90-521

(Cite as: 55 FR 20812)

NOTICES

DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-404]

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

Monday, May 21, 1990

AGENCY: International Trade Administration/Import Administration, Commerce.

ACTION: Notice of Preliminary Results of Countervailing Duty Administrative Reviews.

SUMMARY: The Department of Commerce has conducted two administrative reviews of the countervailing duty order on live swine from Canada. We preliminarily determine the net subsidy for sows and boars to be de minimis for the period April 1, 1986 to March 31, 1987 and Can$0.0068/lb. for the period April 1, 1987 to March 31, 1988. We preliminarily determine the net subsidy for all other live swine to be Can$0.0060/lb. for the period April 1, 1986 to March 31, 1987 and Can$0.0071/lb. for the period April 1, 1987 to March 31, 1988. We invite interested parties to comment on these preliminary results.

EFFECTIVE DATE: May 21, 1990.

FOR FURTHER INFORMATION CONTACT: Sylvia Chadwick or Maria MacKay, Office of Countervailing 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 28, 1987 and August 25, 1988, the Government of Canada requested administrative reviews of the order. We published the initiation of review on September 21, 1987 (52 FR 35466) for the period April 1, 1986 through March 31, 1987, and on September 27, 1988 (53 FR 37618) for the period April 1, 1987 through March 31, 1988. On January 13, 1989, the petitioner submitted new allegations. In accordance with section 355.31(c)(1)(ii) of the Department Regulations, we reviewed these allegations for only the period April 1, 1987 through March 31, 1988. The Department has now conducted the administrative reviews in accordance with section 751(a) of the Tariff Act of 1930 (the Tariff Act).

Scope of Review

The United States, under the auspices of the Customs Cooperation Council, has developed a system of tariff classification based on the international harmonized system of customs nomenclature. On January 1, 1989, the United States fully converted to the Harmonized Tariff Schedule (HTS), as provided for in section 1201 et seq. of the Omnibus Trade and Competitiveness Act of 1988. 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).
Imports covered by these reviews are shipments of Canadian live swine. During the periods of review, such merchandise was classifiable under item 100.8500 of the Tariff Schedules of the United States Annotated. Such merchandise is currently classifiable under HTS item numbers 0103.91.00 and 0103.92.00. The written description remains dispositive.
The reviews cover 35 programs administered during the periods April 1, 1986 through March 31, 1987 (fiscal year 1986/87) and April 1, 1987 through March 31, 1988 (fiscal year 1987/88).

Analysis of Programs

Federal Programs

1. Agricultural Stabilization Act

The Agricultural Stabilization Act (ASA) of 1957-58 was passed by the federal government to provide for the price stabilization of named and designated agricultural commodities. On June 27, 1985, ASA was amended by Bill C-25, which increased the number of commodities on the named list and changed the methodology used to calculate stabilization payments. See Notice of Preliminary Results of Countervailing Duty Administrative Review, Live Swine from Canada (53 FR 22189; June 14, 1988). No changes were made to the ASA during the periods of review.
Named commodities, including cattle, hogs, lambs and wool; industrial milk and industrial cream; corn and soybeans; and spring wheat, winter wheat, oats and barley not produced in the designated area as defined in the Canadian Wheat Board Act; are statutorily guaranteed eligibility for payouts from ASA whereas any other commodity is required to be designated by the Governor in Council and requires a separate, yearly appropriation vote by Parliament. The distinction between named and designated commodities indicates that preferential benefits from ASA are provided to named commodities. Also, only 13 commodities received ASA benefits in FY 1986/87 and 14 in 1987/88. In accordance with section 771(5) of the Tariff Act, we preliminarily determine that the ASA is countervailable because benefits from ASA are provided to a specific enterprise or industry or group of enterprises or industries.
Although the ASA did not make payments for hogs produced during the periods of review, ASA's annual reports showed payments were made in both FY 1987 and FY 1988 for hogs produced in previous years. ASA payments are made on a per hundredweight (cwt.) basis. We used 220 pounds as the average weight of slaughter hogs (excluding sows and boars) in Canada. Payments are made only on indexed slaughter hogs. Indexing is a method of grading hog carcasses according to lean meat percentage, loin fat and weight. Because sows and boars are not indexed, they are not eligible for payments from ASA.
Producers in three provinces (Prince Edward Island, Quebec and Ontario) received payments from ASA in FY 1987. To calculate the benefits from ASA, we allocated the ASA payments made in FY 1987 over the total live weight of swine (minus sows and boars) produced in the three provinces' in FY 1987. We then multiplied the result by the three provinces, share of total Canadian exports of live swine (minus sows and boars) to the United States. We made the same calculation for ASA payments made to four provinces (Nova Scotia, Quebec, Saskatchewan, and Alberta) in FY 1988. On this basis, we preliminarily determine the benefit for live swine to be Can$0.0013/lb. during the period April 1, 1986 through March 31, 1987; and less than Can$0.0001/lb. during the period April 1, 1987 through March 31, 1988. Because sows and boars are not eligible for payments from ASA, we preliminarily determine the benefit from this program to be zero for sows and boars during both periods of review.

