the review period, we calculated an estimated net subsidy of 0.109 percent ad valorem.
38. Quebec: Ice-Making and Fish Chilling Assistance
Based on information contained in the Annual Report for the Ministry of Agriculture, Fisheries and Food, we found that the government of Quebec operates ice-making equipment and cold-storage warehouses to provide commercial fishermen and processing firms with an inexpensive source of fish chilling operations. The government produces ice which the annual report states is then sold to processing plants at a price equal to its production costs, and to Quebec fishermen at a price equal to 53 percent of production costs. It also offers space in cold storage warehouses operated by the Equipment Management Division to processing firms during temporary shortfalls in commercial cold storage space.
Because these benefits are provided only to the fishing industry, we determine that this program is limited to a specific enterprise or industry, or group of enterprises or industries. In addition, because information was not provided on rates charged for similar services, we find that these goods and services are provided at preferential rates, and are countervailable. To calculate the benefit from this program, we used, as best information available, the cost of
(Cite as: 51 FR 10041, *10058)
the government of providing these services as representing the amount of the benefit. Furthermore, because financial data were unavailable for years other than 1983-84, we used expenditures in 1983-84 as representing *10059
(Cite as: 51 FR 10041, *10059)
expenditures during the review period. We expensed this amount to the review period. Dividing by the f.o.b. value of production in Atlantic Canada of fish and shellfish during the review period, we calculated an estimated net subsidy of 0.077 percent ad valorem.
III. Programs Determined Not To Confer Subsidies
We determine that subsidies are not being provided to producers or exporters in Canada of fresh Atlantic groundfish under the following programs:
1. Atlantic Fisheries Management Program
The Atlantic Fisheries Management Program is a federal program for the conservation and restoration of Canada's fisheries resources. The program's functions include: setting total allowable catches, licensing fisheries and vessels, administering biological conservation measures, managing fleet quotas,
(Cite as: 51 FR 10041, *10059)
performing research and surveillance, and monitoring domestic and foreign fleets. The program does not provide any financial assistance to the groundfish industry. Resource management, like the government's regulation of other business activities, is a legitimate government function undertaken to ensure the orderly conduct of business in the general public interest.
Research under the program falls into three general categories: resource assessment, habitat assessment, and aquaculture and resource development. The results of the research are published in publicly available technical and scientific journals.
Because no financial assistance is provided under the program, the research results are publicly available, and the research is not targeted to assist a particular industry, we determine that the program is not countervailable.
2. DFO Marketing Intelligence and Industry Services Branch
As previously discussed in section I.A.3., the Marketing Intelligence and Industry Services Brandh (MIIS) is part of the DFO's Marketing Directorate. MIIS provides market analyses, market research and forecasts and policy advice to DFO management. Its reports are used by the DFO, as well as other government agencies, industry, universities, international organizations, bankers, and the general public. Because MIIS provides no financial assistance
(Cite as: 51 FR 10041, *10059)
to the groundfish industry and because it market reports are publicly available, we determine that no countervailable benefits are provided under MIIS.
3. Enterprise Development Program (EDP)
EDP, which was established in 1977 and terminated in 1983, was administered by the Federal Department of Industry, Trade and Commerce. The purpose of EDP was to increase productivity in the manufacturing and processing sectors by encouraging innovations in the production process. EDP provided loans and grants to manufacturers (individuals, firms, or corporations engaged in a manufacturing or processing activity) and term loan insurance to banks lending to manufacturers or processors.
The groundfish industry received both grants and term loan insurance, but no loans. We verified that term loan insurance and grants provided under EDP were not limited to a specific enterprise or industry, or group of enterprises or industries. Therefore, we determine that assistance given to the groundfish industry under this program is not countervailable.
4. Section 146 of the Unemployment Insurance Act
(Cite as: 51 FR 10041, *10059)
Under the Unemployment Insurance Act, unemployment insurance is provided to all individuals working under a contract of service. Section 146 of that Act authorizes the Canada Employment and Immigration Commission to operate and establish a scheme of unemployment insurance for self-employed fishermen. Fishermen that work under a contract of service are covered under the general provisions of the Act.
Part V of the Unemployment Regulations provides the regulations covering self- employed fishermen (the Fishermen's Regulations). Under the Fishermen's Regulations, the buyer of the catch is considered the employer of the fisherman. All the provisions of the Act and the general regulations apply to self-employed fishermen except where modified by the Fishermen's Regulations.
