Consumer Product Import Bill Could Violate WTO Rules, Says CRS

November 8, 2013 by Brian Feito|Consumer Product Safety Commission

A bill currently before Congress that would impose new registration requirements on foreign exporters of consumer products could run afoul of World Trade Organization rules, said the Congressional Research Service in a Nov. 5 report. The Foreign Manufacturers Legal Accountability Act of 2013 (H.R. 1910), introduced in May, would require foreign exporters of consumer goods to the U.S. to establish a registered U.S. agent with the Consumer Product Safety Commission. Like U.S. agents for imported food required by the Food and Drug Administration, that agent would be liable for any product safety violations, CRS said. The registration requirement could violate national treatment rules, because it would impose a burden on foreign manufacturers that the U.S. doesn’t require of domestic companies, said the report.

The problem with the proposed U.S. agent requirement is that the foreign manufacturers would bear the cost of compliance, CRS said. The increased costs might have to be passed onto the consumer, raising the price of the imported products. The WTO General Agreement on Tariffs and Trade 1994 requires that countries’ laws and regulations treat imported goods no less favorably than the treatment they accord to domestic goods -- the national treatment principle. Because the Foreign Manufacturers Legal Accountability Act potentially makes imported consumer products less competitive, the WTO could find that the law violates this principle, said CRS. If the law is passed and the WTO rules against the U.S., the international trade body could authorize members to impose retaliatory tariffs on U.S. goods if the U.S. doesn’t comply.

However, the U.S. would have a viable defense if H.R. 1910 is passed and the WTO gets involved -- that the law merely evens the playing field for U.S. companies, said CRS. The U.S. might argue that the U.S. agent requirement merely makes foreign manufacturers of imported products subject to the same legal liability that domestic manufacturers are, it said. And should the WTO nonetheless rule against the law, the U.S. might then be able to invoke GATT Article XX, an exception to WTO trade rules for products that protect human, animal, or plant life or health, said CRS.