President Walter, distinguished ISO delegates, Ladies and Gentlemen, Good Morning.

       Thank you very much for inviting me to join you today.  Let me first convey DG Azevedo's best wishes to you for a successful and productive ISO general assembly.

       Given the current turbulence in international trade relations, fostering the trade and standards linkage is more important than ever.

       Why is this "trade and standards linkage" so important?

       The headlines are all about tariffs, and trade war.  Two comments are in order.  One is that a crisis in the past has been an opportunity to create something better, to bring international cooperation to a better place.  This was true with the creation of the GATT, the predecessor of the WTO, born from the ruined global economy of the Second World War, true of the creation of the GATT Tokyo Round and the current international monetary exchange system, and true of the creation of the WTO itself, to escape from international relations characterized by unilateral trade measures.

       Secondly, despite the headlines, the reality is that most trade that has been flowing will continue to flow, and the rules of the multilateral trading system are in large part responsible for the continuity.  This is particularly true with respect to product standards.  A tariff might make a product more expensive, but it does not actually prevent access to the market.  Indeed, it is both transparent and predictable and there is not much uncertainty involved. This is not to suggest that tariffs are a welcome trade instrument, they are just preferable to those which are worse.

       Less thought is given in the press, understandably, of the role of standards. Without international standards there would be far less international trade, far less global prosperity, far fewer markets for exporters, and far less variety for consumers. Most goods and many services traded are affected in one way or another by standards. Indeed, it is often when standards fail that we notice them.  A failure to meet standards can stop trade in a product or service altogether.

The importance of the TBT Agreement to world trade.

       My own experience with standards is less a matter of expertise than personal experience.  I know that I am not to bring most electrical appliances from the United States to use in Geneva.  And I have been told that I will be unable to register my European BMW in the United States when I go back, and that if I did not have status at the WTO I could not register a BMW made in South Carolina on Swiss roads.

       On the other hand, I have visited the modern port of Baltimore, not far from Washington DC, and watched the incredibly intricate choreography of the unloading of a giant container ship onto flatbed trucks.  Each container is unloaded in a pre‑ordained order and it will end up on the right truck going to the right destination.  Of course, this could not occur without the application of sophisticated computer software; but it would not be possible at all without international standards for containers, a revolutionary change that has accelerated the growth of international trade. 

       At the other end of the spectrum, as part of a briefing I received in connection with my activities of the U.S. National Academy of Science, we learned that in a hospital operating theatre, crowded with some fifteen monitoring devices, for oxygen, anaesthesia, the patient's vital signs and the like, none of those devices talk to each other, there is no interoperability. Complex medical equipment comes from many sources from around the world.  International standards were needed.  This was four or five years ago, and maybe everything has changed for the better, but it is not clear that that is the case.

       There have been recent announcements of prototype driverless cars.  Volvo announced one model to be outfitted with beds. Both drivers and passengers will be putting a lot of faith in automation and artificial intelligence.  But before any of us lie down in a car, we best think about whether the standards for intelligent highways and different brands of autonomous vehicles will operate under the same international standards and communicate perfectly with each other.  Standards are needed to build public trust and confidence in artificial intelligence (AI). Compatibility through international standards will be necessary for a restful automobile trip, if is not to be a final journey.

       The challenges that the ISO and TBT faced in the past are going to seem simple, I suspect, compared with the standards challenges posed by AI.

       A standard (regulation) can be a formidable barrier.  As all of us know in our daily lives, unlike a tariff, a product that does not meet a requirement set out in a regulation may not enter at all.  What is not obvious to consumers, but is known to those engaged in international trade, perhaps worse: a product might actually comply with all the necessary requirements but may still not gain access because the importer cannot demonstrate conformity through certification and testing.  For example, a country's bicycles are produced following the latest international standards on safety. But the country does not have accredited labs to issue the required certificates. The result is not less trade, but no trade.  These types of barriers are less transparent and very technical and may curb trade even when markets are open.

