Country of Origin Issues
Origin issues are at issue for a wide variety of purposes. Origin must be accurately declared as a requirement of entry. Moreover, such origin determinations are frequently a prerequisite for the qualification of goods for preferential duty treatment (i.e. NAFTA, CAFTA, GSP, CBERA, AGOA, and other similar free trade agreements). Origin is also frequently at issue in government procurement contracts. Finally, the goods themselves may (or may not) be subject to labeling requirements (either on the goods themselves, or on their packaging).
Labeling claims of "Made in USA" are specifically regulated by both federal (15 U.S.C. §45a) and state law (California Bus. & Prof. Code §17533.7). The Federal Trade Commission enforces the federal law, and allows that Made in the USA" claims even where small (de minimis) amounts of foreign content are present (known in the trade as the "all or virtually all" standard). The California state law, however, does not allow for any foreign content unless "the product and all articles, units and parts thereof has been entirely or substantially made, manufactured or produced in the United States." California's law is stricter than federal law in the sense that there is no de minimis threshold (100% of the materials used in production must be considered of U.S. origin). For example, in a class action filed against AG Adriano Goldschmeid, Inc. (“AG”) and Nordstrom, Inc. the plaintiffs alleged that certain jeans contained fabric, thread, buttons, rivets, and/or certain subcomponents of the zipper assembly which were not of US origin. See, Paz v. AG Adriano Goldschmeid, Inc. et al. Other recent high profile class actions have also prompted renewed concern in this area. See, Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011); Colgan v. Leatherman Tool Group, Inc., 135 Cal. App. 4th 663 (2006).
In sum, the failure to accurately label and declare goods may be the basis for customs seizures of goods against importers, as well as private lawsuits and/or class action lawsuits directed against the downstream distributors and retailers.