Yes, goods are still made in the USA

Yes, goods are still made in the USA

Walking through any retail store today, we silently ask the question: "Isn't anything manufactured in the United States any more?"

Even for those of us without a drop of xenophobia in our veins, the abundance of "Made in China" labels in our stores sends a message. Not the positive message of hope that it ought to be - "These Third World countries are developing! They're making progress; good for them!" No, it's perceived as a dire warning: "We're losing our manufacturing base! The economy must be collapsing!"

That's how we're supposed to interpret it, anyway, in the message delivered by politicians and media this election year. November's vote is being called "the Wal-Mart Election" for the surprising number of candidates who used Big Box retailers as punching bags to score points.

But are the attacks fair? Logically, is it reasonable to believe, in this fourth year of the Bush recovery, with job creation, economic expansion, and the stock market all at record levels, that our economy really doesn't manufacture anything any more? Or might there be some other reason for the seeming universality of foreign goods for sale?

There sure is. The culprit is a largely unknown double standard in U.S. product-marking regulations: Virtually everything finished abroad must be plainly marked as such, while almost nothing finished here is allowed to be.

Consider the three kinds of products on our store shelves - products marked with a foreign country, products marked as USA and products that aren't marked at all. That third group is huge, and that's the deceptive part of our puzzle, because of two contradictory federal approaches to origin marking.

Customs is responsible for ensuring that practically all goods finished abroad (whether they include U.S. components or not) must be marked with their country of origin as permanently, legibly and conspicuously as possible. This is perfectly reasonable, and every importer knows to obey it.

The Federal Trade Commission, however, is responsible for a very different rule: that no products merely finished in the U.S. may claim to have been made here. Goods must be at least 93 to 95 percent of U.S. origin to legally make a "Made in USA" claim. Articles marked "Made in USA" represent only the miniscule percentage of American-made goods that include almost no foreign content.

The third group of commercial goods include those that don't say where they're made. Proud American shoppers may refuse to consider these unmarked goods, assuming they must be foreign. By law, however, the exact opposite is the case. With few exceptions, unmarked goods are indeed made in the USA; they just don't meet the FTC's archaic 93 to 95 percent standard.

In this global economy, many U.S. manufacturers can only afford to keep their doors open by sourcing some parts and raw materials overseas. The very process that enables them to continue to employ workers in the U.S. keeps them from getting credit for it.

This is all particularly illogical in light of our national effort to forge free-trade agreements over the past 20 years. These bilateral FTAs are designed to encourage import-export activity between the U.S. and its partners. U.S. manufacturers are encouraged to source components from Chile and Singapore by FTA-driven low duty rates, while being discouraged from doing so by the resulting loss of the "Made in USA" marking.

It's probably fair for the government to discourage people from doing only minor, final steps here and the lion's share of the work abroad. But this 95 percent threshold for U.S. marking is counterproductive.

Here's a reasonable compromise: The qualifying threshold for "Made in USA" marking could be lowered a little, to match the qualification levels already in place for our free-trade agreements - ranging from two-thirds to three-quarters of U.S. value, or establishing that a substantial transformation occurred here. Under this plan, if a product qualifies for U.S. origin under the North American Free Trade Agreement or another FTA, it could be marked as "Made in USA." If it wouldn't qualify for any FTA, then there's too much foreign content for "Made in USA" marking.

But that's not the way it is, and it won't be unless the federal government corrects this outdated policy. Until this problem is corrected, we need to remember that, on our store shelves at least, things really are much better than they look.

John F. Di Leo is a Chicago-based customs broker and international trade specialist. He can be contacted at (847) 813-4149, or at John.DiLeo@Pentair-EP.com.