As manufacturing has evolved into a genuinely global practice, industry standards and regulatory policies have moved to center stage. A number of factors have driven this, including:
- The growing importance of exports and market access to manufacturers regardless of location
- Greater reliance on global supply chains, especially in markets where time to innovation is key (e.g., telecommunications, computers, pharmaceuticals, aerospace)
- Trade within corporate structures as mergers and acquisitions extend the geographical reach of multinational entities
While the preponderance of technical standards are established by standards development organizations and international standards bodies (e.g., ISO, IEC), the influence of environmental, health, and safety regulations on technical standards points both to the growing influence of the European Union (EU) in driving international regulatory standards and the difference between the EU’s and U.S.’s approach to standards development.
In a nutshell, the EU takes a much more active and directive approach than their counterparts on this side of the pond. Because common standards and regulatory policies have been a goal of the EU since its inception, it has a global orientation (in the generic sense) that is difficult to match in the U.S., where battles between federal and state entities have raged for decades, if not centuries. Moreover, the EU has been driving international regulation in the environmental, health, and safety spheres by developing regulatory policies with a global perspective, and aggressively advocating for those policies internationally. This strategy is underscored by technical assistance from governments within the EU and manufacturers based there.
According to the National Association of Manufacturers, there are five specific ways the EU approach to standards development differs from that employed in the United States:
- Top-down direction by government
- Restricted transparency in regulatory development
- Limited industry participation
- Use of the precautionary principle: the introduction of a new product or process whose ultimate effects are disputed or unknown should be resisted
- The goal to set the global standard at the outset
This is in sharp contrast to the U.S., where there is greater reliance on industry self-regulation and voluntary standards, and where there is greater transparency in the regulatory standards development process. Further, there is greater tolerance for different approaches to compliance issues (e.g., domestic versus international) as opposed to an overarching desire for global solutions.
I believe the realities of global trade are tipping the scales of influence towards the EU approach, where EU directives such as RoHS and REACH have impacted manufacturing on a worldwide scale (as domestic manufacturers know well). For American manufacturers, this means it is critical to track regulatory developments and initiatives in the EU, but also to apply pressure to those in government to work more rigorously in reaching out to the EU (and other markets) to developed harmonized standards. It also means taking a more aggressive stance towards standards development; such a stance is something that should come to us naturally, even if the impulse to globalization is something we struggle with philosophically.
After all, it’s now a commercial reality.