(Cite as: 53 FR 22189)

NOTICES

DEPARTMENT OF COMMERCE

[C-122-404]

Live Swine From Canada; Preliminary Results of Countervailing Duty Administrative Review

Tuesday, June 14, 1988

*22189 AGENCY: International Trade Administration/Import Administration Department of Commerce.

ACTION: Notice of preliminary results of countervailing duty administrative review.

SUMMARY: The Department of Commerce has conducted an administrative review of the countervailing duty order on live swine from Canada. We preliminarily determine the total bounty or grant to be de minimis for slaughter sows and boars and Can$0.022/lb. for all other live swine during the period April 3, 1985 through March 31, 1986. We invite interested parties to comment on these preliminary results.

EFFECTIVE DATE: June 14, 1988.

FOR FURTHER INFORMATION CONTACT:Sylvia Chadwick or Bernard Carreau, Office of Compliance, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230; telephone: (202) 377-2786.

SUPPLEMENTARY INFORMATION: .

Background

On August 15, 1985, the Department of Commerce ("the Department") published in the Federal Register (50 FR 32880) a countervailing duty order on live swine from Canada. On August 27, 1986, the Government of Canada requested in accordance with 19 CFR 355.10 an administrative review of the order. We published the initiation on September 16, 1986 (51 FR 32817). The Department has now conducted that administrative review in accordance with section 751(a) of the Tariff Act of 1930 ("the Tariff Act").

Scope of Review

The United States has developed a system of tariff classification based on the international harmonized system of Customs nomenclature. Congress is considering legislation to convert the United States to the Harmonized System ("HS"). In view of this, we will be providing both the appropriate Tariff Schedules of the United States Annotated ("TSUSA") item numbers and the appropriate HS item numbers with our product descriptions on a test basis, pending Congressional approval. As with the TSUSA, the HS item numbers are provided for convenience and Customs purposes. The written description remains dispositive.

We are requesting petitioners to include the appropriate HS item number(s) as well as the TSUSA item number(s) in all new petitions filed with the Department. A reference copy of the proposed Harmonized System schedule is available for consultation at the Central Records Unit, Room B-099, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. Additionally, all Customs offices have reference copies, and petitioners may contact the Import Specialist at their local Customs office to consult the schedule.

Imports covered by the review are shipments of Canadian live swine. Such merchandise is currently classifiable under TSUSA item 100.8500. These products are currently classifiable under HS item numbers 0103.91.00 and 0103.92.00. We invite comments from all interested parties on these HS classifications.

The review covers the period April 3, 1985 through March 31, 1986, and 28 programs.

P. Quintaine & Sons Ltd. of Brandon, Manitoba, and exporter of sows and boars, has requested that: (1) The scope of the countervailing duty order be changed to exclude slaughter sows and boars, (2) Quintaine and Sons Ltd. be excluded from the order, or (3) slaughter sows and boars be given a separate rate of zero. Quintaine contends that sows and boars are generally used for breeding and that they are used as slaughter hogs only when they can on longer be used effectively as breeding stock. Quintaine also contends that slaughter sows and boars have never received any benefits from the programs found countervailable by the Department in the final affirmative countervailing duty determination in this case (50 FR 25097, June 17, 1985).

We have considered Quintaine's arguments and come to the following conclusions: First, sows and boars are clearly within the scope of the order. The order covers all live swine except breeding swine. As stated in the TSUSA, such breeding animals must be "certified to the collector of customs by the Department of Agriculture as being pure bred of a recognized breed and duty registered in a book of record recognized by the Secretary of Agriculture for that breed, imported . . . specially for breeding purposes." During the period of review, Quintaine's animals were not certified to Customs as breeding animals. Rather, they entered the United States as slaughter animals. Since the petition and the preliminary and final determinations of both the Department and the International Trade Commission have consistently included all live swine, except breeding animals, within the same class or kind of merchandise covered by this order, we cannot now exclude the slaughter sows and boars.

Second, we cannot exclude a company from a countervailing duty order once the order is issued. Requests for company exclusions must be submitted within 30 days of publication of a notice to initiate an investigation, and the decision as to the exclusion must be made in the Department's final determination (19 CFR 355.38).

Finally, the Department has considerable discretion in determining whether to differentiate among products within a class or kind of merchandise. We only differentiate among products in exceptional circumstances. Among the criteria we consider are the extent to which the product qualifies as a distinct product subclass within the applicable class or kind of merchandise and the extent to which the subsidy on the product differs from the subsidy on the other products within the same class or kind of merchandise.

To determine the existence of a product subclass, we compare the specific product to the overall class or kind of merchandise. This comparison is made according to the following four criteria: (1) The general physical characteristics of the product; (2) the expectations of the ultimate purchaser; (3) the ultimate use of the product in question; and (4) the channels of trade in which the product moves. The differences between the products do not need to be so great as to distinguish between a separate class or kind of merchandise. However, the differences between the products must be considerable. Slaughter sows and boars are within the same class or kind of *22190 merchandise as other live swine currently provided for under TSUSA item 100.8500. Slaughter sows and boars, however, can be distinguished from other live swine generally as follows:

Most live swine are bred to be slaughtered; sows and boars are primarily used for breeding. Slaughter hogs (sometimes called "bacon" hogs), in general, are slaughtered when their carcasses yield an acceptable product value; sows and boars are slaughtered only when they can no longer be used effectively as breeding animals. Slaughter hogs, in general, are slaughtered when they weigh between 170 and 240 pounds; sows weigh, on average, 450 pounds when slaughtered, boars, as much as 700 pounds. Slaughter hogs are slaughtered when they are about six months old; sows and boars are two to five years old when they are slaughtered. Slaughter hogs are graded by an index table developed to differentiate between the yield levels in hog carcasses. The value of a carcass is primarily determined by two factors, weight and the maximum backfat thickness at the loin. Slaughter sows and boars are not graded because they are too heavy and have an unacceptably high fat content. In general, about 35 percent of a slaughter hog is sold as prime cuts while the remaining 65 percent is cured for bacon and ham. Slaughter sows and boars are ground up and used exclusively in processed meat products, such as sausage and lunchmeat.

Because of the different expectations of the ultimate purchaser for slaughter sows and boars as opposed to other live swine, and the different ultimate use of the various products in question, the plant facilities used to process the slaughter sows and boars differ substantially from the facilities used to process live swine. For example, the facilities for slaughter sows and boars must be able to grind meat for use in processed meat products. The facilities for other live swine must be able to cut fresh meat. Slaughter sows and boars are marketed separately from live swine, and they command different prices. Finally, and most importantly, it is impossible to convert a sow or boar designated for slaughter into what is generally considered a "bacon" slaughter hog. Therefore, the distinction between slaughter sows and boars and other live swine cannot be used as a means to circumvent the countervailing duty order.

