Federal Trade Commission Recieved Documents Jan. 3, 1996 P894219 B18354900021 Manchester Trade, LTD. International Business Advisers 1155 FIFTEENTH ST., N.W. SUITE 302 WASHINGTON, DC 20005 STEPHEN LANDE, President Telephone: 202-331-9464 NELLIS CRIGLER, Vice President Facsimile: 202-785-0376 December 29, 1995 "Made In USA Policy Comment," FTC File No. P894219 Donald S. Clark Office of the Secretary Federal Trade Commission, Room 159 6th and Pennsylvania Ave., NW Washington, DC 20580 Dear Mr. Clark: I am the author of A Buyer's Guide to American Products, a guide for consumers wishing to determine the relative amount of American content incorporated in a number of branded products. I have also been involved in trade policy for the past thirty years as a private sector consultant, as the first Assistant USTR with the Office of the United States Trade Representative (USTR), and as an adjunct professor at the School of Foreign Service of Georgetown University. I thus feel qualified to respond to your Federal Register Notice of October 18, 1995 soliciting written comments on issues which will be addressed during your public workshop rules for "Made in USA" labeling. I am also requesting to participate in the workshop. The FTC should, to the extent possible, develop standards for "Made in the USA" labeling which are similar to the requirements for qualifying for NAFTA origin. Interestingly, one is considering extending these rules to cover origin requirements under the MFN rules of the World Trade Origin as well as under new preferential agreements currently under negotiation both in the Western Hemisphere and in Asia. NAFTA origin is bestowed automatically for any product wholly grown or produced within the three NAFTA countries. There is a more complex procedure in effect for qualifying for NAFTA origin if the product is produced with both NAFTA and non-NAFTA inputs. For such products, NAFTA origin is usually bestowed if the production process imparting the final shift in tariff classification occurred in a NAFTA partner. In those cases where the production process imparting the final shift is viewed as being insufficient to warrant NAFTA origin, often an additional tariff shift is required or a minimal value-added requirement is added. The justification for the Customs procedure is that often tariff shifts reflect where the essential elements of a product were produced. Knowing where the key component is made can be even more important than knowing the point of final assembly. If the critical part is made in America, the product may have a higher American content than a similar product assembled in the United States with imported components. That is why under NAFTA procedures, simple assembly of a product in one of the NAFTA members is often not sufficient to bestow origin unless significant value-added is part of the process. The same type of rules should apply for "Made in USA" labeling. Obviously, a product wholly made in the United States should be able to be labeled "Made in USA." The more controversial question is under what conditions could a product be labeled "Made in USA" without qualification if it includes some foreign inputs. I would suggest that products whose essential elements are produced in the United States and which are assembled in the U.S. be allowed to carry an unqualified "Made in USA" label. Examples of essential components which should be able to bestow origin if the product is also assembled in the United States are: Bicycles Frame Televisions Picture Tubes Microwaves Magnetrons Computers Motherboards I would suggest that a special label be recognized for products assembled overseas from essential American components such as the rule which currently exists for textiles and apparel. Canada, Mexico, and the Central American countries purchase a high percentage of their imports from the United States and tend to use U.S. components and machinery in their production. A special label for NAFTA and CBI (Caribbean Basin Initiative) products coproduced with American components should also be considered. As for enforcement, in the first instance, the responsibility for the veracity of the "Made in the USA" label should be with the manufacturer. The manufacturer would have to furnish a legitimate justification, based on FTC criteria, for such labeling. If a complaint is lodged, the manufacturer must be willing to defend the label and accept the resulting FTC ruling on the validity of the justification. If the justification was found not to be valid, the FTC could prohibit further use. If the FTC decided that there was an intent to mislead the public as to American content, it should be able to take appropriate punitive action. I look forward to developing these ideas further during the workshop. I would suggest that two other experts in the field of "Made in USA" labeling be invited to participate in the Workshop as they have a sophisticated view on the subject. William J. Lynott, President of the Buy America Foundation, and Joel Joseph, Chairman of the Made in the USA Foundation, have donated their time and money to making Americans aware of the significance of "Buying American". I am enclosing a copy of the Buyer's Guide. Please let me know if you would like me to develop additional ideas for the workshop. Thank you for your attention. Sincerely, Stephen Lande