Commercial Analysis: The Cost of EN 61000-3-2

Introduction  

If the International Electrotechnial Commission and/or the European Union do not change their low frequency emissions (LFE) standard, many companies will be forced to alter their existing product designs and expend greater resources on new product designs.[1] These efforts alone will be very costly. Additionally, the standard will create new design constraints that add weight to products, increase end-of-product waste, limit technology gains achieved by product miniaturization and other factors, [2] and decrease product efficiency and reliability because of increased component counts. In some cases, the cost of compliance with the IEC/EU LFE requirements is expected to price products out of the market.   

The following analysis examines the cost impact of the LFE limits imposed by EN 61000-3-2.[3]  The analysis makes the assumption that manufacturers will adjust all production (whether sold domestically or abroad) to conform to the EU’s regulations.  It may be possible for some companies to alter production in order to produce separate products for Europe, but such product differentiation would be extremely costly in and of itself.   

The Cost of Compliance: The Big Picture 

European Norm 61000-3-2 sets limits on allowable harmonic current emissions for equipment with input current less than 16 amps per phase. Assuming this limit will increase the cost of production of all categories of electronic/electrical equipment by two percent, and assuming that all production is made to comply with the limit, the standard will cost worldwide electronic/electrical manufacturers $50 billion annually by 2001—$17 billion each for U.S. and EU electronic/electrical manufacturers.[4] As for the information technology industry, conservative estimates (estimates that do not include costs associated with product redesign and hardware testing) place the standard’s cost at $3.4 - $5.6 billion annually.[5]  

These increased costs will eliminate certain products from being manufactured.  For example, the commercial light industry predicts that the cost of its high power commercial light dimmers will increase by 800 to 1000 percent—an increase that would make the dimmers unaffordable to most customers and thus unprofitable to manufacture.  The same may happen for audio power amplifiers, for which production costs are expected to increase by 15 percent.[6]  Lap top computers and other small IT equipment may not have the space to install the components necessary to meet the standard.  

In the long run, the $50 billion annual cost estimate is likely to rise since this number is based on a modest two percent increase in production costs.  While the number could shrink if enough products are priced out of the market, this might mean company bankruptcies and job losses.  

Meeting the standard is also expected to increase consumer prices by three to five percent depending on product complexity and volumes.[7] 

The Cost of Compliance: Individual Product Impacts 

For the past 15 years, the majority of ITE products have used switched mode power supplies (SMPS), which offer size, weight, and cost advantages, but also are a source of harmonic currents. For low-power products (i.e., less than or equal to 130 watts) the harmonic currents are a relatively small problem. Such products can be brought into compliance with LFE limits by adding a series inductive component (a simple filter that prevents sudden current changes). The component does not change the operation of the power supply’s rectifier circuits, but peak current and harmonic content are both reduced.[8]  

Bringing higher-power products into compliance is more difficult. The most cost-effective way to reduce current harmonics for these products is to use active power factor correction (APFC) circuitry.  However, this increases the component count of a typical SMPS by 10 to 20 percent, which, in turn, increases hardware costs, space requirements, and the effective failure rate of the power supply.  Currently, the increase in hardware costs is estimated in the range of $.05-$.08 per watt for high production volumes (>100K).  A higher percentage cost increase is expected for low volume products.[9] 

Bringing existing products into compliance with the LFE limits will be perhaps most costly. Because there is no grandfather clause in the European requirements, any product already in production that will stay in production after the January 1, 2001 deadline will have to have its power supply retrofitted. For products like PCs, which have short product-life cycles, this is not a serious problem. However, bringing products with longer product-life cycles (e.g. communication networking products) into compliance will result in substantial engineering and hardware costs. The cost of this type of retrofit is often as high as the cost of developing a power supply for a new product, which is a better use of resources.[10]  

Consider the costs associated with retrofitting a product as simple as an electric coffee grinder. According to one of the electromagnetic interference (EMI) tests, called conducted emissions, a device should not generate an excessive amount of noise that may flow down the power cord back into the electrical power system. Because coffee grinders have this very problem, they must be equipped with an EMI noise filter. The problem is not the cost of the filter, but the time and resources needed to 1) locate space for the filter within the grinder; and 2) design a mounting system that complies with safety requirements such as insulation and spacing requirements.[11] Installing the filter also increases assembly time. 

Keeping the coffee grinder example in mind, it should be easy to understand how the European LFE requirements could cause product costs to rise 15 to 600 percent.  In fact, the EIA/CEMA estimate that material and labor costs will rise 600 percent in bringing audio and video electronic products that consume less than 600W into compliance with EN 61000-3-2.[12]  This despite the fact that these particular products have an insignificant impact on the power system—an estimated total load of less than one-tenth of one percent of the total mains distribution network, i.e. insignificant. 

