Federal Trade Commission
Received Documents
July 1, 1996
P894219
B18354900188



            "MADE IN USA" POLICY COMMENT SUBMITTED BY 

         THE ASSOCIATION OF HOME APPLIANCE MANUFACTURERS

                       FTC FILE NO. P894219






                     Office of the Secretary
                     Federal Trade Commission
                             Room 159
               Sixth and Pennsylvania Avenue, N.W.
                      Washington, DC  20580

                           July 1, 1996


                   Made in USA Policy Comments
                      (FTC File No. P894219)

     The Association of Home Appliance Manufacturers ("AHAM") appreciates the
opportunity to file supplemental comments on the Federal Trade Commission's ("FTC") policy on
"Made in USA" claims.  AHAM is an international trade association that represents manufacturers
of both major and portable home appliances.  AHAM members sell approximately 160 million
appliances annually.

     In earlier comments on this issue, AHAM asserted its belief that the current "Made in
USA" policy is outdated and obsolete.  This policy only allows a manufacturer to claim that its
product is "Made in USA" where all, or virtually all, of the component parts of that product are
made in the United States and all, or virtually all, of the labor in assembling the product is
performed in the United States.  This policy reflects manufacturing conditions that have not been
present in the United States for more than thirty years.  During the 1950s and 1960s, the
manufacturing base of the country was broader and it was exceptional if a consumer product was
not made entirely in the United States of materials originating here.

     Business and manufacturing conditions are dramatically different today.  Manufacturers
operate in a global economy where few products are made solely in one country of wholly
domestic components.  Indeed, for appliance manufacturers, certain component parts cannot be
sourced within the United States.  Consequently, the current "Made in USA" policy unfairly
penalizes manufacturers in many industries -- including the appliance industry -- and deprives
consumers of the ability to choose products whose domestic content is significant, but not total.

     AHAM suggested that the FTC adopt the Preference Rules in Chapter Four of the North
American Free Trade Agreement ("NAFTA rules") as an appropriate, viable, and current
alternative to the "all or virtually all" policy.  The NAFTA rules represent an exhaustively
negotiated precedent for determining when a product is "Made in USA."  Under the NAFTA
rules, a product originates in the United States if:  (1) over 50 percent of the product is of
domestic origin using the net cost method, or (2) more than 60 percent of the product is of
domestic origin using the transaction value method.

     For major appliances, rather than specifying a percent content requirement, the NAFTA
rules identify certain defined components that have to be made in either Mexico, Canada or the
United States to qualify the finished product as "North American."  Adapting the NAFTA rules
for "Made in USA" claims would simply require a major appliance manufacturer to substantiate
the production of these defined components in a United States factory in order to make an
unqualified United States origin claim.

     AHAM continues to urge the FTC to adopt the NAFTA rules, and expressly endorses the
"Made in USA" Guidelines submitted to the FTC by AHAM, The International Mass Retail
Association ("IMRA"), The Stanley Works, The American Association of Exporters and
Importers ("AAEI"),  The Automotive Parts and Accessories Association, The Bicycle
Manufacturers Association of America, The Electronic Industries Association ("EIA"), and 3M,
as a means of achieving the goal of creating a viable "Made in USA" standard.  Those Guidelines
include the NAFTA rules as one of three "safe harbors" for entities making unqualified "Made in
USA" claims, and offer a number of examples to assist manufacturers.  AHAM believes that the
Guidelines represent a good faith effort on the part of a number of industry groups to achieve a
workable guidance document that reflects the current state of consumer perception and global
manufacturing.

     In addition, the Guidelines are responsive to a number of questions posed by the FTC in
its April 26, 1996 Federal Register Notice.  AHAM believes that the Guidelines move this process
several levels beyond the March 26-27 Workshop and provide the FTC with the basis for
adopting a new policy.

     AHAM is grateful for this opportunity to present its views on this important issue and
welcomes additional opportunities to participate in the FTC's ongoing review of the "Made in
USA" policy.  For additional information, please contact J. Stephen Zielezienski, AHAM Counsel,
at (202) 434-7337.

F1/54933.1