64 FR 60301 November 4, 1999
DEPARTMENT OF COMMERCE
International Trade Administration
[C-122-404]
Final Results of Full Sunset Review: Live Swine From Canada
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of full sunset review: live swine from
Canada.
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SUMMARY: On June 25, 1999, the Department of Commerce (``the
Department'') published a notice of preliminary results of the full
sunset review of the countervailing duty order on live swine from
Canada (64 FR 34209) pursuant to section 751(c) of the Tariff Act of
1930, as amended (``the Act''). We provided interested parties an
opportunity to comment on our preliminary results. We received comments
from both domestic and respondent interested parties and held a public
hearing. As a result of this review, the Department finds that
revocation of this order would not be likely to lead to continuation or
recurrence of a countervailable subsidy.
FOR FURTHER INFORMATION CONTACT: Scott E. Smith or Melissa G. Skinner,
Office of Policy for Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
6397 or (202) 482-1560, respectively.
EFFECTIVE DATE: November 4, 1999.
Statute and Regulations
This review was conducted pursuant to sections 751(c) and 752 of
the Act. The Department's procedures for the conduct of sunset reviews
are set forth in Procedures for Conducting Five-year (``Sunset'')
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516
(March 20, 1998) (``Sunset Regulations'') and in 19 CFR part 351 (1998)
in general. Guidance on methodological or analytical issues relevant to
the Department's conduct of sunset reviews is set forth in the
Department's Policy Bulletin 98:3--Policies Regarding the Conduct of
Five-year (``Sunset'') Reviews of Antidumping and Countervailing Duty
Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset Policy
Bulletin'').
Scope
The merchandise subject to this countervailing duty order is
shipments of live swine, except U.S. Department of Agriculture
(``USDA'') certified purebred breeding swine, slaughter sows and boars,
and weanlings from Canada.1 Weanlings are swine weighing up
to 27 kilograms or 59.5 pounds.2 This merchandise is
currently classifiable under the Harmonized Tariff Schedule (``HTS'')
item numbers 0103.91.00 and 0103.92.00. The HTS item numbers are
provided for convenience and customs purposes. The written description
remains dispositive.
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\1\ On August 29, 1996, the Department issued the final results
of a changed circumstances review revoking the order, in part, with
respect to slaughter sows and boars. The revocation became effective
on April 1, 1991 (see Live Swine from Canada; Final Results of
Changed Circumstances Countervailing Duty Administrative Review, and
Partial Revocation In Part of Countervailing Duty Order, 61 FR 45402
(August 29, 1996).
\2\ In the Final Affirmative Countervailing Duty Determination;
Live Swine and Fresh, Chilled and Frozen Pork Products from Canada,
50 FR 25097 (June 17, 1985), the Department also calculated a net
subsidy for dressed-weight swine. However, the Department terminated
its investigation with respect to fresh, chilled, and frozen pork
products from Canada based on a finding by the Commission that no
material injury, threat of material injury, or retardation of an
infant industry existed.
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Background
On June 25, 1999, the Department issued the Preliminary Results of
Full Sunset Review: Live Swine from Canada (64 FR 34209) (``Preliminary
Results''). In our preliminary results, we found that revocation of the
order would likely result in the continuation or recurrence of a
countervailable subsidy. In addition, we preliminarily determined that
the net countervailable subsidy likely to prevail if the order were
revoked would be Can$0.01802234/lb.
On August 9, 1999, within the deadline specified in 19 CFR
351.209(c)(1)(i), we received comments on behalf of National Pork
Producers Council (``NPPC'').3 We also received comments
from the Gouvernement du Quebec (``GOQ''), the Government of Canada
(``GOC'') and the Canadian Pork Council and its Members (``CPC''), the
Canadian respondents in this proceeding (collectively, ``the Canadian
respondents''). On August 16, 1999, within the deadline specified in 19
CFR 351.309(d), the Department received rebuttal comments from the NPPC
and each of the Canadian respondents. On August 18, 1999, the
Department held a public hearing. We have addressed the comments
received below.
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\3\ The NPPC is a trade organization representing U.S. hog and
pork producers through a federation of 44 affiliated state pork
producer associations with a total membership of 85,000. NPPC's
membership consists of small family farms and large hog operations.
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As a result of our reconsideration, we find that the net subsidy
rate likely to prevail were the order revoked is de minimis. Because
any subsidy rate would be de minimis, we find that it is not likely
that revocation would result in the continuation or recurrence of a
countervailable subsidy.
Comments
Comment 1: The NPPC states that it agrees with the Department's
preliminary finding that revocation of the countervailing duty order
would be likely to lead to continuation or recurrence of a
countervailable subsidy. The NPPC argues that given the extensive
federal and provincial programs available, there can be little question
that the Department properly found that subsidization would be likely
to continue if the order were revoked.
The Canadian respondents argue that, when corrected for errors in
the Preliminary Results, any net countervailable subsidy likely to
prevail is zero or de minimis. As such, the Department should find that
subsidization would not be likely to continue or recur if the order
were revoked.
Department Response: Based on comments received, we have
recalculated the net countervailable subsidy likely to prevail were the
order revoked. Because, as discussed below, we find that the subsidy
likely to prevail is de minimis, for our final results of full sunset
review we determine that revocation of this countervailing duty order
would not be likely to result in the continuation or recurrence of a
countervailable subsidy.
Comment 2: The NPPC argues that although, in the Preliminary
Results, the Department identified the Newfoundland Hog Price
Stabilization Program as a program that was created after the
imposition of the order which still exists, the Department failed to
include this program in its net subsidy calculation. The NPPC requests
the Department correct this error for its final determination.
As discussed in more detail below, the CPC argues that the
Newfoundland Hog Price Stabilization Program was terminated on March
31, 1994.
[[Page 60302]]
Department Response: We disagree that we incorrectly failed to
include a subsidy rate from the Newfoundland Hog Price Stabilization
Program in our preliminary calculation of the net subsidy likely to
prevail if the order were revoked. Leaving aside the question of
termination, we note that the Department never calculated a subsidy
rate for this program because it had not been used. Therefore, we do
not believe it appropriate to include a rate from this program in the
calculation of the net countervailable subsidy likely to prevail were
the order revoked.
