Import ban bill has manufacturers worried

U.S. manufacturers and Embassy Row are up in arms over a House bill that would ban imports from manufacturers that don’t have a U.S. agent.

The aim of the legislation is to ensure manufacturers of defective products can be served with legal papers, but critics argue it could lead to retribution from trading partners. Opponents also say legal papers can be served to the importer and retailer of a defective product, as well as the foreign manufacturer, although they acknowledge serving the foreign company can take time.

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The European Union has warned the legislation would burden small and medium-sized manufacturers, and wants the legislation amended. Indian business groups have also complained; the cost of compliance for Indian exporters could be as much as $500 million, according to the Confederation of Indian Industry.

Opposition has also come from some U.S. business groups.

The National Foreign Trade Council, whose members include General Electric, Ford, Boeing and Caterpillar, warns the bill would lead to retaliatory actions by trading partners and would complicate life for U.S. manufacturers. The National Association of Manufacturers says it cannot support the legislation “as currently written.”

The Foreign Manufacturers Legal Accountability Act is part of House Democrats’ “Make it in America” election-year push, designed to show the party’s support for U.S. manufacturers.

Democrats hope the manufacturing push can save dozens of their vulnerable members across the country, but particularly in the Rust Belt, where frustration with the widening trade deficit is high.

The chief sponsor of the legislation is Rep. Betty Sutton, an Ohio Democrat who faces a tough reelection challenge. Several other Democrats in tight races are co-sponsors, including Reps. Steve Driehaus (Ohio), Gary Peters (Mich.), Tim Holden (Pa.), Harry Teague (N.M.) and Dina Titus (Nev.).

Sutton argues the current system makes it difficult to sue shadowy companies that export toxic drywall, faulty infant cribs or children’s toys containing lead paint.

By making it easier to sue foreign companies for faulty products, Sutton argues, the legislation will help U.S. consumers and level the playing field for U.S. manufacturers.

“Every year, many Americans are injured, sometimes fatally, by dangerous products that have been manufactured abroad and imported into the U.S.,” Sutton said in a statement after her legislation was approved by the Energy and Commerce Committee in July.

“We cannot allow foreign manufacturers to continue to undercut U.S. manufacturers by disregarding the safety of their products, thereby endangering our consumers and costing us jobs.”

The act would be enforced by banning imports from any foreign company above a certain size that do not have a U.S. agent. Business groups are pressing sponsors of the legislation and congressional leaders to strip the ban, but it’s unclear whether their demands will be met.

U.S. businesses also are worried the law could violate World Trade Organization rules, despite provisions that allow exemptions from the rules to protect life and health.

“We’re working with the sponsors to see if we can broker a compromise,” said Catherine Robinson, director of high-technology trade policy for the National Association of Manufacturers.

In a letter to Speaker Nancy Pelosi (D-Calif.), EU Ambassador to the U.S. Joao Vale de Almeida warned the bill could hamper trans-Atlantic trade and cut off the economic recovery.

“It is important to ensure that the provisions of the bill ... do not create additional burdens for small and medium-sized business on both sides of the Atlantic,” he wrote. “Open and undistorted trade remains a key vehicle to recovery, of course without prejudice to the legitimate interests of consumers for safe products.”