[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
                     CHINA, EUROPE, AND THE USE OF
                      STANDARDS AS TRADE BARRIERS:
                      HOW SHOULD THE U.S. RESPOND?

=======================================================================

                                HEARING

                               BEFORE THE

                SUBCOMMITTEE ON ENVIRONMENT, TECHNOLOGY,
                             AND STANDARDS

                          COMMITTEE ON SCIENCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 11, 2005

                               __________

                           Serial No. 109-13

                               __________

            Printed for the use of the Committee on Science


     Available via the World Wide Web: http://www.house.gov/science


                                 ______

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                          COMMITTEE ON SCIENCE

             HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas                 BART GORDON, Tennessee
LAMAR S. SMITH, Texas                JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania            EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California         LYNN C. WOOLSEY, California
KEN CALVERT, California              DARLENE HOOLEY, Oregon
ROSCOE G. BARTLETT, Maryland         MARK UDALL, Colorado
VERNON J. EHLERS, Michigan           DAVID WU, Oregon
GIL GUTKNECHT, Minnesota             MICHAEL M. HONDA, California
FRANK D. LUCAS, Oklahoma             BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois               LINCOLN DAVIS, Tennessee
WAYNE T. GILCHREST, Maryland         RUSS CARNAHAN, Missouri
W. TODD AKIN, Missouri               DANIEL LIPINSKI, Illinois
TIMOTHY V. JOHNSON, Illinois         SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia            BRAD SHERMAN, California
JO BONNER, Alabama                   BRIAN BAIRD, Washington
TOM FEENEY, Florida                  JIM MATHESON, Utah
BOB INGLIS, South Carolina           JIM COSTA, California
DAVE G. REICHERT, Washington         AL GREEN, Texas
MICHAEL E. SODREL, Indiana           CHARLIE MELANCON, Louisiana
JOHN J.H. ``JOE'' SCHWARZ, Michigan  VACANCY
MICHAEL T. MCCAUL, Texas
VACANCY
VACANCY
                                 ------                                

         Subcommittee on Environment, Technology, and Standards

                  VERNON J. EHLERS, Michigan, Chairman
GIL GUTKNECHT, Minnesota             DAVID WU, Oregon
JUDY BIGGERT, Illinois               BRAD MILLER, North Carolina
WAYNE T. GILCHREST, Maryland         MARK UDALL, Colorado
TIMOTHY V. JOHNSON, Illinois         LINCOLN DAVIS, Tennessee
DAVE G. REICHERT, Washington         BRIAN BAIRD, Washington
JOHN J.H. ``JOE'' SCHWARZ, Michigan  JIM MATHESON, Utah
VACANCY                                  
SHERWOOD L. BOEHLERT, New York       BART GORDON, Tennessee
                ERIC WEBSTER Subcommittee Staff Director
            MIKE QUEAR Democratic Professional Staff Member
            JEAN FRUCI Democratic Professional Staff Member
                 OLWEN HUXLEY Professional Staff Member
                MARTY SPITZER Professional Staff Member
               SUSANNAH FOSTER Professional Staff Member
       AMY CARROLL Professional Staff Member/Chairman's Designee
                  JAMIE BROWN Majority Staff Assistant


                            C O N T E N T S

                              May 11, 2005

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Vernon J. Ehlers, Chairman, 
  Subcommittee on Environment, Technology, and Standards, 
  Committee on Science, U.S. House of Representatives............    10
    Written Statement............................................    10

Statement by Representative David Wu, Ranking Minority Member, 
  Subcommittee on Environment, Technology, and Standards, 
  Committee on Science, U.S. House of Representatives............    11
    Written Statement............................................    12

                               Witnesses:

Dr. Hratch G. Semerjian, Acting Director, National Institute of 
  Standards and Technology
    Oral Statement...............................................    13
    Written Statement............................................    15
    Biography....................................................    19

Mr. Robert W. Noth, Manager, Engineering Standards, Deere and 
  Company
    Oral Statement...............................................    19
    Written Statement............................................    23
    Biography....................................................    26

Dr. Donald R. Deutsch, Vice President, Standards Strategy and 
  Architecture, Oracle Corporation
    Oral Statement...............................................    26
    Written Statement............................................    28
    Biography....................................................    33

Mr. Joe S. Bhatia, Vice President and Chief Operating Officer, 
  Underwriters Laboratory
    Oral Statement...............................................    33
    Written Statement............................................    35
    Biography....................................................    42
    Financial Disclosure.........................................    43

Mr. David Karmol, Vice President, Public Policy and Government 
  Affairs, American National Standards Institute
    Oral Statement...............................................    44
    Written Statement............................................    46
    Biography....................................................    54

Discussion.......................................................    55

             Appendix 1: Answers to Post-Hearing Questions

Dr. Hratch G. Semerjian, Acting Director, National Institute of 
  Standards and Technology.......................................    76

Mr. Robert W. Noth, Manager, Engineering Standards, Deere and 
  Company........................................................    85

Dr. Donald R. Deutsch, Vice President, Standards Strategy and 
  Architecture, Oracle Corporation...............................    90

Mr. Joe S. Bhatia, Vice President and Chief Operating Officer, 
  Underwriters Laboratory........................................    94

Mr. David Karmol, Vice President, Public Policy and Government 
  Affairs, American National Standards Institute.................    99

             Appendix 2: Additional Material for the Record

Statement of Donald E. Purcell, Chairman, The Center for Global 
  Standards Analysis.............................................   104

Deere Responses to Department of Commerce Workshop Questions.....   133

Statement of William Primosch, Senior Director, International 
  Business Policy, National Association of Manufacturers (NAM)...   137


 CHINA, EUROPE, AND THE USE OF STANDARDS AS TRADE BARRIERS: HOW SHOULD 
                           THE U.S. RESPOND?

                              ----------                              


                        WEDNESDAY, MAY 11, 2005

                  House of Representatives,
      Subcommittee on Environment, Technology, and 
                                         Standards,
                                      Committee on Science,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 2:12 p.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Vernon 
Ehlers [Chairman of the Subcommittee] presiding.



                            hearing charter

         SUBCOMMITTEE ON ENVIRONMENT, TECHNOLOGY, AND STANDARDS

                          COMMITTEE ON SCIENCE

                     U.S. HOUSE OF REPRESENTATIVES

                     China, Europe, and the Use of

                      Standards as Trade Barriers:

                      How Should the U.S. Respond?

                        wednesday, may 11, 2005
                          2:00 p.m.-4:00 p.m.
                   2318 rayburn house office building

Purpose:

    On Wednesday, May 11, at 2:00 p.m. the House Science Committee's 
Subcommittee on Environment, Technology, and Standards will hold a 
hearing to review the increasing use by U.S. trading partners of 
technical standards and other standards-related requirements as 
barriers to trade, and what U.S. companies, standards development 
organizations, and the Federal Government are doing, and could do, to 
overcome or reduce these barriers.

Witnesses:

Dr. Hratch Semerjian is the Acting Director of the National Institute 
of Standards and Technology (NIST).

Mr. Robert W. Noth is the Manager of Engineering Standards for Deere & 
Company, headquartered in Moline, Illinois.

Dr. Don Deutsch is the Vice President for Standards Strategy and 
Architecture for Oracle, headquartered in Redwood Shores, California.

Mr. Joe Bhatia is the Vice President for International Operations at 
Underwriters Laboratory (UL). UL is a commercial laboratory company 
that tests products against U.S. and international standards, 
headquartered in Northbrook, Illinois.

Mr. David Karmol is the Vice President of Public Policy and Government 
Affairs at the American National Standards Institute (ANSI).

Overarching Questions:

    The Subcommittee plans to explore the following overarching 
questions:

        1.  What are standards and why are they important to the global 
        competitiveness of U.S. companies?

        2.  How are standards developed in the U.S.? How is this 
        different from the way standards are developed in our major 
        trading partners such as Europe and Asia?

        3.  Is the U.S. system at a disadvantage in the global 
        standards arena? If so, what should the Federal Government, 
        states, U.S. standards development organizations, and companies 
        be doing to reduce their vulnerability to the use of standards 
        as trade barriers, and how could they promote the adoption of 
        non-exclusionary standards in the global marketplace? What are 
        the merits and drawbacks of these different systems?

Background:

What Is a Standard?
    A standard is a technical specification for a product, process, or 
service. Standards are used to ensure uniformity and inter-operability. 
For example, standards make it possible for cellular phones made by 
different companies to communicate with each other regardless of 
location. Standards ensure that the electrical power grid provides 
electricity to homes and businesses in the same way across the U.S. 
Another example of a standard is the worldwide uniform electronic 
standard that governs the format of credit cards, enabling them to 
processed anywhere in the world where credit cards are accepted. 
Standards are frequently referenced by or tied to government 
regulations to describe or even dictate the technologies or processes 
expected to achieve the goals of regulations, and to ensure compliance. 
For example, the Federal Communications Commission (FCC) regulations 
for the formats for black and white, color, and high-definition 
television are based on technical standards.
Why Are Standards Important?
    Standards play a powerful role in domestic and international 
markets. If a standard achieves broad acceptance in a market, it may 
lead to the abandonment of technologies supported by alternative 
standards and the domination of a market by a specific technology. An 
example is the gradual loss of market share by Sony's Betamax video 
recording standard in the 1980s during the early years of video 
cassette recorders (VCRs), as the Matsushita VHS standard became more 
popular. Once the competition between the two standards had been 
resolved by the dominance of one over the other, the uncertainty of 
which technology to invest in disappeared, and the market for VCRs grew 
rapidly.
    Standards facilitate the growth of markets by assuring 
predictability and inter-operability. For example, agreements between 
manufacturers on communications standards provide certainty for the 
entire cell phone market, ``telling'' designers and providers of 
peripheral services such as e-mail, web services, and the ability to 
take and send pictures what formats they need to use to provide 
compatible add-ons to consumers. If there are multiple standards for a 
type of product, the uncertainty about which standard will eventually 
dominate can paralyze investments into related technologies, or result 
in a fragmented market with multiple technologies that cannot work 
together. International standards promote international trade by 
ensuring that the same product can be sold and used anywhere, 
regardless of origin, which is convenient for manufacturers and 
customers alike.
How Are Standards Used as Trade Barriers?
    Countries can use standards as trade barriers by setting domestic 
standards that are different from those which foreign manufacturers 
would have normally used. (This can happen inadvertently as well as 
deliberately.) This increases the costs of exporting to the country in 
question because the companies trying to export there must change their 
product lines to meet the special standards requirements of that 
country. The existence of unique standards is also a bureaucratic 
disincentive for exporters to do business, particularly small and 
medium-sized enterprises that do not have the resources to learn about, 
understand, and work through often complex or obscure specifications. 
For example, countries may require a different standard for safety 
belts or emission controls in automobiles that must be tested for, or 
institute a complicated testing procedure for imported 
telecommunications goods.
    Companies worldwide are worried that such measures could escalate 
into ``standards wars,'' with countries closing their markets to 
imports with technical requirements, rather than tariffs. This concern 
was partly responsible for the creation of the World Trade Organization 
(WTO), which includes the Technical Barriers to Trade (TBT) agreement, 
a very detailed document that lays out the principles that countries 
should not use technical standards as trade barriers, should adopt 
international standards whenever possible or practicable, and should 
work on harmonizing standards through international standards 
organizations. However, the TBT includes fairly significant exceptions 
for countries to exercise their authority in the areas of health, 
safety, and national security, and it is these exceptions that are 
often cited when a country sets a new standard to block imports. It is 
important to note that although U.S. companies frequently complain 
about technical standards as trade barriers abroad, our trading 
partners frequently voice similar concerns about standards barriers in 
the U.S. market, particularly with respect to telecommunications and 
information technology equipment.
    The following are some examples of standards-related problems U.S. 
companies are beginning to report as presenting or potentially 
presenting serious barriers to U.S. trade:

            China: Wi-Fi versus WAPI
    In an effort to promote an independent economy based on home-grown 
technologies, China has stated in its standards strategy that it plans 
to develop mandatory domestic technical standards based on Chinese 
technology and intellectual property, rather than adopt existing 
industry or international technical standards and having to pay license 
fees for non-Chinese technology.
    To this end, in 2004, the Chinese government announced that it 
would require all wireless-enabled devices to meet a Chinese wireless 
standard, beginning June 1 of that year. The Chinese standard is called 
``WAPI''--Wireless Authentication and Privacy Infrastructure. The 
Chinese cited the WTO TBT national security loophole, saying that the 
WTO principles of non-discrimination did not apply in this case for 
national security reasons. The globally accepted standard for wireless 
internet (Wi-Fi) is IEEE (Institute of Electrical and Electronics 
Engineers) 802.11i. The global semiconductor industry had been 
manufacturing their silicon chips to meet this standard and a variety 
of related electronics manufacturers were designing products to be 
compatible with it. What was most distressing to non-Chinese 
manufacturers, however, was China's requirement that a limited number 
of Chinese companies would be licensed to build and certify products to 
WAPI, and any foreign manufacturer who wanted to comply with the 
standard and do business in China would have to partner with a Chinese 
company.
    Responding to vigorous lobbying by U.S. industry, in March 2004, 
U.S. Secretary of Commerce Don Evans, U.S. Trade Representative Robert 
Zoellick, and Secretary of State Colin Powell intervened, and in April 
2004, the Chinese government agreed to postpone the implementation of 
the standard indefinitely, and participate in the implementation of a 
global standard.
    Since then, China has been working to get the WAPI standard 
accepted via the International Standards Organization (ISO) process in 
order to make it an international standard. The ISO is a body made up 
of representatives from 100 countries, and is a forum for the 
development of global standards. Its deliberations are extremely formal 
and process-oriented. WAPI was considered in February 2005, but when 
the ISO voted to take the WAPI standard off its ``fast-track'' process, 
China walked out of the negotiations, citing unfair treatment. Some 
Chinese accused the U.S. of blocking the process. Meanwhile, IEEE's 
802.11i standard was fast-tracked for approval by ISO. There have been 
no significant developments since then, but China plans to manufacture 
products for the Chinese market according to the WAPI standard, and 
hopes that market forces and the size of its domestic market will cause 
the WAPI standard to be widely adopted.
    Standards experts say that, in spite of the apparent setback, China 
will continue to try to promulgate unique, exclusionary standards for 
its domestic market. They also say that China intends to increase its 
presence within international standards bodies such as the ISO, and is 
eager to assume a leadership role on several of ISO subcommittees in 
order to better position itself to set standards-setting agendas in the 
future.

            Europe: Domination of International Standards Bodies
    Some U.S. companies and industries are very alarmed that the 
European Union, having harmonized most of its technical standards among 
its membership, has exhibited a tendency to vote as a bloc at 
international standards meetings. With 15-25 votes, the EU can exercise 
significant influence in the 100-member ISO. More broadly, U.S. 
companies that are active in international standards are concerned that 
the U.S. commitment to and consistency of participation in 
international standards processes is not as great as that practiced by 
the Europeans, and the lack of a coherent strategy to guide U.S. 
participation is impeding the U.S. ability to act forcefully in the 
standards arena.

            Europe: Standards Aid to Developing Countries
    In contrast to China, the European Union has adopted a very 
outward-looking, export-oriented standards strategy which is geared 
towards developing new markets for EU-made goods. In addition to using 
its national standards as barriers to foreign imports, the EU is 
actively promoting its standards among developing countries as a way to 
give an advantage to EU-made goods. U.S. manufacturers are worried 
because the European Commission has an explicit policy on this issue, 
provides significant financial support for these efforts, and sends 
European delegations to developing countries to help them launch their 
own standards initiatives, based on European standards and the European 
system of standards development, which is a government-run and 
supported process.
    U.S. companies warn that, because the U.S. has not been actively 
promoting its more de-centralized standards system in the emerging 
markets of developing countries, these governments are unfamiliar and 
thus less comfortable with that concept. As a result, they are less apt 
to adopt the U.S. model, even though it is less bureaucratic, more 
flexible, and more market-oriented. The U.S. system uses an open and 
transparent process that solicits the opinion and permits the direct 
participation of all interested firms and other entities. Instead, 
these countries adopt centralized, government-controlled standards 
development systems that are more likely to take an active, 
interventionist role in creating standards specifically designed to 
protect domestic industries. When they do adopt foreign standards, 
these governments are more likely to adopt a European standard over a 
U.S. one.

How Can the U.S. Respond?
    Standards experts argue that the U.S. must take a more active role 
in the international standards arena and take steps to increase its 
support for domestic and international standards development, 
negotiation, and technical assistance. There are several basic ways in 
which the U.S. Government or U.S. companies could reduce the use of 
standards as trade barriers to U.S. products:

  National Standards Strategy
    The American National Standards Institute (ANSI) is developing a 
U.S. Standards Strategy document in collaboration with its membership, 
independent standards consortia, and federal agencies, particularly the 
Department of Commerce. This document, currently in draft form, 
contains a number of recommendations on what steps ought to be taken to 
reduce the incidence of standards-related trade barriers. This document 
emphasizes that the current system of standards development in the U.S. 
works well, but that government (both State and Federal) and industry 
must work together in a more coordinated fashion and commit more 
resources to ensure that the system is adequately supported. The 
strategy also says that standards should be developed in as fair and 
open a process as possible, and that the Federal Government should work 
with its counterparts in other countries to prevent standards from 
becoming trade barriers.

  Department of Commerce Standards Initiative and Report
    In 2003, the Department of Commerce launched a standards initiative 
to bring more focus and resources to address the trade barriers 
problem. The Department of Commerce in 2004 published a paper entitled 
``Standards and Competitiveness: Coordinating for Results,'' which 
included 57 recommendations. As a result, some efforts have been made 
within the Department of Commerce to ensure that different agencies 
that are involved in standards coordinate their activities and share 
information, most notably NIST and the International Trade 
Administration (ITA). Observers have commented that more funding is 
needed to hire subject-matter experts and place them in strategic 
locations around the world, and pay for standards training for existing 
trade officers. Furthermore, they note that the Department of State and 
U.S. Trade Representative's office and other agencies involved in trade 
need to be brought into the process to address the issue most 
comprehensively.

  Standards Outreach to Trading Partners
    Although the China-Wi-Fi case is cited as a victory by some, others 
say that this incident should not become a model for how to resolve a 
standards conflict, because the incident soured relations between the 
U.S. and China in the standards arena at a time when standards experts 
say the U.S. should be reaching out to China. U.S. industry groups have 
urged the U.S. Government to work on improving interactions with China 
in the standards arena, such as providing technical assistance to China 
and other key Asian countries to help them meet their WTO TBT 
obligations. Standards development organizations point out that the 
standards development environment is often collegial and cooperative, 
and provides many opportunities to settle technical differences before 
they manifest themselves in standards wars. ANSI and other participants 
in international standards negotiations say that a substantial effort 
should be made by all U.S. participants in the standards development 
process to build a constructive educational dialogue with the Chinese, 
not just on standards themselves, but also on the process issues: how 
the U.S. method of industry-driven standards development works, and 
what its advantages are.
    To counter the European Union's outreach to developing countries, 
standards experts recommend that the Federal Government and/or U.S. 
companies begin a similar campaign to tout the benefits of the U.S.-
style of standards development in emerging markets in South America and 
Southeast Asia. Industry groups such as the National Association of 
Manufacturers warn that the U.S. has a significant amount of catching 
up to do in this area, and should increase funding for technical 
assistance to these countries through such agencies as the U.S. Agency 
for International Development (USAID), and ensure these programs are 
promoting U.S., rather than European standards and standards-
development processes.

  Domestic Standards Awareness and Education
    U.S. industries, the Federal Government, and to a lesser extent 
State and local governments, appear to be developing a greater 
awareness of the importance of standards in international trade, and 
their significance as an instrument of trade policy. However, academics 
and industry experts together have pointed out that the subject of 
standards and their relevance are not part of engineering or business 
school curricula, and therefore are not ``baked in'' to the 
fundamentals of running a business or designing products. These experts 
suggest grant programs to encourage the development of standards 
curricula for use in business and engineering schools, as well as a 
broader effort to encourage these institutions to incorporate some kind 
of standards education into their programs. Greater awareness should 
also be cultivated within companies, particularly small and medium-
sized enterprises that are not as exposed to international trade 
issues, but are increasingly becoming so.

  Standards Assistance to Small and Medium-Sized Enterprises
    Major corporations with an international presence are usually more 
aware of standards issues, and can afford to hire standards experts or 
create an office to manage, track, and participate in international 
standards processes. Small businesses, however, are generally not as 
knowledgeable about international trade, and do not have the resources 
to hire experts and translators necessary to work through the complex 
business of getting their products certified in a foreign country. The 
ITA has begun to make some efforts to educate its own staff, 
particularly the Foreign Commercial Service (FCS), on the standards 
issues. In addition, ITA plans to place standards experts in several 
countries, including a standards liaison in Beijing in the summer of 
2005.

  Standards Infrastructure Support
    European Union members of international standards-setting bodies, 
and increasingly China and other Asian countries, provide greater 
levels of support (funding, logistics, technical resources, etc.) to 
their standards representatives than does the U.S. Government. 
Frequently, many of the delegates sent to international standards 
setting organizations by other countries are not only subject matter 
experts, but also government representatives. The U.S. participants in 
these processes have suggested that more resources be provided by the 
U.S. Government for technical support by NIST, whose representatives 
participate extensively in international negotiations. They also 
suggest that either U.S. companies or the U.S. Government should 
provide funding to standards development organizations and ANSI to 
boost representation in the international arena, since a more 
consistent and forceful U.S. presence at the standards meetings would 
lead to international standards that are more in line with U.S. 
interests.

Additional Background:

How Does the U.S. Standards Development System Work?
    Any standard is the product of a collaborative process. In the 
United States there are hundreds of Standards Development Organizations 
(SDOs) and Standards Consortia. They are known collectively as 
Standards Setting Organization (SSOs). The membership of SSOs may 
consist of companies, federal agencies, non-profits, and other 
participants. SSOs develop and adopt standards acceptable to their 
members through a consensus process.
    The traditional U.S. SDOs support themselves by selling the 
documents containing the standards to users. Many SDOs represent well-
established industries that over the years have developed highly formal 
processes for the proposal, consideration, and acceptance of standards.
    ``Open Standards'' are a popular way of developing standards, where 
the standards are developed in open forums and made available on a 
royalty-free basis on the premise that the more inclusive and cost-free 
the standard, the wider will be its adoption. This method of developing 
standards is particularly common in the Internet-related hardware and 
software industries.
    ``Global Standards'' are standards that are uniform around the 
world. Internet protocols, for example, which govern how information is 
organized and transmitted through the Internet, are global standards, 
developed by the World Wide Web Consortium, or W3C. Another example is 
the standardized dimensions for shipping containers. The field of 
global standards can be a contentious one, for a global standard often 
compromises between existing standards, or requires abandoning many 
standards for a single one. The European Union has extensive experience 
in this area from harmonizing the standards of its members. Global 
standards are unusual, but there is a movement to try to develop and 
promote them because of their convenience and growing necessity in an 
increasingly interconnected world.
The American National Standards Institute (ANSI)
    ANSI is a non-profit umbrella group for SDOs that accredits the 
standards development procedures of its member organizations, helps 
coordinate standards activities in the U.S., provides a forum for its 
members to discuss standards issues, and is the U.S. representative at 
two major international standards bodies: The ISO and the International 
Electrotechnical Commission (IEC). ANSI's membership includes most of 
the major U.S. manufacturers, as well as universities, government 
agencies, testing laboratories, and other entities. About two hundred 
SDOs in total are accredited by ANSI.
    Although it represents the U.S. in the ISO and other international 
groups, unlike its foreign counterparts, ANSI is a non-governmental 
entity. Hence, ANSI's role as a coordinator of the U.S. is similar to, 
but not exactly the same as the role that foreign governments play in 
standards development abroad. In the U.S., the role of the government 
is largely one of support, providing input where government input is 
required, and providing some of the scientific and technical expertise 
and research that is needed for any effective standards regime, mostly 
through NIST, but also through other federal agencies that relate to 
health and safety.

Testing Laboratories and Testing Procedures in Trade: Conformity 
        Assessment
    Companies that decide to manufacture products based on a given 
standard have to show that their products are compliant with it. This 
is verified by having their products tested against the standard at a 
testing lab, and the procedure is known as ``conformity assessment.'' 
These non-profit and for-profit laboratories test products to ensure 
that they meet the specifications of the appropriate standards and 
provide verification of this to consumers and other companies. There 
are hundreds of testing laboratories in the U.S. and thousands world-
wide. The testing procedures can also constitute trade barriers through 
the imposition of lengthy and complicated requirements for foreign 
manufacturers. For example, China has instituted the China Compulsory 
Certification Mark, which requires companies exporting in a wide range 
of categories to have their products tested first. Often, national 
standards require that the tests be performed in the laboratories of 
the country in question, in some cases the government-run standards 
laboratories there. This is also a cause for concern to U.S. companies 
that fear possibility of having their intellectual property stolen 
during the testing process.
    As markets have become more global and more companies sell their 
products out of their home countries, nations have started engaging in 
Mutual Recognition Agreements (MRAs) which allow testing laboratories 
in other countries to test products against foreign standards. The WTO 
TBT agreement includes language encouraging the use of MRAs to 
facilitate the testing process, but the use of MRAs worldwide is not 
comprehensive.

How Are Standards Developed in Other Countries?
    In Europe and Asia, the system of standards development is 
different from that in the U.S. Although the standards development 
processes in other countries is still a collaboration between companies 
and other groups, the government play a much more direct role. 
Governments provide secretariats to manage their domestic standards 
development processes, publish the standards, and support the country 
representation at international standards meetings. Moreover, the 
standards developed are government-subsidized and are provided to the 
user community for free. This makes the adoption of these standards 
more attractive, and this policy is being pushed, particularly by the 
European countries, into emerging markets which may not necessarily 
have standards of their own. This approach to standards development is 
more top-down, although companies still participate heavily in the 
processes.

National Standards Strategies
    In recognition of the importance of standards to their domestic 
economic development and ability to penetrate markets abroad, several 
countries have developed and published national standards strategies 
which outline how they will promote their standards in the global trade 
system. They believe that standards are an effective strategic tool in 
the world trade arena, and these opinions are borne out in these 
standards strategies. Standards strategies are being developed to help 
focus the resources and management of countries' standards 
infrastructures as a way of extending specific standards regimes to 
emerging markets and thus ensure access to these markets for their 
products.
    These governments see participation in international standards 
activities as a way to promote their economic interests. Recently, the 
Europeans have been promoting their standards development system in 
other countries to enable access to these markets by European goods.
    For example, the German Standardization Strategy states:

         In the face of increasing market globalization and growing 
        competition, the international standardization system needs to 
        be strengthened as the basis for uniform regional and national 
        standards. Alliances should be created to support the 
        introduction of the European model. . .this approach could 
        effectively promote the goals of German industry in accessing 
        global markets. Given the importance of establishing German 
        industry in emerging economies and in the markets of the new 
        and future EU member states, appropriate action must be taken 
        to gain an early market presence. A vital task in this context 
        is to communicate an appreciation of the benefits of the 
        European standardization system and to offer assistance in its 
        adoption.

Questions for the Witnesses:

Dr. Hratch Semerjian, Acting Director, National Institute of Standards 
        and Technology (NIST)
    Briefly describe how NIST supports standards development and answer 
the following questions:

        1.  What is NIST's role in the international standards arena?

        2.  Describe the Department of Commerce's standards document 
        ``Standards and Competitiveness: Coordinating for Results'' and 
        the status of the implementation of its recommendations. What 
        remains to be done?

        3.  How would NIST's FY 2006 budget request improve the U.S. 
        position with respect to standards development? Describe any 
        other NIST standards initiatives that would contribute to the 
        competitive position of U.S. industry.

Mr. Robert W. Noth, Manager of Engineering Standards, Deere & Company; 
        Dr. Don Deutsch, Vice President for Standards Strategy and 
        Architecture, Oracle; Mr. Joe Bhatia, Vice President for 
        International Operations, Underwriters Laboratory

        1.  What has been the experience of your company with Chinese 
        and European technical standards, and how do you work with 
        these countries in this area? What are your concerns regarding 
        the technical standards and standards practices of other 
        countries?

        2.  For your industry, how are standards developed in the U.S.? 
        How is this different from the way standards are developed in 
        our major trading partners such as Europe and Asia? What are 
        the merits and drawbacks of these different systems? Is the 
        U.S. system at a disadvantage in the global standards arena, 
        and if so, why?

        3.  What should the Federal Government, States, U.S. standards-
        setting organizations, and companies be doing to reduce your 
        vulnerability to the use of standards as trade barriers, and 
        how could they promote the use of non-discriminatory standards 
        in the global marketplace? How should these efforts be 
        coordinated?

Mr. David Karmol, Vice President for Public Policy and Government 
        Affairs, American National Standards Institute (ANSI)
    Briefly describe ANSI's role in national and international 
standards development and answer the following questions:

        1.  What has been China's and Europe's approach to the 
        development and use of standards? How is this approach changing 
        international standards development in organizations such as 
        the International Standards Organization, and through bilateral 
        relations with other countries? What are the implications for 
        U.S. trade with China and the rest of the world?

        2.  Based on the U.S. Standards Strategy that ANSI has been 
        developing, what should the Federal Government, States, U.S. 
        standards development organizations, and companies be doing to 
        reduce their vulnerability to the use of standards as trade 
        barriers, and how could they promote the adoption of non-
        exclusionary standards in the global marketplace? How should 
        these efforts be coordinated?
    Chairman Ehlers. Good afternoon, and welcome to today's 
hearing entitled ``China, Europe, and the Use of Standards as 
Trade Barriers: How Should the United States Respond?''
    I apologize for the delayed start. We are waiting for the 
Ranking Member to arrive, but he has been delayed, and so, with 
the permission of the staff, the Minority staff, we will begin.
    I also want to apologize ahead of time. We may be able to 
keep things rolling here, but I am in a committee that is 
having votes today, and they--I was told they desperately need 
my vote, even though they don't know how I am going to vote 
yet. Maybe if I cast one wrong vote, they will send me back. 
But we have someone who will be here in a bit to substitute for 
me in the event that that happens. If I get called for this 
vote before that happens, we will have to recess momentarily 
while I go vote.
    So I apologize ahead of time if that happens.
    This hearing is an opportunity to examine some of the most 
serious problems facing U.S. companies as a result of other 
nations using standards as trade barriers. We will also learn 
what the U.S. Federal Government, U.S. companies, and U.S. 
standards-setting organizations can do to reduce, avoid, or 
eliminate these barriers.
    A standard is a technical specification for a production, 
process, or service. Standards are used to assure uniformity 
and inter-operability. For example, standards make it possible 
for cellular phones made by different companies to communicate 
with each other, regardless of location in the United States. 
But, because Europe and many other nations have different 
standards, our U.S. cell phones generally don't work in those 
areas. When they do, it is generally at considerable extra 
expense.
    It is estimated that 80 percent of the total value of 
global trade, $7.3 trillion in 2003, is affected by standards 
and related technical regulations and testing procedures. Thus, 
this issue has enormous implications for U.S. companies.
    U.S. companies and standards-setting organizations are 
concerned that our trading partners are using technical 
standards as trade barriers to U.S. products to protect their 
own domestic industries. This practice seems to be increasing 
as traditional tariff barriers are being lowered.
    A recent example comes from China's attempt last year to 
use a different standard for wireless computer chips, which 
would have required all companies to make two sets of chips: 
one for China, and one for the rest of the world. Fortunately, 
the U.S. Government was able to pressure China to back down. 
But China will continue to attempt to use standards to favor 
Chinese manufacturers to the detriment of U.S. companies.
    This hearing will help us to better understand these 
complex problems and find ways to help U.S. companies. We also 
hope it will enable us to stave off any ``standards wars.''
    [The prepared statement of Chairman Ehlers follows:]

            Prepared Statement of Chairman Vernon J. Ehlers

    Good afternoon and welcome to today's hearing entitled ``China, 
Europe, and the Use of Standards as Trade Barriers: How Should the U.S. 
Respond?''
    This hearing is an opportunity to examine some of the most serious 
problems facing U.S. companies as a result of other nations using 
standards as trade barriers. We will also learn what the U.S. Federal 
Government, U.S. companies, and U.S. standards-setting organizations 
can do to reduce, avoid, or eliminate these barriers.
    A standard is a technical specification for a product, process, or 
service. Standards are used to ensure uniformity and inter-operability. 
For example, standards make it possible for cellular phones made by 
different companies to communicate with each other regardless of 
location in the U.S. But, because Europe and many other nations have 
different standards, our U.S. cell phones generally don't work in those 
areas. When they do, it is generally at considerable extra expense.
    It is estimated that 80 percent of the total value of global trade 
($7.3 trillion in 2003) is affected by standards and related technical 
regulations and testing procedures. Thus, this issue has enormous 
implications for U.S. companies.
    U.S. companies and standards-setting organizations are concerned 
that our trading partners are using technical standards as trade 
barriers to U.S. products to protect their own domestic industries. 
This practice seems to be increasing as traditional tariff barriers are 
being lowered.
    A recent example comes from China's attempt last year to use a 
different standard for wireless computer chips, which would have 
required all companies to make two sets of chips, one for China and one 
for the rest of the world. Fortunately, the U.S. Government was able to 
pressure China to back down. But, China will continue to attempt to use 
standards to favor Chinese manufacturers to the detriment of U.S. 
companies.
    This hearing will help us to better understand these complex 
problems and find ways to help U.S. companies. We also hope it will 
enable us to stave off any ``standards wars.''

    Chairman Ehlers. With great pleasure, I now recognize the 
Ranking Member, the gentleman from Oregon, Mr. Wu, for his 
opening statement. Good timing.
    Mr. Wu. Thank you very much, Mr. Chairman.
    Standards and timing are everything.
    Good afternoon, and I want to join Chairman Ehlers in 
welcoming everyone to this afternoon's hearing.
    I will be brief in my remarks, because I am here to learn 
from you all.
    While standards support the development of new technology 
and form the basis of commerce, their role and importance is 
not well understood by either the general public or policy-
makers. I welcome the opportunity we have today to learn more 
about the role of standards in an increasingly global 
marketplace.
    I have some understanding of the importance of standards 
from my prior experience as an attorney representing high-tech 
companies in international trade issues in both India and 
China. While standards can support commerce, they can also be 
used as non-tariff barriers to trade and to promote one 
technology over another. We need to ensure that there is a 
level playing field to ensure that standards are used to 
promote rather than hinder trade.
    I realize that we can't force other countries to adopt the 
standards system that is used in the United States. However, we 
can ensure that the Federal Government is using its resources 
to support U.S. standards, businesses, and industry.
    What I hope to learn today is: How can the Federal 
Government do a better job in supporting U.S. standards and be 
responsive to our industry's concerns about standards or abuses 
of standards by other countries in the form of non-tariff trade 
barriers? How can coordination among federal agencies dealing 
with standards be improved? If countries violate standards 
provisions in the WTO, is the Federal Government currently 
sufficiently vigorous in its prosecution of these violations? 
And finally, how do the witnesses see U.S. standards 
development organizations evolving over the next five, 10, or 
20 years?
    I applaud the development of a National Standards Strategy 
under the direction of the American National Standards 
Institute; however, I want to gain a better understanding of 
the actions and resources required for its implementation. 
While the National Standards Strategy lays out a series of 
ambitious goals, we need to also lay out a plan on how to 
achieve these goals.
    I want to thank our witnesses for taking the time to appear 
before the Subcommittee today, and I want to assure them that I 
consider today to be the first step in a continuing dialogue on 
how to best improve the competitiveness of American industry.
    I yield back to the Chairman.
    [The prepared statement of Mr. Wu follows:]

             Prepared Statement of Representative David Wu

    Good Afternoon and I want to join Chairman Ehlers in welcoming 
everyone to this afternoon's hearing.
    I will be brief in my remarks, because we are really here to learn 
about the problems facing industry and what role the government can 
support them.
    While standards support the development of new technology and form 
the basis of commerce, their role and importance is not well-understood 
by the public or most policy-makers. I welcome the opportunity we have 
today to learn more about the role of standards in an increasingly 
global marketplace.
    I have some understanding the importance of standards from my prior 
experience as a lawyer representing high-tech companies on 
international trade issues in both India and China. While standards can 
support commerce, they can also be used as barriers to trade and to 
promote one technology over another. We need to ensure that there is a 
level playing field to ensure that standards are used to promote trade 
not hinder it.
    I realize that we can't force other countries to adopt the 
standards system that is used in the United States. However, we can 
ensure that the Federal Government is using its resources to support 
U.S. standards and industry. What I hope to learn today is:

          How can the U.S. Government a better job in 
        supporting U.S. standards and being responsive to industry's 
        concerns about standards abuses by other countries?

          How can coordination among federal agencies dealing 
        with standards issues be improved?

          If countries violate standards provisions in the WTO, 
        is the Federal Government vigorous in its prosecution of these 
        violations?

          And how do the witnesses see U.S. standards 
        development organizations evolving over the next five to ten 
        years?

    I applaud the development of a National Standards Strategy under 
the direction of the American National Standards Institute, however I 
want to gain a better understanding of the actions and resources 
required for its implementation. While the National Standards 
Strategies lays out a series of ambitious goals, we need to also lay 
out a plan on how to achieve these goals.
    I want to thank our witnesses for taking the time to appear before 
the Subcommittee today. And I want to assure them that I consider today 
to be a first step in a dialogue on how best to improve the 
competitiveness of U.S. industry.

    Chairman Ehlers. I thank the Ranking Member.
    If there is no objection, all additional opening statements 
submitted by the Subcommittee members will be added to the 
record. Without objection, so ordered.
    At this time, I would like to introduce our witnesses. I am 
pleased that we have a distinguished panel, which will help us 
zero-in on the problems that we are discussing today.
    The first person is Dr. Hratch Semerjian. He is the Acting 
Director of the National Institute of Standards and Technology, 
better known as NIST. Next is Mr. Robert Noth. He is the Manger 
of Engineering Standards for Deere and Company, ``Nothing runs 
like a Deere,'' headquartered in Moline, Illinois. And I grew 
up to the--as I told him earlier, I grew up to the sounds of 
the putt-putt of the two-cylinder John Deere tractor, which is 
a mainstay in the community where I grew up. Third is Dr. Don 
Deutsch. He is the Vice President for Standards Strategy and 
Architecture for Oracle, headquartered in Redwood Shores, 
California. Every hearing should have an ``oracle'' present. 
Next is Mr. Joe Bhatia. He is the Vice President for 
International Operations at Underwriters Laboratory, 
headquartered in Northbrook, Illinois. And the final witness is 
Mr. David Karmol. He is the Vice President of Public Policy and 
Government Affairs at the American National Standards 
Institute, better known as ANSI.
    As our witnesses presumably know by now, spoken testimony 
is limited to five minutes each, after which the Members of the 
Committee will then have five minutes each to ask questions. If 
your testimony is longer than five minutes, we will 
automatically enter all of your testimony into the record, so 
you can just give an oral summary and conclude that way.
    I am pleased to call on Dr. Semerjian.