In order for the self-employed fishermen's unemployment insurance program to be deemed a subsidy, it is necessary that the insurance be provided on preferential terms to a specific enterprise or industry, or group of enterprises or industries. We find that self-employed fishermen do not receive unemployment insurance on preferential terms.
The employee and employer premiums (as a percentage of earnings) paid under the general unemployment program and the program for self-employed fishermen are the same. The number of weeks a self-employed fisherman must work and the number of weeks a worker under the general unemployment program must work to qualify for unemployment insurance is the same. The benefit levels for each
(Cite as: 51 FR 10041, *10059)
are set at 60 percent of their average insurable earnings, although the self- employed fisherman may take the average of his ten highest earning weeks if he has 15 or more weeks of fishing. The number of initial benefit weeks is calculated on a one-to-one basis for workers covered under the general unemployment program; for every one week of employment the worker qualifies for one week of benefits. The number of initial benefit weeks for self- employed fishermen is calculated on a six to five ratio; i.e., for every six weeks of employment the self-employed fisherman earns five weeks unemployment insurance. The number of extended benefit weeks available to the self-employed fisherman and a worker covered under the general unemployment program is the same, although a self-employed fisherman is not eligible to receive benefits between May 15th and November 1st.
Thus, while the terms of unemployment insurance for self-employed fishermen and general contract workers are similar in many aspects, they are not identical. In those areas where they differ, some terms appear to benefit contract workers vis-a-vis self-employed fishermen (calculation of initial benefit weeks and the duration of extended benefits), whereas the use of the ten highest earnings weeks for calculating the level of benefits appears to benefit self-employed fishermen vis-a-vis contract workers.
Comparing the terms of unemployment insurance provided under the Fishermen's Regulations for self-employed fishermen to those provided under the
(Cite as: 51 FR 10041, *10059)
Unemployment Insurance Act and Regulations, we determine that unemployment insurance provided to self-employed fishermen is not provided on preferential terms and therefore is not countervailable.
5. Import Duty Remission Under the Machinery Program
Petition alleges that fishermen and processors have import duties remitted on machinery not available from Canadian Manufacturers, and that this program may be administered in such a manner as to de facto limit the program to a specific industry or group of industries. This program is governed by the Financial Administration Act and *10060
(Cite as: 51 FR 10041, *10060)
was established in 1968. The Machinery Program covers machines such as construction equipment, metal working machinery, and general purpose machinery such as hydraulic pumps, and pulp, paper and plastics machinery. The remission of duty is authorized by the Governor-in-Council on the recommendation of the Minister of Regional Industrial Expansion. The Machinery and Equipment Advisory Board (MEAB) advises the Minister on the eligibility of imported machines for remission of duty. To qualify for approval, the remission of duty must be in the public interest and reasonably equivalent machinery must not be available in Canada. We verified that only applications for machinery available for production in Canada were rejected.
(Cite as: 51 FR 10041, *10060)
Since all applications covering machinery not available in Canada were approved, we found no evidence of governmental discretion in the administration of this program and, therefore, no de facto limitation on use of the program. Since the types of machinery eligible for remission of import duties are available for use to a wide range of industries, we determine that this program is not limited to a specific enterprise or industry, or group of enterprises or industries, and therefore is not countervailable.
6. Fishing Vessel Insurance Plan
Established in 1953 and administered by the Economic Programs Branch of the DFO, the Fishing Vessel Insurance Plan insures commercial fishermen against abnormal losses. The plan covers losses or damage caused by perils at sea, accidents in loading, discharging or handling cargo, accidents occurring on dry-docks, explosions on shipboard, and the negligence of master, officers, crew or pilots, provided that any loss or damage has not resulted from lack of due diligence. The purpose of this program is to ensure that marine insurance is available throughout Canada. Although the DFO offers insurance in remote areas of Atlantic Canada where certain private insurers elect not to operate due to the relatively high expenses associated with maintaining offices in inaccessible
(Cite as: 51 FR 10041, *10060)
regions. The DFO is able to avoid these expenses because there is already some form of DFO presence in most regions (for licensing or inspection services). The premium rates are established as a percentage of the appraised and insured value of the hull and machinery. They are adjusted annually by taking the sum of indemnities paid in the preceding five-year period and dividing by the sum of the total insured value at the end of each of the preceding five years. This program was preliminarily determined to be countervailable because information had not been provided on premium rates charged for identical or similar insurance.
