‘Made in USA’ Label Rules Will Stand

WASHINGTON — The Federal Trade Commission, ending a two-year controversy with a decision favored by labor and some business groups, said Monday that it will not tinker with requirements for the “Made in USA” label.

The commission twice this year had proposed expanding the amount of foreign content that a product could contain and still use the label, but ran into a tidal wave of protest each time. In Southern California, garment groups were among those who were opposed to a revision, but U.S. subsidiaries of foreign car makers were hoping for the change.

The 50-year-old rule will essentially stay the same. “When a product is labeled with an unqualified ‘Made in USA’ claim, it should contain only a de minimis, or negligible, amount of foreign content,” the FTC decided, responding to strong pressure from Capitol Hill and an organized outpouring of public sentiment.

Jack Kyser, economist at the Los Angeles Economic Development Corp., said the FTC’s ruling has broad implications in Southern California because it is a major center for international trade. “For a lot of industries, it’s an emotional, complicated issue,” he said.

Joe Rodriguez, executive director of the Garment Contractors Assn. of Southern California, had written letters to the FTC opposing any dilution of the “Made in USA” requirements. “It’s wonderful,” Rodriguez said of the ruling. If the FTC eased the requirement, “it would have invited a floodgate of imports that would have been erroneously labeled,” he said. “That in turn would have meant an erosion of jobs and harm to our domestic contractors and workers here.”

However, Vera Campbell, president of Knit Works, a Los Angeles manufacturer of junior and children’s clothes, offered a counterpoint. Campbell said a change in the labeling rule is needed because the current one is inconsistent. Right now, she said, pieces of clothes that are bought outside the country but sewn in the U.S. can bear the “Made in USA” label. Yet piece goods originating in the U.S. but sewn in Mexico, for example, must say “Assembled in Mexico of U.S. components.”

“The ruling is 50 years old, and it should be updated to reflect the way apparel is being made today,” said Campbell, whose company sews piece goods obtained from South Korea.

Jody Bernstein, director of the Bureau of Consumer Protection, said the guidelines mark the first time the FTC “has articulated its interpretation of how the standard will be applied.”

In the end, the agency had little choice. Outraged members of the House and Senate from both political parties, backed by more than 200 members of Congress, had prepared legislation in case the FTC changed its rules.

The commission said Monday that it had received “more than 1,000 written comments . . . the majority of which strongly supported” the existing standard, along with a petition signed by more than 9,000 people.

The FTC considered changing the rule after earlier public comments that followed its crackdown on a company that allegedly misused the “Made in USA” label. Dozens of people contacted the commission to suggest it loosen its standard in a world of increasing global trade.

American Honda Motor Co. in Torrance was among the multinational companies that favored the change, and expressed disappointment upon hearing the news Monday.

“We knew what was coming,” said spokesman Art Garner. “We would have liked to have seen a more realistic view of the world,” he said, noting that the manufacture of many goods crosses borders. Garner said Honda has not labeled its domestically produced cars with “Made in USA,” even though under some U.S. government classifications, more than 90% of the content of the Honda Accord and Civic originate in the U.S.

But many others opposed any change by the FTC. More than 100 groups--including the Consumer Federation of America and labor and agricultural groups--banded together as the “Made in USA” coalition to oppose any change.

“The FTC deserves praise for listening to the American people before it finalized its proposal to water down the ‘Made in USA’ label,” David Flory, a spokesman for the group said.

Any FTC decision was bound to cut a broad swatch across most companies in America, and even have disparate effects within individual companies.

Four members of Congress who had led the fight to retain the label standard praised the FTC.

“This ruling to keep the current standard is great news for every company that now puts the ‘Made in USA’ label on its products and every consumer who purchases these products,” Sen. Fritz Hollings (D-S.C.) said in a statement.

“American consumers have come to rely on this label as insurance that these products are made in the USA,” he said.

Rep. John Dingell (D-Mich.) said the FTC had “wisely” decided the issue, while Sen. Spence Abraham (R-Mich.) called it a “victory for American workers and consumers.”

Rep. Bob Franks (R-N.J.) said the decision showed that “customers and consumers have prevailed.”

The decision appears to put the controversy to rest after the two earlier misfirings.

In May, the commission proposed loosening the requirement so products could display “Made in USA” labels if 75% of their value in labor and materials came from the United States. But the proposal did not fly.

This fall the FTC suggested permitting the label if products were 90% U.S.-made. That proposal angered bipartisan opponents on Capitol Hill, who said the FTC was still trying to compromise the existing standard.

By not changing anything, the commission said, “there is no ‘bright line’ to establish when a product is or is not” able to qualify for the label.

Without such specific guidelines, the FTC said, it would consider whether final assembly took place in the United States, the portion of a product’s total manufacturing costs attributable to U.S. parts and processing, and how far removed from the finished product any foreign content was.