Reviewing Agricultural Trade Policies

To Promote Intra-OIC Agricultural Trade

173

In line with the constitutive objective of accelerating “the political and socio-economic

integration of the continent,” the African CFTA aims the elimination of tariffs on intra-African

trade in goods by overcoming the challenges posed by the existing trade agreements. The

Tripartite Free Trade Area agreement in 2015 was reached on the removal of tariffs and non-

tariff measures establishing a path to negotiations on tariff liberalization at a continental level,

which will then lead to the convergence of the existing regional economic communities into the

CFTA (UNCTAD 2015). One should keep in mind that Article XXIV of GATT opens the way to

FTAs or customs unions, on the condition of non-discrimination and in line with the GATT’s

utmost aim of liberalizing trade at global scale. A closer look on the existing agreements and

their exceptions/exclusions/sensitivities shows that they are far from achieving that aim and

should not be a barrier to new, larger integration efforts which will require in any case the

approval of the related WTO committees (UNCTAD 2016).

The rules of origin which might be seen as an obstacle could be overcome by the four basic

principles of the WTO’s Rules of Origin Agreement. Those are namely non-discrimination,

predictability, transparency and neutrality (Medalla and Lazaro, 2006).

A recent study made for estimating the costs and benefits of tariff reduction of the African

Continental Free Trade Area in four different scenarios pointed to significant welfare gains,

output and employment expansion, and intra-continental trade growth in the long-run.

However, those gains are unequally distributed without the introduction of necessarymeasures.

Some tariff revenue losses result in the short-run, as well as adjustment costs which may not be

distributed uniformly across the continent. The study showed also that costs and benefits are

reduced if sensitive products are exempt from the tariff reduction (Saygili et al., 2018).

Other than the FTAs described above, the following policy recommendations emerge out of this

report’s review and analyses:

Reduction of tariff rates:

One policy area is concerned with high tariff protection

observed within the OIC for the key product divisions and products that would

otherwise be highly effective in boosting intra-OIC agricultural trade. The OIC countries

would benefit from tariff reductions, particularly in key product divisions and products

identified based on both the growth of the intra-region demand and the existing low

intra-regional trade share.

Bilateral arrangements in key products:

It should also be noted that, since the

existing set of bilateral agreements covers only a small minority of potential exporter-

importer matches in key product divisions, there exists a window of opportunity for the

OIC countries that are being matched to establish new trade agreements that cover the

products identified in the analysis.

Halal certification:

Since there also exists key product groups that can be critical in

promoting intra-OIC agricultural trade but that are not subject to high tariff protection,

the set of NTMs especially related with standardization and certification issues should

be of prime importance for the policy makers. More specifically, since the key product

division that is not subject to high tariff protection is the one that aggregates the meat

products, the process of establishing Halal certification across the OIC is a critical NTM-

related policy dimension that would be used effectively to promote intra-OIC

agricultural trade in meat products. The OIC member countries should accelerate the

process of Halal certification by institutionalizing their national accreditation bodies

and certification agencies also because certain non-OIC countries may benefit from first-