At verification, we found that FVIP premiums are comparable to premiums charged by private insurers and in many instances, are actually higher. In recent years, many commercial fishermen have switched from the FVIP to private insurers to obtain lower premium rates. Therefore, we determine that the FVIP does not offer insurance at preferential rates and, consequently, does not confer a countervailable benefit.
7. Federal Assistance for Bait Services Program
The Bait Services Program was established by the Dominion of Newfoundland before it became a province of Canada in 1949. The federal government agreed to take over this program as a condition of Newfoundland becoming part of
(Cite as: 51 FR 10041, *10060)
Canada. The program is presently administered by the federal DFO. The Bait Services program provides commercial fishermen with a source of bait independent of the local processors. We verified that the Bait Service sells bait at prices identical to those charged by private suppliers to unrelated purchasers. Since the prices charged by the government are not preferential when compared to the prices charged by private suppliers to unrelated purchasers, we determine that this program is not countervailable.
B. Provincial Programs
1. New Brunswick: Marketing and Promotion Activities
The New Brunswick Department of Commerce and Technology (DCT) offers three separate programs to small, newly-established companies to assist in their development, marketing, and export activities. These programs are Trade Services, Marketing Services, and Production Services. Technical/Marketing Assistance was eliminated at the end of 1980 and its functions have been absorbed by the production services section. There are no provincial rules or regulations that specifically provide for the various marketing and export programs; all are activities performed by the Department of Commerce and Technology under the direction of its Minister and the Deputy Administrator of
(Cite as: 51 FR 10041, *10060)
the Department. Funding for the programs is authorized by the Financial Administration Act of October 1984.
Participation in these programs is voluntary and open to all small, newly- established companies in New Brunswick. None of the three programs is designed to deal exclusively with export promotion and, of the three programs available, the only one utilized by producers of groundfish was Trade Services. These programs provide assistance in attending trade shows and missions which might be of use to manufacturers and processors in the province. These activities are available for both export and domestic marketing. The DCT shares the costs on a 50-50 basis for attending a trade show if the manufacturer can show that it is financially solvent, has the production capability to supply a product, and will follow up on any trade leads uncovered. The manufacturer or processor must be a resident of the province of New Brunswick. In fiscal year 1985, less than four percent of the total monies allocated for Trade Services was expended on the promotion of the subject merchandise. The remaining funds were utilized by various other industries within the province.
The Marketing Services section makes marketing professionals available to help companies establish proper marketing techniques. It also provides financial assistance for expanding marketing programs. The program is available throughout the province to all small, newly-established companies who
(Cite as: 51 FR 10041, *10060)
may need marketing assistance. DCT marketing professionals work with the company in implementing a proper marketing scheme and, if financial assistance is needed, provide funds on a 50-50 cost sharing basis to expand into new marketing projects.
Production Services are available to all small, newly-established companies to provide technical advice and assistance in solving problems associated with the development of their products. Although most assistance was of an advisory nature, some financial assistance was also provided on a 50-50 cost sharing basis. Because the services performed by the DCT are available to all industries within the province, for both domestic and export promotion, we determine that receipt of assistance is not contingent on exportation, nor is it limited to a specific enterprise or industry, or group of enterprises or industries. Therefore, we find that New Brunswick marketing and promotion activities are not countervailable.
*10061
(Cite as: 51 FR 10041, *10061)
2. New Brunswick: Training Services
Based on information contained in the New Brunswick Department of Fisheries Annual Report, we found that the government of New Brunswick operates the Training Services Program. Courses for commercial fishermen include electronic
(Cite as: 51 FR 10041, *10061)
navigation, refrigeration, hydraulics, engineering and various levels of fishermen competency. Other courses are offered in conjunction with Transport Canada to provide certification in areas such as Ferry Steamship Master, Small Pleasure Craft Master and various levels of Engineering Competency. Assistance is also provided by the school to various groups organized throughout the province. Because the benefits under this program are not provided to a specific enterprise or industry, or group of enterprises or industries, we conclude that benefits under this program are not countervailable.
