Introduction. The Federal Trade Commission (FTC) is charged with preventing deception and unfairness in the marketplace. The FTC Act gives the Commission
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Table of Contents Introduction 1Basic Information About Made In USA Claims 2The Standard For Unquali˜ed Made In USA Claims 4Quali˜ed Claims 9The FTC and The Customs Service 13Other Statutes 15What To Do About Violations 17For More Information 18Your Opportunity to Comment 18Enforcement Policy Statement on U.S. Origin Claims 19Endnotes 33
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1Introduction˜e Federal Trade Commission (FTC) is charged with preventing deception and unfairness in the marketplace. ˜e FTC Act gives the Commission the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin. Traditionally, the Commission has required that a product advertised as Made in USA be fiall or virtually allfl made in the U.S. After a comprehensive review of Made in USA and other U.S. origin claims in product advertising and labeling, the Commission announced in December 1997 that it would retain the fiall or virtually allfl standard. ˜e Commission also issued an Enforcement Policy Statement on U.S. Origin Claims to provide guidance to marketers who want to make an unquali˚ed Made in USA claim under the fiall or virtually allfl standard and those who want to make a quali˚ed Made in USA claim.˜is publication provides additional guidance about how to comply with the fiall or virtually allfl standard. It also o˛ers some general information about the U.S. Customs Service™s requirement that all products of foreign origin imported into the U.S. be marked with the name of the country of origin. ˜is publication is the Federal Trade Commission sta˛™s view of the law™s requirements. It is not binding on the Commission. ˜e Enforcement Policy Statement issued by the FTC is at the end of the publication.
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2Basic Information About Made In USA ClaimsMust U.S. content be disclosed on products sold in the U.S.?U.S. content must be disclosed on automobiles and textile, wool, and fur products ( see page 15). ˜ere™s no law that requires most other products sold in the U.S. to be marked or labeled Made in USA or have any other disclosure about their amount of U.S. content. However, manufacturers and marketers who choose to make claims about the amount of U.S. content in their products must comply with the FTC™s Made in USA policy. What products does the FTC’s Made in USA policy apply to?˜e policy applies to all products advertised or sold in the U.S., except for those speci˚cally subject to country-of-origin labeling by other laws ( see pages 15-17). Other countries may have their own country-of-origin marking requirements. As a result, exporters should determine whether the country to which they are exporting imposes such requirements. What kinds of claims does the Enforcement Policy Statement apply to? ˜e Enforcement Policy Statement applies to U.S. origin claims that appear on products and labeling, advertising, and other promotional materials. It also applies to all other forms of marketing, including marketing through digital or electronic mechanisms, such as Internet or e-mail. A Made in USA claim can be express or implied. Examples of express claims: Made in USA . fiOur products are American-made.fl fiUSA.fl
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4Representations about entire product lines Manufacturers and marketers should not indicate, either expressly or implicitly, that a whole product line is of U.S. origin (fiOur products are made in USAfl) when only some products in the product line are made in the U.S. according to the fiall or virtually allfl standard. Does the FTC pre-approve Made in USA claims?˜e Commission does not pre-approve advertising or labeling claims. A company doesn™t need approval from the Commission before making a Made in USA claim. As with most other advertising claims, a manufacturer or marketer may make any claim as long as it is truthful and substantiated. The Standard For Unquali˜ed Made In USA ClaimsWhat is the standard for a product to be called Made in USA without quali˜cation?For a product to be called Made in USA , or claimed to be of domestic origin without quali˚cations or limits on the claim, the product must be fiall or virtually allfl made in the U.S. ˜e term fiUnited States,fl as referred to in the Enforcement Policy Statement, includes the 50 states, the District of Columbia, and the U.S. territories and possessions.What does fiall or virtually allfl mean? fiAll or virtually allfl means that all signi˚cant parts and processing that go into the product must be of U.S. origin. ˜at is, the product should contain no Š or negligible Š foreign content.
