Foreign Manufacturers of Dangerous Goods Enjoy Favorable Status in US Markets; Society Pays Heavy Price

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Foreign Manufacturers of Dangerous Goods Enjoy Favorable Status in US Markets; Society Pays Heavy Price  

For Immediate Release: November 13, 2008

Contact: Jen Fuson
202.965.3500, ext. 8369

Foreign Manufacturers of Dangerous Goods Enjoy Favorable Status in US Markets; Society Pays Heavy Price  

Single Dangerous Product Can Cost Billions According to New Analysis

Washington, DC—Foreign manufacturers easily evade responsibility and accountability for producing hazardous products which can cost consumers and other third parties billions of dollars for a single product sold in the United States according to new analyses to be released Friday.

Presented at a discussion on dangerous products sponsored by American Association for Justice (AAJ) Robert L. Habush Endowment and American University’s Washington College of Law, the analysis, Defective Foreign Products in the United States: Issues and Discussion, argues foreign producers “are protected by the complex web of laws, policies, and practices that make it difficult if not impossible to sue successfully foreign manufacturers in domestic courts.”  

According to Professor Andrew Popper of American University Washington College of Law, “Foreign manufacturers suffer few consequences from exporting popular and profitable products that are also inexpensive, untested, and deadly.”

The paper looks at the favorable status enjoyed by foreign manufacturers who face “glaring discrepancies” in product liability insurance rates and can often set their prices lower because they are not subject to the equal prospect of restitution U.S. manufacturers face if a consumer is injured by their product.  Without the prospect of being held accountable through the U.S. civil justice system, a foreign producer has little incentive to maximize product quality and safety, Professor Popper summarizes.

Several options are discussed to level the playing field, including requiring a bond be posted to ensure importers have either enough money or insurance to pay for damages their products might cause, compelling the importer to ensure the quality of their products sold in the U.S.  Another option would require foreign manufacturers to comply with state court jurisdictions where their products are sold.  These and other measurers are subject to congressional action and World Trade Organization approval.

Popper concludes, “stripped of the incentive value the tort system provided, it should come as no surprise that domestic consumers have been exposed to tens of millions of defective products produced by foreign suppliers.”

A second analysis, The Social Costs of Dangerous Products: An Empirical Investigation, looks at the costs of injuries and fatalities associated with three known dangerous products: Ford SUV’s with Firestone tires, the pharmaceutical drug Baycol manufactured by Bayer, and all terrain vehicles, or ATVs. 

Using these products as a base line, Professors Sidney Shapiro of Wake Forest School of Law, Ruth Ruttenberg of National Labor College, and Paul Leigh of the University of California at Davis conclude these three products alone created nearly $4.7 billion in medical costs, lost wages, and other costs, excluding the cost of pain and suffering or and other extended costs.   

The research estimates ATVs cost society $3.9 billion, Baycol about $248 million, and Ford SUV’s with Firestone tires is estimated $555 million in medical expenses and wages, excluding external costs like pain and suffering and life-time income estimated costs.

The research compares compensation awarded in the tort system to the actual costs created by hazardous products and concludes restitution awarded through the tort system is less than the actual costs created by the dangerous products themselves.  Although the actual costs are difficult to measure, “the tort system provides a valuable service for society to the extent it successfully deters the sale of dangerous products,” according to Shapiro, et al.

The paper presentations will be followed by panel discussions with academic and consumer experts on hazardous products. For more details, please contact Jennifer Fuson at 202-965-3500 x. 609.  

Obtain a copy of the paper The Social Costs of Dangerous Products: An Empirical Investigation

Obtain a copy of the paper Unavailable and Unaccountable: A Free Ride for Foreign Manufacturers of Defective Goods 

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