Federal Trade Commission
Received Documents
Jan 17 1996
B18354900057
Secretary

DEERE & COMPANY
JOHN DEERE ROAD, MOLINE, ILLINOIS 61265-8098 U.S.A.

RICHARD E. ANDERSON
Assistant General Counsel

January 1996

Mr. Robert Easton
Special Assistant-Enforcement
Federal Trade Commission
Washington, D.C. 20580

Re:  "Made in USA" Product Advertising and Labeling Claims

Dear Mr. Easton:

While Deere & Company does not wish to be a participant in the public workshops that the
Federal Trade Commission (Commission) will be scheduling, we would like the Commission to
consider the following comments in evaluating any change in the current standard applicable to
"Made in USA" product claims:

1.       In the process of manufacturing complex machinery, many components are outsourced
and are shipped to the manufacturer in an assembled state.  Unknown to the manufacturer some
of the parts of the purchased component may be foreign sourced.  Many problems will be faced in
determining the source of all such subcomponents and then determining under the proposed
formula the "Domestic Content" of a finished product.

2.       The proposed formula appears to be based on a total cost approach with respect to the
finished product.  The cost basis appears to include the cost of foreign sourced components.  The
formula may in certain scenarios disadvantage a U.S. manufacturer with a higher percentage of
U.S. content and with presumably higher costs.  Foreign sourced components will likely be less
costly and may, therefore, understate the value of these components to the finished product, and
with minimal U.S. input may therefore be acceptable under whatever percentage figure is set by
the Commission under the proposed formula.  The point is that we are not comfortable the
proposed formula will create a level playing field for competitors who wish to use the "Made in
USA" claim.

3.       As recently as 1991 the Commission"s own consumer perception study showed that 77%
of the buying public believed that "Made in USA" claims meant "all or nearly all" of a finished
product was manufactured in the U.S. It is unlikely there has been any change in consumer
perception with respect to this issue.  Based on this level of consumer confidence in the "Made in
USA" claims, any change from the current standard would have to be explained in detail to
consumers so that those who desire to buy American made products know what they are
purchasing.  It is certainly foreseeable that the value of the claim becomes meaningless to
consumers if the percentage is not sufficiently significant, particularly if a large number of the
77% of the buying public in responding to the survey meant "all" vis-a-vis "nearly all." The
consumer protection aspect of the current standard should not become lost during the
Commission's review.  If the impact of the claim is important to consumers, then the standard
should be set at a-significant threshold. (See for example the Commission's restrictions placed
upon the term "free" in advertising.)

4.       There are currently available alternative claims that advertisers can utilize if their product
is not entirely domestic content.  If such alternatives are not acceptable to them, that is reflective
of the importance of the claims based on consumer expectations.  A product assembled in the
U.S. of foreign sourced components can currently be labelled as such and accurately informs the
consumer of the domestic content.

As the review process goes forward the Commission should also keep in mind that the processes
involved in manufacturing complex machinery is different from the processes involved in the
manufacture of shoes or other less complex products.  The ability of a manufacturer to avail itself
of the claim based on the adopted standard should not be determined by the manufacturers
inability to apply a formula to its products.  The simplicity of the current standard has
considerable merit.

Very truly yours,

Richard E. Anderson

REA/pm

cc:      Mark C. Rostvold, Executive Offices
         Robert L. Anderson, Government Affairs