Fostering International Trade: Ten Years of MRA Success

The world's first multilateral Mutual Recognition Arrangement for conformity assessment of telecommunications equipment was developed by the APEC Telecommunications and Information Working Group (TEL). This groundbreaking arrangement - known as the APEC TEL MRA - celebrated its tenth anniversary in July 2009.

Thanks to the APEC TEL MRA, the region's manufacturers, exporters, distributors, regulators, and consumers all gain, as it reduces the costs involved in getting a product approved and decreases the time it takes to get products to market.

Says Lord John Edgecumbe Shazell, President of the Association of Telecommunications Industry of Singapore (ATiS), "The MRA is a positive step in improving the process of trade in telecommunications equipment - [making it] much simpler, faster and cheaper."

Leong Keng Thai, Deputy Chief Executive and Director-General (Telecommunications) of the Infocomm Development Authority of Singapore (iDA) adds, "There are still vast opportunities for the growth of businesses in APEC; therefore it's important that we continue to strengthen our competitiveness by simplifying regulatory processes."

Especially for international manufacturing and trading companies, the APEC TEL MRA has reduced the number of hurdles for approvals, provided local access for exporting entities (by allowing in-country testing) and created the incentive to design products to international standards.

In addition to facilitating trade, the arrangement has also helped foster creative solutions for a world increasingly dependent on information and communication technologies (ICT). Indeed the arrangement can be seen to have contributed to the expansion of technology choices in the Asia-Pacific region. APEC economies now enjoy greater access to competitively-priced products as technical barriers to trade have been reduced and transparency is increased.

Consider the cell phone: the latest and greatest only lasts a few months before it's eclipsed by devices with newer features. In this way, the world's marketplace becomes an easily-accessed testing ground for new devices, spawning demand and creating an appetite for competitive and derivative products, especially in the telecommunications and wireless sector.

And with greater access to markets for new products, new devices are placed on the market more quickly and innovation is spurred on.

Bilateral MRAs have been around in several sectors since 1995 when the World Trade Organization (WTO) was formed. However, unlike earlier MRAs (such as the US-EU MRA), the APEC TEL MRA is not simply a bilateral agreement but a multilateral agreement that can be implemented between APEC's 21 economies. Actual implementation is based on a voluntary bilateral process, with developed economies being the most active.

Under the MRA, members agree to the mutual recognition of conformity assessment results (for example, testing and/or certification), which ultimately streamlines the conformity assessment process.

The APEC TEL MRA was endorsed in June 1998 at APEC's 3rd Ministerial Meeting on Telecommunications and Information. Like most APEC initiatives, the TEL MRA is a pact derived organically from open dialogue between member economies and it was made voluntarily.

The implementation of the arrangement began a year later in July 1999 covering the following types of telecommunications equipment:

Canada has been a strong supporter of the APEC TEL MRA and was an early adopter. Industry Canada, the regulatory body overseeing telecommunications approvals, began implementation of the arrangement in July 1999. Like most of the economies participating in the MRA, Industry Canada had to revise and update its legislation and regulations and develop new procedures in order to implement the agreement. These efforts took longer than expected. However, the result has been an up-to-date and modern regulatory regime in Canada which permits conformity assessment to be performed by private or foreign conformity assessment bodies.

Before the APEC TEL MRA was in place, manufacturers from geographically large economies like Canada had to transport and test their products in-country. This route incurred extra costs and time-to-market. According to Stewart Beck, Director of Certification for Nemko Canada, "Third-party conformity assessment service providers have long been offering testing services for their local markets. Since the advent of mutual recognition agreements and arrangements, the private sector has been able to expand its scope of services to suit clients' needs."

From the third party conformity assessment point of view, the advent of the APEC TEL MRA has opened up doors to new markets. This has allowed service organisations - such as Conformity Assessment Bodies (CABs) - to offer additional services to their clients, thereby saving manufacturers time and money in getting new products into their chosen markets.

