Chinese Drywall Makers Refusing to Compensate U.S. Homeowners

The top U.S. product safety official said on Monday the agency has failed to persuade Chinese makers of defective drywall to compensate American homeowners, in a dispute that threatens to mar strained trade ties.

The failure to persuade about 13 makers of contaminated drywall to redress American homeowners has been a major stumbling block for the U.S. Consumer Product Safety Commission, which is responsible for protecting Americans from unsafe household products.

Chairwoman Inez Tenenbaum said she would raise the drywall issue again when she meets her counterparts at China’s Administration of Quality Supervision, Inspection and Quarantine, later on Monday.

“We have not been able to get any of the Chinese manufacturers to come to the table to discuss our scientific findings and what, if any, they think their responsibility is to the American homeowner,” she told reporters at a media briefing.

“We are still very hopeful that the Chinese companies can come to the table and let us explain what our findings are and see if they can participate in helping us make our homeowners get a remedy in getting the Chinese drywall out.”

Drywall is also know as plasterboard and is used to make walls and ceilings.

Tenenbaum said about 4,000 homeowners had filed complaints about Chinese-made drywall saying the material had made their homes uninhabitable because it emits a foul smell and causes appliances such as air-conditioners to fail.

Tenenbaum said the agency has released guidelines that said certain Chinese drywall samples emitted hydrogen sulfide, at higher levels than U.S. samples.

Tenenbaum was in China to announce the appointment of Jeff Hilsgen as the agency’s representative in Beijing — the only overseas office set up by the agency.

The tainted drywall, which was imported to rebuild houses after Hurricane Katrina hit the southern United States in 2005, has added to increased concern about the quality of goods imported from China.

In recent years, worries about the high levels of toxic substances such as lead or cadmium in toys have led to a series of large recalls, hurting trade relations between the United States and China.

Tenenbaum’s visit to China comes a week ahead of Chinese President Hu Jintao’s trip to the United States, during which rising trade tension stemming from issues such as product safety disputes will likely top the agenda.

Last March, U.S. senators pressed U.S. Trade Representative Ron Kirk to demand China pay for damage and health problems caused by contaminated Chinese-made drywall.

But Tenenbaum said the number of products recalls from China had improved markedly in 2010, lauding regulatory measures undertaken by China.

“We’re seeing an improvement in terms of the quality of products coming out of China,” she said, noting that the number of product recalls in 2010 dropped to 220, from 346 in 2008.

Despite this, Tenenbaum said enforcement in the provinces was still a challenge for her Chinese counterparts.

Slightly more than half of U.S. product recalls come from China, according to data provided by the agency.

Only one company, Germany’s Knauf Plasterboard (Tianjin) had agreed to remove the drywall and rewire 300 homes in a pilot program, Tenenbaum said.

The program excludes more than 5,000 homes tainted with drywall from other Chinese manufacturers, which argue they should not be required to face claims in U.S. courts.

Lennar Corp. , the third-biggest U.S. homebuilder, had to set aside millions of dollars to cover claims against it for the use of faulty Chinese drywall.

(Editing by Ken Wills) (Created by Robert Birsel)