Transcript Tariff Implications of Sourcing Decisions

ALSTON&BIRD LLP
U.S. Product
Safety Landscape
AAPN’s Tariffs, Trade & Textiles in the Americas
Washington, DC, October 23, 2012
Copyright © 2012 BJ Shannon All Rights Reserved
U.S. Product Safety Landscape
• Timeline
• Important Questions
• CPSIA Overview
- Standards
- Testing
- Certification
• FFA Requirements
• Online Resources
• State Regulation (Prop 65)
Timeline
• In 1972….
• “American Pie” and “A
Horse with No Name”
were number 1 hits
• Congress passed the
Consumer Product
Safety Act (CPSA)
2007: The year of the recall
• Over 30 million toys
were recalled
• Also milk, toothpaste,
pet food, candles,
jewelry
2008: Congress acts
• Congress amended the
CPSA with the Consumer
Product Safety
Improvement Act of 2008
(CPSIA)
• The CPSIA imposed new
substantive safety rules and
procedural requirements
and also necessitated the
development of many new
regulations.
2009-2010: Hold the presses!
• Neither CPSC nor
industry was prepared
for rapid
implementation of a
sweeping new law
• CPSC issued and
extended several stays
of implementation
In the meantime….
• Textiles and apparel
enjoyed a period of
being largely unaffected
by the new law
- CPSC temporarily stayed most
third party testing and
certification requirements
applicable to textiles
- CPSC concluded that most
textile materials do not contain
lead
2011: The year of enforcement
• Per CPSC Chair Inez
Tenenbaum
• In 2010 and 2011, CPSC
stopped the import of
6.5 million units of 1,700
different children’s
products
• Companies paid millions
in fines
Important CPSIA questions
• What does the CPSIA
require?
• What does this mean for
apparel?
• What about the Flammable
Fabrics Act (FFA)?
- Adults’ and children’s apparel
- Exemptions from the FFA
- Exemptions from testing
• What is the role of U.S.
importers?
• What is the best way to stay
up to date?
What does the CPSIA require?
• The CPSIA requires that the
manufacturer of any product
which is subject to a
consumer product safety rule
under the CPSIA or any
similar rule, ban, standard, or
regulation under any other
statute enforced by the CPSC
certify the product’s
compliance with the standard,
based on a test of each
product or a reasonable
testing program.
Testing and certification
• Consumer Products
(non-children’s)
- Reasonable testing (on each
product or pursuant to a
reasonable testing program)
- General Certificate of
Conformity (showing
compliance with applicable
consumer product safety
rules)

Not the same as an FFA
Continuing Guarantee!
• Children’s Products
(12 years or younger)
- Third party testing (by a
CPSC-accredited laboratory)
- Children’s Product
Certificate (showing
compliance, based on third
party testing, with applicable
rules)
- Tracking labels
(permanently affixed to the
product and its packaging, to
allow identification of the
manufacturer, date and place
of manufacture, and cohort
information)
Children’s products: 3rd party testing
• Lab must be a CPSC
accredited third party
conformity assessment
body accredited by:
- Laboratory
- Location
- CPSC standard
Finding a laboratory
Frequency of testing
• Initial third party testing
of children’s products
• Periodic testing
- Periodic testing plan (at least
every year)
- Production testing plan (at least
every 2 years)
- Testing by an ISO/IEC
17025:2005(E) accredited lab
(at least every 3 years)
Issuance of a certificate
• General Certificate of
Conformity/Children’s
Product Certificate
- Issued by the U.S. manufacturer or
the U.S. importer
- Certificate must:


Accompany the shipment
Be furnished to each retailer and
distributor
- May be paper or electronic
- Must be in English
Contents of a certificate
• Identification of the product
• Citation to each applicable product safety
rule
• Name of manufacturer (or importer)
- Name, mailing address, telephone number
• Contact information for the custodian of
the records
- Must be an individual
- Name, mailing address, telephone number, email
address
• Date of manufacture (month and year)
• Place of manufacture (city and country,
factory-specific)
• Date and place of testing
• Identification of third-party laboratory, if
any
- Name, mailing address, telephone number
What does this mean for apparel?
• Consumer product safety
rules applicable to apparel
include:
- FFA
- Lead limits for all children’s
products


