43921 Technical Regulations in Ukraine: Ensuring Economic Development and Consumer Protection 2008 Technical Regulations in Ukraine: Ensuring Economic Development and Consumer Protection 2008 Policy paper was prepared by the IFC Ukraine Business Enabling Environment Project with the financial support of the Government of Canada provided through the Canadian International Development Agency (CIDA), the Dutch Agency for International Business and Cooperation (EVD), the Swedish International Development Cooperation Agency (SIDA). © International Finance Corporation, 2008 All rights reserved Reproduction, copying and distribution of this report and/or parts thereof in any form is allowed with reference to "Technical Regulations in Ukraine: Ensuring Economic Development and Consumer Protection". The opinions expressed in this report do not necessarily reflect the opinions of the International Finance Corporation (IFC), the Canadian International Development Agency (CIDA), the Dutch Agency for International Business and Cooperation (EVD), the Swedish International Development Cooperation Agency (SIDA) and/or the World Bank Group (WBG). The information in this report is intended for public use, and the International Finance Corporation (IFC), the Canadian International Development Agency (CIDA), the Dutch Agency for International Business and Cooperation (EVD), the Swedish International Development Cooperation Agency (SIDA) and/or the World Bank Group shall not be held liable for any loss, expenses and/or other consequences that may result from usage or publication of the information contained therein. All information and materials used in preparation of the report are the property and the archive of the IFC. Table of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 I. The system of technical regulations in Ukraine: key issues . . . . . . . . . . . . . . . . . . 6 1. The Current Situation in Ukraine: Overall Diagnosis . . . . . . . . . . . . . . . . . . . . . . . 8 2. Rationale: Why Technical Regulations in Ukraine Need Urgent Reform . . . . . 14 II. Main institutional problems to be addressed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 1. The Existing System of Technical Regulations Limits the Capacity of Local Producers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2. The Existing System of Technical Regulations is Obsolete and Ineffective . . . 21 3. The Legislative Framework is Highly Complex and Ambiguous . . . . . . . . . . . . 26 4. The Current System of Technical Regulations Hinders Ukraine's Full Integration in International Trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 III. Conclusions: the reform is crucial and urgent . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Annexes Annex 1. Glossary of technical regulations terminology as per the Ukrainian legislation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Annex 2. Glossary of European Union technical regulations terms . . . . . . . . . . . . 37 Annex 3. Post-Soviet legacy: confusing functions and rules continue to hamper the transformation of Ukraine into a modern economy . . . . . . . . . . . . . 38 Annex 4. List of related laws and regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Annex 5. Survey Methodology and Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Annex 6. "Map" of technical regulations in the European Union. . . . . . . . . . . . . . 45 Annex 7. Different approaches of formulating standards ­ GOST/DSTU standards compared to EN/ISO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Annex 8. Compulsory standardization and certification of services in Ukraine . . 73 Annex 9. Comparison of Ukrainian and Polish Foreign Trade in Capital Goods . . 75 Annex 10. Core Principles of REACH Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Annex 11. Direct costs of technical regulation in Ukraine, 2006 in services. . . . . . 77 Annex 12. Direct costs of technical regulation in Ukraine, 2006 . . . . . . . . . . . . . . 78 Annex 13. Statistical Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Executive Summary Standardization and conformity assessment are major topics for any economy. They are instruments that are vital both to enterprises' competitiveness and integration in international trade, and to consumer protection. The regulatory framework which sets the compulsory safety and information requirements that products on the market have to comply with, and that defines the responsibilities of the state and of the producers, is the crucible of any MSTQ (Metrology Standards Testing Quality) system ­ and any improvement and modernization of the MSTQ infrastructure can only be effective if this regulatory framework is sound, efficient and conform to international best practices. Given Ukraine's joining of WTO, and goal to have closer integration with the European Union, the technical regulations system, comprising standardization and certification (the dominant mode of conformity assessment in the country for now), needs adaptation to conform to international and European approaches. This is also the opportunity to move from a system that is characterized by burdensome, ex ante control and widespread compulsory standards to a more modern and business friendly approach, which would allow businesses to innovate, adopt latest technologies, introduce new products ­ and at the same time would strengthen consumer safety through effective market surveillance. Such a system would increase Ukraine's competitiveness, reinforce competition and thus contribute to improving choice and prices for consumers ­ and could simultaneously lead to a more effective control on the safety of goods, based on producers' responsibility and controls focusing on risks rather than on paperwork. Based on a survey of Ukrainian businesses conducted in 2007 and on extensive analysis of legislation and practice in Ukraine and other countries, in particular in the European Union, IFC has prepared this report. The following key issues in the Ukrainian system of technical regulations have been identified: · Mandatory compliance with state standards applicable de facto to all goods and many services, meaning that any innovation requires to register a new standard or a "technical specification" ­ instead of having only security and information (labeling) requirements be mandatory, and let the choice of technical solutions to the producers · Excessive use of mandatory certification, for over 400 types of goods and services, without regard to their actual level of risk for the public, or to other types of regulation already applicable (for instance food products, which are already regulated by the Sanitary and Veterinary Services) 4 · Excessive coverage of business inspections, in particular at the production level, instead of focusing on targeted checks of products on the market to ensure their safety and the respect of essential requirements · Applicable standards still mostly coming from the former Soviet Union, which not only do not correspond to international standards, but are typically far more restrictive and prescriptive, and slow down the adoption of new approaches and technologies ­ the transition to international standards is still too slow · All functions are still bundled in one institution, which creates conflicts of interest and does not allow specialists to focus properly on their missions, as they have to deal with several, fully different perspectives simultaneously · Insufficient participation of the private sector in the standardization process, which on the international level is primarily driven by industry actors. In spite of these shortcomings, Ukraine can boast on the upside a vast number of well qualified specialists in MSTQ institutions. Its technical infrastructure is better than some of the neighboring countries, but lack of rationalizations (far too many laboratories in too many overlapping institutions) means that it is practically impossible to upgrade at the present stage. WTO integration and the forthcoming negotiations of a Free Trade Agreement with the European Union (as well as the growing understanding of these issues inside Ukraine) offer exceptionally positive perspectives to achieve a breakthrough in reforms. These could focus in a first phase on: · Making standards voluntary and introducing instead compulsory safety and information requirements · Reducing the scope of compulsory certification · Transitioning to a control system based on market checks and producer responsibility · Rapid introduction of international standards by combining translation of the most important ones and direct introduction in the original language for others. In a further stage, Ukraine should look into how it will structure the different functions into a new institutional framework, which will enable a full development of the MSTQ market in Ukraine, and offer new development perspectives to businesses, state institutions and technical specialists. 5 Chapter I The system of technical regulations in Ukraine: key issues 1The Current Situation in Ukraine: Overall Diagnosis 2Rationale: Why Technical Regulations in Ukraine Need Urgent Reform · The Ukrainian technical regulations system is based on the previous Soviet system and differs from what is understood as standardization and certification or conformity assessment in Europe and OECD countries. · Standards are compulsory for most of goods, and many services, whereas in most of the world compliance with standards is optional. Over 60% of Ukrainian businesses have to comply with compulsory standards and/or technical specifications. · Registering all technical specifications in 2006 cost to Ukrainian SME about $2,000 (for food service it was up to $3,000 and for manufacturing firm - up $8,000) and took two month on average (for each third enterprise is was up to half a year and longer). · Mandatory certification procedures covers over 400 types of goods and services and affects a significant share of Ukrainian enterprises, including low-risk businesses and sectors, which are already regulated in other ways. · The State Committee for Technical Regulations and Consumer Protection is responsible simultaneously for development and approval of standards, issuing certificates, conducting inspections of producers, and ensuring market surveillance and protection of consumer rights ­ a combination of responsibilities and powers, which can lead to significant conflicts of interest. I The system of technical regulations in Ukraine: key issues IFC has been supporting Ukraine to improve its investment climate and business environment for over 10 years. Repeated Business Environment surveys conducted by IFC highlighted compulsory certification as one of the key barriers for private sector development in the country. In 2006, the Ministry of Economy of Ukraine requested the IFC Ukraine Business Enabling Environment Project to extend its scope of activities to cover technical regulations1 (in particular standardization, cer- tification and related business inspections in businesses). The Ministry rightly identified this as a critical issue for Ukraine's economic development, for the improvement of its investment climate and its integration in the world economy. It was agreed that the project would help establish the analytical basis for fur- ther reform of the technical regulations regime, and also work on creating consensus around this reform. Subsequently, in 2007 this issue was agreed upon by the Government of Ukraine and the World Bank as one of the benchmarks of the World Bank's proposed Third Development Policy Loan to Ukraine. This forms the background for the present report. The problem of technical regulations affects the interests not only of the vast majority of entrepreneurs in Ukraine but also of all consumers. IFC investigated the current state of affairs in Ukraine with regard to stan- dardization and certification, and the way technical regulations work, by means of a survey conducted in June-July 2007. The data, obtained by surveying a representative sample of 2,100 entrepreneurs throughout Ukraine refers to the situation in 2006. It was complemented by an analysis of the existing legal framework and current practices in Ukraine, and of international best practices in technical regulations ­ these form the basis of the recommendations for improving the system of technical regulations in Ukraine presented in this paper. 1. The Current Situation in Ukraine: Overall Diagnosis The technical regulations system currently existing in 1) Standardization in Ukraine is not a voluntary procedure Ukraine, not unlike systems in other CIS countries, is based through which manufacturers can ensure specific pro- on the previous Soviet system and differs significantly from perties of a process or product, nor is it a system primarily what is understood as standardization and certification or based on the needs and initiatives of the manufacturers conformity assessment in Europe and advanced market and consumers. Contrary to accepted international prac- economies such as OECD countries2. Ukraine's system is tice, standardization in Ukraine is a regulatory procedure not risk-focused and places a burden on businesses not that is part of the current state product regulation system. commensurate with the benefits it has to offer to soci- ety. The main issues with the current standardization and · Standards are compulsory for virtually all goods, and certification system3 include the following characteristic many services5, whereas in most of the world compli- features of a post-Soviet legacy4, which Ukraine shares ance with standards is optional6; with several other states of the region: 1Technical regulations are understood here as a system of legal regulation of relations in the sphere of the establishment, application of and compliance with mandatory standards or processes, systems and services, personnel and authorities involved therein, as well as inspections of compliance through conformity assessments and/or market surveillance. 2OECD ­ Organization of Economic Cooperation and Development. 3Clarification: this report focuses specifically on technical regulations regulating specifically what can be produced and sold, and NOT to labeling and other consumer information requirements. While the latter are also important issues, they are currently of far less concern to entrepreneurs, and pose relatively less problems of harmonization with international approaches. None of the conclusions of this report should be understood as applying to labeling requirements, or as minimizing the importance of consumer information issues, which deserve to be the topic of a separate analysis, which is currently not in IFC's scope of work. 4Additional information about the roots of the current system in the Soviet structures can be found in Annex 3. 5Please find detailed explanation in the section 2.3. below, and in Annex 8: Compulsory certification and standardization of services in Ukraine. 6In the EU, for instance, mandatory regulations exist mainly for high-risk products, as provided by New Approach Directives, which have the status of EU law. The Directives give the manufacturers the option to follow harmonized standards in a voluntary way, and by doing so to indicate that the products meet necessary safety requirements. Manufacturers are nevertheless always free to follow other methods of production and of demonstrating compliance, and in any case substantial safety requirements exist only for some (high risk) goods. 8 I The Current Situation in Ukraine: Overall Diagnosis According to IFC survey data, over 60 percent of Ukrainian businesses have to comply with compulsory standards and/or tech- nical specifications ­ in manufacturing and construction, the figure is as high as 81 percent. Even in services, where prescriptive technical requirements are normally absent in international practice for most services sub-sectors, 46 percent of all businesses report having to follow compulsory technical requirements -- IFC Technical Regulations Survey. Ukrainian standards are very detailed, prescriptive techni- ry) verifying compliance, as well as issuing certificates cal requirements with which products must comply in all based on these standards (see below). Development respects; they do not focus on end results (guaranteeing of standards is not primarily, as per global practice, that products are safe in specific conditions of use) but, something done by the industry to enhance its com- instead, they prescribe use of specific materials, amounts petitiveness, but something done by the state for etc. and their purpose is to impose uniformity (a clear control purposes. legacy of the Soviet system)7. 2) Certification (conformity assessment by third party) in · Standards are approved by a centralized state Ukraine, like standardization, is not primarily a voluntary body ­ the State Committee for Standardization and procedure by which a business seeks to demonstrate Consumer Protection ­ ("DerzhSpozhivStandart" of safety and higher quality or reliability of its products, Ukraine or Derzhstandart). Over the past few years the services or processes to the consumer. Instead, in Ukraine, private sector in Ukraine has been allowed some input certification is: into the development and revision of standards, but its influence has not been strong, contrary to practices · A compulsory requirement for a very wide range of adopted in other countries, where the private sector is goods8. This is in contradiction to usual practice in the playing an important role in developing and improving EU and OECD countries, where mandatory certification standards. As a result, the same body is responsible for is restricted to the highest risk objects9. setting standards and (since standards are compulso- A quarter of Ukrainian enterprises affected by compulsory certification In 2006, 23 percent of Ukrainian enterprises had to undergo mandatory certification procedures for their goods or services. This was no marginal procedure, as it affected on average 84 percent of their turnover. Average time spent to prepare all docu- ments and waiting time needed to obtain all certificates amounted to about 30 days per enterprise. A process that can take a year... For 10 percent of companies having obtained mandatory certificates in 2006, the procedure took from three months to a year. ­ IFC Technical Regulations Survey. 7 Note that, since the Soviet Union essentially functioned as one huge `company', such statewide standards were the equivalent of what exists inside one producer, where each product manufactured must correspond to a company's internal guidelines. When transposed to a market economy, such a system is clearly inadequate, as it essentially makes innovation impossible. 8 Note that voluntary certification (for the purpose of demonstrating compliance with, primarily, international standards) also exists in Ukraine. While there are specific issues, which make the voluntary certification system currently not fully compliant with international practice, we focus here primarily on the compulsory certification regime, which is the most problematic. 9 For instance, mandatory safety control by third parties exists in the EU for lifts, but not for hundreds of low-risk items as in Ukraine (shampoo, soap, children's shoes...). The scope of mandatory certification in Ukraine is much wider than even the scope of all types of technical regulations (mostly not requiring certification) in the EU (see Annex 7, "Map of Technical Regulations"). In addition, third party conformity assessments are not conducted by the state, and even less by agencies responsible for regulatory oversight, such as in Ukraine (where the same agency issues the certificates and later on inspects the business, thus confusing commercial and regulatory role). 9 I The system of technical regulations in Ukraine: key issues Mandatory certification procedures affect a significant certification (while it does of course, like in Ukraine, have share of Ukrainian enterprises, including low-risk busi- to comply with hygiene requirements and the like). In this nesses10 and sectors, that are already regulated in other sector, the cost of obtaining the required certificates was ways. Remarkably, in food service (cafes, restaurants, almost four times higher than for the average Ukrainian catering etc.) one in every four businesses had to com- enterprise ­ reaching $7,800 per food sector company af- ply with mandatory certification. Whereas in the EU this fected by the procedure in 2006 (Fig. 1). sector is virtually free from compulsory standards and In 2006, one quarter of food Average, all sectors 23% vservice companies were subject to compulsory certifi- cation and spent $3,000 on the Food service 24% certification procedures; whereas one third of manufac- turing were subject to certifica- Manufacturing 31% tion and spent almost $8,000 Companies whose product or service was subject to compulsory certification on the procedures Average, all sectors $2,000 Manufacturing $3,000 Food service $7,800 Source: IFC Technical Regulations Survey Total cost, spent to obtain required certificates in 2006 (includes cost of labor, laboratory tests, and official and unofficial payments) The average cost for one SME to obtain required certificates in 2006 (including labour costs, laboratory analyses, other official documents, official and non-official payments ) was $2,000, for 10 percent of businesses, this figure could reach as high as $9,000. In particular, mandatory certification was expensive for food services, where the average cost of all required certificates totaled $7,800. ­ IFC Technical Regulations Survey. 