NOTICES

DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-504]

Suspension of Countervailing Duty Investigation; Certain Red Raspberries From Canada

Thursday, January 9, 1986

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AGENCY: Import Administration, International Trade Administration, Commerce.

ACTION: Notice.

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SUMMARY: The Department of Commerce had decided to suspend the countervailing duty investigation involving certain red raspberries from Canada. The basis for the suspension is an agreement to offset or eliminate completely all benefits provided by the governments of Canada and of the Province of British Columbia, which we find to constitute subsidies on exports of certain red raspberries to the United States.

EFFECTIVE DATE: January 9, 1986.

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) 377-2830 or 377-8320.

SUPPLEMENTARY INFORMATION: On July 18, 1985, we received a petition in proper form from the Washington Red Raspberry Commission, the Red Raspberry Committee of 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, Ron Roberts, Shuksan Frozen Foods, Inc., the Washington Red Raspberry Growers' Association and the North Willamette Horticultural Society, on behalf of domestic producers of red

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raspberries packed in bulk containers and suitable for further processing.

In compliance with the filing requirements of our 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 Tariff Act of 1930, as amended (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.

On September 11, 1985, we received a timely exclusion request from Mukhtiar & Sons Packers Ltd. pursuant to our regulations (19 CFR 355.38). We also received a statement from the British Columbia provincial government certifying that no benefits were provided to Mukhtiar & Sons Packers Ltd. under the Farm Income Plan. We presented a questionaire concerning the allegations to the government of

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Canada in Washinton, D.C. on August 12, 1985. On September 12, 1985, we received responses to our questionnaire from the government of Canada and eleven packers of red raspberries.

On September 24, 1985, petitioners filed an amendment to their petition alleging the existence of critical circumstances. We issued an affirmative preliminary determination on October 11, 1985 (50 FR 42574). We preliminarily determined that there was reason to believe or suspect that certain benefits which constitute subsidies within the meaning of the Act are being provided to producers or exporters in Canada of certain red raspberries. We preliminarily determined that the estimated net subsidy was 0.99 percent ad valorem for certain red raspberries. The program preliminarily determined to bestow countervailable benefits was the British Columbia Farm Income Plan.

We directed 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 and to require a cash deposit or the posting of a bond on entries of these products in the amount equal to the estimated net subsidy. We conducted verification of the questionnaire response from the government and packers of red raspberries in Canada from October 15 through October 22, 1985.

On November 13, 1985, petitioners submitted allegations of three new subsidy

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available to producers or exporters of raspberries in Canada.

Our notice of preliminary determination gave interested parties an opportunity to submit oral and written views. We held a public hearing on November 15, 1985. Both petitioners and respondents submitted comments on this proceeding.

On November 26, 1985, we initiated a proposed suspension agreement with respect to certain red raspberries from Canada. Petitioners have had 30 days in which to submit comments regarding the proposed suspension agreement on certain red raspberries. Their comments have been received and taken into consideration.

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.

Changes Since the Preliminary Determination

As indicated in the Case History section of this notice, petitioners submitted

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three new subsidy program allegations after the preliminary determination and after verification. Due to the lateness of the submission, we were unable to obtain verified information regarding the countervailability of these additional programs. Based on the best information available, a description of the programs tardily alleged follows:

A. Industrial and Regional Development Program (IRDP)

Petitioners allege that a raspberry processor received an IRDP grant in 1984. IRDP is administered by the Department of Regional and Industrial Expansion (DRIE). In 1983, DRIE was created, incorporating the activities of the Department of Regional Economic Expansion (DREE) and of the Department of Industry, Trade, and Commerce. At this time, several programs of DREE were modified and incorporated into IRDP. IRDP's purpose is to increase industrial development and improve the overall economic climate by providing funds for new facilities or for the expansion or modernization of existing facilities. All regions of Canada are divided into four tiers based on the economic development of the region. The amount of assistance available differs for each tier, with the greatest amount going to the most economically disadvantaged tier.

The major component of the IRDP is the Regional Development Incentive Program (RDIP). RDIP was determined to be countervailable in "Final Negative

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Countervailing Duty Determinations; Certain Softwood Products from Canada" (48 Fed. Reg. 24159) because it was limited to companies within specific regions. Because we believe this program may be countervailable, we specifically provided for it in the Suspension Agreement.

