December 17, 1997
We're learning more every month about what "free trade" really means. Not only
does it mean NAFTA, stunning defeats in disputes before the World Trade Organization
(too bad for Eastman Kodak, which lost its effort to open up the Japanese market and just
laid off 10,000 employees), and billion-dollar bailouts of corrupt Asian regimes, but now
we find that free trade means freedom to lie to American consumers.
The advocates of now-we-all-live-in-a-global-economy cooked up a sneaky plan
for the Federal Trade Commission (FTC) to change its rules so that products could
display the label "Made in U.S.A." even when that label is a lie because up to 25 percent
of the product is not made in the U.S.A.
The standard for the last half century has required a product to be "all or virtually
all" made in the U.S., with only "negligible" foreign content, in order to carry the coveted
"Made in U.S.A." label. This standard has been interpreted to mean 98 percent of the
The regulatory legerdemain was to be accomplished by a change published in the
May 5 Federal Register. However, some people actually read the 16 pages of fine print
and, after the firestorm subsided, the FTC backed down and abandoned its proposal.
Nobody was threatening any business's right to sell products that are 25 percent, or
even 100 percent, foreign made or containing foreign content, or to charge any price the
seller wishes. The issue was over allowing businesses to lie about their products, label
them falsely, and deceive their customers about where the merchandise comes from.
This was wholly a truth-in-labeling issue. As Sen. Fritz Hollings (D-SC) said:
"Polluting the `Made in U.S.A.' label with non-American products makes about as much
sense as calling polyester a natural fiber."
The FTC, which was "surprised" at the fierce opposition to the change, didn't
understand that this was an honesty issue. Jodie Bernstein, director of the FTC Bureau of
Consumer Protection who wrote the proposed change, described it as "a complicated
issue" and whined that "I thought we came up with something very reasonable."
Wouldn't you think that protecting consumers against false labeling would be a
priority for the Bureau of Consumer Protection? But no apologies were forthcoming; like
many current politicians, Ms. Bernstein pleaded the excuse of style rather than substance:
"We just didn't communicate the proposal well enough."
What's so fascinating is not only that the grassroots won an upset victory over the
bureaucrats, but the way this regulatory war was reported by the newspapers that always
line up on the side of free trade and the interests of global economy. The news stories
were exemplars of obfuscation.
Those who opposed the change were branded as "emotional" and put down for
supporting a "half-century-old standard," a "World War II-era standard." In touchy-feely
words, we were admonished that it's "time to update the standard," to "relax the
standard," to give the economy "more flexible standards" and "more leniency."
The New York Times admitted that "The idea of changing it grew out of a
recognition of America's place in an increasingly global marketplace, and a growing
sophistication among consumers, who realize that fewer and fewer goods are made within
a single country." That non sequitur is no justification for lying to the American
Our "sophisticated" American consumers should be allowed to decide for
themselves if they prefer to buy products made in the U.S.A., and if they care whether or
not a product has foreign content. It is possible that the "Made in USA" label is even
more valuable today than it was 50 years ago.
The proposed FTC change was defended as an "effort to recognize the reality of
American commerce in the global bazaar." Contrariwise, it was an effort to conceal the
reality that multinationals want to sell low-priced foreign goods marketed under a false
The globalist newspapers portrayed the FTC's retreat as a big victory for the
unions, who worry about the multinationals moving plants abroad to hire cheap labor. It
wasn't just the unions; the successful Made in USA Coalition included agriculture
associations, small businesses, consumer advocates, and grassroots Americans.
The FTC was unable or unwilling to estimate how much of our economy would be
affected by its proposed ruling, but it seems clear that this was another issue that divided
the multinationals, who make extensive use of cheap foreign labor, against smaller,
American-owned businesses. The businesses that lobbied to keep an honest "Made in
U.S.A." standard included food companies, tool makers, manufacturers of precision
instruments, and tile makers.
Rep. Bob Franks (R-NJ), who lined up 150 Republicans and Democrats to sign a
House resolution opposing the change, said, "The agency charged with upholding truth in
advertising is attempting to pull a fast one on America's consumers." But truth won out,
and the FTC had to bugle retreat.