The Cost of Non-Compliance  

In 1998, total U.S. high tech exports to the European Union were valued at $36.5 billion. If 30 percent of U.S. exports to the EU were blocked because of EN 61000-3-2, the United States would lose almost $11 billion in exports, thereby decreasing the U.S. trade balance with Europe from $14.8 billion to $3.9 billion.[13] The loss would also translate into a loss of market position in Europe for U.S. technology companies—a loss that would be difficult to reverse. 

The loss is likely to hit larger companies disproportionately hard. Smaller companies that do not export to the EU or who only export minimal amounts may be able to sell their products for less in the United States while larger companies alter all production to conform to the standard (which would increase their total production costs and product prices). This would give smaller companies a better position within the U.S. market hurting the sales of larger corporations and possibly increasing their profit losses even further.  

Conforming to the standard is expected to be particularly costly because of its ambiguous, difficult to interpret language. In fact, it is estimated that 50 to 70 percent of self-declared CE (European Conformity) marked products will fail their first compliance test.

Legal Analysis

Introduction 

The European Union’s Electromagnetic Compatibility (EMC) Directive 89/336/EEC lays down apparatus protection requirements and leaves it to standards, primarily European harmonized standards, to define technical specifications for achieving those protection requirements.  The EMC directive is a total harmonization directive that replaced all national EMC standards (as well as created some new ones).[14]  

One of the new standards was EN 61000-3-2, which is designed to limit the low frequency emissions from products such as computers, toasters, and fluorescent lights.  The legal basis for the standard is found in the preamble of the EMC Directive 89/336: 

“Member States are also responsible for ensuring that electric energy distribution networks are protected from EM disturbance which can affect them and, consequently, equipment fed by them.”  

Simply put, this means, or at least it is interpreted as meaning, that products should not create electromagnetic disturbances above a certain level, and that they should be sufficiently immune to such interference.

While the concern addressed in the Directive is reasonable, EN 61000-3-2 is problematic for three key reasons:  

1. it violates the WTO Agreement on Technical Barriers to Trade (TBT Agreement);

2. it is ambiguous and internally inconsistent; and

3. it conflicts with other EU technical standard requirements. 

(See Appendix B for a discussion of U.S. EMC requirements and further details concerning the EU’s EMC Directive.)

EN 61000-3-2 & the WTO Technical Barriers to Trade Agreement 

Article 2.2 of the TBT Agreement states that: 

“Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade.  For this purpose, technical regulations shall not be more trade restrictive than necessary to fulfill a legitimate objective, taking account of the risks non-fulfillment would create.  Such legitimate objectives are, inter alia: national security requirements; the prevention of deceptive practices; protection of human health or safety, animal or plant life or health, or the environment.  In assessing such risks, relevant elements of consideration are, inter alia: available scientific and technical information, related processing technology or intended end-uses of products.” (Emphasis added.)

EN 61000-3-2 violates this article because there is no substantial scientific proof that low frequency emissions can pollute power lines to the point of being disruptive. Indeed, the need for the EU standard is based only on the theory that such disruptions might happen in the future as more and more data is transferred via electronic networks. But the IT industry has evidence to the contrary.  

In 1998, the Information Technology Industrial Council (ITIC) in cooperation with IBM conducted a survey on the effects of LFE and harmonics. The purpose was to determine the extent of harmonics and other LFE-related problems inside customer facilities or in utility systems due to distributed harmonic sources. The sites chosen for the study had high concentrations of information technology equipment (ITE) and other distributed non-linear loads.  For example, some of the manufacturing plants chosen contained over 22,000 personal computers, more than one hundred servers, and several mainframes.  

Survey sites were located in Europe (44%), the United States (21%), Japan (14%), South America (13%), and Canada (8%). Of these 63 sites,  90.5 percent of those questioned, responded that they had no problems related to the use of non-linear loads inside their facilities/utilities that required corrective actions.  The remaining 9.5 percent said that they had made minor changes within their facilities to rectify such problems. None of the sites reported that their utility suppliers had voiced any concerns over their low frequency emissions. 

EN 61000-3-2’s Ambiguities  

Standards play a critical role in developing an environment that “promotes cost-effectiveness, uniformity, and stability.”[15]  However, the costs of poorly crafted standards can outweigh their benefits. In order to ensure that international harmonized standards are sensible and useful, the IEC recommends they: 

• Establish explicit and unambiguous methods for demonstrating compliance,

• Reflect a cost/benefit perspective,

• Minimize imposition of mandatory requirements,

• Properly balance competing economic interests,

• Evolve slowly to avoid rapid obsolescence of products and compliance test instruments, and

• Encourage utilization of “best practices” on a worldwide basis.[16]

EN 61000-3-2 fails to live up to the IEC recommendation. No cost/benefit analysis was undertaken as part of the drafting process, and because there is no proof that the standard is needed (at least in the case of ITE), the standard creates unnecessary costs.  

