Congress Turns Toy Story into Nightmare for Small Business

Congress Turns Toy Story into Nightmare for Small Business

By Senator Jim DeMint - February 10, 2009

In a mad rush to "do something" last fall about the lead paint scare involving children's toys, Congress hastily passed the Consumer Product Safety Improvement Act. Today that law goes into effect, and its unintended - but entirely foreseeable - consequences have begun to threaten our already fragile economy.

CPSIA was meant to protect children from careless or unscrupulous Chinese toy manufacturers, but its ultimate function may be to stifle competition in the domestic market for children's goods. The legislation requires expensive tests - for lead and other toxins - be conducted on all products marketed to children under the age of 12, and imposes cumbersome rules to be followed. Big companies with large legal teams and regulatory compliance staffs - foreign and domestic - can afford such tests and follow these rules without much difficulty.

But the CPSIA makes no distinction between such businesses and consignment shops, thrift stores, and small manufacturing companies. Under the new law, even stay-at-home moms selling baby blankets and headbands online would be vulnerable to fines and lawsuits for not conducting the expensive tests or filling out "Form XYZ" in triplicate.

Riding a wave of outrage and media attention, opportunistic advocates of big government convinced Congress that only such a sweeping, one-size-fits-all bill could possibly "protect the children." Consumer and environmentalist groups seized the "lead scare" to push for increased regulations across the board, and now the law may prove as harmful as the danger it was designed the thwart.

My office has been bombarded with phone calls and letters from people from around the country concerned about how this law will affect their livelihood. Companies large and small that were looking to expand and hire more employees are being forced to rethink their business plans now that CPSIA stands in the way.

And just last week, a federal judge sided with environmental and consumer groups in overturning the law's timeline. Rather than allowing for any grace period during which the children's products industry could adjust to the new rules, everyone - even granny knitting her stocking caps - is vulnerable to lawsuits and fines right now.

Worried about just these kinds of problems, I was one of three senators to vote against the original bill last year. Our products - especially children's toys - must be safe, but I believe free-market solutions offer better ways to protect public health while allowing small businesses and second-hand stores to compete.

This past month I drafted legislation that would postpone for six months the effective date of the new regulations, giving all parties involved the chance to find a workable solution - the common good has to include common sense.

My legislation (S. 374) would cut back on duplicative and wasteful testing, while continuing to ensure safety needs are met. After all, if the materials a small manufacturer buys from a large supplier have already been tested, there is no reason to test the final products as well.

It would also exempt thrift stores, yard sales, consignment shops and other re-sellers from being forced to meet unwarranted requirements and remove the threat of retroactive repercussions for selling items already produced under previous rules. That way makers of homemade goods and local manufacturers can stay in business and aren't stuck with un-sellable items already in stock.

Finally, my legislation would instruct the Consumer Product Safety Commission - the agency charged with enforcing CPSIA - to develop a plain-English compliance guide so that even companies without a team of lawyers on staff can understand and follow the rules.

No one can deny that the protection of our children from harmful toxins is of utmost importance, but CPSIA as currently written does more harm than good. Not only will it limit the range of children's products available in the marketplace, it will remove the opportunity to purchase them through less traditional and less expensive venues. And it will stifle market competition at the very moment we need it most.

Protecting children from toy toxins is a good idea, but we need to do it the right way - to make sure there are still jobs waiting for them when they grow up.

Jim DeMint is a U.S. Senator from South Carolina.

Senator Jim DeMint

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