U.S. companies now have a 40-page government handbook, crammed with specific product examples, to help them know if their $5 alarm clock or their $500 exercise treadmill can carry the coveted ''Made in the USA'' label.
The Federal Trade Commission released the book this week to help shepherd companies through the complicated territory of domestic labeling in an age of global manufacturing and imported components. The book, titled ''Complying with the Made in the USA Standard,'' spells out the recommendations the commission made a year ago when it decided to maintain voluntary guidelines in place for decades.Meant to insure that buyers know the true origin of a product, the federal agency's policy requires that ''all or virtually all'' of a product be made in the United States before it can carry the U.S. stamp. The labeling of automobiles and apparel is governed by other rules.
The book tries to clarify the existing guidelines and outline some situations when a company can use an unqualified claim - meaning a label that says ''Made in America'' - and when it has to issue a qualified claim, such as ''Made in America from Imported Parts.''
''The law is that if you choose to make a USA claim, it has to be truthful,'' said Laura Koss, a staff attorney in the commission's Bureau of Consumer Protection. ''We've kept the guidelines (for labeling) as they are. This guide is meant to clarify what has always been the case.''
The rules are increasingly important for proper labeling in an international marketplace where U.S. manufacturers scour the globe for the right components at the best price, using inputs made in foreign countries.
For example, all of the parts of that $5 plastic alarm clock assembled in the United States may have been made at home, but the petroleum used in the plastic was imported. The clock still meets the ''all or virtually all'' rule and can carry the unqualified ''Made in America'' label because the petroleum, though imported, was made so far back in the product's manufacturing process, Ms. Koss said.
On the other hand, if that $500 exercise treadmill was assembled in the United States, had minor parts (such as the floor mat and on/off button) manufactured at home but major parts (such as the motor and frame) imported, the standard would not be met.
The manufacturer would have to place a qualified claim on the product and use a label like ''Made in the U.S. from imported parts,'' Ms. Koss said. That's because the value of the U.S.-made parts is small compared to the value of the major parts, like the motor and frame.
Factors used in assessing whether the ''all or virtually all'' standard is satisfied include the location of the final assembly, the origin of the product's significant parts and what percentage the imported parts compose of the product's final value, Ms. Koss said.
''First and foremost is that the final assembly has to be in the United States. If all of a product's parts were made in the U.S., but the final assembly was done in Mexico, it doesn't meet the 'all or virtually all' rule,'' she said.
The commission had proposed changes that would have allowed manufacturers to expand the foreign content of their products up to 25 percent of the total manufacturing cost and not lose the prestigious American-made label.
But after an extensive review process that lasted several years and involved sifting through about 1,000 public comments, the commission decided to maintain the current guidelines.
The review process was sparked several years ago by an investigation of the ''Made in America'' claims used by several U.S. athletic shoe companies.
The commission's guidelines are voluntary. But the bureau, which enforces the country's consumer protection laws, can file a lawsuit if it determines a company is engaging in deceptive practices.