Global Standards: Building Blocks for the

Future

March 1992

OTA-TCT-512

NTIS order #PB92-167352

GPO stock #052-003-01277-4
Recommended Citation:

U.S. Congress, Office of Technology Assessment, Global Standards: Building Blocks for the

Future, TCT-512 (Washington, DC: U.S. Government Printing Office, March 1992).

For sale by the U.S. Government Printing Office

Superintendent of’ Documents, Mail Stop: SSOP, Washington, DC 20402-9328

ISBN O-16 -036163-X
Foreword

Standards govern the design, operation, manufacture, and use of nearly everything that

mankind produces. There are standards to protect the environment and human health and

safety, and to mediate commercial transactions. Other standards ensure that different products

are compatible when hooked together. There are even standards of acceptable behavior within

a society.

Standards generally go unnoticed. They are mostly quiet, unseen forces, such as

specifications, regulations, and protocols, that ensure that things work properly, interactively,

and responsibly. How standards come about is a mystery to most people should they even

ponder the question.

With the evolution of global markets, standards are even more important to facilitate

international trade. Unfortunately, they may also be used as trade barriers or to gain advantage

over foreign competitors.

The United States has been fortunate to have a pluralistic, industry-led standards setting

process that has served us well in the past. Whether it will continue to do so in the future in

the face of bruising international economic competition is uncertain.

This study considers the U.S. standards setting process in light of the changing economic

and technological environment. Looking across industry sectors, the study compares the U.S.

system with those of other countries, particularly the European Economic Community (EEC).

Where remedies seem to be warranted, OTA suggests alternative strategies and options that

the United States might pursue.

OTA gratefully acknowledges the contribution of those who participated in interviews,

reviewed and commented on drafts, and provided information, advice, and assistance.

However, OTA bears the sole responsibility for the contents of this report.

w JOHN H. GIBBONS

Director

iii
Global Standards: Building Blocks for the Future

OTA Project Staff

John Andelin, Assistant Director, OTA

Science, Information, and Natural Resource Division

James Curlin, Telecommunication and Computing Technologies Program Manager

Linda Garcia, Project Director

Karolyn St. Clair, Research Assistant

Other Contributors

Sherry Emery, Analyst until August, 1991

John Alic, Senior Associate, ITE

Sebastian Remoy, Research Analyst, ITE

Alan Davidson, Summer Intern

Administrative Staff

Liz Emanuel, Office Administrator

Karolyn St. Clair, PC Specialist

JoAnne Young, Secretary

iv
Contents

Page

Chapter 1. Summary, Findings, and Policy Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Chapter 2. Standards Setting in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Chapter 3. Standards Setting in Comparative Perspective: The European Experience . . . . . . . . 61

Chapter 4. Structural Changes in the Standards Setting Environment . . . . . . . . . . . . . . . . . . . . . . . 77

Appendix A. A Framework for Assessing Standardization Issues . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Appendix B. Reviewers and Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

v
Chapter 1

Summary, Findings, and

Policy Options
Contents

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Request for the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

The Scope of the Study and Method of Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

What Is Meant by Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Evaluating the U.S. Standards Development Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

A Growing National Stake’ in Standards Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Insufficient Support for Standards Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

The Need for Cooperation Rather Than Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

The Need To Strike a More Appropriate Balance Between the Public and

Private Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Inadequate Federal Coordination and Policymaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

The Need for Greater Attention to How Other Governments Use Standards

to Create Markets for their Nations’ Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Persistent Due Process Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Criteria for Evaluating Policy Strategies and Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Cultural Consistency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Flexibility in Dealing With Different Industry Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Capability for Evaluation and Foresight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Provide for the Most Efficient and Cost Effective Use of Resources . . . . . . . . . . . . . . . . 20

An Incentive Structure Designed to Promote Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Equivalency With International Norms and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Support of Due Process and Antitrust Prescriptions ● . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Policy Strategies and Options for Addressing Standards Setting Issues . . . . . . . . . . . . . . . . 21

Box

Box Page

l-A. The United States/Saudi Arabia Standards Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Figures

Figure Page

1-1. Standards Universe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

1-2. Strategies and Options To Address Standards Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Tables

Table Page

1-1. Legislation: Creating the Need for Government Standards . . . . . . . . . . . . . . . . . . . . . . . . 9

1-2. Standardization Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Chapter 1

Summary, Findings, and Policy Options

Introduction

Standards affect our lives in many ways. Food and

drugs must comply with health standards; cars use

standardized, interchangeable parts; workplaces have

safety standards; clothing comes in standard sizes;

jobs are evaluated according to performance standards; telephones have standard interfaces; and bed

sheets are sized to fit standard mattresses. Even our

lives have become standardized through our reliance

on technology.

How standards are set is a matter of some concern

because the economic and social stakes in standards

are so large. The standards development process

must be fair to prevent any single interest from

dictating the outcome. Standards have major public

policy implications, but the government has avoided

taking a direct role in the process. Thus, in the

United States, almost half of all standards are set by

the private sector as part of a voluntary consensus

process, in which all or most of the key players—

including government-participate. The system reflects American political culture, and the general

preference for market-based, pluralist solutions.

Many in the standards community contend that

this private sector, voluntary consensus process has

historically worked well.l However, a number of

structural changes in the economy have recently

occurred, which raise the question of whether the

system can continue to be effective in the future.

These include the development of a highly competitive global economy, which the United States no

longer dominates; the emergence of regional trading

blocks; the growing importance of multinational

corporations and other translational nongovernmental institutions; and the rapid advance of technology.

Some people question whether the U.S. standards

development process, which was designed to meet

the problems of an industrial era, can continue to

perform well in this radically new environment.2

They are concerned, moreover, that other countries

are better organized and better able to influence the

international standards setting process, to the detriment of U.S. trade. In particular, they fear that the

harmonization of European trade laws, scheduled for

completion in 1992, will not only make it harder for

U.S. companies to trade in Europe, but will also

1 See proceedings, National Institute for Standards and Technology Public Hearings, “Improving U.S. Participation in International Standards

Activities,” Apr. 3,1990. Satisfaction is not so great among user groups, environmental and consumer safety organizations, industries expenencingrapid

technological change, as well as those heavily dependent on exports. For a discussion of standards development problems in the fast moving information

and telecommunication industries, see National Research Council, Crossroads of Information Technology Standards (Washington DC: National

Academy Press, 1990). See also, J.L. Berg and H. Schumy (eds.), An AnaZysis of thelnformation Technology Standards Process (Amsterdam Elsevier

Science Publishers B.V., 1990); Jeff Mead, “The Standards Process Breaks Do~” Datamation, Sept. 15, 1990, pp. 24-32; Dennis Gilhooly, “A

Standard Line,” Communication Week, Nov. 12, 1990, pp. 67-69; John W. Verity, “Complete Confusion: A Jumble of Competing, Conflicting

Standards is Chilling the hlarke~” June 10, 1991, pp. 72-79; and Irwin Dorros, “The Standard Slowdowq” Telephony, Feb. 26, 1990., pp. 46-49.

For a discussion of problems in the area of safety standards, see Mary Ellen R. Fise, CPSC: Guilding or Hiding From Product Safety (Washington

DC: Consumer Federation of America, May 1987). Among the problems cited are: 1) voluntary standards entail excessive time delays, 2) voluntruy

standards are often inadequate, 3) voluntary standards do not conform sufilciently to the consensus process, 4) agency reliance on nonexisting voluntary

standards, and 5) inadequate monitoring of implementation of voluntary standards.

2 ~sis not ~en~ely new Conwmo It was r~s~, for e~ple, as e~ly as 1974 in a Congressio@ Research SeNice study prepared for Congress.

As thiS study pointed out:

Participation involuntary international standardization has been spotty and uneveq with effective participation for some industries,

such as automatic &ta processing, while others have provided little support. . . . A second undesirable consequence is that the impact

of international standards upon small fm, consumers, and U.S. foreign policy objectives may often receive insufficient attention.

Voluntary Zndustry Statirds in the United States: An Overview of their Evaluation and Signij?cance for the Congress, Report to the Subcommittee

on Science, Research and Development CRS, July 1974, p. 4 (Hereafter referred to as CRS, 1974).

–3–
4 ● Global Standards: Building Blocks for the Future

allow the Europeans to take the lead in setting

international standards.3 Pointing to the active role

that foreign governments play in the international

standard setting process, some have called on the

U.S. Government to assume greater responsibility in

protecting U.S. interests.

This study addresses these concerns. Looking

across industry sectors, it evaluates the U.S. standards setting process in the light of its changing

economic and technological environment, and compares it to processes in other countries. In cases

where specific problems can be identified, it suggests alternative strategies and options that the

Federal Government might pursue.

Request for the Study

This study was requested by the House Committee on Science, Space, and Technology. Noting that

standards are increasingly being used to ease or

block trade throughout the world, the Committee

requested OTA to:

1.

2.

3.

assess the effectiveness of U.S. representation

in the international forums that develop standards and evaluate the impact international

standards setting is having on the U.S. ability

to export;

review the roles played by the governments of

other industrialized nations in their international standards setting activities and;

consider whether the U.S. Government should

play a greater role in funding international

standards development and standards assistance to developing countries.

The Scope of the Study and

Method of Approach

While standards have much in common, they are

not all the same. Standards serve a number of

purposes, having evolved at different points in

history in response to distinct social and economic

problems. In the past, for example, standards were

set only after a product had been developed. Today,

in the face of rapid technological change, many

standards are being set before a product is fully

developed. 4 Standardization processes and stakeholder interests also differ, depending on the nature

of the standard and the structure of the market.

Where a dominant producer or supplier exists, for

example, standards may be set on a de facto basis, in

the market place. But compromises and negotiations

among key players may be required when economic

leverage is more evenly distributed.5 Moreover,

when there are safety or environmental hazards

involved, government is more likely to become

directly involved.6

Because standards and standards processes differ,

it is difficult to generalize about them. What works

well in one set of circumstances may fail in another.

But comparisons over time, across industry sectors,

and among countries can be useful to identify the

important variables that lead to success or failure.

The following analysis is based, therefore, on a

comparison of the U.S. standards development

process, as it has evolved over time, with those of

Europe, as well as comparisons of how standards are

set across industry sectors.

A series of interviews, conducted in both the

United States and Europe, complement the research

3 See for a disc~sioq “Standards, Testing, and Certit3catioq ” The Effects of Greater Econom”c Integration Within The European COmn@ on

the United States: First F0120W Up Report, USITC Publication 2288 (Washington, DC: United States International Trade Co mmissio~ March 1990,

ch. 6). As noted in the USITC report:

Some began to woq-that the growing influence of environmentalists, consumers, and unions would lead the EC to “harmonize

up” regulatory requirements, putting in jeopardy U.S. access to the entire EC market. It became apparent tha~ because of their lack

of direct representation and uneven access to informatio~ some U.S. suppliers had limited influence over the private standards bodies

entrusted by EC authorities with drawing up voluntary standards. . ..The EC’s systematic updating of technical regulations posed the

prospect that standards developed as part of the 1992 program might become de facto or de jure world standards. Some claimed that

the state-of-the-art standards being developed in areas like machine tools could give European competitors an upper hand, not only

in the EC, but in third country markets.

Ibid.,, pp. 6-12,6-13.

d These standards ~referr~ to as anticipatory standards. These standards are written before a product has been developed; thCY Sw+howproducm

must perfo~ but allow producers to independently develop their products to meet these specitlcations. For a discussion see Carl Cargill, Information

Technology Stanalzrdization: Theory, Process, and Organizations (Cambridge, MA: Digital Press, 1989).

5 w~CJkbu ~d Kent Hug~, sta~rdization of ~caz Area Networks, mimeo, Dcp~ent of @@eering ~d Rblic Policy, C=egie Mellon

University, April 1986.

6David A. G~Q “cm ~dustry Self-Re@ation Work?” California Management Review, VO1. 25, No. 4., s~ er 1983.
Chapter l-Summary, Findings, and Policy Options ● 5

for this study.7 They are intended to help fill the gap

between the theoretical understanding of the standard setting process and how it works in practice.

Most standard setting literature is theoretical. It

attempts to identify the conditions under which

“optimal” standards might emerge. This literature,

which is aimed at the microlevel of the firm, views

the producer, or vendor, as the primary actor in the

standards development process. Few studies have

examined how standards evolve through the voluntary consensus process in institutions such as the

American Society for Testing Materials (ASTM)

and the Institute of Electrical and Electronics

Engineers (IEEE). And more often than not they

have ignored key players such as user groups, or the

standard setting institutions themselves.8

What Is Meant by Standards

The choice of definitions has major policy implications. How the term “standards” is used in this

study, for example, determines the terms of the

debate and the range of government options developed for dealing with problems in the standard

setting process.9 The role for government may differ,

for example, depending on whether one’s reference

is product standards or safety and environmental

standards.

Broad definitions used in every day speech are

generally not helpful. They are too vague to guide

analysis. Precision is sacrificed for the sake of

comprehensiveness. This is clearly the case for

standards definitions. They tend to be exceedingly

broad, in order to cover the full range of standards

found throughout society. Included among the

definitions of standards in Webster’s Dictionary

are;

10

. . .something established by authority, custom, or

general consent as a model or example,

. . .something set up and established by authority as

a rule for the measure of quantity, weight, extent,

value, or quality.

Although these definitions provide an overall

notion of what standards are, they do not help focus

the analysis. For this reason, researchers formulate

their definitions to conform to the specific questions

to be asked and the problems to be solved. Economists, for example, generally seek to know how, and

under what circumstances, standards are set in the

marketplace. They tend to view standards as an

agreed upon set of specifications that define a

particular product or that allow products to interopcrate. Anthropologists, on the other hand, focus on

the question of how individuals relate to their

cultures. Thus, they consider standards to be the

accepted rules of behavior that facilitate social

interactions. Government bureaucrats are likely to

view standards as the means to address a societal

concern or to achieve asocial end. They often equate

standards with regulations.

This study focuses on how U.S. standards and

standards development processes might affect U.S.

trade. Thus, it must consider all standards and

standards processes that influence national economic performance. For this purpose, three different

kinds of standards are considered. These include

product standards, control standards, and process

standards. There are also three different methods of

achieving standards: 1) standards can be set through

the market, on a de facto basis; 2) standards can be

set by government, through the regulatory process;

and 3) standards can be negotiated through a

voluntary consensus process. These three kinds of

standards and three kinds of standards processes can

be matched to form a matrix of both the standards

universe and the standards setting processes and

problems analyzed in this study (see figure l-l).

Thus, all three kinds of standards can be established

in any one of the three standards processes. The

T A few of tie pple interviewed requested anonymity because they felt their positions and effectiveness in the Smdilrds community might ~

jeopardized were they to make their statements public. OZ4 decided it was important to include some of this interview material in therepo~ even though

it cannot be directly cited. Because the U.S. standards process is a voluntary process, how well it works depends to a great extent on the attitudes and

perceptions of the participants. The conflict within the standards community is a major problem for the U.S. standards system, and its magnitude only

became apparent through the course of the interview process. All other interviewees and contributors are listed in app. B.

g For a description of this literature w app. A

9 & ROSS E. Cheit notes in quoting Charles Lindblom and David Cohm

. . .we do not discover a problem “out there,” we make a choice about how we want to formulate a problem. That choice reflects

certain values and in turn constrains the realm of possible solutions.

Ross E. Cheit Setting Safety Standizrds: Regulation in the Public and Private Sectors (Berkeley, CA: University of California Press, 1S90), p. 150.

10 Webster’s New Collegiate Dictionary (Springfield, MA: GaC M- Co., 1977). p. 1133.
6 ● Global Standards: Building Blocks for the Future

Figure l-l—Standards Universe

Type of Standard by Goals

particular

tandarization Control Product/quality Process/interoperability

mechanism

Language customs

Warner-amex

De Facto Database-privacy VCR standards Bills of lading

standards

Computer interface

standards

Auto safety NSA encyption standards Open network architecture

regulations standards

regulatory Department of Agriculture

Fuel economy ETSI standards

standards Product classification for European

standards telecommunication

standards

Standards for Map-top protocols

Voluntary medical devices for OSI/standards

Refrigerator

consensus

Pressure vessel standards Standards evolving process

standards legislation

Petroleum standards Electronic data

interexchange

standards

The three kinds of standards and three kinds of standards processes can be paired to forma matrix that scopes

the standards universe and the standards setting processes and problems to be analyzed in this study.

SOURCE: Office of Technology Assessment, 1992.

process by which standards are established is often the result of historical circumstances

and/or political and cultural choice. (For a detailed

discussion of these standards and the processes

through which they evolve, see app. A).

Evaluating the U.S. Standards

Development Process

The analytical basis for evaluating the U.S.

standards setting process is poor. There is no

objective set of criteria to gauge the standardization

process, and little public thought or debate has been

devoted to the question of what standards “ought to

achieve. Much available information is hearsay

and tainted by the narrow perspectives of those

involved. Thus, stakeholders are inclined to judge

how well the standards process works for each of

them, not on the basis of some agreed upon objective

criteria. Even among academics, there is a tendency

to judge the system from an overly narrow perspective. Whereas economists are likely to focus on the

criteria of efficiency, those in political science and

public administration generally stress the system’s

effectiveness in meeting its goals.

Nor is there agreement about who should determine how well the standards development process

works. Because standards organizations perform a

number of public functions, government has generally monitored the process, intervening when it

deemed necessary. For example, assertions of antitrust infringements and unfairness led the Federal

Trade Commission (FTC) in the 1970s to investigate

the system and recommend that government assume
Chapter Summary, Findings, and Policy Options ● 7

a greater role in regulating standard-developing

bodies. ll However, many in the private sector

contend that it is the participants in the system,

themselves, who should be the final arbiters.12 This

position assumes both that 1) the participants know

and are willing to pursue their own best interests;

and 2) that participants’ interests always coincide

with the national interest. Both assumptions, are

certainly open to question, if not clearly refuted by

history. l3

Criteria for judging standards processes also

change over time. As circumstances change, so too

do the demands placed on the standards process.

And different kinds of organizational arrangements

may be more effective in meeting some demands

than others. For example, during wartime, when

speed was essential, government assumed control

over standards setting. However, in the postwar

period it relinquished the responsibility to the

private sector.14

From the perspective of Congress, and for the

specific purposes of this study, the most important

criterion for judging the U.S. standards development

process is its impact on the Nation’s overall economic performance. The three major questions

addressed, therefore, are:

1.

2.

whether and to what extent does the U.S.

standards process support the growth and

competitiveness of the U.S. economy in a

rapidly changing global environment;

to what extent, and in what ways, are the

current set of organizational arrangements a

factor in determining the system’s performance; and

3. under the current set of circumstances, what

kinds of organizational changes, if any, might

lead to enhanced performance.

To answer these questions, this report looks frost

at the evolution of the standards process in the

United States (ch. 2); second, at standardization as it

has taken place in Europe (ch. 3); and third at the

structural changes taking place in the global standards setting environment and their implications for

the United States (ch. 4). Appendix A provides an

analytic framework for assessing standardization

issues.

Key Findings

Concern about the U.S. standards setting process

and recommendations for greater government involvement are based on the notion that the U.S.

approach no longer works as well as it should.

Before considering what government might do to

improve the situation, one needs to identify specific

failures and demonstrate why and how government

involvement will lead to a better result. OTA

identified a number of problems that give cause for

concern.

A Growing National Stake in

Standards Issues

The government, as the sole representative of the

Nation, has a considerable interest in the effectiveness of the U.S. standards setting process. Standards

help determine the efficiency and effectiveness of

the economy, the cost, quality, and availability of

products and services, and the state of the Nation’s

health, safety, and quality of life. The government’s

stake in standards setting will loom even larger in

the future, given a number of developments.

11 ~C, Bmeau of com~erprotectio~ Standards and Certification: Proposed Rules and Staff Report (Washington, DC: Government Prindng Off@

1978).

12 ~s position w= stated repeatedly during interviews with stakeholders.

13 For e-pie, ~thoU@ p~cipation ~ fitemtio~ standards bodies was in the long term interest of U.S. s~d~ds organizations, as VVefl ~ of

the Nation as a whole, U.S. standards developers failed to recognize the opportunity, and were late getting involved. Reportedly, ANSI was able to assume

the position of national representative body within the ISO, not because of its stature in standard setting, but rather because ASTM-the most prominent

standard development organization at the time-made a clear policy decision not to get involved in international standardization.

14 ~ 1917, pr~uct divemip was s. ~eat it ~atened t. ~der the WTW effort, As a res~~ the government set Up a Commercial Economy Board

of the Council of National Defense, whose task was to simplify the use of labor, capital, and equipment in all industries. Its membership was comprised

of businessmen from key industries. In May, 1918, the Board was transferred to the War Industries Board. This Government Board eventually regulated

themanufactureof over 30,000 articles of commerce. See CRS, 1974, p. 11. A similar shift occurred during the Second World War. Noting the importance

attached to standards the ASA wrote:

Never before has the country been so standards conscious. Their president—his Director of Economic Stabilization-the

Army-the Navy-WPB—OPA-industry-are all using standmds as a means of carrying out the stake imposed upon them by war.

Standards are being debated on the floor of Congress, wl-dch has setup a committee to study their use.

As cited in ibid, p. 17.
8 ● Global Standards: Building Blocks for the Future

As the United States adjusts to a changing global

economy, more and more industries are not only

dependent on trade but also affected by standards. It

was estimated, for example, that for the year 1977,

$69 billion of U.S. exports were affected by standards activity. No comparable figure is available

today. However, it is estimated that of $83 billion in

exports of manufactured goods, some $48 billion is,

or will be, subject to European Community (EC)

product safety standards alone.15

Standards help determine the competitiveness of

U.S. industries. Recognizing the relationship between standards and trade, the Europeans are using

standards not only to create a common market, but

also as a marketing device to sell their products in

Eastern Europe and the developing world. If the U.S.

standards process malfunctions, or fails to keep pace

with standards developments in the rest of the world,

American industry will suffer.

Failure to appreciate the implications of international standards can have serious consequences for

U.S. industry. The U.S. machine tool industry

provides a case in point. For years, the industry was

able to thrive without regard to international standards. Industry practices became de facto standards

because the U.S. market for machine tools was so

large. In a global market, where there is intense

foreign competition, this is no longer possible. Not

being involved in the development of international

standards or experienced in producing products to

foreign specifications, the U.S. industry has become

much less competitive.l6 The Japanese, on the other

hand, have gained considerable ground in the

international market, in part by more effectively

using standards to improve productivity and add

value to their products.l7 Concerned about the fate of

the machine tool industry, President Bush recently

agreed to approve a 2-year voluntary restraint

agreement on machine tools, which limits imports

from Taiwan and Japan, to allow time for the

industry to become revitalized.18

Standards will become more important due to

growing reliance on technology. Just as specialization and assembly line production provided an

impetus for standardization during the industrial era,

so too networked production and computer-assisted

work are increasing the demand for standards today.

Machines require more precision than human beings, as they are less flexible in adapting to errors

and omissions.l9

Technology deployment can also give rise to

unintended health and safety problems and threaten

the Nation’s environment. Standards can serve as

mechanisms for limiting or ameliorating these

impacts. Although safety standards were first set

early in this century, creation of standards designed

to control technological impacts has been growing

steadily. At last count, Federal agencies, such as the

Environmental Protection Agency, the Food and

Drug Administration, and the Occupational, Safety,

and Health Administration, had developed approximately 8,500 standards (see table 1-1 on laws

affecting standards) .20

The growing pace of technological change will

also drive the need for standards. The faster the

advance of technologies, the greater the risk in R &

D and product development. Standards setting can

reduce uncertainty in a rapidly changing technology

environment. Participants in the process learn first

hand about new technologies. Moreover, by developing reference models and anticipatory standards,

such as Open Systems Interconnection (0S1),21

manufacturers have a general target towards which

15‘rhis figure was provided by the Department of Commerce.

16 As the chef fiecutive offi~r of Cincinnati Milacrom described the situation to members of his indmtry:

Your competitors are global, ..Your suppliers, your standards, your designs, your issues, your policies, your strategies-they all

must become global. lkchnology is not a provincial field any more. ~dustry must implement] radical measures.

‘Cincinnati MilacromChauman “ Issues Stem Warning to U.S. Manufacturers,’ New Technology Week, Nov. 18, 1991, p. 4.

Iywctiel L. Dertouos et.al., Made in America: Regaining the Productive Edge (Cambridge, MA: ~ PK$SS, 1989), PP. 241-42.

18 ~Bush Approves L~tedExtemion of ~c~e Tool ~s Witi Jap~ T~w~’]nrernafiona/ Trade Reporter, J~. 1, 1992, p. 10.

lg~rd w~emte~ Setting Global Telecomnication sta~rd~: The Stakes, The Players & The Process (Norwood, MA: Art~h House, 1990),

p. 18.

20 Ro~fi Toth, Toth Assoc~tes, (cd+), Sra~rdsAc~vin”e$ of Organizations in the United States (w~hington, DC: NIST Special Publication 806,

February 1991), p. 3.

210s1 (~en systems ~tercom=tion) is ~~chi~~e for ~mputer ne~o~ ~d a f~ly of s~~ds tit permits tih communication ~d data

processing among diverse technologies. OSI-based standards anticipate the development of particular applications or products. They provide a reference

model that defines and categorizes seven layers of functions that need to be performed in the protocols and services at each layer. OSI-based standards

are international in scope and are being developed in international standard-setting bodies.
Chapter Summary, Findings, and Policy Options . 9

Table l-l—Legislation: Creating the Need for

Government Standards

Safe Drinking Water Act of 1974 (Public Law 93-523)

Child Protection and Toy Safety Act of 1969 (P.L. 91-1 13)

Lead-Base Paint Poisoning Prevention Act of 1970 (P.L. 91 -695)

Consumer Product Safety Act of 1972 (P.L. 92-573)

Mobile Home Construction and Safety Standards, Title VI of the

Housing and Community Development Act of 1974 (P.L.

93-383)

Traffic and Motor Vehicle Safety Amendments of 1970 (P.L.

91 -265)

Highway Safety Act of 1970, Title II, Sec. 202 of Federal-Aid

Highway Act of 1970 (P.L. 91 -605)

National Environmental Policy Act of 1969 (P.L. 91-190)

Resource Recovery Act of 1970 (P.L. 91 -512)

Clean Air Amendments of 1970 (P.L. 91 -604)

Federal Water Pollution Control Act Amendments of 1972 (P.L.

92-500)

Federal Environmental Pesticide Control Act of 1972 P.L. 92-516)

Federal Energy Administration Act of 1974 (P.L. 93-275)

Solar Heating and Cooling Demonstration Act of 1974 (P.L.

93-409)

Medical Devices Amendments Act of 1975 (P.L. 94-295)

Occupational Safety and Health Act of 1970 (P.L. 91 -596)

Toxic Substances Control Act of 1976 (P.L. 94-469)

SOURCE: William T. Cavanaugh, “Needed: A National Standards Policy,

ASTM Standardization News, vol. 5, No. 6, June 1977, p. 13.

they can direct technology development. Standards

setting, therefore, is an important aspect of any

national economic policy aimed at encouraging

innovation and economic growth.

Some standards will likely be more important

from a national perspective than others. In a global,

information-based economy, networking technologies provide a basis for productivity and economic

growth. These technologies will become the basis of

an infrastructure for all economic activity. If networks fail to interconnect for lack of standards, the

Nation could suffer considerable economic loss, and

national security might also be jeopardized. Thus,

while government may have a relatively small

interest in the development of certain product

standards, its stake in others, such as standards for

interoperability, will be high.22

Insufficient Support for Standards Setting

Standards are essential for all human activity, but

most people take them for granted. Only when

products fail to work, or mishaps occur, does the

average person thinks about standards. Even in

business, where money is at stake, standards are

often given a low priority. There is a clear need in

the United States for greater attention to standards.

In an information-based global economy, where

standards are not only employed strategically as

marketing tools but also serve to interconnect

economic activities, inadequate support for the

standards setting process will have detrimental

effects.

One reason for the lack of regard for standards is

that they exhibit some of the characteristics of what

economists call ‘public goods. ’ ’23 Public goods are

those goods whose benefits are available to

everyone and from which no one can be excluded,

and no one can frilly appropriate the benefits. As a

result, public goods are underproduced. Standards

often fall into this category.24

Other market failures may also weaken standards

development processes. If the most efficient standard choices are to be made, all interested parties must

have access to accurate and timely information.25

However, information about standards, like standards themselves, is a public good, and is therefore

22 I.U the past, achiev~g adqate intero~rability within the communication infrastructure was relatively easy. In telephony, AT&T provided both

end-to-end service and system interconnection. However, in a recent study, OTA found that interoperability is likely to become more problematic in

the future, from both technical and administrative standpoints. Not only will the need for interoperability become greater, achieving it is also likely to

be harder. see U.S. Congress, Offke of lkchnology Assessment, Critical Connections: Communicarionfor the Future, OTA-CIT407 (Washington DC:

Government Printing Offke, January 1990), chapter 11.

~ he public goods will not be produced privately. There are only a few pure public goods, one example being mtional d~ense. Othti goods, ~

education and standards, are impure public goods. These combine aspects of both public and private goods. Although they serve a private function, there

are also public benefits associated with them. Impure public goods may be produced and distributed privately in the market or collectively through

government. How they are produced is a societal choice of significant consequence. If decisions about impure public goods are made in the market, on

the basis of personal preferences alone, then the public benefits associated with them may not be efficiently produced or equitably distributed. See Edwin

Mansfield, Macroeconomics Theory andApplication (New Yorlq NY:W.W. Nortoq 1970)

XC. Kindelberger, “Standards as Public, Collective, and Private Goods,’ KyZos, vol. 36, pp. 377-395; see also Sanford Berg, “’lkchnical Standards

as Public Goods: Demand Incentives for Cooperative Behavior,” Public Finance Quarterly, vol. 17, January 1989, pp. 35-53.

~ For a &scussion of market failures due to lack of information, S* Jo*ph Farell and Garth Saloner, “Coordination Through Committees and

Markets,” RandJournal ofEconomics, vol. 19, summer 1988, pp. 235-252; and Joseph Farrell and Garth Saloner, “Standardization Compatibility, and

Innovation” Rand Journal of Economics, vol. 16, spring, 1985, pp. 70-83.
10 ● Global Standards: Building Blocks for the Future

likely to be underproduced. Even when standardsrelated information can be packaged for sale like

other commodities, thus yielding an adequate return,

its price may limit distribution so that people have

insufficient information to make sound decisions.

Some kinds of technologies are subject to greater

market failures than others. For example, networked

technologies-e. g., information and communication

technologies-often have large installed bases, making it particularly costly for users to shift to a new,

more technologically advanced standard. Thus, they

may fail to adopt a superior standard, due to what

economists call ‘‘excess inertia. ”26 At the same

time, these technologies also exhibit “increasing

returns to adoption,” a situation that occurs when

the benefits to the user of a technology increase with

the number of users. Under these circumstances, the

wrong standard might be chosen due to ‘‘excess

momentum.’ Not wanting to be left off the network

when a major user moves to a new standard, other

users may rush too quickly to jump on the bandwagon.

These market failures help to justify the role of

government. Sometimes, public interest and involvement in standards can only be sparked by some

form of government action or major national event.

The rise of the standards movement in the United

States, for example, grew out of wartime production

and a national campaign to reduce waste. With an

effort made to reach everyone, standards became a

household word.

The same thing is happening today in Europe,

where standards are seen as a tool for unification.

The European Commission (EC) estimates, for

example, that by 1993 the Community will need at

least 1,000 European standards.27 Viewing standardization as a priority task, the European Council

adopted a new approach for developing European

standards in May 1985.28 As described by one

member of the French standards community: “Standards are bound to lead to unification. Not since the

French Revolution has there been such a significant

movement.

How far, and under what circumstances, the U.S.

Government should, itself, become involved in

standards setting is problematic. It is hard to measure

the societal benefits to be derived from standards, or

the costs of low participation rates. The costs

associated with government involvement must be

taken into account in any calculation. If standards

are produced prematurely, they can retard innovation. If they do not accurately reflect the market, they

will send out false signals and favor some firms over

others.

The situation is further complicated because

standards problems differ by industry. In industries

such as telecommunications, for example, the incentive to participate in standards setting will likely be

high. If communication systems fail to work together, there can be no services to sell. Support for

standards setting will also be greater in industries

comprised of a few large companies. They are more

likely to see a return on their investments, since there

are fewer to share the benefits.29 This has been the

case, for example, in the automotive and petroleum

industries. Industries subject to Government regulation are also likely to be actively involved in

standards setting, if only for preemptive reasons.30

There are, however, cases where greater government involvement can easily be justified. Some

~ Joseph F~ell and Garth Saloner, ‘Horses, Penguins mdumgs,’ H. Landis Gabel (cd.), Product Staruilzrds and Competitive Strategy (North

Holland, Elsevier Science Publishers, 1987), p. 11. As the authors note:

“Excess inertia arises when not enough users are willing to go out on a limb by adopting the new technology. This is most likely

when network externalities are strong and there is a great deal of uncertainty about whether a lead would be followed,” p. 11,

27 sinw 1g86 appm~tely 30 sw&trWtion mandates related to European Economic Community (EEC) legislation (M-for about 800

European standards) have been given to the two rnainEuropeanstandardizationbodies Comite’ Europeende Normalisation (CEN) and Comite’ Europeen

de Normalisation Electrotechnique (CENELEC), which are to be completed by 1992. With more mandates being prepared, the total is likely to be ovez

1,000. Commission on the European Communities, Commission Green Paper on the Development of European Standardization: Action for Faster

Technological Integration in Europe, Brussels, Oct. 8, 1990, COM(90) 456 f~ (hereafter referred to as Green Paper on European

Standardization).

28 see ch. 3. me nm~r of ~~c~ Cohttees ~d wo~g ~oups ~doubled be~een December 1987 and December 1989, ~d the number

of draft European Standards in CEM rose from 220 in 1986 to 950 in 1989. Green Paper on European Standardization, op. cit., p. 9.

See for a discussion Lucy Kalloway, ‘Technical Standards Machinery Grinds Exceeding Slow,” Financial Times, May 14, 1990, p. 4.

29~cW Olse% The ~gic o~Co//ec~ve ~~on: public Goods and the Theory @Gr~up~ (c~bfidge, MA: Hmad University pr~$ 1971),

m For example, flammability standards in upholstered furniture industry were only developed by the industry trade association after a notice of

proposed ndemaking appeared in the Federal Register. See Harvard Business School, The Upholstered Furniture Flammability Zssue (Boston, MA:

Intercollegiate Case Clearinghouse, 9-680084, 1980). See also David GamirL op. cit., foomote 7, and Ross E. Cheit, op. cit., foomote 10.
Chapter 1--Summary, Findings, and Policy Options ● 11

standards-such as health, safety, and environmental standards- will have consequences for the

whole Nation apart from their market values. Moreover, since technological impacts transcend national

boundaries, standards setting in these areas will

likely require intergovernmental negotiations.

When the divisiveness in the standards community becomes intense, and its effectiveness is questioned, the government may also need to step in.

Thus proposals to expand the Federal role have often

come from the government acting in response to

dissident claims. In 1979, for example, assertions of

antitrust infringements and unfairness led the Federal Trade Commission (FTC) to investigate the

system and recommend that government assume a

greater role in accrediting standards setting bodies.31

Government involvement could similarly be

called for to assure that U.S. producers and manufacturers have access to foreign markets. This is

particularly important today, when standards are

critical to the development of regional trading areas.

For example, Secretary of Commerce Robert Mosbacher,

concerned about U.S. access to the European market,

recently initiated discussions with the Vice President of the European Commission, Martin Bangemann to work out some of these issues.32 However,

this action was not without controversy; a number of

people in the standards community felt that the

government had usurped the private sector’s role.33

Government support for standards setting can be

most clearly justified in the international arena.

Although much future standards work will take

place in the international arena, it is not clear that the

United States will bean effective presence there (see

ch. 4). The United States has been slow to appreciate

the growing importance of international standards.

Some say, for example, that U.S. standards bodies

lost a tremendous opportunity in the early post

World War II years, when European standards

institutions were still in a state of disarray .34

Europeans, themselves, complain about the failure

of the United States to make a real commitment to

international standards. Some even suggest that U.S.

involvement in the past was counterproductive.

Americans, they say, were playing for much lower

stakes than the Europeans, since standards implementation in the United States is voluntary, but

compulsory in Europe. To the Europeans, therefore,

U.S. participation has sometimes appeared perfunctory, if not at times obstructionist.35

The United States may also have considerably

less influence than in the past to determine the

character of international standards institutions.36

That the United States was able to play the dominant

role in defining the post-war international economic

order was due to factors, many of which no longer

exist, such as American economic and military

preeminence, the threat of a common enemy, as well

31 ~C, op. cit., footnote 12.

32 See, “Co~erW D~~ent and EC Move Closer to lksting and Certification Agreement,” Business America, July 15, 1991, pp. 7-9.

33 unpublish~ rnerno from ANSI to the OffIce of Management and Budget (oMB).

~ Three Wm li~e inWntive to ~nsidm i.nternarioti standards, so long as national economies were independent of one another. Writing in 1928, K.

H. Conduit explains the attitude of the time. He notes:

Very little has been accomplished in international standardization. . . for obvious reasons. The manufacturing arts are different at

different stages indifferent countries, and what is acceptable in the advanced countries is not in the backward ones. Until international

trade is conducted on a basis less strongly flavored with nationalism, and industrial education has made more progress than it has ye~

there will apparently be little economic justitlcation for extensive standardization.

K.H. Condi6 “The Economic Aspects of Standardization” Standards in Zndustry (The American Academy of Political and Social Science, Notes

from the Annals, 1928), p. 40.

35 Re~fig t. these Cements d~g & o’rA review p~ocess, some memb~s in the Ameri-S@&ds COInInU@ say tittheSe COInmentS we

self-serving, and thus not to be taken too seriously.

% Exp_ U.S. hegemony in the past, Gilpin notes:

For the fwst time ever, all the capitalist economies were politictd allies. American initiatives in the area of trade led to successive

rounds of tariff liberalization. The dollar served as the basis of the international monetary system while American foreign aid, direct

investmen~ and technology facilitated the rapid development of advanced and certain less developed economies. American hegemony

provided the favorable environment within which supply and demand forces created an era of unprecedent growth and an increasingly

open economy.

Robert Gilp@ The Political Economy of International Relations (Princeton NJ: Princeton University Press, 1987), p. 5.
12 ● Global Standards: Building Blocks for the Future

as relatively steady economic growth.37 To affect

standards processes in an international environment

in which economic and political resources are now

both more balanced and dispersed, the United States

will need to exert greater effort and resources, as

well as negotiate and compromise, more than ever

before (see ch. 4).

Rallying sufficient resources for such a task will

also be difficult. The potential for market failures at

the international level is very high, since many

American companies, especially in the small business community, have yet to recognize the implications of international standards in a global economy.

By the time they come to appreciate the potential

consequences, the damage to the national economy

may have already been done. Initial research suggests that a key factor determining outcomes in

standards development bodies is the amount of

resources and skills that participants bring to bear.38

And whereas American participants must pay their

own way, participants from other countries are

generally supported, at least in part, by their national

governments. 39

The cost of international standards development,

and of participating actively in the process, is also a

limiting factor. It has been estimated, for example,

that the development of a major international

telecommunications standard may require in the

range of 1,000 person-years of experience, 20

person-years of actual effort, and $3 million.40

Distributing standards information across national

boundaries, when it requires cultural and political as

well as linguistic translation, can also be very costly.

If sufficient resources could be brought to bear in

the international arena, the payoff would likely be

great. U.S. companies, which are no longer dominant in the market, and hence no longer able to set

de facto standards, will benefit from a standards

setting arena where influence is not based solely on

market power.41 Equally important, signatories of

the General Agreement on Tariffs and Trade (GATT)

Standards Code42 have pledged to adopt any international standards that already exist. Thus, if the

United States supports the timely development of

standards in international standards bodies, it may

preclude the Europeans and others from using

regional standards to restrict trade.

The Need for Cooperation Rather

Than Conflict

The voluntary consensus process requires cooperation and trust to succeed. There is little bureaucratic structure to otherwise hold it together.

Unresolved disputes and disagreements not only

distract from the main purposes of setting standards; they also undermine the legitimacy of the

system, both in the opinion of its members as well as

in the eyes of the rest of the world. Such is the case

in the U.S. standards world today.

The outpouring on behalf of the present standards

development system hides some deep-seated divisions within the standards community itself. Although most members firmly believe in the voluntary consensus process, they differ about what

‘‘opemess’ means. The American Society for

Testing Materials (ASTM) insists that true consensus requires the participation of all interested parties,

37 AS (iexribe(i by Gi.lphl:

The United States emerged from the Second World War as the dominant or hegemonic economic and military power in the

international system. This unchallenged American preeminence was partially due to the wartime destruction of other industrial

economies. From this perspective, the commanding nature of American leadership in the early postwar period was “abnormal” and

would one day decline with the recovery of other economies. This artiilcial situation, however, caused false and extraordinarily high

economic expectations among the American people that continued into the 1990s and made adjustment to economic and political

decline extremely difficult.

Ibid, p. 344.

38 See._B.H. Weiss and win Sirbu, “~hnological Choice in Voluntary Standards C!Ommitt@S,” Op. cit., fOOtnOte 9, pp. 111-132.

39 See ch. 4, for a detailed discussion.

@Dr. Odo J. Struger, “Impact of International and Foreign Standards on a Company’s Operations,” Presentation Aug. 20, 1991, p. 6.

41 tik, op. cit., footnote 9; and Farrell and Saloner, op. cit., footnote 9.

42 ~cle z-z, Aweement on ~c~c~ Barrie~ t. Trade. T& standards c& att~pts to ensure tit “twti~re~ations and smdards are IkOt

prepared, adopted, or applied witha view to creating obstacles to international tmde.” To accomplish this it lays out principles that guide the development

and application of standards and the use of conformity assessments procedures. These principles include using international standards unless

inappropriate for certain speciilc reasons and to not develop or apply standards in a way that poses an unnecessary obstacle to international trade. In the

draft texq which is ahnost complete, countries pledge to use the least restrictive measure to accomplish a legitimate objective. In general these principles

also apply to conformity assessment procedures (that is, the methods by which a body assures that a product conforms to a particular standard).
Chapter Summary, Findings, and Policy Options ● 13

even if this requires subsidizing some groups. On the

other hand, the American National Standards Institute (ANSI) as well as others, argue that due process

requires only that the process be open so all have an

opportunity to participate. They contend that willingness to pay is an essential measure of interest in

the process.

Members of the standards community also disagree about which organizations produce the “best”

standards. For instance, many professional societies

claim that their standards are technologically superior, since their members participate not as representatives of any group or interest, but rather as

individual engineers.43 Some industry groups argue

the opposite. Standards set by professional societies,

they contend, do not reflect market forces, and they

are often insensitive to industry competitive issues.

“Unaccountable to industry, they often do more

harm than good,” OTA was told.

Standards setting bodies also compete to sell

standards, which is another important source of

contention. Many of these organizations resemble

publishers; they orchestrate standards setting in

exchange for the right to sell standards and other

value added, standards-related services. Sales from

standards, for example, account for 80 percent of the

income of ASTM, and 28 percent that of ANSI.

Competition and turf battles among these and other

standards setting bodies often revolve around these

sales. These struggles are likely to become even

more intense and convoluted in the future with the

growth of a world market for standards and the

emergence of new global competitors.

This economic competition is compounded by

personality conflicts in the standards setting community, some dating back a number of years. There

is little trust or respect among the leadership. People

characterize one another in highly acrimonious

terms. 44 As one industry representative, who is

otherwise highly supportive of the U.S. standards

system, described to OTA “This situation is sheer

madness. It has truly gotten out of hand and no

longer serves our needs.”

The interests of some standards setting organizations are also beginning to diverge from those of

manufacturers. In a highly competitive global economy, for example, it is important for manufacturers

to have their standards adopted on an international

basis. They may even want to ‘give’ their standards

away in an effort to develop new markets. However,

such a policy is not in the interest of those standards

setting organizations, whose livelihoods generally

depend on standard sales. In addition, manufacturers

may want to speed up standards development and

implementation, but standards setting organizations

often hesitate to put their standards electronically

online due to copyright concerns.

Conflicts in the standards community weaken the

U.S. position internationally. Aware of these disputes in their most minute detail,45 European standards makers use them to their advantage. Even so,

Europeans would prefer that the United States

presented a united front to the rest of the world.

“The United States,” they say, “is a major economic power, and it must play its role in international standards setting accordingly. ” Europeans

emphasize how difficult it is to negotiate with one

body speaking authoritatively for the United States,

“when you are unclear about its actual power, and

who it really represents. ” They complain that one

moment they are told that ANSI speaks for all the

United States; but the next, ASTM is knocking at

their doors.

