[Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
[Notices]
[Pages 34209-34215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16250]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-122-404]


Preliminary Results of Full Sunset Review: Live Swine From Canada

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

ACTION: Notice of preliminary results of full sunset review: Live swine 
from Canada.

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SUMMARY: On December 2, 1998, the Department of Commerce (``the 
Department'') initiated a sunset review of the countervailing duty 
order on live swine from Canada (63 FR 66527) pursuant to section 
751(c) of the Tariff Act of 1930, as amended (``the Act''). On the 
basis of a notice of intent to participate filed on behalf of a 
domestic interested party and substantive comments filed on behalf of a 
domestic interested party and three respondent interested parties, the 
Department is conducting a full (240 day) review. As a result of this 
review, the Department preliminarily finds that termination of the 
countervailing duty order would be likely to lead to continuation or 
recurrence of a countervailable subsidy. The net countervailable 
subsidy and the nature of the subsidy are identified in the Preliminary 
Results of Review section of this notice.

For Further Information Contact: Scott E. Smith or Melissa G. Skinner, 
Office of Policy for Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th & Constitution 
Avenue, Washington, D.C. 20230; telephone: (202) 482-6397 or (202) 482-
1560, respectively.

EFFECTIVE DATE: June 25, 1999.

Statute and Regulations

    This review was conducted pursuant to sections 751(c) and 752 of 
the Act. The Department's procedures for the conduct of sunset reviews 
are set forth in Procedures for Conducting Five-year (``Sunset'') 
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516 
(March 20, 1998) (``Sunset Regulations'') and in 19 C.F.R. Part 351 
(1998) in general. Guidance on methodological or analytical issues 
relevant to the Department's conduct of sunset reviews is set forth in 
the Department's Policy Bulletin 98:3--Policies Regarding the Conduct 
of Five-year (``Sunset'') Reviews of Antidumping and Countervailing 
Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset 
Policy Bulletin'').

Scope

    The merchandise subject to this countervailing duty order is 
shipments of live swine, except U.S. Department of Agriculture 
(``USDA'') certified purebred breeding swine, slaughter sows and boars, 
and weanlings from Canada.1 Weanlings are swine weighing up 
to 27 kilograms or 59.5 pounds.2
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    \1\ On August 29, 1996, the Department issued the final results 
of a changed circumstances review revoking the order, in part, with 
respect to slaughter sows and boars. The revocation became effective 
on April 1, 1991 (see Live Swine from Canada; Final Results of 
Changed Circumstances Countervailing Duty Administrative Review, and 
Partial Revocation In Part of Countervailing Duty Order, 61 FR 45402 
(August 29, 1996).
    \2\ In the Final Affirmative Countervailing Duty Determination; 
Live Swine and Fresh, Chilled and Frozen Pork Products from Canada, 
50 FR 25097 (June 17, 1985), the Department also calculated a net 
subsidy for dressed-weight swine. However, the Department terminated 
its investigation with respect to fresh, chilled, and frozen pork 
products from Canada based on a finding by the Commission that no 
material injury, threat of material injury, or retardation of an 
infant industry existed.
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    The merchandise subject to the order is currently classifiable 
under the Harmonized Tariff Schedule (``HTS'') item numbers 0103.91.00 
and 0103.92.00. The HTS item numbers are provided for convenience and 
customs purposes. The written description remains dispositive.

Background

    On December 2, 1998, the Department initiated a sunset review of 
the countervailing duty order on live swine from Canada (63 FR 66527), 
pursuant to section 751(c) of the Act. The Department received a Notice 
of Intent to Participate on behalf of the National Pork Producers 
Council (``NPPC'') 3 on December 17, 1998, within the 
deadline specified in section 351.218(d)(1)(i) of the Sunset 
Regulations. The NPPC claimed interested party status under 19 U.S.C. 
1677(9)(C) and (F), as an association whose members are producers of 
live swine. In addition, the NPPC notes that it was the original 
petitioner in the underlying investigation. We received complete 
substantive responses from the NPPC, the Gouvernement du Quebec 
(``GOQ''), the Government of Canada (``GOC'') and the Canadian Pork 
Council and its Members (``CPC'') on January 6, 1999, within the 
deadline specified in the Sunset Regulations under section 
351.218(d)(3)(i).
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    \3\ The NPPC is a trade organization representing U.S. hog and 
pork producers through a federation of 44 affiliated state pork 
producer associations with a total membership of 85,000. NPPC's 
membership consists of small family farms and large hog operations.
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    In their substantive responses, the GOQ and the GOC claimed 
interested party status under 19 U.S.C. 1677(9)(B), as a provincial and 
national government, respectively, of the country in which the subject 
merchandise is produced and from which it is exported. The GOQ also 
claimed interested party status under 19 U.S.C. 1677(3). The CPC 
claimed interested party status, under 19 U.S.C. 1677(9)(A), as a 
council whose members are hog producing organizations whose registered 
members are producers of the subject merchandise. The CPC also stated 
that a majority of its member organizations also serve as importers of 
record of the subject merchandise, whose imports are supplied by their 
registered producers. The Department, on January 13, 1999, received 
timely rebuttals from the NPPC, the GOQ, the GOC, and the CPC.
    Because the Department received complete substantive responses from 
a domestic interested party and from the Canadian Government (both the 
GOC and the GOQ), and the CPC, and in accordance with section 
351.218(e)(2)(i) of the Sunset Regulations, the Department is 
conducting a full (240 day) sunset review.
    The Department determined that the sunset review of the 
countervailing duty order on live swine from Canada is extraordinarily 
complicated. In accordance with section 751(c)(5)(C)(v) of the Act, the 
Department may treat a review as extraordinarily complicated if it is a 
review of a transition order (i.e., an order in effect on January 1, 
1995). (See section 751(c)(6)(C) of the Act.) Therefore, on March 22, 
1999, the Department extended the time limit for completion of the 
preliminary results of this review until not later than June 21,

