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NOTICES
DEPARTMENT OF COMMERCE
C-122-807
Preliminary Affirmative Countervailing Duty Determination; Fresh, Chilled, and
Frozen Pork from Canada
Monday, May 8, 1989
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AGENCY: Import Administration, International Trade Administration, Commerce.
ACTION: Notice.
SUMMARY: We preliminarily determine that benefits which constitute subsidies within the meaning of the countervailing
duty law are being provided to
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producers or exporters in Canada of fresh, chilled, and frozen pork products, as described in the "Scope of Investigation"
section of this notice. The estimated net subsidy is Can$0.077/kg. (Can$0.035/lb.) for all producers or exporters in Canada
of fresh, chilled, and frozen pork products. If this investigation proceeds normally, we will make a final determination on or before
July 17, 1989.
EFFECTIVE DATE: May 8, 1989.
FOR FURTHER INFORMATION CONTACT: Roy A. Malmrose or Rick Herring, Office of Countervailing Investigations, Import
Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution
Avenue, NW., Washington, DC 20230; telephone: (202) 377-5414 or 377-0167.
SUPPLEMENTARY INFORMATION:
Preliminary Determination
Based on our investigation, we preliminarily determine that certain benefits which constitute subsidies within the meaning of
section 701 of the Tariff Act of 1930, as amended (the Act), are being provided to producers or exporters in
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Canada of fresh, chilled, and frozen pork products. For purposes of this investigation, the following programs are
preliminarily found to confer subsidies:
Federal Programs
- Agricultural Stabilization Act/National Tripartite Red Meat Stabilization Program
- Feed Freight Assistance Program Provincial Programs
- Alberta Crow Benefit Offset Program
- Ontario Farm Tax Rebate Program
- Ontario (Northern) Livestock Improvement Program
- Ontario (Northern) Livestock Transportation Assistance Program
- Ontario Pork Industry Improvement Plan
- Ontario Marketing Assistance Program for Pork
- Quebec Farm Income Stabilization Insurance Program
- Quebec Productivity Improvement and Consolidation of Livestock Production Programs
- Quebec Regional Development Assistance
- Saskatchewan Hog Assured Returns Proqram
- Saskatchewan Livestock Investment Tax Credit Program
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- Saskatchewan Livestock Facilities Tax Credit Program
We preliminarily determine the estimated net subsidy to be Can$0.077/kg. (Can $0.035/lb.) for all producers or exporters in
Canada of fresh, chilled, and frozen pork products.
Case History
Since the publication of the Notice of Initiation in the Federal Register (54 FR 5537, February 3, 1989), the following events have
occurred. Prior to our presentation of the questionnaire, we decided to streamline this investigation because of the large number
of programs involved, the large number of swine and pork producers in Canada and our experience of previously examining
most of the programs upon which we initiated. Toward this end, we decided to examine only swine and pork producers in the
provinces of Quebec, Ontario, Alberta, Manitoba and Saskatchewan. These five provinces accounted for 92.5 percent of hogs
slaughtered in Canada in 1987.
On February 9, 1989, we presented a questionnaire to the Government of Canada in Washington, DC, concerning petitioner's
allegations. On February 22, we received further subsidy allegations from petitioner. We chose to initiate an investigation on all of
the additional programs included in that submission with the exception of the Saskatchewan Livestock Cash Advance Program.
This
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program is part of the Saskatchewan Financial Assistance for Livestock and Irrigation Program, which was found to be not
countervailable. [See, Live Swine From Canada: Preliminary Results of Countervailing Duty Administrative
Review, (53 FR 22189, June 14, 1988) and Live Swine From Canada: Final Results of Countervailing Duty
Administrative Review, (Live Swine) (54 FR 651, January 9, 1989)]. The programs initiated based on the February 22nd
allegations were the Special Canada Grains Program, the Feed Freight Assistance Program, the Alberta Crow Benefit Offset
Program and the Newfoundland Swine Breeding Stations Program.
On March 9, 1989, we received responses from the Government of Canada and the Provincial Governments of Alberta,
Ontario, Manitoba, Quebec, and Saskatchewan. On March 10, we postponed the preliminary determination to no later than May 1,
l989 pursuant to section 703(c)(1)(B) of the Act (54 FR 11024, March 16, 1989).
On April 3, 1989, we delivered a supplemental/deficiency questionnaire to the Government of Canada and the Provincial
Governments of Alberta, Ontario, Manitoba, Quebec, and Saskatchewan. On April 17, 1989, we received responses to the
questionnaires from the Government of Canada and the five Provincial Governments. On April 21, 1989, we delivered a
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supplemental/ deficiency questionnaire to the Government of Canada and the Provincial Government of Alberta. On April
27, 1989, we received responses to this second
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supplemental/ deficiency questionnaire from the Government of Canada and the Provincial Government of Alberta.
Scope of Investigation
The United. States has developed a system of tariff classification based on the international harmonized system of customs
nomenclature. On January 1, 1989, the U.S. tariff schedules were fully converted to the Harmonized Tariff Schedule (HTS), and all
merchandise entered or withdrawn from warehouse for consumption on or after that date is now classified solely according to the
appropriate HTS item number(s). The Department is providing both the appropriate Tariff Schedules of the United States
Annotated (TSUSA) item number(s) and the appropriate HTS item number(s) with its product descriptions for convenience and
Customs purposes. The Department's written description of the products under investigation remains dispositive as to the scope
of the products covered by this investigation.
The products covered by this investigation are fresh, chilled, and frozen pork, currently provided for under TSUSA item numbers
106.4020 and 1.06.4040, and currently classifiable under HTS item numbers 0203.11.00, 0203.12.90, 0203.19.40, 0203.21.00,
0203.22.90, and 0203.29.40. Specifically excluded from this investigation are any processed or otherwise prepared or
preserved pork
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products such as canned hams, cured bacon, sausage and ground pork.
