Hearing of the Financial Services Subcommittee of the Senate Appropriations Committee - Toy Safety Standards

Statement

HEARING OF THE FINANCIAL SERVICES SUBCOMMITTEE OF THE SENATE APPROPRIATIONS COMMITTEE
SUBJECT: TOY SAFETY STANDARDS

SEN. DURBIN: Good morning. I want to thank all of our witnesses for being here. We will have Consumer Product Safety Commission Acting Chairman Nancy Nord, who has been visibly involved in negotiations with Chinese officials will be testifying. Today we're hearing from three panels, first a panel of my colleagues from the Commerce Committee, and I welcome my colleague from Arkansas, Senator Mark Pryor as well as Senator Bill Nelson. And I believe Senator Klobuchar will be here shortly. I believe they're all -- Senator Pryor chairs and they're all members of the Subcommittee on Consumer Affairs, which has the authorizing jurisdiction over the issues that we will discuss today.

After their testimony these members and other members from Commerce are welcome to join us at the dais here to ask questions. This is in the nature of a joint hearing, and I hope that it will serve our needs to learn a lot more about this important issue. We have quite a few important witnesses before the panel today, including consumer product safety commissioners and outside witnesses from the toy industry, Toy Industry Association, from the consumer groups and testing organizations. We have a lot to cover in a limited amount of time. I will try to make my opening remarks brief and to the point and hope my colleagues will do the same.

My interest in this issue was sparked when I read a Chicago Tribune front page series just a few weeks ago. It was written by Patricia Callahan. She talked about a toy called Magnetics. I knew all about this toy because I had bought it for my grandson. He has this huge box of Magnetics. Luckily, he's old enough not to be in danger. But we learned in that series that the tiny little rare earth magnets that look like little pieces of candy, when swallowed or inhaled by toddlers and children, if more than one is inhaled or swallowed, can lead to serious complications requiring surgery, and at least in one tragic case, resulting in death.

That series and other publications have documented the real need for improvement in our safety standards in America. Our toy safety system is not as strong as it should be. I can tell you that I've gone home -- and I'm sure Senator Brownback can say the same -- and had families with toddlers come up to me and say what is safe to buy for Christmas, for the holidays? It's a legitimate question with all of the headlines about lead paint and magnets and loose parts of toys that can cause serious problems.

I've introduced the Consumer Safety Modernization Act and shared it with my friend, Senator Pryor, because he has the responsibility for writing the reauthorization of the Consumer Product Safety Commission at a field hearing in Chicago and continuing with our effort today. The Consumer Product Safety Commission is an agency which many people may not have noted until this recent controversy. It is one that flies below the radar most of the time. But it has an important responsibility for the safety of products that are sold in America, not just imports, but all products sold in America.

Tragically, the Consumer Product Safety Commission has been neglected and under funded for years. Since its inception in 1973, its staffing has decreased by almost 60 percent, going from a high of 978 full time employees in 1980 to a current low of 401. This has occurred at a time when the volume of products -- just imports, not just those made in America, but imports -- has increased dramatically. In 1974, the United States imported $104 billion worth of products. In 2006, that number was $1.8 trillion, a 15- fold increase in that 26-year period, 32-year period of time.

Let me show a chart here. The chart with the bar graphs show the increase in value of U.S. imports. The red dots that you note here are the number of people working at the Consumer Product Safety Commission. As the volume of work has increased, the number of people responsible for the safety of the products has decreased. The budget of this commission is about $62 million. It passes through this subcommittee. We're going to increase it, and we're going to make a dedicated effort to make the Consumer Product Safety Commission a better commission with more inspectors, more technical capability, and a better track record in terms of protecting American consumers.

In the past three years, agency staff levels have been reduced 15 percent. The field division responsible for investigations and compliance -- 35 employees. This doesn't tell the whole story, but a couple pictures might. The Consumer Product Safety Commission has one person responsible for toy safety. Its lab is staffed by 30 technicians and engineers housed in a 1960s missile station. The entire compliance staff has 146 inspectors, four less than at the beginning of the year. This commission is significantly under staffed.

What you are looking at here is an employee of the Consumer Product Safety Commission who is responsible for helping to test toys. What you see is the scientific impact test on whether toys will break up. The line on the wall, four feet, five and a half inches at the higher level, two feet, 11 and a half inches at the lower level -- toys are dropped to see what happens to them. That is the scientific test of toys by the Consumer Product Safety Commission.

The next photo I'd like to show you looks like a lot like my work bench in my basement in Springfield. This is the toy safety testing lab at the Consumer Product Safety Commission, what you see. This is totally inadequate. It is not up to the task of building any kind of confidence among American consumers that we are really watching out for them. When American families go into a store they expect whatever's on the shelf is safe. And yet, if we don't have enough people, if we don't have enough resources, if we don't have enough technology, we are not meeting our responsibility, and that is part of this hearing that we will discuss.

