Regulation Blocks Innovation & Growth

Most people understand the economic benefits that flow from growth in world trade. We may be divided on whether those benefits outweigh the potential costs in terms of social and cultural values, yet few would wish to constrain the availability of innovative products or services.

However, there are many hidden barriers to trade and these generally go unnoticed and without debate. An interesting example was highlighted recently in The Economist, highlighting just how pervasive these blocking actions can be  – and it relates to lavatories.

Toto is a Japanese company specializing in bathroom and kitchen ceramics. In Japan, its ‘Neorest’ lavatory is apparently in great demand and elsewhere it is increasingly viewed as a status symbol. Its heated seat, its advanced sound system, its self-cleaning mechanism and built-in bidet make for a luxury experience (according to the Economist reporter). But the advanced features of the Neorest are denied to many because of a range of non-tariff barriers that demand extensive customization for each overseas market.

In Europe, for example, national regulations may demand brass or bronze fixtures, depending on water hardness, or different water pressure ratings. The Neorest also requires an electric outlet – banned in many European bathrooms.

The IACCM export / import regulations Community of Interest last year highlighted the growing array of regulations that inhibit world trade, delay the spread of innovation and raise the costs of international trade. They also observed the absence of any international body that effectively challenges these protectionist measures. Many have been on ths statute books for decades and reflect outdated values or protect aainst phantom issues. Yet because we do not know about them – or the effect they are having – they are rarely challenged.

We all know that a blocked lavatory is undesirable. What other blocks already exist, or may result from current pressures for more regulation? The business community depends on growing and healthy international trade. We shoudl be far more vigilant in pushing for the elimination of barriers to progress.