Product and Export Controls 113

that focus on evaluating case outcomes. For example, debate over the export of
agricultural pesticides involves identifying, measuring and comparing specic benets from increased crop production versus associated harm to health from pesticide
use. One consideration could be distributional impacts, such as whether general
benets for the utilitarian majority should prevail over concentrated harm suered
by a few individuals or minorities. Associated teleological issues would include
specifying when to calculate the cost/benet outcomes and where to measure the
eects, i.e. whether national boundaries or citizenship make a dierence.
Deontological decision methods could also be chosen, relying more on process,
rules and individual rights. If the principle of individual choice prevails, market
mechanisms relatively unrestricted by governmental controls could guide product
purchase decisions. Justications for limiting individual choice might arise if individuals lacked a capability to make fully informed decisions or if individual choices
might result in harmful eects on others. In such cases, more expert and capable
actors might intervene to provide additional information or restrict the range of
choices available to individuals.
The major decision tool currently employed by the global community on product
export and trade control issues involves a process of prior informed consent (PIC) as
applied to trade in certain hazardous products. This mechanism calls for exporting
governments to provide importing governments with pertinent product risk information before permitting a regulated products export, thereby shifting nal decision
responsibility to the importing countrys government. To a more limited extent, intergovernmental organizations also now prohibit or severely restrict trade in a few
products widely agreed to produce signicant and long-lasting harm. These intergovernmental mechanisms, however, depend on achieving a common morality
standard broadly endorsed by most national governments, a dicult goal that
also designates public authorities as the principal responsible actors. Individuals or
groups dissatised with governmental actions may still call upon other actors in
the subsidiarity chain, particularly corporations, to exercise their own decisionmaking power where ocial export and trade controls do not satisfactorily restrict
product sales.

PRODUCT RISK FOR CONSUMERS

The ethical issues outlined above have fueled policy debates for over a quartercentury. Exhibit 6.1 reproduces an editorial appearing in The Washington Post on
27 February 1980, summarizing the contending arguments and ethical challenges
posed by a number of contemporaneous cases involving the export of products
banned or severely regulated for sale in the United States. Some progress on international standards has occurred since that time, shaping both national and international guidelines covering certain products. Reviewing the experiential results in
several of these early cases, however, can help elucidate the issues and highlight
key factors important to the decision-making process.
A classic early case involved childrens pajamas that had been treated with Tris,
a ame-retardant chemical. Introduced in the mid 1970s, the pajamas proved a

114 Ethics for International Business

Exhibit 6.1 Exporting Goods Banned at Home

Unsafe in Any Country?

Should a substance deemed too dangerous for use in
this country be licensed for export? An answer is still
elusive despite years of study and debate, while exports
of banned and untested substances have been growing.
The key issues are these: Does the United States have a
moral responsibility to prevent the export of a substance it knowsor thinksis dangerous? Or does the
making of such judgments constitute unacceptable
intrusions on the sovereignty of other nations? And
what eect would stricter controls have on an already
shaky US balance of trade?
No single, simple control policyfor example, banning the export of anything that is banned domesticallywill sensibly cover the complete range of exports
that include such items as Tris-treated pajamas, pesticides, eective but risky medicines, toxic chemicals and
dangerous toys for children. In each case the nature of
the risk will be dierent, as will the degree of certainty
about whether or not a risk actually exists. In some
cases, alternatives to a dangerous product will be available, in others not.
In many cases the conditions in an importing
countryrampant unemployment, exploding population growth, epidemics of insect-borne diseasemake
US standards of health or safety completely inappropriate. For example, Depo Provera, a long-lasting, injected
contraceptive, has been banned in this country because
of uncertain long-term risks. However, in a country
whose number one problem is overpopulation, and the
illness and mortality rates associated with it, the riskversus-benet judgment is dierent. And in fact, Depo
Provera is licensed in more than seventy nations. Should
US rms then be prohibited from selling it?
An apparently satisfactory way to balance ethical
responsibility, practical economic considerations and
respect for the right of others to make their own
decisions is for the United States to require only that the
importing country be fully aware of the potential risks.
In practice, however, this approach has many drawbacks.
A serious notication policy, for instance, would
require full publication of the thousands of regulatory
actionsbans, suspensions, registrations, deregistrations, judicial injunctions, to name a fewoccurring
each year. A document from the government of the