Of course, at ports of entry enormous quantities of products are coming in, not just toys, but all sorts of different products. This Consumer Product Safety Commission has a jurisdiction way beyond toys when you consider all the possible things that they could be looking at. You can imagine the volume that they have to deal with. In the area of Southern California, around Long Beach, it's my understanding that they have six inspectors on call, six, who were sent from time to time to different places to look at imports.

We have to change this commission and the work that it does. Senator Pryor is going to be leading that effort on reauthorization. We have to reduce the amount of time that a company has to respond to information, from 30 days to 15 or even shorter. We need to increase the maximum fine so that the commission can issue such a fine to affirm it violates the law, and it has to be a fine that catches the attention of multi-million dollar companies. We need to expand to make it a crime to sell recalled products.

The last thing I want to mention here is imports, and I had a meeting this morning with some representatives of the Chinese government, who I believe are in the audience here. If I'm not mistaken, they were invited in. I hope they made it through the queue outside. But among those I met with today was the vice minister in charge of AQSIQ, which is the Chinese agency responsible for inspecting products, both food and non-food products, Mr. Wei Shong Jung (ph). I'm sorry if I mispronounced that. We had a lengthy meeting. He incidentally told me that his agency has 210,000 employees. Thirty thousand are assigned to exports. They have 1,800 laboratories. So it is hard for me to preach to them about dedicating more resources to making sure that the products that they export are safe when you see what we are dealing with here in the United States.

But I can tell you that what we know now gives me concern. Mr. Shong Jung told me that there is zero tolerance for lead in products exported from China. Having said that, we know there's lead paint on toys. We'll have testimony a little later from Mattel and from Toys 'R Us -- and we'll hear firsthand about some of the bitter experiences they've had with lead paint on toys exported from China.

We also know that one in five sampled articles of children's jewelry tested positive for excessive lead levels. Most of those were Chinese imports. Other contaminated products from China have included this year pet foot, which I know very well has caused concern among millions of American families as innocent animals, dogs and cats, died from contaminated food. Toothpaste containing antifreeze, seafood recalls, many, many more.

Now that I've met with this delegation from China, I think we need to follow through. We need to make it clear to those in China who are in the export business America will never compromise the health and safety or our consumers and our families. Our standards of health and safety have to be followed. We are going to make certain that we move forward with the Toy Industry Association and others represented today to try to deal with this season's problems.

As we face a holiday season where toys are a major product, families are concerned, companies are responding. It is unlikely that government will be able to do much to restore confidence. But we will learn a bitter lesson from the holiday season, 2007, and I hope we'll apply that lesson to passing new authorization in 2008 for this commission, putting more resources in this commission, and restoring the confidence of families across America.

Let me turn it over to my Ranking Member, Senator Brownback of Kansas.

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SEN. DURBIN: Thank you, Senator Klobuchar. Senator Pryor, what do you think is a realistic time table on your reauthorization bill on the Commerce Committee?

SEN. PRYOR: Well, we're going to try to move as quickly as we can because we wanted to go ahead and get it filed before we really circulated it for co-sponsors and to have it working. Just yesterday I started to talk with Senator Sununu about some of the specifics, and we're providing that to his office today and trying to start that process.

So the goal is to move as quickly as possible. We'd love to get a broad base of bipartisan co-sponsors on it. So I would welcome members of this subcommittee to consider co-sponsoring that when the time is right.

SEN. DURBIN: Thank you. Senator Nelson, of course, our bill relates not only to toys, but all children's products geared for kids under the age of five would have to go through some sort of independent testing. And I can tell you -- I know you've had a chance to speak to some toy companies and retailers. They get it. They understand. Something has to be done. And third party certified laboratories would be a good way to move resources in quickly. So I'm hoping that we can move along those lines. And please tell Abigail that we're going to our best to make Barbies safe.

SEN. KLOBUCHAR: Okay. Very good, senator. Thank you.

SEN. PRYOR: Thank you, senator, appreciate it.

SEN. DURBIN: And you're all welcome to join us if you have time here, and we are going to proceed. Senator Brownback, do you have any questions of the senators?

SEN. BROWNBACK: No. Thank you.

SEN. DURBIN: Thank you all for being here today. While the next panel comes forward representing the Consumer Product Safety Commission -- these are, of course, what this hearing's all about. As innocuous and small as they appear, the Magnetics toys and others that we've been discussing here today -- as I said, I can recall giving these to my grandson and playing with him over the holiday season. This little tiny magnet that I have here is really one that I've seen. As tiny as this is, you can imagine a toddler swallowing it, and swallowing two of these can be very dangerous, if not lethal, and they are incorporated in these toys and can pop out and break out.

