Selecta, a German toymaker, carves whimsical cars and characters from native woods, colors them with vegetable dyes and coats them in silky beeswax. No lead, no toxic varnishes. Not even waste -- the company heats its factory with leftover woodchips. Just the kind of toymaker in demand after scares about tainted playthings from China. But this holiday season, Selecta is preparing to pull out of the U.S. market. Its problem, executives say, is consumer legislation that is adding crushing costs to selling toys in America. The law, which takes effect Feb. 10, was passed by Congress in response to recalls...