Internationally accepted accreditation is the cornerstone of mutual acceptance and thus central to the implementation of the APEC TEL MRA. Through the MRA process, manufacturers and CABs benefit from direct contact with international regulators which allows them to better understand local regulations and then implement them within the testing and certification services recognised by the participating economy. The Phase I and Phase II procedures, as outlined in the APEC TEL MRA, have worked well because testing and certifications are acceptable for market entry¹. In return, other participating economies have benefited by being able to get their third party CABs accepted in Canada.

Singapore is a dynamic hub for trade; in particular, Singapore is a leader in urban and technology innovation. Implementing the APEC TEL MRA has been a priority and a big success in Singapore. The benefits are clear. Says James Wong, Technical Regulations Engineering Program Manager for South & South-East Asian Countries at Hewlett-Packard, "...our local operations benefit significantly in terms of saving time and cost."

Time-to-market is a big priority for businesses in an increasingly competitive environment. According to Darwin Ho, Executive Council Member of the Association of Telecommunications Industry of Singapore (ATiS), "Economic challenges in the recent years have made companies re-think about the way they do business." He adds, "The MRA allows companies to have the first mover advantage."

This drives the conformity assessment process directly. "The MRA preparation encouraged certification bodies to streamline their existing certification processes. The MRA also promotes the exchange of best-practice information on certification among participating economies," explains Richard Hong, Senior Vice President of Industry Service for TUV SUD PSB Pte Ltd. These 'best practices' ultimately translate to safer and more effective products for consumers.

Hong Kong, China has been implementing Phase I of the APEC TEL MRA with Australia; Singapore; and Chinese Taipei since 1999; and it reached full implementation with the US and Canada in 2005 and 2008 respectively. Between July 2008 and June 2009, 440 test reports were issued under the framework of the MRA.

Stakeholders in Hong Kong, China have appreciated the MRA's benefits including reduced time for approvals, cost savings and 'local service' (i.e. testing products once for multiple markets). They have also reported an increase in business opportunities as market access has improved and the transparency of regulations in foreign markets has increased.

In addition, implementing the MRA has sharpened competition in the testing market, allowing more service providers to enter the market. This in turn drives innovation and reduces costs. For CABs, participating in an MRA boosts their reputation and confidence leading to a market advantage and international exposure, and it removes the need for accreditation from multiple Accreditation Bodies (ABs), particularly foreign ABs.

The US has implemented Phase I of the APEC TEL MRA with Australia; Canada; Chinese Taipei; Singapore; Korea; Hong Kong, China; and Viet Nam. Phase II of the MRA has been implemented with Canada; Singapore; and Hong Kong, China. The US has also implemented an MRA (similar to Phase II of the APEC Tel MRA) with Japan separately.

In the US, the Federal Communications Commission (FCC) serves as the regulatory authority that can recognise foreign CABs under the MRA. The National Institute of Standards and Technology (NIST), an agency under the US Department of Commerce, serves as the MRA Designating Authority. In this role, NIST designates US CABs for MRA partners.

As of 31 December 2009, 77 US CABs (some at multiple locations) were recognised by one or more MRA partner economies, for a total of 228 Phase I testing lab recognitions and 20 Phase II certification body recognitions.

As of 19 February 2010, there are 82 Phase I (testing laboratories) CABs and three Phase II CABs (certification bodies) recognised by the FCC under the APEC TEL MRA.

In a 2009 NIST survey of US CABS, the key benefit of CAB participation in the APEC TEL MRA recognition process was the ability to provide their clients with 'one-stop' regulatory services accepted by multiple economies. Manufacturers prefer the convenience of using a local laboratory where in-person communications can be frequent, and there are fewer language barriers. The reduced time-to-market and lower costs were also cited as key benefits.

The US implementation of Phase II is complementary to the Telecommunications Certification Body (TCB) process implemented by the FCC. Since June 2000, privatisation of the certification of radio devices has streamlined equipment authorisations for thousands of devices. The explosion of wireless technologies worldwide is an indicator of the breadth of this programme. MRA partners have successfully groomed local certification bodies to service manufacturers in participating economies. This has been supported by various agreements on accreditation in which conformity assessment providers are audited according to the same requirements (under the International Laboratory Accreditation Cooperation, for example).