I'd like to thank the Acting Chairman of the Consumer Product Safety Commission, Nancy Nord, and Commissioner Thomas Moore for joining us. It was my understanding -- correct me if I'm wrong, but Mr. Moore has to leave for a dental appointment and would like to speak first. So -- is that right?

MR. MOORE: I do have to leave.

SEN. DURBIN: Well, I'll let you and Ms. Nord decide the order of speaking, but invite you at this point.

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SEN. DURBIN: -- for your dental appointment, it's understood. I thank you very much for your being here today.

Chairman Nord, I want to reflect for a moment on the agreement yesterday with the Chinese. When I met with Minister Wei, he told me that China had a zero tolerance policy now when it came to lead paint. We in the United States have banned all but the tiniest amounts of lead paint for over 30 years. So what's new? This agreement that you say has been reached reaffirms what has been the law in the United States for 30 years and what is already the policy in China. Are you saying that the Chinese have now adopted a new and different standard when it comes to lead paint?

MS. NORD: I think, sir, that that's a question you would really need to put to the Chinese.

SEN. DURBIN: But you entered into the agreement with them.

MS. NORD: Yes, and the Chinese have committed to take immediate action to eliminate all lead paint used in toys exported to the United States. Why it is there is a very legitimate question to put to the Chinese and to put to the toy industry that is going to be following this panel. And I would hope that you would put it to them, and I would be very, very interested in knowing the answer to it.

SEN. DURBIN: You don't know whether this agreement represents a change in the lead standards for products exported from China?

MS. NORD: What I know, sir, is that we have banned lead paint in this country for 30 years. And as I have told you before and as I told Senator Klobuchar very recently, we will not tolerate it and we will enforce the law. And why it is showing up in toys manufactured in China is a very, very serious and legitimate question, and I hope you put it to the manufacturers, and I'd like to know the answer to it.

SEN. DURBIN: I think we all would.

MS. NORD: Indeed.

SEN. DURBIN: When it comes to children's jewelry, we know that we have a serious problem here. And the Consumer Products Safety Commission has acknowledged that with significant recalls of 150 million pieces of children's jewelry in 2004.

MS. NORD: Yes.

SEN. DURBIN: Recent stories indicate that we are still receiving lead jewelry from China. What steps has the Consumer Product Safety Commission taken to stop these shipments, to inspect these shipments, and to protect American families from exposure to this lead-based children's jewelry coming from China?

MS. NORD: Sir, I think I outlined a number of steps that the commission has taken in a recent letter to you. The commission started its activity in 2004, of course, well before I was there, and --

MR. MOORE: Excuse me. Go ahead.

MS. NORD: Are you leaving?

MR. MOORE: Yeah, I've got to go.

MS. NORD: Can I come with you?

(Laughter.)

SEN. DURBIN (?): No, you're facing your own dentist here.

(Laughter.)

MS. NORD: It's a sad day when you'd rather go to the dentist.

(Laughter.)

SEN. DURBIN: Is it safe?

MS. NORD: The commission initiated activity in 2004 dealing with lead jewelry -- and again, I've detailed this in a recent letter to you. The commission was very concerned about this. They did a rather non-scientific survey of what was out there, and as I reported in my letter to you, they found significant numbers of pieces of jewelry that had lead in it. When I say significant, sir, I'm meaning most of it. Unfortunately, because that survey was done in a rather unscientific way, I'm not going to in this setting get into the numbers, but basically most of it was lead jewelry.

Because of that, the agency initiated a enforcement policy which we put out there that said that if we see lead at above the .06 parts per million standard, we will consider that a de facto substantial product hazard warranting a recall. And that has been the policy in place since 2005. In October of 2006, we did another non-scientific survey of the marketplace. Frankly, we were pleased that we only saw 20 percent. But obviously, 20 percent is a whole lot -- a higher number than it should be. And it had gone down from virtually all to 20 percent.

SEN. DURBIN: Does 20 percent represent millions of pieces of children's jewelry still coming into the United States with lead?

MS. NORD: Yes, absolutely.

SEN. DURBIN: So what actions are you taking now to stop those products from reaching the shelves of American stores?

MS. NORD: Sir, we have initiated a rule making which would basically just ban the importation of jewelry with lead in it. In order to take action, we need a legal basis on which to do it. The enforcement policy was a good tool, but if we are going to be able to take effective enforcement policies, we need to have the underlying regulation in place, and that's what we're doing.

SEN. DURBIN: When did you initiate the rule making?

