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Commerce Deputy Secretary Robert Mallett
ASME-Industry Standards Summit

Washington, D.C.
April 15, 1998

Thank you, Jim, and good morning.

As anyone in Washington quickly learns, there are plenty of things you cannot do ... more things you should not do ... but one thing you must do. And that is get invited to lots of conferences. So I try to select wisely, and when I discussed this invitation with Ray Kammer, it became very clear this is one I absolutely should do. So, I am grateful to be here.

I joined the Commerce Department at what is a great time to own a business in America. Since President Clinton has been in office, 15 million new jobs have been created. Unemployment is at its lowest level in 24 years. Inflation is at the lowest level in 30 years. We have the highest home ownership in history. And the federal budget deficit is about to become a surplus -- the first in 30 years. Clearly, these are good economic times. And clearly we need to maintain our momentum.

Our robust economy must continue to grow so all Americans have the opportunity to improve their own bottom lines -- so they can raise the quality of their lives and invest in an even better future for their children. President Clinton believes that to keep the economy strong, training and education must be our highest priority. For today, we have more jobs than people with the skills to fill them. Every time I speak to business people about the need for trained workers, I see the heads nod. They all know it's true.

Secretary Daley believes very strongly that technology will keep the economy growing. In fact, as we meet, Secretary Daley is releasing a major study that shows information technologies have been responsible for -- listen to this -- one-quarter of the growth of this remarkable economy. And let me say, the President -- and particularly the Vice President -- have made sure that as we cut the budget, we still maintained investments in science and technology.

We have several good programs at Commerce, by the way. Our Advanced Technology Program, which co-funds with industry--high-risk R&D ........ our Manufacturing Extension Partnership, more than 400 locations strong, helping smaller manufacturers apply technologies ... and, of course, the NIST Laboratories, where the nuts and bolts work gets done.

I know ASME has been very supportive of these programs, and I thank you.

And one other way to keep the economy strong is through trade. And we are developing trade in new areas of high potential. Twenty years from now, history will show that the President's trip to Africa had a great impact -- it opened the door to Africa, just as President Nixon's historic trip to China changed our view and focus on that country. Africa is a continent larger than the US, Europe, China, and Japan combined. Over 700 million people. We have more exports to Africa than to all of the former Soviet Republics combined. But still trade with Africa is only 1% of all US exports.

This evening, the President leaves for Chile. Secretary Daley will be joining him. They will be attending the Summit of the Americas, with leaders from every democracy, to begin the work to make this hemisphere a free trade zone by 2005. Forty percent of America's exports go to this hemisphere. Our exports to this region are growing at twice the rate they are to any other region in the world. This is a new global economy. And I think everyone in this room would agree. We need a vision of how we can make U.S. product inspections and tests acceptable everywhere ...and maintain the highest level of protection of safety and the environment.

Over the past century, 600 U.S. organizations have evolved to address the technical needs of specific industries. They have done their job well, and some -- like ASME -- have developed a national and international consensus that is relied upon in scores of nations. But too often we are a bystander on the international scene. And to be honest, that's just how competitor nations and companies prefer us to remain. Well, we want to change that.

I firmly believe U.S. industry leaders -- you -- should have more than a passing interest in developing international standards. These standards will dictate the terms of U.S. access to global markets, and the terms of our relationships with foreign suppliers and customers. And, obviously, they will influence the nature of new product development. Just think about this: in the 1970's, international standards accounted for about 10 percent of those used by U.S. industry. Today, it is 45 percent. In 2000, it will be more than 50 percent. Technical barriers to trade can put us at a tremendous disadvantage. As you know, trade barriers come in two forms: tariff barriers and non-tariff barriers. The tariff barriers are the most obvious, and we have aggressively tackled them.

But today, the most intractable, the most sinister, and the hardest to eliminate are the non-tariff barriers. Lack of intellectual property protection. Lack of transparency. And product testing and certification. And conflicting standards.

We have found that key foreign competitors of the United States, particularly the Japanese and certain countries in Europe, are targeting their programs to embed their national or regional design and engineering technologies in standards and regulations adopted in Asia and Latin America. These fast-growing markets are the future of world trade, and America cannot ignore this challenge. US companies cannot compete when forced to design and manufacture their products to narrow national and regional standards, like those of Europe and Japan, that do not reflect the broader needs of global markets.

