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GLOBALBENCHMARKREPORT2020ICT Product SafetyRegulations and their Impacton the Ease of DoingBusiness
Table of ContentsExecutive Summary . 1Introduction . 3The Importance of Safe and Compliant Products . 3Overview of the 2020 Scores . 5Broad Scope . 6Narrow Scope . 8A Closer Look . 9Broad Scope Detailed Scores and Highlighted Countries . 9Morocco . 9Taiwan . 9Israel . 12European Union . 12United States . 13China . 14Argentina . 14United Arab Emirates (UAE) . 14Saudi Arabia . 15Turkey. 15Mexico . 15India. 16Narrow Scope Detailed Scores and Highlighted Countries . 19Cambodia . 19Brazil . 19Colombia . 22Vietnam . 22Chile. 22Criteria and Scoring . 24Recommendations . 29Conclusion . 31Figure 1. Global Scoring of ICT Product Safety Regulations – Broad Scope. 10Figure 2. Global Scoring of ICT Product Safety Regulations – Narrow Scope . 20Table 1. Product Safety Regulations Scoring - Broad Scope . 7Table 2. Product Safety Regulations Scoring - Narrow Scope . 8Table 3. Ease of Doing Business Scoring for Broad IT Product Safety Requirements . 11Table 4. Ease of Doing Business Scoring for Narrow IT Product Safety Requirements . 21
Executive SummaryThe Information Technology Industry Council (ITI) has published the 2020 Global Benchmark Report, ICTProduct Safety Regulations and their Impact on the Ease of Doing Business to assess the impact ofinternational product safety regulatory practices that affect information and communications technology(ICT) products. This report recommends positive steps for governments to identify, prevent, and reduceimpediments to trade, manufacturing, and supply chain operations. With inspiration from the WorldBank’s annual Doing Business Report, ITI has scored 38 countries and the European Union (EU) accordingto how their product safety regulations for ICT equipment, with respect to international standards,impact the ability to do business for manufacturers seeking to import and sell their products in thesemarkets.The World Trade Organization’s (WTO’s) Technical Barriers to Trade (TBT) Agreement has been anessential tool to raise awareness of and address barriers to trade resulting from technical regulationsaimed at ensuring ICT product safety. The TBT Agreement provides an appropriate framework for goodregulatory practices and we have used it to form the basis for scoring countries on their ease of doingbusiness. Based on their knowledge of and experience with various compliance systems around theworld, senior compliance managers from ITI’s member companies scored each country’s or region’sproduct safety requirements using criteria identified by the TBT Committee as non-tariff measures thathave a critical impact on companies’ abilities to sell their ICT products in the global marketplace. In orderto compare ICT product safety regulations of a similar type, ITI divided the scoring into two categories:1) requirements that impact a broad range of IT products and 2) those that impact a select narrow scopeof IT products, such as consumer products, rechargeable batteries, AC adapters or power cords.Based on ITI’s scoring, we found: Morocco ranked as one of the highest scored countries in the broad scope category, with a totalof 28, mainly due to their increased transparency efforts, incorporation of internationalstandards, and acceptance of international test reports. Other countries in Africa also scored 28for similar reasons, including Nigeria, Rwanda, Tanzania, Uganda, and Zambia. With a total score of 7, India ranked last in the broad scope countries, due to onerous andcountry-specific requirements in its Compulsory Registration Order. Among the countries that impose safety requirements for a narrow scope of IT equipment (forexample, AC adapters or power cords only), Australia, Ecuador, Hong Kong, New Zealand, andSingapore led with perfect scores of 30 while Chile ranked lowest with a score of 13. The medianscore for this group of countries was 26 out of 30.ITI compared the scores tallied in this 2020 Ease of Doing Business report with those reported in 2017: The European Union and Mexico saw the largest drops in their scores. The EU’s score droppedby 8 points, from 28 to 20, because of decreased scores in every criterion except for regulatoryimpact analysis/assessment. Mexico’s score dropped 13 points, from 24 to 11, mainly due to1
decreased scores in transparency, impact assessment/avoiding obstacles, predictability, andsurveillance activities. Although India’s score remained the same, it should be noted that their score on transparencyincreased due to enhanced stakeholder communication and participation. However, India’s scorein the international standard criterion decreased from 5 to 3 because of the numerous countryspecific deviations that India is incorporating into their standards, rather than incorporatinginternationally recognized standards by reference. In the narrow scope category, Brazil’s score improved from 20 to 22, due to an increased scorein regulatory impact assessment. We applaud the Brazilian Foreign Trade Council’s (CAMEX’s)2018 resolution that establishes good practices for the preparation