2. Feed Freight Assistance Program

The Feed Freight Assistance Program is administered by the Canadian Livestock Feed Board (the Board) under the Livestock Feed Assistance Act of 1966 (LFA). The Board acts to ensure: (1) The availability of feed grain to meet the needs of livestock feeders; (2) the availability of adequate storage space for feed grain in Eastern Canada; and (3) the stabilization and equalization of feed grain prices in Eastern Canada, British Columbia, the Yukon and Northwest Territories. Eligibility for the program is restricted to: (l) Feed grain millers in "designated areas" (Manitoba, Saskatchewan, Alberta and parts of British Columbia) whose grain is sold for livestock feed; and (2) livestock *20813 owners in parts of Eastern Canada, British Columbia, the Yukon Territory, and the Northwest Territories who purchase grain that will be fed to their livestock. The feed grain must be transported and stored 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 for feed grain transportation are set per ton according to the destination of the grain and on a product-specific basis. During both FY 1986/87 and FY 1987/88, payments were made to feed grain users for both transportation assistance and storage of feed grain.
Because this program is limited to feed grain millers in the above described "designated areas" whose grain is fed to livestock, and to livestock owners in parts of Eastern Canada and British Columbia, in the Yukon and Northwest Territories, we determine that it is limited to a specific enterprise or industry, or group of enterprises or industries, and is therefore countervailable.
Five percent of all feed grains receiving assistance under this program were sold to benefit live swine producers in grain deficit regions throughout Canada. Therefore, we allocated 5 percent of the total payouts made during each of the periods of review over total Canadian hog production for a benefit of Can$0.0002/lb. for FY I986/87 and Can$0.0002/lb. for FY 1987/88, for all live swine.

Federal/Provincial Programs

1. 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, to enter into tripartite 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 a tripartite agreement only after determining that the agreement 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 will not provide an incentive to overproduce.
In January 1986, Ontario, Alberta, and Saskatchewan signed agreements on hogs. Manitoba signed an agreement on February 25, 1986. The four agreements were implemented July l, 1986. Under the terms of the Tripartite Agreements on Hogs, all hog producers in participating provinces receive the same level of support per unit; the cost of the scheme is shared between Canada, the province and the producer; producer participation in the scheme is voluntary; 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 scheme must operate at a level that limits losses but does not stimulate over-production. Payments are restricted to the number of hogs corresponding to the domestic production used for domestic consumption and the agreements must specify the method of determining that number.
The Tripartite Agreements provide for a five-year phase-in period to adjust for differences between the Tripartite Program and the provincial programs still in effect. Existing provincial stabilization plans are to be completely phased out by 1991. During the periods of review, eight provincial stabilization programs remained in effect (see provincial programs).
Hogs eligible for stabilization payments under the Tripartite Agreements must index 80 or above. Sows and boars are not eligible for benefits because they are not indexed. Stabilization payments are made when the market price falls below the support price. Support prices for hogs are calculated quarterly based on a guaranteed margin over production costs. The support price equals the cash costs of production in the current period plus 95 percent of the average margin in the same period for the preceding five years. The margin for any period is 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.
The Omnibus Trade and Competiveness Act of 1988 amended section 771(5)(B) of the Tariff Act to provide that "the administering authority, in each investigation, shall determine whether the bounty, grant, or subsidy in law or in fact is provided to a specific enterprise or industry, or group of enterprises or industries. Nominal general availability, under the terms of the law, regulation, program or rule establishing a bounty, grant, or subsidy, of the benefits thereunder is not a basis for determining that the bounty, grant, or subsidy is not, or has not been, in fact provided to a specific enterprise or industry, or group thereof." Therefore, to determine whether a program is limited to a specific enterprise or industry or group of enterprises or industries, we consider: (1) Whether the law of the foreign government acts to limit the availability of a program; (2) the number of industries or groups thereof that actually use a program; (3) whether there are dominant users of a program, or whether certain industries or groups thereof receive disproportionately large benefits under a program; and (4) the extent to which a government exercises discretion in conferring benefits under a program.
The Tripartite Agreements Program does not act in law to limit the number of commodities that may be covered under agreements. However, the program was limited in fact to only four commodities during FY 1986/87, and eight commodities during FY 1987/88. Hog producers were the dominant users of the program acounting for 57 percent of the total payouts from the program in FY 1986/87 and for 60 percent in FY 1987/88. Furthermore, there are no explicit or standard procedures or criteria for evaluating Tripartite Agreement requests. For the foregoing reasons, in accordance with section 771(5)(B), we preliminarily determine that the Tripartite Agreements Program is countervailable because it is limited to a specific enterprise or industry or group of enterprises or industries.
During the periods of review, no payouts for hogs were made under the Tripartite Agreements. Calculations for the quarter January 1, 1988 through March 31, 1988, triggered a payment for hogs but the payout was made during May and June of 1988, outside the periods of review. Therefore, we preliminarily determine that there was no benefit from the Tripartite Agreements Program for live swine or sows and boars during the periods of review.