Application of Section 771B
Section 1313 of the Omnibus Trade and Competitiveness Act of 1988 amended the Tariff Act of 1930 to include a new section
771B. This section reads as follows:
In the case of an agricultural product processed from a raw agricultural product in which--
(1) the demand for the prior stage product is substantially dependent on the demand for the latter stage product, and
(2) the processing operation adds only limited value to the raw commodity, subsidies found to be provided to either producers or
processors of the product shall be deemed to be provided with respect to the manufacture, production, or exportation of the
processed product.
The subject merchandise in this investigation is fresh, chilled, and frozen pork, an agricultural product, processed from a raw
agricultural product, live swine. Therefore, in this investigation we must first determine whether the elements of 771B are met.
For the reasons described below, we preliminarily determine that the elements of 771B are met. Thus, subsidies found to be
provided to either producers or processors of live swine are deemed to be
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provided with respect to the production or exportation of fresh, chilled, and frozen pork.
Prior to the enactment of 771B, the Department considered benefits to producers of a raw agricultural product when calculating
the benefits to producers of a processed agricultural product. See, Certain Fish from Canada: Final Countervailing Duty
Determination (43 FR 25996, June 16, 1978), Lamb Meat from New Zealand: Preliminary Affirmative Countervailing Duty
Determination (46 FR 58128, November 30, 1981), Final Affirmative Countervailing Duty Determination: Live Swine and
Fresh, Chilled, and Frozen Pork Products from Canada (Swine) (50 FR 25098, June 15, 1985), Final Affirmative
Countervailing Duty Determination and Order: Lamb Meat from New Zealand (50 FR 37708, September 17, 1985),
Preliminary Affirmative Countervailing Duty Determination: Red Raspberries from Canada (50 FR 42574, October 21,
1985), Final Affirmative Countervailing Duty Determination and Order: Rice from Thailand (51 FR 12356, April 10, 1986),
and Final Affirmative Countervailing Duty Determination: Certain Fresh Atlantic Groundfish from Canada (Groundfish)
(51 FR 10041, March 24, 1986). In Swine, we considered benefits to hog growers as direct benefits to pork producers in measuring
the subsidy on fresh, frozen, and chilled pork. Respondents in that case argued that the Department should apply the upstream
subsidy provision, section 771A of the Act, to determine if benefits to hog growers passed through to pork producers.
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We disagreed because we did not consider live swine to be an "input" into unprocessed pork. Therefore, since we otherwise did not
have reasonable grounds to believe or suspect that an upstream subsidy was being paid or bestowed with respect to unprocessed
pork, we did not conduct an upstream subsidy investigation. Our reasons for determining that hogs were not an input for purposes
of section 771A were clearly spelled out in Swine: "We believe there are two characteristics which evidence that live swine should
not be considered an 'input' into fresh, frozen, and chilled pork products. These characteristics are level of value added and the
role of the producer." First, with respect to value added we stated, "A low level of value added at a given level of processing is an
indication that the prior stage product entering that level is not an input into the processed product." Second, in our discussion of
the role of the processor we said, "The salient criterion is the degree to which the demand for the prior stage product is dependent
on the demand for the latter stage product."
Respondents in Swine appealed the Department's decision not to apply the upstream subsidies provision. The Court of
International Trade (CIT) remanded Swine to the Department to conduct an upstream subsidy investigation. The CIT ruled that
Commerce had to apply the upstream subsidy provision because it found no exception to that provision for agricultural products
either in the statute or in the legislative history. See, Canadian Meat Council v. United
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States, 661 F. Supp. 622 (1987). The decision of the CIT can only be considered advisory, however, because its later decision to
uphold the ITC's negative injury determination regarding the domestic industry for pork products mooted its remand
instructions. See, National Pork Producers Council v. United States, 661 F. Supp. 633 (1987). In light of the Court's decision,
Congress amended the Act by adding section 771B to codify the Department's practice. 133 Cong. Rec. S8814-16 (daily ed. June
16, 1989).
We preliminarily determine that the two criteria set out in 771B have been met in this case. The first element, regarding the
demand relationship between the raw and the processed product, is shown by the demand relationship between live swine and
fresh, chilled, and frozen pork. As we stated in Swine, the demand for the slaughtered and quartered swine is by far the
predominant determinant of the demand for live swine. Likewise, just as we found in Swine, we preliminarily find that
substantially all of the raw agricultural product, live swine, is dedicated to the production of unprocessed pork. The fact that
many separate processed products can be made beyond this stage, e.g., canned ham and sausage, is irrelevant. The key is that
there is a single, continuous line of production from live swine to unprocessed pork.
Furthermore, we preliminarily determine that the second criterion of 771B, limited value added, has also been satisfied in this
case. According to the questionnaire responses, the value added to hogs by pork processors is
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approximately 20 percent. Although we have accepted this figure for purposes of our preliminary determination, we note
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that based on our investigation thus far, there is no regularly maintained statistical information or accepted methodology for
calculating the value added by pork processors. Moreover, it appears that the value added by pork processors can vary markedly
between producers and over time. We will continue to examine other methodologies for calculating the value added and will
accept comments on the most appropriate approach for the final determination.
