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U.S. Trade Remedy Law: The Canadian Experience
V. United States Countervailing Duty Investigations regarding Imports from Canada: Case Histories, 1991–1999
4. Live Swine and Fresh, Chilled and Frozen Pork Products1
4.1 Case History
- 4.2.1 CIT Challenge
- 4.2.2 Canada–U.S. Free Trade Agreement Fourth Administrative Review
- 4.2.3 Extraordinary Challenge
- 4.2.4 Fifth Administrative Review
- 4.2.5 Sixth Administrative Review
- 4.2.6 Changed Circumstances Review
- 4.2.7 Administrative Reviews of Countervailing Duty Order
- 4.2.8 Sunset Review
- 4.3.1 Federal Programs
- 4.3.2 Federal–Provincial Programs
- 4.3.3 Provincial Income Stabilization Programs
- 126.96.36.199 British Columbia Farm Income Insurance Program
- 188.8.131.52 British Columbia Swine Producers’ Farm Income Plan
- 184.108.40.206 Manitoba Hog Income Stabilization Plan (HISP)
- 220.127.116.11 New Brunswick Hog Price Stabilization Program
- 18.104.22.168 Newfoundland Hog Price Support Program
- 22.214.171.124 Nova Scotia Pork Price Stabilization Program (NSPPSP)
- 126.96.36.199 Prince Edward Island Price Stabilization Program
- 188.8.131.52 Quebec Farm Income Stabilization Insurance Program (FISI)
- 184.108.40.206 Saskatchewan Hog Assured Returns Program (SHARP)
- 4.3.4 Other Provincial Programs
- 220.127.116.11 Alberta Crow Benefit Offset Program
- 18.104.22.168 Alberta Livestock and Beeyard Compensation Program
- 22.214.171.124 New Brunswick Swine Assistance Policy on Boars
- 126.96.36.199 New Brunswick Swine Industry Financial Restructuring and Agricultural Development Act—Swine Assistance Program
- 188.8.131.52 New Brunswick Loan Guarantees and Grants under the Livestock Incentives Program
- 184.108.40.206 New Brunswick Hog Marketing Program
- 220.127.116.11 Nova Scotia Swine Herd Health Policy
- 18.104.22.168 Nova Scotia Transportation Assistance
- 22.214.171.124 Ontario Bear Damage to Livestock Compensation Program
- 126.96.36.199 Ontario Livestock and Poultry Honeybee Compensation Program
- 188.8.131.52 Ontario Export Sales Aid Program
- 184.108.40.206 Ontario Farm Tax Reduction Program
- 220.127.116.11 Ontario (Northern) Livestock Program
- 18.104.22.168 Ontario Rabies Indemnification Program
- 22.214.171.124 Prince Edward Island Hog Marketing and Transportation Subsidies
- 126.96.36.199 Quebec Meat Sector Rationalization Program
- 188.8.131.52 Quebec Special Credits for Hog Producers
- 184.108.40.206 Saskatchewan Financial Assistance for Livestock and Irrigation
- 220.127.116.11 Saskatchewan Livestock Investment Tax Credit
- 18.104.22.168 Saskatchewan Livestock Facilities Tax Credit Program
- 22.214.171.124 Saskatchewan Interim Red Meat Production Equalization Program
- 4.4.1 Federal Programs
- 4.4.2 Federal–Provincial Programs
- 4.4.3 Provincial Programs
On November 2, 1984, Commerce and the ITC received a petition filed by the U.S. National Pork Producers Council (NPPC) alleging that subsidized imports of various pork products from Canada were injuring U.S. industry. After initiation of an investigation, on December 19, 1984, the ITC issued an affirmative preliminary determination, finding a reasonable indication that an industry in the United States was materially injured by reason of allegedly subsidized Canadian imports.
On April 3, 1985, Commerce issued an affirmative preliminary determination. The bonding/deposit rate was C$0.053/lb. for live swine and for fresh, chilled and frozen pork products. Suspension of liquidation of all Canadian subject goods was ordered. Because of the large number of individual producers and government programs at issue, this investigation was deemed “extraordinarily complicated” and the deadline for release of the preliminary determination was extended.
On June 17, 1985, Commerce issued an affirmative final determination. There were no specific companies named as Commerce had used a country rate.
- Live Swine - C$0.04386/lb
- Fresh, Chilled and Frozen Pork Products - C$0.05523/lb
On September 7, 1985, the ITC released an affirmative final determination with respect to live swine, and a negative final determination with respect to fresh, chilled and frozen pork products. Based on differences in physical characteristics, uses and production facilities, the ITC found two like products: (1) live swine; and (2) fresh, chilled, and frozen pork products. The ITC also found two domestic industries, one producing live swine and the other fresh, chilled and frozen pork products. Although the primary purpose of raising slaughter hogs was to produce pig meat and pork products, hog growers and packing facilities were not sufficiently economically integrated to be considered a single industry.