Based on the considerable differences between slaughter sows and boars and other live swine, we preliminarily determine that slaughter sows and boars are a distinct subclass or kind of merchandise within the class or kind of merchandise covered by this order.

Given this conclusion, we reviewed the programs preliminarily found to be countervailable in this review in order to determine whether there are sufficient grounds for setting a separate rate. Sows and boars are not eligible for any of the federal or provincial stabilization programs, expect Quebec's. We preliminarily find the net subsidy on sows and boars from all other programs to be de minimis. Therefore, we preliminarily determine that it is appropriate to set a separate rate of zero for sows and boars.

Analysis of Programs

(1) Agricultural Stabilization Act (ASA)

(a) ASA Stabilization Payments

The Agricultural Stabilization Act (the "Act") of 1957-58 was passed by the federal government to provide for the price stabilization of certain agricultural commodities. On June 27, 1985, the Act was amended by Bill C-25, which changed several aspects of the program. Four groups of commodities are explicitly provided for, or "named," in the Act: cattle, hogs, lambs and wool (previously this group included cattle, hogs, and sheep); industrial milk and industrial cream; corn and soybeans; and spring wheat, winter wheat, oats and barley (previously this group did not include spring wheat or winter wheat). Other natural or processed products of agriculture may be designated by the Governor in Council as agricultural commodities for purposes of this Act. "Named" and "designated" agricultural commodities are now eligible for stabilization payments at any time. Previously, coverage was limited to those periods in which the market situation was different in one region of Canada from the rest of Canada, as determined by the Governor in Council.

Programs of the ASA are administered by the Agricultural Stabilization Board (the "Board"), the members of which are appointed by the Governor in Council. The Board calculates the stabilization payments for both named and designated products in the following manner: (1) It establishes a "base price," which is the average price of the commodity in the five-year period immediately preceding the period in review; (2) it calculates a "prescribed price" by taking a minimum of 90 percent of the base price and adjusting it by a factor reflecting differences in production costs between the five-year base period and the current review period (previously, the 90-percent minimum applied only to named commodities; it now applies to both named and designated commodities); and (3) it compares the prescribed price to the "average market return price," which is the published average sales price of the commodity in the review period. The difference between the prescribed price and the average market return price is the amount of the stabilization payment.

Stabilization payments are now calculated quarterly instead of annually. Base and prescribed prices are based on the quarterly periods in the previous five years that correspond to the quarterly review period. For example, if the Board is calculating a stabilization payment for the second quarter of 1985, it uses the average prices of the second quarters of the previous five years to calculate the base and prescribed prices.

Despite there no longer being different methodologies for calculating the rates of support for named and designated commodities, we preliminarily determine that the ASA program continues to be countervailable because it is provided to specific industries. Several major agricultural commodities, such as most wheat, dairy products, and poultry, are still ineligible for payments. Furthermore, the distinction between named and designated products still exists, and hogs are guaranteed eligibility because they are on the named product list.

In accordance with a Ministry of Justice opinion, no ASA stabilization payments are made from September 1984 until Bill C-25 was enacted (June 27, 1985). During the time that no payments were made from ASA, the provinces made payments under their own programs. In November 1985, the Board announced it would make payments retroactively for the first two quarters of fiscal year 1985-86 (April 1, 1985 to March 31, 1986). To avoid double payment, the Board reimbursed provincial governments for stabilization payments already made to producers by the provincial governments. The Board also made payments directly to producers in cases where producers' sales exceeded the maximum number of swine allowed under provincial stabilization programs or where producers were not members of a provincial marketing board.

In fiscal year 1985-86, because the average market price of hogs fell short of the prescribed price in the first two quarters, the Board made delayed payments of Can $1.58 per hunderdweight ("cwt") for the first quarter and Can $3.54 per cwt for the second quarter. No payments on hogs were made for the last two quarters of *22191 fiscal year 1985-86 because the average market price of hogs did not fall below the prescribed price during those periods. As before, the payments were made only on hogs indexing 80 or above. By definition, this exludes sows and boars, which are not indexed. Thus, no benefit accrued to sows and boars from this program during the review period.

According to Statistics Canada, 26 percent of total Canadian production of live swine was exported (to all markets) during the period of review. The Board reduced all payments on hogs (both to producers and provincial governments) during the period of review by 26 percent. Payments on other commodities were not reduced. The Canadian government argues that this 26- percent reduction eliminates any potential countervailable benefit from this program on exported swine.

We have considered the Canadian Government's arguments and preliminarily determine that this program continues to confer a benefits on swine exported to the United States. All swine marketed in Canada were eligible to receive ASA payments, regardless of whether the swine were exported or sold in the domestic market. That the payment rate was lowered by 26 percent to account for total exports does not change that fact that each hog marketed in Canada was eligible to receive a payment, albiet at a lower rate.

The federal reduction only affects Board payments made directly to producers. We have estimated that only 16 percent of Board payments was made directly to producers during the period of review. The rest was paid to provincial governments. During the period of review, the provinces continued to calculate their stabilization payments on 100 percent of sales--with no reduction for exports.

Furthermore, it is impossible to tie the federal stabilization payments to specific export or demestic sales by most swine producers. Producers who sell through marketing boards are unaware of the ultimate destination of their merchandise. According to Statistics Canada, approximately 63 percent of all hogs was sold through marketing boards during the period of review. Therefore, most stabilization payments for hogs cannot be tied to specific sales.

Finally, even for the remaining 37 percent that was sold directly by the producers during the period review, in which case the producer was aware of the ultimate destination of his hogs, the individual producer has no control over the rate of the stabilization payment made directly to him by the Board. The producer did not receive a higher payment rate from the Board if he sold more in the domestic market. From the individual producer's point of view, he simply received a lower stabilization payment on his total sales.

For these reasons, despite the 26-percent reduction, we consider the ASA payments to be a domestic subsidy benefiting all sales, not just domestic sales.

To calculate the benefit, we divided the total ASA payments made directly to individual producers in each province by the total live weight of swine (minus sows and boars) produced in that province during the period of review. The ASA payments made to the provincial governments are part of the funding for the provincial stabilization programs. ASA payments are made on a per cwt basis. We used 220 pounds as the average weight of slaughter hogs (excluding sows and boars) in Canada. We confirmed this figure with both Agriculture Canada and the United States Department of Agriculture. We weight-averaged the resulting benefits by each province's proportion of total Canadian exports of this merchandise (minus sows and boars) to the United States during the review period. On this basis, we preliminarily determine the benefit to be zero for sows and boards and Can$0.00075/lb. for all other swine during the period of review.

