The Forum for Partners in Iran's Marketplace

March 2005 / No. 34

Global Standards

The government must devise a mechanism to enable real and legal entities contact officials for clarifying any context, standard or decision that will attune regulations of Iran with those of the WTO

Management and trade systems have adopted approaches in proportion to the gradual improvement of technological capabilities and as a result of the widening domain of knowledge.

As knowledge about human abilities increased, spiritual values were considered and nonphysical skills developed. With the consolidation of those skills, human beings embarked on expanding links among different phenomena. And as understanding of these links increased, the focus on knowledge and its intrinsic values also increased. Greater attention was paid to knowledge management. This value system fluctuated until the international ISO standards were introduced.

While some countries paid more attention to quantitative expansion, others focused on qualitative growth. Some prioritized diversity while others attached more importance to renovation and other phenomena. These countries have consequently been categorized according to the degree of their advancements.

By considering standards as the basis of establishing ties, the necessity of devising a lingua franca was felt. They found that new values could not be promoted without overhauling the traditional framework. Instead of seeking direct profits, some countries embarked on reducing costs. Some focused on productivity by targeting different variables. Yet another group opted for partnership and synergism to both achieve these goals and create a win-win situation for all.

A person satisfied with a commodity or service (ISO 9003 standards) had to ensure the processes through which the said commodity or service has been provided (ISO 9002). For a commodity and service to pass from the stage of satisfaction to trustworthiness with regard to the provider, the person had to ensure the soundness of the thought behind the process (ISO 9001). Such an evolutionary chain of expectations led to the emergence of the 9000 series of standards by the International Standards Organization.

Due to lack of comprehensive understanding about standards, initially they were ignored and people even looked at them with pessimism. However, standards gradually found their place when their repercussions became clear. As knowledge of corporate interests expanded, other standards were also developed to meet corporate demands.

Comprehensive global standards systems such as Total Quality Management (TQM) and greater synergy resulting from engaging in foreign trade as stipulated by the World Trade Organization are examples of this evolutionary process.

The article aims to discuss the grounds that should be prepared for finding models to facilitate the country’s interaction with the rest of the world.

Quality Needs of Trade Transactions: People pay attention to qualitative variables according to their cultural and social status. International Standards Organization, which upholds values, has tried to bring about homogeneity by proposing more comprehensive and effective variables in the form of standards. This prevents the creation of a gap among different strata and paves the way for qualitative growth through implementation of the said standards.

Sustainable development, which is the objective of many countries, has made countries pass harmonious laws and establish win-win trade relations

Sustainable development, which is the objective of many countries, has made countries pass harmonious laws and establish win-win trade relations. These laws are based on the three pillars of society, economy and environment. Those intending to promote sustainable development in their countries have found solutions that made people sensitive about quality while considering the economic dimensions of quality and setting special criteria for any activity that could affect the environment.

By compiling a variety of environmental standards such as the ISO 14000 series, values were disseminated in different ways. For example, with regard to goods or services, a range of qualitative assessment indexes such as energy consumption, emission, toxicity potential, possibility of environmental hazards, raw material consumption, area as well as materials are considered.

Designers of standards subsequently realized the importance of forging cooperation to materialize group interests and came up with requisites of a quality management system that are comprehensive and take advantage of different values.

Realizing TQM Standards: TQM is a managerial approach related to the performance of an organization focused on encouraging participation of all members by satisfying them and benefiting all members of the society. In this system, the supplier is considered a partner, employees are considered assets and the customer is a business guide. Every organization that intends to take advantage of TQM must note that this management tool must also be designed and managed like any other plan. Comparing the type of methods used is an important job for senior managers and their success depends on awareness about details of a method. If not implemented in a good manner, it will not be a useful tool.

For implementing the TQM system, we must look at customers’ orientation, process and employees separately. To do this, we must create a culture that will be crucial to the method’s success; this culture says, “Do your job well, both for the first time and at all time”.

In this approach, the customer will not only be satisfied, but the management will be oriented toward people’s demands and continue to improve. By moving in this direction, we will reap many benefits. It will make group work more appealing, provide more satisfaction to customers and create a suitable atmosphere for assessment or realization of group work. This will also help realize the fact that people shape the quality, have a period of continued improvement and prevent the possibility of work-related accidents.

While implementing TQM, principles such as attention to customers, leadership, people’s participation, process orientation, a systematic approach to management, continued improvement, financial and accounting approach to decisions, as well as the reciprocal relationship between consumers and suppliers are given the main consideration. Institutions moving in line with this managerial approach are successful.

Experiences of countries that joined WTO in recent years show that a gradual adaptive movement is a good solution for Iran’s membership bid as well

Various managerial tools to achieve the goals of TQM have been devised in the course of time, such as Pokayoke, preventing errors, ISO 9000, Kaizen, development of qualitative role, as well as reengineering of business process. Analytical tools such as cause and effect, satisfaction and Teguchi techniques have been developed to satisfy the customer. To gather, analyze and display needed information for gaining customer satisfaction and reflecting the results of qualitative assessments, tools such as graphs and pie charts are used.

Group profit approach is among qualitative values and standards that sets the direction, but has created many difficulties among different social strata. Among important standards are product standards and their assessment procedures assure customers about the quality of services. At times, the free flow of goods threatens many exporters due to restrictions on observing standards in international markets as well as fierce competition.

