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EC's new product standard to bring America opportunity.

At first glance, the European Community's plan to become a single market by 1992 appears to limit the United States' representation in setting EC product standards. However, after carefully examining the issues, it appears that standardized European certification and testing requirements will lend themselves to greater opportunities for U.S. companies.

One objective in creating a single market is to improve regional research and technological development. Specifically, the European Community is trying to standardize certification and testing requirements throughout Europe so each country has easy access to other countries' goods. U.S. testing and certification organizations hope to participate in setting standards at the discussion level and to prevent the community from retaining 12 separate but common votes in international standards-setting organizations. They also want to preserve the subcontracting of product-testing between U.S. and European laboratories, which allows U.S. companies doing business in Europe to avoid retesting their products there and vice versa.

Essential to the formation of a single market are EC directives, which establish requirements that provide the framework for developing and accepting product-testing and certification standards. They are designed to remove physical, technical and fiscal barriers to trade, including border check points and tax differences. The community has identified more than 500 directives needed for market unification and has already approved more than 200. New directives are in place or are expected to be set for fire protection equipment, pressure vessels, construction products, personal protective equipment, machine safety devices, measuring instruments, gas appliances, lifting and loading equipment, toys, medicinal goods, high-tech products and food.

One directive that is being closely watched by the loss prevention industry is the construction products directive, which includes products permanently incorporated into buildings and other civil engineering projects. It essentially addresses six areas: mechanical resistance and stability; fire safety; hygiene, health and the environment; safety in use; noise protection; and energy economy and heat retention.

Still undecided are the actual product standards, or regulations, under the directive. During the transition period, national technical specifications that already comply with the essential requirements are acceptable. The private sector will have to choose between developing new specifications based on a European technical specification or using existing international standards.

Setting Product Standards

Businesses worldwide look to international bodies-the International Standards Organization (ISO) and the International Electrotechnical Commission (IEC) -manufacturers' Declaration of Conformity conditions and independent third party labs to set standards for testing and certification. Because Europe did not have a common certification process or unified testing standards, safety and environmental restrictions on manufacturing varied from country to country. To eliminate these differences, the EC today depends on two key administering bodies for European standards: the European Committee for Standardization (CEN) and the Committee for Electrotechnical Standardization (CENELEC).

The EC proposes using new standards for products made and sold within Europe. It also recommends adopting a single community mark to be used alongside third party marks for certified products. The mark could be used only by organizations that conform to what the community refers to as its "essential requirements" for a specific product-a phrase that is subject to interpretation.

Many businesses outside Europe are urging CEN and CENELEC to adopt existing ISO and IEC standards. These businesses argue that instituting new standards will restrict worldwide product availability, delivery and use, add to the cost of products through additional fees for retesting and delay product development. They also claim that new, untried regulations may force them to locate new suppliers. The argument has left CEN and CENELEC torn between relying on ISO and IEC standards and implementing their own.

Layers of Bureaucracy

The EC reaches decisions through a multitiered government. Commissions propose policy and execute decisions, the European Council then adopts legislation and the European Parliament counsels the governing bodies. In addition, the Court of Justice rules on interpretation and application of community laws. CEN and CENELEC, however, are private organizations that receive funding from various governments and the private sector. Therefore, U.S. businesses seeking certification and testing standards in Europe will probably face a government within a government as the EEC establishes requirements "to protect the common good," then turns over its proposals to CEN and CENELEC for finalization.

To ensure a smooth transition, U.S. multinational companies want to place a representative on the standardization committees. To date, CEN and CENELEC have denied this motion. Yet without representation, it is difficult to know the criteria CEN uses or the extent to which its decisions are based on established certification principles. For example, the technical committees and subcommittees working on standards for automatic sprinkler system components have stated that they are equivalent to ISO standards. However, without U.S. representation at the committee level, where these standards deviate and to what extent they conform to ISO standards becomes a matter of secondhand knowledge.

Another area of uncertainty in setting European standards is the EC's involvement on international standards-setting committees. EC countries each have one vote. However, the new standards require a consensus of 18 countries-the 12 EC members, Norway, Sweden, Switzerland, Austria, Finland and Iceland-for CEN and CENELEC voting. These countries will therefore be disposed to vote alike. Also, the consensus could restrict the United States or EuEuropean countries with mutual trade interests outside the single market from voting according to their best interests.

Third Party Testing

Getting U.S. products approved overseas is difficult and time-consuming. However, the advent of EC92 adds a level of uncertainty; specifically, whether the single market's standards will require U.S. manufacturers to retest their products in Europe. Until recently, U.S. third party testing labs could form direct alliances with their European counterparts. These alliances ensured acceptance of test results and benefited business in the United States and abroad.

Europeans maintain that U.S. organizations and the federal government should not deal on a country-by-country basis to gain certification acceptance. Rather, they contend, the United States should deal only with the EC's central organization for testing and certification. However, U.S. businesses claim that to meet the challenges of unified standards, U.S. testing labs should continue to solidify agreements with European labs, such as Le Centre National de Prevention de Protection in Paris and PhysikalischTechnische Bundesanstalt and Verband der Sachversicherer in West Germany, that offer third party testing of products related to property conservation.

What can U.S. industry do? Testing and research organizations, along with industry representatives, are participating on ISO or IEC committees and on the U.S. Department of Commerce's Industrial Functional Advisory Committee. The committee, which deals with a range of issues concerning certification, standards and accreditation, is urging the community's Brussels-based executive body, the European Commission, to incorporate the concerns of outside interests into the standards and certification process.

U.S. industry is also working with the American National Standards Institute to ensure that ISO and IEC standards are used instead of independent European standards. To strengthen the flow of information, the institute has arranged several discussions between ISO and CEN on overall guidelines and between IEC and CENELEC on electrical product certification. In addition, U.S. businesses are trying, in conjunction with organizations from several countries, including many outside the community, to develop methods and means for accrediting testing labs.

Achieving Objectives

The Single European Act of 1986 outlines the objectives of EC92. They include creating a European internal market by 1992, improving regional research and technological development, progressing toward a European economic and monetary union and improving the environment and working conditions in Europe. Adopting universally recognized standards would help achieve some of these objectives by streamlining property loss control procedures, such as purchasing, installation and training, and reducing the cost of various products. Moreover, by requiring manufacturers to comply with one set of procedures to prove conformity to community directives, product performance and quality assurance would improve.

One of the many positive outcomes brought about by EC92 is that it has rallied businesses to work toward universal product testing and certification standards. Yet any optimism must be cushioned with caution concerning the uncertainties still surrounding the making of the single European market. U.S. companies can only continue the push to ensure that systems will be transparent, coherent and open to outside participation, standards will be international and test results from non-EC organizations will be recognized within the community. John Rennie is vice president and manager of the approvals division at Factory Mutual Research Corp. in Norwood, MA.
COPYRIGHT 1991 Risk Management Society Publishing, Inc.
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Title Annotation:European Community
Author:Rennie, John
Publication:Risk Management
Date:Mar 1, 1991
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