Is it Made in America? That's a tough question
January 9, 2014,
Larry Thomas - Business Editor
This year, the issue is whether a product can be labeled "Made in America."
It should come as no surprise that California has a different labeling standard than the rest of the country, but a bill in the California Senate would bring the state's rules closer to Federal Trade Commission standards.
Notice that I said "closer" to the FTC standards. Even if the bill passes, California's labeling requirements probably would remain the most stringent in the country.
Current California law says that a product sold in the state can't be labeled "Made in America" unless the product and all of its components are manufactured and assembled in the U.S. That's an awfully high bar to clear, and a recent article in the San Jose Mercury News noted that many California business owners believe it's an unrealistic standard in today's global economy.
The article quoted, among others, Richard Russell, president of the three-store Russell's Fine Furniture chain. Russell told the newspaper he was planning to call his fourth store "Made in America," but decided to change the name after his furniture vendors couldn't guarantee that every component would be made domestically. (The law doesn't even make an exception for components that aren't available domestically.)
"We've seen plant after plant shuttered and I want to support American manufacturing and bring jobs back to America," Russell told the newspaper. "But I don't want to get sued. It blows me away that I can't say ‘Made in America.'"
When his newest store opens in February, it will be called Russell's Furniture American Pride/Bringing Jobs Back Home.
The bill in the California Senate would allow a "Made in America" label if foreign parts constitute a "negligible part" of the final product and those parts are not available in the U.S.
We're not sure if that would help Russell and others in the furniture industry, as it would still be more stringent than FTC standards and could require manufacturers to separately label products sold in California.
The FTC standards, adopted in 1998, say that a product can be labeled "Made in America" if "all or virtually all" of it is made domestically.
Obviously, language such as "all or virtually all" leaves considerable room for interpretation. For example, is a recliner built in Mississippi using a cover that is cut and sewn in China considered "Made in America?"
In my opinion, the answer is yes. But it couldn't be labeled that way if it's sold in California, even if the Senate bill is signed into law.
Interestingly, the chairman of the Los Angeles-based Made in the USA Foundation called California's current standard "ridiculous" in the newspaper article. He said most consumers know that products labeled "Made in America" probably do include some foreign parts.
"Because it's so easy to prove a violation, it's the lawyers who want it - not the consumers," Joel Joseph told the newspaper. "A lot of companies are violating California's law, which makes it a hotbed for lawsuits."