Trade obstacles resulting from standards and regulations are at times intentional due to international requirements. This includes a wide range of industries such as computer, television, foodstuff and soft drinks and has increased related costs. The added costs include costs incurred to improve those products as well as costs related to certificates or costs incurred when a commodity or service does not conform to accepted standards. Despite these hardships, the potential of making concealed profits in the long run exists for international customers.

Harmonizing Global Trade: Increasing growth and the necessity of observing global standards led to the conclusion of international treaties in the framework of World Trade Organization.

Observing the WTO agreements would guarantee the large-scale success of economic measures at the international level. To become a member of WTO, which is aimed at achieving international harmonization, all principles related to administrative affairs, transparency, revision of administrative regulations and nondiscrimination must be given special attention.

To attune our administrative affairs with other countries, we must not only attach more importance to our values, but should also pay attention to the demands of international customers.

Increasing awareness of various matters will deepen the understanding of customers about what is happening inside the country and prevent unrealistic speculations. Passing through the current situation and moving toward transparency, as stipulated by standards, will create conditions that will pave the way for greater acceptance of goods and services by customers. Therefore, to get attuned to trade activities at the global level, a growing trend of passing laws for harmonizing the primary principles of WTO should facilitate Iran’s presence in the international arena.

At times, the free flow of goods threatens many exporters due to restrictions on observing standards in international markets as well as fierce competition

Since domestic laws do not allow for implementation of WTO regulations, the details of harmonizing domestic laws with international ones must be outlined. This is a daring task for specialized commissions and ministries.

Studying the experiences of countries that have already gone through this process will show that we may have to change thousands of laws and regulations in Iran to get attuned with global regulations just as neighboring Turkey has taken rapid steps in this regard.

Benchmarking is the job of legal researchers during transition periods and implies using expert views in revising the laws and is a good method for attuning the Iranian society to global standards. This may take years and will allow members of the international community to watch changes in the country.

Measures taken by officials in such countries as Turkey, Qatar, Kuwait, South Korea, India, and China can be used by the government to establish information centers, make certain laws public and reflect them back to WTO authorities. Reflecting laws that cannot be implemented inside the country will lead to adoption of unofficial policies by the government.

The need to bring about administrative changes is quite clear. For instance, regulations related to foreign investments in the country need revision to be attuned to global conditions. Frameworks that were considered in line with the demands of the society and enjoy adequate resilience must be attuned to global frameworks. In addition, administrative laws and international pacts will also be affected by this measure.

Benchmarking: Iran must not only speed up the process of attuning to international regulations to be successful in transmitting its values to the rest of the world, but also embark on creating the specialized atmosphere needed for the task. The legal framework must also be provided. Since there are many authorities that pass regulations, one of the initial difficulties is to harmonize these decision-making centers.

Improving the country’s lawmaking structure is necessary to engage in a win-win interaction with the global community. To do so, values in conformity with TQM must be promoted. Provincial authorities must correct their orientation so that their decisions will be in line with the realities of WTO and pave the way for receiving expert views from the elite within the framework of TQM. By shaping centers that will rapidly incorporate reflections of thinkers with domestic regulations, we will be moving in the right direction.

The government must devise a mechanism to enable real and legal entities contact officials for clarifying any context, standard or decision that will attune regulations of Iran with those of the WTO. In this way, the resulting qualitative synergy could be used to improve efforts to adapt policies and regulations for implementing the TQM system.

To address people’s concerns, special assemblies not affiliated to a particular social stratum should be formed by the people to help find appropriate answers. Such measures will lead to a new division of responsibilities among executive officials and lawmaking authorities, and this will help downsize the government.

WTO resolutions stipulate that no foreign trade entity must be subject to discrimination with regard to pricing and access to needed materials. Experiences of countries that joined WTO in recent years show that a gradual adaptive movement is a good solution for Iran’s membership bid as well.

For example, in China, which acceded to WTO on December 11, 1999, measures were taken to harmonize the country with global necessities. They divided foreign investments into encouraged, permitted, restricted and prohibited categories, and gradually moved toward attunement to the international community. Such a process could also be emulated by other countries.

In China, foreign investments in such projects as oil, gas, rail and air transport, road construction, water treatment and waste disposal were permitted to speed up the process of globalization. The country also encouraged production of many industrial products, especially chemicals, machinery and electronic industries, through foreign investments.

Foreign investments in fields that were directly linked to China’s national security, including military projects, power plants and air traffic control, were prohibited. This also included investments in radio and television stations. Activities of foreign investors with regard to construction and management of water and wastewater projects were restricted. We can work out a similar model.

Due to Iran’s high scientific potential, especially in such fields as health, transportation, communications, higher education and specialized manpower, foreign investments can promote production standards in line with the country’s policies in preparation for WTO accession. Projects harming the environment or deployment of old techniques can be restricted.

On the basis of other countries’ experiences, specialized axes for adaptation of the current situation to WTO regulations could include such fields as import and export of technology, patent, foreign trade, oil and gas, mass communications, foreign investment, legal services, transportation, banking and dumping.

Conclusion: Qualitative standards and adaptation of products to global conditions will lead to agreements based on qualitative values for promoting the standards of living. Using such a system at the national level to establish ties with the global community will not threaten domestic markets and can provide a better opportunity for improving the quality of Iranian products and services.

Joining global treaties will bring opportunities to take advantage of corporate measures for improving quality. To do this, we must follow countries that gradually moved toward adaptation and seek their people’s views about joining WTO. Harmony with global agreements will reduce fluctuation of domestic decisions and this will enable Iran to demonstrate its capabilities.

By: Dr. Mohammad Ali Shafia


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  March  2005 / No. 34