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104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-753
_______________________________________________________________________


 
 TO ESTABLISH A TOLL FREE NUMBER TO ASSIST CONSUMERS IN DETERMINING IF 
                       PRODUCTS ARE AMERICAN-MADE

_______________________________________________________________________


 August 2, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Bliley, from the Committee on Commerce, submitted the following

                              R E P O R T

                        [To accompany H.R. 447]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Commerce, to whom was referred the bill 
(H.R. 447) to establish a toll free number in the Department of 
Commerce to assist consumers in determining if products are 
American-made, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     1
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Rollcall Votes...................................................     3
Committee Oversight Findings.....................................     3
Committee on Government Reform and Oversight.....................     3
New Budget Authority and Tax Expenditures........................     3
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Inflationary Impact Statement....................................     7
Advisory Committee Statement.....................................     7
Section-by-Section Analysis of the Legislation...................     7
Changes in Existing Law Made by the Bill, as Reported............     9

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. ESTABLISHMENT OF TOLL FREE NUMBER PILOT PROGRAM.

    (a) Establishment.--If the Secretary of Commerce determines, on the 
basis of comments submitted in rulemaking under section 2, that--
          (1) interest among manufacturers is sufficient to warrant the 
        establishment of a 3-year toll free number pilot program, and
          (2) manufacturers will provide fees under section 2(c) so 
        that the program will operate without cost to the Federal 
        Government,
the Secretary shall establish such program solely to help inform 
consumers whether a product is made in America or the equivalent 
thereof. The Secretary shall publish the toll-free number by notice in 
the Federal Register.
    (b) Contract.--The Secretary of Commerce shall enter into a 
contract for--
          (1) the establishment and operation of the toll free number 
        pilot program provided for in subsection (a), and
          (2) the registration of products pursuant to regulations 
        issued under section 2,
which shall be funded entirely from fees collected under section 2(c).
    (c) Use.--The toll free number shall be used solely to inform 
consumers as to whether products are registered under section 2 as made 
in America or the equivalent thereof. Consumers shall also be informed 
that registration of a product does not mean--
          (1) that the product is endorsed or approved by the 
        Government,
          (2) that the Secretary has conducted any investigation to 
        confirm that the product is a product which meets the 
        definition of made in America or the equivalent thereof, or
          (3) that the product contains 100 percent United States 
        content.

SEC. 2. REGISTRATION.

    (a) Proposed Regulation.--The Secretary of Commerce shall propose a 
regulation--
          (1) to establish a procedure under which the manufacturer of 
        a product may voluntarily register such product as complying 
        with the definition of a product made in America or the 
        equivalent thereof and have such product included in the 
        information available through the toll free number established 
        under section 1(a);
          (2) to establish, assess, and collect a fee to cover all the 
        costs (including start-up costs) of registering products and 
        including registered products in information provided under the 
        toll-free number;
          (3) for the establishment under section 1(a) of the toll-free 
        number pilot program; and
          (4) to solicit views from the private sector concerning the 
        level of interest of manufacturers in registering products 
        under the terms and conditions of paragraph (1).
    (b) Promulgation.--If the Secretary determines based on the 
comments on the regulation proposed under subsection (a) that the toll-
free number pilot program and the registration of products is 
warranted, the Secretary shall promulgate such regulations
    (c) Registration Fee.--
          (1) In general.--Manufacturers of products included in 
        information provided under section 1 shall be subject to a fee 
        imposed by the Secretary of Commerce to pay the cost of 
        registering products and including them in information provided 
        under subsection (a).
          (2) Amount.--The amount of fees imposed under paragraph (1) 
        shall--
                  (A) in the case of a manufacturer, not be greater 
                than the cost of registering the manufacturer's product 
                and providing product information directly attributable 
                to such manufacturer, and
                  (B) in the case of the total amount of fees, not be 
                greater than the total amount appropriated to the 
                Secretary of Commerce for salaries and expenses 
                directly attributable to registration of manufacturers 
                and having products included in the information 
                provided under section 1(a).
          (3) Crediting and availability of fees.--
                  (A) In general.--Fees collected for a fiscal year 
                pursuant to paragraph (1) shall be credited to the 
                appropriation account for salaries and expenses of the 
                Secretary of Commerce and shall be available in 
                accordance with appropriation Acts until expended 
                without fiscal year limitation.
                  (B) Collections and appropriation acts.--The fees 
                imposed under paragraph (1)--
                          (i) shall be collected in each fiscal year in 
                        an amount equal to the amount specified in 
                        appropriation Acts for such fiscal year, and
                          (ii) shall only be collected and available 
                        for the costs described in paragraph (2).