Comment 3: The NPPC notes that, in addition to the ten programs
used in the net subsidy calculation in the Preliminary
Results,4 the Department identified six programs for which
no subsidy rate has ever been calculated--the Newfoundland Farm
Products Corporation Hog Price Support Program, Western Diversification
Program, Agricultural Products Board Program, Newfoundland Weanling
Bonus Incentive Policy, Federal Atlantic Livestock Initiative, and
Ontario Swine Sales Assistance Program. Further, the NPPC argues that
the Department acknowledged that none of these six programs has been
found to be terminated or modified in such a way that they would not
confer any countervailable benefit in the future. Therefore, to ensure
the most accurate net countervailable subsidy rate is reported to the
Commission, the NPPC requests that the Department include in its final
calculation of the net countervailable subsidy likely to prevail a rate
for each of these programs. The NPPC recommends the use of neutral
``facts available'' in order to identify a subsidy rate for each of the
six programs.
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\4\ The ten programs used in the net subsidy calculation in the
Preliminary Results were: Technology Innovation Program under the
Agri-Food Agreement, Ontario Livestock and Poultry and Honeybee
Compensation Program, Ontario Bear Damage to Livestock Compensation
Program, Ontario Rabies Indemnification Program, New Brunswick Swine
Industry Financial Restructuring Program, Newfoundland Hog Price
Support Program, Quebec Farm Income Stabilization Insurance Program,
New Brunswick Livestock Incentives Program, Support for Strategic
Alliances Program under the Agri-Food Agreement, and Nova Scotia
Improved Sire Program.
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As discussed in more detail below, the Canadian respondents assert
that the Western Diversification Program, Agricultural Products Board
Program, and Federal Atlantic Livestock Initiative were never found to
provide a countervailable subsidy on the subject merchandise and,
therefore, cannot be included in any rate likely to prevail. Further,
they argue that there has been a long track record on non-use of the
Ontario Swine Sales Assistance Program. Therefore, this program should
not be included in the calculation. Finally, with respect to the
Newfoundland Farm Products Corporation Hog Price Support Program and
the Newfoundland Weanling Bonus Incentive Policy, the Canadian
respondents argue that these programs have been terminated and should
thus be excluded from any calculation. We note that the CPC alleges
that the Newfoundland Farm Products Corporation Hog Price Support
Program is the same as the Newfoundland Hog Price Support Program.
Department Response: The Department disagrees with the NPPC that we
should include a neutral facts available rate for these programs in
calculating the net subsidy likely to prevail were the order revoked.
In the Preliminary Results the Department did not include these six
programs in the calculation of the net subsidy rate on the basis that,
despite no finding that any of these programs had been terminated, the
Department had never calculated a subsidy rate for any of these
programs because the Department has never been presented with evidence
establishing the countervailability of these programs and/or these
programs have not been used.
As discussed below, over the life of this order the Department has
never been presented with sufficient evidence that the Western
Diversification Program, Agricultural Products Board Program, or
Federal Atlantic Livestock Initiative provide a countervailable subsidy
with respect to subject merchandise. In addition, with respect to the
Newfoundland Weanling Bonus Incentive Policy, and the Ontario Swine
Sales Assistance Program, although found countervailable, the
Department has never calculated a subsidy rate during the POI or any
administrative review because the Department had determined the
programs had not been used. Additionally, as discussed below, we agree
with the CPC that the Newfoundland Farm Products Corporation Hog Price
Support Program is the same as the Newfoundland Hog Price Support
Program.
Over the fourteen year life of the order, neither of these programs
has been found to provide a measurable countervailable subsidy. The
NPPC has provided no convincing argument or evidence that, were the
order revoked, these programs would be used and found to provide a
measurable countervailable subsidy. Therefore, the Department does not
agree that it is appropriate to calculate a facts available subsidy
rate likely to prevail for these programs were the order revoked.
Comment 4: The NPPC argues that the Department prematurely decided
that British Columbia Feed Grain Market Development Program (``Program
1''); (2) Canada/Alberta Swine Improvement Programs Study (``Program
2''); (3) Prince Edward Island Interest Payments on Assembly Yard Loan
Program (``Program 3''); and (4) British Columbia Special Hog Payment
Program (``Program 4'') were terminated. The NPPC argues that the
Department should utilize different criteria in the course of sunset
reviews with respect to determinations regarding program termination.
Specifically, the NPPC asserts that the sunset criteria for program
termination should be more rigorous than for administrative reviews
because sunset determinations may have the effect of terminating the
order. Termination through administrative action, rather than through
legislative means, the NPPC argues, is insufficient for the Department,
in the course of a sunset review, to determine that the program has
indeed been terminated.
The GOQ argues that the Department applied the appropriate standard
to programs determined terminated in administrative reviews. The GOQ
asserts that neither the statute nor its legislative history supports
the argument that the Department may apply a more stringent standard to
programs that the Department previously determined to be terminated
before they may be considered terminated for sunset review purposes.
Further, the GOQ argues that, in the context of a sunset review, the
Department's prior determination that a program is terminated is
sufficient to support revocation of an order unless contrary evidence
has been shown that the program is likely to be reinstated.
Department Response: The Department agrees with the NPPC, in part.
The Department agrees that the elimination of a program
administratively is not as strong a basis for a finding of termination
as elimination through legislative action (see Sunset Policy Bulletin).
However, where a program was put in place administratively, it is
reasonable to expect that the government would terminate the program in
the same manner (see Final Results of Expedited Sunset Review: Heavy
Iron Construction Castings from Brazil, 64 FR 30313 (June 7, 1999)). In
these circumstances, unless there is a basis for concluding that the
government is likely to reinstate the program, we continue to believe
it is appropriate to treat a program previously found to be terminated
in an
[[Page 60303]]
administrative review as terminated for the purpose of sunset reviews.