10"Low-risk" is understood here as products that cause a comparatively low risk to the public's and consumers' health and safety, i.e. products for which detailed and prescriptive technical regulations are not appropriate because the additional cost of compliance they would impose would not be compensated by commensurate benefits to the public. Sectors that are already regulated in other ways include in particular all food-related sectors (food processing, food service etc.). For these, the internationally accepted practice is that mandatory technical standards such as prevailing in Ukraine are neither needed nor appropriate, whereas hygiene and process safety requirements are needed. In Ukraine, these sectors are simultaneously regulated by agencies such as the Sanitary Safety or Veterinary Safety, which monitor compliance with hygiene and process safety rules, and by the standardization body. Hence they suffer from double regulation, without clear benefit to the public ­ and at a clear and substantial cost. 10 I The Current Situation in Ukraine: Overall Diagnosis Companies must demonstrate to the state certification certification in Ukraine also applies to food products, authority11 that they conform to applicable compulsory for which international practice foresees a fully differ- standards, which may or may not themselves conform to ent regulatory approach (compulsory certification in either established international standards or contempo- Ukraine virtually fixes the food recipe in stone, but it rary technology and approaches. In fact, the vast does little to ensure real consumer safety since it does majority of national standards are not compliant with not provide a real system to monitor hazards on an on- international (ISO) or EU (EN/CENELEC) ones. going basis, nor a traceability mechanism). The system thus creates considerable barriers to doing business in · Compulsory certification in Ukraine is applicable to se- spheres that present very little risk to society, or are al- veral hundred categories of products, including goods ready regulated in other ways, while at the same time presenting very low risks to consumers, and services, being inadapted to the effective regulation of high-risk both of which are not subject to compulsory confor- products. mity assessment in developed countries. Compulsory The "Chocolate Directive" Whereas in Ukraine food compositions or recipes are regulated in a way that prescribes exactly what should be inside, in the EU food composition can be regulated, but only in terms of use of certain names or labeling. The aim is to achieve the free move- ment of goods while avoiding unfair competition and deceptive practices ­ in short, to make business easy, while allowing the consumer to make informed choices. For example, the "Chocolate Directive" defines what producers are allowed to call choco- late or milk chocolate ­ only products that comply can bear this name, but other products with another composition remain legal and just need to have another name. The recent directive in fact loosened the use of the "chocolate" name ­ whereas it used to be restricted to products containing only cocoa butter (and milk for milk chocolate) as a source of fat, the use of other vegetable fats is now allowed ­ the Directive simply imposes simple rules for proper labeling of a product: "Chocolate products which contain vegetable fats other than cocoa butter may be marketed in all of the Member States, provided that their label- ling is supplemented by a conspicuous and clearly legible statement: «contains vegetable fats in addition to cocoa butter». This statement shall be in the same field of vision as the list of ingredients, clearly separated from that list, in lettering at least as large and in bold with the sales name nearby; notwithstanding this requirement, the sales name may also appear elsewhere." Clearly, allowing consumers to be informed and to make informed choices is essential ­ restricting their choices, when this is not based on safety grounds, is on the contrary bad for everyone. Source: Article 2.2. Directive 2000/36/EC of the European Parliament and of the Council of June, 23, 2000 relating to cocoa and chocolate products intended for human consumption. 11The list of products subject to compulsory certification consists of 34 groups comprising more than 400 types of goods (and services). 11 I The system of technical regulations in Ukraine: key issues · Mandatory certification in Ukraine is applicable both · Mandatory certification applies to produced goods to domestic products and to imported goods in most rather than to the production process, thus forcing cases, generally irrespective of whether they already manufacturers to complete certification procedures have proof of conformity with applicable international over and over again (even at ISO-9001 compliant technical regulations12. production facilities) or to submit proof of conformity assessment for each batch of products. Does the adoption of REACH13 mean that the EU is moving towards a system closer to Ukraine's? Some argue that the adoption and implementation of the new directive called REACH (Registration, Evaluation and Authorization of Chemicals) means that the EU is adopting a far more rigid system, akin to Ukraine's current one, and that this means it is "urgent not to reform" Ukraine's system. In fact, this is a misconception, and all recent regulations prepared by the European Commission point to the strengthening and extension of the flexible "new approach" to technical regulations. What is in fact REACH and how does it work? REACH is a new directive governing manufacturing, trade and use of chemicals ­ it aims at protecting human health and the environment from the risks of chemicals without harming the competitiveness of the EU chemicals industry. Substantial features of the REACH Regulation are: ­ Implementation of a risk-based approach to the regulation of chemical substances, i.e. the higher the potential risks and hazards, the more stringent the safety requirements. ­ Authorization (i.e. permit document) is not required for most substances ­ manufacturers or importers should simply regis- ter a technical dossier and a chemical safety report with the regulator, ECHA (Eureopan Chemicals Agency). ­ The registration is a self-certification: the fact of filing the dossier is considered enough to proceed. The registration dossier should testify that the substance is safe and the risks which it may present are properly managed. ­ Registration is subject to ex post compliance check: ECHA may check the compliance of registration dossiers with the re- quirements laid down in the REACH directive. ECHA plans to check 5 percent of dossiers (document check). From these 5 percent, ECHA may decide to conduct field inspections if it considers it necessary ­ but these would cover a very minor percentage of producers or importers (a fraction of the 5 percent). REACH simplifies regulation by replacing 40 existing pieces of legislation and creating a single system for all chemicals. For in- dustry, there will be an incentive for the use and development of safer substances which will direct and stimulate innovation. To allow for the business community to have time to adapt, entry into force is phased in from 2007 to 2022. REACH is based on the idea that industry itself is best placed to ensure that the chemicals it manufactures and puts on the mar- ket do not adversely affect human health or the environment. It puts an emphasis on obtaining all available information from a manufacturer and relying on self-certification and a risk-based control system ­ not trying to impose universal ex ante, detailed and prescriptive control from public authorities as is the case for the compulsory certification system in Ukraine. More information about REACH regulation can be found in Annex 10. Source: REACH in Brief. Environment Directorate General, European Commission, October 2007. 12There are a number of specificities regarding the regulations applicable to imported goods ­ for some of them, Ukraine has entered international agreements resulting in simplified procedures and thus in some cases the technical regulations system applicable to imported goods can be actually lighter to comply with than the one applicable to domestic producers. This, however, does not change the overall picture of a system that is overly burdensome for imports as well as for domestic production. The details of the treatment of imports cannot be covered in the framework of this report and will be the subject of a further publication by IFC. 13REACH ­ Registration, Evaluation and Authorization of Chemicals. 12 I The Current Situation in Ukraine: Overall Diagnosis 3) Contrary to globally accepted practices for many have undergone the official certification process within types of low- or medium-risk goods, Ukrainian busi- the state-run system UkrCEPRO15. nesses are not allowed to stamp their products with the Ukrainian national mark of conformity (similar to the EU's 4) The State Committee for Technical Regulations and "CE" marking) on the basis of self-assessment, since the Consumer Protection ­- is responsible simultaneously for respective legislation has been adopted but not imple- development and approval of standards, issuing certifi- mented14. Goods can only receive the substitutional mark cates, conducting inspections of producers, and ensuring of conformity (so called "trident"), however not through market surveillance and protection of consumer rights16. self-assessment and/or self-certification but only after they In 2006, 40 percent of enterprises reported being inspected by various parts of Derzhstandart for compliance with standards, norms and technical specifications. ­ IFC Technical Regulations Survey. As an example of this confusion of functions and conflict This confusion of functions, including the bundling toge- of interests, only certification bodies operating within the ther in Derzhstandart of functions of a commercial nature state UkrCEPRO system are allowed to provide conformity (certification) with state supervision functions, combined assessment (i.e. certification) of products subject to man- with the fact that the same organisation provides certifi- datory certification, so the whole process (establishing the cation services and appoints other certification bodies, list of goods, creating mandatory rules for their certifica- means that there are considerable sources of conflicts tion and authorizing ­ or not ­ competitors to enter the of interest and of excessively discretionary powers. certification market) is fully controlled by Derzhstandart. Moreover, many of these functions overlap in respect of certain kinds of products with other government authori- Indeed, in order to provide certification for products, ties, such as the Sanitary and Epidemiological Service, the subject to mandatory certification, a conformity assess- State Committee for Veterinary Medicine, and others. This ment body needs to be accredited by the Ukrainian reduces the effectiveness of supervision by creating con- National Accreditation Agency (NAA, under the Ministry fusion and conflicting requirements, is inefficient from the of Economy) and to be included in the UkrCEPRO sys- perspective of allocation of scarce state resources, and tem by Derzhstandart17. Unsurprisingly, the vast majority creates an undue burden on businesses. of certificates in the UkrCEPRO system are being issued by Derzhstandart's own certification centres (established within its regional branches), and the private sector certi- fiers make up only a minor share. 14 The national conformity mark's design and rules of application were approved by the Decree of the Cabinet of Ministers #1599 of November, 29, 2001 (as foreseen by the Ukrainian Law on Conformity Assessment). This decree is formally in force, yet has not been implemented, as the usage of this mark is strictly limited to products that are subject to `technical regulations', which have never been put in force. Therefore this instrument of conformity assessment (including self-certification) does not actually work in Ukraine. 15 UkrCEPRO (Ukrainian Certification of Products) is the network established by the State Committee for Technical Regulations and Consumer Protection, operating as a monopoly provider of compulsory certification services. It does include a number of private certifiers, but only once they have been authorized by Derzhstandart. 16 According to Statute of the Committee, approved by Decree of the President of Ukraine, March 18, 2003 #225/2003, and further regulated by a range of laws ­ see Annex 3 for details. 17 Since Derzhstandart also provides certification services itself, it is in fact a direct conflict of interest. While it is common practice to have a two-tier system (accreditation being just the first tier, and conformity assessment for goods subject to compulsory technical norms being the second tier), the second-tier ap- proval (notification in the EU) is normally never administered by agencies that themselves are involved in providing commercial certification services. 13 I The system of technical regulations in Ukraine: key issues These structural problems should not obscure the fact that country, and the present structure should be transformed Derzhstandart has a well-developed country-wide net- to allow for the development of a modern system of con- work of institutions, which are reasonably well equipped formity assessment and quality management in Ukraine. compared to many countries of the region, and are often staffed with qualified professionals. The availability of a In a reformed system, conforming to international prac- vast number of highly competent staff in Derzhstandart tice, the barriers to innovation and competition would be is a key asset for Ukraine, and a key reason why reform is removed, and the demand for high quality certification feasible and can be implemented with great success. services and quality consulting would in fact increase ­ Ukraine's qualified professionals would be more in de- Currently, however, these assets are not utilized in an ef- mand than ever. The issue is not people, but institutions. fective way to support the economic development of the 2. Rationale: Why Technical Regulations in Ukraine Need Urgent Reform 1. Current regime harms the country's economic com- 3. Technical regulations in Ukraine are too prescriptive petitiveness -- Ukraine is ranked 78th in the Global and complex -- the necessary and adequate level of Competitiveness Rating and 139th in Doing Business. The safety can be achieved without all the restrictions and ad- low rankings are, in particular, due to the high cost and ministrative procedures currently employed by the state great complexity of technical regulation settings, which to regulate production processes ­ and with far more hold back the development of the private sector and flexibility. Worse, over-prescriptive, compulsory technical the economy as a whole. Heavy regulation damages standards actually harm safety by preventing the intro- Ukraine's potential competitive advantage, linked to its duction of new and safer technologies and products18. prime location, human and natural resources, industrial The current certification system also focuses on the valida- infrastructure etc. tion of specific samples of products, instead of focusing on the manufacturing process itself. As a result, there is in 2. Barriers to innovation -- new technologies cannot be fact little guarantee that the goods are consistently safe, legally implemented until they are approved by state only a guarantee that this specific sample was found regulatory agencies. New equipment cannot be im- compliant. Furthermore, because excessively prescriptive, ported, new products cannot be put on the market if they and often oudated requirements make compliance often do not satisfy to existing standards or obtain registered incompatible with modern technological processes, many technical specifications from Derzhstandart, which takes firms have no other choice, if they are to remain competi- considerable time and money. As a result, modernization tive and to offer products that consumers want, but to of Ukrainian companies is hindered, new technologies resort to "unofficial means" as they cannot comply with cannot be generalized, new consumer products are slow Ukrainian standards. to appear ­ and, instead of being able to launch inno- vative goods, Ukraine remains a supplier of traditional semi-finished goods. 18In addition, Derzhstandart requirements openly aim at guaranteeing "quality". In fact, in a market economy, quality is primarily to be ensured through adequate competition and consumer information ­ not through centrally imposed "recipes" limiting innovation and the very competition that can allow consumers to get a real choice. 14 I Rationale: Why Technical Regulations in Ukraine Need Urgent Reform 4. Current system of government control does not effec- 6. A conflicting legal framework -- a modern set of tively focus on real product safety issues ­ the majority of laws adopted in 2001 and completed in 2005, which noncompliances detected by the State Committee for provides for the voluntary nature of compliance with Technical Regulations and Consumer Protection have standards, coexists and conflicts with number of Laws largely to do with formal rather than substantive issues and regulations, e.g. Cabinet of Ministers Decree of 1993 ­ because the regulations themselves focus too much on On Standardization and Certification and the Law On formal and procedural norms. Consumer Rights Protection, which essentially makes the compliance of any product with respective national stan- 5. Non-conformity of local norms and approaches with dards compulsory. international rules and principles (including EU and WTO rules) ­ upon joining the WTO, Ukrainian manufacturers 7. Existing standards are ineffective and obsolete ­ by will not only be prevented from making the most of the granting standards the status of a compulsory docu- benefits of international economic integration, but many ment, the government forces the manufacturers to follow current features of the technical regulations system con- many obsolete norms, as these include 16,765 interstate tradict Ukraine's commitments. The successful completion standards (GOSTs) developed before 1992, 46 percent of and implementation of a Free Trade Agreement (FTA) with which were adopted even before 1980. the EU will also be impossible to achieve without a reform of the TR system in Ukraine. 15 Chapter II Main institutional problems to be addressed 1The Existing System of Technical Regulations Limits the Capacity of Local Producers 2The Existing System of Technical Regulations is Obsolete and Ineffective 3The Legislative Framework is Highly Complex and Ambiguous 4The Current System of Technical Regulations Hinders Ukraine's Full Integration in International Trade · The current system limits the capacity of local producers. The total cost of going through compulsory technical regulations procedures (standardization, certification and relevant inspections) for Ukrainian SMEs was estimated at over $127 million in 2006. · The existing system of technical regulations is obsolete and ineffective. Ukraine uses a huge number of outdated standards and requires mandatory certification even for many low risk goods. · Derzhstandart inspects a considerable share of enterprises, overlapping widely with other regulators. For instance, in 2006 two third of all Ukrainian food service businesses were inspected by Derzhstandart, while simultaneously the Sanitary Service visited half of all enterprises in this sector. · Due to the highly complex and ambiguous legal base, standardization and compulsory certification remain de facto the norm. Derzhstandart continues to work on the basis of the 1993 Decree On Standardization and Certification and of the Law on Consumer Protection, which contradict specific legislation on certification and standardization. · The technical regulation system hinders Ukraine's full integration in international trade, as its current structure contradicts EU and WTO policies and rules, and Ukraine's commitments to these organizations. Main institutional problems to be addressed 1. The Existing System of Technical Regulations Limits the II Capacity of Local Producers The current system foresees that putting goods on the no state standards yet exist, he or she is forced to develop market without them having some kind of "normative and register either a new standard, or so called techni- documents" as basis is virtually illegal, as it can lead to cal specifications. Since registering a new standard is the immediate prohibition of production and sale for such both costlier and longer, and since the new standard can goods (according to the Law on Consumer Protection, then also be used by competitors, most new products in see below section III, Legislative Framework). Ukraine are introduced on the basis of technical speci- fications. Although these specifications are legally an This means in practice that, if an entrepreneur plans to entrepreneur's private property, they must be registered produce and put on the market a new product to which by Derzhstandart. An antiquated system, born in the early transition years Technical specifications ("tekhnicheskie usloviya", or `TUs') contain requirements which regulate relations between a supplier or manufacturer and end user (customer) of products. Derzhstandart sets the fee amount for state registration of technical specifications and changes to them. Source: Art.7, Decree of Cabinet of Ministers of Ukraine N 46-93 of May 10, 1993. In a market economy, technical specifications of products do not need to be registered with the state ­ producers are free to change them in order to adapt to market conditions... This procedure is one of the peculiarities of the post-Soviet tion, colour etc.) requires registration of a new technical system and is not known in other parts of the world. It be- specification. came necessary as a result of the need to produce new types of goods in order to meet market demands while The requirement for all new products to be based on a not reforming the old system in depth. Technical speci- new standard or (in its absence) a new technical speci- fications can be viewed as "individual standards" and fication is not a real guarantee of product safety, but set the exact characteristics of the product ­ as a result, places a considerable burden on firms that wish to inno- any change in the product (recipe, material, composi- vate (Fig.2). In 2006, 62% of all businesses Manufacturing 81% had to comply with standards or technical specifications Average, all sectors 62% Food service 67% % of businesses subject to standards or technical specifications in 2006 Source: IFC Technical Regulations Survey 18 The Existing System of Technical Regulations Limits the Capacity of Local Producers Technical specifications are a considerable weight for businesses The total cost registering technical specifications, including expertise when needed and other official and non-official expenses amounted an average $2,000 per business in 2006. II On average a month was required to prepare all documents needed to register or change technical specifications with Derzhstandart. Therefore, an entrepreneur had to wait (and thus delay the launch of any new product) for another month from the submis- sion of documents to the receipt of technical specifications. On average a SME needed two month to prepare all documents and register technical specifications (Annex 13). Registering all technical 10% of businesses specifications can take More than half a year 25% of businesses half a year and even From 2 months to almost half a year longer 25% of businesses From 3 weeks to 2 months 40% of businesses Up to 3 weeks # of days to register all technical specifications needed Registering technical 10% of businesses $11,000­$150,000 specifications can cost 25% of businesses over $10,000 $2,000­$9,000 30% of businesses $401­$1,600 35% of businesses $60­$400 Costs spent to register all technical specifications at one enterprise When looking at the worst 10 percent of cases, (a) the total duration of registering Source: IFC Technical Regulations Survey technical specifications (including preparing documents and waiting time) took half a year or more; (b) the total costs exceeded $11,000. It is, therefore, no wonder that 57 percent of businesses, Simply to go through all the procedures needed to obtain according to the IFC Technical Regulations Survey, certificates or register "technical specifications", Ukrainian complain about the complexity and ambiguity of the SMEs spent over $100 Million in 2006 (Fig. 4) ­ to which requirements of state standards and other technical the considerable time spent undergoing inspections by regulations. Technical