The largest problem with EN 61000-3-2, however, is its internal inconsistencies and ambiguities: 

• Equipment Class Definitions. The standard includes four classes (A, B, C, and D), and each is defined by a different means.[17] Classes B and C are defined as specific types of equipment, while Classes A and D are only partially defined by equipment type and otherwise defined by the shape of their current waveform and active input power.

• Harmonic Emissions Limits. The standard uses different limit definitions for each class of equipment. For Class D equipment, the standard’s emissions-limit levels increase in proportion to the power consumption of a product. Class C lighting-equipment limits are defined in a similar manner, although in this case, limits are proportional to fundamental current.  Specified, fixed limits are given for Class A and B equipment.[18]

• Power Measurement. The standard does not define how power measurements should be made or how Class D input current waveforms should be evaluated, and it uses different power measurements in different places.[19] In one place, for example, the standard defines Class D limits by rated load conditions. In another place, it defines power consumption as the mean value, taken over one period, of the instantaneous power. By contrast, manufacturers define Class D limits by the EUT’s rated power consumption, and they find it more practical to do so.

EN 61000-3-2 & Other EU Technical Standards 

The EMC Directive enabled the EU to implement numerous standards relating to electromagnetic compatibility and low frequency emissions. These new standards, however, sometimes conflict and overlap with other standards. For example, some manufacturers may use switching power supplies in order to comply with EN 61000-3-2, and this creates additional radio-frequency emissions that could make it more difficult, if not impossible, to comply with EN 55013 and/or EN 55022.[20] Similarly, conformity may require the use of larger EMC “Y” filtering capacitors on some products, but this increases mains leakage current, which might make it possible for products to comply with the safety standards IEC65/IEC60065 and UL6500.[21]
   

 Standard Setting in the U.S. & E.U.

Technical barriers to trade have become priority concerns since the Information Technology Agreement reduced tariff barriers to trade for most information technology (IT) equipment. Because the United States’ and the European Union’s policies for developing technical standards are significantly different, technical barriers to U.S.-EU trade are increasing, not decreasing.[22]

U.S. Policy  

U.S. standards usually percolate from the bottom up; the government plays a limited role in the process. Sometimes standards set by dominant companies or groups of companies become de facto, voluntary standards for an entire industry.[23] Other times, standards are set by one of the country’s over 600 standards-development organizations—organizations that are nonhierarchical, governed by democratic rules relating to due process and voluntary consensus, and open to participation from foreign firms.  

This fragmented approach to standard setting makes it difficult to promote U.S. standards abroad. It also makes the U.S. standards system less transparent, and manufacturers that export to the United States have complained about this difficulty.[24] 

The standard-setting body that represents the United States within the IEC (and the ISO) is the American National Standards Institute (ANSI), a self-designated, private, national coordinating body for U.S. standards.[25] 

EU Policy 

The European standard-setting system is a centralized, top down approach designed to balance national government interests with European Commission interests. The main EU standards-development bodies are the European Committee for Standardization (CEN), the European Committee for Electrotechnical Standardization (CENELEC), and the European Telecommunications Standards Institute (ETSI).   

Many U.S. manufacturers have complained that the EU standards-setting process is non-transparent and that it discriminates against non-European companies. This complaint stems largely from the fact that, unlike U.S. voluntary standards-setting bodies, European standards-setting bodies generally do not allow foreign firm participation.[26]  Moreover, some U.S. industry representatives have complained that EU technical regulations/standards are created within the EU Commission without adequate input from EU or foreign industries until the process is well advanced.[27]   

The most important difference between U.S. and European policy, however, is that the EU actively promotes its standards and standards-process abroad, providing millions of dollars for electronic component test laboratories in large developing markets.[28]  Moreover, the EU Commission and member country governments work much more closely with key international bodies like the ISO and the IEC. According to the U.S. International Trade Commission, “some analysts believe that the substantial support the EU and member countries provide to these standards-setting bodies has strengthened these bodies’ role in international standards activities, providing European companies with more effective representation and influence than U.S. firms in such work.”[29] In 1991, just 22 percent of U.S. national standards were identical or technically equivalent to either ISO or IEC standards in 1991. By contrast, 85 percent of the EU standards produced by CEN or CENELEC were identical to ISO or IEC standards.[30]   

This problem is only exacerbated by the fact that the U.S. IT industry tends not to participate in standards-development activities.[31] Indeed, because the U.S. IT industry failed to get involved with IEC Sub-Committee 77A, the low frequency emissions standard IEC 61000-3-2 was drafted by a committee dominated by the utility industry.  

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