99–006 

111TH CONGRESS REPT. 111–683 " ! HOUSE OF REPRESENTATIVES 2d Session Part 1 

FOREIGN MANUFACTURERS LEGAL ACCOUNTABILITY ACT 

OF 2010 

DECEMBER 16, 2010.—Ordered to be printed 

Mr. WAXMAN, from the Committee on Energy and Commerce, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 4678] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Energy and Commerce, to whom was referred 

the bill (H.R. 4678) to require foreign manufacturers of products 

imported into the United States to establish registered agents in 

the United States who are authorized to accept service of process 

against such manufacturers, and for other purposes, having considered the same, report favorably thereon with an amendment and 

recommend that the bill as amended do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 2 

Purpose and Summary ............................................................................................ 5 

Background and Need for Legislation .................................................................... 6 

Legislative History .................................................................................................. 7 

Committee Consideration ........................................................................................ 7 

Committee Votes ...................................................................................................... 8 

Committee Oversight Findings and Recommendations ........................................ 10 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 10 

Statement of General Performance Goals and Objectives .................................... 10 

Constitutional Authority Statement ...................................................................... 10 

Earmarks and Tax and Tariff Benefits .................................................................. 10 

Federal Advisory Committee Statement ................................................................ 10 

Applicability of Law to Legislative Branch ........................................................... 10 

Federal Mandates Statement ................................................................................. 11 

Committee Cost Estimate ....................................................................................... 11 

Congressional Budget Office Cost Estimate .......................................................... 11 

Section-by-Section Analysis of the Legislation ...................................................... 13 


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Explanation of Amendments ................................................................................... 17 

Changes in Existing Law Made by the Bill, as Reported ..................................... 17 

Dissenting Views ..................................................................................................... 18 

AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Foreign Manufacturers Legal Accountability Act of 

2010’’. 

SEC. 2. DEFINITIONS. 

In this Act: 

(1) APPLICABLE AGENCY.—The term ‘‘applicable agency’’ means, with respect 

to covered products— 

(A) described in subparagraphs (A) and (B) of paragraph (3), the Food 

and Drug Administration; 

(B) described in paragraph (3)(C), the Consumer Product Safety Commission; 

(C) described in subparagraphs (D) and (E) of paragraph (3), the Environmental Protection Agency; 

(D) described in paragraph (3)(F), the National Highway Traffic Safety 

Administration; and 

(E) described in paragraph (3)(G)— 

(i) the Food and Drug Administration, if the item is intended to be 

a component part of a product described in subparagraphs (A) or (B) 

of paragraph (3); 

(ii) the Consumer Product Safety Commission, if the item is intended 

to be a component part of a product described in paragraph (3)(C); 

(iii) the Environmental Protection Agency, if the item is intended to 

be a component part of a product described in subparagraphs (D) or (E) 

of paragraph (3); and 

(iv) the National Highway Traffic Safety Administration, if the item 

is intended to be a component part of a product described in paragraph 

(3)(F). 

(2) COMMERCE.—The term ‘‘commerce’’ means trade, traffic, commerce, or 

transportation— 

(A) between a place in a State and any place outside thereof; or 

(B) which affects trade, traffic, commerce, or transportation described in 

subparagraph (A). 

(3) COVERED PRODUCT.—The term ‘‘covered product’’ means any of the following: 

(A) Drugs, devices, and cosmetics, as such terms are defined in section 

201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321). 

(B) A biological product, as such term is defined in section 351(i) of the 

Public Health Service Act (42 U.S.C. 262(i)). 

(C) A consumer product, as such term is used in section 3(a) of the Consumer Product Safety Act (15 U.S.C. 2052). 

(D) A chemical substance or new chemical substance, as such terms are 

defined in section 3 of the Toxic Substances Control Act (15 U.S.C. 2602). 

(E) A pesticide, as such term is defined in section 2 of the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 136). 

(F) A motor vehicle or motor vehicle equipment, as such terms are defined in section 30102 of title 49, United States Code. 

(G) An item intended to be a component part of a product described in 

subparagraph (A), (B), (C), (D), (E), or (F) but is not yet a component part 

of such product. 

(4) DISTRIBUTE IN COMMERCE.—The term ‘‘distribute in commerce’’ means to 

sell in commerce, to introduce or deliver for introduction into commerce, or to 

hold for sale or distribution after introduction into commerce. 

(5) FOREIGN MANUFACTURER OR PRODUCER.—The term ‘‘foreign manufacturer 

or producer’’ does not include— 

(A) a foreign manufacturer or producer of covered products that is owned 

or controlled, directly or indirectly, by one or more United States natural 

or legal persons, if— 

(i) the United States natural or legal person has assets in excess of 

the foreign manufacturer or producer; or 


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(ii) the United States natural or legal person owns or controls more 

than one foreign manufacturer or producer of covered products and 

such person has assets in excess of the average assets held by each foreign manufacturer or producer; or 

(B) a foreign manufacturer or producer of covered products that owns or 

controls, or through common ownership or control is affiliated with, directly 

or indirectly, one or more United States operating legal persons if the principal executive officer residing in the United States of each United States 

operating legal person certifies in writing to the applicable agency that such 

person— 

(i) is responsible for any liability from a covered product of the foreign manufacturer or producer, including liability from the design, testing, assembly, manufacturing, warnings, labeling, inspection, packaging, or any other cause of action related to the covered product; and 

(ii) will serve as the initial point of contact for the applicable agency 

in case of a voluntary or mandatory recall or other issue involving the 

safety of a covered product. 

SEC. 3. REGISTRATION OF AGENTS OF FOREIGN MANUFACTURERS AUTHORIZED TO ACCEPT 

SERVICE OF PROCESS IN THE UNITED STATES. 

(a) REGISTRATION.— (1) IN GENERAL.—Beginning on the date that is 180 days after the date on 

which the regulations are prescribed pursuant to section 3(d) and except as provided in this subsection, the head of each applicable agency shall require foreign 

manufacturers and producers of covered products distributed in commerce to 

register an agent in the United States who is authorized to accept service of 

process on behalf of such manufacturer or producer for the purpose of any State 

or Federal regulatory proceeding or any civil action in State or Federal court 

related to such covered product, if such service is made in accordance with the 

State or Federal rules for service of process in the State in which the case or 

regulatory action is brought. 

(2) LOCATION.—The head of each applicable agency shall require that an 

agent of a foreign manufacturer or producer registered under paragraph (1) 

be— 

(A) located in a State chosen by the foreign manufacturer or producer 

with a substantial connection to the importation, distribution, or sale of the 

products of the foreign manufacturer or producer; and 

(B) an individual, domestic firm, or domestic corporation that is a permanent resident of the United States. 

(3) DESIGNATION BY MANUFACTURER OR PRODUCER AND ACCEPTANCE BY

AGENT.—The head of each applicable agency shall, at a minimum, require a— 

(A) written designation by a foreign manufacturer or producer with respect to which paragraph (1) applies— 

(i) signed by an official or employee of the foreign manufacturer or 

producer with authority to appoint an agent; 

(ii) containing the full legal name, principal place of business, and 

mailing address of the manufacturer or producer; and 

(iii) containing a statement that the designation is valid and binding 

on the foreign manufacturer or producer for the purposes of this Act. 

