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S. HRG. 110–896

GROWING TRADE, GROWING VIGILANCE: IMPORT

HEALTH AND SAFETY TODAY AND TOMORROW

HEARING

BEFORE THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

OCTOBER 18, 2007

(

Printed for the use of the Committee on Finance
COMMITTEE ON FINANCE

MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

DEBBIE STABENOW, Michigan

MARIA CANTWELL, Washington

KEN SALAZAR, Colorado

CHUCK GRASSLEY, Iowa

ORRIN G. HATCH, Utah

TRENT LOTT, Mississippi

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

PAT ROBERTS, Kansas

JOHN ENSIGN, Nevada

RUSSELL SULLIVAN, Staff Director

KOLAN DAVIS, Republican Staff Director and Chief Counsel

(II)
C O N T E N T S

OPENING STATEMENTS

Page

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee

on Finance ............................................................................................................ 1

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 12

WITNESSES

Baldwin, Hon. Daniel, Assistant Commissioner, Office of International Trade,

U.S. Customs and Border Protection, Department of Homeland Security,

Washington, DC ................................................................................................... 2

Dooley, Hon. Calvin, president and chief executive officer, Grocery Manufacturers Association, Washington, DC ................................................................... 4

Kennedy, Sandra, president, Retail Industry Leaders Association, Arlington,

VA .......................................................................................................................... 6

Halloran, Jean, director, Food Policy Initiatives, Consumers Union, Yonkers,

NY ......................................................................................................................... 8

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baldwin, Hon. Daniel:

Testimony .......................................................................................................... 2

Prepared statement .......................................................................................... 31

Responses to questions from committee members ......................................... 36

Baucus, Hon. Max:

Opening statement ........................................................................................... 1

Bunning, Hon. Jim:

Prepared statement .......................................................................................... 40

Dooley, Hon. Calvin:

Testimony .......................................................................................................... 4

Prepared statement .......................................................................................... 41

Responses to questions from committee members ......................................... 52

Grassley, Hon. Chuck:

Opening statement ........................................................................................... 12

Prepared statement .......................................................................................... 57

Halloran, Jean:

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 59

Responses to questions from committee members ......................................... 70

Kennedy, Sandra:

Testimony .......................................................................................................... 6

Prepared statement .......................................................................................... 74

Responses to questions from committee members ......................................... 79

Salazar, Hon. Ken:

Prepared statement .......................................................................................... 82

COMMUNICATIONS

International Association of Airport Duty Free Stores ........................................ 83

National Customs Brokers & Forwarders Association of America (NCBFAA) .. 85

National Retail Federation ..................................................................................... 88

Underwriters Laboratories Inc. (UL) ..................................................................... 97

(III)

(1)

GROWING TRADE, GROWING VIGILANCE:

IMPORT HEALTH AND SAFETY

TODAY AND TOMORROW

THURSDAY, OCTOBER 18, 2007

U.S. SENATE,

COMMITTEE ON FINANCE,

Washington, DC.

The hearing was convened, pursuant to notice, at 10:05 a.m., in

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus

(chairman of the committee) presiding.

Present: Senators Lincoln, Stabenow, Salazar, Grassley, Snowe,

Bunning, and Roberts.

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE

The CHAIRMAN. The hearing will come to order.

Eduardo Arias went shopping and saved thousands of lives. Last

May, Eduardo Arias walked into a store in Panama City. He picked

up a tube of toothpaste. He read the ingredients. Two words caught

his eye: diethylene glycol. Eduardo Arias recognized the poisonous

chemical used in antifreeze, and he took action. Eduardo Arias

spent the next 2 days alerting Panamanian officials about the contaminated toothpaste.

At first he got the brush-off. He took a vacation day to press his

concerns, but eventually he succeeded and an alert spread through

Panama and across the world. The danger had slipped by government regulators, it eluded trade inspectors; the system had failed.

But thanks to Mr. Arias, people found potentially lethal contaminated toothpaste in Canada, New Zealand, Japan, and here in

America. When it was over, Eduardo Arias said, ‘‘At least I contributed something.’’

We could all learn a lesson from Eduardo Arias: he was alert to

danger where it was unexpected; he was persistent when others

were complacent; he asked tough questions; he knew right from

wrong; he put the welfare of others above his own; he found what

so many sophisticated regulatory systems let pass by. Every year, Americans import nearly $2 trillion in goods from

150 countries. That is more than 10 times what we imported just

10 years ago. When Americans sit down at the dinner table, a

growing percentage of what we eat comes from abroad. We import

85 percent of our fish and half of non-citrus fruits.

More often than not, the televisions, stereos, and toys in American households are made abroad. Imports are sourced globally, as-
2

sembled in several countries, and ultimately shipped to their final

destination. These imports come through our Nation’s 326 ports.

Ships, trucks, and airplanes carry imports across our borders about

13 million times every year. Twenty-one thousand people at Customs and Border Protection work these ports. Specialized agricultural inspectors and other specialists assist them.

Growing trade brings American jobs, prosperity, and choice. Yet,

import growth also brings responsibility. It brings the responsibility to remain vigilant. It brings responsibility to safeguard

Americans’ health and safety. Today, a growing number of Americans fear that the government is not living up to its responsibility:

they hear about pets poisoned by imported pet food; they hear

about kids playing with lead-painted toys; and they hear about imported toothpaste that contains poison.

It is our responsibility to identify every risk, hidden or obvious,

and it is our responsibility to find solutions, no matter how complex. This hearing is part of living up to that responsibility. Dozens

of bills and proposals have been floated on these important issues.

We must work through them very carefully with all interested parties, including our colleagues on the committee, in Congress, and

in other countries.

This process will not be easy. It will take time. Today we need

to look at every aspect. We need to make sure that import safety

is at the core of everyone’s mission. We need to find resources and

manpower to back the mission, but, like Eduardo Arias, we must

persist. We must keep our eyes open, as he did walking around

shopping down there in Panama City. We must know what is right.

If we do our jobs and work together, we, too, will be able to say,

like Eduardo Arias, that we contributed something.

We are very fortunate today to have at this hearing witnesses

who have great expertise and will put a lot of this into perspective.

Today’s panel begins with the Assistant Commissioner for Customs

and Border Protection, Daniel Baldwin. Following Commissioner

Baldwin is Congressman Cal Dooley, who is president and chief executive officer of the Grocery Manufacturers Association. Mr.

Dooley is a former colleague, having represented California’s 20th

District from 1991 to 2005. The third witness is Sandra Kennedy,

who is president of the Retail Industry Leaders Association. Finally, Jean Halloran, who is director of Food Policy Initiatives at

Consumers Union.

As you know, it is customary in this committee to put all of your

statements in the record automatically, and to speak about 5 minutes, if you could, please.

We will start with you, Mr. Baldwin.

STATEMENT OF HON. DANIEL BALDWIN, ASSISTANT COMMISSIONER, OFFICE OF INTERNATIONAL TRADE, U.S. CUSTOMS

AND BORDER PROTECTION, DEPARTMENT OF HOMELAND

SECURITY, WASHINGTON, DC

Mr. BALDWIN. Thank you, Mr. Chairman and members of the

committee. I am pleased to appear before you today to discuss the

actions we are taking at Customs and Border Protection to ensure

the safety of imported products.
3

My name is Daniel Baldwin, and I am the Assistant Commissioner in the Office of International Trade at CBP. My office has

the responsibility for formulating CBP’s trade policy, developing

programs, and enforcing our U.S. import laws.

The recent increase in discoveries of tainted consumer products

is an issue that falls within the purview of my office. In response

to recent dangers, the President established an Interagency Working Group on Import Safety. That working group, chaired by

Health and Human Services Secretary Michael Leavitt, is comprised of senior officials from 12 Federal departments and agencies,

each with unique and critical import safety responsibilities.

CBP is actively participating in the working group and has assigned one of our key senior managers to work full-time with that

group. She and other CBP staff assisted with the development of

the Strategic Framework for Continual Improvement in Import

Safety released by the President on September 10, and we will be

making major contributions to the recommendations due in November.

In recent years, CBP has worked extensively to coordinate activities and enforcement actions with other government agencies such

as USDA and HHS. As the guardian of our Nation’s borders, CBP

has broad authority to interdict imports at the port of entry. We

identify, target, and interdict high-risk shipments using our data,

along with information from other agencies.

It is important to note that, long before the recent headlines,

CBP had been working with these agencies, such as the Consumer

Product Safety Commission, on identifying and interdicting unsafe

products, such as flammable children’s sleepwear and other products that present a danger to our citizens.

CBP has several tools to interdict potentially unsafe imports.

Our diverse workforce on the front line enables CBP to mount

rapid and effective responses by utilizing specialized expertise of

CBP officers, agricultural specialists, import specialists, international trade specialists, and laboratory technicians.

Additionally, CBP uses various targeting mechanisms that are

specifically designed to incorporate the safety concerns of other

agencies in identifying high-risk imports. CBP currently uses several targeting systems, including the Automated Targeting System,

or ATS; the Automated Manifest System; and the Automated Commercial System. CBP uses these three systems to target high-risk

cargo, screen inbound merchandise, and process import entries.

In addition to these CBP automated systems, CBP maintains the

National Targeting Center. The NTC is the facility at which personnel from a number of government agencies are co-located to review advance cargo information on all inbound shipments.

