Good morning everyone. It is great to be back at the American International Toy Fair. I was here in 2010 and was amazed by the size of the fair, and it looks like Toy Fair 2012 is even bigger!
With nearly 100,000 products on display and attendees from nearly 100 countries, this is the place to be.
As part of our commitment to outreach and education, CPSC staff and I plan to walk the showroom floor and meet with as many of you as we can.
We take pride in being accessible at CPSC. We want to get to know you and your company, and we want to support you in complying with all of the U.S. toy requirements.
Carter, I also want to thank you and the TIA for the opportunity to keynote the toy safety compliance session.
When I was here in 2010, I spoke about the responsibility of product safety regulators to ensure that all toy hazards - including small parts, toxic metals, and dangerous magnets - are addressed by manufacturers.
During the past two years, I believe CPSC has continued to uphold our responsibility and solidify our role as a leader in promoting compliance and best practices around the world.
In carrying out our role, we have not acted unilaterally.
Rather, we have favored multilateral collaboration.
We have coordinated with ASTM, our Chinese counterparts at AQSIQ, Health Canada, the European Commission, TIA, and consumer groups.
Toy safety is a year-round effort at the CPSC. Therefore, we will continue to work with foreign regulators and the toy industry throughout 2012.
From Hong Kong to China and in the United States, I am seeing the trend lines for the toy industry pointing in the right direction.
I believe I am in a good position to make such an assessment, as I travelled to Hong Kong last month to address the Hong Kong Toy and Game Fair.
From what I have seen firsthand, the state of toy safety is strong and getting stronger, thanks in large part to the actions of many of you in this room.
To support my assessment of the industry, let's look at the data.
2011 represented the third consecutive year that toy recalls declined in the United States. I applaud all of the manufacturers, suppliers, importers, and labs that complied with CPSC's requirements and did their part to put safer toys in the hands of American children.
Between October 2010 and September 2011, there were 34 toy recalls, mostly related to choking and laceration hazards to young children. The 34 recalls last year represented a drop in the number of recalls from 46 in 2010, 50 in 2009, and 172 in 2008 - a year we must never repeat.
Lead violations that resulted in recalls also remained low. There were only four recalls for lead violations in 2011, as compared to 19 in 2008.
Now, that's good news.
The toy industry, however, still has more work to do: CPSC and Homeland Security inspectors at U.S. ports continue to detect and detain shipments that contain violative toys.
I warned about this in 2010, and I need to warn about it again - there are some bad actors who are importing dangerous toys simply for the profits. These shady companies often show little or no regard for the rules or for the safety of children.
Now, do not get me wrong. I know that I am preaching to the choir today. But, allow me to share some examples of enforcement actions CPSC has taken over the past few years that are unfortunate for the toy industry.
Just days after I spoke here in 2010, CPSC levied a $2 million civil penalty against the Daiso company for importing toys that violated the CPSIA's lead paint, lead content, and phthalates limits.
Daiso's actions were completely unacceptable - they repeatedly ignored letters of advice from CPSC to stop importing violative toys.
As a result, Daiso had to sign a consent decree that prevented them from being an importer of children's products into the United States until they demonstrated that the company had procedures in place to ensure compliance with CPSC safety standards and testing requirements.
On January 23 of this year, the Justice Department filed charges against Hung Lam, Isabella Yeung, and three south Florida corporations. The defendants were charged with conspiracy to smuggle hazardous toys containing small parts and violative lead levels into the United States through the Port of Miami.
Last March, we secured an injunction against the importer LM that was similar to the injunction against Daiso.
There has been tremendous cooperation in this case among CPSC, Customs and Border Protection, Immigration and Customs Enforcement, and the Justice Department.
The defendants are alleged to have made false statements on customs declaration forms, which is a serious charge.
With new resources and technologies aimed at identifying high-risk shipments as they are in transit from Hong Kong or Shanghai, we are getting better and better at sampling and seizing violative products.