(B) written acceptance by the agent registered by a foreign manufacturer 

or producer with respect to which paragraph (1) applies— 

(i) signed by the agent or, in the case in which a domestic firm or 

domestic corporation is designated as an agent, an official or employee 

of the firm or corporation with authority to sign for the firm or corporation; 

(ii) containing the agent’s full legal name, physical address, mailing 

address, and phone number; and 

(iii) containing a statement that the agent accepts the designation 

and acknowledges that the duties of the agent may not be assigned to 

another person or entity and the duties remain in effect until withdrawn or replaced by the foreign manufacturer or producer. 

(4) APPLICABILITY.— 

(A) IN GENERAL.—Paragraph (1) applies only with respect to a foreign 

manufacturer or producer that exceeds minimum requirements established 

by the head of the applicable agency under this section. 

(B) FACTORS.—In determining the minimum requirements for application 

of paragraph (1) to a foreign manufacturer or producer, the head of the applicable agency shall, at a minimum, consider the following: 

(i) The value of all covered products imported from the manufacturer 

or producer in a calendar year. 


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(ii) The quantity of all covered products imported from the manufacturer or producer in a calendar year. 

(iii) The frequency of importation from the manufacturer or producer 

in a calendar year. 

(b) REGISTRY OF AGENTS OF FOREIGN MANUFACTURERS AND CERTIFICATIONS.— (1) IN GENERAL.—The Secretary of Commerce shall, in cooperation with each 

head of an applicable agency, establish and keep up to date a registry of agents 

registered under subsection (a), certifications submitted under section 2(5)(B), 

and certifications removed pursuant to subsection (e). 

(2) AVAILABILITY.—The Secretary of Commerce shall make the registry established under paragraph (1) available— 

(A) to the public in a searchable format through the Internet website of 

the Department of Commerce; and 

(B) to the Commissioner responsible for U.S. Customs and Border Protection in a format prescribed by the Commissioner. 

(c) CONSENT TO JURISDICTION.— (1) IN GENERAL.—A foreign manufacturer or producer of a covered product 

that registers an agent under this section thereby consents to the personal jurisdiction of the State and Federal courts of the State in which the registered 

agent is located for the purpose of any judicial proceeding related to such covered product. 

(2) RULE OF CONSTRUCTION.—Paragraph (1) shall not apply to actions brought 

by foreign plaintiffs where the alleged injury or damage occurred outside the 

United States. 

(d) REGULATIONS.— (1) IN GENERAL.—Not later than one year after the date of the enactment of 

this Act, the Secretary of Commerce, the Commissioner responsible for U.S. 

Customs and Border Protection, and each head of an applicable agency shall 

prescribe regulations to carry out this section. 

(2) INTERAGENCY COOPERATION.—The Secretary of Commerce, the Commissioner responsible for U.S. Customs and Border Protection, and each head of an 

applicable agency shall cooperate and consult with one another for the purpose 

of— 

(A) prescribing consistent regulations to the extent necessary for the effective and efficient sharing of information and establishment of systems 

and procedures necessary to carry out this section; and 

(B) establishing minimum requirements described in subsection (a)(4), 

and to the extent advisable and practicable for the purpose of establishing 

consistent minimum requirements. 

(e) CERTIFICATION REQUIREMENTS.—Upon actual knowledge or verified information that any person to whom the requirements of section 2(5)(B) applies has failed 

to fulfill such requirements the applicable agency shall— 

(1) notify the Secretary of Commerce that the certification of such person 

must be removed from the registry under section 3(b); and 

(2) notify such person that the related foreign manufacturer or producer must 

comply with section 3. 

SEC. 4. PROHIBITION OF IMPORTATION OF PRODUCTS OF MANUFACTURERS WITHOUT REGISTERED AGENTS IN UNITED STATES. 

(a) IN GENERAL.—Beginning on the date that is 180 days after the date the regulations required under section 3(d) are prescribed, a person may not import into the 

United States a covered product (or component part that will be used in the United 

States to manufacture a covered product) if such product (or component part) or any 

part of such product (or component part) was manufactured or produced outside the 

United States by a manufacturer or producer who does not have a registered agent 

described in section 3(a) whose authority is in effect on the date of the importation. 

(b) ENFORCEMENT.—The Secretary of Homeland Security shall prescribe regulations to enforce the prohibition in subsection (a). 

SEC. 5. REPORTING OF DEFECTS IN COVERED PRODUCTS IN FOREIGN COUNTRIES. 

(a) DETERMINATION BY MANUFACTURER OR PRODUCER.—Not later than 5 working 

days after determining to conduct a safety recall or other safety campaign in a foreign country of a covered product that is identical or substantially similar to a covered product offered for sale in the United States, the manufacturer or producer of 

the covered product shall report the determination to the head of the applicable 

agency. 

(b) DETERMINATION BY FOREIGN GOVERNMENT.—Not later than 5 working days 

after receiving notification that the government of a foreign country has determined 

that a safety recall or other safety campaign must be conducted in the foreign country of a covered product that is identical or substantially similar to a covered prodVerDate Mar 15 2010 04:03 Dec 20, 2010 Jkt 099010 PO 00000 Frm 00004 Fmt 6659 Sfmt 6621 E:\HR\OC\HR683P1.XXX HR683P1

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uct offered for sale in the United States, the manufacturer or producer of the covered product shall report the determination to the head of the applicable agency. 

(c) REPORTING REQUIREMENTS.—Not later than the date described in subsection 

(d), the head of each applicable agency shall prescribe the contents of the notification required by this section. 

(d) EFFECTIVE DATE.—Except as provided in subsection (c), this section shall take 

effect on the date that is one year after the date of the enactment of this Act. 

SEC. 6. STUDY ON REGISTRATION OF AGENTS OF FOREIGN FOOD PRODUCERS AUTHORIZED 

TO ACCEPT SERVICE OF PROCESS IN THE UNITED STATES. 

Not later than 1 year after the date of the enactment of this Act, the Secretary 

of Agriculture and the Commissioner of Food and Drugs shall jointly— 

(1) complete a study on the feasibility and advisability of requiring foreign 

producers of food distributed in commerce to register an agent in the United 

States who is authorized to accept service of process on behalf of such producers 

for the purpose of any State or Federal regulatory proceeding or any civil action 

in State or Federal court related to such food products; and 

(2) submit to Congress a report on the findings of the Secretary with respect 

to such study. 

SEC. 7. STUDY ON REGISTRATION OF AGENTS OF FOREIGN MANUFACTURERS AND PRODUCERS OF COMPONENT PARTS WITHIN COVERED PRODUCTS. 

Not later than 1 year after the date of the enactment of this Act, the head of each 

applicable agency shall— 

(1) complete a study on determining feasible and advisable methods of requiring manufacturers or producers of component parts within covered products 

manufactured or produced outside the United States and distributed in commerce to register agents in the United States who are authorized to accept service of process on behalf of such manufacturers or producers for the purpose of 

any State or Federal regulatory proceeding or any civil action in State or Federal court related to such component parts; and 

(2) submit to Congress a report on the findings of the head of the applicable 

agency with respect to the study. 

