VI. Trade Regulations and Standards Germany's regulations and bureaucratic procedures can prove a baffling maze, blunting the enthusiasm of U.S. exporters. Safety standards, not normally discriminatory but sometimes zealously applied, complicate access to the market for many U.S. products. American products frequently run afoul of German standards due to their complexity. It behooves U.S. suppliers to do their homework thoroughly and make sure they know precisely which standards apply to their product, and that they obtain timely testing and certification. This is doubly important because, to the extent EU-wide standards are developed, there is a high probability that the existing German standard will form the basis for the eventual European standard. One of the difficulties that U.S. firms can encounter when exporting to Germany is the need to comply with product standards. The European Union's (EU) attempts to harmonize the various product safety requirements of its member states have complicated the issue. The EU harmonization of safety requirements and related standards is being implemented for industrial products through EU directives. During the transition period national requirements must be met. (After the transition period the european-wide "CE" mark supercedes all other compliance certificates, provided the products in question are covered by an EU-directive.) German buyers, however, may require additional performance or quality marks, which are not necessarily legally required, but greatly enhance a product's chances to be marketed. Both EU requirements and the standards for a German quality or performance mark will, in many cases, require a product to be modified. Even if the product does not require modification, it will require testing and certification before it can be marketed. Important marks are the "gepruefte Sicherheit" (GS) mark for mechanical products, and the "Verband Deutscher Elektrotechniker" (VDE) mark for electrical components. It should be emphasized that neither the "GS" license nor the "VDE" license are mandatory for products sold in Germany. The only exception is for products for use in certain work place applications, where either of these marks are required to meet insurance eligibility requirements. The German organization that compiles the standards laying down the requirements for a "GS" mark is the "Deutscher Industrie Normenausschuss - DIN" (German Standards Institute). The organization responsible for testing is the "Technischer Ueberwachungsverein e.V. - TUV," (Technical Inspection Association). Although the "VDE" license deals with electrical products, instead of mechanical products, the same process of certification can be followed. A company can obtain the "VDE" literature from the VDE publisher, VDE Verlag, GmbH, or from the VDE association directly (for contact information please see below). The TUV tests for both the "VDE" license and the "GS" license. The process for "VDE" certification is the same as that of the "GS" mark. TUV and Certification Process for the "GS" and the "VDE" Licenses: TUVs are private companies set up by various German states to inspect and test products for compliance with German safety standards. Individual TUVs have also been authorized by the German Government to test products for compliance with EU legislation, and many have established representative offices in the United States. Firms interested in certification should contact a U.S. TUV office. Effect of EU Harmonization of Standards on the "GS" and "VDE" mark: The effect of EU harmonization on the "GS" and "VDE" mark is difficult to analyze. It is estimated that about 75 percent of all American products sold in the EU must have the "CE" mark once all directives have been passed and all transition periods have expired. Where EU directives are in place the "CE" mark is mandatory by law for products that are covered by the appropriate directive; the mark allows the product to be marketed in all the EU member states. National certificates such as the "GS" and the "VDE" marks, may not be legally required, but enhance marketing chances. German consumers look for these marks in much the same way as Americans look for the "UL" mark. Currently, only 11 of the 22 proposed and planned EU directives are in place: low voltage electrical safety, toys, simple pressure vessels, construction projects, electro- magnetic capability, gas appliances, personal protective equipment, machinery, active implantable medical devices, non- automatic weighing machines, and type approval of telecommunications terminal equipment. For products where there is as yet no EU directive, national standards must be adhered to. Who has the authority to actually affix the "CE" mark? For many products, the mark may be affixed by the manufacturer, based on his or her own testing to verify that the product meets EU requirements. However, EU legislation may require that an independent third party be involved in product assessment. Who is qualified to be this third party? The EU establishes so- called "notified bodies," i.e. testing or certification agencies. The majority of the TUVs have already been approved - they will play an important role as notified bodies. Contact information for EU "CE" standards: Single Internal Market Information Service Office of European Community Affairs Room H-3036 International Trade Administration U.S. Department of Commerce Washington, D.C. 20230 Tel: (202) 482-5823 Fax: (202) 482-2155 U.S. Contacts for Foreign Standards Information: National Center for Foreign Standards Information National Institute of Standards and Technology TRF Room A163 Gaithersburg, MD 20899 Telephone: (301) 975-4040 Telefax: (301) 975-2128 Ms. Janice Price Europe\Regional, Political, and Economic Affairs Room 6519 U.S. Department of State Washington, D.C. 20520 Telephone: (202) 647-2395 Mr. Chris Marcich DAUSTR for Europe and Mediterranean Office of the U.S. Trade Representative 600 17th St., NW Washington, D.C. 20506 Telephone: (202) 395-3320 American National Standards Institute 11 West 42nd St. 13th Floor New York, NY 10036 Telephone: (212) 642-4900 Telefax: (212) 302-1286 Information for DIN literature: DIN Publisher Beuth Verlag GmbH Burggrafenstrasse 6 10787 Berlin Germany Telephone: 011-49-30-26010 or 26011 Telefax: 011-49-30-26011-231 Global Engineering Documents 2805 McGaw Avenue Irvine, CA 92714 Telephone: (800) 854-7179 Global Engineering Documents 7730 Carondelet Avenue Suite 407 Clayton, MO 63105 Telephone: (800) 854-7179 Global Engineering Documents 1990 M St. NW Suite 400 Washington, D.C. 20036 Telephone: (800) 854-7179 VDE Standards and Literature: VDE - Verband Deutscher Elektrotechniker e.V. Stresemannallee 15 60596 Frankfurt am Main Germany Telephone: 011-49-69-630 80 Telefax: 011-49-69-6308 273 VDE Verlag GmbH Bismarckstr. 33 10625 Berlin Germany Telephone: 011-49-30-348-00-10 Telefax: 011-49-30-3417093 VDE Verlag GmbH Merianstr. 29 63069 Offenbach Germany Telephone: 011-49-69-8400 060 Telefax: 011-49-69-831 081 TUV offices in the United States: Replication Technologies Inc. RTI (A TUV Essen Affiliate) 1032 Elwell Ct., Suite 222 Palo Alto, CA 94303 Telephone: (415) 961-0521 Telefax: (415) 961-9634 Contact: Klaus Petersen, Compliance Engineer Replication Technologies Inc. RTI (A TUV Essen Affiliate) 901 King Street Suite 501 Alexandria, Va 22314 Telephone: (703) 548-2087 Telefax: (703) 548-2029 TUV Essen Laboratories 6 Brighton Rd. Cliffton, NJ 07012 Telephone: (201) 773-8880 Telefax: (201) 773-8834 Contact: Wayne Gruber, Technical Manager TUV America, Inc. Headquarters 5 Cherry Hill Dr. Danvers, Ma 01923 Telephone: (508) 777-7999 Telefax: (508) 777-8441 Contact: Kurt Else, President TUV America, Inc. Northwest Office 1416 Northwest 9th St. Corvallis, OR 97330 Telephone: (503) 753-4438 Telefax: (503) 753-4510 Contact: Burk Brandt, General Manager TUV America, Inc. West Coast Office 7554 Trade St. San Diego, CA 92121 Telephone: (619) 578-7999 Telefax: (619) 578-3706 Contact: Konrad Kobel, General Engineer Frank Hensel, Product Safety Manager TUV Rheinland of North America Headquarters 12 Commerce Rd. Newtown, CT 06470 Telephone: (203) 426-0888 Telefax: (203) 270-8883 Contact: John Tyra TUV Rheinland 5860 West Las Positas Boulevard, Suite 19 Pleasanton, CA 94588 Telephone: (510) 734-8100 Telefax: (510) 734-8455 Contact: Ewald Reichert, General Manager TUV Rheinland 11995 El Camino Real, Suite 101 San Diego, CA 92130 Telephone: (619) 792-2770 Telefax: (619) 792-2774 Contact: Ed Spooner, Office Manager TUV Rheinland 38701 Seven Mile Rd., Suite 100 Livonia, MI 48152 Telephone: (313) 464-8881 Telefax: (313) 464-8919 Contact: Jurgen Hover, Branch Manager TUV Rheinland 165 Forest St., Suite 201 Marlborough, MA 01752 Telephone: (508) 460-0792 Telefax: (508) 460-9073 Contact: Gunter Steege, Branch Manager TUV Rheinland 3420 Executive Center Livingston Building, Suite 165 Austin, TX 78731 Telephone: (512) 343-6231 Telefax: (512) 343-6233 Contact: George Jurasich, Product Safety Manager TUV Rheinland Sanlando Center Office Park, Suite 422 2170 West State Rd. 434 Longwood, FL 32779 Telephone: (407) 774-1222 Telefax: (407) 774-1033 Contact: Eli Orsosf, Branch Manager PCI - Precision Calibration Inc. (A TUV Rheinland Company) 12714 O'Connor Rd. San Antonio, TX 78233 Telephone: (210) 655-7002 Telefax: (210) 646-8013 TUV Rheinland 4236 Commercial Way Glennview, IL 60025 Telephone: (708) 699-0310 Telefax: (708) 699-6898 TUV Rheinland 10260 SW Nimbus, Suite M11 Portland, OR 97223 Telephone: (503) 620-0418 Telefax: (503) 620-6490 TUV Rheinland 728A Diamond Cut Dr. Corpus Christi, TX 78409 Telephone: (512) 289-5890 Telefax: (512) 289-5899 TUV Rheinland 16760 Hedgecroft #608 Houston, TX 77060 Telephone: (713) 931-6096 Telefax: (713) 931-9323 Trade regulations and standards for Agricultural Products in Germany General Veterinary Requirements: All beef and pork exported to Germany for human consumption must come from slaughterhouses, cutting plants and cold stores that have been approved by the EU. Legislation was recently adopted which transfers the authority for approving