Analysis of Agri-Food Trade Structures

To Promote Agri-Food Trade Networks

In the Islamic Countries

Limitation of Trade Diversion and Maximization of Trade Diversion

: Member

countries should prioritize integration—whether through preferences or trade

agreements—with low cost suppliers. Doing so limits the amount of trade diversion

consequent on a policy change, and helps maximize trade creation.

Set Appropriate Policy Objectives

: Member countries as both net exporters and net

importers of agriculture products should target growth in inter- as well as intra-

regional trade in agriculture, especially through best use of preferential trade

agreements and hub economies in order to contribute to both sustained agricultural

trade networks and overall intra-OIC trade expansion.

Make Use of Hub Economies Where Appropriate

: Network analysis shows that there

is no single trade network within the OIC, and that at the product level, network

characteristics vary markedly. However, in some cases, economies like Turkey and

Saudi Arabia play a hub role, with suppliers acting as spokes. It is important for

exporting countries to develop closer links with relevant hubs, so as to help drive their

trade integration.

Take Advantage of Emerging Industrialization

: Exporters of agricultural raw

materials have the opportunity to benefit from derived demand for light manufactured

goods, such as processed foods and garments, through newly industrializing countries.

This dynamic is particularly strong in Asia, but is also emerging in Africa. It involves OIC

member countries, but also non-member countries. As part of efforts to support intra-

and cross-regional integration, member countries can, in addition to targeting low cost

suppliers, target rapidly industrializing countries where demand growth for

agricultural raw materials is likely to be strongest.

Rationalize Non-Tariff Measures

: Agricultural exporters encounter a wide range of

NTMs when entering international markets. OIC member countries are no exception to

this rule. The organization can facilitate regional partners and development partners

working together on issues like standards and certification, including in areas of

particular interest, like halal certification, as well as infrastructure and trade facilitation.

Member countries should endeavor to use NTMs only when justified by a rigorous cost-

benefit analysis. This report has not been able to review individual measures in detail,

but there is clear evidence that whereas MFN tariffs are falling, other types of trade

barriers are not. In the absence of multilateral action, unilateral reforms should be

considered, as should concerted action with willing partners.

Build Supply-Side Capacity

: In particular for low and middle income countries, it is

important to develop their ability to produce competitively if they are to take full

advantage of the opportunities offered by market integration. Dealing with trade

barriers within exporting countries—particularly poor infrastructure and trade

facilitation—is key. But NTMs, unlike tariffs, can also have implications for exporters,

not just importers. In particular, developing national quality infrastructure as it applies

to agricultural products is important. Cooperation through the OIC, as well as through

related bodies, can help support this undertaking.