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5.4.2.2.3 Paragraph 5.4.2.3 below offers some guidance on how States may conduct an assessment on the practicality and contribution to safety of requiring compliance with the either the latest airworthiness requirements or with later amendments of the design standards recorded in the Type Certificate Data Sheet.
5.4.2.3  Determining the appropriate amendment level of airworthiness standards
Note.— The following material is provided to explain how the general ICAO airworthiness policy on enhancing the level of safety of modified products can be pursued in practice. However, some States may not apply this policy to certain types of aircraft or certain levels of modifications. The appropriate upgrading of the certification basis for a modified product could range, depending on the product, from a very simple assessment to a very complex balance between the safety benefit intended to be achieved and the limits imposed by practical considerations (e.g., economic impact assessments). Determination of the appropriate certification basis requires extensive knowledge and experience. This manual only provides a brief explanation of the approach so that the CAA and the applicant can recognize of the type of assessment and decision making process involved in determining the appropriate amendment level of airworthiness standards. Therefore, the intent of this paragraph is to provide general, introductory guidance only. Comprehensive guidance material on this subject exists and should be consulted in order to obtain a more complete understanding. This process commonly referred to as “Changed Product Rule” resulted from cooperative efforts of many CAA’s and aviation industry. (See also Note under 5.4.2.1.1) 
5.4.2.3.1 This section provides general guidance to States on the application of the ICAO airworthiness policy on enhancing the level of safety of modified products, as cited in this Part III, Chapter 5 – Changes to Approved Type Design, 5.4.2.1. The policy aims at progressively upgrading the inherent levels of safety of an aircraft, engine, or propeller, to the greatest extent practicable, as it undergoes several modifications throughout its service or operational life. In general, the policy requires that a modified product demonstrate compliance with the design standards that are in effect on the date of application (rather than with the original certification basis), or with later amendments to the design standards recorded in the product’s Type Certificate. The policy has two components – determining the type of modifications that can benefit the most from compliance with the latest design standards, and assessing if such compliance is cost-effective, meaning practical. The policy encourages incorporating the safety enhancements by giving due consideration to the resources or costs involved to achieve it. 
5.4.2.3.2 Where compliance with the latest design standards is deemed to materially contribute to the overall level of safety of an aircraft, engine, or propeller, the next step is to further assess the cost-effectiveness of applying such policy. Demonstration of compliance entails costs, and both the applicant and CAA should assess if the incremental costs associated with demonstrating compliance with the latest design standards is commensurate with the incremental safety benefit to be gained. If the incremental safety benefit can be shown to economically justify the incremental costs, then the policy should be applied. Otherwise, the applicant should be allowed to continue complying with the design standards recorded in the existing certification basis of the product, or if the applicant chooses, with later amendments to those design standards. It is not the intent of this policy to improve safety regardless of costs.
5.4.2.3.3 Each proposed modification should be judged on its own merit when making the final determination of the certification basis. Also, the certification basis should not be dependent on whether the Type Certificate holder or an applicant for a STC is undertaking the proposed modification. The process applies equally to applications made for Type Certificate amendments, STCs, or STC amendments. The brief introduction to the steps in the process for determining the appropriate amendment level of airworthiness standards follows:
　
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