I've been trying to sort through this for our vendors at the local farmers' market.
From how I understand it - even if the raw materials you use are ok - there is NO provision in the law, as it is, to let you off the hook. (Personally, I'm hoping where this goes - that as long as we use approved materials, the end result will not need to be tested)
I'm taking a wait and see attitude - but I've already seen some of the results. I recently tried to buy a special bike for a grandson that is made in Germany. They were sold out and have no plans to restock because the increase in price will not make it feasible. This is too bad. I love european toys. Although they have higher safety regs than the US, this law covers them too - so the already expensive toys will be higher. I've heard some of them have decided to just not ship here anymore.
This is going to be a mess until they figure it out. I'm glad that I haven't spent the winter making dolls to sell at market this year.
Lastly - if they don't do something, it wouldn't suprise me if the 'child-related' vendor is no longer welcome at shows or farmers' markets. They wouldn't want to risk the fine which according to what I've read has recently been raised to $100,000.