prod regulations

							                                             USNCPEC IAG
                                           Paper for Discussion
                           Product Regulations in Global Markets:
                   How product regulations can best facilitate global commerce1


International trade in products and services underpins economic growth, economic prosperity and
expansion of high paying employment opportunities. Barriers to trade undermine a country's
participation in the global economy because they impede the introduction and use of products and
services. Therefore, as developed and developing countries contemplate the negotiation of agreements
to open markets, they should include among their objectives the facilitation of trade through the
elimination of technical and regulatory barriers, especially as they relate to government product
regulations. In so doing, trade negotiators and regulatory authorities should be guided by the principle:
"One Standard-One Test, Supplier's Declaration of Conformity."

This paper outlines the principle of One Standard-One Test, Supplier's Declaration of Conformity for
product regulations in global markets. Application of this principle will facilitate trade and benefit
consumers, workers, and businesses, while providing the most economically efficient means for ensuring
strong protection of vital health, safety, and environmental concerns.

The Importance of Product Regulations

Global markets are made up of individual customers. A company will remain successful in the market
as long as it continues to provide products and services that have meaningful value to customers.
Customer value can be defined to be a customer's perception of benefits received minus costs incurred
(Value = Benefits - Costs).

In general, governments promulgate product regulations because they believe regulations provide value
to citizens. The value of product regulations is not always immediately visible to customers who choose
products on the basis of cost, performance, features, availability and interoperability. However,
customers (and society) benefit from product regulations (e.g., consumer safety, clean water through
environmental regulations, etc.). Moreover, companies (e.g., suppliers) support regulations that truly
provide customer and societal value. The challenge for industry and government is to provide
value--meet the basic needs that regulations are intended to address--with a minimum of cost to the
customer.

Companies offering products and services that meet government regulations around the world have a
unique understanding of the substantial, hidden, unnecessary costs to customers that result from meeting
multiple national regulations that essentially duplicate one another. Requiring suppliers to perform
repetitive testing and obtain multiple certifications in order to market a product globally, as many
countries do, adds cost without adding customer or societal value. The result is higher cost to customers
for products that are the same from country to country, weighed down by inflated costs because of

1
  For the purpose of this paper, we limit the scope of the discussion to government-mandated product regulations.
Although private standards, consortia standards and formal standards play a vital role in the world economy, they are
not addressed in this paper. For definitions of terms used in this paper, see Annex I, Glossary. For additional
information, see Annex II, Frequently Asked Questions.
redundant product testing, certifications and marks. These costs result in higher prices, limited customer
selection, and delayed availability of innovative, new products, negatively affecting both the customer
and the nation's economy as a whole.

A Vision of Product Regulations

Over the last several years, companies in global industries have evolved a principle to increase the value
of regulations and decrease the associated costs to customers and governments. The principle is often
stated as "One Standard-One Test, Supplier's Declaration of Conformity."

We fully support this principle. There is, however, great variation in interpretation and implementation
of the principle by authorities in different countries. We realize that world wide implementation of the
principle will take time, often depending on the country's level of experience and familiarity with the
development and implementation of regulations and long-term plan. We stress that much work needs to
be done even in industrialized countries such as the United States to fully realize the achievement of the
principle. In newly industrialized and developing countries, a first priority often is to create new product
regulatory infrastructure (e.g., agencies, regulations) to support national objectives; alignment of the
regulatory infrastructure with global practices to facilitate low-cost, global trade often is seen as a lower,
long-term priority. However, we encourage regulatory authorities in both developed and developing
countries to embrace the longer-term priority as quickly as possible.

Recognizing that full implementation of the principle is perhaps a long-term vision, we seek global
agreement on the practical steps needed to achieve "One Standard-One Test, Supplier's Declaration of
Conformity" for product regulations that will best serve customers and society on a global basis. Such
an agreement will better ensure that various country regulatory developments are converging towards one
principle.

"One Standard-One Test ..."

A country's product regulations should reference "one standard-one test," where:

- The standard has widest possible international (global) acceptance, and
- Products need only be tested once for each internationally accepted standard or suite of standards.