CBP shares the committee’s sense of urgency in addressing import safety. This is underscored by CBP’s recent interdiction of melamine-tainted pet food and toothpaste laced with diethylene glycol.

Every day we are looking for additional ways to use existing tools

and data from CBP and other agencies in the pursuit of improved

targeting and interdiction.

The International Trade Data System, or ITDS, is a key component in improving agency cooperation and data exchange. The recently enacted Security and Accountability For Every, or SAFE,
4

Port Act of 2006 established a requirement for an electronic interface among all Federal agencies that monitor or control the movement of imported products in domestic commerce. The ITDS allows

for the single-window environment in which importers, transportation carriers, and other government agencies can exchange information on imported products.

CBP has also led the way in partnering with industry to address

cargo security and other import issues with programs such as the

Customs-Trade Partnership Against Terrorism (C-TPAT) and the

Importer Self-Assessment Program. These programs require that

importers have in place controls over the supply chain security and

importing process such that the government can focus on the areas

of greatest risk. We believe C-TPAT, Importer Self-Assessment,

and our other partnership programs are models that should be

emulated to address import safety.

These partnership programs and other initiatives have helped

CBP shift from reliance on snapshots where unsafe products are

simply interdicted at the border, to a cost-effective, preventionfocused video model that identifies and targets those critical points

in the import life cycle where the risk of unsafe products is greatest and verifies the safety of products at those important phases.

In the years and months since 9/11, we have been partnering

with industry and overseas colleagues to push out the borders for

our imported products for safety, for security, and now for import

safety.

CBP remains committed to partnering with our other Federal

agencies in order to refine our targeting skills and increase coordination of government personnel and to ensure the prevention of

contaminated and dangerous products from entering the United

States.

The CHAIRMAN. I am going to have to ask you to sum up, Mr.

Baldwin.

Mr. BALDWIN. I thank you for the opportunity to testify, Mr.

Chairman.

The CHAIRMAN. Thank you.

Mr. BALDWIN. Thank you.

[The prepared statement of Mr. Baldwin appears in the appendix.]

The CHAIRMAN. Mr. Dooley, welcome.

STATEMENT OF HON. CALVIN DOOLEY, PRESIDENT AND

CHIEF EXECUTIVE OFFICER, GROCERY MANUFACTURERS

ASSOCIATION, WASHINGTON, DC

Mr. DOOLEY. Thank you. It is an honor to be joining all of you

today.

I have the privilege, as the president of the Grocery Manufacturers, to represent companies that manufacture food, beverage, and

consumer products that are responsible for putting the vast majority of the products that you see on grocery store shelves.

Senator Baucus, in his opening statement, talked about how we

are seeing an increased number of those products coming from

other countries. If you think back, when I was a child when you

went into a grocery store and you walked down the produce aisle

in the middle of winter, your choices were pretty limited. You had
5

maybe some citrus that might have been from California, and a few

apples.

Today, you walk down that same produce aisle of any grocery

store in the country in the middle of winter, you have grapes that

are coming from South Africa, blueberries that might be coming

from Chile, you have asparagus that will be coming from Peru, you

might have the bananas from Colombia, the pineapples from Costa

Rica, the kiwis from New Zealand.

Consumers today have a vast number, an additional number, of

choices, and they have those choices because they desire them, they

demand them. The challenge I think we face now—all of us—is not

that we in any way put up barriers to those imported products

coming into the United States, but it is that, how do we ensure

that food products, whether they are produced domestically or

internationally, are safe and nutritious for consumers?

That is what the Grocery Manufacturers are truly dedicated to.

We understand, and though we think we have a strong foundation

of having the safest food supply in the Nation, there is more that

we can do. The recent evidence that we have seen on the front

pages of our headlines all too often in the last few months is a validation of that.

So what we think, though, is a challenge facing Congress today

is, how do you really define that public/private partnership that is

going to, in fact, enhance the level of food safety we can provide

consumers? We suggest that we have to rely primarily on the private sector, and taking a more preventative-based approach, understanding that the private sector has the capacity and expertise to

enact some practices and protocols that can contribute to a higher

level of food and product safety.

We also acknowledge that the public sector, and primarily our

regulatory agencies of the Food and Drug Administration, need the

additional resources and need to be an effective partner to provide

that level of oversight that also can contribute to a greater level of

food safety.

The way we suggested going about this was embodied in our

‘‘Four Pillars for Food Safety’’ that we released a couple of weeks

ago. It really takes an approach where we are suggesting that the

vast majority of our companies today that are manufacturing food

products are employing the best practices. They are not contributing to the problem. They have, in fact, the supplier quality audits, the chain of custody, the testing protocols that ensure we have

a high level and a minimum number of food safety problems.

But what we are suggesting under our proposal is, let’s take that

another step forward. Let us mandate that all importers of record,

regardless if they are small, medium, or large, regardless of what

food product they are producing, will have to put together a mandatory supplier quality assurance program that will embrace some

protocols that will ensure that you have those third party audits,

that ensure you have the testing protocols that can again give us

a greater assurance of food safety.

We also have another pillar that is focused on those suppliers

that are willing to partner to a greater extent with FDA and the

regulatory agencies in sharing additional information, whether it

be the actual report on the supplier quality audit or, in fact, dem-
6

onstrating that they have some testing procedures in place that

minimize the risk of a food safety outbreak so that they, in fact,

could have an expedited entry similar to what Customs is doing

now with some of their activities.

The third pillar really focuses on, how can the United States play

a more effective role in expanding the capacity of some of these

countries that we are importing food products from to ensure that

they have the regulatory policies in place, as well as the enforcement mechanisms, to ensure that we are achieving an equivalent

level of protection to what we have in the United States.

Our fourth pillar is really focused on FDA resources. We have

joined with a broad coalition of interests and stakeholders of FDA,

saying that it is time for us to commit to doubling the FDA budget

over the next 5 years.

I would just like to close on a couple of issues which we think

are important, and where the Senate Finance Committee has jurisdiction. Some of the proposals that we have seen being promoted

to address this issue, we think, have the potential to have significant adverse trade impact on the United States.

When we talk about implementing user fees, which many of us

think are problematic and also would result in a reciprocal action

by the countries that we are exporting to, we think that is something we are very concerned with.

When we start talking about having FDA certify every company

that might be exporting a product into the United States, we have

to understand that, if we implement something of that nature, we

are going to be faced with other countries, to which we are exporting maybe $80 billion worth of agricultural products we have in the

United States, that could impose that same regime on us and could

become, in fact, an impediment to our ability to export the products

that are important to our economy.

So, we think we have to be very judicious in considering any action that we take in our efforts to enhance food safety, and put it

in the context of a broader trade understanding too to make sure

we are being compliant with WTO obligations.

So, I thank you. I want to make a commitment that GMA is committed to working with all of you as we try to move forward.

The CHAIRMAN. Thank you very much, Mr. Dooley.

[The prepared statement of Mr. Dooley appears in the appendix.]

The CHAIRMAN. Ms. Kennedy?

STATEMENT OF SANDRA KENNEDY, PRESIDENT,

RETAIL INDUSTRY LEADERS ASSOCIATION, ARLINGTON, VA

Ms. KENNEDY. Good morning, Chairman Baucus, Ranking Member Grassley, and other committee members. My name is Sandy

Kennedy, and I am the president of the Retail Industry Leaders

Association. RILA represents the largest and fastest-growing companies in the retail industry. Our members provide millions of jobs

and operate more than 100,000 stores domestically and abroad.

I appreciate this opportunity to highlight what retailers are currently doing to assure product safety, the response to recalls, and

the policies they support going forward that will strengthen import

and consumer safety.
7

RILA is eager to work with this committee to identify ways to

strengthen the import safety process, recognizing that the benefits

of trade permeate every aspect of our economy. Indeed, there is no

higher priority than product safety for our members.

RILA believes that ensuring product safety is a shared responsibility between and among manufacturers, retailers, the U.S. Government, and other governments. Manufacturers are the first line

of defense, and they must be diligent in designing and building

safety into the products they make. Retailers work with their suppliers to ensure safety standards are implemented through contracts and specifications.

With respect to products imported into the United States, the

Federal Government has two important responsibilities: trade facilitation and trade enforcement. RILA believes that U.S. Government policy should advance these two goals, and to do so they must

emphasize collaborative programs with importers that facilitate legitimate trade while focusing enforcement efforts on those who attempt to evade U.S. safety standards.

Further, RILA believes that product safety standards should

apply equally to all products, regardless of whether they are produced domestically or abroad. Product safety should not be used as

the pretext for erecting trade barriers.

While no two RILA members sell exactly the same merchandise,

they are equally committed to the safety and integrity of supplier

operations and place the highest priority on ensuring the products

they sell are safe. Retailers’ first line of defense is the vigorous

quality assurance requirements and enforcement mechanisms that

they set forth for their suppliers that manufacture goods for their

stores.

RILA members require their suppliers and manufacturers to understand and adhere to U.S. Government standards and regulations, operate secure factory environments, and rely on known and

approved subcontractors to produce safe, quality products.

RILA members require suppliers and manufacturers to maintain

and document production processes that conform to safety standards beginning at the design phase and continuing through completion of the finished product. Finally, members require suppliers

and manufacturers to open their factories and production processes

to periodic quality and safety audits.

Retailers seek to identify and remedy product safety problems

before the product enters the supply chain or reaches U.S. stores.

