FTC: Made In The USA Comments Concerning David W. Olsen--P894219
3M August 8, 1997
Re: "Made in USA Policy Comment", FTC File No. P894219
COMMENTS OF 3M COMPANY
3M Company submitted comments in response to the Request for Public Comment of October 18, 1996 and participated in the Public Workshop leading up to the issuance of the PROPOSED GUIDES FOR THE USE OF U.S. ORIGIN CLAIMS, in May, 1997. As stated in those instances, 3M is a manufacturer of over 5 0,000 products in 3 8 different states and 42 foreign countries. Over half the company's sales are to customers outside the U.S.
The labeling requirements of the countries we export to and our own U.S. labeling requirements are sometimes in conflict with respect to country of origin qualification so we would achieve some efficiencies from any improvement in the degree of uniformity of the various country of origin marking rules. Typical of the inconsistencies is the conflict among NAFTA country of origin marking rules, U.S. Customs Marking Rules, and FTC "Made in USA" marking policy.
3M's response to the Proposed Guides
The Proposed Guides represent welcome relief from the current uncertainty that surrounds the U.S. country of origin marking rules. 3M is happy to see clear, realistic standards with respect to both qualified and unqualified claims and we support the efforts of the Commission to reach that position.
A concern we have with the Proposed Guides is that in order to make an unqualified "Made in USA" claim it is necessary to meet a "double substantial transformation" test (unless the other test requiring 75% US content is met). A double substantial
transformation test adds a great deal of complexity on top of the existing NAFTA marking rules without necessarily guaranteeing a significantly higher level of US content. The NAFTA marking rules require a single substantial transformation, and, in 3M's experience, a single substantial transformation test represents a fairly high standard for country of origin marking. While requiring a manufacturer to ensure that a finished product and its components are substantially transformed in the US may seem like a better rule, it adds immeasurably to the administrative burden. 3M's US manufacturing processes often incorporate component materials and they may be from US suppliers or they may be imported. The burden of ensuring that the items that are not imported meet the substantial transformation test would be major. It would mean we would have to verify, with some significant level of care, the origin of the component materials and the claims made by US suppliers.
Our experience is that our US suppliers, many of whom are not large companies, are sometimes overwhelmed by the requirements 3M and their other customers place on them to certify the origin of their products for NAFTA tariff preference purposes. They may not be able to afford the cost of complying with yet another set of standards.
We recommend that the benefits for purchasers, if any, of requiring double substantial transformation be further weighed against the potential cost of compliance to US manufacturers. Perhaps a single transformation rule would be found to achieve almost the same result without adding the huge amount of additional work and concision we may otherwise encounter.
Again, thank you for the opportunity to comment and we applaud your efforts to add some degree of certainty to this complex area.
Very truly yours,
David W. Olsen
David W. Olsen