Federal Trade Commission
Received Documents
Jan 16 1996
B18354900034
Secretary

TOSHIBA
TOSHIBA AMERICA ELECTRONIC COMPONENTS, INC.
9775 TOLEDO WAY, IRVINE, CA 92718
TELEPHONE: (714) 455-2000
FACSIMILE: (714) 859-3963

COMMENTS

To:  The Federal Trade Commission

From:  Ms. Laurie Peach
           Traffic Manager
           Toshiba America Electronic Components, Inc.

Date:  January 15, 1996

Subj:  Made in USA Policy Comment: FTC File No. P894219

This issue memorandum constitutes the substantive written comments of Toshiba America
Electronic Components, Inc. ("TAEC") in response to the FTC's request for comments set forth
at 60 FR 53922 of October 18, 1995 as well as a request on behalf of TAEC to participate in the
forthcoming FTC Workshop on this issue to be held in Washington, D.C. on March 26-27 (60 FR
65327 of December 19, 1995).

As TAEC's Traffic Manager, I have expertise in the issues to be raised in the workshop, as I am
responsible for the regulatory compliance of all TAEC products which move over international
borders, both imports and exports.  I would like to attend with our trade administration counsel; I
can be reached at (714) 455-2118, fax 859-1298 and would appreciate your earliest favorable
response.  The delay in submitting these comments was occasioned by the Yuletide holidays.

TAEC is a $3.0 Billion company which not only imports electronic devices and equipment, but
also manufactures electronic devices and equipment in the United States in its own right and
through partnerships and joint ventures with a range of the leading U.S. companies (IBM,
Motorola, Intel, Texas Instruments and others whose comments have been submitted in this
docket) and exports same within the NAFTA countries and overseas, as well.  Compliance with
U.S. import and export law and regulation is critical to our ability to compete internationally, and
compliance with domestic law and regulation is essential to our survival as a domestic U.S.
company.


Sadly, the welter of Country of origin marking laws and regulations with which we and other U.S.
companies have to comply are both obtuse and contradictory.  Moreover, the nature of the
domestic and global marketplace has drastically changed since the enactment of the underlying
legislation and the last evaluation of the implementing regulations.  Finally, there is no on-going
forum whereby an affected company can obtain clear and dispositive agency opinion on a marking
issue or conflict from the FTC.  We believe that this situation is untenable and a direct threat to
U.S. competitiveness.  We sincerely appreciate the opportunity to offer our comments as the FTC
seeks to address this new reality and assist business to achieve cost-effective and straightforward
compliance.

While there still are many U.S. products which are "wholly of domestic origin" (kitty litter is one,
if made from Oregon diatomaceous earth), in the electronics sector of the U.S. economy, there
are few such products, indeed.  Even a DRAM wholly fabricated in Idaho may have a significant
portion of its content arise from foreign-source silicon or a ceramic package: as such, it would not
meet the stringent FTC standard for a "Made in USA" mark.  In addition to the economic reality
of a global marketplace which makes few, if any, U.S. manufactured electronic products worthy
of the "Made in USA" mark, there is the uncontested fact that the FTC standard uncomfortably
co-exists with dozens of other product marking and origin rules which could adversely affect the
ability of a U.S. manufacturer to properly mark its goods consistently and legally.

Other commenters will doubtless identify conflicts between the NAFTA country of origin marking
rules with the FTC standard, as will others underscore the difficulties which arise with
semiconductors of wholly-foreign manufacture but U.S. assembly which imparts U.S.-origin
under U.S. Customs law and regulation.  The welter of "substantial transformation" tests under
both domestic and regional standards, as well as recent judicial interpretations of the Buy
American Act in light of U.S. international procurement agreements all bewilder the good-faith
U.S. manufacturer who desires one standard under which its products can be attractively and
legally marked.

Our observations and comments do not seek to either achieve narrow legal differentials or
propose one cosmic solution to the problem: rather, we wish to identify several real operational
problems which can adversely affect our compliance, competitiveness and the jobs of our
thousands of U.S. employees in nearly a dozen states.

First off, the stated purpose of the FTC Act and the instant regulations was to provide U.S.
consumers clear information on origin upon which they could make sensible purchasing decisions:
the elimination of deceptive marking was the objective, as it was assumed that a U.S. consumer
would prefer to buy a U.S.-made product.  We agree, but in light of the realities of the global
marketplace, a different standard must be adopted in order to protect the U.S. consumer as well
as to protect U.S. jobs and the U.S. economy.

In the electronics sector, the objective should be to keep U.S. electronic manufacturing jobs in the
United States to the greatest degree possible.  As few electronic devices can meet the old FTC
standard, perhaps the standard should be re-framed to highlight the U.S. manufacturing content or
activity.  In this light, f or the FTC to adopt one of the more settled standards of "substantial
transformation" would be to utilize a standard which is attainable, as well as understandable to the
bulk of U.S. companies.  Also, it would help to rationalize the welter of inconsistent regulations
currently on the books.

While more products would be able to meet this standard, the consumer would be protected, and
U.S. jobs would be supported.  Moreover, the cost of compliance would be reduced, hence
further benefitting the consumer as well as the national compliance interest.

Moreover, we believe that the FTC should support the objectives of the National Performance
Review and make this one issue the topic of on-going, annual dialog with industry so that the
FTC rules on marking can be kept congruent with the soon-to-be-changing U.S.-origin rules and
possibly changes in the Buy American Act suggested through recent Congressional Federal
Procurement streamlining.  As part of this annual review and, adjustment process, we believe that
the FTC should immediately begin to accept and issue binding rulings on marking issues, a
practice which it ceased in the 1960s as a consequence of its determination that the regulations
were so clear that further interpretative actions were unnecessary.  Clearly, to further the
purposes of the FTC Act and its marking provisions, the regulations and their implementation
must become more dynamic and responsive through on-going adjustment and responsive
interpretive rulings.

Finally, we would recommend that the FTC seek to adopt a leadership role after the forthcoming
Workshop and through interagency efforts, industry input and Congressional liaison seek to
harmonize -- to the greatest extent possible -- U.S. marking rules across the board.  For years,
industry has had to deal with the welter of conflicting law and regulation at great expense and, at
times, with little or no success.  It is, from an objective standpoint, a great waste of time, effort
and resources to no particular avail of the U.S. consumer or U.S. competitiveness.  It is an issue
deserving of a champion, and we believe the FTC could be a particularly good one in light of its
interest in and understanding of the interests to be balanced in marking decisions.

TAEC ranks fifth in U.S. market share in semiconductors and is committed to full regulatory
compliance.  But in support of its leading role and partnership with other similarly situated U.S.
companies, we ask that the FTC judiciously address the many issues raised in this docket and the
numerous comments submitted and provide industry with an easily administered regime which is
responsive to the continuing changes in the global marketplace while protective of the U.S.
consumer and U.S. jobs in all sectors.

Respectfully submitted,
Toshiba America Electronic Components, Inc.

Laurie J. Peach
Traffic Manager