U.S. imports of Canadian swine more than doubled from 1981 to 1982, increased by 53% in 1983, and almost tripled from 1983 to 1984. During the period from January to March 1985, imports increased by 97% compared with the corresponding period in 1984. This rapid increase in market share was found to have had a disruptive effect on the U.S. market, leading the ITC to conclude that the U.S. industry had been injured by Canadian imports of live swine.
The condition of the pork products industry during the period of investigation had deteriorated, as evidenced by the industry’s declining financial situation and declining capacity utilization rate. The industry was unprofitable and was experiencing material injury. Although imports of pork products increased in volume, the import penetration ratios remained low (less than 3% of U.S. consumption). The pricing data revealed no discernible trends regarding the effect of the subject imports, and the price of U.S. pork generally rose as imports from Canada increased. These indicators led the ITC to conclude that the U.S. industry was not suffering material injury by reason of Canadian pork product imports. Canadian pork production, exportation and consumption levels had all decreased slightly, indicating that Canadian-origin imports did not pose a threat to the U.S. industry.
On August 15, 1985, the countervailing duty order was issued. A cash deposit of C$0.04386/lb. was required for all entries of live swine. The suspension of liquidation with respect to fresh, chilled and frozen pork products was terminated as a result of the negative ITC determination. For a further discussion of the original investigation, see U.S. Trade Remedy Law (March 1993).
The Canadian Meat Council (CMC) took the original subsidy ruling to the U.S. Court of International Trade. The basis of its appeal was that the Commerce decision had assumed a pass-through of subsidies on live swine to pork producers, without actually conducting an upstream investigation to determine the extent or existence of such a pass-through. Commerce had refused to conduct an upstream subsidy investigation because, in its view, swine were not an input into pork production. In effect, Commerce was arguing that swine and pork were the same product. In May 1987, the Court ruled in favour of the CMC and remanded the case back to Commerce to perform a full upstream subsidy investigation. However, as the CIT upheld the ITC no-injury determination, which had been appealed by the U.S. National Pork Producers Council, the issue of the upstream subsidy investigation (and lack thereof) became moot.
The Alberta Pork Producers’ Marketing Board also challenged Commerce’s original decision with respect to the countervailability of the Agricultural Stabilization Act (ASA) Hog Stabilization Program.2 The CIT affirmed Commerce’s determination, finding that: (1) hogs received benefits as a “named” commodity; and (2) the ASA discriminated between commodities by providing pre-authorized, regular payments to producers of named commodities while offering unpredictable benefits to others who might apply for designation.
On July 8, 1991, the Canadian Pork Council (CPC), the Government of Canada and the Government of Quebec filed requests for a Binational Panel Review under Article 1904 of the FTA. Panel Review concerned the final results of the fourth administrative review covering the period from April 1, 1988, through March 31, 1989. On May 19, 1992, the panel affirmed in part and remanded in part the determinations made by Commerce during the fourth administrative review. The complainants challenged Commerce’s determinations with respect to seven of the nine programs found to confer countervailable subsidies. Complainant Pry me Pork Ltd. also challenged Commerce’s refusal either to exclude weanlings from the scope of the order or to establish a separate rate (or sub-class) for weanlings. Furthermore, Pryme asserted that it should have been assigned a separate company rate.
The panel remanded the determinations on the National Tripartite Stabilization Program for hogs, the Quebec Farm Income Stabilization Insurance Program (FISI), the Saskatchewan Hog Assured Returns Program (SHARP), the Alberta Crow Benefit Offset Program (ACBOP), the Feed Freight Assistance Program (FFA) and the establishment of a sub-class for weanlings for further examination and/or explanation by Commerce. Commerce’s determinations regarding the B.C. Feed Program and the British Columbia Farm Income Insurance Program (FIIP), and inclusion of weanlings within the scope of the order, were upheld. Last, the panel denied Pryme’s request for a separate company rate and exclusion of sows and boars from the scope of the order.
On July 20, 1992, Commerce issued its remand determination with respect to the panel report issued in May 1992. On August 10, 1992, CPC, Pryme Pork Ltd., and the governments of Quebec and Canada filed challenges of ITC’s remand determination. Canada and other complainants also filed a motion for oral argument on the remand determination. This motion was granted by the panel on August 28, 1992.
On October 30, 1992, the panel majority remanded Commerce’s remand determination with specific instructions. In its remand determination, Commerce once again concluded that Canada’s National Tripartite Stabilization Program for hogs and Quebec’s Farm Income Stabilization Insurance Program were limited de facto to a specific group of agricultural commodities and were therefore countervailable. The panel found that this determination was not in accordance with law because the test used to determine de facto specificity was inappropriate and purely mathematical. Commerce also determined that it was unable to comply with the panel’s remand order with respect to weanlings, or to determine a separate rate for this specific category of hogs based on the evidence in the administrative record. The panel remanded again, with specific instructions, on these two issues
With respect to the Saskatchewan Hog Assured Returns Program, the Alberta Crow Benefit Offset Program and the Feed Freight Assistance Program, Commerce recalculated the benefits to live swine under these programs, in accordance with the panel’s instructions.
On November 9, 1992, the Binational Panel affirmed in part and remanded in part Commerce’s determination made on remand concerning the final results of the fourth administrative review of the order.