(b) National Tripartite Red Meat Stabilization Program Bill C-25 amended the ASA to authorize the Minister of Agriculture, with the approval of the Governor in Council (Order-in-Council PC 1985-3343), to enter into agreements with the provinces and/or producers to provide price stabilization schemes for any natural or processed product of agriculture. Previously the ASA had been purely a federal program. The Minister may enter into these "Tripartite Agreements" only after he determines that they will not give a financial advantage to some producers in the production or marketing of the product not enjoyed by other producers of the same product in Canada and that the agreements will not provide an incentive to over-produce.

All the provinces signed agreements on swine. The agreements were implemented on January 1, 1986, except for Manitoba's agreement, which was implemented on July 1, 1986. Under the terms of the Tripartite Agreements on Hogs, the provinces may not offer separate stabilization plans or other ad hoc assistance for hogs, nor may the federal government offer compensation to swine producers in a province not a party to an agreement. The Tripartite Scheme provides for a five-year phase-in period to adjust for differences between the Tripartite Scheme and the provincial programs. Existing provincial stabilization plans are to be completely phased out by 1990. During the period of review, all of the provincial stabilization programs remained in effect, and they all conferred benefits.

"Hogs" under the Tripartite Agreements must index 80 or above (thus, sows and boars are excluded by definition). The agreements specify that: all Canadian producers of hogs will receive the same level of support per unit or production; the schemes will be funded equally by the Government of Canada, the provinces and the hog producers; and participation will be voluntary. Payments will cover only the proportion of production used for domestic consumption, and the agreements must specify the method of determining that proportion.

During the period of review, no payments for hogs were made under the Tripartite Agreements. On January 15, 1988, the Canadian Government informed the Department that no payments have been made under the National Tripartite Stabilization Program for Hogs through December 31, 1987. Since all the provinces have signed Tripartite Agreements which have replaced the ASA stabilization program and the provincial stabilization programs, the Canadian government requests that the Department consider the lack of payment in 1987 in setting the cash deposit rates for the Tripartite programs, the ASA hog stabilization program, and the provincial stabilization programs.

We have considered the Canadian government's request. In setting cash deposit rates of estimated countervailing duties, we attempt to establish a rate which most accurately reflects the level of subsidization for entries subject to the estimated rate. Thus, it is our practice to take into account program-wide changes which occur prior to our preliminary notice.

In this case, a program-wide change has occurred. Nevertheless, we have no indication of the benefits that will result from this change because payments will fluctuate depending on swine prices and costs of production. The fact that no payments were made under the ASA or Tripartite Agreements through December 31, 1987, does not mean that payments will not be made on future shipments. Lacking specific data on how the new program will raise or lower the level of benefits now conferred under the ASA and provincial programs, we have no basis for establishing a deposit rate other than that derived from the *22192 programs which are being replaced by the Tripartite Agreements. Therefore, we preliminarily determine that the cash deposit rates for the ASA hog stabilization program and the provincial hog stabilization programs are the review period assessment rates determined for those programs.

(2) Record of Performance Program

The Canadian Swine Record of Performance Program (ROP) is a joint federal and provincial herd testing program for the purpose of improving breeding stock and developing high quality pork at minimal production costs. Purebred sows and boars are tested for backfat, growth rate, feed conversion and breeding performance. The program identifies and ranks genetically superior animals whose progeny cold potentially command increased market prices. Similar performance testing programs exist for all domesticated animals and any animals used in products sold for consumption, including beef and dairy cattle, sheep, poultry, and honey bees.

In our final determination (50 FR 25097), we found this program countervailable because it was limited to a specific group of enterprises or industries. In this review, we have obtained additional information regarding the testing conditions, the applicability of the research, and the availability of the research results.

Agriculture Canada publishes is list of ROP programs in progress, as well as detailed testing requirements regarding housing, hygiene, management, and herd health control. It also publishes detailed specifications for feed ration ingredients and carcass adjustments for weight and sex. Therefore, the test conditions and specifications can be duplicated by anyone.

The results of the tests are publicly available. The provincial governments publish the test results quarterly for producers and annually for the general public. In addition, the provincial governments send biweekly updates to those on their mailing lists. Any person, of Canadian or foreign citizenship, may be put on the mailing lists.

Although the Canadian federal and provincial governments bear most of the cost of this program, producers also contribute to the funding of the research projects. The "cost recovery fees" collected from producers cover the cost of testing, the cost of feed used during testing, and the cost of selling boars after the testing is completed. The cost recovery fee ranged from Can $10 to $50 per head during the period of review.

The International Trade Commission, in its "Conditions of Competition Between the U.S. and Canadian Live Swine and Pork Industries; Report to the United States Senate Committee on Finance on Investigation No. 332-186" (November 1984), page xiv, stated:

The relatively free flow of information between the United States and Canadian farmers and researchers and the free flow of swine production supplies and equipment tend to result in rapid dispersal of technological innovations.

Further, on page 59:

Because of the free flow of information between the United States and Canada, technological innovations in the live swine and meat industries in one country are usually readily available in the other country. Information is exchanged informally between U.S. and Canadian farmers through trade publications, scholarly publications and scientific research reports, and conferences . . . Also, animals for breeding purposes are exchanged between the United States and Canada, making available a common genetic pool.

Conditions for growing hogs are similar in the United States and Canada. The genetically superior sows and boars resulting from the ROP program are used in both countries, as well as in other countries. Therefore, the ROP research has broad applicability in the hog industry both inside and outside Canada.

For these reasons, we preliminarily find that this program provides no special benefit to the Canadian swine industry because the results of the research are publicly available to anyone interested, including hog producers in the United States, and because the research results have broad applicability to hog producers the world over, including those in the United States. We therefore preliminarily determine that this program is not countervailable.

(3) Canada-Ontario Stabilization Plan for Hog Producers 1985

The Canada-Ontario Stabilization Plan for Hog Producers, established under section 5 of the Ministry of Agriculture and Food Act, was an interim program set up to provide price stabilization assistance to hog producers during the period April 1, 1985 to September 30, 1985, pending the implementation of the National Tripartite Scheme. This was the only interim stabilization program in effect during the period of review. Because this program provided payments that were limited to a specific industry, we preliminarily determine that it is countervailable.

Funding for the program came from the federal Agricultural Stabilization Board, the Ontario government, and producer premiums of Can$2.80 per head. Payments, which were calculated according to ASA methodology, were made in the two quarters covered by this program. However, unlike the federal ASA payments, no reduction was made to account for exports. Payments were made on hogs indexing 80 or higher to farrow-to-finish producers and finisher producers and on weaner pigs to sow weaner producers. No payments were made on sows and boars.

To calculate the benefit from this program, we divided the gross payments, net of producer contributions, by the total live weight of swine (minus sows and boars) produced in Ontario during the period of review. We then weight- averaged Ontario's benefit by its share of total Canadian exports of this merchandise (minus sows and boars) to the United States. On this basis, we preliminarily determine the benefit to be zero for sows and boars and Can $0.0124/lb. for all other swine during the period of review.

