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EXHIBIT 6

Sample White Paper

I.             Issue

On January 1, 2001 the European Union (EU) will begin requiring all electronic/electrical products sold on the European market to conform to the low frequency emissions standard EN 61000-3-2.  The standard is difficult to interpret, it will cost worldwide electronic/electrical product manufacturers $50 billion annually, and it conflicts with other standards (so in complying with EN 61000‑3‑2, some standards will fall out of compliance with other European standards). However, there is no scientific evidence to show that the standard is actually needed. The standard will do nothing more than create a significant technical barrier to trade.

II.     Background  

The World Electronics Market  

The European Union is a large producer and consumer of electronic goods. It accounts for about 26 percent of world production; is the world’s largest computer and office equipment market; and is the second largest market for consumer electronics and telecommunications equipment (after the United States).  

The U.S. and Japan dominate EU imports of electronics goods accounting for 27 and 23 percent of imports respectively. In the past few years, the European Union’s electronics trade deficit has increased. The deficit registered with the United States is particularly large—$2,813 million in 1998.  The European Union is also running a negative trade balance in high-tech products.  

The high-tech industry is the United States’ largest exporter. In fact, the United States is the world’s leading producer of computers and personal computers. It accounts for 39 percent of worldwide computer production. Western Europe accounts for just 23 percent.  

   
EU Electromagnetic Compatibility Regulations 

In 1989 the European Union passed the Electromagnetic Compatibility (EMC) Directive 89/336.  The directive’s objective is to guarantee the free movement of apparatus (electronic/electrical appliances together with equipment and installations containing electrical and/or electronic components) and to create an acceptable electromagnetic environment in the EEA territory. The EMC Directive is a regulatory framework that lays down apparatus protection requirements and leaves it to standards, primarily European harmonized standards, to define technical specifications for achieving those protection requirements. 

EN 61000-3-2 grew out of the EMC Directive. The standard is designed to limit the harmonics and low frequency emissions that are produced and fed back into the power lines by all electronic/electrical products—including computers, audio and video equipment, light dimmers, fluorescent lights, air conditioners, refrigerators, etc. The standard is designed to ensure that low frequency feedback cannot reach levels that could create noise on the power lines. 

However, neither European nor American power suppliers have actually complained about feedback problems, and there is no scientific evidence to justify imposing a standard that limits low frequency emissions from all electronic products. The Europeans’ concern about low frequency emissions is based on speculation rather than science. 

III.       Analysis  

Commercial Impact  

Conforming to EN 61000-3-2 will cost EU and U.S. electronic/electrical products manufactures an estimated $34 billion annually—approximately $17 billion each. The U.S. information technology industry alone will pay an estimated $3.4 to $5.6 billion annually. 

The standard will force electronic/electrical product manufacturers to redesign existing products (since the EMC Directive has no grandfather clause). It will also make it more costly to get new products to market; add a layer of complexity to the product design process; and increase the time it takes to get a product from design to market because of the EN61000-3-2’s testing and conformity assessment requirements. Moreover, the new design constraints imposed by EN 61000-3-2 will add weight and volume to products, thereby creating more end of product waste and negating some of the technology gains achieved by product miniaturization. Lower product efficiency and reliability can also be expected due to increased component counts.

Legal Concerns  

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 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.”

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 this might happen in the future as more and more data is transferred via electronic networks. 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 low frequency emissions and harmonics in Europe.  The purpose was to determine the extent of harmonics and other low frequency emission 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.  

Survey sites were located in Europe (44%), the United States (21%), Japan (14%), South America (13%), and Canada (8%).  Out of the 63 survey 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 plants reported that their utility suppliers had voiced any concerns over their low frequency emissions. 

European Power Supply Industry Interests  

European power supply producers and distributors (utilities) are largely responsible for the development of and language in standard IEC/EN 61000-3-2.  Members of the power supply industry dominated the International Electrotechnical Commission subcommittee 77A that drafted the standard.  These very same members also dominated the European Committee for Electrotechnical Standardization (CENELEC) committee that adopted EN 61000-3-2 directly from the IEC.  

Although it is true that the manufacturers of electronic appliances began participating in the standard’s development process very late in the game, this does not justify the subsequent blatant disregard for their concerns.  

The key reason for the European utilities’ interest in this standard is that the utilities see an opportunity in the near future to begin delivering high-speed, residential Internet access over the power lines, and in order to do this, they need to limit the amount of low frequency emissions that returns to those power lines. EN 61000-3-2 provides a means for the European utilities to avoid taking steps to clean noise from the power lines and instead shifts the cost of improving and expanding the power supply business onto electronic/electrical equipment manufacturers. 

