by Susan Daniels

Can the EU Push Standards as a High-Tech Weapon?
by Amy Zuckerman

The European Union (EU) in recent months has been threatening to use standards, directives, and the possibility of legal action--particularly against Microsoft--to gain advantage in the high-tech market.

Much of this activity was outlined in a 1997 communication between the European Commission (EC), which is the bureaucratic arm of the EU, and the European Parliament. The activity has been open knowledge in Europe. What has changed has been the movement from debate to action. Consider these developments:

  • EC restructuring. Much of the high-tech activity has been coming from the Directorate-General III (DG III), Industry, which underwent a restructuring in September. At that time, Reinhard Buescher moved from his position as head of the DG III Standards Unit to head of electronic commerce. Within weeks of this move, Buescher announced plans to convene government and industry user groups to dictate standards to high-tech manufacturers worldwide. Buescher has been particularly concerned with Microsoft and the Seattle, WA, manufacturer's Internet strategy.

  • Possible legal action. At about the same time that Buescher was unveiling his user groups, the EC competition arm announced that it was engrossed in legal proceedings with Microsoft over contracts relating to Internet service providers in Europe. Karel Van Miert, EC competition commissioner, has made it clear that his directorate would utilize all legal tools available if Microsoft did not comply with European competition law. This issue is expected to come to a head in the winter of 1999.

  • High-tech directive. In the meantime, the EU has been developing a series of directives that appear aimed at the high-tech industry--particularly in the United States. These include the controversial data-privacy, battery, and electronic-waste directives.

The EU and U.S. industry are also debating what technology will be included in an international cellular-phone standard. This debate has moved to the International Telecommunication Union, where such a standard is under development.

Will the EC stop at Microsoft?

European officials deny any attempt to hit at the world high-tech industry, or that the activities of recent months at all relate to their well-publicized plan to gain ascendancy in high technology. They are clear that they will not allow Microsoft to control Internet access, but haven't talked about how their policies would affect other companies.

Following in the wake of media interest on this topic, Buescher insisted his plan was to work toward an "open global commerce system.... It's a legitimate interest to strengthen EU competitiveness, and of course this will be done in full line with international obligations. We want to empower European users to make their best choice; that is to say, to increase market transparency, to compare existing market solutions. There's no secret behind this."

Buescher says the EU's aim is "to strengthen the position of the user. We have to break the dominance of the manufacturer over the user. Users have to be more actively involved in the process....The manufacturers still dominate the process. They have tried to impose their standards and specifications successfully for years. This is what needs to be changed."

While not wanting to "stifle competition or keep companies from reaping the benefits of their investments," Buescher adds, "Open access and effective choice between different products and services are prerequisites for electronic commerce to flourish. Companies should, at a given moment, be prepared to give widely used technologies out of their hand and to turn them into publicly available specifications."

Asked whether the EC was creating de facto cartels with its proposed user groups, Buescher would only say that the commission is not directly involved in the standards-making process. "Standards are by definition voluntary and must therefore be left to the market. Our role is to help consumers and users to make a good choice and to ensure that the standards process is open and not against the rules of fair competition."

Buescher says the EC's approach to information technology standardization will be to promote open forums and workshops where users can express their requirements for standardization, define their needs for interoperability, and assess competing technologies and standards.

Many members of the American high-tech community, as well as government officials, are currently grappling with the meaning behind these European activities. Do they really amount to a threat from Europe to the world--particularly the U.S.--high-tech industry, or is this just political posturing? Is this an effort to hit at Microsoft alone? Can the Europeans really create user groups that will influence world high-tech markets?

Some in the U.S. high-tech world have been actively tracking European developments and their potential impact on the American high-tech market. For example, Tim Bennett, senior vice president, international trade affairs at the American Electronics Association in Washington, DC, has been quoted as saying he was well aware of the EU's history of manipulating standards to market advantage.

"If this is a heightened effort, I would just say it is in the same vein of what they have been trying to achieve in the last decade in response to U.S. and Asian competitiveness in high tech and the fear of being left behind," Bennett says. "The EU is a master at trying to develop standards and then work through international standards-setting bodies to get adoption of those standards as the international standards in order to give a distinct competitive advantage to the EU manufacturer."

