Markets Wired

The Federal Trade Commission today issued a staff report on an FTC workshop on Made in USA claims that was held last fall, and a notice of proposed rulemaking for a Made in USA Labeling Rule (proposed Rule).

The proposed Rule will apply to product labels making Made in USA and other unqualified U.S.-origin claims. The proposed Rule incorporates guidance set forth in the Commission’s previous Decisions and Orders and its 1997 Enforcement Policy Statement on U.S. Origin Claims.

Consistent with this guidance, the proposed Rule will prohibit marketers from including unqualified Made in USA claims on labels unless: 1) final assembly or processing of the product occurs in the United States; 2) all significant processing that goes into the product occurs in the United States; and 3) all or virtually all ingredients or components of the product are made and sourced in the United States.

The proposed Rule also covers labels making unqualified Made in USA claims appearing in mail order catalogs or mail order advertising. The proposed Rule does not supersede, alter, or affect any other federal or state statute or regulation relating to country-of-origin labels. The proposed Rule will make civil penalties available to deter violations.

“Whether a product is actually ‘Made in the USA’ is an important issue for consumers, manufacturers, retailers, and American workers,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “We welcome comments from all stakeholders to inform our rulemaking effort.”

According to the staff report, the Made in USA workshop last fall sought to enhance the agency’s understanding of consumer perception of Made in USA claims and consider whether the Made in USA enforcement program can be improved. Public comments and input from the workshop’s panelists addressed three general topics: consumer perception of Made in USA claims, concerns about the FTC’s current enforcement approach, and potential changes to the FTC’s enforcement strategy.

According to the staff report, only one panelist provided survey evidence on how consumers understand Made in USA claims. Citing a 2013 study, the panelist noted that almost three in five Americans agree that “Made in America” means that all parts of a product, including any natural resources it contains, originated in the United States, and a third of consumers believe that 100 percent of a product must originate in a country for that product to be called “made” in that country.

The staff report states that this evidence supports the guidance in the FTC’s Enforcement Policy Statement on U.S. Origin Claims that at least a significant minority of consumers are likely to be deceived by an unqualified Made in USA claim for a product incorporating more than a trivial amount of foreign content.

The Commission vote to issue the staff report was 5-0. The Commission vote approving publication of the proposed Made in USA Labeling Rule in the Federal Register was 4-1, with Commissioner Noah Joshua Phillips voting no and issuing a dissenting statement. Commissioner Rohit Chopra issued a separate statement, as did Commissioner Christine S. Wilson.

The proposed Rule will be published in the Federal Register shortly. Instructions for submitting comments appear in the published document. The FTC will consider all timely and responsive public comments it receives in accordance with those instructions. Once processed, comments will be posted on Regulations.gov.