VZCZCXRO7844
RR RUEHCN RUEHGH
DE RUEHHK #0149/01 0260935
ZNR UUUUU ZZH
R 260935Z JAN 10
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC 9482
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 HONG KONG 000149 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM, PASS CPSC FOR RICHARD OBRIEN 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD USTR HK CH
SUBJECT: HONG KONG AGREES TO PURSUE MOU WITH U.S. CONSUMER 
PRODUCTS SAFETY COMMISSION 
 
REF: 09 HONG KONG 1452 
 
¶1. (SBU) SUMMARY: The Hong Kong Government's (HKG) Customs 
and Excise Department (CED) told U.S. Consumer Products 
Safety Commission (CPSC) Director of International Programs 
and Intergovernmental Affairs Richard O'Brien on January 12 
that CED would work in 2010 on a memorandum of understanding 
(MOU) with the CPSC.  The MOU will facilitate CPSC training 
of CED officers and provide more rapid and comprehensive 
exchanges of information about product safety investigations 
and regulatory efforts.  O'Brien addressed public concerns 
about alleged cadmium-for-lead substitutions in children's 
jewelry made in China.  He also pledged further CPSC efforts 
to work with international jurisdictions - especially the 
European Union and China - to harmonize consumer product 
safety standards and regulations.  A senior PRC product 
safety official requested changes in CPSC product recall 
announcements related to goods made in China, arguing that 
such recalls were often related to product design flaws 
originating outside China; the CPSC's press releases failed 
to mention this and were therefore "misleading."  O'Brien 
also explained why the CPSC might not accept China's regional 
export certification laboratories (CIQs) in its third party 
testing program for children's products.  End summary. 
 
¶2. (SBU) COMMENT: The Associated Press report about cadmium 
in Chinese manufactured children's jewelry exported to the 
United States broke just as O'Brien touched down on January 
11 in Hong Kong.  He addressed the issue at several speaking 
engagements attended by over 800 global consumer product 
safety experts from government and industry.  His public 
appearances and cadmium-related media interviews in Hong Kong 
(including CNN) demonstrated Hong Kong's utility as a media 
center for all of Asia and enabled CPSC to communicate around 
the clock about its immediate efforts to address the problem. 
 The apparent widespread use of cadmium in 
Chinese-manufactured children's jewelry was highlighted by 
industry observers as an example of the developing, often ad 
hoc nature of consumer product safety oversight in China. 
While deep concerns remain about the safety of consumer 
products manufactured in China, tangible progress has been 
made.  CPSC recalled far fewer Chinese-made goods in 2009, 
compared with the prior year.  To support this trend, the 
CPSC strives to maintain its largely amicable and productive 
working relationship with China's General Administration for 
Quality Supervision, Inspection and Quarantine (AQSIQ).  An 
MOU with CED would enhance CPSC's communications and 
relationship with the HKG, while enabling CPSC to gain 
valuable insights into a key component of the Southeast China 
supply chain that provides a large percentage of all consumer 
products sold in the United States.  End comment. 
 
Background 
---------- 
 
¶3. (U) CPSC Director of International Programs and 
Intergovernmental Affairs Richard O'Brien met with consumer 
product safety regulators and business leaders from around 
the world on January 12-13 in Hong Kong.  He addressed over 
800 individuals at several toy safety-related events, 
including an APEC Toy Safety Initiative conference.  He met 
with CED (the HKG's consumer product safety enforcement body) 
to discuss a potential MOU, held trilateral discussions with 
senior PRC and European Union product safety regulators, and 
spoke with AQSIQ about areas of mutual concern and possible 
cooperation. 
 
CED Agrees to Explore MOU 
------------------------- 
 
¶4. (SBU) CED Head of Consumer Protection SM Wong told O'Brien 
on January 13 that Hong Kong accepted CPSC Chairman Inez 
Tenenbaum's August 2009 proposal to explore a Memorandum of 
Understanding (MOU) between CED and CPSC (reftel).  O'Brien 
reiterated that the non-binding MOU should be a "broad, 
cooperative platform" that enables the CPSC to: provide 
training to CED officers; facilitate more rapid and 
comprehensive sharing of intelligence about potentially 
non-compliant consumer products leaving Hong Kong for the 
United States; and share non-public information about product 
investigations and regulatory rulings. 
 
¶5. (SBU) O'Brien said CPSC would soon send CED a draft MOU 
modeled after CPSC's April 2004 agreement with AQSIQ.  CPSC 
will tailor the draft MOU for Hong Kong to suit regulatory 
and market differences between Hong Kong and the PRC.  Wang 
agreed with O'Brien's proposal to try and finalize the MOU 
 
HONG KONG 00000149  002 OF 003 
 
 
text by 2010 year-end, if possible. 
 
