CPSC Reaffirms Authority To Ban Hazardous Exports

I am voting to retain the existing export policy under the Consumer Product Safety Act (CPSA) and Federal Hazardous Substances Act (FHSA).

In the minds of the people of the world, "Made in the U.S.A." stands for quality and safety. This should never be compromised to any degree.

Although our notification policy is a good one the full ramifications of it may not be understood in every country.

So the questions are these: should we be exporting pacifiers that could cause cancer?...rattles that could choke a baby?...baby cribs that could cause a child to suffocate?...fireworks that could maim or cripple?...or, bicycles that could break causing a fatal accident? I believe not.

Voluminous testimony and written comments have been presented to the Commission on the issues of whether it has the authority to change the export policy under the CPSA and FHSA, the economic impact of such changes (both as to the incentive to produce complying products and foreign perceptions of U.S. built product), the moral dilemma of exporting unsafe products and the potential for importing the hazardous products back into the United States.

It is clear that the Commission has legal authority to prohibit the export of non-complying products manufactured for domestic sale, offered for domestic sale, distributed in domestic commerce, or imported into the United States for domestic commerce.

The majority of U.S. manufacturers pride themselves on making high quality, safe products for domestic commerce and it is inconceivable to me that such manufacturers would want to "dump" mistakes on foreign markets.

It is my analysis that the present policy is working and I see no justification --economic, moral or legal-to change. For these reasons I choose to support our present export policy.

My decision is predicated on the explicit language of the two relevant statutes, the CPSA and the FHSA. The plain language of the export exemptions under each Act excludes from their respective scope noncomplying products which have been in, or offered for sale in domestic commerce. To make sure that this authority is not needlessly restrictive, upon request, the Commission allows case-by-case review of possible exceptions to this export bar. I see no valid reason to disturb this balanced policy which is working well and which accurately interprets Congressional intent concerning hazardous exports.

While the statutory language itself compels a conclusion that Congress intended the Commission to exercise export controls under the conditions described, certain policy considerations should not go unexamined. These policy considerations, taken together, tend to confirm the judiciousness of Congress in according discretionary export control to the Commission.

Let me first address a red herring -- that the current policy promotes "international hannyism." This is sheer poppycock. Current policy under both Acts does not mandate that only complying products can be shipped abroad. Violative products which were either produced for export or never introduced or distributed in domestic commerce can, and always could be sent overseas. What is limited is the subsidizing of those firms whose products have been in domestic commerce and which fail to conform to CPSC safety rules. The Commission steps in only when these companies wish to sell abroad these "mistakes." If the CPSC did not preclude such exports there would be a diminished incentive for companies to live up to appropriate quality control measures. Over time, this might mean that lesser quality goods -- and, invariably, hazardous goods -- would find their way, unchecked, into the hands and homes of American consumers.

As far as this nation's trade balance is concerned, the economic data that is part of the record of this proceeding doesn't suggest any significant increase in U.S. sales abroad if the export bar were to be lifted. The National Association of Manufacturers says any trade increase would be "a step" in the right direction. I conclude that it would be more of a stumble than a step, and in any event hardly "a giant leap for all mankind." In fact, a change in the current policy might marginally hurt -- rather than help -- our trade situation. While the perception that domestic firms already dump their substandard and hazardous goods overseas is not an accurate portrayal, a policy shift permitting these exports is likely to promote an "Ugly American" image. This might put a stigma on U.S. trade abroad, thereby tarnishing all U.S.-made products as suspect, defective, or possibly dangerous.

Is it morally objectionable to ship goods to foreign consumers which are deemed too hazardous for American consumers? As Mrs. Esther Peterson of the International Organization of Consumers Union summed up the situation, just how does one respond to the question: "If a product causes cancer in your country, won't it cause cancer in our country, too?" If the product is TRIS-treated pajamas for kids, the evidence is all too persuasively "YES -- it will cause cancer regardless of where the garment is worn."

