Recommendations to Address Future Challenges and Opportunities
This report has examined domestic and international processes for developing standards and assessing conformity to them, as well as the relationships between these processes and U.S. export success. It has demonstrated that standards and conformity assessment systems have important influences on international trade. These are manifest in the successes and opportunities for trade expansion, such as strengthened disciplines in the Uruguay Round Technical Barriers to Trade Agreement provisions; various non-tariff trade barriers that must be reduced or eliminated; and underutilized tools for export expansion. The efficient functioning of standards and conformity assessment systems represents a significant future challenge to industrial advance in the United States, as well as an opportunity for leveraging national advantages in global markets.
This chapter summarizes the state of the U.S. standards and conformity assessment systems and outlines recommendations to enhance their operation to promote economic efficiency. The recommendations include suggested changes in public policies to improve the domestic system, as well as to position U.S. trade policy initiatives to support international trade and U.S. economic advance. As noted below, some recommendations call for action by Congress in the form of new legislation, while others can be implemented by executive branch agencies under existing legislative authority.
The state of the U.S. conformity assessment system poses the most immediate and direct challenge to economic success. Recommendations to streamline this system and increase its efficiency are contained in this chapter. The U.S. standards development system, by comparison, functions well and is effective at meeting national interests. There is the need for improvement, however, in
public–private cooperation in standards development and government use of private standards. Recommendations on international trade policy in this chapter focus on proactive efforts to enhance present and future export opportunities. Finally, recommendations are made to strengthen the nation's capacity to acquire, analyze, and disseminate critical information about international standards and conformity assessment. Measures to anticipate and deter future barriers to trade linked to standards and certification are also outlined.
Previous studies of the U.S. standards system have emphasized the processes by which standards are developed.1 As this report has demonstrated, however, these mechanisms account for only part of the economic and societal impact of standards. The increasingly complex U.S. and international mechanisms for assessing product and process conformity to standards are also significant. These mechanisms include product testing and certification; certification of manufacturing processes such as quality control systems; accreditation of laboratories and certifiers; and government recognition of accreditors, among others. As Chapter 3 outlines, there is increasing demand by customers and government regulators for independent (third-party) assurance of conformity, both in the United States and abroad. The growing complexity of the system imposes uncertainty and cost on U.S. manufacturers. It poses challenges to public and private actors in the U.S. conformity assessment system to keep pace with rapid change.
Significant improvement is needed in the U.S. system for assessing conformity of products and processes to standards. Our system has become increasingly complex, costly, and burdensome to national welfare. This is reflected in unnecessary duplication and unwarranted layers of complexity at the federal, state, and local levels. Manufacturers are increasingly forced to perform redundant tests and obtain repetitive certifications for products sold in different parts of the country. Testing laboratories pay unnecessary fees and undergo duplicative audits to demonstrate their competence to multiple federal, state, and local authorities. The result is higher costs for U.S. manufacturers, public procurement agencies, testing laboratories, product certifiers, and consumers.
Data on the precise magnitude of these costs in the U.S. economy are lacking. The rapid growth of U.S. independent testing services, currently accounting for more than $10 billion in annual revenue, is nevertheless an indication of the expansion of the conformity assessment system. Chapter 3 contains many specific examples of duplications in product testing and accreditation. In addition, a 1993 study of environmental testing laboratory accreditation commissioned by the Environmental Protection Agency (EPA) identified a potential for nationwide cost reduction of approximately 28 percent.2 This saving could be achieved through elimination of redundant accreditation requirements among local, state, and federal agencies.
Although no similar study has been performed in the area of product testing, anecdotal evidence, consultation with a wide range of experts, and a review of federal and state accreditation programs support the conclusion that a similar level of inefficiency exists in that area. A precise estimate of the cost of inefficiency in U.S. state and local systems is outside the scope of this study. Available evidence and analysis, however, demonstrate the need for action to streamline the system of product testing.
At the federal level, government agencies should retain responsibility for oversight of critical regulatory and procurement standards in areas of preeminent public health, safety, environmental, and national security concerns. The assessment of product conformity to those standards, however, is essentially a technical function performed most efficiently and effectively by the private sector. Government should meet its responsibility for serving the public interest in an oversight capacity.
