[Federal Register Volume 73, Number 248 (Wednesday, December 24, 2008)]
[Notices]
[Pages 79207-79221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-30603]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
[Docket No. NHTSA 2008-0113 Notice 2]
Recommended Best Importer Practices To Enhance the Safety of
Imported Motor Vehicles and Motor Vehicle Equipment
AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.
ACTION: Final Notice.
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SUMMARY: This notice provides guidance concerning best practices to be
followed by importers of motor vehicles and motor vehicle equipment to
reduce the likelihood of importing products that contain defects
related to motor vehicle safety or do not comply with applicable
Federal motor vehicle safety standards.
FOR FURTHER INFORMATION CONTACT: Clint Lindsay, Office of Vehicle
Safety Compliance, National Highway Traffic Safety Administration, 1200
New Jersey Avenue, SE., Washington, DC 20590, (202-366-5288).
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
a. National Highway Traffic Safety Administration
b. The Interagency Working Group Report--Strategic Framework
c. Working Group--Action Plan
II. NHTSA's Implementation of the Working Group's Recommendation on
Best Importer Practices
III. Comments and Recommendations Requested
IV. Comments Received
a. Support for NHTSA Guidance
b. Voluntary Product Marking
c. Records Maintenance
d. Methodologies for Product Management and Development
e. Report Submitted
V. Executive Order 12866 on ``Significant Guidance''
VI. Recommended Best Practices for Importers of Motor Vehicles and
Motor Vehicle Equipment
a. Fully Understand the Importer's Obligations under Motor
Vehicle Safety Statutes and Regulations
b. Exercise Great Care in Selecting Foreign Fabricating
Manufacturers
c. Inspect Foreign Manufacturing Facilities
d. Inspect Goods Either Before They Are Exported to or
Distributed in the United States
e. Identify the Product
f. Establish a Consumer Service Program
g. Contact NHTSA Concerning Manufacturer/Importer Reporting
Requirements, Safety Compliance, Defect Issues, and Regulations
h. Know How to Obtain General Assistance with Other Federal
Regulations
I. Background
a. National Highway Traffic Safety Administration
The National Highway Traffic Safety Administration (NHTSA)
administers the National Traffic and Motor Vehicle Safety Act of 1966,
as amended, 49 U.S.C. chapter 301 (the Vehicle Safety Act). Under that
authority, NHTSA issues and enforces Federal motor vehicle safety
standards (FMVSS) that apply to motor vehicles and to certain items of
motor vehicle equipment. NHTSA also monitors motor vehicles and items
of motor vehicle equipment that are imported into the United States for
compliance with applicable FMVSS. In recent years, an ever-increasing
number of motor vehicles and motor vehicle equipment items sold in the
United States have been imported. For example, in 1996 imported tires
comprised just 19 percent of the 282 million tires sold that year in
the United States. By 2006, imported tires rose to 46 percent of all
tire sales, with 140 million tires being imported. Nearly all
motorcycle helmets are now imported, as is the case for a large
percentage of vehicle lighting equipment and child safety seats sold in
this country.
Under the Vehicle Safety Act, fabricating manufacturers (i.e., the
actual assemblers) and importers of motor vehicles and motor vehicle
equipment are responsible for the safety of their products that they
manufacture for sale in or import into the United States. NHTSA has a
standard setting and oversight/enforcement role and may issue guidance
that provides valuable information to affected industries. U.S.
consumers provide valuable feedback to manufacturers and to NHTSA,
which has a hotline, 1-888-DASH-2-DOT (1-888-327-4236), for consumers
to report safety-related problems with motor vehicles and motor vehicle
equipment.\1\
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\1\ Consumers may also file an online complaint concerning a
motor vehicle, child seat, tire, or motor vehicle equipment item.
See http://www.safercar.gov.
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NHTSA's enforcement program has two major elements, compliance
testing and defects investigation. As the volume of motor vehicle and
equipment imports has increased, NHTSA's scrutiny of those imports
through both compliance testing and defect investigations has also
grown. However, recent experience has demonstrated that companies
importing products regulated by NHTSA, particularly motor vehicle
equipment, play an especially important role in ensuring that those
items comply with the FMVSS and are not likely to be defective. At the
same time, both NHTSA's recent experience and that of other agencies
with regulatory authority over the safety of imported goods indicate
that the entire importing community could benefit by following best
practices that help ensure the safety of imported products and reduce
the likelihood of unsafe products entering the United States.
b. The Interagency Working Group Report--Strategic Framework
On July 18, 2007, the President issued Executive Order 13439 to
establish the Interagency Working Group on Import Safety (the ``Working
Group''). The Department of Transportation (DOT), including NHTSA,
participated in the Working Group. As part of its mission, the Working
Group identified strategies that could be pursued within existing
resources to promote the safety of imported products. To begin
identifying best practices for import safety, the Working Group held
consultations with the private sector, reviewed current import safety
procedures and methods, surveyed the authorities and practices of
Federal agencies, and worked with the importing community. The Working
Group recognized that U.S. importers are responsible for ensuring the
safety of regulated products they import into the United States and
should follow best practices to assure safety through methods that
include: (1) Selecting foreign manufacturers to produce their products;
(2) inspecting foreign manufacturing facilities; (3) inspecting goods
produced on their behalf either before export or before distribution in
the United States; (4) identifying the product's country of origin; and
(5) safeguarding the supply chain.
In September 2007, the Working Group published a report entitled
``Protecting American Consumers Every Step of the Way: A Strategic
Framework for Continual Improvement in Import Safety'' (the ``Strategic
Framework''), which inaugurated the process of identifying action steps
needed to enhance the safety of imported products.\2\ The Strategic
Framework promotes a cost-effective, risk-based
[[Page 79208]]
approach to achieve this objective, and contains the following key
principles:
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\2\ Interagency Working Group on Import Safety, ``Protecting
American Consumers Every Step of the Way: A strategic framework for
continual improvement in import safety'' (Washington, DC, September
2007) http://www.importsafety.gov/report/report.pdf.
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(i) Prevention--Prevent harm in the first place. The Strategic
Framework recognizes that the Federal government must work with the
private sector and with foreign governments to adopt an approach to
import safety that builds safety into the manufacturing and
distribution processes;
(ii) Intervention--Intervene when risks are identified. The
Strategic Framework encourages Federal, state, local, and foreign
governments, along with foreign manufacturers and the importing
community, to adopt more effective techniques for identifying potential
noncompliant and/or defective products. When problems are identified,
the Strategic Framework recognizes that government officials must act
swiftly, and in a coordinated manner, to seize, destroy or otherwise
prevent noncompliant and/or defective products from advancing beyond
the point-of-entry; and
(iii) Response--Respond rapidly after harm has occurred. In the
event that an unsafe imported product makes its way into domestic
commerce, the Strategic Framework recommends swift action to limit
potential exposure and harm to the American public.
c. Working Group--Action Plan
The Working Group promised to solicit extensive comments and
recommendations from the public, and to provide an action plan by mid-
November. On November 6, 2007, the Working Group submitted its report
entitled ``Action Plan for Import Safety: A roadmap for continual
improvement'' (the ``Action Plan'').\3\ The Action Plan represents the
culmination of thousands of hours of research and analysis, as well as
public comment received from hundreds of stakeholders. In the Action
Plan, the Working Group presented 14 broad recommendations and 50
specific action steps based on the key principles described above--
Prevention, Intervention, and Response. For each of these key
principles, the Action Plan identified the cross-cutting building
blocks that departments and agencies should use to guide their import
safety programs. Building Block Number 2, with the subject heading
Increase Accountability, Enforcement, and Deterrence, acknowledges that
while it is important to remember that industry has a financial
interest to sell safe products to consumers, all stakeholders involved
in the production, distribution, and sale of imports must be held
accountable to ensure that imported products meet Federal safety
standards in the United States. The Action Plan recommended that
Federal agencies ``work with the importing community and other members
of the public to develop Good Importer Practices and issue guidance
with respect to particular product categories.'' \4\ Although some
members of the importing community have established best practices on
their own, the majority of importers do not have available best
practices that are focused on ensuring product safety. The Working
Group believes that by developing best importer practices, the entire
importing community may benefit from taking appropriate steps to ensure
the safety of imported products and to reduce the likelihood of unsafe
products entering the United States.
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\3\ Interagency Working Group on Import Safety, ``Action Plan
for Import Safety: A roadmap for continual improvement''
(Washington, DC, November 2007) http://www.importsafety.gov/report/actionplan.pdf.
\4\ The Action Plan, Recommendation 3.1, pp. 20-21.
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II. NHTSA's Implementation of the Working Group's Recommendation on
Best Importer Practices
The Action Plan encourages Federal agencies to work with the
importing community to develop best importer practices that will
provide strategies for evaluating foreign manufacturers and imported
products. The Food and Drug Administration (FDA) is in the process of
issuing a set of Good Importer Practice recommendations on behalf of
select Federal agencies and departments that are members of the
Interagency Working Group on Import Safety. Those departments and
agencies include the Consumer Product Safety Commission, the
Environmental Protection Agency, the U.S. Department of Agriculture,
the U.S. Department of Commerce, the U.S. Department of Health and
Human Services, the U.S. Department of Homeland Security, and DOT. As
the DOT representative to this working group, NHTSA has participated in
the development of the Good Importer Practice recommendations that are
awaiting issuance by the FDA. Those recommendations are intended to be
generic in nature, and not specific to the products that are regulated
by any particular Federal agency. In contrast, the recommended best
importer practices that are the subject of this notice are specifically
intended for importers of a particular product category, i.e., motor
vehicles and motor vehicle equipment, the products that are regulated
by NHTSA.
NHTSA published in the Federal Register on July 8, 2008 (73 FR
39078) a notice requesting public comments on the agency's recommended
best importer practices. In today's notice, NHTSA issues in final form,
with some changes, the suggested best practices for importers of motor
vehicles and motor vehicle equipment that were the subject of the July
8 notice. As stated by the agency in the July 8 notice, NHTSA is not
establishing a binding set of rules on best practices or even
suggesting that a single set of best practices would apply in all
situations. The agency fully realizes that best practices may vary
widely depending on the item being imported and the scope of an
importer's operations. We also recognize that such practices must
remain fluid to account for changes in safety regulations and the
global economic environment. Importers remain free to choose the
practices that best fit their needs in ensuring compliant and defect-
free products. Moreover, these recommended practices do not establish
any defenses to any violations of the statutes and regulations that
NHTSA administers.
Consistent with the approach identified in the July 8 notice, we
are issuing this final notice for informative purposes. We will also
post these best importer practices on the agency's Web site for easy
reference.
III. Comments and Recommendations Requested
The agency specifically asked in the July 8 notice for members of
the public, the importing community, and both foreign and domestic
fabricating manufacturers of motor vehicles and motor vehicle equipment
to provide comments and recommendations addressing the agency's initial
thoughts on the suggested guidance regarding best importer practices.
The comments that the agency received are described below, along with
the action the agency has taken in response to each one.