Using the value added figure of 20 percent, however, we must determine whether this figure represents "limited value" as the term
is used in section 771B. Although the term "limited value" is not defined in the statute and Congress provided little guidance with
respect to how we should interpret the term, we note that 771B was enacted by Congress to codify our practice as set forth in the
Department's decision in Swine. In Swine, we stated, "[i]n value-added terms, the packing stage consisting of immobilizing,
stunning, dehairing, eviscerating, splitting, etc., does not contribute significantly to the value of the live swine." Similarly, in
Groundfish, Commerce considered the benefits to harvesters as benefits to processors, even though the value added to the raw
product by processing was, according to the respondents in that case, 40 to 45 percent. In other agricultural cases, the value
added to the raw product has been even higher. Thus, based on the legislative history of 771B, our past
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practice and our investigation to date, we find it reasonable to determine preliminarily that the process of converting a live hog
into pork products adds only limited value added for purposes of 771B.
Therefore, for the reasons set forth above, we preliminarily determine that subsidies found to be provided to live swine shall be
deemed to be provided with respect to the production or exportation of fresh, chilled, and frozen pork in accordance with section
771B of the Act.
Analysis of Programs
We used our standard methodology to calculate benefits under grant programs. Grants provided on a recurring basis are
expensed in the year of receipt. For non-recurring grants, we totalled the grants provided within each program and divided by the
total sales value of the subject merchandise from the five provinces. If the sum was less than 0.5 percent of all sales concerned, we
expensed such grants in the year of receipt. Since we have not yet received sales information for the years prior to the review
period, we used as best information available the sales value for 1988 as reported in the response to determine if grants received
prior to 1988 should be allocated over time or expensed in the year of receipt. For all grant programs reviewed in this
investigation, based on this methodology, grants were expensed in the year of
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receipt.
Consistent with our practice in preliminary determinations, when a response to an allegation denies the existence of a program,
receipt of benefits under a program, or eligibility of a company or producer under a program, and the Department has no
persuasive evidence showing that the response is incorrect, we accept the response for purposes of the preliminary
determination. All such responses, however, are subject to verification under section 776(b) of the Act. If the response cannot be
supported at verification and the program is otherwise countervailable, the program will be considered a subsidy in our final
determination.
For purposes of this preliminary determination, the period for which we are measuring subsidies ("the review period") is calendar
year 1988.
Based on our analysis of the petition and the responses to our questionnaires, we preliminarily determine the following:
I. Programs Preliminarily Determined To Confer Subsidies
We preliminarily determine that subsidies are being provided to producers or exporters in Canada of fresh, chilled, and
frozen pork under the following programs:
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A. Federal Programs
1. Agricultural Stabilization Act/National Tripartite Red Meat Stabilization Program The Agricultural Stabilization Act (ASA) of
1958 was passed by the Federal Government to provide for the price stabilization of certain agricultural commodities. On June
27, 1985, the ASA was amended by Bill C-25, which authorized the Minister of Agriculture, with the approval of the Governor in
Council, to enter into agreements with the provinces and/or producers to provide price stabilization schemes for any natural or
processed product of agriculture. 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 overproduce.
Four groups of commodities are explicitly provided for, or "named," in the ASA: (1) cattle, hogs, lambs and wool; (2) industrial
milk and industrial cream; (3) corn and soybeans; and (4) spring wheat, winter wheat, oats and barley. Other natural or processed
products of agriculture may be "designated" by the Governor in Council as agricultural commodities for purposes of receiving
stabilization payments under the ASA.
Tripartite agreements on hogs were signed effective January l, 1986, with
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Alberta, Saskatchewan, Manitoba, and Ontario. An amended agreement was signed on February 8, 1989, adding the Provinces of
British Columbia, Quebec, New Brunswick, Prince Edward Island, and Nova Scotia. 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 hog producers in a province not a party to the 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 1991.
The Tripartite Agreements on Hogs are administered by the Stabilization Committee ("Committee") in conjunction with the
Agricultural Stabilization Board ("Board"). The Committee consists of nine voting members, three of which are appointed by the
provincial governments, three by the Federal Government, and three by the federal Minister of Agriculture from a list of pork
producers. The members of the Board are appointed by the Governor in Council. The Committee calculates the stabilization
payments for both named and designated products on a quarterly basis in the following manner. First, it calculates a "support
price," which is equal to the cash costs of production in the current 13-week period plus 93 percent of the average margin in the
same l3-week period for the preceding five years. The margin for any period is
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equal to the national average market price for the period minus the national average cash costs in that period. The difference
between the support price and the average market price is the amount of the stabilization payment. Stabilization payments are
triggered in any 13-week period that the market price falls below the support price. Payments are made only on hogs indexing 80
or above.
As previously stated, certain selected commodities are specifically named in *19585
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the ASA and, as such, are guaranteed stabilization schemes under the ASA. Funding for named commodities is approved as a
"statutory item" in the budget through existing legislation, i.e., the legal authority exists for the Committee to support named
commodities without the need for additional parliamentary approval. In contrast, funding for designated commodities is a "vote
item" in the . budget and, as such, must be approved by Parliament as a specific appropriation for a specific purpose. Each year,
prescribed prices are automatically calculated for named commodities, whereas designated products are only considered for ASA
payments if the Governor in Council so directs. Therefore, for designated products, there is no automatic calculation of a
prescribed price and no guarantee of ASA payments. The distinction between named and designated items indicates that certain
products are specifically targeted for ASA benefits.
Although any other natural or processed products of agriculture aside
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from the named commodities may be designated by the Governor in Council to receive payments under the ASA, we must look
beyond the de jure eligibility requirements for a given program to the de facto evidence as to which enterprises or industries were
actually included in ASA stabilization schemes. In our final administrative review of Live Swine, we found that several
major agricultural commodities, such as most wheat, dairy products, and poultry, are not included in ASA stabilization schemes.
The record in this case is unclear whether the factors that led to a finding of specificity in Live Swine have changed. Based on the
de facto finding in Live Swine and the distinction between named and designated products discussed above, we preliminarily
determine that payments under the ASA are limited to a specific enterprise or industry, or group of enterprises or industries and
are, therefore, countervailable. We will examine this issue further before the final determination.
