[Federal Register Volume 69, Number 72 (Wednesday, April 14, 2004)]
[Notices]
[Pages 19818-19821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8479]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-851]


Notice of Initiation of Countervailing Duty Investigation: Live 
Swine From Canada

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

ACTION: Initiation of countervailing duty investigation.

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SUMMARY: The Department of Commerce is initiating a countervailing duty 
investigation to determine whether manufacturers, producers, or 
exporters of live swine from Canada receive countervailable subsidies.

EFFECTIVE DATE: April 14, 2004.

[[Page 19819]]


FOR FURTHER INFORMATION CONTACT: Melani Miller, Blanche Ziv, or S. 
Anthony Grasso, Import Administration, International Trade 
Administration, U.S. Department of Commerce, Room 3099, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
0116, (202) 482-4207, and (202) 482-3853, respectively.

Initiation of Investigation

The Petition

    Between March 5 and 31, 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\ (collectively, ``the 
petitioners''). The Department received supplements to the March 5, 
2004 petition on March 18, 22, 30, and 31, 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., Levelvue 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 702(b)(1) of the Tariff Act of 1930, as 
amended by the Uruguay Round Agreements Act effective January 1, 1995 
(''the Act''), the petitioners allege that manufacturers, producers, or 
exporters of live swine (``swine'' or ``subject merchandise'') from 
Canada receive countervailable subsidies within the meaning of section 
701 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 sections 771(9)(E) and (F) of the Act, and have demonstrated 
sufficient industry support in accordance with section 702(c)(4)(A) of 
the Act. 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.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Government of Canada (``GOC'') for 
consultations with respect to the petition filed. The Department held 
consultations with the GOC on March 19, 2004. The points raised in the 
consultations are described in the consultation memorandum to the file 
dated March 19, 2004 and in the GOC's March 23, 2004 submission to the 
Department, both of which are on file in the Department's CRU.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that 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 702(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.

[[Page 19820]]

    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. 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).
    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.
    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 702(c)(4)(A) of the Act, the 
petition contains adequate evidence of industry support. See April 7, 
2004 memorandum ``Office of AD/CVD Enforcement Initiation Checklist'' 
(``Initiation Checklist''), which is 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 
702(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 702(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 702(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 702(b)(1) of the Act.

Injury Test

    Because Canada is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) of the Act 
applies to this investigation. Accordingly, the ITC must determine 
whether imports of the subject merchandise from Canada materially 
injure, or threaten material injury to, a U.S. industry.

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. 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 of Countervailing Duty Investigation

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition on behalf of an industry that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a) of the Act 
and (2) is accompanied by information reasonably available to the 
petitioners supporting the allegations.
    The Department has examined the countervailing duty petition on 
live swine from Canada and found that it complies with the requirements 
of section 702(b) of the Act. Therefore, in accordance with section 
702(b) of the Act, we are initiating a countervailing duty 
investigation to determine whether manufacturers, producers, or 
exporters of live swine from Canada receive countervailable subsidies. 
For a discussion of evidence supporting our initiation determination, 
see also Initiation Checklist.
    We are including in our investigation the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in Canada:

A. Canadian Farm Income Program
B. Producer Assistance 2003/Transitional Funding Program
C. Canadian Agricultural Income Stabilization Program
D. Farm Credit Canada Financing
    1. Flexi-Hog Loan Program
    2. Enviro-Loan Program
E. Quebec Farm Income Stabilization Insurance/Agricultural Revenue 
Stabilization Insurance Program
F. La Financiere Agricole du Quebec Loans
    1. Preferred Rate Loans
    2. Secure Rate Development Loans
    3. Advantage Rate Loans
G. Farm Improvement and Marketing Cooperatives Guaranteed Loans
H. Alberta Agricultural Financial Services Corporation (``AFSC'') 
Financing: Developing Farmer Loan Program
I. Alberta Disaster Assistance Loan Program
J. Alberta Hog Industry Development Fund Program
K. Alberta Livestock Industry Development Fund Program
L. Manitoba Agricultural Credit Corporation (``MACC'') Financing: 
Diversification Loan and Enhanced Diversification Loan Guarantee 
Programs
M. Saskatchewan Short-Term Hog Loan Program
N. Saskatchewan Livestock and Horticultural Facilities Incentives 
Program
O. New Brunswick Livestock Incentive Program
P. Prince Edward Island (``PEI'') Hog Loan

[[Page 19821]]

Programs
    1. Bridge Financing Program
    2. Expansion Loan Program
    3. Depop-Repop Loan Program
    Q. PEI Swine Quality Improvement Program

