California To Loosen Its Restrictions On 'Made In USA' Labeling

On September 1, 2015, California enacted Senate Bill 633 ("SB 633"), loosening the state's restrictions on "Made in USA" labeling. Under existing law, codified at Cal. Bus. & Prof. Code § 17533.7, a product may not be sold or offered for sale in California as "Made in U.S.A" if the product, or any article, unit, or part of the product, has been entirely or substantially made, manufactured, or produced outside of the United States. In other words, Section 17533.7 requires that a product—including each of its individual components (no matter how small)—be entirely or substantially made, manufactured, or produced domestically to qualify for use of a "Made in U.S.A." or similar label.

SB 633, which goes into effect on January 1, 2016, amends Section 17533.7 to provide exemptions to the "Made in U.S.A." labeling prohibitions if: (1) all the foreign components of the product constitute no more than 5% of the final wholesale value of the manufactured product; or (2) all the foreign components of the product constitute no more than 10% of the final wholesale value of the manufactured product, and the manufacturer of the product shows that it can neither produce the components in the United States, nor obtain the components from a domestic source.

SB 633 should come as a welcome relief to many companies doing business in California. The bill more closely aligns California law with the less restrictive domestic content standards for use of the "Made in U.S.A." designation in all other states and under federal law. The amendment, therefore, should reduce the complications and costs faced by businesses selling products in California that are lawfully...