SEC. 8. STUDY ON ENFORCEMENT OF UNITED STATES JUDGMENTS RELATING TO DEFECTIVE 

DRYWALL IMPORTED FROM CHINA. 

Not later than 1 year after the date of the enactment of this Act, the Comptroller 

General of the United States shall— 

(1) complete a study on methods to enforce judgments of any State or Federal 

regulatory proceeding or any civil action in State or Federal court relating to 

defective drywall imported from the People’s Republic of China and distributed 

in commerce during the period 2004 through 2007 and used in residential dwellings in the United States; and 

(2) submit to Congress a report on the findings of the Comptroller General 

with respect to the study. 

SEC. 9. RELATIONSHIP WITH OTHER LAWS. 

Nothing in this Act shall affect the authority of any State to establish or continue 

in effect a provision of State law relating to service of process or personal jurisdiction, except to the extent that such provision of law is inconsistent with the provisions of this Act, and then only to the extent of such inconsistency. 

PURPOSE AND SUMMARY

H.R. 4678, the ‘‘Foreign Manufacturers Legal Accountability Act 

of 2010’’, introduced by Rep. Betty Sutton (D–OH), requires foreign 

manufacturers and producers that distribute in commerce certain 

products regulated by the Consumer Product Safety Commission 

(CPSC), the Environmental Protection Agency (EPA), and the Food 

and Drug Administration (FDA) to register an agent in the United 

States who is authorized to accept service of process on behalf of 

the foreign manufacturer or producer. Registering an agent consistent with the Act constitutes acceptance by the foreign manufacturer or producer of personal jurisdiction of the state and federal 

courts of the state in which the agent is located. 

Under H.R. 4678, agents would have to be registered in a state 

with a substantial connection to the importation, distribution, or 

sale of products of the foreign manufacturer or producer. The 


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1 U.S. Consumer Product Safety Commission, Import Safety Strategy (July 2008) (online at 

www.cpsc.gov/BUSINFO/importsafety.pdf). 2 Id. 3 U.S. Consumer Product Safety Commission, 2011 Performance Budget Request (Feb. 2010) 

(online at www.cpsc.gov/CPSCPUB/PUBS/REPORTS/2011plan.pdf). 4 U.S. Consumer Product Safety Commission, Import Safety Strategy (July 2008) (online at 

www.cpsc.gov/BUSINFO/importsafety.pdf). 5 Id. 

6 Recalled Toys Contain Chemical Linked to Date-Rape Drug, USA Today (Nov. 7, 2007) (online at www.usatoday.com/money/industries/retail/2007–11–07–toy-recall-chemicalslN.htm). 7 U.S. Consumer Product Safety Commission, RC2 Corp. Recalls Various Thomas & FriendsΤΜ

Wooden Railway Toys Due to Lead Poisoning Hazard (June 13, 2007) (online at www.cpsc.gov/ 

cpscpub/prerel/prhtml07/07212.html). 8Deadly Heparin Contaminant Identified, CBS (Mar. 19, 2008) (online at www.cbsnews.com/ 

stories/2008/03/19/health/main3950732.shtml?tag=dsGoogleModule). 9 CPSC Ties Drywall, Corrosion, The Wall Street Journal (Nov. 24, 2009) (online at 

online.wsj.com/article/SB125899409382460761.html). 10Senate Committee on the Judiciary, Subcommittee on Administrative Oversight and the 

Courts, Testimony of Louise Ellen Teitz, Leveling the Playing Field and Protecting Americans, 

111th Cong. (May 19, 2009). 

CPSC, FDA, and EPA would each be required to determine, based 

on the value or quantity of goods manufactured or produced, which 

foreign manufacturers and producers under their respective authority would be required to designate a registered agent. The Act 

prohibits the importation into the United States of products from 

foreign manufacturers that fail to designate a registered agent. 

BACKGROUND AND NEED FOR LEGISLATION

In the decade between 1998 and 2007, the import of consumer 

products into the United States more than doubled.1 This sharp 

rise in imported consumer products has been accompanied by an 

overall increase in product recalls and a disproportionate increase 

in the share of product recalls involving imported products—particularly products from China. 

In 2007, the CPSC announced 473 recalls.2 This was the highest 

level of recalls in 10 years.3 Of those 473 recalls, 82% involved imported products.4 Of the 389 recalls involving imported products, 

74% involved products from China.5

Incidents involving defective imported products that attracted 

national attention in the past several years included: a children’s 

craft kit containing beads coated with a chemical similar to a date 

rape drug; 6 toy trains coated with lead paint;7 a contaminated 

blood thinning drug; 8 and drywall emitting sulfurous gases.9

Holding foreign manufacturers accountable for injuries caused by 

defective products that make it into the hands of American consumers has proven difficult. Victims trying to sue foreign manufacturers for injuries caused by defective products face significant obstacles with respect to providing service of process (notice about the 

litigation required to be given to the defendant) and establishing 

jurisdiction over foreign manufacturers in U.S. courts. 

The Hague Convention on Service Abroad of Judicial and 

Extrajudicial Documents in Civil or Commercial Matters—of which 

the United States and many of its major trading partners, including China, are parties—provides a means of serving process on foreign manufacturers in their home countries.10 This method, however, can be time consuming and costly because all the legal documents must be translated into the foreign manufacturer’s native 

language and then provided to a governmental central authority, 

which in turn attempts to serve the documents on the manufacVerDate Mar 15 2010 04:03 Dec 20, 2010 Jkt 099010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR683P1.XXX HR683P1

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11 Id. 12 Id. 13 Id. 14 Id. 15 Id. 16 Id. 

turer.11 It can take three or more months for the central authority 

to serve the documents on the manufacturer.12

In addition, even if a victim successfully serves process on a foreign manufacturer, the manufacturer will likely challenge the exercise of personal jurisdiction over it by a U.S. court. Under well-established constitutional due process principles, before a U.S. court 

can exercise personal jurisdiction over a defendant it must consider: (1) the defendant’s purposeful minimum contacts with the 

state in which the court sits, and (2) fairness to the defendant of 

being subjected to jurisdiction in that state’s courts.13 Foreign manufacturers have increasingly turned to litigating this issue to avoid 

being brought before U.S. courts.14 This litigation can be costly and 

time consuming due to the fact specific nature of these issues.15

The result is an increased time and expense burden for both victims injured by defective products and the judicial system.16

LEGISLATIVE HISTORY

On February 24, 2010, H.R. 4678, the ‘‘Foreign Manufacturers 

Legal Accountability Act of 2010’’, was introduced by Reps. Betty 

Sutton, Michael Turner, Linda T. Sa ́nchez, John Conyers, Zoe 

Lofgren, Candice Miller, Bruce Braley, John Sarbanes, Ginny 

Brown-Waite, Michael Michaud, Lloyd Doggett, Walter Jones, John 

Duncan, Phil Hare, Dale Kildee, Bart Stupak, Joe Donnelly, Gene 

Green, Lee Terry, Donna Edwards, Carol Shea-Porter, James Oberstar, Tim Ryan, Paul Kanjorski, Marcy Kaptur, Steve Kagen, and 

John Yarmuth. The bill was referred to the Committee on Energy 

and Commerce, and in addition to the Committee on Ways and 

Means and the Committee on Agriculture. Subsequently, on February 25, 2010, the legislation was referred to the Subcommittee on 

Commerce, Trade, and Consumer Protection. The Subcommittee 

held a hearing on the legislation on June 16, 2010. At the hearing, 

the Subcommittee heard support for the bill from the CPSC, consumers groups, a homeowner affected by defective Chinese drywall, 

and a law professor with expertise on the subject of tort law. A witness representing U.S. importers and exporters expressed reservations about the bill. 

