Let me give you a concrete example of government regulation and the problems it creates. We shall look at mandatory certification of computer technology products.

What makes this issue so important? This will be clear from several figures that will give you a better picture of the size of the Lithuanian computer market.

According to recently published expert estimates, about 40,000 computers were sold in Lithuania this year. Of this, about 20,000 were purchased by the public sector. Let's assume that each computer sold this year cost about 4,000 litas. In that case the public sector alone obtained computers worth 80 million litas. If we add printers, scanners, networking equipment and service costs, the sum will increase by one third to reach 120 million litas.

Assuming that during the next three years the public sector will buy at least half as many computers as this year, we may forcast that in four years it will have purchased a total of 50,000 computers and their accessories, spending approximately 300 million litas.

Let us keep in mind that the computer life cycle is approximately four years and after that it has to be either renovated or replaced. If we now estimate the flow of equipment and cash in ten years, we get an amount of 750 million litas in the public sector alone.

The given estimates are very approximate and actual expenses may be smaller. In any case, the size of the Lithuanian computer market will reach in the next decade millions litas of worth, amounts comparable to the value of the largest strategic industrial sites of the nation.

By decree No 678 of June 26, 1997, the Government of Lithuania resolved to introduce mandatory certification of computer technology products as of January 1, 1998. The term was later postponed by half a year for imported products and by one year for Lithuanian products.

According to the said regulation, mandatory certification of computer technology is designed to achieve the following aims:

1. To ensure that computer technology products supplied to the consumer are safe to use and environment-friendly.

2. To ensure the compatibility of those products with Lithuanian characters.

3. To create conditions for the export of Lithuanian computer technology products.

Certification should be carried out by a special certifying institution for computer technology products. The tender was won by a state-owned Infostruktura company.

It has become common practice in Lithuania and other countries alike to justify unpopular decisions by EU directives. This case is no exception. More than that, computer manufacturers, importers and users are being consoled that conformity assessment procedures in Lithuania are relatively simple compared to those of the EU.

Whether conscious or not, this is a fatal mistake. Initiators and supporters of mandatory certification forget to mention that what is required in EU member states is not computer technology certification, i.e. not a stamp put by a certain institution, but conformity, i.e. a product's conformity to established standards.

Computer equipment assemblers all over Europe can test and declare conformity themselves, without any outside interference. This differs essentially from what is being introduced in Lithuania - certification and quality control procedures carried out by a special company selected, accredited and run by the government, where testing of a device and related paper work may drag on for months. This is a costly process carried out at the cost of a company launching a new product. So this time Lithuania, struggling to catch up with the EU in the area of state regulation, has certainly outstripped others.

The Consequences of Mandatory Certification

1. Producers and importers will shift the costs of certification onto buyers. In other words, as computers and their accessories get cheaper throughout the world, they will inevitably get more expensive in Lithuania. The users will suffer.

2. As Lithuanian producers and importers will be unable to certify all versions of devices they sell, they will give up a number of products. The nomenclature will shrink as a result. While a buyer could choose from among fifteen brands of monitors a year ago, he will find only five now as each brand has to certified individually. This is too expensive to the importer. Again the users' interests will suffer.

3. As the choice shrinks, small computer makers and importers will no longer be able to compete with major market leaders and, as a consequence, will be forced out of the computer technology market. Small enterprises will suffer, people will lose jobs, state layouts on unemployment benefits will increase. This chain reaction is quite familiar. Once liberal and free, the Lithuanian computer technology market will gradually fall prey to oligopoly.

4. As the prices for computer technology sore and the opportunity to choose diminishes, the introduction of modern information technologies will become sluggish, fewer people in the country will be able to improve their qualifications by mastering computer technology, and the formation of information society will significantly slow down. The general competitive ability of the country will diminish in both the European and global contexts. This will trigger direct and indirect losses the extent of which will be hard to conceive.

Any Positive Results?

Of course, certification of computer technology products may bring some positive results. It may occur so that some device which may happen to pose real danger to the users' health or the environment will fall into the nets of the certifying institution. Yet, during the last five years we have heard of any similar case neither in the press nor from the experts in the field. It is therefore doubtful that the first danger mentioned in the government's regulation is serious enough to be addressed with such drastic measures.

Equally as, if not more, doubtful are the second and third arguments in favour of regulation. These arguments concern the compatibility of technology with Lithuanian symbols and, note, the creation of conditions for the export of Lithuanian computer technology products.

IN most cases, producers themselves tend to take care of the ability of personal computers and printers "to communicate" in Lithuanian, realising that otherwise they will be unable to compete on the in the market.

There is not point in speaking about the export of Lithuanian computers at all as Lithuanian computers are non-existent as such. Lithuania is not Taiwan or Hong Kong. Although several Lithuanian enterprises boast about being computer makers, the process whereby imported computer components are connected with wires and placed in a box might be called packing rather than production.

The above said should make it clear that the theoretical basis for mandatory certification is not solid enough. Potential positive results of the certification are minor and negligible as compared to much graver consequences that will affect the computerisation of the country, the growth of information society and the Lithuanian economy as a whole.

Is There Any Alternative?

Are there any alternatives to mandatory computer technology certification? There is no need to look for them far as they already exist. The user is never left alone in the battlefield, facing unfamiliar foreign equipment. Computers as well as their accessories and components have already been tested and assessed by several independent laboratories for a year or so. The results of these tests are accessible to everyone, and there has been much interest on the part of consumers. What is more important, those tests are absolutely free to users, and importers of computer technology are even interested to increase the choice of technology they offer and to strengthen their competing positions with ever more advanced devices and a wider variety of products.

Conformity to computer technology standards can be just as well ensured without increases in prices. For example, conformity requirements could be published, and governmental services could then verify products already on sale and impose fines for non-compliance. This method is used in many countries.

Who Benefits from Mandatory Certification of Computer Technology?

In trying to answer this question, it may be helpful to recall some of the numbers mentioned at the beginning of the article. The volume of the Lithuanian computer market may reach 700 million litas over the next decade, a likely temptation to many. So let me ask a closing question: Who could deny that mandatory certification of computer technology and a consequent command for governmental organizations to buy only so-called Lithuanian computers would allow several large companies to share the millions-of-litas-worth Lithuanian computer market among themselves and, with the helping hand from the state, oust from the market small retailers and respectable foreign companies?

There is only one conclusion I would like to make: If the state wants to foster a free market, it should not strangle it with its own hands.