Final Results of Full Sunset Review: Live Swine From Canada

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

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\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).

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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.

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\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).

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\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; 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