Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
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above 20%. There are yet much higher differences in respective RTA shares in individual
members’ trade structures. Where the share of trade is low than there is greater scope for
trade diversion and a lower likelihood of welfare improving trade creation.
Liberalisation of trade in goods is at the heart of all agreements but coverage of tariff
elimination and pace of removal and/or cuts in tariffs differs considerably reflecting a range of
factors. Tables 27 below provide an indicative summary picture of the approaches to rules of
origin. It is evident that rules of origin differ somewhat between the agreements.
Some regional groups emerge. For instance, the EU neighbourhood countries follow the EU
template to enable participation in the currently created system of Pan-Euro-Mediterranean
cumulation of origin. The most often used rules is the rule requiring the regional value content
of at least 40% sometimes with an alternative of a product changing tariff classification at the 4
digit level in the HS nomenclature. Several agreements also have product-specific rules,
applying either to a narrow or a larger group of products. Overall, it is difficult to assess to
what extent differences between rules or origin in different agreements may foster or impede
utilisation of preferences and trade.
Tables 27 and 28 provide an overview of provisions going beyond liberalisation of tariffs.
Trade in services is covered by almost all the analysed agreements and the agreements
typically either re-iterate countries’ obligations under GATS or - in at least 3 instances - go
beyond them.
Only in three out of the nine cases discussed do the agreements incorporate competition policy
provisions. This reflects different degree of development of policies in this area at the national
level. Public procurement provisions and especially more ambitious arrangement in that area
that would provide for meaningful access to RTA partners domestic public procurement
markets are hard to find. The majority of analysed RTAs contain some mention of intellectual
property rights but the actual provisions are typically light and they never go beyond
Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The considered
agreements generally do not refer to labour or environmental standards. All this suggests that
the degree of deep integration in these agreements is on balanced very low, and the primary
mechanism for greater integration is via lower tariffs.
The discussion above mainly focused on the commitments contained in texts of RTA
agreements but issues related to their effective implementation have already emerged as key
for materialisation or not of the economic effect of the agreements. Indeed, it is evident that in
several cases ambitious integration provisions incorporated in the agreements remain some-
what detached from realities on the ground where some major trade barriers exists either at
the borders, or in relation to poor transport infrastructure or other similar issues. Also,
administrative capacity may sometimes be lacking to effectively implement some of the more
ambitious provisions. This then may lead to severe deficit of effective implementation of