The panel denied Commerce’s request to reopen the record to include additional reports on the number of agricultural commodities in Canada. The panel rejected Commerce’s finding of specificity with respect to two government agricultural support programs, instead directing Commerce to find that the programs were not specific. Furthermore, Commerce was directed to calculate a separate rate for weanlings. Commerce did so on November 19, 1992, and on December 21, 1992, the panel affirmed the determination on remand.
On February 9, 1993, the Office of the U.S. Trade Representative filed a request for an Extraordinary Challenge Committee to review both decisions made by the Binational Panel with respect to the fourth administrative review and the redetermination pursuant to the remand by Commerce, based on the allegation that the panel did not apply the appropriate standard of review.
On April 8, 1993, the Extraordinary Challenge Committee issued its decision, declining to amend or overturn the decision of the Swine IV panel. The Committee stated that, based upon the record before it, it could not conclude that the panel “did not conscientiously apply the appropriate standard of review.”
On July 8, 1991, the Canadian Pork Council filed a request for a Binational Panel Review, as did the Government of Canada and the Government of Quebec. Panel review was requested of the final results of the fifth administrative review covering the period from April 1, 1989, through March 31, 1990.
On August 26, 1992, the panel affirmed Commerce’s determination regarding the Government of Canada’s Feed Freight Assistance Program. The panel also affirmed Commerce’s determination that sows, boars and weanlings were within the scope of the order. The panel remanded to Commerce its determinations regarding:
- the National Tripartite Stabilization Program for hogs;
- the Quebec Farm Income Stabilization Insurance Program;
- the British Columbia Farm Income Insurance Program; and
- the Alberta Crow Benefit Offset Program.
The panel also remanded to Commerce for further explanation its determination that it could not establish a separate rate for weanlings or a separate companyspecific rate for Pryme Pork Ltd. The panel affirmed Commerce’s decision not to conduct a scope inquiry regarding weanlings in the fifth administrative review.
On October 30, 1992, Commerce filed the final results of its redetermination pursuant to remand. Commerce redetermined that the Tripartite, FISI and FIIP programs conferred countervailable subsidies upon specific industries or groups of industries. Commerce also redetermined that Pryme’s request for the establishment of a separate sub-class for weanlings was untimely and that, in any event, the record did not contain sufficient information for it to determine any such separate rate. With respect to ACBOP, Commerce recalculated the benefit conferred under the program. The redetermination was challenged by the complainants.
On June 11, 1993, the panel affirmed Commerce’s redetermination that the Tripartite programs were countervailable during the review period. The panel concluded that substantial evidence in the record supported Commerce’s redeterminations that: (1) hog producers were the dominant users of Tripartite programs; (2) no more than 20% of eligible commodities actually participated in the program; and (3) no other factor or record of evidence raised a significant question with regard to Commerce’s determination of countervailability.
The panel affirmed Commerce’s redetermination that FIIP was de jure countervailable during the review period. Insofar as FIIP was concerned, there was no challenge to the redetermination. The panel affirmed Commerce’s redetermination regarding ACBOP. The panel reviewed Commerce’s recalculations and concluded that the reasoning of Commerce as to how and why it proceeded to make certain adjustments was adequately articulated, was based upon substantial record of evidence, and was otherwise in accordance with law. The panel also affirmed Commerce’s redetermination that, while there was some evidence on the record concerning weanlings, it was insufficient to create a sub-class.
The panel remanded Commerce’s redetermination regarding FISI, with instructions for it to remove FISI benefits from its duty calculation. The panel concluded that Commerce’s redetermination that FISI provided a subsidy to a specific enterprise or industry, or group of enterprises or industries, was based primarily upon a “mathematical formula,” which failed to show that Commerce exercised judgment and had balanced the various factors in analyzing the facts of this particular case. On June 25, 1993, Commerce complied with the panel’s instructions concerning FISI. On July 16, 1993, the panel issued an order affirming all aspects of Commerce’s determination on remand. On September 7, 1993, Commerce released the redetermined subsidy rates. They were:
Sows and boars: C$0.0045/lb.
Other live swine: C$0.0927/lb.
On March 30, 1994, P. Quintaine & Son Ltd. of Brandon, Manitoba, filed a request for a Binational Panel Review of the final countervailing duty determination made by Commerce with respect to the sixth administrative review covering the period from April 1, 1990, through March 31, 1991. A request for Panel Review was also filed by Pryme Pork Ltd. and Earle Baxter Trucking.
On May 30, 1995, the panel affirmed in part and remanded in part the Commerce determination. The petitioners challenged Commerce’s denial of separate treatment for sows and boars, and for a category of weanlings covered by the order. In all prior review periods for which separate rates had been calculated, Commerce had found that these categories of swine received zero or de minimis subsidies under the Canadian programs being countervailed.
The panel affirmed Commerce’s finding that sows and boars as well as weanlings were within the scope of the order. The panel remanded with directions to Commerce to: (1) reinstate the sows and boars sub-class and determine a separate countervailing duty rate for it; and (2) consider Pryme’s application for a subclass for weanlings employing the same criteria used in creating the sows and boars sub-class, and calculate a separate rate for that sub-class.