Internecine warfare in the standards community

also raises questions about the ability of the voluntary standards organizations to carry out the public

trust delegated to them.46 In a recent public display

of these problems, ANSI-which is recognized

internationally as the official member body to

represent the American standards community in

international standards organizations-charged before the Office of Management and Budget (OMB)

43 For a descriptions of the American standards org animations and the rules that govern them, see ch. 2.

44 bong the terms used during the O’E4 interviews to describe members of the community were “SCumM, “ “liar,” and “sleaze,” to name a few.

O’lA interviews.

Some reviewers of the OTA draft believe that it is inappropriate to use such terminology in a government report. However, many of these same

people, argue that OTA has exaggerated the tarf battles and personaMy conflicts within the standaxds community. Because these words illustrate the

intensity of feeling and negative tone of the competition among staudards organizatio~ OTA chose to retain them in the fti document.

45 For e~ple, the word for scum ball in French, OTA was told, is “1’eau du merde. ”

a ~~ou~ a volW@, p~vate smtor activi~, smtids making in the United States is a public trust. The income that standards bodies derive from

sales of standards documents and from member dues is tax deductible.
14 ● Global Standards: Building Blocks for the Future

Table 1-2—Standardization Systems

U s . Other industrialized nations

Distributed Centralized

Pragmatic Systematic

Reactionary Anticipatory

Inch-pound Metric

Entrepreneurial and individualistic Tools of industrial policy

Maximize role of private sector Standards development responsive to government

direction and national policy

Tolerated; implementation questioned Acceptance; immediate implementation

International standards often only guides Direct adoption of international standards

Open and transparent Often closed, negotiated standards development

Appeals mechanisms exist Appeals procedures are exception

Self-certification and warranties Type approval and third party testing

SOURCE: R. B. Toth, Toth Associates, course material from “Establishing and Managing a Company Standardization

Program.”

that certain parties in the Department of Commerce

are underminingg ANSI’s authority through their

actions. However, three other major U.S. standards

setting organizations quickly took exception to this

charge, claiming that they fully support the Department of Commerce’s actions.47

The Need To Strike a More Appropriate

Balance Between the Public and

Private Sectors

Failure to bring American standards setting

organizations together, and to work out their

relationship with government, is a real and very

serious problem in dealing with other nations. A

solution requires afresh perspective that objectively

considers both the problems of the system and the

ways in which all participants can join to resolve

them.

Standards serve both public and private functions; this raises a fundamental question about the

appropriate roles of government and the private

sector. Nations differ in the way they assign

responsibility (see table 1-2). In Europe, many

functions, which in the United States would typically be considered private sector tasks, are carried

out by national governments. Standards setting is no

exception. 48 From the European perspective, standards setting bodies perform a number of “public”

functions. Accordingly, all European governments

routinely support national standards setting to some

degree and in one form or another. Moreover,

whereas the private sector in the United States tends

to view such support with suspicion—if not alarm—

Europeans are comfortable accepting it. As one

member of the French standards community told

OTA “Americans are somewhat paranoid about

government. If our government gives us financial

support, it simply gets what it pays for. This

certainly does not mean that the government has

control.’

The U.S. standards setting process reflects a

strong political and cultural bias in favor of the

marketplace, a preference that has its origins deep in

American history.49 Although government provided

at the turn of the century the first impetus for

national standards, it gradually relinquished much of

this responsibility to private standards setting organizations, 50 which had already begun to emerge as

47 See, for one k~sio~ “ANSI Complaints to OMB Underscore lknaions in fivate SCCtOr,” Luborato?y Regulation News, vol. 2, No. 12, June

25, 1991.

4s sw ch. 3 for a discussion,

49 Gabfiel &ond ~d sy~ey Verba, The civic cul~re: POlitical Attitudes and Democra~ in Five Nations @Os@~ MA: Little, Brown ~d

Company, 1965); See also, Robert Wuthnow (cd.), Between States and Markets: The Voluntary Sector in Comparative Perspective (Princeton, NJ:

Princeton University Press, 1991).

SO Re~ond c. Cmtime, Measure8for progress: A Histo~ of the Natio~l Bureau of Stan&rds (w~hingto~ DC: National Bureau Of S@UdWdS,

1966). As detailed in ch. 4, this transfer was not without its problems. The standardization movement undex Secretary of Commerce Herbert Hoover,

was initially designed to help business. Times change, however, and consum er groups began to press the Bureau to certify product quality. This upset

business, which in a period of prosperity was much less in need of the Bureau’s services. Given budgetary pressures and competing demands, the Bureau

gradually relinquished most of its product standardization efforts.
Chapter Summary, Findings, and Policy Options . 15

early as 1820.51 This private sector tradition remains

strong today (see ch. 2). Instead of setting standards

for the U.S. private sector,52 the government focuses

its efforts on the fairness and effectiveness of

standards setting processes. Uppermost in this regard have been concerns about antitrust infringements, due process and, more recently, international

competitiveness. This preference for voluntary consensus standards was reaffirmed in the 1979 Trade

Act, which formally recognizes the private sector’s

role in standards setting, and in OMB Circular

A-1 19, which directs Federal agencies to use voluntary standards wherever possible. In both instances,

however, the Federal Government retains the right to

assume a greater leadership role when it considers it

necessary .53

This division of labor between the public and

private sectors has strong support in the U.S.

standards setting community. At hearings held in

1990 by the National Institute of Standards and

Technology (NIST, formerly the national Bureau of

Standards, or NBS) to determine whether the government should become more active in standards

setting, especially in the international arena, the

response of those testifying was an emphatic “NO. ”54

However, given the growing national stakes in

standards, the problems in the standards community

identified in this report, and the challenges presented

by fast-moving technology and a highly competitive

global economy, the governments will need to

assume a greater role in the future. An appropriate

division of labor between government and the

private sector in standards setting must be based on

mutual trust and a common recognition of the

strengths and weaknesses of each. A positive relationship of this kind is clearly lacking today.

Viewing proposals for change as either black or

white, each side regards the other with suspicion.

Thus, little that is new has been added to the

discussion. With government and the private sector

increasingly at odds, the basis for trust has deteriorated, and the lines in the debate are becoming more

sharply drawn.

Inadequate Federal Coordination on

and Policymaking

Paralleling the lack of unity in the private sector

standards community is a lack of coordination and

policymaking at the Federal level. While this is not

a new problem, its consequences will be more

serious in the future. As the United States expands

its role in a global economy, new trade-offs among

standards goals must be negotiated. Free trade

objectives are already coming into conflict with

environmental and safety goals.55 Under such circumstances, coordination and conflict resolution

among Federal agencies is essential. Moreover, with

the growing importance of standards, rapid technological advance, and the shift to a global economy,

the Federal Government needs some ongoing organizational capability to identify problems, set goals,

and evaluate system performance.

The 1977 Department of Commerce Report56 

on

the U.S. standards setting process and the 1965

LeQue Report57 both called for a unified, national

standards policy. They proposed the establishment

of some form of government body, where policies

could be coordinated. However, this type solution

was unpopular--especially in the business community-and nothing came of it.

The problem of coordination was eventually

addressed on a limited scale with the establishment

of an interagency committee. In accordance with

OMB Circular A-119, the Department of Commerce

(DOC) was directed to set up an interagency

consultative mechanism to advise the Secretary and

agency heads in implementing Federal standards

51 The first suchorg anization, established in 1820 to establish uniform standards for drugs, was the United States Pharmacopial Convention. The fmt

trade association to develop standards was the American Iron and Steel Institute, established in 1855. The American Society of Civil Engineers, formed

in 1852, is the oldest scientilc and technical socie~ to develop standards. U.S. Department of Commerce (Robert To@ Toth Associates, cd.) Stan&rds

Organizations in the United States NBS Special Publication 681, p. 4.

52 me U.S. Gov-ent ~aditio~y set Pm-merit sp=fimtiom for ~ its p~chases, a practice titis declining in favor of VOl~tary standards.

53 Om C~~M A-l 19; ~d 1979 Trade ~t+

~ See pmceetigs, National Institute for Standards and lkchnology Public Hearings, op. cit., footnote 1.

55 See for one discussion, Kei~ Bmdsher, “U.S. B~ on Mefico ~ is Ovemled,” The New y~rk Ti~s, Aug. 21, 1991, pp. Dl, and D3.

56 volm~ s~~ds and ~sfig ~bomtories ~reditation: ~ysis of ~oblems, Issues, and Alternatives for Federal Action (’waSh@ton DC:

Department of Commerce, 1977).

57 Report on me pael on ~~eefig and comodi~ s~dards of tie Commerce ~chnology Advisory Board. Francis L. b Que, ~1965.

Parts A &B.
16 ● GIobal Standards: Building Blocks for the Future

policy (as defined in the Circular); to coordinate

agency views; and to develop, where possible, a

single, unified position. DOC assigned this task to

the Interagency Committee on Standards Policy

(ICSP), 58 which operates under the direction of

NIST.59 Overall oversight rests with OMB, and the

committee is required to report back to it on a

triennial basis.60

While active during its first year, this interagency

committee has reportedly not met for the last year

and a half.61 Meetings focused on implementing the

Federal policy to encourage agency use of voluntary

standards, as directed in its mandate. The committee

also set standards for agency participation in voluntary standards bodies and laid out guidelines for

public sector use of private certification bodies.

Participants claim, however, that scant attention was

devoted to evaluating existing policy or finding

ways to improve it.62 Nor was there much effort to

identify future standards issues or to view them

strategically as part of the industrial infrastructure.63

Some members claim that the group is not a useful

mechanism for sharing information or coordinating

interagency issues. One person noted with some

irony that his chance of interacting with agency

counterparts was better at private sector meetings of

ANSI’s Government Member Council.

Some of the problems faced by the Interagency

Committee on Standards Policy stem from its

organizational form. Interagency committees have a

poor record of policy coordination.64 Among the

problems associated with them are that they tend to:

bury problems rather than resolve them; make it

difficult to get tasks accomplished because too many

people with only a peripheral interest become

involved; dilute interest in, and commitment to,

addressing a problem; and lead to outcomes based

more on the distribution of power within a committee than on policy considerations.65 Such problems

are clearly reflected in the Interagency Committee

on Standards Policy.

The Office of Management and Budget (OMB)

reviews the work of the ICSP on a triennial basis.

Although OMB is the ultimate coordinating mechanism in the Federal Government, it can do little more

than establish a policy directive.66There is little staff

support in the area of standards. The Deputy

Director of the Office of Federal Procurement Policy

is in charge of overseeing Circular A- 119. However,

there is no one person at OMB who focuses

explicitly on standards.67

A second interagency task force was setup under

the auspices of the Office of the U.S. Trade

Representative(USTR). Although somewhat more

active than the NIST committee, its focus is much

more limited. Agency members meet when necessary to try to reconcile trade and other agency

policies. 68 The committee is not meant to be a

forward looking group, or to consider standards in

strategic terms. Like the Office of the USTR, it tends

58 me Icf$p WM es~lished in 1985 to coordinate Federal Agency S@@trds pOlicY.

59 The Committ=’s tier goes tierthan OMB Circular A-119 in calling for interagency consideration of s~tids policy.

@ ()~ Circtiar A-119. See ch. 2 for a history of this Circuhr.

61 It should ~ noted that some s~~o~tt~smet more fiq~enfly. The comm~ce maQ&te estab~~g fie committee rquires thiit a Ill@.@ be

held at least once a year.

62 ~~repo~ t. s=e~ of Co-erce cited ~d ~ack~ ~m~ess of agencies ~ Usfig VOl~~ s~~ds. But the @ySis that Was provided

with the data is minimal.

63 The ICSp -r policy, developed by commerce is much broader tban the OMB Circular. Howevti, over~ ~PPofi for the COmmittee was ‘ot

sufficient to support this broader mandate. John Donalsonof NIST suggests that the problem was circular. Because the OMB mandate was narrow, people

at higher, policy levels didn’t get involved. Without their involvement however, it was impossible to expand the Committee’s mandate. John Donalsom

NIST, personal communication.

a Characterizingg this form of arrangement, Harold Seidman notes, for example:

Interagency committees are the crab grass in the garden of government institutions. Nobody wants them, but everybody has them.

Committees seem to thrive on scorn and ridicule, and multiply so rapidly that attempts to weed them out appear futile.” But, as

Seidman is quick to add: “The harshest critics have yet been unable to devise satisfactory substitutes.

Harold Seidrnaq Politics, Position, and Power: The Dynam”cs of Federal Organization (New York NY: Oxford University Press, 3rd. cd., 1980),

p. 207.

65 Ibid.

a Ron C. Moe, “The Hud Scandal and the Case for an Office of Federal Management” Public Administration Review, July/Aug. 1991, vol. 511,

No. 4, pp. 298-307.

67 David Gold, OMB, personal communication.

6s Susan Troje, USTR, personal wmmullimtion.
Chapter Summary, Findings, and Policy Options ● 17

to be reactive on standards issues, responding only

when the need arises.

National coordination of communication standards issues is more effective. Because these standards are developed in the Consultative Committee

for International Telephone and Telegraphy (CCITT),

which is part of the International Telecommunications Union (ITU)--an international treaty organization—the State Department coordinates and presents the U.S. position. Even in this case, however,

there are complaints, both in the United States and

abroad, about the lack of a unified U.S. position.

The Federal organization of U.S. standards policymaking contrasts sharply with that of other

countries. In all other major industrialized countries,

governments view standards and the standardization

process as part of the industry infrastructure, and

they support it accordingly. While national differences exist, in all of these countries standards

policies are set nationally and worked out with

private sector organizations.69

The Need for Greater Attention to How Other

Governments Use Standards to Create Markets

for their Nations’ Industries

Having no comprehensive national standards

policy of its own, the United States has tended to

disregard or underestimate other governments’

efforts to use standards as marketing devices to

expand their trading opportunities. This shortsighted approach could undermine U.S. competitiveness. If not addressed quickly, the outcome could

be irreversible. There are significant advantages to

being the “first” to get a standard accepted. When

one standard starts to take hold, more and more

companies jump on the bandwagon to adopt it. And

once a standard is in place, trading relationships can

become locked in.

Most other countries--developed and underdeveloped alike-view standards as part and parcel of

their industrial infrastructures. Not surprisingly,

therefore, foreign aid programs often focus on

standards. This is a mutually advantageous arrangement. Industrialized countries are eager to help

developing countries set up their standards programs. If they can influence the choice of standards

in the developing world, trade will likely follow.

Developing countries also welcome such assistance.

Standards can help them create a national market.

Equally important, they provide an excellent-as

well as unobtrusive-source of technology transfer.

Most U.S. competitors are actively involved in

programs of this sort. The Japanese Five-Year Plan

for Industrial Standards, for example, calls attention

to the role that such technical cooperation can play.70

In pursuit of this strategy, the Ministry of International Trade & Industry has sent technical experts to

five countries to assist them in the development of

their standards programs.71 In the Philippines, for

example, the Japanese International Cooperation

Agency conducted a 13-person team, 500-personday study of the Philippine national standardization

system and provided a $23.1 million grant to

establish 3 regional labs.72 At the same time, the

Japanese Government has paid for 28 people from

developing countries to come to Japan for language

and technical training.73

The Europeans have similar programs.74 With

financial support totaling $16 million from the EEC

and Germany, an electronic component test laboratory has been set up in India. The laboratory receives

technical support from the German Agency for

69 See ch. 3.

7’0 According to the pti:

Standardization and quality control, which are closely related to each other, are atechnicalinfrastructureof industries. It is necessary

to propel technical cooperation in this field to correspond to requests from developing countries. From this viewpoint, efforts should

be directed to securing human resources in this field. It should be noted that implementation phases of technical cooperation should

be designed to incorporate appropriate measures reflecting the developing stage of country cooperation.

As cited in Robert TotlL “Promoting U.S. Competitiveness by Promoting U.S. Standards,” unpublished paper.

71 John R. Hayes, “Who Sets Standards?” Forbes, Apr. 17, 1989, pp. 111-112.

72 Rokfi TO@ Toth Associates, personal communication.

i’s fiide

74 As ~ tie Cme of Jap~ ~ EEC MS adopted a fo~ policy to ~s end. As desc~bed in tie EEC commission communiciltio~ Cooperation in

Science and Technology with Third Countries (June 1990):

Several developing countries have, by virtue of demographic and economic importance, achieved a position which gives them

substantial international weight either in terms of international leadership or of potential markets. It consequently behooves the

Community, in the area of cooperation to reinforce their position and interests by contributing to integrating them more fully into

the various European policies in such areas as commercial relations or the definition of norms and standards.”
18 • Global Standards: Building Blocks for the Future

Technical Cooperation. Specialist training is provided in Germany, the United Kingdom, the Netherlands, and Ireland. The European Commission has

also conducted a study of the Association of South

East Asian Nations (ASEAN) standardization base

and provided a grant of $6 million for an initial effort

to implement its recommendations. Closer to home,

the European Commission has provided Mexico

$1.5 million in consultation and trainingin standardization, testing, and quality system certification.

Moreover, the European Committee for Standardization (CEN), the German Institute for Standards

(DIN), and the Spanish Standards Institute (AENOR)

have each offered to provide a resident expert in

Mexico. 75

The United States has no equivalent programs.

Most U.S. aid programs are dissociated from trade

issues. In the fall of 1989, a law was passed directing

the Department of Commerce to accept invitations

from developing countries to provide assistance in

developing standards programs. However, funding,

which was to come from the private sector, has not

been forthcoming. As of the spring of 1989, only

$85,000 had been raised. According to one source,

German industry raised $5 million for a similar

effort in the course of 20 days.76

Failure to compete in this arena will make it difficult for the United States to enjoy the benefits of a

global economy and the future growth in world

trade. The developing world will be a major world

market, a fact that the United States cannot afford to

ignore. Future trade opportunities are great. In the

area of telecommunications alone, for example,

estimates are that India will spend more than $40

billion over the next 10 years. Already, the ASEAN

bloc is the United State’s fourth largest trading

partner. 77

Persistent Due Process Issues

Due process issues are inherent in standardization. Safeguards must be built into the process,

because manufacturers and users can use standards

to set prices and constrain trade. In a pluralistic

society such as the United States, competition and

countervailing forces provide such safeguards. It is

assumed that no one party can dominate the standards setting process because it is transparent and

everyone can participate. Due process, however, is

not a constant. Agreement about what is a fair and

open standardization process changes over time and

in different circumstances. Today, the rapid advance

of technology, the shift to a global economy, the rise

of user groups, and the desire to substitute voluntary

standards for regulation will likely put the issue of

due process into much starker relief.

The meaning of due process in standards setting

has changed throughout American history. Earlier it

was viewed narrowly. The first Federal efforts to

promote product standards, for example, were taken

on behalf of business. Secretary of Commerce,

Herbert Hoover, sought to promote product standardization through the National Bureau of Standards, believing that standards would reduce waste

and revive the post-war economy, 78 Although business interests were balanced, there was no effort to

bring consumers into the standards process. In fact,

consumers and their demands for variety were seen

as the major source of business’ problem.79 This

arrangement broke down, however, when consumers

requested that the Bureau rate products according to

quality standards. Quick to react, business decided

that standards setting should be a strictly private

sector affair.80

The right of the private sector to determine the

extent of due process was challenged in the 1970s

with the rise of the consumer movement and

75 RObCII ToW Toth Associates, personal communication.

76 Hayes, op. cit., fOOtnOte 78”

77 Robcrt mm Toth Associates, personal communication.

78 CW~me, op. cit., footnote 65.

79As described by Hudson in 1928:

The five years immediately following the World War were marked by a tendency on the part of industry to return to the old

uneconomic conditions of over-diversity. Many products which had been simplified by the Conservation Division of the War

Industries Board were again offered in a bewildering variety of sizes, types and shapes in an effort to break the “buyers’ strike” of

1919 and 1920. In the scramble for sales volume during the industrial depression of 1921 this condition was so aggravated as to suggest

a study of the situation with a view to possible remedies.

Ray M. Hudso% “Organized Effort in Simplitlcatio~” Stunulzrds in Industry, Annals of the American Academy of Political Science, 1928, p. 1.

so coc~me, op. cit., footnote 65.
Chapter 1--Summary, Findings, and Policy Options . 19

growing concerns about antitrust. In 1974, the

Federal Trade Commission (FTC) investigated the

entire private standards setting process.81 After

extensive hearings, at which over 200 people testified, it concluded that the entire standards system

should be regulated, and a rule was proposed that

would require standards setters to meet a substantive

“fairness” criterion. These conclusions were very

controversial, however.82 Under a new administration, the FTC reversed its course. Viewing due

process less comprehensively, it decided to enforce

standard infringements of antitrust law on a case-bycase basis.83

The definition of due process will continue to be

subject to debate. In a global economy, questions

will arise about who should participate in standards

setting, and in which organizations standards activities should be centered. More and more standards

will be set at the international level, but the costs of

international participation will be higher. Many

small companies and public interest groups will be

left out. Moreover, if standards decisions are made

increasingly at the international level, these groups

will be left out of the domestic policymaking

processes as well (see ch. 4).84

Standards decisions will also be made by regional

standards setting bodies. While large translational

corporations can gain access to these processes by

setting up subsidiaries abroad, most small companies cannot. Governments, themselves, may need to

be the standards bearers for due process, seeking

access for their nation’s industries to international

standards processes. Together these governments

will have to agree on an international norm for

fairness in standard setting.

The speed of technological advance together with

the increased complexity of many standards issues

may also upset existing notions of due process.

Assuring all interested parties a voice in standards

processes slows them down. When the system

cannot keep pace with technological change, producers and large users seek alternative solutions,

which are often less open. In the area of telecommunications and computer technologies, for example,

standards setting can take between 4 and 8 years.85

This lengthy process could undermine the market for

some products.86 To get a quicker response on

standards, some producers are setting up standards

consortia. Although they have been successful in

speeding up the process, their membership is limited87 (see ch. 2).

Due process issues are also likely to arise if more

and more regulatory decisions are based on voluntary consensus process standards. Requirements for

due process may vary, depending on economic

context and the type of standard in question. Where

market share is distributed among competing producers, and users are either large or well organized,

the social consequences of limited participation in

standards activities may be positive. The social

outcome is likely to be negative, however, when

users are unorganized and/or there is a dominant

firm. This latter situation is most typical in areas

such as health, safety, and the environment, which

the government has typically regulated. In relying on

voluntary standards, therefore, Federal agencies

may need to focus greater attention on due process.

81 The use of standards for mticompetitive purposes is not new. For examples of cases where the courts struck down sti@dS for ~ti~t r~ons,

seeh4ilkandIce Cream Can Institute v. F. T. C., 152 F.2d 478 (7th Cir. 1946); UnitedStates v. Institute of Carpet Manufacturers, C(2H Trade Reg. Service

(9th cd.). par. 52,517 (S.D.N.Y.); Bon Crown and Cork Co. v. F. T.C., 176 F. 2d 974 (forth Cir. 1949); Radian Burners v. Peoples Gas Co.; and more

recently, American Society of Mechanical Engineers v. Hydrolevel COT. 456. U.S. 5556 (1982).

SZITC, op. cit., footnote 12.

83 ~$Memormdu to the Federal Trade CO remission from Amanda B. Pederse~” Aug. 29, 1985.

~~s is a ~n~ Conwm Ofmy he~@ s~e~, and environment groups. Mark Ritchie, Institute for Agriculture ~d Tr~e PolicY, Wrso~

communication.

85 The ~o~g comple~~ of s~~ds issues pULS additiod burdens on standard setting institutions. This k reflected in the extended period of time

required for standards to be formally ratile~ and the rapid multiplication of standard setting committees and subcommittees. As one journalist observing

international standards meetings has described:

The content [of the materials] is technical, voluminous, and ditllcult.. . . theminuteslooklike telephone books.. . .Readingscometo several hundred

pages of technical matter each month.

See, Timothy I-IaighL “Standards-setting and the Limits of Journalism, ” CommunicationWeek, Mar. 14, 1988, p. 14.

86 fiovide~ of~erelaysemices, for e=ple, ~do~y as-time period in w~chto establisha~ketfor their product. @e of its mOSt tipOIWrM

selling features was that the product was available to meet an existing market need. Had frame relay providers waited too long, their product might have

been superseded by cell relay services such as switched multimegabit data service (SMDS), which were still in the development phase.

S7 Garv@ op. cit., footnote 7.
20 ● Global Standards: Building Blocks for the Future

As revised, OMB Circular A-119 virtually eliminated all due process requirements.88

Criteria for Evaluating Policy

Strategies and Options

Many standards setting problems cited in this

report are persistent problems that have been identified before. The inability to deal with these problems

reflects the high stakes and significant ideological

differences involved. There are no perfect solutions.

Stakeholders strongly disagree about what constitutes a perfect state of affairs. Thus, any politically

viable solution is likely to require compromises. To

lay the groundwork for such a compromise, OTA has

identified a number of criteria that a standards policy

must meet if it is to adequately address the Nation’s

standards needs.

Cultural Consistency

Standards setting institutions strongly reflect

economic and cultural conditions and constraints. In

the United States, organizations have often sprung

from the bottom up, formed spontaneously at the

grass roots in response to perceived needs.89 These

types of organizations reflect the American preference for market solutions and a strong cultural and

political predisposition towards voluntary organizations. Standards policies are likely to be more

politically viable to the extent that they build on this

tradition. Private sector solutions are also likely to

be favored, given the present deregulatory political

environment.

Flexibility in Dealing With Different

Industry Sectors

Standards setting varies across industry sectors,

so standards problems and their solutions will also

differ. Rapidly advancing technologies require an

especially timely standards process. Regulatory

standards merit special attention to due process.

Anticipatory standards need to be implemented and

certified. And standards critical for trade, or for the

national infrastructure, may call for some form of

government promotion or involvement. Government can address this whole array of needs with

greater precision and less disruption if standards

processes allow for a flexible response. To develop

an appropriate range of flexible responses, policymakers will need to know more about how product

types, market structure, and organizational contexts

affect the outcome of standards setting processes.

Capability for Evaluation and Foresight

The factors and conditions that drive standards

setting processes are in a state of great flux. Nations

are being integrated into a global economy; technologies are rapidly advancing and, in many cases, converging; powerful private sector translational organizations are emerging; and governments are redefining their roles in advanced industrial societies. If

standards setting bodies are to perform effectively in

such a rapidly changing environment, they must

have an ongoing capability to evaluate their performances and to assess and plan for their futures.

Provide for the Most Efficient and Cost

Effective Use of Resources

Standards setting will likely be costly in a global

economy based on rapidly advancing technologies.

Bringing together sufficient economic resources to

support standard setting processes is very difficult

due to the public goods nature of standards. If

standards setting bodies are to have adequate support, new ways must be found to share costs and

reduce unnecessary technical and organizational

redundancies. Achieving this objective will require

the system to have a broad base of legitimacy.

An Incentive Structure Designed

to Promote Cooperation

One major obstacle to altering the standards

setting process has been the widespread belief that

change could only take place at the expense of one

party or another. As a result, stakeholders have

88 Memo to Agency Heads from David Stockman regarding revised o~ CirCulaI A-119.

89 ~~ ~sp=t of the ~e~c- ~~cter ~m ~ot~ ealy ~ ~e~ca histo~ by & ~queville. AS he descri~d in Democracy in America:

Nothing . . . is more deserving of our attention than the intellectual and moral associations of America. Americans of all ages, all

conditions, and all dispositions constantly form associations. They have not only commercial and manufacturing companies, in which

all take part, but associations of a thousand other kinds, religious, moral, serious, futile, general or restricted, enormous or diminutive.

. . .Wherever at the head of some new undertaking you see the government in France, or a man of rank in England, in the United States

you will be sure to find an association.

Alexis de Tocqueville, Democracy in America, vol. 1 & 2 (New York NY: Harper and Roe, 1966), pp. 110 and 106.
Chapter 1--Summary, Findings, and Policy Options ● 21

fiercely resisted any tampering with the status quo.

If standards setting processes are to be improved,

solutions must be developed that will distribute

benefits on a broader basis.

Equivalency With International

Norms and Procedures

Standards setting in the United States has usually

been focused on domestic markets and conditions.

Given the size of the U.S. market, there was little

need for many industries to become involved in

other national or international standards processes.

This is no longer the case. In a world economy

comprised of regional trading blocs, Americans

cannot afford to remain aloof. To benefit fully from

the growth in trade, the United States must become

a leader in international standards. To play such a

role, it must have equivalent-but not necessarily

the same-standards setting procedures and institutional mechanisms.

Support of Due Process and

Antitrust Prescriptions

Winning a standards battle-whether in a domestic or international market-is often a matter of

speed. Thus, when the stakes are high, there may be

a temptation to sacrifice due process for speed. Care

must be taken to avoid this trade-off. Little is to be

gained in the long run. Not only will the legitimacy

of the system be questioned; if standards fail to

represent a true consensus, they will not survive.

Policy Strategies and Options for

Addressing Standards Setting Issues

Government can pursue a variety of strategies for

addressing the standards development issues identified in this report. Three are discussed herewith a set

of alternative policy options. Together, these strategies address the issues outlined in this report and

suggest a variety of ways the Federal Government

might deal with them. They are evaluated in terms of

the seven criteria listed above. Each option will meet

some criteria, and satisfy some stakeholders, better

than others. These strategies and options are depicted in figure 1-2.

Strategy 1: Provide more substantial Government support for standards development

processes to address market failures resulting

from public goods aspects of standards.

Many People--especially in industry-believe

that standards development is a private-sector activity, best carried out in voluntary processes that

closely replicate the marketplace. According to this

perspective, the government is cast in the role of

“user.” As a user, the government should support

the standards process in proportion to the benefits it

derives. It need play no larger role; for it is assumed

that voluntary processes, like market mechanisms,

lead to the most socially optimal outcomes.

The marketplace for standards, however, is an

imperfect one. As in the case of other semipublic

goods, the standards market and policy arena occasionally fail As a minimalist strategy, the Federal

Government might provide support for the standards

process, where such failures are likely to occur.

Three areas merit attention:

●

●

●

the lack of government support for standard

development, both politically as well as economically;

the lack of business appreciation for standards;

and

the lack of an information infrastructure to

support standards development processes.

Option A: Establish a Memorandum of Understanding With the Standards Setting Community

Most governments support their national standards development processes and provide for official

national representation in international standards

development organizations.90 At a minimum, they

formally acknowledge the public role performed by

private national standards bodies and lay out mutual

obligations among the players. Thus the British

Standards Institution (BSI) is chartered by the

90 See ch. 3.
22 ● Global Standards: Building Blocks for the Future

Figure 1-2-Strategies and Options To Address Standards Issues

!

Option C Option A

Characterize Fund NIST to

existing systems develop an

and map their electronic standards

likely evolution. database/network.

Option B

Provide startup

support for private

sector development

of information

systems.

Strategy 1

Provide more

substantial government

support for standards

processes to address

market failures resulting

from public-goods

aspects of standards.

Strategy 2

Promote the development

of an information

infrastructure for

accessing and

distributing standards,

and participating

in standards development

processes.

Strategy 3

Improve the process

of standardization

through organizational

restructuring.

Option A

Establish a

memorandum

of understanding

with the standards

setting community.

Option C

Encourage

greater appreciation

of standards within

the business

community.

r

Option B

Provide funding for

standards activities.

Option A

Encourage the

separation of functions

between standards

publication and

standards coordination,

promotion, and

administration.

Option D

1

Option C

Delegate to a Federal

agency the responsibility

for coordinating and

implementing Federal

standards policy.

Option B

Clarify and strengthen

the mandate of the

Interagency Standards

Policy Committee.

Option D

Establish a public

corporation or

instrumentality

to focus on public/private

standards goals.

SOURCE: Office of Technology Assessment, 1992.
Chapter 1--Summary, Findings, and Policy Options ● 23

government of England,91 while the Deutsches

Institut für Normung (DIN) has a memorandum of

understanding with the government of Germany.92

In similar fashion, the government of Sweden has a

contractual relationship between the public and

private sectors. A special case is Japan where 205

private sector trade associations and professional

societies work with the responsible government

ministries to develop sectoral standards. These are in

addition to the national standards developed by the

private sector and these government ministries

under the aegis of the Ministry of International Trade

and Industry (MITI) and the Japanese Industrial

Standards Committee.93

Such arrangements help to legitimize standards

organizations both at home and abroad. They also

encourage participation in standards development

activities, since businesses using nationally approved standards greatly reduce their liability.94

Joint agreements between the public and private

sector are especially useful in international standards negotiations, since they leave no doubts about

where authority lies.

The U.S. Government has no similar arrangement

with ANSI or other national standards bodies. This

situation reflects the history of the American standards movement. In no other country were there so

many grass roots standards organizations emerging

to compete with one another as in the United

States. 95 This history mirrors American political

tradition and the predilection for separating the

public and private sectors.

Today, ANSI is the self-designated national

coordinating body for U.S. standards development

organizations, and the self-designated national member body within the International Organization for

Standardization (ISO). However, ANSI’s status is

not fully accepted by major players in the U.S.

standards community, and a number of organizations continue to act independently in their international dealings with other national standards organizations. Nor have these organizations been willing to

defer to ANSI leadership in domestic standards

activities. 96 In fact, in some cases, they have

preferred that government, itself, take the lead.97

In July, 1991, ANSI proposed that the Government establish a memorandum of understanding

with ANSI. Although there have been preliminary

discussions, no action has been taken. Creating such

a memorandum could facilitate U.S. international

standards development activities. It could, more91 The British Stan&ds ~ti~tionw~ fmt chartered in 1929; an additional Memorandum of Understanding was adopted in 1989 which ~ognims

the important role that standards play in international competitiveness. The Depadment of Trade and Industry laid out the rationale for reinforcing the

Government’s relationship to BSI in its white paper, Standards, Quality and International Competitiveness, which was presented to Parliament in July

1982. The report states:

The experience of other countries shows that strong standards systems capable of securing the industrial and trade benefits do not

emerge spontaneously; they involve not only a legal structure but aspects of organization and attitude which evolve over a long period.

Nor is it just a question of reproducing here the legal and institutional arrangements that have shown themselves successful in other

countries. What is needed is to give strength and coherence to the existing national standards system. This requires the full support

of manufacturers and purchasers in the private and public sectors and all those in central and local government who are responsible

for drawing up technical regulations and specifhtions.

~ See CONTRACT between the Federal Republic of Ge~y, represented by the Federal Minister of Economics, and DIN German Institute for

Standards (Deutsches Institut fur Normung e. V.) represented by its President.

93 R.B. ToW Assoc~tes, Transparency and Accessibility of the Japanese Standardization System, November 1991.

~ ~ Germany, for example, the burden of proof shifts to the user, when DIN standards are met. Dr. Helmut Reihl~ Dr. Christian Kaiser, DIN,

personal communication.

95 The Europe~ ~e perplexed ~ t. why such EUI mgement does not exist. From their point of view, it would be mutu~ly benefici~. me United

States would have more influence internationally, if it spoke with one voice, and the Europeans would have a clearer picture of where the power to

negotiate and make decisions lies. European interviews.

% A recent memo from the ASTM s~to the Bo~d of AS~ w~ch ou~es AsT&f’s re~om for not cooperating mom with ANSI’S hlt~tiOIld

efforts, illustrates the problem. As described in the memo:

The importance to ASW and to ASTM’s long range future, of the strategy which this committee endorsed was clear. If the ANSI

prescription prevailed-if the U.S. adopted a stmtegy of committing its standardization efforts to 1S0 and agreeing to accept and

use ISO standards-ASTM, would, overtime, decline from the largest voluntary consensus standards developer in the world to a “bit

player’ in a system dominated by 1S0 and ANSI. ASTM would become solely a feeder of U.S. consensus standards and positions

into ANSI for blessing as U.S. ‘‘national” standards and into 1S0 for blessing as “international standards.” And, ASTM might not

even to be able to play that limited role. If Europe and the U.S. agreed to adopt and require the use of 1S0 standards in their respcdive

markets, sales of ASTM standards, nationally and internationally, might be so eroded that ASTM could not longer support itself.

ASTM memo to Members of the Board, regardhg “ASTM’s Public Positio~” dated December 12, 1991.

w kteresti.ngly enougk German business supports the role of the Federal Government, because they don’t want to deal with all the different Iaender

(states). Dr. Helmut Reihle% DIN, personal communication.
24 ● Global Standards: Building Blocks for the Future

over, improve government cooperation with the

private sector.

Even if government were disposed to such an

option, it would likely not be politically viable, at

least at this time. Competing standards organizations would not support a memorandum of understanding that would officially designate ANSI as

“the” national standards organization. A compromise might be negotiable, however.98 For example,

organizations might accept ANSI as the recognized

national standards body, so long as it were not a

competitor, selling standards or if their markets for

standards could somehow be preserved. Thus, if

there is to be a more formal relationship between the

government and the private-sector standards community, it will likely have to evolve as part of a

comprehensive overall resolution of the conflict

among standards organizations.

Option B: Provide Funding for Standards Activities

Most governments provide financial support for

standards setting activities. In 1990, for example, the

United Kingdom provided BSI £4,963,000 in grants;

£455,000 for special activities; and £470,000 for

technical assistance to exporters.99 Some of this

funding was used to support the attendance of

British delegates to international standards meetings. In similar fashion, the German Government

provides 15 percent of DIN’s expenses. These public

funds are used primarily for programs that promote

industry, increase competitiveness, and provide

protection against the risks of technology, as well as

for DIN’s membership subscriptions in international

and European standards organizations.l00

Whether or not private standards bodies receive

Federal funds can make a significant difference in

terms of their resources and the kinds of programs

they can support. (Mention has already been made of

the aggressive export programs that many foreign

governments now support.) Some foreign governments also finance their nationals’ participation in

international standards proceedings. In addition,

many governments support the development and use

of electronic media to provide access to standards

information. The German Government, for example,

has provided a subsidy over a 7-year period of 25

million deutsche marks for the development of a

electronic database and standards delivery system.

Europeans standards organizations have also developed special programs to assist businesses in accessing and using standards for exporting goods and

services. The French standards institute, AFNOR,

for example, has set up a U.S. subsidiary (NOREX)

to help French businessman negotiate their ways

through the U.S. standards maze.lO1

Apart from the membership dues paid by Federal

agencies to standards bodies, the U.S. Government

provides almost no funds for private-sector standards development. Even the recently established

NIST program, aimed at promoting trade through

standardization in developing countries, depends

heavily on business contributions. Depending entirely on membership dues and the sale of standards,

ANSI has insufficient financial and human resources

to carry out programs at the same level and intensity

as the Europeans. For example, as compared to

DIN’s 900 employees, BSI’s 1,000 employees, and

AFNOR’s 550 employees, ANSI employs only 110

people. Not surprising, under these circumstances,

ANSI currently has no significant education or

information programs.l02

One reason for this lack of Federal support is that

members of the private sector have been extremely

reluctant to accept any support from government for

fear of strings attached.103 They are concerned,

moreover, that such support, once given, might be

withdrawn at any time, given a budget crisis or

change in political climate.l04 Moreover, many in

the U.S. standards community would be uncomfortable being cast in a semipublic role. Most Europeans

have little problem in this regard.

As the costs of standards activities increase,

however, members of the community may become

98 s~~ f~~tn~t~ 103.

WBSI AIUWI Report and Accounts 1989-1990, nd.

100 IXN, One World, free trade,j?ee standards, p. 4, nd.

101 Emop- have ~ low ~dition of suppo~ ~xport activities ~goes b~k to the f~st standardization efforts. (See ch. 5.)

102 ~C&I does pub~h ~nwSletter, ~d ~S &wde~el~ping el~tro~c ~triev~ systems. ANSI~~SO Ixglm to move in the area of education, but

its resources are, by necessity, spread very thin.

loq MST hefigs, op. cit., footnote 1.

1~ Ibid.
Chapter 1--Summary, Findings, and Policy Options • 25

more receptive to Federal support. Ideally, from

their point of view, Federal contributions should

carry no obligations. Preferably, they would take the

form of tax credits or simple grants. Funding of this

sort, however, might have a low pay-off from the

government’s point of view, since it could not be

targeted to achieve Federal policy goals.

Option C: Encourage Greater Appreciation of

Standards Within the Business Community

The Federal Government could also support the

standards development processes indirectly, by educating business and the public about the important

role of standards. Increased awareness could lead to

increased support for, and participation in, national

and international standards activities. Moreover,

using standards effectively within industry can also

improve productivity, and hence American competitiveness.

This option accords well with a free market

approach. It is user-driven, and aims merely to fill an

information gap. By generating an awareness of

standards, it seeks to stimulate a demand for them.

Thus, it is unlikely to distort the marketplace.

Currently, the Federal Government does very

little to promote standards. Whereas in its early years

the National Bureau of Standards organized business groups to convene for discussions of standards

issues,105 NIST has only limited outreach and/or

educational programs except for the publications of

standards directories and reports. Business concerns

about standards are generally channeled to the

Federal Government through the Interagency Federal Advisory Committee (IFAC),l06 but there is no

information flowing in the opposite direction. Although government agencies, such as the Office of

the International Trade Administration (ITA), or the

United States Trade Representative (USTR)107, respond to business queries and concerns about

standards, they make little effort to educate businesses as to the value and use of standards in

trade.108 Even within the Small Business Administration (SBA) there is no standards education or

awareness program. The most elaborate promotional

event in which the government is involved is

National Standards Week.l09

This situation is greatly different from that in

other countries. In Great Britain, for example, the

British Standards Institution is viewed as an organization that not only sets standards, but also services

industry.

The business community would likely welcome a

government initiative of this sort. Some might

prefer, however, that it come from the private sector.

Private standards organizations, for example, could

view this option as an usurpation of their roles. On

the other hand, because standards organizations are

in competition with one another, some might prefer

that government perform this kind of function to

provide a neutral forum.l10

Option D: Fund Standards Research and Education

National competence in dealing with standards

issues could be greatly enhanced through Federal

support of academic programs and research relating

to standards. Few schools of engineering or business

105 coc~me, op. Cit., footnote 65. MOr~V~, cluring this phase of American standard setting, it was the chief executives Of AmericXn business ~d

top leaders in science and education who were involved. In 1939, the members of the American Standards Association Advisory Committee included:

Lammont du Pent, presiden~ E.I. du Pent de Nemours & Co., Walter S. Gifford, Presideng American Wlephone & lklegraph, J.H. McGraw, Jr.,

presiden~ McGraw-Hill Publishing Co., A.W. Robertsou chairman of board, Westinghouse Electric & Manufacturing Co., Alfred P. Slo~ Jr., chairman

of the board, General Motors Company, E.R. Stettinius, Jr., chairman of board, U.S. Steel Corp., and Walter C. lkagle, chairman of board, Standard

Oil Company of New Jersey, to name a few. See for a discussio~ Edmund A. Prentis, “Leading Executives for ASA Advisory Committee,” Report,

Annual Meeting ASA, June 1939; See also, Edmund A. Prentice, “Democratic Methods Widen ASA Influence, Bring Agreement Between Diverse

GI’OUpS,” Report Annual Meeting ASA, January 1940.

106 The~dus@Fmctio~ Advisov co~ttee on s~d~ds for Trade ad policy ~tt~s w~ es~blished on ~. 21, 1979, md extended onhh.

11, 1982, Mar. 6, 1984, Mar. 7, 1986, and Mar. 8, 1988, by the Secretary of Commerce and the United States Trade Representative pursuant to the

authority delegated under Jkecutive Order 11846 of Mar. 27, 1975. The Committee consists of approxima tely 40 members, with appro ximately 20

members from the Industry Sector Advisory Committeix and approximately 20 from such private-sector areas as to provide expertise on the subject of

standards.

loT ~eus~mor~tm trade policy between thepresiden~ Congress, and the private sector. It manages the private sector advisory system consults

regularly with Congress, aud chairs the interagency committees which develop trade policy with the Executive Branch. 1991 Trade Policy Agen& and

1990 Annuul Report of the President of the United States on the Trade Agreements Program. p. 103.

108 Don Wctiy, Natio~ Association of Engineers, and Bob To@ Toth Associates, perSOMl COInmUniCatiOm.

log~though S-J. ResO 291 wo~d Mve desipted the week Oct. 14, 1990 ~ “Natio~ s~d~ds w~~” it faded to pass. Don M2Cby, National

Association of Engineers, personal communication.

11o ~s po~t c-e up a nm~r of times during interviews with s*eholdms.
26 ● Global Standards: Building Blocks for the Future

schools provide course materials or sponsor research

projects focusing on standards. Even in those cases

where research is being conducted, there is little

cross fertilization of ideas from one circle of scholars

to another. Most research takes a relatively narrow

economic perspective, and fails to take into account

a number of factors affecting standards outcomes:

●

●

●

the role of standards organizations themselves,

and their relationships to one another and the

industry community;

the full range of motivations for corporate

participation in standardizationlll; and

the impact of a global economy and the

globalization of the standards process.

