Customs makes country-of-origin determinations using the "substantial transformation" test on a case-by-case basis. To ensure compliance, please make sure your order or request for quote references the clause requirement. Consult a lawyer to see if this private right of action is an appropriate course of action for you. If you know about import or export fraud, call Customs’ toll-free Commercial Fraud Hotline, 1-800-ITS-FAKE. Whether the steel in a pipe or wrench is imported would be a significant factor in evaluating whether the finished product is "all or virtually all" made in the U.S. Example: A company designs a product in New York City and sends the blueprint to a factory in Finland for manufacturing. that go into the product must be of U.S. origin. See the FTC Made in USA Policy Statement, to claim "Made in the USA". Quite simply, Americans want to buy products that create or keep jobs in the US. Cosmetics marketed in the United States, whether manufactured here or imported from abroad, must be in compliance with the provisions of the Federal Food, Drug, and Cosmetic Act (FD&C Act), Fair Packaging and Labeling Act (FP&L Act), and the regulations published under the authority of these laws.The regulations published by the Food and Drug Administration (FDA) are all codified in Title 21, Code of Federal Regulations (21 CFR). Example: A table lamp is assembled in the U.S. from American-made brass, an American-made Tiffany-style lampshade, and an imported base. The U.S. content in the product has been increased from 2 percent in the previous version to 4 percent in the current version. Manufacturers and marketers should not indicate, either expressly or implicitly, that a whole product line is of U.S. origin ("Our products are made in USA") when only some products in the product line are made in the U.S. according to the "all or virtually all" standard. The Commission does not pre-approve advertising or labeling claims. ... For automobiles and textiles, as well as items made from fur and wool, additional requirements … Customs defines "substantial transformation" as a manufacturing process that results in a new and different product with a new name, character, and use that is different from that which existed before the change. The FTC has jurisdiction over foreign origin claims on products and in packaging that are beyond the disclosures required by Customs (for example, claims that supplement a required foreign origin marking to indicate where additional processing or finishing of a product occurred). U.S. content must be disclosed on automobiles and textile, wool, and fur products. To avoid misleading consumers, marketers should clearly disclose the foreign manufacture of a product. Such costs generally are limited to the total cost of all manufacturing materials, direct manufacturing labor, and manufacturing overhead. And they are getting clever. "Hand carved in U.S. — Wood from Philippines." What is the FTC Standard for Made In USA? In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product’s overall processing. According to a survey conducted by Consumer Reports National Research Center, 78 percent of Americans would rather buy an American product than an identical product made abroad.. That being the case, labeling your product “Made in America” amounts … An unqualified Made in USA claim is deceptive for two reasons: The base is not far enough removed in the manufacturing process from the finished product to be of little consequence and it is a significant part of the final product. NAD handles complaints about the truth and accuracy of national advertising. To comment, call toll-free 1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman. Before claiming the product is Made in USA, this manufacturer should look to its motor supplier for more specific information about the motor’s origin. Ultimately, Walmart removed many of the “Made in USA” logos from its product listings, deleted erroneous U.S. country of origin claims that appeared in product descriptions or titles, and made more detailed disclosures about the percentage of American-made. These days, some companies will do anything to hide where their products are actually manufactured. However, if a marketer chooses to make a country of origin claim in the promotion or labeling of its products, such … Small businesses can comment to the Ombudsman without fear of reprisal. A qualified Made in USA claim is appropriate for products that include U.S. content or processing but don’t meet the criteria for making an unqualified Made in USA claim. The Federal Trade Commission (FTC) is charged with preventing deception and unfairness in the marketplace. Example: A company manufactures food processors in its U.S. plant, making most of the parts, including the housing and blade, from U.S. materials. A qualified Made in USA claim, like an unqualified claim, must be truthful and substantiated. This comparative claim is deceptive because the difference between the U.S. content in the current and previous version of the product are insignificant. Manufacturers and marketers should check with Customs to see if they need to mark their products with the foreign country of origin. Because even qualified claims may imply more domestic content than exists, manufacturers or marketers must exercise care when making these claims. The food processor manufacturer knows that the motor is assembled in a U.S. factory. By contrast, consider the plastic in the plastic case of a clock radio otherwise made in the U.S. of U.S.