The panel found that Commerce had failed to provide a factual basis or legal argument to warrant the abolition of the separate sub-class. The panel expressed no view on Commerce’s treatment of Pryme’s request for an individual review and a company-specific rate.
On August 14, 1995, Commerce submitted to the panel its remanded determination. Commerce: (1) reinstated sows and boars as a sub-class; (2) calculated a de minimis CVD rate for sows and boars; (3) ordered U.S. Customs to liquidate sows and boars entries without regard to duties, and collect zero cash deposits; (4) determined an unspecified de minimis rate for Pryme Pork by a consent motion; and (5) ordered Customs to assess zero duties against Pryme Pork and to collect zero cash deposits on Pryme Pork’s entries. The amended subsidy rates were as follows:
Sows and boars: C$0.0036/kg (de minimis)
Other live swine: C$0.0296/kg
On August 29, 1996, Commerce released the final results of a changed circumstance administrative review. The ITC revoked the order with respect to slaughter sows, boars and weanlings (effective April 1, 1991) because of affirmative statements of no interest by petitioners.
The 13 administrative reviews carried out annually since 1985 examined the changes in the level of support to Canadian swine producers. The results were as follows.
First Administrative Review
Review Period: April 3, 1985 – March 31, 1986
|Preliminary Determination (June 14, 1988)|
|Slaughter sows and boars||de minimis|
|All other live swine||C$0.022/lb.|
|Final Determination (January 9, 1989)|
|Slaughter sows and boars||de minimis|
|All other live swine||C$0.022/lb.|
Fifth Administrative Review
Review Period: April 1, 1989 – March 31, 1990
|Preliminary Determination (June 26, 1991)|
|Sows and boars||C$0.0051/lb.|
|All other live swine||C$0.0937/lb.|
|Final Determination (September 7, 1993)|
|Sows and boars||C$0.0045/lb.|
|All other live swine||C$0.0927/lb.|
Sixth Administrative Review
Review Period: April 1, 1990–March 31, 1991
|Preliminary Determination (October 20, 1993)|
|Final Determination (March 16, 1994)|
|In accordance with the NAFTA Panel Review decision, Commerce amended its determination|
|Sows and boars||C$0.0036/kg (de minimis)|
|All other live swine||C$0.0296/kg|
|All swine produced by Pryme Pork||CVD duties and cash deposit zero|
Seventh, Eighth and Ninth Administrative Reviews
April 1, 1991 – March 31, 1992
April 1, 1992 – March 31, 1993
April 1, 1993 – March 31, 1994
|Preliminary Determination (May 29, 1996)|
|April 1, 1991–March 31, 1992||C$0.0594/kg|
|April 1, 1992–March 31, 1993||C$0.0609/kg|
|April 1, 1993–March 31, 1994||C$0.0099/kg|
|Amended Final Determination (November 14, 1996)|
|April 1, 1991–March 31, 1992||C$0.0597/kg|
|April 1, 1992–March 31, 1993||C$0.0611/kg|
|April 1, 1993–March 31, 1994||C$0.0100/kg|
Tenth Administrative Review
Review Period: April 1, 1994 – March 31, 1995
|Preliminary Determination (October 7, 1996)|
|Final Determination (April 14, 1997)|
Eleventh Administrative Review
Review Period: April 1, 1995 – March 31, 1996
|Preliminary Determination (September 9, 1997)|
|Final Determination (January 14, 1998)|
|Live swine||C$0.0071/kg (duties)|
|Cash deposit||C$0.0055/kg (de minimis)|
U.S. Customs waived cash deposits on shipments of all live swine from Canada.The cash deposit rate was different from the assessment rate because of program-wide changes in calculating the cash deposit rate.
Twelfth Administrative Review
Review Period: April 1, 1996 – March 31, 1997
|Preliminary Determination (April 30, 1998)|
|Live swine||C$0.0041/kg (de minimis)|
|Final Determination (September 4, 1998)|
|Live swine||C$0.0041/kg (de minimis)|
On November 4, 1999, Commerce released its negative final determination of the likelihood of continuation or recurrence of a countervailable subsidy in connection with the subject five-year review. Accordingly, on November 8, the five-year review of the countervailing duty order concerning live swine from Canada was terminated by the ITC.
This program was intended to ensure: (1) the availability of feed grain to meet the needs of livestock feeders; (2) the availability of adequate storage space in Eastern Canada to meet the needs of livestock feeders; (3) reasonable stability in the price of feed grain in Eastern Canada to meet the needs of livestock feeders; and (4) equalization of feed grain prices to livestock feeders in Eastern Canada, British Columbia and the territories. Although the program was clearly designed to benefit livestock feeders, FFA payments were also made to grain mills that transformed the feed grain into livestock feed whenever these mills were the first purchasers of the grain.
Commerce found this program de jure specific and thus countervailable because benefits were available only to a specific group of enterprises or industries (livestock feeders and feed mills). Subsequently, an FTA Binational Panel (USA-91-1904-04) affirmed the Commerce determination.
