Thread: China Loses Congressional Republicans Over Tainted-Toy Trade

China Loses Congressional Republicans Over Tainted-Toy Trade

By Mark Drajem

Oct. 15 (Bloomberg) -- Republican Representative Michael Burgess won his Texas seat five years ago as a free-trade proponent and has been a reliable vote for each of the seven market-opening agreements sent to Congress since then.

No more. When U.S. companies this year recalled millions of Chinese-made toys and a local news station reported that imported flip-flops caused painful foot rashes, Burgess had a change of heart.

``In my household, if it's made in China, it does not come home,'' the 56-year-old lawmaker, a physician, told Mattel Inc. Chief Executive Officer Robert Eckert at a recent hearing.

``It's one thing to talk about free trade,'' Burgess said in an interview. ``It's a whole different issue when it comes to safety.''

Burgess isn't the only free-trader souring on China. Across Congress, even Republican lawmakers who have backed President George W. Bush on open markets are increasingly seeing safety risks, not economic opportunities, when they look overseas. As a result, they are pushing measures that may slow the flow of imports, especially some of the almost $300 billion in goods from China.

The House and Senate are considering a raft of measures aimed at clamping down on unsafe imports. They include expanding funding for import inspections; allowing states to regulate consumer products; and increasing by tens of millions of dollars the fines for companies selling defective products.

The Bush administration has warned lawmakers against embracing protectionism in the name of safety. Still, the White House will be under pressure to agree to what would be the first significant expansion of consumer-product legislation in more than 15 years, lawmakers, lobbyists and consumer advocates say.

`A Wakeup Call'

``If you think this is a partisan issue, you are out of your mind,'' Representative Tom Reynolds, a New York Republican, told officials from the U.S. Trade Representative's office at an Oct. 4 House hearing. ``There is a wakeup call in Congress, and we need to see some results.''

Washington Democratic Representative Rick Larsen and Illinois Republican Representative Mark Kirk, who run Congress's China Working Group and were among the leading opponents of new barriers to Chinese imports, have proposed that fines on makers of unsafe items be increased to as much as $50 million and that U.S. government inspectors be deployed inside Chinese factories for the first time.

They say their concerns were reinforced by an August visit to Beijing, where Chinese officials told them the import-safety problem is only media hype.

China's Problem

``They felt the issue was being overblown and would be used as leverage against them,'' says Larsen, 42, whose district is home to a Boeing Co. plant and exported more goods to China than any other in the U.S. last year. ``But we told them to lead, follow or get out of the way. This is something Congress is going to act on this year.''

U.S. concern about Chinese products has escalated since March, when melamine, a substance used to make plastics, was found in pet food and blamed for killing cats and dogs. Anxieties grew with revelations of tainted vitamins and Cub Scout badges, and of dangerous cribs and Halloween toys.

Product recalls alarmed Arkansas Senator Mark Pryor enough that he was willing to sponsor measures opposed by his state's biggest corporate resident and the world's largest retailer, Bentonville-based Wal-Mart Stores Inc.

Bucking the Leadership

Pryor, 44, a Democrat, had bucked his party's leadership by voting for the Central American Free Trade Agreement in 2005. Now, as head of a key Commerce Committee panel, he is sponsoring legislation that would require outside safety inspections of all imported toys, allow all 50 U.S. state attorneys general to enforce product-safety laws and compel public disclosure of confidential company safety information.

The measure, which would also raise by 50-fold to $100 million the fines companies face for selling unsafe goods, is backed by Committee Chairman Daniel Inouye, a Hawaii Democrat.

Consumer groups have cheered; Wal-Mart hasn't. In testimony to Pryor's panel, Wal-Mart's lobbying group, the Retail Industry Leaders Association, argued that the higher fines and public disclosure might damage American retailers.

Some of the bill's provisions may also ``undermine the critical cooperation'' between companies and federal regulators, Al Thompson, the group's vice president, testified.

The House has already taken steps to increase penalties on companies making unsafe products. Lawmakers last week voted to boost maximum fines to $10 million, from $1.83 million.

Tainted Food

Senator Richard Durbin of Illinois tried for a decade to require companies to report contamination of their food supply within 24 hours. The measure never gained traction until fears about Chinese seafood and toothpaste emerged; Congress passed it last month, and Bush signed it.

Now Durbin, 62, the Senate's second-ranking Democrat, is pressing for user fees on imports to pay for more inspections, drawing companies' ire.

``We believe that adopting retaliatory measures, such as increasing tariffs or assessing user fees on imports, will do more harm than good,'' a coalition of dozens of companies including Wal-Mart, Minneapolis-based Target Corp., Atlanta- based Home Depot Inc. and New York's Citigroup Inc. wrote in a letter to members of Congress on Sept. 26.

Retaliation

Chinese officials say they're working to improve the safety of exports. ``China is always ready to work with the United States to settle the various product-related issues through dialogue,'' says Wang Baodong, a spokesman for the Chinese embassy in Washington. Still, ``we are opposed to the politicization of the product issue.''

Vice Premier Wu Yi was placed in charge of cracking down on unsafe products, and she vowed on Sept. 27 to ``create a chain of oversight covering the whole manufacturing and food- production process.''

The Bush administration says trading partners will retaliate if lawmakers turn protectionist.

Congress can't use ``food safety as an excuse for being protectionist,'' U.S. Trade Representative Susan Schwab said in an interview Oct. 12. ``Whatever we do on imports coming into our country, other countries can do to our exports.''

Even so, business lobbyists say they expect the administration will be compelled to agree to at least some of the measures. ``Something is going to get passed, and it's going to be signed'' by Bush, says William Reinsch, a former Clinton administration trade official who is now president of the National Foreign Trade Council, which represents Boeing, Caterpillar Inc. and other exporters.

Burgess, who supports measures to toughen food-safety rules and increase inspections on imports, says restrictions are inevitable because of public demand. ``The power of the consumer here is much greater than the power of Congress,'' he says.

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The power of the consumer here is much greater than the power of Congress,'' he says.

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