The federal role in conformity assessment should center on recognition of private-sector services. Government should evaluate and recognize private sector organizations that are competent to accredit testing laboratories, product certifiers, and quality system registrars.3 In order to streamline and improve national conformity assessment procedures, the following is recommended:
RECOMMENDATION 1: Congress should provide the National Institute of Standards and Technology (NIST) with a statutory mandate to implement a government-wide policy of phasing out federally operated conformity assessment activities.
NIST should develop and implement a National Conformity Assessment System Recognition (NCASR) program. This program should recognize accreditors of (a) testing laboratories, (b) product certifiers, and (c) quality system registrars. By the year 2000, the government should rely on private-sector conformity assessment services recognized as competent by NIST.
A properly implemented NCASR program will reduce costs for federal agencies by eliminating the need to design and operate government-unique and duplicative testing, certification, and accreditation programs. It will decrease costs for industry of complying with separate, duplicative private and public conformity assessment requirements. The program will draw on NIST's expertise in testing and evaluation, as well as its in-house scientific and technical resources. It will also incorporate, under NIST guidance, participation of technical experts from regulatory and procurement agencies. These agencies will continue to be responsible for determining guidelines for essential standards of safety, health, environmental protection, and fitness for public procurement against which products are assessed. A congressional mandate for NIST should state explicitly, however, that reliance on NIST-recognized accreditation programs is the means by which
agencies should determine compliance with product regulations and procurement standards under their jurisdiction. The deadline of the year 2000 for a phase out of direct government-operated conformity assessment activities should allow the necessary time for NIST to provide assurances of private-sector entities to take on these responsibilities. This is, in fact, already under way in several areas.
Two current programs serve as precedents for the recognition function recommended here. The first is NIST's responsibility under the Fastener Quality Act (P.L. 101-592) to ensure the competence of laboratories that test fasteners. NIST is charged by the act not only with accrediting testing laboratories directly, but also with evaluating and recognizing accreditors.4 A second program that might serve, in part, as an example for NCASR is the National Voluntary Conformity Assessment System Evaluation (NVCASE) program, established by NIST in 1994. NVCASE is designed to evaluate and formally recognize U.S. accreditors of laboratories, certifiers, and quality system registrars in a broad range of product sectors. NVCASE is a voluntary program, and it is applicable only to assessment of U.S. exported goods against foreign regulations. The NCASR program, in contrast, should apply to all conformity assessment activities for compliance with domestic regulatory and procurement standards.
Inefficiency in the U.S. conformity assessment system is especially apparent at the state and local levels. There have been only extremely limited national efforts, however, to promote mutual acceptance by state and local authorities of product testing results, certifications, and laboratory accreditations. In order to reduce redundancy and inefficiency at the state and local levels of the U.S. conformity assessment system, the following is recommended:
RECOMMENDATION 2: NIST should develop, within one year, a ten-year strategic plan to eliminate duplication in state and local criteria for accrediting testing laboratories and product certifiers. NIST should lead efforts to build a network of mutual recognition agreements among federal, state, and local authorities.
After 10 years, the Secretary of Commerce should work with federal regulatory agencies to eliminate remaining duplication through preemption of state and local conformity assessment regulation.
Eliminating duplication in state and local conformity assessment regulations does not involve elimination of all differences among federal, state, and local regulations. There are valid reasons for variations in some standards. It is appropriate, for example, that building codes are more stringent in California for earthquake protection and in Florida for resistance to hurricane-force winds. Competently performed testing and certification, however, should be accepted by all state and local authorities throughout the United States.
The details of a strategic plan to eliminate duplication should be developed
by NIST, in consultation with other federal, state, and local agencies and the private sector. The NIST-led National Conference on Weights and Measures (NCWM) is a promising model for such a plan. The NCWM, as outlined in Chapter 3, promotes regular consultation among state and federal agencies on technical procedures for weighing and measuring products shipped within the United States. The federal–state partnership fostered under this structure has served the needs of domestic commerce. Cooperation in the broader area of product conformity has the potential to yield benefits on a similar scale.