Ditto for patching compounds, perhaps still in warehouses, which contain respirable free-form asbestos. And cancer isn't the only concern. Do we really want to permit the export of lead-containing paint and products containing such lead, which is directly tied to brain dysfunction and retardation? Do we really want to allow what may yet remain in warehouses of extremely flammable contact adhesives which the Commission has banned? Won't they cause fires and explosions, deaths and disfiguring burns in other countries, just as they would in ours? To ask the question is to answer It.

Yet another policy argument on behalf of changing our current policy emphasizes the need for uniformity in the Commission's export policy under the several acts it administers. But in the wake of all the strong policy arguments to the contrary -- and the explicit language of the statutes themselves -- such foolish uniformity is, to borrow a phrase, "... the hobgoblin of little minds,"

The current policy is serving a desired deterrent effect. It provides the needed flexibility to address situations meriting an exception from the export bar. The policy also carries the weight of several years of application. Thus, all parties concerned -- the Commission, manufacturers, exporters, foreign countries, and the public -- know what is involved and how to proceed. And so, with the current policy serving us just fine, In the words of the ancient philosopher, "If it ain't broke, don't fix it."

That the current policy is indeed working is attested to by the transparent absence of any real hue and cry for change from the great bulk of American industry. If the policy were overly restrictive, the Commission would have expected to receive far more input from that source. None stepped forward to testify. Only five submitted any comments at all. Of these, two were from the carpet and rug folks -- an industry not affected by the CPSA and the FHSA. Another was on behalf of the toy industry, which has not exactly been the model over the years, for consistent and conscientious sensitivity to hazards brought to its attention. Still another from a mid-level functionary at the National Association of Manufacturers, who was publicly quoted as being "too busy" to attend the Commission hearing on this subject.

And the final comment in this veritable "tidal wave" of industry concern was from a small businessman, Marty Deltsch, heading the Deitsch Plastic Export Co. in West Haven, Connecticut. To his credit, Mr. Deitsch set forth his case in positively the most simple and forthright terms. You see, he has a problem. He's stuck with a shipment of kids pajama material he bought up at a bargain. They had been treated with the flame-retardant, TRIS, a carcinogen. He'd like to export them as Is, to be slept in by -- kids in other countries.

As much as I welcome Mr. Deitsch's candor, by today's 3-l vote upholding the authority of this Commission to bar exports once a non-complying product has been introduced into domestic commerce, we'll still be able to tell him that the law won't permit that. It hasn't In the past, it doesn't by the terms of the statute, and for every conceivably sound public policy and moral reason I can think of, I really don't believe that it should.

May 16, 1984

In July 1983, this Commission revised its restrictive export policy under the Flammable Fabrics Act (FFA) citing several reasons, including the many additional remedies we have against a manufacturer who introduces non-complying goods into domestic commerce. We also said in that decision:

That quote sums up in my view the issue before us today in the Federal Hazardous Substances Act (FHSA) and the Consumer Product Safety Act (CPSA) export question as well. I note that those same referenced 1978 Congressional amendments, providing for 30-day notice to the government of the intended recipient nation, were applied as well to the FHSA and the CPSA.

Are we here at the Commission to be "international nannies" or does our duty to protect consumers stop at our territorial borders? More importantly, the question is who should make that final determination on consumer safety overseas? It is my view that unelected regulators such as myself are least fit to do so, and that Congress as representatives of the American people should, and has, decided the question for us. By its '78 notice amendments to all our acts, Congress said the decision is for the intended recipient nation's government to make, after being duly informed of the nonconforming nature of the goods.

The so-called "economic" argument that firms will lower their safety standards if they are permitted to export is a straw man. No evidence, even anecdotal evidence, has been offered by the proponents of this theory. What evidence does exist suggests firms will not alter their production processes in response to such a minor variable. The real penalties of noncompliance--the loss of the American market, loss of goodwill from recall, the expense of a recall and any civil penalties levied--drive the manufacturer's incentive to comply.

