4
International Trade

Over the past decade, rising exports have become a principal source of U.S. economic growth. The expansion of global trade in the postwar era has promoted higher standards of living worldwide. Today, many nations around the globe have made great progress in moving toward market systems based on the principles of open trade and investment. For U.S. exporters seeking to take advantage of expanding opportunities, the relationship among standards, conformity assessment, and global trade is increasingly important. Since international trade constitutes a growing share of highly specialized production and services in the U.S. economy, for example, barriers to trade reflected in discriminatory standards and conformity assessment systems threaten to retard U.S. economic progress.

Considerable progress has been made since the Second World War in lowering international trade barriers, particularly those associated with tariffs. As tariff barriers have decreased, however, the relative significance of non-tariff barriers to trade, including those related to standards, has increased. In 1994, a major multilateral trade agreement was concluded in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). The Uruguay Round made significant progress in addressing the rise of non-tariff trade barriers. Strengthening of GATT provision on standards and conformity assessment-related barriers to trade, combined with the establishment of new enforcement mechanisms through the World Trade Organization (WTO), indicate the potential for significant progress in facilitating U.S. exports and future economic growth.

Realizing the full benefits of these opportunities, however, will require creative, forward looking, and aggressive U.S. trade policies. This will involve



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 103
--> 4 International Trade Over the past decade, rising exports have become a principal source of U.S. economic growth. The expansion of global trade in the postwar era has promoted higher standards of living worldwide. Today, many nations around the globe have made great progress in moving toward market systems based on the principles of open trade and investment. For U.S. exporters seeking to take advantage of expanding opportunities, the relationship among standards, conformity assessment, and global trade is increasingly important. Since international trade constitutes a growing share of highly specialized production and services in the U.S. economy, for example, barriers to trade reflected in discriminatory standards and conformity assessment systems threaten to retard U.S. economic progress. Considerable progress has been made since the Second World War in lowering international trade barriers, particularly those associated with tariffs. As tariff barriers have decreased, however, the relative significance of non-tariff barriers to trade, including those related to standards, has increased. In 1994, a major multilateral trade agreement was concluded in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). The Uruguay Round made significant progress in addressing the rise of non-tariff trade barriers. Strengthening of GATT provision on standards and conformity assessment-related barriers to trade, combined with the establishment of new enforcement mechanisms through the World Trade Organization (WTO), indicate the potential for significant progress in facilitating U.S. exports and future economic growth. Realizing the full benefits of these opportunities, however, will require creative, forward looking, and aggressive U.S. trade policies. This will involve

OCR for page 103
--> work to support (1) implementation of the multilateral standards agreements under the WTO; (2) innovative new efforts to link standards and U.S. export promotion services; (3) policies and programs to ensure systems surveillance in areas of growing significance to trade, especially environmental management systems standards and national conformity assessment regimes; and (4) possible aggressive, unilateral use of U.S. law to counteract unfair foreign trade practices in standards. One of the most significant advances in the Uruguay Round, for example, was the expansion in the number of countries brought under disciplines on standards first negotiated in the Tokyo Round of the GATT. Many U.S. trading partners, especially the developing nations of Asia and Latin America, will require assistance in constructing modern standards and conformity assessment regimes. By providing this assistance, the United States has an opportunity to support successful implementation of the GATT, as well as U.S. global export expansion and economic progress. In the context of these developments, issues concerning standards and conformity assessment have moved to a central position in future U.S. foreign economic policy. This chapter outlines the link among product and process standards, global trade, and U.S. economic interests. As discussed in this chapter, our national trade policy objectives are served through the removal of technical trade barriers in key export markets; participation in international, mutual recognition of conformity assessment systems; and expanded efforts at export promotion through cooperation and assistance to standards bodies in existing and emerging U.S. export markets. Standards, Trade, And U.S. Economic Progress Trade and the expansion of global exports are directly linked to U.S. economic vitality and future standards of living. Exports provide for domestic economic growth, increased labor productivity, and creation of jobs in the manufacturing and service sectors that pay wages well above the national average.1 Future U.S. economic success, as a result of these factors, centers to an increasing extent on removing barriers to international trade, as well as creating innovative export promotion programs to help expand markets for U.S. goods and services overseas. Standards and the Economic Benefits of Trade Expansion There are many indicators of the importance of exports to the domestic economy. U.S. exports have grown at a rapid rate as a percentage of Gross Domestic Product (GDP) over the past decade. Goods and services exports rose from 7.5 percent of GDP in 1986 to approximately 13 percent in 1993.2 Merchandise

OCR for page 103
--> exports alone rose from 5 percent of GDP in 1984 to 8 percent in 1993. Total U.S. exports have more than doubled over the period 1985-1993, from $218 billion to $464 billion. In particular, merchandise exports of advanced technology products have risen sharply. Many of these exports are directly affected by international standards, as well as technical regulations of governments overseas. Strong export growth in advanced technology goods resulted in a U.S. trade surplus in these accounts at $25.8 billion.3 This surplus has offset trade deficits in non-advanced technology products each year since 1982. The estimated non-advanced technology U.S. trade deficit was $141.6 billion in 1993, with a total merchandise trade deficit estimated at $115.8 billion. Moreover, advanced technology product exports rose as a share of total merchandise exports to 23 percent in 1993. The rapid expansion of exports has played an important part in U.S. employment growth over the past decade. As of 1990, there were 7.2 million U.S. workers employed in export-related jobs. This represented 20 percent of the total 10.4 million job increase in U.S. employment over the period 1986-1990. Moreover, jobs linked to exports paid wages on average 17 percent higher than the national average for all U.S. workers in 1990 ($11.69 versus $10.02, respectively).4 It is clear that to the extent the U.S. continues to pursue a trade policy focused on the opening of global markets and trade expansion, such a policy will provide greater employment opportunities in high-paying jobs. The benefits of open markets and specialization are important to multinational firms with operations across the globe. They also benefit small and medium-sized firms, whether they export directly or supply components that other firms incorporate into exported products. As outlined in Chapter 1, standards help foster economies of scale in the production process. Economies of scale through open trade allow wide consumer choice and increased purchasing power and consumer welfare. Access to foreign markets also maximizes benefits available through the globalization of production, including access to diversified sources of technology, manufacturing advances, and information on best practices in marketing, sales, and service. In addition, through increased market size on a global scale, firms are able to spread the costs of investment in research and development across larger numbers of sales. In sum, open trade provides the platform through which firms and nations can leverage the benefits of competitive forces in support of long-term economic advance, consumer welfare, and productivity growth. Standards and conformity assessment are closely linked to these benefits of international trade. Standards development systems and the infrastructure necessary to ensure conformity to standards—including testing, certification, and laboratory accreditation—are an important part of modern industrial processes, as discussed in previous chapters. In general, the benefits of standards observed in the domestic economic context increase in proportion to their application on an increasingly larger, international scale.

