The Export of Hazard

Transnational Corporations and Environmental Control Issues

Jane H. Ives

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351999502
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This report, first published in 1985, written by a distinguished group of legal and public policy experts, documents the growing trade in hazardous industries and toxic products. Hazard export threatens the health and environment of workers and ordinary citizens the world over. It is carried out by transnational corporations, in order to locate their most dangerous industrial activities outside the US, in countries where regulatory controls may be less strict.

The issues represented here include occupational safety, environmental protection, international relations and problems of legal control. Attention is focused on the political and economic impact of hazard export on the US, Europe and developing countries, and the book's critical analysis is addressed directly to the institutional level best suited to constructive action. This title will be of interest to students of business studies.

1

Hazardous exports: a consumer perspective

SUSAN B. KING

Introduction

The host of new laws and programs established in the late 1960s and early 1970s to address health, safety and environmental concerns in the United States quickly raised a new issue: what should our policy be regarding the export of highly dangerous products or technologies to other countries? In an era of proliferating nuclear capabilities, booming chemical production and sophisticated manufacturing and sales techniques, trade policy took on new implications for consumer, worker and environmental protection around the world.

Efforts to stimulate the US and international action to address the issue met with some success in the last two years of the Carter Administration. In revoking the Carter Executive Order which set forth a national policy on hazardous exports and opposing the United Nations vote on infant formula sales in the Third World, President Reagan has indicated that his administration is not only unsympathetic but openly hostile to even the most modest proposals for government monitoring and clearance of export practices.

Until there is strong political pressure for public intervention – or a major human or environmental tragedy – the watchword will be “caveat emptor,” especially in the less developed countries.

The problem

FROM THE US PERSPECTIVE

Traditionally, we have understood “dumping” to mean the flooding of US markets with low-priced or subsidized foreign imports which compete with US products and US jobs. The term has taken an entirely different meaning in the last few years: American export to other countries of products which we have banned or restricted for sale in the United States. Objections stem from the fact or the suspicion that very often the banned consumer goods, dangerous pesticides, toxic wastes and hazardous technologies are dumped in the least prepared and often most vulnerable populations of the Third World.

Many of us are convinced that it is bad foreign policy for the United States to permit the totally unrestricted export of seriously defective or dangerous products to unsuspecting buyers. To do so is to establish a double standard for health and safety which is inconsistent with this country’s belief that all human life should be protected.

Dumping is also bad economic policy. One shipment of dangerous products bearing an American label can quickly undermine foreign buyers’ long-standing confidence in the safety and integrity of American goods.

Finally, dumping can hurt us here at home. If US manufacturers believe that a ready market exists abroad for design or production “mistakes,” or products that are, for whatever reason, seriously defective, it may reduce the incentive for safety in the domestic market place. The US consumer loses in this situation. So does the US manufacturer of the safe product. He may find himself at a disadvantage at home and abroad, competing against what amounts to an indirect subsidy for the manufacturer of unsafe goods.

Having said this, let me acknowledge that “dumping” is too simple – and perhaps too pejorative – a term to describe a complex problem.

We have passed many laws in this country to protect people from a wide range of hazards posed by many different products. For example, the products regulated by CPSC alone range from children’s toys to power tools to household substances containing potentially toxic or cancer-causing chemicals. The agency must consider a variety of factors in making health and safety decisions which will affect US consumers. Among these are the nature and severity of the hazard posed by the product, the vulnerability of the population exposed to the hazard, the consumers’ need for the product, the availability of substitutes and the cost of regulation to the manufacturer and the public.

In considering whether products banned in the US would pose a hazard if exported, many of these same factors come into play. For example:

– CPSC has a safety standard for bicycles. While bikes without reflectors would be banned in this country, it is hard to say we or the importing country should be worried by the export of such bikes, especially if traffic conditions are not the same.

– Our standard regulating the flammability of clothing may raise more complicated questions. Suppose a US manufacturer develops a low-priced garment particularly suitable for children but which fails US flammability tests. Conflicting, competing interests arise with regard to such exports – there is a demonstrated human risk to the most vulnerable population, but there may also be a real demand for such product in some countries. Here the tradeoffs may get more difficult and the choice is perhaps best left to the importing country.

– A final example is the product which has so much potential for harm that basic humanitarian considerations support the conclusion that export sales should be prohibited altogether.