SEC. 3. PENALTY.

  Any manufacturer of a product who knowingly registers a product under 
section 2 which is not made in America or the equivalent thereof--
          (1) shall be subject to a civil penalty of not more than 
        $7500 which the Secretary of Commerce may assess and collect, 
        and
          (2) shall not offer such product for purchase by the Federal 
        Government.

SEC. 4. DEFINITION.

  For purposes of this Act:
          (1) The term ``made in America or the equivalent thereof'', 
        with respect to a product, has the meaning given such term for 
        purposes of laws administered by the Federal Trade Commission.
          (2) The term ``product'' means a product with a retail value 
        of at least $250.

SEC. 5. RULE OF CONSTRUCTION.

  Nothing in this Act or in any regulation promulgated under section 2 
shall be construed to alter, amend, modify, or otherwise affect in any 
way, the Federal Trade Commission Act or the opinions, decisions, 
rules, or any guidance issued by the Federal Trade Commission regarding 
the use of the term ``made in America or the equivalent thereof'' in 
labels on products introduced, delivered for introduction, sold, 
advertised, or offered for sale in commerce.

                          Purpose and Summary

    The purpose of the bill is to provide for the establishment 
and operation of a three-year, toll free number pilot program 
to assist consumers in determining what products are ``Made in 
America.'' The reported bill provides that all costs of the 
program be paid with fees collected from manufacturers who 
voluntarily choose to register their products under this 
program.
    The reported bill requires the Secretary of Commerce to 
issue regulations establishing the program, as well as 
procedures for manufacturers to register products that are made 
in America. If there is sufficient interest in providing 
private sector funding, the Secretary is directed to enter into 
a contract for the establishment and operation of the program.

                  Background and Need for Legislation

    In today's global economy, it is increasingly difficult for 
consumers to determine which products are ``Made in America.'' 
Whether shopping for cars, computers, industrial equipment, or 
hand tools, the ``Made in America'' designation still 
represents quality and value to consumers, and is something 
that consumers, when adequately informed, factor into 
purchasing decisions. Currently, there is no central repository 
for lists of American-made products.
    The issue of the appropriate definition of when a product 
is ``Made in America'' continues to occupy the minds of 
manufacturers, regulators, and the consuming public. This is 
clearly evidenced by the recent efforts undertaken by the 
Federal Trade Commission (``FTC'') to reevaluate its long-
standing decisions that, for purposes of enforcement against 
``unfair and deceptive trade practices,'' all or virtually all 
of a product must be made in the United States in order to make 
that claim. In an effort to better understand the sentiment 
among both consumers and manufacturers, the Commission 
undertook a comprehensive series of workshops, an extensive 
public comment period generating more than 300 comments, and 
consumer surveys. The Chairman of the FTC indicated in 
testimony before the Committee that the Commission soon expects 
to receive a staff report on the results of these activities 
and recommendations for the future, in light of the 
increasingly global economy.
    The Committee considered, and the House passed, nearly 
identical legislation in the 103rd Congress. The Committee's 
report on H.R. 3342 (H. Rpt. 103-660) contains additional 
background information on the subject of ``Made in America.''

                                Hearings

    The Subcommittee on Commerce, Trade, and Hazardous 
Materials held a hearing on H.R. 447, a bill to establish a 
toll-free number in the Department of Commerce to assist 
consumers in determining if products are American-made, on July 
11, 1996. The Subcommittee received testimony from the 
Honorable James A. Traficant, M.C., who testified in favor of 
the legislation.

                        Committee Consideration

    On July 18, 1996, the Subcommittee on Commerce, Trade, and 
Hazardous Materials met in open markup session and approved 
H.R. 447 for Full Committee consideration, as amended, by a 
voice vote.
    On July 24, 1996, the Committee on Commerce met in open 
markup session and ordered H.R. 447 reported to the House, as 
amended, by a voice vote, a quorum being present.

                             Rollcall Votes

    Clause 2(l)(2)(B) of rule XI of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. There were no recorded votes taken in connection with 
ordering H.R. 447 reported. A motion by Mr. Bliley to order 
H.R. 447 reported to the House, as amended, was agreed to by a 
voice vote, a quorum being present.

                      Committee Oversight Findings

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the Committee held a legislative 
hearing and made findings that are reflected in this report.

              Committee on Government Reform and Oversight

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform and Oversight.

               New Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that H.R. 447 would result in no new or increased budget 
authority or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 403 of the Congressional Budget Act of 1974 with the 
following clarification: The Committee notes that the 
Congressional Budget Office estimates that there may be some 
minimal cost to the Federal government to conduct the 
rulemaking by the Secretary. However, since these costs are 
minimal, the Committee believes and intends that this program 
should, and can, be operated within existing appropriations 
levels and that no additional funding is required.

