Harmonization, It's Everybody's Business 2000-05-0004

With apologies to the nuclear power industry and the airlines, the automotive industry arguably is the most regulated industry in the world. Certainly, the auto industry has much to gain from harmonizing regulations around the world and, during the past two years, our industry has made great progress in encouraging serious government attention to this concept. Three economies - North America (the U.S. and Canada), The European Union, and Japan - traditionally have accounted for the lion's share of the world's production and consumption of passenger vehicles. While local production in many developing countries is growing, manufacturers from these three economies built 75 percent of the 51 million motor vehicles built worldwide in 1996.

These three also have served as the primary centers for rulemaking in the world. Over time, the U.S. and Europe have developed very dissimilar systems for testing and certifying motor vehicles, while Japan's system utilizing elements of both the U.S. and European system. As the automotive markets in other countries have grown, their governments have created their own regulatory regimes, sometimes incorporating elements of other systems. While drawing on the supposed best aspects of other systems may sound like an appealing approach, the end result has been a proliferation of new regulatory procedures that resemble neither the U.S. or Europe. This explosion of divergent automotive regulations has taken place, ironically, at the same time that the market for automobiles truly has become more global. The ability to design and build products that can be sold in different markets has become the goal of virtually every vehicle and auto part manufacturer. Conflicting and overlapping regulations impede that ability. They create barriers to trade and limit consumer choice, while adding unnecessary costs that may be borne by consumers.