IV. Comments Received
NHTSA received comments from North American Lighting, Inc. (NAL) of
Farmington Hills, Michigan; the Motor and Equipment Manufacturers
Association (MEMA) of Research Triangle Park, North Carolina \5\; the
Truck-Lite Company, Inc. (TLC) of
[[Page 79209]]
Falconer, New York; the Specialty Equipment Market Association (SEMA)
of Washington, DC \6\; and the Ford Motor Company (Ford) of Dearborn,
Michigan.
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\5\ MEMA states that it represents almost 700 companies that
manufacture motor vehicle parts for use in the light vehicle and
heavy duty original equipment and aftermarket industries. MEMA
represents its members through three market segment associations:
Automotive Aftermarket Suppliers Association (AASA), Heavy Duty
Manufacturers Association (HDMA), and Original Equipment Suppliers
Association (OESA). MEMA states its comments are also submitted on
behalf of the Transportation Safety Equipment Institute (TSEI) and
the Motor Vehicle Lighting Council (MVLC)--both independent groups
managed by MEMA.
\6\ SEMA states it represents the $38.1 billion specialty
equipment automotive industry. SEMA describes itself as a nonprofit
trade association comprising nearly 7,500 companies, including
manufacturers, distributors, installers and retailers.
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(a) Support for NHTSA Guidance
The five commenters expressed support for NHTSA's efforts to draft
guidance and recommended best importer practices to enhance the safety
of imported motor vehicles and motor vehicle equipment. NAL stated,
``[w]e support the efforts of [NHTSA] in designing a set of Best
Importer Practices to ensure the quality of imported lighting products
brought into the United States.'' \7\ MEMA wrote that the proposed
guidance, ``[i]s a significant and positive step toward improving the
safety of imported products'' and the ``[g]uidance is well-crafted and
covers many elements that our industry agrees are integral to a
comprehensive and understandable set of best practices for importers.''
MEMA added that it ``[s]upports the action by NHTSA to issue this
proposed guidance'' and believes that ``[i]ssuing guidance on best
practices sends the right message to the automotive and equipment
industry--to practice due diligence, be responsible, and be
compliant.'' \8\ The TLC stated, ``[w]e appreciate the agency's efforts
to provide best practices guidance on imported products.'' \9\ SEMA
stated that it ``[s]upports the coordinated initiative by [NHTSA] and
other federal government agencies to recommend 'best practices' for
importers.'' \10\ Ford stated the company, ``[a]pplauds the agency for
its initiative to enhance the safety of imported motor vehicles and
motor vehicle equipment by providing guidance to importers and supports
the recommendations contained in the notice.'' \11\
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\7\ North American Lighting, Inc. (NAL) ``Comments on Guidance
and Recommended Best Importer Practices to Enhance the Safety of
Imported Motor Vehicles and Motor Vehicle Equipment'' Docket No.
NHTSA 2008-0113, (August 2008), p. 1.
\8\ Motor and Equipment Manufacturers Association (MEMA)
``Comments on Guidance and Recommended Best Importer Practices to
Enhance the Safety of Imported Motor Vehicles and Motor Vehicle
Equipment'' Docket No. NHTSA 2008-0113, (August 2008), pp. 1-2 and
8.
\9\ Truck-Lite Co., Inc. (TLC), ``Comments on Guidance and
Recommended Best Importer Practices to Enhance the Safety of
Imported Motor Vehicles and Motor Vehicle Equipment'' Docket No.
NHTSA 2008-0113, (August 2008), p. 2.
\10\ Specialty Equipment Market Association (SEMA), ``Comments
on Guidance and Recommended Best Importer Practices to Enhance the
Safety of Imported Motor Vehicles and Motor Vehicle Equipment''
Docket No. NHTSA 2008-0113, (August 2008), p. 1.
\11\ Ford Motor Company (Ford), ``Comments on Guidance and
Recommended Best Importer Practices to Enhance the Safety of
Imported Motor Vehicles and Motor Vehicle Equipment'' Docket No.
NHTSA 2008-0113, (August 2008), p. 1.
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(b) Voluntary Product Marking
The five commenters addressed common themes, one of which is that
safety is enhanced when those who manufacture and import motor vehicles
and items of motor vehicle equipment are accountable. However,
accountability cannot be assured when products have no markings that
identify their fabricating manufacturers or importers. The commenters
observed that when unmarked products are noncompliant, or have a
safety-related defect, it becomes difficult for NHTSA to trace the
products' origins or identify the party responsible for remedying those
conditions.
The commenters suggested that accountability would be enhanced if
manufacturers voluntarily marked their products with certain
information. For example, MEMA stated that it ``[b]elieves that
voluntary product marking should be widely encouraged for all imported
aftermarket equipment--particularly products critical to safety.'' MEMA
stated that markings should include the name or trademark of the
fabricating manufacturer or importer, the date or date range of
manufacture, and any marks specified in industry recommended practices
or standards.\12\
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\12\ MEMA Comments, pp. 4-5.
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SEMA furnished with its comments an article entitled ``Sourcing
Your Products from China without Losing Your Shirt, Your Intellectual
Property, or Your Customers.'' The article was written by Merritt R.
Blakeslee and published as a two-part series in the December 2007 and
February 2008 editions of the ``SEMA News'' magazine.\13\ To emphasize
the need for voluntarily marking products, Mr. Blakeslee provides what
he describes as a ``Nightmare Scenario'' in which a company that
imports wheels from an overseas manufacturer is sued for product
liability following a fatal crash that was caused by a defective wheel.
The company suspects that the wheel involved in the crash was produced
without its authorization, but cannot prove this because the company
does not mark its products in a way that would permit it to identify
counterfeits. The company ultimately must defend against a product
liability suit and conduct an expensive product recall, prompting the
author to assert: ``It is essential that you ensure that your products
are carefully marked--by individual serial number or at least by lot
number--so that when you find suspect products in the marketplace, you
can immediately determine whether they are products whose manufacture
you authorized.'' \14\
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\13\ http://sema.org/main/semaorghome.aspx?id=58637.
\14\ Merritt R. Blakeslee, ``Sourcing Your Products from China
without Losing Your Shirt, Your Intellectual Property, or Your
Customers--Parts I and II'' (Washington, DC, December 2007 and
February 2008), p. 1, http://sema.org/main/semaorghome.aspx?id=58637.
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TLC commented that accountability is ``[t]he start of any good
product and the finish of any good product.'' The company stated that
without ``[a] manufacturer identification system, any of the changes
offered [by NHTSA's guidance] will not be effective in improving the
overall safety of imported product.'' TLC notes that to allow for
traceability and accountability of its own products, the company
voluntarily labels its lighting products in accordance with the Society
of Automotive Engineers (SAE) Recommended Practice J759 ``Lighting
Identification Code,'' which the company states ``[p]rovides guidelines
on identifying product function, manufacturer's identification, model
number (or part number), class designation, application and even ampere
load rating (where required).'' TLC contends that manufacturer
identification is one of the most important features in assuring the
ongoing quality of the product and that with such identification,
``[f]ewer risks will be taken by importers on questionable products if
they know that they can be caught.'' \15\
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\15\ TLC Comments, p. 2.
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MEMA also endorses the voluntary labeling of products in accordance
with SAE J759. The organization notes that most lighting and
conspicuity product manufacturers that belong to MEMA, the
Transportation Safety Equipment Institute, and the Motor Vehicle
Lighting Council already voluntarily mark such products with the
manufacturer's name and a date.\16\
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\16\ MEMA Comments, p. 4.
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The agency agrees with the commenters that traceability is enhanced
when fabricating manufacturers and/or importers voluntarily mark their
products with their companies' names, date or lot codes, and industry
recommended information such as that listed in SAE J759, which applies
to lighting equipment. The described markings
[[Page 79210]]
would enhance the ability of a fabricating manufacturer or importer to
ensure that product recalls are initiated when noncompliances or safety
defects are identified. Such markings that are voluntarily applied
would also benefit fabricating manufacturers and importers by allowing
them to accurately identify their products and limit the scope of
recalls to only those products that contain the noncompliance or
safety-related defect. For these reasons, we have included a
recommendation for voluntary markings in our final guidance document
under a new heading entitled ``Identify the Product,'' which replaces
``Product's Country of Origin.''
(c) Records Maintenance
Several commenters observed that an essential element of
accountability is the maintenance of records. Ford commented that NHTSA
should include as part of its recommended guidance document a reference
to 49 CFR part 576, an agency regulation that requires manufacturers to
retain for a period of five years reports and other materials and
documents that contain information concerning malfunctions that may be
related to motor vehicle safety.\17\ MEMA stated that documentation of
a product's design, its testing, and the process used to manufacture
the product should be diligently maintained. The organization contends
that this documentation allows a fabricating manufacturer to readily
produce, if necessary, the appropriate records to demonstrate
compliance with mandated FMVSS performance requirements, or with
voluntary industry standards and recommended practices. MEMA observes
that such records can become particularly important in the event of
changes to a product--whether the change be in material components, the
manufacturing process, or test procedures.\18\ NAL stated that
importers should have to prove they can meet the necessary requirements
for their products in a way that is similar to what U.S. manufacturers
have to do when they build products for the European or Chinese
markets.\19\ NAL stated that in order to manufacture for other markets,
the company has had to perform witness testing and demonstrate process
checks. NAL also stated that the company has allowed government
officials to inspect its manufacturing plants and has shipped its
products to outside test houses to verify compliance with applicable
standards. NAL contends that all manufacturers of lighting equipment
destined for the United States likewise should be required to have
documented proof that the manufacturing plants have passed inspection
and that their products comply with the FMVSS.\20\
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\17\ Ford Comments, p. 1.
\18\ MEMA Comments, p. 7.
\19\ NAL describes the type approval process that is required by
most European countries, but is not required for motor vehicles and
motor vehicle equipment offered for sale or sold in the United
States. NHTSA does not issue type approval certifications and does
not certify any motor vehicles or motor vehicle equipment as
complying with applicable FMVSS. Instead, we have a ``self-
certification'' process, which places responsibility on the
fabricating manufacturer to certify the vehicle or equipment item as
complying with the applicable FMVSS.
\20\ NAL Comments, pp. 1-2.
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The agency generally agrees with many of the points these
commenters have raised. However, to the extent the comments recommend
that NHTSA require certain records to be kept, those comments are
beyond the scope of this notice, which is intended only to offer
recommendations. If the agency sought to impose any new requirements,
it would only do so by initiating rulemaking to establish appropriate
regulations on the subject. In the July 8 notice, we stated why we
believe it is important to create and/or maintain, at a minimum,
records of a product's: (1) Certification data; (2) design changes or
changes in the production process; (3) supporting technical
documentation; (4) test reports; (5) serial number, model, and date of
manufacture; (6) location while in the distribution system; (7) retail
purchasers; (8) accompanying instructions; and 9) manufacturing process
including work orders, operation sheets, inspection logs, repair logs,
and test procedure checklists. The final recommended best practices
include under the heading ``Record Keeping for Manufacturers,'' a
discussion of certain records that manufacturers must maintain under 49
CFR part 576, as well as parts 574 and 588. The final notice also
encourages importers to inquire whether their manufacturing partners
comply with these regulations.