OCR for page 103
--> Efficient international standards regimes accomplish several important goals. These include facilitating the diffusion of innovative technologies and production techniques, as well as supporting global economies of scale.5 When different countries or regions have different technical standards for essentially the same product, manufacturers selling into multiple markets are forced to produce multiple versions of the same product. For example, automobile production lines must be switched between right-hand and left-hand drive cars for the United Kingdom and continental Europe. Consumer electronic devices and household appliances must be adapted for different power supplies in the United States and Europe—110 and 220 volts, respectively. By fragmenting the prospective markets for products that could otherwise be produced and marketed on a global scale, the lack of internationally harmonized standards reduces the economic advantages of free-flowing international markets. Harmonization entails the revision or interpretation of different standards in such a way as to render them equivalent. International harmonization of standards enables manufacturers to produce more efficiently for a larger, combined market. In addition to promoting economies of scale to facilitate multiple export markets, common standards and conformity assessment procedures benefit manufacturers in other ways. Standards convey information to customers about products and services in a technically precise, consistent manner, as outlined in Chapter 1. This is an important benefit when manufacturer and customer are separated across linguistic, cultural, and geographic distances. Well-organized, open, and transparent standards systems also promote compatibility of key components in national infrastructure, such as telecommunications and computer networks.6 Finally, standards and technical regulations can operate to support public welfare by promoting health, safety, and environmental goals. These affect not only the quality of domestic industrial production, but also the operation of international markets and U.S. export success within those markets. Conformity assessment procedures are also directly linked to the efficient functioning of international markets. Even when standards in different countries have been harmonized, the free flow of trade is inhibited if products are subjected to redundant testing and certification requirements in multiple export markets. When conformity assessment procedures performed within the United States are not accepted as valid by regulators or purchasers in foreign markets, U.S. exporters are forced to ship products abroad for costly, wasteful retesting. They also may have to support the costs associated with bringing foreign inspectors to visit and inspect U.S. manufacturing facilities. When nations, states, or local governments here in the United States refuse to accept competent and scientifically sound testing and certification performed abroad without reasonable justification, the costs of imported goods are raised in a discriminatory manner. This is true whether the underlying standards for a product are harmonized between an exporter's home and final destination.

OCR for page 103
--> Cost of Protection: Non-Tariff Barriers to Trade Trade protection that restricts competition or restrains circulation of products in international markets reduces global efficiency and slows economic advance. A number of policy tools are used by nations to shelter firms from international competition.7 These include high tariff rates; voluntary export restraints; production subsidies; import quotas; and a wide range of non-tariff barriers, including those related to standards and conformity assessment mechanisms. Standards that discriminate against imports and nontransparent or discriminatory requirements for showing conformity to standards can create significant non-tariff trade barriers. The economic harm caused by trade discrimination and protection of domestic markets is well documented.8 Most empirical research and data on the costs of instruments to either block imports or subsidize exports have focused on indirect measures of trade protection. Their effect on increased consumer prices and reduction of global wealth is clear. A recent study of the cost of protection in textiles, apparel, autos, and steel, for example, found that removal of all quantitative restrictions, such as quotas, on imports into the United States would result in a 0.5 percent increase in national income. This increase would be worth $25 billion to $29 billion dollars. The same study found that the reduction in welfare caused by U.S. non-tariff barriers in these sectors is equivalent to that which a 49 percent tariff would produce.9 Great progress has been made in reducing worldwide tariffs since the Second World War. Prior to 1947 and the establishment of the GATT, for example, average weighted tariffs on goods in the industrialized nations stood at 35 percent. A tax of $35 per $100 of products traded before 1947, therefore, was paid by final goods producers on imported components and by consumers of finished products. After the Tokyo Round of GATT trade negotiations ended in 1979, average tariffs in the major trading markets of the United States, Japan, and Europe were lowered to about 3.8 percent. The Uruguay Round of negotiations completed in 1994 cut tariffs in major industrial markets to zero in many sectors. These include construction, agricultural, and medical equipment; pharmaceuticals; paper; toys; and furniture, among others.10 Tariff cuts ranged from 50 to 100 percent on semiconductors and computer components. The agreement also committed many emerging, newly industrializing markets to cut tariffs sharply in these sectors. Although global tariffs have been reduced, there has been a rise in the use of other mechanisms to deny access of goods to national markets. Whereas the extent and costs of traditional forms of trade protection are well documented, less attention has been devoted to analyzing or measuring the effects of non-tariff barriers to trade.11 This is particularly true of analysis on the trade effects of discriminatory standards and conformity assessment procedures.12 It is clear, however, that non-tariff barriers raise costs of production in a manner similar to

OCR for page 103
--> tariffs, by increasing the price of imported materials and components and reducing a manufacturer's ability to profit from economies of scale. At the same time, they block more competitive and efficient producers from reaping the benefits of superior products through expansion of sales in export markets. In many cases, especially in the capital goods sector, the world's most efficient and competitive producers are U.S. firms. Although the definitions of non-tariff barriers varies among academic studies, the consensus of several studies is that they are spreading worldwide.13 A study by the World Bank in 1987, for example, found that the share of imports from industrialized nations subject to ''hard-core" non-tariff barriers in the Organization for Economic Cooperation and Development (OECD) nations rose from 13 to 16 percent from 1981 to 1986. These hard-core barriers included import prohibitions, quantitative restrictions, voluntary export restraints, variable levies, restrictions on textiles and apparel, and nonautomatic licensing.14 Since 1970, the United States, Europe, and Japan have been the most active in implementing these restrictions. To the extent that increases in non-tariff barriers offset the gains achieved in the past few decades from lowering tariffs, this trend is a cause for serious concern. To the detriment of sound public policymaking, particularly as it relates to future trade negotiations, there have been no comprehensive analyses of standards and conformity assessment systems as non-tariff barriers to trade. There is a significant and growing need for academic and policy-oriented studies and research in this area. Within the context of the work related to the general subject of non-tariff barriers to trade, however, there is evidence to indicate that significant barriers to global trade are embedded in existing standards and will continue to grow in complexity. This conclusion is based, in part, on observations such as the following: (1) standards that differ from international norms are employed as a means to protect domestic producers; (2) restrictive standards are written to match the design features of domestic products, rather than essential performance criteria; (3) there remains unequal access to testing and certification systems between domestic producers and exporters in most nations; (4) there continues to be a failure to accept test results and certifications performed by competent foreign organizations in multiple markets; and (5) there is a significant lack of transparency in the systems for developing technical regulations and assessing conformity in most countries. Moreover, observations from U.S. government and industry sources indicate that domestic firms continue to confront problems associated with systems in overseas markets, as discussed in the following section.15 Barriers to Trade in Key U.S. Export Markets The National Trade Estimate (NTE) Report on Foreign Trade Barriers, produced annually by the Office of the U.S. Trade Representative (USTR), outlines