STATEMENT OF DR. HRATCH G. SEMERJIAN, ACTING DIRECTOR, NATIONAL 
             INSTITUTE OF STANDARDS AND TECHNOLOGY

    Dr. Semerjian. Thank you, Mr. Chairman and Ranking Member 
Wu. Thank you for the opportunity to testify today on the topic 
of the role of standards in international competitiveness.
    We need to take seriously the challenges posed by the 
growing impact of standards on market access, so that we can 
better position the United States and the U.S. companies to 
compete in the global market. There is much work to be done to 
ensure that the U.S. standards interests have fair opportunity 
to be reflected in standards used globally and that these 
interests are more effectively promoted in our most important 
markets, such as China.
    The decentralized private sector demand-driven U.S. 
standards system has many strengths. U.S. companies derive 
significant advantage from the system's flexibility and 
responsiveness. The government also derives great benefit, both 
as a customer and user of standards.
    The system serves the country well, but there is room for 
improvement. In particular, the growing importance of standards 
to international competitiveness dictates that the United 
States, both private and public sectors, move quickly to 
strengthen the interface between the U.S. standards system and 
the international system. This need was pointed out clearly two 
years ago by industry in response to questions by the 
Department as our Standards Initiative, launched by then-
Secretary Donald Evans. The Standards Initiative was bolstered 
last year with a comprehensive report on ``Standards and 
Competitiveness: Coordinating for Results,'' which contains 
some 50 recommendations for moving forward, including 
intensifying Departmental efforts in China and in collaboration 
with the private sectors in international standards 
organizations.
    The Department's May 2004 report also noted the importance 
of Department representatives participating in the revision of 
the U.S. Standards Strategy. NIST is an active participant in 
the work being done by ANSI and the U.S. Standards Strategy 
Committee to pull together a diverse set of stakeholders to 
update and revise this strategy.
    In the United States, standards are typically developed in 
response to specific concerns and constituent issues expressed 
by both industry and government. Department agency supports 
standards through direct participation in standards development 
activities of ANSI and standards-developing organizations. More 
than 3,200 staff from 26 federal agencies participate in 
private sector standards development activity. Government 
agencies are also major users of some 13,000 standards. Both 
the U.S. Government and private sector participate in 
international standards development in numerous venues. We need 
to make effective use of our participation in each of these 
venues to ensure that U.S. interests are advanced.
    NIST has a variety of roles in the U.S. standards system. 
We are frequently looked to for research and measurements that 
provide the technical underpinning for standards. NIST is 
tasked with promoting the efficiency of the U.S. standards 
system by coordinating federal agency use of non-government 
standards and participating in the development of relevant 
standards and through promoting coordination between the public 
and private sector in both the standards and conformity 
assessment arenas.
    NIST is also directed by law to develop specific standards, 
cryptographic standards and applications for federal IT 
security, biometric, and voting system standards, and to help 
industry develop enterprise integration standards.
    By the way, Mr. Chairman, you will pleased to know that 
NIST and the Technical Guidelines Development Committee, 
submitted the initial set of voluntary voting system guidelines 
to the Election Assistance Commission last Monday in timely 
compliance with the legislation.
    NIST's technical programs support global recognition of 
U.S. standards. These programs take advantage of synergies with 
related Department of Commerce programs and with the private 
sectors and are critical to U.S. manufacturers' access to 
export markets. They include our Standards and Trade Workshop 
program, maintaining good working relationships with foreign 
standards officials, leadership in key standards-development 
activities that impact trade, and notifying U.S. exporters of 
proposed technical regulation standards in key foreign markets.
    NIST's fiscal year 2006 budget proposal addresses the need 
pointed out by the Committee to strengthen the scientific and 
technical infrastructure needed to support the U.S. standards 
base. The proposal supports advances in manufacturing, 
combining activities to help U.S. manufacturers meet 
measurement, integration, and international standards 
challenges. It includes activities relating to standards for 
manufacturing enterprise integration, nano-manufacturing, and 
expanding access to global markets.
    In fact, to understand the global standards arena fully, 
you need to consider not only documentary standards, but also 
measurement standards. Manufacturing and measuring are two 
sides of the same coin. If you can't measure, you can't 
manufacture. And if you can't assure those measurements to 
other companies and consumers, here and abroad, you probably 
will lose them to competitors.
    So I am very pleased to announce today that NIST is 
launching a comprehensive effort to roadmap America's 
measurement needs. The Nation's measurement system is a vital 
element of our innovation infrastructure. The goal of this very 
important initiative is to ensure that the Nation's highest 
priority measurement needs are identified and met. The 
initiative recognizes the growing importance of both the 
international measurement system and its intersection with 
international standards.
    In summary, we recognize the global challenges posed to 
U.S. competitiveness in both the documentary and measurement 
standards arenas. Now, more than ever, in an environment of 
increasingly scarce resources and many competing demands, we 
need to create and implement mechanisms that will enable the 
public and private sectors to make informed choices about how 
best to invest resources to achieve the greatest impact. NIST 
is committed to the success of this effort.
    Thank you, again, for providing a forum for discussion of 
these important issues for the U.S. economy.
    [The prepared statement of Dr. Semerjian follows:]

               Prepared Statement of Hratch G. Semerjian

    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to testify today on the topic of the role of standards in 
international competitiveness. Standards impact an estimated 80 percent 
of world trade and are a significant factor in competitiveness 
worldwide. We need to take seriously the challenges posed by the 
growing impact of standards on market access so that we can better 
position the United States and U.S. companies to compete in the global 
market. There is much work to be done to ensure that U.S. standards 
interests have fair opportunity to be reflected in standards used 
globally and that these interests are more effectively promoted in our 
most important markets, such as China. This need has become more real 
and apparent as more countries become active in the global market and 
the global standards arena.
    To understand the global standards arena, you need to look at two 
types of standards--measurement standards and documentary standards. 
Measurement standards, which are the technical forte of the National 
Institute of Standards and Technology, are generic tools that are 
widely used by industry to support efficiency in the marketplace. These 
measurements are vital to international trade. For example, the way 
that I measure electromagnetic compatibility (EMC) or flow rates may 
not be the same way that a European or Chinese lab measures EMC or flow 
rates. Differences in measurements and lack of equivalency among 
national measurement systems can delay, and sometimes block, entry into 
foreign markets.
    Documentary standards--standards embodied in written documents and 
promulgated by Standards Development Organizations (SDOs)--establish 
the fitness of a product for a particular use. These standards may 
address product features, performance, quality, compatibility, or other 
product attributes. Examples include the dimensions of lumber, rules 
for the construction and operation of steam boilers and pressure 
vessels, and specifications for film speed. There also are documentary 
standards that set specifications for the function and operation of a 
device or system, covering everything from elevators and refrigerators 
to handicapped access. There are thousands upon thousands of standards 
like these that are invisible to most consumers but play a vital role 
in facilitating global trade.
    The United States is a demand-driven, highly diversified economy 
and society, and its standards system reflects this framework. Our 
decentralized, sector- and technology-based standards system is diverse 
and inclusive. The system is based on a strong private-public 
partnership. In the United States, standards are typically developed in 
response to specific concerns and constituent issues expressed by both 
industry and government. This demand-driven approach contrasts with 
that of many of our trading partners, who favor a much more top-down, 
government-driven approach.
    The U.S. standards system is highly decentralized and naturally 
partitioned for most applications into industrial sectors that are 
supported by numerous independent, private-sector standards development 
organizations (SDOs)--currently more than 450 such organizations, with 
at least 150 more consortia standards development activities underway. 
Approximately 20 SDOs develop about 80 percent of standards in the 
United States.
    Without any central authority or direction from government, a wide 
variety of U.S. voluntary standards activities have proceeded very 
successfully along sector-specific lines for over a century. Although 
U.S. decisions about standards authority and responsibilities were not 
made deliberately with a view to providing support for U.S. efforts in 
international trade, they work well to support the domestic goals of 
protection of health, safety and the environment as well as 
specification of products, processes and systems.
    The American National Standards Institute (ANSI), a private sector, 
non-profit organization founded in 1918 by several SDOs and U.S. 
Government representatives, including the Department of Commerce, 
functions as a central clearinghouse and coordinating body for its 
member organizations, which in turn develop standards on a 
decentralized, consensus basis. ANSI is composed of more than 700 
company members; 30 government agencies; 20 institutions; and 260 
professional, technical, trade, labor and commercial organizations.
    Government agencies support standards through direct participation 
in standards development, as well as through participation in policy 
activities of ANSI and specific standards developing organizations in 
which they have a direct interest. Many agencies are active 
participants in standards development, at both the national and 
international levels. This participation is encouraged by both law and 
policy. More than 3200 staff from 26 federal agencies participate in 
private sector standards development activities. At NIST, there are 
more than 350 participants, more than a quarter of our technical staff.
    Government agencies are also major users of standards, to support 
regulation of health, safety, and the environment, as well as for 
procurement of products and services for federal use. We currently 
count more than 13,000 private sector standards in use by the Federal 
Government. This substantial federal agency reliance on private sector 
standards reinforces the importance of globally recognized standards 
that facilitate the seamless flow of products and services across 
borders.
    Both the U.S. Government and private sector participate in 
international standards development in a variety of ways: through 
private, voluntary organizations whose membership is on a national body 
basis; through treaty organizations (governments are members); through 
professional and technical organizations whose membership is on an 
individual or organizational basis; and through consortia, whose 
membership is typically company and industry-based. We need to make 
effective use of our participation in each of these venues to ensure 
that U.S. interests are advanced.
    Our decentralized, private sector and demand-driven U.S. standards 
system has many strengths. U.S. companies derive significant advantage 
from the system's flexibility and responsiveness. The government also 
derives great benefit from the system, both as a customer and user of 
standards. Government agencies play an important role in the U.S. 
standards system as advocates for the national interest, both here at 
home and globally.
    The system serves the country well, but there is room for 
improvement. In particular, the growing importance of standards to 
international competitiveness dictates that the United States--both 
private and public sectors--move quickly to strengthen the interface 
between the U.S. standards system and the international system. This 
need was pointed out clearly two years ago by industry in response to 
questions posed by the Department of Commerce as part of its Standards 
Initiative.
    The Department of Commerce's Standards Initiative was launched in 
March 2003 by then-Secretary Donald Evans specifically to address U.S. 
industry concerns that issues relating to standards and assessment of 
conformity to those standards in foreign markets were among the 
greatest barriers to expanding exports. U.S. businesses want a fair and 
equitable standards playing field and Secretary Evans directed the 
Department to assist them in achieving that balance where standards 
would ideally be judged not only on their technical merits but also on 
their developers' adherence to the principles of openness, 
transparency, balance or interests, due process and consensus. The 
Secretary's Standards Initiative was bolstered last year with a 
comprehensive report on Standards and Competitiveness: Coordinating for 
Results, which contains some 50 recommendations for moving forward. 
These recommendations respond in part to specific industry requests to 
the Department for action in key areas.
    Examples of industry requests of the Department on standards issues 
include a desire for the Department to focus on China as the primary 
market where the United States should attempt to influence standards 
development and trade policy relating to standards; counter the 
aggressive promotion of European standards throughout the world; limit 
the potential for EU block voting on standards in international 
standards development organizations; increase pressure on countries to 
implement their World Trade Organization (WTO) or Free Trade Agreement 
(FTA) obligations; and coordinating more closely interagency on 
standards issues.
    In close collaboration with industry, the Department is pursuing an 
active multi-pronged strategy with respect to standards-related issues 
in China. This strategy includes continued engagement at the policy and 
technical levels to deal with specific issues as they arise, providing 
grant support where appropriate to U.S. standards developing 
organizations to open offices in China, posting a standards attache to 
the U.S. Embassy in Beijing this summer, and sponsoring an ongoing 
series of both general and sector-specific workshops involving Chinese 
officials and relevant U.S. private and public sector interests. 
Regarding the issue of EU influence in standards on the international 
level, the Department is working with ANSI and industry to define and 
address these concerns at the policy level and also on a case-by-case 
basis.
    The Department's May 2004 report also noted the importance of 
Department representatives participating in the revision of the U.S. 
Standards Strategy, which was first created in 2000 under the auspices 
of ANSI. The purpose of the strategy is to strengthen the U.S. 
standards system and to establish a framework for achieving goals 
related to both the competitiveness of U.S. industry and achieving a 
balanced global trading system. ANSI initiated the first effort to 
develop a national standards strategy in 1998, in response to a 
challenge from Ray Kammer, then Director of NIST. The strategy was 
published in August 2000.
    The Strategy, currently under revision to reflect the new global 
environment, provides an excellent framework for strengthening the 
interface between the U.S. standards system and the international 
system. The purpose of a standards strategy for the United States is to 
establish a framework that can be used by all interested parties to 
further advance trade issues in the global marketplace, enhance 
consumer health and safety, meet stakeholder needs and, as appropriate, 
advance U.S. viewpoints in the regional and international arena. The 
U.S. Standards Strategy provides both a statement of the purpose and 
ideals that underlie the U.S. system and a vision for the future of the 
U.S. standards system in a more globally competitive economy.
    The revised U.S. Standards Strategy is being developed in an open, 
balanced, transparent and participatory process. More than 100 
representatives of industry; small, medium and large enterprise; 
standards developers and consortia; consumer groups; and Federal and 
State governments have participated in the development and review 
process. The Strategy highlights key strategic imperatives that will 
maximize the strengths of the U.S. system and minimize weaknesses. NIST 
, and the Department as a whole, are strong supporters of the work 
being done by the American National Standards Institute and the U.S. 
Standards Strategy Committee to pull together a diverse set of 
stakeholders in the future of the U.S. standards system to update and 
revise the strategy.
    A sectoral approach recognizes that there is no simple prescription 
that can be handed down to fit all needs. Sectors must develop their 
own plans; the purpose of the U.S. Standards Strategy is to provide 
guidance and coherence without constraining creativity or 
effectiveness. The Strategy consists of a set of strategic initiatives 
having broad applicability which will be applied according to their 
relevance and importance to particular sectors. Stakeholders are 
encouraged to develop their own tactical initiatives where needed and 
this strategy suggests some which have widespread applicability.
    The Strategy addresses opportunities for improvement in getting the 
message out about the principles and policies that both underlie the 
U.S. system and are key to the development of globally relevant 
standards, whatever venue stakeholders choose for their work. The 
Department will work closely with key players in the U.S. system to 
implement relevant elements of the Strategy. We will also continue our 
strong partnership with ANSI to support its role of coordination of the 
U.S. system and as member body of the International Organization for 
Standardization (ISO) and the International Electrotechnical 
Commission. U.S. membership in the IEC is coordinated by the U.S. 
National Committee to the IEC, through ANSI.
    NIST has a variety of roles in the U.S. standards system. As the 
national measurement institute, NIST is frequently looked to for 
research and measurements that provide the technical underpinning for 
standards, ranging from materials test methods to standards for 
building performance, and for a range of technologies, from information 
and communications technologies to nano- and biotechnologies. Under the 
provisions of the National Technology Transfer and Advancement Act and 
OMB Circular A-119, NIST is tasked with promoting the efficiency of the 
U.S. standards system, by coordinating federal agency use of non-
government standards and participation in the development of relevant 
standards, and through promoting coordination between the public and 
private sectors in both the standards and conformity assessment arenas.
    NIST is also directed by law to develop specific standards--
cryptographic standards and applications, as well as guidelines, 
procedures and best practices for Federal IT security; biometric and 
voting system standards--and to help industry develop enterprise 
integration standards.
    NIST technical programs support global recognition of U.S. 
standards, where relevant, as well as harmonization of standards to 
avoid barriers to trade. These programs take advantage of synergies 
with related Department of Commerce trade-related programs and with the 
private sector, and are critical to U.S. manufacturers' access to 
export markets. Two key outcomes of these programs are an expanded 
network of foreign officials knowledgeable about the U.S. system, and 
wider use and acceptance by foreign governments of U.S. products and 
standards that incorporate U.S. technology.
    NIST's proposed FY06 initiative on standards in support of global 
trade addresses specific needs of U.S. businesses seeking to compete 
successfully in global markets. The initiative supports U.S. 
competitiveness by ensuring that innovative U.S. businesses are 
equipped to satisfy global as well as U.S. measurement and standards 
requirements, thus enabling rapid response to changes in technologies 
and early identification of new and non-traditional measurement and 
standards needs. Specific activities include targeted measurement 
inter-comparisons with national measurement institutes in key markets, 
leadership in key documentary standards development activities in new 
technology areas, and expanded standards-related information relevant 
to key markets.
    With this year's National Export Strategy, the U.S. Government is 
also making improvements on the trade promotion front. U.S. Government 
agencies, led by the Secretary of Commerce under the Trade Promotion 
Coordinating Committee (TPCC), are collaborating to improve the 
government's standards-related trade promotion efforts. We are 
currently developing a strategy through which we can--working with the 
private sector--do a better job of promoting U.S. standards interests 
in our most important markets, such as China.
    We intend to partner with U.S. industry and standards developers to 
more effectively promote the virtues of an open, transparent and 
impartial approach to standards development and implementation. Both 
U.S. standards interests and policy objectives will be served when the 
governments of our most important export markets are convinced of the 
strengths of this approach versus alternatives that are less open and 
transparent, and more subjective.
    We recognize that the government and private sector must each 
leverage our scarce resources. The TPCC strategy endeavors to develop 
an ambitious partnership with U.S. manufacturers and service providers, 
and the U.S. standards community, to better promote U.S. standards 
interests in our most important markets.
    NIST plays a major role in maintaining the measurement 
infrastructure necessary to advance U.S. interests in international 
trade, commerce and regulatory affairs. Manufacturing and measuring are 
two sides of the same coin. If you can't measure, you can't 
manufacture, at least not up to the expectations of increasingly 
demanding customers. And if you can't assure those measurements to 
other companies and consumers here and abroad, you probably will lose 
them to competitors.
    So I am very pleased to announce today that the National Institute 
of Standards and Technology is launching a comprehensive effort to 
roadmap America's measurement needs. The Nation's measurement system is 
a vital element of our innovation infrastructure. The goal of this very 
important initiative--which will be undertaken in close cooperation 
with the private sector and other agencies--is to ensure that the 
Nation's highest priority measurement needs are identified and then 
met. Working with others, NIST will develop and publish a U.S. 
Measurement System roadmap on a regular basis. We will report to our 
customers and stakeholders on what needs to be done by NIST--and 
others--to address American's measurement needs. NIST will hold 
workshops in specific areas and encourage others to also hold workshops 
to identify priority needs. NIST then will sponsor a summit in January 
2005 to focus discussions on how to meet those needs. We need to be 
certain that the U.S. measurement system is robust so that it can 
sustain America's economy and citizens at world-class levels in the 
21st century. The initiative recognizes the growing importance of both 
international measurement system and its intersection with 
international standards.
    We recognize the global challenges posed to U.S. competitiveness, 
in both the documentary and measurement standards arenas. Now more than 
ever, in an environment of increasingly scarce resources and many 
competing demands, we need to create and implement mechanisms that will 
enable both the public and private sectors to make informed choices 
about how best to invest resources to achieve the greatest impact. 
Together, stakeholders in the U.S. standards system are collaborating 
to lay out a comprehensive strategic approach, implemented through 
effective private-public partnership, to better position the United 
States and U.S. companies to compete in the global market. Progress 
will require communication, cooperation, planning, and a commitment to 
action. NIST is committed to the success of this effort. Thank you for 
allowing me to testify today, and I would be happy to answer any 
questions.

                   Biography for Hratch G. Semerjian

    Hratch G. Semerjian is the Acting Director of NIST. NIST's former 
Director, Arden Bement, Jr., began serving a six-year term as Director 
of the National Science Foundation in November 2004.
    Dr. Semerjian has served as the Deputy Director of NIST since July 
2003. In this position, Dr. Semerjian is responsible for overall 
operation of the Institute, effectiveness of NIST's technical programs, 
and for interactions with international organizations. NIST has a total 
budget of about $858 million, and a permanent staff of about 3,000, as 
well as about 1,600 guest researchers from industry, academia, and 
other national metrology institutes from more than 40 countries. Most 
of the NIST researchers are located in two major campuses in 
Gaithersburg, Md., and Boulder, Colo. NIST also has two joint research 
institutes; the oldest of these is JILA, a collaborative research 
program with the University of Colorado at Boulder, and the other is 
CARB (Center for Advanced Research in Biotechnology), a partnership 
with the University of Maryland Biotechnology Institute.
    Dr. Semerjian received his M.Sc. (1968) and Ph.D. (1972) degrees in 
engineering from Brown University. He served as a Lecturer and Post 
Doctoral Research Fellow in the Chemistry Department at the University 
of Toronto. He then joined the research staff of Pratt & Whitney 
Aircraft Division of United Technologies Corp. in East Hartford, Conn. 
In 1977, Dr. Semerjian joined the National Bureau of Standards (now 
NIST), where he served as Director of the Chemical Science and 
Technology Laboratory (CSTL) from April 1992 through July 2003. Awards 
he has received include the Fulbright Fellowship, C.B. Keen Fellowship 
at Brown, the U.S. Department of Commerce Meritorious Federal Service 
(Silver Medal) Award in 1984, and the U.S. Department of Commerce 
Distinguished Achievement in Federal Service (Gold Medal) Award in 
1995. In 1996, he was elected a Fellow of the American Society of 
Mechanical Engineers. In 1997, he received the Brown Engineering Alumni 
Medal. Dr. Semerjian was elected to the National Academy of Engineering 
in 2000.

    Chairman Ehlers. Thank you very much.
    Mr. Noth.

     STATEMENT OF MR. ROBERT W. NOTH, MANAGER, ENGINEERING 
                  STANDARDS, DEERE AND COMPANY

    Mr. Noth. Good afternoon.
    Chairman Ehlers. Turn on your microphone, please.
    Mr. Noth. Thank you, Mr. Chairman.
    My name is Bob Noth, and I am the Manager of Engineering 
Standards for Deere and Company. I have been involved with 
standards now for about 15 years, so I have a little 
experience.
    For those of you who may not know us, we are a U.S.-based 
manufacturer of machinery and equipment for the ag and 
construction, forestry and turf care commercial markets, and 
our products are sold in 160 countries around the world 
currently, and we have more than 50 manufacturing operations 
located in 17 countries.
    We consider it both an honor and a privilege to share our--
--
    Chairman Ehlers. Excuse me. We will have to go into recess 
briefly, and I will be back as soon as I can.
    [Recess.]
    Chairman Ehlers. I apologize to everyone, including--
especially Mr. Noth, for interrupting the proceedings, but my 
presence was demanded elsewhere. And since we did not have an 
alternative Chair, I had little choice.
    You may proceed, Mr. Noth.
    Mr. Noth. Thank you, again, Mr. Chairman.
    As I was just concluding, we consider it an honor and a 
privilege to share our experiences regarding standards today.
    John Deere products, and those of our competitors in the 
markets we serve, are not heavily regulated compared to some 
other products in other industries. Active participation in the 
development of and compliance with voluntary standards has been 
a long-standing John Deere, and in fact, off-highway industry 
practice. We involve John Deere employees as subject matter 
experts on relevant standards committees in the markets we 
serve. We have been involved in Europe since the 1960s, and the 
level of engagement has escalated significantly since 1992 to 
keep pace with standards development for the European Common 
Market. We are not as heavily engaged in China, but we 
anticipate a growing involvement as the Chinese market develops 
and we learn our ways through the Chinese standards-development 
system.
    This has worked effectively for us, but we do have concerns 
for the future based on recent experience and anticipated 
changes in the global market. Specifically, the European top-
down, all-encompassing approach to regulation, as opposed to 
the U.S. approach, which is based more on addressing specific 
needs, coupled with their linking of regulatory compliance to 
voluntary standards through what they call the ``presumption of 
conformity'' and the ``best available technology'' mindset that 
they have has dramatically increased regulatory coverage and 
voluntary standards development and had a significant increase 
in the cost of delivering product in the European market.
    In addition to that--excuse me. I got something out of 
order. I am sorry.
    The Europeans are aggressively exporting their system and 
their standards to the other countries and developing markets 
around the world. The EU itself and member-states are providing 
millions of Euros in technical assistance in exchange for 
agreements to prefer European-based standards, technology, and 
of course, European producers. Countries like Brazil, Mexico, 
Russia, and Israel are making such agreement, even when their 
markets show clear preferences for U.S. goods and services.
    Many countries within the WTO and signatories to the TBT 
agreement continue to be slow in implementation of the 
provisions and mechanisms within the agreement. This includes 
their failure to recognize standards set according to the TBT 
principles as ``international'' and thereby creating potential 
problems for the acceptance of U.S. goods exported into those 
markets.
    And an even larger concern for our industry beyond the 
proliferation of country-unique or regionally-unique standards 
and regulatory requirements is the issue of compliance, 
otherwise known as Conformity Assessment. Most countries 
outside the U.S. and Europe insist on conducting their own 
assessments of conformity before products can enter their 
markets. For our products and our industry, these requirements 
represent a huge redundant and unnecessary cost that must be 
passed on to the consumer with no additional value. Based on 
the methods employed by some countries, it appears that some of 
these requirements are more motivated by technology transfer 
than by consumer protection.
    The demand for John Deere products grows globally and the 
cost of configuring products to unique local standards, 
especially those required by governments and not valued by the 
consumers, becomes prohibitive for both the manufacturer and 
the customers. The need for globally-recognized and accepted 
standards that minimize the need for unnecessary expensive 
product variation increases. As a result, the off-highway 
equipment industry has gravitated to the development of a 
portfolio established under the auspices of the International 
Organization of Standards. This, of course, has forced some 
changes in how we deal with our American-based standards-
developing organizations, like SAE and ASAE, and over the past 
few years, we have been morphing them to a different business 
model for our particular standards and changed some of the 
funding that we provide in order for them to provide the 
appropriate infrastructure. It also makes ANSI a more strategic 
player for us, and that is why we have been engaged with ANSI 
so aggressively.
    The off-highway industry prefers the ISO process, because 
it offers broad political acceptance to our standards, and we 
have a good argument for the international recognition of those 
standards when we build product to them. We can have a seat at 
the table, and our delegation includes subject matter experts 
from our companies. And any dependence on alternative 
international processes leaves the door open for competing 
standards to be developed and gain political acceptance in 
competition with the standards we may be using.
    The primary drawbacks, of course, are that the process--the 
U.S. can be disadvantaged by the ``one country-one vote'' 
principle if there are not enough ``P'' members, or 
participating members, at the table to represent the full 
extent of the global market. And when many stakeholders are at 
the table, of course, it can take longer to reach a consensus 
on what ultimately becomes a standard, as you have to debate 
the issues.
    However, up to this point, we feel the advantages outweigh 
the disadvantages, and we know that the--that you can, in fact, 
by the basis of early involvement, the quality input, and 
because we have been able to deliver excellent products and 
support services where we do business, we have been successful 
in this process, not to say we haven't had setbacks.
    However, as governments that control access to markets 
outside of the developed world start to move toward more 
regulation, unique and sometimes unjustified standards 
requirements and insist on mandatory but redundant testing, 
regardless of brand recognition and excellent product 
experience. We believe better communication between the private 
sector and government and better alignment between the private 
sectors and the multiple departments and agencies of government 
is essential to maintaining a level playing field for U.S.-
based industry.
    First of all, the Federal and State governments need to 
educate themselves on issues relating to standards and trade, 
because, like other issues before Congress, they are complex 
and will not yield to simple fixes. Hearings, such as this one 
today are a good start, and John Deere applauds the Chairman's 
initiative on scheduling it, but while one hearing is 
necessary, it is not sufficient, given the magnitude of the 
challenge.
    In this vein, we seriously urge Congress to consider 
endorsement of the United States Standards Strategy that is 
currently being developed by a large cross-section of U.S. 
industry, standards-developing organizations, standards-
developing consortia, government agencies, consumer groups, and 
conformity assessment organizations under the auspices of ANSI. 
It highlights and takes advantage of the inherent strengths of 
the U.S. standards system and recommends activities that, if 
undertaken and executed effectively, may neutralize much of 
what is currently perceived by some as the disadvantage to U.S. 
interests.
    Beyond endorsing the strategy, though, we believe that the 
Federal Government also needs to put a higher priority--a high 
priority on providing technical assistance to our trading 
partners and into the promotion of U.S.-based standards and 
technology as an alternative to the European approach.
    We believe that we do not have to match the European Union 
dollar for Euro, but a great percentage of the funding 
currently going to facilitating development, through 
organizations like USAID or the Trade Development Agency, 
should be allocated to technical assistance with due 
consideration to priorities based on trading volumes and 
strategic relationships with our partners.
    One of the things that these organizations need is a 
checklist that includes standards-related infrastructure and 
issues. They often get input on what they should fund based on 
in-country input, but because that in-country input often 
doesn't know what it doesn't know, we need something that 
ultimately puts some priority on standards for our agencies.
    Similarly, we need consistent and predictable funding of 
the standards and trade activities in the Department of 
Commerce, NIST, the International Trade Administration, USTR, 
and the Department of State, Energy, and other agencies, but 
with the assurance that more effective coordination between 
these agencies and more interaction with the private sector 
occur. The existing Interagency Council on Standards needs 
broader participation from some departments and agencies, like 
State. What is missing, though, is a policy-level council 
responsible for coordination at a strategic level. To this end, 
we respectfully suggest Congress might consider amending the 
National Technology Transfer Act of 1996 to put more emphasis 
on that policy-level communication, coordination, and alignment 
with consideration of creating a standards ``czar'' to provide 
appropriate accountability.
    In 1992, we were very much where we are with China today, 
and things have improved a great deal. We need to, I think, 
share that we use the lessons learned in what we did with 
Europe and apply that to China and the other countries of the 
developing world as the market changes.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Noth follows:]

                  Prepared Statement of Robert W. Noth

Introduction

    Deere & Company is a U.S. based manufacturer of machinery and 
equipment for the agricultural, construction, forestry, and turf care 
commercial markets. John Deere products are currently sold in 160 
countries around the world and we have more than 50 manufacturing 
operations located in 17 countries around the world. We consider it 
both an honor and privilege to share our experiences regarding 
standards and trade with this subcommittee here today.
    We have been asked to provide testimony addressing questions in 
three areas of interest:

1.  What has been the experience of your company with Chinese and 
European technical standards, and how do you work with these countries 
in this area? What are your concerns regarding the technical standards 
and standards practices of other countries?

    John Deere products and those of our competitors in the markets we 
serve have not been heavily regulated compared to some other 
industries. Active participation in the development of and compliance 
with voluntary standards has been a long standing John Deere and in 
fact, industry practice. Primary reasons for this include:

          Demonstrating social responsibility by addressing 
        health, safety and environmental concerns regarding our 
        products and their use.

          Avoiding unnecessary regulation

          Managing risk regarding product liability

          Creating a supply base of affordable & readily 
        available components

          Maintaining a level playing field for competition

          Documenting the ``state-of-the-art''

    To these ends, we have involved John Deere employees who are 
``subject matter experts'' on relevant standards development committees 
in the markets we serve. We've been involved in Europe since the 1960s 
and the level of our engagement has escalated significantly since 1992 
to keep pace with standards development for the European Common Market. 
We are not yet as heavily engaged in China but we anticipate a growing 
involvement as the Chinese market develops.
    Standards are a form of product specification for build and test. 
The cost of compliance is reflected in the market price for our 
products. However, as the demand for John Deere products grows 
globally, the cost of configuring product to unique local standards, 
especially those required by governments but not the consumers, becomes 
prohibitive for both manufacturer and the customers. The need for 
globally recognized and accepted standards that minimize the need for 
unnecessary and expensive product variation increases. As a result, the 
off highway equipment industry has gravitated to the development of a 
portfolio established under the auspices of the International 
Organization for Standards (ISO).
    This ``strategy'' has worked effectively for us up to now but we do 
have concerns for the future based on recent experience and anticipated 
changes in the global market.

          In establishing the Common Market, the European top 
        down, all encompassing approach to regulation, (as opposed the 
        U.S. approach, based on addressing specific needs) coupled with 
        linking regulatory compliance to voluntary standards through 
        the ``presumption of conformity'' and a ``best available 
        technology'' mindset has dramatically increased regulatory 
        coverage and voluntary standards development.

          The European approach often results in horizontal 
        type standards proposals setting requirements on broad, 
        dissimilar types of off highway equipment. Examples include 
        Environmental type standards (and Regulations) on Engine 
        Emissions, Fuels, Environmental Noise, and ``End of Life'' 
        standards that place additional burdens on manufacturers. While 
        we are not opposed to goals and objectives of some of these 
        initiatives, we have concerns that some proposals will not 
        yield the desired results while timetables put our industry at 
        risk of survival in terms of our abilities to recover the cost 
        of the R&D investment while remaining competitive in the 
        marketplace. The impacts, already being felt, are substantially 
        higher product costs to the consumer with little direct value 
        perceived by the customer. We would prefer a more vertical, 
        product oriented approach to standards and regulation so the 
        solutions can be more effectively tailored to product use and 
        more effectively deployed in global markets consistent with 
        developing demand.

          The Europeans are aggressively exporting their system 
        and their standards to other countries and developing markets 
        around the world. The EU itself and individual member-states 
        are providing millions of Euros in technical assistance in 
        exchange for agreements to prefer European based standards, 
        technology and EU producers. Countries like Brazil, Mexico, 
        Russia and Israel are making such agreements, even when their 
        markets show a clear preference for U.S. goods and services.

          Many of the governments that control access to 
        markets outside of the U.S. are skeptical of products complying 
        with ``voluntary'' standards, no matter how broadly used, 
        accepted and successful. Some have declared their intentions to 
        regulate all aspects of the products entering their markets. In 
        some cases, even products built to internationally recognized 
        and accepted standards from ISO or IEC are not immediately 
        acceptable.

          Many countries within the WTO and signatories to the 
        TBT agreement continue to be slow to implement the provisions 
        and mechanisms within the agreement. This includes their 
        failure to recognize standards set according to the TBT 
        principles as ``international'' thereby creating potential 
        problems for the acceptance of U.S. goods exported to those 
        markets.

          An even larger concern for our industry beyond the 
        proliferation of country or regionally unique standards and 
        regulatory requirements, is the issue of compliance, otherwise 
        known as Conformity Assessment. Most countries outside the U.S. 
        and Europe insist upon conducting their own assessments of 
        conformity before products can enter their markets. For our 
        products and our industry, these requirements represent a huge 
        redundant and unnecessary cost that must be passed on to the 
        consumer with no added value. Based upon the methods employed 
        by some countries, it appears some of these requirements are 
        more motivated by technology transfer than by consumer 
        protection.

2.  For your industry, how are standards developed in the U.S.? How is 
this different from the way standards are developed in our major 
trading partners such as Europe and Asia? What are the merits and 
drawbacks of these different systems? Is the U.S. system at a 
disadvantage in the global standards arena, and if so, why?

    The primary players in developing standards for our industry 
include our trade associations where we can legally collaborate with 
our competitors on needs for new or revised standards requirements. For 
Agricultural, Construction and Forestry equipment we work through the 
Association of Equipment Manufacturers (AEM); Turf care equipment, the 
Outdoor Power Equipment Institute (OPEI) and for Engines, the Engine 
Manufacturers Association (EMA). Standards proposals are then worked 
either through the American Society of Agricultural Engineers (ASAE) 
for Agricultural and Turf care, or the Society of Automotive Engineers 
(SAE) for Construction, Forestry and Engines where the U.S. Technical 
Advisory Groups for the relevant ISO committees are administered. The 
U.S. developed proposals and positions are then introduced in their 
relevant ISO committees with the ultimate objective of obtaining an 
internationally recognized and accepted document so that machines made 
to comply have the broadest possible market access. To ensure the 
broadest acceptability of U.S. positions we also encourage our U.S. 
Trade Associations to coordinate with European, South American and 
Asian Trade Associations where we maintain membership and ``socialize'' 
our proposals and address any expressed concerns from the global 
stakeholders.
    In the past, ASAE and SAE often published their own versions of 
Standards. As the industry has become more globally focused, we have 
evolved to using ISO as our primary development mechanism and have 
moved to eliminate the need for redundant documents. This has forced 
some changes in how the industry funds ASAE and SAE for executing their 
role in the process and elevated the strategic importance of ANSI as 
the U.S. member body of ISO. That is why John Deere and some of our 
competitors are active participants in ANSI.
    Because of our industry commitment to ISO, the differences between 
the U.S. process and those in other countries are not as great as they 
are for some other industry sectors. The primary difference is that 
many participants in ISO Technical Committees are not ``subject matter 
experts'' who have a working knowledge of the industry, the products 
and technologies, but are National Standards Body bureaucrats or even 
government representatives who do not contribute to the technical 
debate, but do have a vote in the final outcome. This brings an element 
of international politics into the process that is often frustrating.
    For the Off Highway Industry the ISO process is preferred to the 
national or regional alternatives for the following reasons.

          It offers broad political acceptance of the 
        standards.

          We can have a seat at the table and our delegation 
        can include ``subject matter experts.''

          Any dependence on alternative ``international'' 
        processes leaves the door open for competing standards to be 
        developed and gain political acceptance.

    Compared to most U.S.-based standards developing organizations, 
National or Regional Standards Bodies are more closed to outside 
participation, less transparent regarding what is being considered and 
often less balanced and occasionally biased against industry 
participation. Europe is now somewhat more participative and open than 
it was in 1992 but still not up to U.S. expectations. China is just 
starting to emerge as a significant international force in standards 
but at this point, does not appear to be quickly embracing open 
participation.
    The primary drawbacks to the ISO process are:

          The U.S. can be disadvantaged by the ``one country--
        one vote'' if there are not enough ``P'' members at the table 
        to represent the full extent of the global market.

          When many stakeholders are at the table it can take 
        longer to reach consensus.

    Up to this point in time, John Deere does not believe our industry 
has been seriously disadvantaged in the global standards arena because 
of our early involvement, the quality of our input and because we've 
been able to deliver excellent products and support services wherever 
we do business. We have not often seen the need to appeal to government 
for assistance, preferring instead to work the challenges ourselves.
    However, as the governments that control access to markets outside 
of the developed world start to move toward more regulation, unique and 
sometimes unjustified standards requirements and insist on mandatory 
but redundant testing regardless of brand recognition or excellent 
product experience, we believe better communication between the private 
sector and government and better alignment between the private sectors 
and the multiple departments and agencies of government is essential to 
maintain a level playing field for U.S. based industry.

3.  What should the Federal Government, State governments, U.S. 
standards-setting organizations, and companies be doing to reduce your 
vulnerability to the use of standards as trade barriers, and how could 
they promote the use of non-discriminatory standards in the global 
marketplace? How should these efforts be coordinated?

    First of all, the Federal and State governments need to educate 
themselves on the issues relating to standards in trade because, like 
other issues before Congress, they are complex and will not yield to 
simple fixes. Hearings such as this one today are a good start and John 
Deere applauds the Chairman's initiative in scheduling it, but while 
one hearing is necessary, it is not likely sufficient given the 
magnitude of the challenge. While we believe most if not all U.S. 
standards setting organizations are already well aware of the issues, 
many companies are just starting to understand the implications and 
many small- and medium-size manufacturers and service providers remain 
unaware.
    In this vain, we seriously urge Congress to consider endorsement of 
the United States Standards Strategy (USSS), currently being developed 
by a large cross-section of U.S. industry, standards developing 
organizations, standards developing consortia, government agencies, 
consumer groups and conformity assessment organizations under the 
auspices of ANSI. It highlights the inherent strengths of the U.S. 
Standards system and recommends activities, if undertaken and executed 
effectively may neutralize much of what is currently perceived by some 
as a disadvantage to U.S. interests.
    Going beyond endorsing the strategy, we believe that Federal and 
State governments need to put a high priority on providing more 
Technical Assistance to our trading partners and into the promotion of 
U.S.-based standards and technology as an alternative to the European 
approach. Specific activities funded by the industries like ours have 
helped in some sectors but are not sufficient given the scope of the 
European effort. We do not believe we have to match the European Union 
dollar for Euro, but a greater percentage of the funding currently 
going to facilitate development through organizations like USAID, 
should be allocated to Technical Assistance with due consideration to 
priorities based on trading volumes and strategic relationships.
    Similarly, we need consistent and predictable funding of the 
Standards and Trade activities in the Department of Commerce, NIST, the 
International Trade Administration, USTR, the Departments of State, 
Defense and Energy and other agencies but with the assurance of more 
effective coordination between these agencies. The Interagency Council 
on Standards already exists but needs broader participation from some 
Departments and Agencies and a higher level of visibility to its 
recommendations. To this end, we respectfully suggest Congress might 
consider amending the National Technology Transfer Act of 1996 to put 
more emphasis on such communication, coordination and alignment with 
consideration of creating a Standards ``czar'' to provide appropriate 
accountability.

                      Biography for Robert W. Noth

    As Manager of Engineering Standards for Deere & Company, Bob Noth 
is responsible for overseeing the development, deployment, utilization 
and administration of standards affecting the Deere product line 
worldwide. This includes responsibility for development and 
implementation of strategies and processes that effectively avoid 
redundant and/or unnecessary parts and components from entering Deere's 
products and product support system.
    Bob joined Deere in 1965 as an Industrial Engineer at the Dubuque 
Works. Over his 40-year career at Deere he has held a variety of 
positions in Manufacturing Engineering, Value Analysis, Production 
Supervision and Management at Deere units in Dubuque, Iowa, Horicon, 
Wisconsin and at Corporate Headquarters. He assumed his current 
position in July of 1992.
    Bob is active on a global scale in professional societies, trade 
associations and standards development organizations. His past service 
includes Chairman of the SAE Technical Standards Board, the SAE Board 
of Directors, and Committee PM 03 of the American Society of 
Agricultural Engineers (ASAE). He became involved with the ANSI Company 
Member Council Executive Committee in 1991 and has since served ANSI in 
a variety of capacities including Vice Chairman of the Standards and 
Data Services Committee (SDSC) where he was involved with development 
of ANSI's National Standards System Network (NSSN). Appointed as 
Chairman of the ANSI Regional Standing Committee on Europe, the Middle 
East and Africa, in 1999, he has presided over three annual bilateral 
discussions with the European Commission, CEN, CENELEC and ETSI. He 
also served on the Drafting Committee for the National Standards 
Strategy.
    He is currently on the ANSI Board of Directors where he was elected 
to the position of Vice Chairman in 2002 and in that role, chairs their 
International Policy Committee.
    Other current responsibilities include representing Deere & Company 
on ICSCA, the International Cooperation on Standards and Conformity 
Assessment and IFAN, the International Organization of Standards Users.

    Chairman Ehlers. Thank you.
    Dr. Deutsch.

