An Update To “Made In USA” For Federally Procured Products And FTC’s “Made In USA” – Advertising, Marketing & Branding

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Recent trends indicate that consumers and the U.S. government
are paying more attention to where products are sourced from.

The Biden administration, for example, has made efforts to raise
federal procurement standards for products “Made in
America.” Specifically, the administration in March announced
a final rule that outlined gradual increases to
the “Made in America” requirement. As of October 25, the
rule requires that federally procured products under the Buy
American Act must have 60% of the value of their component parts
manufactured in the United States. Under the prior rules, the Buy
American Act only required that products contain 55% component
parts manufactured in America in order to qualify for federal
procurement. The threshold will further increase to 65% in 2024 and
75% in 2029.

As an initial signal of the importance of this rule to the
administration, during his first week of his presidency, President
Biden signed Executive Order 14005, Ensuring the Future
Is Made in All of America by All of America’s Workers
,
which established a Made in America Office in the Office of
Management and Budget (OMB) that is dedicated solely to investing
in American workers, manufacturers, and goods. The office will now
be in charge of implementing the federal procurement
requirements.

Importantly, this final rule regarding “Made in
America” claims for federally procured products is separate
and distinct from FTC’s “Made in USA” Labeling Rule
that took effect on August 13, 2021. Although these two actions
sound incredibly similar, they serve different purposes. Under
FTC’s “Made in USA” Labeling Rule, a product using a
U.S. origin claim is prohibited unless 1) final assembly or
processing of the product occurs in the United States; 2) all
significant processing that goes into the product occurs in the
United States; and 3) all or virtually all ingredients or
components of the products are made and sourced in the United
States.

The FTC also now has the authorization and enforcement power to
seek civil penalties of up to $46,517 per violation of this rule.
For more information about FTC’s recent enforcement, please
check out this blog post written by Venable’s Advertising Law Group.

Any way you slice it, the current administration is sending
clear signals that product manufacturing origin claims are a
priority with respect to consumers and federal purchasing. To be
sure, it is also now crucial that labeling claims remain accurate
and compliant, given the dual threat of private litigation and
hefty penalties from the FTC. Indeed, there have already been five
actions brought by the FTC against companies that misused the
“Made in USA” origin claim.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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