A new presidential administration has taken office, and it has made some appealing promises to bring manufacturing back to the U.S. Whether the new administration can deliver on these promises remains to be seen, but it may be a good time to review government standards for the phrases “Made in the USA” and “Made in America.” Often, these promotional claims are made to imply quality and/or inspire purchases based on patriotism or a desire to help American-owned businesses. As these factors can be quite persuasive, and the U.S. government has an interest in prohibiting false advertising, the qualifications for a promotional phrase such as Made in the USA is regulated under the auspices of the Federal Trade Commission (FTC). You might be curious as to how the FTC defines Made in the USA and how that affects metalcasters and their suppliers.
The FTC’s Made in the USA policy applies to all products advertised or sold in the U.S., except for products specifically subject to country of origin labeling by other laws. Two examples of these other laws include the American Automobile Labeling Act and the Buy American Act. The American Automobile Labeling Act requires each automobile manufactured on or after October 1, 1994, for sale in the U.S. bear a label disclosing where the car was assembled, the percentage of equipment that originated in the U.S. and Canada, and the country of origin of the engine and transmission. The Buy American Act requires that a product be manufactured in the U.S. of more than 50% U.S. parts to be considered Made in the USA for government procurement purposes. There is no other law that requires most other product sold in the U.S. to be marked or labeled Made in the USA or have any other disclosure about their amount of U.S. content. However, manufacturers and marketers who choose to make claims about the amount of American content in their products must comply with the FTC’s Made in the USA policy.
The enforcement policy of the FTC applies to U.S. origin claims appearing on products and labeling, advertising and other promotional materials. It also applies to all other forms of marketing, including marketing through digital or electronic means, such as the internet or e-mail. The Made in the USA claim can be express or implied. For example, express claims can include “Made in USA,” “Our products are American-made,” and “USA.” Examples of implied claims can include indications such as “True American quality.” In cases of implied claims, the FTC will focus on the overall impression of the advertising, label, or promotional material. American symbols or geographic references may convey a claim of U.S. origin either by themselves or in conjunction with other phrases or images. An American brand name or trademark by itself is not likely to be considered a U.S. origin claim.
American origin claims can be unqualified or qualified. Claims of American origin made without any qualification must be “all or virtually all” made in the U.S., which includes all 50 states, the District of Columbia, and the U.S. territories and possessions. This leads to the obvious question, “How is ‘all or virtually all’ actually interpreted by the FTC?” This phrase has been interpreted to mean that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no—or negligible—foreign content. This may seem to be open to interpretation, but the FTC has been rather reasonable in its explanations regarding “negligible foreign content” and several factors are used in assessing the product’s manufacturing process. Primarily, the product’s final assembly or processing must occur in the U.S. Other factors include: 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. For example, if a foundry supplier produces a core machine in Oklahoma and uses blow tubes from a foreign manufacturer, then an unqualified Made in the USA claim is not likely found to be deceptive because the blow tubes make up a negligible portion of the product’s total manufacturing costs and are less than significant parts of the final product.
If you feel your castings or casting supplies do not meet the standard for an unqualified claim such as Made in the USA, qualified claims are also accepted by the FTC. Qualified Made in the USA claims describe the extent, amount or type of a product’s domestic content or processing. In essence, they indicate the product is mostly American, but isn’t entirely of domestic origin. Some examples may include: “60% U.S. content,” “Made in USA of U.S. and imported parts,” or “Molding machine assembled in USA from Chinese frame and other foreign parts.”
The FTC is charged with preventing deception and unfairness in the marketplace. The FTC has the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin. Should you have further questions regarding the use of Made in the USA claims, please consult your business attorney.
Click here to see this story as it appears in the May/June 2017 issue of MCDP
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