 STATEMENT OF DR. DONALD R. DEUTSCH, VICE PRESIDENT, STANDARDS 
         STRATEGY AND ARCHITECTURE, ORACLE CORPORATION

    Dr. Deutsch. Thank you, Mr. Chairman.
    Mr. Chairman, Ranking Member Wu, Members of the 
Subcommittee, my name is Don Deutsch. I am Vice President of 
Standards Strategy and Architecture at Oracle.
    I am here today as Chair of the Standardization Policy 
Committee of the Information Technology Industry Council, ITI, 
a trade association of 31 global and market-leading high-tech 
companies. In addition to personally participating in a variety 
of standards-setting organizations, I am responsible for 
orchestrating my company's participation in standards and 
consortia forums. More than 200 Oracle engineers are involved 
in 100-plus working groups and over 70 consortia and formal 
standards bodies around the world. All ITI member companies, as 
well as the entire technology industry, have comparable levels 
of investment and standards body participation.
    ITI appreciates the Committee's focus on standards and your 
understanding of the critical impact on the continued 
competitiveness of the U.S. high-tech industry. Many of the 
most pressing policy issues before the Congress today have 
significant inter-operability in its standardization 
components, such as ensuring our national security, improving 
access to and quality of medical care, and protecting the 
environment.
    My remarks today will cover three areas: the diverse 
worldwide IT standardization process that has served the U.S. 
industry well, international trends that are at odds with the 
U.S. approach, and the use of standards advocacy to stimulate 
openness in trade and market.
    In the technology industry, a focus on how standards are 
developed in the United States misses the mark. Our industry 
designs and builds products for global markets, and we develop 
globally-relevant standards in multiple venues and 
organizations around the world. Standards are at a foundation 
of the new global technology economy. The growth and success of 
the U.S.-led global IT industry is attributable, in large part, 
to the development and use of market-led, voluntary standards.
    To frame our perspective, I would like to highlight a 
recent experience, which the Chairman mentioned in his opening 
remarks, that our industry had in China. You may have heard of 
this issue referred to by its popular acronym, ``WAPI.'' This 
example highlights the many challenges the industry is facing, 
not only in China, but also around the globe. Last year, the 
Chinese government proposed a mandatory standard for Wireless 
Local Area Network products in China, mandating the specific 
technology incompatible with international standards and 
requiring local Chinese production of that technology. U.S. 
technology companies faced a major dilemma. They could either 
be forced to collaborate with a select few Chinese competitors 
or abandon the Chinese market and its opportunities altogether.
    After facing coordinated pressure from the highest levels 
of the Administration and Congress, the Chinese government 
agreed to indefinitely suspend implementation of ``WAPI'', 
revise the specification based on comments from foreign and 
domestic firms, and participate in international standards 
bodies. By standing firm, we avoided a terrible precedent that 
would have encouraged China and other countries to follow 
similar paths of discrimination against foreign firms through 
the standards process.
    While we may attribute the Chinese approach to standards-
setting to their status as an emerging and rapidly-developing 
economy, the EU and other regions of the world are increasingly 
using top-down approaches to standardization driven by 
regulatory interests rather than by market-led requirements.
    We believe that the best role for the Federal Government in 
standardization is in partnership with industry. Specifically, 
we look to the U.S. Government to promote the voluntary, 
market-driven standards process that has served industry well 
and to stimulate openness in trade and markets by helping to 
defend against the use of standards as barriers to innovation 
and market access.
    Moving toward these items, ITI recommends that the U.S. 
Government strengthen current standards liaison and attache 
programs of the Department of Commerce, including additional 
staff and resources to ensure effective coordination and 
promotion of standards, technical, regulatory, and market 
access activities across all relevant government agencies, 
redouble advocacy efforts to promote global, market-led, 
voluntary standards that support innovation and inter-
operability. In this role, the U.S. Government should directly 
engage with other governments about how internationally-
recognized market-led technology and standards can grow 
economies and benefit all parties.
    And finally, Mr. Chairman, we must, together, look at how 
to develop metrics to provide much-needed standards impact 
analyses. For example, there would be real policy and 
commercial use for analyses of global economic impact of 
standards. With this information, we can promote together 
global, market-led, voluntary standards that benefit consumers' 
industry economies around the world.
    Again, Mr. Chairman, Members of the Subcommittee, thank you 
for the opportunity to discuss these important issues with you 
today.
    [The prepared statement of Dr. Deutsch follows:]

                Prepared Statement of Donald R. Deutsch

    Mr. Chairman, Ranking Member Wu, Members of the Subcommittee, my 
name is Don Deutsch, and I am Vice President, Standards Strategy and 
Architecture at Oracle. For over 25 years I have chaired the INCITS H2 
Technical Committee that defines the SQL language standard that all 
relational database system products, including Oracle's, support. I am 
responsible for orchestrating and coordinating my company's 
participation in standards and consortia forums across all business 
units and geographies. In that capacity I represent Oracle at the 
policy level in various consortia as well as in formal standards 
bodies, including the INCITS Executive Board, the Executive Committee 
for the Java Community Process, and the American National Standards 
Institute (ANSI) Board of Directors. I also serve as President of the 
Enterprise Grid Alliance, a consortium focusing on accelerating the 
application of Grid technology in commercial and public sector data 
centers. In many respects the diversity of the bodies in which I 
participate is reflective of the nature of standards development in the 
technology industry.
    I am honored to appear before this subcommittee today in my 
capacity as Chairman of the Standardization Policy Committee for the 
Information Technology Industry Council. ITI is an elite group of the 
Nation's top high-tech companies and is widely recognized as the tech 
industry's most effective lobbying organization in Washington. ITI 
helps member companies achieve their policy objectives through building 
relationships with Members of Congress, Administration officials, and 
foreign governments; organizing industry-wide consensus on policy 
issues; and working to enact tech-friendly government policies.
    ITI would like to address three very important issues:

        1.  The Chinese and European approaches to standardization;

        2.  The U.S. approach to standardization; and

        3.  The U.S. Government's role in promoting the recognition of 
        industry-led, voluntary standards, as well as in preventing 
        standards from being used as barriers to market access.

    ITI appreciates your focus on standards and their impact on the 
competitiveness of the U.S. high-tech industry. Technology standards 
are directly and critically related to innovation and the creation of 
competitive global markets. Many of the most pressing policy issues 
before the Congress today have a significant standardization component, 
such as ensuring our national security, improving access to and quality 
of medical care, and protecting the environment.

Background

    Let me begin by emphasizing the critical importance of standards to 
the technology sector. Standards are at the foundation of the global 
information and communications technology (ICT) economy. They create 
value and aggregate markets. They facilitate technology diffusion, 
promote production efficiency, product compatibility, inter-
operability, and enhanced competition. They help drive down costs for 
consumers, facilitate communication among buyers and sellers of 
important commercial information. In many cases, they advance the 
public welfare, through the adoption of product safety standards, for 
example.
    Industry recognizes that standards are not only the domain of the 
technical and business communities. Policy makers in the U.S. and 
abroad are increasingly interested in and actively influencing a range 
of standards and technical regulatory issues. Governmental interest and 
activity plays a critical role in today's global economy and influences 
the competitiveness of the ICT industry. Representatives of the 
technology industry work very hard to carefully frame our discussions 
with policy makers as we work cooperatively to address critical 
standards policy matters and define appropriate roles. As important as 
these issues are, they are not simple. There is often a need for 
nuanced understanding of standardization policy issues as the 
objectives of different interests, both domestically and abroad, are 
not always aligned.
    One way to help clarify matters is to explain what the high-tech 
industry means when we talk about ``standards.'' In our sector, the 
majority of ICT standards are developed in a variety of open, 
international standards development processes and are adopted and 
implemented on a market-driven, voluntary basis. In few cases is the 
adoption of ICT standards mandated by governments.

Chinese and European Approaches to Standardization

    China's approach to and use of standards is a complex set of 
issues. It is a well-publicized fact that the Chinese Government wants 
to develop a robust domestic high-technology industry. This is not 
unique to China, as many governments around the world, including our 
own, want to see healthy and competitive domestic industries. The use 
and promotion of national or regional standards is one mechanism that 
some governments use to achieve their industrial policy objectives. 
Perhaps I can best illustrate this point with a recent experience that 
our industry had, one that we believe highlights many challenges the 
industry is facing, not only in China, but also around the globe.
    The Chinese Government proposed the mandatory adoption of a 
Chinese-developed Wireless Local Area Network (WLAN) standard, best 
known by its acronym, ``WAPI.''
    In May of 2003, The Chinese Government issued compulsory ``WAPI'' 
security standards that were set to go into effect on June 1, 2004, and 
were incompatible with the international standards upon which most WLAN 
products are based. Moreover, China only provided the technology 
underlying this mandatory technical standard to several of its domestic 
producers of wireless equipment, and designated these companies as the 
obligatory production partners of any foreign manufacturers willing to 
license the mandated technology and seeking to market these products in 
China.
    Thus, in order to comply with the proposed regulations, U.S. 
technology companies faced a major dilemma: either collaborate with a 
select number of their Chinese competitors to co-produce products for 
the Chinese market, and thus potentially be forced to share valuable 
intellectual property with their Chinese competitors and run afoul of 
U.S. export control regulations, or abandon the Chinese market and its 
opportunities altogether.
    These regulations also would have effectively excluded China from 
the world market because WLAN products made outside China would not 
have worked, essentially segmenting the world market for these 
products.
    ITI worked very closely with our industry colleagues around the 
world, and also brought together the various groups in the U.S., to 
closely collaborate and maintain a strong industry voice on this issue. 
ITI worked hard to keep our government informed and to make sure this 
issue was on the agenda of both the Administration and the Congress. 
After considerable dialogue culminating in the April 2004 meeting of 
the Joint Commission on Commerce and Trade, the Chinese Government 
agreed to indefinitely suspend implementation of this mandatory 
standard, revise the standard based on comments from foreign and 
domestic firms, and participate in international standards bodies.
    Yes, this was an important result for U.S. industry, but it was an 
equally important precedent for global competition. ICT is a leading 
U.S. export to China, accounting for 26 percent of all U.S. exports to 
China in 2002. This amounts to several billion dollars per year of U.S. 
tech exports to China. Many of these current and as yet to be designed 
U.S.-made products and components would have been affected by this 
standard, jeopardizing high-end U.S. jobs. By standing firm against 
WAPI, the U.S. Government has ensured that the fast growing wireless 
market in China (forecast to grow by 25 percent per year) remains open 
to global competition. Additionally, the U.S. high-tech industry 
avoided the precedent that would have encouraged China's bad behavior, 
and, potentially encouraged other countries that might choose to 
similarly discriminate against foreign firms through the standards 
process.
    This example illustrates the concerns that many industrial sectors, 
particularly the U.S. high-technology sector, are currently facing in 
China. The damaging precedent that could have been set with WAPI, in 
which a government--a signatory to the WTO agreement--mandates a 
technology and forces domestic production of that technology, would 
have had significant, negative implications for technological 
development and global economic growth.
    I would like to shift now to Europe. As a global industry, the IT 
sector recognizes that the European standards infrastructure--which 
includes the national and European standards organizations (ESOs) and 
the European Commission (EC) and member state governments--is 
sophisticated, complex, and effective. The European standards 
infrastructure has demonstrated a considerable ability to set a single 
standard for the internal European market, drive it through the ISO/IEC 
system and promulgate it globally by leveraging its market power and 
Commission-funded trade promotion efforts.
    The impact of European standards activity reaches well beyond the 
EU. Many developing countries in Asia and the Americas look to Europe 
for leadership on standards and regulatory processes. For example, the 
European Commission funds, with more than 60m Euro, an alliance for the 
Information Society with Latin America. This initiative includes a 
specific standards component, with the stated objective of promoting 
the European system of standardization and creating medium- and long-
term partnerships between the EU and Latin America. This is an explicit 
strategy targeted directly at our industry with the objective of 
extending European influence to the standards and regulatory bodies in 
third markets.
    Let me briefly speak to one very costly example of this dynamic. It 
involves standards related to Electromagnetic Compatibility (EMC) for 
high-tech products.
    In 1989, the European Commission issued the EMC Directive requiring 
that the electrical system in the EU be protected from unacceptable 
disruption from radio frequency and harmonic interference. The 
directive was based upon the precautionary principle. The resulting 
harmonic emissions standards have no technical justification. There is 
a complete absence of data demonstrating any widespread unacceptable 
levels of harmonic interference from consumer electronic products. As 
this standard is now implemented, it places the burden of mitigating a 
potential and undocumented EU electrical grid issue on manufacturers 
with no corresponding mitigation measures on the utility companies. The 
standards (EN 61000-3-2 and EN 61000-3-3) are overly restrictive, apply 
to every piece of equipment produced, and increase the consumer cost of 
products by over $1B annually in Europe.
    Unfortunately, despite the lack of technical justification for this 
standard and the fact that it has been created under irregular 
procedures, we now see other countries, including China, Indonesia, 
India, Russia, and potentially others in Africa, Asia, and South 
America, considering the adoption of these standard. This is a concern 
to product manufacturers, and for an obvious reason: the growth of this 
standard will drive a significant increase in unwarranted additional 
costs and technical requirements for the impacted equipment.
    ITI's view is that the objectives for technical regulations should 
be to ensure safe and legal products. Technical regulations should 
never be more trade-restrictive than necessary and governments should 
consider alternatives whenever possible. This one European example 
demonstrates the impact on the marketplace of technical regulations. 
Governments should reference standards as the basis for technical 
regulations under certain, limited circumstances. When standards are 
intended for use by governments in regulations, the content of the 
standard and the process for developing it are critically important. 
Governments should reference only those standards that meet the test of 
real usage (i.e., they are responsive to real world conditions, 
performance (not design) based, and technically sound and relevant to 
the regulation). Additionally, we believe governments should limit the 
use of standards in regulations to only those standards that are 
developed through a process that is truly open and global.

The U.S. Approach to Standardization

    For our industry, the focus is not on how domestic standards are 
developed ``in the U.S.,'' but rather on creating global technical 
standards that support the growth of the worldwide ICT market. Because 
our industry designs and builds single products for a global market, we 
actually develop international, globally relevant standards in 
different venues and organizations around the world--not simply 
American National standards in a U.S. standardization infrastructure. 
We need that flexibility, because the ICT sector depends on standards 
today more than ever. The rapid pace of change in our sector, with 
product cycles measured in months, not years, requires companies and 
their suppliers constantly to modify, improve, and re-develop their 
technologies, products, and services in order to satisfy worldwide 
consumer demands. Standards and their development process must stay 
relevant and keep pace with this fast changing, global marketplace.
    That being said, of course it is a reality that governments do have 
a perspective on standardization. How governments act on that 
perspective can and does affect global commerce and competitiveness. I 
have spoken a bit already about perspectives and approaches in Europe 
and China. Now I would like to say a little bit about the situation 
here.
    We believe that the growth and success of the global IT industry 
(much of which is based here in the U.S.) is built in large part upon 
the development and use of market-led, voluntary standards that provide 
customer value and facilitate market development. Voluntary standards 
are completely market and consumer-driven. They are not mandated by 
government regulations, though public sector input as technical experts 
and consumers is valuable. In almost all circumstances, the development 
and use of voluntary standards are a key means to create and expand ICT 
markets and maximize benefits to societies, consumers, and companies. 
Industry responds to consumers as the ultimate arbiters when it is 
developing and using voluntary standards.
    We firmly believe that a shared commitment in the U.S. by industry, 
consumers, and government to this kind of voluntary and market driven 
approach to standardization benefits the entire marketplace by creating 
real customer value through consumer choice, lower costs, etc., and by 
facilitating market development by promoting innovation, product inter-
operability and the voluntary adoption of open industry standards.
    We think this approach to standardization is clearly the optimal 
one. The success of the global IT industry demonstrates that. However, 
we do believe that this approach to standardization is not simple to 
explain, particularly in developing economies, where a more top-down 
and government-influenced approach is more readily understood and 
accepted. Explaining the strengths of our perspective and approach to 
standardization is a real challenge that we face in markets around the 
world.

The U.S. Government's Role

    When asked what should be the role of the Federal Government in 
standardization, we are always very careful. We believe there is indeed 
a role. It is a limited and clearly defined role that is responsive to 
industry needs and performed in partnership with industry. It is an 
increasingly important role. Specifically, we look to the U.S. 
Government to perform two functions related to standardization--to 
promote the creation and use of voluntary, market-driven standards and 
to stimulate openness in trade and markets by helping to defend against 
the use of standards as barriers to innovation and market access.
    We can point to important and useful examples of how the USG has 
effectively played that role. As we've seen with WAPI, positive results 
were achieved without the delays associated with the lengthy legal 
process of the WTO dispute settlement procedures. The well-executed 
cooperation and coordination at a variety of levels within and among 
U.S. Government agencies and the Congress was highly impressive and 
crucial to the success of this issue. We believe exactly this type of 
continued coordination will be necessary going forward. With WAPI, we 
may have struck at the symptoms, rather than the underlying cause 
itself, which means we could very well see similar attempts by China 
and other countries to utilize standards to force the creation of their 
own domestic industries, and we must be prepared, as industry and 
government, to address and resolve them.
    We can also point to three specific initiatives that can help the 
U.S. Government to play that role--two that exist to a degree and one 
that does not exist as yet. In 2002, ITI released its Vision for 
Standards and Technical Regulations and presented a Recommended 
Standards Action Plan to the Department of Commerce. I will talk first 
about the initiatives that were the focus of that Action Plan. The 
Commerce Department has taken some actions on these initiatives since 
2002. We are now in the process of evaluating progress against that 
Action Plan and suggesting steps for the future.
    In 2002, we recommended that the Commerce Department create a high-
level standards and technical regulatory policy function to work with 
industry to identify and address both immediate and more long-term 
commercial policy issues in countries and regions around the world. The 
Commerce Department has taken steps through a Standards Liaison 
function to coordinate standards-related activity within the 
International Trade Administration and, to an extent, across the 
Department. The Department has worked to understand the global 
standards objectives of the IT industry and to assist, including by 
coordinating Commerce Department resources, in pursuing those 
objectives. Moving forward, we will recommend that the Department take 
additional steps to strengthen the Liaison function, including with 
additional staff and resources, in order to ensure the most effective 
standards, technical regulatory, and market access activity across all 
its agencies. ITI is committed to working with the Commerce Department 
to continue making progress in this area.
    In our 2002 Standards Action Plan for the Commerce Department, we 
also recommended that it strengthen the existing Standards Attache 
Program. In particular, we sought a program expansion to include 
attaches for China, the rest of Asia, and Geneva to supplement existing 
attaches in Brussels (to deal with European standards issues) and in 
Brazil. Because of the strategic utility of this program, we also 
recommended that the Commerce Department take necessary steps to ensure 
that it is both managed and located within the Department to retain an 
exclusive focus on standards and technical regulatory issues around the 
world. We are pleased to learn that we will likely see a standards 
attache in China very soon. We appreciate the Department's efforts in 
making that happen. Moving forward, we would like to position the 
program for ongoing effectiveness, and we recommend that the Department 
support a formal assessment of the Attache program's results, its 
training program, location within the department, and budgetary needs. 
ITI is committed to working with the Commerce Department to continue 
making progress on these recommendations.
    Finally, I would like to speak briefly about another potential 
activity for the USG and the Commerce Department that we believe is 
critically important moving forward and one that should be given 
serious consideration. In our 2002 Standards Action Plan for the 
Commerce Department, we recommended that it provide much-needed 
standards impact analysis. For example, there would be a real policy 
and commercial use for some analysis of key policy issues (e.g., 
defining what is the global economic impact of standards, developing a 
comparison of government support and promotion of standards, 
forecasting global standards participation trends, etc.). Related to 
this analysis, we also recommend that the Department create an early 
warning system to detect and alert industry to global standards and 
technical regulatory issues that could impact market access.
    Since 2002, the Commerce Department has worked with ITI and others 
to create, on a pilot basis, an ICT Standards Dialogue between the U.S. 
Government and the European Commission (EC) as a form of ``early 
warning system.'' The ICT industry has used this Dialogue to work with 
the Commerce Department (and other agencies) on important ICT 
accessibility standardization issues in Europe.
    Moving forward, we think that the Commerce Department can work with 
industry to continue strengthening and examining the pilot U.S.-EU ICT 
Standards Dialogue. Additionally, we see today even more clearly than 
in 2002 a critical opportunity to support industry's standardization 
policy and market access objectives around the world by working with 
industry to develop a standards and market access research and analysis 
program to better understand the key issues that we have been 
discussing at this hearing today. The Commerce Department has existing 
staff expertise that could be valuable in designing and implementing 
this research and analysis program. ITI is committed to working with 
the Commerce Department to continue making progress on these 
recommendations.
    Finally, Mr. Chairman, I would like to conclude by saying that from 
our various experiences with standards policy issues in markets around 
the world, we have learned that our industry needs to engage in an 
ongoing basis at the policy level directly with our government and 
other governments, particularly in emerging markets, about how 
technology and standards can help grow their economies and why it is in 
their interest to adopt and deploy internationally-recognized, 
voluntary, market-driven standards. We need to redouble our already 
considerable efforts promoting processes that support such standards 
since they address user needs and promote innovation and inter-
operability. We need to encourage market access so that consumers, 
industry, and economies around the world can benefit from innovative 
technological advancements.
    Again, Mr. Chairman, Members of the Subcommittee, thank you for the 
opportunity to discuss these important issues with you today.

                    Biography for Donald R. Deutsch

    A 30-year veteran of the Information Technology industry, Don 
Deutsch is currently Vice President, Standards Strategy and 
Architecture for Oracle Corporation in Redwood Shores, CA. For over 25 
years he has chaired the INCITS H2 Technical Committee on Database that 
defines the standard that all relational database management system 
products support. In addition to continuing to lead H2's development of 
database language SQL specifications, Don represents Oracle at the 
executive/policy level in various consortia as well as in formal 
standards bodies including: the INCITS Executive Board, the Executive 
Committee for the Java Community Process, and the American National 
Standards Institute (ANSI) Board of Directors.
    Don was recently named President of the Enterprise Grid Alliance, a 
consortium focusing on accelerating the application of Grid technology 
in commercial and public sector data centers, and is serving as 
Chairman of the JTC 1 Web Services Study Group. ANSI recognized Dr. 
Deutsch for his leadership of national and international information 
technology standardization as the 2002 recipient of the Edward Lohse 
Information Technology Medal.
    Prior to joining Oracle he held senior software engineering 
management positions with Sybase and the Information Services Division 
of General Electric Co. Before working in industry Don managed the 
database management systems standards and supporting research program 
at the U.S. National Bureau of Standards (now the National Institute 
for Standards and Technology/NIST), held a full-time faculty 
appointment in the Information Systems Management Department of the 
University of Maryland, and worked as a consultant for an international 
public accounting firm.
    Dr. Deutsch earned a BS from Miami University in Oxford, OH, and 
MBA and doctorate degrees from the University of Maryland, College 
Park. He has published numerous articles and papers, and co-authored an 
undergraduate textbook on Database Concepts; the National Bureau of 
Standards published his doctoral research on Modeling and Measurement 
of Database Management Systems.

    Chairman Ehlers. Thank you. And it is interesting, we have 
problems ranging from two-cylinder tractors to large 
earthmovers down to tiny transistors.
    Mr. Bhatia, let us hear from the Underwriters.

   STATEMENT OF MR. JOE S. BHATIA, VICE PRESIDENT AND CHIEF 
           OPERATING OFFICER, UNDERWRITERS LABORATORY

    Mr. Bhatia. Good afternoon, Mr. Chairman.
    Thank you and the distinguished Members of the Committee 
for this opportunity to appear before you.
    In addition to being affiliated with Underwriters 
Laboratories, I am also the Chairman of I-Tech 16, which is the 
advisory committee to U.S. Congress, USTR, and Department of 
Commerce on issues related to trade, technical barriers, and 
standards. I am also the current Chairman of the U.S. Standards 
Strategy Committee. The U.S. Standards Strategy that has been 
discussed by several panel members is in the purview of our 
Committee and working fast and furiously to develop that and 
finalize it.
    UL is pleased to see the increased attention being given to 
standards and technical regulations in trade. We believe that 
your focus and the U.S. Government's support on these issues 
will help U.S. industry competitiveness. I would note, though, 
that testing and certification, in other words, conformity 
assessment, is as critical for product market access and market 
acceptance as the standards themselves, so the two issues must 
be addressed simultaneously.
    But the standards and conformity assessment systems 
currently operating in the global market are not harmonized. 
Compare this with the trade liberalization that is going on and 
that is opening up markets and prompting manufacturers to 
globalize their production processes and their supplier 
networks to remain competitive worldwide.
    In the brief time we have to present oral comments, I would 
like to highlight the following themes.
    On the standardization front, I would like to suggest that 
the U.S. system actually does work. Though decentralized, it 
effectively serves the needs of all stakeholders. It promotes 
comprehensive expertise by encouraging participation of all 
public and private sector experts in bringing all of the 
affected parties to the table.
    The U.S. Government is an active participant and a true 
partner. Many U.S. SDOs produce internationally-recognized and 
relevant standards, which are used all over the world. As we 
look ahead and see ISO and IEC standards gain greater use and 
acceptance globally, it is critical that all affected U.S. 
organizations participate in these forums to ensure that U.S. 
safety systems and principles are not compromised and that U.S. 
products and technologies are not excluded.
    There is much opportunity for U.S.-China collaboration in 
developing standards and technical regulations. U.S. Government 
can help open up additional venues. UL, and other organizations 
like NFPA, have been working for a long time with China on 
standards development, specifically in the areas of fire 
protection and signaling. There is a lot of room to enhance 
cooperation and participation in each other's standards 
committees and panels on an ongoing basis.
    Now shifting to the conformity assessment arena, we all 
recognize that manufacturers must demonstrate that their 
products comply with the requirements and standards in local 
markets. Local governments often, though, exclude non-domestic 
entities from conducting the necessary testing and 
certification. This impedes all manufacturers' ability to 
streamline the certification process, which is necessary to 
obtain the necessary certification marks to sell in those local 
markets. This ultimately increases the costs associated with 
compliance. National treatment, which I will talk about more in 
the later comments, for conformity assessment organizations is, 
perhaps, the most effective approach to providing manufacturers 
with a seamless certification program where services can be 
bundled and streamlined to facilitate simultaneous, multiple-
market access when necessary.
    UL, and other U.S.-based testing and certification 
organizations, seek recognition from U.S. trade negotiators as 
a viable business whose services can help enhance market access 
for U.S. exporters.
    Moving forward and looking ahead, the advancement of 
standards and conformity assessment interests of U.S. 
stakeholders would require a much stronger public and private 
partnership. For its part, the U.S. Government should consider 
several initiatives.
    Let me outline a couple: ensuring that trade partners' 
compliance with obligations that they have signed in existing 
trade agreements are honored, especially in countries like 
China, Mexico, and Europe; linking standards and conformity 
assessment to broader dialogue with trade partners; negotiating 
new commitments and trade agreements, which enable certifiers 
to gain acceptance to offer domestic marks in their markets; 
and adequately funding U.S. Government-supported outreach, 
promotion, and technical assistance programs all over the 
world.
    In the end, globalization will place pressures on standards 
and conformity assessment system to streamline and harmonize. 
But doing so needs to be done in a way that does not sacrifice 
the high levels of product safety enjoyed in the U.S. today.
    The U.S. Government has a real and meaningful role to play. 
We look forward to working with them to advance U.S. interests 
and to minimize the adverse impact of standards on trade 
activities.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Bhatia follows:]

                  Prepared Statement of Joe S. Bhatia

    Chairman Ehlers and distinguished Committee Members, thank you for 
this opportunity to appear before you, to offer Underwriters 
Laboratories (UL) Inc.'s insights on the impact of voluntary standards 
and mandatory technical regulations on global trade, and to recommend 
ways in which the United States government not only can enhance but 
also supplement private sector efforts. UL is pleased to see the 
increased attention being given to standards and technical regulations 
in trade and believes that U.S. Government support on these issues will 
help U.S. industry competitiveness and therefore create jobs. The 
following testimony is intended to address the specific questions posed 
by the Committee, as well as to offer targeted recommendations to 
improve the U.S. position in the global market place moving forward. My 
testimony will further discuss the standards and conformity assessment 
nexus, which is as critical for products' market access (regulated) and 
market acceptance (voluntary) as the standards themselves.

Underwriters Laboratories in Brief

    Underwriters Laboratories (UL) Inc. is an independent, not-for-
profit product safety certification organization that has been testing 
products and writing safety standards for more than a century. It was 
founded in 1894 with a mission of testing for public safety, as defined 
by its Articles of Incorporation, and strives to ensure that public 
health and safety is protected through its standards development 
activities and product conformity assessment services. UL has developed 
and maintains more than 850 product-based Standards for Safety, 80 
percent of which have achieved American National Standards (ANS) 
status.\1\ And UL is a global company, with more than 25 affiliates 
world wide, serving more than 71,000 manufacturers in nearly 100 
countries.
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    \1\ ANS is a designation conferred by the American National 
Standards Institute (ANSI) upon standards submitted by ANSI-accredited 
Standards Development Organizations (SDO). The ANS designation is 
awarded after the opportunity for public review and comment, and a 
certification by the SDO that due process was followed in the 
development of the standard.
---------------------------------------------------------------------------
UL in China and Europe:
    UL entered the China market in 1980, when it established a 
cooperative relationship with the China Certification & Inspection 
(Group) Co., Ltd. (CCIC) to carry out on-site follow-up inspections at 
Chinese factories whose products had already been certified as meeting 
UL's rigorous safety requirements. Growing demand for product safety 
testing and certification services prompted UL and CCIC to negotiate a 
joint venture in 2001. The joint-venture testing facility located in 
Suzhou became fully operation in the Fall of 2003 and performs safety 
tests according to UL's Standards for Safety in the most popular 
product categories, including such small home appliances as lighting 
fixtures and lamps, fans, rice cookers, toasters, and electric tools. 
The facility's capabilities will expand over time to perform tests on 
just about anything exported from China.
    Though in the 1920s UL had agreements with inspection companies in 
England and Germany, it was not until 1956 that UL began testing in 
earnest European-made products according to U.S.-based standards, 
initiating a major new international activity. The on-site factory 
follow-up service inspections in Europe rapidly grew and so UL 
contracted with additional European-based testing and inspection 
authorities. In 1996 UL acquired the Danish government-owned testing 
and certification laboratory DEMKO A/S (est. 1928) and formed it into a 
wholly owned affiliate of UL Inc. UL has since been represented in 
Europe via its own facilities, and has grown to include operations in 
the United Kingdom, Italy, Sweden, Germany, France, Spain, Switzerland, 
Poland, and the Czech Republic.

Seeking Increased Collaboration With China. . .

    Though well versed in providing testing and certification services 
in China and Europe for decades, UL's engagement on standards 
development issues largely has been the most extensive at the 
international level--in the International Electrotechnical Commission 
(IEC) and the International Organization for Standardization (ISO). The 
level of engagement at the national and regional level through our 
affiliates is poised to increase. As UL's customers manufacture more 
products in China, they are seeking to incorporate the traditional 
elements of U.S. requirements in (or influence the direction of) 
Chinese and EU member states' standards.

China Collaboration--Present:
    UL's active collaboration with China on standards development has 
been most evident in the fire protection and signaling (e.g., fire 
alarms) arenas. Discussions have intensified over the past 18 months, 
in part because of UL's engagement with Chinese regulators through the 
National Institute of Standards and Technology (NIST)'s Standards in 
Trade workshops and the U.S. Department of Commerce-sponsored U.S.-
China Standards and Conformity Assessment workshops. UL perceives 
China's interest in collaboration as stemming from a desire to improve 
safety in the built environment, particularly as China ramps up for the 
2008 Olympics, as well as enhancing the competitiveness of Chinese 
manufacturers' products around the world.

China Collaboration--Future:
    In recent years, China has demonstrated a commendable interest in 
enhancing its participation in international standards development and 
in upgrading its standards system to comply with WTO obligations, among 
other things. The American National Standards Institute (ANSI)'s 
testimony speaks to China's recently concluded assessment of its 
national standards system. Among the strategic tasks presented were 
China's wish to ``improve the market adaptability and competitiveness 
of Chinese technical standards,'' as well as ``develop independently 
self-proprietary technical standards through effective measures, so as 
to improve international competitiveness of China's technical standards 
and therefore increase the international market share of Chinese 
products.'' With China setting a 2010 deadline for overhauling its 
technical standards system, the time certainly is ripe for increased 
U.S.-China collaboration, with the impact extending to the 
international stage (ISO and IEC).
    China has shown some interest in adopting UL Standards for Safety. 
The National Electrical Manufacturers Association (NEMA) has suggested 
that China consider adopting the tri-national (United States, Mexico, 
and Canada) fuse and fuse-holder standards. These talks very much 
remain in the preliminary stages, however.
    UL also is considering the possibility of seeking observer status 
on select PRC standards technical panels, with the aim of encouraging 
the adoption of tried and true U.S. requirements as appropriate. This 
collaboration would serve not only to enhance market access for U.S. 
products designed around and certified to comply with such U.S. 
requirements, but also to forge a partnership that will transfer to 
international standards development and harmonization efforts. UL may 
also actively seek to engage Chinese experts for participation in UL's 
own standards development processes.
    New technologies also pose an opportunity for collaboration with 
China, including radio frequency identification (RFID) and renewable 
energy.

. . .And Looking for Solutions to U.S.-EU Tensions on the International 
                    Stage

    The development of standards and technical regulations in Europe 
occur at two levels--the individual member-state level, and the 
European Commission level. At the regional level, there are voluntary 
``European Norms (ENs)'' and New Approach ``directives'' that set 
essential requirements for regulated products. UL has engaged somewhat 
in the development of European Norms (EN), but has been more actively 
involved with Europe in standards development at the international 
level.
    UL has been an active participant in IEC and ISO standards 
development and harmonization activities for decades. In addition to 
participating in numerous IEC and ISO Technical Committees and related 
U.S. Technical Advisory Groups (TAGs), UL also adopts international 
standards (such as IEC and ISO) with National Differences (only when 
needed) to co-exist with current UL requirements and unique safety 
needs in the United States based on its infrastructure and traditional 
expectations. If necessary, existing UL Standards for Safety can be co-
maintained with the internationally harmonized standard for a limited 
time frame for those manufacturers only marketing products in North 
America. UL also promotes international harmonization by encouraging 
adoption of basic North American safety principles in standards 
developed by international standards bodies to reduce the need for 
National Differences in UL and ANSI/UL Standards.
    UL believes that some progress has been made to incorporate U.S.-
based requirements in the development of new international standards or 
with harmonization of existing standards. However, there is room for 
improvement, particularly as the United States utilizes more IEC-based 
standards. Some sectors within the United States believe that the IEC 
process is a violation of the World Trade Organization's Technical 
Barriers to Trade (TBT) Agreement because it results in requirements 
that are most favorable only to Europe. The European Union's well-
financed and coordinated technical assistance program for developing 
countries serves only to further disadvantage U.S. interests. The 
degree to which different sectors are adversely affected varies, but 
some sectors are particularly frustrated with the IEC process and the 
difficulty in incorporating U.S. infrastructure and climatic essential 
differences in requirements (EDRs)\2\ into IEC standards to make them 
truly more global. At this time, these sectors are committed to working 
within the IEC to affect the needed changes.
---------------------------------------------------------------------------
    \2\ Criteria for Essential Differences in Requirements include 
needs of major segment of the global market; differences in technical 
infrastructure--frequencies, voltages, currents, earthing systems, and 
differences in climatic conditions.
---------------------------------------------------------------------------

Recognizing the Merits of the U.S. Standards System. . .

    The United States relies heavily on the private sector for 
voluntary standards development. Under the auspices of the 1996 
National Technology Transfer and Advancement Act (NTTAA), U.S. 
Government agencies are encouraged to rely on voluntary consensus 
standards (VCS) whenever applicable and appropriate. While our 
government generally has not driven the standards development process, 
it has been an active participant and partner. Federal, State, and 
local governments develop and issue procurement specifications and 
mandatory codes, rules, and regulations. Openness, balance, consensus, 
and due process are the fundamental principles of the American National 
Standards process.
    The U.S. system, although decentralized, effectively serves the 
needs of all stakeholders. It promotes comprehensive expertise by 
encouraging participation of all public and private technical experts. 
Stakeholders' needs are reflected because the process is open to all 
interested parties, from manufacturers, users/consumers, the 
government, utilities, material suppliers, regulatory agencies, 
educators, code organizations, and any other interested party. The 
process produces a ``balanced'' standard because all stakeholders are 
able to participate; the standards users' interests are protected while 
at the same time meeting needs of industry that the standard will 
affect. Standards are based on market-driven needs, not mandate. From 
time to time, issues and redundancies emerge as a result of the 
decentralized system, but careful coordination among interested parties 
works to rectify that. In UL's opinion, this openness is unique. How 
many other countries around the world invest their time and resources 
to get all the interested parties at the table to consider health and 
safety requirements?
    Many U.S. standards are international in scope and application and 
currently are accepted in other countries. In some cases, however, a 
number of developing countries have adopted a policy of accepting only 
IEC/ISO standards. This is increasingly an issue in China, parts of 
Latin America, and Southeast Asia. EU enlargement presents related 
issues. The end result, if left unchecked, could lead to lost market 
share for some U.S. exports that comply with valid and internationally 
accepted U.S. standards and that are certified under reputable U.S. 
programs.

. . .And Promoting Standards Harmonization Internationally

    UL has long recognized the need for increased harmonization with 
IEC standards and has recently adopted a more aggressive policy toward 
standards harmonization. U.S. manufacturers are realizing that the 
``world is their oyster'' for their innovative and creative products. 
UL's harmonization priorities are largely driven by what industry 
perceives as priority areas for harmonization. When harmonizing UL's 
standards at the regional or international level, however, it is 
paramount that essential U.S. safety principles are protected, even if 
this means developing National Differences. National Differences are 
not unique to the United States. In international standards meetings, 
however, the United States is singled out whereas in many European and 
Asian countries, the National Differences are undeclared and out-of-
country testing is not permitted. In such cases, the United States is 
not the barrier to trade. The barrier is the country to which U.S. 
manufacturers desire to exports their products. On the other hand, UL 
makes every effort to avoid mutually exclusive requirements when 
National Differences are necessary.
    UL's approach to standards harmonization incorporates several 
guiding principles:

          Ensure that the harmonized standards preserve, at a 
        minimum, the current level of safety expected by the U.S. 
        public,

          Coordinate and collaborate with other SDOs to avoid 
        duplicate documents or requirements,

          Consider the merit(s) of harmonizing existing 
        standards, whether by acceptance of IEC requirements or by 
        advocating a UL standard or its essential requirements as the 
        basis of the harmonized standard, and

          Develop ``globally'' relevant standards in areas 
        where standards do not exist.\3\
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    \3\ Globally relevant standards: ISO defines global relevance as 
``the required characteristic of an International Standard that it can 
be used/implemented as broadly as possible by affected industries and 
other stakeholders in markets around the world.'' Globally relevant 
standards therefore effectively respond to regulatory and market needs 
(in the global marketplace); respond to scientific and technical 
developments in various countries; do not distort markets; have no 
adverse effects on fair competition; do not stifle innovation and 
technological development; do not give preference to characteristics or 
requirements of specific countries or regions when different needs or 
interests exist in other countries or regions; and should be 
performance based rather than design prescriptive.

    The result of this approach is that standards differences are 
minimized, standards are streamlined, a more international approach to 
standards development (consistent with WTO TBT principles) is promoted, 
and unique locally developed standards without justification are 
discouraged.
    As ISO and IEC standards gain greater use and acceptance globally, 
it is critical that all affected U.S. private and public organizations 
participate in these forums to ensure that U.S. safety principles are 
reflected and that U.S. products and technologies are not excluded. 
Enhancing relations and promoting cooperation with like-minded 
countries in these international forums is critical to promoting U.S. 
interests.

The Standards-Conformity Assessment Nexus

    Many national, regional and international standards and conformity 
assessment systems around the world all share a common goal of 
minimizing the hazards associated with and ensuring the inter-
operability of products in the marketplace. But the standards and 
conformity assessment systems currently operating often times are not 
harmonized. Contrast this with trade liberalization opening markets and 
prompting manufacturers to globalize their production processes and 
supplier networks to remain competitive. With roughly 80 percent of the 
global trade (of the $7.3 trillion in 2003) affected by standards and 
related technical regulations for conformity assessment, the potential 
economic impact of meeting requirements in multiple markets is 
staggering.
    Manufacturers must demonstrate that their products comply with 
requirements through domestic conformity assessment processes, where 
applicable, to sell products in those markets. In many cases, 
certification by an independent third party is required, but the local 
governments often preclude non-domestic entities from providing those 
services. This impedes a manufacturer's ability to streamline the 
number of testing and certification organizations it engages (on global 
basis) to obtain the necessary certification marks, and ultimately 
increases costs associated with compliance--from the number of internal 
staff required to oversee the different compliance processes to actual 
dollars expended for testing. It also impedes U.S. testing and 
certification organizations' ability to provide global compliance 
solutions for their customers.
    UL believes that national treatment for conformity assessment 
organizations is the most effective approach to eliminating many trade 
barriers that emerge from technical regulations and standards. National 
treatment enables conformity assessment bodies in one country to 
provide testing and certification to another country's requirements by 
being recognized or accredited through the same process applied to 
domestic bodies. Different standards and technical requirements can 
result in multiple testing and certification requirements for 
manufacturers seeking to sell products into multiple markets. But 
national treatment across markets would enable UL and other conformity 
assessment organizations to provide customers with a seamless 
certification program where services are bundled and streamlined to 
facilitate timely, simultaneous, and effective market access for 
manufacturers.
    From time to time, governments have turned to government-to-
government Mutual Recognition Agreements (MRAs) to address the issue of 
market access for U.S. conformity assessment bodies. With a few 
exceptions like the APEC telecom MRA, MRAs have created unnecessary 
bureaucracies, have proven very difficult to implement, and have 
reduced attention on national treatment as the preferred conformity 
assessment solution. Negotiations for the U.S.-EU MRA lasted more than 
six years, with only two of six sectoral annexes operational, and at 
least one annex suspended. For all of this effort, only a handful of 
products have utilized the MRA. Implementation of the medical device 
MRA remains troublesome, as the European Union has yet to approve the 
U.S. organizations designated by the U.S. Food and Drug Administration 
(FDA). FDA, in contrast, approved the EU designated counterparts 
several years ago and they are already competing for business in the 
United States.

