[Federal Register Volume 69, Number 72 (Wednesday, April 14, 2004)]
[Notices]
[Pages 19815-19818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8478]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-850]


Notice of Initiation of Antidumping Investigation: Live Swine 
From Canada

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

ACTION: Initiation of Antidumping Investigation.

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SUMMARY: The Department of Commerce is initiating an antidumping 
investigation to determine whether producers and exporters of live 
swine from Canada are selling live swine to the United States at less 
than fair value.

EFFECTIVE DATE: April 14, 2004.

FOR FURTHER INFORMATION CONTACT: Judith Wey Rudman at (202) 482-0192, 
Cole Kyle at (202) 482-0192, or Andrew Smith at (202) 482-1276; Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230.

Initiation of Investigation

The Petition

    Between March 5 and 30, 2004, the Department of Commerce (``the 
Department'') received a petition, and amendments to the petition, 
filed in proper form by the Illinois Pork Producers Association, the 
Indiana Pork Advocacy Coalition, the Iowa Pork Producers Association, 
the Minnesota Pork Producers Association, the Missouri Pork 
Association, the Nebraska Pork Producers Association, Inc., the North 
Carolina Pork Council, Inc., the Ohio Pork Producers Council, and 119 
individual producers of live swine \1\

[[Page 19816]]

(hereinafter ``the petitioners''). The Department received information 
supplementing the March 5, 2004, petition on March 18, 22, and 30, 
2004. On March 25, 2004, the Department announced that it was extending 
the deadline for the initiation determination to not later than April 
14, 2004, in order to establish whether the antidumping and 
countervailing duty petitions were filed by or on behalf of the 
domestic industry. See March 25, 2004, memorandum from Jeffrey May, 
Deputy Assistant Secretary for Import Administration, Group I, to James 
J. Jochum, Assistant Secretary for Import Administration, entitled 
``Antidumping and Countervailing Duty Petitions on Live Swine from 
Canada: Extension of Deadline for Determining Industry Support'' 
(``Initiation Extension Memo''), which is on file in the Department's 
Central Records Unit (``CRU'') in Room B-099 of the main Department 
building.
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    \1\ Alan Christensen, Alicia Prill-Adams, Aulis Farms, Baarsch 
Pork Farm, Inc., Bailey Terra Nova Farms, Bartling Brothers Inc., 
Belstra Milling Co. Inc., Berend Bros. Hog Farm LLC, Bill Tempel, BK 
Pork Inc., Blue Wing Farm, Bornhorst Bros, Brandt Bros., Bredehoeft 
Farms, Inc., Bruce Samson, Bryant Premium Pork LLC, Buhl's Ridge 
View Farm, Charles Rossow, Cheney Farms, Chinn Hog Farm, Circle K 
Family Farms LLC, Cleland Farm, Clougherty Packing Company, Coharie 
Hog Farm, County Line Swine Inc., Craig Mensick, Daniel J. Pung, 
David Hansen, De Young Hog Farm LLC, Dean Schrag, Dean Vantiger, 
Dennis Geinger, Double ``M'' Inc., Dykhuis Farms, Inc., E & L 
Harrison Enterprises, Inc., Erle Lockhart, Ernest Smith, F & D 
Farms, Fisher Hog Farm, Fitzke Farm, Fultz Farms, Gary and Warren 
Oberdiek Partnership, Geneseo Pork, Inc., GLM Farms, Greenway Farms, 
H & H Feed and Grain, H & K Enterprises, LTD, Ham Hill Farms, Inc., 
Harrison Creek Farm, Harty Hog Farms, Heartland Pork LLC, Heritage 
Swine, High Lean Pork, Inc., Hilman Schroeder, Holden Farms Inc., 
Huron Pork, LLC, Hurst AgriQuest, J D Howerton and Sons, J.L. 
Ledger, Inc., Jack Rodibaugh & Sons, Inc., JC Howard Farms, Jesina 
Farms, Inc., Jim Kemper, Jorgensen Pork, Keith Berry Farms, Kellogg 
Farms, Kendale Farm, Kessler Farms, L.L. Murphrey Company, Lange 
Farms LLC, Larson Bros Dairy Inc., Levelue Pork Shop, Long Ranch 
Inc., Lou Stoller & Sons, Inc., Luckey Farm, Mac-O-Cheek, Inc., 
Martin Gingerich, Marvin Larrick, Max Schmidt, Maxwell Foods, Inc., 
Mckenzie-Reed Farms, Meier Family Farms Inc., MFA Inc., Michael 
Farm, Mike Bayes, Mike Wehler, Murphy Brown LLC, Ned Black and Sons, 
Ness Farms, Next Generation Pork, Inc., Noecker Farms, Oaklane 
Colony, Orangeburg Foods, Oregon Pork, Pitstick Pork Farms Inc., 
Prairie Lake Farms, Inc., Premium Standard Farms, Inc., Prestage 
Farms, Inc., R Hogs LLC, Rehmeier Farms, Rodger Schamberg, Scott W. 
Tapper, Sheets Farm, Smith-Healy Farms, Inc., Square Butte Farm, 
Steven A. Gay, Sunnycrest Inc., Trails End Far, Inc., TruLine 
Genetics, Two Mile Pork, Valley View Farm, Van Dell Farms, Inc., 
Vollmer Farms, Walters Farms LLP, Watertown Weaners, Inc., Wen Mar 
Farms, Inc., William Walter Farm, Willow Ridge Farm LLC, Wolf Farms, 
Wondraful Pork Systems, Inc., Wooden Purebred Swine Farms, Woodlawn 
Farms, and Zimmerman Hog Farms.
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    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended by the Uruguay Round Agreements Act (``URAA'') effective 
January 1, 1995 (``the Act''), the petitioners allege that imports of 
live swine from Canada are being, or are likely to be, sold in the 
United States at less than fair value within the meaning of section 731 
of the Act, and that such imports are materially injuring, or 
threatening material injury to, an industry in the United States.
    The Department finds that the petitioners filed this petition on 
behalf of the domestic industry because they are interested parties, as 
defined in section 771(9)(E) and (F) of the Act, and have demonstrated 
sufficient industry support in accordance with section 732(c)(4)(A). 
See infra, ``Determination of Industry Support for the Petition.''

