Regulations:

Regulations and standards have a very important role to play in international trade. However, inappropriate regulations can result in high costs and inefficiencies in trading partner countries as well as in the domestic economy and have international repercussions. Inefficiencies also exist in developed market economies. Today, many countries and regional bodies are reconsidering their standardization and related policies and reforming and upgrading their standards and regulations. In addition, national regulators in the west rely more and more on certain key principles such as taking into account the implications for small and medium-sized enterprises, using performance-based instead of design-oriented standards or carefully balancing public safety and economic interests. There is no doubt that the regulatory process requires a great deal of discipline, coordination, accountability and transparency, both in the established market economies and in the transition countries. Restrictive or discriminatory national measures reduce the market entry prospects of foreign companies. A lack of transparent regulations has a significant negative effect on foreign firms, and duplicative certification procedures impose multiple costs on foreign business operators and result in an obvious reduction of related economies of scale. Eventually, consumer welfare decreases and the innovative capabilities oft he economy become limited. For transition economies, the challenge is double; not only are these countries faced with the same concerns and problem areas described above, but they also have a past legacy which is not easy to overcome. Once regulatory procedures have been streamlined and transparency and flexibility have gained ground, efficiencies and benefits from trade and the reallocation of resources will emerge and increase. It is also extremely important to raise the awareness of domestic regulators in transition economies as to the impact national rules and procedures have on international trade and investment decisions. As restrictive standards and duplicative and, often confusing procedures in conformity assessment impose high burdens on foreign firms, it can make them reconsider whether or not a particular market should be entered or a production facility should be built.