COMMITTEE CONSIDERATION

On June 30, 2010, the Subcommittee on Commerce, Trade, and 

Consumer Protection met in open markup session to consider H.R. 

4678. The Subcommittee subsequently favorably forwarded H.R. 

4678 to the full Committee, amended, by a voice vote. 

During Subcommittee consideration and markup, Chairman 

Rush offered an amendment in the nature of a substitute to H.R. 

4678, which was agreed to by a voice vote. The amendment did the 

following: (1) limited the breadth of the consent to personal jurisdiction by making clear that it does not include wholly foreign law 

suits; (2) provided additional guidance to applicable agencies on 

setting the minimum size that foreign manufacturers or producers 


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must exceed in order to trigger the Act’s requirements; (3) set certain minimum requirements to be eligible to serve as the registered 

agent for a foreign manufacturer or producer and also set certain 

minimum requirements for documenting the designation of a registered agent; (4) clarified the Act’s applicability to component part 

manufacturers; (5) added the National Highway Traffic Safety Administration (NHTSA) as an agency that must require foreign manufacturers to meet the requirements of the Act; (6) called on all the 

agencies with responsibilities under the Act to cooperate with each 

other to establish consistent regulations to carry out the Act in an 

effective and efficient manner and extended the timeframe for implementation of the Act to one year; and (7) required foreign manufacturers and producers to report to the applicable agency any safety campaigns or recalls in other countries for products also sold in 

the United States. 

On July 21, 2010, the Committee on Energy and Commerce met 

in open markup session and considered H.R. 4678 as approved by 

the Subcommittee. A manager’s amendment offered by Chairman 

Waxman was agreed to by a voice vote. The Committee also adopted an amendment offered by Mr. Melancon of Louisiana by a voice 

vote. Subsequently, the Committee ordered H.R. 4678 favorably reported to the House, amended, by a rollcall vote of 31 yeas—22 

nays. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list each record vote on the motion 

to report legislation and amendments thereto. A motion by Mr. 

Waxman ordering H.R. 4678 reported to the House, amended, was 

approved by a record vote of 31 yeas and 22 nays. The following 

is the recorded vote taken during Committee consideration, including the names of those members voting for and against: 


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COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the oversight findings and recommendations of the Committee are reflected in the descriptive portions of 

this report, including the recommendation that foreign manufacturers and producers that distribute products in commerce in the 

United States be required to have an agent in the United States 

who is authorized to accept service of process. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

In accordance with clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee’s performance goals and 

objectives are reflected in the descriptive portions of this report, including that foreign manufacturers and producers that distribute 

products in commerce in the United States be required to have an 

agent in the United States who is authorized to accept service of 

process. 

CONSTITUTIONAL AUTHORITY STATEMENT

Clause 3(d)(1) of rule XIII of the Rules of the House of Representatives requires the Committee to include a statement citing 

the specific powers granted to Congress to enact the law proposed 

by H.R. 4678. The Committee finds that the constitutional authority for H.R. 4678 is provided in article I, section 8, clauses 3 and 

18 of the Constitution of the United States. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

Pursuant to clause 3(c)(2) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that H.R. 4678 would result in no new budget authority, entitlement authority, or tax expenditures or revenues. 

EARMARKS AND TAX AND TARIFF BENEFITS

H.R. 4678 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9(d), 9(e), 

or 9(f) of rule XXI of the Rules of the House of Representatives. 

FEDERAL ADVISORY COMMITTEE STATEMENT

No advisory committees were created by H.R. 4678 within the 

meaning of 5 U.S.C. App., section 5(b). 

APPLICABILITY OF LAW TO THE LEGISLATIVE BRANCH

Section 102(b)(3) of the Congressional Accountability Act of 1985 

requires a description of the application of this bill to the legislative branch where the bill relates to terms and conditions of employment or access to public services or accommodations. H.R. 4678 

does not relate to the terms and conditions of employment or access 

to public services or accommodations within the meaning of section 

102(b)(3). 


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FEDERAL MANDATES STATEMENT

Section 423 of the Congressional Budget and Impoundment Control Act of 1974 (as amended by section 101(a)(2) of the Unfunded 

Mandates Reform Act, P.L. 104–4) requires a statement on whether 

the provisions of the report include unfunded mandates. In compliance with this requirement the Committee adopts as its own the 

estimates of federal mandates prepared by the Director of the Congressional Budget Office included herein. 

COMMITTEE COST ESTIMATE

Clause 3(d)(2) of rule XIII of the Rules of the House of Representatives requires an estimate and a comparison by the Committee of the costs that would be incurred in carrying out H.R. 

4678. Clause 3(d)(3)(B) of that rule, however, provides that this requirement does not apply when the Committee has included in its 

report a timely submitted cost estimate of the bill prepared by the 

Director of the Congressional Budget Office under section 402 of 

the Congressional Budget Act. The Committee adopts as its own 

the cost estimate on H.R. 4678 prepared by the Director of the Congressional Budget Office included herein. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In accordance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the following is the cost estimate on H.R. 

4678 provided by the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974: 

DECEMBER 9, 2010. 

Hon. HENRY A. WAXMAN, 

Chairman, Committee on Energy and Commerce, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4678, the Foreign Manufacturers Legal Accountability Act of 2010. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 4678—Foreign Manufacturers Legal Accountability Act of 2010 

H.R. 4678 would require certain foreign manufacturers to register an agent in the United States that would be authorized to accept notice of a regulatory proceeding or civil action. The bill also 

would require those foreign manufacturers and producers to report 

any voluntary or mandatory recalls or other safety campaigns involving affected products to the appropriate regulatory agency. 

Several agencies, including the Food and Drug Administration 

(FDA), the Consumer Product Safety Commission, the Environmental Protection Agency, and the National Highway Traffic Safety 

Administration, would be required to develop regulations to carry 

out the new requirements. For example, the FDA would be responsible for implementing the registration and reporting requirements 

relating to imported drugs. 


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Further, the bill would prohibit foreign goods from being imported if the affected manufacturer fails to designate such an 

agent. We assume that the Customs and Border Patrol (CBP), in 

coordination with the other affected agencies, would be primarily 

responsible for enforcing those new prohibitions. 

The bill also would require the International Trade Administration to develop a registry of agents that would be made available 

to the public and would require agencies to prepare various reports 

for the Congress related to the registration of agents for foreign 

manufacturers and other topics related to imported goods. 