and review of regulatorymeasures affecting foreign trade. Two countries in the narrow scope category saw decreases in scores: Cambodia and Colombia.Cambodia’s score decreased due to a lack of regulatory notifications through the WTO TBTEnquiry Point for several years. Colombia scored zero in surveillance and low in internationalstandards and portability of conformity assessment.ITI concludes that the ease of doing business in most countries could be greatly improved by followinggood regulatory practices, including early and transparent notifications, incorporation of internationalstandards and acceptance of international test reports, adequate transition times, risk-basedapproaches to regulation and conformity assessment, and avoidance of unjustified impediments thatimpact trade, manufacturing and supply chain operations. When considering a new regulation, werecommend that a government consider multiple objectives: Foremost, establish a clear and objective safety goal that can best be achieved throughregulation. Assess and seek to minimize the impact of the regulatory measure on both market access andon the manufacturers and importers that are subject to the regulation. Encourage investment and the creation of an open environment for innovative and newtechnologies and foster competition among the players in the sector, all of which have thedesired effect to improve consumer choice and lower costs.Drawing from the WTO TBT Agreement, which governs the process by which countries enact technicalregulations, ITI provides industry recommendations for national policymakers to improve their scoreswhile still achieving their public policy and safety objectives. With many countries planning to transitionto a new international safety standard for IT equipment in the coming months and years, following thesesteps may be essential to prevent further growth in non-tariff trade barriers (NTBs) resulting fromunnecessarily complex and burdensome requirements.About ITI. ITI advocates for public policies that promote innovation, open markets, and enable thetransformational economic, societal, and commercial opportunities that our companies are creatingworldwide. Our members represent the entire spectrum of technology: from internet companies, tohardware and networking equipment manufacturers, to software developers. ITI’s diversemembership and expert staff provide a broad perspective and intelligent insight in confronting theimplications and opportunities of policy activities around the world. Visit http://www.itic.org/ to learnmore. Follow us on Twitter for the latest ITI news.2
IntroductionInformation and communications technology (ICT) companies seeking to do business globally mustcontend with a complex landscape of technical regulations. Not surprisingly, regulatory compliance posesone of the greatest challenges to the ease of doing business and is a critical factor in whether companiessucceed or fail. This report, ICT Product Safety Regulations and their Impact on the Ease of Doing Business,is the second in a series of ITI benchmark reports that score governments based on their nationaltechnical regulations on ICT products.1 This report is intended to be a yardstick and a guide forpolicymakers to better understand the impacts of their technical regulatory requirements on the ease ofdoing business. We also share recommendations based on global norms and best practices to promotethe creation of policies that promote, rather than hinder, ICT trade and investment.Every year, the World Bank publishes its “Doing Business Report” which ranks economies around theworld according to their ease of doing business.2 The report provides a helpful snapshot and longer-termbenchmark of how “business friendly” countries are. Policymakers use the report to evaluate whetherregulations are meeting their objectives and to determine where policy changes are needed. The rankingis a measure of how their respective countries stack up against others in terms of creating anenvironment in which entrepreneurial efforts are likely to succeed and where foreign businesses aredrawn to trade and investment opportunities.Similarly, our report is intended to provide an evaluation of countries’ requirements for ICT productsafety and to share industry insights to help regulators achieve their public policy and safety objectivesthrough good regulatory practices that eliminate unnecessary and unjustified impediments on trade,manufacturing and supply chain operations.The Importance of Safe and Compliant ProductsThis report focuses on mandatory ICT product safety requirements in 38 countries and the EuropeanUnion (EU). Governments seek to protect their citizens from products that could cause injury or propertydamage (such as electrical shock or fire). As a result, product safety requirements are commonly one ofthe first types of technical regulations that a government is likely to place on products, and they are themost prevalent type of technical regulation with which ICT companies must comply.A manufacturer’s fundamental product safety objective is for its ICT products to be safe for their intendeduse and compliant with the applicable standards and government regulations of those countries in whichthe company markets and sells them. A company gains assurance that its products are safe by identifyingpotential hazards and risks associated with its products, applying adequate safeguards for eachidentified hazard, and then demonstrating that the applied safeguards mitigate these hazards.The first in the series of reports was the 2017 Global Benchmark Report, ICT Product Safety Regulations and their Impact onthe Ease of Doing Business2 The World Bank scores countries using 10 criteria: starting a business, dealing with construction permits, gettingelectricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcingcontracts, and resolving insolvency.13