(d) Methodologies for Product Management and Development
In its comments, MEMA suggests that NHTSA add to its guidance
document a reference to ISO/TS16949, which MEMA describes as a quality
management system that provides for continual improvement, and that
emphasizes defect prevention and the reduction of variation and waste
in the supply chain. MEMA recommends that the approach be used to
review records regarding the development of products, the quality
planning methodology, and the method to improve the ongoing quality and
performance of the products being manufactured.\21\ The agency is aware
that ISO/TS16949 is an internationally recognized Quality Management
System specification for the Automotive Industry that was jointly
developed by the International Automotive Task Force (IATF). As such,
we believe it is important to include a reference to ISO/TS16949 in our
guidance under the heading, ``Inspect Foreign Manufacturing
Facilities.''
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\21\ MEMA Comments, p. 7.
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MEMA commented that it supports a ``design to conform'' methodology
for product development, which the organization describes as including
a number of steps necessary to originate, plan, create, develop,
verify, and manufacture products that, in good faith, consistently meet
established requirements when properly installed and applied.
Essentially, this methodology serves as a ``process map'' from design
to production and from certification to application. Under product
design, MEMA states it is wise to consider: (1) the technical
description of the product's function; (2) the tolerances of parts; (3)
material specifications; (4) test requirements and test reports; and
(5) certification reports including clear documentation and summaries
of test results. For manufacturing specifications, MEMA states that the
following factors should be considered: (1) Process sheets showing
complete details; (2) process control plans detailing statistical
process controls (i.e., part selection criteria, test requirements, and
plans to address nonconformances); and (3) recovery plans (i.e., the
steps to be taken once nonconforming product is identified).\22\
Although the ``design to conform'' methodology, as described by MEMA,
appears to have merit, the agency has not incorporated the methodology
into this final guidance document because its level of specificity far
exceeds the scope of the general recommendations contained in the
document.
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\22\ Ibid, p. 7.
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In the July 8 notice, the agency observed that fabricating
manufacturers use systematic analysis tools such as Failure Modes and
Effects Analysis (FMEA) to identify potential safety hazards and to
improve their products over time by reducing or eliminating failures.
TLC commented that there are related product development and control
systems that can be used to verify product compliance and consistency,
including Design Failure Mode and Effect Analysis (DFMEA),
[[Page 79211]]
Design Verification Plan and Report (DVP&R), Process Failure Mode and
Effect Analysis (PFMEA), Manufacturing Process Plan, and Control Plans.
Because FMEA was cited in the July 8 notice, for illustrative purposes
alone, as one example of the systematic analysis tools that are used to
identify potential safety hazards, little purpose could be served by
including the many other examples that TLC has identified.
(e) Report Submitted
MEMA also appended to its comments a special report published by
the Automotive Aftermarket Suppliers Association entitled ``Direct
Importing: Do the Risks Outweigh the Reward?'' \23\ MEMA states that
this report was published in October 2007 to educate association
members on the costs and risks associated with direct importing as a
result of a growing concern about the safety of imported products.\24\
While the agency recognizes that much of the information in the special
report (such as that pertaining to profit erosion, industry image, and
product liability) is of value to importers, we believe the report
either corroborates information we are already presenting or offers new
information on issues unrelated to the agency's jurisdiction.
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\23\ Ibid, Attachment to MEMA Comments. Also see: http://www.mema.org/publications/index.php.
\24\ The October 2007 Report examines the trend for off-shore
opportunities and direct importing and takes a closer look at
possible pitfalls and additional costs that may offset the savings
on acquisition process. Topics include: quality control, product
liability, intellectual property protection, recall responsibility,
etc. The publication's conclusion states that the only real solution
is to weigh all the associated costs and then decide whether direct
importing is cost effective.
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V. Executive Order 12866 on ``Significant Guidance''
On January 18, 2007, the President issued Executive Order (E.O.)
13422, ``Further Amendment to Executive Order 12866 on Regulatory
Planning and Review.'' On the same day, in connection with E.O. 13422,
the Director of the Office of Management and Budget (OMB) issued OMB
Bulletin No. 07-02 on ``Agency Good Guidance Practices.'' The primary
focus of E.O. 13422 and OMB Bulletin No. 07-02 is to improve the way
the Federal government does business with respect to guidance
documents--by increasing their quality, transparency, accountability,
and coordination.
Both Executive Order 13422 and OMB Bulletin No. 07-02 define
``guidance documents'' as ``an agency statement of general
applicability and future effect, other than a regulatory action, that
sets forth a policy on a statutory, regulatory, or technical issue or
an interpretation of a statutory or regulatory issue.'' Guidance
documents that are not ``significant'' are not covered by E.O.s 13422
and 12866, and by Bulletin No. 07-02.
A ``significant'' guidance document is one disseminated to
regulated entities or the general public that may reasonably be
anticipated to:
(1) Lead to an annual effect of $100 million or more or adversely
effect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities;
(2) create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) materially alter the budgetary impacts of entitlements, grants,
user fees or loan programs or the rights or obligations of recipients
thereof; or,
(4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
one of the cited Executive Orders.
The document the agency is publishing today contains no guidance
that meets any of the four stated criteria to be deemed
``significant.'' Therefore, this document is not subject to E.O. 13422,
E.O. 12866, or to OMB Bulletin 07-02. Nevertheless, because we
anticipated some level of public interest and were eager to obtain
input from other sources, we solicited public comments in our July 8
notice.
In consideration of the foregoing, NHTSA offers the following
recommended best practices for importers of motor vehicles and motor
vehicle equipment:
VI. Recommended Best Practices for Importers of Motor Vehicles and
Motor Vehicle Equipment
The National Highway Traffic Safety Administration (NHTSA) is the
U.S. government agency responsible for implementing and enforcing the
National Traffic and Motor Vehicle Safety Act of 1966, as amended, 49
U.S.C. chapter 301 (the Vehicle Safety Act), and certain other laws
relating to motor vehicle safety. Fabricating manufacturers (i.e., the
actual assemblers) and importers of motor vehicles and motor vehicle
equipment have duties as manufacturers under the Vehicle Safety Act.
Companies that import these products must ensure that the products
comply with applicable Federal motor vehicle safety standards (FMVSS).
If a product does not comply with an applicable FMVSS or contains a
defect related to motor vehicle safety, including a defect that
manifests itself after considerable operation in the field, the
manufacturer, which, by statute, includes the importer, must furnish
owners with notification of, and a remedy for, the noncompliance or
defect. Obviously, it is best if the motor vehicle or equipment
complies with applicable FMVSS and does not manifest defects. To reduce
the likelihood of noncompliances and defects, we recommend that
fabricating manufacturers and importers \25\ become familiar with the
best practices suggested here and adapt them to their specific needs.
NHTSA is also willing to work with fabricating manufacturers and
importers to explain our standards, reporting requirements, regulatory
program, and enforcement process.
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\25\ Our recommended best importer practices are not intended to
address importers specially registered with NHTSA to import motor
vehicles not originally manufactured to comply with all applicable
FMVSS and to perform the necessary modifications on those vehicles
so that they conform to all applicable FMVSS. Instead, NHTSA has
established regulations under 49 CFR Parts 591-594 covering the
registration, duties, and responsibilities of these importers, who
are referred to as ``Registered Importers.''
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In the paragraphs below, we present the recommended best importer
practices first in outline form, and then provide a more detailed
discussion of those recommendations.
Outline
(a) Fully Understand the Importer's Obligations Under Motor Vehicle
Safety Statutes and Regulations
(i) Certification of Motor Vehicles and Equipment to the Federal
Motor Vehicle Safety Standards
(ii) NHTSA Compliance Program
(iii) NHTSA Defect Investigations
(iv) Duty to Notify NHTSA of a Noncompliance With an FMVSS or a
Safety-Related Defect
(v) Duty to Notify Owners and Dealers and Provide a Remedy for a
Noncompliance or a Safety-Related Defect
(vi) Importer's Recall Obligations
(vii) Compliance Needed to Import Motor Vehicles and Equipment
(viii) Procedural Requirements for Fabricating Manufacturers
(ix) Recordkeeping for Manufacturers
(x) Penalties
(b) Exercise Great Care in Selecting Foreign Fabricating
Manufacturers
(i) Establishing a Business Plan
(ii) Minimizing Risks
(iii) Product Design Considerations
(iv) Product Design Records and Traceability
(c) Inspect Foreign Manufacturing Facilities
(i) Evaluating the Manufacturer's Company, Factory, and Staff
(ii) Assuring Quality Control
(iii) Protecting Intellectual Property, Trademarks, Copyrights,
Patents, and Trade Secrets
[[Page 79212]]
(iv) Reaching Agreement on Whether Products are Substandard,
Nonconforming, or Defective
(v) Contract Considerations
(vi) Monitoring Compliance with Contract Requirements
(d) Inspect Goods Either Before They Are Exported to or Distributed
in the United States
(i) Monitoring Production Outputs
(ii) Sampling, Inspecting, and Testing Products
(iii) Post Production Quality Control
(e) Identify the Product
(i) Identify the Product's Country of Origin
(ii) Identify the Product's Manufacturer
(iii) Identify the Product's Date or Lot Codes
(iv) Industry Recommended Practices or Standards for Product
Markings
(f) Establish a Consumer Service Program
(i) Consumer Education
(ii) Product Service
(iii) Recordkeeping
(iv) Safety Recall Plan
(v) Intervention
(vi) Notification
(vii) Business Process Monitoring
(g) Contact NHTSA Concerning Manufacturer/Importer Reporting
Requirements, Safety Compliance, Defect Issues, and Regulations
(h) Know How To Obtain General Assistance With Other Federal
Regulations
Recommended Best Practices
(a) Fully Understand the Importer's Obligations Under Motor Vehicle
Safety Statutes and Regulations
Before importing motor vehicles or motor vehicle equipment into the
United States, it is essential that the importer understand its
obligations under Federal statutes and regulations governing vehicle
safety. This section summarizes those obligations stemming from the
Vehicle Safety Act, which NHTSA administers.\26\
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\26\ It is wise for manufacturers and importers to become
familiar with other laws not administered by NHTSA, such as the
pertinent environmental laws administered by the Environmental
Protection Agency, which could impact the decision to sell products
in the United States.
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(i) Certification of Motor Vehicles and Equipment to the Federal Motor
Vehicle Safety Standards
The Safety Act authorizes NHTSA to issue the FMVSS, which set
minimum performance requirements for motor vehicles and for certain
items of motor vehicle equipment. See 49 CFR part 571. In general,
motor vehicles are vehicles driven or drawn by mechanical power and
manufactured primarily for use on public roads. Typically, motor
vehicles have the following type classifications:
Passenger cars;
Multipurpose passenger vehicles;
Trucks;
Buses;
Motorcycles;
Trailers; and
Low speed vehicles.
