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Toy Recalls Result of US Trade Policy that Promotes Overseas Production, Consumer Group Says.

Dec 20, 2007 | Parker Waichman Alonso LLP

There has been a surge of toy recalls this year—over six million for lead; the highest number ever for product defects—and recalls are due, in part, to U.S. trade agreements encouraging American toymakers to cut costs by shifting production overseas, according to the watchdog group Public Citizen.  Concerns about toy safety have been at the forefront of the holiday shopping season this year as millions of Chinese-made toys were recalled for excessive lead content or other hazards, such as small parts and magnets.  Some of the most popular toys recalled include Thomas the Tank Engine, Curious George and SpongeBob SquarePants; lawsuits include Fisher-Price; Michaels Stores; Sears, Roebuck and Co.; Costco Wholesale; Eveready Battery; KMart; and Marvel Entertainment.

Public Citizen’s report states over 87% of U.S. toys are imported, a huge shift from the 1970s when nearly 90% of U. S. toys were produced domestically.  "This toy safety crisis was made in America by toy corporations who chose to relocate their production to locations that can't ensure toy safety," says Lori Wallach, director of Public Citizen's Global Trade Watch division.  “Failed trade policy" encouraged U.S. toy companies to move much of their manufacturing overseas to areas with less reliable safety standards, according to Ohio Senator Sherrod Brown.  

Legislation to improve toy safety and give more clout to the besieged U.S. Consumer Product Safety Commission is moving through the Senate and the House of Representatives.  Brown said toy manufacturers have irresponsibly pushed hard for foreign subcontractors to cut costs.  "We know these products are made in conditions and under an economic regime where there is no emphasis on toy safety.  It's no surprise they make dangerous toys."  The report said Chinese-made toys accounted for 94% of 2007’s recalls, driven almost entirely by hazards related to excessive lead, probably because highly leaded paint is much cheaper.  It’s also vastly cheaper to purchase toys from China where the hourly wage for toy manufacturing workers in 2006 was 36 cents, about 2.5% of the U.S. wage.

Lead is known to cause cancer and reproductive harm and can cause mental and physical retardation and behavioral and other health problems in children.  In adults, lead can damage the nervous system.  Toys with small parts and small magnets can pose choking hazards and many remained on shelves and were sold without warning labels of possible choking hazards several times this year.

Last week, Treasury Secretary Henry Paulson met with Chinese officials, and the two countries agreed to ensure Chinese-made toys meet U.S. safety standards.  Also, the World Trade Organization and the North American Free Trade Agreements have provisions providing foreign investor protections and limiting product safety standards and inspections.  "These agreements prioritize ensuring a favorable investment climate for U.S. firms seeking to relocate production overseas to take advantage of sweatshop wages, weak regulatory systems, and cheap product inputs over the concern of most Americans," Public Citizen said in the report.  Brown said the United States could make toys safer by changing its approach in trade negotiations and allowing fewer incentives to offshore production.