China-U.S. Trade Law : International Trade Lawyer & Attorney : Baker Hostetler Law Firm : Trade Remedies, Customs & Export Controls

Elliot J. Feldman was the keynote speaker opening an applied International Trade Workshop in Beijing on March 21, sponsored by the University of International Business and Economics of Beijing and the United Nations Conference on Trade and Development (“UNCTAD”). The conference, on “Non Tariff Measures and Chinese Foreign Trade,” comes at a time when there has been growing concern about global protectionism advanced by non-tariff measures, especially in China. UNCTAD is launching a major survey effort to identify non-tariff measures and to design strategies to deal with them.

Dr. Feldman was the only attorney invited to the workshop, the only speaker during the two-day conference from the private sector, and one of only two Americans. Others were university professors, international and Chinese civil servants, almost all economists specializing in trade and international development. The second American on the program was Michael Ferrantino, the Lead International Economist at the United States International Trade Commission.

Dr. Feldman emphasized how difficult it can be to identify non-tariff measures and to distinguish them from legitimate concerns about public health and safety. He shared experiences from his practice in which non tariff measures have played an important role in international trade disputes, applauded the project to create a taxonomy of non-tariff measures globally and to seek a strategy for minimizing them, and urged the workshop participants to promote an understanding of the underlying political and economic motivations for erecting such trade barriers so that compromises can be reached protecting public health and safety legitimately while minimizing impediments to international trade.

Please click here to read the text of Dr. Feldman's address.

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Editor's Note:  Sally Qin, the author of this article, is a law student at the University of Minnesota who was a summer associate at Baker & Hostetler LLP during the summer, 2010.

The Current State Of Consumer Product Safety Relations

The United States Consumer Product Safety Commission (“CPSC”) has adopted several measures in 2010 to increase scrutiny of imported goods and impose higher penalties for products that fail U.S. safety standards. The principal impetus for these measures has been suspect imports from China.

Backed by stronger funding and new inter-agency cooperation, the CPSC seeks better protection for American consumers primarily through more vigorous enforcement of U.S. safety laws. As Robin Harvey and Lourdes Perrino observed in a prior article on this blog , since the signing of a Memorandum of Understanding between the CPSC and Customs and Border Protection (“CBP”) in April 2010 (“MOU 2010”), the CPSC has been posting inspectors at U.S. ports to enforce consumer product safety regulations. When goods are detained and rejected at the border, destruction, rather than re-exportation, now becomes the default mechanism for U.S. Customs.

MOU 2010 followed CPSC’s release of a final interpretive rule in March 2010 to address civil penalties in the Consumer Product Safety Improvements Act (“CPSIA”). Under the CPSIA, the maximum penalty for each knowing violation of the statute increases from $8,000 to $100,000, with maximum penalities for any related series of violations increasing from $1,825,000 to $15,000,000. CPSC interprets “violator,” those subject to these penalties, to be “any person,” including sellers, distributors, manufacturers or any legally responsible party who committed a knowing violation of the statute. The CPSC does not have to prove actual knowledge of the violation to make the violation “knowing” and impose penalties: “constructive knowledge” is enough.  (Constructive knowledge is the inference that, by law, some party is aware of the circumstances, if only he were to exercise reasonable care and diligence.)

The changes in penalties for violations of consumer product safety laws arose in a political atmosphere charged with complaints about Chinese products. Although the law will not discriminate among the products of different countries, the overall heightened scrutiny will be felt most by Chinese manufacturers and exporters. It is now altogether possible that Chinese manufacturers, failing to exercise due diligence, could experience bankruptcy in the seizure and destruction of their goods and the assessment of penalties in the millions of dollars. It would not then be surprising were the Chinese Government to complain of protectionism and retaliate, triggering another round of profound misunderstanding in the bilateral trade relationship.

Memoranda Of Misunderstanding: What Might Have Been

MOU 2010 between the CPSC and CBP came some six years after another consumer product safety Memorandum of Understanding (“MOU 2004”), between China and the United States. Had MOU 2004 fulfilled any of its promise, MOU 2010 might not have been necessary. Certainly it might have taken a different form. The emphasis on enforcement has followed a period of failure in promoting promised cooperation. Both MOU have raised reasonable doubt about the meaning of “understanding.”
 

The CPSC and its Chinese counterpart, the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (“AQSIQ”) signed a Memorandum of Understanding in 2004 that lists the measures both parties could take to ensure the health and safety of consumers. Although these measures do not exclude increased national enforcement, emphasis in the MOU is on cooperation.

