- Incorporate the updated ISO standard 2076:2010(E);
- allow certain hang-tags that do not disclose the product's full fiber content information;
- better address electronic commerce by amending the definition of the terms invoice and invoice or other paper;
- update the guaranty provisions by, among other things, replacing the requirement that suppliers provide a guaranty signed under penalty of perjury with a certification that must be renewed annually, and revising accordingly the form used to file continuing guaranties with the Commission under the Textile, Fur, and Wool Acts; and
- clarify several other provisions.
The Commission seeks comment on these proposals and several remaining issues. Written comments must be received on or before July 8, 2013. The Commission received 17 comments in response to the advance notice of proposed rulemaking in November 2011. The comments indicated widespread support for the Textile Rules. For example, the joint comment of eight textile trade associations ("joint comment") stated that the use of labels on textiles and apparel benefits consumers and businesses. The comments are posted at http://www.ftc.gov/os/comments/textilerulesanpr/index.shtm.
In connection with fiber content disclosures, the joint comment and six others supported amending section 303.7 to incorporate the revised ISO standard for man-made fiber names, ISO 2076:2010(E). Six also requested that the Commission clarify provisions relating to fiber content disclosures for trimmings and ornamentation. In addition,vthe joint comment and three others requested that the Commission modify fiber content disclosure requirements when fiber trademarks or fiber performance characteristics appear on hang-tags and other point-of-sale materials.
Two comments recommended amendments to the Textile Act. Bureau Veritas recommended revising the Textile Act to allow for the naming of fibers present in amounts less than 5% regardless of whether the fibers have a structural significance. Adam Varley recommended adding yak fibers to the definition of wool under the Act, which also would require an amendment to the Wool Act because the definition of wool comes from the Wool Act. Neither commenter provided evidence that the benefits of the proposed amendments, which would require new legislation, would exceed their costs.
Based on the record and the Commission's experience, the Commission proposes several amendments as explained below. The Commission also explains why it declines to propose several other amendments.
A. Fiber Content Disclosures
The Commission proposes the following amendments to the Rules' fiber content disclosures: (1) Revising section 303.7 to incorporate the updated ISO standard establishing generic fiber names for manufactured fibers; (2) clarifying section 303.12(a) concerning disclosures involving trimmings; (3) revising section 303.17(b) to allow certain hang-tags disclosing fiber names and trademarks, and performance information, without disclosing the product's full fiber content; and (4) clarifying section 303.35, describing products containing virgin or new wool, and sections 303.41 and 303.42, addressing fiber content disclosures in advertising. This section also explains why the Commission declines to propose certain amendments relating to fiber content advocated by comments.
1. International Standards and Regulations
The Commission proposes to amend the Rules to incorporate the revised ISO standard for man-made fiber names. The Commission, however, declines to propose any amendments to further align the Rules with textile regulations in other countries.
(a) The Updated ISO Standard for Man-Made Fiber Names
Section 303.7 (generic names and definitions for manufactured fibers) establishes the generic names for manufactured fibers to be used in the fiber content disclosures required by the Textile Act and Rules. This section establishes such names in two ways. First, it includes the generic names and definitions that the Commission has established through its textile petition process. Second, it establishes through incorporation by reference the generic names and definitions set forth in the ISO standard entitled "Textiles--Man-made fibres--Generic names," 2076:1999(E). Since the Commission incorporated ISO 2076:1999(E) into section 303.7 in 2000, the ISO standard has been updated, and is now identified as ISO 2076:2010(E).
The comments expressed strong support for modifying section 303.7 to incorporate the revised international standard for man-made fiber names. The joint comment noted that the ISO standard benefits businesses by establishing an international consensus that removes unnecessary barriers to trade. USA-ITA stated that the ISO standard helps its members develop labeling that satisfies the requirements of multiple countries. AAFA noted that the ISO standard would reduce Customs challenges. NRF stated that the Commission's adoption of the ISO standard would help forestall nationally-biased standards that often create barriers to trade and hinder efficient supply-chain management. C&R supported the modification as a way of addressing frequent inquiries from retailers, manufacturers, and brand companies relating to the standard.
