Avoiding Barriers to Trade, Product can be Efficient and Sustainable

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Offline Khan Ehsanul Hoque

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"Avoiding Barriers to Trade, Product can be Efficient and Sustainable"

Sustainability Is Important to the Digital Technology Industry

The World Information Technology and Services Alliance is the global voice for the digital tech industry, spanning 80 countries across the developed and developing world. The purpose of this paper is to address why sustainability is so important to the digital technology industry.

In recent years, businesses and governments have worked together nationally and globally to advance environmental sustainability through innovative products and services, policies, and programs in the digital technology sector. Areas of focus and investment include materials use, packaging, repair, recycling, and recyclability. Energy efficiency also is a critical component of environmental sustainability, and to this end, governments and private sector stakeholders have developed energy efficiency policies and programs to meet national and international energy savings and carbon emissions reduction goals. Recognizing the need for a sustainable economy, the digital technology industry has likewise engaged in energy efficiency research and analysis, policy development, standard-setting, consumer education, and policymaker education. Many of these initiatives have had an impact at local, national, and international levels. One of the most prominent success stories is the ENERGY STAR program in the U.S. which has advanced consumer and commercial product and equipment energy efficiency goals for 30 years.

The digital technology industry recognizes that significant work remains to meet the industry’s ambitious sustainability goals. During the past several years, industry all around the world has initiated and expanded energy efficiency voluntary agreements, a novel policy approach that has delivered energy savings faster than traditional regulation while protecting innovation, consumer choice and competition. The industry is committed to continuing dialogue and collaboration with governments and other stakeholders to improve technical understanding of digital technology products, identify best practices to advance sustainability goals, and avoid problematic approaches.

Policies that Reduce Barriers to Trade Are Complementary to Sustainability Policies

Sustainability objectives can be more readily achieved when consumers throughout the world have access to the most energy efficient and sustainably produced products, which often are manufactured in countries other than their own. Moreover, manufacturers are better able to invest in the development of more sustainable products when they have efficient access to global markets. Barriers to trade that
prevent consumers from purchasing sustainable products or that increase the costs and/or challenges to offering a sustainable product worldwide undermine the effective realization of sustainability policy, and in the process also deprive consumers of the benefits of the latest innovations and efficiencies.

To realize the full benefits of digital technology products, industry, NGOs and governments have frequently collaborated to achieve sustainability goals while minimizing barriers to trade. For example, globally in the past decade, industry concluded energy-saving voluntary agreements with national and regional regulators to expand access to energy-efficient set-top boxes and broadband networking equipment. Such initiatives facilitate market access to innovative products without conflicting with sustainability goals, principally because these initiatives provide speed and flexibility where traditional regulation typically cannot. Harmonization of national and regional policies around such initiatives would facilitate trade, advance energy efficiency, and protect innovation.

By contrast, some governments have enacted policies that run counter to their sustainability goals by increasing the costs associated with entering a market and selling the latest energy efficient digital technology products. Such products are globally traded, but government requirements often result in unnecessary obstacles to market access and trade. Certain requirements– such as duplicative and varying testing and labeling requirements and forced localization policies – discriminate against the non-domestic energy-efficient digital technology products. Additionally, governments have failed to update regulatory policies to keep up with innovations in the digital technology industry. Thus, even well-intentioned but outmoded approaches to energy-efficiency can be counterproductive to sustainability goals and impose unnecessary hurdles and burdens on trade. Trade and sustainability are not only compatible policy objectives, but they also are complementary objectives that can be achieved through policy approaches and practices supportive of innovation.

Common Barriers to Trade and Sustainability Goals

As the digital technology industry designs, produces, and sells products globally, industry has encountered numerous energy efficiency-related measures that segment markets and impede trade and the global distribution of products. These non-tariff barriers to trade increase the cost of delivering such technology products to global consumers and slow the widespread adoption of cutting-edge, energy-
saving devices. When such measures are more trade-restrictive than necessary, they may also be inconsistent with Members’ obligations under the WTO Agreement on Technical Barriers to Trade. Examples of problematic measures that can be counterproductive to energy efficiency goals include:

 Divergent test method standards across WTO Members: The digital technology industry faces a broad combination of mandatory and voluntary policies and programs across WTO Members, including divergent national and sub-national requirements. Often these testing standards do not completely align with internationally accepted industry consensus standards, developed by a wide range of stakeholders, thus requiring the industry to incur unnecessary delays and overhead costs (and energy expenditures) to deliver such technology products to markets worldwide.

 Regulations that do not account for ever-changing digital technology products: At times, even the best-intentioned energy efficiency measures have had a negative impact on trade and sustainability because they do not account for and keep pace with ever-evolving product features and functions. As a result, the digital technology industry faces barriers to innovation when new products confront static or outmoded regulatory requirements, or when new technologies were not anticipated in the development of a fixed regulatory policy.