The following motor vehicle equipment items are also subject to the
FMVSS:
Tires;
Rims;
Brake hoses;
Brake fluid;
Seat belt assemblies;
Lamps, reflective devices, and associated equipment;
Glazing (automotive glass and plastics);
Motorcycle helmets;
Child restraint systems (child safety seats);
Platform lift systems for the mobility impaired;
Rear impact guards for trailers;
Triangular reflective warning devices, and;
Compressed natural gas containers.
The Vehicle Safety Act requires that motor vehicles and regulated
items of motor vehicle equipment produced for sale in the United States
be certified to comply with all applicable FMVSS. See 49 U.S.C. 30115.
Motor vehicle equipment items that are not subject to the FMVSS do not
require certification; however, such items may be found (by either
NHTSA or the manufacturer) to have a safety-related defect, and if so,
the manufacturer will have an obligation to furnish owners of the
equipment with notification of, and a remedy for, the defect, usually
at no charge to the consumer.
Type approval \27\ is not required for motor vehicles and motor
vehicle equipment sold in the United States. NHTSA does not issue type
approval certifications and does not certify any motor vehicles or
motor vehicle equipment as complying with applicable FMVSS. Instead, in
accordance with 49 U.S.C. 30115, we have in place a ``self-
certification'' process, which imposes responsibility on the
manufacturer to certify the vehicle or equipment item as complying with
the applicable FMVSS. Self-certification reduces the cost and time
associated with lengthy, government-mandated testing that is required
under type approval. Self-certification also reduces regulatory costs
and facilitates international trade because it allows manufacturers to
quickly bring to market vehicles and equipment items that incorporate
safety and technology advancements.
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\27\ In many countries, before motor vehicles or motor vehicle
equipment items may be sold to consumers, the fabricating
manufacturer must prove that these items comply with safety
regulations and receive pre-approval from a government agency. This
approach is commonly referred to as ``type approval.'' For example,
the Vehicle Certification Agency, an Executive Agency of the United
Kingdom Department for Transport, administers type approval in the
U.K. See: http://www.vca.gov.uk/index.asp. Under type approval, a
manufacturer submits production samples and specifications to an
approved laboratory and if the product complies with the standards,
the government issues a type approval certificate of compliance.
Because this can take many months, the manufacturer begins the
process of obtaining type approval well in advance of bringing the
product to market. After type approval is granted, the manufacturer
ensures that each vehicle or equipment item is produced in
conformance with the specifications that were submitted for
approval. If countries enter into international agreements covering
vehicle safety regulations, one country's type approval may be valid
for another member country.
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The Vehicle Safety Act requires the exercise of ``reasonable care''
in issuing a certification of compliance with safety standards. See 49
U.S.C. 30115. To this end, NHTSA encourages manufacturers to conduct
tests as specified in certain of the FMVSS. See 49 CFR part 571.
(ii) NHTSA Compliance Program
NHTSA's primary mission is to save lives, prevent injuries, and
reduce economic costs due to road traffic crashes. The agency's
enforcement activities, which are directed at vehicles and equipment
items, are structured so that they will have the greatest impact on
safety. Consistent with this approach, each year the agency purchases
more than 100 vehicles and conducts more than 500 crashworthiness and
crash avoidance performance tests on those vehicles, and more than
1,200 performance tests on regulated equipment items to assure
compliance with all applicable standards. As part of its enforcement
program, NHTSA's Office of Vehicle Safety Compliance (OVSC) also
inspects regulated equipment items at industry trade shows and conducts
``spot checks'' of vehicles and equipment items at retailers to assure
compliance with all applicable FMVSS. In the event of a test failure,
OVSC conducts an investigation to determine whether a noncompliance
exists. NHTSA will ask the fabricating manufacturer and/or importer to
provide the basis for the certification that the vehicle or equipment
item complies with applicable FMVSS, and the agency may perform
additional testing. If NHTSA concludes that a product does not comply
with an applicable FMVSS the fabricating manufacturer and/or importer
must furnish owners or dealers with notification of, and a remedy for,
the noncompliance, usually without charge.
(iii) NHTSA Defect Investigations
In addition to conducting tests and inspections to determine
whether
[[Page 79213]]
selected motor vehicles and motor vehicle equipment comply with the
FMVSS, NHTSA through its Office of Defects Investigation, investigates
potential safety-related defects in motor vehicles and motor vehicle
equipment items. NHTSA has authority to investigate possible safety-
related defects in a motor vehicle equipment item regardless of whether
the item is subject to the FMVSS. When an item is subject to an FMVSS,
compliance with the standard does not ensure that the item is free of a
safety-related defect. NHTSA investigates numerous vehicles and items
of equipment each year for possible defects.
Before initiating an investigation of a suspected safety-related
defect, NHTSA reviews information and data from several sources,
including consumers and manufacturers to determine whether a defect
trend may exist. Consumers submit complaints related to issues or
problems in particular makes and models of vehicles and equipment.
Manufacturers submit quarterly reports to NHTSA pursuant to the
agency's Early Warning Reporting (EWR) regulations that implement the
Transportation Recall Enhancement, Accountability, and Documentation
(TREAD) Act of 2000. These regulations require manufacturers, including
by definition, importers, to submit information that could assist the
agency in determining whether a safety-related defect exists in a
vehicle or equipment item used in the United States. See 49 CFR part
579, subpart C. The regulations divide manufacturers of motor vehicles
and motor vehicle equipment into two groups with different
responsibilities for reporting information that could indicate the
existence of potential safety-related defects.
The first group comprises larger volume manufacturers of motor
vehicles, and all manufacturers of child restraint systems and tires.
In general, the larger volume vehicle manufacturers must report
separately on four categories of vehicles (if they produced, imported,
offered for sale, or sold 500 or more of a category annually in the
United States): (1) Light vehicles, (2) medium-heavy vehicles and all
buses, (3) trailers, and (4) motorcycles. These larger volume vehicle,
child restraint, and tire manufacturers must generally report to NHTSA
production-related information, incidents related to a death or injury,
consumer complaints, warranty claims (warranty adjustments for tires),
property damage claims, and field reports.
The second group of manufacturers comprises all other manufacturers
of motor vehicles and motor vehicle equipment, i.e., vehicle
manufacturers that produce, import, or sell in the United States fewer
than 500 light vehicles, medium-heavy vehicles (including buses),
motorcycles, or trailers annually; manufacturers of original motor
vehicle equipment; and manufacturers of replacement motor vehicle
equipment other than child restraint systems and tires. These
manufacturers must submit a report if they receive a claim or notice
related to an incident involving a death, but are not required to
report any other information under the EWR rule. Manufacturers and
importers are encouraged to review the agency's Web site for more
comprehensive EWR information. See http://www-odi.nhtsa.dot.gov.
Under other NHTSA regulations at 49 CFR 579.5 and 579.6, all
vehicle and equipment manufacturers in both groups must provide copies
of all documents sent or made available to more than one dealer,
distributor, owner, purchaser, lessor or lessee, in the United States
concerning customer satisfaction campaigns, consumer advisories,
recalls, or other activities involving the repair or replacement of
vehicles or equipment. A manufacturer must also report safety recalls
and other safety campaigns it conducts in a foreign country that cover
a motor vehicle, an item of motor vehicle equipment, or a tire that is
identical or substantially similar to such a product offered for sale
or sold in the United States. See 49 CFR part 579, subpart B.
After reviewing all the relevant information, the agency may open
an investigation to determine the existence of a safety-related defect.
At the conclusion of the agency's investigation, if the agency
determines that a safety-related defect exists, but the manufacturer
refuses to conduct a recall, the agency will hold a public hearing.
After the public hearing, NHTSA may order the manufacturer to conduct a
recall.\28\ If the manufacturer fails to obey such an order, NHTSA may
bring an action in Federal court to compel the recall.
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\28\ See 49 U.S.C. 30118(b) and 49 CFR part 554.
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NHTSA, through its Recall Management Division, maintains the
administrative records for all safety recalls, and monitors these
recalls to ensure that the scope is appropriate, and that the recall
completion rate and remedy are adequate. NHTSA's monitoring of recall
performance may lead to the opening of a recall investigation if the
facts appear to indicate a problem with the adequacy or execution of
the recall. A recall investigation may result in expanding the scope of
a previously announced recall or in the adjustment of an existing
recall remedy.
(iv) Duty To Notify NHTSA of a Noncompliance With an FMVSS or a Safety-
Related Defect
Notwithstanding its certification of a product, a manufacturer may
subsequently determine that a noncompliance with an FMVSS or a safety-
related defect exists in a motor vehicle or a motor vehicle equipment
item it has produced. Manufacturers have a duty to notify NHTSA if they
learn the vehicle or equipment contains a defect and in good faith they
decide that the defect is related to motor vehicle safety, or in good
faith they decide that the vehicle or equipment does not comply with an
applicable FMVSS. See 49 U.S.C. 30118(c). The manufacturer must notify
NHTSA within five working days after determining the existence of a
noncompliance or a safety-related defect. See 49 CFR 573.6.
Alternately, as discussed above, NHTSA may determine the existence of a
noncompliance or a safety-related defect in a particular motor vehicle
or motor vehicle equipment item and order the responsible manufacturer
to recall the product. See 49 U.S.C. 30118(b).
(v) Duty to Notify Owners and Dealers and Provide a Remedy for a
Noncompliance or a Safety-Related Defect
Regardless of whether the noncompliance with an FMVSS or a safety-
related defect is determined to exist by the manufacturer or by NHTSA,
the manufacturer must provide owners and dealers of the affected
products with notification of the noncompliance or defect and must
remedy the noncompliance or defect, usually without charge. See 49 CFR
part 577. There is a limited exception under which a manufacturer that
has reported a noncompliance or safety-related defect to NHTSA may
petition the agency for a determination that the noncompliance or
defect is inconsequential as it relates to motor vehicle safety.\29\
See 49 CFR part 556. The notification and remedy process is commonly
referred to as a ``safety recall campaign'' or more simply
[[Page 79214]]
as a ``recall.'' NHTSA monitors the remedy program to ensure its
successful completion. The agency is not authorized to expend its funds
on recalls; the expense of notifying owners and providing a remedy must
be borne by the fabricating manufacturer and/or importer of the
products found to contain the noncompliance or defect. See 49 U.S.C.
30118-30120.
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\29\ The Vehicle Safety Act gives NHTSA the authority to exempt
manufacturers from the requirement to provide notification and
remedy for noncompliances or safety-related defects if the agency
determines that the noncompliance or defect is inconsequential as it
relates to motor vehicle safety. See 49 U.S.C. 30118, 30120. The
procedures for implementing this statutory authority are set forth
in 49 CFR part 556, Exemption for Inconsequential Defect or
Noncompliance.
