STATEMENT OF
THE HONORABLE NICOLE R. NASON
ADMINISTRATOR
NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION
REGARDING
THE SAFETY OF CONSUMER PRODUCTS IMPORTED FROM THE PEOPLE’S REPUBLIC OF CHINA
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
JULY 18, 2007
Mr. Chairman, thank you for inviting me to discuss the safety of consumer products imported from the People’s Republic of China.
In 2006, 46 percent of the 306 million car, light truck and medium truck tires sold here were imported. Ten years ago, imports constituted just 19 percent of total tire sales. Of tires imported in 2006, 23 percent were imported from China, making China the leading country of origin for imported tires. In 2000, Chinese tires were just six percent of imported tires.
The National Highway Traffic Safety Administration (NHTSA) is the federal agency responsible for setting safety standards for motor vehicles and equipment. We are also responsible for two enforcement programs. Our compliance program assures that vehicles and equipment comply with safety standards; our defects investigation program assures that, regardless of compliance with standards, they do not contain safety-related defects. Protecting consumers from defective or substandard tires is one of NHTSA’s most important responsibilities, and a duty I view with the utmost seriousness.
Every year NHTSA selects a sampling of new vehicles and equipment for compliance testing to determine whether these items meet our standards. We crash test more than a hundred vehicles, test hundreds of tires, and conduct tests on about 100 child seat models. Our increased testing has resulted in the number of recalls of noncompliant equipment influenced by NHTSA investigations doubling from 2005 to 2006.
In addition to testing for compliance with our standards, we also look at a wide variety of information sources to determine whether vehicles and equipment may be defective. This Committee was instrumental in drafting the TREAD Act of 2000, which gave NHTSA much-needed authority to collect important data from manufacturers as part of its Early Warning Reporting (EWR) program. Every quarter we receive reports on production data, death and injury claims, property damage claims, warranty claims, and field reports. We review this data along with complaints received directly from consumers and all other available data to determine which vehicles or equipment warrant investigation. Thus far, EWR data have proven useful in both providing the impetus for several investigations and recalls and providing supporting data for many more.
Although NHTSA’s compliance and defect investigations influence many recalls, manufacturers often undertake recalls without NHTSA’s involvement. Manufacturers have a legal duty to report to NHTSA that a vehicle or equipment does not comply with NHTSA’s standards or when they learn that a vehicle or equipment contains a defect and determine that the defect is safety-related. The manufacturers also have the duty to conduct a recall by notifying owners of the problem and offering to remedy the defect or noncompliance by repairing or replacing the vehicle or equipment or refunding the purchase price.
Under the National Traffic and Motor Vehicle Safety Act (Safety Act), importers of vehicles or equipment manufactured abroad are considered manufacturers. This requirement is important because often neither NHTSA nor American consumers have effective recourse against foreign manufacturers of noncompliant or defective equipment. Importers, therefore, have a duty to notify NHTSA of defects or noncompliance of which they are aware in the vehicles or equipment they import and to provide a remedy to the consumer. Congress placed these duties on importers to ensure that the American public would be as protected from the possible dangers from foreign-made goods as they are from domestic goods.
In June, Foreign Tire Sales, Inc. (FTS), an importer of foreign tires, informed NHTSA that up to 450,000 tires it imported from China may be defective. FTS then told NHTSA that the company would not be providing a remedy plan for the alleged defect (which was originally reported as “non-compliant”) because it lacked the financial resources to conduct a recall, despite a clear legal obligation to do so. NHTSA promptly wrote to FTS to inform the company of its legal obligations as an importer to conduct the recall for the reported defective condition that FTS itself had determined to exist. FTS subsequently stated its intention to conduct the recall and provided a remedy program. That recall will soon be underway.
This is the first time NHTSA is aware of an importer who has declared its financial inability to conduct a recall. By comparison, in 2000 and 2001, Firestone conducted two recalls involving nearly 17 million tires, and Ford conducted a campaign involving an additional 13 million tires. As recently as 2006, Firestone issued a re-notification of those recalls to ensure that any still in use were located and replaced. Ford and Firestone took action to address the safety risk. The law demands no less from importers.
Current law does contain financial responsibility requirements for so-called “registered importers” who import vehicles not built to comply with NHTSA standards. As amended in 1988, the Safety Act permits importation of noncompliant vehicles under certain conditions and with NHTSA approval. For example, a registered importer who wishes to import a non-compliant vehicle must post a bond to ensure that the vehicle is appropriately modified to conform with NHTSA safety standards. A registered importer also must demonstrate to NHTSA the capability to conduct a recall by providing evidence of being insured for that purpose.
The Safety Act contains no similar requirements for importers of motor vehicle equipment. Present law does not contemplate the problem of an importer of compliant motor vehicle equipment who simply refuses to perform a recall of a defective product because of financial reasons. With the growing tide of imported motor vehicle equipment, the prospect of an importer actually being financially unable to conduct a safety recall may some day pose a risk to American consumers. Accordingly, we are studying means of addressing this problem and look forward to sharing our thoughts as the study progresses.
Mr. Chairman, we hope this hearing will serve as a reminder to all importers of motor vehicle equipment that they are financially liable under law to recall a defective or noncompliant product they import. That is the risk importers assume in exchange for profiting on the sale of imported motor vehicle equipment. There is no “hardship exemption” in the law, nor should there be.
NHTSA will continue to vigorously enforce our Nation’s vehicle safety standards, and ensure recalls of defective products occur when warranted. Thank you again for holding this hearing, and I look forward to the Committee’s questions.