Easing barriers to trade was one of the reasons for incorporating the previous version of the international standard into section 303.7 and remains an important priority for the Commission. Incorporating the updated standard would further this goal by permitting more internationally-recognized fiber names. In addition, updating the Rules would promote efficiency by reducing the need for industry members to petition the Commission to recognize new fiber names on a piecemeal basis. Accordingly, the Commission proposes to amend section 303.7 to incorporate the revised ISO standard ISO 2076:2010(E), "Textiles--Man-made fibres--Generic names."
The Commission notes that section 303.7 and the revised ISO standard define certain fiber names slightly differently. For example, section 303.7 includes elasterell-p as a subclass of polyester, while the ISO standard includes elasterell-p as an alternate name for elastomultiester. Similarly, section 303.7 includes lastol as a subclass of olefin, while the ISO standard includes lastol as an alternate name for elastolefin. The comments do not suggest that these differences present an obstacle to incorporating the ISO standard into section 303.7 or warrant any other amendments to that section. However, the Commission seeks comment on whether these differences present any problems and, if so, how the Commission should address them.
USA-ITA recommended that the Commission further amend section 303.7 to automatically incorporate future changes to the ISO standard to eliminate the need to amend section 303.7 each time the standard changes. However, the Textile Act directs the Commission to establish the generic names of manufactured fibers. Pursuant to this responsibility, the Commission cannot preapprove generic names that may be added to the ISO standard in the future. Nor can the Commission delegate its responsibility to establish fiber names to a standard setting organization such as the ISO. The Commission therefore declines to propose this amendment.
(b) International Regulations
To further ease trade barriers, the comments supported harmonizing the Textile Rules with regulations of other countries. USA-ITA stated that differing national labeling requirements inhibit U.S. companies from selling textile products in international markets, and suggested that the Commission consider recognizing international labeling requirements. CAF stated that the review of the Textile Rules is an excellent opportunity for the U.S. and Canada to harmonize labeling requirements. In addition, IKEA recommended that the FTC consider European Union Regulation (EU) No 1007/2011, and "align the US rules to the new EU regulation as much as possible, especially in regards to accepted fiber names and tolerances for fiber content." The comments promoting harmonization were very general and either did not discuss how the Commission should change the Textile Rules to further reduce barriers to trade, or did not discuss how specific international labeling requirements relate to the requirements of the Textile Rules or whether they are consistent with the Textile Act. The Commission declines to propose aligning the Textile Rules more closely with EU regulations. The Rules and EU regulations already substantially overlap. Specifically, all but five of the generic fiber names for man-made fibers in the EU regulations also appear in the proposed Rules. With respect to fiber tolerances (i.e., permissible deviations from specified fiber percentages), the Rules already allow the same tolerance as the EU regulations for textile products containing multiple fibers.
Additionally, the record does not support further harmonization. For example, it does not address whether differences between the Rules and EU regulations create problems for industry, or whether the benefits of further harmonization exceed the costs. Moreover, unlike the unanimous support for incorporating the latest ISO standard, which reflects a long-standing international consensus, further harmonization with the EU regulation was supported by only one commenter. Two comments urged greater international harmonization. One urged greater harmonization generally. The other sought increased consistency between Canadian and United States labeling. Neither, however, proposed specific changes or provided evidence regarding the problems caused by the lack of harmonization. Moreover, neither indicated whether the benefits of further harmonization would exceed the costs.
