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Appendix C The European Community: Will Standards Open or Close the Market in 1992? Lit John Rue EXE:CUTIV1E SUMMARY The full ramifications of Europe 1992 are difficult to determine at this stage, the overall effects, good or bad, will affect European interests as well as U.S. ones. The development of a sense of hysteria in the United States about 1992 is counterproductive and tends to create a United States versus Europe polarization that is not necessary. It is also positioning standards making as a key trade issue when, so far, it is not. As a result, the U.S. government is being drawn into the private sector standards-making process unnecessarily and the private sector voluntary standards-making process is, likewise, getting too involved in areas best dealt with by the government. Separation and judicious coordination of government and private sector efforts is needed. In the area of information technology, international standards are' a way of life, and the continued need for them should discourage possible attempts to use standards as non-tariff trade barriers. International infor- mation technology standards will continue to open the market in 1992, and The views expressed in this paper are solely the personal views of the author and are not intended to represent those of any committee or organization with which the author is associated. For further information the author can be contacted at L. John Rankine Consulting Services, 231 Bayberry Lane, Westport CT, 06880. Tel: 20~226 0657. Fax: 20~222-79 78. 59

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60 the nations of the European Community will play a key role in their devel- opment. One of the problems most likely to occur is delay in achieving the needed harmonization of certification and conformance testing schemes in areas such as open systems interconnection. The value of the vendor-user relationship in achieving working systems rapidly and at the lowest cost needs to be much better understood and accepted. While it is not necessary to restructure the U.S. voluntary consensus standards- making system, it requires considerably more support from all participants and several refinements to satisfy the needs of information technology standardization and to make the United States a more effective contributor. Industry, government, and users must provide greater financial support and bear their fair share of the costs. Information technology interests are poorly represented at the management level in both the national and international standardization structures. This problem must be addressed to retain the respect and allegiance of the information technology industry and users. Most of all there is a critical need for U.S. industry, users, and government as well as the major U.S. standards-writing bodies to rally behind a voluntary consensus standards-writing system in which they all play and pay for their proper share and in which they are fairly represented. If this national need is not met, then the problems for U.S. competitiveness in 1992 as far as standards are concerned will not arise so much in Europe as they will at home. EUROPE 1992 It is currently fashionable to tale a lot about Europe 1992. Indeed, there is so much talk about Europe 1992 that the United States may well be developing a national hysteria on the issue that does not serve the national interest. At one end of the scale the pundits proclaim an era of discrimination against U.S. goods and services, at the other end we are assured that all the Europeans are doing is what the United States did years ago, namely, eliminate trade barriers among the states by "federalizing" trade requirements. Both are facile and specious points of view. First, Europe as an entity cannot be equated to the United States. Nor can the member countries of the European Community, with all their differences in culture, history, language, and politics, be equated to the states of the United States. Furthermore, neither the United States nor the European countries themselves know what is going to be the ultimate outcome of the very understandable desire of the European nations to eliminate trade barriers and facilitate the free flow of goods and services. Indeed, whatever the result of 1992, the ultimate effects on European-based companies may be just as good or bad as those on U.S.-based companies. At present, we do not know. So what are those in the U.S. standards system to do?

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61 First, they should take time to understand what Europe 1992 is all about and what it is not about. It all began with the Treaty of Rome in 1958. Basically, the idea is to have in place by 1992 all of the agreements to dismantle the technical and physical barriers between the member states. The physical barriers refer to the movement of goods and people; and the technical ones refer to standards, procurement, financial information services, telecommunications, etc. This does not mean that on January 1, 1992, Europe will flip from one state to another like some binary switch. It will take years to implement all of the agreements, perhaps even a couple of decades. What appears certain now is that Europe 1992 is going to happen, and many European expectations are likely to be fulfilled. Among these are a faster rate of innovation, improved productivity, lower prices, reduced inflation, and more " European companies " with economies of scale that are not tied to being champions of the national cause. In all of this the information technology industry is viewed as the most vital and it is understood that the market must be open to succeed. International information technology standards have been and will continue to be a crucial need, and Europe 1992 should provide added impetus to their continued development. From a standards viewpoint, the structure exists to interact with Eu- ropean developments on a sensible and mutually beneficial basis. It is not necessary to rush to open offices in Brussels or to engineer U.S. gov- ernment involvement with the regional European standards bodies. How would U.S. standards bodies feel if they had to deal with European gov- ernments instead of their peers in Europe? How would they feel if the European standards bodies were to open offices in Washington instead of working through the U.S. organizations? Also, it exacerbates the Eu- rope 1992 issue when the United States is perceived as wooing Europe one week and apparently trying to form Pacific Rim alliances against Eu- rope the next. As far as standards issues are concerned, the International Organization for Standardization/International Electrotechnical Commis- sion (ISO/IEC), and International Telecommunication Union/International Consultative Committee for Telephone and Telegraph (ITU/CCI11) mech- anism is best for reaching international accords. If it should fail, then there is the General Agreement on Tariffs and Made (GATE Standards Code. Finally, it is not the job of the private sector standards developing bodies to do the work of governments nor for governments to do what is done best by the national standards bodies. The best course is to work through and continue to strengthen the well- established ISO/IEC, and ITU/CCIIT standards mechanism and rapport both in acquiring information about Europe 1992 and in anticipating and resolving problems that may arise calling upon the GATE Standards Code if need be. 1b do otherwise is to weaken and seriously damage a fine