Now, I know you do not want the actions of a few bad importers to cast the entire industry in a bad light - and I do not want that to happen either.
So, let's work together to ensure that only those that are willing and able to play by the rules remain in the business of producing toys.
From what I have seen, the majority of the toy industry has made great progress in recent years. Quality assurance, quality controls systems, and adherence to U.S. safety standards all have improved.
But, we cannot let our guard down because customers here in the U.S. - the largest trading market in the world - have high expectations that imported toys will be compliant with CPSC's toy safety rules.
And I have the same expectations.
So that we all can make 2012 the best year in toy safety and build a toy safety system that will last, I want to focus on three areas during the balance of my time with you this morning.
First, the CPSIA. I will give you an update on all of the latest developments with the Consumer Product Safety Improvement Act and the amendments to the Act that were signed into law.
Second, "Safety by Design." I will discuss ways that toy companies can ensure that they meet CPSC's rules and requirements by ensuring that they are designed safely.
And finally, education and prevention. I will talk about CPSC's renewed effort to be a regulator that favors education and prevention over reaction and recall.
Let's start with a discussion about the Consumer Product Safety Improvement Act, or CPSIA.
I trust that everyone knows by now that this sweeping U.S. child safety law established some of the lowest lead paint and lead content limits in the world for toys.
Paint is set at 90 parts per million of lead, and total lead content is set at 100 parts per million. The drop down to 100 parts per million for lead content became effective, prospectively, on August 14, 2011.
The law also bans toys from being made or sold with more than 1,000 parts per million of six different phthalates. There is an expert panel of scientists who are researching three of the six banned phthalates, as well as the safety of chemical alternatives.
We expect to receive their report in just a few months.
I trust that you all are aware that the CPSIA turned the longstanding voluntary toy standard, ASTM F963, into a mandatory, federal safety standard.
Except for the drop down to the 100 parts per million lead limit for total content, all of the requirements I just cited have been in place for more than two years.
I support these rules because they are paying off. The payoff is seen in increased consumer confidence and increased efforts by overseas manufacturers to move away from harmful metals and chemicals.
Now, here is the big news.
On January 1, CPSC lifted the 2-year-old stays of enforcement for the testing and certification requirements for lead content, phthalates, and ASTM F963.
The headline from CPSC is that independent, third party testing is now required and is in effect for these important toy safety rules.
I recognize that some of you may be unfazed by this news. That's because many retailers have required their suppliers to adhere to and test to these rules, even when the stays of enforcement were in place.
Yet, everyone should understand that with the stays lifted, imported and domestically manufactured toys may not reach their intended destination if they are not accompanied by a certificate of compliance.
This certificate is the golden ticket that CPSC port inspectors and field investigators, importers, and retailers are looking for to ensure that the toys you make and sell are suitable to reach the hands of children.
I applaud those of you at this fair who conduct first party conformance testing; however, the law calls for toys to also be third party tested.
If you need to know which laboratories are accredited to test to these requirements, log on to CPSC.gov, where we have an easy-to-use, searchable database.
The other new development that I'm pleased to share with you is that, thanks to the leadership of many people in this room, the ASTM F963 subcommittee approved a 2011 version of their standard last December.
Under the CPSIA, my fellow Commissioners and I can accept this new version of the voluntary standard and turn it into the updated mandatory standard.
In fact, when I return to CPSC's headquarters tomorrow, my fellow Commissioners and I will take that vote. If tomorrow's vote passes, then F963-11 will become a mandatory standard in June.
This revised standard is a net positive for the industry and for the safety of children. Since it was created through a voluntary consensus process that included many members and leaders of the toy industry, I trust that it should not be a cause for confusion.
Assuming CPSC accepts the new version of the standard, we will issue new notices of requirements, which will provide you with guidance on how to test to the new or upgraded requirements.
Neal Cohen, CPSC's outstanding Small Business Ombudsman, will talk to you about some of the specifics of the new standard during his presentation.