Where National Treatment Has Gone Right. . .
    In some countries, like Japan, the government has introduced 
regulatory reforms that permit non-domestic entities to seek 
accreditation and provide domestic testing and certification services. 
We would like to see more countries introduce similar regulatory 
reforms.
    The North American Free Trade Agreement (NAFTA) introduced national 
treatment for testing and certification bodies. Shortly after its 
introduction manufacturers began working with a single certifier, 
having their product tested once and accepted in both Canada and the 
United States. Required factory audits for certification have been 
combined into a single system thereby lowering the cost of compliance 
for products sold in Canada and the United States. Certifiers 
accredited under both the Canadian and U.S. systems compete for 
manufacturers' business. This competitive environment has led to 
increased efficiency and value in testing and certification programs. 
Because national level systems for accreditation of testing and 
certification continue in force, the high level of safety and national 
acceptance for products in both markets has been maintained.
. . .And Where Problems Remain:
    Under NAFTAA, the Mexican government committed to market access/
national treatment for testing and certification organizations 
domiciled in the United States and Canada. Even after the four-year 
transition period ended (in 1998), Mexico has failed to implement 
directly its commitments. In January 2005, Mexican authorities finally 
issued the document that permitted organizations to apply for 
accreditation. The application documentation requirements present a 
challenge, however, and no entity, including UL, has yet been able to 
submit an application. UL has been working both with Mexican 
authorities and through the auspices of the Office of the U.S. Trade 
Representative (USTR) and the U.S. Department of Commerce (DOC) to 
resolve matters, and is hopeful that a resolution will soon be found.
    UL has been able to facilitate customers' product certification 
applications for China's CCC mark through its ``agent'' status. This 
means making sure that all necessary documentation is in compliance 
with the CCC mark certification requirements. However, UL's joint 
venture cannot perform related tests or authorize the use of the CCC 
mark; the government currently restricts such activities to domestic 
entities. Ultimately, UL-CCIC would like to be accredited to provide 
testing and certification services for the CCC mark.
    China's WTO accession commitments obligated them to provide 
National Treatment to non-domestic testing and conformity assessment 
organizations. Paragraphs 194 and 195 of the Working Party Report (WPR) 
reference these market access obligations for conformity assessment 
organizations. However, unlike the services schedule that outlines a 
timeline for testing services, the WPR does not outline a specific 
timeline for implementing market access for conformity assessment 
organizations. Regulations introduced in 2003 and early 2004 appeared 
to address testing and conformity assessment obligations in the 
Commodity Inspection and Appraisal Institution Regulations (Order No. 
58, effective January 2004) and PRC Regulations on Certification and 
Accreditation (effective November 2003). However, when pressed for 
clarification by USTR in January 2004, PRC authorities indicated that 
the scope of work did not include testing and certification for the CCC 
mark.
    China has made commendable strides in bringing its product 
certification system into compliance with WTO requirements and 
participates in international schemes, including the CB scheme for 
safety testing.\4\ In some cases, however, China has opted not to 
participate in international schemes to which most all other trading 
partners belong. One such example relates to electromagnetic 
compatibility (EMC) testing. China opted out of the scheme for EMC, 
requiring in-country testing instead of accepting reports generated by 
other participating members. Manufacturers in general perceive this 
practice as creating unnecessary and duplicative testing requirements.
---------------------------------------------------------------------------
    \4\ The IECEE CB Scheme is the world's first truly international 
system for acceptance of test certificates and test reports dealing 
with the safety of electrical and electronic products. It is a 
multilateral agreement among over 43 participating countries and their 
associated member certification organizations. A manufacturer utilizing 
a CB Test Certificate and CB Test Report issued by one of these 
organizations can obtain national product certification from other 
participating member organizations without the need for re-testing. UL 
is an active member in the CB Scheme with participating certification 
bodies in Canada, Denmark, Japan and the United States. The CB Scheme 
applies IEC based standards in 18 categories of electrical and 
electonic products from office equipment and electronics to household 
and similar equipment to installation assessories. The CB Scheme 
includes safety testing, EMC testing and performance testing. It has 
recently expanded into photovoltaics.
---------------------------------------------------------------------------
    In Europe, UL continues to face market access issues under the New 
Approach, which inherently lacks national treatment for conformity 
assessment organizations.\5\ Under the New Approach, Member States are 
responsible for the notification of Notified Bodies and may only notify 
bodies within their territory. Therefore, U.S. conformity assessment 
organizations cannot provide cross-border conformity assessment 
services in the European system. A soil-based presence is required.
---------------------------------------------------------------------------
    \5\ The New Approach consists of more than 25 directives that 
specify safety, health and environmental ``essential requirements.'' 
European harmonized standards, developed by the European standards 
organizations, provide the technical answer to addressing these 
requirements. Technical, the use of New Approach harmonized standards 
is voluntary, but companies using other standards must prove how they 
are equivalent to the EU standards.
---------------------------------------------------------------------------

What Can Be Done?

    Advancing the standards and conformity assessment interests of U.S. 
stakeholders will require a stronger public-private partnership. For 
its part, the private sector--working through the auspices of ANSI and 
with input from U.S. Government stakeholders--is making a concerted 
effort to develop a meaningful U.S. Standards Strategy (USSS) that 
``can be used by all interested parties to further advance trade issues 
in the global marketplace, enhance consumer health and safety, meet 
stakeholder needs and, as appropriate, advance U.S. viewpoints in the 
regional and international arena.'' \6\ As the ANSI testimony notes, a 
``key aspect of the Strategy is reference to the requirements of the 
WTO's Technical Barriers to Trade as related to standards practices.'' 
The following are some priority considerations that fall within the 
twelve broad USSS initiatives:
---------------------------------------------------------------------------
    \6\ United States Standards Strategy Notice of Public Review and 
Comment, issued March 7, 2005. Copy of the draft is available online at 
www.ansi.org/usss.

          U.S. stakeholders should take the lead in submitting 
        standards development proposals and requesting recognition of 
        U.S. documents at the international level in such emerging 
        national priority areas as homeland security and 
        nanotechnology. Radio Frequency Identification (RFID) is 
        another such area where the impact of standards on trade is 
---------------------------------------------------------------------------
        potentially staggering.

          Government and private sector stakeholders alike 
        should work toward enhanced protection of intellectual property 
        rights (IPR) of standards development organizations, especially 
        in countries like China where general enforcement of IPR has 
        been uneven.

          U.S. stakeholders should work to ensure that trade 
        partners comply with WTO principles of openness, transparency, 
        and advance notice.

    UL proposes that the U.S. Government consider initiatives that 
focus on negotiating new commitments in trade agreements, incorporating 
standards and conformity assessment technical assistance elements into 
all future U.S.-negotiated bilateral free trade agreements (FTAs), 
ensuring trade partners' compliance with obligations under existing 
trade agreements, linking standards and conformity assessment to 
broader dialogues with trade partners, adequately funding the office of 
the Standards Liaison within the U.S. Department of Commerce, and 
increasing funding for existing government standards programs from 
which the private sector derives important benefits.

Negotiating New Commitments in Trade Agreements:
    UL and other U.S.-based testing and certification organizations 
seek recognition from U.S. trade negotiators as a viable business 
sector whose services can help enhance market access for U.S. exports. 
We welcome a partnership with the Office of the U.S. Trade 
Representative (USTR) and other U.S. Government agencies to define and 
refine relevant provisions in FTAs and future WTO negotiating rounds. 
To that end, USTR has recently engaged the testing and certification 
community in negotiating such commitments for the WTO Doha Round.
    Within the WTO Doha negotiations and U.S.-negotiated bilateral/
regional FTAs, U.S. testing and certification organizations seek 
commitments from U.S. trade partners--whether through enhancements to 
the current Technical Barriers to Trade Agreement or the market access 
for services schedule--to permit non-domestic testing and certification 
providers to apply for accreditation to offer domestic certification 
marks. Those applications would be conducted in accordance with 
domestic accreditation requirements.

Providing Technical Assistance in U.S.-Negotiated FTAs:
    UL recommends that technical assistance provisions for standards 
and conformity assessment systems be incorporated into all FTAs that 
the United States negotiates moving forward and that Congress 
appropriates adequate funding for execution of the technical assistance 
programs. Such technical assistance provisions in the Central American 
Free Trade Agreement (CAFTA) proved helpful in educating CAFTA 
countries about the U.S. standards and conformity assessment system. We 
would expect this education to influence CAFTA countries to establish 
and refine their own systems in a way that (ideally) aligns with the 
United States, or at a minimum, refrains from introducing elements that 
unduly restrict market access for U.S. exporters.

Enforcing Existing Trade Agreement Commitments:
    For Mexico, we ask that the United States incorporate a regulatory 
dialogue into the recently announced Security and Prosperity 
Partnership agenda (under the Manufactured Goods Working Group) and 
specifically address increased access for non-domestic testing and 
certification organizations.
    For China, we seek increased dialogue under both the WTO accession 
Transitional Review Mechanism and the Joint Commission on Commerce and 
Trade to develop a timeline for implementation of national treatment 
commitments referenced in Paragraphs 194 and 195 of China's Working 
Party Report.
    For Europe, we seek increased U.S. Government pressure on the 
Europe Union to implement fully its obligations under the EU-U.S. MRA 
for medical devices by approving the U.S. FDA-designated entities, 
including UL.

Incorporating Standards and Conformity Assessment Issues in Dialogues:
    One of the key recommendations to emerge from the DOC Standards 
Initiative focused on enhanced dialogues with foreign governments. A 
more active standards dialogue between and among countries and regions 
could help prevent standards from becoming trade barriers. To that end, 
UL welcomes the inclusion of standards and conformity assessment issues 
as a mainstay component of such bilateral and regional dialogues as the 
Security and Prosperity Partnership of North America, EU-U.S. 
Regulatory Dialogue, the Transatlantic Business Dialogue, and the U.S.-
China Joint Commission on Commerce and Trade. Such dialogues provide a 
meaningful forum to address emerging concerns as well as identify areas 
of mutual interest where collaboration is ripe.
    With respect to the IEC process and related issues, UL believes 
that the United States should work first to identify solutions, to the 
maximum extent possible, within the international standards development 
processes. There are several initiatives underway within the standards 
community that allow for the exchange of ideas and the introduction of 
change. Within the IEC these initiatives are carried out through the 
United States National Committee to the IEC. Only if these mechanisms 
fail to achieve resolutions should the United States consider raising 
IEC-related issues in government-to-government dialogues.

Funding the DOC Standards Liaison Office:
    The office of the DOC Standards Liaison has done a commendable job 
of improving coordination across departments within DOC in a very short 
time. Collaborating with other DOC colleagues has also enabled pilot 
training programs for U.S. Government officials on standards and 
conformity assessment issues as they affect trade. Such training is 
paramount as the intersection between standards and trade is 
increasing.
    But a lot of work remains undone, and UL would like to see more 
meaningful funding for execution of the Standards Liaison's mandate. 
The pilot training programs indeed are commendable, but a more 
comprehensive and regular program is needed to ensure that the ever 
evolving and rotating cadre of U.S. trade officials become proficient 
in standards and trade issues.
    Careful consideration should also be given to funding of additional 
Standards Attaches in overseas posts. Such attaches have played pivotal 
roles in facilitating resolution of standards and conformity assessment 
issues faced by manufacturers and conformity assessment providers 
alike. Their ability to track trends and report on them makes it easier 
for industry to uncover signs of emerging problems and to address them 
earlier rather than later.

Increasing Funding for Existing Government Standards Programs:

          NIST Standards in Trade (SIT) Workshops: UL has been 
        a longstanding active participant in the NIST SIT workshops. 
        These workshops prove a valuable venue through which interested 
        U.S. private sector organizations can educate foreign 
        government officials on the U.S. standards and certification 
        system and build bridges for future cooperation. These broad 
        and specific programs are especially important when they target 
        countries/regions in which systems/structures currently do not 
        exist or are in their infancy, and in which there is a 
        perceived receptivity to U.S. principles and practices. We 
        believe that the impact of these workshops could be 
        strengthened through increased funding that would enable NIST 
        to continue offering new programs while providing a mechanism 
        to sustain momentum of previous programs.

          Commercial Law and Development Program (CLDP): 
        Funding for standards and conformity assessment related 
        programs under the auspices of the CLDP program are also 
        valued. Having participated in a number of these programs over 
        the years, UL believes that these programs also help advance 
        U.S. commercial and public safety interests over the long-term. 
        Sustained funding is warranted.

Preserving Safety and Facilitating Trade

    In the end, globalization will place pressure on standards and 
conformity assessment systems to streamline and harmonize. The merits 
of such harmonization are real, but doing so needs to be executed in a 
manner that does not sacrifice the high level of product safety enjoyed 
in the United States today.
    Standards should continue to be driven by market needs and 
developed through open processes. At the international level, U.S. 
stakeholders need to find ways to inject greater balance into the IEC 
process, working through its technical committees and governance 
bodies.
    Encouraging trading partners to provide national treatment to U.S.-
domiciled testing and certification organizations helps U.S. 
manufacturers reduce costs of compliance by minimizing duplicative 
testing requirements and enables a global approach to conformance. 
Reduction of manufacturers' costs will help U.S. exporters remain 
competitive abroad and address some pressure points that drive U.S. 
companies to shift production overseas.
    In all of these areas, the U.S. Government has a real and 
meaningful role to play. UL and other private sector stakeholders look 
forward to working with all divisions of the U.S. Government to advance 
U.S. interests and minimize the adverse impact of standards, technical 
regulations, and conformity assessment processes on trade.

                      Biography for Joe S. Bhatia

    Prior to his recent retirement from UL on May 1, 2005, Joe Bhatia 
served as the Executive Vice President, International for Underwriters 
Laboratories Inc. (UL). Mr. Bhatia had held a variety of increasingly 
complex and demanding executive positions during a 35-year career at 
UL, one of the world's largest and most visible providers of safety 
standards and technical certification services. Specific areas of 
involvement include engineering and technical management; governmental 
and congressional liaisons; P&L responsibility, customer service; and 
global business expansion and development. Mr. Bhatia directed all day-
to-day activities of 2300 employees in UL's 26 international subsidiary 
operations in Europe, Middle East, Africa, Asia-Pacific, Canada and 
Latin America, reporting to the UL chief executive officer. Currently, 
Mr. Bhatia is serving UL as a Consultant--Strategic Projects.
    Mr. Bhatia is the chairman of the U.S. Department of Commerce and 
U.S. Trade Representative's Industry Technical Advisory Committee 16--
Standards and Technical Barriers to Trade. This committee advises the 
U.S. Government on international trade and market access matters. He is 
a member of the Board of Directors the National Fire Protection 
Association (NFPA) and the American National Standards Institute. Mr. 
Bhatia has also been the Educational Foundation Director of Oakton 
Community College (Des Plaines, Ill.) since 1999. Mr. Bhatia has a 
Bachelor's degree in electrical engineering and a Master's degree in 
business management.



    Chairman Ehlers. Thank you.
    Mr. Karmol.

 STATEMENT OF MR. DAVID KARMOL, VICE PRESIDENT, PUBLIC POLICY 
 AND GOVERNMENT AFFAIRS, AMERICAN NATIONAL STANDARDS INSTITUTE

    Mr. Karmol. Thank you, Mr. Chairman, Ranking Member Wu, and 
Representative Biggert. I am pleased to be here.
    I am David Karmol. I am Vice President of Public Policy and 
Government Affairs for the American National Standards 
Institute.
    As you know, ANSI is the coordinator of the U.S. private 
sector-led and public sector-supported voluntary consensus 
standards and conformity assessment system. We share the 
concerns of industry and this committee about the ramification 
of standards and regulatory activities on American businesses 
competing in the global marketplace.
    In our testimony, ANSI will suggest actions that can be 
taken by the Congress to help mitigate concerns related to the 
standardization policies and practices of China and the 
European Union.
    My first point will address considerations with respect to 
the People's Republic of China. As the world's largest contract 
manufacturer and the world's largest single market, it is 
critical that China be persuaded to participate in 
international standards forums and to embrace the globally-
accepted principles of standardization endorsed by the World 
Trade Organization.
    Events of the past few years indicate that China may have 
been considering a strategy of using national standards as 
trade barriers to shelter its growing industries. China must be 
encouraged to adopt existing and globally-recognized voluntary 
standards rather than develop unique standards for use only in 
that country.
    To avoid future ``WAPI'' situations, companies in China 
should be urged to consider offering the inclusion of 
intellectual property in globally-recognized standards under 
reasonable and non-discriminatory terms and conditions in the 
same manner as they are used in the United States' standards.
    Finally, China should be encouraged to adopt the WTO TBT 
agreement definition of ``international standard'' that 
includes documents that have been developed by a consensus-
based organization that follows transparent policies that are 
balanced, reasonable, and non-discriminatory.
    The Chinese government recently completed an investigation 
of its standards system, identifying problems and suggesting 
solutions. ANSI has praised these efforts and continues to 
support Chinese leaders to adopt a standards process that is 
marketplace-driven.
    My next point will address considerations with respect to 
the European Union and the European standards organizations.
    European standards are often developed to meet specific 
regulatory requirements or procurement policies. A standard 
that is adopted by the European Union must also become the 
normative document for each EU member nation. With few 
exceptions, the three European regional standards organizations 
restrict participation on their standard-setting committees to 
entities that have a physical presence in an EU member state.
    ANSI believes that the European standards organizations 
should allow U.S. stakeholders to participate in the 
development of EU standards that will ultimately impact their 
ability to trade in the European market. We have had bilateral 
discussions annually with representatives of the European 
Commission and European standards organizations, and we 
encourage them, and continue to encourage them, to open their 
doors to U.S. stakeholders.
    Recently, the EU and its member nations have begun 
expending millions of Euros annually to provide technical 
assistance to developing and emerging nations, including China. 
These efforts often include providing free standards and even 
translations of standards in return for commitments by the 
recipient nations to adopt or otherwise use the EU standards. 
To date, the U.S. standardization community has not had the 
resources to offset this aggressive effort.
    The strengthening of U.S. Federal Government support of and 
cooperation with the private sector is needed for standards 
education and outreach activities, technical support and 
assistance, and resources to assure adequate U.S. 
representation at international standards meetings. To 
facilitate stronger U.S. coordination, ANSI recently offered 
its Regional Standing Committee for Europe, the Middle East, 
and Africa as a focal point to improve coordination between 
government agencies and the private sector in the areas of 
representation, technical assistance, and outreach and other 
related aspects of trade and regulatory policy.
    My last point will address coordinating public and private 
sector strategies.
    The policy considerations put forth in this testimony are 
aligned with high-level strategies developed by the U.S. 
Department of Commerce, as expressed in former Secretary Evans' 
``Standards in Competitiveness--Coordinating for Results'' 
document. They are also aligned with the latest edition of the 
draft ``United States Standards Strategy,'' which is now being 
developed by members of the U.S. standardization community in a 
process that ANSI is managing.
    Mr. Joe Bhatia to my right chairs the U.S. Standards 
Strategy Project. The other witnesses here today have also 
provided valuable input throughout the development of this 
strategy. We would be pleased to respond to your questions 
about it.
    In summary, the strategy provides a framework to address 
the cross-border trade of goods and services as well as key 
national priorities, such as homeland security and emerging 
technologies. Congressional recognition and endorsement of the 
strategy would provide valuable support to the private sector 
as it engages with Europe and China. ANSI asks you, as members 
of the House Science Committee, to offer a resolution endorsing 
the U.S. Standards Strategy when it is finalized. Such a 
resolution would demonstrate to other nations that the U.S. 
speaks with one voice on standards issues, even though our 
development of standards takes advantage of a decentralized and 
sector-based approach.
    I thank you for your consideration, welcome your questions, 
and ask that my full statement be made a part of the record.
    [The prepared statement of Mr. Karmol follows:]

                   Prepared Statement of David Karmol

Introduction

    ``If you control an industry's standards, you control that industry 
lock, stock, and ledger.'' That prophetic statement was made more than 
ten years ago by Dr. W. Edwards Deming, father of the quality movement 
that has transformed the ways companies do business both here and 
abroad.
    Today, standardization\1\ has become the key to market access. When 
standards and conformity assessment related policies and practices 
differ from country to country, or when standards are used as barriers 
to trade, businesses are unable to compete effectively in the global 
marketplace. These challenges are being faced around the globe--country 
by country--on a daily basis.
---------------------------------------------------------------------------
    \1\ ``Standardization'' encompasses a broad range of considerations 
such as which (whose) standards will be used, laboratory accreditation, 
certification of products, services, and personnel, metrology and 
measurement, testing and sampling.
---------------------------------------------------------------------------
    The United States Department of Commerce reports that many 
businesses now view standardization and regulatory issues as their 
major impediment to increasing exports. Of particular concern are the 
standards-related activities of the People's Republic of China 
(hereinafter referred to as either ``PRC'' or ``China'') and the member 
nations of the European Union (EU), each of which have significant 
ramifications for American firms that wish to export to those markets 
or who wish to source manufacturing there.
    As administrator and coordinator of the United States' private 
sector-led and public sector-supported voluntary consensus 
standardization system, the American National Standards Institute 
(ANSI) shares the concerns of industry and this committee vis-a-vis our 
nation's ability to compete effectively in world economies. A key 
element of ANSI's mission is focused on enhancing the global 
competitiveness of U.S. business by facilitating voluntary consensus 
standards (VCS) and conformity assessment systems, and safeguarding 
their integrity.
    In this testimony, ANSI will explain many of its relevant 
standardization activities related to China and the EU and will 
recommend actions that can be taken by Congress to assist in mitigating 
many of the concerns identified. ANSI will also call for Congressional 
endorsement of the United States Standards Strategy\2\ (USSS) as a 
framework that effectively addresses the cross-border trade of goods 
and services; key national priorities such as homeland security; 
emerging technologies--such as nanotechnology--and their significant 
related commercial and business applications; consumer health and 
safety, and more.
---------------------------------------------------------------------------
    \2\ The United States Standards Strategy (draft second edition) is 
an update of the National Standards Strategy for the United States 
(first edition--August 2000). It is being developed by representatives 
of various industry sectors, including small, medium and large 
organizations, consortia, professional societies, trade associations, 
labor unions, consumer and consumer representative organizations, 
educational institutions, Federal and State government regulators, and 
legislators and staff.
---------------------------------------------------------------------------
    Mr. Joe Bhatia, who is appearing here today on behalf of 
Underwriters Laboratories, chairs the USSS project. Robert Noth, Donald 
Deutsch, and Dr. Hratch Semerjian and his staff at the National 
Institute of Standards and Technology (NIST) all provided invaluable 
input and leadership throughout the development process of the 
Strategy. All of us will be pleased to respond to your questions about 
it.
    In addition, ANSI will call for strengthened federal support of, 
and cooperation with, the private sector for activities such as 
research, education, and technical support, and resources to assure 
adequate U.S. representation at international standards meetings. These 
actions will help to level the playing field for U.S. businesses 
competing in the international marketplace.

Considerations with Respect to the People's Republic of China (PRC)

    Events of the past few years indicate that stakeholders within the 
PRC may have been considering a strategy of using national standards as 
trade barriers to shelter the Nation's growing industries. However, the 
role of the PRC as the world's largest contract manufacturer makes it 
critical that China be persuaded to continue its participation in 
international standards forums, rather than develop unique national 
standards. This is especially important in those instances where the 
intellectual property rights that are often incorporated into standards 
are not made available on the basis of reasonable and non-
discriminatory terms.
    During 2004, the PRC government completed its own investigation of 
its standards system, identifying problems and suggesting solutions. 
The issuance of these strategy reports and the seemingly positive 
content identifying internal changes to be made to the PRC 
standardization system has been applauded by ANSI.
    ANSI has offered its support in reforming the PRC standards system 
and will encourage support of a process that is driven by marketplace 
demand where standards are developed in response to specific concerns 
and needs expressed by industry, government, and consumers (see Annex 
B).
    To assist in the mitigation of concerns about the Chinese 
standardization policy, ANSI offers the following policy considerations 
for review and deliberation by the Science Committee of the United 
States House of Representatives and for consideration by stakeholders 
in the PRC:

          The global economy will be best served if the PRC 
        joins with the United States and other nations in embracing the 
        globally accepted principles of standardization endorsed by the 
        WTO (see Annex C). In particular, support should be given to 
        open and inclusive participation in standardization activities; 
        balancing the interests of all stakeholder groups so that the 
        outcomes are representative and broadly supported; and 
        maximizing the participation of, and value to, both 
        intellectual property rights (IPR) holders and implementers.

          Voluntary consensus standards enable industry growth, 
        promote vendor differentiation and allow for adaptation to meet 
        unique consumer and stakeholder needs. To the extent that the 
        PRC adopts existing and globally recognized voluntary 
        standards--rather than developing unique standards for use only 
        in China--the Nation and its growing export market will 
        benefit.

          The inclusion of intellectual property, under 
        reasonable and non-discriminatory (RAND) terms and conditions, 
        in voluntary consensus standards provides benefit to the 
        contributor of that intellectual property via licenses and/or 
        recognition and to implementers of the standard via the reduced 
        need to support multiple specifications. Companies in China are 
        encouraged to consider offering intellectual property for 
        inclusion in globally recognized standards.

          The global landscape is rich with entities, systems 
        and processes that support regional and international 
        standardization activities. These include treaty organizations 
        where governments are members; non-treaty organizations whose 
        membership is comprised of national representatives; 
        professional and technical organizations whose membership is on 
        an individual or organizational basis; and through consortia 
        whose membership is typically company and industry based.

                --  The PRC will benefit by broadening its definition 
                of ``international standard'' to include documents that 
                have been either developed or ratified by any 
                consensus-based organization pursuant to transparent 
                policies that are reasonable and non-discriminatory. 
                China's current definition is limiting in that it 
                applies only to standards that have been approved by 
                the International Organization for Standardization 
                (ISO), International Electrotechnical Commission (IEC), 
                and the International Telecommunication Union (ITU).

                --  As a means of fostering both competition and 
                innovation, governments in all nations should allow 
                stakeholders, particularly companies, to choose among 
                the different voluntary standards that may be 
                applicable.

Considerations with Respect to the European Union and the European 
                    Standards Organizations

    Similar to the United States, the European Union and its member 
nations have increased their reliance on standards developed under a 
voluntary consensus process. Unfortunately, the similarities often end 
here.
    In the U.S., a standard is generally developed in response to 
market demand or need. Standards in Europe are often developed to fill 
a government need for a specific set of regulatory requirements or 
procurement policies of government agencies. A standard that is adopted 
by the EU must become the normative document for each of the EU member 
nations. With few exceptions, the three European Standards 
Organizations--the European Committee on Standardization (CEN), the 
European Committee on Electrotechnical Standardization (CENELEC), and 
the European Telecommunications Standards Institute (ETSI)--restrict 
participation on their standards-setting committees to entities that 
have a physical presence in one of the EU member nations.
    To assist in the mitigation of concerns about the EU 
standardization policy, ANSI offers the following policy considerations 
for review and deliberation by the Science Committee of the United 
States House of Representatives and for consideration by stakeholders 
in Europe:

          Some access to the ESOs is available via the role of 
        ANSI and its U.S. National Committee of the International 
        Electrotechnical Commission (USNC/IEC) as the U.S. member of 
        the ISO and IEC, respectively. An ANSI delegation engages 
        regularly with representatives of the European Commission and 
        the ESOs to raise strategic standards issues from the U.S. 
        perspective. ANSI will continue to pursue an expansion of the 
        ESO's participation requirements to provide for the ability of 
        U.S. stakeholders to influence the development of EU standards 
        that will ultimately impact their ability to trade with the 
        European market.

          At the same time that the EU and its member nations 
        have become more aggressive in producing standards that serve 
        EU producers, they have also begun expending millions of Euros 
        annually to provide technical assistance to developing and 
        emerging nations, including China. These efforts often include 
        providing free standards, and even translations of standards, 
        in return for commitments by the recipient nations to adopt or 
        otherwise use the EU standards. While some U.S. standards 
        developers and companies have aggressively promoted their 
        catalogues of standards to emerging nations, to date neither 
        U.S. industry nor government has been willing or able to make 
        contributions that will offset this imbalance.

                --  The U.S. standardization community does not have 
                the resources to match the large investment being made 
                by the Europeans. Federal Government support of, and 
                cooperation with, the private sector is needed for 
                activities such as research, education, and technical 
                support, and resources to assure adequate U.S. 
                representation at international standards meetings.

                --  These U.S. outreach and promotion efforts must be 
                well coordinated. ANSI offers its Regional Standing 
                Committee for Europe, the Middle East and Africa (RSC-
                EMEA) \3\ as a focal point to improve coordination 
                between private sector interests, and governmental 
                interests in the areas of trade and regulatory policy, 
                which involve different government agencies and 
                participants.
---------------------------------------------------------------------------
    \3\ ANSI established the RSC-EMEA to broaden the participation of 
U.S. stakeholders in the development of policy positions regarding 
regional standards and conformity assessment activities, and to 
coordinate U.S. activities, respond to initiatives and advise ANSI on 
matters relating to the European, Middle Eastern and African regions.
---------------------------------------------------------------------------

Coordinating Public and Private Sector Strategies

    The above policy considerations for China and Europe are aligned 
with high-level strategies developed by the U.S. Department of Commerce 
following the issuance in May 2004 of ``Standards and Competitiveness--
Coordinating for Results,'' a report acknowledging the growing 
awareness of standards as a key trade issue. These considerations are 
also aligned with the latest edition of the draft United States 
Standards Strategy (USSS) (www.ansi.org/usss). A key aspect of the 
Strategy is reference to the requirements of the WTO's Technical 
Barriers to Trade as related to standards practices.
    As referenced in the Introduction of this testimony, the USSS is a 
guidance document that is being developed by members of the U.S. 
standardization community, including representatives of industry,\4\ 
government, consumers, academia and more. It is a perfect example of 
the U.S. public-private sector partnership approach to standardization.
---------------------------------------------------------------------------
    \4\ Representatives of the National Association of Manufacturers 
(NAM) have been actively involved in the process of updating the U.S. 
Standards Strategy; William Primosch, NAM's senior director of 
international business policy, headed the working group drafting the 
international section of the Strategy.

          The U.S. Standards Strategy is expected to be 
        finalized in late 2005. Implementation of its strategic 
        initiatives and tactics will be strengthened by Congressional 
        recognition and endorsement. This endorsement will also provide 
        valuable support to the private sector as it engages with 
---------------------------------------------------------------------------
        Europe and the various standards organizations in China.

                --  ANSI encourages the Science Committee to offer a 
                resolution or other legislative vehicle to enable the 
                Congress to formally endorse the U.S. Standards 
                Strategy.

Summary

    The American National Standards Institute is proceeding with its 
plans to assist in reforming the PRC standards system, working with 
Europe in establishing a level playing field for U.S. stakeholders, and 
finalizing and implementing the United States Standards Strategy.
    On behalf of its members, constituents, and the U.S. 
standardization community, the Institute will continue to serve as an 
advocate for an open, balanced and transparent global standards system 
that is driven by marketplace demand. ANSI will also encourage China, 
the EU and its members, and all other nations to pursue the 
development, endorsement and adoption of globally recognized standards 
that respond to specific concerns and that meet the needs expressed by 
all stakeholders.
    ANSI welcomes the opportunity to continue to work in partnership 
with this committee, Congress, and other U.S. public sector 
representatives to achieve these goals.

Annex A

Background on the U.S. Standardization System and the Role of the 
                    American National Standards Institute (ANSI)

    The U.S. private sector-led, voluntary standardization system has 
been in existence for more than 100 years. It is a highly decentralized 
system and naturally partitioned into industrial sectors that are 
supported by numerous independent, private sector standards developing 
organizations (SDOs). It is a system that is demand-driven by the 
marketplace with standards typically developed in response to specific 
concerns and needs expressed by industry, government, and consumers.
    Since 1918, this system has been administered and coordinated by 
the American National Standards Institute (ANSI) with the cooperation 
of the private sector and the Federal, State and local governments. 
ANSI does not develop standards. Rather, it functions as a central 
clearinghouse and coordinating body for its member organizations. The 
Institute is a unique partnership of industry, professional, technical, 
trade, labor, academic and consumer organizations, as well as 
government agencies. These members of the ANSI federation actually 
develop standards or otherwise participate in their development, 
contributing their time and expertise in order to make the system work.
    ANSI ensures the integrity of the U.S. standards system by:

        1.  establishing a set of due process-based ``essential 
        requirements'' that SDOs may follow in order to manage the 
        consensus standards development process in a fair and open 
        manner,

        2.  accrediting SDOs who adhere to these requirements,

        3.  approving candidate standards from ANSI-accredited SDOs as 
        American National Standards (ANS), and

        4.  conducting regular audits of the ANS activities of ANSI-
        accredited SDOs to ensure ongoing compliance with ANSI's 
        essential requirements.

    ANSI has accredited hundreds of SDOs across a range of industry 
sectors. These industries include (but certainly are not limited to) 
telecommunications, medical devices, heavy equipment, fire protection, 
information technology, petroleum, banking and household appliances. 
There are now approximately 10,000 ANSI-approved ANS that address 
topics as diverse as dimensions, ratings, terminology and symbols, test 
methods, inter-operability criteria, product specifications, and 
performance and safety requirements. These standards development 
efforts serve the public interest and are being applied to new critical 
areas such as the environment, healthcare, homeland security and 
nanotechnology.
    The Institute's approval of a candidate standard as an ANS verifies 
that the principles of openness and due process have been followed and 
that a consensus of all interested parties has been reached. Due 
process requires that all proposed ANS be circulated to the public at 
large for comment, that an attempt be made to resolve all comments, and 
that there is a right of appeal. In addition, ANSI considers any 
evidence that a proposed ANS is contrary to the public interest, 
contains unfair provisions or is unsuitable for national use. This 
basic formula has been the hallmark of the ANS process for decades, and 
it has garnered worldwide respect and acceptance.
    One of the best indicators of confidence in the U.S. voluntary 
consensus standardization system (as exemplified by the ANS process) is 
Congress's 1996 passage of the National Technology Transfer and 
Advancement Act (NTTAA). This law (P.L. 104-113) requires federal 
agencies to use voluntary consensus standards for regulatory purposes 
wherever feasible and to procure equipment and services in accordance 
with such standards. It also requires agencies to increase their 
participation in voluntary consensus standards activities and directs 
the Commerce Department's National Institute of Standards and 
Technology (NIST) to coordinate federal, State and local voluntary 
standards and related conformity assessment activities.
    ANSI also promotes the use of U.S. standards internationally. The 
Institute serves as the U.S. national body representative in two major, 
non-treaty international standards organizations: the International 
Organization for Standardization (ISO) and, through the United States 
National Committee (USNC), the International Electrotechnical 
Commission (IEC). ANSI and the USNC play a leadership role in ISO and 
IEC, respectively, on both policy and technical matters.
    Part of ANSI's role as the U.S. member of ISO includes accrediting 
U.S. Technical Advisory Groups (U.S. TAGs) which develop and transmit, 
via ANSI, U.S. consensus positions on the activities and ballots of 
technical committees and subcommittees. Similarly, the USNC approves 
TAGs for IEC activities. In many instances, voluntary standards 
developed by U.S. SDOs are taken forward, through ANSI or the USNC, 
where they are approved in whole or in part by the ISO and/or IEC as 
International Standards. ANSI also encourages the adoption of 
international standards as national standards where they meet the needs 
of the user community.
    In addition, ANSI advocates U.S. positions in various regional 
standards organizations and regularly meets with representatives from 
standards bodies in other nations. Thus, ANSI plays an important role 
in facilitating the development of global standards that support global 
commerce and which prevent regions from using local standards that 
favor local industries as trade barriers.
    Conformity assessment is the term used to describe steps taken by 
both manufacturers and independent third-parties to determine 
fulfillment of standards requirements. ANSI's role in the conformity 
assessment arena includes accreditation of organizations that certify 
that products and personnel meet recognized standards. The ANSI-
American Society for Quality National Accreditation Board (ANAB) serves 
as the U.S. accreditation body for management systems certification, 
primarily in areas such as quality (ISO 9000 family of standards) and/
or the environment (ISO 14000 family of standards). ANSI also is 
involved in several international and regional organizations to promote 
multilateral recognition of conformity assessments across borders to 
preclude redundant and costly barriers to trade.
    In summary, through its various roles and responsibilities, ANSI 
advances its mission to ``enhance both the global competitiveness of 
U.S. business and the U.S. quality of life by promoting and 
facilitating voluntary consensus standards and conformity assessment 
systems and safeguarding their integrity.''

Annex B

Background on Standards and Trade with China

    As the U.S. member body of ISO, and via the U.S. National Committee 
of IEC, ANSI serves as the national standards body counterpart to the 
PRC and can help influence Chinese stakeholders to participate in the 
fair and open standardization process that has as its goal the 
development of a single set of globally recognized and accepted 
standards.
    As noted earlier in this testimony, recent events indicate that the 
PRC may have been considering using standards to establish trade 
barriers as a strategy to shelter the Nation's growing industries. One 
well-publicized example is related to the PRC's domestic high-
technology industry and the issue of a Wireless Local Area Network 
(WLAN) Authentication and Privacy Infrastructure (WAPI) and Wireless 
Fidelity (Wi-Fi) chips, the devices that allow computers to access the 
Internet through local wireless networks.
    On May 12, 2003, the PRC government mandated that a new WLAN WAPI 
security standard take effect in June 2004. The new standard was 
developed independently by the PRC Broadband Wireless IP Standard 
(BWIPS) Group with little or no communication with other standards 
organizations and no foreign participation. Upon implementation of the 
PRC government directive, foreign importers to China would have been 
mandated to comply with a requirement to form joint ventures with one 
of 24 PRC companies that had been given proprietary technical 
information required for implementation of the WAPI standard.
    The U.S. Government and industry pointed out that there is already 
an internationally accepted standard for such technology (IEEE 802.11). 
On March 2, 2004, in a joint letter signed by U.S. Secretary of State 
Colin Powell, U.S. Commerce Secretary Don Evans and U.S. Trade 
Representative Robert Zoellick to Zeng Peiyan, Vice Premier of the 
People's Republic of China, the Bush administration urged PRC to drop 
WAPI. Following high-level meetings in Washington, D.C., the PRC 
government announced that it would (a) suspend implementation of the 
WAPI standard, (b) work to revise the WAPI standard, taking into 
account comments received from PRC and foreign firms, and (c) 
participate in international standards bodies on WAPI and wireless 
encryption for computer networks.
    In recent months, ANSI has worked through international forums, its 
membership, and in concert with the China desk at the Department of 
Commerce's International Trade Administration to invite representatives 
of the PRC standards organizations to a meeting to discuss a long-term 
resolution of the WAPI issue, including fair consideration of the PRC 
proposal in the appropriate international forum. ANSI believes that 
respectful and open engagement with the various PRC standards groups is 
the best way to resolve such issues going forward.
    While WAPI is important for many reasons, the PRC is also 
developing several other important (but locally divergent) standards in 
areas as diverse as the Internet Protocol, 3G wireless communications 
(such as TD SCDMA\5\ and SCDMA\6\), audio-video capture and playback 
(AVS), document and data protection, the small intelligent grouping and 
resource sharing (IGRS) for terminal device collaboration radio devices 
being developed for inventory management (RFID), and others. It is the 
pervasive nature of these activities, and the related treatment of 
intellectual property, that is of significant concern to PRC's trading 
partners.
---------------------------------------------------------------------------
    \5\ Time Division Synchronous Code Division Multiple Access (TD-
SCDMA) is a mobile telephone standard for wireless network operators 
who want to move from a second generation (2G) wireless network to a 
third-generation (3G) one.
    \6\ Synchronous Code Division Multiple Access
---------------------------------------------------------------------------
    Subsequent to the initial WAPI controversy, the PRC government 
issued a report identifying concerns in the PRC standards system and 
suggesting solutions. The study was a cooperative effort between the 
Chinese Ministry of Science and Technology (MoST), the Chinese General 
Administration for Quality Supervision, Inspection and Quarantine 
(AQSIQ), and the Standardization Administration of China (SAC). The 
report itself was drafted by the China National Institute of 
Standardization (CNIS), an agency within the AQSIQ, which met with an 
ANSI delegation in Washington, D.C. in December 2003.
    The report suggested:

          changing the existing four levels of: National, 
        Vertical, Local, and Enterprise standards to the three levels 
        of: National, Association, and Enterprise standards;

          changing the two categories of standards: Mandatory 
        and Recommended standards into only voluntary standards; 
        voluntary standards becoming mandatory only via references or 
        citations in government regulations;

          changing the standards development accreditation 
        scheme: Currently, national, vertical and local standards are 
        subject to government approval. The suggestion is to change 
        this system so that: governmentally accredited bodies will 
        approve national standards and associations will approve 
        association standards;

          that enterprises should be free to determine their 
        own standards usage without the governmental registration 
        required today;

          that standards should be adopted voluntarily by the 
        users of standards.