Moreover, most ongoing research focuses on

existing problems; there is almost no current work

being done to anticipate future standardization

problems or standards needs.

Federally sponsored research about standards

processes is sporadic, at best.112 The National

Science Foundation has funded some economic

research on standards, specifically in the area of

networking technologies. But it is not typical of the

projects NSF is likely to fund. Much of the general

policy oriented research at NSF has been cut back,

so funding would have to be provided at the program

level. 113 As one NSF program director pointed out:

“From a philosophical perspective, standards are

the last thing that we would look at. That’s applied

research; we are interested in science. ’

Research on standards could also be generated

through the National Research Council (NRC),

which undertakes 80 percent of its research at the

behest of Congress. The NRC has already undertaken an investigation of information technology

standards. 114 Because NRC research is organized on

a committee basis, it could help to bring a multidisciplinary approach to the study of standards processes.

However, such projects are generally one-time

efforts, so they are unlikely to stimulate ongoing

research.

Strategy 2: Promote the Development of an

Information Infrastructure for Accessing and

Distributing Standards, and Participating in

Standards Development Processes.

Information and communication technologies can

play a critical role in the standards development and

implementation processes. Online systems connecting standards developers and users across the globe

can help standards organizations keep pace with

technological change and improve the efficiency and

effectiveness of all standards activities. Standards

developers and users can be apprised of standards

activities and access standards on a real-time basis.

Shared, distributed information systems allow standards developers to reduce costs through interactive

online participation at a greatly reduced cost. Access

to such systems can facilitate the implementation of

standards in business and industry.

Much of the technology needed to create such

systems is already--or will soon be—available.115

Existing services such as CompuServe and Internet,

for example, can be used to develop standards

through electronic mail exchanges. Off-the-shelf

technology is also available to create online distributed libraries, which could be designed to house

standards-related information.ll6 In addition, databases can be automated to notify parties of standardsrelated subjects and activities of interest to them.117

In the near future, personal computers will be

equipped to perform this function on a personalized

basis. With the deployment of high-capacity networks and the development of standard interchange

111 Most economic litem~e look at the strategic use of standards to achieve competitive advantages in the marketplace. More attention ne~s to be

given to the use of standards to improve the production process, and the role that standards play in technology transfer.

112 DaLI Ne~@ Lany Rosenberg, National Science Foundation personal Conversations.

113 Dan Ne~~ NSF, alSO interviews with program directors, National Science FoundatiorL personal Commtication.

11A S= Crossroads of Information Technology Standards, op. cit., footnote 1.

115 mere me fom basic categories of ~lectronic systems: 1) ~dexes of s~~ds; 2) delive~ of ~.text; 3) announcement of new standartition

projects and the provision of drafts for review; and 4) conferencing to develop and revise standards. Some of these systems are already underwa~ others

will require additional work. R. B Toth (R.B.Toth Associates) Lee McKnight (MIT) AMhony Rutkowski (TITJ) and Carl Malamud (Carl Malumud

Consultant), pensonal communications.

116 M~~ Sirbu, reformation Networking rnstitute, Carnegie Mellon university, persoti COInlnuIlkltiOn.

117 selective &s ernination of information (SDI) &is been available on Dialogue for more than 5 years and these features have been available on

standards databases File 92 and File 113 for quite some time.
Chapter 1--Summary, Findings, and Policy Options . 27

formats for multimedia electronic mail,118 more and

more kinds of standards activities can be carried out

interactively online.119

A number of standards groups are already taking

advantage of such technologies. Many are beginning

to setup standards databases. Some provide bibliographic data about standards; others the full text. In

1981, for example, ANSI created a database of

standards as well as a Project Identification Notification System (PINS), which compiles data about new

and upcoming ANSI standards projects and activities.120 ANSI has also undertaken a project to deliver

standards using CD-ROM. Eager for the system to

be fully functioning, the Member Council of ANSI’s

Board has recently set up a committee to hasten its

development. 121 The Library of Congress is also

considering whether to include a bibliographic

database on standards as part of its Science and

Technology Information Initiative.122

Similar initiatives are taking place at the international level. Within the European Community, the

Commission has helped to finance a joint database

of German, French, and U.K. standards. These

standards are cross referenced and available in each

language. 12d In accordance with Resolution 18,

passed in 1988 at the Melborne meeting of the

CCITT, a group has been set up to promote

electronic document handling within the worldwide

telecommunications standards community.l24

Information and communication technologies can

also be used to sell standards information and

full-text standards in electronic form. Online sales of

expanded bibliographic citations are provided

through Information Handling Services and Dialogue. Although these services have existed since

1980, they have not been as popular as one might

expect; only 2,000 subscribers worldwide regularly

use these two standards information services. One

major barrier to their use is the need for trained

intermediaries to perform searches. Cost is also an

inhibiting factor; users are discouraged from spending much time online because the meter is constantly

ticking. 125

CD-ROM is the most cost-effective media for

distributing Ml-text standards. CD-ROM databases

are also more popular than online systems. 126 They

are easier to use and do not require information

search specialists. However, CD-ROM full-text

standards are expensive, so their market is relatively

narrow. The major customers are large companies

that can afford the price. Moreover, not all kinds of

standards are available in this form. Generally it is

the more voluminOUS, complex sets of standards that

are published electronically, since they tend to yield

the greatest profits.127

In the United States, two major companies publish

standards in CD-ROM—Information Handling Services (IHS), which accounts for close to 85 percent of

all sales, and the National Standards Association

(NSA) which covers the rest.128 These companies do

not create standards. They are essentially resellers

who sign licensing agreements to sell standards from

standards-development bodies.129 Both have in1lS s=, foradiscWsionNa~el S. Borenste@ “MultimediaElectronic Mail: Will the DreamBecomeaReality, Communication of theACM, AP~

1991, vol. 34, No. 4, pp. 117-119.

119 Bob Smi@ Nynex, personal communication.

IZO ~s system is not Ofie. ~terest~ parties contact ANSI for this information wbich is then made available to them. !ltacy Listner, ANSI staff,

personal communication. It should be noted tbat a number of stakeholders claimed that the process works too slowly.

121 Paul Mercer, Boeing, personal communication.

122 Presser Gifford, Director of Scholarly Programs, The Library of Congress, personal Commtication.

123 Dr. Helmut Reihle~ DIN, personal communication.

124 Bob Sfia NPex, pemo~ com~catiom. ~fic~y, one of the problems that ~bits el~tronic data exchange is that the CCITT and the 1S0

format their documents differently. Thus, there is a need to standrudize this aspect of the standardization process.

125 Bob Tom R.B. Toth Associates, personal commtimtion.

126 ~thoughtheseda~bwm Mveka av~~ble for ~~y the past Yearor two, hey ~eady have more subscribers thanonhe systems. Bob To* ‘bth

Associates, personal communication.

127 mid.

128 o~~e system ~ not effective for sel~g ~.text standmds. ~o major problems are the graphic content, which rquires the use Of high COSt

imaging technology, and the lack of standards.

129 Deferring to commerci~ distributors, anumber of standards developingorg anizationshave worked withNSA and IHS to develop effective systems

and new products. These distributors perform an important service for them. Not only do they receive substantial royalty checks; they often benefit from

greater sales. Distributors open new markets where the standards developer is not well know, or does not have easy access to the developer. Robert lbtlq

Toth Associates, personal communication.
28 ● Global Standards: Building Blocks for the Future

vested considerable amounts of money testing the

market, making false starts, developing and applying appropriate technology, and educating users. A

substantial return on this investment will clearly take

some time.130

Standards processes and related activities can also

be conducted electronically. For example, some

standards-making organizations use technology interactively to develop standards online. The most

well-known case is the Internet Engineering Task

Force (IETF), which has responsiblility for the

TCP/IP protocol and a number of other internationally accepted networking standards. General Motors

is also creating a system to develop standards online,

as is the Defense Department with its CALS system.

Communication systems are even being used to

implement standards. Some companies are beginning to view the implementation and use of standards from a competitive perspective. They use their

communication networks to speed up standards

implementation and improve the quality of their

products. The Boeing Corp., for example, has

recently made a major investment in its communication system to this end.

Despite the success of many of these individual

initiatives, online standards activities are still the

exception rather than the rule. Moreover, most

technology efforts are occurring independently of

one another. Barriers to extending and coordinating

these electronic standards related activities are

financial and institutional, not technological. Authoring systems and networking can be expensive.

The costs of a conferencing system include, for

example: 1) the cost of software for each committee

member, 2) the cost of online charges, and 3) the cost

of storing the working document and ports to

users.

l3l Among the institutional problems are

concerns about copyright protection, lack of expertise and resistance to the use of technology, and

competition among standards publishers.132

One step the Federal Government might take to

promote the use of technology, therefore, would be

to explore these problems in greater depth and

identify creative ways to address them. Some

possible options are laid out below.

Option A: Fund NIST to Develop an Electronic

Standards Database/Network

Most developed countries provide financial support for national standards databases and retrieval

systems. As noted above, the European Commission

also provides such support for a community-wide

database. The U.S. Federal Government has no

program equivalent in size or scope. At present,

NIST does not have a standards database.133 Although MST used to maintain a computer database

of U.S. voluntary engineering standards, called

KWIC Index, it stopped maintaining the system for

lack of resources.

One option for government, therefore, might be to

provide funding for a national electronic standards

database/network. Funding would probably need to

be targeted as a line item for this project. If funds

were provided discretionally from the general MST

budget, support for the undertaking would be subject

to administrative whim or expediency. Its future

would likely depend more on the political ups and

downs and internal affairs of NIST than on the

national value of the project.

Most people in the standards community agree, in

principle, on the value of an information infrastructure for carrying out standards-related activities.

Small users would likely favor this option if it would

give them greater, more affordable access to standards and standards-related materials. However, many

might oppose a greater Federal role in its development, especially if government might compete with

private-sector activities. Competition among standards organizations is much more intense in a global

economy, so organizations are looking for new kinds

of value-added services to provide. In these circumstances, standards bodies are suspicious of possible

130 ~~d&tio~ ~~erp~vate Sector org~zatiom Suchas~S(co~~ction~db~~g s~~ds)~dcADIS (3-D graph.icspresentation of s~dmd

parts) have pushed the technology and developed the market. One estimate is that between $40 to $60 million has been spent by these four organizations,

three or four now-defunct start-ups, and the SAE, AS~ and IEEE on electronic delivery of standards. Robert Tot& Tbth Associates, personal

communication.

131 s~~ds org~atiom often view the costs for sof~~e, ~e~or~g, etc. as costs that &ey c~’t pass onto committee members. Robcll ‘rb~

Toth Associates, personal communication.

132 SW for one discussio~ Tony Rutkowski, ‘‘Networking the lklecom Standruds Bodies,” unpublished paper, Version 3.0. Aug. 1, 1991.

133 Walter ~ight, Jo~e ove~ NEST, personal commtication.
Chapter 1--Summary, Findings, and Policy Options . 29

government encroachments in their areas.134 Many

in industry, moreover, are unfamiliar with NIST, and

might be reluctant to see a database housed there. If

this option is to be pursued effectively, therefore,

care must be taken to work cooperatively with the

private sector and to sort out the complementary

roles.

If technology is used interactively to actually

carry out standards processes, participation could be

greatly expanded. However, at the same time, the

balance of power within standards bodies would

most likely be changed.135 Thus, those exercising

leadership under present circumstances may strongly

oppose the substitution of technology for face-toface relations, which is their stock in trade.136

Option B: Provide Start-up Support for PrivateSector Development of Information Systems

Information and communication systems are often

underfunded, especially in their early stages. As

previously noted, information exhibits many characteristics of a public good; because it tends to be

“leaky,” its value is difficult to appropriate.l37 As

a result, information systems often fail to attract

adequate investment. Communication systems may

also be slow to develop until they reach a critical

mass. A communication network will-up until a

certain point-increase in value as more and more

users are interconnected. Given this potential for

underdevelopment, government might provide some

start-up funding for private-sector projects.

One successful example of such an effort is the

OnLine Computer Library Center (OCLC), an electronic bibliographic database developed jointly by

university libraries with grants from the Council on

Library Resources, the State of Ohio, the Department of Education, and private foundations.138

These libraries contributed bibliographic information to a central database, which when compiled and

put online was made accessible to them. Today,

OCLC is a self-sufficient, nonprofit venture, competing with other similar operations.139 To promote

the system, the Federal Government did not have to

make a major financial commitment, only provide

enough support to launch the system and support the

development of new innovative programs.l40

One advantage of this approach is joint funding.

Joint funding not only encourages resource sharing;

it can also help promote cooperation among highly

competitive, or otherwise disparate, parties.141 In

addition, by funding a project jointly, the government is not forced to second-guess the marketplace

and pick winners and losers. This option is also

appealing because government support can be limited to a certain time period or set of conditions.

An alternative way of supporting private-sector

information-based standards activities is to subsidize use. Such an approach allows for competition,

and lets the market allocate resources. 142 Moreover,

users deemed to have special needs, or whose

involvement is considered necessary to the standards process, can be targeted to receive funds. If this

approach is pursued, however, efforts will be needed

134 ~s position is not swns~g sfice, as Priscilla Reg~h~ pointed ou~ organizations will likely be threatened by policies seeking to interferewi~

their information practices, since they are dependent for their existence and autonomy on information. See, Priscilla Regaq “Two Political Approaches

to Information Policy,’ ch. 3, Public UseofPn”vate Information:A Comparison ofPersonalInformation Policies in the United States andBn”tain, (New

York, NY: Cornell University, unpublished dissertatio~ 1981).

135 communication systems greatly affect power relationships within organimations. As Lucien Pye has pointed out:

Communications is the web of human society. The structure of a communication system with its more or less well-defined channels

is ina sense the skeleton of the social body which envelops it. The content of communications is of course the very substance of human

intercourse. The flow of communications determines the direction and the pace of dynamic social development. Hence it is possible

to analyze all social processes in terms of the structure, content, and flow of communications.

Lucien Pye, Communication and Political Developnnt (Princeton, NJ: Princeton University Press, 1963), p. 4.

136 AsWillim~~~ shoq tie tec~c~outcome of s~~~tiomprocesses will differdepen~gupon~e orgtimtioti structure of standards

bodies. See Lehr, op. cit., footnote 9.

137 S= foradiscussion Of some of~eecono~cc~act~stic~ of fiomtion, ~les Jonsher, “Info~tionEconomics mdpolicy I (North Holl~d:

Elsevier Science Publishers, 1983), pp. 13-35.

138 ~s aaonp o~@ly stood for Otio Couege Lib~ Center, ~d w~ ~ter c~g~ to tie Ofie computer l,ibr~ catalc)g’ue System. For a

description and history of OCLC, see Kathleen L. Machwko, OCLC: A Decade of Development, 1984. See also, Anne Marie Allison and Ann Al@

OCLC: A National Library Network (Short Hills, NJ: En.slow Publishers, 1979); Also, Richard Wn C)rdem OCLC, personal communication.

lsg David L. Wflson, “Rese~hers Get Direct Access to Huge Data Base, ” The Chronicle of Higher Education, Oct. 9, 1991, pp. A24-A29.

140 ~~=n L. Mciuszko, op. cit., footnote 146.

141 It is ~po~t t. note, however, tit as Omc bec~e more profi~ble, issues of copyright ~d RSOWW SkUhlg emerged.

M2 -Sirbu, c~egie Mellon University, personal communication.
30 ● Global Standards: Building Blocks for the Future

to assure that standards activities are interconnected

and widely accessible on an open, and transparent,

basis. Otherwise, the emergence of competitive,

independent technology-based systems could serve

to inhibit access to information and due process.

Inefficiencies might also result from the perpetuation of overlapping projects and duplication. Technical architectures for linking decentralized database

systems are being developed, which might help

alleviate such problems.143

Option C: Characterize Existing Systems and Map

Their Likely Evolution

One difficulty in developing Federal strategies to

promote electronically based standards information

activities is the lack of information about existing

systems and the directions they are likely to take in

the future. With few exceptions, these standards

systems are being developed independently of one

another. It is only recently, for example, that the

three major international standards bodies-the

ISO, the ITU, and the IEC—have begun discussing

how their information systems might be linked.

Thus, innovations are unlikely to be shared, and

systems will evolve without reference to the latest

technical and institutional developments. There are

today, for example, many exciting things happening

within the Internet community that are useful in the

context of standards. There has been little cross

fertilization of ideas, however.l44

If the government is to develop effective programs to promote online standards activities, it will

need to have a better idea of the key players, their

plans and competing interests, and the potential

resources that they can bring to bear. To initiate such

an undertaking the Government might sponsor a

major conference or convention, perhaps under the

auspices of the Library of Congress, NIST, or the

National Academy of Sciences. With a clearer

picture of what is already going on, and what is at

stake for all players, it will be easier to develop

policies calling for complementary, rather than

conflicting, roles. If successful, such a conference

might lead to more enduring relationships. For

example, such a group might be reconvened--or

even maintained online-to discuss and debate

issues, such as copyright, that have typically stood

in the way of the development of online standards

systems. Research might also be undertaken to fill in

knowledge gaps and raise the level of debate.

Strategy 3: Improve the Process of Standardization Through Organizational Restructuring.

New organizational arrangements are often necessary to address a perceived problem or set of

problems, or when old tasks and functions cannot be

accomplished by established individual or collective

means.

145 This is because organizations often become fossilized and resistant to change; instead of

finding new solutions, energies are spent trying to

preserve existing practices.146 Over time, however,

failure to adapt can threaten an organization’s

survival. 147

Basic changes in the standards environment have

already led to a number of organizational changes

throughout the standards community. In the United

States, ad hoc industry consortia have emerged,

bypassing traditional standards organizations. In the

United Kingdom, BSI has spawned an offshoot

group-DISC-that, operating by somewhat different rules, sets standards for rapidly advancing

143 Marvin Skbu, Carnegie Mellon University, personal Comnmrdcation.

144 Ru&ows@ op. cit., footnote 140.

145 ~oldseimpolitic~,po~ition, ~~power: TheDy~m”c~ofF~eral Organization @ndoq Engl~& @fordIJniversityPress, 3rded., 1980),

p. 15; See also, Harvey C. Mansfield, “Reorganizing the Federal Executive Branch: The Limits of hstitutionalizatio~” Luw and Contemporary

Problems, vol. 35, summer 1970, p. 462.

146 AS ~tz ~d Kahn have pointed out:

They [the decisionmakers] do not consider all possibilities of problem solution because it is of the very nature of organizations to

set limits beyond which rational alternatives cannot go. The organization represents the walls of the maze and, by and large,

organizational decisions have to do with solving maze problems, not reconstructing maze walls.

Daniel Katz and Robert Kalq “The Social Psychology of Organimations (New York NY: John Wiley & Sons, 2nd ed, 1978) p. 283.

See also, Mancur Olsem The Rise and Decline of Nations: Economic Growth, Stagjlation, and Social Rigidities: (New HaveU CT: Yale University

Press, 1982.

147 As ~~ew Schotter notes:

Economic and social systems evolve the way species do. To ensure their survival and grow~ they must solve a whole set of

problems that arise as the system evolved. Each problem creates the need for some adaptive feature, that is, a social institution.

. . .Those societies that create the proper set of social institutions survive and flourislq those that do not falter and die.

Andrew Schotter, The Econom”c Theory of Social Institutions (Cambridge, London: Cambridge University Press, 1981), pp. 1-2.
Chapter 1--Summary, Findings, and Policy Options ● 31

information technologies. 148 In the European Community as a whole, new standards organizations—

such as ETSI—are being created, and new standardization procedures adopted.149 Changes are also

being made at the international level. The ITU, for

example, is completely revising its organizational

structure to take account of converging technologies

and a changing regulatory environment.150 Technology convergence has also led to international,

interorganizational restructuring; to work on common standards and avoid project overlaps, the

International Standards Organization (ISO) and the

International Electrotechnical Commission (IEC)

established a joint committee, JTC1. More recently,

the ISO, IEC, and CCITT met in Tokyo to work out

a common approach for developing image header

standards. 151

It is in this context that the U.S. Government will

need to consider whether reorganizing national

standards procedures are in order. Any reorganization will likely be difficult to execute. Organizational arrangements are not neutral; they define

power relationships determining who shall control

what, and for what ends.152 Because organizations

are inherently political, their restructuring serves to

redefine commitment, influence program direction,

153 Many who have an invest- and reorder priorities.

ment in the status quo will resist. Organizational

change might be facilitated, however, to the extent

that the government and the private sector can,

together, develop anew understanding of the role of

standards in American life.

Option A: Encourage the Separation of Functions

Between Standards Publication and Standards

Coordination, Promotion, and Administration

Most standards organizations function to some

extent as publishers; they seek to maximize standards sales since their survival depends on them.

Competition among standards bodies is fierce and

likely to become even more so in the future.

Increasingly, standards resemble international commodities. In a global marketplace there will not only

be more standards bodies competing with one

another for sales, industry restructuring will also

likely follow, with business alliances cutting across

national lines.

In such an environment, the interests of national

governments, manufacturers and users, and standards bodies alike might increasingly diverge. National governments and manufacturers, for example,

may view standards implementation as a way of

improving productivity and national competitiveness.

154 To this end, they may want to encourage the

dissemination of standards information in ways

contrary to the needs and interests of standards

organizations. Otherwise, competition among standards organizations may become so intense that it

precludes the development of national standards

goals and policies.

One way of reducing this mounting tension is to

separate the functions of standards publication and

distribution from those of standards coordination,

promotion, and administration. Perhaps the least

disruptive approach would be to have ANSI-as the

existing national body representative to the ISOrenounce standards sales in exchange for both

greater responsibilities and formal government recognition of its coordinating role (i.e., a memorandum of understanding). Federal financial support

might also be required if members were unwilling or

unable to fill the income gap. Members might agree

to increase their support if such a restructuring meant

that standards bodies would better serve their needs.

Government might also provide incentives for such

support through the tax code.

148 BSI, perso~ comm~cation;The term DISC stands for “Delivering Information to Customers thrOU@ hlte~tiOMl S~tids.” ~g~Y Pm

of BSI, DISC has substantial autonomy with respect to program and resource development. See, for a discussion, J.L. Bogod, “Information ‘lkchnology

Standardization,” Berg, op. cit., foomote 1, pp. 70-73.

l@Fr~e he, Depu~ Director, ETSI; perso~ tite~iew, see, for discussions, M.E. Brento~ ‘‘The Role of ETSI ~ IT S@~~tiOXL” ‘~g~ oP”

cit., footnote 1, pp. 49-51; John Williamson, “Raising the European Standard, ” Telephony, June 3, 1991.

150~temtio~ ~lecom~mtion Ufioq High ~vel Cotittee, F~~ Repofi DOC. No. 145. April 29, 1991 (Genev& Switzerland.

151 Bob &ni@ Nynex, personal COIUmUUiCatiOn.

152 field Sei-,Politic-, PoSition,~~power: TheDy~~”CS ofF~eral&gani~ation @ndo~ >id: Oxford University Press, 3rded., 1980)

p. 15.

153 rbid. See ~so, Hmey C. ~sfield, 6’Reorg~~g he Fe&r~ Executive Br~ch: The Limits of ~ti~tio~fitio~” f%W Und COnk?~pO?tZ~

Problems, vol. 35, summer, 1970, p. 462.

154 ~s, for e=ple, was one of the ofi~ b~is for fie Fe&r~ Government becotigkN’Okd in s~~ds, cochr~e, oPQ cit., foomote 65.
32 ● Global Standards: Building Blocks for the Future

Some standards organizations would welcome

such a change. A number who have acted independently in the past have made it clear that they would

be much more inclined to coordinate their policies at

the national level if they could do so within an

organization that is not competing with them for

standards sales.155 Some industry groups who are

becoming impatient with the standards community

squabbles and want to be more assertive in the use

of standards might also support this option. They

might be hesitant, however, to te extent that

government funding is involved.

ANSI is not likely to favor this option; on the

contrary, it has argued persistently in favor of the

status quo. However, there may be some room for

maneuvering and incentive to compromise. If enough

of its members become dissatisfied by the present set

of arrangements, ANSI will be pressed to reconfirm

and/or broaden its role. Under the circumstances, it

may be willing to trade off standards sales in

exchange for a greater coordinating role and Federal

support.

Option B: Clarify and Strengthen the Mandate of the

Interagency Committee on Standards Policy

Many of the problems experienced by the Interagency Committee on Standards Policy are due not

just to the Committee’s organizational form; they

stem also from overly ambitious expectations about

what the committee might reasonably accomplish.156

Although called on to coordinate, such committees are often expected to develop a policy consensus--

a task much more easily said than done.157 For, if the

chairman of an interagency committee actually had

power to force a consensus, he or she would enjoy

more authority than the President himself.158 On the

contrary, the chairmen of interagency committees

often have very little authority. When these committees are established, it is generally understood and

agreed upon in advance that the power relationships

among the members will remain the same.159 Given

this tendency to delegate responsibility without

equivalent authority, interagency committees are

likely to be most successful when they are assigned

realistic tasks.160 In addition, these tasks should be

related to some overall shared goal-one that is

agreed on at the outset and which, over time, can

sustain an organizational commitment.161

One option for the Federal Government, therefore, is to clarify the mandate of the Interagency

Committee on Standards Policy, relating it to an

overall national standards policy. This option presumes, of course, the existence of a commitment to

develop such a policy. To sustain an organizational

commitment, a national standards policy will need

to be worked out in an organizational context that is

broader than the focus now provided by the Office

of Management and Budget. Acknowledging the

relationships between standards and national economic peformance, it might be developed, for

example, in the Economic Policy Counci1162 or the

Office of Science Technology Policy (OSTP).

155 ML Brooks, AS’rM, personal communication. At a subsequent meednghlz. Brooks said that this wasnot AS’rM’smain Opposition. More impo*t

to AS~ he said, was his opposition to the use of the canvass method of standards of adoption. Responding to this commen~ ANSI director Manny

Paralta points out that ASTM takes advantage of the canvass method when the need arises.

156 sei~m, op. cit., footnote 160.

157As Seidman has noted:

The quest for coordination is in many respects the twentieth century equivalent of the medieval search for the philosopher’s stone.

If only we can find the right formula for coordinatio~ we can reconcile, harmonize compelling and wholly divergent interests,

overcome irrationalities in our government structure, and make hard policy choices to which no one will dissent.

Op. cit., footnote 160, p. 205.

158 sei~m, op. cit., footnote 160, p. 216.

159~id., pp. 213-216.

160 It i5 ~teres~g t. note, fi ~s regmd,tit even ~ou@ the problems of interagency committees Me well kuown, such committees C4)ndllUe tO be

established. President Carter, for example, planned to reduce the number of these committees as part of his reorganization efforts. Instead, however,

during one 12-monthperiod, he established seven such committees by executive order. Alan Schick “The Coordinating OptioQ’ Peter Szanton, Federal

Reorganization: What Have We Learned? (Chatham, NJ: Chatham House Publishers, Inc., 1981), pp. 95-96.

161 As Wm Schicktis noted, $C~tmagency ~o~tt~s ~~ot sumeed as org~ation~ orp~. Whennobody MS avestd iIlkXeSt h dle gTOUp’S

work and nobody is responsible for following through on its decisions, a committee will languish even if its formal status remains intact.” Alan Schick

op. cit., footnote 168, p. 97.

162 fiesidentReagm setup the fionofic policy Coucfl ~ 1985 as ame~s of wor~g out ~teragencycconoficpoficy issues. A cabinet-levdbody,

it is comprised of the Secretaries of the Treasury, Commerce, State, Energy, Agriculture, and Labor; the Director of the Offke of Management and

Budget the U.S. Trade Representative; and the CMirman of the Council of Economic Advisers. The Vice President and the Chief of State are ex-ofllcio

members, and the heads of nonmember departments may be invited to attend when issues germane to their activities are under discussion.
Chapter 1--Summary, Findings, and Policy Options ● 33

From the point of view of agency stakeholders,

any proposed new interagency coordination could

generate strong opposition. As Harold Seidman has

noted, efforts at coordination are not designed to

make friends. For “coordination is rarely neutral,”

and always “advances some interests at the expense

of others." 163 ThuS, any proposal to enhance coordination is likely to be judged less on its merits than on

how it might redistribute power among existing

players. OTA interviews with members of the

Interagency Standards Policy Committee suggest

that lack of participation was not due to concerns

about turf, but rather for lack of a clear and

meaningful mandate. However, were the committee

to have a significant mandate, it is likely that power

disputes would arise.

Option C: Delegate to a Federal Agency the Responsibility for Coordinating and Implementing

Federal Standards Policy

Existing Federal standards policy is limited to

support for private-sector development of standards.

The Federal role, according to this position, is to

encourage all Federal agencies to voluntarily use

consensus standards. Unlike in other countries, the

Federal Government has given little consideration to

the notion that standards serve as an industrial

infrastructure, or as international marketing tools for

American companies.

The findings in this report contradict this point of

view. They emphasize that the U.S. Government—

as representative of the Nation—has a growing stake

in standards and the effectiveness of the standards

setting process. They describe, moreover, a number

of market and political failures in the system, and

outline reasons why, in the future, private sector and

national goals may no longer coincide.

If the Federal Government favored the development of national standards goals, it might delegate

the responsibility for implementing them to an

agency within the Federal Government. The most

likely candidate is NIST, given its history and

experience in this area. Based on the analysis in this

report, some of the functions that NIST might

perform would include:

. Build an organizational capacity at the Federal

level to address standards questions. To this

end, for example, NIST might sponsor research

●

●

●

●

●

●

●

on standards and standards development processes especially as it relates to standards usage

by industry and the impact on the national

economy as well as to the question of how the

outcomes of standards processes may vary in

different economic and organizational contexts.

Support standard development activities

through the promotion or development of an

information infrastructure. Sponsor efforts to

identify and reduce obstacles (i.e., copyright

issues) to the development and use of such an

infrastructure.

Educate producers, users, and other interested

parties with respect to the role of standards and

the importance of participation in standards

processes both domestic and international.

Foster and/or sponsor programs to encourage

the use of international standards by potential

trading partners.

Monitor the private sector process to assure that

its performance is consistent with public sector

goals. Serve as an ombudsman, providing a

mechanism for feedback about the effectiveness of the standards process.

Identify, on behalf of the government, areas

where future standards activity will likely be

required (i.e., environmental concerns, critical

technologies, etc.).

Foster a debate about, and coordinate interagency interests in, national standards policy.

Represent, along with private sector standards

developers, the United States in international

standards negotiations.

Were NIST to be assigned such tasks, it would

need to have much greater resources in this area than

it has today. Not since its heyday in the postwar

years has NIST had such a mandate, so its financial

and human resources to perform such functions are

no match for the complex tasks involved. NIST

would also need greater political support. One can

only speculate whether Congress, given budget

concerns, would be willing to fund such a program.

And in recent years the Executive Branch, through

OMB, has sought to curtail the role of NIST rather

than enhance it. Nor would the private sector be

likely to support such a role for NIST, judging from

the recent NIST hearing on the Standards Council of

the United States of America (SCUSA) proposal.

163 sei~m, Op. cit., footnote 160, P. 205.
34 . Global Standards: Building Blocks for the Future

Although perhaps not politically viable, this

option has considerable merit from a public administration point of view. 164 According to many public

administration experts, once an authentic national

need meriting Federal attention has been clearly

identified should be addressed within the public

sector. Privatization of public sector tasks, it is

argued, diminishes government resources to deal

with complex policy issues, and undermines the

principal of political accountability.165

Option D: Establish a Government Corporation or

Instrumentality to Focus on Public/Private

Standards Goals

166

Perhaps a more politically viable option would be

to create a joint venture between government and the

private sector, where national standards policy

might be worked out and the tasks identified above

pursued. As in Option C, the actual development of

standards would continue to be performed by the

private sector. This kind of an arrangement might be

especially appealing in today’s political climate,

given efforts to limit the role of government. 167 It

might be especially appropriate in the case of

standards, which serve both public and private

functions.

While foreign to the free-market advocacy style of

the American political economy, organizational

arrangements that promote collaboration among

government industry and user interests are not only

common in other parts of the world but also

extremely successful. In Japan, for example, such

collaboration is an integral feature of industrial

policy. Generally, the Minister of International

Trade and Industry (MITI) issues “administrative

guidance” to alert large corporations of its plans.

Industry, which often employs ex-MITI officials to

facilitate its liaison with MITI, usually complies

with this guidance. MITI also coordinates with

industry through advisory committees and public

and private-sector forums.168

In the United States, such collaboration has been

much more limited. Here, the most typical kind of

cooperative arrangement between government and

the private sector has been the government corporation or instrumentality .169 Precedents for such organizations date back to 1781 with the establishment

of the First Bank of the United States. Their major

supporters were those suspicious of politics and

politicians. They wanted government to be “run in

a more business-like manner. ’’170

The public corporation’s popularity ebbed and

flowed throughout American history, becoming

la As identified by Ira SharkanS@, there are four intellectual roots thatj in this COuntry, provide a public~“ ‘ trationrationale. They are: “l) the

desire to maintain political accountability in public adrninistratiory 2) the desire to maintain the traditional equilibrium among the three constitutional

branches of government by preserving the separation of powers and checks and balances; 3) the desire to insure that professional and technical skills

are brought to bear on relevant matters of policy formulation and implementation; and 4) the desire to maximize the efllcient use of resources by means

of a hierarchical form of organimation.’ See Ira Sharkans@, ‘‘Adnmu“ “strative Organization and Control Units: Structures and Their Intellectual Roots,”

Public Administration: Policy-Making in Government Agencies (Chicago, IL: Rand McNally College Publishing Co., 3rd cd).

165 See for discussions, Ron C. Moe, “Government Corporations and the Erosion of Accountability: The Case of the Proposed Energy Security Corp.,”

Public Administration Review, November/December 1979; Ronald C. Moe and Thomas H. Stanto~ “Government-Sponsored Enterprises as Federal

Instrumentalities: Reconciling Private Management with public Accountability,” PublicAdministration Review, vol. 49, July/August 1989, pp. 321-329;

Harold Seidmau, “The Quasi World of Federal Government” The Brookings Review, summer 1988, pp. 213-27; and Ronald C. Moe, “Liabilities of

the Quasi Government” Government Executive, November 1988, pp. 47-50.

166 mere is n. precise or leg~ definition of a Government corporation. Most broadly stated, ‘‘Government corporations are organized to achieve a

public purpose authorized by law.” Harold Sei- “The Theory of the Autonomous Government Corporation: A Critical Appraisal,” Public

, Adndnistration Review, vol. 12, spring, 1952. p. 93. They are, however, operationally and f~cially independent of Government. A good portion of

, all public corporations me not-for-profit. These include, for example, the Corporation for Public Broadcasting, the National Park Foundation the I

Securities Investor Protection Corporation, and the United States Railway Association. Most of their funding comes from Government. Instrumentalities ,

are government sponsored enterprises, such as the National Academy of Sciences. They perform no commercial functions and are designed to minimize

Presidential involvement. Ron Moe, CRS, personal communications.

I 167 According to Moe, “While American society might want the Federal Government to “do something” about aparticuhuproblem area, there is also

an aversion on the part of a substantial portion of the public towards creating a new department or agency since tbis is seen as just more ‘bureaucracy.’

I The acceptable solution in several instances has been to create quasi-governmental units that emphasize their privateness and their profit seeing character.

Ronald C. Moe, Library of Congress, Congressional Reseach Service, “Admuu. .stering Public Functions at the Margin of Government: The Case

of Federal Corporations, ’ HD 2755, Dec. 1, 1983, p. 22.

168 Jill Hartley, “The Japanese Approach to the Development of New Residential Communication Services,” Marjorie Ferguson (cd.) New

Communication Technologies and the Public Interest (1.nndoq England: Sage, 1986), p, 168; See also, Ira SharkanslgI, Wither the State? Politics and

Public Enterprise in Three Countries (Cha~ NJ: Chatham House, 1979).

l@ For a &scussiom StX Ronald C. Moe, op. cit., footnote 167.

1701bid., p. 9.
Chapter 1--Summary, Findings, and Policy Options . 35

more popular during periods of crisis and emergency.

171 Thus, a number of government corporations were established to deal with the problems

arising from the Depression and during the First and

Second World Wars. These included the Reconstruction Finance Corporation, the Commodity Credit

Corporation, and the Tennessee Wiley Authority.172

More recently, however, the rapid growth and

increased autonomy of government corporations

began to raise concerns among government administrators 173 and political scientists, who fear that they

are no longer accountable to either Congress or the

President. 174

Because of their long and varied

corporations differ considerably in

goals and organizational structures.

history, public

terms of their

75 Like COMSAT, they may be profit-making corporations sponsored by government and calling for a major

government role. Or, as in the case of the Corporation for Public Broadcasting, they may be nonprofit

ventures in which government’s role is limited to

appointing the board of directors.

A public corporation created to develop and

oversee national standards policy could take a

variety of forms, given this organizational leeway.

176 Its board of directors, for example, could be

comprised of individuals representing government,

standards development organizations, industry, and

the general public. Its role could be advisory, or

supervisory. Its structure and functions could even

be negotiated among the key interested parties. Such

an arrangement would allow for flexibility, provide

for the efficient use of resources, promote cooperation, and be capable of evaluation and foresight.

Established on behalf of the public interest, but

operating somewhat apart from government, it could

help the United States to better promote its interests

in the international arena, while still keeping with

American tradition (see box l-A).

171 Ibid., pp. 6-7.

172 ~id,

173 The Bro~owCommission, while recognizing thevalueof this form of organizational arrangemen~ recommended that they be incorpomtedwithin

existing Federal agencies. Concerned that government corporations were getting out of hand, Congress, in 1945, passed The Govemment Corp. Control

Act, which established budgeting and auditing standards. The act provided, moreover, that no corporation be created or acquired by any agency or corp.

of the Federal Government without the specific authorization of Congress.

174 s=, for example, Harold Seidman, “Government-Sponsored Enterprises in the United States,’ Bruce Smith (cd.) The Public Use of the Private

Sector (Tmndo~ England: Macmillan Co., 1975).

175 As Moe po~ts out ~~By 1981, effo~ t. neatly categofie the new breed of co~orations were doomed to fi@ation. Neither the President IIOr

Congress had used a set of criteria when creating ‘‘corporations,’rather each new “corporation’ tended to be viewed sui generis.” Op. cit., footnote

167, p. 26.

176 Foronee_ple see H.R. 649fj, in@oducedin my19, 1948. T&j bill was designed to inco~orate the Americ~ Standards Association. Its pllTpOSe

was to operate exclusively as a nonprofit educational and scientific organizatio~ and, in comection therewia to assemble and diffuse knowledge

concerning the standardization of measurements, materials, products, methods, operations, and nomenclature; to study, approve, and promote the use

of suitable and desirable standards; to provide systematic means by which organimations concerned with standardization work may cooperate in creating

and developing such standards so that they may represent a consensus of those concerned with their scope and provisions; to furnish facilities for

promoting the use of such standards; to serve as a clearinghouse for information on standardization work in the United States and foreign countries; and

to cooperate with the Government of the United States, and with other organizations in standardization matters, including coopemtion in international

standardization matters. ”
36 . Global Standards: Building Blocks for the Future

Box l-A—The United States and Saudi Arabia Standards Program

Created in 1989 by NIST and the American and Saudi Roundtable (an association of U.S. companies with

business interests in Saudi Arabia), the Program has had a substantial impact on the development of Saudi national

standards.

Many Saudi product standards, incompatible with U.S. products, promulgated prior to 1989 with assistance

from Japan, the United Kingdom, Germany, and other countries, have diminished U.S. export opportunity by $100

to 500 million annually.l

Since the inception of the NIST Roundtable Program, no standard incompatible with U.S. products has been

promulgated, and effort is underway to achieve revision of the earlier, damaging standards.

Under the program, a U.S. standards advisor, stationed in Riyadh, works directly with the Saudi standards

agency (SASO), providing advice and counsel on standards development. The advisor obtains standards in the draft

stage and sends them to NIST, which disseminates the drafts to U.S. companies, industry associations, and standards

organizations for comments. NIST collects and harmonizes the comments and sends them to the U.S. standards

advisor who presents and advocates them to the Saudi agency. Unlike any U.S. industry and thereby provides the

Saudis the broadest possible expertise and establishes maximum credibility for U.S. comments.

The Program demonstrates that industry and government can work effectively together to bring U.S. standards

capability to bear on foreign standards development.

Formed by a Memorandum of Understanding between NIST and the American/Saudi Roundtable, the Program

costs about $5000,000 per year ($250,000 from the private sector maintains and supports the Standards Advisor in

Saudi Arabia, $250,000 from the NIST budget maintains the standards dissemination and review system). Private

sector funds have been contributed by fewer than 50 U.S. companies, however, out of the several hundreds which

benefit from the program.

1 Stidy by U.S. Embassy, Riyad.hj Saudi ~abi% 1991”

SOURCE: American and Saudi Roundtable.
Chapter 2

Standards Setting in the

United States
Contents

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

The Evolution of Standards in the U.S. Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

The Role of Standards in Economic Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Stakeholders in the Standards Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Balancing the Public and Private Interests in Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

The American Preference for Pluralist Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

The Emergence of Standards Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Tensions Within the System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

The Need for Cooperation and Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

The U.S. Standards Development Process as it Exists Today . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Private Sector Standards Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

The Role of ANSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

The Role of the Federal Government in Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

The Consumer Movement and the Rise of Regulatory Standards . . . . . . . . . . . . . . . . . . . 54

A National Standards Policy - OMB Circular A-119 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Coordinating the Federal Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

The Trade Act of 1979 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Federal Support for the Voluntary Standards Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Boxes

Box Page

2-A. The Need for Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

2-B. Facsimile Edition of NFPA’s First Standard-the Fire Sprinkler Standard . . . . . . . . 45

Figures

Figure Page

2-1. U.S. Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

2-2. ASTM Consensus Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

2-3. Overview of ISO-ANSI Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Tables

Table Page

2-1. Selected Features of Nine Private Standards Setters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

2-2. Twenty Major Nongovernment Standards Developers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

I 2-3. Balloting Sequence and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

2-4. Legislation: Creating the Need for Government Standards . . . . . . . . . . . . . . . . . . . . . . . . 55 )1 2-5. Selected Features of Six Public Agencies Involved in Safety Regulation, 1988 . . . . 55 ~

I
Chapter 2

Standards Setting in the United States

Introduction

The current U.S. standards process was adopted at

the turn of the century, as the Nation entered the

industrial age. Its form reflects American political

culture and the manner in which industrialization

took place in the United States. In contrast to many

other countries, where unified national standards

bodies were established in conjunction with the

State, standards development organizations in the

United States first emerged in the private sector, in

response to specific needs and concerns.

Today, the U.S. economy is in a state of flux due

to a number of developments. These include the

emergence of a highly competitive global economy

in which the United States is no longer dominant; the

rise of regional trading blocs, the growing importance of multinational corporations and other transnational nongovernmental institutions, and the rapid

advance of technology.

Just as the industrial era gave rise to the present

standards development system, so too these major

structural changes will likely place new demands on

it. To understand the implications of these changes

for the U.S. standards process, one must first look

historically at the evolution of standards within the

U.S. economy and the institutional arrangements

that promote their development.

The Evolution of Standards in the

U.S. Economy

The Role of Standards in Economic

Transactions

Standards are part of all social interactions.

Interpersonal relations cannot occur without some

mutual expectation. Language, itself, is based on a

common understanding, as are simple gestures. l

Shared expectations give coherence and meaning to

social life. They are necessary for cooperation.

When reenacted and reinforced over time, such

normative expectations give rise to “standards of

behavior.’

Standards also serve to govern economic interactions. In preindustrial societies, for example, economic interactions were often regulated by family

relationships and codes of human behavior. 3 Bureaucracy provided a parallel function in more

complex organizations. By standardizing roles, relationships, and responses, workloads were greatly

reduced. 4 Standards are especially important in the

marketplace, because market interactions require a

high level of cooperation and coordination. Standards lower the cost of economic transactions and,

thus, can greatly improve efficiency.

Economic standards have proliferated and become more highly valued, as economic relationships

became more intricate. One major impetus for

standardization was economic specialization. With

1 Irving Goffman, Frame Analysis (New York NY: Harper and ROW, 1974).

2 Norms”. . .designateany standard as a rule that states what human beings should or should not thinlq say, or do under a given set of circumstances.’

Judith Blake and Kingsley David, “Norms, Wlues, and Sanctions,” Robert E.L. Fairs (cd.), Handbook of Modern Sociology (Chicago, IL: Rand

McNally, 1964), p. 456. Norms guide the behavior of individuals belonging to a group. People conform to norms not only for fear of punishmen~ but

also because norms are internalized, so people believe they correctly define the right thing to do. John and Erma Perry, The Social Web: An Introduction

to Sociology (New York NY: Harper and Row, Publisher, 1979), p. 95.

3 As K~l Polanyi notes:

in preindustrial societies trading relations were governed by standards relating to magic, etiquette, and norms of reciprocity.