       UNCTAD has recently found, based on data from December 2017 comprising 109 countries and covering 90% of global trade, that identifiable TBT measures are the most frequent form of non‑tariff measures, NTMs, affecting 65% of world trade in terms of value, and 35% of product lines.⁽¹⁾

       This is not to disparage standards; and here I am using this term broadly, to mean any form of regulation.  Standards are also necessary, and increasingly so.  Where production is fragmented across borders and firms, production lines need to merge at some point, so as to deliver the final product. When this happens, then the use of international standards is crucial in ensuring compatibility, quality and safety.  They help build trust throughout the global value chain, from the original suppliers of components, through the various dispersed producers, to the consumer - wherever she may happen to be.

       In the current trade conflicts, global value chains are likely being reconfigured.  The extent that a country can participate in this process depends in large part on its ability to meet international standards. 

       So, what, then, is the challenge?  As you are keenly aware, governments greatly prize their freedom to regulate as a sovereign right.  As a general proposition, no government wants to be told by another government (let alone an international organization) how to protect their consumers, animals, plants or the environment.

       Fortunately, they have not given up that right under the Technical Barriers to Trade (TBT) Agreement. Instead, what the Agreement aims to do is to filter out unnecessary friction that arises because approaches chosen in standards differ. This does not impinge on the right to regulate.  It is about reducing unnecessary trade costs that arise from different choices made in crafting national and regional standards while not jeopardizing their underlying purpose.

       That's why TBT gives international standards such a central role.  They can serve as an important tool for helping countries find a balance between their right to regulate and their obligation not to create unnecessary barriers trade.  International standard setting – your work – is not only important here: it's essential!

How can the international standard-setting community support the multilateral trading system and promote inclusive and sustainable development?  In short, what can you do?

       This is a forward‑looking question, but let me begin with the context of the past.

       Both the ISO and the GATT (the WTO's predecessor) were born in 1947, rising from the ashes of the Second World War.  They were part of efforts of a community of nations seeking more international cooperation and coordination.  Since 1947 our organizations have collaborated constructively.  The ISO has been a WTO TBT Committee observer since its creation in 1995.⁽²⁾

       The relationship between trade and international standards has been and continues to be mutually supportive.  A shared standard is of even more value when markets are open.  Benefits multiply.  This was why the adoption of the GATT "Standards Code" in 1979 was such a landmark achievement.  It was the first international instrument recognizing the use of international standards as a powerful tool for addressing non‑tariff, regulatory barriers.

       On my first visit to Geneva and the GATT, I attended a negotiating session on the new Standards Code.  Later when I was Deputy U.S. Trade Representative, it was part of my responsibilities to explain the value to business and legislators the importance of this new Code.  NTBs were then a relatively novel concern, but it was understood that they could potentially nullify market access gained from years of tariff reductions, and even the elimination of tariffs.  This recognition later led to the WTO TBT Agreement, which created an even more sophisticated framework of rules, including the promotion of international standards.

       A word on the present. As put by ISO Secretary‑General Sergio Mujica: "multilateralism [is] being challenged and [we have seen] an increase in support of protectionist measures".⁽³⁾

       This is a time when it is more important than ever to foster a broad understanding that the world trading system and the activities in which the ISO is engaged, within the framework of the WTO delivers results, underwriting global economic growth and prosperity.

       In recent years, the WTO has delivered new results with respect to trade facilitation and information technology products.  Members with an interest in doing so are working hard on e‑commerce; domestic regulation of services; investment facilitation; and benefits of the system for micro, small and medium sized enterprises (MSMEs).  There is also much talk of how to make the WTO set of rules and the institutional arrangements better.  The TBT Committee is frequently cited by WTO Members as an example of where things work well.  Where there is increased transparency, a major objective of those WTO Members seeking reform.  The TBT processes are frequently mentioned as a potential role model for other WTO bodies.