A new upgrade that is especially noteworthy is the limit on cadmium and other toxic metals in surface coatings and substrates.
For the past two years, I have been warning manufacturers about substituting cadmium or other toxic metals in place of lead.
I am thankful that the TIA and Fashion Jewelry and Accessories Trade Association were all supportive of new ASTM voluntary standards for cadmium and other toxic metals for surface coatings and substrates of toys and children's jewelry.
At my urging, the ASTM F963 subcommittee and a separate children's jewelry subcommittee approved these voluntary standards last December. I appreciate the determination that both subcommittees displayed in carrying out their work.
Toys and children's jewelry will be safer, thanks to their efforts.
Now that is forward progress.
Knowing the specific standards and testing requirements to deal with various hazards is very important because standards and testing are the foundations of the CPSIA.
In October 2011, the Commission approved a rule requiring continuous, third party testing for all toys and children's products. The third party testing requirement is an achievement of CPSC's work on the CPSIA.
The rule furthers CPSC's efforts to create a stronger safety framework - a framework designed to ensure the safety of toys and children's products before they get into the hands of children, no matter where they are made.
Let's say that after you begin making a new toy, there is a material change introduced during the manufacturing process.
Maybe you change your paint supplier or plastics supplier.
Should the child who ends up playing with the toy manufactured after the material change have to serve as an unwitting tester of whether it potentially made that toy unsafe?
I say absolutely not, and I trust all of you would agree with me.
Well, our continuous testing rule is intended to ensure that there is a high level of assurance that a particular toy complies with all of the pertinent safety requirements.
And that compliance is maintained during the entire production life of a toy and any safety issues are discovered before the product goes out the factory door - not after it ends up in a child's hands.
This rule goes into effect early next year, but I am confident that all of you are committed to providing children with the highest level of safety in their toys this year and beyond.
It is important to note that on the same day CPSC approved the continuous testing rule, we also approved the final component part testing rule.
I recognize fully that component part testing may not work in every situation, but I hope it will prove to be beneficial and provide relief to many.
For the past few years, my fellow Commissioners and I have been advocating that U.S. toy and children's product companies push the responsibility for testing upstream.
Well, upstream means Hong Kong.
Upstream means Guangzhou.
When I was in China last month, I advocated that suppliers of paints, parts, and accessories do the right thing and certify that their components meet U.S. safety requirements.
The benefits downstream - in the form of reduced costs - will be significant; however, safety will not be sacrificed. Again, we are pursuing an approach to provide relief without sacrificing safety.
In August 2011, Congress approved, and the President signed into law, amendments to certain parts of the CPSIA.
Congress did not overhaul the independent testing requirements, nor did it back away from the stringent lead limits in children's products.
What it did was establish a pathway for small batch manufacturers to gain some relief from some of the third party testing requirements.
Neal Cohen will talk about the small batch registry, which we implemented in December 2011, to provide qualified companies - some of whom may be at this fair - with some degree of relief.
Congress also made sure that the 100 parts per million total lead limit was applied prospectively, not retroactively, for manufacturers, retailers, and resellers. I fully supported this change to the law.
Inaccessible component parts were also excluded from the phthalates testing requirements by the CPSIA amendments. I know that this change provided many in your industry with relief.
In addition, Congress asked the agency to seek public comment on ways to reduce third party testing burdens, while still assuring compliance. CPSC staff is currently reviewing comments, including the detailed submission from TIA.
Now, I am aware that the CPSIA has presented certain challenges to the toy industry.
Nevertheless, I believe that your motivation to comply with the law should continue to be the same as CPSC's motivation to implement the law - a desire to keep children safe while at play.
Many of the toys on display at this fair are ingenious, and eventually, they will appear in retail stores or online. Take the necessary steps now to ensure that those toys comply with the CPSIA so that children are safe and happy when those toys reach their hands.
It's not just the law; it's the right thing for your company to do.
