Made in the USA: An FTC Workshop

On September 26, 2019, the Federal Trade Commission (“FTC” or “Commission”) hosted a public workshop to enhance its understanding of consumer perception of “Made in the USA” and other U.S.-origin claims, and to consider whether it can improve its “Made in USA” enforcement program.

Though the Commission has not issued regulations specifically covering “Made in USA” and other U.S.-origin claims, its 1997 Enforcement Policy Statement On U.S. Origin Claims (“Policy Statement”)[1] provides guidance on how the Commission applies Section 5 of the FTC Act, 15 U.S.C. § 45(a), to the use of such claims in advertising and labeling. Based on consumer research and thousands of public comments, the Policy Statement states that when a marketer makes an unqualified “Made in USA” claim, the marketer should, at the time of the representation, have a reasonable basis for asserting that “all or virtually all” of the product is, in fact, made in the United States. The Policy Statement also provides guidance to marketers on how to make appropriately qualified claims.

The workshop began by summarizing research on consumer perception of U.S.-origin claims, and included panels to discuss policy issues and appropriate enforcement measures and remedies. The panels included experts representing a wide range of perspectives, including industry representatives (large and small manufacturers, retailers, etc.) and consumer groups.

To aid our analysis, the Federal Trade Commission staff seek public comment from interested parties. In particular, we invite comment on the following questions:

1. How do consumers interpret “Made in USA” claims? Does this interpretation vary depending on the product advertised (e.g., do consumers interpret a claim made with respect to a shovel in the same way they do a claim made with respect to a smartphone)? Please provide any supporting studies, data, or other evidence.
2. What rationales underlie consumer preferences for products made in USA?  Does this vary by product?  How? Please provide any supporting studies, data, or other evidence.
3. What consumer perception testing of “Made in USA” claims has been done? Please provide any supporting studies, data, or other evidence.
4. When consumers see product advertisements or labels stating or implying that products are “Made in USA” or the equivalent, what amount of U.S. parts and labor do they assume are in the products? Does this vary by product? Please provide any supporting studies, data, or other evidence.
5. What are the costs and benefits of strictly enforcing an “all or virtually all” threshold for unqualified “Made in USA” claims? Please provide any supporting studies, data, or other evidence.
6. What are the costs and benefits of enforcing a bright-line, costs-based standard (e.g., 85% of costs must be attributable to U.S. costs in order to make an unqualified claim)? Please provide any supporting studies, data, or other evidence.
7. What are the costs and benefits of enforcing a flexible standard requiring case-by-case analysis? Please provide any supporting studies, data, or other evidence.
8. How do consumers interpret qualified “Made in USA” claims (e.g., “Made in USA with Imported Content,” “Assembled in USA,” “50% Made in USA”)? Do they believe that “Assembled in the USA” means something different than “Made in USA?” How would they interpret a claim that a portion of the product is “Made in USA,” for example, that a product is “80 Percent Made in USA?” Please provide any supporting studies, data, or other evidence.
9. Do consumers interpret “Made in USA” claims for similar products differently based on changes to manufacturing processes to increase or decrease the proportion of manufacturing costs attributable to U.S. costs? For example, consider Product A and Product B. For each, 20% of manufacturing costs are attributable to U.S. costs.  However, until last year, 50% of Product A’s manufacturing costs were attributable to U.S. costs. On the other hand, until last year, 5% of Product B’s manufacturing costs were attributable to U.S. costs. How would this affect consumer perception of  “Made in USA” claims? Please provide any supporting studies, data, or other evidence.
10. Do consumers interpret “Made in USA” claims differently based on whether a firm’s product’s U.S. content is higher than that of its competitors’ products? For example, for a given industry, if a firm uses a higher percentage of U.S. content in its products relative to the rest of the industry, would this affect consumer perception of a “Made in USA” claim? Please provide any supporting studies, data, or other evidence.
11. Do firms that advertise their products as “Made in USA” charge higher prices than their competitors whose products are not advertised in this way? Please provide any supporting studies, data, or other evidence.
12. If a firm advertises its product as “Made in USA,” how does this affect the quantity of sales it makes? Specifically, does a “Made in USA” claim: (1) cause consumers to shift away from competitors’ products that are not advertised in this way, or (2) cause new consumers to purchase the product? If so, by how much does the quantity sold increase through each of these channels? Please provide any supporting studies, data, or other evidence.
13. What remedies should the FTC seek against companies that make deceptive “Made in USA” claims?
14. If the FTC issues a rule regarding “Made in USA” claims, violators could face civil penalties in addition to equitable relief. In awarding civil penalties, courts consider the defendant’s degree of culpability, any history of prior misconduct, ability to pay, effect on ability to continue doing business, and such other matters as justice may require. Given these factors, if the FTC should seek civil penalties against companies that make deceptive “Made in USA” claims in violation of a rule, how should the FTC calculate the penalty amount it seeks to impose?
15. The FTC has addressed deceptive U.S- origin claims by U.S. firms through its ongoing enforcement program. However, overseas firms selling directly to U.S. consumers through online sales platforms may also make deceptive U.S.-origin claims. Given the limits imposed by the Communications Decency Act, 47 U.S.C. 230(c)(1), as well as the limits on the FTC’s jurisdiction and resources, what steps should the agency take to address deceptive U.S.-origin claims made to U.S. consumers on third-party platforms by firms with no U.S. presence?

We welcome comment on these and related questions and issues. The process for submitting comments is explained below.

[1] FTC, Issuance of Enforcement Policy Statement on “Made in USA” and Other U.S. Origin Claims, 62 FR 63756, 63766 (Dec. 2, 1997), available at https://www.ftc.gov/sites/default/files/documents/federal_register_notices/made-usa-and-other-u.s.origin-claims/971202madeinusa.pdf.

Attending the Workshop:

The workshop was free, open to the public, and was webcast.

Questions?

If you have a question about the workshop, please email musa@ftc.gov.