Made In USA: Be Careful In California
James M. Borneman
So, what is AB 858, and who really cares about California state politics? Well, if you are a California manufacturer or you want to market your products in California with a Made in USA label, it is worthwhile to learn a little more.
Many textile manufacturers are familiar with the rules of origin. According to the Federal Trade Commission (FTC), the 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. Textile products that are imported must be labeled as required by the Customs Service."
The FTC is charged with policing claims by marketers that label products Made in USA. A breach is considered false advertising. Regarding compliance with the Made in USA Standard, the commission states: "For a product to be called Made in USA, or claimed to be of domestic origin without qualifications or limits on the claim, the product must be 'all or virtually all' made in the U.S. The term 'United States,' as referred to in the Enforcement Policy Statement, includes the 50 states, the District of Columbia, and the U.S. territories and possessions."
So what does "all or virtually all" mean? "'All or virtually all' means that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no - or negligible - foreign content."
Apparently, California is a little different from the other 49 states that recognize the FTC's standards. Bill AB 858 would have overturned California's stricter requirements in favor of the FTC's standard, and harmonized the use of Made in USA across all 50 states. As one manufacturer explains about the current California requirements, "... if so much as a pin, a screw, or a rubber o-ring was made outside the country, then the manufacturer cannot sell his product in California with a 'Made in USA' label, according to state statute."
Sources report that AB 858 was endorsed by the Made in the USA Foundation, Made In USA Brand Certification Program, California Retailers Association and California Manufacturers & Technology Association.
At a time when Made in USA increasingly resonates with consumers, and with the FTC's challenging but effective rules already in place and accepted by 49 states, a 3-2 decision blocks a unanimous Assembly and potentially the voice of the Senate, and brings more confusion to doing business in California.
Editor's note: In an effort to eliminate any possible confusion with regard to requirements for Made in USA labeling of textile products, Textile World presents below comments from David Trumbull, vice president, International Trade, National Textile Association, in which he describes the FTC's one step removed rule that applies to labeling of textile products:
I write in response to your From The Editor column "Made in USA: Be Careful in California," which appears in the July/August 2012 issue of Textile World . In that column, you state that the relevant labeling laws "Require a Made in USA label ... 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."
That statement is correct only in the case of a final product made of cloth. As it stands, it could be read (erroneously) as suggesting that the origin of the yarn or fiber can be ignored inall cases. A more accurate statement is that one must follow the FTC one step removed rule. As found in the FTC publication "Threading Your Way Through the Labeling Requirements Under the Textile and Wool Acts," the one step removed rule states: "In deciding whether to mark a product as made, in whole or in part, in the U.S., a manufacturer must consider only the origin of materials that are one step removed from the particular manufacturing process. For example, a yarn manufacturer must identify imported fiber. A manufacturer of knitted garments must identify imported yarn. A manufacturer of apparel made from cloth must identify imported fabric."
Vice President, International Trade
National Textile Association