Prior to a product release, a company ensures its products are legally compliant by identifying whichregulations apply to a particular product or family of products. For each country where the companyplans to deliver a product, manufacturers ensure the completion of all necessary product regulatorytesting and evaluation to demonstrate its products comply with applicable product regulations, includingany relevant standards cited in regulations. A company employs engineers, procures laboratoryresources, invests in testing facilities, and bears the costs of product testing and, where required,certifications by third-party organizations.A company that fails in its commitment and delivers products that are unsafe or that do not comply withlegal requirements will likely compromise its access to markets, diminish its relationships withgovernment authorities, adversely impact its customers, and potentially face legal action. Manufacturersrecognize that regulations serve a critical role in protecting consumers from harm and setting baselinerequirements to preserve and advance public interests. However, manufacturers also believe thatgovernments’ regulatory measures should be consistent with achieving legitimate regulatory objectives,avoid imposing unnecessary burdens on society, and minimize adverse impacts on citizens and business.Companies support product regulations that follow appropriate regulatory practices for establishingessential safety requirements that are risk-based and necessary conformity assessment procedures tofulfill those requirements. Well-designed and implemented product regulations can set an essentialbaseline for manufacturers, create a growth-enhancing competitive environment, and establish a levelplaying field among both domestic and foreign companies.As a rule, ICT companies prefer to manufacture products for the world market instead of “localized”products for a specific country. This provides economies of scale for product design, manufacturing, anddelivery. When governments pursue unnecessary regulatory requirements that are unique andburdensome in comparison to global norms, companies lose these economies of scale and struggle tonavigate, innovate and adapt to different requirements. Unique and burdensome regulations are notjust an inconvenience – they challenge profitability with new costs and create uncertainty about marketaccess.In response, a company may decide to pass these costs to consumers in the form of higher product prices.Or a company may decide to stop selling certain product models or reduce local investments because ofthe high regulatory costs and unwarranted delays due to interrupted shipments or other penalties. Thisis especially relevant for small- and medium-sized companies that may not have the resources to addresssuch problems. In turn, consumers and both developed and developing economies are disadvantagedwhen regulations drive up the cost of ICT products and limit access to cutting-edge technology. Forconsumers this means a lack of access to critical technologies that bring important economic and socialbenefits.4
Overview of the 2020 ScoresThe ITI member company representatives that contributed to this report agreed that regulatoryuncertainty poses some of the greatest challenges to their companies’ abilities to succeed in marketsaround the world, in addition to hindering global economic growth. To address this issue, we encouragethe development and adoption of globally aligned, internationally recognized standards and regulatorybest practices to help prevent an expanding patchwork of localized rules and regulations.Based on their knowledge of and experience with various compliance systems around the world, seniorcompliance managers from ITI’s member companies scored each country’s or region’s product safetyrequirements using criteria identified by the World Trade Organization’s (WTO’s) Technical Barriers toTrade (TBT) Committee as non-tariff measures that have a critical impact on companies’ abilities to selltheir products in the global marketplace. Among other factors, these criteria include an evaluation of acountry’s regulatory impact assessments, a determination of whether product safety regulations arebased on relevant international standards, and whether the compliance process is predictable for thoseseeking to import and sell in the market. The full set of criteria and scoring explanations are described