With respect to Program 1, the Department determined that the
program was terminated with no residual benefits in the 1990-1991
administrative review. The Department has information on the record of
this proceeding which indicates that this program was terminated at the
end of the 1988 crop year and that final payments were made in
February, 1990. Since the Department's determination in the 1990-1991
administrative review regarding this program's termination, the
Department has not found any grounds for reconsideration of this
program or its termination. Based on these facts, the Department
continues to find this program terminated.
With respect to Program 2 and Program 3, the Department determined
that these programs were terminated with no residual benefits in the
1991-1992 administrative review. Specifically, the Department found
that these programs were terminated prior to April 1, 1991, with no
residual benefits after this date. Since the Department's determination
in the 1991-1992 administrative review regarding the termination of
these programs, the Department has not found any grounds for a
reconsideration of these programs or their termination. Based on these
facts, the Department continues to find these programs terminated.
With respect to the Program 4, the Department determined that the
program was terminated with no residual benefits in the 1994-1995
administrative review. Specifically, the Department found that this
program was terminated prior to April 1, 1994, with no residual
benefits after this date. Further, information on the record indicates
that this program was only in existence during fiscal year 1988-1989
and that all benefits were countervailed during the 1988-1989
administrative review. Since the Department's determination in the
1994-1995 administrative review regarding this program's termination,
the Department has not found any grounds for a reconsideration of this
program or its termination. Based on these facts, the Department
continues to find this program terminated.
Comment 5: The NPPC argues that the Department should take into
consideration new programs that have not been investigated and include
such programs in its analysis. The NPPC argues that the Department
should consider new programs proposed by both federal and provincial
governments and should consider programs determined to provide
subsidies in other proceedings.
Specifically, the NPPC alleges that the Farm Improvement and
Marketing Cooperative Loans Act (``FIMCLA''), identified in the
Department's Preliminary Negative Countervailing Duty Determination;
Live Cattle from Canada (64 FR 25279, May 11, 1999) (``Cattle
Prelim''), provides countervailable benefits to Canadian hog producers.
In addition, the NPPC alleges that the Manitoba Pork Council will
impose a twenty cent levy on each iso-wean and weanling pig exported
out of the province. This export tax is apparently being used to fund
Manitoba manure disposal. Therefore, the NPPC requests that the
Department include these programs in its final sunset determination as
programs likely to provide a countervailable subsidy were the order
revoked.
The CPC asserts that the news release, relied upon by the NPPC in
its request that the Department identify subsidy rates from levies
being imposed by the Manitoba Pork Council, does not discuss a new
government program, but rather, on-going producer-funded activities.
The CPC argues that the NPPC has not identified a new program, nor has
it even attempted to explain how producer-collected and producer-funded
promotion, education and research activities could ever provide a
countervailable benefit. On this basis, the CPC argues that the
statutory likelihood the Department must have in making its
calculations is not present.
With respect to the program currently under investigation in the
live cattle investigation, the CPC argues that the Department need not
consider such programs and, in the Preliminary Results, correctly
rejected the NPPC's suggestion to do so.
Department Response: The Department disagrees with the NPPC. With
respect to new programs proposed by the federal and provincial
governments of Canada, the NPPC merely claims that these governments
are discussing the possibility of establishing new subsidies for
Canada's hog farmers. Furthermore, the NPPC argues that the Canadian
federal government is contemplating a recovery plan that would include
a comprehensive financial aid package that could potentially provide
subsidies. The Department finds that reports of mere ``contemplation''
or ``possibility'' of new programs do not provide sufficient
justification for the Department to determine that new programs will
provide a countervailable subsidy were the order revoked.
With respect to FIMCLA, the Department disagrees with the NPPC.
First, the FIMCLA program was enacted in 1987 with the purpose of
increasing the availability of loans for the improvement and
development of farms and the processing, distribution or marketing of
farm products by cooperative associations. The SAA at 889 states that
``subsidy allegations normally should be made in the context of
[administrative] reviews . . . however, where there have been no recent
[administrative] reviews or where the alleged countervailable subsidy
program came into existence after the most recently completed
[administrative] review, [the Department] may consider new subsidy
allegations in the context of a . . . [sunset] review.'' However, the
FIMCLA program has been in existence for over a decade, providing ample
opportunity for domestic interested parties to allege countervailable
benefits to swine producers during the course of administrative
reviews.
In addition, the information included in the verification report of
our investigation of live cattle from Canada relates only to benefits
received by cattle producers, not cattle and swine producers (see
Verification Report: Live Cattle from Canada, dated August 27, 1999).
Thus, the Department has no information regarding the extent of usage
of the FIMCLA program, if any, by swine producers and, therefore,
whether there is any benefit provided to swine producers. Because the
Department has no information with which to make a determination
regarding any countervailable benefits of this program with respect to
live swine because NPPC provided no evidence that this program was used
by swine producers, and because domestic interested parties had ample
opportunity but failed during the administrative review process to
allege the countervailability of this program, the Department finds
that an analysis of this program, in the context of this sunset review,
is not warranted.
Comment 6: The CPC and GOC claim that four programs identified in
the Department's Preliminary Results as providing countervailable
subsidies have been terminated.5 The CPC argues that it has
repeatedly provided documentation demonstrating that these programs
have been terminated (with no residual benefits) over the past three
successive administrative reviews, although the Department did not make
[[Page 60304]]
a determination regarding termination in any of the administrative
reviews. The CPC re-submitted the documentation concerning the
termination of these programs for this sunset review and requests that
the Department make a determination concerning their termination in the
course of this sunset review.
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\5\ The four programs are: Nova Scotia Improved Sire Policy,
Newfoundland Hog Price Support Program, Newfoundland Weanling Bonus
Incentive Policy, and Newfoundland Hog Price Stabilization Program.
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The NPPC argues that the Department, even applying the less
rigorous standards of administrative reviews, has never made a formal
finding that these programs were officially terminated. Further, the
NPPC argues that the documentation provided by the CPC to support a
finding of termination is insufficient to demonstrate that these
programs have been terminated in such a way that they would not be
reinstituted, as the SAA and the Department's policy bulletin
anticipate.