See Karl Polanyi, The Great Tran@ormation: The Political and Economic Origins of our Time (Boston, MA: Beacon Press, 1957 cd.), p. 57. For

a discussion of the relationships between social and economic interactions in preindustrial England, see Neil J. Smelser, Social Change in the Industrz”al

Revolution: An Application of Theory to the Lancashire Cotton Industry, 1770-1840, (London: Rout.ledge and Kegan Paul, 1959).

4 As J~es Beniger notes:

One example from within bureaucracy is the development of standardized forms. This might at fwst seem a contradiction in that

the proliferation of paperwork is usually associated with a growth in information to be processed not with its reduction. Imagine how

much more processing would be required, however, if each new case were recorded in an unstructured way, including every nuance

and in full detail rather than by checking boxes, filling blanks, or in some other way reducing the burdens of the bureaucratic system

to only the limited usage of formal, objec- tive, and impersonal information required by stand- ardized forms.

James Beniger, The Control Revolution: Technology and the Economic Origins of the Information Society (Cambridge MA: Harvard University

Press, 1986), pp. 15-16.

-39-
40 ● Global Standards: Building Blocks for the Future

the division of labor and specialization, tasks

became more interdependent, requiring greater cooperation and information exchange. 5

Mass production provided a tremendous impetus

for standards development, since standardized processes required that there be standardized parts. 6

Mass production, and with it the demand for

interoperable parts, was especially prominent in the

United States where the economic conditions for

large-scale production were ripe. In no other country

was there a geographic market large enough to

absorb the output of a single standardized commodity or stable enough to sustain continual large-scale

production. 7 Nor was there anywhere else a labor or

consumer market equivalent to that in the United

States, which could take advantage of an ever

expanding volume of mass produced capital and

consumer goods.

Henry Ford was one of the first to recognize the

relationship between mass production and mass

consumption, and he paid generous wages accordingly. However, by 1920, most businessmen subscribed to the view that it would be the wage earners

who would be “the spenders of the nation. ’ Not

surprisingly, therefore, by 1928 the average American’s national income was estimated to be one-third

greater that the average European’s.9

The relationship between standards and mass

production was self-reinforcing. Further advances in

precision manufacturing required the development

of machine tools and precision gauges, which in turn

further drove the need for standards and standard

measures. Of particular importance was the vernier

caliper, which was first made in the United States in

1851 .

10 Inexpensive and capable of reading to

thousandths of an inch, the new caliper permitted

ordinary machinists-whether they were gun

smiths, watchmakers, or sewing machine manufacturers-to develop precision, interoperable parts.ll

Standards were also spurred on by the extension

of markets across great distances. Coinage, for

example, was used to standardize value, increasing

both the potential and geographic scope of trade.12

Coinage allowed people to compare things in the

abstract, and hence carry out exchanges irrespective

of time and distance. As trade became more dispersed, standards were needed to assure that products manufactured in different locals could work

together and be easily replicated, assembled, and

repaired13 (see box 2-A). Moreover, standards were

required to facilitate trading, itself. For example, the

railroad extended trade over vast regions, so proce5 see, for a discussion, Ernile Durkheirn, The Division of Lubor in Socie~ (New York NY: Free Mess, 1933).

G As noted by Harold Williamson:

Chief among the other elements in the pattern of mass production k the principle of standardization. Stemming from the

rudimentary division of labor, standardization involved the continuous pursuit and progressive realizatio~ of uniformity of the

materials, operations and products of industry, which made possible the future subdivision and mechanization of labor.

Harold Williamso~ (cd.) The Growth of the American Economy (New York, NY: Prentice Hall, 1951), p. 722.

7 Mictiel J. Piore and c~les F. s~~l, The Seco~z~uStriu/ ~ivi~e: possibilities forprosperi~ (New Yorlc, NY: Basic Books, 1984).

B As Williamson notes:

Mass Consumption was the main support as it was the prerequisite of mass production. . . The Americauhome marke~ in the words

of Andrew Carnegie, is a “vast homogeneous market, ” and this factor too was a major influence affecting the evolution of mass

production. Across the horizontal plane and its great geographical extent, as well as up and down the vertical social scale, the American

market place underwent a standardization of taste and consumption that bore profound psychological and economic significance. In

P@ the demand for great quantities of identical and similar commodities was built up by the subtle suggestions of salesmanship and

advertising that were a parallel and logical accomplishment of mass production itself.

In part also, such ready standardization of consumption was due to the scarcity of craft skills in the new country. This basic

compatibility between mass production and standardized mass consumption was, furthermore, a practical manifestation of that

democratic egalitarianism. Williamson, op. cit., footnote 6, p. 721-722.

g Ibid.

10 Conswce McLaughlin Green, “Light Manufacturing and the Beginning of Precision Manufacture,’ Harold Williamson, op. cit., footnote 6, p.

201.

11 Ibid.

12 See, for a discussio% Dodd B. Woodwind md Marc A. Rose, A Primer of Money (New Yorlq NY: MC@W ml Book CO., kc., 1935).

13 Ibid., p. 6.
Chapter 2--Standards Setting in the United States . 41

Box 2-A—The Need for Standards

Everyday, millions of pictures are taken by thousands of people who profess not to understand standards.

There are few better illustrations of the types and nature

of standards than this example. It gives some indication

of the number of types of standards involved.

To begin, the film and the camera matched. They

were not made by the same manufacturer, but they

interoperated. This interoperation was made possible by

voluntary consensus standards. The film maker and the

camera maker agreed to conform to market pressure and

used a standard 35mm format. No law requires this; the

market expects the standard to be honored The camera

understood that the film speed was one specified by an

ISO number-ISO standing for the International Organization for Standardization. Again, the market expects

conformance to a standard

The film was sent to a processing plant-and the

internal standards of the processing plant require that the

E

The developer:

film be tagged with appropriate header information to postal regulations ,

ensure that it is returned to the owner. The film is THE QUICK FILM DEVELOPER internal standards

developed according to a certain process, usually speci- ❑

on processing speed,

rules for film return,

fied on the outside of the film canister. The chemicals disposal of dangerous

used to develop it must be disposed of in a manner chemicals. -

approved by environmental authorities, and the final

pictures are printed in a reasonably standard format, SOURCE: Reproduced with the permission of ANSI.

usually three inches by five inches. These were then

returned to the sender, the check cashed, money deposited and the transaction completed. It is a simple occurrence,

but one that is completely driven and controlled by standards, on which our industrialized society is built.

SOURCE: Carl Cargdl, “Justifying the Need for a StandardS Program,” Stanalzrds Management: A Handbook for Proj?ts (New Yorlq NY:

ANSI, 1990), pp. 1-2.

dures for billing and exchange were also standard- standards. Many early standards were simply set

i.zed through bills of lading.14 unilaterally, by ‘the powers that be. Europe~ monarchs, for example, established standard weights and

Stakeholders in the Standards Process measures as a matter of royal prerogative.15 In

similar fashion, Article 1, Section 8 of the United

As the role of standards increased, so did the States Constitution autho&es the Federal Governnumber of people who had a stake in the selection of ment to set standard weights and measures.16

14 AS noted by Kiddand:

A mtional railroad system required business innovatio~ f~ilititig joint and through operations. Passengers must make

connections with tolerable certainty and ease: the freight cars of a corporation must not come back to stop at some corporate terminus

where an agency would have to unpack their cam and transfer it to the cars of another carrier, like as not just across the street. Ahnost

unchronicalledand undated, the railroads introduced through bills of lading, and though shippers still carped at their limitations, these

bills became the accepted method of freighting in the seventies. . .

Edward Kirkland, Industry Comes of Age: Business, Labor, and Public Policy (New Yor~ NY: Hol~ Rheinhar~ and Winsto~ 1961), p. 49.

15 As SOIO~ notes:

. . .according to The Oxjord English Dictionary, the word standard is derived from an early concept of the flag or standard beare~

one might say, “the King’s Standard.”

Richard Solo- “New Paradigms for Future Standards” (Cambridge MA: Research Lab of Electronics, MIT 1989), pp. 1-2.

161t is notewofiy tit Congess did not ~t ~ecfly on ~authori~. On Apr. 2, 1722, Congress adopted tie d~~ syst~ of money; weights Of

coins, however, were not standardized until 1828, when Congress adopted the British troy pound as the standard for Americau coinage. Rexmond C.

Cochrane, Measuresfor Progress: A History of the National Bureau of Standards (Washington DC: National Bureau of Standards, 1966) p. 24.
42 ● Global Standards: Building Blocks for the Future

Producers got involved in standardization when

trade was extended across greater distances. Standards served as a trademark, allowing them to

differentiate their products from their competitors,

and to price products for different markets. It was to

this end, for example, that American farmers played

such an important role in setting agricultural standards during the frost half of the 18th century. They

realized that by grading and classifying their products, they could set up separate distribution channels

and increase their profits. Thus, when farmers

moved west, they labeled their products by the

region of their origin, while wholesalers used these

names—Goschen butter, Genessee flour, and

Herkimer cheese—as designations of grade.17

Suppliers were brought into the standards process

with industrialization and the development of precision manufacturing. Recognizing that production

costs could be greatly reduced with interchangeable

parts, they began to produce to specifications.l8 Gun

manufacturing was one of the first industries in the

United States to take advantage of production based

on interoperable parts, followed by clock making

and the manufacturing of bicycles and sewing

machines. l9 In 1813, Simon North signed a contract

with the Federal Government to produce 20,000

pistols. His contract specifically stipulated that, “the

component parts of pistols, are to correspond so

exactly that any limb or part of one pistol. . maybe

fitted to any other of the twenty thousand.”20

No one understood the value of interoperability

better than Henry Ford, who, in 1913, limited

production at his Highland Park plant to the standard, black Model T. ‘‘Any customer can have a car

painted any color he wants,” he said, “so long as its

black.”21 Ford, however, was not the only one to

standardize the production of cars. Henry Lebland,

who created the Cadillac and the Lincoln, illustrated

the benefits of interchangeable parts when, in 1908,

he took apart three Cadillacs; mixed up the parts; put

the cars back together, and then drove them away.22

Consumers also gained from standardization.

Mass produced goods were cheaper. Thus many

consumer goods—such as cars, refrigerators, and

vacuum cleaners, which were once regarded as

luxuries-became more accessible to all. Between

1914 and 1924, Ford produced more than 15,000,000

standardized Model Ts, the cost of which dropped

during the same period from $950 to $240.23

Standards also conveyed product information and

provided greater quality control. One of the frost

product areas to benefit from standards was that of

food. Responding to scandals in the meat packing

industry, Congress passed the Pure Food and Drug

Act of 1906. This legislation not only protected

against misbranding and food adulteration; it also

standardized containers for marketing fruits and

vegetables, thereby eliminating false measurements

and deceptive shapes. 24 Later the Department of

Agriculture, continuing the standards program initiated during the First World War, developed standards for fruits, vegetables, peanuts, honey, butter,

cheese, eggs, and meat, and established inspection

stations at a number of key distribution centers.25

17 J~es Beniger, op. cit., footnote 4.

18 As Cmgill pOiIltS OUt:

It was the secondary suppliers who most spurred the growth of voluntary standards; screw sizes, pipes and valve fittings, and rail

ties were just a few of the scores of newly standardized objects. Wrious interest groups coalesced within industries to insure that their

industry has its standard~tan&uds were intended to make the industry grow or to make it more profitable and/or less complex.

, See Carl Cargill, Information Technology Stanckwdization: Theory, Process, and Organization (Digital Press, Boston 1989), pp. 20-21.

I 19 Siegfried Giedion, Mechanization Takes Command: A Contribution to Ananomous His- tory (New York, NY: Oxford university ~ess, 1948),

,

I pp. 47-50.

~As cited in G.S. Mdford, The Control of Quality in Manufacturing (New York: NY: The Ronald press CO., 1922), P. 270.

21 ~ti Nevins and Frti Ernest Hill, Ford: The Times, The Men, The Company (New York, NY: Stibner, 1954).

1

22 For~discussionof the fipact of s~~ds on the automobile ~dusq, see George V. ~ompso~ Journal of Economic Histo~, Vol. 14, Winter,

h 1954, pp. 1-20. F

23 ~ ~s seine it @@t ~s~d tit Ford$s r~gefius Wm in ~eco~~gthe explosive ~ket for a less expensive “eve-” CU+Ufly btil~

sold, and maintained. Personal communication, Carl Cargill, DEC. Williamson also notes that:

the philosophical and practical relation between mass production and mass purchasing power was perceived early by Henry Ford.

By 1920, it had become a commonly held business option that “wage earners . . . are the spenders of the nation.”

Williamson, op. cit., footnote 6, p. 721; See also Gidieo~ op. cit. footnote 19.

U One of the problems for consumers was the lack of standard weights ~d measures.

25 Alice Edw~ds, ~~stm~d~ation in the Household, ” inAn~ls of the American Academy of po/itical Science, 1928, p. 213, hereafter referred tO

as Annals.
Chapter 2--Standards Setting in the United States ● 43

The general public became even more attuned to

the need for standards because of the many problems

accompanying industrialization. With more and

more mishaps due to the rapid expansion of technology, safety standards were introduced.26 Explosions

averaging 1,400 per year led the American Society

of Mechanical Engineers, for example, to write a

comprehensive boiler code in 1910. Once most

States and cities had moved to adopt the code, such

explosions were virtually eliminated. 27

The leaf fire in 1904 on the grounds of the

National Bureau of Standards also had a significant

impact. Dealing with the fire was made much more

difficult because the fire hoses could not be coupled

because of differences in threads. The incompatibility between hoses and hydrants also accounted for

the problem controlling the Baltimore fire, which

occurred the same year. Buildings numbering 1,526

and all electric lights, telegraph, telephone, and

power facilities in an area of more than 70 city

blocks were destroyed before the fire burned out.

And fire companies from outside the area could not

link their hoses to the Baltimore hydrants, making it

impossible for them to help28 (see box 2-B).

With the advance of technology and its further

deployment in industry, scientists and engineers

began to play a special role, as a group, in standards

development. 29 Faced more and more with the need

to quantify their results, they could not proceed in

their work without more accurate standards of

measurements, precision instruments, and better

tools.30 Thus, even though standards were a boon to

industry, it was the scientist and not the industrialist

who called for national standards to be developed

through a Federal Bureau of Standards. 31 T h e

demand for electrical standards was especially

acute, and it was in fact the scientist and engineers

working in this field that supplied the frost cadre of

workers for the National Bureau of Standards after

it was established in 1901.32

Although the Federal Government became involved in standards as early as the mid-eighties

through the work of the Office of Weights and

Measures, and later with the establishment of the

Bureau of Standards, it was not until World War I

that the government’s stake in standards was really

brought home to the Nation. In 1917, product

diversity was so great it threatened to hinder the war

effort. To deal with the problem, the government set

U & David % &%zw~ writing in 1!328, described the impetus behind safety s~dards:

One of the most interesting developments of the last decade or two has been the rapid increase of interest in industrial safety. It

was only natural that the astonishing progress in machine production which had placed the United States in the forefront of industrial

mtions should direct its attention to the humanwaste accompanying it. . . . This waste made its first appeal to the moral sense, but

this was soon supplemented by a steadily increasing belief that accidents in industry have more than a humanitarian aspect—that they

have such an impact on production that they must be taken into consideration from an economic point of view.

David Vm Schaack, “Development of Safety Codes,” op. cit., footnote 25, Annals, p. 70.

ZTAchs~ Nesmi@ ‘CA long, arduous mruch toward standardization” Smith- sonian Magazine, February 1985, p. 185.

28 Remend c+ Coctime, op. Cit,, foo~ote 16, pp. 84.86. To overcome such problems it is not enough to merely set standards; sadards need tO b

implemented. As Nesmith notes:

Sixty years after the Baltimore fire, the city learned that firemen in an adjoining county were requesting fireplugs which did not

fit hoses made to mtional standards be marked with fluorescent paint so fuefighters could tell where special adapters were needed.

Nesmi@ op. cit., footnote 26, p, 188.

29 AS described by Cargill:

Standardization was pushed by the growing group of technocrats, headed by the engineers+ivil, metallurgical, rnining, electrical.

For the first time an emerging discipline had a body of literature that dealt with demonstrable reality, capable of being duplicated. . . .

This reliance on a factual, demonstrable base is the hallmark of the standards industry-It is no accident that in the late 1800s, the

American Society for Tksting Materials (ASTM) was one of the first organizations to gain prominence as a standards group.

Cargill, op. cit., footnote 18, p. 21.

30 Thefhstred effo~to develop accmtewei~ts ~dm~s~s &dnotomm~tiI 1832 ~der the direction of Ferdinand Rudolf Hassler, who cOkXt?d

the various standards used in government departments. It was a slow process, however, and Hassler’s work was only half completed when he died in

1843. Cochrane, op. cit., footnote 16, pp. 24-25.

31 As Cochrme notes:

The builders of America’s industrial complex had little interest in standards as suc~ but the scientists, engineers, and experimenters

working for them found themselves increasingly hampered without them.

Cochrane, op. cit., footnote 16, p. 9.

32 Accortig to Coch.rane:

Electric light and power companies developed at a phe- nomenal rate throughout this period. So numerous were the demands of

the electrical industry and of electrical research labs for basic measurements, instrumentation tests and calibrations that almost half

of the new people coming into the Bureau went into this division,

Ibid., p. 109.
44 ● Global Standards: Building Blocks for the Future

up a Commercial Economy Board of the Council of

National Defense, whose task was to simplify the

use of labor, capital, and equipment for all industries. 33 In 1918, the Board was incorporated within

the War Industries Board, which eventually supervised the manufacture of over 30,000 articles of

commerce. The intensity of this campaign made

every American conscious of standards-its impact

“reached into every home, every office, factory,

institution, and government agency in the United

States.” 34

Concern about the post war economy led government to take a continued-if not more intense—

interest in standards, in the period following the war.

The hope that wartime simplification efforts would

endure was dashed when manufacturers’ sought to

revive consumer demand by increasing product

diversity during the “buyers’ strike” of 1919-

1920. 35 The government’s response to the post war

slump was quite the opposite.36 Inspired by the

report, Waste in Industry, written by the American

Academy of the Federated American Engineering

Societies, the government hoped to revive the

economy by increasing economic efficiency through

greater standardization.

The driving force behind this “crusade for standardization,’ was Herbert Hoover, Secretary of

Commerce under President Harding. Hoover called

for a three-pronged approach to the reduction of

waste in industry: 37

. standardization of business practices and of

materials, machinery and products;

. specifications to insure good quality of products; and

. simplification in variety of products.

In contrast to the wartime simplification program

that had focused on military products, Hoover’s

program was directed at the economy as a whole. To

carry out the program, he organized agencies within

the Department of Commerce to provide standards

assistance to business at their request.

The standards crusade was considered a success.

It reached a peak in the late twenties when,

according to the American Standards Association:38

Standardization had become “the outstanding

note of this century, “ its influence pervading “the

remotest details of our industrial regime’ topping

“all sources of scientific knowledge and [affecting]

every phase of design, production, and utilization. ”

Balancing the Public and Private

Interests in Standards

As more and more stakeholders became involved

in standards, it became necessary to differentiate the

responsibilities among them. Of prime importance

was the relationship between the public and the

private sectors. Although the government actively

promoted standardization at the turn of the century,

it gradually relinquished this responsibility to the

private standards development organizations. However, because standards serve both public and

private functions, this arrangement was not without

tensions. And, every so often these tensions erupted

from under the surface, as they have today.

33 me govement worked b coopmation with industry. M 1917, the American Chamber of Commerce met in Atlantic Ci@, where it endorsed tie

committee system. According to this system, each industry would organize its own committee and cooperate with government in its own fashion.

Reflecdng the attitudes of business, W.E. McCulloug& a participant noted:

The experience of the members of these committees, which were largely made up of executives of several industries opened their

eyes to the danger which they had been drifting into prior to the wm in permitting the increasing of their varieties, which also meant

the insidious reduction of volume, thereby decreasing their plant efficiency, and greatly increasing their costs.

E.W. McCulloug~ “The Relation of the Cbamber of Commerce of the United States to the Growth of the Simplification Program in American

Industry,” pp. 9-10, Annals, op. cit., footnote 23.

34 According to COchrane:

Labor savings in the manufacture of products from clothing to coffins reportedly reached as high as 35 percent. Savings over prewar

consumption of materials in some instances rose to 50 percent as simplicity ruled and plentiful wood, paper, ~ and cotton replaced

the steel, tinplate, copper, brass, bronze, pig@ nickel, and raw wool consumed by the war, The country had experienced nothing

like it before.

Cochrane, op. cit., footnote 16, p. 167.

35 Ray M. Hudso~ “Org@~d Effort in Simplification, ” op. cit., Annals, foo~ote 23, p. 1.

36 Coctiae, op. cit., footnote 16, p. 255.

37 congessio~ Rese~ch Senice, science policy Divisio~ Voluntav 1~us~ standards in &Unitedstates: An overview of their Evolution and

Signijicancefor Contress, Report to the Subcommittee on Science, Researck and Development of the Committee on Science and Astronautics, U.S.

House of Representatives, 93rd Cong. 2nd Sess., July 1974, hereafter referred to as CRS 1974.

38 Ibid.
Chapter 2--Standards Setting in the United States . 45

Box 2-B—Facsimile Edition of NFPA’s First Standard—the Fire Sprinkler Standard

Photo credit: James Smalley/NFPA

This is a facsimile edition of NFPA’s First Standard-the Fire Sprinkler Standard. It is the very standard which

led to the creation of the National Fire Protection Association in 1896. At that time, the Association’s first Secretary,

Everett U. Crosby, reported that within a small radius of New York City alone, “nine radically different standards

for size of piping and sprinkler spacing” existed.

In 1897, he described the principles applied in creating the Sprinkler Standard-a process that continues to

direct NFPA technical committees today:

To bring together the experience of different sections and bodies of underwriters, to come to a mutual understanding,

and, if possible, an agreement on general principles governing fire protection, to harmonize and adjust our differences

so that we may go before the public with uniform rules and conditions which may appeal to their judgement is the

object of this Association.

SOURCE: National Fire Protection Association.

The American Preference for ing the loosely organized and fragmented standards

Pluralist Solutions system to be found in the United States, Publius

(a.k.a. James Madison), in the Federalist Papers

(no. 10) contends that the only way to guard aThe American preference for private, pluralist gainst domination by a majority faction is to

solutions is as old as the Constitution itself. Presag- promote a large number of diverse competing
46 ● Global Standards: Building Blocks for the Future

ones.

39 Writing to Thomas Jefferson, James Madison summed up this view:

Divide et impera, the reprobated axiom of tyranny

is, under certain qualifications, the only policy by

which a republic can be administered on just principles.40

The Founding Fathers were successful in framing

the Constitution to have just such an effect. From the

outset of the new republic, Americans proved to

have a penchant for joining factions and establishing

associations, a trait that did not escape the observation of Alexis de Tocqueville when he visited

America in the mid-1800s. As he described in

Democracy in America:

Nothing . . . is more deserving of our attention

than the intellectual and moral associations of

America. Americans of all ages, all conditions, and

all dispositions constantly form associations. They

have not only commercial and manufacturing companies, in which all take part, but associations of a

thousand other kinds, religious, moral, serious,

futile, general or restricted, enormous or diminutive.

. . . Wherever at the head of some new undertaking you see the Government of France, or a man of

rank in England, in the United States you will be

sure to find an association.41

This support for voluntary, private sector associations 42 was reinforced by a general suspicion of the

state and preferences for market solutions.43 Although these values were often supported more by

rhetoric than practice, they were greatly popularized

by the progressive movement, which had its heyday

in the late 1800s just at the moment when industrialization was primed to take off.44 Thus, whereas in

many other countries government actively sponsored the growth and development of business, in the

United States industrial development was managed,

directed, and financed primarily by the private

sector. 45

The Emergence of Standards Organizations

The first American standards organization were in

keeping with this tradition. They generally emerged

to deal with specific needs as they arose, and thus

took a variety of forms (see table 2-l). Often

established on an industry by industry basis, there

was little interaction between them.46 The frost

American standards organization was the United

States Pharmacopial Convention, which was setup

in 1829 to establish uniform standards for drugs. The

American Iron and Steel Institute, established in

1855, was the frost trade association to develop

standards. The American Society of Civil Engineers,

which was formed in 1852, was the first scientific

39 AS (iescribed by Plattner:

How can a republic be protected from such a faction? The first and most important part of Publius’s answer is that “the existence

of the same passion or interest in a majority at the same time must be prevented. ” In other words, far from seeking the greatest possible

unity among the citizens, as the legislators of the small virtuous republics did, the framers of the American Constitution made the

choice of encouraging multiplicity and disunity.

See MaIc F. Plattner, “American Democracy and the Acquisitive Spirit,” Robert A. Goldwin and William Sebambu (eds.) How Capitalist is the

Constitution? (Washington DC: The American Enterprise Institute, Constitutional Studies Series, 1982), ch. 1.

@Jmes ~&50n t. ~om5 Jeffersou Oct. 24, 1787, G~i~d H~~ (~.) The writings ofJames~~ison, 9 VOIS. (New York NY: G.P. ~~’S

Sons 1906, as cited in ibid.

41 ~e~s de TocquevMe, Democracy in America (1963 cd.), PP. 106 md 110.

42 For cross c~~comp~som, see Ro&.fl Wutiow (cd.), The vo~~nta~ Sector in comparative perspective (Princetoq NJ: Mceton UI1.iversity

Press, 1991).

AS See for discussions, Willi Paul Adams, “Republicanism,” JackP. Gree~ ed.,Encyclopedia ofPoliticalHistory (NewYorL NY: Scribners, 1984);

see also Dorothy Ross, “Liberalism,” ibid.

44 Mem&.r of ~eprowessivemovementhelped t. expose a n~ber of sc~d~s @t ~edpofitici~ ~d business, reinforcing AllleriU.lIls SUSpiCiOIIS

of the government. Ironically, the reputation of big business was actually improved. As Walsh notes:

Laissez-faire economic thmry seemed newly justified by the record of great corporate successes between 1889 and 1929. The role

of government in that development was discounted and its reputation tarnished.

Armemarie Hauch Walsh The Public’ sBusiness; The Politics and Practices of Government Corporations (Cambridge, MA: The Mit Press, 1978),

pp. 25-26.

45 See, for a discussio~ David Vogel, “GOV ernment-rndustry Relations in the United States: An Overview,” Stephen Wilks and Maurice Wright

(eds.), Comparative Government- Industry Relations (Oxford: Clarendon Press, 1987), ch. 5.

~ AS described by C@ll:

The tone for the entire voluntary standards effort was set by 1890. There was a strong concentration on creating standards within

specific disciplines (metallurgy, mechanical engineering, electrical engineering, etc.), and emphasis on demonstrable and

reproducible facts, and an internal focus on the part of the participants-a modified siege mentality.

Cargill, op. cit., footnote 18, p. 21.
Chapter 2--Standards Setting in the United States Ž 47

Table 2-l—Selected Features of Nine Private

Standards Setters

Founding

date

American Society of Mechanical Engineers (ASME). . 1880

Underwriters Laboratories (UL). . . . . . . . . . . . . . . . . . . 1894

National Fire Protection Association (NFPA). . . . . . . . 1896

American Society for Testing and Materials (ASTM).. 1898

Building Officials and Code Administrators

international (BOCA). . . . . . . . . . . . . . . . . . . . . . . . . 1915

American Gas Association Labs (AGA Labs). . . . . . . . 1918

American National Standards institute (Anal) . . . . . . . 1918

The American Conference of Government Industrial

Hygienists (ACGIH). . . . . . . . . . . . . . . . . . . . . . . . . . . 1938

Southern Building Code Congress (SBCCl). ......, . 1940

SOURCE: U.S. Department of Commerce, National Bureau of Standards,

Standards Activities of Organizations in the United States, NBS

Special Publication 681 (Washington, DC: U.S. Government

Printing Office, August 1984).

and technical society involved in standards development. 47

While these private standards organizations could

boast a number of accomplishments, perhaps the

most impressive standardization effort of the period

was the interconnection of the Nation’s railways. By

1897, 1,158 independent railroad companies laid

and interconnected over 240,000 miles of track with

little assistance from government. This feat required

not only the standardization of gauges but also of

cars and their equipment. Also needed were uniform

procedures and freight classifications as well as

standardized time.48 That such an achievement was

accomplished within the private sector prompted a

New York editorial writer to remark that:

The laws of trade and the instinct of self preservation effect reforms and improvements that all

legislative bodies combined could not accomplish.49

The private sector approach survived the war time

simplification effort, and was reconfirmed by Secretary of Commerce Hoover, when he undertook the

standardization crusade in 1921. Hoover was a

staunch believer in the private sector. Vetoing a

public power bill that called for an active government role, he proclaimed, for example:

I hesitate to contemplate the future of our

institutions, of our government, and of our country

if the preoccupation of its officials is no longer to be

the promotion of justice and equal opportunity but is

to be devoted to barter in the markets. This is not

liberalism, it is degeneration.50

In accordance with this perspective, the Division

of Simplified Practice set up in the Department of

Commerce was designed to supply guidance, information, and assistance. But compliance with the

program was purely on a voluntary basis.51

The depression capped the voluntary approach to

standard setting. In 1933, Congress cut the Bureau’s

standards appropriations and impounded its funds.

As a result, the staff of the Simplified Practice

Division was cut from 40 to 4, and much of its work

in the area of commercial standards was transferred

to the American Standards Association (ASA).52

Tensions Within the System

Notwithstanding the American preference for

voluntary standards, there were a number of tensions

in the standards setting community. Consumers

were among the first groups to question the system.

In the wake of Hoover’s standardization crusade,

they began to question whether they had derived any

benefits from it. It was clear that standardization had

saved industry money, but consumers saw little

evidence that these benefits were being passed down

to them.53 They also looked to the Bureau for

consumer product information, an area that business

was loath to have government become involved in.

The business community also began to register

complaints about the expansion of the Bureau’s role,

charging it with meddling in their affairs. Alarmed

at the establishment of a trade standardization

47 U.S. Department of Commerce (Robert Toth, cd.) Standards Organizations in the United States, NBS Special fiblication 681, P. 4.

~ fikland, op. cit., foomote 14, pp. 49-51.

49 As cited in ibid., p. 50.

~As cited by Armemarie Hauch Walsh op. cit., fOOtnOte 44, p. 15.

51 coc~~e, op. cit., foo~ote 16. AS Ray Hudso@ the Assistant Secretary of Commercial Standards witithe Department des~b~:

The committees operate on the principle tbat if producers, distribution% and consumers of a commodity can meet and develop a

program of simplification which can be of benefit to all concerned, the Department of Commerce is glad to assist in securing its general

adoption and in seeing that it is subject to periodic review so as to keep it in accord witb the best current practice.

Hays, Annals, op. cit., footnote 24, p. 9.

52 CM, 1974, op. cit., foomote 37, P. 16.

53 Coctime, op. cit., foomote 16, p. 202.
48 ● Global Standards: Building Blocks for the Future

division at the Bureau, the American Engineering

Standards Committee (AESC) formally petitioned

the Bureau to withdraw from all commercial standards activities. Members of the Bureau refused to

attend private sector meetings in protest.54

For the next two decades, relations between the

public and private sectors were severely strained.

The Bureau charged that the ASA was deliberately

duplicating and blocking its standards. Meanwhile,

ASA accused the Bureau of usurping its functions by

promoting Federal specifications as commodity

standards. 55

The Need for Cooperation and Coordination

With the government’s retreat from the standards

arena together with the proliferation of standards

organizations, the need for national coordination of

standards activities soon became apparent. Standards organizations were not only competing with

one another to write standards, they were also

writing conflicting standards, thus defeating the

purpose.

The first steps towards coordination took place in

1918, during the war, when five national engineering

societies, together with the U.S. Departments of

War, Navy, and Commerce, formed the nucleus of

an organization that was to become the AESC. In

1927, the representatives of 365 national organizations—technical, industrial, and governmental—

were officially accredited to the AESC. The following year, this group was reconstituted to form the

American Standards Association (ASA). However,

despite ASA, coordination continued to prove difficult, because of competition among standards

organization. 56

The second world war placed even greater demands for coordination on the U.S. standards

community, again raising the question of the government’s role in standards .57 To meet the needs of war,

the government became involved in setting standards for consumer goods. At the behest of the

Department of Commerce, a special consultant,

Carroll L. Wilson, was asked to report on the

standards problem, with particular attention to the

role the National Bureau of Standards should play in

the postwar period. Wilson concluded that both the

government and the private sector standards programs fell short. Acting on Wilson’s recommendations, the ASA broadened the scope of its concerns

to include consumer goods. The ASA constitution

was also revised so that all groups with an interest in

a particular standard would have a voice in its

development. Moreover, the revised constitution

required that three members at large be included on

the association’s board of directors in order to

provide a greater voice for consumer interests.58

The broadening of ASA’s mandate had only a

marginal effect on its ability to serve as coordinator

of all private sector standards activities. In February

1965, Francis L. LaQue, vice president of the

International Nickel Co., issued a report on the state

of the United States standards system, which had

been undertaken at the request of Herbert Holloman,

Assistant Secretary of Commerce for Science and

Technology. According to the report, the principle

standardization problem in the United States continued to be that of achieving legitimacy and coordination. The study noted that only 2,300 of the 13,675

nationally produced and used standards were designated as American standards through ASA. To

overcome this problem, the report called for a

national coordinating institution for voluntary standardization with international recognition such as that

granted other national standards bodies. To assure

such recognition, LaQue proposed that this institution have a Federal charter and that its standards be

officially designated as U.S. standards.59

Hoping to gain such a charter, the ASA adopted

anew constitution and bylaws and took on the name

of the United States of America Standards Institute.(USASI). Characterizing itself as a federation of

trade and other organizations, it redefined its mission. Among its purposes were to:

M coc~me, Op. cit., footnote 16, P. 3~.

55 Ibid., p. 304.

56CRS, 1974, op. cit., footnote 37, p 13.

57 To meet tie ~eed~ of tie ~U, indu~~ ~dvisow ~o~ttees were set up to se~e as ~sons ~~ gove~ent on ~tters (XX.MXhg SiIIlp~C2tiOn

and standards.

58 CR$ 1974, op. cit., footnote 37, p. 18.

59 Report of tie Pmel on ~n@wfig ~d comodi~ s~~ds of tie Comerce ~c~c~ Advisow Bored. Francis L. L@e,C~1965.

Parts A and B.
Chapter 2--Standards Setting in the United States ● 49

act as the national coordinating institution for

voluntary standardization;

assure that the interests of all concerned are

included in the process;

eliminate duplication and conflict;

promote knowledge and use of voluntary standards;

simplify the development of standards;

encourage the development of standards in

accordance with the Institute procedures;

serve as a national clearing house; and

provide the channel for U.S representation in

the development of international standards

recommendations.

Acting purely as a coordinating body, the Institute

no longer intended to develop standards; rather it

would orchestrate their development through the

combined technical talent and expertise of its

member bodies and certify that these standards

development bodies adhered to the consensus process.

60

The government and other members of the standards community resisted the effort of ASA to

strengthen its role. A national charter was not

forthcoming, and the FTC protested the use of the

name USASI on the grounds that it suggested that

ASA was an official organization of the Federal

Government. A compromise was reached, and ASA

became the American National Standards Institute

(ANSI). Reporting on the state of the U.S. standards

process several years later, the Stanford Research

Institute (SRI) saw little hope for the future. The

situation, according to SRI, was in fact deteriorating.

There is little hope that the situation will improve

in the next several years. In fact fragmentation is

becoming worse. Up through the mid-1960s, a

favorable solution appeared possible under the guise

of the quasi-official American National Standards

Institute (ANSI). . . . Reportedly, however, ANSI

now has less support and less probability of succeeding as the nominal national voluntary standards

coordinating agency than it did a decade ago.

At the same time, other standards organizations

are attempting to strengthen their individual positions, portending less opportunity for a coordinated

effort. A leadership conflict exists and will probably

persist for some time.61

The U.S. Standards Development

Process as it Exists Today

Were Publius to observe the United States standards process today, he might well be pleased.

American standards organizations continue to operate in a pluralistic framework. Almost half of all

standards are set as part of a voluntary consensus

process, in which all, or most of the key players—

including government agencies—participate (see

figure 2-l).

On the other hand, times have changed. The

United States is no longer an isolated, homogeneous

agricultural society where the greatest danger is rule

by an oppressive majority. Quite the contrary.

Among the dangers that the United States faces

today is a loss of competitiveness, due partially to a

failure at leadership in the international standards

development process. Thus, like many reports on the

U.S. standards process, Publius might be alarmed by

the lack of leadership and failure to develop a

national standards policy. However, leadership would

require either that the private sector work cooperatively, or that the Federal Government assume a

greater role. Ironically, neither remedy is likely,

precisely because of the intensity of conflict that

Publius prescribed.

Private Sector Standards Organizations

Within the U.S. standards community, there are

approximately 400 organizations involved in standards development (see table 2-2). These groups are

organized and function independently of one another, although they all arrive at decisions through a

process of consensus, and provide some level of due

process. All have mechanisms for participation,

comment, and appeal.

There are five different types of private sector

standards organizations. These include: trade associations, professional societies, general membership

organizations, third-party certifiers, and consortia.62

Trade associations are the most homogeneous,

since they were most often created specifically to

promote their industries’ needs. Trade associations

are also considered to be among the most exclusive

standards bodies. Precisely for this reason, they are

@ CRS, 1974, op. cit., footnote 37, pp. *6-*7.

61 SRI, Ztiustiiaz Stanuizrds (Menlo Parlq CA: SRI, The hng R~ge PI- g Service, 1971), p. 3.

62 Ro~~ )7. ch~i~ sef~~g safe~ sfa~rds: R~gu/ation in th~pubzic andprivate sect~rs @erlceley, CA: university of c~ofia press, 1990), p. 150.
50 ● Global Standards: Building Blocks for the Future

Figure 2-1—U.S. Sta ndards

?

Total

94,000

I I

Private sector

41,500

(25% ANS)

Federal Government

52,500

+

5,000 adopted

private sector

I

r--’--l(-----+ f--’- 1 >

Standards

developing

organizations

14,000

L /

Scientific &

professional

Trade

associations

14,500 -_-J13,000

SOURCE: Robert Toth, Toth Associates.

also the most likely to replicate market forces.

Although some trade associations sell standards,

they are generally supported overall through membership dues. Thus, with funds already committed,

participation tends to be high. Among the trade

associations participating in standards development

are, for example, the National Electrical Manufactures Association (NEMA), the American Petroleum

Institute (API), and the Computer Business Equipment Manufacturers Association (CBEMA). Trade

associations are also among the largest supporters of

ANSI. This may be because ANSI buffers their

activities from potential charges of anti-trust infringement.

Professional societies include organizations such

as the American Society of Agricultural Engineers

(ASAE), the American Society of Automotive

Engineers (ASAE), and the Institute of Electrical

and Electronics Engineers (IEEE). These societies

are intended to advance theory and practice in a

technical field, and thus have a strong engineering

bent. Members participate as individuals, not as

industry representatives. Not surprisingly, therefore,

industry groups sometimes complain that professional society standards do not adequately represent

market forces. To support their organizations, these

societies often rely on the sale of standards, and thus

they jealously guard their turf as they would a
Chapter 2-Standards Setting in the United States . 51

Table 2-2—Twent y Major Nongovernment

Standards Developers

Number of

standards

Aerospace Information Association. . . . . . . . . . . . . . .

American Association of Cereal Chemists. . . . . . . . .

American Association of State Highway&

Transportation Officials. . . . . . . . . . . . . . . . . . . . . .

American Conference of Governmental Industrial

Hygienists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

American National Standards Institute. . . . . . . . . . . .

American Oil Chemists Society. . . . . . . . . . . . . . . . . .

American Petroleum Institute. . . . . . . . . . . . . . . . . . . .

American Railway Engineers Association. . . . . . . . .

American Society of Mechanical Engineers. . . . . . . .

American Society for Testing and Materials. . . . . . . .

Association of American Railroads. . . . . . . . . . . . . . .

Association of Official Analytical Chemists. . . . . . . . .

Cosmetic, Toiletry & Fragrance Association. . . . . . . .

Electronic Industries Association. . . . . . . . . . . . . . . .

Institute of Electrical & Electronics Engineers. . . . . .

National Fire Protection Association. . . . . . . . . . . . . .

Society of Automotive Engineers. . . . . . . . . . . . . . . . .

Technical Association of the Pulp and Paper Industry.

Underwriters Laboratories. . . . . . . . . . . . . . . . . . . . . .

U.S. Pharmacopoeia. . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,000

370

1,100

700

1,400

365

880

300

745

8,500

1,350

1,900

800

600

575

275

5,100

270

630

4,450

SOURCE: NIST Special Publication 806.

market. Some of the tensions within the standards

communities relate to these standard sales.63

General membership organizations are the most

broad based of all the standards development

organizations. Included among them, for example,

are the American Society of Testing Materials

(ASTM) and the National Fire Protection Association (NFPA). These organizations pride themselves

on their fair and open standards processes (see figure

2-2, and table 2-3). Efforts are made to assure that

participants represent a variety of backgrounds and

interests. Moreover, their procedures most closely

approximate formal due process. The National Fire

Protection Association, for example, has 32,000

members including among them architects, engineers, fireman, manufacturers, and representatives

from the insurance industry, government, and labor.

And final standards decisions are made in plenary

session, with everyone voting. These organizations

are heavily dependent on sales for their survival.

Standards sales, for example, constitute 80 percent

of ASTM’s income and 66 percent of NFPA’s.64

Third-party certifiers are independent organizations that test products to assure that they meet

certain standards. Often these groups also write the

standards to be certified. Manufacturers pay such

labs to test their products for standards conformance.

Third-party certifiers tend to have a strong engineering orientation, and they are among those who

generally support the canvass method of standards

development. These groups have a major stake in the

outcome of European decisions about certification

and testing. Underwriters Laboratories and the

American Gas Association are examples of these

kinds of standards organizations.

Consortia are not generally included among the

traditional list of standards developers. These groups

have emerged to deal with the rapidly developing

information and communication technologies, and

they are becoming increasingly popular. In the past

year, consortia have been established, for example,

to set standards for switched multimegabit data

service (SMDS), Fiber Distributed Data Interface

(FDDI) over twisted pair, asynchronous transfer

mode (ATM), and frame relay technologies. They

are generally exclusive groups who operate in a

relatively closed environment, and thus questions

may emerge in the future with respect to due process

and the relationship of these groups to the rest of the

standards community.

The Role of ANSI

While functioning independently, many of these

standards bodies coordinate their activities through

the American National Standards Institute (ANSI).

ANSI is a private, non-profit federation of standards

organizations. Having no official charter, ANSI is in

effect the ‘‘self-designated” national coordinating

body for U.S. standards development organizations

as well as the internationally accepted member body

in the International Organization for Standardization

(ISO) and the International Electrotechnical Commission (IEC).

Receiving the bulk of its financial support from

private sector contributions (28 percent come from

standards sales), ANSI’s existence depends on its

ability to continually meet the needs of its diverse

membership. This has not always been easy, and

63 some ~la~, for ~.pie, titthe ~re~ent ~o~ble~ ~~een ASTM and ~sl~ be @ac~ back to ~ incident involving ASTM and IEEE.

Allegedly, IEEE rushed to register a standard with ANSI that had actually been developed within ASTM. ANSI, it is said, was willing to oblige IEEE

because it had a dispute of its own with ASTM. OTA interviews.

~ Cheit, op. cit., footnote 64.
52 ● Global Standards: Building Blocks for the Future

Figure 2-2—ASTM Consensus Process

Task Task Task

I ,Q

Task Task Task

group group group group group group

I 1

I

Subcommittee Subcommittee Subcommittee

I

I I

I Main committee I

1 Committee on Standards

SOURCE: American Society for Testing and Materials.

Table 2-3—Balloting Sequence and Requirements

To complete successfully

Level To initiate and proceed to next level

. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Task group study No formal requirements No formal requirements

Subcommittee ballot. . . . . Subcommittee chairman approval

or motion passed at subcommittee meeting

At least 30 days between issue &

closing date

Cover letter explaining reasons for

ballot

Main committee. . . . . . . . . Completed submittal form sent to

headquarters with item

All main committee ballots issued

by headquarters

Society ballot. . . . . . . . . . . Staff submits items to society ballot after successful main committee ballot

Committee on.. . . . . . . . . . Staff submits item to Committee

on standards after successful

society ballot

Approval & publication. . . .