[[Page 34210]]

1999, in accordance with section 751(c)(5)(B) of the Act.4
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    \4\ See Live Swine From Canada: Extension of Time Limit for 
Preliminary Results of Five-Year Review, 64 FR 14884 (March 29, 
1999).
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Determination

    In accordance with section 751(c)(1) of the Act, the Department is 
conducting this review to determine whether termination of the 
countervailing duty order would be likely to lead to continuation or 
recurrence of a countervailable subsidy. Section 752(b) of the Act 
provides that, in making this determination, the Department shall 
consider the net countervailable subsidy determined in the 
investigation and subsequent reviews, and whether any change in the 
program which gave rise to the net countervailable subsidy has occurred 
that is likely to affect that net countervailable subsidy. Pursuant to 
section 752(b)(3) of the Act, the Department shall provide to the 
International Trade Commission (``the Commission'') the net 
countervailable subsidy likely to prevail if the order is revoked. In 
addition, consistent with section 752(a)(6), the Department shall 
provide to the Commission information concerning the nature of the 
subsidy and whether the subsidy is a subsidy described in Article 3 or 
Article 6.1 of the Subsidies Agreement.
    The Department's determinations concerning continuation or 
recurrence of a countervailable subsidy, the net countervailable 
subsidy likely to prevail if the order is revoked, and nature of the 
subsidy are discussed below. In addition, parties' comments with 
respect to each of these issues are addressed within the respective 
sections.

Continuation or Recurrence of a Countervailable Subsidy

Party Comments

    In its substantive response, the NPPC states that there is a strong 
likelihood that, were the countervailing duty order on live swine from 
Canada revoked, a countervailable subsidy would continue or recur. The 
NPPC claims that there are a number of Canadian hog subsidies currently 
in place and there is evidence that suggests the possibility of 
additional subsidies in the future. Further, the NPPC argues that the 
Canadian government has a history of replacing terminated programs with 
new ones and, for these reasons, the Department should not revoke the 
order on live swine from Canada.
    The NPPC argues that the history and scope of subsidization of live 
swine from Canada demonstrates that subsidies will recur absent 
continuation of the order. The NPPC asserts that the Canadian federal 
and provincial governments have maintained a large number of subsidies 
intended to benefit pork producers and that the number of subsidies 
have increased over time. Further, the NPPC argues, as indicated in the 
Statement of Administrative Action (``the SAA'') H.R. Doc. No. 103-316, 
vol. 1 at 888 (1994), that continuation of a program is highly 
probative of the likelihood of continuation or recurrence of 
countervailable subsidies. Given the continued maintenance of a number 
of subsidy programs, the NPPC argues that the Department should 
conclude that a CVD order is necessary to prevent subsidies from 
continuing.
    The NPPC also questions the method with which the Canadian federal 
and provincial governments terminate pork subsidy programs and, more 
importantly, the permanence of such terminations. The NPPC states, 
citing the Sunset Policy Bulletin, that the Department should consider 
the legal method by which the government eliminated the program and 
whether the government is likely to reinstate the program. The NPPC 
claims that the governments have demonstrated a pattern of eliminating 
and then replacing pork subsidy programs with new ones (e.g., according 
to the NPPC, the National Tripartite Stabilization Plan was terminated 
and then replaced, for all intents and purposes, with the National 
Transition Scheme). The NPPC claims that, due to this factor, the small 
number of programs that have been eliminated have had little, if any, 
effect on the overall subsidization of the Canadian pork industry. The 
NPPC argues that as long as programs exist there is a real possibility 
of continued subsidization. The NPPC further claims that termination 
through administrative action, rather than through legislative means, 
is insufficient for the Department to determine that the program has 
indeed been terminated (e.g., the Ontario Export Sales Program). In 
addition, the Department should not find programs terminated that have 
simply not been funded for a particular period or have expired (e.g., 
the Alberta Livestock and Beeyard Compensation Program and the Canada/
Ontario Western Agribition Livestock Transportation Assistance Program, 
respectively).
    The NPPC also argues that there is a possibility of additional 
subsidies for Canadian hog producers that further supports the 
likelihood of continued subsidization. The NPPC notes that extremely 
low hog prices currently exist in North America and that the Department 
has recognized this situation as a trigger for subsidies. Further, the 
NPPC provided Canadian newspaper articles which suggest that the 
Canadian federal and provincial governments are discussing the 
possibility of establishing new subsidies for Canadian swine producers.
    In addition, the NPPC claims that the Department should examine 
certain subsidies given to Canadian cattle producers in the context of 
swine subsidization. The NPPC argues that there are several programs 
being investigated by the Department in the ongoing investigation of 
cattle from Canada which may be applicable to swine. However, the NPPC 
notes that the Department has not yet made any determination on whether 
these programs confer countervailable benefits to cattle or swine. 
Nevertheless, the NPPC argues that Department should consider the 
existence of these programs in its sunset determination of live swine 
from Canada.
    The NPPC notes that, over the life of this order, the level of 
subsidization for subject merchandise has reached a de minimis level on 
three occasions. It argues that three instances of de minimis subsidy 
rates, out of thirteen, are insufficient to determine that subsidies 
have permanently reached de minimis levels and that the CVD order is 
unneeded.
    In their substantive responses, the GOC, GOQ, and the CPC argue 
that the likely effect of revocation is that the value of any 
countervailable subsidy would continue to be de minimis, or, 
effectively zero. The three respondents argue collectively that net 
benefits conferred by any remaining countervailable subsidies are so 
small as to be effectively non-existent.
    The GOC and the CPC claim that the Department has reviewed 43 
different federal and provincial subsidy programs since the original 
investigation in 1985. Of these, 28 have been found by the Department 
to have been terminated, with no residual benefits or replacement 
programs. Of the remaining 15 programs, eight have been determined not 
to provide countervailable benefits to live swine. Finally, of the 
remaining seven programs, four have been found in the most recently 
completed administrative review of the order (63 FR 47235, September 4, 
1998) to convey de minimis benefits. The last three programs, according 
to the respondents, were found by the Department to have not been used. 
The GOC and the CPC assert that the de minimis benefits conferred on 
producers and the non-use of the remaining three programs

