FTC: Made In The USA Comments Concerning AISI--P894219
This statement on the Federal Trade Commission's (FTC's) " Proposed Guides for the Use of U.S. Origin Claims" is submitted on behalf of the U.S. members of the American Iron and Steel Institute (AISI). Together, these companies account for approximately two-thirds of the raw steel produced annually in the United States.
Clearly defined, easily understood guides that recognize the high standard of "all or virtually all" input of U.S. components and labor to make the claim "Made in USA" are necessary to (1) preserve and enhance the U.S. manufacturing base and (2) provide the consumer with the needed input to make informed purchasing decisions. The current guides succeed well in meeting these criteria. The proposed guides fall short.
Dilution of the standard to the proposed safe harbor level of 75 percent U.S. content would harm the U.S. manufacturing base and provide consumers with confusing information. "Made in USA" should mean precisely that -- not partly made in USA or mostly made in USA. It is highly likely that the vast majority of U.S. consumers would be unaware of a change in the standard, and would continue to believe that items labeled "Made in USA" were held to the current high standard.
Basic materials industries, such as steel, would be harmed by a change to a lower standard, since component and finished goods manufacturers would have additional incentive to purchase a substantial portion of their inputs from abroad. For the capital-intensive steel industry, which has high fixed costs and relatively high break-even operating rates, a lower "Made in USA" standard would be especially damaging. The U.S. steel industry has spent over $50 billion since 1980 to modernize and become world-class in both quality and cost. A strong and growing market in the United States is essential for U.S. steel producers to realize adequate returns on investments.
In recent years, manufacturing has declined as a percentage of the U.S. economy, even though U.S. steel producers and other U.S. manufacturers have modernized, restructured and dramatically improved their international competitive position. This has occurred for several reasons and has led to the loss of thousands of highly paid U.S. manufacturing jobs. This loss of income and accompanying loss in tax revenues has hurt the U.S. economy. However, just because there have been changes in the makeup of the economy does not mean that consumer attitudes and preferences have changed. A reduction in the "Made in USA" standard would only cause further harm to the U.S. manufacturing base and additional confusion for U.S. consumers.
While AISI supports retention of the current "all or virtually all" FTC standard, we also support other qualified origin labels, such as "assembled in the USA from foreign components", or "minimum 70 percent USA content." At the same time, if these compromise labels are to be fair and effective, the definitions must be transparent, and the options must be very limited to allow strong enforcement. U.S. consumers would be informed in a more effective manner by having a family of labels, strictly enforced, than by the proposed change in the FTC standard. The sole benefit of the proposed new FTC guides would be to foreign interests (both U.S. manufacturers with foreign parts plants and foreign companies serving U.S. assemblers).
If U.S. citizens take contradictory meanings from "Made in USA" under the current guides, the solution is education. If two-thirds of the consumer survey sample thought that 70 percent content meant "Made in USA," then it is the job of the FTC to educate those U.S. consumers. It is not the job of the FTC to change the guides to conform to erroneous public perception.
With respect to the existing U.S. Customs rules on "substantial transformation", AISI's position is that (1) these are adequate and (2) they should be the governing voice regarding the origin of basic materials, components and finished goods.
In sum, AISI's U.S. member companies support retention of the current guides for the use of U.S. origin claims. The guides should not be changed to support public misconception. Rather, the public should be educated in the meaning of the current "Made in USA" guides. The guides should not be changed in support of foreign interests. Current guides should be retained in support of U.S. workers, the U.S. manufacturing base and the right of U.S. consumers to make informed purchasing decisions based on clearly defined, easily understood guides.
AISI's U.S. member companies appreciate this opportunity to provide the FTC with comments on the proposed change in the "Made in USA" standard.
J:\POLICY\USORIGIN.DOC 09/18/97 12:21 PM