[Federal Register Volume 70, Number 169 (Thursday, September 1, 2005)]
[Notices]
[Pages 52129-52131]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4774]


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DEPARTMENT OF LABOR

Employment and Training Administration

[TA-W-53,209]


Computer Sciences Corporation, Financial Services Group, East 
Hartford, CT; Notice of Negative Determination on Remand

    On April 14, 2005, the U.S. Court of International Trade (USCIT) 
issued a second remand order directing the Department of Labor (Labor) 
to further investigate workers' eligibility to apply for Trade 
Adjustment Assistance (TAA) in the matter of Former Employees of 
Computer Sciences Corporation v. United States Secretary of Labor 
(Court No. 04-00149).
    The Department's initial negative determination for the workers of 
Computer Sciences Corporation, Financial Services Group, East Hartford, 
Connecticut (hereafter ``CSC'') was issued on October 24, 2003 and 
published in the Federal Register on November 28, 2003 (68 FR 66878). 
The Department's determination was based on the finding that workers 
did not produce an article within the meaning of Section 222 of the 
Trade Act of 1974. It was determined that the subject worker group 
provided business and information consulting, specialized application 
software, and technology

[[Page 52130]]

outsourcing support to customers in the financial services industry.
    By letter of November 24, 2003, the petitioner requested 
administrative reconsideration of the Department's negative 
determination. The Department issued a Notice of Affirmative 
Determination Regarding Application for Reconsideration on January 5, 
2004. The determination Notice was published in the Federal Register on 
January 23, 2004 (69 FR 3391).
    The Department issued a Notice of Negative Determination on 
Reconsideration was issued on February 3, 2004 and published in the 
Federal Register on February 24, 2004 (69 FR 8488). On reconsideration, 
the Department determined that the subject company produced widely 
marketed software on CD Rom and tapes but the workers were not eligible 
to apply for TAA because the subject company did not shift production, 
nor import completed software on physical media that is like or 
directly competitive with that which was produced at the subject 
facility.
    On March 15, 2004, the petitioner sought judicial review of the 
negative determination, alleging that packaging functions (storing 
completed software on physical media and making a tape copy of the 
completed software on physical media) had shifted to India. On June 2, 
2004, the USCIT granted the Department's request for voluntary remand 
and directed the Department to further investigate the subject workers' 
eligibility to apply for TAA.
    On July 29, 2004, the Department issued a Negative Determination on 
Reconsideration on Remand for the workers of the subject firm on the 
basis that packing functions did not shift to India and that all 
storing and copying functions remained in the United States. The 
determination also stated that CSC did not import any software which is 
like or directly competitive with the software produced at the subject 
facility. The Department's Notice of determination was published in the 
Federal Register on August 10, 2004 (69 FR 48526).
    In response to the petitioner's appeal of the negative 
determination on remand, the USCIT, in its April 14, 2005 order, 
directed the Department to: (1) Explain why code is not a software 
component; (2) examine whether the workers were engaged in the 
production of code; (3) investigate whether there was a shift of code 
production to India; (4) investigate whether code imported from India 
is like or directly competitive with the completed software of any 
component of software formerly produced by the workers; and (5) 
investigate whether there has been or is likely to be an increase in 
imports of like or directly competitive article by entities in the 
United States.
    During the second remand investigation, the Department contacted 
the subject firm to determine what code and software is developed at 
the subject facility, how code is written and handled, and what 
services are provide to CSC clients.
    The Department considered all information provided by the 
petitioners as well as solicited comments from the petitioners through 
their counsel.
    In order to meet the criteria for TAA certification, the following 
criteria must be met:
    (1) A significant number or proportion of the workers in such 
workers' firm, or an appropriate subdivision of the firm, have become, 
or are threatened to become, totally or partially separated; and
    (2) The sales or production, or both, of such firm or subdivision 
have decreased absolutely; and
    (3) Imports of articles like or directly competitive with articles 
produced by such firm or subdivision have increased; and the increase 
in imports contributed importantly to such workers' separation or 
threat of separation and to the decline in the sales or production of 
such firm or subdivision; or
    (4) There has been a shift in production by such workers' firm or 
subdivision to a foreign country of articles like or directly 
competitive with articles which are produced by such firm or 
subdivision; and the country to which the workers' firm has shifted 
production of the articles is a party to a free trade agreement with 
the United States, is a beneficiary country under the Andean Trade 
Preference Act, African Growth and Opportunity Act, or the Caribbean 
Basin Economic Recovery Act or there has been or is likely to be an 
increase in imports of articles that are like or directly competitive 
with articles which are or were produced by such firm or subdivision.