[[Page 34211]]

indicate that revocation of the order would not lead to continuation or 
recurrence of countervailable subsidies.
    The GOC and the CPC also argue that the programs terminated over 
the life of the order accounted for nearly all of the subsidization 
applicable to live swine. Termination of these and other programs led 
to the de minimis deposit and subsidy rates in the most recently 
completed reviews.
    The GOQ echoes many of the same arguments as the GOC and the CPC. 
The submissions of the GOQ, however, deal more directly with the 
subsidy programs of Quebec. The GOQ asserts that, of the seven programs 
found by the Department to confer countervailable subsidies in the 
final results of the latest administrative review (63 FR 47235, 
September 4, 1998), none was a Quebec program and only one was a 
national program (the National Transition Scheme for Hogs Program). 
According to the GOQ, this last remaining national program was 
terminated prior to the completion of the latest administrative review 
and has now been found to confer no benefits to hog producers.
    The GOQ also claims that three other programs, two of which were 
created by the GOQ, were found to have no impact on the net subsidy 
rate from the latest administrative review because the benefits 
conveyed were too small. These two programs were the Technology 
Innovations Program and the Support for Strategic Alliances 
Program.5 According to the GOQ, hog producers, as of March 
31, 1998, can no longer apply for benefits under the Technology 
Innovations Program. As for the Support for Strategic Alliances 
Program, the GOQ states that it expired on March 31, 1998.
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    \5\ Despite the Department's treatment of these two programs as 
separate, the GOQ claims that these programs are not separate 
programs but represent two of the three components of the Canada/
Quebec Subsidiary Agreement on Agri-Food Development.
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    Finally, the GOQ notes that the Department examined another Quebec 
program in the latest administrative review--Quebec's Farm Income 
Stabilization Insurance program (``FISI''). The GOQ states that the 
Department found this program not to be used because no hogs benefiting 
from FISI were exported to the United States. Moreover, the GOQ claims 
that FISI has not been used with respect to hogs exported to the United 
States, from April 1, 1996 to the present.
    Collectively, the GOQ, GOC, and CPC argue that, in light of the 
criterion for revocation as outlined in the Sunset Policy Bulletin, the 
termination without replacement of all major countervailed programs, 
combined with the findings of non-countervailability, non-usage, and no 
impact of the remaining programs, compels the conclusion that subsidies 
would not be likely to continue or recur were the order to be revoked 
(see January 6, 1999, Substantive Response of the GOC).

Parties' Rebuttal Comments

    In its rebuttal, the NPPC argues that the GOC, GOQ, and CPC 
assessments of the likelihood of continued subsidization is flawed 
because it focuses on active, ``non-terminated'' countervailable 
subsidy programs and ignores those subsidies that continue to exist, 
but have been found to be ``not used.'' The NPPC asserts that such an 
assessment is invalid with respect to the Department's determination of 
whether subsidization will continue. They argue that a program 
determined to confer benefits in one period may provide benefits in 
another and that the distinction between these ``sets'' of programs is 
irrelevant.
    The NPPC also argues that the GOC and CPC are incorrect in claiming 
that there have been no replacements for programs that have been 
terminated over the life of the order. The NPPC asserts that the fact 
that some programs have been terminated while other new countervailable 
programs have been created demonstrates that there has been replacement 
of terminated programs.
    The CPC, GOQ, and GOC assert that the NPPC has incorrectly reported 
the most recent administrative review as covering 27 subsidy programs. 
The respondents argue that the NPPC has reported that 27 
countervailable programs continue to exist, but has ignored the fact 
that many of these programs never existed, were never used by hog 
producers, or never provided countervailable benefits. Further, the CPC 
argues that the NPPC's attempts to discredit the Department's findings 
concerning program terminations is not only unfounded, but has already 
been resolved in the most recent administrative review (63 FR 47235, 
September 4, 1998).
    The GOQ, GOC, and CPC argue that the NPPC's allegations concerning 
the possible future creation of countervailable subsidies is 
irrelevant. First, the respondents' argue that there is no credible 
evidence to suggest that new countervailable subsidy and/or price 
stabilization programs are likely to be created. Second, respondents 
argue that the NPPC has failed to provide ``good cause'' for the 
Department to consider any programs not previously examined by the 
Department. Therefore, such accusations should play no part in the 
Department's likelihood and net subsidy determinations.