Clearly, political resistance to change is likely to be strong in some states and localities. For this reason, motivation for progress must be ensured through a congressionally mandated 10-year deadline for agreement. After this period, federal conformity assessment regulations should preempt remaining duplications. A clear precedent for this type of preemption exists in the Occupational Safety and Health Administration's (OSHA's) Nationally Recognized Testing Laboratory program. State and local agencies are prohibited, through preemption by Department of Labor regulations, from refusing to accept product testing data and certification performed by OSHA-recognized laboratories.5
Chapters 1 and 2 of this report examine the role of standards in a modern economy and assess the processes by which standards are developed. The U.S. standards development system serves the national interest well. In most cases, it supports efficient and timely development of product and process standards that meet economic and public interests. The system is complex and diversified, with a lead role for the private sector in decisionmaking. The system's decentralized structure provides for flexibility in meeting new market and societal needs. It embodies, therefore, the mechanisms necessary to respond to technological change and the uncertainties of market-driven economic advance.
This report has identified a serious need for improvement, however, in federal policies and public–private cooperation to increase federal use of voluntary consensus-based standards developed in the private sector. There are many benefits to government use of standards developed in the private sector for regulatory and public procurement needs.6 Government adoption of private standards lowers costs to federal agencies and taxpayers. It also reduces unjustifiable burdens on private firms to meet duplicative standards for both government and private markets. Clearly, not every public standard can be developed through private-sector processes. Government should, however, rely on private activities in all but the most vital cases involving protection of public health, safety, environment, and national security. The U.S. government should establish improved mechanisms to ensure progress toward reaching this goal.
Current efforts by the U.S. government to leverage the strengths of the U.S. standards establishment and its services are inadequate. There has been only
limited progress by federal agencies in promoting the use of private standards. The Office of Management and Budget (OMB) Circular A-119, ''Federal Participation in the Development and Use of Voluntary Standards," does set a sound goal for increased federal adoption of private, consensus standards. As discussed in Chapter 2, however, the circular provides an ineffective mechanism to ensure government action. Stronger, better-coordinated institutional mechanisms are needed. These should be led by NIST, which has unique technical expertise to coordinate government interaction with private standards organizations, as well as federal use of private standards.
A legislative mandate for NIST oversight of federal adoption of consensus standards will accomplish these critical tasks: It will (a) significantly improve and streamline the government's regulatory and procurement functions; (b) reduce burdens on U.S. manufacturers arising from duplicative government and commercial standards; and (c) provide a centralized government focus for liaison with private sector standards organizations, including—but not limited to—the American National Standards Institute. The following is therefore recommended:
- RECOMMENDATION 3: Congress should enact legislation replacing OMB Circular A-119 with a statutory mandate for NIST as the lead U.S. agency for ensuring federal use of standards developed by private, consensus organizations to meet regulatory and procurement needs.
The existing requirement for reports to OMB on agency use of private standards has not proved sufficient to ensure progress toward the policy goals expressed in Circular A-119. A congressional mandate that NIST report annually to Congress on progress within all agencies in using private standards would significantly increase the effectiveness of these policies. NIST work to fulfill this mandate in the interagency process will not be without difficulty; however, over time the leadership exercised by NIST should provide for significant progress. In addition, the Interagency Committee for Standards Policy (ICSP) should be reconstituted. The ICSP's present structure, comprising 35 members in equal standing from all federal agencies with major or minor standards activities, is too large and inflexible. A stronger leadership role for NIST and active participation by core standards-using agencies such as the Department of Defense, the General Services Administration, EPA, OSHA, and the Consumer Product Safety Commission would enable the ICSP to coordinate interagency decisionmaking more effectively. Other agencies should participate in information sharing and decisionmaking on issues relevant to their respective missions.