2. Canada/British Columbia Agri-Food Regional Development Subsidiary Agreement (ARDSA)
On July 25, 1985, Canada and British Columbia signed an agreement to continue agricultural development cooperation between the two governments. The agreement was preceded by the ARDSA which existed between July 1977 and July 1983. The objectives of the new agreement are to improve the competitiveness of the agri-food industry in British Columbia, increase economic output and employment opportunities in the industry, and conserve and improve the province's agricultural resources. Programs funded under the new agreement are: (1) Productivity Enhancement--including technology *20814 development, technology transfer, market and new product development, farm and agribusiness education, commodity and program planning, and public information, evaluation and implementation; (2) Resource Development--including regional irrigation and water supply systems, watershed drainage systems for agriculture, soil conservation and improvement; and (3) Commodity Development-- including on- farm commodity enhancement, new and expanded market facilities, agricultural support facilities and services.
Under the new agreement, each government is committed to spending up to Can $20,000,000 over five years. Funding for projects under this agreement will be jointly shared by both governments. Because projects under this program are limited to British Columbia, we preliminarily determine that the Federal government's contribution is limited to enterprises or industries located in a specific region of Canada and is therefore countervailable. During the periods of review, no benefits from this program were provided to swine producers. Therefore, we find no countervailable benefit from this program during the periods of review. During the next review, we will review projects funded under this program.

3. Canada/Quebec Subsidiary Agreement on Agri-Food Development

On December 14, 1984, the Government of Canada entered into an Economic and Regional Development Agreement with the Province of Quebec. Programs funded under the agreement are: (1) Research and Development--including contract research and food research; (2) Technological Innovations and New Initiatives--including agricultural production, conservation, processing and marketing; and (3) Soil Conservation and Improvement--including inventory of soil degradation problems, soil and water conservation research, and technology transfer in soil and water conservation.
Funding for projects under this agreement is evenly shared by the Federal and provincial governments. Because projects under this program are limited to Quebec, we preliminarily determine that the Federal government's contribution is limited to enterprises or industries located in a specific region of Canada and is therefore countervailable. During the periods of review, no benefits from this program were provided to swine producers. Therefore, we find no benefit from this program during our periods of review. During the next review, we will review projects funded under this program.

Provincial Price Stabilization Programs

1. Saskatchewan Hog Assured Returns Program (SHARP)

SHARP was established in 1976 pursuant to the Saskatchewan Agricultural Returns Stabilization Act. SHARP provides stabilization payments to hog producers in Saskatchewan at times when market prices 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. Participation is voluntary and is open to all hog producers in the province. Coverage is limited to 1,500 indexed hogs per producer each quarter. Under the Saskatchewan Agricultural Returns Act, the provincial government may establish a stabilization plan for any agricultural commodity. However, only hogs and cattle have such plans. In accordance with the Tripartite Agreement, SHARP is being phased out and will be terminated by March 31, 1991. No producers have been allowed to join SHARP since December 31, 1985.
The program is funded by levies on the sale of hogs from participating producers and by matching amounts from the provincial government. After the Tripartite Agreement was implemented on July 1, 1986, SHARP payments were reduced by the amount of Tripartite program payments. 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 at terms consistent with commercial considerations. The principal and interest on these loans are repaid by the Board using the producer and provincial contributions.
The support price for this program is calculated quarterly using the total of cash production costs plus 75 percent of noncash costs. Stabilization payments are made when the market price is below the support price. During FY 1986/87, payments were made in two quarters. During FY 1987/88, payments were made in three quarters.
Because payments from this program were provided to indexed hogs and cattle only, we preliminarily determine that the program is limited to a specific enterprise or industry or group of enterprises or industries and is countervailable.
To calculate the benefit, we allocated the province's half of the total stabilization payments over the total weight of live swine (minus sows and boars) produced in Saskatchewan during FY 1986/87. We then weight-averaged the benefit by Saskatchewan's share of total Canadian exports of this merchandise (minus sows and boars) to the United States. We made the same calculation for FY 1987/88. On this basis, we preliminarily determine the benefit to be zero for sows and boars for both periods of review. We preliminarily determine that the benefit for all other swine is Can$0.0001/lb. during FY 1986/87 and Can $0.0001/lb. during FY 1987/88.

2. 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 guidelines for the individual commodities receiving benefits are in Schedule B of the Farm Act. Schedule B4 is the guidelines for swine producers.
The program is administered by the provincial Ministry of Agriculture and Food and the British Columbia Federation of Agriculture, and is funded equally by producers and the provincial government. Premiums are paid in all quarters regardless of market results.
FIP payments are calculated quarterly based on the difference between costs of production and market returns. Participating producers receive FIP payments for 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 Farm Act. The same per unit cost of production model is used for all products receiving benefits. The Farm Act requires that ASA payments to individual producers be added to the market return price. Payments were made to indexed hog producers for two quarters of each of the two review periods.
FIP is available to farmers producing commodities specified in the Schedule B guidelines. Therefore, we preliminarily determine that this program is countervailable because payments were limited to a specific group of enterprises or industries.
To calculate the benefit, we followed the same methodology as described for the Saskatchewan SHARP program (see section 1 under Provincial Price Stabilization Programs). On this basis, we preliminarily determine the benefit *20815 to be zero for sows and boars during both periods of review. We preliminarily determine the benefit for all other swine to be less than Can $0.0001/lb. for FY l986/87 and less than Can$0.0001/lb. for FY l987/88.

