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Standardization: Fundamentals, Impact, and Business Strategy APEC Sub Committee on Standards and Conformance Education Guideline 3 – Textbook for Higher Education Standardization : Fundamentals, Impact, and Business Strategy i Preface “Ministers recognized the importance of standards education and encouraged members to develop reference curricula and materials to address the significance of standards and conformance to trade facilitation in the region.” - 2006 APEC Ministerial Joint Statement – Noting the views expressed by the Ministers, APEC Sub-Committee on Standards and Conformance (SCSC), which has been working since 1994 to APEC Economies to address key issues in standards and conformance, initiated a project titled APEC Strategic Standards and Conformance Education Program in 2007. This textbook is the third “Education Guideline” produced with the funding provided for the APEC Strategic Standards and Conformance Education Program. The first Education Guideline, ‘Case Studies of How to Plan and Implement Standards Education Programs and Strategic Curriculum Model (APEC#209-CT- 03.3),’ was published in March 2008. The second Education Guideline, ‘Strategy for Education and Outreach on Standards, Conformity Assessment, and Technical Regulations (APEC#208-CT-03.3),’ was published in July 2009. The objective of this third guideline, ‘Standardization: Fundamentals, Impacts, and Business Strategy’, is to provide a common reference textbook on standardization for the graduate program in higher education in the APEC region. This textbook can also be used in the senior level of the undergraduate program as well as professional training for business managers and government officials. This textbook is an outcome of the APEC project CTI20/2008T jointly funded by the APEC and Korean Agency for Technology and Standards (KATS). The project of developing this textbook was proposed and managed by the Korean Standards Association (KSA). Since there are few textbooks on standardization, individual economies particularly developing economies were faced with the challenging task of developing teaching materials due to the lack of experiences and resources. Moreover, individual developments may cause the overlapping consumption of resources in fulfillment of the same goal. In this sense, we believe that the development of this teaching material will not only enable members to save time and efforts in the process but also build the fundamental bases for future education on standardization in the region, one that will increase public awareness in companies and public authorities in member economies in addition to universities; thus contributing to trade facilitation in our region. No textbook is perfect and complete, and this third guide is no exception. Since this textbook is the publication of the APEC, we should explicitly include a full articulation of the relationship of this document to the work of the SCSC and the views of its members as follows. The chapters and case studies contained in this textbook were commissioned by the project editors to be developed and written by ii Preface individual authors. The governments of the APEC member economies, including the co-sponsoring economies, do not endorse or take a position on the views or opinions expressed in ‘Standardization: Fundamentals, Impacts, and Business Strategy’ and cannot guarantee the accuracy, relevance, timeliness, or completeness of information it contains. The views and opinions expressed in the chapters of this textbook are those of the respective authors. The contents of these chapters and case studies do not necessarily represent the views of APEC, the SCSC, and the member economies of APEC or the APEC Specialist Regional Bodies1). This book focuses on the fundamentals, impacts, and business strategies of standardization. Part I Fundamentals deals with the definitions and functions (chapter 1), lifecycles, organizations, and development procedures (chapter 2) as well as conformity assessment (chapter 3). Part II Impacts presents the economic impacts from the macro perspective (chapter 4) and micro perspective (chapter 5) as well as the legal impacts (chapter 6). Part III Business Strategy has four chapters – standardization and innovation (chapter 7), competitive strategy (chapter 8), collaborative strategy (chapter 9) and two case studies of information and communication standards (chapter 10). Three annexes are attached to this book. Annex A presents nine brief cases on how standards make a real difference in our society. Annex B discusses the role of the five APEC Specialist Regional Bodies. To provide students with tangible images of a standard, sample pages of ISO/IEC 27000 are embraced in Annex C. We should indicate that this book includes limited amount of contents and suggest the