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by Sharon McLoone
Money.CNN.com

Washington, DC — For toymakers, the world changes on Aug. 14. That’s the day a new regulation takes effect that small manufacturers say could force them out of business.

“I hear gut-wrenching stories every day, like the soldier’s wife who doesn’t think she can continue her homemade doll business or the Native American women who are worried that they’d run afoul of the law if they continue to make handcrafted authentic clothing for Native American children,” says Rosario Palmieri, vice president of regulatory policy for the National Association of Manufacturers.

Last year, in the wake of several high-profile toy recalls, Congress passed the Consumer Product Safety Improvement Act (CPSIA). Intended to ensure that children’s products are free of lead and toxic chemicals, the law has been taking effect in phases — and each new rule that kicks in brings with it a raft of unintended consequences.

Amy Sharp is exactly the kind of parent the law is intended to reassure. Two years ago, she made multiple treks to the post office to return 10 lead-tainted Thomas the Tank Engine toys to their manufacturer — toys her young son had repeatedly put in his mouth. The experience prompted Amy and her husband Joe, a trained carpenter, to launch a line of natural wooden toys for babies. Their venture, Little Alouette in Columbus, Ohio, has built a loyal fan base and helps keep the Sharps afloat financially.

But now the Sharps are worried that their popular Harper the Hippo teether will go the way of the dodo.

“We don’t think the entire law is a bad law, but we are a small and new business,” Amy Sharp says. “When it comes down to these testing and labeling expenses, we don’t think we’ll be able to thrive. I started this company to provide a safe alternative to mass junk out there, and here I am having to prove myself. It’s definitely a monetary issue.”

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