importing country indicating that it had received and

considered the information would also be required.
Masses of paperwork and thousands of additional manhours would be needed. In this country all that would
be possible, though unwelcome, but in manyif not
mostothers it would be impossible. Two years ago, for
example, the Ministry for Environment in Nigeria (one
of the larger and richer developing countries) consisted
of the minister, one assistant and one secretary. A high
level of scientic and technical expertise would also be
necessary to evaluate the risk-benet trade-os posed
by a possible import. And even if this step could be
accomplished, many governments lack the procedures
and the degree of central control necessary to set and
implement standards for safe use.
Probably the only really workable solution lies in the
creation of common international standards. But
although some steps in this direction are being taken by
a number of UN agencies, it will be many years, if ever,
before they amount to much. Meanwhile, this country
will have to nd an acceptable set of standards for itself.
The United States must accept some responsibility for its
exportsthat much is clear. But where the line comes
between appropriate care and becoming the worlds
environmental policemanagainst the will and wishes
of importing countries with dierent priorities and
standards and needs of their ownis not so clear. Finding the right balance will be a thankless task: for every
developing country that objects to becoming a dumping ground for the industrialized world, there is
another that objects even more loudly to having the
developed worlds standards imposed on it. Nevertheless, the task is worth the eort. Lethal pesticides, toxic
chemicals and dangerous drugs all have a way of coming back to haunt their makers. Mixed in the volatile
brew of international relations, they can become
explosive.
Source: From The Washington Post, 27 February 1980,
p. A18 1980 The Washington Post. All rights reserved.
Used by permission and protected by the Copyright
Laws of the United States. The printing, copying,
redistribution, or retransmission of the Material without express written permission is prohibited.

Product and Export Controls 115

popular item with safety-conscious parents until Tris was found to cause kidney
cancer in children. The US Consumer Product and Safety Commission (CPSC)
banned domestic sales in June 1977 and ordered a product recall to protect consumers. The aected clothing could be buried, burned or used as industrial wiping
cloths. The CPSC, however, did not ban export sales until the following year, providing some producing companies a window of opportunity to prevent the complete
loss of their investment. Other trading rms also stepped into the gap, buying
Tris-treated pajamas for 1030 percent of the wholesale price and shipping the goods
overseas. An estimated 2.4 million pajamas were exported to other countries before
imposition of the export ban.1
If companies can ethically sell any products whose sale is not prohibited by
government regulation, then the pajama exporters cannot be judged any more
harshly than the manufacturers selling Tris-treated products in the United States
prior to the CPSC action. However, what if the manufacturers had originally known
about the carcinogenic risk to children before the product was rst sold and the
companies marketed the product anyway; would knowledge of health risks impose
ethical obligations on the companies to refrain from product sales, or at least require
prior eective notication or warnings to governmental authorities and/or potential
buyers? In such cases, awareness and knowledge factors may increase corporate responsibility regardless of government action, especially if only the company possesses
such knowledge.
There is no indication in the pajama case that manufacturers knew about the
Tris cancer risk before the rst sales in the United States. There is no doubt that these
companies were aware of the risk after the CPSC domestic sales ban and before the
export prohibition. Unless all responsibility falls on governmental entities (exporting
and importing country agencies), manufacturers exporting their products after the
initial CPSC action could be seen as causal agents for kidney cancers in any foreign
children who wore Tris-treated pajamas. Manufacturers selling discounted pajamas
to intermediary agents who then exported the products may also be held indirectly
responsible for harms suered, if the manufacturers were aware (or should have been
aware) that the products were being purchased for foreign sale. The awareness factor
raises issues of willful ignorance, or how far a company should go in asking questions
regarding its products use, once aware of product risk. (A comparative case scenario
in Chapter 4 might be Polaroids assessment of its cameras use in enforcing
apartheid regulations.)
Much public revulsion over this case probably stemmed from the characteristics
of potential victims and the seemingly clear cost/benet calculation related to the
products sale. The image of vulnerable pajama-clad children exposed to carcinogenic
chemicals evokes protective impulses that for many people can transcend considerations of a victims nationality, creating a sense of shared responsibility that may not
apply in other cases. The harm to personal health suered by victims of kidney
cancer also oers a more salient measure of serious cost compared to the economic
benets to corporations from continued product sales.
Perhaps an assessment of the pajamas ame-retardant qualities would yield a
more comparable benet measure that also focuses on a childs health. The CPSC

