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Chinese Asked for "Fair and Just" Response to Drywll Crisis

Oct 26, 2009 | Parker Waichman Alonso LLP

A top U.S. regulator has called on the Chinese to do "what is fair and just" in its response to the crisis over Chinese drywall.  According to The Wall Street Journal, the head of the   Consumer Products Safety Commission (CPSC) made the appeal while attending the U.S.-China product safety summit that was held in Beijing beginning Thursday.

The CPSC has received over 1,700 complaints regarding Chinese drywall from homeowners across the country.  Gases emitted from Chinese drywall are being blamed for significant property damage, including damage to HVAC systems, smoke detectors, electrical wiring, metal plumbing components, and other household appliances. These gases also produce a sulfurous odor that permeates homes, and cause metals, including air conditioning coils and even jewelry, to corrode. People living with Chinese drywall have also suffered eye, respiratory and sinus problems that may be linked to the gases.

The Beijing product safety summit was attended by Inez Tenenbaum, head of the CPSC, and her counterpart with the Chinese General Administration of Quality Supervision, Inspection and Quarantine (Aqsiq).   According to The Wall Street Journal, Tenenbaum and Aqsiq vice-minister Wei Chuanzhong signed a joint statement in which the two sides agreed to continue to cooperate in their investigations into the drywall problems.

As we've reported previously, before the summit, Tenenbaum had said she wanted to discuss whether the Chinese firms were willing to help pay for the drywall-related damage. But according to the Journal, at the summit's end, Tenenbaum appeared to be warning that a resolution would take time.  She promised that the U.S. and China would  continue to cooperate "to complete the scientific examination, then trace it up the supply chain and then match it with individual homeowners….But there's a tremendous amount of work to be done before any of that occurs."

Next week, the CPSC will release two reports detailing the initial results of its tests on Chinese- and American-made drywall, with another report to follow next month, the Journal said.  Previous tests of Chinese drywall by the U.S. Environmental Protection Agency have found sulfur and two organic compounds associated with acrylic paint — compounds not found in samples of American-made drywall.

Chinese drywall poured into the U.S. between 1999 and 2007 because of the high demand created by the housing boom. Imports accelerated when the rebuilding that followed Hurricane Charley in Florida in 2004, and Hurricane Katrina along the Gulf Coast in 2005, created a drywall shortage. According to an earlier Wall Street Journal report, some 500 million pounds of Chinese drywall was imported to the U.S. during the housing boom. That means as many as 100,000 homes throughout the country could have been built with the material.

According to The Wall Street Journal, consulting firm Towers Perrin estimates that the tab for Chinese drywall damage could range from $15 billion to $25 billion.