Made in USA: FTC Outlines Compliance with its Guidelines

February 4th, 2013 | Category: Featured Content

In any manufacturing industry, doors and windows included, “made in the USA” is a term that often pops up. But what does this mean—and what does the Federal Trade Commission (FTC) require when it comes to this term?

The FTC’s “Made in USA” Act was designed to give the agency “the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin.” The Act requires that in order for a product to be labeled or advertised as “Made in USA” that it be “all or virtually all” made in the U.S.

“‘All or virtually all’ means that all significant parts and processing that go into the product must be of U.S. origin,” writes the FTC. “That is, the product should contain no — or negligible — foreign content.”

According to the report, the product’s final assembly or processing also must take place in the U.S. “The Commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the finished product,” writes the FTC. “In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product’s overall processing. The same could be true for some foreign parts. In these cases, the foreign content (processing or parts) is more than negligible, and, as a result, unqualified claims are inappropriate.”

The Act applies to any U.S. origin claims that appear on products and labeling, advertising and other promotional materials, along with electronic marketing, according to the FTC.

The FTC notes that claims can be expressed or implied. For example, using U.S. symbols, such as the flag or references to location of a company’s headquarters, could imply a claim of U.S. origin, according to the FTC.

Additionally, FTC notes that it’s important that manufacturers not imply that a whole product line is of U.S. origin if only part of it meets the guidelines.

The FTC also addresses the manufacturing process—and how far back manufacturers should look before making such claims.

“To determine the percentage of U.S. content, manufacturers and marketers should look back far enough in the manufacturing process to be reasonably sure that any significant foreign content has been included in their assessment of foreign costs,” writes FTC. “Foreign content incorporated early in the manufacturing process often will be less significant to consumers than content that is a direct part of the finished product or the parts or components produced by the immediate supplier.”

When it comes to raw materials used in a product, the FTC looks at “how much of the product’s cost the raw materials make up and how far removed from the finished product they are.”

FTC also notes that the act also addresses qualified claims (i.e. “a product is of 60 percent U.S. content.”

“A qualified Made in USA claim describes the extent, amount or type of a product’s domestic content or processing; it indicates that the product isn’t entirely of domestic origin,” writes FTC.

Companies should stick to qualified Made in USA claims “when a product includes U.S. content or processing but don’t meet the criteria for making an unqualified Made in USA claim,” according to FTC.

“Because even qualified claims may imply more domestic content than exists, manufacturers or marketers must exercise care when making these claims,” adds the FTC report. “That is, avoid qualified claims unless the product has a significant amount of U.S. content or U.S. processing. A qualified Made in USA claim, like an unqualified claim, must be truthful and substantiated.”

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