3. Newfoundland: Exemptions from Sales and Gasoline Taxes
Under the direction of the Tax Administration Branch of the Ministry of Finance, the government of Newfoundland offers exemptions from the application of the Retail Sales Tax Act and the Gas Tax Act, both enacted in 1978. The sales tax applies a flat rate of 12 percent on the consumption of tangible personal property. Its purpose is to tax only the final consumer of retail products. Pursuant to this purpose, the regulations enumerate specific exemptions in all areas of commercial production, including production of primary products: agriculture, fish, forestry, and minerals; and manufacturing and processing. Vessels or boats purchased by commercial fishermen, farm equipment and supplies, all productive capital equipment
(Cite as: 51 FR 10041, *10061)
purchased for use in manufacturing, and all tangible personal property to be processed, fabricated, or manufactured for purpose of resale, are exempt. The gas tax is an ad valorem tax based on 22 percent of the average retail price of fuel and is used to provide funds for highway repair. Exemptions apply to all uses of gas that are not related to the use of a motor vehicle on a public roadway. We verified that the gas tax exemptions are used by a broad spectrum of industries. Therefore, we determine that benefits provided under these programs are not limited to a specific enterprise or industry, or group of enterprises or industries, and are not countervailable.
4. Newfoundland: Newfoundland and Labrador Development Corporation (NLDC)
A 1972 agreement between the government of Newfoundland and the federal government created the NLDC as a crown corporation to promote small- and medium-size businesses by providing loans and equity investments to all commercial sectors. Until March 1984, the program received partial federal funding. Since then, it has been solely under provincial responsibility, although any operating losses are shared on an equal basis by Newfoundland and the federal government. Besides fishing, the NLDC has assisted enterprises in manufacturing, mining, forestry, agriculture, services, and tourism. Interest rates are established once a month at one percent or more above the cost of
(Cite as: 51 FR 10041, *10061)
funds charged by the government to all crown corporations. The rate is fixed during the term of a loan. We verified that this rate is consistently higher than the prime rate charged by chartered banks. The maximum repayment period is 15 years, and is based on the average useful life of the asset. We verified that the dividend rate on equity investments is normally higher than the average market rate. The NLDC also offers business and technical information on an informal basis in response to anyone's inquiries.
Because a wide range of industries receive financing from the NLDC and because loans and equity investments are not provided on terms inconsistent with commercial considerations, we determine that this program meets neither of the two tests in section 771(5)(B)(i) of the Act, and is not countervailable.
5. Newfoundland: Rural Development Loan Program (RDLP)
Under the direction of the Rural Development Authority and pursuant to the Newfoundland Department of Rural Development Act of 1973, the government of Newfoundland operates the RDLP. The Rural Development Authority is comprised of three ministers: the Minister of Rural Development, the Minister of Forestry and Agriculture, and the Minister of Fisheries, as well as three to five other appointed members. The RDLP promotes the development of small industries and rural enterprises by providing loans to both emerging and existing businesses.
(Cite as: 51 FR 10041, *10061)
"Rural" is interpreted to embrace all of Newfoundland including St. Johns, the capital of Newfoundland. Loans are at fixed interest rates for a maximum of $25,000. Maximum repayment periods are 15 years for buildings, ten years for new capital equipment, and three years for used equipment. Security is required for all loans. The regulations authorize loans for many purposes including the purchase and repair of equipment, the purchase, construction, and renovation of buildings, land purchases, and working capital needs. The only producers specifically excluded from the program are fish harvesters who already receive loans from the Fisheries Loan Board. We verified that loans are provided to any industry in primary resource production, manufacturing, processing, services and tourism. Therefore, we determine that benefits provided under this program are not limited to a specific enterprise or industry, or group of enterprises or industries, or to particular regions within the province and are not countervailable.
6. Newfoundland: Loan Deficiency Guarantee Program
The government of Newfoundland's Ministry of Finance, pursuant to the Crown Guarantee and Loan Act of 1973, has guaranteed short-term working capital loans to eligible fishing companies since 1977. We verified that under this program, guarantees have been provided to a variety of industries including fishing,
(Cite as: 51 FR 10041, *10061)
mining, agriculture, pulpwood harvesting and sawmilling. All loans that are guaranteed must be secured, and a guarantee fee of between 0.5 and 1.0 percent is charged on the loans. Because the guarantees provided under this program are not limited to a specific enterprise or industry, or group of enterprises or industries, we determine that they are not countervailable.