MS. NORD: The rule making was initiated -- I became acting chairman July of 2006, and this is one of the very first things I initiated, and we got it -- and the ANPR issued -- just before we lost our quorum in January of 2007.

SEN. DURBIN: And so as a result of that rule making, how many of these dangerous lead jewelry products has the CPSC recalled and removed from the shelves?

MS. NORD: Sir, I will have to get back with you. I just --

SEN. DURBIN: Any? Have you recalled any?

MS. NORD: Oh, I'm sure we have, but, sir, I'm going to have to --

SEN. DURBIN: Okay.

MS. NORD: -- come back to you with those details. I just don't remember them off the top of my head.

SEN. DURBIN: If you would, please. You've seen this photo. It's probably familiar to you.

MS. NORD: It surely is, sir.

SEN. DURBIN: And could you explain to me -- when most Americans feel that their government is there to help them out, protect them from dangerous products -- could you explain to me what we're looking at here and what this reflects in terms of the toy safety inspection capacity of the Consumer Products Safety Commission?

MS. NORD: Yes, but I think actually that photo represents a bigger question. The Product Safety Commission's laboratory in Gaithersburg, Maryland is a 1950s era Nike missile testing site. It is an incredibly inefficient facility. We've got a number of different buildings. Some of them I hate to admit do not even meet code. The CPSC's laboratory must be modernized, and we've been talking to the Congress for a number of years about that. This situation cannot continue, sir.

As I discussed with our authorizers in March, we are trying very hard to work through some issues with GSA in order to modernize our facilities. I am frankly not happy with the progress that is being made. I was very, very pleased that the staff of both the Appropriations Committee and the Commerce Committee were able to go out to our laboratory about two weeks ago to see firsthand the situation there.

However, having said all that, generally with respect to toy testing that is a piece of our toy testing facility. We do a number of tests out there. There has been quite a bit of press play about our lonely toy testers, single toy tester. I think you showed a picture of him. He basically spends his time doing small parts testing, drop testing. If there are other issues dealing with toys, for example lead testing or electrical testing, there are obviously other people in the laboratory that do all that. But Bob's our small parts guy.

SEN. DURBIN: Thank you. Senator Brownback.

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SEN. DURBIN: Thank you. Senator Brownback.

SEN. BROWNBACK: Thank you, Mr. Chairman. Chairman Nord, I want to make sure I understand. You're saying serious actions will take place if the Chinese do not comply with the lead paint rule that you're putting in place. Is that correct?

SEN. DURBIN: No, what I said was that we reached an agreement that the Chinese would take immediate steps to eliminate the use of lead paint, and at our summit over these last two days the Chinese went through and listed a number of actions that they intent to take, and I'd be happy to --

SEN. BROWNBACK: What I want to understand from you is that if lead continues to show up in toy products, what will your commission do?

SEN. DURBIN: Well, I think that we have to address not only this issue, but the whole question of unsafe imports with respect to toys, as I said earlier, in an organic way, because I think you can't look at one kind of activity and say that's going to solve the problem because this is a problem that needs to be solved at a number of different levels. I've outlined --

SEN. BROWNBACK: Chairman, what I want to hear is you say these products are not going to enter our shores if that's what you continue to find.

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SEN. DURBIN: Thank you, Senator.

Chairman Nord, going back to my earlier questions, when I asked you if the new agreement meant that there would be a new lead standard from products exported from China, you said I should ask the Chinese. And

MS. NORD: I'm sorry; I didn't understand that to be your question, sir.

SEN. DURBIN: Well go with - can you tell me, does your new agreement with China mean that there is a new standard in terms of lead and lead paint for products exported to the United States from China?

MS. NORD: Sir, there is a -- both a statutory and a regulatory ban on lead paint coming into the United States. I'm not sure how we would make that tougher.

SEN. DURBIN: No, do you - please, I'm asking you about the Chinese standard.

MS. NORD: Mm hmm.

SEN. DURBIN: Did the Chinese agree to a new standard when it comes to lead and lead paint for exports to the United States.

MS. NORD: Sir, what I'm concerned about are products that are being exported to the United States. I do not want to see any lead paint in those standards --

SEN. DURBIN: We understand --

MS. NORD: -- what the Chinese do internally is up to the Chinese.

SEN. DURBIN: Now wait a minute. If this is a memorandum of understanding and agreement with the Chinese, what they do internally is not up to the Chinese if it comes to the United States. That's what this is about. I'm asking you if there's a new lead standard agreed to in this agreement with China for lead or lead paint? I've said that three times.

Is there or isn't there?

MS. NORD: Sir, the Chinese have agreed to eliminate any lead paint used in toys exported to the United States. That -

SEN. DURBIN: Is this a new standard?