Department's Determination

    Drawing on the guidance provided in the legislative history 
accompanying the Uruguay Round Agreements Act (``URAA''), specifically 
the SAA, H.R. Doc. No. 103-316, vol. 1 (1994), the House Report, H.R. 
Rep. No. 103-826, pt.1 (1994), and the Senate Report, S. Rep. No. 103-
412 (1994), the Department issued its Sunset Policy Bulletin providing 
guidance on methodological and analytical issues, including the basis 
for likelihood determinations. The Department clarified that 
determinations of likelihood will be made on an order-wide basis (see 
section III.A.2 of the Sunset Policy Bulletin). Additionally, the 
Department normally will determine that revocation of a countervailing 
duty order is likely to lead to continuation or recurrence of a 
countervailable subsidy where (a) a subsidy program continues, (b) a 
subsidy program has been only temporarily suspended, or (c) a subsidy 
program has been only partially terminated (see section III.A.3.a of 
the Sunset Policy Bulletin). Exceptions to this policy are provided 
where a company has a long record of not using a program (see section 
III.A.3.b of the Sunset Policy Bulletin).
    In its final affirmative countervailing duty determination (50 FR 
25097, June 17, 1985), the Department determined that the net subsidy 
from the 23 programs investigated for live swine from Canada was 
Can$0.02602/lb. (bonding rate Can$0.04390/lb.).6 Since

[[Page 34212]]

