VZCZCXRO6386
RR RUEHCHI RUEHCN RUEHDT RUEHGH RUEHHM RUEHVC
DE RUEHHK #0091/01 0141002
ZNR UUUUU ZZH
R 141002Z JAN 09
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC 6650
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 HONG KONG 000091 
 
SIPDIS 
 
STATE FOR EAP/CM, STATE PASS CPSC RICHARD O'BRIEN 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD HK
SUBJECT: PRODUCT SAFETY TRUMPS FUN AND GAMES AT HONG KONG 
TOY FAIR 
 
REF: A. HONG KONG 2211 
     ¶B. HONG KONG 1989 
 
¶1. (SBU) Summary: Director of International Programs and 
Intergovernmental Affairs at the U.S. Consumer Product Safety 
Commission (CPSC) Richard O'Brien visited Hong Kong from 
January 4-9. He educated local manufacturers and exporters 
about the new U.S. Consumer Product Safety Improvement Act 
(CPSIA), and received feedback regarding CPSC's efforts to 
implement the revised regulatory framework mandated by the 
law.  In meetings with HKG officials, industry associations 
and individual firms, O'Brien described the CPSIA's 2009 
deadlines for reduced lead content in toys, the revised 
accreditation process for third party laboratories testing 
products shipped to the United States, and new restrictions 
on the composition of plastic components in consumer 
products.  During O'Brien's visit, a senior PRC product 
safety official publicly acknowledged several shortcomings of 
mainland government bodies in ensuring the safety of consumer 
products made in China.  The largest product testing labs 
told O'Brien that the CPSIA has not yet caused product 
testing capacity constraints.  He conducted a media 
roundtable with local and international publications, 
provided interviews to local and regional television 
broadcasters, and provided interviews to Guangdong-based 
trade publications.  O'Brien and EconOff also visited 300 
booths at the Hong Kong Toy Fair to provide information about 
the CPSIA, and distributed cards with the CPSC website link 
that contains detailed information about U.S. consumer 
product safety requirements in both English and Chinese. 
Hong Kong interlocutors expressed their desire for a 
permanent CPSC presence here; O'Brien informed them that the 
CPSC recently requested permission to establish an office in 
Beijing.  End summary. 
 
¶2. (SBU) Comment: O'Brien's visit was eagerly anticipated by 
HKG officials and Hong Kong's leading manufacturers and 
exporters.  Hong Kong-based toy manufacturers especially 
appreciated the opportunity to pose detailed questions and 
express their concerns in person about the CPSIA's rigorous 
testing and product content rules.  His visit reinforced our 
view that the CPSIA inadvertently provides a competitive 
advantage - at least in the near term - to larger and more 
sophisticated manufacturers in mainland China.  Compared with 
their smaller rivals, the larger firms can better devote the 
resources necessary to ensure full compliance with the law 
(i.e. enhanced product testing, and adjustments to product 
component compositions), with compliance-related costs spread 
over a larger production base.  Smaller Hong Kong-based firms 
continued to express nervousness regarding their ability to 
comply with new U.S. product safety regulations in a timely 
and cost-efficient manner (refs A and B). 
 
Strong Interest from Manufacturers and Exporters 
--------------------------------------------- --- 
 
¶3. (U) At two major speaking engagements - an AmCham-arranged 
gathering of 35 procurement professionals from U.S. and Hong 
Kong-based firms, and a seminar at the Toy Fair attended by 
600 individuals - O'Brien explained the CPSC's efforts to 
revise its regulatory framework in support of the CPSIA.  He 
described the law's lowered limits on lead content, new rules 
restricting phthalate content (phthalates are additives that 
increase the flexibility of plastics), and tightened 
regulation of children's products and toys. 
 
¶4. (U) O'Brien also described CPSC's efforts with European 
Union product safety officials to identify mutually 
compatible regulatory requirements, especially with regard to 
product testing and content limits on hazardous substances. 
These discussions could potentially form the basis for more 
harmonized product safety statutes in Europe and the United 
States.  Audience members expressed strong support for such 
efforts.  They commented that the paucity of internationally 
accepted product safety standards requires duplicative and 
"unnecessarily" costly product testing programs. 
 
¶5. (SBU) AmCham event participants reiterated their December 
2008 request to a visiting U.S. Congressional Staff 
delegation that the CPSC permanently post in Hong Kong and/or 
China an officer to field product safety inquiries and 
conduct educational outreach programs.  O'Brien responded 
that the CPSC in October 2008 formally requested permission 
from the PRC's Ministry of Foreign Affairs to establish a 
two-person office (one American, one Chinese national) in 
Beijing that would have regional responsibility for Asia. 
The ministry has not yet responded to CPSC's request. 
 
