Synergism Between Technical Standards And Corresponding Laws And Policies

Due to historical reasons, our technical standard system is far behind that in developed countries, even worse, sometimes it cannot satisfy our own domestic demand. This is sure to change under the pressure of high quality demand from export market, technical barriers to trade, international technical standard competition and demand from international coordinative organizations.Technical standard development is a complicated task as it has multi-functions, i.e., information symmetry, network externality, production/consumption externality, variety reduction, etc. These functions work differently under various contexts, which leads to uncertainty in terms of their impact on technical change, competition, international trade and economic growth. According to new Shumpeterian theory, technical change is closely linked with institution. As a part of technology, technical standard should also establish close relations with its surrounding institutions. If technical standard is expected to perform well, favorable relation between technical standard and its surrounding institutional environment has to be ensured, which is what we called synergism. To put in more detail, synergism is defined in two ways: firstly, it means the corresponding law or policy is helpful for the development and execution of technical standard, which in turn contributes to overall market quality level, technical progress and economic growth; secondly, it means the joint forces of technical standard and surrounding laws or policies can make positive contributions to the quality improvement, technical progress and economic growth. In short, it means maximization of social welfare.Currently, the development of technical standards in our country is government-oriented. Such top-bottom mechanism always relies on administrative or compulsory measures in implementation, which is not expected to work effectively. From a long-term viewpoint, government should not take the major role in developing technical standards, instead, it should help to create a favorable environment for the enterprises to play the major role. Meanwhile, given our“catching up”growth pattern, the state should consider intervening to protect some strategic industries and to maintain the competitive structure of the market.Based on the functions, technical standards can be divided into two categories: quality standard and compatible standard. They both can be divided into legislative standard and voluntary standard. In the legislative quality standard category, environment standard and safety standard are two most important types. This dissertation identifies several laws and policies which are regarded as having the closest relation with the technical standards, including research and development incentive policy, environment protection tax, product liability, industry protection policy, intellectual property law and anti-trust law. The synergism between technical standards and its relevant laws and policies is analyzed.Sections 2 to 4 focus on quality standard. For all kinds of quality standards, its design is based on overall quality level. The direct way to improve quality level is to invest in research and development. A lot of research papers have focused on investment in quality improvement, this paper takes on a different viewpoint, focusing on the investment in reducing non-quality cost. The findings are quite different from others. It emphasizes that the efficient investment by low-quality enterprises can improve the overall quality level because its efficient investment in reducing cost will compel the high-quality enterprise to improve quality even more to maintain its competence, therefore, the overall quality level is improved.Sections 3 and 4 deal with two most important standards in quality standard category: environment standard and safety standard. Given our realistic situation, our task is to improve environment while maintaining the competitive market structure, which means monopoly by foreign enterprises should be avoided. Therefore, section 3 proposes to adopt uniform environment tax and differential standard. Though it seems to be a discriminated measure, our analysis shows it’s a fair treatment based on social welfare maximization principle. On the contrary, the seemingly fair treatment between different enterprises will strengthen technology advanced enterprises’advantage in competition and ensure them to gain huge rent. As to safety standard, it is a different story. As everyone should enjoy the same protection from risk, discriminated treatment is not suitable to be applied. Its focus should be on creating more favorable environment for its implementation. The analysis shows that consumption-type (in contrast to production-type) will encourage enterprises to voluntarily adopt higher safety standards, which is helpful for its implementation.Section 5 studies compatible standard. In international competition, compatible standards are sometimes used as a tool to protect domestic enterprises and block foreign enterprises. The analysis shows that static standard policy which consistently set domestic technology as national standard has at least two shortcomings: firstly, foreign enterprise might take a leap in developing standard; secondly, it has time-inconsistency problem, i.e., social welfare is not always the maximum. State-contingent standard policy can overcome these problems, but it is only a better choice, not the best one, as it also has its shortcoming, such as the technology-lagged domestic enterprise might just wait for the new technology to be developed.Section 6 discusses the highly controversial issue of the relation between technical standard and intellectual property right. The issue mainly occurs in high technology as there is a shortage of public technology in this area, at the same time, they are updated very quickly, therefore, intellectual property right can be a huge blocking tool in new technology development. Technical standard comprises a lot of intellectual property rights, actually, it relies heavily on intellectual property right, on the other hand, it is troubled by such intellectual property rights as“blocking patents”. Therefore, establishment of anti-trust law is quite necessary. However, based on their innovative capacities, various countries have their own preference in balancing intellectual property rights and anti-trust. As per our country, the overall innovative capacities in our country is low, our preference should be more inclined towards sharing knowledge, then moving towards knowledge monopoly with the improvement of innovative capacities. Currently anti-trust law is needed to make a balancing power..Finally, the paper studies the international coordinative mechanism of technical standards. The analysis shows that the current coordinative mechanism is effective to some extent, but still needs some complementary elements.The key innovations include:1. In the study of synergism of research and development incentive policy and quality standard, this paper takes up a different perspective, i.e., research and development investment does not affect quality directly, but indirectly through the competition of the enterprises via cost reduction. This is totally different from other papers.2. In the study of compatible standards, aiming to overcome the shortcomings of static standard policy, especially the problem of time-inconsistency, this paper proposes“state-contingent standard policy”, that is, when foreign enterprises agrees to transfer technology at reasonable price, the foreign standard can be set as the national standard.3. This paper illustrates the relation between intellectual property rights, anti-trust law and technical standard, then puts forward some suggestions for China in trading off their relations based on the comparative analysis of the United States and the European Union.4. This paper analyzes the necessity of the current articles in the WTO/TBT agreement, then expands the analysis to accommodate technology asymmetry. In this case, the paper argues that non-discrimination should be accompanied by provision of technical consulting and assistance service to developing countries. In addition, it also argues that information transparency is most critical for dispute settlement procedure. However, it also shows that all of these articles can only realize Pareto improvement instead of Pareto optimum, therefore, bi-negotiation and bi-coordination should be included as a supplement article.