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Implementation of  STANDARDS – Voluntary or mandatory?

Adapted from paper presented by Mr Rajinder Raj, SIRIM Berhad at the National Standards Congress, October 14, 2002 Kuala Lumpur

Synopsis

The implementation of voluntary standards is being re-examined at the national level in many countries and also at the international level in WTO. The close relationship between voluntary standards and technical regulations is one of the main reasons for this re-examination. The impact of voluntary standards on trade is a another major factor. The obligation to adopt international standards included in the Technical Barriers to Trade (TBT) Agreement of the World Trade Organisation (WTO) has influenced the policies of many nations for standardisation. This paper examines the implementation of voluntary standards in a qualitative manner and discusses the manner of use of standards in technical regulations.  Some examples from our experience in Malaysia are also presented. General recommendations related to improvements to  the regulatory system, compliance with international obligations of the TBT agreement, and cost effectiveness and efficiency are suggested as a conclusion.

Background and Issues

Standardisation has evolved on a voluntary basis in most developed nations and has been industry driven and funded. By comparison we note that in Malaysia, like in many other developing nations, national standards bodies are established by the governments. However the outputs of these bodies are published as voluntary standards. Although most standards bodies have attained some kind of official recognition, many standards bodies, including ISO and IEC at the international level are non-governmental organisations. Voluntary standards developed at national, regional or international level serve a myriad of purposes, for trade, technology development, and provision of health safety and security.

We note examples of standards developed in developed countries by the insurance industry, manufacturer associations and trade interest groups to serve their technical and commercial needs. Several subjects of the voluntary standards have in turn been regulated by governments due to public concern on issues related to safety, health, environment and consumer protection. As income levels rises and the expectations for a better quality of life increases, there is a greater the demand for such standards in Malaysia.

These factors  made it necessary for both the government regulators and standardisers to closely examine the need for such standards and manage the implementation of these standards. At this stage of development we note:

i)                     the increasing overlap of subject matter on voluntary standards and regulations developed by regulatory agencies e.g. several standards are being developed to define safety requirements or  levels of acceptable quality and at the same time there are calls for implementation of regulations

ii)             the trade impact of voluntary standards when referenced in technical regulations, both for domestic and international trade.  Products thus regulated are required to be inspected, tested or certified for compliance and such standards can restrict the entry of certain products into markets. In this aspect we note the significant increase in technical regulations by several nations in recent years.

At the international level, the TBT agreement has specific provisions on the obligations for the utilisation of voluntary standards in technical regulations promulgated by signatories to the agreement. The international standards referred to in this context are voluntary consensus documents and often these are adopted by national or regional standards bodies as their own standards.

Regulators in Malaysia as in other countries, however, in many instances have often not referred voluntary international standards but have utilised alternate means in developing technical regulations. This has caused a variety of differing requirements to exist globally and create barriers to the free flow of goods.

At the second Triennial review of the TBT agreement in 2000, it is clearly stated that international (voluntary) standards are important elements of the agreement and have a significant role in the implementation of the obligations of signatories especially through technical regulations. The review devotes several more paragraphs to implementation issues related to standards in this context.

The Triennial review additionally notes the opportunities for governments to use voluntary international standards as an alternative to mandatory technical regulations ( i.e. to use market forces as an alternative to legislation to achieve regulatory objectives).

It acknowledges that the use of voluntary international standards will result in reduction of regulatory burden for  governments and also for improving market access. Both governments and standardisers need to study the implications of these observations.

The subject matter of voluntary standards will be seen in a more serious manner by governments if it is intended as an alternative to regulation. Regulators will also begin to give more serious attention to standards development both at international and national levels.

Institutional Framework at national regional and international levels. The interface between voluntary standards and technical regulations should be examined both at the national and international levels.

National

At the national level, the interface depends on the laws and regulations in force. The Standards Act of Malaysia 1996 places the Department of Standards Malaysia (DSM) as the focal point and authority for all Malaysian Standards, in addition to its position as the national accreditation body. However, its role is limited to developing voluntary standards and it only has an advisory role with regard to implementation of the standards.

However, it cannot on its own decide on the implementation of any Malaysian standard nor require that certification bodies and test laboratories be accredited. These decisions are left to specific regulatory agencies, i.e. regulatory agencies decide on the standards and the  manner of  the implementation of the standards.