Globally accepted standards. Technical requirements in product regulations should reference
internationally-accepted (global) standards or suite of standards instead of unique specifications. Many
companies design products one time to standards for global markets. Internationally-accepted standards
have the widest scope and acceptance in global markets.

References to technical specifications in national regulations should clearly indicate that they are
equivalent to the relevant internationally-accepted standard. The status of equivalency can be indicated
by referencing a given internationally-accepted standard in whole, or by identifying point-to-point
equivalency to the requirements of an internationally-accepted standard. More and more governments
are adopting this practice. For instance, product regulations for electromagnetic interference are
referencing internationally-accepted standards developed by the International Special Committee on
Radio Interference (CISPR) where previously, they referenced unique country government standards.

Ideally, regulatory specifications should not deviate from internationally accepted standards. Deviations
are appropriate only in those instances where internationally accepted standards are not capable of
meeting a unique national requirement, for reasons such as fundamental climate or geographic factors or
fundamental technological conditions.

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Tested once for each standard or suite of standards. Regulators should recognize and accept test results
from any supplier's laboratory or third-party laboratory that meets requirements of ISO/IEC Guide 25,
General Requirements for the Competence of Calibration and Testing Laboratories. Regulators should
not place constraints on the geographical location of the test laboratory. With these principles in place,
it will be possible for a product to be tested once against a standard or suite of standards and accepted
everywhere as conforming to that standard or suite of standards.

"... Supplier's Declaration of Conformity"

Bilateral and multilateral discussions are underway to increase worldwide acceptance of a product test
and a declaration of conformity with relevant regulations. In many respects, these discussions are not
fully considering the benefits of supplier's declaration, the most cost-effective method for demonstrating
conformity. There is no need for regulators to mandate third-party certification; regulators should
recognize and accept equally a supplier's declaration or a third-party's certification. Regulators should
allow suppliers to choose freely between a supplier's declaration and third-party testing and certification
services. In this way, the supplier's choice can be based on cost, convenience, availability, perceived
marketplace needs, and other business considerations.

Trade agreements will more likely recognize supplier's declaration if there is assurance of consistency in
its meaning and application from one supplier to another. Suppliers should not be given "free rein."
Consistency and integrity are better assured if:

a) Regulators accept a declaration of conformity that conforms to internationally-accepted standard,
ISO/IEC Guide 22: General Criteria for Supplier's Declaration of Conformity. Regulators can hold
suppliers, local authorized representatives or importers legally responsible for a declaration of
conformity.

b) Regulators and industry work through ISO to develop additional specifications not fully addressed in
the current version of ISO/IEC Guide 22, such as:

- Local accountability of supplier's declaration (e.g., who is locally responsible)
- Delivery of supplier's declaration (e.g., shipped with product)
- Access to supplier's declaration (e.g., physical location, retention)
- Compliance records (e.g. required content, physical location, accessibility, retention)
- Audits and follow-up review of reports (e.g., frequency schedule)

Product Regulatory Marks

Many problems with proliferating product marks on products were discussed at the recent ISO
COPOLCO/CASCO Joint Workshop meeting ("Marks and Labels; difficulties with diversity," ISO
Bulletin, September 1996). When there are too many marks, the problems include confusion,
misinterpretation and misplaced trust in their integrity.

The increasing number of regulatory product marks required by regulators does not necessarily serve
their needs. If the objective of marks is to signify regulatory conformance, a review of the documents
associated with the supplier's declaration provides more detailed and complete information. This review
would eliminate the need for unique country markings on the product itself.

Ideally, companies, customers and governments should develop a strategy for reducing the number of
national and regional product marks that leads to the acceptance of global marks, accepted worldwide.

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The vision is a minimum set of one--one "global" mark indicating the product meets all requirement in all
participating countries. As an intermediate step toward this long-term vision, customers and regulatory
authorities would benefit from a new, graphical symbol that indicates that regulatory conformance
information--i.e., conformance to standards, technical specifications, codes, regulations and associated
product marks--is found on the declaration of conformity document. ISO/IEC has begun work to
develop the specifications and requirements for displaying such a symbol on products.