OCR for page 103
--> foreign use of discriminatory standards, testing, and certification requirements as barriers to U.S. exports.16 In a number of foreign markets, U.S. goods are subject to more stringent standards and testing requirements than domestic products (for selected examples, see Table 4-1). Many of the barriers to U.S. products outlined in the NTE reports affect sectors in which U.S. industry enjoys substantial comparative advantages over foreign competitors. This is true, for example, in the capital goods and high-technology sectors, including transportation equipment, electrical machinery, medical devices, biotechnology, and pharmaceutical products, among others. In the absence of trade barriers, these are sectors in which U.S. firms have strong potential to gain export market share. One example of foreign technical regulations as unfair barriers to U.S. exports is the case of the European-wide ban on use of livestock growth hormones.17 In 1989, the European Union (EU) banned the import of meats and meat products, except pet food, produced with the aid of natural or synthetic growth hormones. The U.S. considers this a trade violation. An increasing number of U.S. producers employ these hormones. There is no internationally recognized scientific evidence to support EU regulation. The ban eliminated most U.S. red meat and meat product exports, causing $97 million per year of economic harm. In retaliation, the United States imposed an equal value of tariffs on EU agricultural products and brought the dispute for resolution to the GATT. As of September 1994, the EU has successfully blocked resolution of the GATT case. However, new dispute procedures instituted in the Uruguay Round agreements, discussed later in this chapter, will lead to more rapid resolution of cases such as this. Data on the total volume of global trade subject to conformity assessment regulations are limited. Increased attention by U.S. government agencies to data gathering and analysis would be of significant benefit in formulating sound U.S. trade policies, as well as supporting U.S. export promotion programs. As noted previously, conformity assessment systems have the potential to create equal or greater barriers to trade than standards. Worldwide growth in the complexity of mechanisms for approval of regulated products, such as food additives and medical devices, is of particular concern. As discussed in Chapter 3, government agencies and private-sector firms in the United States and abroad are involved in performing redundant testing, certification, quality system registration, and laboratory accreditation. If not monitored and addressed in a systematic manner, these systems will provide a great number of opportunities for nations to employ a variety of extremely complex and nontransparent barriers to imported goods. There have been only a limited number of recent attempts to estimate the impact of standards and conformity assessment barriers on U.S. trade. The Department of Commerce and Trade Policy Coordinating Committee (TPCC) have, however, completed preliminary work in this area. The project could not independently verify the department's analysis, because supporting data and a detailed methodology employed in the work were unavailable for review. The

OCR for page 103
--> TABLE 4-1 —Standards and Certification: Selected Barriers to U.S. Exports COUNTRY TRADE BARRIERS European Union (EU) In 1989, the EU banned meat and meat products produced from livestock treated with natural or artificial (biotechnology-derived) growth hormones. The EU has stated its recognition that there is no scientific evidence to support the ban; however, it remains in effect. Damage to U.S. exporters is measured at $97 million per year. STATUS: Unresolved; U.S. retaliation under Section 301 remains in effect.   The EU's "Global Approach to Testing and Certification," instituted in 1990, mandates that certification of regulated products be performed by European testing laboratories and certifiers. This system imposes unbalanced costs on non-European manufacturers for obtaining product approvals. (U.S. government accreditation, by contrast, does not discriminate between U.S. and foreign laboratories.) In some sectors, testing can be performed by a U.S. laboratory under subcontract to a European laboratory. Success in U.S.-EU mutual recognition agreement (MRA) negotiations, which began in 1994, would remove or reduce this barrier. STATUS: MRA negotiations ongoing. Japan Prescriptive design standards under the High Pressure Gas Law favor Japanese producers. Affected sectors include air conditioners, refrigeration equipment, supercomputers, and aircraft support equipment. Performance standards would be less trade restrictive and more flexible in accommodating technological innovations. STATUS: Ongoing.   Barriers to imported wood products were estimated, in 1989, to restrict U.S. exports between $500 million and $2 billion annually. Key among the barriers were restrictive fire and building codes and refusal to accept foreign testing procedures. The National Forest Products Association petitioned the USTR to initiate a Super 301 case against Japan. STATUS: Case was resolved in April 1990. Japan agreed to increase reliance on performance-based standards and to accept foreign test data. International technical committees monitor implementation, which has been largely successful. China China does not accept U.S. certifications of quality. Procedures for obtaining a required "quality license" are costly and discriminatory, often imposing higher standards for imports than domestic goods. Many regulatory requirements are unknown or unavailable to non-Chinese firms. STATUS: In 1991, USTR self-initiated a Section 301 investigation of these and other Chinese trade practices. China agreed to publish notice of regulations and to discuss other issues. Implementation remains unclear. Indonesia Acceptance of new pharmaceutical imports can take more than a year. Copied products are often available on the local market before the original is accepted. STATUS: Ongoing. Republic of Korea Many regulatory standards, such as shelf-life standards for processed foods, differ substantially from international practices without scientific basis. Public notice of rule making is often inadequate. Some standards are applied unequally to imported and domestic products. Medical equipment and processed agricultural products are among imports facing nontransparent or unclear standards. STATUS: Ongoing. Taiwan Agricultural imports are routinely tested, unlike domestic products. Complex registration procedures exist for approval of imported pharmaceuticals, medical devices, and cosmetics. STATUS: Ongoing.

OCR for page 103
--> COUNTRY TRADE BARRIERS Mexico Beginning in July 1994, regulated products must be tested and certified by laboratories accredited by the Mexican Director General for Standards (DGN) or by DGN itself. Quality system registrations must be performed by DGN-accredited ISO 9000 registrars. In practice, DGN has accredited no non-Mexican laboratories or registrars and very few Mexican ones. It is not obligated to accredit or recognize foreign organizations, under the North American Free Trade Agreement, until 1998. STATUS: Ongoing.   SOURCES: U.S. Trade Representative, Office of the. 1994 National Trade Estimate Report on Foreign Trade Barriers. Washington, D.C.: U.S. Government Printing Office, 1994. Bayard, Thomas O. and Kimberly Ann Elliott. Reciprocity and Retaliation in U.S. Trade Policy. Washington, D.C.: Institute for International Economics, 1994. American National Standards Institute. New Certification Methods Established for Exports to Mexico That Are Subject to Mandatory Standards. 1994. Retlif Testing Laboratories. U.S./EU Trade Negotiations. 1994. department indicates, however, that $300 billion of the $465 billion in U.S. merchandise exports in 1993 were affected by foreign technical requirements and standards. A total of $180 billion is reportedly subject to certification to non-U.S. standards in such sectors as automotive, aerospace, computers, telecommunications, pharmaceuticals, and chemicals. An additional $70 billion was subject to quality or environmental management system registration.18 These estimates and the analysis supporting the work need to be carefully examined and reviewed. They provide some indication, nevertheless, that the addition of new layers of complexity and cost in international commercial transactions is cause for concern. There is danger that a proliferation of complex, costly, and redundant conformity assessment systems among nations will present serious problems in future international trade. Duplicative or discriminatory requirements threaten to undermine the trade-enhancing benefits of international standards by adding layers of costly and redundant requirements for showing conformity to specifications in multiple export markets. The request by Congress for this study specifically identified the evolving product approval systems in the European Union as a source of concern for the United States. For example, the expense of meeting EU approval requirements can be a particular obstacle to small and medium-sized U.S. firms. This is true whether the firm exports directly to European markets or acts as a supplier of components to manufacturers of exported goods.19 With Europe as the largest single destination for U.S. exports, accounting for 25 percent of total U.S. merchandise exported, European barriers to U.S. products have a direct and substantial impact on U.S. trade performance.20

