Federal Trade Commission
Received Documents
July 1, 1996
P894219
B18354900178

                    UNITED STATES OF AMERICA
              BEFORE THE FEDERAL TRADE COMMISSION



In The Matter of                                  POST-WORKSHOP
                                                  SUBMISSION OF THE RUBBER
 MADE IN USA POLICY COMMENT                    AND PLASTIC FOOTWEAR
FILE NO. P894219                                    MANUFACTURERS ASSOCIATION



     The FTC's Made in USA's workshop provided several guideposts for the Commission as
it deals with the difficult questions of when Made In USA means what it says:

     As a point of reference on the question of consumer deception one could do no better than
cite the Chairman's opening remarks: "The real issue is what do they think Made in America
means and what are they entitled to think it means....Aside from perception, however, there's a
background against which this question needs to be measured.  And the background has to do
with issues of International Trade" (Transcript, 6&7, emphasis added). 

      Several consumer surveys were introduced at the workshop, but the conflicting nature of
their results shed more fog than light on the issue at hand.  We suggest that the single most
relevant finding was that in the Commission's own survey; Commission staff member Anderson
summarized that finding as follows "...many respondents were ready to accept a Made In The
USA on products that contained significant amounts of foreign parts, provided the product was
assembled in the US"(Transcript, 38).  In short, there is consumer recognition that American
manufacturing today is an integral part of a global economy.
     
     A further significant contribution of the workshop was the testimony of various industry
witnesses evidencing the difficulty of developing a standard which would meet the legitimate
needs of all American industries.  In this regard, one thing became clear: the FTC's "all or
virtually all" rule is unworkable for the majority of the industries represented at the workshop;
see, for example, the testimony of spokesmen for the following industries: rubber footwear, non-rubber footwear, automobile manufacturers, bicycle manufacturers, electronics, luggage and
leather goods, electrical manufacturers, home appliance manufacturers, wire producers, the 3M
company and the Stanley Works.  In addition, the International Mass Retailers Association, whose
constituents market the products of virtually every industry, emphasized the inappropriateness of
an all or virtually all standard.  
     
     An additional way in which the FTC workshop proved its value was its encouragement of
the Herculean effort leading to the production of the proposed safe harbor guidelines which we
understand will be submitted to the Commission in behalf of many of the workshop participants. 
The development of these guidelines was spearheaded by Robin Lanier of the Mass Retailers, and
we applaud her initiative, her patience and her draftsmanship.  These proposal guidelines buttress
the evidence that one size does not fit all and that the problem may best be approached by
providing a variety of safe harbors.  However, in considering what would be appropriate safe
harbors, the Commission should be wary of the danger of creating loopholes so wide that a claim
of Made In The USA becomes of little value.  For example, given the nature of footwear
production, a final assembly, substantial transformation or significant processing test, standing
alone without a required percentage of domestic value and/or labor, would so dilute the
significance of a Made In USA logo on footwear as to be virtually meaningless.  A domestic
footwear company which imports all or a significant number of its components and does little
more than assemble them into a finished product could meet the requirements of substantial
transformation.  As an incentive to use as much American labor and as many American
components as possible, a Made in USA test - at least for footwear - must require a combination
of final assembly in this country with domestic components of more than 50% in value. (The
justification for a 50% standard was set forth in detail in the pre-workshop Statements of the
Rubber and Plastic Footwear Manufacturers Association, the Footwear Industries of America and
New Balance and need not be repeated here.)

     Just as substantial transformation ,or final assembly, or significant processing, standing
alone would be insufficient, a percentage value requirement standing alone would also be
insufficient.  In 1995 more than 9,000,000 pairs of fabric-upper, rubber-soled footwear made
entirely with United States components entered this country from the Dominican Republic; failure
to require final assembly to take place in the United States would permit such Dominican
footwear to be labeled Made In The USA.  

     Because of our view that there ought not to be an alternative to a standard which requires
both final assembly and a fixed percentage of value, the Rubber and Plastic Footwear
Manufacturers Association regretfully cannot sign onto the Mass Retailers' proposed guidelines. 


     Finally, as we pointed out in our pre-workshop Statement, it would be unduly burdensome
on manufacturers to look further than one step back in determining the source of a given
component for purposes of the 50% requirement, and there should be an exclusion from this
calculation of raw materials - such as natural rubber- not indigenous to this country.  We believe
that both of these principles are endorsed in the proposed guidelines.

     In conclusion, the FTC workshop provided additional justification for the adoption of a
rule, or a safe harbor under a broadly stated rule, requiring that the value of domestic materials,
manufacturing overhead, and labor and components in a given product should exceed 50%; also,
final assembly must take place in the United States. The value of foreign components should
exclude raw materials -such as natural rubber- not indigenous to this country, and manufacturers
should not have to look more than one step back in computing such value.



                                        ________________
                                        Mitchell J. Cooper
                                        Counsel, Rubber and
                                        Plastic Footwear
                                        Manufacturers'
                                        Association

June 28, 1996