    The issuance of the SAC strategy reports, and the seemingly 
positive content identifying internal changes to be made to the PRC 
standardization system, prompted ANSI to send a letter to the 
Administrator of SAC, Li Zhonghai, in October 2004. This letter 
congratulated SAC on the undertaking of this study and applauded the 
recommendations put forward in the report.
    To further its outreach efforts, in mid-January 2005 ANSI's 
President and Chief Executive Officer Dr. Mark. W. Hurwitz, traveled to 
China to meet with Administrator Li and representatives of CNIS, the 
Administration of Certification and Accreditation of China (CNCA), the 
Standards Press of China (SPC) and the U.S. Foreign Commercial Service 
in Beijing. During these discussions, ANSI agreed to serve as the 
distributor of Chinese national standards in the U.S. and SAC agreed to 
become a distributor of American National Standards, as well as certain 
other standards developed by U.S.-based standards-setting bodies, in 
China. This arrangement will facilitate access to the national 
standards of each nation and is seen as crucial to the promotion of 
cross-border trade.
    ANSI has also taken steps to mitigate the difficulty of obtaining 
entry visas for Chinese technical experts who are attempting to attend 
meetings of international standards committees in the United States. 
Among the actions taken was publication of a guidelines document that 
provides information for Chinese technical experts and for the 
administrators and officers of the technical committee meetings that 
are hosting those meetings; ANSI is engaged in ongoing discussions of 
this topic with the U.S. Department of State and other relevant 
agencies.
    Dr. Hurwitz also explored with SAC the prospect of increasing U.S. 
and other foreign access to participation on standards-setting 
committees in the PRC. Current and proposed future options were 
discussed, with a strong indication being given to ANSI by SAC that 
China will be moving away from its past practices of favoring 
government-held seats on its national standardization committees and 
placing restrictions and/or limits on open participation on these 
committees.
    Finally, during his visit Dr. Hurwitz was introduced to a new 
initiative within PRC to develop a Chinese Standards Strategy. The 
Strategy's goals include efforts to develop, within 15 years, 
``independently self-proprietary technical standards through effective 
measures, so as to improve international competitiveness of China's 
technical standards and therefore increase the international market 
share of Chinese products.''
    Its Guiding Principles bear in mind the goals of ``new-stage 
industrialization and comfortably-off society,'' focus on improvement 
of technical standard adaptability and competitiveness, couple standard 
independence/innovation with international norms, integrate 
governmental instruction and market orientation with enterprise as the 
major player, and meet the strategic requirements of technological 
innovation as well as industrial and trade development on technical 
standards.
    In the near-term, Chinese strategic goals to be achieved by 2010 
include the formation of a rather complete national technical standard 
system, putting the overall technological level of Chinese standards on 
a par with that of international standards for key areas. By 2020, the 
PRC intends to upgrade its international standards involvement to an 
advanced level, putting China high on the rank of international 
standardization contributors.

Annex C

       Excerpt from the [draft] United States Standards Strategy

PRINCIPLES

    It is well established in the community of nations that standards 
should meet societal and market needs and should not be developed to 
act as barriers to trade. In approving the World Trade Organization 
Technical Barriers to Trade Agreement, WTO members recognized that goal 
and established globally accepted principles as a framework to promote 
cooperation and discourage the use of standards as trade barriers. The 
U.S. standards system is based on the following set of globally 
accepted principles for standards development.

          Transparency

           Essential information regarding standardization activities 
        is accessible to all interested parties.

          Openness

           Participation is open to all affected interests.

          Impartiality

           No one interest dominates the process or is favored over 
        another.

          Effectiveness and relevance

           Standards are relevant and effectively respond to regulatory 
        and market needs, as well as scientific and technological 
        developments.

          Consensus

           Decisions are reached through consensus among those 
        affected.

          Performance-based

           Standards are performance-based, specifying essential 
        characteristics rather than detailed designs where possible.

          Coherence

           The process encourages coherence to avoid overlapping and 
        conflicting standards.

          Due Process

           Standards development accords with due process so that all 
        views are considered and appeals are possible.

          Technical Assistance

           Assistance is offered to developing countries in the 
        formulation and application of standards.

    In addition, U.S. interests strongly agree that the process should 
be:

          Flexible, allowing the use of different methodologies 
        to meet the needs of different technology and product sectors;

          Timely, so that purely administrative matters do not 
        slow down the work, but meet market expectations; and

          Balanced among competing interests.

                       Biography for David Karmol

    David Karmol currently serves as Vice President for Public Policy 
and Government Affairs at the American National Standards Institute 
(ANSI). In this position he is responsible for advocacy and outreach 
programs designed to better educate Federal, State and local government 
officials on the value of the voluntary consensus standardization 
system and its importance to advancing the competitiveness of U.S. 
businesses and enhancing the health and safety of the world's citizens.
    Karmol joined ANSI in July 2001 with a thorough knowledge of the 
issues important to the standards and conformity assessment community 
and a track record of success working on policies, strategies and 
programs in close liaison with Federal, State and local governments. 
Prior to joining ANSI, he spent ten years as general counsel and 
director of public affairs at the National Spa and Pool Institute 
(NSPI), an ANSI member and accredited standards developer. Karmol also 
served as Press Secretary and Special Assistant to the Director of the 
United States Mint; general counsel for the Can Manufacturers 
Institute; associate counsel to the U.S. House of Representatives 
Judiciary Committee; member of the Ohio House of Representatives, and 
assistant prosecuting attorney in Franklin County, Ohio.
    Mr. Karmol received his B.A. from Miami University of Ohio, and his 
J.D. from the Ohio State University College of Law and is admitted to 
practice law in Virginia, the District of Columbia and Ohio.
    ANSI's mission is to enhance U.S. global competitiveness and the 
American quality of life by promoting, facilitating, and safeguarding 
the integrity of the voluntary standardization system. ANSI is the 
official U.S. representative to the International Accreditation Forum 
(IAF), the International Organization for Standardization (ISO) and, 
via the U.S. National Committee, the International Electrotechnical 
Commission (IEC). ANSI currently has offices in New York City and 
Washington, DC.

                               Discussion

    Chairman Ehlers. And it certainly will.
    I thank all of you for excellent testimony. You covered the 
spectrum and outlined very well the nature of the problem, at 
least as I perceive it, and now to decide where we go from 
here.
    Let me begin the question period, and I recognize myself 
for five minutes.
    Something for all of the witnesses to answer, and I have 
often heard that we are not, as a nation, playing an active 
enough role in various ways, and so I would like each of you to 
respond to that. Is the United States playing a strong enough 
role in international standards-setting? And by that, I don't 
mean just the U.S. Government. I mean the whole country. And in 
your answer, if you could--if you think they are not playing a 
strong enough role, could you outline for me what you think 
would be the top three actions the United States should take to 
assert itself. And are these action items for the Federal 
Government, for U.S. industry, or some other entity?
    Now that may be hard to do for all of you in five minutes--
in a total of five minutes, but I would appreciate reactions 
you give. And usually we go in the same order we ask the 
question, but I would like to reverse it, just for variety's 
sake.
    And Mr. Karmol, since you were the one to offer some 
concrete suggestions, we will start with you.
    Mr. Karmol. Thank you, Mr. Chairman.
    I guess I will start by saying I think the United States 
does play an active role, and I appreciate your recognition 
that it is a joint effort of the private sector and government. 
And although we are playing an active role, I think better 
coordination between the private sector and the public sector 
would benefit our participation. Certainly stronger federal 
support, in terms of providing more outreach and support for 
standards infrastructure development in emerging nations would 
be helpful. And finally, better recognition of the importance 
of standards, which you can help by raising the awareness of 
the importance of standards, you and the Congress and the 
Executive Branch would be helpful by encouraging companies and 
government agencies to participate actively in international 
standards-setting activities.
    Chairman Ehlers. Thank you.
    Mr. Bhatia.
    Mr. Bhatia. Thank you, Mr. Chairman.
    The development of the U.S. Standards Strategy, which is a 
process that is coming near completion, will define actionable 
items. We want to have industry and government step up to the 
plate and own up to their obligations to take certain 
initiatives and take certain actions to support the U.S. 
Standards Strategy. We feel that there is a contribution to be 
made by both the U.S. Government and the industry, including 
SDOs, including people in the private sector, including people 
in the industry.
    With regard to the government contributions, we feel that 
more needs to be done by Federal Government in supporting our 
initiatives overseas. We need to have a better outreach 
program, better education program, more funding of initiatives 
that support our needs, such as standards attaches in the right 
countries, such as workshops in standardization, which allow us 
to explain and make others understand the good features and 
acceptable points and practices of our system, which also 
allows, ultimately, then the acceptance of our products in 
those markets. I feel that we need to have SDOs, as well as 
private industry people, participate and recognize the value 
and the economic impact that standards and conformity 
assessment systems have on our business practices here and 
globally.
    So I urge you to stay tuned, because we will be spelling 
out specific actions and will be looking for endorsement from 
various parties, both in the private sector and the government 
agencies, to support those initiatives that would be beneficial 
for the country.
    Chairman Ehlers. Thank you.
    Dr. Deutsch.
    Dr. Deutsch. Thank you, Mr. Chairman.
    One thing that I think we have heard from all of the 
testimony today is that we are in agreement that the U.S. 
standards process works. It has served our industry and all of 
the industries represented here and the government well. So you 
have asked me for three things the government should do. I want 
to start out by saying one thing the government should not do 
is become a standard-setter or to emulate some of the behavior 
we have described that we are seeing outside the United States. 
We have a very well-functioning, market-driven, diverse 
mechanism for setting standards in the United States.
    So what is it the government can do then? And basically, I 
will go back to the three items I mentioned in my testimony. 
One is to strengthen the current standards liaison and attache 
programs that are already underway.
    The second is to redouble our advocacy efforts. And let me 
put a little bit of meat on the bones of that. We have a 
process that serves us well, but it is a complex process. And 
it is a difficult process to understand. So it is a lot easier, 
especially for an emerging economy, to understand a top-down, 
government-driven process than it is to understand a disparate, 
diverse, and bottoms-up, market-driven process like we have. It 
would really help if the government, in its relations outside 
the United States became a strong advocate for that. Okay.
    And the third recommendation that I brought forward was 
something which is not yet underway, to my knowledge, in the 
United States and which I see is a combination of government 
and industry working together, and that is we probably would 
benefit from having some metrics, some research that supported 
what is obvious to us that the United States standardization 
process, in fact, benefits society as a whole as well as 
industries and consumers.
    Thank you very much.
    Chairman Ehlers. Thank you.
    Mr. Noth.
    Mr. Noth. Thank you, Mr. Chairman. It is an excellent 
question.
    I don't think, at this point in time, that, especially in 
the small and medium-sized enterprises within the United 
States, there is enough industry participation in standards 
globally. There are a lot of very intelligent people in those 
areas, but they are small. They don't have a lot of extra 
funds. They don't fund travel to international organizations. 
And they tend to have a mindset that suggests that they should 
do what the customer wants and will follow that. I don't think 
they have a realization of what is going on, and somehow or 
another we need mechanisms to attract them and make it aware 
that some of their competition in the future is going to come 
from offshore. And even if they only see their market as local 
today, their competition is actually coming from other places 
in the global world.
    From the Federal Government's perspective, what I also 
recommended is exactly there. I think the Federal Government 
needs to step up with better alignment across the agency with 
more of a policy of strategic focus to our activities and 
promote this. I think that has impacts, because one of the 
areas we are having difficulty getting is state governments to 
understand where standards play in. And many of their trade 
missions, and what have you, ignore standards and the impacts 
of standards that they have, and in our decentralized society, 
I think we need better alignment in that area. And our 
leadership, the leadership of the Congress, would have some 
impact on getting their attention.
    Beyond that, it is providing stable funding and resources. 
And as Mr. Deutsch and others have said, we need a strong 
advocacy, both onshore and offshore, from our extensions, 
whether they be State or Commerce or trade missions to make 
sure that we are advocating for both the technology and the 
standards that underpin them from the United States.
    Thank you, Mr. Chairman.
    Chairman Ehlers. Thank you.
    Dr. Semerjian.
    Dr. Semerjian. We are probably running out of answers, but 
I will try.
    Chairman Ehlers. We can provide more questions if you need 
them.
    Dr. Semerjian. Well, one of the things that wasn't 
mentioned was certainly in the developing markets, such as 
China, clearly there is some education to be done. And we are 
making significant efforts in that regard through our standards 
and trade workshops, for example, where we invite standards 
officials and the decision-makers to come to the United States 
and try to understand and be exposed to our diverse, as 
described by others, system of standards. And I think that is 
very important, because in many cases, people don't really 
understand how things work in the United States. And if we 
expect them to endorse and adopt some of our ways, I think we 
need to do a better job of educating and informing them of how 
we operate.
    Also, we need to make more of an effort to get them 
involved, go out of our way to get them involved in the 
standards process. For example, we have some NIST staff who are 
chairing some of the standards committees who have, on purpose, 
held their committee meetings in China to facilitate the 
participation of Chinese officials in these activities, and we 
hope that if they participate or at least find them 
interesting, hopefully they will not--they will see that there 
is not necessarily a need for passing different and additional 
standards as opposed to using existing ones.
    So there are a couple of suggestions. I think there are a 
lot of ways of improving the situation. Unfortunately, I don't 
think there is a ``silver bullet'' that will solve all of our 
problems. I think we need to work on all fronts.
    Thank you.
    Chairman Ehlers. Thank you all for the good answers. They 
stimulated a lot more questions in my mind, but my time has 
expired.
    I am pleased to call on the gentleman from Oregon, Mr. Wu.
    Mr. Wu. Thank you, Mr. Chairman.
    First of all, Dr. Deutsch, when the People's Republic of 
China first started going down the ``WAPI'' road instead of 
standard Wi-fi, my impression was that the Commerce Department 
and USTR was not exactly prompt in bringing pressure to bear on 
the Chinese. Is that impression accurate?
    Dr. Deutsch. I am sorry, Representative; I do not have 
personal knowledge of the initial stages of that. I do know 
that when the government became engaged that it was ultimately 
effective. I do think it took us a while to get not just the 
government but the private sector focused on the reality of the 
issue.
    Mr. Wu. I somehow got the impression that there was a lag 
time, a significant lag time, on the order of a year or more.
    Dr. Deutsch. That is possible. I will yield to some of my 
colleagues here who may have had some immediate----
    Mr. Wu. No one is talking.
    Mr. Karmol. Mr. Wu, we would be happy to respond back to 
you. I don't know--have personal knowledge of that myself, but 
we have people in our organization that would be familiar with 
that and could give you a more complete answer.
    Mr. Wu. Sure thing. Thank you, Mr.--very much, Mr. Karmol.
    Mr. Karmol and Dr. Deutsch, especially Dr. Deutsch, I hear 
you loud and clear about what the U.S. Federal Government 
should not be doing with respect to American standards setting. 
What I am very curious about is I understand, I think, what you 
would like to see in the international arena. I am at a loss, 
at least at this moment, to think of what possible leverage we 
have to get other countries to adopt, not our standards, but 
our standards-setting process. Many cultures are different. 
Their governments are different. They come from a different 
tradition, and perhaps the automatic thought is instead of 
having a competition in the marketplace and voluntary 
standards, by golly, you know, we are going to develop a 
regulatory approach to this. I--help me out here. I just don't 
see how--this is like pushing on a string. I don't quickly see 
any leverage to get other societies to change the way in which 
they set their standards. Do you have some in mind?
    Dr. Deutsch. Well, if by leverage you mean a carrot and a 
stick, okay----
    Mr. Wu. I have generally found that without sticks, carrots 
tend not to be all that effective.
    Dr. Deutsch. I think--and I don't have the stick. I mean--
but I do think the most significant ``carrot'' is how well our 
system serves--take my industry, the IT industry. This is an 
industry that is U.S.-dominated. We have thrived in the absence 
of government intervention. We have used this standardization 
process and evolved it, over time, to meet our time-to-market 
requirements to meet the rapid growth of the IT industry, and 
as such, not only have our companies, you know, benefited, but 
society, as a whole, has benefited with the efficiency and the 
productivity in our economy, and that is why I suggest that I 
think a really good case could be made that our approach to 
standardization has a substantial amount to do with the success 
of the economy in general of the IT sector in particular and 
that alternative approaches do not have the same positive 
effect.
    Mr. Wu. Well, I am not so much disagreeing with you as just 
thinking back to instances like beta videotapes and Apple 
software versus DOS and a couple of other instances where, you 
know, the market did come to a conclusion, but whether the 
market came to the best technical conclusion or not is--it is 
still a question open to history, one would think.
    Mr. Bhatia. I think your question is very insightful. 
Clearly, there are governments out there, nations out there 
that will never be comfortable in the standards-setting process 
that we deploy in the United States. It has to have a structure 
of the type which is comparable. And constituency build-up and 
contributions from different groups that is feasible here may 
not be feasible in other countries. But clearly, the 
opportunity to promote and educate others to go out and 
celebrate, if you will, our successes openly to tell them about 
the benefits that we accrue from this system, which is open, 
which is market-relevant, which has participatory options, 
which has impacts that are analyzed and considered and 
technical superiority of the documents that are often produced 
in many industry sectors: medical, aerospace, IT, you name it. 
There is industry after industry, which is totally dependent on 
United States and United States standardizations and documents 
to carry the flag.
    I think we need to get that message out there. We need to 
educate people early on. If we are not available to do this and 
the Europeans and other parts of the globe are there with their 
arsenal and capability, I think we will lose out. People will 
accept what is available in absence of something better.
    So I think we have a challenge to get out there and preach, 
if you will, the benefits and the goodness of the process as 
well as the documents.
    Mr. Wu. Well, I think the Chairman is going to tell me that 
I have run out of time, and I have, but I would very much like 
to help you out in your enterprise. I would like to help you 
out as effectively as possible, and the challenge is to find a 
sufficiently large carrot or a smaller carrot backed up by a 
little bit of a stick. So if you all could help us think 
through what the appropriate carrots and sticks would be, I 
would love to work with you on this. It is a question of 
finding proper leverage.
    Chairman Ehlers. The gentleman's time has expired. I would 
just comment that carrots have never done it for me, but a good 
piece of pecan pie will always work.
    But I would also observe, I have no expertise on the beta 
versus VHS issue, but you are clearly right on the MAC versus 
DOS system, and the public made the wrong choice there.
    I am pleased, next to you, to recognize the gentlewoman 
from Illinois, Mrs. Biggert.
    Ms. Biggert. Thank you, Mr. Chairman, and thank you for 
holding this hearing.
    My first question is to Mr. Karmol. ANSI has been 
designated by the U.S. Government as the organization that 
represents U.S. interests in international standards 
organizations, such as the ISO, while the U.S. Government is a 
party to the WTO agreement on technical barriers to trade, 
which states that members shall ensure that standards are not 
prepared, adopted, or applied with a view to or with the effect 
of creating unnecessary obstacles to international trade. How 
exactly does ANSI ensure that it has accredited SDOs and the 
standards they develop comply with the WTO agreement?
    Mr. Karmol. Thank you, Ms. Biggert, for your question.
    I guess the first point I want to make is that actually 
ANSI has not actually been designated by the government as a 
representative to ISO and IEC. We are the representative--we 
are a founding member of both organizations. They are private 
sector, however, so although the government does recognize our 
role there through various means, we are really not officially 
designated.
    With respect to your question about WTO principles, ANSI's 
document ``The Essential Requirements'' is the document that 
governs the development of American national standards, and 
that document requires openness, transparency, balance, and due 
process in the creation of American national standards. And we 
think that properly followed, those provisions do ensure that 
American national standards, as reviewed by ANSI, will not be 
barriers to trade.
    Ms. Biggert. And Dr. Semerjian, how does the U.S. 
Government ensure that ANSI-accredited SDOs and the standards 
that they develop comply with the WTO agreement, in your 
opinion? Would it be through monitoring or responding to 
complaints?
    Dr. Semerjian. Yeah, I guess I need to state that NIST 
directly is not involved in the implementation or--so those 
would fall in the realm of the responsibility for USTR or 
perhaps ITA, but primarily USTR.
    But these certification, accreditation type of processes 
are done through internationally-recognized organizations, so 
there is always a mutual recognition aspect built into the 
system. So what ANSI does is recognized by others, their 
counterpart organizations in other countries. And I don't think 
that that is a real point of contention, at least to my 
knowledge, but I am not very knowledgeable in this area.
    Ms. Biggert. I guess my problem seems to be that there is a 
disconnect between the WTO barriers and the organizations, such 
as ANSI and maybe with NIST.
    Mr. Bhatia.
    Mr. Bhatia. May I amplify?
    I would like to suggest that all signatories to WTO member 
nations have an obligation to adhere to those principles. ANSI, 
as a representative of the United States to these 
organizations, is duty-bound to comply with WTO principles, and 
we are reflecting that in all of the documents that ANSI uses 
for accreditation. So the basic criteria of openness, of 
balance, of consensus, of due process are fundamental 
principles on which American national standard designation is 
based. You can not become an American national standard using 
an accredited SDO process unless you comply with these 
criteria.
    The further balance comes from checks and balances of 
public review comment period, an obligation to respond to every 
critique that is presented in resolving that. And we have an 
additional verification process to USTR and DOC in the form of 
industry technical advisory committees, one of which I chair 
along with members like Bob Noth and others. And these 
individuals make sure that we stay on the track and we report 
back to USTR, DOC, and Congress, if appropriate, if there are 
any violations that are noted or recorded or complaints that 
are made.
    Ms. Biggert. Well, in 2002, the ANSI Chairman, Oliver 
Smoot, said that the ANSI accreditation process applies only to 
those standards submitted to ANSI for adoption as an American 
national standard, so there is----
    Mr. Bhatia. That is correct.
    Ms. Biggert. And so is there a group out there then that 
there is no process to ensure that they are not complying if 
they haven't really----
    Mr. Bhatia. You are absolutely right. There is a large body 
of SDOs who do not follow the accreditation process. I think 
they suffer in the marketplace because of that. They lack, 
perhaps, some of the credibility and some of the prestige that 
goes with a recognized accredited process. And that affects the 
ability, if you will, in their marketplace of conducting their 
business. For some industry sectors, it works. For others, it 
is more important to have that credential, especially if you 
are going to be operating internationally.
    Ms. Biggert. Is there something that should be changed 
then?
    Mr. Bhatia. I think, as has been noted by other panel 
members, the system we have is very market-responsive. It seems 
to work, and it has a sectoral approach to it, which seems to 
recognize the needs that are different for each industry 
sector.
    Ms. Biggert. But there are no police, then, as far as the 
development of standards or the standards being carried out?
    Mr. Karmol. If I may respond further, Representative 
Biggert, ANSI actually does--in addition to the essential 
requirements that our accredited standards developers are 
required to use--we audit each of our accredited standards 
developers at least once every five years to ensure that they 
are following The Essential Requirements. We have actually 
suspended the accreditation of a number of organizations, whose 
names I am sure you would know, if I mention them, which I 
won't. But we have a very strict audit procedure that goes 
along with the accreditation process to make sure that our 
accredited developers are using the process and following it 
precisely as they have told us they will.
    Ms. Biggert. Okay. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Chairman Ehlers. The gentlewoman's time has expired.
    We will start a second round of questions.
    Let me--I am not sure I can ask a question on this, but let 
me just share some of my unease here. The world has 
dramatically changed, as far as I can see, in the area of 
standards. Mr. Noth, you have been here a long time in this. 
Maybe you can verify that or contradict it. But as a scientist, 
I remember being involved indirectly with standards-setting, 
and there was always a good spirit about it, a good--saying, 
``This is good for all of us if we can agree on standards and 
let us all work together.'' And by ``all,'' I mean different 
countries. What seems to me has changed is that not all 
countries are working out of a sense of integrity and good will 
anymore. And perhaps it is epitomized by what a friend told me 
in dealing with a certain country. He said, ``They always tell 
the truth, except when it is not convenient.'' It makes it very 
hard to work together at that point. And several of you 
referred to the fact that perhaps a trade representative's 
office should be more heavily involved in these issues. And I 
would certainly like to pursue that, if you think that is 
something good. We do have a brand new trade representative, a 
former Member of Congress, and I am sure he will be very 
responsive to us.
    You talked about the U.S. standard as having developed in a 
way that is very beneficial for our country, but is it truly 
beneficial for the rest of the world or is it even beneficial 
for us vis-a-vis the rest of the world? That is still not clear 
to me.
    And a specific question, Mr. Karmol, you are working on the 
new Standards Strategy. When do you expect that to be out?
    And then I will ask--I will let the rest of you respond to 
my ramblings.
    When do you expect the new Standards Strategy to be coming 
out?
    Mr. Karmol. We have a draft at this point, Mr. Chairman, 
which is available on our website, and it is referred to in the 
testimony. We do have some thoughts--some comments that came in 
during the comment period, which ended April 18, which we are 
reviewing. I think the expectation is that there will be a 
special meeting of our Board of Directors prior to our 
scheduled December meeting to approve the Strategy, but Mr. 
Bhatia may be the better person to answer, since he is chairing 
the committee.
    Would you like to----
    Mr. Bhatia. All I can do is give you our best estimate. We 
hope to have this accomplished by the end of November. If the 
dialogue and review of the comments submitted and resolution of 
those comments takes longer, I would propose to the ANSI Board 
and others that we take our time and come up with a document 
that has more meaning rather than one that is finished in a 
speedy fashion.
    Chairman Ehlers. Thank you for your response to that 
specific--now would any of you like to comment on my unease or 
set me at ease or say, ``You are right: we should all be 
uneasy.''?
    Mr. Noth.
    Mr. Noth. I think your unease is justified. There have been 
a lot of changes in the standards world. Starting with the 
European Common Market's activities in 1992 and their--what 
they call their new approach as it evolved, that had the effect 
of taking what was basically a technical process in the past, 
and your recollections, Mr. Chairman, as a scientist, probably 
remember more collegial activities between technical experts. 
The European approach, and now what they are trying to export 
and, to a certain extent, the ISO and IEC approach, puts a 
political element into the process. So it is--now requires a 
two-level activity: one is an agreement between experts, when 
you can get the experts to the table; and two, an agreement 
between the politicians as to whether or not the agreement of 
the technical experts makes sense to them in terms of their 
developing world. And that creates some unease. It was 
challenging enough when it was the United States and Europe 
that were basically arguing over technical specifications and 
political issues. The size and the forceful entry of the--and 
aggressive entry, not forceful, but aggressive entry of the 
Chinese into the global markets has also shifted the balance of 
power, and they are not the only ones: the South Americans, the 
Indians, the former Soviet Union countries, the CIS countries 
are all going to ultimately want to claim a share of this.
    And we need to remember that standards are only a form of 
product specification. What we are really talking about here is 
trade issues on commerce and goods of services, because 
standards are simply just the technical underpinnings of many 
of those, as you said in your opening remarks.
    So we need to make sure that ultimately we don't lose that 
track. One of the advantages of the U.S. system is that we are 
rapid. We are--our system is much more responsive to 
innovation. We get our technical specifications, when locally 
set, are often technically superior to what the rest of the 
world will adopt.
    So our ability--our efficiency with our system is one of 
the reasons why our economy continues to be the economic engine 
of the world. And that is our advantage, Mr. Wu, is that we 
need to taut that. And you are already starting to see some of 
that, because the Europeans, 15 years later, now are shifting 
their activities toward what they call their Lisbon Agenda, 
trying to make their industries more competitive, because their 
regulatory agenda that they have pursued has moved them in the 
wrong direction.
    So you are--ultimately, market forces themselves are going 
to help us correct and let other countries see the advantages 
of the U.S. system.
    Thank you, sir.
    Chairman Ehlers. Do you ever expect we will ever have one 
vote for the United States and one for the European Union?
    Mr. Noth. I don't hold my breath on that one, Mr. Chairman, 
but I also know, from vast experience in this area, that it is 
a myth to believe that all of Europe is united and it is going 
to get worse before it gets better now that they have expanded 
the size. So the fact that we are disadvantaged politically 
when ISO has more players at the table does not necessarily 
mean that we can not make the system work for us, because we 
can work behind the scenes, based on the quality and 
effectiveness of our technical input.
    Chairman Ehlers. And of course we could always say we have 
our 50 different states and we need 50 votes.
    A last quick one, Dr. Deutsch, and then----
    Dr. Deutsch. I was going to vote for a vote for Alabama, 
myself.
    Chairman Ehlers. I see.
    Dr. Deutsch. I would like to follow up on your comment that 
things have changed. And one aspect of the change from the 
perspective of the IT industry, which is--we have a sector-
based approach in the United States, the IT industry has 
increasingly taken our standards development activities outside 
of the formal process where we have the ANSI-accredited SDOs. 
We still participate there, and we still do work there, but a 
very, very substantial part of our efforts are going on in 
consortia and other forums, okay, that--many in which are 
international in nature from the beginning, such as W3C. Okay. 
I can put on my Oracle hat and tell you we are spending more 
money today in fees, in engineers' time, in travel to do 
standards-related activities than we ever have, okay. An 
increasing percentage of that money is being--and professional 
time is being spent in forums other than ANSI-accredited SDOs. 
Okay. And that--the effectiveness of what we are doing is 
demonstrated whether you fire up your MAC or fire up your 
Microsoft operating system and bring up your web browser and 
say, ``Google,'' and all of a sudden there is something there 
that you want to see. There is a layer after layer after layer 
after layer of standards, which make that happen that we 
absolutely take for granted, okay, and that is what you have 
gotten out of the standards system that we have been using.
    Chairman Ehlers. Okay. I guess--well, my time is running 
very short, but I just--thank you. I am just troubled. You 
know. Take for example the U.S. cell phone standard as used in 
the United States. The European standard is used in 80 percent 
of the world, the non-U.S. portion. I--it is hard to say we 
have won on that one.
    But Mr. Bhatia.
    Mr. Bhatia. Yeah. I think I would like to suggest that the 
change in standardization is not necessarily bad. I think it is 
the natural outcome of opening up of the markets. If you talked 
to somebody 20 or 25 years ago, it was a given that you had to 
comply with Japanese standards and Japanese codes if you wanted 
to sell in Japan. You have to comply with the U.S. standards 
and the U.S. codes if you had to sell here. With the exception 
of very few industries, you basically had to work with 
standards and codes of that nation which were regulatory or 
marketplace requirements. But the opening of markets with the 
trade agreements which allowed manufacturers to sell and seek 
opportunities in multiple markets, the standardization process 
needed to change. There was more of a need to participate in 
internationally-relevant documents. There was more need to 
harmonize standards. There was more need to be aware of what 
the other countries were doing, so you could avoid repetitive 
mistakes or repetitive efforts.
    So I think that is the natural outcome, and we are going to 
get better as we go forward. But clearly, make no mistake about 
it, many nations, even today, use standards as a barrier for 
market protection for supporting their inherent industries or 
their infrastructures. And at some point, that will have to be 
taking a subservient position, but for many countries, 
especially the new ones and developing ones, criteria, which 
are unique in the name of national security or national 
interest, are in the transitional period do pose as barriers.
    So I think we need to look at standards that need to be 
more harmonized, we need to be more participatory, and we need 
to open up our system to allow other countries to participate 
as willingly.
    Chairman Ehlers. Thank you all, and my time is more than 
expired.
    I am pleased to call on Mr. Wu again.
    Mr. Wu. Thank you very much, Mr. Chairman.
    I want to make one comment and get out as many questions as 
I can. Some--I hardly recommend this institution as a model of 
efficiency, however, you might consider, just as we set up the 
Congress with two Senators for every state and then population-
weighted on the House side, that you might have each country 
have one representative in part of your standards-setting 
operation and then have a GDP-weighted chamber, if you will, 
for the other part of it.
    And then that leads me to my first question. I mean, the 
way that that system works, as it works here in Congress, is 
that we have certain efficiency challenges. The speed with 
which we do things can be somewhat challenging. And especially 
for you, Dr. Deutsch, who--and perhaps others would want to 
comment, it seems to me that the standards-setting 
organizations have had some difficulty in keeping up with 
technological change and that a lot of private sector 
operations have gone to a regime where folks form consortia in 
the absence of a true standard of, you know, ``We need 
something quick, and we need it now, so let us get it done 
quickly.'' Is there something that can be done to improve the 
speed with which standards can be set?
    Dr. Deutsch. Let me respond. First of all, in the interest 
of full disclosure, let me just say I am a member of the ANSI 
Board. I also serve on the Board of an ANSI-accredited SDO, the 
INCITS, which is an ANSI-accredited SDO that does most of the 
IT-related standardization in the United States. And my 
observation, from my personal experience over even more years 
than Mr. Noth has had in the standards business, is that there 
is a competitive world of standards-setting organizations and 
that in response to observations such as yours, which I think 
was absolutely correct 10 years ago, okay, the standards-
setting organizations have, over a period of time, recognized 
the threat to their turf and have responded. I can tell you 
this, if there is consensus, which is a big if, among all of 
the stakeholders, I can create an INCITS ANSI-accredited U.S. 
standard in a very, very short period of time. If there is 
contention, which there very well may be, my industry--I am 
sitting here representing both Apple and Microsoft, by the way, 
Mr. Chairman, okay, you know, there is frequently disagreement 
in those forums. Then it takes a little bit longer. The time is 
to resolve the differences.
    Mr. Wu. Is there a special problem in the medical 
information technology field? I mean, it seems to me that I 
hear repeatedly that there are problems with inter-operability 
of platforms in medical information systems.
    Mr. Noth. I can respond, wearing my ANSI International 
Policy Committee hat, and a little bit of knowledge of 
manufacturing. Where we get into trouble, and if you look back 
at the history of standards or where there have been 
``standards wars,'' usually you have problems where the 
industries have innovated and brought products out on the 
marketplace and had them--and had an installed base of 
investment for a long time before the standards activity 
started to actually get together and the public got to--got 
congealed in their opinion enough to start calling for 
standards and inter-operability. And then you have people who 
play the game defensively, because they are trying to protect 
that installed investment and not have to--and ultimately you 
end up--that is where the beta versus VHS kind of a scenario 
tends to play itself out in the marketplace. And in the medical 
device community, and many of those areas, it is exactly that 
way.
    What many of us are trying to do in the new technology is 
we all have to recognize that it is slower in--where we have 
got an installed base. But in the new technologies, we are 
trying to be much more proactive and work in the standards 
world ahead of the game, so that you don't get those 
innovations and that installed investment in the marketplace 
earlier, and that is the big challenge, because it takes a 
significant commitment of resources and dollars, you know, 
human resources in terms of subject matter experts and dollars 
to get out there ahead of the products. And then you have the 
concerns about sharing intellectual property or destroying a 
competitive advantage in that activity.
    So it is the challenge--everybody is working on it, but it 
is not a simple problem to solve.
    Mr. Wu. Well, we will take this conversation off-line, 
because I want to ask one quick question before the light goes 
red.
    But I am very, very surprised that there would be this 
large installed based problem in the medical IS field, given 
the many complaints I have heard about lack of medical IS. So 
it seems to me that, you know, this is a wide--it should be a 
wide-open field instead of one strewn with installed-base 
problems.
    But Mr. Noth, I am very sympathetic to your--to the 
challenge you raised about conformity and the costs. And I 
believe, Dr. Deutsch, you referred to that, also. And maybe--
that is part of Oracle's challenge, also. What can we do? What 
can we do to develop better reciprocity between different 
national or continental testing organizations so that we can 
decrease the costs of conformity testing and conformity 
standards?
    Mr. Noth. One of the areas we have worked on collectively 
is trying to ultimately get mutual recognition agreements in 
the--so that we can test it once and have that test accepted 
everywhere.
    Mr. Wu. What has held that up?
    Mr. Noth. Again, special interests. Ultimately, on a global 
basis, you are talking about jobs in other markets, and because 
much of the innovation and the products are coming from the 
developed world, whether they be U.S. or Europe, the developing 
world is much more interested, as I tried to indicate in my 
testimony, not only in making sure that their consumers are 
protected, because they are not sure they trust us, but also 
because they want to ultimately learn from the technology we 
are delivering and then advance their own industries and their 
own abilities. Our industry, we are the largest manufacturer of 
farm equipment, agricultural equipment in the world, full line 
farm equipment in the world. But in every local market, we face 
local competition, who makes the same products, and they are 
all very interested in knowing exactly how we are doing it. And 
so there is always a concern, whether it be China or other 
markets, that are--that much of the testing that is being done 
is really a reverse engineering activity, and very often, they 
want to come to our facilities to do the testing rather than 
have us ship the product to them to test so that they can not 
only test the--see the product but also see how we produce it.
    Mr. Wu. Thank you very much. As always, the answers raise 
even more questions.
    Thank you very much, Mr. Chairman.
    Chairman Ehlers. Thank you, Mr. Wu.
    Ms. Biggert.
    Ms. Biggert. Thank you, Mr. Chairman.
    Dr. Semerjian and probably Mr. Karmol again, when we--what 
recourse do U.S. companies have if there is--they think that 
there is an SDO who is not adhering to the ANSI-accredited 
process and they have no intention of--and we just talked a 
little bit--this is kind of the beta versus VHS, that they have 
no intention of submitting it as a national--American national 
standard but really going right to the international standard 
and bypassing the U.S. Is there any appeal process? What 
happens if companies--and that would be, you know, to be out in 
front, but then they go to the international and not to the 
American?
    Mr. Karmol. I am not exactly sure I understand your 
question. Are you suggesting that a company has an issue with a 
standard that was developed by an accredited standards 
developer or----
    Ms. Biggert. Yes.
    Mr. Karmol.--not?
    Ms. Biggert. Yes.
    Mr. Karmol. If the standard was developed by an accredited 
standards developer and submitted as an American national 
standard----
    Ms. Biggert. Well, no, I am saying that they bypass that 
process and go and submit it as an international standard.
    Mr. Karmol. Well, in order to submit it as an international 
standard, they would have to, essentially, go through ANSI, 
which holds the seat in ISO.
    Ms. Biggert. Yes.
    Mr. Karmol. So----
    Ms. Biggert. But they don't have to submit it as an 
American standard, do they?
    Mr. Karmol. Not necessarily, no.
    Ms. Biggert. So they go directly to an international 
standard, what--and the U.S. company objects----
    Mr. Karmol. Well, the process----
    Ms. Biggert.--what recourse would they have?
    Mr. Karmol. The process for submitting at the international 
level, the technical advisory group, has the same requirements 
as--operates under the same essential requirements as we 
require of our accredited standards developers. So you have the 
same due process requirements imposed on that technical 
advisory group as you do on all of the accredited groups.
    Ms. Biggert. Maybe Mr. Noth. You seem to----
    Mr. Noth. Maybe I should comment, Ms. Biggert.
    The--that is exactly what our industry is doing, as I tried 
to put into my testimony. We are working with--we are taking 
our proposals as well as reacting to proposals from other 
sources and working our whole standards issues at the ISO 
level, because that seems to make the most sense for our 
industry. And all of our players anymore are more and more 
global in their scope.
    There is--most of the standards in the U.S. at this point 
in time are voluntary, so if an American company suggests that 
they don't like to use an ISO standard or follow all of its 
tenets exactly, they have complete freedom to do that, as long 
as they meet the requirements of product liability or market 
acceptance or what have you, and they can--if they want to 
petition SAE or ASAE or any other SDO to put up a competing 
standard, they certainly can do that, and that occasionally 
happens. But for the most part, because everybody is interested 
in being able to produce at the lowest possible cost and 
distribute their goods on the broadest possible market, working 
with an international standard and reducing the cost and the 
number of venues you have to send subject matter experts to 
makes a lot of sense. So really, it is--that is the way that 
many industry sectors, like the off-highway industry, is 
pursuing the--pursuing global standards.
    Ms. Biggert. Would a company have any recourse? Is there 
any appeal process?
    Mr. Noth. Yes. Yeah. There is an ANSI appeals process. 
Anybody who wanted to complain, would file----
    Ms. Biggert. What about international?
    Mr. Noth. Well, and there is a process in the national 
environment, but----
    Ms. Biggert. International.
    Mr. Noth. In the international environment, but there is 
also an--there is an appeals process there as well.
    Ms. Biggert. Do you think that this would at all undermine 
the voluntary consensus standards? I mean, it is voluntary. You 
don't see any problem with going directly and not having the--
--
    Mr. Noth. If the voluntary process worked worldwide, we 
wouldn't really have a big problem, because it would be fine 
and the processes are great. Where we are getting into 
problems, and what we have tried to put into our testimony, is 
that many of the developing world and other countries around 
the world are blurring the line between what is voluntary and 
what is regulatory by creating mandatory requirements to comply 
with voluntary standards before you can sell in their markets, 
and as a result of that, the process gains more political 
importance than it did maybe a decade ago or longer.
    Ms. Biggert. Dr. Semerjian, do you have any--at NIST, are 
you concerned about how ANSI is being used, then, for going 
directly to the international? I guess not.
    Dr. Semerjian. No, I think they have represented us well. 
We are not a regulatory agency. This is--as was said again and 
again, we do have a voluntary system. Companies are not 
required to adopt any given standard. They can--just like other 
countries are doing, they can adopt their own standards. They 
can adopt some other country's standard. The question is, which 
standards serve their purposes best? But we provide--we 
certainly contribute to the robustness and the technical 
strength of the standards that are developed by ANSI-member 
SDOs, because many of our--we have some--more than 400 NIST 
staff who serve as technical experts on many, many committees.
    Ms. Biggert. Would there be any reason to want to have the 
SDOs certified that they are in compliance with the WTO 
technical barriers?
    Dr. Semerjian. I think the system that Mr. Karmol 
articulated, you know, is very well defined, and they have very 
specific measures. If those requirements aren't met, I see no 
reason why there would be an issue.
    Ms. Biggert. Thank you.
    Thank you, Mr. Chairman.
    Chairman Ehlers. The gentlewoman's time has expired.
    It is about time to wrap up, but I have a few quick ones, 
first.
    First of all, this is--this may sound tongue in cheek, and 
it probably is, but it is not offered in jest. Do you think 
that any country that has refused to adopt the metric standard 
has any right to expect the respect of other countries when 
they come to them to make suggestions about standards?
    Mr. Noth.
    Mr. Noth. The metric issue has been--is a challenging one, 
and of course, it has been politicized again. But you--it is--
most companies, at least, that are doing--dealing 
internationally are already adopted metric, where metric is 
available in the marketplace. The automotive industry, 
certainly in your state, is clearly a metric industry. The--our 
industry is metric where we can be metric, metric where the 
tools go on the nuts and the bolts and the washers. But you 
still can not buy metric pipe, for example. You can't buy 
metric steel--or metric barstock around the world because that 
is the way it has been--the supplier industry has developed, 
and so even metrics don't apply everywhere. But where we can be 
metric, we are.
    The only industry that I know that is clearly is the 
aerospace industry, which has--which grew up in the United 
States, was based on U.S. metrics and therefore has been 
accepted for most of the metric legislation and that, because 
they have--as everyone else has said, we are totally satisfied 
in the redevelopment of all of that technology is--would be a 
waste of time and resources.
    Mr. Wu. If the gentleman would yield for just one moment.
    Chairman Ehlers. Yes, I would be happy to yield.
    Mr. Wu. Mr. Chairman, I am just shocked and appalled that 
you would attack the roots of American culture this way. The 
day when a football field is no longer 100 yards long, the 
White Cliffs of Dover are going to fall into the ocean.
    I yield back.
    Chairman Ehlers. Thank you for yielding back.
    Now I think it is a major problem. I remember the argument 
when Thomas Jefferson tried to institute the metric system, and 
the argument was that it would cost far too much. It would be 
$7 million to convert. And today, of course, it is upwards of 
$170 billion or something like that.
    More serious questions.
    One of you mentioned that perhaps we need a ``standards 
czar,'' and I don't recall who mentioned that, but is that a 
general feeling? We should have a ``standards czar'' who sort 
of ties all of this together? Maybe you feel we have one 
already, but we have the trade issue, which somehow seems to be 
separate, even from the Department of Commerce, and we have the 
standards-setting process, which is different from most of the 
rest of the world. What do you think?
    Mr. Noth. Mr. Chairman, I was the one who mentioned it, so 
I will respond and let the others add, as they see fit.
    But we think alignment between government agencies and with 
the private sector, the various sectors, is critical to our 
long-term competitiveness. And so we think we need some 
accountability to get the alignment. The efforts that have--
that are going on, the Interagency Council, what have you, are 
a bottoms-up kind of effort. We need a little bit of top-down 
leadership in this area to make sure that some of that 
alignment happens and it gets the appropriate priority.
    We think the Department of Commerce probably is a good 
place for that ``standards czar.'' We probably think it ought 
to be a government individual who is charged with oversight and 
has some accountability in the area so that the alignment 
processes take place with a little bit more priority and 
urgency than we have seen in the past. And that is why we 
propose it. We think it ought to be a government, because the 
sectors are so diverse and what have you they are going to put 
their people forward. What you need is someone in the 
government who is going to understand what we are talking about 
in terms of standards and make sure that we are all basically 
on the same page when it comes to how we deal with standards on 
the international arena.
    Mr. Bhatia. I think----
    Chairman Ehlers. Mr. Bhatia.
    Mr. Bhatia. I think what is needed is empowerment of the 
people at policy level to interface effectively with the 
private sector and advance our agenda on the international 
stage. If we have federal agencies, which are dedicated to 
their own particular mission, their own empowered area of 
activity, if we have that coordination at the policy level, we 
will not be successful. It could be a ``czar.'' It could be a 
coordination at the standards executive level from each of the 
federal agencies that works effectively to resolve the 
horizontal issues but leaves individual sectoral issues to that 
particular agency.
    There are many ways to skin the cat. The reality is we do 
need more attention, more recognition of the impact that the 
standards have and the standards issues have on the economic 
well being of many, many industry sectors. That is lacking. We 
do have one standards executive, Heidi Hejukata from ITA. We 
have executives who are top-level policy people in various 
federal agencies who need to work together. There is an 
interagency standards policy coordinating committee. I don't 
know what the name is, but I believe you chair that. We need 
more coordination of that. We need more linkages of these 
organizations with the private sector. And I think we need to 
have them more focused on international issues and problems.
    Chairman Ehlers. Any other comments, Mr. Karmol?
    Mr. Karmol. Yes, Mr. Chairman.
    I certainly--I don't want to be at odds with any of my 
member organizations here, but I think I would want to 
recognize that a lot of good work is being done by NIST with 
the SIT programs, ITA. There is now great coordination within 
the Department of Commerce, headed by Heidi Hejukata. But we 
could use more coordination among the agencies, and that is the 
place where, you know, USTR and Commerce and the Department of 
State, if there could be some coordination. And I think that is 
where the Congress can step in. And I think if Congress would 
raise the profile of this whole standards community and the 
importance of standards, at some point, by appropriate 
recognition of the U.S. Standards Strategy and other ways, I 
think that is what really is needed to bring better 
coordination with the private sector and the government sector.
    Chairman Ehlers. Thank you for your comments.
    Did you have anything further that you wish to ask, Mr. Wu?
    Mr. Wu. Thank you very much, Mr. Chairman.
    There are a host of questions that I think I would like to 
ask in writing, but just to--one final question.
    The overall theme that I have heard is further support for 
voluntary private sector standards-setting organizations and 
perhaps further advocacy and--well, the question is this, that 
given that there are so many different standards-setting 
organizations, do we talk about the system in general? Do we 
get behind particular ones and not others? In essence, how do 
we set the standard for this standard advocacy?
    Dr. Deutsch. I don't see how you could select from among 
the many. And I think one thing about our standards-setting 
mechanisms in the United States is that it is constantly 
evolving, so it would be, I think, inappropriate to get behind 
a particular SDO or a particular consortia. But--so therefore, 
I think the answer has to be A, your first option, and that is 
that we really want to recognize the benefits of the system in 
general and become a strong advocate for that.
    Mr. Bhatia. I would like to suggest, once again, that we 
recognize that we have a sectoral approach to the 
standardization process. Different sectors would have different 
needs. Some would work within the consortia type framework and 
would bypass the accredited process or the very long and 
prolonged consensus-developing process and it would work fine 
for them. I think there will be other sectors, which are more 
heavily dependent on health and safety and environmental 
issues, which are much more heavily regulated, and government 
agencies and others have to participate and play a role. I 
think there we have to have a different approach. There are 
other opportunities to look at and enhance the overall quality 
of the SDO activity.
    One fundamental suggestion that I can make is we encourage 
all of the players to adhere to nationally-recognized, 
internationally-honored WTO principles of standards development 
and stick with that, whether it is a credited process or not. 
If we do the right things, if we bring the right people to the 
table, if we have an open and balanced process, if we give an 
opportunity for people to comment and react honestly to those 
comments and those suggestions, I think we will have a very 
robust and well-connected process.
    Mr. Wu. I want to thank all of the witnesses.
    Mr. Chairman, thank you and all of the Committee staff for 
a very, very interesting hearing.
    Chairman Ehlers. I would certainly echo that. We couldn't 
have had a better Committee--or I am sorry, a better panel of 
witnesses. And we really appreciate your contributions.
    Yes, I see two--Dr. Semerjian, you----
    Dr. Semerjian. If I may, Mr. Chairman.
    I would certainly like to finish this with some positive 
comments. Things--there are some things that are working well. 
Mr. Wu asked earlier, you know, how can we accomplish mutual 
recognition of conformance testing, et cetera. There is room, 
obviously, for improvement there, but one area where we have 
made significant progress over the last 6 years, I guess, is we 
have signed--some 60-some-odd countries have signed an 
International Bureau of Weights and Measures mutual recognition 
arrangement where we recognize each other's measurement 
standards, which are, obviously, the foundation of the 
conformance testing and the other standards activities.
    So at least in those--in that area, we have come full 
circle, and it is a very open and transparent process where we 
compare our capabilities with each other, and the results of 
these are shown on the--you know, included on the websites of 
all of the laboratories, so you can basically go in and see the 
capabilities vis-a-vis each other of the laboratory--National 
Laboratories, such as PTB in Germany versus NIST or versus 
Japan or in China. So this is one area where mutual recognition 
of measurement standards have been accomplished in a very 
quantitative way.
    And I think that is a significant step forward in this 
general area of measurements and normality of standards.
    Thank you.
    Chairman Ehlers. Thank you.
    Mr. Noth, did you want the last word?
    Mr. Noth. I don't know if I want the last word. I just 
wanted to--and I don't know that I could speak for the whole 
panel, but I, for one, certainly would be willing to entertain 
any written questions or anything else that Mr. Wu or any of 
the other panel members would like to submit before the process 
is over. I think this is an excellent hearing, and I would--and 
we--I think I can speak for the panel when we say we all 
appreciate the fact that you called it and we had the 
opportunity to highlight these issues. And anything further we 
can do to help you understand and focus on this activity, I 
think we are willing to participate.
    Chairman Ehlers. I appreciate that, and without objection, 
the record will remain open for members' statements and 
members' written questions and your written responses. So 
without objection, so ordered.
    I want to express, again, my appreciation. We wandered a 
bit away from what we were really after and that is the use of 
standards as trade barriers, but that is our overwhelming 
interest here, and we will certainly continue to pursue that on 
the Committee. And the advice and information you have given us 
today is extremely valuable.
    I will continue to argue for the metric system, even though 
I am outnumbered, I think, 433 to two, but I would also comment 
that if football fields were 100 meters long, probably football 
could become an Olympic sport, and maybe that would be enough 
of an inducement.
    I----
    Mr. Wu. Mr. Chairman, we have a term for 100-meter long 
football field, and that is ``Canadian football.''
    Chairman Ehlers. Thank you.
    But the other fact that I have mentioned, the aerospace 
industry, I am not so sure it operated that well. We have lost 
$150 million satellite because they used the--didn't use the 
metric system. So I will continue my battle on that, but--
without conceding defeat but without anticipating a quick 
victory.
    Thank you, again, very much for your expertise and the help 
you have given us. It has been wonderful. We appreciate it.
    And with that, the hearing is adjourned.
    [Whereupon, at 4:05 p.m., the Subcommittee was adjourned.]

