Whither European or International Services Standards?

Let us focus on the issue within the topic “Twelve projects for the 2012 Single Market” of European services standards as distinct from the impact of the effectiveness, efficiency and inclusiveness of the European standards system on that question.

While of course to separate these issues removes the very interesting political and philosophical debate whether it is wise or not to revise the European standardisation system to extend it to services based upon the performance of the European standards system to deliver relevant services standards to the market. My rationale is that the best predictor of future performance is past performance. Those who believe that the European standards model largely oriented to products has performed well in the past will see benefits to its extension to services in the future. And those who believe other standards models have better served markets in the past will reach negative conclusions.

If we remove the efficiency factor, the material strategic question becomes which services standards are relevant and what geographical scope is in question?

GTW Associates addressed the first question in papers presented in 2002 at DIN in Berlin [1] and the AFSMI S-Business Education Summit. [2] DIN had contracted with GTW Associates to complete a study Service Standardization in the United States Overview of current activities and issues [3]

GTW identified for DIN the sectors below from the view of potential role of standards upon the global services market place.

• Advertising Services
• Audiovisual and Related Services
• Construction
• Distribution Services
• Education and Training Services
• eGovernment
• Energy Services
• Environmental Services
• Express Delivery Services
• Financial Services
• Health Care
• Legal Services
• Telecommunications, value-added network, and complementary services
• Tourism Services

2002 was an interesting time for the services sector globally. The Doha Development Agenda Negotiations in the World Trade Organization (WTO) were beginning and governments around the world were requesting recommendations for negotiating objectives and examples of impediments to trade in services.

Indeed services have non trivial economic impacts in the US markets global markets. Services in the US economy account for 78% of US gross domestic product compared to 22% for goods. The United states leads the world trade in services with a market share of 20%. And in 1999, the US produced an $80 Billion surplus of trade in services while trade in merchandise produced a 348 Billion deficit.

With respect to geographical scope the strategic question for services standards becomes whether a European regional or International approach is optimal?

In 2002 there was beginning to accrue reasonable experience around the world with the standards policy text of the WTO Agreement on Technical Barriers to Trade [4] and in particular the special role reserved for “international standards:”

In cases where technical regulations were required, that in accordance with Article 2.4, Members were obliged to use relevant international standards or relevant parts of them as a basis for their technical regulations except when such international standards or relevant parts would be ineffective

Evidence was mounting in global product markets that “international” standards carried strategic impacts that national and regional standards could not deliver.

However there was less experience with the General Agreement on Trade in Services (GATS) [5] and in particular its standards principles remarkably parallel to those of the TBT:

With a view to ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services, the Council for Trade in Services shall, through appropriate bodies it may establish, develop any necessary disciplines

In determining whether a Member is in conformity with the obligation …, account shall be taken of international standards of relevant international organizations[1] applied by that Member.

The term “relevant international organizations” refers to international bodies whose membership is open to the relevant bodies of at least all Members of the WTO.

Members shall work in cooperation with relevant intergovernmental and non-governmental organizations towards the establishment and adoption of common international standards and criteria for recognition and common international standards for the practice of relevant services trades and professions.

Nevertheless the parallels are striking. GTW observed in 2002 with respect to international standards for services:

The strategic question is not “if” such standards will come to pass, the strategic question is who will write them and what will they require [6]

Any services business that does not contemplate its strategic global position and its global stake in international standards setting limits if not dooms its future

So my query to the European standards policy makers is why with respect to services standards have you stopped at the confines of what constitutes Europe these days? Is this not a strategic blunder? Should not the objective be a global market?

It could be a strait jacket definition of the term “International Standard” and or “International Standard Organization” that some European standards policy makers have proposed within the WTO Negotiating Group on Market Access for non-agricultural products round of discussions in Geneva. [7] It could be that the term “International standard” as understood in one context of products may be understood in the second context of services.

The United States submitted a proposal within the WTO NAMA March 29, 2011:

The United States notes the submissions relating to international standards advanced by other Members in the Negotiating Group on Non-Agricultural Market Access (NGMA). The aim of some of these submissions is to name specific standardizing bodies, and to deem that any standard developed by these bodies is a relevant international standard within the meaning of the WTO Agreement on Technical Barriers to Trade (“TBT Agreement” or the “Agreement”). The United States does not share the views advanced in these submissions as they would undermine the principles of the Committee Decision, and put the World Trade Organization (WTO) in the position of picking winners and losers among non-governmental, private sector bodies that produce standards. [8]

The European Union and others had proposed [9] to name the International Organization for Standards (ISO), International Electrotechnical Commission (IEC), the International Telecommunication Union (ITU) and Codex Alimentarius as sources for relevant international standards within the meaning of the WTO Agreement on Technical Barriers to Trade (“TBT Agreement” or the “Agreement”) provided that in their development the principles and procedures set out in TBT Committee Decision on Principles for the Development of International Standards, Guides and Recommendations with relation to Articles 2, 5 and Annex 3 of the Agreement were followed

The US instead proposed the definition for an international standard to be:

For purposes of the TBT Agreement, an international standard, guide or recommendation is one developed in accordance with the principles set out in the Decisions and Recommendations adopted by the Committee since 1 January 1995, G/TBT/1/Rev.9, Annex B (Decision of the Committee on Principles for the Development of International Standards, Guides and Recommendations with relation to Articles 2, 5 and Annex 3 of the Agreement) (Committee Decision) issued by the WTO Committee on Technical Barriers to Trade (TBT Committee). These six principles are: 1) openness, 2) transparency, 3) impartiality and consensus, 4) relevance and effectiveness, 5) coherence, and 6) the development dimension [10]

In this regard the US decentralized market oriented bottoms up approach allows materially interested parties including those in Europe to pursue services standards within the international standards process described by the latter principles. We welcome global participation.

George T. Willingmyre, P.E.

GTW Associates

[1] Services Standardization in the USA, George T. Willingmyre Presented at the International Conference “Service Standards for Global Markets” Berlin, September 30, 2002 http://www.gtwassociates.com/alerts/DIINpresentationSERVICESPAPERFINAL.doc
[2] International Services Standards in your Future? George T. Willingmyre AFSMI S-Business Education Summit and Expo Georgia World Congress Center Atlanta, Georgia October 6-8, 2002 http://www.gtwassociates.com/alerts/submitted.doc
[3] As component of the project Service-Standards for Global Markets Supported by the German Federal Ministry for Education and Research March 31, 2002 George T. Willingmyre http://gtwassociates.com/answers/Services/COVER.doc
[4] WTO TBT Agreement at http://www.wto.org/english/tratop_e/tbt_e/tbt_e.htm
[5] General Agreement on Trade in Services (GATS see http://www.wto.org/english/tratop_e/serv_e/serv_e.htm
[6] International Services Standards in your Future? George T. Willingmyre AFSMI S-Business Education Summit and Expo Georgia World Congress Center Atlanta, Georgia October 6-8, 2002 http://www.gtwassociates.com/alerts/submitted.doc
[7] http://www.gtwassociates.com/alerts/UStoNAMA.htm
[8] TN/MA/W/141 http://www.gtwassociates.com/alerts/tnmaW141.doc
[9] TN/MA/W/142 http://www.gtwassociates.com/alerts/tnmaW142.doc
[10] TN/MA/W/141 http://www.gtwassociates.com/alerts/tnmaW141.doc