(4) Alberta Red Meat Interim Insurance Program

The Alberta Red Meat Interim Insurance Program operated in a manner similar to the Canada-Ontario Stabilization Plan for Hogs, except that payments were calculated as specified in the proposed National Tripartite Scheme. Payments were made on cattle and on hogs indexing 80 or above (which do not include sows and boars). Cattle and hogs were the only commodities covered by an interim stabilization program in Alberta during the period of review. Because this program provided payments that were limited to specific industries, we preliminarily determine that it is countervailable.

To calculate the benefit from this program, we divided the gross payments, net of producer contributions, by the total live weight of swine (minus sows and boars) produced in Alberta during the period of review. We then weight- averaged Alberta's benefit by its share of total Canadian exports of this merchandise (minus sows and boars) to the United States. On this basis, we preliminarily determine the benefit to be zero for sows and boars and Can $0.0032/lb. for all other swine during the period of review.

(5) Saskatchewan Hog Assured Returns Program (SHARP)

SHARP was established in 1976 pursuant to the Saskatchewan Agricultural Returns Stabilization Act. It provides stabilization payments to hog *22193 producers in Saskatchewan at times when market prices fall below certain production costs. The program, which is scheduled to be discontinued by 1991, is administered by the Saskatchewan Pork Producers' Marketing Board on behalf of the provincial Department of Agriculture. Participation is voluntary and is open to all hog producers in the province. Coverage is limited to 1,500 hogs per producer each calendar quarter. Under the Saskatchewan Agricultural Returns Act, the provincial government may establish a stabilization plan for any agricultural commodity. However, in practice, only hogs and beef have such plans. Because this program provides payments to specific industries, we preliminarily determine that it is countervailable.

The program is funded by levies on the sale of hogs from participating producers and by matching amounts from the provincial government. The levies are charged regardless of whether the fund is in a surplus or deficit position. Producer levies range from 1.5 to 4.5 percent of market returns on the sale of hogs covered by the program. Whenever the balance in the SHARP account is insufficient to make payments to participants, the provincial government lends the needed funds to the program. The principal and interest on these loans are repaid by the Board using the producer and provincial contributions.

The stabilization price under this program is the total of cash production costs plus 75 percent of noncash costs. This price is determined each calendar quarter. Stabilization payments are made at the end of each quarter to each participating producer whose average price for hogs marketed in that quarter is less than the stabilization price. During the period of review, payments were made in all four quarters.

In the final determination (50 FR 25105), we considered the benefit from this program to be the provincial government's contribution to the fund in fiscal year 1984. We treated the provincial government's contribution as a grant. We have reconsidered our calculation methodology. The program is funded by equal contributions from the producers and the provincial government. In theory, producer contributions over time should equal half of the total payments received by producers from the fund. When market prices are significantly lower than stabilization prices for several years in a row, as was the case during the years up to and including the review period, the fund must make payments that are much greater than the accumulated contributions of the producers and the provincial government. In such cases, the provincial government makes up the deficit in the form of a loan. Because all producer contributions are matched by the provincial government, the actual loan liability of the producers is equal to half of the net deficit of the fund. However, there is no benefit from this loan liability because the fund pays interest, at market rates, on its net deficit. Therefore, there is only a grant benefit to the producers, which is equal to half of the total stabilization payments made during the review period.

To calculate the benefit, we divided half of the total stabilization payments received by the total live weight of swine (minus sows and boars) produced in Saskatchewan during the period of review. We then weight-averaged Saskatchewan's share of total Canadian exports of this merchandise (minus sows and boars) to the United States. On this basis, we preliminarily determine the benefit to be zero for sows and boars and Can$0.0024/lb. for all other swine during the period of review.

(6) British Columbia Farm Income Insurance Plan (FIP)

The FIP was established in 1979 in accordance with the Farm Income Insurance Act of 1973 ("the Farm Act") in order to assure income for farmers when commodity market prices fluctuate below basic costs of production. The criteria for eligibility in the FIP programs, which are described in Schedule A of the Farm Act, are the same for all farmers who produce certain commodities. Schedule B of the Farm Act contains the guidelines for the individual commodities receiving benefits. During the period of review, stabilization plans were in effect for beef, blueberries, greenhouse tomatoes and cucumbers, potatoes, processing vegetables, raspberries, sheep, strawberries, swine and tree fruits.

Schedule B4 contains the guidelines for swine producers. The program is administered by the provincial Ministry of Agriculture and Food and the British Columbia Federation of Agriculture. In addition, the British Columbia Pork Producers' Association has a role in the Swine Producers' Farm Income Plan (the title of Schedule B4) in that it verifies claims, collects producer premiums, and consults with the government on matters such as premium levels and the cost of production formula. The program is funded by premiums that are paid in equal proportions by producers and by the provincial government. Producers pay premiums in all quarters regardless of market results.

Participating producers receive FIP payments in calendar quarters during which costs of production exceed market returns. The basic costs of production and market returns are calculated quarterly according to a cost of production model described in the Act. The same per unit cost of production model is used for all products receiving benefits. FIP payments are calculated quarterly based on the difference between costs of production and market returns. The Farm Act requires that ASA payments to individual producers be added to the market return price. Payments were made to hog producers in all quarters of the review period.

Because several major agricultural commodities, such as wheat, dairy products, and poultry, are excluded from the FIP, we preliminarily determine that this program provided payments that were limited to specific industries and is therefore countervailable. To calculate the benefit, we followed the same methodology as described for the Saskatchewan SHARP program (see section 5). On this basis, we preliminarily determine the benefit to be zero for sows and boars and Can$0.0003/lb. for all other swine during the period of review.

(7) Manitoba Hog Income Stabilization Plan (HISP)

The HISP was created in 1983 pursuant to the Farm Income Assurance Plans Act to provide income support payments to hog producers in Manitoba. The program was terminated on June 28, 1986. It was administered by the provincial Ministry of Agriculture and the Manitoba Hog Producers' Marketing Board. It was funded by premiums from participating producers (five-sevenths) and from the Government of Manitoba (two-sevenths). Whenever the balance in the HISP account is insufficient to make payments to participants, the provincial government lends the needed funds to the program. The principal and interest on these loans are repaid by the Board using the producer and provincial contributions.

Participation in the program was voluntary, and coverage was limited to a maximum of 1,250 hogs per quarter. Only indexed hogs were eligible for beneifts. Sows and boars were not eligible for benefits. Participating producers received payments at the end of each quarter in which the market price for hogs fell below an established price support level. The price support level was 87 percent of the cost of production model, which was revised by the Ministry of Agriculture each quarter. *22194 Although the enabling legislation for this program permitted the Minister to establish income assurance plans for many natural products, there were only two commodites for which plans were in operation during the period of review. Because payments were limited to these two products, we preliminarily determine that this program was provided to a specific group of industries and is therefore countervailable.