                              Appendix 1:

                              ----------                              


                   Answers to Post-Hearing Questions


Responses by Hratch G. Semerjian, Acting Director, National Institute 
        of Standards and Technology

Questions submitted by the House Science Committee Majority

Q1.  Are foreign governments using standards in a way that is 
inhibiting innovation, competition, respect for intellectual property, 
and free trade in products where the U.S. is competitive, and if so, 
how?

A1. The globalization of commercial activity is increasing the 
potential scope of the effects of the manner in which governments 
utilize standards in technical regulations to regulate products for 
their safety, health and environmental effects, and also the effects of 
divergent standards systems. The U.S. rule-making process is 
characterized by transparency in the making of technical assessments, 
factual findings, and normative policy choices, and transparent and 
open opportunities for public participation to ensure effective 
monitoring, critiquing and reviewing of rule-making. Competition and 
respect for intellectual property are inherent in both the U.S. 
regulatory and commercial arenas.
    This is not always the case in other countries, where government 
structures and economies are more centralized and the scope of 
government authority is much broader than in the United States. In 
countries where the government retains responsibility for directing the 
standards development process, participation in standards development 
activities may be restricted to domestic interests. Laws on competition 
and protection of intellectual property, if enacted, may not be 
enforced effectively.

Q2.  Are foreign governments using standards policy as a mechanism to 
protect their domestic industries at the expense of external 
competition, including competition from U.S. companies?

A2. As noted above, some foreign governments restrict participation in 
standards development activities to domestic interests. And in some 
cases, government, rather than industry and market needs, drives the 
standards development process. The result may be at the expense of 
external competition. The WTO Agreement on Technical Barriers to Trade 
was created to discipline the development and use of standards, 
technical regulations and associated conformity assessment procedures 
so as to prevent their use as trade protectionist tools. Among other 
things, the Agreement requires such documents to be developed through 
transparent procedures and prohibits the creation of unnecessary 
obstacles to trade.

Q3.  If the answer to any of these questions is yes, what, if anything, 
should the U.S. Government be doing to respond?

A3. The U.S. Government should continue to place a high priority on 
ensuring that our trading partners live up to their WTO commitments, 
including those under the Technical Barriers to Trade Agreement. The 
U.S. Government is actively pursuing specific trade complaints through 
bilateral representations and, as appropriate, seeking third country 
support by raising at meetings of the WTO TBT Committee. We are also 
working in partnership with U.S. industry and the U.S. standards 
community to promote the advantages of market-driven, globally relevant 
standards, and the merits of openness and transparency in standards 
development.
    Likewise, strong intellectual property laws and effective 
enforcement of those laws is integral to stimulate and protect the 
creativity and innovation that is the foundation of many U.S., as well 
as foreign, industries. The USG will continue to work with our foreign 
trading partners to ensure they implement and enforce their 
intellectual property laws and will oppose the development of any 
standard that undermines the intellectual property rights of U.S. 
innovators.

Questions submitted by the House Science Committee Minority

Q1.  The U.S. Standards Strategy lays out a series of ambitious 
recommendations. Aside from Congress endorsing the Strategy, will there 
be a follow-up document laying out how these recommendations should be 
implemented? What resources will be required to implement the Strategy 
and what does the Federal Government need to do?

A1. Once the Strategy is finalized, later this year, all interested 
parties--government agencies, industry, standards developers and 
others--will be requested to identify appropriate implementation 
actions that will address the tactical initiatives in the Strategy. 
ANSI, who facilitated the development of the draft, will serve as the 
mechanism to coordinate, integrate and report progress on the Strategy 
at regular intervals. The Interagency Committee on Standards Policy, 
composed of federal agency Standards Executives and chaired by NIST, 
has received periodic briefings on the status of the Strategy and will 
consider action on the Strategy document once it is approved, as will 
the Trade Policy Staff Committee (Subcommittee on Standards and 
Technical Barriers to Trade), chaired by USTR.
    Implementation of the Strategy should help the U.S. Government to 
address many of its high-priority concerns by working in concert with 
the private sector. The Strategy calls on government agencies to seek 
early collaboration with industry and standards developers to identify 
standards needed to meet emerging national needs, to increase 
participation in the development of voluntary consensus standards, to 
continue to foster and support the unique character and strengths of 
the public-private partnership in standards development as it pursues 
its international agenda, and to work with counterparts in other 
countries to encourage the consideration of all relevant standards in 
support of regulations.
    Implementation of most elements of the Strategy will not 
necessarily require additional resources from federal agencies, but may 
require thoughtful alignment of existing programs with both the 
strategic goals and tactical objectives outlined in the Strategy. There 
may be resource implications for federal agencies associated with 
increasing participation in the development of voluntary consensus 
standards, however. Federal agencies have noted that maintaining their 
current levels of participation in standards development activities is 
becoming increasingly difficult because of competing agency priorities.

Q2.  What do you think are the three most important things the Federal 
Government needs to do in the standards and trade arena? What role do 
you think NIST should play within the Federal Government and should 
NIST be doing anything differently?

A2. The Federal Government needs to continue to place a high priority 
on ensuring that our trading partners live up to their WTO commitments 
under the Technical Barriers to Trade Agreement. Where relevant, 
education of foreign governments on these commitments and how to carry 
them out effectively should be a component of this effort. The 
government also needs to continue to engage U.S. industry and the U.S. 
standards community in a partnership to promote the advantages of 
market-driven, globally relevant standards.
    NIST is tasked by Congress with promoting the efficiency of the 
U.S. standards system, by coordinating federal agency use of non-
government standards and participation in the development of relevant 
standards, and through promoting coordination between the public and 
private sectors in both the standards and conformity assessment arenas. 
Under the Trade Agreements Act, NIST is designated as the U.S. Inquiry 
Point for the WTO Agreement on Technical Barriers to Trade, and as such 
is responsible both for notifying proposed U.S. technical regulations 
that may have an impact on trade and for disseminating notifications to 
U.S. Government agencies and the private sector of proposed foreign 
technical regulations and conformity assessment requirements. It is 
also responsible for responding to requests for information on U.S. 
standards and technical regulations.
    NIST technical programs support global awareness of U.S. standards. 
NIST researchers participate in standards development activities of 90 
standards developing organizations; activities that help ensure the 
transfer of NIST measurements, standards and technology in areas 
ranging from information technology to telecommunications to health 
care, and so on. NIST programs take advantage of synergies with related 
Department of Commerce trade-related programs and with the private 
sector, and are critical to U.S. manufacturers' access to export 
markets. These programs include our Standards in Trade Workshop 
program, maintaining good working relationships with foreign standards 
officials, leadership in key standards development activities that 
impact trade, and notifying U.S. exporters of proposed technical 
regulations and standards in foreign markets.
    NIST should expand its outreach to standards developers and 
industry to enhance our ability to define high priority technology 
issues where NIST-sponsored workshops, participation in developing 
documentary standards, and development of measurement technologies can 
facilitate the development and deployment of innovative technology. In 
this context, NIST should develop specific metrics to measure the 
impact of NIST programs in these areas. In the area of knowledge 
dissemination, NIST should expand web-based access to standards 
information, both for federal agency use and to support U.S. exporters. 
NIST should also expand its outreach to promote awareness of U.S. 
stakeholders' opportunities pursuant to the TBT Agreement to influence 
the development of other countries' standards and regulations.

Q2a.  We are facing an increasingly global marketplace, how do you see 
U.S.-based standards organizations evolving over the next five to ten 
years?

A2a. U.S.-based standards organizations take a variety of different 
forms--trade associations, professional societies, consortia, and so 
on. Some serve very small market niches, while others serve large 
economic sectors or reach across sectors in their technical work. Many 
of the standards produced by U.S.-based organizations are used 
globally. These organizations are likely to evolve toward increasingly 
global membership, allocating a larger percentage of funds to 
translating their documents into other languages, and working in 
partnership where feasible with national standards bodies in other 
countries, as well as with associations of national bodies such as ISO 
and IEC. This may take the form of partnership arrangements, joint 
adoption of standards, and/or sharing of workloads.

Q3.  Clearly, the commitment to technical assistance by the EU is 
unmatched by the U.S. in its coordination and magnitude. Is it fair to 
say that the EU and European industries believe that they can create a 
competitive advantage in world markets by strongly influencing the 
content of international standards? Will the mass marketing by the EU 
of selected standards create a preference for European products rather 
than U.S. products? If so, what should the U.S. be doing and why have 
we waited so long to take any action?

A3. European Commission policy gives preference to international 
standards, specifically ISO and IEC standards, and regional European 
standards, in fulfilling regional regulatory requirements. Some 
European Union (EU) regional standards are developed specifically to 
meet European regulatory requirements. It is these standards, and 
accompanying European regulations, that are not only used in the 
growing EU market, but are also being promoted for use in emerging 
economies, which comprise some of the major U.S. (and EU) export 
markets. In addition, a number of countries are adopting EU standards 
and regulations in anticipation of joining the EU and/or to ensure 
their domestic exporting companies comply with the EU requirements.
    The U.S. Government, working with our private sector, should 
continue to promote U.S. interests in our most important markets. Our 
message needs to emphasize the U.S. principles of effective 
standardization, which underpin the U.S. system and which lead to 
standards development driven by the marketplace, with sound technical 
content, allowing for multiple technologies. The fact that U.S. 
Government agencies rely to a great extent on private sector standards 
in their own regulatory and procurement activities, and the 
transparency and safeguards against trade protectionism or other 
bureaucratic abuse, should be a part of our message to foreign 
governments as well. The importance of delivering a positive and 
persuasive message is especially critical in key emerging markets where 
infrastructure is lacking.
    The Commerce Department launched its Standards Initiative in 2003 
to facilitate more effective Federal Government work to effectively 
promote U.S. standards interests and to eliminate standards-related 
market barriers that undermine U.S. exports and threaten the 
international competitiveness of U.S. industry. A Departmental report--
``Standards & Competitiveness: Coordinating for Results,'' May 2004--
presents a broad set of recommendations, some of which address outreach 
and promotion. Priority action has been taken to date on more than two-
thirds of the report's recommendations.
    We are working now with our partner agencies on the Trade Promotion 
Coordinating Committee to build on these recommendations and craft a 
trade promotion strategy for the coming year recognizing the importance 
of standards to the export competitiveness of American companies. Our 
strategy endeavors to develop an ambitious partnership with U.S. 
manufacturers and service providers, and the U.S. standards community, 
to better promote U.S. standards interests in our most important 
markets. This includes not only emerging, fast-growing markets such as 
China, but also the EU itself. The USG is working with the EU through a 
variety of cooperative mechanisms intended to promote better quality 
regulation, minimize regulatory divergences and facilitate 
transatlantic trade.

Q4.  Do China's laws and regulations concerning the recognition and use 
of ``international standards'' comply with their commitments under the 
WTO? If not, is this discrepancy a problem for U.S. industry and has 
the U.S. Government taken any action to respond to industry concerns?

A4. China, as a Member of the WTO, has passed legislation to implement 
its WTO commitments, including those of the WTO Agreement on Technical 
Barriers to Trade. The Department of Commerce is unaware of any 
national or comprehensive Chinese law or regulation limiting its 
recognition and use of international standards. The Department of 
Commerce's International Trade Administration operates a monitoring and 
agreement compliance program, which actively responds to the concerns 
of U.S. industry and helps ensure that U.S. exporters receive the full 
benefits of U.S. trade agreements.

Q5.  The National Technology Transfer Act promotes the use of private 
standards by U.S. Government agencies. How successfully has this Act 
been implemented and what improvement could be made to the Act?

A5. NIST believes that implementation of the Act has very successful. 
The data reported by federal agencies from FY 1997 through FY 2004 
indicate that federal agencies continue to increase their use of 
private sector standards. A key measure of agency behavior in this area 
is the number of government-unique standards used in lieu of available 
private sector standards. This figure is quite small compared to the 
high frequency with which agencies use available private sector 
standards; in FY 2004 the number of government-unique standards 
reported in this category was about one-half-of-one-percent of the 
total private sector standards used.
    For many federal agencies, the NTTAA serves to reinforce practices 
for using private sector standards, managing and reporting standards 
activities as called for by pre-existing legislation and/or policy 
directives. The Departments of Defense and Energy, Environmental 
Protection Agency, Consumer Product Safety Commission, Food and Drug 
Administration and National Aeronautics and Space Administration are 
examples of agencies that have effectively developed such policies. 
However, for a number of agencies implementation of their NTTAA 
responsibilities has been difficult and slow, due to competing budget 
priorities.
    The Interagency Committee on Standards Policy, chaired by NIST, has 
become an effective vehicle for exchange of important information 
affecting standards use by federal agencies. The committee also serves 
as a primary point of contact for addressing private sector concerns 
about use of government-unique standards. NIST has enhanced its role as 
coordinator of standards use within the Federal Government in other 
ways as well. In 2005, NIST launched Standards.gov, which offers 
background materials, useful links, and search tools for locating 
information about government use of standards for regulatory and 
procurement purposes. A key component on the Standards.gov site is a 
searchable database of standards currently incorporated by reference 
into federal regulations.
    Agency opinions regarding the effectiveness of the Act, and 
therefore the need to make changes to it, are varied. Some government 
officials have found the Act to be a strong motivator for encouraging 
greater use of private sector standards and increased participation in 
standards development activities. On the other hand, some agencies have 
questioned whether the problems that made passage of the NTTAA 
necessary back in 1995 still exist today. The bottom line is that since 
the passage of the NTTAA, federal use of government-unique standards 
has dropped, while the number of private sector standards used by the 
government in both regulation and procurement has increased by more 
than 2600. These data reinforce the fact that non-government standards, 
both U.S.-developed and international standards, meet government needs 
in both regulation and procurement. Now more than ever, federal 
agencies look to private sector standards before initiating in-house 
standards, and they are working in concert with the private sector to 
develop standards appropriate for government use.

Q6.  Last year, the Commerce Secretary created a Standards Liaison 
office and issued a comprehensive report, Standards and 
Competitiveness: Coordinating for Results that includes 50 
recommendations for federal action. How much funding has been allocated 
to the Standards Liaison Office and to implementing the recommendations 
in the Secretary's report? A year later, how many and which of the 
recommendations have been implemented?

A6. The Standards Initiative launched by then-Secretary Don Evans in 
2003 created a position of Standards Liaison within the International 
Trade Administration. There is, however, no Standards Liaison Office 
and therefore, no specific allocation. As part of the Office of the 
Assistant Secretary for Manufacturing and Services, there are now three 
FTEs specifically dedicated to addressing standards concerns of the 
U.S. private sector, and numerous other staff throughout ITA (e.g., 
industry and country-specific specialists, as well as Commercial 
Service domestic and overseas staff) who focus in part on standards-
related issues and activities.
    Priority action has been taken to date on more than two-thirds of 
the 50 recommendations in the 2004 report. Progress continues to be 
made on all fronts identified in the report. Based on a comprehensive 
assessment of Department standards-related programs, substantial work 
has been done to improve coordination within the Department.
    An ITA standards liaison with industry was named more than a year 
ago to ensure that industry's priorities on standards are promoted 
through the Department's international policies and programs. Intensive 
training is being provided for Commercial Service officers and other 
ITA staff on standards-related issues.
    Department training and outreach programs, both those of NIST and 
ITA, have been enhanced where feasible and are targeted at key markets, 
such as China, where industry has identified standards-related issues. 
NIST, ITA and TA are collaborating on the 2005 U.S.-China Standards and 
Conformity Assessment Workshop scheduled for August 10-11, which will 
allow U.S. industry with export potential and interest in China to get 
to know the Chinese Standardization System and learn more about the 
Chinese system requirements for their market sector. Furthermore, the 
following NIST workshops have been delivered or are scheduled for FY05: 
(1) Standards in Trade (SIT) workshop for Israel on Roadway 
Infrastructure and Safety (April 2005), Enquiry Point Workshop for the 
Caribbean (June 2005), SIT Workshop on Standards and Conformity 
Assessment in the Oil and Gas Sector in India (August 2005). In 
addition, on July 1st, NIST launched a new, improved electronic 
notification system for U.S. exporters on proposed foreign regulations 
and standards.

Q7.  What are the duties of a Commercial Officer in a Standards 
position? For example, the Department recently announced posting a 
Commercial Officer to the new standards position in our Embassy in 
Beijing. What are the duties of the Officer and what does the 
Department hope that he will achieve? Also, what special skills and 
background are required to fill this technically-oriented post?

A7. In general, Foreign Commercial Service Officers (FCSO) assigned to 
Standards positions--currently three, in Sao Paulo, Mexico City and 
Brussels--provide technical support to their respective regions on 
standards-related issues that might affect U.S. Government agencies or 
U.S. companies. The three current Commercial Officers in Standards 
positions, and the officer to be posted to the American Embassy in 
Beijing this fall, provide assistance on standards-related issues to 
host government and private sector bodies that establish and implement 
policies, technical regulations or voluntary standards and conformity 
assessment practices that might affect market access for U.S. exports. 
These officers arrange and participate in technical assistance projects 
and workshops targeted at participants from the region in which they 
are stationed, either in-region or in the United States.
    The Commercial Officer to be posted to the Standards position at 
the U.S. Embassy in Beijing is a career FCSO and was selected through a 
rigorous recruiting and panel process by the Department's Commercial 
Service. The Officer meets the language and technical expertise 
requirements established by the Commercial Service for this position. 
Prior to posting in Beijing, the Officer will undergo intensive 
training, both at NIST and through the Commercial Service. As the 
Ambassador to China and the Secretary of Commerce have both recognized, 
there is a clear need for a dedicated STANDARDS position in China, to 
facilitate communication and regular interaction with Chinese officials 
on standards issues.

Q8.  Recognizing that access to global markets increasingly depends on 
standards being set by other countries and international organizations, 
what is the policy of the U.S. towards implementation and enforcement 
of the WTO's Technical Barriers to Trade agreement as it relates to the 
definition, recognition and use of ``international standards''?

          Is the U.S. Government aware of any country whose 
        laws or policies fail to comply with the Technical Barriers to 
        Trade agreement obligations to recognize and use international 
        standards to meet the requirements of the agreement? If yes, 
        what action does the U.S. Government take to ensure compliance?

          China's policy is that ``International Standards are 
        the standards issued by the International Standards 
        Organization (ISO), the International Telecommunications Union 
        (ITY) and other international organizations recognized and 
        publicized by the ISO.'' Is this regulation compliant with the 
        technical Barriers to Trade Agreement and if not what changes 
        will China be obligated to implement to achieve compliance?

A8. The WTO Agreement on Technical Barriers to Trade recognizes the 
right of Members to establish standards and technical regulations but 
establishes a set of rules and procedures aimed at preventing the 
development and application of such documents as unnecessary obstacles 
to trade. Among other things, the Agreement encourages Members to base 
their standards, technical regulations, and conformity assessment 
procedures on ``international standards,'' if relevant ones exist and 
they would be effective and appropriate for the particular objective at 
hand. The Agreement itself does not define ``international standards'' 
nor does it specify the use of standards from any specific 
international standards-developing body. However, the WTO Committee on 
Technical Barriers to Trade further refined the concept of 
``international standards'' in a Committee decision which emphasizes 
the need for international standards to be developed with ``open, 
impartial, and transparent procedures that afford an opportunity for 
consensus among all interested parties.'' The United States played an 
instrumental role in the development of, and fully supports, the 
Committee's Decision. The amplified criteria assist in evaluating 
whether a particular standard or technical regulation of a trading 
partner is an unnecessary barrier to trade.
    The Department of Commerce is unaware of any individual Member's 
law or national policy limiting the recognition and use of 
international standards. Likewise, the Department of Commerce is 
unaware of any national or comprehensive Chinese law or regulation 
limiting its recognition and use of international standards.

Q9.  Has the Administration endorsed the U.S. Standards Strategy? What 
level of resources and actions will be required by the Federal 
Government to implement the U.S. Standards Strategy?

A9. The U.S. Standards Strategy is still under development. We expect 
that a final document will be approved by the ANSI Board of Directors 
sometime this fall. The Strategy contains recommendations for action by 
government, ANSI, standards developers and industry. The Commerce 
Department will consider the Strategy's recommendations for action by 
government agencies, identify areas where Department standards-related 
objectives can be aligned with those of the U.S. Standards Strategy and 
promote similar actions by other government agencies.
    The Interagency Committee on Standards Policy, composed of federal 
agency Standards Executives and chaired by NIST, has received periodic 
briefings on the status of the Strategy and will consider action on the 
Strategy document once it is approved. We anticipate that individual 
agencies will endorse or otherwise indicate support for the Strategy on 
a case-by-case basis. It is unclear at this point what level of 
resources and actions will be required by the Federal Government to 
implement relevant elements of the Strategy. Since government interests 
are well represented on the U.S. Standards Strategy Committee, 
responsible for development of the U.S. Standards Strategy, they were 
able to provide ideas for strategies that will meet USG needs. 
Consequently, alignment and implementation should not be difficult.

Q10.  You stated that the Department will work to implement relevant 
elements of the U.S. Standards Strategy. What are the relevant elements 
of the Strategy and what level of resources will be required to 
implement these recommendations?

A10. The Department plans to leverage its relationships with other 
government agencies, with industry and standards developing 
organizations, and with academia, to implement key elements of the U.S. 
Standards Strategy. These include as a first principle the Strategy's 
promotion of broad access and inclusivity in the standards development 
process. This is a clear evidence of the strength of standardization in 
the United States. The strategy recognizes that many types of 
organizations develop standards, and that new modes of operation and 
new methodologies have changed the standards landscape in recent years. 
A dynamic standards infrastructure is needed to meet future demands--
both government and private sector. The Department supports this 
standards infrastructure both through Department staff participation in 
standards activities and through coordination among federal agencies in 
the use of non-government standards and participation in standards 
development. Another key element of the strategy is the encouragement 
of government at all levels to seek early collaboration with industry 
and standards developers to identify standards needed to meet emerging 
national priorities. We have had success already with this proactive 
approach in both the homeland security and nanotechnology standards 
arenas where NIST staff co-chair private sector standards panels under 
the sponsorship of the American National Standards Institute. The 
strategy also recognizes the clear link between standards and 
government trade policy and the need for both the government and 
private sector interests to give more attention to the impact of 
standards on market access. Department technical and policy programs 
support global recognition of standards that are fair and responsive to 
market and technology needs. We expect to be able to implement key 
elements of the Strategy through focused allocation of existing budget 
resources.

Q11.  NIST has proposed a FY06 initiative on standards in support of 
global trade to address specific needs of U.S. business. What are the 
specific needs of U.S. business, and what activities will NIST 
undertake under this initiative?

A11. In an increasingly globalized economy, the capacity to compete 
successfully depends on the ability of individual manufacturers to 
satisfy global as well as U.S. measurement and standards requirements. 
To respond to global challenges, a growing number of companies, both 
large and small, are organizing their operations on a multinational 
basis. This has led to reduced attention or dependence on nation-
centric measurement and standards infrastructures, and increased demand 
for a viable global infrastructure. NIST's role as the primary agency 
responsible for the health of the Nation's measurement system and its 
mandate to ensure that appropriate non-government standards are 
available to meet the needs of federal agencies and to coordinate 
between the public and private sectors, places the Institute in a 
unique position to address these international measurement and 
standards challenges.
    In order to promote international trade, at every step, U.S. 
manufacturers need to tie their processes and products to international 
standards of measurement that are provided by NIST. Standards and 
calibrations must be aligned with international standards to give U.S. 
manufacturers seamless access to foreign markets, developing foreign 
and international standards efforts must be monitored for potential 
impact on U.S. exports and the resulting information made easily 
accessible to U.S. manufacturers.
    NIST proposes a program for FY06 to coordinate with U.S. industry 
to meet its needs for leading-edge measurement capabilities for key 
technologies, and to develop new and more efficient ways to deliver the 
highly accurate measurements needed by U.S. industry. NIST will provide 
the technical leadership and coordination for key trade-related 
documentary standards activities in specific technology sectors such as 
wireless communications, manufacturing systems inter-operability and 
nanomanufacturing to ease access to foreign markets, and to ensure that 
U.S. interests are fairly represented. NIST also will work to align 
U.S. measuring instrument standards with international standards, to 
provide standards-related information and analysis to U.S. industry, 
and in-depth training on standards and measurements for regulatory 
officials in key foreign markets. These activities are key to enabling 
U.S. industry to overcome market access barriers and compete 
effectively in global markets.

Q12.  The Department is developing a strategy to do a better job of 
promoting U.S. standards interests in foreign countries and especially 
in China. When will this strategy be completed and what are the 
components?

A12. In May, the Trade Promotion Coordinating Committee launched an 
interagency standards-related promotion plan as part of its National 
Export Strategy. NIST and ITA are taking the lead in partnering with 
the private sector and in consulting with other U.S. Government 
agencies. The plan grew out of the Department's focus on markets with 
the most commercial potential. Standards area major market access issue 
in many of these markets.
    Some elements of the plan have already been implemented, (e.g., 
focusing of NIST's assistance and foreign outreach on target 
countries). A long-term goal is outreach to markets (a) whose standards 
systems are still in flux and (b) where EU marketing of selected 
standards may create a preference for European products. The target 
markets include Brazil, China, India, South Korea, and Russia. We want 
to engage these trading partners in a more positive working 
relationship and improve their understanding of the advantages of 
market-driven, globally relevant standards, which advances U.S. 
technology.
    In China, we are pursuing a series of cooperative ventures with the 
Chinese Government and U.S. industry. Through ITA's Market Development 
Cooperator Program, we have awarded partner-matched financial awards to 
support the establishment of three U.S. private-sector offices in China 
to work with the Chinese Government and industry. The Department of 
Commerce will hold its second comprehensive U.S.-China Standards and 
Conformity Assessment Workshop this summer with relevant Chinese 
Government partners. We are working with other agencies and U.S. 
industry to head off new Chinese mandatory standards that create 
unnecessary barriers to trade.
    In the other spotlight markets, we are at various stages of 
developing and implementing strategies for engagement. In India, the 
Commerce Department has proposed standards as an initial subject for 
re-energizing the U.S.-India Commercial Dialogue. In Korea, Embassy 
Seoul has found productive ways to engage the Korean Government, and 
ITA and NIST are exploring options for expanding public and private 
dialogue. In Brazil, we are exploring the possibility of activities 
focused on emerging technologies and sectors. In Russia, we are 
reaching out to U.S. industry in Russia to identify partners and target 
sectors of interest.

Q13.  NIST intends to partner with U.S. industry and standards 
developers to promote the U.S. approach to standards development. What 
will NIST do to meet this goal and what are you going to do differently 
from past activities?

A13. NIST, working with ITA and other parts of the Department, and 
other agencies, will actively engage U.S. industry and the U.S. 
standards community in a partnership to promote the advantages of 
market-driven, globally relevant standards that advance U.S. 
technology. At the heart of this outreach plan is the realization that 
the United States will not succeed in overcoming standards-related 
market barriers unless it does a better job than the competition in 
promoting standards that are fair and responsive to market and 
technology needs. The importance of developing and delivering a 
positive and persuasive message is especially critical in key emerging 
markets where standards regimes are still in the formative stage. It is 
important for our trading partners around the world to hear loud and 
clear how recognition of U.S. and other market-driven, globally 
relevant standards can help them improve their economic efficiency and 
competitiveness while promoting a higher quality of life.
    In collaboration with the American National Standards Institute, 
the Department is planning a high level summit meeting of standards 
developers, corporate representatives and key government participants 
in standards activities to develop a proactive plan of action, based on 
the principles of the U.S. Standards Strategy and the Department's 
Standards Initiative and Standards and Competitiveness Report. The goal 
is to identify and consider the many activities being undertaken by 
various government, corporate and standards groups, and develop options 
to better coordinate and leverage these actions; while also considering 
new actions to provide more and better partnering in this area. With 
respect to NIST's own outreach and education programs--our Standards in 
Trade Workshop program, dialogues with foreign standards officials and 
other outreach--we will expand our partnership with private sector 
stakeholders to facilitate greater reach and investigate other means of 
disseminating information on the U.S. approach to standards 
development. NIST has also begun referencing the National Export 
Strategy in its Federal Register announcements calling for Workshop 
applications.

Q14.  Today you announced that NIST will launch a comprehensive effort 
to roadmap American industry's measurement needs. How long will this 
take to complete, and does NIST currently have the funding to undertake 
this ambitious project? How much funding will be required?

A14. This comprehensive effort will ultimately involve all customers 
and stakeholders of the U.S. measurement system (USMS), which is the 
complex of all methods, instruments, entities, institutions, and 
standards involved in measurements of products and processes of 
significance to the economy, security, and quality of life of the 
Nation. In particular, the USMS is an essential component of the 
national innovation infrastructure, and a critical element of the 
strategic environment in which we all operate. NIST has established an 
aggressive timetable for completion of the first iteration of the 
measurement needs roadmap, which will comprise a comprehensive 
assessment of the most important current and future measurement needs 
of the U.S. economy; a plan delineating what USMS solution providers 
intend to do, both individually and working together, to address those 
needs; and identification of the most important gaps remaining, and the 
consequences of not addressing those gaps. We expect to publish the 
first USMS roadmap in late 2006 or early 2007. NIST and other 
interested parties will monitor and report periodically on progress in 
implementing the resultant plan; update the roadmap on an ongoing 
basis; and repeat the entire process approximately every four years. 
Given the breadth and complexity of the task at hand, NIST estimates 
that it will take three iterations--or ten years--to create a robust 
self-sustaining process that covers the entire economy, including both 
the private and public sectors. NIST is committing the resources 
necessary to complete the first iteration and to demonstrate the value 
of the overall roadmapping approach.

Q15.  Under OMB Circular A-119, NIST is responsible for collecting and 
reporting to Congress on the participation by federal agencies in 
Standards Development Organizations (SDOs). As a part of this 
requirement, do agencies report on the level of participation by their 
employees in standards development activities? What has been the trend 
in federal employee participation in SDO activities over the past five 
years?

A15. Yes, federal agencies do report on their employees' participation 
in private sector standards development activities. Over the past five 
years, participation of federal agency personnel in the activities of 
private sector standards developers (SDOs) has increased (from 2001 
through 2003) and then declined slightly. Agencies continue to face 
competing budget priorities as they try to maintain adequate levels of 
participation in SDO activities. Private sector standards developers 
continue to request greater government participation in a variety of 
development activities. U.S. Government participation is an excellent 
way of ensuring that federal needs are considered during the 
development of a standard and making sure that the resulting standard 
can be used by the government.

Q16.  The U.S. Government is a party to the WTO Agreement on Technical 
Barriers to Trade, which states that Members ``shall ensure that 
standards are not prepared, adopted or applied with a view to, or with 
the effect of, creating un-necessary obstacles to international 
trade.'' As a part of NIST's responsibilities under Circular A-119, 
does NIST ask federal employees that participate in standards 
development activities to report if the standards produced are in 
compliance with the WTO Agreement on Technical Barriers to Trade? If 
not, should NIST monitor these activities to ensure compliance?