In addition to intragovernment coordination, there is a need for effective, long-term public–private cooperation in standards development and use. As Chapter 2 outlines, this type of cooperation has often been lacking, although improvement has occurred in recent years. Sustained cooperation requires improved information transfer between government and industry; clear division of
public and private responsibilities within the consensus standards system; and institutionalized mechanisms to effect systems improvement and lasting change. The following is therefore recommended:
RECOMMENDATION 4: The Director of NIST should initiate formal negotiations toward a memorandum of understanding (MOU) between NIST and the American National Standards Institute (ANSI). The MOU should outline modes of cooperation and division of responsibility between (1) ANSI, as the organizer and accreditor of the U.S. voluntary consensus standards system and the U.S. representative to international, non-treaty standards-setting organizations; and (2) NIST, as the coordinator of federal use of consensus standards and recognizing authority for federal use of private conformity assessment services. NIST should not be precluded from negotiating MOUs with other national standards organizations.
In addition, all federal regulatory and procurement agencies should become dues-paying members of ANSI. Dues will support government's fair share of ANSI's infrastructure expenses.
An ANSI-NIST MOU would not be exclusive to these two parties. NIST could sign MOUs with other standards developers, for example, to facilitate use of their standards as appropriate to meet government needs. ANSI could enter into agreements with other agencies. The purpose of an ANSI-NIST MOU is to institutionalize a public division of the unique responsibilities of ANSI and NIST within the U.S. and international standards systems. The MOU will also raise the visibility, within and outside government, of federal policies mandating use of private consensus standards.
Government payment of ANSI dues, similarly, would not preclude use of non-ANSI standards or membership in standards organizations aside from ANSI. Dues payment would, however, uphold the federal government's responsibility, as a major beneficiary of the private, ANSI-accredited consensus standards system, to support its share of ANSI infrastructure and expenses. Dues from federal, state, and local government agencies presently account for less than 1 percent of ANSI dues collections and less than half of 1 percent of total ANSI revenues. Government adoption of private standards developed under the ANSI-accredited system, however, as well as participation of government experts in standards-writing committees, imposes substantial administrative costs on ANSI. These costs include managerial oversight of standardization processes; information dissemination and communication; and support for conferences and technical committee meetings, among others. Government payment of ANSI dues will enhance ANSI's ability to meet these administrative burdens and will provide for improvements in communication between the public and private standards communities. Agency dues will not, however, represent so large a share of ANSI's
revenues as to compromise its capacity for independent oversight of consensus standards processes. Dues will be limited to a level sufficient to meet administrative burdens. They will not provide, and should not be considered, a broad public subsidy of the private standards development system.
Expansion of U.S. exports is a vital economic interest. As Chapter 4 has outlined, exports promote a strong domestic economy, increased productivity, and employment opportunities for U.S. workers. Moreover, although the United States is the most open economy in the world, continued work to promote a domestic economy open to foreign trade and competition is also important. Two integral components of U.S. trade policy aimed at securing the benefits of trade are (1) reduction of trade barriers, and (2) promotion of U.S. exports. U.S. trade policy, with input from U.S. industry, is targeted at accomplishing these objectives through multilateral, regional, and bilateral efforts. The U.S. Trade Representative (USTR), in cooperation with the Department of Commerce's International Trade Administration, should make every effort to encourage our trading partners to adopt transparent and open standards and conformity assessment systems.
At the multilateral level, the Uruguay Round negotiations of the General Agreement on Tariffs and Trade (GATT) achieved significant progress in expanding global trade and reducing trade barriers—particularly those associated with discriminatory national standards and product certification systems. The growing complexity of standards and conformity assessment systems in many nations, however, threatens to undermine future trade expansion. Manufacturers throughout the world face increasing costs in gaining product acceptance in multiple export markets. Many nations impose unnecessarily duplicative or discriminatory requirements for product testing, certification, and quality assurance.
The European Union's (EU's) mechanisms for approving regulated products, in particular, are a barrier to U.S. exports. The EU requires that product certification be performed by European testing laboratories and certifiers designated by European national governments. The system imposes unbalanced costs on U.S. manufacturers as they seek to compete in European markets, for example, by requiring retesting of products already certified within the United States. It also prevents U.S. testing laboratories from providing service to U.S. manufacturers for export of EU-regulated products, except in the limited capacity of subcontractors to European laboratories. As noted in Chapter 4, the severity of these obstacles varies by industry sector. It is important, however, to achieve a rapid, negotiated removal of EU barriers to U.S. exports, both to expand trade with Europe and to set a model for similar negotiations between the United States and other trading partners.