There is also a variation in the implementation from sector to sector. For some sectors such as the electrical and telecommunications sectors, the authority is at the national level with the Energy Commission and the Communications & Multimedia Commission respectively, for  the building, construction and water supply sectors it is distributed to the state governments and the federal ministries only perform a coordinating role. In some instances it has been noted that existing legislation does not adequately define the authority responsible and there is no clear agency responsible for implementation of standards.

DSM  as the National Standards Body (NSB) oversees a National Standards Development Infrastructure with participation from government agencies, private sectors and voluntary organisations.. The nature of the system fosters closer linkages with regulators and is beneficial for all parties.

For regulators the benefits of a closer coordination include:

·          Readily available resources (technical specifications contained in standards) for the development of technical regulations

·          Consultation mechanism with stakeholders (in the form of technical committees) to ensure sound regulations are developed (when standards are used as basis)

·          Trade impact considerations incorporated through the standards development process as this process includes trade interests

·          Potential to use voluntary standards as an alternative to regulations can be promoted thus reducing regulatory costs e.g. through incentive schemes or other market actions

·          Compliance to TBT obligations (article 2.4) simplified through the connection of NSBs to the International standards system  i.e. when standards adopted in regulations, are adopted international standards.

For standardisers the benefits would include:

·          Development of viable and implementable standards (market relevant standards)

·          Avoidance of duplication of effort when standards developed with an objective of being adopted in technical regulations

·          Increased and assured support for its activities from government and other stakeholders

It is obvious that the provisions of the TBT agreement (Article 2.4 – use of international standards in technical regulations) and the recommendations of the Triennial review on standards can be realised by the close collaboration between standards bodies and regulatory agencies.

International

There are two aspects that we should focus on at the international level:

i)              The linkages between the International Standards Bodies and the World Trade Organisation

International Standards Bodies (ISBs) also like national bodies are of both types-inter-governmental organisations with representation by official governments or non-governmental organisations such as the ISO and IEC.  There is no formal organisational link between the ISBs and the WTO. The linkages are only recently being strengthened to enable a higher level of cooperation. There is still a discussion on fundamental questions as to which organisations can be considered to be an international standards body.

ii)             The issue of participation in international standardisation

At the international level, the participation of regulators in voluntary standards is again an important factor.  Participation in ISBs that are of the intergovernmental type is generally through representation by regulatory agencies from member economies. However in NGO type ISBs, the representation is through the national standards body. The regulators may not be represented in some instances. It thus becomes important for national standards bodies to ensure participation by their regulatory agencies in national mirror standards committees to ensure representation at the international level.

The other major concern is the participation by developing economies in international standardisation. It has been well recognised by the TBT Committee  that participation by developing economies is very low and urgent action by both the ISBs and the NSBs is required to address this concern if the use of voluntary standards is to be further developed.

Participation would ensure widely acceptable voluntary standards taking into consideration the widest concerns of members and thus facilitating use by all member economies. It is only recently that constraints faced by developing members are being investigated. Of course participation is now critically important due to the TBT agreement. Developing economies must take the initiative to rectify the imbalance that exists in many international standards committees.

We in SIRIM  over  the last few years, have taken note of this urgent need to participate.  A systematic review of participation has been on going and this has resulted in a significant increase. In 1999 Malaysia was “participating member” in forty nine ISO committees and this has increased to sixty six currently. We have also enhance the impact of our participation by taking on chairmanship and convenor of committees and with six positions and recently taken on the secretariatship to ISO/TC 157, in addition to ISO/TC 45 and TC/45/SC4. However we still are of the opinion that there is a need to further increase participation in committees of trade interest to Malaysia.

Voluntary Standards Development

This model of utilising voluntary standards in regulations implies that Malaysia will need to develop a collection of sufficient voluntary standards These standards will either be developed indigenously or be adopted and adapted from international standards. This effort for the development of voluntary standards is in turn dependent on:

·          a suitable infrastructure;

·          a regular source of funding;

·          participation in international standards development;

·          knowledge and skills in management of standards development activity; and

·          awareness of the use, need and methods of development of voluntary standards by stakeholders.

In Malaysia we are fortunate to be in a situation where we have a major part of the essentials noted above in place although the need for further development is noted. It is the last of these factors that are often least recognised and major effort is required to educate the regulators, industry, policy makers, professionals and other business interests. We are conscious of the need to develop our infrastructure further and enhance participation internationally.

Methods of Implementation of Standards in Technical Regulation

The primary means of the implementation of standards is through technical regulations. Generally, in technical regulations, four different approaches are available specifying technical requirements and specifications for the subject of regulation:

·          Method 1           A specific reference to the standard in the text of the regulation.