MOU 2004 contains a list setting out the scope of the products concerned, and establishes an information exchange mechanism for China and the United States. The MOU pledges to “address safety problems of consumer products through consultation.” Both China and the United States agreed to consider the inspection results obtained by laboratories each one was to authorize and to participate in training laboratory and inspection personnel for each other.

Had MOU 2004 been followed faithfully, the recent dynamics of bilateral consumer product safety issues likely would have been very different. The CPSC and AQSIQ could have made public a common list of recognized laboratories, encouraging manufacturers in both countries to participate in inspection and testing from these domestic laboratories. They could have organized systematic training of laboratory and inspection personnel to address emerging product safety issues. They could have moved toward common standards and expectations for consumer safety.

Conscientious implementation of MOU 2004 should have reduced bilateral mistrust and improved consumer safety in both countries. A Chinese manufacturer with doubts about whether its product would satisfy U.S. consumer product safety standards would have sought assistance from AQSIQ to request the CPSC to send inspectors to conduct on-site inspections and testing in China. MOU 2004 would have made such on-site inspections in China by American personnel at AQSIQ’s expense. The Chinese manufacturer could have shipped products to the United States confidently, without fear of detention, denial or destruction of the goods, and without fear of a harsh financial penalty. (MOU 2004 provides, “4, The participants are to address safety problems of consumer products covered in this MOU which are manufactured in the country of one Participant and sold in the country of another Participant through consultation.”) CPSC, for its part, would have been better positioned to carry out its statutory purpose, preventing substandard products from entering the United States and transferring inspection expense to the Chinese. There would have been less call for inspectors at U.S. ports because more inspections would have taken place, offshore, by CPSC inspectors.

Memoranda Of Misunderstanding: What Happened Instead

Since the signing of MOU 2004, there have been only three CPSC-AQSIQ Safety Summits. At all three, documents were signed containing only vague language expressing the intention to communicate further on product safety issues. These official documents contain no specific methodology to carry out any of the underlying purposes of the MOU.
 

There have been frequent talks between the CPSC and AQSIQ since they entered MOU 2004, but they have led to no improvements in the screening of Chinese goods for U.S. Customs clearance. Instead, both countries have become more defensive about the quality of products and inspection regimes. AQSIQ complains privately that the CPSC does not trust Chinese producers and officials, which means that the confidence-building prescribed in MOU 2004 has failed.

Credit is owed the CPSC, which has tried hard to educate Chinese manufacturers on laws and regulations in the United States through, for example, releasing multiple articles and video clips available in both English and Chinese on its website.  However, how well these messages have been received in China remains in doubt. Chinese invitations for American inspections sometimes follow the eruption of disputes, but Chinese producers have never anticipated (or admitted to) a potential problem that would benefit from a preemptive inspection. There is still no link to the CPSC’s website on AQSIQ’s, and while AQSIQ keeps a record of international communications on its website, MOU 2004 is not available online for Chinese stakeholders to reference.

MOU 2004 was to have internationalized both the CPSC and AQSIQ, making both of them more aware and sensitive to the standards and requirements of other countries. Both agencies are, of course, inherently domestic, concerned for the safety of products as they impact their own domestic populations. However, whereas the CPSC gives great attention to imports, AQSIQ still is perceived in China to be an agency addressing predominantly domestic product safety issues. Not until recently, has AQSIQ been recognized in MOFCOM’s traditional terrain, helping to resolve trade-related disputes.

What Could Yet Happen

Chinese manufacturers need to sell in the U.S. market. Safety issues are becoming an ever more important obstacle. Benefiting from MOU 2004, AQSIQ and Chinese manufacturers could take a more proactive role in protecting their interests and the interests of American consumers. Instead of having goods intercepted in American ports, they could be inviting CPSC inspectors to conduct the same testing in China. As much as AQSIQ might feel a budgetary constraint on shifting such costs away from the United States and onto China, the net savings for Chinese manufactures could be substantial and the manufacturers could be taxed by China to pay the bills for on-site inspections.
 

MOU 2004 does not provide for this cost-shifting, and requests for inspections must come from a participating government agency, not a manufacturer. Provisions of this kind, however, have not been examined or developed since the MOU was signed in 2004, to the lasting detriment of everyone concerned.