2. Trimmings and Ornamentation
The Textile Act and Rules exempt trimmings and ornamentation from the fiber content disclosure requirement under certain circumstances, and require that the fiber content disclosure state that it does not apply to trimmings or ornamentation. Six comments stated that the Rules relating to trimmings and ornamentation overlap and create confusion. These comments proposed four amendments and a clarification. The Commission addresses each below. First, Consumer Testing Laboratories recommended that the Commission define ``minor proportion'' in the description of trimmings because "the challenge for the industry is in determining what is considered minor proportion." However, the comment did not propose any particular definition, and it is the experience of the Commission that the absence of a definition of this term has not posed significant problems. Furthermore, the limited inquiries received by the Commission regarding this phrase indicate that its application to particular textile products is fact-specific, and that the phrase allows necessary flexibility. In addition, none of the other comments urged the Commission to address this issue. Therefore, the Commission declines to propose amending this section to define "minor proportion." The Commission notes that interested parties may seek advice from Commission staff, or consult educational materials published by the Commission.
Second, USA-ITA recommended that the Commission amend section 303.12 to clarify that elastic material is not a "finding" if it exceeds 20 percent of the surface area of a household textile article. The Commission, however, finds that section 303.12 is sufficiently clear. Under section 303.12, trim clearly includes both "findings" and certain elastic material that does not exceed 20 percent of the surface area.\37\ Thus, the Rules are clear that elastic material is not a "finding" or any other type of trim if it exceeds 20 percent of the surface area. In addition, the comments did not present any evidence that the provision has resulted in general confusion. The Commission therefore declines to propose this amendment.
Third, USA-ITA advocated amending the Rules to eliminate the fiber content disclosure for embroidery or other decoration on the interior of garments. Section 303.12(a) does not require a fiber content disclosure for decorative trim, whether applied by embroidery, overlay, applique, or attachment; or decorative patterns or designs which are an integral part of the fabric if the decorative trim or decorative pattern or design does not exceed 15 percent of the surface area of the article. If the embroidery or decoration exceeds this threshold, consumers may well regard the fiber content as material regardless of where it appears in the product. USA-ITA did not present any evidence showing otherwise. The Commission therefore declines to propose this amendment.
Fourth, NRF stated that when a textile product contains trimmings, elastic, and ornamentation, separately disclosing that each of these parts are excluded is excessive and does not provide meaningful information. NRF therefore recommended that the Commission amend the Rules to require only one statement. The Commission declines to propose this amendment because the Rules do not mandate the repetition of the phrase "exclusive of" (e.g., "exclusive of elastic," "exclusive of ornamentation") as NRF suggests. Rather, the Rules do not prohibit and therefore already allow such disclosures to be made in one statement (e.g., "exclusive of elastic and ornamentation").
Fifth, Bureau Veritas stated that where textile decoration is made of the same fiber blend as the fabric to which it is attached, although in different proportions, requiring the phrase "exclusive of decoration" may be unwarranted. Bureau Veritas requested that the FTC clarify the reason for using "exclusive of decoration" in that instance. The Commission notes that the disclosure is necessary because, if the decoration's fiber content differs in proportions from the fabric's fiber content, the fiber content disclosure for the fabric would not accurately describe the decoration's or the garment's fiber content. However, when the fabric's fiber content is the same as the decoration's fiber content, the Commission agrees that the Rules would not require the "exclusive of decoration" statement. The Commission proposes amending section 303.12 to clarify this point.
Although it declines to propose some of these suggested changes, the Commission proposes amending section 303.12 to clarify when the Textile Act and Rules exempt trimmings from fiber content disclosures. As described above, section 303.12 currently describes trimmings and the conditions for exempting trim from disclosure requirements, but does not expressly state that trim is generally exempt. The Commission proposes amending section 303.12 to remedy this omission.
Specifically, the Commission proposes amending section 303.12 to clarify that: (1) Section 12 of the Textile Act exempts trimmings; (2) exempt trimmings do not include decorative trim, decorative patterns and designs, and elastic material in findings that exceed the surface area thresholds described later in section 303.12; and (3) if the fiber content of exempt trimmings consisting of decorative trim or decoration differs from the fabric's fiber content, the fiber content of the fabric shall be followed by the statement "exclusive of decoration."
