California manufacturers will now catch a bit of a break when it comes to labeling their American-made goods—the state’s governor loosened the outdated definition of what can be marked “Made in USA.”
On Tuesday, Gov. Jerry Brown approved legislation that expands the Golden state’s definition of Made in USA to align more closely with the federal standard 49 other states follow for their domestically made products.
The Federal Trade Commission’s (FTC) Made in USA standard says for a product to be labeled American made “all or virtually all” of its components must be made stateside and final assembly has to be done domestically too.
There aren’t any hard and fast percentages that dictate the amount of foreign inclusions allowed for a product to still deserve a Made in USA label, products are assessed case by case. Collars, cuffs, zippers, buttons, linings, interlinings, fillings or padding used just for structural purposes and not warmth, however, can be excluded from factoring into the Made in USA labeling requirements, per the federal standard.
But until now, California’s labeling law had been much more stringent, somewhat impractical and hardly advantageous to manufacturers in the state, according to Sen. Jerry Hill (D-San Mateo), the bill’s author.
Under California’s existing law, no product can be marked Made in USA, Made in America, USA or anything similar when any part of it has been entirely—or substantially—made outside of the U.S.
As Elise Shibles, a member of the Sandler, Travis & Rosenberg (STR) customs and international trade law firm, explained, if you were making a garment in California under the old law, “You not only have to look at the country of origin for the fabric that went into it, “but also any buttons, zippers, thread, labels, rhinestones, decals, the drawstring on a hood. Every single solitary teeny, tiny part has to be taken into consideration.”
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According to the Sacramento Business Journal, Hill said the new legislation “fixes this problem and brings California’s labeling statute into the 21st century, helping to promote California manufacturing and jobs.”
The new legislation (Senate Bill 633), would allow goods to still be dubbed American made as long as 95 percent of the product’s final wholesale value comes from domestic inclusions.
“The law further clarifies that the “sale or offer for sale” of goods that violate the law pertains to the retail sale of goods within California, and not wholesale transactions that occur within California for goods distributed in other states,” Shibles explained. “This fix helps California companies who sell wholesale to other states from being disadvantaged by the higher marking standard simply by being located in California.”
With Made in USA pulling the purported appeal it does from consumers, the more flexible definition is expected to be a boon for marketing Made in USA goods and could keep California manufacturers more competitive in the global market.