In my last post I traced the origins of the 1998 EU-US MRA on conformity assessment back to the Internal Market program of 1985-92 and its New Approach to product safety legislation. In accordance with the Community’s obligations under GATT, and the GATT Standards Code in particular, both the essential requirements that products had to meet, and the assessment procedures laid down to demonstrate their conformity with those requirements, were formally exactly the same for all products, whether imported or produced in Member States. The potential problem for third countries was that the third party conformity assessment bodies (CABs), whose involvement was necessary for some products, were designated by Member States and might naturally be expected to be established in the same Member State. Would it therefore be necessary for third country manufacturers to send their products to laboratories in the Community for type approval? And where the procedures required inspection of the manufacturing facilities and quality control systems, would inspectors have to come from Europe to carry them out, at considerable expense to the manufacturer?
Under pressure from the United States, the Commission had in July 1989 stated (p. 45/56, and see my last post at section entitled ‘Mutual recognition of tests and certificates’) its willingness to ‘to conclude agreements for mutual recognition of tests, reports, certificates and marks’. On 21 December 1989, the Council adopted a Resolution on ‘a global approach to conformity assessment’, with one of its guiding principles being to pursue mutual recognition agreements:
Articles 113 and 114 of the EEC Treaty provided for the Commission to negotiate, and the Council, acting by qualified majority, to conclude, international trade agreements with third countries. The Community expressed a willingness to recognise ‘reports, certificates and marks’ issued by the CABs of third countries, but only on a reciprocal basis, with its own bodies being recognised where appropriate, so as to achieve a ‘balanced situation’.
Response from the United States
With regard to conformity assessment specifically, three early types of response from the United States may be distinguished:
- Attempts to persuade or pressure the Community to accept American CABs as Notified Bodies, without an MRA, on the grounds that it was discriminatory not to do so, and that American regulatory agencies were willing to accept European bodies;
- Attempts to persuade or pressure the Community to allow Notified Bodies to subcontract conformity assessment work to American entities;
- The pursuit of an MRA or MRAs with the Community, although not necessarily at governmental level.
A later report by the U.S. International Trade Commission on ‘The Effects of Greater Economic Integration Within the European Community on the United States’ (3rd Follow-Up Report), covering developments in the second half of 1990, laid out these three options clearly (p. 4-12):
In this post I examine the third of these (number 1 in my list above).
Acceptance of U.S. bodies without an MRA
According to the 1st USITC Follow-Up Report (henceforth USITC-1) at 6-27, an argument put forward by the United States was that ‘the U.S. [regulatory] system was already open to EC labs on the same basis as U.S. labs’, so that there was no reason why U.S. labs should not be treated in the same way in the EC. In 1988, an American laboratory, MET Electrical Testing had through court action broken the effective monopoly held by Underwriters Laboratories over the certification of industrial and commercial electrical equipment in the U.S., a sector regulated by the Occupational and Safety Administration (OSHA). According to USITC-1 (6-27), the court case put other agencies on notice that they must accept applications from all comers on a nondiscriminatory basis:
It is indeed the case today that non-U.S. bodies can and do become Nationally Recognized Testing Laboratories (NRTLs) under OSHA. Currently, three Canadian companies and one German company are listed as NRTLs, with the logo below for TÜV SÜD Product Services GmbH of Munich showing its NRTL designated status:
In early 1990, it had not yet (USITC-1, 6-29) been definitely decided that non-EC laboratories would not be permitted to become Notified Bodies:
In fact, the Commission’s view was reported (USITC-1, 6-29, n. 93) to be that Member States were at that time free to notify bodies outside their territory:
Some recent product safety legislation includes a clear statement that notified bodies must be established in a Member State. For example, Article 24 of EMC Directive 2014/30/EU begins:
In contrast the early New Approach Directives seem to lack any such definite stipulation (see, for example, the Personal Protective Equipment Directive 89/686/EEC, Article 9(2) and Annex V):
Lobbying by industry
While the matter was still ‘under review’ by the Commission, some in U.S. industry were ‘lobbying hard for the designation of U.S.-based test laboratories as “notified bodies”‘, as reported at page 4-22 of the second USITC Follow-Up Report, which covered events in the first half of 1990:
It would appear that it was the smaller U.S. laboratories who were pressing for the right to apply for Notified Body status, while ‘some large U.S. certification bodies’ were actually opposed (USITC-2, 4-23):
It seems to me that the probable explanation for the opposition of the larger companies, is that the acquisition of Notified Body status by smaller U.S. companies would raise their status relative to that of the large U.S. companies, both home and abroad, creating a more level playing field between them. Conversely, if U.S. companies were not able to become Notified Bodies, but were to be allowed to subcontract to European Notified Bodies, it was thought that larger companies would be in a better position to win the contracts (USITC-2, 4-22):
Amend the Standards Code?
