FTC: Made In The USA Comments Concerning The Rubber and Plastic Footwear Manufacturers Association--P894219
UNITED STATE OF AMERICA
In the Matter of
SUBMISSION OF RUBBER MADE IN USA POLICY COMMENT AND PLASTIC FOOTWEAR MANUFACTURERS ASSOCIATION FILE NO. P894219
July 18, 1997
The comments which follow are in behalf of thirteen domestic manufacturers of rubber footwear and slippers and domestic suppliers of components for those manufacturers. The Rubber and Plastic Footwear Manufacturers Association, representing these companies, was a participant in the Made in USA workshop conducted by the Federal Trade Commission. The RPFMA took the position that it is not possible in today's global economy for a manufacturing industry such as rubber footwear and slippers to meet the FTC's standard of "all or virtually all" as a prerequisite to a claim of Made in USA. We pointed out that in order to survive as a domestic industry in competition with low-wage foreign producers, it is essential to import one or more components. We also pointed out that the small size of the industry has resulted in some domestic suppliers discontinuing the production of essential components, leaving the industry no choice but to import those components.
We urged that a standard which would be more appropriate than " all or virtually all" would be one which requires a "substantial" share of the components and labor to be of American origin and which requires that final assembly take place in the United States. We salute the Federal Trade Commission for its recognition of the merits of this proposal and for its willingness to adapt its guidelines so as to meet the reality of a global economy which has changed markedly over the past several years.
The FTC's proposed new guidelines reflect not only the needs of domestic manufacturers but also, and equally important, the change in consumer understanding of the meaning of Made in USA-- an understanding evidenced in the various consumer surveys introduced at the workshop.
So far so good. The question remains, however, as to what it should take to satisfy the test of "substantial". The Commission has proposed a formula of 75% domestic content. We respectfully suggest that while this is a step in the right direction, the 75% figure is unrealistically high. Members of this Association have undertaken detailed accounting tests, and in some instances they have found that the cost of the component(s) which they must import makes it impossible to meet the 75% requirement.
We have been sufficiently impressed by the Commission's own consumer survey to accept the fact that while we believe that "substantial" would best be satisfied by domestic content in excess of 50%, this view is shared by only 36% of consumers. On the other hand, the FTC's survey revealed that two-thirds of the respondents agree that a Made in USA label is approporiate "when the product was assembled in the United States and US production was over 70%".(1) While the 70% test would still be difficult for some companies, there is clearly a justification for it and the members of this Association would strive to meet it.
In short, the rubber footwear and slipper industry is of the view that a "substantial" test accompanied by the requirement of final assembly in the United States would satisfy the needs of most companies, as well as the perception of most consumers, provided that the safe harbor for determining substantiality is set at 70% of domestic components and labor.
Finally, a word should be said about H. Con. Res. 80, which calls for the maintenance of the "all or virtually all" test. In the press release which accompanied the announcement of this Resolution, its principal proponent alleged that "lowering the standard could entice American manufacturers to move some of their operations overseas, resulting in a loss of more manufacturing jobs". This assertion, at least so far as the rubber footwear and slipper industry is concerned, is directly contrary to fact. This domestic industry cannot compete with foreign producers unless it imports some of its components, and will be denied one of its few competitive advantages if it cannot label its products "Made In USA". Surely, the proponents of H. Con. Res. 80 have as their objective the retention of American jobs; the reassertion of an "all or virtually all" standard would be in fact a repudiation of that objective.
1. See page 48 of the FTC document containing its proposed guides for the use of US origin claims.