Publication of ``Made in the USA'' Provisions of the Violent Crime Control and Law Enforcement Act of 1994

FEDERAL TRADE COMMISSION

Publication of ``Made in the USA'' Provisions of the Violent

Crime Control and Law Enforcement Act of 1994

AGENCY: Federal Trade Commission.

ACTION: Notice of provisions of statute.

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SUMMARY: On September 13, 1994, Congress enacted the Violent Crime

Control and Law Enforcement Act of 1994 (``Crime Bill''). Section

320933 of the Crime Bill states, inter alia, that ``Made in the

U.S.A.'' or ``Made in America'' claims or their equivalent shall be

consistent with decisions and orders of the Federal Trade Commission

(``Commission''). Section 320933 further states that it ``shall be

effective upon publication in the Federal Register of a Notice of the

provisions of this section.'' This notice implements the latter

requirement.

DATES: Section 320933 of the Crime Bill is effective on March 10, 1995.

FOR FURTHER INFORMATION CONTACT:

Robert Easton, Special Assistant, Division of Enforcement, Federal

Trade Commission, Washington, DC 20580, telephone 202/326-3029.

SUPPLEMENTARY INFORMATION: Section 5 of the Federal Trade Commission

Act (``FTC Act''), 15 U.S.C. 45, directs the Commission to prevent

``deceptive acts and practices,'' including deceptive claims of

domestic origin. Although goods manufactured in the United States

generally are not required to have a label identifying domestic

content, a manufacturer may choose to make an unqualified or a

qualified domestic origin claim for its products.\1\ An example of an

unqualified claim is that a product is ``Made in USA,'' while an

example of a qualified claim is that a product is ``Made in USA of

foreign components.'' The Commission reviews Made in USA claims

principally under its section 5 authority to prohibit deceptive acts or

practices.\2\

\1\Some statutes require disclosure of domestic origin or

domestic content for certain products. E.g., Textile Products

Identification Act, 15 U.S.C. 70; Wool Products Labeling Act, 15

U.S.C. 68 (both enforced by the Federal Trade Commission); American

Automobile Labeling Act, 15 U.S.C. 1950 (enforced by the U.S.

Department of Transportation.

\2\The Commission will find deception ``if there is a

representation, omission or practice that is likely to mislead the

consumer acting reasonably in the circumstances, to the consumer's

detriment.'' Letter dated October 14, 1983, from the Federal Trade

Commission to the Honorable John D. Dingell, Chairman, Committee on

Energy and Commerce, U.S. House of Representatives (``Deception

Statement''), reprinted in Cliffdale Associates, Inc., 103 F.T.C.

110, 176 (1984).

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On September 13, 1994, Congress enacted the Crime Bill, P.L. 103-

322, 108 Stat. 2135. Section 320933 of the [[Page 13159]] Crime Bill

(15 U.S.C. 45a) governs the use of certain Made in USA claims. Section

320933 states, inter alia, that ``Made in the U.S.A.'' or ``Made in

America'' claims or their equivalent shall be consistent with decisions

and orders of the Federal Trade Commission. The section further states

that the section ``shall be effective upon publication in the Federal

Register of a Notice of the provisions of this section. The Commission

shall publish such notice within six months after the enactment of this

section.''

The text of Section 320933 of the Crime Bill is as follows:

To the extent that any person introduces, delivers for

introduction, sells, advertises, or offers for sale in commerce a

product with a ``Made in the U.S.A.'' or ``Made in America'' label,

or the equivalent thereof, in order to represent that such product

was in whole or substantial part of domestic origin, such label

shall be consistent with decisions and orders of the Federal Trade

Commission issued pursuant to section 5 of the Federal Trade

Commission Act. This section only applies to such labels. Nothing in

this section shall preclude the application of other provisions of

law relating to labeling. The Commission may periodically consider

an appropriate percentage of imported components which may be

included in the product and still be reasonably consistent with such

decisions and orders. Nothing in this section shall preclude use of

such labels for products that contain imported components under the

label when the label also discloses such information in a clear and

conspicuous manner. The Commission shall administer this section

pursuant to section 5 of the Federal Trade Commission Act and may

from time to time issue rules pursuant to section 553 of Title 5,

United States Code for such purpose. If a rule is issued, such

violation shall be treated by the Commission as a violation of a

rule under section 18 of the Federal Trade Commissions [sic] Act (15

U.S.C. 57a) regarding unfair or deceptive acts or practices. This

section shall be effective upon publication in the Federal Register

of a Notice of the provisions of this section. The Commission shall

publish such notice within six months after the enactment of this

section.

Section 320933 provides that Made in USA claims are to be

consistent with section 5 of the FTC Act, 15 U.S.C. 45 (``unfair or

deceptive acts or practices''), and that the Commission may reexamine

the application of its legal standard to particular facts as

circumstances warrant. This provision authorizes the Commission to

issue rules with respect to certain Made in USA claims. The Commission

has made no determination whether rulemaking would be appropriate.

However, the comments the Commission has received in response to a

proposed consent agreement in Hyde Athletic Industries, Inc.\3\

suggests that additional guidance may be appropriate in this area.

Should the Commission so determine, further opportunity for public

input will be considered.

\3\File No. 922-3236 (accepted for public comment Sept. 20,

1994, Commissioners Azcuenaga and Owen dissenting). In that mater,

the Commission alleged that the company falsely implied that all, or

virtually all, of the component parts of its product and all, or

virtually all, of the labor used in assembling its product was

domestic when, in fact, a substantial portion of the firm's product

line was assembled overseas of foreign component parts, and a

substantial portion of the products assembled in the United States

was composed of foreign component parts. The proposed order provided

that unqualified Made in USA claims will be permitted ``so long as

all, or virtually all, of the component parts of the footwear are

made in the United States and all, or virtually all, of the labor in

assembling the footwear is performed in the United States.'' 59 FR

48892, 48893 (1994). After reviewing the comments received, the

Commission will issue a public notice of its disposition in Hyde. (A

consent agreement that the Commission has accepted subject to final

approval is placed on the public record for a 60-day comment period,

after which the Commission decides whether to make the agreement

final. See Rule 2.34 of the Commission's Rules of Practice, 16 CFR

2.34).

At the same time that it published its proposed consent

agreement with Hyde, the Commission also issued a complaint against

New Balance Athletic Shoe, Inc., Docket No. 9268 (Commissioner

Azcuenaga dissenting). That matter is currently in litigation before

an administrative law judge.

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By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 95-5876 Filed 3-9-95; 8:45 am]

BILLING CODE 6750-01-M