"We are now experiencing trade wars on a new level, one in which high-tech manufacturers in particular are having standards dictated to them by strong, unified regional bodies representing parochial interests that benefit companies based in their regions at the expense of U.S. business," Rich Forselius told the media. Forselius is manager of engineering standards and procedures for United Technologies/Hamilton Standard's Aircraft Products Engineering Division.

Carl Cargill, standards director at Sun Microsystems, has just returned from Europe and believes the recent activities are being fueled by the EU's need to survive in a highly competitive world technology market. "I would agree that the EU is reenergizing itself," he explained publicly. "They [the Europeans] are asserting their ability to manage change. It's not a trade war. It's a war to survive."

No one interviewed either in the United States or Europe late last year on this issue was really certain what the EU can accomplish with its efforts to move into the high-tech arena. There is consensus among U.S. industry members that Europe would hardly go so far as banning products, which wouldn't go over well with European consumers.

European standards officials affiliated with high-tech companies downplay these developments as old news and inconsequential. They say the user-group method has been floated before to no great impact.

That's not the opinion on this side of the Atlantic. There is some agreement that the user-group approach, if actually implemented, could prove to be a powerful force. One expert, who has asked to remain anonymous, explains that user groups can be used to slow down an activity so the home team can catch up or use information to change direction as a technology shift occurs.

The expert goes on to explain that a user group can bring an innovation to a crawl and wait until domestic industry can gain a competitive innovation. The United States and Europe did this against the Japanese as they were getting ready to introduce their version of high-definition television. "Digital technology came to the rescue and bought the U.S. five years."

What can the U.S. government do?

U.S. government officials appear to be in a holding pattern, watching to see if the EU ups the ante. Ray Kammer, director of the National Institute of Standards and Technology, had told this author the EU's activities amount to an attack on our high-tech industry but has softened those statements in recent weeks.

Kammer, who has not been available for comment recently, has been holding firm on plans to raise worldwide concerns over the EU's domination of the international standards arena. However, his action plan does not call for lobbying until after the new year.

Officials affiliated with the Office of the United States Trade Representative say the European threats leave our government in a bit of a jam. There are things the United States can do politically, although officials are not describing what those may be. But the Europeans have to move beyond making threats to taking real action before this issue can be brought before the World Trade Organization.

Editor's note: Rosalind McLymont helped research this article. Some of this material was adapted from the author's report, "Standards, Technology, and Issues Facing the Global Economy." Copies of the complete report can be purchased from CEEM, Inc., a subsidiary of the British Standards Institute. Call 800-745-5565 or e-mail inquiry@CEEM.com.

Amy Zuckerman is principal of A-Z International Associates in Amherst, MA, and author of the book International Standards Desk Reference: Your Passport to World Markets.

ANSI and RAB Approve IATCA Training Course

The American National Standards Institute (ANSI) and Registrar Accreditation Board's (RAB) National Accreditation Program has approved its first International Auditor and Training Certification Association (IATCA) auditor training course.

Quality Management Institute (QMI), headquartered in Mississauga, ON, earned approval for its weeklong IATCA quality management systems (QMS) training course.

IATCA's individual auditor certification and training course approval programs support worldwide acceptance of a supplier's QMS ISO 9000 registration. Specifically, IATCA eliminates the need for multiple certifications of auditors who audit internationally and multiple approvals of auditor training courses.

A multilateral recognition agreement (MLA) signed in August by ANSI and RAB, along with their peers in Australia and New Zealand, China, and the United Kingdom, paved the way for QMI's course approval. The MLA binds each signatory to recognize the IATCA training course approvals issued by each other.

While the approval process for an IATCA course is the same as the steps under the established national acccreditation program (NAP), course providers must meet the harmonized IATCA criteria rather than the NAP criteria. Auditor certification candidates for either RAB or IATCA certification may use an IATCA-approved course to satisfy either program's training course requirement.

John Kalinowski, QMI's manager, training services, predicts QMI will offer its IATCA course approximately 60 times each year across Canada and the United States. QP

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