To calculate the benefit, we followed the same methodology as described for the Saskatchewan SHARP program (see section 5). On this basis, we preliminarily determine the benefit to be zero for sows and boars and Can $0.0003/lb. for all other swine during the period of review.

(8) New Brunswick Hog Price Stabilization Plan (NBHPSP)

The NBHPSP was established in 1974 to assure hog producers greater income stability during periods of both high and low market prices. The plan is administered jointly by the New Brunswick Department of Agriculture Hog Stabilization Board and the New Brunswick Hog Marketing Board. Participation in the plan is voluntary. Producers who sell through the Marketing Board are eligible to receive payments on up to 7,500 hogs per year. Hogs indexing 100 or above (which do not include sows and boars) are the only agricultural commodity that received stabilization payments in New Brunswick during the period of review. Because this program provided payments that were limited to a specific industry, we preliminarily determine that it is contervailable.

The Board establishes a base price that is based on production costs. When the market price exceeds the base price by Can$5.00, farmers pay into the stabilization fund. Ninety-five percent of this amount is considered to be the farmer's equity in the program. When the average weekly market price falls below the base price, farmers receive payments to make up the difference between the two prices. Half of the payment is provided by the Government of New Brunswick as an outright grant to the farmer. The other half is drawn from the farmer's equity in the fund. When the farmer has exhausted his equity in the fund, the province assumes the producer's portion of the payment by providing an interest-free loan. This loan is only paid back when the fund is in a surplus position. In fiscal year 1985-86 the base price exceeded the market price throughout the year, and producers received both loan and grant payments from the program in all four quarters.

All outstanding interest-free loans as of April 1, 1985 were subsumed under the New Brunswick Swine Industry Financial Restructuring Program (see section 16). The benefit from the interest-free loans loans provided in fiscal year 1985-86 will accure in fiscal year 1986-87. Therefore, only the grant portion of this program provided a benefit during the review period.

The calculate the benefit, we allocated half the total stabilization payments received during the review period over the total live weight of swine produced in New Brunswick during the review period. We then weight-averaged the result by New Brunswick's share of total Canadian exports of this merchandise (minus sows and boars) to the United States. On this basis, we preliminarily determine the benefit to be zero for sows and boars and Can$0.000002/lb. for all other swine during the period of review.

(9) Newfoundland Hog Price Support Program

In April 1985, the Executive Council of Newfoundland authorized the Newfoundland Farm Products Corporation, which acts on behalf of the provincial government, to pay 85 cents per pound for all hogs indexing 80 or above (which do not include sows and boars) that were purchased by the Corporation. This price was paid regardless of the prevailing market price. The price was based on monthly determinations of input costs of production. During the period of review, costs were approximately 91 cents per pound, and the market price averaged 70 cents per pound. Producers do not contribute to this program. Hogs are the only agricultural commodity that received stabilization payments in Newfoundland during the period of review. Because the program provided payments that were limited to a specific industry, we preliminarly determine that it is countervailable.

Although Newfoundland did not export hogs to the United States directly during the review period, we verified that Newfoundland exported hogs to Ontario that were later exported to the United States during the review period. These Newfoundland hogs did not qualify for stabilization payments from the Ontario provincial government but did form the basis for stabilization payments from the Newfoundland provincial government. Therefore, to calculate the benefits, we divided the gross payments on swine by the total live weight of swine (minus sows and boars) produced in Newfoundland during the period of review. We than weight-averaged the result by Newfoundland's share (based on its exports through Ontario) of total Canadian exports of this merchandise (minus sows and boars) to the United States during the period of review. On this basis, we preliminarily determine the benefit from this program to be zero for sows and boars and Can$0.00002/lb. for all other swine.

(10) Nova Scotia Pork Price Stabilization Program (NSPPSP)

Pursuant to the Nova Scotia Natural Products Act, the NSPPSP was administered under the Pork Producers Marketing Plan of August 9, 1983. The program was terminated on September 30, 1987. The purpose of the program was to assure price stability for hogs by compensating farmers for fluctuations in hog prices and by assuring that producers consistently recover direct operating costs. Participation was open to all hog producers who sold through the Nova Scotia Pork Price Stabilization Board. Maximum eligibility was established annually according to the producers' current production levels. Indexed hogs (not sows and boars) were the only agricultural commodity that received stabilization payments during the period of review. Because the stabilization payments were limited to a specific industry, we preliminarily find them to be countervailable.

The NSPPSP was funded by producer and provincial government contributions. Each quarter, the Board set and reviewed the base price to reflect current, direct, out-of-pocket operating costs. During periods of high prices, producers built equity in the fund with their contributions. When the market price fell below the stabilization price, the producers received a deficiency payment, which equaled the difference between the two prices. Half of the payment was contributed by the provincial government. The other half was drawn from the producer's equity in the fund. When the producer's equity was exhausted, the provincial government assumed the producer's portion of the stabilization payment in the form of an interest-free loan. Because market prices did not exceed the base prices during the period of review, payments were made in all four quarters of the review period. During the period of review, the producers did not contribute to the fund. In addition, because of an extended period of low market returns with no support payments, a one-time supplementary payment of Can$2 per cwt was given to producers during the period of review.

On September 20, 1985, the Government of Nova Scotia amended *22195 this program by eliminating the interest-free loan element. The total amount of the stabilization payment is now a grant only. However, producers continue to be liable for interest-free loans provided before fiscal year 1985-86. Therefore, the benefit during the review period consists of the total stabilization payments received in the review period, which are grants, plus the interest on the outstanding loan balance as of the beginning of fiscal year 1985-86. We do not know the outstanding loan balance as of the beginning of fiscal year 1985-86. As the best information available, we have assumed that the outstanding loan balance is equal to half the amount of the total stabilization payments made during the review period.

To calculate the benefit, we considered the total amount of the stabilization payments received in the review period as a grant. We treated the outstanding loan balance as a one-year interest-free loan. We took the difference between the zero interest rate charged on these loans and the national average short- term commercial rate for comparable agricultural loans and multiplied this interest differential by the outstanding loan balance. We allocated the grant and loan benefits over the toal live weight of swine produced in Nova Scotia during the review period. We then weight-averaged the result by Nova Scotia's share of total Canadian exports of this merchandise (minus sows and boars) to the United States. On this basis, we preliminarily determine the benefit to be zero for sows and boars and Can$0.000002/lb. for all other swine during the period of review.

