BILL ANALYSIS Ó
SB 633
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SENATE THIRD READING
SB
633 (Hill)
As Amended July 13, 2015
Majority vote
SENATE VOTE: 39-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Privacy |11-0 |Gatto, Wilk, Baker, | |
| | |Calderon, Chang, | |
| | |Chau, Cooper, | |
| | |Dababneh, Dahle, | |
| | |Gordon, Low | |
| | | | |
| | | | |
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SUMMARY: Permits merchandise with the words "Made in U.S.A." to
be offered for sale if no more than 5% of the final wholesale
value of the product is foreign-made, or no more than 10% is
foreign-made if the content could not be produced or obtained
domestically, regardless of cost. Specifically, this bill:
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1)Permits merchandise with the words "Made in U.S.A." or similar
words to be sold or offered for sale in California if not more
than 5% of the final wholesale value of the manufactured
product consists of articles, units or parts obtained from
outside the United States (US).
2)Permits merchandise with the words "Made in U.S.A." or similar
words to be sold or offered for sale in California if not more
than 10% of the final wholesale value of the manufactured
product consists of articles, units or parts obtained from
outside the US, and the manufacturer cannot produce or obtain
the articles, units or parts domestically, regardless of cost.
3)Declares that the prohibitions and exceptions for use of the
"Made in U.S.A." label shall not apply to merchandise sold for
resale to consumers outside of California.
4)Clarifies that merchandise sold or offered for sale outside of
California shall not be deemed mislabeled if the label
conforms to the law of the forum state or country within which
they are sold or offered for sale.
5)Makes other technical or nonsubstantive changes.
EXISTING LAW:
1)Generally protects consumers and competitors against false or
misleading advertising. (Business and Professions Code (BPC)
Section 17500, et seq.)
2)Makes it unlawful for any person, firm, corporation, or
association to sell, or offer for sale, merchandise that
advertises itself as being made or manufactured in the US when
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any article, unit, or part of the merchandise has been
entirely or substantially made, manufactured, or produced
outside of the US. (BPC Section 17533.7)
3)Authorizes the Federal Trade Commission (FTC) to regulate
claims of US origin pursuant to authority granted to it under
the FTC Act, which prohibits "unfair or deceptive acts or
practices." (15 United States Code (USC) Section 45)
4)Requires that a "Made in U.S.A." label be consistent with
orders and decisions of the FTC. (15 USC Section 45 (a))
5)Provides, in the form of a policy statement, that a product
may be labeled as "Made in U.S.A." if the product is all or
virtually all made in the US; however, a product using such a
label may contain - in a negligible amount - components made
outside of the US. ("Enforcement Policy Statement on U.S.
Origin Claims," FTC, 62 Federal Regulations Section 63756
(December 2, 1997))
FISCAL EFFECT: None. This bill has been keyed non-fiscal by
the Legislative Counsel.
COMMENTS: This bill is intended to permit a domestically
produced product to bear a "Made in USA" label even if up to 5%
of the final wholesale value of the product contains
foreign-produced content, or up to 10% foreign content if the
article, unit or part could not be obtained in the US. This
bill is author-sponsored.
California is unique within the US for having its own statutory
standard for use of the term "Made in U.S.A." California's law
is different from - and, in practice, stricter than - the
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federal standard laid out in the FTC's December 1997 Enforcement
Policy Statement on US Origin Claims (the "FTC Standard").
The FTC is charged with preventing deception and unfairness in
the marketplace. Federal law gives the FTC power to bring
enforcement actions against false or misleading claims that a
product is of US origin. The FTC's standard requires that for
any unqualified "Made in U.S.A." claim, the product must be "all
or virtually all" made in the US. According to the FTC, "all or
virtually all" means that "all significant parts and processing
that go into the product must be of US origin. That is, the
product should contain no - or negligible - foreign content."
The precise meaning of "negligible" is not provided, meaning
that it will be understood and applied on a case-by-case basis.
Any unqualified claim must have a reasonable basis in fact.
Conversely, California's Business and Professions Code states
that it is unlawful to sell or offer merchandise in California
with the words "Made in U.S.A." or similar wording when the
merchandise or any part thereof has been entirely or
substantially made, manufactured, or produced outside of the
United States. This provision was added to the BPC in 1961.
Courts have interpreted this requirement strictly, holding that
any merchandise containing even one part that is foreign made or
assembled may not be marketed as "Made in U.S.A." (Colgan v.
Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663). As
such, California's domestic production standard for use of the
"Made in USA" designation is effectively 100%.
Analysis Prepared by:
Hank Dempsey / P. & C.P. / (916) 319-2200 FN:
0001242
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