NOTICES
DEPARTMENT OF COMMERCE
International Trade Administration
[C-122-504]
Preliminary Affirmative Countervailing Duty Determination; Certain Red Raspberries From Canada
Monday, October 21, 1985
*42574
(Cite as: 50 FR 42574, *42574)
AGENCY: Import Administration, International Trade Administration, Commerce.
ACTION: Notice.
(Cite as: 50 FR 42574, *42574)
SUMMARY: We preliminarily determine that certain benefits which constitute subsidies within the meaning of the countervailing duty law are being provided to producers or exporters in Canada of certain red raspberries. The estimated net subsidy is 0.99 percent ad valorem.
We have notified the U.S. International Trade Commission (ITC) of our determination. We are directing the U.S. Customs Service to suspend liquidation of all entries of certain red raspberries from Canada that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice, and to require a cash deposit or bond on entries of these products in the amount equal to the estimated net subsidy.
If this investigation proceeds normally, we will make our final determination by December 26, 1985.
EFFECTIVE DATE: October 21, 1985.
FOR FURTHER INFORMATION CONTACT:Mary Martin or Roy Malmrose, Office of Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, D.C. 20230; telephone: (202) 377-3464 or 377-8320.
(Cite as: 50 FR 42574, *42574)
SUPPLEMENTARY INFORMATION:
Preliminary Determination
Based upon our investigation, we preliminarily determine that there is reason to believe or suspect that certain benefits which constitute subsidies within the meaning of section 701 of the Tariff Act of 1930, as amended (the Act), are being provided to producers or exporters in Canada of certain red raspberries. For purposes of this investigation, the British Columbia Raspberry Producers' Farm Income Plan (FIP) is found to confer a subsidy. We determine the estimated net subsidy to be 0.99 percent ad valorem.
Case History
On July 18, 1985, we received a petition in proper form from the Washington Red Raspberry Commission, the Red Raspberry Committee of the Oregon Caneberry Commission, the Red Raspberry Committee of the Northwest Food Processors Association, the Red Raspberry Member Group of the American Frozen Food Institute, Rader Farms (a grower-packer), Ron Roberts (a grower), Shuksan Frozen Foods, Inc., the Washington Red Raspberry Growers Association, and the
(Cite as: 50 FR 42574, *42574)
North Willamette Horticultural Society, on behalf of domestic producers of red raspberries packed in bulk containers and suitable for further processing. In compliance with the filling requirments of § 355.26 of the Commerce Regulations (19 CFR 355.26), the petition alleges that producers or exporters of certain red raspberries in Canada directly or indirectly receive benefits which constitute subsidies within the meaning of section 701 of the Act, and that these imports materially injure, or threaten material injury to, a U.S. industry.
We found that the petition contained sufficient grounds upon which to initiate a countervailing duty investigation, and on August 6, 1985, we initiated this investigation (50 FR 32461).
Since Canada is a "country under the Agreement" within the meaning of section 701(b) of the Act, an injury determination is required for this investigation. Therefore, we notified the ITC of our initiation. On September 3, 1985, the ITC determined that there is a reasonable indication that these imports materially injure, or threaten material injury to, a U.S. industry.
We presented a questionnaire concerning the allegations to the government of Canada in Washington, D.C. on August 12, 1985. On September 12, 1985, we received responses to our questionnaire from the government of Canada and eleven commercial growers, *42575
(Cite as: 50 FR 42574, *42575)
packers, grower-owned cooperative packers, and grower-packers of red raspberries.
(Cite as: 50 FR 42574, *42575)
On September 11, 1985 we received an exclusion request from Mukhtiar & Sons Packers Ltd. However, the response indicates that while Mukhtiar does not directly receive benefits under FIP, it does purchase raspberries from growers which may receive FIP benefits. Therefore, for purposes of this preliminary determination we are denying Mukhtiar's exclusion request.
On September 24, 1985, petitioners filed an amendment to their petition alleging the existence of critical circumstances.
Scope of the Investigation
The products covered by this investigation are fresh and frozen red raspberries packed in bulk and suitable for further processing. Fresh red raspberries are currently classified under item numbers 146.5400 and 146.5600 of the Tariff Schedules of the United States, Annotated (TSUSA) and frozen raspberries under item number 146.7400.
Analysis of Programs
Throughout this notice, we refer to certain general principles applied to the facts of the current investigation. These principles are described in the "Subsidies Appendix" attached to the notice of "Cold-Rolled Carbon Steel Flat-
(Cite as: 50 FR 42574, *42575)
Rolled Products from Argentina; Final Affirmative Countervailing Duty Determination and Countervailing Duty Order," which was published in the April 26, 1984, issue of the Federal Register (49 FR 18006).
Consistent with our practice in preliminary determinations, where a response to an allegation denies the existence of a program, recept of benefits under a program, or eligibility of a company or industry under a program, and the Department has no persuasive evidence showing that the response is incorrect, we accept the response for purposes of the preliminary determination. All such responses are subject to verification. If the responses cannot be supported at verification, and the program is otherwise countervailable, the program will be considered a subsidy in the final determination.