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(vi) Importer's Recall Obligations
An importer's primary obligation is to assure that the motor
vehicle or item of motor vehicle equipment subject to the FMVSS that it
imports into the United States contains the required certification of
compliance with those standards. If a fabricating manufacturer is not
located in the United States and does not conduct business operations
in this country, including through a subsidiary or other controlled
entity, the U.S. judicial system likely will not be able to effectively
compel the foreign manufacturer to conduct a recall. In that case, the
burden of providing notification to owners and dealers and a free
remedy will fall solely upon the importer, unless the fabricating
manufacturer voluntarily supports the recall. This is because under the
Vehicle Safety Act, importers of motor vehicles and motor vehicle
equipment for resale are considered ``manufacturers'' for the purposes
of notification and remedy. See 49 U.S.C. 30102(a)(5). Where the
fabricating manufacturer or importer finds a noncompliance or safety
defect in a motor vehicle or equipment item imported into the United
States, compliance with notification and recall responsibilities by
either the manufacturer or the importer of the vehicle or equipment
item is considered to be compliance by both. See 49 CFR 573.3(b).
Importers must therefore recognize that they have obligations under
the Vehicle Safety Act, which continue after motor vehicles or items of
motor vehicle equipment are sold to consumers within the United States.
If an importer becomes aware that a vehicle or equipment item it has
imported does not comply with an applicable FMVSS or contains a defect
related to motor vehicle safety, it must provide NHTSA, as well as
owners and dealers of the affected vehicles or equipment, with
notification of the noncompliance or defect and must remedy the
noncompliance or defect, usually without charge to the consumer. An
importer also has notification and remedy responsibility if NHTSA
determines the existence of the noncompliance or defect and orders it
to undertake a notification and remedy campaign. Importers should be
fully familiar with all of the recall-related provisions of 49 CFR
parts 573 and 577.
(vii) Compliance Needed To Import Motor Vehicles and Equipment
As part of its safety mandate, NHTSA monitors motor vehicles and
items of motor vehicle equipment that are imported into the United
States for compliance with applicable FMVSS and regulations. To be
imported free of restriction, a motor vehicle less than 25 years old
must be manufactured to comply with all applicable FMVSS and bear a
label certifying such compliance that is permanently affixed by the
vehicle's manufacturer. To be lawfully imported, a new or used item of
motor vehicle equipment that is subject to an FMVSS must, as originally
manufactured, conform to the standard and be so certified. In most
instances, certification of compliance with the applicable FMVSS for
regulated safety equipment is evidenced by the symbol ``DOT'' either
inscribed on the equipment item in a prescribed location, or placed on
the outside of the container in which the equipment item is shipped.
See 49 U.S.C. 30112 and 30115.
(viii) Procedural Requirements for Fabricating Manufacturers
Before offering a vehicle or motor vehicle equipment item for sale
in the United States, the fabricating manufacturer must: (1) Comply
with the requirements to designate a permanent resident of the United
States as its agent for service of process if the fabricating
manufacturer is not located in the United States (49 CFR part 551,
subpart D Service of Process on Foreign Manufacturers and Importers)
and (2) submit to NHTSA identifying information on itself and the
products it manufactures to comply with the FMVSS, not later than 30
days after the manufacturing process begins (49 CFR part 566
Manufacturer Identification).\30\ The fabricating manufacturer of a
motor vehicle must also submit to NHTSA information the agency will
need to decipher the manufacturer's vehicle identification number (VIN)
format not later than 60 days prior to offering the first vehicle for
sale in the United States (49 CFR part 565 Vehicle Identification
Number Requirements). The fabricating manufacturer of certain regulated
equipment items such as brake hoses, glazing (automotive glass and
plastics), and tires must label its products with identification
numbers assigned to the manufacturer by NHTSA.\31\
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\30\ NHTSA maintains a list of these manufacturers on its Web
site. See http://www.nhtsa.dot/cars/rules/manufacture.
\31\ See 49 CFR 571.106, paragraph S5.2.2(b), relating to brake
hoses; 49 CFR 571.205, paragraph S6.2, relating to glazing; and 49
CFR 574.5, relating to tires.
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(ix) Recordkeeping for Manufacturers
A new tire manufacturer is required by NHTSA regulations to
permanently mold into each tire intended for use on a motor vehicle a
``tire identification number'' or ``TIN.'' See 49 CFR 574.5. Tire
distributors and dealers that are owned or controlled by tire
manufacturers are required to send to the tire manufacturers, records
of any new tires they sell, including the TINs of the tires and the
name and address of the tire purchasers. Independent tire distributors
or dealers are required to furnish tire registration forms that
identify the TIN and the tire distributor or dealer's name and address
to the purchasers of new tires, who may then mail the forms to the tire
manufacturer. Instead of furnishing the tire purchaser with a
registration form, independent tire distributors or dealers may
electronically transmit tire purchaser and tire registration
information to the tire manufacturer by secure means, as identified or
authorized by the manufacturer.\32\
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\32\ NHTSA amended regulations at 49 CFR part 574 to accommodate
and facilitate Internet and other electronic registration of tires,
including voluntary registration of tires by independent dealers.
The amendments are effective January 27, 2009; however, optional
compliance with these amendments was permitted as of November 28,
2008. See 73 FR 72358.
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Tire manufacturers must maintain information from the registration
forms for a period of not less than 5 years from the date on which the
information is recorded. Motor vehicle manufacturers are required to
maintain records of the TINs for the tires installed on their vehicles
and the name and address of the first purchasers of their vehicles for
5 years from the date that the vehicles are sold. These requirements
are intended to ensure that purchasers receive proper notification in
the event that a tire is recalled to remedy a noncompliance or safety-
related defect. See 49 CFR part 574.
In like manner, the manufacturer of a child restraint system (i.e.,
a child safety seat), other than one installed on a vehicle as newly
manufactured, must furnish a registration form to be completed by the
owners of those seats and retain information from the form for a period
of not less than 6 years to ensure that the owners receive proper
notification during a recall campaign. See 49 CFR part 588.
[[Page 79215]]
NHTSA regulations also require manufacturers of motor vehicles and
motor vehicle equipment to retain claims, complaints, reports, and
other records concerning alleged and proven defects and malfunctions
that may be related to motor vehicle safety for a period of five
calendar years from the date on which they were generated or acquired
by the manufacturer.\33\ See 49 CFR part 576. Under section 576.8 of
this regulation, ``malfunctions that may be related to motor vehicle
safety'' are defined as including any failure or malfunction beyond
normal deterioration in use, or any failure of performance, or any flaw
or unintended deviation from design specifications, that could in any
reasonably foreseeable manner be a causative factor in, or aggravate, a
crash or an injury to a person. Section 576.6 describes the records
that manufacturers must maintain, including all documentary materials,
films, tapes, and other information-storing media that contain
information concerning malfunctions that may be related to motor
vehicle safety. The section describes such records as including, but
not being limited to, reports and other documents, including material
generated or communicated by computer, telefax or other electronic
means, that are related to work performed under warranties; and any
lists, compilations, analyses, or discussions of such malfunctions
contained in internal or external correspondence of the manufacturer,
including communications transmitted electronically. Importers may wish
to consider purchasing products from fabricating manufacturers that
comply with this regulation.
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\33\ Under 49 CFR 576.5(c), manufacturers need not retain copies
of documents transmitted to NHTSA pursuant to 49 CFR part 573
(notification to NHTSA of safety-related defects and noncompliances
with FMVSS); 49 CFR part 577 (notifications of defects or
noncompliances with FMVSS made to owners, dealers, and
distributors); and 49 CFR part 579 (EWR reporting to NHTSA).
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(x) Penalties
Fabricating manufacturers and importers may be subject to
substantial civil penalties for failure to meet the requirements of the
statutes and regulations that NHTSA administers. See 49 U.S.C. 30165.
Currently, those penalties can be as high as $6,000 for each violation
with a maximum of $16,375,000 for a related series of violations. See
49 CFR part 578. For example, the failure of a fabricating manufacturer
or importer to furnish notification of a noncompliance or defect to
owners or to NHTSA may subject the fabricating manufacturer or importer
to substantial civil penalties.
(b) Exercise Great Care in Selecting Foreign Fabricating Manufacturers
(i) Establishing a Business Plan
International trade presents unique risks. A company engaged in
importing foreign manufactured goods or considering becoming an
importer should have a complete and detailed business plan. The plan
should reflect careful consideration of the following questions:
Who will determine the specifications for the product?
On what basis will the product specifications be
developed?
Who will design the product?
Who will verify the product's design?
What laboratory and field tests will be undertaken?
Who will test product prototypes?
What entity will fabricate various parts?
What manufacturing quality control will be undertaken?
How will manufacturing quality control be maintained?
How often will products be tested to ensure continued
compliance with the FMVSS?
What documentation will be generated?
What documentation will be maintained?
Who will maintain the documentation?
Who will check the documentation?
Compliance with FMVSS at the time of manufacture is only a part of
these considerations. Motor vehicles and equipment operate in harsh
conditions over many miles and some abuse must be assumed; therefore,
avoidance of safety-related defects that may develop during use of the
product is critical.
(ii) Minimizing Risks
Selecting a capable and responsible overseas business partner is
one of the best ways to minimize risks. Before selecting a business
partner in another country, it is wise to investigate the fabricating
manufacturer's reputation using readily available public source
information (such as the Internet) or, if possible, by interviewing
other customers of the fabricating manufacturer. It is advisable for a
prospective importer to check many references and not to limit its
inquiries to references that the prospective manufacturer identifies.
If the country in which a fabricating manufacturer is located has an
established government agency to oversee product safety, that agency's
public records may contain useful information on the company's history
of recalls and regulatory compliance. Importers may also wish to
consider requesting the potential fabricating manufacturer's catalogs
and sample products for evaluation.
It may be wise to look for a fabricating manufacturer that has
prior experience with exporting to the United States. By selecting such
a fabricating manufacturer, the importer has some assurance that the
manufacturer understands the supply-chain and logistics issues
associated with supplying a foreign purchaser and that it has some
experience in meeting the demands of a U.S. customer.\34\
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\34\Merritt R. Blakeslee, ``Sourcing Your Products from China
without Losing Your Shirt, Your Intellectual Property, or Your
Customers--Parts I and II'' (Washington, DC, December 2007 and
February 2008), p. 5, http://sema.org/main/semaorghome.aspx?id=58637.
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The U.S. Department of Commerce also offers an International
Company Profile Report that may assist importers in evaluating
potential foreign partners. This report summarizes the financial
strength of a company and provides useful information gleaned from the
local press, industry contacts, and other sources. More information
about this service is available on the Department of Commerce Web site.
See http://www.export.gov/salesandmarketing/ICP.asp. When considering
doing business in China, it may be advisable to know that organizations
such as the U.S.-China Business Council, the American Chambers of
Commerce in China, and the Department of Commerce's Foreign Commercial
Service assist U.S. companies and they may be a good starting point for
selecting a reliable Chinese fabricating manufacturer.\35\
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\35\Ibid, p. 5.
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Importers may wish to consider selecting more than one foreign
fabricating manufacturer to manufacture their products. By doing so, an
importer's operations may remain viable when one of its fabricating
manufacturer's products is found to contain a noncompliance or safety
defect and a recall becomes necessary.\36\
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\36\ Ibid, p. 7.
