Bush Seeking Limits on Product Liability : Congress: Commerce official tells Senate panel that changes in standards are needed to make U.S. business competitive in world markets.

The Bush Administration today challenged Congress to help American businesses compete in world markets by enacting a law limiting their legal liability for their products.

“If we are serious about addressing our nation’s competitiveness, we must address the excessive burdens placed on American business by our current liability system,” said Wendell Wilkie II, general counsel for the Commerce Department.

Wilkie’s comments came as the Senate Commerce consumer subcommittee today considered the first nationwide product liability law, which in past years has failed to win committee approval.

Wilkie said a federal law would make the rules for doing business “clear, consistent, uniform and predictable” and reduce “transaction” costs related to liability lawsuits involving potentially dangerous products.

Transaction costs are attorneys’ fees and other court costs associated with product liability lawsuits.

A 1988 survey of business administrators by the Conference Board, an organization of business executives, showed that 40% of U.S. businesses said product liability had a “major” impact on their operations, Wilkie said.

But Sen. Ernest F. Hollings (D-S.C.), chairman of the Commerce Committee, armed with a recent report by the General Accounting Office, disputed Wilkie’s claims.

Hollings said the study by Congress’ investigative arm showed most punitive damages awards are overturned on appeal by businesses of product liability cases.

“This goes to the heart of transaction costs,” Hollings said.

The participants in today’s hearing skirted the linkage of the Bush Administration’s backing of the bill with the debate over blocking development of new birth control products, including the French abortion pill.

A leading consumer advocate contends Administration officials, in arguing for such a law, are citing a government study that criticizes legislative and regulatory obstacles to U.S. production of RU486, the so-called abortion pill.

But David Beckwith, spokesman for Vice President Dan Quayle, said Wednesday that the Council for Competitiveness--which Quayle heads--”took no position” on whether existing laws create obstacles to the production of RU486 in this country.

President Bush called product liability standards a legislative priority in his State of the Union address.