Lead in substrate (100 ppm)
Lead in surface coatings (90 ppm)
- Phthalate limits for children’s
toys and child care articles,
including sleepwear (0.1 percent)
- Drawstring rules (children’s
upper outerwear)
The FFA: What’s old is new again
• Flammable Fabrics Act
(FFA) dates back to 1953
• Fabrics and apparel made
from fabric have long
been subject to the same
flammability standards
• Most fabrics are known
to be safe without testing
• But now we need to
certify to compliance
Four examples
Women’s silk blouse
• Is the blouse subject to the FFA?
- Only certain hats, gloves, footwear, and
interlining fabrics are categorically exempt
- The blouse is subject to the FFA
• Is the blouse fabric exempt from
testing?
- Plain surface fabrics, regardless of fiber
content, weighing 2.6 ounces per square yard
or more, are exempt from testing
- All fabrics, with both plain and raised-fiber
surfaces, regardless of weight, made entirely
from acrylic, modacrylic, nylon, olefin,
polyester, wool, or any combination therefor
are exempt from testing
- The silk blouse, assuming a fabric weight of
less than 2.6 oz/sq. yd, is not exempt from
testing under the FFA
Men’s cotton corduroy pants
• Are the pants subject to the
FFA?
- The pants are subject to the FFA
• Is the pants fabric exempt
from testing?
- The fabric has a raised surface so it is
not exempt based on weight
- Because the pants are cotton, the
fabric is not exempt based on fiber
content
Men’s wool sweater
• Remember: Most
apparel fabric is exempt
from FFA testing
• Men’s wool sweater
- Sweater is subject to the FFA
- But exempt from testing due
to wool fiber content
- CPSC’s Position: GCC still
required!
Women’s gloves
• Certain articles are not
subject to the FFA at all
• Women’s gloves
- Not more than 14 inches in
length and not affixed to/do not
form an integral part of another
garment
- Not subject to the FFA
- No testing and no GCC
• Similar rules for hats,
footwear, and interlinings
Example: children’s products
• Children’s sleepwear is
subject to specific FFA
flammability testing
regulations
• Third party testing is
required
• Other product safety rules?
- Phthalate testing is required if the feet
have plasticized components
- Buttons could be subject to lead/lead
in paint testing
• Children’s Product Certificate
• Tracking label
What is the role of U.S. importers?
• For products manufactured outside
the U.S., the importer is the
“manufacturer”
- Responsible for CPSIA certification



No requirement to file with CPSC or U.S.
Customs and Border Protection (CBP)
Must be available as soon as the product or
shipment itself is available for U.S. inspection
Must be furnished to retailers/distributors
- Recordkeeping responsibilities


Generally 3 years
Traceability
• CPSC exercises independent seizure
authority
- Seized goods remain in CBP custody
• CPSC and CBP are conducting joint
product safety audits
How do I stay up to date?
Monitoring the database
• The CPSIA also mandated the
creation of a Publicly Available
Consumer Product Safety
Information Database
• Contains reports of harm or risk of
harm, recall notices, etc.
• Reports may be submitted by:
- Consumers (users of products, family
members, relatives, parents, guardians, friends,
attorneys, investigators, professional engineers,
agents of a user of a product, observers of a
user of a product)
- Government agencies
- Health care professionals
- Child service providers
- Public safety entities
• Manufacturers may sign up to
receive reports at
www.SaferProducts.gov
What about state laws?
• CPSIA does not preempt many state laws
• Many states also have
consumer product
safety laws that affect
adults’ or children’s
apparel
- California (Prop 65)
- Washington (Children’s Safe
Product Act)
- Also Maine, Illinois, etc.
What Prop 65 is not
• Prop 65 is not new
- Safe Drinking Water and Toxic
Enforcement Act of 1986
• Prop 65 is not preempted by
CPSIA
• Prop 65 is not limited to
children’s products
• Prop 65 limits are not based
on content, but on exposure
levels
• Prop 65 is not a ban, but
requires warning labels
When a warning is required
• CA publishes and updates a list of
chemicals that cause cancer or birth
defects (over 800)
- Including


Lead
Phthalates
• Labeling is not required if:
- The product does not contain listed chemicals
- Exposure is low enough to pose no significant
risk of cancer or is significantly below levels
observed to cause birth defects or other
reproductive harm
- Levels are below “safe harbor” levels
(available for ~ 300 chemicals)

Levels from prior settlements may be a guide
Warning label requirements
• If labeling is required:
-
Available before exposure
Reasonable, clear
Prominent, conspicuous
Language:
This product contains chemicals known to the
State of California to cause cancer, birth defects,
or other reproductive harm.
- Noncompliant language:


“This product complies with Proposition 65.”
“This product may contain chemicals known to the State of California to cause cancer,
birth defects, or other reproductive harm.”
Prop 65 enforcement
• Enforcers
- CA Attorney General, district attorneys, certain city attorneys
- NGOs, other groups
- Private citizens
• First steps: “Notice of Violation” (“60-day notice”)
• Remedies from CA courts
- Injunctions
- Civil Penalties up to $2500 per violation per day
• More common result – Private settlement
- Average settlement in 2008: $125,000
• Notable product trends:
- Handbags
- Apparel/Shoes
- Zipper pulls
BJ Shannon
Alston & Bird LLP
950 F Street, NW
Washington, D.C. 20004
202.239.3344
[email protected]