FTC: Made In The USA Comments Concerning Michael Korchmar--P894219
July 31, 1997
Office of the Secretary
Dear Mr. Secretary:
The FTC's proposed changes in criteria for unqualified claims of Made in the USA country of origin represent an improvement over the previous "all or virtually all" rule. However, the proposed 75% of value rule falls short of what is reasonably possible for the few remaining American manufacturers to achieve. The proposal combines the origin of materials and labor. As a result, an article of commerce's country of origin is confused with the origin of its components, a distinction the average consumer does not make or seek.
Today's global economy makes it virtually impossible to entirely manufacture any article with American-made components. For example, the primary raw material leather in the leather goods industry often represents 60% of the product value. Under the current and proposed FTC guidelines, it is difficult to manufacture a "Made in the USA" product unless the leather is of American origin. However, the domestic leather tanning industry has drastically declined in size over the past 15 years and produced some of the most costly leather in the world. The other industries that support leather goods manufacturing companies, such as hardware manufacturers, have also declined in size and produce components at noncompetitive prices. The result is that the few remaining American leather goods manufacturers must be able to market the unique "Made in the USA" label to have any hope of competing with low labor cost countries.
The net result of the FTC continuing to impost unrealistic country of origin marking requirements will be the continued decline of the American leather goods industry. Domestic leather goods manufacturers cannot source American materials and components at a cost or in a style that is marketable today. Therefore, domestic manufacturers are forced to use raw material from other parts of the world to produce a product that the American consumer wants to buy. The end product, a wallet, briefcase, or piece of luggage is truly "Made in the USA" regardless of the country of origin of its materials.
The more significant issue is where the skilled labor was performed that transformed raw materials into a new and unique article of commerce. If the product was assembled in the United States then the article was "Made in the USA." LLGMA's recommended "over 50% value" rule succeeds as a realistic standard for the Made in the USA standard.
The FTC proposed 75% value rule, like the current guideline, imposes a standard which exceeds the average consumer's expectations. Combining the end product's country of origin with that of the component parts or raw materials used to produce it to achieve the 75% value rule is a false standard which results in little value for consumers. For example, when a consumer buys an American automobile, he assumes the car was manufactured domestically; i.e., American labor transformed the steel, rubber and electrical parts at a domestic manufacturing facility into an American-made automobile. The consumer is not concerned with the country of origin of each component of the automobile.
In the leather goods industry where a high percentage of the product's value is concentrated in one raw material, it is unrealistic and unnecessary to require that more than 50% of the product's value be of domestic origin. American leather goods manufacturers cannot meet the guideline and American consumers do not expect the higher standard. I support LLGMA's "over 50%" value rule or a standard that applies to the labor content of an article of commerce "Made in the USA." LLGMA's proposed 50% standard achieves the FTC's goal of providing the consumer with accurate information while offering the leather goods industry an incentive to employ Americans to produce leather goods.