Federal Trade Commission Received Documents June 17, 1996 P894219 B18354900162 June 11, 1996 Office of the Secretary Federal Trade Commission Room 1159 Sixth and Pennsylvania Avenue, NW Washington, DC 20580 ATTN: Beth Grossman Division of Advertising Practices Bureau of Consumer Protection Kent C. Howerton Division of Enforcement Bureau of Consumer Protection RE: "Made in USA Policy Comments FIC File No. P 894219 Dear Secretary Clark: Per the request for comments in the FederalRegister dated April 26 regarding the "Made in U.S.A" product marking policy, please note the enclosed questionnaire that we recently returned to the ITC in their "country of origin" marking requirements inquiry. We think that much of it is also relevant to this FTC inquiry. It is incredibly important for our company and our industry to retain strong "Made in USA" marking eligibility standards (and to retain and enforce strong country of origin marking requirements), both for selling domestically and when importing or exporting commodities. It is especially important to retain and enforce proper use of the "Made in US.A." marking eligibility rules that are the responsibility of the FTC. The "all or virtually all" standard absolutely should be continued and strictly enforced. Please do not reduce this standard to a 50% content rule or to a "substantial transformation' standard. The opportunity for abuse and misuse of those concepts are endless, and can be made very subjective, even for a relatively simple product like ceramic tile. For ceramic tile, this issue is really simple. A product is either made in America or it isn't. If it isn't, it should not be eligible to be so marked in order to mislead consumers both in the U.S. and in export markets, to acquire public contracting eligibility in the U.S. or even to avoid payment of import tariffs. In the New World Order that we must compete in, it is imperative that we know where our products come from. If I can ever be of any additional service, feel free to give me a call. Sincerely, SUMMITVILLE TILES, INC. Peter C. Johnson, Jr. Vice Chairman of the Board Director of Sales and Marketing PCJ/jrs COUNTRY OF ORIGIN MARKINGS WORKSHEET Analyst: Linda White Trade Monitoring Group # MM012 Company: Summitville Tiles Inc. Main Products Glazed & unglazed ceramic tiles - Wall tiles, mosaica tiles, bricks. Contract Name and tile: Peter C. Johnson Jr. Vice Chairman of the Board Contact Phone (214) 223-1511 Soon changing to (330) For Interviewing DOMESTIC AND FOREIGN PRODUCERS, AND IMPORTERS-- 1) Does your company have concerns or problems about U.S. or foreign country of origin marking requirements? United States Foreign __x__Yes ____Yes _x___Yes ____No _____No All products should be marked "made in ____" Many Foreigners mark foreign produced tiles as "made in USA" That fraudulent action should be stopped! 2) How important are U.S. or foreign country of origin markings to your customers (i.e., are your customers purchasing preferences influenced by the country of origin of the good)? X very important ____somewhat important ____not important If very or somewhat important, is there any evidence that customers will shift purchases to products marked with a particular country or origin? Customers want "Made in USA" for quality assurances and they want reliable service from Americans who speak English etc. Also important for some government projects and for those of us who prefer our money is kept here in America so we have tax bases to run schools, parks, highways, etc. There are still some Americans who believe it is a patriotic duty to buy American First ! I do! If not important, then why not? 3) What specific problems or concerns does your company have regarding compliance with U.S. country of origin marking requirements administered by agencies of the Federal government, including the U.S. customs Service and the Federal Trade Commission (FTC)? None of these are problems unless you want to cheat! __technical or commercial suitability of marking products __difficulty in tracking origins due to varying sources of supply __increased costs (specify in question #4, below) __difficulty in meeting FTC "Made in USA" labeling requirements (due to necessity of using foreign-origin inputs) __inconsistent application of marking regulations __lack of transparency in U.S. regulations (FTC, customs, DOT, etc.) __lack of harmonization among U.S. regulations (FTC, Customs, DOT, etc.) __implications of customs rules of origin proposals (explain below) __other (specify: there is a high degree of non-compliance especially from Mexico! They even mis-label their products as "Made in USA" Or Print "Made in Mexico" in a discreet manner. Comments (including on-going or recently completed efforts to solve problems): Some Mexican suppliers have written letters stating that their tiles meet "made in USA" requirement because the raw materials came from USA -Shame! 