60% of ballots returned

2/3 affirmative votes (of total affirmative & negative votes cast

on each item)

All negative votes considered

No negative votes are persuasive

60% Of ballots returned

9/10 affirmative vote (of total affirmative & negative votes cast

one each item)

All negative votes considered

All pink forms completed & returned to staff

No negative votes are persuasive

All negative votes considered

All green forms completed & returned to staff

No negative votes are persuasive

Committee on standards agrees

that correct procedures were followed

SOURCE: American Society for Testing and Materials.

some of the major U.S. standards bodies—such as

ASTM, ASME, and IEEE-have refused to defer to

ANSI, and continue to act independent both domestically and internationally.

ANSI does not develop standards. Rather, it

functions as a central clearing house and coordinating body for its member organizations, which

develop standards on a decentralized, committee
Chapter 2--Standards Setting in the United States ● 53

Figure 2-3-Overview of ISO-ANSI Process

ISO governance 2

National ●

member bodies General assembly

council

Executive committee

ISO central

secretariat

ISO technical .

committee secretariats 3

National

TAG administrators 4g

m

Provide overall governance

including policy procedures,

fiscal basis, etc.

Oversee/coordinate standards

development process as well as

publish and sell ISO standards

Determine scope and content

of standard utilizing ISO

consensus process

Determine/advocate national

consensus input to

international process 5

Materially interested parties

Academia

I

Trade Companies Professional

[ Government I

Consumer

NOTES: 1

2

3

4

5

associations societies groups

ANSI, AFNOR, BSI, DIN, JISC, SCC, ETC

Includes ISO Secretary-General and Treasurer

Generally ISO national member body except in U.S. Typically deIegated to TAG administrator

ANSI- Accredited U.S. administrators include: AAMI, ASME, ASTM, CBEMA, NEMA, etc.

In U.S. involves advancing either consensus standard or position as determined by TAG

SOURCE: American National Standards Institute.

basis. Nor does ANSI make judgments about the

substance of a standard. Instead, it certifies that these

voluntary standards bodies have arrived at standards

through one of three ANSI accredited procedures.

Having met ANSI’s approval, a standard is entitled

to become an American National Standard. In 1988,

the National Bureau of Standards (NBS)--now the

National Institute of Standards (NIST)-estimated

that approximately 8,500 standards, or 25 percent of

all nongovernmental standards, have been processed

through ANSI.65

As the member body of ISO and the manager of

U.S. IEC activities, ANSI also coordinates the U.S.

standards position in the international arena (see

figure 2-3). ANSI is the only member body within

these organizations that is not officially so designated, and one of the few that receives no financial

support from its national government.

The Role of the Federal Government

in Standards

The Federal Government does little to promote

voluntary standards. Instead of orchestrating the U.S

national standards setting process, the government

has focused much of its efforts on the fairness and

effectiveness of the standards development process.66

65 p~~ck Cooke, A Review of U.S. participation in InterMtio~l Sta&rds Activities (Wastigtoq DC: TJ.S. Department of COmmelCe, National

Bureau of Standards, 1988), p. 17.

66 me U.S. Gov_ent ~, however, ~a~tio~y set pm~rnent specification for all i~ p~chases. l’hus, the Department of Defense ad the

General Security Administration account for a major portion of all government standards. However, both agencies are moving towards greater reliance

on voluntmy standards.
54 . Global Standards: Building Blocks for the Future

This preference for voluntary consensus standards

was reaffirmed in the 1979 Trade Act, which

formally recognizes the private sector’s role in

standard development, and in the Office of Management and Budget (OMB) Circular A-119, which

directs Federal agencies to use voluntary standards

wherever possible in both regulatory and procurement activities. In both instances, however, the

Federal Government retains the right to assume a

greater role when necessary.67

The Consumer Movement and the Rise of

Regulatory Standards

The Federal Government’s interest in standards

was rekindled in the late ’60s and early ’70s in

response to consumer concerns about safety and

anti-trust matters. Ralph Nader frost raised the issue

in 1965, when he published Unsafe at Any Speed,

which severely criticized automobile standards as

they had been developed by the Society for Automotive Engineers. Other horror stories about the

standards system abounded. Testifying some years

later on the Voluntary Standards Accreditation Act,

Nader summarized consumers’ concerns about the

standards process.

. . .Trade product standards often harm consumers. The history of standards is strewn with

abuses: standards essentially written by large corporations to exclude competitors from the marketplace,

standards that misrepresent hazardous products as

safe, standards that boost sales while benefiting only

the producer, and standards designed to head off

tough government safety requirements rather than

protect the public.68

Congress was quick to react. In 1967 it set up a

National Commission on Product Safety to analyze

the effectiveness of consumer product standards.

After reviewing more than 1,000 standards, the

Commission concluded that the system was ‘chronically inadequate both in scope and permissible

levels of risk.”69 Moreover, it suggested that the

voluntary sector process was unable to produce

adequate standards, given the dominant role of

industry .70 This attitude was reflected in much of the

health and safety legislation that followed, which

often made special provision for standards.71 It was

also the basis on which Senator James Abourezk, in

March 1975, and again in 1977, introduced the

Voluntary Standards and Accreditation Act (S.825)

designed to give the Federal Government considerable control over the voluntary standards system.72

Responding to consumer concerns and allegations

of antitrust infringements and unfairness, the Federal Trade Commission also undertook a major

investigation of the U.S. standards system. After

extensive hearings, at which over 200 people testified, it too concluded that the entire standards

process should be regulated. It proposed a rule that

would require standard setters to meet a substantive

“fairness,” criterion.73

Another outcome of this period was a major

increase in the number of Federal Agencies issuing

standards. From the late ’60s until the early ’70s a

67 OM13 Circular A-119 and the 1979 Trade Act.

6s Ralph Nad~, ~stimony on the Voluntary Standards Accreditation Act, Hearings on S825, Before the Subcommittee on Antitrust and MonoPolY

of the Senate Committee on the Judiciary, Ist Sess. 1977.

69 Natio~ co~ssion of ~oduct s~e~, FM Repoflof the National Commission of Product Safety, June 1970, ~ cited inRo~fi Hamilton? “me

Role of Nongovernmental Standards in the Development of Mandatory Standards Affecting Safety and Heal@” Texas Law Review, vol. 56, No. 8,

November 1978, p. 1372.

7(I Ibid. It sho~d ~ noted ~tANSI crated the Commer Coucil in 1967 in response to these criticisms, This COUIICil reVieWS W COIISUDler rehttd

standards prior to their acceptance by ANSI.

71 For example, as Hamilton nOteS:

. . .the Federal Energy Authorization of 1977 required that the A&mm“ “strator consult with the Attorney General and Chairman of

the FTC “concerning the impact of such standards on competitio~” before adopting a voluntary standard, and state in the public

notice that the organizations that promulgated the standard meet a number of requirements.

Ibid.

72 l“hi5 legislation, ~hich ~M s~ongly ~ppo5~ by ANSI, ~o~d have establish~ a Natio~ s~~ds Management Bead that would essentially

take over ANSI’s role. The Board would have had the responsibility for manag- ing and coordinating the voluntary standards pro- gr~ including

the accreditation of standards devel- opment organizations and the listing and approving of “national standards.” The FTC would be author- ized

to consider appeals and order revision in standards when necessary. Some members of the voluntary sector, such as NFPA, supported the bill, with

modifications. Ibid, p. 1438.

73 see u-s+ Feder~ Tmde co~ssioqs~~ds and Cefilcation: ~oposed R~e and Staff Repofi (December 1978). These conchlslom Were Ve~

controversial, however. Under a new administratio~ the FTC reversed its course. Viewing due process less comprehensive, it decided to enforce

standards infringements of antitrust law on a case-by-case basis. See ‘Memorandum to the Federal Trade Commission from Amanda B. Pederse% Aug.

29, 1985.
Chapter 2--Standards Setting in the United States ● 5 5

Table 2-4-Legislation: Creating the Need for

Government Standards

Safe Drinking Water Act of 1974 (Public Law 93-523)

Child Protection and Toy Safety Act of 1969 (P.L. 91-1 13)

Lead-Base Paint Poisoning Prevention Act of 1970 (P.L. 91-695)

Consumer Product Safety Act of 1972 (P.L. 92-573)

Mobile Home Construction and Safety Standards, Title VI of the

Housing and Community Development Act of 1974 (P.L. 93-383)

Traffic and Motor Vehicle Safety Amendments of 1970 (P.L. 91-265)

Highway Safety Act of 1970, Title II, Sec. 202 of Federal-Aid Highway

Act of 1970 (P.L. 91 -605)

National Environmental Policy Act of 1969 (P.L. 91-190)

Resource Recovery Act of 1970(P.L.91-512)

Clean Air Amendments of 1970 (P.L. 91-604)

Federal Water Pollution Control Act Amendments of 1972 (P.L. 92-500)

Federal Environmental Pesticide Control Act of 1972 (P.L. 92-51 6)

Federal Energy Administration Act of 1974 (P.L. 93-275)

Solar Heating and Cooling Demonstration Act of 1974 (P.L. 93-409)

Medical Devices Amendments Act of 1975 (P.L. 94-295)

Occupational Safety and Health Act of 1970 (P.L. 91-596)

Toxic Substances Control Act of 1976 (P.L. 94-469)

SOURCE: William T. Cavanaugh, “Needed: A National Standards Policy,”

ASTM Standardization News, vol. 5, No. 6, June 1977, p. 13.

rash of environmental, health, and safety legislation

was passed, and agencies were created to administer

these laws (see table 2-4). Included among these, for

example, were the Consumer Product Safety Commission (CPSC), the Environmental Protection Agency

(EPA), and the Occupational, Safety and Health

Administration (OSHA). Whereas private sector

standards bodies adhere to a consensus process in

developing standards, government regulatory agencies must comply with the Administrative Procedure

Act, which provides for both formal and informal

rulemaking.74 These agencies vary considerably in

their size and resources (see table 2-5). The number

of standards that they set is small in comparison to

the number of overall national standards, and many

of them now use standards developed by private

sector organizations .75

A National Standards Policy - OMB

Circular A-119

Responding to repeated appeals for a national

standards policy, OMB in 1976 proposed a draft

circular that called for the incorporation of voluntary

standards by reference. Noting that the voluntary

standards process had been greatly improved, it

required agencies to use commercial standards

whenever possible, and to identify commercial

standards when they were used. Comments on the

circular were mixed, with some agencies being more

responsive than others. A revised circular was issued

in 1977 to incorporate many of the concerns that had

been expressed. This circular distinguished between

procurement and regulatory standards, and estabTable 2-5—Selected Features of Six Public Agencies

Involved in Safety Regulation, 1988

Agency Founding date Budget a Staff b

Consumer Product Safety Commission (PSC).. . . 1972 $32,696 459

Environmental Protection Agency (EPA) . . . . . . . . . 1970 4,968,429 11,127

Federal Aviation Administration (FAA). . . . . . . . . . . 1958 2,367,778 46,811

Federal Drug Administration (FDA). . . . . . . . . . . . . 1906 483,066 7,032

National Highway Traffic Safety Administration

(NHTSA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1970 62,534 503

Occupational Safety and Health Administration

(OSHA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1970 235,474 2,532

aAppopriated funds only; does not include highway or airport trust funds.

bFull-time staff only.

SOURCE: Federal Budget, 1988 (Washington, DC: Government Printing Office, 1988).

74 see, for a discussio~ Richard B. Steward, “The Reformation of American ~“ “strative Law,” HarvardLaw Review, vol. 88, No. 8, June 1975,

pp. 1667-1813.

75 Ross Cheit, op. cit., footnote 62, p. 30.
56 • Global Standards: Building Blocks for the Future

lished a number of procedural due process requirements, many of which were drawn from S.825.76 The

revised circular was controversial, and opposed by

many voluntary standards organization, including

ANSI. A final version of Circular, OMB A-119 was

adopted in 1982. Now, with the due process requirements eliminated, OMB Circular A-119 is strongly

supported by the private sector.77

Coordinating the Federal Role

OMB Circular A-119 also provides a mechanism

for coordinating the Federal role in standards policy.

In accordance with the circular, the Department of

Commerce (DOC) set up an interagency consultative mechanism to advise the Secretary and agency

heads in implementing Federal standards policy (as

defined in the Circular). Its mission is to coordinate

agency views and to develop, where possible, a

single, unified position. DOC assigned this task to

the Interagency Committee on Standards,78 which

operates under the direction of NIST Policy .79

Overall oversight rests with OMB, and the committee is required to report back to it on a triennial

basis.

80

While active during its first year, this interagency

committee has reportedly not met for the last year

and a half.81 Meetings focused on implementing the

Federal policy to encourage agency use of voluntary

standards, as directed in its mandate. The committee

also set standards for agency participation in voluntary standards bodies and laid out guidelines for

public sector use of private certification bodies.

Participants claim, however, that scant attention was

devoted to evaluating existing policy or finding

ways to improve it.82 Nor was there much effort to

identify future standards issues or to view them

strategically as part of the industrial infrastructure.83

Some members claim that the group is not a useful

mechanism for sharing information or coordinating

interagency issues. One person noted with some

irony that his chance of interacting with agency

counterparts was better at private sector meetings of

ANSI’s Government Member Council. 84

Some of the problems faced by the Interagency

Committee on Standards Policy stem from its

organizational form. Interagency committees have a

poor record of policy coordination. 85 Among the

problems associated with them are that they tend to:

76 As described by Hamilton:

The due process and other basic criteria include not only the traditional procedural requirements of fairness, openness and balance,

but also require standards organizations to give preference to the use of performance criteria rather than desigq materials or

constructive criteria, to accept a mediation or conciliation service provided by the Department of Commerce. . . and to include a

statement, in all literature they publish that participation by government officials in that organization does not constitute government

endorsement.

The Department of Commerce was to police these requirements, and publish a list of the standards bodies tbat complied with them. Hamilto~ op.

cit., footnote 69, p. 1442.

77 See, Memor~d~ to Heads of Ex~utive Departments and Agencies, from David Stockman, regarding OMB CtictdW No. A-1 19, “Fedefi

Participation in the Development and Use of Voluntary Standards,” Oct. 26, 1982. For an evaluation of its effectiveness in promoting the use of private

sector standards, see Steve Spivaclq Implementation of OMB Circular A-119: An Inde- pendent Appraisal of Federal Participation in the Development

and Use of Voh.mta~ Stan&rds, (Washingto~ DC: U.S. Department of Commerce, March 1985).

78 The ICSp Was established in 1985 to coordinate Federal Agency S@dards PolicY.

79 me co~tt=~s ch~er goes tier~OMB cfic~ar A-119 ~ cal~g for ~teragency Comideration of stidards pOhCy.

~ Om c~~ A-119.

81 It should be noted tit some su~o~ttees met more fr~uenfly+ The commerce ~date establis~g tie committee IIX.@KS that a I)Kd.hg be

held at least once a year.

82 perso~ com~cations ~th mem~r~ of the co~tteeo All r~uested ~onymityo ~u~report to Secretary of Commerce cited ~d tracked

progress of agencies in using voluntary standards. But the analysis provided with the data is minimal.

83 me c~erof~e~teragency co~ttee on s~~ds Policy, developed by commerce, ismuchbroader~~e OMB Circular. However, overall

support for the Committee was not sufficient to support this broader mandate. John Donaldson of NIST suggests that the problem was circular. Because

the OMB mandate was narrow, people at higher, policy levels didn’t get involved. Without their iuvolvemen~ however, it was impossible to expand

the Committee’s mandate. John Donaldso~ NIS~ personal communication.

~ perso~ comm~catiom with member of the Committee, who requested monymity.

85 c~xte~~gMS form of arrangement, Harold Seidman notes, for example:

‘Interagencyconunittees are the crabgrass in the garden of government institutions. Nobody wants them, but everybody has them, Committees

seem to thrive on scorn and ridicule, and multiply so rapidly that attempts to weed them out appear futile.” But, as Seidman is quick to add: “The

harshest critics have yet been unable to devise satisfactory substitutes.’

Harold Sei- Politics, Position, and Power: The Dynamics of Federal Organization (New York NY: Oxford University Press, 3rd. cd., 1980),

p. 207.
Chapter 2--Standards Setting in the United States .57

●

●

●

●

bury problems rather than resolve them;

make it difficult to get tasks accomplished

because too many people with only a peripheral

interest become involved;

dilute interest in, and commitment to, addressing a problem; and

lead to outcomes based more on the distribution

of power within a committee than on policy

considerations .86

Such problems are clearly reflected in the Interagency Committee on Standards Policy.

The Office of Management and Budget (OMB)

reviews the work of the Interagency Committee on

Standards Policy on a triennial basis. Although

OMB is the ultimate coordinating mechanism in the

Federal Government, it can do little more than

establish a policy directive. There is little staff

support in the area of standards. 87 The Deputy

Director of the Office of Federal Procurement

Policy is in charge of overseeing Circular A-119.

However, there is no one person at OMB who

focuses explicitly on standards. 88

The Trade Act of 1979

The Trade Act of 1979 requires the Secretaries of

Commerce and Agriculture to monitor the standards

process to assure that United States interests are

adequately represented. It provides no guidelines,

however, to determine what is required for adequate

representation. The Associate Director for Industry

and Standards within NIST is assigned responsibility for carrying out the functions specified in the Act.

An interagency task force has also been set up

under the auspices of the Office of the U.S. Trade

Representative (USTR) in conjunction with the Act.

Although somewhat more active than the NIST

Interagency Committee on Standards Policy, its

focus is more limited. Agency members meet when

necessary to try to reconcile trade and other agency

policies. 89 The committee is not meant to be a

forward looking group, or to consider standards in

strategic terms. Like the Office of the USTR, it tends

to be reactive on standards issues, responding

when the need arises.

Federal Support for the Voluntary

Standards Process

Currently, the Federal Government does

only

very

little to promote the development of voluntary

standards. Whereas in its early years the National

Bureau of Standards organized business groups to

convene for discussions of standards issues,90 NIST

has only limited outreach and/or educational programs except for the publications of standards

directories and reports. Business concerns about

standards are generally channeled to the Federal

Government through the Interagency Federal Advisory Committee (IFAC),91 but there is no information flowing in the opposite direction. Although

government agencies, such as the Office of the

International Trade Administration (ITA), or the

United States Trade Representative (USTR) 92

, respond to business queries and concerns about

standards, they make little effort to educate businesses as to the value and use of standards in trade.93

Even within the Small Business Administration

there is no standards education or awareness program. The most elaborate promotional event in

86 Ibid.

g7Ron C. Moe, “TheHud SCan&l and the Case for an Office of Federal kfanagemen~” Public Administration Re- view, VO1. 511, July/Aug. 1991,

pp. 298-307.

88 David Gold, OMB, personal Commtications.

89 SUSaU Troje, USTR, personal communication.

N coc~me, op. cit., footnote 16.

91 me ~dus~ F~~tio~Advisow co~tt= on s~~ds for Trade ~d policy ~tters was es~bfished on Mm. 21, 1979, ad extended on Ma.

11, 1982, Mar. 6, 1984, Mar. 7, 1986, and Mar. 8, 1988, by the Secretary of Commerce and the United States Trade Representative pursuant to the

authority delegated under Executive Order 11846 of Mar. 27, 1975. The Committee consists of approximately 40 members, with approximately 20

members from the Industry Sector Advisory CommitteeS and approximately 20 from such private-sector areas as to provide expertise on the subject of

standards.

92 ~eus~~oor~tes @ade Pollcy be~een the Mesidenc Congess, ~d the pfivate smtor. It m~ages the private sector advisory SyStem, Consdts

regularly with Congress, and chairs the interagency committees which develop trade policy with the Executive Branch. 1991 Trade Policy Agenda and

1990 Annual Report of the President of the United States on the Trade Agreements Program, (W%shingtoq DC: USTR, 1991), p. 103.

93 Don ~ckay, Natio~ Association of En@eers, ~d Bob To@ Toth Associates, perso~ coftlmUIlicatioIIS.
58 ● Global Standards: Building Blocks for the Future

which the government is involved is National ards development. Even the recently established

Standards Week.94

NIST program, aimed at promoting trade through

Apart from the membership dues paid by Federal standardization in developing countries, depends

agencies to standards bodies, the U.S. Government heavily on business contributions.

provides almost no funds for private-sector stand-

~ AMOU@ S.J. Res. 291 would have designated the week Oct. 14, 1990 as “National Stm@ds Week, “ it failed to pass. Personal eommunieatiou

Don Mackay, National Association of Engineers.
Chapter 3

Standards Setting in

Comparative Perspective:

The European Experience
Contents

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Nation by Nation Comparisons; Germany, France, and The United Kingdom . . . . . . . . . . 61

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

The United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67

Towards European Standardization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

European Standards Bodies: The Role of CEN, CENELEC and ETSI . . . . . . . . . . . . . . . 69

The New Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

The Green Paper on Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

Figures

Figure Page

3-1. Resources Devoted by Deutsche Institute für Normung (DIN) . . . . . . . . . . . . . . . . . . . . 65

3-2. Budget of Deutsche Institute für Normung (DIN) . . . . . . . . . . . . . . . . . . . . . . . . . . ...• ● . 66

3-3. British Standards Institution (BSI) Conferences and Seminars . . . . . . . . . . . . . . . . . . . . 69

3-4. Deutsche Institute für Normung (DIN) Working Towards Europe . . . . . . . . . . . . . . . . . 70

3-5. The Organizational Structure of Comité Européen de Normalisation . . . . . . . . . . . . . . 71

3-6. Participation in European Telecommunications Standards Institute (ETSI) . . . . . . . . 72

3-7. European Telecommunications Standards Institute (ETSI) Membership . . . . . . . . . . . 72

3-8. Resource for European Telecommunications Standards Institute (ETSI)

Project Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

Table

Table Page

3-1. Comparative Table of Some European Standards Institutions . . . . . . . . . . . . . . . . . . . . . 63
Chapter 3

Standards Setting in Comparative Perspective:

The European Experience

Introduction

Dissatisfaction with the U.S. standards setting

process has led to several reports and recommendations, but little action. Failure to respond is partially

due to the way the standards debate is posed. The

issues are polarized, and the solutions cast in all or

nothing terms. One side argues that the U.S.

standards system works fine and should remain in

private sector hands. The other contends that it’s

failing and should be taken over by government. No

hybrid solutions, which call for sharing responsibility between government and the private sector, are

proposed. l

Looking comparatively at the systems in other

countries, however, it is clear that there are a variety

of ways to organize standards processes, with

government playing a greater role in some and a

lesser role in others. The case of Europe is particularly illustrative. Although European countries share

much in common, each approaches standards development somewhat differently, reflecting their differences in history and culture. Their collective experiences provides diverse options that have not been

considered by U. S. policymakers. The European

experience is also revealing, because standards

organizations in all these counties are, themselves,

reevaluating their own strengths and weaknesses in

the light of European economic integration.

Nation by Nation Comparisons;

Germany, France, and

The United Kingdom

As in the United States, the move towards

simplification and standardization accelerated after

the First World War. While there was only one

standards organization in Europe before the war—

the British Engineering Standards Association—by

1928 there were 16.2 Advancing technology and the

demand for interoperable parts drove the need for

standardization, paralleling experience in the United

States. Europeans also adopted the consensus approach, with standards evolving through negotiations among interested parties in an open process of

give and take.3

However, in contrast to the United States, where

the market was large enough to sustain mass

production, Europeans were dependent on intercountry trade for large-scale production. From the

beginning, therefore, European standards organizations were viewed as part of the industrial infrastructure, and European standards organizations geared

their operations towards trade promotion. Moreover,

European governments generally pursued active

industrial policies, and thus they played a greater

role in standards development than was typical in the

United States. But the relationship between government and the private sector, and the extent of

government involvement in standards, differed from

1‘IMS phenomenon is not limited to the area of standards. As Peter =LZenstein noks:

But America’s mtional debate on industrial policy betrays the strength of a liberal ideology. We conceive of the political

alternatives that confront us as polar opposites: market or plan. The biases of our ideology are reinforced by a veritable mtional

obsession with Japa.q a country that American businessmen inparticularview as a statist antidote to America’s ideological celebration

of market competition.

Our political debate typically pits the proponents of government against the advocates of market competition. Fundamentally, the

debate concerns the character of state involvement in the economy.

Peter Katzenste@ Small States in World Markets: Industrial Policy in Europe @hac& NY: Cornell University Press, 1985.), p. 19.

2 victors. nabasz, ‘‘Simp~lcationand Standarbtion in ~~pe,” Notesfiom the Annuls: Standards in Indus~ (New York, NY: The American

Academy of Political and Social Science, 1928), p. 25.

3 ~orenm Nicolas, ~th the Coopemtion of Jacques Repussmd, co-nStandUrds for Enterprises. ~uefnboug: office of OffiCial Publications

for the European Community, 1988).

-61-
62 . Global Standards: Building Blocks for the Future

country to country. European national standards

organizations can be differentiated according to the

following characteristics (see table 3-l).

●

●

●

●

types of financial support-e. g., voluntary

contributions from industry, sale of standards

and standards related services, and public

subsidies;

degree of centralization;

dependency on the public sector; and

size of standards organization and scope of

activities.

Germany

German standardization is based on a corporatist

approach to government-industry relations.5 In contrast to the United States, where there is no agreed on

national standards policy, in Germany, standards are

intended to serve the public good.6 Moreover,

German national standards policy is neither formulated through competition among standards development organizations, nor imposed by government.7

Rather, German standards policies evolve through

negotiations among economic interests and other

key interest groups in society. However, in contrast

to the United States where such groups participate in

an ad hoc fashion, in Germany they are organized

nationally through peak associations.8 German standardization efforts are similarly centralized, operating

through a nationally recognized standards organization, the Deutsche Institute für Normung e.V. (DIN).

This pattern of German standardization was set in

May 1917 with the establishment of the Normalienausschus für den Maschinenbau. Although originally focused on machine parts, this standards body

rapidly expanded its activities to other industries.

Six months after its inception, its name was changed

to the Normenausschuss der Deutschen Industries to

reflect its broader mission. Like other national

standards organizations that emerged at the same

time, the Normenausschuss operated on a committee

basis, with all parties represented and each free to

comment on draft standards. It received some

funding from the Reichs Kuratorium für Wirtschaftlichkeit, an industry association that was itself supported by government grants. Additional financing

came from technical societies, trade associations,

government departments, and contributing indus4 Ibid., p. 26.

5 ~or~g to Katzenstein:

Democratic co~oratism is distinguished by three traits: an ideology of social partnership expressed at the national level; arelat.ively

centralized and concentrated system of interest groups; and voluntary and informal coordination of conflicting objectives through

continuous political bargaining between interest groups, state bureaucracies and political parties. These traits make for low-voltage

politics.

Peter Katzenste@ op. cit, footnote 1, p. 32.

For geneml discussions of Germanpolitics and industrial policy, see, W. S@ewk, ZndusttiaZRelations in West Germany (London: Heinemamq 1984);

See also K. Dyson, “West Germany: The Search for a Rationalist Consensus,” J. Richardson (cd.), Policy Styles in Western Europe (hmdon: Allen

& Unwiq 1982).

6 ~s is typical of German government-industry relations in general. As described by Paterson and Whitston:

. . .there appears to be in the Gerrnau case a sense of organic unity, a commitment to action in the national interest which extends

the interests of individuals or particular groups. The importance of this orientation is that it allows the state to facilitate action by other

actors which promotes the achievement of long term mtional goals.

William Patemon and Colin whitsto~ “Government-Indusby Relations in the chemical Industry: An Anglo-German Comparison,” Stephen Wilks

and Maurice Wright (eds.), Comparative Government-Zndustry Relations (Oxford: Clarendon Press, 1987), p. 38.

7 AS describ~ by Paterson and Wh.itston:

. . .the State in the Federal Republic acts in a variety of ways as a supporting, facilitating, encouraging force in the formation and

preservation of broad, encompassing, internally heterogeneous interest organizations. Ironically, but hardly unintended, the

interventionist policy of the German state on the organizational forms of social interests enables it in many cases to abst.ainfrom direct

economic intervention since it provides interest groups with a capacity to fiid viable solutions between and for themselves.

Ibid.

s AS noted by Anheir:

The organization of trade and industry is one of the major aspects of Germany’s centralized society. All firms are represented by

tbree types of associations; industrial business associations, employers’ associations, and chambers of commerce and industry. A key

characteristic of the West German landscape of economic organimations is the grouping of decentralized constituencies into more

central units to form “peak associations. ”

. . .Together economic associations (lWrtschaftsverbande) provide the prototypical example of liberal corporatism.

Hehnut K. Anheir, “West Germany: The Ambiguities of Peak Associations,” Robert Wutbnow (cd.), Between States andh4arkets: The Voluntary

Sector in Comparative Perspective (Princeton NJ: Princeton University Press, 1991), pp. 68-71; See also, Peter J. Katzensteti Policy and Politics in

West Germany:The Growth ojthe Semisovereign State (Philadelp~ PA: ‘Ikmple University Press, 1987); and Peter J. Katzenstein (cd.), Industry and

Politics in West Germany: Toward the Third Republic (Ithaca, NY: Cornell University Press, 1989).
Chapter 3--Standards Setting in Comparative Perspective: The European Experience ● 63

Table 3-l—Comparative Table of Some European Standards Institutions

(the figures are taken from ISO and Cen documents and refer mainly to 1986)

Annual CEN secretariat (out of 82

Standards Number of pages output of technical committees)

Country institution Status

a Staff of standards standards (1987 figures)

Germany (FR).... . . . . . . . DIN 2 596 120,000 1,400 34

(25,700)

Denmark. . . . . . . . . . . . . . . DS 1 65 15,000 250 6

(2,355)

Spain. . . . . . . . . . . . . . . . . . Aenor 1 70 78,200 850 0

(6,589)

France. . . . . . . . . . . . . . . . . Afnor 1 446 138,344 1,100 17

(13,366)

Italy. . . . . . . . . . . . . . . . . . . UNI 1 48 30,000 270 3

(6,41 1)

Netherlands. . . . . . . . . . . . . NNI 2 100 55,000 110 2

(5,500)

United Kingdom.. . . . . . . . BSI 1 1 ,200b

125,000 660 10

(9,360)

aStatus: 1. Organization under private law but given a public service function by the State.

2. Private organizations.

bAbout half the staff is engaged on testing laboratory and certification work.

CThe approximate number of standards is given in brackets.

dOrder of magnitude.

SOURCE: Florence Nicolas, with the cooperation of Jacques Repussard, Common Standards for Enterprises (Luxembourg: Official Publications for

the European Communities, 1988), p. 26.

trial firms.9 German standards were well respected officially released, standards are reviewed by the

in Europe, and the Deutscher Normenasschuss was Standards Examination Office to assure that there

very productive. With both large and medium firms are no overlaps. There are 8 basic principles that

actively participating, it produced more than 2,100 govern DIN’s operations:12

standards in its first 10 years.10

DIN plays a similar role in Germany today. DIN

is a consensus organization with a central administration that manages the administrative and financial

activities of DIN as well as the various committees

that actually develop standards. These committees

are comprised of representatives from producer

groups, the academic community, user groups and

organizations (including consumer advocate

groups), government, and trade unions. 11 The general membership, made up of all these groups, elects

a president who appoints the director of DIN. As in

most consensus processes, the standards go through

a period of review and comment before they are

—

1.

2.

3.

4.

5.

6.

7.

8.

In

voluntarism: standards are recommended, not

imposed;

publicness: standards processes are open;

participation of all interested parties;

unity and consistency: standards form a unified whole;

keeping to the point: standards transcribe the

state of the art;

geared to economic factors: market factors are

taken into account;

geared to benefit the community as a whole;

and

internationalism: focus on trade.

contrast to the United States where standards

formally adopted. In Germany, an additional step is organizations are often taken for granted, DIN is an

followed: once agreed on, but before they are important presence in Germany. DIN employs over

9 Associations of trade and businesses have a long history in Germany, going backto the guildlike craft societies of the Middle Ages. Such associations

continue to provide the basis for interest group representation in the public sector. Anheir, op. cit., footnote 7.

10 K~abaSz, op. cit., footnote 2, p. 28.

11 cml Cwgfi, l~formtio~ T~Ch~olo~~ Sta@~&~tiOn: Th~O~, process, and organizations @oSto~ MA: Digital Press, 1989), pp. 190-191.

lzDr. He~ut Reihle~ Dfi@or of DIN, speech to the General Meeting of the 1991 Ge~ Foundry Convention Berlin, June 21, 1991: See also

DIN, One World, Free Trade, Free Standards (Berlin: Deutsche Institute fiir Normung, rid.).
64 . Global Standards: Building Blocks for the Future

900 people, and has offices in 40 locations nationwide. Many Germans are aware of the importance of

standards, and knowledgeable about DIN’s role in

their development. Moreover, the Germans have an

excellent reputation for standards development, so

many other European countries look to Germany for

standards. 13

One reason for DIN’s prominence is its formal

status. In 1975, the government of Germany signed

a contract with DIN, designating it as the national

standards organization of Germany and the official

representative of Germany in international standards

organizations. Because DIN has a monopoly on

standards development and standard sales, the national resources available for standardization can be

utilized to the fullest. In exchange for the government’s political and financial support, DIN “undertakes to consider the public interest in all of its work

in the preparation of standards, ” and “to give

preferential treatment to requests from the Federal

Government to carry out work on standards projects

which the Federal Government considers of public

interest. ” Although DIN standards are voluntary,

they too have a special status, serving as the basis for

regulatory law.

DIN also has strong support from the business

community. Because German business is well organized, participation in standards development also

tends to be high.14 Moreover, businesses have a

strong incentive to adopt DIN standards, since the

use of DIN standards shifts liability to the user, and

insurance companies often refuse to grant policies to

those whose products fail to carry the DIN testing

and inspection marks .15 German businesses also

benefit from DIN’s export oriented policies.

Because trade is essential to the German economy, DIN is very active in international standards

development. DIN members hold the secretariat of

15 percent of all International Organization for

Standardization (ISO) and IEC technical committees

and subcommittees, and 40 percent of those in

Comité Européen de Normalisation and Comité

Européen de Normalisation Electrotéchnique (CENLEC). Moreover, the resources devoted to international and regional standardization have been steadily on the rise (see figure 3-l). DIN is able to make

this commitment to international standards in part

because of the support it receives from the German

government. In addition to the income that DIN

receives from members dues, standards sales, and

related activities, DIN also receives a subsidy from

the public sector, which constitutes approximately

15 percent of its total budget (see figure 3-2). These

funds are generally targeted to activities that promote industry, increase competitiveness,

protect against the risks of technology.l6

France

or that

Standardization in France also reflects French

political culture and the way in which authority has

traditionally been divided between the state and the

private sector. Whereas in the United States, standardization bodies took advantage of the penchant for

voluntary associations, in France the opposite was

the case. From the time of the French Revolution,

voluntary associations in France were looked on, not

as the basis for a democratic order, but rather as

narrow interests impeding public welfare and the

good of the nation, which it was believed could only

be embodied in the state.17 This perspective can be

clearly seen, for example, in a speech made to the

13 A,s descfibed to (YIA staff in Sweden, ‘We are a small country dependent upon trade, so why not let tieGe~who do an outstanding job-set

the standards for us.” Or, as one member of the French standards community noted, “The French are individualists; they can’t make good standards.

We are happy to use German standards. Setting standards comes mturally to them.”

14 AS noted by ~eim:

For most fins, joining business and interest groups is both necessary and useful. The size distribution of West German Industries

shows that the great majority have between 2 and 20 employees. Only 891 of 360,463 manufacturing firms have more than 1,000

employees, and about 1,200 employ between 500 and 999 people. They are in a weak bargaining position vis h vis political authorities

unless they join together.

Anhe@ op. cit., footnote 7.

15 cm~, op. cit., fOOmOte 10, P- 191.

IGReWen, op. cit., footnote 11.

17 As described by Veugelers and Lament:

During the Revolution the state pursued a persistent struggle against bodies such as guilds, the nobility, and political clubs, which

stood between the citizen and the republic. Since then both the Left and the Right have at various times viewed with suspicion the

church voluntary associations, decentralization, and ethnic pluralism.

Jack Veugelers and Michele Lament, “France: Alternative Locations for Public Debate.” Robert Wuthnow (cd.), Between States and Markets.’ The

Voluntary Sector in Comparative Perspective (Princetom NJ: Princeton University Press, 1991), p. 140.
Chapter 3--Standards Setting in Comparative Perspective: The European Experience ● 65

Figure 3-l—Resources Devoted by Deutsche Institute fur Normung (DIN)

Bilateral cooperation

with other countries

60%

National

5 0 % - standardization

4 0 %- Worldwide

standardization

30%- - +

20%- -

standardization

Bilateral

10%- relations

*

1984 1986 1988 1990

Resources devoted by DIN to the various levels of standardization in percent of total budget.

KEY: DIN=European Committee for Standardization; CENELEG=European Committee for Electrotechnical Standardization; IEC=International Electrotechnical Commission; ISO=lnternational Organization for Standardization

SOURCE: Deutsche Institute fur Normung, 1991.

French Constituent Assembly in 1791 that called for guilds in the state but only the individual interest of

an end to all voluntary associations: each citizen and the general interest. No one shall be

allowed to arouse in any citizen any kind of

It should not be permissible for citizens of certain intermediate interests and to separate him from the

occupations to meet together in defense of their public weal through the medium of corporate interpretended common interests. There must be no more ests.18

18 R~~d B~~@ Kj~g~ or p~o~z~: POwer ad the ~a~te ~0 Rule (Berkeley ~d LOS Angeles: University of California Press, 1978), p. 372.
66 ● Global Standards: Building Blocks for the Future

Figure 3-2-Budget of Deutsche Institute fur Normung (DIN)

Revenues, million DEM

I 67% \

I

::, : ,, ,: : ,, ..,

Members fees ,,

. :.sponsorship by, ,.

Expenses for

production of

publishing

1989 - 89 DEM

1990 - 100 DEM

1991 - 140 DEM

Expenditures, million DEM

(

Pesonnel expenses

products

SOURCE: Deutsche Institute fur Normung, 1991.

Mirroring the dominant role ascribed to the state Presidential decree. The first standards organization,

in French politics,l9 standardization in France emerged the Association Francaise de Normalisation (AFNOR),

at the national level, with one stroke, from a was founded on June 10, 1918. Unlike the national

19 J7~~ di.sCu~~iOn~, we J+ ~w~d, cCMObi~atiOnof private interests in tie s~i~ of pubfic ~bitions: the Aeht element in the dual French policy

style,” J. Richardson (cd.), PoZicy Styles in Western Europe (London: Allen& Unwiq 1982); See also J. Hayward, Governing France: The One and

Zndivisibie Republic (London: Weidenfeld & Nicolso~ 1983); and D. Greew “Strategic management and the state:France,” K. Dyson and S. Wilks

(eds.),lndustrial Crisis: A Comparative Study of the State andIndustry (Oxford: Martin Robertso~ 1983).
Chapter 3--Standards Setting in Comparative Perspective: The European Experience ● 67

standards bodies in Germany and the United Kingdom, which were private sector organizations, the

Association Française de Normalisation was attached directly to the Ministries of Commerce, War,

Naval Affairs, Public Works, and Labor. Included

among its members were the Academy of Science,

the Society for the Encouragement of National

Industry, the Society of Civil Engineers, the Society

of Electrical Engineers, and the Society of mining

Engineers as well as other technical societies.20

AFNOR continues to be linked with government

today. Although reconsititued as a private organization in 1926, AFNOR’s status was again changed in

1984, when the French Government declared standardization a public service and entrusted AFNOR

with responsibility for sourcing, coordinating, approving, and promoting standards; training in the use

of standardization; and controlling the use of the NF

label—a trademark that shows compliance with a

French national standard. AFNOR was also named

to represent France at international meetings.

A High Council for Standardization was created

in 1984 to oversee the French standardization

process. It is convened under the authority of the

Minister for Industry and Research and presided

over by the chair of AFNOR. Included among the

Council’s 51 members are representatives from

government, local communities, the various sectors

of the economy (industrial, agricultural, services,

and commercial), and unions, as well as standards

participants, academicians and scientists. The Council advises the Minister of Industry and Research on

the future direction of standards and comments on

AFNOR’s general program.21

AFNOR’s board of directors also includes senior

civil servants appointed from the government ministries that have a strong interest in standards. Other

board members are elected by the board from the

AFNOR membership for 3-year terms, other generally elected members who serve as representatives

with 3-year terms, and experts appointed by the

various ministries.

22 The Bored manages AFNOR’s

day-to-day operations and approves AFNOR standards. It is supported by committees that deal with

finances, consumer interests, international affairs,

and certification.23

Responsible for managing and coordinating the

entire French standards process, AFNOR pursues 6

basic missions:24

1.

2.

3.

4.

5.

6.

evaluating standardization needs;

setting up standardization strategies;

allocating standards resources;

leading and coordinating the standards system;

participating in European and international

standardization; and

motivating AFNOR’s partners.

AFNOR’s work is carried out by two different

kinds of groups. Organization/follow-up working

groups are concerned with administrative matters—

defining standardization tasks, assigning them to

appropriate groups, and setting up and guiding the

standardization efforts. Technical development/

standards creation working groups, made up of

experts, are charged with creating the standards.25

The United Kingdom

Standards setting in the United Kingdom most

closely resembles the U.S. standards setting process.

This similarity stems from sharing a pluralist political culture. However, the British standards system

differs from the U.S. system in two major ways—the

emphasis placed on trade and international standards, and the formal relationship existing between

the British Standards Institution (BSI) and the

national government. These differences suggest that

some changes in the U.S. system could be made

without underminingg the traditional approach to

standards development.

The British Engineering Standards Association,

established in 1901, was the first national standards

organization to be established in Europe. Engineering groups were the major source of standards

development, as they were in the United States. The

procedures for developing standards were almost

identical to those used in the United States, although

20 K~abasz, op. cit., P. 28.

21 ca~, op. cit., footnote 10, P. 192.

Z Ibid.

~ Ibid.

mAFNOR: Stan&rds and Strategies (Paris: AFNOK rid.).

= Ibid.
68 ● Global Standards: Building Blocks for the Future

there was no government organization corresponding to the Division of Simplified Practice of the U.S.

Department of Commerce to facilitate the work of

simplification. 26

The British Engineering Standards Association

was granted official status in April 1929, when His

Majesty King George IV conferred on it a royal

charter.27 Supplementary charters were granted in

1931 (when its name was changed to the British

Standards Institution (BSI)), 1968, 1974, 1981, and

again in 1989. The Charter identifies four major

purposes for BSI

●

●

●

●

to coordinate the efforts of producers and users

for the improvement, standardization, and simplification of engineering and industrial materials;

to set up standards of quality and dimensions,

and prepare and promote the general adoption

of British Standard Specifications and schedules;

to register, in the name of the Institute, marks of

all descriptions, and to prove and affix or

license the affixing of such marks; and

to take such action as appears desirable or

necessary to protect the objects or interests of

the Institution.28

In accordance with its bylaws, BSI is a voluntary

organization, with membership open to all interested

parties ranging from nationalized industries all the

way to professionals and consulting engineers.

Standards Policy Committees established by the

Board of the Institute appoint technical committees,

as needed, to develop standards. In developing

standards, these technical committees follow the

consensus procedures practiced by other national

standards organizations. 29 BSI is supported by

membership dues, the government, and revenues

from the sale of standards and standards activities.

British standardization has been global in perspective from the start. This emphasis was required

for trading with the Empire. To meet the needs of its

colonies, for example, the British developed four

telegraph pole standards, one for every climate.

Moreover, funds were appropriated from the outset

to have British standards translated into foreign

languages, with the hope that such standards would

increase British trade.30

Today, the British continue to link standards

policy and trade policy. Noting the relationship

between standards and competitiveness, for example, a 1982 White Paper, developed by the Department of Trade, called on the British Government to

lend greater support to British standards efforts by

establishing a formal memorandum of understanding with BSI.31

With funding from the government, BSI now

provides export support to its members through the

Technical Help to Exporter Section (THE). This

group identifies the appropriate standards and regulations for almost any product in almost any country

26 K~abasz, op. cit., foolnote 2, W. *8-29.

27 Iti5nOtmu~ual~Bfitish politic. for ~ovementto look to the pfivate sector to cm out public sector tasks. This badition was rdready ill evidence,

for example, in the sixteenth century when local parishes were empowered to levy “poor rates, ” for the maintenance of workhouses, houses of correction

and almhouses. As described by James:

The subsidies [from government] facilitate private and private-sector grovv@ but they also enable the government to extract

concessions inre~ in the form of regulations over inputs, outputs, and other characteristics that satisfy diverse constituencies. The

subsidies, and the regulations and market forces that accompany them, have the effect of raising costs. . . .Thus, the very factors that

originally created the demand for a private sector also set inmotionforces making the private sector more like the public; as the private

sector grows, with government funding and regulating, it becomes quasi-governmental.

E. James, ‘The Nonprofit Sector in Comparative Perspective,” W.W. Powell, The Nonprojit Sector: A Research Handbook (New Have% CT: Yale

University Press, 1987), p. 413.

