The Roots of the Chinese Drywall Problem: Part II January 31, 2010

As consumers across the nation are struggling to cope with the burdens associated with Chinese drywall (financial or/and health), a question beginning to be asked with some consistency is, “What caused or allowed the Chinese drywall crisis to take place? . . . What are its origins?”  This two-part article will explore in brevity the backdrop of the issue, and the relationship between China and the U.S

Please Read Part I of this Article First

The SPS agreement imposes limits on regulatory standards relating to food, animal, and plant safety.[1] The TBT agreement similarly limits testing and certification issues.[2] These limits restrict adoption of appropriate health and safety standards because there is a legitimate fear that China and other countries would view such standards as barriers to trade.[3] The treatment of both the SPS and TBT agreements by the U.S., as well as by the private sector in international negotiations, sheds some light on the underpinnings of the burden that is shifted to U.S. consumers.

Since implementation of the SPS and TBT agreements, the SPS agreement has garnered the most attention.  One commentator put it this way:

“[W]hen looking through the Federal Register . . . references to the SPS agreement outnumber references to the TBT agreement by a ratio of roughly five to one.  One possible explanation for this phenomenon might be that in the United States, most top-down regulation occurs in the areas of food, animal, and plant health. Thus, most regulations covered under the TBT agreement remain within the province of voluntary, consensus-based standards often negotiated by industry members themselves.”[4]

With this backdrop, it is not difficult to observe that the U.S. approach to free-trade policy has historically sought to place its domestic businesses on an equal playing field with that of global competition.  Ensuring the safety and quality of imported consumer goods, on the other hand, has not been a recurring concern brought to the forefront of negotiations.

Now that thousands of U.S. consumers are facing financial strains and health related issues associated by the Consumer Product Safety Commission with Chinese drywall, legislators must take notice.  Imported goods from China have been flowing into the U.S. with such regularity and health and safety concerns have gone overlooked.  However, we have reached a point where it is necessary to take a step back; consumers, businesses, and government all must recognize the need for ensuring the integrity and safety of the American marketplace.

REFERENCES

[1] Agreement on Technical Barriers to Trade, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Ann. 1A, Legal Instruments-Results of the Uruguay Round, 1868 U.N.T.S. 120 (1994) [hereinafter TBT Agreement].

[2] Agreement on the Application of Sanitary and Phytosanitary Measures, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, Legal Instruments–Results of the Uruguay Round, 1867 U.N.T.S. 493 (1994) [hereinafter SPS Agreement].

[3] Rebecca Mowbray, Chinese Drywall Problems Have Spotlighted Flaws in the U.S. Legal System, The Times-Picayune, Oct. 4, 2009, available at http://www.nola.com/business/index.ssf/2009/10/chinese_drywall_problems_have.html.

[4] David Livshiz, Updating American Administrative Law: WTO, International Standards, Domestic Implementation and Public Participation, 24 Wis. Int’l L.J. 961(2007) (discussing the trend of TBT Agreements being left to industry stakeholders as opposed to Executive branch action).