FTC: Made In The USA Comments Concerning NCITD--P894219
August 8, 1997
Mr. Donald S. Clark
Re:Made in USA Policy Comments, FTC File No. P894219.
Dear Secretary Clark:
On behalf of the National Council on International Trade Development (NCITD) I respectfully submit the following comments as requested by the Federal Trade Commission in the Federal Register notice of May 7, 1997 (62 Fed. Reg. No. 88 250191), regarding Made in USA labeling.
The NCITD is a non-profit association that has provided direction and expertise in the international trade arena since 1967. Our membership includes Fortune 500 companies, importers, exporters, bankers, carriers, forwarders, trade organizations, manufacturers and individuals with a common interest in trade facilitation. The NCITD membership represents more than $250 billion annually in trade, and a greater monetary sum in domestically consumed goods.
The Commission has proposed replacing the all or virtually all standard for determining Rule of Origin labeling to a standard based on percentages and substantial transformation. In order to qualify for Made in USA labeling privileges, a company would be required to satisfy one of the proposed standards:
BOARD OF DIRECTORS
Richard Bolte, Jr.
John E. Carr
James A. Geraghty
Monica C. McVitie
Geoffrey A. Peters
The NCITD Position
The NCITD congratulates the Commission for recognizing the need to replace the old standard of all or virtually all. The proposed standards reflect a more consistent position among government agencies involved with marking requirements. Our membership agrees that the proposal allows greater flexibility for US manufacturers, and provides consumers with greater information. While we strongly support the proposed 75% of the total manufacturing cost standard as outlined by the Commission, we recommend a slightly different approach for the standard based on substantial transformation.
A standard of double transformation creates too great an administrative cost for US corporations, forcing companies to attempt to monitor the components and materials used in production. For example, a computer diskette has two main parts: the plastic jacket, and the computer film. Plastics that make up the jacket are manufactured with resins that are produced in and out of the United States. In a system of double transformation, corporations would be required to know the resin origin for each batch of diskette jackets, assuming that resins havent been mixed. It would require additional accounting, monitoring of vendors, and still may not obtain the information required. We suggest modifying the substantial transformation standard to match that of the North American Free Trade Agreement (NAFTA) marking rules for single substantial transformation. In the example of the diskette, the plastic jacket is substantially transformed into a computer diskette. We believe the NAFTA rules should be acceptable for determining Made in USA origin.
Our association supports the proposals that provide guidelines for the use of qualified US origin claims such as Made in USA from Imported Parts, Software Written in the USA, Assembled in the USA, and Designed in the USA. We support the guidelines set forth to determine the value of multiple item sets, multiple sourcing practices, and pricing changes created by fluctuating exchange rates. We additionally support the Origin: USA label which is created for those products sold in the United States that do not meet the Made in USA standard, and that are not required to be labeled with a foreign country of origin.
We do not support percentage content requirements because they would create extreme regulatory burdens for NCITD members and other US manufacturers. By following a percentage content system, companies would be required to conduct constant detailed internal cost analyses to accurately determine the exact domestic content for their products. As sourcing patterns change, and the prices of materials, labor and other cost allocations change, companies would be forced to constantly update their cost-value analyses.
The NCITD is aware that the Commission has received more than 340 written comments throughout the public comment period. We understand that approximately 64% of the comments supported remaining with the current all or virtually all standard. An additional 10% favored the content formula, and 7% supported substantial transformation. The remainder of the comments evidently offered no solutions, or offered combinations of various proposals. We urge the Commission not to ultimately base their decisions using a tally system of for and against. United States consumers have already voiced their opinions in a survey where the majority of the consumers supported the proposed Made in USA labeling requirement. Conversely, in supporting a 70% to 90% content range, consumers have stated that all or virtually all is no longer a realistic designation in our global market. We regret that a small minority of manufacturers, who evidently do not understand the global market, support the retention of the antiquated all or virtually all standard. While the United States enjoys a wealth of natural resources, commonly used goods such as rubber and silk are available only through importation.
The NCITD recommends the adoption of the proposed rules with the suggested changes to the second Made in USA standard of substantial transformation. Substantial transformation and the reasonable content rule proposed by the Commission recognize the reality of global materials and component sourcing, which are common in todays market, and are supported by US consumers.