California Governor Jerry Brown has signed SB633 into law, changing the state's rules for "Made in U.S.A." and "Made in America" claims by coming closer to the Federal Trade Commission's (FTC) more lenient standard applicable elsewhere in the country.
The new law amends Section 17533.7 of California's Business and Professions Code to add new exceptions to the prohibition in that law barring the sale of any merchandise that provides on the merchandise or on its container that the merchandise is "Made in U.S.A." or "Made in America," or similar words, if "any" part of the merchandise has been entirely or substantially made, manufactured, or produced outside of the United States. The existing California prohibition is significantly more severe than the FTC's flexible "all, or virtually all" test for "Made in U.S.A." claims – but the newly added exceptions will make it easier to comply with the California rule.
5 Percent Exception
Now, as a result of the amendment, the prohibition does not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States if all of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than "5 percent of the final wholesale value of the manufactured product."
10 Percent Exception
The revised law also provides that the prohibition does not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States where both of the following apply:
- The manufacturer of the merchandise shows that it can neither produce the article, unit, or part within the United States nor obtain the article, unit, or part of the merchandise from a domestic source.
- All of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 10 percent of the final wholesale value of the manufactured product.
Resale Exception
Finally, the revised law makes it clear that merchandise sold or offered for sale outside of California is not mislabeled if the label conforms to the law of the forum state or country within which they are sold or offered for sale.
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