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62 international rapport that has been built up over years among the ISO/IEC member organizations. In a nutshell, the U.S. private sector and the U.S. government would do well to keep their powder dry, work their respective sides of the street, and exchange information and coordinate strategies as needed on a thoughtful and cooperative basis without getting in each other's way. The challenge of Europe 1992 to U.S. competitiveness in world markets is not going to be met by handwringing over imagined standards issues. It has to be met by educational capability, innovation, product and service excellence, intelligent and direct involvement, and quality salesmanship in a European community that is going to be increasingly populated by a lot of people making the most of all of these qualities in a huge marketplace. THE INTERNATIONAL STANDARI)S STRUCTURE A major step forward for information technology was taken when the IEC and the ISO, after several years of study fraught with political as well as technical considerations, formed the IEC/ISO Joint Technical Committee known as JTC1. Earlier this year I reported on the progress of JTC1: Both the IEC and the ISO should take pride in having established JTCI. The first JTCI Plenary took place in Tolyo from November 17 to November 20, 19B7, and was attended by 98 delegates from 20 countries. Subsequently there was a JTCI Advisory Group meeting in Washington, D.C., in the United States on April 20 to April 22, 1988, with 16 countries represented. A second Advisory Group meeting took place in London from December 7 to December 9, 1988, with 18 countries attending. The second J]Cl Plenary was held in Paris on June 6 to June 9, 1989. It is important to note that the national representations at JTCI Plenary meetings and Advisory Group meetings comprise executives from national standards bodies, user groups, governments, manufacturers, academies and others. Furthermore, the meetings are attended by representatives from key regional bodies and international organizations. Thus when JTa reaches a unanimous conclusion on a matter such as its scope, it is reflecting not just the opinion of a few people: it is stating a truly international position. This latter fact has been of great utility to important international groupings such as the ITU, CCII1; EEC (European Economic Community), etc. Instead of having to look in two directions, namely at the IEC and the ISO, they now have to look in only one. Equally important is the fact that major regional activities in the infor- mation technology field such as Standards Promotion and Applications Group (SPAG), Corporation for Open Systems (COS), and Promoting Conference for Open Systems Interconnections (POSI) need a central point of international competence to harmonize the standards profiles and test suites which are vital to the successful interconnection of information technology equipment worldwide. Indeed, if JTCl did not exist IEC and ISO would have to create it in order to survive in sensing the needs of nations in information technology standardization. As a consequence of the pace of technological advancement in the information technology (II) field, JTC1 is responsible for the most active international standards program. There are 16 Subcommittees and 75 working groups responsible for over 700 projects. There are approximately 270 published

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63 standards, 125 Draft International Standards, 150 Draft Proposals and 175 working drafts which eventuate will lead to international standards. Although the size of this program and its associated workload pose a mapr challenge for JTCI, its Subcommittees and Secretariats, it is interesting to note that a marked reduction has already been achieved in the time required to process documents from new work item stage to publication. In the early 198(k; it would have taken no less than seven years to process an IT standard. Today, owing to improved procedures and management control, we are averaging less than four yeam for even the most complex systems standards. In addition, the Fast Clack Procedure has proven extremely efficient in obtaining world- wide agreement within 1~18 months on existing standards developed by other organizations. An on-line accessible database containing status information on all JTCI projects as well as meeting schedules is expected to be available later this year. Increased usage of standard graphics markup language (SGML3 will further speed up publication schedules. Further improvements are anticipated with increased mechanization. The point on increased mechanization is important in that uniform methods for the publication and speedy delivery and updating of informa- tion technology standards, profiles, and test suites is becoming increasingly critical. The ISO and IEC cooperation on JTC1 should be continued and supported to the fullest, as should the JTC1 cooperation with the CCI1T and European Computer Manufacturing Association (ECMA), etc. In the case of the United States, this requires coordination between the private and government sectors to ensure that actions with the nontreaty bodies such as the ISO and IEC are consistent with those being taken with treaty organizations such as the ITU/CCITT and the EEC. The ISO in particular should be encouraged to draw more heavily upon the expertise resident in its key secretariats and committee chairman. Currently, the ISO Council, the governing body of ISO, and its executive committees are devoid of any management expertise from the information technology sector. Indeed, the current management experience is drawn from those who are understandably more concerned with standards publi- cation, distribution, and royalties than with in-depth understanding of the end purpose and utility of the standards being produced. Accordingly, some of the management decisions and requests of those writing the standards and bearing the costs are counterproductive. It has been suggested outside of the United States that it would be better for JTC1 to break free from ISO and IEC because it brings together truly national delegations from the nations involved with information tech- nolo~ standards, is more closely focussed, and has a management structure and planning function composed of those who understand the technology and the use needs. Also, JTC1 activities are already larger in than those in the remainder of ISO and IEC if information technology activities were to be removed from them. My personal view is that the current structure should be maintained

