Wednesday, August 22, 2007
Toxic Toys From China
Why does no one notice that these toys come from an authoritarian country where personal responsibility has withered away under tyranny? Why is the first reaction always "More Laws! Government save us from this!"? More tyranny will make this problem go away, how? The company caught the problem and is working to resolve it. Thier reputation has been harmed by this and I can assure you they will go overboard trying to make certain this doesn't happen again, laws or no laws. The market works.
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Admittedly, China did take aggressive measures to protect its export reputation ranging from the execution of Zheng Xiaoyu to increased inspections and export bans for the worst offending companies. However, “give the market time to reform” provides scant comfort to the parents of the four-year old who died from Reebok’s lead-based, heart-shaped charm bracelet. It certainly will not help the dead twenty-month old with the perforated intestine.
ReplyDeleteA free trade policy has to go both ways. If a company in Europe, Mexico, Taiwan, Japan, or any other of a host of countries exports bad product to the United States—and that bad product harms a loved one—we can sue that company in the United States (the place where we were harmed; it goes both way, if we harm someone abroad, they can sue in the country that imported the bad product) and if we win, we can take that judgment to the country where that company is located and you can enforce it against them. It is not cheap. It is not easy. Nevertheless, you can do it.
We can do this, because the United States has entered into a treaty with those countries that essentially extends “full faith and credit” between us and our respective trading partners. We see this treaty reflected in the statutory versions of the Uniform Enforcement of Foreign Judgments Act adopted by most states.
China is an exception. It refused to enter into such a treaty with the United States. Therefore, unless the exporting company has assets in the United States (some do, but not the factories at issue in the recent cases), you have no recourse against the Chinese manufacturer (what they do is “close down” and reopen under a new name).
China does have a treaty that pertains to the enforcement of arbitration awards in certain circumstances. However, in September 2002 (about the time it entered the World Trade Organization), China changed the rules. It no longer permits the use of foreign (that would be American) attorneys in arbitration proceedings in China. Further, it does not permit informal arbitration, so you generally have to go to CIETAC.
At one time, we had leverage, and we may have been able to force a mutual treaty with China on enforcement of judgments. It would have meant that Europe, South America, North America, and China would have played on a level field. But we did not use that leverage. Instead, we opened the doors and now, I do not think we have that kind of leverage anymore.
I suspect your counter argument may be that such treaties are inappropriate in the first place. And we had no business entering into those kinds of treaties in the first place with Europe, et al. But we did enter into those treaties. So, China, who is becoming the world’s biggest trading partner, plays by different rules.
I too support free trade. Where we differ is in my belief that all should play by the same rules. I disagree that China gets to play a special game, by special rules, and we must trust China not to game the market. And that the parents of dead four-year olds and dead babies must accept that the market will have these little time kinks from time to time.
So yes, dismantle the trade barriers; but dismantle them for everyone.
I do believe that the rules must be the same for everyone, and I think anyone harmed by these toxic toys should be able to sue for damages somehow. I don't agree with hiding behind a government or a corporation to avoid taking responsibility for your actions.
ReplyDeleteI would also support more in-house tests for things like this so they can be caught before they get to the store shelves.
Kent,
ReplyDeleteFree trade is good. But what we currently have is "government implemented free trade" (almost an oxymoron). It may not surprise you to know that any government can generally muck up any good idea.
If we dismantled some of our government regulations, so that US companies and Chinese companies competed under the same terms and conditions, it would get interesting.
And you are right, US companies will adjust with more in-house testing. They'll have to.
There is no true "free trade" anywhere in the world except for on the black or gray markets.
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