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36.The MRAs under discussion between the US and the EU are limited in coverage but do include highly sensitive sectors such as pharmaceuticals, medical devices and telecommunication equipment where the regulatory issues that arise can be most contentious. Moreover, they will likely set a precedent for future action both between these two parties and their other trading partners and for the negotiation of MRAs elsewhere. Although the negotiations are not yet concluded, some important lessons can already be drawn that illustrate some of the general points discussed in the previous sections.
37.Up to now, I have discussed MR of regulations and of regulatory control indiscriminately. It is important to stress that the current MRA negotiations between the US and the EU, as well as most others referred to as such around the world, are limited to recognition of conformity assessment in the field of goods (that is the set of procedures by which products and processes are evaluated and determined to conform to particular standards or regulations). As illustrated in exhibit 1 (see separate annex) in the separate annex, the mutual recognition of home country conformity assessment can occur in three circumstances:
_Where there has already been a process of (partial) MR of underlying regulations and standards and where home country conformity assessment follows. This was the cases in the EU with the sequence "new approach"(1984)--"global approach" (1989). The issue here is whether parties trust each other to enforce their own regulations and/or delegate this capacity to the "right" bodies. Note that the same issue arises with agreements based on implicit MR of standards (NAFTA o the environment) where the debate is shifted to whether the home standards are actually enforced.
_Where there already exist international standards (e.g. ISO) or where the parties to the agreements have already harmonised their standards and regulations. In these cases, the conformity assessment procedures themselves have often also been harmonised. Parties still need to assess whether they trust each other's capacity to apply these guidelines.
_Where standards and regulations have not been harmonised nor mutually recognised and therefore where policed national treatment applies with regards to the regulations themselves. This is the case for US-EU MRAs which consist in recognising the authority of bodies accredited in the country of origin to certify to rules of the country of destination. To be sure, some degree of harmonization or autonomous convergence of underlying standards may be a likely consequence of MRAs. These negotiations therefore involve a judgement regarding the competence of one side to correctly assess conformity against regulations of the other side. Contrary to what is sometimes said this is not a trivial matter since agreement requires confidence both in each other's assessment procedures and in each other' understanding of unfamiliar standards and regulations.
38.The second distinction that needs to be made here is that between accreditation and certification both part of conformity assessment systems. Certification is the formal verification by an unbiased third party that a product conforms to specific standard or that a manufacturing process itself does. It results in a formal statement of conformity. Third party testing is usually an integral component of such certification, with testing and certification usually but not always carried out by the same body. Accreditation is the evaluation of the competence of certification bodies by an independent party. In the case of mandatory requirements, the ultimate power of control resides with the locus of accreditation. Systems of accreditation are therefore the ultimate targets of MRAs.
39.An intermediary step towards mutual recognition of conformity assessment systems (labelled here pre-MRA) is the recognition of competence of foreign certification/testing bodies which can as a result apply for accreditation or approval by the host country. The issue of access of these bodies to the host country accreditation system has been cited as a primary goal in APEC, ASEAN and in the FTAA contexts. Such access was actually called for under the US-Canada FTA and later NAFTA, but both Canada up to 1995 and Mexico to this day have been dragging their feet to implement this clause. Lobbies in both countries fear competition from the highly competitive US testing labs industry. By the same token, the United States accreditation programs often do not discriminate between domestic and local applicants, thus practising a limited form of unilateral recognition. It must be noted however that such recognition does not usually extend to the full power of certification but is often limited to the recognition of test data and reports, leaving the final market approval to host country bodies. In any case, labs and certification bodies are still subject to redundant accreditation. As a result, the great majority of manufacturers even in the sectors covered are still dealing with certifies accredited in only one jurisdiction. Effective market access requires MRA of accreditation.
40.Exhibit 2 (see separate annex) summarises the range of trade agreements under consideration according to the scope of MR. It is interesting to note how the expansion of the scope of MR creates two overlapping cycles in the market for products and in the market for product testing/certification. Under a protectionist regime, exporters of products demand access to markets, including to certification bodies. With national treatment, producers fight redundant certification while the demand for access shift from producers to testers/certifiers who demand access to accreditation in the country of import. As this access is granted to the latter, redundancy also becomes an issue for certifiers/testers who now demand MR of accreditation. As the scope of MR expands, so does the type of competition, from a competition between products, to testing labs and certifiers to accreditation systems and finally to regulatory regimes as a whole.
