- Associated Press - Tuesday, January 4, 2011

An Obama administration proposal aimed at preventing air shipments of lithium batteries from causing fires in flight is drawing fierce opposition from some of the United States‘ top trading partners, who say it would disrupt international shipping and drive up the cost of countless products.

The European Union, China, Japan, South Korea and Israel are lobbying against requiring air shipments of lithium batteries and products containing them to meet hazardous cargo regulations, diplomatic and industry officials told the Associated Press.

At a minimum the proposal could cost hundreds of millions of dollars and disrupt the flow of products such as cell phones, laptops, medical devices, water meters and electric car batteries, among others, these governments say.

But the Transportation Department contends its proposal would cost only $9 million a year. Pilot unions want the additional safety precautions, saying it’s only a matter of time before the batteries cause a plane crash.

The fight over the regulations is an example of how lobbying often works — out of sight and taking advantage of relationships, institutional knowledge and politics to promote well-heeled financial interests. And it’s become a test of the administration’s resolve to place safety first.

Lithium batteries can short-circuit and catch fire. Government testing has shown lithium-battery fires burn extremely hot and are exceptionally difficult to put out.

A United Parcel Service plane loaded with electronics crashed in Dubai in September. The two pilots, who were killed, reported a cargo compartment fire and smoke so thick they couldn’t see their cockpit instruments. Investigators suspect lithium batteries either started the fire or worsened it.

“We take a back seat to no one when it comes to safety,” has been Transportation Secretary Ray LaHood’s mantra.

But Michael O. Moore, a professor of economics and international affairs at George Washington University, said it’s not always easy to balance safety needs and trade interests.

“Certainly, any sensible administration would be careful when you are irritating that list of trading partners,” Mr. Moore said.

The final say on the regulations rests with the White House Office of Management and Budget. Last month, its officials held separate meetings with Japanese and South Korean government officials and industry leaders, and their lobbyists, even though the official comment period had been closed for months.

The meetings were arranged by the Office of the U.S. Trade Representative, a Korean official said, adding that the budget office’s final review now will likely be delayed by weeks and perhaps months. The official asked that his name not be used because he wasn’t authorized to speak publicly.

OMB spokeswoman Meg Reilly said the office doesn’t comment on the progress of regulations. U.S. trade spokeswoman Nkenge Harmon said trade officials advised the two governments how to arrange the meetings, but didn’t set them up.

Those talks came after the 27-nation EU, China, Japan, and South Korea opposed the proposal at World Trade Organization committee meetings in March and June in Geneva, calling it a potential barrier to trade, diplomatic and industry officials said. Those governments, and Israel, also raised the issue in talks with the U.S. trade office in Washington, officials said.

The regulation would raise the price of medical-device and water-meter exports to the U.S. by about 5 percent and create untold logistical headaches, Israeli diplomat Ohad Cohen said.

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