The CPSC posts online proposed new regulations and product safety standards at least two months before a final version becomes effective, and invites public comment. On many occasions, the final regulation or standard reflects modifications based on the public comments. AQSIQ could take advantage of this open-window period and communicate with CPSC to work together on reasonable and cost-efficient regulations that would ensure the safety of U.S. consumers while making the regulations feasible for Chinese manufacturers. Such interventions, plainly contemplated by U.S. law and encouraged by intentions of MOU 2004, could move the safety issue in trade relations away from confrontation and toward cooperation.

MOU 2004 was intended to ensure more efficient and secure product safety for consumers in both China and the United States. It is a great misfortune that the outcome of MOU 2004 appears to be MOU 2010, an understanding between U.S. agencies effectively supplanting an understanding between two countries. To benefit both consumers and manufacturers in both countries, private and public sectors must work together, using MOU 2004 as a platform, pursuing not more official documents of little content, but more mutual cooperation, standardization, and reciprocal inspections. The opportunity of MOU 2004 was squandered for six years for lack of imagination and mutual commitment. MOU 2010 should be more of a warning than a conclusion, that failure in enterprises such as MOU 2004 can lead to mutual suspicion and wildly greater cost.

China, in its failure to implement MOU 2004 effectively, must share the blame for MOU 2010. Instead of fighting MOU 2010, however, China could ask the United States to return to the principles of MOU 2004. It might cost China in cash to pay American inspectors, but the payoff in good will and in long-term savings for Chinese manufacturers would easily compensate.
 

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Robin E. Harvey and Lourdes Perrino

Beginning mid-June, 2010, the Consumer Product Safety Commission (“CPSC”) has been posting inspectors at U.S. ports of entry for the purpose of enforcing product safety statutes and regulations. Before, screening always had been performed by Customs inspectors, who could call in CPSC inspectors when they thought it necessary or appropriate.

Containers are being seized at both air and sea ports, requiring importers and customs brokers to produce general conformity certificates for all products and product testing compliance certificates for products specifically identified under the Consumer Product Safety Improvement Act (“CPSIA”) as requiring specialized testing for lead and phthalate content. So far, reports from the field indicate that seized goods are being released almost immediately after the proper certificates are produced. However, seized products not intended for use by children and not tested in conformity with CPSIA requirements are being detained by the CPSC as alleged non-conforming goods, until inspectors are satisfied that the seized goods should not be considered children’s products. Importers and customs brokers benefit from having on hand documentation to support the position that seized merchandise are not children’s products.

A series of problems with Chinese goods triggered this increased vigilance, leading to the posting of CPSC inspectors directly at ports of entry in the United States. Issues over lead paint in 2007 in toys, compounded by other incidents including problems with tainted pet food, galvanized Congress, which learned quickly that the CPSC was an understaffed and underfunded bureaucracy incapable of policing all the products coming in from China that might be consumed by Americans, especially children and family pets, and might contain toxic levels of ingredients. Congress increased the CPSC budget authorization from $80 million to $136 million by 2014 and ordered it to be more aggressive and more vigilant in protecting American consumers.

The move to police ports directly includes procedures for CPSC independent of Customs and increases penalties for consumer safety violations very substantially. These steps are intended to reassure Americans that the CPSC is serious about consumer protection, particularly as to imported goods. They also communicate to American trade partners, however, that increased vigilance and tougher penalties do not necessarily mean the exclusion of goods. U.S. agencies have been meticulous in establishing the new practice as an act of protection, not protectionism. Properly tested and certified goods remain welcome and free of penalties.

The posting of CPSC inspectors requires close cooperation with Customs and Border Protection (“CBP”), which began April 26, 2010 with a Memorandum of Understanding signed by CBP Commissioner Alan Bersin and CPSC Chairman Inez Tenenbaum. The MOU gave CPSC access to CBP’s Import Safety Commercial Targeting Analysis Center (“CTAC”), enabling CPSC inspectors to identify the nature of incoming products and utilize hand-held XRF (X-ray Fluorescence technology) units to immediately scan for lead content. The agreement also granted the CPSC power to contact importers directly; in the past, the CPSC could contact importers only through the CBP.

The developing collaboration between the CBP and the CPSC is part of a larger effort by U.S. administrative agencies to cooperate in enforcing the mandates of the CPSIA. That cooperation has been aided by the formation of CTAC in 2009, which initially advised President Obama on ways to improve the food safety system in the United States. Other agencies participating in CTAC include the Federal Food and Drug Administration (“FDA”) and the U.S. Department of Agriculture’s Food Safety Inspection Service.

