Bringing cutting edge products and services to markets around the world in record time is what the tech industry does best. To help accomplish this, companies aim to manufacture a product to meet a common set of internationally accepted technical standards for things such as product safety, electromagnetic interference (EMI), and telecommunications functionality. They then seek to test the product one time anywhere in the world at an appropriate lab, and bring it to market with minimal disruptions and delays. While the objectives are simple, the challenges to this process from forced localization requirements are not.
Over 80 countries have technical regulations for safety, EMI, and telecommunications. Many have chosen to adopt national standards that deviate from global norms. More commonly, they adopt unique compliance procedures, including mandatory testing and certification by local firms designated by the government. These forced localization measures disrupt supply chains and diminish the benefits of a single, global market. The differences among their approaches have also created a patchwork of local requirements—often duplicating, conflicting, or diverging—that effectively limit consumers’ access to innovative technologies by driving up product costs and creating delays to bring them to market.
To eliminate the need for localized standards and regulatory requirements, governments can use a variety of tools. For example, they can participate in global standards development efforts to ensure that they are not pursuing a national standard that would duplicate or conflict with an existing standard. They can also participate in multilateral and bilateral agreements that allow for the mutual acceptance of product testing; if a product is tested at a participating lab in one country, it does not need to be retested in another.
In some cases, mandatory regulations may not be necessary, as industry compliance with voluntary standards can achieve the desired objectives. In other cases, where regulations are necessary, countries can adopt internationally recognized compliance procedures, such as a supplier’s declaration of conformity, where obstacles like local testing and certification are minimized by allowing manufacturers to test their products at a competent lab anywhere in the world and to provide relevant documentation without added costs and delays. In all cases, governments should follow a guiding principle of the World Trade Organization’s Technical Barriers to Trade Agreement, which states that these technical requirements should not be any more trade-restrictive than necessary to meet legitimate regulatory objectives (Article 2.2).
In case after case, localized standards and regulatory requirements have an especially significant impact on the tech industry, where the rapid evolution of technologies makes any interruption in getting products to market a critical concern. As we engage with policymakers around the world, ITI works to advance more constructive policy options for countries seeking to promote economic growth and innovation.
Forced Localization Blog Series Table of Contents:
- What is Forced Localization?
- Local Content Requirements
- Local Presence Requirements
- Local Standards and Conformity Assessment
- Data Localization Explained
- The Costs of Data Localization
- Development and Data Localization
- Privacy Protection and Data Localization
- Cybersecurity and Data Localization
- Law Enforcement Access to Information and Data Localization
- Using Trade Agreements and other Multilateral Approaches to Address Forced Localization