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105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-759
_______________________________________________________________________


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

_______________________________________________________________________


October 1, 1998.--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. 563]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Commerce, to whom was referred the bill 
(H.R. 563) 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..............................................     3
Background and Need for Legislation..............................     3
Hearings.........................................................     4
Committee Consideration..........................................     4
Rollcall Votes...................................................     4
Committee Oversight Findings.....................................     4
Committee on Government Reform and Oversight.....................     4
New Budget Authority and Tax Expenditures........................     4
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Inflationary Impact Statement....................................     7
Advisory Committee Statement.....................................     7
Constitutional Authority Statement...............................     7
Applicability to the Legislative Branch..........................     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''. 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''. 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'' in section 4 of this Act, 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 ``Made in America'' in section 4 of this 
        Act 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 regulation.
  (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''--
          (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'' has the meaning given 
        unqualified ``Made in U.S.A.'' or ``Made in America'' claims 
        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 unqualified ``Made in U.S.A.'' or ``Made in America'' claims 
in labels on products introduced, delivered for introduction, sold, 
advertised, or offered for sale in commerce.

                          Purpose and Summary

    The purpose of H.R. 563 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'' was recently reviewed by the Federal 
Trade Commission (FTC). The FTC's long-standing decisions have 
held 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 understand the sentiment among both consumers 
and manufacturers better, the Commission undertook a 
comprehensive series of workshops, an extensive public comment 
period generating more than 300 comments, and consumer surveys. 
On December 1, 1997, the Commission issued an enforcement 
policy statement on U.S. origin claims rejecting an earlier 
effort to change the standard used by the Commission and 
announcing its intent to continue enforcing the Commission's 
``all or virtually all'' content standard.
    The Committee considered, and the House passed, nearly 
identical legislation in the 103rd and 104th Congresses. The 
Committee's report on H.R. 3342 on the 103rd Congress (H. Rpt. 
103-660) contains additional background information on the 
subject of ``Made in America.'' (See also H.R. 447 in the 104th 
Congress; H. Rpt. 104-753).

                                Hearings

    In the 104th Congress, the Subcommittee on Commerce, Trade, 
and Hazardous Materials held a hearing on virtually identical 
legislation, 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, U.S. House of Representatives, Seventeenth District, 
State of Ohio, who testified in favor of the legislation. The 
Committee held no additional hearings during the 105th 
Congress.

                        Committee Consideration

    On September 24, 1998, the Committee on Commerce met in 
open markup session and ordered H.R. 563 reported to the House, 
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. 563 reported. A motion by Mr. Bliley to order 
H.R. 563 reported to the House, 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. 563 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, September 29, 1998.
Hon. Tom Bliley,
Chairman, Committee on Commerce,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 563, a bill to 
establish a toll free number in the Department of Commerce to 
assist consumers in determining if products are American-made.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark Hadley.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 563--A bill to establish a toll free number in the Department of 
        Commerce to assist consumers in determining if products are 
        American-made

    Summary: H.R. 563 would require the Department of Commerce 
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 
department to enter into a contract to establish a three-year 
pilot program and to charge fees to pay for the cost of the 
contract.
    CBO estimates that enacting H.R. 563 would not result in 
any significant net cost to the federal government because the 
bill would authorize Commerce to establish fees to offset the 
costs of the toll-free line, subject to approval in 
appropriations acts. H.R. 563 could increase 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. 
Because the bill could affect receipts, pay-as-you-go 
procedures would apply, but CBO estimates that any such 
receipts would not be significant in any year.
    This bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reforms Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 563 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit).

                                    [By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                       1999     2000     2001     2002     2003
----------------------------------------------------------------------------------------------------------------
                                      SPENDNG SUBJECT TO APPROPRIATION \1\
Estimated Authorization Level:
    Funding for the Department of Commerce.........................       12        0        0        0        0
    Less: Estimated Collections of Fees............................       -2       -4       -5       -1        0
                                                                    --------------------------------------------
      Estimated Net Authorization..................................       10       -4       -5       -1        0
Outlays:
    Estimated Gross Outlays........................................        2        4        5        1        0
    Less: Estimated Collections of Fees............................       -2       -4       -5       -1        0
                                                                    --------------------------------------------
      Estimated Net Outlays........................................        0        0        0        0        0
----------------------------------------------------------------------------------------------------------------
\1\ H.R. 563 also could increase government receipts, but CBO estimates that any such change would be less than
  $500,000 a year.

    Basis of estimate: For purposes of this estimate, CBO 
assumes H.R. 563 will be enacted near October 1, 1998--the 
start of fiscal year 1999--and that the necessary amount will 
be appropriated in that year for the full cost of the three-
year contract for a consumer hotline.
    Based on information from the Department of Commerce, CBO 
estimates that the rulemaking proceeding required by the bill 
would cost less than $500,000, primarily for personnel costs. 
Assuming the department finds sufficient interest among 
manufacturers, CBO estimates that establishing a hotline and 
database, and operating the program over a three-year period 
would cost the federal government approximately $12 million 
beginning in fiscal year 1999 and ending during fiscal year 
2002. 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.
    The 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.
    Pay-as-you-go-considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. H.R. 563 
would affect 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 
less than $500,000 in any year.
    Intergovernmental and private-sector impact: The bill 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Mark Hadley.
    Estimate approved by: 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.

                   Constitutional Authority Statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             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 an 
equivalent label; 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''; 
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 
        America 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'' 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'' has 
the same meaning given unqualified ``Made in the U.S.A.'' or 
``Made in America'' claims, for purposes of the laws 
administered by the Federal Trade Commission. Under the Federal 
Trade Commission Act, as historically applied and recently 
reaffirmed by the FTC, that agency has treated unqualified 
``Made in America'' or ``Made in U.S.A.'' claims as having to 
meet a standard of all or virtually all domestic content. The 
bill's definition adopts the standard used by the FTC in order 
to ensure that ``Made in America'' claims made pursuant to this 
legislation meet the standard for unqualified ``Made in 
U.S.A.'' or ``Made in America'' claims that the FTC uses to 
enforce section 5 of the Federal Trade Commission Act's (15 
U.S.C. Sec. 45) prohibition against deceptive acts or 
practices.
    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 unqualified ``Made in the U.S.A.'' or 
``Made in America'' claims 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.