SEMA eNews Vol. 23, No. 30, July 23, 2020

Federal Trade Commission to Create a “Made in USA” Regulation

By SEMA Washington, D.C., Staff

The Federal Trade Commission (FTC) is proposing to consolidate its longstanding policy on enforcing unqualified “Made in USA” claims within a regulation (Part 323—Made in USA Labeling), making it easier for businesses to understand the requirements.

Since at least 1940, the FTC has used its general legal authority to enforce against unfair or deceptive trade practices regarding unqualified Made in USA claims. It has provided broad guidance, most recently in December 1997, that requires a seller making an unqualified Made in USA claim to have a reasonable basis for asserting that “all or virtually all” of the product is made in the United States.

The FTC policy is based on the principle that an unqualified Made in USA claim implies no more than a de minimis amount of product is of foreign origin. The agency prohibits unqualified claims unless: (1) final assembly or processing of the product occurs in the United States, (2) all significant processing that goes into the product occurs in the United States, and (3) all or virtually all ingredients or components of the product are made and sourced in the United States.

Companies may still make qualified Made in USA claims for products that include U.S. content or processing but do not meet the criteria for making an unqualified claim. Examples of qualified claims include: “Made in USA of U.S. and imported parts.” “75% U.S. content.”  “Assembled in U.S.A.”

The FTC rule would not supersede or affect any other federal or state rule that is consistent or would provide greater protection. For example, California allows a “Made in U.S.A.” label for products sold in California if the product is made in the United States and all its subcomponents that are sourced from outside the United States constitute no more than 5% of the final value of the manufactured product. The labels may also be used if the subcomponents cannot be obtained in the United States and all subcomponents sourced from outside the United States make up no more than 10% of the final wholesale value of the manufactured product.

Find out more information. Comments due September 14, 2020.

For more information, contact Stuart Gosswein at stuartg@sema.org.

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