116 Ethics for International Business

action suggests how US authorities evaluated this comparison, but the likelihood of
cancer versus re deaths in children could vary depending on conditions where the
children reside, so a teleologically oriented decision tool might use national or even
local cost/benet projections to inform case-by-case determinations. Study results
could be given to public authorities in importing countries or even provided to
parents, who could then make more informed individual purchase decisions. Of
course, the expense of more detailed studies would also likely raise product cost,
unless subsidized by other entities.
Comparisons with other examples help illustrate the relative importance of various case factors. For instance, the vulnerability of children as potential victims often
plays a key role in making certain product exports appear especially heinous, such as
the dangerous toys mentioned in Exhibit 6.1, or the export of nearly one-half million
paciers of a type that caused choking deaths.2 These products appear to oer even
less signicant osetting benets for children than ame-retardant pajamas. Similarly questionable osetting benets to health risks appeared to mark an earlier case
in 1969. Tests with cyclamate, an articial sweetener, produced dangerous malformations in chick embryos, leading the Food and Drug Administration (FDA) to ban US
sales of the product. Companies challenged the reasonableness of the FDAs risk
criteria, however, and continued to export cyclamate to countries whose authorities
did not restrict its importation and sale. The FDA never acted on a 1985 petition to
reapprove cyclamate even though over 50 countries, including the United Kingdom
and Canada, permit its use in consumer products.3 The cyclamate example highlights
dicult questions regarding how much condence to place in scientic tests and,
equally importantly, who should determine acceptable risk levels.
Many similar ethical considerations arose in a long-running controversy over
potential health risks posed by silicone breast implants. Introduced by Dow Corning
in 1963, this product faced subsequent charges that implant ruptures or leakage of
silicone gel caused diseases such as lupus, rheumatoid arthritis or breast cancer.4
Numerous lawsuits resulted, many alleging that Dow Corning ignored or concealed
problems with the product. As media attention grew, the FDA called in January 1992
for a 45-day moratorium on implant sales and later ordered them o the market in
the United States, except for women undergoing mastectomies.
Four US producers of silicone implants took contrasting actions following the
FDA call for a sales moratorium. While all four companies stopped selling the product in the United States, only Dow Corning ended all sales. Bioplasty continued to
export its product, contending it had not received an FDA request to stop such sales.
Mentor and McGhan both stopped exports but Mentor continued sales abroad by
using a two-month inventory of goods previously exported, while McGhan sold
implants manufactured at its plant in Ireland. For Bioplasty, the immediate ethical
question was whether the FDAs request for a domestic sales moratorium should be
sucient indication of a potential customer health risk that the company should
also halt export sales, even if not requested by the FDA. For Mentor and McGhan,
the issue revolves around whether suspending exports met their ethical obligation
toward customer safety if foreign sales continue unabated through use of existing
product inventory or new foreign production. If governments bear full responsibility