the original investigation in 1985, the Department has determined, 
during various administrative reviews of this order, that a number of 
the programs examined in the original investigation have been 
terminated.7 Furthermore, the Department has determined, in 
the final results of administrative reviews, that some of the remaining 
programs from the original investigation do not confer countervailable 
benefits.8 The Department finds that there are four 
countervailable subsidy programs from the original investigation which 
continue to exist.9
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    \6\ In the Final Affirmative Countervailing Duty Determination; 
Live Swine and Fresh, Chilled and Frozen Pork Products from Canada, 
50 FR 25097 (June 17, 1985), the Department also calculated a net 
subsidy for dressed-weight swine of Can$0.03272/lb. (bonding rate 
Can$0.025523/lb.). However, the Department terminated its 
investigation with respect to fresh, chilled, and frozen pork 
products from Canada based on a finding by the Commission that no 
material injury, threat of material injury, or retardation of an 
infant industry existed. Further, on August 29, 1996, the Department 
issued the final results of a changed circumstances review revoking 
the order, in part, with respect to slaughter sows and boars. The 
revocation became effective on April 1, 1991 (see Live Swine from 
Canada; Final Results of Changed Circumstances Countervailing Duty 
Administrative Review, and Partial Revocation In Part of 
Countervailing Duty Order, 61 FR 45402 (August 29, 1996). The 
programs determined by the Department in the original investigation 
to confer, or have the potential to confer, countervailable 
subsidies were:
    1. Agricultural Stabilization Act
    2. Record of Performance Program
    3. Quebec Special Credits for Hog Producers
    4. Prince Edward Island Interest Payments on Assembly Yard Loan
    5. Saskatchewan Hog Assured Returns
    6. British Columbia Farm Income Insurance Plan
    7. Manitoba Hog Income Stabilization Plan
    8. New Brunswick Hog Price Stabilization Plan
    9. Newfoundland Hog Price Support Program
    10. Nova Scotia Pork Price Stabilization Program
    11. Prince Edward Island Price Stabilization Program
    12. Quebec Farm Income Stabilization Insurance Programs
    13. New Brunswick Swine Assistance Program
    14. New Brunswick Livestock Incentives Program
    15. New Brunswick Hog Marketing Program
    16. Saskatchewan Financial Assistance for Livestock and 
Irrigation
    17. Nova Scotia Swine Herd Health Policy
    18. Nova Scotia Transportation Assistance
    19. Ontario Farm Tax Reduction Program
    20. Ontario (Northern) Livestock Programs
    21. Prince Edward Island Hog Marketing and Transportation 
Subsidies
    22. Quebec Meat Sector Rationalization Program
    23. Price Edward Island Swine Development Program
    \7\ The Department has determined that the following programs, 
examined in the original investigation, have been terminated with no 
present residual benefits:
    1. Hog Stabilization Payments under Agricultural Stabilization 
Act (Tripartite Agreement) (terminated prior to April 1, 1994) (62 
FR 18087, April 14, 1997)
    2. Ontario (Northern) Livestock Programs (terminated April 1, 
1991) (58 FR 54112, October 20, 1993)
    3. Prince Edward Island Interest Payments on Assembly Yard Loan 
(terminated prior to April 1, 1991)( 61 FR 26879, May 29, 1996)
    4. Saskatchewan Hog Assured Returns (terminated March 31, 1991) 
(62 FR 47460, September 9, 1997)
    5. British Columbia Farm Income Insurance Plan (terminated July 
2, 1994)(61 FR 52426, October 7, 1996)
    6. Manitoba Hog Income Stabilization Plan (terminated June 28, 
1986)(53 FR 22189, June 14, 1988)
    7. New Brunswick Hog Price Stabilization Plan (terminated March 
31, 1991)(61 FR 26889, May 29, 1996)
    8. Nova Scotia Pork Price Stabilization Program (terminated 
prior to March 31, 1991)(58 FR 54112, October 20, 1993)
    9. Prince Edward Island Price Stabilization Program (terminated 
prior to March 31, 1991)(59 FR 12243, March 16, 1994)
    10. New Brunswick Swine Assistance Program (program transferred 
to New Brunswick Swine Industry Financial Restructuring Program; 62 
FR 47460, September 9, 1997 (see footnote 11))
    11. Nova Scotia Swine Herd Health Policy (terminated March 31, 
1996)(62 FR 47460, September 9, 1997)
    \8\ Of the 23 programs originally investigated, the following 
have been determined by the Department not to confer countervailable 
benefits:
    1. New Brunswick Hog Marketing Program (determination 55 FR 
20812, May 21, 1990)
    2. Ontario Farm Tax Reduction Program (determination 61 FR 
26888, May 29, 1996)
    3. Quebec Meat Sector Rationalization Program (determination 50 
FR 25097, June 17, 1985; 50 FR 32880, August 15, 1985))
    4. Prince Edward Island Hog Marketing and Transportation 
Subsidies (determination 55 FR 20812, May 21, 1990)
    5. Record of Performance Program (determination 54 FR 651, 
January 9, 1989)
    6. Nova Scotia Transportation Assistance Program (determination 
53 FR 22189, June 14, 1988)
    7. Prince Edward Island Swine Development Program (determination 
55 FR 20812, May 21, 1990)
    8. Saskatchewan Financial Assistance for Livestock and 
Irrigation (determination 53 FR 22189, June 14, 1988)
    9. Quebec Special Credits for Hog Producers (determination 53 FR 
22189, June 14, 1988)
    In the original investigation (50 FR 25097, June 17, 1985), the 
Department determined that the Quebec Meat Sector Rationalization 
Program conferred benefits for the establishment, standardization, 
expansion, or modernization of slaughterhouses, processing plants, 
or plants preparing foods that contain meat. Because this program 
only confers benefits to those producers/exporters of fresh, chilled 
and frozen pork products, it is not applicable to producers/
exporters of live swine.
    \9\ Of the 23 programs originally investigated, the following 
countervailable programs continue to exist:
    1. Ontario Sales Swine Assistance (determined to confer benefits 
in the original investigation; 50 FR 25097, June 17, 1985)
    2. Quebec Farm Income Stabilization Program (determined to 
confer benefits in original investigation; 50 FR 25097, June 17, 
1985)
    3. New Brunswick Livestock Incentives Program (determined to 
confer benefits in original investigation; 50 FR 25097, June 17, 
1985)
    4. Newfoundland Hog Price Support Program (determined to confer 
benefits in the original investigation; 50 FR 25097, June 17, 1985)
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    In addition, the Department can confirm, through the final results 
of administrative reviews, that there are several countervailable 
subsidy programs created by the national and provincial governments of 
Canada after the original investigation. A number of these programs are 
also still in existence.10
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    \10\ The following are countervailable subsidy programs still in 
existence and created after the imposition of the order, which have 
not been officially terminated, and which confer, or have the 
potential to confer, countervailable benefits:
    1. Nova Scotia Improved Sire Program (identified in 86/87 
review; 56 FR 10410, March 12, 1991)
    2. Technology Innovation Program Under the Agri-Food Agreement 
(identified in 94/95 review; 62 FR 18087, April 14, 1997)
    3. Ontario Livestock and Poultry and Honeybee Compensation 
Program (identified in 89/90 review; 56 FR 50560, October 7, 1991)
    4. Ontario Bear Damage to Livestock Compensation Program 
(identified in 94/95 review; 62 FR 18087, April 14, 1997)
    5. Ontario Rabies Indemnification Program (identified in 89/90 
review; 56 FR 29224, June 26, 1991)
    6. New Brunswick Swine Industry Financial Restructuring Program 
(identified in the 85/86 review; 53 FR 22189, June 14, 1988)
    7. Western Diversification Program (identified in 89/90 review; 
56 FR 50560, October 7, 1991)
    8. Support for Strategic Alliances Program Under the Agri-Food 
Agreement (determined to confer benefits prior to 94/95 review; 62 
FR 18087, April 14, 1997)
    9. Agricultural Products Board Program (identified in 91/92 
review; 61 FR 52408, October 7, 1996)
    10. Newfoundland Weanling Bonus Incentive Policy (identified in 
86/87 review; 56 FR 10410, March 12, 1991)
    11. Newfoundland Hog Price Stabilization Program (determined to 
confer benefits in April 1985)
    12. Federal Atlantic Livestock Feed Initiative (identified in 
91/92 review; 61 FR 52408, October 7, 1996)
    13. Newfoundland Farm Products Corporation Hog Price Support 
Program (identified in 96/97 review; 63 FR 23723, April 30, 1998 and 
63 FR 47235, September 4, 1998)
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    As claimed by the GOQ, one countervailable subsidization program 
examined in the original investigation, the Quebec Farm Income 
Stabilization Insurance Program, is not currently being used. In 
addition, two subsidy programs created after the imposition of the 
order are also not currently being used. However, current use is not 
the standard employed by the Department in sunset reviews. As stated in 
the Sunset Policy Bulletin, ``where a company has a long track record 
of not using a program, including during the investigation, the 
Department normally will determine that the mere availability of the 
program does not, by itself, indicate likelihood of continuation or 
recurrence of a countervailable subsidy.'' Therefore, with respect to 
the three programs addressed by the GOQ, the Department preliminarily 
determines that these three programs do not have a ``long track 
record'' of non-use.11
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    \11\ The three programs are: (1) The Ontario Bear Damage to 
Livestock Compensation Program, (2) the Ontario Rabies 
Indemnification Program and (3) the Quebec Income Stabilization 
Program. The last known use of the Ontario Bear Damage to Livestock 
Compensation Program was during the 1994/1995 Administrative Review 
(63 FR 2204, January 14, 1998). The last known use of the Quebec 
Farm Income Stabilization Insurance Program was April 1, 1996 (see 
Substantive Response of GOQ at 11). The last known use of the 
Ontario Rabies Indemnification Program was during the 1993/1994 
Administrative Review (61 FR 52408, October 7, 1996; Amended, 61 FR 
58383, November 14, 1996). The Department finds the recent use of 
these three programs does not constitute a long track record of non-
use.
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    With respect to the termination of programs, the Department has 
preliminarily determined, in this case, to follow prior administrative 
review determinations concerning terminated programs. In these prior 
determinations, the Department addressed evidence demonstrating that 
programs were terminated and not merely suspended. In addition, the 
Department addressed the NPPC's arguments concerning the

