Background

The Federal Trade Commission is proposing to adopt a rule prohibiting marketers from including unqualified “Made in USA” claims on labels unless (1) final assembly or processing of the product occurs in the U.S., (2) all significant processing that goes into the product occurs in the U.S., and (3) all or virtually all ingredients or components of the product are made and sourced in the U.S. Interested parties will be able to comment on this proposal for a period of 60 days from its date of publication in the Federal Register.

The FTC has pursued enforcement actions since at least 1940 to prevent unfair and deceptive “Made in USA” and other U.S.-origin claims (MUSA claims). FTC enforcement actions have established the principle that unqualified MUSA claims imply no more than a de minimis amount of the product is of foreign origin. Issued in 1997, the FTC’s Enforcement Policy Statement on U.S. Origin Claims established that a marketer making an unqualified claim for its product should, at the time of the representation, have a reasonable basis for asserting that “all or virtually all” of the product is made in the U.S. The FTC has routinely applied this standard in its MUSA decisions and orders since that time.

Currently, the FTC’s MUSA program consists of compliance monitoring, counseling, and targeted enforcement pursuant to the agency’s general authority under Section 5 of the FTC Act. Congress has also granted the FTC authority to address MUSA labeling under a separate statute (15 U.S.C. 45a), although to date the FTC has not exercised its rulemaking authority under that provision.

Recently, the FTC held a public workshop and collected public comments in support of a review of its MUSA program. The agency indicates that during that proceeding stakeholders expressed nearly universal support for the FTC to exercise authority pursuant to 15 U.S.C. 45a to issue a rule addressing MUSA claims. Commenters argued that such a rule could have a strong deterrent effect against unlawful MUSA claims without imposing new burdens on law-abiding companies.

Accordingly, the FTC has determined to proceed with a proposed rule that would incorporate its established standard for MUSA claims. The proposal also covers labels making unqualified “Made in USA” claims appearing in mail order catalogs or mail order advertising. To avoid confusion or perceived conflict with other country-of-origin labeling laws and regulations, the proposed rule specifies that it does not supersede, alter, or affect any other federal or state statute or regulation relating to country-of-origin labels, except to the extent that a state country-of-origin statute, regulation, order, or interpretation is inconsistent with the proposed rule.

For more information on “Made in USA” labeling requirements, please contact trade attorney Elise Shibles at (415) 490-1403.

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