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5What substantiation is required for a Made in USA claim?When a manufacturer or marketer makes an unquali˚ed claim that a product is Made in USA , it should have Š and rely on Š a fireasonable basisfl to support the claim at the time it is made. ˜is means a manufacturer or marketer needs competent and reliable evidence to back up the claim that its product is fiall or virtually allfl made in the U.S. What factors does the Commission consider to determine whether a product is fiall or virtually allfl made in the U.S.?˜e product™s ˚nal assembly or processing must take place in the U.S. ˜e Commission then considers other factors, including how much of the product™s total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the ˚nished product. In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a signi˚cant amount of the product™s overall processing. ˜e same could be true for some foreign parts. In these cases, the foreign content (processing or parts) is more than negligible, and, as a result, unquali˚ed claims are inappropriate. Example: A company produces propane barbecue grills at a plant in Nevada. ˜e product™s major components include the gas valve, burner and aluminum housing, each of which is made in the U.S. ˜e grill™s knobs and tubing are imported from Mexico. An unquali˚ed Made in USA claim is not likely to be deceptive because the knobs and tubing make up a negligible portion of the product™s total manufacturing costs and are insigni˚cant parts of the ˚nal product.
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6Example: A table lamp is assembled in the U.S. from American-made brass, an American-made Ti˛any-style lampshade, and an imported base. ˜e base accounts for a small percent of the total cost of making the lamp. An unquali˚ed Made in USA claim is deceptive for two reasons: ˜e base is not far enough removed in the manufacturing process from the ˚nished product to be of little consequence and it is a signi˚cant part of the ˚nal product. What items should manufacturers and marketers include in analyzing the percentage of domestic content in a particular product?Manufacturers and marketers should use the cost of goods sold or inventory costs of ˚nished goods in their analysis. Such costs generally are limited to the total cost of all manufacturing materials, direct manufacturing labor, and manufacturing overhead. Should manufacturers and marketers rely on information from American suppliers about the amount of domestic content in the parts, components, and other elements they buy and use for their ˜nal products?If given in good faith, manufacturers and marketers can rely on information from suppliers about the domestic content in the parts, components, and other elements they produce. Rather than assume that the input is 100 percent U.S.-made, however, manufacturers and marketers would be wise to ask the supplier for speci˚c information about the percentage of U.S. content before they make a U.S. origin claim. Example: A company manufactures food processors in its U.S. plant, making most of the parts, including the housing and blade, from U.S. materials. ˜e motor, which constitutes 50 percent of the food
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7processor™s total manufacturing costs, is bought from a U.S. supplier. ˜e food processor manufacturer knows that the motor is assembled in a U.S. factory. Even though most of the parts of the food processor are of U.S. origin, the ˚nal assembly is in the U.S., and the motor is assembled in the U.S., the food processor is not considered fiall or virtually allfl American-made if the motor itself is made of imported parts that constitute a signi˚cant percentage of the appliance™s total manufacturing cost. Before claiming the product is Made in USA , this manufacturer should look to its motor supplier for more speci˚c information about the motor™s origin. Example: On its purchase order, a company states: fiOur company requires that suppliers certify the percentage of U.S. content in products supplied to us. If you are unable or unwilling to make such certi˚cation, we will not purchase from you.fl Appearing under this statement is the sentence, fiWe certify that our ___ have at least ___% U.S. content,fl with space for the supplier to ˚ll in the name of the product and its percentage of U.S. content. ˜e company generally could rely on a certi˚cation like this to determine the appropriate country-of-origin designation for its product. How far back in the manufacturing process should manufacturers and marketers look?To determine the percentage of U.S. content, manufacturers and marketers should look back far enough in the manufacturing process to be reasonably sure that any signi˚cant foreign content has been included in their assessment of foreign costs. Foreign content incorporated early in the manufacturing process often will be less
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