Detention Procedures

Newly empowered, the CPSC has introduced several new procedures at U.S. ports of entry. It is issuing its own Notices of Detention, and expects to change both detention periods and conditional releases within weeks. The new notices will soon contain a description of the alleged violation, its statutory basis, and the contact information for the CPSC inspector who examined the goods.

CBP inspectors will continue to issue their own detention notices, so the same goods likely will become subject to two different notices involving different procedures whenever a reason for detention is product safety. The CPSC has announced that it will send copies of its notices to both importers and customs brokers. Anyone receiving a notice will have five business days to respond with the required certificates (general conformity and/or testing certification) showing compliance with product safety requirements. Extensions may be available on a case by case basis, and in those instances where there is a dispute over whether a product is intended for children, extensions probably will be necessary.

CPSC inspection and detention procedures are not only applicable to CPSIA, but to all statutes enforced by the CPSC, including the Consumer Product Safety Act itself (CPSA), the Federal Hazardous Substances Act (FHSA), the Flammable Fabrics Act (FFA), the Poison Prevention Packaging Act (PPPA), the Refrigerator Safety Act (RSA), the Virginia Graeme Baker Pool and Spa Safety Act, and the Children’s Gasoline Burn Prevention Act. They are all enforceable now by CPSC inspectors at ports of entry.

Penalties & Releases

Some of the changes within CPSC discretionary power include the conditional release of goods and increased monetary penalties. For products determined not to present an immediate threat to public health, the CPSC may issue a conditional release of goods requiring customs bonds during the tentative 30-day detention period in which the CPSC decides whether to release, seize, or deny altogether entry of the goods. Goods released conditionally may not be sold or distributed in the U.S. before a final determination concerning safety has been made.

The CPSC will issue a Notice of Recovery for goods granted conditional release that are determined to be in violation of product safety laws. A Notice of Recovery requires the owner to redeliver the goods to the CPSC or risk liquidated treble damages based on the value of the goods. The CPSIA gives the CPSC authority to add civil penalties when goods contain safety marks that have not been authorized for use on a product by a certified third-party testing facility. The CPSIA increases the maximum penalty for violating CPSC safety standards from $8,000 to $100,000 for each violation and from $1.8 million to $15 million for a related series of such violations.

The CPSC is utilizing its authority in enforcement to seek higher penalties, as the $2.3 million penalty assessed against Mattel in 2009 for lead in paint on children’s toys indicates. It is also examining for any unauthorized use of safety marks, such as an Underwriters Laboratories “UL” or the Canadian Standards Association’s “CSA” affixed to goods sold for use, consumption, or enjoyment in or around a permanent or temporary household or residence, a school, or in recreation. There are exceptions, but the objective is to inspect products destined for individual or personal use or consumption rather than factory or other production. CPSC, thus, is empowered to assure that foreign products destined for personal consumption do not enter the United States pretending to have been certified as safe. Products found to display such safety marks illegitimately are now subject to both CPSC and CBP detention. The CPSC may levy twice the amount of civil penalties, in these circumstances, under its detention order.

Goods not conditionally released are now detained at a CBP bonding facility during the 30-day detention period. Under the new procedure, the CPSC is not required to resolve the detention in 30 days; rather, the 30 day time frame is merely a target. Previously, when the CBP did not make a decision as to whether it would release, seize, or deny entry of goods in 30 days, the goods automatically were deemed excluded from entry and the importer was allowed to protest the result. Under the new procedure, goods are not automatically deemed to be excluded entry on the 30th day. Consequently, the importer cannot protest the detention until the CPSC makes a final determination as to the status of the goods.

Indeterminate detention could lead to constitutional disputes over takings and due process, so the immediate situation surely will not continue for long. The CPSC will have to establish time limits for their inspectors in issuing decisions. The first step toward identifying what the limit on time may be probably will appear on the CPSC website in the form of a Q and A response, ultimately to be followed by CPSC regulations. CPSC, however, will try to develop some experience with its inspectors before it fixes a time limit with a rule.

Whereas CBP historically has encouraged re-exportation of rejected goods, the CPSC’s primary mechanism is destruction rather than exportation. An importer must apply to the Secretary of the Treasury in order to get a special exemption to have the goods exported rather than destroyed. Under the CPSIA, exported non-conforming goods can be sent only to a country seeking them for the purpose of destroying the goods in conformity with hazardous material regulations.

