Strengthening the Compliance of the OIC Member States
to International Standards
14
sectors. Other initiatives tend to lie between these two extremes, but there is clear scope to move
forwards on harmonization—including with international standards—through regional frameworks.
Box 2: Empirical Evidence on Regional Approaches to Standards
Chen and Mattoo (2008) go beyond the analysis of the trade effects of standards to examine two
instruments designed to reduce standards-related trade costs: harmonization and mutual recognition.
They focus on the European Union, as that is the region where harmonization is the most advanced, and
thus where data are most easily available.
Empirical analysis using a set of econometric models shows that harmonization and mutual recognition
can both be effective strategies for boosting trade, by implication through mechanisms that reduce the
trade costs associated with standards. Harmonization tends to boost trade for the countries that
harmonize, but can reduce exports of countries outside the harmonization zone, in particular when the
new standard is more stringent than some pre-existing national standards. Mutual recognition is more
generally trade promoting, although it interacts with the structure of trade agreements through rules of
origin: agreements with restrictive rules of origin tend to see intra-regional trade grow following
implementation of mutual recognition, but at the expense of imports from outside the region. That effect
is absent in agreements with relatively liberal rules of origin.
In addition to highlighting the potential for coordinated efforts to boost trade in the presence of product
standards, this study shows that it is important to situation harmonization and mutual recognition
within broader regional integration frameworks. Product standards are only one factor that influences
trade between countries, and it is important not to over-emphasize them. At a policy level, the key is to
proceed on the basis of a solid understanding of how standards rules interact with trade patterns and
trade agreements to produce a beneficial outcome that does not have undue negative effects on
excluded countries.
On its own, harmonizing standards is not enough to fully eliminate the costs that arise from divergent
national norms. It is also necessary to address the issue of conformity assessment, i.e. procedures for
testing goods to see whether they comply with a relevant standard, and potentially issuing a certificate
or mark to indicate compliance. Harmonization on its own does not eliminate the usual requirement that
imported products undergo conformity assessment procedures in the importing market, typically in
addition to any procedures completed in the exporting market. This requirement leads to duplication of
testing costs, which can be substantial, particularly when the import market is a developed country
where price levels are much higher than in the exporting developing country.