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, the following is the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 403 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 1, 1996.
Hon. Thomas J. Bliley, Jr.,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 447, a bill to 
establish a toll free number in the Department of Commerce to 
assist consumers in determining if products are American-made.
    Enacting H.R. 447 would affect receipts. Therefore, pay-as-
you-go procedures would apply to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               Congressional Budget Office Cost Estimate

    1. Bill number: H.R. 447.
    2. Bill title: A bill to establish a toll free number in 
the Department of Commerce to assist consumers in determining 
if products are American-made.
    3. Bill status: As ordered reported by the House Committee 
on Commerce on July 24, 1996.
    4. Bill purpose: H.R. 447 would require the Department of 
Commerce (DOC) to conduct a rulemaking proceeding to determine 
if sufficient interest exists among manufacturers to establish 
a consumer hotline listing products that are made in America. 
If sufficient interest is found, the bill would require the DOC 
to enter into a contract to establish a three-year pilot 
program and to charge fees to pay for the cost of the contract.
    5. Estimated cost to the Federal Government: CBO estimates 
that enacting H.R. 447 would not result in any significant net 
cost to the federal government because the bill would authorize 
the DOC to establish fees to offset the costs of the toll-free 
line, subject to approval in appropriations acts. H.R. 447 
would affect governmental receipts because the bill would 
establish a civil penalty for anyone who knowingly registers a 
product for the toll-free hotline that is not made in America, 
as defined by the bill. Additional receipts from civil 
penalties are likely to be small. The following table 
summarizes the estimated budgetary impact of H.R. 447 over the 
1997-2002 period.

                [By fiscal year, in millions of dollars]                
------------------------------------------------------------------------
                                 1997   1998   1999   2000   2001   2002
------------------------------------------------------------------------
      SPENDING SUBJECT TO                                               
         APPROPRIATION                                                  
                                                                        
Estimated Authorization Level:                                          
    Funding for the Department                                          
     of Commerce..............     12      0      0      0      0      0
    Less: Estimated Fee                                                 
     Collections..............     -2     -4     -5     -1      0      0
                               -----------------------------------------
        Estimated Net                                                   
         Authorization........      8     -4     -5     -1      0      0
                               =========================================
Outlays:                                                                
    Estimated Gross Outlays...      2      4      5      1      0      0
    Less: Estimated Fee                                                 
     Collections..............     -2     -4     -5     -1      0      0
                               -----------------------------------------
        Estimated Net Outlays.      0      0      0      0      0      0
                                                                        
      CHANGES IN REVENUES                                               
                                                                        
Estimated Receipts from Civil                                           
 Penalties....................  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)
                                                                        
------------------------------------------------------------------------
\1\ Less than $500,000.                                                 

    The costs of this bill fall within budget function 370.
    6. Basis of estimate: CBO assumes that all amounts 
estimated to be authorized are appropriated, and in particular, 
that the funding would be provided in fiscal year 1997 for the 
full cost of the three-year contract for a consumer hotline.
    Based on information from the DOC, CBO estimates that the 
rulemaking proceeding required by the bill would cost 
approximately $200,000, primarily for personnel costs. Assuming 
the DOC finds sufficient interest among manufacturers, CBO 
estimates that entering into a contract to establish a hotline 
and database, and to operate it over a three-year period would 
cost the federal government approximately $12 million beginning 
in fiscal year 1997 and ending during fiscal year 2000. This 
estimate assumes that all costs of the three-year contract for 
the consumer hotline would be covered by fees, as specified in 
the bill.
    DOC's authorization to enter into a contract for operation 
of the hotline would not constitute direct spending because the 
bill would require that the contract be paid solely through fee 
collections, and that those fees be collected only to the 
extent allowed in appropriations acts.
    7. Pay-as-you-go considerations: Section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985 sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts through 1998. H.R. 447 would affect 
governmental receipts because the bill would establish a civil 
penalty for anyone who knowingly registers a product for the 
toll-free hotline that is not made in America, as defined by 
the bill. Collections of fines would count as governmental 
receipts and would be deposited in the general fund of the 
Treasury. CBO expects that any additional collections would be 
negligible. The following table summarizes the estimated pay-
as-you-go impact of this bill.

