Federal Trade Commission
Received Documents
Jan. 16, 1996
P894219
B18354900024

UNITED STATES "APPAREL INDUSTRY COUNCIL

1341 G Street N.W., Suite 820
Washington, D.C.20005-3105    
Fax (202) 638,2236
(202) 638-2230 


5200 Blue Lagoon Drive, Suite 600
Miami, Florida 33126 
(305) 267-9200
Fax (305)267-5155


PRESIDENT                                         EXECUTIVE BOARD
Jim Scully                                            Julio Barea
Haggar Apparel Co.                         Sara Lee Knit Products
VICE PRESIDENT                                         David Ginn
James Kilgore                                   Oxford Industries
Levi Strauss & Co.
                                                       Bill Isaac
EXECUTIVE DIRECTOR                                   Salant Corp.
Chandri Navarro-Bowman
Sandler, Travis & Rosenberg PA.                      Robert Rowan
                                                   Wrangler, Inc.


                         January 15, 1996             Mano Howard
                                             Bend'n Stretch, Inc.


Office of the Secretary
Federal Trade Commission
Room 159
Sixth and Pennsylvania Avenue, N.W.
Washington, D.C. 20580


                 MADE IN U.S.A. POLICY COMMENTS
         MADE IN USA WORKSHOP -- REQUEST TO PARTICIPATE
                      FTC FILE No. P894219

Dear Sir/Madam:

         In Federal Register notices dated October 18, 1995 (60 Fed. 
Reg. 53922) and December 19, 1995 (60 Fed.  Reg. 65327), the
Federal Trade Commission ("FTC") solicited comments from the public
in preparation for a workshop to be held on March 26-27, 1996,
concerning the legal standard applicable to "Made in U.S.A." claims
in product advertising and labeling.  The United States Apparel
Industry Council ("USAIC") herein provides its comments regarding
this issue and requests permission to participate in the FTC public
workshop.

         USAIC is a national trade association representing the major
U.S. apparel companies importing apparel from Latin America and the
Caribbean.  USAIC was formed in June of 1986 to address concerns of
American multinational apparel companies involved in the offshore
assembly of U.S. components.  USAIC member companies include
Haggar, Levi Strauss, Sara Lee, Oxford, Salant, Wrangler, Bend'n
Stretch, Phillips-Van Heusen, Cluett Shirt, Greenwood Mills, Mamiye
Brothers, and Tropical Garment, among others.

         USAIC Board Members include senior officials with vast
expertise in origin marking, customs, and other trade-related
matters, relevant to this FTC workshop topic.  USAIC BoardUSAIC

Office of the Secretary
Federal Trade Commission
January 15, 1996
Page 2

Members represent the largest apparel manufacturers with domestic
(U.S.) manufacturing facilities which also have large off-shore
manufacturing operations.  Their expertise has been sought by U.S.
government officials involved in customs and trade matters and
USAIC has worked closely over the past ten years with numerous
government agencies in facilitating trade in apparel products. 
Thus, USAIC's attendance at the workshop would promote the
representation of a large segment of the apparel industry
potentially impacted by the issues to be raised during the
workshop.  Furthermore, USAIC's role in promoting the interests of
U.S. apparel manufacturers with off-shore operations and
facilitating trade in apparel goods thereby appropriately reflects
the interests of both U.S. apparel manufacturers and importers. 
The member companies of USAIC would nominate a USAIC Board member
as the USAIC representative to the FTC workshop.

         USAIC member companies encounter complicated (and oftentimes
conflicting) rules and regulations concerning country of origin
marking and labeling.  For example, in addition to the FTC's "Made
in U.S.A." rules, USAIC member companies generally have to comply
with the following partial list of country of origin rules and
regulations:

              The North American Free Trade Agreement ("NAFTA") country
              of origin marking rules (Annex 311 to the NAFTA; 19
              C.F.R. Part 102);

              NAFTA rules of origin (Chapter 4 of the NAFTA; 19 C.F.R.
              Part 181);

              U.S. Customs Service country of origin marking
              regulations (19 C.F.R. Part 134);

              The Textile Fiber Product Identification Act (15 U.S.C.
              70-70k) and the Wool Products Labeling Act (15 U.S.C. 68
              et seq.);

              U.S. Customs Service textile country of origin rules (19
              C.F.R. 12.130 et seq.);

              Secretaria de Comercio y Fomento Industrial ("Mexico
              Customs") textile labeling regulations (Diario Oficial,
              November 22, 1995);

              Mexico Customs rules of origin (Diario Oficial, January
              7, 1994);
              Mexico Customs certificate of origin regulations (Diario
              Oficial, August 30, 1994);

              Revenue Canada marking regulations (Can.  Gaz., Part II,
              Vol. 128, No. 1,


USAIC

Office of the Secretary
Federal Trade Commission
January 15, 1996
Page 3

December 1, 1994); and

              Revenue Canada rules of origin (Memorandum DI 1-3-1,
              Memorandum DI 1-4-3).


         In order to eliminate the complexity and confusion that often
results from the application of these rules, USAIC urges the FTC to
work with the U.S. Customs Service, the International Trade
Commission and the Office of the United States Trade Representative
in their efforts to negotiate, under the auspices of the World
Trade Organization, an international standard for determining
origin and to adopt the resulting international rules.  The
adoption of the international rules, along with greater
coordination among the involved U.S. agencies and foreign
governments in developing and enforcing these rules, would benefit
consumers and producers alike.

