Highlights of the Proposed Guides for the Use of U.S. Origin Claims

The guides propose a new standard for making unqualified "Made in USA" claims:

• To be called "Made in USA," a product must be substantially all made in the United States

• A product will be considered substantially all made in the United States if:
  • U.S. manufacturing costs are at least 75% of manufacturing costs and the product was last substantially transformed in the United States; OR
  • The product was last substantially transformed in the United States and all significant parts or components of the product were last substantially transformed in the United States.

(Note: "substantial transformation" is a U.S. Customs Service term that refers to a manufacturing process that results in a new and different article of commerce, having a new name, character and use that is different from that which existed prior to the processing)

If a product does not meet the standard for an unqualified "Made in USA" claim, the marketer of the product may still promote the U.S. content of the product through more limited types of U.S. origin claims. These include:

• Qualified claims, e.g.,"Made in USA of U.S. and imported parts" or "U.S. Content: 50%"

• Claims about the U.S. origin of specific parts or manufacturing processes

• Claims comparing the product’s U.S. content with that of competing products

In addition, the proposed guides:

• Include examples that show how the guides apply in different situations

• Address the relationship between the FTC’s requirements for U.S. origin claims and the U.S. Customs Service’s requirements for foreign country-of-origin labels (e.g., "Made in Japan")

• Provide guidance on how marketers can calculate U.S. content

• Include a provision addressing situations where a product is both sold in the United States and exported, and the United States and foreign countries have potentially conflicting country-of-origin marking policies

Finalization and Enforcement of the Proposed Guides

• The guides are not yet final. The Commission will accept written comments on the proposed guides until August 11, 1997. After reviewing the public comments, the Commission can accept, reject, or modify the proposed guides.

• Because the guides are not themselves enforceable regulations, there is no penalty for violating the guides per se. However, conduct which violates the guides may lead to enforcement action under Section 5 of the FTC Act, which prohibits unfair and deceptive acts and practices.