(11) Prince Edward Island (PEI) Price Stabilization Program

In accordance with the PEI Natural Products Marketing Act, the PEI Hog Commodity Marketing Board established the PEI Price Stabilization Program in 1974. The purpose of the program is to provide income stability to hog producers. The Stabilization Board and the provincial lending authorities meet quarterly to determine the level of support prices. Support levels are set at 95 percent of the cost of production. If the weekly market price of hogs exceeds the support price by Can$3.00, producers contribute to the fund. If the weekly market price falls below the support price plus Can$3.00, the producers do not contribute to the fund. Whenever the weekly price of hogs is below the support price, the PEI Hog Commodity Board makes stabilization payments from the fund of one-half the difference between the two prices. Half the payment is contributed by the provincial government, and the other half is drawn from the producers' equity in the fund. In the event that producers' equity in the fund is exhausted, the provincial government assumes the producers' portion of the stabilization payment in the form of an interest-free loan, which is repaid when the fund is in a surplus position. During the period of review, the producers did not contribute to the fund.

Payments are made only on hogs indexing between 67 and 114 (not sows and boars). Participation in the program is voluntary, and there are no minimum production requirements. However, producers are only eligible to receive stabilization payments on the number of hogs equal to the average number of hogs marketed in the previous quarter, up to a ceiling of 4,300 hogs per year.

The Natural Products Marketing Act established marketing boards for hogs, dairy products, tobacco, pedigreed seed, pulp trees, meat, eggs, and cole crops. However, hogs were the only agricultural commodity that received stabilization payments during the review period. Because this program provided payments that were limited to a specific industry, we preliminarily find it to be countervailable.

To calculate the benefit, we used the same methodology as described under the Nova Scotia stabilization program (see section 10). On this basis, we preliminarily determine the benefit to be zero for sows and boars and Can $0.00003/lb. for all other swine during the period of review.

(12) Quebec Farm Income Stabilization Insurance Programs (FISI)

In accordance with the "Loi sur l'assurance-stabilisation des revenus agricoles" (the FISI), the Government of Quebec established stabilization schemes for producers of various commodities, including feeder hogs and weaner pigs. The schemes are administered by the Regie des Assurances Agricoles du Quebec (the Regie), a crown corporation. The purpose of the schemes is to guarantee a positive net annual income to participants whose income is lower than the stabilized net annual income. The stabilized net annual income is calculated according to a cost of production model that includes an adjustment for the difference between the average wage of farm workers and the average wage of all other workers in Quebec. When the annual average income is lower than the stabilized net annual income, the Regie makes a payment to the participant at the end of the year.

The schemes are funded two-thirds by the provincial government and one-third by producer assessments. Participation in a stabilization scheme is voluntary. However, once a producer enrolls in a program, he must make a five- year commitment. The maximum number of feeder hogs eligible to be insured is 5,000, and a maximum of 400 sows may be insured. Whenever the balance in the FISI account is insufficient to make payments to participants, the provincial government lends the needed funds to the program. The principal and interest on these loans are repaid by the Regia using the producer and provincial contributions.

The Government of Quebec contends that, because this program covers 11 commodities that together comprise 71 percent of commercial farm production in the province of Quebec, the Department should not consider the program to be targeted to specific industries. We have considered the Government of Quebec's arguments. In calculating total commercial farm production, the Government of Quebec did not include milk products, poultry, and eggs, which made up almost half of Quebec's total agricultural production in 1985. By including these products, we find that the proportion of total farm production in Quebec covered by the FISI in 1985 was much less than that claimed by the Government of Quebec. Therefore, we are not persuaded by the Government of Quebec's arguments and preliminarily determine that this program continues to be countervailable.

To calculate the benefit, we followed the same methodology as described under the Saskatchewan SHARP program (see section 5).

On this basis, we preliminarily determine the benefit to be Can$0.0007/lb. for both sows and boars and all other swine.

(13) New Brunswick Swine Assistance Program

In 1981-82, the Farm Adjustment Board, which was created by the Farm Adjustment Act, provided interest subsidies on medium-term loans to hog producers in order to alleviate high interest charges on the producers' short- term debt for operating credit. The program was available only to hog producers who entered production or underwent expansion since 1979. The loans bore a five-year term and an effective interest rate of 10 percent. Because these loans were provided to a specific industry at noncommecial rates, we preliminarily determine that they are countervailable.

*22196 To calculate the benefit from this program, we divided the aggregate interest subsidy by the total live weight of swine produced in New Brunswick. We then weight-averaged the result by New Brunswick's share of total Canadian exports of swine to the United States in the period of review. On this basis, we preliminarily determine the benefit from this program to be Can $0.00000003/lb. for both sows and boars and all other swine.

(14) New Brunswick Livestock Incentives Program

This program, which operates under the New Brunswick Livestock Incentives Act, OC 71-544, provides free loan guarantees to producers for purchasing breeder and feeder animals. In addition, a 20-percent refund of the principal is granted to farmers upon repayment of the breeder loans. We preliminarily determine that this program is countervailable because it is provided to a specific industry on terms inconsistent with commercial considerations. This program affects only sows and boars, which are old breeders.

To calculate the benefit, we multiplied the total amount of loans given to hog producers during the period of review by 0.75 percent, which was the average commercial cost of loan guarantees in New Brunswick during the period of the investigation (we used this as the best information available because the Government of New Brunswick did not report the average cost of commercial loan guarantees for the period of review). We allocated the result, plus the total amount of refunds, over the total live weight of sows and boars produced in New Brunswick during the period of review and then weight-averaged that amount by New Brunswick's share of total Canadian exports of live swine (the only information available) to the United States during the period of review. On this basis, we preliminarily determine the benefit from this program to be Can $0.00000535/lb. for sows and boars, and zero for all other swine.

(15) New Brunswick Hog Marketing Program

Under this program, the Livestock Branch of the New Brunswick Department of Agriculture paid the New Brunswick Hog Marketing Board 64 cents for each hog sold during the review period in order to equalize the cost of transporting hogs to slaughter facilities in all areas of the province.

Because this program is provided to a specific industry and constitutes government assumption of transportation costs, we preliminarily determine that it is countervailable. To calculate the benefit, we divided the total amount granted under this program by the total live weight of hogs produced in New Brunswick during the the period of review. We then weight-averaged the result by New Brunswick's share of total Canadian exports of swine to the United States in the period of review. On this basis, we preliminarily determine the benefit from this program to be Can$0.00000019/lb. for both sows and boars and all other swine.

(16) New Brunswick Swine Industry Financial Restructuring Program

This program was created by the Farm Adjustment Act (OC 85-98) and became effective April 1, 1985. During the period of review, the Government of New Brunswick granted hog producers indebted to the Board a rebate of the interest on that portion of their total debt (the "residual debt") that, on March 31, 1984, exceeded the "standard debt load." The standard debt load is defined in the progarm regulations as the amount of debt which a swine producing unit can, in the opinion of the Board, reasonably be expected to service. The residual debt does not begin to accrue interest again until the debt load is no longer "excessive."