Therefore, RILA believes the critical point in the supply chain

where the product safety compliance efforts should be focused is at

the point of design and manufacture. Safety must be built into the

products as they are made.

When a product is recalled, retailers take prompt action to remove the products from the stream of commerce and properly dispose of them so they cannot be resold. After implementing a recall,

our members also review their supplier’s testing protocols to minimize the potential for future problems and take appropriate action

or levy sanctions as needed.

As Congress considers how to protect consumers, particularly

children, from dangerous products, whether imported or produced

domestically, I want to outline some of the public policies that
8

RILA supports. We support increased Federal funding for the

CPSC, Consumer Product Safety Commission. We support mandatory recall authority for the CPSC and a legal prohibition against

knowingly selling a recalled product. We support the proposal to include tracking information on children’s products to promote

traceability. We support heightened lead standards for children’s

products, and we support the establishment of clear and predictable safety standards for all products.

Additionally, RILA welcomes the administration’s Interagency

Working Group on Import Safety’s innovative approach to the issue

of import safety, which characterizes the flow of commerce as a life

cycle where risks are identified and mitigated throughout the supply chain rather than focusing simply on the port of entry.

Finally, RILA believes a public-private partnership is critical to

establishing an effective product safety regime. Such a partnership

would recognize the shared goals and responsibilities of government and industry to ensure that the products entering the United

States are safe for consumers.

RILA appreciates the opportunity to provide comments to the

committee as it considers ways to improve import safety. RILA

stands ready to work with Congress and the administration to

enact policies that strengthen consumer confidence and that advance the production of safe, high-quality products that are affordable and readily available to consumers.

Thank you for this opportunity.

The CHAIRMAN. Thank you, Ms. Kennedy.

[The prepared statement of Ms. Kennedy appears in the appendix.]

The CHAIRMAN. Ms. Halloran?

STATEMENT OF JEAN HALLORAN, DIRECTOR, FOOD POLICY

INITIATIVES, CONSUMERS UNION, YONKERS, NY

Ms. HALLORAN. Thank you for the opportunity to testify on what

has become a serious crisis in import safety. In addition to my food

policy work, I also oversee a new Consumer’s Union website we

have launched this week on recalls called notinmycart.org. Almost

daily we are seeing new reports of safety problems in imported

food, toys, lipstick, toothpaste, cribs, and other consumer products.

Just 2 weeks ago, Halloween cups painted with lead-laden scary

faces were recalled after testing requested by Senator Sherrod

Brown. This raises the obvious question: how did we get in this situation? We see two causes of the problem. One, is that two of the

most important Federal agencies that the public relies on to ensure

that everything in our marketplace is safe, the Food and Drug Administration and the Consumer Product Safety Commission, have

not kept up with globalization. On the contrary, quite the opposite.

Congress has repeatedly cut the budget of the CPSC so it now has

half the number of employees it had when it opened in 1973.

It now has 15 inspectors to police the millions of toys and consumer products coming into this country through hundreds of entry

points. FDA is equally hamstrung. Today it inspects less than 1

percent of food imports entering the country. There is no FDA inspector stationed at many of the ports, leading to a phenomenon

known as ‘‘port shopping,’’ where, if your import is rejected at one
9

port by an FDA inspector, the importer is free to go elsewhere and

try to bring it in where there is no inspector on site.

In the absence of adequate FDA and CPSC capacity, Customs

and Border Protection becomes the fallback consumer protection

agency at the border. However, they are not adequately coordinated

with the other agencies. It has been pointed out that USDA and

CBP databases cannot communicate with each other.

The U.S. Government, further, does not protect the public from

unsafe imports as well as other governments. The European Union

physically inspects 20 percent of fish imports and prohibits imports

of seafood except from countries and facilities that have been

preapproved by food safety authorities. We do not do this. Japan

has a similar program.

Overall, Consumers Union recommends that Congress consider

three major steps to address these problems: mandate a major increase in border inspection staffs at both CPSC and FDA, and increase overseas inspection of manufacturing and processing plants.

We believe that user fees could be an appropriate way to fund such

inspections. We should require FDA and CPSC to establish federally supervised systems for independent third-party certification of

imports similar to the OSHA-supervised system for Underwriters

Laboratory certification for electrical products. Companies’ selfcertification alone, as we have seen from experiences with California spinach and Mattel products, are not enough. Company

quality control will not get us there.

A second major cause of import problems we are currently seeing

lies with our current trade policy. For many years, U.S. trade policy, at the direction of Congress and the executive branch, has proceeded with blinders on towards just one goal: that of gaining U.S.

companies access to markets in other countries.

Safety standards are typically viewed as potential barriers to

U.S. exports rather than measures that assure the quality of imports and assure a level playing field for both domestic producers

and imports. We, therefore, recommend that Congress enact broadening of the many advisory committees that give marching orders

to the U.S. Trade Representative so they include members of the

public, not just the business community.

Two, Congress should examine the four pending trade agreements, as well as past and future ones, to see if they protect the

safety of citizens. We would call your attention especially to the

chapter 11 agreement in NAFTA as a problem.

Three, our trade and policy negotiators should make import safety a top priority. For example, they are heavily concerned about

copyright and counterfeiting of CDs. How about looking into counterfeiting of safety-related labeling, such as the Underwriter’s Laboratory logo, which is a significant problem?

Four, Congress should ensure that where trade negotiators seek

harmonization, they seek harmonization up, not down. Rather than

trying to force our untested beef on Japan, USDA could allow domestic producers to test for Mad Cow Disease in the way that

Japan requires of its own industry.

Finally, U.S. trade and WTO rules, in general, provide that one

company cannot impose stricter standards on imported products

than it imposes on our own. Much of our USDA regulations are in
10

the form of guidance, which is widely adhered to but is not mandatory. This cannot be legally required of imports.

In sum, in recent years, while imports have ballooned, regulatory

capacity has shrunk. Our regulatory capacity must be overhauled

to meet the import challenge, and our trade policy must be designed with food and product safety in mind.

Thank you very much.

[The prepared statement of Ms. Halloran appears in the appendix.]

The CHAIRMAN. Thank you, Ms. Halloran. I thank all of you very

much.

I would just like to ask each of the four of you, what mistakes

have been made? Someone once said, and I think there is something to it, ‘‘Wisdom is experience, and experience is mistakes.’’ So,

what mistakes have we made here, and what do we need to shore

up, in each of your areas, to minimize reoccurrence of some of the

problems that we all know about? Speak candidly. We have to solve

this. We cannot just talk.

Mr. BALDWIN. I would suggest, from my perspective, one of the

biggest mistakes we made is—how to put this? We did not see this

problem coming. I am sure my other panel members would agree

with me that this is not a new problem. I think we have been seeing this for quite a while. I do not think we have understood it to

quite this magnitude. I do not think we ever quite got to the point

that we realized that components in antifreeze were actually finding their way into our toothpaste.

The CHAIRMAN. Why is that? Why did you not?

Mr. BALDWIN. Well, I will certainly just speak from the Customs

and Border Protection perspective, in that obviously, since 9/11, our

focus has been—and correctly so, I would argue—on our physical

security of this Nation. I think a lot of our attention and our resources have been directly devoted to making sure that we keep

terrorists and terrorist weapons of mass effect out of this country.

However, I think from the traditional trade perspective and the

legacy of the U.S. Customs Service responsibilities, we have been

focusing a lot on our trade mission as well. But again, remember

that CBP is primarily enforcing other regulatory agencies’ laws.

However, when we saw what was going on with the melaminetainted wheat gluten in pet food, when we saw what was going on

with toothpaste, when we saw the fungicide antibiotics being put

on seafood, CBP, I think, expanded our role a little bit and took

a much more proactive approach.

The CHAIRMAN. So you are too focused on terrorism and not

enough on product safety?

Mr. BALDWIN. That was not my comment.

The CHAIRMAN. Oh. I thought you said you——

Mr. BALDWIN. We have been focused on it.

The CHAIRMAN. You had been.

Mr. BALDWIN. We have focused on security, and I would argue,

still, correctly so. What I am suggesting is, now we recognize what

an imperative problem import safety is across the supply chain

that relates to the consumer products as well, and we need to be

a little bit more aggressive on that.
11

The CHAIRMAN. Mr. Dooley, what mistakes, from your perspective? What can we learn?

Mr. DOOLEY. I would say that, if you go back into the grocery

store, an average grocery store today has 15,000 different products

on its shelves. The overwhelming majority of those products are

safe. So before I say we have made a lot of mistakes, I would say

we have had a lot of successes. We have the safest food supply in

the world.

The CHAIRMAN. Yes. But poisoned toothpaste is not very safe.

Mr. DOOLEY. No. We are not saying that there is not additional

work that needs to be done. But what I would also say is, in part,

we have not necessarily contributed the resources in order to effectively deal with the globalization of the marketplace. Also, we have

not necessarily committed our regulatory agencies to really embrace a risk-based approach. I mean, if you look at FSIS and

USDA, and FDA, to an extent, they are not necessarily allocating

their inspections programs in a manner that is consistent with the

relative risks that a product might pose.

The CHAIRMAN. For example?

Mr. DOOLEY. If you look at, even on FSIS, the fact that we now

have inspectors that are placed at facilities to inspect by visual,

sensory inspection and we are not really acknowledging that some

of the new developments and technology can minimize the risk that

would reallocate those inspection resources to perhaps areas that

pose a greater risk, we are impeded from doing that.