       The TBT Committee is getting favorable notice because it has been consistently successful in doing two things:

• adopting decisions and recommendations on how to best implement and make use of the TBT Agreement.  An example you are probably aware of is the famous "Six Principles" decision on international standardization.⁽⁴⁾  Some of these decisions find their way into regional trade agreements as TBT‑plus elements, such as in the US‑Korea FTA and the CPTPP⁽⁵⁾.
• bringing, discussing (and sometimes even resolving) concerns with respect to other Members' draft or adopted standards and regulations.  This is not just another "talk‑shop".  Members take very seriously this practice of raising "specific trade concerns" (known simply as "STCs").  This is a practice that offers them, and their stakeholders, a faster, cheaper and non‑litigious alternative avenue for addressing trade frictions.⁽⁶⁾  This practice has been wholeheartedly embraced by TBT Committee Members⁽⁷⁾; and frequently recommended to be emulated by other WTO bodies.  These principles are also included in recent proposals for reforming the WTO⁽⁸⁾.

       The rules of the international trading system have continually evolved since the foundation of the GATT in 1947.  This is equally the case today.  Conditions and needs of international trade change over time.  The rules need to remain relevant.  Ways to improve the WTO, to make it more efficient, responsive and stronger, are currently being discussed by interested Members. 

       That brings me to the future.  

       I have five suggestions for you with respect to what your role can be with respect to fostering trade

       First, by improving coherence in international standard-setting. Competing or contradictory international standards can lock-in divergent regulatory approaches, impede market access, sometimes without good reason. Take again the example of "driverless cars".  If, for example, two international bodies decide, independently and without talking with each other, to develop differing standards for addressing issues related to the safety of these vehicles, for example, in terms of obstacle avoidance, they may well end up adopting two significantly different - or worse, conflicting - international standards addressing the same issue.  This may in turn result in driverless safety regulations in countries varying depending on which of the two international standards was used as a basis.  Trade in driverless cars will be very difficult, if not impossible, between countries that have not used the same international standard as a basis for their regulations.

       I encourage ISO and its members to lead by example in promoting coherence with other standardizing bodies.  You can do this by simply following, implementing and promoting principle 5 of the "Six Principles" TBT Committee Decision: "In order to avoid the development of conflicting international standards, it is important that international standardizing bodies avoid duplication of, or overlap with, the work of other international standardizing bodies. In this respect, cooperation and coordination with other relevant international bodies is essential."

       Second, I would ask you to promote the development of quality infrastructure for trade.  The TBT Agreement ensures that regulations in export markets are not disproportionally restrictive and discriminatory.  But this is meaningless if a producer, or whoever is bringing his/her product into another country's market, cannot actually show that a product complies with applicable regulations. Having an adequate National Quality Infrastructure (NQI) is an important way to overcome this problem.  In some cases, this can be done most practically on a region rather than solely a national basis.

       Possessing quality infrastructure is particularly important for MSMEs, as they need access to adequate conformity assessment, standardization and metrology infrastructure to be able to engage successfully in trade.

       This is a gap worth narrowing and it can be useful to consider a mechanism linking TBT and quality infrastructure capacity, similar to that already in place for SPS:  The Standards and Trade Development Facility (STDF)⁽⁹⁾.  A possible good start in this direction would be to begin with a common data collection hub that would help identify and prioritize gaps in NQI capacity.  There could also be a mechanism for rating the level of development of NQI in countries in a manner similar to the ease of doing business ratings provided by the World Bank.  These are just a couple of ideas worth thinking about.

       Third, increase your support to MSMEs.  Ambassador José Luis Cancela Gómez ⁽¹⁰⁾ gave a presentation yesterday in Astana, from where I have just arrived today, which included the following striking data:

• Firms employing fewer than 250 workers account for 78% of total exporters worldwide.
• In developing countries, MSME exporters only account for 7.6% of total sales of manufactured products.  Smaller firms often lack the necessary resources to seek information about foreign regulations that may affect their trade.  They are extremely unlikely to be able to engage directly with trading partners.  It is difficult for them to ensure that standards being developed at home – let alone in international settings – take into account their particular commercial interests.

