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Wednesday May 7, 1997 Part II Federal Trade Commission Request for Public Comment on Proposed Guides for the Use of U.S. Origin Claims; Notice federal register 25019 25020 Federal Register / Vol. 62, No. 88 / Wednesday, May 7, 1997 / Notices FEDERAL TRADE COMMISSION and exported. Throughout, the proposed domestic origin.1 Recently, this standard guides address the interaction of FTC had been rearticulated to require that a Request for Public Comment on deception law with U.S. Customs product advertised as ``Made in USA'' Proposed Guides for the use of U.S. Service requirements. be ``all or virtually all'' made in the Origin Claims DATES: Written comment will be United States, i.e., that all or virtually all of the parts are made in the U.S. and AGENCY: Federal Trade Commission. accepted until August 11, 1997. all or virtually all of the labor is ADDRESSES: Six paper copies of each ACTION: Request for public comment on performed in the U.S.2 In both cases, written comment should be submitted proposed Guides for the Use of U.S. however, the import has been the same: to the Office of the Secretary, Federal Origin Claims. unqualified claims of domestic origin Trade Commission, Room 159, Sixth were deemed to imply to consumers SUMMARY: The Federal Trade and Pennsylvania Avenue, N.W., Commission (``FTC'' or ``Commission'') that the product for which the claims Washington, D.C. 20580. To encourage were made was in all but de minimis has been conducting a comprehensive prompt and efficient review and review of ``Made in USA'' and other amounts made in the United States. dissemination of the comments to the In a July 11, 1995 press release, the U.S. origin claims in product public, all comments also should be Commission announced that it would advertising and labeling. Historically, submitted, if possible, in electronic undertake a comprehensive review of the Commission has held that a product 1 1 form, on either a 5 ¤4 or a 3 ¤2 inch U.S. origin claims and examine whether must be wholly domestic to substantiate computer diskette, with a label on the the Commission's traditional standard an unqualified ``Made in USA'' claim. diskette stating the name of the for evaluating such claims remained As part of its review, the Commission, commenter and the name and version of consistent with consumer perceptions by Federal Register notice dated the word processing program used to and continued to be appropriate in October 18, 1995, requested public create the document. (If possible, today's global economy. On October 18, comment on various issues related to documents in WordPerfect 6.1 or Word 1995, the Commission published a the evaluation of such claims and, on 6.0, or earlier generations of these word notice in the Federal Register formally March 26 and 27, 1996, held a public processing programs, are preferred. Files soliciting public comment for 90 days workshop and invited representatives of from operating systems other than DOS on various issues related to this review, industry, consumer groups, unions, or Windows should be submitted in including the costs and benefits of government agencies and others to ASCII text format to be accepted.) continuing to use the ``all or virtually attend and exchange views. On April Individuals filing comments need not all'' standard, and announcing that 26, 1996, the Commission published a submit multiple copies or comments in Commission staff would conduct a Federal Register notice extending the electronic form. Submissions should be public workshop on this topic. 60 FR deadline for post-workshop public captioned: ``Made in USA Policy 53922. A follow-up notice published on comments until June 30, 1996. Comment,'' FTC File No. P894219. December 19, 1995, announced that the The Commission now announces FOR FURTHER INFORMATION CONTACT: Beth public workshop would be held on proposed Guides for the Use of U.S. M. Grossman, Attorney, Division of March 26 and 27, 1996, and indicated Origin Claims and seeks public Advertising Practices, Bureau of that the record would be held open for comment on these guides. Under these Consumer Protection, FTC, Washington, post-workshop public comment until proposed guides, a marketer making an DC 20580, telephone 202±326±3019, or April 30, 1996. 