KANBrief 2/13

The challenges to standardization policy presented by a transatlantic free-trade zone

The export of high-quality technical products is of great importance for the German economy. For this reason, DIN has for many years been committed, within the ISO and IEC, to the development of international standards. The EU and the USA are now planning a transatlantic free-trade agreement by which remaining customs duties and technical barriers to trade are to be eliminated as far as possible. This also represents a task for standardization.

Harmonized international standards serve to eliminate technical barriers to trade, facilitate access to global markets, and thereby contribute to maintaining the competitiveness of Germany's export industry. Inevitably however, international standardization ceases to be effective when differences between statutory provisions in the various countries and regions make it difficult or even impossible to harmonize the technical requirements. Initial efforts to harmonize technical legislation have already been made by the World Trade Organization (WTO) and the United Nations Economic Commission for Europe (UNECE). As yet however, these efforts have met with only limited success.

In Europe, it was recognized as early as 1985 that interaction between state legislation and voluntary technical standardization was an essential condition for the free movement of goods. This observation was put into practice with the "New Approach", an instrument which has proved exceptionally effective. For trade relationships with countries outside Europe, however, further efforts must be made in order to promote mutual trade in goods. The priority here is international co-operation between the standards organizations, provided this leads to viable solutions within the given legislation. For this reason, DIN maintains close contacts with the standards organizations of Germany's major trading partners in order to identify technical barriers to trade and to co-operate in finding technical solutions.

The USA has traditionally been an important trading partner for Europe. The standardization systems are however very different: whereas in Europe, central standards organizations co-ordinate the work, the standardization system in the USA is characterized by a plethora of standards organizations operating largely independently of each other. This makes harmonization difficult and gives rise to additional costs for market access. According to a study by the Ifo institute for example, European exporters in the machinery sector face on average additional costs of 46% (Dimensions and Effects of a Transatlantic Free Trade Agreement Between the EU and US, Ifo Institute Munich, February 2013 (pdf)). As yet, the USA has not faced a comparable problem, since its manufacturing sector has focused primarily on the domestic market, and exports have played a relatively minor role compared to those from Europe (Export quota 2011: Germany 50%; USA 14%).

The global flow of trade is however subject to continual change. With the growing importance of the Asian Pacific region, the USA's dominant position in world trade is weakening. Interest is therefore growing in the USA in reliable partnerships and closer co-operation with Europe.

In a press release issued on 13 February 2013, US President Barack Obama, European Commission President José Manuel Barroso and President of the European Council Herman Van Rompuy announced a new Transatlantic Trade and Investment Partnership. Trade between the EU and the USA already accounts for around half of all world trade. Specific steps are now to be taken to draw up a comprehensive free-trade agreement, if at all possible within two years. The agreement is expected to generate considerable economic growth on both sides of the Atlantic, and to create new jobs.

In the sphere of standardization, the course for closer co-operation has already been set at a meeting between American and European delegations in Dublin. The intention is for an agreement supporting the trade policy initiatives to be reached between the standards organizations involved. Difficulties of market access arising through different standards are to be discussed and resolved by consultation. One initial specific measure in this area is a plan to eliminate the existing differences between standards governing elevators through bilateral co-operation between the American Society of Mechanical Engineers (ASME) and CEN.

Ernst-Peter Ziethen