[[Page 34213]]

Department's criteria and/or methodology in determining whether a 
program had been terminated (see Live Swine from Canada; Final Results 
of Countervailing Duty Administrative Review, 63 FR 47235 (September 4, 
1998)).
    With respect to the NPPC's argument that certain programs were 
terminated solely through administrative action, the Department agrees 
that the elimination of a program administratively is not as strong a 
basis for termination as elimination through legislative action (see 
Sunset Policy Bulletin). However, where a program was put in place 
administratively, it is reasonable to expect that the government would 
terminate the program in the same manner (see Final Results of 
Expedited Sunset Review: Heavy Iron Construction Castings from Brazil, 
64 FR 30313 (June 7, 1999). In these circumstances, unless there is a 
basis for concluding that the government is likely to reinstate the 
program, we believe it is appropriate to treat the program as 
terminated. The NPPC has argued that reinstatement will be likely in 
this case because many new programs have been put in place during the 
life of the order. In this case, the record does not indicate a 
connection between the programs that have been terminated and the new 
programs. Therefore, the Department does not view the creation of new 
programs as supporting the conclusion that terminated programs will be 
reinstated.
    The Department finds that the continued existence of 
countervailable subsidies is highly probative of the likelihood of 
continuation or recurrence of countervailable subsidies. Because the 
Government of Canada currently maintains countervailable subsidy 
programs, as acknowledged by the GOC, the GOQ, and the CPC, and as 
evidenced by the most recent administrative review, because there are 
programs that have not been officially terminated, and because no 
program has a ``long track record'' of non-use, the Department finds 
that there is a likelihood of continuation or recurrence of a 
countervailable subsidy if the order were to be revoked. As noted 
above, there are countervailable subsidy programs created after the 
imposition of the order which continue to exist.12 The 
Department finds that the creation and maintenance of countervailable 
subsidies after the imposition of the order strongly suggests and 
supports the conclusion that revocation of the order would likely lead 
to continuation or recurrence of countervailable subsidies.
---------------------------------------------------------------------------

    \12\ See supra n.11. and accompanying text.
---------------------------------------------------------------------------

    Because the Department is basing its likelihood determination on 
the current existence and maintenance of countervailable subsidy 
programs benefitting, or potentially benefitting, swine producers and/
or exporters by the federal and provincial governments of Canada, the 
Department finds no reason to examine programs which have not been 
previously reviewed by the Department.

Net Countervailable Subsidy

Party Comments

    The NPPC argues that the net subsidy calculated in the original 
investigation of live swine from Canada is not representative of the 
net subsidy likely to prevail if the order were revoked. Instead, the 
NPPC asks that, as stipulated in the Sunset Policy Bulletin, the 
Department use a more recently calculated rate. The NPPC states that 
there are several factors that require adjustment of the original 
subsidy rate (see Substantive Response of NPPC at 16). The NPPC argues 
that the chief subsidy programs driving this order have always been 
stabilization programs. These programs are designed to increase 
payments to producers when market prices fall below support prices. The 
NPPC claims that, as hog prices are at historically low levels, subsidy 
payments will be at historically high levels. Furthermore, the NPPC 
states that Canadian federal and provincial governments are currently 
considering additional subsidy programs in response to the hog crisis. 
Lastly, the NPPC argues that a review of the case history indicates 
that only a few of the programs from the original investigation 
continue to exist and the majority of the countervailable programs 
which exist at present are programs created after the imposition of the 
order.
    For these reasons, the NPPC argues that the Department should not 
use the net subsidy from the original investigation, but instead should 
use the net subsidy rate from the seventh or eighth administrative 
review. 13 The NPPC argues that these reviews cover the 
largest number of programs ever investigated and also resulted in high 
net subsidy rates as a result of price stabilization programs. 
Alternatively, the NPPC suggests the Department use the net subsidy 
from the fifth administrative review as it represents the highest rate 
ever calculated.14
---------------------------------------------------------------------------

    \13\ The net subsidy from the seventh administrative review is 
Can$0.0587/lb. and the net subsidy from the eighth administrative 
review is Can$0.0611/lb. (See Live Swine from Canada; Final Results 
of Countervailing Duty Administrative Review, 61 FR 52408 (October 
7, 1996) and Live Swine from Canada; Amended Final Results of 
Countervailing Duty Administrative Review, 61 FR 58383 (November 14, 
1996)).
    \14\ The net subsidy from the fifth administrative review is 
Can$0.0927/lb. (See Live Swine from Canada; Final Results of 
Countervailing Duty Administrative Review, 56 FR 50560 (October 7, 
1991) and Live Swine from Canada; Amended Final Results of 
Countervailing Duty Administrative Review, 58 FR 47123 (September 7, 
1993)).
---------------------------------------------------------------------------

    The GOC and CPC agree with the NPPC about the use of a net subsidy 
rate other than that calculated in the original investigation. The GOC 
and CPC argue, collectively, that the net subsidy from the original 
investigation is not reflective of the rate likely to prevail if the 
order were revoked. They point out that a number of the programs 
examined in the original investigation have since been terminated or 
deemed non-countervailable, and that adjustments would need to be made 
to this rate to reflect these changes. Collectively, the respondents 
argue that the net subsidy likely to prevail, after these corrections 
have been made, will be de minimis or, effectively zero.
    The GOQ also argues that the net subsidy likely to prevail will be 
de minimis and, therefore, the order should be revoked. The GOQ argues 
that as subsidy programs have been terminated, consistently not used, 
determined to be non-countervailable, and created throughout the life 
of the order, the rate from the investigation as well as from any final 
results of administrative review would not accurately reflect the net 
subsidy likely to prevail if the order were revoked.