7. Newfoundland: Market Development Information Service
This service, offered by the Support services Branch of the Newfoundland Department of Fisheries, provides information on all aspects of the fishing industry to anyone who inquires. As such, we determine that the service provided under this program are not limited to a specific enterprise or industry, or group of enterprises or industries, and is not countervailable.
8. Newfoundland: Construction of Fisheries Access Roads
Based on information contained in the Public Accounts for the Department of Fisheries, the government of Newfoundland offers grants to local fishermen's committees for the construction of access roads. The *10062
(Cite as: 51 FR 10041, *10062)
construction is usually undertaken by the Department of Transportation and Communication. All access roads constructed with government funding must be accessible to the
(Cite as: 51 FR 10041, *10062)
public. Newfoundland's road network is not very extensive, so most new roads are necessary additions to the province's infrastructure. Because these roads are open to and used by the public and are used by more than a group of industries, we determine that assistance for road construction provided by the Department of Fisheries does not confer a countervailable benefit.
9. Newfoundland: Market and Product Development Program (MAPD)
Based on information contained in the Public Accounts for the Department of Development, we found that the government of Newfoundland since 1978, has offered grants to any Newfoundland manufacturer, processor, or consulting service to develop new market opportunities and new product lines. A grant may cover up to 50 percent of a project's total cost to a maximum of $50,000. We verified that a wide variety of industries have participated in this program. Therefore, we determine that benefits conferred under this program are not limited to a specific enterprise or industry, or group of enterprises or industries, and are not countervailable.
10. Newfoundland: Rural Development Assistance Program (RDAP)
Based on information contained in the Public Accounts for the Department of
(Cite as: 51 FR 10041, *10062)
Development, we found that the government of Newfoundland provides funds to municipalities in all areas of Newfoundland to undertake development projects which stimulate economic growth in the municipality and region. Grants are aimed at assessment and promotion of economic opportunities. "Rural" is interpreted to embrace all of Newfoundland, including St. Johns, the capital of the province. Because benefits conferred under this program are not limited to a specific enterprise or industry, or group of enterprises or industries, or to particular regions within the province, we determine that they are not countervailable.
11. Newfoundland: Small Business Program
Based on information contained in the Public Accounts for the Department of Development, we found that the P. H. Gardiner Institute for Small Business Studies at the Memorial University of Newfoundland offers the services of its students to help small businesses in any industry prepare feasibility studies, financial statements, accounting systems, marketing studies and other related business activities. The program is designed to assist those small businesses which need advice yet cannot afford commercial rates. Consequently, the only eligibility requirement is a demonstrated inability to pay. Because benefits conferred under this program are not limited to a specific enterprise or
(Cite as: 51 FR 10041, *10062)
industry, or group of enterprises or industries, we determine that they are not countervailable.
IV. Programs Determined Not To Be Used
Based on our verification, we determine that producers or exporters in Canada of certain fresh Atlantic groundfish did not use the following programs:
1. Community-Based Industrial Adjustment Program (CIAP)
CIAP was established in 1981 and terminated in 1984. The program was one part of the Industrial and Labor Adjustment Program which was administered by the Department of Industry, Trade and Commerce. The objective of CIAP was to encourage businesses to undertake capital projects in certain designated communities affected by serious industrial dislocations. CIAP financial assistance took the form of grants of up to 75 percent of the consulting costs associated with CIAP projects or loans to cover capital costs and preproduction expenses.
(Cite as: 51 FR 10041, *10062)
B. Joint Federal-Provincial Programs
1. Fisheries Development Program for Coastal Labrador
This program, which is administered jointly by DRIE and DFO, began in 1981 and is scheduled to terminate in 1987. Its purpose is to improve the quality of fish landed and increase the efficiency of fish processors within the coastal Labrador region of the province of Newfoundland. We verified that no products subject to this investigation are exported from coastal Labrador.
1. New Brunswick Fuel Subsidy for Fishermen
Based on information contained in the New Brunswick Department of Fisheries 1983 Annual Report, we found that the government of New Brunswick operated the Fuel Subsidy Program. This special program provided five cents per litre to commercial fishermen for fuel used in their fishing vessels during the 1982 fishing season. We found no evidence of any government expenditures under this program subsequent to fiscal year 1983.
