Federal Trade Commission Received Documents Jan. 17, 1996 B18354900053 NATIONAL KNITWEAR & SPORTSWEAR ASSOCIATION 386 Park Avenue South Nnew York, N.Y. 10016 (212) 683-7520 Telex: 239801 Knit UR/Fax: (212) 532-0766 January 15, 1996 Office Of The Secretary Federal Trade Commission Room 159 Made in USA Policy Sixth and Pennsylvania Avenue, N.W.FTC File No. P894219 Washington, D.C. 20580 This is in response to the Commissions request for comment on questions relating to the terms "Made in USA" as published in the Federal Register on October 18, 1995. The NKSA is a national trade association representing U.S. manufacturers and contractors, design studios and related businesses engaged in the production of knitted sportswear and knit products of all types, including sweaters, knit shirts, knit dresses and separates, sweatshirts, headwear, leggings and a variety of similar and related products. For the most part, our members are smaller and medium sized companies and are engaged in domestic manufacturing. We are not aware of any of our companies that is operating any factories outside the US, although some import part of their product line and many, on occasion, use some imported yarns. At this point, we see little reason to change the standards currently in place. A limited survey of our manufacturing companies indicates a split between those preferring to see the current labeling requirements for garments to remain in effect, so that, for example, garments like sweaters, that are knit in the US of imported yarns would be labeled "Made in USA of Imported Yarn" and those wishing to see such goods entitled to be labeled "Made in USA." Their positions are similar regarding cases in which garments cut and sewn in the U.S. of imported fabric, although some feel that using imported fabric in a cut and sewn garment should necessitate separate identification even though using imported yarn should not. The rationale for that is that in sweater knitting, the fabric itself is being knit in the US and then assembled into a final garment, a form of double transformation in the Customs usage sense, whereas in the cut and sew product, with the fabric imported, a major part of the total production is being done outside the US and there is but a single stage of transformation. We emphasize, however, that this was a limited survey and a limited response, albeit involving responses from some of the more substantial sweater manufacturers mid jobbers in the country. This survey did not attempt to assess consurner beliefs, or even the views of the industry regarding consumer beliefs. We find it difficult to see any serious justification for changing established labeling requirements by altering the meaning of language that has been accepted by consumers for years. When production is globalized, consumers can be told they are buying a globalized product. Changing the meaning of established terms to permit a Made in USA label when less and less of the whole product is made in the US, whatever might be its propriety were we starting from the beginning, at this stage is likely only to mask the truth about the locus of actual production from consumers. Surely this is not the spirit of the marking and identification laws. At the same time, however, we recognize that the word "Made" in "Made USA" easily could be taken more literally to mean "assembled" or "fabricated" and need not automatically carry weight as a statement of origin of the materials used to "make" the product. Thus, a sweater is "made" of yarns which themselves are "made" of fibers, of some origin. The final fabrication ("making") of the garment in the US, where yarn is transformed into fabric and thence into garment may be the crucial point for consurners, as opposed to the origin of the yarns, or the provenance of the machinery on which the production operations took place, etc. Indeed, the requirement that goods labeled "Made in the USA" of imported yarns, so label the "imported yarns" suggests clearly that the initial designers of these rules were not totally comfortable that "Made in USA" by itself in fact could reliably be assumed to describe anything other than fabrication. If yarns were "made" in the US, and were knit and assembled into finished garments elsewhere, we assume the Commission would not be comfortable to have them labeled, "made in the USA, fabricated and assembled overseas." This would produce total confusion. At the consumer stage, it is not yarns that are being bought, or even in most cases fabric, but a finished product. It is this final product whose origin is of interest to the consurner and the rule maker, although there are nksa p.3 many situations and products in which the components are a key part of the consumer buying decision. Over time, and under the pressure of government directed policy, much of the garment industry has been moved outside the United States, whether for the sourcing of materials such as yarns and fabric, or even for the sourcing of sewing labor. Nonetheless, years of practice have established a meaning for "Made in USA" which in fact goes beyond the "making" to the major components. If business practices are changing, then compaines should be expected to change their labels accordingly rather than to have the government rework the rules and adulterate the language from its present established meaning. Even if not completely descriptive, the language of the current rules is better understood as including key components than any change would be which permits the introduction of foreign components without so labeling them. Reducing the content requirement needed to carry the MIUSA label at this pohit would not be consumer protection so much as consumer misdirection. We will be most interested to see the exposure of any true consumer studies done in this area, and to consider the results of any proposals emanating from the "workshops" planned by the Commission. very truly yours, Seth M. Bodner Executive Director National KNitwear and Sportswear Association