Trade Promotion Infrastructure: Standards and Certification
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Box 2.18. Definitions Quality—the value of a set of parameters that describe the nature of a product, service, or management system. An apple, for instance, is a fruit with edible flesh, certain sugar content, a given color, and so on. There are many apple qualities differentiated by, for instance, sweetness or color. Some qualities may be ranked on a low-to-high quality scale; others cannot be ranked but are fit for different purposes. An economic understanding of quality should not talk about low and high quality but rather efficient quality that is the quality that produces the highest benefit-cost ratio. Quality services—all services relevant to establish the values of the parameters that describe the quality of a product, service, or management system. These are the instruments of standards and technical regulations and conformity services. Quality infrastructure—the institutions and technologies used to provide quality services. The term relates to all the fields of metrology, standardization and testing, quality management, and conformity assessment, including certification and accreditation. Often the term MSTQ (Metrology, Standardization, Testing, and Quality) assurance is used interchangeably with quality infrastructure. Standard—a formal description of the desired quality of a product. Standards are voluntary and many standards often compete. Technical regulation—a mandatory formal description of the desired quality of a product. Technical regulations are often created by referring to a standard, thereby making it mandatory. Conformity assessment—activities concerned with determining that requirements laid out in a standard or technical regulation are fulfilled. Conformity assessment includes the areas of testing, surveillance, inspection, auditing, certification, registration, and accreditation. Conformity assessment services—services used to ensure conformity with a standard or technical regulation. Source: Authors.
Standards also offer an opportunity for producers to access high-margin markets. Indeed, standards have the potential to shape a number of aspects of export competitiveness. The channels through which standards shape competitiveness are summarized in the remainder of this section. Product Compatibility
A well-functioning quality system improves market coordination by ensuring product compatibility. This is a key issue behind the rapid growth in global trade. Standardization ensures that inputs produced in distant locations fit together when assembled in the final product. This often is achieved by referring to voluntary standards and using private conformity assessment services, such as testing and certification. Occasionally, the government intervenes to direct the choice of product variety toward a social optimum that market participants are unwilling to reach themselves. In an export context, the drive for product compatibility often translates into complying with standards set up by global buyers.
Market Access
Standards help create market access by ensuring that the product specifications are aligned with foreign demands, which may be public regulatory requirements or private market demands. The EU seafood regulations, for instance, are highly demanding both in terms of product standards and management practices, as are US regulations. Vietnamese seafood exporters frequently export to both markets. The Vietnamese authorities with the assistance of Danida, the Danish development agency, have designed national standards that combine the EU and US demands, ensuring that complying with the Vietnamese standards simultaneously ensures compliance with EU and US demands. In some cases, standards help shape and develop markets. The competitiveness of a country or industry is then influenced by the ability to participate in the standardsetting process. The rapidly developing biofuel market is an example. Quality issues include chemical composition to ensure compatibility with the existing stock of combustion engines, environmental parameters to ensure a positive effect on climate change, and social parameters to guarantee ethical behavior of biofuel producers. Environmental and social parameters are important to ensure market access into markets like the United States and the European Union. The ability to follow and, if possible, influence the standard-setting process may be a key factor when a country wants to ensure that its emerging industry complies with regulation. Rules on forest clearance, for example, may exclude countries that have recently converted forests into agricultural lands as opposed to most developing countries where this conversion took place centuries ago.
Module 2
that producers have to meet are often neither widely publicized nor stable and consistent. • Unlike tariffs and quotas for which there are established mechanisms to resolve conflicts (for example, the dispute resolution procedures under the WTO), the determination of performance with respect to standards is generally an asymmetric process, determined solely by the buying party or country, with the producer having little capacity to challenge decisions on conformance.