We preliminarily determine that this program is countervailable because it provides noncommercial loan terms to a specific industry. We consider both the interest rebate and the interest holiday to confer benefits. However, because the interest holiday did not begin until April 1, 1985, the benefit from this portion of the program does not occur until April 1, 1986, which is outside this revie period.

To calculate the benefit, we divided the amount of the rebate by the total live weight of hogs produced in New Brunswick during the period of review. We then weight-averaged the result by New Brunswick's share of total Canadian exports of swine to the United States in the period of review. On this basis, we preliminarily determine the benefit to be Can$0.00000154/lb. for both sows and boars and all other swine.

(17) Nova Scotia (NS) Swine Herd Health Policy

The Nova Scotia Department of Agriculture and Marketing administers a herd health program whereby it reimburses veterinarians for housecalls made to breeders of commercial and purebred livestock. Because this program provides payments that are limited to specific industries, we preliminarily determine it is countervailable. This program affects only sows and boars, which are old breeders. To calculate the benefit, we divided the total reimbursements by the total live weight of sows and boars produced in Nova Scotia during the period of review. We then weight-averaged the result by Nova Scotia's share of total Canadian exports of live swine (the only information available) to the United States during the period of review. On this basis, we preliminarily determine the benefit to be Can$0.00000646/lb. for sows and boars, and zero for all other swine.

(18) Nova Scotia (NS) Transportation Assistance

The NS Department of Agriculture and Marketing provides grants to the NS Hog Marketing Board, which in turn distributes the funds to producers, in order to equalize the cost of transporting hogs to slaughter facilities. The funds are available only to farmers who produce and slaughter their hogs in Nova Scotia. Because this program does not affect live swine exported to the United States, we preliminarily determine that it is not countervailable.

(19) Ontario Farm Tax Reduction Program

This program provides eligible farmers with a rebate of 60 percent of municipal property taxes levied on farm properties the products of which have a gross value of Can$5,000 in eastern or northern Ontario, and Can$8,000 elsewhere in Ontario. There is no restriction on the types of farm products that are eligible, nor is it necessary that the products actually be sold. Any resident of Ontario may receive a rebate if he owns and pays taxes on eligible properties. Because the eligibility criteria vary depending on the region of Ontario in which the farm is located, we preliminarily determine that this program is countervailable. Since all farmers in Ontario whose gross output is at least Can$8,000 are eligible to receive payments under this program, this program is countervailable only to the extent that farmers in eastern and northern Ontario whose gross output is between Can$5,000 and Can$8,000 receive benefits.

In our final determination (50 FR 25105), we were not able to determine the portion of hog farmers in eastern and northern Ontario in the $5,000 to $8,000 gross output range. Therefore, we calculated the benefit by dividing the portion of the total payout under this program that represented the proportion of swine produced in all of Ontario to total agricultural production in all of Ontario. In this review, we have collected more accurate information. From the Canadian census, we found *22197 that 16 percent of all Ontario farmers have sales valued between $5,000 and $9,999. Although the subsidy is paid to farmers in the $5,000 to $8,000 range, the census data is the only available breakdown of production according to output level. We have therefore used it as the best information otherwise available. We multiplied the 16 percent by the amount paid under this program to swine farmers in eastern and northern Ontario during the period of review. We allocated this amount over the total live weight of swine produced in Ontario during the period of review. We then weight-averaged the result by Ontario's share of total Canadian exports of this merchandise to the United States during the period of review. On this basis, we preliminarily determine the benefit from this program to be Can $0,00003182/lb. for both sows and boars and all other swine.

(20) Ontario (Northern) Livestock Programs

The Northern Livestock Improvement Program reimburses farmers for up to 20 percent of the purchase cost of breeding stock, including dairy cows, heifers, beef bulls, rams, ewes, and boars. A maximum of Can$1,500 may be reimbursed to an individual during a three-year period. Swine producers are reimbursed for a maximum of Can$100 per boar. The Northern Livestock Transportation Assistance Program reimburses the producers living in northern Ontario 50 percent of the costs of transporting high quality breeding stock from southern and northern Ontario and 33.30 percent from Quebec and western Canada. These programs affect only sows and boars, which are old breeders.

Because these programs provide payments that are limited to livestock producers in northern Ontario, we preliminarily determine that they are countervailable. To calculate the benefit, we divided the total payments to hog producers under these programs by the total live weight of sows and boars produced in Ontario. We then weight-averaged the result by Ontario's share of Canadian exports of live swine (the only information available) to the United States during the period of review. On this basis, we preliminarily determine the benefit to be Can$0.00002666/lb. for sows and boars, and zero for all other swine.

(21) Prince Edward Island (PEI) Hog Marketing and Transportation Subsidies

The PEI Department of Agriculture and Marketing provides grants to one hog packer in order to defray the cost of processing and transportation. We preliminarily determine that this portion of the program is not countervailable because it is given only to a packer of pork products, and the countervailing duty order covers only live swine.

The Government of PEI also provides transportation grants to hog producers in the western part of the province in order to equalize the cost of producing hogs in different parts of the province. Because this portion of the program provides payments that are limited to a specific industry and a specific region, and because this portion benefits live swine, we preliminarily determine that it is countervailable.

In this review, the PEI Government provided no information on this program. Therefore, as the best information available, we used the amended rate determined for the period of the original investigation. On this basis, we preliminarily determine the benefit from this program to be Can$0.00005/lb. during the period of review for both sows and boars and all other swine.

(22) Prince Edward Island (PEI) Swine Development Program

The Department of Agriculture and Marketing pays a bonus to breeders who purchase boars or purebred and crossbred gilts. The boars and gilts must meet certain Record of Performance standards and are sold as breeding stock. Because this program provides payments that are limited to a specific industry, we preliminarily determine that it is countervailable. This program affects only sows and boars, which are old breeders.

To calculate the benefit from this program, we divided the total payments by the total live weight of sows and boars produced in PEI during the period of review. We then weight-averaged the result by PEI's share of total Canadian exports of live swine (the only information available) to the United States during the period of review. On this basis, we preliminarily determine the benefit to be Can$0.00004476/lb. during the peiod of review for sows and boars, and zero for all other swine.

(23) Prince Edward Island Interest Payments on Assembly Yard Loan

The PEI government assumed the interest on a loan granted to hog producers for the purpose of constructing a hog assembly yard. Because this interest assumption is limited to a specific enterprise, we preliminarily determine that it is countervailable.

