Import Anxiety - What do we do?

August 31, 2007

After a summer of tainted dog food, toxic toothpaste and contaminated fish, some consumers have begun to experience “import anxiety attacks” when browsing the aisles at the local megastore. Many of us used to assume that some hyper-vigilant government agency or trustworthy US corporation carefully screened our consumer goods for us. Mattel’s recall of nine million Chinese-made toys (due to unsafe levels of lead in the paint) suggests that this faith may have been misplaced. In mid-July, in response to widespread concern regarding foreign imports, President Bush ordered the formation of a Working Group to analyze US safeguards and “promote the safety of imported products.”  The Group will make its recommendations in mid-September, but I predict that Bush’s committee will emphasize the limitations of governmental regulatory agencies and pass much of the responsibility onto the private sector. And that may not be a bad thing.

The sheer volume of foreign imports into the United States makes it impossible for our regulatory commissions to examine and approve every item. In 2006, US companies imported 1.8 trillion dollars’ worth of goods from all over the world and $287 billion from China alone. The Food and Drug Administration, the Consumer Product Safety Commission, and the Department of Commerce simply cannot open every container, inspect every box and test every tube of toothpaste. In fact, these federal agencies were never intended to exercise that kind of micro-oversight.

Instead, the US system places much responsibility onto the domestic importer, holding him answerable for the quality of goods purchased from overseas. When these goods are re-sold on the domestic market, the importer is legally accountable to both consumers and the US government. When there’s a problem (like diethylene glycol in your toothpaste), consumers can take legal action and federal agencies can levy a variety of penalties ranging from recalls to jail time. This system may close the barn door after the cows are already out but it provides importers with the greatest incentives to supervise foreign manufacturers. The assumption is that a company will oversee its imports in order to protect its reputation, dodge expensive lawsuits and avoid government penalties. American importers have been undeniably negligent – but they can improve supervision far more quickly and effectively than government agencies.

In contrast, the European Union (EU) places much of the regulatory responsibility on the national government. When legislators like Representative Etheridge call for greater federal supervision of US imports, they are really moving us away from our market-driven approach towards the EU model of governmental oversight. In theory, this might sound like a good idea. Who wouldn’t like dispassionate, white-coated government inspectors carefully testing every can of imported dog food? In reality, however, the result is an inflated bureaucracy, suffocating regulations and rising consumer prices. Even the EU is waging a war on its own red tape. The United States simply imports too much stuff for the government to serve as the sole gatekeeper.

While the size and scope of US trade seems incompatible with the EU model of government micro-management, there are still things both private industry and federal agencies can do. American companies need to establish substantial foreign offices, with their employees on-site to monitor production. US businesses may also need to establish information-sharing networks, to notify each other when a foreign manufacturer cuts too many corners. Contracts with foreign manufacturers should detail quality and safety standards. This summer, corporate America has reaped the fruit of its own carelessness. Things at the orchard need to change.

Though private businesses should shoulder much responsibility, we can ask our federal government to take some useful action. The US Department of Commerce should expand and enforce labeling regulations, which require imported goods to be clearly identified with country of origin information. If you cook with olive oil imported from Tunisia, it should say so on the label. A coffee cup made in Taiwan should be clearly marked. Shoppers can then make more informed choices about everything from haddock to hair spray. When companies have been negligent in overseeing the safety of imports, government agencies should investigate and impose appropriate penalties. US companies are working to win back the trust of nervous consumers.  The American public has high standards and prudent corporations will work to meet them – or find themselves closed for business.