M British Stantids ~ti~tion(BSI), Royal Charter and Bye-laws 1981, Amended 1989.

29 Ibid.

30 K~abasz, op. cit., fOOtiOte 2.

31 AS described in the White paper:

If standards-rnaldng and related activities are to contribute more effectively to industrial and trade policy objectives, there must

be close co-ordination between the Government and the British Standards Institution (BSI) as the national Standards authority,

Government representation on BSI’S Board already includes the Department of Trade, the Minister of Defense, the Department of

the Environment and the Department of Indus~. However, both the Government and BSI consider tha~ if the status of standards in

this country is to be enhanced significantly, there is a further need for a more formal and detailed understanding between them on

their roles and obligations under the standards system. Consequently, the Government and BSI have agreed to draw up a memorandum

of understanding.

Department of Trade, Standards, Quality and International Competitiveness, presentedto Parliament by the Secretary of State for Trade, by

Command of Her Majesty, July 1982 (London: Her Majesty’s Stationary Office, 1982).
Chapter 3--Standards Setting in Comparative Perspective: The European Experience . 69

in the world to assist its members. Drawing on a pool

of 100 external translators, THE produces approximately 1,000 new standards translations each year.32

BSI also conducts seminars and conferences to help

its members understand and prepare for the single

European market33 (see figure 3-3).

BSI is also involved in a number of programs in

developing areas. Working with AFNOR through

the program RESOURCE, BSI serves as consultant

to the European Economic Community (EEC and

Association of South East Asian Nations (ASEAN)

program on Industry Standards and Quality Assurance. In addition, it has provided advisory and

consultancy services in Saudi Arabia, Bahrain,

Yemen, Tunisia, Turkey, Hong Kong, Taiwan,

Singapore, Malaysia, Thailand, Brunei, Brazil, Mexico, and Mauritius.34

With an eye to future trading opportunities, BSI is

focusing more on regional and international standards setting. The amount of effort devoted to

European standardization has greatly increased over

the past few years. Between 1989 and 1990, for

example, the number of man days spent on European

work rose from 15,000 to 21,000, while the input to

European Committees increased from 2,179 man

days to 9,034. BSI is also active in ISO and the IEC.

In 1990, it held 114 secretariats in ISO, and 24 in the

IEC.

35

Towards European Standardization

The United States is not alone in rethinking its

standards setting processes in the light of a changing

global environment. Discouraged, somewhat, by the

slow pace of European integration, the EC Commission proposed major reforms in 1985, which were

intended to speed up the process.36 These proposals

comprised 287 specific actions that together would

create a “Europe without boundaries. ” When carried out, all barriers to the free flow of people, goods,

Figure 3-3—British Standards Institution (BSI)

Conferences and Seminars

NOTE: British Standards Institution conferences and seminars in 1992

covered the country.

SOURCE: British Standards Institution Annual Report and Accounts,

1989-90, p. 4.

services, and capital among EC countries will be

eliminated. 37 A key mechanism for speeding the

pace of integration is the harmonization of European

standardization and certification processes.

European Standards Bodies: The Role

of CEN, CENELEC and ETSI

European standardization began in 1965 with the

establishment of the Comité Européen de Normalisation (CEN) and the Comité Européen de Normalisation Electrotéchnique (CENELEC), which together are referred to as the Joint European Standards Institute. As nonprofit international associations, these two organizations resemble national

standards bodies, with a few major exceptions. The

members of CEN and CENELEC are the 16 nation

32“wOr&g with Foreign Words,” BSZ News, June 1990, p. 18.

33 Be~een 1989.1990, for ~xwple, BSI held fou conferences on the design and insp~tion to AS~ pressure vessel codes, one on mOtOr VehiCleS,

and one on electrical equipment exports to Europe. In addition, the lkchnical Help To Exporters Section took part in the Manufacturers Agents National

Association of the U.S.A road show, which looked at the United States as a potential market. BSIAnnualReport andAccounts 1989-1990 (kmdon: BSI,

1990), p. 9.

~ Ibid.

35 fCBSI meets European chaUenge, “ BSINews, June 1990, p. 5.

36 CEC, Completing the 1nter~l Mar&: White Paperfiom the Commission to the European Council COM (85) 31O fid.

37 Most of~e fit--ketmemues o~~ed by the Commission in 1985 ~ve been drafted ad tabled, and two-~ds of these have been adOpted

by the EC Council. Less successfid, however, has been the record of implementation. As of June, 1991, only 1/4 of all di.reetives had been implemented.

See Professor Hehnut Reihleq “Standardization & Certification in Europe-1992 and Beyond,” ASZ Standardization News, June 1991, p. 38.
70 . Global Standards: Building Blocks for the Future

Figure 3-4-Deutsche Institute fur Normung (DIN)

Working Towards Europe

/ DIN (Germany) ~ : )

~~FNOR (France)

, . ,. ——

39”/0

L Remaining F

L 15 member bodies

CEN and CENELEC produce three kinds of

documents: European standards (EN), harmonization documents (HD), and European prestandards

(ENV). When an EN is issued, governments must

make it a national standard, withdrawing any

competing national standards. However, national

governments can continue to maintain or issue

national standards on a subject pertaining to an HD,

so long as it is technically equivalent. ENVs are

applied provisionally, for a period of no longer than

5 years, so member governments can maintain

conflicting standards until the ENV is converted to

an EN or HD.40

KEY: AFNOR=Association francaise de normalisation; BSl=British Standards Institution; DIN= Deutsches Institut für Normung eV.

SOURCE: Deutsche Institute fur Normung, 1991.

states of Europe, who have committed themselves to

adopt European standards in place of national

standards (see figure 3-4). Moreover, standard decisions are made, not on the basis of consensus, but

rather on the basis of a qualified majority .38

The organization of CEN is similar to CENELEC.

It is governed by a general assembly that is

comprised of all 16 member nations (see figure 3-5).

This group meets annually to establish policy.

Day-to-day operations are in the charge of the

Secretary General, who is aided by a technical

coordinating committee and a management committee. Planning committees assure that CEN’s schedule mirrors the Community’s priorities. Standards

are developed in technical committees, where efforts

are made to reach unanimous decisions. A subordinate body, known as CENSER, deals with certificates of conformance to CEN standards.39

Since 1986, approximately 30 standardization

mandates related to EEC legislation (calling for

about 800 European standards) have been assigned

to CEN and CENELEC.41 To meet these needs, they

have greatly intensified their operations. Thus, the

number of Technical Committees and working

groups has doubled between December 1987 and

December 1989, and the number of draft European

Standards rose from 220 in 1986 to 950 in 1989.42

Despite these efforts, the European standards

processe is viewed as proceeding too slow.

Speed in standards development is especially

important in telecommunications and information

technologies, since these technologies will play a

major role in linking the nations of Europe.43 To

meet this need, the EC established a special standards body, the European Telecommunications Standards Institute (ETSI) in March 1988. ETSI’S organizational structure is designed to accelerate standards

development. For example, standards are adopted

not on the basis of a consensus procedure, but

38 Votig is we@t~. For EEC rnem~n the We@ting coefllcients provided in Article 148 of the Treaty of Rome for EEC Members are used.

Coefficients for the EF’E4 countries were decided by common agreement taking into account political and economic considerations. As described by

Florenee Nicolas:

In the context of European standardization the qualifled majority rule does not mean a simple two-thirds majority; there are other

additional conditions for the adoption of a European document in order to ensure that the standard is the outcome of an agreement

involving the largest possible number of countries. Consequently, the number of countries voting agains~ tie number of abstentions

and the number of votes against are taken into account. Finally, there is an appeal procedure designed to ensure that the decisions taken

are fair.

Florence Nicolas, op. cit., footnote 3, p. 30.

3gIbid.

m Ibid., pp. 30-31.

41 Lucy Kalloway, ‘‘Tkchnical Standards Machinery Grinds Exceedingly Slow,” Financial Times, May 14, 1990, p. 4.

42 co~ssion &wn Paper on the Development of E~ope~ s~~~tion: Action for Faster ‘&hologic~ htqption hI Ewope, Brussels, ~t. I

, 8, 1990, COM (90) 456 final, hereafter refereed to as Green Paper. 1

43 For the ~tio~e ~~d the c~tion of ETSI, see Commission on the E~ope~ Comm@ties, Green Paper On the Development Of the COm.?nOn

, Market for Telecommunications Services and Equipment, COM (87) fti, Brussels, June 30, 1987, pp. 2&22.

,
Chapter 3--Standards Setting in Comparative Perspective: The European Experience ● 71

Figure 3-5—The Organizational Structure of Comité Européen de Normalisation

I

General assembly

ITSTC ---------------------------------------------- --------------------- I CEN I

&

Eciss

EWOS

Administrative Board 1 --1

I I \ I I

r

Technical

board

I I

Programming

committees

1 1

I

l--

Technical

committees

Reporting

secretariats —

I \l group

1 1 Cancer

Steering

Committee

Cancer

Certification

Committees

+

CEN/Ceneiec group

for the information

Iprocedure and Iconel

KEY: Afnor=Association francaise de normalisation; BSl=British Standards Institute; CEN=European Committee for

Standardization; CENELEC= European Committee for Electrotechnical Standardization; DIN= Deutsches Institut

für Normung eV; DS=Dansk Standardisetingsrad; ECMA=European Computer Manufacturers Association;

ELOT=Hellenic Organization for Standardization; IBN=lnstitut beige de normalisation; NNl=Nederlands

Normalisatie Instituut; UNl=Ente nazionale italiano di unificazione.

SOURCE: Florence Nicolas, with the cooperation of Jacques Repussard, Common Standards for Enterprises

(Luxembourg, office for Official Publications for the European Community, 1988), p. 29.

through a system of individual weighted voting.44

Moreover, in contrast to the technical committees in

other standards organizations-which are comprised of interested parties-ETSI’s technical committees are staffed by experts chosen on the basis of

their technical competence. When a high priority is

given to a standard, these technical committees set

up expert Project Teams, whose members work on

standards development full time.

ETSI’s membership is heterogeneous, including

representatives from manufacturers, administrations,

public network operators, users, and research bodies

(see figure 3-6 and 3-7). Moreover, a new membership category has recently been created. In addition

to full members, there are now associate members

who can participate in meetings but cannot vote.

Together these members, which are grouped into

national delegations, constitute ETSI’s general assembly. Day-to-day operations are carried out by the

secretariat, led by a director chosen by the general

assembly. The technical assembly, however, is the

“highest authority within the Institute for the

production and approval of technical standards.”45

It is in the technical assembly that ETSI’s priorities

are set, through the Costed Work Program. Whereas

standard decisions are made by weighted voting, the

Costed Work Program requires a unanimous vote.

ETSI’s resources have been steadily increasing

(see figure 3-8). Before 1991, its budget was divided

between Common Operating Costs and the Costed

44 Votes ~~ed t. ~~ei~t~ on ~ ~tio~ ba~i~. ~s Vofig system was revised in 1991. Now individ~ members votes are weighted atXOrding tO

their sales or, in the case of administrations, on the basis of their gross domestic products. Exceptions are made whe% in voting on a standard, ETSI must

be consistent with the rules of Article 148 of the Treaty of Rome and those of CEN and CENELEC. ET21Z, No. 5, spring 1991, p. 3.

45 R~es of ~oc~we of the European Telecommunications Standards Institute, Copenhagen 1988, ~cle 6.3.
72 . Global Standards: Building Blocks for the Future

Figure 3-6-Participation in European Telecommunications Standards Institute (ETSI)

50%

40%

30%

20%

10%

0%

791

44.8%

490

27.7%

19

37%

I

457

25.8%

17 1 12

1% 2%

6

12%

Manufacturers Administrations Public network Users Research bodies

1

operators

Experts in technical committees Experts in project teams

SOURCE: European Telecommunications Standards Institute, May 1991.

Figure 3-7—European Telecommunications Standards Institute (ETSI) Membership

Research bodies

and others

UsersL

3.8%

2%

10.7%

9 2“/. r- — P

11 .2%

Public network 14.5%

operators

Manufacturers 60.4%

163 50%

Administrations

I I 1

Number O 20 40 60 80

_ End 1989 0

End 1990

187 ECU 249 ECU

SOURCE: European Telecommunications Standards Institute, May 1991.

Work Program. Administrations (mainly the PTTs) operators, service providers, and research institutes

paid the operating costs, while all members shared pay according to their turnover, and administrations

the costs of the work program. In 1991, a single pay according to their Gross Domestic Product

budget was adopted. Now manufacturers, network (GDP). %

‘$6 E’I’SI, op. cit., foo~ok 43, p. 3.
Chapter 3-Standards Setting in Comparative Perspective: The European Experience ● 73

Figure 3-8--Resource for European

Telecommunications Standards Institute (ETSI)

Project Teams

Man/months

300

200

100

0

166

294

72

1988 1989 1990

(6 months)

1991

= Costed work programme n Voluntary work programme

SOURCE: European Telecommunications Standards Institute, May 1991.

The New Approach

Viewing standardization as a priority task, the

European Commission (EC) adopted a new approach for developing European standards in May

1985. 47 This program is based on the mutual recognition of test data and product certification within the

EC. It calls for two separate procedures-one for

regulated and one for nonregulated products.

Products that have potential health, safety, or

environmental implications are regulated by the

commission. The commission writes directives for

these products, which have the force of EC law.

These directives outline broad essential requirements that products must meet.48 CEN, CENELEC,

and ETSI write detailed standards that meet these

requirements, which manufactures may choose to

follow. Or, manufacturers may meet the directive

using another approach. Manufactures must prove

conformance to the commission’s directive in one of

two ways. They can submit their products to testing

by an independent laboratory, which is itself licensed as a notified body by a member government.

Or they can test and certify their products themselves (a procedure known as self-certification.) If

challenged, the burden of proving conformance rests

with the manufacturer.

Manufacturers can continue to use national standards for nonregulated standards. However, to allow

for harmonization, nations are required to treat all

EEC products alike. Any product that can be legally

sold, manufactured, and marketed in one member

nation must be able to be sold on an equal basis in

any other country .49

The Green Paper on Standards

Even though the number of European standards

has greatly increased, the demand for European

standards continues to outpace Supply.50 The EC

estimates, for example, that by 1993, the EEC will

need at least 1,000 European standards.51 With the

exception of telecommunication and information

technologies (which are to be set through ETSI) the

task of developing these standards falls to CEN and

CENELEC. To support this development, the EC

contributed more than 60 percent of CEN/

CENELEC’s secretariats budgets in 1990. Moreover, in an effort to speed up the process, the EC

proposed a number of reforms in its 1990 Green

Paper on the Development of European Standardardization. 52

These proposals, however, have been highly

controversial. National standard development bodies have been opposed, as have CEN and CENELEC, since the Green Paper calls for the eventual

dTpro~ess in EUIOp~ standardization has been greatly facilitated by the passage of the Single European Act, adopted in Feb~1986. AS one

of its major objectives, it calls for the completion of the European internal market by the end of 1992 to create a continental trading area. To facilitate

this end, the Aet substitutes qualifled majority voting for the previous system requiring unanimity. See, Patrick W. Cooke, A Summary of the New

European Community Approach to Stan&rds Dnelopwnt (was-n DC: U.S. Department of Commerce, National Bureau of Standards, August

1988), p. 2-3.

4S Dime Good, ~~~e ~p~catiom of 1992 for U.S. ~~ac~ers: ~~ucts (~~uct standar~ ad ~oduct L~bility) ~d Environmental Law, ”

International Quarterly, vol. 2, July 1990.

0 ~s pMciple comes from ~e~stofic Cassis de D~-on case decided by the European COW of Justh in 1979; tie d=ision stated tit French ~sis

could not be barred from sale in West Germany merely because it was manufactured to non-German specifications. CEC, Europe Without

Frontiers-Completing the Znternal Market, Periodical 3/1988 (Luxembourg: OffIce for Official Publications of the European Communities, 1988).

~ Green Paper, op. cit., footnote 43. See also Lucy Ka.lloway, Op. Cit., fOOtnOte 41.

51 Green paper, Op. Cit., foo~ote 43.

52 Ibid.
74 ● Global Standards: Building Blocks for the Future

restructuring of European standards organizations proposal would create a system that is too bureaualong industry, rather than national, lines.53 More- cratic; others argue that it would unnecessarily limit

over, it would replicate the ETSI model, rather than due process. Having been barraged with negative

build on the traditional voluntary approach to responses, the EEC is currently revising its proposal

standards setting. Some contend that the EC’s to take these kinds of comments into account.

53 See, for example, “Comments of DIN on the Commission Green Paper on the Development of European Standardization as published in the

Official Journal of the European Communities on Jan. 1, CENELEC1991;” Commentary on the Commission Communication on the Development “

of European Standards,’ (OJ 91/c 20/01); and ‘The Future of European Standardization: The BSI Response to the European Commission Green Paper,”

(British Standards Institute, London: 1991),
Chapter 4

Structural Changes in the

Standards Setting Environment
Contents

Page

The Emergence of a Global Economy in Which the United States No Longer

Plays the Predominate Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Increased Competitiveness and Greater State Involvement in Promoting

National Economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

Standards for Industrial Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

Standards as Industrial Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Standards as Marketing Devices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Rise of the Multinationals and Other Translational Groups . . . . . . . . . . . . . . . . . . . . . . . . 90

Trend Towards and Information-based, Knowledge Society . . . . . . . . . . . . . . . . . . . . . . . . . . 92

Box

Box Page

4-A. ITU Standards Available Via Global Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Figures

Figure Page

4-1. International Standards (ISO): Activity Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

4-2. Participation in International Standards Work, International Organization

for Standardization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

4-3. Participation in International Standards Work, International Electrotechnical

Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89

Table

Table Page

4-1. U.S. Share of World Imports and Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Chapter 4

Structural Changes in the Standards Setting Environment

Throughout history, social institutions evolved in

response to changing environments. Those that

failed to adapt fell by the wayside; those that took

advantage of a changing situation took the lead.l

This rise and fall of institutions occurs because the

conditions for success--or comparative advantage—

vary according to circumstances. What works well

in one case, will not necessarily succeed in another.2

Thus, for example, the U.S. economy gained advantage over many European economies during the

industrial era because mass production required a

large market, which existed in the United States.3

Today, however, the United States may lose this

advantage because market conditions now require

small batch, flexible, industrial processes that differ

from traditional U.S. processes.4 Similarly, although

the British economy was successful in the nineteenth

century, it declined in the twentieth because, unlike

the Germans and others,5 the British failed to

anticipate the emergence of new markets and the

growing importance of knowledge resources.6

Today, a number of structural changes are taking

place in the standards setting environment. U.S.

standards setting bodies must address these if they

are to serve the needs of American industries and the

Nation as a whole. To fully appreciate the implications of these changes, one needs to examine these

trends and how they might affect the international

standards setting arena.

The Emergence of a Global Economy

in Which the United States No Longer

Plays the Predominate Role

Key among the developments affecting standards

setting is the emergence of a global economy in

which the United States no longer plays the predominant role.7 In a global economy, all nations are

interdependent. They depend on one another not

only for exports and imports, but also to support the

international institutional mechanisms that enable

such exchange. Standards are critical both to national economic performance as well as the function1 As Andrew Schotter has pointed out:

Economic and social systems evolve the way species do. To ensure their survival and growt@ they must solve a whole set of

problems that arise as the systems evolves. Each problem creates the need for some adaptive feature, that is, a social institution. Every

evolutionary economic problem requires a social institution to solve it. . . . Those societies that create the proper set of social

institutions survive and flourish those that do not, falter and die. The distressing fact is that what is functional to meet today ’sproblems

may be totally inadequate in meeting the tests our society faces tomorrow.

Andrew Schotter, The Theory of Social Institutions (Cambridge, London: Cambridge University Press, 1981), pp. 1-2.

z As described by Pokmyi:

A mtion may be handicapped in its struggle for survival by the fact that its institutions, or some of them, belong to a type that

happens to be on the down grade-the gold standards in World WaI II was an instance of such an antiquated outfit. Countries, on

the other hand, which for reasons of their own are opposed to the status quo, would be quick to discover the weaknesses of the existing

institutional order and to anticipate the creation of institutions better adapted to their interests.

Karl Polanyi, The Great Transformation: The Political and Economic Origins of our Time (Boston, MA: Beacon Press, 1957), p. 28.

3 See ch. 2.

4 piore ad Sable es~te, for exmple,tit ~ tie 1970s, roug~y 70 percent of all products in tie me~working sector consisted C)f Small batches.

See Michael J. Piore and Charles F. Sabel, The Second Industrial Divide: Possibilities for Prosperity (New York, NY: Basic Books, 1984), p. 26.

5 It WaS during the late 1980s, for example, that tie Ge~ established a number of major research universities, which had an industrial as well

as research orientation. Many American universities, such as John Hopkins, began to follow suit. For a discussio~ see Edward Shils, “The Order of

Leaming in the United States from 1865-1920: The Ascendancy of the Universities,” Minerva, vol. 16, No. 2, summer, 19’78.

6 According to James Beckford, for example:

Current tbinkm“ gabouttheperfo rmance of the British economy in the twentieth century is that the process of secular decline relative

to some other WestemEuropeancountries, JapW and the United States had its origins in the failure to plan adequately for the efficient

exploitation of new markets and new resources in the late nineteenth century. The results of a rather rigid adherence to laissez-faire

doctrines were evident even before World War I in a relative slowness to appreciate the importance of technical and scientific

educatiou training, business studies and labor relations. . . . At present, tie United Kingdom’s weakness in industrial productivity

is largely responsible for a serious decline in the country’s living standards in comparison with those of other advanced industrial

societies.

James Beckford, “Great Britain: Voluntarism and Sectional Interests,” Robert Wuthrow (cd.), Between States and Markets: The Voluntary Sector

in Comparative Perspective (Princeton, NJ: Princeton University Press, 1991), p. 33.

7 For a discussion of U.S. hegemony ~d me fiplicatiom for tie world e~nomy, see c~les Kindelberger, “Dominallce ad Leadership kl the

International Economy: 13xploitatio~ Public Goods, and Free Rides,’ International Studies Quarterly, vol. 27, pp. 242-254.

–77–
78 . Global Standards: Building Blocks for the Future

ing of the international marketplace. This means

standards making bodies—at all jurisdictional

levels—have a major role to play. However, greater

resources will be needed in the international arena,

since, in a global economy, domestic economic

performance is increasingly dependent on the international marketplace.

From the U.S. perspective, the beginning of a

global economy can be traced back to the end of the

19th century when large, multifunctional corporations emerged, many with branches or subsidiaries

abroad. These firms became highly successful.

Being the first of their kind, they used their size and

complex corporate structures as barriers to latecoming rivals.8 U.S. multinational firms had an

advantage over their European counterparts, who

were constrained in their operations by their much

smaller domestic markets and, unlike American

companies, were unaccustomed to competing on the

basis of improved efficiency and cost reductions.9

As European and Japanese economies recovered

from World War II and managed to overcome the

U.S. technological lead, however, this pattern of

U.S. economic hegemony shifted significantly, and

American multinationals increasingly found themselves competing intensely with their European and

Japanese counterparts.10 Japanese corporations, benefiting from their export-oriented industrial policy,

have been particularly successful in their efforts to

establish international connections by investing and

producing abroad.ll

The integration of the international economy has

been facilitated and fostered by a number of

developments. These include:12

●

●

●

●

●

●

●

the growing similarity of countries, both with

respect to taste as well as to infrastructure,

distribution channels, and marketing approaches;

the emergence of a global capital market as

witnessed by large flows of funds between

countries;

declining tariff barriers and the establishment

of regional trading agreements;

shifting opportunities for competitive advantage due to technology restructuring;

the integrating role of advanced information

and communication technologies;

slow and uneven world economic growth that

has fanned the flames of international competitiveness; and

the emergence of new global competitors,

principally from East Asia.

Together, these developments have given rise to

a global economy in which patterns of international

trade now primarily reflect patterns of international

production. Specialization takes place on the basis

of parts and specialized components, rather than on

the exchange of finished products as in the past.

Thus, interfirm and intrafirm trade is steadily

replacing interindustry trade.13 Today, for example,

Japan provides approximately 40 percent of U.S.

component parts in electronics and automobiles.14

Patterns of direct investment abroad also highlight this trend towards global economic integration

8 Alfred D. Chandler, Jr., ‘The Evolution of Modem Global Competitio~” Michael E. Porter (cd.), Competition in GZobaZIndustries (Bostoq MA:

Harvard Business School Press, 1986), pp. 408-409.

g As Chandler has pointed out:

In Europe~the lack of antitrust legislation meant that market power was achieved and maintained in the domestic market far more

by contractual cooperation than through functional and strategic differences. In those British industries where a single firm did not

dominate, federations of relatively small, usually family enterprises, normally in the form of holding companies, maintained

agreement as to price, output and marketing territories.

Ibid.

Because of the dominant position of American firms, the term “multinational corporation” originally was, according to Robert

Gilpiq “a euphemism for the foreign expansion of American giant oligopolistic corp.” The strength of the U.S. economic position

was reflected by the fact tha$ in 1981, more than two-f~ of the world’s direct foreign investment was accounted for by the United

States, with the bulk of it being invested in advanced manufacturing. Moreover, foreign investment and the activities of American

multinationals were increasingly critical to the U.S. economy in tha~ in the early 1970s, a sizable number of American corporations

held more than $500 billion of their assets and gained more than one-half of their eamings abroad. Robert GilpirL The Political

Economy of International Relations (Princeton, NJ: Princeton University Press, 1987), p. 238.

10 c~~er, op. cit., footnote 8, p. 240.

11 c~~er, op. cit., footnote 8, p. 5.

12 ~c~el power (cd,), competition in Global I~us~ies @osto~ MA: ward Business School Press, 1986), pp. 2-3.

13 Gilp@ Op, cit., foo~ote 9 p. 238+ See ~so Jack N. Behrmq ~~ustrial policies: ~nter~tiona/Res@uc@ring ati TransnationaZs @X@On, MA:

bcington Books, 1984).

14 Porter, op. cit., footnote 12, p. 225.
Chapter 4--Structural Changes in the Standards Setting Environment ● 79

and interdependence. Between 1960 and 1988, for

example, direct investment abroad by all firms in all

nations increased by over 10 percent, to over $1.1

trillion. 15

This trend is especially pronounced in the United

States, where foreign direct investment increased

during the same period faster than the world

average—from $9.9 to $328.9 billion, or 18 percent

per year. Moreover, foreign direct investment accounted for 3.4 percent of Gross National Product

(GNP) in 1987, as compared to 1.8 percent a decade

earlier.l6

To date, the United States has not done well in this

changing economic environment. The impact of

foreign competition can be seen, for example, by

examining the combined data on U.S. share of world

imports and exports, with figures on the proportion

of U.S.-made goods in domestic consumption. From

these data, it is clear that the United States has lost

world market share, for example, in merchandise.

The situation is the same, moreover, in the case of

microelectronics 17 (see table 4-l). As a recent OTA

study concludes: “At least in the most important

sectors, U.S. companies are not holding their own

against foreign competition. ’ ’18

How the United States fares in this global

economy depends not only on trade but also on

standards, many of which will be established by

other countries or in the international standards

setting arena. 19 The role of standards in this equation

for success is on the rise. In 1977, for examples, it

was estimated that, for the year 1977, $69 billion of

Table 4-1—U.S. Share of World Imports

and Exports

Year Percent of imports Percent of exports

1970. . . . . . . . . . . . . . 12.9 13.8

1973. . . . . . . . . . . . . . 12.4 12.4

1975. . . . . . . . . . . . . . 11.7 12.7

1977. . . . . . . . . . . . . . 13.6 10.8

1978. . . . . . . . . . . . . . 13.8 11.1

1979. . . . . . . . . . . . . . 13.1 11.1

1980. . . . . . . . . . . . . . 12.5 11.1

1981 . . . . . . . . . . . . . . 13.4 11.9

1982. . . . . . . . . . . . . . 13.4 11.6

1983. . . . . . . . . . . . . . 14.4 11.1

1984. . . . . . . . . . . . . . 17.2 11.5

1985. . . . . . . . . . . . . . 17.9 11.1

1986. . . . . . . . . . . . . . 17.5 10.3

SOURCE: United Nations, Department of International and Social Affairs,

1985/86 Statistic/ Yearbook, 35th issue (New York, NY: United

Nations, 1988).

U.S. exports were subject to standards activity. No

comparable figure is available today. However, it is

estimated that of $83 billion in exports of manufactured goods to the European Economic Community

(EEC) in 1990, some $48 billion is, or will, be

subject to EEC product safety standards alone.20

The growth of imports also enhances the value of

international standards. In 1990, 7.3 percent of

Gross Domestic Product (GDP) and 38 percent of

manufacturing were dependent on imports.21 Imported products, many of which are component

parts, must conform to standards that meet the needs

of both foreign producers as well as manufacturers

in the United States. Moreover, standards will need

15 U.S. Conwess, Office of nchnolo= Assessment Competing Economies: America, Europe, and the Pacific Rim, OTA-lTE-498 (was~$$on, DC:

U.S. Government Printing Office, October 1991), p. 26.

16 Ibid+

17 As OTA points Out:

In microelectronics, Japanese mrmufacturem dominate world markets and technology developments in many products, starting with

DRAM chips inearly 1980s. Japanese manufacturers have challenged the American leaders in computers throughout the market, from

laptop PCs to supercomputers, and few believe that they have reached their limit. After having pioneered scientilc work in

superconductivity. . ., Americans and Europeans have watched Japanese companies take solid steps to incorporating superconducting

materials in commercial products. And inhigh-resolution televisio~ American companies have been mostly spectators in a game that

involves European companies and governments struggling to catchup to the Japanese.

U.S. Congress, Office of Technology Assessment, Competing Economies: America, Europe, and the Pac@c Rim, OTA-ITE-498 (Washington

DC: Government Printing Ofllce, October 1991), pp. 123-124. The President’s Council on Competitiveness drew a similar conclusion in its repofi

Gaining New Ground: Technology Priorities for America’s Future, (Washington, DC: U.S. Government Printing OffIce, March 1991).

IS kcording to OTA “at least in the most important sectors U.S. Companies are not holding their own against foreign competition. In particular,

American companies are beleaguered by Japanese competition.” OTA op. cit., footnote 17, p. 5.

19~e nm~r of p~icipats involv~ ~ s@dards development wi~ISO is es-ted to ~ve incr~ed from 50,~() b 1972 to 1(X),000 today.

And the number of standards approved has increased from 2,000 in 1972 to 7,500 by 1985. Stanley H. Besen and Garth Saloner, “The Economics of

lklecommunication Standards,” R. Crandell and K. Flamm, Technology and Government Policy in Computers and Telecommunications (W%shingtom

DC: Brookings Institute, 1989), p. 26.

m ~s fiWe was provided by the Department of Commerce.

21 OTA op. cit., footnote 17, p. 94.
80 ● Global Standards: Building Blocks for the Future

I

I

to be made available to producers in a timely and

efficient manner.

Failure to understand the implications of international standards can have serious consequences for

U.S. industry. The U.S. machine tool industry is a

case in point. For years, the industry was able to

thrive without regard to international standards.

Industry practices became de facto standards because the U.S. market for machine tools was so

large. In a global market, where there is intense

foreign competition, this is no longer possible. Not

being involved in the development of international

standards or experienced in producing products to

foreign specifications, the U.S. industry has lost its

competitive edge.22 The Japanese, on the other hand,

have gained considerable ground in the international

market, in part by more effectively using standards

to improve productivity and add value to their

products.23 Concerned about the fate of the machine

tool industry, President Bush recently agreed to

approve a 2-year voluntary restraint agreement on

machine tools, which limits imports from Taiwan

and Japan, to allow time for the industry to become

revitalized.24

Although considerably more future standards

work will take place in the international arena, it is

not clear that the United States will have an effective

presence there. The United States has been slow to

appreciate the growing importance of international

standards. Some say, for example, that U.S. standards bodies lost a tremendous opportunity in the

early post-World War II years, when European

standards institutions were still in a state of disarray.

25 Europeans, themselves, complain about the

failure of the United States to make a real commitment to international standards. Some even suggest

that U.S. involvement in the past was counterproductive. Americans, they say, were playing for much

lower stakes than the Europeans, since standards

implementation in the United States is voluntary, but

compulsory in Europe. To the Europeans, therefore,

U.S. participation sometimes appears perfunctory, if

not at times obstructionist.26

The United States may also have considerably

less influence than in the past to determine the

character of international standards institutions.27

The United States was able to play the dominate role

in defining the post-World War H international

economic order because of factors, many of which

no longer exist, such as American economic and

military preeminence, the threat of a common

22 AS tie Chief Ex~utive Offiwr of Cincinnati Milaaom described the situation to members of his industry, “Your competitors are global, Yom

suppliers, your standards, your designs, your issues, your policies, your strategie~they all must become global. lkchnology is not a provincial field

any more. ~dustry must implement] radical measures. ’ ‘‘Cincinnati Milacrom C hanman “ Issues Stern Warning to U.S. Manufacturers,” New

Technology Week, Nov. 18, 1991, p. 4.

~ Michael L. Dertowos et al., Made in Amen”ca: Regaining the Productive Edge (Cambridge, MA: Mrr Press, 1989), PP. ~1-242.

u “Bush Approves Limited Extension of Machine Tool VIUs Witb Jap~ ‘Mwan,” International Trade Reporter, Jan. 1, 1992, p. 10.

~ Three Ww li~e ~Wntive t. consider internatioti standards, so long as national economies were independent of one another. Writing in 1928, K.

H. Conduct explains the attitude of the time. He notes:

Very little has been accomplished in international standardization. . . for obvious reasons. The manufacturing arts are different at

different stages indifferent countries, and what is acceptable in the advanced countries is not in the backward ones. Until international

trade is conducted on a basis less strongly flavored with mtionalism, and industrial education has made more progress than it has ye~

there will apparently be little economic justitlcation for extensive standardization.

K.H. Condi~ “TheEconomic Aspects of Standardizatio~” Standards in Industry (The American Academy of Political and Social Science, Notes

from the Annals, 1928), p. 40.

26 )7Wopem ~temiews. Re~~g t. ~ese comments d~g the OT’ review pm~ss, some mem~rs in the hl~~ sa(hds COIIMIIUIlity Say that

these comments are self-serving, and thus not to be taken too seriously.

27 Exptig U.S. hegemony in the past, Gilpin notes:

For the first time ever, all the capitalist economies were political allies. American initiatives in the area of trade led to successive

rounds of tariff liberalization. The dollar served as the basis of the international monetary system while American foreign aid, direct

investment and technology facilitated the rapid development of advanced and certain less developed economies. Americanhegemony

provided the favorable environment within which supply and demand forces created an era of unprecedent growth and an increasingly

open economy.

Gilp@ op. cit. footnote 9, p. 5.
Chapter 4--Structural Changes in the Standards Setting Environment ● 81

enemy, as well as relatively steady economic

growth. 28 To affect standards processes in an international environment in which economic and political resources are now both better balanced and

dispersed, the United States must exert greater effort

and resources, as well as negotiate and compromise,

more than ever before.

Rallying sufficient resources for this task will be

difficult. The potential for market failures at the

international level is high, since many American

companies, especially in the small business community, do not recognize the implications of international standards in a global economy. By the time

they realize the potential consequences, damage to

the national economy may already be done. A key

factor in determining outcomes in standards development bodies is the amount of resources and skills

that participants contribute.29 American participants

must pay their own way, but participants from other

countries are generally supported, at least in part, by

their national governments.

The costs of international standards development

and the expense of participating in the process is also

a limiting factor. It has been estimated, for example,

that the development of a major international

telecommunications standard may require perhaps

1,000 person-years of experience, 20 person-years of

actual effort, and $3 million.30 Distributing standards information across national boundaries, when it

requires cultural, political and language translation,

is also costly.

If sufficient resources are brought to bear in the

international arena, the payoff would likely be great.

U.S. companies, which are no longer dominant in the

market, and hence unable to set de facto standards,

will benefit from a standards setting process where

influence is not based solely on market power.31

Equally important, signatories of the General Agreement on Tarriff and Trade (GATT) Standards Code32

have pledged to adopt international standards, where

they exist. Thus, if the United States supports the

timely development of standards in international

standards bodies, it may preclude the Europeans and

others from using regional standards to restrict trade.

Increased Competitiveness and

Greater State Involvement in

Promoting National Economies

Even as the international marketplace becomes

more integrated, the political and ideological framework that governed the post-war international order

is coming apart. A revival of 19th century mercantalist philosophy and practice has been filling the gap.

Acutely aware of the growing linkages between

national economic well being and performance in

the international marketplace, many governments

are adopting policies to assure that their industries

compete successfully. Standards and standards processes provide useful mechanisms to advance national industrial policies. Thus, they must be viewed

in the context of an increasingly competitive, global

environment.

28 AS described by GfipiTx

The United States emerged from the Second World War as the dominant or hegemonic economic and military power in the

international systen. This unchallenged American preeminence was partially due to the wartime destruction of other industrial

economies. From this perspective, the coremanding nature of American leadership in the early postwar period was ‘abnormal” and

would one day decline with the recovery of other economies. This artificial situation, however, caused false and extraordinarily high

economic expectations among the American people that continued into the 1990s and made adjustment to economic and political

decline extremely difllcult.

Gilp@ op. cit., footnote 9, p. 344.

29 See Martin B.H. Weiss and Marvin Sirbu, “’lkchnological Choice in Voluntary Standards Committees: An Emperial Analysis,” Economics of

Innovation and New Technology, vol. 1, No. 1/2, 1988), pp. 111-132.

w Odo J. Struger, “Impact of International and Foreign Standards on a Company’s Operations,” presentation Aug. 20, 1991, p. 6.

31 See for discussio~ Joseph Farrell and Garth %loner, “Competition% Compatibility, and Standards: The Economics of Horses, Penguins and

kmmings,” H. Landis Gabel (cd.), Product Stan&rdization and Competitive Srrategy (North Holland: Elsevier Science Publishers, 1987), pp. 1-21;

See also, William Lehr, “The Case of Two Data Transport Standards: IEEE’s 908.6 Metropolitan Area Network (MAN) versus the ANSi X3’s Fiber

Distributed Data Interface @DDI), paper presented to the nineteenth annual Telecommunications Policy Reseach Conference, Session on the Economics

of Networks and Standardization, Solomon Island, MD, Sept. 30, 1991.

32 ~icle 2+2, AWeement on ~c~c~ Bfiers to Trade. me Standards Code attempts to ensme tit ‘‘techni~ regulations and stantids are nOt

prepared, adopted, or applied withaview to creating obstacles to international trade.’ To accomplish this it lays out principles that guide the development

and application of standards and the use of conformity assessments procedures. These principles include using international standards unless

inappropriate for certain specific reasons and to not develop or apply standards in a way that poses an unnecessary obstacle to international trade. J.r.I the

draft text, which is ahnost complete, countries pledge to use the least restrictive measure to accomplish a legitimate objective. In general these principles

also apply to conformity assessment procedures (that is, the methods by which a body assures that a product conforms to a particular standard).
82 ● Global Standards: Building Blocks for the Future

Standards for Industrial Policy

Mercantilism--the policy of state intervention in

the economy—has a long history, which can be

traced in Europe back to the development of national

markets. Using their sovereign authority to establish

national markets, European monarchs sought to

control their impacts through regulation.33 Although

the policy of mercantilism was disavowed in England during the industrial revolution,34 it remained

entrenched on the continent, providing the successful blueprint for German industrialization at the end

of the 19th century .35 Even in the United States,

mercantilism continued to find a receptive audience

throughout the first half of the nineteenth century.36

The decline of mercantilism after the Second

World War was due, in part, to widespread disillusionment with the statist approach, which was

carried to extreme in Fascist Italy and Nazi Germany. Equally important was the influential role

played by the United States in reconstructing the

post-war international economy based on the principles of trade liberalization and a stabilized monetary

order supported by fixed exchange rates.37

The two pillars on which this system was based

were the Bretton Woods monetary system, established at the Bretton Woods Conference in 1944, and

the General Agreement on Tariffs and Trade (GATT)

adopted in 1948.38 The post-win international economic system was successful, so long as it was

considered mutually beneficial.39 Strains in the

system became apparent, however, in the early

1970s, when the dollar started to diverge significantly from other currencies. 40 In August 1971,

President Richard M. Nixon unilaterally suspended

convertibility of the dollar and established a surcharge on U.S. imports, which was designed to force

the reevaluation of European and Japanese currencies.41 In 1973, the United States abandoned the

Bretton Woods monetary system when it shifted to

flexible exchange rates.

33& (iwxibe(i by pokyni:

Deliberate action of the state in the fifteenth and sixteenth centuries foisted the mercantile system on the fiercely protectionist towns

and principalities. Mercantilismdestroyed theoutwomparticularism of local andintermunicipal trading by breaking down the barriers

separating these two types of noncompetitive commerce and thus clearing the way for a national market. . . . The “freeing” of trade

performed by mercantilism merely liberated trade from particularism, but at the same time extended the scope of regulation. T’he

economic system was submerged in general social relations: markets were merely an accessory feature of an institutional setting

controlled and regulated more than ever by social authority.

Polanyi, op. cit., footnote 2, pp. 65-67.

34 me end of mercmtilism ~ Englmd is us~yassociat~ ~th the passage of the Reform Act of 1832, ~d the Poor Law Amendment of 1834.

35 For the classic accomtofuseofstate power t. es~bhshcapi~smin~peri~ Germ~y, see ‘rhorste~veble~~~perial Germany andtheIndustrial

Revolution (New York, NY: Viking Press, 1939).

36 See, for Cmple, Forrest McDotid, who notes:

That period [when the Constitution was adopted] was one of transition from ancient zero-sum conceptions of economic activity

to modern growth-oriented conceptions. Precapitdism and anticapitalistic values, attitudes, and institutions, rooted in the feudal pas~

were far from dead in America, and those of mercantilism-a system in which economic activity was regulated by the state as a means

of aggrandizing the international power and prestige of the state-were in full bloom. The new values, looking to free trade,

entrepreneurship, and a market economy, were, with few exceptions, little more than a gleam in the eyes of a few advanced thinkers.

The establishment of the Constitution thus was a benchmark in the evolution of systems of political economy, for it made

possible-not inevitabh+-the transformation from the old order to the new.

Forrest McDonald, “The Constitution and Hamiltonian Capitalism,” Robert A. GoldWin and William A. Schambra (eds.), How Capitalistic IS the

Constitution (Washington, DC: American Enterprise Institute, 1984), p. 50.

37 See Jo~GerwdRug@e, 4 ‘~temtio~Regimes, Trmactiom, ad Ctige: Emb~&dLi~r~smin the post.warfionomic order,” ZnternatiOIZU/

Organizations, vol. 36, pp. 379-415.

38 GATT was desimed t. achieve C Cfreer ~d f~er trade’ by providing ~ agreed on set of univers~ fies for conducting commerc,id pOliCy. TheSe

incorporated three basic principles: 1) nondiscriminatio~ multilateralism, and the application of the Most Favored Nation Principle to all signatories;

2) expansion of irade through the reduction of trade barriers; and 3) unconditional reciprocity among all signatories. See, Marina v. N. WhitmruL

“Sustaining the International Economic System: Issues for U.S. Policy,” Essays in International Finance, No. 121., Department of Economics,

Princeton University, p. 28.

39 It was hop~ titthe system would ~ flexible enough s. tit nations could p~ue their domestic policies while stu operating by the IldeS Of the

game. Ruggie, op. cit., footnote 37.

40 Gilp~ op. cit., footnote 9, PP. l@-142.

41 me ~ater~ act Ww *eafly resented by the other mem~m of the Bretton Woods accord, They complfied titthe United States preferred to

abandon the system, rather than have its freedom of action curtailed. From the American point of view, as defined by a former government official, “the

growing economic and political strength of Europe and Japan made the Bretton Woods system obsolete.” As cited @ Robert O. Keohane, “T’he

International Politics of Inflation,” Leon N. Lindberg and Charles S. Maier (eds.), The Politics ofh..ation and Economic Stagnation: Theoretical

Approaches and International Case Studies (Washington DC: Brookings Institute, 1985), p. 97.
Chapter 4-Structural Changes in the Standards Setting Environment ● 83

At the same time, protectionism was also on the

rise.Az Exceptions and escape clauses were built into

the GATT, and nations began to resort to them at an

increasing rate.43 Even when GATT’s efforts to reduce tariff barriers were successful, they were often

countered by the growing popularity and use of

barter agreements and nontariff trade barriers.44

Thus, the ratio of managed to total trade increased

from 40 to 48 percent between 1974 and 1980. This

percentage would be even greater had intrafirm trade

between multinational corporations been considered.45

Retreating further from the post-war international

economic system, many governments adopted industrial policies to improve their economy’s comparative advantages. Japan’s remarkable success,

and that of several newly industrializing countries,

rekindled an interest in mercantilism. Economic

activity became increasingly politicized as the

positive effect that government intervention on

behalf of a nation’s economy became apparent.