Department Response: The Department agrees with the CPC that it is
appropriate to consider possible termination of these programs during
the course of this sunset review. Because there were no exports of the
subject merchandise from the provinces in question during
administrative reviews in which the CPC raised the issue of program
termination, the fact that the Department did not consider possible
termination during the reviews could not have had an effect on the
outcome of those administrative reviews. Thus, the Department has not
had a real opportunity to address respondents' evidence of termination.
However, because the existence or termination of these programs may
have an effect on the outcome of this sunset review, the Department
will consider such information during the course of this review.
According to documentation presented by the Government of the
Province of Newfoundland, the Newfoundland Hog Price Support Program
was terminated on March 18, 1993, the Newfoundland Weanling Bonus
Incentive Policy was terminated on March 31, 1993, and the Newfoundland
Hog Price Stabilization Program was terminated on March 31,
1994.6 According to documentation presented by the
Government of the Province of Nova Scotia, the Nova Scotia Improved
Sire Policy was terminated on May 15, 1996.7
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\6\ See Questionnaire Response for the Government of the
Province of Newfoundland, 1996-1997 administrative review and as
submitted by the CPC in its August 9, 1999, case brief.
\7\ See Supplemental Questionnaire Response for the Government
of the Province of Nova Scotia, 1996-1997 administrative review and
as submitted by the CPC in its August 9, 1999, case brief.
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With respect to the Newfoundland programs, the Government of the
Province of Newfoundland submitted, in support of its argument for
termination, a provincial budget report from 1993 indicating that
production subsidies to hog producers were eliminated in 1993. Given
this documentation submitted by the Government of the Province of
Newfoundland, we are satisfied that the three Newfoundland programs
have been terminated. Further, because the benefits from these programs
would not be allocated over time, we find no residual benefits from any
of these programs.
With respect to the Nova Scotia Improved Sire Program, the
Government of the Province of Nova Scotia submitted an affidavit in
support of its argument that this program had been terminated. No other
evidence in support of termination was provided. We do not find an
affidavit, in and of itself, sufficient for the Department to consider
this program terminated. Therefore, the Department will not consider
this program terminated in this sunset review and will include the
subsidy rate for this program in its net subsidy calculation.
Comment 7: The CPC and GOC argue with respect to the Western
Diversification Program, the Agricultural Products Board Program, and
the Federal Atlantic Livestock Feed Initiative, that the Department
never made a determination that any of these programs conferred a
countervailable subsidy to producers and exporters of swine. Rather,
although each of the programs was included in one or more
administrative review questionnaires, none of the programs has ever
been used or found countervailable with respect to exports of subject
merchandise. As such, the CPC argues that the existence of these
programs cannot support a decision that revocation of the order would
likely lead to continuation or recurrence of a countervailable subsidy.
The NPPC suggests that the status of a program that has yet to be
countervailed should not be treated differently from a program that has
not been used in recent administrative reviews. The NPPC argues that
the order acts as a general deterrent to the continued use of
countervailable programs or to exporting products that are subject to
an order and thus it should not be viewed as unusual that a particular
program has never conferred a benefit on exported products. On this
basis, the NPPC contends that simply because some programs have not
been countervailed does not mean that the programs are not likely to
confer a benefit in the future if the order were revoked. The NPPC
therefore requests that for the purpose of the final results, the
Department should calculate a proposed benefit for each such program.
In rebuttal, the Canadian respondents argue that there is no
factual basis for including a subsidy rate from programs that have not
been found to confer subsidies. Moreover, the GOQ argues that the
Department must reject NPPC's argument and proposed facts available
rates. Referring to the language of the SAA regarding the undue
speculation associated with the calculation of future net
countervailable subsidies, the GOQ asserts that the NPPC is asking the
Department to unduly speculate what the subsidy rates might be for
programs that never had subsidy rates calculated throughout the
investigation and twelve administrative reviews. The GOQ further argues
that the NPPC has submitted no evidence for the record that its
proposed facts available rates bear any relation whatsoever to the
rates likely to prevail for these programs.
Department Response: We do not agree with the NPPC that we should
include a proposed benefit from any of these three programs in our
final calculation of the net subsidy likely to prevail. Rather, the
Department agrees with the CPC that these programs, having never been
found to be countervailable with respect to exports of the subject
merchandise, do not support a likelihood finding. Further, we agree
with the GOQ that calculation of a rate for any of these programs would
be unduly speculative. Therefore, we are not including a proposed
benefit for any of these programs in our final results.
Comment 8: The CPC argues that the Ontario Swine Sales Assistance
Program should be excluded from the Department's determination
concerning the likelihood of continuation or recurrence of a
countervailable subsidy. The CPC claims that benefits from this grant
program were last provided to producers and/or exporters of the subject
merchandise in 1982. Thus, the length of non-use of this program is in
accordance with the Department's policy concerning a ``long track
record'' of non-use of a program. The CPC, therefore, requests that
this program be excluded from the Department's final determination.
The NPPC argues that other factors outweigh the CPC's objections to
the inclusion of this program. Specifically, the NPPC argues that, by
its own title, the Ontario Swine Sales Assistance Program is
specifically related to swine. Further, despite its non-use, this
program has remained in existence for
[[Page 60305]]
one particular industry for an extensive period of time and is
indicative of the special nature and special benefits that have been
and continue to be available to this industry. The NPPC argues that a
hog farmer's decision not to a avail itself of one particular program
that has remained in existence while a variety of other programs are
available and have been widely used does not demonstrate the requisite
track record of non-use. Rather, it suggests that hog farmers have not
been required to use that particular program because they have been
able to benefit from the wide variety of other programs available.
Under these circumstances, the NPPC argues that a long track record of
non-use has not been established.
Department Response: We disagree with the NPPC's argument that a
long track record of non-use cannot be established in cases where
exporters benefit from other countervailable programs that exist. We
believe that such a standard would inappropriately make moot the
question of program non-use in cases where any program continues to be
used.