I would put one particular CPSC experience in the last category. TRIS-treated children’s sleepwear was removed from the US market after tests determined that TRIS could be absorbed into the human body and possibly cause cancer. CPSC subsequently moved to ban export of TRIS-treated garments. In a case like TRIS, the agency concluded that the obligation of the United States not to expose other nations to a cancer-causing substance outweighed the interests manufacturers had in cutting their losses or foreign buyers had in purchasing the product.

The experience with consumer products points up at least some of the questions encountered when attempting to assess the degree of hazard an export may pose for other countries and other cultures. The TRIS incident is particularly relevant because it is the broad area of toxic substances and toxic wastes (as well as pharmaceuticals) that has caused greatest alarm. Here scientific uncertainty about the degree of toxicity and level of human or environmental exposure often complicates the issue as well as increasing the public health concerns.

The efforts to fashion a single uniform export policy have identified three basic approaches: (1) a total prohibition on the export of any and all products that are banned for sale in the United States for health and/or safety reasons; (2) a system based solely on notification, in which the US government or private seller would provide the importing country with full and timely notice of the intent to export a banned or hazardous product and that country would make a decision based on the information disclosed; and (3) a “mixed” system combining comprehensive notification with governmental authority to restrict export on a finding of severe or extreme hazard.

Obviously, for us to ever develop a workable US policy we must take into account both the complex interests and needs of the importing countries and the distinctions we ourselves make in responding to different public health and safety hazards at home. We must also operate on the premise that the vast majority of American producers and manufacturers want to, and will, comply with the law. To encourage such compliance, we must work to develop a policy that is as reasonable, as clear and as equitable as possible. Past experience in both the domestic and the international arena demonstrates that reconciling the complex competing interests is no simple matter, and that this has served to strengthen the hand of those who oppose any action at all.

The domestic dilemma

At least five federal health and safety agencies share responsibility for the regulation of toxic substances under twenty-one different statutes. The major players include the Environmental Protection Agency, the Food and Drug Administration, the Occupational Safety and Health Administration, the Consumer Product Safety Commission, and the Food Safety and Quality Service of the Department of Agriculture. Each agency has health and safety responsibilities beyond toxic substances. In addition, other regulatory bodies such as the National Highway Traffic Safety Administration and the Federal Trade Commission oversee a host of safety-related problems.

Congress created these agencies to address health and safety matters at home, and in so doing demonstrated that it was clearly aware that the export of regulated products could pose serious problems. A number of the more recent statutes contain specific provisions regarding exports. However, these provisions are not uniform or consistent, and they are far from all-inclusive. For example, while new drugs which have not been approved for the domestic market may not be exported, new pesticides may be sold abroad. Many products simply are not addressed at all.

CPSC policy: one approach to export notification

The Consumer Product Safety Act and other acts administered by CPSC prohibit the export of products which violate an agency standard or ban if those products have ever been in domestic commerce. It was under this authority that CPSC prohibited the export of TRIS-treated children’s sleep-wear manufactured for the US market.

Until 1978, CPSC had no authority over products manufactured and labeled solely for export. That year, Congress amended the statute to provide a comprehensive system of export notification for non-complying consumer products.

Agency regulations have been issued to implement the congressional mandate. The regulations require a two step notification process:

(1) Thirty-day advance notice to CPSC by any person who intends to export any product which fails to comply with a product safety standard or ban.

(2) Notice by CPSC to the country of destination, including shipment dates, name of consignee, and information regarding the relevant standard or ban and the nature of non-compliance.

As a matter of policy, CPSC treats products recalled under a voluntary or mandatory recall the same as it treats those subject to a standard or a ban, i.e. the agency requires notice of intent to export and provides the relevant information to recipient governments.

By providing export information, CPSC hopes to assure that foreign countries will be able to make informed choices about whether to permit entry into their country of products not permitted in the United States for health or safety reasons. In passing the 1978 act, Congress said that:

The United States Government has an obligation to share the results of its safety research with countries which purchase U.S. exports. Such a policy not only affirms its nation’s commitment to human rights, but also strengthens US diplomatic relations and long-range export prospects. (H.Rep. no. 95-1164, accompanying HR 12442 (May 15, 1978), p. 7)

Congress recognized that informed choice would not always be appropriate. The 1978 amendments also authorize the Commission to prohibit the exportation of certain products which might pose a hazard to US residents, for example, from reimportation.