When other nations, following Japan’s lead, began

competing aggressively for the same value-added,

high-technology market, international trade became

a zero-sum game.

The result is a highly competitive, global economy, in which multinational corporations are aided

in their competitive endeavors by increasingly

protectionist and interventionist policies of their

home governments. Whereas in the past protectionist policies generally were intended to protect an

infant or declining industry, today they are calculated to enhance or create a comparative advantage--

especially in high technology, high value-added

industries. 46 To the extent that governments can alter

industry advantages, one can no longer view comparative advantage in the classic, economic sense,

which calls for free trade.47 Furthermore, these

competitive policies are self-reinforcing. Because

many countries are focusing their industrial policies

to support the same sectors, there tends to be

overproduction in these areas and, hence, increased

pressure for protectionist policies.48

This atmosphere is not conducive to global

solutions. When cooperation between nations is

deemed appropriate, it increasingly takes the form of

regionalism. Thus, in addition to the European

Common Market, there now exists a Pacific trading

area, a North American Trading Area, and-if all

goes well with the Enterprise for the Americas

Initiative-perhaps even an Hemisperhic Free Trade

Zone. 49 However, unlike the European Community,

which originated within the context of the post-war

42 Eme~tH. fieeg, ‘f’& A~n”can challenge in wOrld T~~&: u-s. Interests in the G~Multilateral Tr~ing system ~ashgto~ DC: The c(Xlter

For Strategic Studies, 1989).

43 As OTA points Out:

There is an increasing tendency for nations to negotiate quotas bilaterally or among trading blocs or customs unions. GATT has

recorded over 200 quota arrangements that restrict industrialized counties’ imports in products such as textile and apparel, steel,

motor vehicles, semiconductors, machine tools, footwear, and consumer electronics. These arrangements include the proliferation of

voluntary restrain agreements (VRA)S that restrict trade between two mtions. An example is the VRA between Japan and the United

States in which Japan agreed to limit its exports of motor vehicles to the United States, from 1.76 million units in 1981 to 1.94 million

units in 1985.

OTA op. cit., footnote 17, p. 121.

44 As tie Comcfl of fionofic Advisers desc~b~ the si~tion ~ its 1985 Economic Report Of the President, the world is moving away from rather

than toward, comprehensive free trade. In major industrialized countries, for example, the proportion of total manufacturing subject to nontariff

restrictions rose to about 30 percent in 1983, up from 20 percent just three years earlier.”Council on Economic Advisers, op. cit., footnote 17, p. 114.

See also GilpirL who notes:

Thus by the late 1970s, several broad changes had begun to erode the GATT system of trade liberalization. As tariff barriers within

the GATI’havefallew nontariffbarriers inmost countries have risen. Barter or counterirade has grown rapidly, especially with respect

to the less developed countries; the U.S. Commerce Department estimates that between 1976 and 1983, barter increased from

approximately 2-3 to 25-30 percent of world trade.

Gilpiq op. cit., footnote 9, p. 195.

45 Gilp@ op. cit., footnote 9, P. 207.

46 Gilp@ op. cit., fOOtUOte 9* P. 261-

47 Gilp@ op. cit., footnote 9, P. 277+

48 Be- op. cit., foo~ote 13s p. 11“

@ c (Bush H~~ Possibifi& of a Hemispheric Free Trade fine During South Americas Trip’ International Reporter, Dec. 5, 1990, p. 1824.
84 . Global Standards: Building Blocks for the Future

I

international system and was motivated by political

as well as economic goals,50 regional trading pacts

today appear to be operating more defensively.

Standards developments must be viewed in this

context. If the GATT cannot sustain an international

economic order based on free trade principles,

standards will be used, increasingly, as nontariff

trade barriers and also as part of national, or regional,

industrial policies. This is now happening both in

Europe and Japan.51

Standards as Industrial Policy

The Japanese were the frost to use standards as a

key component of industrial policy and the frost to be

chastised for using them as nontariff trade barriers.52

Because Japan had a small domestic market, and was

late in the process of industrialization, the Japanese

Standards System (JSS) originally focused on improving economic efficiency and gaining the benefits of technology transfer.53 Later, standards were

used to control product quality, and thereby promote

trade. More recently, Japanese standards have been

designed to address issues relating to “environmental safety, consumer protection, economy of

natural resources, and energy. ‘’54 The Japanese have

a rigorous procedure for testing and certifying these

standards, which has been a source of dispute

between the United States and Japan. Responding to

U.S. complaints that these certification procedures

were serving as nontariff trade barriers, the Japanese

agreed, in May 1983, to accept the results of testing

organizations located outside Japan.55

Standards also play a central role in the European

plans for unification and industrial development.

Although the creation of a single European market

is still incomplete, there has been considerable

progress made in this direction. Despite high tension, and a number of compromises, the recent

European summit at Maastricht makes clear that

Europe is on track towards creating a grand European Market.56 If successful, the Europeans have

much to gain. By most accounts, the removal of trade

barriers will lead to increased productivity and

growth due to heightened competition, the benefits

of increased economies, and increased investment.57

If European firms become more competitive, their

exports will also increase.

Europeans may also gain in the area of standards

development. With a market the size of the EEC,

Europeans will likely have much greater economic

and political leverage to promote their standards in

the international arena. This may be the case in the

future if the development of standards at the

international level fails to keep pace with the

European standardization process.

~ For a discussion of the early history and logic behind the establishment of the European Community, see Emile Benoiti Europe at~ties and~evens

(WestPort, CT: Greenwood Press, 1961). See also Ernst Haas The Uniting of Europe: Political, Social, and Economic Forces (Stanford, CA: Stanford

University Press, 1968).

51 See, for e=ple, ~on~Cme, The politics of Internatiomlsta@rds: France and the Color TV War (NOIW~, NJ: AbleX~bliS~g, 1979))

for a discussion of how the French used standards to protect their color TV mmket. Some also claim that European enthusiasm for Open System

Intercomection Standards (0S1) reflected their eagerness to prevent hrther consolidation of IBM’s control of network standards through SNA, its

proprietary network model. See for a discussion, Larry DeBoever,“Trek Toward Connection” Computerworld, Nov. 16, 1987, pp. S1-S13.

52 Dodd J. ~raw, ~~JapmeSe s~dmds: A B~er to Trade?’ H, ~dis Gabel (cd.) op, Cit,, footnote 31, pp. 29-4.6. AS the Zllltior points OU~ the

most notorious case was that of the Japanese standard for baseball bats, which prevented the United States from exporting baseball bats to Japan. The

problems was eventually resolved through the settlement court of the GATT

53 As ~flaw points OUt:

At the start of Japan’s industrialization process in the late 1800s, its industrial firms were small and inefficien~ and lacked a modem

technology base. To meet these problems, tbe Japanese government actively promoted industry rationalizatio~ simplification of

product variety, and interchangeability and compatibility between products. On the one hand, this strategy enabled Japanese firms

to achieve the efficiency of high volumes even though they were relatively small, and on the other, it facilitated the transfer of

technology from abroad since the same product or process could be used by all firms within an industry and by firms across industrial

sectors.

Ibid., p 31.

~Jap~ese S~&@j &soc~tio~ “~dus~~ Standardization System in Japq” JSA, TokYo, 1978> P. 1.

55 Ibid., p. 37. me Japanese first came under pressure tO elimiMte non-tariff trade barriers, including those relating to standards, during the Tbkyo

round of the GA~.

56A ~joras=mentwaswedecisiontocrateasingleE~ope~ B@ and a single European currency by the end of 1999. See for a discussion of

the issues, William Brozdi~ “National Destinies on the Line as EC Summi t Convenes,” The Washington Post, Dec. 8, 1991, A33; and “EC Nations

Reach Accord on Landmark Unity Pacts,’ The Washington Post, Dec. 11, 1991, pp. Al, A30.

57~e est~ates of tie ~gni~deof go~ differ, few question tit here~be ~ow~. See for discussions Rickd Biild~ “The &OWth

Effects of 1992, ” Economic Policy, October 1988, pp. 248-81; and Merton J. Peck “Industrial Organization and the Gain ftom Europe 1992,” in

Witliam C. Brainar d and George L. Perry (eds.), Brookings Papers on Economic Activity 2 (Washington DC: Brookings Institution 1989).
Chapter 4--Structural Changes in the Standards Setting Environment . 85

How the European standardization process develops will have a major impact on the U.S. economy,

because Europe as a whole constitutes the United

States’ largest trading partner.58 If American industries have access to the European market, they stand

to benefit from integration. In a growing, single

market, there will not only be gains in trade;

American firms will also have lower costs, since

they will be able to deal with a single set of standards

and a more unified administration.

On the other hand, if third-country access to the

European market is hindered, American firms will

suffer. This might happen, for example, if the

European Community were (as the Japanese did

previously) to adopt its own, independent testing/

certification procedures. To compete in the European market, U.S. companies might then have to

retool their products to meet European specifications, and/or undergo complex and costly certification and testing procedures. The new testing and

certification system, which was adopted as part of

the ‘‘new approach,’ could be especially problematic for American firms.59 In accordance with this

procedure, manufacturers can meet Community

standards requirements either by having their products tested in an independent laboratory--or ‘ ‘notified body’ ‘-or by self certification, which involves

testing their own products or having them tested by

an outside laboratory. The problem for American

companies is that, as of now, U.S. laboratories are

not accredited in the European Community, and

shipping products overseas for testing is costly and

often impractical. Final decisions about testing will

be made by the recently established European

Organization for Testing and Certification. (EOTC)

According to the Europeans, negotiations would be

greatly simplified if they could deal with a single

U.S. negotiating entity.

Europeans have sought to assure the United States

they have no plans to create a ‘‘Fortress Europe.”6

°

They point out that, under Community rules, the

European standards bodies-CEN, CENELEC, and

ETSI—are obliged to use international standards

when they are, or will soon be, available. Moreover,

under pressure from the United States, the European

standards bodies now allow U.S. interested parties to

review European standards before they are implemented. 61

The Europeans, however, have a schedule to

meet; they are unlikely to slow the process of

European harmonization for lack of international

standards. To reconcile their own interests with

those of countries outside the European Community,

they propose to reorganize international standards

bodies to hasten the development of international

standards. Moreover, they call on the United States

to make a greater commitment to the development

and implementation of international standards. They

point out that, whereas 85 percent of all CEN and

CENELEC standards are identical to international

standards, only 22 percent of U.S. national standards

are identical or technically equivalent.62

58 Themostirnpo~tcom~es in terms of U.S. trade are Germany, the United Kingdo~ France, and Italy, all of whom are among the top IOinvolume

of total trade with the United States. The bulk of U.S. foreign direct investment is also located in Europe. OTA op. cit., footnote 17.

59 John Burgess, “Competing in a Diverse Market: U.S. Firms Seek Unity on Product Standards in Europe,” Washington Post, pp. Al, A6; See also,

Karen A. Frenkel, “The Politics of Standards,” Communication of the ACh4, July 1990, pp. 4052; and Elizabeth Horwit~ “Finding Foreign Fingers

in Standards Pie,” Computer World, July 16, 1990, p. 56.

60 See IS() Memo to Executive Board Members, “EC Commission Reaffirms Support for International S~dards, ” June 3, 1991. AS Prof. He~ut

Reihle~ V. President 1S0, points ou~ “West Europe knows full well that it would only endanger its exports ifit hindered imports. . . it is not a question

of one region making the other dance to its tune. The fact is that a great need for international standards has arisen in one region. An eager new market

has been created so to speak.’

61 Karen Fitzgerald, “Global Standards, ZEEE Spectrum, June 1990, pp. 4446.

62 see EC ComtiqueSmdy Group Issue Paper on ~temtio~ s~dmdi~tion. J~. 6, 1992, provided iII response to the June 21, 1991 Jofit

Communique resulting from the U.S.-EC meeting between EC Commission Vice President Martin Bangemann and Secretary of Commerce Robert

Mosbacher.

As Professor Helmut Reihlen points out:

EC 1992, among other developments, including perhaps GATT’s planned Code of Good Practice for standardizing bodies, has

triggered a critical appraisal in the U.S. regarding its involvement in international standards work. The recognition is gaining ground

that the U.S. can no longer sit back in the assurance that American Standards are de facto international standards, because of their

extensive use. The response to this challenge can surely not be that the U.S. standard “. . needs legal protection. The track nxord

of the United States in the implementation of international standards has been open to criticism; initial figures from the United States

stated that fewer than 30 of the more than 38,700 privately developed standards in the United States today were ISO/IEC standards,

though results of the American National Standards Institute sample study have since indicated that 22 percent of ISO/IEC standards

are “identical or technically equivalent to U.S. standards. ”
86 ● Global Standards: Building Blocks for the Future

i

I

I

I

,

i

Concerned about assuring U.S. access to the

European standardization process, Secretary of Commerce Robert Mosbacher initiated discussions in

1991 with EC Commission Vice President Martin

Bangemann to work out some of the issues. On June

21st, the United States and EC governments and

their respective standards developers agreed that the

private sector should suggest ways to improve

international standards to meet industry needs. A

study group was formed to produce a joint report for

Secretary Mosbacher and EC Commission Vice

President Bangemann by the end of 1992.

Various private-sector standards groups have also

been carrying on dialogues with European standards

developers. The X3 committee, which is responsible

for many information technology standards, has

taken their concerns to the international standards

committee, the JTCI.63 ANSI has also been active,

coordinating semiannual meetings with CEN and

CENELEC, where their member organizations can

share information with their European counterparts

and discuss problems and issues.64

The Europeans and the United States differ in how

to improve the situation. The Europeans stress the

need for organizational reform to expedite the

international standards process. 65 In contrast, the

U.S. private-sector organizations call for more

transparency in standards development and greater

information exchange. And, whereas the Europeans

look for a solution at the international level, the

United States focuses more on a bilateral, U.S.-EEC

exchange.

The U.S. response reflects the belief of many in

the U.S. private sector that the United States is

adequately represented in the international standards

arena, and that its commitment to the international

system is sufficiently strong. 66 To illustrate this

point, they cite the number of leadership positions

held, and the percentage of standards developed, by

U.S. participants compared to France, the United

Kingdom, Germany, Sweden, the Netherlands, and

Japan (see figure 4-l). However, in the light of

European unification, country-by-country comparisons are not the best measure; more telling is a

comparison of the U.S. contribution to international

standards with that of the European Community as

a whole (see figures 4-2 and 4-3 ).

This private-sector view also ignores the point,

which the Europeans are quick to make, that

commitment to international standards is reflected

not only by participation in the process, but also by

a willingness to commit to the implementation of

international standards. The United States has a

problem in this regard insofar as the implementation

of standards in the United States is—and will likely

continue to be-voluntary.

Many in the private-sector also contend that the

international system works well as it now exists, and

does not require reorganization. They point to the

increased productivity of the International Organization for Standardization (ISO) and International

Electrotechnical Commission (IEC), and note that

both organizations have already undertaken a number of steps to shorten the standards development

process.

67 However, these criteria of success maybe

inappropriate. If the United States is concerned

about the preemption of EEC standards, then the

better measure for judging the effectiveness of

international standards bodies is not whether they

produce standards more rapidly, but whether these

standards organizations will have developed the

standards that the Europeans need by the time they

are required. To address this problem, Europeans

have raised the possibility of establishing a priority

for developing international standards.

Standards as Marketing Devices

International standards developments will not

only affect U.S. trade prospects in Europe, they will

also affect U.S. competitiveness in the global

market. Building on the relationships between standards and competitiveness, many industrialized nations use standards as marketing devices to sell their

products in Eastern Europe and to the developing

63 me Joint ~c~c~ Commiti= (~c~ iS ~ fiomtion tec~olog s~dards committee tit res~t~ from a merger between ~ 1S0 and an IEC

technical committee.

64 For ~ discussion of ~ese activities, s= Amel-ica Natio~ Stantids ~sti~te (~SI), u-s. v~z~nfa~ Sta~~diza~On System: Meeting the GZObUi

Challenge (New Yorlq NY: nd)

65 EwOpean draft response to Mosbacher/Bangemann Commtique.

66 ~s Pofit represents tit of sever~ mem~rs of ANSI. OTA interviews suggest that the private sector is not, however, completely ~ted on ~s

point. Some would even argue the opposite,

67 See, for exmple, ANSI’S comments on OTA draft.
Chapter 4--Structural Changes in the Standards Setting Environment . 87

Figure 4-1—lnternational Standards (ISO): Activity Level

10.9%

n 11 .0%

1 z.g~o

B17.1%

13%

19.4%

16.6Y01

I-14.6Y0 4% 5.9~o

2.8% 1.6%

France Us. U.K. Germany Netherlands Sweden Japan

Percent of ISO secretariats held (Tag Chairman’s and Subcommittee Chairman’s)

_ Percent of lSO standards developed

m Percent of draft international Standards (DIS) pages

SOURCE: American National Standards Institute (ANSI), 1990.

countries of the world. 68 Therefore, many of their

foreign aid programs focus on standards. 69 They

recognize that if they can influence the choice of

standards in the developing world, trade will likely

follow. This is because there are significant benefits

to being the ‘first’ to get a standard accepted. When

one standard starts to take hold, more and more

companies “jump on the bandwagon’ to adopt it.70

And once a standard is in place, trading relationships

can become locked in.

This kind of an arrangement is also advantageous

for developing countries. They welcome help in

setting up a national standards program, because

they too see standards as a mechanism for building

their economies. Standards will not only help them

create a national market, they also provide an

excellent and unobtrusive source of

transfer, and reduce the importation

products.

technology

of inferior

To stimulate trade, the EEC and Germany have

provided financial support totaling $16 million to

help establish an electronic component test laboratory in India. The laboratory also receives technical

support from the German Agency for Technical

Cooperation. In addition, specialist training in standardization is provided in Germany, the United

Kingdom, the Netherlands, and Ireland. The European Commission has, moreover, conducted a study

of the Association of South East Asian Nations

(ASEAN) standardization base, and provided a grant

of $6 million for an initial effort to implement its

recommendations. Closer to home, the European

6S For ~ &~m~ion of the ~nefits l)erceived to be derived ~m a wed ~ket, see pa~o c~c~, with ~c~el ca~t ~d Alexis Jacquerniq

The European Challenge: 1992: The Benejits of a Single Market (Aldersho~ UK: Wildwood House Press, 1988).

@As described in the EEC Commission communicatio~ Cooperation in Science and Technology with Third Countn’es (Jwe 1990):

Several developing countries have, by virtue of demographic and economic importance achieved a position which gives them

substantial international weight either in terms of international leadership or of potential markets. It consequently behooves the

Community, in the area of cooperation to reinforce their position and interests by contributing to integrating them more fully into

the various European policies in such areas as commercial relations or the definition of norms and standards.

To See, for a discussion of how the bandwagon effect impacts trade, Farrell and Saloner, Op. cit., fOO~Ote 31.

297-939 0 - 92 - 5 : QL3
88 . Global Standards: Building Blocks for the Future

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90 . Global Standards: Building Blocks for the Future

Commission has provided Mexico $1.5 million in

consultation and training in standardization, testing,

and quality system certification. Also, the European

Committee for Standardization (CEN), the German

Institute for Standards (DIN) and the Spanish

Standards Institute (AENOR) have each offered to

provide a resident standards expert in Mexico. An

AENOR senior staff person has completed a 4-week

study of Mexico’s standardization needs for the

European Community .71

The Japanese are pursuing similar programs. The

Japanese Five-Year Plan for Industrial Standards,

for example, calls attention to the role that such

technical cooperation can play.72 In pursuit of this

strategy, the Ministry of International Trade &

Industry has sent technical experts to five countries

to assist them in the development of their standards

programs.

73 In the Philippines, for example, the

Japan International Cooperation Agency sponsored

a 13-person team, conducted a 500-person-day study

of the Philippines national standardization system,

and provided a $23.1 million grant to establish three

regional labs.74 Each year, the Japanese Government

pays for 32 people from developing countries to

come to Japan for technical training in standardization at courses and seminars ranging in duration

from 4 weeks to 3 months.75

The United States has no equivalent programs.

Most U.S. foreign aid programs are dissociated from

trade issues. In the fall of 1989, a law was enacted

directing the U.S. Department of Commerce to

accept invitations from developing countries to

provide technical assistance in developing standards

programs except in the case of Saudi Arabia. 76

However, funding, which was to come from the

private sector, has not been adequate. As of the

spring of 1989, only $85,000 had been raised.

According to one source, German industry raised $5

million for a similar effort in the course of 20 days.77

Failure to compete in this arena could make it

difficult for the United States to fully benefit from

the global economy and the future growth in world

trade. The developing world will be a major world

market, a fact that the United States cannot afford to

ignore. Future trading opportunities are great. In the

area of telecommunications alone, for example,

estimates are that India will spend more than $40

billion over the next 10 years. Already the Association of South East Asian Nations is the United

States’ fourth largest trading partner.78

Rise of the Multinationals and Other

Translational Groups

Nation states are not the only forces in motion that

are recasting the world economic order. Multinational corporations play an increasingly important

role, acting, at times, in ways that may be contrary

to the interests of the nations of their origin. 7 9

Multinational corporations will be particularly influential in the area of international standards setting.

Because their organizational structures span the

world market, they can participate in a variety of

national and regional standards activities. Given

their size and independent status, the behavior and

the goals they pursue will not only affect the choice

of international standards; they will also influence

the course of national standards processes themselves.

71 Bob Toth, Toth Associates, personal communication.

TzAccor~g to the plan:

Standardization and quality control, which are closely related to each other, area technical infrastructure of industries. It is necessary

to propel technical cooperation in this field to correspond to requests from developing countries. From this viewpoint, efforts should

be dkected to securing human resources in this field. It should be noted that implementation phases of technical cooperation should

be designed to incorporate appropriate measures reflecting the developing stage of country cooperation.

As cited in Robert Tom “Promoting U.S. Competitiveness by Promoting U.S. Standards.” Unpublished paper, n.d.

73 John R. Hayes, “Who Sets Standards?” Forbes, Apr. 17, 1989, pp. 111-112.

74 Robert ToO Tot.h Associates, personal Wmmtication.

75 Japanese ~dustrial Standards Committee, JIS Yearbook 199].

TCD-Y ~en~ent to the NIST appropriation Bfll, 1989.

77 Hayes, op. cit., footnote 73”

78 Bob TO@ Toth Associates, personal communication.

79 AS Ro~rt Reich notes:

Today corporate decisions about production and location are driven by the dictates of global competitio~ not by mtional allegiance.

. . . Nor do trade flows behveenmtions accurately keep score of which companies are gaining the lead. For the past two decades, U.S.

businesses have maintained their shares of world markets even as America has lost its lead.

Robert B. Reic@ “Who is Them?” Harvard Business Review (March-April 1991, p. 77.
Chapter 4--Structural Changes in the Standards Setting Environment ● 91

The enhanced role of multinational corporations

results from their changed character. In the past,

most multinational corporations tried to exploit

comparative advantage by producing or selling in a

single country. In today’s global environment, they

seek a comparative advantage by integrating their

activities on a worldwide basis. 80 To compet e

globally, firms must allocate all their activities

among a number of countries to gain the optimum

advantage. 81 Thus, depending on the particular case,

it might be best for a firm to disperse its production

facilities-such as design modification, fabrication,

and assembly—to foreign countries, and to focus its

own domestic production on the fabrication of key

components .82 Or, alternatively, a firm might decide

to manufacture a product domestically, but transfer

abroad such downstream activities as distribution,

sales, marketing, and service. 83 Vertically integrating all of these activities, multinational corporations

generally take the form of large, international

oligopolies. 84

U.S. multinationals are already playing an independent role in European standards development.

Not wanting to be excluded from Europe 1992,

many U.S. multinationals have set up subsidiaries

within the European Community. As European

companies, they can be full members of European

standards organizations. Thus, IBM, for example,

now participates in European Telecommunications

Standards Institute (ETSI) through each of its six

European subsidiaries. Although IBM and other

U.S. multinationals located in Europe gain through

such participation, the United States economy as a

whole may not.

If U.S. companies-large and small-are to have

access to the European market, the United States

must provide greater support for international standards organizations. However, in the current situation, this support comes from the private sector

alone. If large multinational firms, who once provided the support for international standards development, now hedge their bets by participating in

regional standards organizations, there will likely be

fewer resources at the international level. Under

such circumstances small companies who cannot

afford to setup regional subsidiaries will be greatly

disadvantaged.

In some cases, the conflict may be more direct.

U.S. multinationals located abroad may pursue

policies in Europe contrary to those in the United

States. Such a situation is increasingly likely. Today,

global managers must make decisions on the basis of

profit margins, not nationality. Global companies

can afford to be footloose. For example, warning the

State of Nebraska when faced with the possibility of

anew tax code, Charles Harper, head of ConAgra, a

giant food-processing and commodity trading company, recently pointed out:

The bonds of loyalty could slip over the weekend.

Some Friday night, we turn out the lights-click,

click, click—back up the trucks and be gone by

Monday morning.85

Examples of such conflicts already exist in the

case of standards. In spring 1991, for example, ETSI

issued a draft policy involving patented standards.

This policy would have required patent holders to

license the standard only to EC producers or to

producers in countries that adopt the EC standards.

Such a policy would not only have prevented U.S.

firms from using the patent on an equal basis; it

would also be a strong inducement for other

countries to adopt EC standards. American companies as well as ANSI opposed such policies. When

asked about the EEC’S intentions, commission staff

point out that the most ardent supporter of this policy

within the commission is none other than the British

subsidiary of Motorola. 86 Such incidents not only

hurt U.S. industry; they also confuse Europeans,

~POfieF, op. cit., footnote 12, P. 19.

81 Ibid., p. 23.

82 Ibid., p. 45.

S3 As Michel Porter has said:

In global competitio~ a country must be viewed as a platform and not as a place where all of a firm’s activities are performed.

Ibid.

84 As Gilpfi ~ Pofited out, the key factors a~o~~g for the expansion and success of this vefi~ fo~ of m~ti.oatiorlal entel@Se me SklhI tO

those that led to the domination of the Nation’s economy by large oligopolistic corporations. Gilp@ op. cit., footnote. 9, p. 241.

S5 As cited in Robefi Reic& “who is Them?” op. cit., footnote 79, p. 78.

86~temiew, EC Cotissions~+ ~ position is understandable from Motorola’s point of view. me E~c)pe.au Community requires that all

Community procurements be based on European standards. Motorola hopes to capture the European market for cellular digital radio. If its standard is

adopted, its competition will be excluded in a situation where the winner takes all.
92 . Global Standards: Building Blocks for the Future

,

,

I

making them question whether the United States has

a hidden agenda.87

The policies pursued by multinationals abroad

may also have an impact on the United States

policymaking process. Many in the environmental

community fear, for example, that the Uruguay

Round of the GATT allows large corporations to

make key environmental decisions, not on the basis

of environmental criteria, but rather according to

criteria such as economic growth, profit maximization, and deregulation.88 Some even believe that

multinationals have a conspiratorial bent, insofar as

they avoid dissident groups by circumventing the

traditional policymaking process and working

through the Office of the U.S. Trade Representative.

For this reason, these groups have begun to redefine

themselves as translational organizations. They

now encourage their members to bypass domestic

decisionmakers, going directly to international standards organizations. If transnational environmental

and consumer groups join multinationals to set

policy internationally, the U.S. Government will

have a diminished voice.

Multinational corporations may also generate

greater tensions within domestic standards development bodies, especially ANSI. ANSI has always had

a difficult time balancing the multiple interests that

constitute its membership. Juggling these interests

will likely be even more difficult in the future, when

some companies are confined to working through

ANSI and others have the advantage of working

through regional and other national standards making bodies. Reportedly, a number of large companies

have left ANSI within the past few years, and ANSI

has had to be especially diligent to prevent the

departure of others.89

Trend Towards and Informationbased, Knowledge Society

The United States and other advanced industrial

countries are rapidly evolving into informationbased, knowledge societies, where the creation, use,

and communication of information plays a central

role. In the economy, information now serves as a

primary resource, an important factor of production.

It is becoming, moreover, a prerequisite to the

development and allocation of other resources. As

such, it is treated less and less as a free good, and

more and more as a commodity to be bought and

sold in the marketplace. And, as the economic value

of information increases, so too will the economic

rewards of those who have the greatest access to it.

This trend will greatly affect standards developments. Standards embody information, and like any

other information commodity, their future availability and use will depend increasingly on market

forces.

This trend towards an information-based economy results in part from the development and

widespread deployment of information and communication technologies. The emergence of these

technologies has increased the speed at which

information can be communicated; increased the

quality of information that can be collected, stored,

manipulated, and transmitted; increased access to

information; and enhanced our ability to use information to account for past actions and to predict

future events.

These technologies provide numerous ways of

improving efficiency, increasing productivity, and

thus engendering growth. Information is, for example, reusable and, unlike capital resources such as

steel and iron, it requires very few physical resources

for its production and distribution.% Moreover,

information can now be used not only to substitute

I

87 p~cdmly ~Ofi@ to the EwO~~~~ is the fact tit USTR ~s s~m~ to support Motom~ in MS position. Some explain thiS, Saying tht lE311y

of Motorola’s executives were once employed by the USTR. Ibid.

88 Interviews Patricia Ba-Bauman Foundation Fran Weber, Audubon Society, and Mare Ritchie, Institute for Agricuhure and Trade Policy. See

for one discussio~ Steven Shrybmq International Trade and thel?nvirontnent (Toronto, ontario: Canadian Environmental Law Association october

1989) .ForaEuropeanPerspective, see Gatt,Agriculture, andEnvironment: Towards a Positive Approach, report of a conference organized by the Center

for Agriculture and Enviromnen4 held in the Netherlands, on Sept. 14-15, 1990.

89 ANSI memo to bored of dhectOrS.

~ See Harlan Cleveland, “The ‘IWilight of Hierarchy: Speculations on the Global Information Society,” Bruce R. Guile (cd.) Znjormation

Technologies and Social Transformation (Washington DC: National Academy Press, 1985), p. 56.
Chapter 4--Structural Changes in the Standards Setting Environment ● 93

more efficiently for labor; it can also be used to

improve the overall efficiency of the productive

process itself. As productive processes become

increasingly complex, the largest reserve of economic opportunities will be in organizing and

coordinating productive activity through the process

of information handling.91

This growing importance of information to the

economy is evident from the continued growth of the

information sector of the economy, a trend that has

been paralleled in other advanced industrialized

societies. In fact, it was to highlight such changes

that terms such as the “information society’ and the

“information age’ were first employed.92 The most

recent analysis estimates that the information sector

constitutes 34 percent of GNP, and accounts for

about 41.23 percent of the national labor force.93

The changing economic role of information can

also be seen by examining how information technologies are being used by business and industry.

Businesses are now applying computer technology

to almost all of their activities: from recruiting to

laying off workers, from ordering raw materials to

manufacturing products, from analyzing markets to

performing strategic planning, and from inventing

new technologies to designing applications for their

use. These technologies, moreover, are being applied not just to traditional tasks; the diffusion of

new technologies is also being used to reconfigure

the nature of the business process itself.94

Because of its new economic and managerial

importance, information is becoming much more

commercially valuable. Businesses have always

been willing to pay for information such as market

research and economic forecasts. Today, however,

they are not only buying more; they are willing to

pay much higher prices for it. For example, American business firms might pay $800 per year for a

monthly professional information service, or perhaps $15,000 for a market research report shared by

others in the industry.95

The new technologies provide new ways and

opportunities to meet these burgeoning information

needs. They allow information to be processed in a

variety of new ways, adding value to it from the

point at which it is created or composed to the point

at which it is assimilated or used. As the opportunities for creating new information products and

services have increased, so too has the number of

commercial providers. Taking advantage of the

increased demand for information, the new technologies have spawned a rapidly growing industry. This

industry is relatively young, having developed hand

in hand with the new technologies. More than half of

the companies that comprise it were formed since

1970. Nevertheless, it is one of the fastest growing

industries in the economy.96

Given its increased value, information will most

likely be exchanged less freely. This shift will create

tensions and problems in a society such as ours

where information serves critical social and political

purposes as well as economic ones. Consideration

must be given, and perhaps new decisions made,

91 Ckles Johnshur, “Information Resources and Economic Productivity,” Information Economics andpolicy 1 (North Holland: Elsevier Science

Publishers, 1983), pp. 13-35.

92 Fritz ~chlupwas one of the first to note these changes; and to measure the information SXtorinhk pioneering VfOr~ nowa classic, The Production

and Distribution of Knowledge in the United States, others have followed this tradition, By far, one of the most ambitious efforts to date has been the

innovative work of Marc Uri Porat for the offIce of TelNommticatiom in the Department of commerce. In 1967, according to Porat, information

activities accounted for 45.2 percent of the GNP 25.1 percent in the “primary information” sector (which produces information goods and services as

final output) and 21.1 percent in a “secondary information” sector (the bureaucracies of non-information enterprises).

93 ~c~el Roger Ru~n ad M~ Tay~or Huber, The Knowledge JndustV in the United States: ~960.~9~~+ This volwe up(hites work done by Fritz

Machlup. Intheirbreakdownof the information sector of the economy, Rubin and Hubernote that leaving education aside, the contribution of knowledge

production to GNP increased from 17.9 percent in 1967 to 24.5 percent in 1980. The contribution of educatio~ on the other hand, fell from 16.6 percent

to 12.0 percent during the same period, a decline that accounts for the fact that knowledge production’s overall contribution remained relatively stable

at about one-third of GNP.

94 See Eric K, Claom ad WT. Wmen McF~@ “Telecom: Hook Up or ~se @~” Hamard B~sine~s Review, J~y-AuWst 1986, pp. 91-97; See

alSO Peter G.W. Kee~ Competing in Time: Using Telecommunicationsfor Competitive Advantage (Cambridge, MA: Ballinger Publishing CO., 1986);

Donald A. Marchand and Forest W. Horton, Jr., lnfotrends: Profiting From Your Information Resources (New York NY: John Wiley and Sons, 1986);

andJames J. Cash, Jr., F. Warren McFarl~ and James L. McKenney, Corporate Information Systems Management: The Issues Facing SeniorExecutives

(1-Iomewood, IL: Irwin, 1988).

95 Ctistopher B-,~c. The Economics of ]nforwtion, con&Wt repofi prep~ed for the OffIce of T&hnology” Assessmen~ U.S. Congress, 1985.

% Ibid.
94 ● Global Standards: Building Blocks for the Future

about intellectual property rights and the rules

governing information dissemination, 97

These tensions are also becoming increasingly

apparent in the standards world. Standards share

many characteristics of information, and standards

developers are similar to publishers in a number of

ways. Many are dependent on information sales for

their existence. And, like the new breed of information providers, they have much to gain in an

information-based economy, where the value of

their product is greatly enhanced. Like information

providers, moreover, they can use information and

communication technologies to distribute and add

value to their products. These opportunities, however, also create conflicts, since standards are

developed both voluntarily and by committees.

Equally, if not more, important, standards are public

goods, whose purpose is to be shared.

The case of “Project Bruno” illustrates this

conflict. Pressed to speed up the delivery of standards, the International Telecommunications Union

(ITU) began a program to put standards “online.”

ITU staff estimated that the project would take 8

years. In October 1991, the ITU commissioned an

experiment, asking a group of volunteers, led by Carl

Malamud, to put International Telephone and Telegraph Consultative Committee (CCITT) and International Radio Consultative Committee (CCIR)

standards (including the 19,000 page Blue Book) on

the Internet-a world-wide communication network \

I

comprised of over three million users (see box 4-A).

The experiment was open ended in terms of time.

Within a few weeks, these standards were listed on

22 computer servers around the world, where they

could be accessed by Internet users. The project was

extraordinarily successful, so much so, in fact, that

after 90 days Pekka Tarjanne, Secretary General of

the ITU, abruptly called it to a halt.98 Tarjanne

explained the termination of the project saying, ‘We

know what can and cannot be done. ” Reportedly,

however, “politics,” financial concerns, and concerns about intellectual property rights played a

major part in the ITU’S decision.99

Competition among standards organizations to

sell of standards will also be more intense. Domestic

standards bodies will be competing, not only with

one another for an increasingly lucrative market;

they will also be facing standards developers from

other countries who, taking advantage of communications and information technologies, will be able to

compete on a global scale. Although increased

competition may, in some cases, help to lower the

costs of standards, it will also create problems.

Standards tend to be underfunded, since they are

quasipublic goods. If competition is too intense, the

limited resources available for developing standards

will be spread too thin. Competition will also be

detrimental, if standards bodies become so preoccupied with sales that they fail to meet the needs of

their clients and the Nation.

97 F~~ ~gener~ di~cu~~ionof these i~~ue~ ~ee, U,S, Congess, Offlce of ~c~oloWAssessmen$ Intel/ec~lProper~R ights in an Age ofElectronics

and~nformution OTA-CIT-302 (Washington DC: U.S. Government Printing Office, April 1986).

98 personal communication CarlMalamudand correspondence behveen Carl Malmud and Secretary General Tarjanne. See also, Carl Malamud, “Are

Secrets Standards? Even ANSI Secrets,” CommunicationsWeek, Oct. 7, 1991 and Sharon Fisher, “ITU Standards Program to End,”

CommunicationsWeek, Dec. 23.1991, pp 3,39.

~ As interpreted by Makmud: I

The reason for this abrupt reversal in policy is a lesson in bureaucratic politics. Tarjanne wanted to make the ITU more relevant

to the world, and what better way than making its work available to an intemetwork of 4 million people, growing at 15 percent to

20 percent per month? The bureaucracy fought this move every step of the way. They felt threatened., If we gave away the standards,

there would be fewer jobs at the ITU. There would be less control over distribution and more pressure to start responding to the realities

1 of engineering in the rest of the world.

Carl Malamud, “ITU Decision llrns Back the Clock. CommunicationsWeek, Dec. 23, 1991, pp. 3,39.
Chapter 4--Structural Changes in the Standards Setting Environment ● 95

Box 4-A—ITU Standards Available Via Global Network

Thanks to a major state-of-the-art project undertaken by the Digital Resources

Colorado, thousands of CCITT and CCIR standards are now being provided

network-of-networks known as the Internet.

How To Get the Standards

. Direct Internet access. Anonymous FTP via the Internet to:

(bruno.cs.colorado.edu);IP address is (128.138.243.151)

● E-Mail message. Send an E-Mail message to:

(infosrv@bruno.cs.colorado.edu)

Follow the instructions in the attached annex for either FPT or E-Mail access

Institute at the University of

through the worldwide open

Notes

1.

2.

3.

4.

You can also send mail to (infoserve@bruno.cs.colorado.edu) and put the word HELP in the body of the

message. You will get back instructions.

There is no charge for this experimental service.

Additional servers will be operational at several other locations throughout the world over the coming

months. The standards of other organizations are expected to be available on servers. Advanced search

routines are being developed.

Questions may be directed to Carl Malamud at the University of Colorado (carl@malamud.com) or Tony

Rutkowski at the ITU (amr@cernvax.cern.ch), tel: +41 227305207. E-Mail is preferred

Who Is Bruno?

The server being used at the Digital Resource Institute at the University of Colorado is named after Giordano Bruno.

Giordano Bruno (1548-1600) was a member of the Dominican order. The Dominicans had kept alive the Greek secrets of memory, first perfected by the poet Simonides of Ceos (c.556-468? B.C.). Before the printing press, mnemonic methods for remembering verse or other forms of knowledge were the only ways to pass that information

on.

Bruno, after mastering the Dominican secrets, revealed them to the rest of the world in his classic, Shaddow of Ideas

(1582). A noted advocate of free thought, Bruno was accused by the Inquisition in 1592 of various acts of heresy,

including making bad jokes about God. He was convicted and burned at the stake in 1600.

SOURCE: Friends of Bruno Newsletter, No. l-B, Oct. 21, 1991, via e-mail.
Appendixes
Appendix A

A Framework for Assessing Standardization Issues

To approach the discussion of standards objectively,

one must begin with a sound conceptual idea of what

constitutes a standard and how standards come about.

This kind of analytic framework provides an objective

basis for interpreting stakeholder viewpoints and adds

rigor to the analysis. By identifying the key relationships

in the standards setting process, it suggests the questions

and issues that must be examined.

What Is Meant by Standards

An analytic framework must begin with definitions,

since definitions determine the scope of analysis. Moreover, the choice of definitions can have significant policy

implications. How the term ‘‘standards’ is used in this

study, for example, will determine the terms of the debate

and the range of government options developed for

dealing with problems in the standards setting process.l

The role for government may differ, for example,

depending on whether one’s reference is product standards or safety and environmental standards.

Broad definitions used in everyday speech are generally not helpful. They are too vague to guide analysis.

Precision is sacrificed for the sake of comprehensiveness.

This is clearly the case for standards definitions. They

tend to be exceedingly broad, in order to cover the full

range of standards found throughout society. Included

among the definitions of standards in Webster’s Dictionary are:

2

“something established by authority, custom, or

general consent as a model or example,” and

“something set up and established by authority

as a rule for the measure of quantity, weight, extent,

value, or quality. ”

Although these definitions provide an overall notion

of what constitutes a standard, they do not help focus the

analysis. For this reason, researchers operationalize their

definitions in accordance with the specific questions to be

asked and problems to be solved. Economists, for

example, generally seek to know how and under what

circumstances standards are set in the marketplace.

Accordingly, they tend to view standards as an agreed

upon set of specifications that define a particular product

or that allow products to interoperate. Anthropologists, on

the other hand, focus on the question of how individuals

relate to their cultures. Thus, they consider standards to be

the accepted rules of behavior that facilitate social

interactions and that help individuals find their places in

the world. Government bureaucrats are likely to view

standards as the means to address a societal concern or to

achieve a social end. They often equate standards with

regulations.

This study asks how U.S. standards and standards

development processes might affect U.S. trade. Thus, it

needs to consider all standards and standards processes

that influence national economic performance. For this

purpose, three different kinds of standards are relevant.

These include product standards, control standards, and

process standards.

Types of Standard

Product Standards—Product standards embody information. By specifying the characteristics of a product,

they allow for product identification, interoperability, and

quality control. Product standards can have a number of

economic effects, both negative as well as positive. For

example, by reducing consumer search costs, product

standards will likely promote trade. On the other hand,

when standards serve to limit product offerings, they may

have the reverse effect. Product standards will also have

an impact on innovation rates. If adopted prematurely,

standards may inhibit technology improvements. But,

when they allow for the development of competing,

complementary products, standards can serve to encourage innovation.3 When applied to the internal production

process, standards can help increase efficiency and assure

quality, thereby improving the overall competitiveness of

a firm or industry. Whether or not standards effects will

be beneficial or not in any given instance will depend on

factors such as market structure 4 and the pace of

technology change.

1 As Ross E. Cheit notes in quoting Charles Lindblom and David Cohen:

. . .we do not discover a problem ‘out there,’ we make a choice about how we want to formulate a problem. That choice reflects

certain values and in turn constrains the realm of possible solutions.

Ross E. Chei4 Setting Sa-ety Standards: Regulation in the Public and Private Sectors (Berkeley, CA: University of California Press, 1990), p. 150.

z Webster’s New Collegiate Dictionary (Spri.ngtleld, MA: G&C Merriam Co., 1977), p. 1133.

3 S= pad A. David, c ‘Some New Stan@ds for the ~onomics of Standardi=tion iII the ~ormation Age,”P* Dxgupta and P.L. StOn~

(eds.), The Economic Theory of Technology Policy (Imndon: Cambridge University Press, 1987), ch. 8; and Paul David and Julie Ann Bunn, Information

Economics and Policy, vol. 3., f~ 1988, pp. 165-202.

4 For diswssiom of tie ~p=t of market s~c~e on standards see, -inSirbu and Steven Stew@ ‘‘Market Smcture and the fiergence Of

Standards’ (mimeo), Carnegie Mellon University, October 1986; and also Timothy Bresnahan and Amit Chopra, “Users Role in Standard Setting: The

Imcal Area Network Industry,“ in Economics of Innovation and New Technology, vol. 1, No. 1~, 1990.

-99–
100 ● Global Standards: Building Blocks for the Future

Control Standards-Control standards are designed to

address a societal hazard or problem. They generally

define a range of acceptability with respect to the design,

performance, and/or use of a product. Often taking the

form of regulations, they range from such things as

building codes to fuel economy standards.

Control standards have a number of economic impacts,

and hence a potential to influence trade. They affect the

supply and demand of a product, through their impacts on

costs of production, price, and consumer perceptions.

Fuel economy standards and airbag requirements, for

example, not only increase the cost of automobile

production, and the price consumers have to pay for cars;

they may also create new marketing opportunities and

new bases for competition that the market had overlooked. 5

These impacts are global in their effects. Where U.S.

standards are more stringent than those in other countriesas in the case of U.S. standards regulating tuna harvesting

to protect dolphins-they may be perceived as nontariff

trade barriers.6 On the other hand, where-as in the case

of fuel economy standards-foreign manufacturers are

better prepared than their U.S. counterparts to meet U.S.

requirements, standards can serve to make U.S. firms

more vulnerable to foreign competition.7

Process Standards—process standards facilitate and

support socioeconomic transactions and interactions.