B. Federal Financing Assistance

Petitioners allege that the Federal Government provided a raspberry processor with financing to help process the 1983 raspberry crop. The financing took the form of a purchase and resale program. We do not know the general program under which this assistance was given. We also do not know the terms of the assistance provided such as the rate of interest charged, the length of the loan, the repayment schedule and the collateral provided. It is questionable whether the financing was related to the products under investigation. Therefore, because of the imprecise nature of the allegation and its tardiness, we have not considered this allegation for purposes of the Agreement. However, as appropriate, we will consider this allegation in any section 751 administrative review of the Agreement that may occur.

C. Lower Mainland Horticultural Improvement Association

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Petitioners allege that the above association provided grants to conduct horticultural research. Among the grants listed in the information submitted, three could conceivably benefit the raspberry industry. However, we do not have detailed information regarding the eligibility for such grants, the date of receipt and the purpose of all the research projects funded. We also do not know if the results of the research funded are available to the general public. Therefore, because of the imprecise nature of the allegation and its tardiness, we have not considered this allegation for purposes of the *1007

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Agreement. However, as appropriate, we will consider this allegation in any section 751 administrative review of the Agreement that may occur.

Petitioners' Comments

Comment 1

Petitioners contend that the Department violated section 704(e) of the Act, because petitioners did not receive a copy of the proposed suspension agreement 30 days before suspension of the investigation.

DOC Position

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On November 26, 1985, 30 days prior to suspension of this investigation, the petitioners were notified that a proposed agreement was initialled by the Government of Canada and the Department. A copy of the agreement was made available to petitioners at the time. Petitioners, however, declined receipt of the document that day. A copy of the proposed agreement was delivered to the petitioners on November 27, 1985.

Comment 2

Petitioners also contend that, since the Department failed to attach compies of the Order-in-Council and the letter from the British Columbia government to the copy of the proposed agreement that they received, the Department further violated statutory and regulatory procedures. Petitioners maintain that these documents are substantial parts of the Suspension Agreement (the Agreement), and their omission constitutes a failure to provide petitioners with a complete copy of the proposed agreement in a timely manner.

DOC Position

The Order-in-Council and the referenced letter are not parts of, nor do they affect, the provisions of the Agreement. They were supplied by the Government

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of Canada merely as evidence that the FIP program was terminated, which is the primary, although not exclusive, basis of the Agreement. The Department required the Government of Canada to agree to furnish these documents as a condition for entering into the Agreement. The complete terms under which this investigation is suspended are contained in the Agreement, a copy of which was made available to petitioners, in draft form, in full compliance with statutory and regulatory procedures. The petitioners were delivered a copy of the Order-in-Council and letter as soon as possible after we received them.

Comment 3

Petitioners contend that, although the Agreement indicates that the FIP has been terminated, it does not ensure that the program will not be reinstituted in the future.

DOC Position

We have made an addition to section II.A. of the Agreement to dispel this concern of the petitioners.

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Comment 4

Petitioners argue that at least some of the Wage Subsidy Programs are countervailable, under the standard adopted by the Court of International Trade in Cabot Corp. v. United States, Slip Op. 85-102 (October 4, 1985). The Department has failed to require the respondents to eliminate or offset the benefits of this program. Accordingly, the petitioners contend that the Agreement does not eliminate or offset completely all subsidy programs, as required by section 704(b) of the Act.

DOC Position

The Wage Subsidy Programs were preliminarily found to be non-countervailable, because they appeared not to be limited to a specific enterprise or industry, or group of enterprises or industries. We have not subsequently received any information that the program is so limited, and we verified that it benefits a wide array of industries and companies. As a result, we do not consider it to be a subsidy, and we did not require the Government of Canada to eliminate or offset the benefits of this program.

In view of the decision in Carlisle Tire and Rubber Co. v. United States, 564 F. Supp. 834 (C.I.T. 1983), in which the Court of International Trade approved

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the Department's standard for finding that benefits are generally available, we are not following the standard adopted in Cabot.

Comment 5

Petitioners state that the Agreement does not require respondents to offset the benefits that petitioners discovered after the preliminary determination, and that were included in petitioners' letter to the Department of November 13, 1985. Petitioners argue that these benefits should be considered countervailable using the best information available, and respondents should be required to offset them in the Agreement.

DOC Position

Section II.C. of the Agreement requires respondents to repay within 90 days of a final determination any grant that benefits the subject merchandise that has been found countervailable in that determination. The IRDP program was specifically included in this subsection. Section II.B. of the Agreement provides that the provision of subsidies may result in termination of the Agreement. Subsidies are defined as benefits from programs that have been found countervailable in a final determination regarding a Canadian product.