regulations procedures are among Derzhstandart should be added. the heaviest regulatory procedures in the country (Fig. 3). Taxation 70% , Four procedures that repre- sent the biggest regulatory Permits barriers to development of 67% business in Ukraine Inspections 65% Certification& Standardization 63% % of enterprises believing these procedures are complex and Source: IFC, SME surveys, 2003-2007 hindering business development in Ukraine 19 Main institutional problems to be addressed Total money costs to obtain $47 mln II mandatory certificates in 2006 , The current system creates a huge Total money costs to register or amend burden for SMEs* technical specifications in 2006 $59 mln Labour costs of time spent during DSSU inspections in 2006 $21 mln Total costs of technical regulations * See Annex 12 procedures for SMEs in Ukraine in 2006 $127 mln Source: IFC Technical Regulations Survey Costs for SMEs of going through compulsory technical regulations procedures Due to the difficulty to comply with the regulatory pro- forward ­ meaning that honest and transparent entrepre- cedures, and the excessive discretion given to officials neurs are penalized by the system. A total of 72 percent because of the confusion of functions in Derzhstandart, of respondents admitted using some kind of non-official many enterprises found corruption the easiest way method to solve issues relating to technical regulations. Entrepreneurs Speak · In the local jewelry industry the cost of the certification process for any alloy is $40,000. Suppliers of ligature, which is usu- ally imported from the USA, are continuously working on improving the alloys; therefore, certification procedures have to be completed over and over again, because each time the exact composition has to be approved, whereas it would be much easier to simply check the alloys for presence of hazardous elements such as cadmium. · Each time on the eve of the new school year (September 1st) Ukrainian customers experience deficit of modern and high- quality school uniforms, particularly of unusual sizes. The problem is arising as the proportion of kids stronger or taller than the old average for their age has been increasing over the past decade or two. Yet clothes producers have to comply with out- dated Soviet standards created in the 1980's, and are unable to supply what the market needs. At the moment, the system of technical regulations in methods, and production of innovative goods, which limits Ukraine presents a major barrier to innovative development the range of products available for consumers. because it makes developing and marketing new products, or implementing new technologies too cumbersome and The percentage of enterprises which are in the business of costly (in both time and money). This impedes the spread of developing or introducing innovations has been shrinking advanced technology, use of state-of-the-art materials and steadily since 2000 (Fig. 5). Developed innovations 15% , Percentage of innovative 2000 Introduced innovations enterprises in Ukraine is 18% declining Developed innovations 10% 2006 Introduced innovations 11% Source: State Statistics Committee of Ukraine19 % of all enterprises in the country 19The State Statistics Committee of Ukraine defines innovative activity as a series of scientific, technical, logistical, financial, and marketing activities aimed at developing and marketing innovations, i.e. conducting research work and purchasing the product of such research, new technology, production design, other methods of preparing the production sector for manufacturing new products, introducing new production methods, acquiring facilities, equipment, devices, and other property, plant, and equipment, and capital expenditures for the introduction of innovations, marketing, advertisement, etc. Data is gathered and aggregated through yearly surveys via forms that all enterprises are required to submit to the State Committee of Statistics. Statistical reports can be accessed at http://www.ukrstat.gov.ua. 20 The existing System of Technical Regulations is Obsolete and Ineffective Entrepreneurs Speak · The standard applied to rose bush saplings, adopted in 1988, establishes their size. Thus, grade two semi-standard rose sap- lings must be 40-80 cm in length with 30 cm roots. There is no demand for such rose bush saplings. As a result, rose nurseries II have no choice but to violate existing norms all the time. · Toilet seats can only be made of plastic meeting the standards approved in 1977, 1979, and 1986 or of birch tree plywood, their shape being in line with a GOST standard approved in 1985. But it is 2007 now, and materials and tastes have changed. As a comparison, in the European Union the characteristics of toilet seats are not regulated by the state at all. 2. The Existing System of Technical Regulations is Obsolete and Ineffective The country's economy as a whole and all of its resi- are not only obsolete but also compulsory, the poten- dents, producers and consumers, are denied the benefits tial for growth is very seriously limited in all sectors of the of safer, more effective new products and technology economy. due to obsolete technical regulations. And since they Quantitative Facts · As of March 1, 2006 Ukraine had 16,765 interstate standards (GOSTs) in effect, all of them developed before 1992; 46 percent of those had been approved before 1980. Without a doubt, the conformity of a product or service with a standard developed more than 30 years ago cannot be regarded as a guarantee of quality ­ or even, in many cases, of safety. Source: State Committee for Standardization and Consumer Protection The main cause of this situation is the way in which the pose the type of technology to be used. Production and entire system of technical regulations is organized, the sale of goods that do not meet government-approved focus being on overseeing compliance not only with standards are prohibited. safety requirements but rather with formal prescriptions. Instead of checking whether the product is safe in given Such excessive regulation, with a focus on narrow techni- circumstances, and whether the manufacturing process cal characteristics rather than on end results, which exists guarantees that each and every product meets these in Ukraine, is even more restrictive and constraining than safety requirements, the authorities are concerned with the so-called "old approach", from which the EU started inspecting precise technical characteristics and ensuring to depart back in 1985. compliance with extremely prescriptive norms, which im- Table 1. "Old Approach" and "New Approach" in EU Documents "Old Approach" "New Approach" Standards Each product Product categories Technical regulations Detailed technical requirements for Key requirements for the characteristics of production process end product (health+safety) Source: IFC Technical Regulations Survey 21 Main institutional problems to be addressed Technical rules in Ukraine ­ the problem is not confined to Derzhstandart II While this paper focuses on technical regulations administered by Derzhstandart, there are many technical rules in Ukraine that are also excessively rigid, force enterprises to use obsolete technologies etc. The following comparison gives a concrete example of the differences between EU and Ukraine approaches to technical rules in the food safety sphere (the Ukrainian rules quoted here are enforced by the Sanitary and Epidemiological Service of the Ministry of Health). The EU legislation has specific details and requirements on items necessary for food safety, such as water temperature, but is flexible enough on how to reach these, allowing systems `having an equivalent effect'. This is noticeably lacking throughout the Ukrainian rules. EU Regulations20 Ukraine21 Commentary 1. (a) Slaughterhouses must have 1. The territory of the slaughter- Note the specificity of the provision in this adequate and hygienic lairage house should be surrounded Ukrainian document on fence height and facilities or, climate permitting, wait- by a dense fence 2 meters requirements for `plantations', which do ing pens that are easy to clean and high and green plantations. not affect the end-product. On necessary disinfect. These facilities must be elements, such as materials that may affect equipped for watering the animals 5. Floor, walls, feeding-racks quality or safety, it is lacking. The equivalent and, if necessary, feeding them. should be made of easy-to- EU document focuses on hygiene, cleanli- The drainage of the wastewater disinfect material and not ness, disinfection and food safety. must not compromise food safety. wood. Key Provisions of the New Approach The main focus of the New Approach is on laying down harmonized requirements in order to achieve free movement of goods through establishing key health and safety regulations for goods that are deemed hazardous enough to mandate Government intervention. For these goods, to prevent the risk of national Governments edicting incompatible rules, the EU adopts `harmo- nized regulations' that are valid throughout the Union. EU directives establish substantial technical requirements (regulations) and conformity assessment procedures for each product category. Conformity with these directives serves as the guarantee for the product's compliance with health and safety regulations. Harmonized ISO, IEC etc. standards to which each directive refers to are just possible ways in which producers can ensure compliance ­ they do NOT have to use them, though most of them chose to do so. Products based on these standards have a presumption of conformity ­ but it is always possible to use another approach to prove conformity! Standardisation processes in the EU serve both public and private interests. Manufacturers that comply with voluntary EU or ISO standards enjoy a presumption of conformity with the essential requirements of New Approach directives ­ certification based on these standards also helps manufacturers export, and the adoption of standards helps spread good production prac- tices and new technologies. The new approach to technical regulations, therefore, is a method whereby the government identifies by law key compulsory requirements the product must meet to ensure high level of public safety, and the manufacturer is held responsible for finding a way to fulfill these tasks. Standards, mostly developed by the private sector, are offered as a way to help producers meet the requirements ­ they do not have to use them. In addition, for most goods except the riskiest, compliance is verified by the pro- ducer itself, and self-certification is used. The advantages of this approach include flexibility, promotion of innovations, and, therefore, enhancement of the economy's competitiveness. Source: Guide to the implementation of directives based on the New Approach and the Global Approach, European Communities, 2000. 20Regulation (EC) No 853/2004. Annex 3 Chapter II: Requirements for Slaughterhouses 21Sanitary Rules for enterprises of meat industry issued March 27, 1985 22 The existing System of Technical Regulations is Obsolete and Ineffective Ukraine has well established standardization and certifi- adoption of international standards, in particular, will be- cation bodies in place, with a well developed network come increasingly important, as this is a key tool for global of certification centres in the regions, most of them with competitiveness. The way these resources are used would, II relatively good laboratories and competent staff. In a new however, be different ­ it would not anymore be one over- system based on the EU model, all these assets would be arching and all-encompassing regulatory institution, but further employed in a much more effective way to support many independent service providers, with only an overall, economic growth and serve consumers. Services to support lighter coordination and supervision function for the state. So far, differences between international and domestic standardization and certification practices remain striking. Table 2. Global practice vs. Ukrainian practice Procedures EU/Global Practices Ukrainian Practices Standards · Two categories of regulations applicable to product · Compulsory standardization does not categories, not individual products: compulsory and guaranty quality of goods (because voluntary. most of them are outdated) and is not · 90 percent of EU standards are strictly voluntary ­ the focused strictly on safety but instead other 10 percent recommended as the easiest (but constraining innovation by extremely not exclusive) way to comply with directives. detailed and prescriptive wording. · Compulsory regulations are concerned only with pub- lic health and public safety (including consumer in- formation) while optional ones define also such para- meters of products/services as quality, reliability, etc. Conformity · No compulsory certification. Instead, procedure · Standards are compulsory for virtually assessment/ of conformity assessment is based on a modular all goods: manufacturers are allowed Certification approach - for many goods self-certification . to produce only those kinds of products · This system is based on the assessment of risks, i.e. level that meet the requirements approved of safety of each category of products/services. by the state. · Products with higher level of potential risk are liable · Compulsory certification for a broad to tighter conformity assessment procedures involving range of products (regardless of their risk external certifiers (usually private, accredited bodies). category) is established and controlled by Derzhstandart To sum up, while the existing system of government control their resources too thin by trying to enforce norms on is very burdensome and complex, it does not ensure a every single detail ­ as a result, non-compliance is high, high level of quality. The Ukrainian regulators also spread but without this being necessarily meaningful. State authorities' functions in the area of technical regulations are not properly divided and often overlap In international and European standardization practice, management is divided between the regulatory authority, which is the government institution responsible for development or adoption of regulations and the executive regulatory authority, which is the government institution responsible for regulation enforcement. In Ukraine, the central executive authorities which in ac- cordance with the above mentioned laws perform public regulation within the areas defined by such laws are at the same time regulatory authorities and responsible for enforcement of regulations. Moreover, analysis of legislation shows that there is duplication of inspection functions with regard to food products, cater- ing and trade facilities, sanitary and veterinary services, regulatory functions concerning safe levels of chemical and biological agents in water, air, soil etc. Source: Report on "Harmonization of National Standards with International and European Standards", European Profiles S.A., December 2007. 23 Main institutional problems to be addressed Derzhstandart inspections particularly affect sectors that: lion a year for all businesses. The burden was particularly · have the greatest potential to create new jobs - food heavy for the food service sector, already the most affec- II service (66 percent of businesses were inspected at ted by inspections from other regulators (SES in particular least once in 2006) and retail trade (41 percent), ­ Fig. 6). · are the cornerstone of economic development as a whole - in manufacturing 50 percent of businesses Considering that the development of the food service underwent inspections. sector is crucial both to create jobs, and to prepare the country for a massive influx of visitors in the context of Euro In the end, this leads to a strong negative economic 2012, it is striking to see how extremely heavy regulation is impact for SMEs, as the labour costs for time spent during clearly preventing the development of the sector. Derzhstandart inspections in 2006 accounted for $20 mil- Average 40% , Derzhstandart inspects a massive share of Trade 41% Derzhstandart enterprises ­ and over- Manufacturing 50% laps widely with other regulators Food service 66% Sanitary service Food service 51% Percentage of businesses which were inspected at least once by Derzhstandart in Source: IFC Technical Regulations Survey 2006, compared to Sanitary service inspections Again, this indicates a lack of risk focus. In a proper consumers and/or the environment. In modern market sur- risk-based system, mandatory regulations would apply veillance systems, only a small proportion of business are only to the production of goods that present high-risk for inspected, based on appropriate risk assessment. Derzhstandart inspections create considerable costs for Ukrainian SMEs In 2006, 40 percent of all Ukrainian SMEs were inspected at least once by Derzhstandart. The average duration was two days. In 10 percent of cases the inspections lasted an average of nine days, and in the worst five percent of cases they reached an av- erage of over one month. ­ IFC Technical Regulations Survey. Some advocates of the current system of technical by Derzhstandart have proven that inspections mostly regulations in Ukraine keep arguing that "blanket" in- reveal petty issues, if anything ­ in fact, the vast majority of spections are needed to provide customers with safe noncompliances with norms and mandatory requirements and high-quality products. Yet internal reports produced have nothing to do with product safety. 24 The existing System of Technical Regulations is Obsolete and Ineffective Figure Facts · According to data obtained in the course of inspections conducted by Derzhstandart authorities in the first half of 2007, between 44 percent and 72 percent of goods were found non-compliant with the appropriate regulations. Yet only between II 4 percent and 14 percent (depending on the type of goods) the cases of industrial goods were due to nonconformity with standards. All other violations were of formal norms. Inspections of food products did not reveal any nonconformity at all, the only exception being fat and oil products. The lion's share of all documented noncompliances were due to a lack of appropriate documentation (29-62 percent) and/or product information (20-62 percent). Source: Derzhstandart press releases of March 13, 2007; June 1, 2007; May 4, 2007. Entrepreneurs Speak · "Our technologist developed a unique recipe of crispy snacks ("sukhari"), which was found to be quite tasty by consumers. We needed to obtain technical specifications for the product, since this is what retailers ask for. But when we went to the standardization authorities, we realized that this was going to be immensely difficult. Moreover, the procedure is the same for dried crust bread, which uses only four components, and for Kyiv Cake, which has an extremely complex recipe. So we decided to do it the easy way: we simply bought specifications with a comparable set of ingredients and a recipe from a state- owned company. But we could not follow them, since we changed our suppliers very often (flavor additives, oil, etc.). Every time we changed a supplier, we had to submit and register "complementary provisions". Large confectionary producers nor- mally have a special unit to do that kind of work, but our company is too small for that. Compliance with such complex formal procedures requires a great deal of resources, thereby increasing the price of our products and reducing our ability to compete." As in this example, extremely constraining regulations sure that for all food products, appropriate controls are in that aim at fixing the recipe of each food product are place at all steps of the chain and that products conform unenforceable, and only result in "unofficial solutions" and to traceability requirements ­ while also allowing inno- barriers to innovation and entry of new actors on the mar- vation, which helps to increase the quality of consumer ket ­ the consumers do not get any benefit from them. goods. There is no mandatory certification of food products in EU The key is that all the system relies primarily on making countries, which does not mean that over 450 million EU sure that businesses have appropriate internal monitoring nationals consume low-quality or dangerous products. On and control mechanisms, and follow them ­ not that they the contrary, food safety employed there help to make bake bread according to the official state recipe22. 22Of course, the EU and EU member states have hygiene regulations and food safety requirements. They also have strict consumer information rules forcing producers and sellers to provide all relevant details on the product, and preventing abusive marketing. They do not, on the other hand, prescribe producers what recipe they should use. 25 Main institutional problems to be addressed 3. The Legislative Framework is Highly Complex and II Ambiguous The package of new laws adopted in 2001 and 2005 establishment of a modern system, conforming to EU and (Law On Standardization, Law On Conformity Assessment, WTO approaches. In reality, however, these Laws have Law On Accreditation of Conformity Assessment Bodies, mostly not been implemented, as the technical regula- all of May 2001, and Law On Standards, Technical tions system has remained mostly unreformed. In spite of Requirements and Conformity Assessment Procedures of the precedence of more recent norms in legal and consti- December 2005) contradict the Decree of the Cabinet of tutional practice, Derzhstandart continues to work on the Ministers On Standardization and Certification (May 1993), basis of the 1993 Decree (and on the basis of the Law on which was never abolished or substantially amended. Consumer Protection, which was last amended in 2006). Therefore standardization and compulsory certification of The adoption of laws in 2001-2005 to help Ukraine comply a vast array of goods remain de facto the norm. with international practices was a major step towards the Conflicting Legislation The provisions of the Law of Ukraine On Consumer Rights Protection contradict specific legislation on certification and standardization. For instance, Article 11 of the Law On Standardization states that: "Compliance with standards should be optional, except in instances where application of standards is required by technical regulations." Paragraph 2 of Part 1 of Article 14 of the Law On Consumer Rights Protection, however, says: "Failure to provide standard documentation or regulations specifying compulsory requirements for products which may do harm to the well-being or health of consumers, the environment, or property, shall result in immediate ban on the production or sale of such products by executive authorities in charge of consumer protection." The norms of the Law on Consumer Rights Protection, The problem is compounded by duplication of techni- quoted above, really mean that Derzhstandart authori- cal control functions, i.e. when the same product can ties can stop or ban the production or sale of any goods undergo two or three inspections by different authori- (including those of a lowest risk) at any time, because: ties. For example, all food products are inspected by · The criteria for measuring potential harm to public Derzhstandart, sanitary safety authorities, and, in case of well-being, health, the environment, or property are animal goods, by vet safety authorities, certificates being not established, and therefore left at the discretion of issued not only for end products but also for interim ones. inspectors · There are no other applicable requirements but those As a result, the cost of administrative hassle is placed on provided by state standards, or by `technical specifi- the consumer, as the private sector has to recoup the cations' (known as `TUs') that one has first to register at costs of completing bureaucratic procedures by increas- great cost. As a result all innovative goods and tech- ing the price of the end product. In addition the whole nologies are, by default, illegal ­ until they have been economy bears considerable opportunity costs due to formally authorized. lost profit from goods not produced, or technologies not introduced. In addition, there is a great number of regulations stipu- lating compulsory certification for many categories of products and services. 