Product Standards, Conformity Assessment and Safety in the Global Marketplace

by Timothy Baker, Esq.

Technical trade barriers created by differing product standards and conformity assessment requirements have emerged from relative obscurity and now rank among the most important obstacles to free trade. The highly technical nature of product standards, testing procedures and certification requirements render them attractive devices for protecting domestic industries against tough global competition. Trade disputes involving product standards and conformity assessment requirements are particularly troublesome because they are often linked to sensitive cultural issues.

The task of sorting out these difficult issues is complicated by the lack of hard statistical evidence concerning the trade effects of differing product standards and conformity assessment requirements. According to the Deputy Director General of the World Trade Organization (WTO), Jesus Seade, most of what was known about technical barriers to trade was by anecdote and example until the Organization for Economic Co-Operation and Development (OECD) issued its study, Consumer Product Safety Standards and Conformity Assessment: Issues in the Global Marketplace.

The OECD study is based largely on a survey regarding the impact of differing product standards and conformity assessment requirements on the cost, safety and marketing of products. Governments, manufacturers, trade associations, standards bodies and conformity assessment organizations were asked about a variety of consumer products reflecting differences in price, markets, trade volume and levels of technological development.

Survey findings were discussed at an OECD conference and resulted in a number of recommendations designed to adapt the standardization and conformity assessment systems to the global marketplace and clarify their functions. (Recommendations will be discussed in part 2 in the next issue of the Report.)

The OECD study reveals a complex patchwork of product standards, standards bodies and systems for regulating product standards throughout the industrialized world. Likewise, an equally complex patchwork exists characterizing conformity assessment systems and requirements. Conformity assessment requirements vary in the level of scrutiny involved in product testing (from a manufacturer's self-declaration of conformity to third-party testing) and in the qualifications of certifiers and certification schemes. Adding to the confusion is a variety of enforcement mechanisms.

According to the OECD study, manufacturers and trade associations believe that different product safety standards and conformity assessment requirements add to the cost of products and increase delays in placing them in world markets, yet provide little benefit to the buyer. Moreover, the study found that the complexity of these systems alone appears to create particularly difficult obstacles for small and medium manufacturers and, consequently, presents significant trade and competition considerations. Manufacturers and trade associations stress that variations in product standards having little or no effect on a product’s inherent safety often create costly production difficulties and hinder trade.

Safety officials, on the other hand, dismiss the notion that product safety standards and conformity assessment requirements differ significantly, and believe they are necessary in the interest of safety. Not surprisingly, therefore, the study found that functionally equivalent product standards are not widely accepted in the world’s markets, which is why manufacturers must modify their products to meet national and regional safety requirements.

In addition to having to modify their products to meet differing safety standards, manufacturers have to contend with a variety of different conformity assessment requirements. Repeated testing of products and multiple certifications are the norm for the average manufacturer that exports consumer products because few markets accept the results of product testing and certification performed in foreign markets. For a manufacturer selling in several countries, national and regional conformity assessment requirements that result in repeated product testing is a major concern.

Computer giant Dell’s experience has been cited as an example of the worsening problem of duplication of testing and multiple certification. At the end of 1995, Dell was introducing 180 new products a year, with almost half of its sales international. In 1991, the Dell regulatory compliance department was required to get five regulatory approvals to sell worldwide; by 1996, 26 approvals were required.

These problems will disappear, according to manufacturers and trade associations responding to the OECD survey, when products need to meet only one universally accepted standard and be tested only once to be permitted access to all world markets. Unfortunately, such a system is not likely to come about soon. Currently, few international product standards are widely accepted in major markets, and mutual recognition of testing and certification results is rare. Moreover, simply removing differences in product standards and conformity assessment requirements would not address the important role they play in assuring consumer confidence in the safety of products available in open, competitive markets. The recent example of mad cow’s disease in England and its impact on the entire European beef market dramatically illustrates the importance of consumer confidence.

With its Agreement on Technical Barriers to Trade (TBA) and Annex 3, “Code of Good Practice for the Preparation, Adoption and Application of Standards,” the WTO took major steps toward reducing the opportunity for product standards and conformity assessment requirements to be utilized as technical barriers to trade. The TBA requires governments to institute a number of practices regarding standards development, such as providing notice in certain instances and instituting non-discrimination policies in their processes.

The TBA also encourages member governments to adopt international standards, enter into mutual recognition agreements on conformity assessment results, and accept the principle of recognition of equivalent standards.

Still, safety concerns about products available on open markets are being addressed primarily by national safety officials using antiquated methods. Applied in a global trading environment, detailed national product regulations issued by central bureaucratic bodies governing standards and conformity assessment tend to hamper consumer choice, product innovation and competition, and can easily become technical barriers to trade.

Meanwhile, manufacturing, marketing, distribution and other thoroughly internationalized commercial activities continue to develop in response to rapid advancements in technology. World products are no longer limited to high-tech and costly items, such as computers and aircraft. Even the teddy bear has component parts produced in many countries and continents. The sheer quantity and variety of products available to the consumer and the pace at which new products enter the market are straining current standardization and conformity assessment systems and their effectiveness in ensuring product safety.

Timothy Baker, Esq. formerly with the OECD, is President of the National Law and Language Institute. The Institute conducts Law, Legal English and Spanish language programs in cooperation with the NLCIFT. Mr. Baker may be contacted at (703) 378-1073