Further, we agree with the CPC that there is a long track record of
non-use of the Ontario Swine Sales Assistance Program. During the
original investigation of live swine from Canada, the Department found
that countervailable subsidies in the form of grants were provided
under this program during 1982, a period prior to the fiscal year 1984
period of investigation (``POI''). The Department has not found this
program used during the POI or during any subsequent administrative
review period (a period of over 14 years). As stated in the Sunset
Policy Bulletin, where a company has a long track record of not using a
program, including during the investigation, the Department normally
will determine that the mere availability of the program does not, by
itself, indicate likelihood of continuation or recurrence of a
countervailable subsidy. Because the Ontario Swine Sales Assistance
Program was not used during the POI or in any subsequent administrative
review of the countervailing duty order on live swine from Canada, the
Department determines that there is a ``long track record'' of non-use.
Therefore, we find that the mere availability of this program does not,
by itself, indicate likelihood of continuation or recurrence of a
countervailable subsidy. Further, because we have determined that the
program is not likely to provide a countervailable subsidy were the
order revoked, we have not included a subsidy rate from this program in
our calculation of the net subsidy likely to prevail if the order were
revoked.
Comment 9: The GOQ argues that three programs which the Department
preliminarily found likely to provide a countervailable benefit,
specifically the Quebec Farm Income Stabilization Insurance Program,
the Ontario Bear Damage to Livestock Compensation Program, and the
Ontario Rabies Indemnification Program, in fact, have a ``long track
record'' of non-use and should be excluded from the Department's final
determination. The GOQ acknowledges that the Sunset Policy Bulletin
states that where a company has a long track record of not using a
program, including during the investigation, the Department normally
will determine that the mere availability of the program does not, by
itself, indicate likelihood of continuation or recurrence of a
countervailable subsidy. The GOQ claims, however, that holding
transition orders (i.e. orders in place as of January 1, 1995) to the
same standard as non-transition orders places an unreasonable and
inappropriate time-specific burden on parties that was not intended by
Congress. According to the GOQ, the long track record standard was
clearly established for non-transition orders, orders that will be
reviewed after five years. As such, the Department is unjustified in
requiring a more lengthy long track record of non-use for transition
orders based solely on the fact that the order is a transition order.
Further, the GOQ argues that an order may be otherwise revoked through
administrative review based on non-receipt or non-application for
benefits for a period of five years. As such, the appropriate standard
for determining long track record of non-use in a sunset review should
be whether, for a majority of the recent five years, there is non-use.
Based on this standard, the GOQ requests the Department determine that
these three programs have a long track record of non-use and, as a
result, exclude them from the Department's final determination.
The NPPC argues that the continued existence of these programs is
not in question. Further, the NPPC asserts that the non-use of one
particular program among many other programs suggests only that the hog
farmers have not been required to use that particular program because
they have been able to benefit from other programs available. Under
these circumstances, the NPPC asserts that a long track record of non-
use has not been established and, therefore, the Department properly
included these programs as likely to provide a countervailable subsidy
were the order revoked.
Department Response: The Department disagrees with the GOQ that two
of these programs have a long track record of non-use. The Ontario Bear
Damage to Livestock Compensation Program was found to provide a
countervailable subsidy during the 1994-1995 administrative review (62
FR 18087, April 14, 1997). The Quebec Farm Income Stabilization
Insurance Program provided a countervailable subsidy as recently as
April 1, 1996 (see Substantive Response of GOQ at 11). Therefore, even
if the appropriate standard for determining long track record was five
years, these two programs do not have a long track record of non-use.
With respect to the Ontario Rabies Indemnification Program, this
program was last found to provide a countervailable subsidy during the
1993-1994 administrative review (61 FR 52408, October 7, 1996; Amended,
61 FR 58383, November 14, 1996). Although the Department does not agree
with the GOQ that because an order could be revoked through
administrative review based on five years of non-use, the long track
record standard in sunset reviews must be five years, we do agree that
there is a long track record of non-use of the Ontario Rabies
Indemnification Program. Therefore, we have not included a subsidy rate
from this program in our calculation of the net countervailable subsidy
likely to prevail if the order were revoked. Department does not agree
that this constitutes a long track record of non-use.
Comment 10: The GOC and GOQ argue that the Department has twice
refused to consider the requests of the GOQ and the GOC for ``green-
box'' treatment for the Support for Strategic Alliances and Technology
Innovation programs under the Agri-Food Agreement because the benefits
conferred by them are de minimis and would not affect the subsidy rate.
Having refused to consider requests for green-box treatment, the GOC
and GOQ argue, the Department cannot now find these programs to be
countervailable. If the Department is to consider these programs, the
GOQ asserts that the Department must make a determination regarding its
``green-box'' requests and the countervailability of these programs in
the course of this sunset review.
In addition, the GOC and GOQ argue that these programs expired
March 31, 1998. The GOQ states that the Department, in its 1996-1997
administrative review, noted that the Agri-Food Agreement was enacted
by both the governments of Canada and Quebec for the period April 1,
1993
[[Page 60306]]
through March 31, 1998. The GOQ states that this program has not been
replaced. The GOQ also provided an affidavit from a Quebec government
official stating that the program has expired and has not been
replaced. As such, the GOQ requests that the Department find the Agri-
Food Agreement has expired and eliminate it from the Department's final
sunset determination.
The NPPC did not address these programs.
