Federal Trade Commission Received Documents Jan 17 1996 B18354900051 Secretary Law Offices Stewart and Stewart 2100 M Street, N.W. Washington, D.C. 20037 (202) 785-4185 General@stewartlaw.com January 17, 1996 Mr. Donald S. Clark Office of the Secretary Federal Trade Commission Room 159 Sixth and Pennsylvania Avenue, N.W. Washington, D.C. 20580 Dear Mr. Secretary: Re: Made in USA Policy Comment On behalf of The Timken Company and The Torrington Company, U.S. manufacturers of antifriction bearings, we submit the following comments concerning the policy of the Federal Trade Commission with respect to the marking of manufactured products as "Made in U.S.A." Request for Public Comment in Preparation for Public Workshop Regarding "Made in USA" Claims in Product Advertising and Labeling, 60 Fed. Reg. 53,922 (Oct. 18, 1995). Timken and Torrington support the adoption of legal standards for the marking of merchandise manufactured in this country that coincide with the standards applied by U.S. Customs to imported goods and by our trading partners with respect to exported merchandise. As global manufacturers of antifriction bearings, including ball bearings, cylindrical roller bearings, needle roller bearings, plain bearings, spherical roller bearings, and tapered roller bearings, mounted and unmounted, Timken and Torrington have taken an active interest in the rules of origin and marking rules imposed by U.S. Customs and its counterparts around the world. Both companies have plants in several countries manufacturing bearings and bearing parts. And, although both sell a significant volume of the bearings produced in a given country within the domestic market in which their plants are located, it is also the case that both are substantial exporters and importers. The companies have actively participated with respect to the formulation of preference and marking rules in the context of the NAFTA and in the context of the harmonized rules to be developed by the World Customs Organization. Copies of two submissions made to Customs and the International Trade Commission, respectively, are enclosed. Therein, Timken and Torrington have advocated the position that the origin of a "bearing" is determined by the country of origin of the two major components of the bearing, the inner and outer rings or races. Although the balls or rollers are equally essential components, the manufacturing content of the rings or races typically accounts for the majority of the value of the finished bearing. This approach also offers ease of administration. Because the inner and outer rings are shaped to match the rolling element, whether a ball or roller, these components are dedicated to use as a particular finished bearing. Not only do these components largely define the ultimate use of the finished bearing, but in the trade it is the races or rings that are typically engraved with country-of-origin marking. Other components of the bearing, such as the balls or rollers and the retainer, are impractical to mark. Our companies typically source 100% of our parts and labor content in the United States. From time to time, however, we may require a small quantity of imported balls or rollers or other components as a result of temporary shutdowns, emergency orders, or lack of domestic capacity. Over the course of a year, we may therefore import a small quantity of parts to be incorporated in our bearings. The races or rings, which are manufactured in the United States, will retain their "made in U.S.A." marking. It is impractical to set up unique production runs and to change tooling in order to identify a different country of origin in those relatively few cases where imported balls or rollers might be assembled with domestic races or rings. Customs' marking rules with respect to bearings establish a simple, bright-line test: the country of origin is the country where the races or rings are manufactured. This avoids the need to conduct extensive valuation analysis or to consider whether particular parts are "essential" or "substantially transformed." At the same time, consumers purchasing bearings marked in conformity with such principles are assured that the large majority of the value content was added in the identified country. Bearing producers also benefit from the ability to use the same rules for marking bearings shipped to Canada and Mexico as are used for those sold in the United States. Because a substantial portion of the market for bearings is the automotive market, any requirement to use different origin markings on bearings bound for Canada and Mexico would impose considerable costs on the company. At the same time, constraints on our ability to import a small percentage of parts (other than inner and outer rings) from factories outside the United States would reduce our ability to be competitive with other international producers who have rationalized their own facilities in different countries to produce balls, rollers, cages, or other bearing parts. Accordingly, The Timken Company and The Torrington Company respectfully request that the Federal Trade Commission adopt a rule for marking bearings "made in U.S.A." that is equivalent to the rule adopted by Customs. Such guidelines are objective, reasonable, transparent, and predictable. Bearing consumers, who include a substantial portion of OEM producers of various automotive, agricultural and industrial equipment, are not misled or deceived by "made in U.S.A." bearings that in some cases include imported retainers, seals, shields, balls or rollers, but that consist predominantly of inner and outer rings manufactured in the United States. Respectfully submitted, Terence P. Stewart James R. Cannon, Jr. STEWART AND STEWART 2100 M Street, N.W. Washington, D.C. 20037 Special Counsel for The Timken Company and The Torrington Company Enclosures (2)