MS. NORD: Sir, again, you will have to ask the Chinese what the state of the Chinese law is.

SEN. DURBIN: Let me ask you about your quote in this morning's Wall Street Journal. This relates to the toy industry.

MS. NORD: Sir?

SEN. DURBIN: I might say that this article said that the most concrete aspect of the agreement that we've referred to here, is the prohibition on using lead paint in toys.

MS. NORD: Mm hmm.

SEN. DURBIN: And I'm trying to get down to whether the Chinese have agreed to a new standard in terms of what they are going to export. But I will ask the Chinese.

But let me ask you what you meant when you referred to the toy industry and said, "'No longer can the industry tolerate an ask no questions mentality,' said Nancy Nord, the CPSC's acting Chairman. 'The stakes are just too high.'" Are you saying that that has been the practice in the past? That your Commission did not ask questions?

MS. NORD: Well, certainly sir, since I've been a Commissioner we've been asking lots of questions. As I indicated in my opening statement, the very first group I reached out to when I became a Commissioner was the Toy Industry Association. And I think I have a very strong record indicating a concern here, and a desire to work with you, with the industry, with consumer groups to make sure that toys that are sold in this country are safe.

SEN. DURBIN: All right, let me ask you this. I return to the issue of children's jewelry.

MS. NORD: Uh-huh.

SEN. DURBIN: And I want - I want to give you a chance to clear up the record if there's --

MS. NORD: Okay, thank you.

SEN. DURBIN: -- if there's any uncertainty. I believe that you have acknowledged that your Commission found that there were dangerous lead in children's jewelry that led to a substantial recall in 2004. I believe that your earlier testimony was that you initiated a rule making in July of 2006 --

MS. NORD: Uh-huh.

SEN. DURBIN: -- relative to lead children's jewelry, which, I think goes without saying, is a hazard if tiny parts can break off and children can swallow them or be exposed to them. So I want to know, as a result of that rule making, what action has been taken by the Consumer Product Safety Commission to stop the export or to even examine the exports of dangerous children's jewelry to the United States.

MS. NORD: Okay. What the Commission did in January of 2007 was issue a Notice of Proposed Rulemaking -- this is not a final rule -- and what the Commission did over the period of time where we did not have our quorum, was analyze the comments that came back and, as I have told your staff, we intend to go to the next stage of rulemaking in the fall.

I am not going to presume to predict the way that rulemaking will come out. That would not be administratively proper.

SEN. DURBIN: So for over a year, your Commission has been sufficiently concerned about dangerous lead content in children's jewelry. And, from what you have told me, no direct action has been taken to stop imports of this dangerous jewelry into the United States?

MS. NORD: Sir, I believe we've done recalls.

SEN. DURBIN: No, well, I'm asking you - tell me about that.

MS. NORD: (Off mike commentary.) No, there is no rule in place. That's what I'm trying to tell you. But we deal with this -- we've got an enforcement policy that we are enforcing. I would like to have a rule because that is a much stronger regulatory tool. Until we get a rule in place, we will enforce our enforcement policy.

SEN. DURBIN: Well, I - I can just tell you that what you've just said is no consolation to families across America. That you are somehow caught up in a rule making process, when you know that one out of five pieces of children's jewelry has dangerous lead content. We expect - Americans expect our government to act to protect families and children.

MS. NORD: That's why we have an enforcement policy --

SEN. DURBIN: Well --

MS. NORD: -- sir, that's why we're - and -

SEN. DURBIN: -- that's why I've asked you several times to tell me what you have done to stop this jewelry from coming into the United States. And when I've written you letters asking you to do a risk analysis of these imports of children's jewelry, you say we don't have the authority; we don't do that. And if that is the case, then I think either the law or the Commission need to change.

MS. NORD: Well, the law is what it is, sir. And I think I outlined in the letter where the holes are. So I look forward to working with you and the Commerce Committee to address this situation.

SEN. DURBIN: Thank you.

Senator Brownback.

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SEN. DURBIN: The third panel which we will now invite to the table includes Jerry Storch, Chairman and Chief Executive Officer of Toys R Us; Bob Eckert, Chairman and Chief Executive Officer of Mattel, Incorporated; Sally Greenberg, Senior Product Safety Counsel with the Consumer's Union; Carter Keithley, President of the Toy Industry Association; and Joe Bhatia -- I hope I didn't butcher that too badly, Joe -- President and CEO of the American National Standards Institute. Thank you all for joining us today.

You have all submitted written statements which will be made a part of the official record. In the interest of moving to questions and exchanges, we hope that you'll keep your opening remarks five minutes or less. I know that's hardly enough to do justice to an issue of this complexity, but we hope our questions will also lead in that same direction.

