THE LOBBY OF THE TOY INDUSTRY (USA)

The Toy Industry Association (TIA) is generally supportive of efforts to pursue a comprehensive U.S.-EU transatlantic trade and investment partnership (T-TIP).  The TIA has a membership of more than 600 businesses – from toy manufacturers, retailers and importers to inventors, designers and testing labs – all involved in creating and bringing safe toys and games to children. Its members account for 85% of the $22 billion U.S. toy market. The U.S. toy industry supports an estimated 533,177 jobs, generating $25.8 billion in wages for U.S. workers, with a total annual economic impact in the U.S. of nearly $81 billion.

Regulatory Cooperation

The toy industry in both the U.S. and EU has espoused the goal of greater regulatory cooperation for a number of years. According to TIA’s experience, there are, however, very significant political and other barriers to this very worthwhile goal.

While toys are regulated differently in the U.S. and EU markets, both regulatory systems provide strong and effective consumer protection. Another way to state this is that toys are safe in both markets, but the regulatory approaches to achieving this end differ between the two markets. Given the differences in regulatory approach, in order to sell in both markets, companies often have to make design and/or manufacturing changes to meet both sets of requirements and must at a minimum perform redundant testing in order to demonstrate compliance to both sets of requirements. These costs to the toy industry add up to an estimated US$3 billion annually – unnecessary and redundant costs of demonstrating compliance – and costs ultimately shared by consumers – without improving the safety of toys. Currently, toy safety standards are currently about 80% “aligned.”

Achieving the current level of alignment has taken a tremendous amount of time and effort from all involved. In fact, within the 80% of those standards that are “aligned,” only a small handful (about 10% of the EU and US physical and mechanical standards) are word-for-word identical. The other standards that are “aligned,” though not identical, are fundamentally the same or functionally equivalent.

Significant barriers to further alignment, namely politics and differences in regulatory approach, remain on both sides of the Atlantic. According to TIA, politics and differences in regulatory philosophy are the root causes of differences in toy safety standards. Therefore, approaching regulatory cooperation as strictly a technical alignment effort will result in marginal benefits – especially considering the short time frame set to complete negotiations.

TIA views regulatory cooperation as two separate exercises: addressing current regulatory divergences and promoting greater alignment for future regulations.

General Principles

 Any regulatory outcomes in the T-TIP must adhere to sound principles of science, risk assessment and cost-benefit analysis. As mentioned above, regulatory differences are often politically motivated and these measures add burden to companies without introducing a significant difference in the level of safety. TIA believes this to be a flawed approach. Decisions should be based on sound science, rather than children’s safety being used for political purposes.

Addressing Current Regulatory Divergences

Addressing current regulatory divergences will be significantly more challenging than promoting greater future regulatory cooperation. This is because both sides’ standards have been set through long-established procedures and each party has significant investment in their own process. However, since differences in methodology are due largely to political considerations, not technical or scientific ones, these differences do not result in differences in the safety of the regulated toy. As current regulatory divergences do not alter the underlying safety of the product, when addressing regulatory cooperation between existing standards, it is important to focus on the regulatory outcomes (ensuring toy safety) and not the specific approaches of the regulations themselves.

Experience has shown that achieving full regulatory alignment will be extremely difficult and may have some drawbacks that may result in additional costs to businesses without benefiting consumer safety. Therefore, instead TIA is asking that regulators pursue mutual recognition. This would mean that each jurisdiction would agree to accept suitable demonstration of conformance to the other’s standards as presumptive evidence of an adequate level of safety and acceptability for importation and sale.

Seeking mutual recognition depends on the understanding, acknowledgment and acceptance of the fact that regulators on both sides of the Atlantic set effective toy safety standards based on a unified objective (to ensure that toys are safe) and consumers in both markets enjoy a high level of regulatory protection. When one recognizes this, it naturally follows then that toys that are compliant with either the U.S. or the EU toy safety standard are safe – regardless of where the toy is sold. Therefore, mutual recognition would not result in any reduction in toy safety.

Mutual recognition is ultimately a better and more realistic alternative than full regulatory alignment, at least for toys. Mutual recognition would not undermine either side’s regulatory sovereignty nor should it mandate that one adopt the other’s regulatory approach. Moreover, regulatory alignment could result in significant costs to businesses especially if regulators decide to simply adopt the most onerous standard regardless of effectiveness, or the risk of hazard. However, the most stringent standard is not necessarily a better or more protective standard, and is not necessarily one based on any underlying science. Frequently, standards that are stricter than their international counterparts are promulgated due to political influence.

Whenever a standard setting body begins to consider a new regulation, it is important that its international standard setting counterpart is not only alerted but is continuously updated throughout the process. An ‘open’ standards process should allow active participation and input. Should the standards setting body diverge from a pre-existing regulation, it should demonstrate a compelling need for divergence from that requirement, and demonstrate convincingly that the costs of that divergence do not outweigh the manifest benefits of alignment. The standard setting body must also consider whether the divergent regulation achieves the same regulatory outcome as the pre-existing standard. If both standards adequately protect human health and safety, then the respective regulatory bodies should grant “mutual recognition” of regulations.

Finally, in order to implement, promote and enforce regulatory cooperation, an agreement should create a committee consisting of stakeholders from standard setting bodies on both sides of the Atlantic to mediate any disagreements. Enforcement of a regulatory cooperation agreement will be an important element as an agreement will not be useful if these bodies do not observe their obligation to follow its international alignment mandate.