-made components. In general, goods imported into the United States must have a country of origin label unless excepted, but goods manufactured in the United States can be sold with no origin label unless explicitly required. This claim is deceptive because consumers are likely to interpret the term "Created" as Made in USA — an unqualified U.S. origin claim. "All or virtually all" means that all significant parts and processing that go into the product must be of U.S. origin. Ordinarily, the Commission will not consider a manufacturer or marketer’s use of an American brand name or trademark by itself as a U.S. origin claim. However, making the statement "All our picture tubes are made in the USA" — without disclosing the foreign origin of the television’s manufacture — might imply a broader claim (for example, that the television set is largely made in the U.S.) than could be substantiated. It is not binding on the Commission. may require the purchase of supplies that are produced or manufactured in the United States, and entities found to have intentionally affixed a “Made in America” or similar designation on an ineligible product that was sold in or shipped to the United … content contained in the products. Together, these parts account for approximately three percent of the total cost of all the parts. • Requirements for “Made in USA” Claims To qualify for a ‘Made in USA’ or ‘Made in America’ label, a product must be “all or virtually all” manufactured in America according to the Federal Trade Commission (FTC). An unqualified Made in USA claim is not likely to be deceptive because the knobs and tubing make up a negligible portion of the product’s total manufacturing costs and are insignificant parts of the final product. Each year, the Ombudsman evaluates the conduct of these activities and rates each agency’s responsiveness to small businesses. On Friday, January 6, 2011, The New York Times reported that manufacturing is experiencing an upswing in the United States. Buy American Act — Requires that a product be manufactured in the U.S. of more than 50 percent U.S. parts to be considered Made in USA for government procurement purposes. Even though most of the parts of the food processor are of U.S. origin, the final assembly is in the U.S., and the motor is assembled in the U.S., the food processor is not considered "all or virtually all" American-made if the motor itself is made of imported parts that constitute a significant percentage of the appliance’s total manufacturing cost. This publication provides additional guidance about how to comply with the "all or virtually all" standard. When an imported product incorporates materials and/or processing from more than one country, Customs considers the country of origin to be the last country in which a "substantial transformation" took place. Depending on the context, U.S. symbols or geographic references (for example, U.S. flags, outlines of U.S. maps, or references to U.S. locations of headquarters or factories) may convey a claim of U.S. origin either by themselves, or in conjunction with other phrases or images. That is, the product should contain no — or negligible — foreign content. In some instances, Customs uses a "tariff shift" analysis, comparable to "substantial transformation," to determine a product’s country of origin. Example: The Acme Camera Company assembles its cameras in the U.S. Other countries may have their own country-of-origin marking requirements. On a garment with a neck, the country of origin must be disclosed on the front of a label attached to the inside center of the neck — either midway between the shoulder seams or very near another label attached to the inside center of the neck. It also offers some general information about the U.S. Customs Service’s requirement that all products of foreign origin imported into the U.S. be marked with the name of the country of origin. Deceptive “Made in USA” advertising and labeling claims have received a lot of attention from the FTC in recent years, reflecting the agency’s recognition that USA-origin claims are a persuasive selling point and should not be false and misleading. Textile Fiber Products Identification Act and Wool Products Labeling Act — Require a Made in USA label on most clothing and other textile or wool household products if the final product is manufactured in the U.S. of fabric that is manufactured in the U.S., regardless of where materials earlier in the manufacturing process (for example, the yarn and fiber) came from. American Automobile Labeling Act — Requires that 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 Commission also issued an Enforcement Policy Statement on U.S. Comparative claims should be truthful and substantiated, and presented in a way that makes the basis for comparison clear (for example, whether the comparison is to another leading brand or to a previous version of the same product). The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. Manufacturers and marketers should use the cost of goods sold or inventory costs of finished goods in their analysis. The grill’s knobs and tubing are imported from Mexico. That is, avoid qualified claims unless the product has a significant amount of U.S. content or U.S. processing. Blanks made in (foreign country of origin).". "Made in USA of U.S. and imported parts." The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. But when can a marketer properly label or promote a product as “Made in USA”? The law was amended to relax the state’s strict requirements that prohibited Made in USA labels on products containing any part that was “entirely or substantially made, manufactured, or produced outside of the United States,” to a rule that closely aligns with the FTC’s standard. The FTC also has jurisdiction over foreign origin claims in advertising and other promotional materials. A claim like "Made in U.S. from Imported Parts" or "Assembled in U.S.A." would not be deceptive.

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