OCR for page 103
--> According to estimates by the Department of Commerce's International Trade Administration, $66 billion of the $110 billion in U.S. merchandise exports to Europe in 1993—more than half—was subject to some form of EU-required product certification. Approximately $30 billion required government-issued certificates, with pharmaceuticals, automobiles, and engines accounting for the majority. An additional $25 billion required a manufacturer's declaration of conformity (self-certification), while $10 billion was subject to private, third-party certification—primarily in the information technology sector.21 The transition to a unified European economic market has included a number of measures to remove barriers to trade in regulated products among European nations. To the extent that market unification enables U.S. exporters to access all nations of the European Union by meeting the import requirements of any single European country, these changes facilitate increased U.S. exports. New EU requirements for product approval, however, have raised serious concern about U.S. access to the European market. Changes in EU procedures for setting standards and verifying product compliance with them, their potential effect on U.S. trade, and the utility of U.S.-EU agreements on conformity assessment in mitigating these effects are discussed in detail in the section on mutual recognition negotiations. A forceful effort at streamlining international systems in standards, certification, and quality regulations at the regional and multilateral levels is an appropriate priority for U.S. trade and standards policymakers. The goal of these efforts is clear. They should provide a mechanism for manufacturers servicing global markets to obtain testing, certification, and registration of quality systems one time, and in one market, to have products accepted globally. The goal of assured credibility in these systems is also essential. Reaching this goal should be a multilateral priority, however, work to advance this principle can be undertaken unilaterally and at the regional level, as outlined later in sections on the use of U.S. trade law to lower barriers and regional dialogue on mutual recognition agreements (MRAs) in the Asia Pacific Economic Cooperation Council (APEC) forum. As the next section outlines, international mechanisms also exist to reduce standards-related trade barriers. These mechanisms are part of the GATT and new World Trade Organization created through the Uruguay Round of multilateral negotiations. Multilateral Trading System: The Uruguay Round The Uruguay Round of multilateral trade negotiations under the General Agreement on Tariffs and Trade concluded in 1994 with the signing of a world trade agreement.22 Significant progress was made in advancing the goal of reducing barriers to trade, including both tariffs and non-tariff barriers. Members accepted a revised Agreement on Technical Barriers to Trade (TBT). The TBT

OCR for page 103
--> agreement, or Standards Code, was first incorporated in the previous Tokyo Round of the GATT.23 A new Agreement on Sanitary and Phytosanitary Standards (SPS) was also concluded, with special implications for global agricultural trade.24 President Clinton signed the U.S. law to implement these agreements on December 8, 1994. It is expected that the GATT obligations will enter into force on January 1, 1995, for all member nations. Table 4-2 describes major advances in coverage related to standards and conformity assessment in the Uruguay Round Agreements.25 The TBT agreement covers "product characteristics or their related processes and production methods," as reflected in mandatory technical regulations of national governments. The agreement attempts to reduce barriers to trade reflected in the preparation, adoption, or application of standards in a discriminatory manner. It also addresses the prevention of new barriers, particularly as they might arise in divergent conformity assurance systems. The TBT agreement also has important implications for standards set by subnational and regional governments (such as the EU) and private-sector bodies. This section outlines the key elements of the agreement to reveal progress made in the Uruguay Round in relationship to the existing Standards Code negotiated in the Tokyo Round, as well as areas of uncertainty in its implementation and impact on trade.26 Membership and Expansion of Scope The most important progress made in the Uruguay Round TBT and SPS agreements is related directly to the expanded scope and coverage of international disciplines on technical regulations as they affect trade. This includes both the increase in the number of countries bound by the obligations in the new agreement and the extension of TBT rules to cover new areas of standards and conformity assessment systems. The expansion in coverage of the Uruguay Round TBT code to include all members of the newly established World Trade Organization is an important move toward strengthened international discipline (see Table 4-3). As of November 1993, there were 46 signatories to the Tokyo Round TBT code. Most of these members are the industrialized nations of the European Union, with the United States and selected Asian and Latin American countries represented. The signatories to the Uruguay Round Agreement and the new TBT agreement include 68 additional nations. Many of these are among the most rapidly developing nations of Asia and Latin America. Based on 1991 data, new signatories of the Uruguay Round TBT agreement represent an expansion of approximately $182 billion in global imports subject to international discipline. This is a 17.5 percent increase over imports covered under the Tokyo Round Standards Code.27 The extension of rules and procedures on standards and conformity assessment is an important part of strengthening the multilateral trading system. The TBT code helps support progress toward global market liberalization worldwide.

OCR for page 103
--> growth over the past decade. GDP in Indonesia grew 5.7 percent over the period 1980-1992. The growth rate of imports in 1992 was 7.1 percent. This economic expansion has been driven by a series of domestic and foreign economic policy reforms launched in 1985. As part of these initiatives, the government liberalized Indonesian trade policies. Reform has included not only a sharp reduction in average tariff rates, but also the elimination of myriad licensing and other quantitative restrictions on imports.81 There has been substantial progress in deregulation of domestic markets, as well as opening of the Indonesian economy to foreign investment. In part due to these market-opening reforms, U.S. trade with Indonesia has expanded rapidly. In 1993, U.S. exports to Indonesia totaled $2.8 billion. The U.S. stock of foreign investment in 1992 was $4.3 billion. Economic opening and modernization of the Indonesian manufacturing sector have involved many important policy changes, including a set of changes associated with product standards. Although much of the economy is comprised of government-owned ''strategic" corporations, the private economy and nongovernment sector continue to expand. The government, through the National Standardization Council of Indonesia (Dewan Standardisasi Nasional, DSN) has moved to develop a new, modern framework for the development, adoption, and dissemination of product and process standards.82 There is an opportunity and a need for industrialized countries, such as the United States, to provide important assistance to Indonesia as this work continues. Assistance could be provided both unilaterally, and through regional mechanisms such as the APEC forum. The DSN and government ministries are currently working to construct new procedures and institutions for (1) product testing and certification, (2) oversight rules for laboratory and certifier accreditation, and (3) rules to accredit the competence of ISO 9000 quality system auditors in Indonesia. The Indonesian government is revising standards and conformity assessment systems to meet the increasing demand for efficiency in the domestic market. These reforms are also motivated by increased competition in foreign markets and the demand for higher quality in Indonesian exports. The type of model Indonesia adopts for an evolving standards system—particularly, the extent to which it centers on either government or private-sector activities—will, therefore, have important implications for future economic growth. The committees supporting standards activities of the DSN are currently comprised of only 50 percent private-sector representatives. The technical work and drafting of standards are completed by government ministries. There is the expectation that private-sector representation in this work will increase. Expert advice and technical assistance on how to achieve this goal and the evolution of a private standards system are critical. The growth of efficient, private-sector-driven standards development would also serve to benefit foreign firms with manufacturing facilities in Indonesia, as well as exporters wishing to penetrate

