Issue link: http://read.dmtmag.com/i/211845
Where Did It Come From? W LEGAL LINE hat follows is the essence of my talk that was planned for the Convention – the general rules and risks of how, when and where to designate where a product comes from that is being sold in one or more markets. While not dwelling on the USA or North America, these are some of the largest markets for imported finished goods, as well as for components that become finished goods after importation. However, the general rules in place in these markets can be "safely" applied to other markets so that governmental and legal challenges can be avoided. As in most governmental and legal situations, several general concepts apply to the "national origin" of products and components: 1. If a product is completely manufactured from raw materials or parts/components sourced in the USA, it can be labeled "Made in the USA." 2. If the parts and components undergo a "substantial transformation" in the USA, "Made in the USA" can be used. 3. If approximately 20 percent of the content and value of a product is not sourced in the USA, the only designation that is proper to use is "Assembled in the USA." Under these general concepts, what is or is not qualified for this type of designation? For example: 1. If a turbo is assembled in California from parts from outside the USA, it is not 'made' in the USA but merely 'assembled 'there and must be clearly designated as 'Assembled in the USA.' IDA UNIVERSAL November-December 2013 2. If the turbo's assembly process/ value or some 'local' component content is under 5% of the total value, then even the 'Assembly' designation cannot be used and the country of origin must be identified. 3. If raw forgings or castings for pistons are sourced from outside the USA and completely machined and assembled with rings and pins in the USA, a substantial transformation can be said to have occurred in the USA and therefore the pistons are indeed "Made in the USA" 4. If assemblies or kits imported complete or are packaged in the USA ,contain parts and products from more than one country of origin, then the locale of the greatest value contribution should be designated as the country of origin. In addition, a substantial body of law and regulation governs "stretching" these rules by creating incorrect or improper inferences of the actual origin of goods. Examples of this type of inference include: 1. "XYZ" product identified only by the U.S. importer's address, with no other information 2, Using a national flag or other well-known symbol of a country 3. Using pictures of a company's USA or other "in country" facility 4. Using misleading statements, like "Sold with pride in Calgary/Torrance/Birmingham," "Engineered in the USA to perform in the USA," "Buy 'American' quality from 'XYZ' company," "true American quality," etc. Robert W. McIntyre IDA Association Legal Counsel In summary, if the overall content of the message to the buying public – including advertisements, websites, paper materials, packaging, and the product itself – taken as a whole creates an impression that it has been made in the USA and it has not, the law has been broken. What's the risk? It's significant, and it comes from two directions... First, the U.S. Federal Trade Commission (FTC) investigates ANY complaint by a consumer (or your competitors) or some motivated politician, and if you have been naughty, the FTC can do the following: 1. Seize your "offending" goods in inventory and force you to "deport" them at your cost 2. Levy fines and obtain injunctions, cease-and-desist orders, and orders to notify the "public" and your past and present customers 3. Force you to notify your past and present customers, buy back any goods you sold that are improperly designated and "deport" those goods 4. Stop any on-the-water shipments on arrival and/or inspect goods that are in transit within the USA to you or your customers Continued on page 84 11