WASHINGTON — The Federal Trade Commission on July 1 announced it finalized a new rule that will crack down on marketers who make false, unqualified claims that their products are made in the United States. The FTC said under the new rule, marketers using Made in USA claims on their labels must be able to prove their products are “all or virtually all” made in the United States.

This means final assembly or processing of the product occurs in the United States, all significant processing that goes into a 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.

On the same day, Secretary of Agriculture Tom Vilsack said the FTC decision was timely and the US Department of Agriculture itself would undertake a “top-to-bottom” review of its current voluntary Product of the USA label that will, among other things, help the Department determine what that label means to consumers and whether changes should be made.

The FTC voted 3 to 2 in favor of implementing the final rule that the commission majority said would be especially beneficial to small businesses that rely on the Made in USA label but lack the resources to defend themselves against imitators. The new rule codifies a broad range of remedies that may be employed by the FTC, including the ability to seek redress, damages, penalties, and other relief from those who mispresent their products by using the Made in USA label. It will enable the commission for the first time to seek civil penalties of up to $43,280 per violation.

The FTC said while stiff penalties may not be appropriate in every instance, “they send a strong signal to would-be violators that they abuse the Made in USA label at their peril.”

The FTC noted that during the course of its rulemaking, it heard “from hundreds of ranchers and shrimpers concerned about Made in USA labels that mislead consumers.”

Mr. Vilsack said the “USDA will complement the FTC’s efforts with our own initiative on labeling for products regulated by the Food Safety and Inspection Service, an area of consumer labeling where USDA has a long tradition of protecting consumers from false and misleading labels.”

Mr. Vilsack noted American consumers depend upon accurate, transparent labels to obtain important information about the food they consume. American farmers and ranchers depend upon those same labels to convey information about their products that consumers value and demand.

“We have taken note of the many comments submitted to USDA and the FTC regarding meat labeling and understand that the current Product of USA label on meat products may no longer effectively serve either of those purposes, to the detriment of consumers, producers, and fair and competitive markets.”

Mr. Vilsack said the USDA last year announced its intention to conduct its own rulemaking to address the concern that the voluntary Product of USA label may confuse consumers about the origin of FSIS-regulated products.

“After considering the many comments received by the FTC and USDA on this issue, we are initiating a top-to-bottom review of the Product of USA label that will, among other things, help us to determine what that label means to consumers,” Mr. Vilsack said.

“I am committed to ensuring that the Product of USA label reflects what a plain understanding of those terms means to US consumers,” Mr. Vilsack continued. “Throughout the rulemaking process, we will be asking questions, collecting data, and requesting comments. And we will be considering all ideas suggested by the whole range of stakeholders, including our trading partners with whom we will engage to ensure that this labeling initiative is implemented in a way that fulfills our commitment to working cooperatively with our trade partners and meeting our international trade obligations.”

The National Beef Cattlemen’s Association welcomed the FTC new rule and the USDA’s announcement of a review of the Product of the USA label. The NBCA recently filed a petition with the FSIS to eliminate the use of the Product of the USA label.

“The Product of the USA label is not subject to source verification, is not tied to any kind of food safety standard and is applied by packers and retailers in a manner that does not deliver value back to the cattle producer,” said Jerry Bohn, president of the NBCA. “This label not only misleads consumers, it is yet another barrier to producers gaining leverage and distinguishing their product in the marketplace.”

The NBCA supports a more appropriate generic label, such as “Processed in the USA,” Mr. Bohn said.

The Southern Shrimp Alliance also welcomed the FTC and USDA announcements,

“The FTC’s adoption of the Made in the USA rule, coupled with the commissioners’ recognition of the agency’s past unwillingness to enforce prohibitions against false labeling of imported products as domestic, represents an important step forward,” the alliance said.