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American Chamber of Commerce of Hong Kong Address - Wednesday, January 12, 2011, Hong Kong

September 17, 2012

Good morning and happy New Year to everyone and thank you for that kind introduction. It is great to be back in Hong Kong and to have the opportunity to spend time with members of the chamber.

With 40 years of experience promoting trade in Hong Kong, China, and the United States, your organization is a driving force for economic growth in the region.

Even as we progress out of our deep recession, the United States remains a leading consumer of goods manufactured in this region.

During my time as Chairman, there has been little, if any, measureable decline in the demand for consumer products from this region or in the number of imports coming in to the United Sates from this region.

My agency recognizes that Chinese trade through Hong Kong and Hong Kong’s investments in the production of goods made in mainland China account for a significant percentage of exports to the U.S.

Other exporters in the region are also becoming more significant.

This is why I and other officials from CPSC have focused so much of our attention and energy on working with manufacturers, exporters, and regulators in Asia.

We have held numerous training sessions for manufacturers, visited countless factories and laboratories, and committed to bilateral agreements with governments in the region.

In fact, I had the honor of signing a new memorandum of understanding yesterday with Commissioner Yuen [YU-AN] of the Customs and Excise Department.

This new agreement is a testament to the spirit of cooperation that we have fostered in the region. It is also a testament to the symbolism that the Port of Hong Kong represents in the global economy.

Standing on the observation deck at the port, there is an amazing view of a mountain of goods being loaded up and shipped out to different parts of the world every day. It is an awe-inspiring sight.

In our agreement, CPSC and the government of Hong Kong have pledged to share vital safety information, exchange technical resources, and work together on training.

Here is why I believe this MOU is so important: the more violative products that can be screened and stopped before being exported, the greater the level of safety provided to the marketplace.

Increased cooperation between Hong Kong Customs and CPSC will increase our chances of preventing toys with small parts or overloaded firecrackers from reaching the hands of American consumers.

Last year, our agency determined that more than 55 percent of the products that we sampled at U.S. ports were violative or dangerous to consumers. 2010 turned out to be a record year at CPSC for samples collected and samples found to be violative. This was no accident. CPSC is committing more resources and more sophisticated technologies to our import surveillance effort.

The reason I am emphasizing this message today is to make sure all of you know that CPSC is getting better at catching the bad imports, so that the good ones can flow through the system faster.

We do not want to hold up trade. We want trade and safety to be interconnected.

When that shipment of cigarette lighters or children’s sleepwear reaches a checkpoint at a U.S. port, we want trade and safety to come together to help keep that shipment moving to its retail destination.

The vision I have as Chairman is for CPSC to foster cooperative relationships with foreign stakeholders and regulators. A relationship based on a common understanding that the more proactive we are, the more likely we are to prevent injuries to consumers using imported products.

I believe we can achieve this vision if manufacturers build products to the latest safety standards and if regulators can continue to converge on the best and safest standards.

If our regulatory partners can join us in identifying unsafe products that may have been exported to the United States, CPSC also can be more effective in its interdiction efforts at our ports.

Now I know that many of you came to this breakfast this morning seeking an update and discussion about the Consumer Product Safety Improvement Act. So let me spend a few minutes summarizing what CPSC achieved last year in implementing the CPSIA and what lies ahead this year.

In 2010, we continued to ensure that makers of children’s products complied with the stringent lead limits. The toy industry, which I will address in just a few hours, had a good year. In 2010, there were only three recalls of toys in the United States due to violations of the CPSIA’s lead requirements.

That’s tremendous progress.

The CPSIA mandates that by August of 2011, we must drop the total lead limit to 100 parts per million—unless it is not technologically feasible.

The Commission has made no decision yet on whether this is technological feasible.

However, we continue to solicit comments and insights from key stakeholders as we approach making a final decision on this issue.

In 2010, we vowed not to repeat the mistakes of the past and we got ahead of the curve on cadmium in children’s products.

The CPSIA only sets a cadmium regulation for surface coatings on toys. So I delivered remarks via video right here in Hong Kong last year that warned manufacturers not to substitute cadmium for lead in metal jewelry and other children’s products.

The warning I gave was actually very similar to a directive on cadmium that AQSIQ sent to Chinese manufacturers just a few weeks after I spoke. My words last year certainly still apply this year.

