FTC

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Federal Trade Commission (FTC)

Problem – Made in USA labeling is frequently abused by companies who would not even qualify for Assembled in USA labeling under the current rules. This gives them an unfair advantage in the marketplace as many American consumers prefer to buy "Made in USA" products when given the option, especially if the retail price is not too much higher than imported goods.

Current enforcement by the FTC does not impose any financial penalty for companies who make false Made in USA claims. The FTC merely sends them a letter, demanding that they stop. There is no penalty imposed unless there was a previous FTC order against the company regarding the same products. Even if a company has made false claims for years, they are not penalized unless a previous order exists. (See this case for example)

This practice does not seem to work and may actually encourage companies to follow bad examples of making false country of origin claims. The end result is that American companies (who also employ American workers), but who honestly label their products as Made in China for example, are penalized by loss of sales to dishonest competitors.

Ironically, the FCC currently imposes penalties for infractions that hurt no one, while the FTC does not impose penalties for infractions that hurt many. And according to the FTC’s charter, their mission is “Protecting America’s Consumers”.

Spirit of the Regulation – Encourage companies to make products in America, by giving them a significant marketing advantage.

Solution – Enforce the regulations already in place, with real penalties for companies who make false claims.

Idea for another solution:

Although the FTC clearly defines Made in USA and Assembled in USA qualifications, for some products it is simply not possible to meet the qualifications. For example, it is impossible for any electronic product to be Made in USA anymore, because all basic electronic components (resistors, capacitors, diodes, IC’s, switches, connectors, etc.) are no longer made in America. There are many reasons for this, but that is a discussion for another venue.

The current rules do not allow a product to bear an unqualified Assembled in USA label for simple “screwdriver assembly” of foreign sourced sub-assemblies into a finished product. To bear an unqualified Assembled in USA label, companies must purchase very expensive equipment to handle auto-insertion of electronic components into circuit boards and more expensive equipment to handle automated soldering. Then they have to add the expense of complying with EPA and OSHA, as they are dealing with “hazardous” materials and processes… all for the luxury of putting an unqualified “Assembled in USA” on their products. That is why it is rare to see an Assembled in USA label, and never on electronic products.

To get back to the spirit of the regulation, to encourage companies to make their products in America, perhaps the qualifications for the Made in USA label should only require 51% USA content. Ironically, the US Government allows as little as 51% US content to be called Made in USA for government procurement purposes, according to the Buy American Act, but this standard is not allowed for American businesses.

For unqualified Assembled in USA claims, “screwdriver assembly” of foreign sourced components or sub-assemblies should be allowed.

Everyone wants high manufacturing wages and cheap products, but you can’t have it both ways.  We need a compromise to make Made in USA work for Americans.

Note: Complete details of the Made in USA standard can be found here.