26 The Current System of Technical Regulations Hinders Ukraine's Full Integration in International Trade 4. The Current System of Technical Regulations Hinders Ukraine's Full Integration in International Trade II The experience of other post-Socialist countries, such as contains a number of provisions in clear contradiction with the Czech Republic, Hungary, Bulgaria etc., shows that EU and WTO policies. As Ukraine is now poised to join the membership in the EU and WTO promotes economic de- WTO (a step which is now pending only ratification by the velopment, first and foremost, by lifting trade barriers and Ukrainian Parliament), this could lead to serious disputes restrictions, and allowing access to capital, technology because of Ukrainian norms not being in compliance with and markets. The Ukrainian legal framework, however, still WTO agreements and with Ukraine's commitments. Putting WTO requirements into practice ­ a long way to go Ukraine is obliged to comply with the TBT agreement upon accession and therefore give priority to international standards over regional and other national ones. All national and regional standards will be voluntary, except those referred to in technical regulations intended to protect na- tional security interests, prevent deceptive practices, protect the life and health of people, animals or plants, as well as protect the environment. Source: WTO welcomes Ukraine as a new member/Press-release, February 5, 2008, http://www.wto.org/english/news_e/pres08_e/pr511_e.htm In practice, Ukraine continues to use a huge number of Onerous pre-market, third party certification, in areas ge- outdated standards and to require mandatory certifica- nerally not subject to such procedures (i.e. foodstuffs and tion for a number of lower risk products, which does not consumer electronic products), combined with an under- correspond to internationally accepted practices, al- developed post-market surveillance system, and model of though the list of products subject to this requirement has individual importer approval, which is used instead of type started to be reduced. This amounts to a violation of the approval, with no possibility of granting an approval for WTO TBT Agreement principles of proportionality and least the whole life-span of a product, result in long time delays trade-restrictiveness. and unnecessary costs for companies23. 23Market Access Database. Industrial Standards and Conformity Assessment. Standards and Other Technical Requirements ­ Ukraine. http://www.madb.europa.eu/ 27 Main institutional problems to be addressed Where international standards exist or their completion is imminent, the standardizing body shall use them, or the relevant parts of them, as a basis for the standards it develops." II "Wherever appropriate, the standardizing body shall specify standards based on product requirements in terms of performance rather than design or descriptive characteristics." Source: WTO Agreement on Technical Barriers to Trade, Annex 3: Code of Good Practice for the Preparation, Adoption and Application of Standards. Lessons from neighbouring countries: · Slovakia completed technical regulations reform in slightly more than eight years: over the period from 1995 to 2002 it intro- duced 19,000 European technical norms. 45 percent of national regulations are international standards introduced through translation and 55 percent by the "cover letter" method24. · The impetus for effective reform of technical regulations in Latvia sprang from a set of priorities, including harmonization with European and global standards (introduced as Latvian standards), regulations limited to key safety requirements, revo- cation of the compulsory nature of standards and technical regulations, move to modern, risk-focused market surveillance on the national level, and introduction of conformity assessment via a network of accredited private entities. · Over the period 2003-2006, Poland introduced 16,382 European standards, 33 percent of which were translated to Polish and the rest introduced using the cover letter method. The foreign trade and competitiveness of Ukraine in the In addition, to comply with EU rules (in order to export global markets is negatively affected by its technical goods there), Ukrainian capital goods producers would regulations system. have to comply with a double layer of regulations and specifications within the same production process ­ one Although the system of technical regulations is not the for internal use (based on the old Soviet GOST system), only factor that hinders Ukrainian foreign trade, the analy- another ­ for export needs. This means that doing business sis shows that trading across borders is suffering due to the gets more burdensome and costly. current standardization and certification system in Ukraine at least in two ways: 2) Creating additional hurdles for innovations and tech- nology transfer by making import of capital goods from 1) Weakening export potential in trade with developed OECD countries more difficult and costly: without a well economies (OECD countries, but not only), which could established system of conformity assessment that cor- be attractive markets for Ukrainian industry. Instead, the responds to the world's best practice (incl. ACAA and top export partners for Ukrainian enterprises in capital MRA26), certification is mandated for imported goods that goods remain post-Soviet economies having a similar are in the Derzhstandart List of compulsory certification. GOST-based system, and similarly lagging behind in terms of innovation and technology adoption25. 24The easiest and fastest method, which does not involve translation and makes it possible to approve the standard by simply attaching to it a national cover letter, officially announcing its endorsement as national regulation. 25Please note that there are also other specific factors that cause higher trade volumes between Ukraine and post-Soviet economies (incl. historical linkages, similar business culture etc.), but importance of technical aspects cannot be underestimated. 26ACAA ­ Agreement on Conformity Assessment and Acceptance of Industrial Products; MRA ­ Mutual Recognition Agreement. Under the terms of the Europe Agreements, candidate countries for EU membership should approximate their legislation to that of the Community. In the field of industrial standards and conformity assessment, the Europe Agreements aim to achieve the candidate countries' full conformity with Community technical regulations and European standardization and conformity assessment procedures. They also envisage the conclusion of agreements on mutual recognition in these fields. Mutual Recognition Agreements between the European Union and third countries ensure mutual acceptance of test reports, certificates and marks of conformity issued by the conformity assessment bodies. 28 The Current System of Technical Regulations Hinders Ukraine's Full Integration in International Trade Figure Facts In 2006, Russia, Belarus and Kazakhstan together accounted for two-thirds of the whole Ukrainian export in capital goods (see charts in Annex 9), whereas entire OECD zone makes about 17 percent of the export value. This is particularly weak compared, II for instance, to Poland with its 78 percent of export to OECD in capital goods. Ukraine compares unfavorably even with Russia, whose export in capital goods to OECD is higher than Ukrainian one: 22 per- cent to 17 percent. The positions of Brazil and China are even stronger in this respect. In a highly competitive world even a small gap means a big advantage or disadvantage for the economic perspective ­ and this is no small gap... Imports of capital goods show a similar problem, which means Ukraine is not closing its gap with competitors ­ in 2006 OECD countries provided 69 percent of capital goods imported to Ukraine, as compared to 78 percent for Poland - Russia was the top-two among the Ukraine's import partners after Germany. Ukraine also imported much less from China than other large industrial middle-income countries. While the Ukrainian media are regularly filled with "scare stories" about low-quality Chinese consumer goods, the reality is that China has also become one of the lead providers of high-quality capital goods ­ often produced by foreign firms in China. Instead, Ukraine is importing obsolete Russian equipment that conforms with the obsolete standards that are still compulsory. Therefore, since capital goods imports are crucial for technological progress and overall productivity growth, we may assume that Ukrainian economy has not gained from foreign trade as much as possible in terms of competitiveness. Overall, regulation of foreign trade in Ukraine is a major 2. The number of documents as well as various permits problem, and is negatively affecting businesses in three and discretionary decisions from authorities required to ways: engage in foreign trade is too extensive. 1. Procedures directly affecting export and import opera- 3. Total cost of border crossing procedures is too high. tions are too long, not because of custom regulations alone, but also due to the rules in area of standardi- It is therefore no wonder that Ukraine ranks 120th out of 178 zation, certification, phyto-sanitary and veterinary economies in "Trading across borders" rating according control. to the latest World Bank/IFC "Doing Business" report ­ by far the the worst rating in the region (table 3). Table 3. Ease of international trade in Ukraine and its neighbours Trading across borders Country Ukraine Poland Slovakia Hungary Romania Rank 120 40 90 45 38 Source: Doing business in 2008. Comparing regulations in 178 economies 29 Chapter Conclusions: the reform is crucial and urgent The system needs urgent reform as it: · Harms the country's economic competitiveness ­ while not focusing on real safety issues · Hinders innovation and technology adoption ­ because it is too prescriptive, complex and based on obsolete standards. · Contradicts international approaches (WTO requirements, EU principles) ­ and is full of internal legal contradictions. A first phase of reforms could focus on: · Making standards voluntary ­ while retaining and strengthening compulsory safety and information requirements · Reducing the scope of compulsory certification · Transitioning to a control system based on market checks and producer responsibility · Introducing rapidly most international standards by combining translation of the most important ones and direct introduction in the original language for others. Conclusions: the reform is crucial and urgent In short, the system of technical regulations in Ukraine cur- The existing system of technical regulations in Ukraine rently faces the following challenges: must, and can be improved quickly and effectively by · It hinders innovation and decreases competitiveness drawing upon international experience, which is based because of its overly prescriptive and bureaucratic na- on risk-focused approach. This allows for an appropri- ture and of the use of many antiquated requirements ate balance between costs and benefits of regulations, · The legal basis if characterized by contradictions and the overarching principle of technical regulations in III inconsistencies advanced economies. The essence of this approach is · Many goods and services are regulated several times maintaining a focus on goods posing potential danger to in different ways by a number of State regulators, re- society and/or the environment (Fig. 7). sulting in a waste of resources · Ukraine's full participation in international trade agree- ments requires urgent reform of the system. Pre-market surveillance through conformity assessment by third parties, including through In a risk manage- mutual recognition agreements High ment model, the risk Market surveillance Government Compulsory requirements Marking focuses resources on high risk areas and relies on Pre-market and market surveillance "ex post" surveil- Medium Conformity declaration by manufacturer or lance for low risk risk certificate from accredited authorities sectors Marking No compulsory Conformity declaration from manufacturer requirements Marking Low risk Optional assessment and conformity assessment by third party Source: IFC Technical Market surveillance Regulations Survey The reform is fully feasible, and in a few years at most, as What is required is a change in the system, i.e. the way in demonstrated by the successful experience from neigh- which these resources are used. bouring countries which recently joined the EU: Poland, Slovakia, the Baltics and others can serve as a "blueprint" As technical regulations serve both public and private as they have achieved excellent results within a short interests, the Ukrainian private sector will also need to period of time. Given this experience and the clarity of undertake considerable efforts in order to meet its respon- EU requirements, the way forward to reform the system of sibilities under a future EU-compliant system. Businesses will technical regulations in Ukraine is clear, and there should need in many cases to upgrade their processes, and will not be any need to "reinvent the wheel". be expected to contribute more significantly to standards development. These efforts will in turn help them conside- Ukraine already has all the other preconditions for success rably boost their competitiveness, as has been seen in ­ a technical infrastructure (laboratories), which are rather other Central and Eastern Europe countries. better than in many countries of the region, and excellent technical specialists currently working in Derzhstandart. 32 Reform of technical regulations, which was conducted in a considerable reduction in time and money costs for the many countries around the globe along the same lines, government and enterprises. Its implementation in Ukraine has had a positive impact on their development through could focus on the following: Short-Term Changes III · review and update all relevant laws to eliminate contradictions and inconsistencies · gradually curtail the list of goods subject to compulsory certification aiming at further approximation of the Technical regu- lation system in Ukraine to the EU approach · revoke the universal requirement for all goods to comply with standards by amending the Articles 14 and 15 of the Law of Ukraine "On Protection of Consumer Rights" · use conformity assessment procedures based on `New Approach' technical regulations that already have been adopted in Ukraine (17 in total ­ for the moment adopted but not used) · eliminate overlaps and duplication of functions between regulators · eliminate contradictions and inconsistencies between applicable laws Medium-Term Objectives · adopt the principles of market surveillance, based on lighter, risk-focused regulations ­ and of inspection of goods on the market, rather than during the production process · accelerate the process of harmonization of national standards with European ones by using the "cover letter" approach The proposed measures will help to: · decrease administrative burden to businesses through reduction in the share of enterprises that have to comply with com- pulsory standards · strengthen the competitiveness of Ukrainian enterprises in local and international markets · broaden the range of products available to consumers and reduce prices/tariffs · create a supportive environment for pursuing robust innovative technology policy efforts on the national scale · allow international integration (WTO, Free Trade Agreement with the EU). Implementation of the proposed reforms would result zation and certification for services would result in in immediate, considerable cost savings for Ukrainian immediate savings of around $14 Million for SMEs in this businesses, thus improving the competitiveness of the sector, taking into account only direct money cost of Ukrainian economy in the critical time of WTO accession. these procedures. As an example, the abolition of compulsory standardi- 33 Annexes Glossary of technical regulations terminology as per the Ukrainian legislation 1 Glossary of European Union technical regulations terms 2 Post-Soviet legacy: confusing functions and rules continue to hamper the transformation of Ukraine into a modern economy 3 List of related laws and regulations 4 Survey Methodology and Process 5 "Map" of technical regulations in the European Union 6 Different approaches of formulating standards ­ GOST/DSTU standards compared to EN/ISO 7 Compulsory standardization and certification of services in Ukraine 8 Comparison of Ukrainian and Polish Foreign Trade in Capital Goods 9 Core Principles of REACH Regulations 10 Direct costs of technical regulations in Ukraine, 2006 in services11 Direct costs of technical regulations in Ukraine, 2006 12 Statistical Data13 Annexes Annex 1. Glossary of technical regulations terminology as per the Ukrainian legislation · Conformity assessment ­ the process of providing · National conformity mark ­ a single sign indicating the evidence that the requirements applicable to pro- product's compliance with applicable regulations. It ducts, processes, systems, individuals, or authorities are also indicates that the individual or organization that fulfilled, proven by tests, oversight, or certification; stamped the product with this mark has assumed liabi- lity for that, verified and confirms the compliance of 1 · Conformity certificate ­ documentation proving that the product to all applicable requirements and confor- products, quality assurance systems, quality manage- mity assessment procedures confirming the product's ment systems, environment management systems, compliance with technical regulations; and personnel meet the requirements established by a specific standard or other regulations approved by the · Market surveillance ­ on-going oversight of the compli- government; ance of mass use products with technical regulations, the legality of the products being stamped with the · Conformity confirmation ­ issuance of a document National conformity mark, and verification of the (conformity declaration or conformity certificate) on completion and accuracy of product information; the basis of a decision passed upon the completion of necessary conformity assessment procedures proving · Technical regulations ­ a law or regulations approved the fulfillment of applicable requirements; by the Cabinet of Ministers of Ukraine, which identifies product characteristics or relevant production · Conformity declaration ­ a process in the course of processes and methods, as well as requirements which the manufacturer or organization authorized pertaining to services, including provisions compliance by the manufacturer (further "the manufacturer") with which is mandatory.27 assumes full liability for presenting documented proof that the products are compliant with applicable · Standard ­ a document developed on the basis of a requirements; consensus decision and approved by the authorized body, establishing rules, instructions, or characteristics · Internal production control ­ a set of conformity as- pertaining to an activity or results thereof, intended sessment procedures through which the manufacturer for general and multiple use, including products, guarantees and declares that the products are com- processes, and services, compliance with which is not pliant with applicable regulations. The manufacturer mandatory.28 stamps the products with the national conformity mark and draws up a conformity declaration; 27This and the previous definition are given in accordance with the Law "On Standards, Technical Regulations, and Conformity Assessment Procedures". 28As provided by the Law "On Standardization". 36 Annex 2 Annex 2. Glossary of European Union technical regulations terms29 · Accreditation ­ Procedure by which an authoritative but which leaves to the national authorities the choice body gives formal recognition that a body or person is of form and methods used to attain the objectives competent to carry out specific tasks. which were agreed on at EU level within their domestic legal systems. · Certification ­ Procedure by which a third party gives written assurance that a product, process or service · European Standard ­ Standard adopted by CEN/ conforms to specified requirements CENELEC and carrying with it an obligation of imple- mentation as an identical national standard and · Conformity assessment ­ Any activity concerned with withdrawal of conflicting national standards 2 determining directly or indirectly that relevant require- ments are fulfilled. · Harmonized standard ­ Technical specification adop- NOTE: Typical examples of conformity assessment ac- ted by European Standards Organizations, developed tivities are sampling, testing and inspection; evaluation, under a mandate given by the European Commission verification and assurance of conformity (supplier's and/or European Free Trade Association, in support of declaration, certification); registration and approval as essential requirements of a New Approach Directives well as their combinations. · Standard ­ Document, established by consensus · Essential requirements ­ Requirements that represent and approved by a recognized body, that provides, the core of European Union law around which an for common and repeated use, rules, guidelines or effective policy has been developed in matters of characteristics for activities or their results, aimed at safety, health and other measures for those areas cov- the achievement of the optimum degree of order in a ered by the `new approach directives'. given context · European Directive ­ A legislative instrument within the European Union (EU) which is binding for Member States with regards to the objective to be achieved 29Source: European Committee for Standardization (CEN) http://www.cen.eu/boss/glossary.asp 37 Annexes Annex 3. Post-Soviet legacy: confusing functions and rules continue to hamper the transformation of Ukraine into a modern economy30 In the former USSR, in addition to obligatory state (GOST) According to the Ministry of Health more than 700 en- and industry (OST) standards, there existed more than a forceable official documents relating to occupational, thousand additional documents relating to occupational food, transport safety, radiation and community hygiene safety, sanitary conditions, health care, government au- are effective. Standards and regulations provided in these thorities with supervisory functions (construction standards documents determine parameters of production process; and regulations, design, production and/or safe utilization product, process and service safety; inspection or analysis regulations, sanitary and veterinary-sanitary rules, sanitary methods; necessary individual and collective protection standards and regulations, boundary concentrations or equipment etc. levels, microbiological standards, medical and biological 3 requirements etc). As in the case of sanitary rules, documents relating to occupational health and safety determine approved It should be noted that state (compulsory) technical materials and substances, stipulate regulations for pro- regulation in Ukraine is carried out on the basis of the duction, installation and operation of machines and management system of the former USSR. According to it, equipment, storage and recycling regulations for hazar- the sector-specific standards, norms and rules fall within dous substances, protection equipment application competence of respective government agency. There rules etc. It should be noted that many of the these are separate governing bodies in such areas as construc- documents, particularly, construction and public health tion (Ministry of Construction and Regional Development), standards and regulations, as well as occupational and health care (Ministry of Health), industrial safety, oc- industrial safety requirements are documents of the former cupational safety, state mines inspectorate and state USSR which validity has been extended. regulation for treatment of industrial explosive materials (State Committee for Mining and Industrial Control); envi- ronmental protection (Ministry of Environment), fire safety (Ministry of Emergency), veterinary and phytosanitary rules (Ministry of Agricultural Policy) etc. 30Source: Report on "Harmonization of National Standards with International and European Standards". European Profiles S.A., December 2007. 