John, there have been more studies on this and the laws have been refined for exemptions due to the nature of the phthalates and how they are passed. They have ruled that in the use of clothing, it's different than the original intended purpose. If an item is less than 5cm squared in dimension, then it can be placed in a child's mouth, and this is what is attempting to be prevented with phthalate exposure. This is from the CPSC's site:
1. Fabric Materials as a Barrier to Accessibility of Component Parts
Comment: One commenter states that fabric should not be considered a barrier, regardless of the size of the component, because children could be exposed to phthalates through the fabric.
Response: As provided in CPSC staff's briefing memo “Guidance for Evaluating Accessibility of Phthalate-Containing Component Parts” dated July 13, 2012, CPSC staff is not aware of any studies that show the propensity for phthalates to move from a phthalate-containing material through an intact, non-phthalate-containing material, such as an outside covering, where it could eventually reach the outside of a product. Furthermore, CPSC staff's review showed that the non-vapor passive movement of phthalates within a product, if it exists, would be exceedingly slow and would never account for any more than a small, negligible fraction of the original phthalate content of the inaccessible phthalate-containing part. Based on CPSC staff's analysis, the Commission finds that, in most cases, phthalates that are inaccessible would not result in physical exposure to phthalates, unless it is reasonably foreseeable that a component part will become physically exposed through mouthing, swallowing, breaking, or other children's activities, and aging of the product. Accordingly, a children's toy or child care article that is, or contains, a phthalate-containing part that is enclosed, encased, or covered by fabric and passes the appropriate use and abuse tests on such covers, is considered inaccessible to a child, unless the product, or part of the product, in one dimension, is smaller than 5 centimeters; i.e., a fabric-covered component part is not inaccessible if the product, or part of the product, can be placed in a child's mouth.
So the exemption goes on to clarify what is a child care article:
The term “child care article” means a consumer product designed or intended by the manufacturer to facilitate sleep or the feeding of children age 3 years and younger, or to help such children with sucking or teething.
(b) Section 108(d) of the CPSIA provides that the prohibitions in paragraph (a) of this section do not apply to component parts of a children's toy or child care article that are not accessible to children through normal and reasonably foreseeable use and abuse of such product, as determined by the Commission. A component part is not accessible if it is not physically exposed, by reason of a sealed covering or casing, and does not become physically exposed through reasonably foreseeable use and abuse of the product, including swallowing, mouthing, breaking, or other children's activities, and the aging of the product.
So it appears to me that the firestorm that arose when the law was set forced them to redefine what constitutes a child's article. The stroke was too broad, but has been refined. According to this, it appears there is no need to have testing on standard clothing items for children 3 and under.
If someone sees something different than me, let us know:
Children’s Toys and Child Care Articles Containing Phthalates; Final Guidance on Inaccessible Component Parts, 16 CFR Part 1199, FINAL RULE | CPSC.gov