Whenever I am talking with someone about the purpose of the WTO (or trade agreements generally), I like to draw the distinction between discrminatory trade barriers and non-discriminatory trade barriers, with the point being that we may want to treat the two categories differently. Putting aside the difficult question of how to define discrimination, I find there is often confusion about what exactly I mean by a non-discriminatory trade barrier. For many of the examples I come up with, some people see a discriminatory intent buried in there. Well, this might be a good, clear example:
Worries over lead paint in mass-market toys made the holidays a little brighter for handcrafted toy makers last year, but now the federal government's response to the scare has some workshops fearful that this Christmas might be their last.
Without changes to strict new safety rules, they say, mom-and-pop toy makers and retailers could be forced to conduct testing and labeling they can't afford, even if they use materials as benign as unfinished wood, organic cotton and beeswax.
"It's ironic that the companies who never violated the public trust, who have already operated with integrity, are the ones being threatened," said Julia Chen, owner of The Playstore in Palo Alto, which specializes in wooden and organic playthings.
A spokeswoman for the Consumer Product Safety Commission said Wednesday the agency is working to set up some exemptions.
Lead paint spurred the recall of 45 million toys last year, mostly made in China for larger manufacturers. Parents flocked to stores like The Playstore in the recall's aftermath searching for safer alternatives.
Lawmakers also responded. In August, President Bush imposed the world's strictest lead ban in products for children 12 or younger by signing the Consumer Product Safety Improvement Act.
Small toy makers strongly back the restrictions in the bill, which they say reflect voluntary standards they have long observed to keep harmful substances out of toys. But they never thought their products would also be considered a threat.
Under the law, all children's products must be tested for lead and other harmful substances. Toy makers are required to pay a third-party lab for the testing and to put tracking labels on all toys to show when and where they were made.
Those requirements make sense for a multinational toy manufacturer churning out thousands of plastic toys on an overseas assembly line, said Dan Marshall, co-owner of Peapods Natural Toys and Baby Care in St. Paul, Minn.
But a business that makes, for example, a few hundred handcrafted wooden baby rattles each year cannot afford to pay up to $4,000 per product for testing, a price some toy makers have been quoted, he said.
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One European toy maker has already announced it will stop its exports to the U.S. because of the law's costs and uncertainties. Selecta Spielzeug, a German company, said earlier this month that it will stop shipping its wooden push toys, games and other products to 1,200 U.S. stores after Dec. 31.
As noted in the article, there's talk of clarifying the rules to make sure they do not apply to companies that use only products that are not harmful. Regardless, though, the law at issue is clearly a "trade barrier" in some sense. As the article states, a European toy maker is stopping its exports because the cost of complying with the law is too great. Despite the clear impact on trade, though, the law seems to be non-discriminatory, as some domestic producers are hurt by it, too (it's not clear whether there is an overall disparate impact on foreign toy makers).
So what should international trade rules say about such measures? Should there be limits on non-discriminatory trade barriers such as this one? If there are limits, how strict should they be?