U.S.-EU negotiations toward mutual recognition of conformity assessment
procedures began in 1994. The objective of mutual recognition agreements (MRAs) is to enable manufacturers to test products once and obtain certification and acceptance in all national markets. The negotiations are led on the U.S. side by the USTR, with input from the Department of Commerce, other federal agencies, and private U.S. firms. Negotiators are seeking MRAs in 11 EU-regulated sectors: information technology; telecommunications equipment; medical devices; electronics; electromagnetic interference; pharmaceuticals; pressure equipment; road safety equipment; recreational boats; lawn mowers; and personal protective equipment such as helmets. These MRAs have strong potential to overcome impediments to trade and increase U.S. manufacturers' access to export markets.
Early discussions within the Asia Pacific Economic Cooperation (APEC) forum in 1994 indicate a favorable economic and political climate for regional MRAs in the Asia-Pacific region. Members of the APEC forum, including the United States, account for 40 percent of global economic activity. Many of the world's fastest-growing economies belong to APEC. Trade expansion through MRAs within the Asia-Pacific region represents a critical, new opportunity for export-led U.S. economic advance.
In order to facilitate U.S. and global trade expansion and economic advance, the following are recommended:
- RECOMMENDATION 5: The Office of the U.S. Trade Representative should continue ongoing mutual recognition agreement negotiations with the European Union. The USTR should also expand efforts to negotiate MRAs with other U.S. trading partners in markets and product sectors that represent significant U.S. export opportunities. Priority should be given to conclusion of MRAs for conformity assessment through the Asia Pacific Economic Cooperation forum.
- RECOMMENDATION 6: The USTR should use its authority under Section 301 of the Trade Act of 1974 to self-initiate retaliatory actions against foreign trade practices involving discriminatory or unreasonable standards and conformity assessment criteria. In particular, if U.S.-EU negotiations do not succeed within two years in securing fair access for U.S. exporters to European conformity assessment mechanisms, the USTR should initiate retaliatory actions under Section 301.
There are clearly problems of access for global producers in accessing national markets outside Europe where use of Section 301 may be warranted. The congressional request for this report, however, specifically referenced current EU-U.S. trading relationships and access for U.S. firms to European markets. Negotiations to remove barriers to U.S. manufacturers in Europe have been ongoing
for a substantial period of time. It is reasonable, therefore, to promote closure of this serious, outstanding issue within a two-year time frame.
In addition to policies aimed at reducing trade barriers, innovative export promotion programs will also provide economic benefit. The United States has a unique opportunity to provide leadership, facilitate world trade, and promote U.S. exports through technical assistance to countries in emerging markets. U.S. government and industry should provide expertise and resources to assist developing countries in establishing open, fair standards and conformity assessment systems. As noted in Chapter 4, NIST is currently developing an expanded program on International Trade Standardization and Measurement Services that serves to meet some part of this overarching goal.7 Programs such as these facilitate trade expansion. In addition, technical assistance has the potential to increase our exports by promoting adoption of both U.S. standards and international standards developed by U.S. industry as a means of meeting recipient countries' economic and regulatory objectives. The following is therefore recommended:
RECOMMENDATION 7: NIST should develop and fund a program to provide standards assistance in key emerging markets. The program should have four functions:
provide technical assistance, including training of host-country standards officials, in building institutional mechanisms to comply with the Agreement on Technical Barriers to Trade under the Uruguay Round of the GATT;
convey technical advice from U.S. industry, standards developers, testing and certification organizations, and government agencies to standards authorities in host countries;
assist U.S. private-sector organizations in organizing special delegations to conduct technical assistance programs, such as seminars and workshops; and
report to the export promotion agencies of the Department of Commerce (such as the U.S. and Foreign Commercial Service) and the USTR regarding standards and conformity assessment issues affecting U.S. exports.