38 Annex 4 Annex 4. List of related laws and regulations 1. Decree of the Cabinet of Ministers On State Control over Standards, Norms and Regulations and on Responsibility for their Violations of April 8, 1993; 2. Decree of the Cabinet of Ministers On Standardization and Certification of May 10,1993; 3. Law On Standardization of May 17, 2001; 4. Law On Conformity Assessment of May 17, 2001; 5. Law On Accreditation of Conformity Assessment Bodies of May 17, 2001; 6. Law On Standards, Technical Requirements and Conformity Assessment Procedures of December 1, 2005; 7. Law On Consumer Rights Protection of May 12, 1991; 8. Law On Ensuring Sanitary and Epidemiological Wellbeing of Population of February 24, 1994; 4 Besides, provisions related to technical regulations are set in a number of sector-specific laws, in particular concerning food: - Law On Safety and Quality of Food Products and Foodstuffs of December 23, 1997; - Law On Sate Control over Import of Agricultural Products of July 17, 1997; etc. 39 Annexes Annex 5. Survey Methodology and Process31 Survey Overview years of experience in conducting surveys in Ukraine and Objective elsewhere. The survey was intended to provide data for assessing the business environment in Ukraine in terms of interaction Respondents were interviewed using a comprehen- of Ukrainian enterprises with State bodies responsible for sive questionnaire consisting of sixty-nine questions with standardization and certification in 2006 and developing respect to standardization and certification regulatory recommendations for further improvement. barriers encountered in day-to-day operations as well as overall opinion about business enabling environment. Source of data These findings were supplemented by focus group ses- The survey sought the opinions of SME entrepreneurs sions, in-depth interviews with entrepreneurs, roundtables across Ukraine on the conditions for doing business in 2006. covering the issues raised in the survey, and meetings with experts and government agency stakeholders. Sampling A multi-stage selection process was used, random at the Preliminary results of the survey were released to the stage of selecting respondents. media, the business community, and officials of govern- ment agencies regulating business activity in Ukraine. Their 5 The sample included 2,099 companies across Ukraine and feedback was incorporated in this report. in Crimea, representing all key sectors of the Ukrainian eco- nomy (with the exception of agriculture, forestry, fisheries, Characteristics of the Sample public administration, and house-keeping services). The survey sample was based on data released by the State Statistics Committee of Ukraine, effective January 1, Where the number of enterprises per region by business 2007, and designed to be representative of SMEs operat- sector and company size was out of proportion to the ing in Ukraine. sample, the results were weighted to normalize the statis- tics and to ensure adequate representation by business The sample included only active (operating) enterprises. size and sector. State-owned enterprises or those receiving full or partial financing from the state and/or local budgets were not The sampling error was less than two percent. included. Process The sample was selected according to the following ad- Commissioned by IFC, preliminary data collection was ditional criteria: 1) size (based on number of employees); carried out between June 11 and July 13, 2007 by Gfk 2) business type (sector); 3) location. Ukraine, an independent marketing company with many 31While all efforts have been made to ensure the accuracy of the information published in this report, we do not guarantee that the data is the latest or free of errors. IFC assumes no liability for any use of the data contained in this report. Regarding the statistics and research herein, it is possible that figures may be different from ones released previously. In such cases, the data released most recently should be preferred. 40 Annex 5 Enterprises surveyed, by size For the purposes of relevant comparison, enterprises with The sample was selected to be representative of the clas- more than 1,000 employees were not included. Enterprises sifications of companies in Ukraine32: in this category accounted for less than one percent of · micro: 10 employees or fewer the potential sample population when the sample was · small: 11 to 50 employees prepared. Figure1 shows the enterprises sample selected, · medium: 51 to 250 employees by size. · large: 251 to 1,000 employees Medium 19% Sample structure, by enterprise size Small 35% Large 6%6% Micro 40% % of respondents 5 Enerprises surveyed, by sector ing services. Table 1 shows the sector categories applied The enterprises included in this survey represented all key to the sample, while Figure 2 shows sample structure by private sector industries, with the exception of agriculture, SME sector. forestry, fisheries, public administration, and house-keep- Table 1. Sample structure, by sector Sector Business Activity Industry Producers of metal products, machinery, food products, fuel, chemicals, petrochemicals, pulp and paper, light industry, wood products, and construction materials Construction Builders Trade Wholesale and retail operations Food service Restaurants, bars, cafes, and canteens Transport Cargo, passenger, and public transport operations Services Commercial banks and insurance companies, pension funds, real estate agencies, publishing houses, telecommunications companies, and other service providers 32These classifications conform to internationally accepted standards, not the definitions in the Economic Code of Ukraine of January 1, 2004. 41 Annexes Transport 18% Sample structure, Food services 11% by sector Services 14% Trade 14% Manufacturing 26% Construction 17% % of respondents Table 2 shows the number of SMEs by size and sector. Table 3 shows the distribution of the sample by region. Table 2. Sample structure, by sector and size Enterprise size 5 Sector Total Micro Small Medium Large Manufacturing 140 180 150 84 554 Construction 134 143 76 13 366 Trade 170 82 31 4 287 Food services 103 94 24 3 224 Transport 126 128 90 25 369 Services 160 105 30 4 299 Total: 833 732 401 133 2,099 42 Annex 5 Table 3. Sample structure, by region Region Number of enterprises Autonomous Republic of Crimea 85 Cherkasy 87 Chernihiv 84 Chernivtsi 87 Dnipropetrovs'k 82 Donets'k 82 Ivano-Frankivs'k 77 Kharkiv 82 Kherson 74 Khmel'nyts'kyi 86 Kirovohrad 84 Kyiv 114 Luhans'k 81 L'viv 90 5 Mykolaiv 78 Odesa 86 Poltava 77 Rivne 87 Sumy 79 Ternopil' 84 Vinnytsia 81 Volyn' 89 Zakarpattia 89 Zaporizhzhia 76 Zhytomyr 78 Ukraine (total) 2,099 43 Annexes Characteristics of Respondents · were fully informed about inspections conducted by control authorities The survey respondents were company managers who · supervised other personnel who completed the above- were fully aware of the environment in which their com- mentioned procedures or who were fully informed panies operated. Most of them were company directors about inspections. falling into at least one of the categories of personnel below: Figure 3 shows respondents by managerial level. · obtained certificates and passed standardization pro- cedure for their companies Respondents structure, Finance director / Chief accountant / Accountant 43% by managerial level Other 8% 5 Director / Deputy director / Owner 49% % of respondents 44 Annex 6 Annex 6. "Map" of technical regulations in the European Union List of EU Directives and relevant conformity assessment procedure for possible harmonisation by Ukraine Key to supporting standards Key to Conformity Assessment Process 1 Standards are necessary for the support/operation of the Conformity assessment modules ("New Directive (see comments/definitions below) Approach" Directives) a New Approach Legislation needing (usually many) HACCP, methods approved by the Codex 2 standards harmonized with European Standards (see Alimentarius b comments/definitions below) Other (see comments/definitions below) Authorization c Monitoring d Product placement notification e Marking (by the manufacturer etc) after conformity assessment f Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market Consumer Products (Non-Food) Crystal 69/493/EEC Composition of material Marking Outdated method of analysis. Directive not in real operation f within EU Textiles 96/74/EC Requirements to provide Marking (non CE) Analytical methods similar to ISO 6 97/37/EC the name of textiles and standards 2004/34/EC information about textile f 2006/3/EC composition Cosmetics 76/768/EEC Safety and harmlessness re- Marking (non CE); 95/17/EC quirements; product label packaging; ingredi- 2003/15/EC information requirements; ents list f composition requirements Household appli- 92/75/EEC Energy consumption Marking environmen- ances (refrigerators, 94/2/EC tal (non CE) freezers, and com- 95/12/EEC binations thereof, 95/13/EEC washing machines, 96/60/EC dryers, and combi- 97/17/EEC nations thereof, dish 2002/40/EC f washers, ovens, wa- ter heaters and hot water tanks, lighting fixtures, air condition- ing devices) Packaging and 94/62/EC Special requirements for Marking (non CE) packaging waste 2004/12/EC the manufacturing and preparation of packaging, 1 multiple use requirements, f recycling requirements, color metal concentration requirements Ballasts for fluores- 2000/55/EC Energy efficiency Storage of technical Module A (see comments/defi- 2 cent lamps (energy documentation; CE nitions below) f efficiency) marking 45 Annexes Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market Consumer Products (Food) Alcoholic beverages 87/250/EEC Alcohol by volume Marking (non CE) 80/232/ Nominal quantity require- 1576/89 ments for packaged prod- 670/2003 ucts f Alcohol presentation re- quirements Food additives 89/107/EEC; Information and marking Marking (non CE) 94/35/EC; requirements 94/36/EC; 95/2/EC; 96/77/EC; 95/31/EC; 95/45/EC; 81/712/EEC; f 2003/95/EC; 2003/114/EC; 2003/115/EC; 2004/45/EC; 2004/46/EC; 2004/47/EC. Spices 88/388/EEC Information and marking Marking (non CE) requirements, admissible level of unwanted sub- f stances in food due to the use of spices Sweet'n low 94/35/EC Marking requirements Marking(non CE) Spring water 80/777/EEC Terms of use and distribu- Marking (non CE) 96/70/EC; tion of natural spring water 6 2003/40/EC. Quality of water and gas used f Maximum admissible level of minerals Products for Animals Animal feed 82/471/EEC Marking and packaging Marking 70/524/EEC, requirements 79/373/EEC, 82/471/EEC, 82/475/EEC, 86/174/EEC, 90/167/EEC, 93/74/EEC, f 93/113/EC, 94/39/EC, 95/10/EC, 96/25/EC, 2002/2/EC 2002/32/EC 80/511/EEC Consumer Products (Non-Food) Fuel 98/70/EC; Environmental require- Monitoring ments, maximum admis- d sible level of sulfur Consumer Products (Food) Water for human use 98/83/EC Microbiological parame- Monitoring 75/440/EEC ters, chemical parameters, d indicative parameters 46 Annex 6 Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market Tobacco products 2001/37/EC Tar, nicotine, and carbon Testing, marking (non monoxide content require- CE) f ments, warning signs Consumer Products (Non-Food) Drugs for human use 2001/83/EC Requirements with regard Authorization for mar- Pre market authorization. 2004/24/EC to a number of indicators, ket placement; au- Full documentation to be sub- 2004/27/EC packaging and packaging thorization for produc- mitted (including clinical tests) information requirements tion; authorization for for authorization prior to market c distribution; marking placement. (non CE) Products for Animals Food additives for 1831/2003 Marking and packaging Authorization, marking Pre market authorization. animals 82/471/EEC requirements, general re- (non CE) Full documentation to be sub- 84/443/EEC quirements for application mitted (including clinical tests) 85/509/EEC for authorization prior to market 86/530/EEC placement. 90/439/EEC c 93/56/EEC 95/33/EC 1999/20/EC 2004/116/EC Veterinary drugs 2001/82/EC Marking and packaging Authorization for Pre market authorization. requirements, requirements market placement; Full documentation to be sub- with regard to a number of authorization for sale; mitted (including clinical tests) indicators authorization for pro- for authorization prior to market c duction; packaging; placement. marking Chemicals Materials and items 89/109/EEC General safety require- Authorization for new Pre market authorization. 6 (including plastic 2002/72/EC ments, marking require- materials Technical dossier to be submit- products) used in 82/711/EEC ments, requirements for Declaration of con- ted to national competent 1contact with food 85/572/EEC materials used formity; Conditions for authority for approval before 97/48/EC special marking (for market placement c 2004/19/EC food) 93/8/EEC 2005/79/EC Plant protection 91/414/EEC Safety requirements, ap- Authorization for mar- Pre market authorization (ex- products 93/71/EEC plication requirements, 2004/66/EC marking and packaging ket placement; mark- haustive list of 23 product types) c requirements ing and packaging Biocidal products 98/8/EC Packaging and marking Authorization for mar- Pre market authorization requirements; requirements ket placement; mark- Full documentation to be sub- with regard to a number of ing and packaging mitted for authorization prior to c indicators market placement. Detergents 648/2004/EC Marking requirements Storage of technical Regulation; Law directly appli- 1 907/2006/EC (composition and dosage) documentation; test- cable in the EU f ing, marking Hazardous agents 67/548/EEC Safety requirements, label Manufacturing re- and substances 1999/45/ information requirements, cord, chemical safety 92/32/EC packaging and marking re- report, registration, 2000/32/EC quirements, concentration authorization for mar- c 2001/59/EC limit requirements ket placement 2001/59/EC 2006/8/EC 47 Annexes Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market Consumer Products (Food) Food (including ani- 2000/13/EC Marking, packaging, and Marking, packaging, No pre market control mal products) 852/2004 advertisement require- and ingredient infor- 853/2004 ments, ingredient informa- mation 854/2004 tion 2002/99/EC 78/2002 Requirements with regard HACCP (non CE mark- 87/250/EEC; to the hygienic manufac- ing) 89/396/EC; turing, processing and dis- 90/496/EEC; tribution of foodstuffs 91/238/EC; 92/11/EC; Hygienic requirements f 94/54/EC; 96/21/EC; General safety require- 2001/101/EC; ments 2002/67/EC; 2003/89/EC; 2003/120/EC; 2004/77/EC; 2005/26/EC; 2005/63/EC Honey 2001/110/EC Composition requirements Methods approved No pre market control by the Codex Alimen- f tarius Consumer Products (Food) Genetically modified 2001/18/EC Information and marking Placement notifica- Conditions for deliberate re- products 90/219/EEC requirements, environmen- tion, authorization for lease of GMOs tal requirements market placement, environmental risk as- e 6 sessment procedure, marking Special use food- 89/398/EEC Marking and packaging Notification of the au- Non CE marking stuffs (dietary prod- 96/84/EC; requirements, composition thorized body about ucts) 1999/21/EC; requirements market placement, 1999/41/EC; marking 2001/15/EC. e 96/8/EC; 99/21/EC; 96/8/EC. Baby and child food 2006/141/EC General safety require- Notification of the au- Non CE marking 96/5/EC ments, composition require- thorized body about 89/398/EEC ments, label information market placemetn, 91/321/EEC; and marking requirements marking 92/52/EEC; 96/4/EC; e 96/84/EC; 1999/41/EC; 1999/50/E; 2003/14/EC Genetically modified 98/95/EC Inspection, certifica- Non CE Marking plant varieties (seeds 66/402/EEC tion, marking and etc) 74/268/EEC packaging f 95/514/EC Equipment Automobiles, motor- 70/156/EEC Noise level, discharge, fuel EU approval certifi- Mutual recognition of Authorisa- cycles 92/61 tanks/protection devices, cate, conformity cer- tions; power steering, rear regis- tificate, marking tration plate space, door Non CE Marking related confor- c locks, rear and side view mity assessment devices, brakes, 48 Annex 6 Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market radio signal suppression, Testing of different parts of mo- diesel discharge level, in- tor vehicles by authorized labo- terior, anti-theft devices, ratories, with influence for safety safety steering, seat dura- foreseen. The result is motor bility, external projections, vehicles "homologation" speedometer and rear gear, seat belt holders, lighting and signal fixtures, light reflectors, lights, driv- ing lights, sidelights, towing hook, seat belts, controls detection, heating system, protectors, head rest, CO2 c discharge during fuel con- sumption, engine power, side protection, sprinkling system, mass and param- eters, shatterproof glass, tires, speed limit devices, coupling, inflammability, frontal impact, side impact, pedestrian protection, re- charge capacity, air con- ditioning Outdoor equipment 2000/14/EC Level of noise Internal manufactur- CE Marking (with regard to noise ing control; storage of radiation) technical documen- tation, declaration of conformity, marking or 1 product verification, conformity certificate, f 6 marking or full quality guarantee, conformity declara- tion, marking (see Article 14) Low voltage equip- 73/23/EEC General safety require- Internal manufactur- ment 2006/95/EC ments, protection against ing control; storage of 2 93/68/EEC risk from equipment, pro- technical documen- a tection against risk from tation, declaration of external effects conformity, marking Household electrical 96/57/EC Energy efficiency Storage of technical CE Marking refrigerators, freezers 92/75/EEC documentation, con- 1 and combinations 94/2/EC formity declaration, a thereof (with regard marking to energy efficiency) Simple pressure ves- 87/404/EEC Requirements for materi- If the manufacturing Prior to production the manu- sels als, design, manufacturing, process is compli- facturer should: guidelines (for PS.V>50 bar. ant with applicable L) standards: conformity 1. If process is compliant to stan- certificate or assess- dards: 2 ment with regard to a) Either inform an approved EU type; product veri- inspection body to examine a fication: the design and manufactur- ing schedule and draw a cer- tificate of adequacy attesting that the schedule is satisfac- tory, or 49 Annexes Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market if PS V>3000 bar/litre; b) Submit a prototype vessel conformity declara- for the EC type- examination tion or product veri- (see below); fication if PS V<3000 2. If not, or only partly, compli- bar/litre; marking ant to standards the manufac- turer, submits a prototype for If the manufacturing the EC type-examination: process is not compli- a)Manufacturer applies for an ant or not fully com- EC Type examination of his pliant with relevant quality system to a notified standards: EU type body (application should in- assessment, product clude name and address of verification, if PS manufacturer, written dec- V>3000 bar/litre; con- laration that the application formity declaration, has not been lodged with any if PS V<3000 bar/litre; other notified body, design marking documentation, as described in Annex III and a specimen of production envisaged - type) a b)The notified body shall ex- 2 amine and evaluate the documentation, carry out the appropriate inspections and the tests on the type to ensure that it meets essential requirements and harmonised standards c)Where the type meets the provisions of the Directive, the notified body shall issue an EC type-examination certificate 6 to the applicant. d)In future the applicant informs the notified body of any modification to the approved type. For PS.V<50 bar.L ­ manu- For PS.V<50 bar.L Must be manufactured in ac- facturing in accordance ­ marking without cordance with sound engineer- with reasonable engineer- ing practice in one of the Mem- a ing practices ber States and bear appropri- ate markings Electromagnetic 89/336/EEC Maximum admissible level If the manufacturing CE marking compatibility 92/31/EEC of electromagnetic distur- process is compli- 93/68/EEC bance ant with applicable 2002/95/EC standards: conformity declaration; mark- ing (except for radio transmitters) If the manufacturing process is not compli- ant or not fully com- 3 pliant with relevant a standards: storage of technical documen- tation, conformity declaration; mark- ing (except for radio transmitters) For radio transmitters: EC type assessment, conformity declara- tion; marking 50 Annex 6 Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market Safety of Machinery 98/37/EC General safety require- For machinery not CE Marking 93/68/EEC ments , requirements for mentioned in Annex Before placing on the market, 93/95/EEC materials used, means of 4 to the Directive: the manufacturer has three 96/58/EC control, protection against storage of technical options depending on the prod- mechanical risks, protec- documentation, con- uct: tive system characteristics, formity declaration; protection