 
HONG KONG 00000091  002 OF 003 
 
 
Beijing Acknowledges Product Safety Deficits 
-------------------------------------------- 
 
¶6. (U) A senior PRC quality assurance official provided 
public statements at the Toy Fair that on surface supported 
stricter consumer product safety standards.  Liu Xiang, Vice 
Director at the Administration of Quality Supervision, 
Inspection and Quarantine (AQSIQ), told reporters that 
Beijing is developing incentives for toy producers to meet 
safety standards, in an effort to avoid further international 
product recalls and related damage to the reputation of PRC 
manufacturers.  Strengthening safety standards would 
inevitably increase costs, but would also ensure only safe 
products were sold, according to Liu.  The PRC government 
would be tightening the regulatory regime on toy safety and 
quality, implemented in August 2007, to boost consumer 
confidence and meet international practices, and is 
developing safety regulations for mainland-made electronics 
and home appliances, Liu said.  Since the summer of 2007, 
said Liu, approximately 20,000 mainland-made toys had been 
recalled over safety hazards, with many found to contain 
toxic materials such as lead paint.  Liu admitted that China 
"lags behind Europe and the U.S." on its product safety 
monitoring and enforcement capabilities.  He said, "We need 
to step up our work on consumer product defect 
investigations, information collection, inspections, 
documentation of complaints, and our ability to serve 
consumers." 
 
Hong Kong Customs Values Cooperation with CPSC 
--------------------------------------------- - 
 
¶7. (SBU) During O'Brien's January 5 meeting with Hong Kong 
Customs Head of Trade Inspection and Verification S.M. Wong 
and Head of Trade Controls S.Y. Cheung, the officials 
explained that the HKG does not regulate the safety of 
consumer products exported from Hong Kong or transshipped 
through its ports.  Cheung contrasted this approach with the 
PRC's AQSIQ that regulates and tests the safety of mainland 
China's consumer product exports.  He said AQSIQ's 
laboratories currently conduct most of the testing on 
consumer products produced in mainland China, and he 
questioned the reasonableness of CPSIA provisions that 
prevent U.S. importers from accepting those test results. 
O'Brien explained that unlike privately held labs, PRC 
government labs issue export licenses in addition to their 
provision of product testing services.  The CPSIA prevents 
U.S. accreditation of government-owned labs that offer 
special government services or privileges. 
 
¶8. (SBU) Wong and Cheung requested creation of a CPSC 
training program for Hong Kong Customs officials.  The 
program would provide detailed information about CPSIA 
requirements, the CPSC's regulatory framework and activities 
in support of the new law, and USG enforcement efforts to 
ensure product safety compliance.  O'Brien informed the HKG 
officials about the CPSIA's new provisions that authorize the 
CPSC to conduct training of foreign officials.  He requested 
Wong and Cheung to request such training in writing, but he 
stated that CPSIA implementation has priority and it would 
likely be some months before any training could be scheduled. 
 O'Brien said the CPSC would like to work in a "closer, more 
formal manner" with Hong Kong Customs. 
 
Lab Operating Capacity Not Stretched 
------------------------------------ 
 
¶9. (SBU) At the annual Toys and Games Fair in Hong Kong, 
representatives of five leading consumer product testing 
companies told O'Brien that while enactment of the CPSIA had 
boosted their firms' respective revenues, their operations 
had not yet been stretched to capacity.  Turnaround times for 
product testing remained five to ten days - unchanged from 
the period prior to enactment of the CPSIA in August 2008. 
In addition, sufficient numbers of technical and professional 
staff remain available for employment.  The CPSC will 
continue to monitor turnaround times at product testing labs, 
in order to ensure that the CPSC's product content deadlines 
and testing requirements do not outstrip product testing 
capacity. 
 
O'Brien's Additional Outreach Efforts in HK 
------------------------------------------- 
 
¶10. (U) O'Brien received extensive media interest and 
coverage during his visit.  He conducted a media roundtable 
discussion with local and international publications, as well 
as interviews with RTHK (local English language radio), NOW 
 
HONG KONG 00000091  003 OF 003 
 
 
TV (local), and Phoenix TV (Hong Kong-based broadcaster 
reaching 150 million PRC viewers).  O'Brien and EconOff also 
visited approximately 300 booths at the Toy Fair, in order to 
remind exporters and manufacturers about the CPSIA, and to 
distribute business cards with the CPSC website link 
containing information in both English and Chinese about U.S. 
consumer product safety compliance requirements. 
 
¶11. (SBU) The HKG's Director General of the Trade and 
Industry Department, Joseph Lai, hosted a meeting for O'Brien 
and leaders of six major Hong Kong-owned toy and apparel 
manufacturers.  Lai praised O'Brien's visit to Hong Kong as a 
"highly productive effort to reach out to local companies who 
might be struggling to comply" with the CPSIA.  He said the 
HKG shares the USG's goals of improving the safety of toys 
and other consumer products.  Lai was pleased to learn the 
CPSC has requested PRC permission to establish an office in 
Beijing, stating that the office would "facilitate 
communication about product safety among the HKG, PRC, USG 
and industry." 
 
¶12. (U) This cable has been cleared by CPSC's Richard O'Brien. 
DONOVAN