Technical Regulation. Document which lays down product characteristics or their related processes and production methods, including the administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method.

Standard. Document approved by a recognised body, that provides, for common and repeated use, rules, guidelines or characteristics for products and related processes or production methods, with which compliance is not mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method.

WTO/TBT Agreement on Technical Barriers to Trade
(Italics added)

1. Governments have a right and an obligation to intervene in markets to assure health and safety of their citizens, due to

• technological and market failures;
• unfair trade practices; and
• environmental threats.

1. Such interventions can create barriers to trade; hence international agreements are in place to regulate such interventions (called Technical Regulations), e.g. the WTO Agreement on Technical Barriers to Trade (WTO/TBT). An analysis of the Articles of the WTO/TBT lead to a number of very important conclusions, namely

• Technical Regulations are mandatory, and in the context of the WTO/TBT Agreement this indicates that they form part of legislation.
• Hence, Technical Regulations are the responsibility of governments, and governments alone.
• Standards on the other hand are voluntary in nature, hence do not form part of legislation according to the fundamentals underpinning the WTO/TBT Agreement.
• Standards can therefore be developed by a wide variety of bodies; e.g. either public or private sector bodies, but governments have the responsibility to ensure that such bodies developing national standards work in accordance with WTO/TBT Agreement requirements, e.g. WTO/TBT Code of Good Practice for the Preparation, Adoption and Application of Standards.
• Technical Regulations encompass two equally important concepts, namely
• Product characteristics with which products or processes have to comply; and
• Administrative procedures that are to be followed by suppliers and authorities to ensure that the desired outcome of the technical regulation is achieved.
• In Standards on the other hand the concept is that they contain only technical requirements which products or processes have to comply with in order to meet the standard.
• The Government Department or the Regulator without necessarily taking the views of stakeholders into consideration develops Technical Regulations, whereas Standards are developed in a stakeholder inclusive, consensus process.

2.1 In recent years, as regions struggle to meet the requirements of the WTO/TBT and their own free trade arrangements, a Technical Regulation best practice is emerging.

2. This Technical Regulation best practice encompasses five essential building blocks (see figure 1) for the effective and efficient implementation of Technical Regulations.

Figure 1: Building blocks of Technical Regulation best practice

The building blocks in particular are:

• Legislation details the "essential elements" of the Technical Regulation or the "desired outcome" the Technical Regulation should achieve. In addition, Legislation should clearly articulate the product characteristics and the administrative procedures as required by the WTO/TBT Agreement.
• Product characteristics should be based on Standards. The Standards could be an International, Regional or a National Standard. The advantages of recourse to standardisation as a method of determining technical requirements, have been well researched and documented (EU Commission Communication No. C96 of 1992-04-15). In particular:
• Standardisation is a highly transparent process in which all interested or affected parties may be involved;
• It combines the advantages of democracy with the ability to reflect technological state of the art;
• Standards can be readily modified to reflect technological development;
• Reference to standards in legislation means that most of the costs of production of technical specifications are transferred from the public to the private sector (i.e. the private sector funds the specialists dealing with the technical committee work, sometimes even funds the total standards development process);
• To the extent that many sources of expertise are available for standardisation work and the final outcome must receive support from interested parties in order to be accepted, standardisation may be more efficient than technical regulation, insofar as it will better reflect technical reality in the market; and
• Standardisation is a far easier vehicle than technical regulation, to comply with the WTO Agreement on Technical Barriers to Trade requirements, due to the information being more readily available to be notified.
• The Administrative Procedures should include a clear definition of
• the Regulatory Authority;
• the Conformity Assessment requirements; and
• the Sanctions for non-compliance.
• The Regulatory Authority oversees the implementation and administration of the technical regulation. Without such enforcement, consumer protection as envisaged by the legislator would not take place owing to the very failure of the market forces. Appropriate regulatory powers have to be vested in the regulatory authority.
• Conformity assessment requirements have to be met by the supplier. This can be achieved by providing evidence to the Regulator indicating compliance with the technical regulation.
• The nature of such evidence will vary depending on the level of risk associated with the commodity, as well as which consequential damages would result, should the product fail.
• For low risk, a self-declaration of conformity from the supplier may suffice.
• In the case of a high-risk commodity, certification of each individual commodity by independent third party organisations may be indicated.
• In all cases, the responsibility for the product remains with the supplier.
• Independent third parties should be accredited (to provide evidence of technical competency) and be a juristic person (to enforce legal liability).
• Sanctions have to be applied to perpetrators who fail to comply with technical regulations. In order to be effective, the severity of sanctions has to be appropriate to the consequences (i.e. the level of risk the public is exposed to) of the failure. The Regulator should initiate Sanctions through the judicial system, and they have to be reviewed regularly to ensure continued effectiveness.