Government Enforcement of Product Regulations based on Supplier's Declaration of Conformity

We believe regulatory authorities must continue to safeguard legal conformance to regulations, including
conformance through supplier's declaration.

Regulatory authorities are more willing to allow a supplier's declaration if given more "up front"
assurance--based on solid, consistent record-keeping--of the supplier's diligence and capability in
utilizing the supplier's declaration approach. Along with the ability to access records to verify supplier's
capabilities, the existing mechanisms for enforcement are powerful tools for authorities to ensure
continued integrity in the marketplace; they include:

- Product market sample and audit
- Customs inspection for the existence of declaration of conformity documents
- Marketplace complaints to the regulatory authority
- After-market surveillance

A Role for Developed and Developing Countries

If we compare our stated positions with the realities we see today in product regulations across the world,
there are both positive and negative trends.

Certainly, a positive trend is that many countries' product regulations reference internationally-accepted
standards (e.g., European Union member countries, Australia, United States). But more attention is
needed to specify equivalency and to minimize local deviations.

At the same time there is a negative trend in the area of product testing and in demonstrating
conformance for worldwide acceptance. Product regulations from country to country vary in the
requirements for conformity assessment--and the trend is toward divergence. This problem is not
restricted to developing countries but ensnares all nations including the United States. If this continues,
suppliers will be faced with significantly different testing and conformity assessment requirements from
approximately 200 sovereign nations! That situation would not benefit customers, suppliers or
governments.

Therefore, again, we recommend that when establishing a product regulatory infrastructure or negotiating
trade agreements, developed and developing countries give full consideration to the application of the
principle of "One Standard-One Test, Supplier's Declaration of Conformity." That infrastructure should
be developed from an innovative, long-term perspective, looking beyond existing regulatory
infrastructures. Countries that have established regulatory infrastructures must be willing to change
their regulations and practices and not simply promote their own model and agenda. We offer this paper
on "One Standard-One Test, Supplier's Declaration of Conformity" as a common basis for developing
strategic plans for product regulations to best serve the needs of all countries in enhancing their economic
growth and prosperity.




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                                          ANNEX I: GLOSSARY


To better ensure understanding, we use the following definitions of the words "standards," "product
regulations" and "conformity assessment" in describing our position.

What are Standards?

In general, a standard is a document that describes the features of a product, process, service, interface or
material. When we use the term "standard," we mean voluntary specifications. For instance, a
company chooses to comply with the specifications of a standard because the company believes it is
important for marketplace entry and acceptance. Marketplace entry and acceptance encompass
perceived customer need, competitive pressures, interoperability advantages, and internal benefits to
achieve business objectives. Ideally, companies meet those standards where the derived benefits exceed
the cost for compliance.

There are many ways to group standards. One way is the following:

Private standard: a standard published, developed and maintained by a single company for its own
purposes. The company may make its existence known to the public or limit it to internal use.

Consortia standard: a standard published by a limited group of companies or organizations. The group
decides the process and voting procedures for its development, revision and maintenance. The standard
serves the group's need. The group may or may not share these standards with those outside the
consortia.

Government standard: a standard published, developed and maintained by the government, which
determines its application and use.

Formal standard: a standard published by a private organization that has defined procedures for
consensus and due process to develop and maintain its contents. The standard is publicly available to
anyone. There are three general types of formal standards:

   International Standards, including but not limited to those published by the International
    Organization for Standardization (ISO), the International Electrotechnical Commission (IEC), and
    the International Telecom Union (ITU).

   Regional standards such as those published by the European Committee for Standardization (CEN)
    and the European Committee for Electrotechnical Commission (CENELEC).

   National standards such as those published by a Standards Development Organizations (SDOs) that
    solicits individuals from within its country to develop, revise and maintain its contents.

Some national and regional standards are equivalent to ISO or IEC standard, with possible deviations
from it.

What are Product Regulations?

A product regulation is a legal requirement promulgated by a government entity or a government
authorized entity that specifies the features of a product, process, service, interface or material, and the


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administration thereof. We use the term "regulations" to mean mandatory specifications, as dictated by
government authorities.

