Here is info on trade standards long but interesting
Playing catch-up in global game of standards
European leadership in international standards and product testing has prompted Washington and industry to take action, scheduling a summit in effort to regain a lost dominance.
First of two articles BY AMY ZUCKERMAN
JOURNAL OF COMMERCE SPECIAL
Convinced that U.S. companies are falling behind as international product standards and testing systems evolve, Washington and industries are moving to regain the edge.
At stake is the pre-eminence of the United States as well as the very future of international standards and product testing, a billion-dollar industry that has become the hidden economic and political force in global trade.
On one front, industry and government officials are calling for a U.S. summit on standards in September.
On another, multinational firms are pushing for a realignment of the entire standards system and the third-party registration industry connected to that system.
For manufacturers, meeting regional and international standards such as ISO 9000 or Europe's CE Mark is an everyday struggle -- you either comply with a country or trading bloc's regulations, or you market your goods elsewhere.
But well-known standards such as ISO-9000 represent only the tip of an ever-expanding list of international standards and testing requirements, many of which are unknown to U.S. companies.
Foreign competitors and regional blocs often have developed standards to their advantage, using them to shut out U.S. companies, or in many cases, force them to make costly adjustments to their product or its packaging, U.S. executives complain.
Leading the push for a standards summit is Ray Kammer, director of the National Institute of Standards and Technology. The intent, Mr. Kammer says, is to develop "a coherent U.S. strategy and improve U.S. coordination (of standards development)."
The summit is scheduled for Sept. 23 in Washington.
Appearing before the House Subcommittee on Technology at an April 28 hearing on international standards as a barrier to free trade, Mr. Kammer took umbrage particularly with what he saw as the European Union's manipulation of standards.
"We have a coherent strategy of attack by Western Europe against us . . . we need to develop a U.S. strategy," he said. "We are beginning to hear more and more about instances in which American firms are finding the gates to trade being swung shut as compliance with standards developed overseas becomes the price of admission. Of equal or even greater concern is the system which too often puts U.S. firms in the position of having to demonstrate adherence through testing not just in the United States, but by duplicate, costly and time-consuming testing overseas," he said. (Mr. Kammer's testimony is available on the Science Subcommittee Web site: www.house.gov/science/welcome.htm. See "Hearings" and then "Technology Sub-Committee"). Mr. Kammer and other industry representatives contend that in the process of developing European standards to harmonize disparate national practices, some European countries are using the practice to stall or bar entirely foreign competition. EU officials deny such a strategy.
The notion is tricky because the issue of what constitutes a non-tariff barrier depends on your point of view. What can ensue is a lengthy geopolitical debate.
An issue of money
For multinational corpora- tions, adherence to the products standards also is a matter of money -- lots of it. An automotive parts supplier like AMP Inc. of Harrisburg, Pa., can expect to spend at least $1 million a year to maintain its 114 plant registrations (or certifications, as they are known outside the United States) to the International Organization for Standardization's quality assurance standard alone -- known as ISO 9000.
That doesn't include the thousands, perhaps millions, of dollars the company spends on meeting the environmental requirements needed to obtain the health and safety marks on products wishing to enter the European, Latin American or Pacific Rim markets.
Foreign governments also have created standards and established testing practices that subsequently became mandatory. For example, the EU and China bar goods that lack special health and safety marks. Since 1995, U.S. industry has complained repeatedly to the Office of the U.S. Trade Representative that these standards serve as non-tariff trade barriers. One well-publicized incident involved Japan and the potential misuse of ISO 9000. Tokyo eventually dropped its demand for special registration requirements for software manufacturers after U.S. companies petitioned USTR and the American National Standards Institution.
In another case, Dormont Manufacturing Co. -- a U.S. maker of rubber hosing for restaurants -- had earned the CE Mark for product health, safety and environment standards in Europe. Although the mark is supposed to cover all EU markets, Dormont has found its products barred from several European countries.
Dormont executives contend a European cartel opposes the sale of their products and has brought the force of national governments to bear on keeping the company out of England, Netherlands and France. The case is unresolved.
Enter the government
Incidents such as these have caused USTR and the Commerce Department to increase scrutiny of standards. USTR, for instance, now has staff members who track the development of standards and their potential emergence as trade barriers.
Experts such as Carl Cargill, until recently head of standards for Netscape, have warned U.S. industry for years that standards and related practices are the new guns in global competition.
