Director General of the World Trade Organization talks to ISO about international Standards

Issue 25 – March 2011

The January 2011 ISO Focus+ features an interview with Pascal Lamy, Director-General of the World Trade Organization (WTO), the organisation whose agreements encourage the use of international Standards. This interview is reproduced with permission from the International Organization for Standardization (ISO).

Pascal Lamy has been Director-General of the World Trade Organization (WTO) since September 2005. He began his career in the French civil service at the Inspection Générale des finances and at the Treasury. He then became an advisor to the Finance Minister Jacques Delors, and subsequently to Prime Minister Pierre Mauroy.

ISO Focus+: The WTO TBT Agreement encourages referring to international Standards as a means to reduce technical barriers to trade that technical regulations may generate. How can ISO promote the effective use and reference of our international Standards by regulatory authorities?

Pascal Lamy: In a nutshell, I think ISO can promote the uptake of its Standards by making them globally relevant and of high quality. To achieve relevance and quality, both process and substance are important. The process whereby the Standard is developed is crucial. Delegations at the WTO repeatedly emphasise the importance of transparency and accountability – that the process is open, impartial, and based on consensus. A broad stakeholder involvement will boost the beneficial, confidence-building aspects of Standards; in fact, the process for the development of the recently launched ISO 26000 Standard is interesting in this regard.

On substance, Standards need to effectively respond to market needs. I would emphasise the need for Standards to reflect state-of-the-art scientific and technological developments. It is also important that international Standards are effective and avoid duplication or overlap with the work of other bodies. By following these principles, I think, Standards will stay both relevant and of high quality.

I would like to also emphasise the importance of enhancing developing country participation in the Standard-setting process: it is important to ensure that international Standards reflect their needs. Today, actual participation in Standards-setting activities by developing countries remains a challenge; only a small proportion of developing countries are responsible for the management of working groups and technical committees, where the nitty-gritty work takes place. If international Standards are more reflective of developing country needs, they will stand a better chance of actually being used.

ISO Focus+: What specific examples coming out of the WTO's research and experience help illustrate the benefits of a quality infrastructure in a developing country (metrology, standardisation and conformity assessment) and of a better access to and participation in international standardisation? How do you perceive the importance of efforts to assist developing countries in increasing standardisation capacity?

Pascal Lamy: Let me first address the last part of the question. Clearly, issues related to non-tariff barriers are becoming more important by the day. I should make one thing clear at the outset: some barriers are necessary. For instance, countries may restrict trade in order to protect human health, safety, or the environment. This may seem obvious, but the WTO is sometimes accused of wanting to remove all obstacles to trade! What the WTO seeks to do is to reduce or even eliminate those barriers that unnecessarily restrict trade, and, in this effort, international Standards play an important role. The reason for this is that even though the objectives of the measure are not objectionable, the means to achieve them may cause friction.

At a recent meeting of the Technical Barriers to Trade (TBT) Committee, for example, over 47 trade concerns – all of them involving regulations – were raised as points of concern between WTO members. Many of these concerns relate to the use or non-use of international Standards. Because harmonisation facilitates trade, the use of relevant international Standards is seen as one means to ensure that trade barriers do not become unnecessarily restrictive. Hence the importance of increasing standardisation capacity.

Of course, it is also important that developing countries are able to meet the Standard. This is where the quality infrastructure becomes important: markets crave confidence! A product may be denied access not because it does not fulfil the requirements in a Standard, but simply for lack of ability to show conformance (for instance with a certificate) because there is no trust. This may be because a laboratory is not certified, or the certification body itself not recognised. So quality infrastructure is essential for developing countries' competitiveness. And WTO members have recognised this.

Only 1 year ago, WTO members encouraged technical cooperation in the area of conformity assessment specifically aimed at improving technical infrastructure (for example, metrology, testing, certification, and accreditation). I can only encourage ISO as well as other standardising bodies to step up their efforts in building know-how as well as institutions that underpin developing countries' quality infrastructure, including standardisation, and particularly in Africa.

Certification processes, too, must be looked at. I have recently seen, first-hand, the high cost, complexities and challenges that can be involved in certifying products, upon a visit to a factory in Rwanda producing insecticides from flowers.

ISO Focus+: A key message from the WTO/TBT Committee workshop on international Standards (held in March 2009) was that Standards are a crucial link between research, innovation and markets, and an efficient tool for the transfer of technology. Can you please comment on this?

Pascal Lamy: If developed according to the principles I mentioned above, an international Standard can be seen as comprising the collective know-how of the international community in a particular field. This is valuable. Almost by definition an international Standard is the outcome of multilateral cooperation.

Participation in the process itself – or simply the use of the final product – is a form of technology transfer. In fact, the preamble of the TBT Agreement emphasises the contribution that international standardisation can make to the transfer of technology. However, quantifying the benefits of Standards remains elusive, and more research, in fact, needs to be done on this. With this in mind, WTO members have been encouraged to share case studies on the economic benefits of the use of Standards to shed more light on this issue.

ISO Focus+: You have written much about trade and globalisation, and you are a staunch supporter of free and fair trade. What are the main benefits of the WTO trading system?

Pascal Lamy: The WTO and the global trading system are public goods which ensure that trade flows smoothly, transparently and more openly. Trade brings greater efficiency to our national economies because it encourages better specialisation and more effective division of labour. Countries can play to their strengths through their comparative advantage.

For consumers, trade means lower prices and a wider selection of goods. Imagine if your country had to manufacture everything that its citizens consume. You would have to do without many items you take for granted. Trade brings greater competition, and with it greater efficiency. Trade also brings new technologies and better ways of doing things and this in turn fosters innovation and job growth.

Companies which compete in the international market through exports tend to pay between 10 % – 20 % higher wages and that is of benefit to workers as well. This is not to say that opening trade benefits everyone, everywhere, all the time. Trade brings about reshuffling and this can be traumatic and even tragic for some workers. This is why adequate social safety nets – training, income support and assurances of medical care – are vitally important to securing public support for trade.

But what we know for sure is that blocking trade results in catastrophic consequences. This was clearly true in the 1930s when countries imposed high tariffs on imports which helped to deepen and widen the depression. In today's ever more interconnected global economy – with its global supply chains and international demand for the latest products – it is even more the case.

ISO Focus+: In a recent speech, you referred to more and more products as being 'made in the world'. Could you expand on this idea and explain what role international Standards play in this context?

Pascal Lamy: What this means is that, today, very few products are made exclusively in a single country. Global supply chains are the norm and companies – and countries – need to be able to move inputs smoothly across borders so that production of the final good is not delayed.

Whether you are talking about aircraft, automobiles or iPODs, products today are made in several countries. The iPOD, for example, was designed in California, the chip comes from Japan and the final assembly occurs in China. Standards are of course, a very important part of this because if one element of the product is not of high quality, the whole product is undermined and the manufacturer's reputation suffers. This may mean internal company standards of quality, or it may relate to health and safety standards set by national governments.

Summarised from ISO Focus+ January 2011.

Published in international.