For purposes of this preliminary determination, the period for which we are measuring subsidization (the review period) is the government of Canada's 1985 fiscal year (April 1, 1984--March 31, 1985). Based upon our analysis of the petition, information submitted by petitioners, and the responses to our questionnaires submitted by the government of Canada, and the growers and packers of red raspberries in British Columbia, we preliminarily determine the following:
I. Program Preliminarily Determined to Confer a Subsidy
(Cite as: 50 FR 42574, *42575)
We preliminarily determine that a subsidy is being provided to producers or exporters in Canada of certain red raspberries under the following program:
A. British Columbia Raspberry Producers' Farm Income Plan (FIP)
Created in 1976 pursuant to British Columbia's Farm Income Insurance Act, FIP assures raspberry producers in British Columbia a specified level of return over estimated production costs. The program is administered by the provincial Ministry of Agriculture and Food, the British Columbia Federation of Agriculture, and the British Columbia Raspberry Growers' Association. The growers contribute to the funding of FIP through the payment of premiums and administrative surcharges. The provincial government's share of the funding consists of payments equal to those of the growers or, in deficit years, payments to the extent necessary, which will return the program to financial equilibrium.
Participation in the program is voluntary and is open to all producers who are members of the British Columbia Raspberry Growers' Association and who ship a minimum of 10 tons of raspberries grown in British Columbia to a processor in British Columbia. Certain participation ceilings restrict the number of pounds for which the program provides coverage. There are also payment ceilings, above which benefits are reduced.
(Cite as: 50 FR 42574, *42575)
Participating raspberry producers receive stabilization payments for years during which estimated costs of production exceed market returns. Costs of production and market returns are determined by the administering authorities. Stabilization payments are equal to the difference between the estimated costs of production and market returns, multiplied by the number of pounds of raspberries sold, less premiums and administrative surcharges paid by the grower. In the "Final Affirmative Countervailing Duty Determination: Live Swine and Fresh, Chilled and Frozen Pork Products from Canada" (50 FR 25097), we found the Farm Income Plan for swine producers in British Columbia to be countervailable. We found FIP in "Live Swine" to be countervailable because: (1) Neither the Farm Income Insurance Act nor its implementing regulations and guidelines contain procedures or criteria establishing when a commodity is to become subject to a stabilization plan; (2) there is room for considerable variance in the treatment of those commodities for which stabilization plans are in place; and (3) the models used to estimate the cost of production are not necessarily an accurate reflection of the cost of production experience of the relevant producer group. Because the FIP program for growers of red raspberries in British Columbia is virtually identical to the program found countervailable in "Live Swine," we preliminarily determine this program to be countervailable.
(Cite as: 50 FR 42574, *42575)
As described above, to be eligible for FIP payments a grower must be a member of the British Columbia Raspberry Growers' Association. However, in calculating the estimated net subsidy we did not subtract membership fees paid by the growers to the Association from the amount of FIP payments received by growers. Although section 771(6)(A) of the Act permits the subtraction of "any application fee, deposit, or similar payment paid in order to qualify for, or to receive, the benefit of the subsidy," we are not convinced it is appropriate to deduct the membership fees from the funds provided under FIP to arrive at a "net subsidy." It is clear from the regulations provided in the response that the membership fees are not used in any manner to fund FIP. Furthermore, the link between membership fees and the benefits provided under FIP is neither specifically described nor well-defined in the regulations. In particular, the payment of membership fees is not specifically listed as a prerequisite for receiving FIP benefits. While the regulations do require that a grower be a member "in good standing" in the Growers' Association, the payment of substantial membership fees does not appear to be directly related to receipt of FIP benefits.
The premiums paid by the growers do actually flow into the fund from which FIP payments are made. The surcharges paid by the growers finance the administration of the program. The payment of premiums and surcharges is specifically stated in the regulations as a requirement for participation in
(Cite as: 50 FR 42574, *42575)
the program. Accordingly, these charges qualify as offsets under section 771(6)(A) of the Act and have been subtracted from FIP payments in the calculation of the estimated net subsidy.
To calculate the estimated net subsidy, we subtracted the premiums and administrative surcharges paid by *42576
(Cite as: 50 FR 42574, *42576)
the growers from the amount of government payments made during the review period and divided the resulting amount by total sales. We preliminarily determine that the estimated net subsidy is 0.99 percent ad valorem.
II. Program Preliminarily Determined Not to Confer a Subsidy
The Ministry of Labor in the Province of British Columbia administers a number of wage subsidy programs. The two objectives of these programs are to create employment for target groups of individuals and to stimulate economic growth within the Province. Each program reimburses the employer for up to 50 percent of the wages paid to a maximum of $2.50 per hour. The various "target groups" include: Women, clients of the Ministry of Human Resources, disabled persons and students. To be eligible for funding, employers must have an established operation in British Columbia and be able to create a position that will
(Cite as: 50 FR 42574, *42576)
provide employment. Because this program is not limited to a specific enterprise or industry or group of enterprises or industries, we preliminarily determine it to be not countervailable.