This change in policy, making destruction of the goods the default instead of re-exportation, signals a broader change in U.S. policy. Previously, the United States was willing to reject goods, for whatever reason, but did not aggressively inhibit other countries from receiving them. Now, when the United States decides a foreign product seeking enry is not safe, it acts to protect not only Americans, but people in all other parts of the world. A foreign product found not safe for Americans no longer is to be exported as if it were safe for someone else.

Impact Of CPSC Agents At U.S. Ports

The addition of an agency charged with vigilance at U.S. ports and armed with new powers and penalties may cause concern for foreign exporters and for importers, especially in the handling of Chinese goods because goods from China triggered these developments. Certainly the general move to greater vigilance and penalties was intended to persuade exporters and importers alike to be more vigilant themselves. In addition, despite the increased budget and staffing, the CPSC remains shorthanded for its new tasks. It has been able to deploy only a small number of inspectors at each of the ten largest ports in the U.S.

Importers and exporters might deduce that consumer goods and food will be delayed at major ports. So far, that concern would be misplaced. Early reports from New York’s Kennedy International Airport and the port at Savannah GA indicate that release of detained goods generally has been prompt. The key is to have the proper documentation ready. Inspectors are proving cooperative and responsible. They are not bottling up goods unnecessarily, but they do represent a greater commitment in the United States to protect against unsafe products being imported from other countries.
 

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中文请点击这里

The new Chairman of the U.S. Consumer Product Safety Commission (“CPSC”), Inez Moore Tenenbaum, plans to attend the third biennial consumer product safety summit from October 21 through 26, 2009 in three Chinese cities, Beijing, Wuxi (Jiangsu Province), and Jinhua (Zhejiang Province). The CPSC delegation will meet its Chinese counterpart agency, the General Administration of Quality Supervision, Inspection, and Quarantine (“AQSIQ”), and manufacturers and exporters.

China’s commercial reputation in the United States was seriously damaged in 2007 because of safety problems with food and toys. China’s subsequent domestic scandal over infant formula in 2008 heightened the concerns of American consumers. The public response revealed, however, that the CPSC was underfunded, with a limited mandate to inspect and enforce safety rules. The policy of the Bush Administration had been to favor voluntary compliance with industry-defined safety standards instead of mandatory laws and regulations.

There has been much anticipation of how the Obama Administration, committed to “change,” might change the ways and means of the CPSC, especially in dealing with China. In May, President Obama included in his budget a 71 percent increase in CPSC funding. Consequently, the Tenenbaum visit to China could be particularly important. It could lead to policy changes affecting access to the U.S. market for Chinese products.

Officially, the CPSC and the AQSIQ expect to help U.S. importers and Chinese suppliers “establish a comprehensive and systemic approach” to meet both voluntary standards and U.S. laws and regulations. Recent regulatory developments in the United States under the Obama Administration already are impacting Chinese manufacturers and exporters of toys, bicycle parts, jogger strollers and youth electronic devices, as John Burke discussed in two previous blog posts (“CPSC Issues Exemptions To Lead Content Requirements” and “Recent Changes To U.S. Consumer Protection Laws Affect Chinese Exporters”).

Tenenbaum, nominated by President Obama on June 9, 2009 and confirmed by the Senate ten days later to serve as the ninth Chairman of the CPSC, was not an obvious appointment to this specialized agency. Her background is in education, not consumer safety, but her early endorsement of Obama and support during the primary elections could give her direct access to the White House. According to Newsweek columnist Howard Fineman, the first person Obama embraced (after his wife) on primary night in South Carolina was Tenenbaum. The appointment may have been more important to Obama politically than substantively, but Obama understands the importance of consumer safety both for his own stature and for relations with China, in particular.

President Obama also nominated Robert S. Adler and Anne M. Northup as CPSC Commissioners, which is part of the White House’s effort to expand and strengthen the agency. For more than fifteen years, CPSC operated with only three Commissioners, and in the final years of the Bush Administration frequently was without even three. Confirmed by the Senate on August 7, 2009, Adler and Northup expand the agency’s leadership to five and bring important professional and political resources: Adler spent eleven years (1973 – 1984) as an attorney-advisor to two CPSC Commissioners, and Northup, an experienced Republican politician, represented the 3rd congressional district of Kentucky in the United States House of Representatives, from 1997 to 2007, where she served on the powerful House Appropriations Committee. The combination of moves – the appointment of an early and ardent supporter of the President as Chairman; the expansion of the number of Commissioners from three to five; bipartisan appointments mixed with experience and expertise in consumer safety; early regulatory reform – all suggest a serious presidential commitment. The trip to China, four months after Ms. Tenenbaum’s appointment, signals a primary commitment to improved consumer safety regarding Chinese products.
 