That is what we think when we move forward. We are always

going to have limited resources in FDA, so the challenge going forward is, how are we going to also identify where the greatest risks

on food safety problems are and allocate those resources there, and

how does the private sector engage in programs where we can minimize that?

The CHAIRMAN. Ms. Kennedy?

Ms. KENNEDY. We believe it is a shared responsibility.

The CHAIRMAN. No, no. What are the mistakes? Where are the

weaknesses?

Ms. KENNEDY. Clearly, there are challenges with CPSC in terms

of response time on recalls. When one of our members identifies a

challenge or an issue with a product, it takes way too long for the

CPSC to respond with recalls on that product.

The CHAIRMAN. Why does it take so long?

Ms. KENNEDY. I would suspect that it has to do with resources.

They need to be strengthened. They need additional funding.

The CHAIRMAN. Ms. Halloran?

Ms. HALLORAN. I think we cannot talk about poor allocation of

resources when CPSC has 15 inspectors to allocate. We need a

huge beefing up of FDA and CPSC to deal with globalization. We

all failed to really anticipate what it would mean when China

moved from the 19th century into the 21st century in a decade or

so and became our second major trading partner. They just do not

have the kind of regulatory infrastructure that we have developed

here over a century to keep our people safe, and we just have to

address that.

The CHAIRMAN. So how do we begin addressing it, in your view?
12

Ms. HALLORAN. We need a fairly massive upgrading of budget for

the CPSC and FDA, as well as increase in authority. A bill in the

House of Representatives has proposed user fees that would provide $500 million additional to FDA for this. We are supporting

that bill, for example.

The CHAIRMAN. All right. Thank you.

Senator Grassley?

OPENING STATEMENT OF HON. CHUCK GRASSLEY,

A U.S. SENATOR FROM IOWA

Senator GRASSLEY. I am going to put a statement in the record,

but I would like just an extra minute to emphasize a part of my

statement. I want to say a few words about our international trade

obligations. I understand that some have claimed that our trade

agreements prevent us from adopting measures to protect the

health of Americans. That is flat-out wrong.

There is nothing in our trade agreements that prevents us from

determining our own level of protection for products sold in the

United States. We set our own safety standards, and no other country can force us to lower our standards. That is the law. That is

the reality. No one should be misled by false allegations that our

trade agreements have anything to do with not protecting the safety of our people.

The rest of the statement, I would put in the record. I apologize

for not being here at the opening, because I was across the hall

asking questions of the new Attorney General.

[The prepared statement of Senator Grassley appears in the appendix.]

Senator GRASSLEY. Before I ask questions, and this will come out

of my time now, I wanted to point out something to Congressman

Dooley, if I could. I read, over the weekend, where you are piling

on, like everybody else is, in ethanol now on the price of food. I

know you understand agriculture enough that you do not intend to

do damage to agriculture.

But stop to think in terms of $4 corn. In June, the price of corn

goes up, so everybody says the price of food goes up. But when corn

got down to $2.85 2 months later, the price of food did not go down.

So that direct relationship, because ethanol raises the price of corn,

it has nothing to do with the price of food. You can understand that

sweet corn is not used for ethanol.

You can understand as well, where a farmer gets a nickel out of

a box of cornflakes and the consumer spends 9 percent of their income on food, that ethanol is not going to be a big problem. Just

be a little bit patient. When we get to cellulosic ethanol, we get bigger feedstocks, and we are not getting everything from kernel corn,

the marketplace is going to take care of these problems that you

might be complaining about right now.

So I hope that you will not join the American Meat Institute. I

hope you will stick with the farmers, as you always have. Until

now, for 25 years, all of agriculture was together on ethanol. Everything about ethanol was good, good, good. Nothing has changed because of $4 corn.

Mr. Baldwin, I want to refer to Ms. Halloran’s testimony. She

states that she is unaware of efforts to address the counterfeiting
13

of consumer products such as the Underwriter’s Laboratory logo.

That is a problem that raises significant safety concerns.

Could you respond? What efforts is your agency engaged in to

combat such counterfeiting? What other government agencies are

involved? Does your agency specifically target and inspect cargo for

health and safety concerns?

Mr. BALDWIN. Thank you, Senator. I would love to respond to

that, because I think that we have, in CBP, set a tremendous

benchmark, both domestically and internationally, in our fight

against intellectual property rights infringement. As a key component to our IPR enforcement strategy, we do focus very heavily on

health and safety issues.

You have already mentioned Underwriters Laboratory. I am sure

they would be happy to join with me in saying we have been incredibly successful in interdicting, seizing, and destroying infringing wire cords, light bulbs, and other electronic products that UL

typically would certify for safety issues that we are finding, destroying, and keeping out of the marketplace.

I draw an interesting analogy that I try to give when I talk about

our efforts in IP enforcement, that one of the predominant items

that we do seize quite a bit of are circuit breakers. I find it rather

amazing that, in our local markets, we could be importing dangerous circuit breakers that we would install into our homes, and

that would be the very element that ends up burning down your

house and killing your children.

I think it is critical that CBP stay out in front and take an active

role in that kind of work on intellectual property infringement as

it relates to health and safety.

Senator GRASSLEY. You testified, Mr. Baldwin, that it is not currently possible to share information among U.S. Government agencies because they use non-integrated systems that lack connectivity. You describe this as a major operational challenge. The Import Safety Working Group also cites problems of siloed information systems; it reminds me of the FBI and the CIA not connecting

with each other in the war on terrorism.

To what extent will implementation of the International Trade

Data System resolve this problem?

Mr. BALDWIN. Providing that single window into our ability to review import entries, target more effectively, is absolutely critical.

I must applaud the Import Safety Working Group in working to expedite the process of getting over 34 other government agencies to

sign on and more proactively address getting involved in ITDS. It

is one of the most critical components in having an integrated, uniform, and effective automated targeting system throughout the

Federal agencies.

Senator GRASSLEY. All right.

And, Mr. Dooley, our trading partners can play a vital role in

preventing and detecting safety concerns. For example, in 2001,

when Basa fish were found to be contaminated with banned antibiotics, the Government of Vietnam helped trace the problem and

imposed a 100-percent testing requirement on that type of fish

bound for the United States.

What more can our trading partners do to ensure the safety of

our products in the United States?
14

Mr. DOOLEY. Well, I should point out that what Vietnam did in

that case was to ensure, as is the case with all products you are

importing into the United States, that they meet our existing

standards that we have in the United States. What we find,

though, in countries such as Vietnam and others that are in that

stage of development, that they do not have the internal capacity,

oftentimes, to effectively enforce compliance with those regulations.

That is where I think there is an important role for the United

States to be playing in helping to provide the resources, as well as

the training, to ensure that some of our new trading partners are,

in fact, in compliance.

What we also suggest, though, in our proposal, is that there is

a private sector role here that can also be very cost-effective, and

that, if we mandate that any importer of record has to have in

place these mandatory quality assurance programs that have thirdparty audits that could be a part of them, also have testing protocols that could do a similar analysis as Vietnam did, we could then

have the private sector be able to demonstrate to FDA and other

U.S. regulators that we are, in fact, playing a role to provide a level

of compliance and assurance that these products are safe.

The CHAIRMAN. Thank you, Senator.

Senator Stabenow?

Senator STABENOW. Thank you, Mr. Chairman. And welcome to

all of our witnesses, particularly Congressman Dooley. It is wonderful to see you. We worked together on many issues when we

were both in the House of Representatives.

I know that no one has more to gain by a safe food supply than

our grocers and our retailers, from a product standpoint. But I

need to start, first, by saying that the headlines we have heard,

whether it is toys, toothpaste, or food products, really are not new

from a Michigan perspective. We have been expressing grave concern now for a number of years.

There is a counterfeit auto parts industry that has not been ad- dressed now for a number of years. It now equals $12 billion. If

someone is going into the secondary market to buy brakes, you do

not know whether or not they are meeting safety standards, or

other kinds of auto parts, which is one of the reasons that those

of us in Michigan have been deeply concerned about the lack of

oversight in terms of safety.

We saw last summer, 255,000 imported tires were recalled because of a death in Pennsylvania. So, unfortunately, these headlines are not new to us in Michigan. That is one of my concerns,

frankly, about entering into new trade agreements without fixing

this, because this is serious. We need to get this fixed.

So I guess I would start by asking, and I would ask anyone who

wants to respond to this, why should we not say that, if you want

to do business with U.S. consumers, the biggest consumer pool in

the world—everyone wants to sell to us—why should you not have

to meet our food safety regulations or other product regulations, or

auto part standards? Why should you not have to meet our standards if you want to sell to the American people?

Mr. DOOLEY. Well, maybe I can start. For any food product that

is being imported into this country, it does, in fact, have to meet

our existing standards. That is a requirement that is currently in
15

law and is not in any way, as Senator Grassley said, undermined

by any of the FTAs that are being proposed, or any of the trade

agreements that we have in place.

I think that what we are finding, though, is that we do not necessarily have the infrastructure in place to ensure compliance with

those regulations, and that is where we are suggesting that we

have to give additional resources to the public sector in that regulatory community, and we also have to ask more of the private sector to put in place some practices that can ensure greater compliance with existing standards and regulations.