OCR for page 103
--> Indonesian markets. Through the provision of assistance by in-country experts, training seminars for government officials, and other mechanisms, the U.S. and other governments could play an important role in helping to establish modern and effective standards systems. There are other ways in which developments in Indonesian standards policies will affect economic development and trade. In order to support global trade expansion and facilitation, it will be necessary to understand and monitor these developments, as they affect U.S. trade and commercial interests. There are currently 3,550 Indonesian standards in force under DSN authority. Only about 20 percent of these are based on international standards. As an outgrowth of trade policy reforms and market liberalization, Indonesia signed the Tokyo Round Standards Code of the GATT in September 1993. Prior to developing a new Indonesian national standard, therefore, the DSN is now obligated to consult ISO and International Electrotechnical Commission (IEC) standards. The DSN has stated a goal of increasing the number of national standards based on international ones, including those developed in the United States. New cement standards in Indonesia, for example, are based on American Society for Testing and Materials standards. It is important that Indonesia and other new signatories of the Uruguay Round Technical Barriers to Trade Agreement be provided with expert assistance in the implementation of policies to fulfill new obligations under the GATT agreement. This includes aid in creating systems that serve to support multilateral obligations in the agreement, such as increased use of international standards. To the extent that nations such as Indonesia are aided by the United States and other industrialized nations in rapidly meeting new international obligations in standards and conformity assessment, U.S. economic interests are fostered. Countries such as Indonesia will require assistance in meeting the provisions of the new Uruguay Round SPS agreement, for example. This will both support the expansion of Indonesian agricultural exports to industrialized nations, and raise incomes in Indonesia, which serve to expand imports. In addition to changing policies on the development of national standards, Indonesia is building a new infrastructure to support quality systems management. The manner in which this system develops and the extent to which it is modeled on principles of nondiscrimination, transparency, economic efficiency, and trade facilitation will have a direct impact on both long-term growth in Indonesia, and relations with the United States and other nations. Indonesia adopted the ISO 9000 series as national standards in 1992. As of August 1994, there were 25 private manufacturing firms and one construction company in the service sector with ISO 9000 certification. Another important development centers on the creation of a national accreditation body in 1994 as part of the DSN. In 1994, one quality systems certification body was granted official accreditation, and there were three applications pending as of August 1994. Most of the large testing laboratories in Indonesia are government owned and operated, with

OCR for page 103
--> smaller, in-house facilities dedicated to servicing private firms. To promote Indonesian export success, the government has emphasized work necessary to gain international recognition of the technical competence of these laboratories. The establishment of advanced systems to support internationally recognized testing facilities is therefore another area in which the expertise and assistance of industrialized nations, including the United States, could be significant, not only to Indonesia but also to the long-term interests of global economic welfare and the facilitation of global trade. In sum, an active effort by the United States to link standards, trade, and technical assistance is extremely important at this point in history. As developments in nations such as Indonesia indicate, U.S. trading partners in East Asia and Latin America have begun to modernize their standards and conformity assessment infrastructures. U.S. involvement and active participation in assisting these nations to construct policies and programs to meet development needs can serve not only to advance growth prospects overseas, but also help to help bind the United States with these nations as they continue to embrace market-based economic principles and systems. A Model for Standards Assistance Activities Since 1990, the U.S. Department of Commerce's National Institute of Standards and Technology has conducted a pilot program to provide technical assistance on standards and conformity assessment to Saudi Arabia. U.S. exports to Saudi Arabia totaled $6.7 billion in 1993. This represents a slight decline from 1992 levels but is significantly higher than U.S. exports of $4.0 billion in 1990. The U.S.-Saudi Arabia Standards Cooperation Program was established to channel technical input from U.S. industry and government experts to the Saudi Arabian Standards Organization (SASO). This program presents a clear model of how an effective standards assistance effort could operate in other U.S. export markets. The U.S.-Saudi Arabia program centers on the placement of a single, full-time U.S. standards adviser in the capital, Riyadh.83 The advisers who have filled this position were recruited from private industry. The standards adviser has NIST credentials as a U.S. government representative, raising the position's visibility and authority in the host country. Substantial experience in the private sector with standardization issues is a critical requirement for this position. The standards adviser interacts on a daily basis with SASO officials, providing advice on standards and conformity assessment issues as appropriate. More important, however, is the adviser's role as a communications contact point, channeling requests from SASO for technical information on particular issues back to NIST. These frequently take the form of draft, technical standards prepared by SASO, which U.S. experts are able to review and comment on before they become official Saudi standards.

OCR for page 103
--> NIST coordinates referral of questions referred from SASO, including draft standards and certification criteria, to a network of U.S. experts for comment. These experts are not paid. They include standardization officials in private U.S. firms, standards-developing organizations, and government agencies. This referral process is critical to enable a high quality of technical comment on questions and issues raised by SASO. No single expert or group of experts, placed in a host country, could match the breadth and depth of technical expertise accessible through referral of questions back to a network of U.S. firms and agencies. In the model provided by the U.S.-SASO pilot program, the most important role of the standards adviser is to develop communications with host country standards officials and to facilitate their use of the technical assistance mechanism. The results of the pilot program have been highly promising.84 From 1990 to 1993, 516 draft SASO standards were sent through this mechanism to the United States for comment.85 These encompassed standards related to agriculture and food products; construction and building materials; electrical equipment; machinery; chemicals; textiles; and measuring instruments and procedures. U.S. firms with material interests in Saudi standards, primarily U.S. exporters to Saudi Arabia and government agencies, commented on 340 of these drafts. In every case but one, U.S. comments were incorporated directly into formal SASO standards. Many U.S. comments, for example, have been in the area of automotive industry standards. This sector is the largest single component of U.S. exports to Saudi Arabia, accounting for more than $1 billion in exports in 1993. U.S. automobile manufacturers have been among the most active participants in the U.S.-Saudi pilot program. One key achievement of the program has been to ensure that where SASO standards reference international automotive electronics standards developed by the IEC, they also recognize as equivalent any non-IEC standards used by the U.S. automotive industry. In this way, unnecessary barriers to U.S. exports have been avoided, enhancing the competitive opportunities that the market presents for U.S. manufacturers and preserving the broadest range of choice and competition in the Saudi import market. These benefits were achieved as a result of the rapid, focused access by directly interested U.S. parties made possible by the pilot program. The most important factors in the success of the U.S.-Saudi Arabia Standards Cooperation Program included the full-time commitment within the host country of a qualified standards adviser; access, through the NIST-coordinated communication channel, to a broad range of U.S. technology and expertise for comment on draft standards; and a high level of participation by U.S. private-sector experts in the draft review and comment process.86 U.S. industry initially provided matching funds for program expenses. These funds declined over time, and at present, NIST provides full financial support for the program. The most import contribution of U.S. industry to program success, however, continues to be the time and expertise required to prepare written comments and responses to queries referred