3. 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 producers of indexed hogs. Sows and boars were not eligible for payouts. The program was terminated on June 28, 1986. It was funded by premiums from participating producers and from the Government of Manitoba. Whenever the balance in the HISP account was insufficient to make payments to participants, the provincial government loaned the needed funds to the program. Because the HISP provided payments only to hog producers, we preliminarily determine that this program was provided to a specific group of enterprises or industries and is therefore countervailable.
Payouts from HISP were made during FY 1986/87 for the first and second calendar year quarters of 1986. The last payout from the program was made in July I986. Upon termination of the HISP on June 28, 1986, the Province of Manitoba agreed to absorb the accumulated deficit of the plan. Subsequent to the termination, the HISP received funding from the provincial government to cover the second calendar year quarter payouts. Because the province imposed no obligations in return, we consider the absorption of the accumulated deficit and the subsequent funding to be grants. We divided the total grant by the total live weight of swine (minus sows and boars) produced in Manitoba during the period of review. We then weight-averaged the result by Manitoba'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$0.0040/lb. for all other swine during FY 1986/87, our first period of review. There was no benefit to hog producers during FY 1987/88, our second period of review, because the program was terminated and no payouts were made.

4. 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 a maximum of 7,500 hogs per year. Only hogs indexing 100 or above (sows and boars are not eligible) are eligible for stabilization payments. Because this program provided payments that were limited to a specific industry, we preliminarily determine that it is countervailable.
Because New Brunswick did not export hogs to the United States during either of the periods of review, we preliminarily determine that there were no countervailable benefits from this program during the two periods of review.

5. Newfoundland Hog Price Support Program

The Newfoundland Farm Products Corporation, on behalf of the provincial government, pays hog producers a subsidy on all hogs indexing 80 or above (sows and boars are not eligible) purchased by the corporation. Effective April 1, 1986, the calculation of the payout is made according to a formula based on the Newfoundland Farm Products Corporation price plus 75 percent of the difference between the cost of production and the Newfoundland Farm Products price. The Newfoundland Farm Products Corporation price is the average weekly Ontario price plus two cents a pound. The cost of production is updated quarterly. Producers do not contribute to this program. Hogs are the only agricultural commodity that receive stabilization payments in Newfoundland. Because the program provided payments that were limited to a specific industry, we preliminarily determine that it is countervailable.
To calculate the benefit, we followed the same methodology as described for the Saskatchewan SHARP program (see section 1 under Provincial Price Stabilization Programs). On this basis, we preliminarily determine the benefit for sows and boars to be zero during both periods of review and the benefit for all other swine to be less than Can$0.0001/lb. for FY 1986/87. Because Newfoundland did not export hogs to the United States during 1987/88, we preliminarily determine there was no countervailable benefit during l987/88.

6. Nova Scotia Pork Price Stabilization Program (NSPPSP)

Pursuant to the Nova Scotia Natural Products Act, the NSPPSP is administered under the Pork Producers Marketing Plan of August 9, 1983. On September 20, 1985, the plan was revised from a grant and loan program to a grant-only stabilization plan. The purpose of the program is to assure price stability for hogs by compensating farmers for fluctuations in hog prices and by assuring that producers recover direct operating costs. Participation is voluntary and is open to all hog producers who sell through the Nova Scotia Pork Price Stabilization Board. Maximum eligibility is established annually according to the producers' current production levels. Indexed hogs (sows and boars are not eligible) were the only agricultural commodity that received stabilization payments during the periods of review. Because this program is limited to a specific industry, we preliminarily determine that it is countervailable.
To calculate the benefit, we followed the same methodology as described for the Saskatchewan SHARP program (see section 1 under Provincial Price Stabilization Programs). On this basis, we preliminarily determine the benefit for sows and boars to be zero during both periods of review and the benefit for all other swine to be less than Can$0.0001/lb. for FY 1986/87. Because Nova Scotia did not export hogs to the United States during 1987/88, we preliminarily determine there was no countervailable benefit during 1987/88.

7. Prince Edward Island (PEI) Price Stabilization Program
The PEI Natural Products Marketing Act established marketing boards for hogs, dairy products, tobacco, pedigreed seed, pulp trees, meat, eggs, and cole crops. In 1974, the PEI Hog Commodity Marketing Board established the PEI Price Stabilization Program. The purpose of the program is to provide income stability to hog producers. Support levels are set by the Stabilization Board at 95 percent of the cost of production. Producers contribute to the fund only when the weekly market price of hogs exceeds the support price by Can$3. Whenever the weekly price of hogs is below the support price, the PEI Hog Commodity Board makes stabilization payments from the fund. Half the payment is contributed by the provincial government, and the other half is drawn from the producers' equity in the fund. In the event that the producers' equity in the fund is exhausted, the provincial government assumes the producers' portion of the stabilization payment in the form of an interest-free loan, which is repaid when the fund is in a surplus position.
Payments are made only on hogs indexing between 67 and 114 (sows and *20816 boars are not eligible). Participation in the program is voluntary, and there are no minimum production requirements. However, producers are only eligible to receive stabilization payments on the number of hogs equal to the average number of hogs marketed in the previous quarter, up to a ceiling of 4,300 hogs per year.
Although marketing boards were established for a variety of commodities, a price stabilization plan existed only for hogs. Therefore, hogs were the only agricultural commodity in PEI that received stabilization payments during the review periods. We preliminarily determine that this program is countervailable because it provided stabilization payments and loans inconsistent with commercial considerations, to a specific enterprise or industry or group of enterprises or industries.
To calculate the benefit, we followed the same methodology as described for the Saskatchewan SHARP program (see section 1 under Provincial Price Stabilization Programs). On this basis, we preliminarily determine the benefit for sows and boars to be zero and less than Can$.0001/lb. for all other swine during both periods of review.