41.In most developed countries, conformity assessment systems are the result of idiosyncratic national developments and a product of prevailing relationships between the state and the market. The United States has an extensive and increasingly complex conformity assessment system which evolved in a decentralised and uncoordinated manner over time. This is not the place for a detailed description. In short, manufacturers in the US can resort to four types of mechanisms for ensuring that products conform to standards, whether these standards are voluntary or mandatory. They can issue their own manufacturer's declaration of conformity; they can register their own quality assurance system with a quality system registrar; they can resort to product testing by independent laboratories as is often required by buyers; or they can resort to the certification, itself involving preliminary testing of products or inspection of production site. It is this latest category that is most relevant for mandatory standards. Third party assessment (the last three categories) has grown over the years with the growing demand for health and safety as well as environmental impact assessment. Private certification programs have also emerged to forestall government regulatory intervention. Haphazard growth has led to a high degree of redundancy in the system, both across states who often require separate accreditation or even certification, and between the state and federal level where agencies like the FCC does not necessarily recognise accreditation by other bodies.
42.In its drive to complete the single market, the European Union introduced in 1989 the "global approach to testing and certification," a co-ordinated system for MR of conformity assessment within Europe. This complements the new approach, whereby manufacturers must meet "essential requirements" spelled out in EU directives and it is up to private bodies to develop specific standards (while conformity to the more specific standards developed by private action bodies is not required, it is often the easiest way to prove that a product meets the relevant essential requirements). In turn, under the global approach, if third party assessment of conformity to EU directives approval is required by law (e.g. "regulated"), product approval (and the "CE mark") can only be granted by entities "notified" to the EU Commission as technically competent by the governments in which they operate (a form of co-ordinated accreditation). The European Organisation for Testing and Certification has been created to provide a framework for co-operation MRAs between these notified bodies as well as all entities involved in conformity assessment. EOTC partners are involved in on-going negotiations within sectoral committees (e.g. on information technology) which involve a great degree of harmonization of conformity assessment procedures and parameters. A web of multilateral agreements are thus negotiated among conformity assessment bodies in Europe to ensure that products tested and certified once in the EU accepted everywhere.
43.Although MRAs inside Europe eliminate the need for redundant testing within Europe for European producers and US exporters alike, the fact that EU approval can only be performed by "notified" bodies located in Europe (although sub-contractors located in the US can participate in assessing conformity to EU regulations) indisputably puts foreign producers at a disadvantage, sometimes even reducing previous levels of market access. While it is clear that this new situation in Europe provided the reason for the current US-EU negotiations, US and Europeans officials differ in their description of the impetus behind the negotiations. US officials naturally have sought to fulfil their mission to enhance market access for US firms. But as readily admitted by one of them, "MRAs are a European invention unlike anything before." From a European viewpoint, the announcement of the EU's intention to allow third country conformity assessment bodies to participate in the new European system on the same basis as European bodies -which dates back to 1989- was "a small conceptual step." Indeed, MRAs can be seen as a typical instance of proselytising on the part of EU regulators and Commission officials. In addition, there is little doubt that Europeans were keen on deflecting criticism of fortress Europe and obtaining reciprocal benefits. If it took until 1994 for the EU to initiate formal negotiations with the US and others it is both because an informal phase of familiarisation with the EU system was needed and because this system itself was still in the making.
44.The envisaged MRAs cover $40 billion of US exports to the EU across eleven sectors, six of which are currently actively under negotiation (pharmaceuticals, electromagnetic compatibility, electrical safety, medical devices, telecommunications equipment and recreational craft). Sectors were originally selected according to whether the EU had itself an MRA in the sector, potential trade benefits of liberalisation for both sides and the assessed feasibility of reaching agreement. Yet, participants concur that the process turned out to be much more complex than imagined and that devising adequate MRAs requires an extended learning period to exchange background information and sector-specific data. The high political visibility granted to MRAs in "The New Transatlantic Agenda" agreed to in Madrid in the fall of 1995 has increased the pressure on all parties to achieve results in a timely fashion. This should not, however, lead to the temptation to sign face-saving agreements that do not provide the increase in market access hoped for by the industry or does so at the expense of the guarantees demanded by regulators. Negotiators have had to overcome major obstacles, and confront asymmetries not only in regulatory practices but also in assessment of market access benefits and in the degree of penetration of the trade culture inside regulatory circles.