CPSC Addresses Cadmium Concerns 
------------------------------- 
 
¶6. (U) In a video recorded message to the APEC Toy Safety 
Dialogue by CPSC Chairman Inez Tenenbaum, in O'Brien's media 
interviews (including CNN), and at various toy safety events 
attended by over 800 government and industry representatives, 
CPSC effectively addressed an Associated Press news report 
that Chinese manufacturers used large amounts of cadmium in 
children's jewelry sold in the United States.  Cadmium is a 
known carcinogen deemed especially dangerous to children. 
O'Brien said the CPSC immediately launched an investigation 
into the cadmium report and would work quickly to address the 
issue. 
 
¶7. (U) O'Brien explained that children's jewelry is not 
categorized as a toy within U.S. product safety laws and 
regulations, and therefore did not fall under the USG's tight 
regulatory restrictions on hazardous substances such as lead 
and certain phthalates in toys.  However, O'Brien said the 
CPSC has broad powers under the Federal Hazardous Substances 
Act (FHSA) to investigate and prevent the retail sale of any 
children's products containing harmful substances such as 
cadmium or other heavy metals.  (Note: Industry observers 
suspect that Chinese manufacturers began to substitute 
cadmium for lead after very tight lead limits came into 
effect under the U.S. Consumer Product Safety Improvement Act 
(CPSIA) of 2008.  Cadmium melts at a much lower temperature 
than zinc (a much safer lead substitute), consumes less 
energy than zinc during the manufacturing process, and is 
much cheaper than zinc.  End note.) 
 
Harmonization of Global Toy Safety Standards 
-------------------------------------------- 
 
¶8. (U) Participants at each of O'Brien's public meetings 
described difficulties faced by each part of the toy supply 
chain (i.e., manufacturers, importers and retailers) in 
complying with disparate toy safety regulations from the 
United States, the European Union, other international 
jurisdictions, and even from various U.S. states. 
Acknowledging the benefits of international synchronization 
of toy safety regulations, O'Brien said the CPSC would 
continue discussions with its counterparts in Europe and 
China toward that goal.  He noted that global regulators made 
progress in 2009 toward a future common approach on product 
tracking labels.  He urged toy industry leaders to suggest 
priority areas for harmonization, including submission of 
specific ideas that could be accepted by regulators in 
disparate jurisdictions. 
 
AQSIQ Requests Changes in CPSC Recall Announcements... 
--------------------------------------------- --------- 
 
¶9. (SBU) AQSIQ Director General Wang Xin told O'Brien on 
January 12 that his agency was concerned that CPSC product 
recall announcements for goods manufactured in China were 
misleading.  He said most recently recalled products 
manufactured in China resulted from product design flaws 
originating outside China.  By only including China as the 
country of manufacture in its recall announcements, Wang said 
CPSC unfairly placed all the blame for design-related recalls 
on Chinese manufacturers.  O'Brien acknowledged that flawed 
product designs were often the primary cause of recalls, and 
said he would discuss AQSIQ's concerns with his CPSC 
colleagues.  O'Brien pointed out to Wang that even when 
designs didn't originate with Chinese producers, they should 
adopt the best practice of examining the design for possible 
problems.  He also noted the overall progress made by Chinese 
toy manufacturers in improving the safety of toys exported to 
the United States.  The CPSC recalled only 41 toys in 2009, 
down significantly from 162 in 2008. 
 
...And Wants CPSC Certification of AQSIQ Labs 
--------------------------------------------- 
 
¶10. (SBU) The CPSC does not recognize product test results 
from AQSIQ-owned or controlled testing laboratories (CIQ 
laboratories), but accepts product safety test results from 
66 private sector and other government testing laboratories 
in China (including Hong Kong).  The competence and 
independence of CPSC-certified "third-party" labs play a 
crucial role in ensuring the safety of sensitive imports such 
as toys and other children's products.  AQSIQ's Wang 
reiterated his agency's previous requests to the CPSC to 
 
HONG KONG 00000149  003 OF 003 
 
 
certify and accept product test results from AQSIQ labs in 
China.  O'Brien said U.S. law prohibits CPSC certification of 
any testing labs that enjoy foreign government preferences 
withheld from competing private sector labs.  In addition to 
being PRC-owned, O'Brien said AQSIQ labs enjoy at least one 
key government preference currently denied to competing labs 
- i.e., the ability to issue consumer product export 
certificates in China.  Absent structural changes that sever 
the PRC's influence over AQSIQ labs, the CPSC would remain 
unable to accept the labs' test results, O'Brien concluded. 
 
¶11. (U) This cable has been cleared by CPSC's O'Brien. 
MARUT