60 FR 65327. In unqualified claim of U.S. origin must, at Kent C. Howerton, Attorney, Division of response to these notices, the the time it makes the claim, possess and Enforcement, Bureau of Consumer Commission received approximately rely upon a reasonable basis that the Protection, FTC, Washington, DC 20580, 294 written comments. product is substantially all made in the telephone 202±326±3013. Contemporaneous with the solicitation United States. To assist manufacturers of public comment, Commission staff in complying with this standard, the SUPPLEMENTARY INFORMATION: also commissioned a two-part study to proposed guides also set out two I. Introduction examine consumer understandings of alternative ``safe harbors'' under which U.S. origin claims. The results of this The Commission has been conducting an unqualified U.S. origin claim would study are discussed below. not be considered deceptive. The first a comprehensive review of its standards As noted, Commission staff safe harbor encompasses products for evaluating ``Made in USA'' claims in conducted a two-day public workshop whose U.S. manufacturing costs advertising and labeling. The on issues related to U.S. origin claims. constitute 75% of total manufacturing Commission now proposes to issue Thirty-three individuals, representing costs and were last substantially Guides for the Use of U.S. Origin corporations and trade associations from transformed in the United States. The Claims, set out at the end of this notice, a variety of industries; labor unions; second safe harbor applies to products and seeks comment on these proposed federal and state government agencies; that have undergone two levels of guides. The comment period will substantial transformation in the United remain open until August 11, 1997. 1 See, e.g., Windsor Pen Corp., 64 F.T.C. 454 States: i.e., the product's last substantial The Commission regulates claims of (1964); Vulcan Lamp Works, Inc., 32 F.T.C. 7 transformation took place in the United U.S. origin, such as ``Made in USA,'' (1940). pursuant to its statutory authority under 2 This language was first used in the cases of Hyde States, and the last substantial Athletic Industries, File No. 922±3236 (consent transformation of each of its significant Section 5 of the Federal Trade agreement accepted subject to public comment inputs took place in the United States. Commission Act, which prohibits Sept. 20, 1994) and New Balance Athletic Shoes, The proposed guides also address ``unfair or deceptive acts or practices.'' Inc., Docket No. 9268 (complaint issued Sept. 20, Cases brought by the Commission 1994). In light of the decision to review the various qualified claims, claims standard for U.S. origin claims, the Commission regarding specific processes and parts, beginning over 50 years ago established later modified the complaints in these cases to multiple-item sets, and changes in costs the principle that it was deceptive for a eliminate the allegations based on the ``all or and sourcing. They also authorize marketer to promote a product with an virtually all'' standard. Consent agreements based on these revised complaints were issued on specific origin claims for certain unqualified ``Made in USA'' claim December 2, 1996 (New Balance) and December 4, products that are both sold domestically unless that product was wholly of 1996 (Hyde). Federal Register / Vol. 62, No. 88 / Wednesday, May 7, 1997 / Notices 25021 and consumer groups, participated in Washington, DC 20580. In addition, the in USA'' or any other indication of U.S. the workshop, and a number of other public comments, the workshop origin.5 Where a marketer chooses interested individuals attended the transcript, and previous Federal voluntarily, however, to make a U.S. workshop as observers. At the Register notices related to this review origin claim in an advertisement or on workshop, which was moderated by a are available on the Commission's Home a label, the marketer must conform with neutral, third-party facilitator, results of Page on the World Wide Web, which the FTC Act's general prohibition on the Commission's consumer perception can be reached through the internet at ``unfair or deceptive acts and practices.'' study as well as consumer studies http://www.ftc.gov. Thus, a ``Made in USA'' claim, like any conducted by several other participants other advertising claim, must be truthful were presented, and there was an II. Background: Country-of-Origin and substantiated. extended round table discussion of the Marking Requirements for Imported B. Other Relevant Information on costs and benefits of the various Goods Country-of-Origin Determinations alternative standards under A. Relationship Between the consideration for the evaluation of U.S. Requirements of the U.S. Customs In addition to the Tariff Act, two origin claims. Following the workshop, Service and the Policies of the FTC international agreements provide a the Commission, in a notice published further backdrop to the discussion of on April 26, 1996, extended the period In the course of the Commission's country-of-origin labeling. for clarifying or rebuttal comments until review, there has been much discussion of the relationship between the policies North American Free Trade Agreement June 30, 1996, and set forth additional (NAFTA) questions for comment. 61 FR 18600. of the U.S. Customs Service (``Customs'' Approximately 49 additional comments or ``the Customs Service'') and those of Goods imported from NAFTA were received in response to the April the FTC with respect to country-of- countries are not subject to the Customs 26 notice, including a proposed set of origin marking.