Federal Trade Commission Received Documents July 1, 1996 P894219 B18354900191 VAUGHAN July 1, 1996 Office of the Secretary Federal Trade Commission Room 159 Sixth and Pennsylvania Avenue, N.W. Washington, DC 20580 Re: Made in USA Policy Comment, FTC File No. P894219 To Whom It May Concern: Vaughan & Bushnell Manufacturing Company ("Vaughan & Bushnell") respectfully submits Comments to the Federal Trade Commission regarding the "Made in USA" policy consideration. Vaughan & Bushnell endorses the Comments submitted by the American Hand Tool Coalition. As a United States manufacturer that competes successfully in world-wide markets, Vaughan & Bushnell believes that the Commission should retain its current "all or virtually all" standard for determining whether unqualified "Made in USA" claims are deceptive under the Federal Trade Commission Act ("the F.T.C. Act"). See 15 U.S.C.  45(a)(1) (Supp. 1995) (prohibiting "unfair or deceptive acts or practices in or affecting commerce"). Under the current standard, a "Made in USA" claim informs consumers that all or virtually all of a product is of U.S. origin. If the standard is weakened, however, products with more than de minimis foreign components and labor also will be able to claim to be "Made in USA". Consumers will have no basis on which to distinguish between genuine domestic products from those with foreign content. In addition, weakening the current standard will further encourage large multinational manufacturers to shift production overseas and increase outsourcing, effectively shipping U.S. jobs overseas and sacrificing the quality associated with domestic production. Smaller businesses, which have been the backbone of increased jobs in the U.S., do not have the financial resources or flexibility to build their own factories in foreign countries. However, these smaller companies would be forced to reduce their domestic production and move some sourcing overseas, thus reducing jobs in the U.S. This shift of production overseas will further undermine the meaning of "Made in USA to consumers. Survey research indicates that consumers associate the "Made in USA" claim with high-quality products, and buy "Made in USA" products to support U.S. jobs. If the "all or virtually all" standard were weakened neither of these messages would be truthfully conveyed by the "Made in USA" claim on products that, in fact, were made with foreign components or labor. None of the alternative standards proposed in comments submitted to the Commission or at the March Workshop is rooted in the fundamental consumer protection principle embodied in the F.T.C. Act. Once that principled basis for a standard is abandoned, the consideration of alternatives becomes a question simply of whose marketing interests to serve. This problem is glaringly apparent in the draft document worked on by some industry representatives entitled the "Guidelines for Making U.S. Origin Advertising and/or Labeling Claims" ("Guidelines").1/These Guidelines are very complicated and combine a sufficient number of alternative standards so that each of the signatories can meet at least one. The Guidelines' disregard for consumer deception is particularly evident in its suggestion of a "Wholly Made in USA" label for products that meet the current "all or virtually all" test, while assigning the unqualified "Made in USA" claim to products with varying degrees of foreign components, processing, and labor. Undoubtedly, the new "Wholly Made in USA" label is acceptable to the Guidelines' signatories because they are confident that it will not pose a marketing threat to their products bearing the newly diluted "Made in USA" claim. In other words, they apparently expect that consumers will assume that "Wholly Made in USA" and "Made in USA" mean the same thing. Based on Vaughan & Bushnell's more than 125 years of selling hand tools to American consumers, this expectation is probably correct. Only the most vigilant consumer would notice the difference between the two claims, and even if the distinction were noticed the consumer would have no basis by which to discern the different meanings of the two phrases. Consumers are more likely to assume that "Wholly Made in USA" and "Made in USA" refer to all or virtually all domestic origin, particularly when the two competing products are sold by domestic brand-name companies. As discussed in the Comments submitted by the American Hand Tool Coalition, the percentage content and substantial transformation standard for "Made in USA" claims also would deceive a substantial proportion of consumers. While these alternatives might benefit certain industries, they have nothing to do with the Commission's mandate to prevent consumer deception. Indeed, the record before the Commission contains no evidence showing that abandoning the long-standing "all or virtually all" test for "Made in USA" claims would reduce consumer deception. On that basis, Vaughan & Bushnell urges the Commission to reject proposals to weaken the current standard and recommends instead that it be retained. We would be pleased to respond to questions or provide the Commission with additional information. Sincerely, VAUGHAN & BUSHNELL MFG. CO. G. Farlin Caufield Executive Vice President ___________________________ 1 The Guidelines were circulated for consideration to the American Hand Tool Coalition, of which Vaughan & Bushnell is a member. An analysis of the Guidelines is included in the Coalition's Comment to be submitted to the Commission on July 1, 1996. Vaughan & Bushnell's observations are based on a draft of the Guidelines dated June 23, 1996.