Buyer’s Remorse: How America Has Failed to See …s3-us-west-2.amazonaws.com/aamweb/uploads/research-pdf...9 testimony of Stephen S. Miller, “Safety of Food Supply,” U.S. house

Page �

BUYeR'S ReMORSe • DeCeMBeR �3, 2007

BY RiChaRD MiniteR

Buyer’s Remorse: How America Has Failed to See the Threat Posed by Dangerous Chinese Goods and the Case for “Safe Trade.”

DeCeMBeR �3, 2007

Page 2


I. Executive Summary

Dog and cat owners were alarmed when their young and healthy pets died suddenly, from mysterious causes, in the spring of 2006. Some 4000 pets perished before authori-ties found the culprit: poisonous pet food ingredients made in China.

Deadly dog chow was just the beginning. in the coming months, government officials would find tainted seafood, dangerous medicines, toxic toothpaste, and shoddy tires that unraveled on the road. each time the pattern was the same. a Chinese supplier was using unsafe (and cheaper) ingredients – allegedly without the knowledge or consent of their american partners.

in too many cases, it seems that unscrupulous Chinese manufacturers knowingly adulterated their products and violated contractual safety standards in order to pump up their profits. a series of import product safety scandals this year has shaken the faith of consumers and companies all over the world.

american firms are more dependent on Chinese goods than ever before, as more than one-fifth of all consumer products sold in the U.S. last year were made (or partly made) in China, up from 5 percent in �997. in some categories – such as seafood – China is the leading exporter to the american market.

Chinese goods may be cheap, but they come at a high price. the free-trade Wall Street Journal editorial page recently pointed out: “american companies have not always realized how expensive Chinese-manufactured goods can turn out to be once the cost of low quality is included. naïveté is as much to blame as greed.”

So far, the risks to consumer health and shareholder wealth have been largely ignored. But the risk is real. it would take only one bad case—say, a contaminated cough syr-up—to trigger a lawsuit, force a massive recall and devastate a company’s reputation. Worse still, such an incident could cost thousands of americans their lives – potentially creating america’s second 9-��.

the risks of unsafe Chinese manufactured goods can not be overstated. Unsafe Chinese made imports–from pet food and pharmaceuticals to toys and tires–cause two types of harm: (�) a direct harm to consumers and (2) an indirect harm of displacing safer american alternatives.

to date, the response of the federal government has been weak and uncertain. Mostly, the Bush administration has engaged in bilateral talks with their Chinese counterparts.

the Chinese government has simultaneously said there is no problem with its products while shuttering hundreds of factories and sentencing at least one executive to death. Lately, China is blocking american products at the border on dubious health grounds. this appears to be in retaliation for america’s interdiction of potentially dangerous Chinese products. a trade war looms.

Meanwhile there is no comprehensive plan in place to prevent a major disaster in the making. Policymakers in Washington are stymied by the ongoing debate between so called “free traders” and “protectionists” and are unable to develop solutions to this looming threat.

there is a solution: “safe trade.” Moving beyond the false choice between unfettered free trade or no trade, it focuses on the health and safety of consumers, and if implemented it could prevent devastating death and injury. if left unaddressed, it could very well be yet another example of a failure of imagination that costs america lives and security.

a detailed implementation plan is contained in the final section of this paper.

“To get rich is

glorious.”

—Deng Xiaoping, former Chairman

Chinese Communist Party.

Page 3


Table Of Contents

I. Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 2

II. Case Studies:

Pet Food. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 4

Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 8

tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. �2

toothpaste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. �4

toys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. �7

Medicine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. �9

Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 22

III. U.S. Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 24

Bush administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 24

Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 26

IV. Chinese Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 28

V. U.S. Dependence on Chinese Goods . . . . . . . . . . . . . . . . . . . . Pg. 32

VI. Conclusion: The Safe Trade Agenda . . . . . . . . . . . . . . . . . . . Pg. 33

Charts:

�. U.S. tire imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. �4

2. Chinese trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 35

3. U.S. imports of Selected Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 36

4. Leading Suppliers of U.S. agricultural and Seafood imports . . . . . . . . . Pg. 36

Contact information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pg. 37

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Pet Food

the pet food crisis began as a mystery. Menu Foods first learned of contamination

in pet food on February 20, 2007, when it received reports from owners of three sick

cats. these cats soon died.

executives wondered , what could be killing the cats? Could it be their products?

two of the cats had access to the outdoors and may have ingested antifreeze, which

can damage feline kidneys. So the cause could be accidental. Prudently, Menu

Foods managers decided to test the product batch which seemed to trigger the

complaints.

Beginning on February 27, Menu Foods conducted tests on some 50 dogs and cats,

resulting in the deaths of at least nine cats. autopsies and chemical analysis led

researchers to tainted wheat gluten, a pet food ingredient.

By March 6, Menu Foods discontinued the use of wheat gluten from Chemnutra,

a new supplier that had purchased their supplies from China. “Wheat gluten is a

mixture of two proteins obtained when wheat flour is washed to remove the starch.

it is sometimes used to thicken pet food ‘gravy’ [and increase protein levels.] the

wheat gluten that had gone into the pet food had been received from a new supplier

in China, according to Menu Foods.”�

at about this time, Menu Foods sent food for independent tests at Cornell Univer-

sity. those tests confirmed that tainted wheat gluten was to blame.

now it was Chemnutra’s turn to worry and investigate. Chemnutra, which imports

nutritional and pharmaceutical chemicals from China, learned on March 8 that the

wheat gluten it had bought from a Chinese manufacturer was among the ingredi-

ents suspected of killing pets. Up until this point, Chemnutra officials said, it had

never had an issue with its Chinese manufacturers.2

that same day, Chemnutra quarantined all of its stocks of Chinese wheat gluten

and ended all shipping and sales of the suspect ingredient.

Menu Foods issued its first recall of pet food on March �6. the recall comprised

95 different brand names manufactured between December 3, 2006, and March 6,

2007.

Menu Foods inc. informed the Food & Drug administration on March �6, 2007

that it was recalling cat and dog food made with tainted wheat gluten. the recall,

including food sold under the iams and eukanuba labels,3 totaled some 60 million

cans and pouches of wet food.4

� “FDa’s Ongoing Pet Food investigation,” april �6, 2007, http://www.fda.gov/consumer/up-dates/pet_food_recall_FDa.pdf.

2 testimony of Stephen S. Miller, “Safety of Food Supply,” U.S. house energy and Commerce Committee, april 24, 2007.

3 See: http://www.fda.gov/oc/opacom/hottopics/petfood/transcript03�907.pdf.4 Matthew Philips, “is Pet Food Properly Regulated?” (Web exclusive), Newsweek, March 2�,

2007, http://www.msnbc.msn.com/id/�7728426/site/newsweek/.

“Chinese goods

may be cheap, but

they come at a

high price.”

Page 5


these brands, especially iams, once distinguished themselves as being healthier for

pets than lower-priced foods. now that brand image – and the profitability it brings

– is in tatters.

ten days after the nationwide recall began, at least 47� cases of pet kidney failure

were reported, resulting in �04 pet deaths.5 the death toll would continue to climb

over the next few months.

Poisonous pet food from China would ultimately kill �,950 cats and 2,200 dogs,

according to figures collected by the national association of Manufacturers.6 in

addition to the loss of beloved pets, the poisonous Chinese pet food also hurt

american companies, their shareholders, and their workers.

One reason that Chinese-made pet food could cause so much harm is that ameri-

cans buy so much of it. in 2006, China was the second largest foreign supplier to

the United States of animal food products, providing almost one-quarter of ameri-

ca’s livestock feed and pet food.

By late March, the Food and Drug administration traced the source of the contami-

nated wheat gluten to a small firm in Jangsu province, XuZhou anying Biologic

technology Development CO. Ltd. the wheat gluten contaminant was melamine,

which the FDa described as “a chemical used in plastics and fire retardants that is

unfit for use in food.”7

Melamine, according to the FDa, “is a molecule that has a number of industrial

uses, including use in manufacturing cooking utensils. it has no approved use in

human or animal food in the United States, nor is it permitted to be used as fertil-

izer, as it is in some parts of the world.”8

Stephen S. Miller, CeO of Chemnutra, traveled to China and met with the presi-

dent of XuZhou anying Biologic technology Development Co. Ltd, from March 29

to april �.

the president of Xuzhou anying Biologic, Miller said, denied any wrong doing. he

said he didn’t know there was melamine in their wheat gluten or “how that could

have happened.”9

apparently, the Chinese manufacturer violated the safety and processing standards

stipulated by its voluminous contract with Chemnutra.

5 associated Press, “�04 Deaths Reported in Pet Food Recall,” New York Times, March 28, 2007, http://www.nytimes.com/2007/03/28/science/28brfs-pet.html.

6 timmons, Jay, Senior Vice President, Policy and government Relations, Comments in front of the United States Senate Committee on Commerce, Science, and transportation, July �8, 2007, http://secure.nam.org/s_nam/bin.asp?CiD=202�37&DiD=2390�4&DOC=FiLe.PDF

7 nicholas Zamiska, Jason Leow and Shai Oster, “China Confronts Crisis Over Food Safety,” Wall Street Journal, May 30, 2007, p. a3, http://online.wsj.com/article/SB��80426448903�6974.html.

8 “FDa’s Ongoing Pet Food investigation,” april �6, 2007, http://www.fda.gov/consumer/up-dates/pet_food_recall_FDa.pdf.

9 testimony of Stephen S. Miller, “Safety of Food Supply,” U.S. house energy and Commerce Committee, april 24, 2007.

“In 2006, China

was the second

largest foreign

supplier to the

United States

of animal food

products”

Page 6


By late april, XuZhou anying had yet to provide any additional information.�0

Chemnutra formally recalled all wheat gluten supplied by XuZhou anying on april

2. three days later, Menu Foods voluntarily recalled all products manufactured

with wheat gluten purchased from Chemnutra, dating from november 8, 2006 to

March 6, 2007.��

the contaminated wheat gluten might not have been an accident – the pet poison

pumps up profits for the Chinese firm. “We at Chemnutra strongly suspect,” said

Chemnutra president Stephen Miller in an april 24 congressional hearing, “at this

point, that XuZhou anying Biologic technology Development Co. Ltd may have

added melamine to the wheat gluten as an ‘economic adulteration’ designed to

make inferior wheat gluten appear to have a higher protein content. they can sell it

to us at the price we would pay for a higher-quality product because the melamine,

our experts tell us, falsely elevates the results of a nitrogen-content test used to assess

protein content.”�2

the Chinese firm seemed to be cynically exploiting an american regulatory achilles’

heel. “there is no real pet-food department of any federal agency,” said Bob Vetere,

president of the american Pet Product Manufacturers association.�3 they had

found a regulatory loophole.

the Pet Food trade association was quick to point out that virtually all (non-Chi-

nese origin) pet food was safe.

On March 20, the Pet Food institute, a trade group, issued a statement saying: “all

cat and dog food products on store shelves are safe. the recall is now complete and

all suspected products have been removed from the stream of commerce.”�4 But the

damage was done.

Senator Dick Durbin (D-iL) announced that the U.S. Senate would hold an over-

sight hearing on the pet food crisis on april 5, 2007. “Many cats, dogs and other

pets, considered members of the family are now suffering as a result of a deeply

flawed pet food inspection system,” Durbin said. “the FDa’s response to this situ-

ation has been tragically slow. Pet owners deserve answers. the uncertainty about

what is safe to feed their pets has gone on far too long.”�5

China flat out denied it had shipped tainted pet foods to the United States. “China

has nothing to do with the pet poisoning incident in the U.S.,” said a spokesman of

�0 testimony of Stephen S. Miller, “Safety of Food Supply,” U.S. house energy and Commerce Committee, april 24, 2007.