       MSMEs are going to account for an increasing share of world trade in electronic commerce.  I ask that you consider what more can be done to enhance the interests of MSMEs in the standard‑setting context, including how their participation can be increased.  It is important that they benefit more from standards development – so that they can, to a greater extent, become standards makers, and not just standards takers.

       Fourth, placing more focus on reaching out to regulators.  National regulators have to decide whether and how to use (international) standards as the basis for their regulations, which can either facilitate or impede trade.  Regulators might not be aware of the existence of relevant international standards, or their obligations under the TBT Agreement.   Here are some further areas where your reaching out to regulators can really matter:

Good Regulatory Practices (GRP): Engaging with regulators to promote the application of GRP, and the appropriate use of the NQI, in their regulatory interventions.  The WTO TBT and SPS notification and comment obligations can make a meaningful contribution in this direction by generating valuable feedback to improve regulatory proposals.  More than 4,000 draft regulations are subject of TBT/SPS notification each year, and the WTO Secretariat is working with Members and their regulators to further increase this number, including through our technical assistance to developing countries.  To help this notification process work even more effectively, the WTO, in cooperation with ITC and UNDESA, developed ePing ⁽¹¹⁾ – an online alert system which gives public and private sector stakeholders instant updates and access to TBT measures notified to the WTO.  ePing helps users of the system to keep track of technical regulations proposed for adoption by country and product category.  The number of ePing subscribers grows every day ⁽¹²⁾, but we need your help to make it truly a global success.  Please, visit the "Ask ISO" stand during the upcoming break to find out more and register. Help ePing make trade more inclusive and participative.  You can make this tool something that makes a real difference in the accessibility of world markets, increasing global prosperity. 

Regulatory cooperation is an area of growing focus for trade negotiators in efforts to combat NTBs to trade.  In the transatlantic context, it was recently reported that identifying and reducing technical barriers to trade could be an early focus for talks between the EU and US in coming months. ⁽¹³⁾  This follows a joint US‑EU statement from last July, which called for "a close dialogue on standards in order to ease trade, reduce bureaucratic obstacles, and slash costs". ⁽¹⁴⁾  In defining the future relationship between the UK and EU, standards and regulatory alignment may quietly prove to be one of the thorny issues.  In general, regional trade agreements now systematically include TBT provisions; and increasingly these agreements contain provisions that build upon the work of the TBT Committee to improve transparency or identify relevant international standards as the basis for regulation (the TBT Committee's "Six Principles").  In this context, your outreach to regulators is ever more relevant!

       It would be helpful for the WTO Secretariat to receive more broad‑based information about the extent to which ISO standards (as well as standards developed by other international standardizing bodies) are used by regulators in different countries.  I would encourage you to explore how this information could be gathered and shared.

       Fifth, there needs to be broader and stronger support for multilateral trade and the WTO from the standardization community.  We need to spread the message that an integrated global economy, with a strong and dynamic multilateral trading system – which includes international standards! – is a better world for everyone.  The backlash against globalization has tended to focus on trade as one of the most visible pillars of globalization.  But behind trade are other drivers of change, like new technologies – supported by standardization.  These need to be nurtured.  Technology and innovation do not tend to thrive behind walls of any kind.  If governments take a more protectionist stance, this is worrying and could weaken the case for international standardization.  Today, in this inward‑looking climate, it is easy to forget the fruits of competition and cooperation.  But these need to be promoted now more than ever.  You, too, can help us with this! 

       A strong and dynamic multilateral trading system, supported by international standards – supported by you! – is going to be a better world for all.

       The work that you do is vitally important to world trade.  I wish you well in your efforts.

Thank you!

