Conformity Assessment in IT Products - Essay Example

Non-tariff barriers to trade in IT products Q Conformity assessment is an activity conducted by governments to ensure that products that are brought into countries under their jurisdiction have fulfilled all the required standards. This is normally done in a bid to ensure that only products of the best quality enter the markets of a country in a bid to prevent such practices as dumping that might end up being harmful to consumers. Conformity assessment is essential especially in a globalised environment where there is free movement of goods and this in such a way that it ensures only the highest standard of goods are allowed to move from one country to another (Lin 2011, p.401). Government regulation is essential because it is the only authority responsible in making sure that mechanisms that have been put in place to prevent new trade barriers are closely monitored. Conformity assessment is a tool used by governments in such a way as to allow the free movement of goods while at the same time making sure that the goods comply with set standards. During such assessments, only goods that comply with provisions concerning standards of a specific country are allowed into its markets and those that do not are sent back to their manufacturers for correction. In most cases, conformity assessments are done on a regular basis and it is required that these assessments be carried out according to the legislation that has been passed within a country. The government is therefore tied by these legislations and it cannot go beyond them when inspecting goods for conformity because to do so might result in serious legal action from the manufacturer. Manufacturers are also obligated to ensure that the products that they design and manufacture are done in a way that they conform to the requirements needed by the government. The need to ensure that products conform to requirements is supposed to motivate manufacturers to produce only the best products that they can because they have to be in line with legislation concerning technical harmonization (Reynolds 2009, p.21). Conformity assessment is a course of action that is taken before a product is allowed into the market and this is a procedure that is designed to ensure that it fulfils all necessary requirements. Legislations concerning this procedure are enforced by governments in such a way that it is performed in a manner that follows technical procedures as is specified in the specific legislation. Under normal circumstances, manufacturers are required to choose from among different procedures of conformity in a bid to ensure that they remain in compliance with applicable directives. The procedure can be conducted either by the manufactures of by a government body which has been designated the task of performing conformity assessments although who can conduct the assessment depends on the laws that have been put in place to guide the procedure. Therefore, conformity assessment is conducted on products as a means of ensuring that the government has firm regulatory control over all products that enter its jurisdiction because this is a way of ensuring that it carries its responsibility in ensuring the health and safety of its population. Q.2 Conformity assessment is said to be a non-tariff barrier to trade in IT goods because it is a means through which governments can control the flow of goods into its markets. One would suggest that governments could use conformity assessments as a means of limiting the number of foreign products into its markets in a bid to protect domestic industries from competition (Bolwig, Riisgaard, Gibbon, and Ponte 2013, p.408). Conformity assessments in IT goods are increasingly being used because globalization has brought fast-paced changes and many more persistent problems, spurring a growth in the degree of interdependence amongst societies and economies. This interdependence has been through having trans-boundary flow of ideas, technology, information, goods and services resulting in changes in the previous government regulations and control of activities taking place in the markets. The integration of various economies linking world markets has led to the need of national policies affecting various issues including the need to introduce regulations in the movement of IT products. Governments have put regulatory efforts in trade in IT goods through conformity assessments to ensure that their own domestic industries are protected from outside competition. Furthermore, conformity assessments are put in place for the purpose of ensuring domestic IT industries are not overburdened with the costs of domestic tariffs as compared to those imposed on their competitors. The main aim of conformity assessment is to ensure there is a translation of legislation concerning conformity into the actual market and this is done in such a manner that foreign IT products find it difficult to enter the markets of countries where the IT industry is established. Despite there being a number of agreements concerning the trade in IT products such as the 1996 WTO Information Technology Agreement, which was designed to ensure that IT products were provided greater access to global markets, conformity assessments have been designed to ensure that their movements in some countries are limited (Peng 2010, p.79). Therefore, trade rules that have been interpreted in order to have an agreed upon standards have essentially come to be avoided through the institution of strict conformity assessments. The World Trade organization has rules that are put in place to accept legitimate conformity assessments and make sure that policies more reinforced in a