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64 for the present It has been a tremendous task to bring about ISO/IEC JTC1, which is working well, and we should give time for further necessary adjustments to be made. It is important to understand, however, that JTC1 may someday reach a different opinion, but that is for the committee and others to decide. So far, block voting by nations in the area of information technology standardization, in ISO and IEC has not been a problem and should not be made an issue until it does. The possibility exists, however, that it may arise in the future as an outcome of Europe 1991 Should this occur, it could destroy the efficacy of the current system and require an entirely new approach to meeting the needs of producers and users for information technology standards. Most likely this would be a user-producer-based system completely outside of the current nationaVinternational structure. In its most probable form it would be a supplier- and user-based system that is completely self-supportive and that produces standards proposals for ultimate ratification by the standards developing bodies but that is otherwise completely independent of them. Finally, there has to be a better understanding of the fact that the international certification and conformance requirements for information technology systems are vastly different from those for ensuring that dishes will not melt in a dishwasher. The expertise and resources required for open systems testing and conformance are enormous and are often spread around the world in the many laboratories and manufacturing plants of the various manufacturers involved. Furthermore, there are great legal exposures. For example, consider the legal implications of a certifying body that certifies a system that permits a misdirection of millions of dollars in a banking system or the mid-air collision of two fully loaded passenger aircraft. It has to be realized that in this highly specialized and skill- dependent area, the vendor-user relationship is the key to success and it should not be unnecessarily impeded by bureaucratic schemes that are incapable of doing what users and vendors can do best for themselves and, indeed, that may retard the success of their efforts. The current international structure does not need to be replaced, but it does need to be refined and improved; otherwise, it will lose its relevance and support, both of which are already being eroded. THE U.S. STANI)ARDS STRUCTURE The current apprehensions over Europe 1992 have rejuvenated na- tional debate over the question of whether or not a new national standards structure is needed. In this regard the approach of having a National Standards Council analogous to the Standards Council of Canada is being discussed.

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65 While any country can always learn from and even adopt the methods of another, the argument does not necessarily follow that because it works well In one country it should be adopted in this one. One way to help decide what, if anything, needs to be done differently is to wipe the slate clean and examine the question of what structure could best serve national needs in terms of today's environment if we did not have the American National Standards Institute. Based on my own observations of the U.S. standards scene and the national character and culture of the United States it would appear vital to construct something along the following lines: 1. A national standards institute largely supported by private sector industry and organizations with a board of directors that truly represents, in proper proportion to the support given and the work performed, the needs of U.S. industry, users, government, labor, and general interest groups. The fee structure would have to ensure that all who benefit should bear their fair share of the costs. 2. The institute would provide the national coordination procedures under which voluntary consensus standards are written and provide the U.S. interface to the ISO and the IEC as well as other appropriate international and regional bodies. 3. In addition to a properly representative board of directors the institute would have a properly representative executive committee, finance committee, and strategic planning committee. These committees would draw on advice from a general advisory council open to all institute members and an international advisory council appointed by the institute to bring together the best available expertise in international affairs and strategy from whatever source. 4. As needed (e.g., for information technology) there can also be created industry sector councils open to all institute members interested in a specific industry to assist the institute in serving the needs of that industry. 5. There should be a standards associations council open to the standards-writing associations to promote the unity of national and interna- tional purposes and advise the institute accordingly. Associations providing key services such as secretariats would also participate. 6. There should be also a government advisory council to advise and coordinate with the U.S. Government on key issues. This council would draw upon the best expertise from all sectors, as needed, for the issue or issues at hand. 7. The chairs of the above councils should report directly to the institute's board of directors and advise the executive committee of the board of directors as needed.

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66 The underlying purpose of the institute would be to serve the national and international interests of the United States in the voluntary consensus standards-making process and to be officially recognized and supported as such by all participating U.S. interests, including those of the U.S. government. An obvious reaction to the above proposal is that the pieces to imple- ment all of what has been listed above already exist. If that is the case, then all who have the responsibility for the pieces should pick them up, put them together, and make them work. When that is done, the United States can be an effective international force in working competently with the other nations, including those of the European Community, to ensure that standards will continue to open the market worldwide in 1992 and beyond.