Kenneth A. Bamberger & Andrew T. Guzman

(Also published in the San Francisco Chronicle, Feb. 25, 2009.)

The Obama administration’s response to the problem of unsafe imports—from tainted foreign-made toys to adulterated drugs—must reflect the realities of globalization.

U.S. regulators possess a full toolbox to police domestic production. When laws mandating product safety aren’t enough, the production process itself is regulated – effectively placing a regulator on the each factory floor. For foreign products, however, American regulation of the production process is often impossible.

The dominant regulatory response to date has been more government inspections, ignoring the fact that there are simply too many imports for inspections to work. There are eight inspectors in the FDA’s new Beijing office, while Chinese exports to the U.S. total $321 billion. Even doubling or tripling the number of inspectors would clearly not be enough.

There is another option: giving U.S. importers incentives to monitor compliance with domestic consumer protection laws. Where imports are likely to pose a threat to consumers, higher legal penalties should be imposed against U.S. companies trading in these products, making these firms liable for the true costs of their foreign activity. Drug companies using foreign supply chains, for example, would face increased administrative penalties if harmful products enter the U.S. Companies would respond by taking safety costs into account when deciding where and how to conduct their business—extending the force of American consumer protection far beyond the formal reach of U.S. law. Companies would compete for the cheapest way to produce safe goods, rather than competing to produce the cheapest goods.

(An article detailing this proposal can be found in the California Law Review (December 2oo8).

Kenneth Bamberger is Assistant Professor of Law and Andrew Guzman is Professor of Law and Director of Graudate Programs.

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