Firms, and governments, that know how to play the game are dominating the new global order, Mr. Cargill says. Says Sergio Mazza, president of the American National Standards Institute: "You can't separate politics from standards. It's our frustration that companies don't realize that. Companies that do it (standards) well, laugh all the way to the bank. Huge sums of money are involved.
"Standards are an explicit part of suppliers' contracts with their customers. Not being involved with standards is like having your competitors' lawyer write the contract," he says.
Until the formation of the EU in the early 1990s, standards and testing practices (called conformity assessment at the time) primarily were industry-specific and voluntary. U.S. industry controlled the arena through its domination of world markets.
Standards a secret
During this halcyon period, many U.S. companies kept standards a secret. Mr. Mazza says ANSI has recorded several cases where the control of standards led to triumph in world markets and, conversely, how loss of such control has meant the opposite.
"Companies make hundreds of millions of dollars on intellectual property rights, or spend hundreds of millions retooling because they didn't play the standards game," he says. "The ones who have gotten hurt have come back to the standards process in a big way." U.S. industry's unwillingness to speak out, or even to participate in the international process, has made this country "selectively very weak," Mr. Mazza says. There are "strong" pockets, he says, referring to those sectors -- such as medical devices and heavy equipment -- that know the game and play it well.
Because of the high cost of meeting redundant standards and earning the appropriate certifications to market within regional trading blocs -- not to mention the lack of oversight -- even the World Trade Organization has joined in targeting standards as potential trade barriers.
In Washington, U.S. Rep. Connie Morella, R-Md., who chairs the House Technology Subcommittee, has "become increasingly concerned with reports, especially from smaller companies, that their products are being shutout of foreign markets because ISO standards have been developed which do not conform to U.S. standards."
Industry representatives who testified at the Morella hearings in April said they had difficulty in advancing U.S. interests to the ISO and to the European Standards Organizations.
In response, Rep. Morella says she plans to work with the National Institute of Standards and Technology and other standard-setting groups to ensure that the process is more favorable to U.S. businesses. Among the suggestions industry representatives made at the hearing was one calling on Washington to level the field within international standards bodies such as the Geneva-based ISO, where the United States has only one vote to the EU's 15.
More responsive
In the meantime, U.S. and European multinationals are trying to overturn the third-party registration system that has grown around international standardization.Fifty-eight multinationals from the telecommunications, aerospace and auto industries are calling for changes that would make the international accreditation and standards systems less costly.
The multinationals also want the system to be more responsive to their high-speed, competitive needs.
At the same time, Asian countries -- led by Japan -- have been threatening to set up their own standards system if the various international bodies do not become more responsive. And alternative organizations are starting to create their own standards.
Part of the problem is how to create a system that's open, accountable and able to resolve disputes equitably and with appropriate speed. It can take several years to develop an international standard. In the high-tech and telecommunications worlds, technology is usually obsolete long before then.
To date, no government body oversees the issue of accreditation, wherein organizations confer credibility on auditors and testing labs. Rather, registrars and testing labs offer certification and charge large amounts of money to do so.
An estimated 32 accreditation bodies operate worldwide, all creating rules of accreditation. Industry and accreditation bodies have formed the International Accreditation Forum to regulate such a system, but the forum is not directly accountable to any government body.
An issue of funding
U.S. and international standards systems also are facing funding constraints. Most, including ISO, the International Technical Commission and the International Telecommunications Union, raise money through memberships and the sale of standards they create. But this engenders a conflict of interest given the temptation to float a standard to earn money.
ANSI, which represents U.S. interests worldwide, receives it revenue from membership dues and standards sales and training programs. But declining membership and staff cuts reportedly have placed the institute's survival in jeopardy.
"There's no free lunch. You fund things one way or another. We've chosen the sale of documents, but undoing that would require an alternative source of funding," says Belinda Collins, director of NIST's Office of Standards Services.
Another issue is the role that government should play. Industry traditionally has kept government at arms length, but that approach may not be realistic in a global economy where economic blocs -- not industry -- are imposing standards
"I suspect we need a lot more discussion about what the role of government should be," says Ms. Collins.
TOMORROW: Trying to realign the standards industry.
A list of resolutions by the International Committee on Standards and Conformity Assessment can be found at The Journal of Commerce Web site -- www.joc.com. You can learn more about standards by calling up 209.36.115.125 index.html, a Web site written and edited by Amy Zuckerman. |