(Cite as: 51 FR 10041, *10062)
2. New Brunswick: Winterization of Fish Plants Program
In 1979, the Department of Fisheries provided a grant to a processor of herring to winterize its plant. We verified that no grants for that purpose were provided to processors of fresh Atlantic groundfish subject to this investigation.
3. Newfoundland: Secondary Processing Interest Subsidy Program (SPISP)
Under the direction of the Department of Fisheries, the government of Newfoundland operates the SPISP. This program was initiated in 1978 to provide interest subsidies to secondary processors of fish for the purchase of machinery and equipment. The program is designed to encourage increased production of fish products processed beyond the whole fish and filleting stage of processing. We verified that no fresh fish producers received benefits under this program during the review period.
4. Newfoundland: Ocean Industries Development Program (OIDP)
Based on information contained in the Public Accounts for the Department of Development, we found that the government of Newfoundland provides funding for
(Cite as: 51 FR 10041, *10062)
the development of research and technology, marketing strategies, and manufacturing and processing techniques in ocean-related industries. The Ocean Industry Development Subsidiary Agreement between the governments of Newfoundland and Canada authorized initiation of the program in 1984. The Department of Development has steered most of the funding into industries which are currently developing the Hibernia offshore oil fields. We verified that no fishing or processing operations have received benefits under this program.
5. Newfoundland: Ocean Industry Capital Assistance Program (OICAP)
Based on information contained in the Public Accounts for the Department of Development, we found that the government of Newfoundland provides assistance to ocean-related manufacturing and technical service industries. We verified that the eligibility requirements for OICAP specifically exclude firms in the primary products sector and that no fish harvesters or processors received benefits under the program.
*10063
(Cite as: 51 FR 10041, *10063)
6. Newfoundland: Newfoundland Oceans Research and Development Corporation (NORDCO)
Based on information contained in the Public Accounts for the Department of
(Cite as: 51 FR 10041, *10063)
Development, we found that the government of Newfoundland offers assistance for research programs concerned with gathering intelligence related to ice and cold water technology. This program seeks to make the exploration and production of mineral resources more feasible by ameliorating the problems associated with ice and cold water. No benefits were provided to the producers of the products under investigation under this program.
7. Quebec: Tax Abatement Program (TAP)
Under the direction of the Fonds de Reliance Industrielle and in accordance with Chapter S-34 of the Act Respecting Fiscal Incentives to Industrial Development (Nov. 1980), the government of Quebec operates the TAP. This program is available to those manufacturing businesses not engaged in initial processing operations in a resource-based industry that are willing to make capital investments in one of two regional zones. These two zones embrace all of the province of Quebec except Montreal. It provides certificates allowing a firm to deduct from taxes payable 25 percent of the value of allowable capital investments, or a maximum of 50 percent of the year's income taxes due, up to a limit of $500,000. This program was terminated in 1981. However, firms participating in the program while it was in effect had the option to claim their earned tax credits during the five years following the issuance of the
(Cite as: 51 FR 10041, *10063)
certificates. We verified that no producers of the subject merchandise claimed tax credits under this program on income tax returns filed during the review period.
8. Quebec: Aide a la Promotion des Exportations (APEX)
Under the direction of the Ministry of Foreign Trade, the government of Quebec operates the APEX. Established in 1972 by the Ministry of Industry, Commerce and Tourism, this program provides grants to cover partial expenses for new export market development programs and attendance at trade fairs. Export markets are defined as those outside the province of Quebec. We verified that benefits under this program were not provided to any exporters to the United States of the subject merchandise during the review period.
9. Quebec: Technological Assistance Service for Business Program (TASBP)
Under the direction of MAFF, the government of Quebec operates the TASBP. This service, which is available to all companies or individuals in industries related to the processing, distribution, and research and development of food products, provides financial assistance, up to 50 percent of total costs, for the development of new products and methods. This service also provides
(Cite as: 51 FR 10041, *10063)
technological counselling on an informal basis to firms in all sections of the food industry. We verified that none of the merchandise subject to this investigation benefitted from financial assistance under this program during the review period.