Department Response: With regard to the Technology Innovations
program and the Support for Strategic Alliances program, the Department
continues to find that any benefit to the subject merchandise under
either program, or both programs combined, is so small that there is no
cumulative impact on the overall subsidy rate. Accordingly, because
there is no impact on the overall subsidy rate in this sunset review,
we have not included the benefits from Technology Innovations program
and the Support for Strategic Alliances program in the calculated net
subsidy for this review. Therefore, as in prior administrative reviews,
we determine that it is not necessary to address the issue of whether
benefits under these programs are non-countervailable as green box
subsidies pursuant to section 771(5B)(F) of the Act.8
---------------------------------------------------------------------------
\8\ See, e.g., Final Affirmative Countervailing Duty
Determination: Steel Wire Rod from Germany, 62 FR 54990, 54995
(October 22, 1997); Certain Carbon Steel Products from Sweden;
Preliminary Results of Countervailing Duty Administrative Review, 61
FR 64062, 64065 (December 3, 1996) and Certain Carbon Steel Products
from Sweden; Final Results of Countervailing Duty Administrative
Review, 62 FR 16549 (April 7, 1997); Final Negative Countervailing
Duty Determination: Certain Laminated Hardwood Trailer Flooring
(``LHF'') From Canada, 62 FR 5201 (February 4, 1997); Industrial
Phosphoric Acid From Israel; Preliminary Results of Countervailing
Duty Administrative Review, 61 FR 28845 (June 6, 1996) and
Industrial Phosphoric Acid From Israel; Final Results of
Countervailing Duty Administrative Review, 61 FR 53351 (October 11,
1996).
---------------------------------------------------------------------------
Comment 11: The Canadian respondents argue that the Department's
decision to continue to treat the Quebec Farm Income Stabilization
Insurance (``FISI'') program as countervailable is contrary to law. The
GOQ states that in two administrative reviews, the Department treated
the FISI program as non-countervailable as instructed by Binational
Panels convened under the United States-Canada Free Trade Agreement.
Furthermore, the GOQ adds, the Department has never found an above de
minimis net subsidy for FISI in any administrative review of this
order. Based on this information, the GOQ argues, the Department should
determine that the FISI program is not countervailable.
Department Response: The Department disagrees with the Canadian
respondents. As we explained in Live Swine from Canada; Final Results
of Countervailing Duty Administrative Reviews, 61 FR 52408 (October 7,
1996), the remand determinations issued pursuant to panel decisions in
prior reviews requested the Department to reconsider certain aspects of
the underlying methodology used in those determinations. Because panel
decisions are binding only on the proceeding of that respective review,
none of these remand determinations requires the Department to
establish a policy affecting all subsequent reviews, as they are based
on different administrative records. Therefore, because the Department
is not bound by these panel decisions with respect to its decision in
this sunset review, because the Department has found the FISI program
countervailable even after the latest remand determination concerning
FISI and because the FISI program continues to exist, the Department
continues to find the FISI program countervailable.
Furthermore, as explained in Live Swine from Canada; Final Results
of Countervailing Duty Administrative Reviews, 61 FR 52408 (October 7,
1996), where the Department has determined a program to be
countervailable, it is the Department's policy not to reexamine the
issue in subsequent reviews unless new information or evidence of
changed circumstances is submitted which warrants reconsideration. In
this sunset review, the GOQ has presented essentially the same
arguments as in previous reviews but provided no new information or
evidence of changed circumstances concerning the countervailability of
FISI. Because the cumulative information on the record of this
proceeding provides no evidence that FISI is not countervailable, the
Department will continue to treat this program as a countervailable
subsidy.
Comment 12: The CPC argues that the Newfoundland Hog Price Support
Program and the Newfoundland Farm Products Corporation Hog Price
Support Program, identified separately by the Department in its
Preliminary Results are, in actuality, the same program. The CPC
requests that the Department correct this error in the final results of
this sunset review.
The NPPC did not address this issue. However, as discussed above,
the NPPC requested that the Department apply a neutral facts available
rate to this program.
Department Response: As discussed above, for the purposes of these
final results, we determine that the Newfoundland Hog Price Support
Program was terminated without residual benefits. Therefore, we have
not included any benefit from this program in our calculation of the
net countervailable subsidy likely to prevail were the order to be
revoked. With respect to the Newfoundland Farm Products Corporation Hog
Price Support Program, the Department agrees with the CPC that this is
the same program as the Newfoundland Hog Price Support Program. In the
notice of preliminary results of the 1987-1988 administrative review,
the Department first identifies the program by name as the Newfoundland
Hog Price Support Program Farm and then discusses the Newfoundland Farm
Products Corporation Hog Price Support Program (see 55 FR 20812 (May
21, 1990)).
Comment 13: The Canadian respondents argue that three program rates
from the original investigation, which used a different calculation
methodology, must be trade weighted in order to be combined with rates
from subsequent administrative reviews. The CPC argues that the subsidy
rates calculated in the original investigation of this order use a
methodology which the Department subsequently reexamined and ultimately
rejected in the first administrative review. This new methodology
weight-averages benefits from individual provincial programs by that
province's share of exports to the United States (``trade-weighting'').
This trade-weighted methodology has been used in every administrative
review of this order. The CPC argues that the inclusion of three
programs from the original investigation, which were not trade-
weighted, and seven programs from subsequent administrative reviews,
which were trade-weighted, is illogical. The CPC argues that the
Department is combining the rates of programs that were calculated in
completely different manners. As such, the CPC requests that the rates
from the original investigation be trade-weighted to reflect the
Department's most current and accepted methodology.
The NPPC argues that the Department properly used the rates found
in the investigation, or review. Acknowledging that different
calculation methodologies may have been used in subsequent proceedings,
the NPPC argues nonetheless that the Department should not undertake to
recalculate these rates based on different methodologies in different
administrative reviews that are based on different records. The NPPC
asserts that, accordingly, the
[[Page 60307]]
Department's preliminary calculations are correct and should not be
revised.
Department Response: The Department agrees with the Canadian
respondents. Following the original investigation, the Department
adopted a trade-weighting methodology for the calculation of subsidy
rates for the programs benefitting live swine from Canada. The
Department stated, in Live Swine from Canada; Final Results of
Countervailing Duty Administrative Review, 54 FR 651 (January 9, 1989),
that the trade-weighted methodology provides a better measure of the
subsidy on exports to the United States than the methodology used in
the original investigation. This is because it gives greater weight to
those provinces which export more hogs to the United States and
therefore more accurately reflects the level of subsidy on the subject
merchandise. The Department continues to find this true. Therefore, for
purposes of combining subsidy rates from the investigation (which were
not trade-weighted) with those calculated in the administrative
reviews, the Department finds that it is appropriate to trade weight
the rates from the original investigation. We do not view this as the
calculation of new rates. Rather, the Department is using the rates
from the original investigation as adjusted by the methodology
currently in use. The two programs from the original investigation
which the Department applied the trade-weighting methodology to are the
Quebec Farm Income Stabilization Insurance Program (``FISI'') and the
New Brunswick Livestock Incentives Program (``NBLI''). The trade-
weighted subsidy rate for FISI is Can$0.00320542/lb. and the trade-
weighted subsidy rate for NBLI is Can$0.00000054/lb.
