FTC: Made In The USA Comments Concerning International Mass Retail Association (IMRA)--P894219
COMMENTS OF THE
INTERNATIONAL MASS RETAIL ASSOCIATION
FEDERAL TRADE COMMISSION
PROPOSED GUIDES FOR THE USE OF U.S. ORIGIN CLAIMS
(Made in USA Policy Comment - FTC File Number P894219)
August 8, 1997
Phone: (703) 841-2300 Fax: (703) 841-1184
The International Mass Retail Association (IMRA) represents 170 mass retailers that include discount department stores, home centers, catalogue showrooms, dollar stores, variety stores, warehouse clubs, deep discount drugstores, specialty discounters and off-price stores. Collectively, IMRA retail members operate more than 54,000 stores in the U.S. and abroad and employ over a million people. The retail members represent the overwhelming majority of the $346 billion mass retail industry. IMRA's member companies have a strong and direct interest in the issue of how country of origin information--particularly "Made in the USA" claims--are presented to the consuming public.
IMRA filed original comments on this matter in January 1996, participated in the Federal Trade Commission's ("Commission" or "FTC") March 1996 workshop, and filed post-workshop comments in July 1996. In addition, IMRA served as the chair for "The Ad Hoc Group," which filed separate comments in July 1996.
Throughout this process IMRA has advocated three central positions:
IMRA Generally Supports the Commission's Proposed Guides
IMRA supports the approach taken by the Commission in its May 1997 proposed Guide, because it meets the three general principles IMRA has advocated during the long comment process.
First, the proposal provides a realistic relaxation of the unworkable "all or virtually all" standard for substantiating U.S. origin claims. It does so by attempting to satisfy consumer needs, first for a substantial amount of U.S. value, and second, through defining a processing standard that meets a consumer view of what it means to make something in the United States. Finally, IMRA supports the guidelines approach taken by the FTC, especially because the Commission has provided two separate safe-harbors, each of which requires some analysis of U.S. manufacturing processes.
Although IMRA has long taken a dim view of the arbitrary nature of the value-added approach, we recognize that some manufacturing industries would prefer to substantiate U.S. origin claims using this method. IMRA much prefers the processing standard, and views the double-substantial transformation test as a good compromise.
Indeed, the double substantial transformation approach is a good approximation of the kind of processing standard IMRA has long suggested. Namely, that a manufacturer who makes something in the United States out of parts that have, themselves, been made here, ought to be able to advertise (or label) their product as "Made in the United States." IMRA has long felt that including raw materials and other intermediary products several steps back in the process is not necessary to guard against consumer deception, because consumers are interested in the process of making something and the parts that go into the final product.
IMRA is less enthusiastic about the 75 percent value added safe harbor, although we applaud the Commission for including a requirement that the product also be last substantially transformed in the United States. IMRA has long felt that value alone does not confer origin. Nevertheless, we recognize that many U.S. manufacturers prefer this value-added approach, and leave the detailed comments about cost methods and manufacturing steps in their capable hands.
Additional specific comments on elements of the proposal are presented below.
Assembled in the United States
The Commission has specifically sought comments on whether advertisers should be allowed to claim that a product is "assembled in the US" without further qualification. The Ad Hoc Group, which IMRA chaired, suggested consumers perceive little difference between the terms "assembled in" and "made in." For this reason, IMRA believes that marketers should be required to qualify the term "assembled" whenever it is used, unless the product would qualify for the claim "made in the USA".
In our post-workshop filing with the FTC, IMRA endorsed the idea of a lesser mark for products that are exported into markets that mandate a "Made in the USA" label. We suggested that this lesser mark be limited in three ways:
IMRA also pointed out that an "Origin: USA" claim was only a short-term solution, during the time when the World Trade Organization (WTO) is working on harmonized origin marking rules. Once such rules are in place, IMRA would hope that the Commission would, once again, revisit this issue with an eye toward harmonizing advertising rules with international marking rules.
IMRA strongly supports the proposed "Origin: USA" label contained in the Guide, however we urge the Commission to make it clear that advertisers should not use this claim in advertising. The issue faced by exporters is not an advertising issue, it is purely and simply a labeling issue and this lesser mark could be abused in advertising.
Indeed, there should be no need to repeat the "Origin: USA" claim in advertising for the U.S. market. Such a repetition, even if it included an additional, qualified claim such as "Made in the US out of foreign parts" would be, in IMRA's view, deceptive and confusing for consumers.
Goods With No Country-of-Origin Marking
IMRA agrees with the Commission that there is no longer a rebuttable presumption that consumers interpret the absence of a country of origin mark as, by itself, a representation that the product is U.S. made. If that were the case, then Congress would not have required U.S. manufacturers to place "Made in the USA" labels in all U.S.-made apparel products, more than a decade ago.
While IMRA supports the Commission's determination to cease using this traditional presumption, we are deeply concerned by the FTC's new proposal regarding goods containing no mark, which is set out in Section VII of the preamble to the Proposed Guide. Based on the explanation contained in Section VII, the FTC has suggested some goods may require disclosure of foreign origin where a significant minority of consumers would consider the unlabeled product to be of U.S. origin. Unfortunately, neither the preamble nor the Proposed Guides provide any examples of situations where consumers might reach such a conclusion. Moreover, in the absence of examples or further explanation, the proposal appears to suggest that some kinds of goods, in and of themselves, might always have to be marked with foreign content in order to avoid consumer deception. We hope and believe this is not what the Commission intends. IMRA would strongly oppose any requirement to force the disclosure of foreign content on goods that the U.S. Customs Service does not consider to be imported.
IMRA can see situations in which non-marked, non-imported goods could lead to deception, but not in and of themselves. Other facts, such as how the goods are displayed or packaged would have to be present for deception to occur.
We believe any confusion over this change in FTC policy could be avoided if the Commission would provide concrete examples of situations where unmarked goods may cause consumer deception as part of the guide itself.
IMRA congratulates the FTC in formulating a guide that is workable in today's global marketplace. It provides the needed flexibility that U.S. manufacturers, advertisers and exporters need to promote high-content U.S. made products, while at the same time protecting the interests of consumers. IMRA strongly supports the general proposal, and has suggested two minor modifications:
If you have any questions about IMRA or its position on this issue, contact Robin Lanier, Senior Vice President, Government Affairs at 703/841-2300 ( email@example.com ).