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Reviewing Agricultural Trade Policies

To Promote Intra-OIC Agricultural Trade

6

The regional groups of the OIC differ in the number of member countries included in the group,

the average and total level of population of the group, and the overall level of economic and

agricultural development. This implies that comparing the economic and agricultural

performance of the groups is a difficult task. However, the uneven distribution of agricultural

trade capacities, performance and potential of different groups within the OIC can still be simply

documented by looking, for example, at their shares in total OIC agricultural trade: As of 2016,

the Asian Group had the highest share (66.9%) in total OIC exports of agricultural products;

followed by the Arab and the African Groups with shares at 21.8% and 11.3%, respectively. In

terms of agricultural products imports, the Arab Group accounted for 52% of the OIC’s total in

the same year, and was followed by Asian and African groups’ shares of 40% and 8%,

respectively. The African Group countries whose trade networks include many third party

partners have the lowest intra-OIC trade share in its agri-food products exports, 7.4%while the

Arab Group and Asian Group countries have an intra OIC trade share of 45.7% and 11%,

respectively.

The dual challenges of reliance on trade for both agricultural development and securing food

supply to feed the urban populations in OIC member countries make international trade a

strategic area of public policy. Yet, in line with the diverse structures of the OIC economies,

governments employ a wide spectrum of tools in the pursuit of an equally wide ranging set of

trade policies, depending upon the role of international trade in their economy-wide and

agricultural policy objectives.

Trade policy measures are broadly composed of (i) border measures (mainly the tariff rates),

(ii) non-tariff measures, and (iii) trade agreements between two or more countries. Tariffs are

simply taxes exercised on imported products. A tariff can either be levied as an ad valorem tax

in percentage terms or be levied as a specific absolute value per imported unit. There exists a

diverse set of qualifications that characterize tariffs. Most-Favored Nation tariff rates are the

ones promised to be applied to the other members of the WTO under the condition that the

exporting partner does not have a preferential trade agreement with the imposing country.

Bound tariffs are the highest levels of MFN tariffs determined during the trade negotiations

between trade partners. Applied tariffs exercised by the customs administrations of the

imposing country are usually lower than the bound rates committed. The Non-Tariff Measures

include a large and diverse set of regulations, arrangements, taxes and standardization schemes

that are applied to the exported and imported products in a country. Sanitary requirements,

export subsidies, technical barriers to trade, anti-dumping measures, and rules of origin are

among the most commonly exercised NTMs. Trade agreements are negotiated and signed

bilaterally and multilaterally and covers certain predetermined sets of tariff preferences and

NTMs. Regional trade agreements are reciprocal, but preferential trade agreements are the ones

where a country unilaterally agrees to follow the existing preferential system of a partner

country or a groups of partners. Free trade agreements are signed bilaterally and, most

commonly, multilaterally to establish a free trade area, which, by definition, is characterized by

zero tariffs among the partner countries.

The purpose of this report is to review the current performance and agricultural trade policies

of different groups of the OIC countries so as to study the interaction between policies and

performance. Any regularities and patterns emerging from such a study will facilitate the

identification of right measures needed to create an environment enabling the member states

to reach larger volumes of global and intra-OIC trade in a wider range of agricultural products

by taking better advantage of their comparative advantages, and improving their

competitiveness.