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Petitioner has the right to request a continuation of the investigation, pursuant to section 704(g) of the Act, which would consider petitioners' late allegations regarding the three programs. That determination could decide whether the benefits must be repaid, unless an earlier final determination had already done so. Based upon the opportunity for a final determination in this investigation and the limited information presently available for an assessment of the character and receipt of the alleged benefits, we find that the Agreement adequately ensures that all subsidies have been eliminated.

Comment 6

Petitioners state that section II.C. of the Agreement could be read as requiring producers and exporters to refund only that portion of a subsidy received within 90 days of a determination that the subsidy is countervailable.

DOC Position

We agree. We have rewritten this language in the Agreement to address this concern. Further, the Department always intended that the full benefit applicable to the subject merchandise should be refunded within 90 days of a determination, regardless of when that benefit was actually received.

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Comment 7

Petitioners are concerned that the Agreement makes no provision for the refund of benefits under programs that are found to be countervailable by the courts.

DOC Position

We feel that the definition of "subsidies" in section II.B. of the Agreement is adequate. If a court overturns the Department's decision in a final determination regarding the countervailability of a program, the Department makes a new determination based upon the decision, unless the decision is appealed. The new determination would then have the same effect upon the Agreement as any other final determination, which *1008

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obviates the necessity for the special provision suggested by petitioners.

Comment 8

The petitioners contend that the producers and exporters of the subject merchandise should be made parties to the Agreement.

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DOC Position

Petitioners recognize that the Act authorizes the Department to enter into a suspension agreement with either the government of the country from which the subject merchandise is exported, or the producers and exporters of the subject merchandise. Frequently, suspension agreements are based upon the participation of both the producers and exporters, and the foreign government. In this investigation, however, we do not believe that the participation of the producers and exporters in the Agreement was necessary. Two factors in this decision are the termination of the FIP program by the government of British Columbia, which was the only program preliminarily found to be countervailable, and the large numbers of growers of red raspberries. If, at a future date, we find that the participation of producers and exporters is required for the proper implementation of the Agreement, we may choose to renegotiate the Agreement to include them as parties.

Comment 9

Petitioners maintain that section II.A.(1) fails to ensure that FIP benefits will not be paid out between April 1, 1985 and the effective date of the Agreement.

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DOC Position

Section 704(B)(1) of the Act requires only that suspension agreements eliminate or offset the net subsidy within 6 months after suspension of the investigation. This Agreement accomplishes more than what is required under the statute, and prohibits the receipt of countervailable benefits as of the date of publication of the Agreement in the Federal Register. Furthermore, there is evidence in the record that no FIP benefits have been received during the referenced period.

Comment 10

Petitioners argue that the Government of Canada should require recipients to refund, with interest, "any benefits" rather than "grants" as described in section II.C. of the Agreement, under the terms of that section.

DOC Position

The Agreement as written provides a greater safeguard against the provision of benefits other than grants than would the amendment that petitioners propose.

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Section II.B. provides that the provision of subsidies may result in termination of the Agreement.

Comment 11

The petitioners contend that the Government of Canada should be required to: (1) Notify the Department in writing whenever any producers or exporters qualify for, apply for, or receive a new benefit which is, or is likely to be, a countervailable benefit; (2) notify all relevant federal and provinical ministries as to the Agreement; (3) notify the producers and exporters as to the definition of a subsidy; (4) ensure that producers and exporters supply all the necessary information the Department deems necessary to verify compliance; (5) allow for verification to monitor the Agreement; (6) provide periodic certification that no benefits were received by producers and exporters; and (7) include in its certification of compliance a statement that it has conferred with the relevant federal and provincial officials to determine whether any benefits have been received under programs administered by those officials.

DOC Position

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Section III of the Agreement provides for extensive monitoring procedures. We consider the provisions in section III adequate to ensure compliance with the Agreement. Furthermore, the Government of Canada has stated that it intends to provide copies of the Agreement to members of the raspberry industry and to the government of the Province of British Columbia.

Respondent's Comments

Comment 1

Respondents argue that the Department should not consider the three late allegations submitted by the petitioners. The allegations were submitted too late to allow the Department to investigate them and the bases of the allegations, three newspaper articles, provide insufficient information upon which to make a determination. Further, respondents note that the IRDP program, alleged to be used, is not the same as the RDIP program found to be countervailable in the past. They state that there is substantial evidence that IRDP is neither limited to a specific enterprise or industry or group of enterprises or industries, nor is it limited to specific regions. Therfore, it should be found not to be countervailable.