III. Programs Preliminarily Determined Not Used
A. Stabilization Payments Under the Agricultural Stabilization Act
The Agricultural Stabilization Act (ASA) of 1957-58 was enacted to provide for the stabilization of the prices of certain agricultural commodities. Three groups of commodities are explicitly provided for within the ASA: Cattle, hogs and sheep; industrial milk and cream; and corn, soybeans, oats and barley. Other natural or processed agricultural products, with certain exceptions, may be designated by the Governor in Council. Red raspberries are not named as a commodity under the Act nor have they been discretionarily designated for support in the last two fiscal years. Therefore, we preliminarily determine that this program was not used.
B. "Loi Sur L'assurance-Recolte"
This Quebec provincial law authorizes the establishment of crop insurance
(Cite as: 50 FR 42574, *42576)
programs. The administering authority is "Regie des Assurances Agricoles du Quebec." Under the law, several commodity-specific regulations have been issued. The Regulations on the Insurance for Raspberries and Strawberries (number: A-30, r.9) establish procedures through which raspberry producers in Quebec can insure their raspberry crop in the first and second years of planting against snow, hail, drought, insects, disease etc. Because all of the growers and packers of red raspberries which are exported to the United States are located in British Columbia, we preliminarily determine that this program was not used.
Preliminary Negative Determination of Critical Circumstances
Petitioners alleged that imports of certain red raspberries from Canada present "critical circumstances." Under section 703(e)(1) of the Act, critical circumstances exist when the Department has a reasonable basis to believe or suspect that (1) the alleged subsidy is inconsistent with the Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade ("the Subsidies Code"), and (2) there have been massive imports of the class or kind of merchandise which is the subject of the investigation over a relatively short period. Section 355.29(a) of the Commerce Regulations (19 CFR 355.29(a)) on critical
(Cite as: 50 FR 42574, *42576)
circumstances provides, inter alia, that we will determine "whether the alleged subsidy is an export subsidy inconsistent with the Agreement" (emphasis added). Article 5(9) of the Subsidies Code also clearly limits the finding of critical circumstances to situations involving export subsidies. Thus, to be inconsistent with the Subsidies Code, a subsidy must be an export subsidy. Because eligibility for benefits under FIP is not contingent upon export performance, FIP is not an export subsidy and is not inconsistent with the Subsidies Code. Therefore, we preliminarily determine that "critical circumstances" do not exist with respect to certain red raspberries from Canada. We do not reach the question of whether there have been massive imports.
Verification
In accordance with section 776(a) of the Act, we will verify the data used in making our final determination.
Suspension of Liquidation
In accordance with section 703(d) of the Act, we are directing the U.S. Customs Service to suspend liquidation of all entries of red raspberries that
(Cite as: 50 FR 42574, *42576)
are subject to this investigation which are entered or withdrawn from warehouse, for consumption, on or after the date of publication of this notice in the Federal Register, and to require a cash deposit or bond in the amount of 0.99 percent ad valorem.
ITC Notification
In accordance with section 703(f) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all nonprivileged and nonconfidential information relating to this investigation. We will allow the ITC access to all privileged and confidential information in our file, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order, without the written consent of the Deputy Assistant Secretary for Import Administration. If our final determination is affirmative, the ITC will make its determination of whether these imports materially injure, or threaten material injury to, a U.S. industry within 45 days after our final determination.
Public Comment
In accordance with § 355.35 of the Commerce Department Regulations we will
(Cite as: 50 FR 42574, *42576)
hold a public hearing, if requested, to afford interested parties an opportunity to comment on this preliminary determination at 11:00 a.m. on November 15, 1985, at the U.S. Department of Commerce, Room 1413, 14th Street and Constitution Avenue, NW., Washington, D.C. 20230. Individuals who wish to participate in the hearing must submit a request to the Deputy Assistant Secretary for Import Administration, Room B099, at the above address within 10 days of this notice's publication. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; (3) the reason for attending; and (4) a list of the issues to be discussed. In addition, prehearing briefs in at least 10 copies must be submitted to the Deputy Assistant Secretary by November 8, 1985. Oral presentations will be limited to issues raised in the briefs.
In accordance with 19 CFR 355.33(d) and 19 CFR 355.34, written views will be considered if received not less than 30 days before the final determination or if a hearing is held, within 10 days after the hearing transcript is available.
This Notice is published pursuant to section 703(f) of the Act (19 U.S.C. 1671b(f)).
Gilbert B. Kaplan,
(Cite as: 50 FR 42574, *42576)
Acting Deputy Assistant Secretary for Import Administration.
October 11, 1985.
[FR Doc. 85-25022 Filed 10-18-85; 8:45 am]
BILLING CODE 3510-DS-M