NEWS RELEASES

March 7, 2005 (6:50 p.m. EST)
No. 41

CANADIAN SWINE NOT UNFAIRLY SUBSIDIZED: U.S.

The Government of Canada today welcomed the final determination of the U.S. Department of Commerce (DOC) that trade in Canadian live swine is not unfairly subsidized. However, the Government expressed disappointment that provisional anti-dumping duties will be maintained.

"The subsidy decision shows that Canadian live swine are traded fairly," said International Trade Minister Jim Peterson. "We will keep working with the Canadian industry to prove there is no injury and to show that the provisional anti-dumping duties should be dropped."

"Canada's whole-farm programs have, once again, been found not to be countervailable," said Minister of Agriculture and Agri-Food Andy Mitchell. "This should send a clear message that Canadian producers are fair traders."

While DOC did not impose countervailing duties, it announced its final determination in the anti-dumping investigation. The overall margin of dumping was reduced from 14.06 percent to 10.63 percent. On April 18, 2005, the U.S. International Trade Commission (ITC) will issue its final determination as to whether imports of Canadian live swine covered by these investigations are causing or threatening to cause material injury to the U.S. domestic live swine industry. Final anti-dumping duties will only apply in the event of an affirmative ruling by the ITC.

In 2003, hog exports from Canada were valued at $554 million, with Ontario, Manitoba, Saskatchewan and Alberta being the primary producers. The U.S. is the principal market for Canadian live swine exports.

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A backgrounder is attached.

For further information, media representatives may contact:

Jacqueline LaRocque
Director of Communications
Office of the Minister of International Trade
(613) 992-7332

Media Relations Office
Foreign Affairs Canada and International Trade Canada
(613) 995-1874
http://www.international.gc.ca

Elizabeth Whiting
Office of the Minister of Agriculture and Agri-Food
(613) 759-1059

Media Relations
Agriculture and Agri-Food Canada
(613) 759-7972

Backgrounder

On March 5, 2004, the National Pork Producers Council (NPPC), a group representing U.S. swine producers, filed a petition with the U.S. Department of Commerce (DOC) requesting countervailing and anti-dumping duty investigations on imports of live swine from Canada. The petition alleged that Canada is unfairly subsidizing live swine exported to the U.S. and that these exports are being dumped or sold at less than fair value.

The U.S. DOC is responsible for determining whether the products under investigation are being subsidized and/or dumped. The U.S. International Trade Commission (ITC) is responsible for determining whether the domestic industry in the U.S. has been injured or is threatened with injury by reason of the subsidized and/or dumped imports. The two organizations perform their investigations concurrently.

On April 8, 2004, the Government of Canada was notified by the U.S. DOC that it had initiated investigations at the request of the NPPC.

Countervail investigation

On May 5, 2004, the U.S. DOC issued an initial questionnaire to the federal and provincial governments, as well as to a limited number of swine producers/exporters. The U.S. DOC was looking for information on the Canadian programs that allegedly provide countervailable subsidies.

The Government of Canada prepared its response in close consultation with industry and provincial representatives.

On August 17, 2004, the U.S. DOC preliminarily determined that Canadian producers and exporters of live swine are not receiving countervailable subsidies. As a result of that determination, provisional countervail duties were not imposed.

Anti-dumping investigation

On October 15, 2004, the U.S. DOC preliminarily determined that some of the subject Canadian exports of live swine were being sold into the U.S. market at prices below those in Canada or below the full cost of production. As a result of this ruling, company-specific anti-dumping duties of 13.25 percent and 15.01 percent were levied on two Canadian companies. A third Canadian company had calculated dumping margins of less than two percent, or de minimis levels, and was therefore excluded from having to post anti-dumping duties. A 14.06 percent provisional anti-dumping duty rate was assessed against "all other" exporters of live swine.

Injury investigation

On May 7, 2004, the U.S. ITC, in a preliminary determination, decided by a vote of 6 to 0 that imports of Canadian swine are causing material injury to the U.S. domestic live swine industry. As a result of this decision, the U.S. DOC and the ITC continued their respective investigations.

Today's decision

Following today's de minimis final determination concerning the amount of subsidy, countervailing duties will not be imposed on imports of live swine from Canada.

The U.S. DOC's final determination of dumping maintains a de minimis margin of dumping for one exporter. The margins of dumping for the other three exporters sampled for the final determination range from 4.64 percent to 18.87 percent. The "all others" rate was lowered to 10.63 percent.

The final step in the overall investigation is the final determination on injury by the ITC.

If the ITC issues a negative final determination on injury, the provisional anti-dumping duties will be refunded. The ITC's final determination on injury is expected on April 18, 2005.

Definitions

A countervailing duty is a special duty imposed to protect a domestic industry from injury caused by imports that have benefited from subsidies provided by a foreign government. Subsidies that are generally available, i.e., that are not directed specifically at an enterprise, industry or group of enterprises or industries, are not countervailable.

An anti-dumping duty is a special duty imposed to protect a domestic industry from goods sold in that market at prices below those charged for comparable sales in the producer's home market, or sold at a price less than the cost of producing the goods.