The key European trade association that supports EN 61000-3-2 is the European Power Supply Manufacturers Association (EPSMA).  EPSMA represents over 75 percent of European power supply manufacturers.  It is also very active in lobbying against the IT industry’s efforts to change EN 61000-3-2. 
   

IV.     Recommendations  

The control of low order power-line harmonic emissions from nonlinear loads is a serious issue that requires cooperation between utilities, equipment manufacturers, premises owners, and end users.  Currently, two different approaches to regulating the effects of low frequency emissions are under consideration.  One is the Institute of Electrical and Electronics Engineers (IEEE) Standard 519, which seeks to control emissions at the interface between facilities and the public distribution system.  The other is typified by the IEC/EN 61000-3-2 standard, which focuses primarily on controlling emissions at the product level.  

Ultimately, all costs associated with harmonic emissions are born by consumers.  Emission control requirements, including guidelines and standards, should strive to minimize the overall cost to consumers while providing both needed flexibility for product design and the ability for utilities companies to maintain acceptable electric power quality.  Also, regulations should promote free market mechanisms and promote free trade.  They should not create trade or market barriers. There should be equal opportunity for all affected parties to participate in the establishment of the limits.  

Finally, limits should be based on sound science and objective data.  The following factors should be considered when drafting a low frequency emissions standard: power level, actual or expected market volume, usage patterns, efficiency, and emission properties.  Electric utility and building electric power network properties must also be considered.  These properties include, but are not limited to, system impedance, network topologies, attenuation, cancellation, and dilution.  

The application of limits is appropriate only when statistically valid field data documents the existence of voltage distortion problems that may be attributed to harmonic emissions from identifiable product classes.

Action  

1.      It is essential for the U.S. electrical/electronics sector to become more involved in the international standards writing committees of the International Electrotechnical Commission (IEC) and the International Standard Organization (ISO). Specifically, electrical/electronics manufacturers need to begin participating fully in IEC committee SC77A as it redrafts IEC 61000-3-2. 

2.      The United States must persuade the EU to postpone the January 1, 2001 implementation date for EN 61000-3-2. The date should be postponed until the IEC completes its review of the same standard, IEC 61000-3-2, which should take three to five years.

3.      The United States should offer support to the EU as it begins its own review of the EMC Directive 89/336.  Specifically the United States should encourage the EU to rethink its establishment of disparate and potentially inconsistent product design requirement that will disrupt worldwide trade in electronic/electrical products by diminishing the prospect for global harmonized standards.  

4.      The U.S. should become more active in its promotion of U.S. standards abroad.

V.       Conclusion 

The IT industry is growing quickly, which makes it essential to eliminate unnecessary technical trade barriers.  The U.S. and the European government and electronic/electrical equipment manufacturing industry need to act now to ensure that the rewritten version of EN 61000-3-2 is based on science. Using science as a basis for the standard is the only way to ensure that the standard is written in the most most cost-efficient way possible. Otherwise, products that do not create harmonics problems will be required to conform to the standard, which will unnecessarily result in an increase in consumer prices and may also serve to impede technological improvements. 

In the end, the best solution for controlling low frequency feedback may lie somewhere in between the IEEE 519 standard and IEC/EN 61000-3-2.  

APPENDIX A

Macroeconomic Analysis    

Introduction  

Throughout the 1990s, the high-tech industry has been the leading export industry in the United States. Economists estimate that technology diffusion from high-tech source industries to other parts of the economy accounts for some one-third to one-half of GDP growth and at least two-thirds of productivity growth.[1]   

Government regulation, however, has the potential to significantly slow down the growth of the high-tech industry, and this is just what the EU Electromagnetic Compatibility (EMC) Directive threatens to do. The EMC Directive has created an opportunity for the EU to establish standards for areas of the electronics/electrical industry that have never before been regulated within the EU. EN 61000-3-2 is one of these standards.  

Despite the importance of the high-tech industry to the overall economy, however, the macroeconomic impact of EN 61000-3-2 is expected to be negligible.

Analysis  

The European Union is a large producer and consumer of electronic goods accounting for about 26 percent of world production.  It is also the world’s largest computer and office equipment market.  As for consumer electronics and telecommunications, the EU market is the second largest after the United States.[2]  (The following subsections are included in the electronics sector: computers and office equipment, telecommunication equipment, electronic components and consumer electronics.)   

The United States and Japan dominate EU trade in the electronics sector.  The U.S. accounts for 27 percent and Japan accounts for 23 percent of total EU imports of electronics.[3] The remaining 50 percent is accounted for by intra-EU trade and imports from various other nations.  