�� Press Release, “all Menu Foods Pet Food with Chemnutra Wheat gluten Voluntarily Recalled,” april 5, 2007, http://www.fda.gov/oc/po/firmrecalls/menu04_07.html.

�2 testimony of Stephen S. Miller, “Safety of Food Supply,” U.S. house energy and Commerce Committee, april 24, 2007. For opening statement, see http://energycommerce.house.gov/cmte_mtgs/��0-oi-hrg.042407.Miller-testimony.pdf.

�3 Matthew Philips, “is Pet Food Properly Regulated?” Newsweek (Web exclusive), March 2�, 2007, http://www.msnbc.msn.com/id/�7728426/site/newsweek/.

�4 Matthew Philips, “is Pet Food Properly Regulated?” Newsweek (Web exclusive), March 2�, 2007, http://www.msnbc.msn.com/id/�7728426/site/newsweek/.

�5 Senator Dick Durbin, Press Release, “Durbin announces Senate hearing on Pet Food Con-tamination,” http://durbin.senate.gov/record.cfm?id=27�9�0.

Page 7


China’s general administration of Quality Supervision, inspection and Quarantine

-- the Middle Kingdom’s equivalent of the FDa -- on april 5, 2007.�6

the Chinese manufacturer supplied only denials, not explanations. “We have never

exported wheat gluten directly or indirectly to the U.S., Canada or the netherlands,”

Mao Lijun, the general manager of Xuzhou anying Biologic told reporters.�7

Despite the domestic denials, Chinese regulators took swift action. administra-

tion of Quality Supervision, inspection and Quarantine announced on May �4

that it had closed the two companies that exported melamine-tainted pet food and

detained several employees. if China had played no role in the deaths of american

dogs and cats, why did it shut down plants and hold supervisors for questioning?

the Chinese government later revoked the business license of Xuzhou anying Bio-

logic technology Development Co. Ltd. “it unlawfully added melamine in some of

its products, which could not meet the protein content requirement set in the con-

tracts,” said the aQSiQ spokesman. “this behavior of adulteration severely violated

the feed quality and safety standards.”�8

By then, almost 4000 beloved dogs and cats were dead. american importers lost

millions of dollars in product recalls. the reputations of american pet food brands

will take years to rebuild.

neither Chinese pet food manufacturers nor their american suppliers seem to have

learned much from crisis, which sickened or killed thousands of cherished cats and

dogs. Chemnutra is still importing wheat gluten from China.

in July 2007, Dolores Cole walked into an Ohio Wal-Mart to buy her five-year-old

Yorkshire terrier a treat. She selected Bestro Chicken Jerky treats ($6.97) and fed

them to her soft-haired pooch that night. the healthy dog suddenly developed

acute kidney failure. She rushed him to the vet and willingly paid $�,200 for surgery

in a desperate attempt to save her small companion’s life. the terrier died shortly

thereafter.

Cole was devastated. the “loss of her Yorkie has hit her extremely hard, as the pet

had provided comfort following the recent death of her daughter.”�9

the tainted treats were made at Shanghai Bestro trading, in China. the toxin was

melamine – the same illegal additive that killed american pets earlier in the year.

it was the beginning of a pattern which would emerge: deadly products and lax

enforcement. Fortunately this time, the threat was limited and no humans were

harmed.

�6 David Barboza, “China Says it had nothing to Do with tainted Pet Foods,” New York Times, april 6, 2007, http://www.nytimes.com/2007/04/06/business/worldbusiness/06petfood.html.

�7 David Barboza, “China Says it had nothing to Do with tainted Pet Foods,” New York Times, april 6, 2007, http://www.nytimes.com/2007/04/06/business/worldbusiness/06petfood.html.

�8 “China Polishing Food Safety image,” associated Press, July 20, 2007, http://www.cbsnews.com/stories/2007/07/20/health/main3079533.shtml.

�9 “Woman says Wal-Mart’s tainted Pet treats Killer her Dog,” no byline, www.newsinferno.com, august 29, 2007, �2:20 p.m.

“The contaminated

wheat gluten might

not have been an

accident – the pet

poison pumps

up profits for the

Chinese firm.”

Page 8


Food

a few months later, it was humans who were put at risk by food from China. the

FDa issued an import alert on catfish, shrimp, dace, and eel from China on June 28,

2007. according to a Washington Post report, of the nearly $2 billion in food im-

ports from China, less than �% of the shipments are actually inspected by the FDa.

� ironically, “the rejection rate for foods imported from China, on a dollar-for-dol-

lar basis, is more than 25 times that for Canada”2 our northern trading partner with

whom we have as much as five time more in food imports.

While there were no reports of illnesses, the FDa said its import alert would stop

the listed goods at the border. “We’re taking this strong step because of current and

continuing evidence that certain Chinese aquaculture products imported into the

United States contain illegal substances that are not permitted in seafood sold in

the United States,” said Dr. David acheson, FDa’s assistant commissioner for food

protection.20

it seems that the Chinese were exporting an internal health hazard that many

americans had never heard about.

the domestic Chinese food market was rocked by scandals in the past year, as the

Chinese press has amply documented. in 2006, China suffered a host of food safety

problems, including steroid-tainted pork, parasite-infested snails, turbots (a fish)

that contained excessive amounts of carcinogens, and ducks that were fed cancer-

causing dye to make their egg yolks red, according to the People’s Daily.2�

indeed, it appears that Chinese food products are as dangerous to their domestic

consumers as their foreign partners. “industrial raw materials, such as dyes, mineral

oils, paraffin wax, formaldehyde and the carcinogenic malachite green, have been

used in the production of flour, candy, pickles, biscuits, black fungus, melon seeds,

bean curd and seafood,” according to a report in the state-run China Daily newspa-

per.22

Li Changjiang, who heads China’s general administration for Quality Supervision,

inspection and Quarantine, put the blame on small, local manufacturers: “they

exist in large numbers, they are scattered around in a large geographical area, they

have poor production conditions, and the quality of their products is not stable,

even substandard. We will resolutely close down these small food manufactures…

who are engaged in producing substandard or fake or shoddy food and they will not

be allowed to restart their business.”

indeed, China seems to be suffering a vast, sustained food safety crisis. according to

health Ministry spokesman Mao Qunan, China’s officials say that they uncovered

��,226 cases of illegal food production in 2006, which led to the closure of 29,57�

20 Press Release, “FDa Detains imports of Farm-Raised Chinese Seafood,” June 28, 2007, http://www.fda.gov/bbs/topics/neWS/2007/neW0�660.html.

2� People’s Daily (tK)22 Zhu Zhe, “industrial raw materials found in food,” China Daily, June 27, 2007, http://www.

chinadaily.com.cn/china/2007-06/27/content_903365.htm.

“It was the

beginning

of a pattern

which would

emerge: deadly

products and lax

enforcement.”

Page 9


businesses and the destruction of �,700 tons of food.23 given that China is a one-

party communist state, these numbers may be an understatement.

those problems have been festering for years. in June 2004, China’s People’s Daily

reported that adulterated baby formula had killed some 60 infants in China.24

On May �0, 2007, the Chinese government vowed to crack down on the food in-

dustry, saying it will promote organic agriculture, beef up inspections of farms and

butchers, and blacklist companies that sold tainted products.25

But publicly the Chinese put more emphasis on denial than enforcement. Li Yuan-

ping, director general of the government’s import and export Food Safety Bureau,

said at a May 3� news conference: “ninety-nine percent is a relatively high percent-

age of suitable goods. Facts speak more loudly than anything…. From what i have

told you, you can see China has a very sound system that can guarantee the safety of

food exported abroad.”26

Li Yuanping, who blamed concerns over Chinese-produced food exports on bad

information and “sensationalism,” added: “no food-inspection system is foolproof.

it’s like an airplane. Flying is said to be the safest way to travel, but sometimes you

have plane crashes.”27

there are two problems with Li Yuanping’s analogy. We investigate air crashes and

try to prevent their repetition; we do not accept them as inevitable, even though,

statistically they are. Second, the food contaminants do not seem accidental – these

dangerous additives enabled the suppliers to sell inferior food at the price com-

manded by superior food.

in domestic settings, Li Yuanping prefers to philosophize on the nature of risk.

“there is no such thing as zero risk,” Li told the state-run new China news agency.

“in terms of food safety, it’s impossible for any country to make �00 percent of their

foodstuff safe.”28 While true at the philosophical level, these kind of statements by

regulators transmit a dangerous signal of lax enforcement to subordinates.

in Washington, the Chinese embassy strongly defended the quality of Chinese food

exports. “[M]ore than 99% of Chinese food exports meet applicable standards

23 audra ang, “Product Safety Fear inflated, China Says,” associated Press, Washington Post, august ��, 2007, p. D02, http://www.washingtonpost.com/wp-dyn/content/article/2007/08/�0/aR200708�002098.html.

24 People’s Daily, June 25, 2004. See Jim Yardley, “infants in Chinese City Starve on Protein-Short Formula,” New York Times, May 5, 2004, p. a3.

25 Jane Zhang and ellen Byron, “FDa Blocks imports of Chinese toothpaste,” Wall Street Journal, May 24, 2007, p. a8, http://online.wsj.com/article/SB��79959885984�2652.html.

26 edward Cody, “China Says Food export inspections are effective,” Washington Post, June �, 2007, p. D0�, http://www.washingtonpost.com/wp-dyn/content/article/2007/05/3�/aR2007053�0090�.html.

27 edward Cody, “China Says Food export inspections are effective,” Washington Post, June �, 2007, p. D0�, http://www.washingtonpost.com/wp-dyn/content/article/2007/05/3�/aR2007053�0090�.html.

28 ariana eunjung Cha and Renae Merle, “in Role Reversal, China Blocks Some U.S. Meat,” Washington Post, July �5, 2007, p. a0�, http://www.washingtonpost.com/wp-dyn/content/ar-ticle/2007/07/�4/aR200707�400264.html.

Page �0


which is in parallel with the rate of U.S. food exports to China, even a little higher.”29

“Certain isolated cases should not be blown out of proportion to mislead the public

into thinking that all food from China is unsafe,” the statement said. “to exaggerate

and complicate the issue is not conducive to healthy growth of bilateral trade, or to

the overall bilateral relations.”30

Meanwhile, in China, the same government that made denials took a harder line

internally. the Chinese government announced that it had closed �80 food manu-

facturers found to have used industrial chemicals and additives in food products on

June 27, 2007. in addition, it had revoked the licenses of another 37 food plants.

Most of the manufacturers that were shut down were small, unlicensed food-pro-

cessing plants employing fewer than ten people, according to Chinese government

reports.

“these are not isolated cases,” han Yi, director of the administration’s quality con-

trol and inspection department, told the Chinese press.3�

On July 20, “China said it had shut down several firms at the heart of food and drug

safety scares. the country’s quality supervision agency pulled the business license

of taixing glycerin Factory, which has been accused of exporting diethylene gly-

col—a thickening agent used in antifreeze—and fraudulently passing it off as 99.5%

pure glycerin. the use of diethylene glycol medicines bound for Panama killed 5�

people in the isthmus nation.32

But the same health Ministry spokesman is quick to blast the Western press, rather

than domestic regulators. at an august �0 news conference, Mao Qunan said:

“Foreign media are using irrelevant cases or just a few cases to make the safety issue

much bigger than it is and have linked this to the success of hosting the Olympics.”33

to be sure, China is not the only source of unsafe food. From July 2006 to June

2007, the FDa blocked �,90� shipments (food, drugs, cosmetics, medical devices,

animal drugs, electronic devices) from China, followed by india (�,782), Mexico

(�,560), and the Dominican Republic (862). “the reality is, this is not a single-

country issue at all,” said Carl R. nielsen, a former FDa official.34 But China appears

to be the biggest offender.