Scope of Investigation

    The products covered by this investigation are all live swine from 
Canada except U.S. Department of Agriculture (``USDA'') certified 
purebred breeding swine. Live swine are defined as four-legged, 
monogastric (single-chambered stomach), litter-bearing (litters 
typically range from 8 to 12 animals), of the species sus scrofa 
domesticus. This merchandise is currently classifiable under Harmonized 
Tariff Schedule of the United States (``HTSUS'') subheadings 
0103.91.0010, 0103.91.0020, 0103.91.0030, 0103.92.0010, 
0103.92.0090.\2\
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    \2\ Prior to June 30, 2003, HTSUS subheadings 0103.91.0010, 
0103.91.0020, and 0103.91.0030 were all included under one heading, 
HTSUS 0103.91.0000.
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    Although the HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the merchandise under 
investigation is dispositive.
    As discussed in the preamble to the Department's regulations (see 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27323 (May 19, 1997)), we are setting aside a period for parties to 
raise issues regarding product coverage. The Department encourages all 
parties to submit such comments within 20 days of publication of this 
notice. Comments should be addressed to Import Administration's Central 
Records Unit, Room 1870, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230. The period of scope 
consultations is intended to provide the Department with ample 
opportunity to consider all comments and consult with parties prior to 
the issuance of our preliminary determination.

Determination of Industry Support for the Petition

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that the Department's industry support determination, which is 
to be made before the initiation of an investigation, be based on 
whether a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (1) at least 25 
percent of the total production of the domestic like product; and (2) 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act 
provides that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall: (1) poll 
the industry or rely on other information in order to determine if 
there is support for the petition, as required by subparagraph (A), or 
(2) determine industry support using a statistically valid sample.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the Act directs the 
Department to look to producers and workers who account for production 
of the domestic like product. The International Trade Commission 
(``ITC''), which is responsible for determining whether ``the domestic 
industry'' has been injured, must also determine what constitutes a 
domestic like product in order to define the industry. While both the 
Department and the ITC must apply the same statutory definition 
regarding the domestic like product (see section 771(10) of the Act), 
they do so for different purposes and pursuant to separate and distinct 
authority. In addition, the Department's determination is subject to 
limitations of time and information. Although this may result in 
different definitions of the domestic like product, such differences do 
not render the decision of either agency contrary to the law.\3\
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    \3\ See USEC, Inc. v. United States, 132 F. Supp. 2d 1 (CIT 
2001), citing Algoma Steel Corp. Ltd. v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product that is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    The domestic like product referred to in the petition is the 
domestic like product defined in the ``Scope of Investigation'' section 
above. No party has commented on the petition's definition of the 
domestic like product, and there is nothing on the record to indicate 
that this definition is inaccurate. The Department, therefore, has 
adopted the domestic like product definition set forth in the petition.