poultry slaughter and processing facilities from Member States to the Union. Until this legislation is fully implemented, however, Germany will continue to maintain a separate list of approved poultry facilities in third countries. Since 1989, the EU has prohibited the importation of meat from cattle treated with growth hormones. Soon after this ban went into effect, an agreement was reached between the United States and the EU that allows American producers of beef from animals not treated with hormones to export to the EU. Under the terms of this agreement, the cattle must come from an EU-approved source, and the animals must be slaughtered in a slaughterhouse that has been approved by the EU for handling untreated beef. Beef: The EU beef market is largely insulated from the world market by high import duties on most products. Import opportunities do exist, however, for selected products that are covered by fixed relatively low tariffs or special quota. Most notably, the EU grants levy-free access for annual imports of up to 10,000 MT of beef from the U.S. and Canada under its high- quality beef (HQB) quota. (Imports under this quota are still charged a 20-percent ad valorem duty, which is preserved in the Uruguay Round Agreement.) To qualify for entry into the Union under the HQB quota, the U.S. product must be accompanied by a Certificate of Authenticity signed by the Food Safety and Inspection Service of the USDA, attesting that the meat satisfies the EU's definition of high-quality beef. Only meat that has been graded USDA "Choice" or "Prime", or that has come from cattle not over 30 months of age which have been fed a high- energy ration for at least 100 days, can be certified by the USDA for export under the HQB quota. In addition to beef cuts entering Germany under the HQB quota, beef offal also is excluded from a variable levy. Beef livers carry a flat ad valorem duty of seven percent, all other beef offal is charged four percent on an ad valorem basis. Under the Uruguay Round Agreement, the seven-percent duty on beef livers will be eliminated in six equal annual installments, with the first reduction effective on January 1, 1995. Pork: Although imports of pork are subject to a variable levy (currently $0.55/lb for frozen loins), selected market opportunities exist for these products. Under the Uruguay Round Agreement, the levy will be converted to a tariff equivalent which, in the case of frozen loins, will be reduced to $0.45/lb in the last year of the six-year implementation period beginning January 1, 1995. Market access within the EU will be improved through the creation of a tariff-rate quota totalling 75,000 MT by the year 2000, including a 39,000 MT allocation for tenderloins, boneless loins and boneless hams. Pork offal imports are charged at the same duty rate as beef offal, and are treated similarly under the Uruguay Round Agreement. Until the Uruguay Round arrangements are implemented, if pork meat is presented for import into Germany at prices below the EU's sluicegate price (an institutional price that is meant to reflect the world cost of production), product from that country of origin will be charged a supplementary levy equal to the average difference between the import price and the sluicegate price. Poultry: The current system of market protection measures for poultry meat and egg products works on the same principle as for pork. When the Commission receives evidence that product has entered the Union at prices below the sluicegate price, it attaches an additional amount equal to the average difference between the import price and the sluicegate price to imports from those countries of origin. Poultry liver imports carry a flat ad valorem duty of 10 percent. Other than fresh or frozen poultry, import opportunities exist for poultry meat that has been seasoned. The European Union defines seasoned meat to be "uncooked meat that has been seasoned either in depth or over the whole surface of the product, with seasoning either visible to the naked eye or clearly distinguished by taste." Imports of seasoned poultry are charged a flat ad valorem duty of 17 percent. Under the Uruguay Round Agreement, the variable levy system will be replaced by a fixed tariff. Access for poultry within the EU will be increased through the creation of a tariff-rate quota of 19,000 MT in 1995, increasing to 29,000 MT in the year 2000. The EU also committed to cut tariffs on processed turkey from 17 to 8.5 percent over the six-year implementation period. Dairy Products: In general, dairy product imports into Germany are charged the variable levy. However, the rate of duty for products containing sugar is calculated according to a complex formula that yields high levels of market protection. Nonetheless, import opportunities exist for certain products. Under the Uruguay Round Agreement, the variable levy will be replaced by a fixed tariff equivalent. Legislation recently adopted by the EU will limit the countries and establishments from which the Union will accept imports of