the beef 
industry and the agriculture industry in general. Programs related to 
training services, marketing and promotion service, and extension and 
advisory services were also considered and approved. All of these 
approved projects have consisted of grants, not revenue forgone, and 
none have been paid directly to producers or processors.
    Based on the above analysis, we preliminarily find that SBDF is 
eligible for green box treatment under section 771(5B)(F) of the Act 
and, thus, is not countervailable. However, if an order is issued, and 
an administrative review requested, and any of these facts are 
different, we will re-examine the green box status of this program.

III. Programs Preliminarily Determined To Be Not Used

    Based upon the information provided in the responses, we determine 
that the producers of the subject merchandise under investigation did 
not apply for or receive benefits under the following programs during 
the POI.

A. Feed Freight Assistance Adjustment Fund

    Of the four responding provinces in this investigation, only one, 
Ontario, participated in the Feed Freight Assistance Adjustment Fund 
program. Specifically, in the year prior to the POI, the first year of 
the FFAF, a grant was provided to Ontario producers. However, because 
the benefit was below 0.50 percent of the investigated provinces' total 
sales, we expensed this grant in the year received. Thus, cattle 
producers received no benefit during the POI from grants received prior 
to the POI. During the POI, the respondents reported that Ontario did 
not receive benefits under FFAF. Therefore, we preliminarily determine 
that the FFAF program was not used during the POI.

B. Canadian Adaptation and Rural Development (CARDS) Program in 
Saskatchewan

C. Western Diversification Program

IV. Programs Preliminarily Determined To Be Terminated

A. Ontario Export Sales Aid Program

V. Other Programs Reviewed

    The GOC demonstrated that, for the following programs, any benefit 
to the subject merchandise would be so small that there would be no 
impact on the overall subsidy rate, regardless of a determination of 
countervailability. In light of this, we do not consider it necessary 
to determine whether benefits conferred under these programs to the 
subject merchandise are countervailable.

A. Ontario Bear Damage to Livestock Compensation Program

B. Ontario Livestock Programs for Purebred Dairy Cattle, Beef, and 
Sheep Sales Assistance Policy/Swine Assistance Policy

C. Ontario Artificial Insemination of Livestock Act

Verification

    In accordance with section 782(i) of the Act, we will verify the 
information submitted by the respondent prior to making our final 
determination.

Summary

    The total estimated preliminary net countervailable subsidy rate 
for all producers or exporters of live cattle in Canada is 0.38 percent 
ad valorem, which is de minimis. Therefore, we preliminarily determine 
that countervailable subsidies are not being provided to producers, or 
exporters of live cattle in Canada.

ITC Notification

    In accordance with section 703(f) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all nonprivileged and nonproprietary information relating to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files, provided the ITC 
confirms that it will

[[Page 25288]]

not disclose such information, either publicly or under an 
administrative protective order, without the written consent of the 
Assistant Secretary, Import Administration.
    If our final determination is affirmative, the ITC will make its 
final determination within 75 days after the Department makes its final 
determination.

Public Comment

    In accordance with 19 CFR 351.310, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
this preliminary determination. The hearing is tentatively scheduled to 
be held 62 days from the date of publication of this notice in the 
Federal Register at the U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230. Individuals who wish 
to request a hearing must submit a written request within 30 days of 
the publication of this notice in the Federal Register to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, 14th Street and Constitution Avenue, N.W., Washington, DC 20230. 
Parties should confirm by telephone the time, date, and place of the 
hearing 48 hours before the scheduled time.
    Requests for a public hearing should contain: (1) The party's name, 
address, and telephone number; (2) the number of participants; and, (3) 
to the extent practicable, an identification of the arguments to be 
raised at the hearing. In addition, six copies of the business 
proprietary version and six copies of the nonproprietary version of the 
case briefs must be submitted to the Assistant Secretary no later than 
50 days from the date of publication of the preliminary determination. 
As part of the case brief, parties are encouraged to provide a summary 
of the arguments not to exceed five pages and a table of statutes, 
regulations, and cases cited. Six copies of the business proprietary 
version and six copies of the nonproprietary version of the rebuttal 
briefs must be submitted to the Assistant Secretary no later than 55 
days from the date of publication of the preliminary determination. An 
interested party may make a hearing presentation only on arguments 
included in that party's case or rebuttal briefs. Written arguments 
should be submitted in accordance with 19 CFR 351.309 and will be 
considered if received within the time limits specified above.
    This determination is published pursuant to sections 703(f) and 
777(i) of the Act.

    Dated: May 3, 1999.
Robert LaRussa,
Assistant Secretary for Import Administration
[FR Doc. 99-11887 Filed 5-10-99; 8:45 am]
BILLING CODE 3510-DS-P