Israeli Cabinet Panel Approves Ending Monopoly of Standards Institution in Product Certification

Measure, now headed for Knesset, aims to put more products in stores and lower prices.

Ora Coren
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The Standards Institution headquarters.
The Standards Institution headquarters.
Ora Coren

The monopoly of the quasi-governmental Standards Institution of Israel over approving products for safety and quality is due to be broken, following a cabinet panel’s approval on Sunday for legislation that should make more lower-priced imports available to the Israeli consumer.

Under the proposed, law, which will go to the Knesset for final approval in the next few months, additional private laboratories will be authorized to test and certify for use thousands of products, such as household appliances. Competing labs will have to get certification by the International Laboratory Accreditation Cooperation.

“Passing this significant legislation marks an important milestone in increasing competition in line with recommendations from many authorities, including the Trajtenberg committee,” said Roy Folkman, the Kulanu party lawmaker who led the initiative to end the Standards Institution monopoly.

The Trajtenberg committee was formed in the wake of the 2011 social justice protests to propose reforms that would reduce the cost of living and narrow income inequality.

In that context, the Standards Institution has been accused by critics of delaying imported products reaching store shelves by imposing lengthy testing procedures and setting idiosyncratic standards impossible or too costly for foreign manufactures to meet, most famously a rule imposed for many years requiring teabags to be stapled, a practice only one domestic maker met.

The Standards Institution, a private body chartered by the government, monitors for compliances with some 3,500 standards, 500 of them mandatory.

Efforts to break its monopoly were firmly opposed by the Manufacturers Association, an umbrella organization of Israeli industrialists, and the Histadrut labor federation, both of which lobbied hard against the legislation.

Critics said the Standards Institutions often used red tape to benefit local industry.

But the proposed law also won powerful friends, no less than Prime Minister Benjamin Netanyahu, Finance Minister Moshe Kahlon, who is also the Kulanu party leader, and Economy Ministry director general Amit Lang.

“The goal of the law is to create competition in the field of [product] standards by reducing regulatory burdens, which impose many costs on the business sector,” the legislation states. “This measure is expected to bring cost savings for manufacturers and importers in the Israeli economy, which will translate into lower prices paid for by the consumer.”

Observers said that the legislation, if it passes, will lower prices but not dramatically.