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HQ 115676

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May 24, 2002

RES-3-RR:IT:EC 115676 GEV

CATEGORY: RESTRICTED MERCHANDISE

Robert J. Leo, Esq.
Meeks & Sheppard
330 Madison Avenue
39th Floor
New York, N.Y. 10017

RE: Convict Labor; Packaging; 19 U.S.C. § 1307

Dear Mr. Leo:

This is in response to your fax of April 30, 2002, enclosing a copy of your letter to us requesting a ruling regarding the admissibility of merchandise packaged by convict labor. Our ruling on this matter is set forth below.

FACTS:

The consumer product, women’s plastic beauty accessories, will be manufactured in a country in Europe in a private, non-penal factory. Clear, rectangular blister packs and printed inserts for the product will be manufactured in a second country in Europe, also in a private, non-penal institution. The finished product, blister packs, and printed inserts will be sent to a prison for white collar criminals in Europe where the prisoners will place the inserts and the product in the blister pack, snap the pack closed, and then staple it. The product will be plainly visible through the packs. No further processing or operations will be done to the product, inserts, or the blister packs. The packaged product will then be placed inside a larger shipping container which will be picked up from the prison by a forwarder for shipment to the United States.

The prisoners will have a choice of whether or not to participate in the packaging operation and will be paid for their labor. This packaging operation will cost only 15% of the cost of the finished, packaged product.

ISSUE:

Whether the packaging of merchandise by convict labor is an operation whereby such merchandise is considered to be “manufactured in part” by such labor so as to be within the purview of the prohibitions contained in 19 U.S.C. § 1307.

LAW AND ANALYSIS:

Title 19, United States Code, § 1307 (19 U.S.C. § 1307), provides, in pertinent part, as follows:

All goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict laborshall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited (Emphasis added)

The Customs Regulations promulgated pursuant to 19 U.S.C. § 1307 are found at title 19, Code of Federal Regulations, §§ 12.42-12-45 (19 CFR §§ 12.42-12.45).

With respect to the issue under consideration, neither the plain language of the statute nor its legislative history provide any degree of guidance upon which Customs may rely, the latter only reflecting the Congressional intent to protect domestic producers and workers from unfair competition that would result from the importation of foreign goods produced by forced labor, only allowing access to such goods when they are in short supply domestically. (See McKinney v. United States Dep’t of Treas., 799 F.2d 1544, 1557 (Fed. Cir. 1986)) Furthermore, neither the courts nor Customs have ever ruled on whether the mere packaging of a product by convict labor falls within the scope of the phrase “manufacturedin part” set forth in 19 U.S.C. § 1307.

Notwithstanding this dearth of legislative, judicial and administrative authority in this matter, we nonetheless find instructive a 1928 Opinion of the Attorney General (35 Op. Atty. Gen. 500) addressing the issue of whether phosphate rock that was mined by convict labor was considered to be “manufactured wholly or in part” within the meaning of 19 U.S.C. § 1307. Although this decision predates the amendment to this statute which included “mining” by convict labor as a prohibited activity enumerated thereunder, it thus far constitutes the sole
adjudication of this statute that is interpretive of the operative language in this case and therefore merits our review as set forth below.

At the outset, we note that the Attorney General, upon reviewing the entirety of the original statutory text (§ 301 of the Tariff Act of September 21, 1922; 42 Stat. 858), stated that:

A reading of the entire statute does not justify the inference that Congress used the term “manufactured” in any loose, colloquial, or general sense. On the contrary, throughout the Act the discriminating choice of words in describing various industrial processes reveals an intent to use language with accuracy and even nicety. (35 Op. Atty. Gen. 500, 503)

The Attorney General further provided that:
when Congress in section 307 used the word “manufactured”we are justified in applying it only where it is plainly appropriateI do not find that the courts have attempted to frame a completely inclusive and exclusive definition of the word manufactured. It is a term of description rather than definition. Certain principles, however, have been settled. Id. at p. 504

In regard to the above-referenced principles, the Attorney General’s Opinion cited two cases decided by the Supreme Court. In Hartranft v. Wiegmann, 121 U.S. 609 (1887), the Court determined that shells subject to cleaning, grinding and possible etching were not manufactured. The Court opined that, “The application of labor to an article, either by hand or by mechanism, does not make the article necessarily a manufactured article, within the meaning of that term as used in the tariff laws.” (Emphasis added) Id. at p. 615

In Anheuser-Busch Brewing Association v. The United States, 207 U.S. 556 (1908), the other Supreme Court cased cited by the Attorney General, the Court held that the mere subjecting of corks to a cleaning and coating process to adapt them to a special use did not amount to a manufacturing for purposes of the drawback statute. The Court stated:

Manufacture implies a change, but every change is not a
manufacture, and yet every change in an article is the result of treatment, labor and manipulation. But something more is necessary, as set forth and illustrated in Hartranft v. Wiegmann, 121 U.S. 609. There must be transformation; a new and different article must emerge, ‘having a distinctive name, character or use.’

In discussing the applicability of the aforementioned principles in cases adjudicated under the customs laws, the Attorney General cited numerous cases of the Court of Customs Appeals. In one of these cases the court stated that:

It may be generally said that it has been uniformly held in customs interpretation that the application of processes necessary to produce an article from its native condition and to bring it into a condition that it may be imported, without affecting its per se character, is not regarded either as a manufacturing process or as a process advancing it in value or condition. Hampton, Jr. & Co. v. United States, 6 Ct. Cust. Appls. 392, 395 (1915)

Although not directly addressing the provisions of 19 U.S.C. § 1307, the three cases cited above discuss principles which, collectively, lead us to conclude that the blister packaging described herein, although indisputably a process effected by convict labor, does not rise to the level of “manufacturing” for purposes of that statute. Such labor does not change the name, character or use of the consumer product in question (women’s plastic beauty accessories). These products, once subjected to the aforementioned blister packaging, will therefore not be considered as “manufacturedin partby convict labor” within the meaning of 19 U.S.C. § 1307.

Further support for this conclusion is found in China Diesel Imports, Inc. v. U.S., 855 F.Supp. 380 (CIT 1994). Although this decision did not address the operative language in question, it did provide some guidance as to the protectionist parameters of the statute. In addressing evidentiary standards with respect to actions arising under this statute, the court stated, “Additionally, § 1307 only prohibits the entry of merchandise that ‘actually contains ‘wholly or in part’ components made with prohibited labor.” Id. at p. 384, citing Enforcement of U.S. Prohibitions on the Importation of Goods produced by Convict Labor: Hearing before the Subcommittee on Int’l

Trade of the Senate Comm. on Finance, 99th Cong., 1st Sess. 53, §II, ¶ C (1985) (emphasis added) (“Evidentiary Standards”) As stated in the FACTS portion of this ruling, the product, the blister pack, and the inserts will be made with non-penal labor, not convict labor which will merely effect the packaging of these components.

HOLDING:

The packaging of merchandise by convict labor is not an operation whereby such merchandise is considered to be “manufactured in part” by such labor so as to be within the purview of the prohibitions contained in 19 U.S.C. § 1307.

Sincerely,

Jeremy Baskin

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