How can we manage the change?
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1 Why do we need a change? Technical conditions for the free movement of goods in EU and WTO agreements. Problems in the existing legal systems and infrastructure How can we manage the change? What do we know? General Methodology Specific Actions to be Taken Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 1
2 Why do we need a change? Technical conditions for the free movement of goods in EU and WTO agreements. Problems in the existing legal systems and infrastructure How can we manage the change? What do we know? General Methodology Specific Actions to be Taken Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 2
3 Key Elements in Market Non-Technical Semi-Technical Technical International State Corparate Finance/Capital Infrastructure Trade Infrastructure Production Taxes Stock Market R&D, Innovation Business Regulations Intellectual Property Quality Infrastructure Business Starting and Trade Marking Bankruptcy Technical Regulations Consumer Protection MSTQ Conformity Assessment Quotas Customs International Recognition TBT (mostly political) (mostly technical) Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 3
4 Main elements of Technical Barriers in Trade Products must comply with the rules and regulations of the country it is marketed in. Compliance is demonstrated by tests. Products should be tested once according to these requirements, and the tests performed by the producer should be recognized by the purchaser. Imported and locally produced goods should be treated equally. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 4
5 How is it implemented in ECA area? EU has the most advance system and is using New and Global Approach Directives more (new system) and Old Approach Directives (classical system) less. Countries with plans and programs for EU membership are following EU practices. However, some of them have to make radical changes (both legally and technically). Others are guided by WTO guidelines as well as EU practices (also needed in economical areas or clusters). Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 5
6 Need for Quality Infrastructure and its main tools Full compliance requires a fully functioning Quality Infrastructure. Technical regulations are the main tools of the Quality Infrastructure. Technical Regulations use standards (and tests required by the standards), as references. Most (almost all) of the tests are standardized. Metrology assures the correctness of the tests by referencing all measurements to national standards. Inspection (within market surveillance) is used to supervise the implementation. Conformity of all the elements used in the system is verified by the accreditation. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 6
7 Main elements of Technical Regulations Refers to the standards that will be used to manufacture the product. Refers to the standards that will be used for the tests used during and after manufacturing the product. Refers authorized organizations for supervising the production (if and when needed). Refers authorized organizations for tests performed during and after production. Refers who will perform the inspections before the product is put in the market (type approval). Refers who will perform inspections (regular or random) while the product is in the market. Refers how complaints will be handled. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 7
8 MSTQ and MAS Systems, Conformity Assessment Schemes MSTQ (Metrology, Standardization, Testing and Quality), MAS (Metrology, Accreditation, Standardization) are subsets of the Quality Infrastructures and are used in various activities. These concepts are used mostly for referring individual elements and institutions of the system. Conformity Assessment Systems are accreditation centered operations of the Quality Infrastructures. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 8
9 We can t prepare technical regulation for each product or service. So: Standards that are prepared are used on a voluntary basis. State (through regulatory bodies) puts only a small number of these standards into mandatory usage through technical regulations. State is concerned in human safety, environmental impact and compatibility to existing systems. Industry uses standards for mostly compatibility purposes, so many parts manufactured by many companies can be assembled in one place. Accreditation and Metrology are also mostly voluntary operations used by the industry. Accreditation is used in order to demonstrate the competency. Metrology is the fundamental technical basis for production and compatibility as well as trade and consumer protection. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 9
10 Why do we need a change? Technical conditions for the free movement of goods in EU and WTO agreements. Problems in the existing legal systems and infrastructure How can we manage the change? What do we know? General Methodology Specific Actions to be Taken Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 10
11 Compatibility of existing systems with the required systems. Legal systems. Preparation and implementation of Technical Regulations. Physical infrastructures. Implementation, market surveillance problems. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 11
12 Compatibility of existing systems with the required systems. Legal systems. Most of the time, legal systems are not in compliance with contemporary implementations and requirements. Major problems in Standardization (mandatory versus voluntary usage of standards), Technical Regulations (authorization, industrial interest groups), Accreditation (coverage, authorization), Metrology (designation of national measurement reference standards). Preparation and implementation of Technical Regulations. Contents/scope, who prepares, who supervises the implementation, reference to existing physical infrastructure especially the tests. Participation of private sector in inspections. Physical infrastructures. Insufficient Metrology Institute for national measurement reference standards, insufficient accredited calibration laboratories, lack of accredited laboratories for product testing, material analysis, and health. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 12
13 Implementation, market surveillance problems Major problems in Coordination among demand (market), service providers (standardization, metrology, accreditation), regulatory authorities and inspection and supervision mechanisms. Coordination with universities for preparation of standards, pool of assessors for accreditation, various tests that can be performed at university laboratories. Insufficient information, documentation for the system. Multiple inspections, overlap between various organizations. Inspections without tests, measurements. Insufficient level of training for inspectors. Inspections without feedback. Abuse, corruption. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 13
