FTC: Made In The USA Comments Concerning Toyota Motor Sales, U.S.A., Inc.--P894219

Made In USA Policy Comment

(FTC File No. P894219)

Filed by

Toyota Motor Sales, U.S.A., Inc.

The premise at the heart of the Commission's proposed Guidelines is that consumers see an implied claim with respect to the total cost of a product when an advertiser makes an unqualified "made/built/assembled in America" claim. Unless consumers see that implied claim, there is no deception to guard against.

The Commission's own consumer survey shows what Toyota⁽¹⁾ and many others have been saying all along: consumers overwhelmingly do not see an implied claim about the total cost of producing the product or where the parts originated. With respect to the few who see any such a claim, they do not see it as a claim that "all or virtually all" of the cost of producing the product was incurred in the United States.

For this reason, as well as the reasons previously stated by Toyota in its earlier comments⁽²⁾, Toyota strongly recommends that the Commission withdraw the proposed Guidelines. Rather, the Commission should return to the only standard which makes sense in light of the every increasing complexity of consumer products and the global marketplace: the Commission's traditional, case-by-case, reasonable basis standard for advertising.

There Is No Implied Claim

The Commission's consumer testing on this issue leads to the conclusion that, to the extent consumers see an implied claim in an advertisement containing a "Made in the USA" claim, they believe that it implies that the product was assembled in the U.S.⁽³⁾

When asked if consumers saw an implied claim about the origins of the total cost of making the product, they said they did not. 73% of those viewing a "Made" claim, and 79% of those viewing an "Assembled" claim, saw no implied statement about how much of the total cost of making the product was from the United States. Only 14.5% of those viewing a "Made" claim saw an implied claim that 70% or more of the total cost of making the product was from the United States. And, only 1.5% of those viewing the "Assembled" claim saw an implied claim that 70% or more of the total cost was from the United States.

Simply put, consumers do not see the purported implied claim when viewing the express claim in the context of the product's packaging or its advertising. Since these numbers are lower than those of the attitudinal survey, they lead to the conclusion that consumers are sophisticated enough to put these claims in context when faced with the real world situation of the product or its advertising.

The lack of an implied claim, beyond that of the country of assembly, is also evidenced by the responses the Commission received to questions aimed at uncovering possible implied claims about the origin of the parts. Consistent with the findings on the total cost, 70% of the consumers viewing a "Made" claim, and 73.5% of those viewing an "Assembled" claim, saw no implied claim about the origin of the parts. In the end, only 10.5% of those who viewed the "Made" claim saw an implied claim that "all or virtually all" of the parts were of U.S. origin, while a mere 2% of those viewing the "Assembled" claim saw it. Indeed, that is far less than the 16.7% of all those viewing the "Assembled" claim who thought the parts were imported.⁽⁴⁾

Accordingly, the Commission's own study strongly supports the conclusion that consumers do not see an implied claim that the product is substantially all made in the United States. Since there is no deception to prevent, the Guidelines are unnecessary.

Advertising Must Be Put In Context

The Commission's consumer survey results must be coupled with the general principle that advertising can only be properly evaluated in context. Identical claims for different products will, in at least some circumstances, result in different consumer perceptions.

This was shown by the Commission's February 1991 study of advertising for electronic typewriters and bicycles. Even in that somewhat limited survey, consumers reacted differently to identical claims based upon differences in the product and consumers understanding of their respective industries.⁽⁵⁾

In the February 1991 study, consumers indicated their knowledge of foreign trade. That level of sophistication is likely to vary from industry to industry. While many consumers may not know that there are components necessary to make athletic shoes which are no longer made in the United States, they are much more aware of what is happening in the auto and electronics industries, for example, and their continuing globalization. In many cases the brand name will also give consumers important information about what claims can be reasonably inferred from an unqualified "Made/Built/Assembled in the USA" claim.

It is precisely because today's sophisticated consumers take into account all of these factors that the "one-size-fits-all" approach of the proposed Guidelines is inappropriate in today's marketplace.

The Commission Should Not Chill Truthful Claims

In the consumer protection area, the Commission's primary goal is to prevent deception. In an effort to do so, the Commission should not -- and cannot as a matter of law -- unreasonably restrict truthful commercial speech. Should the Commission decide to impose Guidelines with bright line standards which go beyond what is necessary to prevent deception -- as Toyota believes the proposed Guidelines would do -- it would only serve to harm the very consumers the Commission is charged with protecting.

If adopted, the Guidelines would put some advertisers in the position of choosing between making truthful claims and risking the possibility of at least an investigation (and, quite possibly more), or not making the claims. Many advertisers will choose to not make the claims, to the detriment of the marketplace.

While making truthful "qualified" claims is also an alternative, the message becomes much more cluttered, making it more difficult to convey and for consumers to understand. To the extent that the unqualified claim is truthful, an advertiser should not be faced with the choice of making a much less effective claim or facing a possible enforcement action. Such a choice will clearly chill the dissemination of honest, important information. The Commission should not enact Guidelines that lead to this result.

Conclusion

For the reasons set forth above, Toyota urges the Commission to withdraw its proposed Guidelines and to apply a case-by-case, reasonable basis, approach to all "Made/Built/Assembled/Manufactured in the USA" claims. In the alternative, the Guidelines should be modified to impose only the requirement that the product be substantially transformed in the United States since that requirement is supported by the survey data.

If the Commission concludes that some bright line test is necessary, it should be limited to unqualified "made" claims. With respect to unqualified "assembled" or "built" claims, there can be no doubt that they should not require any particular level of total costs or parts. There is simply no basis in the record to support Guidelines that would impose such a standard on "assembled" or "built" claims. Indeed, the record clearly supports the conclusion that the substantial transformation requirement alone would completely meet consumers' understanding of those terms.

Guidelines that require anything more would be entirely at odds with the Commission's statutory mandate.

1. Toyota is Toyota Motor Sales, U.S.A., Inc., a wholly-owned subsidiary of Toyota Motor Corporation, a Japanese corporation. Toyota markets Toyota and Lexus brand vehicles in 49 states. Almost 60% of the Toyota brand vehicles sold in the U.S. during 1996 were built at its plant in Georgetown, Kentucky (Toyota Motor Manufacturing, Kentucky, Inc.), or by New United Motor Manufacturing, Inc. in Fremont, California. Toyota is also a member of the Association of International Automobile Manufacturers, Inc. that filed comments in this matter. Toyota endorses the comments of AIAM to the extent they are consistent with these comments.

2. Toyota incorporates herein its previous comments by reference.

3. Since advertising must be evaluated in its context, the copy testing portion of the Commission's consumer testing is much more relevant than the attitudinal survey with respect to the application of the Guidelines to advertising. Based upon the results of the Commission's testing, and assuming that the Commission feels compelled to adopt Guidelines of some sort, the Customs substantial transformation test is most directly on point and eliminates the administrative burden of having to calculate U.S. origin under another test. Accordingly, Toyota would not object to Guidelines which simply imposed the substantial transformation test on an advertiser making an unqualified claim.

4. The almost 6,000 workers at Toyota's Kentucky plant assemble hundreds of thousands of new Toyotas every year. Toyota should be able to tell the public about their efforts irrespective of the percentages of the total cost of production or the origins of the parts. The assembly process itself is of great significance ­ especially to the thousands of Toyota associates who work at the plant.

5. See pages 38 - 39 of the February 1991 study, put on the public record in this proceeding. Also see Toyota's comments dated January 15, 1996 on this issue.