OCR for page 103
--> from the host country standards authorities. In the case of the U.S.-Saudi pilot program, the level of U.S. private participation in this respect has not declined. As of October 1994, the program was preparing to provide a second type of assistance to Saudi Arabia that also has strong potential applicability in emerging U.S. export markets. In the fall of 1994, a delegation from the American Automobile Manufacturers Association was scheduled to conduct a technical seminar for SASO's engineering staff to update them on a range of state-of-the-art automobile safety technologies. The seminar was to present information on items such as air bags; conversion of automobiles to unleaded gasoline; antilock brakes; electronic suspension; passive seat restraints; and design for distribution of impact energy in a collision. Conveying technical information on these topics to the Saudi officials responsible for writing product certification requirements has at least two crucial benefits: (1) it improves SASO's capacity to write effective safety standards for Saudi Arabia; and (2) it promotes the use of U.S. industrial technologies in an important market for U.S. manufacturers. Duplication of the U.S.-Saudi Arabia export promotion program in other foreign markets will depend on strong linkages and communication between the U.S. government and private industry. It is particularly important that programs of the Department of Commerce, NIST, and other agencies involved in the promotion of U.S. exports are coordinated. In the Department of Commerce Appropriations Act for 1995, the Congress appropriated approximately $5 million for an expanded program within NIST on International Trade Standardization and Measurement Services.87 A review of NIST plans for expansion of assistance in this program, which builds on the SASO model, reveals the following conclusions: An expanded program in standards assistance overseas should involve U.S. private sector firms closely both in providing advice to host country officials, and in organizing special government–industry training missions to developing and newly industrializing nations, especially those in East Asia and Latin America. These special missions should be funded by industry. This program should target a wide number of developing countries in East Asia and Latin America, where U.S. standards assistance will have the most significant impact on the evolution of standards and conformity assessment systems. Current plans call for the placement of experts in Russia, the Czech Republic, Mexico, India, China, Japan, Korea, Argentina (for all South America), Geneva (for the United Nations Economic Commission for Europe), and Paris (for the OECD nations). Although it is anticipated that these missions will serve multiple markets, a more rapid expansion of personnel in individual countries is necessary to take full advantage of rapidly developing systems overseas. An overseas assistance program should provide regular, ongoing written and other reports on standards and conformity assessment developments to the Department of Commerce's trade promotion programs, Office of the U.S. Trade

OCR for page 103
--> Representative, Export-Import Bank, and other relevant U.S. government agencies. Summary And Conclusions This chapter has outlined both the challenges and the opportunities offered by standards and conformity assessment systems overseas. They represent both the potentially complex and difficult barriers to international trade and unique opportunities through innovative export promotion programs to increase U.S. competitiveness in global markets. Future U.S. policy in these areas, therefore, will play an important role in positioning U.S. industry for success into the next century. Several key developments in the international economy will serve to heighten the importance of standards and conformity assessment as barriers to future global trade. These include (1) the decline of tariff barriers in world markets, especially as the Uruguay Round of tariff cuts is implemented; (2) the growing complexity of conformity assessment mechanisms in both the industrializing and the developed nations; and (3) new demands for third-party assurance, not only of product safety, but also of producers' quality management systems and environmental management systems, among other factors. There are several necessary conditions for the United States to take advantage of the growing interrelationships among standards, conformity assessment, and global trade. First, a high level of attention to emerging standards developments by both government and private industry is necessary. In particular, there is the need for a new analytical capacity in government to monitor and report on the economics of standards and conformity assessment, including domestic systems, as well as developments in overseas markets. The specific functions of such a unit are outlined in greater detail in the following chapter. Second, strong support for mechanisms and programs by the United States to rapidly implement the provisions that support trade liberalization in the Uruguay Round Agreement is necessary. This should include the type of organized and detailed support for implementation that is being conducted by the United States through the APEC standards and conformity, for example. Moreover, the U.S. government, in consultation with industry, must continue to provide leadership on the conclusion of MRAs with the European Union and other major trading partners, particularly in the APEC region. This will help ensure continued progress in the world economy in reducing barriers to trade in standards, especially under the likely circumstances that a major trade negotiating round will not be under way for a long period of time. In addition to U.S. leadership in negotiations on bilateral or regional MRAs and the provision of technical assistance, a post-Uruguay Round U.S. trade policy should involve aggressive use of the new dispute resolution procedures available in the WTO to address barriers related to standards and conformity assessment.

OCR for page 103
--> U.S. policy must also leverage our ability to move in a unilateral fashion to open overseas markets. This should come through a more proactive use of Section 301 to remove foreign barriers to U.S. exports. Finally, U.S. trade policy should work toward rapid development of mutual recognition agreements with major trading partners in order to facilitate trade expansion and forestall the development of new barriers in the post-Uruguay Round system. These policy prescriptions are developed more fully in Chapter 5, along with detailed recommendations for government and industry, as requested by Congress in the solicitation of this report. Notes 1.   David Walters, Comparison of Export Sector Wages to Overall Sector Wages. Additional data supplied by the Office of the Assistant U.S. Trade Representative for Economic Affairs, Office of the U.S. Trade Representative, Washington, D.C. 2.   Data supplied by the Office of the Assistant U.S. Trade Representative for Economic Affairs, Office of the U.S. Trade Representative. 3.   John Wilson, The U.S. Performance in Advanced Technology Trade: 1982-93 (est.). 4.   Office of the Chief Economist, Office of the U.S. Trade Representative, U.S. Exports Create High-Wage Employment. 5.   Kindleberger, Standards as Public, Collective and Private Goods, 384-385. 6.   As noted in previous chapters, there is a growing body of economics research on compatibility standards. See, for example, Besen, Stanley M., and Leland L. Johnson. 1986. Compatibility Standards, Competition, and Innovation in the Broadcasting Industry. 7.   There are numerous studies which detail trade protection in the post-war period. Among the recent analyses of the types of protection employed by the industrialized and developing nations in the post-war period, especially those under discussion in the Uruguay Round of multilateral trade negotiations see, for example; Analytical and Negotiating Issues in the Global Trading System, A. V. Deardorff and R. M. Stern. The Uruguay Round: An Assessment, Jeffrey J. Schott. American Trade Politics, 2nd edition, I. M. Destler, among many others. 8.   Estimates of the cost of tariff and non-tariff trade barriers have been conducted by numerous organizations. See, for example, recent work of multilateral institutions such as the Organization for Economic Cooperation and Development (OECD), Paris, and World Bank, as well as the Center for the Study of American Business, University of Washington, St. Louis, and U.S. government agencies, such as the United States International Trade Commission (USITC). 9.   See, for example, Jaime de Melo and David Tarr, A General Equilibrium Analysis of U.S. Foreign Trade Policy. 10.   White House, Trade Agreements Resulting from the Uruguay Round of Multilateral Trade Negotiations, Federal Register 58, no. 242: pp. 67269-67270. 11.   See, for example; Sam Laird and Alexander Yeats, Quantitative Methods for Trade Barrier Analysis. United Nations Council on Trade and Development (UNCTD), Problems of Protectionism and Structural Adjustment: Restrictions on Trade. World Bank, World Development Report 1987, among other reports. 12.   Joseph Grieco, Cooperation Among Nations: Europe, America, and Non-Tariff Barriers to Trade. 13.   For a discussion, see the studies summarized in Trading Free, The GATT and U.S. Trade Policy, Patrick Low, 73-74. 14.   World Development Report 1987, The World Bank. 15.   As part of this study, extensive interviews were conducted with senior U.S. government