29 Press Release, “Chinese Food exports are Safe,” June 26, 2007, http://www.china-embassy.org/eng/zmgx/t334047.htm.

30 Press Release, “Chinese Food exports are Safe,” June 26, 2007, http://www.china-embassy.org/eng/zmgx/t334047.htm.

3� Zhu Zhe, “industrial raw materials found in food,” China Daily, June 27, 2007, http://www.chinadaily.com.cn/china/2007-06/27/content_903365.htm.

32 “Key Dates in China export Scares,” Wall Street Journal, august �9, 2007, http://online.wsj.com/article/SB��8606827�56686�95.html.

33 audra ang, “Product Safety Fear inflated, China Says,” associated Press, Washington Post, august ��, 2007, p. D02, http://www.washingtonpost.com/wp-dyn/content/article/2007/08/�0/aR200708�002098.html.

34 andrew Martin and griff Palmer, “China not Sole Source of Dubious Food,” New York Times, July �2, 2007, p. C�, http://www.nytimes.com/2007/07/�2/business/�2imports.html.

Page ��


a report by the U.S. Department of agriculture released in november of 2006 sum-

marized the problems China faces regarding food safety:

Many of China’s food safety problems can be traced back to the farm level. Farmers

rely on heavy use of chemicals to coax production out of intensively cultivated soils

and deal with pest pressures, a practice that contributes to food safety problems.

China has one of the world’s highest rates of chemical fertilizer use per hectare, and

Chinese farmers use many highly toxic pesticides, including some that are banned

in the United States. Farm chemicals are sometimes mislabeled. the Chinese

government is tackling this problem by encouraging farmers to buy agricultural

chemicals only from approved outlets. Some farmers have little understanding of

correct chemical use; for example, they may fail to wait the prescribed number of

days between the last application of a pesticide and harvest, resulting in excessive

residues in the harvested product. antibiotics are widely used to control disease

in livestock, poultry, and aquaculture products. industrialization and lax envi-

ronmental controls have also led to concern about the potential for heavy metal

contamination of food products. Untreated human and animal waste in fields and

water raises the risk of microbial contamination.35

Worse still, Chinese farmers all too often irrigate by using water from rivers con-

taminated by industrial waste and other pollutants.

With regard to food safety issues, China suffers from a bureaucratic knot of overlap-

ping authorities and jurisdictions. Many Chinese industries employ standards that

are unclear, duplicative, outdated or inconsistent with international standards. two

researchers, Fengxia Dong and helen h. Jensen, identify the problem: “Moreover,

the establishment of agricultural standards involves �0 government ministries,

with little coordination from the central government down to the county level. as

a result, each level of government has developed its own standards. this dispersed

structure neither facilitates coordination nor supports effective implementation

of food safety regulations. in addition, the lack of technical, institutional, and

managerial capacity to control and ensure compliance makes the regulations and

standards less effective.”36

Further, enforcement of standards handed down from the national level are often

ignored by local officials. Drew thompson, Director of China Studies and Starr Se-

nior Fellow at the nixon Center, told the U.S.-China economic and Security Review

Commission that, “Manufacturers often see government oversight as capricious and

corrupt, spending more energy trying to outwit and avoid the system rather than

“buying in” and focusing on compliance and good manufacturing practices.”37

35 Linda Calvin, Fred gale, Dinghuan hu, and Bryan Lohmar, “Food Safety improvements Underway in China,” Amber Waves, Vol. 4, no. 5, U.S. Department of agriculture, economic Research Service, november 2006, p. 20, http://www.ers.usda.gov/amberWaves/november06/PDF/FoodSafety.pdf.

36 Fengxia Dong and helen h. Jensen, “Challenges for China’s agricultural exports: Compliance with Sanitary and Phytosanitary Measures,” Choices, �st Quarter 2007, pp. 20-2�, http://www.choicesmagazine.org/2007-�/foodchains/2007-�-04.pdf.

37 thompson, Drew, “Food Safety, Public health and information access in the PRC”, US-China economic and Security Review Commission, July 3�, 2007

“Indeed, China

seems to be

suffering a vast,

sustained food

safety crisis. ”

Page �2


the Chinese government has introduced numerous laws and regulations to make it

seem as though oversight is being maintained, and yet the corruption makes it im-

possible for monitoring or evaluation of the effectiveness of these measures. there’s

simply no way to ensure the compliance of lower level manufacturers.

Despite a half-decade of documented problems with the Chinese-made food

products, its exports to the U.S. continue to set new records. “China has gone

from literally nowhere to no. 3 in food imports behind Canada and Mexico,” notes

Michael Doyle, director of the Center for Food Safety at the University of georgia.

“and if we’re going to continue to import more and more of our food, we’re going

to have to have a better inspection program.”38

in case after case the evidence shows that Chinese food imports pose a clear and

present danger, and yet while policymakers fail to take action the risks of illness and

death only increase.

Tires

in the wake of the disastrous Firestone/Ford explorer debacle in which more than

�20 americans lost their lives3, it is unfathomable that we are unprepared to deal

with the threat posed by Chinese made tires.

not one of the four passengers boarding a Chevrolet express 2500 cargo van on

august �2, 2006 was concerned about the vehicle’s Compass telluride Steel-belted

radial tires. the driver and his three passengers had to get to a construction job site.

Driving with the flow of traffic on Pennsylvania Route 476, the van began to vibrate

and growl. the rubber-encased steel threads on the tire tread suddenly ripped

apart. the driver spun out of control and the van rolled over.39

Rafael B. Melo and Claudeir Jose Figueiredo were thrown to their deaths. a third

passenger, Carlos Souza, was also ejected from the tumbling vehicle. he survived

but will never be the same again. Souza suffered a permanent brain injury. the

driver, whose name has not been made public, sustained a battery of brutal injuries.

the Compass telluride tire was imported by the Union, new Jersey-based Foreign

tire Sales (known also as FtS). the defective tire itself was made by the hangzhou

Rubber Company (hZ) in China.

FtS executives, who helped design the tire with their Chinese supplier in 2000, say

that they repeatedly stressed the importance of 0.6 mm “gum strip” to hold the

treads of the tire together. a tiny strip that could save lives…

When warranty claims climbed sharply in 2005, FtS executives ordered an exami-

nation of the Chinese-made tires. Many were missing that vital 0.6 mm “gum strip.”

FtS conducted a series of tests which, though inconclusive, “seemed to indicate that

38 David Barboza, “a Slippery, Writhing trade Dispute,” New York Times, July 3, 2007, http://www.nytimes.com/2007/07/03/business/worldbusiness/03fish.html.

39 “Chinese tires blamed for fatal van accident,” by Joe Benton, Consumeraffairs.com, posted June 25, 2007.

Page �3


there were no gum strips or insufficient gum strips in the inspected tires,” FtS wrote

in a June �� report to the national highway traffic Safety administration. hZ ini-

tially denied this charge and assured FtS that there were no problems with the tire.40

inspections of hZ tires made in 2004 and 2005 revealed belt edge separations and

a lack of adequate gum strips in the tires. according to FtS’s attorney, Lawrence

n. Lavigne, the tires, which were tested in texas and inspected by an independent

lab in Ohio, were supposed to last 40,000 miles but were deteriorating after 25,000

miles during the tests.4� the american testers discovered that hZ was making a

dangerous tire.

FtS executives were incredulous. One recalled a May 2002 meeting with the Chi-

nese manufacturer in which the importance of the “gum strip” was emphasized

– and the example of the massive Firestone tire recall was cited to underline the

point.

according to the FtS report, hZ had “unilaterally decided to omit the gum strips”

without notifying FtS. Shortly thereafter, FtS President Richard Kuskin and gary

eiber, a company engineer, and Lavigne, flew to hangzhou to meet with hZ execu-

tives.

FtS found hZ to be “generally unresponsive.”42

On May 30, 2007, Richard Kuskin sent an email to hZ saying: “Problems do not

go away because they are ignored. We notified you of two quite severe problems. i

have heard nothing or very little on these subjects.”43

the national highway traffic Safety administration ordered FtS –which sold tires

under the brand names Compass, Westlake, telluride, and YKS -- to recall 450,000

Chinese-made light truck tires on June 27, 2007.

FtS faces a wrongful death lawsuit by the families of two men who were killed in a

van accident in Pennsylvania in august 2006, as well as other lawsuits.44

the families, represented by Jeffrey B. Killino, a Philadelphia personal-injury at-

torney, alleged that the accident was caused by tread separation in a hangzhou

Zhongee tire. “i’m going to build a case that they [the tire importer, FtS] should be

criminally indicted,” said Killino. “it was my case that prompted the recall.”45

On May 3�, 2007, FtS sued the manufacturer of the tires, hangzhou Zhongee Rub-

ber, in the United States District Court in newark, nJ. FtS hoped to recover the

40 andrew Martin, “Chinese tires are Ordered Recalled,” New York Times, June 26, 2007, p. C�.4� timothy aeppel, “accident Raises Safety Concerns on Chinese tires,” Wall Street Journal, June

26, 2007, p. a�.42 Foreign tire Sales, inc., “non-Compliance information Report,” June ��, 2007, http://

nhthqnwws��.odi.nhtsa.dot.gov/acms/docservlet/artemis/Public/Recalls/2007/t/RCDnn-07t003-498�.pdf. See also: andrew Martin, “Chinese tires are Ordered Recalled,” New York Times, June 26, 2007, p. C�.

43 David Welch, “an importer’s Worst nightmare,” Business Week, Vol. 4043, July 23, 2007.44 audra ang, “Product Safety Fear inflated, China Says,” associated Press, Washington Post, au-

gust ��, 2007, p. D02.45 David Welch, “an importer’s Worst nightmare,” Business Week, Vol. 4043, July 23, 2007.

A tiny strip that

could save lives…

Page �4


costs of the tire recall from its Chinese supplier.

Kuskin has estimated that the recall will cost FtS at least $90 million. nhtSa, in a

June 26 letter, said the company’s inability to afford the recall was “not acceptable.”46

“We’re just outraged it’s taken this long to get to this point,” said Ron Medford,

senior associate administrator for vehicle safety at nhtSa, “because they knew that

they had this problem for some time.”47

Sen. Charles e. Schumer (D-nY) has called for an investigation into the importa-

tion of the defective tires.

in 2006, China was the largest foreign supplier to the United States of tires at $�.9

billion (22% of total tire sales).48

49

there is no mystery why hZ, the Chinese tire maker omitted the life-saving gum

strips – it saved them money and they hoped no one would know. the mystery is

why U.S. regulators can’t seem to do anything more effective than order a tire recall.

and even that action was slow in coming.50

Toothpaste

Rather than discover this threat as a result of the capable efforts of american inspec-

tors, americans would largely dodge a bullet posed by tainted toothpaste because of

the vigilance of several of our trading partners. alarmed by reports from australia,

the Dominican Republic, and Panama that Chinese-made toothpaste contained a

toxic additive, the FDa announced it would block Chinese toothpaste imports on

46 Daniel C. Smith, letter to Richard Kuskin, June 26, 2007, http://nhthqnwws��.odi.nhtsa.dot.gov/acms/docservlet/artemis/Public/Recalls/2007/t/RCnOC-07t003-7��9.pdf. See also: David Welch, “an importer’s Worst nightmare,” Business Week, Vol. 4043, July 23, 2007.

47 timothy aeppel, “accident Raises Safety Concerns on Chinese tires,” Wall Street Journal, June 26, 2007, p. a�.

48 Wayne M. Morrison, “China-U.S. trade issues,” Congressional Research Service, July ��, 2007, p. 9.

49 timothy aeppel, “accident Raises Safety Concerns on Chinese tires,” Wall Street Journal, June 26, 2007, p. a�.

50 Wayne M. Morrison, “China-U.S. trade issues,” Congressional Research Service, July ��, 2007, p. �7, n. 25

Page �5


May 24, 2007.5� the toxin was diethylene glycol.