Senator STABENOW. But when we have seen legislation proposed

that would require equivalent food safety standards, there has been

opposition. So I am wondering, is it just because of the way it is

being proposed to pay for it with the fees? Is that the issue at this

point? Because there certainly have been efforts to say explicitly,

not only with food but with other products, you have to meet our

safety standards. Then we need to beef up enforcement.

I mean, clearly, if we are talking about staffing, as Ms. Halloran

was saying, which is below the 1970s levels, when we have had the

explosion in the global economy, on its face that does not make any

sense. So, clearly, as all of you are saying, we need to beef up those

eyes and ears with people who are directly involved in oversight.

But are you saying that at this point you support, or would continue to support, equivalent food safety standards? I guess then I

would ask the others about other product standards. I mean, we

are not allowing lead in toys. We have certain standards that clearly are not being met. Are you suggesting it is just a matter of enforcement, that the standards themselves are all in place? That is

my question.

Mr. DOOLEY. Yes. Just very briefly. We support existing law,

which requires any food product that is imported into this country

to meet our standards in terms of whether it is the chemical residues standards, as well as other food safety standards that we

have in place. They key here is, you have to have equivalent domestic standards. Whatever domestic standards we have in place,

we can require that of an imported product.

Senator STABENOW. Yes?

Ms. HALLORAN. Thank you. If I could respond to a couple of your

points. There are a number of standards that are not adequate, of

which the lead standard is probably the most prominent. It currently applies only to lead paint on toys, for example. It does not

apply to unpainted toys, like plastic or vinyl, which can also contain lead. So, it is important to extend it. Also, the standard is too

high. It is a 1975 standard of 600 parts per million. Experts have

said it should be perhaps a tenth of that, perhaps even lower.

But on this other problem of trade, the mentality we have had

is, if we go and we push harder on these safety issues, if we say,

all right, every fish production facility in China has to be certified

by FDA before they can have permission to export to the U.S., the

concern is that, what if they retaliate and come back and say, all

right, we are going to go look at your production of oranges, or

something, and that they might impose protectionist measures.

This is certainly a risk, but it is one that we have to fight

through our trade rules. We cannot sacrifice safety because we are
16

afraid that the other country will not abide by the WTO system.

We have to really be aggressive on these food safety issues and

then make the other countries also toe the line.

Senator STABENOW. Thank you.

Anyone else? Excuse me. I am sorry.

Senator GRASSLEY. Oh. You wanted another person to respond?

Senator STABENOW. Well, I thought there was someone else that

wanted to.

Senator GRASSLEY. Because if you have an additional

question——

Senator STABENOW. No other questions, but I thought someone

else wanted to respond.

Ms. KENNEDY. I would just like to let you know that there is no

higher priority for our retail members than consumer safety. I

mean, we have to make sure that the products on our shelves are

safe. In many cases, we have very strict contractual relationships,

we have requirements that are actually higher in terms of safety

requirements than what the U.S. guidelines recommend. We take

this very seriously. We are stepping up a lot of our own individual

testing, validation, verification programs to make sure that we do

not do anything to violate the trust of our customers.

Senator STABENOW. Thank you.

Senator GRASSLEY. Senator Bunning, now.

Senator BUNNING. Yes. Thank you, Senator.

Ms. Halloran, in your testimony you said that the Customs and

Border Protection Agency is not being used in the best way possible

to address threats to consumer safety, including the defective

children’s cribs imported from China and the 20 million children’s

toys with high levels of lead. These are the threats that we now

know about.

What about other threats to consumer safety that are out there,

and what should the Customs and Border Protection Agency do

about it now?

Ms. HALLORAN. I believe my colleague has adequately pointed to

the first step that absolutely needs to be taken, which is to get all

the computer systems talking to each other so that they know what

they are doing. That is the very first thing.

Senator BUNNING. Would that also stop the port shopping?

Ms. HALLORAN. No, it would not. I think we cannot assume—

well, perhaps you could comment, but I do not think CPB can adequately, all by itself, take on the food and consumer product protection role. We need the specialists from the food and consumer protection agencies. I think we should not be allowing food in through

ports where there is not at least one FDA inspector stationed.

Senator BUNNING. All right.

You also said in your testimony, you talked about the practice of

port shopping to avoid inspectors from the Food and Drug Administration. You also pointed out that other countries inspect a much

higher percentage of food imports than we do today. How serious,

first of all, is this problem? Should Congress consider restricting

the number of ports that can accept food products just to FDAinspected food ports? How do you get the communication from one

to the other, between the FDA and our current agency that does

the inspections?
17

Ms. HALLORAN. I think we need to consider some kind of policy

for what happens when a shipment is rejected.

Senator BUNNING. That is the secret. That is, first of all, the secret of not allowing them in another port and making sure the

other ports know they are out there.

Ms. HALLORAN. Right. I mean, it should not just be sent back

where it came from. I think if it poses a hazard, it should be destroyed or condemned in some way. I think we also have to find

a balance. Yes, we should probably have a smaller number of ports,

but it would be a serious impediment to trade if we went to some

minuscule number of ports; so much food is coming in, we need a

lot. What we have to do is beef up the capacity to police those

ports. So, if it is not 300 perhaps 150. Or if it is 300, then we have

to bite the bullet and finance the inspection at the 300 ports by

FDA.

Senator BUNNING. Thank you.

Welcome, Mr. Calvin Dooley. It is good to see you back here, in

front of our committee.

In your written testimony you proposed increasing the FDA’s

budget, but you opposed paying for it with user fees. You say that

user fees would violate our trade commitments. Would you care to

elaborate on this?

Mr. DOOLEY. In regards to how we contend that they will violate

our trade agreements, if you are only applying the user fee on

products that are being imported into the United States and that

same user fee is not also charged to domestic production, you are

not then complying with the national treatment that we are subject

to under WTO.

Senator BUNNING. China has written all the laws that were necessary to get into WTO, but I can tell you, after being in Beijing,

they do not apply the laws in China. So you are saying that we

should do it on our own without the other side doing it, too?

Mr. DOOLEY. I think our concern with user fees is, if you look at

where the vast majority of the products—and especially food products—we are importing into this country are coming from, they are

not coming from China, they are coming from Canada and Mexico.

Senator BUNNING. Well, how about cigarettes with lead from

China?

Mr. DOOLEY. Cigarettes with lead should not be allowed to come

into this country.

Senator BUNNING. Well, they are here. Right now, you can get

the cigarettes that are being black-marketed into the United States

of America. Six hundred thousand cartons were discovered in New

York. If you inspected the cigarettes, first of all, they had lead in

them, and secondly, they had phony Kentucky and two other

States’ revenue stamps on them, and they were all produced in

China. So it has to be, we have to have something to say about who

is importing what. If it is going to be an equal, level playing field,

you have to have control on both ends.

Mr. DOOLEY. And we very much would agree with that. It is my

member companies that are suffering to the greatest extent when

people are counterfeiting their products, or if they are facing competition from fraudulent commercial trade. So we are totally supportive of that greater enforcement to ensure that our consumers
18

and U.S. manufacturers are not subject to unfair competition and

consumers are not subject to products that do not meet our existing

standards.

Senator BUNNING. Thank you very much, Mr. Chairman.

Senator GRASSLEY. This will be the order, unless Senator Roberts

comes back: Senator Lincoln, then Senator Salazar, then Senator

Snowe.

Senator LINCOLN. Thank you, Senator. Again, thanks to you and

Chairman Baucus for once again bringing us together on such an

important issue. As the chair of the Subcommittee on International

Trade, I am always pleased when the committee really focuses on

these issues. I have also been a consistent supporter of free trade,

and am grateful that we are having this hearing today.

Each of us are so well aware of the recent and numerous occurrences of tainted and dangerous imports coming into our country

from our trading partners around the world. As the mother of twin

11-year-old boys, it hits home for me, I think, and for many of our

constituents. Also with a puppy, and seeing as a pet owner how important it is to me, to my family, and our household, I think it really hits home to us as individuals how confident can we be that our

Nation is providing the kind of inspection that is necessary and

that we are making adequate demands of our trading partners. It

is plain and simple. I think our system is definitely failing the

American people.

I believe the consequences of not taking action are simply too

high. I mean, already innocent lives have been lost and consumers’

uncertainty has grown as the support for international trade

among the American people is beginning to dwindle. As a free trader, and certainly from a State where I think many of my constituents have always been very supportive of free trade, there is a level

of alarm among consumers. Those are the very consumers that

have, in the past, been good free traders.

So having, throughout my career, supported trade agreements

and trade promotion authority, I have done so assuming that we

would do what was necessary to ensure our children’s safety, our

families’ safety, and the health of our citizens throughout the process. But, unfortunately, the evidence is now pointing the other way,

and we do have to take action. We appreciate you all being here

with us today.

I think Mr. Dooley’s testimony points out that we are importing

more and more of our food. In fact, the Department of Agriculture

indicates that we are on the verge of a trade deficit in agriculture,

which is probably the first time in the history of our country. I

guess, said more frankly and something that people can understand a little better, just like foreign oil, we are becoming dependent on foreign food as well.

I do not think it is anything that the American people are comfortable with at all, and that is why I have been an ardent supporter of our domestic farm policy. I think it helps level the disparities in global agricultural trade, which continues to be the most

heavily distorted industry in the world.