OCR for page 103
-->     officials responsible for trade policy formation and implementation. These included briefings by officials from USTR and Department of Commerce concerning barriers to U.S. exports related to standards and conformity assessment policies overseas. Information was also gathered in Tokyo, Japan and Jakarta, Indonesia in August 1994 from (1) U.S. government officials in the U.S. and Foreign Commercial Service, economic and commercial affairs, and science and environment offices, and (2) U.S. business executives located in Japan and Indonesia through the American Chamber of Commerce. 16.   Office of the United States Trade Representative, 1994 National Trade Estimates Report on Foreign Trade Barriers. 17.   1994 National Trade Estimate Report of Foreign Trade Barriers, 93-94. 18.   U.S. Government Trade Policy Coordinating Committee, Product Standard Working Group, estimates applied to U.S. Census Bureau export data, Washington, 1994. 19.   1994 National Trade Estimate Report of Foreign Trade Barriers, 81. 20.   Data provided by Charles Ludolph, Director, Office of EC Affairs, U.S. Department of Commerce, October 27, 1993. 21.   Data supplied by Charles Ludolph, Director, Office of European Affairs, International Trade Administration, U.S. Department of Commerce, 1994. 22.   This section draws, in part, on Victoria Curzon Price, The Post Uruguay Round Trade Outlook: Standards and Technical Barriers to Trade, and John Sullivan Wilson, Standards, Conformity Assessment, and Trade: New Developments and the Asia Pacific Economic Cooperation (APEC) Forum. 23.   Office of the United States Trade Representative, Final Texts of the GATT Uruguay Round Agreements, including the agreement establishing The World Trade Organization, and Agreement on Technical Barriers to Trade, 117-137. 24.   Office of the United States Trade Representative, Final Texts of the GATT Uruguay Round Agreements, Agreement of the Application of Sanitary and Phytosanitary Measures, p. 69-83. For an overview of the Agreement and implications for the U.S. see: Donna U. Vogt, Sanitary and Phyto-sanitary Safety Standards for Foods in the GATT Uruguay Round Accords. 25.   For a comprehensive assessment of the implications of the Uruguay Round Agreements in full see: Schott, The Uruguay Round: An Assessment. 26.   For an analysis of the 1994 Agreement see Richard H. Steinberg, The Uruguay Round: A Legal Analysis of the Final Act, 1-97. 27.   Calculated using World Bank, IMF data on imports for 1991, totals for signatories to the Tokyo Round Standards Code and new signatories to the Uruguay Round Agreement. 28.   Data included in William J. Clinton, Report to Congress on Recommendations on Future Free Trade Area Negotiation, Table 2. 29.   Based on estimates by NRC Project on International Standards, Conformity Assessment, and U.S. Trade Policy. Calculated from data supplied by the U.S. Bureau of the Census, 1993-1994. 30.   Locke, John W. 1993. Conformity Assessment—At What Level? 31.   Curzon-Price, The Post-Uruguay Round Trade Outlook: Standards and Technical Barriers to Trade. 32.   For an overview of efforts to develop environmental management system standards at the international level see: Marilyn R. Block, ISO/TC 207: Developing an International Environmental Management Standard. 33.   Harmonization of technical regulations as well as certification mechanisms have been particularly significant in health-related industries, such as medical devices. See, for example, Health Industry Manufacturers Association, EU-U.S. Mutual Recognition Agreements (MRAs): Key Issues for the Medical Device Industry. 34.   Office of Public Affairs, Office of the United States Trade Representative. Facsimile describing the USTR and its functions.

OCR for page 103
--> 35.   U.S. Congress, House, Committee on Ways and Means, Overview and Compilation of U.S. Trade Statutes, 1993 Edition, p. 185-196. 36.   Office of Public Affairs, Office of the United States Trade Representative. Facsimile describing the USTR and its functions. 37.   Subtitle A of Title VII, Section 704 of the Tariff Act of 1930 deals with termination or suspension of investigations involving countervailing duties. Subtitle B of Title VII Section 734 deals with the termination or suspension of investigations involving antidumping duties. 38.   Title III, Chapter 1, Section 301 of the Trade Act of 1974 (amended) outlines the actions that may be taken by the USTR to enforce U.S. rights under the trade agreement and as a response to certain foreign trade practices. 39.   U.S. Congress, House. Committee on Ways and Means, Overview and Compilation of U.S. Trade Statutes, 1993 Edition, p. 185-196. 40.   Ibid. 41.   In 1993 Annual Report, Office of the United States Trade Representative. 42.   Office of Intergovernmental Affairs, Office of the United States Trade Representative. Facsimile describing the advisory committee system and its functions. 43.   Office of United States Trade Representative, 1993 Annual Report . Facsimile transmission of pp. 114-117. 44.   Ibid. 45.   For an overview of Section 301, including USTR self-initiation of cases under the statute see: John S. Wilson, The U.S. Government Trade Policy Response to Japanese Competition in Semiconductors: 1982-87. 46.   John H. Jackson and William J. Davey, Legal Problems of International Economic Relations, p. 804. 47.   Patrick Low, Trading Free: The GATT and US Trade Policy, p. 94. 48.   John H. Jackson and William J. Davey, Legal Problems of International Economic Relations, p. 147. 49.   Patrick Low, Trading Free: The GATT and US Trade Policy, p. 95. 50.   Data in this section is drawn from Patrick Low, Trading Free: The GATT and US Trade Policy, and from Thomas O. Bayard and Kimberly Ann Elliott, Reciprocity and Retaliation in U.S. Trade Policy. 51.   The results of this work are cited in a recent analysis of the use of Section 301; Reciprocity and Retaliation in U.S. Trade Policy , Thomas O. Bayard and Kimberly Ann Elliott. For further detail see also, Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliott, Economic Sanctions Reconsidered. 52.   Industry and government assessment of the negotiations and outcome are outlined in Reciprocity and Retaliation in U.S. Trade Policy, Thomas O. Bayard and Kimberly Ann Elliott, p. 134-138. 53.   For an overview of the NAFTA agreement, including reference to standards and conformity assessment issues in NAFTA see; U.S. International Trade Commission, Potential Impact on the U.S. Economy and Selected Industries of the North American Free Trade Agreement. Gary Clyde Hufbauer and Jeffrey J. Schott, NAFTA: An Assessment, among others. 54.   Clinton, Report to the Congress on Recommendations on Future Free Trade Area Negotiations. 55.   New European systems also exist for facilitating trade in non-regulated products. The European Organization for Testing and Certification (EOTC) was established in Brussels in 1992. EOTC functions as a focal point for promoting mutual confidence among private-sector conformity assessment systems. It recognizes voluntary "agreement groups" consisting of testing, certification, and accreditation organizations in a range of industry sectors. EOTC has approved participation of non-European organizations in the agreement groups, indicating that the new system is unlikely to present a barrier to U.S. exports. The organization is new, however, and continued monitoring of its