Impact on the Federal Budget 

Based on information from the affected agencies, CBO estimates 

that implementing H.R. 4678 would cost about $170 million over 

the 2011–2015 period, assuming appropriation of the necessary 

amounts, to develop and enforce the new regulations, to create the 

registry of agents, and to prepare reports. CBO expects that most 

of those costs would be incurred by CBP and FDA for administration and enforcement activities. 

Enacting H.R. 4678 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. 

Intergovernmental and private-sector impact 

H.R. 4678 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would not affect 

the budgets of state, local, or tribal governments. 

H.R. 4678 would impose private-sector mandates as defined in 

UMRA by requiring manufacturers in the United States with foreign locations or subsidiaries to register agents in the United 

States and to report on any safety campaigns resulting from the recall of products covered by the legislation. Based on information 

from industry sources about the cost of hiring or appointing registered agents and on the small incremental difference between 

current safety standards for consumer products and the legislation’s requirement, CBO estimates that the cost to comply with 

those mandates would not be significant. 

The bill also would impose a private-sector mandate on importers 

and manufacturers by prohibiting them from importing certain 

products or components if those imports come from a foreign manufacturer that does not have a registered agent in the United States. 

Currently, industry standards do not require manufacturers to 

know the origin of imported components or parts used to manufacture most goods. The cost of the mandate would include the cost 

of tracking the origin of imports and their components and any net 

loss in income resulting from purchasing imports from foreign manufacturers that comply with the bill. Based on information from industry experts on the cost of obtaining that additional information 

and on the number of manufacturers that would be affected, CBO 

estimates that the cost of this mandate would probably be substantial. 

In total, CBO estimates that the cost of complying with the mandates in the bill would probably exceed the annual threshold for 

private-sector mandates established in UMRA ($141 million in 

2010, adjusted annually for inflation). 


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CBO staff contacts 

The staff contacts for this estimate are Susan Willie (for federal 

costs), and Marin Randall, Jimmy Jim, and Samuel Wice (for the 

private-sector impact). This estimate was approved by Theresa 

Gullo, Deputy Assistant Director for Budget Analysis. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section designates that the short title of the Act as the ‘‘Foreign Manufacturer Legal Accountability Act of 2010’’. 

Section 2. Definitions 

This section defines the terms ‘‘applicable agency’’, ‘‘commerce’’, 

‘‘covered product’’, and ‘‘distribute in commerce’’. It also defines by 

exclusion the term ‘‘foreign manufacturer or producer’’. 

The definition of ‘‘foreign manufacturer or producer’’ is intended 

to address concerns by industry stakeholders about including within the scope of the Act foreign manufacturers and producers related 

to an entity located in the United States. These stakeholders contended that the presence of a related entity over which a U.S. court 

already has jurisdiction means there is a responsible party located 

here who can be held accountable in place of the foreign manufacturer or producer in the event of damage or injury from a covered 

product, such that it was unnecessary to require the foreign manufacturer to register an agent and consent to jurisdiction. The definition, in general terms, removes from the scope of the Act two types 

of U.S. entities that distribute in commerce covered products from 

a foreign manufacturer to which they are related: (1) a foreign 

manufacturer that distributes a covered product through its U.S. 

parent; and (2) a foreign manufacturer that distributes a covered 

product through its U.S. subsidiary. 

The exemption, however, is not unqualified. It is the view of the 

Committee that it would be unwise to exempt these categories of 

manufacturers entirely from the provisions of the Act without securing specific, credible assurance that consumers injured by dangerous or defective products made by such manufacturers can hold 

someone in the United States responsible. The exemption is only 

available to a foreign manufacturer with a U.S. parent that is a 

going concern, and not merely a shell. The exclusion attempts to 

capture only operating companies by requiring that the level of assets held by the parent exceed those of the foreign manufacturer, 

or exceed an average of the assets held by each foreign manufacturer related to the parent. The Committee believes that if the parent possesses more in assets than a subsidiary then it is in wellenough condition to settle a judgment. The exemption also is only 

available to a foreign manufacturer with a U.S. subsidiary that will 

certify to the applicable agency that it is responsible for any liability related to a covered product of the foreign manufacturer and 

will be responsive in the event of a recall. 

While the Committee was sympathetic to the concerns of these 

industry stakeholders, it also is aware that U.S. subsidiaries of foreign manufacturers that distribute covered products have argued 

against responding to consumers in U.S. courts on the grounds that 


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17See, e.g., Defendant Toyota Motor Sales USA, Inc.’s, Response to Plaintiffs’ Special Interrogatory Set No. One, Ezal v. Martin Resorts, Inc. and Toyota Motor Sales USA, Inc., (Aug. 6, 2009) 

(stating: ‘‘PREFATORY STATEMENT: Toyota Motor Sales, U.S.A., Inc. is the authorized importer and distributor of Toyota motor vehicles in certain geographic areas of the continental 

United States. Toyota Motor Sales, U.S.A., Inc. does not design, test, manufacture or assemble 

Toyota vehicles in the ordinary course of its business, and Toyota Motor Sales, U.S.A., Inc. was 

not responsible for the design, manufacture, assembly or developmental testing of the 2005 Toyota Camry in this case. Therefore, Toyota Motor Sales, U.S.A., Inc. does not have sufficient information or documents to respond completely and accurately to many of these interrogatories. 

Such interrogatories should be addressed to Toyota Motor Corporation. Toyota Motor Corporation, located in Japan, was responsible for the overall design and developmental testing of the 

2005 Camry’’). 18See Richardson v. Volkswagenwerk, A.G., No. 77–0702–CV–W–1–S–4 (W.D. Mo., Apr. 14, 

1982) (stating: ‘‘Contrary to plaintiffs’ argument, three reasons lead to the conclusion that 

VWAG’s designation of VWOA as an agent under 15 U.S.C. § 1399(e) [now 49 U.S.C. 30164] is 

limited to service of documents by, of and from the United States Secretary of Transportation. . . . Finally, this Court’s decision that 15 U.S.C. § 1399(e) is not a proper method for 

service of process in common law actions is supported by the wisdom of other courts which have 

addressed the same issue. Utsey v. VWAG, No. 80–1620–9 (D.S.C.Sept. 18, 1981); Hamilton v. 

VWAG, Nos. 81–01–L, 80–594–D (D.N.H.June 10, 1981); Pasquale v. Genovese, 428 A.2d 1126 

(Vt.1981); Sipes v. American Honda Motor Co., 608 S.W.2d 125 (Mo.App.1980); Fields v. Peyer, 

75 Wis.2d 644, 250 N.W.2d 311 (1977); VWAG v. McCurdy, 340 So.2d 544 (Fla.App. 1976); 

Rubino v. Celeste Motors, Inc., No. 72–CV–350 (N.D.N.Y. Oct. 11, 1974)’’). 

only the foreign entity is the appropriate entity to respond.17 The 

definition in the bill ensures that if a U.S. subsidiary is unwilling 

to provide a certification of responsibility for actions of the related 

foreign manufacturer, then the related foreign manufacturer will 

have to comply with the registration and consent requirements of 

the Act and be treated like any other foreign or domestic manufacturer doing business in the United States. 

