Does It Matter That E-Cigarettes Are Imported From China?

Senator Ron Wyden wants the government to track imports of e-cigarettes more closely.  Specifically, he has asked the U.S. International Trade Commission to create a specific reporting category for e-cigarette imports, which are not currently tracked as a distinct category from other small electronic devices.  But why does it matter where the e-cigarettes come from?

Senator Wyden never really answers that question in his letter to the ITC. 

The e-cigarette market in the U.S. is already a multi-billion dollar market and growing.  Unlike the traditional U.S. market for tobacco products where less than 6% of products are imported, it appears that most e-cigarettes are imported, as are the nicotine-containing liquids used in them.  Although the health risks of these products are not fully known, the FDA and [CDC] have warned of their use.  In 2014, the [FDA] proposed to deem e-cigarettes to be tobacco products under the [Tobacco Control Act].  Currently, because they are not a traditional tobacco product, e-cigarettes and liquids can be sold without restriction to vulnerable segments of the population.  CDC recently reported that use among middle and high school students tripled in just the past year from 4.5% of students in 2013 to 13.4% in 2014.  Nonetheless, at this point, these products are not subject to health-based regulation, unlike traditional tobacco products imported into the U.S.  Similarly, these products are not subject to unique import tariffs or federal excise taxes.

Because of the large and growing size of the e-cigarette market and because of the potential revenue, public health and economic impacts of e-cigarette and related imports, I respectfully request that the interagency 484(f) committee adopt statistical reporting numbers for e-cigarette devices, e-cigarette parts, and e-cigarette liquids and cartridges respectively.

He notes that e-cigarettes are increasingly popular, that their health risks are unknown, that the government wants to regulate them, and that they are being imported.  But that doesn’t explain how the product’s foreign origin could possibly impact whether and how the government should regulate the product’s use.  How will it help health regulators to know how many of the products are made abroad and in what countries?

I suppose import statistics could be relevant if the government wanted to impose  a tariff on e-cigarette imports.  But tariffs are by their nature discriminatory taxes—they exist to protect the domestic industry from foreign competition.  If you wanted to impose sin taxes on e-cigarettes, tariffs would be a silly way to do that.

The foreign origin of e-cigarettes may not legitimately impact the justification for regulation, but it could certainly impact the political calculus driving regulatory efforts.  As Wyden noted, the vast majority of tobacco products sold in the United States are made in the United States, while “most e-cigarettes are imported with upwards of 90% coming from China.”  As bootleggers and Baptists push for regulation, the fact that these tobacco alternatives are made by foreigners and competing against domestic products virtually guarantees that regulations will benefit the tobacco industry at the expense of e-cigarette users.