·          Method 2           Incorporation of the full text of the standard in the technical regulation (with or without modification).

·          Method 3           Incorporation of full technical specifications in the text, which may differ from voluntary standards.

·          Method 4           Specification of key requirements in the technical regulation accompanied by reference to a voluntary standard by administrative means.

Malaysia has utilised all four methods.  Again we believe that the situation is not uniform within various sectors within a particular economy. In Malaysia for example the building sector regulations (Uniform Building By Laws or UBBL) contain several direct references to standards but the road transport sector has limited references and relies largely on Method 3.

We have an ongoing discussion in Malaysia on the use of this method of directly referencing voluntary standards in technical regulations. Some from the legal establishments have raised objections of this method and have stated a preference to use Method 2 or 3.  We in SIRIM believe that this approach, for most instances, is not the best for the development of effective and efficient technical regulations and also not in line with international practice. We will continue to convince the parties of the preference for Method 1 in most cases and Method 4 in special cases.

The four manner of specifying technical content in regulations is significant. While it may be necessary to rely on all the four different options available, it would be beneficial if reliance on the use of the first method is the preferred option. This option has several benefits:

i)              consultation of interested parties takes place at an early stage of the process due to the fact that all significant interested parties are represented in the voluntary standards committees

ii)             this method promotes transparency due to the open procedures utilised

iii)            regular revision to update in line with changing needs and technological developments is possible due to the established review processes

iv)            alignment with international standards is facilitated, in this respect, the adoption of international standards and the reference in technical regulations can be readily accomplished in accordance with Article 2.4 of the TBT agreement.

This last point is of importance for purposes of promoting international trade. In the international standards community, the need for aligning and harmonising standards is well accepted. As a comparison we note that the mechanisms and dialogues between regulators internationally are limited to only some specific areas. In the fire safety sector for example, we are not aware of any mechanism for a dialogue between regulators on standards at an international or regional forum, other than through ISO committees. Efforts to remove trade barriers for fire safety products would encounter more difficulty if regulators rely on Method 3 due to differences in technical specifications adopted by regulators.

Implementation of voluntary standards in other Regulated sectors, examples in Malaysia

The approach adopted in the Electricity Supply Regulations in Malaysia facilitates quick alignment to international standards is by reference to voluntary standards through administrative circulars (Method 4 above). The regulations require the regulatory agency to grant certificates of approval to products that are safe. No standards are quoted in the regulations, and the regulator determines the standards and publishes these through administrative circulars. Voluntary Malaysian Standards are quoted in the circulars.

As most of the Malaysian Standards are based on IEC standards, the net effect is the alignment of technical regulations internationally. In the sectors of food safety and telecommunications the implementation of standards is through an alternative mechanism. For all of these three sectors, there is direct participation by regulatory agencies in international standardisation that results in the publication of recommendations. At a national level these recommendations are often directly adopted into regulations usually with modification to suit local requirements. Voluntary national standards are not utilised. The use of voluntary national standards is restricted to instances where there is an absence of international documents from the standards bodies.

Removal of trade barriers through alignment with International standards

Trading in the global marketplace has its own challenges. Trade barriers still exist due to several factors such as regulatory restrictions, conformity assessment requirements and also due to differences in product standards. Individual nations impose technical regulations and associated standards based on their economic and social considerations.  When domestic conditions differ, standards and regulations will often differ.  Manufacturers and exporters of regulated products are required to comply with these.

In situations where difficulties are encountered in complying or demonstrating compliance through conformity assessment systems, standards and associated technical regulations are thus often seen as technical barriers to free trade. Very often when standards are a barrier, it is the differences in local or national standards that create barriers. It is envisaged that barriers can be significantly reduced or eliminated by adopting a common set of internationally harmonised or aligned standards.

International standards organisations such as the ISO (International Organisation for Standardisation) and the IEC (International Electrotechnical Commission) have been established to fulfill this very necessary function. International Standards are widely adopted at the regional or national level and applied by multinational manufacturers, trade organisations, purchasers, consumers, testing laboratories, authorities and other interested parties.  Since these standards generally reflect the best experience of industry, researchers, consumers and regulators worldwide, and cover common needs in a variety of countries, they constitute one of the important bases for the removal of technical barriers to barriers.

For these reasons, we encourage our standards committees reference to and adopt or align with international standards wherever appropriate. The alignment of standards with international standards is also a key component aspect in the periodic review of standards programme. Only by developing such an approach can the benefits of participating in  international standardisation be fully realised.