In fact, the speech I delivered took place one year ago today. I guess it is becoming a tradition for me to speak in Hong Kong on January 12. Maybe I should plan to celebrate New Year’s Eve here.

Let me return to the issue of metals in children’s products for one more minute. As I stated to the APEC conference last year, all toxic metals need to come out and stay out of toys.

The time is right to expand our vision beyond just lead and cadmium, because the CPSIA addresses more than lead and cadmium. Antimony, arsenic, mercury, chromium, barium and selenium are in our sights.

Like lead and cadmium, these are bad metals for children to be exposed to; and there is no good reason to use these metals in the manufacture of toys or other children’s products.

I am calling upon all manufacturers, exporters, and retailers of children’s products to take the necessary steps to ensure that final products do not contain these or other harmful metals or chemicals.

CPSC staff is actively engaged in scientific work aimed at putting us in a leadership role to address these dangerous metals.

However, we want to have sound scientific evidence before we move to the next step.

As with cadmium, the CPSIA set requirements limiting the use of antimony, arsenic, chromium and other toxic heavy metals in surface coatings on toys. The CPSIA turned these limits into U.S. requirements by making the ASTM F963 Toy Safety Standard mandatory.

I intend for CPSC to explore ways for the United States to go beyond surface coating requirements.

In 2010, we focused on establishing new national requirements for various juvenile products, as required by the CPSIA. The Commission approved new, mandatory rules for baby walkers and infant bath seats.

Indeed, one of CPSC’s biggest moments of 2010 came when we established for the first time in 30 years, new and improved requirements for baby cribs.

So many families in the United States have suffered unspeakable tragedies due to defective cribs that contributed to the death of their baby. Our new rules were approved in December and go into effect this June.

You may have heard that the rules do away with dangerous, traditional drop-side cribs, but the rules also improve the hardware, the mattress support, and the slat strength. Improved testing and certification is also a requirement.

I am confident that a new generation of safer cribs will be on the market this year as a result of our new rules.

Bassinets, cradles, baby hammocks, play yards, strollers, high chairs, and other juvenile products will be subject to U.S. requirements over the next few years.

I trust that many of you have heard about the consumer database that we are creating. This database is one of the most significant requirements of the CPSIA and one that I have supported from my first day as Chairman.

The staff at CPSC is working tirelessly on this project and I am pleased to say that we are on time and on budget with the database. The new, searchable public database of product incidents is set to be launched in March, as part of CPSC’s website.

Consumers in the United States will be able to use the database to report product incidents to the government and have open access to the database to search for incidents of harm that other consumers have reported.

I believe that an informed consumer is an empowered consumer and this is another example of how CPSC is creating tools to empower consumers.

It is very important to me that members of the chamber know that manufacturers have certain protections in the database process. If a consumer submits a report of harm involving a product made in this region, the manufacturer or private labeler will be notified by CPSC staff within five days of what the report claims.

The manufacturer or private labeler will then have 10 days to respond to CPSC if they believe information in the report is materially inaccurate or confidential. Information within a report that a manufacturer believes is materially inaccurate will not be posted or will be removed from the database once the agency determines whether the information is materially inaccurate.

Information within a report that a manufacturer believes is confidential will not be posted on the database unless the agency determines that it is not confidential.

A report free of materially inaccurate or confidential information will go up onto the database within 15 days of CPSC first receiving it.

When the report goes up for the public to see, the manufacturer or private labeler still has the option and right to post a comment responding to the report. CPSC will attach the comment to the consumer’s report of harm for the public to see.

CPSC staff is working hard to educate the business community about what the CPSIA requires, how will operate, and how a special business portal is being created to expedite delivery of a report of harm.

Those are the most significant CPSIA highlights from the past year and for the new year.

Instead of talking about product testing and certification and all of the pending requirements, I can address that during the question and answer portion of our discussion.

With all that the CPSIA has meant to my agency and this region, I want to recognize the positives that have come from the law.

The changes made by Asian industries in the supply chain and in testing are helping to restore the confidence of American parents.

Parents are more confident that lead is not being added to toy paints or substrates; they are more confident that standards are being strengthened; and they are more confident that children’s products are being tested.

We must keep up consumer confidence by continuing to put up safeguards in the manufacturing process.

Many of the product recalls that CPSC announced last year were tied to a theme that I have spoken about repeatedly during my visits to Asia: manufacturers need to design out product hazards and build in safety.