The first person on my list is Jerry Storch, the CEO of Toys R Us.

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SEN. DURBIN: Thank you, Mr. Bhatia and thanks to the entire panel. I was just noting as Mr. Storch and Mr. Eckert noted that they had five and four children, respectively. I wonder when your kids realize that they can say to the kids in school, my dad owns a toy store, or a toy company.

I was wondering, must have been the most popular kids in school. Let me thank Mr. Keith, Mr. Storch, Mr. Eckert, in particular, and say that over the course of my congressional career there have been times when I've been tough on businesses. And I really have been heartened, and refreshed by the response of your industry to this crisis. I think there is a level of openness and honesty that is essential for restoring the confidence in your products, and to bring consumers back to your stores and back to your company. There's no corporate denial going on here. There's no defensive crouch. There's no throwing around of the terms junk science.

I mean, you're facing this honestly, and I think that's the only way to deal with it, and I'm glad that you are. I commend you for doing that. Of course, you have to follow through. And we'll watch you, as this process unfolds.

So Mr. Eckert, critics would say, that's kind of you, Senator Durbin, but Mattel knew what they were doing. They were looking for the cheapest places in the world to make their toys. So they found a country with the lowest wage scale, with virtually no environmental standards and very basically, no safety inspection.

So why should we be surprised at the outcome? Lead paint goes on products, maybe not because it's cheap, but because the folks that are applying it have no notion that it's dangerous or what the toy ultimately is going to be used for. So is this a situation where your industry is facing the reality of deciding to ship your production overseas?

MR. ECKERT: Mr. Chairman, what's important to me -- the regulations are important, the laws are important. But, as I tried to communicate in my statement, we're a company built on brands and trust. And if consumers can't trust our brands, regardless of where our products are made, and we make product in our own plants and in vendor plants, in China and in other countries.

To me the issue here hasn't been where these products are made, or what the rules are, have we done everything we can to ensure their safety? And I believe everything we're doing today, and the new program that I talked about in my testimony, of certifying paint, re- testing the paint, making sure we test samples of finished products before -- in every production run before they reach store shelves, and increasing the monitoring worldwide, not just in vendor plants in China, will make a big difference.

SEN. DURBIN: Well, having taken a look at our laboratory facilities here at the Consumer Product Safety Commission, it's pretty clear we're not going to test your toys. And I want to get down to this third party certification or testing. Is it your plan -- you and I have discussed this, but I want to put it on the record -- is it your plan to have testing in the countries of origin of these products before they're exported to the United States by reputable firms which can be trusted to do the job well?

MR. ECKERT: Yes, in fact, that's what we're doing today.

Now we have -- we have testing facilities in Mattel, and I know our labs, and our labs are a little more sophisticated and have more opportunities than some of the things I've seen here today. I know what our labs do.

SEN. DURBIN: I hope so.

MR. ECKERT: This hasn't been an issue of the labs haven't done their jobs. The labs have worked. I think it is important to level the playing field. Make sure everybody's protocols are right. Have labs certified or accredited --

SEN. DURBIN: Accredited.

MR. ECKERT: -- by an independent organization to make sure the labs have the right equipment, are doing the right tests, and are doing it with the right frequency. But I can commit to you today, and I use the cookie analogy. If we test the ingredients going into the cookie, and we know they're safe, and we watch the baking of the cookie, when the cookies come out, we do need to sample some of the cookies. Of course, remember, you know, every time we sample a cookie, we destroy it. And every time we do one of these lead paint samples on a toy we destroy it. But if we get the ingredients right, if we're doing the tests up front by certified facilities or accredited facilities, I cannot imagine we're going to have this problem again.

SEN. DURBIN: Now, for the record, most of the toys for sale this holiday season have been manufactured long before. They are in the pipeline all ready and in warehouses and on ships. Is that true?

MR. ECKERT: It's probably in the ballpark.

SEN. DURBIN: And so the testing that would bring consumer confidence involves products that have all ready been shipped, in many instances, from the country from where they were manufactured.

MR. ECKERT: And we're testing those as well. So the firs thing we did was we've got to stop this at the source. The source is in these overseas plants.

Let's make sure we've got our arms around that inventory and what is there. We know that we have now tested every batch of finished products before it leaves Asia or any other facility. That was the important thing.

Now, we've shifted our attention, with the help of retailers, into what products are already here and are there any problems here? But from a long term perspective to me, the real issue is at the source.