                [By fiscal year, in millions of dollars]                
------------------------------------------------------------------------
                                                   1996    1997    1998 
------------------------------------------------------------------------
Change in outlays...............................   (\1\)   (\1\)   (\1\)
Change in receipts..............................       0       0       0
------------------------------------------------------------------------
\1\ Not applicable.                                                     

    8. Estimated impact on State, local, and tribal 
governments: The bill contains no intergovernmental mandates as 
defined in the Unfunded Mandates Reform Act of 1995 (Public Law 
104-4) and would have no impact on the budgets of state, local, 
or tribal governments.
    9. Estimated impact on the private sector: This bill would 
impose no new private-sector mandates as defined in Public Law 
104-4.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Federal cost estimate: Rachel 
Forward and Stephanie Weiner. Impact on State, local, and 
tribal governments: Pepper Santalucia. Impact on the private 
sector: Amy Downs.
    12. Estimate approved by: Robert A. Sunshine (for Paul N. 
Van de Water, Assistant Director for Budget Analysis).

                     inflationary impact statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee finds that the bill 
would have no inflationary impact.

                      advisory committee statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

             section-by-section analysis of the legislation

Sec. 1. Establishment of toll free number pilot program

    This section provides that if, pursuant to comments 
received during rulemaking under section 2 of the bill, the 
Secretary of Commerce (``the Secretary'') determines there is 
sufficient interest among manufacturers in the private sector 
to operate the program established under this section without 
Federal funding, the Secretary shall provide for the 
establishment of a toll free number which may be used by 
consumers to determine if a product is made in America. Under 
this section, the Secretary has responsibility to publish the 
toll free number in the Federal Register.
    This section also provides that the Secretary shall 
contract out the establishment and operation of the toll free 
number pilot program and the registration of products pursuant 
to regulations issued under section 2.
    This section further provides that consumers shall be 
informed: as to whether products about which inquiry is being 
made are registered as being made in America or the equivalent 
thereof; that registration of a product does not mean that the 
product is endorsed or approved by the Government; that 
registration of a product does not mean that the Secretary has 
conducted any investigation to confirm that the product is a 
product which meets the definition of made in America or the 
equivalent thereof; and that registration of a product does not 
mean that the product contains 100 percent U.S. content.

Sec. 2. Registration

    This section provides that the Secretary shall propose a 
regulation:
          (1) to establish procedures under which manufacturers 
        may voluntarily register products which are made in 
        American and have such products included in the 
        information available through the toll free number;
          (2) to establish, assess, and collect fees for the 
        costs of having products included in information 
        available through the toll free number established 
        under section 1;
          (3) to establish a toll free number pilot program; 
        and
          (4) to solicit views from the private sector 
        concerning the level of interest of manufacturers in 
        registering products under the terms and conditions of 
        the toll free number pilot program described in the 
        proposed regulations and the level of interest of 
        consumers.
    This section also states that manufacturers who register 
products as being made in America or the equivalent thereof for 
purposes of this Act shall be subject to a fee to cover all 
costs of operating the toll free number pilot program 
established in section 1.

Sec. 3. Penalty

    This section provides that if a manufacturer knowingly 
registers a product with the Secretary under section 2 which is 
not made in America, the manufacturer may not offer such 
product for purchase to the Federal government and shall be 
subject to a civil penalty of not more than $7500, which the 
Secretary of Commerce may impose.

Sec. 4. Definition

    This section provides that the term ``made in America or 
the equivalent thereof'', with respect to a product, has the 
same meaning given the term for purposes of the laws 
administered by the Federal Trade Commission. Under the Federal 
Trade Commission Act, as historically applied by the FTC, that 
agency has treated unqualified ``made in America'' claims as 
meeting a standard of all or virtually all domestic content. 
The Committee adopted the FTC's definition to avoid the 
numerous, differing, and even conflicting definitions and 
interpretations in Federal law and by Federal agencies. While 
the Committee believes that the FTC should continue to be the 
arbiter of what constitutes a product ``Made in America'' for 
purposes of an advertising claim, the definition adopted by the 
Committee should not be construed as suggesting that the FTC 
change its current definition, standards, or interpretations, 
with respect to this Act or any other law.
    This section also states that the term ``product'', as used 
in the reported bill, means a product with a retail value of at 
least $250.

Sec. 5. Rule of construction

    This section states that nothing in this Act shall be 
deemed to alter, amend, modify, or otherwise affect in any way, 
the Federal Trade Commission Act or the opinions, decisions, 
rules, or any guidance issued by the Federal Trade Commission 
regarding the use of the term ``made in America or the 
equivalent thereof'' in labels on products introduced, 
delivered for introduction, sold, advertised, or offered for 
sale in commerce.

         changes in existing law made by the bill, as reported

    This legislation does not amend any existing Federal 
statute.