So I think I speak for many members of the committee, and certainly the agriculture community, and certainly the vast majority

of my constituents, when I say that I am anxiously awaiting the
19

report from the recently established Interagency Working Group on

Import Safety. Hopefully that will give us some assistance in terms

of where we can go and what we can do. We are certainly grateful

to all of you all for your insight.

Just a couple of questions. The interoperability that Ms. Halloran mentioned, and I think Senator Bunning brought up, has existed for a long time. The reason that our dual eligibles in the prescription drug component of Medicare could not get their prescription drugs when they should have was because Social Security and

the Medicare system could not talk to each other. We have sophisticated agencies that are using not only 1970s levels of staffing, but

1970s technology. It is inexcusable.

It is a huge investment that we have to make. If we do not bite

the bullet and go ahead and do it, we are going to continue to stay

behind, because the business industry continues to upgrade and

modernize in terms of those investments in better technology, and

as a Nation and as a government, we have to do the same thing.

I would just applaud you bringing it up, because I think it has consistently been a problem for us when we see that the things that

we try to implement in law cannot happen because we have not

made the investment in our government.

Mr. Baldwin and Ms. Halloran. Ms. Halloran, I am hoping that

at some point you will expand on your comments about chapter 11

and NAFTA. I think you were the one who made that comment

about that. And Mr. Baldwin, terrorism. You mentioned your focus,

from your agency’s perspective, on terrorism. I also wonder, and I

completely agree with Ms. Halloran, that you cannot do it all. You

have to have the resources from the other agencies with the expertise to be able to do what you need to do.

But I also know that coming from rural America, when we have

talked of terrorism and we have researched or seen a lot of the reports after 9/11, knowing that a lot of those terrorists were training

in rural America, particularly with aviation, agricultural aviation,

the possibilities of contaminating food sources, bioterrorism, and

other things like that, has that not been a focus in terms of your

focus on terrorism and our food source?

Mr. BALDWIN. Well, I would add that some of the issues you just

raised, I am sure, would be looked at—are looked at—very carefully by our Department of Homeland Security and by our sister

agency, Immigration and Customs Enforcement. Again, just to refresh, Customs and Border Protection’s primary focus is at the

physical border, so when goods, people, whatnot come into the

country, that is when we have our biggest challenge.

But, of course, CBP has taken such an active role in trying to

make sure that we understand the entire supply chain, that we extend the borders both for security and for trade issues, that we understand what is going on internationally and domestically and follow the supply chain of the commodity as it is being imported

through the country until it ends up in the final destination, or the

ultimate consignee.

Senator LINCOLN. Ms. Halloran?

Ms. HALLORAN. Well, on this chapter 11 issue, it is a provision

that allows a company that invests in another country and whose

profits are damaged by a foreign regulatory action, to be com-
20

pensated for their loss. I think what they had in mind when they

first instituted this measure was economic regulatory actions, like

nationalization of oil, or telecom, or something like that.

But it can be applied to safety and consumer regulation. Cases

have been brought, one by a Canadian funeral parlor company who

sought compensation when they were regulated in terms of having

fraudulent consumer practices. They did not win that case. Cases

have not been won yet, but these kinds of cases can have a chilling

effect on regulation because people are afraid of a case.

There is one pending now where a Canadian cattleman’s organization has filed for compensation because of the decision of the

USDA to exclude Canadian cattle from the United States. We really think that consumer protection and health and safety, at the

very least, should be excluded from these chapter 11 agreements,

and those are being included in other trade agreements.

The CHAIRMAN. Thank you, Ms. Halloran, very much.

Senator Salazar?

Senator SALAZAR. Thank you very much, Chairman Baucus. I

want to thank the witnesses for coming here today. My bottom line

question is, who is in charge and what are we doing about the

problem? We heard Senator Baucus’s question to all of you about

what mistakes have been made. When I look at the FDA’s role, the

Consumer Product Safety Commission’s role, and I look at the Department of Homeland Security, Commissioner Baldwin, I have to

ask the question, who the hell is in charge?

I mean, here we have a situation in our country where we have

poisoned toothpaste, we have lead coming across in toys into our

country, we have Ms. Halloran’s description, which is an accurate

description, that we have gone to a world of globalization and yet

our regulatory resources are about the same as they were in 1970

or less, so imports have mushroomed, yet the ability to do the inspections and to make sure we have regulatory compliance have

not kept up with the changing world.

So who is in charge? Is this a problem that President Bush

should be an ‘‘F’’ on? Is it a Secretary Chertoff problem, where he

should get an ‘‘F’’ on? What is the nature of who is in charge? Now,

you know the problem. We know the facts, just like you know the

facts, here. So what is it that the administration is doing to try to

deal with this problem going forward? That is to you, Mr. Baldwin.

Mr. BALDWIN. Thank you, Senator. I think that is probably one

of the key questions being addressed by the Import Safety Working

Group we mentioned before. I think it is pretty clear that the administration recognized that this was a tremendous problem. With

12 different Federal departments and agencies all having a role

with import safety to some degree, I think the underlying question

might be the one you just asked. I think that is a fundamental

issue that they will be trying to address.

But I do want to point out something my panel members have

also been talking about, though, which is what the role of CBP and

Homeland Security is at the border. Again, even though we enforce

other government agencies’ laws, we have been doing our best, in

exigent circumstances, to step to the plate and actually try to complement, or even supplement, a lot of what the FDA inspectors

have not been able to get to, what the USDA inspectors have been
21

having challenges with, to try to leverage our various resources at

the border, and even domestically, to try to answer some of these

questions.

Senator SALAZAR. Let me ask you just a follow-up question on

that. In terms of, if we have to do some kind of a Congressional

fix, it seems to me that part of it may be providing the necessary

resources so that we can make sure that the inspections are taking

place and that the regulatory agencies are doing what they have

to do.

But in your view, Commissioner Baldwin, what are the other

kinds of changes that we need to take on to try to transform our

inspection and regulation of imports that are coming in? If you look

at what we did in the post-9/11 world, it was the 9/11 Commission

that led probably to the most significant restructuring of government since World War II. Is that the kind of action that we need

to take, to look at how we are organized at the Federal level to try

to bring about the kind of change that will protect American consumers from the burgeoning imports that we have?

Mr. BALDWIN. I do not believe the Safety Working Group, nor

would I, be encouraging a discussion about massive reorganization

for the government. I think one of the key components that I think

has been alluded to earlier is the tremendous globalization of our

international trade role right now. Perhaps a lot of our regulatory

agencies have not all kept pace, and at the same pace.

I think concepts such as risk management have been bandied

about, and I would just offer that not all agencies are on the same

page with that at the same point in time. We have talked about

supply chain management and quality assurance programs. Again,

I think we need to work on all being in lock step and at the same

stage to address the new international trade environment, as opposed to discussing reorganization of the Federal Government.

Senator SALAZAR. Mr. Baldwin, you know the problems out there.

My colleagues here have been asking questions and panelists have

been describing what is happening out there. So if I were to ask

you, when will we have an action plan from the administration in

terms of addressing these problems that we have seen during the

last year, what is the timing of us getting some recommendations

from you?

Mr. BALDWIN. The Import Safety Working Group is scheduled to

have their recommendations prepared for the White House in November, so you should see a fairly short turnaround time as to

what the direct deliverables are that are expected of the various

agencies. That is based on the strategic framework that has already been published.

Senator SALAZAR. I look, very much, forward to receiving that report, and I am sure the other members of this committee do as

well.

Thank you very much, Chairman Baucus.

The CHAIRMAN. Thank you, Senator.

Senator Snowe?

Senator SNOWE. Thank you, Mr. Chairman.

I want to thank all of our panelists here today. Welcome, Mr.

Dooley. It is probably interesting to be on that side of the dais.

Thank you all very much. This is obviously a critical issue. I know,
22

Ms. Halloran, you raised, I think, some very interesting points regarding China and the fact that imports have skyrocketed, and the

preponderance, for example, of the toys that are sold in the United

States that come from China.

I think you said 80 percent are imported from China, 80 percent

of all toys sold in America, which I think is a critical issue, and

certainly, I think, underscores some of the challenges that we are

facing. Eighty-three percent of the seafood we eat is imported, 21

percent from China. All of the food we consume, 13 percent is imported overall, including the developing countries.

I think the point is that we really do have to look at, in addition

to inspectors, more funding for the Consumer Product Safety Commission. I think that that is critical. But on the other hand, we are

also looking at some of our trade-related mechanisms. I know, Mr.

Dooley, you mentioned in your testimony that the free trade agreements do not impose any additional limitations on the United

States to implement the enforcement of its own safety regulations,

but the problem is through the WTO and many of our relationships

that exist through the World Trade Organization to which we have

no remedies. There is no obligation under the WTO to enforce a

member to uphold its own domestic laws. That is, frankly, where

we have, I think, a significant challenge.

If you look at China, for example, or India, or Brazil, these are

the three largest manufacturers outside of the United States and

Europe, and these are all World Trade Organization relationships.

So how do we enforce a remedy against countries like China that,

frankly, have demonstrated time and again, whether it is counterfeiting—for example, appropriating intellectual property rights—

that they have not enforced their own domestic laws and regulations. So I think, frankly, that is an issue that needs to be addressed.

So, Mr. Baldwin, is that a subject of the Import Safety Working

Group?