To calculate the benefit under this program, we first calculated the dressed- weight equivalent of all hogs marketed in the five
provinces during the review period. To obtain the dressed-weight equivalent, we used the conversion factor of 79.5 percent as
provided in the Government of Canada response. Since the stabilization payments are paid out from a pool of funds which are
made up of equal contributions from the federal government, provincial governments, and producer premiums, plus interest, we
multiplied the stabilization payments made
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during the review period by two-thirds to factor out the producer premiums and allocated the result over the dressed-weight
equivalent of hogs marketed in the five provinces during the review period to obtain an estimated net subsidy of
Can$0.026945/kg. (Can$0.012222/lb.).
Petitioner has argued that we should change our calculation methodology to reflect benefits accrued on sales made during the
review period as opposed to cash payments received during the review period. If we find this program to be countervailable in
our final determination, we will consider petitioner's comments, as well as comments from other interested parties, as to which is
the most appropriate method to calculate the benefit.
2. Feed Freight Assistance Program (FFAP)
In 1966, Parliament enacted the Livestock Feed Assistance Act in response to domestic feed grain supply problems and price
fluctuations in Eastern Canada and British Columbia. The Canada Livestock Feed Board oversees the FFAP. The Board
ensures the availability of feed grain to meet the needs of livestock feeders, the availability of adequate storage space in Eastern
Canada for feed grain, and price stability for feed grain in Eastern Canada, British Columbia, Yukon, and the Northwest
Territories. Only users of grain, i.e., those who buy grain to feed livestock (commercial mills and livestock producers), are
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eligible for assistance.
To qualify for assistance, the feed grain must be transported outside the farm where it is grown and moved through commercial
channels. Commercial channels are defined as transactions that provide an invoice, weight certificate, grade certificate, and bill of
lading. Payments are made only on grain that will be fed to livestock.
Benefits are provided for transporting and storing feed. Payments for feed grain transportation are set per ton according to the
grain's destination. Feed grain storage payments are paid on a product basis.
Because this program is limited to feed grain users in Eastern Canada and British Columbia, we preliminarily determine that it
is limited to a specific enterprise or industry, or group of enterprises or industries and is, therefore, countervailable.
According to the responses, the most recent data on this program is for the 1986-1987 crop year. Of the five provinces we are
examining for purposes of this investigation, only Ontario and Quebec are eligible for assistance under the program. In its
response, the Government of Canada estimated that less than five percent of the program benefits were provided to
individuals involved in hog production. To calculate a benefit for the program, we therefore used as best information available
five percent of the disbursements made to Ontario and Quebec in 1986-1987, as reported in the latest available annual report of
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the Livestock Feed Board submitted in the response. We divided this amount by the dressed-weight equivalent of hogs marketed
during the review period in the five provinces to obtain an estimated net subsidy of Can$0.000115/kg. (Can $0.000052/lb.).
B. PROVINCIAL PROGRAMS
1. Alberta Crow Benefit Offset Program. The purpose of this program, which is administered by Agriculture Alberta, is to eliminate
market distortions in feed grain prices created by the federal government's policy on grain transportation.
Assistance is provided on feed grain produced in Alberta, feed grain produced outside Alberta but sold in Alberta, and feed grain
produced in Alberta to be fed to livestock on the same farm. The government provides certificates to registered feed grain users
and registered feed grain merchants which can be used as partial payments for grains purchased from grain producers. Feed grain
producers who feed their own grain to their own livestock submit a claim directly to the government for payment.
Because this program is limited to feed grain users, we preliminarily determine that it is limited to a specific enterprise or
industry, or group of enterprises or industries and is, therefore, countervailable.
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Hog producers receive benefits in one of three ways. Hog producers who do not grow any of their own feed grain receive
certificates which are used to cover part of the cost of purchasing grain. Hog producers who grow all of their own grain submit a
claim to the Government of Alberta for direct payment. Finally, hog producers who grow part of their own grain but who also
purchase grain receive both certificates and direct payments.
The Government of Alberta estimated that 12 percent of benefits provided under this program went to swine producers.
Therefore, to calculate the benefit, we took 12 percent of the total amount of benefits to feed grain users in Alberta and allocated it
over the *19586
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dressed-weight equivalent of hogs marketed during the review period in the five provinces. On this basis, we calculated an
estimated net subsidy of Can$0.002948/kg. (Can$0.001337/lb.).
2. Ontario Farm Tax Rebate Program
The Ontario Farm Tax Rebate Program replaced the Ontario Farm Tax Reduction Program. While the Ontario Farm Tax Reduction
Program provided a rebate of 60 percent of total property taxes levied on eligible farm properties, the current program provides
a rebate of 100 percent of taxes levied on outbuildings and properties only. Taxes levied on the residence and one acre of land are
no longer rebated.
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Any resident of Ontario may receive a rebate if he owns and pays taxes on eligible properties. Eligible properties are farming
enterprises that produce farm products with a gross value of Can$8,000 in southern and western Ontario and Can$5,000 in
northern and eastern Ontario. Since all farmers in Ontario whose gross output is at least Can$8,000 are eligible to receive a rebate
under this program, the program is limited to a specific enterprise or industry, or group of enterprises or industries, and is thus
countervailable, only to the extent that farmers in northern and eastern Ontario whose gross output is between Can$5,000 8,000
receive benefits.
Based on data taken from the 1986 Census of Agriculture, Statistics Canada, the last year for which complete information is
available, the Government of Ontario estimated that 4.7 percent of all Ontario swine farmers have sales valued within the
Can$5,000-8,000 range. To calculate the benefit, we multiplied the total amount paid to swine producers in eastern and northern
Ontario by 4.7 percent during the review period. We divided the result by the dressed-weight equivalent of hogs marketed during
the review period in the five provinces to obtain an estimated net subsidy of Can$0.000020/kg. (Can $0.000009/lb.).