SEN. DURBIN: Ms. Greenberg, I hope I hope you were here and listened to the testimony of Chairman Nord on children's jewelry. I'm at a loss to figure out what the Consumer Product Safety Commission is doing. What I heard her say is that in 2004 there were massive recalls. They're concerned that one out of five pieces of jewelry, children's jewelry, coming into America now are dangerous because of lead content.

And the best I could get from her testimony is that they're in the process of rulemaking, whatever that might be, that may have started in July of last year or January of this year.

And I'm not certain; I don't want to misstate her testimony, that she answered directly my question as to whether or not they are stopping and examining shipments of children's jewelry. As someone who has analyzed this agency and has a critique here, what was your impression of that testimony?

MS. GREENBERG: Well, it didn't sound, from her testimony, like they had taken the kind of aggressive action I would have liked to have seen from this agency. And what she's saying is that because there's no standard in place, she felt she didn't have the power to go in and take these samples out of the ships that were coming in.

But what that generated in my mind is okay, what would I do in that situation? And if I were a member of her staff or if I ran that agency, what I would have done is say, "Listen, maybe I don't have the standard in place, but my hands certainly aren't tied because the statute under which the CPSC operates provides a lot of leeway for whoever's in charge there to take a number of steps.

One of the first things I probably would do is I would, and particularly Senator Klobuchar, since you had a young constituent who died from a lead toy that ended up in his stomach, we've got a serious problem here.

So we need to pull the manufacturers in, anybody who is making these toys, pull them into a room and say, "We've got kids who are getting seriously injured by this. What can you promise me you intend to do? Are you doing the testing that needs to be done? What is the level of lead in these toys that come over? Obviously, it is way too high. Are you willing to sit down with us and pound out a voluntary agreement to do the testing and keep these lead toys out of the country?" So that's one idea.

The second idea is, under Section 19, which covers imports from CPSC, there is an opportunity to take -- if a product is a substantial product hazard, that can be the subject of reports to the CPSC about any company that is selling that product. I would have taken those reports.

I would have looked at those, and I would have maybe gone to a member of Congress and said, "We've got a lot of these products out there. I need your help because the rulemaking process is a very lengthy one. So let's take this product and let's try to get some legislation passed quickly that would put a ban in place, because this is a substantial product hazard, and it's killed a kid, and it's hurt many others."

So in other words, her hands are not tied. She may not have a standard in place, but there are a myriad options that I think the chairman of the CPSC ought to have considered.

SEN. DURBIN: I'm just going to close this round of questions by saying it's not just a matter of providing more money to the agency, more staff at the agency, more and better laboratories and buildings. There has to be an aggressive attitude at the agency about protecting families and consumers.

And when they don't have the tools to protect them, to reach out to Congress and other places, the president, and say, "We need more authority here, because there's a danger at stake here." And I think that's --

MS. GREENBERG: Exactly.

SEN. DURBIN: I was looking for that in her testimony, and I'm sorry that I didn't find it in many of her responses. Senator Brownback.

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SEN. DURBIN: Following up on that, Mr. Eckert. One of the questions that was raised is your requirement, as a toy manufacturer, to report defective products or dangerous products. And so what do you understand your corporate obligation to be under the law, or otherwise, to notify either the Consumer Product Safety Commission about the dangers that you found of a product that you're selling or to take other action?

MR. ECKERT: First let me say, we would also support more resources for the CPSC. I think they do important work. We do support them. Some of the things I've said in the last couple of weeks, I believe, have been misattributed about my support of the CPSC, and I would appreciate the opportunity, senator, to be on the record here saying we do support this agency.

And I'll tell you, the work they've done with us this past summer on the lead paint recalls has been exemplary. We're working with short periods of time. We're calling them at night. We're calling them on weekends. We are calling retailers the night before a recall is going to be announced. Everybody is working as fast as they possibly can.

My understanding of the requirements, sir, are these. The requirement of 24-hour notice to the agency of a product that could present a hazard has been well covered. And one of my concerns always is the could standard, because with the benefit of hindsight, going out three or four years, well now we know it could have been a problem because it was a problem three or four years down the road.

What hasn't been reported or what hasn't received as much attention is the provision of the CPSC regulations that gives companies 10 business days or more to determine that they have a reportable incident. So for example, in our very first situation, first lead paint recall this year, we found this paint -- we found this issue in a shipment of product destined for a retailer in France.

Our people on the ground thought they had their arms around the situation, that they controlled the product. It wasn't in commerce, and it wasn't heading to the United States. I wish it would have dialed up sooner to the corporate situation, because it wasn't until we did subsequent tests.

And let me give you an example. A retailer tested this little green fox, an Adora (ph) product, and it failed a lead paint test. We do thousands of lead paint tests every year and don't have failures. So our people, well intended people on the ground in China, called the vendor and said, "You got a problem. Get us some new green foxes." The retailer tests green foxes again. They pass. Our people on the ground think the problem is behind them.