The definition of ‘‘applicable agency’’ was expanded during Subcommittee consideration to include the National Highway Traffic 

Safety Administration (NHTSA). While foreign manufacturers of 

motor vehicles and motor vehicle equipment are required to designate an agent for service of process and notices pursuant to 49 

U.S.C. 30164, designation of an agent under that statute does not 

constitute acceptance of jurisdiction of U.S. courts by the manufacturer. Additionally, some courts have held that the designation of 

an agent under that statute is for the limited purpose of federal 

regulatory proceedings.18 The Committee has included NHTSA 

here to eliminate barriers for injured consumers to accessing and 

fully utilizing agents designated by these manufacturers, and so 

there is no inconsistency with respect to the role of registered 

agents across the agencies with responsibilities for consumer protection. 

Section 3. Registration of agents of foreign manufacturers authorized to accept service of process in the United States 

Section 3(a) requires foreign manufacturers and producers that 

send covered products to the United States for distribution in commerce to designate a registered agent who is authorized to accept 

service of process on behalf of the manufacturer or producer here 

in the United States for state or federal regulatory proceedings or 

civil actions in state or federal court related to a covered product. 

This subsection also sets out the requirements for the designation 

of an agent, including selection of the location, who may serve as 

an agent, and the minimum documentation that an applicable 

agency must require for a valid designation. Finally, this subsection provides guidance to applicable agencies on setting the minimum level of import activity that foreign manufacturers or producers under their respective authority must exceed in order to be 


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19 Hague Conference on Private International Law, Outline: Hague Service Convention (Nov. 

2009) (online at www.hcch.net/upload/outline14e.pdf). 

required to register an agent under the Act. The Committee heard 

concerns that requiring an agent for service of process in the 

United States would violate U.S. international obligations as a 

party to the Hague Convention on the Service Abroad of Judicial 

and Extrajudicial Documents in Civil or Commercial Matters. 

These concerns, however, are misplaced. The Hague Convention on 

Service, as the title makes clear, relates to service abroad. This Act 

relates to service within the territorial boundaries of the United 

States. The Hague Conference’s own explanatory documents make 

clear that the Convention only applies when ‘‘a document is to be 

transmitted from one State party to the Convention to another 

State party for service in the latter (the law of the forum State determines whether or not a document has to be transmitted abroad 

for service in the other State—the Convention is non-mandatory).’’ 19 The Committee has determined that service of process 

does not need to be transmitted abroad under the circumstances 

provided for under this Act. 

Section 3(b) requires the Secretary of Commerce in cooperation 

with the applicable agencies to establish a searchable Internet 

database containing information about the agent registered by a 

foreign manufacturer or producer, U.S. entities that have submitted certifications of responsibility and liability for their foreign related entities, and U.S. entities that have had their certifications 

of responsibility and liability removed for failure to fulfill their responsibility or liability obligations. The Secretary of Commerce is 

also required to provide this information to the Commissioner of 

Customs and Border Protection. 

Section 3(c) provides that a foreign manufacturer or producer 

that registers an agent consistent with the Act consents to the jurisdiction of the state and federal courts of the state in which the 

agent for service of process is located for the purpose of any judicial 

proceeding related to a covered product. This consent ensures that 

injured consumers have access to a court in the United States to 

bring claims related to a covered product. For example, a foreign 

manufacturer that exports bicycle helmets subject to regulation by 

the CPSC must register an agent with the CPSC. If a person in the 

United States is injured in a bicycle accident and claims that the 

helmet was defective, then that company would have consented to 

the jurisdiction of the courts in the state where the agent is located. The scope of consent extends only to the covered product 

that allegedly caused the plaintiff’s injury. A foreign manufacturer 

that exports bicycle helmets into the United States does not, by virtue of registering an agent with the CPSC, generally consent to jurisdiction related to claims involving products that are not covered 

by the Act. 

That a foreign manufacturer has consented to the jurisdiction of 

the courts in one state, however, does not mean that injured consumers can only bring suit in that state. It is the Committee’s intent that injured consumers can continue to pursue their claims in 

any state they wish. The difference is that the foreign manufacturer can contest the exercise of jurisdiction by courts in states 

other than the one where the registered agent is located. It is the 


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20 House Committee on Energy and Commerce, Subcommittee on Commerce, Trade, and Consumer Protection, Testimony of Prof. Andrew Popper, Hearing on H.R. 4678, the ‘‘Foreign Manufacturers Legal Accountability Act’’ and H.R. 5156, the ‘‘Clean Energy Technology Manufacturing 

and Export Assistance Act,’’ 111th Cong. (June 16, 2010). 

Committee’s view that establishing the floor of at least one state 

where consumers can seek judicial relief brings United States and 

foreign manufacturers closer to competing on a level field because 

there is no doubt that a U.S.-based manufacturer will always be 

subject to the jurisdiction of courts of at least one state. This subsection also provides that the consent does not extend to civil actions brought by foreign plaintiffs where the injury or damage from 

a covered product occurred outside the United States. 

The Committee heard concerns that requiring foreign manufacturers to submit to the jurisdiction of U.S. courts would lead to retaliation by other countries against U.S. manufacturers that do 

business abroad. These concerns are also misplaced. The problem 

of establishing jurisdiction over foreign manufacturers is one of 

American law. Our constitutional principles require measuring 

minimum contacts with a given state to establish jurisdiction. Most 

other countries follow the general rule of tort law that the forum 

is governed by lex loci delecti—the law of the place of the wrong.20

Section 3(d) requires the departments and agencies with responsibilities under the Act to prescribe regulations no later than one 

year after enactment and that the departments and agencies work 

together so that the Act is implemented as effectively and consistently as possible. 

Section 3(e) requires applicable agencies to remove the certifications of U.S. entities that fail to fulfill the responsibility or liability obligations that served as the assurance for exempting their related foreign manufacture from having to register an agent and 

consent to the jurisdiction of U.S. courts. 

Section 4. Prohibition of importation of products of manufacturers 

without registered agents in United States 

This section bans the importation of covered products from foreign manufacturers and producers that fail to register an agent 

consistent with the Act. 

Section 5. Reporting of defects in covered products in foreign countries 

This section requires a foreign manufacturer or producer of a 

covered product to report within five business days to the applicable agency any voluntary or mandatory recalls or other safety campaigns concerning a product that is identical or substantially similar to a covered product sold in the United States. 

Section 6. Study on registration of agents of foreign food producers 

authorized to accept service of process in the United States 

This section calls on the U.S. Department of Agriculture and the 

FDA to complete a study to determine the feasibility of requiring 

foreign producers of food exported to the United States to register 

an agent in the United States for service process. 


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Section 7. Study on registration of agents of foreign manufacturers 

and producers of component parts within covered products 

This section calls on the head of each applicable agency to complete a study to determine the feasibility of requiring foreign manufacturers and producers of component parts included in fully assembled products exported to the United States to register an 

agent in the United States for service of process. 

Section 8. Study on enforcement of United States judgments relating 

to defective drywall imported from China 

This section calls on the U.S. Government Accountability Office, 

GAO, to study potential methods for enforcing judgments by U.S. 

courts against Chinese drywall manufacturers that exported defective drywall to the United States between 2004 and 2007. 