The program was found countervailable in administrative reviews for the periods of 1991–1992, 1992–1993 and 1993–1994.
The ASA was enacted to provide for the stabilization of prices of certain agricultural products through the use of price support systems. The program offered different support mechanisms for certain products (including live swine). Commerce found that the program offered additional, specific benefits for certain products and industries, and thus that the support payments delivered to hog farmers were countervailable.
Prior to the first administrative review, the ASA was amended. Changes included an expanded list of commodities and the adoption of identical methodologies for the calculation of support for commodities. However, Commerce continued to find the ASA program countervailable, determining that only a limited number of commodities benefited from the program.
This program tested purebred swine to increase the efficiency of hog production. During the original investigation, Commerce found that as the program was limited to a specific group of industries, it was countervailable. In the first administrative review, Commerce decided that as the results of the program were available to other countries and industries, it was “generally available” and therefore not countervailable.
This program provided for cost-sharing schemes involving producers, the federal government and the provinces. The general terms were as follows: all participating hog producers received the same level of support per market-hog unit; the cost of the scheme was shared equally between the federal government, the provincial government and the producers; producer participation in the scheme was voluntary; the provinces were not to offer separate stabilization or assistance plans for hogs (with the exception of Quebec’s FISI program); and the scheme was to operate at a level that limited losses but did not stimulate overproduction. Stabilization payments were made when the market price fell below the calculated support price. The difference between the support price and the market price was the amount of the stabilization payment.
Commerce determined that the program was de facto specific because benefits were being provided to a specific enterprise or industry, or group thereof. It was found countervailable in administrative reviews for the periods of 1991–1992, 1992–1993 and 1994–1995.
After termination of the National Tripartite Stabilization Program for hogs in July 1994, hog producers became eligible for the National Transition Scheme for Hogs, which provided for one-time payments to producers of hogs marketed from April 3, 1994, through December 31, 1994. The Transition Scheme provided payments to hog producers of C$1.50 per hog from the federal government and a matching C$1.50 from the provincial government. In the tenth administrative review, Commerce found this program to be de jure specific, and thus countervailable, because the agreement expressly limited its availability to a specific industry (swine producers). Commerce determined that the amounts provided by both the federal and provincial governments to the hog producers during that review period constituted a non-recurring grant.
Funding for this agreement was shared equally by the federal and provincial governments. Through the agreement, grants were made to private businesses and academic organizations to fund projects in the areas of research, technological innovation and support for strategic alliances as they related to the agri-food industry. Since assistance under the Technological Innovation Program was provided by the federal government to industries located within a designated geographic region of Canada (i.e. Quebec), Commerce determined that the federal contributions were countervailable.
Commerce determined all the following hog price stabilization programs to be limited to a specific group of enterprises or industries, and thus countervailable.
This program was intended to assure income to farmers when commodity market prices went below the basic costs of production. It was funded equally by producers and the provincial government. Premiums were paid in all quarters regardless of market returns. In the administrative reviews for the periods of 1992–1993 and 1993–1994, Commerce found the program to be countervailable because it was limited to a specific group of enterprises or industries. It was found countervailable in administrative reviews for the periods of 1992–1993 and 1993–1994.
Created in 1979, this program assured hog producers in British Columbia a specified level of return over certain basic production costs. The program was funded in roughly equal proportion by the provincial government and participating hog producers. In 1984, the provincial share of the support payment to hog producers averaged C$10.73 per hog.
Created in 1983 and ending in 1986, the HISP provided price support payments to hog producers in Manitoba. It was funded by both the Government of Manitoba and hog producers in the province. Participation in the program was voluntary. Provincial government contributions accounted for approximately 30% of the stabilization payment. In fiscal year 1984, the provincial share of the support payment to hog producers averaged C$5.26 per hog.
This program was created to provide income stabilization to hog producers during periods of both high and low market prices. Created in 1974, the program was terminated on March 31, 1989, with the fund showing a sizeable deficit based on the loans made by the provincial government to cover pay-outs to producers. In view of the termination date, the program was found to be terminated and to have provided no residual benefits during subsequent review periods.
This program began in April 1985. Under the program, producers were paid an amount ($0.85/lb. in the period from April 3, 1985 to March 31, 1986) for all hogs indexing 80 or above (excluding sows and boars) that were purchased by the Newfoundland Farm Products Corporation (a provincial Crown corporation). Producers did not contribute to the program, and hogs were the only agricultural commodity in Newfoundland receiving stabilization payments.
The program was deemed limited to a specific industry and therefore countervailable. Despite the fact that Newfoundland did not directly export to the United States, it was held that since Newfoundland swine were sent to Ontario and then exported to the United States, Newfoundland’s swine were indeed being exported to the United States (1985–1986 review period). In the 1986–1987 period the program was found not to be countervailable since Newfoundland was not found to be exporting any swine to the United States. In the review period from April 1, 1991, to March 31, 1994, and for all subsequent administrative reviews, the program was found not to be used.
