Trade Policy & Product Safety… Plan B?

Wednesday, June 6, 2007 9:27
Comments Off on Trade Policy & Product Safety… Plan B?

For the last 2 years, Washington has been trying to get Beijing to reduce the deficit, revalue the currency, and open its markets to American goods & services.

Politically, it has not gone as plan…

The RMB has moved from 8.28 to 7.63 over this time, and while the trading band was recently widened, Washington remains publicly disappointed, frustrated, and the call for action is growing in Congress

Even worse, in the eyes of the administration, is the deficit. The USTR released their 90 page report on the first 5 years of WTO (see our coverage” Part I, II, III, IV, V, VI, VII, & VIII), Gonzalez has publicly stated on several occasions that American goods are not competitive in China because of high barriers to entry, and despite the stronger RMB… the deficit continues to get biggerand biggerand bigger.

Just recently, the U.S. and China held another round of Economic discussions in Washington, and instead of IPR and the trade deficit, the number one topic of discussion was product safety. It was just a few weeks before that thousands of pets in the U.S. took ill or died, Washington wanted answers.. and they wanted someone to be held accountable

For those of us operating in China, tainted food was not a surprised.. and sadly, it was not surprising to hear that industry players in China all knew that the ingredient was being used. What was a surprise to many here was that the companies buying the product form China had little or no QC process in place.

After all… had anyone actually visited any of the offending factories, it would not have taken government officials over a week to find them. (See USA Today Story Pet food probe: Who was watching suppliers?)

Since then there have been several more scandals surrounding goods “Made in China” …including toothpaste, and now ATVs.. and it appears that the U.S. has gone on the offensive against Chinese manufacturers and the quality of Chinese goods.

Again, it is not surprising that there are QC issues… but what I am having a hard timing understanding is why it is only now that these issues are coming out. After all, over 100 shipments had been turned away in April, and nothing was said about those until just now.

No one was telling people to throw away all toothpaste made in China or to throw away Apple, peach, or pear products from China when Yantai Ruioing Commerce And Trade Co.’s shipment on Apr 3, 2007 was turned away for being filthy and unsafe (see FDA report of APR rejections)….

So while China was reporting a successful round of talks, and the U.S. was reporting a poor showing, the spin cycle kicked into high gear, and the trade talks are now reaching a personal level.

QC is, and always will be, a major issue whenever a good is manufactured. Wherever it is manufactured.

But blaming China as the sole contributor is not a solution, it is a diversionary tacit, and if congress, the FDA, and the administration is really concerned about product safety the will begin recognizing that it is ultimately the responsibility of American companies to test these goods for safety before they hit the shelf.. and hold them equally accountable.

Still 18 months away from the U.S. 2008 Presidential election, the U.S. – China relationship is sure going to be tested, and it is my hope that everyone involved keeps a cool head before it goes to far.

Otherwise, politics could get in the way of business, and that could have implications for your operations

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