10. Quebec: Societe de Developement Industriel (SDI) Expansion Program
Under this program, the government of Quebec provided grants as interest cost reimbursement to Quebec firms which increased direct exports by 20 percent over those of the previous years. As stated above, exports are defined as sales outside the province of Quebec. SDI would disburse grants over a five-year period to a participating exporter commensurate with its export performance. Although the program was terminated in 1981, payments are still made to those firms who entered the program in 1980 and 1981. We verified that no firms producing the subject merchandise received grants during the review period. SDI also operates three additional export assistance programs: 1) a consortium program, 2) a new market development program for firms seeking to sell outside the Province, and 3) an export financing program. We verified that no firms producing the subject merchandise received benefits under these programs.
V. Programs Determined Not To Exist
(Cite as: 51 FR 10041, *10063)
Based on our verification, we determine that the following programs do not exist:
1. New Brunswick: Fish Chilling Assistance Program
This is a program of the federal government. See section 1.A.3. of this notice.
2. Newfoundland: Bait Services Program
This is a program of the federal government. See section III.A.7. of this notice.
3. Newfoundland: Production Machinery and Processing Technology Program
We verified that this program, alleged by petitioner to provide financial and technical assistance for the design of plant layouts and the development and acquisition of machinery, is the same as the Secondary Processing Interest Subsidy Program. See section IV.C.2. of this notice.
(Cite as: 51 FR 10041, *10063)
4. P.E.I. Fish Chilling Assistance Program
This is a program of the federal government. See section I.A.3. of this notice.
5. P.E.I. Fishermen's Holding Unit Program
This is a program of the federal government. See section I.B.2. of this notice.
6. Quebec: Joint Federal-Provincial Development Program
This is a program of the federal government. See section I.B.4. of this notice.
Petitioner's Comments
Comment 1: Petitioner contends that the Department erred by selecting a short- term loan interest rate as the benchmark for FILP and loans provided by the New Brunswick Fisheries Development Board. Petitioner maintains that most of the loans provided under these programs are long-term and the appropriate benchmark
(Cite as: 51 FR 10041, *10063)
is the long-term corporate bond rate.
DOC Position: The loans given under the two programs mentioned above are long-term variable rate loans. Therefore, the most accurate measure of the benefit to the recipient is obtained by comparing these loans to commercially available loans with variable interest rates. As we did not have long-term variable rate loans as benchmarks, we treated these loans as if they were short-term, one-year loans rolled over each year.
Comment 2: Petitioner contends that the benchmark selected by the Department in the preliminary determination fails to measure correctly the extent of the subsidy provided by the equity infusion into NSP. Petitioner maintains that, in the comparison of the government's rate of return to the rate of return on shares issued to Toronto-Dominion Bank, the Department overvalued the right of the government shares to a future stock dividend. Petitioner maintains that the right to a common stock dividend six years in the future entails a large risk factor not taken into account when current market price is used to value the anticipated return. Petitioner further maintains that the benchmark selected by the Department, the rate of return on stocks issued to Toronto- Dominion Bank, *10064
(Cite as: 51 FR 10041, *10064)
undervalues the rate of return required by a commercial investor. The Toronto-Dominion stock is an unusual, tax-exempt type of financing which does not meet the Department's criteria of a comparable commercial investment. Because the purchase by Toronto-Dominion was
(Cite as: 51 FR 10041, *10064)
conditioned on the purchase by the government, it is not an accurate measure of what an investor would require without a concurrent purchase by the government. Finally, petitioner maintains that an equity infusion of $105 million into FPIL, which was approved by the federal government in October 1985, should be taken into account by the Department.
DOC Position: Although petitioner maintains that the right to a stock dividend in the future entails a large risk factor in comparison to the current value of the stock, no methodology for the measurement of their risk factor or of its effect on the value of the stock dividend is suggested. Indeed, any adjustment for the additional risk would be difficult to estimate and inexact, and if a long-term investment outlook is assumed, would not be large. In our determination of a benchmark, we took the spread between a taxed bond and a tax-free bond and added that onto the return of the Toronto-Dominion difficulty preferred shares, to account for the fact that the term-difficulty preferred shares are tax exempt. With this modification, we believe that the term- difficulty preferred shares reflect the most accurate benchmark of a comparable commercial investment in this case.
We did not examine the issue of an additional equity infusion into FPIL because the infusion took place after the review period.
Comment 3: Petitioner contends that the use of an ad valorem subsidy rate improperly gauges the real benefit provided to the fresh groundfish industry in