Parties' Rebuttal Comments

    With respect to the net countervailable subsidy likely to prevail, 
the NPPC argues that the GOC, GOQ, and CPC incorrectly focus on the 
most recent subsidy rates calculated for the order. According to the 
NPPC, the Department's regulations clearly state that the original 
investigation should be the starting point for predicting future 
subsidy rates as these are the only rates that reflect the behavior of 
exporters and foreign governments without the discipline of the order. 
In their focus on this most recent rate, the NPPC argues, the 
respondents have ignored the fluctuations in the benefit levels which 
have occurred over the life of order.
    The CPC claims that the NPPC's suggested choice of net subsidy 
rates for the Department are unsupported by the record. The CPC argues 
that several of the programs included in the calculation of these rates 
have since been terminated and, therefore, the net subsidy rates from 
the NPPC's suggestions are invalid. Lastly, the GOC reiterates its 
argument that the net

[[Page 34214]]

subsidy rate from the original investigation is an inappropriate choice 
as the rate likely to prevail if the order were revoked.

Department's Determination

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with the SAA and House Report, the Department normally will 
select a rate from the investigation, because that is the only 
calculated rate that reflects the behavior of exporters and foreign 
governments without the discipline of an order or suspension agreement 
in place. The Department noted that this rate may not be the most 
appropriate rate if, for example, the rate was derived from subsidy 
programs which were found in subsequent reviews to be terminated, there 
has been a program-wide change, or the rate ignores a program found to 
be countervailable in a subsequent administrative review.15
---------------------------------------------------------------------------

    \15\ See Section III.B.3 of the Sunset Policy Bulletin.
---------------------------------------------------------------------------

    The Department agrees with all parties that the net countervailable 
subsidy rate from the original investigation is not probative of the 
net countervailable subsidy rate likely to prevail if the order were to 
be revoked. As noted above, sections III.B.3.a and III.B.3.c of the 
Sunset Policy Bulletin provide that the Department may adjust the net 
countervailable subsidy where, ``* * * the Department has conducted an 
administrative review of the order * * * and found that a program was 
terminated with no residual benefits and no likelihood of reinstatement 
* * *'' or where, ``* * * the Department has conducted an 
administrative review of the order * * * and found a new 
countervailable program, or found a program previously not used but 
subsequently found to be countervailable. * * *'' 16
---------------------------------------------------------------------------

    \16\ See Section III.B.3.a and Section III.B.3.c of the Sunset 
Policy Bulletin.
---------------------------------------------------------------------------

    Several programs from the investigation have been terminated, found 
not to confer countervailable subsidies, or have never been used. These 
terminated programs provide no residual benefits which persist. 
Additionally, several new programs have been created since the 
imposition of the order. Of these new programs, the Department has 
determined that some have been terminated. Therefore, pursuant to the 
Sunset Policy Bulletin, the net countervailable subsidy from the 
original investigation has been adjusted to reflect the termination of 
programs, as well as the identification of new programs found to be 
countervailable in subsequent administrative reviews. Consequently, the 
Department preliminarily determines that the net subsidy rate that 
would be likely to prevail in the event of revocation of the order 
would be Can$0.01802234/lb. 17 See Memorandum to File 
Regarding Calculation of the Net Countervailable Subsidy, June 21, 
1999.
---------------------------------------------------------------------------

    \17\ Please note that the Department considers anything less 
than 0.5 percent (or Can$0.0030/lb.) to be de minimis. See Live 
Swine From Canada; Final Results of Countervailing Duty 
Administrative Review, 56 FR 50560 (October 7, 1991).
---------------------------------------------------------------------------

    In determining the net countervailable subsidy rate likely to 
prevail, the Department combined the benefits from ten programs that 
continue to exist.18 The individual subsidy rates for these 
ten programs, consistent with the Sunset Policy Bulletin, were those 
calculated in the original investigation because these are the only 
rates that reflect the behavior of exporters and/or foreign governments 
without the discipline of the order. For subsidy programs established 
after the imposition of the order, we have included in this 
calculation, the subsidy rates from the final results of the first 
administrative review in which rates were calculated. We note that a 
review of the countervailable subsidy rates, for each of post-order 
established programs, does not demonstrate a pattern of increased usage 
after introduction.
---------------------------------------------------------------------------