I would now like to transition from talking about what the rules and requirements are, to talking about ways that toy companies can ensure that they meet our rules and requirements by ensuring that all products are designed safely.
In 2008, two researchers from western Canada published a paper analyzing about 600 toy recalls announced in the United States over a 20-year period.
Hari Bapuji and Paul Beamish found that "the number of defects attributable to design issues was much higher than those attributable to manufacturing problems."
In fact, 71 percent of the toy recalls that they analyzed were related to a design problem.
Bapuji and Beamish stated that "a design problem is reflected in sharp edges of a toy, which pose a laceration hazard. Another common design problem is small detachable parts, such as balls and beads, which pose a swallowing and choking hazard. Other examples of design flaws include open tubes and spaces, which can entrap children's body parts, long strings that pose a strangulation hazard, and sewn buttons and glued eyes on stuffed toys (as opposed to button-less clothing for toys and embroidered eyes)."
The researchers added: "A design problem would result in an unsafe toy irrespective of where it was manufactured. On the other hand, a manufacturing defect arises because of manufacturer errors or negligence…If a toy's design is good, it does not necessarily mean that the toys produced will be good. By contrast, if the design is poor, the toys manufactured will definitely be faulty."
The researchers made two suggestions: first, ensure the accountability of toy companies to improve their product designs; and second, encourage the development of global standards to enhance product safety.
We already know that the standards have been enhanced. So, the focus needs to be on building safety into the design of your toys.
This is especially important for your industry because the offerings of new designs to your distributors and customers change so frequently.
And with nearly $20 billion of toys imported from China into the United States, the final design has to be right, every time.
Before manufacturing and assembly starts, it is vital that toy companies design out potential health and safety risks in each and every model.
Here are some examples of what I mean.
If you are making electronic toys that use button batteries, your design must ensure that children cannot access those batteries.
Button batteries in toys and in certain adult products re-emerged last year as a public health issue in the U.S., due to a rise in incidents of children swallowing these toxic batteries.
There is actually international cooperation aimed at addressing this hazard. The World Health Organization is sponsoring a global health and safety conference later this year, and they are looking for research papers from engineers with ideas to reduce child exposure to button batteries.
Hopefully, the ideas generated by the W.H.O. conference can help your industry develop even better designs for electronic toys.
Another important design factor concerns the metals and chemicals used in your plastics, surface coatings, and substrates.
Safety by design means ensuring that your specs are very clear about not including lead, cadmium, antimony, chromium, and other toxic metals.
And there cannot be more than 1,000 parts per million of six types of phthalates in your plastics because anything above that level is banned.
During my time at the Hong Kong Toy Fair, I learned that the Hong Kong Toy Council had developed a special database - a database that prevents chemicals from being used in their toys that do not comply with U.S. and European requirements.
Now that's another sign of progress.
Adhering to ASTM F963 and the CPSIA in your designs is good for business and good for the health and safety of children.
Another key to a safe design is proper age grading of your toys.
Parents and grandparents certainly have an obligation to provide age-appropriate toys to young children. But when consumers look at the age grading on the package, it should reflect who the toy was designed for, as well as the best science in age determinations.
As I stated earlier, we continue to find small parts violations and choking hazards in toys seized at import or that are recalled after they make it into the marketplace.
Small balls, small parts, or protruding parts are acute hazards in toys, and these hazards not only lead to recalls, but they also can be the cause of deaths and hospitalizations.
As a result, every precaution should be taken to design out these risks.
I believe that "safety by design," can be a winning approach for the toy industry to incorporate.
If toy companies can aim for the highest level of safety in their design specifications, while CPSC and AQSIQ keep working to promote best manufacturing practices in China, we can achieve something great!
The entire toy industry can reach a level of superior quality, conformance, and customer satisfaction if it embraces "Safety by Design."
Now the third topic I want to discuss this morning is education and prevention. With each new year, come new parents who need to be educated on making safe purchases and be made aware of risks with toys.
Informing parents and consumers about buying the right toy for the right age child has been a constant part of CPSC's work for more than two decades.