Use of diethylene glycol as an ingredient in toothpaste is widespread in China,

where manufacturers have turned to it in place of glycerine, a safe but more costly

chemical used to keep toothpaste smooth and moist.

america once had its problems with the chemical. in �937, over �00 people died

in the U.S. as a result of taking an antibiotic containing the toxic chemical.52 the

chemical has been banned in the United States since the �930s.

On June �, 2007, the FDa issued an import alert for Chinese-made toothpaste53 and

told consumers to throw away any toothpaste labeled “Made in China.”54

in a mood of denial and defiance, China called the FDa warning “unscientific, ir-

responsible and contradictory.”55

in addition, China falsely claimed that an obscure FDa regulation allowed the

use of the poisonous ingredient, diethylene glycol, in toothpaste. this claim was

printed in hundreds of Chinese news stories, according to the Wall Street Journal.

But the Chinese officials were mistaken, as FDa officials were quick to point out.

the FDa rule allows the use of a different and widely used ingredient— polyeth-

ylene glycol—not the toxic additive. “they got the chemical wrong,” said an FDa

official.56

Diethylene glycol, if consumed in large quantities, can cause serious damage to the

central nervous system, the kidneys, and the liver.

When Chinese counterfeiters used it in cough syrup, hundreds of people died in

Panama last year.57

in a series of investigative reports earlier this year, the New York Times exposed how

shady Chinese firms evaded regulators on three continents:

the counterfeit glycerin passed through three trading companies on three conti-

nents, yet not one of them tested the syrup to confirm what was on the label. along

the way, a certificate falsely attesting to the purity of the shipment was repeatedly

5� See, e.g., Joseph S. enoch, “FDa Bans toothpaste from China,” ConsumerAffairs.com, May 24, 2007, http://www.consumeraffairs.com/news04/2007/05/toothpaste02.html.

52 gordon Fairclough, “China-Product Scare hits home, too,” Wall Street Journal, July 20, 2007, p. B�, http://online.wsj.com/article/SB��848737�42�67�957.html.

53 FDa import alert #66-74, “Detention without Physical examination of Dentifrice Products Containing Diethylene glycol (Deg),” http://www.fda.gov/ora/fiars/ora_import_ia6674.html.

54 Food and Drug administration, Press Release, “FDa advises Consumers to avoid toothpaste from China Containing harmful Chemical,” June �, 2007, http://www.fda.gov/bbs/topics/neWS/2007/neW0�646.html.

55 “Beijing Condemns U.S. Warning against Chinese-Made toothpaste,” Wall Street Journal, June 4, 2007, http://online.wsj.com/article/SB��807300435652�826.html.

56 neil King Jr. and Rebecca Blumenstein, “China Launches Public Response to Safety Outcry,” Wall Street Journal, June 30, 2007, p. a�, http://online.wsj.com/article/SB��83�65�7029653742.html.

57 Of the 365 deaths that were reported, �00 had been confirmed as of early May 2007. Walt Bogdanich and Jake hooker, “From China to Panama, a trail of Poisoned Medicine,” New York Times, May 6, 2007, http://www.nytimes.com/2007/05/06/world/06poison.html.

Page �6


altered, eliminating the name of the manufacturer and previous owner. as a result,

traders bought the syrup without knowing where it came from, or who made it.

With this information, the traders might have discovered—as the times did—that

the manufacturer was not certified to make pharmaceutical ingredients.58

a new pattern emerges. Unscrupulous Chinese firms not only counterfeit goods,

but bills of lading and other shipping documents. Worse, documents were falsified

to make impure and even dangerous products appear pure and safe.

On June �0, China’s State Food and Drug administration announced that it had

shut down �4 outfits trying to export toxic toothpaste.

On July ��, China banned diethylene glycol from toothpaste.”59 the prohibition ap-

plies to imports and exports. as this case shows, it is not just the toxic additive that

is dangerous, but the falsified paper that allows it to masquerade as safe and make

its way onto store shelves.

however, in a sadly common bit of doublespeak, the Chinese government said that

consumers need not worry about negative effects from the poisonous chemical.60

Chinese toothpaste-makers largely take the same line. aoqili Co., a guangzhou-

based toothpaste company which makes about 30,000 tons of toothpaste per year,

mostly for the domestic market, said it would cease use of diethylene glycol but

would not recall toothpaste already on store shelves. “this problem doesn’t exist,”

said the company’s president, Zong Changbao, told The Wall Street Journal. “it’s just

a matter of U.S. standards, not a safety problem.”

“the FDa standard is used as a reference in many countries,” he added. “if China

were as powerful as the U.S., we could set the world standard.”6�

again, we see the same pattern: a frustration with american safety standards, rather

than a deep concern about product quality and consumer safety.

if american safety standards were simply protectionist annoyances, as Zong Chang-

bao implies, his government could challenge them under the procedures of the

World trade Organization. instead, Beijing banned the chemical.

this time american consumers got lucky. FDa and other regulators moved quickly

based on the harm to those in other countries and american lives were saved. Until

the safety inspections on imports are reformulated and reformed, unfortunately

luck alone is all that consumers will have to protect them from tainted goods.

58 Walt Bogdanich and Jake hooker, “From China to Panama, a trail of Poisoned Medicine,” New York Times, May 6, 2007, http://www.nytimes.com/2007/05/06/world/06poison.html.

59 audra ang, “China Bans toothpaste additive,” associated Press, Washington Post, July �2, 2007, p. D08, http://www.washingtonpost.com/wp-dyn/content/article/2007/07/��/aR200707��02�78.html.

60 gordon Fairclough, “China-Product Scare hits home, too,” Wall Street Journal, July 20, 2007, p. B�, http://online.wsj.com/article/SB��848737�42�67�957.html.

6� gordon Fairclough, “China-Product Scare hits home, too,” Wall Street Journal, July 20, 2007, p. B�, http://online.wsj.com/article/SB��848737�42�67�957.html.

Page �7


Toys

Of all the threats that america faces from Chinese imports, one that directly affects

children should cause the most alarm. tragically, today our children are exposed to

a dangerous killer disguised for all intents and purposes as toys.

these “toxic” toys prey on the households of the american rich and poor alike as

China has demonstrated a remarkable grip on the U.S. toy market. China was the

largest supplier to the United States of dolls, toys, and games, in 2006, accounting

for 86% of total U.S. imports of toy products.62 those sales totaled $�4.6 billion.

encompassing �0,000 factories, the toy industry is one of China’s most successful

exporters.

Unfortunately, China’s toy market dominance has not translated into stronger safety

standards.

“thomas and Friends” is a collection of colorful wooden trains meant for the Ses-

ame Street set. Parents were shocked on June �3, 2007, when RC2, the Oak Brook,

illinois manufacturer of the toy trains ordered a recall of some �.5 million toys.63

the trains contained lead paint, which has been banned in the U.S. since �978.

Lead has long been linked to retardation and reductions in iQ among children who

ingest it in sufficient amounts.

“We’ve always required our suppliers to follow our safety specifications,” said Curt

Stoelting, CeO of RC2 told the New York Times. “in this incident, those require-

ments were not met.”64

the company used a supplier in Dongguan, China – and paid heavily when its Chi-

nese partners violated safety standards. RC2 estimated a $4 million net charge in the

second quarter and a $3-4 million net charge in the second half of 2007 due to the

lost profits from the recalled toy trains.65

the Consumer Product Safety Commission announced a voluntary recall of certain

Chinese-made toy trains containing lead paint in June 2007.

it turns out that Chinese manufacturers were also illicitly using lead in other

products meant for children. Chinese-made children’s necklaces and earrings were

recently recalled, due to dangerously high levels of lead.66

Still the lead crisis continued. Future industries inc. recalled some 20,000 children’s

62 Wayne M. Morrison, “China-U.S. trade issues,” Congressional Research Service, July ��, 2007, p. 9.

63 Press Release, “RC2 Corp. Recalls Various thomas & Friends Wooden Railway toys Due to Lead Poisoning hazard,” June �3, 2007, http://www.cpsc.gov/cpscpub/prerel/prhtml07/072�2.html.

64 Louise Story, “thomas & Friends toy Maker Discusses Lead Paint Problem,” New York Times, July 26, 2007, p. C�0.

65 Press Release, “RC2 Updates estimates of Recall-Related Costs,” July 26, 2007, http://www.rc-2corp.com/investor/financial/2007/Release_recall_update_final.pdf.

66 gordon Fairclough, “new Recall of Chinese toys adds to Safety Concerns,” Wall Street Journal, July 6, 2007, p. a2, http://online.wsj.com/article/SB��8368769��7358824.html.

“China’s toy

market dominance

has not translated

into stronger

safety standards.”

Page �8


metal jewelry sets because of dangerously high levels of lead, on July 5.67

On august 2, U.S. Consumer Product Safety Commission said Mattel inc.’s Fisher-

Price unit would recall 967,000 toys that could contain hazardous levels of lead

paint, including items featuring popular Sesame Street characters such as elmo and

Big Bird.

Mattel, the world’s largest toy manufacturer, said the recall would reduce the

company’s second-quarter results by about $30 million or 47%.68

On august 7, Mattel inc. identified Lee Der industrial Co., located in guangdong

province, as the Chinese factory involved in the company’s recall of Chinese-made

toys believed to contain lead paint.69 Some industry observers speculated that the

Chinese company may have been duped by one of its own paint suppliers, which

may have used a cheaper lead paint rather than the higher-priced non-lead-based

paint the company ordered.70

in response, China’s general administration for Quality Supervision, inspection

and Quarantine temporarily suspended the export licenses of two toy factories:

hansheng Wood Products (linked to the RC2 recall of �.5 million toys) and Lee Der

industrial Co. Ltd. (implicated in the august 2 Mattel recall of 967,000 Fisher-Price

toys).7�

Mattel was served with a class-action lawsuit for allegedly violating consumer pro-

tection laws on august �0.

Cheung Shu-hung, co-owner of Lee Der industrial Co., the toy factory at the center

of a major recall by Mattel inc., killed himself. the Mattel recall had cost Cheung

$30 million.72

Mattel issued a global recall of �8.6 million Chinese-made toys on august �4. Of

those, �8.2 million were recalled because they contained magnets that could be

67 Press Release, “Children’s Metal Jewelry Recalled by Future industries Due to Lead Poisoning hazard,” July 5, 2007, http://www.cpsc.gov/cpscpub/prerel/prhtml07/07232.html.

68 Press Release, “Fisher-Price Recalls Licensed Character toys Due to Lead Poisoning hazard,” august 2, 2007, http://www.cpsc.gov/cpscpub/prerel/prhtml07/07257.html. See nicholas Casey, “Mattel toys to Be Pulled amid Lead Fears,” Wall Street Journal, august 2, 2007, p. a3, http://online.wsj.com/article/SB��860�25934�385476.html; Louise Story, “Lead Paint Prompts Mattel to Recall 967,000 toys,” New York Times, august 2, 2007, p. C�; Mark Magnier and abi-gail goldman, “More Mattel Recalls Likely,” Los Angeles Times, august �4, 2007.

69 nicholas Casey and nicholas Zamiska, “Chinese Factory is identified in tainted toy Recall,” Wall Street Journal, august 8, 2007, p. a4, http://online.wsj.com/article/SB��8652557882990930.html.

70 nicholas Zamiska and nicholas Casey, “Supplier of toys to Mattel is investigated in China,” Wall Street Journal, august 9, 2007, p. a8, http://online.wsj.com/article/SB��86600394�869�993.html.

7� David Barboza, “China Bars two Companies from exporting toys,” New York Times, august �0, 2007, p. C2.

72 See nicholas Casey and nicholas Zamiska, “Owner of Chinese toy Factory Kills himself,” Wall Street Journal, august �4, 2007, p. a2, http://online.wsj.com/article/SB��8699838250495806.html; edward Cody, “China toy Boss Kills Self after Recall,” Washington Post, august �3, 2007; David Barboza, “Owner of Chinese toy Factory Commits Suicide,” New York Times, august �4, 2007, http://www.nytimes.com/2007/08/�4/business/worldbusiness/�4toy.html; ivan Zhai and Minnie Chan, “toy boss hit by lead-paint recall kills himself,” South China Morning Post, august �4, 2007, p. �.

