California’s New ‘Made in USA’ Legislation

What the law means for apparel companies

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California’s New ‘Made in USA’ Legislation. Photo Credit: Marissa Babin

In this article, I address a reader’s question: California’s recent enactment of the law loosens the claim on “Made in USA” label requirements. What does that mean?

First, it’s important to understand the old law:

“In 1997, the FTC developed a standard that products advertised as ‘Made in the USA’ must be ‘all or virtually all’ made in the US. All or virtually all significant parts and processing that go into the product must be of US origin.

The FDA could also take action on a product under its domain based on misleading claims that misbrand products under the Food Drug & Cosmetic Act.” - Source

The new law, as I understand it, gives apparel companies more flexibility sourcing their products and could potentially ward off litigation. That is, provided at least 95 percent of a company’s parts are manufactured domestically. Additionally, the bill levels the playing field for California manufacturers and helps California’s economy to grow.

As a point of clarification, I am not an attorney. I am merely interpreting the law just as you would, by reading up on it. The interesting twist here is that California has always been considered a state of people marching to their own drums, so in this instance they have joined the rest of the country in ‘Made in USA” rules, as you will see below.  

What constitutes a “Made in USA” claim?

A while back, I wrote about what constitutes a “Made in USA” product.

According to The National Law Review: “Long considered the bane of domestic manufacturers, forcing them to maintain multiple label inventories and juggle competing domestic and foreign country of origin marking requirements, California law previously prohibited labeling products with an unqualified ‘Made in USA’ claim if any portion of the underlying product was made outside the United States” - Source 

Further, the FTC’s standard on “Made in USA” demands a product to be “all or virtually all” of U.S. content and have its final assembly occurring within the U.S. However, for most companies it’s unclear or murky, to say the least, at determining when an unqualified “Made in USA” claim is appropriate or to specify an exact percentage for compliance. 

Why the focus on apparel companies?

The reason for the focus on apparel companies is that they typically make products where the parts are sourced from all over the world.

What’s the actual law?

The California law, SB 633, takes effect Jan. 1, 2016. Consumer Product Matters, a product safety and consumer-related regulation and litigation blog, says, “CA SB 633 allows merchandise made, manufactured, or produced in the United States to carry a ‘Made in USA’ label if 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 if 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.”

The National Law Review also claims “both California and the FTC will continue to allow for qualified ‘Made in USA’ claims (e.g., ‘Made in USA of foreign and domestic materials’) for product that is not required under CBP’s laws to be marked with a foreign country of origin, but which do not otherwise meet the FTC’s or California’s threshold for an unqualified claim” - Source

When in doubt, consult with an international attorney. Better to be safe than sorry, especially pertaining to the “Made in USA” law.

For more information, conduct a search with the keywords: “Made in USA, California.”