Prepared Remarks for the American National Standards Institute Board Meeting

It's a pleasure to be with you, and especially to be here for an ANSI meeting at ASTM. I think we have made great progress in gaining consensus, and that we should take this as an encouraging sign that we can all work together. With all of the difficulties and challenges that we face in dealing with some very complicated matters, there is little chance for success unless we do work together -- closely and cooperatively.

If I needed to be reminded about the importance of standards matters to U.S. companies and our economy -- and I assure you, I didn't -- I got it in spades a few weeks ago.

We sponsored a session for trade and professional associations. It was an information sharing meeting where I updated more than 30 groups representing large sectors of our technical professionals and our societies.

But a major goal of the session was to hear more from these associations about the issues that mattered the most for their members, and how NIST could do a better job in both sharing information and in the day-to-day business that we do in our four programs: the Advanced Technology Program, the Manufacturing Extension Partnership, the Baldrige National Quality Program, and the Measurement and Standards Laboratories.

We've held these sessions before, and while we get a few substantive questions, the conversation tends to center around the political situation for science and technology and the prospects for getting various parts of NIST's budget passed in Congress.

Not this time. We got those kinds of questions, but more than half of the questions I was asked focused directly on issues of standards and conformity assessment. And I was told what these groups thought.

I was asked about the role of NIST staff members in professional societies and other standards development organizations, and the prospects that we might get directions from the Justice Department to severely constrain our activities -- and I was told that several of these organizations had huge concerns about this possibility.

I was asked about NIST's level of effort in specific standards-development organizations overseas -- and I was told that we needed to increase, not lower, our profile.

I was asked if we could increase our efforts to report back to these societies and their members on international standards developments -- and I was told that we needed to do a better job of communicating the importance of standards and conformity assessment matters to the more general public.

It was a good reminder of just how important these matters are becoming to a broader cross-section of our economy. It was also a reminder that while the U.S. voluntary standards "system" is unique in the world, and though it has worked well to meet our domestic needs, there are entirely new circumstances.

There's been a lot of talk about the New Economy. I think we had better start talking about the New Standards Economy, because it is upon us.

The emergence of the global market is having an unexpected effect upon U.S. domestic standards. The Department of Commerce currently estimates that standards are an integral portion of about $150 billion in U.S. exports, and that they serve as barriers to trade for an additional $20-40 billion of exports. Estimates made as long ago as 1993 suggested that U.S. industries that participate in international standards activities were responsible for a trade surplus of $26 billion, while those industries for which there were no international standards or no strong U.S. participation contributed to a trade deficit -- perhaps as high as $100 billion.

Last year, American and European automobile manufacturers estimated that differing regulatory and certification requirements may add "more than 10 percent to the design and development cost" of motor vehicles. The American Electronics Association estimates that duplicative testing and certification requirements can add 10 percent to the cost of sales in Europe. Certifying telecommunications equipment and information technology products as meeting European Union requirements costs U.S. businesses nearly $1.4 billion a year. About half of U.S. merchandise exports to Europe require some type of EU certification -- in addition to country-specific requirements.

None of these figures is exact. But they certainly indicate that effective participation in international standards activities and policies is crucial to U.S. competitiveness.

The United States needs an effective national standards strategy if we are to compete effectively in the global market. We've all talked about that for the past several years -- I know Mary Good delivered that message loud and clear to you last year -- but we just don't have that strategy now.

Europe does have a strategy and it is running at full throttle. It is fair to say that European governments and industries believe that they can create a competitive advantage in world markets by strongly influencing the content of international standards. Today, while our economy hums along and U.S. industries continue to do well, this view may be quickly dismissed. That would be a terrible mistake.

First, as they should in a global economy, trade agreements often require signatory nations to use international standards.

Second, the success of European companies in South America, our Western Hemisphere neighbor, should be fair warning. In 1996, trade between the EU and the Mercosur countries -- Brazil, Argentina, Uruguay, and Paraguay -- topped the export- import volume for the United States and that trading bloc. Between 1993 and 1996, Europe's trade with Mercosur grew 62 percent -- 62 percent!

