Objectives for a Standards and Conformance Infrastructure
83. The Ministry has identified three objectives which the Standards and Conformance infrastructure contributes to. Expressed as outcomes,15 it can be said that a standards and conformance system is intended to ensure that:
- health, safety and environmental risks are managed,
- domestic economic development is facilitated, and
- international trade is facilitated.
Outcome One: Health, Safety, and Environmental Risks Are Managed
Standards contribute to this outcome when:
- Appropriate and readily accessible standards, compatible with regulatory systems, are available where necessary to support regulation.
- Standards are consensus-based, transparent, up-to-date and reflect New Zealand expectations on managing risk.
Measurement services contribute to this outcome when:
- Product and process characteristics affecting health, safety and the environment are able to be adequately measured.
Accreditation services contribute to this outcome when:
- Consumers, businesses and the government can rely on conformity assessment results about health, safety and environmental risks.
Conformity assessment services contribute to this outcome when:
- Products and processes sold in New Zealand are able to be assessed against standards.
- Regulations are supported by appropriate conformity assessment regimes.
Regulations contribute to this outcome when:
- Firms, organisations and the public are encouraged or required to meet New Zealand expectations on managing risks to health, safety and the environment.
84. Many standards and technical regulations are intended to assist in the management of risks to health, safety and the environment by setting mechanisms and requirements that will minimise such risks.
85. Economic theory provides a rationale for setting standards or regulations in these areas. There are two types of market failure which are likely to occur around health, safety and environmental risks - information asymmetries16, and externalities17. Depending on the severity and likelihood of the risk, the solutions may involve voluntary or mandatory requirements.
86. Both the government and consumers rely on standards to protect public health, safety and the environment. Businesses use standards and conformance to support innovation and development and to maintain a competitive edge. Standards can also support regulations which aim to manage health, safety and environmental risks.
Outcome Two: Domestic Economic Development Is Facilitated
Standards contribute to this outcome when:
- Standards ensure compatibility and quality of components and processes with minimised transaction costs.
- Standards do not act improperly as barriers to market entry.
- Standards reflect relevant stakeholder interests.
- Standards encourage innovative and high quality products and processes.
- New Zealand businesses know how to meet standards and regulatory requirements.
Measurement services contribute to this outcome when:
- New Zealand businesses can access timely, cost-effective and adequate measurement services.
- Consumers and traders can rely on measurements used for trade.
Accreditation services contribute to this outcome when:
- Conformity assessment services can access appropriate, recognise and cost-effective accreditation
- Consumers, businesses and regulators can rely on conformity assessment results.
Conformity assessment services contribute to this outcome when:
- New Zealand businesses, organisations and regulators can access timely and cost-effective assessment of their products and processes against standards and regulations.
Regulations contribute to this outcome when:
- Methods of complying with regulation are available and known to producers and suppliers.
- Compliance and monitoring are effective and sufficient to ensure fair competition.
87. This outcome can be seen as one of the original rationales for the development of standards. The existence of a standards and conformance infrastructure increases economic efficiency by aiding consumer confidence and by enhancing compatibility among products, which enables economies of scale to develop. Standards are instrumental in disseminating technical know-how and can be used to improve the quality of goods produced domestically.18
88. Many standards are designed to ensure compatibility and quality and minimise transaction costs. However, standards can have other effects on the overall functioning of the economy and market. It is possible for Standards development processes to be captured by particular interests and to be used anti-competitively as barriers to entry of a market.
89. Standards can also affect innovation, either by limiting it through over-prescriptive requirements or encouraging innovation by spreading new technology. Voluntary Standards set above minimum technical regulations can also promote best practice, raising the quality of goods.
90. The 1995 review of Australia's standards and conformance infrastructure19 pointed out that "at the most fundamental level, the standards and conformance infrastructure enables the production of goods and services. Only the most rudimentary production methods would be possible without accurate and sophisticated measurement." Each industry sector active in New Zealand generates a need for measurement, and in many cases new technologies must be accompanied by developments in measurement technologies.
Outcome Three: International Trade Is Facilitated
Standards contribute to this outcome when:
- Standards supporting regulations are international, transparent, non-discriminatory and the least trade-restrictive necessary to meet the required outcome.
- Exporters and importers know how to meet standards and regulatory requirements in New Zealand and export markets.
Measurement services contribute to this outcome when:
- Measures of traded goods and processes are traceable to international measures, sufficiently precise to meet standards and accepted by export markets.
Accreditation services contribute to this outcome when:
- International activities facilitate the acceptance of New Zealand conformity assessment results by all markets, and New Zealand can have confidence in the conformity assessment processes of its trading partners.
Conformity assessment services contribute to this outcome when:
- Businesses have reasonable access to all required conformity assessment services.
Regulations contribute to this outcome when:
- Regulations utilise international or trans-Tasman standards if they achieve the New Zealand Government's desired outcome.
- New Zealand's regulatory requirements are not unnecessarily trade-restrictive, are transparent and available to all.
- New Zealand's regulatory systems are coordinated with the regulatory systems of trading partners.
91. Differences between nations' standards and conformance regimes have become more important as global trade has increased and diversified. The international community has sought to reduce the risk that poor design of technical regulations acts as a barrier to trade though the TBT and Sanitary and Phytosanitary (SPS) agreements. These agreements are intended to reduce the threat of standards being used for hidden protection or discrimination.20
92. The use of international Standards assists in overcoming the cost of different standards in different markets. However, differences in preferences, tastes and assessment of risks among countries can appropriately lead to the adoption of differing product standards.
93. To facilitate trade, not only standards, but all aspects of the standards and conformance infrastructure may need to be recognised by the importing country. The overall aim in conformity assessment and accreditation is "one Standard, one test, accepted everywhere",21 but in reality this is far from the case.
94. In New Zealand it is noted that where the accreditation of a conformity assessment body is internationally recognised, this reduces duplicate requirements and significantly reduces transaction costs. Voluntary sector multi-lateral agreements, where accreditation bodies recognise each other's accreditation, contribute to this.
95. New Zealand generally has regulatory regimes that rely heavily on suppliers' declarations of conformance whereas many of New Zealand's trading partners place more emphasis on pre-market approvals. Co-ordination of the different strategies to ensure compliance is an important aspect of trade facilitation.
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