Our challenge is two-fold. First, international standards institutions could become dominated by narrow regional standards that reflect positions of one technology and one market rather than standards that support global trade. Second, in key Latin American and Asian markets, the United States must ensure that "technology- and trade-neutral" standards and regulations are adopted and maintained. Both the US government and the private sector, especially multinational companies and the voluntary standards community, must be fully involved in this problem.

Conflicting standards, unnecessary testing and certification requirements, duplicative government regulations -- these are the tools nations use to shield their companies from global competitors. We call them the stealth weapons of trade. All they do is add a hefty sum to the cost of doing business, so our manufacturers have a tougher time competing. Let me give you some examples. Last year, American car companies said that differing regulatory and certification requirements in Europe added 10 percent to their costs.

The American Electronics Association estimates 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 EU requirements costs our businesses nearly $1.4 billion yearly. And about half of our exports to Europe have some type of EU certification -- in addition to meeting country-specific requirements.

And let me say, it's not just Europe. These things hamper our companies in Latin America, in Asia, and other markets as well. At the November APEC Summit meeting in Vancouver, the Business Advisory Council described testing requirements as "one of the great nontariff barriers of the world." And recently enacted legislation on labeling on consumer products in Mexico would have cost U.S. manufacturers as much as $500 million in lost sales. But, fortunately, a delay in the enforcement date enabled an orderly transition in packaging to be shipped to Mexico.

I can tell you that Secretary Daley wants us to work very hard at eliminating technical barriers to trade. We've made a good start in some areas. There is the recent U.S.-European Union agreement that calls for mutually recognized testing, inspection, and certification procedures for five categories of products. They account for $50 billion in trade. We are trying to do the same with five trading partners in the Asia-Pacific region -- Japan, Taiwan, Singapore, Australia, and New Zealand. Reducing the need for multiple tests will save U.S. manufacturers millions of dollars. And in a more forward looking approach, we are working with Canada and Mexico to develop common communication protocols for the intelligent highway systems of the future. This will open up better ways of moving goods on highways -- a potential billion dollar market. All of this is so we can see our vision: to get to a world in which U.S. product tests are accepted everywhere. We are serious about this.

I am pleased to announce that Commerce will host a major national conference on international standards on September 23 in Washington to discuss this. It will be in conjunction with World Standards Day. I invite each of you to take part and to bring your organization's views to the table. As we have stated in our National Export Strategy, the lack of a strong, focused US national infrastructure for standards and conformity assessment hampers our competitiveness in the global trading market. We often find ourselves in a reactive posture. U.S. activities in standards and conformity assessment are diverse, decentralized, often competing with one another, and divided between the public and private sectors. The system has generally worked well to support the domestic goals of health, safety, protection of the environment, and the technical needs of the U.S. marketplace. However as the EU has strengthened its own regional technical infrastructure, the United States is increasingly challenged in playing an effective global leadership role.

We can, we must, we want to do more. Small things help. We helped create an international standards information network on the World Wide Web. Developed by ANSI, the system is a catalog of more than 100,000 national and international standards. With ANSI, we are spearheading efforts to streamline laboratory accreditation procedures. Working with our partners, we are developing the framework for a national accreditation system. What this may mean is that U.S. goods that are tested by recognized laboratories would be accepted in all North American markets without further testing.

We also are working with other nations to help train their measurement and standards officials. When the Europeans assist developing countries, they help them build a standards infrastructure that is modeled after -- surprise, surprise -- the European system.

In Africa, for instance, the Europeans are moving in, and these nations are tending to rely on European standards. We need to change that. We have helped train more than 400 people, mostly from Latin America, Russia, and all the former Soviet Union, and we need to do more. We need to target Asia and Africa as well. We also have stationed our experts in five markets: the European Union, Mexico, Argentina, Saudi Arabia, and India. We think this helps us stay on top of developments, so we can better advise businesses on potentially troublesome technical requirements. So, to sum it up, we have an action agenda. And it's one where we've made some important progress already.

Today, the United States is the world's most prolific exporter; its strongest competitor; its best innovator; and its most robust economy. Yet, we are jeopardizing our leadership position -- and perhaps future economic growth -- by not paying full attention to important details of international trade: measurements, standards, laboratory accreditation. If we do not, we may discover someday that the devil truly was in the details. So, I challenge U.S. industry and government to work as partners ... to act aggressively, persistently, and intelligently to advance our concepts as the basis for international standards. We cannot risk the prospect that our products and our companies will be locked out of future markets. Exports are the fastest growing segment of the economy. The opportunity for continued strong growth -- and future prosperity -- is ours to realize.

Thank you very much.