September 16, 2015

　　On Sept. 1, California Gov. Jerry Brown signed into law, SB 633, more commonly referred to as the “Made in the USA” bill. The bill amends the current California “Made in the USA” requirements to afford marketers additional flexibility to make “Made in USA” or “Made in America” claims.

　　The law is effective on Jan. 1, 2016.

　　California’s new law now recognizes that merchandise made, manufactured, or produced in the United States can be labeled “Made in the U.S.A.” even if it includes one or more articles, units, or parts from outside of the United States.

　　This California law seeks to provide additional flexibility like the U.S. Federal Trade Commission’s (FTC) standard. The federal standard for products labeled and marketed as “Made in the U.S.A.” requires that “all or virtually all” of a product be made in the United States, examining the foreign content of a product as a whole. According to the FTC’s guidelines, “all or virtually all” means that “all significant parts and processing that go into the product must be of U.S. origin,” or “the product should contain no — or negligible — foreign content.” FTC will consider a number of factors in determining whether a claim complies with this standard, including: (a) the location of final assembly or processing; (b) source of total manufacturing costs attributable to U.S. parts and processing; and (c) how far removed the foreign content is in the final product.

　　The California bill states the following:

　　It is unlawful for any person, firm, corporation or association to sell or offer for sale in this state any merchandise on which merchandise or on its container there appears the words “Made in U.S.A.,” “Made in America,” “U.S.A.,” or similar words unless the merchandise has been all or virtually all made in if the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States.

　　This bill would exempt from the prohibition merchandise made, manufactured, or produced in the United States if either the merchandise has one or more articles, units, or parts from outside the United States if they do not constitute more than 5% of the final wholesale value of the product or the manufacturer makes a specified showing regarding the articles, units, or parts from outside the United States and they do not constitute more than 10% of the final wholesale value of the product.

　　(b) This section shall not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States, if all of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 5 percent of the final wholesale value of the manufactured product.

　　(c) (1) This section shall not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States, if both of the following apply:

　　(A) The manufacturer of the merchandise shows that it can neither produce the article, unit, or part within the United States nor obtain the article, unit, or part of the merchandise from a domestic source.

　　(B) All of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 10 percent of the final wholesale value of the manufactured product.

　　Manufacturers still need to determine whether their products meet the new California standard. But this amended law provides flexibility, like the FTC’s Standard, and helps reduce the disparity between these two labeling schemes, making it easier for manufacturers to create one set of labeling materials for the entire country country.

　　Contact ACA’s Stephen Wieroniey or Timothy Serie for more information.