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At a minimum, it is prudent for importers to use existing sources
of information to ensure that they will purchase, import, distribute,
and sell motor vehicles and motor vehicle equipment items subject to
the FMVSS that are produced by foreign fabricating manufacturers who:
1. Properly identify themselves and their products to NHTSA (49 CFR
part 566);
[[Page 79216]]
2. Comply with the requirements to designate a permanent resident
of the United States as its agent for service of process if the
fabricating manufacturer is not located in the United States (49 CFR
part 551, subpart D);
3. Furnish NHTSA with VIN-deciphering information (if they
manufacture ``motor vehicles'') (49 CFR part 565); and
4. Certify their products as complying with all applicable FMVSS
and so label their products (49 U.S.C. 30115).
(iii) Product Design Considerations
It would be advisable for the importer to focus on the
specifications for, and design of, the product and the requirements of
all applicable FMVSS covering the product that it wishes to import
before beginning negotiations with a prospective overseas business
partner. The importer should be well informed about U.S. import
regulations and any FMVSS requirements that cover the products the
importer intends to import. Before discussions take place with a
prospective fabricating manufacturer, it may be worthwhile for the
importer to have translated into the language used by that manufacturer
the FMVSS that are applicable to the product and the agency regulations
pertaining to manufacturers located outside the United States. It is
reasonable to discuss with the prospective fabricating manufacturer at
the outset the need for incorporating the requirements of the
applicable FMVSS into the product's design because it is far less
expensive to change the product's design in the planning stage than
after the product is manufactured, when tooling must be changed or an
expensive safety recall conducted. If the importer intends to have the
manufacturer produce a replacement part for a motor vehicle, the part
installed as original equipment may be used as a reference, keeping in
mind the need to avoid infringing on any applicable patent.
The importer and fabricating manufacturer may wish to consider
conducting a review of the product's design (a ``design review'') that
involves examining the product's configuration, the materials used in
its fabrication, and its labeling and packaging.\37\ Importers without
staff expertise and experience in design review may consider hiring a
qualified consultant. It may be worthwhile for the design review to
include a foreseeable use analysis,\38\ which involves integrating
safety into the product's design. An effective foreseeable use analysis
may reveal substantial safety hazards that involve risks of injury or
impairment of health that are related to the product's characteristics
or deficiencies.
---------------------------------------------------------------------------
\37\ U.S. Consumer Product Safety Commission (CPSC), ``Handbook
For Manufacturing Safer Consumer Products'' (Washington, DC, July
2006), p. 9 http://www.cpsc.gov/businfo/intl/handbookenglishaug05.pdf. Note: many of our suggestions are based on
CPSC's Handbook, which provides a wealth of helpful ideas that are
generally applicable to various types of manufacturing processes.
\38\ Ibid, p. 10.
---------------------------------------------------------------------------
Because products may contain safety defects even if they comply
with all applicable FMVSS, or when no FMVSS applies, the importer may
wish to measure the product's design against a known set of objectives
for the product and compare the product's design to that of similar
products produced by other manufacturers. When no FMVSS apply, it may
also be sensible to measure the product's design against accepted
product standards such as a set of voluntary industry standards, should
one exist.\39\ To find applicable standards, importers and fabricating
manufacturers may wish to check the Web sites of standard-setting
bodies for products of the type at issue, such as the Underwriters
Laboratories Inc. (UL), American National Standards Institute (ANSI),
American Welding Society (AWS), ASTM International (originally the
American Society for Testing and Materials or ASTM), and the Society of
Automotive Engineers, International. See: http://www.sae.org.
Manufacturers of certain automotive replacement parts such as lighting
equipment may wish to visit the Web site of the Certified Automotive
Parts Association (CAPA) for more information about that organization's
certification program. See http://www.capacertified.org/home.asp. These
examples are not intended to be all-inclusive. It may be desirable for
an importer to contact other standard-setting and certification
organizations associated with the type of products it wishes to have
manufactured, should such organizations exist.
---------------------------------------------------------------------------
\39\ Ibid, p. 26.
---------------------------------------------------------------------------
Some fabricating manufacturers use other systematic analysis tools
such as a Failure Modes and Effects Analysis (FMEA) \40\ to identify
potential safety hazards and to improve their products over time by
reducing or eliminating failures. Using FMEA, failures can be
prioritized according to how serious their consequences are, how
frequently they may occur, and how easily they can be detected.\41\
---------------------------------------------------------------------------
\40\ The FMEA process was originally developed by the U.S.
military in the 1940s. See: American Society for Quality, http://www.asq.org/learn-about-quality/process-analysis-tools/overview/fmea.html.
\41\ CPSC Handbook, p. 10.
---------------------------------------------------------------------------
It may be advisable to have parties with expertise in standards and
regulations compliance, in-use durability, quality assurance, and
customer service examine the results of the importer's product design
review. Importers and fabricating manufacturers that do not have in-
house expertise may consider using an accredited test laboratory to
evaluate the safety of a product.\42\
---------------------------------------------------------------------------
\42\ Ibid, p. 10.
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(iv) Product Design Records and Traceability
Importers should consider creating records that identify changes in
the product's design or in the production process and to incorporate
changes that affect the product's use into the documents that accompany
the product when sold. When changes are made to the product's design or
to the production process, importers should obtain additional test data
to assure the product continues to comply with stated technical
specifications and with all applicable FMVSS. For traceability \43\ or
recall reasons, changed products can be identified by being marked or
stamped with ``date'' or ``lot'' codes, or in another manner that
distinguishes new products from old. It makes good sense to use current
versions of the supporting technical documentation such as drawings;
replacement parts data; instructions for the product's production,
inspection, testing, and repair; as well as operating handbooks, and to
remove from use obsolete documents and data.\44\
---------------------------------------------------------------------------
\43\ Ibid, p. 25.
\44\ Ibid, p. 24.
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(c) Inspect Foreign Manufacturing Facilities
(i) Evaluating the Manufacturer's Company, Factory, and Staff
Before entering into a written contract, we believe it is prudent
for the importer to personally visit the fabricating manufacturer's
facility and to determine whether the manufacturer is properly licensed
by the appropriate government agencies. It may also be reasonable to
hire a consultant if the importer has limited knowledge of, or
experience with, the culture and trade practices of a foreign country.
Several trips may be necessary to conduct an objective evaluation of
the company, its factory, and its management. To reduce the potential
for fraud, it is preferable to deal directly with the fabricating
manufacturer and to avoid dealing with
[[Page 79217]]
representatives (such as trade groups) that claim to represent a
manufacturer. When dealing with a business partner of the fabricating
manufacturer, it is generally advisable to determine whether the
partner is a subsidiary of a larger company \45\ and whether the
importer has recourse against the parent company if the subsidiary
defaults on its obligations.
---------------------------------------------------------------------------
\45\ For example, see U.S. Department of Commerce (DOC),
``Essential China Advice'' (Washington, DC, 2001-2008) http://www.buyusa.gov/china/en/chinabiztips.html (February 22, 2008).
---------------------------------------------------------------------------
(ii) Assuring Quality Control
While visiting a fabricating manufacturer's foreign facilities, the
importer may consider asking the manufacturer's production managers to
identify the quality control mechanisms that are in place (e.g., ISO
9000 series quality assurance compliance) and it may be helpful to
observe whether there is evidence of good quality workmanship. The
importer should also be aware that other quality management systems are
used such as ISO/TS16949, which was jointly developed by the
International Automotive Task Force (IATF) \46\ and submitted to the
ISO for approval and publication. \47\ ISO/TS16949 applies to the
design and development, production, and, as relevant, the installation
and servicing of automotive-related products.
---------------------------------------------------------------------------
\46\ IATF members include the following vehicle manufacturers:
BMW Group, Chrysler LLC, Daimler AG, Fiat Group Automobiles, Ford
Motor Company, General Motors Corporation (including Opel Vauxhall),
PSA Peugeot-Citroen, Renault, Volkswagen AG and the vehicle
manufacturers' respective trade associations--AIAG (U.S.), ANFIA
(Italy), FIEV (France), SMMT (U.K.) and VDA (Germany).
\47\ See: http://www.iso.org/iso/catalogue_detail?csnumber=36155.
---------------------------------------------------------------------------
(iii) Protecting Intellectual Property, Trademarks, Copyrights,
Patents, and Trade Secrets
During the on-site visit, the importer should look for counterfeit
commodities or evidence of trademark or copyright violations such as
fraudulent seals made to look like those produced by certification
organizations. We believe that it is in the best interest of an
importer to consider protecting its intellectual property, trademarks,
copyrights, patents, and trade secrets. While NHTSA does not have
authority to enforce statutes that prohibit counterfeit products from
being imported and the agency is aware that in some situations
counterfeit products may, in fact, comply with applicable FMVSS, we
believe it is prudent for importers to avoid business dealings with
known or suspected counterfeiters because evidence of counterfeiting
activities demonstrates the company's disdain for compliance with
accepted norms, which may extend to safety standards. \48\ Importers
should be aware that many Federal departments and agencies are working
with industry to stop the proliferation of counterfeit products. \49\
For example, importers should be aware that the International Trade
Administration of the U.S. Department of Commerce, has posted on its
Web site an ``IPR Toolkit--Intellectual Property Rights in China'' that
describes how to develop an intellectual property strategy plan,
including what is involved in registering intellectual property in
China. \50\ Also assisting in these efforts are many independent
organizations such as the U.S. Chamber of Commerce, which represents
more than three million businesses. \51\
---------------------------------------------------------------------------
\48\ Importers should be aware that the U.S. Department of
Homeland Security recently announced The National Intellectual
Property Rights Coordination Center (IPR Center) to keep unsafe
products out of the United States. See ``DHS Announces New Center to
Target Unsafe Products'' (Washington, DC, July 11, 2008) http://www.cbp.gov/xp/cgov/newsroom/highlights/target_center.xml.
\49\ The Office of the U.S. Trade Representative and the
Departments of Commerce, State, Justice, and Homeland Security lead
a government-wide initiative, the Strategy Targeting Organized
Piracy (STOP!), to fight billions of dollars in global trade in
pirated and counterfeit goods that cheat American innovators and
manufacturers, hurt the U.S. economy and endanger consumers
worldwide. See: http://www.stopfakes.gov or call 1-866-999-HALT.
\50\ Ibid, p. 12. See also: http://www.stopfakes.gov.
\51\ The U.S. Chamber of Commerce sponsors the Coalition Against
Counterfeiting and Piracy. See: http://www.thetruecosts.org/.
---------------------------------------------------------------------------
(iv) Reaching Agreement on Whether Products are Substandard,
Nonconforming, or Defective
It is advisable to reach agreement with a prospective fabricating
manufacturer on what constitutes substandard or defective products, and
on who will be responsible for conducting recalls of products that have
a noncompliance with an FMVSS or safety-related defect. Of particular
importance in this context are the importer's obligations under the
Vehicle Safety Act to make determinations as to whether a product does
not comply with an FMVSS or contains a safety-related defect. The
importer should make clear to the foreign fabricating manufacturer that
the importer makes the determination of a noncompliance or safety-
related defect under U.S. law regardless of the fabricating
manufacturer's views. The importer must recognize that its legal duty
to conduct a recall when the facts so warrant under the Vehicle Safety
Act is not affected by the willingness of the foreign fabricating
manufacturer to pay for all or some of the costs of the recall.
