By Emily Flitter:
NEW YORK (Reuters) – When it comes to protecting consumers, American politicians in China don’t always practice what they preach, unpublished U.S. diplomatic cables show.
In 2007, two U.S. Congressmen privately admonished a Chinese official about the sudden spike in potentially harmful Made-in-China products being shipped around the world, according to a cable from the U.S. embassy in Beijing obtained by WikiLeaks and provided to Reuters by a third party.
At the time, China was under fire from the United States and other nations for a host of toxic exports — everything from lead paint in toys to poisonous chemical substitutes for ingredients in medicine and pet food. In August of that year, Mattel alone was compelled to recall 20 million toys that had been manufactured in China.
Two years later, the cables show, the same U.S. Congressmen — Mark Kirk, then a House Republican from Illinois, and Rick Larsen, a Democrat from Washington — returned to Beijing, only this time they had an entirely different message. Kirk and Larsen asked Chinese officials to look the other way as an American company failed to meet regulations restricting the use of a toxic chemical in medical equipment sold to Chinese hospitals.
The company, Baxter Healthcare, was making blood bags for intravenous delivery using polyvinyl chloride (PVC), a plastic softener that has been banned in some other parts of the world. A chemical found in PVC has been shown to build up in humans, causing developmental defects in children, among other things. The European Union banned the chemical in question — commonly known as DEHP — from all household products this year.
According to the diplomatic cables, China was seeking to do the same for its hospitals. Its regulators had already stipulated that new IV bags must be manufactured without PVCs.
On behalf of Baxter, however, the two Congressmen pressed the Chinese commerce minister to buy time for the company, which was the third largest contributor to Kirk’s 2008 reelection campaign. In 2010 he was elected a senator, filling the vacant Illinois seat left by President Barack Obama.
While the United States is a recognized leader in consumer safety standards, some experts fear that an inconsistent diplomatic message could jeopardize its ability to insist others abide by the same beliefs.
“If we want to really focus on the issue, we’ve got to be consistent,” said Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations in New York, who is the founding editor of Global Health Governance, a journal dealing with international health security issues. “You don’t want to leave a credibility gap for the Chinese to criticize.”
HEALTH HAZARDS
Based in Deerfield, Illinois, Baxter International is a medical equipment maker best known for making vaccines and IV solutions, with annual revenue of $12.84 billion in 2010. The company has long denied that DEHP is harmful, though it has been making an alternative line of IV equipment free of the chemical in the United States for some time. While there is no outright ban on the use of PVCs in the United States, some major hospital companies have voluntarily halted their use.
For its part, the Chinese government has had restrictions in place on DEHP for over 20 years.
“DEHP has a number of known health hazards,” Tin-Lap Lee, associate professor at the Chinese University of Hong Kong’s School of Medical Sciences, told Reuters in an interview. “It’s classified as carcinogen and may cause reproductive and developmental effects.”
The first time China regulated DEHP content in plastics was in 1988. The government updated its regulations in 1995 and 2004, and today at least three regulations govern its use there. They specify safe levels of the chemical for medical products such as blood storage bags, blood transfusion materials and blood tubes, all of which are commonly made of PVC. These restrictions state that contaminants in these products must not exceed certain limits.
A spokeswoman for Baxter International declined to specify how many IV bags Baxter sells in China, but said the company was “the leading manufacturer of flexible, closed-system IV solutions in China, serving the country’s leading hospitals.”
She said a new product Baxter is working on “meets the regulations” in China, and that “pending regulatory approvals, we are preparing for full commercial launch later this year.” She added that the old IV bags would no longer be sold once the new line was introduced.
Asked if Baxter is currently selling IV bags that don’t meet regulatory requirements, she replied: “We are still working through the details of the transition with authorities and hospitals to ensure there is no disruption to supply of vital products to hospitals.”
THE CONGRESSMEN
Kirk and Larsen have traveled to China together three times over the past five years as co-chairs of the U.S.-China Working Group of the U.S. Congress, which they co-founded in 2005. The group connects members of Congress with Chinese academics, businesspeople and politicians. Over that period they have held talks with dozens of Chinese officials, including with the nation’s vice premier, commerce secretary and assistant foreign minister.