Product and Export Controls 117

for assuring product safety, then corporate compliance with regulatory requirements
meets a minimal ethical standard; following voluntary FDA requests might even
qualify as maximal ethical action. On the other hand, if companies owe ethical
responsibilities to customers, regardless of governmental mandates, then the issue
becomes whether FDA concerns should indicate a sucient health risk to warrant
stopping all sales, domestic and foreign.
Ending all sales could impose high costs on the companies, particularly the
three small rms that depended far more than Dow Corning on implant sales.
Most ethicists do not contend that individuals are ethically obligated to sacrice
their own life to save others. (Although such self-sacrice may be deemed meritorious, it is not ethically required.) The same self-sacrice limitation may not apply
to corporations (as articial legal persons). Even though a corporations death
(bankruptcy or dissolution) would inict some harm on certain stakeholders (shareholders, employees, communities), continuing to sell products posing serious health
risks for consumers would be judged unethical by deontological standards and,
except in theoretically extreme cases, by most teleologically measured cost/benet
standards as well.
In general, the more important the ethical value at stake, the more costs ethical
actors should be willing to bear. Preservation of life, and the prevention of serious
physical injuries, usually ranks high on the priority list of human values. In the case
of silicone breast implants, a key decision factor concerned evaluations regarding the
level of consumer health risks posed by the implants. The case against silicone
implants was also strengthened by the existence of a safer alternative (implants lled
with a saline solution). In cases where nearly equivalent benets can be obtained by
using a signicantly safer alternative, the ethical burden of proof becomes heavier on
advocates for the riskier product.
Later developments highlight the sometimes unpredictable and even ironic twists
that can occur in complex ethical dilemmas. Dow Corning, rather than its smaller
competitors, declared bankruptcy, driven to this step in 1995 by thousands of lawsuits brought by women suering various health maladies they attributed to the
companys silicone implants. Then, in a rather startling turnabout, new reviews of
silicone implant studies concluded in 2000 that the implants likely did not cause
most serious health problems previously associated with the product, casting doubt
on the FDAs earlier assessment. Inamed Corporation, McGhans corporate parent,
applied to the FDA to renew sales of silicone breast implants. (Both Inamed and
Mentor had reportedly continued their overseas sales, despite the FDAs mandatory
imposition of a domestic sales ban, since the nal FDA action did not cover exports
or foreign production. Lawsuits had forced Bioplasty into bankruptcy.)
Controversy continued over the scientic studies of longer-term health risks as
well as the appropriate standard to evaluate the products costs and benets. In July
2003 a news article reported that, according to an FDA ocial: the goal of the FDA
is not to approve only those drugs and devices that are entirely safe. The agency,
he said, has to weigh the risks and benets of a product. If the potential benets
outweigh the risks, he said, then it is reasonable to let consumers decide if they want
to take the risks for the potential benet. 5 This approach clearly endorses the cost/

118 Ethics for International Business

benet decision tool, although the appropriate measurements or time frame remain
unclear. Implicitly, this position does require the FDA to determine that potential
benets can (to some unspecied degree of certainty) outweigh costs before transferring the nal decision to potential consumers.6 In November 2006 the FDA nally
lifted its ban on silicone implants but mandated follow-up studies. With recent
evidence that many women still suer ruptures or leakage, the agency also requires
the manufacturers to inform women that most recipients will need at least one
additional surgery to remove or replace their implants.7
This case thus returns to the questions of who should decide, when, and where
(i.e. should the US government preemptively control sales to foreign consumers;
should the geographic location of potential consumers determine their degree of
product choice?). Questions regarding what actions to take (such as voluntary or
mandatory restrictions on production, exports and sales) depend largely on who will
decide and the decision tools they will employ. Answering these ethical questions can
be informed by scientic studies of factors such as product health risks, but this case
suggests that such objective factors may change or be reinterpreted.8 In the end, the
answer to who decides should derive from a clear rationale for why that choice is
made (i.e. which value standard guided the selection) based on shared societal values.

RISKS AND BENEFITS FOR MULTIPLE STAKEHOLDERS

Whereas consumers enjoyed the direct benets and bore the principal health risks
of products discussed above, the costs and benets from other products fall more
broadly among multiple stakeholders. These products may also face domestic sales
restrictions or prohibitions if governments determine they cause signicant harm to
their citizens. In such cases, similar ethical issues arise regarding whether to impose
export and trade controls on the products in order to protect foreign populations or to leave such decisions to the discretion of exporting companies, importing
governments or other foreign groups and individuals.
Pesticides represent the classic example of products typifying this kind of ethical
issue.9 An article in the November 1979 edition of Mother Jones magazine spawned a
follow-up piece entitled The Circle of Poison that set out the initial concerns and
stimulated early debate on this topic.10 The concept traces the circuitous route that
can evolve from the use of potentially hazardous products. For example, pesticides
banned from domestic operations by US regulators were still exported to developing
countries for application to improve agricultural harvests. Along the way, such pesticides can cause serious illness or death among farm workers exposed during eld
applications, as well as residents in surrounding communities poisoned by pesticide
run-o into nearby streams or through consumption of tainted produce. The described circle of poison is closed when pesticides return to the United States as
residue on the growing import of agricultural produce, placing US consumers at risk.
One way to explore the debate over pesticide exports would be to start with
elements that raise ethical responsibility issues, such as the harm suered by particular individuals. After examining the causes and assessing responsibility for the harm,
including ways to reduce pesticide hazards, osetting benets might be considered.