         An international standard for determining origin, adopted by
the United States and implemented by the U.S. Customs Service,
would best reflect consumer expectations concerning
country of origin marking.  It is not realistic to assume that
consumers know or believe "Made in U.S.A." determinations are based
on rules which differ from the rules for "Made In [Foreign
Country].  With uniform rules, consumers will be able to make
informed decisions about product origin without the confusion now
associated with country of origin marking.

         Producers also benefit from uniform country of origin rules. 
Ensuring compliance with diverse country of origin rules is time
consuming and costly for USAIC member companies.  For example, at
least one, full-time employee is assigned by many of our member
companies to monitor compliance with these (constantly changing)
rules.  Moreover, in some instances, differences between the
labeling rules for goods sold domestically versus those that are
exported can result in some manufacturers having to undergo
separate production runs for the same product.  Uniformity between
the FTC "Made in U.S.A." rules and the international rules for
determining origin will allow these manufacturers to make fewer
production runs.  These savings will ultimately result in lower
prices for consumers and greater competitiveness for U.S. exports.
         Furthermore, Uniformity in country of origin rules will meet
a stated objective of NAFTA and the GATT Uruguay Round Agreements. 
In both treaties, the United States made commitments to achieve
global harmonization in labeling regulations. (See, e.g., Article
513 of the NAFTA).  Obtaining Uniformity and flexibility in country
of origin labeling would enable manufacturers to more efficiently
supply wearing apparel to an increased number of countries.  This
benefits consumers and manufacturers alike, which is the primary
objective of both treaties.
 USAIC

Office of the Secretary
Federal Trade Commission
January 15, 1996
Page 4

         During the negotiation and the adoption period for the
international origin rules, USAIC urges the FTC not to change its
origin criteria for apparel.  The apparel industry is already in
the midst of preparing for new Customs rules of origin for imported
articles, which will take effect July 1, 1996.  Upon the U.S.'s
adoption of the international standard (expected in about three
years), the industry will be required to change again.  If at that
point in time, the FTC rules for "Made In USA" claims were
modified, as necessary, to mirror the international standard, not
only would the U.S. apparel industry be better able to implement
the new rules, but consumer education as to the meaning of the new
rules (for both U.S.-made and imported articles) would be more
effective.  The result would be a win-win situation for both U.S.
consumers and the U.S. apparel industry.

         In its October 18, 1995 Federal Register notice, the FTC made
several suggestions for modifying its "Made in U.S.A." policy.  The
FTC presently considers unqualified "Made in U. S. A. " claims as
implying that products are " wholly of domestic origin.  "(See
Windsor Pen Corp., 64 FTC 454 (1964)).  As possible modifications
to this strict rule, the FTC proposed, inter alia, adopting
Customs' "substantial transformation" test or developing a formula
for determining "Made in U.S.A." claims.

         Under Customs' substantial transformation test, an imported
product comprised of foreign and domestic parts could be marked
"Made in U.S.A." if it is substantially transformed into "a new and
different product" in the United States.  While not objecting per
se to the FTC's adoption of Customs substantial transformation
test, USAIC cautions against a change to this test unless the
international standard is based also on this test because of the
confusion which will be caused by separate, disparate standards for
U.S. and foreign-produced articles.  Moreover, the FTC's adoption
of this test could conflict with the country of origin rule for
textiles set forth in the Uruguay Round Agreements Act
("URAA")(P.L. 103-465, 108 Stat. 4809).  Under the URAA, effective
July 1, 1996, the country of origin of textile articles assembled
offshore will be that country where the last assembly operation
occurred.  This is a deviation from Customs' current substantial
transformation test. (See 19 C.F.R. 12.130(e)). Additionally, such
an approach might well not conform in all instances with the NAFTA
marking rules ( 19 C.F.R. Part 102).

         Similar confusion could exist if the FTC adopts a formula for
determining "Made in U.S.A." claims.  Pursuant to this proposal, in
order for products to be marked with "Made in U.S.A." labels, they
would have to contain a certain percentage of domestic content
(e.g., 50 percent domestic content).  The FTC suggested computing
this percentage by dividing domestic content (the total cost of
U.S. parts, labor and overhead) by total product costs.  While
USAIC also does not object per se to the use of a formula for
determining "Made in U. S.A. " claims,USAIC

Office of the Secretary
Federal Trade Commission
January 15, 1996
Page 5

it recommends that no such test be adopted unless in conformity
with the international standards to be negotiated.

         As stated above, USAIC believes the best alternative would be
for the FTC to actively participate in the WTO negotiations on
origin standards and then adopt rules in accordance with these
standards.  This would promote uniformity and ease the adoption of
and education concerning the World Trade Organizations' final
rules.

         For the reasons stated above, USAIC recommends that the FTC
maintain its current "Made in U.S.A." rule for apparel products and
coordinate with the involved U.S. government agencies and foreign
governments in developing and enforcing an international standard
rules, so as to promote greater consumer awareness in the use of
"Made in U.S.A." claims.

         Should you have any questions, please telephone Chandri
Navarro-Bowman at (202)638-2230.  Thank you for your attention to
this matter.

Sincerely,

UNITED STATES APPAREL
INDUSTRY COUNCIL

By: Chandri Navarro-Bowman
         Executive Director

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