Because 19 U.S.C. 2272(a)(2) requires that an article must be produced 
by the firm employing the workers covered by the petition, the first 
issue is whether CSC produces an article and whether the workers are 
engaged in production.
    After completing its investigation, DOL still concludes that the 
plaintiffs should not be certified for TAA benefits. The first 
requirement that an applicant for TAA benefits must meet in a shift of 
production case such as this one, is that the production of an article 
was actually shifted. In the present case, what was shifted was the act 
of code writing. Code, not embodied on a physical medium, is not 
considered an article for TAA purposes. It is not found on the 
Harmonized Tariff Schedule (``HTS''). The USCIT has concluded in past 
cases that an item must be on the HTS to be an ``article'' for the 
purposes of the Trade Act. See Former Employees of Murray Engineering 
v. Chao, 358 F. Supp.2d 1269, 1272 n.7 (``the language of the Act 
clearly indicates that the HTSUS governs the definition of articles, as 
it repeatedly refers to ``articles'' as items subject to a duty''). 
Software code, not on a physical medium, is exempt from the HTSUS, and 
is, therefore, not an article under the HTSUS test. See HTSUS, General 
Note 3(I) (exempting ``telecommunications transmissions'' from ``goods 
subject to the provisions of the [HTSUS]''). Therefore, there was no 
shift of production of an article, and there can be no Trade Act 
coverage.
    Although the preceding discussion resolves this case, DOL undertook 
the investigation required by the USCIT. First, DOL does not consider 
software code, not embodied on any physical medium, to be a component 
of completed software. To be a component, DOL requires that the item in 
question also be an article in and of itself. It is not enough that the 
item be indispensable to the function of the completed article. The 
code is like an idea that will eventually lead to the existence of an 
``article''--it is, in fact, necessary--but it is not something that 
can be measured or ``imported.'' Therefore, software code, like an 
idea, is not a component of an ``article.''
    With respect to the second and third directions of the USCIT, DOL 
has concluded that the plaintiffs did write software code, and that the 
code writing function was transferred to India. The software code 
written in India is similar to the software code plaintiffs wrote in 
the United States. It is impossible to answer whether it is ``like or 
directly competitive'' because that assumes the existence of articles 
to compare. Because software code, not embodied on a physical medium, 
is not an ``article'' for the purposes of the Trade Act, it is clearly 
not ``like or directly competitive'' with an actual article such as 
completed software on a physical medium.
    Finally, in order to determine whether the universe of entities who 
are producing software like or directly competitive with the software 
produced by the subject company are importing or likely to increase its 
imports of those products, the Department conducted a survey of the 
subject company's major competitors. The survey was sent to

[[Page 52131]]

those seven companies who produce software which might be considered 
like or directly competitive with the four CSC software programs at 
issue: Performance Plus, JETS, Repetitive Payment System, and Vantage-
One. Of the companies surveyed, none had imported software in a 
physical medium, and while some stated that new business opportunities 
were always possible, none had expressed that they were likely to 
import any software. Specifically, one competitor stated that it has 
``never used offshore resources for anything,'' another competitor 
stated that their software was written ``100% Stateside'' and that 
there was ``no intention to import anything--no software, no code'' and 
a third competitor stated ``no way, no how'' that the company imports 
software. Because all the competitors are domestic, and none of them 
have increased or are likely to increase imports, it is impossible for 
consumers of the software code or software on a physical medium to buy 
an imported product ``like or directly competitive'' to CSC's. 
Obviously, CSC has increased its ``delivery'' of software code to the 
United States, but because software code is not an article for the 
purposes of the Trade Act, such an increase does not qualify to make 
plaintiffs eligible for TAA benefits.

Conclusion

    After reconsideration on remand, I affirm the original notice of 
negative determination of eligibility to apply for adjustment 
assistance for workers and former workers of Computer Sciences 
Corporation, Financial Services Group, East Hartford, Connecticut.

    Signed at Washington, DC, this 24th day of August, 2005.
Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
[FR Doc. E5-4774 Filed 8-31-05; 8:45 am]
BILLING CODE 4510-30-P