Federal Trade Commission Received Documents Jan 22 1996 B18354900104 Secretary POWELL, GOLDSTEIN, FRAZER & MURPHY ATTORNEYS AT LAW Sixteenth Floor Sixth Floor 191 Peachtree Street, N.E. 1001 Pennsylvania Avenue, NW Atlanta. Georgia 30303 Washington, D.C. 20004 404 572-6600 202 347-0066 Facsimile 404 572-6999 Facsimile 202 624-7222 January 22, 1996 Office of the Secretary Federal Trade Commission (FTC) Room 159 Sixth and Pennsylvania Avenue, NW Washington, DC 20580 "Made in USA" Policy Comments FTC File No. P894219 Dear Secretary Clark: On behalf of Caterpillar Inc., we respectfully submit the following comments with regard to the Federal Trade Commission's request for comments as published in the Federal Register on Wednesday, October 18, 1995 (60 Fed. Reg. No. 201 53922). Caterpillar Inc. is a leading manufacturer of construction and mining equipment, natural gas engines, industrial gas engines and diesel engines. We submit that the current policy for requiring products labeled "Made in USA" to be manufactured almost entirely with United States materials and labor is inconsistent with modem manufacturing practice. Rather, we recommend that the FTC's standard for "Made in USA" labeling should be harmonized with country of origin marking requirements administered by the United States Customs Service. The FTC has long taken the position that a product may not be labeled with an unqualified "Made in USA" claim unless it is composed entirely, or almost entirely, of U.S. materials and components and unless it is manufactured entirely, or almost entirely, with U.S. labor. The FTC has advised that the presence of any significant foreign components precludes an article from being labeled "Made in USA" even where those components are subjected to further processing in the U.S. during the course of manufacturing. In today's manufacturing environment, products made in the U.S. with the use of foreign-origin components do contain a high degree of U.S. value added. Product research, design and engineering activities are conducted in the United States. Capital-intensive and labor-intensive manufacturing operations performed in the U.S. transform domestic and imported components into new and unique articles of commerce with names, characteristics and uses different from those of the components. These products are "Made in the USA" under any reasonable commercial standard and are recognized as such when exported to foreign markets. For example, when these products are exported to Canada or Mexico, they are required by the NAFTA Marking Rules to be labeled "Made in USA." Moreover, in today's global marketplace, U.S. purchasers of capital products are sophisticated consumers and realize the realities of multiple sourcing for components. We feel that domestic content should be measured via a "substantial transformation" standard as required under customs laws. Value based systems are too onerous and costly. Companies should not be faced with an additional regulatory standard with regard to country-of-origin marking information. In the global competition of today, U.S. companies should not be burdened with additional costs which result from multiple origin marketing requirements. Respectfully submitted, Richard M. Belanger