Ericsson, Inc., Brea, CA; Notice of Negative Determination on Reconsideration on Remand

The United States Court of International Trade (USCIT) granted the Secretary of Labor's motion for a voluntary remand for further investigation in Former Employees of Ericsson, Inc. v. Elaine Chao, U.S. Secretary of Labor (Court No. 02-00809).

The Department's initial negative determination for the workers of Ericsson, Inc. (hereafter “Ericsson”) was issued on September 24, 2002 and published in the Federal Register on October 10, 2002 (67 FR 63160). The determination was based on the finding that workers did not produce an article within the meaning of Section 250(a) of the Trade Act of 1974, as amended. The Department determined that the workers develop computer software for other Ericsson units. The petitioners did not appeal to the Department for administrative reconsideration.

By letter to the U.S. Court of International Trade, filed on December 18, 2002, the petitioner requested judicial review. The petitioner asserted that the Department did not conduct a full investigation of the petition, that the workers were misclassified as service providers, and that the Department incorrectly applied the eligibility criteria.

On remand, the Department conducted an investigation to determine whether the petitioners were production workers and, if so, whether the workers were eligible to apply for NAFTA-TAA. The remand investigation consisted of independent research and analysis of software as a commodity and multiple requests of additional information from the petitioners and the subject company regarding the functions of the subject worker group.

The initial investigation revealed that Ericsson is a global supplier of mobile communication systems and solutions, that the subject facility developed software applications for other Ericsson units, the absence of production at the subject facility, and that the petitioning worker group developed software components which enable base station units (controllers) to route cellular phone calls for customers with service contracts with Ericsson. The investigation also revealed that the subject facility did not support an affiliated facility covered by an existing certification.

The remand investigation revealed that the petitioning workers designed and programmed software which enabled base stations (routing equipment) to properly route cellular phone messages pursuant to customers' telecommunication needs. The software was not sold as manufactured products to the general public or sold as a component to an article that is available to the general public.

While the Department considers workers who are engaged in the mass copying of software and manufacturing of the medium upon which the software is stored, such as compact disks and floppy disks, to be production workers, the Department does not consider the design and development of the software itself to be production and, therefore, does not consider software designers and developers to be production workers.

The U.S. Customs Service does not regard software design and development as a tangible commodity and determines the value of software based only on the cost of the carrier media, such as compact discs, floppy disks, records, and tapes. Further, computer software is not listed on the Harmonized Tariff Schedule of the United States (HTS), a code that represents an international standard maintained by most industrialized countries as established by the International Convention on the Harmonized Commodity Description and Coding.

Throughout the Trade Act, an article is often referenced as something that can be subject to a duty. To be subject to a duty on a tariff schedule, an article will have a value that makes it marketable, fungible and interchangeable for commercial purposes. While a wide variety of tangible products are described as articles and characterized as dutiable in the HTS, informational products that could historically be sent in letter form and that can currently be electronically transmitted are not listed in the HTS. Such products are not the type of employment work products that customs officials inspect and that the TAA program was generally designed to address.

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 Ericsson, Inc., Brea, California.