Mr. BALDWIN. I know international agreements and international

negotiations with other countries are going to be part of the recommendation process. I cannot say that engaging the WTO is,

though.

Senator SNOWE. Well, I think that that is really a huge vacuum,

to be honest with you. If it is not and you have a country like

China that really has, I think, demonstrated, as I have said, consistently in the past that they have not upheld their own domestic

laws, I mean, we have huge challenges on counterfeiting of CDs

that we have seen, as well as intellectual property rights. Now we

are discovering it in areas that affect the life, safety, and wellbeing of American consumers. So if we cannot get it addressed

through a remedy in WTO, which is currently the situation, I think

that that presents a gaping hole in addressing this whole critical

question.

Now, for example, would you agree that perhaps we should consider China’s lack of enforcement as an unfair and anti-competitive

subsidy to its businesses? I mean, that is another way we could address it through our own laws unilaterally if we cannot do it

through the WTO in any changes that could be orchestrated

through that organization.
23

Mr. BALDWIN. I am afraid that question is outside my realm of

expertise. I think it is probably best addressed through the U.S.

Trade Representative or the Department of Commerce.

Senator SNOWE. But is it going to be a subject? I mean, I think

it has to be a subject of the Import Safety Working Group, otherwise we are just ignoring a preponderance of arrangements that we

have globally with respect to importing goods in this country.

Mr. BALDWIN. Using China as an example, though, I do know

they are spending quite a bit of time talking about our international negotiation and verification processes, so that they could

talk about things like third-party validations in-country, or perhaps

even joint verifications in-country, for registered companies in

China, certifying their processes, evaluating exactly how they are

doing their production of food products and other import products.

I know those negotiations are going on and are topics of the Import

Safety Working Group.

Senator SNOWE. Ms. Halloran, what is your view on this?

Ms. HALLORAN. Well, we are very concerned. I mean, as we have

seen from many news reports, corruption is rampant in China. It

will be very difficult. They have a long way to go before they have

effective enforcement. I think your concept of this as an unfair

trade subsidy is a very interesting one.

We were very disappointed in the first draft of the report of the

Import Safety Working Group. There was not one single, concrete

recommendation for either increasing of resources or a change in

authority in that report. It was all about frameworks and strategies, which of course we need, but we also need some, I think, onthe-ground, specific changes.

Senator SNOWE. Well, I appreciate that, because I do think it is

essential. I think we have to be very aggressive and we have to be

very proactive to avert any catastrophes or tragedies in the future.

Mr. Dooley, what is your comment? I know you addressed the

free trade agreements, and that is true that that governs the relationships we have on a bilateral basis. But it does nothing to address the issue regarding our membership in the World Trade Organization, and other members.

Mr. DOOLEY. That is correct. I guess when you have the importation of seafood—and Senator Grassley used the example of Basa

coming in from Vietnam, which was not in compliance with our

standards in terms of the level of antibiotics that were not registered for use in the United States—we were able to put in place

a barrier to the entry of that product because it did not meet those

standards. There is nothing in the WTO or our FTAs that precludes us from enforcing that.

That is where I think we are asking, under pillar three and pillar four, for additional resources for FDA to be able to interdict

those products when they are coming into the United States, when

they are not in compliance. Then our pillar three, which is in the

capacity building, a lot of these countries, such as Vietnam, I think,

have an interest and understand that it is in their own economic

interests to be in compliance. So, the degree that we can help in

building their capacity is, I think, another important contribution

to enhancing the product safety coming into the United States.

Senator SNOWE. All right. Thank you.
24

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator.

With the world changing so much and so quickly, there are a lot

of opportunities here to kind of do things a bit differently. This is

not directly on point, but let us take intellectual property. We have

a TRIPS regime which requires consensus under WTO. The trouble

is, it is hard to get consensus with so many countries. One thought

would be—and this is just IPR, maybe it could be expanded a little

bit in this area—to get countries together that really want to boost

up IPR.

I would like to ask you something else. I am a bit surprised,

frankly, that the industries here have not rushed to come to this

committee to testify and explain that they understand the problem

and they are really doing something about it, with real vigor and

energy, as, say, the Tylenol company did when those caps were

adulterated. They knew they had a problem and they just jumped

on it right away, big-time. Huge, big public effort explaining what

they were doing to get consumer confidence back.

Ford Motor made a similar effort. I have forgotten exactly when

it was, but a couple, 3 years ago there were some roll-overs, a tire

issue, and Ford just addressed it firmly. They said, we have a problem, we have to deal with this. We know that. Here is what we are

doing. It passed the smell test. It was not just words, it was real.

I am just surprised, frankly, that industries here, whether toy

manufacturers, grocery manufacturers, or other companies that import a lot of products that are sold to consumers in the United

States, have not rushed forward to say, hey, here is what we are

doing, we are addressing this thing frontally because we want to

get consumer confidence back. I resay right now that American

consumer confidence in a lot of imported products is pretty low,

whether it is food, whether it is toys, or whatever it is.

A key here is consumer confidence. How do you get consumer

confidence? Clearly, Mr. Baldwin, your agency is part of it; all of

you are. It just seems to me, without getting too much into the

public/private partnership and mechanics of how you do all this, if

the companies themselves were to show that they have some really

good ideas, and, first of all, they get it. They show they get it and

are fully addressing it, honestly, directly. That is, I think, necessary. I am just surprised we do not see more of that up to this

point. I do not know if anybody wants to respond to that or not.

Mr. DOOLEY. Yes, I would like to respond to that. I think that

our companies clearly get it. They understand that. Every CEO understands, the greatest equity they have in their company is in

their brand. All my member companies compete for the allegiance

and loyalty of customers on taste, quality, nutrition, convenience,

a whole host of issues.

But they also fully recognize, if any consumer going down that

grocery store aisle has any questions about the safety of that product, it is not going to go off the shelf into the shopping cart. So,

nobody has a greater vested interest in responding to these challenges. That is where I make my point, too. We have a limited

number of problems here. Can we do a better job? Yes. Are we trying to? Absolutely. That is why we came forward with our proposal,

that is, asking government to further regulate the industry.
25

We have set out a policy here that is saying, we want FDA to

work with the industry and consumer groups to develop guidance

that would be mandated on every importer of record or company

that is going to be importing a product into the United States that

would include some practices that would further enhance the already high quality of our food supply. So, we think we are responding in a responsible, a constructive manner, and a rapid manner

to build upon, I think, our foundation of success.

The CHAIRMAN. I cannot dispute whether your companies get it

or do not get it. I am just not in a position to know. But I am in

a position to say that I do not see that they get it. That is, I do

not see lots of proposals and press conferences or ads that show

they get it. I am not talking about fluff. I am not talking about PR.

I am not talking about just ads to buy my product. I am saying,

hey, we get this, this is a problem, and here is what we are doing.

It has to come across as real. People are pretty smart. They can

read between the lines. They can listen to the music as well as the

words. They know when it is real and when it is not. I am just saying, I do not see something that is really real so far, and I am surprised.

Mr. DOOLEY. This is the third hearing I have testified at in the

last 6 weeks on this issue, outlining the actions that we are taking

to further enhance the high quality of food safety we have. We

held, 2 weeks ago, a global sourcing conference, where we invited

our member companies, as well as the FDA and other interested

parties, to a forum where we talked about the best practices that

we have in place.

The CHAIRMAN. Maybe. But I do not think it is getting through.

The bottom line is confidence, consumer confidence. My guess

would be, consumer confidence is not very high right now on imported products coming into the United States.

Mr. DOOLEY. There is no question, there has been a decline in

consumer confidence. That is why we are responding. Again, that

is why we think we really are seeing a confluence of events that

really requires the private sector and the public sector to further

develop those programs that are going to respond to this decline in

consumer confidence. We are totally committed to working with

you and your colleagues.

The CHAIRMAN. Does anybody want to respond to that perception

that at least I have?

Ms. KENNEDY. Representing the retail industry, we have taken

action. We have been very aggressive on implementing new testing,

looking at all of our internal processes and protocols. We have

looked at multi-phased testing of products, especially in toys. We

have looked beyond just—every manufacturer has been scrutinized.

I would think that——

The CHAIRMAN. So what have you discovered in that examination? What has turned up in terms of process, in terms of maybe

a new way of doing things?

Ms. KENNEDY. I think that we can always do things——

The CHAIRMAN. No. Obviously we can all do better. I am asking

a different question. I am asking, what have your retailers, precisely, discovered in terms of what new processes, what new ways

of doing things might be better?
26

Ms. KENNEDY. I believe that in looking at multi-testing, multiphased testing where they actually remove products from the line

randomly and test them in independent labs all along different

processes, they have been much more aggressive in looking at sanctions and severing relationships with people who are not living up

to the requirements of their contracts for sourcing.

The CHAIRMAN. I was struck. Somebody said about 20 percent of

fish imported into the European Union is inspected. Twenty percent. I do not know if that is accurate. Let us assume it is accurate.

Should we be doing that in the United States? Mr. Dooley, how

about that? Twenty percent?

Mr. DOOLEY. Currently, I do not know what the percent of fish

imports is that we are inspecting today. In food, in general, it is

about——

The CHAIRMAN. Let us assume it is 2 percent.