Finally, as recommended by AAFA, the Commission staff will continue to provide advice and educational materials on how to properly label products with decorative trim and ornamentation.
3. Disclosure Requirements Applicable to Hang-Tags and Advertisements
The Rules allow disclosure of non-deceptive fiber trademarks in conjunction with the generic name of each such fiber, and address how labels disclose these fiber trademarks. In particular, section 303.17(b) provides that a label using a generic name or a fiber trademark must disclose full and complete fiber content the first time the generic name or fiber trademark appears on the label. Similarly, sections 303.41 and 303.42 address fiber content disclosures in advertising, including point-of-sale advertising. These sections require a fiber content disclosure, including the generic name of the fiber, in advertising that uses a fiber trademark.
The joint comment of eight trade associations urged the Commission to modify the Rules to allow the use of hang-tags and other point-of-sale ("POS") materials relating to fiber trademarks and performance without requiring disclosure of full fiber content information. The joint comment did not urge the Commission to amend any particular section of the Rules. However, two of the eight trade associations also submitted a separate comment urging the Commission to amend section 303.17 to address this issue.
The joint comment and AAFA stated that the requirement that a full fiber content disclosure be made whenever a fiber trademark is used on a label (e.g., on hang-tags) is unnecessary for consumers and a burden on fiber producers. AAFA stated that requiring fiber percentages on hang-tags is redundant since the information is mandated on the required textile label. The joint comment, AAFA, and USA-ITA stated that fiber manufacturers often create hang-tags to provide important information about the performance characteristics and attributes of their fibers (e.g., the fiber's ability to stretch, its recycled content, the UV protection it provides, its moisture management characteristics, and its antimicrobial properties). However, fiber manufacturers may not know the final composition of the fabric or garment made with their fibers at the time they create these hang-tags. The final composition of the fabric or garment is determined by fabric manufacturers and apparel assemblers.
Therefore, the comments asserted that section 303.17 inhibits them from creating hang-tags to provide consumers with important fiber performance information. Instead of requiring a full fiber content disclosure, the comments recommended that the Textile Rules prohibit deceptive representations about fiber content on hang-tags and POS materials.
The Commission agrees. Section 303.17(b) may well discourage the non-deceptive use of fiber trademarks and truthful fiber performance representations on hang-tags. Furthermore, the Commission does not see any reason to prevent fiber, fabric, or garment manufacturers from creating hang-tags to provide consumers with truthful non-deceptive information, provided the product has a label with full fiber content information as required by the Act and the Rules. Allowing such hang-tags could also lower compliance costs because the tags would not have to include the full fiber content information. The Commission proposes to amend section 303.17(b) accordingly.
The Commission notes, however, that under some circumstances hang-tags without full fiber content information might mislead consumers if consumers mistakenly believe that the hang-tag provides full fiber content information. For example, a consumer reading a garment hang-tag with the trademark for a rayon fiber might incorrectly conclude that the product consists entirely of rayon. To address this concern, the Commission proposes amending section 303.17(b) to provide that hang-tags stating a fiber generic name or trademark must disclose clearly and conspicuously that the hang-tag does not provide the product's full fiber content unless the product's full fiber content is disclosed on the hang-tag or if the product is entirely composed of that fiber. Proposed section 303.17(b) provides two examples of compliant disclosures: "This tag does not disclose the product's full fiber content" and "See label for the product's full fiber content."
The joint comment also proposed that the Commission amend the rules to allow POS materials other than hang-tags to disclose fiber trademarks and performance without requiring disclosure of full fiber content information. However, the Textile Act requires that any written advertisement used to promote, sell or offer the product for sale disclose the product's full fiber content (although it need not disclose fiber percentages). Therefore, the Commission does not propose to amend sections 303.41 or 303.42 to allow POS advertising to disclose fiber trademarks and performance without requiring a fiber content disclosure.