We treated the interest payment due during the review period as a grant and expensed it in the review period. We divided the grant by the total live weight of hogs produced in PEI during the period of review. We then weight- averaged the result by PEI's share of total Canadian exports of this merchandise to the United States in the period of review. On this basis, we preliminarily determine the benefit from this program to be Can$0.00000002/lb. during the period of review for both sows and boars and all other swine.

(24) Quebec Special Credits for Hog Producers

Under the terms of the "Loi favorisant un credit special pour les producteurs agricoles au cours de periodes critiques," all agricultural producers are eligible for reimbursement of interest on low-interest loans made by chartered banks or savings and loan associations during critical periods. Critical periods are defined as natural disasters, an unexpected and uncontrollable drop in prices, or a lower than designated level of production in a designated region for reasons beyond the control of producers.

In our final determination, we determined that this program was limited to specific industries and was countervailable because it requires a special government regulation in order for a particular commodity group to obtain special assistance. We have reconsidered this issue. Although a special regulation is required, we verified that this program is available to, and used by, all agricultural industries on the same terms. Therefore, we preliminarily determine that it is not countervailable.

(25) Saskatchewan Financial Assistance for Livestock and Irrigation

Pursuant to the Agricultural Credit Corporation of Saskatchewan Act, the Agricultural Credit Corporation of Saskatchewan (ACS) established the Capital Loan Program, which provides loans, grants and loan guarantees to farmers for purposes related primarily to the acquisition and production of livestock. In our final determination, we found this program countervailable because it was limited to specific enterprises or industries. On December 13, 1985, this act was amended by Bill 117, which eliminated the restrictions to livestock production and livestock products from the definition of farming. Farming now includes livetock raising, bee keeping, fur farming, dairying, tilling the soil or any other activity undertaken to produce agricultural products.

The Bill also eliminated the list of specific purposes for which loans are made. Loans and grants are now made *22198 "for prescribed purposes to farmers to assist or enable them to develop or maintain viable farming operations." In order to incorporate the changes made to the Bill, the ACS regulations now include two new programs--the Livestock Cash Advance Program and the Production Loan Program--to the existing Capital Loan Program, the Guaranteed Loan Program, and the Beef Industry Assistance Program. ACS's client base has now been expanded to include almost all Saskatchewan's farmers in a broad array of agricultural operations and in all regions of Saskatchewan. Because this program is now available to, and used by, the entire agricultural sector on equal, objective terms, we preliminarily determine that it is not countervailable.

(26) Saskatchewan Livestock Investment Tax Credit

Saskatchewan's 1984 Livestock Tax Credit Act provides tax credits to individuals, partnerships, co-operatives and corporations who own and feed livestock in Saskatchewan for slaughter. Claimants must be residents of Saskatchewan and pay Saskatchewan income taxes. Eligible claimants receive credits of Can$25 for each bull, steer or heifer, Can$2, for each lamb and Can $3 for each hog. The tax credits may be carried forward for seven years. There is a Can$100 deduction from the credit each year in which the credit is used. The credits must be included as taxable income the year after receipt. The credit is available to hogs indexing 80 or higher. We preliminarily determine that this program is countervailable because it is provided only to specific industries.

The Government of Sasketchewan estimated the aggregate amount of tax credits received by hog producers in fiscal year 1985-86. To calculate the benefit, we divided this amount, minus the Can$100 deduction for each of the estimated number of hog producer claimants, by the total live weight of live swine produced in Saskatchewan. We then weight-averaged the result by Sasketchewan's share of total exports (minus sows and boars) of this merchandise to the United States during the period of review. On this basis, we preliminarily determine the benefit to be zero for sows and boars and Can$0.00008302/lb. for all other swine.

(27) Saskatchewan Livestock Stock Advance Program (SLCAP)

The SLCAP provides livestock producers with interest-free loans to enable the producers to meet immedite cash requirements while retaining their animals for future sale. The first interest payment under this program became due in August 1986. Because there were no interest payments due in fiscal year 1985- 86, we preliminarily determine that there was no benefit from this program during the review period.

(28) Ontario Weaner Pig Stabilization Plan

Pursuant to the Farm Income Stabilization Act (FISA), the Government of Ontario operated a weaner pig stabilization program from April 1, 1980 through March 31, 1985. The intent of the program was to provide producers of weaner pigs with support payments in any production peiod in which the average market price for that period fell below a certain support price. The market and support prices were based on data used by the federal government for its ASA slaughter hog program. Participation in the program was voluntary, and funding for the program was provided by the provincial government and the participating producers in the ratio of two to one.

In our final determination (50 FR 25110), we stated that this program had been statutorily terminated on March 31, 1985 and that no payments under this program had been made since 1984. From FISA's annual report for fiscal year 1986, we have learned that payments were made under this program during the review period. Lacking any further information on this program, we preliminarily determine that it is countervailable and that two-thirds of the payment is a grant. We allocated this amount over the total live weight of swine produced in Ontario during the review period and then weight-averaged that result by Ontario's share of total Canadian exports of this mearchandise to the United States during the period of review. On this basis, we preliminarily determine the benefit from this program to be zero for sows and boars and Can$0.000505/lb. for all other swine.

Preliminary Results of Review

As a result of our review, we preliminarily determine the net subsidy to be Can$0.004147/lb. for slaughter sows and boars and Can$0.022/lb. for all other swine for the period April 3, 1985 through March 31, 1986. The rate for sows and boars is equivalent to 0.32 percent ad valorem. The Department considers any rate less than 0.50 percent to be de minimis.

The Department intends to instruct the Customs Service to liquidate, without regard to countervailing duties, shipments of sows and boars and to assess countervailing duties of Can$0.0022/lb. on shipments of all other live swine entered, or withdrawn from warehouse, for consumption on or after April 3, 1985 and exported on or before March 31, 1986.

As provided by section 751(a)(1) of the Tariff Act, the Department also intends to instruct the Customs Service to waive cash deposits of estimated countervailing duties on shipments of slaughter sows and boars and to collect cash deposits of estimated countervailing duties of Can$0.022/lb. on shipments of all other live swine entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this review. This deposit requirement will remain in effect until publication of the final results of the next administrative review.

Interested parties may submit written comments on these preliminary results within 30 days of the date of publication of this notice and may request diclosure and/or a hearing within 7 days of the date of publication. Any hearing, if requested, will be held 30 days from the date of publication or the next workday following. Any request for an administrative protective order must be made no later than five days after the date of publication. The Department will publish the final results of this administrative review including the results of its analysis of issues raised in any such written comments or at a hearing.

This administrative review and notice are in accordance with section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.10.

Date: June 3, 1988.

Joseph A. Spetrini,

Acting Assistant Secretary, Import Administration.

[FR Doc. 88-13397 Filed 6-13-88; 8:45 am]

BILLING CODE 3510-DS-M