Standards Adoption in Trade: What, Why, and How.

Jun 15

What are industry standards? Industry standards, such as the Standard International Trade Classification, are the norms or conventions established by an industry or sector.

Let’s start with the basics. What are industry standards, and why do they matter?

Industry standards, such as the Standard International Trade Classification, are the norms or conventions established by an industry or sector. These standards can be voluntary, such as in the case of best practices, or they can be mandatory, as is often the case with regulatory requirements.

There are many reasons why industry standards exist. They can help to ensure the safety of products and services, improve the quality of goods and services, and promote efficiency and interoperability. In some cases, standards can also level the playing field for competition.

Various organizations develop and oversee industry standards. Standards-setting bodies can be national or international in scope, and they often work closely with trade associations, government agencies, and other stakeholders.

The process of developing a new industry standard can be quite lengthy and involved. It typically starts with identifying a need or problem that a standards-setting body believes can be addressed by establishing a new standard. Once a proposal is drafted, it is subject to a public comment period and then undergoes various rounds of voting by members of the standards-setting body. Once a standard is approved, it is published and becomes available for use by the relevant industry.

Standards can be revised over time as new technologies or changes in the marketplace require updates. And sometimes, standards that were once widely used can fall out of favor and eventually become obsolete.

What are the differences between voluntary standards and non-voluntary regulations?

Voluntary standards are sets of guidelines that organizations agree to follow in order to improve their operations or products. The guidelines are usually set by an industry association or other group with expertise in the relevant area. For example, the voluntary standards for electrical safety might be set by the National Electrical Code.

Regulations, on the other hand, are laws that dictate how businesses must operate. These laws are usually enacted by Congress or another legislative body, and they are enforced by government agencies such as the Environmental Protection Agency or the Occupational Safety and Health Administration. Regulations usually carry more weight than voluntary standards, because businesses that violate them can be fined or forced to shut down.

There are pros and cons to both voluntary standards and regulations. Voluntary standards are typically less expensive and burdensome for businesses to comply with, since they are not legally required. But they can also be less effective, because there is no penalty for not following them. Regulations are often more effective at ensuring compliance, but they can also be more costly and difficult for businesses to follow.

In general, voluntary standards are more flexible and allow businesses more leeway in how they operate. Regulations are more rigid and can impose stricter requirements on businesses. Both types of standards can be important tools for improving safety, quality, and other aspects of business operations.

What are some methods for adopting new standards?

There are a variety of different ways that new standards get adopted by industry groups. In some cases, a standard is developed by a group or consortium of companies that have a common interest in the area that the standard addresses. For example, the Bluetooth wireless standard was developed by a group of companies that were interested in creating a short-range wireless connection between devices. In other cases, a standard is developed by a single company or organization and then adopted by others. For example, the USB (Universal Serial Bus) standard was developed by Intel and then adopted by other companies.

Once a standard has been developed, there are a number of different ways that it can be adopted by industry groups. Sometimes, a standard is simply published and then companies can choose to adopt it on their own. In other cases, a standard is submitted to an existing standards body such as the Institute of Electrical and Electronics Engineers (IEEE) or the International Organization for Standardization (ISO). If the standards body decides to adopt the standard, then it becomes an official standard that companies can choose to adopt.

There are a number of factors that influence whether or not an industry group will adopt a new standard. One of the most important factors is whether or not the new standard is compatible with existing standards. For example, when the Bluetooth wireless standard was first developed, it was not compatible with the IEEE 802.11 wireless standard. As a result, many companies were reluctant to adopt Bluetooth because it would not work with their existing wireless infrastructure.

Another important factor is whether or not there is a need for the new standard. In some cases, a new standard is developed to address a specific problem or need that exists in the market. For example, the USB 3.0 standard was developed in order to address the need for faster data transfer speeds between devices. In other cases, a new standard is developed simply because it is seen as an improvement over an existing standard. For example, the HDMI (High-Definition Multimedia Interface) cable standard was developed as an improved alternative to the existing DVI (Digital Visual Interface) cable standard.

Finally, cost can also be a factor in whether or not an industry group will adopt a new standard. In some cases, adopting a new standard may require companies to invest in new equipment or make other changes to their operations. As a result, companies may be reluctant to adopt a new standard unless there is a clear benefit or cost savings associated with doing so.

What mandatory standards do we use today in international trade?

The two main organizations that govern international trade are the World Trade Organization (WTO) and the International Monetary Fund (IMF). The WTO deals with trade rules between countries, while the IMF deals with the global financial system. Both organizations work to promote free and fair trade by setting and enforcing global standards.

The WTO’s main job is to ensure that trade flows as smoothly, predictably and freely as possible. To do this, the WTO sets and enforces the rules of international trade. The rules cover goods, services and intellectual property. They are designed to help producers of goods and services compete in international markets, and to ensure that trade flows as smoothly as possible.

The WTO’s dispute settlement system is one of the organization’s most important functions. It helps resolve conflicts between trading partners and ensures that countries comply with WTO rules.

The IMF is primarily concerned with the global financial system. It promotes economic stability and growth by regulating the international flow of money. The IMF also provides financial assistance to countries in need.

Both the WTO and the IMF work to promote free and fair trade by setting and enforcing global standards. These organizations help to ensure that trade flows smoothly and efficiently and that countries comply with international rules.

What about voluntary standards for trade. Is there a need?

In a world where international trade is becoming increasingly commonplace, adopting voluntary standards for cross-border trade can bring many benefits.

When it comes to compliance with customs regulations, one of the most important things is to have a standardized way of describing imported and exported products. This helps to ensure that the right information is being provided to customs officials and that the correct duties and taxes are being paid.

Voluntarily agreeing on a standardized way of describing products can help to streamline the customs compliance process and make it easier for businesses to comply with the law. It can also help to reduce the risk of errors and misunderstandings, which can lead to costly delays and penalties.

What’s the best way to facilitate the voluntary adoption of trade standards?

There is no one "best" way to facilitate the adoption of a new voluntary international standard. Some options include:

-Developing a marketing and outreach plan to promote the standard;

-Working with existing standards organizations to get the standard recognized and endorsed;

-Creating educational materials (e.g., webinars, whitepapers, case studies) on the benefits of adopting the standard;

-Organizing events (e.g., conferences, workshops) to generate interest and discussion about the standard; and

- Working with governments, industry groups, and other stakeholders to create a favorable environment for the standard's adoption.

——————————————————————————

Ready to join the digital trade standards revolution? Schedule a demo with KYG Trade™ today. Our open, interoperable, decentralized platform for trade + ESG compliance is the way of the future, and here now, using the new global standard for product compliance attributes, OriginBX. Transform your data into a structured attestation that will survive scrutiny and convince government regulators and the public alike that you know your goods.