Accordingly, I vote to extend our FFA export policy to the FHSA and the CPSA.

I have reviewed the Commission's authority under the Consumer Product Safety Act and the Federal Hazardous Substances Act to prohibit the export of non-complying products that have been introduced into commerce for domestic use. In deliberating this issue, I have read the administrative record; heard and considered the testimony presented during the public hearing held on March 16, 1984; and discussed this matter with people from within and without the Commission. More importantly, in reaching my decision I carefully studied the statutes, their legislative histories, and the case law construing them.

It is my judgment that the export exemptions provided by the statutes do not apply to products that have been sold, distributed, or otherwise introduced into domestic commerce for use in the United States and that the Commission may properly prevent export of those Non-complying products. Therefore, I vote to retain the present export policy under these Acts.

The Commission's present export policy is consistent with and mandated by the statutes. I do not believe that this Commission possesses the authority to change its interpretation of these statutes and to adopt a policy that is demonstrably contrary to the statutory language and Congressional intent. This change can only be accomplished through amendments to the statutes. I believe that Congress has established a statutory scheme that creates a difference in treatment between products "for export" in the first instance and those distributed for use in domestic commerce. A firm that elects to distribute products for use in the United States loses the benefit, in my estimation, of the export exemptions with respect to those products.

During discussion of the proposed change in policy, much attention has been focused on the 1978 amendments to the CPSA and FHSA. Based on my review of the legislative history, I am convinced that the 1978 amendments do not assist in resolving the issue currently before the Commission. Congress did not intend the 1978 amendments to alter the existing laws with respect to the Commission's authority to prohibit the export of noncomplying products that have been introduced into domestic commerce. The authority given the Commission in 1978 is in addition to that already granted under the CPSA and FHSA. Therefore, the appropriate legislative history for consideration in this context is that developed when the CPSA was enacted in 1972 and when the FHSA was amended in 1960 to add the export provisions. From my view, that legislative history fully supports the Commission's present policy.

Those advocating change in our export policy base their argument in part on the need for a uniform policy for all the statutes administered by the Commission. They suggest that the Commission adopt a policy under the CPSA and FHSA similar to that recently adopted under the Flammable Fabrics Act (FFA). The language of the CPSA and FHSA is clear that products distributed in domestic commerce lose the protection of the export provision. This is an explicit limitation on the applicability of the exemption that does not appear in the FFA and, in my view, that prevents our establishing a uniform export policy under the acts we administer.

It is my understanding that in administering the present export policy, in certain meritorious cases, the Commission has permitted export of noncomplying products that have been in domestic commerce. While I understand that this discretion has not been administratively or judicially challenged, and I believe that this practice provides the control mandated by the Acts and, at the same time, affords the Commission a certain amount of flexibility in its response, it is not at all clear to me that the Commission possesses the authority to make these case-by-case determinations. Since Congress has not provided for export of noncomplying products that have been introduced into domestic commerce, whether the Commission has authority to allow exports, albeit on a case-by-case basis, is open to question. In casting my vote to retain the present policy, I recommend that the Commission formally review this current practice and, if it is continued, establish or adopt specific criteria by which to assess a request for export of these noncomplying products. This would provide the clear guidance, certainty. and consistency ostensibly failing in the current process, and ease any administrative burden on the Commission.

It was clear during the March 16th public hearing that there are many misconceptions about the scope of the export policy. Additionally, the Commission has been made aware that the public is concerned that citizens overseas may be exposed to hazardous products that have been recalled because they cannot be sold in the United States. I believe it is important, therefore, to clarify the reach of today's decision. The export provisions apply to products that are subject to existing safety standards and banning regulations. They do not apply to a myriad of products that present or may present substantial product hazards or imminent hazards.

A decision on the immediate issue does not, therefore, dispose of many of the concerns articulated by commenters. Unregulated products may now be exported and, without a change in the underlying statutes, in the majority of cases will continue to be legally exportable. I have filed a detailed statement on my opinion with the Office of the Secretary.