Federal Trade Commission Received Documents Jan 22 1996 B18354900107 Secretary COMMENTS BY THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS IN RESPONSE TO THE FEDERAL TRADE COMMISSION REQUEST FOR COMMENTS Federal Register Notice 60 FR 53922 October 18, 1995 Submitted on behalf of the International Brotherhood of Teamsters by Despres, Schwartz & Geoghegan 77 West Washington-711 Chicago, Illinois 60602 (312) 372-2511 (Office) (312) 372-7391 (Fax) INTRODUCTION The International Brotherhood of Teamsters ("IBT") appreciates the opportunity to submit comments on the Federal Trade Commission's standards for the use of "Made in USA" product labeling and advertising claims. As shown by the FTC's initial survey, U.S. consumers believe that a "Made in USA" label means a product was in fact made in the USA, and will tend to buy such products when possible. The consumer appeal of the "Made in USA" label reflects not only support for American jobs and industry, but also a belief that such a product is manufactured under American health and safety regulations and wage and hour standards. People shrink from buying goods that could have been made by slave labor, child labor, or other types of oppressed labor. The IBT believes the FTC should firmly oppose any weakening of the standards for use of the Made in USA label that might undermine current incentives to use American labor; and should avoid misleading consumers by giving the Made in USA label an ambiguous meaning. While it is understandable that industry groups seek to blunt the competitive edge provided by the label, it is not in the interest of American consumers (who are also American workers) to do so. Should the FTC decide nevertheless to amend the current standard, the IBT strongly urges that any such amendment ensure support for American jobs and work conditions at least as effectively as does the current standard. COMMENTS A. The Current Standard Should Be Retained The Made in USA label came out of a long history of government support for domestic industry and employment. The very first Congress enacted trade laws not merely to raise funds through customs duties on goods and tonnage duties on foreign vessels, but also to give a "just and decided preference to the labors of American artisans...". The same first Congress also passed the first comprehensive labor law for merchant seaman, guaranteeing both the right to adequate pay and medicine, and the right not to sail on a leaky vessel. (David P. Currie: The Constitution in Congress: Substantive Issues in the First Congress, 1789-91, 61 U. of Chicago Law Review 775, 780.) Over the years, other laws have been enacted to encourage "Buying American." Americans' historic belief in "taking care of our own" explains why the "Made in USA" label is such a positive selling tool. With a genuine "Made in USA" label, consumers can feel that they are helping to maintain the jobs of their neighbors, and that their purchases are not based on the labor of eight year old children working sixteen hour days. While consumers might be willing to pay somewhat more for that assurance, they don't have to. They can walk into any store and find items with the Made in USA label priced competitively with items from, e.g., Bangladesh. If consumers should no longer be assured that the "Made in USA" label means what it says, they will be discouraged from using their consumer power to support retention of American jobs. Nor will manufacturers have the incentive to keep using American labor even to the extent they still do. If they are allowed the benefits of the Made in USA label while relying heavily on third world workers with low wages and no health and safety protections, the quality of the work environment here and abroad will be certain to deteriorate. In addition, at least two other policy considerations support retention of the FTC's current standard for the Made in USA label. One is that any dilution of the standard would confuse the public about the source of consumer goods and undermine confidence in the accuracy of labels, in direct violation of the FTC's mission. The other is that the government is in the process of revamping the nation's welfare system, and will be compelling thousands of currently unemployed people to get jobs. At the very least, Governmental agencies should not take any action that may diminish the number of jobs available to them. B. Arguments for Modification are Unpersuasive Arguments by industry groups for dilution of the FTC's standard do not support the modifications they seek. According to the FTC's request for comments, such groups argue that 1) because of increased globalization, consumers do not assume now that Made in USA means that a product has been made with all or virtually all American labor and materials; 2) the standard is inconsistent with that of the U.S. Customs Service; 3) the standard cannot be met by many sellers today; and 4) the standard operates to reduce the use of American labor because it makes it too difficult to reap the public relations benefit of doing so. 1. Consumers undoubtedly are aware of increased globalization of production, but that makes the unqualified Made in USA label more, not less, significant. Consumers are familiar with alternative formulations being used all the time, such as "assembled in America," or "made with American labor and materials from X." In the face of globalization, consumers can appreciate even more the determination of a company to retain American jobs and use American materials. 