FTC: Made In The USA Comments Concerning Imation Corp.--P894219
August 11, 1997 BY HAND Office of the Secretary Re: Made In U.S.A. Policy Comment Gentlemen: Pursuant to the Commission's notice published in the May 7, 1997, Federal Register (62 Fed. Reg. 25020), Imation Corp. ("Imation") hereby comments upon the Commission's proposed Guides for the Use of U.S. Origin Claims. In particular, Imation expresses support for the so-called second, alternative safe harbor, which is set forth on page 25050 of the Commission's notice. Imation supplies a variety of products and services worldwide for the imaging and information industries. For example, Imation makes products related to medical imaging, data storage, printing, and photography. It also provides a range of customer support services in those fields. Imation generated revenues of approximately $2.3 billion in 1996. It employs 9,400 people and is based in Oakdale, Minnesota. The second, alternative safe harbor allows the marketer to make an unqualified U.S. origin claim where a product undergoes two levels of substantial transformation in the United States. That is, the product's last substantial transformation must take place in the United States, and the last substantial transformation of each of its significant inputs must take place in the United States. Presumably, the second, alternative safe harbor also takes into account any significant input that is wholly of U.S. origin as well. On page 25041, the Commission states its belief that this safe harbor ensures that a "Made in U.S.A." label reflects significant U.S. content and is unlikely to be deceptive to consumers. In support of the second, alternative safe harbor, Imation makes the following three points. First, it endorses the Commission's basic principle, expressed on page 25041, that a marketer making an unqualified U.S. origin claim must have a reasonable basis substantiating that the product is substantially all made in the United States. Imation believes that this is an appropriate precondition for the affirmative use of a "Made in U.S.A." label. Second, Imation approves the use of the concept of substantial transformation as a necessary element of the second, alternative safe harbor. Although not free of interpretative difficulty, over the years this concept has proven to be a fairly reliable indicator of the country of origin. Imation further supports the two-fold definition of "substantial transformation" set out on page 25048. That is, a product will be considered to have been substantially transformed if (1) it would be considered to be substantially transformed under 19 CFR Part 134 and the rulings of the U.S. Customs Service ("Customs") and decisions of the U.S. courts issued pursuant thereto; or (2) it undergoes an applicable change in tariff classification and/or satisfies other applicable requirements set out in the NAFTA marking rules, 19 CFR Part 102. Imation believes that it is important for the marketer to have the choice of either test of substantial transformation. Third, Imation supports the specific terms of the second, alternative safe harbor, drawing upon its own experience in the manufacture of cassettes of color photographic film in two formats, that is, 16 mm and 35 mm. The manufacture of the cassette entails the two levels of substantial transformation required by the second, alternative safe harbor, as the following description confirms. The product, that is, the film cassette, contains one significant input that uses a foreign material. This significant input is the film, however, the last substantial transformation of this significant input occurs in the United States, as described below. A "jumbo" is made in, and imported from, Italy. A jumbo is a roll of bulk film which weighs about 2,000 pounds and is about five feet in width, four feet in diameter, and 8,000 feet in length. The film in the roll is about seven millimeters in thickness. In the United States, the jumbo is transformed into "pancakes" by dividing it into 38 pancakes of a width of 35 millimeters and 83 pancakes of a width of 16 millimeters, each pancake being four feet in diameter. Each pancake is perforated with perforations of an exact size and spacing to permit the proper alignment in a camera and the transporting of the film in and out of the cassette during the picture-taking process. The film is subjected to a series of exposing or "flashing" operations, whereby a series of images is applied through chemical changes caused by the application of different wavelengths of light for differing periods. These include: (i) frame flashing, where frames (for 16 mm film) are flashed on; (ii) arrow flashing, where direction arrows are flashed on; (iii) number flashing, where frame numbers are flashed on; (iv) identity flashing, where the seller's name is flashed on; (v) emulsion flashing, where emulsion numbers identifying the emulsions used on the film are flashed on; and (vi) bar code flashing in the DX format (for 35 mm), where this information is used by the photo finisher to set the color balances during the developing and printing processes. The film is then cut to the exact length required for each cassette. The finished product - that is, the film cassette - is manufactured in the United States and last substantially transformed in the following way. In the case of the 16 mm film, the cassette is made up of the following five parts, the first three of which are wholly made in the United States(1) : a plastic body, plastic cover, plastic spool, backing paper(2) , and the transformed film. The plastic parts are automatically fed to the transport fixture, which conveys the parts to a darkroom for film loading and assembly. The darkroom consists of spoolers, spool staking, cassette-closing and ultrasonic welding station, and automatic quality checks. The spoolers wind the film and backing paper (for light protection) into a scroll, which is transferred to the plastic body. Next, the backing paper is heat staked to the plastic spool, which is used to advance the film in cameras. After heat staking, the plastic cover is automatically loaded onto the plastic body and ultrasonically welded to complete the assembly. The 16 mm cassette is now loaded and sealed. In the case of the 35 mm film, the cassette is made up of, in addition to the film, four parts, all of which are made in the United States. These include a metal cylinder, end caps, plastic spool, and velvet strips. The cassette is made from a section cut from a U.S.-printed metal sheet. An electrically readable encodement of speed, exposure index, number of exposures, and recommended exposure latitude is applied to the exterior of the cassette via a pattern of conductive or insulating areas. The metal cylinder, plastic spool, and velvet strips are automatically fed to the transport fixture, which conveys the parts to a darkroom for loading and assembly. The darkroom consists of one spooler and cassette-closing station. The spooler winds the film onto the spool, and the spool is placed within the cassette. The cassette is closed by attaching the two end caps to the cylinder and sealing the opening of the cassette with the velvet strips. The strips provide protection from light and scratching. The 35 mm cassette is now loaded and sealed. The 16 mm and 35 mm cassettes are subjected to a drying process to reduce the relative humidity to specific levels designed to achieve a proper balance between photographic performance and handling. In order to retain the proper level of relative humidity, the 16 mm cassette is wrapped in a metallic foil, and the 35 mm cassette is placed in a plastic container. The cassettes are now ready for packaging and shipment. This description confirms that the significant input - the 16 mm and 35 mm film - is last substantially transformed in the United States. That is, the imported jumbo undergoes a process of substantial transformation that results in individual units of 16 mm and 35 mm film prepared for use in the film cassette. The description further confirms that the product - the cassette - is last substantially transformed in the United States. That is, the film and individual plastic and other parts undergo a process of substantial transformation that results in a loaded cassette ready for use in a camera. At each level there is the requisite change in name, character, and use. Accordingly, if the Commission adopts the second, alternative safe harbor as proposed, Imation's cassettes could appropriately be labeled "Made in U.S.A.". In response to the Commission's express solicitation on page 25044, Imation expresses its view that the second, alternative safe harbor is likely to ensure that a product promoted as "Made in U.S.A." will be substantially all made in the United States. Imation commends the Commission for its useful work in this field. Sincerely yours, John B. Rehm 1. Because the plastic body, plastic cover, and plastic spool are wholly made in the United States, a discussion of where the last substantial transformation of these significant inputs was made is unnecessary. 2. The backing paper is also substantially transformed in the United States. It goes through several processes in the United States, including notching with holes for alignment with the film and cutting into prescribed dimensions for the film format. |