3. Ontario (Northern) Livestock Improvement Program
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The purpose of this program is to aid livestock producers in northern Ontario by increasing production through herd
improvement. Livestock producers in northern Ontario are reimbursed up to 20 percent of the cost of purchasing breeding stock
from Ontario, Quebec or Western Canada which meet certain performance requirements. A maximum of Can$2,500 may be
reimbursed to an individual during a three-year period.
Because this program is limited to livestock producers in northern Ontario, we preliminarily determine it to be limited to a
specific enterprise or industry, or group of enterprises or industries and, therefore, countervailable.
To calculate the benefit to swine growers, we allocated the reimbursements made to swine growers during the review period, as
reported in the response, over the dressed-weight equivalent of hogs marketed during the review period in the five provinces to
obtain an estimated net subsidy of less than Can$0.000001 in either kilograms or pounds.
4. Ontario (Northern) Livestock Transportation Assistance Program
This program is designed to assist livestock growers in northern Ontario by reducing their relatively higher costs of maintaining
and improving herd quality. Livestock growers who purchase breeding stock from Ontario, Quebec or Western Canada which
meet certain performance requirements receive a grant
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equal to 50 percent of the delivery charges for such livestock.
Because this program is limited to livestock growers in northern Ontario, we preliminarily determine that it is limited to a specific
enterprise or industry, or group of enterprises or industries and is, therefore, countervailable.
To calculate the benefit, we divided the grants received by swine growers during the review period by the dressed-weight
equivalent of hogs marketed during the review period in the five provinces to obtain an estimated net subsidy of less than
Can$0.000001 in either kilograms or pounds.
5. Ontario Pork Industry Improvement Plan (OPIIP)
The purpose of the OPIIP is to foster excellence in farm business management and the adoption of improved production
technologies. Assistance is provided under a number of subprograms. To be eligible for any of the subprograms, a producer must
have at least 20 sow equivalents (one sow equivalent is equal to one sow or 15 market-weight hogs marketed annually) and must
submit the required production records. Assistance is provided under the following subprograms:
a. Swine Production Analysis Grants: Hog growers receive a grant of Can$5 per sow equivalent after they submit production
records for the calendar year. The
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maximum grant for finishing operations is Can$200. For farrow-to-finish operations, the minimum is Can$200 and the maximum
is Can$500.
b. Enterprise Analysis Grants: A grant of Can$100 is provided to growers who supply financial records annually in the approved
format. Growers also receive a confidential business analysis based on their financial records which identifies the strengths and
weaknesses of their farm operations.
c. Swine Ventilation Grants: Growers receive a grant of two-thirds of the cost of materials to correct ventilation problems. These
grants are given up to a maximum of Can$1,500. Eligible items include fans, thermostats, heat exchangers, insulation materials,
air vents, materials for natural ventilation, recirculation systems, heaters, monitoring equipment, electrical wiring and cooling
equipment.
d. Productivity and Quality Improvement Grants: Growers receive a grant of two-thirds of the cost of materials for eligible
projects which include scales for weighing pigs or feed, swine loading facilities, high pressure washers, electronic pregnancy
detection equipment, rodent control barriers, caesarean section or embryo transfer facilities and slatted floors in farrowing pens.
e. Artificial Insemination Grants: Growers receive grants to cover two-thirds of the cost of purchasing and transporting swine
semen or of the tuition for approved artificial insemination courses. Grants cannot exceed Can$500.
f. Rodent Control Grants: A grant of Can$250 is paid to growers who
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complete a 12-month rodent control program by a professional licensed exterminator.
g. Private Veterinary Herd Health Program: Growers who institute a herd health program supervised by a private veterinarian
with at least four consultative visits per year receive a grant of Can$200 per year.
h. Education Grants: Growers receive up to Can$100 to cover 50 percent of the tuition fees for approved courses.
i. Feed Analysis Grants: Feed analysis vouchers are provided to growers annually.
j. Herd Health Improvement Grants: Grants are given (1) to establish a primary herd or maintain a closed herd and (2) to
depopulate and restock herds with pigs of improved health status. The amount of the grant depends on the performance level of
the animals. For animals classified "excellent" the maximum grant is Can$10,000 and for animals classified "good" the maximum
grant is Can$5,000.
k. Ontario Swine Artificial Insemination Association Grants: Grants are paid to a farmer cooperative for the purpose of developing
swine semen production facilities.
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1. Ontario Pork Producers Marketing Board Grants: Education grants are provided to numerous county chapters of the Ontario
Pork Producers Marketing Board.
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In addition to the subprograms above, grants are also provided to support various research projects related to swine production.
For additional information on these grants, see Section II of the notice, Program Preliminarily Determined to be Not
Countervailable.
Because the OPIIP provides grants to swine growers only, we preliminarily determine that it is limited to a specific enterprise or
industry, or group of enterprises or industries and is, therefore, countervailable.
To calculate the benefit, we summed the grants provided under this program during the review period and divided the result by
the dressed-weight equivalent of hogs marketed in the five provinces during the review period to calculate an estimated net
subsidy of Can$0.002332/kg. (Can$0.001058/lb.).
6. Ontario Marketing Assistance Program for Pork (MAPP)
This program, instituted in 1986, assists Ontario pork processors in their efforts to improve domestic market prospects for pork
sales and to sustain and enhance their ability to compete in global pork markets. Pork packers and processors receive grants of 25
percent of the total cost of plant upgrading, new technology adoption or new product development. The maximum grant per
project is Can$2,000,000. No single firm can receive more than Can$3,000,000 over the five years of the program. Grants
under this program were first
(Cite as: 54 FR 19582, *19587)
disbursed in 1987.
