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Victory in a War of Definitions
Jesse Richman, 8/11/2014

In June I posted an analysis of the proposed rules changes that would have allowed many companies that physically manufacture nothing in the United States to classify the goods they purchase from factories in other countries as American made.  http://www.idealtaxes.com/post3776.shtml.  Fortunately, the efforts of the Coalition for a Prosperous America and many other organizations resulted in an extraordinarily large number of comments (more than 26,000) objecting to the rules change.  And the objections were heard. According to Michael Stumo for the CPA:

A notice in the Federal Register, published today, makes it official. The Office of Management and Budget (OMB) cited the large number of comments received, as well as statistical uncertainty, in withdrawing the proposal.

This is only one piece of a broader battle over goods classifications as a variety of related rules changes are already in place.  It seems likely that these revisions aim at masking the fact that many outsourced corporations would like to claim they produce in the U.S. even when they don't. 

One of the classification battles that has been lost (for now at least) is over the classification of merchanting as manufacturing by the BEA.  http://www.bea.gov/international/revision-2014.htm.  As I noted in another post in June (http://www.idealtaxes.com/post3774.shtml) this classification decision flatly contradicts international norms, and makes little objective sense.  Why must we pretend merchanting is manufacturing?  Perhaps because some would like to imagine that an "American" part-owned factory in China is American.  It is no more made in America than car produced in a Toyota plant in Kentucky (http://www.toyotageorgetown.com/mandex.asp) is made in Japan. 

Jesse

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