To accomplish the objectives of the program, NIST should station U.S. technical experts in key foreign markets, including the rapidly emerging economies of Asia and Latin America. These experts must have at least five years of directly relevant experience in standardization, testing, and certification. They should be recruited primarily from the private sector and accredited by NIST as U.S. government representatives.
Meeting Future Challenges
As noted in this report, data and analysis are lacking on the economic effects of domestic and international standards and conformity assessment systems. Success in efforts to improve U.S. systems will be greatly facilitated by increased federal data-gathering and analytical capacities. In addition, over the next several decades, there will be important new, international developments in such areas as environmental management process standards. These developments will confront industrial leaders and policymakers with a critical need for information, monitoring, and early analysis of global standards and conformity assessment issues.
Accessing information about international developments is especially difficult for small and medium-size U.S. firms. Future U.S. export expansion will be influenced by the ability of these firms to meet standards and certification requirements of their customers abroad, as well as those of domestic customers who incorporate their products into finished goods for export. The recent agreement between ANSI and NIST to establish a national electronic network to interconnect existing sources of standards information is a first step toward improvement of information dissemination.8 Additional mechanisms must be established, however, to develop new sources of information and to reach small firms that lack access to electronic data networks.
In order to build a national capacity to monitor, assess, and disseminate information about international trends as they affect U.S. economic interests, the following are recommended:
- RECOMMENDATION 8: NIST should increase its resources for education and information dissemination to U.S. industry about standards and conformity assessment. NIST should develop programs focusing on product acceptance in domestic and foreign markets. These efforts should include both print and electronic information dissemination, as well as seminars, workshops, and other outreach efforts. Programs should be conducted both by NIST staff and by private organizations with NIST cooperation and funding.
- RECOMMENDATION 9: NIST should establish a permanent analytical office with economics expertise to analyze emerging U.S. and international conformity assessment issues. The office should evaluate and quantify the cost to U.S. industry and consumers of duplicative conformity assessment requirements of federal, state, and local agencies. To support the work of the USTR and other federal agencies, including those involved in export promotion, it should also collect, analyze, and report data on the effects of foreign conformity assessment systems and regulations on U.S. trade.
The need for information is acute in areas of emerging complexity in international conformity assessment systems, including third-party testing, certification, accreditation, and quality system registration. These systems have the potential for significant impact on U.S. manufacturers' costs and export opportunities. As noted in Chapter 3, for example, the rapid spread of requirements for certification of manufacturers' quality management systems to the International Organization for Standardization (ISO) 9000 series of standards was largely unanticipated in the United States. Registration of quality systems by third-party registrars imposes a significant cost burden on manufacturers, which is particularly difficult for small firms to bear. Furthermore it is important to recognize that ISO 9000 registration is related only indirectly to final product quality. Consistency and documentation of manufacturing processes, the focal points of ISO 9000, do not guarantee product quality if other elements, such as excellence in product design, are missing.
Mechanisms for auditing and certifying firms' environmental management systems, now under development in ISO, may follow a similar pattern. Without careful monitoring and active participation of U.S. government and industry experts in the early stages of development, environmental management standards have the potential to restrict trade and add unjustified complexity and cost to international conformity assessment systems, while providing only indirect enhancement of environmental protection. Anticipatory analysis of these and other emerging standards and conformity assessment issues is needed, therefore, to enhance U.S. trade and standards policymaking. The following is recommended:
- RECOMMENDATION 10: The USTR's post-Uruguay Round trade agenda, including work through the World Trade Organization, should include detailed analysis and monitoring of emerging environmental management system standards and their potential effects on U.S. exports. Technical assistance should be provided to USTR by NIST.
U.S. Environmental Protection Agency, Jeanne Hawkins, ed., Final Report of the Committee on National Accreditation of Environmental Laboratories.
U.S. Congress. Fastener Quality Act, H.R. 3000.
U.S. consensus standards-developing organizations were identified in Chapter Two. These include, for example, the American Society of Mechanical Engineers; the American Society for Testing and Materials; the Institute for Electrical and Electronics Engineers; the Computer and Business Equipment Manufacturers Association; and the National Fire Prevention Association, among others.
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