Accordingly, the importer may wish to include provisions in the
contract with the foreign fabricating manufacturer that covers
contingencies, including recalls.
(v) Contract Considerations
All aspects of the product's design and the production process may
be considered for inclusion in the written contract, such as inspection
and testing procedures and any documentation the importer requires,
including work orders, operation sheets, inspection logs, repair logs,
and test procedure checklists.\52\ The contract may also specify under
what circumstances the product's design may be changed (if at all),
what equipment must be used for particular manufacturing operations,
product traceability measures to be employed, and the types of forms to
be used for recording quantitative data such as test readings. It is
useful for the contract to specify exact terms of payment, performance
standards, and timelines for deliveries and payments. Other
arrangements that are reached between the importer and fabricating
manufacturer should also be made in writing, such as those covering the
importer's rights to visit the production facility in order to provide
guidance and conduct product inspections.
---------------------------------------------------------------------------
\52\ CPSC Handbook, p. 28.
---------------------------------------------------------------------------
An agency's enforcement activities and the importer's legal duties
may be complicated when the overseas fabricating manufacturer begins
selling the importer's product to customers that have previously been
buying directly from the importer. In the event of a product
noncompliance, the agency must investigate the product importations by
many, rather than just one importer. We therefore believe it is prudent
for an importer to consider having contract language that prohibits the
fabricating manufacturer from selling the importer's product (either
with or without the importer's markings) to anyone except the importer.
Without such assurances from the fabricating manufacturer, an importer
may find that the manufacturer is performing the unauthorized
manufacture (so-called ``midnight runs'') of the importer's products
after business hours, which the manufacturer subsequently sells in the
gray market. The importer may also consider not disclosing its customer
lists to the manufacturer and not having the manufacturer drop-ship the
importer's products to its customers because this provides an
opportunity for the
[[Page 79218]]
manufacturer to deal directly with the importer's customers.\53\
---------------------------------------------------------------------------
\53\ Blakeslee Sourcing Your Products, pp. 6-9.
---------------------------------------------------------------------------
The importer should obtain sound legal guidance before entering
into an agreement. Following execution of the contract, it is wise to
adhere to the contract provisions or risk the costs of a legal dispute
in a foreign country. The importer should obey all laws and regulations
of the foreign country and be wary of any offer by the partner to
ignore or avoid those laws. Also, the importer may wish to become
familiar with U.S. Department of Commerce, Bureau of Industry and
Security (BIS) regulations relating to the transfer of dual use
technology to certain foreign countries. U.S. statutes prohibit
transfer of some sensitive technologies without a license. See http://www.bis.doc.gov/2.
While the contract between the importer and the fabricating
manufacturer may clarify responsibilities between these entities, it
does not modify the Vehicle Safety Act and has no bearing on NHTSA. The
importer retains the obligations of a manufacturer for notification and
recall under the Vehicle Safety Act and NHTSA regulations.
(vi) Monitoring Compliance With Contract Requirements
It may be imprudent to assume that the overseas operations will run
by themselves. Visits to the foreign fabricating manufacturer on a
frequent basis may be needed to evaluate the state of affairs. During
these visits, the importer should, if possible, talk to employees to
learn of any substitutions of materials, modifications of the product's
design, and manufacturing problems that were encountered. The importer
should verify that the fabricating manufacturer is complying with
contractual requirements by inspecting the facilities, production
operations, inspection and test records, supplies, and audit results.
The importer should also ensure the product's continued compliance with
the standards by having performed ongoing FMVSS compliance tests. This
inspection and testing will provide feedback into the nature of the
operation and is part of the importer's oversight of the operation and
its quality assurance/quality control. The importer should not delay
taking corrective action with the fabricating manufacturer when
circumstances necessitate such action.\54\
---------------------------------------------------------------------------
\54\ CPSC Handbook, p. 10.
---------------------------------------------------------------------------
(d) Inspect Goods Either Before They Are Exported to or Distributed in
the United States
(i) Monitoring Production Outputs
Different products, designs, and fabrication processes will require
various levels of precision and accuracy of manufacturing equipment and
tooling.\55\ In all manufacturing processes, there is a need to monitor
how well the products meet given specifications because products will
deviate from specifications for reasons such as new tooling, aging
machinery, and human error. Fabricating manufacturers of quality
products use mathematical models for calibrating production equipment,
controlling the output of the manufacturing process, and auditing
production processes to attain improvements. Therefore, importers may
wish to carefully consider instituting a quality control program at the
outset.
---------------------------------------------------------------------------
\55\ Ibid, p. 28.
---------------------------------------------------------------------------
(ii) Sampling, Inspecting, and Testing Products
It would be wise for an importer to bear in mind that even though a
product appears to be well manufactured, this does not necessarily mean
that it also complies with applicable FMVSS and will not prove to be
defective in actual use. While it is important to produce quality
products, it is crucial that manufacturers test, on a continuing basis,
their products to verify compliance with the FMVSS. To better shoulder
the costs of any testing needed to assure compliance, smaller importers
may wish to consider consortium purchasing, which would allow them to
pool their resources.
To ensure that product requirements are within tolerances, it is
sensible to collect product samples at predetermined intervals and
inspect them for compliance with any specifications that are identified
in advance. The purpose of the inspection is to assure that the
products safely perform their intended functions. Inspection procedures
may include a visual examination, testing with appropriate instruments,
measuring, or other forms of evaluation.\56\ Fabricating manufacturers
collect production samples for inspection based on mathematical models,
which are beyond the scope of this notice, but that are critical to
ensuring the quality of the end products. More information relating to
statistically valid sampling plans is available on Web sites such as
that of the American Society for Quality. See http://www.asq.org/index.html. Test programs that are based on statistically valid
sampling techniques will increase the probability that problems will be
quickly identified and remedied before the products are shipped.
Obviously, it is preferable from a cost perspective for nonconforming
or substandard products to be discovered by the fabricating
manufacturer before shipping costs are incurred.
---------------------------------------------------------------------------
\56\ Ibid, p. 35.
---------------------------------------------------------------------------
It is generally expected that quality control issues will be
greater within the first batch of products made by the new fabricating
manufacturer. After the initial production run, the importer and
fabricating manufacturer may want to conduct an inspection to determine
whether the initial products function as intended, whether their
dimensions are within tolerances, and whether their appearance is
satisfactory. The importer and fabricating manufacturer may consider
conducting comprehensive tests of representative products to ensure
compliance with design specifications.
It is desirable to have an inspection plan to specify exactly what
is to be inspected, how an inspection will be conducted and how often,
and the types of gauges, tools, or instruments that will be used. If
inspections are particularly critical to product safety, the inspection
plan may require that they be performed by designated specialized or
certified personnel.\57\
---------------------------------------------------------------------------
\57\ Ibid, p. 36.
---------------------------------------------------------------------------
It would be advisable to include inspection procedures in the
contract and any changes should be mutually agreed upon so that a
record of changes is maintained. We also suggest that the contract
clearly state how the costs of quality control inspection and any need
to redesign a product or process based on such inspections will be
apportioned.
(iii) Post-Production Quality Control
From the moment products leave the fabricating manufacturer until
they are acquired by consumers, they are exposed to numerous
contingencies that can affect their safety or usability. For these
reasons, it is best not to terminate quality control measures at the
port and the prudent importer might consider instituting quality
control measures at storage locations and throughout the domestic
distribution process. Distribution practices directly influence the
safety of consumer products so it is wise to exercise control over
packaging and shipping operations. This control includes the selection
of adequate packaging materials, design of methods of packaging that
preclude damage in
[[Page 79219]]
shipment, and selection of shipping methods consistent with the
physical properties of the product. Packaging and shipping techniques
may need to be revised as experience dictates. In those instances where
distributors are involved in assembly or test operations before
delivery to the consumer it is wise to provide them with current and
adequate assembly and test instructions and the importer may wish to
ensure that these instructions are followed.\58\
---------------------------------------------------------------------------
\58\ Ibid, p. 40.
---------------------------------------------------------------------------
When quality control problems are encountered, it may be useful to
determine what has caused the problem and to collaborate with the
fabricating manufacturer and participants in the distribution process
to remediate the cause and prevent similar future problems. We believe
it is wise to keep in mind that reputable fabricating manufacturers
want to be apprised of problems and will work for compliance with the
importer's requirements and applicable government standards.
To prevent potentially dangerous products from being delivered to
consumers, it may be desirable for importers and fabricating
manufacturers to discuss the need for prompt corrective actions and to
agree on those in advance. These actions may include determining what
caused the problem, how to prevent future problems, and the removal of
problem products from the production and distribution channels before
they reach consumers.\59\ Locating products within the production and
distribution system is crucial to preventing hazardous products from
being delivered to consumers after safety defects become apparent.
---------------------------------------------------------------------------
\59\ Ibid, p. 45.
---------------------------------------------------------------------------
The importer may consider providing the overseas partner with
training and technical assistance to assure product quality.\60\ This
commitment to quality control may minimize defect costs and maintain
profits by ensuring the end user's satisfaction, thereby enhancing the
prospect for repeat business. On the other hand, neglecting oversight
may result in compromised product quality and could possibly lead to
legal consequences at home and abroad. It is worth noting that the
foreign country's court system may not be relied on to offer a legal
settlement consistent with U.S. practice.\61\
---------------------------------------------------------------------------
\60\ U.S. DOC Essential Advice.
\61\ Ibid.
---------------------------------------------------------------------------
(e) Identify the Product
(i) Identify the Product's Country of Origin
It is generally required that an imported product be properly
marked with its country of origin. The pertinent statute, which is
administered by CBP, requires that, unless excepted, every article of
foreign origin (or its container) imported into the United States must
be marked with the article's country of origin. See Section 304, Tariff
Act of 1930, as amended (19 U.S.C. 1304). The purpose of the marking
requirement is to inform the ultimate purchaser in the United States of
the country in which the imported article was produced.
Articles that are not marked at the time of importation with the
English name of their country of origin may be subject to additional
duties unless they are properly marked after importation, or are
exported or destroyed under CBP supervision. CBP allows importers,
where administratively practicable, to mark goods that are not marked
at the time of importation, prior to their release from CBP's control
or custody. This rule does not apply to an importer that has repeatedly
violated the country of origin marking requirements after receiving
written notification from CBP that the goods are required to be marked
prior to importation.
It is also important to keep in mind that any person who removes,
destroys, alters, covers, or obliterates, with the intent of
concealing, the country of origin marking on an imported article could
be subject to criminal prosecution.\62\
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\62\ U.S. Customs and Border Protection (CBP), ``Marking of
Country of Origin'' (Washington, DC, December 2004) Publication
0000-0539 http://www.cbp.gov/xp/cgov/toolbox/publications/trade/ (February 22, 2008).
---------------------------------------------------------------------------
(ii) Identify the Product's Manufacturer
As noted above, items of motor vehicle equipment that are subject
to the FMVSS must, as originally manufactured, conform to the
applicable standard and be so certified. In most instances,
certification of compliance with the applicable FMVSS for regulated
safety equipment is evidenced by the symbol ``DOT'' either inscribed on
the equipment item in a prescribed location, or placed on the outside
of the container in which the equipment item is shipped. See 49 U.S.C.