against other marking EC Decleration of conformity risks, technical application, Before drawing up the EC indicators For machinery men- declaration of conformity, the tioned in Annex 4 to manufacturer will have the fol- the Directive and if lowing available for a possible the manufacturing inspection: process is not compli- a)A technical construction file ant or not fully com- b)For series manufacture, the pliant with relevant internal measures that will be standards: EC type as- implemented to ensure that sessment, conformity the machinery remains in declaration; marking conformity with the provisions of the Directive For machinery men- EC Type Examination 2 tioned in Annex 4 to e)Manufacturer applies for an a the Directive and if EC Type examination of his the manufacturing quality system to a notified process is compliant body with applicable stan- (application should include dards: submit techni- name and address of manu- cal documentation facturer, written declaration with or without con- that the application has not formity certificate or been lodged with any other EC type assessment, notified body, design docu- conformity declara- mentation, as described in tion; marking Annex III and a specimen of production envisaged - type) 6 f) The notified body shall ex- amine and evaluate the documentation, carry out the appropriate inspections and the tests on the type to ensure that it meets essential requirements and harmonised standards g)Where the type meets the provisions of the Directive, the notified body shall issue an EC type-examination certificate to the applicant. h) In future the applicant in- forms the notified body of any modification to the ap- proved type. 2 Third option Either draw up a file (inlcuding a name and address of manufac- turer, written declaration that the application has not been lodged with any other notified body, design documentation,) and submit it to a notified body for approval, Or submit a type of the product foe EC type examination 51 Annexes Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market Personal protection 89/686/EEC Design, comfort, and ef- Storage of techni- CE Marking equipment fectiveness, manufacturer's cal documentation, information, protection EC type assessment Certification procedures against mechanical im- (except simple PPE), pact, protection against EC quality assurance 1. Before placing the product squeezing, protection system for the end on the market the manufac- against physical damage product, or monitor- turer shall to the body, protection ing-based quality a)submit technical documents against heat and fire, pro- certification system to the competent national tection against cold, pro- (except simple PPE), authorities. tection against electrical conformity declara- b)submit a model for EC type- shock, protection against tion, marking examination (not required if radiation exposure, protec- design is simple) tion against hazardous sub- 2. Manufacture applies for EC stances and infections type-examination to a single approved inspection body in respect of the model in ques- tion 3. EC Type examination in- 2 cludes examination of: a)The technical file a b)The model 4. If the model satisfies the rele- vant provisions, the inspection body draws up an EC type- examination certificate `EC' quality control system for the final product 1. A manufacturer shall ensure that the manufacturing 6 process, including the final inspection of PPE and tests, are in line with the EC type- approval certificate and with the basic requirements of the Directive. 2. An inspection body, chosen by a manufacturer, shall carry out the necessary checks. System for ensuring EC quality of production by means of moni- toring 1. The manufacturer submits an application for the approval of his quality-control system to an inspection body 2. The inspection body shall examined the production and make appropriate tests 2 to check conformity to the a relevant requirements of the Directive 3. The manufacturer draws up a declaration certifying that the product placed on the market is in conformity with the provisions of the Directive and submits it to relevant authorities 4. The manufacturer affixes the EC mark of conformity 52 Annex 6 Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market Measuring instru- 90/384/EEC Metrological requirements, Either: CE Marking ments and non-au- 2004/22/EC design and construction EC type assessment, tomatic weighing type conformity EC Type Examination nstruments declaration (product a) Manufacturer applies for quality warranty) or an EC Type examination of his product verification; quality system to a notified body marking (application should include Or name and address of manufac- Individual item verifi- turer, written declaration that cation, marking the application has not been lodged with any other notified body, design documentation, as described in Annex III and a specimen of production envis- 2 aged - type) b)The notified body shall exam- a ine and evaluate the documen- tation, carry out the appropri- ate inspections and the tests on the type to ensure that it meets essential requirements and har- monised standards c)Where the type meets the provisions of the Directive, the notified body shall issue an EC type-examination certificate to the applicant. d)In future the applicant informs the notified body of any modifi- cation to the approved type. Active implantable 90/385/EEC General safety require- Conformity declara- CE Marking medical devices 93/42/EEC; ments, design and con- tion (full quality cer- 6 93/68/EEC; struction tification system with Conformity Decleration: EC-approved design 1. Manufacturer applies CE certificate); marking mark and draws up written or declaration of conformity. De- EC type assessment; cleration should cover at least product verification one specimen of the product or conformity decla- 2. Manufacturer applies for eval- ration with regard to uation of his quality system to type (product quality a notified body certification), marking 3. The notified body undertakes an audit of the quality system 2 to determine whether it meets the requirements. a 4. In addition the manufacturer shall make an application for examination of the design dossier relating to the product which he plans to manufac- ture 5. The notified body shall ex- amine the application and, where the product complies with the relevant provisions of the Directive, shall issue the applicant with an EC design examination certificate 53 Annexes Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market In vitro diagnostic 98/79/EC General safety require- Equipment not men- CE Marking; Modules related medical devices ments, design and con- tioned in Annex 2 to t the device and listed in the struction the Directive: and Directive equipment designed to assess perfor- mance: storage of technical documen- tation, conformity declaration, marking Equipment listed in Schedule A of An- nex 2: Full quality guarantee, conformity declara- 2 tion, marking or a EC type assessment, conformity declara- tion (manufacturer's guarantee), marking Equipment listed in Schedule B of An- nex 2: Full quality guarantee, conformity declara- tion, marking or EC type assessment; product verification or manufacturer's guar- 6 antee, marking Appliances burning 90/396/EEC General safety require- EC type assessment; CE Marking gaseous fuel com- ments, materials, design conformity declara- bustion devices and construction (including tion with regard to EC Type Examination aspects of performance) type; marking 1. Manufacturer applies for an see later in 92/42/EC or EC Type examination of his EC type assessment; quality system to a notified conformity declara- body (application should tion with regard to include name and address type (manufacturer's of manufacturer, written dec- guarantee; marking laration that the application or has not been lodged with any EC type assessment; other notified body, design conformity declara- documentation, as described tion with regard to in Annex III and a specimen of type (product quality production envisaged - type) 2 guarantee); marking 2. The notified body shall ex- or amine and evaluate the a EC type assessment; documentation, carry out product verification, the appropriate inspections marking and the tests on the type to ensure that it meets essential requirements and harmonised standards 3. Where the type meets the provisions of the Directive, the notified body shall issue an EC type-examination certificate to the applicant. 4. In future The applicant informs the notified body of any modification to the approved type. 54 Annex 6 Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market EC decleration to type (produc- tion quality) 1. The manufacturer declares that the product is in con- formity with the type as de- scribed in the EC type-exami- nation certificate and satisfy the essential requirements of the Directive. The manufac- turer affixes the EC mark on each appliance and draw up a written declaration of con- formity. 2. The manufacturer shall apply a quality system that ensures conformity of the product with the type as described in the EC type-examination cer- tificate and with the essential requirements of the Directive 3. The manufacturer applies for approval of his quality system with a notified body of his 2 choice for the appliances in a question. 4. The notified body evaluates the quality system to deter- mine whether it satisfies the requirements 5. A check at least once every two years is performed to en- sure that the manufacturer is 6 maintaining and applying the approved quality system. EC decleration to type (product quality) 1. The manufacturer applies an approved quality system for the final inspection of the product and the tests. 2. The manufacturer aspplies for approval of his quality system with a notified body 3. The notified body shall exam- ine and evaluate the quality system to determine whether it satisfies the requirements Hot water boilers 92/42/EEC Performance index require- EC type assessment; CE Marking fired with liquid or ments conformity declara- gaseous fuels tion with regard to Declaration and conformity type, or conformity declaration with re- 2 gard to type (manu- a facturer's guarantee), or conformity decla- ration with regard to type (product quality guarantee); marking 55 Annexes Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market EC type assessment; conformity declara- tion with regard to type, or conformity 2 declaration with re- a gard to type (manu- facturer's guarantee) or product verifica- tion, marking Medical equipment 93/42/EEC General safety require- For Class III products: CE Marking ments, design and con- Full quality guarantee Several modules related to the struction Marking; or risk involved EC type assessment; product verification or conformity declara- tion (manufacturer's guarantee), marking For Class II (a) prod- ucts: EC type assessment; product verification or conformity declara- tion (manufacturer's guarantee) or con- formity declaration (product quality guar- antee), marking 2 For Class II (b) prod- a ucts: conformity declara- 6 tion (full quality guar- antee); marking or EC type assessment; product verification or conformity declara- tion (manufacturer's guarantee) or con- formity declaration (product quality guar- antee), marking Clinical testing devic- es and custom-made devices: conformity declaration, no CE marking Equipment and 94/9/EC General safety require- Equipment group I CE Marking protection systems ments, additional require- and II, category M 1 for use in explosive ments applicable to and 1: Several modules depending on atmospheres equipment, additional EC type assessment; the risk requirements applicable to manufacturer's guar- protection systems antee or product verification, marking 2 Equipment group I a and II, category M 2 and 2: EC type assessment; conformity declara- tion with regard to type or product quali- ty guarantee, marking 56 Annex 6 Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market Equipment group II, category 3: Internal control of the manufacturing pro- cess, storage of tech- nical documentation, 2 conformity declara- a tion, marking Equipment group I and II: Aside from the above, individual item verifi- cation, marking Lifts 95/16/EC General safety require- EC type assessment; CE Marking ments, risk to people out- conformity declara- side, risk to people inside, tion with regard to other risks, lifting capacity type; marking, final information requirements, testing or manufac- operating guidelines turer's guarantee, or product quality guar- antee or EC type assessment; product quality guar- antee; conformity 2 declaration, marking, a final testing or manu- facturer's guarantee or product quality guarantee or full quality guarantee, 6 conformity declara- tion, marking, final testing or manufac- turer's guarantee or product quality guar- antee Pressure equipment 97/23/EC General safety require- For category I: CE Marking 94/55/EC ments, design require- Module ; 99/49/EC ments, manufacturing For category II: Several modules depending on 97/23/EC requirements, requirements Module 1, C1, 1 the risk involved for materials used, require- For category III: ments for heated press module B1 + D machine equipment, pip- module B1 + F 2 ing requirements, special module B + E quantitative requirements module B + C1 a for individual categories of module equipment For category IV: module B + D module B + F module G module H1 Marking Radio equipment 1999/5/EC Protection of human health Storage of techni- CE Marking (several modules) and terminal tele- and safety, requirements cal documentation, communications for electromagnetic com- internal control of the 2 equipment patibility, construction re- manufacturing pro- a quirements cess, conformity dec- laration, marking or 57 Annexes Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market If the manufacturing process is compli- ant with applicable standards: conformity declaration, marking (except radio trans- mitters) If the manufacturing is not compliant or not fully compliant with applicable standards: storage of technical documentation, con- formity declaration, marking (except radio transmitters) For radio transmitters: EC type assessment, conformity declara- tion; marking If the manufacturing process is compliant with applicable stan- 2 dards: Internal control of a the manufacturing process and tests, marking 6 or Internal control of the manufacturing process and tests, submission of techni- cal documentation, marking or Full quality guarantee, marking If the manufacturing is not compliant or not fully compliant with applicable standards: Internal control of the manufacturing process and tests, submission of techni- cal documentation, marking or Full quality guarantee, marking Cable-way instal- 2000/9/EC General safety require- Safety components: CE Marking lations designed to ments, requirements with EC type assessment, carry persons regard to structure, cables, manufacturer's guar- barrels, brakes, mechani- antee, product veri- 2 cal and electric devices, fication, conformity engines and towing equip- declaration, marking a ment, equipment for pas- or senger use, performance full quality guarantee, conformity declara- tion, marking 58 Annex 6 Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market or individual item veri- fication, conformity declaration, marking 2 Subsystems: a Storage of technical documentation, con- formity declaration, marking Marine equipment 96/98/EC Free movement of marine EC type assessment; CE Marking equipment; General safety type conformity requirements marking con- declaration or type ditions conformity declara- tion (manufacturer's guarantee) or type conformity declara- tion (product quality guarantee) or type 2 conformity declara- tion (product verifica- a tion) or full quality guarantee, marking Individual items or small lots: individual item verification, marking Transportable pres- 1999/36/EC Specific requirements Assessment modules: Different marking (non- CE) 2 sure equipment A1, C1, F and G, a 6 marking Consumer Products (Non-Food) Toys 88/378/EEC General safety require- If the manufacturing CE Marking 93/68/EEC ments, physical parameters process is compli- 2004/178/EC and strength characteris- ant with applicable tics, inflammability, chemi- standards: storage of cal properties, electrical technical documen- properties, hygiene and tation, marking radioactivity 2 If the manufacturing is a not compliant or not fully compliant with applicable standards: EC type conformity assessment, storage of technical docu- mentation, marking Construction prod- 89/106/EEC Mechanical resistibility and If the manufacturing CE Marking (obligatory) confor- ucts stability, inflammability, process is compli- mity assessment depending on hygiene, health and envi- ant with applicable the product ronmental risks, application standards: EC type 2 safety, acoustic protection, conformity assess- a heat retention ment; conformity declaration or prod- uct control conformity certificate, marking 59 Annexes Conformity Product Regulation Mandatory Assessment/Other Requirements Methods to Gain Comments/ Description Entry to Market If the manufacturing is not compliant or not fully compliant with 2 applicable standards or in instances where a no standards apply: European technical approval Explosives for civil 93/15/EEC General safety require- EC type conformity CE Marking use 1991/477/EEC ments, special require- assessment; type con- 1993/15/EEC ments formity declaration or type conformity declaration (manu- facturer's guarantee), 2 or type conformity declaration (product a quality guarantee) or product verification, marking or individual item verifi- cation , marking Recreation craft 94/25/EC Requirements with regard For categories and CE Marking to design and construc- C: tion, integrity and structure, Internal control of operation characteristics, the manufacturing equipment process and tests or EC type conformity assessment; type con- formity declaration or 6 modules B and D or B and E or B and F or G or H; marking For category : Internal control of the manufacturing process or internal control of the manu- facturing process plus tests or EC type 2 conformity assess- ment and type con- formity declaration or modules B and D or B and E or B and F or G; marking For category D: Internal control of the manufacturing process or internal control of the manu- facturing process plus tests or EC type conformity assess- ment and type con- formity declaration or modules B and D or B and E or B and F or G; marking 60 Annex 6 Notes and definitions the objectives of the legislator regarding the relevant product and or aspect; 1) The marking is placed on products meaning that the · European standards are established by the indepen- manufacturer states that the product complies with the dent standards bodies (CEN, CENELEC, ETSI) and they requirements of relevant directives, i.e. essential require- provide a presumption of conformity of the products ments. The marking, which consists of the letters CE, must and or aspects, which complies with the standards; be put either on the technical data sheet or, if that is · The manufacturer or his authorized representative impossible, on the product's packaging. The CE marking affixes a marking (CE marking) declaring the confor- must be put in such a way as to be easily seen, read, and mity of the product to the relevant legislation. No pre indelible. The product may have other markings as well, market control is forseen for the relevant products. provided that they do not impair the visibility or readability or in any other way prevent the CE marking from being 4) Standards necessary for the support of the opera- seen. tion of the Directive. Apart from the New Approach Directives, where usually many standards are necessary Depending on the legislation (and often within the same for the application of relavent law, there are Directives in legislation) the marking may be put by the manufacturer the EC foreseeing the use of standards outside the New or his authorized representative only if a third authorized Approach (measurement standards, minimum require- party ("notified body") is involved in the assessment of the ments etc.) relevant product. The "new Approach" legislation does not imply that the conformity assessment is performed by 5) Other Directives: These refer to non New Approach the authorities before the placing on the market of the Directives where no reference to standards is made. product. 6) There are eight key conformity assessment modules It is obvious that the market surveillance authorities are used in the framework of the New Approach based responsible for the control of the lawful marking of the legislation. 