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A previous blog post discussed the impact of the Consumer Product Safety Improvement Act of 2008 (“the CPSIA”) on foreign manufacturers of products sold in the United States. This blog discusses certain temporary exemptions that the Consumer Product Safety Commission (“the Commission”) has issued for certain categories of products. Some of them require manufacturers to take immediate action to qualify.

Bikes and Joggers

The Commission issued a conditional exclusion from the lead requirements for bicycle parts, jogger strollers, and bicycle trailers. However, to qualify for this exclusion, one must file a report with the Commission by August 29, 2009.

On March 11, 2009, the Bicycle Product Suppliers Association (“BPSA”) filed a petition to exclude a class of materials for certain bicycle parts, jogger strollers, and bicycle trailers intended for children ages 12 and younger. The BPSA sought exclusion for certain components made with metal alloys, including steel containing up to 0.35% lead, aluminum with up to 0.4% lead, and copper with up to 4% lead. The Commission originally denied the BPSA’s petition for exclusion. However, on June 25, 2009, the Commission decided to stay enforcement of the lead content levels for the components listed in the BPSA’s petition until July 1, 2011. This stay of enforcement is conditioned on: (a) the stay applying only to bicycles, jogger strollers, and bicycle trailers that are manufactured on or before June 30, 2011; (b) the stay applying only to the components and concentrations of lead that are listed above; (c) each manufacturer covered by the stay filing with the Secretary of the Commission, not later August 29, 2009, a report identifying each model of bicycle the manufacturer produced since May 1, 2008; and (d) no later than December 31, 2009, each manufacturer covered by the stay presenting a comprehensive plan to the Commission describing how it intends to reduce the lead exposure from parts used that exceed a 300 ppm lead content.

 Youth Motorized Recreational Vehicles

The Commission granted a stay of enforcement until May 1, 2011 of the lead content restrictions for certain parts of youth all-terrain vehicles, youth off-road motorcycles, and youth snowmobiles. Specifically, the exclusion pertains to battery terminals containing up to 100% lead, and components made with metal alloys, including steel containing up to 0.35% lead, aluminum with up to 0.4% lead, and copper with up to 4.0% lead. This stay of enforcement is subject to essentially the same conditions as those discussed in the “Bikes and Joggers” section above. These conditions include a requirement that each manufacturer covered by the stay file with the Secretary of the Commission a report that details all youth motorized recreational vehicle that the manufacturer has produced since March 1, 2008. No later than November 1, 2009, each manufacturer covered by the stay must also present a comprehensive plan to the Commission that describes how it intends to reduce the lead exposure of parts that have a lead content of over 300 ppm. Unfortunately, the deadline for submission of the first report has already passed. Accordingly, manufacturers who have not filed a timely report will be unable to take advantage of this stay of enforcement.

Youth Electronic Devices

Although the Commission stayed the testing and certification requirements for manufacturers of electronic devices until February 10, 2010, the stay did not provide much relief to these manufacturers, because many of their devices contain component parts that exceed the lead content limits of the CPSIA. In response to the outcry by the affected electronics manufacturers, the Commission issued an interim final rule that clarifies which products are subject to exemptions from the lead content limits. The rule provides that if a lead-containing component part is not accessible to a child, then it is not subject to the lead limits prescribed by the CPSIA. This exemption includes removable or replaceable component parts that are inaccessible when the product is assembled in functional form (e.g., most batteries). Additionally, the Commission provided a list of exemptions for child-accessible component parts that do not meet the lead content limits. All other child-accessible component parts are not exempt from the lead content limits. The CPSC published its interim final rule and a list of exempt, child-accessible component parts  on February 12, 2009.

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The Consumer Product Safety Improvement Act of 2008 (“the CPSIA”) significantly impacts both foreign and domestic manufacturers of children’s products and other goods through the regulation of these manufacturers’ products. Many of the CPSIA’s requirements came into effect last year. Others are being phased in. The new, drastically lower maximum lead limits come into effect on August 14, 2009.