30112 and 30115. The manufacturer of certain regulated equipment items
such as brake hoses, glazing (automotive glass and plastics), and tires
must label its products with identification numbers assigned to the
manufacturer by NHTSA.
However, motor vehicle equipment items that are not covered by an
equipment standard are not required by NHTSA regulations to be marked.
NHTSA's enforcement efforts are complicated when unmarked products are
noncompliant or have safety-related defects because it becomes more
difficult to trace the products' origins and to request or order the
fabricating manufacturer or importer to conduct a safety recall
campaign. It is generally assumed that safety is enhanced when those
who manufacture and import motor vehicles and items of motor vehicle
equipment are accountable and that accountability may be compromised
when products have no markings that identify their fabricating
manufacturers or importers.
The agency is aware that many fabricating manufacturers voluntarily
mark their products with information that identifies the manufacturer.
When a fabricating manufacturer does not mark its products, it becomes
difficult to discern whether those products were produced by the
manufacturer in accordance with a legitimate business relationship or
were counterfeited by an unscrupulous manufacturer. An all-too-real
possibility is that the fabricating manufacturer or importer may have
to initiate a recall for the counterfeit products and incur costs that
it otherwise would not have had to pay if the legitimate products were
easily identifiable with their markings.
The agency therefore believes it is in the best interests of
importers and fabricating manufacturers to ensure that the legitimate
manufacturer (and where feasible, the importer) is clearly identified
on the product or its packaging. Readily apparent markings on the item
itself are preferable, because after the item is in service, its
packaging will usually not be available for reference purposes. It is
important to keep in mind that such identification may limit a
fabricating manufacturer or importer's recall liability to only those
products that were actually manufactured or imported by those entities.
(iii) Identify the Product's Date or Lot Codes
The agency also believes it is reasonable for importers and
fabricating manufacturers to consider marking products with
``production date codes'' or ``lot codes.'' As noted above, by doing so
items that do not comply with standards or that contain safety defects
can be traced back to the point at which the manufacturing process was
changed or to other changes that were made, such as purchases of raw
materials from different suppliers. By doing so, a recall may be
limited to an identified ``lot'' of products or to products
manufactured in a specific date range, thereby reducing the overall
cost of the recall.
[[Page 79220]]
(iv) Industry Recommended Practices or Standards for Product Markings
The agency is aware that many fabricating manufacturers also
voluntarily mark their products in accordance with industry guidance to
show that the products conform to established standards or recommended
practices. Industry guidance is typically derived from broadly accepted
specifications for a product. As an example, SAE Recommended Practice
J759 entitled ``Lighting Identification Code,'' provides guidelines to
manufacturers of lighting products that specify permanent markings that
identify the product's manufacturer, the function for which it was
designed, the model or part number, the class designation, and the
product's application.\63\ When such guidance is available, the agency
believes that importers and fabricating manufacturers should give it
serious consideration.
---------------------------------------------------------------------------
\63\ See: www.sae.org/standardsdev/.
---------------------------------------------------------------------------
(f) Establish a Consumer Service Program
It is wise for importers to establish and maintain an effective
consumer service program because good service leads to satisfied
customers and repeat business. An effective consumer service program
may also assist the importer in quickly identifying quality control and
safety-related problems and allow the importer to remedy those problems
before they become widespread. Importers should consider establishing a
consumer service program that includes the following elements:
(i) Consumer Education
An effective consumer service program will inform consumers through
product manuals or instructions on how products are to be assembled,
installed, and operated to prevent safety hazards. For example, NHTSA
recommends that consumers read the instruction manual provided with a
newly purchased child safety seat as well as the seat belt and child
seat installation section of their vehicle owner's manual before
attempting to install and use a child safety seat.
(ii) Product Service
An effective consumer service program will make it easy for
consumers to obtain replacement parts and will inform consumers how and
where to take the product for servicing, particularly for deficiencies
or malfunctions that are potential causes of safety hazards. Importers
may consider providing a U.S. telephone number with the product for
consumers to call if they have questions regarding the product.
(iii) Recordkeeping
An effective consumer service program will include a records system
that identifies a product by serial number, model, and date of
manufacture and that identifies its location in the distribution system
and after sale to a consumer. Importers should be aware that
recordkeeping becomes very important for notifying consumers, dealers,
and distributors of products when a safety recall is announced.
(iv) Safety Recall Plan
An effective consumer service program will include a plan for the
rapid recall of imported products from consumers, distributors, and
dealers. The plan should include procedures to inform consumers how the
importer will respond to noncompliances with the FMVSS or safety
defects that are determined to exist in a product.\64\ The recall plan
should also establish procedures for notifying NHTSA about
noncompliances with the FMVSS or safety-related defects as required by
agency regulations. The recall plan should be periodically evaluated
and amended as necessary.
---------------------------------------------------------------------------
\64\ CPSC Handbook, p. 42.
---------------------------------------------------------------------------
(v) Intervention
If a noncompliance or safety-related defect becomes apparent, an
effective consumer service program will assist an importer in locating
products within the production and distribution system and help to
prevent problem products from being delivered to consumers.
(vi) Notification
In the event of a recall, the most important factor is the ability
to inform as many owners, dealers, retailers, and distributors of the
product as possible. Notifying owners ordinarily will be the importer's
responsibility. While it may be impractical to maintain records
identifying all retail purchasers of a particular consumer product, the
importer may wish to make a reasonable effort in that direction by
requesting distributors, dealers or retailers to maintain such records
or by including with products self-addressed mailing cards for
consumers to use, if they so choose, to register their ownership of the
product.\65\ Where it is a requirement to maintain records identifying
retail purchasers of a product, such as is the case for tires, child
restraint systems, and motor vehicles, the importer must ensure that
distributors, dealers, and retailers understand their obligations under
existing regulations. For example, see 49 CFR part 574 Tire
Identification and Recordkeeping and 49 CFR part 588 Child Restraint
Systems Recordkeeping Requirements.
---------------------------------------------------------------------------
\65\ Ibid, p. 45.
---------------------------------------------------------------------------
(vii) Business Process Monitoring
Other than complaints received directly from the importer's
consumer service program, information that could assist in identifying
noncompliances with the FMVSS or safety-related defects includes
insurance claims, lawsuits, product return data from business partners,
the results of ongoing quality assurance testing, and information about
products that share common parts or platforms. The importer should also
pay close attention to the EWR data it submits to NHTSA because that
information may be very useful in identifying safety-related problems
early in the product's history.
(g) Contact NHTSA Concerning Manufacturer/Importer Reporting
Requirements, Safety Compliance, Defect Issues, and Regulations
Enhanced product safety for imported motor vehicles and equipment
will result from a collaborative effort between the importer community,
fabricating manufacturers, and NHTSA. To this end, we offer the
following agency contact numbers and Internet resources to help answer
questions about these recommended best importer practices.
Office of Vehicle Safety Compliance
------------------------------------------------------------------------
NHTSA Office/
Topic Internet Telephone No.
------------------------------------------------------------------------
General questions about Import and (202) 366-5291
importing vehicles and Certification
equipment items. Division.
General Importation Information: http://www.nhtsa.dot.gov/cars/rules/import/ import/
[[Page 79221]]
Questions about how a Import and (202) 366-5291
manufacturer informs NHTSA Certification
about its company and the Division.
products it manufactures.
Questions about how to provide Import and (202) 366-5291
NHTSA with the manufacturer's Certification
vehicle identification number Division.
deciphering information.
Questions about NHTSA ID numbers Equipment Division. (202) 366-5322
that are assigned to equipment
manufacturers of brake hoses,
glazing (glass), and tires.
Information to Assist New http://www.nhtsa.dot.gov/cars/rules/
Manufacturers: maninfo/
Questions about FMVSS as they Equipment Division. (202) 366-5322
relate to equipment items
(i.e., tires, rims, brake
hoses, brake fluid, seat belt
assemblies, lighting equipment,
glazing (automotive glass and
plastics), motorcycle helmets,
child restraint systems (child
safety seats), platform lift
systems for the mobility
impaired, rear impact guards
for trailers, triangular
reflective warning devices, and
compressed natural gas
containers).
Federal motor vehicle safety http://www.nhtsa.dot.gov/cars/rules/
standards (FMVSS):
NHTSA's Manufacturer Databases: http://www.nhtsa.dot.gov/cars/rules/
manufacture
Government Vehicle Safety http://www.safercar.gov/
Information:
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Office of Defects Investigation
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NHTSA Office/ Telephone No./
Topic Internet Link
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Questions about Early Warning Early Warning (202) 366-4238
Reporting (EWR). Division.
Early Warning Reporting: http://www-odi.nhtsa.dot.gov/ewr/ewr.cfm
Questions about Defects and Office of Defects (202) 366-5210
Recalls. Investigation.
Defects Investigations: http://www-odi.nhtsa.dot.gov/
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Office of Chief Counsel
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NHTSA Office/
Topic Internet Telephone No.
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Questions about how the statutes Office of Chief Requests for
and regulations administered by Counsel. interpretations
NHTSA are interpreted. should be made in
writing.
NHTSA Chief Counsel interpretive http://isearch.nhtsa.gov/
letters:
NHTSA Statutory Authorities: http://www.nhtsa.dot.gov/nhtsa/Cfc_title49/index.html
NHTSA Regulations: http://www.nhtsa.dot.gov/cars/rules/
Questions about how to designate Office of Chief (202) 366-1834
a U.S. resident as an agent for Counsel.
service of process.
Suggested Designation of Agent http://www.nhtsa.dot.gov/cars/rules/
for Service of Process 49 CFR manufacture/agent/customer.html
Part 551, Subpart D:
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(h) Know How To Obtain General Assistance With Other Federal
Regulations
The Office of Management and Budget, in conjunction with the U.S.
Small Business Administration, publishes a one-stop Internet resource
to make it easier for fabricating manufacturers and importers to
understand Federal regulations, including those administered by NHTSA.
This Web site provides a point of contact at each agency to answer
specific questions.\66\ See: http://www.business.gov/contacts/federal/.
U.S. Customs and Border Protection (CBP), an agency of the U.S.
Department of Homeland Security, has also published ``Importing into
the United States: A Guide for Commercial Importers,'' which provides
wide-ranging information about the importing process and import
requirements. See: http://www.cbp.gov/xp/cgov/toolbox/publications/trade/.
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\66\ The Small Business Paperwork Relief Act of 2002 (SBPRA)
requires each Federal agency to establish a point of contact to act
as a liaison between the agency and small businesses. In addition,
SBPRA requires the Office of Management and Budget (OMB), in
conjunction with the Small Business Administration, to publish on
the Internet a list of compliance assistance resources available at
Federal agencies for small businesses.
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Authority: E.O. 13439, 72 FR 40051.
David Kelly,
Acting Administrator.
[FR Doc. E8-30603 Filed 12-23-08; 8:45 am]
BILLING CODE 4910-59-P