[[Page 19817]]

    As noted above, on March 25, 2004, the Department announced that it 
was extending the deadline for the initiation determination to not 
later than April 14, 2004, in order to establish whether the 
antidumping and countervailing duty petitions were filed by or on 
behalf of the domestic industry. See Initiation Extension Memo. The 
Department has determined that, pursuant to section 732(c)(4)(A) of the 
Act, the petition contains adequate evidence of industry support (see, 
April 7, 2004, ``Office of AD/CVD Enforcement Initiation Checklist'' 
(``Initiation Checklist'') on file in the CRU). We determine that the 
petitioners have demonstrated industry support representing over 50 
percent of total production of the domestic like product, requiring no 
further action by the Department pursuant to section 732(c)(4)(D) of 
the Act. Therefore, the domestic producers or workers who support the 
petition account for at least 25 percent of the total production of the 
domestic like product, and the requirements of section 732(c)(4)(A)(i) 
of the Act are met. Furthermore, the domestic producers or workers who 
support the petition account for more than 50 percent of the production 
of domestic like product produced by that portion of the industry 
expressing support for or opposition to the petition. Thus, the 
requirements of section 732(c)(4)(A)(ii) are met. The Department 
received no opposition to the petition. Accordingly, we determine that 
the petition is filed on behalf of the respective domestic industry 
within the meaning of section 732(b)(1) of the Act.

Allegations and Evidence of Material Injury and Causation

    The petitioners allege that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of the imports of the subject 
merchandise sold at less than normal value (``NV''). The petitioners 
contend that the industry's injured condition is evident in the 
declining trends in financial indicators, depression of prices, 
declining profitability, production volume and value, lost market 
share, and lost jobs. The petitioners further allege threat of injury 
due to excess production in Canada and increased import volumes and 
market penetration, causing further price depression. The allegations 
of injury and causation are supported by relevant evidence including 
U.S. Census Bureau import data, USDA and University of Iowa data, hog 
statistics from Statistics Canada, and a report by the Chicago 
Mercantile Exchange. We have assessed the allegations and supporting 
evidence regarding material injury and causation and have determined 
that these allegations are properly supported by accurate and adequate 
evidence and meet the statutory requirements for initiation (see 
Initiation Checklist).

Initiation Standard for Cost Investigations

    Pursuant to section 773(b) of the Act, the petitioner submitted 
information providing reasonable grounds to believe or suspect that 
sales made by Canadian producers/exporters in the home market were at 
prices below the cost of production (``COP'') and, accordingly, 
requested that the Department initiate a country-wide sales-below-COP 
investigation in connection with this investigation. The Statement of 
Administrative Action (''SAA''), submitted to the Congress in 
connection with the interpretation and application of the URAA, states 
that an allegation of sales below COP needs not be specific to 
individual exporters or producers. See SAA, H.R. Doc. No. 103-316 at 
833 (1994). The SAA, at 833, states that ``Commerce will consider 
allegations of below-cost sales in the aggregate for a foreign country, 
just as Commerce currently considers allegations of sales at less than 
fair value on a country-wide basis for purposes of initiating an 
antidumping investigation.''
    Further, the SAA provides that section 773(b)(2)(A) of the Act 
requires that the Department have ``reasonable grounds to believe or 
suspect'' that below-cost sales have occurred before initiating such an 
investigation. Reasonable grounds exist when an interested party 
provides specific factual information on costs and prices, observed or 
constructed, indicating that sales in the foreign market in question 
are at below-cost prices. Id. We have analyzed the country-specific 
allegation as described below (see infra, ``Normal Value'').

Export Price and Normal Value

    The following are descriptions of the allegations of sales at less 
than fair value upon which the Department based its decision to 
initiate this investigation. A more detailed description of these 
allegations is provided in the Initiation Checklist. Should the need 
arise to use any of this information as facts available under section 
776 of the Act in our preliminary or final determinations, we may re-
examine the information and revise the margin calculations, as 
appropriate.

Export Price

    The petitioners calculated export price (``EP''), based on January 
through December 2003 average unit values (``AUVs'') from import data 
contained on the U.S. ITC's Dataweb, for comparison to NV. The 
petitioners calculated two separate EPs, one based on imports of live 
swine weighing less than 50 kilograms (``feeder'') and the other based 
on imports of live swine weighing 50 kilograms or more (``finish''). We 
note that the petitioners calculated EP for finish animals based on 
imports of live swine classifiable only under HTSUS 0103.92.0010. HTSUS 
0103.92.0090 also includes imports of lives swine weighing 50 kilograms 
or more. Therefore, we revised EP for finish animals to also include 
imports of live swine classifiable under HTSUS 0103.92.0090. The 
petitioners made no deductions to EP. For further discussion, see the 
Initiation Checklist.