    We are not including in our investigation the following programs 
alleged to benefit producers and exporters of the subject merchandise 
in Canada:

A. Alberta Agricultural Financial Services Corporation Financing: Farm 
Development Loan Program

    According to the petition, the Farm Development Loan program is a 
Government of Alberta program that offers short, medium, and long-term 
loans to farmers in amounts up to C$250,000 at a ``reasonable cost.''
    The information relied upon by the petitioners in making this 
allegation related only to the Developing Farmer Loan Program (included 
above) and not to this program. We find that the petitioners did not 
provide sufficient evidence, as required by section 702(b) of the Act, 
that (1) this program was designed for the benefit of live swine 
producers, (2) swine producers were predominant users of the program, 
or (3) swine producers received disproportionate benefits under this 
program. Therefore, because the evidence provided is not sufficient to 
support the allegations of the elements necessary for the imposition of 
a countervailing duty imposed by section 701(a) of the Act, we are not 
investigating this program.

B. Manitoba Agricultural Credit Corporation Financing

1. Direct Lending Program

    The MACC Direct Lending Program is intended for the purchase of 
land or buildings, construction or renovation of farm buildings, 
breeding stock, debt consolidation, supply-managed quota, and share 
financing. Manitoba farmers whose annual off-farm income does not 
exceed C$70,000 and whose net worth is C$650,000 or less are eligible 
to obtain these loans. The maximum amount of the loans are C$400,000 
for individuals and joint farm units and C$800,000 for partnerships, 
corporations, or cooperatives.
    As we noted in the Initiation Checklist, the petitioners withdrew 
their allegation in regard to this program. See Memorandum from Team to 
File dated March 29, 2004, ``Ex-Parte Meeting with Counsel for 
Petitioners: Antidumping and Countervailing Duty Petitions on Live 
Swine from Canada.'' Moreover, the petitioners did not provide 
sufficient evidence to support the allegation. Therefore, we are not 
initiating an investigation of this program.

2. Bovine Spongiform Encephalopathy (``BSE'') Recovery Program

    The BSE Recovery Program provides financing to Manitoba cattle and 
other ruminant producers to address feed purchase requirements and 
accounts payable which may otherwise jeopardize the continuity of the 
operation due to the impact of the detection of BSE in Canada. 
Qualified applicants must be ruminant producers and must demonstrate an 
agricultural-related financial setback as a consequence of BSE. Loans 
under this program are capped at C$50,000 or C$75,000 depending on 
whether a shorter or a longer-term loan is needed.
    According to the program description, loans issued under this 
program are limited to ruminant producers only (e.g., cattle or sheep 
producers). Because swine producers are not ruminant producers, this 
program would not benefit subject merchandise production. Although the 
petitioners contend that, because Manitoba's hog producers have been 
adversely impacted by BSE, this program may have been extended to swine 
producers, the petitioners do not provide sufficient evidence, beyond 
mere speculation, to support this allegation. Therefore, because the 
petitioners have not met the requirements of section 702(b) of the Act, 
we are not initiating an investigation of this program.

C. Saskatchewan Farm Fuel Program

    Under this program, farmers in Saskatchewan are eligible to 
purchase farm gasoline and propane, as well as marked diesel fuel, tax 
free from bulk dealers. To qualify for the fuel tax exemption, an 
individual must have a Fuel Tax Exemption Permit number issued by the 
Farm Fuel Program and must present that number when making a purchase. 
Farmers can also obtain the fuel tax rebate on farm gasoline and 
propane purchased from a retail outlet by applying for the rebate at 
the end of each year and submitting their fuel purchase receipts.
    The petitioners claim that this program is de facto specific 
according to sections 771(5A)(D)(iii)(II) and (III) of the Act because 
live swine producers are the predominant users of this program and 
receive a disproportionate share of the program's benefits. According 
to record information and the description of the program itself, it 
appears that benefits through this program are available to all farmers 
in Saskatchewan. The petitioners have not adequately supported their 
claims that swine producers received a disproportionate share of the 
farm fuel tax exemptions or that swine producers are the predominant 
users of the program. Because the petitioners have not sufficiently 
supported their claims regarding the specificity of this program, we 
are not including this program in our investigation.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the petition has been provided to the GOC. 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).

ITC Notification

    We have notified the ITC of our initiation, as required by section 
702(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 703(a)(2) of the Act. A negative ITC 
determination will result in the investigation being terminated; 
otherwise, these investigations 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. 04-8479 Filed 4-13-04; 8:45 am]
BILLING CODE 3510-DS-P