The U.S. standards system, which has grown up over the last 100 years to meet the needs of industry, has its roots in the private sector and has successfully met domestic needs - - on a sector by sector basis. Over the years, it has developed rules for consensus, transparency, openness and due process -- all of which have found their way into the World Trade Organization as bedrock principles for developing good and fair standards.

Yet, the same open, competitive system for developing standards creates major issues for us in the global market.

• There are currently about 600 U.S. standards developers (if you include the approximately 150 consortia now developing 'standards

• There is no single responsible entity or point of contact in either the private or public sector;

• Coordination is nearly impossible; and finances for U.S. representation in international standards activities are a major point of contention.

The National Research Council report on Standards, Conformity Assessment and Trade for the 21st Century pointed out that the decentralization of the U.S. standards system is not serving industry needs well for the global market.

The World Trade Organization (WTO) Agreement on Technical Barriers to Trade commits member bodies, including the United States, to use international standards and conformity assessment procedures as integral tools for the development of free trade world wide. Many nations view this commitment as occurring through formalized bodies such as ISO, IEC, ITU, and they include the use of standards developed by these bodies in their laws and regulations.

The WTO commitment presents the United States with several challenges:

• First, achieving worldwide recognition of the technology incorporated into U.S. standards and conformity assessment procedures is critical for acceptance of our products and services in the global marketplace.

• Second, the United States must work to harmonize U.S. standards and conformity assessment procedures with those of our major trading partners. This means increased participation in the development and use of international standards. Standards such as those developed by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC) are key to eliminating technical barriers to trade in global markets. We must make sure that international standards contain strong U.S. technical input so that our products will face fewer technical barriers to trade, and so that our balance of trade figures can move in a more positive direction.

The U.S. standards community needs to face squarely the issue of adopting and developing international standards. While many U.S. developed standards are used internationally, world-wide pressure is increasing to move toward standards developed and promulgated at the international level. Industry in all countries, including the United States, wants standards that enable industry to build products acceptable world-wide, with international acceptance of valid conformity tests done in the manufacturing nation.

We are the key players in this community. We need to continue to work together to resolve our differences with one another to achieve a unified U.S. approach in international fora. Our current domestic standards system is not succeeding at the international level -- where we are unable to field national positions to meet national needs. Together we have made progress over the last five years, but we must continue on this path at a more rapid pace.

• We must work together to solve the competing issues of revenue recovery, intellectual property, and good U.S. technical input to international standards. As a nation, we are in danger of losing our technical edge in markets -- not because of lack of merit -- but because of arguments among key players over ownership of the process. A splintering of efforts weakens the voice of U.S. business. The U.S. should be a leader in international standards, but today we are often a bystander. And that is how competitor nations and companies prefer us to remain.

So where does NIST fit in? Since being confirmed by the Senate, I've begun to focus on the key challenges for NIST, identifying where we can really make a difference for U.S. industry over the next several years, and I have settled on five challenges. Just five. One is assuring that we are the world's leaders in measurements. That should be no surprise to you. But I have set another primary challenge of even greater interest to this group: helping to assure that the capabilities and standards are in place to support full and unfettered U.S. participation in global markets.

NIST, as part of the U.S. Commerce Department, is fully committed to support ANSI, private sector standards developing organizations and federal agencies in efforts to eliminate standards-related trade barriers in international trade. I pledge my efforts to work with all of you as we sort through these difficult issues. NIST plans to host a workshop later this year on the international standards issue. We look to you to participate and work together on a difficult problem for us all. Our combined efforts are essential for resolving long-standing issues -- and for forging a national standards strategy that meets the needs of U.S. industry, service providers, and consumers.