Section 9. Relationship with other laws 

This section leaves intact state laws concerning service of process 

and personal jurisdiction, and the authority of states to enact such 

laws, to the extent that they are not inconsistent with the Act and 

then only to the extent of the inconsistency. 

EXPLANATION OF AMENDMENTS

During Committee consideration of H.R. 4678, Chairman Waxman offered an amendment that excluded from the requirements of 

the bill: (1) foreign manufacturers and producers owned or controlled by a U.S. person or business that maintains a certain level 

of assets; and (2) foreign manufacturers and producers with related 

entities located in the United States so long as the related U.S. entity certifies that it is responsible for liabilities related to the covered product and will act as a point of contact in the event of a recall or other issue concerning the safety of a covered product. The 

Waxman amendment also eliminated the requirement that the 

written agent designation submitted by the foreign manufacturer 

or producer include the trade or brand names or other identifying 

information under which the covered product would be sold in the 

United States. The amendment also clarified that the effective date 

for the requirement to register an agent was to follow the publication of regulations implementing the Act. The Committee agreed to 

the Waxman amendment by a voice vote. 

The Committee considered an amendment by Mr. Braley of Iowa 

calling on GAO to study potential methods for enforcing judgments 

by U.S. courts against Chinese drywall manufacturers. The Committee agreed to the Braley amendment by a voice vote. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

H.R. 4678, as reported by the Committee, makes no change to existing law. 


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1See Hague Convention of the Service Abroad of Judicial and Extra-Judicial Documents in 

Civil or Commercial Matters, Feb. 10, 1969, 658 U.N.T.S. 163 [hereinafter Hague Service Convention]. 2 Hague Conference on Private International Law, Outline Hague Service Convention, 1 (Nov. 

2009) http://www.hcch.net/upload/outline14e.pdf. 3 Id. at 2. 

DISSENTING VIEWS 

We, the undersigned Members of the Committee on Energy and 

Commerce, oppose the passage of H.R. 4678 and submit the following comments to express our concerns with this legislation. 

The Foreign Manufacturers Legal Accountability Act, H.R. 4678, 

while born of good intentions, will result in nothing but harm to 

American businesses and the American consumer. Not only will it 

severely disrupt supply chains, potentially violate our international 

trade agreements, and open our domestic industries to retaliatory 

actions, but it does nothing to achieve the Majority’s stated goal: 

aiding consumers in obtaining damages from foreign manufacturers 

for product liability. Even if a consumer obtains a judgment under 

this purportedly easier procedure, there is less incentive for a foreign court to enforce a U.S. judgment when the treaty procedures 

(to which we are a party) have been circumvented. That alone may 

render this bill anti-consumer: a consumer will still spend considerable resources obtaining a judgment only to find parties are less 

likely to enforce the judgment and must spend additional funds to 

comply with treaty procedures. 

The bill’s proponents deem this legislation as necessary because 

it has proven difficult for U.S. plaintiffs to hold foreign manufacturers accountable. While recognizing the existence of the Hague 

Service Convention (to which 59 nations, including China, are signatories) 1, they cite testimony of a law professor from a 2009 Senate Judiciary Committee hearing to support their conclusion that 

it can take ‘‘three or more months’’ to serve process documents on 

a foreign manufacturer. However, a Special Commission convened 

by The Hague in 2009 to review the Convention’s operation concluded that ‘‘the Convention is both efficient and effective—statistical data shows that 66% of requests are executed within 2 

months.’’ 2 The Special Commission further ‘‘confirmed ‘wide use 

and effectiveness, as well as the absence of major practical difficulties.’’ ’ 3

The oft-cited example for the policy need for this legislation is 

the defective drywall imported from China during the building 

boom when U.S. manufactured drywall was in short supply. However, in this case, existing process was successful: at least one Chinese drywall manufacturer was served and a default judgment was 

achieved in Federal court. 

The bill’s proponents also note that even if a victim is successful 

in serving process on a foreign manufacturer, the manufacturer 

will challenge personal jurisdiction of the U.S. court. An objection 


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to personal jurisdiction is founded in the Fifth Amendment of the 

U.S. Constitution and courts have found that foreign nationals are 

afforded the same equal protection of the laws as U.S. citizens. Due 

process extends to the definition of in personam jurisdiction and to 

whether minimum contacts exist for a court to claim jurisdiction 

over a foreign defendant. This bill, however, would strip foreign nationals of their due process right to object to personal jurisdiction 

by mandating consent to the personal jurisdiction of U.S. courts. 

In addition to violating Constitutional protections, H.R. 4678 

may also violate our World Trade Organization (WTO) obligations. 

As a party to numerous WTO agreements, the U.S. has pledged to 

not treat foreign trading partners differently than domestic producers. This bill creates a potential national treatment violation by 

imposing legal obligations on foreign trading partners that do not 

apply to domestic producers. U.S. manufacturers are not required 

to incorporate and, as a result, there are no legal obligations on domestic manufacturers to identify an agent for service of process. 

Further, a U.S. manufacturer may argue that it does not have sufficient minimum contacts to be subject to the jurisdiction of another State’s courts. Conversely, H.R. 4678 places a legal obligation 

on foreign manufacturers to designate an agent and, by the act of 

designating an agent, denies foreign manufacturers the right to 

argue they do not have minimum contacts with a State to be subject to its jurisdiction. 

Below we detail a number of specific objections. 

SECTION-BY-SECTION

Section 2. Definitions 

Section 2, paragraph (2) defines ‘‘commerce’’ in a circular manner. Under H.R. 4678, ‘‘The term ‘commerce’ means trade, traffic, 

commerce, or transportation . . . which affects trade, traffic, commerce, or transportation.’’ While there is precedent for this definition in the Magnusson-Moss Warranty Act, there are certainly 

more recent and more logical definitions at Congress’s disposal. 

Section 2, paragraph (3)(G) defines a ‘‘covered product’’ to include 

not just a finished product, but a component part to be assembled 

into a finished product. This extends to not only pre-made components but also to raw materials imported from a foreign mine or 

ingredients used for pharmaceutical products or drug testing, notwithstanding existing requirements for foreign drug manufacturers 

to register with the Food and Drug Administration. 

This extension of a covered product to include component parts 

in combination with a definition of ‘‘commerce’’ so broad it captures 

research and development could have a significant chilling effect on 

emerging industries reliant on the global economy, such as clean 

energy technology. On the same day the Committee acted on H.R. 

4678, the Committee also considered and reported H.R. 5156, a 

new $75 million program within the International Trade Administration dedicated to growing the clean energy technology industry 

and the export of such technology. H.R. 4678 would severely undercut the effectiveness of such programs and viability of such industries for several reasons. Forcing foreign manufacturers or importers of components, including raw materials (i.e., a component inVerDate Mar 15 2010 04:03 Dec 20, 2010 Jkt 099010 PO 00000 Frm 00019 Fmt 6604 Sfmt 6604 E:\HR\OC\HR683P1.XXX HR683P1

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tended to be assembled in the U.S.), to individually register and 

submit to U.S. jurisdiction will likely restrict the supply of necessary materials. This could also have serious consequences in the 

research and development of new drugs as many ingredients are 

imported. If such imports are restricted, it will necessarily impact 

the research into and development of new drugs, raising the costs 

to U.S. consumers. It remains unclear whether the requirement in 

this legislation for the relevant agency to promulgate minimum 

size guidelines determining which manufacturers will be required 

to register will in fact exempt the very manufacturers cited as the 

impetus for this legislation. 

