Foreign trade is a state monopoly. Trade policy is established by the PCR and the government, and its implementation is the responsibility of the Ministry of Foreign Trade. Authority to engage in foreign trade operations has been partially decentralized by a law enacted in March 1971, although initial steps in this direction were taken under administrative regulations in the beginning of 1970. The main purpose of the law has been to raise the efficiency of foreign trade and to help expand exports. These ends are to be attained through greater exposure of domestic producers to international competition and by providing incentives for them to meet it. The law was also intended to create favorable conditions in the country for the establishment of industrial enterprises with foreign participation. Before the adoption of the trade reform law, only specialized foreign trade enterprises directly subordinated to the Ministry of Foreign Trade were empowered to carry on trade activities. Producing enterprises were completely divorced from foreign buyers. They delivered their export goods to the foreign trade enterprises at domestic prices, without knowing to whom or at what price the goods were sold abroad. Imports were also obtainable only through foreign trade enterprises at domestic prices, regardless of their acquisition cost. Foreign trade losses were covered out of the state budget, and enterprises assumed no risk whatever in foreign trade transactions. Producing enterprises had no interest in marketing their output abroad or in making their products competitive in world markets; neither were they interested in using domestic substitutes to avoid the need for imports. Under the new law authority to engage in foreign trade has been granted to some of the industrial ministries, trusts, and enterprises. Others must continue to trade through foreign trade enterprises. The delegation of authority has not involved a transfer of basic decisionmaking powers, and the continuance of central control is therefore assured. All trade must be conducted in accordance with binding state plans and guidelines issued by the minister of foreign trade. Every transaction requires approval by the Ministry of Foreign Trade in the form of an import or export license. Central controls have also been retained over foreign exchange and over export and import prices. The main advantage of the new regulation lies in the opportunity it provides for producers to develop direct customer relations, thus enabling them to learn at first hand the preferences of buyers and the nature of the competition they must face. It also encourages them to exercise initiative in seeking out potential customers.