8. Quebec Farm Income Stabilization Insurance Programs (FISI)

This program was established in 1976 under the "Loi sur l'assurance- stabilisation des revenus agricoles" (the FISI). The program is administered by the Regie des Assurances Agricoles du Quebec (the Regie). The purpose of the program 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 farm worker income is lower than the stabilized net annual income, the Regie makes a payment to the participant at the end of the year.
Two-thirds of the funding for the program is provided 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 Regie using the producer and provincial contributions.
The program covers calves, feeder cattle, potatoes, piglets, feeder hogs, corn, oats, wheat, barley, heavy veal, and sheep. Several major agricultural commodities, such as eggs, dairy products, and poultry, which make up almost half of Quebec's total agricultural production, are not covered under this program. Because this program provides benefits to only 12 commodities, we determine that it is limited to a specific group of enterprises or industries, and is therefore countervailable.
To calculate the benefit, we multiplied the total payments for FY l986/87 made under both the piglet and feeder hog programs by two-thirds to factor out producer assessments. We then weight-averaged the benefit by Quebec's share of total Canadian exports of this merchandise (minus sows and boars) to the United States. We made the same calculation for FY 1987/88. On this basis, we preliminarily determine the benefit to be zero for sows and boars for both periods of review. We preliminarily determine that the benefit for all other swine is Can$0.0001/lb. during our first period of review and Can$0.0001/lb. during our second period of review.

Other Provincial Programs

1. Alberta Crow Benefit Offset Program

During our periods of review, this program operated from July 1, 1987 to March 31, 1988. 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.
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. Second, 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 also purchase grain receive both certificates and direct payments.
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.
The payout from this program during our period of review was Can$13 per ton. Because respondent furnished no information on this program, as best information available we used data in the Fresh, Chilled, and Frozen Pork from Canada case (54 FR 30774, July 24, 1989) and published in Agriculture in Alberta, which states that barley is the primary grain fed to hogs and that hogs consumed 15 percent of the province's barley production. Therefore, to calculate the benefit, we used 15 percent of the total payout to feed grain users in Alberta allocated over the live weight of swine produced in Alberta. We then weight-averaged the benefit by Alberta's share of total Canadian exports of live swine to the United States. On this basis, we preliminarily determine the benefit to be Can$0.0028/lb. for FY 1987/88.

2. New Brunswick Swine Assistance Program

In FY 1981/82, the Farm Adjustment Board, 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. In 1985, the name of the Farm Adjustment Act changed to Agricultural Development Act. The program was available only to hog producers who entered production or underwent expansion after 1979. The loans bore a five-year term and interest rates of 10.45 percent during FY 1986/87 and 9.95 percent for FY 1987/88. During the periods of review, the average weighted commercial interest rates on medium-term loans was 11.06 percent in 1986 and 11.07 percent in 1987. Because these loans were provided to a specific industry on terms inconsistent with commercial considerations, we preliminarily determine that they are countervailable.
Because New Brunswick did not export hogs to the United States during the periods of review, we preliminarily determine that there were no countervailable benefits from this program during the periods of review.

*20817 3. New Brunswick Livestock Incentives Program
This program, which operates under the New Brunswick Livestock Incentives Act, OC 71-544, provides livestock loans and free loan guarantees to producers for purchasing cattle, sheep, swine, foxes and mink for breeding purposes, and for feeding and finishing livestock for slaughter. During FY 1986-87, 13.93 percent of total loans and loan guarantees went to swine. During FY 1987-88, 11.92 percent went to swine. In addition, a 20-percent refund of the loan principal is granted to farmers upon repayment of the breeder loans. We preliminarily determine that this program is countervailable because it provides loan guarantees and loans on terms inconsistent with commercial considerations to a specific industry.
Because New Brunswick did not export hogs to the United States during of the periods of review, we preliminarily determine that there were no countervailable benefits from this program during the periods of review.

4. New Brunswick Hog Marketing Program

Under this program, a transportation pool funded by the Hog Marketing Board, producers, and packers was established to assist in equalizing transportation costs of moving hogs to market from all areas of New Brunswick. The Livestock Branch of the New Brunswick Department of Agriculture contributed up to Can $0.64 for each hog sold by the New Brunswick Hog Marketing Board during the review periods. We preliminarily determine that this program is not countervailable because benefits under this program accrue only to hogs slaughtered in New Brunswick.