Chinese Taipei has implemented Phase I of the MRA with five economies: Australia; Canada; Hong Kong, China; Singapore; and the United States; and Phase II has been implemented with Canada. Chinese Taipei has recognised 18 telecommunications laboratories, 105 EMC laboratories and one certification body in other APEC economies. In addition, 11 Chinese Taipei laboratories are recognised by other economies.

The MRA process has worked well for Chinese Taipei as state-of-the-art telecommunications products are available to end-users and manufacturers can access the global markets with greater ease and less cost. Going forward Chinese Taipei will also be lending its support to a new APEC MRA that proposes to deal with Equivalence of Technical Regulations (ETR). This would benefit users of the MRA by minimising the need for the re-testing of devices.

According to Nigel N.L. Jou, Chief Executive Officer of the Taiwan Accreditation Foundation (TAF), "The telecommunications industry plays a very important role in Chinese Taipei's export market. In 2009 over 60 percent of Chinese Taipei's telecommunications products were exported to world markets. The MRA is a very positive solution providing significant time and cost savings for manufacturers and customers. In the coming years, I deeply believe that the MRA of Equivalence of Technical Requirements will continue to strengthen and benefit the stakeholders in the APEC region."

Roger Sheng, Manager of the Telecom Technology Center in Chinese Taipei points out the TEL MRA's immediate benefits to manufacturers and laboratories: "As a government funded non-profit independent lab in Chinese Taipei, we have witnessed how the APEC TEL MRA helps domestic telecom manufacturers. Most of our customers are small businesses and it is hard for them to have a representative located in other economies for approvals. With the APEC TEL MRA, small businesses can access the Asia-Pacific markets faster and easier. To meet client requests for better and faster testing and certification services, labs in Chinese Taipei have the opportunity to develop new testing technologies, set up state-of-the-art testing facilities and build up a robust testing/certification ecosystem."

Faster testing and certification services contribute to increased efficiencies and linkages in trade of electronic devices, as well as technological innovation. These are direct benefits of the APEC TEL MRA. Steven Chuang, Director of the Certification Department of Compliance Certification Services in Chinese Taipei also notes: "The concept of a global village is not only an ideal but is becoming a reality." Chuang adds, "In the past, due to the specific requirements from different economies, laboratories were forced to generate additional reports and documents specific to those economies. This wasted a lot of time and money. The MRA has helped advance the development of a global village and saved resources that are better expended elsewhere."

Korea has actively implemented Phase I with Canada (1997); the US (2005); Viet Nam (2006); and Chile (2008). Korea polled 347 organisations involved in exports, imports, sales and test labs. Of the respondents, an overwhelming majority (73 percent) recognised and utilised the MRA with the major benefit cited as being the reduction of time-to-market (estimated at 3.3 weeks on average) and average cost savings of $2650. Queried on the notion of moving onto Phase II, 97 percent of respondents believed that it would provide further benefits.

Currently, Korea plans to implement Phase I with Singapore, based on a Free Trade Agreement (FTA) signed in 2004. Phase II implementation with the US would follow ratification of an FTA with the US.

In September 2009 the APEC TEL MRA Task Force approved a new MRA for the Equivalence of Technical Requirements (ETR) of telecommunications equipment and is currently working on the operational details. This ETR MRA complements the TEL MRA and is being developed to further reduce technical barriers to trade and ease compliance for manufacturers. The ETR MRA will also be implemented on a voluntary bilateral basis.

This article was previously published in a technical journal and has been re-edited for the APEC Newsletter. The following persons contributed significant information and supporting material: Melinda Tan (IDA Singapore), Efrain Guevara (Industry Canada), Lawrence Kwan and KK Sin (OFTA Hong Kong, China), Ramona Saar (NIST), Kun-Young Ahn and Mr. Koh (KCC Korea), and Roger Sheng (TTC Chinese Taipei). Originally edited by Michael Violette (Washington Laboratories).