The purpose of the program was to provide price stability for hogs by compensating farmers for fluctuations in prices, and to ensure that producers consistently recovered direct operating costs. The NSPPSP was funded jointly by producer premiums (which became equity in the fund) and provincial government contributions, and was available on a voluntary basis to all producers who sold hogs through the Nova Scotia Pork Price Stabilization Board. In the period from April 1, 1983, to March 31, 1984, the program was in a deficit position. Producers were not required to fund their share of the deficiency payment through a premium but received a loan from the province. However, the deficiency payment, which could include loans, was C$16.74 per hog. For the period from April 3, 1985, to March 31, 1986, the program was found to be countervailable because the stabilization payments were limited to a particular industry, namely swine producers. In that period, when producer equity was exhausted, the deficiency payment was made by the provincial government in the form of an interest-free loan. The loan portion was eliminated and replaced with a purely grant-based system on September 20, 1985. The program was terminated on September 30, 1987.
This program was established by the PEI Hog Commodity Marketing Board in 1973. The program provided income stability to hog producers by compensating them for price fluctuations caused by traditional hog-price cycles. It was made up of equal contributions from both the provincial government and producers. Contributions were made when the average weekly price for hogs increased, while payments were made not when the market price fell below the contribution level but rather when the market price fell below a predetermined “stabilization price.” The payment equalled one half of the difference between the depressed market price and the stabilization price. In fiscal year 1984, the provincial share of the support payment to hog producers averaged C$9.33 per hog. Half the amount of the payments came from the provincial government, with the other half drawn from the producers’ equity. If the producers’ equity was exhausted, the government assumed the producers’ portion in the form of an interest-free loan. During fiscal year 1985 the producers did not contribute to the fund.
While the Natural Products Marketing Act established marketing boards for a number of agricultural products, hogs were the only commodity to receive stabilization payments. The program was found to be countervailable in the original investigation. For the review period from April 1, 1995, to March 31, 1996, the program was found to be terminated.
Administered by the Régie des assurances agricoles du Québec, a provincial Crown corporation, the program was intended to guarantee a net annual income to participating producers. The program was voluntary, although some conditions applied. For example, Quebec producers had to agree to stay with the program for at least five years and to produce at least 100 hogs and own 15 sows during the first year, with a participating ceiling of 5,000 hogs or 400 sows. The provincial government annually assessed participants for contributions to the income stabilization fund. The contributions made up one third of the fund; the government covered the balance. In fiscal year 1984, the provincial share of the support payment to hog producers averaged C$15.08 per hog.
The Government of Quebec argued that since the program covered 11 commodities and 71% of total farm production, it should not be deemed to be targeted to specific industries. Commerce was not persuaded and deemed the program to be nonetheless limited to a specific group of industries or enterprises, and therefore countervailable. Even if the program were not found to be de jure specific, Commerce held that it would still be considered de facto specific. In the 1991– 1992 administrative review, Quebec argued that FISI was integrally linked to the crop insurance program and the supply management system. Again, Commerce was not persuaded by the integral linkage argument and it once more found the program countervailable. In the 1994–1995 review period, FISI was found not to be used. However in the 1995–1996 review period, the program was determined to confer a subsidy of C$0.0008 per kilogram.
SHARP provided income stabilization payments to hog producers when market prices fell below a designated “floor price,” which was calculated quarterly. The program was funded by levies from participating producers on the sale of hogs covered by the program; they ranged from 1.5% to 4.5% of market returns, and were matched by the provincial government. When the balance in the SHARP account was insufficient to cover payments to producers, the provincial government provided financing on commercial terms. The principal and interest on these loans was to be repaid from producer and provincial government contributions. SHARP was terminated on March 31, 1991. Commerce found the SHARP program to be de jure specific and thus countervailable because the legislation expressly made the program available only to a single industry (hog producers).
SHARP was found countervailable in administrative reviews for the periods of 1991–1992, 1992–1993, 1993–1994 and 1994–1995.
This program was designed to compensate producers and users of feed grain for market distortions in feed grain prices. Assistance was provided for feed grain produced in Alberta, feed grain produced outside Alberta but sold in Alberta, and feed grain produced in Alberta to be fed to livestock on the same farm where it was produced. The program was terminated on March 31, 1994, and there were no residual benefits. Commerce found the program to be de jure specific and thus countervailable because the legislation expressly made it available only to a specific group of enterprises or industries (producers and users of feed grain). It was found countervailable in administrative reviews for the periods of 1991–1992, 1992–1993, 1993–1994 and 1994–1995.
This program was found countervailable in administrative reviews for the periods of 1991–1992, 1992–1993 and 1993–1994. The program compensated Alberta livestock producers for losses of food-producing livestock (including cattle, sheep, hogs, goats, rabbits and poultry) to predators. The Alberta Department of Agriculture administered the program and provided assistance in the form of grants compensating farmers for up to 100% of the value of the livestock.
This program was intended to encourage breeding stock producers to produce quality boars at reasonable prices for use in commercial swine herds. The program provided assistance in the form of grants to swine producers (to a maximum of C$110) for the purchase of boars. Commerce found the program to be countervailable because it was limited to a specific industry.