2. The standard used by the U.S. Customs Service is not inconsistent with the FTC's current standard for the Made in USA label. Manufacturers know or can determine where component parts are from. So, even if the Customs Service allows a part to be identified as having a U.S. origin because it is to be "substantially transformed" here, the FTC can require the label on the finished product to accurately reflect whether the item was in fact Made in USA. 3. While it may be true that many U.S. producers today would find it difficult to meet the FTC's standards for using the Made in USA label, they have no "right" to use it if the goods are not made in America. If they use cheaper foreign labor, there is no reason for them to have the benefit of both cheaper labor and the Made in USA label. If particular raw materials are unavailable in America, a producer can readily state that an item is made with American labor and material from imported raw materials. 4. There is no empirical basis for industry's claim that a less restrictive Made in USA label would increase use of American labor. It is unlikely that companies which have already moved their plants to Malaysia or Brazil would re-open plants in America just because they could use the label. It is much more likely that, if a lower standard prevailed such as requiring that only 50% of the workers manufacturing an item need be American, some companies whose workforce is now more than 50% American might be encouraged to reduce that percentage and rely more on foreign labor. C. Possible Alternatives For the reasons stated above, the IBT believes the FTC must retain the current standard requiring that a "Made in USA" label may be used only if all the labor and parts are American. Nevertheless, if the FTC should decide to modify that standard, the following should be considered. First, while arguably it may be reasonable to "relax" the standard when necessary raw materials are unavailable to meet domestic needs, there is absolutely no reason to relax it as to labor. Therefore, if there is to be a modification, the FTC should still insist that the label may only be used on an item if all or virtually all of the labor involved in making it is American. Second, to the extent the FTC allows a modification as to labor, any use of the Made in USA label where less than virtually all of the labor is American should be predicated on a company's agreeing that any non-American labor used in producing an item will be subject to minimum wage, hour, health and safety standards. An alternate label also could be approved, stating "Assembled in America with Parts Produced under Fair Labor Code." This would allow the "Made in USA" label to keep its original value, and still provide incentives for companies both to retain American workers and promote higher labor standards elsewhere. Indeed, the best solution for the future of the Made in USA label would be for it to reflect not only the production of goods in America, but a commitment on the part of any user of the label to decent working standards and respect for workers, much as the old "Blue Eagle" label signified in the 1930's. To allow clothing manufacturers relying on Thai "slaves" in California sweatshops to use the label derogates the meaning of the label as much as would allowing its use on products actually made in Thailand. The label, ideally, should tell consumers that a product is made by a company that is trying to be a good citizen, a company who views its own economic health as linked with the economic health of the community. Certainly in this day and age companies are not required to use American labor and abide by American working standards, but if they do not, they should not benefit from a label that indicates they do. CONCLUSION As is reflected by the FTC's re-examination of the "Made in USA" label, such labels have meaning that can change as society changes. However, the FTC's position on the use of the Made in USA label will not simply be a passive reflection of current consumer perception of that label; whatever standards the FTC promulgates ultimately will affect consumer perception and the social meaning of the label. The IBT urges that the FTC exercise its responsibilities in this regard in the interests of American consumers, who happen also to be the very workers whose work is claimed as the basis for the Made in USA label. The FTC should retain the current standard for using that label. If it modifies that standard, it should do so only in a manner that protects American jobs and American working standards. MADE IN USA WORKSHOP REQUEST TO PARTICIPATE FTC FILE NO. P 894219 Pursuant to Federal Register Notice of December 19, 1996, 60 FR 65328, the International Brotherhood of Teamsters ("IBT") requests the opportunity to participate in the Workshop to be conducted by the FTC on March 26 and 27, 1996 concerning "Made in USA" labeling claims. The IBT has submitted, concurrently with this Request, a written substantive comment pursuant to Federal Register Notice 60 FR 53922, October 18, 1995. Please notify the IBT as to whether it may participate in the workshop: Attention: Sarah Vanderwicken c/o Despres, Schwartz & Geoghegan 77 West Washington Street-711 Chicago, Illinois 60602 (312) 372-2511 (Office) (312) 372-7391 (Fax)