FTC: Made In The USA Comments Concerning Charles E. Mercer--P894219
MADE IN USA POLICY COMMENT
Union Label & Service Trades Department, AFL-CIO
Federal Trade Commission (FTC)
"Proposed Guides for the Use of U.S. Origin Claims"
(FTC File No. P894210)
The Union Label & Service Trades Department, AFL-CIO, (UL&STD) opposes adoption of the "Proposed Guides for the Use of U.S. Origin Claims" in product labeling and marketing that were published in the Federal Register of May 7, 1997.
Any new standard for use of the "Made in USA" claim should promote the employment of American workers and the use of American production facilities, should maintain the value and the credibility of the "Made in USA" claim, and should be easily understood by the American consumer. Under any standard, the consumer must be able to be confident that the "Made in USA" claim states clearly what it means and means what it says.
The "Proposed Guides" would do and be none of the above.
Instead, by permitting more foreign content the "Proposed Guides" would result in fewer American workers and on-shore production facilities being involved in the manufacture of goods that could carry the "Made in USA" label, would cheapen the value and severely weaken the credibility of the "Made in USA" claim, and would make the claim, in effect, an FTC-approved deception of the American consumer.
The "wholly . . . domestic origin" standard that was in use for decades was clear on its face. The recent requirement for "all or virtually all" U.S. parts and labor is a step back from that standard, but still clearly is intended to mandate an extremely high level of U.S. content for use of the "Made in USA" claim.
The "substantially all" criterion of the "Proposed Guides," however, in our view, amounts to a headlong retreat from any effort to keep "Made in USA" claims honest, i.e. make them mean what they say. This is especially clear when "substantially all" is measured against the "safe harbors" offered in the "Proposed Guides."
The first "safe harbor" -- "75% U.S. content" -- cannot pass the test of common sense to be considered "substantially all" made in the U.S., even with no attention to where it might be "last substantially transformed." Foreign content of 25% would be on its face much more than the "relatively minor amount of foreign content" the Commission says in its Federal Register Notice (page 56) it believes the consumer is prepared to accept in a product labeled "Made in USA."
In addition, because of much lower wages in countries like China, Mexico and elsewhere, importing a product's principal components and assembling the product here of the major, imported components plus a few, minor U.S.-made components could under the FTC's proposal result in the product meeting the "75% U.S. content" test. The product could carry the "Made in USA" label even though its major components were produced abroad.
The second "safe harbor" -- "two levels of substantial transformation" -- proposes no method of guaranteeing that "substantially all" of the labor and value of the product is of domestic origin. Instead, by its silence on the subject, it would appear to eliminate the relative value of U.S. parts and labor as a consideration.
Conceivably, under the second "safe harbor" a product could be labeled "Made in USA" even though less than 75% of its value would be of U.S. origin. It could be assembled in the U.S. of components put together in the U.S. of parts made overseas that account for more than 25% of the product's value. The FTC's own "Example 1" in the "Proposed Guides" (Federal Register Notice, page 79) shows that this is not a far-fetched scenario. The "Made in USA" label on such a product would be seriously misleading to the consumer.
As the Commission recognizes in its "Proposed Guides" (Federal Register Notice, pages 80-82), it is permissible for manufacturers and marketers to promote the domestic portion of the content of their products when they do not qualify for the "Made in USA" label. There are many acceptable formulations that acknowledge both foreign and U.S. content.
Adoption of the "Proposed Guides" would be a disservice to the workers whose jobs depend on consumers who look for and believe the "Made in USA" label, and to the manufacturers who meet the "all or virtually all" test in spite of pressures to use more imported parts, material and labor.
As the Commission knows, and as its Workshop last year on U.S. Origin Claims demonstrated, there are strong emotions and considerable commercial value involved with "Made in USA" claims in product labeling and marketing. Precisely because of those emotions and that commercial value, the credibility of the "Made in USA" claim must be maintained. The Commission's "Proposed Guides" would not maintain the label's credibility. We fear that they would do just the opposite. In fact, we fear that, if adopted, the "Proposed Guides" would be "likely to mislead consumers acting reasonably," the very thing the Commission is charged with preventing in Section 5 of the FTC Act as interpreted by the Commission (letter from the Commission, Oct. 14, 1983, cited on page 73 of the Federal Register Notice).
Charles E. Mercer