A16. The OMB Circular contains no requirement for federal employees to 
report on the compliance of developed standards with the WTO Agreement 
on Technical Barriers to Trade (TBT). The Uruguay Round Agreements Act 
(Public Law 103-465) provided the basis for implementing the WTO TBT 
obligations in the United States. The Office of the U.S. Trade 
Representative has overall responsibility for domestic implementation 
and works in partnership with other agencies via the TPSC to monitor 
implementation and develop appropriate responses to issues identified. 
Individual agencies regularly consult with the U.S. Trade 
Representative's office and other relevant agencies through the trade 
policy coordinating process when they undertake regulatory actions that 
may have an impact on trade.

                   Answers to Post-Hearing Questions

Responses by Robert W. Noth, Manager, Engineering Standards, Deere and 
        Company

Questions submitted by the House Science Committee Majority

Q1.  Are foreign governments using standards in a way that is 
inhibiting innovation, competition, respect for intellectual property, 
and free trade in products where the U.S. is competitive, and if so, 
how?

A1. The answer is yes. Europe has a penchant for design prescriptive 
standards that tend to inhibit innovation and to the extent they are 
successful exporting their standards it remains a concern as it affects 
competitiveness and free trade in other markets. In regard to 
intellectual property, John Deere has had negative experience with 
trademark infringement emanating from several countries including 
China. Overall however, the off-highway equipment sector has not been 
impacted by standards disrespecting intellectual property ownership as 
other sectors like ICT but it is a real concern with potential future 
impacts.

Q2.  Are foreign governments using standards policy as a mechanism to 
protect their domestic industries at the expense of external 
competition, including competition from U.S. companies?

A2. The answer is clearly yes. In our industry sector, we can observe 
it in countries all over the world, including Europe, South America, 
the CIS countries, China, and even Mexico and Canada on occasion. It is 
most notable through selective enforcement, by which U.S. products are 
challenged but locally-produced goods are not, even when designs are 
identical.

Q3.  If the answer to any of these questions is yes, what, if anything, 
should the U.S. Government be doing to respond?

A3. The U.S. Government must be more aggressive in addressing these 
issues on behalf of U.S. manufacturers. The U.S. should insist that our 
trading partners who are WTO members live up to their commitments to 
the WTO principles, but in doing so the U.S. must also be prepared to 
demonstrate more visibly its commitment to them. This is why, in 
previous testimony, we commented on the need for better targeting of 
USAID and Trade Development Agency funding and programs, so that the 
U.S. can provide more effective technical support. Beyond that, our 
other recommendations include: new priority and visibility to the 
challenges, better alignment between government agencies and the 
private sector to ensure our international message is clear and 
unambiguous, continued and annually secure funding for the ongoing 
efforts of NIST, the new standards initiatives in the U.S. Department 
of Commerce and the endorsement of the U.S. Standards Strategy with 
ultimate support, including funding for the appropriate government-
related initiatives outlined there.

Questions submitted by Representative David Wu

Q1.  The U.S. Standards Strategy lays out a series of ambitious 
recommendations. Aside from Congress endorsing the Strategy, will there 
be a follow-up document laying out how these recommendations should be 
implemented? What resources will be required to implement the Strategy 
and what does the Federal Government need to do?

A1. Actually, the proposed Strategy encourages individual sectors to 
develop their own follow up documents. The work recently completed by 
the Aerospace Sector outlining their strategy provides an excellent 
example. John Deere is involved in the Off-Highway Sector's efforts to 
utilize a similar approach and in appropriate forums; we encourage 
other sectors to consider it as well. As was initiated with the current 
version of the strategy, ANSI will keep track of the sector specific 
strategies and tactical initiatives as they are reported and issue an 
annual status report. Most, if not all of the recommendations presented 
and discussed in the hearing are included in the proposed Strategy 
document. The effort required to implement will come primarily from the 
private sector but there are some important public sector elements. 
Some of the recommended initiatives in the public sector are new but 
most are extensions and expansions of efforts already underway that 
need to be made more visible and adequately funded. The Federal 
Government needs to ensure those outcomes.

Q2.  What do you think are the three most important things the Federal 
Government needs to do in the standards and trade arena? What role do 
you think NIST should play within the Federal Government and should 
NIST be doing anything differently?

A2. (1) Improved direct support for and increased government 
participation in the U.S. standards system. This includes restoring 
support for ANSI, as our National Standards Body in international 
forums and include funding for emerging standards initiatives driven by 
global public interest (such as Social Responsibility) that attract 
subsidized support internationally but without enough immediate impact 
to be fully supported by U.S. private sector funding; support for our 
outreach and promotion of the U.S. Standards System and US based 
standards; encouragement for more government personnel to participate 
in private sector standards development and support for education and 
training of foreign service/foreign commercial service officers in 
standards and standards issues.
    (2) Increased policy level coordination between U.S. Government 
departments and agencies engaged in standards activities so as to 
better align with private sector activities. The U.S. can maximize its 
power and influence by better coordination to avoid sending conflicting 
messages or signaling conflicting priorities.
    (3) Congressional endorsement of the U.S. Standards Strategy. The 
signal sent by this act would of itself, indicate better coordination 
between the public and private sector, reinforce the U.S. Standards 
System and motivate the resources required to effectively implement it.
    Regarding NIST, we believe they have a uniquely important place in 
the U.S. standards system. Dr. Semerjian itemized some of the agency's 
many roles in his written and oral testimony, from basic metrology as 
applied to the wide span of U.S. commerce and ranging to advanced 
Research and Development in important or emerging technologies like 
cryptography and nanotechnology. They are also the U.S. WTO inquiry 
point and conduct Standards in Trade (SIT) workshops. Both are 
important resources to our trade partners and U.S. stakeholders. These 
important services need to be maintained and allowed to grow to keep 
pace with demand.

Q3.  We are facing an increasingly global marketplace, how do you see 
U.S.-based standards organizations evolving over the next five to ten 
years?

A3. Market forces relative to globalization will continue to impact 
different industry sectors in different ways and on different timelines 
so even in five to ten years the impacts on U.S.-based standards 
organizations will be mixed. Most U.S.-based standards organizations 
evolved in support of a specific industry or technology sector and 
enjoyed a captive market for their standards as long as the products 
made to their standard specifications were acceptable in the markets 
the industry chose to serve; primarily but not exclusively U.S. or 
North American. As the companies that make up those industries seek to 
be competitive in new global markets and are faced with new demands 
from both customers and governments, the previously symbiotic 
relationship becomes at risk. The future of those standards 
organizations will be determined primarily by the decisions made by the 
constituent companies in the sector and in part by how the standards 
organizations choose to respond to those decisions. In some sectors the 
market for U.S. produced standards may dry up in favor of more 
internationally acceptable specifications established in other 
organizations as the company/industry seeks the best fit solution. 
Those organizations thus effected will be forced to consider a revised 
business model. Large organizations serving many sectors may have to 
support multiple processes to better serve their constituents; much 
like SAE has done to effectively serve the standards needs of their 
Aerospace, Automotive and Commercial Vehicle sectors. (See question 8 
below). Smaller, more narrowly focused organizations may have to 
consider merger, acquisition, partnership or loss of the standards line 
of business. To a large degree ``competing standards'' are an oxy-moron 
and over-capacity relative to the demands of the market eventually 
results in consolidation of suppliers in some form.

Q4.  Clearly, the commitment to technical assistance by the EU is 
unmatched by the U.S. in its coordination and magnitude. Is it fair to 
say that the EU and European industries believe that they can create a 
competitive advantage in world markets by strongly influencing the 
content of international standards? Will the mass marketing by the EU 
of selected standards create a preference for European products rather 
than U.S. products? If so, what should the U.S. be doing and why have 
we waited so long to take any action?

A4. Yes. In fact, Europe has published documents indicating their 
commitment to that very strategy. Our company already has experience 
with sales contracts in several countries where a Memorandum of 
Understanding (MOU) between Europe and that country resulted in a 
preference for European manufactured products where it did not exist 
before. We recently experienced a problem of this nature with Turkey 
for example. As stated in previous testimony, effective and timely 
response is dependent on new priority and visibility being given to the 
U.S. Government departments and agencies already working to meet the 
challenge. Better alignment between them and the private sector must 
also be assured so our international message is clear and unambiguous. 
This has to include secure funding for them and a retargeting of the 
funds allocated to USAID and the Trade Development Agency to better 
address these specific challenges.

Q5.  Do China's laws and regulations concerning the recognition and use 
of ``international standards'' comply with their commitments under the 
WTO? If not, is this discrepancy a problem for U.S. industry and has 
the U.S. Government taken any action to respond to industry concerns?

A5. China has made it clear on several occasions in public that they do 
not share the U.S. interpretation of the WTO language defining 
``international standards,'' and have taken positions against products 
that incorporate U.S.-based standards in their specifications that, 
under the U.S. interpretation, should be perfectly acceptable. This 
makes the Chinese position a problem for U.S. industry in many sectors. 
The U.S. Government has been quick to respond to these concerns and 
there are several private sector initiatives as well. While, the 
Chinese attitude, up to this point, remains unchanged, we need to 
continue to press the point through all appropriate channels of 
communication.

Q6.  The National Technology Transfer Act promotes the use of private 
standards by U.S. Government agencies. How successfully has this Act 
been implemented and what improvement could be made to the Act?

A6. The U.S. Government agencies have made a good faith effort in 
implementing the NTTAA, with a positive impact. In effect, it forges a 
partnership between the public and the private sector that benefits 
both sectors. We believe its shortcoming is that it allows exceptions 
based on the unilateral judgment of the agencies, without recourse. As 
suggested in previous testimony, establishing a policy level oversight 
committee to be made up of senior agency officers might provide an 
appropriate level of accountability and provide needed incentives for 
enhanced alignment and cooperation. Another alternative might be to 
elevate interagency standards concerns enough to create an incentive 
for agency executives to become more actively engaged with the existing 
Interagency Council on Standards. The objective is to speak more 
clearly and unambiguously and therefore more effectively in 
international discussions on standards utilized in trade.

Q7.  You mention that many World Trade Organization (WTO) countries and 
signatories to the Technical Barriers to Trade Agreement have not yet 
implemented its provisions. Which countries are the worst offenders and 
how does this hurt U.S. companies? How responsive has the U.S. 
Government been in addressing this issue and how do you think 
governmental actions could be improved?

A7. The worst offenders are listed annually in The National Trade 
Estimate, a report to Congress from the office of the U.S. Trade 
Representative. It lists specific trade issues and problems by country 
that are compiled from industry input. Impacts on U.S. companies 
include lost sales and increased costs due to meeting requirements not 
imposed upon local competitors. The numbers vary by country but add up 
to a substantial amount of lost trade. The sensitivity and 
responsiveness of the U.S. Government to these issues has been good and 
continues to improve. The recommendations in my earlier testimony are 
aimed at making that responsiveness even better.

Q8.  As your industry has become more globally focused, you depend more 
on the International Standards Organization (ISO) for standards 
development. How has this affected how your industry funds and 
interacts with traditional U.S.-based standards organizations such as 
the Society of Automotive Engineers (SAE) and the American Society of 
Agricultural Engineers (ASAE)? As industry becomes more globally 
focused, how do you think U.S.-based standards organization will need 
to evolve? What should the Federal Government do differently in the 
face of these changes?

A8. In the past, SAE and ASAE have relied upon a combination of three 
streams of revenue to fund their activities related to standards 
development. They primarily depend upon sales revenue from the 
documents and seek voluntary industry contributions in addition to 
cover their costs. Membership dues subsidize any shortfall from the 
other two. Their industry constituents are the primary source of all 
three streams. Over the last decade, as market forces have consolidated 
the Off Highway Equipment Industry reducing voluntary contributions and 
increased demand for a more internationally acceptable standards 
portfolio has driven document sales revenues to other organizations, 
these revenue streams no longer consistently cover costs and have put 
pressure on dues to provide adequate funding. Concurrently the 
surviving industry participants have realized that going forward we 
cannot continue to fund redundant committees as they currently exist; 
often at the industry, national, regional and international levels, 
with the potential for each to produce its own unique, proprietary or 
conflicting standards. (Reference the response to question 3.) However, 
to participate effectively in ISO, we still need services from SAE and 
ASAE in the form of US Technical Advisory Group (US TAG) 
administration, plus meeting and secretariat services. Therefore we've 
been working with both societies to change their financial model in 
relation to our industry, from one that was based on producing 
documents for sale to one of providing these services. Since the 
service expectations are easily quantifiable and the cost is 
predictable, the new model becomes more like a service contract where 
the participants are expected to pay their share of the cost to 
maintain the service. The model appeals to industry participants and 
the societies in that it simplifies the funding, makes it more 
predictable and manageable as an ongoing cost of doing business. The 
model is not a new one as it has been utilized in other sectors 
successfully for some time; however it does represent a change to our 
industry and for the societies involved.
    A point worth noting is that SAE also supports aerospace and 
automotive industry sector standardization needs, in addition to Off 
Highway equipment. Each of these sectors is pursuing an international 
standards strategy uniquely tailored to its products and market 
situation. To respond effectively to multiple constituent requirements, 
SAE reorganized as their historical approach no longer suited any of 
their constituent industries well. ASAE is in a similar situation but 
with some smaller industry sectors serving a business markets. This 
speaks to the broader question on how U.S.-based standards 
organizations will need to evolve and my earlier response to question 
3.
    The Federal Government's best response to this is to focus on 
maintaining a level playing field for U.S.-based products and services 
in the international trade arena. Specific actions to address this were 
included in my earlier testimony and reiterated in response to question 
4. Additional specificity is contained in the draft of the U.S. 
Standards Strategy.

Q9.  You believe there needs to be better communication between the 
government and private sector. You also recommend better alignment 
between the private sector and federal agencies. Could you give us some 
examples what needs to be done?

A9. The Department of Commerce Standards Initiative started under 
Secretary Evans, the more recent Manufacturing initiative as well as 
the ongoing activities within NIST and the ITA are excellent examples 
where focused dialogue between private sector stakeholders and 
government in specific sector oriented workshops has improved 
understanding and resulted in actionable agendas. We are pleased to see 
that most of the recommendations have been endorsed and are moving 
forward. These efforts deserve continued support from Congress in the 
form of appropriate recognition and continued funding. However, to 
ensure long-term success two things need to happen:

        1.  Continued dialogue is necessary to ensure private/public 
        sector alignment on priorities as conditions change and new 
        issues emerge. Such programs need to seen as on-going 
        processes, not a one time activities.

        2.  The information obtained from agency interaction with the 
        private sector needs to be shared more effectively across the 
        several agencies of government so a more common agenda can be 
        pursued when government to government discussions take place 
        relating to international trade issues. The main challenge 
        seems to be that many agencies do not see such coordination 
        activity as an element of their legal mandate. Congress needs 
        to more clearly provide incentives for such communication and 
        coordination.
    This is the rationale for why; in previous testimony we expressed a 
desire for more engagement from policy level executives either by 
creating a new policy level mechanism or by creating incentives for 
greater executive engagement in existing mechanisms.

Q10.  You hit on a key point of the U.S. Standards Strategy--
implementation. Aside from Congress endorsing the Strategy, what is 
required for the Strategy to be undertaken and executed efficiently?

A10. The U.S. Standards Strategy addresses the broadest cross-section 
of the U.S. economy because every sector utilizes standards in one form 
or another and activity, relative to standards and standardization, is 
going on every day. The objective of the Strategy is to channel that 
activity more productively.
    Due to the decentralized nature of the U.S. Standards System, 
implementation responsibility remains largely within the private 
sector. If the strategic initiatives identified are judged by private 
sector elements to improve competitiveness by addressing identified 
problems they will likely be resourced to a level commensurate with the 
perceived benefit. We anticipate, based on the response to the current 
version of the U.S. Strategy, the updated version, based on more input 
from an even larger cross-section of the U.S. standards community, will 
result in even better response in pursuing implementation.
    Government however, plays a unique and important role and what it 
does or does not do to support and implement the elements of the 
strategy relevant to their role in the system will have significant 
impact on the private sector. For example, as indicated in oral 
testimony, John Deere utilizes its resources to try to resolve problems 
experienced in commerce by direct interaction as a first step. We only 
attempt to enlist government support when our efforts prove 
insufficient. Some of the problems we have related in hearing testimony 
have reached that point. Likewise, many of the issues addressed in the 
strategy, especially related to international trade, are not things the 
private sector can resolve without government understanding of the 
sector specific issues and direct government to government interaction 
on their behalf. The caveat is in understanding sector specifics 
because what may be a solution in one sector may be problematic in 
another. If this is not well understood and that understanding 
reflected in the government to government dialogue, the intervention 
might solve the problem in one sector and wreak havoc in several 
others.
    Whether or not Congress chooses to publicly endorse the strategy, 
if the specific recommendations it contains, many of which were also 
proposed in testimony at the hearing, are not funded and implemented 
there will be negative consequences on the competitiveness of U.S.-
based industry and ultimately on the whole U.S. economy.

                   Answers to Post-Hearing Questions

Responses by Donald R. Deutsch, Vice President, Standards Strategy and 
        Architecture, Oracle Corporation

Questions submitted by the House Science Committee Majority

Q1.  Are foreign governments using standards in a way that is 
inhibiting innovation, competition, respect for intellectual property, 
and free trade in products where the U.S. is competitive, and if so, 
how?

A1. Yes, industry recognizes from first hand experience that standards 
are not only the domain of the technical and business communities. 
Policy-makers in the U.S. and abroad are increasingly interested in and 
actively influencing a range of standards and technical regulatory 
issues. Governmental interest and activity plays a critical role in 
today's global economy and influences the competitiveness of the ICT 
industry, including innovation, competition, respect for intellectual 
property, and market access.

Q2.  Are foreign governments using standards policy as a mechanism to 
protect their domestic industries at the expense of external 
competition, including competition from U.S. companies?

A2. Yes, it is our experience that some governments do use and promote 
national or regional standards as a mechanism to achieve their 
industrial policy objectives. Perhaps one of the best illustrations of 
this dynamic is the recent experience that our industry had when the 
Chinese Government proposed the mandatory adoption of a Chinese-
developed Wireless Local Area Network (WLAN) standard, best known by 
its acronym, ``WAPI.'' This example illustrates the concerns that many 
industrial sectors, particularly the U.S. high technology sector, are 
currently facing in China. The damaging precedent that could have been 
set with WAPI, in which a government--a signatory to the WTO 
agreement--mandates a technology and forces domestic production of that 
technology, would have had significant, negative implications for 
technological development and global economic growth. We believe this 
example highlights many challenges the industry is facing, not only in 
China, but also around the globe.

Q3.  If the answer to any of these questions is yes, what, if anything, 
should the U.S. Government be doing to respond?

A3. When asked what should be the role of the Federal Government in 
standardization, we are always very careful. We believe there is indeed 
a role, including in response to the actions of other governments. It 
is a limited and clearly defined role that is responsive to industry 
needs and performed in partnership with industry. It is an increasingly 
important role. Specifically, we look to the U.S. Government to perform 
two functions related to standardization--to promote the creation and 
use of voluntary, market-driven standards and to stimulate openness in 
trade and markets by helping to defend against the use of standards as 
barriers to innovation and market access.
    More specifically, we can point to three specific initiatives that 
can help the U.S. Government to play that role--two that exist to a 
degree and one that does not exist as yet.
    First, in 2002, ITI recommended that the Commerce Department create 
a high-level standards and technical regulatory policy function to work 
with industry to identify and address both immediate and more long-term 
commercial policy issues in countries and regions around the world. The 
Commerce Department has taken steps to implement this recommendation. 
We believe that it can take additional steps to strengthen the 
function, including with additional staff and resources, in order to 
ensure the most effective standards, technical regulatory, and market 
access activity across all its agencies.
    Second, in 2002 ITI also recommended that the Commerce Department 
strengthen the existing Standards Attache Program. In particular, we 
sought a program expansion to include attaches for China, the rest of 
Asia, and Geneva to supplement existing attaches in Brussels (to deal 
with European standards issues) and in Brazil. Because of the strategic 
utility of this program, we also recommended that the Commerce 
Department take necessary steps to ensure that it is both managed and 
located within the Department to retain an exclusive focus on standards 
and technical regulatory issues around the world. Moving forward, we 
would like to position the program for ongoing effectiveness, and we 
recommend that the Department support a formal assessment of the 
Attache Program's results, its training program, location within the 
department, and budgetary needs. ITI is committed to working with the 
Commerce Department to continue making progress on these 
recommendations.
    Finally, we believe there is another potential activity for the USG 
and the Commerce Department that we believe is critically important 
moving forward and one that should be given serious consideration. We 
think that the Commerce Department can work with industry to continue 
strengthening and examining the pilot U.S.-EUICT Standards Dialogue. 
Additionally, we see today even more clearly than in 2002 a critical 
opportunity to support industry's standardization policy and market 
access objectives around the world by working with industry to develop 
a standards and market access research and analysis program to better 
understand the key issues discussed at the hearing. There would be a 
real policy and commercial use for some analysis of key policy issues 
(e.g., defining what is the global economic impact of standards, 
developing a comparison of government support and promotion of 
standards, forecasting global standards participation trends, etc.). 
The Commerce Department has existing staff expertise that could be 
valuable in designing and implementing this research and analysis 
program.

Questions submitted by Representative David Wu

Q1.  The U.S. Standards Strategy lays out a series of ambitious 
recommendations. Aside from Congress endorsing the Strategy, will there 
be a follow-up document laying out how these recommendations should be 
implemented? What resources will be required to implement the Strategy 
and what does the Federal Government need to do?

A1. ITI is a member of ANSI as are several of its member companies. We 
have not yet had an opportunity to review, discuss and conclude on a 
position regarding the current public draft of the U.S. Standards 
Strategy. We will be including the U.S. Standards Strategy on the 
agenda of all of our relevant committees in the near future so that we 
can arrive at a consensus position regarding the document as well as on 
a possible congressional endorsement.

Q2.  What do you think are the three most important things the Federal 
Government needs to do in the standards and trade arena? What role do 
you think NIST should play within the Federal Government and should 
NIST be doing anything differently?

A2. When asked what should be the role of the Federal Government in 
standardization, we are always very careful. We believe there is indeed 
a role. It is a limited and clearly defined role that is responsive to 
industry needs and performed in partnership with industry. It is an 
increasingly important role. Specifically, we look to the U.S. 
Government to perform two functions related to standardization--to 
promote the creation and use of voluntary, market-driven standards and 
to stimulate openness in trade and markets by helping to defend against 
the use of standards as barriers to innovation and market access.
    A critically important way that the Federal Government can promote 
the creation and use of voluntary standards is to be actively and 
appropriately engaged in the standards development process. The Federal 
Government should be engaged as both a consumer of voluntary standards 
and as an important technical resource. This role is identified in the 
National Technology Transfer and Advancement Act and NIST keeps track 
of how the Federal Government is participating in the voluntary 
standards process.
    In the standards and trade arena, we can point to three specific 
initiatives that can help the U.S. Government to play a positive role--
two that exist to a degree and one that does not exist as yet.
    First, in 2002, ITI recommended that the Commerce Department create 
a high-level standards and technical regulatory policy function to work 
with industry to identify and address both immediate and more long-term 
commercial policy issues in countries and regions around the world. The 
Commerce Department has taken steps to implement this recommendation. 
We believe that it can take additional steps to strengthen the 
function, including with additional staff and resources, in order to 
ensure the most effective standards, technical regulatory, and market 
access activity across all its agencies.
    Second, in 2002 ITI also recommended that the Commerce Department 
strengthen the existing Standards Attache Program. In particular, we 
sought a program expansion to include attaches for China, the rest of 
Asia, and Geneva to supplement existing attaches in Brussels (to deal 
with European standards issues) and in Brazil. Because of the strategic 
utility of this program, we also recommended that the Commerce 
Department take necessary steps to ensure that it is both managed and 
located within the Department to retain an exclusive focus on standards 
and technical regulatory issues around the world. Moving forward, we 
would like to position the program for ongoing effectiveness, and we 
recommend that the Department support a formal assessment of the 
Attache Program's results, its training program, location within the 
department, and budgetary needs. ITI is committed to working with the 
Commerce Department to continue making progress on these 
recommendations.
    Finally, we believe there is another potential activity for the USG 
and the Commerce Department that we believe is critically important 
moving forward and one that should be given serious consideration. We 
think that the Commerce Department can work with industry to continue 
strengthening and examining the pilot U.S.-EUICT Standards Dialogue. 
Additionally, we see today even more clearly than in 2002 a critical 
opportunity to support industry's standardization policy and market 
access objectives around the world by working with industry to develop 
a standards and market access research and analysis program to better 
understand the key issues discussed at the hearing. There would be a 
real policy and commercial use for some analysis of key policy issues 
(e.g., defining what is the global economic impact of standards, 
developing a comparison of government support and promotion of 
standards, forecasting global standards participation trends, etc.). 
The Commerce Department has existing staff expertise that could be 
valuable in designing and implementing this research and analysis 
program.

Q3.  We are facing an increasingly global marketplace, how do you see 
U.S.-based standards organizations evolving over the next five to ten 
years?

A3. Our industry is a truly global one. For our industry, the focus is 
not on how domestic standards are developed ``in the U.S.;'' but rather 
on creating global technical standards that support the growth of the 
worldwide ICT market. Because our industry designs and builds single 
products for a global market, we actually develop international, 
globally relevant standards in different venues and organizations 
around the world--not simply American National standards in a U.S. 
standardization infrastructure. We need that flexibility, because the 
ICT sector depends on standards today more than ever. The rapid pace of 
change in our sector, with product cycles measured in months, not 
years, requires companies and their suppliers constantly to modify, 
improve, and re-develop their technologies, products, and services in 
order to satisfy worldwide consumer demands. Standards and their 
development process must stay relevant and keep pace with this fast 
changing, global marketplace. We expect this global focus on standards 
development to remain a reality for our sector into the future.

Q4.  Clearly, the commitment to technical assistance by the EU is 
unmatched by the U.S. in its coordination and magnitude. Is it fair to 
say that the EU and European industries believe that they can create a 
competitive advantage in world markets by strongly influencing the 
content of international standards? Will the mass marketing by the EU 
of selected standards create a preference for European products rather 
than U.S. products? If so, what should the U.S. be doing and why have 
we waited so long to take any action?

A4. Regardless of the strategies and industrial policies of other 
governments, our industry strongly believes in the value to the 
international marketplace of global, market-led, voluntary standards 
that support innovation and inter-operability. We encourage the U.S. to 
redouble advocacy efforts to promote this approach to standardization. 
The U.S. Government should directly engage with other governments about 
how internationally recognized, market-led technology and standards can 
grow economies and benefit all parties.
    From our various experiences with standards policy issues in 
markets around the world, we have learned that our industry needs to 
engage in an ongoing basis at the policy level directly with our 
government and other governments, particularly in emerging markets, 
about how technology and standards can help grow their economies and 
why it is in their interest to adopt and deploy internationally-
recognized, voluntary, market-driven standards. We need to redouble our 
already considerable efforts promoting processes that support such 
standards since they address user needs and promote innovation and 
inter-operability. We need to encourage market access so that 
consumers, industry, and economies around the world can benefit from 
innovative technological advancements.

Q5.  Do China's laws and regulations concerning the recognition and use 
of ``international standards'' comply with their commitments under the 
WTO? If not, is this discrepancy a problem for U.S. industry and has 
the U.S. Government taken any action to respond to industry concerns?

A5. The Chinese and U.S. ICT sectors are large, important, and growing 
parts of the global economy. China's approach to and use of standards 
is a complex set of issues. Our sector has worked very closely with the 
U.S. Government on a range of China standards and technical regulatory 
issues that can be integral parts of broader industrial policies and 
directly impact trade flows and market access.
    The WAPI example discussed at length at the hearing illustrates the 
concerns that many industrial sectors, particularly the U.S. high-
technology sector, are currently facing in China. The damaging 
precedent that could have been set with WAPI, in which a government--a 
signatory to the WTO agreement--mandates a technology and forces 
domestic production of that technology, would have had significant, 
negative implications for technological development and global economic 
growth.
    With this example, ITI worked closely with our government to make 
sure this issue was on the agenda of both the Administration and the 
Congress. After considerable dialogue culminating in the April 2004 
meeting of the Joint Commission on Commerce and Trade, the Chinese 
Government agreed to indefinitely suspend implementation of this 
mandatory standard, revise the standard based on comments from foreign 
and domestic firms, and participate in international standards bodies.

Q6.  The National Technology Transfer Act promotes the use of private 
standards by U.S. Government agencies. How successfully has this Act 
been implemented and what improvement could be made to the Act?

A6. We support the promotion and use of voluntary, market driven 
standards by the U.S. Government as described in the NTTAA. We 
encourage even greater participation, where appropriate and as a 
standards consumer and technical resource, in the standardization 
process by the U.S. Government.

Q7.  Dr. Deutsch, when the Chinese ``WAPI'' standard first became an 
issue for U.S. industry, how prompt was the U.S. Government in 
responding to industry's concerns? What could the government have done 
better?

A7. ITI worked closely with several U.S. Government agencies on this 
issue--which transpired relatively rapidly and which demanded 
significant private and public sector attention and action.
    The Chinese Government issued the compulsory ``WAPI'' security 
standards initially in May of 2003. After considerable dialogue over 
the course of not even one full year, at the April 2004 meeting of the 
Joint Commission on Commerce and Trade, the Chinese Government agreed 
to indefinitely suspend implementation of this mandatory standard, 
revise the standard based on comments from foreign and domestic firms, 
and participate in international standards bodies.
    We believe that the private and public efforts on this issue were 
both appropriately collaborative and effective.

Q8.  Dr. Deutsch, you recommend that the Commerce Department's 
Standards Attache program needs to be strengthened. What should be the 
duties of a Standards Attache and what sort of skill set are needed by 
the Attaches? How many of these Attaches do we need and where should 
they be located?

A8. ITI believes that the USG should strengthen the current Standards 
Attache program at the Department of Commerce by expanding the program 
to include attaches for China, the rest of Asia, and Geneva to 
supplement existing attaches in Brussels (to deal with European 
standards issues) and in Brazil. Because of the strategic utility of 
this program, we also recommend that the Commerce Department take 
necessary steps to ensure that it is both managed and located within 
the Department to retain an exclusive focus on standards and technical 
regulatory issues around the world. We believe that the Commerce 
Department should take necessary steps to make certain that the 
program's personnel selection, performance criteria, incentives, career 
path definition, and training all reinforce the goal of providing 
effective standards attaches for industry. Finally, ITI would like the 
USG to position this program for ongoing effectiveness, and so we also 
recommend that the Department support a formal assessment of the 
Attache program's results, its training program, location within the 
department, and budgetary needs.

                   Answers to Post-Hearing Questions

Responses by Joe S. Bhatia, Vice President and Chief Operating Officer, 
        Underwriters Laboratory

Questions submitted by the House Science Committee Majority

Q1.  Are foreign governments using standards in a way that is 
inhibiting innovation, competition, respect for intellectual property, 
and free trade in products where the U.S. is competitive, and if so, 
how?

A1. Underwriters Laboratories Inc. is a standards development and 
product testing and certification organization, and as such cannot 
speak to whether foreign governments' standards inhibit innovation in 
products where the U.S. is competitive. This information perhaps can be 
best supplied by industry. However, there are cases in which foreign 
governments' testing requirements duplicate testing already conducted 
under internationally recognized schemes. Having to duplicate the tests 
increases costs for manufacturers and thereby affects their 
competitiveness. China's in-country testing for electromagnetic 
compatibility (EMC) is one such example. (See page 8 of written 
testimony for details.)

Q2.  Are foreign governments using standards policy as a mechanism to 
protect their domestic industries at the expense of external 
competition, including competition from U.S. companies?

A2. Underwriters Laboratories Inc., due to the nature of its work, 
cannot corroborate the use of standards policy as a mechanism to 
protect domestic industries. However, the often top-down approach to 
standards development in many countries means that processes are 
sometimes not open and transparent, and not all interested stakeholder 
groups can participate. Resulting standards can thus sometimes have 
unintended or unanticipated consequences, which may affect the 
competitiveness of U.S. products.

Q3.  If the answer to any of these questions is yes, what, if anything, 
should the U.S. Government be doing to respond?

A3. The U.S. Government should aggressively negotiate market access for 
U.S. testing and certification providers in all free trade agreements 
(FTAs) and future rounds of the World Trade Organization (WTO). The 
ability to offer testing and certification services to local 
requirements means that companies like Underwriters Laboratories Inc. 
can bundle testing for customers and help reduce manufacturers' global 
compliance costs.
    The U.S. Government should better fund standards and certification 
education and outreach. For instance, all current and future U.S.-
negotiated FTAs should incorporate technical assistance (and 
corresponding funding) for standards and certification. The National 
Institute of Standards & Technology (NIST) Standards in Trade (SIT) 
workshops should be better funded to increase the number of workshops 
held annually.
    Consideration should be given to funding additional standards 
attache positions within the U.S. Department of Commerce (DOC) in 
select countries or regions, including Saudi Arabia and Korea. The 
standards attaches currently in place in Mexico and Brussels have 
proven pivotal in helping to identify potentially troublesome trends 
and in helping U.S. companies work through related regulatory issues.

Questions submitted by Representative David Wu

Q1.  The U.S. Standards Strategy lays out a series of ambitious 
recommendations. Aside from Congress endorsing the Strategy, will there 
be a follow-up document laying out how these recommendations should be 
implemented? What resources will be required to implement the Strategy 
and what does the Federal Government need to do?

A1. The proposed U.S. Standards Strategy (USSS) encourages individual 
sectors and organizations to develop their own specific implementation 
plans and tactics as well as their own strategic documents. This 
approach helps amplify and supplement specific elements of the USSS 
while at the same time respecting individual organizations' own needs. 
The work recently completed by the Aerospace Sector, outlining its 
strategy provides an excellent example. ANSI will help track the 
specific strategies and tactical initiatives as they are reported and 
issue an annual status report. Most, if not all of the recommendations 
presented and discussed in the hearing are included in the proposed 
strategy document.
    The resources required to implement the USSS must come from a 
combination of private and public constituencies. Some of the 
recommended initiatives are new but most are extensions and expansions 
of efforts already underway that need to be more robust and better 
funded.
    Consideration of a Congressional earmark of $2 million for ANSI 
implementation efforts and international standards outreach would be 
appropriate. In 2001, a grant of $2 million was requested through NIST. 
The result was a $500,000 grant for three years (2001-2003). The grant 
lapsed in 2004 in light of NIST budget constraints.

Q2.  What do you think are the three most important things the Federal 
Government needs to do in the standards and trade arena? What role do 
you think NIST should play within the Federal Government and should 
NIST be doing anything differently?

A2. The three most important things the U.S. Government should to in 
the standards and trade arena include:

        1.  Aggressively negotiating market access for U.S.-domiciled 
        testing and certification providers in free trade agreements 
        (FTAs) and in current and future rounds of the World Trade 
        Organization (WTO). The corollary to this is ensuring trade 
        partners' compliance with related obligations. (See written 
        testimony for additional details.)

        2.  Enhanced funding for the U.S. Department of Commerce (DOC) 
        (a) International Trade Administration Standards Liaison Office 
        (b) standards attaches and (c) NIST Standards in Trade (SIT) 
        workshops. (See written testimony for additional details.)

        3.  Technical assistance/capacity building components 
        (including funding) in FTAs, Trade & Investment Framework 
        Agreements (TIFAs), and other bilateral and regional trade 
        agreements.

    With respect to standards in trade, NIST plays an important role as 
the U.S. WTO enquiry point for Technical Barriers to Trade (TBT). It is 
a rich resource for U.S. companies seeking timely information regarding 
standards and regulatory developments.
    NIST also plays an important role in the commercialization of new 
technologies developed in the United States; this is through the 
development of related measurement standards. Fuel cells, 
nanotechnology and biometrics are areas in which NIST's measurement 
standards work needs to be sustained, and perhaps enhanced.

Q3.  We are facing an increasingly global marketplace, how do you see 
U.S.-based standards organizations evolving over the next five to ten 
years?

A3. Paths will vary for the evolution of U.S.-based standards 
organizations, in large part because trends and issues vary by sector. 
But in general, standards development processes increasingly adapt to 
reflect time-to-market sensitivities of technology-driven sectors; 
technology itself is being used to improve the standards development 
process.
    One thing that should be enhanced and not changed is acceptance 
internationally of standards developed by U.S.-domiciled standards 
development organizations (SDOs) in accordance with internationally 
accepted principles outlined in the World Trade Organization (WTO) 
Technical Barriers to Trade (TBT) Annex 4. The key tenants of standards 
development--openness, balance, consensus, and due process--similarly 
will not change.
    Underwriters Laboratories Inc. (UL)'s own approach to standards 
development has evolved in recent years. It has adopted a more 
aggressive policy toward standards harmonization within the IEC and 
ISO. U.S. manufacturers are realizing that they have an increasingly 
global marketplace for their innovative and creative products. UL's 
harmonization priorities rely largely on what industry perceives as 
priority areas for harmonization.
    When developing new standards or harmonizing UL's standards at the 
regional or international level, however, it is paramount that 
essential U.S. safety principles are protected and not compromised, 
even if this means developing National Differences, a practice that is 
not unique to the United States. UL considers the merit(s) of 
harmonizing existing standards, whether by acceptance of IEC and ISO 
requirements or by advocating a UL standard or its essential 
requirements as the basis of the harmonized standard. UL will also 
develop ``globally'' relevant standards in areas where standards do not 
exist.
    U.S. standards development organizations (SDOs) should also take 
the lead in submitting standards development proposals and requesting 
recognition of U.S. documents at the international level in such 
emerging national priority areas as homeland security and 
nanotechnology. Radio Frequency Identification (RFID) is another such 
area where the impact of standards on trade is potentially staggering.

Q4.  Clearly, the commitment to technical assistance by the EU is 
unmatched by the U.S. in its coordination and magnitude. Is it fair to 
say that the EU and European industries believe that they can create a 
competitive advantage in world markets by strongly influencing the 
content of international standards? Will the mass marketing by the EU 
of selected standards create a preference for European products rather 
than U.S. products? If so, what should the U.S. be doing and why have 
we waited so long to take any action?

A4. Yes, the European Union aggressively tries to influence the content 
of international standards, which can provide an advantage for related 
EU products in the region and globally. The promotion of EU standards, 
especially if codified in IEC and ISO standards for which U.S. 
standards are not harmonized, means that U.S. manufacturers must adapt 
products typically produced according to U.S. standards if they want to 
compete in markets whose conformance systems are based on EU (and EU-
based IEC and ISO) standards.
    The U.S. Government should incorporate technical assistance 
components--that specifically address standards, technical regulations, 
and conformity assessment systems--in all FTAs, TIFAs, and other 
bilateral and regional trade agreements with U.S. trade partners.

Q5.  Do China's laws and regulations concerning the recognition and use 
of ``international standards'' comply with their commitments under the 
WTO? If not, is this discrepancy a problem for U.S. industry and has 
the U.S. Government taken any action to respond to industry concerns?

A5. UL has not undertaken an evaluation of China's laws and regulations 
concerning standards and whether they comply with WTO obligations. UL 
understands, however, that China has publicly expressed a preference 
for IEC and ISO standards (in general, but not across all sectors) and 
that it does not share the U.S. interpretation of WTO language defining 
``international standards.''
    With respect to testing and certification, China is obligated under 
its WTO accession commitments to accredit or recognize testing and 
certification organizations not domiciled in China for the purpose of 
administering its CCC mark. To date, no timeline has been outlined to 
phase in these commitments, and existing PRC certification and 
accreditation regulations preclude non-Chinese entities from providing 
CCC mark testing and certification services. UL thus would like to see 
increased dialogue under both the WTO accession Transitional Review 
Mechanism and the Joint Commission on Commerce and Trade to develop a 
timeline for implementation of national treatment commitments 
referenced in Paragraphs 194 and 195 of China's Working Party Report.
    When new PRC regulations took effect in early 2004, the Office of 
the U.S. Trade Representative (USTR) and DOC both worked with UL to 
clarify their scope. In working bilateral meetings, it is UL's 
understanding that the issue has been raised, with no hard and fast 
commitments from the Chinese.

Q6.  The National Technology Transfer Act promotes the use of private 
standards by U.S. Government agencies. How successfully has this Act 
been implemented and what improvement could be made to the Act?

A6. The fundamental intent of the Act--to promote the use of voluntary 
consensus standards, wherever appropriate--is on mark and should not be 
altered. Implementation varies by agency, but it is clear from the 
practice of the Department of Defense (DOD) and the Consumer Product 
Safety Commission (CPSC) that the NTTAA has been effective in 
increasing U.S. Government reliance on voluntary consensus standards, 
whenever possible, for both procurement and regulatory purposes.
    With respect to improving implementation, NIST already is actively 
engaged with private sector stakeholders to evaluate options for 
enhancing implementation. One of the thoughts to emerge from that 
dialogue is improving the role of the Standards Executive within each 
federal agency. This includes adequate funding for their participation 
as subject matter experts in related private sector standards 
development processes, as well as addressing some of the organizational 
structure issues that can frustrate their responsibilities.

Q7.  We are having conformity assessment problems with the European 
Union, Mexico and China. Why is this a problem for U.S. industry? How 
effective has the Federal Government in solving these problems for U.S. 
industry? What should we be doing differently?