The high-tech industry is the United States’ largest export industry. In fact, the United States is the world’s leading producer of computers and personal computers. It accounts for 39 percent of worldwide personal computer production. Western Europe represents 23 percent of production.[4] 

The United States’ total trade balance with the European Union is negative. In 1998, the U.S. trade deficit with Europe was $34 billion, up from the 1992 deficit of $3 billion. Within the high-tech sector, [5] however, the U.S. is running a positive trade balance with the EU. In 1998, the U.S. exported $36 billion worth of high tech equipment to the EU but imported just $21 billion worth of such equipment from the EU. Exports exceeded imports by almost $15 billion. And 1998 is not an anomaly. The EU’s high-tech trade deficit with the United States increased steadily from 1994 to 1998. Twenty-six percent of all U.S. exports to the EU in 1998 were high-tech goods[6]  

The electronics industry is one of the largest contributors to the U.S. gross domestic product (GDP). The gross domestic product of the U.S. electronics industry in current dollars as a percentage of GDP for 1995-1997 remained consistently around 2 percent.[7]  The electronics industry’s contribution to U.S. GDP was $136.7 billion in 1995; $141.6 billion in 1996; and 157.3 in 1997.[8] The United States’ electronics trade surplus with the European Union was 2,813 million dollars in 1998.[9]  

Conforming to the EU/IEC 61000-3-2 low frequency emissions standard will cost the U.S. electronic/electrical industry an estimated $25 billion or just 0.003 percent of total U.S. GDP (using 1997 figures). 

U.S. Direct Investment in the EU  

EN 61000-3-2 is unlikely to have a significant effect on U.S. foreign direct investment in Europe. First, since all companies selling electronic/electrical products on the EU market must conform to this standard, there is no significant advantage to producing in the EU over producing elsewhere; there will be no need to expand production facilities in Europe. Second, since the U.S. and EU recently negotiated a mutual recognition agreement on electromagnetic compatibility standards, it is possible to certify within a manufacturer’s home country that his electronic/electrical products comply with the standards of either market. So, again there is no benefit to expanding production in Europe.  Finally, conforming to the EU standard will lower parent company earnings in the short run, thus lowering investment.  However, this does not imply that overall U.S. direct investment, such as venture capital, will be negatively affected.  

The one way in which U.S. direct investment in the EU could increase as a result of EN 61000-3-2 is if companies are able to split production so that only those plants located in Europe would be restructured to conform to the EU standard while other facilities would continue manufacturing as always.  This would only be a desirable choice for those companies that already have enough production facilities in the EU to completely supply that market. U.S. direct investment into the EU would then increase due to the extra costs for restructuring plants in order to comply with the low frequency emissions standard and perhaps because of increased production.  The benefit of this approach is that a company would not have to restructure all of its production facilities.  

Employment  

EU standard EN 61000-3-2 is not expected to have a large effect on employment. The standard may result in some job loss if the standard causes some products to be too costly to be produced profitably.  However, the standard may actually create jobs as more people may be needed for research and development, increased component production, and restructuring of production facilities in order to comply to the standard. There may also be an increased need for inspectors and inspection facilities in order to determine compliance to the standard prior to sale in the EU. 

In any event, the overall numbers of these job losses and gains are expected to be small in terms of the overall picture, and they are likely to balance each other out at least somewhat. The impact will be mitigated further by the fact that some of the losses and gains will be within American companies’ European facilities.

Conclusion  

Overall the macro-economic impact of EN 61000-3-2 is expected to be negligible with the most significant impact occurring in the short run as companies adjust to the standard. 

APPENDIX B

THE E.U. ELECTROMAGNETIC COMPATIBILITY (EMC) DIRECTIVE[10]

EMC Directive 89/336/EEC 

The main objective of the EMC Directive is to guarantee the free movement of apparatus[11] and to create an acceptable electromagnetic environment in the EEA territory.

The main goals of the EMC Directive are:

• “To ensure that the electromagnetic disturbances produced by electrical and electronic apparatus does not affect the correct functioning of other apparatus according to the definition of Article 1.1 of the EMC Directive, as well as radio and telecommunication networks, related equipment and electricity distribution networks.”

• “To ensure that apparatus have an adequate level of intrinsic immunity to electromagnetic disturbances to enable them to operate as intended.”

The Directive does not intend the level of protection requirement to be an absolute zero emission level or to provide total immunity for all apparatus. It leaves room for future technical development by only describing protection requirements in general terms. 

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