Comment 14: The CPC argues that the remaining eight programs
9 used by the Department in its preliminary net subsidy
calculation have never collectively provided more than a de minimis
level of benefit in any of the twelve administrative reviews of this
order. As such, the existence of these programs does not support a
finding of likelihood of continuation or recurrence of a
countervailable subsidy were the order revoked.
---------------------------------------------------------------------------
\9\ The eight programs are: Quebec Farm Income Stabilization
Program, New Brunswick Livestock Incentives Program, New Brunswick
Swine Industry Financial Restructuring Program, Technology
Innovation Program under the Agri-Food Agreement, Support for
Strategic Alliances Program under the Agri-Food Agreement, Ontario
Livestock and Poultry and Honeybee Compensation Program, Ontario
Bear Damage to Livestock Compensation Program, and Ontario Rabies
Indemnification Program.
---------------------------------------------------------------------------
The CPC argues that the fact that none of these programs is
national in scope but, rather, each is limited to a particular
province, is crucial to the Department's sunset analysis. Asserting
that the SAA contemplates that the Department will take into account a
company's history of use or non-use of a particular program, the CPC
argues that, because the order is administered and rates are calculated
on a country-wide basis, the Department should take into account
provincial shares of exports over time to determine use or non-use of
particular provincial programs.
The CPC notes that the Department has never calculated an above de
minimis benefit from the two New Brunswick programs and argues that the
minimal exports from New Brunswick have never contributed to the
overall CVD rate. Thus, Canadian exports have a long history of not
benefitting from these provincial programs. Additionally, the CPC
asserts that, based on the fact that Quebec has virtually no exports of
the subject merchandise to the United States, as with the New Brunswick
programs, Canadian exports have a long history of not using Quebec
programs. The CPC adds that the reason for both New Brunswick's and
Quebec's consistently very low share of exports is the growth of the
pork packing industry in Quebec and the constant demand by packers in
that province for live swine. This factor has been constant and will
not change according to the CPC.
With respect to Ontario, the CPC argues that although Ontario
exports significant numbers of live swine to the United States, because
of the very small nature of benefits from the Ontario programs, the
Department has never calculated an above de minimis benefit for these
programs over the history of these proceedings. In conclusion, the CPC
argues that the existence of these eight programs do not support a
finding of a likelihood of continuation or recurrence of a
countervailable subsidy were the order to be revoked.
The NPPC argues that in an administrative review, the Department
properly weight-averages the subsidy rate on the basis of actual
shipments because it is attempting to calculate a precise cash deposit
rate that will actually be applied to exports. However, the NPPC argues
that the sunset proceeding is substantially different from an
administrative review, and thus the calculations in a sunset review are
also substantially different from the calculations made in an
administrative review. Given the objective of the sunset review is to
calculate an estimated rate that would result if the order were
revoked, the NPPC argues that it would not be proper to weight average
the rate on the basis of past levels of exports given that the absence
of exports may have been the direct result of the countervailing duty
order and elimination of the order would likely result in the
resumption of shipments. Accordingly, the NPPC argues that the
Department has properly calculated the net subsidy rate.
Department Response: The Department continues to find that where a
countervailable subsidy program continues to exist and provides
benefits to producers and/or exporters of the subject merchandise, it
is appropriate to include such a program in the calculation of the net
countervailable subsidy likely to prevail were the order revoked.
Despite the limited use of some of these eight programs, producers and/
or exporters of live swine from Canada have received, and/or have the
potential to receive, countervailable benefits from each of these
programs.10 However, because the Department is combining
rates calculated during administrative reviews, during which benefits
were weighted based on province-specific exports, and the Department
has determined it is appropriate to trade-weight the benefits from the
original investigation in order to make a comparison based on the same
methodology over the life of the order, we believe that the CPC's
arguments and concerns are adequately addressed. As to the NPPC's
arguments, while we agree that any rate calculated in a sunset review
will not be applied to entries, we do not agree that our calculations
should not be as precise as possible. Because the Department
administers this order on a country-wide basis and has consistently, in
every administrative review, determined that it is appropriate to trade
weight benefits by province-specific exports, for the purpose of
determining the net countervailable subsidy likely to prevail were the
order revoked, as discussed above, we determine that trade weighting of
benefits is appropriate.
---------------------------------------------------------------------------
\10\ The CPC claims that the Technology Innovation Program under
the Agri-Food Agreement and the Support for Strategic Alliances
Program under the Agri-Food Agreement were terminated on March 31,
1998 and argue that neither program can provide a basis of support
for the Department's Preliminary Results.
---------------------------------------------------------------------------
Comment 15: The Canadian respondents disagree with the Department's
use of the de minimis rate from the 1989-1990 administrative review for
the purpose of this sunset review. The CPC asserts that the Department
provided no explanation for its choice of $0.0030/lb. as the de minimis
rate. The CPC further asserts that the Department revised the
[[Page 60308]]
methodology used to calculate the de minimis rates in the 1995-1996
administrative review so that the weighted-average selling price used
in the calculation reflects the weight of a live swine. The CPC argues
that the Department should, using pricing data from the most recently
completed review, determine that the de minimis rate is C$0.0035/lb.
The NPPC did not address this issue.