A7. The ``conformity assessment problems'' from UL's perspective relate 
to accreditation of testing and certification organizations not 
domiciled in the country in question. ``U.S. industry'' consists of the 
product manufacturers for which organizations like UL conduct testing 
and certification. If current practices in Europe, Mexico, and China 
(or other countries with local product certification schemes, for that 
matter) delay or preclude the participation of testing and 
certification organizations domiciled in other countries, then the 
``problem for U.S. industry'' is that they must use multiple testing 
and certification organizations to obtain the multiple certification 
marks needed to sell their products globally. Allowing local 
accreditation of U.S.-domiciled testing and certification organizations 
means that manufacturers can reduce the number of certification 
organizations used globally and that organizations like UL can bundle 
testing and help manufacturers reduce their overall global compliance 
costs.
    DOC and USTR have been very helpful to date in resolving issues in 
Mexico. UL continues to work with DOC and USTR on issues in Europe and 
China. As noted in responses to questions (2) and (5) above, UL would 
like to see the U.S. Government take a more aggressive negotiating 
stance on market access for testing and certification organizations 
within the services schedule of FTAs and future rounds of the WTO.

Q8.  You recommend that U.S. stakeholders should work to ensure that 
trade partners comply with WTO principles of openness, transparency, 
and advance notice. I couldn't agree more, we need to ensure that our 
trading partners meet their obligations. Could you provide us with some 
specifics of what needs to be done by both industry and government to 
implement your recommendation?

A8. Industry needs to improve cooperation with foreign counterparts in 
international forums to support and encourage compliance with WTO 
principles. Industry should also use such multinational events as OECD-
sponsored conferences as a platform for improved compliance. Industry 
should also promptly bring non-compliance issues to the attention of 
appropriate authorities in the U.S. Government.
    UL recommends that the U.S. Government highlight and emphasize WTO 
Technical Barriers to Trade Agreement compliance principles in all 
negotiated agreements. Emphasis should also be placed on education and 
technical support through such organizations as the U.S. Agency for 
International Development (USAID) that would concentrate on best 
practices for meeting elements of trading partners' commitments. 
Related compliance issues should be elevated to the highest levels of a 
counterpart's government to facilitate prompt attention and resolution 
of the issues brought forward by industry and others.

Q9.  Mr. Bhatia, you recommend increasing funding for existing 
government standards programs. Which programs require increased funding 
and how much more funding do they need? Also, what additional 
activities need to be undertaken with this additional funding?

A9. 

          NIST Standards in Trade (SIT) Workshops: Recommend at 
        least doubling the funding (and staff, as appropriate) to 
        accommodate at least 3-4 additional programs per year. UL would 
        like to see sufficient funding that permits 3-4 workshops each 
        year focused on new sectors/regions and an equal number of 
        workshops that build on previous programs. The follow-on 
        programs help sustain momentum built in the initial sessions.

          DOC International Trade Administration (ITA) 
        Standards Liaison: UL recommends authorizing funds that would 
        enable the ITA Standards Liaison office to develop and 
        implement a comprehensive training program for all ITA-
        affiliated staff, including those in the Commercial Service. 
        The pilot programs have proven successful, but they have 
        focused on foundational concepts, which by themselves are 
        insufficient. The funding should facilitate continuation of the 
        core 101-level programs, while enabling the development of 
        programs targeting specific sectors and/or specific regions and 
        countries. Funding should accommodate both classroom-style and 
        web-based training sessions. Adequate funding also means 
        covering travel costs for U.S. Embassy and U.S. Consulate-based 
        staff to participate in U.S.-based or region-based classroom-
        style sessions.

          Standards Attaches: UL recommends that additional 
        funding be allocated to DOC for additional standards attache 
        positions in strategic U.S. embassies. Re-instating the attache 
        in Saudi Arabia and adding a new attache in Korea would be of 
        particular interest to UL.

          ANSI: Funding should be provided as outlined in the 
        response to question (1) above.
                   Answers to Post-Hearing Questions
Responses by David Karmol, Vice President, Public Policy and Government 
        Affairs, American National Standards Institute

Questions submitted by the House Science Committee Majority

Q1.  Are foreign governments using standards in a way that is 
inhibiting innovation, competition, respect for intellectual property, 
and free trade in products where the U.S. is competitive, and if so, 
how?

A1. As reflected in my testimony, the actions of some governments could 
be seen to be anti-competitive. Since most countries are WTO 
signatories, however, standards actions are almost always cast as 
necessary for national security or to reflect regional or national 
needs, which are recognized as permissible under the WTO TBT agreement. 
It is difficult for ANSI to describe specific instances where U.S. 
products have been specifically disadvantaged, however, in those few 
cases that have been notified to us, it was because Europe generally 
develops design specific standards whereas the United States develops 
performance based standards. Specific designs can become technical 
barriers to trade.

Q2.  Are foreign governments using standards policy as a mechanism to 
protect their domestic industries at the expense of external 
competition, including competition from U.S. companies?

A2. As reflected in my testimony, ANSI does not believe that other 
countries are specifically using standards policy to shelter domestic 
industries However, these countries may well be attempting to advantage 
their domestic producers in foreign markets through the aggressive 
promotion of their domestic or regional standards, in the same way the 
U.S. attempts to assist its industry by promoting U.S. developed 
standards, through outreach to developing and less-developed nations.

Q3.  If the answer to any of these questions is yes, what, if anything, 
should the U.S. Government be doing to respond?

A3. As I indicated in my written and oral testimony, ANSI believes that 
three government actions would be useful in addressing the standards 
challenges we currently face:

        1.  Direct support for the U.S. standards system, including 
        support for ANSI participation in international standards 
        forums, support for outreach and standards distribution 
        efforts, and increased education and training of foreign 
        service and foreign and commercial service officers in 
        standards.

        2.  Increased coordination between the several U.S. Government 
        agencies engaged in standards activities, and their private 
        sector counterparts and partners.

        3.  Congressional endorsement of the U.S. Standards Strategy, a 
        document reflecting input from the private and governmental 
        sectors, which lays out responsible and practical strategies to 
        address current standards challenges that can be implements 
        jointly by the private sector and the government, working in 
        close harmony.

Questions submitted by Representative David Wu

Q1.  The U.S. Standards Strategy lays out a series of ambitious 
recommendations. Aside from Congress endorsing the Strategy, will there 
be a follow-up document laying out how these recommendations should be 
implemented? What resources will be required to implement the Strategy 
and what does the Federal Government need to do?

A1. With respect to the initial National Standards Strategy, issued in 
2000, ANSI maintained a web-based tracking document to track specific 
actions taken in furtherance of the strategy, both by ANSI and ANSI 
staff, and by government and private sector standards participants. We 
anticipate using a similar system to monitor actions taken pursuant to 
the U.S. Standards Strategy.
    We do not believe significant new resources are needed to implement 
the U.S. Standards Strategy, as most of the principles of the strategy 
reflect improved or coordinated efforts where current efforts are 
ongoing. However, it would be helpful if the Federal Government would 
take on some additional responsibility to support outreach on 
standards, in terms of making selected standards available in U.S. 
Embassies, supporting additional direct outreach programs, and 
encouraging better cooperation between agencies currently engaged in 
promoting use of U.S. standards. We think that for approximately $10 
million, a significant desktop-downloadable, U.S. standards collection 
could be placed in every embassy.

Q2.  What do you think are the three most important things the Federal 
Government needs to do in the standards and trade arena? What role do 
you think NIST should play within the Federal Government and should 
NIST be doing anything differently?

A2. As I indicated in my written and oral testimony, ANSI believes that 
three government actions would be useful in addressing the standards 
challenges we currently face:

        1.  Direct support for the U.S. standards system, including 
        support for ANSI participation in international standards 
        forums, support for outreach and standards distribution 
        efforts, and increased education and training of foreign 
        service and foreign and commercial service officers in 
        standards.

        2.  Increased coordination between the several U.S. Government 
        agencies engaged in standards activities, and their private 
        sector counterparts and partners.

        3.  Congressional endorsement of the U.S. Standards Strategy, a 
        document reflecting input from the private and governmental 
        sectors, which lays out responsible and practical strategies to 
        address current standards challenges that can be implements 
        jointly by the private sector and the government, working in 
        close harmony.

Q3.  We are facing an increasingly global marketplace, how do you see 
U.S.-based standards organizations evolving over the next five to ten 
years?

A3. U.S.-based standards developers, following the U.S. Standards 
Strategy, will continue to develop market relevant and globally 
relevant standards in future years, in accordance with requirements of 
the WTO Technical Barriers to Trade Agreement. They will continue to 
evolve to meet market requirements, as they have in the past.

Q4.  Clearly, the commitment to technical assistance by the EU is 
unmatched by the U.S. in its coordination and magnitude. Is it fair to 
say that the EU and European industries believe that they can create a 
competitive advantage in world markets by strongly influencing the 
content of international standards? Will the mass marketing by the EU 
of selected standards create a preference for European products rather 
than U.S. products? If so, what should the U.S. be doing and why have 
we waited so long to take any action?

A4. Standards can be used to facilitate trade or to create barriers. 
European companies and governments, like U.S. companies and our 
government, would like to see standards adopted that favor their 
respective businesses and products. The Europeans have become more 
aggressive in recent years, but it is not correct that the U.S. has 
``waited too long to respond.'' It is more accurate to say that the 
Europeans have succeeded in catching up, and are now playing the 
standards game aggressively. The U.S. traditionally had been the world 
leader in standards, influencing most other nations. Now there are 
several centers of influence, including both Europe and China. However, 
the European Commission is clearly subsidizing the voluntary standards 
development system in Europe, and promotion of the European Standards 
around the world. U.S. Government funding assistance of the U.S. 
standardization system would help to counterbalance the EC funding 
program.

Q5.  Do China's laws and regulations concerning the recognition and use 
of ``international standards'' comply with their commitments under the 
WTO? If not, is this discrepancy a problem for U.S. industry and has 
the U.S. Government taken any action to respond to industry concerns?

A5. China appears to be attempting to comply with the WTO/TBT 
agreement, but at the same time is at times applying a somewhat 
stretched interpretation of several WTO/TBT provisions, in order to 
help domestic industry. We believe the way to address this issue is 
through continuous engagement of the Chinese, and a uniform and 
consistent approach when dealing with them. There must be, and is, good 
coordination between the U.S. Government and the private sector 
participants in the standards community.

Q6.  The National Technology Transfer Act promotes the use of private 
standards by U.S. Government agencies. How successfully has this Act 
been implemented and what improvement could be made to the Act?

A6. We believe that the NTTAA has been a great success, and has 
demonstrably and dramatically increased the number of standards adopted 
by and used by Federal Government agencies. The implementation has been 
good, and appears to be increasingly more effective as time passes and 
participants and agencies gain more experience and understanding of 
voluntary standards. We think that at some point language might be 
added to require that federal agencies also use Conformity Assessment 
services (Certification and Accreditation of Certifiers) from the 
private sector, in the same way that the law now requires the use of 
voluntary consensus standards from the private sector. Many agencies 
are already using such services, but the law would encourage further 
use of this tool. This is a natural extension of the law, and would 
complement the use of private sector standards.

Q7.  You point out that the U.S. standards community does not have the 
resources to match the investment of the EU. You recommend that the 
Federal Government provide funding for research, education, and 
technical support and for representation at international standards 
meetings. How much funding is required for this agenda and, among the 
numerous standards development organizations, who should receive 
federal funding?

A7. As stated above, we believe an initial amount of $10 million would 
fund the set-up and implementation of an on-line standards resource in 
the U.S. embassies around the world, and perhaps five million dollars 
per year beyond that for maintenance costs. This could be paid to ANSI, 
since a standards collection is available from ANSI, but a large 
portion of the funding would be passed through to the standards 
developers, both ANSI accredited and not, who own the various 
collections of standards hosted on ANSI's website. This way the funding 
would go to those groups whose standards were most sought after and 
used, rather than a more arbitrary funding formula.

Q8.  Over the past 10 years what has been the trend of participation in 
U.S. standards setting activities? If decreasing, why do you think 
there has been less participation and what does this mean for U.S.-
based standards organizations in the long-term?

A8. Unfortunately the trend appears to be one of decreasing 
participation. We believe this is a result of number of factors, 
including the downsizing and merging of corporations over the last ten 
to fifteen years, the retirement of experienced standards participants, 
without such participants being replaced, the lack of understanding of 
the strategic importance of standards in company executive suites, and 
the general move to cut cost where the activity cannot be shown to 
contribute directly to the bottom line. We believe that this trend must 
be reversed, or U.S.-based standards developers will have increasing 
difficulty producing the high quality standards that the U.S. is known 
to produce.

Q9.  As we are trying to engage the Chinese in international standards 
committees, I understand that they have had trouble obtaining entry 
visas for meetings in the United States. What is the problem?

A9. Yes, we are fully engaging the Chinese in international standards 
activities and forums. There have been some recent problems with visas, 
which apparently arise from a number of causes and are being addressed 
aggressively by ANSI, working cooperatively with our government 
partners in the Departments of State and Commerce. Some of the problems 
can be traced to the fact that applications were not made with 
sufficient lead time by the Chinese delegates involved. Other problems 
apparently were a result of slow processing of the applications by the 
Chinese authorities involved in processing the applications internally. 
Still other problems apparently arose from delays in the processing of 
applications by the relevant U.S. agencies and offices. All of these 
problems are being addressed as appropriate. The Department of State 
has been responsive in assisting ANSI address the problems, where they 
had the ability to assist.

                              Appendix 2:

                              ----------                              


                   Additional Material for the Record






    Deere Responses to the Department of Commerce Workshop Questions

    Deere provides a broad variety of equipment for off-highway 
applications in markets around the world. The responses to the 
questions posed by the Department of Commerce are often different based 
upon the particular type of equipment. We differentiate between 
Agricultural Tractors, Agricultural Harvesting Equipment, Construction 
and Earthmoving Equipment and Grounds Care machines. Even on a global 
basis, the markets for this type of equipment is relatively low volume 
and capital intensive so the ideal situation for us is a portfolio of 
globally accepted standards and harmonized regulations by product type 
where compliance would allow us to market our equipment anywhere in the 
world without modification and we could self-declare our compliance. 
Any unique requirement, whether a standard, regulation or test adds to 
our and therefore our customers cost and is something we strive to 
avoid. As a result, we have been active in trying to create standards 
portfolios in ISO to best meet both technical and political 
requirements and minimize trade related issues. Based on equipment 
types, not all ISO portfolios provide complete machine family coverage 
or are current with the latest technology. In responding to the 
questions below, we will highlight those differences in more detail.
    One other point is worth mentioning up front. The Off-highway Heavy 
Equipment industry, in comparison with other industries such as 
Aerospace or Automotive is lightly regulated and as an industry, we 
prefer it that way. We have a long history of involvement in voluntary 
standards activities as a means of self-regulation to meet societal 
concerns including safety health and the environment. We have been 
actively involved in standards development at both the national and 
international level for more than 50 years. For that reason, many of 
our responses are based upon real experience within the standards 
system.

1.  What are the highest priority standards issues facing your 
industry?

    There are two areas of concern: First are the horizontal type 
standards proposals using a common approach or setting requirements on 
broad, dissimilar types of off highway equipment. Examples include 
Environmental type standards (and Regulations) on Engine Emissions, 
Fuels, Environmental Noise, and ``End of Life'' standards that place 
additional burdens on manufacturers. While we are not opposed to goals 
and objectives of some of these initiatives, we have concerns that some 
proposals will not yield the desired results and some timetables put 
our industry at risk of survival in terms of our abilities to recover 
the cost of the R&D investment while remaining competitive in the 
marketplace. The impacts will be substantially higher product cost to 
the consumer and with little direct value perceived by the customer, 
even though society in general may benefit. We would prefer a more 
vertical product oriented approach to standards and regulation so the 
solutions can be more effectively tailored to product use.
    The second concern is the pace of standards development covering 
use of emerging technologies. For example, the development of 
intelligent agricultural systems is far out-pacing the development of 
standards for such applications. The concern is not about the 
technology, it is about the availability of expert resources and the 
pace of standards development to fill gaps in the portfolio. Our 
inability to keep pace with voluntary standards may give rise to 
regulatory proposals.

2.  Are there adequate national and/or international standards to 
satisfy your industry's trade/export-related needs?

    For Agricultural Tractors: No. International standards are either 
lacking, unacceptable due to being design specific as opposed to 
performance based, or are biased to the European approach based on the 
European regulations for Agricultural Tractors. Tractors made to 
existing U.S. National Standards are at risk in trade due to 
politically motivated preferences for European or ISO references.
    For Ag Harvesting equipment, the International portfolio is 
improving but not yet complete, with most of the work being done 
between CEN and ISO utilizing the Vienna Agreement.
    In the Earthmoving equipment sector, the portfolio of ISO standards 
is meeting most of the needs and doing a good job of keeping up with 
changing and emerging requirements.

3.  Does your industry experience standards-related problems in 
specific countries or regions, or do these problems affect multiple 
regions? What is the definition of problem?

    Yes and Yes. We have standards related problems regarding road 
regulations across Europe for all types of equipment. Likewise we are 
having country specific problems forcing machine modifications in 
countries such as Japan and Australia to satisfy specific road 
regulations. A harmonized approach to on-road use of off-highway 
equipment would save millions. From a regional perspective, the 
European Union creates the biggest challenge due to the design specific 
regulations that are imposed, or with requirements that make sense in 
densely populated Europe but are not relevant in other market areas 
around the world.
    Another problem is that some regions of the world have been 
reluctant to adopt ISO standards, preferring instead to adopt unique 
country or regional requirements. This is complicated by the fact that 
the EU and its member states fund an active campaign to promote their 
Directives and standards, seeking preference for European made products 
and the U.S. has no equivalent effort.

4.  Do your industry's problems result primarily from the technical 
requirements contained in standards or technical regulations that adopt 
such standards? Please describe specific examples where the technical 
requirements resulted in market entry problems in your industry.

    Both. Technical differences cause problems and expense regardless. 
For example, in the European Union the regulations limit the width of a 
machine to 2.5 meters. This is an old approach Directive. The John 
Deere 8000T (Track) machine width exceeded the restriction by 50 mm. 
Even though the width was of no consequence in other markets around the 
world, the machine had to be redesigned to satisfy the EU requirement 
or individually homologated with each EU member body. Additional 
examples include the height from the ground restrictions on headlight 
installations for European tractors, ladder step height on self-
propelled harvesting equipment such as combines that are also different 
than the same requirement for tractors. The European requirement for 
non-rotating guards and guards that must be fixed or require a tool to 
open continue to contentious issues as far as global relevancy of the 
requirement is concerned.
    Another very current example involves CEN 474-3 Loaders, currently 
under revision. In the revision the secondary exit opening is being 
reduced from the dimensional criteria of ISO 2867. This change will 
result in the secondary exit opening of compact machines (such as skid 
steer loaders) currently in production and use without reported or 
known problems being considered inappropriate for the EU market. This 
trade barrier will permit one major manufacturer (JCB in UK) to be in 
compliance because their design configuration currently meets the new 
requirement. There are many other specific examples that can be cited.

5.  Do your industry's problems result from how compliance with 
technical requirements is assessed? Do you have examples of cases where 
either the technical requirements or the assessment process resulted in 
market entry problems for your industry?

    Conformity Assessment requirements are an issue. The European Union 
``Old Approach,'' which still covers Agricultural Tractors mandates 
third-party certification and ``Type approval'' for products to enter 
their market. Australia has recently started to require ``risk 
assessment'' decisions to be documented and approved before products 
can be offered for sale. Taiwan has proposed mandatory ISO 9000 
certification for Companies who want to sell in their market. Several 
South American countries are considering similar requirements.
    We believe strongly in the principle of Supplier's Declaration of 
Conformity or SDOC. This applies to all of our products as well as our 
internal processes. We've spent nearly 167 years building our brand 
reputation internationally and see little added value in third party 
assessment that is not as robust as our own testing. Any requirement 
for mandatory third-party assessment by any government around the world 
gets our attention. We further support the principle of one test 
accepted everywhere and offer the acceptance of OECD tractor tests 
(even though it is a third-party certification methodology) by 30 
countries around the world as an example of a success story in this 
regard.

6.  Has your industry been able to take an effective approach to 
address international standards issues? What steps have produced the 
most benefit? Could other industrial sectors benefit from using these 
approaches?

    The Construction and Earthmoving Equipment industry sector has for 
years been actively participating and leading the creation and adoption 
of ISO standards for Construction and Forestry equipment. As a result, 
that industry sector has a portfolio of ISO standards in place. This 
approach has been very effective and has included the EU member states 
in the process. The key to effectiveness has been the commitment of 
subject matter experts to key committees (TC 127 and its subcommittees 
and working groups), staying involved on a continuous basis and taking 
leadership roles occasionally to keep the agenda moving. The only 
problems we've experienced with this approach has been since the 
development of EU New Approach. The EU members often take a position 
that the ISO standard should mirror the regional requirements of the 
EU. If they are unsuccessful, they adopt ``amended'' ISO standards with 
regional differences or they create CEN standards because the ISO 
standards will not meet their regional requirements. This is done after 
the global community has rejected the EU proposals as not performance 
based but design based or purely regional opinions. The EU process for 
creating ``amended'' ISO standards or CEN standards is limited to EU 
member bodies and prohibits review or comments from other industry 
experts outside the EU member bodies during development. In spite of 
this concern, which we have been attempting to address with both CEN 
and ISO through ANSI, this is an excellent model for other sectors to 
emulate.
    On the other hand, the agricultural machinery sector has not been 
very serious in the development of globally acceptable international 
standards. Differences in regional farming practice led to the 
development of regional or national standards. Within the last few 
years however, globalization of markets, economic pressures and 
industry consolidations have made a portfolio of globally accepted 
standards for Agricultural Equipment an important priority. Just 
recently changes have been initiated in the industry SDO (ASAE) to 
adopt procedures for the national adoption of ISO standards. In 
addition, the SDO standards committee structure has been reorganized in 
order to allow for the integration of the U.S. TAG with the associated 
ASAE committees. While it is premature to evaluate the benefits, it is 
expected to improve focus on the development of an international 
portfolio. The approach is now similar to the Earthmoving equipment 
model and certainly could be applied to other sectors. Again, the key 
is committing subject matter experts from industry to participate but 
this has become somewhat problematic as the economic conditions within 
the industry and consolidation of equipment producing companies has 
reduced the pool of resources as well as the economic support for the 
standards development organizations.

7.  Has your industry been able to take an effective approach to 
address national standards issues? What steps have produced the most 
benefit? Could other industrial sectors benefit from using these 
approaches?

    Over the years our industry has gotten good service from the SDOs 
we've chosen to use in the U.S. national arena. The Society of 
Automotive Engineers (SAE) and the American Society of Agricultural 
Engineers (ASAE) have been our primary SDOs, with ASTM, ASME, NFPa, 
IEEE and others playing lesser more focused but none-the-less important 
roles. The American National Standards Institute (ANSI) also plays a 
key role. Populating key committees with subject matter experts and 
taking leadership roles has been most productive in producing the 
standards that meet our business needs as well as those of society in 
general. Needs change however, and now, with few product offerings 
being produced exclusively for national markets only, national 
standards are becoming less relevant for the reasons implied in the 
opening paragraph. Building products to standards acceptable in more 
markets just makes good economic sense. That said, the ability of 
International standards bodies (ISO and IEC primarily) to develop or 
maintain standards fast enough to keep up with technology and 
technology application development is not good enough to eliminate a 
role for other standards developers. Therefore we will continue to 
support some key nationally based standards developers and, where their 
documents are globally accepted and utilized, support them as 
internationally acceptable.
    We also believe strongly that the American National Standards 
Institute (ANSI) plays a strategic and indispensable role in addressing 
both national and international standards issues. As a private sector 
federation of standards producers (SDOs), users (Industry and 
Government) as well as consumer interests, ANSI represents a 
consistently available forum for discussion and debate on standards 
issues by a broad cross section of stakeholders, and the one best place 
to develop a single U.S. position on international issues. As our 
national member body to ISO and IEC, they are both a source of 
intelligence for global standards issues and represent the only channel 
for direct representation of U.S. positions on key international 
standards committees. Because of our interest in globally acceptable 
technical standards for the Earth-moving industry, we found value in 
ANSI membership relatively early in our involvement with standards. 
Now, with an even greater array of our industry's products impacted by 
a globally relevant and acceptable technical standards portfolio, we 
see even greater value in ANSI participation.

8.  Do you have examples of a problem experienced by your industry 
where the Federal Government has been effective in resolving the 
issues? What steps taken by Federal Government officials were effective 
in resolving the issue, and why were they effective? Would such steps 
or approaches be applicable in other cases or were their success unique 
to a specific problem? What steps were ineffective or less effective, 
and why do you think that this was so? Was it the unique nature of the 
problem, or would such steps have been equally ineffective in most 
cases?

    Deere (and the off highway heavy equipment industry) has been and 
continues to be supportive of the TABD process. TABD brings industry 
leaders from the U.S. and Europe together with government officials 
from both continents to identify priority issues around standards and 
regulatory harmonization, then set timetables and provide project 
management oversight for quick resolution to improve trade and 
commerce. Our experience has shown that government to government 
discussions, when focused on the right issues and aligned with standard 
and regulatory discussions at the working level, can clear away the 
often bureaucratic obstacles that slow down or stall problem resolution 
at the industry level.
    TABD discussions initiated efforts to harmonize requirements and 
timetables for Diesel Engine Emission requirements between the U.S. and 
the EU with some success so far. Another example of success from 
government involvement was the postponement of Metric labeling 
requirements that were to be imposed by the European Union until 2009. 
There have been many others.
    We believe that to overcome systemic differences in approaches to 
standards and regulation between the U.S. and our overseas trading 
partners requires more government understanding of Industry issues and 
better coordination of strategies to protect U.S. based company 
competitiveness abroad. However, success will only come from 
understanding and respecting the differences between the sectors. As 
indicated above, even within one definition of industry sector (like 
Off-highway Heavy Equipment) one size does not fit all when it comes to 
standards and regulations. Requirements vary by product, their intended 
uses by customers and the environment where they are used. The 
differences are even more pronounced between industry sectors like 
Automotive, Aerospace, Information Technology or Telecommunications. 
Too often we seem to want a ``one size fits all'' approach with a 
result that satisfies no one.

9.  What actions would you recommend the Department undertake? Would 
your industry be willing to help to improve the situation encountered 
with respect to problems associated with standards and conformity 
assessment?

    Our experiences to date with the responsiveness of the DOC, the ITA 
and the USTR have been positive. Our frustrations stem from the lack of 
similar responsiveness from other regulatory agencies such as EPA, MSHA 
and OSHA to trade related issues. Interagency coordination must improve 
if we are to have any hope of success in keeping U.S. manufacturing 
competitive and the global playing field level in terms of standards 
and regulations. We believe it will take a commitment to coordination 
at the Cabinet level to substantially improve cooperation.
    Another issue is the depth of understanding of industry sector 
differences within the Agencies. As indicated above, different sectors 
and even different product oriented sub-sectors have different needs in 
terms of problem resolution relating to standards, regulations and 
conformity assessment. The Department may need to consider more 
specific focus and/or training of its resources to more effectively 
provide response to issues.
    A third issue is a reactive mindset as opposed to a proactive one. 
Industry, driven by performance requirements to keep investors happy, 
tends to avoid problems through pre-emptive action. Government seems to 
be set up to respond only when problems occur, not to prevent them from 
occurring. We would recommend working more closely with industry, 
relative to standards, regulations and conformity assessment to head 
off problems more effectively.
    We believe our industry has a very positive track record, providing 
resources and working both nationally and internationally to resolve 
our own problems when it comes to standards, regulations and conformity 
assessment. We are only calling on government to assist us in knocking 
down barriers or resistance we have been unsuccessful in resolving by 
ourselves. Consistent with our track record, we are certainly willing 
to cooperate with the DOC and other key agencies to improve the 
effectiveness of U.S. influence in standards and conformity assessment 
in both the national and international arena.

             Statement of William Primosch, Senior Director
                     International Business Policy
                 National Association of Manufacturers

    On behalf of the National Association of Manufacturers, I thank the 
Subcommittee for providing the opportunity of submitting a written 
statement for the record on how the United States should respond to 
trade barriers arising from technical standards in Europe and China.
    The NAM is the Nation's largest multi-industry trade association, 
representing small and large manufacturers in every industrial sector 
and in all 50 states. In recent years, our members have expressed 
increasing concern about the impact that international standards and 
government-mandated technical requirements, and their application, have 
on companies' ability to market their products and services abroad and 
access foreign products here at home.
    As the Senior Director for International Business Policy, I have 
responsibility for helping members address these concerns and 
coordinating a special NAM Working Group on International Standards and 
Regulatory Policies. I also serve on the Board of Directors of the 
American National Standards Institute (ANSI) and the U.S. Government's 
Industry Trade Advisory Committee for Standards (ITAC 16).

Importance of Standards and Technical Regulations in Trade

    Technical standards play an essential role in the manufacturing 
sector, ensuring inter-operability, consumer acceptance and fulfillment 
of health, safety and environmental requirements. Standards facilitate 
the sale of manufactured products within the national economy and in 
foreign markets around the world and enable our companies to achieve 
enormous production efficiencies through the operation of global supply 
chains.
    About two-thirds of all U.S. exports and imports are manufactured 
goods so standards play a vital role in our nation's international 
trade. When standards and technical regulations become impediments to 
trade, this is a concern for not only the manufacturing sector but also 
the broader U.S. economy.
    The WTO Agreement on Technical Barriers to Trade (TBT Agreement) 
established disciplines aimed at ensuring that countries do not use 
standards, technical regulations and their application through 
conformity assessment procedures to create unnecessary obstacles to 
international trade. The TBT Agreement includes a number of provisions 
important for U.S. manufacturers, notably in Article 2 relating to the 
preparation, adoption and application of technical regulations by 
central government bodies. For example, the agreement specifies that 
technical regulations ``shall not be more trade-restrictive than 
necessary to fulfill a legitimate objective.'' Also, where 
international standards exist or are imminent, the agreement requires 
that these standards be used instead of unique national standards, 
unless justified by specific reasons. Another useful guideline in the 
agreement is that WTO members are expected to specify technical 
regulations based on product requirements in terms of performance 
rather than design.
    The TBT Agreement has helped to prevent egregious attempts by 
governments to use standards and technical regulations as tools to 
limit market access and protect local industry. But problems, often of 
a serious nature, persist. Our members encounter trade barriers related 
to standards, technical regulations and conformity assessment 
procedures in markets around the world, including with our NAFTA 
partners. However, problems in China and the European Union are of 
special concern because of the volume of trade affected and the 
prospect that these problems will worsen in the years ahead.

China

    In little over a decade, China has emerged as one of the largest 
global producers of manufactured goods and one of the largest global 
traders. In 2004 China ranked third in world trade, with exports and 
imports totaling $1.2 trillion. China benefits enormously from the 
international standards system. By manufacturing to international 
standards, Chinese products are accepted around the world and are now 
integrated into the global supply chain of many U.S. retailers and 
multinational manufacturing businesses.
    Chinese exports to the United States amounted to $197 billion in 
2004 and, if current trends continue, will increase to around $250-$270 
billion in 2005. U.S. exports to China, on the other hand, amounted to 
only $35 billion in 2004. Even if U.S. exports grow at the high end of 
projections to $45 billion in 2005, this would still leave a trade 
deficit of $205-$225 billion. In 2004, U.S. products accounted for only 
eight percent of China's total imports. In comparison, Japanese 
products accounted for 17 percent of China's total imports and European 
products, 13 percent.
    It is in this context of a large trade imbalance and modest market 
penetration that U.S. manufacturers view growing problems relating to 
standards, technical regulations and conformity assessment procedures 
in China. Our members are concerned about the impact that these 
problems are having on market access now and how they will affect 
market access to the world's fast-growing large economy in the future.
    Several kinds of problems have come to our attention.

          China is creating unique national standards. One 
        prominent example was China's attempt to set a unique national 
        standard for so-called WIFI or WAPI technology (WLAN 
        Authentication and Privacy Infrastructure) different from 
        international standards. As part of the requirement, U.S. firms 
        would have had to partner with selected Chinese companies and 
        share proprietary technical product specifications. China 
        postponed implementing the standard after strong protests from 
        the U.S. Government.

          Obtaining the China CCC quality mark is difficult. 
        China has established a cumbersome and expensive system for 
        obtaining the China Compulsory Certification mark (similar to 
        the EU's CE mark) as an indication that regulatory requirements 
        have been met. Only Chinese testing firms can certify for the 
        CCC mark, and Chinese inspectors must inspect overseas 
        factories.

          Chinese standards bodies lack transparency. Unlike 
        U.S. standards development organizations, Chinese SDOs do not 
        allow participation by foreign stakeholders and publish little 
        information on the standards development process until it is 
        nearly complete.

          Market Access for U.S. testing firms is restricted. 
        U.S. testing and certification companies cannot operate in 
        China. Products must be tested by Chinese companies, often at 
        higher charges and with extended delays that raise costs for 
        manufacturers.

    A broader and more fundamental concern is that China seems to be 
pursuing a deliberate strategy to establish standards that gives 
competitive advantage to Chinese technology and domestically produced 
manufactured goods over technology and products from the United States 
and other industrial countries. Efforts to establish a unique WAPI 
standard is seen as one example. Others include Chinese promotion of 
third-generation mobile telephone standards, use of Linux systems over 
Windows operating system and work on radio frequency identification 
tagging and other information technology standards.
    Since China is becoming both the largest producing and consuming 
market for many types of products (e.g., mobile phones, computers, 
telecommunications equipment, cars and power generation equipment), it 
has the potential to exert strong market power. If the Chinese were to 
succeed in establishing unique Chinese national standards and promote 
these standards internationally, this could have a major impact on 
market access for U.S. technology and products, particularly in high-
technology sectors.

European Union

    U.S. manufacturers confront a different set challenges with the 25-
member European Union (EU) trade community. Concerns about the EU 
generally relate to four issues:

          The EU's top-down approach to setting standards, 
        which differs from our more open bottom-up, market-driven 
        system, and its restrictions on access to standards-setting 
        bodies.

          Approaches to health, safety and environmental 
        regulation that diverge from those in the United States, and 
        the expansion of products subject to regulation.

          Its influence in international standards bodies, such 
        as the Organization for International Standardization (ISO) and 
        International Electro-Technical Commission (IEC), in promoting 
        standards more closely aligned to its own.

          The generous financial support for outreach programs 
        on standards and regulation to important emerging markets 
        (e.g., South America, China and other newly industrializing 
        Asian countries) and its growing influence on standards and 
        regulatory policies of these countries.

Top-Down Approach to Standards-Setting
    As part of its effort to create a single European market in which 
products can move freely among member states, the EU has favored a more 
centralized, top-down approach to standards-setting that differs 
fundamentally from the U.S. system. The EU encourages European industry 
to work through a small number of standards development organizations, 
of which CEN and CENELEC are the two most prominent. In this way the EU 
is able to develop community-wide standards that are used throughout 
the EU and avoid the proliferation of national standards that may be 
incompatible. The United States, on the other hand, has over 400 
recognized standards development organizations based on sectoral 
interests.
    Some U.S. manufacturers, particularly large multi-nationals with 
well established operations in Europe, find that they can participate 
effectively in the EU system and protect their interests. Other 
companies, notably small firms without a manufacturing presence in 
Europe, complain that their access to the standards-development process 
is severely limited and that the process lacks transparency. U.S. 
standards development organizations tend to be sector-based and more 
open to participation of all stakeholders, whether foreign or domestic. 
Many manufacturers, both large and small, see the EU standards systems 
as biased to the standards preferences of European industry.

Divergent Approaches to Product Regulation
    Overall European industry is more highly regulated than industry in 
the United States. A particularly difficult challenge for U.S. 
manufacturers, however, is the growing divergence in regulatory 
approaches. Divergent approaches increase manufacturing costs because 
manufacturers must comply with different national regulations for 
producing and selling their products. Divergent regulations can also 
create trade barriers that restrict market access or block it 
altogether. Here are four examples.

          The EU's Restriction on Hazardous Substances in 
        electrical and electronic equipment (RoHS) will ban the use of 
        lead in 2006 in most electrical equipment and electronic 
        components regardless of risk. The United States effectively 
        employs risk assessment tools to protect consumers and the 
        environment and allow continued lead use. A number of U.S. 
        manufacturers have told us that they will have to stop 
        exporting to Europe because they are unable to manufacture 
        their products without lead or cannot obtain inputs that are 
        lead-free.

          The EU is considering a much different approach to 
        testing and registering potentially hazardous chemicals than we 
        have in the United States. A new proposal now before the 
        European Parliament and EU Council of Ministers called REACH 
        (Registration, Evaluation and Authorization of Chemicals 
        Directive) would establish an expensive, complicated process of 
        registering and testing chemicals that experts say will not 
        result in greater protection of health and the environment but 
        will limit trade and industry competitiveness. Some small U.S. 
        chemical manufacturers have told us that they would have to 
        stop exporting to Europe because the regulatory costs would be 
        so great.

          Despite years of discussion in the Transatlantic 
        Business Dialogue and official channels, the United States and 
        Europe have made little progress in harmonizing auto safety 
        standards although safety goals of regulators are quite 
        similar. As a result, U.S. and European auto makers must design 
        and build vehicles that have significantly different technical 
        requirements, raising production costs and making the companies 
        less globally competitive.

          The EU continues to espouse a non-science-based 
        ``precautionary principle'' in restricting certain kinds of 
        products, such as products containing genetically modified 
        organisms (GMOs) and hormone-treated beef, even though no 
        adverse health or environmental effects can be proven.

EU Influence in International Standards Bodies
    Another concern of U.S. manufacturers is that European countries 
appear to be more successful in promoting European standards in 
international standards bodies, particularly the ISO and IEC. Too 
often, some companies allege, ISO standards are more closely aligned to 
European standards than to those used in the United States. The fact 
that the ISO operates by a ``one-country, one-vote'' rule is cited as 
giving EU members unfair advantage. The voting record in these 
organizations does not reflect a pattern of ``bloc'' voting but the 
perception nonetheless exists that EU members are working together to 
promote European standards in these organizations. Another practical 
advantage that European countries have in the ISO and IEC is that the 
two organizations are located in the heart of Europe and European 
governments support the budgets of European standards development 
organizations, thus facilitating more active European participation. 
The burden of financing U.S. participation in the ISO and IEC falls on 
the private sector.

EU Support for International Outreach on Standards
    Finally, U.S. manufacturers note that European governments and the 
EU's European Commission provide generous funding for international 
outreach to promote European standards and regulatory approaches in 
emerging markets, such as China, South America, North Africa and the 
Middle East. EU and national government funding pays for technical 
assistance, travel of foreign standards experts to Europe and the 
placement of European standards abroad. The prospect that emerging 
markets may be considering adoption of EU regulatory approaches, such 
as REACH and RoHS, is a matter of particular concern because they could 
significantly restrict market access for U.S. manufactured products. 
The NAM does not have a detailed breakdown of European funding for 
outreach but knows that it runs into the tens of millions of dollars 
and vastly exceeds the funding available to U.S. agencies (e.g., NIST 
and USAID) for such programs.

Recommended Responses--the New ``United States Standards Strategy''

    Standards and regulatory developments in China and the EU call for 
a strong U.S. private sector and government response to ensure that 
U.S. economic interests are protected. Under the leadership of the 
American National Standards Institute (ANSI), some 50 U.S. business, 
government and non-governmental organization representatives 
participated in a review of the 2000 National Standards Strategy. I was 
a member of the review committee and chaired the subgroup on 
international issues. Reflecting on standards developments over the 
past four years in the United States and abroad, including those in 
China and the EU, the group substantially revised the strategy and 
renamed it the ``United States Standards Strategy'' (USSS) with a view 
to emphasizing the U.S. approach to developing standards for the global 
marketplace, and not solely for the national market.
    The USSS, which is still in the final review process, calls for 
action in four areas that are relevant to China and EU standards issues 
identified in this statement.

          Actively promote the consistent application of 
        international recognized principles in the development of 
        standards, notably those contained in the WTO TBT Agreement.

          Encourage common governmental approaches to the use 
        of voluntary consensus standards as tools for meeting 
        regulatory needs, thus reducing the possibility of regulatory 
        differences creating trade barriers.

          Work to prevent standards and their application from 
        becoming technical trade barriers to U.S. products and 
        services, taking a vigorous pro-active approach that recognizes 
        the growing importance of standards for market access.

          Strengthen international outreach programs to promote 
        understanding of how voluntary, consensus-based, market-driven 
        sectoral standards processes can benefit businesses, consumers 
        and society as whole, in recognition that more needs to be done 
        by both the government and private sector to communicate the 
        U.S. perspective on standards.

    We believe that, when finally adopted, the USSS will provide a 
highly useful guide for developing responses to market access concerns 
relating to standards not only in China and the EU but also in other 
key foreign markets.
    The Subcommittee's hearing provides a timely opportunity to educate 
Members of Congress, government agencies, the business community and 
general public on the importance of international standards and 
regulation for trade and the need to ensure effective public and 
private sector support for the U.S. standards system and its role in 
the global marketplace. We applaud the Subcommittee for taking the 
initiative on this matter.
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