I develop a general‐equilibrium framework to analyze the welfare consequences of product regulations and their international harmonization. In my model, raising product standards reduces a negative consumption externality, but also increases the marginal and fixed costs of production. When product standards are set non‐cooperatively, the effects of standards on other countries' wages and number of firms are not internalized, giving rise to an international inefficiency. The World Trade Organization's non‐discrimination principle of national treatment only partly addresses this inefficiency. Welfare losses from abandoning national treatment average 2.8 percent, whereas the maximum welfare gains from efficient cooperation average 11.8 percent.This article is protected by copyright. All rights reserved