I would like to remind you that ANSI and NIST signed a Memorandum of Understanding, or MOU, in July of 1995 to enhance and strengthen the national voluntary standards system. This Agreement recognizes ANSI's role as the U.S. member body to non-treaty standards organizations, and NIST's role to coordinate standards-related activities of Federal agencies. It calls for the public and private sector to work together to support U.S. interests in international standards.

• ANSI and NIST agreed to improve communications within and between the public and private sectors to ensure the timely flow of information, facilitate decision-making and implementation of actions on standards at both national and international levels. We also believe that U.S. Federal agencies -- both regulatory and procurement -- must contribute to the development, implementation, and use of voluntary standards - as embodied in the recent revision of the OMB Circular A-119. In fact, we are hosting a seminar in Washington a week from today to explain those revisions. You may want to attend or send a representative.

• It may be time to consider strengthening the MOU. I welcome your ideas and suggestions on this topic.

The National Technology Transfer and Advancement Act of 1995 assigns NIST responsibility to coordinate federal, state and local activities in voluntary standards and conformity assessment with those of the private sector. NIST is working with Federal agencies by chairing the Interagency Committee on Standards Policy, which seeks coordination in federal standards policy and encourages active participation in private voluntary standards activities. NIST regularly invites private sector representatives, including ANSI, ASTM, ASME, UL, and others to brief the Interagency committee on topics of mutual interest.

NIST is continuing to implement the National Technology Transfer and Advancement Act. The plan we submitted to Congress in 1996 provides specific goals for coordinating standards and conformity assessment activities of government agencies with those of the private sector to build a workable technical infrastructure to meet the needs of U.S. industry in the global marketplace.

• I am pleased that the report we just submitted to OMB on Federal progress in using voluntary standards in 1997 reports that more than 180 agency specific standards were withdrawn or converted to voluntary standards, and agencies reported use of more than 540 voluntary standards.

• I regret that the same report shows a significant drop in Federal participation in voluntary standards activities. NIST will work with you to try to reverse this unfortunate trend. We will seek to assure that Federal needs are considered as we develop the voluntary standards that are so important to the United States. I feel strongly about this issue, and I intend to push it to the limit, which could include legislative action if that becomes necessary.

• Our plan for carrying out the Technology Transfer and Advancement Act also asserts that we -- the private sector and government -- will work together to build and implement an agreed-upon U.S. system of standards and procedures for voluntary standards, product certification, accreditation of testing and calibration laboratories, registration of quality and environmental management systems, and formal recognition procedures for private-sector bodies to support global trade.

• Toward this objective, NIST continues to work with ANSI and ACIL, as well as other private and public sector representatives, to establish a national laboratory accreditation infrastructure. This cooperation will save money and increase U.S. competitiveness in domestic and global markets, and it is expected to be operational later this year. This subject will be discussed in a public workshop on April 16 at NIST, and I encourage you to take part. Once implemented, users will benefit from a test performed once, with worldwide acceptance of the data.

• We need to work together in a similar effort to remove national differences in testing and certification requirements which frequently pose obstacles to U.S. exports.

Together, we must cooperate on the development of sound U.S. policy on using standards to support global trade. We must agree on goals; work with our trading partners in advance of meetings to further our mutual technical interests; and commit ourselves to participate -- on a regular basis -- in the activities of technical committees. We must also commit to make the process serve U.S. industry needs. This means commitment to work effectively and efficiently -- to match the standards development process to the cycle time of products, and to use it strategically to support our very real industrial and technical needs.

Clearly, if we are to succeed and prosper, U.S. industry, standards developers, and government must cooperate with each other in standards and conformity assessment activities. ANSI, NIST, and the standards community must -- and will -- continue to work together to develop and implement unified U.S. positions on technical and standards policy issues at the domestic and international levels. If we continue to progress together, as we have over the last several years, the future will be bright. Achieving this bright future, however, means resolving the remaining differences that have plagued us over the years.

We are in the New Standards Economy, and we can be the leaders. I urge you to continue to work together and to work with NIST and the Federal government to build a national standards strategy -- and I look forward to a continuing strong relationship with all of you.