Standards, Conformity Assessment, and Trade Into the 21st Century (1995) / Chapter Skim
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4 International Trade
4 International Trade
Pages 103-152
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economic progress. Considerable progress has been made since the Second World War in lowering international trade barriers, particularly those associated with tariffs.
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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.
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.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.
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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.
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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.~° Tariff cuts ranged from 50 to 100 percent on semiconductors and computer components.
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Report on Foreign Trade Barriers, produced annually by the Office of the U.S. Trade Representative (USTR)
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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.
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laboratory under subcontract to a European laboratory. Success in U.S.-EU mutual recognition agreement (MRA)
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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.
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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.
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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.
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This is perhaps particularly important in the APEC region since the economies of East Asia, excluding Japan, are expected to grow 6.2 percent per year from 1993 to 2000 and to constitute 27.9 percent of global GDP by the year 2003.28 In addition, the new TOT agreement subjects processes and production methods to the same rules as those applied under the Tokyo Round code to manufactured goods. This expansion of multilateral rules will serve to reduce the likelihood that unjustified measures to block imports through technical regulations will continue unchallenged.
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These principles require that the treatment of imports by a GATT member country be no less favorable than the treatment of domestic products or imports from other GATT members. Articles 5 through 9 of the Uruguay Round TBT agreement extend the basic obligation of national treatment and nondiscrimination to laboratory accreditation, recognition, and quality system registration programs, such as ISO 9000 registration requirements.
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From page 119... ...
; publication and dissemination of work in progress; institution of a 60-day open comment period prior to adoption of standards; and refraining from applying standards that could serve as barriers to international trade. Adoption of the Code of Good Practice is voluntary and lacks an enforcement mechanism.
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It is uncertain, for example, how national governments will interpret Article 6 of the agreement, which requires "whenever possible, that the results of conformity assessment procedures in other Members are accepted, even when those procedures differ from their own, provided they are satisfied that those procedures offer an assurance of conformity." Efforts by governments to negotiate mutual recognition of conformity as
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U.S. TRADE POLICY AND SECTION 301 As noted, the Uruguay Round and the new World Trade Organization represent significant advances in international coverage of issues related to standards and conformity assessment.
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The USTR has primary responsibility for developing and coordinating the implementation of U.S. international trade policy.35 The office serves as the principal adviser to the president on trade policy and on the impact of other government policies on international trade.
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In addition, the National Trade Data Bank was established and designed to provide a central repository of U.S. government data on international trade and export promotion.
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Section 301 of the Trade Act of 1974, as amended, provides a useful tool to address barriers to trade in standards and conformity assessment systems.45 Section 301 supports petitions by individuals or commercial interests to enforce U.S. rights under international trade agreements, as well.
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The use of trade policy tools, such as Section 301, has clearly not always been uniformly effective in meeting U.S. objectives.
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In general, the NAFTA provisions on standards, testing, and certification indicate that regional trade agreements can be reached that both ensure continued high levels of health, safety, and environmental standards and move toward harmonization and mutual recognition between nations with differing levels of economic development.53 Background: Product Approval in the European Union In its request for this study, Congress asked for an appraisal of changes in the standards and conformity assessment systems of the European Union and ways for U.S. exporters to respond to the challenges they present.
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New European product approval regulations, however, have erected a potentially significant trade barrier around the European market as a whole.55 There are two components to these new regulations: product standards and systems for assessing conformity to those standards. In 1985, the European Commission addressed the former issue with its "New Approach to Technical Harmonization." The New Approach abandoned the pursuit of lengthy, detailed negotiations to harmonize (rewrite as equivalent)
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The European Commission instituted these changes as the "Global Approach to Testing and Certification." This is a framework for showing compliance to the EU New Approach product directives that relies on mutual recognition of conformity assessment systems within Europe. The framework consists of technical rules for conformity assessment procedures outlined by the European Commission.