further development of teaching materials on conformity assessment and metrology in the future. Finally, professors and teachers can gain additional teaching materials (power- point slides) and list of relevant references upon request. For those who plan to introduce this textbook in any sort of class, please contact the editor at dgchoi@ksa. or.kr for more teaching resources. Editor, Dong-Geun Choi (Senior Researcher, Korean Standards Association) Co-Editor, Byung-Goo Kang (Professor, Korea University) Co-Editor, Taeha Kim (Professor, Chung-Ang University) 1) Representatives from the APEC “Specialist Regional Bodies” (SRBs) participate in the SCSC as technical experts. The five APEC SRBs are: the Pacific Area Standards Congress (PASC), the Asia-Pacific Metrology Program (APMP), the Pacific Accreditation Cooperation (PAC), the Asia Pacific Legal Metrology Forum (APLMF) and the Asia- Pacific Laboratory Accreditation Cooperation (APLAC). iii Table of Contents Preface PART I. FUNDAMENTALS Chapter 1. Definitions and Functions ....................................... 3 1.1 History and Definitions / 6 1.1.1 History / 6 1.1.2 Definitions / 7 1.2 Functions / 11 1.2.1 Objectives and Value / 12 1.2.2 Basic Function / 13 1.2.3 Extended Value /15 1.3 Classifications / 27 1.3.1 De Facto, De Jure, and Forum Standards / 27 1.3.2 International, Regional, National, Industry and Company Standards / 32 1.3.3 Basic, Testing, Product, and Process Standards / 33 Chapter 2. Lifecycle, Organizations, and Development Procedures ............................................................. 37 2.1 Lifecycle of Standards / 40 2.1.1 Lifecycle of Standards / 40 2.1.2 Lifecycle Basics / 40 2.1.3 Growth of Standards / 42 2.1.4 Derivation of Standards / 44 2.2 Standards-Related Organizations / 45 2.2.1 SDOs/SSOs / 45 2.2.2 Conformity-Related Organizations / 47 2.2.3 Organizations related to measurement / 48 2.2.4 Organizations Representing Users/Consumers / 49 2.2.5 Other organizations related to standardization / 49 2.3 Standards Development Procedures Example / 49 2.3.1 ISO Procedures / 49 2.3.2 ITU Procedures / 52 2.3.3 Other International Organizations / 53 iv Table of Contents Chapter 3. Conformity Assessment ........................................ 57 3.1 Overview of Conformity Assessment / 59 3.1.1 Definitions and Purposes / 60 3.1.2 Conformity Assessment Activities / 62 3.1.3 Importance of Testing Activities / 63 3.1.4 Types of Certification Systems and Characteristics/64 3.2 System Certifications / 66 3.2.1 Quality Management Systems /66 3.2.2 Environmental Management System / 69 3.2.3 Other System Certifications / 71 3.3 Product Certification System / 72 3.3.1 Certification System of Major Product Markets / 72 3.3.2 International Certification Systems of IEC / 74 3.4 Conformity Assessment and Multilateral / Mutual Recognition Arrangements and Agreements / 78 3.4.1 Conformity Assessment and International Trade / 78 3.4.2 Objectives of MLAs/MRAs / 79 3.4.3 Effects of MLAs/MRAs / 79 3.4.4 Important MLAs/MRAs / 80 PART II. IMPACTS Chapter 4. Economic Impacts - Macro Perspective .............. 91 4.1 Definition of the Macro-Perspective / 92 4.2 Analysis framework of economic effects of national standards and conformance infrastructure / 92 4.2.1 Review of principal studies / 92 4.2.2 The quantum of economic benefit derived from innovation and technological change / 94 4.2.3 The more standards the better? / 95 4.2.4 The halo effect / 96 4.2.5 Summary of impacts at the macro level / 97 4.3 Standards and sustainable trade / 97 4.3.1 Sustainable trade / 97 4.3.2 Economic models / 98 4.3.3 Offshore manufacturing / 99 4.3.4 The evolution of technical barriers to trade / 100 4.3.5 Approaches to resolving trade barriers / 102 4.3.6 WTO Agreements and international standards / 103 4.3.7 TBT Agreement / 103 4.3.8 Containerisation – a standards success story / 106 4.3.9 Conformity assessment and trade / 106 4.3.10 SPS Agreement / 109 4.3.11 Intergovernmental standards / 110 Table of Contents v Chapter 5. Economic Impacts - Micro Perspective ..............115 5.1 Definition of Micro-Perspective / 116 5.2 Analysis Framework of Economic Effects from the Micro- Perspective / 117 5.2.1 Identifying the problem / 117 5.2.2 The baseline / 118 5.2.3 Sustainable markets / 118 5.2.4 Information asymmetries / 119 5.2.5 Diffusion of technological information / 120 5.3 Benefits of standards / 121 5.3.1 Beneficiaries of standards / 121 5.3.2 Standard or no standard / 122 5.3.3 The financial benefit provided by specific standards / 124 5.3.4 Value of a statistical human life / 124 5.3.5 Quantified risk assessment / 126 5.4 Cost impacts of standards / 127 5.4.1 Business cost impacts / 127 5.4.2 Prescriptive and performance-based standards / 127 5.4.3 Outcomes-based technical regulations / 129 5.4.4
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