Page �9


swallowed by children. 436,000 of the remaining recalled products were toy cars. 73

they, too, were covered with lead paint.

Li Zhuoming, executive vice chairman of the guangdong Provincial toy industry

association, said that both Chinese manufacturers and Mattel are at fault. Blame

“cannot be pushed to either side,” he said, adding that Mattel had failed to “do its

job well in quality inspections.”

the state-run Guangzhou Daily newspaper quoted Li as saying, “the producers are

responsible because they do not have tight controls over purchasing and produc-

tion. But the buyer Mattel cannot evade responsibility.”74

in an astonishing turn of events, Mattel’s executive vice president for worldwide

operations, thomas Debrowski apologized – to the Chinese.

“Mattel takes full responsibility for these recalls and apologizes personally to you,

the Chinese people and all of our customers who received the toys,” he said, on a

visit to Beijing. “But it’s important for everyone to understand that the vast major-

ity of those products that we recalled were the result of a design flaw in Mattel’s

design, not through the manufacturing flaw in Chinese manufacturers,” he said.75

he then announced plans to invest $30 million on a Barbie Doll plant in Shanghai.

the Chinese toy makers who helped expose america’s children to lead did not make

a similar apology. they did not even promise not to do it again.

But it did happen again. Over one million Boy Scout badges were recalled on

October 5, 2007 for containing dangerous levels of lead that were made in Chinese

factories. this marked an additional strike against products from our trading

partner.76

the risks are real a. Yet even though the threat is imposed largely on the most vul-

nerable in american society, our nation’s failure to act leaves thousands of children

at risk.

Medicine

as american policy makers work to increase access to health care and pharmaceu-

ticals, little to no attention is paid to the deadly risks associated with Chinese made

pharmaceuticals. Yet it turns out that Chinese-made medicine can be poisonous.

the Xinhua news agency reported that �� people in China had died from a tainted

73 Press Release, “Mattel Recalls ‘Sarge’ Die Cast toy Cars Due to Violation of Lead Safety Standard,” august �4, 2007, http://www.cpsc.gov/cpscpub/prerel/prhtml07/07270.html. See Michael Oneal, Patricia Callahan and evan Osnos, “Mattel Recalls Millions of toys,” Chicago Tribune, august �4, 2007; Louise Story and David Barboza, “Mattel Recalls �9 Million toys Sent from China,” New York Times, august �5, 2007, p. a�.

74 audra ang, “China Claims U.S. Soybeans tainted,” associated Press, august 22, 2007, http://www.washingtonpost.com/wp-dyn/content/article/2007/08/22/aR200708220038�.html.

75 “Mattel apology to China over toy recall,” Rte Business, September 2�, 2007, http://www.rte.ie/business/2007/092�/mattel.html

76 american Foreign Press, “Made-in-China Boy Scout badges recalled for lead levels” Bre-itbart.com, October 5, 2007, 0�:�9pm eSt, available at <http://www.breitbart.com/print.php?id=07�005�7�932.q4cwknlp&show_article=�>

Page 20


injection used to treat gall bladders in June 2006. the drug reportedly contained

diglycol, a deadly chemical.

the chemical was traced to Qiqihar no. 2 Pharmaceutical Co., Ltd., which used

diglycol—which if swallowed can cause pain in throat, and stomach and severe

damage to the kidneys, nervous system and liver.

in response, the Chinese government arrested the vendor, ordered an investigation

into the incident, and promised stricter regulation of the pharmaceutical market. in

addition, Qiqihar no. 2 Pharmaceutical Co. was shut down, and China’s State Food

and Drug administration ordered all its sold products to be traced and destroyed.77

“those directly responsible for the incident and those who fail to fulfill their super-

visory duties will be punished,” Chinese Premier Wen Jiabao in May 2006 promised.

“the pharmaceutical market is in disorder.”78

a case in the guangzhou City intermediate People’s Court, China against Qiqihar

no.2 Pharmaceutical Co. Ltd., brought many more disturbing aspects of Chinese

company practices to light.

Mr. niu Zhongren, the only individual responsible for purchasing raw materials

[for Qiqihar no.2 Pharmaceutical Co. Ltd], was only a junior high school graduate.

he cited being “unbearably busy,” and replaced the mandatory “field inspections”

and “sample testing” with simple “phone calls” in the purchasing process. Mr. niu

believed that drug production quality control was a matter for the Quality Control

Division, so it did not fall within his scope of responsibilities. he also claimed that

he “could not understand the quality control reports from vendors.”79

Mr. guo Xingping, Deputy general Manager of Qiqihar, bought fake safety cer-

tificates for his company. “it is just a disc that contains all the documents. the

company bought it for �00,000 yuan ($�3,�50).”80

Ms. Chen guifen, the Laboratory Director, “wrote false inspection reports following

the instructions of Deputy general Manager Zhu Chuahua, who was in charge of

quality control.”8�

77 “tainted medicine kills ��th victim in China,” Xinhua News Agency, June 23, 2006. See also: “Suspect held as bogus drug kills 4,” Shanghai Daily, May �5, 2006, http://news.xinhuanet.com/english/2006-05/�5/content_454642�.htm.

78 tian Sulei, “3rd Ld Chinese Premier orders thorough probe into fake drug incident,” Xinhua News Agency, May �9, 2006, http://news.xinhuanet.com/english/2006-05/�9/content_4574327.htm. See also: nicholas Zamiska, Jason Leow and Shai Oster, “China Confronts Crisis Over Food Safety,” Wall Street Journal, May 30, 2007, p. a3, http://online.wsj.com/article/SB��80426448903�6974.html; gordon Fairclough, “China-Product Scare hits home, too,” Wall Street Journal, July 20, 2007, p. B�, http://online.wsj.com/article/SB��848737�42�67�957.html; Walt Bogdanich and Jake hooker, “From China to Panama, a trail of Poisoned Medi-cine,” New York Times, May 6, 2007, http://www.nytimes.com/2007/05/06/world/06poison.html.

79 “trial of Pharmaceutical Company exposes Counterfeit Medicine Production,” the epoch times, august 2�, 2007, accessed October �2, 2007, available at < http://en.epochtimes.com/news/7-8-20/58854.html>


8� “trial of Pharmaceutical Company exposes Counterfeit Medicine Production,” the epoch times, august 2�, 2007, accessed October �2, 2007, available at < http://en.epochtimes.com/news/7-8-20/58854.html>

Page 2�


Mr. Zhu said, “it is the company’s unspoken rule that if raw materials are substan-

dard, we need to approve them (by way of an inspection Report). this is the way it

has always been done.”82

thirteen people lost their lives. the claims of those seeking damages in the case top

20 million yuan or $620, �29.83

But the problem persisted. Other shady drug manufacturers kept selling danger-

ous drugs. in august 2006, Xinhua news agency reported that a defective antibiotic

drug killed seven people in China and sickened many others.

a Chinese factory produced fake Viagra with far higher levels of the active ingredi-

ent than would be safe in September of 2007. “Just one of those tablets would have

given you an overdose,” said a Pfizer spokeswoman. “there would be increased

severity in side effects and the effects in men with existing diseases, such as cardio-

vascular conditions, may be unpredictable and potentially serious.”84

even now, Leukemia drugs have become one of the more recent recall victims for

China, containing methotrexate and cytarabin hydrochloride, according to the Xin-

hua news agency.85 Chinese officials have been characteristically cryptic on whether

or not these drugs have already been exported.

Counterfeit pharmaceuticals are a growing problem. the World health Organiza-

tion estimates that counterfeit drugs could account for $75 billion globally by 20�0,

over a 90% increase from 2005.86

in 200�, the Chinese government-controlled newspaper, Shenzhen evening news,

reported that �92,000 people in China died after using fake drugs manufactured in

China.87

the record is replete with examples of Chinese fraud and piracy of american

manufactured goods. in most instances the consequences of these actions is as loss

of market share or profit by american companies, a harm to be sure. When the

piracy involves medicine, the consequences can be deadly.



84 Calvert, Jonathan, howard Foster, Roger Waite, and Simon Parry, “Factory for fake prescrip-tion drugs”, The Sunday Times, September 23, 2007

85 associate Press, “China Recalls tainted Leukemia Drugs” CBS News, September �6, 2007, accessed October �2, 2007 3:47 eSt, < http://www.cbsnews.com/stories/2007/09/�6/health/main326433�. shtml?source=RSSattr=health_326433�>

86 World health Organization, Fact Sheet number 275, Revised november �4, 2006, available at <http://www.who.int/mediacentre/factsheets/fs275/en/>

87 Fackler, Martin, “China’s fake drugs kill thousands,” San Francisco Examiner, associate Press, July 3�, 2002 �4:5�

Page 22


Steel

Following the collapse of a Minneapolis bridge, safety inspectors began to worry

about the integrity of Chinese-made steel. While the stricken span did not contain

Chinese steel, many other structures – from bridges and cranes, to skyscrapers and

pipelines – do. and troubling new reports suggest that China’s steel makers may be

cutting corners.

in the first half of 2007, the United States imported 2.6 million tons of finished steel

from China, the second-largest supplier (behind Canada) of steel to the U.S. this

figure constitutes �8% of all american steel imports.88

Chinese steel poses two threats to public health: the integrity of the metal some-

times fails and some Chinese steel products are coated in lead.

Of those imports in the first half of this year, at least three or four shipments from

at least two Chinese factories were tainted with lead paint.

a series of tests revealed those steel imports had “very high lead content,” according

to Daniel adley, the chief operating officer at Kta tator, an american firm hired to

inspect the steel. “the shipments caused tremendous problems for our customers,”

said adley.89

the lead-coated steel was sent to two american firms to be used for building

condominiums and factories. Some of the contaminated steel may have already

been installed, which could pose a safety hazard to construction workers and the

public. Clean-up costs could top $� million. if the steel is somehow disturbed – say,

by drilling during installation or repairs--the lead in the coating might be emitted,

threatening workers, residents, and others.

Possible repercussions include nausea and other digestive problems, harm to the

central nervous system, and delayed reaction time. in children, exposure to high

doses of lead can lead to mental retardation.90

although the U.S. does not prohibit lead paint in commercial steel, it does ban its

use in products designed for consumer use such as toys. Lead paint, though legal in

certain construction products, is very rarely used due to health concerns.

Michael Damiano, the director of product development for the Society for Protec-

tive Coatings, told aBC news: “it doesn’t surprise us that steel coated outside the

United States, where these issues are not regulated, contains lead.”9�

the results of using the steel of inferior quality could be catastrophic. “a Chinese

power plant exploded recently when high-strength steel tubing blew out, says Roger

88 William Marra, “China Lead Paint Crisis Spreads to Commercial Sector,” ABC News, augst 23, 2007, http://www.abcnews.go.com/Business/story?id=35�0��4



9� William Marra, “China Lead Paint Crisis Spreads to Commercial Sector,” ABC News, augst 23, 2007, http://www.abcnews.go.com/Business/story?id=35�0��4

“In the first half of

2007, the United

States imported

2.6 million tons of

finished steel from

China.”

Page 23


Schagrin, general counsel for the Committee on Pipe and tube imports.”92

Dan Malone, construction manager for garneau Manufacturing, a Canadian-based

energy service company, said the tests on 80 tons of Chinese steel tube products

found “the welds failed horribly.” Malone said there was no question that if the steel

had been turned into a finished product and installed, said Malone, it “would have

killed somebody.”93

“this reflects on the nature of Chinese companies hell-bent on jumping on the

country’s industrial boom bandwagon. ‘Most of China’s 800-plus steelmakers are

small fabricators who have no idea what quality is about, so there is a risk that some

guy with a welding torch buys some hot-rolled cold steel and just welds it together,’

explains Charles Bradford, president of Bradford Research, a metals consulting

firm.”94

in July 2005, China issued new guidelines on steel production, which are said to give

preferential treatment to domestic technologies and domestic steel-manufactur-

ing equipment. all Chinese steel makers are state-owned enterprises, which receive

substantial subsidies.