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Mutual recognition by national governments of testing data, laboratory accreditation, and product certifications against specific standards represents significant potential for increased trade. The talks illustrate the potential economic
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Under mutual recognition, European manufacturers would also gain greater access to U.S. certification, including increased opportunities for conducting laboratory tests within Europe for products regulated in the United States.59 This would obviously involve acceptance by the United States of work performed in Europe by European entities.
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organizations could become notified bodies and perform testing and certification of exports to the KU. The EU has indicated that any mutual recognition will require some form of U.S.
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It does not, however, in a legal, government-mandated manner, pose a discriminatory international trade barrier, as noted in several recent reports of the EU on trade and investment with the United States.70 The U.S. conformity assessment system, as well as associated product liability practices, is as complex for U.S.
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trading partners. As the text of the Uruguay Round Technical Barriers to Trade Agreement acknowledges, mutual recognition of conformity assessment is important to future global trade expansion.
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Latin American markets, apart from Mexico, will grow at a 5.2 percent annual rate.73 With Japan and Mexico included, East Asia and Latin America will represent almost 50 percent of the world's combined GDP by 2003. Table 4-5 further underscores the importance of Asian and Latin American markets to U.S.
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. Latin America 31.0 72.9 East Asia-Pacific, i.e., 31.4 87.5 Japan Japan 22.6 47.9 Canada 53.3 100.2 European Union 49.1 97.1 Rest of the world 31.4 58.9 Total 1 218.8 1 464.5 1 112.3 CHANGE (%)
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In 1994, preliminary discussions on mutual recognition of conformity assessment began within the APEC forum.74 APEC consists of most of the principal economies bordering the Pacific Ocean: the United States, Canada, Japan, South Korea, Taiwan, Hong Kong, Singapore, China, Australia, New Zealand, and the members of the Association of Southeast Asian Nations (Malaysia, Indonesia, the Philippines, Thailand, Brunei, and Myanmar)
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This process was further advanced through the endorsement of the principle of an APEC MRA by the Eminent Persons Group created to advise the APEC member nations and leaders on achieving more open trade in APEC.7s The APEC Leaders Meeting in Jakarta, Indonesia in November 1994 endorsed the broad concept of MRAs among APEC members, as part of its declaration to begin the process of region-wide open trade by the year 2020.76 The declaration on an APEC standards and conformity assessment framework agreed to in Jakarta outlines several key principles for such mutual recognition. The objectives of the framework include both reducing barriers to trade within the region and promoting "the further development of open regionalism and market-driven economic interdependence in the Asia Pacific region."77 Noting the benefits to be gained from reducing "unnecessary costs and time-consuming delays associated with duplicate testing of products," the draft states that, "the development of broader networks of mutual recognition arrangements through the region will be a key objective of APEC's work program." The key elements of an MRA, identified in the draft submission to the APEC Leaders Meeting in Jakarta are presented in Box 4-2.
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and Foreign Commercial Service and the International Trade Administration; the Department of Energy; the Agency for International Development; Eximbank; the Overseas Private Investment Corporation; the Small Business Administration; and the Trade and Development Agency, which provides grants for project feasibility studies. These and other executive branch agencies coordinate U.S.
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Many developing countries, however, require technical assistance from industrialized nations in establishing standards systems that comply with their new, often challenging obligations under the Technical Barriers to Trade Agreement of the GATT Uruguay Round.
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The growth of efficient, private-sectordriven standards development would also serve to benefit foreign firms with manufacturing facilities in Indonesia, as well as exporters wishing to penetrate
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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 (IECJ standards.
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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.
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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.
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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: 1. An expanded program in standards assistance overseas should involve U.S.
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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.
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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 bamers in the post-Uruguay Round system.
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23. Office of the United States Trade Representative, Final Texts of the GAIT Uruguay Round Agreements, including the agreement establishing The World Trade Organization, and Agreement on Technical Barriers to Trade, 117-137.
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International Trade Commission, Potential Impact on the U.S. Economy and Selected Industries of the North American Free Trade Agreement.
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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.
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U.S. International Trade Commission, Development Assistance in East Asia, p.
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