FTC: Made In The USA Comments Concerning Joel D. Joseph--P894219
Federal Trade Commission
Comments of the Made in the USA Foundation
Joel D. Joseph
August 11, 1997
In the past, the Made in the USA Foundation has been very critical of the Federal Trade Commission concerning its enforcement of U.S. origin claims. However, the Foundation now praises the Commission for its proposed guidelines as they are, in the main, understandable and fair for both consumers and manufacturers.
The Foundation represents 60,000 individual consumers who want to buy American-made products. In addition, the Foundation represents hundreds of trade unions and corporations. Like members of Congress and the general public, our membership is very split on the FTC's guidelines.
The Foundation's opinion is that
Bearing these factors in mind, the Foundation wholeheartedly agrees that the 75% standard suggested by the commission is both fair and reasonable to all concerned.
The Foundation would simplify the guidelines. The Foundation believes that "substantially" all made in the USA is the proper standard and that it should never mean less than 75% U.S. content and final assembly in the United States.
The Foundation would not recommend adoption of any other so-called "safe harbor." To be frank, every other "safe harbor" is a potential loophole.
Two levels of "substantial transformation" is our concern. Even though the commission requires "double substantial transformation," it opens up a very wide loophole. The following example could be a real-life one:
A computer manufacturer buys a monitor that is "substantially transformed" in the United States. In reality, every part of that monitor is imported and it is merely assembled in the U.S.A. The same for the keyboard, mouse, motherboard and so forth. By putting these substantially transformed components together in the United States, the computer manufacturer meets the safe-harbor of two levels substantial transformation. But how
American is this computer? While the computer could have less than 50% U.S. content, under the proposed guidelines it could legally be labelled "Made in the USA."
Made in Italy and Made in Japan
Substantial transformation is a real problem for consumers. "Made in Italy" on a pair of shoes is a strong selling point. However, in reality a pair of shoes marked made in Italy could have virtually no Italian content. With soles from China and uppers from Romania, shoes glued together in Italy, under U.S. Customs regulations could be marked "Made in Italy" because the components were substantially transformed in Italy. The Foundation contends that this is an unfair and misleading practice and that the shoes should be labelled "Assembled in Italy of Chinese and Romanian components."
Similarly, a video cassette recorder could be labelled "Made in Japan" with little Japanese content. A Japanese VCR assembled in Japan of wholly imported parts from Taiwan, Singapore, Thailand, China and Hong Kong could be sold in the United States as "Made in Japan."
The Federal Trade Commission should not start using "substantial transformation" as a part of its guidelines. Instead, the Commission should use its "substantially all made" in a country as its guidelines for "Made in the USA" as well as "Made in Italy," "Made in Japan" or made in any other country.
Joel D. Joseph
Joel D. Joseph