On June �4, 2006, timothy Stratford, the assistant U.S. trade Representative for

China affairs, said the Chinese guidelines are “troubling, because [they] attempt

to dictate industry outcomes and involve the government in making decisions that

should be left to the marketplace.”95

“Corruption is pervasive,” says arthur Waldron, professor of international rela-

tions at the University of Pennsylvania. “Further, there’s no complete legal code

governing these things, and even if there were, the policy and court systems are not

intended to be objective. they’re intended to serve the party and therefore, these

corrupt officials.”96

China is the largest steel producer, responsible for 3�% of the world’s steel produc-

tion. China’s surplus steel capacity last year could be larger than all of america’s

steel production, the Congressional Research Service estimated. 97

92 im Ostroff, “new threat from China: Shoddy Steel imports,” Kiplinger Business Forecasts, September 7, 2007, http://www.kiplinger.com/businessresource/forecast/archive/new_threat_from_China_Steel_070907.html

93 Jim Ostroff, “new threat from China: Shoddy Steel imports,” Kiplinger Business Forecasts, September 7, 2007, http://www.kiplinger.com/businessresource/forecast/archive/new_threat_from_China_Steel_070907.html

94 Jim Ostroff, “new threat from China: Shoddy Steel imports,” Kiplinger Business Forecasts, September 7, 2007, http://www.kiplinger.com/businessresource/forecast/archive/new_threat_from_China_Steel_070907.html


96 andrew C. Schneider, “China Scrambling to Restore Product integrity,” Kiplinger Business Resrouce Center, august �, 2007, http://www.kiplinger.com/businessresource/forecast/archive/china_scrambles_to_restore_product_integrity_07080�.html


Page 24


III. U.S. RESPONSE

Bush Administration

So far, the response of the policymakers in Washington, including the Bush admin-

istration has been uncoordinated and inadequate. the risks outlined in this report

are real and when combined expose america to dangers far greater than that faced

before September ��.

Unfortunately, most of the Bush administration’s “action” is simply american bu-

reaucrats chatting with their Chinese counterparts.

the US has taken no action as allowed under the World trade Organization or

other multi- or bi-lateral agreements with China, to stem the tide of unsafe imports.

avenues are available to the administration, but it doesn’t take them.

the U.S. Consumer Protection Safety Commission and its counterpart, China’s

general administration of Quality Supervision, inspection and Quarantine signed

a Memorandum of Understanding on april 2�, 2004.98 the following year, on

august 30, 2005, the two parties signed the Plan of action on Cooperation, which

outlines bilateral mechanisms whereby working groups from the two countries can

address safety problems quickly.99 Working groups covering four product catego-

ries (electrical products, toys, cigarette lighters, fireworks) conducted meetings this

past May during the international Consumer Product health Safety Organization

Conference in Beijing.

During the second installment of the Strategic economic Dialogue (SeD-ii), held

May 22-23, 2007, U.S. and Chinese officials briefly discussed food and product

safety issues. american officials stressed the need for three things: better coopera-

tion, better information, and comprehensible and adequate regulation on the part

of China.�00

On July 3�, the U.S. Department of health and human Services sent an envoy to

China to try to reach agreements aimed at improving the country’s food and drug

safety by the end of the year.�0�

health and human Services Secretary Mike Leavitt dispatched his chief of staff,

Rich McKeown, on what he termed “a fact-finding mission to Beijing to pave

the way for us to open discussions on developing two Memoranda of agreement

between our two governments, one on the safety of food and feed, and one on the

safety of drugs and medical devices.” Leavitt said U.S. regulatory agencies were

alarmed by “insufficient infrastructure across the board in China to assure the

98 See http://www.cpsc.gov/BUSinFO/intl/chinamou.pdf.99 See http://www.cpsc.gov/BUSinFO/intl/planaction.pdf.�00 See, e.g., http://www.hhs.gov/news/speech/2007/sp20070529a.html.�0� Jason Leow, “U.S. Pushes China on Safety,” Wall Street Journal, august �, 2007, p. a8.

Page 25


safety, quality and effectiveness of many products exported to the United States.”�02

During the discussions, the two sides signed a framework agreement to begin a

new round of technical exchanges, seminars, and other activities for both countries’

inspectors.�03

During this time, U.S. treasury Secretary henry Paulson also met with Chinese offi-

cials, including President hu and Vice Premier Wu Yi, and said that safety issues will

likely be a major concern leading up to the third round of the Strategic economic

Dialogue in December.

President Bush announced on July �8, 2007 the formation of a task force led by

health and human Services Secretary Mike Leavitt that would look for ways to

resolve ongoing food and safety issues with products shipped to the United States.

the president’s executive order requires the task force to resolve the issues “within

existing resources,”�04 that is to spend no more money on stopping the threat of

deadly foods, poisonous medicines, and toxic toys. the panel reported to the presi-

dent on September �6, 2007.

included in the report were recommendations to change the analysis of imports to

focus on high-risk segments of the import cycle and to concentrate safety precau-

tions at these junctures. the report encourages U.S. importers to be critical of their

suppliers and recommends the government develop technological advances to

assist importers with meeting those standards and work to close loopholes in the

law. “For example, under the Consumer Product Safety act (CPSa) – the enabling

statute of the Consumer Product Safety Commission (CPSC) – it is currently legal

for entities to sell a voluntarily recalled consumer product even after the public an-

nouncement of the recall.”�05

Further, the report stresses that federal, state, local, and foreign governments must

collaborate to swiftly intervene should these protections miss an unsafe import and

actively release information to manufactures, importers, retailers, and consumers on

dangerous products with more emphasis than recall mechanisms have in the past.

“Federal and state agencies use multiple, non-integrated automated systems and

currently cannot adequately share information on import transactions. For ex-

ample, during the Working groups fact-finding mission, border officials noted that

in order to process cargo, they have to use multiple passwords to access multiple

�02 Statement by Mike Leavitt, Secretary of health and human Services, On the United States-China Bilateral Meetings on Food and Drug Safety, July 30, 2007, http://www.hhs.gov/news/press/2007pres/07/pr20070730a.html. See associated Press, “U.S. Officials talk Food Safety in China,” USA Today, July 30, 2007, http://www.usatoday.com/news/washington/2007-07-30-us-china-food_n.htm.

�03 Statement by Mike Leavitt, Secretary of health and human Services, On the United States-China Bilateral Meetings on the Safety of Food and Drugs, august 2, 2007, http://www.hhs.gov/news/press/2007pres/08/pr20070802a.html.

�04 executive Order: establishing an interagency Working group on import Safety, July �8, 2007, http://www.whitehouse.gov/news/releases/2007/07/200707�8-4.html.

�05 “Protecting american Consumers every Step of the Way: a strategic framework for continual improvement in import safety,” a Report to the President, interagency Working group on import Safety, September �0, 2007

Page 26


systems rather than a single password to access a single system.”�06

essentially, the interagency task Force report encouraged the government to “foster

a culture of collaboration” and “promote technological innovation and new science”

to protect the american consumer. �07

the report reeks of maintaining the status quo on dangerous imports. and the

public is left hoping that the panel would recommend action stronger than another

round of meetings in Beijing, as valuable as those confabs are.

Congress

the Congressional leadership hasn’t been much better even as the evidence of the

threat mounts. On July 3�, 2007, the U.S. - China economic Security Review Com-

mission held a Congressional hearing regarding access to information on China

and the massive effect it has on U.S. ability to verify the safety of Chinese imports.

Senator tom harkin noted, “if this lack of transparency remains, not only will

it endanger our trade relationship with China, but it will be to the detriment of

consumers around the world.” �08 the dishonesty of Beijing is based upon a desire

to promote legitimacy and stability of PRC’s government. however, the effect of lax

government accountability in China translates to a barrier to safety enforcement in

the United States.

“While the Chinese government plays a dominant role in regulating food as well as

pharmaceutical production, it has had limited success in establishing a culture of

safety in the industry and ensuring that unlicensed and unqualified processors and

their products do not enter the market. government capacity is particularly weak

at local levels, and new regulations and dictates from Beijing are often ignored by

local officials.”�09

Congressional involvement followed, not led, the concerns of the press and the

public. the U.S. house agriculture Committee agreed on July �9, 2007 to require

country-of-origin labels on meats beginning in 2008, while softening penalties and

record-keeping requirements. the committee approved the language in drafting

the 2007 Farm Bill (h.R. 24�9), which the U.S. house of Representatives passed on

July 27.��0

So far this year, members of Congress have introduced the following bills to protect



�08 Statement of Senator tom harkin, U.S.-China economic and Security Review Commission, “access to information in the People’s Republic of China” July 3�, 2007

�09 Drew thompson, Director of China Studies and Starr Senior Fellow, testimony before the US-China economic and Security Review Commission hearing on access to information in the People’s Republic of China, July 3�, 2007

��0 See http://agriculture.house.gov/inside/2007FarmBill.html; http://thomas.loc.gov/cgi-bin/bd-query/z?d��0:h.r.024�9:.

Page 27


consumers from defective Chinese goods:

· “Food and Product Responsibility act of 2007” [S.208�]: introduced by Sen.

Sherrod Brown (D-Oh); requires manufactures to carry insurance, or other

sufficient means, to cover the cost of potential recalls.��

o 9/20/07: Referred to the Committee on agriculture, nutrition, and For-

estry

· “human and Pet Food Safety act of 2007” [h.R. 2�08]: introduced by Rep.

Rosa DeLauro (D-Ct); a bill to amend the Federal Food, Drug, and Cosmetic

act with respect to the safety of food for humans and pets.��2

o 5/2/07: Referred to energy & Commerce Committee

· “agricultural Border Safeguard Protection act” [h.R. 2629]: introduced by

Rep. adam Putnam (R-FL); a bill to restore import and entry agricultural

inspection functions to the Department of agriculture.��3

o 6/7/07: Referred to committees on agriculture and homeland Security

· “assured Food Safety act of 2007” [h.R. 2997]: introduced by Rep. Marcy

Kaptur (D-Oh); a bill to require the Secretary of agriculture and the Com-

missioner of Food and Drugs to establish a program requiring a certificate of

assured safety for imported food items.��4

o 7/��/07: Referred to the committees on Ways and Means, agriculture, and

energy & Commerce

· “import Safety act of 2007” [h.R. 3�00]: introduced by Rep. Steven Kirk

(R-iL); a bill to amend the Federal Food, Drug, and Cosmetic act and the

Consumer Product Safety act to increase the safety of food, toothpaste, and

toys.��5

o 7/�9/07: Referred to the Committee on energy & Commerce

�� govtrack.us S. 208� – ��0th Congress (2007): Food and Product Responsibility act of 2007, govtrack.us (database of federal legislation) http://www.govtrack.us/congress/billtext.xpd?bill=s��0-208� (accessed October ��, 2007). See also: <http://thomas.loc.gov/cgi-bin/que-ry/z?c��0:S.208�:>

��2 govtrack.us. h.R. 2�08—��0th Congress (2007): human and Pet Food Safety act of 2007, govtrack.us (database of federal legislation) <http://www.govtrack.us/congress/bill.xpd?bill=h��0-2�08> (accessed September 3, 2007).

��3 govtrack.us. h.R. 2629—��0th Congress (2007): agricultural Border Safeguard Protection act, govtrack.us (database of federal legislation) <http://www.govtrack.us/congress/bill.xpd?bill=h��0-2629> (accessed September 3, 2007).

