FTC: Made In The USA Comments Concerning Carter Footwear Inc.--P894219 August 8, 1997 Donald S. Clark ATTN: "Made in USA Policy Comment," FTC File No. P894219 Dear Mr. Clark, Carter Footwear offers the following comments on the Federal Trade Commission's (FTC) proposed guides for the use of U.S. origin claims. Overall, we think the FTC has succeeded in establishing a reasonable and flexible set of guidelines for "Made in USA" and other U.S. origin claims in product advertising and labeling. The proposed guidelines are a significant improvement over the current standard and far better reflect the practical realities of U.S.-manufactured products in today's global marketplace. One specific area in which Carter Footwear seeks additional clarification relates to the proposed new standard for making qualified claims of U.S. origin. Carter Footwear manufactures shoes in the Dominican Republican from U.S. materials pursuant to U.S. Note 2(b) to subchapter II of chapter 98 of the Harmonized Tariff Schedule. This provision of U.S. trade law permits the duty-free import of these shoes into the U.S. provided they are made entirely of U.S. materials. The question for the FTC is: what is an acceptable origin claim for the shoes made in the Dominican Republic from U.S. materials (for purposes of advertising and labeling)? Carter Footwear's preference is to make the following qualified claim: Made in the Dominican Republic from U.S. materials. We are obviously not trying to claim that the finished shoe itself is made in the U.S. -- only that its component materials are of U.S. origin. The issue is, when making such a qualified claim for purposes of advertising/labeling, what standard must be met to claim U.S. origin for the component materials of the product? For example, a piece of canvas from India that is dyed, treated and cut to shape in the U.S. is considered to be U.S. material for purposes of qualifying for duty free treatment pursuant to U.S. Note 2(b) to subchapter II of chapter 98 of the HTS. Under the proposed FTC guidelines, would it be permissible to say the shoe made from such canvas (and other U.S. components) is made in the Dominican Republic from U.S. materials? Our review of the proposed FTC guidelines do not provide a clear answer to this question. Section IX. "Qualified U.S. Origin Claims" provide a number of "safe harbor" options for making qualified claims. However, the listed options do not apply to the situation we describe above. The "qualifications" in those examples all relate to the origin of the finished product, not the method of determining the origin of the component parts. Elsewhere in the proposed guidelines (Section VII.A.), there is discussion of the relationship of the FTC guides and the Tariff Act. The FTC says that where the Tariff Act requires that an article be marked with a particular foreign country of origin, any U.S. origin claim appearing on the article or container should comport with the Tariff Act requirements. Does this mean that the FTC will permit a "Made in the Dominican Republic from U.S. components" label if such a label is permitted by the Customs Service under the Tariff Act? Because of the uncertainty of applying the proposed FTC guidelines to the situation we describe, Carter Footwear requests further guidance from the Commission in this area. We also believe that it is consistent with the purposes of the guidelines to permit a qualified U.S. origin claim in the circumstances we have presented. We, therefore, urge you to clarify that this is a permissible claim under FTC's new guidelines. We would be pleased to provide you with any additional information that would be useful to you. Thanks for the opportunity to comment on the proposed guidelines. Sincerely, Howard Gonchar |