In either example, neither the final product nor its components 

ever reach a U.S. citizen and there is thus no need for a U.S. citizen to be able to sue such suppliers. If a need should arise, U.S. 

citizens may find recourse through our judicial system utilizing the 

procedures of The Hague Treaty to which we have been a party for 

nearly 50 years. 

Finally, if we make it burdensome for foreign manufacturers to 

export their products to the U.S. by requiring the designation of an 

agent and registration with the applicable Federal agency, and by 

opening the door to vicarious liability, some manufacturers may 

withdraw from the U.S. market. Decreased supply means decreased competition, which in turn means higher prices for U.S. 

consumers. 

Section 3. Registration of agents of foreign manufacturers authorized to accept service of process in the United States 

The new requirements and restrictions of H.R. 4678 may violate 

our obligations under various international treaties. The Majority, 

however, notes that ‘‘. . . [the Hague Service Convention] relates 

to service abroad.’’ If a defendant neither resides in the forum nor 

has sufficient contacts in the forum, the only reasonably certain 

way of serving process is by serving the defendant where he or she 

resides—in these instances, abroad. Rule 4 of the Federal Rules of 

Civil Procedure in fact references the established treaty procedures 

by permitting service of a foreign defendant ‘‘by any internationally 

agreed means of service that is reasonably calculated to give notice, 

such as those authorized by the Hague Convention on the Service 

Abroad of Judicial and Extrajudicial Documents.’’ Also, while the 

Majority concludes that the Committee ‘‘determined that service of 

process does not need to be transmitted abroad,’’ this Committee 

does not have the authority to change civil suit procedures. 

Section 3(b) requires the Department of Commerce to maintain 

a public, searchable database of every manufacturer or component 

part manufacturer and their designated agent for every single import that enters the U.S. Such a database would be vast in its size 

and scope and was not vetted in the Committee. Second, this program is not compatible with the Department’s mission statement: 

The Department of Commerce promotes job creation, economic growth, sustainable development, and improved living standards for all Americans, by working in partnership 

with business, universities, communities, and workers to: 


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4Department of Commerce, Strategic Plan for 1997–2002, 1 (visited Jun. 3, 2010) http:// 

www.osec.doc.gov/bmi/budget/strtgc/Aintro.pdf. 5Ways and Means Examining Foreign Manufacturers Bill for WTO Issues, INSIDE U.S. TRADE

(June 25, 2010). 

1. Build for the future and promote U.S. competitiveness in the global marketplace, by strengthening and 

safeguarding the nation’s economic infrastructure; 

2. Keep America competitive with cutting-edge science and technology and an unrivaled information 

base; and, 

3. Provide effective management and stewardship of 

our nation’s resources and assets to ensure sustainable 

economic opportunities.4

Section 3(c) requires foreign manufacturers, by the act of designating an agent, to consent to the personal jurisdiction of courts. 

In so doing, this eliminates a foreign manufacturer’s ability to 

argue it does not have sufficient contacts with a State. Further, it 

disregards whether any party can reasonably anticipate being 

hauled into U.S. State court. For reasons noted above, this is a violation of the Due Process Clause. 

Additionally, Section 3(c) states that such consent shall be ‘‘for 

the purpose of any judicial proceeding related to such covered product.’’ Without any limitation, a manufacturer could be pulled into 

a lawsuit for any reason—regardless of whether the suit relates to 

a product defect. 

Both of these troubling aspects pose a risk to domestic manufacturers should foreign countries choose to adopt mirror legislation as 

a retaliatory measure. The Majority dismisses this concern as 

‘‘without merit;’’ however, trade press reports indicate both the European Union and Canada are already examining H.R. 4678 for inconsistencies with the General Agreement on Tariffs and Trade 

and for its impact on supply chains. 5

Section 4. Prohibition of importation of products of manufacturers 

without registered agents in United States 

The Committee did not address Section 4 at markup due to lack 

of jurisdiction. However, the section remains in the legislation. Section 4 bans the import of covered products, component parts intended for assembly into a covered product if the ‘‘product (or component part) or part of such product (or component part)’’ was produced by a foreign manufacturer who fails to designate or maintain 

an agent for service of process. The inclusion of the term ‘‘any part’’ 

extends the import ban to products that are not defined in Section 

2 as a ‘‘covered product.’’ In effect, this means that while manufacturers of parts are not required to designate an agent under Section 2, they may not export to the U.S. unless they do so under Section 4. For example, if a computer manufacturer imports motherboards for assembly into a computer here in the U.S., the motherboard manufacturer must designate an agent because it is a ‘‘covered product’’ under Section 2. Under Section 4, the import of those 

motherboards would be banned if the manufacturer of the transistors already installed on the motherboards has not also designated 

an agent. Further, it is unclear how far down the line this definition applies; the term ‘‘any part’’ could be interpreted to mean even 


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6General Agreement on Tariffs and Trade, Jan. 1, 1948, 55 U.N.T.S. 224 http:// 

www.wto.org/english/docsle/legalle/gatt47le.pdf. 

No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences [sic] or other measures, shall be instituted or 

maintained by any contracting party on the importation of any product of the territory of any 

other contracting party or on the exportation or sale for export of any product destined for the 

territory of any other contracting party. 

the lead soldering (or even the lead itself) and thus if the manufacturers of the soldering and lead do not register agents, the motherboard may be banned from importation. At markup, Committee 

counsel was unable to clarify the definition of ‘‘any part’’ within 

this section. 

Beyond the technical problems with section 4, this section may 

violate Article XI of the General Agreement on Tariffs and Trade 

as an illegal prohibition on trade.6

Conclusion 

This legislation is a disincentive for foreign manufacturers of all 

products, but particularly component parts, to export to the U.S. 

market. This could result in a grave disruption in supply chains 

across the board. H.R. 4678 potentially violates our international 

agreement obligations by treating foreign companies differently 

from U.S. companies and institutes an importation ban based on 

something other than duties or taxes. 

For those foreign companies that choose to continue exporting to 

the U.S., this bill creates a potentially overwhelming administrative burden for U.S. companies. Many companies have thousands, 

if not tens of thousands of suppliers. Our retailers and manufacturers will incur the cost of checking on each vendor to ensure the 

products are legally entered into the U.S. with no net benefit to 

consumers. 

Further, creating regulatory burdens for domestic companies who 

source products from foreign manufacturers is a job killer, not a 

jobs program. This legislation creates far more problems for U.S. 

businesses than it will ever resolve regarding foreign manufacturers. For these and the reasons enumerated above, we, the undersigned, cannot support H.R. 4678. 

JOE BARTON. 

MARSHA BLACKBURN. 

JOHN SHIMKUS. 

CLIFF STEARNS. 

JOSEPH R. PITTS. 

ED WHITFIELD. 

PHIL GINGREY. 

ROBERT E. LATTA. 

LEE TERRY. 

Æ 


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