mutual way and this way, reduce the risks involved in covering activities that shrink the possibility of member states reversing gains made through trade in IT products. With deep integration of the global economy, many countries have become sensitive to the regulations and policies of various partners in the IT trade. The trade between China and United States that took place in the 1970s was less than a billion but this has changed since today, China has increased its business with the United States to over ninety two billion dollars. This has resulted in the United States imposing non-tariff barriers on Chinese IT products to ensure that it has a level of conformity that is acceptable in the global market. With domestic regulations through conformity assessments acting as a non-tariff barrier, the IT trade agreements between the two countries have included access of the market and various disciplines responsible for frameworks for national regulation. Q.3 One of the ways that have been proposed to overcome trade barriers in the IT industry is through the different organizations in the industry pooling their resources to make trade easier. Through pooling their resources, manufacturers can be able to have greater power of persuasion through their resources to encourage governments to change their protectionist policies (Fouda 2012, p.351). Teaming up with companies within the countries that they wish to export their products to ensures that manufacturers have the opportunity to have their products allowed into these countries. This is because local manufacturers have a better understanding of the regulations that have been put up in their markets and how to evade them. In situations where there is collaboration, it is easy for IT trade products to be moved into the country since the government will consider products developed in partnership as being crucial in the development of local industry. Furthermore, pooling resources gives smaller IT companies the opportunities to export their products to a wider market than they would be capable of doing were they to go it alone. Governments tend to prefer dealing with better established entities because this helps in assuring regulators that they are better capable of handling changes required by regulators. Therefore, pooling resources allows smaller entities in the IT industry to develop the necessary reputation to ensure the confidence of governments, thus easier access to markets. Overcoming barriers brought about by conformity assessments can be done through smaller firms cooperating with larger firms because this allows them to develop the necessary knowledge to deal with these assessments. There are firms, which are specialized in ensuring that small firms are able to expand their businesses to the international level. These specialized firms allow businesses to make use of their knowledge of how to get around trade barriers to ensure their success in different markets. When it comes to conformity assessments, these firms are quite capable of ensuring that IT businesses are able to pass them because they have the necessary networks as well as abilities to ensure that businesses flourish in international markets (Krugman 1987, p.131). IT companies have the responsibility of ensuring that they develop their businesses according to the regulations that have been put in all of their markets. This should be done in a way that products conform to the regulations that have been put in place in each of the countries to which they export their products. Such moves ensure that none of these countries have plenty to complain about and even if conformity assessments have been put in place as barriers, they are easily overcome. The ability of a company to operate within a foreign environment as if it is its own domestic environment because of proper steps towards conformity allows for the development of a strong enough position to break trade barriers. This implies that the company should develop some knowledge of local languages and cultures of international markets in order to maximize its standing within them. Some governments have developed programs through bilateral agreements with other countries to ensure that their exporters have an advantage in the markets of the latter. Companies in the IT industry have to take advantage of these programs because many of them have been designed to ensure that barriers to trade are overcome (Schoop, Köhne, and Ostertag 2010, p.193). Bilateral agreements as well as intergovernmental cooperation means that exporters end up being at an advantage because they have the full backing of their home governments in ensuring that their activities are conducted effectively. This is especially the case where IT companies need information concerning regulations as well as other barriers that they are likely to encounter in countries where they have a potential of exporting their products. Their home governments tend to have all the necessary information needed to support these entities and armed with this knowledge, they can develop products that are more likely to pass conformity assessments in such a manner that they are able to penetrate markets that may be closed to other industries. In some cases, home governments play a crucial role in the provision of networks and at times financing which enable companies to be in a better position to overcome the barriers that might have been set up in other countries where there are strict regulations in their markets. It is, therefore, essential for IT companies to take advantage of the export programs that have been developed by their home governments to ensure that there is an increase in the exports of their products