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MAKING IT IN AMERICA
March 22, 2022 | Robert Bergman
Look closely at the label of any clothing, fur product or automobile and you should see the location at which it was is made, as required by government regulation. This is not the case for industrial and technical products, or, for that matter, anything else sold in the U.S.A. But because Made in U.S.A. claims have proven to give a distinct advantage in the marketplace, fraud is rampant and stopping it is easier said than done.
The increase in fraud has resulted in Federal Trade Commission (F.T.C.) updating its guidance. According to a recent F.T.C. news release, promoting or offering product or service with an unqualified U.S.-origin claim, whether express or implied, is an unfair or deceptive act unless:
- The final assembly or processing of the product occurs in the United States,
- All significant processing for 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.
This guidance, however, applies only to “Made in the U.S.A.” claims in advertising and on labels, whether they appear on product packaging or online. For Made in the U.S.A. claims not on labels, the F.T.C. could enforce violations through Section 5 of the Federal Trade Commission Act. Still, any action would typically require a complaint of related injury or harm to consumers.
Spending taxpayer dollars
For the goods the government buys for its own use; however, the Federal Government has much more enforcement power. On March 7, 2022, the Biden administration issued final rules updating the Buy America Act of 1978, which stated that “substantially all” of any product which the Federal Government buys with taxpayer dollars must be made in the U.S. unless there is no domestic source. “Substantially all” initially meant more than 50 percent. Executive order 13881 raised that to “more than 55% of its component parts and the March 7 rulemaking extends it to 75 percent over several years.
What the buyer can do
We hope that F.T.C. regulations and White House executive orders move the Made in the U.S.A. needle. In the meantime, the National Institute for Standards and Technology (NIST) provides guidance for industrial buyers who want to act on Buy America preferences while also reducing the risk of supply chain disruption and cyber security penetration.
In its 2021 Key Practices in Cyber Supply Chain Risk Management: Observations from Industry, NIST suggests that suppliers and end-users acknowledge that they share an ecosystem that is potentially under threat and collaborate on practices to keep it secure. The document defines the components of a Cybersecurity Supply Chain Risk Management Plan, which includes the following measures:
- Applying industry standards and best practices to determine supplier criticality.
- Involving key suppliers in contingency planning, incident response and disaster recovery planning and testing.
- Creating explicit collaborative roles, structures, and processes for supply chain, cybersecurity, product security, physical security, and other relevant functions.
- Assessing and monitoring activity throughout the supplier relationship.
- Integrating cyber security considerations into the system and product life cycle.
- Implementing service-level agreements (S.L.A.s) that state the requirements for adhering to the organization’s cybersecurity policy and any controls.
- Mentoring and coaching suppliers to improve their cyber security practices.
- Using third-party assessments, site visits, and formal certification to assess critical suppliers.
This level of vendor scrutiny is significant for users of products in critical infrastructure applications. For a perspective on Made in U.S.A. issues for the water/wastewater industry, see Albert Rooyakkers’ article in the forthcoming April 2022 issue of Water & Wastes Digest.