The attitude adopted by corporate America regarding compliance with product liability requirements issued in the form of directives by the European Union to member states suggests many companies assume that if their product meets U.S. regulations, there should be no marketing problem in the European marketplace. While those companies mar-keting in Europe wait to
decide whether they want to bother complying with the directives, they need to be aware of the penalties involved for noncompliance.
``U.S. product law, in certain aspects, may parallel that of the European Union; however, arriving at a verdict and levying penalties for noncompliance is swifter and much more severe. In an increasing number of cases, the U.S. does not even have parallel product safety laws,'' said James W. Kolka, president of Kolka and Associates, an Atlanta-based international legal consultant who specializes in product liability.
Until 1985, technical directives for the internal European market were detailed and the process of developing legislation was slow. A council resolution led to a new format for directive, the new approach.
In 1987, alterations to the European Economic Community treaty led to the Single European Act. Article 100a of this act is aimed to remove trade barriers on essential requirements on industrial products, with specific emphasis on essential requirements on safety and health. These products are referred to as ``regulated'' products, those which have an affect on safety and health.
The penalties can be significant under the directives, which are legislative acts of the Commission of the European Union that establish the scope the legislation is to have while leaving to individual member states the right to determine how that is to be translated into national law.
Violation of the directives can result in penalties, including:
Impounding of products.
Confiscation of products.
Suspension of products in the EU.
Returning of products to point of origin.
Tagging of products as dangerous or nonconforming.
Criminal penalties or imprisonment.
The type of penalty imposed will depend on which EU directive is involved, the nature of violation and the particular law of the member state. Other EU members will be notified of product violations so that they also may take action.
The directives' geographic and product coverage are substantial. They include 15 European nations representing 375 million consumers in Spain, Portugal, Luxembourg, the Netherlands, Sweden, Finland, Austria, Italy, Germany, Greece, Belgium, the United Kingdom, Denmark, Ireland and France. By the end of the decade, Hungary, Poland, Romania, Bulgaria, the Czech and Slovak republics will have full EU membership, and within 10 years, so will Estonia, Latvia and Lithuania.
This is compared to 250 million consumers in the United States and 120 million consumers in Japan.
The size of this arena will snowball into a multitrillion-dollar marketplace with more than 500 million people as more countries join the ranks of the EU.
North and West Africa, South Africa and several Caribbean countries also have associate EU member status, which further broadens the realm of requirements for a wide variety U.S. manufactured goods. Products the directives may affect include rubber and plastics machinery, toys, packaging and continuous handling equipment, telecommunications products, medical devices and personal protection equipment.
If your company does business in any of these areas, you should know of the upcoming EU product requirements. Some EU members are expected to mandate compliance with the directives, or at least EU product safety standards. Other countries, such as India, Malaysia and Singapore, have already adopted some EU standards in the area of telecommunications and more are expected to do the same.
Traditionally, the compliance to regulatory requirements was different from company to company and greatly depended upon the industries that each company served.
However, in many companies, the engineering and quality departments were singled out for assuring that their products met the applicable requirements, since they had been responsible for implementing the company's quality system.
The EU statutory responsibilities for products entering the EU territory should make corporate America rethink this position since corporate officers could be held directly responsible for their product's performance.
Areas in which compliance to EU directives is not required today may be required tomorrow. Awareness is the first step to becoming prepared.
In today's economic competition, a firm cannot afford to have its products returned from the European marketplace nor can a firm sustain any adverse publicity resulting from the suspension of a product or the imprisonment of a company officer.
Weightman is president of Qualified Specialists Inc., a Houston consulting and training company specializing in European Union standards and training in directive requirements.