Complying with the
Made in USA
Standard
(Summary)
Sr
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Claim
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Description
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01
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Unqualified Made in USA Claim
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At the time the claim is made, the claimant must have and relied upon competent and reliable evidence that,
1- U.S. Manufacturing costs constitute 75% of the total manufacturing cost of the product, and
2- The product is last substantially transformed in United States.
The product should contain No or Negligible foreign content.
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05
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Assembled in USA Claim.
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Product should be assembled in US and last substantial transformation should have occurred in US.
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When do the above claims become deceptive
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Sr
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Claim
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Description
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02
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Qualified Made in USA Claim
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A product assembled in US with imported part and only 3% of US made parts would be deceptive to claim as “Made in US with US and Imported parts” instead a claim that “Made in US from Imported parts” or “Assembled in USA” can be used.
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05
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Assembled in USA Claim.
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All the major components of a computer, including the motherboard and hard drive, are imported. The computer’s components then are put together in a simple “screwdriver” operation in the U.S. this computer can’t be labeled “Assembled in USA” because it is not a substantial transformation.
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Unqualified Made in USA Claims
1- Mandatory disclosures are for Automobile, Textile, Wool, and Fur products, but who chooses to make “Made in USA” claim he must comply with FTC Made in USA Policy.
2- Express claims; Made in USA, American Made etc
Implied Claims; US symbol or geographical references (US flag, outline of US map) True American Quality etc.
3- Brand name does not claim US origin unless the brand name is “Made in USA Incorporation”
4- Pre-approval for claim is not required but at the time the claim is made you must have and relied upon reasonable basis (competent evidence) to support claim.
5- All or virtually all Made in UAS means product should contain no or negligible foreign content.
6- Factors to consider that product is all or virtually all is made in USA.
a. Final assembly or processing must take place in US.
b. How much of product’s total cost can be assigned to US parts and processing?
c. How far removed any foreign content is from the finished product.
7- Items to analyze the percentage of domestic content,
a. Cost of Goods Sold or Cost of Finished Gods.
i. All manufacturing material cost
ii. Direct manufacturing labor cost
iii. Manufacturing overhead cost.
8- Reliance on information from American supplier about amount of domestic content they buy and use in their final products.
a. If given in good faith, manufacturer/marketer can rely on information from USA suppliers about amount of domestic content they buy and use in their final products.
b. Rather than assuming that input is 100% US made, supplier should be asked about percentage of US content,
i. A clause in purchase order like “Our company requires that suppliers certify the percentage of U.S. content in products supplied to us. If you are unable or unwilling to make such certification, we will not purchase from you.” Appearing under this statement is the sentence, “We certify that our ___ have at least ___% US content.
9- How far back into manufacturing process should manufacturer/marketer look?
a. Look back far enough in manufacturing process to be reasonably sure that any significant foreign content has been included in their assessment of foreign cost.
i. Example: imported steel used in casing of floppy a drive of a computer manufactured in US will not make the “Made in US” claim deceptive.
10- Evaluation of Raw Material (imported raw material)
a. How much of the product’s cost the raw material make up and how far removed from the finished goods they are.
b. Example: Gold ring made of imported ring can not be claimed Made in USA.
c. Example: Imported petroleum used to manufacture plastic casing or of clock radio is far removed from the finished good and is an insignificant part so the clock radio can be claimed as Made in USA.
The FTC and the Customs Services
1- Imported goods should be marked with the country of origin like “Made in Japan”
2- Products incorporating material/processing from more than one country, country of origin would be where last substantial transformation took place.
a. Substantial Transformation-
i. Manufacturing process that results in a different product with new name and use.
ii. In some instances Customs use the Tariff Shift analysis.
Interaction between the FTC and Customs regarding country-of-origin claims
If customs says that a product does not need foreign country origin then it is not necessarily permissible to claim US origin.
Example: TV assembled in Korea using picture tube manufactured in US, custom would mark it as “Made in Korea” because it is substantially transformed in Korea. And marketer in USA states that “Although our products are made abroad but always contain US made picture tube” in advertisement this claim is not deceptive. But if the marketer states that “All our picture tubes are Made in USA” with no other disclosures then this would be deceptive claim.
Buy American Act
Product manufactured in US of more than 50% of US content is to be considered “Made in USA’ for government procurement purposes.