Because this program provides grants to pork processors only, we preliminarily determine that it is limited to a specific enterprise
or industry, or group of enterprises or industries and is, therefore, countervailable.
To calculate the benefit, we summed the grants provided under this program during the review period and divided the result by
the dressed-weight equivalent of hogs marketed in the five provinces during the review period to calculate an estimated net
subsidy of Can$0.000491/kg. (Can$0.000223/lb.).
7. Quebec Farm Income Stabilization Insurance Program (QFISIP)
This program was started in 1976 to guarantee a net annual income to participating growers. The program is administered by the
Regie des Assurance Agricoles du Quebec (Regie), which each year stabilizes the income of growers who operate in accordance
with its production and marketing standards. The program covers cow-calf cattle, feeder cattle, potatoes, weaner pigs, feeder
hogs, corn, oats, wheat, barley, heavy veal, and sheep. To be eligible for the piglet or feeder hog programs, a grower must own the
feeder hogs or sows he insures, be personally involved in raising the feeder hogs or piglets, own at least 300 insurable hogs or 15
insurable sows and enroll in the scheme for at least five years. The coverage year for the feeder hog program is from April l
(Cite as: 54 FR 19582, *19587)
to March 31 and from July l to June 30 for the piglet program.
The support level 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. Payments to growers are calculated on a
yearly basis and are made at the end of the covered year. The program is funded two-thirds by the provincial government and one
third by producer assessments. For the 1988-1989 insurance year, pursuant to the amendment of July 13, 1988, regarding the
QFISIP, producer assessments and the stabilized net annual income have been set according to the size of production.
Since several major agricultural commodities, such as eggs, dairy products, and poultry are not included, we preliminarily
determine this program to be limited to a specific enterprise or industry, or group of enterprises or industries and, therefore,
countervailable.
We calculated the benefit by multiplying the total amount of stabilization payments made during the review period by two-thirds
to factor out the producer assessments. We then divided the result by the dressed-weight equivalent of hogs marketed during the
review period in the five provinces to obtain an estimated net subsidy of Can$0.042318/kg. (Can$0.019195/lb.).
8. Quebec Productivity Improvement and Consolidation of Livestock Production
(Cite as: 54 FR 19582, *19587)
Programs (QPICLP)
The QPICLP was started in 1987 and was designed for small livestock farmers, excluding large swine growers and packers. The
program is divided into eight subprograms. Swine growers are only eligible for one subprogram, the Farm Building Improvements
Program. Under this subprogram, grants are provided to convert existing piggeries to farrow-to-finish operations. Grants cover
up to 30 percent of the actual cost of the conversion.
To be eligible for assistance, applicants must be recognized farm producers according to the Farm Producer's Act and be
registered with the Bureau de Renseignements Agricoles. Producers operating farrowing piggeries must maintain between 40 and
80 sows, and finishing piggeries must maintain between 500 and 1,000 hogs. Maximum assistance is Can$200 per sow and
Can$25 per hog, with a maximum of Can$15,000 per farm operation for the duration of the program.
Because this program is limited to livestock producers, we preliminarily determine it to be limited to a specific enterprise or
industry, or group of enterprises or industries and, therefore, countervailable.
To calculate the benefit, we summed the grants provided under this program during the review period and divided the result by
the dressed-weight equivalent of hogs marketed in the five provinces during the review period to
(Cite as: 54 FR 19582, *19587)
calculate an estimated net subsidy of Can$0.000010/kg. (Can$0.000005/lb.).
9. Quebec Regional Development Assistance (QRDA)
The QRDA was started in 1987 to promote regional development in Quebec. The program consists of four subprograms: Soil
Upgrading, Consolidation of Cattle and Sheep Production, Assistance for Transporting Livestock, and Marketing Assistance. Swine
growers are only eligible for the Assistance for Transporting Livestock subprogram. This subprogram provides eligible farmers
financial assistance for transporting animals to a slaughterhouse or to a public market. To be eligible for assistance under this
program, swine growers must be located in one of the following agricultural regions: Bas St-Laurent et Gaspesie, Quebec,
Outaouais, or Saguenay. The assistance offered varies according to the zone in which the applicant's operation is located.
Because this program is limited to farmers in specific regions of Quebec, we preliminarily determine that it is limited to a specific
enterprise or industry, or group of enterprises or industries and is, therefore, countervailable.
To calculate the benefit, we divided the amount of payments made to hog producers during the review period by the
dressed-weight equivalent of hogs marketed during the review period in the five provinces to obtain an estimated
(Cite as: 54 FR 19582, *19587)
net subsidy of Can$0.000025/kg. (Can$0.000011/lb.).
10. Saskatchewan Hog Assured Returns Program (SHARP)
SHARP was established in 1976 pursuant to the Saskatchewan Agricultural Returns Stabilization Act. *19588
(Cite as: 54 FR 19582, *19588)
SHARP provides stabilization payments to the Saskatchewan hog producers when market returns fall below a designated "floor
price." The program is administered by the Saskatchewan Pork Producers, Marketing Board on behalf of the provincial
Department of Agriculture. 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.
To be eligible, a grower must own market hogs which are raised and finished to slaughter weight on the production unit, or which
are purchased as weanling or feeder hogs and fed a minimum of 60 days. Coverage is limited to 1,500 hogs per grower per
quarter.
The program is funded through producer premiums and matching funds from the provincial government. When Saskatchewan
joined the National Tripartite Red Meat Stabilization Program on January 1, 1986, SHARP payments were reduced by the amount
of payments received through the Tripartite program. No producers have been eligible to join SHARP since December 31, 1985.