45.To simplify, three core sets of issues have created major obstacles to the completion of the US-EU negotiations while pointing to the type of bargains that must be struck in order to reach agreements on mutual recognition.
46.First, in the face of US demand for access the EU has clearly announced its main condition: convergence to the EU system. If US bodies are to be granted the status of notified bodies, the US government must get involved in guaranteeing the competence of its conformity assessment bodies and thus provide formal assurances to its partner that US bodies can perform essential services and certify to EU standards. While US conformity assessment bodies may have simply demanded to be accredited/notified by EU governments, the EU offered more in response (accreditation in the US) but at a higher price.
47.In a most interesting development, the Department of Commerce asked the National Institute of Standards & Technology to create the National Voluntary Conformity Assessment Program ( NVCASE) as a mechanism for addressing this European demand. NVCASE will officially recognise the competence of US accreditors to check the capacity of certifiers to work with EU requirements and may temporarily fill in the gap and accredit certifiers where accreditation programs are still lacking. One of the early success of the negotiation was the EU indication that recognition by NVCASE would prove sufficient to grants US entities the status of EU notified body.
48.Nevertheless, there may be reasons to doubt that NVCASE will actually work to the EU satisfaction while many in the US would still prefer a direct understanding between accreditation bodies. US officials recognise that such a system is utterly new to the United States. It is not an easy proposition to implement in a country, where, except for automobile emission, drug certification, and a few other instances, there has traditionally been less reliance than in Europe on third party assessment and greater reliance on manufacturer's declaration, voluntary standard and ex-post liability constraints. At the same time, third party assessment has been less privatised in the US than in the EU. In addition NVCASE must turn around an accreditation system that is highly fragmented and with no prior experience in accreditation to meet foreign requirements.
49.US negotiators also acknowledge that the required overhaul will allow to streamline the US system and eliminate unnecessary government accreditation and certification programs. Adding a layer of government recognition to the domestic conformity assessment system is a prerequisite for a government-to-government MRAs while it provides an impetus for the devolution of conformity assessment function on the part of governments. The lesson: As government-to-government agreement, MRAs require government involvement in conformity assessment systems as the ultimate authority accountable for compliance.
50.The second set of controversial issues has to do with EU access to the US markets and the EU demand for a balanced agreement with regard to the advantages derived by either party. In terms of sectoral coverage, the EU has refuse to set aside a problematic sector like pharmaceutical where the commercial benefits derived could compensate for losses elsewhere (e.g. telecommunication). It has been harder, however, to obtain that balance be measured in terms of relative gains from mutual recognition based on prior and posterior costs of regulatory compliance. Given the prevalence of US liability laws for instance, EU laboratories may find that such an unfamiliar operating environment after MR may not be a great gain. More generally, while recognising that the US does not impose discriminatory trade barriers, EU negotiators have pointed to the complexity of the US system -with overlapping layers of jurisdiction at the national, state and local levels, and a complex web of public and private bodies- as hindering effective and complete access for EU exporters. To be sure, the lack of a single US Mark -like the EC Mark- across the 50 states is also an hindrance for US producers. But on the grounds of reciprocity, Europeans want the US to deliver the whole US market in the same way that they are committing to deliver theirs.
51.In order to oblige, the US would need to put in place a full fledged domestic MRA system with pre-emption by federal accreditation program and ensure that all relevant bodies are part of the domestic MRA and involved in the external one. But while the US commerce department may be envious of the relative simplicity of the EU global approach and may even be suspected to try to import the global approach in the US though MRAs, there is little chance that even general commitments towards this goal could be credibly issued in the current negotiation time frame. The lesson here is that MRA are not simply about technical requirements but about the comparability of ensuing market access broadly defined and that moves towards such comparability may need to predate the negotiations.