Concurrently, the United States had been trying to force the Community to allow U.S. companies to become Notified Bodies, through a change in the GATT Standards Code. As it stood (see my last post and Section entitled ‘The GATT Standards Code’ and following), the Code prohibited discrimination against imported products in testing and certification requirements, but not against foreign testing and certification companies in the opportunity to carry out the required procedures. The American proposal, tabled in November 1989, was to amend the Code to provide (USITC-1, 6-26) for nondiscrimination in the approval of conformity assessment bodies:
The next month, on 14 December 1989, the U.S. Under Secretary of Commerce for International Trade J. Michael Farren presented his government’s formal response to COM(89) 209, the Commission’s proposal for ‘A Global Approach to Certification and Testing’, which had been released in July. 1 According to USITC-1 (p. 6-28), the U.S. demanded that accreditation to perform conformity assessment according to European standards should be open to bodies located outside the EC:
One week later, on 21 December 1989, the Council adopted its Resolution ‘on a global approach to conformity assessment’, referred to above. While it does not explicitly rule out allowing non-EC bodies to apply to become Notified Bodies, its silence on the subject, combined with the emphasis laid rather upon mutual recognition agreements, suggests that the EC was leaning towards a policy of making recognition of non-EC bodies conditional upon reciprocation by third countries. The EC perceived U.S. trade barriers that it wanted to bring down. It was not necessarily that the American regulatory system was not open to all comers. Rather, it was its private, complex and fragmented nature that made it hard for outsiders to penetrate (USITC-2, 4-25):
The United States continued until at least July 1990 to make representations to the EC to extend national treatment to non-EC labs, as evidenced by a State Department telegram from Brussels referenced in USITC-2 (p. 4-23 and n. 150):
Action in Congress
Meanwhile, Congressman Sam Gejdenson introduced five bills that would prevent U.S. regulatory agencies granting approvals to non-U.S. laboratories. At least one of them, House Resolution 4471, introduced on 4 April 1990, was clearly retaliatory in nature, being directed specifically against product certification by EC nationals, as this summary by the Congressional Research Service shows:
USITC-3 reports American attempts to amend the Standards Code continuing until October 1990, when a provisional agreement was reached that fell short of U.S. objectives, with nondiscriminatory access by extra-territorial conformity assessment bodies to domestic regulatory systems being reportedly encouraged but not obligated 2:
A Council Decision
The December 1989 ‘Global Approach’ Council Resolution, which had no legal effect, was followed on 13 December 1990 by Council Decision 90/683/EEC setting out the conformity assessment modules to be used in the New Approach product safety Directives:
At Annex(I)(k), the Decision provided that Member States should notify bodies ‘under their jurisdiction’:
Presumably, this excludes any body established outside Member State territory. The first edition of the Blue Guide, published in 2000 and entitled ‘Guide to the implementation of directives based on the New Approach and the Global Approach’, made explicit the connection between jurisdiction and territory:
By 1991, it would appear that American attempts to pressure or persuade the EC to allow non-EC entities to become Notified Bodies had effectively ceased. USITC-4, which covers events in that year, now presents two options for gaining acceptance of U.S. test rather than the three of the previous report:
The skirmish that erupted between the United States and the European Community over the EC’s restriction of the place of establishment of Notified Bodies to the territory of Member States, brings to light the fact that such a restriction is by no means universal or inevitable. At least on regulatory agency in the USA, OSHA, recognises testing laboratories outside the US as competent to test and certify products to conformity with Federal regulations. It strikes me as worth noting that an option available to the UK with regard to a potential trade agreement with the U.S. might be to allow American CABs to apply to UK regulatory agencies for designated status under UK legislation.
The following factors may have played a part in the failure of the U.S. to bring about a change in EC policy in this matter:
- The legality of the EC proposals under GATT, and the GATT Standards Code in particular.
- Lack of support, or even opposition, from large U.S. testing and certification companies, owing probably to commercial considerations vis-a-vis American competitors.
- The reasonableness, or apparent reasonableness, of the EC’s position of offering designation to American CABs in exchange for reciprocal improvements in access to the American market.
- The reference to ‘prior consultations’ leading to a ‘mutually satisfactory understanding’ in Article 5(2) of the Standards Code, giving support to the European position.
- An economic interest for the EC in a) providing a measure of protection against imports and/or b) creating leverage to lower foreign trade barriers through the negotiation of MRAs on conformity assessment.
The photograph is of the Baltimore Product Safety Laboratory of MET Laboratories, the company which – as its promotional material puts it – ‘broke the UL monopoly for product safety testing and certification in the United States’, and thereby helped open the U.S. regulatory system to participation by foreign CABs.
- ‘Response of the Government of the United States to the European Community on (89) 209’, referenced at USITC-1, 6-28, n. 88 ↩
- I have not however been able to confirm a strengthening of the relevant provisions between the GATT Standards Code and the WTO TBT Agreement. Article 5(2) of the Standards Code already requires parties ‘wherever possible’ to accept certificates issued by bodies in the territories of other parties ↩