6 products on the market, but not before their placing on the market. MODULE A. Internal control of the manufacturing process applies to the internal control of product design and 2) Conformity assessment consists of a number of opera- manufacturing. This module does not involve any actions tions. The determination of conformity assessment by a certification authority. procedures depends, among other things, on the type of risk associated with a particular product. The modules vary MODULE B. EC type conformity assessment applies to the based on: design stage and followed by the product stage assess- · the stage of product creation (e.g. design, prototype ment module. The certification authority issues an EC type development, mass production etc.); conformity certificate. · the type of assessment performed (e.g. documenta- tion check, product type approval, quality guarantee MODULE C. Type conformity applies to the manufacturing etc.); stage and follows the B module. It confirms the product's · the subject performing the assessment (manufacturer conformity to the type specified in the EC type conformity or third party) certificate, issued upon the completion of the B module. This module does not involve any actions by the certifica- 3) New approach legislation. This is legislation applicable tion authority (part of technical documentation). in the EU and has the following characteristics: · They cover broad product families of risks; MODULE D. The manufacturer's quality guarantee applies · The obligatory requirements included in the relevant to the manufacturing stage and follows the B module. This law (Directive) are non- descriptive and represent module is based on the EN ISO 9002 quality guarantee 61 Annexes standard and includes the participation of a certification module B, and issues a conformity certificate (included in authority responsible for the approval and control of the technical documentation). manufacturer's quality assurance systems and testing of finished products (included in technical documentation). MODULE G. Individual item verification applies to the de- sign and manufacturing stages. The certification authority MODULE E. Product quality guarantee applies to the ma- conducts an assessment of each individual product and nufacturing stage and follows the B module. This module issues conformity certificates at the end of the assessment is based on the EN ISO 9003 quality guarantee standard process. and includes the participation of a certification authority responsible for the approval and control of the manufac- MODULE H. Full quality guarantee applies to the design turer's quality assurance systems and testing of finished and manufacturing stages. This module is based on the products (included in technical documentation). EN ISO 9001 quality guarantee standard and includes the participation of a certification authority responsible for MODULE F. Product verification applies to the manufac- the approval and control of the manufacturer's quality turing stage and follows the B module. The certification assurance systems used in the design, manufacturing, and authority supervises conformity to type, specified in the EC testing of finished products. type certificate, which is issued upon the completion of 6 62 Annex 7 Annex 7. Different approaches of formulating standards­ GOST/DSTU standards compared to EN/ISO 1. Footwear (except special purpose footwear and pro- dimensions, water resistance by EN); one standard ­ on tective footwear) the conciliations for conducting testing. The remaining 23 standards (72 percent) are technical requirements (TR) 1.1. The framework of Ukrainian standards as compared to and establish detailed technical requirements to products, international (ISO) and European (EN) norms. acceptance rules, and other requirements. ISO catalogue specifies 64 standards related to everyday 1.2. Degree of Harmonization footwear. Among footwear standards valid in the EU only 13 EN One standard is a dictionary (ISO 19952:2005), 11 stan- were adopted before the year 2000 (one in 1997 and 12 dards specify the requirements, and the remaining 52 in 1999). The remaining 49 documents (79 percent) were normative documents (81 percent) establish the methods adopted after the year 2000. of testing in order to define the values of indicators or cha- racteristics of footwear or its components. In Ukraine, 14 standards were adopted after 2000 (43 per- cent). The rest of normative documents were approved Interesting is the fact that standards with requirements from 1984 through 1999. pertain only to footwear components ­ nine standards, and to cast plastic footwear ­ two standards. Ukrainian standardization in footwear sector significantly (several times) lags behind the European practice and is The total of 62 standards are valid in EU: one ­ standard still oriented towards regional standardization within CIS that establishes the dictionary of ISO 19952:2005 (N ISO framework. The share of GOSTs is 22 percent. Among 32 na- 19952:2005), seven ­ include requirements to manufacture tional standards for everyday footwear only one standard of footwear components. The remaining 54 standards is identical to European EN 13073:2001, and only eight are (87 percent), just like in ISO system, stipulate the testing identical to international ISO standards. Thus, the level of 7 methods in order to define the values of characteristics of harmonization of Ukrainian standards with those of ISO and footwear and its components. EN is only 28 percent. Thus, most of normative documents establish exclusively Most of currently valid national standards include outda- the methods of testing to determine the values of different ted formulations, norms and references to obsolete GOSTs parameters of footwear and its components. of the former USSR. In addition, they include various man- datory requirements that enable controlling authorities to In Ukraine, according to the Catalogue, there are 32 apply sanctions to businesses, hamper the introduction of normative documents related to everyday footwear new materials and technologies in footwear production, and its components. These include: six standards for the and, accordingly, impede the development of footwear terms, definitions, and nomenclature of indicators; two industry. standards ­ for methods of testing (determination of linear 63 Annexes International standards: focus on performance characteristics of products and methods of testing Example 1. Ukrainian (DSTU) and international (ISO) standards for footwear The structure of Ukrainian standard ­ developed mostly on the basis of Soviet type GOST ­ does not correspond to the structure of ISO international standard for the similar type of products. Therefore, the table bellow provides just the comparison between the formulation of key requirements to the components of footwear-uppers in international and Ukrainian standards. / ISO/TR 20879 : 2007 (E) Footwear-Performance National Standard of Ukraine (DSTU) 3923-99 (GOST requirements for components for footwear-Uppers 30678-2000) «Footwear. Components and work pieces for footwear-uppers. Technical requirements» 4. General Requirements (extracts) 4. Technical requirements (extracts) 4.1 This document (in the original ­technical report) 4.1 Components and piece works of footwear upper shall establish two different types of performance must comply with the requirements of this standard requirements: essential and additional. and technology approved pursuant to the established All essential requirements shall all be taken into procedure. account. The additional ones can be separately agreed by the component supplier and the footwear 4.2 Configuration and linear dimensions of footwear-upper manufacturer. components must comply with the test patterns. Allowable variation of linear dimensions of footwear-upper 4.2 ­ 4.5. Performance requirements to general components from the test pattern shall not exceed the purpose upper for sport, school, everyday, men's and norms established by the technology. woman's city footwear Essential requirements 4.3 External upper components of everyday and Testing methods and tested properties of footwear children's footwear must be manufactured from the upper ­ essential requirements: leather for footwear-upper in accordance with GOST · Bondability 485, GOST 939, GOST 1838, GOST 3717, GOST 9705, elastic · Tear strength leather in accordance with currently valid ND; backing · Color fastness components ­ from leather for footwear backing in · Abrasion resistance (only for children's footwear) accordance with GOST 940, GOST 1838 and must comply with the requirements and norms specified in Table 1. Additional requirements must be agreed by the ... component supplier and footwear manufacturer. Thickness of upper components of summer woman's 7 Testing methods and tested properties of footwear and girl's footwear made of chevrette under GOST 939 upper ­ additional requirements: must be from 0.8 to 1,5 mm; in case of footwear for little · Wear resistance/lastability children ­ from 0.6 to 1 mm. · Seam strength · Gluing strength 4.3.3 It is allowed to use for components of footwear · Water vapor transport upper the leather with polyurethane or butadiene · Color migration covering under currently valid ND, except footwear for · Water resistance little children. · High temperature resistance · Abrasion resistance 4.3.4 Thickness of components of footwear upper made of · Water soluble substance content leather with hairy covering under currently valid ND must · Breaking strength and elongation be from 1.6 to 2, finishing ­ from 1 to 1.6 mm. · Delamination resistance 4.3.5 Upon agreement with consumer, it is allowed to 4.6 Performance requirements to upper components use for everyday footwear the dressing of a heel made of footwear for cold weather of porous rubber under GOST 12632 and current ND, no less than 0.8 mm thick, as well as other materials in Essential requirements accordance with current ND no less than 0.5 mm thick. Testing methods and properties of upper components ... of footwear for cold weather -- Essential requirements · Bondability · Tear strength · Color fastness · Water resistance · Thermal insulation 64 Annex 7 Additional requirements must be agreed by the 4.8 Backing and insole for footwear upper in accordance component supplier and footwear manufacturer. with GOST 1838 must be at least 10 mm for men's footwear Testing methods and tested properties of upper and at least 0.9 mm for woman's footwear. components of footwear for cold weather ­ additional requirements 4.9 For backing free fancy shoes and everyday footwear it · Seam strength is allowed to use leather with natural front surface without · Gluing strength cover coloring in accordance with current ND and from · Water vapor transport 2 mm to 3.5 mm thick. · Color migration · High temperature resistance 4.10 Upper limits of components' thickness of the upper of · Abrasion resistance everyday and fancy footwear for elderly people must be · Breaking strength and elongation by 0.2 mm. bellow the norm, specified in tables 1 and 3. · Water soluble substance · Delamination resistance 4.11 Upon agreement with consumer it is allowed to produce flaps for zip fasteners from artificial and synthetic leather in accordance with current ND, except fancy footwear with upper made of leather, pre-school footwear and shoes for small children. ... 4.13 For components of footwear-upper it is allowed to use other materials, which by physical-mechanical indicators and quality characteristics are not inferior to those specified above. ... 4.15 Thickness of components of footwear upper made of artificial and synthetic leather in accordance with current ND must be from 0.8 to 1.5 mm, for backing free footwear ­ at least 1.9 mm, for thong footwear ­ from 1.4 to 1.6 mm. ... 4.17 Quality of the design of components and work pieces of footwear upper shall be determined based on GOST 28371, GOST 5394, and technology approved pursuant to the established procedure. 7. Methods of testing 7.1. Testing of the quality of components of footwear upper shall be sensory. 7 7.2. Dimensions and configuration of components of footwear upper shall be verified with the use of test pattern. 7.3. Determination of linear dimensions shall be performed in accordance with current normative documents. In addition to the above mentioned requirements of DSTU, text of a standard includes the section "Safety Requirements and Protection of Environment". Provisions of this section are general in nature, not related to manufacture of footwear components, but are mandatory for compliance by all Ukrainian footwear producers. The compliance of production processes and facilities with these require- ments is mandatory and controlled by the State Committee for Standardization and Consumer Protection: · Manufacture of components and work pieces of footwear upper shall not have harmful effect on employees and shall not be hazardous for the environment. · Production conditions must comply with the requirements of Norms and Rules in Construction (SNiP) 2.04.05 and Sanitary Rules and Norms (SanPiN) 5047. · Fire safety must comply with the requirements of GOST 1.004 · In case of fire, all fire extinguishing means shall be used. · Acceptable level of noise must comply with the requirements of Sanitary Norms (SN) 3223. 65 Annexes · Optimal indicators of production facilities' microclimate must correspond to medium heaviness work category 11 by GOST 12.1.005 and SN 4088 · Vibration level in production facilities must be within the norms under GOST 12.1.012 and SN 3044. · Production facilities must have local and general draft ventilation under GOST 12.4.021, and lightning ­ in accordance with SNiP 11-4. · Employees must be provided with individual protective means under "Model Norms for Free Provision of Workwear». · Working place must meet the requirements of GOST 12.2.032 and GOST 12.2.033. · Employees must be provided with sanitary and amenity rooms in accordance with requirements of SNiP 2.09.04 · Operational personnel must undergo training on safety procedures. · Production process shall not lead to any harmful emissions in the atmosphere. Conclusion: detailed regulation of parameters for each type of pro- ISO standard is focused on footwear performance cha- duct and used materials (often outdated), while testing racteristics and methods of their testing (being highly of footwear performance ­ the most important thing for technical, they are not specified in detail in this report) consumers ­ is limited to sensory method and measure- rather than separate indicators of materials and product ment by the test pattern. On the one hand, this hampers dimensions. This makes ISO standard helpful for producers, introduction of innovations in production process. On since it allows self-control over the production of high the other hand, it does not provide producers with the quality footwear and does not hamper the introduction of instrument for securing essential footwear performance new models and materials. By contrast, DSTU provide characteristics. Examples of Other Ukrainian Standards for Footwear: 7 DSTU 3485-96 "Footwear. Nomenclature of quality indicators". · Establishes specific formalized list of footwear quality indicators33 and divides them into mandatory and recommen- ded. Mandatory: - Lifetime - Repairability - Thickness of footwear components - Footwear linear dimensions - Footwear work pieces · Also establishes quality indicators for footwear certification: - Holding strength of footwear components; - General and residual deformation of toepiece and heel; - Weight - Flexibility - Linear dimensions 33It is worth noting once again that international and European norms do not include standards for footwear as for ready made products; instead, standards only refer to separate elements and components used for footwear production. 66 Annex 7 Most of standards for footwear (as well as for other con- · Standards with terms and definitions ­ 12 sumer goods) include reference regarding mandatory · Standards with technical specifications of items ­ 31 compliance with requirements specified by a standard · Standards for test methods ­ 34 (e.g., DSTU 2726-94 (GOST 939-94) Leather for footwear · Standards containing both specifications and methods upper. Technical specifications: "The requirements of this ­ one standard are mandatory for enterprises, institutions, and organizations operating in CIS, as well as for individual 2.2. Degree of harmonization entrepreneurs irrespective of the form of ownership and types of activity"). Only 18 EN out of 78 current EU furniture standards were adopted before 2000 (between 1994 and 1998). All the Moreover, (and this is well seen from the table) standards rest, namely 56 documents (76 percent) were adopted specify the lists of materials allowed for use and excessive after 2000. details for footwear technical parameters and produc- tion technology (e.g. GOST 26165-84 Children's footwear. In Ukraine, 20 standards (26 percent) were adopted after General technical specifications: "It is prohibited to manu- 2000, while the remaining bulk was endorsed between facture boy's, girl's, and school winter footwear by using 1989 and 1999. stitch-gluing method of fastening"). Degree of harmonization of national furniture standards is 2. Furniture around 26 percent (10 standards are adapted to ISO and 10 ­ to EN). 2.1. Set of Ukrainian standards vs. International (ISO) and European norms (EN) Analysis of lists of current international and European furniture standards finds out that the number of regulatory ISO catalogue contains 26 standards related to furniture. documents containing requirements to products does Of these: 17 (65 percent) deal with dimensions or defini- not exceed 25 percent. Meanwhile, the bulk of standards tions of various properties of furniture and test methods. specify test methods applicable to various parameters of One standard states functional dimensions for chairs and furniture and components. desks used in educational establishments. Requirements 7 are presented only in standards for furniture rollers, Standardization of furniture-making industry of Ukraine is kids' tall chairs and fabric for soft furniture (three ISO by far not as efficient as the European one, as it continues standards). being based on GOST (GOSTs make up 41 percent of the overall number of regulatory documents) List of EN furniture standards contains 74 regulatory docu- ments. These include: nine standards for terms, dimensions Current national standards with technical requirements etc.; 18 standards with technical specifications to manu- mostly contain outdated wording, burdensome provisions factured items; 36 standards related to testing methods, and references to out-of-date USSR GOSTs. Moreover, while 11 standards contain both requirements and test they include mandatory requirements, which both make methods. Furniture is categorized by type of intended pur- application of sanctions to businesses by inspecting pose into: office, kids', domestic, outdoor and for storage. bodies easier and discourage implementation of new material and advanced technologies by furniture makers, Ukraine's catalogue of regulatory documents includes thus hindering development of the industry in general. 78 furniture-related standards. They also fall into several groups by contents: 67 Annexes European standards: present only essential safety requirements Example 2: Standard ENV 12520 "Domestic furniture. Chairs and armchairs ­ Mechanical and structural safety requirements" (extract) 4 Safety requirements 4.1 Edges and corners Components or parts of the seating with which the user may come into contact during normal use shall not have burrs, sharp edges or sharp points, nor shall there be any open ended tubes. 4.2 Shear and squeeze points Shear and squeeze points shall as far as possible be avoided. In cases where this is not possible, the requirements specified in 4.2.2 and 4.2.3 shall be fulfilled. 4.2.1 Shear and squeeze points when setting up and folding Provided 4.2.2 and 4.2.3 are not applicable, shear and squeeze points that are created only during setting up or folding the seat- ing are acceptable because the user can be assumed to be in control of his/her movements and to be able to cease applying the effective forces immediately on experiencing pain. 4.2.2 Shear and squeeze points under the influence of powered mechanisms There shall be no accessible shear and squeeze points being created by parts of the seating operated by powered mechanisms, including springs. 4.2.3 Shear and squeeze points under body weight Shear and squeeze points are not acceptable if unintentional movement of the parts may occur so that a hazard is created by the weight of the user. Shear and squeeze points shall not be created by normal movements and actions, e.g. attempting to move the seating by lifting the seat or by adjusting the backrest. 4.3 Stability The seating shall not overturn when tested in accordance with the applicable tests specified in EN 1022. 4.4 Structural After carrying out the relevant strength and durability tests specified in table 1 there shall be no damage or change of function 7 that affect the safety of the seating. This also implies that after testing there shall be no sharp edges, sharp points etc. It should be understood that fulfilling the specified requirements does not ensure that failure will not occur as a result of ha- bitual misuse or after an excessively long period of service. Source: Standard ENV 12520 «Domestic furniture-Seating-Mechanical and structural safety requirements». 68 Annex 7 Examples of Ukrainian standards: GOST 19917-93 "Seat and Lie-Back Furniture, General Technical Specifications" · The text contains indication at binding nature of the presented requirements: «...para.2.1. Furniture shall meet requirements of the present standard, technical documentation and the model sample (similar requirement is included into many other Ukrainian standards for furniture and components) · Technical requirements are excessively detailed and refer to outdated GOSTs (applicable to fitting, plywood, fiber- board, cotton wool and others) · Acceptance testing is required for each item ST SEV 2025-79 "Domestic and Cabinet Furniture and Tables. Quality Parameters List" Contains such parameters as: · Comfort (functional dimensions, convenience of usage, care and indoor location) · Aesthetic parameters (shape, color, texture) · Reliability and durability · Surface properties (category of coating, degree of luster, thickness of varnish, adhesion, firmness, resistance to tem- perature fluctuations, water resistance, light resistance etc.) · Performance quality (deviation of gap sizes, roughness). In general, standards are overburdened with excessive detail (very specific description of acceptable types of material, their parameters and so on), which does not promote utilization of advanced technologies and material. 3. Garments (except for special purpose and protective number, seven standards deal with testing of such proper- wear). ties as: · Compressibility index; 7 3.1. Ukrainian standards base vs. International and (ISO) · Sunray UV protection properties of fabrics; and European Norms (EN). · Wear resistance; · Physiological properties (thermal insulation); ISO catalogue includes 10 standards that deal exclusively · Changeability of sizes. with the definition of garment sizes. Four standards establish terminology, definitions, classifica- List of EU standards encompasses 14 N standards. Of this tion, labeling etc. Only three standards actually contain requirements to garments. These are: N 14682:2004 "Safety of Children's Wear. Lace and strings to tie on children's wear. Specification". N 14878:2007 "Textiles ­ Burning behavior of children's nightwear ­ Specification" N 13536:2001 "Items filled with feathers and down. Requirements to garments. Easy Use" 69 Annexes Analysis of ISO and EN lists of standards demonstrate that In Ukraine, on the contrary, only five standards (26 per- the overall number of standards and things they regulate cent) were adopted after 2000, while all other GOSTs were is a lot smaller than the number of standards existing in endorsed between 1980 and 1993. Ukraine: no ISO standard contains detailed technical re- quirement to clothes, while only three European standards Analysis of titles of existing international and European present such requirements. Main bulk of these standards standards for garment demonstrates that the number of establish exclusively test methods used to determine va- documents containing specific requirements to clothing lues of various parameters of clothing. (mainly, children's) is minimal, while the vast majority of documents standardize specific methods for testing vari- The official publication of the 2007 Catalogue of regula- ous parameters of everyday garments. tory documents for everyday clothes contains 19 existing Ukrainian standards. They include 12 GOSTs, 6 DSTU and 1 Ukrainian standardization in the area of everyday gar- RST URSR. Two standards present ranges of quality pa- ments remains on the level of USSR times. GOSTs make rameters: sizes, types of used material, meeting intended up 79 percent of all standards. None of the national purpose, possibility of dry cleaning, washing, ironing and standards for everyday clothing has been adapted to others, and one discusses test methods. The remaining 16 ISO and/or EN. Existing standards to the largest extent documents (84 percent) offer detailed technical require- contain outdated norms and references to GOSTs of the ments to types of garments and propose test methods. former USSR. They also set a whole number of mandatory requirements, regulating the process or components of 3.2. Degree of harmonization production, rather than the output, which gives inspecting authorities a green light to impose sanctions to businesses EU standards for garments currently in effect have only whenever the latter fail to comply with such requirements. two regulatory documents as of 1993 and 1995. All the This also discourages implementation of new material and rest, specifically 12 (86 percent) of documents were ad- technologies in the clothing industry and poses a barrier opted after 2000. for modernization and development of the sector. 