SHARP payments are
(Cite as: 54 FR 19582, *19588)
being phased out and will be terminated by March 31, 1991.
Under SHARP, the levy (producer premium) for producers is three percent of market returns on the sale of covered hogs.
However, if the interest on the SHARP account for that quarter and the three previous quarters is negative, the levy can range
from 3.5 percent to 4.5 percent. If the interest in the account is positive and greater than 3.0 percent, the levy can range from l.5
percent to 2.5 percent. If the balance in the SHARP account is insufficient to make stabilization payments, the provincial
government loans the necessary funds to SHARP.
Stabilization payments are based on the sum of the producer's cash costs plus 75 percent of the sum of non-cash costs for each
quarter. Payments are made at the end of each quarter.
Because this program is limited to swine producers, we preliminarily determine it to be limited to a specific enterprise or
industry, or group of enterprises or industries and, therefore, countervailable.
To calculate the benefit, we multiplied the total amount of stabilization payments made in 1988 by one-half to factor out producer
premiums and divided the result by the dressed-weight equivalent of hogs marketed during the review period in the five
provinces to obtain an estimated net subsidy of Can $0.001380/kg. (Can$0.000626/lb.).
(Cite as: 54 FR 19582, *19588)
11. Saskatchewan Livestock Investment Tax Credit Program (SLITC)
The SLITC provides investment tax credits to livestock growers who pay income taxes and whose livestock are fed in
Saskatchewan for slaughter. Hogs, cattle and sheep are covered by this program. To be eligible, hogs must index 80 or higher,
must be owned for at least 60 days, and must be fed in Saskatchewan. Hog growers are eligible for a tax credit of Can$3.00 per
hog. There is a Can $100 deduction from the credit in each year the tax credit is claimed. If any portion of the tax credit is not
used, it may be carried forward for up to seven years.
Because the SLITC is limited to certain livestock growers, we preliminarily determine that it is limited to a specific enterprise or
industry, or group of enterprises or industries and is, therefore, countervailable.
To calculate the benefit, we multiplied the estimated number of swine producers who used this program by $100. We then
subtracted this amount from the estimated amount of credits claimed by swine producers during the review period. We divided
the result by the dressed-weight equivalent of hogs marketed during the review period in the five provinces to obtain an estimated
net subsidy of Can$0.000553/kg. (Can$0.000251/lb.).
12. Saskatchewan Livestock Facilities Tax Credit Program (SLFTCP).
(Cite as: 54 FR 19582, *19588)
The SLFTCP, implemented on January 1, 1986, provides tax credits to livestock growers for investment in livestock production
facilities. The credits are deductible only from provincial taxes.
Livestock eligible under this program includes cattle, horses, sheep, swine, goats, poultry, bees, or fur-bearing animals raised in
captivity. Investments covered under this program include new buildings, improvements to existing livestock facilities and any
stationary equipment related to livestock facilities.
During the review period, livestock growers were eligible for a tax credit of 15 percent of 95 percent (14.25 percent) of the total
facilities investment. Participants may carry forward any unused credit for up to seven years.
Because this program is limited to certain livestock growers, we preliminarily determine it to be limited to a specific enterprise or
industry, or group of enterprises or industries and, therefore, countervailable.
To calculate the benefit, as best information available, we divided the total tax credits claimed in 1987, as estimated in the
response, by the dressed- weight equivalent of hogs marketed during the review period in the five provinces to obtain an
estimated net subsidy of Can$0.000162/kg. (Can $0.000074/lb.).
(Cite as: 54 FR 19582, *19588)
II. Program Preliminarily Determined To Be Not Countervailable
Research Grants Under the OPIIP
Research grants under OPIIP are provided to support research projects related to swine production. According to the response,
the results of such research are publicly available both inside and outside Canada. Therefore we preliminarily determine that
the benefits of such research grants are not limited to a specific enterprise or industry, or group of enterprises or industries, and
that the grants are therefore not countervailable.
III. Programs Preliminarily Determined Not To Be Used
We preliminarily determine that the following programs were not used by producers or exporters in Canada of fresh, chilled,
and frozen pork during the review period:
1. Canada/Alberta Subsidiary Agreement on Agricultural Processing and Marketing
This subsidiary agreement operates under the Economic and Regional Development
(Cite as: 54 FR 19582, *19588)
Agreement (ERDA) between the Government of Alberta and the Government of Canada which became effective June 8, 1984.
The agreement is jointly funded and administered by the federal and the provincial government. The purpose of the agreement is
to enhance the agricultural processing sector of Alberta's economy.
Applicants who carry out approved projects within the agricultural processing sector receive non-repayable contributions
toward eligible costs incurred. Applications are reviewed by the Management Committee to the Agreement to determine whether
the project is eligible and whether it meets the program's objectives. Eligible projects include the establishment, expansion, and
modernization of processing operations and testing and research facilities, as well as feasibility studies and product research and
development.
Assistance cannot exceed 35 percent of costs for a new facility (25 percent for projects in Calgary or Edmonton) and 25 percent of
costs for the modernization of an existing facility (l5 percent for projects in Edmonton or Calgary). Funds are not available until
the project is commercially operational at which time 90 percent of the non-repayable *19589
(Cite as: 54 FR 19582, *19589)
contribution is issued. The remaining 10 percent is issued only after 24 months of continuous operation.
According to the responses, no assistance was provided to federally- inspected pork producers (the only producers eligible to
export) during the
(Cite as: 54 FR 19582, *19589)
review period.
2. Manitoba Hog Income Stabilization Program.
This program was created to provide income support payments to hog producers when the market price for hogs fell below an
established price support level. It was funded by premiums from participating producers and from the provinicial government.