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ANNEX:  WTO TBT Committee
"Six Principles Decision"

ANNEX: "Six Principles" WTO TBT Committee Decision

Decision of the Committee on Principles for the Development of International Standards, Guides and Recommendations with relation to Articles 2, 5 and Annex 3 of the Agreement

Decision

The following principles and procedures should be observed, when international standards, guides and recommendations (as mentioned under Articles 2, 5 and Annex 3 of the TBT Agreement for the preparation of mandatory technical regulations, conformity assessment procedures and voluntary standards) are elaborated, to ensure transparency, openness, impartiality and consensus, effectiveness and relevance, coherence, and to address the concerns of developing countries.

The same principles should also be observed when technical work or a part of the international standard development is delegated under agreements or contracts by international standardizing bodies to other relevant organizations, including regional bodies.

1.  TRANSPARENCY

All essential information regarding current work programmes, as well as on proposals for standards, guides and recommendations under consideration and on the final results should be made easily accessible to at least all interested parties in the territories of at least all WTO Members. Procedures should be established so that adequate time and opportunities are provided for written comments. The information on these procedures should be effectively disseminated.

In providing the essential information, the transparency procedures should, at a minimum, include:

1. the publication of a notice at an early appropriate stage, in such a manner as to enable interested parties to become acquainted with it, that the international standardizing body proposes to develop a particular standard;
2. the notification or other communication through established mechanisms to members of the international standardizing body, providing a brief description of the scope of the draft standard, including its objective and rationale. Such communications shall take place at an early appropriate stage, when amendments can still be introduced and comments taken into account;
3. upon request, the prompt provision to members of the international standardizing body of the text of the draft standard;
4. the provision of an adequate period of time for interested parties in the territory of at least all members of the international standardizing body to make comments in writing and take these written comments into account in the further consideration of the standard;
5. the prompt publication of a standard upon adoption; and
6. to publish periodically a work programme containing information on the standards currently being prepared and adopted.

It is recognized that the publication and communication of notices, notifications, draft standards, comments, adopted standards or work programmes electronically, via the Internet, where feasible, can provide a useful means of ensuring the timely provision of information. At the same time, it is also recognized that the requisite technical means may not be available in some cases, particularly with regard to developing countries. Accordingly, it is important that procedures are in place to enable hard copies of such documents to be made available upon request.

2. OPENNESS

Membership of an international standardizing body should be open on a non-discriminatory basis to relevant bodies of at least all WTO Members. This would include openness without discrimination with respect to the participation at the policy development level and at every stage of standards development, such as the:

1. proposal and acceptance of new work items;
2. technical discussion on proposals;
3. submission of comments on drafts in order that they can be taken into account;
4. reviewing existing standards;
5. voting and adoption of standards; and
6. dissemination of the adopted standards.

Any interested member of the international standardizing body, including especially developing country Members, with an interest in a specific standardization activity should be provided with meaningful opportunities to participate at all stages of standard development. It is noted that with respect to standardizing bodies within the territory of a WTO Member that have accepted the Code of Good Practice for the Preparation, Adoption and Application of Standards by Standardizing Bodies (Annex 3 of the TBT Agreement) participation in a particular international standardization activity takes place, wherever possible, through one delegation representing all standardizing bodies in the territory that have adopted, or expected to adopt, standards for the subject-matter to which the international standardization activity relates. This is illustrative of the importance of participation in the international standardizing process accommodating all relevant interests.

3. IMPARTIALITY AND CONSENSUS

All relevant bodies of WTO Members should be provided with meaningful opportunities to contribute to the elaboration of an international standard so that the standard development process will not give privilege to, or favour the interests of, a particular supplier/s, country/ies or region/s. Consensus procedures should be established that seek to take into account the views of all parties concerned and to reconcile any conflicting arguments.

Impartiality should be accorded throughout all the standards development process with respect to, among other things:

1. access to participation in work;
2. submission of comments on drafts;
3. consideration of views expressed and comments made;
4. decision-making through consensus;
5. obtaining of information and documents;
6. dissemination of the international standard;
7. fees charged for documents;
8. right to transpose the international standard into a regional or national standard; and
9. revision of the international standard.