52.A third set of obstacles calling for special mention here relate to the tension between an incremental or building block approach promoted by the US and the EU demand for full MRAs. The tension arises especially for the sectors under discussion directly controlled in the US by regulatory agencies that usually centralise all conformity assessment function under one roof (FDA, FCC; EPA). Contrary to the EU where most authority has been delegated to quasi-public bodies that are prone to MR in order to expand their network, these US regulatory agencies remain all powerful and have not warmed up to the MR culture. Having not been exposed to trade-related constraints in the past and enjoying a great degree of autonomy, these agencies would have preferred to develop direct and informal co-operation with European accreditors instead of being directed by governments. They have increasingly resisted significant loss of regulatory sovereignty as they progressively realised what was involved in the negotiations. Against the position of both EU and US negotiators they demand -and are likely to obtain- limitations on the MRAs in three directions:
Agencies like the FDA want to reduce the scope of MR to recognition of test data or inspection reports (the first three steps in the conformity assessment procedure), thus ensuring that they retain the ultimate authority of approval. For the EU, such a truncated agreement would leave intact arbitrary decision power in the host country. Europeans may have to settle for an incremental approach where full MR is attained at a later stage through progressive scope expansion (ironically, US manufacturers are currently complaining that their unique MRA with Mexico on tires only recognises test data and not yet final approval).
b)Prior harmonization of procedures:
While both parties require confidence in the other's technical competence as a pre-condition to negotiations, they disagree on how to determine such competence. The US side wants prior harmonization of the detailed conformity assessment procedures rather than merely accepting the results of such assessment as demanded by the EU. The FDA and EPA are actually working with some of their foreign counterparts to reach agreement on equivalency of assessment standards as a precondition for the MRAs. If they succeed in an acceptable time frame, the EU can still object to similar pre-conditions across the board but will be in a weaker position.
c)Length of transition:
Finally, parties disagree on the extent of prior co-operation required before implementing MRAs. US negotiators want long transition period during which to implement confidence building measures as well as flexibility as to the timing of implementation of actual recognition. Europeans have long insisted on a short term deadline for implementing MRAs along with a firm commitment, if not automaticity, of such a deadline. Here again, the EU needs to move toward compromise and recognise that its own strategy of setting quasi-automatic deadlines for completion of the single market was predicated on two decades of prior discussions and familiarisation between regulators, something that is not true across the Atlantic.
53.This last set of issues has proven to be the most contentious in the last phase of negotiations. The European question the ability of the Department of Commerce to force significant change on regulatory agencies especially when its authority and even existence is put into question by the US Congress. At the same time, the US side asks why the EU Commission is not ready to settle for what it can get, suspecting it to revert to old protectionist temptations. Instead of questioning each other's ability to deliver, the US and EU must seek an acceptable bargain. The EU can accept most of the elements of the US incremental approach while insisting that significant progress be made to deliver a single US market. Progress in the second dimension will actually accelerate progress on the path of incremental liberalisation. If this core underlying bargain is struck, almost any result achieved by December 1996 should be considered a success. Exhibits 4 and 5 (See separate annex) provide a graphic illustration of the MRAs under discussion.
The most limited form of such "pre-MRAs" has existed for some time through bilateral arrangemets in industries such a machinery or consumer electronic where regultors of one country recognize the test data produced by foreign labs, without extending to the power to certify theproduct in question.
 For an overview, see National Research Council (1995) Standards, Conformity Assessment, and Trade, National Academy Press, Washington, 1995
 There are more than 110 private-sector certifiers in the US where certification was an estimated 12 billion industry by the end of 1995. The UL label (underwriters laboratory product safety certification) is one of the most known. There are also 84 certification programs run by federal agencies, including: USDA which certifies to meat and poultry; the Federal Aviation Administation; FDA for phamaceuticals; the Occupational Safety and Health Administration (OSHA). There are also more than 100 public and private acceditation bodies
 In addition, approval is now required for entry into all member states where no approval may have been the norm before and pre-existing bilateral agreements will need to be renegotiated at the EU level.
 For a presentation of the issues from both sides' viewpoint one can contrast Charles Ludolph (1994; 1995) and John Clarke (1996).
 The National Export Strategy: Annual Report to the United States Congress, (Washington: Trade Promotion Coordinating Committee) October, 1994, p. 140.
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