    \18\ The following countervailable programs have been determined 
by the Department not to have been officially terminated by 
administrative decree or legislative repeal. The programs are:
    1. Nova Scotia Improved Sire Program (Can$0.0002/lb., first rate 
calculated in 95/96 review; 62 FR 47460, September 9, 1997)
    2. Technology Innovation Program Under the Agri-Food Agreement 
(Can$0.0002/lb., found to be used in the 94/95 review; 62 FR 18087, 
April 14, 1997 (used most recently in 96/97 review))
    3. Ontario Livestock and Poultry and Honeybee Compensation 
Program (Can$0.0002/lb., found to be used in 89/90 review; 56 FR 
29224 (first rate calculated in 93/94 review; 61 FR 26879, May 29, 
1996) (used most recently in 96/97 review))
    4. Ontario Bear Damage to Livestock Compensation Program 
(Can$0.0002/lb., found to be used in the 94/95 review; 62 FR 18087, 
April 14, 1997 (used most recently in 94/95 review))
    5. Ontario Rabies Indemnification Program (Can$0.0001/lb., found 
to be used in the 89/90 review; 56 FR 29224 (used most recently in 
93/94 review))
    6. Support for Strategic Alliances Program Under the Agri-Food 
Agreement
    7. Newfoundland Hog Price Support Program (Can$0.00013/lb., 
found to be used in investigation; 50 FR 25097 (used most recently 
in 85/86 review))
    8. New Brunswick Swine Industry Financial Restructuring Program 
(Can$0.00000154/lb.,
    9. Quebec Farm Income Stabilization Program (Can$0.01696/lb., 
found to be used in the investigation; 50 FR 25097 (used most 
recently in the 95/96 review)) and
    10. New Brunswick Livestock Incentives Program (Can$0.00003/lb., 
found to be used in investigation; 50 FR 25097 (used most recently 
in 96/97 review) found to be used 85/86 review; 53 FR 22189 (used 
most recently in 96/97 review).
    For six additional programs, no subsidy rate has ever been 
calculated by the Department. Therefore, although these programs 
have not been determined to be terminated, we have not included them 
in our calculation.
    1. Newfoundland Farm Products Corporation Hog Price Support 
Program (not used or published)
    2. Western Diversification Program (not used or published) 
(Can$0.0000008/lb., first rate calculated in 96/97 review; 63 FR 
23723, April 30, 1998)
    3. Agricultural Products Board Program (not used or published)
    4. Newfoundland Weanling Bonus Incentive Policy (not used or 
published)
    5. Federal Atlantic Livestock Feed Initiative (not used or 
published)
    6. Ontario Sales Swine Assistance (not used or published).
---------------------------------------------------------------------------

Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with section 752(a)(6) of the Act, the Department will 
provide information to the Commission concerning the nature of the 
subsidy and whether the subsidy is a subsidy described in Article 3 or 
Article 6.1 of the Subsidies Agreement.
    Given that receipt of benefits under any of the programs included 
in our calculation are not contingent upon export. Therefore, none of 
these programs fall within the definition of an export subsidy under 
Article 3.1(a) of the Subsidies Agreement.
    Each of these programs are, however, programs that could be found 
inconsistent with Article 6 if the net countervailable subsidy exceeds 
5 percent, as measured in accordance with Annex IV of the Subsidies 
Agreement.19 The Department, however, has no information 
with which to make such a calculation, nor do we believe it appropriate 
to attempt such calculation in the course of a sunset review. Rather, 
we intend to provide to the Commission the following program 
descriptions.
---------------------------------------------------------------------------

    \19\  The GOC and the GOQ have previously requested ``green 
box'' treatment for the Support for Strategic Alliances and 
Technology Innovation programs under the Agri-Food Agreement. 
However, the Department has not made a determination on whether 
benefits from these programs are non-countervailable as ``green 
box'' subsidies pursuant to section 771(5B)(F) of the Act. See Live 
Swine from Canada; Final Results of Countervailing Duty 
Administrative Review, 63 FR 47235 (September 4, 1998) and Live 
Swine from Canada; Preliminary Results of Countervailing Duty 
Administrative Review, 63 FR 23723 (April 30, 1998).
---------------------------------------------------------------------------

Subsidy Programs

    The subsidy programs identified by the Department and used in its 
determination of the net subsidy likely to prevail if the order were 
revoked are listed below. A description of each is also included.

New Brunswick Livestock Incentives Program
    This program provides loan guarantees to livestock producers

[[Page 34215]]

purchasing cattle, sheep, swine, foxes, and mink for breeding purposes, 
and for feeding and finishing livestock for slaughter.
Ontario Bear Damage to Livestock Compensation Program
    This program provides compensation for the destruction of, or 
injury to, certain types of livestock by bears.
Ontario Livestock and Poultry and Honeybee Compensation Program
    This program provides grants to compensate producers for livestock 
and poultry injured or killed by wolves, coyotes, or dogs.
Ontario Rabies Indemnification Program
    This program compensates livestock producers, including producers 
of cattle, horses, sheep, swine, and goats, for damage caused by 
rabies.
Quebec Farm Income Stabilization Insurance Program
    Schemes under this program guarantee a positive net annual income 
to participants when their income falls below the stabilized net annual 
income.
Technology Innovation Program Under the Agri-Food Agreement
    This program provides grants to producers within a designated 
geographical region of Canada (i.e., Quebec) for technology innovation.
New Brunswick Swine Industry Financial Restructuring Program
    This program provides subsidies on medium-term loans to hog 
producers. This program was available to hog producers who entered 
production or underwent expansion after 1979.
Newfoundland Hog Price Support Program
    This program is a price stabilization program which provides pork 
producers interest-free loans from the provincial government equal to 
the difference between a stabilization price based on the cost of 
production and the market price for hogs.
Nova Scotia Improved Sire Program
    This program provides grants to purebred and commercial swine 
producers for the purchase of boars.
Support for Strategic Alliances Under the Agri-Food Agreement
    The purpose of this program area is stimulate cooperation and 
promote strategic activities intended to improve competitiveness in 
domestic and foreign markets.

Preliminary Results of Review

    Any interested party may request a hearing within 30 days of 
publication of this notice in accordance with 19 CFR 351.310(c). Any 
hearing, if requested, will be held on August 18, 1999. Interested 
parties may submit case briefs no later than August 9, 1999, in 
accordance with 19 CFR 351.309(c)(1)(i). Rebuttal briefs, which must be 
limited to issues raised in the case briefs, may be filed not later 
than August 16, 1999. The Department will issue a notice of final 
results of this sunset review, which will include the results of its 
analysis of issues raised in any such comments, no later than October 
28, 1999.
    This five-year (``sunset'') review and notice are in accordance 
with sections 751(c), 752, and 777(i)(1) of the Act.

    Dated: June 21, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-16250 Filed 6-24-99; 8:45 am]
BILLING CODE 3510-DS-P