This program was terminated effective June 28, 1986.
3. Ontario Export Sales Aid
This program assists agriculture and food producers and processors with their efforts to develop markets abroad by providing
financial and technical support for various promotional activities. According to the response of the Government of Ontario, no
assistance was provided to hog growers or pork producers during the review period.
4. Ontario Small Food Processors Assistance Program
This program assists eligible small food processing companies by improving their access to market information, strengthening
their business planning
(Cite as: 54 FR 19582, *19589)
skills and capabilities and providing financial assistance on eligible capital investments. According to the response of the
Government of Ontario, no assistance was provided to hog growers or pork producers during the review period.
5. Quebec Meat Sector Rationalization Program (QMSRP)
The QMSRP was started in 1975 and terminated in 1982, with financial assistance granted until 1984. The program was designed to
foster the development of the Quebec meat sector, to provide Quebec producers viable outlets for their production and to
improve the industry's competitive position. Under the QMSRP, the Ministry of Agriculture assumes part of the eligible capital
costs of investments for the establishment, standardization, expansion, modernization or amalgamation of slaughterhouses or
meat processing plants.
Under the QMSRP, producers were eligible for the equivalent of 35 percent of the cost of eligible capital assets, up to a maximum
of Can$200,000 per business.
According to the response, no grants were provided under this program during the review period, therefore, we preliminarily
determine this program to be not used.
(Cite as: 54 FR 19582, *19589)
IV. Programs for Which More Information is Needed
l. Alberta Department of Economic Development and Trade Act
Loans, loan guarantees and grants were made to pork packers in Alberta under the Alberta Department of Economic Development
and Trade Act. We are seeking additional information to determine whether eligibility for assistance under this program is limited
by law or in practice to a specific enterprise or industry, or group of enterprises or industries.
2. Special Canada Grains Program
The Special Canada Grains Program 1987 Extension (SCGP 1987) provides grants to grain, oilseed, special crop and honey
producers, who have experienced dramatic drops in income due to international agricultural policies. To be eligible for
assistance, producers must have seeded acreage in Canada of eligible crops harvested in 1987 or have seeded acreage which
was cut for silage, greenfeed, ploughed down, or left for summerfallow, due to a natural disaster. Eligible crops include wheat,
oats, barley, mixed grains, rye, corn, and high moisture grains which are intended to be harvested as grains or fed to
(Cite as: 54 FR 19582, *19589)
livestock.
Payments are based on producers' seeded acreage of eligible crops harvested or intended for harvest in 1987, weighted by
representative yields and an assistance rate. Representative yields were averaged from the best three years between 1981 and
1986 to minimize the influence of abnormal crop loss situations. Assistance rates for grains, oilseeds and special crops are
calculated based on the decrease in 1987 market prices compared with 1985 prices for the eligible crops. Payments are made
yearly, with a Can$25,000 maximum per producer per year.
We are seeking more information to determine whether this program confers countervailable benefits on the production of hogs.
Verification
In accordance with section 776(b) of the Act, we will verify the information used in making our final determination.
Suspension of Liquidation
In accordance with section 703(d) of the Act, we are directing the U.S. Customs Service to suspend liquidation of all entries of
fresh, chilled, and
(Cite as: 54 FR 19582, *19589)
frozen pork products from Canada which are entered, or withdrawn from warehouse, for consumption, on or after the date of
publication of this notice in the Federal Register and to require a cash deposit or bond for all entries of this merchandise equal to
Can$0.077/kg. (Can$0.035/lb.). This suspension will remain in effect until further notice.
ITC Notification
In accordance with section 703(f) of the Act, we will notify the ITC of our determination. In addition, we are making available to
the ITC all non- privileged and non-proprietary information relating to this investigation. We will allow the ITC access to all
privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information,
either publicly or under an administrative protective order, without the written consent of the Assistant Secretary for Import
Administration.
If our final determination is affirmative, the ITC will make its final determination 45 days after the Department makes its final
determination.
Public Comment
(Cite as: 54 FR 19582, *19589)
In accordance with section 355.38 of the Department's regulations published in the Federal Register on December 27, 1988 (53
FR 52306) (to be codified at 19 CFR section 355.38), we will hold a public hearing, if requested, on June 28, 1989, at 10:00 a.m. in
room 1412, to afford interested parties an opportunity to comment on this preliminary determination. Interested parties who
wish to request or to participate in the hearing must submit a request within 10 days of the publication of this notice in the Federal
Register to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room B-099, 14th Street and
Constitution Avenue, NW., Washington, DC 20230.
Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; (3) the reason for
attending; and (4) a list of the arguments to be raised at the hearing. In addition, ten copies of the business proprietary version
and five copies of the non- proprietary version of case briefs must be submitted to the Assistant Secretary no later than June 21,
1989. Ten copies of the business proprietary version and five copies of the non-proprietary version of rebuttal briefs must be
submitted to the Assistant Secretary no later than June 26, 1989. An interested party may make *19590
(Cite as: 54 FR 19582, *19590)
an affirmative presentation at the public hearing only on arguments included in that party's case brief, and may make a rebuttal
presentation only on arguments included in that party's rebuttal brief. Written argument should be submitted in accordance with
§ 355.38 of
(Cite as: 54 FR 19582, *19590)
the Commerce Department's regulations published in the Federal Register on December 27, 1988 (53 FR 52306) (to be codified at
19 CFR section 355.38), and will be considered if received within the time limits specified in this notice.
This determination is published pursuant to section 703(f) of the Act (19 U.S.C. 1671b(f)).
May 1, 1989.
Timothy N. Bergan,
Acting Assistant Secretary for Import Administration.
[FR Doc. 89-10893 Filed 5-5-89; 8:45 am]
BILLING CODE 3510-DS-M