5. 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 program 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 the government's rebate of interest and interest repayment holiday are loan terms inconsistent with commercial considerations. We consider both the interest rebate and the interest holiday to confer benefits. Because New Brunswick did not export hogs to the United States during the periods of review, we preliminarily determine that there were no countervailable benefits from this program during the periods of review.

6. New Brunswick Swine Assistance Policy on Boars

This program is administered by the New Brunswick Department of Agriculture, Animal Industry Branch, for the purpose of improving the quality of hog production. The program provides grants to swine producers for the purchase of boars. Eligible producers are entitled to receive up to Can$110 for the purchase of a maximum of ten boars during a two-year period.
We preliminarily determine that this program is countervailable because it is limited to a specific industry. Because New Brunswick did not export live swine to the United States during the periods of review, we preliminarily determine that there were no countervailable benefits from this program during the periods of review.

7. Newfoundland Weanling Bonus Incentive Policy

This program is operated by the Agriculture Branch, Department of Rural, Agricultural and Northern Development. A payment of Can$3 is provided for each weanling produced by individuals engaged in swine production. Payments are limited to a maximum of Can$2,000 to each producer in a fiscal year.
Because this program is provided only to weanling producers, we preliminarily determine that it is limited to a specific enterprise or industry and is therefore countervailable.
Because the allegation that this program provided a benefit was untimely submitted for the first period of review, we calculated a benefit for FY 1987/88 only (see Supplementary Information: Background). Because Newfoundland did not export live swine to the United States during FY l987/88, we preliminarily determine that there was no benefit from this program during that period of review.

8. 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 house calls made to producers of commercial and purebred breeding livestock. Breeding livestock is not covered by the order on live swine. Therefore, we preliminarily determine that this program isnot countervailable in these reviews because it is available only for breeding stock.

9. 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.

10. Nova Scotia Improved Sire Policy

This program is administered by the Nova Scotia Department of Agriculture and Marketing, Livestock Services Branch, for the purpose of improving the quality of hog production. The program provides grants to purebred and commercial swine producers for the purchase of boars. Because this program is limited to a specific industry, we preliminarily determine that it is countervailable.
Because the allegation that this program provided a benefit was untimely submitted for the first period of review, we calculated a benefit for FY 1987/88 only (see Supplementary Information: Background). Because Nova Scotia did not export live swine to the United States during FY 1987/88, we preliminarily determine that there was no countervailable benefit from this program during that period of review.

11. Ontario Farm Tax Rebate Program

This program replaced the Ontario Farm Tax Reduction Program. Eligible farmers receive a rebate of 100 percent of property taxes levied on farm properties for municipal and school purposes; levied for local improvements under the Local Improvement Act; levied under the Provincial Land Tax Act or the Local Roads Boards Act; imposed under the Local Services Boards Act; and levied under the Provincial Land Tax Act. Farm property includes farm lands and outbuildings. Eligible properties include farms that produce food, fish, breeding horses and donkeys, pregnant mare's urine, fur-bearing animals, tobacco, flowers, nursery stock, sod or ornamentals.
*20818 Any resident of Ontario may receive a rebate if he/she owns and pays taxes on eligible properties. Residents of Southern and Western Ontario must produce farm products with a gross value of at least Can$8,000 and residents of Northern and Eastern Ontario must produce products with a gross value of at least Can$5,000. 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.
According to the 1986 Census of Agriculture, Statistics Canada, 4.7 percent of all Ontario swine farmers have sales valued within theCan$5,000 to $8,000 range. Therefore, we assumed as best information available, that 4.7 percent of farmers in the Northern and Eastern Ontario have sales valued within the Can$5,000 to $8,000 range. We calculated the benefit for FY 1986/87 by allocating 4.7 percent of the total payout to farmers in Eastern and Northern Ontario over the total live swine produced in all of Ontario during the corresponding period. We then weight-averaged the result by Ontario's share of total Canadian exports of this merchandise to the United States during the corresponding period. We did the same calculation for FY 1987/88. On this basis, we preliminarily determine the benefit from this program for all swine to be Can$0.000l/lb. for FY 1986/87 and Can$0.0001/lb. for FY 1987/88.

12. Ontario (Northern) Livestock Improvement and Transportation Assistance 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$2,500 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 producers living in Northern Ontario 50 percent of the costs of transporting high quality breeding stock from Southern and Northern Ontario.
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 for each period of review, we divided the total payment to hog producers under these programs by the total live weight of swine produced in Ontario during the corresponding period. We then weight-averaged the result by Ontario's share of Canadian exports of live swine to the United States during the corresponding period of review. On this basis, we preliminarily determine the benefit for all swine to be less than Can $0.0001/lb. for FY 1986/87 and less than Can$0.0001/lb. for FY 1987/88.

13. Ontario Weaner Pig Stabilization Plan

This program was statutorily terminated on March 31, 1985. Financial statements of the Farm Income Stabilization Commission of Ontario show no payouts for this program during the periods of review. Therefore, there was no benefit from this program.

