FTC and USDA Promote Transparency in ‘Made in USA’ Labeling Claims

Morgan Lewis - Well Done

Morgan Lewis - Well Done

The Federal Trade Commission (FTC) recently issued a final rule that marks a major shift in the regulatory landscape for labeling that has already begun to impact other regulatory bodies—namely, the US Department of Agriculture (USDA). The FTC’s new rule adds teeth to its longtime policy to prevent deceptive “Made in USA” (MUSA) claims, codifies its informal 1997 Enforcement Policy Statement on U.S. Origin Claims, and enables it to seek civil penalties of up to $43,280 for each violation of the rule.

Under the final rule, marketers that make unqualified MUSA claims on labels should be able to prove that their products are “all or virtually all” made in the United States. Specifically, the standard requires that

  • final assembly or processing of the product occurs in the United States,
  • all significant processing that goes into the product occurs in the United States, and
  • all or virtually all ingredients or components of the product are made and sourced in the United States.

Although the rule does not become effective until August 13, 2021, and explicitly states that it does not supersede or affect any federal statute or regulation relating to country-of-origin labels, its impact on the USDA was seen almost immediately.

The USDA administers two distinct US-origin labeling programs: the Agricultural Marketing Service’s mandatory country-of-origin labeling at retail for certain covered agricultural products, and the Food Safety and Inspection Service’s (FSIS’s) policy for voluntary MUSA claims on labels for certain meat and poultry products.

Immediately following the FTC’s vote to strengthen the MUSA standard, Secretary of Agriculture Tom Vilsack released a statement announcing that the USDA will “complement” the FTC’s efforts with its own initiative on the labeling of products regulated by the FSIS.

Last year, the USDA announced its intention to pursue rulemaking to address the limitations and flaws of the voluntary “Product of USA” label. Now, in response to the comments received by both the FTC and the USDA, the USDA is initiating a “top-to-bottom review” of the “Product of USA” label to better reflect US consumers’ plain understanding of this label.

In the meantime, companies that market FSIS-regulated meat and poultry products should take care to monitor the FSIS’s rulemaking progress. Furthermore, the recent and enhanced emphasis on MUSA claims should signal the renewed importance of robust recordkeeping policies to document a company’s sourcing, manufacturing, and labeling practices for supporting MUSA-related claims.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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