OCR for page 103
-->     impact on international trade is necessary before conclusions can be drawn. See EOTC, EOTC: Focal Point for Testing & Certification in Europe. 56.   For a detailed description of European Union harmonized standards and certification procedures for regulated products, see U.S. Department of Commerce, EC Product Standards Under the Internal Market Program and U.S. Department of Commerce, EC Testing and Certification Procedures Under the Internal Market Program. 57.   For example, U.S. information technology firms were highly concerned in 1994 about a proposed ETSI intellectual property policy. This would have required firms to license their proprietary technology for inclusion in ETSI standards at unfavorable and inflexible terms. Opposition from U.S. firms and government officials persuaded ETSI to revise the policy. Examples of successfully resolved disagreements with CEN are presented in an internal memorandum from ANSI's Brussels office to Manuel Peralta, then ANSI president. The memorandum states in part, "…the CEN responses to the U.S. concerns have been positive and are almost complete. The system is working well in the standardization area. The only pending case studies requiring a response from CEN concern power lawn mowers and toy safety." D. W. Smith, Vice President, ANSI Brussels Office, memorandum, January 8, 1993. 58.   For a thorough discussion of product regulation and conformity in the EU (formerly, the European Community, or EC), see U.S. Department of Commerce, International Trade Administration, EC Testing and Certification Procedures Under the Internal Market Program. 59.   For a discussion of the early results of these talks see: Charles M. Ludolph, Mutual Recognition Agreements—Access to the European Union. 60.   Charles M. Ludolph, Mutual Recognition Agreements, Part III: Summary of Negotiations at Midpoint. 61.   Richard Schulte, Vice President, AGA Laboratories, personal communication, June 30, 1994. 62.   See Ludolph, Mutual Recognition Agreements, Part II. For a discussion of specific issues in electromagnetic interference testing, see Bert G. Simson, Conformity Assessment Workshop on Electromagnetic Compatibility , and Retlif Testing Laboratories, U.S./EU Trade Negotiations: EMC Issues. 63.   For discussion of specific issues arising in the U.S.-EU negotiations, see Ludolph, Mutual Recognition Agreements—Access to the European Union and Ludolph, Mutual Recognition Agreements Part II. 64.   See, for example, Donald S. C, Deputy U.S. Trade Representative, quoted in Grieco, Cooperation Among Nations: Europe, America, and Non-Tariff Barriers to Trade, p. 194. 65.   National Institute of Standards and Technology, Establishment of the National Voluntary Conformity Assessment System Evaluation Program, p. 19129-19133. 66.   Ludolph, Mutual Recognition Agreements—Access to the European Union. 67.   ANSI, letter to Charles F. Meissner, Assistant Secretary for International Economic Policy, U.S. Department of Commerce, and Richard G. Meier, Deputy Assistant U.S. Trade Representative, April 20, 1994. 68.   It is important to note that even with the CE Mark, the free flow of goods throughout the European Union has not yet been fully realized. The acceptance of testing and certification performed in the less-developed member states by national authorities elsewhere in Europe is mandated by the European Commission, but does not always, in practice, occur. See Ludolph, Mutual Recognition Agreements; and David Stanger, EOTC. 69.   For discussion of product liability in the U.S., including sector-specific case studies, see National Academy of Engineering, Product Liability and Innovation. See also Eads and Reuter, Designing Safer Products. 70.   See, for example, Report on United States Barriers to Trade and Investment, 1994, Services of the European Commission, Section G, "Standards, Testing, Labeling, and Certification, p. 55-60.

OCR for page 103
--> 71.   NVLAP, National Voluntary Laboratory Accreditation Program, 1994 Directory, U.S. Department of Commerce, Technology Administration, National Institute of Standards and Technology, and American Association for Laboratory Accreditation, A2LA 1994 Directory of Accredited Laboratories. 72.   Clinton, Report to the Congress on Recommendations on Future Free Trade Area Negotiations. 73.   Ibid. 74.   For an overview of possible directions for the APEC forum, including issues of trade facilitation, see Gary Clyde Hufbauer, Whither APEC? 75.   Achieving the APEC Vision; Free and Open Trade in the Asia Pacific, Asia-Pacific Economic Cooperation. 76.   APEC Economic Leader's Declaration of Common Resolve, Bogor, Indonesia, November 15, 1994. 77.   Proposed Declaration on an APEC Standards and Conformance Framework: Submitted by Australia, APEC Committee on Trade and Investment. 78.   U.S. International Trade Commission, Development Assistance in East Asia, p. 98-99. 79.   Ibid. 80.   This section draws, in part, on information presented in interviews conducted with U.S. government officials, affiliates of the U.S. Chamber of Commerce in Jakarta, Indonesia, and representatives of the Indonesian government, including the Dewan Standardisasi Nasional (DSN), Standardization Council of Indonesia, in Jakarta, Indonesia, in August 1994. Personal communications with John Wilson, project director. 81.   For an overview of recent trade reforms in East Asia, including Indonesia, see: Development in Practice, East Asia's Trade and Investment, Regional and Global Gains from Liberalization, The International Bank for Reconstruction and Development. 82.   DSN operates under authority of a Presidential Decree of 1984, revised in 1989 to establish Indonesian national standards (Standard Nasional Indonesia, SNI). DSN is the coordinating body through which all standards and metrology organizations establish standards in Indonesia. It works with 2,000 experts from industry and government. The DSN represents Indonesia as the government members body of the International Organization for Standardization (ISO), the International Electrotechnical Commission (IEC) and represents Indonesia in Codex Alimentarius Commission (CAC). Pusat Standardisasi LIPI operates as the Secretariat of the DSN. It manages Indonesian participation in the activities of ISO and IEC. Technical committees employ experts from government, private institutions, industry, and professional associations. 83.   Information on the U.S.-Saudi Standards Cooperation Program provided by Gilbert Dwyer, American-Saudi Roundtable, and Edward Wunder, NIST representative to SASO, fact sheets and personal communication, May 16, 1994. 84.   For example, an independent advisory panel of industry and academic experts reviewed this program in 1993 and recommended that NIST's proposal to expand it be fully funded. See Visiting Committee on Advanced Technology of the National Institute of Standards and Technology, International Standards Issues: A Statement to the Secretary of Commerce, p. 4-6. 85.   American-Saudi Roundtable, U.S.-Saudi Arabia Standards Cooperation Program, progress report dated December 31, 1993. 86.   Memorandum by Gilbert Dwyer, American-Saudi Roundtable, U.S.-Saudi Arabia Standards Cooperation Program: Critical Success Factors, March 21, 1994. For an additional example of private standards setting firms assisting in other countries see: Letter of Intent between NSF and The Instituto Mexicano de Tecnologia del Agua, in which the NSF agreed to share through training its expertise and experience in product certification with the ultimate goal of mutual recognition. 87.   U.S. Congress. House. Department of Commerce Appropriations Act, 1995.