It is by no means uncommon for members of Congress to travel to China and lobby on behalf of constituents. Yet a review of dozens of cables describing congressional delegations to China reveals no other instance of a U.S. politician requesting rule changes to help an American firm.
At the time of Kirk’s 2009 visit to China, he was a member of the U.S. House of Representatives, serving Illinois’ 10th district, the wealthy northern suburbs of Chicago where Baxter is headquartered. The company’s political action committee and its executives are among Kirk’s largest campaign contributors, providing him with a total of $98,900 over the past 10 years.
Baxter executives have not contributed to Larsen’s fundraising activities in any significant way, but two other companies with substantial business ties in China do: Boeing and Honeywell International.
DOUBLE STANDARD
The first time Kirk and Larsen spoke with the Chinese about product safety, it was to admonish China’s Assistant Foreign Minister He Yafei for scandals in 2007 involving Chinese goods exported to the United States that were found to contain toxins such as lead.
“Representative Larsen urged China to address U.S. concerns about the safety of Chinese exports, particularly food products and toys,” reads a cable describing Kirk and Larsen’s meeting with He on Aug 27, 2007.
“It would be a mistake for China to ‘underestimate the passion of the American public on this issue,’” Larsen told He.
Two years later, however, the two were making the opposite request, asking for leniency in medical product regulations.
A spokeswoman from Larsen’s office said Larsen was too busy to comment on the story, but added:
“Congressman Larsen, along with many others, has worked to help China raise its product safety standards by promoting and securing a Food and Drug Administration (FDA) presence in China, and his understanding of the Baxter products is that they are FDA certified, sold in the United States, safe for use, China wants something different than the standards the FDA approved for this product and Baxter needs more time to fully comply with the Chinese regulation.”
A spokeswoman for Kirk said: “The USFDA is the gold standard for safe and effective medical supplies. Once FDA approves a product, Senator Kirk will advocate for its export to boost jobs and U.S. leadership. The claims against these products by the Chinese government are thinly veiled attempts to stop American competitors.”
WHY THE PREFERENTIAL TREATMENT?
The United States lobbied hard on Baxter’s behalf. In a meeting with China’s Minister of Commerce Chen Deming on May 31, 2009, Kirk asked for more time for Baxter to meet China’s regulations, arguing that a crackdown on Baxter would hurt the company’s Shanghai plant.
The cable describing the meeting doesn’t convey the exact wording of Kirk’s request, but it does describe Chen’s response:
“He said that while he lacked the requisite technical knowledge, if additional time for phasing in a new regulation would help preserve employment in China and made economic sense, this would seem to be good.”
A note in the cable adds: “(U.S. government) officials have raised this issue at a sub-ministerial level in the past with (the Ministry of Commerce).”
Ira Kasoff, then the deputy assistant secretary for Asia at the Commerce Department’s International Trade Administration, asked National Development and Reform Commission Director General Chen Bin in a meeting on April 1, 2009 to “give Baxter China adequate time to phase out the use of polyvinyl chloride (PVC) in intravenous infusion bags or face possible job losses.”
Kasoff no longer works for the Commerce Department; he’s a senior counselor at APCO Worldwide, a Washington-based consulting firm.
“I did, along with others, try to speak to the Chinese about allowing enough of a transitional time for allowing these companies to make the adjustment,” Kasoff said in an interview, adding that he did not remember many details.
“It was a fairly complicated changeover and they had to retool the factories.”
Of Baxter, he said “they have a long-term commitment to China and they’ve made major investments there.”
Questions remain over what the Chinese agreed to do in response to the U.S. request on behalf of Baxter. The Baxter spokeswoman insisted that the problem was not one of time but rather of complicated coordination between different Chinese regulators that was holding Baxter up in its efforts to retool its four Chinese factors to make non-PVC IV bags.
Kasoff suggested that the person who would know the story best was J.V. Schwan, a former Commerce Department official who did not respond to calls and emails seeking comment.
Schwan left his job as deputy chief of staff at the Commerce Department in late 2008 to become a lobbyist for Baxter.
(Additional reporting by Ee Lyn Tan in Hong Kong and Mark Hosenball in Washington; Editing by Jim Impoco and Claudia Parsons)