Affected manufacturers should take note of these new rules and regulations, because the CPSIA increases substantially the civil and criminal penalties for violations. Under the CPSIA, “manufacturer” includes importers and anyone who makes, produces, or assembles a product. Foreign manufacturers of relevant products are effected directly, through liability as a manufacturer, and indirectly, through new U.S. customer requirements as those customers seek to ensure compliance with their own obligations under the CPSIA. This blog addresses issues that affect most products under the CPSIA’s regime. A subsequent blog will discuss certain temporary exemptions that have been granted to specific industries.

Lead Content

The CPSIA establishes new limits on the lead content of the products that it regulates, with said limits decreasing over time. For children’s products, the maximum allowable total lead content will decrease from 600 ppm to 300 ppm on August 14, 2009, and to 100 ppm on August 14, 2011. For lead paint, the maximum amount of lead that it can contain will be reduced from 600 ppm to 90 ppm on August 14, 2009.  The CPSIA also authorizes the Consumer Product Safety Commission (“the Commission”) to revise the lead content levels of consumer products downward, provided such a revision is technologically feasible.

Additionally, the Commission is granted discretion to determine whether a commodity, class of materials, or a specific material automatically does not exceed the lead content limits discussed above or whether it exceeds such limits, but is excluded from such regulations. The Commission recently published a final rule detailing the procedures and requirements for a Commission determination or exclusion.  If the Commission determines that a material in question automatically does not exceed the relevant lead content limits, that material would not be subject to the testing requirements prescribed by the CPSIA (discussed below). On the other hand, if a product or component unavoidably has a lead content higher than the CPSIA allows, that item must be granted an exclusion by the Commission in order to be sold in the United States. In order to qualify for an exclusion, normal and foreseeable use of the item in question must not result in the absorption of any lead into the human body nor have any other adverse impact on public health or safety.

Phthalate Content

The CPSIA places restrictions on the amounts of phthalates that children’s toys and other child care articles can contain. A “children’s toy” is defined as a product intended for a child 12 years old or younger for use when playing, and a “child care article” is a product that a child 3 years old and younger would use for sleeping, feeding, sucking, or teething. These products are not allowed to contain concentrations of DEHP, DBP, or BBP higher than 0.1%. Additionally, on an interim basis, a product falling under one of these two categories cannot contain DINP, DIDP, or DnOP in concentrations higher than 0.1% if the product can be placed in the child’s mouth or brought to the mouth to be sucked or chewed.  The CPSC has published on its website answers to frequently asked questions about the phthalates restrictions.

Certificates of Compliance

For any product manufactured after November 12, 2008, the CPSIA initially required that all manufacturers, importers and private labelers of such products certify that they comply with all applicable consumer product safety rules, regulations, bans, and standards that are issued by Congress or the Commission. The CPSIA also granted the Commission the authority to designate by rule one or more of the above-mentioned parties to issue the required certificate and to relieve the other parties from the requirement to furnish certificates. In the case of products manufactured outside of the U.S., the Commission has designated the importer as the sole entity that must issue such certificates. Nevertheless, while the importer has the legal duty to certify, in order to make that certification it is likely to contractually impose certification requirements on its foreign suppliers. Additionally, the Commission has determined that these certificates may be furnished in electronic form, provided that the electronic certificate is available to the Commission upon request before the product or shipment is introduced into domestic commerce.  The CPSC published its final rule regarding certificates of compliance on November 18, 2008.

Testing Requirements

The Commission is required to establish deadlines by which manufacturers of CPSIA-regulated products are to begin third-party testing and certification of their products. Due to the Commission’s limited resources, it was unable to meet the CPSIA’s deadline for establishing these testing and certification requirements, which has resulted in a stay of enforcement of those requirements until February 10, 2010.  This stay of enforcement currently applies to all products regulated by the CPSIA, with the exception of: products that were subject to such requirements prior to the CPSIA, lead paint, full-size and non-full size cribs and pacifiers, small parts, metal components of children’s metal jewelry, certain ATV’s, and other products governed by different acts incorporated into the pre-existing Consumer Product Safety Act. Testing guidelines and a list of approved third-party testing laboratories will be provided for CPSIA-regulated products on a rolling basis. Nevertheless, all products regulated by the CPSIA, regardless of whether they are currently subject to testing requirements, must still comply with the other certification requirements discussed above.
 

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