��4 govtrack.us. h.R. 2997—��0th Congress (2007): assured Food Safety act of 2007, govtrack.us (database of federal legislation) <http://www.govtrack.us/congress/bill.xpd?bill=h��0-2997> (accessed September 3, 2007).

��5 govtrack.us. h.R. 3�00—��0th Congress (2007): import Safety act of 2007, govtrack.us (database of federal legislation) <http://www.govtrack.us/congress/bill.xpd?bill=h��0-3�00> (accessed September 3, 2007). For Rep. Kirk’s press release, see http://www.house.gov/apps/list/press/il�0_kirk/Kirk_Bipartisan_legislation_needed_to_protect_american_families.html.

Page 28


· “human and Pet Food Safety act of 2007” [S. �274]: introduced by Sen. Rich-

ard Durbin (D-iL); a bill to amend the Federal Food, Drug, and Cosmetic act

with respect to the safety of food for humans and pets.��6

o 5/2/07: Referred to health, education and Labor Committee

· “imported Food Security act of 2007” [S. �776]: introduced by Sen. Richard

Durbin (D-iL); a bill to amend the Federal Food, Drug, and Cosmetic act to

establish a user fee program to ensure food safety, and for other purposes.��7

o 7/�2/07: Referred to the Committee on agriculture, nutrition, and For-

estry

· “agriculture, Rural Development, FDa, and Related agencies appropriations

act of 2008” [h.R. 3�6�]: introduced by Rep. Rosa DeLauro (D-Ct); Sec-

tion 73� reads, “none of the funds made available in this act may be used to

establish or implement a rule allowing poultry products to be imported into

the United States from the People’s Republic of China.”��8

o 8/2/07: Passed in the house (237-�8) Roll number 8�6

o 8/3/07: Received in the Senate, Calendar number 331

however at the end of the day, no new laws strengthening safety standards on im-

ports have reached the President’s desk.

IV. CHINA’S RESPONSE

the Chinese response has been multi-layered and misleading. its embassies insist

the problem is minor or imaginary, while its regulators close down small, politically

unconnected manufacturers. Lately, China has been retaliating against american-

made goods.

this remark is sadly typical of China’s denial policy: “in certain quarters, people are

trying to create a panic about Chinese products,” an unnamed senior Chinese of-

ficial told the Wall Street Journal.��9

��6 govtrack.us. S. �274—��0th Congress (2007): human and Pet Food Safety act of 2007, govtrack.us (database of federal legislation) <http://www.govtrack.us/congress/bill.xpd?bill=s��0-�274> (accessed September 3, 2007). See also: http://thomas.loc.gov/cgi-bin/bdquery/z?d��0:s�274:.

��7 govtrack.us. S. �776—��0th Congress (2007): imported Food Security act of 2007, govtrack.us (database of federal legislation) <http://www.govtrack.us/congress/bill.xpd?bill=s��0-�776> (accessed September 3, 2007).

��8 govtrack.us. h.R. 3�6�--��0th Congress (2007): agriculture, Rural Development, Food and Drug administration, and Related agencies appropriations act, 2008, govtrack.us (database of federal legislation) <http://www.govtrack.us/congress/bill.xpd?bill=h��0-3�6�> (accessed September 3, 2007). For statement of Bush administration’s policy, see http://www.whitehouse.gov/omb/legislative/sap/��0-�/hr3�6�sap-h.pdf.

��9 neil King Jr. and Rebecca Blumenstein, “China Launches Public Response to Safety Outcry,” Wall Street Journal, June 30, 2007, p. a�.

Page 29


the State Food and Drug administration announced the launch of a nationwide

campaign to enhance inspection and drug safety on May 28. in accordance with

the campaign, 90 inspection officials were sent to �5 provinces between May 28 and

June 8.

administration of Quality Supervision, inspection and Quarantine (aQSiQ) an-

nounced that it was drafting the country’s first product-recall system, to be released

by the end of 2007.�20

that same day, May 29, the Beijing no. � intermediate People’s Court sentenced

former State Food and Drug administration (SFDa), chair Zheng Xiaoyu to death

for receiving bribes of cash and gifts. an editorial in the official People’s Daily

newspaper said the execution “showed the will and wish of the people, as well as the

spirit of legal justice…. [and] the firm resolution of our party to punish corrupt of-

ficials.”�2� Readers were left to wonder if Zheng Xiaoyu was the only corrupt official

involved or simply the only one to be singled out for punishment. Without a full

and transparent investigation, it is simply impossible to know if Chinese authorities

found the culprit or a scapegoat.

the China Daily reported that the government had finished making amendments to

all food safety standards and had established an emergency response system among

several ministries to improve food safety in July 2007.�22

administration of Quality Supervision, inspection and Quarantine (aQSiQ) in-

troduced the “China Compulsory Certification” (CCC) program on June �, which

requires China’s toy manufacturers to pass a safety inspection and receive a CCC

label prior to exporting toys abroad or selling them domestically.

the State Council released the ��th Five-Year Plan for Food and Drug Safety on

June 7. it sets benchmarks for product inspection, such as randomly testing 80% of

product types by 20�0.�23

administration of Quality Supervision, inspection and Quarantine (aQSiQ) and

the Standardization administration of China (SaC) held a press conference to an-

nounce that they will write, review, and revise up to 4,000 food quality and safety

standards. the administration vowed that the review period for standards would be

reduced from the current �2 years to 4.5 years by 20�0.

On July 4, administration of Quality Supervision, inspection and Quarantine

(aQSiQ) released a survey on the safety of products in China’s domestic market,

which found that almost 20% of goods failed to meet quality requirements. in the

�20 Xinhua News Agency, May 29, 2007.�2� edward Cody, “China Says Food export inspections are effective,” Washington Post, June

�, 2007, p. D0�, http://www.washingtonpost.com/wp-dyn/content/article/2007/05/3�/aR2007053�0090�.html.

�22 China Daily, July 4, 2007.�23 See: Mure Dickie, “China publishes first food safety five-year plan,” Financial Times, June 7,

2007; Bill Savadove, “grip to tighten on fake and low-quality food,” South China Morning Post, June 7, 2007, p. 4; Peter Ford, “China offers a plan in wake of poisoned-food scandals,” Chris-tian Science Monitor, June 8, 2007, p. 4.

“The Chinese

response has been

multi-layered and

misleading.”

Page 30


first half of 2007, China “reviewed ��4 types of products made for domestic con-

sumption by more than 6,300 companies, and found nearly a fifth of them failed

quality and safety standards,” the Wall Street Journal reported. “the worst problems

occurred in canned and preserved fruit and dried fish, which had excessive levels of

bacteria and additives.”�24

On July 9, a spokesman for the administration of Quality Supervision, inspection

of Quality Supervision, inspection and Quarantine (aQSiQ) said that clearer Chi-

nese standards must be included in import contracts.

Former State Food and Drug administration (SFDa), chair Zheng Xiaoyu was

executed on July �0, 2007.

that same day, administration of Quality Supervision, inspection and Quarantine

(aQSiQ) and SFDa held a joint press conference on product safety. SFDa an-

nounced that it would rotate its inspection officials more often as a way to prevent

corruption and that it would increase inspections.”

“Our work in food and drug supervision is only just beginning. the foundation

of the work is still weak, and the trend is not promising,” admitted State Food and

Drug administration spokeswoman Yan Jianyang.�25

Still the policy of denial continues. the Chinese embassy in Washington recently

issued a statement saying: “Certain isolated cases shouldn’t be blown out of propor-

tion to mislead the public into thinking that all food from China is unsafe” on July

�9.�26

On august 8, China said it would heighten its scrutiny of food safety in rural areas

of the country. Yang Jiangying, spokeswoman of the State Food and Drug adminis-

tration (SFDa), said the goal is for town and county governments to establish food

accident response systems by the end of 2007.�27

then, in an about face, China began rejecting certain U.S. goods that it says fail

China’s own safety standards. it looked like retaliation.

China’s efforts seemed to be an attempt to portray american products as unsafe

– leading the unsuspecting to the world-weary conclusion that all food exports are

equally unsafe.

Of course, american exports face extensive tests and inspections before they leave

our shores. it is highly unlikely that any of those U.S. exports are actually unsafe;

they are simply victims of retaliation.

administration of Quality Supervision, inspection and Quarantine (aQSiQ) halted

�24 gordon Fairclough, “China-Product Scare hits home, too,” Wall Street Journal, July 20, 2007, p. B�, http://online.wsj.com/article/SB��848737�42�67�957.html.

�25 ariana eunjung Cha, “China executes Former head of Food, Drug Safety,” Washington Post, July ��, 2007, p. D0�, http://www.washingtonpost.com/wp-dyn/content/article/2007/07/�0/aR200707�000�65.html.

�26 gordon Fairclough, “China-Product Scare hits home, too,” Wall Street Journal, July 20, 2007, p. B�, http://online.wsj.com/article/SB��848737�42�67�957.html.

�27 Wang hongjiang, “China to intensify Food Safety Supervision in Rural areas,” Xinhua News Agency, august 8, 2007, http://news.xinhuanet.com/english/2007-08/08/content_649829�.htm.

Page 3�


U.S. imports of three types of health supplements and one type of raisin on June 8,

citing excess fecal coliform bacteria, mold, and sulfur dioxide. in a brief statement

on its website, aQSiQ claimed: “the products failed to meet the sanitary standards

of China.”�28

Meanwhile, Chinese officials told domestic importers to “clarify food safety require-

ments in contracts to reduce trade risks.”�29

aQSiQ stopped a shipment of pistachios from the United States, saying it was in-

fested with ants, on June 9. Chinese Central television said the ants could “cause a

serious threat to trees and to the ecological environment.”�30

aQSiQ announced that shipments of orange pulp and dried apricots from the

United States had been seized and destroyed because of excess bacteria and mold,

on June 26. Local inspectors in China were ordered “to intensify scrutiny over

food products imported from the United States” and asked “to specify food safety

requirements in importing U.S. food products to lower trade risks.”�3�

China said it had blocked shipments of processed meat from seven U.S. companies

on June �4, among them were tyson Foods, whose frozen poultry products alleg-

edly contained salmonella, and Cargill Meat Solutions, whose frozen pork ribs were

allegedly spiked with a food additive.�32

On august 20, 2007, China announced that it had rejected 272 pacemakers im-

ported from the U.S. because they had failed quality inspections. Valued at

approximately $240,000, the pacemakers were detained by Shanghai entry-exit

inspection and Quarantine Bureau in late april 2007, according to Xinhua news

Service. the problem, according to Chinese officials, was that the pulse strength of

the devices was not in proportion to its “indicated properties.”�33

the aQSiQ said it had found “numerous quality problems” with american soy-

beans on august 22. One batch was said to carry a “great potential hazard to the

food safety of Chinese consumers.”�34

“the ultimate danger is that China will embark on an overt or understood trade

war and close its markets,” said gene grabowski, senior vice president of Levick

�28 “China Blocks US Shipments amid Food Safety Row,” Xinhua Financial News, June 8, 2007.�29 irene Wang, “Beijing targets ‘tainted’ US Food imports,” South China Morning Post, June 9,

2007, p. 5.�30 “Pistachios imported from US infested with ants,” Xinhua News Agency, June �3, 2007, http://

www.chinadaily.com.cn/china/2007-06/�3/content_893032.htm; audra ang, “China broadcast alleges U.S. products fail sanitary standards,” associated Press, San Francisco Chronicle, June 9, 2007, http://sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/06/09/state/n�335�3D64.DtL.

�3� “China seizes U.S. food products containing excessive bacteria, chemicals,” Xinhua News Agency, June 26, 2007, http://news.xinhuanet.com/english/2007-06/26/content_6294254.htm.

�32 ariana eunjung Cha and Renae Merle, “in Role Reversal, China Blocks Some U.S. Meat,” Washington Post, July �5, 2007, p. a0�, http://www.washingtonpost.com/wp-dyn/content/ar-ticle/2007/07/�4/aR200707�400264.html.