They define roles and relationships, establish the rules for

interpreting behavior, and specify the way in which a

particular procedure or process is executed. Process

standards are inherent in all social interactions. Interpersonal relations cannot occur without some degree of

mutual expectation. Language, itself, is based on a

common understanding, as are simple gestures.8 Shared

expectations give coherence and meaning to social life.

They are necessary for cooperation. When reenacted and

reinforced over time, such normative expectations give

rise to “standards” of behavior.9

Process standards also serve to govern economic

interactions. In preindustrial societies, for example, economic interactions were often regulated by family relationships and codes of human behavior.10 Bureaucracy

provided a parallel function in more complex social

organizations.

11 And the assembly line process was

critical to the mass production of standardized products. 12 Moreover, when with the development of the

railroad and other forms of modern transportation trade

was extended over vast regions, procedures for exchange

5 It is interesfig to note, for exmple, that the United States is now a net exporter of airbags to Japan. Clarence Ditlow, Center for Auto Stiety,

personal communication.

I

r c See, for one discussio~ Keith Bradsher, “U.S. Ban on Mexico llma is Overruled,” The New York Tinws, Aug. 21, 1991, pp. D1 ~d D3.

i

7s= for one discussion Rob A~onad ~s G~er, “Re@tion as ~dus~~ Policy: A Case of tie U.S. Auto Industry,’ Economic Development

Quarterly, vol. 1,1977, pp. 358-373.

b

I 8 ~~g Go- Fra~Analysis (New Yorlq NY:~er ~d ROW, 1974).

I 9 Norms “ . . designate any standard or rule that states what human being should or should not t.binlG say, or do under a given set of circumstances.’

I

Judith Blake and Kingsley Davis, “Norms, Wlues, and Sanctions,” Robert E.L. Faris (cd.), Handbook of Modern Sociology (Chicago, IL: Rand

I McNally, 1964), p. 456. They guide the behavior of individuals belonging to a group. People conform to norms not only for fear of punishment, but also

I because norms are internalized, so people believe they correcfly defiie the right thing to do. John And Erma Perry, The Social Web: An Introduction

to Sociology (New Yorlq NY: Harper and Row, Publishers, 1979), p. 95.

lo For a discussion of the re~tiomhip ~~een soci~ ad economic ~teractions in preindus~ times, see Neil J. Smelser, Social Change in the

Industrial Revolution: An Application of Theory to the Lancashire Cotton Industry 1770-1840 (London: Routledge and Kegan Paul, 1970).

11 AS J~es Beniger notes,

One example from within bureaucracy is the development of standardized forms. This might at first seem a contradictio~ in that

the proliferation of paperwork is usually associated with a growth in information to be processed not with its reduction. Imagine how

much more processing would be required, however, if each new case were recorded in an unstructured way, including every nuance

and in full detail, rather than by checking boxes, filling blanks, or in some other way reducing the burdens of the bureaucratic system

to only the limited range of formal, objective, and impersonal information required by standardized forms.

James R. Beniger, The Control Revolution: Technology and the Economic &igins of the Information Society (Cambridge MA: Harvard University

Press, 1986), pp. 15-16.

12 AS describ~ by Radford,

. . . a uniform product is most economically obtained by making all the contributory processes equally uniform, as nearly as may

be with consistency to the requirements of manufacturing economy. Weaving a piece of cloth on the loom is a continuous process

of assembling various standardized elements or like parts. It can hardly be called interchangeable worlq because there is no possibility

of interchanging parts after the goods are completed. Yet the general principle of standardization of process holds. It is advantageous

commercially and technically to hold the process to uniform standards within speciiled limits or allowed variations.

G.S. Radford, The Control of Quality in A4anufacturing (New York: NY: The Ronald Press Co., 1922), p. 275.
Appendix AA Framework for Assessing Standardization Issues ● 101

also came to be standardized-as in the case of bills of

lading. 13

As we move into an information-based, networked

economy, economic interactions will likely be governed

by standardized electronic procedures, such as electronic

data interexchange (EDI). EDI standards not only

establish communication protocols for business interactions, they also determine the role relationships between suppliers, manufacturers, and consumers (see box

A-l).

Standardization Processes

Just as there are three different kinds of standards, so

there are also three different methods of achieving these

standards. Standards can be set in the marketplace on a de

facto basis; they can be developed within the organizational framework of a standards setting body, and they

can be established through administrative or regulatory

processes.

The De Facto Standards Setting Process—De facto

standards are set in the marketplace, through the process

of exchange.

14 They evolve from the bottom up, in

accordance with the forces and mechanisms that drive the

market.15 How well the standards process works depends

largely on the functioning of the market.

When the market operates effectively, appropriate

standards will emerge at the right time through the process

of supply and demand.l6 Producers will agree on the

“best” standard for a product in the face of competition

from other suppliers and the demand of users. Producers

may press for the adoption of their own standards. Or they

may select strategically from among other competing

standards, evaluating each in terms of its potential impact

on costs of production, profitability, and market share.

Users will demand standards that reduce purchasing

prices, improve utility, and are easily integrated with

other products and systems.

The market is said to fail when appropriate standards—

measured in terms of efficiency-do not emerge in a

timely fashion. Economists point out that market failures

can occur for several reasons, some of which are directly

related to the nature of standards themselves. Standards,

for example, exhibit some of the characteristics that

economists call ‘public goods. 17 Public goods are those

goods whose benefits are available to everyone and from

which no one can be excluded. Thus, no one can fully

13 As noted by Kiddand:

A national railroad system required business innovations facilitating joint and through operations. Passengers must make

connections with tolerable certainty and ease; the freight cars of a corporation must not come to a stop at some corporate terminus

where an agency would have to unpack their cargo and transfer it to the cars of another carrier, like as not just across the street. Almost

unchronicled and undated, the railroads introduced through bills of lading, and though shippers still carped at their limitations, these

bills became the accepted method of freighting in the seventies;

Edward C. Kirkland, Industry Comes of Age: Business, Labor, and Public Policy (New York NY: Holg Rinehard, and Winsto@ 1961), p. 49.

As Karl Polany notes, in preindustrial societies trading mlationships were governed by standards relating to magic, etiquette, and norms of reciprocity.

See Karl Polany, The Great Tran~ormation: The Political and Econom”c Origins of Our Time (Bostoq MA: Beacon Press, 1957 cd.), p. 57.

14 Exc~ges are reciproc~ transfers of valued things between two or more autonomous units within a system. Societies have developed major

institutional mechanisms to facilitate exchange transactions. The generic institution is, of course, the marke~ but there area variety of other political

and social institutions that carry out parallel functions. Underlying all exchange concepts of social behavior is the concept of goal or outcome- some

configuration of system elements that is valued and sought. See for discussio~ G.C. Homans, Social Behavior: Its Elementary Forms (New York NY:

Harcourt Brace and World, 1961); P. Blau, Exchange and Power in Social Lije (New Yor~ NY: John Wiley and Sons, 1964); and W. Ouchi, “Markets,

Bureaucracies, and ClanS,” Administrative Science Quarterly, vol. 25, 1980, pp. 129-42.

15 As Garth Saloner describes:

~icdly, de facto standards emerge as more and more agents adopt a focal alternative. The bandwagon process builds on its own

momentum as the set of adopters of the standard grows making it even more attractive for others. Eventually the standard is so widely

adopted that it is self enforcing. The benefits of going with the crowd become irresistible.

Garth Saloner, “Economic Issues in Computer Interface Standards,” Economic Innovation & New Technology, vol. 1, No. 1/2, 1990, p. 147.

16 h a well fictioning marke~ economic relations are govem~ by self interesL so it is self interest that drives outcomes. Accordingly, producers

seek higher profits; workers better wages and improved quality of work life; investors higher returns on their investments; and consumem higher quality

products at lower prices. The market is considered to work well when it maximizes the goals of efficiency and economic growth. This situation is most

likely to occur when each individual and each group in the system carry out rationally conceived, specified roles that, taken together, are designed to

maximize production. The goal of efficiency is achieved by economizing; decisions are made on the bases of cost/benefit analyses, and technology is

applied to substitute more efficient processes for less efficient ones. The market will work most effectively when it replicates a state of perfect competition

in which each producer selects the combination of factors of production that will maximize profits and each consumer seeks to maximize preferences.

See, for discussions of the assumptions and values that underlie the marketplace, Duncan MacRae, The Social Function of Social Science (New Haveu

CT: Yale University Press, 1976), especially chs. 5 & 6. See also Robert Heilbroner, The Nature and Logic of Capitalism (New York, NY: W.W. Norton

and Co., 1985).

17 me public gmds ~1 not ~ produc~ privately. mere me o~y a few pm public goods, one ex~ple ~bg rMtioti defense. other goods, like

education and standards, are impure public goods. These combine aspects of both public and private goods. Although they serve a private function, there

are also public benefits associated with them. Impure public goods may be produced and distributed privately in the market or collectively through

government. How they are produced is a societal choice of significant consequence. If decisions about impure public goods are made in the market, on

the basis of personal preferences alone, then the public benefits associated with them may not be efilciently produced or equitably distributed. See Edwin

Mansfield, Macroeconomics Theory and Application (New York NY: W.W. Norton, 1970)
102 . Global Standards: Building Blocks for the Future

Box A-l—Electronic Data Interexchange

Electronic data interexchange (EDI) is a notable example of how information and communication technologies

are emerging as important strategic tools for efficient and effective business operations. EDI is essentially the

modern, computer-based method by which companies order, invoice, and bill their products and services. Such

common transaction functions as invoices, shipping notices, and bills, which traditionally have entailed the transfer

and processing of paper documents, are replaced by electronic transfers between the businesses’ computers.

Electronic data interexchange improves the efficiency and effectiveness of operations by empowering

businesses to purchase supplies and to produce and distribute products precisely when and where they are needed.

The company’s computer system, for example, will initiate a purchase order and execute the purchasing transaction

when an item is requested and removed from the inventory. The price, terms, and conditions of the contract are all

stored in the computer. In addition to the considerable savings gained as inventory costs are reduced, EDI also

minimizes human clerical error and the considerable processing costs involved with paper transactions. By reducing

or eliminating the prolonged and often error-plagued paper trail, large retailers and manufacturers are able to gain

a competitive advantage by streamlining transactions with their suppliers and buyers.

SOURCE: Office of Technology Assessment, 1992.

r

I l—l — rnl \l 1-

4QiL n

.:...,:.:.:.:.:.: .... ::::::::::::::::: .:::::::::::::::.

.——

Specifier

I

Standardized

purchase order

IZl.—

-.

~

Q

O*

m

m

=

. .

r, monitors inventory ‘Xper’’ystem ~;i’]~x Buyer I’h

and production, I I

m Ih\ —- CJ ––’ u ~.: ,

and automatically

reorders inventory r

—

1

Buyer ‘“ - (

- . . . Frocruct delivery

How electronic data interexchange internally and externally expedites business transactions.

SOURCE: Reprinted from Datamation, Mar. 15, 1988 Copywrite 1990 by Cahners/Ziff Publishing Associates, L.P.

appropriate the benefits. As a result, public goods are choices are to be made, all interested parties must have

underproduced. Standards often fall into this category.18 access to accurate and timely information.19 However,

information about standards. like standards themselves, is

Other market failures may also weaken standards a public good, and is therefore likely to be underproduced.

development processes. If the most efficient standards Even when standards-related information can be pack18 C. Kindelberger, “Standards as Public, Collective, and Private Goods,” Kylos, vol. 36, pp. 377-395; see also Sanford Berg, “Technical Standards

as Public Goods: Demand Incentives for Cooperative Behavior, ’ Public Finance Quarterly, 17, January 1989, pp. 35-53.

19 For a dismssion of -ketf~mes due to l~k of informatio~ see Joseph F~ell and Garth Sdoner, ‘‘Coordination Through Committees and

Markets, ’’RandJournal ofEconomics, vol. 19, summer 1988, pp. 235-252; and Joseph Farrell and Garth Saloner, “Standardization Compatibility, and

Innovation” Rand Journal of Economics, vol. 16, spring, 1985, pp. 70-83.
Appendix A-A Framework for Assessing Standardization Issues ● 103

aged for sale like other commodities, thus yielding an

adequate return, its price may limit distribution so that

people have insufficient information to make sound

decisions.

Some kinds of technologies are subject to greater

market failures than others. For example, networked

technologies—such as information and communication

technologies-often have large installed bases, making it

particularly costly for users to shift to a new, more

technologically advanced standard. Thus, they may fail to

adopt the socially optimal standard, due to what economists call ‘‘excess inertia.”20 At the same time, these

technologies also exhibit “increasing returns to adoption,” a situation that occurs when the benefits to the user

of a technology increase with the number of users. Under

these circumstances, the wrong standard might be chosen

due to “excess momentum. ” Not wanting to be left off

the network when a major adopter moves to a new

standard, users may rush too quickly to jump on the

bandwagon.

The Voluntary Consensus Process—Standards can

also be set through organizational processes that reduce

transaction costs and facilitate information exchange and

negotiation among key players.2l Such processes can

provide for better coordination than the market when

levels of uncertainty are high, when there are frequent

recurring exchange activities among the parties, and/or

when information exchange is complex.22 These three

conditions often occur in the area of standards development.

Just as markets function in a somewhat predictable

fashion, so too do organizations.

23 Moreover, organizations, like markets, facilitate exchange transactions.24

However, whereas marketplace participants act independently of one another, those involved in organizational

activities are joined together and cooperate to achieve

their respective goals.25 To understand organizational

behavior, therefore, one needs to look at organizational

goals and the norms and role relationships that are

designed to achieve them. The more formal the organization, the more defined these relationships are.26 But, even

in informal organizations, stable, consistent relationships

eventually develop as behavior, attitudes, values, and

criteria come to be associated with specific activities.

Organizations can survive only so long as they continue

to fulfill the needs and expectations of their members.27

In the United States, standards setting in voluntary

consensus bodies is nonhierarchical. As in the case of the

marketplace, decisions tend to rise from the bottom.

Because relationships are somewhat fluid, these standards

~ Joseph Farrell and Garth Saloner, ‘‘Horses, Penguins and hmmirws,’ H. Landis Gabel (cd.), Product Standardization and Competitive Strategy

(Amsterdam: North Holland, 1987), p. 11. As the authors note:

Excess inertia arises when not enough users are willing to go out on a limb by adopting the new technology. This is most likely

when network externalities are strong and there is a great deal of uncertainty about whether a lead would be followed.

21 AS noted by Srdoner:

. . .another major advantage of the committee system over de facto standard setting is that the committee is more likely to lead to

the adoption of a single standard whereas with de facto standardization rival “standards” can battle out in the market place,

diminishing the network externalities on both. Moreover, committees are able to workout technical compromises, performing a useful

function in the process. On the other hand, committees are often criticized for their slowness; consensus building takes time and

participants with a lot to lose after their preferred standard is not adopted may delay adoption of a rival standards.

Saloner, op. cit., footnote 15, 1990, p. 147.

22 olivmE. Wimaon, Mar~t~ a~Hierarchie~; A~lysis ~ndAnti~stJmplications (New York, ~:ne Fr~ press, 1975); See &lO, Robefi E.

Parks, “Economics and Standards: Sharing the Cost of Doing Business,” Optics and Photonics News, January 1992, p. 59.

23 AS defm~ by soci~ pSYChOl@m Daniel Katz and Robert L. ~:

All social systems consist of the patterned activities of a number of individuals. Moreover, these patterned activities are

complementary or interdependent with respect to some common output or outcome.

Daniel Katz and Robert L. IQ@ The Social Psychology of Organizations (New York: John Wiley& Sons Inc., 2nd cd., 1978), p. 21. See also Karl

E. WeicQ The Social Psychology of Organizing (New York NY: Random House, 1979).

24 See, for a d@ussion, L.B. Mohr, “The Concept of Orgtintioti Go~>” The American Political Science Review, vol. 67, 1973, pp. 470-81.

25 J7ach p~cipmt ~a god or cfiteM for judg~gmesuccessOr f~lme of each tr~action. However, loy~ty to ~orgtiation often supmmdes

personal goals. As Duncan MacRae has pointed out:

Exchange theory] cannot account for the devotion of a particular member of a group when self-interest might dictate that he leave,

remaining in it even as its prospects decline, out of loyalty to the organiz.atio~ his fellow workers and members, and its symbols.

Duncan MaeRae, op. cit. footnote 16, p. 225.

26 AS des~b~ by Blau and Scott, for example:

Formal organizations exist when the goals to be achieved, the rules the members are expected to follow, and the status structure

that defines the relationships between them (the organizational chart) have not spontaneously emerged in the course of social

interaction but have been consciously designed a priori to anticipate and guide interaction and activities.

P.M. Blau and W. R. Scott, Formal Organizations (San Francisco, CA: Chandler, 1962), p. 5.

27 AS noted by Katz and Kahn:

As humau inventions, social systems are imperfect. They can come apart at the seams ovemigh~ but they can also outlast by

centuries the biological organisms that originally created them. The cement that holds them together is essentially psychological rather

than biological. Social systems are anchored in the attitudes, perceptions, beliefs, motivations, habits, and expectations of human beings.

Op. cit., footnote 23, p. 37.
104 . Global Standards: Building Blocks for the Future

bodies depend on participants acting within the organizational norms that define the purpose of group participation

and interaction. Most American standard development

bodies are governed primarily by norms relating to due

process and voluntary consensus. When the gap between

individual behavior and these norms becomes too wide,

these standards bodies will lose their legitimacy and the

support not only of their members but also of the larger

society of which they are a part.

People participate in the voluntary standards development process for a number of reasons. They may, for

example, want to influence the development of standards, 28 or they simply may want to keep abreast of technological developments.29 However, participation is not

without costs. In voluntary organizations, members must

not only cover the administrative costs of the organization; they must also provide the personnel needed to

develop standards. These costs are considerable, so members expect a return for their investment. Continued participation requires observable--if not measurable--membership benefits. When benefits appear to be lacking, voluntary standards bodies will become ineffective and

eventually fail.30

The incentive to participate will likely vary in different

industries. In industries such as telecommunications, for

example, the incentive to participate in standards setting

will likely be high. If communication systems fail to work

together, there can be no services to sell. Support for

standards setting will also be greater in industries comprised of a few large companies. They are more likely to

see a return on their investments, since there are fewer to

share the benefits.31 This has been the case, for example,

in the automotive and petroleum industries. Industries

subject to government regulation are also likely to be

actively involved in standards setting, if only for preemptive reasons.32

Regulatory Standards Processes—Standards can also

result from political choices. Standards developed in the

political arena are often referred to as regulatory standards. In contrast to market standards, which are based on

exchange relationships, regulatory standards are based on

authority relationships.33 They are established by legitimate government authorities and mandated from the top

down.

Standards might be set in the political arena for a number of reasons. For example, if the market structure for

standards setting is uncompetitive, economic outcomes

will be inefficient. Some market decisions might fail to

incorporate or account for environmental, safety, and

other social externalities.34 In some cases, standards

decisions entail conflict of values and policy trade-offs.

Their resolution may require abroad-based consideration

of values. Timeliness may also be a factor. Decisions

based on authority can be very efficient, because, once

established, the marginal cost of exercising authority is

generally very l0W.

35

28 AS -~weiss has pointed OU~ businesses may support voluntary consensus processes if they believe they can eXertmOR tiuence in this ~na

than in the market place. See, for a discussion, Martin B. H. Weiss, Comparability Standards and Product Development Strategy, unpublished paper,

Telecommunications Prograq Department of Information science, University of Pittsbur~ Pittsburgh, Pennsylvania, Mar. 24, 1988; William Lehr,

“The Case of Two Data Transport Standards: IEEE’s 802.6 Man Versus the Ansi X3’S FDDI Interface,” presented to the 19th Annual

Telecommunications Policy Research Conference, Solomon Island, Maryland, September 30, 1991.

N With the shift towards anticipator standards, this is an increasingly important rationale. As noted by sirbu and Hughs:

As standards become more frequently developed in advance of well defined market demand, the process comes to resemble the

act of innovation in which firms struggle to develop new technologies to satisfy unclear needs. Firms frequently misapprehend either

the technology, the marke~ or both. The complexity of the issues being addressed mean that much of the effort in the development

of standards lies in the process of educating the participants to a common perception of the problems to be solved.

Marvin Sirbu and Kent Hughs, “Standardization of Local Area Networks,” Department of Engineering and Public Policy, Carnegie Mellon

University, (mimeo) April 1986.

qo Notingthatli~erese~chhas been done looking at such failures, Paul David suggests that:

future work should assess the costs born by private companies, and the incentives that appear to justify the resource expenditure

entailed in having personnel participating regularly in standards-writing groups. Moreover, the literature on coordination could be

linked better to the micro-institutional arrangements of the voluntary standards organizations.

Paul David, op. cit., footnote 3, pp. 28-29.

31 CJee for adiscussio~ MmcW 01=% The figic of Co//ectiveAction: pub/ic Goods and the Theo~ of Groups (Cmbridge, MA: Harvard University

Press, 1971).

32 For example, flamiability standards in the upholstered furniture industry were only developed by the industry trade association after a notice of

proposed rulemaking appeared in the Federal Register. See Harvard Business School, The Upholstered Furniture Flammability Issue (Bosto@ MA:

Intercollegiate Case Clearing House, 9-680-084, 1980). Ross E. Cheit, op. cit., footnote 1.

33 one cm say tit autho~~ ~l~omhips efist whene~~ “one, seve~ or many Wople explicifly or tacifly permit someone else to make decisions

for some category of behavior.’ Charles E. Lindblom, Politics and Markets: The World’s Political- Economic Systems (New York NY: Basic Books,

1977), pp. 17-18.

w see for ~ discussio% Ro~~ Kuttner, The Econo~”c Illusion: False Choices Between Prosperity and Social Justice (p~~elp~% pA: UniV~sitY

of Pennsylvania Press, 1984).

35 Charles Lindblom, Politics and h@kets, op. cit., footnote 33.
Appendix AA Framework for Assessing Standardization Issues ● 105

Relations based on authority, however, require legitimacy;

36 people must explicitly or tacitly allow decisions

to be made for them. In democratic societies, political

authority is based on the rule of law. Thus authority is

exercised through laws, rules, and regulations, setting

forth who can exercise control under the circumstances.37

In the United States, standards decisions must be made in

accordance with the Administrative Procedure Act, which

requires that the decisionmaking process be open to all

interests and prohibits ex parte proceedings. Executive

Orders also require government standards makers to base

their decisions on cost-benefit criteria.38 In addition,

Office of Management and Budget (OMB) Circular A-19

directs regulatory agencies to use private sector standards

whenever “feasible and consistent with the law. ”39

As in the market place, and the voluntary consensus

process, standards setting in the political arena can fail.

The process may breakdown if regulatory agencies are

ineffective and fail to achieve public interest goals. This

could occur, for example, if regulators are ‘captured’ by

special interest,40 or if complex bureaucratic processes

and procedures stifle the regulatory process. At a more

fundamental level, regulatory standards can lose legitimacy.

4l As happened in the late 1970s, the public may

challenge the government’s right to set regulatory standards in certain areas.42 Problems may also arise, if the

government is unable to agree on standard goals.

The Standards Universe

Taken together, these three kinds of standards and three

kinds of standards processes can be paired to form a

matrix that scopes the standards universe and the standards setting processes and problems to be analyzed in this

study (see figure A-l). It illustrates that all three kinds of

standards can be established in any one of the three

standards processes. The particular process by which

standards are established is often the result of historical

circumstances and/or political and cultural choice. Thus,

this matrix can be used to highlight temporal and cross

national comparisons.

36 The notion of le~tiyas a b~is for authori~ WaS developed by hla.x Weber. See for a discussion Max WeberEconomy and Society:An Outline

oflnterpretive Sociology (cd.), by Guenther Roth and Claus Wittich (New York, NY: Bedminster Press, 1968, especially ch. 10, “Domination and

Legitimacy.’ See also, Robert A. Nisbit, The Social Bond: An Introduction to the Study of Society (New York, NY: Alfred A. Knopf, 1970), especially

ch. 6, “Social Authority. ”

w A p-feawe of democratic or represen~tive govement is that government decisionmakers Cm ~d shollld be held responsible to el~t~

officials and ultimately to the electorate for decisions made and policies followed. It is this accountability, rather than the good will of the decisionmaker,

that must be served as the basis for assurance that activities are conducted in the public interest. To assure such accountability, it is necessary that the

public and its representatives have information regamiing the means by which a decision is reached, the bases for that decisio~ and the means by which

aetioncanbe taken to modify or reverse that decision. See, Government Regulatory Activity: Justifications, Processes, Impacts, and Alternatives, Report

to the Congress by the Comptroller General of the United States, June 3, 1077, PAD-77-34, p. 43.

38 See, for one example, Executive Order 12291, 1981.

39 OMB circular No. A-1 19, S=. 6(A) (C)ct. 26, 1982),

dO For the c~ssic discussion of re~tov ~p~e, see *er He Bernste~ Regulating Business by lndepe~ent Comission (princeto~ NJ:

Princeton University Press, 1955); See also, Bruce M. Owen and Ronald Braeutiga The Regulation Game: Strategic Use of the Administrative Process

(Cambridge, MA: Balinger Publishing, 1978); and George J. Stigler, The Citizen and the State: Essays on Regulation (Chicago, IL: The University of

Chicago Press, 1975).

41 Re@atoV ~~d~d~ me ~so less ~gned ~th m~ket forces ad the ~c,entives of the relev~t ~OnOfiC actors. Gti Sdoller, Op. Ci~ fOOhlOte

15, 1990, p. 148.

42 For a discussion of one such as~~ the pubfic’s mood, see Michael pertschuc~ RevoltAgainst Regulation: The Rise and pause of the Consumer

Movement (Berkeley and Los Angeles, CA: University of California Press, 1982).
106 ● Global Standards: Building Blocks for the Future

Figure A-l—Standards Universe

Type of Standard by Goals

tandarization Control Product/quality Process/interoperability

mechanism

Language customs

Warner-amex

De Facto Database-privacy VCR standards Bills of lading

standards

Computer interface

standards

Auto safety NSA encryption standards Open network architecture

regulations standards

eguiatory Department of Agriculture

Fuel economy ETSI standards

standards Product classification for European

standards telecommunication

standards

Standards for Map-top protocols

Voluntary medical devices for OSI/standards

Refrigerator Consensus

Pressure vessel standards Standards evolving process

standards legislation

Petroleum standards Electronic data

interexchange

standards

The three kinds of standards and three kinds of standards processes can be paired to form a matrix that scopes the standards

universe and the standards setting processes and problems to be analyzed in this study.

SOURCE: Office of Technology Assessment, 1992.
Appendix B

Reviewers and Contributors

Lars Ackzell

Vice Chairman of the Technical Assembly

European Telecommunications and

Standards Institute

Ed Albrigo

Director, Engineering Services

Corporation for Open Systems

Frede Axe

Deputy Director

European Telecommunications

Standards Institute

Earl Barbely

Director of Telecommunications and

Information Standards

U.S. Department of State

Patricia Bauman

President & Co-Director

Bauman Institute

James Beniger

Professor of Sociology

The Annenburg School of

Communications

University of Southern California

John L. Berg

President

Future Tech, Inc.

Sanford Berg

Professor

University of Florida

Hans Bjornsson

Program Director

Institute for Management of Innovation

and Technology, Sweden

Dennis Bodson

Assistant Manager

National Communications System

Office of Technology and Standards

Sharon Bomer

Assistant to the Director

Fruit and Vegetable Division

Agriculture Marketing Service

U.S. Department of Agriculture

Barbara Boykin

Assistant Vice President for

Standardization

Aerospace Industries Association

Tony Bratkovich

Director of Technology

National Association for Manufacturing

Technology

Tim Brennan

Professor

University of Maryland, Baltimore County

Morris R. Brooke

Special Assistant to the President

American Society for Testing and

Materials

John D. Broten

Director, Federal Relations

Bell Atlantic Network Services, Inc

Thomas J. Buckholtz

Commissioner

Information Management Resources

Management Service

U.S. General Services Administration

Jim Burroughs

Director for Computer Systems

Laboratory

National Institute of Standards and

Technology

Carl Cargill

Sun Microsystems, Inc.

Charles A. Carlsson

Vice President

National Association for Manufacturing

Technology

Charles Carter

Vice President of Technology

National Association for Manufacturing

Technology

Martin Cave

Professor of Economics

Department of Social Science

& Economics

Brunei University

Stephen J. Collins

Director, International Affairs

Motor Vehicle Manufacturers

Association

James Converse

Director of Corporate Standards

Eastman Kodak Co.

Christopher J. Corbett

External Relations Officer

Technical Organization Department

European Telecommunications Standards

Institute

Nicolas Costello

Commission of the European

Communities

Cabinet of Vice President Pandolfi

Arthur E, Cote

Assistant Vice President & Chief

National Fire Protection Association

Marilyn Courtot

Director, Standards & Technology

Association for Information and Image

Management

A. Ray Daniels

Director, Industry Standards & Reg.

NCR Corp.

Ian Davidson

Vice President, Strategies Development

Corporation for Open Systems

Helen Davis

Washington Representative

American Society for Testing

and Materials

James de Raeve

Conformance Strategy Manager

X/Open

John Deam

Technical Director

NMTBA-Manufacturing Technology

Clarence Ditlow

Executive Director

Center for Auto Safety

John L. Donaldson

Chief

United States Dept. of Commerce

National Institute of Standards

& Technology

Thomas Dusterberg

Assistant Secretary

U.S. Department of Commerce

Marsha A. Echols

Counsel for National Association

Specialty Food Trade

–107–
108 ● Global Standards: Building Blocks for the Future

Lawrence Eicher

Secretary General

International Organization for

Standardization

Robert C. Eisenach

Assistant to the Chairman

The Mead Corp.

William W. Ellis

Senior Specialist

Congressional Research Service

Sture Elovsson

Coordinator, International Affairs

Televerket

Lamont Eltinge

President

Society for Automotive Engineers

Richard Engleman

Chief of Technical Standards Branch

Federal Communications Commission

Sture Evenson

President

Footwear Industries of America

Bernard H. Falk

Former President

National Electrical Manufacture

Association

John Famell

Head

Commission of the European Communities

Director-General

Internal Market and Industrial Affairs

Joseph Farrell

Professor

University of California at Berkeley

Frank Fenton

Senior Vice President, Public Policy

American Iron & Steel Institute

George Feme

Organization for Economic

Cooperation and Development

Mary Ellen Fise

Product Safety Director

Consumer Federation of America

Robert C. Flink

Director, Standards

Medtronic, Inc.

Roger Garcia

Analyst

Congressional Research Service

Presser Gifford

Director of Scholarly Programs

The Library of Congress

David Gold

Budget Examiner

Commerce & Justice Branch

Office of Management & Budget

Mary Anne D. Gray

Director of Standards Relations

International Business Machines Corp.

Mel Green

Associate Executive Director, Codes and

Standards

American Society of Mechanical Engineers

O.J. Gusella, Jr.

Executive Director

Exchange Carriers Standards Assoc.

David Hamond

President

Intercom

Bill Hanrahan

Senior Director, Technology Programs

Computer Business & Equipment

Manufacturing Association

Karen Higginbottom

Global Standards Camp Counselor

Network & Communications

Apple Computer, Inc.

Herman K. Hochschwencler

Chairman of the Board

Smithers Scientific Services, Inc.

Richard Hopper

Director, Government Affairs

Carpet & Rug Institute

Sven Ake Horte

Senior Research Manager

Institute for Management of Innovation

and Technology, Sweden

James Johnson

Associate Chief Executive Officer

AMDAHL

Peter K. Johnson

Director, Marketing & Public Relations

Metal Powder Industries Federation

Herr Thomas-Christian Kaiser

Deutsches Institut fur Normung e.V.

Herb Kaufman

Division Manager

Land and Sea Technical

Gene Kimmelman

Executive Director

Consumer Federation of America

Marin Kirk

Distributed Systems Management

X/Open

Frank Kitzantides

Vice President, Engineering

National Electrical Manufacturers

Association

Ivor N. Knight

Vice President, Business, Technology and

Standards

Communications Satellite Corp.

Walter F. Kosikowski

Manager, International Standards

National Electrician Manufacturers

Association

Len Kruger

Specialist in Science& Technology

Congressional Research Service

George Kuper

President

Industrial Technology Institute

Kohn J. Lainson

Corporate Secretary

Dutton-Lainson Co.

Norman Lamb

Head of Standards

CCTA

Meg Langdon

Deputy Director

British Standards Institution

Marily Langill

Assistant Director, Federal Affairs

SPI

Pat Lanthier

Director, Public Policy & Technology

Pacific Telesis

William Lehr

Professor

Columbia University

Graduate School of Business

Walter J-eight

Deputy Director

National Institute of Standards and

Technology

Bernard Liebler

Director

Health Industry Manufacturers

Association

Christopher Lion

International Economist

International Trade Administration

U.S. Department of Commerce

John W. Locke

Executive Director

American Association for Lab

Accreditation
Appendix B--Reviewers and Contributors ● 109

Don Loughry

Hewlett Packard

Charles R. Luebke, P.E.

Director of International Standards

Square D Co.

John Lyons

Director

National Institute of Standards

& Technology

Carl Malamud

Consultant

Steve Marriot

Secretary General

Comité Européen de Normalisation

Katheryn Martin

Assistant to the Director of

Telecommunications & Information

Standards

U.S. Department of State

Patrick McCabe

New Zealand Ministry of Commerce

David McCarty

Professor

Michigan State University

Frank M. McClelland

Senior Electronics Engineer

Technology and Standards

National Communications System

Office of the Manager

Don McKay

Manager

Air Conditioning & Refrigeration Institute

Lee McKnight

Post Doctorate Associate

Center for Technology, Policy, and

Industrial Development

Massachusetts Institute of Technology

John F. Mclver Jr,

Vice President, Government Liaison

Information Handling Services

Paul Mercer

Senior Manager, Standards Process,

Improvement and External Standards

Boeing Co.

M. Barry Meyer

Vice President, Government Affairs

The Aluminum Association, Inc.

Nelson Milder

Assistant Director

Policy Development and Technical Support

The American Society of Mechanical

Engineering

1

1

Michael J. Miller

Executive Director

association for the Advancement of

Medical Instrumentation

Samuel P. Miller

Assistant Director, Program Division

Office of Assistant Secretary of Defense

U.S. Department of Defense

William E. Miller

Director, Technical Services

CIMA

Ronald Moe

Specialist in American Government

Congressional Research Service

Thomas P. Monkus

Compliance Officer

Medical High Tech. International, Inc.

Keith Mowry

Manager, Governmental Affairs

Underwriters Laboratories, Inc.

Abbe Mowshowitz

Professor, Faculty of Psychology

University of Amsterdam

Suzanne Neal

Massachusetts Institute of Technology

Florence Nicolas

Economic Affairs Specialist

Association Française de Normalisation

Robert W. Noth

Manager, Engineering Standards

Deere & Co.

Joseph O’Grady

President

American Society for Testing and

Materials

Malcolm O’Hagan

President

National Electrical Manufacturers

Association

Anthony R. O’Neill

Chief Operating Officer

National Fire Protection Association

Stephen P. Oksala

Director Corporate Standards

UNISYS Corp.

John E. Olsson

Manager, Safety & Regulatory Engin.

GE Medical Systems

General Electric Co.

Joanne Overman

National Institute of Standards

and Technology

Marv Patterson

Director

Hewlett-Packard Co.

James N. Pearse

Group Vice President, Engineering

Leviton Manufacturing Co., Inc.

Jacques Pelkman

Director

Center for European Policy Studies

Manuel Peralta

President

American National Standards Inst.

Michael Pertschuck

Co-Director

Advocacy Institute

Don Peyton

Past President

American National Standards Institute

Herb Phillips

Vice President, Engineering

Air Conditioning and Refrigeration

Institite

Henry R. Piehler

Professor

Carnegie Mellon University

Philip M. Piqueira

Manager

General Electric Co.

Charles E. Quentel

Corporate Vice President, Engineering

Square D Co.

Anthony M. Raebum

Secretaire General

International Electrotechnical

Commission

John Rankine

President

Rankine Associates

International Management Services

Helmut Reihlen

Director

Deutsches Institute fur Normung e.V.

Marc Ritchie

Executive Director

Institute for Agriculture& Trade Policy

Gerald Ritterbush

Manager

Caterpiller, Inc.

Gary S. Robinson

Sun Microsystems, Inc.
110 ● Global Standards: Building Blocks for the Future

Lee E. Rogers, P.E.

Assistant for Material Standardization

Office of The Assistant Secretary

of Defense

Laurence Rosenberg

Information Technology and

Organization Program Manager

National Science Foundation

Max E. Rumbaugh

Executive Vice President

Society of Automotive Engineers

Anthony Rutkowski

Special Assistant to Pekka Tarjanne

Secretary General

International Telecommunications Union

Andy Salem

Staff Director, Standards Office

Institute of Electrical and

Electronics Engineers, Inc.

James Selkaitis

Director

AT&T

Marvin Sirbu

Professor of Engineering & Public

Policy

Carnegie-Mellon University

Bob Smith

Director, Science & Technology

NYNEX

Daniel Smith

Vice President, International Policy

American Standards Institute

Oliver Smoot

Executive Vice President

Computer Business Equipment

Manufacturers Association

R. Stephen Soley

Manager, Planning and Research

International Operations

Owens-Corning Fiberglass

Richard Soloman

Research Associate

MIT Lab of Electronics and Center for

Technology Policy, and Industrial

Development

Howard E. Sorrows

Staff Director

Board on Assessment of NIST Prog.

National Academy of Sciences

Steven M. Spivak

Professor

University of Maryland

Michael B. Spring

Assistant Professor

Department of Information Science

University of Pittsburgh

Monica Stahl

IBM Svenska AB

Robert B. Toth

consultant

Robert B. Toth Associates

Suzanne Troje

Director of Standards

Office of the U.S. Trade

Representative

Gilbert P. Tupper

Former Director

U.S./Saudi Standards Program

Bernard Vaucelle

Director General

Afnor

Fred Victor

Research Associate

Operational Evaluation Division

Institute for Defense Analysis

Bo Viklund

Informationstekniska standardiseringen

Andrew Walker

Standards Manager

X/Open

James Walters

Director Petroleum Measurements

American Petroleum Institute

Stanley I. Warshaw

Director, Office of Standards

Services

National Institute of Standards and

Technology

Martin B.H. Weiss

Assistant Professor

Information Science and Telecomm.

University of Pittsburgh

Gail Berry West

Director, Government Relations

Bellcore

Bob White

Under Secretary for Technology Policy

U.S. Department of Commerce

Philip B. White

Director

U.S. Food and Drug Adminis tratio n

Keith Wicks

Head of Quality Policy

British Standards Institute

George Willingsmeyer

Vice President

American National Standards Institute

Sidney Wolfe

Executive Director

Citizens Public Health Research Group

Brian P. Wynne

Manager, Intl. Trade Affairs

American Electronics Assoc.
Index
Index

Administrative Procedure Act, 105

Alexis de Tocqueville, 46

American Engineering Standards Committee (AESC), 48

American National Standards/Institute (ANSI), 13, 14,

23,26,31,32,49,51-53, 91

American Petroleum Institute (API), 50

American Society for Testing Materials (ASTM), 5, 12,

13,51,52

American Society of Agricultural Engineers (ASAE), 50

American Society of Mechanical Engineers (ASME), 43,

52

American Standards Association, 48,49

ANSI Government Member Council, 16,57

Association Francaise de Normalisation (AFNOR), 66-

67,69

Association of South East Asian Nations (ASEAN), 18,

69, 87,90

Boeing Corp, 28

British Engineering Standards Association, 61

British Standards Institution, (BSI) 21,24,25,30,67-69,

69

Bureau for Consumer Product Information, 47

CALS, 28

Carl Malamud, 94-95

CCITT_, 17,27,31,94

Coinage, relationship to trade, 40

Comite Europeen de Normalisation (CEN), 64,69-74,85,

90

Comite Europeen de Normalisation Electrotechnique

(CENELEC), 64,69-74,85

Committe on Science, Space, and Technology, 4

Computer Business and Equipment Manufacturers Association (CBEMA), 50

COMSAT, 35

Consumer Product Safety Commission, 55

Control standards, 100

Corporation for Public Broadcasting, 35

Council on Library Resources, 29

De facto standard setting, 101-103

Defense Department, 28

Department of Agriculture, 421

Department of Commerce, 1977 report, 15

Department of Commerce, 14, 16, 18,56,90

Department of Education, 29

Deutsche Institute für Normunb e. V (DIN), 23,24,62-64,

65-66,90

Developing countries, 86

Dialogue, 27

DISC, 30

Eastern Europe, 86

Economic Policy Council, 32

Electronic data interexchange, 102

Environmental Protection Agency, 8,55

European Commission, 18,28,69,73-74,86,87

European Economic Community, (EEC) 8,17,27,31,69,

73-74,78,79, 83,84

EuropeanTelecommunications Standards Institute (ETSI),

31,69-74,85,91

Excess inertia, 10

Excess momentum, 10

Federal Trade Commission (FTC), 7, 11, 18,49,54

Food and Drug Administration, 8

France, 27

General Agreement on Tariffs and Trade (GATT), 12,

81-84

General Motors, 28

German Agency for Technical Cooperation, 18,87

Germany, 17,27,62

Green paper on standards, 73

Harold Seidman, 33

Henry Ford, 40,42

Herbert Hoover, 18,44,47

IBM, 91

Information Handling Systems, 27

Information-based economy, relationship to standards,

92-94

Institute of Electrical and Electronics Engineers (IEEE),

5,50,52

Interagency Committee on Standards Policy (ICSP), 16,

32

Interagency Federal Advisory Committee (IFAC), 25,57

International Electrotechnical Commission (IEC), 31,51,

52,64,86 International Organization for Standardization (ISO), 23, 30, 31, 51, 52, 64, 86

International Radio Consultative Committee (CCIR), 94

International Telecommunications Union (ITU), 17, 30,

94

International Trade Administration (ITA), 25,57

Internet Engineering Task Force (IETF), 28

Ireland, 87

Japan, 23

Japan International Cooperation Agency, 90

Japanese Industrial Standards Committee, 23

Japanese International Cooperation Agency, 17

Japanese Ministry of International Trade & Industry

(MITI), 23,34

Japanese standards system, (JSS), 84

JTC1, 31, 86

–113–
114 ● Global Standards: Building Blocks for the Future

KWIC Index, 28

LeQue Report, 15,48

Library of Congress, 27

Maastricht, 84

Machine tool industry, 8

Martin Bangemann, 11, 86

Mass production, 40

Memorandum of Understanding, 21

Mercantalism, 81,82

Mexico, 18

Multinational corporations, 90-92

National Bureau of Standards (NBS), 15,24

National Commission on Product Safety, 54

National Electrical Manufacturers Association (NEMA),

51

National Fire Protection Association (NFPA), 45,51

National Institute for Standards and Technology (NIST),

15, 16,24,28,33,56

National Research Council (NRC), 26

National Science Foundation (NSF), 26

National Standards Association, 27

National Standards Week, 58

Netherlands, 87

New approach, 73

NOREX, 24

North American Free Trading Area, 83

Occupational Health and Safety Administration, 8, p. 55

Office of Management and Budget, 13, 16,32,33

Office of Science Technology Policy (OSTP), 32

Office of Weights and Measures, 43

OMB Circular A-119, 15, 16,20,54-57, 105

On-Line Computer Library Center (OCLC), 29

Open Systems Interconnection, 9

Pekka Tarjanne, 94

Product standards, 99-100

Project Bruno, 94-95

Project Identification Notification System (PINS), 27

Publius, 49

Pure Food and Drug Act of 1906,42

Railways, standardization of, 47

Ralph Nader, 53

Regulatory standards process, 104

RESOURCE, 69

Robert Mosbacher, 11, 86

Saudi Arabia, 90

SCUSA, 33

Small Business Administration, 25,57

Spanish Standards Institute (AENOR), 90

Standards, defined, 99

Standards universe, 6, 106

Stanford Research Institute, 49

State of Ohio, 29

Sweden, 23

TCP/IP protocol, 28

Technical Help to Exporter Section (THE), 68

Trade Act of 1979,57

United States of America Standards Institute (USASI), 48

United States Trade Representative (USTR), 16, 25,57,

92

Uruguay Round, 92

Voluntary consensus process, 103

War Industries Board, 44

Waste in Industry, 44

x3, 86

U.S. GOVERNMENT PRINTING OFFICE : 1992 0 - 297-939 : QL3