inmore detail in the “Criteria and Scoring” section.In order to compare ICT product safety regulations of a similar type, ITI has divided the scoring into twocategories: 1) requirements that impact a broad range of IT products and 2) those that impact a selectnarrow scope of IT products. The narrow scope might be limited, for example, to consumer products,rechargeable batteries, AC adapters or power cords.Some highlights of the 2020 scores: Within the group of countries that have product safety requirements for a broad range of ITequipment, the median score for ease of doing business was 23 out of a perfect score of 30. Nocountry scored a perfect 30 points. With a total score of 7, India ranked last in the broad scope countries, due to onerous and countryspecific requirements in its Compulsory Registration Order (CRO). Morocco ranked as one of the highest scored countries in the broad scope category, with a totalof 28, mainly due to their increased transparency efforts, incorporation of internationalstandards, and acceptance of international test reports. Other countries in Africa also scored 28for similar reasons, including Nigeria, Rwanda, Tanzania, Uganda, and Zambia. Among the countries that impose safety requirements for a narrow scope of ICT equipment (suchas, AC adapters or power cords only), Australia, Ecuador, Hong Kong, New Zealand, and Singaporeled with perfect scores of 30 while Chile ranked lowest with a score of 13. The median score forthis group of countries was 26 out of 30.5
ITI compared the scores tallied in this 2020 Ease of Doing Business report with those reported in 2017: The European Union and Mexico saw the largest drops in their scores. The EU’s score droppedby 8 points, from 28 to 20, because of decreased scores in every criterion except for regulatoryimpact analysis/assessment. Mexico’s score dropped 13 points, from 24 to 11, mainly due todecreased scores in transparency, impact assessment/avoiding obstacles, predictability, andsurveillance activities. Although India’s score remained the same, it should be noted that their score on transparencyincreased due to enhanced stakeholder communication and participation. However, India’s scorein the international standard criterion decreased from 5 to 3 because of the numerous countryspecific deviations that India is incorporating into their standards, rather than incorporatinginternationally recognized standards by reference. In the narrow scope category, Brazil’s score improved from 20 to 22, due to an increased scorein regulatory impact assessment. We applaud the Brazilian Foreign Trade Council’s (CAMEX’s)2018 resolution that establishes good practices for the preparation and review of regulatorymeasures affecting foreign trade. Two countries in the narrow scope category saw decreases in scores: Cambodia and Colombia.Cambodia’s score decreased due to a lack of regulatory notifications through the WTO TBTEnquiry Point for several years. Colombia scored zero in surveillance and low in internationalstandards and portability of conformity assessment.Broad ScopeTable 1 summarizes our scoring of product safety regulations and programs in countries that regulate abroad scope of ICT products, including servers, consumer equipment, computers, tablets and mobilephones. Arrows indicate where scores have increased, decreased or are unchanged from our 2017scoring. Table 3 in “A Closer Look” provides a detailed breakdown of the scoring for each of the criteriafor each country.6
Table 1. Product Safety Regulations Scoring - Broad ScopeCountryRegulatory ProgramEase of DoingBusinessScoreChange from2017 ScoreMoroccoMandatory marking for low voltage equipment28NigeriaPreshipment Verification of Compliance28New in 2020report*RwandaPreshipment Verification of Compliance28*TanzaniaPreshipment Verification of Compliance28*UgandaPreshipment Verification of Compliance28*Zambia28*IsraelPreshipment Verification of ComplianceStandards Institute of Israel (SII) product and system certificationGroup 1: certification for AC Adapters and UPSGroup 2: declaration for all IT equipmentTaiwanBSMI26Uzbekistan26CanadaEuroAsian Commission (Customs Union) - in processConsumer Product Safety Act and Mandatory Electrical Standards (SCC)(including associated national certification programs that are commonunder the regulatory program)KazakhstanEuroAsian Commission (Customs Union)24KenyaPreshipment Verification of Compliance24RussiaEuroAsian Commission (Customs Union)24South AfricaNRCS23BelarusEuroAsian Commission (Customs Union)KC Marking (Electrical Appliances Safety Control Act) (includingassociated national certification programs that are common under theregulatory program)2222ChinaMEDT NAAULVD; RED; Machinery Directive (including associated nationalcertification programs that are common under the regulatory program)OSHA (Workplace safety) (including associated national certificationprograms that are common under the regulatory program)China Compulsory Certification (including associated nationalcertification programs that are common under the regulatory program)ArgentinaS Mark certification for IT products (HSE exempt)17South ALEEM and CTIC16TurkeyRisk-Based Trade Control System (TAREKS)16MexicoIT products (HSE exempt)Compulsory Registration Order (CRO); Mandatory Testing andCertification of Telecom Equipment (MTCTE)11IndiaNew in 2020reportNew in 2020reportNew in 2020reportNew in 2020report7*2017 score was based on incomplete information. As a result, a comparison between the 2017 and 2020 scores is not included.7