While the Commission has not yet had a great deal of experience with the notification regulations, there are a few examples of how the system works in practice. Late in 1980, CPSC was notified by a US exporter of its intent to ship nursery lamps to Canada. These lamps were banned in this country because the paint on the decorative figurines had a lead content well in excess of the US lead-in-paint standard. The Commission immediately informed the Canadian government of the impending export. Canada requested more information about the hazards to children posed by lead in paint, and eventually told the exporter that the incoming goods would be refused. I might add that the Ministry of Consumer and Corporate Affairs of the Canadian government made a special point of expressing appreciation to the CPSC for the timely information. This had given Canada the opportunity to exercise a choice that otherwise would not have been possible.

The initial response of other governments to the CPSC notification program was uniformly positive. Sixty countries, representing all major trading partners and many African and Latin American countries, provided rapid instructions as to their appropriate official contacts. The governments expressed interest in and enthusiasm for the program. The next step for the agency was to try to assure that manufacturers and exporters are fully informed as to their obligations to report intended exports to the CPSC.

The Toxic Substances Control Act, administered by the EPA, contains export notification procedures similar to the Consumer Product Safety Act. Despite these provisions, neither CPSC nor EPA has any way of knowing yet how many, if any, banned goods may have been shipped without the government’s knowledge, either because firms are unaware of the law or choose to ignore it.

WHITE HOUSE INITIATIVES

For three years, consumer advocates pressed the Carter Administration to consider the harmful effects of hazardous American exports. In 1978, the White House established an Interagency Working Group on a Hazardous Substances Export Policy, chaired by Consumer Affairs Advisor Esther Peterson, whose mission was to develop one uniform govern-mentwide policy which would apply to all potentially hazardous exports. Over twenty departments and agencies were involved in writing and debating a succession of five drafts over a two-year period.

It was clear from the beginning that the Department of Commerce, the Department of State, and the health and safety agencies, in particular, had very different perspectives and conflicting interests. The disagreements were aired publicly in June of 1980 during hearings before the House Subcommittee on International Economic Policy and Trade. The subject of the hearings was a bill introduced by Rep. Michael Barnes to ban all hazardous exports.

Representatives of the Commerce Department opposed export restrictions, while witnesses from the White House Consumer Affairs Office, the Council on Environmental Quality and the Consumer Product Safety Commission argued for a regulatory policy, either by legislation or by executive order.

Even though the interagency debate continued, the White House Working Group hammered out a compromise and released its fifth and final draft in mid-August of 1980. It recommended a multi-stage review of all products and substances banned or restricted by the federal government. It proposed a program under which exporters would have to notify the government if they wished to sell such goods abroad. In the vast majority of cases, the system contemplated no more than government-to-government notification of the pending export of the hazardous products. However, for those products or substances determined to be “extremely hazardous” by a multi-member panel (composed of representatives of the State Department, Commerce Department and certain other agencies), a more restrictive approach would apply. Such items would be placed on the Export Commodity Control List, and a license to export would be required. Such licenses would be approved only if the government of the importing country responded that it had no objections to the entry of the product. Export from the United States would be prohibited if the foreign government responded negatively or failed to respond at all.

The Working Group’s proposed policy thus rested primarily on the principle of notice: provide importing countries with full and complete information about the hazard and the nature of the US restrictions on sale or u...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Dedication
• Table of Contents
• Foreword
• Editor’s preface
• Acknowledgments
• 1 Hazardous exports: a consumer perspective
• 2 A review of US and international restrictions on exports of hazardous substances
• 3 Hazard export: ethical problems, policy proposals and prospects for implementation
• 4 Exporting hazardous industries: “for example” is not proof
• Response to Levenstein-Eller Critique
• 5 The double standard in industrial hazards
• 6 Occupational health and the economic development of Latin America
• 7 Hazard export in the developing Irish Republic
• 8 Policy issues in technology transfer
• 9 Remedies against hazardous exports: compensation, products liability and criminal sanctions
• 10 Export of hazardous industries: the view from a local union in the United States
• 11 Future directions for US public policy initiatives on hazard export issues
• 12 The health effects of the transfer of technology to the developing world: report and case studies
• Export of hazardous products from the United States: a bibliography
• Appendix: The Bhopal disaster as a case study in double standards
• Index