milk-based products to those that have provided guarantees that sanitary controls equivalent to those required of the EU Member States are in place. Until this legislation is implemented, Germany will retain authority over imports of milk-based products. Horticultural Products: Germany is an important market for United States horticultural products with U.S. exports reaching almost $300 million in 1993. Principal products include citrus, raisins, prunes, almonds and walnuts. Increasingly, dried vegetables have shown strong sales. Horticultural products entering Germany face a number of border restrictions. In addition to considerable tariffs, which vary by product, many horticultural imports face an additional price restriction in the reference price system. This system is used to protect internal EU prices which are generally well above world market levels. If imports are priced below the reference price, an additional countervailing duty is charged to bring the import price above an internal administrative price. Since U.S. horticultural exports are generally of high quality, and thereby command a premium price, the reference price is rarely an obstacle. The minimum import price (MIP) system used for raisins is similar to the reference price system. Raisin imports valued below a fixed reference price are charged an additional countervailing duty. Here again, U.S. exports have not been subject to the countervailing charge because they have been priced above the minimum import price. Under the Uruguay Round Agreement, the reference and minimum import prices, the countervailing charges, and the duties for horticultural products will be reduced by an average of 36 percent. Increased export opportunities will be created for single-strength orange juice because the EU will reduce its tariff from 19 percent in 1995 to 12.2 percent by the year 2000. Other significant tariff cuts include a 75 percent reduction in the duty on fresh foliage; a 50-percent cut in the duty for shelled almonds, in-shell walnuts, and apples from January through March; and a 36-percent cut in the duty for fresh asparagus, shelled walnuts, fresh grapes, apples from August through December, roasted almonds, roasted pistachios and potato chips. Plant Health: As part of the Single Market exercise, the plant health regulations in the twelve European Union Member States have been harmonized. The new regulations came into effect on June 1, 1993. The EU has been successful in reducing the number of phytosanitary restrictions and new marketing opportunities have been created for U.S. horticultural exports. Phytosanitary certificates are required for most fresh products. Pesticide Residue Requirements: European Union legislation dated from 1990, requires the establishment of mandatory, EU-wide maximum residue levels (MRLs) for most commonly used pesticides. Given the large number of commodities and pesticides involved, the European Commission is working with experts in the Member States to establish lists of compounds for which MRLs will be developed and recommended for final approval. The Commission is working in stages, starting with the pesticides most commonly used in the Union. The first tranche of maximum residue levels was adopted and published in July of 1993. For pesticides not included on that list, German regulations will remain in effect until a harmonized MRL is established by the Commission. Organic Products: There is a small but growing niche market within Germany for certified organic products. Since July 1992, Union-wide regulations on marketing organic products have been in effect. The United States and the European Union are currently discussing an approach which would allow organic products from the U.S. to be marketed within the Union. Until an agreement is reached between the Union and the U.S., importers must work through German authorities to submit technical information on certified organic products on a case-by-case basis. Consumer-Ready Products: For consumer-ready food products, there are a number of issues to consider when planning a market development activity in Germany. These issues can be broadly divided into two areas: market access restrictions and food laws. In addition to bound import duties, the EU has established a complex system of border protection measures for food products. Since prices for basic agricultural commodities such as dairy products, sugar and cereals are considerably higher than world market prices, the EU maintains a mechanism to protect European consumer-ready food products from imports made with lower-prices inputs. Therefore, most processed products entering the Union are subject to additional import charges based on the percentage of sugar, milk fat, milk protein and starch in the product. These additional import charges have made imported processed products non-competitive in the European market. The situation should improve over the next few years because these charges will be converted to fixed tariff equivalents and reduced under the Uruguay Round Agreement.