Federal Trade Commission Documents Received Jan. 22, 1996 B18354900099 McDermott, Will & Emery 1850 K Street Washington, D.C. 20006-2296 Facsimile 202-778-8087 January 22, 1996 Office of the Secretary U.S. Federal Trade Commission Room 159 Sixth Street & Pennsylvania Avenue, NW Washington, DC 20580 Re: "Made In USA" Review - Comments and Request to Participate in Workshop; FTC File No. P894219 Dear Mr. Secretary: Pursuant to the notices published by the Federal Trade Commission ("Commission") on October 18 and December 19, 1995 (60 Fed. Reg. 53922; 60 Fed. Reg. 65327), the attached comments and request to attend the Commission's workshop are submitted on behalf of the International Electronics Manufacturers of America ("IEMCA"). IEMCA urges the Commission to revise its rule and policy respecting use of "Made in USA" claims in product advertising and labeling in accordance with the attached comments, and IEMCA requests that the undersigned be invited to participate on behalf of IEMCA in the workshop scheduled for March 26-27, 1996. Respectfully submitted, Robert S. Schwartz David J. Levine McDermott, Will & Emery 1850 K Street, NW Suite 450 Washington, DC 20006 Attachment \17575\027\50CORDJL.001 INTERNATIONAL ELECTRONICS MANUFACTURERS AND CONSUMERS OF AMERICA COMMENTS AND REQUEST TO PARTICIPATE IN WORKSHOP "MADE IN USA" REVIEW" - FTC FILE NO. P894219 The Federal Trade Commission ("Commission") announced in notices published October 18 and December 19, 1995 (60 Fed. Reg. 53922; 60 Fed. Reg. 65327) that it is conducting a comprehensive review of consumer perceptions and the Commission's rule and policy respecting use of "Made in USA" claims in product advertising and labeling. The Commission also invited parties to apply to attend a workshop on these issues to be held on March 26-27, 1996. The deadline for submitting comments and requesting to attend the workshop, originally set for January 16, 1996, was extended to January 22, 1996. These comments and request to participate in the workshop are submitted on behalf of the International Electronics Manufacturers of America ("IEMCA"). IEMCA is a U.S. trade association composed of 22 foreign-owned U.S. manufacturers and distributors of consumer and office electronics products, computer products, and telecommunications equipment. IEMCA members also include U.S. retailers of the products of IEMCA members. IEMCA members manufacture and sell a wide range of electronics products in the United States and most markets throughout the world. Country of origin claims and labeling issues are very important to these IEMCA members and their customers. As U.S. manufacturers and sellers, IEMCA members are directly affected by the Commission's rules and policy respecting origin claims and labeling. As multinational companies, IEMCA members must also abide by the rules of origin applied and enforced by other U.S. agencies, such as the U.S. Customs Service ("U.S. Customs") and by customs authorities in other countries. IEMCA members must properly identify and mark their products (and product packaging) wherever they are manufactured and wherever they are distributed and sold. As discussed in its October 18, 1995, Federal Register notice, the Commission's rule for allowing unqualified "Made in USA" claims in product advertising or labeling has required that such products be "wholly domestic in origin." In other words, the Commission requires all parts and labor to be domestic in order for a product or its packaging to be marked "Made in USA" for sale in U.S. commerce. 60 Fed. Reg. at 53923. IEMCA members firmly believe that this rule is outdated and ill-advised. They urge the Commission to revise its rule to comport with market realities and to be consistent with the origin and marking rules applied by U.S. Customs and the customs authorities of other countries. As the Commission is well aware, its rule for allowing "Made in USA" claims or labels on products sold in U.S. commerce differs significantly from the rules of origin applied by U.S. Customs. See item II.C. of the October 18 notice, 60 Fed. Reg. 53925. U.S. Customs applies a "substantial transformation" rule for determining a product's foreign country of origin. U.S. Customs applies its origin rules for purposes of quotas and duties, as the Commission recognizes in its notice, and for marking purposes. Foreign customs authorities apply various similar rules of origin for products entering their countries. The Commission should also be aware that an Agreement on Rules of Origin was negotiated as part of the Uruguay Round of multilateral trade negotiations, which resulted in the formation of the World Trade Organization ("WTO") in 1994. The United States agreed to implement to Agreement on Rules of Origin in section 132 of the Uruguay Round Agreements Act. The primary purpose of the Agreement on Rules of Origin is the international harmonization of rules of origin. As stated by the U.S. International Trade Commission, the Agreement is designed to harmonize and clarify nonpreferential rules of origin for goods in trade on the basis of the substantial transformation test; achieve discipline in the rules' administration; and provide a framework for notification, review, consultation, and dispute settlement. These harmonized rules are intended to make country-or-origin determinations impartial, predictable, transparent, consistent, and neutral, and to avoid restrictive or distortive effects on international trade." International Harmonization of Customs Rules of Origin; Inv. No. 332-360, 60 Fed. Reg. 32339 (June 21, 1995). The work program for accomplishing this goal is well underway, under the auspices of the World Customs Organization ("WCO", formerly the Customs Cooperation Council), and the United States is an active participant. IEMCA members and all other firms that manufacture products in the United States and sell those products in the United States and abroad must contend with the rules of customs authorities and with the Commission's inconsistent rule. This creates the burdensome and very expensive circumstances where a manufacturer must apply different origin markings on identically U.S.-manufactured products, depending on whether the products are destined for U.S. commerce or other markets. Such circumstances would be significantly eliminated if the Commission's rule of origin were made consistent with the rules of origin applied by customs authorities. Accordingly, IEMCA urges the Commission to revise its rule and policy respecting use of "Made in USA" claims in product advertising and labeling so as to be consistent with the substantial transformation rules, as applied by U.S. Customs and other customs authorities and as promoted in the WCO negotiations. Manufacturers, sellers, and consumers alike would be well served if the Commission applied its "Made in USA" rule in a manner that was consistent with the origin rules applied by customs authorities, including U.S. Customs. IEMCA appreciates this opportunity to present its views, and also requests the opportunity for its representative counsel to attend the workshop scheduled for March 26-27, 1996.