 Domestic testing requirements: Some WTO Members require manufacturers to obtain testing and certification in their own jurisdictions from their own accredited labs, instead of recognizing results from foreign but internationally recognized accredited labs. Local testing requirements are challenging for multiple reasons. For example, local testing requirements oblige companies to find labs with adequate capacity and ability to test cutting-edge hardware and software combinations that are constantly evolving. Usually, local testing companies promote these local testing requirements. Additionally, such testing may be duplicative of testing that has already occurred, contradicting the streamlined solution to “test once, ship everywhere,” which is itself a more efficient approach to product development.

 Burdensome or misaligned market-specific markings: The industry must comply with a broad range of market-specific marking and labeling requirements for digital technology products. Divergent marking requirements increase the cost of regulatory compliance, often unnecessarily and without distinct local benefit. Moreover, the digital technology industry has found marking and labeling requirements to be often inflexible and require physical labeling on already-limited product surfaces. More modern, less resource-intensive approaches include electronic labeling using a device’s display, a scannable code, or a website, all of which can convey the required
information to the consumer with fewer burdens and less cost.

 Forced localization requirements: As a precondition for conducting business in their territories, several WTO Members require companies to meet certain “forced localization requirements.” The policies – including mandatory technology transfer requirements, local sourcing requirements, restrictions on the flow of data across borders – intend to strengthen domestic manufacturing, goods, and services by discriminating against foreign companies, products and services. Forced localization requirements threaten the intellectual property rights of the digital technology industry and raise the cost of delivering high-technology products to consumers in WTO Members that enact such policies. Local consumers suffer with fewer choices and higher prices. Such localization requirements also lead to market segmentation, reducing economies of scale and increasing costs for businesses and consumers alike. Consequently, forced localization requirements may disallow the introduction and sale of the most capable and energy efficient
digital technology products in those markets.

Best Practices for Promoting Trade and Sustainability Goals

Governments can avoid counterproductive energy efficiency policies for digital technology products by following certain best practices to minimize barriers to international trade and promote the development and deployment of innovative, energy-saving products featuring digital technology. Examples of actions that promote both trade and sustainability include:

 Encouraging and relying on flexible programs, such as voluntary agreements: In recent years, voluntary agreements among private sector companies have proven to be well-suited to fast- moving digital technology products, with several examples in regions around the world. Under this approach, industry commits itself to energy efficiency requirements with broad product coverage, built-in transparency and accountability to governments through online disclosures and annual reporting, and protections for innovation, with energy savings achieved faster than regulation. Examples of successful voluntary agreements include those in Australia, Canada, the
European Union, and the United States for set-top boxes and more recent agreements for broadband networking equipment.

 Regulatory and policy alignment: Digital technology products have global supply chains and are typically shipped in identical form to many WTO Members. However, standards, testing requirements, and marking and labeling requirements frequently diverge, creating unnecessary trade barriers and increasing the cost and challenges of doing business worldwide, especially for small and medium-sized enterprises. Many of these requirements can be aligned without sacrificing any underlying regulatory interest. Where possible, governments should engage in international cooperation to reduce the burden of divergent regulatory policy on the digital technology industry. Bilateral, regional, and multilateral policy forums are effective tools to facilitate dialogue and policy alignment between governments, industry, and NGOs on critical issues affecting the industry, best practices for achieving sustainability goals, and compliance with international trade obligations.

 Avoiding locking outdated ideas and technologies into regulation: Government should avoid mandating regulatory requirements that can quickly become outdated in the fast-paced digital technology market. For example, when power consumption requirements or test method standards are drafted into law or regulation, they are not easily revised and will not readily keep pace with developing technology. To this end, governments should defer to flexible, innovation- friendly programs and internationally recognized consensus standards that are a better fit with the fast-moving digital technology industry.

 Stakeholder participation in policy development: Partnership and collaboration between industry, government and other stakeholders in policy development can help governments shape optimum solutions, avoid hindering market access, and achieve environmental sustainability objectives. The digital technology industry has long engaged with governments and other organizations at the local, national, and international levels to educate policymakers on technical developments, industry initiatives, and best practices. Public-private partnerships ensure that industry and government interests align in a way that promotes both trade and sustainability goals.

 Policies that support innovation: The digital technology industry is a dynamic, innovative industry that develops increasingly environmentally sustainable products, including products and systems which help manage consumers’ energy use at home. Governments can encourage these innovations by implementing supportive policies. For example, governments should pursue policies and programs that ensure protection of intellectual property rights. Additionally, governments should avoid imposing requirements that discriminate against foreign-made products.

 Leveraging ongoing WTO bodies and negotiations: The WTO can play a significant role in promoting greater energy efficiency, preventing barriers to trade, and supporting its Members’ sustainability and climate goals. The digital technology industry sees great promise in the ongoing Trade and Environmental Sustainability Structured Discussions (TESSD) 4 and values the long-standing expertise and agenda of the WTO Committee on Technical Barriers to Trade. WTO Members should prioritize including work on energy efficiency in their deliberations, since it is an essential element of achieving global sustainability and climate goals.

Source: WITSA - World Innovation, Technology & Services Alliance
Khan Ehsanul Hoque

Daffodil International University
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fd@daffodilvarsity.edu.bd
www.daffodilvarsity.edu.bd