Narrow ScopeTable 2 presents our scoring of product safety regulations for countries that regulate a narrow scope ofproducts, such AC adapters or batteries only or consumer products only. Arrows indicate where scoreshave increased, decreased or are unchanged from our 2017 scoring. Table 4 in “A Closer Look” providesa detailed breakdown of the scoring for each of the criteria for each country.Table 2. Product Safety Regulations Scoring - Narrow ScopeEase of DoingBusinessScoreCountryRegulatory Program or ProductAustraliaElectrical Equipment Safety System (EESS)30EcuadorPower cord, batt, AC adapter, charger30Hong KongElectrical Ordinance Law (Home use products)30New ZealandElectrical Equipment Safety System (EESS)30SingaporeConsumer Protection Regulation (AC adapter)Safety regulation 2004 (Consumer products connected toAC mains)3026MalaysiaDenan (AC adapter, Battery)IINMETRO Certification - Power cord, Phone batteries andchargers (HSE exempt)Suruhan Jaya (adapter below 20V is categorized as lowrisk product); IPv6; Secondary battery standardsThailandTISI Mandatory Standards (rechargeable batt, UPS)20ColombiaUPS onlyMIC Technical Regulations - Secondary lithium batteries;conformity assessmentSystem 2 (S mark) Scheme for smartphone poweradaptors and low voltage chargers19CambodiaJapanBrazilVietnamChile8Change from 2017Score2622221613New in 2020reportNew in 2020report
A Closer LookTo better understand the wide range of scores for each criterion, we provide a more detailed look atproduct safety regulations in several countries and in the EU. We highlight best practices and areas forimprovement in both broad and narrow scope programs. As regulatory systems continue to evolve, wenote some recent changes to these programs and expectations for the future.Broad Scope Detailed Scores and Highlighted CountriesFigure 1 provides a graphic representation of the detailed breakdown of scores for each of the countrieslisted in Table 3. This section provides detailed discussions of countries that are new to this 2020 reportand those whose scores changed significantly since our 2017 report.Morocco (Overall Score: 28)Morocco has been newly evaluated for this 2020 report. The country’s mandatory marking programfor low voltage equipment received perfect scores for all criteria except avoiding regulatory obstacles.Member companies appreciate Morocco’s incorporation of EU standards (with only minor differencesin renumbering), acceptance of international test reports, and timely notifications through the WTOTBT inquiry point. Morocco is kept from a perfect score of 30 due to its unique marking requirementsand the requirement to provide declarations in French or Arabic.Taiwan (Overall Score: 26)Although Taiwan scores high in the broad scope category, its score decreased 2 points from our 2017report. Taiwan’s use of best regulatory practices ensured high scores in criteria on internationalstandards, transparency, and avoiding obstacles. However, the country currently scores only a 3 onportability of conformity assessment due in part to the Bureau of Standards, Metrology and Inspection(BSMI) accreditation requirement for international safety labs that goes beyond direct acceptance ofcertification body (CB) test reports from all IECEE3 CB testing laboratories. There are concerns thatTaiwan’s score in this area may drop further because the government is proposing to require local testingand may no longer accept CB test reports. Surveillance activities have room for improvement, as ITImembers report that BSMI surveillance processes for safety have deteriorated. In the past, customsofficials did not open boxes for inspections; however, packages are now being opened, productsremoved and opened, and critical components matched with report criteria. In addition, it is not clearthat all of the inspections are needed because issues with custom’s recordkeeping may be leading toduplicative or repeat inspections. This surveillance process is especially problematic for niche productsbecause the inspections can cause product damage and create quality concerns for the consumer.IECEE, the IEC System for Conformity Assessment Schemes for Electrotechnical Equipment and Components, is amultilateral certification system based on IEC International Standards. Members use the principle of mutual recognition(reciprocal acceptance) of test results to obtain certification or app
doing business. We also share recommendations based on global norms and best practices to promote the creation of policies that promote, rather than hinder, ICT trade and investment. Every year, the World Bank publishes its " Doing Business Report " which ranks economies around the world according to their ease of doing business. 2
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