Mr. DOOLEY. Yes. And food, in general, is about 1 percent. Do we

need to inspect more of the food products coming in, fish and otherwise? Absolutely. Do we increase it by 10-fold to get to 10 percent,

is that enough? I am not sure. Is it 20 percent? I think that, again,

goes back to my point, that you are not going to be able to inspect

your way out of this problem, but inspection is going to be an important component.

Your most effective response to enhancing food safety is going to

be built upon prevention, and how can you most effectively have

the private sector utilizing their expertise and capacity to do a better job of preventing food safety incidences, and couple that with

the appropriate level of oversight by inspections. So, if you get to

20, maybe that is the right number. But I think that is going to

be a resource challenge. The question is, how do you maximize the

investment of those resources to make the greatest difference?

The CHAIRMAN. I always found one of the greatest enforcers is

the disinfectant of sunshine, transparency. I was thinking off the

top of my head now, if there is some way maybe to publish the

companies and the number of products that are allowed in that are

faulty, and so forth, so there is sunshine on the bad actors, so the

public knows who the bad actors are. Years ago in another committee, Congress enacted, as you all know, emissions standard publication. That is, a stationary source of emissions publication.

I have forgotten what the process is called, but naming stationary sources, power plants, sulfur dioxide, nitrous oxide, and so

forth. We published the pollutants, the tons of pollutants that came

out of each plant. That was public information. That forced the

companies—ooh, we do not want to be the world’s biggest polluter,

so we have to cut down our pollution. It worked. Sometimes it is

better than some government action, some regulatory action, and

so forth.

So I am wondering if the same process could be applied here

somehow, that the bad actors, more of the public knows what they

are doing so those companies might be, on their own, more inclined

to shape up.

Mr. DOOLEY. Well, I will respond to that. I mean, we can look.

A lot of the food safety challenges and problems that we experienced, say, in the last 6 months have not necessarily been strictly

imports, although the melamine, you could say that was, in fact.
27

That cost the pet food industry and the companies there, who were

pretty well publicized on the nightly news—there were few that

were not uncovered—in excess of $40 million.

You can look at the issue that we had with salmonella in peanut

butter. That cost that particular company over $66 million. You can

look at the E. coli in the spinach industry that had significant impacts on the baggers of that product, and they still have not recovered in terms of the sales of the category. You can look at the chili

sauce issue we had, which was pretty well publicized, $35 million.

I mean, there is a significant public response and a penalty that

these companies are paying today by having a problem that could

have been handled, perhaps, with greater or improved practices.

The CHAIRMAN. What metrics do you think make sense here as

we try to address and solve it? That is, what standards, what

metrics, what data, what benchmarks, by what date do you think

tends to make sense so we have an idea of how well we are progressing here, whether it is agency consolidation, whether it is

computers talking to each other, whatever it might be? Just kind

of a free-flowing discussion here. What kinds of metrics, benchmarks, data do you think would be good for the country to know

about, or for at least the agencies and this committee to know

about, if anybody wants to respond?

Mr. BALDWIN. I would like to take a first shot at it. I first want

to address the comment that was made earlier about, 1 to 2 percent of food is actually inspected when it comes into the country.

I know it is a challenge that we face in CBP when we talk about

our targeting for our security purposes. And again, I always want

to make mention that simply doing more exams is not necessarily

a good thing, and oftentimes it can actually be a detriment to what

we try to do in our risk management policies.

I would suggest the following metrics you should consider, at

least at the 50,000-foot level. First, our facilitation programs and

partnership programs where we could identify, who are the good

corporate citizens that have good quality assurance programs, who

have the internal controls, who are randomly selecting products off

of the assembly line and testing them for the safety standards that

have been established?

Second, you do obviously need to have a detection process at the

physical border, but perhaps even internationally and domestically,

too, to go out and do basic oversight to make sure the companies

and other players are doing the right thing.

The CHAIRMAN. So what metrics would you like to see from your

perspective so you know whether you are doing a good job or not?

Mr. BALDWIN. The very first thing that I would try to suggest,

as I tried to allude to in my testimony, is again looking at how we

can do a better job from the regulatory process: stronger data processing through our International Trade Data System so we have

that under way; better targeting so that we have a better idea of

how to target both internationally and domestically and at the

physical border; and stronger actions taken on bad corporate citizens.

The CHAIRMAN. All right. But those are three areas. You just

gave goals. How would you measure each of those goals? What data
28

would you like to have for each of those three goals? Like, X

amount of what?

Mr. BALDWIN. For example, I know you were mentioning before

that perhaps they do 20 percent more exams in the European

Union. But if the discrepancy rate or the number of findings or bad

findings that they find does not go up, all that does is really delay

legitimate traffic. So I would like to see an increase in our detection abilities.

The CHAIRMAN. What percent, by what amount, by what date?

Mr. BALDWIN. I would be happy to do some research for you. But

I think the goal would be, if you are going to do more exams, they

have to be more productive exams. I would also say you would

want to do that work abroad. Finally, I would still argue that this

might be the most critical component, and I think this is what you

are talking about in terms of corporate responsibility, is get out

there and identify what number of importers and foreign producers

are actually producing safe products and are certified as such, and

we can have a good idea of what percentage of importers, what percentage of foreign manufacturers are actually on the ‘‘good guy’’

list, how many of them are actually producing safe products. I

think that goes a long way to improving your consumer confidence.

The CHAIRMAN. Who else wants to take a crack at data, dates,

metrics, et cetera, that will enable us to better know whether, in

fact, we are getting a handle on this or not.

Ms. HALLORAN. I am afraid that our capacity is so limited, that

we cannot even have baseline data at this point against which we

could measure progress. We have to first have the capacity to know

the hazards that might be in our marketplace.

For example, China has become a major exporter of garlic and

apple juice to the United States. Now, what kind of testing has

FDA done for, say, pesticide residues in apple juice? I do not know.

I do not know if they have thought of all the things that could be

in apple juice that might be coming here to determine that it is not

there.

I am also very wary of identifying the good company and putting

them on a low-priority list. One reason is, Mattel, in fact, had one

of the better, as I understand it, quality assurance programs, but

there were serious flaws in it. They had trained a certain supplier,

they had a trusted relationship, and then, unbeknownst to them,

apparently the supplier betrayed that relationship and started

using lead paint. So we have to have sampling. We have to have

beefed up checking. We have to have third-party certification from

non-interested parties without a financial interest in the issue,

whose only interest is in accurate information.

The CHAIRMAN. I will press you, too. So what percent, by what

date, in terms of numbers, from your perspective, to determine

whether we are doing a decent job of getting a handle on this?

Ms. HALLORAN. Right. I think we should be inspecting 10 to 20

percent of the food that comes in that is imported, with the higher

percentages for the higher-risk categories, like seafood.

The CHAIRMAN. Ms. Kennedy, let us get down to some numbers

here.
29

Ms. KENNEDY. I think the metrics are a great idea, Senator. I

think one of the things that we have looked at is the time between

when a retailer identifies an issue with a product and how quickly

we can issue that recall so that we can keep our consumers safe.

That would be a metric that I think would be very beneficial.

The CHAIRMAN. All right.

Mr. Dooley?

Mr. DOOLEY. I cannot respond to the actual metrics. We had,

under our risk-based inspection initiative that we have been working with USDA on, developed a very comprehensive algorithm that

had a series of indicators that was going to try to ascertain what

facilities might pose a greater risk, and thus should be subject to

greater inspection. But I do not know what the components of that

algorithm were that would, in fact, embrace some of the metrics

that you have, that you are asking for.

I think the issue in terms of what percent, again, I look at this

as, we are never going to have the amount of inspections that I

think people might like to have, and so how can you be, again,

more effective? That is where we go back to; our companies today

are instituting better practices to provide greater control over the

products that they are sourcing domestically, as well as internationally, because of this decline in consumer safety.

The CHAIRMAN. But would you not like to know how many companies, by what date, are instituting what practices to get a better

idea of your risk management, of success?

Mr. DOOLEY. If you look at the vast majority of manufacturers

of food products, the vast majority are employing the best practices

today which have the third party certification, the audits that are

in place that are doing the testing. A good example on melamine.

They have developed new testing methodology now to try to intercept any proteins or gluten that might be spiked with melamine,

as it was in the past, which they did not anticipate. So they are

constantly evolving and developing new protocols to try to respond

to challenges and problems that they become aware of.

The CHAIRMAN. Here is what I would like. I appreciate the executive branch’s interagency program to find solutions to this problem.

I guess you said there were recommendations coming to the White

House in November, and then to be public when?

Mr. BALDWIN. Soon after.

The CHAIRMAN. Soon after. All right. That is the executive

branch. We have a co-responsibility here in the Congress. So here

is what I would like. I would like each of the four of you, over the

next 2 months, indicate to this committee what you think the

metrics, the standards, the data should be. Not the exact data, but

just the benchmarks, the kind of benchmarks you think would

make sense to help address solutions here.

Then I am going to come back and ask to see what that data actually shows maybe 6, 8, 10 months from now. But at the very

least, let us get a good process lined up here, something that is responsible, to get the job done. So within 2 months. What is today,

the 18th? Great. The 18th. December 18th. That is the deadline

that we have to get that in to this committee. All right? All right.

Obviously the subject is very important. It is complicated and

very important. It is going to become more important as the world
30

becomes more complex as the years go by, so let us get a good handle on it right now.

The committee is adjourned.

[Whereupon, at 11:40 a.m., the hearing was concluded.]
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