Hüseyin Uğur Consultant, ECA Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009

 Technical conditions for the free movement of goods in EU and WTO agreements.  Problems in the existing legal systems and infrastructure  Major problems for the development of Quality Infrastructures. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur2

3 Non-TechnicalSemi-Technical Technical Finance/CapitalTrade Infrastructure Production Infrastructure Taxes Stock Market R&D, Innovation Business Regulations Intellectual Property Quality Infrastructure Business Starting and Trade Marking Bankruptcy Technical Regulations Consumer Protection MSTQ Conformity Assessment Quotas Customs (mostly political)(mostly technical) Key Elements in Market

Main elements of Technical Barriers in Trade  Products must comply with the rules and regulations of the country it is marketed in.  Compliance is demonstrated by tests. Products should be tested once according to these requirements, and the tests performed by the producer should be recognized by the purchaser.  Imported and locally produced goods should be treated equally. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur4

How is it implemented in ECA area?  EU has the most advance system and is using New and Global Approach Directives more and Old Approach Directives less.  Countries with plans and programs for EU membership are following EU practices. However, some of them have to make radical changes (both legally and technically).  Others are guided by WTO guidelines as well as EU practices. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur5

Need for “Quality Infrastructure” and its main tools  Full compliance requires a fully functioning Quality Infrastructure.  Technical regulations are the main tools of the Quality Infrastructure.  Technical Regulations use standards (and tests required by the standards), as references.  Most (almost all) of the tests are standardized.  Metrology assures the correctness of the tests by referencing all measurements to national standards.  Inspection (market surveillance) is used to supervise the implementation.  Conformity of all the elements used in the system is verified by the accreditation. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur6

Main elements of Technical Regulations  Refers to the standards that will be used to manufacture the product.  Refers to the standards that will be used for the tests used during and after manufacturing the product.  Refers authorized organizations for supervising the production.  Refers authorized organizations for tests performed during and after production.  Refers who will perform the inspections before the product is put in the market (type approval).  Refers who will perform inspections (regular or random) while the product is in the market.  Refers how complaints will be handled. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur7

MSTQ and MAS Systems, Conformity Assessment Schemes  MSTQ (Metrology, Standardization, Testing and Quality), MAS (Metrology, Accreditation, Standardization) are subsets of the Quality Infrastructures and are used in various activities. These concepts are used mostly for referring individual elements and institutions of the system.  Conformity Assessment Systems are accreditation centered operations of the Quality Infrastructures. Generally, this concept is used for the processes not for the institutions. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur8

Compatibility of existing systems with the required systems.  Legal systems.  Most of the time, legal systems are not in compliance with contemporary implementations and requirements. We observe major problems in :  Standardization (mandatory versus voluntary usage of standards),  Technical Regulations (authorization, industrial interest groups),  Accreditation (coverage, authorization),  Metrology (designation of national measurement reference standards).  Preparation and implementation of Technical Regulations.  Contents, who prepares, who supervises the implementation, reference to existing physical infrastructure especially the tests.  Participation of private sector in inspections.  Physical infrastructures.  Insufficient Metrology Institute for national measurement reference standards, insufficient accredited calibration laboratories, lack of accredited laboratories for product testing, material analysis, and health. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur9

Implementation, market surveillance problems  Major problems in  Coordination among demand (market), service providers (standardization, metrology, accreditation), regulatory authorities, inspection and supervision mechanisms.  Coordination with universities for preparation of standards, pool of assessors for accreditation, various tests that can be performed at university laboratories.  Insufficient information, documentation for the system.  Multiple inspections, overlap between various organizations.  Inspections without tests, measurements.  Insufficient level of training for inspectors.  Inspections without feedback.  Abuse, corruption. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur10

Awareness, perception of needs (1).  In industrially developed states, producers, especially the private sector, is the driving force in the Quality Infrastructures.  Needs generally are first recognized in the market, then proposals are prepared by the industry to solve the problems.  State regulates the market, and establishes the key elements of the Quality Infrastructures, such as regulators, metrology, standardization and accreditation organizations.  Needs are apparent, and there are not much problems regarding awareness. People are also rather knowledgeable due to dissemination of information during various marketing processes. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur11

Awareness, perception of needs (2).  However, if the industry is not developed sufficiently, state has to “do everything”, namely, determine the needs, provide solutions to problems and create public awareness.  In such environments, industry waits for the state “to act”. State is the main driving force.  The needs are mostly originated in the “problem solving” processes.  On the other hand, state can’t establish, manage and maintain the whole system since it lacks the necessary know-how and experience.  The problem is in the perception of the needs. In real cases the needs are much more than they appear to be, or top decision makers are informed. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur12

Awareness, perception of needs (3). Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur13 Industry (Provider) State (Regulator) Public (Consumer) Driving force. Identification of needs. Weights in decision making. Sources of know-how. Usage of available people. Usage of available infrastructure. Development of Strategy

Funding  Generally local funds are not sufficient.  Even if local funds are sufficient, there are too many restrictions.  Local funds don’t have the continuity (lack of long term commitment).  Funds needed mostly for:  Metrology Institute (5-200 million €, 5-25 year development).  Secondary laboratories for calibration and/or testing (2-500 million €, 2-15 year development).  Accreditation (0-2 million €, 1-5 year development).  Standardization (0-2 million €, 1-5 year development).  Regulatory infrastructure, including inspection/market surveillance (0-2 million €, 1-5 year development). Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur14

Know-how gap  Lack of know-how on Quality Infrastructures.  Lack of experience in the operations of MSTQ organizations, conformity assessment schemes.  Lack of trained staff for using delicate and sensitive measurement equipment.  Lack of experience for standard preparation committees.  Lack of experience for the pool of assessors in accreditation.  Lack of trainers for the trainees.  Lack of long-term consultants with proper knowledge. Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur15

Coordination among key players, transparency Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Dr. Hüseyin Uğur16 Regulators Ministries Technical Regulation Preparation Department Control/Inspection Department Laboratories Other authorized Organizations CoordinatorService Providers Core Service Providers Standardization Metrology/Measurement Accreditation Private Service Providers Laboratories Inspection Certification

Economic benefits to borrowers  Metrology related activities amount to 5-13% GDP for a typical economy.  In metrology, Return of Investment is between 2,1 and 51 in the lifetime of investments (approximately years).  So borrower “recovers” the resources used for investments in metrology in couple of years.  As an example, for Turkey, in ITP Project (World Bank), Return of Investment for metrology was calculated to be 42 by international consultants (SG/NPL of UK). 45 million USD total investment in metrology generates more than 100 million USD per year additional income for the state.  2-5% of this figure is the direct income by the metrology institute.  3-15% is the tax revenues generated by direct customers of the metrology institute (secondary laboratories, testing facilities, military etc.).  Remaining amount (80-95%) is from revenues due to increased industrial exports by the existence of a functional Quality Infrastructure.  So, investments in the Quality Infrastructure is one of the best investments a state can make. 17Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Hüseyin Uğur

18Knowledge Economy Forum, VIII Fontainebleau, 1 May 2009 Hüseyin Uğur Thank You for Your Attention