We, in the meantime, have also drawn our own samples from that vendor facility and saw products that failed. And once we did that, we quarantined all products and very quickly this situation moved into the United States where we can take action, which we did in a matter of days.

SEN. DURBIN: You told me in a meeting, I believe it was our conversation, that when it comes to vinyl, for example, there is some presence of lead in most or all vinyl. And so we talked for a few moments about what is the standard, what is the lead safety standard.

Ms. Greenberg, in her testimony, said that the CPSC has not really established an acceptable standard when it comes to lead. So what have you found, as you're testing, what do you use as the standard for your products as acceptable amounts of lead? Is it zero?

MR. ECKERT: We use six parts per million. There is lead in the environment. Unfortunately, lead is pretty ubiquitous in our lives. That's the way it is. So I don't know that one can find zero lead, but we use a very small portion of lead, which as I understand now is not mandated, that's one that everyone in the industry uses.

SEN. DURBIN: You mentioned to me, I think, that California had a state standard that was more -- one of either you or Mr. Storch mentioned, that California had a state standard that was even stricter. Is that correct?

MR. STORCH: I believe that's not the case in regard to toys, and I'll check on this, where the toy standard is the same. But I believe that's in regard to vinyl -- in vinyl products, and I'll check with my experts here in a second. And I believe that that's a standard under their law where it's a standard of where it has to be stated on the package that it could be potentially harmful, as opposed to an absolute standard.

They have a lot of things like that in California, where you'll see on the back of the package, "This has been determined by the state to be potentially hazardous." I believe it's like that. Let me just, if I may just check for a second. I'll get you a definitive answer on that. Prop. 65, and they say 30 parts per million.

SEN. DURBIN: My last question relates to design. When I met with Minister Wei this morning from China, he said part of the problem we have with toys is that our people are manufacturing to the design standards of the U.S. And so if the Magnetix toy has a magnet that pops out it's because we were told to make it that way. We didn't design them, so don't blame us.

How much of this, beyond lead paint, which obviously you've said you don't include on any products, but how much of this does go to design, and how much could be laid at the doorstep of toy manufacturers, of having designs that create loose parts or magnets that pop out?

MR. ECKERT: I think that is well stated, because a lot of these problems, not the lead paint problem, but a lot of toy recalls are related to design. We ourselves are producing thousands and thousands of new products every year, and we're very careful when we design those products to make sure they meet standards, not just regulatory standards around the world, but our own internal standards.

That said, we occasionally make a mistake. Everybody does, and when we do, we need to fix it. And that's not a manufacturing issue. Everything I've seen in the magnet situation has nothing to do with manufacturing.

And what has happened in magnets is these small high powered magnets, senator, as you know, have become almost ubiquitous. We have them on our cell phones, our blackberries, and we've been using them in toys for the past few years. And when a magnet came loose, I think the industry, certainly Mattel, and I believe the regulators, saw it as a quality issue, not a safety issue.

A small part came unglued. That occasionally happens, and what do you do about it? And in our situation, we twice changed our requirements for how to affix those magnets as small parts so they don't come off.

It really wasn't until November of 2005, when unfortunately a child died as a result of ingesting multiple magnets, that I think we all got the wake-up call. This is a safety problem. This isn't about quality, and it has to do with design. How do we design a system to keep these magnets in place?

In January of this year, we created a locking system to embed these small high powered magnets in the plastic itself, so they won't come out. And we had had a recall before then related to loose magnets, but we found the solution.

And what we've done this year, and I think is an example of how Mattel tries to lead the industry, is we retroactively applied that new system for locking the magnet in place to toys that we sold years ago before that was even discovered.

Because again, I think it's most important to get to consumers, even if they bought these products two or three years ago, if we know that magnet isn't a small part issue, it could be a real safety hazard, it's our job to get that product back.

SEN. DURBIN: Senator Brownback.

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SEN. DURBIN: Thank you very much. I want to thank this entire panel, my colleagues, Senator Brownback and Senator Klobuchar. I think there are three obvious conclusions from this hearing. China has failed in sending us products that are dangerous, that have harmed children and many others, and certainly we have to hold them to higher standards if they want to do business with the United States.

The Consumer Product Safety Commission has failed in not providing adequate resources, staffing, or perhaps the will to deal with the important issues that they face. And Congress has failed; those who have argued for so many years that we have to get government out of our lives understand that there are moments when we need government, when we need someone to make certain that the products on the shelves are always going to be safe for our families and our kids.

We need to step up to that responsibility. I thank you all for attending this hearing. It stands adjourned.

END.

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