A regulation specifies the many administrative requirements, including the effective date for compliance.
The technical requirements of some regulations may reference a government standard or a formal
standard.

What is Conformity Assessment?

Conformity Assessment (CA) is a comprehensive term for procedures by which products and processes
are evaluated and determined to conform to a standard or regulation. We use the term "conformity
assessment" to mean a method to demonstrate conformance to a standard or regulation.

There are many CA methods (options) for product testing:

   Supplier (Manufacturer) test
   Private third-party test
   Government-recognized private third-party test
   Government test

Similarly, there are many CA methods for product conformity assessment declaration. The methods are:

   Supplier's (Manufacturer's) declaration
   Private third-party certification
   Government-recognized third-party certification
   Government certification

There are many CA methods for demonstrating the competence of laboratories, testing and calibration
services. The standard that is most often referenced is international guide ISO/IEC Guide 25. The CA
methods are:

   Self-declaration
   Private third-party accreditation
   Government-recognized private third-party accreditation
   Government accreditation

There are many CA methods for demonstrating the competence of a company's management system.
For quality system assurance, the standards that are most often referenced are international standard ISO
9001 and ISO 9002. For an environmental management system, the standard that is most often
referenced is international standard ISO 14001. The CA methods are:

 Self-declaration
 Private third-party registration
 Private third-party accredited registration
Government-recognized private third-party registration




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                          ANNEX II: FREQUENTLY ASKED QUESTIONS


Q: The paper applies only to product regulations. Why are private standards, consortia standards and
formal standards not addressed?

The driving forces are different for product regulations than voluntary standards. Regulations have the
force of law. The use of voluntary standards are determined by the marketplace. Although the
principle of "one standard-one test, supplier's declaration of conformity" can apply to both regulations
and voluntary standards, the paper would be unnecessarily complicated if we addressed both at this time.
Our priority is on government imposed obstacles to the flow of trade that can be addressed in trade
negotiations that are aimed at facilitating trade.

Q: The paper does not specify product regulations by industry sector and/or geographic region. Which
areas are being targeted?

The paper applies to all industry sectors in all geographic regions. From ITI's perspective, we would
like to see governments focus on product regulations for the information technology sector. Other
stakeholders are free to advocate on behalf of other sectors.

Q: Is "One standard-one test, supplier's declaration of conformity" the same as "one-stop shopping" or
"tested-once, accepted everywhere?"

No. Each is distinctly different.

The term "One standard-one test, supplier's declaration of conformity" restates in its simplest form a
fundamental industry principle. It expresses a concept that if fully implemented would lead to the
operation of a low-cost, effective method that best facilitates global trade. The term "One standard-one
test" is a call for the adoption of regulations under which the greatest use of internationally-accepted
standards and corresponding tests conducted by the supplier (manufacturer) or a third-party at any
geographic location is accepted worldwide. The term "Supplier's declaration of conformity" urges
regulatory authorities to recognize such a declaration as an equally effective method of demonstrating
conformance as third-party certification, given the necessary specifications and safeguards for supplier's
declaration have been established.

"One-stop shopping" is a term expressing the concept of third-party certification or accreditation mutual
recognition program. "One-stop shopping" allows for either (1) a third-party certificate or accreditation
accepted by all other third-parties at face value, or (2) a third-party to "broker" a another third-party's
certification, accreditation or product mark -- as a service offered on request. With respect to
negotiating trade agreements, the problem is its exclusive focus on third-party programs and its exclusion
of supplier's declaration as well as the broader concept of "one-standard-one test."

"Tested-once, accepted everywhere" is a term that is at a higher level of abstraction and generality than
needed to guide trade negotiations. It encompasses both the "One standard-one test, supplier's declaration
of conformity" principle and the "one-stop shopping" concept, without specifying either. We believe
this term is too vague to be of use in trade agreements.

Q: What happens if a country regulation references an international standard that is subsequently
revised?


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The international standard referenced in the regulation remains in effect until the regulatory authority
first adopts and then formally references the revised international standard. Before adoption, it is
important that the regulatory authority verifies the revised international standards meet its needs. In
referencing a revised international standard, the regulatory authority should allow for an orderly
transition by setting compliance dates between the old and revised standards.