4) Can you identify the major types of costs that comprise your firm's total cost in complying with country of origin marking requirements? (DO NOT INCLUDE COSTS THAT YOUR COMPANY INCURS VOLUNTARILY IN MARKING YOUR PRODUCTS FOR COMPETITIVE REASONS OR FOR MARKETING STRATEGY): None physical marking costs None administrative costs of complying with regulatory agencies None warehousing , accounting, and costs of tracking the use of foreign components None added production costs required for multiple production or marking lines None added marketing/advertising costs incurred in complying with making requirements ____ other (please Specify): We put "Made in USA" on die-ea til is marked. Very simple - no extra cost associated with manufacture. Can you quantify (or estimate) the total cost (as a percentage of net sales) that your company incurs in order to comply with country of origin marking requirements? 0% (Specify percentage amount or range) __no response or cannot quantify Can you estimate how much these costs of complying with marking requirements add to the retail purchase price of the average product? 0 (cents/dollars) added per retail price________(total cents/dollars) of _______ ____________________________(specify product) _________ no response or cannot quantify comments: If someone tells you it costs money to mark their tiles "Made in Mexico" then they are liars! 5(a) What benefits does your company receive from country of origin marking requirements? Lets the buyer know where the product is form. Good for quality assurances and future service requirements. ___ allows consumers to choose the U.S product and the imported product ___ basis for determining quality of materials, workmanship, or service ___ basis for establishing information on conditions of production (including labor conditions, likely kinds of pesticides used, health and safety tests or religious requirements likely satisfied, etc.) ___ basis for price comparisons ___ preserves domestic jobs ___ supports local economy ___ other (specify:____________________________________) comments: It is very important to Summitville tiles to keep country or origin requirements in place and to enforce them. (b) What benefits do you believe the retail consumer receives from country of origin marking requirements? __ allows consumers to choose between the U.S. product and the imported product __ determining likely place of product availability, including replacement parts __ basis for determining quality of materials, workmanship, or service __ basis for establishing information on conditions of production ( including labor conditions, likely kinds of pesticides used, health and safety tests or religious requirements likely satisfied, etc.) __ basis for price comparisons __ preserves domestic jobs __ supports local economy __ enhances labor's bargaining position __ other (specify:_________________________________) comments: What wrong with telling the truth? 6) Does your company mark its products with "Made in USA" Type labeling? __ "Yes" then what benefits do you perceive in doing so? __ preference by wholesale customers __ preference by retail customers __ easier to meet "Buy America" preferences of government agencies __ brand loyalty (for domestic products) __ designates superior quality of materials, workmanship, or service __ other benefits (Specify:________________________________) __ increased unit sales due to competitive preference __ increased unit price, and if so, how much are your customers willing to pay for products bearing a "Made in USA" type label? ___________% (specify percentage amount or range) ____ none ____ no response or cannot quantify __ "no" response ( unable to specify benefits) __ if no, then what might be the reasons? I wish! Our industry is much to competitive! 7) What effect does country of origin marking requirements have on your company's ability to use "made in USA" type labeling? None- the label is printed along with other information on the catalog& Carton. The tiles are marked during production with "Made in USA" on the back of the tile. 8) If your company exports, what specific problems have you encountered with foreign country of origin markings) None ___ lack of transparency in foreign regulations for products exported from the U.S ___ lack of harmonization between U.S. and foreign regulations ___ lack of harmonization among various foreign regulations ___ delays at the border _x__ market access difficulties (Specify: some countries only use products from within their borders for Govt.. Jobs.) ___ re-marking of goods ___ extra duties ___ other (specify:_____________________________) comments: 9) Are you aware of any published studies or information on this issue? If so, could you please tell me of how the USITC can obtain a copy? NO 10) Do you have any other comments or concerns about country of origin markings? 1) keep a strong definition 2) retain these requirements 3) enforce these requirements 4) Represent America and Americans who pay your salaries.