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Consumer Protection, Standardization and Business Competitiveness

The convening of this Workshop on “Consumer Protection, Standardization and Business Competitiveness” demonstrates in no small way the critical importance which my Ministry, and indeed the Government of Barbados, attaches to the role which standardization can and must play in the economic, social and cultural development of our country as we move into the twenty-first century.

I, therefore, welcome the opportunity to deliver the opening address at what I consider to be a most distinguished gathering of professionals and technicians from both the public sector and the private sector assembled here this morning.
As you are aware Barbados, like so many other developed and developing countries, is caught up in a process of constant change, occasioned in no small measure by the impact of trade liberalization and globalization. As a consequence, our country has had, inter alia, to commit itself to the removal of restrictions on the importation of goods and services in an effort to position itself to participate fully in international trade. In this connection, Barbados was one of the founding members of the World Trade Organization (WTO) which became operational in January, 1995.

The WTO was established basically to promote and facilitate the development and expansion of international trade in goods and services. As reference to the Marrakesh Agreement will show, the Organization is supposed to help raise standards of living “while allowing for the optimal use of the World’s resources in accordance with the objective of sustainable development.”

Here, I must point out that one of the multilateral agreements on trade in goods annexed to the Final Act Establishing the World Trade Organization is the Agreement on Technical Barriers to Trade. This Agreement specifically provides for Member States to eliminate technical barriers to trade. It further provides for the use of standards in order to facilitate international trade and for Member States to conform to these standards, while affording imported goods and services treatment no less favourable than those that are produced domestically.

I need not remind you of the critical role which trade plays in the process of economic, social and cultural development. It should not be surprising, therefore, that so many countries are part of one or other trading block and are in many instances seeking to expand existing trading blocks. Barbados is no exception. On the one hand, we are actively participating in the establishment of the CARICOM Single Market and Economy (CSME) which will provide a single economic space for CARICOM Member States. A key component of the CSME is that it will provide for free trade in goods and services among participating states. On the other hand, we are participating in negotiations for the establishment of the Free Trade Area of the Americas which is to become operational by 2005. This hemispheric agreement will, inter alia, provide for economic co-operation as well as for the facilitation of trade between participating states.

I have mentioned these developments so that you can have a clearer appreciation of the manner in which trade liberalization is likely to impact on our economy in the years ahead. For there is no gainsaying the fact that domestic businesses will have to prepare themselves to deal with increasing competition not only in international markets but also in the domestic market as tariffs and other impediments to imports from an ever-increasing number of countries are lowered or removed.

Already we are seeing the impact of trade liberalization on our foreign trade. Available statistics show that between 1990 and 1995, the value of total visible trade increased by 9.5% from $1,407 million to $1,541 million whereas between 1995, the year in which the WTO became operational, and 2001, the figure jumped to 38.7%, reaching $2,137 million in 2001.
What is particularly significant is that goods are now being imported in larger volumes from a wider range of countries. This means that consumers are being exposed to goods which are produced under varying production systems in countries with different cultures and practices. Authorities therefore need to exercise greater vigilance in respect of goods being imported into the country in order to provide proper protection for the consuming public.

Vigilance is also needed to ensure that our producers can be assured of the quality of goods being imported as inputs for production.

Clearly, in my view, the use of standards can go a long way towards providing the kind of protection needed in this regard.
There are several organizations which are involved in the formulation of standards at the national, regional and international level. Here in Barbados, the Barbados National Standards Institution is the national body with that responsibility while at the regional level, responsibility has been entrusted to a new body, the Caribbean Regional Organization for Standards and Quality which is headquartered right here in Barbados.

At the international level, several of these organizations play a lead role in the development of standards, according to the industry involved. Key organizations which can be mentioned in this regard are the International Organization for Standardization (ISO), the International Electrochemical Commission (IEC), the International Telecommunication Union (ITU), the Codex Alimentarious Commission (CAC), the International Plant Protection Council (IPPC) and the International Organization for Legal Metrology (OIML). I am sure that you will hear a lot more about these organizations over the next two days.

You may well ask the question: What really is a standard?

