Most of the products consumers believe to be “Made in China” actually contain more U.S.-made parts or other content than they or policymakers realize, according to a new report prepared for the National Retail Federation.
“This report looks at retailers’ worldwide sourcing of merchandise not just as a global supply chain but as a global value chain,” NRF President and CEO Matthew Shay said. “It shows the value added at each step along the way, not just in manufacturing but from the initial concept to the finished product. Even in a product that says ‘Made in China,’ much of what goes into that product is ‘Made in America.’ That means millions of American jobs for American workers regardless of what the label might say.”
“Rethinking Made in America in the 21st Century” was prepared for NRF by Laura M. Baughman, a well-known Washington economist specializing in international trade and president of The Trade Partnership. The report was released as part of activities to mark Imports Work Week.
“In a world of global supply chains, does ‘Made in America’ really mean what people think?” Shay and Baughman ask in the introduction to the report. “Unbeknownst to consumers, imported goods with foreign labels often include significant but unrevealed amounts of U.S. content.”
According to the study, apparel products contain more than 70 percent U.S. value on average, some foreign-brand automobiles contain as much as 95 percent U.S. content while no U.S. car has more than 75 percent U.S. content, and the popular Apple iPod contains $162 in American content compared with $4 in Chinese content even though it is labeled “Made in China.”
Of $1.85 trillion in products imported in 2009, $464 billion of the value was American and 10 million U.S. jobs, or 11.2 percent of U.S. employment, were sustained by global supply chains in 2008, the report said.
Product origin labels are misleading because federal law allows a product to be labeled “Made in America” or “Made in USA” only if American manufacturing workers made the product and “all or virtually all” of the value of significant parts and processing that go into the product were made or done in the United States, according to the report. The determination looks only at direct manufacturing costs such as materials, labor and overhead. Non-manufacturing costs such as research and development, product design, marketing and other services are not considered even if all of those activities took place in the United States and were performed by U.S. workers.
The report calls on policymakers to adopt trade policies that recognize the importance of U.S. jobs tied to imported products. It recommends that both U.S. and foreign tariffs be eliminated and that non-tariff barriers such as regulations that treat imported products differently also be removed. Trade facilitation measures affecting issues ranging from customs processing to transportation infrastructure are needed, and trade agreements should “recognize 21st Century global value chains,” the report states. Furthermore, it specifically calls for passage of the Bipartisan Congressional Trade Priorities Act of 2014, which would “support U.S. participation in global value chains and ensure that trade agreements reflect the increasingly interrelated and multi-sector nature of trade and investment activity.”