FTC: Made In The USA Comments Concerning G. Farlin Caufield--P894219
August 11, 1997
Office of the Secretary
RE:Made in USA Policy Comment, FTC File No. P894219
To Whom It May Concern:
Vaughan & Bushnell Manufacturing Company ("Vaughan & Bushnell") respectfully submits comments regarding the Proposed Guides For The Use Of U.S. Origin Claims. 62 Fed. Reg. 25,020 (1997) (proposed May 7, 1997). We endorse the comments submitted in this proceeding by the American Hand Tool Coalition.
Vaughan & Bushnell has urged the Commission throughout this proceeding to retain the "all or virtually all" standard. As a manufacturer of hand tools that meet the current standard, the Commission's recently proposed guidelines to lower the standard for making an unqualified "Made in USA" claim are a disappointment and a mystery. They are a disappointment because they are likely to result in consumer deception by permitting products with substantial, if not entirely, foreign material to be labeled "Made in USA". They are a mystery because we can think of no public policy reason for the Commission to abandon a clear and non-deceptive standard for one that, according to the Commission's own survey research, will deceive a significant minority of consumers.
The lowering of the "all or virtually all" standard would have far-reaching consequences for consumers, workers and the American economy generally. Consumers will not know if a product marked "Made in USA" is "all or virtually all" domestic, is 75 percent U.S. content, or something even less, depriving them of information they feel is important in their purchasing decisions. In addition, the proposed guidelines reward companies that already have transferred production to foreign countries to take advantage of low labor and material costs at the expense of U.S. workers and suppliers. If the guidelines were adopted, companies would have even greater incentives to ship more jobs overseas.
The impact of the proposed guidelines on our industry clearly illustrate these problems. Hand tools with significant foreign materials are likely to be able to meet the proposed "substantially all" standard and therefore could be labeled with an unqualified "Made in USA" claim. For example, the most important element of most hand tools such as hammers, wrenches and ratchets is the steel forging. If the steel in these products is forged in a foreign country and imported for machining and other finishing processes in the United States, the ultimate products could nevertheless still qualify for a "Made in USA" label if their total manufacturing cost is at least 75 percent domestic and if they are last substantially transformed in the United States. In such a case, consumers would find "Made in USA" labels on both a hammer with the foreign forging and on a Vaughan & Bushnell hammer with a U.S. forging. Consumers would be deceived about the origin of the steel and the forging. In addition, they would reasonably, but incorrectly, assume that both products would be of the quality and durability they associate with U.S.-forged tools using U.S. steel.
The double substantial transformation safe harbor also would result in consumer deception. The proposed guidelines allow a marketer to choose between often-conflicting substantial transformation determinations to reach a desired result under the safe harbors. But this betrays the inherent weakness in the substantial transformation test. It does not ensure that products contain any minimum level of U.S. content or significant U.S. process. Indeed, the discussion accompanying the proposed guidelines concedes as much. The customs rules are not intended to correspond to consumer perceptions of "Made in USA." They merely set minimal requirements to determine when foreign country of origin labels can be removed. Simply requiring two levels of substantial transformation, as the guidelines propose, does not "substantially transform" customs rules into consumer protection standards.
These serious flaws in the proposed guidelines would render the unqualified "Made in USA" claim increasingly meaningless. Even the most sophisticated consumer would have little basis on which to distinguish products that would meet the current "all or virtually all' test from those that contain significant foreign materials.
Survey research conducted by the American Hand Tool Coalition and by the Commission itself supports this conclusion. In a survey conducted for the Coalition, participants were asked what percentage of a hand tool labeled "Made in USA" is made in the United States. Fifty-three percent responded with 100 percent. Thus a majority of hand tool consumers would be deceived by a "Made in USA" label on a product with substantially less domestic material and processing, as the proposed guidelines would permit. In addition, more than 87 percent of hand tool purchasers consider "Made in USA" an important factor in their purchase, and two-thirds rate it a very important factor. The deception permitted by the proposed guidelines, therefore, would be of great significance to these consumers.
This step down the slippery slope of a "substantially all" standard is particularly hard to justify given the clear and non-deceptive alternative that is available. As the Commission recognizes in the proposed guidelines, the current rules permit manufacturers to make truthful qualified claims about the U.S. content of their products. As experience in the apparel industry has shown (under the provisions of a separate statutory scheme), labels clearly indicating the origin of the material and labor in clothing provide consumers with easily understandable and non-deceptive information. The use of qualified claims for other products, as the examples in the proposed guidelines describe, would avoid the widespread deception inherent in the proposed 44substantially all" standard, and would increase the truthful information available to consumers.
In fact, the availability of qualified claims is one of the best reasons not to dilute the standard for unqualified claims; manufacturers have a reasonable and more accurate alternative.
On behalf of our workers, suppliers and sales representatives, Vaughan & Bushnell urges the Commission to retain the current "Made in USA" standard.
G. Farlin Caufield/ DCC
G. Farlin Caufield
A TRADITION OF FINE TOOLS SINCE 1869