14 Why do we need a change? Technical conditions for the free movement of goods in EU and WTO agreements. Problems in the existing legal systems and infrastructure How can we manage the change? What do we know? General Methodology Specific Actions to be Taken Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 14
15 We know that many industrial nations are using the new system successfully EU countries USA, Japan, Australia etc Industrialized third world countries We know 10 countries that joined EU since 2004 made the transition successfully in a rather short time We know outside of EU, many countries are in transition with various degrees of success and various levels of implementation Brasil, Turkey Many South East Asian Countries Countries within former Soviet Union Countries within former Yugoslavia Other Balkan and North African Countries Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 15
16 We also know in these countries: Available Resources Natural Resources Financial Resources Human Resources Ability to Use Resources Leadership (its role and impact) Ownership culture (its role and impact) Decision Making System (at national and institutional level) Investment Absorption Capability Work Environment Culture and mentality in the country Relations with neighbors and with trading partners Extend and effect of corruption Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 16
17 We also know in these countries: What they did Legal infrastructure Implementation and processes Physical infrastructure How they did Line of thinking Methodology and timing External assistance What the result was Effect in compliance with international requirements/practices Increase in production, trade, quality, and human welfare Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 17
18 Why do we need a change? Technical conditions for the free movement of goods in EU and WTO agreements. Problems in the existing legal systems and infrastructure How can we manage the change? What do we know? General Methodology Specific Actions to be Taken Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 18
19 I. Gather relevant information about Uzbekistan II. Compare various parameters for Uzbekistan with other countries using existing information. III. Determine the similarities and differences IV. Select a group of countries for benchmarking and reference. V. Determine the timeline (compared to other countries) and evolution profile for critical processes (decision making, human and financial resources, mentality, economic development, demand for services etc.) VI. Understand the current state of Uzbekistan and determine the steps needed for the development of NQI. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 19
20 Why do we need a change? Technical conditions for the free movement of goods in EU and WTO agreements. Problems in the existing legal systems and infrastructure How can we manage the change? What do we know? General Methodology Specific Actions to be Taken Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 20
21 I. Preliminary Survey Inputs Existing Reports, Other Documents, Library Search, Internet Search. Output: Preliminary Report Usable Information, Information that needs to be verified, Missing Information, Site Survey Program. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 21
22 II. Site Surveys Inputs Preliminary Report, Other Documents, Site Visits, Interviews. Output: Inception Report Organized, reformatted information, As is analysis to be used for : National Strategy SWOT Analysis, Project Preparation. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 22
23 III. Strategy and SWOT Analysis Inputs Inception Report, Discussions with all Stakeholders SWOT Analysis Workshop Output: National Strategy and SWOT Analysis As is situation (existing state today) Objectives for 15 years (what to be achieved, targets) Vision in 15 years (state to be reached after 15 years) Activities for 15 years (what to be done) Project Modules for Investments (investment packages) Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 23
24 IV. Development of Individual Projects (I) Inputs National Strategy and SWOT Analysis, Experience from previous project(s), Funding organization requirements, Resources to become available. Output: Project Consultants Premises Equipment Training Monitoring Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 24
25 IV. Development of Individual Projects (III) Need for Funding Generally local funds are not sufficient. Even if local funds are sufficient, there are too many restrictions. Local funds don t have the continuity (lack of long term commitment). Funds needed mostly for: Metrology Institute (5-200 million, 5-25 year development). Secondary laboratories for calibration and/or testing (2-500 million, 2-15 year development). Accreditation (0-2 million, 1-5 year development). Standardization (0-2 million, 1-5 year development). Regulatory infrastructure, including inspection/market surveillance (0-2 million, 1-5 year development). Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 25
26 IV. Development of Individual Projects (IV) Main Elements Project Infrastructure Project Implementation Unit/Team Public Awareness Campaign National Infrastructure National Strategy (if not done before) Improvements in Legal System Business Regulations/reform Technical Regulations/reform Standardization Accreditation Metrology RIA NQI/MSTQ Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 26
27 Too much to do, is it worth the efforts? Economic benefits of NQI projects (metrology component only) Metrology related activities amount to 5-13% GDP for a typical economy. In metrology, Return of Investment is between 2,1 and 51 in the lifetime of investments (approximately years). So borrower recovers the resources used for investments in metrology in couple of years. As an example, for Turkey, in ITP Project (World Bank), Return of Investment for metrology was calculated to be 42 by international consultants (SG/NPL of UK). 45 million USD total investment in metrology generates more than 100 million USD per year additional income for the state. 2-5% of this figure is the direct income by the metrology institute. 3-15% is the tax revenues generated by direct customers of the metrology institute (secondary laboratories, testing facilities, military etc.). Remaining amount (80-95%) is from revenues due to increased industrial exports by the existence of functional Quality Infrastructure. So, investments in the Quality Infrastructures is one of the best investments a state can make. Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 27
28 Thank You for Your Attention Uzbekistan Quality Infrastructure Workshop, 19 January 2011 Dr. Hüseyin Uğur 28
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