3.1 Technical Regulations are in force in South Africa. These differ appreciably in the way they are being implemented, due to the fact that responsibility is apportioned amongst a wide variety of Government Departments and Regulators. They also differ appreciably in their effectiveness in providing the required outcome.

2. A large number of the product characteristics of the Technical Regulations are embedded directly within legislation. This has lead to an unworkable situation, as

• Product characteristics are continuously changing due to technological developments;
• Government structures seldom have the experts who are able to understand and react quickly to such changes; and
• It is the nature of legislation that it cannot be readily or speedily changed, or runs the risk of political interference for non-technical reasons.

The result has been that such technical regulations are no longer effective.

2. A review of the administrative procedures for Technical Regulations in South Africa shows that a large number do not lead to the desired output or result. This is mainly due to weaknesses in the Technical Regulations to address all the elements of an effective and efficient regime, namely

• Confusion as to who the Regulator is;
• Reluctance of the Regulator to act in the case of known transgressions;
• Conformity Assessment requirements are not spelt out, hence suppliers do not know what evidence to present;
• Sanctions are low (i.e. have not been adjusted for many years), hence ineffective;
• Sanctions are not indicated at all; and
• Powers of Regulators are in conflict with the constitution, but have not been amended.

2. South Africa as a signatory of the WTO Agreement on Technical Barriers to Trade has to fulfil a number of obligations. These include:

• Ongoing notification regarding development of new Technical Regulations;
• Bi-annual notification of the standards development programme; and
• Compliance with the Code of Good Practice for the Development of Standards.

Whereas the notification process for standards is up to date, South Africa cannot fulfil its obligations regarding Technical Regulation notifications. Technical Regulations are being developed in many government areas, they are not referencing standards, and no system exists that would inform the SABS (as the WTO/TBT Information Point) regarding such developments.

Government performance is under pressure. Budget deficits and economic constraints must be managed even as citizens demand more action to deal with emerging social and environmental issues. As a result, the public sector must learn to do more with less, to do things differently and better. Government must find effective ways to make responsive policy decisions and to identify the right mix of instruments and incentives to implement.

The Organisation for Economic Co-operation and Development (OECD) has developed a checklist to facilitate more effective and efficient regulatory decision making. The list comprise ten questions designed to improve the legal and factual basis for technical regulations, clarifying options, assisting officials in reaching better decisions, establishing more orderly and predictable decision processes, identifying existing regulations that are outdated or unnecessary, and making government actions more transparent. The OECD Reference Checklist for Regulatory Decision-Making is attached as Appendix A.

2. Technical regulation legislation model

• In terms of the underlying principles of the WTO Agreement on Technical Barriers to Trade, and emerging best practice as detailed in 2.2 above, legislation should articulate the desired output or essential requirement that have to be fulfilled.
• Legislation should unambiguously identify the Regulatory Authority.
• Legislation should clearly detail the minimum conformity assessment requirements suppliers have to comply with, taking due cognisance of the relevant risks associated with product failure.
• Legislation should contain the appropriate sanctions to be applied for non-compliance.
• Legislation should not contain any detailed product characteristics, but should reference relevant standards in an appropriate manner.

2. Product Characteristics/Standards

• WTO/TBT requirements clearly indicate that standards are to be used as basis for technical regulations.
• Three possibilities exist to do so:
• Standards are used as the basis for developing legislative text, suitably arranged and changed to meet the requirements of the legislator;
• Standards are used as "deemed to satisfy" rules, e.g. compliance with the standard is considered a first line defence in litigation. In this case standards are not referenced directly in legislation, but are provided in separate, authoritative lists by the authorities. The supplier can choose to prove compliance through other routes as well, but the proof of compliance then rests with him on two counts, namely that his method provides the desired output and that his product complies with his elected method. This system is used quite successfully in sophisticated economies with well developed product liability legislation.
• Standards (or parts thereof) are directly referenced as the authoritative text. This does mean however, that the legislator has to be directly involved in the standard development process.

2. Regulatory Authority

• The organisation identified as the Regulatory Authority in the relevant Legislation should have regulatory powers bestowed upon them. This means that only government departments or statutory organisations would qualify for this role. Government can delegate operational activities, but not its responsibility, hence private companies cannot be used in this role.
• The number of government departments and statutory bodies already acting as Regulatory Authorities is shown in Appendix B.
• A number of possible scenarios can be envisaged for the future:
• Set up a super regulatory authority to harmonise the technical regulations regime;
• Ensure that all the government departments and regulators adhere to a best practice model through a Cabinet decision;
• Review the number of organisations currently acting as Regulators with the view to decrease the number to a more efficient number, e.g. merge Regulators that are active in the same domain, cut out overlaps in regulatory practice, etc; and
• Develop a liaison and feedback mechanism to ensure that Regulators adhere to the Technical Regulation Best Practice model.

2. Conformity Assessment

Conformity Assessment. Any procedure used, directly or indirectly, to determine that relevant requirements in technical regulations or standards are fulfilled.