14. Ontario Pork Industry Improvement Plan (OPIIP)

This five-year plan is effective from April 1, 1986 to March 31, 1991. The plan provides grants to Ontario swine producers to enable them to improve their productivity, profitability and competitive position by improving their efficiency. To be eligible for the plan, producers must be residents of Ontario, own or lease facilities in Ontario for swine production and have at least 20 sow equivalents. One sow equivalent is equal to one sow or 15 marketweight hogs marketed annually. During the FY 1987/88 period of review, Ontario swine producers received grants under the following programs: swine production analysis, swine ventilation, productivity and quality improvement, rodent control enterprise analysis, feed analysis, private veterinary herd health, artificial insemination, education, and establishment-maintenance- restocking.
Because the OPIIP provides grants only to swine producers, we preliminarily determine that it is limited to a specific enterprise or industry and is therefore countervailable.
Because the allegation that this program provided a benefit was untimely submitted for the first period of review, we calculated a benefit for FY 1987/88 only (see Supplementary Information: Background). To calculate the benefit, we allocated the total of all grants provided to producers during the FY 1987/88 review period over the total live weight of hogs produced in Ontario during this period of review. We then weight-averaged the result by Ontario's share of total Canadian exports of live swine to the United States during the period of review. On this basis, we preliminarily determine the benefit from this program to be Can$0.0005/lb. for all swine.

15. 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 program is not countervailable under this order because the benefit is provided to a packer of pork products, and the order covers only benefits on the production of live swine.

16. 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. Breeding stock, bred and sold as breeding stock, is not covered by the order on live swine. Therefore, this program is not countervailable under this order.

17. PEI Interest Payments on Assembly Yard Loan

The PEI government provided a grant to hog producers by assuming the interest on a loan granted to hog producers for the purpose of constructing a hog assembly yard. Because this grant was limited to a specific industry, we preliminarily determine that it is countervailable.
To calculate the benefit, for each period of review we allocated the interest payment assumed by the province, over PEI's total swine production. We then weight averaged the benefit by PEI's share of total Canadian exports of live swine to the United States during the respective periods. On this basis, for both periods of review, we preliminarily determine the benefit to be less than Can$0.000001/lb. for all live swine.

18. PEI Swine Incentive Policy Program

This program was established to provide incentives for the increased and efficient production and management of hogs in order for the industry to be more competitive on a regional, national and international basis. The program is administered by the Livestock Section of the Extension Services Branch of the PEI Department of Agriculture. This program provides incentive payments for increased production; cash advances for new construction based on the additional pigs the facility is expected to produce; direct payments on all hogs sold either through the PEI Hog Commodity Marketing Board or to local butcher shops for slaughter locally; payments for participation in the PEI Swine Productivity Program and recognized Herd Health Program; and a bonus of Can$30 per gilt for purchase of minimal disease status gilts. PEI Department of Agriculture regulations *20819 limit the production incentive and the new construction payments to swine slaughtered in PEI. Because this program is limited to swine producers, we preliminarily determine that it is provided to a specific industry and that it is countervailable.
Because the allegation that this program provided a benefit was untimely submitted for the first period of review, we calculated a benefit for the FY 1987/88 only (see Supplementary Information: Background). To calculate the benefit, we allocated the total payout from the program, less the production incentive, the new construction payouts, and the direct payments on all hogs slaughtered locally, over the live weight of swine produced in PEI. We then weight-averaged the benefit by PEI's share of total Canadian exports of live swine to the United States. On this basis, we preliminarily determine the benefit to be less than Can$0.0001/lb. during the FY 1987/88 period of review.

19. Quebec Productivity Improvement and Consolidation of Livestock Production Program

This program was established in April 1987 to provide financial assistance to livestock producers for the diversification and consolidation of farm operations. The program is limited to producers with small farming operations and is divided into eight subprograms. Swine producers are eligible for only the Farm Building Improvements Subprogram. This subprogram provides grants for changes to existing piggeries in order to consolidate single-purpose operations into farrow-to-finish operations. The grants cover up to 30 percent of the actual cost of the conversion as well as the purchase and installation of special equipment.
To be eligible for assistance, applicants must be recognized farm producers according to the Farm Producers' Act and be registered with the Bureau de Renseignements Agricoles. Producers operating farrowing facilities must maintain between 40 and 80 sows, and finishing farms must maintain between 500 and 1,000 hogs. The 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 that it is limited to a specific group of enterprises or industries, and is therefore countervailable.
Because this program was established in April 1987, we calculated a benefit only for the period FY 1987/88. We allocated the total payout to swine producers over the total live weight of hogs produced in Quebec during our second period of review. We then weight-averaged the result by Quebec's share of total Canadian exports of swine to the United States during the period of review. On this basis, we preliminarily determine the benefit to be less than Can$0.0001/lb. for all swine during FY 1987/88.