Building safety into a toy, an all-terrain vehicle, a window covering, or a children’s garment, means always following the appropriate mandatory and voluntary standards.

It is important also to consider foreseeable use and misuse of a product, beyond what the standard addresses. This is the only way to ensure that a product will maintain its integrity and safety.

As I stated earlier, prevention must win out over reaction—from manufacturing to distribution, industry must work to prevent injuries by taking every step possible to build safety into the product.

From the start of my tenure as Chairman of the CPSC in June 2009, I said that I would be a firm, but fair, regulator.

I believe part of being fair is making sure you know what the staff at CPSC is working on that could impact the work of the chamber.

My visit to Hong Kong is part of this effort. Another critical component of CPSC’s commitment is the creation of an Office of Education, Global Outreach, and Small Business Ombudsman. Establishing this office has been a priority of mine for quite some time, and the Commission approved its creation last September.

Through the excellent work of our Global Outreach team, including the establishment of our first foreign presence in Beijing, we are looking to bolster our visibility in Asia this year.

The new Office of Education, Global Outreach, and Small Business Ombudsman will coordinate and provide education and outreach activities to international stakeholders, including manufacturers, importers, and foreign governments.

We realize that many manufacturers may not know where to turn for information on our regulations, or they might experience difficulty accessing the information needed to fully address safety in the manufacturing process.

I've been in enough meetings with associations and companies to know that sometimes even the experts disagree on the interpretation of a regulation.

I trust that by enhancing CPSC’s ability to address the questions and concerns of the regulated community, our agency can facilitate the transfer of knowledge across industries. This, I think, will ultimately create safer products through better educated manufacturers.

The Office of Education, Global Outreach, and Small Business Ombudsman has the potential to increase our focus on important issues, such as quality assurance in the manufacturing process. CPSC has long maintained that enhanced quality assurance programs assist manufacturers in producing products that comply with relevant safety standards.

As I stated, this new office will aim to work with both industry and regulators. During my travel overseas, I learned early on how much foreign governments rely on the United States for help in developing their product safety systems.

I had quite a memorable trip to Hanoi within weeks of taking office. The Vietnamese government could not have been more welcoming. In fact, they would have been happy if other agency officials and I could have stayed for a few months to help companies in their country learn U.S. safety requirements.

We know that there is a small shift occurring, a shift that is leading certain manufacturing sectors to transfer some of their factories to other countries, such as Vietnam and Bangladesh.

We need to be ready to help these countries implement the necessary controls so that the import problems we have experienced do not materialize again in those countries.

This new Office of Education, Global Outreach, and Small Business Ombudsman will serve as a coordinated business unit to carry out this activity and allow CPSC to enhance its outreach to the international community generally.

By working with foreign regulators, we can help them develop effective product surveillance strategies, product testing methods, and voluntary and mandatory product safety standards.

I am very excited about the potential of this new office.

We are on the verge of even greater things at CPSC in 2011, as this will be the first full year of implementing CPSC’s new, five-year strategic plan. This plan is designed to establish CPSC as the global leader in consumer product safety.

The five goals of our Strategic Plan are:

Leadership in safety: we will establish ourselves as leaders in identifying and addressing the most pressing consumer product safety priorities and mobilizing action by our partners;

Commitment to prevention: we will engage our stakeholders to ensure that the products consumers purchase are as safe as possible;

Rigorous hazard identification: we need to ensure timely and accurate detection of consumer product safety risks;

Decisive response: we will use our full range of authorities to quickly remove hazards from the marketplace; and

Raising awareness: we will promote a public understanding of product risks and CPSC capabilities.

This new plan was developed with significant input from industry stakeholders, consumer groups, and CPSC staff. It builds upon a vision of a CPSC that is more focused on injury prevention and a CPSC that works proactively with global manufacturers and suppliers to build safety into their products.

I have focused a lot on these two themes today, because I believe lives can be saved and injuries can be prevented if we are proactive and collaborative.

If we are partners in this effort, I know that we can build upon the progress that has been made in recent years.

Progress that will help us move together to further reduce toy recalls.

Progress that will help us move together to reduce toy-related injuries.

Progress that will help ensure a safe holiday toy shopping season for consumers in the United States and around the world.

CPSC stands for safety and I know that if each of you stands with CPSC, we can make 2011 a great year.

Thank you all for coming out to this breakfast this morning. I would be glad to take a few questions at this time.

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