�33 “China rejects unqualified pacemakers from US,” Xinhua, 8/20/07, http://www.chinadaily.com.cn/china/2007-08/20/content_6034465.htm.

�34 audra ang, “China Claims U.S. Soybeans tainted,” associated Press, august 22, 2007, http://www.washingtonpost.com/wp-dyn/content/article/2007/08/22/aR200708220038�.html.

Page 32


Strategic Communications.�35

the other danger? Dangerous goods will continue to kill, maim, or sicken consum-

ers in the United States and around the world.

V. U.S. RELIANCE ON CHINESE GOODS

the string of health crises posed by Chinese products is particularly alarming be-

cause the U.S. increasingly demands low-priced products from China.

american reliance on Chinese products is enormous and growing. “in just the last

decade, imports of Chinese consumer products nationwide have surged to $246

billion from $62 billion, according to official statistics. nearly 20 percent of the

consumer products for sale in the country today are Chinese-made, compared to 5

percent in �997.”�36

in 2006, China was the sixth leading supplier of agricultural products to the United

States and the second leading seafood supplier. Combining seafood and agricultural

products, China was the third leading foreign supplier, behind Canada and Mexico.

Sara Bongiorni wrote a book entitled “a Year Without ‘Made in China’: One Fami-

ly’s true Life adventure in the global economy.”�37 Bongiorni and her family tried

to live a year without using any product made in China. her conclusion? “there’s

just really no way to live what would be considered an ordinary consumer life with-

out a heavy reliance on merchandise from China.”�38

Wal-Mart could not function as it does without an ever-flowing river of Chinese

products. Peter goodman and Philip Pan, writing in the Washington Post, docu-

ment Wal-Mart’s dependence:

“More than 80 percent of the 6,000 factories in Wal-Mart’s worldwide database of

suppliers are in China. Wal-Mart estimates it spent $�5 billion on Chinese-made

products last year, accounting for nearly one-eighth of all Chinese exports to the

United States. if the company that Sam Walton built with his ‘Made in america’ ad

campaign were itself a separate nation, it would rank as China’s fifth-largest export

market, ahead of germany and Britain.”�39

in principle, in a globalized world, this reliance on China is a curiosity, not a

concern. But in practice, we have seen a sharp rise in Chinese-made products that

imperil the lives and health of american consumers. Something must be done.

�35 neil King Jr. and Rebecca Blumenstein, “China Launches Public Response to Safety Outcry,” Wall Street Journal, June 30, 2007.

�36 eric Lipton, “Safety agency Faces Scrutiny amid Changes,” New York Times, September 2, 2007, p. 20, http://www.nytimes.com/2007/09/02/business/02consumer.html.

�37 Bongiorni, Sara, A Year Without ‘Made in China’: One Family’s True Life Adventure in the Global Economy, Publ: John Wiley & Sons, 2007, iSBn-�0 : 0470��6�37

�38 “Seven Questions: Can You Live Without China?” (Web exclusive), Foreign Policy, July 2007, http://www.foreignpolicy.com/story/cms.php?story_id=3905.

�39 Peter S. goodman and Philip P. Pan, “Chinese Workers Pay for Wal-Mart’s Low Prices,” Wash-ington Post, February 8, 2004, p. a0�.

Page 33


VI. CONCLUSION: THE SAFE TRADE AGENDA

We need to embrace a “safe trade” agenda.

trade without fear is not possible when unscrupulous suppliers add poisons to

food, medicine and children’s toys. if the consumer’s faith in the safety of food,

medicine, or other products is lost, expanding trade in a way that benefits consum-

ers, workers, and businesses becomes impossible. Few people would knowingly buy

dangerous goods. this should be an issue on which ardent free trade advocates, as

well as those who have opposed trade agreements, can agree.

the cost of inaction is too high. Mislabelled metals and metallic parts can bring

down airplanes and buckle office towers. adulterated pet food can kill dogs and

cats, in some cases the only companions of the old or the lonely. inferior tires can

kill ambulance drivers, long-haul truckers and soccer moms.

Safety regulations, under “safe trade,” should meet two conditions: the measures

should apply equally to domestic and foreign producers and should be based on

peer-reviewed science that clearly links a suspect chemical or defective product

to consumer harm. Border and customs inspections should insure that american

safety standards apply equally to inputs and domestic goods.

With these conditions, “safe trade” regulations should survive the scrutiny of the

World trade Organization and other international bodies.

“Safe trade” is not an expansion of government power, but a core duty of any de-

mocracy. it is the primary responsibility of government to safeguard the lives and

property of its citizens.

“Safe trade” does not mean that the prices of imported goods will rise. in many

cases, american importers are paying market rates for high-quality ingredients or

parts --and getting a dangerous substitute. (that substitute is cheaper for the ex-

porter, who in turn reaps the price difference between the real McCoy and its deadly

imposter). Under “safe trade,” importers will get what they are already paying for

– as will consumers. Prices, for the most part, should remain the same.

guaranteeing the safety of imports will require reforms in all three branches of

government as well as the private sector.

here are some first steps.

· a “safe trade” task force should be established comprising all relevant

regulators (Consumer Product Safety Commission, the Food and Drug ad-

ministration, Customs and Border Patrol and so on). this task force would

allow agencies to share information and work together to keep dangerous

goods from reaching the consumer. this task force should have two per-

manent components: First, an intelligence unit that pools information from

Page 34


foreign governments and U.S. law enforcement. the unit would trace dan-

gerous products to their source and track the individuals responsible. When

strong evidence is uncovered that american, international, or foreign law has

been violated, this information would be passed to the relevant authority for

prosecution or other action. Second, a “Safe trade Center” would be formed

to coordinate the communication among agencies and to enhance actions of

regulators. every relevant agency would have liaison officer at the center who

would be empowered to go directly to his agency head in event of an emergen-

cy. this would protect americans not only from adulterated foods, medicines

and other goods, but safeguard citizens from trans-national diseases (moved

in food) or even food-borne terrorism.

· Significantly boost the pace and number of border inspections.

· Upgrade inspections from visual examinations to random chemical testing of

imported products meant for humans or animals. the FDa currently inspects

�% of all food imported. Clearly this percentage must grow substantially.

· improve the training of food inspectors and customs officials, emphasizing

the development of new threats to consumer health and new tactics for avoid-

ing detection.

· Congress should increase its oversight of regulators to ensure that they are

working together to enforce tough safety standards, for domestic producers

and importers.

· Congress should form a “Safe trade Caucus” to inform members and coordi-

nate oversight and legislation. the caucus could also communicate with the

press and the public.

· Chinese firms and others that put poisons into food and medicine or misla-

bel shoddy goods as safe should be made financially liable for the harms they

cause. in many cases, Chinese and others maintain bank accounts in the U.S.

or other substantial assets. Making those assets subject to lawsuits may con-

centrate the minds of shady manufacturers.

· Congress should pass legislation enjoining the State department from at-

tempting to block any such lawsuits on foreign policy grounds.

Beyond the federal government and international bodies, the private sector should

also embrace the “safe trade” agenda.

· Overseas suppliers should be subject to random inspections by american

firms that buy their products.

· Products should be randomly tested by independent inspectors, before goods

leave the plant. the inspectors should be frequently rotated to discourage cor-

ruption.

We need to

embrace a “safe

trade” agenda.

Page 35


· Corporate contracts should be amended to include online cameras through-

out the plants of overseas suppliers for the purpose of ensuring the safety and

wholesomeness of products – and those cameras should be monitored by

employees in the U.S. over a secure network.

· Corporations should be given an anti-trust waiver for the sole purpose of

sharing information with each other about substandard suppliers, new tech-

nologies for discovering dangerous adulterations and so on.

· insurance companies should be free to charge differing rates for imports

based on safety standards and to issue quality seals denoting that the highest

safety standards have been met. Under Senator Sherrod Brown’s legislation, S.

208�, manufacturers would be required to carry insurance or prove the finan-

cial capacity to protect them and those they employ against the cost of recalls

and damage claims arising from distribution of products found to be unsafe.

embracing the “safe trade” agenda will benefit the United States, China and other

nations. trade, in a globalized world, depends on trust. and trust is invigorated by

verification on both sides of the Pacific.

in 2007, unsafe Chinese-made products killed dozens of people and thousands of

pets. Millions more—including infants and senior citizens— were put at risk. this

tragedy will reoccur year after year if policy makers fail to reform america’s import

controls in the name of “safe trade.”

China’S tRaDe With U.S. ($ BiLLiOn)�40 2002 202004006 Q1 2007

US Exports

US Imports

Total

US Balance

2002 2003 2004 2005 2006 Q1 2007

22.1

125.2

147.3

-103.1

28.4

152.4

180.8

-124

34.7

196.7

231.4

-162

41.8

243.5

285.3

-201.6

55.2

287.8

343

-232.5

14.5

71.4

85.9

-57.8

�40 See http://www.uschina.org/info/analysis/2007/june-trade-performance.html.

Page 36


U.S. iMPORtS OF SeLeCteD PRODUCtS FROM China in 2006�4�

Dolls, toys and gamesFish and other marine products(fresh, chilled, or frozen, excluding canned)TiresAnimal FoodsToothpaste

Imports from China as % of Total U.S. Imports (%)

14,593

1,695

1,8961353.3

First

First

FirstSecond

Sixth

86.0%

19.8

22.023.83.5

China’s Rank as Source

of Imported Product

Imports

from China

($million)

LeaDing SUPPLieRS OF

U.S. agRiCULtURaL anD SeaFOOD iMPORtS, CY2006�42

(VaLUe in BiLLiOn U.S. DOLLaRS)

CanadaMexicoChinaThailandItalyIndonesiaChileAustraliaBrazilIrelandWorld Total

Total

$13.4339.3902.2621.8122.8022.0231.7742.4872.2372.354

65.333

$2.1840.4541.9221.334.009.778.952.091.130.008

13.143

SeafoodAgriculturalCountry

$15.6179.8444.1843.1462.8112.8012.7262.5782.3672.362

78.475

�4� Wayne M. Morrison, “China-U.S. trade issues,” Congressional Research Service, July ��, 2007, p. 9.

�42 geoffrey S. Becker, “Food and agricultural imports from China,” Congressional Research Ser-vice, July �7, 2007, p. 2.

Page 37


About the Author

Richard Miniter is the author of two new York times bestsellers, including “Shadow

War” and “Losing Bin Laden” he has appeared on every major american cable news

network including Cnn , C-Span, Fox news, and MSnBC he is also the former

editor of the Wall Street Journal europe’s weekly “Business europe” column and

has been published in the new York times, the Washington Post, the Wall Street

Journal, and the Christian Science Monitor, as well as leading magazines includ-

ing the atlantic Monthly, the national Review, the new Republic, and Reader’s

Digest. in addition, his articles have appeared in newspapers throughout europe,

asia, and australia.

Richard Miniter can be contacted at:

Office 703-684-6682

[email protected]

About AAM

the alliance for american Manufacturing (aa M) is a unique non-partisan,

nonprofit partnership forged to strengthen manufacturing in the U.S. aaM brings

together a select group of america’s leading manufacturers and the United Steel-

workers. Our mission is to promote creative policy solutions on priorities such

as international trade, energy security, health care, retirement security, currency

manipulation, and other issues of mutual concern.

the alliance for american Manufacturing (aa M) can be contacted at:

727 �5th Street nW #700

Washington, DC 20005

202-393-3430

[email protected]

www.americanmanufacturing.org.

This report was made possible by a research grant from the Alliance for American Manufacturing (AAM). The views contained within are those of the author. AAM takes no position on the legislative recommendations contained within.

Documents

Buyer’s Remorse: How America Has Failed to See …s3-us-west-2.amazonaws.com/aamweb/uploads/research-pdf...9 testimony of Stephen S. Miller, “Safety of Food Supply,” U.S. house