126.96.36.199 New Brunswick Swine Industry Financial Restructuring and Agricultural Development Act—Swine Assistance Program
Under this program, hog producers indebted to the Farm Adjustment Board because of earlier loans were granted an interest rebate on the portion of their total debt that exceeded the “standard debt load” as of March 31, 1984. Commerce found the program to be countervailable because loans were provided to a specific industry on terms inconsistent with commercial considerations.
This program provided loan guarantees to livestock producers. Loans ranging from $1,000 to $90,000 were granted by commercial lending institutions and guaranteed by the Government of New Brunswick. The interest rate for the loans was set at the prime rate plus 1.0 percentage point. Commerce established as its benchmark the Bank of Canada prime rate plus 1.5 percentage points. This rate represented the average of the spread above prime charged by commercial banks on comparable loans. The amount that a recipient paid on such a loan was therefore less than what the recipient would have paid on a comparable commercial loan. Commerce found the program to be de jure specific and therefore countervailable because the legislation expressly made it available only to livestock producers.
With the closure of slaughterhouses in northern New Brunswick, it became more expensive for farmers in that area to move their hogs to market. This program was aimed at equalizing the cost of moving hogs to markets across the province. In 1984, the provincial government paid C$1.25 per hog marketed. Because these grants targeted specific groups, the program was found countervailable.
This program reimbursed veterinarians for house calls to enrolled producers. Any hog producer could enroll, but each had to agree to follow specific health practices and to pay the veterinarian a stipulated fee for the services provided. Because the program was limited to a specific enterprise or industry, or group of enterprises or industries, Commerce found that it conferred countervailable benefits.
This program defrayed the cost of transporting hogs to pork processing plants. The funds were distributed based on the number of hogs marketed per year and the distance from the processing facility. The grant was limited to a specific enterprise or industry, or group of enterprises or industries, and was found to be countervailable in 1984.
This program provided compensation for the destruction of, or injury to, certain types of livestock by bears. Grants for damage to live swine could not exceed C$200 per head. In the tenth administrative review, Commerce determined that the program was de jure specific and thus countervailable because the legislation expressly made it available only to livestock producers. During earlier administrative reviews, Commerce determined that the program had not been used.
This program provided assistance in the form of grants compensating producers for livestock and poultry injured or killed by wolves, coyotes or dogs. Commerce found the program to be de jure specific and thus countervailable because the legislation expressly made it available only to a specific group of enterprises or industries (livestock, poultry farmers and beekeepers). It was found countervailable in administrative reviews for the periods of 1991–1992, 1992–1993 and 1993–1994.
This program was established in 1987 to assist producers and processors of agricultural and food products in developing export markets. The Ontario government provided reimbursements in the form of grants for up to 50% of the costs incurred in developing export marketing materials, with a maximum dollar amount. Commerce determined the program to be a countervailable subsidy because receipt of benefits was contingent upon actual or expected exportation. It was found countervailable in administrative reviews for the periods of 1991–1992 and 1993–1994.
This program provided a rebate of up to 75% of municipal property taxes on eligible farmland. As eligibility varied by location, this was found to be a regional subsidy and thus countervailable. A rate of C$0.00003182/lb. dressed-weight was determined in 1984. However, in an administrative review in 1991–1992, Commerce verified that there was no restriction on the types of farm products that received these rebates, and no evidence that the Ontario government exercised discretion in the distribution of the rebates. Commerce therefore reconsidered its decision and determined that the program was not specific and not countervailable.
This program reimbursed Northern Ontario farmers for 20% of the purchase costs of boars (among other animals). It was determined that the program was terminated prior to April 1, 1991, and that no residual benefits were provided during the 1991–1992, 1992–1993 and 1993–1994 review periods.
This program enabled producers to apply for compensation through a federal inspector, who determined whether an animal was rabid and had to be destroyed. Farmers received a maximum of C$100 per hog under the program. Commerce found it to be countervailable on the basis that the legislation made the program available only to livestock producers. It was found countervailable for the review periods of 1991–1992, 1992–1993 and 1993–1994.
This program defrayed the cost of hog transportation and processing. Inasmuch as these benefits were regional subsidies within the province, it was found to be countervailable in 1984.
This program provided technical assistance and grants for the establishment, standardization, expansion or modernization of slaughterhouses, processing plants, or plants preparing food containing meat. Because the grants were limited to the meat sector and thus to specific groups, the program was found to be countervailable.
This program provided low-interest loans or loan interest subsidies to agricultural producers during “critical” periods. A critical period was defined as a natural disaster that created an emergency, an unexpected, uncontrollable drop in prices, or the disappearance of production for reasons beyond the control of the producer. Because of the specificity of the program, it was found to be countervailable. The Government of Quebec reported that it had stopped giving interest subsidies to pork producers as of March 1983. However, delayed payments were made in 1984 and were therefore calculated for that period.
This program provided low-interest long-term loans, grants and loan guarantees to farmers for the acquisition of livestock, including swine. Loans to each participant were limited to C$350,000. This programme was found to confer countervailable subsidies.