Normal Value

Price-to-Price Comparisons
    To determine NV based on home market prices, the petitioners used 
monthly pricing information from ``Swine Enterprise Budgets,'' 
published by the Government of Ontario's Ministry of Agriculture and 
Food, for the period January through December 2003. The petitioners 
took an average of the farrow-to-feeder and an average of the finish 
prices listed in this source to compare to the two calculated EPs, as 
described above (see supra, ``Export Price''). As with EP, the 
petitioners made no deductions to NV. For further discussion, see the 
Initiation Checklist.
    We made one minor adjustment to the petitioners' calculations. The 
petitioners used the incorrect farrow-to-feeder unit prices for 
October, November, and December 2003 in their calculation of the NV 
average price for the period. Accordingly, we revised the farrow-to-
feeder NV unit prices for October, November, and December 2003 and 
recalculated the NV average price for the period. For further 
discussion, see the Initiation Checklist.
    Based on the price-to-price comparisons described above, the 
margins in the petition, as adjusted by the Department, range from 0.00 
to 18.87 percent.
EP-to-CV Comparisons
    The petitioners provided information demonstrating reasonable 
grounds to believe or suspect that sales of live swine from Canada were 
made at prices below the fully absorbed COP in the home market, within 
the meaning of section 773(b) of the Act, and requested that the 
Department conduct a country-wide sales-below-cost investigation of 
such sales.

[[Page 19818]]

    Pursuant to section 773(b)(3) of the Act, the COP consists of cost 
of manufacture plus amounts for selling, general, and administrative 
expenses and packing costs. The petitioners calculated the COP based on 
the same publicly available data as the NV price calculation, ``Swine 
Enterprise Budgets,'' published by the Government of Ontario's Ministry 
of Agriculture and Food. The ``Swine Enterprise Budgets'' provides 
estimates for the COP for a swine enterprise for the year 2003. Because 
the provincial government is the source for the information, we found 
this information reasonable for use in the COP calculation. We relied 
on the COP calculations submitted by the petitioners except as follows. 
Petitioners in their calculations used the cost of ``finished pig'' as 
shown in the ``Swine Enterprise Budgets'' based on the cost of a 
finishing barn which purchases feeder pigs rather than raising pigs 
from farrow to finish. We revised the petitioners' calculation of the 
COP for ``finished pig'' by substituting the COP of ``farrow-to finish 
pig'', also shown in the ``Swine Enterprise Budgets,'' which more 
accurately reflects the total cost of producing a finished pig.
    Based upon a comparison of the prices of the foreign like product 
in the home market to the calculated COP of the product, we find 
reasonable grounds to believe or suspect that sales of the foreign like 
product in the home market were made below the COP, within the meaning 
of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is 
initiating a country-wide cost investigation for the Canadian home 
market.
    Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the 
petitioners also based NV for sales in the home market on CV. The 
petitioners calculated CV starting with the same COP figure used to 
compute home market costs. Consistent with section 773(e)(2) of the 
Act, the petitioners also included in CV an amount for profit. For 
profit, the petitioners state that they were unable to obtain financial 
statements from any Canadian swine farming operation. As a result, they 
based CV profit on a company in a related field of production, pork 
processing. However, we revised the petitioners' CV profit calculation. 
Instead of basing CV profit on a pork processor, we based our profit 
calculation on the ``Swine Enterprise Budgets'' because it represents 
the profit for the ``same general category of products'' as the 
merchandise listed in the scope of this initiation, consistent with 
Section 773(e)(2)(B) of the Act. For further discussion, see the 
Initiation Checklist.
    Based upon the comparison of EP to CV, after adjustments by the 
Department, the petitioners calculated estimated dumping margins 
ranging from 13.22 to 66.48 percent.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of live swine from Canada are being, or are likely 
to be, sold at less than fair value.

Initiation of Antidumping Investigation

    Based upon our examination of the petition on live swine from 
Canada, we have found that it meets the requirements of section 732 of 
the Act. Therefore, we are initiating an antidumping investigation to 
determine whether imports of live swine from Canada are being, or are 
likely to be, sold in the United States at less than fair value. Unless 
this deadline is extended pursuant to section 773(c)(1) of the Act, we 
will make our preliminary determination no later than 140 days after 
the date of this initiation.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the representatives 
of the Government of Canada. We will attempt to provide a copy of the 
public version of the petition to each exporter named in the petition, 
as provided for under 19 CFR 351.203(c)(2) (2004).

International Trade Commission Notification

    We have notified the ITC of our initiation, as required by section 
732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of this initiation, whether there is a 
reasonable indication that imports of live swine from Canada are 
causing material injury, or threatening to cause material injury, to a 
U.S. industry.
    See section 733(a)(2) of the Act. A negative ITC determination will 
result in the investigation being terminated; otherwise, this 
investigation will proceed according to statutory and regulatory time 
limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: April 7, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-8478 Filed 4-13-04; 8:45 am]
BILLING CODE 3510-DS-P