Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States

With Special Emphasis on the TPS-OIC

INTRODUCTION

The objective of this report is to examine closely the preferential trade liberalisation efforts of the

OIC member states in the context of the broader process of (regional) trade liberalisation in the

world, and in particular, to shed light on the relevance of the TPS-OIC. In order to do so the study

is composed of several substantive sections. In Section 3 (Key Issues in Regional Trade

Agreements), we provide a summary analysis of some key issues which need to be kept in mind

when analysing regional or preferential trade. This covers core conceptual and definitional issues

as well as sub-sections where we address broader issues to do with growth, development and

value chains.

We also provide an overview of the empirical literature on the impact of regional trading

agreements on trade and economic welfare. Section 4 (Current Trends in Preferential Trade

Agreements) then looks at current trends in preferential trading agreements in the world. Here

we first consider the different types of agreements and their compatibility with the WTO and

secondly, we provide a discussion of the factors driving the growth in regionalism over the last

two decades. These two sections provide the backdrop for the remaining part of the report. The

first of these remaining sections, Section 5 (Trade Liberalisation of OIC Countries) pro- vides a

discussion of patterns of trade and trade liberalisation of all the OIC member states. We also

consider in some detail nine agreements with OIC members in order to see what lessons can be

drawn for the TPS-OIC. The second of the remaining sections, Section 6 (The Trade Preferential

System Among the Member States of the OIC (TPS-OIC)) goes on to a detailed analysis and

discussion of the TPS-OIC, where we look at the patterns of trade of the member states, the

provisions of the agreement and the scope for increased trade arising from the agreement.

The final section of the report, (Conclusions and Recommendations), draws together the

preceding discussion and focusses on possible recommendations designed to improve the

effectiveness and success of the TPS-OIC

2. K

SSUES IN

EGIONAL

RADE

GREEMENTS

This part of the study sets the scene for the rest of the report by providing a discussion of the

possible role of regional trade agreements in the multilateral trading system both conceptually

and empirically.

On the conceptual side we first identify some of the key issues which arise when considering

the role and impact of regional trade agreements on trade and economic welfare. We then

discuss the different types of agreement that exist, classified according to the degree of

integration. This leads on to distinguishing between the impacts from shallow integration and

the role of trade creation, trade diversion and trade reorientation; and the role of deeper

integration which focuses on behind the border barriers such as standards, competition pol-

icy, investment, services, government procurement and trade facilitation. We also include a