Department Response: The Department agrees with the CPC that the de
minimis rate from the 1989-1990 administrative review, by itself, is
not the appropriate de minimis rate for the purpose of this sunset
review. Because the net subsidy has never been reported on an ad
valorem basis over the life of this order, the Department calculated
the de minimis rate in terms of cents per pound (or kilogram) in the
administrative reviews. We agree with the CPC that the Department
adjusted the methodology for calculating the de minimis rate so that
the weighted-average selling price used in the calculation reflects the
weight of a live swine. However, we are not persuaded that such a
change in methodology negates the validity of de minimis rates
calculated prior to the change in methodology. Nor are we convinced
that the use of the most recently calculated rate is appropriate. In
considering the appropriate de minimis rate for purposes of this sunset
review, we note that the de minimis rates have fluctuated over the life
of the order, ranging from C$0.0028/lb. to C$0.0041/lb. Therefore, we
determined not to rely on any one rate, but rather to apply as the de
minimis standard in this sunset review an average of previously
calculated rates. For this purpose, we calculated the simple average of
the rate from the 1986-1997 administrative reviews,11 in
terms of cents per pound. As a result, we find the de minimis rate to
be C$0.0033/lb. (see Memo to File, RE: De Minimis Calculation, dated
October 28, 1999).
---------------------------------------------------------------------------
\11\ Of the twelve administrative reviews of this order, the
Department is creating an average of the de minimis levels using the
last eleven. The de minimis level calculations are not available
from the first administrative review (1985-1986 administrative
review). The Department attempted to obtain the de minimis level
calculations from the sunset review participants, however, these
calculations either do not exist or could not be located (see Memo
to File, RE: Request for De Minimis Calculations, dated October 28,
1999).
---------------------------------------------------------------------------
Comment 16: The CPC claims that mathematical errors exist in the
Department's calculations of the subsidy rates for six programs cited
in the Preliminary Results.12 Specifically, the CPC argues
that the Department's conversions from Canadian cents per kilogram to
Canadian cents per pound in its Preliminary Results were done
incorrectly for these six programs. They request that the Department
correct these errors for its final determination. In addition, the CPC
states that the Department, in its Preliminary Results, used both
subsidy rates rounded to the fourth decimal place and subsidy rates
rounded to the eighth decimal place.13 The CPC requests that
the Department round all subsidy rate calculations to the same decimal
place.
---------------------------------------------------------------------------
\12\ The six programs are: Nova Scotia Improved Sire Program,
Technology Innovation Program under the Agri-Food Agreement, Support
for Strategic Alliances Program under the Agri-Food Agreement,
Ontario Livestock and Poultry and Honeybee Compensation Program, the
Ontario Bear Damage to Livestock Compensation Program, and Ontario
Rabies Indemnification Program.
\13\ The Department used subsidy rates rounded to the fourth
decimal place for the following subsidy programs: Nova Scotia
Improved Sire Program, Technology Innovation Program under the Agri-
Food Agreement, Ontario Rabies Indemnification Program, Ontario Bear
Damage to Livestock Compensation, and Ontario Livestock and Poultry
and Honeybee Compensation Program.
---------------------------------------------------------------------------
The NPPC did not address these issues.
Department Response: The Department agrees with the CPC and will
correct for the final the conversion of the subsidy rates from cents
per kilogram to cents per pound. As a result of our corrections, we
find the net countervailable subsidies likely to prevail were the order
revoked: Can$0.00000003/lb. for the Ontario Bear Damage to Livestock
Compensation; Can$0.00000004/lb. for Ontario Livestock and Poultry and
Honeybee Compensation Program; and Can$0.00000013/lb. for Ontario
Rabies Indemnification,/b>; and Can$0.00000002/lb. for Nova Scotia Improved
Sire Program. As such, the Department will rely on these values for its
net subsidy calculations in its final determination.
Final Results of Review
As discussed more fully above, we determine that the Technology
Innovation and Support for Strategic Alliances Programs under the Agri-
Food Agreement are programs that, even if countervailable, would not
have a measurable impact on the Department's net subsidy calculation.
Further, we find that the Newfoundland Hog Price Support Program, the
Newfoundland Hog Price Stabilization Program, and the Newfoundland
Weanling Bonus Incentive Program are programs that have been terminated
without residual benefits and we note that, even if these programs had
been found to continue, they would have no measurable impact on the
Department's net subsidy calculation. Additionally, we find there is a
long track record of non-use of the Ontario Rabies Indemnification
Program.
We find that the Ontario Livestock and Poultry and Honeybee
Compensation Program, the Ontario Bear Damage to Livestock Compensation
Program, the New Brunswick Swine Industry Financial Restructuring
Program, the Quebec Farm Income Stabilization Insurance Program, and
the New Brunswick Livestock Incentives Program continue to exist and
provide, or have the potential to provide, countervailable benefits
were the order revoked. We combined the subsidy rates from these
programs and found the net countervailable subsidy to be Can$0.0032/
lb., below the de minimis level of Can$0.0033/lb. (see Memo to File,
RE: Final Net Subsidy Calculations).
Based on the reasons cited above and those set forth in our
Preliminary Results, the Department finds that the net countervailable
subsidy likely to prevail were the order revoked is de minimis.
Therefore, as a result of this sunset review, the Department finds that
revocation of the countervailing duty order would not be likely to lead
to continuation or recurrence of a countervailable subsidy.
As result of this determination by the Department that revocation
of the countervailing duty order on live swine from Canada would not be
likely to lead to continuation or recurrence of a countervailable
subsidy, the Department, pursuant to section 751(d)(2) of the Act, will
revoke this countervailing duty order. Pursuant to 751(c)(6)(A)(iv) of
the Act, this revocation is effective January 1, 2000. The Department
will instruct the U.S. Customs Service to discontinue suspension of
liquidation and collection of cash deposits on entries of the subject
merchandise entered or withdrawn from warehouse on or after January 1,
2000 (the effective date). The Department will complete any pending
administrative reviews of this order and will conduct administrative
reviews of subject merchandise entered prior to the effective date of
revocation in response to appropriately filed requests for review.
This notice serves as the only reminder to parties subject to
administrative protective order (``APO'') of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 351.305 of the Department's regulations.
Timely notification of return/destruction of APO materials or
conversion to judicial
[[Page 60309]]
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: October 28, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-28775 Filed 11-3-99; 8:45 am]
BILLING CODE 3510-DS-P