Apart from the absence of statutory authority, the Commission notes that practical considerations warrant different treatment of hang-tags and advertisements. Hang-tags are affixed to the product, and likely are in relatively close proximity to the required labels disclosing the product's full fiber content. Therefore, a consumer examining a textile fiber product could read any labels and hang-tags at the same time the consumer considers purchasing the product. Because the required label disclosing the product's full fiber content is, like the hang-tag, affixed to the product, there is no need for, and the Act does not require, the hang-tag to disclose the product's full fiber content with, or without, the fiber percentages. In contrast, advertisements not affixed to the product have no such likely proximity to the product. A consumer reviewing such advertisements without access to the product would not necessarily be able to review any labels disclosing the product's full fiber content at the same time the consumer considers the advertisements.
4. Clarifications of Sections Relating to "Virgin" or "New" Fibers and Disclosures in Advertising
Based on informal inquiries received over the years, the Commission proposes clarifying sections 303.35, 303.41, and 303.42. None of the proposed clarifications involve a substantive change.
(a) New or Virgin Fiber
Section 303.35 states that the terms "virgin" or "new" should not be used to describe a product or any fiber or part thereof when the product or part so described is not wholly virgin or new. Although this section governs descriptions of any "product, or any fiber or part thereof," (emphasis added), it only expressly allows the use of the terms "virgin" or "new" in connection with "the product or part so described," not the "fiber." In other words, this provision literally prohibits truthful fiber content claims for virgin or new fiber. Prohibiting such truthful claims does not advance the goals of the Textile Act or protect consumers from deception, and prohibiting such claims was not the Commission's intent when it promulgated this provision. For example, a product or part containing 50% new fibers could not be described as containing 50% "new" fibers because the product or part is not composed wholly of such fibers. Accordingly, the Commission proposes to amend section 303.35 by adding the word "fiber" as set forth in section X below so that it states that the terms virgin or new shall not be used when the product, fiber or part so described is not composed wholly of new or virgin fiber.
(b) Advertising Disclosures
Section 303.41(a) provides that the use of a fiber trademark in an advertisement shall require a full disclosure of the fiber content information at least once in the advertisement. In other words, the use of a fiber trademark triggers the Rule's fiber content disclosure. In contrast, this section does not require a full disclosure of fiber content information when a generic fiber name is used. This distinction conflicts with the Act, which requires such a disclosure in advertisements that disclose or imply fiber content. Accordingly, to conform the Rules to the Act, the Commission proposes to amend section 303.41(a) to state that the use of a fiber trademark or a generic fiber name in an advertisement shall require a full disclosure of the fiber content information required by the Act and regulations at least once in the advertisement.
Section 303.42(a) also addresses the content and format of fiber disclosures in advertising. This provision implements the Textile Act's requirement that written textile fiber product advertisements disclosing or implying the presence of a fiber also disclose the product's full fiber content, "except that the percentages of the fiber present in the textile fiber product need not be stated." Section 303.42 implements this requirement but fails to explicitly state that advertising need not state the fiber percentages. Accordingly, the Commission proposes to amend the second sentence in section 303.42(a) by adding the following phrase: "except that the advertisement need not state the percentage of each fiber."
B. Country-of-Origin Disclosures
Section 303.33 effectuates the Textile Act's requirement that textile fiber products have labels disclosing the country where they were processed or manufactured. Section 303.33(a) provides sample disclosures for products completely made in the United States, products made in the United States using imported materials, and products partially manufactured in a foreign country and partially manufactured in the United States.
For the purpose of determining where an imported product was processed or manufactured (i.e., the country of origin), section 303.33(d) provides that the country where the imported product was principally made shall be considered to be the country where such product was processed or manufactured. It also provides that further work or material added to the product in another country must effect a basic change in form to render such other country the place where such product was processed or manufactured.