Explanatory note: Conformity assessment procedures include, inter alia, procedures for sampling, testing and inspection; evaluation, verification and assurance of conformity; registration, accreditation and approval as well as their combinations.

WTO Agreement on Technical Barriers to Trade

• The supplier is required to provide evidence of compliance with the product characteristics to the Regulator in order to satisfy the desired outcome of the Technical Regulation.
• The nature of such evidence will vary, depending on the level of risk associated with the commodity.
• In the case of low risk a self-declaration of conformity from the supplier may suffice. In the case of a high-risk commodity the necessary evidence might only be obtained from certification of each individual commodity by an authorised, independent and technically competent third party. There are various levels of evidence in between these two extremes.
• As the conformity assessment service provider to some extent certifies on behalf of the authorities, e.g. the authorities remain accountable, government needs to have recourse in court should they fail. This is only feasible if the conformity assessment service provider is a juristic person in South Africa.
• The provision of conformity assessment services lends itself to commercial funding. The supplier, as the entity responsible for providing the required evidence, will negotiate the commercial arrangements directly with accredited and approved suppliers.

2. Sanctions

Sanctions for non-compliance are very necessary, but should be dealt with through the proper judicial system. A combination of

• Administrative justice for clearly defined, relatively minor infractions;
• Prosecution in higher courts for higher risk and major infractions, using criminal law; and
• Prosecution under liability law where appropriate.

5. Conclusion

A number of countries, spearheaded by some of the OECD countries, are in the process of a total review of their technical regulations. In view of the current state of the effectiveness of technical regulations in South Africa and the importance of technical regulations in forthcoming trade negotiations, a review of the total system and the implementation of a best practice model is indicated.

End.

MG Kellermann

SABS

June 2000

{OECD Occasional Paper in Public Management [OCED/GD(93)181]}

The problem to be solved should be precisely stated, giving clear evidence of its nature and magnitude, and explaining why it has arisen (identifying the incentives of the affected entities).

Government intervention should be based on clear evidence that the government action is justified, given the nature of the problem, the likely benefits and costs of action (based on a realistic assessment of government effectiveness), and alternative mechanisms for addressing the problem.

Regulators should carry out, early in the regulatory process, an informal comparison of a variety of regulatory and non-regulatory policy instruments, considering relevant issues such as costs, benefits, distributional effects, and administrative requirements.

Regulatory processes should be structured so that all regulatory decisions rigorously respect the "rule of law"; that is, responsibility should be explicit for ensuring that all regulations are authorised by higher- level regulations and consistent with treaty obligations, and comply with relevant legal principles such as certainty, proportionality, and applicable procedural requirements.

Regulators should choose the most appropriate level of government to take action, or, if multiple levels are involved, should design effective systems of co-ordination between levels of government.

Regulators should estimate the total expected costs and benefits of each regulatory proposal and of feasible alternatives, and should make the estimates available in accessible format to decision-makers. The cost of government action should be justified by its benefits before action is taken.

To the extent that distributive and equity values are affected by government intervention, regulators should make transparent the distribution of regulatory costs and benefits across social groups.

Regulators should assess whether rules will be understood by likely users, and to that end should take steps to ensure that the text and structure of rules are as clear as possible.

Regulations should be developed in an open and transparent fashion, with appropriate procedures for effective and timely input from interested parties such as affected businesses and trade unions, other interest groups, or other levels of government.

Regulators should assess the incentives and institutions through which the regulation will take effect, and should design responsive implementation strategies that make the best use of them.

• Department of Agriculture
• Department of Communications
• Department of Health
• Department of Trade and Industry
• Department of Water Affairs and Forestry
• Department of Welfare and Population Development
• Harmful Business Practices Commission
• Liquor Board
• National Gaming Board
• SABS

1. Road safety

• Department of Transport
• Provincial Traffic Authorities
• Municipalities
• SABS

1. Occupational Health and Safety

• Department of Labour
• Department of Mineral and Energy Affairs
• Department of Health
• SABS

1. Building and Construction

• Department of Labour
• Department of Trade and Industry
• National Home Builders Registration Council (NHBRC)
• SABS

1. Health and Foods

• Department of Health
• Department of Agriculture
• Municipalities
• SABS

1. Environment

• Department of Environmental Affairs
• Department of Health
• Department of Land Affairs
• Department of Water Affairs and Forestry
• SABS

1. Telecommunication

• South African Telecommunications Regulatory Authority (SATRA)
• Independent Broadcasting Authority (IBA)
• Department of Post and Telecommunication

1. Energy

• National Electricity Regulator (NER)
• Department of Mineral and Energy Affairs

1. Miscellaneous

• Department of Education
• Department of Finance
• Department of Home Affairs
• Department of Public Enterprises
• Department of Public Works
• Department of Sport and Recreation
• Department of Welfare and Population Development