20. Quebec Regional Development Assistance Program

This program was established in April 1987 to promote regional development in Quebec. The program consists of four subprograms: (1) Soil upgrading; (2) consolidation of cattle and sheep production; (3) assistance for transporting livestock; and (4) marketing assistance. The Livestock Transportation Subprogram is the only one available to hog producers. This subprogram provides financial assistance to eligible producers for transporting animals to a government inspected slaughterhouse or to a public market. Quebec is divided into twelve agricultural regions, only five of which (three full regions and parts of two others) are eligible for aid under the subprogram. For purposes of this program, these five regions are divided into seven zones based on the distance from the Montreal-Quebec triangle. The assistance offered varies according to the zone in which the applicant's operation is located.
Because this subprogram is limited to livestock producers in specific regions of Quebec, we preliminarily determine that it is limited to a specific group of enterprises or industries located in a specific region within the province, and is therefore countervailable.
This program became operational in April 1987; therefore, we calculated a benefit for only FY 1987/88, our second period of review. Because respondent did not provide the percent of assistance provided for transportation to slaughterhouses and to public market, to calculate the benefit, we allocated the total payout to swine producers by the total live weight of hogs produced in Quebec during our second period of review. We then weight-averaged the result by Quebec's share of total Canadian exports of live swine to the United States during the period of review. On this basis, we preliminarily determine the benefit for FY 1987/88 to be less than Can$0.0001/lb. for all swine.

21. Saskatchewan Livestock Investment Tax Credit

Saskatchewan's 1984 Livestock Tax Credit Act provides tax credits to individuals, partnerships, cooperatives 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. Each year in which the credit is used, there is a Can$100 deduction from the total credits earned. 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 available only to livestock producers and therefore countervailable because it is provided only to specific enterprises or industries.
To calculate the benefit, for each year we allocated the aggregate amount of tax credits used by hog producers, minus the Can$100 deduction for each of the estimated number of hog producer claimants, over the total live weight of live swine (minus sows and boars) produced in Saskatchewan. We then weight-averaged the result by Saskatchewan's share of total exports (minus sows and boars) of this merchandise to the United States. On this basis, we preliminarily determine the benefit for live swine to be Can$0.0001/lb. for FY 1986/87 and Can$0.0001/lb. for FY 1987/88. For both periods of review, the benefit is zero for sows and boars.

22. Saskatchewan Livestock Facilities Tax Credit Program

This program was implemented on January 1, 1986 and provides tax credits to livestock producers for investment in livestock production facilities. The credit may only be used to offset provincial taxes. Applications for tax credits must be received by Saskatchewan Agriculture no later than six months after the project is completed.
Livestock covered by this program can be raised for either breeding or slaughter. Eligible livestock include cattle, horses, sheep, swine, goats, poultry, bees, fur-bearing animals raised in captivity, or any other designated animals. Investments covered under the program include new buildings, improvements to existing livestock facilities, and any stationary equipment related to livestock facilities.
*20820 The program pays 15 percent of 95 percent of project costs, or 14.25 percent of total costs, in order not to overlap the Business Investment Tax Credit Program, a federal program. Participants may carry forward any unused credit for up to seven years. Because this program is limited to livestock producers, we determine that it is limited to a specific group of enterprises or industries and is therefore countervailable.
To calculate the benefit, we allocated the tax credits used by hog producers during each period of review, over the total live weight of swine produced in Saskatchewan during the corresponding period. We then weight-averaged the result by Saskatchewan's share of total exports of this merchandise to the United States during the periods of review. On this basis, we preliminarily determine the benefit for all live swine to be less than Can$0.0001/lb. during FY 1986/87 and less than Can$0.0001/lb. during FY 1987/88.

Preliminary Results of Review

As a result of our reviews, we preliminarily determine the net subsidy for the period April 1, 1986 through March 31, 1987 to be de minimis for sows and boars and Can$0.0061/lb. for all other swine. Further, we preliminarily determine the net subsidy for the period April 1, 1987 through March 31, 1988 to be Can $0.0068/lb. for sows and boars and Can$0.0071/lb. for all other swine.
The Department intends to instruct the Customs Service to liquidate and to assess no countervailing duties on shipments of sows and boars and Can $0.0061/lb. on all other live swine for all shipments exported on or after April 1, 1986 and exported on or before March 31, 1987. It also intends to instruct the Customs Service to liquidate and to assess countervailing duties of Can$0.0068/lb. on shipments of sows and boars and Can$0.0071 on all other live swine for all shipments exported on or after April 1, 1987 and on or before March 31, 1988.
As provided by section 751(a)(1) of the Tariff Act, the Department also intends to instruct the Customs Service to collect cash deposits of estimated countervailing duties of Can$0.0068/lb. on shipments of sows and boars, and Can $0.0071/lb. for all other 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.
Parties to the proceeding may request disclosure of the calculations methodology and interested parties may request a hearing not later than I0 days after the date of publication of this notice. Interested parties may submit written arguments in case briefs on these preliminary results within 30 days of the date of publication. Rebuttal briefs, limited to arguments raised in case briefs, may be submitted seven days after the time limit for filing the case brief. Any hearing, if requested, will be held seven days after the scheduled date for submission of rebuttal briefs. Copies of case briefs and rebuttal briefs must be served on interested parties in accordance with section 355.38(e) of the Department regulations.
Any request for disclosure under 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 case or rebuttal briefs 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 s 355.22 of the Department's regulations.
Dated: May 11, 1990.

Eric I. Garfinkel,

Assistant Secretary for Import Administration.

[FR Doc. 90-11648 Filed 5-18-90; 8:45 am]

BILLING CODE 3510-DS-M