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DOC Position

We agree that the allegations were submitted too late to determine whether the benefits were countervailable for purposes of the Agreement. See also "DOC Position" in response to Petitioners Comment 5.

Suspension of Investigation

The Department has consulted with the petitioners and has considered their comments submitted with respect to the proposed suspension agreement. We have determined that the Agreement will eliminate or offset completely the amount of the estimated net subsidy with respect to the subject merchandise exported directly or indirectly to the United States, that the Agreement can be monitored effectively and that the Agreement is in the public interest. Therefore, we find that the criteria for suspension of an investigation pursuant to section 704 of the Act have been met. The terms and conditions of the Agreement are set forth in Appendix A to this notice. Pursuant to section 704(f)(2)(A) of the Act, the suspension of liquidation of all entries of certain red raspberries from Canada entered or withdrawn from warehouse, for consumption, effective October 11, 1985, as directed in our notice of "Preliminary Affirmative Countervailing Duty Determination: Certain

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Red Raspberries from Canada," (50 FR 42574) is hereby terminated. Any cash deposit on entries of certain red raspberries from Canada pursuant to that preliminary affirmative determination shall be refunded and any bonds shall be released. Notwithstanding the Agreement, the Department will continue the investigation, if we receive such a request in accordance with section 704(g) of the Act within 20 days after the date of publication of this notice.

This notice is published pursuant to section 704(f)(1)(A) of the Act (19 U.S.C. 1671(c)(f)(1)(A)).

Gilbert B. Kaplan,

Deputy Assistant Secretary for Import Administration.

December 26, 1985.

Appendix A--Suspension Agreement

Pursuant to the provisions of section 704(b)(1) of the Tariff Act of 1930 ("the Act") and § 355.31(a) of the Department of Commerce Regulations, the Department of Commerce ("the Department") and the Government of Canada

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("Canada"), enter into the following Suspension Agreement ("the Agreement"), on the basis that the *1009

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Government of the Province of British Columbia ("British Columbia") has terminated the British Columbia Raspberry Growers' Farm Income Plan. On the basis of the foregoing, the Department shall suspend its countervailing duty investigation initiated on August 6, 1985 (50 FR 32461) with respect to certain red raspberries from Canada subject to the terms and conditions set forth below.

I. Scope of the Agreement

The Agreement applies to "certain red raspberries" defined as fresh and frozen red raspberries packed in bulk and suitable for further processing.

II. Basis of the Agreement

A. Canada certifies, by virtue of a letter from British Columbia's Minister of Food and Agriculture to Canada's Minister for International Trade and by copy of British Columbia's Order-in-Council both of which are attached to this agreement, that; (1) British Columbia has terminated the British Columbia Raspberry Growers' Farm Income Plan, and therefore no benefits will be paid as of the effective day of this Agreement, to growers, producers or exporters of

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certain red raspberries under the British Columbia Farm Income Insurance Act; and (2) British Columbia does not intend to provide such a scheme to growers, producers or exporters of certain red raspberries in the future. Canada recognizes that the provision of benefits under the British Columbia Raspberry Growers' Farm Income Plan on the production or shipment of certain red raspberries exported, directly or indirectly, from Canada to the United States may result in termination of this Agreement and the resumption of the investigation pursuant to the provisions of section 704(i)(1) of the Act.

B. Canada recognizes that the provision of subsidies by Canada on the production or shipment of certain red raspberries exported, directly or indirectly, from Canada to the United States may result in termination of this Agreement and resumption of the investigation pursuant to the provisions of section 704(i)(1) of the Act. Subsidies are those benefits which have been found or are likely to be found countervailable in any investigation of a Canadian product, in any final determination in this investigation, or in any review of a Canadian product under section 751 of the Act, including countervailable benefits which may apply to both certain red raspberries and other products or exports to other destinations to the extent that such benefits cannot be segregated as applying solely to such other products or exports.

C. Canada recognizes that: (1) If grants provided under the Industrial

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Regional Development Program (IRDP) or any other program are determined by the Department to be countervailable subsidies in any investigation or review under section 751 of the Act, and (2) if any portion of such grants has benefited the production or exportation of certain red raspberries, and (3) the growers, producers or exporters of the subject product exported to the United States fail to refund with interest, within 90 days of the final determination in the investigation or 751 review, that portion received under said grant, then this Agreement will terminate and section 704(i)(1) of the Act will apply.

