Looser Rules for ‘Made in the U.S.A’?

WASHINGTON — It will be easier for American companies to wave the flag in their advertising after the Federal Trade Commission eases long-standing rules about what it takes to tout a product as “Made in the U.S.A.”

The agency on Monday proposed new regulations that would permit made-in-America advertising claims as long as 75% of a product’s manufacturing cost is incurred in the United States, or if imported raw materials are “substantially transformed” into a new product at a U.S. factory.

These standards would replace stricter rules that have been in place for decades. The FTC, which polices federal false-advertising laws, has previously said that “all or substantially all” of a product had to be made in America--a standard that many industries complained was almost impossible for most products to meet in today’s age of global commerce.

The new FTC guidelines, which govern the agency’s decisions about when to bring false-advertising cases, generally track a separate set of U.S. Customs Service regulations about labeling of imported products.

The proposed rules will be open to public comment until Aug. 11. After reviewing those comments, the FTC will issue new guidelines in final form.

Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection, said the agency tried “to strike a balance” between the “recognition that our policies must keep up with changes in the global economy” and the need to “ensure that consumers are not deceived.”

The new regulations grew from a controversy that started in September 1994, when the FTC filed false-advertising charges against Hyde Athletic Industries Inc. and New Balance Athletic Shoe Inc., two New England shoe makers that had proudly promoted American-made products. The FTC’s complaints centered on the fact that Hyde’s Saucony shoes and New Balance products used some imported components, even if the finished shoes were assembled in the U.S.

The charges touched off protests from companies and trade groups who complained that the FTC’s rules were so rigid they had led to the extinction of the “Made in the U.S.A.” label. Trade groups and companies representing manufacturers of cars, bicycles, candy, furniture, luggage, footwear and other products all said that an array of U.S. products today include at least some imported parts or ingredients.

The FTC’s initiative has drawn some opposition. For instance, a group of 18 state attorneys general urged the FTC to hold the line and demand that made-in-America advertising be restricted to products that are truly American-made.

Different groups proposed various, more lenient standards. Some said any products with at least 51% American-made parts should qualify. Others pushed for higher minimums or rules that concentrate on the amount of American labor used in the manufacturing.