How E-Labels Can Support Trade and Innovation in ICT

As information and communication technology (ICT) products get smaller, manufacturers face the challenge of fitting multiple small labels on their products to show a range of regulators and consumers that these products conform to regulations. This can lead to jumbled collections of barely legible labels that convey little or no information. Allowing the display of regulatory and other product information via electronic means—an “e-label”—is a sensible solution that ensures labels don’t inhibit product innovation while helping to minimize cost and maximize consumer convenience. However, there is a risk that countries will implement divergent and complicated approaches to e-labeling that will undermine its benefits and present a barrier to global trade in ICT.

Allowing e-labeling is one small way that policymakers can support technological innovation, a crucial driver of economic productivity and improvements in quality of life. E-labeling allows regulators to be confident in their ability to access and enforce compliance, but in such a way that minimizes or eliminates the impact such requirements have on a firm’s ability to innovate. For example, e-labeling can help avoid cases where ICT manufacturers have to change the design of a product simply to fulfil physical labeling requirements. Furthermore, if a country’s e-labeling system is aligned with international best practices or standards, manufacturers can maintain compliance while providing innovative products at the lowest possible cost, thereby facilitating the trade in ICT products.

This report examines the use of physical and e-labels, shows that e-labeling offers benefits to the regulator, the consumer, and the manufacturer alike, highlights the risk of countries enacting onerous and divergent approaches to e-labeling, and analyzes challenges and issues in allowing e-labeling. Finally, the report presents a range of recommendations and best practices for policies on e-labeling. These include:

• Countries should allow e-labeling. Policymakers should view the development of e-labeling policy as an iterative process they can start by allowing e-labeling to display information for products with an inbuilt screen, such as a smart phone, and then seek to expand the scope of products in subsequent revisions, such as to include products that don’t have a screen, but can connect to one. It can eventually extend to allowing e-labels to be accessed through URL or QR (Quick Response) code, for ICT products that don’t have a screen. In this way, policymakers can move forward with basic e-labeling rules, even if they aren’t ready for advanced ones.
• Given that e-labeling has the potential to exert a significant impact on product design, manufacture, and distribution, policymakers should engage industry stakeholders at each stage of the policy process. To ensure policies for e-labeling aren’t an unnecessary burden, private-sector experts should be involved in the design, drafting, implementation, and review process for e-labeling policies. Industry expertise can help ensure that the rules account for the technical details involved in presenting compliance information in an electronic format.
• Policymakers should aim for the “lightest touch” possible to ensure that requirements satisfy compliance requirements while minimizing or eliminating the impact on product cost and design.
• Policymakers should be flexible in how they initiate and pursue the changes needed to allow e-labeling.