I want to stress, however, that we still have work to do in educating everyone in your industry.
Just a few weeks ago, I was reading a Los Angeles Times story that shows we still have work to do.
The writer was visiting Toy Town in Los Angeles and spoke with importers and distributors.
The writer approached the owner of a small toy store, who was stocking up for the holiday sales, and the writer asked how he knew the items he was purchasing were safe.
He replied: "I don't know."
Yes, he actually said, "I don't know."
The store owner then told the reporter that "he holds the Toy District wholesaler responsible for passing along toys that meet U.S. safety standards."
So the reporter asked the wholesaler how he knows his toys are safe.
When the container arrives in the harbor, it gets inspected. If it's not safe, it won't be released to the public, was his response.
These answers concern me.
CPSC needs everyone in the supply chain to understand the new toy safety requirements and to be able to communicate them downstream, as well as to the public.
CPSC is working very hard to keep up consumer confidence in the safety of toys that are in the marketplace; but, we can't do it alone.
From manufacturers to importers, and from wholesalers to retailers, I want everyone to know and talk about the independent, third party testing requirement and the certificate of conformity requirement.
I want everyone to know and be able to talk about the lead content and lead paint limits, cadmium limits, the limit on phthalates, and the mandatory toy standard.
You may not agree with all of these safety requirements, but to keep the nearly $23 billion worth of toys in the U.S. moving, it is vital to know about these requirements and comply with them.
There was also the wholesaler's comment: "when the container arrives in the harbor, it gets inspected. If it's not safe, it won't be released to the public."
CPSC certainly has a stronger presence at the ports than ever before, and we are seeking additional funds to hire more staff to work at more ports.
But, I don't want consumers to be misled into thinking that we are anywhere close to having the capacity to inspect each shipment of toys that arrives at a U.S. port.
That is a vision we have, but it does not reflect the current reality.
The reality is that the responsibility starts with the manufacturers and exporters - a responsibility not to cut corners when it comes to complying with our requirements.
If you fail to send a new toy through a third party lab, fail to produce a legitimate certificate, or fail to adhere to ASTM F963, there are going to be consequences.
Your products may be stopped at import, rejected by the importer, rejected by the retailer, caught by CPSC in the market, or potentially recalled at the consumer level.
I don't want any of this to happen to you or your company. That is why I'm here today.
I am here to educate, inform, and empower you to take the necessary steps now to ensure that your products flow through the stream of commerce and reach your customers.
In closing, I would like to emphasize that the three areas I spoke about this morning - the CPSIA requirements, the concept of "safety by design," and educating everyone in the supply chain - all have something in common.
They all contribute to CPSC's strategic approach aimed at promoting prevention.
I believe that prevention must win out over reaction - from manufacturing and distribution, the toy industry and CPSC should continue to work cooperatively to prevent injuries by getting it right from the start.
I predict that the year 2012 will be another successful year in toy safety, especially if everyone rallies around this approach.
There will always be some injuries with toys that we cannot prevent; but there are thousands of injuries that we can prevent by designing in safety and designing out defects.
Superior designs and fewer manufacturing defects will lead to fewer seizures at U.S. ports and also result in fewer recalls.
I want both of those statistics to decline this year, and that can only happen if attention continues to be focused on safety issues.
I know the industry is up to the challenge.
And I know that each of you is up to the challenge because many of your companies already have a mission that is committed to safety, injury prevention, and the well-being of your customers.
From New York to Hong Kong - and everywhere in between - I want us to be partners - partners in promoting the new toy safety rules and partners in preventing toy-related deaths and injuries.
As a wave of safe, compliant toys reach stores shelves and American homes, I trust that we can achieve our shared vision - a vision of children, happy and safe at play, with smiling parents watching over them.
Let's do the work now that is needed to achieve this vision throughout 2012 and beyond.
Thank you all for you time today and congratulations to the Toy Industry Association for organizing another great toy fair.