Regulatory authorities should track the progress of international standards development through their
country representatives to the international committees. This is important if the regulations themselves
are to quickly reflect the latest versions of the international standards.

Q: Since you are advocating "supplier's declaration" over "one-stop shopping," are you opposed to
third-party certification?

No. We believe third-party certification serves an important role in the full range of conformity
assessment options. As indicated in the paper, we believe the supplier should have the choice of using
third-party certification or supplier's declaration and that regulators recognize both as equally valid.

Q: Are you arguing that the approach embodied in the negotiation of Mutual Recognition Agreements
(MRAs) should be abandoned?

A: Not at all. To the extent that MRAs can be negotiated to facilitate trade, we support them. We are
not proposing a "global agreement" approach. Instead, we are proposing that as MRAs are negotiated,
the negotiators be guided in their approach by the principle "One standard-one test, supplier's declaration
of conformity."

We argue that multilateral MRAs are more effective than bilateral MRAs in facilitating trade. One
advantage is that multilateral MRAs advance a more global, innovative perspective, while bilateral
discussions restrict negotiations to established models of operation in the two countries party to the
negotiations. Moreover, there are approximately 200 sovereign nations in the world. Even if
multilateral MRAs are "grouped" in some rational way, we are talking about a protracted negotiation
schedule. It should be noted that even multilateral MRAs are necessarily tailored to the circumstances
of those involved in the negotiation. This suggests that we will wind up with some variances among
negotiated multilateral MRAs. To assist in overcoming this potential problem, we urge that all
multilateral and regional agreements embrace and be guided by the principle: "One standard-one test,
supplier's declaration of conformity."

Q: What assurance do governments have that their national responsibilities for enforcing conformance
to laws and regulations are not compromised by allowing greater applicability of supplier's declaration?

A: We believe regulatory authorities continue to safeguard legal conformance to regulations.
Regulatory authorities will continue to be responsible for ensuring conformance with regulations,
including conformance through supplier's declaration.

Supplier's declaration has a long history of success for a number of product regulations. For example,
the European Union has successfully enforced electromagnetic compatibility regulations through the
option of supplier's declaration. We believe regulatory authorities would be willing to extend greater
application of supplier's declaration to more regulations if given more "up front" assurance--based on
solid, consistent record-keeping--of the supplier's diligence and capability in utilizing the supplier's
declaration approach. With the ability to access records to verify supplier's capabilities, the existing
mechanisms for enforcement are powerful tools for authorities to ensure continued integrity in the
marketplace; they include:

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   Product market sample and audit
   Customs inspection for the existence of declaration of conformity documents
   Marketplace complaints to the regulatory authority
   After-market surveillance

Regulators will have greater confidence if supplier's declaration is consistent in its meaning and
application from one supplier to another. Suppliers should not be given "free rein" in the form and
administration of supplier's declaration. To better ensure consistency, we propose that regulators
recognize suppliers that issue a declaration that conforms to international standard ISO/IEC Guide 22.

In addition, we proposed that ISO/IEC CASCO be supported in developing additional
internationally-accepted specifications not currently addressed by ISO/IEC Guide 22. These additional
specifications are necessary for global consistency and better integrity of supplier's declaration.

Q. What happens if a country regulation references an international standard that is subsequently
revised?

A. The version of the international standard specifically referenced in the regulation remains effective for
the regulation until the revised international standard is adopted by the country regulatory authority and
formally referenced in the country regulation. It is important that country regulatory authorities follow
this process as it 1) provides a check on the output of the international standards process and 2) allows
for the setting of compliance dates for the orderly transition between the old and new standards in
country and world commerce.

Government regulatory authorities should participate in and track the progress of international standards
development through their country representatives to the international committees. This is important if
the regulations themselves are to quickly reflect the latest versions of the international standards
themselves.

                  This paper is under review by the USNCPEC Telecom Taskforce
                                       and is a product of the
                              Information Technology Industry Council
                                         WWW.ITIC.ORG




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