4. EFFECTIVENESS AND RELEVANCE

In order to serve the interests of the WTO membership in facilitating international trade and preventing unnecessary trade barriers, international standards need to be relevant and to effectively respond to regulatory and market needs, as well as scientific and technological developments in various countries. They should not distort the global market, have adverse effects on fair competition, or stifle innovation and technological development. In addition, they should not give preference to the characteristics or requirements of specific countries or regions when different needs or interests exist in other countries or regions. Whenever possible, international standards should be performance based rather than based on design or descriptive characteristics.

Accordingly, it is important that international standardizing bodies:

1. take account of relevant regulatory or market needs, as feasible and appropriate, as well as scientific and technological developments in the elaboration of standards;
2. put in place procedures aimed at identifying and reviewing standards that have become obsolete, inappropriate or ineffective for various reasons; and
3. put in place procedures aimed at improving communication with the World Trade Organization.

5. COHERENCE

In order to avoid the development of conflicting international standards, it is important that international standardizing bodies avoid duplication of, or overlap with, the work of other international standardizing bodies. In this respect, cooperation and coordination with other relevant international bodies is essential.

6. DEVELOPMENT DIMENSION

Constraints on developing countries, in particular, to effectively participate in standards development, should be taken into consideration in the standards development process. Tangible ways of facilitating developing countries' participation in international standards development should be sought. The impartiality and openness of any international standardization process requires that developing countries are not excluded de facto from the process. With respect to improving participation by developing countries, it may be appropriate to use technical assistance, in line with Article 11 of the TBT Agreement. Provisions for capacity building and technical assistance within international standardizing bodies are important in this context.

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Notes:

1. The Unseen Impact of Non-Tariff Measures: Insights from a new database, Preliminary Draft dated December 2017) WB, UNCTAD, UN, Section 3.3, pp.9-10. back to text
2. ISO was also one of the first observers of the GATT TBT Committee back in 1980.  And also at that time, one of ISO's former Secretary‑Generals, Alan Bryden (France), was elected the very first vice-Chair of GATT TBT Committee.  The first Chair was William Douglas "Doug" Newkirk (US). back to text
3. Report from the Secretary‑General of the ISO to the 2018 ISO General Assembly, 27 September 2018. back to text
4. The full text of this Decision is provided below, as an Annex to this address. back to text
5. "Comprehensive and Progressive Agreement for Trans-Pacific Partnership". back to text
6. STC is a Committee practice that offers other benefits too.  For instance, STCs can also foster international regulatory co‑operation:  these discussions provide a valuable opportunity to learn from the experiences of others. Through peer feedback WTO Members can gather information about the design and performance of regulations. back to text
7. 562 TBT STCs have been raised from 1995 to date. back to text
8. For instance, the 5 July 2018 "EU's Proposal on WTO modernization". back to text
9. Established in 2002, the STDF is a partnership of the WTO with FAO, World Bank, OIE, and WHO. Its aim is to enhance capacity of developing countries to meet SPS standards.  It promotes coherence in donor activities on SPS, by serving as a global coordination and knowledge hub.  It also supports many specific projects to build SPS capacity. back to text
10. Ambassador and Permanent Representative of Uruguay to the WTO. back to text
11. https://www.epingalert.org/en back to text
12. Around 4,500 ePing subscribers, as of 14 September 2018: 47% from governments, 32% from the private sector; 4% are National Standardizing Bodies; and 17% from others groups (IGOs, NGOs, academia, etc.). back to text
13. "US trade talks with EU on course for partial deal in November", Financial Times, 10 September 2018, https://www.ft.com/content/c0b6bb52-b508-11e8-bbc3-ccd7de085ffe back to text
14. http://europa.eu/rapid/press-release_STATEMENT-18-4687_en.htm back to text