The ISO, which is perhaps the most widely known of the international agencies involved in standards development and which boasts a membership of over 140 countries, has defined a standard as a documented agreement containing technical specifications or other precise criteria to be used consistently as rules, guidelines, or definitions of characteristics to ensure that materials, products, processes and services are fit for their purpose. Standards deal with issues such as reliability, safety and efficiency of operation in many different fields of endeavour and are normally developed through a process of consensus, with input form stakeholders in both the public and private sector at the national level in the case of national standards and from the members states of the particular organization in the case of regional or international standards.

A formal standards development process, such as that used by the ISO and national standards bodies, is a complex process and is characterized by:
· openness to facilitate participation by interested persons;
· a sharing of information;
· a balancing of the views and interest of participants;
· agreement by consensus; and
· due process so that all views can be expressed and objections heard.

It is of Interest to note that standards are also developed by individuals or companies or by groups of parties with a common interest. Clearly, standards developed in this manner will serve the interests of the participants, but may serve to disadvantage those who were not involved in the preparation process.
Consequently, it can be said that not all standards are equal and not all standards will gain international acceptance.

I must warn however, that concerns have been raised in respect of the interpretation of the word “consensus” in the international context. Many countries are concerned too that consensus is not required for certain international standards to acquire status within the context of the WTO rules. As far as the ISO is concerned, there is consensus when there is general agreement characterized by the absence of sustained opposition to substantial issues by any important part of the concerned interests and by a process that involves seeking to take into account the views of all parties concerned and to reconcile any complicating arguments.

My information is that many developing countries are unable, for reasons such as lack of financial resources or technical expertise, to participate actively in the formulation of international standards. Further, few developing countries have representation on key committees of organizations such as the ISO. Consequently, while the standards development process may appear to be open, many developing countries are unable to make any meaningful input in that process with the result that international standards can be formulated which fail to reflect their particular interest, thus making a mockery of the concept of consensus.

Another major concern has been the influence which European Standards Bodies such as the European Committee for Standardization, the European Committee for Electrotechnical Standardization and the European Telecommunication Standards Institute have apparently been able to exert in the process of the development of international standards by virtue of the existing close working relationship with the International Organization for Standardization and International Electrochemical Commission. Indications are that countries which are not members of the European Union experience difficulty in being able to participate in the standards development work of those organizations. These are critical concerns given the role of standards in international trade and given that trade can exert a major influence on the process of economic, social and cultural development. Not surprisingly, the ISO is taking serious steps to facilitate greater involvement, and participation of developing countries in, its standards development process.

I must point out that there are several different types of standards and that different organizations tend to describe them in different ways. However, included among the common types are the following:

1. Basic Standard:
One that has wide-ranging coverage or contains general provisions for one particular field;

2. Terminology Standard:
One that is concerned with terms, and usually accompanied by their definitions or explanatory notes;
3. Testing Standard:
One that is concerned with test methods and sometimes includes related activities such as sampling;
4. Product Standard:
One that specifies requirements to be fulfilled by a product or a group of products to establish fitness for purpose;
5. Process Standard:
One that specifies requirements to be fulfilled by a process to establish fitness for purpose;
6. Service Standard:
One that specifies requirements to be fulfilled by a service to establish fitness for purpose;
7. Interface Standard:
One that specifies requirements concerned with the compatibility of products or systems at their points of interconnection; and
8. Standard on Data to be Provided:

One that contains a list of characteristics for which values or other data are to be stated for specifying the product, process or service.

Clearly, each type of standard serves a different purpose. Both developed and developing countries can however benefit from the use and application of standards in many different ways such as:

1. the promotion of market efficiency;
2. the facilitation and expansion of international trade;
3. the facilitation of fair competition;
4. the lowering of barriers to market entry;
5. the facilitation of the diffusion of new technology;
6. the protection of consumers against unsafe or substandard products; and
7. the facilitation of interoperability among products. This is of particular importance in the Electronic and Information Technology industries.

I must warn however that it is important that particular care is taken in the formulation of standards since poorly designed standards can have a negative impact on a country’s development in that they can serve to raise transaction costs and present barriers to trade. They can also constrain innovation and promote inferior technologies as well as hinder the development of interoperable systems.

In short, poor standards can act to raise the cost of doing business, compromise product and service quality and limit market penetration. Here, I am reminded of a statement made by Ralph Flaunders, a former United States Senator and an Engineer by profession. He expressed the view that standards should relegate the problems that have already been solved to the field of the routine leaving the creative faculties for problems that are unsolved.
Madam Chairperson, the Government of Barbados is cognizant of the critical role which standardization can play in the process of sustainable economic, social and cultural development. For this reason, it has been giving ever-increasing attention to the area of consumer affairs.

As many of you are aware, Consumers International is an independent, non-profit, international body, consisting of over 250 organizations from 115 countries, which seeks to promote a fairer society and acts to defend the rights of all consumers by:
· supporting and strengthening member organizations and the consumer movement in general; and
· campaigning at the international level for policies which respect consumer concerns.

It holds the view that consumer policy should promote the establishment of legislation, institutions and information that improves the quality of life and empowers people to make positive changes in their own lives. Further, it strongly advocates that consumers should be provided with the following rights:
· the right to satisfaction of basic needs;
· the right to safety;
· the right to be informed;
· the right to choose;
· the right to be heard;
· the right to redress;
· the right to consumer education; and
· the right to a healthy environment.

Additionally Consumers International subscribes to the view that the protection and promotion of the rights of consumers can lead to:
· the eradication of poverty;
· good governance;
· social justice;
· fair and effective market economies; and
· the protection of the environment.

Another matter which I wish to mention here is the United Nations Guidelines for Consumer Protection. The General Assembly of the United Nations adopted guidelines for consumer protection in April, 1985 and they were expanded in 1999 so as to incorporate sustainable consumption principles. The guidelines provide a framework for Governments, particularly those in developing countries, to use in elaborating consumer protection policies and legislation.
Earlier, I alluded to the CARICOM Single Market and Economy which is scheduled to become operational in the very near future. I wish to point out that Part Two of Chapter Eight of the Revised Treaty of Chaguaramus Establishing the Caribbean Community including the CARICOM Single Market and Economy contains specific provisions for the protection of consumers.

I have taken the trouble to reference these organizations and arrangements precisely because I want to stress the point that the Government of Barbados is firmly committed to the protection of the rights of consumers. That is why we strongly support the eight rights being promoted by Consumers International. That is why we are in agreement with the United Nations Guidelines for Consumer Protection and have drawn heavily on them in formulating our consumer protection policies. That is why Barbados has given its support to the provisions of Part Two of Chapter Eight of the Revised Treaty of Chaguaramus.

Over the past four years or so, Government has been seeking to provide a new framework for the protection of consumers. In this regard, new legislation has been enacted including:
· A Consumer Protection Act;
· A Consumer Guarantees Act; and
· A Utilities Regulation Act.

Additionally, existing legislation, which has implications for consumer protection, is being reviewed. Included here are the Control of Standards Act and the Weights and Measures Act.
Institutional arrangements are also being strengthened to provide better protection for consumers. Already, Government has established a Fair Trading Commission, under the provisions of the Fair Trading Commission Act to, inter alia,bbbbb administer the Utilities Regulation Act, which was mentioned earlier. In addition, it has established the office of Public Counsel to represent consumers in preparing for reviews and hearings and presenting arguments before the Fair Trading Commission in relation to utilities matters and to mediate on behalf of consumers in relation to disputes being heard before the Consumer Claims Tribunal. Attention is also drawn to the fact that the Consumer Claims Tribunal was established under Section 41 (1) of the Consumer Guarantees Act to enforce the rights conferred upon consumers and others by the said Act and is authorized to entertain disputes involving claims not exceeding $10,000.00 in value. I must stress that consumers can utilize the services of the Tribunal as well as the Public Counsel free of cost.

Another major development has been the decision to restructure the Price Control Division to form the Department of Commerce and Consumer Affairs. This will serve to strengthen the capacity of the Ministry of Commerce, Consumer Affairs and Business Development to formulate and monitor consumer policy, enforce consumer protection measures and generally to look after consumer affairs more effectively. A major benefit here is that there will be a fourfold increase in the manpower available for policing mandatory standards. This is particularly important in view of the fact that the number of officers currently available to police these standards is woefully inadequate.

There are also plans to upgrade the facilities available for supporting personnel involved in the formulation of standards as well as the policing of trading standards. In this regard, the facilities of the Barbados National Standards Institution are to be expanded and refurbished while plans are being drawn up for the provision of a Metrology Laboratory to support the work of officers involved in legal metrology.

To cap it all, an extensive training and retraining exercise has already started to upgrade the skills of person involved in activities related to standardization and consumer affairs.

This government is committed to educating consumers about their rights as well as about matters such as standards and codes of practice which can have implications for their health and welfare. Further, government will promote the formation of strong and effective consumer groups so as to encourage consumers to look after their interest. One area in which this can be especially helpful is with respect to the policing of mandatory standards. In my view, consumers are ideally placed to help police these standards. Additionally, government will encourage the active participation of stakeholders in the process of standards development. The Barbados National Standards Institution has a number of committees which are involved in the formulation of national standards. These committees draw representation from both the public sector and private sector and there is provision for consumer groups to be represented. At the regional and international level, the BNSI is equipped to represent Barbados in relevant standards formulation bodies and has been doing so for some time with much success.

From all appearances, Barbados has not experienced any major or serious problems in respect of inadequacies relating to standards and their impact on consumer protection over the past four years.

I am aware of one problem relating to a particular brand of oven, and another one relating to a particular make of motorcar. In both instances, I am pleased to be able to say that the local dealers were most co-operative in having the problems rectified once they were identified and found attributable to a manufacturing deficiency.
Several other consumer problems were drawn to the attention of the Price Control Division of my Ministry as well as the Barbados National Standards Institution before the enactment of consumer protection legislation and officers of these institutions were able to have most of these problems resolved amicably through a process of moral suasion.
I can say also that since the passing of the consumer protection legislation on January 16, 2003, the Public Counsel has achieved considerable success in having those problems which have been referred to him resolved satisfactorily and has not yet found it necessary to refer a single compliant to the Consumer Claims Tribunal.

The local business community is therefore to be complimented for showing such high respect for the rights of the consuming public.

Nevertheless, I would not wish to give the impression that our Standards Inspectors have not had their share of challenges in policing our mandatory standards. Barbados has 44 mandatory standards at the moment. I am advised that Jamaica has over 72 while Trinidad and Tobago has over 62, not including standards on food and food related products.

Most of the problems encountered in the domestic market relate to the labelling of clothing, pre-packaged food and food products and to a lesser extent items for use in the home. The major difficulty relates to the fact that many of these items are imported from countries with different standards and the manufacturers seem reluctant to incur the expense necessary to comply with the requirements of a small market such as we have in Barbados. My Ministry and the Barbados National Standards Institution are working assiduously to educate importers of the importance of ensuring that their goods comply with mandatory standards in an effort to help alleviate the problem.

Madam Chairperson, I believe that it is imperative for consumers as well as local business persons to familiarize themselves with the provisions of national standards, especially mandatory standards. In the case of business persons, whether they are involved in import or export trade, they need to keep abreast of ongoing standards development work, especially as regards those products and services which they trade in. Indeed, it is not enough to know what the existing standards are but also what standards are in the pipeline so that production lines and production techniques can be adjusted to comply with the new standards as they emerge. This is necessary since failure to comply with standards could limit opportunities for trade and thus adversely affect a business. Further, in today’s world, businesses must be competitive in order to survive and in order to be competitive they have to find ways of minimizing production costs. Early knowledge about new standards could help businesses to avoid the need for incurring unnecessary costs in equipment, where retooling or refurbishment work is to be undertaken, thus helping to minimize production costs.

Thousands of standards have been produced by various agencies and organizations in different countries. This has caused one writer to note that the nice thing about standards is that there are so many to choose from. I must warn however that businesses must be properly educated about standards so that they can choose the ones that best suit their particular needs.

I am satisfied that standards permeate virtually every sphere of human endeavour. I am satisfied too that they contribute in a tangible way towards the improvement of consumer welfare, the growth and development of businesses and indeed to sustainable economic, social and cultural development.

In concluding, I wish to encourage participants to take full advantage of the opportunity being afforded them to broaden and deepen their knowledge and understanding about standardization through this Workshop.
I wish you success in your deliberations.

I thank you.