internationally. Despite their adopting protectionist policies, some governments often have some very favourable regulatory structures, which ensure that foreign entities have an easier time doing business. These are conditions that IT companies should always be ready to take advantage of because they are provided with the means of ensuring that they are able to set up their operations easily in foreign countries (Smith 2009, p.264). However, in order to receive the full advantages of easier regulatory policies, companies have to be keen on developing products that regard these policies completely so that they can be able to pass all conformity assessments. Through the imposition of regulations, governments tend to aim at developing their own local IT industries and often leave the door open for foreign companies to set up operations in their countries. The adoption of such policies often means that the countries involved have the necessary talent to work in the IT industry and that all they need is for cooperation with foreign entities to enhance the quality of their products so that they can be produced locally (Kim 2013, p.1300). Such conditions can be extremely advantageous for IT companies because it will ensure that they will be able to create subsidiaries in collaboration with local entities and this helps for the most part in escaping barriers to trade. Thus, IT companies are better able to adapt to local conditions while at the same time saving on the cost of importing labour because there are competent individuals within the countries where they have based their operations to make them successful. Q.4 The cooperation between smaller and larger IT firms is most likely to work considering that the IT industry is one of the fastest growing in the world. The result of this growth is that a large number of individuals as currently demanding IT since they need it for their daily lives. Significant change in the way information technology is approached in the modern world has led to a discrepancy between demand for IT and capacity of IT produced. In some countries, this situation has led to a deep spiral decrease in the quality of IT and support offered because regulatory conditions have undermined them. It should be noted that a drastic increase in demand and decrease in resources diminishes support quality and quantity. Thus, it is important for companies in the IT industry to cooperate in such a manner that they are able to overcome the barriers in trade that has created problems concerning support and quality (Chang 2003, p.17). Furthermore, it is important for companies in this industry to explore mechanisms and characters of technological support to provide a better understanding of the problems associated with IT hence lead to a possible solution. IT companies should carry on with their operational activities in other countries while at the same time ensuring that they closely follow the guidelines that have been set by regulators so that their activities can continue to run smoothly. In circumstances where it is difficult for them to operate smoothly, it is essential that they undertake activities designed to gain the confidence of government regulators because this is the only way through which their operations cannot be interfered with. When dealing with those governments that have favourable regulatory structure, it is essential to note that mutual interest can be gleaned from an agreement between an IT company and these governments to ensure that its products are allowed unrestricted access to their markets (Bhagwati 2002, p.1). This is because in most instances, these governments have an interest in ensuring that IT companies set up their manufacturing operations in their countries in a bid to help uplift their domestic industries. While this may be the case, there are more often than not many disputes that may arise, especially during the initial process when a company is working towards establishing itself in a new environment. In most instances, disagreements might take place between the company and local investors and in these cases, governments tend to take the side of local investors because they are there to protect the latter’s interests. Therefore, in order for an IT company to be able to bypass any potential barriers that might hinder its products from getting into the market, it is essential that it makes use of the negotiation process. Making use of the negotiation process is extremely important for any business enterprise because it allows for finding of useful solutions. When dealing with disputes concerning diverse business matters, such as trade barriers, it is essential for both of the parties involved to ensure that they negotiate so that they can solve these disputes through settlements rather than incurring many expenses in prolonged court cases. Successful negotiations often ensure that both of the parties involved get at least part of what they want and this, more than anything, is essential because neither of the parties can claim to be dissatisfied. It is only through negotiation that parties involved in a dispute can reach an amicable compromise for ensuring that there business runs as usual. Negotiations allow for a reduction of trade barriers as well as ensuring that conformity assessments as regulatory measures do not get in the way of trade in IT products (Pugel 2007, p.25). However, conformity assessments have become a premier form of regulation for products in the IT sector mainly because of the massive demand for these products in the global market. This demand has raised fears among governments of the possibility of these products ending up being substandard and has led to tighter controls over