The national use of voluntary international standards has not progressed to the same level in all sectors. It would be useful to look at the example of the fire safety sector. Fire safety standards have generally evolved at a national level. It is only in recent years that we see increased activity in the development of international standards in this sector. The ISO committees for fire protection and safety are:

TC 21 Equipment for fire protection and fire fighting

TC 92 Fire safety

We believe that the work of these two committees will facilitate considerable external trade in fire protection equipment. In the earlier years international standards for fire safety were limited in number. It is noted that in recent years these committees have increased their level of activity and several new standards have been published.

We note that the level of alignment is low primarily due to the small number of existing international standards which are now increasing in number significantly. Alignment is a slow process as fire safety standards are often incorporated in building codes which are under differing legal systems and in many economies involve local government.

Observations and Conclusions

Several very significant developments are occurring in International Standardisation and the status of the voluntary standards that are developed are worth noting:

·          Many nations are placing increased focus on international standards and allocating a greater part of their budget to international standards than national standards.

·          International Standards are increasingly adopted at regional (e.g. in the European Union) and national level.

·          Voluntary implementation at operating level by manufacturers, traders, purchasers, regulators and other parties is increasing. Several corporations including some multinational giants have adopted policies of using such standards.

·          Explicitly acknowledged in the Agreement on Technical Barriers  to Trade of the World Trade Organisation (WTO/TBT Agreement) a  key basis for trade and obligation for signatories  to utilise.

·          These standards usually reflect the current state of the art and agreed needs and requirements.

Voluntary international standards are now seen as an appropriate means for enhancing market access. This is an opportunity for Malaysia to utilise these standards through adoption or adaptation, both voluntarily and in technical regulations, to facilitate export trade, upgrade our regulatory systems to meet current expectations for safety, health, consumer and environmental protection. Where international standards are not available the National Standards Development Infrastructure is well placed to develop the required standards through the voluntary process.

References

1.             Agreement on Technical Barriers to Trade

2.             Second triennial review of the operation and implementation of the agreement on technical barriers to trade

International Guidelines for Measuring, Reporting and Verifying Entity-  and Project -level Greenhouse Gas Emissions (ISO Project Jointly Proposed by Malaysia and Canada)

At the final plenary meeting of the ISO/TC 207 Environmental Management held in Kuala Lumpur on 1-8 July 2001, Malaysia had announced that they would be submitting a new work item proposal (NWIP) to develop an international standard on climate change and carbon accounting.

The Technical Committee was assigned by ISC Z to look into the development of the proposal. Relevant organisations assisted the preparation of the proposal. A seminar on Climate Change and Carbon Accounting was successfully held on 8 January 2002 at SIRIM Berhad to collect and obtain data and feedback.

In January 2002, the Standards Council of Canada (SCC) agreed to be the joint proposer of the NWIP. Finally, on March 7, 2002, the NWIP which is jointly proposed by the Department of Standards Malaysia (DSM) and Standards Council of Canada (SCC) was submitted to the ISO/TC 207 secretariat.

The proposed project is intended to develop a new international standard to specify guidelines for measuring, reporting and verifying entity- and project-level greenhouse gas emissions.

The scope of the proposed standard includes greenhouse gas (GHG) inventory principles and guidelines for entity- level GHG emissions measurement, project-level GHG emissions/removals measurement, GHG inventory reporting and GHG inventory verification. 30 P-members had voted in favour of the proposal, 2 against and 5 abstain.

Therefore, the NWIP was approved with a simple majority and more than 5 members agreed to participate in the development of the project. An ISO/TC 207/WG 5 Climate Change was then established which directly reports to the ISO/TC 207. The scope of ISO/TC 207/WG 5 is to develop international standard(s) for measuring, reporting and verifying greenhouse (GHG) emissions at entity- and project-levels.

Dr. Chan Kook Weng of MPOB, Malaysia was appointed as the Convenor of the WG 5 while Mr. Kevin Boehmer of CSA, Canada as the secretary. The first meeting of ISO/TC 207/WG 5 was held from June 10 to 13, 2002.

Four Ad Hoc Groups (AHGs) were established to look into four subjects i.e. AHG 1 on Entity Measurement, AHG 2 on Project Measurement, AHG 3 on Verification and AHG 4 on Cross-cutting Subjects. The Ad Hoc Groups tasks are as follows:

ISO TC207/WG 5 AHGs 1, 2 and 3 are to complete the following analysis: