A couple of years ago South Africa was seeking collaborations with companies to help improve its rail infrastructure. I was making the case for U.S. businesses to be the preferred vendors for rail signaling systems and equipment. We were informed that South Africa would adopt European standards. While not a deal breaker, it made competing more difficult. Fast-forward a few months later to Abu Dhabi, hub for the Gulf Cooperation Council (GCC) countries initiative for resurrecting the Lawrence of Arabia rail link, to establish and extend long-distance rail transport in the Arabian Peninsula across Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain. The estimated project cost of $100 billion this decade alone presented opportunities for U.S. companies. The catch: as in S. Africa, the GCC was inclined to adopt European standard for signaling equipment. U.S. companies would again have a higher hurdle in becoming vendors of choice in the new railroad.
Two strikes. How do we preempt the proverbial, "three strikes, and you're out?"
Several years ago I led the Canadian oral care business of a U.S. multinational. The countries had different standards for sweeteners used in mouthwashes which necessitated manufacturing Listerine in two locations making the operation less capital efficient, increasing cost of production and consumers having to pay higher prices. The FDA approved saccharin as the sweetener of choice and deemed cyclamates unsafe, while the Canadian equivalent of FDA, the Health Protection Branch (HPB) approved cyclamates, but not saccharin. The difference in standards also necessitated maintaining different formulations, different quality standards and duplicating staff. It took several years, and NAFTA to evolve to a common standard.
Influencing the many national, regional and multilateral institutions that set or approve a vast array of standards e.g., product, services, process and platform standards, is a necessary first step. Railroad or mouthwash, successfully securing mass adoption of a standard translates to significant opportunity and commercial gain.
In its second term, the Obama administration must make influencing adoption of U.S. standards in key sectors a priority. My discussions with stakeholders from the private sector, government agencies and different chambers of commerce globally suggest that this will require three things. First, closer collaboration between the administration and the private sector; standards setting must involve more businesses and trade associations, and fewer bureaucratic task forces. Second, more U.S. trade specialists -- boots on the ground -- are needed in capitals of major trading partners and in key trade capitals, the headquarters of regional trade blocs like EU, ASEAN, MERCOSUR etc. to represent our business interests and influence adoption of U.S. standards. And third, the need to address the U.S. tax laws on global income that is affecting our competitiveness. In high growth developing markets where there is demand for global talent, U.S. nationals are no longer just more expensive to hire than citizens of other developed countries like the UK, but U.S. tax laws make them unaffordable to hiring organizations. Expatriate senior advisors to governments on major international development projects, and expatriate business leaders in developing markets influence the adoption of standards, procurement of products and services and awarding contracts. These expatriates are increasingly nationals of a country other than the U.S. that invariably results in adoption of standards they are familiar with, and selection of suppliers and contractors they are accustomed to. This handicaps U.S. businesses in securing global trade contracts.
Securing access of your standard provides greater adoption to markets and quicker commercialization of innovative new products and services. It helps U.S. businesses extend to newer markets and global consumers secure quality products that are "made in the USA". One area that can have big near term impact is securing adoption of common protocols across the healthcare spectrum: from clinical studies for drug discovery, to medical device development, to care delivery including practice and hospital management. Every country seeks to control healthcare costs and pursue greater access to better quality, cost effective care. Adopting common standards in clinical study protocols can help reduce cost of discovery, improve the quality of life, and make innovative new products available to more people around the world.
Influencing our trading partners to adopt of U.S. Standards amongst must be a priority. There must be greater clarity and lesser overlap amongst what trade agencies do e.g., USTR must balance the needs of labor, agriculture and foreign policy in it's negotiations while the Department of Commerce must be the voice of business and the ally to help companies on the ground. The battle for adoption of U.S. standards is fought on the main streets of major trade capitals across the world, and not in the corridors DC.
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