them despite the removal of tariffs as per WTO agreements. Under such circumstances, companies have to hold direct negotiations with governments in order to reassure the latter concerning the quality of their products. Negotiations should be done in such a manner that the two parties come to an agreement concerning the manner through which conformity assessments can be conducted as well as the means through which non-tariff barriers can be relaxed to such an extent that there is free movement of IT products in the market. Such negotiations are more likely than not to work because they allow both parties to present their cases and this in such a manner that they develop an understanding on where each side is coming from. Despite this being the case, a challenge might arise where neither of the parties is willing to concede to the other and this leads to a situation where negotiations break down and the trade barriers remain in place. When tariffs on IT products are removed with government agreement to ensure free trade and then the latter takes action in a manner that can only be considered as protectionist, this action has to be countered by the entities affected, that is, IT companies (Smith 2009, p.265). Under these circumstances, it is essential for IT companies to pool their resources in order to have a capacity to defend their interests in matters that prevent the free trade of their products. Through pooling their resources, manufacturers can be able to have greater power of persuasion through their resources to encourage governments to change their protectionist policies. While IT manufacturers might achieve success in persuading governments to loosen their non-trade barriers such as strict conformity assessments through negotiations, the former have to be prepared to put their resources into use by seeking justice either through private or governing laws. Among the most important implications of seeking private law in the attempt to find ratification is the fact that it is designed only to cater for the obligations of entities towards others as stated in contracts (Bronckers 2008, p.245). Under these circumstances, it might be easier for IT companies to present their case before an arbiter to ensure that they are not only heard, but that they are also allowed to present evidence that the governments involved are not fulfilling their side of the bargain through allowing free trade in their products. Private law allows for a clearer end of the conflict because if the IT companies win, they end up having the upper hand because their products will have a free market that cannot be easily disputed by the governments of specific countries. Therefore, private law can be extremely advantageous in barriers to trade in IT trade are not only lifted, but that are also liberalised, guaranteeing their free flow in the market. The liberalisation of trade comes about as a result of not only negotiations by various parties, but also the willingness of these parties to implement the agreements that facilitate the process. Therefore, while private law has been said to be advantageous, there are instances where it might not work in the interests of the aggrieved party, in this case IT companies. When IT companies seek the resolution of matters concerning lifting of all trade barriers using private law, it is possible that they will either win or lose the case outright, because the resolution of conflicts in this system depends on the agreements made between the parties involved in the dispute (Muchlinski 2011, p.665). If one party, in this case the government, has not fulfilled its obligations, then it will be forced to do so through private law. The use of such law is prevalent when dealing with matters concerning the relationship between the government and individuals. Therefore, private law might end up being risky for the IT companies because they risk losing their position of strength. IT manufacturers should only court in order to bring about the implementation of free trade agreements as a last resort and this should only be done when negotiations fail. This is to ensure that they do not end up opening themselves to government hostility that might lead to even greater obstacles being imposed on their products in some countries. In order to avoid such problems, it would be advisable to use governing law because it is the best for business entities because it treats both people and companies as individuals, and as such, it is much easier to ensure that justice is attained against any entity. Since people and businesses are treated on an equal basis, it is possible that one side will not be favoured against the other until such a time as a final judgement is made. Taking legal action through governing law makes it possible for IT companies to present their case and provides them with a fair chance of attaining free trade. However, the mobilisation of resources among IT companies might end up not achieving their goals because they might end up neither having successful negotiations nor winning any of the cases they take to court, thus a setback in liberalisation of IT trade. References Bhagwati, J. 2002, Free Trade Today. Princeton: Princeton University Press. Bolwig, S., Riisgaard, L., Gibbon, P. & Ponte, S. 2013, "Challenges of Agro-Food Standards Conformity: Lessons from East Africa and Policy Implications", The European Journal of Development Research, 25(3), pp.408-427. Bronckers, M. 2008, “Private appeals to WTO law: An update.” Journal of World Trade, 42, (2), pp. 245-260. Chang, H-J. 2003, Kicking away the ladder: development strategy in historical Perspective. London: Anthem Press. 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