Privatization Issues

Allowing the Free Market to Set Product Safety Standards

Most standards for product safety and compatibility in the UnitedStates are written by voluntary groups and testing is performedand certified by private laboratories -- while government plays a dominant role in many countries. However, some so-called consumer advocates and bureaucrats would like to impose federal controls over the process.

The free market system works well, according to Carol Dawson, who was a member of the U.S. Consumer Product Safety Commission (a federal agency) for almost 10 years.

  • Major voluntary standards can often be developed in less than a year, while government agencies can spend decades writing, revising or even terminating regulations.

  • Voluntary standards are enforced by competition and the threat of liability suits, not the arbitrary fines and endless reports required by government agencies.

  • Private bodies can often write stricter standards than government agencies, since they do not have to meet the same strict legal findings necessary to impose mandatory regulations.

Standards writers include Underwriters' Laboratories (UL), which has set standards for electrical products for more than 100 years, and the American Society for Testing Materials (ASTM), which has developed about 8,000 voluntary standards. Since 1918, the umbrella group for the standards community has been the American National Standards Institute (ANSI), which includes 1,300 companies and 250 standards-writing bodies.

  • About 270 separate standards-writing bodies use expert and consumer advisory boards to reach consensus, and nearly 400 private organizations are involved in testing and certification.

  • Bodies that audit and accredit labs which perform testing include the American Association of Laboratory Accreditation and about 20 industry-specific groups.

  • Today, independent testing is a $10.5 billion-a-year industry in the U.S.

Although federal law often defers to private standards bodies, some federal agencies, such as the Commerce Department, would like to take over the process. Consumer groups pushed Congress into changing the law to require companies to report noncompliance with voluntary standards to the CPSC. And Congress has required the writing of mandatory standards, such as for bicycle helmets, when there were already good voluntary standards.

Source: Carol Dawson, "Product Standards and Consumers," Consumers' Research, March 1996.

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