D. Canada shall notify the Department in writing of any new benefit which is, or is likely to be, a countervailable benefit on shipments of the subject products exported, directly or indirectly, from Canada to the United States, including countervailable benefits which may apply to both certain red raspberries and other products or exports to other destinations to the extent such subsidies cannot be segregated as applying solely to such other products or exports.

E. If any program under which benefits have been received in the past, and which is included in this Agreement, is found not to constitute a subsidy under the Act in the notice of suspension of investigation, the final determination or the final results of administrative review of this Agreement under section 751 of the Act in this proceeding, then the elimination of the benefits under that program will no longer be required.

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III. Monitoring of the Agreement

A. Canada agrees to supply information and documentation (consistent with Canadian law and regulations) which the Department deems necessary to demonstrate that there is full compliance with the terms of this Agreement.

B. Canada agrees to permit such verification and data collection (consistent with Canadian law and regulations) as deemed necessary by the Department in order to monitor this Agreement.

C. Canada agrees to provide a periodic certification that it continues to be in compliance with the terms of the Agreement. Certification will be provided within 45 days from the end of each calendar year beginning with the year ending December 31, 1986.

D. Canada agrees to notify the Department if it alters its position with respect to any of the terms of this Agreement.

IV. General Provisions

A. In entering into this Agreement, Canada does not admit that any of the programs alleged or investigated constitute counteravailable benefits within the meaning of the Act or the GATT Subsidies Code.

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B. The provisions of section 704(i)(1) of the Act shall apply if: (1) Canada withdraws from this Agreement; or (2) the Department determines that the Agreement is being or has been violated or no longer meets the requirements of section 704 of the Act.

C. The Department will terminate this suspended investigation after review under section 751 of the Act, whenever the conditions set forth in § 355.42 of the Commerce regulations (or any successor to this regulation) are satisfied.

V. Effective Date

The effective date of this Agreement is the date of its publication in the Federal Register.

Signed on this 20 day of December, 1985 for: The Government of Canada.

PIerre Gosselin

I have determined pursuant to section 704(b) of the Act that the provisions of Section II, completely eliminate the subsidies that the Government of Canada is providing with respect to certain red raspberries exported, directly or indirectly, from Canada to the United States. Furthermore, I have determined that suspension of the investigation is in the public interest, that the

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provisions of Section III, ensure that this Agreement can be monitored effectively, and that this agreement meets the requirements of section 704(d) of the Act. Signed on this 20 day of December, 1985 for: The Government of the United States of America.

Gilbert B. Kaplan,

Deputy Assistant Secretary for Import Administration.

November 7, 1985.

Honourable James Kelleher,
Minister of International Trade, Agriculture Canada, 930 Carling Avenue, Ottawa, Canada
Dear Mr. Kelleher:
RE: United States Countervailing Duty Case Certain Red Raspberries From Canada
By virtue of the Order-in-Council attached, the Government of British Columbia has terminated the British Columbia Raspberry Growers' Farm Income Plan.
We are taking this action with the understanding that a suspension agreement

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under provision of the United States Tariff Act of 1930, in regard to the current countervailing duty case pertaining to certain red raspberries from Canada , will be concluded with the United States of America.

It is our firm intention not to provide such a scheme to growers or processors of red raspberries in future. Please convey this information to the appropriate United States authorities at the earliest possible date as I understand, to be most effective, it should be in their hands at least one week before the deadline of November 26, 1985.

Yours very truly,

s/H.W. Schroeder,

Minister of Agriculture and Food.

Province of British Columbia Order of the Lieutenant Governor in Council

Order-in-Council No. 2104, Approved and Ordered Nov. 13, 1985.

s/Robert G. Rogers,

Lieutenant Governor.

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Executive Council Chambers, Victoria, Nov. 13, 1985:
On the recommendation of the undersigned, the Lieutenant Governor, by and with the advice and consent of the Executive Council, orders that Schedule B10 of the Farm Income Program Regulation (B.C. Reg. 394/79) is repealed.

*1010

(Cite as: 51 FR 1005, *1010) s/H.W. Schroeder,

Minister of Agriculture and Food.

s/W. R. Bennett,

President Member of the Executive Council.