7 70 Annex 7 European standards: outline only essential safety requirements Example 3. Ukrainian (GOST) and European (EN) standards for children's wear Unlike Ukraine, European Union has virtually no standards and norms that set technical requirements to clothing, while in respect to children's wear, there exist only two specifications dealing exclusively with product safety. Meanwhile, Ukraine stan- dards apparently lack requirements, for example, to burning behavior of children's clothing, including nightwear. That's why, we offer below a comparison of matching clauses of a European standard and a GOST related to general design characteristics of children's wear. EN 14878:2007-08 Textiles ­ Burning behavior of children's GOST 12694-90. Knitted underwear for newborns, nightwear ­ Specification toddlers and preschool children. ... ... 10.1 General design features and requirements to 2. Technical requirements pajamas 2.1 Knitted underwear must meet requirements of this ... standard, while its appearance, design, construction, 10.1.2 Certain features of garments can be considered manufacturing and applied material must comply of greater hazard than others; full skirts and long, loose with the model sample, approved under GOST 15.007, sleeves are some of such features. Certain restrictions are and technical description to the design, approved in to be respected in such circumstances and the clauses the established order. below give measurements that shall be followed. 2.2 Characteristics. 2.2.1. Knitted underwear shall be made of natural and 10.2 Pajama tops or jackets artificial raw material and of their combinations. 10.2.1 Pajama tops or jackets shall not have a lower hem 2.2.2 Requirements to tailoring, types and parameters circumference greater than the hip size it is designed to of stitches and seams, strength of sewing threads shall fit +20 percent. meet requirements of GOST 10399, GOST 6309 and 10.2.2 Pajama tops or jackets shall be designed to have other NTD34. a lower hem no more than 10 cm below the crotch. 2.3 Requirements to raw material. 2.3.1. Textile sheets, used for manufacture of 10.3 Pajama trousers underwear shall meet requirements of GOST 28554 Pajama trouser legs shall not be wider at the lower hem and other NTD. than at the knee. 2.3.2. Change of linear dimensions shall meet GOST 26289. 10.4 Sleeve cuffs for pajamas 2.3.3. Persistence of coloring shall meet GOST 2351 Where the sleeve is designed to finish below the elbow, 2.3.4. Applied, decoration material, accessories and the lower hem shall not have a circumference greater sewing threads shall meet requirements of NTD. than 40 cm and at no point shall the circumference of 7 the sleeve width be greater than 50 cm. Examples from other Ukrainian standards GOST 4.45-86 "SPKP. Ready-made Everyday Garments. Range of Parameters" Establishes quality parameters to evaluate items while designing and placing them for production: · Meeting its main intended purpose · Possibility of dry cleaning, washing and ironing · Static compliance · Follows the current fashion · Level of processing and trimming · Clarity and legibility of trade marks and labels · Convenient usage. 34NTD ­ normative and technical documentation 71 Annexes GOST 7474-88 "Outer knitted wear for women and girls. General Technical specifications" · Establishes obligation to comply with the standard. Includes a statement that "...incompliance with standard is subject to prosecution under the law", while paragraph 2.1 states that "...outer knitted wear must comply with requirements of this standard, while its appearance and construction must follow the model sample, approved ac- cording to GOST 17.005-88" · Describes in every detail requirements to raw material (as a rule, with references to other GOSTs) · Sets controllable parameters in items: surface density and moisture; line dimensions, tensile strength, stretchability; irreversible deformity; wear resistance; resistance of paint to physical and chemical impacts (light, washing, sweat, ironing, dry friction, organic solvents); seam strength... · Provides for acceptance of items, including mandatory acceptance testing, and requirements to transportation and storage. As we can see, Ukrainian standards contain a lot of refer- implement. To make it even worse, unlike in most countries ences to other norms and clauses. This makes technical worldwide, the standards are not voluntary, and explicitly regulation in each industry a multi-staged and burden- state that the whole lot of prescriptions and norms must some mechanism, extremely difficult to comprehend and be strictly complied with. 7 72 Annex 8 Annex 8. Compulsory standardization and certification of services in Ukraine Additional Standard # Title Objects of compulsory certification regulations applicable List of customer services subject to standards requirements and compulsory certification35 1. GOST 30523-97 Food services. General requirements Food services in Sanitary Rules 2. GOST 30524-97 Food services. Staff requirements restaurants, bars, cafes and Norms, etc. food specifi- 3. GOST 30389-95 Food services. Classification of enterprises cations, fire services safety rules 4. GOST 30390-95 Food services. Cooked food products. General technical specifications Food 5. DSTU 4281:2004 Food service businesses. Classification 6. GOST 28681.2-95 Tourism and excursion services. General Hotels services with and Sanitary Rules requirements without restaurants; and Norms, Services of campings Constructions 7. DSTU 4268:2003 Tourism services. Lodging. General requirements and short-term lodging Rules and facilities; Services of Norms, fire 8. DSTU 4269:2003 Tourism services. Hotels classification youth camps; Services safety rules, services of rest centers; Services hotel services of resort and health- regulations, care facilities; Short-term normative renting of apartments; documents 9. Tourism DSTU 4527:2006 Tourism services. Lodging. Terms and definitions Hosting in sleeping for service wagons, cruise boats providers and other types of vehicles. List of customer services subject to standards requirements 10. GOST 30335-95 Consumer services. Terms and definitions 11. GSTU 201-01-95 Guidelines for development, coordination, approval, reporting and implementation of sectoral standards for consumer services 8 12. services GOST 30589-97 Consumer services. Repair and maintenance of domestic radio appliances. General technical specifications 13. GOST 30590-97 Consumer services. Repair and maintenance of washing machines. Technical specifications 14. Consumer GOST 30591-97 Consumer services. Repair and maintenance of domestic electrical appliances. General technical specifications 15. GOST 30592-97 Consumer services. Repair and maintenance of freezers. Technical specifications 35According to Decree of Derzhstandart "On the List of products subject to compulsory certification in Ukraine" of February 7, 2005 N 28. 73 Annexes 16. GOST 30594-97 Transport services. Public conveyance. Indicators of quality assessment 17. GOST 30595-97 Transport services. Trucking industry. Indicators of quality assessment Transport services 18. GOST 30596-97 Transport services. Terms and definitions 19. DSTU 4094-2002 Hairdressing services. General requirements shops 20. GSTU 201-05-97 Hairdressing services. General technical specifications services 21. Beauty GSTU 201-14-99 Manicure and pedicure services. General technical specifications 22. GOST 31304-2005 Car maintenance service. Types of services, rendering and quality requirements Car 23. services GOST 31305-2005 Car maintenance service. Coloration of car glasses. General requirements 8 74 Annex 9 Annex 9. Comparison of Ukrainian and Polish Foreign Trade in Capital Goods UKRAINE top export Other OECD countires 7% partners - compared to Hungary 6% OECD and non-OECD Germany 3% (capital goods), 2006 Poland 1% Russia 51% For all OECD countires 17% Other 17% India 3% Kazakhstan 6% Belarus 6% UKRAINE top import partners - compared to China 7% Russia 17% OECD and non-OECD Other 7% (capital goods), 2006 For all OECD countires 69% Italy 9% Other OECD countries 30% Sweden 5% Germany 21% Source: United Nations Commodity Trade Statistics USA 4% Database, http://comtrade.un.org POLAND top export Italy 4% Sweden 5% partners - compared to OECD and non-OECD Other 12% United Kingdom 5% (capital goods), 2006 Ukraine 4% Russia 6% the Netherlands 6% for all OECD countries 78% France 8% 9 Other OECD countries 27% Germany 23% POLAND top import Japan 3% United States 4% partners - compared to Other 9% OECD and non-OECD France 5% (capital goods), 2006 China 13% Korea 7% Ukraine 0.1% Italy 8% Russia 0.1% for all OECD Germany 25% countries 77% Source: United Nations Commodity Trade Statistics Other OECD countries 25% Database, http://comtrade.un.org 75 Annexes Annex 10. Core Principles of REACH Regulations REACH (Regulation on Registration, Evaluation, The Agency may then check that the registration dossier Authorization and Restriction of Chemicals) entered into complies with the Regulation and must evaluate testing force on June 1, 2007. It streamlines and improves the proposals to ensure that the assessment of the chemical former legislative framework on chemicals of the European substances will not result in unnecessary testing, especially Union (EU). on animals. The main aims of REACH are: Where appropriate, authorities may also select substances · to improve the protection of human health and the for a broader substance evaluation to further investigate environment from the risks that can be posed by substances of concern. chemicals, · promotion of alternative test methods, REACH also foresees an authorization system aiming to · free circulation of substances on the internal market, ensure that substances of very high concern are pro- and perly controlled, and progressively replaced by suitable · enhancing competitiveness and innovation. alternative substances or technologies where these are economically and technically viable. Where this is not REACH makes industry responsible for assessing and possible, the use of substances may only be authorized managing the risks posed by chemicals and providing ap- where there is an overall benefit for society of using the propriate safety information to their users. In parallel, the substance. European Union can take additional measures on highly dangerous substances, where there is a need for comple- In addition, EU authorities may impose restrictions on the menting action at EU level. manufacture, use or placing on the market of substances causing an unacceptable risk to human health or the All manufacturers and importers of chemicals must identify environment. and manage risks linked to the substances they manufac- ture and market. For substances produced or imported The Member States authorities are responsible for enforcing in quantities of one ton or more per year per company, REACH through inspections as well as penalties in case of manufacturers and importers need to demonstrate that non-compliance. they have appropriately done so by means of a registra- tion dossier, which must be submitted to the European Source: http://ec.europa. Chemicals Agency (ECHA). eu/enterprise/reach/reach_more_info_en.htm 10 76 Annex 11 Annex 11. Direct costs of technical regulations in Ukraine, 2006 in services Indicator Registration of technical requirements Obligatory certificates Total Total costs in 2006 (in terms of net profit) $3,844,762 $10,071,133 $13,915,895 Costs saved IF companies had not been required to participate in the procedure of registering technical specifications (or changes to them) Item Indicator Value Source State Statistics Committee A Number of active companies in Ukraine in 2006 (in services) 95,335 companies of Ukraine, State Tax Administration B Share of companies (in services), which registered technical requirements or changes to them in 2006 9 percent IFC Technical Regulations Full amount (including official and unofficial Survey C payments) paid by a company to register all UAH 3,000 ($594) technical requirements or changes to them in 2006 D Company Profit Tax rate 25 percent National legislation * Exchange rate of $ in 2006 UAH/$ 5.05 National Bank of Ukraine Total costs in 2006, in terms of net profit UAH 19,416,048 ($3,844,762) A*B*C*(1-D) Costs saved IF companies had not been required to participate in the procedure of receiving obligatory certificates Item Indicator Value Source State Statistics Committee A Number of active companies in Ukraine in 2006 (in services) 95,335 companies of Ukraine, State Tax Administration Share of companies (in services), which received B obligatory certificates for their output in TR agency in 7 percent 2006 IFC Technical Regulations Full amount (including official and unofficial payments) Survey C paid by a company to obtain one obligatory UAH 10,000 ($1,980) certificate in 2006 D Company Profit Tax rate 25 percent National legislation * Exchange rate of $ in 2006 UAH/$ 5.05 National Bank of Ukraine 11 Total costs in 2006, in terms of net profit UAH 50,859,223 ($10,071,133) A*B*C*(1-D) 77 Annexes Annex 12. Direct costs of technical regulations in Ukraine, 2006 Registration Item Indicator of technical Obligatory Inspections by Total requirements certificates TR agency TMC (1, 2) Total money costs in 2006, in terms of net profit $59,187,850 $47,191,396 $106,379,245 TLC Total labor costs in 2006, in terms of net profit $20,831,285 $20,831,285 TC Total costs in 2006 (in terms of net profit) $59,187,850 $47,191,396 $20,831,285 $127,210,530 Costs saved IF companies had not been required to participate in the procedure of registering technical specifications (or changes to them) Item Indicator Value Source State Statistics A Number of active companies in Ukraine in 2006 382,210 companies Committee of Ukraine, State Tax Administration B Share of companies, which registered technical requirements or changes to them in 2006 10 percent IFC Technical Full amount (including official and unofficial payments) Regulations Survey C paid by a company to register all technical requirements or UAH 10,000 changes to them in 2006 ($1,980) D Company Profit Tax rate 25 percent National legislation * Exchange rate of $ in 2006 UAH/$ 5.05 National Bank of Ukraine TMC 1 Total money costs in 2006, in terms of net profit UAH 298,898,642 ($59,187,850) A*B*C*(1-D) 12 78 Annex 12 Costs saved IF companies had not been required to participate in the procedure of receiving obligatory certificates Item # Indicator Value Source State Statistics Committee A Number of active companies in Ukraine in 2006 382,210 companies of Ukraine, State Tax Administration B Share of companies, which received obligatory certificates for their output in TR agency in 2006 8 percent IFC Technical Regulations Full amount (including official and unofficial payments) Survey C paid by a company to obtain all obligatory certificates in UAH 10,000 2006 ($1,980) D Company Profit Tax rate 25 percent National legislation * Exchange rate of $ in 2006 UAH/$ 5.05 National Bank of Ukraine TMC 2 Total money costs in 2006, in terms of net profit UAH 238,316,548 ($47,191,396) A*B*C*(1-D) Costs saved IF companies had not been inspected by Derzhspozhyvstandart Item Indicator Value Source State Statistics Committee A Number of active companies in Ukraine in 2006 382,210 companies of Ukraine, State Tax Administration B Share of companies, which were inspected by at least one department of TR agency (Derzhspozhyvstandart) 40 percent IFC Technical Regulations Survey C Costs of labor involved in inspections from company's side UAH 928 ($184) D Company Profit Tax rate 25 percent National legislation * Exchange rate of $ in 2006 UAH/$ 5.05 National Bank of Ukraine TLC Total labor costs in 2006, in terms of net profit UAH 105,197,987 ($20,831,285) A * B * C * (1-D) 12 79 Annexes Annex 13. Statistical Data Summary Data STANDARDS REGISTRATION Average Manufacturing Services Percentage of businesses subject to standards or technical specifications 62 percent 81 percent 46 percent Time required to prepare all documents needed to register or change technical specifications with the Derzhstandart in 2006 26 business days Time between submission of documents and receipt of technical 30 calendar specifications days Total cost, per enterprise, spent to register or change technical specifications in 2006, including lab expertise and other official and UAH 10,000 non-official expenses ($2,000) Percentage who responded that compliance with State standards was difficult or very difficult 57 percent CERTIFICATION Average Manufacturing Food services Percentage of companies whose product or service was subject to compulsory certification 23 percent 31 percent 24 percent Percentage of turnover represented within these companies 84 percent Time required to prepare all documents to obtain a certificate (including analysis of samples) but excluding trade 13 business days Time between submitting documents and obtaining a certificate, 30 calendar excluding trade days Total cost, per enterprise, spent to obtain required certificates in 2006, including lab expertise and other official documents, UAH 10,000 UAH 15,000 UAH 39,000 excluding trade ($2,000) ($3,000) ($7,800) INSPECTIONS Average Manufacturing Food services Trade Percentage of businesses which were inspected at least once by Derzhstandart in 2006 40 percent 50 percent 66 percent 41 percent CIRCUMVENTION OF PROCEDURES Average Percentage of respondents who used any kind of non-official method to solve issues with 72 percent Derzhstandart Source: IFC Technical Regulations Survey 13 80 Annex 13 Ukraine (average) 62% , "Is your enterprise's production subject Construction 86% to mandatory stan- dardization (such as Manufacturing 81% "GOST", "DSTU") or technical specifica- Food services 67% tions?" Trade 57% Transportation 46% Other services 46% Source: IFC Technical Regulations Survey % of respondents Ukraine (average) 62% , "Is your enterprise's production subject to Micro 59% mandatory standardiza- tion (such as "GOST", Small 72% "DSTU") or technical specifications?" Medium 77% Large 96% Source: IFC Technical Regulations Survey % of respondents Ukraine (average) 10% , "Have your enterprise registered technical Food services 20% specifications (or changes to those) in Manufacturing 17% DSSU ("Derzhspozhyvstand Construction 10% art") bodies in 2006?" Other services 9% Trade 9% Transportation 5% Source: IFC Technical Regulations Survey % of respondents 13 81 Annexes Ukraine (average) 10% , "Have your enterprise registered technical Micro 8% specifications (or changes to those) in DSSU Small 16% ("Derzhspozhyvstandart") bodies in 2006?" Medium 19% Large 61% Source: IFC Technical Regulations Survey % of respondents Ukraine (average) 26 , "How much time (in business days) did your enterprise spend Micro 10 for preparation of package of documents necessary for registra- Small 3 tion of technical conditions (or changes to those) in DSSU (Derzhspozhyvstandart) bodies on Medium 32 average in 2006?" Large 70 Source: IFC Technical Regulations Survey Average number of business days Ukraine (average) 30 , "How much time (in calendar days) did your enterprise wait Micro 22 for registration of technical conditions (or changes to Small 7 those) by DSSU since submission of documents on average in 2006?" Medium 18 Large 45 Source: IFC Technical Regulations Survey Average number of calendar days 13 82 Annex 13 Ukraine (average) 23% , "Is your enterprise's Manufacturing 31% output (services) subject Food services 24% to mandatory certification?" Trade 23% Transportation 23% Other services 22% Construction 14% Source: IFC Technical Regulations Survey % of respondents Ukraine (average) 23% , "Is your enterprise's output (services) Micro 22% subject to mandatory certification?"* Small 26% Medium 37% * - excluding trade Large 32% Source: IFC Technical Regulations Survey % of respondents Ukraine (average) 8% , Share of enterprises, which received Manufacturing 15% mandatory certifi- cates in 2006 Trade 8% Food services 8% Other services 7% Transportation 5% Construction 3% Source: IFC Technical Regulations Survey % of respondents 13 83 Annexes Ukraine (average) 8% , Share of enterprises, which received Micro 7% mandatory certificates in 2006* Small 9% Medium 24% * - excluding trade Large 14% Source: IFC Technical Regulations Survey % of respondents Ukraine (average) 13 , "How much time (in business days) did your enterprise spend Micro 14 in preparing the package of documents necessary for Small 24 obtaining one mandatory certificate (including testing of product samples) in 2006?"* Medium 7 Large 22 * - excluding trade Average number of business days Source: IFC Technical Regulations Survey Ukraine (average) 30 , "How much time (in calen- dar days) did your enterprise Micro 23 wait to obtain one manda- tory certificate since submis- Small 21 sion of documents on aver- age in 2006?"* Medium 30 Large 15 * - excluding trade Average number of calendar days Source: IFC Technical Regulations Survey 13 84 Annex 13 Ukraine (average) 30 , "How much time (in calendar days) did your Micro 38 enterprise spend in total to obtain all mandatory Small 31 certificates in 2006?"* Medium 27 Large 58 * - excluding trade Average number of calendar days Source: IFC Technical Regulations Survey Ukraine (average) 10,000 , "What amount of money (in UAH) did your enterprise Micro 8,200 spend in total to obtain all mandatory certificates in Small 10,000 2006 (including all official and non-official expenses)?"* Medium 22,000 Large 22,500 * - excluding trade Average cost - UAH Source: IFC Technical Regulations Survey Ukraine (average) 40% , Share of enterprises, which were Food services 66% inspected by at least one of DSSU Manufacturing 50% departments in 2006 Trade 41% Construction 38% Transportation 31% Other services 30% Source: IFC Technical Regulations Survey % of respondents 13 85 Annexes Ukraine (average) 40% , Share of enterprises, which were inspected Micro 36% by at least one of DSSU departments Small 49% in 2006 Medium 72% Large 78% Source: IFC Technical Regulations Survey % of respondents Ukraine (average) 2 , "How many times was your enterprise Food services 3 inspected by any of DSSU depart- Manufacturing 2 ments in 2006?" Trade 2 Construction 2 Transportation 2 Other services 2 Source: IFC Technical Regulations Survey Average number of inspections Ukraine (average) 2 , "How many times was your enterprise Micro 2 inspected by a DSSU department Small 2 in 2006?" Medium 3 Large 17 Source: IFC Technical Regulations Survey Average number of inspections 13 86 Annex 13 State technical control 2 18% , "Was your enterprise inspected by any of the following DSSU State control of norms and rules compliance 16% departments in 2006?" State metrological control 20% Consumer rights protection by DSSU 22% Source: IFC Technical Regulations Survey % of respondents 13 87