The latest horror stories about lead-laced toys imported from China may stir Congress to pass legislation providing overdue funding and enforcement authority to the beleagured Consumer Product Safety Commission. But testimony given at a House hearing Thursday raised the prospect that the World Trade Organization could overturn new laws designed to safeguard Americans from unsafe Barbies and other imports.

Lori Wallach, executive director of the D.C.-based advocacy group Public Citizen, testified to the House Energy and Commerce Subcommittee that while U.S. law enforcement is part of the problem the “root cause is U.S. trade policies.” Wallach noted that following the 2000 decision to grant China most favored nation trade status (which paved the way for China’s entry into the WTO), more than 80 percent of all imported toys are now being made in China.

Wallach asserted that any serious efforts to regulate these toys and other Chinese products are likely to be challenged by China in the WTO court. So far the U.S. has lost 86 percent of all cases brought beforethe WTO; the majority of them were claims that America’s consumer and environmental safeguards were too restrictive

Fellow witnesses amplified Wallach’s testimony and argued that the United States, in addition to hiring more port inspectors, needs to find a way to ensure Chinese factories are manufacturing safe products.

“Chinese officials estimate that 50 percent of exported products do not even comply with Chinese laws,” said Mary Teagarden, who is a professor at the Thunderbird School of Global Management, a top international business school, and has visited Chinese factories. “Their system relies on self-regulation and we found that this does not work.”

For its part, toy industry has been sending out conflicting signals. At yesterday’s hearing, toy company officials called for establishing better safety standards in China. Today, Mattel said that it was the company’s own design flaws, not Chinese factories, that were responsible for unsafe toys. Whoever is to blame for hazardous toys, if Wallach and others are correct, the effort to make toys safe could end up sacrificed on the altar of free trade, with trade rules–that were backed by both the Clinton and Bush II administrations–trumping laws that protect kids.