USA-ITA urged the Commission to consider revising section 303.33(d) to state that the country where imported products were processed or manufactured (i.e., country of origin) is determined under the trade laws (i.e., Customs laws) requiring country-of-origin labeling on imported products. USA-ITA argued that there is a conflict between the very detailed trade laws, specifically 19 U.S.C. 3592, and the more general country-of-origin rule in section 303.33(d). The Commission recognized the interplay between the Rules and the Customs laws when it first promulgated the Rules in 1959. Indeed, the Rules state that "[n]othing in this rule shall be construed as limiting in any way" the disclosures required by "any Tariff Act of the United States or regulations prescribed by the Secretary of the Treasury." Although the Commission has repeatedly noted its intent to ensure consistency between section 303.33 and the Customs laws, the trade laws and regulations applicable to textile fiber products have changed significantly. For example, in 1959, Customs regulations on marking imported products provided simply that the country of origin is the country where the product was first manufactured or substantially transformed. The Rules follow a nearly identical approach to determining the origin of imported products even though they do not use identical terminology. However, Customs no longer uses "substantial transformation" to determine the origin of many imported textile products. Rather, the Customs law now contains detailed rules for determining the country of origin of imported textile products. Therefore, the Commission agrees that it should update section 303.33(d) and (f) to better account for current Customs country-of-origin regulations and the fact that Customs is now part of the Department of Homeland Security rather than the Department of the Treasury. Accordingly, the Commission proposes to update and clarify section 303.33(d) to state that an imported product's country of origin as determined under the laws and regulations enforced by Customs shall be the country where the product was processed or manufactured. The Commission also proposes to update section 303.33(f) by dropping the outdated reference to the Treasury Department and instead refer to any Tariff Act and the regulations promulgated thereunder. These amendments would revise the Rules to clearly reflect the Commission's longstanding policy of ensuring the consistency of the Textile Rules and Customs regulations and address USA-ITA's concerns.
C. E-Commerce and Textile Guaranties
The Rules already apply to and specifically address electronic commerce by, for example, defining the terms mail order catalog and mail order promotional material to include materials disseminated by electronic means. Nonetheless, NRF urged the Commission to amend the Rules to more effectively address certain aspects of electronic commerce and to modify the provisions applicable to guaranties. To address these concerns, the Commission proposes amending the definition of the terms invoice and invoice or other paper in section 303.1(h) and the guaranty provisions in sections 303.36, 303.37, and 303.38. The Commission makes some modification to the rule as regards e-commerce and textile guaranties.
D. Coverage and Exemptions From the Act and Rules
Section 303.45 (Exclusions from the Act) has been the source of some confusion. The provision is phrased in terms of textile products excluded from operation of the Textile Act. However, instead of listing the excluded products, the provision lists 23 textile product categories that are not excluded. It then identifies the excluded product categories. To address this issue without changing the substance of this section, the Commission proposes amending the section so that paragraph (a) identifies the textile fiber product categories subject to the Act and regulations, unless excluded from the Act's requirements in paragraph (b). New paragraph (b) provides that all textile fiber products other than those identified in paragraph (a) are excluded, as well as the exempted products identified in paragraph (b). The Commission also proposes revising current paragraphs (b) and (c) to reflect the above change and redesignating them as paragraphs (c) and (d), respectively.
V. Other Amendments the Commission Declines to Propose
Several comments urged the Commission to address the disclosure of a business's identity, the provisions implementing the RN program, and disclosures in multiple languages. The Commission declines these requests either because the record does not include sufficient evidence to support them or the Commission lacks the authority to adopt them.
To read the Commission's full responses to all the comments submitted regarding the advanced notice of proposed rulemaking; to see the Commission's current proposals to modify the Textile Rules; or to see how to comment on the proposals, go the the notice of proposed rulemaking at http://www.gpo.gov/fdsys/pkg/FR-2013-05-20/pdf/2013-10584.pdf