This program provided tax credits to owners of livestock marketed or slaughtered by December 31, 1989. Eligible claimants received credits of $3.00 per hog. Although the program was terminated on December 31, 1989, tax credits were carried forward through the end of fiscal year 1996. Commerce found the program to be de jure specific and thus countervailable because the legislation expressly made the program available only to livestock producers. It was found countervailable in administrative reviews for the periods of 1991–1992, 1992–1993 and 1993–1994.
This program, which was terminated on December 31, 1989, provided tax credits to livestock producers based on their investments in livestock production facilities. The tax credits could be used only to offset provincial taxes, and could be carried forward for up to seven years or until no later than fiscal year 1996. The program paid 15% of 95% of project costs, or 14.25% of total costs.
Commerce found the program to be de jure specific and thus countervailable because the legislation expressly made the program available only to livestock producers. It was found countervailable in administrative reviews for the periods of 1991–1992, 1992–1993 and 1993–1994.
This program provided grants to livestock producers who raised and fed their livestock in Saskatchewan. In order to qualify, producers had to have sold a minimum number of eligible livestock. Commerce found the program de jure specific and thus countervailable because the legislation expressly limited the program’s availability to a specific group of enterprises or industries (livestock producers). Commerce also determined that the grants were recurring because recipients could expect to receive benefits on an ongoing basis. The last date on which producers could apply for or claim benefits was November 30, 1994, and the last date on which producers could receive benefits was March 31, 1995. The program was found countervailable in administrative reviews for the periods of 1992–1993, 1993–1994 and 1994–1995.
Commerce found that as the following programs did not designate specific products for financing, they were not limited to a specific industry and were not countervailable:
- Farm Credit Act
- Farm Syndicates Credit Act
- Special Farm Assistance Programs
As numerous agricultural products were similarly graded at government cost, this program was not limited to a specific industry and was found not to be countervailable.
The aim of this agreement was to promote agricultural development cooperation between the two governments. The federal and B.C. governments shared funding for projects in the areas of productivity enhancement, resource development and commodity development. The program was not found countervailable during the 1988–1989 review, and was not used during the 1989–1990 and 1990–1991 reviews. Again during the 1991–1992, 1992–1993 and 1993–1994 reviews, the program was found not to confer subsidies. It was terminated in 1995.
Under this 1984 agreement, the federal and Manitoba governments supported research for the development of agriculture. Both levels of government shared the funding in the following areas: (1) enhanced agricultural productivity; (2) enhanced soil and water resource management; (3) human resources management; and (4) analysis, evaluation and public relations. The program was found not countervailable during the administration review of 1988–1989, and not used during 1989–1990. Again during the 1991–1992, 1992–1993 and 1993–1994 reviews, it was found not countervailable. The program was terminated in) 1995.
Funding for this agreement was shared equally by the federal and provincial governments. Through the agreement, grants were made to private businesses and academic organizations to fund projects in the areas of research, technological innovation and support for strategic alliances as they related to the agrifood industry. The results of research carried out under the program were made publicly available and were published in an annual report upon completion. The federal and Quebec governments reported that all projects completed under the program were made publicly available. Because the research results were publicly available, Commerce determined that the research program did not confer countervailable subsidies to live swine.
The following programs did not designate specific products or regions for the receipt of funding, nor did they establish differing terms for specified products. They therefore were not limited to any specific enterprise(s) or industry/industries and were not found countervailable.
Grant Programs in Quebec
- grants under the Act to Promote the Development of Agricultural Operations
- grants to Provincial Pork Packers under the Quebec Industrial Assistance Act
Financing Programs in Quebec
- low-interest financing under the Act to Promote Long-Term Farm Credit by Private Institutions
- low-interest financing under the Farm Credit Act
- low-interest guaranteed loans under an Act to Promote Farm Improvement
- interest-free loans under the Act to Promote the Establishment of Young Farmers
- low-interest mortgages under the Farm Loan Act
- certain short-term loans
Financing Programs in Ontario
- Ontario Farm Adjustment Assistance Program
- Ontario Beginning Farmer Assistance Program
- Ontario Young-Farmer Credit Program
New Brunswick Financing under the 1980 Farm Adjustment Act
Newfoundland Loans under the Farm Development Loan Act
Nova Scotia Farm Loan Board Program
Prince Edward Island Lending Authority Long- and Short-Term Loans
Alberta Agricultural Development Corporation Low-Interest Loans and Loan Guarantees
Financing Programs in British Columbia
- low-interest loans and loan guarantees by the B.C. Ministry of Agriculture and Food
- partial interest reimbursement
Manitoba Agricultural Credit Corporation Loans and Loan Guarantees
Saskatchewan Economic Development Corporation Financial Assistance
Saskatchewan Livestock Cash Advance Program
Ontario Farm Credit Tax Rebate Program
Prince Edward Island Pork Assistance Program
1The original investigation is summarized here, even though it is outside the time period of this study, because of the continued participation by the Government of Canada in the many administrative reviews that were to follow.
2Alberta Pork Producers’ Marketing Board v. United States, 669 F. Supp. 445 (Court of International Trade 1987).
- Date Modified: